Promulgation of NCUA Rules and Regulations, 11954-11958 [2015-03806]

Download as PDF 11954 Federal Register / Vol. 80, No. 43 / Thursday, March 5, 2015 / Proposed Rules 4. Amend § 3555.108 by revising paragraph (d) to read as follows: ■ § 3555.108 Full faith and credit. * * * * * (d) Indemnification. If the Agency determines that a Lender did not originate a loan in accordance with the requirements in this part, and the Agency pays a claim under the loan guarantee, the Agency may revoke the lender’s eligibility status in accordance with subpart B of this part and may also require the lender: (1) To indemnify the Agency for the loss, if the default leading to the payment of loss claim occurred within five (5) years of loan closing, and the default arose from failure to originate the loan in accordance with agency requirements; or: (2) To indemnify the Agency for the loss regardless of how long ago the loan closed or the default occurred, if the Agency determines that fraud or misrepresentation was involved with the origination of the loan. (3) In addition, the Agency may use any other legal remedies it has against the Lender. * * * * * ■ 5. Add § 3555.109 to read as follows: § 3555.109 Qualified mortgage. A qualified mortgage is a guaranteed loan meeting the requirements of this part and applicable Agency guidance, as well as the requirements in 12 CFR 1026.43(e)(i) through (iii) and 12 CFR 1026.43(e)(3). ■ 6. Section 3555.304 is amended by: ■ a. Revising paragraph (d)(1). ■ b. Removing paragraph (d)(3). ■ c. Re-designating paragraphs (d)(4) through (8) as (d)(3) through (7) respectively. ■ d. Adding paragraph (e). The revisions read as follows: § 3555.304 Special servicing options. mstockstill on DSK4VPTVN1PROD with PROPOSALS * * * * * (d) * * * (1) The maximum amount of a mortgage recovery advance is the sum of arrearages not to exceed 12 months of PITI, annual fees, legal fees and foreclosure costs related to a cancelled foreclosure action. * * * * * (e) Principal reduction advance. A principal reduction advance cannot be issued independently of a mortgage recovery advance, and the amount of the principal reduction advance, when combined with the mortgage recovery advance, cannot exceed 30 percent of the unpaid principal balance as of the date of default. Principal reduction advances can be considered only for VerDate Sep<11>2014 19:43 Mar 04, 2015 Jkt 235001 loans originated and closed on or after January 1, 2001 through January 1, 2010. (1) After a mortgage recovery advance has been calculated, the principal reduction amount for the modified mortgage is determined by calculating how much principal reduction advance is needed to achieve a mortgage payment-to-income ratio that is 31 percent or a proximate value extremely close to, but not less than, 31 percent, while ensuring that the total debt-toincome ratio does not exceed 55 percent and that the combined mortgage recovery advance and principal reduction advance does not exceed 30 percent of the unpaid principal balance. (2) The Lender must have the borrower execute an unsecured promissory note payable to RHS for the amount of the principal reduction advance. (3) The following terms apply to the repayment of principal reduction advances: (i) The principal reduction advance debt under the promissory note shall be interest-free. (ii) Borrowers are not required to make any monthly or periodic payments on the principal reduction advance note; however, borrowers may voluntarily submit partial payments without incurring any prepayment penalty. (iii) The due date for the principal reduction advance note shall be three years from the date of the note. Prior to the due date on the principal reduction note, payment in full under the note is due should the borrower transfer title to the property by voluntary or involuntary means within three years of the principal reduction advance. (iv) At the conclusion of three years, RHS will review the account and determine if it is in good standing. An account will be deemed in good standing if it has not been 60 days or more delinquent over the past three years. If the debt is forgiven, RHS must report this amount to the Internal Revenue Service in accordance with applicable law and regulations. (v) If the account is in good standing at the conclusion of the three year period, RHS will forgive the principal reduction advance note and the borrower will be released of all liability from the principal reduction advance promissory note. (vi) If the account is not in good standing, the principal reduction advance note will be payable and due in full. The Agency will collect this Federal debt from the borrower by any available means if the principal reduction advance is not repaid based PO 00000 Frm 00009 Fmt 4702 Sfmt 4702 on the terms outlined in the promissory note. (4) The lender may request reimbursement from the Agency for a principal reduction advance. A fully supported and documented claim for reimbursement must be submitted to the Agency within 60 days of the advance being completed. To be complete, the lender must provide the original promissory note to the Agency. (5) The loss claim filed by the lender will be adjusted by any amount of principal recovery advance reimbursed to the lender by the Agency. * * * * * Dated: January 20, 2015. Tony Hernandez, Administrator, Rural Housing Service. [FR Doc. 2015–03711 Filed 3–4–15; 8:45 am] BILLING CODE 3410–XV–P NATIONAL CREDIT UNION ADMINISTRATION 12 CFR Part 791 RIN 3133–AE45 Promulgation of NCUA Rules and Regulations National Credit Union Administration (NCUA). ACTION: Proposed rule and interpretive ruling and Policy Statement 15–1 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 13–1. The amended IRPS would increase the asset threshold used to define small entity under the Regulatory Flexibility Act (RFA) from $50 million to $100 million and, thereby, provide transparent consideration of regulatory relief for a greater number of credit unions in future rulemakings. The proposed rule and IRPS also make a technical change to NCUA’s regulations in connection with NCUA’s procedures for developing regulations. DATES: Comments must be received on or before May 4, 2015. 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]— SUMMARY: E:\FR\FM\05MRP1.SGM 05MRP1 Federal Register / Vol. 80, No. 43 / Thursday, March 5, 2015 / Proposed Rules Comments on Proposed Rule 791 and IRPS 15–1’’ 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 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, Lead Liquidations Counsel, 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 Proposed Rule and IRPS III. Regulatory Procedures mstockstill on DSK4VPTVN1PROD with PROPOSALS I. Background A. What changes does this proposed rule make? The RFA,1 as amended, generally requires federal agencies to determine and consider the impact of proposed and final rules on small entities. Since adopting IRPS 13–1 in 2013, the Board has defined ‘‘small entity’’ in this context as a federally insured credit union (FICU) with less than $50 million in assets.2 This proposed rule and IRPS 15–1 redefines ‘‘small entity’’ as a FICU with less than $100 million in assets. In addition, the proposed rule amends § 791.8(a) of NCUA’s regulations to cross reference proposed IRPS 15–1. Section 791.8(a) governs NCUA’s procedures for developing regulations and incorporates IRPS 87–2 and each of its amendments. B. Why is the board proposing this rule and IRPS? The Board is proposing this rulemaking and IRPS to increase the 1 Public 2 IRPS Law 96–354. 