Appeals Procedures, 26378-26391 [2017-11319]
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26378
Proposed Rules
Federal Register
Vol. 82, No. 108
Wednesday, June 7, 2017
This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
NATIONAL CREDIT UNION
ADMINISTRATION
12 CFR Parts 701, 703, 705, 708a, 709,
741, 745, 746, 747, and 750
RIN 3133–AE68
Appeals Procedures
National Credit Union
Administration (NCUA).
ACTION: Proposed rule.
AGENCY:
The NCUA Board (Board)
proposes to adopt procedures to govern
appeals to the Board that would apply
to agency regulations that currently
have their own embedded appeals
provisions and will replace those
current provisions. The procedures
would apply in cases in which a
decision rendered by a regional director
or other program office director is
subject to appeal to the Board. The
proposed procedures are intended to
result in greater efficiency, consistency,
and better understanding of the way in
which matters under covered
regulations may be appealed to the
Board.
Excluded from the scope of this
proposal are formal adjudications
required under the Administrative
Procedure Act (APA) to be accompanied
by ‘‘notice and an opportunity for a
hearing on the record.’’ Matters that are
not covered include formal enforcement
actions, challenges to orders imposing
prompt corrective action and matters
that are within the jurisdiction of the
NCUA’s Supervisory Review Committee
(SRC). With the issuance of this
proposed rule, the Board is also
proposing a new rule to govern the SRC,
including the appeal to the Board of
adverse determinations made by the
SRC.
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SUMMARY:
Comments must be received on
or before August 7, 2017.
ADDRESSES: You may submit comments
by any of the following methods (Please
send comments by one method only):
DATES:
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• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• NCUA Web site: https://
www.ncua.gov/regulation-supervision/
Pages/rules/proposed.aspx. Follow the
instructions for submitting comments.
• Email: Address to regcomments@
ncua.gov. Include ‘‘[Your name]
Comments on Appeals Procedures’’ in
the email subject line.
• Fax: (703) 518–6319. Use the
subject line described above for email.
• Mail: Address to Gerard Poliquin,
Secretary of the Board, National Credit
Union Administration, 1775 Duke
Street, Alexandria, Virginia 22314–
3428.
• Hand Delivery/Courier: Same as
mail address.
Public Inspection: All public
comments are available on the agency’s
Web site at https://www.ncua.gov/
RegulationsOpinionsLaws/comments as
submitted, except as may not be
possible for technical reasons. Public
comments will not be edited to remove
any identifying or contact information.
Paper copies of comments may be
inspected in NCUA’s law library at 1775
Duke Street, Alexandria, Virginia 22314,
by appointment weekdays between 9:00
a.m. and 3:00 p.m. To make an
appointment, call (703) 518–6546 or
send an email to OGCMail@ncua.gov.
FOR FURTHER INFORMATION CONTACT:
Michael J. McKenna, General Counsel,
Ross P. Kendall, Special Counsel to the
General Counsel, or Benjamin M.
Litchfield, Staff Attorney, at the above
address, or telephone: (703) 518–6540.
SUPPLEMENTARY INFORMATION:
Executive Summary
If adopted, new part 746, subpart B
will govern most authorized appeals to
the Board of adverse determinations
made at program office levels under
agency regulations that permit such an
appeal. The agency’s discussion of the
proposed changes details which rules
would be affected but the Board
specifically requests comments on any
other agency rules that should provide
for an appeal and thus be covered under
the proposal. The following actions or
determinations would not be covered
under the proposal because appeals
relating to them are already covered
under different agency procedures but
the Board nonetheless seeks comments
on their proposed exclusion:
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• Formal enforcement actions;
• Creditor claims in liquidation, to
the extent that the claimant has
requested and the Board has agreed to
consider the appeal formally on the
record;
• Material supervisory determination
within the jurisdiction of the
Supervisory Review Committee,
including appeals of SRC determination
to the Board (addressed under a separate
agency proposal issued with this
proposal);
• Challenges to actions imposed
under the prompt corrective action
regime; and
• Appeals of matters that are
delegated by rule to an officer or
position below the Board for final,
binding agency action.
I. Background
The Board is committed to providing
credit unions, and other persons or
entities that are affected by agency
decisions, with an opportunity to obtain
meaningful review of those decisions.
At present, procedures for obtaining that
review are embedded in and scattered
throughout NCUA’s regulations and, in
many cases, are slightly different from
one another. For example, time frames
for seeking higher level review may
differ and deadlines within which final
agency action is to be rendered may also
be different.1 In this proposal, the Board
has developed a more uniform set of
procedures to govern those rules in
which an appeal to the Board is
permitted. The Board seeks to strike a
balance that will afford the appellant
fair consideration of the issues while
avoiding procedures that are overly
burdensome, time consuming, and
expensive for either the petitioner or the
agency. The Board invites comment on
all aspects of this proposal.
The proposed procedures would
apply to federal credit unions (FCUs),
federally insured, state-chartered credit
unions (FISCUs), or certain institutionaffiliated parties (IAPs) such as officers
or directors when appealing an agency
determination under one of the rules to
which proposed part 746, subpart B
would apply. For example, FCUs and
FISCUs appealing a waiver
determination by a regional director
under the loan participations rule
1 See, e.g., 12 CFR 701.32(b)(5), 701.34(a)(4),
741.11(d), 703.111(d).
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would be subject to these procedures.2
These procedures would also apply to
an IAP appealing an adverse
determination relating to a change in
officials.3
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II. Summary of Regulations Affected by
Part 746
Several NCUA regulations contain
appeals procedures in addition to their
substantive provisions. These
procedures generally lack uniformity
and may be confusing for those seeking
an appeal. To improve the appeals
process that applies under the covered
rules, the Board proposes to promulgate
a more uniform set of appeals
procedures contained in subpart B of
part 746 to replace the current
inconsistent appeals procedures that
now apply to agency determinations
under the affected regulations. The
Board proposes to include in each of the
affected rules a cross-reference to the
proposed procedures to be located in
subpart B of part 746.
The following is a bulleted list of the
various regulations that have appeals
procedures that would be replaced by
the proposed procedures in subpart B of
part 746.
• Claims of a Creditor of an Insolvent
FICU Under an NCUA Alternative
Resolution Dispute Process. Within 60
days from the date that NCUA’s Asset
Management and Assistance Center
(AMAC) issues a notice of disallowance,
a creditor of an insolvent FICU may file
or continue a lawsuit in U.S. district
court or seek review by the Board.4
Claimants seeking Board review may
request a hearing on the record in
accordance with part 747 of NCUA’s
regulations and the formal adjudicatory
procedures set forth in the APA.5
Alternatively, a claimant seeking review
by the Board may submit to an
alternative dispute resolution process.6
The proposed amendments supplant
those procedures currently in part 709
of NCUA’s regulations 7 and replace
them with a reference to new subpart B
to part 746.
• Payment of Claims Regarding
Federally Insured Shares or Deposits.
The FCU Act provides that the Board is
to make payment of the insured shares
or deposits as soon as possible following
a liquidation.8 The FCU Act authorizes
the Board to require a proof of claim to
be filed with it before making payment,
CFR 701.22.
CFR 701.14.
4 12 U.S.C. 1787(b)(6).
5 12 U.S.C. 1787(b)(7)(A).
6 12 U.S.C. 1787(b)(7)(B).
7 12 CFR 709.8(c).
8 12 U.S.C. 1787(d)(1).
and it contemplates that the Board may
‘‘approve or reject’’ such claims.9 The
FCU Act also provides that the Board
may, by regulation, prescribe
procedures to resolve disputed claims.10
No conditions or limitations are
imposed by statute on this resolution
process, although the FCU Act does
provide that the agency’s final
determination of an insurance claim is
subject to judicial review in accordance
with the relevant provisions of the
APA.11 Subpart B to part 745 currently
implements this authority. The
proposed amendments would replace
the current procedures.
• Chartering and Field of
Membership. NCUA’s Office of
Consumer Financial Protection and
Access (OCFPA) is responsible for
making certain determinations regarding
chartering and field of membership, and
these determinations are appealable to
the Board. The FCU Act does not
provide any specific right to a hearing
on the record in connection with any of
these determinations, and the
procedures do not call for such a
proceeding. The Board proposes to
delete from NCUA’s Chartering and
Field of Membership Manual all
descriptions of the current procedures
for challenging OCFPA determinations,
such as the denial of initial charter
applications (including proposed senior
officials), requests for expansion or
spinoff, requests to add an underserved
area, and conversion requests. The
Board proposes that all of these
procedures be governed by new subpart
B to part 746.
• Community Development Loans. In
accordance with part 705 of NCUA’s
regulations, qualifying credit unions
may apply for loans from NCUA’s
Community Development Revolving
Loan Fund.12 A credit union failing to
qualify may appeal to the Board. Part
705 specifies that the appeal must be
taken within 30 days of the notice of
disqualification, and it provides that the
Board’s review is limited to the
threshold question of qualification.13
The Board proposes to replace these
procedures with new subpart B to part
746.
• Golden Parachutes. Pursuant to part
750 of NCUA’s regulations, FICUs are
limited in the amount of severance plan
arrangements that are permissible for
senior level officials.14 Credit unions are
permitted to request from the regional
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director or the Office of National
Examinations and Supervision (ONES)
Director, as appropriate, the authority to
make an otherwise impermissible
severance payment. If the request is
denied, part 750 specifies a process by
which the credit union may appeal to
the Board.15 The Board proposes to
replace that process with the procedures
in subpart B to part 746.
• Investment Authority. An FCU may
appeal decisions by the regional director
or ONES Director rejecting its request
for expanded investment authority or
authority to engage in derivatives
investment activity.16 In each case, the
investment rule is silent as to the
appeals procedures other than timing.
The Board proposes that these appeals
be governed by the procedures in new
subpart B to part 746.
• Change of Officials for Troubled or
Newly Chartered Credit Unions. A
‘troubled’ or newly chartered FICU may
appeal an adverse determination
regarding a change of an official or
officials to the Board. Procedures
governing this review are in § 701.14 of
NCUA’s regulations. The regulation
refers to subpart J of part 747 of NCUA’s
regulations which contains explicit
guidance on the appeals process.17
There is no express statutory right to a
hearing on the record in this
circumstance. The Board proposes to
replace the current procedures with the
procedures in new subpart B to part
746. The 90-day time frame within
which the Board must decide an appeal
under § 701.14 would be preserved, as
would other shorter time frames
currently included in subpart J.
• Conversions and Mergers. NCUA
administers the processes by which a
FICU may convert to a mutual savings
bank or merge into a bank.18 Part 708a
specifies that the appropriate NCUA
official will oversee the methods and
procedures of the conversion or merger.
If the appropriate NCUA official
disapproves the methods by which the
vote was taken or the procedures
applicable to the vote, the FICU may
appeal that disapproval to the Board.19
For conversions, a FICU may appeal a
determination within 30 days and the
Board must act within 90 days.20 For
mergers, a FICU may appeal a
determination within 30 days and the
Board must act within 120 days.21 The
Board proposes to replace these
15 12
3 12
CFR 750.6(b.).
CFR 703.20(d); 703.111(d); 703.114(c).
17 12 CFR 747.901 et seq.
18 12 CFR part 708a.
19 12 CFR 708a.108(d).
20 Id.
21 12 CFR 708a.308(d).
9 12
U.S.C. 1787(d)(2).
10 12 U.S.C. 1787(d)(3).
11 Id.
12 12 CFR part 705.
13 12 CFR 705.6(f)(1).
14 12 CFR part 750.
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procedures with the appeals procedures
in new subpart B to part 746. The Board
specifically invites comment on
whether the extension of these
deadlines would pose an undue
hardship on credit unions converting to
mutual savings banks or merging with
banks.
• Other Miscellaneous Regulations
Affected by Subpart B to Part 746. The
following is a list of additional
regulations that contain appeals
procedures that would be replaced with
the proposed appeals procedures in
subpart B of part 746.
• NCUA’s general lending rule.22
• NCUA’s eligible obligations rule.23
• NCUA’s loan participations rule.24
• Section 701.32 of NCUA’s
regulations regarding public unit and
nonmember shares.25
• Section 701.34 of NCUA’s
regulations regarding the low income
designation.26
• Section 741.11 of NCUA’s
regulations regarding branch offices
outside the United States.27
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III. Exclusions
New subpart B to part 746 is designed
to govern appeals under the regulations
addressed above. There are five areas
that are excluded from the scope of the
proposed rule. Each of these is
discussed below.
Enforcement Actions. Appeals that
involve an agency hearing on the record
and the development of an initial
decision by a hearing officer or
administrative law judge and are
governed by formal procedural
requirements described in secs. 7 and 8
of the APA.28 These formal
requirements are applicable only where
the Federal Credit Union Act (FCU
Act) 29 specifically calls for the agency’s
adjudication ‘‘to be determined on the
record after opportunity for an agency
hearing.’’ 30
Section 206 of the FCU Act addresses
enforcement actions that the NCUA may
take against an insured institution or its
IAPs.31 Of these, four specifically
include an opportunity for the affected
entity or individual to be heard before
the action becomes effective. These
include actions to terminate the
institution’s insured status (sec. 206(c)),
cease and desist actions (sec. 206(e)),
CFR 701.21(h)(3).
CFR 701.23(h)(3).
24 12 CFR 701.22(c).
25 12 CFR 701.32(b)(5).
26 12 CFR 701.34(a)(4).
27 12 CFR 741.11(d).
28 5 U.S.C. 556, 557.
29 12 U.S.C. 1751 et seq.
30 5 U.S.C. 554(a).
31 12 U.S.C. 1786.
removal actions (sec. 206(g)), and civil
money penalties (sec. 206(k)), including
any actions to obtain enforcement of an
outstanding order issued under sec. 206
or under the prompt corrective action
provisions in sec. 216 of the FCU Act.32
There are two enforcement actions that
may be taken by NCUA with immediate
effectiveness and an agency hearing is
not required (temporary cease and desist
actions (sec. 206(f)) and actions to
appoint a conservator (sec. 206(h)). Each
of these carries with it an opportunity
for the affected entity or individual to
proceed immediately to court to file a
challenge to the NCUA’s action.
Other formal enforcement measures
are found in sec. 131 of the FCU Act,
which provides that FCUs convicted of
money laundering, cash transaction
reporting, or certain other related
offenses are subject to forfeiture of their
charter after a pre-termination hearing
conducted on the record.33 In addition,
FICUs fined for failure to file accurate
call reports may request a hearing on the
record under sec. 202(a)(3) of the FCU
Act.34 Similarly, FISCUs fined for
failure to submit accurate certified
statements in connection with
calculating National Credit Union Share
Insurance Fund premium charges may
request a hearing on the record under
sec. 202(d)(2)(E) of the FCU Act.35
Finally, in accordance with sec.
304(e)(3) of the FCU Act, the Board may
terminate a FICU’s membership in the
Central Liquidity Facility (CLF) for noncompliance with statutory or regulatory
requirements pertaining to the CLF, but
only after providing the opportunity for
an agency hearing.36
Actions under sec. 206(i) of the FCU
Act to suspend, remove, or prohibit
individuals who have engaged in certain
criminal acts are treated somewhat
differently. In these instances, the
affected individual is removed
immediately, but is given the
opportunity to appear before the Board
to show that his or her continued
service on behalf of the FICU does not
pose a threat to the interests of the
credit union or its members.37 The FCU
Act directs the Board to fix a time and
place at which the party may appear, in
person or through counsel, to submit
written material and make oral
presentations and, with the agreement
of the Board, oral testimony.38
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32 12
U.S.C. 1790d.
U.S.C. 1772d.
34 12 U.S.C. 1782(a)(3).
35 12 U.S.C. 1782(d)(2)(E).
36 12 U.S.C. 1795c(e)(3).
37 12 U.S.C. 1786(i)(3).
38 Id.; 12 CFR part 747, subpart D. In a case
involving a challenge to an immediate removal of
a bank executive by the FDIC, acting under its
33 12
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For these types of actions, NCUA has
promulgated explicit rules of procedure,
which provide safeguards such as
representation by counsel, document
production, discovery, testimony from
witnesses, an official record of the
proceedings, and the development of a
recommended decision by an
administrative law judge for the
consideration of the Board.39 Such
procedures regarding these enforcement
actions would not be covered by new
subpart B to part 746.
Creditor claims in liquidation that are
litigated or reviewed by the Board under
formal agency adjudication procedures.
The FCU Act specifies that a person
appealing an initial creditor claim
determination by the liquidating agent
of an insolvent FICU may either: (1) File
an action in federal court (or renew an
action that had been pending before the
liquidation began) seeking a de novo
judicial determination of the merits of
his claim; or (2) they may request that
the Board review the claim.40 The FCU
Act also specifies that, if the Board
agrees to the review request, the Board
must consider the claim after
opportunity for a hearing on the
record.41 Part 709 of NCUA’s
regulations implements this provision
by providing that the formal
adjudication provisions set out in part
747, subpart A will govern the
process.42 These provisions remain in
place and are not affected by new
subpart B to part 746. However, as
discussed above, alternatively a
petitioner may request an appeal under
the proposed provisions in subpart B to
part 746.
Material Supervisory Determinations.
As required by the Riegle Community
Development and Regulatory
Improvement Act of 1994,43 NCUA
established an SRC to provide a forum
for FICUs to appeal an examiner’s
material supervisory determinations.
Procedures followed by the SRC are
described in Interpretive Ruling and
Policy Statement (IRPS) 11–1, as
amended by IRPS 12–1. Subjects that
may be appealed to the SRC include
examination ratings, the adequacy of
similar authority, the Supreme Court held that the
absence of the right to a pre-removal hearing was
constitutionally sufficient and did not violate the
due process clause of the Fifth Amendment. FDIC
v. Mallen, 486 U.S. 230 (1988).
39 12 CFR part 747.
40 12 U.S.C. 1787(b)(6), (7). The FCU Act also
permits the Board to establish alternative dispute
resolution procedures, which it has done in
§ 709.8(c). As discussed below, those procedures
will be replaced by new subpart B to part 746.
41 12 U.S.C. 1787(b)(7).
42 12 CFR 709.8(b).
43 Public Law 103–325, 108 Stat. 2160 (Sept. 23,
1994).
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loan loss reserve provisions, and loan
classifications on loans that are
significant to the institution.44 The
Board expanded the jurisdiction of the
SRC in April 2011 by adding appeals of
determinations by the Director of the
Office of Small Credit Union Initiatives
to deny a reimbursement request made
in connection with a technical
assistance grant.45 As proposed, the
provisions in new subpart B to part 746
would not apply to issues that are
reviewable by the SRC. Along with the
issuance of this proposed rule, the
Board is seeking comments on a
separate proposal that contains
significant changes to the SRC,
including how adverse determinations
made by the SRC may be appealed to
the Board. If adopted, those proposed
changes to the SRC would be contained
in a new subpart A to part 746.
Prompt Corrective Action. Under the
FCU Act, FICUs are subject to
mandatory and discretionary
supervisory actions, based on their net
worth position.46 Mandatory actions are
not subject to appeal, but discretionary
actions are. Under the FCU Act, these
discretionary measures are considered
‘‘material supervisory determinations’’
and could have been made subject to the
jurisdiction of the SRC.47 The FCU Act,
however, permits the Board to establish
a separate appeals process regarding
these determinations. Exercising this
authority, the Board determined
previously that challenges to
determinations made by a regional
director or ONES Director and imposed
under the prompt corrective action
regime are more appropriately covered
by the procedures in subpart L to part
747.48 These procedures are informal
but specialized, ranging from the
submission of written materials (in the
case of orders imposing discretionary
supervisory action) 49 to requesting a
hearing before a presiding officer
designated by the Board (for orders
reclassifying a credit union on safety
and soundness criteria, as well as orders
to dismiss a director or senior executive
officer). In the context of discretionary
supervisory actions, the Board will
respond to the written challenge.50 In
the context of challenges to
reclassification and dismissal of officials
or directors, the rules provide for a
44 Id.
45 76
FR 3674 (Jan. 20, 2011).
U.S.C. 1790d; 12 CFR part 702.
47 12 U.S.C. 1790d(k).
48 See 12 CFR part 747, subpart L.
49 The affected credit union also has the option
under this procedure to request the
recommendation of NCUA’s Ombudsman
concerning the matters at issue.
50 12 CFR 747.2002.
