Temporary Regulatory Relief in Response to COVID-19, 22010-22014 [2020-08434]

Download as PDF 22010 Federal Register / Vol. 85, No. 77 / Tuesday, April 21, 2020 / Rules and Regulations that appeared in the Federal Register on April 13, 2020, titled ‘‘Regulatory Capital Rule: Paycheck Protection Program Lending Facility and Paycheck Protection Program Loans.’’ This correction is necessary to conform the FDIC’s rule text to the regulations of the other federal banking agencies that issued that interagency interim final rule. DATES: Effective April 21, 2020. lotter on DSKBCFDHB2PROD with RULES FOR FURTHER INFORMATION CONTACT: FDIC: Michael Phillips, Counsel, mphillips@fdic.gov; Catherine Wood, Counsel, cawood@fdic.gov; Francis Kuo, Counsel, fkuo@fdic.gov, Supervision Branch, Legal Division, Federal Deposit Insurance Corporation, 550 17th Street NW, Washington, DC 20429. SUPPLEMENTARY INFORMATION: On April 13, 2020, the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Board), and the FDIC (collectively, the agencies) published a final rule ‘‘Regulatory Capital Rule: Paycheck Protection Program Lending Facility and Paycheck Protection Program Loans’’ (PPPL final rule).1 In the wake of economic disruptions caused by COVID–19, the Board of Governors of the Federal Reserve System authorized each of the Federal Reserve Banks to participate in the Paycheck Protection Program Lending Facility (PPPL Facility), pursuant to section 13(3) of the Federal Reserve Act, to provide liquidity to small business lenders and the broader credit markets, to help stabilize the financial system, and to provide economic relief to small businesses nationwide. The PPPL final rule allows banking organizations to neutralize the regulatory capital effects of participating in the facility. The PPPL final rule permits banking organizations to exclude exposures pledged as collateral to the PPPL Facility from a banking organization’s total leverage exposure, average total consolidated assets, advanced approaches-total risk-weighted assets, and standardized total risk-weighted assets, as applicable. The PPPL final rule also amends section 32 of the FDIC’s regulatory capital rule to clarify that PPP covered loans originated by a banking organization under the Paycheck Protection Program will receive a zero percent risk weight.2 This correcting amendment will add a new § 324.131(e)(3)(viii) to the FDIC’s regulatory capital rule in conformance 1 85 FR 20387 (April 13, 2020). the definition of ‘‘total capital’’ in the FDIC’s capital rules in 12 CFR 324.2. 2 See VerDate Sep<11>2014 15:57 Apr 20, 2020 Jkt 250001 with the regulatory capital rules of the other federal banking agencies. For the reasons stated in the preamble, the FDIC corrects 12 CFR part 324 as follows: PART 324—CAPITAL ADEQUACY OF FDIC-SUPERVISED INSTITUTIONS 1. The authority citation for part 324 continues to read as follows: ■ Authority: 12 U.S.C. 1815(a), 1815(b), 1816, 1818(a), 1818(b), 1818(c), 1818(t), 1819(Tenth), 1828(c), 1828(d), 1828(i), 1828(n), 1828(o), 1831o, 1835, 3907, 3909, 4808; 5371; 5412; Pub. L. 102–233, 105 Stat. 1761, 1789, 1790 (12 U.S.C. 1831n note); Pub. L. 102–242, 105 Stat. 2236, 2355, as amended by Pub. L. 103–325, 108 Stat. 2160, 2233 (12 U.S.C. 1828 note); Pub. L. 102–242, 105 Stat. 2236, 2386, as amended by Pub. L. 102–550, 106 Stat. 3672, 4089 (12 U.S.C. 1828 note); Pub. L. 111–203, 124 Stat. 1376, 1887 (15 U.S.C. 78o–7 note); Pub. L. 115–174; Pub. L. 116–136, 134 Stat. 281. 2. Amend § 324.131 by adding paragraph (e)(3)(viii) to read as follows: ■ § 324.131 Mechanics for calculating total wholesale and retail risk-weighted assets. * * * * * (e) * * * (3) * * * (viii) The risk-weighted asset amount for a Paycheck Protection Program covered loan as defined in section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)(36)) equals zero. * * * * * Federal Deposit Insurance Corporation. Dated in Washington, DC, on April 15, 2020. Robert E. Feldman, Executive Secretary. [FR Doc. 2020–08361 Filed 4–20–20; 8:45 am] BILLING CODE 6714–01–P NATIONAL CREDIT UNION ADMINISTRATION 12 CFR Part 701 RIN 3133–AF15 Temporary Regulatory Relief in Response to COVID–19 National Credit Union Administration (NCUA). ACTION: Temporary final rule. AGENCY: The NCUA Board (Board) is temporarily modifying certain regulatory requirements to help ensure that federally insured credit unions (FICUs) remain operational and liquid during the COVID–19 crisis. Specifically, the Board is temporarily raising the maximum aggregate amount SUMMARY: PO 00000 Frm 00002 Fmt 4700 Sfmt 4700 of loan participations that a FICU may purchase from a single originating lender to the greater of $5,000,000 or 200 percent of the FICU’s net worth. The Board is also temporarily suspending limitations on the eligible obligations that a federal credit union (FCU) may purchase and hold. In addition, given physical distancing policies implemented in response to the crisis, the Board is tolling the required timeframes for the occupancy or disposition of properties not being used for FCU business or that have been abandoned. These temporary modifications will be in place until December 31, 2020, unless extended. DATES: This rule is effective from April 21, 2020 through December 31, 2020. FOR FURTHER INFORMATION CONTACT: Policy and Analysis: Amanda Parkhill, Director, Policy Division, Office of Examination and Insurance, at (703) 518–6360; Legal: Ariel Pereira, Staff Attorney, Office of General Counsel, at (703) 518–6540; or by mail at: National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314. SUPPLEMENTARY INFORMATION: I. Background II. Legal Authority III. Section-by-Section Analysis IV. Regulatory Procedures I. Background The COVID–19 pandemic has created uncertainty for FICUs and their members. The Board is working with federal and state regulatory agencies, in addition to FICUs, to assist FICUs in managing their operations and to facilitate continued assistance to credit union members and communities impacted by the coronavirus. As part of these ongoing efforts, the Board is temporarily modifying certain regulatory requirements to help ensure that FICUs remain operational and liquid during the COVID–19 crisis. The Board has concluded that the amendments will provide FICUs with necessary additional flexibility in a manner consistent with the NCUA’s responsibility to maintain the safety and soundness of the credit union system. The temporary amendments are effective upon publication and will be in place through the end of calendar year 2020, unless the Board takes action to extend their effectiveness. In general, two of the temporary amendments will expand the authority of FICUs to purchase loans and participations in loans, thereby enhancing their ability to meet liquidity needs. Specifically, the Board is temporarily raising the maximum aggregate amount of loan participations E:\FR\FM\21APR1.SGM 21APR1 Federal Register / Vol. 85, No. 77 / Tuesday, April 21, 2020 / Rules and Regulations that a FICU may purchase from a single originating lender to the greater of $5,000,000 or 200 percent of the credit union’s net worth. The Board is also temporarily suspending certain limitations on the types of eligible obligations that a FICU may purchase and hold. The third regulatory amendment addresses a requirement that may be difficult, if not impossible, to meet during the pandemic. Given the physical distancing policies in effect, the Board is tolling the required timeframes for the occupancy or disposition of properties not being used for FCU business or that have been abandoned. Section III of this preamble discusses the temporary regulatory amendments in greater detail. II. Legal Authority The Board is issuing this temporary final rule pursuant to its authority under the Federal Credit Union (FCU) Act.1 The FCU Act grants the Board a broad mandate to issue regulations governing both FCUs and, more generally, all FICUs. For example, section 120 of the FCU Act is a general grant of regulatory authority and authorizes the Board to prescribe rules and regulations for the administration of the act.2 Section 209 of the FCU Act is a plenary grant of regulatory authority to issue rules and regulations necessary or appropriate to carry out its role as share insurer for all FICUs 3 Other provisions of the act confer specific rulemaking authority to address prescribed issues or circumstances.4 Accordingly, the FCU Act grants the Board broad rulemaking authority to ensure that the credit union industry and the National Credit Union Share Insurance Fund (NCUSIF) remain safe and sound. III. Section-by-Section Analysis A. Aggregate Limit on Loan Participation Purchases (§ 701.22(b)(5)(ii)) Section 107(5)(E) of the FCU Act authorizes an FCU to engage in participation lending with other credit unions, credit union organizations, or financial organizations in accordance with written policies of the FCU’s board of directors.5 The NCUA has implemented this statutory provision in § 701.22 of its regulations, which lotter on DSKBCFDHB2PROD with RULES 1 12 U.S.C. 1751 et al. U.S.C. 1766(a). 