Unfair or Deceptive Acts or Practices; Technical Amendments, 59627-59630 [2014-22715]
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Federal Register / Vol. 79, No. 192 / Friday, October 3, 2014 / Rules and Regulations
NATIONAL CREDIT UNION
ADMINISTRATION
12 CFR Parts 701, 706, and 790
RIN 3133–AE42
Unfair or Deceptive Acts or Practices;
Technical Amendments
National Credit Union
Administration (NCUA).
ACTION: Final rule.
AGENCY:
The Dodd-Frank Wall Street
Reform and Consumer Protection Act
(Dodd-Frank Act) repealed NCUA’s
rulemaking authority under the Federal
Trade Commission Act (FTC Act). As a
result, the NCUA Board (Board) is now
repealing NCUA’s regulations governing
unfair or deceptive acts or practices.
The Board is also making a number of
technical amendments to other NCUA
regulations to conform them to the
agency’s current central and field office
structures. Additionally, the Board is
amending NCUA’s payday alternative
loans regulation to replace all references
to ‘‘short-term, small amount loans’’ and
‘‘STS loans’’ with corresponding
references to ‘‘payday alternative loans’’
and ‘‘PAL loans.’’ The latter terms more
accurately reflect the nature and
purpose of this loan product.
DATES: This final rule is effective on
October 3, 2014.
FOR FURTHER INFORMATION CONTACT:
Frank Kressman, Associate General
Counsel, Office of General Counsel, at
1775 Duke Street, Alexandria, VA 22314
or telephone: (703) 518–6540.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Background and Purpose of the Final Rule
II. Regulatory Amendments
III. Regulatory Procedures
I. Background and Purpose of the Final
Rule
Why is the NCUA Board issuing this
rule?
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Part 706
In 2010, President Obama signed into
law the Dodd-Frank Act (Pub. L. 111–
203, 124 Stat. 1376 (2010)). The DoddFrank Act substantially changed the
federal legal framework with respect to
consumer financial protection
regulation. Among the many changes,
section 1092 of the Dodd-Frank Act
repealed NCUA’s rulemaking authority
under the FTC Act.1 As a result, the
Board is repealing NCUA’s rules under
1 15 U.S.C. 57a(f) as amended by the Dodd-Frank
Act.
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part 706, titled ‘‘Unfair or Deceptive
Acts or Practices.’’
Despite the repeal of part 706, NCUA
still has supervisory and enforcement
authority regarding unfair or deceptive
acts or practices,2 which could include
the practices previously addressed in
part 706. NCUA may determine that
statutory violations exist if federal credit
unions engage in acts or practices that
are prohibited by the Dodd-Frank Act or
the FTC Act. Such prohibited acts or
practices may include, but are not
limited to:
• Including confessions of judgment,
waivers of exemptions, wage
assignments, or security interests on
household goods in consumer contracts;
• Misrepresenting the nature or
extent of cosigner liability; and
• Pyramiding late fees.
loans.’’ The Board believes that
replacing that terminology with
‘‘payday alternative loans’’ or ‘‘PAL
loans’’ more accurately reflects the
nature and purpose of this loan product.
The updated terminology also is more
consistent with the way NCUA and
some industry stakeholders currently
refer to this loan product. This
important loan product deserves
nomenclature that more precisely
describes its function and is more
readily understood.
Agency Structure
In November 2013, the Board
approved a restructuring of NCUA’s
central office. This restructuring
consisted of transferring certain
functions from one office to another and
establishing the Office of Continuity and
Security Management (OCSM). OCSM
performs all security-related functions
that were formerly the responsibility of
several different offices. The core
functions of OCSM are national
continuity programs, emergency
management and physical security,
personnel security, and intelligence and
information security. As a result of this
and other organizational changes
described in section II, the Board is
making a number of conforming
technical amendments to NCUA’s
regulations.
2. Part 790—Changes to NCUA’s Central
and Field Office Structure
As discussed above, the Board is
amending part 790 of NCUA’s
regulations to conform it to NCUA’s
current central and field office
structures.
Payday Alternative Loans
In September 2010, the Board
amended its general lending regulation
to enable federal credit unions (FCUs) to
offer payday alternative loans (PAL
loans).3 PAL loans serve as a viable
alternative to predatory payday loans
and can help members break free of
their dependency on high-cost
predatory payday loans. The Board
encourages FCUs to make PAL loans
available for their members who need
them, provided they are offered in a safe
and sound manner. To be more readily
understood, NCUA is amending the
current terminology used to describe
this type of loan. Specifically, § 701.21
currently refers to these loans as ‘‘shortterm, small amount loans’’ or ‘‘STS
2 NCUA
has authority to enforce section 5 of the
FTC Act (15 U.S.C. 45), and sections 1031 and 1036
of the Dodd-Frank Act (12 U.S.C. 5531 and 5536),
under the Federal Credit Union Act. See 12 U.S.C.
1786(e) and 1786(k)(2).
