Chartering and Field of Membership Manual for Federal Credit Unions, 59137-59139 [2012-23643]

Download as PDF 59137 Proposed Rules Federal Register Vol. 77, No. 187 Wednesday, September 26, 2012 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 Part 701 RIN 3133–AE02 Chartering and Field of Membership Manual for Federal Credit Unions National Credit Union Administration (NCUA). ACTION: Proposed rule with request for comments. AGENCY: The NCUA Board (Board) proposes to amend the definition of ‘‘rural district’’ in NCUA’s Chartering and Field of Membership Manual. The proposed amendment to the definition of ‘‘rural district’’ permits a geographic area to qualify as a rural district if, among other criteria, it has a total population that does not exceed the greater of 200,000 people or three percent of the population of the state in which the majority of the district is located. The current definition limits the rural district’s population to 200,000, regardless of the population of the state containing the majority of the rural district. DATES: Comments must be received on or before November 26, 2012. ADDRESSES: You may submit comments by any of the following methods (Please send comments by one method only): • Federal eRulemaking Portal: http:// www.regulations.gov. Follow the instructions for submitting comments. • NCUA Web Site: http:// 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 Notice of Proposed Rulemaking for Chartering and Field of Membership Manual’’ in the email subject line. • Fax: (703) 518–6319. Use the subject line described above for email. • Mail: Address to Mary Rupp, Secretary of the Board, National Credit Union Administration, 1775 Duke wreier-aviles on DSK5TPTVN1PROD with PROPOSALS SUMMARY: VerDate Mar<15>2010 15:05 Sep 25, 2012 Jkt 226001 Street, Alexandria, Virginia 22314– 3428. • Hand Delivery/Courier: Same as mail address. Public Inspection: You may view all public comments on NCUA’s Web site at http://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. FOR FURTHER INFORMATION CONTACT: Frank Kressman, Associate General Counsel, or Elizabeth Wirick, Staff Attorney, Office of General Counsel, at the above address or by telephone (703) 518–6545, or Robert Leonard, Director, Division of Consumer Access, Office of Consumer Protection, at the above address or by telephone (703) 518–1150. SUPPLEMENTARY INFORMATION: I. Background The Federal Credit Union Act (Act), as amended by the Credit Union Membership Access Act of 1998 (CUMAA), establishes requirements for membership in federal credit unions (FCUs). The Act gives the Board broad rulemaking authority over FCUs. 12 U.S.C. 1766(a). NCUA has implemented the Act’s field of membership requirements in its Chartering and Field of Membership Manual (Chartering Manual), incorporated as Appendix B to Part 701 of NCUA’s regulations. 12 CFR Part 701, Appendix B. NCUA also publishes the Chartering Manual as an Interpretative Ruling and Policy Statement (IRPS). The current version of the Chartering Manual is set forth as IRPS 08–2, as amended by IRPS 10–1. Rural District The Act provides that a community credit union is one organized around a ‘‘well-defined local community, neighborhood, or rural district.’’ 12 U.S.C. 1759(b)(3). In CUMAA, Congress also specifically delegated to the Board the authority to define by regulation the meaning of ‘‘well-defined local community’’ (WDLC) and ‘‘rural PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 district’’ for FCU charters. 12 U.S.C. 1759(g). Since CUMAA’s enactment, the agency has gained significant experience in determining the criteria that establish an area as a WDLC or rural district by fully analyzing and processing numerous applications for community charter conversions and expansions. With the benefit of this extensive experience, the Board is concerned that the current population limit associated with establishing a rural district is too restrictive to fulfill the potential of that charter type and is limiting some FCUs’ abilities to serve members in rural America. II. Proposed Change to the Definition of Rural District The Chartering Manual currently includes two alternative sets of criteria to establish a rural district. One set of criteria is: • The district has well-defined, contiguous boundaries; • More than 50% of its population resides in areas the U.S. Census Bureau designates as rural; and • The district’s total population does not exceed 200,000. The alternate criteria require: • The district has well-defined, contiguous boundaries; • It has a population density of no more than 100 people per square mile; and • The district’s total population does not exceed 200,000. 12 CFR part 701, Appendix B; Chartering Manual, Chapter 2.V.A.2. Thus, under either alternative, the upper limit on the population of a rural district is currently 200,000 persons. The Board believes that the limit of 200,000 persons may, in many instances, be too low to sustain a viable rural district FCU for several reasons. A rural area may often be anchored by a small hub city or town. A relatively high portion of individuals living in the rural area may periodically travel to that small hub for shopping, entertainment, medical care or financial services. That hub is important to the rural district for services, and it is important to be included in the rural district to enhance an FCU’s economic potential. Unfortunately, when included in the rural district for chartering purposes, the hub could cause the area to exceed the 200,000 person population limit E:\FR\FM\26SEP1.SGM 26SEP1 wreier-aviles on DSK5TPTVN1PROD with PROPOSALS 59138 Federal Register / Vol. 77, No. 187 / Wednesday, September 26, 2012 / Proposed Rules under the current definition. Additionally, the Board is aware that it is difficult for an FCU to reach and attract members living in large rural areas with widely dispersed populations. FCUs often incur greater expenses to locate, join, and serve these members than members in a smaller geographic area with a higher