3 12 U.S.C. 1789. 4 An example of a provision of the FCU Act that provides the Board with specific rulemaking authority is section 207 (12 U.S.C. 1787), which is a specific grant of authority over share insurance coverage, conservatorships, and liquidations. 5 12 U.S.C. 1757(5)(e). 2 12 VerDate Sep<11>2014 15:57 Apr 20, 2020 Jkt 250001 applies to all FICUs. The statute contains no limitation on the amount of participations that an FCU may purchase from any single originating lender. The regulation limits the aggregate amount of loan participations that a FICU may purchase from any one originating lender to the greater of $5,000,000 or 100 percent of the FICU’s net worth.6 As explained in the preamble to the final rule that established the limitation, the purpose of the provision is to mitigate the exposure of FICUs to concentration risk.7 The preamble explained that in prescribing concentration limits on loan participations, the Board’s goal was ‘‘to strike an appropriate balance between mitigating risk and fostering the industry’s growth and stability.’’ 8 The Board continues to believe that a cap is an important protection against FICU insolvency. However, consistent with the NCUA’s 2018 Regulatory Reform Agenda, the Board also believes that, as currently formulated, the limitation may be overly prescriptive.9 Additional regulatory flexibility is especially warranted during the present COVID–19 crisis when many FICUs are seeking to maintain adequate liquidity. Accordingly, the Board believes that temporarily raising the cap is necessary to strike the balance it sought in originally promulgating the rule and encourages FICUs to engage in appropriate due diligence in this context. Under the temporary final rule, the aggregate limit below which a waiver from the appropriate NCUA regional director is not required will be raised to the greater of $5,000,000 or 200 percent of the FICU’s net worth. The increase will help safeguard the stability of FICUs during the crisis, without undue additional risk to the safety and soundness of the credit union system. Subsequent to the temporary rule’s expiration at the close of December 31, 2020, a FICU must return into compliance with the current limitation (that is, the greater of $5,000,000 or 100 percent of its net worth) by either ceasing to purchase loan participations from the originating lender or requesting a waiver as provided in the regulation. B. Purchase, Sale, and Pledge of Eligible Obligations (§ 701.23(b)) Section 107(13) of the FCU Act authorizes an FCU, ‘‘in accordance with rules and regulations prescribed by the 6 12 CFR 701.22(b)(5)(ii). FR 37946 (June 25, 2013). 8 Id. at 37951. 9 83 FR 65926, 65946–65947 (Dec. 21, 2018). 7 78 PO 00000 Frm 00003 Fmt 4700 Sfmt 4700 22011 Board,’’ to purchase, sell, or pledge all or part of an eligible obligation to one of its own members.10 The NCUA has implemented this authority in its regulations at § 701.23(b)(1)(i) and § 703.21(b)(2)(i), which provides that an FCU may purchase an eligible obligation from any source, provided the FCU is empowered to grant the loan or the loan is refinanced within 60 days following its purchase so that it is a loan the FCU is empowered to grant. The purpose of the refinancing requirement is to help ensure that loans purchased by an FCU comply with the statutory and regulatory requirements applicable to loans made by the FCU. Although the Board’s longstanding policy is that all eligible obligations of an FCU, whether made or purchased, comply with the requirements and goals of the FCU Act, the explicit statutory language of the FCU Act does not necessarily compel this. Given the COVID–19 emergency, the Board believes that the balance weighs in favor of adopting a closer reading of the text of the statute and suspending the refinancing requirement for a temporary period to promote the extension of credit and flow of liquidity in the credit union system generally. As noted, the FCU Act and § 701.23 generally do not authorize an FCU to purchase a loan unless the person liable on the loan is a member of that credit union. The Board’s publicly articulated interpretation since the 1979 rulemaking that implemented section 107(13), is that Congress did not intend section 107(13) to be an express prohibition on purchases of obligations made to non-members provided they are authorized by other sections of the FCU Act.11 The Board’s regulations in 12 CFR 701.23 generally require that purchased eligible obligations be obligations of the purchasing FCU’s members. However, § 701.23(b)(2) provides certain limited exceptions to the general requirements for well-capitalized FCUs with composite CAMEL ratings of ‘‘1’’ or ‘‘2.’’ 12 The regulations authorize these FCUs to purchase the eligible obligations of any FICU or of any liquidating credit union without regard to whether they are obligations of the purchasing FCU’s members. As the Board has previously noted, these types of purchases could be construed as 10 12 U.S.C. 1757(13). FR 27068, 27069 (May 9, 1979). 12 Section 701.23 also contains exceptions to the membership requirement for certain purchases of student loans and real estate loans that an FCU purchases to complete a pool for sale. The Board established this exception in the 1979 final rule discussed above. 44 FR 27068 (May 9, 1979). 11 44 E:\FR\FM\21APR1.SGM 21APR1 22012 Federal Register / Vol. 85, No. 77 / Tuesday, April 21, 2020 / Rules and Regulations being made under section 107(14) of the FCU Act, which does not impose a membership requirement, as opposed to under section 107(13).13 Section 107(14) authorizes FCUs to ‘‘purchase all or part of the assets of another credit union and to assume the liabilities of the selling credit union and those of its members.’’ This statutory interpretation is consistent with the general principle that the more specific provision or authority applies in favor of the more general provision. Although the Board continues to believe that this exception should generally be limited to FCUs with CAMEL 1 or 2 composite ratings, it also recognizes the urgent need to support the extension of credit and facilitate downstream loan purchases as a tool to manage liquidity. The Board, therefore, is temporarily amending its regulations to authorize FCUs with CAMEL composite ratings of 1, 2, or 3 to purchase eligible obligations of FICUs and liquidating credit unions irrespective of whether the obligation belongs to the purchasing FCU’s members.14 FCUs may continue to hold obligations purchased pursuant to this temporary final rule subsequent to the rule’s expiration at the close of December 31, 2020. The Board notes that the restrictions temporarily relieved in § 701.23 do not apply to state-chartered, federally insured credit unions. Any such restrictions applicable to state-chartered credit unions would be based on state laws or regulations. The Board also notes that this temporary final rule does not modify the current authority of FCUs under § 701.23 to purchase the obligations of a liquidating credit union without regard to whether the obligations belong to the purchasing FCU’s members. C. FCU Occupancy and Disposal of Acquired Premises (§ 701.36(c)) lotter on DSKBCFDHB2PROD with RULES Section 107(4) of the FCU Act authorizes an FCU to purchase, hold, and dispose of property necessary or incidental to its operations.15 The Board has implemented and interpreted this provision of the FCU Act in its regulation at 12 CFR 701.36. In general, an FCU may invest in property only that it intends to use to transact credit union 13 Section 107(14) is codified in 12 U.S.C. 1757(14). For the Board’s prior statements on this matter, please refer to 66 FR 58656, 58660 (Nov. 23, 2001); 51 FR15055, 15059 (Mar. 15, 2001), and 76 FR 81421, 81426 (Dec. 28, 2011). 14 Generally, credit unions with a CAMEL composite rating lower than 3 are considered to be in ‘‘troubled condition’’ under the NCUA’s regulations. 12 CFR 700.2. 