3 75 FR 58285 (Sept. 24, 2010).
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II. Regulatory Amendments
1. Part 706—Unfair or Deceptive Acts or
Practices
As discussed above, in response to
changes made by the Dodd-Frank Act,
this final rule repeals 12 CFR part 706.
Office of Continuity and Security
Management
The Office of Continuity and Security
Management (OCSM), created in
November 2013, began operating in
January 2014. It was created to aggregate
all of the agency’s security-related
functions into one office. The primary
consolidated functions are continuity of
operations planning, physical security,
and personnel security. Also, NCUA put
in place an additional security function
to address national security issues
affecting the financial services industry.
All federal agencies are required to
comply with various statutes and
Executive Orders related to the
safeguarding of national assets. Through
OCSM, NCUA will be able to more
efficiently respond to these federal
mandates and conduct its securityrelated functions.
The final rule amends Part 790 to add
a new paragraph describing OCSM and
its functions.
Office of the Chief Financial Officer
The final rule amends the description
of the Office of Chief Financial Officer
to add strategic planning as one of its
duties. NCUA shifted this duty from
another office to better utilize staffing
resources.
Office of Consumer Protection
The final rule amends the description
of the Office of Consumer Protection
(OCP) to reflect that the office now has
four divisions. The Board added two
divisions within OCP to more efficiently
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Federal Register / Vol. 79, No. 192 / Friday, October 3, 2014 / Rules and Regulations
balance and structure the office’s
workload. In addition, NCUA deleted
the duties of the Ombudsman from
OCP’s description. The Executive
Director’s office now supervises the
Ombudsman.
‘‘short-term, small amount loans’’ and
‘‘STS loans’’ with the terms ‘‘payday
alternative loans’’ and ‘‘PAL loans’’ to
more accurately reflect the nature and
purpose of this loan product and to
make it more readily understood.
Office of the Executive Director
III. Regulatory Procedures
The Board established the
Ombudsman position in April 1995, as
required by the Riegle Community
Development and Regulatory
Improvement Act of 1994. The
Ombudsman operates as an objective
third party to resolve disputes that
cannot be resolved at the operational
level. In 2013, the Board elevated the
position of the Ombudsman to the
Executive Director’s office. It is
supervised by the Executive Director’s
office and reports directly to the Board.
Previously, OCP oversaw the
Ombudsman’s duties, and the
Ombudsman reported to the Director of
OCP.
Regulatory Flexibility Act
Regional Offices
NCUA realigned its regional offices
effective January 1, 2014. This was
designed to create geographically
compact districts that balance workload,
improve efficiency, and reduce travel
costs. In addition, the new regional
structure coincides with other changes
to strengthen NCUA’s supervision, such
as the creation of the Office of National
Examinations and Supervision. Each
NCUA region now has approximately an
equal number of examiners, in addition
to supervision, special actions, and
support personnel.
The Board is updating the table in
§ 790.2(c)(1)(i), indicating the states that
each region is responsible for
supervising. Nine states have been
transferred among the NCUA regional
offices for the reasons noted above.4 The
changes are as follows:
• Wisconsin is in Region I;
• Ohio is in Region II;
• Arkansas and Louisiana are in
Region III;
• Colorado, Montana, New Mexico,
and Wyoming are in Region IV and
• California is in Region V.
Lastly, the territory of American
Samoa is no longer listed in
§ 790.2(c)(1)(i) as NCUA no longer
supervises any credit unions in that
jurisdiction.
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 $50 million in assets).5 This
final rule only makes non-substantive,
technical changes. NCUA certifies that
these technical amendments 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 modifies an existing burden.6 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 the technical
amendments in this final rule do not
increase the paperwork requirements
under PRA or regulations of the Office
of Management and Budget.
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 final rule will not have
a substantial direct effect 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 final rule does not
constitute a policy that has federalism
implications for purposes of the
executive order.
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3. Part 701—Payday Alternative Loans
Assessment of Federal Regulations and
Policies on Families
As discussed above, the Board is
amending NCUA’s payday alternative
loans regulation to replace the terms
NCUA has determined that this final
rule will not affect family well-being
within the meaning of Section 654 of
4 https://www.ncua.gov/about/Leadership/Pages/
field-program-offices.aspx. This map shows the
current regional alignment.
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55
U.S.C. 603(a).
U.S.C. 3507(d); 5 CFR part 1320.
6 44
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the Treasury and General Government
Appropriations Act, 1999.7
Small Business Regulatory Enforcement
Fairness Act
The Small Business Regulatory
Enforcement Fairness Act of 1996 8
(SBREFA) provides generally for
congressional review of agency rules. A
reporting requirement is triggered in
instances where NCUA issues a final
rule as defined by Section 551 of the
Administrative Procedure Act (APA).9
NCUA has submitted this rule to the
Office of Management and Budget for it
to determine if the final rule is a ‘‘major
rule’’ for purposes of SBREFA. NCUA
does not believe the rule is major.
