Temporary Regulatory Relief in Response to COVID-19-Prompt Corrective Action, 20258-20264 [2021-08027]
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Federal Register / Vol. 86, No. 73 / Monday, April 19, 2021 / Rules and Regulations
a form from the website, or request a
sign-up form by contacting CottonRP@
usda.gov or (540) 361–2726 and one will
be provided to them. Importers may
participate in the sign-up period by
submitting a signed, written request for
a continuance referendum, along with a
copy of a U.S. Customs and Border
Protection form 7501 showing payment
of a cotton assessment for calendar year
2020. The USDA, AMS, Cotton and
Tobacco Program, Attention: Cotton
Sign-Up, P.O. Box 23181, Washington,
DC 20077–8249 shall be considered the
polling place for all cotton importers.
All requests and supporting documents
must be received by July 2, 2021.
(c) Each person on the county FSA
office lists may participate in the signup period. Eligible producers must date
and sign their name on the ‘‘County
FSA Office Sign-up Sheet.’’ A person
whose name does not appear on the
county FSA office list may participate in
the sign-up period. Such person must be
identified on FSA–578 during the
representative period or provide
documentation that demonstrates that
the person was a cotton producer during
the representative period. Cotton
producers not listed on the FSA–578
shall submit at least one sales receipt for
cotton they planted during the
representative period. Cotton producers
must make requests to the county FSA
office where the producer’s farm is
located. If the producer’s land is in more
than one county, the producer shall
make request at the county office where
FSA administratively maintains and
processes the producer’s farm records. It
is the responsibility of the person to
provide the information needed by the
county FSA office to determine
eligibility. It is not the responsibility of
the county FSA office to obtain this
information. If any person whose name
does not appear on the county FSA
office list fails to provide at least one
sales receipt for the cotton they
produced during the representative
period, the county FSA office shall
determine that such person is ineligible
to participate in the sign-up period, and
shall note ‘‘ineligible’’ in the remarks
section next to the person’s name on the
county FSA office sign-up sheet. In lieu
of personally appearing at a county FSA
office, eligible producers may request a
sign-up form from the county FSA office
where the producer’s farm is located. If
the producer’s land is in more than one
county, the producer shall make the
request for the sign-up form at the
county office where FSA
administratively maintains and
processes the producer’s farm records.
Such request must be accompanied by
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a copy of at least one sales receipt for
cotton they produced during the
representative period. The appropriate
FSA office must receive all completed
forms and supporting documentation by
July 2, 2021.
■ 7. In § 1205.28, the first sentence is
revised to read as follows:
§ 1205.28
Counting.
County FSA offices and FSA, Deputy
Administrator for Field Operations
(DAFO), shall begin counting requests
no later than July 2, 2021. * * *
■ 8. Section 1205.29 is revised to read
as follows:
§ 1205.29
Reporting results.
(a) Each county FSA office shall
prepare and transmit to the state FSA
office, by July 12, 2021, a written report
of the number of eligible producers who
requested the conduct of a referendum,
and the number of ineligible persons
who made requests.
(b) DAFO shall prepare, by July 12,
2021, a written report of the number of
eligible importers who requested the
conduct of a referendum, and the
number of ineligible persons who made
requests.
(c) Each state FSA office shall, by July
12, 2021, forward all county reports to
DAFO. By July 19, 2021, DAFO shall
forward its report of the total number of
eligible producers and importers that
requested a continuance referendum,
through the sign-up period, to the
Deputy Administrator, Cotton and
Tobacco Program, Agricultural
Marketing Service, USDA, 100 Riverside
Parkway, Suite 101, Fredericksburg,
Virginia 22406.
Bruce Summers,
Administrator, Agricultural Marketing
Service.
[FR Doc. 2021–07989 Filed 4–16–21; 8:45 am]
BILLING CODE P
NATIONAL CREDIT UNION
ADMINISTRATION
12 CFR Part 702
[NCUA–2021–0046]
RIN 3133–AF19
Temporary Regulatory Relief in
Response to COVID–19—Prompt
Corrective Action
National Credit Union
Administration (NCUA).
ACTION: Interim final rule; request for
comments.
AGENCY:
The NCUA Board (Board) is
making two temporary changes to its
SUMMARY:
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prompt corrective action (PCA)
regulations to help ensure that federally
insured credit unions (FICUs) remain
operational and liquid during the
COVID–19 pandemic. The first amends
these regulations to temporarily enable
the Board to issue an order applicable
to all FICUs to waive the earningsretention requirement for any FICU that
is classified as adequately capitalized.
The second modifies these regulations
with respect to the specific
documentation required for net worth
restoration plans (NWRPs) for FICUs
that become undercapitalized. These
temporary modifications will be in
place until March 31, 2022. This rule is
substantially similar to an interim final
rule that the Board published on May
28, 2020.
DATES: This rule is effective on April 19,
2021. Comments must be received on or
before June 18, 2021.
ADDRESSES: You may submit written
comments, identified by RIN 3133–
AF19, 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
for Docket #NCUA–2021–0046.
• Fax: (703) 518–6319. Include
‘‘[Your Name]—Comments on
Temporary Regulatory Relief Rule in
Response to COVID–19—Prompt
Corrective Action’’ in the transmittal.
• Mail/Hand Delivery/Courier:
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 OGCMail@ncua.gov.
FOR FURTHER INFORMATION CONTACT:
Policy and Analysis: Lisa Roberson,
Director, Policy Division, Office of
Examination and Insurance, at (703)
518–6360; Legal: Marvin Shaw, Senior
Staff Attorney and Thomas Zells, Senior
Staff Attorney, Office of General
Counsel, at (703) 518–6540; or by mail
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at: National Credit Union
Administration, 1775 Duke Street,
Alexandria, Virginia 22314.
SUPPLEMENTARY INFORMATION:
I. Legal Authority
The Board is issuing this interim final
rule pursuant to its authority under the
Federal Credit Union Act.1 The Act
grants the Board a broad mandate to
issue regulations that govern both
federal credit unions and, more
generally, all FICUs. For example,
section 120 of the 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 Act is a plenary
grant of regulatory authority to issue
rules and regulations necessary or
appropriate for the Board 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
Such specific rulemaking authority is
set forth in section 216(b) with respect
to PCA.5
II. Prompt Corrective Action
Background
A. Statutory Provisions
In 1998, Congress enacted the Credit
Union Membership Access Act
(‘‘CUMAA’’).6 The CUMAA amended
the Federal Credit Union Act (‘‘the
Act’’) to require the NCUA to adopt, by
regulation, a system of PCA consisting
of minimum capital standards and
corresponding remedies to improve the
net worth of federally insured ‘‘natural
person’’ credit unions.7 The purpose of
PCA is to ‘‘resolve the problems of
insured credit unions at the least
possible long-term loss to the [National
Credit Union Share Insurance Fund
(‘NCUSIF’)].’’ 8
The statute designated three principal
components of PCA: (1) A framework
combining mandatory actions
prescribed by statute with discretionary
actions developed by the NCUA; (2) an
alternative system of PCA to be
developed by the NCUA for FICUs
which CUMAA defines as ‘‘new;’’ and
(3) a risk-based net worth requirement
U.S.C. 1751 et seq.
U.S.C. 1766(a).
3 12 U.S.C. 1789.
4 An example of a provision of the 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. 1790d(b).
6 Public Law 105–219, 112 Stat. 913 (1998).
7 12 U.S.C. 1790d et seq.
8 12 U.S.C. 1790d(a)(1).
to apply to FICUs which the NCUA
defines as ‘‘complex.’’
For FICUs other than those that meet
the statutory definition of a ‘‘new’’
FICU, the CUMAA mandated a
framework of mandatory and
discretionary supervisory actions
indexed to five statutory net worth
categories:
1. Well capitalized
2. Adequately capitalized
3. Undercapitalized
4. Significantly undercapitalized, and
5. Critically undercapitalized
The mandatory actions and
conditions that trigger conservatorship
and liquidation are expressly prescribed
by statute.9 To supplement the
mandatory actions, the statute directed
the NCUA to develop discretionary
actions which are ‘‘comparable’’ to the
‘‘discretionary safeguards’’ available
under section 38 of the Federal Deposit
Insurance Act, which is the statute that
applies PCA to other federally insured
depository institutions.10
The Act addresses the earningsretention requirement applicable to
FICUs that are not well capitalized.11
Such FICUs are required to annually set
aside as net worth an amount equal to
not less than 0.4% of their total assets.12
The Board has the authority to decrease
the earnings-retention requirement.13 To
accomplish this, the Board may issue an
order if it determines the decrease is
necessary to avoid a significant
redemption of shares and further the
purpose of PCA—to resolve the
problems of insured credit unions at the
least possible long-term cost to the
NCUSIF. The Act also requires the
Board to periodically review any order
that it issues to decrease a FICU’s
earnings-retention requirement.14
Separately, 12 U.S.C. 1790d(f) sets
forth requirements related to NWRPs,
which FICUs must submit to the NCUA
and which the NCUA must review when
a FICU becomes undercapitalized. The
regulatory provisions that address the
procedures and documentation
requirements for NWRPs are codified at
12 CFR 702.206 and are detailed below.
B. Regulatory Provisions
In February 2000, the NCUA Board
adopted part 702 and subpart L of part
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9 12 U.S.C. 1790d(e), (f), (g), and (i); 12 U.S.C.