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hearing at which the appellant is
entitled to be represented by counsel, to
introduce relevant documents, and to
make oral presentations. Witness
testimony is permissible with the
consent of the presiding officer.51 The
hearing is recorded, and the appellant is
entitled to receive a transcript upon
request and payment of the cost thereof.
The presiding officer makes a
recommendation to the Board, which
has 60 days in which to decide the
issue.52
Because the determinations made by
a regional director or the ONES Director
and imposed under the prompt
corrective action regime are addressed
separately, they are not subject to
proposed subpart B to part 746. Similar
determinations involving exclusively
corporate credit unions are set forth in
subpart M to part 747 and are likewise
unaffected by this proposal. However,
the Board seeks specific comments as to
whether appeals provisions relating to
prompt corrective action are sufficient
and whether such provisions should be
consolidated with the proposed part
746.
Other Exclusions. By rule, appeals of
adverse determinations under the
Freedom of Information Act are decided
by the General Counsel.53 The General
Counsel also decides on requests made
under NCUA’s Touhy regulation 54 and
appeals of initial determinations made
under the Privacy Act.55 None of these
areas would be affected by this
proposed rule but the Board seeks
comments on their exclusion.
The proposed procedures in subpart B
to part 746 would also not affect how
consumer complaints are processed by
the NCUA.56 On September 30, 2010,
the Board delegated the authority to
examine and supervise federal credit
unions for compliance with consumer
laws and regulations to OCFPA. As a
result of this delegation, consumers may
not appeal determinations by OCFPA’s
Director of the Division of Consumer
51 The
presiding officer is an individual
designated by the NCUA Board to hold informal
hearings under subpart L to part 747.
52 12 CFR 747.2003, 743.2004.
53 12 CFR 792.28.
54 Touhy regulations prohibit the unauthorized
release of information by current (and typically
former) agency employees and provide a procedure
for centralized agency decision-making concerning
how the agency will respond to a subpoena or other
request for testimony or documents served on a
current or former agency employee. See United
States ex rel. Touhy v. Ragen, 340 U.S. 462, 468
(1951); see also 5 U.S.C. 301.
55 12 CFR 792.46, 792.59.
56 NCUA’s current consumer complaint
procedures are set forth in NCUA Letter to Credit
Unions 15–CU–04 (June 2015).
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Affairs to the Board. The Board invites
comment on this exclusion.
IV. Section Analysis
Subpart B to Part 746—Informal
Appeals Procedures
The Board is proposing to add subpart
B to part 746 to address procedures that
govern informal appeals of agency
decisions under specific regulations. As
discussed above, the proposed rule
would amend existing NCUA
regulations to include a cross-reference
to the procedures contained in this
subpart. The Board proposes to adopt
these procedures to improve and
streamline the appeals process as it
applies to decisions under the covered
rules.
Section 746.201—Authority, Purpose,
and Scope
The first section of proposed subpart
B to part 746 states the Board’s authority
for issuing the rule as well as its scope
and purpose.
201(a) Authority
The Board is issuing this proposed
rule pursuant to authority granted to it
by secs. 120, 207, and 209 of the FCU
Act. Section 120 of the FCU Act is a
general grant of regulatory authority
over FCUs. Section 207 of the FCU Act
is a specific grant of authority over share
insurance coverage, conservatorships,
and liquidations. Section 209 of the
FCU Act is a plenary grant of regulatory
authority to issue rules and regulations
necessary or appropriate to carry out its
role as share insurer for all FICUs.
Section 746.201(b) Purpose
As stated above, the purpose of the
proposed rule is to provide uniform
procedures for appeals to the Board
under affected agency regulations. The
Board believes the creation of uniform
rules will help ensure that appellants
receive appropriate due process and that
agency decisions are made in a prompt
and efficient manner.
Section 746.201(c) Scope
Paragraph (c) first lists each of the
regulations with current appeal
procedures that would be covered under
the new rule. The section would also
clarify that there are five categories of
agency actions that are excluded from
the scope of the rule. Because this rule
would only apply to informal agency
adjudications, formal adjudications
would be excluded. Likewise, creditor
claim appeals where the claimant has
requested a hearing on the record would
be excluded. In addition, the rule would
not cover appeals of prompt corrective
action determinations or material
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supervisory determinations appealable
to NCUA’s SRC. Finally, the rule would
not cover the appeal of FOIA
determinations, Privacy Act
determinations, or determinations made
under NCUA’s Touhy regulation.
Section 746.202—Definitions
In § 746.202, the Board proposes to
define certain terms. Unless otherwise
defined, the Board expects FICUs and
other affected parties to interpret terms
or phrases according to their plain
meaning.
Initial Agency Determination
The proposed rule would define
‘‘initial agency determination’’ to clarify
that the rule only applies to certain
agency decisions made by personnel
below the Board level. The rule does not
apply to any action that results in the
formulation of a rule, regulation,
guidance document, or policy
statement.
Petitioner
The term ‘‘petitioner’’ would refer to
a natural person or legal entity seeking
review of an initial agency
determination. Several of NCUA’s
regulations use different terminology
when referring to parties appealing
determinations to the Board. For
example, a party appealing the denial a
creditor claim is a ‘‘claimant,’’ 57 while
a party appealing a denial of share
insurance coverage is referred to as an
‘‘accountholder.’’ 58 Rather than use all
of these different terms, the Board is
proposing to adopt a uniform term to
describe all classes of individuals or
legal entities appealing determinations
to the Board.
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Program Office
Similarly, the Board is proposing to
adopt a uniform term ‘‘program office’’
to refer to all offices within NCUA
responsible for making initial agency
determinations. Several NCUA offices
below the Board level are responsible
for administering various NCUA
regulations. For example, chartering and
field of membership determinations are
made by OCFPA, while waivers and
safety and soundness determinations are
made by the appropriate regional office
or ONES. Rather than use different
terminology, the Board is proposing to
adopt ‘‘program office’’ as a uniform
term to describe the different NCUA
offices responsible for making initial
agency determinations.
57 See
58 See
12 CFR 709.7.
12 CFR 745.202.
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Section 746.203—Request for
Reconsideration
Proposed § 746.203 would set forth
procedures for requesting
reconsideration from a program office
prior to filing an appeal with the Board.
Several regulations issued by the NCUA
Board permit affected parties to request
reconsideration. This process is a
useful, relatively inexpensive, and
efficient method of resolving most
disputes. It also limits the overall
number of matters appealed to the
Board. Therefore, the Board proposes to
make this optional procedure available
for any matter that could otherwise be
appealed to the Board under part 746,
subpart B and seeks comments on this
approach.
Section 746.203(a)
Reconsideration
The reconsideration process promotes
greater efficiency by allowing matters to
be resolved at the program office level
where possible. In general, the Board
anticipates that the disposition of a
request for reconsideration will either
resolve the matter entirely or clarify the
issues that remain for resolution at the
Board level. Ordinarily, the Board
anticipates that one request for
reconsideration will be sufficient, and
that the next appropriate step for a party
still seeking resolution of the issues will
be to appeal to the Board. The rule
recognizes, however, that there may be
cases involving extenuating
circumstances, such as the discovery of
new evidence or documentation, and
that a second request for reconsideration
may be appropriate in such
circumstances. Absent such
circumstances, a second request for
reconsideration would be treated as an
appeal to the Board.
Section 746.203(e); (f); (g)
Determination of Program Office; Notice
of Determination; Failure To Make a
Determination
Paragraph (e) would require the
program office to issue a written
determination within 30 calendar days
of receiving a first request for
reconsideration. Paragraph (f) would
specify that the written determination
must include a description of any right
to appeal a determination to the Board.
In the case of creditor claims, paragraph
(f)(2) would require a description of the
right to file or continue a lawsuit in
federal court.
In the Board’s experience, 30 calendar
days is a sufficient amount of time for
a program office to consider new
information and reach a determination
after reconsideration. If the program
office fails to make a determination
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within 30 calendar days, proposed
paragraph (g) would treat the request for
reconsideration as if it had been denied.
To avoid undue prejudice, the denial of
a request for reconsideration is treated
as an initial agency determination for
purposes of the deadline to file an
appeal with the Board in proposed
§ 746.204. If the petitioner obtains new
information or there are reasonable,
mitigating circumstances that precluded
the presentation of existing information
in connection with the first request for
reconsideration, as determined solely by
the program office in its reasonable
judgment, the petitioner may request a
second reconsideration prior to a Board
appeal.
Section 746.204—Appeal to the Board
Proposed § 746.204 would state the
procedures for filing an appeal with the
Board. The provision would also list the
information that must be included as
part of the appeal. These requirements
would be similar to the current
requirements for creditor claims and
share insurance claims, including the
requirement that any appeal must be
filed with the Secretary of the Board
within 60 calendar days of the date of
the initial agency determination or, if
applicable, any determination following
a request for reconsideration. However,
the Board may grant extensions for
timely filing in response to a petitioner’s
request base on the petitioner’s
reasonable, extenuating circumstances.
Section 746.204(c) Failure To File a
Timely Appeal
In order to establish subject matter
jurisdiction, federal courts typically
require affected parties to exhaust
administrative remedies.59 For example,
in creditor and share insurance cases,
the failure to exhaust administrative
remedies is a jurisdictional bar
preventing affected parties from seeking
judicial review of their claims in federal
court.60 Proposed paragraph (c) would
clarify that, absent mitigating
circumstances, a petitioner who fails to
file a timely request for an appeal would
be considered to have waived claims
that may be adjudicated under part 746,
subpart B.
204(d); (e); (f) Content of Request;
Burden of Proof; Amending or
Supplementing the Appeal
Proposed paragraph (d) would outline
the content requirements for an appeal
59 See Avocados Plus, Inc. v. Veneman, 370 F.3d
1243 (D.C. Cir. 2004); Volvo GM Heavy Truck Corp.
v. Dep’t of Labor, 118 F.3d 205, 209–211 (4th Cir.
1997).
60 See Freeman v. FDIC, 56 F.3d 1394 (D.C. Cir.
1994).
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to the Board. To ensure the Board is able
to review an appeal in a timely and
efficient manner, this paragraph would
require a petitioner to provide a
statement of the facts on which an
appeal is based, any objections to the
basis on which the program office made
its initial determination, and any
additional evidence that may be
relevant to the matter that was not
previously provided to the program
office. Proposed paragraph (e) would
address the burden of proof at the
appeal level.
Proposed paragraph (f) would
describe the right of the petitioner to file
supplemental materials within 45
calendar days of filing an appeal. In
addition to the authority of the Board to
request additional information, the
petitioner may amend or supplement
the written record. If the petitioner does
amend or supplement the record, the
Board is permitted to request additional
information. A petitioner’s failure to
provide information requested by the
Board could serve as a basis for denial
of an appeal.
Section 746.204(g)
Hearing
Request for Oral
Section 746.204(g) would specify that
a petitioner may request an oral hearing
before the Board and provides crossreferences to proposed § 746.207, which
sets out the procedures that govern oral
hearings. The petitioner may request to
appear before the Board, in person or
through or with counsel. This request
should be filed with the initial appeal
documents. On his or her own initiative
or at the request of the petitioner, the
Chairman may in his or her sole
discretion allow for a hearing to be
conducted via teleconference or video
conference facilities.
Section 746.205—Preliminary
Considerations Regarding the Appeal
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This section of the proposed rule
describes preliminary internal processes
for reviewing appeals. Additional
information from the petitioner may be
requested by the agency in order to
provide the Board with a more full and
complete administrative record but such
requests must be reasonable and timely
to facilitate the processing of the appeal,
not to delay it.
Section 746.206
Appeal
Administration of the
Proposed § 746.206 would set out the
standard procedures followed by the
Board when it receives a timely appeal.
These proposed procedures would be,
in some respects, a codification of
informal practices that the Board
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currently follows when reviewing
appeals.
Section 746.206(a)
Special Counsel
Review by the
Proposed paragraph (a) would
describe procedures followed by the
Special Counsel when reviewing an
appeal. After receiving a timely appeal,
the Special Counsel would be
responsible for gathering relevant
evidence from the appropriate program
office and conducting an independent
review of these materials along with any
materials provided by the petitioner.
The Special Counsel would then
provide a written recommendation to
the Board and, at the request of the
Board, make an oral presentation in an
official meeting concerning the
recommendation. The duties of the
Special Counsel under this provision
must be fulfilled in a timely manner and
all requests for additional information
must be reasonable, to facilitate the
appeal.
Section 746.206(b)
Appeal
Determination on
Proposed paragraph (b) would require
the Board to render a written decision
stating the reasons for the decision
within 90 calendar days from the date
of receipt of an appeal by the Secretary
of the Board. Such a decision would
constitute a final agency action
permitting the petitioner to seek review
in federal court under the APA. In the
discretion of the Chairman, the time for
the Board’s decision may be extended as
the Chairman may consider necessary or
appropriate for a full and fair
consideration of the issues, including
accommodation of an oral hearing. If the
Board does not reach a decision within
90 calendar days from the date of
receipt, or within any extension of time
as established by the Chairman, the
appeal will be deemed to be denied. The
deadline will help ensure that the Board
has adequate time to decide a matter on
appeal while avoiding any undue
prejudice to petitioners from
unnecessary delays.
Section 746.207—Procedures for Oral
Hearing
This section of the proposed rule sets
out the process for requesting and
conducting an oral hearing. The Board
recognizes that, in some unusual cases,
the opportunity to make a presentation
in person is necessary or useful to
assure a thorough understanding of the
issues in a case.
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Fmt 4702
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26383
Section 746.207(a); (b); (c) Request for
Oral Hearing; Action on Request; Effect
of Denial
Paragraph (a) would describe the
process for requesting an oral hearing.
The request would accompany the
notice of appeal itself, set out in a
separate document entitled ‘‘Request for
Oral Hearing.’’ The petitioner must
show good cause as to why the NCUA
should hold an oral hearing, stating
reasons why the case cannot be
presented adequately with only written
statements. Proposed paragraph (b)
would specify that an oral hearing
would be scheduled provided at least
one Board member agrees to hear the
appeal, but specifies that the action by
a Board member to approve an oral
hearing must be taken within 20 days of
the receipt of the appeal by the Board
Secretary. The Special Counsel would
notify the petitioner of the Board’s
determination whether to approve a
request for an oral hearing. Proposed
paragraph (c) would specify that, in the
event the request does not receive the
support of at least one Board member,
the appeal will proceed on the basis of
the written record.
Section 746.207(d)
Hearing
Procedures for Oral
(d)(1) Scheduling; Location
Oral hearings will be held at NCUA
headquarters in Alexandria, Virginia,
except that on his or her own initiative
or at the request of the petitioner, the
Chairman may in his or her sole
discretion allow for a hearing to be
conducted via teleconference or video
conference facilities.
(d)(2) Appearances; Representation
At an oral hearing, the petitioner
would be permitted to be represented by
not more than two officers, employees,
or other representatives (including
counsel) unless the Chairman, in his or
hers sole discretion, allows a greater
number of participants. This proposed
paragraph recognizes the general right
granted in the APA for individuals
appearing in person before an agency to
be ‘‘accompanied, represented, and
advised by counsel or, if permitted by
the agency, by other qualified
representative[s].’’ 61 In general, courts
have found the right to counsel to be a
fundamental aspect of procedural due
process in both informal and formal
agency adjudications.62
61 5
U.S.C. 555(b).
Goldberg v. Kelly, 397 U.S. 254, 270 (1970)
(‘‘The right to be heard would be, in many cases,
of little avail if it did not comprehend the right to
be heard by counsel. We do not say that counsel
62 See
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Conduct of Oral Hearing
Proposed paragraph (d)(3) addresses
procedures at the oral hearing and
would permit the use of presentations
based on written evidence submitted as
part of the appeal documents filed with
the Secretary of the Board. The
petitioner would be given the
opportunity to present first, followed by
a representative of the program office.
The petitioner would be permitted to
rebut information presented by the
program office.
V. Regulatory Procedures
Regulatory Flexibility Act
The Regulatory Flexibility Act
requires NCUA to prepare an analysis to
describe any significant economic
impact a rule may have on a substantial
number of small entities (primarily
those under $100 million in assets).
This proposed rule only provides
enhanced voluntary opportunities for
credit unions to appeal agency
determinations. Accordingly, it will not
have a significant economic impact on
a substantial number of small credit
unions, and therefore, no regulatory
flexibility analysis is required.
pmangrum on DSK3GDR082PROD with PROPOSALS
Paperwork Reduction Act
Requests for Reconsideration: 24;
Appeals: 10.
Frequency:
Requests for Reconsideration: 1;
Appeals: 1.
Estimated Burden per Response:
Requests for Reconsideration: 10
hours; Appeals: 20 hours.
Estimated Annual Burden:
Requests for Reconsideration: 240
hours; Appeals: 200 hours.
Total: 440 hours.
The PRA and OMB regulations
require that the public be provided an
opportunity to comment on the
paperwork requirements, including an
agency’s estimate of the burden of the
paperwork requirements. The Board
invites comment on: (1) Whether the
paperwork requirements are necessary;
(2) the accuracy of NCUA’s estimates on
the burden of the paperwork
requirements; (3) ways to enhance the
quality, utility, and clarity of the
paperwork requirements; and (4) ways
to minimize the burden of the
paperwork requirements.
The Treasury and General Government
Appropriations Act, 1999—Assessment
of Federal Regulations and Policies on
Families
The Paperwork Reduction Act of 1995
(PRA) applies to rulemakings in which
an agency by rule creates a new
paperwork burden on regulated entities
or modifies an existing burden. 44
U.S.C. 3507(d). For purposes of the
PRA, a paperwork burden may take the
form of a either a reporting or a
recordkeeping requirement, both
referred to as information collections.
Proposed new Subpart B to part 746
establishes procedures by which credit
unions or other entities affected by an
initial decision by an NCUA program
office may seek and obtain the review of
that decision by the NCUA Board.
The rule proposes to consolidate the
information collection requirements of
the informal appeals process under a
new part; as such, NCUA intends to
remove the burden allocated to the
appeals process currently under OMB
control numbers 3133–0141, –0127,
–0114, –0117, –0133, and –0138, upon
promulgation of this new rule, and
requests a new OMB control number for
the information collection requirements
under part 746.
Estimated Number of Respondents:
NCUA has determined that this rule
will not affect family well-being within
the meaning of sec. 654 of the Treasury
and General Government
Appropriations Act, 1999, Public Law
105–277, 112 Stat. 2681 (1998).
must be provided at the pre-termination hearing,
but only that the recipient must be allowed to retain
an attorney if he so desires. Counsel can help
delineate the issues, present factual contentions in
an orderly manner, conduct cross-examination, and
generally safeguard the interests of the recipient.’’).
Credit, Credit unions, Reporting and
recordkeeping requirements.
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Executive Order 13132
Executive Order 13132 encourages
independent regulatory agencies to
consider the impact of their actions on
state and local interests. In adherence to
fundamental federalism principles,
NCUA, an independent regulatory
agency as defined in 44 U.S.C. 3502(5),
voluntarily complies with the executive
order. This rulemaking will not have a
substantial direct effect on the states, on
the connection between the national
government and the states, or on the
distribution of power and
responsibilities among the various
levels of government. NCUA has
determined that this proposal does not
constitute a policy that has federalism
implications for purposes of the
executive order.
List of Subjects
Credit unions, Investments.
Fmt 4702
12 CFR Part 708a
Credit unions, Reporting and
recordkeeping requirements
12 CFR Part 709
Claims, Credit unions.
12 CFR Part 741
Credit unions, Reporting and
recordkeeping requirements, Share
insurance.
12 CFR Part 745
Administrative practice and
procedure, Claims, Credit unions, Share
insurance.
12 CFR Part 746
Administrative practice and
procedure, Claims, Credit Unions,
Investigations.
12 CFR Part 747
Administrative practice and
procedure, Claims, Credit unions,
Investigations.
12 CFR Part 750
Credit unions, Golden parachute
payments, Indemnity payments.
By the National Credit Union
Administration Board, this 25th day of May,
2017.
Gerard Poliquin,
Secretary of the Board.