Final Rule
Generally, the APA requires a federal
agency to provide the public with notice
and the opportunity to comment on
agency rulemakings. The amendments
in this rule are non-substantive and
technical, or involve only matters
relating to management and personnel
and are exempt from APA notice and
comment requirements.10 They reflect
changes to NCUA’s organizational
structure, remove duplicative and
imprecise language, make minor
changes updating cross citations, and
make minor changes which are
statutorily required by the Dodd-Frank
Act. The APA permits an agency to
forego the notice and comment period
under certain circumstances, such as
when a rulemaking is technical and
non-substantive. NCUA finds that, in
this instance, notice and public
comment are unnecessary under section
553(b)(3)(B) of the APA.11 NCUA also
finds good cause to dispense with the
30-day delayed effective date
requirement under section 553(d)(3) of
the APA.12 The rule, therefore, will be
effective immediately upon publication.
List of Subjects
12 CFR Part 701
Credit, Credit unions, Reporting and
recordkeeping requirements.
12 CFR Part 706
Consumer protection, Credit, Credit
unions, Deception, Intergovernmental
relations, Trade practices, Unfairness.
12 CFR Part 790
Organization and functions
(Government agencies).
7 Public
Law 105–277, 112 Stat. 2681 (1998).
Law 104–121, 110 Stat. 857 (1996).
9 5 U.S.C. 551.
10 5 U.S.C. 553(a)(2) and 553(b)(3)(B).
11 5 U.S.C. 553(b)(3)(B).
12 5 U.S.C. 553(d)(3).
8 Public
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By the National Credit Union
Administration Board on September 18,
2014.
Gerard Poliquin,
Secretary of the Board.
b. Adding paragraph (b)(17); and
c. Revising paragraph (c)(1)(i).
The revisions and addition read as
follows:
■
■
For the reasons discussed above, the
NCUA Board amends 12 CFR parts 701,
706, and 790 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 701.31
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.
2. Amend § 701.21(c)(7)(iii) as
follows:
■ a. Remove the words ‘‘Short-term,
small amount’’ wherever they appear
and add, in their place, the words
‘‘Payday alternative’’.
■ b. Remove the words ‘‘short-term,
small amount’’ wherever they appear
and add, in their place, the words
‘‘payday alternative’’.
■ c. Remove the words ‘‘an STS’’
wherever they appear and add, in their
place, the words ‘‘a PAL’’.
■ d. Remove the term ‘‘STS’’ wherever
it appears and add, in its place, the term
‘‘PAL’’.
■
PART 706—[REMOVED]
3. Under the authority of 12 U.S.C.
1751 et seq., part 706 is removed and
reserved.
■
PART 790—DESCRIPTION OF NCUA;
REQUESTS FOR AGENCY ACTION
4. The authority citation for part 790
continues to read as follows:
■
Authority: 12 U.S.C. 1766, 1789, 1795f.
5. Amend § 790.2 by:
a. Revising paragraphs (b)(4), (b)(6),
and (b)(15);
■
■
§ 790.2 Central and field office
organization.
*
*
*
*
*
(b) * * *
(4) The Office of the Chief Financial
Officer. NCUA’s Chief Financial Officer
plans, organizes, implements, directs,
and provides overall direction and
leadership for:
(i) Agency-wide strategic planning,
budget formulation, and performance
reporting;
(ii) The agency’s financial
management system and financial
reporting functions;
(iii) Procurement and facilities
management to include various
administrative responsibilities such as
property management, mail services,
graphics support, supply management,
printing, and publications management;
and
(iv) Managing the operations of the
Operating and Insurance Funds,
including payroll, travel policies,
revenue assessment, and dividend
distributions.
*
*
*
*
*
(6) Office of the Executive Director.
The Executive Director reports to the
entire NCUA Board. The Executive
Director translates NCUA Board policy
decisions into workable programs,
delegates responsibility for these
programs to appropriate staff members,
and coordinates the activities of the
senior executive staff, which includes:
the General Counsel; the Regional
Directors; and the Office Directors for
Chief Financial Officer, Examination
and Insurance, Human Resources, Chief
Information Officer, and Public and
Congressional Affairs. Because of the
nature of the attorney/client
relationship between the Board and
General Counsel, the General Counsel
may be directed by the Board not to
disclose discussions and/or assignments
with anyone, including the Executive
59629
Director. The Executive Director is
otherwise to be privy to all matters
within senior executive staff’s
responsibility. The Executive Director
also serves as the agency’s Director of
Equal Employment Opportunity. The
Office of the Executive Director also
supervises the agency’s ombudsman.
The ombudsman investigates
complaints and recommends solutions
on regulatory issues that cannot be
resolved at the regional level.
*
*
*
*
*
(15) Office of Consumer Protection. (i)
The Office of Consumer Protection
contains four divisions:
(A) The Division of Consumer
Compliance Policy and Outreach;
(B) The Division of Consumer Affairs;
(C) The Division of Consumer Access;
and
(D) The Division of Consumer AccessSouth.