13–1, 78 FR 4032 (Jan. 18, 2013). VerDate Sep<11>2014 19:43 Mar 04, 2015 Jkt 235001 number of FICUs that receive special consideration of regulatory relief under the RFA. Congress enacted the RFA in 1980 and amended it with the Small Business Regulatory Enforcement Fairness Act of 1996.3 A principal purpose of the 1996 amendment was to provide an opportunity for judicial review of agency compliance with the RFA.4 The RFA, in part, requires federal agencies to determine whether a proposed or final rule would have a significant economic impact on a substantial number of small entities.5 If so, the RFA requires agencies to engage in a small entity impact analysis, known as an initial regulatory flexibility analysis (IRFA) for proposed rules and a final regulatory flexibility analysis (FRFA) for final rules.6 The IRFA and FRFA each must be published in the Federal Register.7 If an agency determines that a proposed or final rule will not have a ‘‘significant economic impact on a substantial number of small entities,’’ the agency may certify as much in the Federal Register and forego the IRFA and FRFA.8 For an IRFA, the procedural requirements include, among other things, ‘‘a description of and, where feasible, an estimate of the number of small entities to which the proposed rule will apply,’’ a description of reporting, recordkeeping, and other compliance burden, and an identification of any overlapping or conflicting federal rules.9 In addition, the IRFA must ‘‘contain a description of any significant alternatives to the proposed rule which accomplish the stated objectives . . . and which minimize any significant economic impact of the proposed rule on small entities.’’ 10 This discussion must include alternatives such as allowing ‘‘differing compliance or reporting requirements or timetables,’’ ‘‘the clarification, consolidation, or simplification of compliance and reporting requirements,’’ ‘‘the use of performance rather than design 3 Public Law 104–121. 4 Id. 5 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). 6 5 U.S.C. 603, 604. 7 Id. 8 5 U.S.C. 605(b). 9 5 U.S.C. 603(b). The IRFA must also include a description of why the agency is considering action and ‘‘a succinct statement of the objectives of, and legal basis for, the proposed rule . . . .’’ Id. 10 5 U.S.C. 603(c). PO 00000 Frm 00010 Fmt 4702 Sfmt 4702 11955 standards,’’ and a full or partial exemption for small entities.11 The FRFA must meet requirements similar to that of the IRFA, but must also discuss and respond to public comments and describe ‘‘the steps the agency has taken to minimize the significant economic impact on small entities . . ., including a statement of factual, policy, and legal reasons for selecting the alternative adopted in the final rule and why each one of the other significant alternatives to the rule . . . was rejected.’’ 12 These processes encourage federal agencies to give special consideration to the ability of smaller entities to absorb compliance burdens imposed by new rules. The RFA establishes terms for various subgroups that fall within the meaning of ‘‘small entity,’’ including ‘‘small business,’’ ‘‘small organization,’’ and ‘‘small governmental jurisdiction.’’ 13 FICUs, as not-for-profit enterprises, are ‘‘small organizations,’’ within the broader meaning of ‘‘small entity.’’ The RFA permits a regulator, including NCUA, to establish one or more definitions of ‘‘small organization,’’ as appropriate to the activities of the agency.14 An agency’s definition must be subjected to public comment and published in the Federal Register.15 The RFA provides a default definition of ‘‘small organization’’ as ‘‘a not-for-profit enterprise which is independently owned and operated and is not dominant in its field. . . .’’ 16 In 1981, the Board initially defined ‘‘small entity’’ in the credit union context as any FICU with less than $1 million in assets.17 IRPS 87–2 superseded IRPS 81–4, but retained the definition of ‘‘small entity’’ as a FICU with less than $1 million in assets.18 The Board updated the definition in 2003 to include FICUs with less than $10 million in assets with IRPS 03–2.19 The last update occurred in 2013, when the Board increased the defining threshold to include FICUs with less than $50 million in assets in IRPS 13–1.20 In addition, in IRPS 13–1, the Board pledged to review the RFA threshold after two years and thereafter 11 Id. 12 5 U.S.C. 604(a). U.S.C. 601. 14 5 U.S.C. 601(4). 15 Id. 16 Id. 17 IRPS 81–4, 46 FR 29248 (June 1, 1981). 18 52 FR 35231 (Sept. 8, 1987). 19 68 FR 31949 (May 29, 2003). 20 78 FR 4032 (Jan. 18, 2013). 13 5 E:\FR\FM\05MRP1.SGM 05MRP1 11956 Federal Register / Vol. 80, No. 43 / Thursday, March 5, 2015 / Proposed Rules mstockstill on DSK4VPTVN1PROD with PROPOSALS on a three-year cycle, similar to its regulatory review process.21 As a result of conducting its review two years following the issuance IRPS 13–1, the Board believes it should increase the asset threshold used to define ‘‘small entity’’ from $50 million to $100 million. In its last two adjustments to the RFA threshold, the Board primarily referenced inflation, asset growth, and the percentage of FICUs covered by certain 1998 amendments to the Federal Credit Union Act to justify increasing the threshold.22 In light of the persistent economic trends in the industry that are discussed below, the Board has decided to bypass the extrapolation approach it has used in the past, which would justify only an incremental increase to the RFA threshold at this time. Instead, the Board believes it should weigh competitive disadvantages within the credit union industry, relative threats to the National Credit Union Share Insurance Fund (Insurance Fund), and the need for broader regulatory relief to adopt a larger increase. Increasing the RFA threshold to $100 million will account for FICUs that generally face significant challenges from their relatively small asset base, membership, and economies of scale. The Board believes competitive disadvantages, rather than industry percentages, better delineate which FICUs should receive special consideration during future rulemakings. This new approach would result in a more inclusive threshold with respect to RFA coverage, reflecting the Board’s intent to reduce regulatory burdens for FICUs under $100 million in assets. II. The Proposed Rule and IRPS This proposed rule and IRPS 15–1 would amend IRPS 87–2 (as amended by IRPS 03–2 and IRPS 13–1) by changing the definition of ‘‘small entity’’ to include FICUs with less than $100 million in assets. The increased threshold would cause NCUA to give special consideration to the economic impact of proposed and final regulations on an additional 745 small FICUs, bringing the total number of FICUs covered by the RFA to approximately 4,869. The proposed rule and IRPS 15– 1 retains the three-year review cycle that the Board adopted in 2013. IRPS 15–1 would be incorporated by reference into § 791.8(a) of NCUA’s regulations 21 Id. IRPSs 87–2, 03–2, and 13–1 are incorporated by reference into NCUA’s rule governing the promulgation of regulations. 12 CFR 791.8(a). 22 68 FR 31949, 31950 (May 29, 2003); 78 FR 4032, 4034 (Jan. 18, 2013). VerDate Sep<11>2014 19:43 Mar 04, 2015 Jkt 235001 governing regulatory procedures, and it would replace the reference to IRPS 13– 1. In IRPS 13–1, the Board combined adjustments to existing regulatory asset thresholds with an increase to the RFA threshold.23 Specifically, asset thresholds addressed in IRPS 13–1 included the threshold governing the definition of ‘‘complex’’ in § 702.103(a) of NCUA’s regulations, which determines the application of risk-based net worth requirements, and the threshold providing an exemption to NCUA’s interest rate risk (IRR) rule in § 741.3(b)(5). Rather than replicate this approach in this proposal, the Board will separately establish the asset threshold used to define which FICUs are ‘‘complex’’ in § 702.103(a) in the risk-based capital rule itself. Further, other regulatory asset thresholds, including those applying to IRR and liquidity requirements, will be separately considered in the Board’s general three-year regulatory review cycle. Individual review will facilitate consideration of unique risks and compliance burdens that are specific to those rules, rather than encouraging a one-size-fits-all approach. A. How did the Board identify $100 million as an appropriate asset threshold for the RFA? The Board believes that the RFA threshold proposed in this rulemaking and IRPS will result in thorough consideration of regulatory relief for a larger number of FICUs in future rulemakings. Thus, to determine an appropriate asset threshold for the RFA and support a significant increase, the Board considered which FICUs are most disadvantaged in comparison to their peers, as well as risk to the Insurance Fund. The concept of competitive disadvantage aligns well with Congress’s default description of RFAcovered entities as those that are ‘‘not dominant’’ in their field.24 In an effort to determine which institutions fall within that concept in this proposed rule and IRPS, the Board examined the following industry metrics for the period between 2001 and 2013: • Deposit growth rates; • asset growth rates; membership growth rates; • loan origination growth rates; • inflation-adjusted average loan amounts; • ratio of operating costs to assets; • merger and liquidation trends; • average year-to-date loan amounts; 23 78 FR 4032 (Jan. 18, 2013). 