15 12 U.S.C. 1757(4). VerDate Sep<11>2014 15:57 Apr 20, 2020 Jkt 250001 business or in property that supports its internal operations or serves its members. Among other provisions, § 701.36: (1) Limits FCU investments in fixed assets; and (2) establishes occupancy, planning, and disposal requirements for acquired and abandoned premises. The regulation provides that if an FCU acquires premises, including unimproved land or unimproved real property, it must partially occupy them ‘‘no later than six years after the date of acquisition,’’ subject to the NCUA granting a waiver.16 Further, an FCU must make diligent efforts to dispose of abandoned premises and any other real property it does not intend to use in transacting business. Additionally, the FCU must advertise for sale premises that have been abandoned for four years.17 The specific terms of these requirements do not stem directly from the FCU Act but instead reflect the Board’s judgment in implementing the general statutory provision. In response to the COVID–19 crisis, many state and localities have implemented physical distancing measures to arrest the spread of the disease.18 These health-related restrictions on the mobility of individuals make the changes in occupancy and dispositions required by § 701.36 extremely difficult. Accordingly, the Board is temporarily tolling the regulatory mandated timeframes. This temporary change appropriately reflects the unique circumstances while maintaining consistency with the statutory provision as interpreted and implemented by the Board. Any days that fall within the period commencing on April 21, 2020 and concluding at the close of December 31, 2020, shall not be counted for purposes of determining an FCU’s compliance with the regulatory time periods. This temporary deferral will provide FCUs with additional flexibility to comply with the prescribed time periods, while still complying with the statutory and regulatory goals of ensuring that properties acquired or held by FCUs are used for credit union business. Example One: An FCU closed on the purchase of an office building 30 days before April 21, 2020 (that is, the temporary final rule is published on the 31st day following acquisition). Under the temporary regulatory amendment, 16 12 CFR 701.36(c)(1). CFR 701.36(c)(2). 18 See, https://www.nytimes.com/interactive/ 2020/us/coronavirus-stay-at-home-order.html. (‘‘[A] a vast majority of Americans—nine in 10 United States residents—are now or will soon be under instructions to stay at home.’’) 17 12 PO 00000 Frm 00004 Fmt 4700 Sfmt 4700 January 1, 2021 would be deemed the 31st day following acquisition for purposes of calculating the six-year deadline for partial occupancy. Example Two: An FCU has an abandoned parcel of land that, under § 701.36(c)(2), it is required to advertise for sale no later than November 9, 2020 (i.e., that fourth year anniversary of the date the parcel was abandoned). Under this temporary final rule, the FCU would have an additional amount of time to meet this requirement equal to the number of days between the publication date and January 1, 2021. IV. Regulatory Procedures A. Administrative Procedure Act The Board is issuing the temporary final rule without prior notice and the opportunity for public comment and the delayed effective date ordinarily prescribed by the Administrative Procedure Act (APA).19 Pursuant to the APA, general notice and the opportunity for public comment are not required with respect to a rulemaking when an ‘‘agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.’’ 20 The Board believes that the public interest is best served by implementing the temporary final rule immediately upon publication in the Federal Register. The Board notes that the COVID–19 crisis is unprecedented. It is a rapidly changing situation and difficult to anticipate how the disruptions caused by the crisis will manifest themselves within the financial system and how individual credit unions may be impacted. Because of the widespread impact of a pandemic and the speed with which disruptions have transmitted throughout the United States, the Board believes it is has good cause to determine that ordinary notice and public procedure are impracticable and that moving expeditiously in the form of a temporary final rule is in the best of interests of the public and the FICUs that serve that public. The temporary regulatory changes are proactive steps that are designed to alleviate potential liquidity strains and are undertaken with expedience to ensure the maximum intended effects are in place at the earliest opportunity. The Board values public input in its rulemakings and believes that providing the opportunity for comment enhances 19 5 20 5 E:\FR\FM\21APR1.SGM U.S.C. 551 et seq. U.S.C. 553(b)(3). 21APR1 Federal Register / Vol. 85, No. 77 / Tuesday, April 21, 2020 / Rules and Regulations lotter on DSKBCFDHB2PROD with RULES its regulations. Accordingly, the Board often solicits comments on its rules even when not required under the APA, such as for the rules it issues on an interim-final basis. The Board, however, notes that the provisions in this rule are temporary in nature, and designed specifically to help credit unions affected by the COVID–19 pandemic. The amendment made by the temporary final rule will automatically expire at the close of December 31, 2020, and are limited in number and scope. For these reasons, the Board finds that there is good cause consistent with the public interest to issue the rule without advance notice and comment. The APA also requires a 30-day delayed effective date, except for (1) substantive rules which grant or recognize an exemption or relieve a restriction; (2) interpretative rules and statements of policy; or (3) as otherwise provided by the agency for good cause.21 Because the rules relieves currently codified limitations and restrictions, the temporary final rule is exempt from the APA’s delayed effective date requirement. As an alternative basis to make the rule effective without the 30-day delayed effective date, the Board finds there is good cause to do so for the same reasons set forth above regarding advance notice and opportunity for comment. B. Congressional Review Act For purposes of the Congressional Review Act,22 the Office of Management and Budget (OMB) makes a determination as to whether a final rule constitutes a ‘‘major’’ rule. If the OMB deems a rule to be a ‘‘major rule,’’ the Congressional Review Act generally provides that the rule may not take effect until at least 60 days following its publication. The Congressional Review Act defines a ‘‘major rule’’ as any rule that the Administrator of the Office of Information and Regulatory Affairs of the OMB finds has resulted in or is likely to result in (A) an annual effect on the economy of $100,000,000 or more; (B) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies or geographic regions, or (C) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreignbased enterprises in domestic and export markets.23 U.S.C. 553(d). 22 5 U.S.C. 801–808. 23 5 U.S.C. 804(2). For the same reasons set forth above, the Board is adopting the temporary final rule without the delayed effective date generally prescribed under the Congressional Review Act. The delayed effective date required by the Congressional Review Act does not apply to any rule for which an agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rule issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.24 In light of current market uncertainty, the Board believes that delaying the effective date of the rule would be contrary to the public interest for the same reasons discussed above. As required by the Congressional Review Act, the Board will submit the final rule and other appropriate reports to Congress and the Government Accountability Office for review. C. 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.25 For purposes of the PRA, a paperwork burden may take the form of a reporting, recordkeeping, or a third-party disclosure requirement, referred to as an information collection. The NCUA may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a valid Office of Management and Budget (OMB) control number. The impact of this temporary rule on information collection requirements are estimated as follows: 701.22—OMB No. 3133–0141, Organization and Operation of FCU— Loan Participations. It is anticipated that there will be no increase in the number of credit unions currently participating. It is estimated that these credit unions may see a slight increase in the number of loan participation agreements. The recordkeeping requirement to retain and maintain a copy of the agreement is minimal, and would not impact the recordkeeping burden. Because of the net worth increase, NCUA estimates that the waiver request on the limits will be reduced by 50 percent, for an estimated reduction of 20 burden hours. A total burden hours of 3,025 requested. 