Chartering and Field of Membership-Shared Facility Requirements, 1826-1831 [2020-28277]
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1826
Proposed Rules
Federal Register
Vol. 86, No. 6
Monday, January 11, 2021
This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
NATIONAL CREDIT UNION
ADMINISTRATION
12 CFR Part 701
RIN 3133–AF23
Chartering and Field of Membership—
Shared Facility Requirements
National Credit Union
Administration (NCUA).
ACTION: Proposed rule.
AGENCY:
The NCUA Board (Board)
proposes to amend its chartering and
field of membership (‘‘FOM’’) rules to
modernize requirements related to
service facilities for multiple common
bond (‘‘MCB’’) federal credit unions
(‘‘FCUs’’). The Board is proposing to
include any shared branch, shared
ATM, or shared electronic facility in the
definition of ‘‘service facility’’ for an
FCU that participates in a shared
branching network. The FCU need not
be an owner of the shared branch
network for the shared branch or shared
ATM to be a service facility. These
changes would apply to the definition of
service facility both for additions of
select groups to MCB FCUs and for
expansions into underserved areas.
DATES: Comments must be received on
or before February 10, 2021.
ADDRESSES: You may submit written
comments, identified by RIN 3133–
AF23, by any of the following methods
(Please send comments by one method
only):
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• Fax: (703) 518–6319. Include
‘‘[Your Name]—Comments on Proposed
Rule: Field of Membership—Shared
Facility Requirements’’ in the
transmittal.
• Mail: Address to Melane ConyersAusbrooks, Secretary of the Board,
National Credit Union Administration,
1775 Duke Street, Alexandria, Virginia
22314–3428.
Public inspection: You may view all
public comments on the Federal
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eRulemaking Portal at https://
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, 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:
Elizabeth Wirick, Senior Staff Attorney,
Office of General Counsel, at 1775 Duke
Street, Alexandria, VA 22314 or
telephone: (703) 518–6545.
SUPPLEMENTARY INFORMATION:
I. Background
II. Legal Authority
III. Summary of the Proposed Rule
IV. Regulatory Procedures
I. Background
NCUA’s Chartering and Field of
Membership Manual, incorporated as
Appendix B to part 701 of its
regulations (‘‘Chartering Manual’’),1
implements the FOM requirements and
limitations established by the Federal
Credit Union Act (‘‘the Act’’) 2 for FCUs.
The Act permits an FCU to have one of
three charter types: a single common
bond comprised of a group whose
members all share the same
occupational or associational common
bond; a multiple common bond in
which each group has a distinct
occupational or associational common
bond among its own members; and a
community common bond. With the
Board’s approval, a MCB FCU may add
additional groups and underserved
areas to its FOM.3 This proposal would
amend the Chartering Manual so that
the facilities of any shared branch
network in which an FCU participates,
regardless of ownership interest, would
qualify as a service facility.
One of the Act’s several requirements
for adding a group to a MCB FCU is that
the credit union must be ‘‘within
reasonable proximity to the location of
the group whenever practicable and
consistent with reasonable standards for
the safe and sound operation of the
1 12
CFR part 701, Appendix B.
U.S.C. 1750 et. seq.
3 Id. 1759(f)(2), (c)(2).
2 12
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credit union.’’ 4 The Chartering Manual
interprets the term ‘‘reasonable
proximity’’ as requiring the group to be
‘‘within reasonable geographic
proximity’’ of the credit union. The
Chartering Manual then explains this
means that the group ‘‘must be within
the service area of one of the credit
union’s service facilities.’’ 5 For
purposes of group additions, the current
definition of a service facility is:
a place where shares are accepted for
members’ accounts, loan applications are
accepted or loans are disbursed. This
definition includes a credit union owned
branch, a mobile branch, an office operated
on a regularly scheduled weekly basis, a
credit union owned ATM, or a credit union
owned electronic facility that meets, at a
minimum, these requirements. A service
facility also includes a shared branch or a
shared branch network if either: (1) The
credit union has an ownership interest in the
service facility either directly or through a
CUSO or similar organization; or (2) the
service facility is local to the credit union
and the credit union is an authorized
participant in the service center. This
definition does not include the credit union’s
internet website.6
Among the Act’s requirements for
adding an underserved area to a MCB
FCU is that ‘‘the credit union establishes
and maintains an office or facility’’ in
the underserved area.7 The Chartering
Manual implements this provision of
the Act by requiring a credit union
adding an underserved area to its FOM
to ‘‘establish within two years, and
maintain, an office or service facility in
the community.’’ 8 For purposes of
underserved area additions, the current
Chartering Manual definition of a
service facility is:
a place where shares are accepted for
members’ accounts, loan applications are
accepted and loans are disbursed. By
definition, a service facility includes a credit
union-owned branch, a shared branch, a
mobile branch, or an office operated on a
regularly scheduled weekly basis or a credit
union owned electronic facility that meets, at
a minimum, the above requirements. This
definition does not include an ATM or the
credit union’s internet website.9
A third definition of service facility,
which combines the two definitions,
4 Id.
(f)(1)(B).
Manual, § 2.IV.A.1.
6 Id. § 2.IV.A.1.
7 12 U.S.C. 1759(c)(2)(B).
8 Chartering Manual, § 2.III.F.
9 Id. § 3.III.F.
5 Chartering
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appears in the ‘‘Glossary’’ appendix to
the Chartering Manual.
Although the Chartering Manual
requires a service facility for both group
and underserved area additions, it
currently incorporates a different
definition of the term ‘‘service facility’’
for each context. For example, under the
current rule, an ATM is a service facility
for purposes of select group additions
but not for purposes of underserved area
additions. In addition, the definition of
service facility for select group
additions requires that a facility provide
at least one service from a list of
services, but the definition of service
facility for underserved area additions
requires that a facility provide all of the
listed services.10
The provisions of the Act authorizing
the existence of MCB FCUs were
adopted in 1998, in the Credit Union
Membership Access Act (‘‘CUMAA’’).
From the first Chartering Manual the
NCUA promulgated after CUMAA’s
enactment, the NCUA took the position
that group additions could only occur
around service facilities in which the
credit union had an ownership
interest.11 Although the required
proportion of ownership was initially
unspecific, in 2000 the Board
promulgated a rule requiring a MCB to
have at least a five percent interest in a
facility to add groups based on the
location of the shared facility.12
In 2003, the Board revised the
Chartering Manual to delete the five
percent ownership interest requirement,
describing the change as follows:
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In response to some commenters, the
NCUA Board is clarifying in the final rule
that the requisite ownership interest can be
in a shared service center, a shared service
network, or similar organization. Therefore,
as long as the credit union has an ownership
interest in the service center, network, or
similar organization, the credit union can
expand around any of them. The credit union
does not need to have an ownership interest
in the specific service facility. This means,
for example, that, if the credit union has an
ownership interest in a CUSO, it can expand
around any service center connected to the
CUSO. This also would allow a participating
credit union with an ownership interest in
the service facility to expand around other
service facilities connected to the shared
service network or similar organization.13
10 Compare Chartering Manual § 2.IV.A.1. (a
service facility is ‘‘a place where shares are
accepted for members’ accounts, loan applications
are accepted or loans are disbursed’’) with
Chartering Manual § 3.III.F (a service facility is ‘‘a
place where shares are accepted for members’
accounts, loan applications are accepted and loans
are disbursed’’) (emphasis added).
11 65 FR 64512, 64513 (Oct. 27, 2000).
12 Id.
13 68 FR 18334, 18335 (April 15, 2003).
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Even while eliminating the five
percent requirement tied to each
specific location, the Board continued to
assert, ‘‘[A]n ownership interest is
crucial in analyzing the reasonable
proximity requirement for ATMs and
shared service facilities.’’ 14
The Board has now determined that
an ownership requirement related to
shared facilities and ATMs is needlessly
restrictive, and the Board is proposing
to remove this requirement. The
structure of shared branching has
changed dramatically since the NCUA
adopted and amended the ownership
requirement. Shared branches
originated as physical locations
specifically designed for shared use,
jointly owned by a small group of
participating credit unions operating in
adjacent areas. Participating credit
unions now use their existing branches
and ATMs as shared locations, generally
without separate facilities designated as
shared branches. Entities offering shared
branching services have also
consolidated over time. In this changed
environment, obtaining an ownership
interest in a shared branch network may
be difficult or a practical impossibility
for credit unions not already owners of
a shared branching network.