1786(h)(1)(F); 12 U.S.C. 1786(a)(3)(A)(1).
10 12 U.S.C. 1790d(b)(1)(A); S. Rep. No. 193,
105th Cong., 2d Sess. 12 (1998) (S. Rep.); H.R. Rep.
No. 472, 105th Cong; see also 12 U.S.C. 1831o
(Section 38 of the Federal Deposit Insurance Act
setting forth the PCA requirements for banks).
11 12 U.S.C. 1790d(e).
12 12 U.S.C. 1790d(e)(1).
13 12 U.S.C. 1790d(e)(2).
14 12 U.S.C. 1790d(e)(2)(B).
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747, establishing a comprehensive
system of PCA that combines mandatory
supervisory actions prescribed by the
statute with discretionary supervisory
actions developed by the NCUA (2000
final rule).15 Each of these supervisory
actions index to the five statutory net
worth categories (well capitalized,
adequately capitalized,
undercapitalized, significantly
undercapitalized, and critically
undercapitalized).
In addition, the 2000 final rule
permits the NCUA to impose other
action to carry out PCA beyond any
discretionary supervisory action
available for a particular net worth
category.16 In the proposal that
provided the basis for the 2000 final
rule, the Board noted that part 702 also
amplifies the terms of the statutory
exception to the 0.4% minimum set
aside. Specifically, the Board stated that
it interpreted the phrase by order to
indicate that exceptions to the 0.4%
statutory minimum are to be granted on
a case-by-case basis.17 The Board had
historically interpreted these orders on
a case-by-case basis. However, given the
current economic conditions associated
with the COVID–19 pandemic—during
which many FICUs broadly face similar
circumstances that affect net worth—the
Board has determined it is appropriate
to implement the changes in this rule to
authorize a broadly applicable order to
decrease the earnings-retention
requirements for multiple FICUs and to
allow a streamlined NWRP in certain
circumstances.
III. Temporary Amendments to
Earnings Retention and NWRP
Provisions
A. May 2020 Interim Final Rule
On May 21, 2020, the Board approved
an interim final rule that temporarily
amended two provisions in the PCA
regulations in part 702.18 The first
amendment addressed the earningsretention requirement in § 702.201 for
FICUs classified as adequately
capitalized. The second amendment
addressed the NWRPs in § 702.206(c)
that have become undercapitalized.
The May 2020 interim final rule was
issued in response to the COVID–19
pandemic. It sought to ensure that
FICUs continued to operate efficiently,
to ensure that FICUs maintained
sufficient liquidity, and to account for
the potential temporary increase in
shares that FICUs may experience
during the COVID–19 pandemic.
15 65
FR 8560 (Feb. 18, 2000).
CFR 702.202(b)(9).
17 64 FR 27090 (May 18, 1999).
18 85 FR 31952 (May 28, 2020).
16 12
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Specifically, the Board believed the
temporary amendments in the interim
final rule would allow FICUs to better
utilize resources by reducing the
administrative burden associated with a
temporary increase in shares.
The Board concluded that the
amendments would 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 Board made the temporary
amendments effective upon publication
and specified that they would remain in
place through the end of calendar year
2020. The Board sought comment on the
interim final rule.
On June 5, 2020, pursuant to the
changes made by the May 2020 interim
final rule, the Board issued a temporary
order decreasing the earnings-retention
requirement.19 Specifically, the Board
determined that, in light of the
economic circumstances caused by the
COVID–19 pandemic, decreasing the
earnings-retention requirements set
forth in the NCUA’s regulations was
necessary to avoid a significant
redemption of shares and would further
the purposes of the PCA regulations.
Accordingly, the Board ordered that any
natural-person FICU that had a net
worth classification, as defined in part
702 of the NCUA’s regulations, of
adequately capitalized between March
31, 2020, and December 31, 2020, could
decrease its earnings-retention
requirement to zero as set forth in part
702. The order was effective through,
and including, December 31, 2020.
As noted, the Board solicited
comment on the May 2020 interim final
rule. The Board received comments
from a credit union trade association,
two state credit union leagues, and an
organization of state credit union
supervisors. All commenters supported
the interim final rule, and no
commenter opposed it. All commenters
stated that the changes were
appropriate, noting that they provided
regulatory relief and flexibility to credit
unions to manage their liquidity and
address financial hardships caused by
the COVID–19 pandemic.
The interim final rule’s two
provisions expired on December 31,
2020. All commenters requested that the
temporary amendments be extended or
made permanent. One commenter stated
that if the economic dislocation caused
by the pandemic lingered, the regulatory
relief contemplated in the interim final
19 The Order is available on the NCUA website:
https://www.ncua.gov/regulation-supervision/
letters-credit-unions-other-guidance/temporaryorder-decreasing-earnings-retention-requirement.
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rule could be necessary beyond
December 31, 2020. Among the
recommendations to extend the effective
date were (1) make the rule permanent,
(2) extend the applicability until the
COVID–19 pandemic was declared over
by the Center for Disease Control or
other Federal agency, or (3) make the
end date December 31, 2021.
B. New Interim Final Rule
Based on limited utilization of the
previous relief as of December 2020, the
Board did not extend these provisions
but continued to consider this issue.
Considering information available
following the expiration of the 2020
interim final rule, the Board has
determined it is appropriate to readopt
these amendments to the PCA
regulations in part 702 on a temporary
basis. Specifically, based on the recent
congressional action (the American
Rescue Plan Act of 2021) 20 to provide
direct financial relief to individual
taxpayers, the Board anticipates that
credit unions will receive a significant
increase in deposits due to stimulus
checks. Accordingly, the Board has
determined it is appropriate to
reinstitute the changes to the PCA
provisions previously adopted in May
2020.
In 2020, the credit union industry
experienced significant asset growth as
a result of the COVID–19 pandemic. The
Board believes this growth will be
temporary. This growth strained the net
worth position of credit unions, and
negatively impacted many credit
unions’ PCA classification. Specifically,
the credit union industry experienced
asset growth—predominantly from
share growth—at a rate of 17.73 percent
from December 31, 2019, to December
31, 2020. During this same period, the
number of FICUs with a PCA
classification of adequately capitalized
increased by 274 percent, and those
classified as undercapitalized increased
by 123 percent.21
The American Rescue Plan Act is the
third in a series of congressional actions
to provide taxpayers monetary relief.22
This action, approved in March 2021,
provides relief to individual taxpayers
in the form of stimulus payments
(referred to as ‘‘recovery rebates’’ in the
American Rescue Plan Act). At the time
of this action, the previous stimulus
payments approved by Congress in
December 2020 as part of the
Consolidated Appropriations Act of
2021 were still being distributed to
qualified individuals in the form of
stimulus payments.23 Looking forward,
the combination of both stimulus
payments will place a continued strain
on FICUs’ PCA classifications.
III. Section-by-Section Analysis
A. Section 702.201—Earnings-Retention
Requirement for ‘‘Adequately
Capitalized’’ FICUs
With respect to earnings retention, a
FICU that is classified as adequately
capitalized or lower must increase the
dollar amount of its net worth quarterly
by an amount equivalent to at least
1/10th of a percent of its total assets and
must quarterly transfer at least that
amount (for a total of 0.4% annually)
from undivided earnings to its regular
reserve account every quarter until it is
well capitalized.24 The purpose of this
provision is to restore a FICU that is less
than well capitalized to a wellcapitalized position in an incremental
manner.
As discussed previously, § 702.201
currently provides that the Board may
waive this requirement on a case-bycase basis when an affected FICU
submits a waiver application to the
NCUA. The Act provides broader
authority for the Board to issue an order
to waive this requirement and does not
require an application or individual
orders.25 In response to the COVID–19
pandemic and resulting economic
conditions, the Board has determined
that it is appropriate to temporarily
amend § 702.201 to provide the Board
express regulatory authority to issue a
single order waiving the earningsretention requirement for all FICUs
classified as adequately capitalized
while this temporary rule is in effect.
The Board intends, as it did in its June
2020 order, to authorize the applicable
Regional Director to require an
application for an earnings transfer
waiver if a particular FICU poses undue
risk to the NCUSIF or exhibits material
safety and soundness concerns.