For the reasons discussed above, the
NCUA Board proposes to amend 12 CFR
parts 701, 703, 705, 708a, 709, 741, 745,
747, and 750; and to amend 12 CFR part
746, as proposed to be added elsewhere
in this issue of the Federal Register, as
follows:
PART 701—ORGANIZATION AND
OPERATION OF FEDERAL CREDIT
UNIONS
1. The authority citation for part 701
continues to read as follows:
■
Authority: 12 U.S.C. 1752(5), 1755, 1756,
1757, 1758, 1759, 1761a, 1761b, 1766, 1767,
1782, 1784, 1786, 1787, 1789. Section 701.6
is also authorized by 15 U.S.C. 3717. Section
701.31 is also authorized by 15 U.S.C. 1601
et seq.; 42 U.S.C. 1981 and 3601–3610.
Section 701.35 is also authorized by 42
U.S.C. 4311–4312.
2. Revise § 701.14(e) to read as
follows:
12 CFR Part 703
Frm 00007
Credit unions, grants, loans, revolving
fund.
■
12 CFR Part 701
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Sfmt 4702
§ 701.14 Change in official or senior
executive officer in credit unions that are
newly chartered or are in troubled
condition.
*
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(e) Notice of disapproval. NCUA may
disapprove the individual serving as a
director, committee member or senior
executive officer if it finds that the
competence, experience, character, or
integrity of the individual with respect
to whom a notice under this section is
submitted indicates that it would not be
in the best interests of the members of
the credit union or of the public to
permit the individual to be employed
by, or associated with, the credit union.
The Notice of Disapproval will advise
the parties of their rights to request
reconsideration from the regional
director and/or file an appeal with the
NCUA Board in accordance with the
procedures set forth in subpart B to part
746 of this chapter.
■ 3. Revise § 701.21(h)(3) to read as
follows:
§ 701.21 Loans to Members and Lines of
Credit to Members.
*
*
*
*
*
(h) * * *
(3) A regional director will provide a
written determination on a waiver
request within 45 calendar days after
receipt of the request; however, the 45day period will not begin until the
requesting credit union has submitted
all necessary information to the regional
director. If the regional director does not
provide a written determination within
the 45-day period the request is deemed
denied. A credit union may request the
regional director to reconsider a denied
waiver request and/or file an appeal
with the NCUA Board in accordance
with the procedures set forth in subpart
B to part 746 of this chapter.
*
*
*
*
*
■ 4. Revise § 701.22(c) to read as
follows:
§ 701.22
Loan participations.
pmangrum on DSK3GDR082PROD with PROPOSALS
*
*
*
*
*
(c) To seek a waiver from any of the
limitations in paragraph (b) of this
section, a federally insured credit union
must submit a written request to its
regional director with a full and detailed
explanation of why it is requesting the
waiver. Within 45 calendar days of
receipt of a completed waiver request,
including all necessary supporting
documentation and, if appropriate, any
written concurrence, the regional
director will provide the federally
insured credit union a written response.
The regional director’s decision will be
based on safety and soundness and
other considerations; however, the
regional director will not grant a waiver
to a federally insured, state-chartered
credit union without the prior written
concurrence of the appropriate state
supervisory authority. A federally
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insured credit union may request the
regional director to reconsider a denied
waiver request and/or file an appeal
with the NCUA Board in accordance
with the procedures set forth in subpart
B to part 746 of this chapter.
*
*
*
*
*
■ 5. Revise § 701.23(h)(3) to read as
follows:
§ 701.23 Purchase, sale, and pledge of
eligible obligations.
*
*
*
*
*
(h) * * *
(3) Appeal to NCUA Board. A federal
credit union may request the regional
director to reconsider a denied request
for expanded authority and/or file an
appeal with the NCUA Board in
accordance with the procedures set
forth in subpart B to part 746 of this
chapter.
■ 6. Revise § 701.32(b)(5) to read as
follows:
§ 701.32 Payment on shares by public
units and nonmembers.
*
*
*
*
*
(b) * * *
(5) The regional director will provide
a written determination on an
exemption request within 30 calendar
days after receipt of the request. The 30day period will not begin to run until
all necessary information has been
submitted to the regional director. A
credit union may request the regional
director to reconsider a denied
exemption request and/or file an appeal
with the NCUA Board in accordance
with the procedures set forth in subpart
B to part 746 of this chapter.
*
*
*
*
*
■ 7. Revise § 701.34(a)(4) to read as
follows:
§ 701.34 Designation of low income status;
Acceptance of secondary capital accounts
by low-income designated credit unions.
(a) * * *
(4) If NCUA determines a low-income
designated federal credit union no
longer meets the criteria for the
designation, NCUA will notify the
federal credit union in writing, and the
federal credit union must, within five
years, meet the criteria for the
designation or come into compliance
with the regulatory requirements
applicable to federal credit unions that
do not have a low-income designation.
The designation will remain in effect
during the five-year period. If a federal
credit union does not requalify and has
secondary capital or nonmember
deposit accounts with a maturity
beyond the five-year period, NCUA may
extend the time for a federal credit
union to come into compliance with
PO 00000
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Fmt 4702
Sfmt 4702
26385
regulatory requirements to allow the
federal credit union to satisfy the terms
of any account agreements. A federal
credit union may request NCUA to
reconsider a determination that it no
longer meets the criteria for the
designation and/or file an appeal with
the NCUA Board in accordance with the
procedures set forth in subpart B to part
746 of this chapter.
*
*
*
*
*
■ 8. Appendix B to part 701 is amended
as follows:
■ a. Section VII.D of Chapter 1 is
revised.
■ b. Section II.C.5 of Chapter 2 is
revised.
■ c. Section III.C.5 of Chapter 2 is
revised.
■ d. Section IV.C.5 of Chapter 2 is
revised.
■ e. Section V.C.5 of Chapter 2 is
revised.
■ f. Section IV.B of Chapter 3 is revised.
■ g. Section II.C.6 of Chapter 4 is
revised.
■ h. Section II.D—Application for a
Federal Charter of Chapter 4 is
redesignated as Section II.D.2—
Application for a Federal Charter and
revised.
■ i. Section III.D.6 of Chapter 4 is
revised.
The revisions read as follows:
Appendix B to Part 701—Chartering
and Field of Membership Manual
Chapter 1—Federal Credit Union Chartering
VII.D—Appeal of Office of Consumer
Financial Protection and Access Director
Decision
If the Office of Consumer Financial
Protection and Access Director denies a
charter application, in whole or in part, that
decision may be appealed to the NCUA
Board in accordance with the procedures set
forth in subpart B to part 746 of this chapter.
Before appealing, the prospective group
may, within 30 days of the denial, provide
supplemental information to the Office of
Consumer Financial Protection and Access
Director for reconsideration. A request for
reconsideration should contain new and
material evidence addressing the reasons for
the initial denial. The Office of Consumer
Financial Protection and Access Director will
have 30 days from the date of the receipt of
the request for reconsideration to make a
final decision. If the request is again denied,
the applicant may proceed with the appeal
process within 60 days of the date of the last
denial.
*
*
*
*
*
Chapter 2—Field of Membership
Requirements for Federal Credit Unions
*
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II.C.5—Appeal of Office of Consumer
Financial Protection and Access Director
Decision
If the Office of Consumer Financial
Protection and Access Director denies a field
of membership expansion request, merger, or
spin-off, that decision may be appealed to the
NCUA Board in accordance with the
procedures set forth in subpart B to part 746
of this chapter.
Before appealing, the credit union may,
within 30 days of the denial, provide
supplemental information to the Office of
Consumer Financial Protection and Access
Director for reconsideration. A request for
reconsideration should contain new and
material evidence addressing the reasons for
the initial denial. The Office of Consumer
Financial Protection and Access Director will
have 30 days from the date of the receipt of
the request for reconsideration to make a
final decision. If the request is again denied,
the applicant may proceed with the appeal
process within 60 days of the date of the last
denial.
*
*
*
*
*
III.C.5—Appeal of Office of Consumer
Financial Protection and Access Director
Decision
If the Office of Consumer Financial
Protection and Access Director denies a field
of membership expansion request, merger, or
spin-off is denied, that decision may be
appealed to the NCUA Board in accordance
with the procedures set forth in subpart B to
part 746 of this chapter.
Before appealing, the credit union may,
within 30 days of the denial, provide
supplemental information to the Office of
Consumer Financial Protection and Access
Director for reconsideration. A request for
reconsideration should contain new and
material evidence addressing the reasons for
the initial denial or explain extenuating
circumstances that precluded the inclusion
of existing material evidence or information
that should have been filed with the request
for reconsideration. The Office of Consumer
Financial Protection and Access Director will
have 30 days from the date of the receipt of
the request for reconsideration to make a
final decision. If the request is again denied,
the applicant may proceed with the appeal
process within 60 days of the date of the last
denial. A petitioner may seek a second
reconsideration based on new material
evidence or information or extenuating
circumstances that precluded the inclusion
of such information in the previous request.
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IV.C.5—Appeal of Office of Consumer
Financial Protection and Access Director
Decision
If the Office of Consumer Financial
Protection and Access Director denies a field
of membership expansion request, merger, or
spin-off, that decision may be appealed to the
NCUA Board in accordance with the
procedures set forth in subpart B to part 746
of this chapter.
Before appealing, the credit union may,
within 30 days of the denial, provide
supplemental information to the Office of
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Consumer Financial Protection and Access
Director for reconsideration. A request for
reconsideration should contain new and
material evidence addressing the reasons for
the initial denial or explain extenuating
circumstances that precluded the inclusion
of existing material evidence or information
that should have been filed with the request
for reconsideration. The Office of Consumer
Financial Protection and Access Director will
have 30 days from the date of the receipt of
the request for reconsideration to make a
final decision. If the request is again denied,
the applicant may proceed with the appeal
process within 60 days of the date of the last
denial. A petitioner may seek a second
reconsideration based on new material
evidence or information or extenuating
circumstances that precluded the inclusion
of such information in the previous request.
reconsideration should contain new and
material evidence addressing the reasons for
the initial denial or explain extenuating
circumstances that precluded the inclusion
of existing material evidence or information
that should have been filed with the request
for reconsideration. The Office of Consumer
Financial Protection and Access Director will
have 30 days from the date of the receipt of
the request for reconsideration to make a
final decision. If the request is again denied,
the applicant may proceed with the appeal
process within 60 days of the date of the last
denial. A petitioner may seek a second
reconsideration based on new material
evidence or information or extenuating
circumstances that precluded the inclusion
of such information in the previous request.
*
Chapter 4—Charter Conversions
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V.C.5—Appeal of Office of Consumer
Financial Protection and Access Director
Decision
If the Office of Consumer Financial
Protection and Access Director denies a field
of membership expansion request, merger, or
spin-off, that decision may be appealed to the
NCUA Board in accordance with the
procedures set forth in subpart B to part 746
of this chapter.
Before appealing, the credit union may,
within 30 days of the denial, provide
supplemental information to the Office of
Consumer Financial Protection and Access
Director for reconsideration. A request for
reconsideration should contain new and
material evidence addressing the reasons for
the initial denial or explain extenuating
circumstances that precluded the inclusion
of existing material evidence or information
that should have been filed with the request
for reconsideration. The Office of Consumer
Financial Protection and Access Director will
have 30 days from the date of the receipt of
the request for reconsideration to make a
final decision. If the request is again denied,
the applicant may proceed with the appeal
process within 60 days of the date of the last
denial. A petitioner may seek a second
reconsideration based on new material
evidence or information or extenuating
circumstances that precluded the inclusion
of such information in the previous request.
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Chapter 3—Low-Income Credit Unions and
Credit Unions Serving Underserved Areas
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IV.B—Appeal of Office of Consumer
Financial Protection and Access Director
Decision
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If the Office of Consumer Financial
Protection and Access Director denies an
‘‘underserved area’’ request, the federal credit
union may appeal that decision to the NCUA
Board in accordance with the procedures set
forth in subpart B to part 746 of this chapter.
Before appealing, the credit union may,
within 30 days of the denial, provide
supplemental information to the Office of
Consumer Financial Protection and Access
Director for reconsideration. A request for
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II.C.6—Appeal of the Office of Consumer
Financial Protection and Access Director
Decision
If a conversion to a federal charter is
denied by the Office of Consumer Financial
Protection and Access Director, the applicant
credit union may appeal that decision to the
NCUA Board in accordance with the
procedures set forth in subpart B to part 746
of this chapter.
Before appealing, the credit union may,
within 30 days of the denial, provide
supplemental information to the Office of
Consumer Financial Protection and Access
Director for reconsideration. A request for
reconsideration should contain new and
material evidence addressing the reasons for
the initial denial or explain extenuating
circumstances that precluded the inclusion
of existing material evidence or information
that should have been filed with the request
for reconsideration. The Office of Consumer
Financial Protection and Access Director will
have 30 days from the date of the receipt of
the request for reconsideration to make a
final decision. If the request is again denied,
the applicant may proceed with the appeal
process within 60 days of the date of the last
denial. A petitioner may seek a second
reconsideration based on new material
evidence or information or extenuating
circumstances that precluded the inclusion
of such information in the previous request.
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II.D.2—Application for a Federal Charter
When the Office of Consumer Financial
Protection and Access Director has received
evidence that the board of directors has
satisfactorily completed the actions described
above, the federal charter and new Certificate
of Insurance will be issued.
The credit union may then complete the
conversion as discussed in the following
section. A credit union may request the
Office of Consumer Financial Protection and
Access Director to reconsider a denial of a
conversion application and/or appeal a
denial to the NCUA Board. For more
information, refer to Section II.C.6 of this
chapter.
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III.D.6—Appeal of Office of Consumer
Financial Protection and Access Director
Decision
If the Office of Consumer Financial
Protection and Access Director denies a
conversion to a state charter, the federal
credit union may appeal that decision to the
NCUA Board in accordance with the
procedures set forth in subpart B to part 746
of this chapter.
Before appealing, the credit union may,
within 30 days of the denial, provide
supplemental information to the Office of
Consumer Financial Protection and Access
Director for reconsideration. The Office of
Consumer Financial Protection and Access
Director will have 30 business days from the
date of the receipt of the request for
reconsideration to make a final decision. If
the application is again denied, the credit
union may proceed with the appeal process
to the NCUA Board within 60 days of the
date of the last denial by the Office of
Consumer Financial Protection and Access
Director.
accordance with the procedures set
forth in subpart B to part 746 of this
chapter.
■ 13. Revise § 703.114(c) to read as
follows:
*
Authority: 12 U.S.C. 1756, 1757(5)(D), and
(7)(I), 1766, 1782, 1784, 1785 and 1786.
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§ 703.114
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(c) A federal credit union may request
the regional director to reconsider a
revocation of derivatives authority or an
order to terminate existing derivatives
positions and/or file an appeal with the
NCUA Board in accordance with the
procedures set forth in subpart B to part
746 of this chapter.
*
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PART 705—COMMUNITY
DEVELOPMENT REVOLVING LOAN
FUND ACCESS FOR CREDIT UNIONS
§ 708a.304 Notice to NCUA and request to
proceed with member vote.
14. The authority citation for part 705
continues to read as follows:
■
9. The authority citation for part 703
continues to read as follows:
§ 705.10
15. Revise § 705.10(a) to read as
follows:
10. Revise § 703.20(d) to read as
follows:
■
§ 703.20
Request for additional authority.
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(d) Appeal to NCUA Board. A federal
credit union may request the regional
director to reconsider any part of the
determination made under paragraph (c)
and/or file an appeal with the NCUA
Board in accordance with the
procedures set forth in subpart B to part
746 of this chapter.
■ 11. Revise § 703.111(d) to read as
follows:
§ 703.111
NCUA approval.
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(d) Right to appeal. A federal credit
union may request the regional director
to reconsider a determination made
under paragraph (a) or (c) of this section
and/or file an appeal with the NCUA
Board in accordance with the
procedures set forth in subpart B to part
746 of this chapter.
■ 12. Revise § 703.112(c) to read as
follows:
§ 703.112 Applying for additional products
or characteristics.
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(c) A federal credit union may request
the regional director to reconsider a
denial of an application for additional
products or characteristics and/or file an
appeal with the NCUA Board in
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17. Revise § 708a.108(d) to read as
follows:
■
§ 708a.108 NCUA oversight of methods
and procedures of membership vote.
Regulatory violation.
■
Authority: 12 U.S.C. 1757(7), 1757(8),
1757(15).
Authority: 12 U.S.C. 1766, 1785(b), and
1785(c).
*
PART 703—INVESTMENT AND
DEPOSIT ACTIVITIES
■
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Appeals.
(a) Appeals of non-qualification. A
qualifying credit union whose
application for a loan or technical
assistance grant has been denied under
§ 705.7(f) for failure to satisfy any of the
conditions set forth in § 705.7(c),
including any additional criteria set
forth in the related notice of funding
opportunity, may request the Director of
the Office of Small Credit Union
Initiatives to reconsider the denial and/
or appeal that decision to the NCUA
Board in accordance with the
procedures set forth in subpart B to part
746 of this chapter, subject to the
following limitations:
(1) Scope. The scope of the Board’s
review is limited to the threshold
question of qualification and not the
issue of whether, among qualified
applicants, a particular loan or technical
assistance grant is funded.
(2) Appeals procedures inapplicable.
The foregoing procedure applies during
an open period in which funds are
available and NCUA has called for
applications. NCUA will reject any
application submitted during a period
in which NCUA has not called for
applications, except for applications
submitted under § 705.8. Such
rejections are not subject to appeal or
review by the NCUA Board.
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PART 708a—BANK CONVERSIONS
AND MERGERS
16. The authority citation for part
708a continues to read as follows:
■
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(d) A converting credit union may
request the regional director to
reconsider a determination regarding
the methods and procedures of the
membership vote and/or file an appeal
with the NCUA Board in accordance
with the procedures set forth in subpart
B to part 746 of this chapter.
■ 18. Revise § 708a.304(h) to read as
follows:
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(h) Appeal of adverse decision. If the
regional director disapproves a merger
proposal, the credit union may request
reconsideration and/or file an appeal
with the NCUA Board in accordance
with the procedures set forth in subpart
B to part 746 of this chapter.
■ 19. Revise § 708a.308(d) to read as
follows:
§ 708a.308
NCUA approval of merger.
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*
(d) A merging credit union may
request the regional director to
reconsider the disapproval of a merger
proposal and/or file an appeal with the
NCUA Board in accordance with the
procedures set forth in subpart B to part
746 of this chapter.
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PART 709—INVOLUNTARY
LIQUIDATION OF FEDERAL CREDIT
UNIONS AND ADJUDICATION OF
CREDITOR CLAIMS INVOLVING
FEDERALLY INSURED CREDIT
UNIONS IN LIQUIDATION
20. The authority citation for part 709
continues to read as follows:
■
Authority: 12 U.S.C. 1757, 1766, 1767,
1786(h), 1787, 1788, 1789, 1789a.
■
21. Revise § 709.7 to read as follows:
§ 709.7 Procedures for agency review or
judicial determination of claims.
(a) General. A claimant may either
request agency review of an initial
determination of the liquidating agent to
disallow a claim or seek a de novo
judicial determination of claims. In
order to receive agency review of an
initial determination, a claimant must
request an administrative appeal before
the NCUA Board. In order to seek a
judicial determination, a claimant must
file suit (or continue an action
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commenced before the appointment of
the liquidating agent) in the district or
territorial court of the United States for
the district within which the credit
union’s principal place of business is
located or the United States District
Court for the District of Columbia.
(b) Procedures for agency review. A
claimant requesting an administrative
appeal may request a hearing on the
record conducted pursuant to the
procedures set forth in subpart A of part
747 of this chapter. The determination
of whether to agree to a request for a
hearing on the record shall rest solely
with the NCUA Board, which shall
notify the claimant of its decision in
writing. Alternatively, a claimant may
request an appeal before the NCUA
Board pursuant to the procedures set
forth in subpart B to part 746 of this
chapter.
(c) Deadline to request agency review
or file suit. A claimant must request
agency review of an initial
determination or file suit (or continue
an action commenced before the
appointment of the liquidating agent)
within 60 days from the mailing of the
initial determination or the expiration of
the time period for the liquidating agent
to determine claims under § 709.6(c),
whichever is earlier. A request for a
hearing on the record will suspend the
60-day period for filing a lawsuit (or
continuing an action commenced before
the appointment of the liquidating
agent) from the date of the claimant’s
request to the date of the NCUA Board’s
decision regarding that request. If a
claimant fails to either request a hearing
on the record or an appeal to the Board
or file suit (or continue an action
commenced before the appointment of
the liquidating agent) within the 60-day
period, any disallowance of claims shall
be final and the claimant shall have no
further rights or remedies with respect
to such claims.