The ownership requirement restricts
the use of shared locations for FOM
expansions, without enhancing the
utility of the shared location for FCU
members. Member access to services
from a shared branch is the same
whether or not the FCU has an
ownership interest in the shared
branching network. Nor does being a
part owner of a shared branching
network confer any more permanence to
a shared location than being an
authorized participant in the shared
branching network. In light of these
factors, the Board has determined that
the Chartering Manual’s current
requirement that the credit union have
‘‘an ownership interest in the service
facility either directly or through a
CUSO’’ needlessly limits MCB FCU
services to additional groups and their
members and ignores the way business
is done in the current marketplace. The
FCU Act places few conditions on what
constitutes ‘‘reasonable proximity.’’ If a
MCB FCU participates in a shared
branching network, and has access to a
location based on contractual
agreements with the network, the Board
believes the FCU is in reasonable
proximity to a group that is within the
service area of the shared location. The
change to this definition will expand
FOM eligibility to groups that are within
the service area of the shared branches
and ATMs to which a MCB FCU has
access through a shared branching
network.
For similar reasons, the Board is also
proposing to permit MCB FCUs to add
underserved areas based on the location
of a shared branch or ATM of a network
in which the FCU participates. The Act
permits an underserved area addition if
the credit union establishes and
maintains ‘‘an office or facility’’ in the
underserved area ‘‘at which credit union
services are available.’’ 15 ATMs and
shared branch locations provide credit
union services. As noted above, credit
union members have the same access to
services at shared locations, regardless
of whether the FCU has an ownership
interest in the shared branching network
or is an authorized participant in the
network. With continuing technological
advances, members will be able to
obtain the services they need through
using ATMs or other electronic facilities
combined with telephone or email
communications with credit union staff.
In light of the changes to the ways
consumers access financial services
since CUMAA’s enactment, the Board
believes its former policies were
needlessly restrictive.
In summary, the financial services
world has undergone significant
changes since the Board adopted the
various requirements related to shared
locations and shared branching
networks some decades ago. For these
reasons, the Board believes it is now
appropriate to revise its policy about the
types of shared facilities that can be
considered in the context of the Act’s
requirement for ‘‘reasonable proximity’’
for both additions of groups and
additions of underserved areas. The
proposed changes will also provide
regulatory relief by conforming the
several definitions of ‘‘service facility’’
in the Chartering Manual.
II. Legal Authority
The Board is issuing this proposed
rule pursuant to its authority under the
FCU Act. Under the FCU Act, the NCUA
is the chartering and supervisory
authority for FCUs and the Federal
supervisory authority for all federally
insured credit unions (‘‘FICUs’’).16 The
FCU Act grants the NCUA a broad
mandate to issue regulations governing
both FCUs and FICUs. 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 FCU Act.17
15 12
U.S.C. 1759(c)(2)(B).
1752–1775.
17 Id. 1766(a).
16 Id.
14 Id.
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The Act requires the Board to develop
regulations to establish the criteria for
additions of groups 18 and requires the
Board to approve a MCB FCU’s addition
of underserved areas.19 The Act does
not use the term ‘‘service facility.’’
Rather, the Board adopted the term
‘‘service facility’’ to define the limits of
reasonable proximity.20
The position that an FCU’s
participation in a shared branch
network constitutes a sufficient interest
to make the shared branch a service
facility for purposes of MCB expansion
is a reversal from a position the agency
initiated over two decades ago. The
Chartering Manual has consistently
required ownership either in the shared
service facility itself or the network
operating the shared facility in order to
permit a MCB FCU to add a group based
on the location of the shared facility for
any facilities that are not local to the
FCU. Similarly, the Chartering Manual
has consistently required that a MCB
FCU seeking to add an underserved area
must, at a minimum, establish and
maintain a shared branch (with
ownership in the branch), or a credit
union-owned electronic facility in the
area. As discussed above, the Act does
not dictate the agency’s prior positions
requiring ownership in a shared
branching network or excluding ATMs
from the definition of service facility for
purposes of underserved area
expansion, and there are now sound
policy reasons for the reversal.
Agencies must ‘‘use the same
procedures when they amend or repeal
a rule as they used to issue the rule in
the first instance.’’ 21 Accordingly,
agencies cannot reverse rules adopted
by notice-and-comment rulemaking by
other, less transparent methods.22 The
term ‘‘service facility’’ appears in the
Chartering Manual, which the Board has
promulgated and amended using notice
and comment rulemaking. The Board is
now engaging in a notice and comment
rulemaking to change its position,
proposing to remove ownership
requirements when considering shared
branch networks and allowing ATMs to
18 12
U.S.C. 1759(d)(3).
1759(c).
20 63 FR 71998, 72002 (Dec. 30, 1998); 68 FR
18334, 18335 (April 15, 2003).
21 Perez v. Mortgage Bankers Ass’n, 575 U.S. 92,
101 (2015).
22 Nat’l Family Planning and Reproductive Health
Ass’n, Inc. v. Sullivan, 979 F.2d 227, 236 (D.C. Cir.
1992). (‘‘[The agency] may not constructively
rewrite the regulation, which was expressly based
upon a specific interpretation of the statute, through
internal memoranda or guidance directives that
incorporate a totally different interpretation and
effect a totally different result’’); Clean Ocean
Action v. York, 57 F.3d 328 (3d Cir. 1995).
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qualify as service facilities in
underserved areas.
III. Summary of the Proposed Rule
As highlighted above, the Chartering
Manual defines ‘‘service facility’’
differently for group additions than for
underserved area additions. The
proposed rule would conform these
definitions.
A. Changes to the Definition of Service
Facility for Purposes of Group Additions
For group additions, FCU-owned
electronic facilities that accept deposits,
take loan applications, or disburse loans
are service facilities.23 Credit unionowned branches, mobile branches,
offices operated on a regularly
scheduled weekly basis, and video teller
machines also meet the criteria for
service facilities. Finally, shared
branching network facilities also meet
the criteria for service facilities for
group additions, provided the credit
union has an ownership interest in the
shared branching network. The proposal
would leave the definition of service
facility intact, but would remove the
ownership requirement for shared
branch networks.
B. Change to the Definition of Service
Facility for Purpose of Underserved
Area Additions
For underserved areas, the current
definition of ‘‘service facility’’ is more
limited and allows fewer kinds of
facilities to qualify. More specifically,
for underserved areas, a service facility
includes credit union-owned electronic
facilities (other than ATMs) that take
deposits, accept loan applications, and
disburse loans.24 Credit union branches,
certain shared branches, mobile
branches, and offices operated on a
regularly scheduled weekly basis also
meet the current criteria for a service
facility in an underserved area
expansion. Under the current definition,
shared locations to which an FCU has
access by virtue of participating in a
shared branching network without an
ownership interest do not meet the
criteria for a service facility in an
underserved area. ATMs are excluded,
even if wholly owned by the FCU. The
proposal would change the definition to
allow shared facilities to qualify as
service facilities, without any
requirement for shared ownership. The
proposal would also permit ATMs to
qualify as service facilities, whether
wholly owned by an FCU or part of a
23 Chartering
24 Id.
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§ 3.III.F.
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shared branch network in which the
FCU participates.
The proposal would make the
definition of service facility for
purposes of adding underserved areas
identical to the definition of service
facility for purposes of adding groups.
The proposal also makes the definition
of service facility in the glossary section
of the Chartering Manual consistent
with the other definitions. The Board
emphasizes that neither the current rule
nor this proposal permit a credit union’s
transactional website to count as a
service facility for purposes of adding a
group or an underserved area.
The NCUA invites comments on all
aspects of the proposal.25
IV. Additional Request for Comment
Over time, the Board’s definitions of
terms like ‘‘service facility’’ have
evolved, consistent with the underlying
constraints of the FCU Act, to reflect the
increasing role of technology in the
provision of financial services. For
example, the Board determined that a
credit union-owned ATM was a service
facility for purposes of group additions
to MCB FCUs in 2003,26 although it had
initially not viewed an ATM as a service
facility.27 Similarly, in a 2012 Opinion
Letter, the NCUA’s Office of General
Counsel concluded that a video teller
machine which permits real-time
interaction between a person and an
FCU member is a service facility both
for additions of groups and for additions
of underserved areas.28 The proposed
amendments to the chartering manual
outlined above represent a further
evolution, reflecting technological
advances as well as changes in
consumer behaviors.