Amending the regulation in this
manner will allow the Board to respond
to circumstances that broadly affect
many FICUs with a single issuance
rather than numerous individual waiver
approvals. This provision will be
effective on the date the interim final
rule is published in the Federal Register
and will expire on March 31, 2022.
23 Public
20 Public
Law 117–2 (Mar. 11, 2021).
21 Based on December 31, 2020 Call Report Data.
22 Coronavirus Aid, Relief, and Economic
Security Act, Public Law 116–136 (Mar. 27, 2020);
Consolidated Appropriations Act, 2021, Public Law
116–260 (Dec. 27, 2020).
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Law 116–260 (Dec. 27, 2020).
relief is provided for FICUs that are
required to make an earnings retention transfer
under § 702.201.
25 See 1 U.S.C. 1 (providing that unless context
indicates otherwise, words importing the singular
also apply to several persons or parties).
24 This
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This interim final rule will impact the
processing of earnings transfer waiver
submissions listed in the following
table. It will not impact the earnings
Call Report effective date
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March 31, 2021 .................
June 30, 2021 ...................
Sept. 30, 2021 ...................
Dec. 31, 2021 ....................
PCA classification date
April 30, 2021
July 30, 2021
Oct. 31, 2021
Jan. 30, 2022
....................
....................
....................
....................
Once this regulatory amendment is in
effect, the Board intends to issue the
order described above following the
publication of this rule in the Federal
Register. The order will be applicable to
adequately capitalized FICUs and will
grant relief from the earnings-retention
requirement without requiring those
FICUs to submit applications and
receive individual waiver approvals,
subject to the qualification previously
noted in this section.
The Board is exercising this authority
under 12 U.S.C. 1790d(e)(2) to enhance
flexibility in the application of the
earnings-retention requirement. This
relief is necessary to avoid a reduction
of shares and thus retain system
liquidity and capital adequacy, thereby
furthering the purpose of PCA. As
previously noted, the COVID–19
pandemic resulted in significant asset
growth in the credit union industry.
This growth may impact many credit
unions’ PCA classification, resulting in
an increased number of credit unions
being subject to the earnings retention
requirement. Based on the December 31,
2020 Call Report data, 155 credit unions
are classified as less than well
capitalized and are subject to mandatory
action under PCA. An estimated 107
credit unions were classified as
adequately capitalized. These credit
unions may experience relief from this
rulemaking. The potential for the impact
of additional issuance of COVID–19
pandemic relief in the form of stimulus
payments could result in further
reported asset growth and result in more
credit unions qualifying for earnings
retention relief. Specifically, 465 credit
unions had net worth ratios between
seven and eight percent at December 31,
2020. If these credit unions experienced
substantial asset growth caused by
increased share growth, there is a
potential that some of these credit
unions may also qualify for earnings
retention relief during the next twelve
months.
The Board further notes that FICU
operations continue to be significantly
disrupted as a result of social distancing
practices, remote work, and related
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transfer waiver submissions that were
due March 16, 2021, as a result of a
credit union’s PCA classification of
adequately capitalized (or lower), based
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Quarterly net worth
transfer date
June 15, 2021 ...................
Sept. 15, 2021 ..................
Dec. 16, 2021 ...................
March 16, 2022 .................
June 30, 2021 ...................
Sept. 30, 2021 ..................
Dec. 31, 2021 ...................
March 31, 2022 .................
26 The Board notes that 12 U.S.C. 1790d(e)(1)
requires earnings retention. However, additional
provisions in 12 CFR part 702, including those
related to timing and the content of the application,
supplement this statutory provision.
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on the Call Report for the quarter ending
of December 31, 2020.
Earnings transfer waiver
submission date
complications. This regulatory relief
will lessen the administrative burden on
both FICUs and the NCUA by avoiding
the effort associated with preparing a
waiver application and (for the NCUA)
evaluating and responding to such
applications. The Board notes
qualifications in the planned order
regarding FICUs that pose undue risk or
material safety and soundness concerns
will help ensure the purpose of PCA—
namely, to resolve the problems of
insured credit unions at the least
possible long-term cost to the NCUSIF—
is maintained while this temporary rule
is in effect.
This approach affords the agency the
flexibility to address potential
difficulties FICUs face during this
unprecedented period. The Board also
notes that the current, specific
requirements on earnings transfer
waivers are based on a regulatory
provision rather than a specific statutory
directive.26 Accordingly, the Board has
flexibility to modify the regulatory
provision to address the financial
circumstances of individual FICUs as
well as the broader credit union system.
This is consistent with the overall
statutory structure of PCA, which
combines both mandatory and
discretionary provisions.
Expansionary monetary and fiscal
policies, combined with precautionary
savings, are placing a strain on FICU net
worth. The ongoing economic impact of
the COVID–19 pandemic may result in
an increase in the volatility of share
balances, loan demand, and loan losses.
The resulting stress on credit union
balance sheets could potentially require
an increased level of liquidity
management throughout 2021. The
NCUA continues to encourage credit
unions to work with their members who
are affected by the COVID–19 pandemic.
Allowing for a broad order relieving
adequately capitalized FICUs from this
requirement is consistent with the
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Earnings transfer waiver
permissible
Yes.
Yes.
Yes.
Yes.
statutory criteria for issuing such an
order—namely, avoiding a significant
redemption of shares and furthering the
purpose of 12 U.S.C. 1790d to ‘‘resolve
the problems of insured credit unions at
the least possible long-term loss to the
Fund.’’ 27
Accordingly, the Board is amending
§ 702.201 to adopt the temporary
provision to issue a broadly applicable
order. The Board plans to issue through
a separate action an order consistent
with this re-adopted provision to set
forth the terms of relief from the
earnings-retention requirement.
B. Section 702.206(c)—Net Worth
Restoration Plans (NWRPs); Contents of
NWRP
With respect to NWRPs, the Act
provides a broad directive that a FICU
that is less than adequately capitalized
must submit an applicable NWRP to the
NCUA. The NCUA, by regulation, has
provided additional details to flesh out
this statutory provision. Section
702.206(a) of the NCUA’s regulations
specifies the schedule for filing an
NWRP, and § 702.206(c) of the NCUA’s
regulations outlines the contents of an
NWRP.28
27 12
U.S.C. 1790d(a)(1).
CFR 702.206(c). Under the current
regulation, an NWRP must—
• Specify—
Æ A quarterly timetable of steps the credit union
will take to increase its net worth ratio so that it
becomes ‘‘adequately capitalized’’ by the end of the
term of the NWRP, and to remain so for four (4)
consecutive calendar quarters. If ‘‘complex,’’ the
credit union is subject to a risk-based net worth
requirement that may require a net worth ratio
higher than six percent (6%) to become ‘‘adequately
capitalized’’;
Æ The projected amount of earnings to be
transferred to the regular reserve account in each
quarter of the term of the NWRP as required under
§ 702.201(a), or as permitted under § 702.201(b);
Æ How the credit union will comply with the
mandatory and any discretionary supervisory
actions imposed on it by the NCUA Board under
the subpart;
Æ The types and levels of activities in which the
credit union will engage; and
Æ If reclassified to a lower category under
§ 702.102(b), the steps the credit union will take to
correct the unsafe or unsound practice(s) or
condition(s);
28 12
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The Board has determined that it is
appropriate to waive the NWRP content
requirements for FICUs that become
classified as undercapitalized (those
that have a net worth ratio of 4 percent
to 5.99 percent) predominantly as a
result of share growth. In these cases, a
FICU may submit a significantly simpler
NWRP to the applicable Regional
Director noting that the FICU became
undercapitalized as a result of share
growth. Specifically, a FICU would be
required to attest that its reduction in
capital was caused by share growth and
that such share growth is a temporary
condition due to the COVID–19
pandemic and congressional actions to
provide stimulus through direct
payments to taxpayers. Federally
insured, state-chartered credit unions
must comply with applicable state
requirements when submitting NWRPs
for state supervisory authority approval.
When reviewing an NWRP submitted
under this authority, the Regional
Director will determine if the decrease
in the net worth ratio was
predominantly a result of share growth.
To assess the reason for the decrease,
the Regional Director will analyze the
numerator and denominator of the net
worth ratio—no change, or an increase
in the numerator and an increase in the
denominator, would indicate that the
decrease in the net worth ratio was due
to share growth. If there is an increase
in the denominator and a decrease in
the numerator, the Regional Director
will analyze whether the decrease in the
numerator would have caused the credit
union to fall to a lower net worth
classification if there were no change in
the denominator. If so, the credit
union’s net worth decline would not be
predominantly due to share growth and
As it concluded in the May 2020
interim final rule, the Board continues
to believe it will be able to fulfill its
statutory duty to evaluate an NWRP
even if the plan is more concise and
streamlined than plans submitted prior
to the COVID–19 pandemic. Such a
streamlined approach is acceptable
because the more extensive information
required under the current requirements
may not be practicable or useful under
the current situation. Further, the
current requirement addresses methods
for the Board to evaluate an NWRP. The
Board believes it can determine if an
NWRP is acceptable even if it lacks
some of the detailed submissions that
the current regulation specifies. The
Board further notes that if a FICU falls
below being adequately capitalized
because of temporary share growth, the
risk is limited.