(d) Reconsideration. Prior to
requesting agency review or filing or
continuing a lawsuit, a claimant may
request reconsideration of the initial
determination of the liquidating agent in
accordance with the procedures set
forth in subpart B to part 746 of this
chapter. The deadline to request agency
review or file suit (or continue an action
commenced before the appointment of
the liquidating agent) in paragraph (c) of
this section will be suspended from the
date of the claimant’s request to the date
of the liquidating agent’s decision
regarding that request.
■ 22. Remove § 709.8 and redesignate
§§ 709.9 through 709.13 as §§ 709.8
through 709.12, respectively.
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PART 741—REQUIREMENTS FOR
INSURANCE
23. The authority citation for part 741
continues to read as follows:
■
Authority: 12 U.S.C. 1757, 1766(a), 1781–
1790, and 1790d; 31 U.S.C. 3717.
24. Revise § 741.11(d) to read as
follows:
■
§ 741.11
Foreign branching.
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(d) Revocation of approval. A state
regulator that revokes approval of the
branch office must notify NCUA of the
action once it issues the notice of
revocation. The regional director may
revoke approval of the branch office for
failure to follow the business plan in a
material respect or for substantive and
documented safety and soundness
reasons. If the regional director revokes
the approval, the credit union will have
six months from the date of the
revocation letter to terminate the
operations of the branch. The credit
union can request reconsideration of the
revocation and/or appeal this revocation
to the NCUA Board in accordance with
the procedures set forth in subpart B to
part 746 of this chapter.
*
*
*
*
*
PART 745—SHARE INSURANCE AND
APPENDIX
25. The authority citation for part 745
continues to read as follows:
■
Authority: 12 U.S.C. 1752(5), 1757, 1765,
1766, 1781, 1782, 1787, 1789; title V, Pub. L.
109–351, 120 Stat. 1966.
26. Revise § 745.201(c) to read as
follows:
■
§ 745.201
Processing of insurance claims.
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*
(c) Reconsideration and appeals. An
accountholder may request
reconsideration from the Liquidating
Agent of the initial determination and/
or file an appeal with the NCUA Board
in accordance with the procedures set
forth in subpart B to part 746 of this
chapter.
■ 27. Remove § 745.202 and redesignate
§ 745.203 as § 745.202.
PART 746—APPEALS PROCEDURES
THAT DO NOT BY LAW REQUIRE A
BOARD HEARING
Subpart B—Appeals Procedures That Do
Not by Law Require a Board Hearing
Sec.
746.201 Authority, purpose, and scope.
746.202 Definitions.
746.203 Request for reconsideration.
746.204 Appeal to the Board.
746.205 Preliminary considerations
regarding the appeal.
746.206 Administration of the appeal.
746.207 Procedures for oral hearing.
Subpart B—Appeals Procedures That
Do Not by Law Require a Board
Hearing
§ 746.201
Authority, purpose, and scope.
(a) Authority. This part is issued
pursuant to sections 120, 207, and 209
of the Federal Credit Union Act (12
U.S.C. 1766, 1787, and 1789).
(b) Purpose. Part 746, subpart B
provides generally uniform procedures
by which petitioners may appeal initial
agency determinations to the NCUA
Board under this part.
(c) Scope. This part covers the appeal
of initial agency determinations by a
program office which the petitioner has
a right to appeal to the NCUA Board
under the following regulations:
701.14(e), 701.21(h)(3), 701.22(c),
701.23(h)(3), 701.32(b)(5), 701.34(a)(4),
Appendix B to part 701, Chapters 1–4,
§§ 703.20(d), 703.111(d), 703.112(c),
703.114(c), 705.10(a), 708a.108(d),
708a.304(h), 708a.308(d), 709.7,
741.11(d), 745.201(c), subpart J to part
747, and § 750.6(b).
(d) This part does not apply to:
(1) Actions by the agency to develop
regulations, policy statements, or
guidance documents;
(2) Formal enforcement actions, the
review of material supervisory
determinations that come under the
jurisdiction of NCUA’s Supervisory
Review Committee, or the appeal of any
agency determination made pursuant to
part 792 of this chapter;
(3) Challenges to determinations
under the prompt corrective action
regime in parts 702 and 704 of this
chapter and subparts L and M to part
747; and
(4) Creditor claims arising from the
liquidation of an insured credit union to
the extent that the creditor has
requested, and the NCUA Board has
agreed, for the claim to be handled
through a hearing on the record
pursuant to 12 U.S.C. 1787(b)(7)(A) and
subpart A of part 747 of this chapter.
■
§ 746.202
29. Add subpart B to part 746 to read
as follows:
For purposes of this part:
Appeal means a process by which a
petitioner may obtain the review by the
Board of an initial agency
determination.
28. The authority citation for part 746
continues to read as follows:
Authority: 12 U.S.C. 1766, 1787, and 1789.
■
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Board means the NCUA Board.
Initial agency determination means an
agency action taken at a level below the
Board with respect to an application,
request, claim, or other matter in which
a determination of rights or resolution of
issues is rendered and the party affected
by the determination has been provided
with a right to appeal the determination
to the NCUA Board. The initial agency
determination shall notify the Petitioner
of the right to request reconsideration or
to file an appeal with the Board, and
shall include a description of applicable
filing deadlines and time frames for
agency responses. Agency
determinations involving the
formulation of a regulation, guidance
document, or policy statement are
excluded from this definition.
Oral hearing means an opportunity,
granted at the sole discretion of the
Board, by which a petitioner may make
an oral presentation to the Board
concerning issues pertinent to an
appeal.
Petitioner means the person or entity
seeking Board review of an initial
agency determination.
Program office means the office
within NCUA responsible for making an
initial agency determination.
Special Counsel to the General
Counsel means an individual (referred
to herein as the ‘‘Special Counsel’’)
within NCUA’s Office of General
Counsel charged with administering
appeals in accordance with the
procedures set forth in this part.
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§ 746.203
Request for reconsideration.
(a) Reconsideration. Prior to
submitting an appeal in accordance
with § 746.204, the petitioner may in its
sole discretion make a written request to
the appropriate program office to
reconsider the initial agency
determination.
(b) Deadline to file. A request for
reconsideration must be sent to the
appropriate program office within 30
calendar days of the date of the initial
agency determination. A petitioner who
does not file a request for
reconsideration in a timely manner is
considered to have waived the right to
request reconsideration.
(c) Special rule regarding change in
officials. Notwithstanding paragraph (a)
of this section, a request for
reconsideration of an initial agency
determination disapproving an
individual serving as a director,
committee member or senior executive
officer pursuant to § 701.14 of this
chapter must be sent to the appropriate
program office within 15 calendar days
of the date of the initial agency
determination.
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(d) Content of request. Any request for
reconsideration must include:
(1) A statement of the facts on which
the request for reconsideration is based;
(2) A statement of the basis for the
initial agency determination to which
the petitioner objects and the alleged
error in such determination; and
(3) Any other support or evidence
relied upon by the petitioner which was
not previously provided to the
appropriate program office.
(e) Determination of program office.
The appropriate program office will
review its initial agency determination
and reconsider the position initially
taken in the light of the arguments and
additional materials provided in the
request for reconsideration. Within 30
calendar days of its receipt of a request
for reconsideration, the appropriate
program office shall issue its
determination either affirming in whole
or in part the initial agency
determination or rejecting it.
(f) Notice of determination. The
appropriate program office shall provide
its decision concerning the
reconsideration request to the petitioner
in writing, stating the reasons for the
decision. The decision shall be treated
as an initial agency determination for
purposes of paragraph (a) of § 746.204.
(1) In addition to a written statement
of reasons for the decision, the
appropriate program office shall provide
the petitioner with written notice of the
right to appeal the decision, in whole or
in part, to the Board in accordance with
the procedures set forth in § 746.204.
(2) For creditor claims brought
pursuant to sec. 207 of the Federal
Credit Union Act (12 U.S.C. 1787), the
appropriate program office shall provide
the petitioner with written notice of the
right, in the alternative to filing an
appeal with the Board, to file suit or
continue an action commenced before
the appointment of the liquidating agent
in the district or territorial court of the
United States for the district within
which the credit union’s principal place
of business was located or the United
States District Court for the District of
Columbia. For such claims, the 60-day
period for filing a lawsuit in United
States district court provided in 12
U.S.C. 1787(b)(6) shall be tolled from
the date of the petitioner’s request for
reconsideration to the date of a
determination pursuant to paragraph (e)
of this section.
(3) Upon a showing of extenuating
circumstances, as determined by the
program office in its reasonable
judgment, a petitioner may be allowed
to submit a second reconsideration
request before filing an appeal with the
Board. In such cases, the deadline for
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filing an appeal with the Board shall
begin to run from the earlier of the date
of the decision of the program office
regarding the second reconsideration
request or thirty calendar days from the
date the second reconsideration request
was accepted by the program office.
(g) Failure to make a determination.
Failure by the appropriate program
office to issue a decision within the
timeframe specified in paragraph (e) of
this section shall be an affirmation of
the original initial agency determination
and shall be treated as an initial agency
determination for purposes of paragraph
(a) of § 746.204.
(h) Burden of proof. The burden of
proof to lead the appropriate program
office to modify or reverse an initial
agency determination shall rest solely
upon the petitioner.
§ 746.204
Appeal to the Board.
(a) Filing. Within 60 calendar days of
the date of an initial agency
determination, or, as applicable, a
determination by the program office on
any request for reconsideration, a
petitioner may file an appeal seeking
review of the determination by the
Board. The request must be in writing
and filed with the Secretary of the
Board, National Credit Union
Administration, 1775 Duke Street,
Alexandria, VA 22314–3428.
(b) Special rule regarding change in
officials. Notwithstanding paragraph (a)
of this section, an appeal of an initial
agency determination disapproving an
individual serving as a director,
committee member or senior executive
officer pursuant to § 701.14 of this
chapter must be filed with the Secretary
of the Board within 15 calendar days of
the date of the initial agency
determination.
(c) Failure to file a timely appeal.
Absent extenuating circumstances, as
determined by the Board in its sole
discretion, a petitioner who fails to file
an appeal within the specified 60-day
period shall be deemed to have waived
all claims pertaining to the matters in
issue.
(d) Content of request. Any appeal
filed with the Board must include:
(1) A statement summarizing the
underlying facts that form the basis of
the appeal, together with copies of all
pertinent documents, records, and
materials on which the petitioner relies
in support of the appeal.
(2) A statement outlining why the
petitioner objects to the conclusions in
the initial agency determination,
including any errors alleged to have
been made by the program office in
reaching its determination.
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(3) Any other materials or evidence
relied upon by the petitioner that were
not previously provided to the
appropriate program office.
(e) Burden of proof. The burden of
proof to lead the Board to modify or
reverse an initial agency determination
shall rest solely upon the petitioner.
(f) Amending or supplementing the
appeal. Within 45 calendar days from
the date the Secretary of the Board
receives an appeal, the petitioner may
amend or supplement the appeal in
writing.
(g) Request for oral hearing. In
accordance with § 746.207, the
petitioner may request an opportunity to
appear before the Board, in person, or
via teleconference or videoconference,
to make an oral presentation in support
of the appeal.
§ 746.205 Preliminary considerations
regarding the appeal.
(a) Initial review. The Special Counsel
shall review all appeals filed with the
Secretary of the Board and make a
recommendation for their disposition to
the Board. The Special Counsel shall
have the authority to dismiss an appeal
upon the request of the petitioner.
(b) Supplemental materials. Within
30 calendar days from the date the
Secretary of the Board receives an
appeal, the Special Counsel may request
in writing that the petitioner submit
additional evidence in support of the
appeal. If additional evidence is
requested, the petitioner shall have 30
calendar days from the date of issuance
of such request to provide the requested
information. Failure by the petitioner to
provide such information may result in
denial of the petitioner’s appeal. The
Special Counsel shall have the authority
to request additional information from
any other relevant source in order to
provide the Board with a full and
complete administrative record. All
requests by the Special Counsel
pursuant to this section must be
reasonable and designed to facilitate the
processing of the appeal, not to delay it.
pmangrum on DSK3GDR082PROD with PROPOSALS
§ 746.206
Administration of the appeal.
(a) De novo review by Special
Counsel. After receipt of a timely
appeal, the Special Counsel shall
contact the relevant NCUA program
office and request a complete set of all
pertinent materials, including internal
memoranda, correspondence, and
records having a bearing on the initial
agency determination being appealed.
The Special Counsel will conduct an
independent review of these materials,
along with all materials submitted by
the petitioner in support of the appeal.
The Special Counsel will make a
VerDate Sep<11>2014
15:12 Jun 06, 2017
Jkt 241001
recommendation to the Board as to the
appropriate disposition of the appeal
after having evaluated the applicable
legal arguments and considered the facts
and circumstances that pertain to the
appeal. As directed by the Board, the
Special Counsel may provide his or her
recommendation in writing to the Board
and may make an oral presentation
before the Board.
(b) Determination on appeal. Within
90 calendar days from the date of
receipt of an appeal by the Secretary of
the Board, or within any extension of
time as established by the Chairman, the
Board shall issue a decision allowing, in
whole or in part, or disallowing the
petitioner’s appeal. The decision by the
Board shall be in writing, stating the
reasons for the decision, and shall
constitute a final agency action for
purposes of chapter 7 of title 5 of the
United States Code. Failure by the
Board to issue a decision on an appeal
within the 90-day period or within any
extension of time as established by the
Board shall be deemed to be a denial of
the appeal.
(c) Extension of time. In the discretion
of the Chairman, the time frame for the
Board’s decision may be extended as the
Chairman may consider necessary or
appropriate for a full and fair
consideration of the issues. For
purposes of this paragraph (c), the
Special Counsel is authorized to act on
behalf of the Chairman and may, in that
capacity, grant an extension of time.
§ 746.207
Procedures for oral hearing.
(a) Request for oral hearing. The
petitioner may request to appear before
the Board to make an oral presentation
in support of the appeal. The request
must be submitted with the initial
appeal documents and should be in the
form of a separate written document
titled ‘‘Request for Oral Hearing.’’ The
request must show good cause for an
oral presentation and state reasons why
the appeal cannot be presented
adequately in writing.
(b) Action on the request. The Board
shall determine whether to grant the
request for oral hearing and shall direct
the Special Counsel to serve notice of
the Board’s determination in writing to
the petitioner. A request for oral hearing
shall be granted with the approval of
any Board member. The determination
by a Board member approving an oral
hearing must be taken within 20 days of
the Board Secretary’s receipt of the
appeal.
(c) Effect of denial. In the event no
Board member approves of holding an
oral hearing, the request for an oral
hearing is deemed to be denied, and the
appeal shall be reviewed and
PO 00000
Frm 00013
Fmt 4702
Sfmt 4702
determined by the Board on the basis of
the written record.
(d) Procedures for oral hearing. The
following procedures shall govern the
conduct of any oral hearing:
(1) Scheduling of oral hearing;
location. The Special Counsel shall
notify the petitioner and the program
office of the date and time for the oral
hearing, making sure to provide
reasonable lead time and schedule
accommodations. The oral hearing will
be held at NCUA headquarters in
Alexandria, Virginia; provided,
however, that on his or her own
initiative or at the request of the
petitioner, the Chairman may in his or
her sole discretion allow for a hearing
to be conducted via teleconference or
video conference facilities.
(2) Appearances; representation. The
petitioner and the NCUA program office
shall submit a notice of appearance
identifying the individual(s) who will
be representing them at the oral
presentation. The petitioner shall
designate not more than two officers,
employees, or other representatives
(including counsel), unless otherwise
authorized by the Chairman. The NCUA
program office shall designate not more
than two individuals (one of whom may
be a litigation and enforcement attorney
from NCUA’s Office of General
Counsel), unless otherwise authorized
by the Chairman.
(3) Conduct of oral hearing. The oral
hearing shall consist entirely of oral
presentations. The introduction of
written evidence or witness testimony at
the hearing shall not be permitted. The
petitioner shall present first, followed
by the NCUA program office. Each side
shall be allotted a specified and equal
amount of time for its presentation, of
which a portion may be reserved for
purposes of rebuttal. This time limit
shall be set by the Board and will be
based on the complexity of the appeal.
Members of the Board may ask
questions of any individual appearing
before the Board.
(4) Transcript. The oral hearing shall
be on the record and transcribed by a
stenographer, who will prepare a
transcript of the proceedings. The
stenographer will make the transcript
available to the petitioner upon
payment of the cost thereof.
(e) Confidentiality. An oral hearing as
provided for herein constitutes a
meeting of the Board within the
meaning of the Government in the
Sunshine Act (5 U.S.C. 552b). The
NCUA Chairman shall preside over the
conduct of the oral hearing. The meeting
will be closed to the public to the extent
that one or more of the exemptions from
public meetings apply as certified by
E:\FR\FM\07JNP1.SGM
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Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 / Proposed Rules
NCUA’s Office of General Counsel. The
Board shall maintain the confidentiality
of any information or materials
submitted or otherwise obtained in the
course of the procedures outlined
herein, subject to applicable law and
regulations.
(f) Conclusion of the oral hearing. The
Board shall take the oral presentations
under advisement. The Board shall
render its decision on the appeal in
accordance with § 746.206.
PART 747—ADMINISTRATIVE
ACTIONS, ADJUDICATIVE HEARINGS,
RULES OF PRACTICE AND
PROCEDURE, AND INVESTIGATIONS
30. The authority citation for part 747
continues to read as follows:
■
Authority: 12 U.S.C. 1766, 1782, 1784,
1785, 1786, 1787, 1790a, 1790d; 15 U.S.C.
1639e; 42 U.S.C. 4012a; Pub. L. 101–410;
Pub. L. 104–134; Pub. L. 109–351; Pub. L.
114–74.
31. Remove and reserve subpart J of
part 747.
■
PART 750—GOLDEN PARACHUTE
AND INDEMNIFICATION PAYMENTS
32. The authority citation for part 750
continues to read as follows:
■
Authority: 12 U.S.C. 1786(t).
33. Revise § 750.6(b) to read as
follows:
■
§ 750.6
Filing instructions; appeal.
*
*
*
*
*
(b) A FICU whose request for approval
by NCUA, in accordance with paragraph
(a) of this section, has been denied may
seek reconsideration of the request
and/or file an appeal with the NCUA
Board in accordance with the
procedures set forth in subpart B to part
746 of this chapter.
[FR Doc. 2017–11319 Filed 6–6–17; 8:45 am]
BILLING CODE 7535–01–P
NATIONAL CREDIT UNION
ADMINISTRATION
12 CFR Part 746
pmangrum on DSK3GDR082PROD with PROPOSALS
RIN 3133–AE69
Supervisory Review Committee;
Procedures for Appealing Material
Supervisory Determinations
The NCUA Board (Board)
proposes to amend its procedures for
appealing material supervisory
determinations to the NCUA
SUMMARY:
VerDate Sep<11>2014
15:12 Jun 06, 2017
Jkt 241001
Comments must be received on
or before August 7, 2017.
DATES:
You may submit comments
by any of the following methods (Please
send comments by one method only):
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• NCUA Web site: https://
www.ncua.gov/Legal/Regs/Pages/
PropRegs.aspx. Follow the instructions
for submitting comments.
• Email: Address to regcomments@
ncua.gov. Include ‘‘[Your name]—
Comments on Supervisory Review
Committee; Proposed Procedures for
Appealing Material Supervisory
Determinations’’ in the email subject
line.
• Fax: (703) 518–6319. Use the
subject line described above for email.
• Mail: Address to Gerard Poliquin,
Secretary of the Board, National Credit
Union Administration, 1775 Duke
Street, Alexandria, Virginia 22314–
3428.
• Hand Delivery/Courier: Same as
mail address.
Public Inspection: You can view all
public comments on NCUA’s Web site
at https://www.ncua.gov/Legal/Regs/
Pages/PropRegs.aspx as submitted,
except for those we cannot post for
technical reasons. NCUA will not edit or
remove any identifying or contact
information from the public comments
submitted. You may inspect paper
copies of comments in NCUA’s law
library at 1775 Duke Street, Alexandria,
Virginia 22314, by appointment
weekdays between 9 a.m. and 3 p.m. To
make an appointment, call (703) 518–
6546 or send an email to OGCMail@
ncua.gov.
ADDRESSES:
FOR FURTHER INFORMATION CONTACT:
National Credit Union
Administration (NCUA).
ACTION: Notice of proposed rulemaking.