(ii) The office provides consumer
services, including consumer education
and complaint resolution; establishes,
consolidates, and coordinates consumer
protections within the agency; acts as
the central liaison on consumer
protection with other federal agencies;
and nationalizes field of membership
processing and chartering activities.
*
*
*
*
*
(17) The Office of Continuity and
Security Management. The Director of
the Office of Continuity and Security
Management is responsible for NCUA’s
emergency preparedness and for
coordinating the response to natural
disasters or national security events; for
timely dissemination of information on
cyber threats, terrorism, foreign criminal
activity, and other national security
threats to the agency or to the credit
union sector; and for conducting risk
assessments and managing executive
branch programs to protect NCUA
personnel and facilities, and to
safeguard classified national security
information.
(c) * * *
(1) Regional Offices. (i) The NCUA
has five Regional Offices:
Region
No.
Area within region
Office address
I ............
Connecticut, Maine, Massachusetts, Michigan, New Hampshire,
New York, Rhode Island, Vermont, Wisconsin.
Delaware, District of Columbia, Maryland, New Jersey, Ohio,
Pennsylvania, Virginia, West Virginia.
Alabama, Arkansas, Florida, Georgia, Indiana, Kentucky, Louisiana, Mississippi, North Carolina, Puerto Rico, South Carolina, Tennessee, Virgin Islands.
Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana,
Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Wyoming.
9 Washington Square, Washington Avenue Extension, Albany,
NY 12205–5512.
1900 Duke St., Suite 300, Alexandria, VA 22314–3498.
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II ...........
III ..........
IV .........
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7000 Central Parkway, Suite 1600, Atlanta, GA 30328–4598.
4807 Spicewood Springs Road, Suite 5200, Austin, TX 78759–
8490.
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Federal Register / Vol. 79, No. 192 / Friday, October 3, 2014 / Rules and Regulations
Region
No.
Area within region
V ..........
Alaska, Arizona, California, Guam, Hawaii, Idaho, Nevada, Oregon, Utah, Washington.
*
*
*
*
*
[FR Doc. 2014–22715 Filed 10–2–14; 8:45 am]
BILLING CODE 7535–01–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2013–1067; Directorate
Identifier 2013–NM–164–AD; Amendment
39–17982; AD 2014–20–09]
RIN 2120–AA64
Airworthiness Directives; Bombardier,
Inc. Airplanes
Federal Aviation
Administration (FAA), Department of
Transportation (DOT).
ACTION: Final rule.
AGENCY:
We are adopting a new
airworthiness directive (AD) for certain
Bombardier, Inc. Model DHC–8–400
series airplanes. This AD was prompted
by reports of missing clamps that are
required to provide positive separation
between the alternating current (AC)
feeder cables and the hydraulic line of
the landing gear alternate extension.
This AD requires an inspection for
missing clamps that are required to
provide positive separation between the
AC feeder cables and the hydraulic line
of the landing gear alternate extension,
and related investigative and corrective
actions if necessary. We are issuing this
AD to detect and correct chafing of the
AC feeder cable. A chafed and arcing
AC feeder cable could puncture the
adjacent hydraulic line, which, in
combination with the use of the
alternate extension system, could result
in an in-flight fire.
DATES: This AD becomes effective
November 7, 2014.
The Director of the Federal Register
approved the incorporation by reference
of a certain publication listed in this AD
as of November 7, 2014.
ADDRESSES: You may examine the AD
docket on the Internet at https://
www.regulations.gov/
#!docketDetail;D=FAA-2013-1067 or in
person at the Docket Management
Facility, U.S. Department of
Transportation, Docket Operations, M–
30, West Building Ground Floor, Room
W12–140, 1200 New Jersey Avenue SE.,
Washington, DC.
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SUMMARY:
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Office address
1230 W. Washington Street, Suite 301, Tempe, AZ 85281.
For service information identified in
this AD, contact Bombardier, Inc., QSeries Technical Help Desk, 123 Garratt
Boulevard, Toronto, Ontario M3K 1Y5,
Canada; telephone 416–375–4000; fax
416–375–4539; email thd.qseries@
aero.bombardier.com; Internet https://
www.bombardier.com. You may view
this referenced service information at
the FAA, Transport Airplane
Directorate, 1601 Lind Avenue SW.,
Renton, WA. For information on the
availability of this material at the FAA,
call 425–227–1221.
FOR FURTHER INFORMATION CONTACT:
Assata Dessaline, Aerospace Engineer,
Avionics and Service Branch, ANE–172,
FAA, New York Aircraft Certification
Office, 1600 Stewart Avenue, Suite 410,
Westbury, NY 11590; telephone 516–
228–7301; fax 516–794–5531.