A credit union’s eligibility to submit
a streamlined NWRP to the NCUA will
be determined based on the effective
date of the credit union’s PCA
classification, as defined in part 702 of
the NCUA’s regulations.29 The
streamlined NWRP will apply, on a
case-by-case basis, to credit unions that
become classified as undercapitalized
(those that have a net worth ratio of 4
percent to 5.99 percent) predominantly
as a result of share growth. A credit
union that has a PCA classification
which has declined prior to the
implementation of this rule will not be
able to submit a streamlined NWRP. To
further clarify, a credit union that has a
PCA classification which has declined,
requiring a NWRP prior to the
expiration of this interim final rule, will
be permitted to submit a streamlined
NWRP as reflected in the following
table.
Streamlined NWRP
permissible
Call Report effective date
PCA classification date
December 31, 2020 ...............................................................
March 31, 2021 .....................................................................
June 30, 2021 .......................................................................
September 30, 2021 ..............................................................
December 31, 2021 ...............................................................
January 30, 2021 .................................................................
April 30, 2021 ......................................................................
July 30, 2021 .......................................................................
October 31, 2021 .................................................................
January 30, 2022 .................................................................
IV. Regulatory Procedures
A. Administrative Procedure Act
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the credit union would not be eligible
to submit a streamlined NWRP.
The Board has determined it is
appropriate to modify the regulation
addressing NWRPs given the continued
economic disruption caused by the
COVID–19 pandemic. The ongoing
disruption has led to unprecedented
expansionary monetary and fiscal
policies, combined with precautionary
savings, placing a strain on FICU net
worth. Accordingly, an increased
number of credit unions are
experiencing PCA reclassification to
lower categories due to growth in
savings. Given the current levels of
volatility of share balances, loan
demand, and loan losses in the credit
union industry, the detail contained in
traditional NWRPs may not be as
meaningful. Accordingly, the
streamlined NWRP described in this
interim final rule will provide sufficient
information to account for current
economic conditions.
Based on December 31, 2020, Call
Report data, 48 credit unions would
require an NWRP to be in place or be
submitted for approval based on their
PCA classification. This is an increase of
30 percent from the 37 credit unions
required to have an NWRP in place or
submitted for approval when compared
to PCA classifications based on
December 31, 2019 Call Report data,
illustrating an upward trend.
The streamlined NWRP described in
the proposed rule will provide sufficient
information, based on current economic
conditions, to allow a Regional Director
to determine if a credit union is
prepared to manage the volatility
associated with the COVID–19
pandemic and the impact on a credit
union’s financial and operational
position.
The Board is issuing the interim final
rule without prior notice and the
opportunity for public comment and the
delayed effective date ordinarily
prescribed by the Administrative
Procedure Act (APA).30 Pursuant to the
• Include pro forma financial statements,
including any off-balance sheet items, covering a
minimum of the next two years; and
VerDate Sep<11>2014
16:00 Apr 16, 2021
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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,
• Contain such other information as the NCUA
Board has required.
29 12 CFR part 702.
PO 00000
Frm 00010
Fmt 4700
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No.
Yes.
Yes.
Yes.
Yes.
unnecessary, or contrary to the public
interest.’’ 31
The Board believes the public interest
is best served by implementing the
interim final rule immediately upon
publication in the Federal Register. The
Board notes that the COVID–19
pandemic is unprecedented. It remains
an evolving situation, making it difficult
30 5
31 5
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U.S.C. 553(b)(3).
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to anticipate how disruptions caused by
the pandemic will manifest themselves
in the financial system. In particular, an
individual FICU may face an emergency
situation, including a downgraded
capital classification and the
corresponding implications, unless it
can invoke the regulatory relief afforded
by this interim final rule. Because the
unprecedented expansionary monetary
and fiscal policies, combined with
precautionary savings, are placing a
strain on FICU net worth, the Board
believes it has good cause to determine
that ordinary notice and public
procedure are impracticable and that
moving expeditiously in the form of an
interim final rule is in the best of
interests of the public and the FICUs
that serve that public. The temporary
regulatory changes are necessary steps
designed to alleviate potential liquidity
and resource strains including stress on
capital adequacy and are undertaken
with expedience to ensure the
maximum intended effects are in place
at the earliest opportunity.
Further, as an independent basis for
good cause with respect to forgoing
comments before issuing the interim
final rule, the Board received comments
on the May 2020 interim final rule,
which addressed identical issues as this
interim final rule. All commenters
supported the proposed changes to
alleviate burden on credit unions and
the agency, which largely addressed
issues related to waiving certain PCA
procedures rather than substantive
concerns. Accordingly, further delay for
additional comments is inconsistent
with the public interest because it
would unnecessarily delay the needed
relief for credit unions.
Notwithstanding the issuance of an
interim final rule without the
opportunity for advance comments, the
Board values public input in its
rulemakings and believes that providing
the opportunity for comment enhances
its regulations. Accordingly, the Board
is soliciting comments on this
rulemaking even though this rule is
being issued on an interim-final basis.
The amendments made by the interim
final rule will automatically expire on
March 31, 2022 and are limited in
number and scope. For these reasons,
the Board finds there is good cause
consistent with the public interest to
issue the rule without advance notice
and comment.
The APA also typically requires a 30day 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
VerDate Sep<11>2014
16:00 Apr 16, 2021
Jkt 253001
cause.32 Because the rule relieves
currently codified limitations and
restrictions, the interim 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,33 the Office of Management
and Budget (OMB) determines 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 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.34
For the same reasons set forth above,
the Board is adopting the interim 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.35 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.
32 5
U.S.C. 553(d).
U.S.C. 801–808.
34 5 U.S.C. 804(2).
35 5 U.S.C. 808.
33 5
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Fmt 4700
Sfmt 4700
20263
C. Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(PRA) (44 U.S.C. 3501 et seq.) requires
that OMB approve all collections of
information by a Federal agency from
the public before they can be
implemented. Respondents are not
required to respond to any collection of
information unless it displays a valid
OMB control number. The information
collection requirements prescribed by
the May 2020 interim final rule under
PCA remains in effect and are cleared
under OMB control number 3133–0154.
D. Executive Order 13132
Executive Order 13132 36 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 interim 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
interim final rule will not affect family
well-being within the meaning of
Section 654 of the Treasury and General
Government Appropriations Act,
1999.37
F. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA)
generally requires that when an agency
issues a proposed rule or a final rule
pursuant to the APA 38 or another law,
the agency must prepare a regulatory
flexibility analysis that meets the
requirements of the RFA and publish
such analysis in the Federal Register.39
Specifically, the RFA normally requires
agencies to describe the impact of a
rulemaking on small entities by
providing a regulatory impact analysis.
For purposes of the RFA, the Board
36 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).
37 Public Law 105–277, 112 Stat. 2681 (1998).
38 5 U.S.C. 553(b).
39 5 U.S.C. 603, 604.
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Federal Register / Vol. 86, No. 73 / Monday, April 19, 2021 / Rules and Regulations
considers FICUs with assets less than
$100 million to be small entities.40
As discussed previously, consistent
with the APA,41 the Board has
determined for good cause that general
notice and opportunity for public
comment is unnecessary, and therefore
the Board is not issuing a notice of
proposed rulemaking. Rules that are
exempt from notice and comment
procedures are also exempt from the
RFA requirements, including
conducting a regulatory flexibility
analysis, when among other things the
agency for good cause finds that notice
and public procedure are impracticable,
unnecessary, or contrary to the public
interest. Accordingly, the Board has
concluded that the RFA’s requirements
relating to initial and final regulatory
flexibility analysis do not apply.
Nevertheless, the Board seeks
comment on whether, and the extent to
which, the interim final rule would
affect a significant number of small
entities.
List of Subjects in 12 CFR Part 702
PART 702—CAPITAL ADEQUACY
1. The authority citation for part 702
continues to read as follows:
■
Authority: 12 U.S.C. 1766(a), 1790d.
2. In § 702.201, revise and republish
the introductory text of paragraph (b)(2)
to read as follows:
■
§ 702.201 Prompt corrective action for
‘‘adequately capitalized’’ credit unions.
*
*
*
*
*
(b) * * *
(2) Notwithstanding paragraph (a) of
this section, starting on April 19, 2021
and ending on March 31, 2022, for a
credit union that is adequately
capitalized:
*
*
*
*
*
■ 3. In § 702.206, revise and republish
paragraph (c)(4) to read as follows:
Net worth restoration plans.