AGENCY:
Supervisory Review Committee (SRC) to
enhance due process and to be more
consistent with the practices of the
federal banking agencies. The proposed
rule would expand the number of
supervisory determinations appealable
to the SRC and provide credit unions
with the opportunity for additional
review by the Director of the Office of
Examinations and Insurance (E&I). The
Board proposes to codify these
procedures of our regulations.
Michael J. McKenna, General Counsel,
Frank S. Kressman, Associate General
Counsel, or Benjamin M. Litchfield,
Staff Attorney, National Credit Union
Administration, 1775 Duke Street,
Alexandria, Virginia 22314–3428 or
telephone: (703) 518–6540.
SUPPLEMENTARY INFORMATION:
PO 00000
Frm 00014
Fmt 4702
Sfmt 4702
26391
I. Background
Section 309(a) of the Riegle
Community Development and
Regulatory Improvement Act of 1994
(Riegle Act) 1 required the NCUA and
the federal banking agencies to establish
independent intra-agency appellate
processes to review material supervisory
determinations.2 The Riegle Act also
required the NCUA and the federal
banking agencies to ensure that appeals
of material supervisory determinations
are heard and decided expeditiously
and that appropriate safeguards exist for
protecting appellants from retaliation by
agency examiners.3
On November 17, 1994, the Board
published proposed Interpretive Ruling
and Policy Statement (IRPS) 94–2
‘‘Guidelines for the Supervisory Review
Committee’’ in the Federal Register and
solicited public comment.4 The Board
proposed to establish a committee of
five regular members consisting of
NCUA’s Executive Director, General
Counsel, Director of E&I, a regional
director, and one additional senior or
Board staff member. The regional
director was to be selected on a rotating
basis every two years and an alternate
regional director was to be designated to
consider matters arising in the regular
regional director member’s region. The
Executive Director was to serve as chair.
The jurisdiction of the SRC was to be
limited to matters specifically listed as
material supervisory determinations in
the Riegle Act.5
After receiving and considering
public comment, the Board adopted an
IRPS and published it in the Federal
Register on March 20, 1995 as IRPS 95–
1.6 In the final IRPS, the Board reduced
the size of the SRC from five members
to three, with each member appointed
by the NCUA Chairman. The
jurisdiction of the SRC was limited to
matters specifically listed as material
supervisory determinations in the Riegle
Act, although the Board reserved the
right to expand the number of
supervisory determinations appealable
to the SRC after gaining some
experience with the process. The final
IRPS also clarified that material
‘‘examination ratings’’ included
composite CAMEL ratings of 3, 4, or 5,
1 Public
Law 103–325, 108 Stat. 2160 (1994).
U.S.C. 4806(a).
3 Id. at 4806(b)(1)–(2).
4 59 FR 59437 (Nov. 17, 1994).
5 The Riegle Act defines ‘‘material supervisory
determination’’ to include determinations relating
to: (1) Examination ratings; (2) the adequacy of loan
loss reserve provisions; and (3) classifications on
loans that are significant to a federally insured
credit union. 12 U.S.C. 4806(f)(1)(A)(i)–(iii).
6 60 FR 14795 (Mar. 20, 1995).
2 12
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Agencies
[Federal Register Volume 82, Number 108 (Wednesday, June 7, 2017)]
[Proposed Rules]
[Pages 26378-26391]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-11319]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 82, No. 108 / Wednesday, June 7, 2017 /
Proposed Rules
[[Page 26378]]
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Parts 701, 703, 705, 708a, 709, 741, 745, 746, 747, and 750
RIN 3133-AE68
Appeals Procedures
AGENCY: National Credit Union Administration (NCUA).
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The NCUA Board (Board) proposes to adopt procedures to govern
appeals to the Board that would apply to agency regulations that
currently have their own embedded appeals provisions and will replace
those current provisions. The procedures would apply in cases in which
a decision rendered by a regional director or other program office
director is subject to appeal to the Board. The proposed procedures are
intended to result in greater efficiency, consistency, and better
understanding of the way in which matters under covered regulations may
be appealed to the Board.
Excluded from the scope of this proposal are formal adjudications
required under the Administrative Procedure Act (APA) to be accompanied
by ``notice and an opportunity for a hearing on the record.'' Matters
that are not covered include formal enforcement actions, challenges to
orders imposing prompt corrective action and matters that are within
the jurisdiction of the NCUA's Supervisory Review Committee (SRC). With
the issuance of this proposed rule, the Board is also proposing a new
rule to govern the SRC, including the appeal to the Board of adverse
determinations made by the SRC.
DATES: Comments must be received on or before August 7, 2017.
ADDRESSES: You may submit comments by any of the following methods
(Please send comments by one method only):
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
NCUA Web site: https://www.ncua.gov/regulation-supervision/Pages/rules/proposed.aspx. Follow the instructions for
submitting comments.
Email: Address to regcomments@ncua.gov. Include ``[Your
name] Comments on Appeals Procedures'' in the email subject line.
Fax: (703) 518-6319. Use the subject line described above
for email.
Mail: Address to Gerard Poliquin, Secretary of the Board,
National Credit Union Administration, 1775 Duke Street, Alexandria,
Virginia 22314-3428.
Hand Delivery/Courier: Same as mail address.
Public Inspection: All public comments are available on the
agency's Web site at https://www.ncua.gov/RegulationsOpinionsLaws/comments as submitted, except as may not be possible for technical
reasons. Public comments will not be edited to remove any identifying
or contact information. Paper copies of comments may be inspected in
NCUA's law library at 1775 Duke Street, Alexandria, Virginia 22314, by
appointment weekdays between 9:00 a.m. and 3:00 p.m. To make an
appointment, call (703) 518-6546 or send an email to OGCMail@ncua.gov.
FOR FURTHER INFORMATION CONTACT: Michael J. McKenna, General Counsel,
Ross P. Kendall, Special Counsel to the General Counsel, or Benjamin M.
Litchfield, Staff Attorney, at the above address, or telephone: (703)
518-6540.
SUPPLEMENTARY INFORMATION:
Executive Summary
If adopted, new part 746, subpart B will govern most authorized
appeals to the Board of adverse determinations made at program office
levels under agency regulations that permit such an appeal. The
agency's discussion of the proposed changes details which rules would
be affected but the Board specifically requests comments on any other
agency rules that should provide for an appeal and thus be covered
under the proposal. The following actions or determinations would not
be covered under the proposal because appeals relating to them are
already covered under different agency procedures but the Board
nonetheless seeks comments on their proposed exclusion:
Formal enforcement actions;
Creditor claims in liquidation, to the extent that the
claimant has requested and the Board has agreed to consider the appeal
formally on the record;
Material supervisory determination within the jurisdiction
of the Supervisory Review Committee, including appeals of SRC
determination to the Board (addressed under a separate agency proposal
issued with this proposal);
Challenges to actions imposed under the prompt corrective
action regime; and
Appeals of matters that are delegated by rule to an
officer or position below the Board for final, binding agency action.
I. Background
The Board is committed to providing credit unions, and other
persons or entities that are affected by agency decisions, with an
opportunity to obtain meaningful review of those decisions. At present,
procedures for obtaining that review are embedded in and scattered
throughout NCUA's regulations and, in many cases, are slightly
different from one another. For example, time frames for seeking higher
level review may differ and deadlines within which final agency action
is to be rendered may also be different.\1\ In this proposal, the Board
has developed a more uniform set of procedures to govern those rules in
which an appeal to the Board is permitted. The Board seeks to strike a
balance that will afford the appellant fair consideration of the issues
while avoiding procedures that are overly burdensome, time consuming,
and expensive for either the petitioner or the agency. The Board
invites comment on all aspects of this proposal.
---------------------------------------------------------------------------
\1\ See, e.g., 12 CFR 701.32(b)(5), 701.34(a)(4), 741.11(d),
703.111(d).
---------------------------------------------------------------------------
The proposed procedures would apply to federal credit unions
(FCUs), federally insured, state-chartered credit unions (FISCUs), or
certain institution-affiliated parties (IAPs) such as officers or
directors when appealing an agency determination under one of the rules
to which proposed part 746, subpart B would apply. For example, FCUs
and FISCUs appealing a waiver determination by a regional director
under the loan participations rule
[[Page 26379]]
would be subject to these procedures.\2\ These procedures would also
apply to an IAP appealing an adverse determination relating to a change
in officials.\3\
---------------------------------------------------------------------------
\2\ 12 CFR 701.22.
\3\ 12 CFR 701.14.
---------------------------------------------------------------------------
II. Summary of Regulations Affected by Part 746
Several NCUA regulations contain appeals procedures in addition to
their substantive provisions. These procedures generally lack
uniformity and may be confusing for those seeking an appeal. To improve
the appeals process that applies under the covered rules, the Board
proposes to promulgate a more uniform set of appeals procedures
contained in subpart B of part 746 to replace the current inconsistent
appeals procedures that now apply to agency determinations under the
affected regulations. The Board proposes to include in each of the
affected rules a cross-reference to the proposed procedures to be
located in subpart B of part 746.
The following is a bulleted list of the various regulations that
have appeals procedures that would be replaced by the proposed
procedures in subpart B of part 746.
Claims of a Creditor of an Insolvent FICU Under an NCUA
Alternative Resolution Dispute Process. Within 60 days from the date
that NCUA's Asset Management and Assistance Center (AMAC) issues a
notice of disallowance, a creditor of an insolvent FICU may file or
continue a lawsuit in U.S. district court or seek review by the
Board.\4\ Claimants seeking Board review may request a hearing on the
record in accordance with part 747 of NCUA's regulations and the formal
adjudicatory procedures set forth in the APA.\5\ Alternatively, a
claimant seeking review by the Board may submit to an alternative
dispute resolution process.\6\ The proposed amendments supplant those
procedures currently in part 709 of NCUA's regulations \7\ and replace
them with a reference to new subpart B to part 746.
---------------------------------------------------------------------------
\4\ 12 U.S.C. 1787(b)(6).
\5\ 12 U.S.C. 1787(b)(7)(A).
\6\ 12 U.S.C. 1787(b)(7)(B).
\7\ 12 CFR 709.8(c).
---------------------------------------------------------------------------
Payment of Claims Regarding Federally Insured Shares or
Deposits. The FCU Act provides that the Board is to make payment of the
insured shares or deposits as soon as possible following a
liquidation.\8\ The FCU Act authorizes the Board to require a proof of
claim to be filed with it before making payment, and it contemplates
that the Board may ``approve or reject'' such claims.\9\ The FCU Act
also provides that the Board may, by regulation, prescribe procedures
to resolve disputed claims.\10\ No conditions or limitations are
imposed by statute on this resolution process, although the FCU Act
does provide that the agency's final determination of an insurance
claim is subject to judicial review in accordance with the relevant
provisions of the APA.\11\ Subpart B to part 745 currently implements
this authority. The proposed amendments would replace the current
procedures.
---------------------------------------------------------------------------
\8\ 12 U.S.C. 1787(d)(1).
\9\ 12 U.S.C. 1787(d)(2).
\10\ 12 U.S.C. 1787(d)(3).
\11\ Id.
---------------------------------------------------------------------------
Chartering and Field of Membership. NCUA's Office of
Consumer Financial Protection and Access (OCFPA) is responsible for
making certain determinations regarding chartering and field of
membership, and these determinations are appealable to the Board. The
FCU Act does not provide any specific right to a hearing on the record
in connection with any of these determinations, and the procedures do
not call for such a proceeding. The Board proposes to delete from
NCUA's Chartering and Field of Membership Manual all descriptions of
the current procedures for challenging OCFPA determinations, such as
the denial of initial charter applications (including proposed senior
officials), requests for expansion or spinoff, requests to add an
underserved area, and conversion requests. The Board proposes that all
of these procedures be governed by new subpart B to part 746.
Community Development Loans. In accordance with part 705
of NCUA's regulations, qualifying credit unions may apply for loans
from NCUA's Community Development Revolving Loan Fund.\12\ A credit
union failing to qualify may appeal to the Board. Part 705 specifies
that the appeal must be taken within 30 days of the notice of
disqualification, and it provides that the Board's review is limited to
the threshold question of qualification.\13\ The Board proposes to
replace these procedures with new subpart B to part 746.
---------------------------------------------------------------------------
\12\ 12 CFR part 705.
\13\ 12 CFR 705.6(f)(1).
---------------------------------------------------------------------------
Golden Parachutes. Pursuant to part 750 of NCUA's
regulations, FICUs are limited in the amount of severance plan
arrangements that are permissible for senior level officials.\14\
Credit unions are permitted to request from the regional director or
the Office of National Examinations and Supervision (ONES) Director, as
appropriate, the authority to make an otherwise impermissible severance
payment. If the request is denied, part 750 specifies a process by
which the credit union may appeal to the Board.\15\ The Board proposes
to replace that process with the procedures in subpart B to part 746.
---------------------------------------------------------------------------
\14\ 12 CFR part 750.
\15\ 12 CFR 750.6(b.).
---------------------------------------------------------------------------
Investment Authority. An FCU may appeal decisions by the
regional director or ONES Director rejecting its request for expanded
investment authority or authority to engage in derivatives investment
activity.\16\ In each case, the investment rule is silent as to the
appeals procedures other than timing. The Board proposes that these
appeals be governed by the procedures in new subpart B to part 746.
---------------------------------------------------------------------------
\16\ 12 CFR 703.20(d); 703.111(d); 703.114(c).
---------------------------------------------------------------------------
Change of Officials for Troubled or Newly Chartered Credit
Unions. A `troubled' or newly chartered FICU may appeal an adverse
determination regarding a change of an official or officials to the
Board. Procedures governing this review are in Sec. 701.14 of NCUA's
regulations. The regulation refers to subpart J of part 747 of NCUA's
regulations which contains explicit guidance on the appeals
process.\17\ There is no express statutory right to a hearing on the
record in this circumstance. The Board proposes to replace the current
procedures with the procedures in new subpart B to part 746. The 90-day
time frame within which the Board must decide an appeal under Sec.
701.14 would be preserved, as would other shorter time frames currently
included in subpart J.
---------------------------------------------------------------------------
\17\ 12 CFR 747.901 et seq.
---------------------------------------------------------------------------
Conversions and Mergers. NCUA administers the processes by
which a FICU may convert to a mutual savings bank or merge into a
bank.\18\ Part 708a specifies that the appropriate NCUA official will
oversee the methods and procedures of the conversion or merger. If the
appropriate NCUA official disapproves the methods by which the vote was
taken or the procedures applicable to the vote, the FICU may appeal
that disapproval to the Board.\19\ For conversions, a FICU may appeal a
determination within 30 days and the Board must act within 90 days.\20\
For mergers, a FICU may appeal a determination within 30 days and the
Board must act within 120 days.\21\ The Board proposes to replace these
[[Page 26380]]
procedures with the appeals procedures in new subpart B to part 746.
The Board specifically invites comment on whether the extension of
these deadlines would pose an undue hardship on credit unions
converting to mutual savings banks or merging with banks.
---------------------------------------------------------------------------
\18\ 12 CFR part 708a.
\19\ 12 CFR 708a.108(d).
\20\ Id.
\21\ 12 CFR 708a.308(d).
---------------------------------------------------------------------------
Other Miscellaneous Regulations Affected by Subpart B to
Part 746. The following is a list of additional regulations that
contain appeals procedures that would be replaced with the proposed
appeals procedures in subpart B of part 746.
NCUA's general lending rule.\22\
---------------------------------------------------------------------------
\22\ 12 CFR 701.21(h)(3).
---------------------------------------------------------------------------
NCUA's eligible obligations rule.\23\
---------------------------------------------------------------------------
\23\ 12 CFR 701.23(h)(3).
---------------------------------------------------------------------------
NCUA's loan participations rule.\24\
---------------------------------------------------------------------------
\24\ 12 CFR 701.22(c).
---------------------------------------------------------------------------
Section 701.32 of NCUA's regulations regarding public unit
and nonmember shares.\25\
---------------------------------------------------------------------------
\25\ 12 CFR 701.32(b)(5).
---------------------------------------------------------------------------
Section 701.34 of NCUA's regulations regarding the low
income designation.\26\
---------------------------------------------------------------------------
\26\ 12 CFR 701.34(a)(4).
---------------------------------------------------------------------------
Section 741.11 of NCUA's regulations regarding branch
offices outside the United States.\27\
---------------------------------------------------------------------------
\27\ 12 CFR 741.11(d).
---------------------------------------------------------------------------
III. Exclusions
New subpart B to part 746 is designed to govern appeals under the
regulations addressed above. There are five areas that are excluded
from the scope of the proposed rule. Each of these is discussed below.
Enforcement Actions. Appeals that involve an agency hearing on the
record and the development of an initial decision by a hearing officer
or administrative law judge and are governed by formal procedural
requirements described in secs. 7 and 8 of the APA.\28\ These formal
requirements are applicable only where the Federal Credit Union Act
(FCU Act) \29\ specifically calls for the agency's adjudication ``to be
determined on the record after opportunity for an agency hearing.''
\30\
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\28\ 5 U.S.C. 556, 557.
\29\ 12 U.S.C. 1751 et seq.
\30\ 5 U.S.C. 554(a).
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Section 206 of the FCU Act addresses enforcement actions that the
NCUA may take against an insured institution or its IAPs.\31\ Of these,
four specifically include an opportunity for the affected entity or
individual to be heard before the action becomes effective. These
include actions to terminate the institution's insured status (sec.
206(c)), cease and desist actions (sec. 206(e)), removal actions (sec.
206(g)), and civil money penalties (sec. 206(k)), including any actions
to obtain enforcement of an outstanding order issued under sec. 206 or
under the prompt corrective action provisions in sec. 216 of the FCU
Act.\32\ There are two enforcement actions that may be taken by NCUA
with immediate effectiveness and an agency hearing is not required
(temporary cease and desist actions (sec. 206(f)) and actions to
appoint a conservator (sec. 206(h)). Each of these carries with it an
opportunity for the affected entity or individual to proceed
immediately to court to file a challenge to the NCUA's action.
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\31\ 12 U.S.C. 1786.
\32\ 12 U.S.C. 1790d.
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Other formal enforcement measures are found in sec. 131 of the FCU
Act, which provides that FCUs convicted of money laundering, cash
transaction reporting, or certain other related offenses are subject to
forfeiture of their charter after a pre-termination hearing conducted
on the record.\33\ In addition, FICUs fined for failure to file
accurate call reports may request a hearing on the record under sec.
202(a)(3) of the FCU Act.\34\ Similarly, FISCUs fined for failure to
submit accurate certified statements in connection with calculating
National Credit Union Share Insurance Fund premium charges may request
a hearing on the record under sec. 202(d)(2)(E) of the FCU Act.\35\
Finally, in accordance with sec. 304(e)(3) of the FCU Act, the Board
may terminate a FICU's membership in the Central Liquidity Facility
(CLF) for non-compliance with statutory or regulatory requirements
pertaining to the CLF, but only after providing the opportunity for an
agency hearing.\36\
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\33\ 12 U.S.C. 1772d.
\34\ 12 U.S.C. 1782(a)(3).
\35\ 12 U.S.C. 1782(d)(2)(E).
\36\ 12 U.S.C. 1795c(e)(3).
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Actions under sec. 206(i) of the FCU Act to suspend, remove, or
prohibit individuals who have engaged in certain criminal acts are
treated somewhat differently. In these instances, the affected
individual is removed immediately, but is given the opportunity to
appear before the Board to show that his or her continued service on
behalf of the FICU does not pose a threat to the interests of the
credit union or its members.\37\ The FCU Act directs the Board to fix a
time and place at which the party may appear, in person or through
counsel, to submit written material and make oral presentations and,
with the agreement of the Board, oral testimony.\38\
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\37\ 12 U.S.C. 1786(i)(3).
\38\ Id.; 12 CFR part 747, subpart D. In a case involving a
challenge to an immediate removal of a bank executive by the FDIC,
acting under its similar authority, the Supreme Court held that the
absence of the right to a pre-removal hearing was constitutionally
sufficient and did not violate the due process clause of the Fifth
Amendment. FDIC v. Mallen, 486 U.S. 230 (1988).
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For these types of actions, NCUA has promulgated explicit rules of
procedure, which provide safeguards such as representation by counsel,
document production, discovery, testimony from witnesses, an official
record of the proceedings, and the development of a recommended
decision by an administrative law judge for the consideration of the
Board.\39\ Such procedures regarding these enforcement actions would
not be covered by new subpart B to part 746.