701.23—OMB No. 3133–0127, Purchase, Sale, and Pledge of Eligible Obligations. NCUA estimates a minimal increase in the number of respondents 21 5 VerDate Sep<11>2014 15:57 Apr 20, 2020 24 5 U.S.C. 808. U.S.C. 3507(d). 25 44 Jkt 250001 PO 00000 Frm 00005 Fmt 4700 Sfmt 4700 22013 from the suspension of the limitations and in the number of agreements. The recordkeeping requirement to retain and maintain these records would increase based on this estimate. Due to the expanded authority, waivers would not be necessary and appeals to the waivers are null during this period. An estimated increase of 2,207 burden hours is due to this change, for a total of 12,747 burden hours requested. 701.36—OMB No. 3133–0040, Federal Credit Union Occupancy, Planning, and Disposal of Acquired and Abandoned Premises. The temporary rule will suspend the time limit assigned to partial occupancy, disposal of abandoned property, and advertisement of the sale of abandoned property, that falls on the date of the publication of this rule through December 31, 2020; not to begin until January 1, 2021. The suspension of time requirements will eliminate the need for a waiver during this period for a reduction of 305 burden hours; for a total of 30 burden hours requested. The cumulative changes of the burden hours associated with these three information collections requirements total to 1,882. An emergency request for approval has been submitted to OMB for the revisions to the information collection requirements under the OMB control numbers identified above. A separate notice will be published in the Federal Register soliciting public comments on these revisions. D. Executive Order 13132, on Federalism Executive Order 13132 26 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. The 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. The temporary final rule will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. The Board has therefore determined that this rule does not constitute a policy that has federalism implications for purposes of the executive order. E. Assessment of Federal Regulations and Policies on Families The NCUA has determined that this temporary final rule will not affect 26 Executive Order 13132 on Federalism, was signed by former President Clinton on August 4, 1999, and subsequently published in the Federal Register on August 10, 1999 (64 FR 43255). E:\FR\FM\21APR1.SGM 21APR1 22014 Federal Register / Vol. 85, No. 77 / Tuesday, April 21, 2020 / Rules and Regulations family well-being within the meaning of Section 654 of the Treasury and General Government Appropriations Act, 1999.27 List of Subjects in 12 CFR Part 701 Aged, Civil rights, Credit, Credit unions, Fair housing, Individuals with disabilities, Insurance, Mortgages, Reporting and recordkeeping requirements. By the National Credit Union Administration Board, this 16th day of April 2020. Gerard Poliquin, Secretary of the Board. For the reasons discussed above, the NCUA amends part 701 as follows: PART 701—ORGANIZATION AND OPERATION OF 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, 1785, 1786, 1787, 1788, 1789. Section 701.6 is also authorized by 15 U.S.C. 3717. Section 701.31 is also authorized by 15 U.S.C. 1601 et seq.; 42 U.S.C. 1981 and 3601– 3610. Section 701.35 is also authorized by 42 U.S.C. 4311–4312. § 701.36 Federal credit union occupancy and disposal of acquired and abandoned properties. * * * * * (c) * * * (3) Temporary regulatory relief in response to COVID–19. Any days that fall within the period commencing on April 21, 2020 and concluding on December 31, 2020, shall not be counted for purposes of determining a federal credit union’s compliance with the required time periods described in paragraphs (c)(1) and (2) of this section. * * * * * [FR Doc. 2020–08434 Filed 4–20–20; 8:45 am] BILLING CODE P NATIONAL CREDIT UNION ADMINISTRATION 2. In § 701.22, add paragraph (e) to read as follows: 12 CFR Part 722 § 701.22 Real Estate Appraisals ■ RIN 3133–AF17 Loan participations. * * * * * (e) Temporary regulatory relief in response to COVID–19. Notwithstanding paragraph (b)(1)(ii) of this section, during the period commencing on April 21, 2020 and concluding on December 31, 2020, the aggregate amount of loan participations that may be purchased from any one originating lender shall not exceed the greater of $5,000,000 or 200 percent of the federally insured credit union’s net worth. ■ 3. In § 701.23, add paragraph (i) to read as follows: § 701.23 Purchase, sale, and pledge of eligible obligations. * lotter on DSKBCFDHB2PROD with RULES to grant or are refinancing to ensure the obligations are ones the purchasing credit union is empowered to grant; and (2) Purchase and hold the obligations described in § 701.23(b)(2)(i) through (iv) if the Federal credit union’s CAMEL composite rating is ‘‘1,’’ ‘‘2,’’ or ‘‘3’’. ■ 4. In § 701.36, add paragraph (c)(3) to read as follows * * * * (i) Temporary regulatory relief in response to COVID–19. Notwithstanding § 701.23(b), during the period commencing on April 21, 2020 and concluding on December 31, 2020, a Federal credit union may: (1) Purchase, in whole or in part, and within the limitations of the board of directors’ written purchase policies, any eligible obligations pursuant to paragraph (b)(1)(i) and (b)(2)(i) of this section without regard to whether they are loans the credit union is empowered 27 Public Law 105–277, 112 Stat. 2681 (1998). VerDate Sep<11>2014 15:57 Apr 20, 2020 Jkt 250001 National Credit Union Administration (NCUA). ACTION: Interim final rule with request for comments. AGENCY: The NCUA Board (Board) is adopting this interim final rule to amend its regulations requiring appraisals of real estate for certain transactions. The interim final rule defers the requirement to obtain an appraisal or written estimate of market value for up to 120 days following the closing of a transaction for certain residential and commercial real estate transactions, excluding transactions for acquisition, development, and construction of real estate. Credit unions should make best efforts to obtain a credible valuation of real property collateral before the loan closing, and otherwise underwrite loans consistent with safety and soundness principles. The Board is providing this relief to allow credit unions to expeditiously extend liquidity to creditworthy households and businesses in light of recent strains on the U.S. economy as a result of the National Emergency declared in connection with coronavirus disease 2019 (COVID–19). The interim final rule is substantially identical to a SUMMARY: PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 recent interim final rule issued by the Office of the Comptroller of the Currency, Treasury (OCC); Board of Governors of the Federal Reserve System (FRB); and Federal Deposit Insurance Corporation (FDIC) (collectively, the other banking agencies) that also defers the requirement to obtain an appraisal or evaluation for up to 120 days following the closing of a transaction for certain residential and commercial real estate transactions. The interim final rule is effective April 21, 2020 through December 31, 2020. Comments on the interim final rule must be received no later than June 5, 2020. ADDRESSES: You may submit written comments, identified by RIN 3133– AF17, 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. • Fax: (703) 518–6319. Include ‘‘[Your Name]—Comments on Interim Final Rule: Real Estate Appraisals’’ in the transmittal. • 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 may view all public comments on the Federal eRulemaking Portal at http:// www.regulations.gov as submitted, except for those we cannot post for technical reasons. The NCUA will not edit or remove any identifying or contact information from the public comments submitted. Due to social distancing measures in effect through at least April 30, 2020, the usual opportunity to inspect paper copies of comments in the NCUA’s law library is not currently available. After social distancing measures are relaxed, visitors may make an appointment to review paper copies by calling (703) 518–6540 or emailing OGCMail@ncua.gov. FOR FURTHER INFORMATION CONTACT: Technical information: Uduak Essien, Director—Credit Markets, (703) 518– 6399, and Lou Pham, Senior Credit Specialist, (703) 548–2745, Office of Examination and Insurance. Legal information: Rachel Ackmann, Senior Staff Attorney, (703) 548–2601, Office of General Counsel, National Credit Union Administration, each at 1775 Duke Street, Alexandria, VA 22314. SUPPLEMENTARY INFORMATION: DATES: E:\FR\FM\21APR1.SGM 21APR1