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*
*
*
*
*
(c) * * *
(4) Notwithstanding paragraphs (c)(1),
(2), and (3) of this section, the Board
may permit a credit union that is
40 NCUA
IRPS 15–1. 80 FR 57512 (Sept. 24, 2015).
U.S.C. 553(b)(3)(B).
16:00 Apr 16, 2021
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 29
[Docket No. FAA–2021–0241; Special
Conditions No. 29–053–SC]
Special Conditions: Airbus Helicopters
Model H160B Helicopter; Use of 30Minute All Engines Operating Power
Rating
These special conditions are
issued for the Airbus Helicopters
(Airbus) Model H160B helicopter. This
model helicopter will have a novel or
unusual design feature associated with
a 30-minute all engines operating (AEO)
power rating. The applicable
airworthiness regulations do not contain
adequate or appropriate safety standards
for this design feature. These special
conditions contain the additional safety
standards that the Administrator
considers necessary to establish a level
of safety equivalent to that established
by the existing airworthiness standards.
DATES:
Effective date: The effective date of
these special conditions is May 4, 2021.
Comment due date: The FAA must
receive your comments by May 19,
2021.
ADDRESSES: Send comments identified
by docket number FAA–2021–0241
using any of the following methods:
• Federal eRegulations Portal: Go to
https://www.regulations.gov and follow
the online instructions for sending your
comments electronically.
• Mail: Send comments to Docket
Operations, M–30, U.S. Department of
Transportation (DOT), 1200 New Jersey
Avenue SE, Room W12–140, West
Building Ground Floor, Washington, DC
20590–0001.
• Hand Delivery of Courier: Take
comments to Docket Operations in
SUMMARY:
For the reasons set forth in the
preamble, the Board amends 12 CFR
part 702 as follows:
VerDate Sep<11>2014
BILLING CODE 7535–01–P
Federal Aviation
Administration (FAA), Department of
Transportation (DOT).
ACTION: Final special conditions; request
for comments.
By the NCUA Board.
Melane Conyers-Ausbrooks,
Secretary of the Board.
41 5
[FR Doc. 2021–08027 Filed 4–16–21; 8:45 am]
AGENCY:
Credit unions, Reporting and
recordkeeping requirements.
§ 702.206
undercapitalized to submit to the
Regional Director a streamlined NWRP
plan attesting that its reduction in
capital was caused by share growth and
that such share growth is a temporary
condition due to the COVID–19
pandemic. A streamlined NWRP plan is
permitted between April 19, 2021 and
March 31, 2022.
*
*
*
*
*
Jkt 253001
PO 00000
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Room W12–140 of the West Building
Ground Floor at 1200 New Jersey
Avenue SE, Washington, DC, between 9
a.m., and 5 p.m., Monday through
Friday, except Federal holidays.
• Fax: Fax comments to Docket
Operations at 202–493–2251.
Privacy: Except for Confidential
Business Information (CBI) as described
in the following paragraph, and other
information as described in 14 CFR
1.35, the FAA will post all comments it
receives, without change, to https://
regulations.gov, including any personal
information the commenter provides.
Using the search function of the docket
website, anyone can find and read the
electronic form of all comments
received into any FAA docket,
including the name of the individual
sending the comment (or signing the
comment for an association, business,
labor union, etc.). DOT’s complete
Privacy Act Statement can be found in
the Federal Register published on April
11, 2000 (65 FR 19477–19478), as well
as at https://DocketsInfo.dot.gov.
Confidential Business Information:
CBI is commercial or financial
information that is both customarily and
actually treated as private by its owner.
Under the Freedom of Information Act
(FOIA) (5 U.S.C. 552), CBI is exempt
from public disclosure. If your
comments responsive to these special
conditions contain commercial or
financial information that is customarily
treated as private, that you actually treat
as private, and that is relevant or
responsive to these special conditions, it
is important that you clearly designate
the submitted comments as CBI. Please
mark each page of your submission
containing CBI as ‘‘PROPIN’’. The FAA
will treat such marked submissions as
confidential under the FOIA, and they
will not be placed in the public docket
of these special conditions. Submissions
containing CBI should be sent to Rao
Edupuganti, Dynamic System Section,
AIR–627, Technical Innovation Policy
Branch, Policy and Innovation Division,
Aircraft Certification Service, 10101
Hillwood Parkway, Fort Worth, TX
76177; telephone (817) 222–5110; email
Rao.Edupuganti@faa.gov. Any
commentary that the FAA receives
which is not specifically designated as
CBI will be placed in the public docket
for this rulemaking.
Docket: Background documents or
comments received may be read at
https://www.regulations.gov at any time.
Follow the online instructions for
accessing the docket, or go to the Docket
Operations in Room W12–140 of the
West Building Ground Floor at 1200
New Jersey Avenue SE, Washington,
E:\FR\FM\19APR1.SGM
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]]>Agencies
[Federal Register Volume 86, Number 73 (Monday, April 19, 2021)]
[Rules and Regulations]
[Pages 20258-20264]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-08027]
=======================================================================
-----------------------------------------------------------------------
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 702
[NCUA-2021-0046]
RIN 3133-AF19
Temporary Regulatory Relief in Response to COVID-19--Prompt
Corrective Action
AGENCY: National Credit Union Administration (NCUA).
ACTION: Interim final rule; request for comments.
-----------------------------------------------------------------------
SUMMARY: The NCUA Board (Board) is making two temporary changes to its
prompt corrective action (PCA) regulations to help ensure that
federally insured credit unions (FICUs) remain operational and liquid
during the COVID-19 pandemic. The first amends these regulations to
temporarily enable the Board to issue an order applicable to all FICUs
to waive the earnings-retention requirement for any FICU that is
classified as adequately capitalized. The second modifies these
regulations with respect to the specific documentation required for net
worth restoration plans (NWRPs) for FICUs that become undercapitalized.
These temporary modifications will be in place until March 31, 2022.
This rule is substantially similar to an interim final rule that the
Board published on May 28, 2020.
DATES: This rule is effective on April 19, 2021. Comments must be
received on or before June 18, 2021.
ADDRESSES: You may submit written comments, identified by RIN 3133-
AF19, 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 for Docket #NCUA-2021-
0046.
Fax: (703) 518-6319. Include ``[Your Name]--Comments on
Temporary Regulatory Relief Rule in Response to COVID-19--Prompt
Corrective Action'' in the transmittal.
Mail/Hand Delivery/Courier: 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: Policy and Analysis: Lisa Roberson,
Director, Policy Division, Office of Examination and Insurance, at
(703) 518-6360; Legal: Marvin Shaw, Senior Staff Attorney and Thomas
Zells, Senior Staff Attorney, Office of General Counsel, at (703) 518-
6540; or by mail
[[Page 20259]]
at: National Credit Union Administration, 1775 Duke Street, Alexandria,
Virginia 22314.
SUPPLEMENTARY INFORMATION:
I. Legal Authority
The Board is issuing this interim final rule pursuant to its
authority under the Federal Credit Union Act.\1\ The Act grants the
Board a broad mandate to issue regulations that govern both federal
credit unions and, more generally, all FICUs. For example, section 120
of the 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 Act is a plenary grant of regulatory
authority to issue rules and regulations necessary or appropriate for
the Board 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\ Such specific rulemaking
authority is set forth in section 216(b) with respect to PCA.\5\
---------------------------------------------------------------------------
\1\ 12 U.S.C. 1751 et seq.
\2\ 12 U.S.C. 1766(a).
\3\ 12 U.S.C. 1789.
\4\ An example of a provision of the 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. 1790d(b).
---------------------------------------------------------------------------
II. Prompt Corrective Action Background
A. Statutory Provisions
In 1998, Congress enacted the Credit Union Membership Access Act
(``CUMAA'').\6\ The CUMAA amended the Federal Credit Union Act (``the
Act'') to require the NCUA to adopt, by regulation, a system of PCA
consisting of minimum capital standards and corresponding remedies to
improve the net worth of federally insured ``natural person'' credit
unions.\7\ The purpose of PCA is to ``resolve the problems of insured
credit unions at the least possible long-term loss to the [National
Credit Union Share Insurance Fund (`NCUSIF')].'' \8\
---------------------------------------------------------------------------
\6\ Public Law 105-219, 112 Stat. 913 (1998).
\7\ 12 U.S.C. 1790d et seq.
\8\ 12 U.S.C. 1790d(a)(1).
---------------------------------------------------------------------------
The statute designated three principal components of PCA: (1) A
framework combining mandatory actions prescribed by statute with
discretionary actions developed by the NCUA; (2) an alternative system
of PCA to be developed by the NCUA for FICUs which CUMAA defines as
``new;'' and (3) a risk-based net worth requirement to apply to FICUs
which the NCUA defines as ``complex.''