population density. Accordingly, a higher potential population is often necessary to ensure the economic viability of many rural district charters. Since first defining the term rural district in 2010, NCUA has seen only modest usage of the rural district charter. In fact, currently there are fewer than 50 FCUs operating as a rural district charter. For the reasons noted above, the Board believes a higher population limit for an area to be considered a rural district is appropriate. Rather than simply imposing a larger numerical limit to attempt to fit all circumstances, the Board proposes to permit an area to qualify as a rural district if its population does not exceed the greater of (1) 200,000; or (2) three percent of the total population of the state in which the majority of the district is located. The Board believes the addition of the three percent of state population component is broad enough to enhance an FCU’s ability to serve individuals living in rural America, who often suffer from a lack of affordable financial services. The Board also believes that this component is sufficiently limited to permit the designation of a rural district only in geographic areas that are truly rural. Specifically, the enhanced definition will only affect FCUs seeking a rural district located in states with a population above approximately 6.67 million. This is because three percent of the population of states with fewer than 6.67 million people would already be less than the current 200,000 person limit. There are 13 states of this size. This will protect against having a rural district that is unreasonably large in relation to the size and population of a state. The Board has considered using a higher limit but is concerned that a higher limit could result in overly large rural districts. For example, if the limit were set at four percent, then that would affect FCUs seeking rural districts located in states with populations greater than approximately 5 million. This is because four percent of the population of states with fewer than 5 million people would already be less than the current 200,000 person limit. There are 22 states of this size. NCUA believes this higher limit could result in rural districts disproportionately large in relation to states of this size. VerDate Mar<15>2010 15:05 Sep 25, 2012 Jkt 226001 Nonetheless, NCUA would appreciate receiving comments on this aspect of the proposal. Additionally, even with the proposed amendment to the definition, the other criteria in the definition not related to total population remain in place and help ensure the definition as a whole does not exceed appropriate boundaries. Although NCUA is not proposing changes to the other criteria in the definition of rural district at this time, NCUA welcomes comments on these aspects of the definition as well. For FCUs seeking a rural district that includes portions of two or more states, the three percent state population component will be based on the population of the state containing the majority of the proposed rural district. The majority of a multi-state rural district will be based on population rather than geographic areas. For example, if an FCU applies to serve a district with two counties and 100,000 residents in one state, plus one county and 200,000 residents in a second state, the combined population of 300,000 could not exceed three percent of the population of the second state. FCUs with current rural district charters are grandfathered, but they would also be able to apply to amend their charters based on the proposed criteria. As with all community charters, FCUs serving more populated rural districts must develop business and marketing plans that demonstrate how they will serve their entire community. 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 credit unions (primarily those under $10 million in assets). This proposed rule does not impose any requirements on small credit unions. NCUA has determined that this proposed rule will not have a significant economic impact on a substantial number of small credit unions. 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 increases an existing burden. 44 U.S.C. 3507(d); 5 CFR part 1320. For purposes of the PRA, a paperwork burden may take the form of either a reporting or a recordkeeping requirement, both referred to as information collections. NCUA has Frm 00002 Fmt 4702 Sfmt 4702 Executive Order 13132 Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the executive order to adhere to fundamental federalism principles. This proposed rule will not have substantial direct effects on the states, on the relationship 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 proposed rule does not constitute a policy that has federalism implications for purposes of the executive order. Treasury and General Government Appropriations Act, 1999 NCUA has determined that this proposed rule will not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999, Public Law 105–277, 112 Stat. 2681 (1998). List of Subjects 12 CFR Part 701 Credit, Credit unions, Reporting and recordkeeping requirements. III. Regulatory Procedures PO 00000 determined that this proposed rule does not impose a new information collection requirement or increase an existing burden. By the National Credit Union Administration Board on September 20, 2012. Mary Rupp, Secretary of the Board. For the reasons set forth above, NCUA proposes to amend Appendix B of 12 CFR part 701 as follows: PART 701—ORGANIZATION AND OPERATIONS 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 701.31 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 12 U.S.C. 4311– 4312. Appendix B [Amended] 2. Revise the fifth paragraph of Section V.A.2 of Chapter 2 of Appendix B to part 701 to read as follows: E:\FR\FM\26SEP1.SGM 26SEP1 Federal Register / Vol. 77, No. 187 / Wednesday, September 26, 2012 / Proposed Rules Chapter 2 V.A.2—Definition of Well-Defined Local Community and Rural District * * * * * The rural district requirement is met if: • Rural District— • The district has well-defined, contiguous geographic boundaries; • More than 50% of the district’s population resides in census blocks or other geographic areas that are designated as rural by the United State Census Bureau; and • The total population of the district does not exceed the greater of 200,000 people or three percent of the population of the state in which the majority of the district is located; or • The district has well-defined, contiguous geographic boundaries; • The district does not have a population density in excess of 100 people per square mile; and • The total population of the district does not exceed the greater of 200,000 people or three percent of the population of the state in which the majority of the district is located. * * * * * [FR Doc. 2012–23643 Filed 9–25–12; 8:45 am] BILLING CODE 7535–01–P NATIONAL CREDIT UNION ADMINISTRATION 12 CFR Parts 702, 741 and 791 RIN 3133–AE07 Prompt Corrective Action, Requirements for Insurance, and Promulgation of NCUA Rules and Regulations National Credit Union Administration (NCUA). ACTION: Proposed rule and Interpretive Ruling and Policy Statement 12–2 with request for comments. AGENCY: The NCUA Board (Board) proposes to amend Interpretive Ruling and Policy Statement (IRPS) 87–2, as amended by IRPS 03–2, and two NCUA regulations that apply asset thresholds to grant relief from risk-based net worth and interest rate risk requirements. The amended IRPS would result in more robust consideration of regulatory relief for more small credit unions in future rulemakings. The amended regulations would grant immediate and prospective relief from regulatory burden to a larger group of small credit unions. DATES: Send your comments to reach us on or before October 26, 2012. We may not consider comments received after the above date in making our decision on the proposed rule. ADDRESSES: You may submit comments by any of the following methods (Please send comments by one method only): wreier-aviles on DSK5TPTVN1PROD with PROPOSALS SUMMARY: VerDate Mar<15>2010 15:05 Sep 25, 2012 Jkt 226001 • Federal eRulemaking Portal: http:// www.regulations.gov. Follow the instructions for submitting comments. • NCUA Web Site: http:// 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 Proposed Rule 702, 741, 791 and IRPS 12–2’’ in the email subject line. • Fax: (703) 518–6319. Use the subject line described above for email. • Mail: Address to Mary Rupp, 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 http://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. FOR FURTHER INFORMATION CONTACT: Kevin Tuininga, Trial Attorney, Office of General Counsel, National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314–3428 or telephone: (703) 518–6543. SUPPLEMENTARY INFORMATION: I. Background II. The Rule as Proposed III. Regulatory Procedures I. Background A. What changes does this proposed rule make? The Regulatory Flexibility Act, Public Law 96–354, as amended (RFA), generally requires federal agencies to determine and consider the impact of proposed and final rules on small entities. Since 2003, the Board has defined ‘‘small entity’’ in this context as a credit union with less than $10 million in assets.1 This proposed rule and IRPS 12–2 redefines ‘‘small entity’’ as a credit union with less than $30 million in assets. The proposed rule also amends 12 CFR 702.103, where a $10 million asset threshold is used to define a ‘‘complex’’ credit union for 1 IRPS PO 00000 03–2, 68 FR 31949 (May 29, 2003). Frm 00003 Fmt 4702 Sfmt 4702 59139 determining whether risk-based net worth requirements apply, and 12 CFR 741.3(b)(5)(i), set to go into effect September 30, 2012, where an asset range of $10 million to $50 million is used as part of the determination of whether a federally-insured credit union (FICU) is subject to certain interest rate risk rule requirements. B. Why is the Board proposing this rule? The Board is proposing this rule and IRPS to implement an updated measure of immediate and prospective regulatory relief for small FICUs across multiple applications, while avoiding undue risk to the National Credit Union Share Insurance Fund (NCUSIF). The Board believes the $10 million asset threshold used to define ‘‘small entity’’ for purposes of the RFA and for other provisions in NCUA’s regulations where the Board has discretion to set asset thresholds is outdated. Increasing these thresholds will account for industry asset growth, consolidation, and inflation. It will provide an updated, reasonable, and historically consistent threshold for FICUs with respect to RFA coverage, regulatory compliance relief, and risk to the NCUSIF. C. What is the history and purpose of the RFA? Congress enacted the RFA in 1980 and amended it with the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104–121. The RFA in part requires federal agencies to determine whether a proposed rule will have a significant economic impact on a substantial number of small entities.2 If so, agencies must prepare an analysis that describes the proposed rule’s impact on small entities.3 The analysis must include descriptions of any significant alternatives that minimize the impact.4 This requirement encourages federal agencies to give special consideration to the ability of smaller entities to absorb compliance burden imposed by new rules. In 1981, the Board initially defined ‘‘small entity’’ for purposes of the RFA as any credit union with less than $1 million in assets.5 IRPS 87–2 superseded IRPS 81–4 but retained the definition of ‘‘small entity’’ as a credit union with less than $1 million in 2 5 U.S.C. 603, 604, 605(b). The term ‘‘small entity’’ as used in the RFA includes small businesses, small organizations, and small government jurisdictions. 5 U.S.C. 601(6). Credit unions fall within the definition of organization. 5 U.S.C. 601(4). The RFA gives agencies authority to establish their own definition of ‘‘small entity.’’ Id. 3 Id. 4 Id. 5 IRPS 81–4, 46 FR 29248 (June 1, 1981). E:\FR\FM\26SEP1.SGM 26SEP1