SUPPLEMENTARY INFORMATION:
Discussion
We issued a notice of proposed
rulemaking (NPRM) to amend 14 CFR
part 39 by adding an AD that would
apply to certain Bombardier, Inc. Model
DHC–8–400 series airplanes. The NPRM
published in the Federal Register on
December 30, 2013 (78 FR 79338).
Transport Canada Civil Aviation
(TCCA), which is the aviation authority
for Canada, has issued Canadian
Airworthiness Directive CF–2013–16,
dated June 14, 2013 (referred to after
this as the Mandatory Continuing
Airworthiness Information, or ‘‘the
MCAI’’), to correct an unsafe condition
for the specified products. The MCAI
states:
During production checks, it was found
that the appropriate clamps required to
provide positive separation between the AC
feeder cables and the hydraulic line of the
landing gear alternate extension were
omitted. The AC feeder cable could sag and
be in direct contact with the swage fitting of
the landing gear alternate extension
hydraulic line, resulting in chafing of the AC
feeder cable. The chafed and arcing AC
feeder cable could puncture the adjacent
hydraulic line. In combination with the use
of the alternate extension system, this could
result in an in-flight fire.
This [Canadian] AD mandates the [general
visual] inspection [for missing clamps], and
rectification [related investigative and
corrective actions] as necessary, for proper
clamp installation.
The related investigative action is a
general visual inspection of the AC
power feeder cables and the hydraulic
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line for damage due to chafing. The
corrective actions include repair of
chafed parts, and replacement of
missing clamps. You may examine the
MCAI in the AD docket on the Internet
at https://www.regulations.gov/
#!documentDetail;D=FAA-2013-10670002.
Comment
We gave the public the opportunity to
participate in developing this AD. We
have considered the comment received.
The following presents the comment
received on the NPRM (78 FR 79338,
December 30, 2013) and the FAA’s
response to the comment.
Request To Remove Certain Service
Information Procedures
Horizon Air requested that we change
the language in paragraph (g) of the
NPRM (78 FR 79338, December 30,
2013) from mandating the
Accomplishment Instructions in
Bombardier Service Bulletin 84–24–53,
Revision A, dated May 16, 2013, to
mandating only the section of
Bombardier Service Bulletin 84–24–53,
Revision A, dated May 16, 2013, that
corrects the unsafe condition. Horizon
Air stated that the Accomplishment
Instructions, Part A, ‘‘Job Set-up,’’ and
Part C, ‘‘Close Out,’’ have nothing to do
with correcting the unsafe condition.
Horizon Air expressed that mandating
operators to perform these sections adds
an unnecessary regulatory requirement
because operators must have the
airplane in a specific condition, and
keep it in that condition, while
performing the corrective action.
Horizon Air also stated that, if the FAA
keeps the requirements of job setup and
job close-out, it forces an operator to
request an alternative method of
compliance (AMOC) if it chooses to
deviate from the work-steps. Horizon
Air provided its cost estimate of
obtaining an AMOC.
In this case, we agree with the
commenter’s request to exclude the ‘‘Job
Set-up’’ and ‘‘Close Out’’ sections of
Bombardier Service Bulletin 84–24–53,
Revision A, dated May 16, 2013. We
have revised paragraph (g) of this AD to
require accomplishment of paragraph
3.B., ‘‘Procedure,’’ of the
Accomplishment Instructions of
Bombardier Service Bulletin 84–24–53,
Revision A, dated May 16, 2013.
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]]>Agencies
[Federal Register Volume 79, Number 192 (Friday, October 3, 2014)]
[Rules and Regulations]
[Pages 59627-59630]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-22715]
[[Page 59627]]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Parts 701, 706, and 790
RIN 3133-AE42
Unfair or Deceptive Acts or Practices; Technical Amendments
AGENCY: National Credit Union Administration (NCUA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Dodd-Frank Wall Street Reform and Consumer Protection Act
(Dodd-Frank Act) repealed NCUA's rulemaking authority under the Federal
Trade Commission Act (FTC Act). As a result, the NCUA Board (Board) is
now repealing NCUA's regulations governing unfair or deceptive acts or
practices. The Board is also making a number of technical amendments to
other NCUA regulations to conform them to the agency's current central
and field office structures. Additionally, the Board is amending NCUA's
payday alternative loans regulation to replace all references to
``short-term, small amount loans'' and ``STS loans'' with corresponding
references to ``payday alternative loans'' and ``PAL loans.'' The
latter terms more accurately reflect the nature and purpose of this
loan product.
DATES: This final rule is effective on October 3, 2014.
FOR FURTHER INFORMATION CONTACT: Frank Kressman, Associate General
Counsel, Office of General Counsel, at 1775 Duke Street, Alexandria, VA
22314 or telephone: (703) 518-6540.
SUPPLEMENTARY INFORMATION:
I. Background and Purpose of the Final Rule
II. Regulatory Amendments
III. Regulatory Procedures
I. Background and Purpose of the Final Rule
Why is the NCUA Board issuing this rule?
Part 706
In 2010, President Obama signed into law the Dodd-Frank Act (Pub.