24 5 U.S.C. 601(4). PO 00000 Frm 00011 Fmt 4702 Sfmt 4702 • non-interest expenses per dollar loaned; • average assets per full-time employee; and • average non-interest expense per annual loan originations. As discussed below, rates of deposit growth, rates of membership growth, rates of loan origination growth, and the ratio of operating costs to assets exemplified the results of the Board’s examination.25 (i) Slower Deposit Growth Rates Smaller FICUs have consistently demonstrated an inability to grow their deposit base at a rate that keeps pace with larger FICUs. This slower growth rate makes it difficult for smaller FICUs to cover fixed costs, which are increasing over time. FICUs with growing deposits and loans are able to spread out fixed costs and incrementally reduce operating costs. In general, deposit growth rates drop off significantly for FICUs with less than $100 million in assets. FICUs with less than $100 million in assets as of the end of the year 2000 grew their deposits by an average of 4.0 percent annually over the next 13 years. In comparison, FICUs with greater than $100 million in assets as of the end of the year 2000 grew deposits at 7.3 percent annually, on average, over the same period. On an asset-weighted basis, the industry’s average deposit growth rate from 2001 to 2013 was 7.0 percent per year. (ii) Slower Membership Growth Rates FICUs with less than $100 million in assets also had significantly slower membership growth rates than larger FICUs. On average, FICUs with less than $100 million in assets as of the end of the year 2000 had their membership shrink by 0.5 percent annually over the next 13 years. In contrast, FICUs with more than $100 million in assets as of the end of the year 2000 grew their membership by 2.3 percent annually over the same period. On an assetweighted basis, the industry’s membership growth rate was 1.7 percent per year from 2001 to 2013. (iii) Slower Growth in Loan Originations FICUs with less than $100 million in assets also had significantly slower growth in loan originations than larger FICUs. On average, FICUs with less than $100 million in assets as of the end of the year 2000 grew loan originations by 2.3 percent annually over the next 13 years. In contrast, FICUs with more than 25 The data used to calculate each of the metrics is adjusted to prevent outliers from skewing the average results. E:\FR\FM\05MRP1.SGM 05MRP1 Federal Register / Vol. 80, No. 43 / Thursday, March 5, 2015 / Proposed Rules $100 million in assets as of the end of the year 2000 grew their loan originations by 8.5 percent annually over the same period. On an assetweighted basis, the industry’s loan origination growth was 6.9 percent per year from 2001 to 2013. mstockstill on DSK4VPTVN1PROD with PROPOSALS (iv) Higher Operating Expenses FICUs with less than $100 million in assets also had higher annual operating expenses per unit of assets and per dollar of loan originations compared to other asset groups. On average, FICUs with less than $100 million in assets as of the end of the year 2000 had annual operating expenses equal to 4.0 percent of assets over the next 13 years. FICUs with more than $100 million in assets as of the end of the year 2000 had annual operating expenses of 3.5 percent of assets over the same period. The impact of these differences in operating expenses can be dramatic. Between 2001 and 2013, FICUs with less than $100 million in assets as of the end of the year 2000, had operating expenses, on average, equal to 18 cents for every dollar in loan originations. This expense ratio was a third higher than at FICUs with more than $100 million in assets as of the end of the year 2000, which averaged annual operating expenses equal to 13 cents for every dollar in loan originations over the same period. The 50-basis-point difference in operating expenses (as a share of assets) between FICUs above and below the $100 million asset threshold resulted in large and persistent differences in earnings between these FICUs. The earnings gap between FICUs above and below the $100 million threshold averaged 40 basis points from 2001 to 2013. To put this in perspective, during that period, 25 percent of FICUs below the $100 million asset threshold had negative earnings. Only 3.3 percent of FICUs with more than $100 million in assets had negative earnings over the same period. FICUs with persistently weak or negative earnings are more likely to go out of business via failure or merger. The Board believes that if smaller FICUs are going to be successful and meet their mission in the long term, they should have every feasible opportunity to lower costs. Challenges related to lagging deposit growth, stagnant membership, and high operating costs have caused FICUs with less than $100 million in assets to merge and/or fail at higher rates. Despite representing 83 percent of all FICUs, FICUs with less than $100 million in assets experienced 96 percent of VerDate Sep<11>2014 19:43 Mar 04, 2015 Jkt 235001 mergers and liquidations since 2004 (through the second quarter of 2014). Although the number of mergers and failures for FICUs below $100 million is disproportionately high, losses suffered by FICUs with assets between $50 million and $100 million have historically been relatively small. Seven FICUs between $50 million and $100 million in inflation-adjusted assets failed between the first quarter of 2002 and second quarter of 2014. Resulting losses totaled less than $52 million. In contrast, losses for FICUs between $100 million and $200 million were more than triple that amount over the same period. Moreover, FICUs with between $50 million and $100 million in assets represent a small additional share of the system’s assets (4.8 percent). Thus, to the extent the increase to $100 million results in more FICU exemptions from rules governing safety and soundness, the Board does not believe it will present material risk to the Insurance Fund. By increasing the RFA threshold to $100 million in assets, the Board recognizes its role in ensuring additional scrutiny of the regulatory costs of FICUs under that threshold. The increase to $100 million in assets will require the Board to engage in the public analytical process the RFA requires for the benefit of significantly more FICUs whenever a regulation would impose significant economic burdens on a substantial number of FICUs under $100 million. Further, it will encourage the consideration of alternatives for more FICUs and subject that consideration to the benefit of public comments. B. How will the proposed rule and IRPS affect FICUs? The change to the RFA threshold will ensure that regulatory relief will be consistently and robustly considered for an additional 745 FICUs. Future rules are more likely to invoke an RFA analysis because of the significantly increased threshold. When an IRFA or FRFA is triggered, these additional FICUs will have the benefit of an opportunity to comment on a transparent and published analysis of impacts and alternatives. In all, approximately 4,869 FICUs with less than $100 million in assets would come within the