Agencies

[Federal Register Volume 85, Number 77 (Tuesday, April 21, 2020)]
[Rules and Regulations]
[Pages 22010-22014]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-08434]


=======================================================================
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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 701

RIN 3133-AF15


Temporary Regulatory Relief in Response to COVID-19

AGENCY: National Credit Union Administration (NCUA).

ACTION: Temporary final rule.

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SUMMARY: The NCUA Board (Board) is temporarily modifying certain 
regulatory requirements to help ensure that federally insured credit 
unions (FICUs) remain operational and liquid during the COVID-19 
crisis. Specifically, the Board is temporarily raising the maximum 
aggregate amount of loan participations that a FICU may purchase from a 
single originating lender to the greater of $5,000,000 or 200 percent 
of the FICU's net worth. The Board is also temporarily suspending 
limitations on the eligible obligations that a federal credit union 
(FCU) may purchase and hold. In addition, given physical distancing 
policies implemented in response to the crisis, the Board is tolling 
the required timeframes for the occupancy or disposition of properties 
not being used for FCU business or that have been abandoned. These 
temporary modifications will be in place until December 31, 2020, 
unless extended.

DATES: This rule is effective from April 21, 2020 through December 31, 
2020.

FOR FURTHER INFORMATION CONTACT: Policy and Analysis: Amanda Parkhill, 
Director, Policy Division, Office of Examination and Insurance, at 
(703) 518-6360; Legal: Ariel Pereira, Staff Attorney, Office of General 
Counsel, at (703) 518-6540; or by mail at: National Credit Union 
Administration, 1775 Duke Street, Alexandria, Virginia 22314.

SUPPLEMENTARY INFORMATION: 

I. Background
II. Legal Authority
III. Section-by-Section Analysis
IV. Regulatory Procedures

I. Background

    The COVID-19 pandemic has created uncertainty for FICUs and their 
members. The Board is working with federal and state regulatory 
agencies, in addition to FICUs, to assist FICUs in managing their 
operations and to facilitate continued assistance to credit union 
members and communities impacted by the coronavirus. As part of these 
ongoing efforts, the Board is temporarily modifying certain regulatory 
requirements to help ensure that FICUs remain operational and liquid 
during the COVID-19 crisis. The Board has concluded that the amendments 
will provide FICUs with necessary additional flexibility in a manner 
consistent with the NCUA's responsibility to maintain the safety and 
soundness of the credit union system. The temporary amendments are 
effective upon publication and will be in place through the end of 
calendar year 2020, unless the Board takes action to extend their 
effectiveness.
    In general, two of the temporary amendments will expand the 
authority of FICUs to purchase loans and participations in loans, 
thereby enhancing their ability to meet liquidity needs. Specifically, 
the Board is temporarily raising the maximum aggregate amount of loan 
participations

[[Page 22011]]

that a FICU may purchase from a single originating lender to the 
greater of $5,000,000 or 200 percent of the credit union's net worth. 
The Board is also temporarily suspending certain limitations on the 
types of eligible obligations that a FICU may purchase and hold. The 
third regulatory amendment addresses a requirement that may be 
difficult, if not impossible, to meet during the pandemic. Given the 
physical distancing policies in effect, the Board is tolling the 
required timeframes for the occupancy or disposition of properties not 
being used for FCU business or that have been abandoned.
    Section III of this preamble discusses the temporary regulatory 
amendments in greater detail.