---------------------------------------------------------------------------
\39\ 12 CFR part 747.
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Creditor claims in liquidation that are litigated or reviewed by
the Board under formal agency adjudication procedures. The FCU Act
specifies that a person appealing an initial creditor claim
determination by the liquidating agent of an insolvent FICU may either:
(1) File an action in federal court (or renew an action that had been
pending before the liquidation began) seeking a de novo judicial
determination of the merits of his claim; or (2) they may request that
the Board review the claim.\40\ The FCU Act also specifies that, if the
Board agrees to the review request, the Board must consider the claim
after opportunity for a hearing on the record.\41\ Part 709 of NCUA's
regulations implements this provision by providing that the formal
adjudication provisions set out in part 747, subpart A will govern the
process.\42\ These provisions remain in place and are not affected by
new subpart B to part 746. However, as discussed above, alternatively a
petitioner may request an appeal under the proposed provisions in
subpart B to part 746.
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\40\ 12 U.S.C. 1787(b)(6), (7). The FCU Act also permits the
Board to establish alternative dispute resolution procedures, which
it has done in Sec. 709.8(c). As discussed below, those procedures
will be replaced by new subpart B to part 746.
\41\ 12 U.S.C. 1787(b)(7).
\42\ 12 CFR 709.8(b).
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Material Supervisory Determinations. As required by the Riegle
Community Development and Regulatory Improvement Act of 1994,\43\ NCUA
established an SRC to provide a forum for FICUs to appeal an examiner's
material supervisory determinations. Procedures followed by the SRC are
described in Interpretive Ruling and Policy Statement (IRPS) 11-1, as
amended by IRPS 12-1. Subjects that may be appealed to the SRC include
examination ratings, the adequacy of
[[Page 26381]]
loan loss reserve provisions, and loan classifications on loans that
are significant to the institution.\44\ The Board expanded the
jurisdiction of the SRC in April 2011 by adding appeals of
determinations by the Director of the Office of Small Credit Union
Initiatives to deny a reimbursement request made in connection with a
technical assistance grant.\45\ As proposed, the provisions in new
subpart B to part 746 would not apply to issues that are reviewable by
the SRC. Along with the issuance of this proposed rule, the Board is
seeking comments on a separate proposal that contains significant
changes to the SRC, including how adverse determinations made by the
SRC may be appealed to the Board. If adopted, those proposed changes to
the SRC would be contained in a new subpart A to part 746.
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\43\ Public Law 103-325, 108 Stat. 2160 (Sept. 23, 1994).
\44\ Id.
\45\ 76 FR 3674 (Jan. 20, 2011).
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Prompt Corrective Action. Under the FCU Act, FICUs are subject to
mandatory and discretionary supervisory actions, based on their net
worth position.\46\ Mandatory actions are not subject to appeal, but
discretionary actions are. Under the FCU Act, these discretionary
measures are considered ``material supervisory determinations'' and
could have been made subject to the jurisdiction of the SRC.\47\ The
FCU Act, however, permits the Board to establish a separate appeals
process regarding these determinations. Exercising this authority, the
Board determined previously that challenges to determinations made by a
regional director or ONES Director and imposed under the prompt
corrective action regime are more appropriately covered by the
procedures in subpart L to part 747.\48\ These procedures are informal
but specialized, ranging from the submission of written materials (in
the case of orders imposing discretionary supervisory action) \49\ to
requesting a hearing before a presiding officer designated by the Board
(for orders reclassifying a credit union on safety and soundness
criteria, as well as orders to dismiss a director or senior executive
officer). In the context of discretionary supervisory actions, the
Board will respond to the written challenge.\50\ In the context of
challenges to reclassification and dismissal of officials or directors,
the rules provide for a hearing at which the appellant is entitled to
be represented by counsel, to introduce relevant documents, and to make
oral presentations. Witness testimony is permissible with the consent
of the presiding officer.\51\ The hearing is recorded, and the
appellant is entitled to receive a transcript upon request and payment
of the cost thereof. The presiding officer makes a recommendation to
the Board, which has 60 days in which to decide the issue.\52\
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\46\ 12 U.S.C. 1790d; 12 CFR part 702.
\47\ 12 U.S.C. 1790d(k).
\48\ See 12 CFR part 747, subpart L.
\49\ The affected credit union also has the option under this
procedure to request the recommendation of NCUA's Ombudsman
concerning the matters at issue.
\50\ 12 CFR 747.2002.
\51\ The presiding officer is an individual designated by the
NCUA Board to hold informal hearings under subpart L to part 747.
\52\ 12 CFR 747.2003, 743.2004.
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Because the determinations made by a regional director or the ONES
Director and imposed under the prompt corrective action regime are
addressed separately, they are not subject to proposed subpart B to
part 746. Similar determinations involving exclusively corporate credit
unions are set forth in subpart M to part 747 and are likewise
unaffected by this proposal. However, the Board seeks specific comments
as to whether appeals provisions relating to prompt corrective action
are sufficient and whether such provisions should be consolidated with
the proposed part 746.
Other Exclusions. By rule, appeals of adverse determinations under
the Freedom of Information Act are decided by the General Counsel.\53\
The General Counsel also decides on requests made under NCUA's Touhy
regulation \54\ and appeals of initial determinations made under the
Privacy Act.\55\ None of these areas would be affected by this proposed
rule but the Board seeks comments on their exclusion.
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\53\ 12 CFR 792.28.
\54\ Touhy regulations prohibit the unauthorized release of
information by current (and typically former) agency employees and
provide a procedure for centralized agency decision-making
concerning how the agency will respond to a subpoena or other
request for testimony or documents served on a current or former
agency employee. See United States ex rel. Touhy v. Ragen, 340 U.S.
462, 468 (1951); see also 5 U.S.C. 301.
\55\ 12 CFR 792.46, 792.59.
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The proposed procedures in subpart B to part 746 would also not
affect how consumer complaints are processed by the NCUA.\56\ On
September 30, 2010, the Board delegated the authority to examine and
supervise federal credit unions for compliance with consumer laws and
regulations to OCFPA. As a result of this delegation, consumers may not
appeal determinations by OCFPA's Director of the Division of Consumer
Affairs to the Board. The Board invites comment on this exclusion.
---------------------------------------------------------------------------
\56\ NCUA's current consumer complaint procedures are set forth
in NCUA Letter to Credit Unions 15-CU-04 (June 2015).
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IV. Section Analysis
Subpart B to Part 746--Informal Appeals Procedures
The Board is proposing to add subpart B to part 746 to address
procedures that govern informal appeals of agency decisions under
specific regulations. As discussed above, the proposed rule would amend
existing NCUA regulations to include a cross-reference to the
procedures contained in this subpart. The Board proposes to adopt these
procedures to improve and streamline the appeals process as it applies
to decisions under the covered rules.
Section 746.201--Authority, Purpose, and Scope
The first section of proposed subpart B to part 746 states the
Board's authority for issuing the rule as well as its scope and
purpose.
201(a) Authority
The Board is issuing this proposed rule pursuant to authority
granted to it by secs. 120, 207, and 209 of the FCU Act. Section 120 of
the FCU Act is a general grant of regulatory authority over FCUs.
Section 207 of the FCU Act is a specific grant of authority over share
insurance coverage, conservatorships, and liquidations. Section 209 of
the FCU Act is a plenary grant of regulatory authority to issue rules
and regulations necessary or appropriate to carry out its role as share
insurer for all FICUs.
Section 746.201(b) Purpose
As stated above, the purpose of the proposed rule is to provide
uniform procedures for appeals to the Board under affected agency
regulations. The Board believes the creation of uniform rules will help
ensure that appellants receive appropriate due process and that agency
decisions are made in a prompt and efficient manner.
Section 746.201(c) Scope
Paragraph (c) first lists each of the regulations with current
appeal procedures that would be covered under the new rule. The section
would also clarify that there are five categories of agency actions
that are excluded from the scope of the rule. Because this rule would
only apply to informal agency adjudications, formal adjudications would
be excluded. Likewise, creditor claim appeals where the claimant has
requested a hearing on the record would be excluded. In addition, the
rule would not cover appeals of prompt corrective action determinations
or material
[[Page 26382]]
supervisory determinations appealable to NCUA's SRC. Finally, the rule
would not cover the appeal of FOIA determinations, Privacy Act
determinations, or determinations made under NCUA's Touhy regulation.
Section 746.202--Definitions
In Sec. 746.202, the Board proposes to define certain terms.
Unless otherwise defined, the Board expects FICUs and other affected
parties to interpret terms or phrases according to their plain meaning.
Initial Agency Determination
The proposed rule would define ``initial agency determination'' to
clarify that the rule only applies to certain agency decisions made by
personnel below the Board level. The rule does not apply to any action
that results in the formulation of a rule, regulation, guidance
document, or policy statement.
Petitioner
The term ``petitioner'' would refer to a natural person or legal
entity seeking review of an initial agency determination. Several of
NCUA's regulations use different terminology when referring to parties
appealing determinations to the Board. For example, a party appealing
the denial a creditor claim is a ``claimant,'' \57\ while a party
appealing a denial of share insurance coverage is referred to as an
``accountholder.'' \58\ Rather than use all of these different terms,
the Board is proposing to adopt a uniform term to describe all classes
of individuals or legal entities appealing determinations to the Board.
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\57\ See 12 CFR 709.7.
\58\ See 12 CFR 745.202.
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Program Office
Similarly, the Board is proposing to adopt a uniform term ``program
office'' to refer to all offices within NCUA responsible for making
initial agency determinations. Several NCUA offices below the Board
level are responsible for administering various NCUA regulations. For
example, chartering and field of membership determinations are made by
OCFPA, while waivers and safety and soundness determinations are made
by the appropriate regional office or ONES. Rather than use different
terminology, the Board is proposing to adopt ``program office'' as a
uniform term to describe the different NCUA offices responsible for
making initial agency determinations.
Section 746.203--Request for Reconsideration
Proposed Sec. 746.203 would set forth procedures for requesting
reconsideration from a program office prior to filing an appeal with
the Board. Several regulations issued by the NCUA Board permit affected
parties to request reconsideration. This process is a useful,
relatively inexpensive, and efficient method of resolving most
disputes. It also limits the overall number of matters appealed to the
Board. Therefore, the Board proposes to make this optional procedure
available for any matter that could otherwise be appealed to the Board
under part 746, subpart B and seeks comments on this approach.
Section 746.203(a) Reconsideration
The reconsideration process promotes greater efficiency by allowing
matters to be resolved at the program office level where possible. In
general, the Board anticipates that the disposition of a request for
reconsideration will either resolve the matter entirely or clarify the
issues that remain for resolution at the Board level. Ordinarily, the
Board anticipates that one request for reconsideration will be
sufficient, and that the next appropriate step for a party still
seeking resolution of the issues will be to appeal to the Board. The
rule recognizes, however, that there may be cases involving extenuating
circumstances, such as the discovery of new evidence or documentation,
and that a second request for reconsideration may be appropriate in
such circumstances. Absent such circumstances, a second request for
reconsideration would be treated as an appeal to the Board.
Section 746.203(e); (f); (g) Determination of Program Office; Notice of
Determination; Failure To Make a Determination
Paragraph (e) would require the program office to issue a written
determination within 30 calendar days of receiving a first request for
reconsideration. Paragraph (f) would specify that the written
determination must include a description of any right to appeal a
determination to the Board. In the case of creditor claims, paragraph
(f)(2) would require a description of the right to file or continue a
lawsuit in federal court.
In the Board's experience, 30 calendar days is a sufficient amount
of time for a program office to consider new information and reach a
determination after reconsideration. If the program office fails to
make a determination within 30 calendar days, proposed paragraph (g)
would treat the request for reconsideration as if it had been denied.
To avoid undue prejudice, the denial of a request for reconsideration
is treated as an initial agency determination for purposes of the
deadline to file an appeal with the Board in proposed Sec. 746.204. If
the petitioner obtains new information or there are reasonable,
mitigating circumstances that precluded the presentation of existing
information in connection with the first request for reconsideration,
as determined solely by the program office in its reasonable judgment,
the petitioner may request a second reconsideration prior to a Board
appeal.
Section 746.204--Appeal to the Board
Proposed Sec. 746.204 would state the procedures for filing an
appeal with the Board. The provision would also list the information
that must be included as part of the appeal. These requirements would
be similar to the current requirements for creditor claims and share
insurance claims, including the requirement that any appeal must be
filed with the Secretary of the Board within 60 calendar days of the
date of the initial agency determination or, if applicable, any
determination following a request for reconsideration. However, the
Board may grant extensions for timely filing in response to a
petitioner's request base on the petitioner's reasonable, extenuating
circumstances.
Section 746.204(c) Failure To File a Timely Appeal
In order to establish subject matter jurisdiction, federal courts
typically require affected parties to exhaust administrative
remedies.\59\ For example, in creditor and share insurance cases, the
failure to exhaust administrative remedies is a jurisdictional bar
preventing affected parties from seeking judicial review of their
claims in federal court.\60\ Proposed paragraph (c) would clarify that,
absent mitigating circumstances, a petitioner who fails to file a
timely request for an appeal would be considered to have waived claims
that may be adjudicated under part 746, subpart B.
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\59\ See Avocados Plus, Inc. v. Veneman, 370 F.3d 1243 (D.C.
Cir. 2004); Volvo GM Heavy Truck Corp. v. Dep't of Labor, 118 F.3d
205, 209-211 (4th Cir. 1997).
\60\ See Freeman v. FDIC, 56 F.3d 1394 (D.C. Cir. 1994).
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204(d); (e); (f) Content of Request; Burden of Proof; Amending or
Supplementing the Appeal
Proposed paragraph (d) would outline the content requirements for
an appeal
[[Page 26383]]
to the Board. To ensure the Board is able to review an appeal in a
timely and efficient manner, this paragraph would require a petitioner
to provide a statement of the facts on which an appeal is based, any
objections to the basis on which the program office made its initial
determination, and any additional evidence that may be relevant to the
matter that was not previously provided to the program office. Proposed
paragraph (e) would address the burden of proof at the appeal level.
Proposed paragraph (f) would describe the right of the petitioner
to file supplemental materials within 45 calendar days of filing an
appeal. In addition to the authority of the Board to request additional
information, the petitioner may amend or supplement the written record.
If the petitioner does amend or supplement the record, the Board is
permitted to request additional information. A petitioner's failure to
provide information requested by the Board could serve as a basis for
denial of an appeal.
Section 746.204(g) Request for Oral Hearing
Section 746.204(g) would specify that a petitioner may request an
oral hearing before the Board and provides cross-references to proposed
Sec. 746.207, which sets out the procedures that govern oral hearings.
The petitioner may request to appear before the Board, in person or
through or with counsel. This request should be filed with the initial
appeal documents. On his or her own initiative or at the request of the
petitioner, the Chairman may in his or her sole discretion allow for a
hearing to be conducted via teleconference or video conference
facilities.
Section 746.205--Preliminary Considerations Regarding the Appeal
This section of the proposed rule describes preliminary internal
processes for reviewing appeals. Additional information from the
petitioner may be requested by the agency in order to provide the Board
with a more full and complete administrative record but such requests
must be reasonable and timely to facilitate the processing of the
appeal, not to delay it.
Section 746.206 Administration of the Appeal
Proposed Sec. 746.206 would set out the standard procedures
followed by the Board when it receives a timely appeal. These proposed
procedures would be, in some respects, a codification of informal
practices that the Board currently follows when reviewing appeals.
Section 746.206(a) Review by the Special Counsel
Proposed paragraph (a) would describe procedures followed by the
Special Counsel when reviewing an appeal. After receiving a timely
appeal, the Special Counsel would be responsible for gathering relevant
evidence from the appropriate program office and conducting an
independent review of these materials along with any materials provided
by the petitioner. The Special Counsel would then provide a written
recommendation to the Board and, at the request of the Board, make an
oral presentation in an official meeting concerning the recommendation.
The duties of the Special Counsel under this provision must be
fulfilled in a timely manner and all requests for additional
information must be reasonable, to facilitate the appeal.
Section 746.206(b) Determination on Appeal
Proposed paragraph (b) would require the Board to render a written
decision stating the reasons for the decision within 90 calendar days
from the date of receipt of an appeal by the Secretary of the Board.
Such a decision would constitute a final agency action permitting the
petitioner to seek review in federal court under the APA. In the
discretion of the Chairman, the time for the Board's decision may be
extended as the Chairman may consider necessary or appropriate for a
full and fair consideration of the issues, including accommodation of
an oral hearing. If the Board does not reach a decision within 90
calendar days from the date of receipt, or within any extension of time
as established by the Chairman, the appeal will be deemed to be denied.
The deadline will help ensure that the Board has adequate time to
decide a matter on appeal while avoiding any undue prejudice to
petitioners from unnecessary delays.
Section 746.207--Procedures for Oral Hearing
This section of the proposed rule sets out the process for
requesting and conducting an oral hearing. The Board recognizes that,
in some unusual cases, the opportunity to make a presentation in person
is necessary or useful to assure a thorough understanding of the issues
in a case.
Section 746.207(a); (b); (c) Request for Oral Hearing; Action on
Request; Effect of Denial
Paragraph (a) would describe the process for requesting an oral
hearing. The request would accompany the notice of appeal itself, set
out in a separate document entitled ``Request for Oral Hearing.'' The
petitioner must show good cause as to why the NCUA should hold an oral
hearing, stating reasons why the case cannot be presented adequately
with only written statements. Proposed paragraph (b) would specify that
an oral hearing would be scheduled provided at least one Board member
agrees to hear the appeal, but specifies that the action by a Board
member to approve an oral hearing must be taken within 20 days of the
receipt of the appeal by the Board Secretary. The Special Counsel would
notify the petitioner of the Board's determination whether to approve a
request for an oral hearing. Proposed paragraph (c) would specify that,
in the event the request does not receive the support of at least one
Board member, the appeal will proceed on the basis of the written
record.
Section 746.207(d) Procedures for Oral Hearing
(d)(1) Scheduling; Location
Oral hearings will be held at NCUA headquarters in Alexandria,
Virginia, except that on his or her own initiative or at the request of
the petitioner, the Chairman may in his or her sole discretion allow
for a hearing to be conducted via teleconference or video conference
facilities.
(d)(2) Appearances; Representation
At an oral hearing, the petitioner would be permitted to be
represented by not more than two officers, employees, or other
representatives (including counsel) unless the Chairman, in his or hers
sole discretion, allows a greater number of participants. This proposed
paragraph recognizes the general right granted in the APA for
individuals appearing in person before an agency to be ``accompanied,
represented, and advised by counsel or, if permitted by the agency, by
other qualified representative[s].'' \61\ In general, courts have found
the right to counsel to be a fundamental aspect of procedural due
process in both informal and formal agency adjudications.\62\
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\61\ 5 U.S.C. 555(b).
\62\ See Goldberg v. Kelly, 397 U.S. 254, 270 (1970) (``The
right to be heard would be, in many cases, of little avail if it did
not comprehend the right to be heard by counsel. We do not say that
counsel must be provided at the pre-termination hearing, but only
that the recipient must be allowed to retain an attorney if he so
desires. Counsel can help delineate the issues, present factual
contentions in an orderly manner, conduct cross-examination, and
generally safeguard the interests of the recipient.'').
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[[Page 26384]]
(d)(3) Conduct of Oral Hearing
Proposed paragraph (d)(3) addresses procedures at the oral hearing
and would permit the use of presentations based on written evidence
submitted as part of the appeal documents filed with the Secretary of
the Board. The petitioner would be given the opportunity to present
first, followed by a representative of the program office. The
petitioner would be permitted to rebut information presented by the
program office.
V. Regulatory Procedures
Regulatory Flexibility Act
The Regulatory Flexibility Act requires NCUA to prepare an analysis
to describe any significant economic impact a rule may have on a
substantial number of small entities (primarily those under $100
million in assets). This proposed rule only provides enhanced voluntary
opportunities for credit unions to appeal agency determinations.
Accordingly, it will not have a significant economic impact on a
substantial number of small credit unions, and therefore, no regulatory
flexibility analysis is required.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in
which an agency by rule creates a new paperwork burden on regulated
entities or modifies an existing burden. 44 U.S.C. 3507(d). For
purposes of the PRA, a paperwork burden may take the form of a either a
reporting or a recordkeeping requirement, both referred to as
information collections. Proposed new Subpart B to part 746 establishes
procedures by which credit unions or other entities affected by an
initial decision by an NCUA program office may seek and obtain the
review of that decision by the NCUA Board.