RFA’s mandates as of the adoption of this proposed rule and IRPS. This represents 76.7 percent of FICUs. For all of these FICUs, future regulations will be thoroughly evaluated to determine whether an exemption or other separate consideration should apply. PO 00000 Frm 00012 Fmt 4702 Sfmt 4702 11957 III. Regulatory Procedures A. Regulatory Flexibility Act The RFA requires NCUA to prepare an analysis to describe any significant economic impact a proposed rule may have on a substantial number of small entities (currently defined by NCUA as FICUs with under $50 million in assets). In this case, the proposed rule and IRPS expands the number of FICUs defined as small entities under the RFA. The proposed rule and IRPS therefore will not have a significant economic impact on a substantial number of FICUs under $50 million in assets that are already covered by the RFA. With respect to additional FICUs that would be covered by the RFA, a significant component of the proposed rule and IRPS will provide prospective relief in the form of special and more robust consideration of their ability to handle compliance burden. This prospective relief is not yet quantifiable. Further, the proposed rule and IRPS can only reduce, rather than increase, compliance burden for these FICUs and, therefore, will not raise costs in a manner that requires an IRFA or FRFA or a discussion of alternatives for minimizing the proposed rule’s compliance burden. Accordingly, NCUA has determined and certifies that the proposed rule and IRPS will not have a significant economic impact on a substantial number of small entities. No regulatory flexibility analysis is required. B. Paperwork Reduction Act The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in which an agency creates a new paperwork burden on regulated entities or modifies an existing burden.26 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. The proposed changes to IRPS 87–2, as amended by IRPSs 03–2 and 13–1, will not create any new paperwork burden for FICUs. Thus, NCUA has determined that the terms of this proposed rule and IRPS do not increase the paperwork requirements under the PRA and regulations of the Office of Management and Budget. C. 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 26 44 E:\FR\FM\05MRP1.SGM U.S.C. 3507(d). 05MRP1 11958 Federal Register / Vol. 80, No. 43 / Thursday, March 5, 2015 / Proposed Rules complies with the executive order to adhere to fundamental federalism principles. This proposed rule and IRPS would 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 proposed rule does not constitute a policy that has federalism implications for purposes of the executive order. D. Assessment of Federal Regulations and Policies on Families 2. Amend § 791.8(a) to read as follows: ■ § 791.8 Promulgation of NCUA rules and regulations. (a) NCUA’s procedures for developing regulations are governed by the Administrative Procedure Act (5 U.S.C. 551 et seq.), the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), and NCUA’s policies for the promulgation of rules and regulations as set forth in its Interpretive Ruling and Policy Statement 87–2, as amended by Interpretive Ruling and Policy Statements 03–2, 13–1, and 15–1. NCUA has determined that this proposed rule and IRPS 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). [FR Doc. 2015–03806 Filed 3–4–15; 8:45 am] List of Subjects in 12 CFR Part 791 14 CFR Part 25 Administrative practice and procedure, Credit unions, Sunshine Act. [Docket No. FAA–2015–0455; Notice No. 25– 15–04–SC] By the National Credit Union Administration Board on February 19, 2015. Gerard Poliquin, Secretary of the Board. Special Conditions: Bombardier Aerospace, Models BD–500–1A10 and BD–500–1A11; Electronic Flight Control System: Lateral-Directional and Longitudinal Stability and LowEnergy Awareness For the reasons discussed above, the Board proposes to amend IRPS 87–2 (as amended by IRPS 03–2 and IRPS 13–1) by revising the second sentence of paragraph 2 of Section II and replacing the last two sentences of paragraph 2 of Section II to read as follows: ■ II. Procedures for the Development of Regulations * * * * 2. * * * NCUA will designate federally insured credit unions with less than $100 million in assets as small entities. * * * Every three years, the NCUA Board will review and consider adjusting the asset threshold it uses to define small entities for purposes of analyzing whether a regulation will have a significant economic impact on a substantial number of small entities. * * * * For the reasons discussed above, the Board proposes to amend 12 CFR part 791 as follows: mstockstill on DSK4VPTVN1PROD with PROPOSALS * PART 791—RULES OF NCUA BOARD PROCEDURES; PROMULGATION OF NCUA RULES AND REGULATIONS; PUBLIC OBSERVATION OF NCUA BOARD MEETINGS 1. The authority citation for part 791 continues to read as follows: ■ Authority: 12 U.S.C. 1766, 1789 and 5 U.S.C 552b. VerDate Sep<11>2014 19:43 Mar 04, 2015 Jkt 235001 DEPARTMENT OF TRANSPORTATION Federal Aviation Administration Federal Aviation Administration (FAA), DOT. ACTION: Notice of proposed special conditions. AGENCY: This action proposes special conditions for the Bombardier Aerospace Models BD–500–1A10 and BD–500–1A11 series airplanes. These airplanes will have a novel or unusual design feature when compared to the state of technology envisioned in the airworthiness standards for transport category airplanes. This design feature is a fly-by-wire electronic flight control system that provides an electronic interface between the pilot’s flight controls and the flight control surfaces for both normal and failure states. The system generates the actual surface commands that provide for stability augmentation and control about all three airplane axes. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. These proposed special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards. DATES: Send your comments on or before April 20, 2015. SUMMARY: Interpretive Ruling and Policy Statement 87–2 * BILLING CODE 7535–01–P PO 00000 Frm 00013 Fmt 4702 Sfmt 4702 Send comments identified by docket number FAA–2015–0455 using any of the following methods: • Federal eRegulations Portal: Go to http://www.regulations.gov/ and follow the online instructions for sending your comments electronically. • Mail: Send comments to Docket Operations, M–30, U.S. Department of Transportation (DOT), 1200 New Jersey Avenue SE., Room W12–140, West Building Ground Floor, Washington, DC, 20590–0001. • Hand Delivery or Courier: Take comments to Docket Operations in Room W12–140 of the West Building Ground Floor at 1200 New Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. • Fax: Fax comments to Docket Operations at 202–493–2251. Privacy: The FAA will post all comments it receives, without change, to http://www.regulations.gov/, including any personal information the commenter provides. Using the search function of the docket Web site, anyone can find and read the electronic form of all comments received into any FAA docket, including the name of the individual sending the comment (or signing the comment for an association, business, labor union, etc.). DOT’s complete Privacy Act Statement can be found in the Federal Register published on April 11, 2000 (65 FR 19477–19478), as well as at http://DocketsInfo.dot.gov/. Docket: Background documents or comments received may be read at http://www.regulations.gov/ at any time. Follow the online instructions for accessing the docket or go to the Docket Operations in Room W12–140 of the West Building Ground Floor at 1200 New Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. FOR FURTHER INFORMATION CONTACT: Joe Jacobsen, FAA, Airplane and Flight Crew Interface, ANM–111, Transport Airplane Directorate, Aircraft Certification Service, 1601 Lind Avenue SW., Renton, Washington, 98057–3356; telephone 425–227–2011; facsimile 425–227–1320. SUPPLEMENTARY INFORMATION: ADDRESSES: Comments Invited We invite interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data. E:\FR\FM\05MRP1.SGM 05MRP1