II. Legal Authority

    The Board is issuing this temporary final rule pursuant to its 
authority under the Federal Credit Union (FCU) Act.\1\ The FCU Act 
grants the Board a broad mandate to issue regulations governing both 
FCUs and, more generally, all FICUs. For example, section 120 of the 
FCU Act is a general grant of regulatory authority and authorizes the 
Board to prescribe rules and regulations for the administration of the 
act.\2\ Section 209 of the FCU Act is a plenary grant of regulatory 
authority to issue rules and regulations necessary or appropriate to 
carry out its role as share insurer for all FICUs \3\ Other provisions 
of the act confer specific rulemaking authority to address prescribed 
issues or circumstances.\4\ Accordingly, the FCU Act grants the Board 
broad rulemaking authority to ensure that the credit union industry and 
the National Credit Union Share Insurance Fund (NCUSIF) remain safe and 
sound.
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    \1\ 12 U.S.C. 1751 et al.
    \2\ 12 U.S.C. 1766(a).
    \3\ 12 U.S.C. 1789.
    \4\ An example of a provision of the FCU Act that provides the 
Board with specific rulemaking authority is section 207 (12 U.S.C. 
1787), which is a specific grant of authority over share insurance 
coverage, conservatorships, and liquidations.
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III. Section-by-Section Analysis

A. Aggregate Limit on Loan Participation Purchases (Sec.  
701.22(b)(5)(ii))

    Section 107(5)(E) of the FCU Act authorizes an FCU to engage in 
participation lending with other credit unions, credit union 
organizations, or financial organizations in accordance with written 
policies of the FCU's board of directors.\5\ The NCUA has implemented 
this statutory provision in Sec.  701.22 of its regulations, which 
applies to all FICUs. The statute contains no limitation on the amount 
of participations that an FCU may purchase from any single originating 
lender.
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    \5\ 12 U.S.C. 1757(5)(e).
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    The regulation limits the aggregate amount of loan participations 
that a FICU may purchase from any one originating lender to the greater 
of $5,000,000 or 100 percent of the FICU's net worth.\6\ As explained 
in the preamble to the final rule that established the limitation, the 
purpose of the provision is to mitigate the exposure of FICUs to 
concentration risk.\7\ The preamble explained that in prescribing 
concentration limits on loan participations, the Board's goal was ``to 
strike an appropriate balance between mitigating risk and fostering the 
industry's growth and stability.'' \8\
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    \6\ 12 CFR 701.22(b)(5)(ii).
    \7\ 78 FR 37946 (June 25, 2013).
    \8\ Id. at 37951.
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    The Board continues to believe that a cap is an important 
protection against FICU insolvency. However, consistent with the NCUA's 
2018 Regulatory Reform Agenda, the Board also believes that, as 
currently formulated, the limitation may be overly prescriptive.\9\ 
Additional regulatory flexibility is especially warranted during the 
present COVID-19 crisis when many FICUs are seeking to maintain 
adequate liquidity. Accordingly, the Board believes that temporarily 
raising the cap is necessary to strike the balance it sought in 
originally promulgating the rule and encourages FICUs to engage in 
appropriate due diligence in this context.
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    \9\ 83 FR 65926, 65946-65947 (Dec. 21, 2018).
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    Under the temporary final rule, the aggregate limit below which a 
waiver from the appropriate NCUA regional director is not required will 
be raised to the greater of $5,000,000 or 200 percent of the FICU's net 
worth. The increase will help safeguard the stability of FICUs during 
the crisis, without undue additional risk to the safety and soundness 
of the credit union system. Subsequent to the temporary rule's 
expiration at the close of December 31, 2020, a FICU must return into 
compliance with the current limitation (that is, the greater of 
$5,000,000 or 100 percent of its net worth) by either ceasing to 
purchase loan participations from the originating lender or requesting 
a waiver as provided in the regulation.

B. Purchase, Sale, and Pledge of Eligible Obligations (Sec.  701.23(b))

    Section 107(13) of the FCU Act authorizes an FCU, ``in accordance 
with rules and regulations prescribed by the Board,'' to purchase, 
sell, or pledge all or part of an eligible obligation to one of its own 
members.\10\ The NCUA has implemented this authority in its regulations 
at Sec.  701.23(b)(1)(i) and Sec.  703.21(b)(2)(i), which provides that 
an FCU may purchase an eligible obligation from any source, provided 
the FCU is empowered to grant the loan or the loan is refinanced within 
60 days following its purchase so that it is a loan the FCU is 
empowered to grant.
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    \10\ 12 U.S.C. 1757(13).
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    The purpose of the refinancing requirement is to help ensure that 
loans purchased by an FCU comply with the statutory and regulatory 
requirements applicable to loans made by the FCU. Although the Board's 
longstanding policy is that all eligible obligations of an FCU, whether 
made or purchased, comply with the requirements and goals of the FCU 
Act, the explicit statutory language of the FCU Act does not 
necessarily compel this. Given the COVID-19 emergency, the Board 
believes that the balance weighs in favor of adopting a closer reading 
of the text of the statute and suspending the refinancing requirement 
for a temporary period to promote the extension of credit and flow of 
liquidity in the credit union system generally.
    As noted, the FCU Act and Sec.  701.23 generally do not authorize 
an FCU to purchase a loan unless the person liable on the loan is a 
member of that credit union. The Board's publicly articulated 
interpretation since the 1979 rulemaking that implemented section 
107(13), is that Congress did not intend section 107(13) to be an 
express prohibition on purchases of obligations made to non-members 
provided they are authorized by other sections of the FCU Act.\11\
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    \11\ 44 FR 27068, 27069 (May 9, 1979).
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    The Board's regulations in 12 CFR 701.23 generally require that 
purchased eligible obligations be obligations of the purchasing FCU's 
members. However, Sec.  701.23(b)(2) provides certain limited 
exceptions to the general requirements for well-capitalized FCUs with 
composite CAMEL ratings of ``1'' or ``2.'' \12\ The regulations 
authorize these FCUs to purchase the eligible obligations of any FICU 
or of any liquidating credit union without regard to whether they are 
obligations of the purchasing FCU's members. As the Board has 
previously noted, these types of purchases could be construed as

[[Page 22012]]

being made under section 107(14) of the FCU Act, which does not impose 
a membership requirement, as opposed to under section 107(13).\13\ 
Section 107(14) authorizes FCUs to ``purchase all or part of the assets 
of another credit union and to assume the liabilities of the selling 
credit union and those of its members.'' This statutory interpretation 
is consistent with the general principle that the more specific 
provision or authority applies in favor of the more general provision.
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    \12\ Section 701.23 also contains exceptions to the membership 
requirement for certain purchases of student loans and real estate 
loans that an FCU purchases to complete a pool for sale. The Board 
established this exception in the 1979 final rule discussed above. 
44 FR 27068 (May 9, 1979).
    \13\ Section 107(14) is codified in 12 U.S.C. 1757(14). For the 
Board's prior statements on this matter, please refer to 66 FR 
58656, 58660 (Nov. 23, 2001); 51 FR15055, 15059 (Mar. 15, 2001), and 
76 FR 81421, 81426 (Dec. 28, 2011).
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    Although the Board continues to believe that this exception should 
generally be limited to FCUs with CAMEL 1 or 2 composite ratings, it 
also recognizes the urgent need to support the extension of credit and 
facilitate downstream loan purchases as a tool to manage liquidity. The 
Board, therefore, is temporarily amending its regulations to authorize 
FCUs with CAMEL composite ratings of 1, 2, or 3 to purchase eligible 
obligations of FICUs and liquidating credit unions irrespective of 
whether the obligation belongs to the purchasing FCU's members.\14\ 
FCUs may continue to hold obligations purchased pursuant to this 
temporary final rule subsequent to the rule's expiration at the close 
of December 31, 2020.
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    \14\ Generally, credit unions with a CAMEL composite rating 
lower than 3 are considered to be in ``troubled condition'' under 
the NCUA's regulations. 12 CFR 700.2.
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    The Board notes that the restrictions temporarily relieved in Sec.  
701.23 do not apply to state-chartered, federally insured credit 
unions. Any such restrictions applicable to state-chartered credit 
unions would be based on state laws or regulations. The Board also 
notes that this temporary final rule does not modify the current 
authority of FCUs under Sec.  701.23 to purchase the obligations of a 
liquidating credit union without regard to whether the obligations 
belong to the purchasing FCU's members.