The Board is also now requesting
comment on another possible evolution
in the definition of service facility,
specifically, whether a credit union’s
transactional website and mobile
banking applications should be
included in the definition of service
facility. The Board previously proposed
to amend the definition of ‘‘service
facility’’ for group additions to MCB
25 Because this change will not add any increased
burden, the Board is not providing the usual 60-day
comment period before finalizing this rule. See
NCUA Interpretive Ruling and Policy Statement
(IRPS) 87–2, as amended by IRPS 03–2 and IRPS
15–1. 80 FR 57512 (Sept. 24, 2015), available at
https://www.ncua.gov/files/publications/irps/
IRPS1987-2.pdf.
26 68 FR 18334, 18352 (April 15, 2003).
27 63 FR 71998, 712002 (Dec. 30, 1998).
28 OGC Op. No. 11–0965 (Aug. 2012), available at
https://www.ncua.gov/regulation-supervision/legalopinions/2012/video-teller-machine. Should this
proposed rule become final, this opinion will be
superseded, as there would no longer be an
advantage to having a video teller machine, as
opposed to an ATM.
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FCUs to include online financial
services, including computer-based and
mobile phone channels meeting certain
criteria for access.29 In support of its
proposal, the Board cited extensive data
showing the increasing use of online
and mobile banking.30 After analyzing
the comments it received on the
proposal, the Board deferred action on
it to a later date.31
The Board is now renewing its
consideration of this issue. In the four
years since the Board deferred action on
its initial proposal, the proportion of
financial services delivered through
transactional websites has continued to
increase. For example, in 2017, 40% of
consumers reported primarily using
online banking to manage their
accounts.32 The pandemic has
accelerated the trend toward providing
financial services digitally. According to
the J.D. Power 2020 Retail Banking
Satisfaction Survey, 35% of consumers
report increased online banking using a
computer since the pandemic began,
with 17% reporting much more use. The
pandemic also caused 30% of
consumers to increase their use of
mobile banking apps, with 11% stating
they used mobile banking much more.33
Additionally, as of April 2020, 39% of
adults planned to make an online
banking transaction such as account
opening or debt consolidation in the
next 30 days.34 The transition to online
financial services is expected to outlast
the pandemic.35 In light of the
inexorably increasing use of digital
financial services, the Board believes it
is now appropriate to reconsider
including transactional websites and
mobile banking applications in the
definition of service facilities.
V. Regulatory Procedures
A. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA)
generally requires that, in connection
29 80
FR 76748, 76752 (Dec. 10, 2015).
30 Id.
31 81
FR 88412, 88420 (Dec. 7, 2016).
additional 26 percent of consumers report
mobile devices are their most frequently used
banking method. ABA Banking Journal blog (Sept.
21, 2017), https://bankingjournal.aba.com/2017/09/
aba-survey-two-thirds-of-americans-use-digitalbanking-channels-most-often/.
33 As summarized by Jim Marous, Financial
Brand blog, (April 27, 2020), https://
thefinancialbrand.com/95735/digital-onlinebanking-coronavirus/.
34 Roy Urrico, ‘‘Digital Transformation in the
COVID–19 Age, Credit Union Times (April 30,
2020), https://www.cutimes.com/2020/04/30/
digital-transformation-in-the-covid-19-age/.
35 Stephanie Walden and Daphne Forman, ‘‘5
Fintech Trends Likely to Stick Around After the
Pandemic,’’ Forbes Advisor (Sept. 28, 2020), https://
www.forbes.com/advisor/banking/fintech-trendsafter-the-pandemic/.
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with a notice of proposed rulemaking,
an agency prepare and make available
for public comment an initial regulatory
flexibility analysis that describes the
impact of a proposed rule on small
entities. A regulatory flexibility analysis
is not required, however, if the agency
certifies that the rule will not have a
significant economic impact on a
substantial number of small entities
(defined for purposes of the RFA to
include FICUs with assets less than
$100 million) and publishes its
certification and a short, explanatory
statement in the Federal Register
together with the rule.
The proposed rule changes the criteria
for service facilities and facilitates the
provision of credit union services to
additional groups and underserved
areas by MCB FCUs. As of September
30, 2020, there are 1,373 MCB FCUs, of
which 974 have assets less than $100
million. Of these 974 MCB FCUs with
assets less than $100 million, 286 are
already participating in a shared
branching network. This means that the
remaining 688 MCB FCUs under $100
million may have additional incentive
to participate in shared branching, as
they will be able to use shared locations
as a basis for expanding their FOM to
additional groups or underserved areas.
Any benefit to small FCUs from the
ability to add additional members is
likely minimal. The negative effect on
small FCUs whose members gain
eligibility for membership in another
credit union under these changes is also
likely minimal. Although this rule is
anticipated to economically benefit
FCUs that choose to expand their FOMs,
NCUA certifies that it will not have a
significant economic impact on small
credit unions.
B. Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(PRA) applies to rulemakings in which
an agency creates a new or amends
existing information collection
requirements.36 For purposes of the
PRA, an information collection
requirement may take the form of a
reporting, recordkeeping, or a thirdparty disclosure requirement. 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 current
information collection requirements for
the Chartering Manual are approved
under OMB control number 3133–0015.
This rule proposes to amend Chapter 2,
Chapter 3 and Appendix 1 of Appendix
36 44
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B to Part 701 by changing the definition
of service facilities for MCB FCUs
seeking to add select groups or
underserved areas. The proposed rule
creates new strategic opportunities for
MCB FCUs while not changing the
information FCUs are required to supply
to take advantage of these opportunities.
Nevertheless, the total information
collection burden will increase because
the change means more FCUs will
qualify to add select groups or
underserved areas, which will lead to
additional applications.
There are currently 1,373 multiple
common bond FCUs, of which 594
participate in shared branching. The
proposed change is estimated to
increase the number of applications/
amendments by an additional 90
respondents.
OMB Control Number: 3133–0015.
Title of information collection:
Chartering and Field of Membership
Manual, 12 CFR 701.1, App. B to Part
701.
Estimated number respondents: 8,245.
Estimated number of responses per
respondent: 1.
Estimated total annual responses:
8,245.
Estimated total annual burden per
response: 1.97.
Estimated total annual burden:
16,223.
The NCUA invites comments on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden of the proposed collection
of information, including the validity of
the methodology and assumptions used;
(c) ways to enhance the quality, utility
and clarity of the information to be
collected; and (d) ways to minimize the
burden of the collection of information
on those who are to respond, including
through the use of appropriate
automated, electronic, mechanical, or
other technological collection
techniques or other forms of information
technology; and (e) estimates of capital
or start-up costs and cost of operation,
maintenance, and purchase of services
to provide information.
All comments are a matter of public
record. Interested persons are invited to
submit written comments to (1)
www.reginfo.gov/public/do/PRAMain.
Find this particular information
collection by selecting the Agency
under ‘‘Currently under Review’’ and to
(2) Dawn Wolfgang, National Credit
Union Administration, 1775 Duke
Street, Suite 6032, Alexandria, Virginia
22314; Fax No. 703–519–8579; or email
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Federal Register / Vol. 86, No. 6 / Monday, January 11, 2021 / Proposed Rules
at PRAComments@ncua.gov. Given the
limited in-house staff because of the
COVID–19 pandemic, email comments
are preferred.
C. Executive Order 13132
Executive Order 13132 encourages
independent regulatory agencies to
consider the impact of their actions on
state and local interests. In adherence to
fundamental federalism principles, the
NCUA, an independent regulatory
agency as defined in 44 U.S.C. 3502(5),
voluntarily complies with the executive
order. This rulemaking will not have a
substantial direct effect on the states, on
the connection between the national
government and the states, or on the
distribution of power and
responsibilities among the various
levels of government. The NCUA has
determined that this proposal does not
constitute a policy that has federalism
implications for purposes of the
executive order.
D. Assessment of Federal Regulations
and Policies on Families
The NCUA has determined that this
final rule will not affect family wellbeing within the meaning of Section 654
of the Treasury and General
Government Appropriations Act,
1999.37
List of Subjects in 12 CFR Part 701
Credit, Credit unions, Reporting and
recordkeeping requirements.
By the National Credit Union
Administration Board on December 17, 2020.
Melane Conyers-Ausbrooks,
Secretary of the Board.