Agencies

[Federal Register Volume 80, Number 43 (Thursday, March 5, 2015)]
[Proposed Rules]
[Pages 11954-11958]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-03806]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 791

RIN 3133-AE45


Promulgation of NCUA Rules and Regulations

AGENCY: National Credit Union Administration (NCUA).

ACTION: Proposed rule and interpretive ruling and Policy Statement 15-1 
with request for comments.

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SUMMARY: The NCUA Board (Board) proposes to amend Interpretive Ruling 
and Policy Statement (IRPS) 87-2, as amended by IRPS 03-2 and 13-1. The 
amended IRPS would increase the asset threshold used to define small 
entity under the Regulatory Flexibility Act (RFA) from $50 million to 
$100 million and, thereby, provide transparent consideration of 
regulatory relief for a greater number of credit unions in future 
rulemakings. The proposed rule and IRPS also make a technical change to 
NCUA's regulations in connection with NCUA's procedures for developing 
regulations.

DATES: Comments must be received on or before May 4, 2015.

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]--

[[Page 11955]]

Comments on Proposed Rule 791 and IRPS 15-1'' 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 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, Lead Liquidations 
Counsel, 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 Proposed Rule and IRPS
III. Regulatory Procedures

I. Background

A. What changes does this proposed rule make?

    The RFA,\1\ as amended, generally requires federal agencies to 
determine and consider the impact of proposed and final rules on small 
entities. Since adopting IRPS 13-1 in 2013, the Board has defined 
``small entity'' in this context as a federally insured credit union 
(FICU) with less than $50 million in assets.\2\ This proposed rule and 
IRPS 15-1 redefines ``small entity'' as a FICU with less than $100 
million in assets. In addition, the proposed rule amends Sec.  791.8(a) 
of NCUA's regulations to cross reference proposed IRPS 15-1. Section 
791.8(a) governs NCUA's procedures for developing regulations and 
incorporates IRPS 87-2 and each of its amendments.
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    \1\ Public Law 96-354.
    \2\ IRPS 13-1, 78 FR 4032 (Jan. 18, 2013).
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B. Why is the board proposing this rule and IRPS?