Agencies

[Federal Register Volume 77, Number 187 (Wednesday, September 26, 2012)]
[Proposed Rules]
[Pages 59137-59139]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-23643]


========================================================================
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. 77, No. 187 / Wednesday, September 26, 2012 / 
Proposed Rules

[[Page 59137]]



NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 701

RIN 3133-AE02


Chartering and Field of Membership Manual for Federal Credit 
Unions

AGENCY: National Credit Union Administration (NCUA).

ACTION: Proposed rule with request for comments.

-----------------------------------------------------------------------

SUMMARY: The NCUA Board (Board) proposes to amend the definition of 
``rural district'' in NCUA's Chartering and Field of Membership Manual. 
The proposed amendment to the definition of ``rural district'' permits 
a geographic area to qualify as a rural district if, among other 
criteria, it has a total population that does not exceed the greater of 
200,000 people or three percent of the population of the state in which 
the majority of the district is located. The current definition limits 
the rural district's population to 200,000, regardless of the 
population of the state containing the majority of the rural district.

DATES: Comments must be received on or before November 26, 2012.

ADDRESSES: You may submit comments by any of the following methods 
(Please send comments by one method only):
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     NCUA Web Site: http://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 Notice of Proposed Rulemaking for Chartering and 
Field of Membership Manual'' in the email subject line.
     Fax: (703) 518-6319. Use the subject line described above 
for email.
     Mail: Address to Mary Rupp, 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 may view all public comments on NCUA's Web 
site at http://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.

FOR FURTHER INFORMATION CONTACT: Frank Kressman, Associate General 
Counsel, or Elizabeth Wirick, Staff Attorney, Office of General 
Counsel, at the above address or by telephone (703) 518-6545, or Robert 
Leonard, Director, Division of Consumer Access, Office of Consumer 
Protection, at the above address or by telephone (703) 518-1150.