C. FCU Occupancy and Disposal of Acquired Premises (Sec.  701.36(c))

    Section 107(4) of the FCU Act authorizes an FCU to purchase, hold, 
and dispose of property necessary or incidental to its operations.\15\ 
The Board has implemented and interpreted this provision of the FCU Act 
in its regulation at 12 CFR 701.36. In general, an FCU may invest in 
property only that it intends to use to transact credit union business 
or in property that supports its internal operations or serves its 
members. Among other provisions, Sec.  701.36: (1) Limits FCU 
investments in fixed assets; and (2) establishes occupancy, planning, 
and disposal requirements for acquired and abandoned premises.
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    \15\ 12 U.S.C. 1757(4).
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    The regulation provides that if an FCU acquires premises, including 
unimproved land or unimproved real property, it must partially occupy 
them ``no later than six years after the date of acquisition,'' subject 
to the NCUA granting a waiver.\16\ Further, an FCU must make diligent 
efforts to dispose of abandoned premises and any other real property it 
does not intend to use in transacting business. Additionally, the FCU 
must advertise for sale premises that have been abandoned for four 
years.\17\ The specific terms of these requirements do not stem 
directly from the FCU Act but instead reflect the Board's judgment in 
implementing the general statutory provision.
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    \16\ 12 CFR 701.36(c)(1).
    \17\ 12 CFR 701.36(c)(2).
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    In response to the COVID-19 crisis, many state and localities have 
implemented physical distancing measures to arrest the spread of the 
disease.\18\ These health-related restrictions on the mobility of 
individuals make the changes in occupancy and dispositions required by 
Sec.  701.36 extremely difficult. Accordingly, the Board is temporarily 
tolling the regulatory mandated timeframes. This temporary change 
appropriately reflects the unique circumstances while maintaining 
consistency with the statutory provision as interpreted and implemented 
by the Board. Any days that fall within the period commencing on April 
21, 2020 and concluding at the close of December 31, 2020, shall not be 
counted for purposes of determining an FCU's compliance with the 
regulatory time periods. This temporary deferral will provide FCUs with 
additional flexibility to comply with the prescribed time periods, 
while still complying with the statutory and regulatory goals of 
ensuring that properties acquired or held by FCUs are used for credit 
union business.
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    \18\ See, https://www.nytimes.com/interactive/2020/us/coronavirus-stay-at-home-order.html. (``[A] a vast majority of 
Americans--nine in 10 United States residents--are now or will soon 
be under instructions to stay at home.'')
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    Example One: An FCU closed on the purchase of an office building 30 
days before April 21, 2020 (that is, the temporary final rule is 
published on the 31st day following acquisition). Under the temporary 
regulatory amendment, January 1, 2021 would be deemed the 31st day 
following acquisition for purposes of calculating the six-year deadline 
for partial occupancy.
    Example Two: An FCU has an abandoned parcel of land that, under 
Sec.  701.36(c)(2), it is required to advertise for sale no later than 
November 9, 2020 (i.e., that fourth year anniversary of the date the 
parcel was abandoned). Under this temporary final rule, the FCU would 
have an additional amount of time to meet this requirement equal to the 
number of days between the publication date and January 1, 2021.

IV. Regulatory Procedures

A. Administrative Procedure Act

    The Board is issuing the temporary final rule without prior notice 
and the opportunity for public comment and the delayed effective date 
ordinarily prescribed by the Administrative Procedure Act (APA).\19\ 
Pursuant to the APA, general notice and the opportunity for public 
comment are not required with respect to a rulemaking when an ``agency 
for good cause finds (and incorporates the finding and a brief 
statement of reasons therefor in the rules issued) that notice and 
public procedure thereon are impracticable, unnecessary, or contrary to 
the public interest.'' \20\
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    \19\ 5 U.S.C. 551 et seq.
    \20\ 5 U.S.C. 553(b)(3).
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    The Board believes that the public interest is best served by 
implementing the temporary final rule immediately upon publication in 
the Federal Register. The Board notes that the COVID-19 crisis is 
unprecedented. It is a rapidly changing situation and difficult to 
anticipate how the disruptions caused by the crisis will manifest 
themselves within the financial system and how individual credit unions 
may be impacted. Because of the widespread impact of a pandemic and the 
speed with which disruptions have transmitted throughout the United 
States, the Board believes it is has good cause to determine that 
ordinary notice and public procedure are impracticable and that moving 
expeditiously in the form of a temporary final rule is in the best of 
interests of the public and the FICUs that serve that public. The 
temporary regulatory changes are proactive steps that are designed to 
alleviate potential liquidity strains and are undertaken with 
expedience to ensure the maximum intended effects are in place at the 
earliest opportunity.
    The Board values public input in its rulemakings and believes that 
providing the opportunity for comment enhances

[[Page 22013]]

its regulations. Accordingly, the Board often solicits comments on its 
rules even when not required under the APA, such as for the rules it 
issues on an interim-final basis. The Board, however, notes that the 
provisions in this rule are temporary in nature, and designed 
specifically to help credit unions affected by the COVID-19 pandemic. 
The amendment made by the temporary final rule will automatically 
expire at the close of December 31, 2020, and are limited in number and 
scope. For these reasons, the Board finds that there is good cause 
consistent with the public interest to issue the rule without advance 
notice and comment.
    The APA also requires a 30-day delayed effective date, except for 
(1) substantive rules which grant or recognize an exemption or relieve 
a restriction; (2) interpretative rules and statements of policy; or 
(3) as otherwise provided by the agency for good cause.\21\ Because the 
rules relieves currently codified limitations and restrictions, the 
temporary final rule is exempt from the APA's delayed effective date 
requirement. As an alternative basis to make the rule effective without 
the 30-day delayed effective date, the Board finds there is good cause 
to do so for the same reasons set forth above regarding advance notice 
and opportunity for comment.
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    \21\ 5 U.S.C. 553(d).
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B. Congressional Review Act

    For purposes of the Congressional Review Act,\22\ the Office of 
Management and Budget (OMB) makes a determination as to whether a final 
rule constitutes a ``major'' rule. If the OMB deems a rule to be a 
``major rule,'' the Congressional Review Act generally provides that 
the rule may not take effect until at least 60 days following its 
publication.
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    \22\ 5 U.S.C. 801-808.
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    The Congressional Review Act defines a ``major rule'' as any rule 
that the Administrator of the Office of Information and Regulatory 
Affairs of the OMB finds has resulted in or is likely to result in (A) 
an annual effect on the economy of $100,000,000 or more; (B) a major 
increase in costs or prices for consumers, individual industries, 
Federal, State, or local government agencies or geographic regions, or 
(C) significant adverse effects on competition, employment, investment, 
productivity, innovation, or on the ability of United States-based 
enterprises to compete with foreign-based enterprises in domestic and 
export markets.\23\
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    \23\ 5 U.S.C. 804(2).
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    For the same reasons set forth above, the Board is adopting the 
temporary final rule without the delayed effective date generally 
prescribed under the Congressional Review Act. The delayed effective 
date required by the Congressional Review Act does not apply to any 
rule for which an agency for good cause finds (and incorporates the 
finding and a brief statement of reasons therefor in the rule issued) 
that notice and public procedure thereon are impracticable, 
unnecessary, or contrary to the public interest.\24\ In light of 
current market uncertainty, the Board believes that delaying the 
effective date of the rule would be contrary to the public interest for 
the same reasons discussed above.
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    \24\ 5 U.S.C. 808.
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    As required by the Congressional Review Act, the Board will submit 
the final rule and other appropriate reports to Congress and the 
Government Accountability Office for review.