    The Board is proposing this rulemaking and IRPS to increase the 
number of FICUs that receive special consideration of regulatory relief 
under the RFA. Congress enacted the RFA in 1980 and amended it with the 
Small Business Regulatory Enforcement Fairness Act of 1996.\3\ A 
principal purpose of the 1996 amendment was to provide an opportunity 
for judicial review of agency compliance with the RFA.\4\
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    \3\ Public Law 104-121.
    \4\ Id.
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    The RFA, in part, requires federal agencies to determine whether a 
proposed or final rule would have a significant economic impact on a 
substantial number of small entities.\5\ If so, the RFA requires 
agencies to engage in a small entity impact analysis, known as an 
initial regulatory flexibility analysis (IRFA) for proposed rules and a 
final regulatory flexibility analysis (FRFA) for final rules.\6\ The 
IRFA and FRFA each must be published in the Federal Register.\7\ If an 
agency determines that a proposed or final rule will not have a 
``significant economic impact on a substantial number of small 
entities,'' the agency may certify as much in the Federal Register and 
forego the IRFA and FRFA.\8\
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    \5\ 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).
    \6\ 5 U.S.C. 603, 604.
    \7\ Id.
    \8\ 5 U.S.C. 605(b).
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    For an IRFA, the procedural requirements include, among other 
things, ``a description of and, where feasible, an estimate of the 
number of small entities to which the proposed rule will apply,'' a 
description of reporting, recordkeeping, and other compliance burden, 
and an identification of any overlapping or conflicting federal 
rules.\9\ In addition, the IRFA must ``contain a description of any 
significant alternatives to the proposed rule which accomplish the 
stated objectives . . . and which minimize any significant economic 
impact of the proposed rule on small entities.'' \10\ This discussion 
must include alternatives such as allowing ``differing compliance or 
reporting requirements or timetables,'' ``the clarification, 
consolidation, or simplification of compliance and reporting 
requirements,'' ``the use of performance rather than design 
standards,'' and a full or partial exemption for small entities.\11\
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    \9\ 5 U.S.C. 603(b). The IRFA must also include a description of 
why the agency is considering action and ``a succinct statement of 
the objectives of, and legal basis for, the proposed rule . . . .'' 
Id.
    \10\ 5 U.S.C. 603(c).
    \11\ Id.
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    The FRFA must meet requirements similar to that of the IRFA, but 
must also discuss and respond to public comments and describe ``the 
steps the agency has taken to minimize the significant economic impact 
on small entities . . ., including a statement of factual, policy, and 
legal reasons for selecting the alternative adopted in the final rule 
and why each one of the other significant alternatives to the rule . . 
. was rejected.'' \12\ These processes encourage federal agencies to 
give special consideration to the ability of smaller entities to absorb 
compliance burdens imposed by new rules.
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    \12\ 5 U.S.C. 604(a).
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    The RFA establishes terms for various subgroups that fall within 
the meaning of ``small entity,'' including ``small business,'' ``small 
organization,'' and ``small governmental jurisdiction.'' \13\ FICUs, as 
not-for-profit enterprises, are ``small organizations,'' within the 
broader meaning of ``small entity.'' The RFA permits a regulator, 
including NCUA, to establish one or more definitions of ``small 
organization,'' as appropriate to the activities of the agency.\14\ An 
agency's definition must be subjected to public comment and published 
in the Federal Register.\15\ The RFA provides a default definition of 
``small organization'' as ``a not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field. . . 
.'' \16\
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    \13\ 5 U.S.C. 601.
    \14\ 5 U.S.C. 601(4).
    \15\ Id.
    \16\ Id.
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    In 1981, the Board initially defined ``small entity'' in the credit 
union context as any FICU with less than $1 million in assets.\17\ IRPS 
87-2 superseded IRPS 81-4, but retained the definition of ``small 
entity'' as a FICU with less than $1 million in assets.\18\ The Board 
updated the definition in 2003 to include FICUs with less than $10 
million in assets with IRPS 03-2.\19\ The last update occurred in 2013, 
when the Board increased the defining threshold to include FICUs with 
less than $50 million in assets in IRPS 13-1.\20\ In addition, in IRPS 
13-1, the Board pledged to review the RFA threshold after two years and 
thereafter

[[Page 11956]]

on a three-year cycle, similar to its regulatory review process.\21\
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    \17\ IRPS 81-4, 46 FR 29248 (June 1, 1981).
    \18\ 52 FR 35231 (Sept. 8, 1987).
    \19\ 68 FR 31949 (May 29, 2003).
    \20\ 78 FR 4032 (Jan. 18, 2013).
    \21\ Id. IRPSs 87-2, 03-2, and 13-1 are incorporated by 
reference into NCUA's rule governing the promulgation of 
regulations. 12 CFR 791.8(a).
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    As a result of conducting its review two years following the 
issuance IRPS 13-1, the Board believes it should increase the asset 
threshold used to define ``small entity'' from $50 million to $100 
million. In its last two adjustments to the RFA threshold, the Board 
primarily referenced inflation, asset growth, and the percentage of 
FICUs covered by certain 1998 amendments to the Federal Credit Union 
Act to justify increasing the threshold.\22\ In light of the persistent 
economic trends in the industry that are discussed below, the Board has 
decided to bypass the extrapolation approach it has used in the past, 
which would justify only an incremental increase to the RFA threshold 
at this time. Instead, the Board believes it should weigh competitive 
disadvantages within the credit union industry, relative threats to the 
National Credit Union Share Insurance Fund (Insurance Fund), and the 
need for broader regulatory relief to adopt a larger increase.
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    \22\ 68 FR 31949, 31950 (May 29, 2003); 78 FR 4032, 4034 (Jan. 
18, 2013).
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    Increasing the RFA threshold to $100 million will account for FICUs 
that generally face significant challenges from their relatively small 
asset base, membership, and economies of scale. The Board believes 
competitive disadvantages, rather than industry percentages, better 
delineate which FICUs should receive special consideration during 
future rulemakings. This new approach would result in a more inclusive 
threshold with respect to RFA coverage, reflecting the Board's intent 
to reduce regulatory burdens for FICUs under $100 million in assets.