L. 111-203, 124 Stat. 1376 (2010)). The Dodd-Frank Act substantially
changed the federal legal framework with respect to consumer financial
protection regulation. Among the many changes, section 1092 of the
Dodd-Frank Act repealed NCUA's rulemaking authority under the FTC
Act.\1\ As a result, the Board is repealing NCUA's rules under part
706, titled ``Unfair or Deceptive Acts or Practices.''
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\1\ 15 U.S.C. 57a(f) as amended by the Dodd-Frank Act.
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Despite the repeal of part 706, NCUA still has supervisory and
enforcement authority regarding unfair or deceptive acts or
practices,\2\ which could include the practices previously addressed in
part 706. NCUA may determine that statutory violations exist if federal
credit unions engage in acts or practices that are prohibited by the
Dodd-Frank Act or the FTC Act. Such prohibited acts or practices may
include, but are not limited to:
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\2\ NCUA has authority to enforce section 5 of the FTC Act (15
U.S.C. 45), and sections 1031 and 1036 of the Dodd-Frank Act (12
U.S.C. 5531 and 5536), under the Federal Credit Union Act. See 12
U.S.C. 1786(e) and 1786(k)(2).
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Including confessions of judgment, waivers of exemptions,
wage assignments, or security interests on household goods in consumer
contracts;
Misrepresenting the nature or extent of cosigner
liability; and
Pyramiding late fees.
Agency Structure
In November 2013, the Board approved a restructuring of NCUA's
central office. This restructuring consisted of transferring certain
functions from one office to another and establishing the Office of
Continuity and Security Management (OCSM). OCSM performs all security-
related functions that were formerly the responsibility of several
different offices. The core functions of OCSM are national continuity
programs, emergency management and physical security, personnel
security, and intelligence and information security. As a result of
this and other organizational changes described in section II, the
Board is making a number of conforming technical amendments to NCUA's
regulations.
Payday Alternative Loans
In September 2010, the Board amended its general lending regulation
to enable federal credit unions (FCUs) to offer payday alternative
loans (PAL loans).\3\ PAL loans serve as a viable alternative to
predatory payday loans and can help members break free of their
dependency on high-cost predatory payday loans. The Board encourages
FCUs to make PAL loans available for their members who need them,
provided they are offered in a safe and sound manner. To be more
readily understood, NCUA is amending the current terminology used to
describe this type of loan. Specifically, Sec. 701.21 currently refers
to these loans as ``short-term, small amount loans'' or ``STS loans.''
The Board believes that replacing that terminology with ``payday
alternative loans'' or ``PAL loans'' more accurately reflects the
nature and purpose of this loan product. The updated terminology also
is more consistent with the way NCUA and some industry stakeholders
currently refer to this loan product. This important loan product
deserves nomenclature that more precisely describes its function and is
more readily understood.
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\3\ 75 FR 58285 (Sept. 24, 2010).
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II. Regulatory Amendments
1. Part 706--Unfair or Deceptive Acts or Practices
As discussed above, in response to changes made by the Dodd-Frank
Act, this final rule repeals 12 CFR part 706.
2. Part 790--Changes to NCUA's Central and Field Office Structure
As discussed above, the Board is amending part 790 of NCUA's
regulations to conform it to NCUA's current central and field office
structures.
Office of Continuity and Security Management
The Office of Continuity and Security Management (OCSM), created in
November 2013, began operating in January 2014. It was created to
aggregate all of the agency's security-related functions into one
office. The primary consolidated functions are continuity of operations
planning, physical security, and personnel security. Also, NCUA put in
place an additional security function to address national security
issues affecting the financial services industry. All federal agencies
are required to comply with various statutes and Executive Orders
related to the safeguarding of national assets. Through OCSM, NCUA will
be able to more efficiently respond to these federal mandates and
conduct its security-related functions.
The final rule amends Part 790 to add a new paragraph describing
OCSM and its functions.
Office of the Chief Financial Officer
The final rule amends the description of the Office of Chief
Financial Officer to add strategic planning as one of its duties. NCUA
shifted this duty from another office to better utilize staffing
resources.
Office of Consumer Protection
The final rule amends the description of the Office of Consumer
Protection (OCP) to reflect that the office now has four divisions. The
Board added two divisions within OCP to more efficiently
[[Page 59628]]
balance and structure the office's workload. In addition, NCUA deleted
the duties of the Ombudsman from OCP's description. The Executive
Director's office now supervises the Ombudsman.
Office of the Executive Director
The Board established the Ombudsman position in April 1995, as
required by the Riegle Community Development and Regulatory Improvement
Act of 1994. The Ombudsman operates as an objective third party to
resolve disputes that cannot be resolved at the operational level. In
2013, the Board elevated the position of the Ombudsman to the Executive
Director's office. It is supervised by the Executive Director's office
and reports directly to the Board. Previously, OCP oversaw the
Ombudsman's duties, and the Ombudsman reported to the Director of OCP.