For the reasons stated above, the
Board proposes to amend 12 CFR part
701, Appendix B as follows:
PART 701—ORGANIZATION AND
OPERATION OF FEDERAL CREDIT
UNIONS
1. The authority citation for part 701
continues to read as follows:
■
Authority: 12 U.S.C. 1752(5), 1755, 1756,
1757, 1758, 1759, 1761a, 1761b, 1766, 1767,
1782, 1784, 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.
2. In Appendix B to Part 701, revise
Chapter 2 Section IV.A.1 to read as
follows:
jbell on DSKJLSW7X2PROD with PROPOSALS
■
Appendix B to Part 701—Chartering
and Field of Membership Manual
*
*
37 Public
*
*
*
Law 105–277, 112 Stat. 2681 (1998).
VerDate Sep<11>2014
21:32 Jan 08, 2021
Jkt 253001
IV—Multiple Occupational/Associational
Common Bonds
IV.A.1—General
A federal credit union may be chartered to
serve a combination of distinct, definable
single occupational and/or associational
common bonds. This type of credit union is
called a multiple common bond credit union.
Each group in the field of membership must
have its own occupational or associational
common bond. For example, a multiple
common bond credit union may include two
unrelated employers, or two unrelated
associations, or a combination of two or more
employers or associations. Additionally,
these groups must be within reasonable
geographic proximity of the credit union.
That is, the groups must be within the service
area of one of the credit union’s service
facilities. These groups are referred to as
select groups. A multiple common bond
credit union cannot include a TIP or expand
using single common bond criteria.
Employment in a corporation or other legal
entity which is related to another legal entity
(such as a company under contract to, and
possessing a strong dependency relationship
with, the other company) makes that person
part of the occupational common bond of a
select employee group within a multiple
common bond. In this context, a ‘‘strong
dependency relationship’’ is a relationship in
which the entities rely on each other as
measured by a pattern of regularly doing
business with each other, for example, as
documented by the number, the term length,
and the dollar volume of prior and pending
contracts between them.
A multiple common bond credit union’s
charter may also combine individual
occupational groups that each consist of
employees of a retailer or other business
tenant of an industrial park, a shopping mall,
office park or office building (each ‘‘a park’’).
To be able to have this type of clause in its
charter, the multiple common bond credit
union first must receive a request from an
authorized representative of the group or the
park to establish credit union service. The
park must be within the multiple common
bond credit union’s service area, and each
occupational group must have fewer than
3,000 employees, who are eligible for
membership only for so long as each is
employed by a park tenant. Under this
clause, a multiple common bond credit union
can enroll group employees only while the
group’s retail or business employer is a park
tenant, but such credit unions are free to
serve employees of new groups under the
above conditions as each respective employer
becomes a park tenant.
A federal credit union’s service area is the
area that can reasonably be served by the
service facilities accessible to the groups
within the field of membership. The service
area will most often coincide with that
geographic area primarily served by the
service facility. Additionally, the groups
served by the credit union must have access
to the service facility. The non-availability of
other credit union service is a factor to be
considered in determining whether the group
is within reasonable proximity of a credit
union wishing to add the group to its field
of membership.
PO 00000
Frm 00005
Fmt 4702
Sfmt 4702
A service facility for multiple common
bond credit unions is defined as a place
where shares are accepted for members’
accounts, loan applications are accepted or
loans are disbursed. This definition includes
a credit union branch, a mobile branch, an
office operated on a regularly scheduled
weekly basis, a credit union owned ATM, or
a credit union owned electronic facility that
meets, at a minimum, these requirements. A
service facility also includes a shared branch
or a shared branch network location,
including a shared ATM or electronic
facility, if the credit union participates in a
shared branching network. This definition
does not include the credit union’s internet
website.
The select group as a whole will be
considered to be within a credit union’s
service area when:
• A majority of the persons in a select
group live, work, or gather regularly within
the service area;
• The group’s headquarters is located
within the service area; or
• The group’s ‘‘paid from’’ or ‘‘supervised
from’’ location is within the service area.
3. In Appendix B to Part 701, revise
Chapter 3 Section III.F to read as
follows:
■
Appendix B to Part 701—Chartering
and Field of Membership Manual
*
*
*
*
*
III.F—Service Facility
Once an ‘‘underserved area’’ has been
added to a federal credit union’s field of
membership, the credit union must establish
within two years, and maintain, an office or
service facility in the community. A service
facility is defined as a place where shares are
accepted for members’ accounts, loan
applications are accepted or loans are
disbursed. By definition, a service facility
includes a credit union-owned branch, a
shared branch, a mobile branch, an office
operated on a regularly scheduled weekly
basis, a credit union owned ATM, or an
electronic facility that meets, at a minimum,
the above requirements. A service facility
also includes a shared branch or a shared
branch network location, including a shared
ATM or other electronic facility, if a credit
union participates in a shared branching
network.
This definition does not include the credit
union’s internet website.
4. In Appendix B to Part 701 revise
the entry for ‘‘service facility’’ in the
Glossary section to read as follows:
■
Appendix B to Part 701—Chartering
and Field of Membership Manual
*
*
*
*
*
Appendix 1—Glossary
*
*
*
*
*
Service facility—A place where shares are
accepted for members’ accounts, loan
applications are accepted or loans are
disbursed. This definition includes a credit
union owned branch, a mobile branch, an
office operated on a regularly scheduled
weekly basis, a credit union owned ATM, or
E:\FR\FM\11JAP1.SGM
11JAP1
Federal Register / Vol. 86, No. 6 / Monday, January 11, 2021 / Proposed Rules
a credit union owned electronic facility that
meets, at a minimum, these requirements. A
service facility also includes a shared branch
or a shared branch network location,
including a shared ATM or other electronic
facility, if a credit union participates in a
shared branching network. This definition
does not include the credit union’s internet
website.
*
*
*
*
*
[FR Doc. 2020–28277 Filed 1–8–21; 8:45 am]
BILLING CODE 7535–01–P
DEPARTMENT OF LABOR
Employees’ Compensation Appeals
Board
20 CFR Part 501
RIN 1290–AA37
Rules of Practice and Procedure
Employees’ Compensation
Appeals Board, Department of Labor.
ACTION: Notice of proposed rulemaking;
request for comments.
AGENCY:
The Department of Labor
(DOL or Department) is issuing this
Notice of Proposed Rulemaking (NPRM)
to seek public comments on a proposal
to require electronic filing (e-filing) and
electronic service (e-service) for
attorneys and lay representatives
representing parties in proceedings
before the Employees’ Compensation
Appeals Board (ECAB or the Board).
These proposed regulations would
establish e-filing and e-service rules of
practice and procedure for the Board
that would apply where a governing
statute, regulation, or executive order
does not establish contrary rules of
practice or procedure. The rule would
mandate e-filing, makes e-service
automatic of documents for parties
represented by attorneys and duly
authorized lay representatives, and
provides an option for pro se/selfrepresented parties to utilize these
capabilities. It would also allow the
Board, in its discretion, to hold oral
arguments by videoconference.
DATES: The Department invites
interested persons to submit comments
on the proposed rules of practice and
procedure. To ensure consideration,
comments must be in writing and must
be received by February 10, 2021.
ADDRESSES: You may send comments,
identified by Regulatory Identification
Number (RIN) 1290–AA37, only by the
following method: Electronic
Comments. Submit comments through
the Federal eRulemaking Portal https://
www.regulations.gov. To locate the
proposed rule, use docket number DOL–
jbell on DSKJLSW7X2PROD with PROPOSALS
SUMMARY:
VerDate Sep<11>2014
21:32 Jan 08, 2021
Jkt 253001
2020–0017 or key words such as
‘‘Administrative practice and
procedure’’ or ‘‘Workers’
compensation.’’ Follow the instructions
for submitting comments. All comments
must be received by 11:59 p.m. on the
date indicated for consideration in this
rulemaking.
Instructions: All submissions received
must include the agency name and
docket number or Regulatory
Information Number (RIN) for this
rulemaking. All comments received will
generally be posted without change to
https://www.regulations.gov, including
any personal information provided. If
you need assistance to review the
comments or the proposed rule, the
Department will consider providing the
comments and the proposed rule in
other formats upon request. For
assistance to review the comments or
obtain the proposed rule in an alternate
format, contact Mr. Thomas Shepherd,
Clerk of the Appellate Boards, at (202)
693–6319. Individuals with hearing or
speech impairments may access the
telephone number above by TTY by
calling the toll-free Federal Information
Relay Service at (800) 877–8339.