The rule proposes to consolidate the information collection
requirements of the informal appeals process under a new part; as such,
NCUA intends to remove the burden allocated to the appeals process
currently under OMB control numbers 3133-0141, -0127, -0114, -0117, -
0133, and -0138, upon promulgation of this new rule, and requests a new
OMB control number for the information collection requirements under
part 746.
Estimated Number of Respondents:
Requests for Reconsideration: 24; Appeals: 10.
Frequency:
Requests for Reconsideration: 1; Appeals: 1.
Estimated Burden per Response:
Requests for Reconsideration: 10 hours; Appeals: 20 hours.
Estimated Annual Burden:
Requests for Reconsideration: 240 hours; Appeals: 200 hours.
Total: 440 hours.
The PRA and OMB regulations require that the public be provided an
opportunity to comment on the paperwork requirements, including an
agency's estimate of the burden of the paperwork requirements. The
Board invites comment on: (1) Whether the paperwork requirements are
necessary; (2) the accuracy of NCUA's estimates on the burden of the
paperwork requirements; (3) ways to enhance the quality, utility, and
clarity of the paperwork requirements; and (4) ways to minimize the
burden of the paperwork requirements.
The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families
NCUA has determined that this rule will not affect family well-
being within the meaning of sec. 654 of the Treasury and General
Government Appropriations Act, 1999, Public Law 105-277, 112 Stat. 2681
(1998).
Executive Order 13132
Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests. In
adherence to fundamental federalism principles, NCUA, an independent
regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies
with the executive order. This rulemaking will not have a substantial
direct effect on the states, on the connection between the national
government and the states, or on the distribution of power and
responsibilities among the various levels of government. NCUA has
determined that this proposal does not constitute a policy that has
federalism implications for purposes of the executive order.
List of Subjects
12 CFR Part 701
Credit, Credit unions, Reporting and recordkeeping requirements.
12 CFR Part 703
Credit unions, Investments.
12 CFR Part 705
Credit unions, grants, loans, revolving fund.
12 CFR Part 708a
Credit unions, Reporting and recordkeeping requirements
12 CFR Part 709
Claims, Credit unions.
12 CFR Part 741
Credit unions, Reporting and recordkeeping requirements, Share
insurance.
12 CFR Part 745
Administrative practice and procedure, Claims, Credit unions, Share
insurance.
12 CFR Part 746
Administrative practice and procedure, Claims, Credit Unions,
Investigations.
12 CFR Part 747
Administrative practice and procedure, Claims, Credit unions,
Investigations.
12 CFR Part 750
Credit unions, Golden parachute payments, Indemnity payments.
By the National Credit Union Administration Board, this 25th day
of May, 2017.
Gerard Poliquin,
Secretary of the Board.
For the reasons discussed above, the NCUA Board proposes to amend
12 CFR parts 701, 703, 705, 708a, 709, 741, 745, 747, and 750; and to
amend 12 CFR part 746, as proposed to be added elsewhere in this issue
of the Federal Register, as follows:
PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS
0
1. The authority citation for part 701 continues to read as follows:
Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759,
1761a, 1761b, 1766, 1767, 1782, 1784, 1786, 1787, 1789. Section
701.6 is also authorized by 15 U.S.C. 3717. Section 701.31 is also
authorized by 15 U.S.C. 1601 et seq.; 42 U.S.C. 1981 and 3601-3610.
Section 701.35 is also authorized by 42 U.S.C. 4311-4312.
0
2. Revise Sec. 701.14(e) to read as follows:
Sec. 701.14 Change in official or senior executive officer in credit
unions that are newly chartered or are in troubled condition.
* * * * *
[[Page 26385]]
(e) Notice of disapproval. NCUA may disapprove the individual
serving as a director, committee member or senior executive officer if
it finds that the competence, experience, character, or integrity of
the individual with respect to whom a notice under this section is
submitted indicates that it would not be in the best interests of the
members of the credit union or of the public to permit the individual
to be employed by, or associated with, the credit union. The Notice of
Disapproval will advise the parties of their rights to request
reconsideration from the regional director and/or file an appeal with
the NCUA Board in accordance with the procedures set forth in subpart B
to part 746 of this chapter.
0
3. Revise Sec. 701.21(h)(3) to read as follows:
Sec. 701.21 Loans to Members and Lines of Credit to Members.
* * * * *
(h) * * *
(3) A regional director will provide a written determination on a
waiver request within 45 calendar days after receipt of the request;
however, the 45-day period will not begin until the requesting credit
union has submitted all necessary information to the regional director.
If the regional director does not provide a written determination
within the 45-day period the request is deemed denied. A credit union
may request the regional director to reconsider a denied waiver request
and/or file an appeal with the NCUA Board in accordance with the
procedures set forth in subpart B to part 746 of this chapter.
* * * * *
0
4. Revise Sec. 701.22(c) to read as follows:
Sec. 701.22 Loan participations.
* * * * *
(c) To seek a waiver from any of the limitations in paragraph (b)
of this section, a federally insured credit union must submit a written
request to its regional director with a full and detailed explanation
of why it is requesting the waiver. Within 45 calendar days of receipt
of a completed waiver request, including all necessary supporting
documentation and, if appropriate, any written concurrence, the
regional director will provide the federally insured credit union a
written response. The regional director's decision will be based on
safety and soundness and other considerations; however, the regional
director will not grant a waiver to a federally insured, state-
chartered credit union without the prior written concurrence of the
appropriate state supervisory authority. A federally insured credit
union may request the regional director to reconsider a denied waiver
request and/or file an appeal with the NCUA Board in accordance with
the procedures set forth in subpart B to part 746 of this chapter.
* * * * *
0
5. Revise Sec. 701.23(h)(3) to read as follows:
Sec. 701.23 Purchase, sale, and pledge of eligible obligations.
* * * * *
(h) * * *
(3) Appeal to NCUA Board. A federal credit union may request the
regional director to reconsider a denied request for expanded authority
and/or file an appeal with the NCUA Board in accordance with the
procedures set forth in subpart B to part 746 of this chapter.
0
6. Revise Sec. 701.32(b)(5) to read as follows:
Sec. 701.32 Payment on shares by public units and nonmembers.
* * * * *
(b) * * *
(5) The regional director will provide a written determination on
an exemption request within 30 calendar days after receipt of the
request. The 30-day period will not begin to run until all necessary
information has been submitted to the regional director. A credit union
may request the regional director to reconsider a denied exemption
request and/or file an appeal with the NCUA Board in accordance with
the procedures set forth in subpart B to part 746 of this chapter.
* * * * *
0
7. Revise Sec. 701.34(a)(4) to read as follows:
Sec. 701.34 Designation of low income status; Acceptance of
secondary capital accounts by low-income designated credit unions.
(a) * * *
(4) If NCUA determines a low-income designated federal credit union
no longer meets the criteria for the designation, NCUA will notify the
federal credit union in writing, and the federal credit union must,
within five years, meet the criteria for the designation or come into
compliance with the regulatory requirements applicable to federal
credit unions that do not have a low-income designation. The
designation will remain in effect during the five-year period. If a
federal credit union does not requalify and has secondary capital or
nonmember deposit accounts with a maturity beyond the five-year period,
NCUA may extend the time for a federal credit union to come into
compliance with regulatory requirements to allow the federal credit
union to satisfy the terms of any account agreements. A federal credit
union may request NCUA to reconsider a determination that it no longer
meets the criteria for the designation and/or file an appeal with the
NCUA Board in accordance with the procedures set forth in subpart B to
part 746 of this chapter.
* * * * *
0
8. Appendix B to part 701 is amended as follows:
0
a. Section VII.D of Chapter 1 is revised.
0
b. Section II.C.5 of Chapter 2 is revised.
0
c. Section III.C.5 of Chapter 2 is revised.
0
d. Section IV.C.5 of Chapter 2 is revised.
0
e. Section V.C.5 of Chapter 2 is revised.
0
f. Section IV.B of Chapter 3 is revised.
0
g. Section II.C.6 of Chapter 4 is revised.
0
h. Section II.D--Application for a Federal Charter of Chapter 4 is
redesignated as Section II.D.2--Application for a Federal Charter and
revised.
0
i. Section III.D.6 of Chapter 4 is revised.
The revisions read as follows:
Appendix B to Part 701--Chartering and Field of Membership Manual
Chapter 1--Federal Credit Union Chartering
VII.D--Appeal of Office of Consumer Financial Protection and Access
Director Decision
If the Office of Consumer Financial Protection and Access
Director denies a charter application, in whole or in part, that
decision may be appealed to the NCUA Board in accordance with the
procedures set forth in subpart B to part 746 of this chapter.
Before appealing, the prospective group may, within 30 days of
the denial, provide supplemental information to the Office of
Consumer Financial Protection and Access Director for
reconsideration. A request for reconsideration should contain new
and material evidence addressing the reasons for the initial denial.
The Office of Consumer Financial Protection and Access Director will
have 30 days from the date of the receipt of the request for
reconsideration to make a final decision. If the request is again
denied, the applicant may proceed with the appeal process within 60
days of the date of the last denial.
* * * * *
Chapter 2--Field of Membership Requirements for Federal Credit Unions
* * * * *
[[Page 26386]]
II.C.5--Appeal of Office of Consumer Financial Protection and
Access Director Decision
If the Office of Consumer Financial Protection and Access
Director denies a field of membership expansion request, merger, or
spin-off, that decision may be appealed to the NCUA Board in
accordance with the procedures set forth in subpart B to part 746 of
this chapter.
Before appealing, the credit union may, within 30 days of the
denial, provide supplemental information to the Office of Consumer
Financial Protection and Access Director for reconsideration. A
request for reconsideration should contain new and material evidence
addressing the reasons for the initial denial. The Office of
Consumer Financial Protection and Access Director will have 30 days
from the date of the receipt of the request for reconsideration to
make a final decision. If the request is again denied, the applicant
may proceed with the appeal process within 60 days of the date of
the last denial.
* * * * *
III.C.5--Appeal of Office of Consumer Financial Protection and
Access Director Decision
If the Office of Consumer Financial Protection and Access
Director denies a field of membership expansion request, merger, or
spin-off is denied, that decision may be appealed to the NCUA Board
in accordance with the procedures set forth in subpart B to part 746
of this chapter.
Before appealing, the credit union may, within 30 days of the
denial, provide supplemental information to the Office of Consumer
Financial Protection and Access Director for reconsideration. A
request for reconsideration should contain new and material evidence
addressing the reasons for the initial denial or explain extenuating
circumstances that precluded the inclusion of existing material
evidence or information that should have been filed with the request
for reconsideration. The Office of Consumer Financial Protection and
Access Director will have 30 days from the date of the receipt of
the request for reconsideration to make a final decision. If the
request is again denied, the applicant may proceed with the appeal
process within 60 days of the date of the last denial. A petitioner
may seek a second reconsideration based on new material evidence or
information or extenuating circumstances that precluded the
inclusion of such information in the previous request.
* * * * *
IV.C.5--Appeal of Office of Consumer Financial Protection and
Access Director Decision
If the Office of Consumer Financial Protection and Access
Director denies a field of membership expansion request, merger, or
spin-off, that decision may be appealed to the NCUA Board in
accordance with the procedures set forth in subpart B to part 746 of
this chapter.
Before appealing, the credit union may, within 30 days of the
denial, provide supplemental information to the Office of Consumer
Financial Protection and Access Director for reconsideration. A
request for reconsideration should contain new and material evidence
addressing the reasons for the initial denial or explain extenuating
circumstances that precluded the inclusion of existing material
evidence or information that should have been filed with the request
for reconsideration. The Office of Consumer Financial Protection and
Access Director will have 30 days from the date of the receipt of
the request for reconsideration to make a final decision. If the
request is again denied, the applicant may proceed with the appeal
process within 60 days of the date of the last denial. A petitioner
may seek a second reconsideration based on new material evidence or
information or extenuating circumstances that precluded the
inclusion of such information in the previous request.
* * * * *
V.C.5--Appeal of Office of Consumer Financial Protection and Access
Director Decision
If the Office of Consumer Financial Protection and Access
Director denies a field of membership expansion request, merger, or
spin-off, that decision may be appealed to the NCUA Board in
accordance with the procedures set forth in subpart B to part 746 of
this chapter.
Before appealing, the credit union may, within 30 days of the
denial, provide supplemental information to the Office of Consumer
Financial Protection and Access Director for reconsideration. A
request for reconsideration should contain new and material evidence
addressing the reasons for the initial denial or explain extenuating
circumstances that precluded the inclusion of existing material
evidence or information that should have been filed with the request
for reconsideration. The Office of Consumer Financial Protection and
Access Director will have 30 days from the date of the receipt of
the request for reconsideration to make a final decision. If the
request is again denied, the applicant may proceed with the appeal
process within 60 days of the date of the last denial. A petitioner
may seek a second reconsideration based on new material evidence or
information or extenuating circumstances that precluded the
inclusion of such information in the previous request.
* * * * *
Chapter 3--Low-Income Credit Unions and Credit Unions Serving
Underserved Areas
* * * * *
IV.B--Appeal of Office of Consumer Financial Protection and Access
Director Decision
* * * * *
If the Office of Consumer Financial Protection and Access
Director denies an ``underserved area'' request, the federal credit
union may appeal that decision to the NCUA Board in accordance with
the procedures set forth in subpart B to part 746 of this chapter.
Before appealing, the credit union may, within 30 days of the
denial, provide supplemental information to the Office of Consumer
Financial Protection and Access Director for reconsideration. A
request for reconsideration should contain new and material evidence
addressing the reasons for the initial denial or explain extenuating
circumstances that precluded the inclusion of existing material
evidence or information that should have been filed with the request
for reconsideration. The Office of Consumer Financial Protection and
Access Director will have 30 days from the date of the receipt of
the request for reconsideration to make a final decision. If the
request is again denied, the applicant may proceed with the appeal
process within 60 days of the date of the last denial. A petitioner
may seek a second reconsideration based on new material evidence or
information or extenuating circumstances that precluded the
inclusion of such information in the previous request.
* * * * *
Chapter 4--Charter Conversions
* * * * *
II.C.6--Appeal of the Office of Consumer Financial Protection and
Access Director Decision
If a conversion to a federal charter is denied by the Office of
Consumer Financial Protection and Access Director, the applicant
credit union may appeal that decision to the NCUA Board in
accordance with the procedures set forth in subpart B to part 746 of
this chapter.
Before appealing, the credit union may, within 30 days of the
denial, provide supplemental information to the Office of Consumer
Financial Protection and Access Director for reconsideration. A
request for reconsideration should contain new and material evidence
addressing the reasons for the initial denial or explain extenuating
circumstances that precluded the inclusion of existing material
evidence or information that should have been filed with the request
for reconsideration. The Office of Consumer Financial Protection and
Access Director will have 30 days from the date of the receipt of
the request for reconsideration to make a final decision. If the
request is again denied, the applicant may proceed with the appeal
process within 60 days of the date of the last denial. A petitioner
may seek a second reconsideration based on new material evidence or
information or extenuating circumstances that precluded the
inclusion of such information in the previous request.
* * * * *
II.D.2--Application for a Federal Charter
When the Office of Consumer Financial Protection and Access
Director has received evidence that the board of directors has
satisfactorily completed the actions described above, the federal
charter and new Certificate of Insurance will be issued.
The credit union may then complete the conversion as discussed
in the following section. A credit union may request the Office of
Consumer Financial Protection and Access Director to reconsider a
denial of a conversion application and/or appeal a denial to the
NCUA Board. For more information, refer to Section II.C.6 of this
chapter.
* * * * *
[[Page 26387]]
III.D.6--Appeal of Office of Consumer Financial Protection and
Access Director Decision
If the Office of Consumer Financial Protection and Access
Director denies a conversion to a state charter, the federal credit
union may appeal that decision to the NCUA Board in accordance with
the procedures set forth in subpart B to part 746 of this chapter.
Before appealing, the credit union may, within 30 days of the
denial, provide supplemental information to the Office of Consumer
Financial Protection and Access Director for reconsideration. The
Office of Consumer Financial Protection and Access Director will
have 30 business days from the date of the receipt of the request
for reconsideration to make a final decision. If the application is
again denied, the credit union may proceed with the appeal process
to the NCUA Board within 60 days of the date of the last denial by
the Office of Consumer Financial Protection and Access Director.
* * * * *
PART 703--INVESTMENT AND DEPOSIT ACTIVITIES
0
9. The authority citation for part 703 continues to read as follows:
Authority: 12 U.S.C. 1757(7), 1757(8), 1757(15).
0
10. Revise Sec. 703.20(d) to read as follows:
Sec. 703.20 Request for additional authority.
* * * * *
(d) Appeal to NCUA Board. A federal credit union may request the
regional director to reconsider any part of the determination made
under paragraph (c) and/or file an appeal with the NCUA Board in
accordance with the procedures set forth in subpart B to part 746 of
this chapter.
0
11. Revise Sec. 703.111(d) to read as follows:
Sec. 703.111 NCUA approval.
* * * * *
(d) Right to appeal. A federal credit union may request the
regional director to reconsider a determination made under paragraph
(a) or (c) of this section and/or file an appeal with the NCUA Board in
accordance with the procedures set forth in subpart B to part 746 of
this chapter.
0
12. Revise Sec. 703.112(c) to read as follows:
Sec. 703.112 Applying for additional products or characteristics.
* * * * *
(c) A federal credit union may request the regional director to
reconsider a denial of an application for additional products or
characteristics and/or file an appeal with the NCUA Board in accordance
with the procedures set forth in subpart B to part 746 of this chapter.
0
13. Revise Sec. 703.114(c) to read as follows:
Sec. 703.114 Regulatory violation.
* * * * *
(c) A federal credit union may request the regional director to
reconsider a revocation of derivatives authority or an order to
terminate existing derivatives positions and/or file an appeal with the
NCUA Board in accordance with the procedures set forth in subpart B to
part 746 of this chapter.
* * * * *
PART 705--COMMUNITY DEVELOPMENT REVOLVING LOAN FUND ACCESS FOR
CREDIT UNIONS
0
14. The authority citation for part 705 continues to read as follows:
Authority: 12 U.S.C. 1756, 1757(5)(D), and (7)(I), 1766, 1782,
1784, 1785 and 1786.
0
15. Revise Sec. 705.10(a) to read as follows:
Sec. 705.10 Appeals.
(a) Appeals of non-qualification. A qualifying credit union whose
application for a loan or technical assistance grant has been denied
under Sec. 705.7(f) for failure to satisfy any of the conditions set
forth in Sec. 705.7(c), including any additional criteria set forth in
the related notice of funding opportunity, may request the Director of
the Office of Small Credit Union Initiatives to reconsider the denial
and/or appeal that decision to the NCUA Board in accordance with the
procedures set forth in subpart B to part 746 of this chapter, subject
to the following limitations:
(1) Scope. The scope of the Board's review is limited to the
threshold question of qualification and not the issue of whether, among
qualified applicants, a particular loan or technical assistance grant
is funded.
(2) Appeals procedures inapplicable. The foregoing procedure
applies during an open period in which funds are available and NCUA has
called for applications. NCUA will reject any application submitted
during a period in which NCUA has not called for applications, except
for applications submitted under Sec. 705.8. Such rejections are not
subject to appeal or review by the NCUA Board.
* * * * *
PART 708a--BANK CONVERSIONS AND MERGERS
0
16. The authority citation for part 708a continues to read as follows:
Authority: 12 U.S.C. 1766, 1785(b), and 1785(c).
0
17. Revise Sec. 708a.108(d) to read as follows:
Sec. 708a.108 NCUA oversight of methods and procedures of membership
vote.
* * * * *
(d) A converting credit union may request the regional director to
reconsider a determination regarding the methods and procedures of the
membership vote and/or file an appeal with the NCUA Board in accordance
with the procedures set forth in subpart B to part 746 of this chapter.
0
18. Revise Sec. 708a.304(h) to read as follows:
Sec. 708a.304 Notice to NCUA and request to proceed with member
vote.
* * * * *
(h) Appeal of adverse decision. If the regional director
disapproves a merger proposal, the credit union may request
reconsideration and/or file an appeal with the NCUA Board in accordance
with the procedures set forth in subpart B to part 746 of this chapter.