Regional Offices
NCUA realigned its regional offices effective January 1, 2014. This
was designed to create geographically compact districts that balance
workload, improve efficiency, and reduce travel costs. In addition, the
new regional structure coincides with other changes to strengthen
NCUA's supervision, such as the creation of the Office of National
Examinations and Supervision. Each NCUA region now has approximately an
equal number of examiners, in addition to supervision, special actions,
and support personnel.
The Board is updating the table in Sec. 790.2(c)(1)(i), indicating
the states that each region is responsible for supervising. Nine states
have been transferred among the NCUA regional offices for the reasons
noted above.\4\ The changes are as follows:
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\4\ https://www.ncua.gov/about/Leadership/Pages/field-program-offices.aspx. This map shows the current regional alignment.
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Wisconsin is in Region I;
Ohio is in Region II;
Arkansas and Louisiana are in Region III;
Colorado, Montana, New Mexico, and Wyoming are in Region
IV and
California is in Region V.
Lastly, the territory of American Samoa is no longer listed in
Sec. 790.2(c)(1)(i) as NCUA no longer supervises any credit unions in
that jurisdiction.
3. Part 701--Payday Alternative Loans
As discussed above, the Board is amending NCUA's payday alternative
loans regulation to replace the terms ``short-term, small amount
loans'' and ``STS loans'' with the terms ``payday alternative loans''
and ``PAL loans'' to more accurately reflect the nature and purpose of
this loan product and to make it more readily understood.
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 entities (primarily those under $50 million
in assets).\5\ This final rule only makes non-substantive, technical
changes. NCUA certifies that these technical amendments will not have a
significant economic impact on a substantial number of small credit
unions.
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\5\ 5 U.S.C. 603(a).
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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.\6\ 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 the technical amendments in this final rule do
not increase the paperwork requirements under PRA or regulations of the
Office of Management and Budget.
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\6\ 44 U.S.C. 3507(d); 5 CFR part 1320.
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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.
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 final rule will not have a substantial
direct effect 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 final rule does not constitute a policy that has
federalism implications for purposes of the executive order.
Assessment of Federal Regulations and Policies on Families
NCUA has determined that this final rule will not affect family
well-being within the meaning of Section 654 of the Treasury and
General Government Appropriations Act, 1999.\7\
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\7\ Public Law 105-277, 112 Stat. 2681 (1998).
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Small Business Regulatory Enforcement Fairness Act
The Small Business Regulatory Enforcement Fairness Act of 1996 \8\
(SBREFA) provides generally for congressional review of agency rules. A
reporting requirement is triggered in instances where NCUA issues a
final rule as defined by Section 551 of the Administrative Procedure
Act (APA).\9\ NCUA has submitted this rule to the Office of Management
and Budget for it to determine if the final rule is a ``major rule''
for purposes of SBREFA. NCUA does not believe the rule is major.
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\8\ Public Law 104-121, 110 Stat. 857 (1996).
\9\ 5 U.S.C. 551.
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Final Rule
Generally, the APA requires a federal agency to provide the public
with notice and the opportunity to comment on agency rulemakings. The
amendments in this rule are non-substantive and technical, or involve
only matters relating to management and personnel and are exempt from
APA notice and comment requirements.\10\ They reflect changes to NCUA's
organizational structure, remove duplicative and imprecise language,
make minor changes updating cross citations, and make minor changes
which are statutorily required by the Dodd-Frank Act. The APA permits
an agency to forego the notice and comment period under certain
circumstances, such as when a rulemaking is technical and non-
substantive. NCUA finds that, in this instance, notice and public
comment are unnecessary under section 553(b)(3)(B) of the APA.\11\ NCUA
also finds good cause to dispense with the 30-day delayed effective
date requirement under section 553(d)(3) of the APA.\12\ The rule,
therefore, will be effective immediately upon publication.
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\10\ 5 U.S.C. 553(a)(2) and 553(b)(3)(B).
\11\ 5 U.S.C. 553(b)(3)(B).
\12\ 5 U.S.C. 553(d)(3).
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List of Subjects
12 CFR Part 701
Credit, Credit unions, Reporting and recordkeeping requirements.
12 CFR Part 706
Consumer protection, Credit, Credit unions, Deception,
Intergovernmental relations, Trade practices, Unfairness.
12 CFR Part 790
Organization and functions (Government agencies).
[[Page 59629]]
By the National Credit Union Administration Board on September
18, 2014.
Gerard Poliquin,
Secretary of the Board.
For the reasons discussed above, the NCUA Board amends 12 CFR parts
701, 706, and 790 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
701.31 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.
0
2. Amend Sec. 701.21(c)(7)(iii) as follows:
0
a. Remove the words ``Short-term, small amount'' wherever they appear
and add, in their place, the words ``Payday alternative''.
0
b. Remove the words ``short-term, small amount'' wherever they appear
and add, in their place, the words ``payday alternative''.