SUPPLEMENTARY INFORMATION: 

I. Background

    The Federal Credit Union Act (Act), as amended by the Credit Union 
Membership Access Act of 1998 (CUMAA), establishes requirements for 
membership in federal credit unions (FCUs). The Act gives the Board 
broad rulemaking authority over FCUs. 12 U.S.C. 1766(a). NCUA has 
implemented the Act's field of membership requirements in its 
Chartering and Field of Membership Manual (Chartering Manual), 
incorporated as Appendix B to Part 701 of NCUA's regulations. 12 CFR 
Part 701, Appendix B. NCUA also publishes the Chartering Manual as an 
Interpretative Ruling and Policy Statement (IRPS). The current version 
of the Chartering Manual is set forth as IRPS 08-2, as amended by IRPS 
10-1.

Rural District

    The Act provides that a community credit union is one organized 
around a ``well-defined local community, neighborhood, or rural 
district.'' 12 U.S.C. 1759(b)(3). In CUMAA, Congress also specifically 
delegated to the Board the authority to define by regulation the 
meaning of ``well-defined local community'' (WDLC) and ``rural 
district'' for FCU charters. 12 U.S.C. 1759(g).
    Since CUMAA's enactment, the agency has gained significant 
experience in determining the criteria that establish an area as a WDLC 
or rural district by fully analyzing and processing numerous 
applications for community charter conversions and expansions. With the 
benefit of this extensive experience, the Board is concerned that the 
current population limit associated with establishing a rural district 
is too restrictive to fulfill the potential of that charter type and is 
limiting some FCUs' abilities to serve members in rural America.

II. Proposed Change to the Definition of Rural District

    The Chartering Manual currently includes two alternative sets of 
criteria to establish a rural district. One set of criteria is:
     The district has well-defined, contiguous boundaries;
     More than 50% of its population resides in areas the U.S. 
Census Bureau designates as rural; and
     The district's total population does not exceed 200,000.

The alternate criteria require:
     The district has well-defined, contiguous boundaries;
     It has a population density of no more than 100 people per 
square mile; and
     The district's total population does not exceed 200,000.

12 CFR part 701, Appendix B; Chartering Manual, Chapter 2.V.A.2. Thus, 
under either alternative, the upper limit on the population of a rural 
district is currently 200,000 persons.
    The Board believes that the limit of 200,000 persons may, in many 
instances, be too low to sustain a viable rural district FCU for 
several reasons. A rural area may often be anchored by a small hub city 
or town. A relatively high portion of individuals living in the rural 
area may periodically travel to that small hub for shopping, 
entertainment, medical care or financial services. That hub is 
important to the rural district for services, and it is important to be 
included in the rural district to enhance an FCU's economic potential. 
Unfortunately, when included in the rural district for chartering 
purposes, the hub could cause the area to exceed the 200,000 person 
population limit

[[Page 59138]]