FOR FURTHER INFORMATION CONTACT:
Thomas Shepherd, Clerk of the
Appellate Boards, at 202–693–6319 or
ECAB-Inquiries@dol.gov.
SUPPLEMENTARY INFORMATION: This
preamble is divided into four sections:
Section I explains the process of issuing
a proposed rule concurrently with a
companion direct final rule; Section II
provides general background
information on the development of the
proposed rulemaking; Section III is a
section-by-section summary and
discussion of the proposed regulatory
text; and Section IV covers the
administrative requirements for this
proposed rulemaking.
I. Proposed Rule Published
Concurrently With Companion Direct
Final Rule
The Department is simultaneously
publishing with this proposed rule an
identical ‘‘direct final’’ rule elsewhere
in this issue of the Federal Register. In
direct final rulemaking, an agency
publishes a final rule with a statement
that the rule will go into effect unless
the agency receives significant adverse
comment within a specified period. If
the agency receives no significant
adverse comment in response to the
direct final rule, the rule goes into
effect. If the agency receives significant
adverse comment, the agency withdraws
the direct final rule and treats such
comment as submissions on the
proposed rule. The proposed rule then
PO 00000
Frm 00006
Fmt 4702
Sfmt 4702
1831
provides the procedural framework to
finalize the rule. An agency typically
uses direct final rulemaking when it
anticipates the rule will be noncontroversial.
The Department has determined that
this rule is suitable for direct final
rulemaking. The proposed revisions to
the Board’s procedural regulations
would require representatives to use the
Board’s electronic system for filing and
serving documents unless exempted by
the Board for good cause. Some
represented parties are already filing
documents through the Board’s existing
electronic system on a voluntary basis.
Moreover, this system is similar to those
used by courts and other administrative
agency electronic systems and will thus
be familiar to the representatives. The
proposed rule would also give selfrepresented (pro se) appellants the
option to file and serve documents
through the electronic system or via
conventional methods. It would also
allow the Board to hear oral argument
by videoconference under the same
discretionary criteria outlined in its
2008 proposal. These changes to the
Board’s procedures and practices are not
expected to be controversial and are
consistent with its statements in its
2008 proposal. 73 FR 35103 (‘‘[T]he
Board has anticipated that technological
advances may, in the future, allow the
filing, notice, service and presentation
of documents and argument by
electronic means.’’).
The comment period for this
proposed rule runs concurrently with
the comment period for the direct final
rule. Any comments received in
response to this proposed rule will also
be considered as comments regarding
the direct final rule and vice versa. For
purposes of this rulemaking, a
significant adverse comment is one that
explains (1) why the rule is
inappropriate, including challenges to
the rule’s underlying premise or
approach; or (2) why the direct final
rule will be ineffective or unacceptable
without a change. In determining
whether a significant adverse comment
necessitates withdrawal of this direct
final rule, the Department will consider
whether the comment raises an issue
serious enough to warrant a substantive
response had it been submitted in a
standard notice-and-comment process.
A comment recommending an addition
to the rule will not be considered
significant and adverse unless the
comment explains how this direct final
rule would be ineffective without the
addition.
The Department requests comments
on all issues related to this rule,
including economic or other regulatory
E:\FR\FM\11JAP1.SGM
11JAP1
]]>Agencies
[Federal Register Volume 86, Number 6 (Monday, January 11, 2021)]
[Proposed Rules]
[Pages 1826-1831]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-28277]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 86, No. 6 / Monday, January 11, 2021 /
Proposed Rules
[[Page 1826]]
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 701
RIN 3133-AF23
Chartering and Field of Membership--Shared Facility Requirements
AGENCY: National Credit Union Administration (NCUA).
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The NCUA Board (Board) proposes to amend its chartering and
field of membership (``FOM'') rules to modernize requirements related
to service facilities for multiple common bond (``MCB'') federal credit
unions (``FCUs''). The Board is proposing to include any shared branch,
shared ATM, or shared electronic facility in the definition of
``service facility'' for an FCU that participates in a shared branching
network. The FCU need not be an owner of the shared branch network for
the shared branch or shared ATM to be a service facility. These changes
would apply to the definition of service facility both for additions of
select groups to MCB FCUs and for expansions into underserved areas.
DATES: Comments must be received on or before February 10, 2021.
ADDRESSES: You may submit written comments, identified by RIN 3133-
AF23, by any of the following methods (Please send comments by one
method only):
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
Fax: (703) 518-6319. Include ``[Your Name]--Comments on
Proposed Rule: Field of Membership--Shared Facility Requirements'' in
the transmittal.
Mail: Address to Melane Conyers-Ausbrooks, Secretary of
the Board, National Credit Union Administration, 1775 Duke Street,
Alexandria, Virginia 22314-3428.
Public inspection: You may view all public comments on the Federal
eRulemaking Portal at https://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, 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 [email protected].
FOR FURTHER INFORMATION CONTACT: Elizabeth Wirick, Senior Staff
Attorney, Office of General Counsel, at 1775 Duke Street, Alexandria,
VA 22314 or telephone: (703) 518-6545.
SUPPLEMENTARY INFORMATION:
I. Background
II. Legal Authority
III. Summary of the Proposed Rule
IV. Regulatory Procedures
I. Background
NCUA's Chartering and Field of Membership Manual, incorporated as
Appendix B to part 701 of its regulations (``Chartering Manual''),\1\
implements the FOM requirements and limitations established by the
Federal Credit Union Act (``the Act'') \2\ for FCUs. The Act permits an
FCU to have one of three charter types: a single common bond comprised
of a group whose members all share the same occupational or
associational common bond; a multiple common bond in which each group
has a distinct occupational or associational common bond among its own
members; and a community common bond. With the Board's approval, a MCB
FCU may add additional groups and underserved areas to its FOM.\3\ This
proposal would amend the Chartering Manual so that the facilities of
any shared branch network in which an FCU participates, regardless of
ownership interest, would qualify as a service facility.
---------------------------------------------------------------------------
\1\ 12 CFR part 701, Appendix B.
\2\ 12 U.S.C. 1750 et. seq.
\3\ Id. 1759(f)(2), (c)(2).
---------------------------------------------------------------------------
One of the Act's several requirements for adding a group to a MCB
FCU is that the credit union must be ``within reasonable proximity to
the location of the group whenever practicable and consistent with
reasonable standards for the safe and sound operation of the credit
union.'' \4\ The Chartering Manual interprets the term ``reasonable
proximity'' as requiring the group to be ``within reasonable geographic
proximity'' of the credit union. The Chartering Manual then explains
this means that the group ``must be within the service area of one of
the credit union's service facilities.'' \5\ For purposes of group
additions, the current definition of a service facility is:
---------------------------------------------------------------------------
\4\ Id. (f)(1)(B).
\5\ Chartering Manual, Sec. 2.IV.A.1.
a place where shares are accepted for members' accounts, loan
applications are accepted or loans are disbursed. This definition
includes a credit union owned branch, a mobile branch, an office
operated on a regularly scheduled weekly basis, a credit union owned
ATM, or a credit union owned electronic facility that meets, at a
minimum, these requirements. A service facility also includes a
shared branch or a shared branch network if either: (1) The credit
union has an ownership interest in the service facility either
directly or through a CUSO or similar organization; or (2) the
service facility is local to the credit union and the credit union
is an authorized participant in the service center. This definition
does not include the credit union's internet website.\6\
---------------------------------------------------------------------------
\6\ Id. Sec. 2.IV.A.1.
Among the Act's requirements for adding an underserved area to a
MCB FCU is that ``the credit union establishes and maintains an office
or facility'' in the underserved area.\7\ The Chartering Manual
implements this provision of the Act by requiring a credit union adding
an underserved area to its FOM to ``establish within two years, and
maintain, an office or service facility in the community.'' \8\ For
purposes of underserved area additions, the current Chartering Manual
definition of a service facility is:
---------------------------------------------------------------------------
\7\ 12 U.S.C. 1759(c)(2)(B).
\8\ Chartering Manual, Sec. 2.III.F.
a place where shares are accepted for members' accounts, loan
applications are accepted and loans are disbursed. By definition, a
service facility includes a credit union-owned branch, a shared
branch, a mobile branch, or an office operated on a regularly
scheduled weekly basis or a credit union owned electronic facility
that meets, at a minimum, the above requirements. This definition
does not include an ATM or the credit union's internet website.\9\
---------------------------------------------------------------------------
\9\ Id. Sec. 3.III.F.