II. The Proposed Rule and IRPS

    This proposed rule and IRPS 15-1 would amend IRPS 87-2 (as amended 
by IRPS 03-2 and IRPS 13-1) by changing the definition of ``small 
entity'' to include FICUs with less than $100 million in assets. The 
increased threshold would cause NCUA to give special consideration to 
the economic impact of proposed and final regulations on an additional 
745 small FICUs, bringing the total number of FICUs covered by the RFA 
to approximately 4,869. The proposed rule and IRPS 15-1 retains the 
three-year review cycle that the Board adopted in 2013. IRPS 15-1 would 
be incorporated by reference into Sec.  791.8(a) of NCUA's regulations 
governing regulatory procedures, and it would replace the reference to 
IRPS 13-1.
    In IRPS 13-1, the Board combined adjustments to existing regulatory 
asset thresholds with an increase to the RFA threshold.\23\ 
Specifically, asset thresholds addressed in IRPS 13-1 included the 
threshold governing the definition of ``complex'' in Sec.  702.103(a) 
of NCUA's regulations, which determines the application of risk-based 
net worth requirements, and the threshold providing an exemption to 
NCUA's interest rate risk (IRR) rule in Sec.  741.3(b)(5). Rather than 
replicate this approach in this proposal, the Board will separately 
establish the asset threshold used to define which FICUs are 
``complex'' in Sec.  702.103(a) in the risk-based capital rule itself. 
Further, other regulatory asset thresholds, including those applying to 
IRR and liquidity requirements, will be separately considered in the 
Board's general three-year regulatory review cycle. Individual review 
will facilitate consideration of unique risks and compliance burdens 
that are specific to those rules, rather than encouraging a one-size-
fits-all approach.
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    \23\ 78 FR 4032 (Jan. 18, 2013).
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A. How did the Board identify $100 million as an appropriate asset 
threshold for the RFA?

    The Board believes that the RFA threshold proposed in this 
rulemaking and IRPS will result in thorough consideration of regulatory 
relief for a larger number of FICUs in future rulemakings. Thus, to 
determine an appropriate asset threshold for the RFA and support a 
significant increase, the Board considered which FICUs are most 
disadvantaged in comparison to their peers, as well as risk to the 
Insurance Fund. The concept of competitive disadvantage aligns well 
with Congress's default description of RFA-covered entities as those 
that are ``not dominant'' in their field.\24\ In an effort to determine 
which institutions fall within that concept in this proposed rule and 
IRPS, the Board examined the following industry metrics for the period 
between 2001 and 2013:
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    \24\ 5 U.S.C. 601(4).
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     Deposit growth rates;
     asset growth rates; membership growth rates;
     loan origination growth rates;
     inflation-adjusted average loan amounts;
     ratio of operating costs to assets;
     merger and liquidation trends;
     average year-to-date loan amounts;
     non-interest expenses per dollar loaned;
     average assets per full-time employee; and
     average non-interest expense per annual loan originations.
    As discussed below, rates of deposit growth, rates of membership 
growth, rates of loan origination growth, and the ratio of operating 
costs to assets exemplified the results of the Board's examination.\25\
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    \25\ The data used to calculate each of the metrics is adjusted 
to prevent outliers from skewing the average results.
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(i) Slower Deposit Growth Rates
    Smaller FICUs have consistently demonstrated an inability to grow 
their deposit base at a rate that keeps pace with larger FICUs. This 
slower growth rate makes it difficult for smaller FICUs to cover fixed 
costs, which are increasing over time. FICUs with growing deposits and 
loans are able to spread out fixed costs and incrementally reduce 
operating costs.
    In general, deposit growth rates drop off significantly for FICUs 
with less than $100 million in assets. FICUs with less than $100 
million in assets as of the end of the year 2000 grew their deposits by 
an average of 4.0 percent annually over the next 13 years. In 
comparison, FICUs with greater than $100 million in assets as of the 
end of the year 2000 grew deposits at 7.3 percent annually, on average, 
over the same period. On an asset-weighted basis, the industry's 
average deposit growth rate from 2001 to 2013 was 7.0 percent per year.
(ii) Slower Membership Growth Rates
    FICUs with less than $100 million in assets also had significantly 
slower membership growth rates than larger FICUs. On average, FICUs 
with less than $100 million in assets as of the end of the year 2000 
had their membership shrink by 0.5 percent annually over the next 13 
years. In contrast, FICUs with more than $100 million in assets as of 
the end of the year 2000 grew their membership by 2.3 percent annually 
over the same period. On an asset-weighted basis, the industry's 
membership growth rate was 1.7 percent per year from 2001 to 2013.
(iii) Slower Growth in Loan Originations
    FICUs with less than $100 million in assets also had significantly 
slower growth in loan originations than larger FICUs. On average, FICUs 
with less than $100 million in assets as of the end of the year 2000 
grew loan originations by 2.3 percent annually over the next 13 years. 
In contrast, FICUs with more than

[[Page 11957]]

$100 million in assets as of the end of the year 2000 grew their loan 
originations by 8.5 percent annually over the same period. On an asset-
weighted basis, the industry's loan origination growth was 6.9 percent 
per year from 2001 to 2013.
(iv) Higher Operating Expenses
    FICUs with less than $100 million in assets also had higher annual 
operating expenses per unit of assets and per dollar of loan 
originations compared to other asset groups. On average, FICUs with 
less than $100 million in assets as of the end of the year 2000 had 
annual operating expenses equal to 4.0 percent of assets over the next 
13 years. FICUs with more than $100 million in assets as of the end of 
the year 2000 had annual operating expenses of 3.5 percent of assets 
over the same period.
    The impact of these differences in operating expenses can be 
dramatic. Between 2001 and 2013, FICUs with less than $100 million in 
assets as of the end of the year 2000, had operating expenses, on 
average, equal to 18 cents for every dollar in loan originations. This 
expense ratio was a third higher than at FICUs with more than $100 
million in assets as of the end of the year 2000, which averaged annual 
operating expenses equal to 13 cents for every dollar in loan 
originations over the same period.
    The 50-basis-point difference in operating expenses (as a share of 
assets) between FICUs above and below the $100 million asset threshold 
resulted in large and persistent differences in earnings between these 
FICUs. The earnings gap between FICUs above and below the $100 million 
threshold averaged 40 basis points from 2001 to 2013. To put this in 
perspective, during that period, 25 percent of FICUs below the $100 
million asset threshold had negative earnings. Only 3.3 percent of 
FICUs with more than $100 million in assets had negative earnings over 
the same period. FICUs with persistently weak or negative earnings are 
more likely to go out of business via failure or merger.
    The Board believes that if smaller FICUs are going to be successful 
and meet their mission in the long term, they should have every 
feasible opportunity to lower costs. Challenges related to lagging 
deposit growth, stagnant membership, and high operating costs have 
caused FICUs with less than $100 million in assets to merge and/or fail 
at higher rates. Despite representing 83 percent of all FICUs, FICUs 
with less than $100 million in assets experienced 96 percent of mergers 
and liquidations since 2004 (through the second quarter of 2014).
    Although the number of mergers and failures for FICUs below $100 
million is disproportionately high, losses suffered by FICUs with 
assets between $50 million and $100 million have historically been 
relatively small. Seven FICUs between $50 million and $100 million in 
inflation-adjusted assets failed between the first quarter of 2002 and 
second quarter of 2014. Resulting losses totaled less than $52 million. 
In contrast, losses for FICUs between $100 million and $200 million 
were more than triple that amount over the same period. Moreover, FICUs 
with between $50 million and $100 million in assets represent a small 
additional share of the system's assets (4.8 percent). Thus, to the 
extent the increase to $100 million results in more FICU exemptions 
from rules governing safety and soundness, the Board does not believe 
it will present material risk to the Insurance Fund.
    By increasing the RFA threshold to $100 million in assets, the 
Board recognizes its role in ensuring additional scrutiny of the 
regulatory costs of FICUs under that threshold. The increase to $100 
million in assets will require the Board to engage in the public 
analytical process the RFA requires for the benefit of significantly 
more FICUs whenever a regulation would impose significant economic 
burdens on a substantial number of FICUs under $100 million. Further, 
it will encourage the consideration of alternatives for more FICUs and 
subject that consideration to the benefit of public comments.