under the current definition. Additionally, the Board is aware that it 
is difficult for an FCU to reach and attract members living in large 
rural areas with widely dispersed populations. FCUs often incur greater 
expenses to locate, join, and serve these members than members in a 
smaller geographic area with a higher population density. Accordingly, 
a higher potential population is often necessary to ensure the economic 
viability of many rural district charters.
    Since first defining the term rural district in 2010, NCUA has seen 
only modest usage of the rural district charter. In fact, currently 
there are fewer than 50 FCUs operating as a rural district charter. For 
the reasons noted above, the Board believes a higher population limit 
for an area to be considered a rural district is appropriate. Rather 
than simply imposing a larger numerical limit to attempt to fit all 
circumstances, the Board proposes to permit an area to qualify as a 
rural district if its population does not exceed the greater of (1) 
200,000; or (2) three percent of the total population of the state in 
which the majority of the district is located.
    The Board believes the addition of the three percent of state 
population component is broad enough to enhance an FCU's ability to 
serve individuals living in rural America, who often suffer from a lack 
of affordable financial services. The Board also believes that this 
component is sufficiently limited to permit the designation of a rural 
district only in geographic areas that are truly rural. Specifically, 
the enhanced definition will only affect FCUs seeking a rural district 
located in states with a population above approximately 6.67 million. 
This is because three percent of the population of states with fewer 
than 6.67 million people would already be less than the current 200,000 
person limit. There are 13 states of this size. This will protect 
against having a rural district that is unreasonably large in relation 
to the size and population of a state. The Board has considered using a 
higher limit but is concerned that a higher limit could result in 
overly large rural districts. For example, if the limit were set at 
four percent, then that would affect FCUs seeking rural districts 
located in states with populations greater than approximately 5 
million. This is because four percent of the population of states with 
fewer than 5 million people would already be less than the current 
200,000 person limit. There are 22 states of this size. NCUA believes 
this higher limit could result in rural districts disproportionately 
large in relation to states of this size. Nonetheless, NCUA would 
appreciate receiving comments on this aspect of the proposal. 
Additionally, even with the proposed amendment to the definition, the 
other criteria in the definition not related to total population remain 
in place and help ensure the definition as a whole does not exceed 
appropriate boundaries. Although NCUA is not proposing changes to the 
other criteria in the definition of rural district at this time, NCUA 
welcomes comments on these aspects of the definition as well.
    For FCUs seeking a rural district that includes portions of two or 
more states, the three percent state population component will be based 
on the population of the state containing the majority of the proposed 
rural district. The majority of a multi-state rural district will be 
based on population rather than geographic areas. For example, if an 
FCU applies to serve a district with two counties and 100,000 residents 
in one state, plus one county and 200,000 residents in a second state, 
the combined population of 300,000 could not exceed three percent of 
the population of the second state.
    FCUs with current rural district charters are grandfathered, but 
they would also be able to apply to amend their charters based on the 
proposed criteria. As with all community charters, FCUs serving more 
populated rural districts must develop business and marketing plans 
that demonstrate how they will serve their entire community.

III. 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 credit unions (primarily those under $10 
million in assets). This proposed rule does not impose any requirements 
on small credit unions. NCUA has determined that this proposed rule 
will not have a significant economic impact on a substantial number of 
small credit unions.

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 increases an existing burden. 44 U.S.C. 3507(d); 5 CFR part 
1320. For purposes of the PRA, a paperwork burden may take the form of 
either a reporting or a recordkeeping requirement, both referred to as 
information collections. NCUA has determined that this proposed rule 
does not impose a new information collection requirement or increase an 
existing burden.

Executive Order 13132

    Executive Order 13132 encourages independent regulatory agencies to 
consider the impact of their actions on state and local interests. 
NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), 
voluntarily complies with the executive order to adhere to fundamental 
federalism principles. This proposed rule will not have substantial 
direct effects on the states, on the relationship 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 proposed rule does not constitute a policy that 
has federalism implications for purposes of the executive order.

Treasury and General Government Appropriations Act, 1999

    NCUA has determined that this proposed rule will not affect family 
well-being within the meaning of section 654 of the Treasury and 
General Government Appropriations Act, 1999, Public Law 105-277, 112 
Stat. 2681 (1998).

List of Subjects

12 CFR Part 701

    Credit, Credit unions, Reporting and recordkeeping requirements.

    By the National Credit Union Administration Board on September 
20, 2012.
Mary Rupp,
Secretary of the Board.

    For the reasons set forth above, NCUA proposes to amend Appendix B 
of 12 CFR part 701 as follows:

PART 701--ORGANIZATION AND OPERATIONS 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 
701.31 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 12 U.S.C. 4311-
4312.

Appendix B [Amended]

    2. Revise the fifth paragraph of Section V.A.2 of Chapter 2 of 
Appendix B to part 701 to read as follows:


[[Page 59139]]



Chapter 2

V.A.2--Definition of Well-Defined Local Community and Rural District

* * * * *
    The rural district requirement is met if:
     Rural District--
     The district has well-defined, contiguous geographic 
boundaries;
     More than 50% of the district's population resides in 
census blocks or other geographic areas that are designated as rural 
by the United State Census Bureau; and
     The total population of the district does not exceed 
the greater of 200,000 people or three percent of the population of 
the state in which the majority of the district is located; or
     The district has well-defined, contiguous geographic 
boundaries;
     The district does not have a population density in 
excess of 100 people per square mile; and
     The total population of the district does not exceed 
the greater of 200,000 people or three percent of the population of 
the state in which the majority of the district is located.
* * * * *
[FR Doc. 2012-23643 Filed 9-25-12; 8:45 am]
BILLING CODE 7535-01-P