C. 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.\25\ For purposes of the PRA, a 
paperwork burden may take the form of a reporting, recordkeeping, or a 
third-party disclosure requirement, referred to as an information 
collection. The NCUA may not conduct or sponsor, and the respondent is 
not required to respond to, an information collection unless it 
displays a valid Office of Management and Budget (OMB) control number.
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    \25\ 44 U.S.C. 3507(d).
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    The impact of this temporary rule on information collection 
requirements are estimated as follows:
    701.22--OMB No. 3133-0141, Organization and Operation of FCU--Loan 
Participations. It is anticipated that there will be no increase in the 
number of credit unions currently participating. It is estimated that 
these credit unions may see a slight increase in the number of loan 
participation agreements. The recordkeeping requirement to retain and 
maintain a copy of the agreement is minimal, and would not impact the 
recordkeeping burden. Because of the net worth increase, NCUA estimates 
that the waiver request on the limits will be reduced by 50 percent, 
for an estimated reduction of 20 burden hours. A total burden hours of 
3,025 requested.
    701.23--OMB No. 3133-0127, Purchase, Sale, and Pledge of Eligible 
Obligations. NCUA estimates a minimal increase in the number of 
respondents from the suspension of the limitations and in the number of 
agreements. The recordkeeping requirement to retain and maintain these 
records would increase based on this estimate. Due to the expanded 
authority, waivers would not be necessary and appeals to the waivers 
are null during this period. An estimated increase of 2,207 burden 
hours is due to this change, for a total of 12,747 burden hours 
requested.
    701.36--OMB No. 3133-0040, Federal Credit Union Occupancy, 
Planning, and Disposal of Acquired and Abandoned Premises. The 
temporary rule will suspend the time limit assigned to partial 
occupancy, disposal of abandoned property, and advertisement of the 
sale of abandoned property, that falls on the date of the publication 
of this rule through December 31, 2020; not to begin until January 1, 
2021. The suspension of time requirements will eliminate the need for a 
waiver during this period for a reduction of 305 burden hours; for a 
total of 30 burden hours requested.
    The cumulative changes of the burden hours associated with these 
three information collections requirements total to 1,882. An emergency 
request for approval has been submitted to OMB for the revisions to the 
information collection requirements under the OMB control numbers 
identified above. A separate notice will be published in the Federal 
Register soliciting public comments on these revisions.

D. Executive Order 13132, on Federalism

    Executive Order 13132 \26\ encourages independent regulatory 
agencies to consider the impact of their actions on state and local 
interests. The 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. The temporary final rule will not 
have substantial direct effects on the states, on the relationship 
between the national government and the states, or on the distribution 
of power and responsibilities among the various levels of government. 
The Board has therefore determined that this rule does not constitute a 
policy that has federalism implications for purposes of the executive 
order.
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    \26\ Executive Order 13132 on Federalism, was signed by former 
President Clinton on August 4, 1999, and subsequently published in 
the Federal Register on August 10, 1999 (64 FR 43255).
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E. Assessment of Federal Regulations and Policies on Families

    The NCUA has determined that this temporary final rule will not 
affect

[[Page 22014]]

family well-being within the meaning of Section 654 of the Treasury and 
General Government Appropriations Act, 1999.\27\
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    \27\ Public Law 105-277, 112 Stat. 2681 (1998).
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List of Subjects in 12 CFR Part 701

    Aged, Civil rights, Credit, Credit unions, Fair housing, 
Individuals with disabilities, Insurance, Mortgages, Reporting and 
recordkeeping requirements.

    By the National Credit Union Administration Board, this 16th day 
of April 2020.
Gerard Poliquin,
Secretary of the Board.

    For the reasons discussed above, the NCUA amends part 701 as 
follows:

PART 701--ORGANIZATION AND OPERATION OF 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, 1785, 1786, 1787, 1788, 1789. 
Section 701.6 is also authorized by 15 U.S.C. 3717. Section 701.31 
is also authorized by 15 U.S.C. 1601 et seq.; 42 U.S.C. 1981 and 
3601-3610. Section 701.35 is also authorized by 42 U.S.C. 4311-4312.

0
2. In Sec.  701.22, add paragraph (e) to read as follows:


Sec.  701.22  Loan participations.

* * * * *
    (e) Temporary regulatory relief in response to COVID-19. 
Notwithstanding paragraph (b)(1)(ii) of this section, during the period 
commencing on April 21, 2020 and concluding on December 31, 2020, the 
aggregate amount of loan participations that may be purchased from any 
one originating lender shall not exceed the greater of $5,000,000 or 
200 percent of the federally insured credit union's net worth.

0
3. In Sec.  701.23, add paragraph (i) to read as follows:


Sec.  701.23  Purchase, sale, and pledge of eligible obligations.

* * * * *
    (i) Temporary regulatory relief in response to COVID-19. 
Notwithstanding Sec.  701.23(b), during the period commencing on April 
21, 2020 and concluding on December 31, 2020, a Federal credit union 
may:
    (1) Purchase, in whole or in part, and within the limitations of 
the board of directors' written purchase policies, any eligible 
obligations pursuant to paragraph (b)(1)(i) and (b)(2)(i) of this 
section without regard to whether they are loans the credit union is 
empowered to grant or are refinancing to ensure the obligations are 
ones the purchasing credit union is empowered to grant; and
    (2) Purchase and hold the obligations described in Sec.  
701.23(b)(2)(i) through (iv) if the Federal credit union's CAMEL 
composite rating is ``1,'' ``2,'' or ``3''.

0
4. In Sec.  701.36, add paragraph (c)(3) to read as follows


Sec.  701.36  Federal credit union occupancy and disposal of acquired 
and abandoned properties.

* * * * *
    (c) * * *
    (3) Temporary regulatory relief in response to COVID-19. Any days 
that fall within the period commencing on April 21, 2020 and concluding 
on December 31, 2020, shall not be counted for purposes of determining 
a federal credit union's compliance with the required time periods 
described in paragraphs (c)(1) and (2) of this section.
* * * * *
[FR Doc. 2020-08434 Filed 4-20-20; 8:45 am]
BILLING CODE P