B. How will the proposed rule and IRPS affect FICUs?

    The change to the RFA threshold will ensure that regulatory relief 
will be consistently and robustly considered for an additional 745 
FICUs. Future rules are more likely to invoke an RFA analysis because 
of the significantly increased threshold. When an IRFA or FRFA is 
triggered, these additional FICUs will have the benefit of an 
opportunity to comment on a transparent and published analysis of 
impacts and alternatives.
    In all, approximately 4,869 FICUs with less than $100 million in 
assets would come within the RFA's mandates as of the adoption of this 
proposed rule and IRPS. This represents 76.7 percent of FICUs. For all 
of these FICUs, future regulations will be thoroughly evaluated to 
determine whether an exemption or other separate consideration should 
apply.

III. Regulatory Procedures

A. Regulatory Flexibility Act

    The RFA requires NCUA to prepare an analysis to describe any 
significant economic impact a proposed rule may have on a substantial 
number of small entities (currently defined by NCUA as FICUs with under 
$50 million in assets). In this case, the proposed rule and IRPS 
expands the number of FICUs defined as small entities under the RFA. 
The proposed rule and IRPS therefore will not have a significant 
economic impact on a substantial number of FICUs under $50 million in 
assets that are already covered by the RFA.
    With respect to additional FICUs that would be covered by the RFA, 
a significant component of the proposed rule and IRPS will provide 
prospective relief in the form of special and more robust consideration 
of their ability to handle compliance burden. This prospective relief 
is not yet quantifiable. Further, the proposed rule and IRPS can only 
reduce, rather than increase, compliance burden for these FICUs and, 
therefore, will not raise costs in a manner that requires an IRFA or 
FRFA or a discussion of alternatives for minimizing the proposed rule's 
compliance burden. Accordingly, NCUA has determined and certifies that 
the proposed rule and IRPS will not have a significant economic impact 
on a substantial number of small entities. No regulatory flexibility 
analysis is required.

B. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in 
which an agency creates a new paperwork burden on regulated entities or 
modifies an existing burden.\26\ 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. The proposed 
changes to IRPS 87-2, as amended by IRPSs 03-2 and 13-1, will not 
create any new paperwork burden for FICUs. Thus, NCUA has determined 
that the terms of this proposed rule and IRPS do not increase the 
paperwork requirements under the PRA and regulations of the Office of 
Management and Budget.
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    \26\ 44 U.S.C. 3507(d).
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C. 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

[[Page 11958]]

complies with the executive order to adhere to fundamental federalism 
principles. This proposed rule and IRPS would 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 proposed rule does not constitute a policy that 
has federalism implications for purposes of the executive order.

D. Assessment of Federal Regulations and Policies on Families

    NCUA has determined that this proposed rule and IRPS 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 in 12 CFR Part 791

    Administrative practice and procedure, Credit unions, Sunshine Act.

    By the National Credit Union Administration Board on February 
19, 2015.
Gerard Poliquin,
Secretary of the Board.


0
For the reasons discussed above, the Board proposes to amend IRPS 87-2 
(as amended by IRPS 03-2 and IRPS 13-1) by revising the second sentence 
of paragraph 2 of Section II and replacing the last two sentences of 
paragraph 2 of Section II to read as follows:

Interpretive Ruling and Policy Statement 87-2

II. Procedures for the Development of Regulations

* * * * *
    2. * * * NCUA will designate federally insured credit unions 
with less than $100 million in assets as small entities. * * * Every 
three years, the NCUA Board will review and consider adjusting the 
asset threshold it uses to define small entities for purposes of 
analyzing whether a regulation will have a significant economic 
impact on a substantial number of small entities.
* * * * *
    For the reasons discussed above, the Board proposes to amend 12 CFR 
part 791 as follows:

PART 791--RULES OF NCUA BOARD PROCEDURES; PROMULGATION OF NCUA 
RULES AND REGULATIONS; PUBLIC OBSERVATION OF NCUA BOARD MEETINGS

0
1. The authority citation for part 791 continues to read as follows:

    Authority:  12 U.S.C. 1766, 1789 and 5 U.S.C 552b.

0
2. Amend Sec.  791.8(a) to read as follows:


Sec.  791.8  Promulgation of NCUA rules and regulations.

    (a) NCUA's procedures for developing regulations are governed by 
the Administrative Procedure Act (5 U.S.C. 551 et seq.), the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.), and NCUA's policies for the 
promulgation of rules and regulations as set forth in its Interpretive 
Ruling and Policy Statement 87-2, as amended by Interpretive Ruling and 
Policy Statements 03-2, 13-1, and 15-1.

[FR Doc. 2015-03806 Filed 3-4-15; 8:45 am]
 BILLING CODE 7535-01-P