0
19. Revise Sec. 708a.308(d) to read as follows:
Sec. 708a.308 NCUA approval of merger.
* * * * *
(d) A merging credit union may request the regional director to
reconsider the disapproval of a merger proposal and/or file an appeal
with the NCUA Board in accordance with the procedures set forth in
subpart B to part 746 of this chapter.
* * * * *
PART 709--INVOLUNTARY LIQUIDATION OF FEDERAL CREDIT UNIONS AND
ADJUDICATION OF CREDITOR CLAIMS INVOLVING FEDERALLY INSURED CREDIT
UNIONS IN LIQUIDATION
0
20. The authority citation for part 709 continues to read as follows:
Authority: 12 U.S.C. 1757, 1766, 1767, 1786(h), 1787, 1788,
1789, 1789a.
0
21. Revise Sec. 709.7 to read as follows:
Sec. 709.7 Procedures for agency review or judicial determination of
claims.
(a) General. A claimant may either request agency review of an
initial determination of the liquidating agent to disallow a claim or
seek a de novo judicial determination of claims. In order to receive
agency review of an initial determination, a claimant must request an
administrative appeal before the NCUA Board. In order to seek a
judicial determination, a claimant must file suit (or continue an
action
[[Page 26388]]
commenced before the appointment of the liquidating agent) in the
district or territorial court of the United States for the district
within which the credit union's principal place of business is located
or the United States District Court for the District of Columbia.
(b) Procedures for agency review. A claimant requesting an
administrative appeal may request a hearing on the record conducted
pursuant to the procedures set forth in subpart A of part 747 of this
chapter. The determination of whether to agree to a request for a
hearing on the record shall rest solely with the NCUA Board, which
shall notify the claimant of its decision in writing. Alternatively, a
claimant may request an appeal before the NCUA Board pursuant to the
procedures set forth in subpart B to part 746 of this chapter.
(c) Deadline to request agency review or file suit. A claimant must
request agency review of an initial determination or file suit (or
continue an action commenced before the appointment of the liquidating
agent) within 60 days from the mailing of the initial determination or
the expiration of the time period for the liquidating agent to
determine claims under Sec. 709.6(c), whichever is earlier. A request
for a hearing on the record will suspend the 60-day period for filing a
lawsuit (or continuing an action commenced before the appointment of
the liquidating agent) from the date of the claimant's request to the
date of the NCUA Board's decision regarding that request. If a claimant
fails to either request a hearing on the record or an appeal to the
Board or file suit (or continue an action commenced before the
appointment of the liquidating agent) within the 60-day period, any
disallowance of claims shall be final and the claimant shall have no
further rights or remedies with respect to such claims.
(d) Reconsideration. Prior to requesting agency review or filing or
continuing a lawsuit, a claimant may request reconsideration of the
initial determination of the liquidating agent in accordance with the
procedures set forth in subpart B to part 746 of this chapter. The
deadline to request agency review or file suit (or continue an action
commenced before the appointment of the liquidating agent) in paragraph
(c) of this section will be suspended from the date of the claimant's
request to the date of the liquidating agent's decision regarding that
request.
0
22. Remove Sec. 709.8 and redesignate Sec. Sec. 709.9 through 709.13
as Sec. Sec. 709.8 through 709.12, respectively.
PART 741--REQUIREMENTS FOR INSURANCE
0
23. The authority citation for part 741 continues to read as follows:
Authority: 12 U.S.C. 1757, 1766(a), 1781-1790, and 1790d; 31
U.S.C. 3717.
0
24. Revise Sec. 741.11(d) to read as follows:
Sec. 741.11 Foreign branching.
* * * * *
(d) Revocation of approval. A state regulator that revokes approval
of the branch office must notify NCUA of the action once it issues the
notice of revocation. The regional director may revoke approval of the
branch office for failure to follow the business plan in a material
respect or for substantive and documented safety and soundness reasons.
If the regional director revokes the approval, the credit union will
have six months from the date of the revocation letter to terminate the
operations of the branch. The credit union can request reconsideration
of the revocation and/or appeal this revocation to the NCUA Board in
accordance with the procedures set forth in subpart B to part 746 of
this chapter.
* * * * *
PART 745--SHARE INSURANCE AND APPENDIX
0
25. The authority citation for part 745 continues to read as follows:
Authority: 12 U.S.C. 1752(5), 1757, 1765, 1766, 1781, 1782,
1787, 1789; title V, Pub. L. 109-351, 120 Stat. 1966.
0
26. Revise Sec. 745.201(c) to read as follows:
Sec. 745.201 Processing of insurance claims.
* * * * *
(c) Reconsideration and appeals. An accountholder may request
reconsideration from the Liquidating Agent of the initial determination
and/or file an appeal with the NCUA Board in accordance with the
procedures set forth in subpart B to part 746 of this chapter.
0
27. Remove Sec. 745.202 and redesignate Sec. 745.203 as Sec.
745.202.
PART 746--APPEALS PROCEDURES THAT DO NOT BY LAW REQUIRE A BOARD
HEARING
0
28. The authority citation for part 746 continues to read as follows:
Authority: 12 U.S.C. 1766, 1787, and 1789.
0
29. Add subpart B to part 746 to read as follows:
Subpart B--Appeals Procedures That Do Not by Law Require a Board
Hearing
Sec.
746.201 Authority, purpose, and scope.
746.202 Definitions.
746.203 Request for reconsideration.
746.204 Appeal to the Board.
746.205 Preliminary considerations regarding the appeal.
746.206 Administration of the appeal.
746.207 Procedures for oral hearing.
Subpart B--Appeals Procedures That Do Not by Law Require a Board
Hearing
Sec. 746.201 Authority, purpose, and scope.
(a) Authority. This part is issued pursuant to sections 120, 207,
and 209 of the Federal Credit Union Act (12 U.S.C. 1766, 1787, and
1789).
(b) Purpose. Part 746, subpart B provides generally uniform
procedures by which petitioners may appeal initial agency
determinations to the NCUA Board under this part.
(c) Scope. This part covers the appeal of initial agency
determinations by a program office which the petitioner has a right to
appeal to the NCUA Board under the following regulations: 701.14(e),
701.21(h)(3), 701.22(c), 701.23(h)(3), 701.32(b)(5), 701.34(a)(4),
Appendix B to part 701, Chapters 1-4, Sec. Sec. 703.20(d), 703.111(d),
703.112(c), 703.114(c), 705.10(a), 708a.108(d), 708a.304(h),
708a.308(d), 709.7, 741.11(d), 745.201(c), subpart J to part 747, and
Sec. 750.6(b).
(d) This part does not apply to:
(1) Actions by the agency to develop regulations, policy
statements, or guidance documents;
(2) Formal enforcement actions, the review of material supervisory
determinations that come under the jurisdiction of NCUA's Supervisory
Review Committee, or the appeal of any agency determination made
pursuant to part 792 of this chapter;
(3) Challenges to determinations under the prompt corrective action
regime in parts 702 and 704 of this chapter and subparts L and M to
part 747; and
(4) Creditor claims arising from the liquidation of an insured
credit union to the extent that the creditor has requested, and the
NCUA Board has agreed, for the claim to be handled through a hearing on
the record pursuant to 12 U.S.C. 1787(b)(7)(A) and subpart A of part
747 of this chapter.
Sec. 746.202 Definitions.
For purposes of this part:
Appeal means a process by which a petitioner may obtain the review
by the Board of an initial agency determination.
[[Page 26389]]
Board means the NCUA Board.
Initial agency determination means an agency action taken at a
level below the Board with respect to an application, request, claim,
or other matter in which a determination of rights or resolution of
issues is rendered and the party affected by the determination has been
provided with a right to appeal the determination to the NCUA Board.
The initial agency determination shall notify the Petitioner of the
right to request reconsideration or to file an appeal with the Board,
and shall include a description of applicable filing deadlines and time
frames for agency responses. Agency determinations involving the
formulation of a regulation, guidance document, or policy statement are
excluded from this definition.
Oral hearing means an opportunity, granted at the sole discretion
of the Board, by which a petitioner may make an oral presentation to
the Board concerning issues pertinent to an appeal.
Petitioner means the person or entity seeking Board review of an
initial agency determination.
Program office means the office within NCUA responsible for making
an initial agency determination.
Special Counsel to the General Counsel means an individual
(referred to herein as the ``Special Counsel'') within NCUA's Office of
General Counsel charged with administering appeals in accordance with
the procedures set forth in this part.
Sec. 746.203 Request for reconsideration.
(a) Reconsideration. Prior to submitting an appeal in accordance
with Sec. 746.204, the petitioner may in its sole discretion make a
written request to the appropriate program office to reconsider the
initial agency determination.
(b) Deadline to file. A request for reconsideration must be sent to
the appropriate program office within 30 calendar days of the date of
the initial agency determination. A petitioner who does not file a
request for reconsideration in a timely manner is considered to have
waived the right to request reconsideration.
(c) Special rule regarding change in officials. Notwithstanding
paragraph (a) of this section, a request for reconsideration of an
initial agency determination disapproving an individual serving as a
director, committee member or senior executive officer pursuant to
Sec. 701.14 of this chapter must be sent to the appropriate program
office within 15 calendar days of the date of the initial agency
determination.
(d) Content of request. Any request for reconsideration must
include:
(1) A statement of the facts on which the request for
reconsideration is based;
(2) A statement of the basis for the initial agency determination
to which the petitioner objects and the alleged error in such
determination; and
(3) Any other support or evidence relied upon by the petitioner
which was not previously provided to the appropriate program office.
(e) Determination of program office. The appropriate program office
will review its initial agency determination and reconsider the
position initially taken in the light of the arguments and additional
materials provided in the request for reconsideration. Within 30
calendar days of its receipt of a request for reconsideration, the
appropriate program office shall issue its determination either
affirming in whole or in part the initial agency determination or
rejecting it.
(f) Notice of determination. The appropriate program office shall
provide its decision concerning the reconsideration request to the
petitioner in writing, stating the reasons for the decision. The
decision shall be treated as an initial agency determination for
purposes of paragraph (a) of Sec. 746.204.
(1) In addition to a written statement of reasons for the decision,
the appropriate program office shall provide the petitioner with
written notice of the right to appeal the decision, in whole or in
part, to the Board in accordance with the procedures set forth in Sec.
746.204.
(2) For creditor claims brought pursuant to sec. 207 of the Federal
Credit Union Act (12 U.S.C. 1787), the appropriate program office shall
provide the petitioner with written notice of the right, in the
alternative to filing an appeal with the Board, to file suit or
continue an action commenced before the appointment of the liquidating
agent in the district or territorial court of the United States for the
district within which the credit union's principal place of business
was located or the United States District Court for the District of
Columbia. For such claims, the 60-day period for filing a lawsuit in
United States district court provided in 12 U.S.C. 1787(b)(6) shall be
tolled from the date of the petitioner's request for reconsideration to
the date of a determination pursuant to paragraph (e) of this section.
(3) Upon a showing of extenuating circumstances, as determined by
the program office in its reasonable judgment, a petitioner may be
allowed to submit a second reconsideration request before filing an
appeal with the Board. In such cases, the deadline for filing an appeal
with the Board shall begin to run from the earlier of the date of the
decision of the program office regarding the second reconsideration
request or thirty calendar days from the date the second
reconsideration request was accepted by the program office.
(g) Failure to make a determination. Failure by the appropriate
program office to issue a decision within the timeframe specified in
paragraph (e) of this section shall be an affirmation of the original
initial agency determination and shall be treated as an initial agency
determination for purposes of paragraph (a) of Sec. 746.204.
(h) Burden of proof. The burden of proof to lead the appropriate
program office to modify or reverse an initial agency determination
shall rest solely upon the petitioner.
Sec. 746.204 Appeal to the Board.
(a) Filing. Within 60 calendar days of the date of an initial
agency determination, or, as applicable, a determination by the program
office on any request for reconsideration, a petitioner may file an
appeal seeking review of the determination by the Board. The request
must be in writing and filed with the Secretary of the Board, National
Credit Union Administration, 1775 Duke Street, Alexandria, VA 22314-
3428.
(b) Special rule regarding change in officials. Notwithstanding
paragraph (a) of this section, an appeal of an initial agency
determination disapproving an individual serving as a director,
committee member or senior executive officer pursuant to Sec. 701.14
of this chapter must be filed with the Secretary of the Board within 15
calendar days of the date of the initial agency determination.
(c) Failure to file a timely appeal. Absent extenuating
circumstances, as determined by the Board in its sole discretion, a
petitioner who fails to file an appeal within the specified 60-day
period shall be deemed to have waived all claims pertaining to the
matters in issue.
(d) Content of request. Any appeal filed with the Board must
include:
(1) A statement summarizing the underlying facts that form the
basis of the appeal, together with copies of all pertinent documents,
records, and materials on which the petitioner relies in support of the
appeal.
(2) A statement outlining why the petitioner objects to the
conclusions in the initial agency determination, including any errors
alleged to have been made by the program office in reaching its
determination.
[[Page 26390]]
(3) Any other materials or evidence relied upon by the petitioner
that were not previously provided to the appropriate program office.
(e) Burden of proof. The burden of proof to lead the Board to
modify or reverse an initial agency determination shall rest solely
upon the petitioner.
(f) Amending or supplementing the appeal. Within 45 calendar days
from the date the Secretary of the Board receives an appeal, the
petitioner may amend or supplement the appeal in writing.
(g) Request for oral hearing. In accordance with Sec. 746.207, the
petitioner may request an opportunity to appear before the Board, in
person, or via teleconference or videoconference, to make an oral
presentation in support of the appeal.
Sec. 746.205 Preliminary considerations regarding the appeal.
(a) Initial review. The Special Counsel shall review all appeals
filed with the Secretary of the Board and make a recommendation for
their disposition to the Board. The Special Counsel shall have the
authority to dismiss an appeal upon the request of the petitioner.
(b) Supplemental materials. Within 30 calendar days from the date
the Secretary of the Board receives an appeal, the Special Counsel may
request in writing that the petitioner submit additional evidence in
support of the appeal. If additional evidence is requested, the
petitioner shall have 30 calendar days from the date of issuance of
such request to provide the requested information. Failure by the
petitioner to provide such information may result in denial of the
petitioner's appeal. The Special Counsel shall have the authority to
request additional information from any other relevant source in order
to provide the Board with a full and complete administrative record.
All requests by the Special Counsel pursuant to this section must be
reasonable and designed to facilitate the processing of the appeal, not
to delay it.
Sec. 746.206 Administration of the appeal.
(a) De novo review by Special Counsel. After receipt of a timely
appeal, the Special Counsel shall contact the relevant NCUA program
office and request a complete set of all pertinent materials, including
internal memoranda, correspondence, and records having a bearing on the
initial agency determination being appealed. The Special Counsel will
conduct an independent review of these materials, along with all
materials submitted by the petitioner in support of the appeal. The
Special Counsel will make a recommendation to the Board as to the
appropriate disposition of the appeal after having evaluated the
applicable legal arguments and considered the facts and circumstances
that pertain to the appeal. As directed by the Board, the Special
Counsel may provide his or her recommendation in writing to the Board
and may make an oral presentation before the Board.
(b) Determination on appeal. Within 90 calendar days from the date
of receipt of an appeal by the Secretary of the Board, or within any
extension of time as established by the Chairman, the Board shall issue
a decision allowing, in whole or in part, or disallowing the
petitioner's appeal. The decision by the Board shall be in writing,
stating the reasons for the decision, and shall constitute a final
agency action for purposes of chapter 7 of title 5 of the United States
Code. Failure by the Board to issue a decision on an appeal within the
90-day period or within any extension of time as established by the
Board shall be deemed to be a denial of the appeal.
(c) Extension of time. In the discretion of the Chairman, the time
frame for the Board's decision may be extended as the Chairman may
consider necessary or appropriate for a full and fair consideration of
the issues. For purposes of this paragraph (c), the Special Counsel is
authorized to act on behalf of the Chairman and may, in that capacity,
grant an extension of time.
Sec. 746.207 Procedures for oral hearing.
(a) Request for oral hearing. The petitioner may request to appear
before the Board to make an oral presentation in support of the appeal.
The request must be submitted with the initial appeal documents and
should be in the form of a separate written document titled ``Request
for Oral Hearing.'' The request must show good cause for an oral
presentation and state reasons why the appeal cannot be presented
adequately in writing.
(b) Action on the request. The Board shall determine whether to
grant the request for oral hearing and shall direct the Special Counsel
to serve notice of the Board's determination in writing to the
petitioner. A request for oral hearing shall be granted with the
approval of any Board member. The determination by a Board member
approving an oral hearing must be taken within 20 days of the Board
Secretary's receipt of the appeal.
(c) Effect of denial. In the event no Board member approves of
holding an oral hearing, the request for an oral hearing is deemed to
be denied, and the appeal shall be reviewed and determined by the Board
on the basis of the written record.
(d) Procedures for oral hearing. The following procedures shall
govern the conduct of any oral hearing:
(1) Scheduling of oral hearing; location. The Special Counsel shall
notify the petitioner and the program office of the date and time for
the oral hearing, making sure to provide reasonable lead time and
schedule accommodations. The oral hearing will be held at NCUA
headquarters in Alexandria, Virginia; provided, however, that on his or
her own initiative or at the request of the petitioner, the Chairman
may in his or her sole discretion allow for a hearing to be conducted
via teleconference or video conference facilities.
(2) Appearances; representation. The petitioner and the NCUA
program office shall submit a notice of appearance identifying the
individual(s) who will be representing them at the oral presentation.
The petitioner shall designate not more than two officers, employees,
or other representatives (including counsel), unless otherwise
authorized by the Chairman. The NCUA program office shall designate not
more than two individuals (one of whom may be a litigation and
enforcement attorney from NCUA's Office of General Counsel), unless
otherwise authorized by the Chairman.
(3) Conduct of oral hearing. The oral hearing shall consist
entirely of oral presentations. The introduction of written evidence or
witness testimony at the hearing shall not be permitted. The petitioner
shall present first, followed by the NCUA program office. Each side
shall be allotted a specified and equal amount of time for its
presentation, of which a portion may be reserved for purposes of
rebuttal. This time limit shall be set by the Board and will be based
on the complexity of the appeal. Members of the Board may ask questions
of any individual appearing before the Board.
(4) Transcript. The oral hearing shall be on the record and
transcribed by a stenographer, who will prepare a transcript of the
proceedings. The stenographer will make the transcript available to the
petitioner upon payment of the cost thereof.
(e) Confidentiality. An oral hearing as provided for herein
constitutes a meeting of the Board within the meaning of the Government
in the Sunshine Act (5 U.S.C. 552b). The NCUA Chairman shall preside
over the conduct of the oral hearing. The meeting will be closed to the
public to the extent that one or more of the exemptions from public
meetings apply as certified by
[[Page 26391]]
NCUA's Office of General Counsel. The Board shall maintain the
confidentiality of any information or materials submitted or otherwise
obtained in the course of the procedures outlined herein, subject to
applicable law and regulations.
(f) Conclusion of the oral hearing. The Board shall take the oral
presentations under advisement. The Board shall render its decision on
the appeal in accordance with Sec. 746.206.
PART 747--ADMINISTRATIVE ACTIONS, ADJUDICATIVE HEARINGS, RULES OF
PRACTICE AND PROCEDURE, AND INVESTIGATIONS
0
30. The authority citation for part 747 continues to read as follows:
Authority: 12 U.S.C. 1766, 1782, 1784, 1785, 1786, 1787, 1790a,
1790d; 15 U.S.C. 1639e; 42 U.S.C. 4012a; Pub. L. 101-410; Pub. L.
104-134; Pub. L. 109-351; Pub. L. 114-74.
0
31. Remove and reserve subpart J of part 747.
PART 750--GOLDEN PARACHUTE AND INDEMNIFICATION PAYMENTS
0
32. The authority citation for part 750 continues to read as follows:
Authority: 12 U.S.C. 1786(t).
0
33. Revise Sec. 750.6(b) to read as follows:
Sec. 750.6 Filing instructions; appeal.
* * * * *
(b) A FICU whose request for approval by NCUA, in accordance with
paragraph (a) of this section, has been denied may seek reconsideration
of the request and/or file an appeal with the NCUA Board in accordance
with the procedures set forth in subpart B to part 746 of this chapter.
[FR Doc. 2017-11319 Filed 6-6-17; 8:45 am]
BILLING CODE 7535-01-P