0
c. Remove the words ``an STS'' wherever they appear and add, in their
place, the words ``a PAL''.
0
d. Remove the term ``STS'' wherever it appears and add, in its place,
the term ``PAL''.
PART 706--[REMOVED]
0
3. Under the authority of 12 U.S.C. 1751 et seq., part 706 is removed
and reserved.
PART 790--DESCRIPTION OF NCUA; REQUESTS FOR AGENCY ACTION
0
4. The authority citation for part 790 continues to read as follows:
Authority: 12 U.S.C. 1766, 1789, 1795f.
0
5. Amend Sec. 790.2 by:
0
a. Revising paragraphs (b)(4), (b)(6), and (b)(15);
0
b. Adding paragraph (b)(17); and
0
c. Revising paragraph (c)(1)(i).
The revisions and addition read as follows:
Sec. 790.2 Central and field office organization.
* * * * *
(b) * * *
(4) The Office of the Chief Financial Officer. NCUA's Chief
Financial Officer plans, organizes, implements, directs, and provides
overall direction and leadership for:
(i) Agency-wide strategic planning, budget formulation, and
performance reporting;
(ii) The agency's financial management system and financial
reporting functions;
(iii) Procurement and facilities management to include various
administrative responsibilities such as property management, mail
services, graphics support, supply management, printing, and
publications management; and
(iv) Managing the operations of the Operating and Insurance Funds,
including payroll, travel policies, revenue assessment, and dividend
distributions.
* * * * *
(6) Office of the Executive Director. The Executive Director
reports to the entire NCUA Board. The Executive Director translates
NCUA Board policy decisions into workable programs, delegates
responsibility for these programs to appropriate staff members, and
coordinates the activities of the senior executive staff, which
includes: the General Counsel; the Regional Directors; and the Office
Directors for Chief Financial Officer, Examination and Insurance, Human
Resources, Chief Information Officer, and Public and Congressional
Affairs. Because of the nature of the attorney/client relationship
between the Board and General Counsel, the General Counsel may be
directed by the Board not to disclose discussions and/or assignments
with anyone, including the Executive Director. The Executive Director
is otherwise to be privy to all matters within senior executive staff's
responsibility. The Executive Director also serves as the agency's
Director of Equal Employment Opportunity. The Office of the Executive
Director also supervises the agency's ombudsman. The ombudsman
investigates complaints and recommends solutions on regulatory issues
that cannot be resolved at the regional level.
* * * * *
(15) Office of Consumer Protection. (i) The Office of Consumer
Protection contains four divisions:
(A) The Division of Consumer Compliance Policy and Outreach;
(B) The Division of Consumer Affairs;
(C) The Division of Consumer Access; and
(D) The Division of Consumer Access-South.
(ii) The office provides consumer services, including consumer
education and complaint resolution; establishes, consolidates, and
coordinates consumer protections within the agency; acts as the central
liaison on consumer protection with other federal agencies; and
nationalizes field of membership processing and chartering activities.
* * * * *
(17) The Office of Continuity and Security Management. The Director
of the Office of Continuity and Security Management is responsible for
NCUA's emergency preparedness and for coordinating the response to
natural disasters or national security events; for timely dissemination
of information on cyber threats, terrorism, foreign criminal activity,
and other national security threats to the agency or to the credit
union sector; and for conducting risk assessments and managing
executive branch programs to protect NCUA personnel and facilities, and
to safeguard classified national security information.
(c) * * *
(1) Regional Offices. (i) The NCUA has five Regional Offices:
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Region No. Area within region Office address
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I............... Connecticut, Maine, 9 Washington Square,
Massachusetts, Michigan, Washington Avenue
New Hampshire, New York, Extension, Albany, NY
Rhode Island, Vermont, 12205-5512.
Wisconsin.
II.............. Delaware, District of 1900 Duke St., Suite 300,
Columbia, Maryland, New Alexandria, VA 22314-
Jersey, Ohio, 3498.
Pennsylvania, Virginia,
West Virginia.
III............. Alabama, Arkansas, 7000 Central Parkway,
Florida, Georgia, Suite 1600, Atlanta, GA
Indiana, Kentucky, 30328-4598.
Louisiana, Mississippi,
North Carolina, Puerto
Rico, South Carolina,
Tennessee, Virgin Islands.
IV.............. Colorado, Illinois, Iowa, 4807 Spicewood Springs
Kansas, Minnesota, Road, Suite 5200, Austin,
Missouri, Montana, TX 78759-8490.
Nebraska, New Mexico,
North Dakota, Oklahoma,
South Dakota, Texas,
Wyoming.
[[Page 59630]]
V............... Alaska, Arizona, 1230 W. Washington Street,
California, Guam, Hawaii, Suite 301, Tempe, AZ
Idaho, Nevada, Oregon, 85281.
Utah, Washington.
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* * * * *
[FR Doc. 2014-22715 Filed 10-2-14; 8:45 am]
BILLING CODE 7535-01-P