For FICUs other than those that meet the statutory definition of a
``new'' FICU, the CUMAA mandated a framework of mandatory and
discretionary supervisory actions indexed to five statutory net worth
categories:
1. Well capitalized
2. Adequately capitalized
3. Undercapitalized
4. Significantly undercapitalized, and
5. Critically undercapitalized
The mandatory actions and conditions that trigger conservatorship
and liquidation are expressly prescribed by statute.\9\ To supplement
the mandatory actions, the statute directed the NCUA to develop
discretionary actions which are ``comparable'' to the ``discretionary
safeguards'' available under section 38 of the Federal Deposit
Insurance Act, which is the statute that applies PCA to other federally
insured depository institutions.\10\
---------------------------------------------------------------------------
\9\ 12 U.S.C. 1790d(e), (f), (g), and (i); 12 U.S.C.
1786(h)(1)(F); 12 U.S.C. 1786(a)(3)(A)(1).
\10\ 12 U.S.C. 1790d(b)(1)(A); S. Rep. No. 193, 105th Cong., 2d
Sess. 12 (1998) (S. Rep.); H.R. Rep. No. 472, 105th Cong; see also
12 U.S.C. 1831o (Section 38 of the Federal Deposit Insurance Act
setting forth the PCA requirements for banks).
---------------------------------------------------------------------------
The Act addresses the earnings-retention requirement applicable to
FICUs that are not well capitalized.\11\ Such FICUs are required to
annually set aside as net worth an amount equal to not less than 0.4%
of their total assets.\12\ The Board has the authority to decrease the
earnings-retention requirement.\13\ To accomplish this, the Board may
issue an order if it determines the decrease is necessary to avoid a
significant redemption of shares and further the purpose of PCA--to
resolve the problems of insured credit unions at the least possible
long-term cost to the NCUSIF. The Act also requires the Board to
periodically review any order that it issues to decrease a FICU's
earnings-retention requirement.\14\
---------------------------------------------------------------------------
\11\ 12 U.S.C. 1790d(e).
\12\ 12 U.S.C. 1790d(e)(1).
\13\ 12 U.S.C. 1790d(e)(2).
\14\ 12 U.S.C. 1790d(e)(2)(B).
---------------------------------------------------------------------------
Separately, 12 U.S.C. 1790d(f) sets forth requirements related to
NWRPs, which FICUs must submit to the NCUA and which the NCUA must
review when a FICU becomes undercapitalized. The regulatory provisions
that address the procedures and documentation requirements for NWRPs
are codified at 12 CFR 702.206 and are detailed below.
B. Regulatory Provisions
In February 2000, the NCUA Board adopted part 702 and subpart L of
part 747, establishing a comprehensive system of PCA that combines
mandatory supervisory actions prescribed by the statute with
discretionary supervisory actions developed by the NCUA (2000 final
rule).\15\ Each of these supervisory actions index to the five
statutory net worth categories (well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized, and
critically undercapitalized).
---------------------------------------------------------------------------
\15\ 65 FR 8560 (Feb. 18, 2000).
---------------------------------------------------------------------------
In addition, the 2000 final rule permits the NCUA to impose other
action to carry out PCA beyond any discretionary supervisory action
available for a particular net worth category.\16\ In the proposal that
provided the basis for the 2000 final rule, the Board noted that part
702 also amplifies the terms of the statutory exception to the 0.4%
minimum set aside. Specifically, the Board stated that it interpreted
the phrase by order to indicate that exceptions to the 0.4% statutory
minimum are to be granted on a case-by-case basis.\17\ The Board had
historically interpreted these orders on a case-by-case basis. However,
given the current economic conditions associated with the COVID-19
pandemic--during which many FICUs broadly face similar circumstances
that affect net worth--the Board has determined it is appropriate to
implement the changes in this rule to authorize a broadly applicable
order to decrease the earnings-retention requirements for multiple
FICUs and to allow a streamlined NWRP in certain circumstances.
---------------------------------------------------------------------------
\16\ 12 CFR 702.202(b)(9).
\17\ 64 FR 27090 (May 18, 1999).
---------------------------------------------------------------------------
III. Temporary Amendments to Earnings Retention and NWRP Provisions
A. May 2020 Interim Final Rule
On May 21, 2020, the Board approved an interim final rule that
temporarily amended two provisions in the PCA regulations in part
702.\18\ The first amendment addressed the earnings-retention
requirement in Sec. 702.201 for FICUs classified as adequately
capitalized. The second amendment addressed the NWRPs in Sec.
702.206(c) that have become undercapitalized.
---------------------------------------------------------------------------
\18\ 85 FR 31952 (May 28, 2020).
---------------------------------------------------------------------------
The May 2020 interim final rule was issued in response to the
COVID-19 pandemic. It sought to ensure that FICUs continued to operate
efficiently, to ensure that FICUs maintained sufficient liquidity, and
to account for the potential temporary increase in shares that FICUs
may experience during the COVID-19 pandemic.
[[Page 20260]]
Specifically, the Board believed the temporary amendments in the
interim final rule would allow FICUs to better utilize resources by
reducing the administrative burden associated with a temporary increase
in shares.
The Board concluded that the amendments would 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 Board made the temporary amendments effective upon
publication and specified that they would remain in place through the
end of calendar year 2020. The Board sought comment on the interim
final rule.
On June 5, 2020, pursuant to the changes made by the May 2020
interim final rule, the Board issued a temporary order decreasing the
earnings-retention requirement.\19\ Specifically, the Board determined
that, in light of the economic circumstances caused by the COVID-19
pandemic, decreasing the earnings-retention requirements set forth in
the NCUA's regulations was necessary to avoid a significant redemption
of shares and would further the purposes of the PCA regulations.
Accordingly, the Board ordered that any natural-person FICU that had a
net worth classification, as defined in part 702 of the NCUA's
regulations, of adequately capitalized between March 31, 2020, and
December 31, 2020, could decrease its earnings-retention requirement to
zero as set forth in part 702. The order was effective through, and
including, December 31, 2020.
---------------------------------------------------------------------------
\19\ The Order is available on the NCUA website: https://www.ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/temporary-order-decreasing-earnings-retention-requirement.
---------------------------------------------------------------------------
As noted, the Board solicited comment on the May 2020 interim final
rule. The Board received comments from a credit union trade
association, two state credit union leagues, and an organization of
state credit union supervisors. All commenters supported the interim
final rule, and no commenter opposed it. All commenters stated that the
changes were appropriate, noting that they provided regulatory relief
and flexibility to credit unions to manage their liquidity and address
financial hardships caused by the COVID-19 pandemic.
The interim final rule's two provisions expired on December 31,
2020. All commenters requested that the temporary amendments be
extended or made permanent. One commenter stated that if the economic
dislocation caused by the pandemic lingered, the regulatory relief
contemplated in the interim final rule could be necessary beyond
December 31, 2020. Among the recommendations to extend the effective
date were (1) make the rule permanent, (2) extend the applicability
until the COVID-19 pandemic was declared over by the Center for Disease
Control or other Federal agency, or (3) make the end date December 31,
2021.
B. New Interim Final Rule
Based on limited utilization of the previous relief as of December
2020, the Board did not extend these provisions but continued to
consider this issue. Considering information available following the
expiration of the 2020 interim final rule, the Board has determined it
is appropriate to readopt these amendments to the PCA regulations in
part 702 on a temporary basis. Specifically, based on the recent
congressional action (the American Rescue Plan Act of 2021) \20\ to
provide direct financial relief to individual taxpayers, the Board
anticipates that credit unions will receive a significant increase in
deposits due to stimulus checks. Accordingly, the Board has determined
it is appropriate to reinstitute the changes to the PCA provisions
previously adopted in May 2020.
---------------------------------------------------------------------------
\20\ Public Law 117-2 (Mar. 11, 2021).
---------------------------------------------------------------------------
In 2020, the credit union industry experienced significant asset
growth as a result of the COVID-19 pandemic. The Board believes this
growth will be temporary. This growth strained the net worth position
of credit unions, and negatively impacted many credit unions' PCA
classification. Specifically, the credit union industry experienced
asset growth--predominantly from share growth--at a rate of 17.73
percent from December 31, 2019, to December 31, 2020. During this same
period, the number of FICUs with a PCA classification of adequately
capitalized increased by 274 percent, and those classified as
undercapitalized increased by 123 percent.\21\
---------------------------------------------------------------------------
\21\ Based on December 31, 2020 Call Report Data.
---------------------------------------------------------------------------
The American Rescue Plan Act is the third in a series of
congressional actions to provide taxpayers monetary relief.\22\ This
action, approved in March 2021, provides relief to individual taxpayers
in the form of stimulus payments (referred to as ``recovery rebates''
in the American Rescue Plan Act). At the time of this action, the
previous stimulus payments approved by Congress in December 2020 as
part of the Consolidated Appropriations Act of 2021 were still being
distributed to qualified individuals in the form of stimulus
payments.\23\ Looking forward, the combination of both stimulus
payments will place a continued strain on FICUs' PCA classifications.