A third definition of service facility, which combines the two
definitions,
[[Page 1827]]
appears in the ``Glossary'' appendix to the Chartering Manual.
Although the Chartering Manual requires a service facility for both
group and underserved area additions, it currently incorporates a
different definition of the term ``service facility'' for each context.
For example, under the current rule, an ATM is a service facility for
purposes of select group additions but not for purposes of underserved
area additions. In addition, the definition of service facility for
select group additions requires that a facility provide at least one
service from a list of services, but the definition of service facility
for underserved area additions requires that a facility provide all of
the listed services.\10\
---------------------------------------------------------------------------
\10\ Compare Chartering Manual Sec. 2.IV.A.1. (a service
facility is ``a place where shares are accepted for members'
accounts, loan applications are accepted or loans are disbursed'')
with Chartering Manual Sec. 3.III.F (a service facility is ``a
place where shares are accepted for members' accounts, loan
applications are accepted and loans are disbursed'') (emphasis
added).
---------------------------------------------------------------------------
The provisions of the Act authorizing the existence of MCB FCUs
were adopted in 1998, in the Credit Union Membership Access Act
(``CUMAA''). From the first Chartering Manual the NCUA promulgated
after CUMAA's enactment, the NCUA took the position that group
additions could only occur around service facilities in which the
credit union had an ownership interest.\11\ Although the required
proportion of ownership was initially unspecific, in 2000 the Board
promulgated a rule requiring a MCB to have at least a five percent
interest in a facility to add groups based on the location of the
shared facility.\12\
---------------------------------------------------------------------------
\11\ 65 FR 64512, 64513 (Oct. 27, 2000).
\12\ Id.
---------------------------------------------------------------------------
In 2003, the Board revised the Chartering Manual to delete the five
percent ownership interest requirement, describing the change as
follows:
In response to some commenters, the NCUA Board is clarifying in
the final rule that the requisite ownership interest can be in a
shared service center, a shared service network, or similar
organization. Therefore, as long as the credit union has an
ownership interest in the service center, network, or similar
organization, the credit union can expand around any of them. The
credit union does not need to have an ownership interest in the
specific service facility. This means, for example, that, if the
credit union has an ownership interest in a CUSO, it can expand
around any service center connected to the CUSO. This also would
allow a participating credit union with an ownership interest in the
service facility to expand around other service facilities connected
to the shared service network or similar organization.\13\
---------------------------------------------------------------------------
\13\ 68 FR 18334, 18335 (April 15, 2003).
Even while eliminating the five percent requirement tied to each
specific location, the Board continued to assert, ``[A]n ownership
interest is crucial in analyzing the reasonable proximity requirement
for ATMs and shared service facilities.'' \14\
---------------------------------------------------------------------------
\14\ Id.
---------------------------------------------------------------------------
The Board has now determined that an ownership requirement related
to shared facilities and ATMs is needlessly restrictive, and the Board
is proposing to remove this requirement. The structure of shared
branching has changed dramatically since the NCUA adopted and amended
the ownership requirement. Shared branches originated as physical
locations specifically designed for shared use, jointly owned by a
small group of participating credit unions operating in adjacent areas.
Participating credit unions now use their existing branches and ATMs as
shared locations, generally without separate facilities designated as
shared branches. Entities offering shared branching services have also
consolidated over time. In this changed environment, obtaining an
ownership interest in a shared branch network may be difficult or a
practical impossibility for credit unions not already owners of a
shared branching network.
The ownership requirement restricts the use of shared locations for
FOM expansions, without enhancing the utility of the shared location
for FCU members. Member access to services from a shared branch is the
same whether or not the FCU has an ownership interest in the shared
branching network. Nor does being a part owner of a shared branching
network confer any more permanence to a shared location than being an
authorized participant in the shared branching network. In light of
these factors, the Board has determined that the Chartering Manual's
current requirement that the credit union have ``an ownership interest
in the service facility either directly or through a CUSO'' needlessly
limits MCB FCU services to additional groups and their members and
ignores the way business is done in the current marketplace. The FCU
Act places few conditions on what constitutes ``reasonable proximity.''
If a MCB FCU participates in a shared branching network, and has access
to a location based on contractual agreements with the network, the
Board believes the FCU is in reasonable proximity to a group that is
within the service area of the shared location. The change to this
definition will expand FOM eligibility to groups that are within the
service area of the shared branches and ATMs to which a MCB FCU has
access through a shared branching network.
For similar reasons, the Board is also proposing to permit MCB FCUs
to add underserved areas based on the location of a shared branch or
ATM of a network in which the FCU participates. The Act permits an
underserved area addition if the credit union establishes and maintains
``an office or facility'' in the underserved area ``at which credit
union services are available.'' \15\ ATMs and shared branch locations
provide credit union services. As noted above, credit union members
have the same access to services at shared locations, regardless of
whether the FCU has an ownership interest in the shared branching
network or is an authorized participant in the network. With continuing
technological advances, members will be able to obtain the services
they need through using ATMs or other electronic facilities combined
with telephone or email communications with credit union staff. In
light of the changes to the ways consumers access financial services
since CUMAA's enactment, the Board believes its former policies were
needlessly restrictive.
---------------------------------------------------------------------------
\15\ 12 U.S.C. 1759(c)(2)(B).
---------------------------------------------------------------------------
In summary, the financial services world has undergone significant
changes since the Board adopted the various requirements related to
shared locations and shared branching networks some decades ago. For
these reasons, the Board believes it is now appropriate to revise its
policy about the types of shared facilities that can be considered in
the context of the Act's requirement for ``reasonable proximity'' for
both additions of groups and additions of underserved areas. The
proposed changes will also provide regulatory relief by conforming the
several definitions of ``service facility'' in the Chartering Manual.
II. Legal Authority
The Board is issuing this proposed rule pursuant to its authority
under the FCU Act. Under the FCU Act, the NCUA is the chartering and
supervisory authority for FCUs and the Federal supervisory authority
for all federally insured credit unions (``FICUs'').\16\ The FCU Act
grants the NCUA a broad mandate to issue regulations governing both
FCUs and FICUs. 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 FCU Act.\17\
---------------------------------------------------------------------------
\16\ Id. 1752-1775.
\17\ Id. 1766(a).
---------------------------------------------------------------------------
[[Page 1828]]
The Act requires the Board to develop regulations to establish the
criteria for additions of groups \18\ and requires the Board to approve
a MCB FCU's addition of underserved areas.\19\ The Act does not use the
term ``service facility.'' Rather, the Board adopted the term ``service
facility'' to define the limits of reasonable proximity.\20\
---------------------------------------------------------------------------
\18\ 12 U.S.C. 1759(d)(3).
\19\ Id. 1759(c).
\20\ 63 FR 71998, 72002 (Dec. 30, 1998); 68 FR 18334, 18335
(April 15, 2003).
---------------------------------------------------------------------------
The position that an FCU's participation in a shared branch network
constitutes a sufficient interest to make the shared branch a service
facility for purposes of MCB expansion is a reversal from a position
the agency initiated over two decades ago. The Chartering Manual has
consistently required ownership either in the shared service facility
itself or the network operating the shared facility in order to permit
a MCB FCU to add a group based on the location of the shared facility
for any facilities that are not local to the FCU. Similarly, the
Chartering Manual has consistently required that a MCB FCU seeking to
add an underserved area must, at a minimum, establish and maintain a
shared branch (with ownership in the branch), or a credit union-owned
electronic facility in the area. As discussed above, the Act does not
dictate the agency's prior positions requiring ownership in a shared
branching network or excluding ATMs from the definition of service
facility for purposes of underserved area expansion, and there are now
sound policy reasons for the reversal.
Agencies must ``use the same procedures when they amend or repeal a
rule as they used to issue the rule in the first instance.'' \21\
Accordingly, agencies cannot reverse rules adopted by notice-and-
comment rulemaking by other, less transparent methods.\22\ The term
``service facility'' appears in the Chartering Manual, which the Board
has promulgated and amended using notice and comment rulemaking. The
Board is now engaging in a notice and comment rulemaking to change its
position, proposing to remove ownership requirements when considering
shared branch networks and allowing ATMs to qualify as service
facilities in underserved areas.