---------------------------------------------------------------------------
\22\ Coronavirus Aid, Relief, and Economic Security Act, Public
Law 116-136 (Mar. 27, 2020); Consolidated Appropriations Act, 2021,
Public Law 116-260 (Dec. 27, 2020).
\23\ Public Law 116-260 (Dec. 27, 2020).
---------------------------------------------------------------------------
III. Section-by-Section Analysis
A. Section 702.201--Earnings-Retention Requirement for ``Adequately
Capitalized'' FICUs
With respect to earnings retention, a FICU that is classified as
adequately capitalized or lower must increase the dollar amount of its
net worth quarterly by an amount equivalent to at least 1/10th of a
percent of its total assets and must quarterly transfer at least that
amount (for a total of 0.4% annually) from undivided earnings to its
regular reserve account every quarter until it is well capitalized.\24\
The purpose of this provision is to restore a FICU that is less than
well capitalized to a well-capitalized position in an incremental
manner.
---------------------------------------------------------------------------
\24\ This relief is provided for FICUs that are required to make
an earnings retention transfer under Sec. 702.201.
---------------------------------------------------------------------------
As discussed previously, Sec. 702.201 currently provides that the
Board may waive this requirement on a case-by-case basis when an
affected FICU submits a waiver application to the NCUA. The Act
provides broader authority for the Board to issue an order to waive
this requirement and does not require an application or individual
orders.\25\ In response to the COVID-19 pandemic and resulting economic
conditions, the Board has determined that it is appropriate to
temporarily amend Sec. 702.201 to provide the Board express regulatory
authority to issue a single order waiving the earnings-retention
requirement for all FICUs classified as adequately capitalized while
this temporary rule is in effect. The Board intends, as it did in its
June 2020 order, to authorize the applicable Regional Director to
require an application for an earnings transfer waiver if a particular
FICU poses undue risk to the NCUSIF or exhibits material safety and
soundness concerns.
---------------------------------------------------------------------------
\25\ See 1 U.S.C. 1 (providing that unless context indicates
otherwise, words importing the singular also apply to several
persons or parties).
---------------------------------------------------------------------------
Amending the regulation in this manner will allow the Board to
respond to circumstances that broadly affect many FICUs with a single
issuance rather than numerous individual waiver approvals. This
provision will be effective on the date the interim final rule is
published in the Federal Register and will expire on March 31, 2022.
[[Page 20261]]
This interim final rule will impact the processing of earnings
transfer waiver submissions listed in the following table. It will not
impact the earnings transfer waiver submissions that were due March 16,
2021, as a result of a credit union's PCA classification of adequately
capitalized (or lower), based on the Call Report for the quarter ending
of December 31, 2020.
----------------------------------------------------------------------------------------------------------------
Earnings transfer Quarterly net Earnings transfer
Call Report effective date PCA classification waiver submission worth transfer waiver
date date date permissible
----------------------------------------------------------------------------------------------------------------
March 31, 2021.................. April 30, 2021.... June 15, 2021..... June 30, 2021..... Yes.
June 30, 2021................... July 30, 2021..... Sept. 15, 2021.... Sept. 30, 2021.... Yes.
Sept. 30, 2021.................. Oct. 31, 2021..... Dec. 16, 2021..... Dec. 31, 2021..... Yes.
Dec. 31, 2021................... Jan. 30, 2022..... March 16, 2022.... March 31, 2022.... Yes.
----------------------------------------------------------------------------------------------------------------
Once this regulatory amendment is in effect, the Board intends to
issue the order described above following the publication of this rule
in the Federal Register. The order will be applicable to adequately
capitalized FICUs and will grant relief from the earnings-retention
requirement without requiring those FICUs to submit applications and
receive individual waiver approvals, subject to the qualification
previously noted in this section.
The Board is exercising this authority under 12 U.S.C. 1790d(e)(2)
to enhance flexibility in the application of the earnings-retention
requirement. This relief is necessary to avoid a reduction of shares
and thus retain system liquidity and capital adequacy, thereby
furthering the purpose of PCA. As previously noted, the COVID-19
pandemic resulted in significant asset growth in the credit union
industry. This growth may impact many credit unions' PCA
classification, resulting in an increased number of credit unions being
subject to the earnings retention requirement. Based on the December
31, 2020 Call Report data, 155 credit unions are classified as less
than well capitalized and are subject to mandatory action under PCA. An
estimated 107 credit unions were classified as adequately capitalized.
These credit unions may experience relief from this rulemaking. The
potential for the impact of additional issuance of COVID-19 pandemic
relief in the form of stimulus payments could result in further
reported asset growth and result in more credit unions qualifying for
earnings retention relief. Specifically, 465 credit unions had net
worth ratios between seven and eight percent at December 31, 2020. If
these credit unions experienced substantial asset growth caused by
increased share growth, there is a potential that some of these credit
unions may also qualify for earnings retention relief during the next
twelve months.
The Board further notes that FICU operations continue to be
significantly disrupted as a result of social distancing practices,
remote work, and related complications. This regulatory relief will
lessen the administrative burden on both FICUs and the NCUA by avoiding
the effort associated with preparing a waiver application and (for the
NCUA) evaluating and responding to such applications. The Board notes
qualifications in the planned order regarding FICUs that pose undue
risk or material safety and soundness concerns will help ensure the
purpose of PCA--namely, to resolve the problems of insured credit
unions at the least possible long-term cost to the NCUSIF--is
maintained while this temporary rule is in effect.
This approach affords the agency the flexibility to address
potential difficulties FICUs face during this unprecedented period. The
Board also notes that the current, specific requirements on earnings
transfer waivers are based on a regulatory provision rather than a
specific statutory directive.\26\ Accordingly, the Board has
flexibility to modify the regulatory provision to address the financial
circumstances of individual FICUs as well as the broader credit union
system. This is consistent with the overall statutory structure of PCA,
which combines both mandatory and discretionary provisions.
---------------------------------------------------------------------------
\26\ The Board notes that 12 U.S.C. 1790d(e)(1) requires
earnings retention. However, additional provisions in 12 CFR part
702, including those related to timing and the content of the
application, supplement this statutory provision.
---------------------------------------------------------------------------
Expansionary monetary and fiscal policies, combined with
precautionary savings, are placing a strain on FICU net worth. The
ongoing economic impact of the COVID-19 pandemic may result in an
increase in the volatility of share balances, loan demand, and loan
losses. The resulting stress on credit union balance sheets could
potentially require an increased level of liquidity management
throughout 2021. The NCUA continues to encourage credit unions to work
with their members who are affected by the COVID-19 pandemic. Allowing
for a broad order relieving adequately capitalized FICUs from this
requirement is consistent with the statutory criteria for issuing such
an order--namely, avoiding a significant redemption of shares and
furthering the purpose of 12 U.S.C. 1790d to ``resolve the problems of
insured credit unions at the least possible long-term loss to the
Fund.'' \27\
---------------------------------------------------------------------------
\27\ 12 U.S.C. 1790d(a)(1).
---------------------------------------------------------------------------
Accordingly, the Board is amending Sec. 702.201 to adopt the
temporary provision to issue a broadly applicable order. The Board
plans to issue through a separate action an order consistent with this
re-adopted provision to set forth the terms of relief from the
earnings-retention requirement.
B. Section 702.206(c)--Net Worth Restoration Plans (NWRPs); Contents of
NWRP
With respect to NWRPs, the Act provides a broad directive that a
FICU that is less than adequately capitalized must submit an applicable
NWRP to the NCUA. The NCUA, by regulation, has provided additional
details to flesh out this statutory provision. Section 702.206(a) of
the NCUA's regulations specifies the schedule for filing an NWRP, and
Sec. 702.206(c) of the NCUA's regulations outlines the contents of an
NWRP.\28\
---------------------------------------------------------------------------
\28\ 12 CFR 702.206(c). Under the current regulation, an NWRP
must--
Specify--
[cir] A quarterly timetable of steps the credit union will take
to increase its net worth ratio so that it becomes ``adequately
capitalized'' by the end of the term of the NWRP, and to remain so
for four (4) consecutive calendar quarters. If ``complex,'' the
credit union is subject to a risk-based net worth requirement that
may require a net worth ratio higher than six percent (6%) to become
``adequately capitalized'';
[cir] The projected amount of earnings to be transferred to the
regular reserve account in each quarter of the term of the NWRP as
required under Sec. 702.201(a), or as permitted under Sec.
702.201(b);
[cir] How the credit union will comply with the mandatory and
any discretionary supervisory actions imposed on it by the NCUA
Board under the subpart;
[cir] The types and levels of activities in which the credit
union will engage; and
[cir] If reclassified to a lower category under Sec.