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\21\ Perez v. Mortgage Bankers Ass'n, 575 U.S. 92, 101 (2015).
\22\ Nat'l Family Planning and Reproductive Health Ass'n, Inc.
v. Sullivan, 979 F.2d 227, 236 (D.C. Cir. 1992). (``[The agency] may
not constructively rewrite the regulation, which was expressly based
upon a specific interpretation of the statute, through internal
memoranda or guidance directives that incorporate a totally
different interpretation and effect a totally different result'');
Clean Ocean Action v. York, 57 F.3d 328 (3d Cir. 1995).
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III. Summary of the Proposed Rule
As highlighted above, the Chartering Manual defines ``service
facility'' differently for group additions than for underserved area
additions. The proposed rule would conform these definitions.
A. Changes to the Definition of Service Facility for Purposes of Group
Additions
For group additions, FCU-owned electronic facilities that accept
deposits, take loan applications, or disburse loans are service
facilities.\23\ Credit union-owned branches, mobile branches, offices
operated on a regularly scheduled weekly basis, and video teller
machines also meet the criteria for service facilities. Finally, shared
branching network facilities also meet the criteria for service
facilities for group additions, provided the credit union has an
ownership interest in the shared branching network. The proposal would
leave the definition of service facility intact, but would remove the
ownership requirement for shared branch networks.
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\23\ Chartering Manual, Sec. IV.A.1.
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B. Change to the Definition of Service Facility for Purpose of
Underserved Area Additions
For underserved areas, the current definition of ``service
facility'' is more limited and allows fewer kinds of facilities to
qualify. More specifically, for underserved areas, a service facility
includes credit union-owned electronic facilities (other than ATMs)
that take deposits, accept loan applications, and disburse loans.\24\
Credit union branches, certain shared branches, mobile branches, and
offices operated on a regularly scheduled weekly basis also meet the
current criteria for a service facility in an underserved area
expansion. Under the current definition, shared locations to which an
FCU has access by virtue of participating in a shared branching network
without an ownership interest do not meet the criteria for a service
facility in an underserved area. ATMs are excluded, even if wholly
owned by the FCU. The proposal would change the definition to allow
shared facilities to qualify as service facilities, without any
requirement for shared ownership. The proposal would also permit ATMs
to qualify as service facilities, whether wholly owned by an FCU or
part of a shared branch network in which the FCU participates.
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\24\ Id. Sec. 3.III.F.
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The proposal would make the definition of service facility for
purposes of adding underserved areas identical to the definition of
service facility for purposes of adding groups. The proposal also makes
the definition of service facility in the glossary section of the
Chartering Manual consistent with the other definitions. The Board
emphasizes that neither the current rule nor this proposal permit a
credit union's transactional website to count as a service facility for
purposes of adding a group or an underserved area.
The NCUA invites comments on all aspects of the proposal.\25\
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\25\ Because this change will not add any increased burden, the
Board is not providing the usual 60-day comment period before
finalizing this rule. See NCUA Interpretive Ruling and Policy
Statement (IRPS) 87-2, as amended by IRPS 03-2 and IRPS 15-1. 80 FR
57512 (Sept. 24, 2015), available at https://www.ncua.gov/files/publications/irps/IRPS1987-2.pdf.
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IV. Additional Request for Comment
Over time, the Board's definitions of terms like ``service
facility'' have evolved, consistent with the underlying constraints of
the FCU Act, to reflect the increasing role of technology in the
provision of financial services. For example, the Board determined that
a credit union-owned ATM was a service facility for purposes of group
additions to MCB FCUs in 2003,\26\ although it had initially not viewed
an ATM as a service facility.\27\ Similarly, in a 2012 Opinion Letter,
the NCUA's Office of General Counsel concluded that a video teller
machine which permits real-time interaction between a person and an FCU
member is a service facility both for additions of groups and for
additions of underserved areas.\28\ The proposed amendments to the
chartering manual outlined above represent a further evolution,
reflecting technological advances as well as changes in consumer
behaviors.
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\26\ 68 FR 18334, 18352 (April 15, 2003).
\27\ 63 FR 71998, 712002 (Dec. 30, 1998).
\28\ OGC Op. No. 11-0965 (Aug. 2012), available at https://www.ncua.gov/regulation-supervision/legal-opinions/2012/video-teller-machine. Should this proposed rule become final, this opinion
will be superseded, as there would no longer be an advantage to
having a video teller machine, as opposed to an ATM.
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The Board is also now requesting comment on another possible
evolution in the definition of service facility, specifically, whether
a credit union's transactional website and mobile banking applications
should be included in the definition of service facility. The Board
previously proposed to amend the definition of ``service facility'' for
group additions to MCB
[[Page 1829]]
FCUs to include online financial services, including computer-based and
mobile phone channels meeting certain criteria for access.\29\ In
support of its proposal, the Board cited extensive data showing the
increasing use of online and mobile banking.\30\ After analyzing the
comments it received on the proposal, the Board deferred action on it
to a later date.\31\
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\29\ 80 FR 76748, 76752 (Dec. 10, 2015).
\30\ Id.
\31\ 81 FR 88412, 88420 (Dec. 7, 2016).
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The Board is now renewing its consideration of this issue. In the
four years since the Board deferred action on its initial proposal, the
proportion of financial services delivered through transactional
websites has continued to increase. For example, in 2017, 40% of
consumers reported primarily using online banking to manage their
accounts.\32\ The pandemic has accelerated the trend toward providing
financial services digitally. According to the J.D. Power 2020 Retail
Banking Satisfaction Survey, 35% of consumers report increased online
banking using a computer since the pandemic began, with 17% reporting
much more use. The pandemic also caused 30% of consumers to increase
their use of mobile banking apps, with 11% stating they used mobile
banking much more.\33\ Additionally, as of April 2020, 39% of adults
planned to make an online banking transaction such as account opening
or debt consolidation in the next 30 days.\34\ The transition to online
financial services is expected to outlast the pandemic.\35\ In light of
the inexorably increasing use of digital financial services, the Board
believes it is now appropriate to reconsider including transactional
websites and mobile banking applications in the definition of service
facilities.
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\32\ An additional 26 percent of consumers report mobile devices
are their most frequently used banking method. ABA Banking Journal
blog (Sept. 21, 2017), https://bankingjournal.aba.com/2017/09/aba-survey-two-thirds-of-americans-use-digital-banking-channels-most-often/.
\33\ As summarized by Jim Marous, Financial Brand blog, (April
27, 2020), https://thefinancialbrand.com/95735/digital-online-banking-coronavirus/.
\34\ Roy Urrico, ``Digital Transformation in the COVID-19 Age,
Credit Union Times (April 30, 2020), https://www.cutimes.com/2020/04/30/digital-transformation-in-the-covid-19-age/.
\35\ Stephanie Walden and Daphne Forman, ``5 Fintech Trends
Likely to Stick Around After the Pandemic,'' Forbes Advisor (Sept.
28, 2020), https://www.forbes.com/advisor/banking/fintech-trends-after-the-pandemic/.
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V. Regulatory Procedures
A. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) generally requires that, in
connection with a notice of proposed rulemaking, an agency prepare and
make available for public comment an initial regulatory flexibility
analysis that describes the impact of a proposed rule on small
entities. A regulatory flexibility analysis is not required, however,
if the agency certifies that the rule will not have a significant
economic impact on a substantial number of small entities (defined for
purposes of the RFA to include FICUs with assets less than $100
million) and publishes its certification and a short, explanatory
statement in the Federal Register together with the rule.
The proposed rule changes the criteria for service facilities and
facilitates the provision of credit union services to additional groups
and underserved areas by MCB FCUs. As of September 30, 2020, there are
1,373 MCB FCUs, of which 974 have assets less than $100 million. Of
these 974 MCB FCUs with assets less than $100 million, 286 are already
participating in a shared branching network. This means that the
remaining 688 MCB FCUs under $100 million may have additional incentive
to participate in shared branching, as they will be able to use shared
locations as a basis for expanding their FOM to additional groups or
underserved areas.
Any benefit to small FCUs from the ability to add additional
members is likely minimal. The negative effect on small FCUs whose
members gain eligibility for membership in another credit union under
these changes is also likely minimal. Although this rule is anticipated
to economically benefit FCUs that choose to expand their FOMs, NCUA
certifies that it will not have a significant economic impact on small
credit unions.
B. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in
which an agency creates a new or amends existing information collection
requirements.\36\ For purposes of the PRA, an information collection
requirement may take the form of a reporting, recordkeeping, or a
third-party disclosure requirement. 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 current information collection
requirements for the Chartering Manual are approved under OMB control
number 3133-0015. This rule proposes to amend Chapter 2, Chapter 3 and
Appendix 1 of Appendix B to Part 701 by changing the definition of
service facilities for MCB FCUs seeking to add select groups or
underserved areas. The proposed rule creates new strategic
opportunities for MCB FCUs while not changing the information FCUs are
required to supply to take advantage of these opportunities.
Nevertheless, the total information collection burden will increase
because the change means more FCUs will qualify to add select groups or
underserved areas, which will lead to additional applications.
---------------------------------------------------------------------------
\36\ 44 U.S.C. 3507(d); 5 CFR part 1320.
---------------------------------------------------------------------------
There are currently 1,373 multiple common bond FCUs, of which 594
participate in shared branching. The proposed change is estimated to
increase the number of applications/amendments by an additional 90
respondents.
OMB Control Number: 3133-0015.
Title of information collection: Chartering and Field of Membership
Manual, 12 CFR 701.1, App. B to Part 701.
Estimated number respondents: 8,245.
Estimated number of responses per respondent: 1.
Estimated total annual responses: 8,245.
Estimated total annual burden per response: 1.97.
Estimated total annual burden: 16,223.
The NCUA invites comments on: (a) Whether the proposed collection
of information is necessary for the proper performance of the functions
of the agency, including whether the information will have practical
utility; (b) the accuracy of the agency's estimate of the burden of the
proposed collection of information, including the validity of the
methodology and assumptions used; (c) ways to enhance the quality,
utility and clarity of the information to be collected; and (d) ways to
minimize the burden of the collection of information on those who are
to respond, including through the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology; and (e) estimates of capital or
start-up costs and cost of operation, maintenance, and purchase of
services to provide information.
All comments are a matter of public record. Interested persons are
invited to submit written comments to (1) www.reginfo.gov/public/do/PRAMain. Find this particular information collection by selecting the
Agency under ``Currently under Review'' and to (2) Dawn Wolfgang,
National Credit Union Administration, 1775 Duke Street, Suite 6032,
Alexandria, Virginia 22314; Fax No. 703-519-8579; or email
[[Page 1830]]
at [email protected]. Given the limited in-house staff because of
the COVID-19 pandemic, email comments are preferred.
C. Executive Order 13132
Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests. In
adherence to fundamental federalism principles, the NCUA, an
independent regulatory agency as defined in 44 U.S.C. 3502(5),
voluntarily complies with the executive order. This rulemaking will not
have a substantial direct effect on the states, on the connection
between the national government and the states, or on the distribution
of power and responsibilities among the various levels of government.
The NCUA has determined that this proposal does not constitute a policy
that has federalism implications for purposes of the executive order.
D. Assessment of Federal Regulations and Policies on Families
The NCUA has determined that this final rule will not affect family
well-being within the meaning of Section 654 of the Treasury and
General Government Appropriations Act, 1999.\37\
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\37\ Public Law 105-277, 112 Stat. 2681 (1998).
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List of Subjects in 12 CFR Part 701
Credit, Credit unions, Reporting and recordkeeping requirements.
By the National Credit Union Administration Board on December
17, 2020.
Melane Conyers-Ausbrooks,
Secretary of the Board.
For the reasons stated above, the Board proposes to amend 12 CFR
part 701, Appendix B as follows:
PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS
0
1. The authority citation for part 701 continues to read as follows:
Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759,
1761a, 1761b, 1766, 1767, 1782, 1784, 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 Appendix B to Part 701, revise Chapter 2 Section IV.A.1 to read
as follows:
Appendix B to Part 701--Chartering and Field of Membership Manual
* * * * *
IV--Multiple Occupational/Associational Common Bonds
IV.A.1--General
A federal credit union may be chartered to serve a combination
of distinct, definable single occupational and/or associational
common bonds. This type of credit union is called a multiple common
bond credit union. Each group in the field of membership must have
its own occupational or associational common bond. For example, a
multiple common bond credit union may include two unrelated
employers, or two unrelated associations, or a combination of two or
more employers or associations. Additionally, these groups must be
within reasonable geographic proximity of the credit union. That is,
the groups must be within the service area of one of the credit
union's service facilities. These groups are referred to as select
groups. A multiple common bond credit union cannot include a TIP or
expand using single common bond criteria.
Employment in a corporation or other legal entity which is
related to another legal entity (such as a company under contract
to, and possessing a strong dependency relationship with, the other
company) makes that person part of the occupational common bond of a
select employee group within a multiple common bond. In this
context, a ``strong dependency relationship'' is a relationship in
which the entities rely on each other as measured by a pattern of
regularly doing business with each other, for example, as documented
by the number, the term length, and the dollar volume of prior and
pending contracts between them.
A multiple common bond credit union's charter may also combine
individual occupational groups that each consist of employees of a
retailer or other business tenant of an industrial park, a shopping
mall, office park or office building (each ``a park''). To be able
to have this type of clause in its charter, the multiple common bond
credit union first must receive a request from an authorized
representative of the group or the park to establish credit union
service. The park must be within the multiple common bond credit
union's service area, and each occupational group must have fewer
than 3,000 employees, who are eligible for membership only for so
long as each is employed by a park tenant. Under this clause, a
multiple common bond credit union can enroll group employees only
while the group's retail or business employer is a park tenant, but
such credit unions are free to serve employees of new groups under
the above conditions as each respective employer becomes a park
tenant.
A federal credit union's service area is the area that can
reasonably be served by the service facilities accessible to the
groups within the field of membership. The service area will most
often coincide with that geographic area primarily served by the
service facility. Additionally, the groups served by the credit
union must have access to the service facility. The non-availability
of other credit union service is a factor to be considered in
determining whether the group is within reasonable proximity of a
credit union wishing to add the group to its field of membership.
A service facility for multiple common bond credit unions is
defined as a place where shares are accepted for members' accounts,
loan applications are accepted or loans are disbursed. This
definition includes a credit union branch, a mobile branch, an
office operated on a regularly scheduled weekly basis, a credit
union owned ATM, or a credit union owned electronic facility that
meets, at a minimum, these requirements. A service facility also
includes a shared branch or a shared branch network location,
including a shared ATM or electronic facility, if the credit union
participates in a shared branching network. This definition does not
include the credit union's internet website.
The select group as a whole will be considered to be within a
credit union's service area when:
A majority of the persons in a select group live, work,
or gather regularly within the service area;
The group's headquarters is located within the service
area; or
The group's ``paid from'' or ``supervised from''
location is within the service area.
0
3. In Appendix B to Part 701, revise Chapter 3 Section III.F to read as
follows:
Appendix B to Part 701--Chartering and Field of Membership Manual
* * * * *
III.F--Service Facility
Once an ``underserved area'' has been added to a federal credit
union's field of membership, the credit union must establish within
two years, and maintain, an office or service facility in the
community. A service facility is defined as a place where shares are
accepted for members' accounts, loan applications are accepted or
loans are disbursed. By definition, a service facility includes a
credit union-owned branch, a shared branch, a mobile branch, an
office operated on a regularly scheduled weekly basis, a credit
union owned ATM, or an electronic facility that meets, at a minimum,
the above requirements. A service facility also includes a shared
branch or a shared branch network location, including a shared ATM
or other electronic facility, if a credit union participates in a
shared branching network.
This definition does not include the credit union's internet
website.
0
4. In Appendix B to Part 701 revise the entry for ``service facility''
in the Glossary section to read as follows:
Appendix B to Part 701--Chartering and Field of Membership Manual
* * * * *
Appendix 1--Glossary
* * * * *
Service facility--A place where shares are accepted for members'
accounts, loan applications are accepted or loans are disbursed.
This definition includes a credit union owned branch, a mobile
branch, an office operated on a regularly scheduled weekly basis, a
credit union owned ATM, or
[[Page 1831]]
a credit union owned electronic facility that meets, at a minimum,
these requirements. A service facility also includes a shared branch
or a shared branch network location, including a shared ATM or other
electronic facility, if a credit union participates in a shared
branching network. This definition does not include the credit
union's internet website.
* * * * *
[FR Doc. 2020-28277 Filed 1-8-21; 8:45 am]
BILLING CODE 7535-01-P