702.102(b), the steps the credit union will take to correct the
unsafe or unsound practice(s) or condition(s);
Include pro forma financial statements, including any
off-balance sheet items, covering a minimum of the next two years;
and
Contain such other information as the NCUA Board has
required.
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[[Page 20262]]
The Board has determined that it is appropriate to waive the NWRP
content requirements for FICUs that become classified as
undercapitalized (those that have a net worth ratio of 4 percent to
5.99 percent) predominantly as a result of share growth. In these
cases, a FICU may submit a significantly simpler NWRP to the applicable
Regional Director noting that the FICU became undercapitalized as a
result of share growth. Specifically, a FICU would be required to
attest that its reduction in capital was caused by share growth and
that such share growth is a temporary condition due to the COVID-19
pandemic and congressional actions to provide stimulus through direct
payments to taxpayers. Federally insured, state-chartered credit unions
must comply with applicable state requirements when submitting NWRPs
for state supervisory authority approval.
When reviewing an NWRP submitted under this authority, the Regional
Director will determine if the decrease in the net worth ratio was
predominantly a result of share growth. To assess the reason for the
decrease, the Regional Director will analyze the numerator and
denominator of the net worth ratio--no change, or an increase in the
numerator and an increase in the denominator, would indicate that the
decrease in the net worth ratio was due to share growth. If there is an
increase in the denominator and a decrease in the numerator, the
Regional Director will analyze whether the decrease in the numerator
would have caused the credit union to fall to a lower net worth
classification if there were no change in the denominator. If so, the
credit union's net worth decline would not be predominantly due to
share growth and the credit union would not be eligible to submit a
streamlined NWRP.
The Board has determined it is appropriate to modify the regulation
addressing NWRPs given the continued economic disruption caused by the
COVID-19 pandemic. The ongoing disruption has led to unprecedented
expansionary monetary and fiscal policies, combined with precautionary
savings, placing a strain on FICU net worth. Accordingly, an increased
number of credit unions are experiencing PCA reclassification to lower
categories due to growth in savings. Given the current levels of
volatility of share balances, loan demand, and loan losses in the
credit union industry, the detail contained in traditional NWRPs may
not be as meaningful. Accordingly, the streamlined NWRP described in
this interim final rule will provide sufficient information to account
for current economic conditions.
Based on December 31, 2020, Call Report data, 48 credit unions
would require an NWRP to be in place or be submitted for approval based
on their PCA classification. This is an increase of 30 percent from the
37 credit unions required to have an NWRP in place or submitted for
approval when compared to PCA classifications based on December 31,
2019 Call Report data, illustrating an upward trend.
The streamlined NWRP described in the proposed rule will provide
sufficient information, based on current economic conditions, to allow
a Regional Director to determine if a credit union is prepared to
manage the volatility associated with the COVID-19 pandemic and the
impact on a credit union's financial and operational position.
As it concluded in the May 2020 interim final rule, the Board
continues to believe it will be able to fulfill its statutory duty to
evaluate an NWRP even if the plan is more concise and streamlined than
plans submitted prior to the COVID-19 pandemic. Such a streamlined
approach is acceptable because the more extensive information required
under the current requirements may not be practicable or useful under
the current situation. Further, the current requirement addresses
methods for the Board to evaluate an NWRP. The Board believes it can
determine if an NWRP is acceptable even if it lacks some of the
detailed submissions that the current regulation specifies. The Board
further notes that if a FICU falls below being adequately capitalized
because of temporary share growth, the risk is limited.
A credit union's eligibility to submit a streamlined NWRP to the
NCUA will be determined based on the effective date of the credit
union's PCA classification, as defined in part 702 of the NCUA's
regulations.\29\ The streamlined NWRP will apply, on a case-by-case
basis, to credit unions that become classified as undercapitalized
(those that have a net worth ratio of 4 percent to 5.99 percent)
predominantly as a result of share growth. A credit union that has a
PCA classification which has declined prior to the implementation of
this rule will not be able to submit a streamlined NWRP. To further
clarify, a credit union that has a PCA classification which has
declined, requiring a NWRP prior to the expiration of this interim
final rule, will be permitted to submit a streamlined NWRP as reflected
in the following table.
---------------------------------------------------------------------------
\29\ 12 CFR part 702.
----------------------------------------------------------------------------------------------------------------
Call Report effective date PCA classification date Streamlined NWRP permissible
----------------------------------------------------------------------------------------------------------------
December 31, 2020....................... January 30, 2021............... No.
March 31, 2021.......................... April 30, 2021................. Yes.
June 30, 2021........................... July 30, 2021.................. Yes.
September 30, 2021...................... October 31, 2021............... Yes.
December 31, 2021....................... January 30, 2022............... Yes.
----------------------------------------------------------------------------------------------------------------
IV. Regulatory Procedures
A. Administrative Procedure Act
The Board is issuing the interim final rule without prior notice
and the opportunity for public comment and the delayed effective date
ordinarily prescribed by the Administrative Procedure Act (APA).\30\
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.'' \31\
---------------------------------------------------------------------------
\30\ 5 U.S.C. 553.
\31\ 5 U.S.C. 553(b)(3).
---------------------------------------------------------------------------
The Board believes the public interest is best served by
implementing the interim final rule immediately upon publication in the
Federal Register. The Board notes that the COVID-19 pandemic is
unprecedented. It remains an evolving situation, making it difficult
[[Page 20263]]
to anticipate how disruptions caused by the pandemic will manifest
themselves in the financial system. In particular, an individual FICU
may face an emergency situation, including a downgraded capital
classification and the corresponding implications, unless it can invoke
the regulatory relief afforded by this interim final rule. Because the
unprecedented expansionary monetary and fiscal policies, combined with
precautionary savings, are placing a strain on FICU net worth, the
Board believes it has good cause to determine that ordinary notice and
public procedure are impracticable and that moving expeditiously in the
form of an interim final rule is in the best of interests of the public
and the FICUs that serve that public. The temporary regulatory changes
are necessary steps designed to alleviate potential liquidity and
resource strains including stress on capital adequacy and are
undertaken with expedience to ensure the maximum intended effects are
in place at the earliest opportunity.
Further, as an independent basis for good cause with respect to
forgoing comments before issuing the interim final rule, the Board
received comments on the May 2020 interim final rule, which addressed
identical issues as this interim final rule. All commenters supported
the proposed changes to alleviate burden on credit unions and the
agency, which largely addressed issues related to waiving certain PCA
procedures rather than substantive concerns. Accordingly, further delay
for additional comments is inconsistent with the public interest
because it would unnecessarily delay the needed relief for credit
unions.
Notwithstanding the issuance of an interim final rule without the
opportunity for advance comments, the Board values public input in its
rulemakings and believes that providing the opportunity for comment
enhances its regulations. Accordingly, the Board is soliciting comments
on this rulemaking even though this rule is being issued on an interim-
final basis. The amendments made by the interim final rule will
automatically expire on March 31, 2022 and are limited in number and
scope. For these reasons, the Board finds there is good cause
consistent with the public interest to issue the rule without advance
notice and comment.
The APA also typically 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.\32\
Because the rule relieves currently codified limitations and
restrictions, the interim 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.
---------------------------------------------------------------------------
\32\ 5 U.S.C. 553(d).
---------------------------------------------------------------------------
B. Congressional Review Act.
For purposes of the Congressional Review Act,\33\ the Office of
Management and Budget (OMB) determines 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.
---------------------------------------------------------------------------
\33\ 5 U.S.C. 801-808.
---------------------------------------------------------------------------
The Congressional Review Act defines a ``major rule'' as any rule
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.\34\
---------------------------------------------------------------------------
\34\ 5 U.S.C. 804(2).
---------------------------------------------------------------------------
For the same reasons set forth above, the Board is adopting the
interim 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.\35\ 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.
---------------------------------------------------------------------------
\35\ 5 U.S.C. 808.
---------------------------------------------------------------------------
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) (44 U.S.C. 3501 et seq.)
requires that OMB approve all collections of information by a Federal
agency from the public before they can be implemented. Respondents are
not required to respond to any collection of information unless it
displays a valid OMB control number. The information collection
requirements prescribed by the May 2020 interim final rule under PCA
remains in effect and are cleared under OMB control number 3133-0154.
D. Executive Order 13132
Executive Order 13132 \36\ 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 interim 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.
---------------------------------------------------------------------------
\36\ 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. Assessment of Federal Regulations and Policies on Families
The NCUA has determined that this interim final rule will not
affect family well-being within the meaning of Section 654 of the
Treasury and General Government Appropriations Act, 1999.\37\
---------------------------------------------------------------------------
\37\ Public Law 105-277, 112 Stat. 2681 (1998).
---------------------------------------------------------------------------
F. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) generally requires that when
an agency issues a proposed rule or a final rule pursuant to the APA
\38\ or another law, the agency must prepare a regulatory flexibility
analysis that meets the requirements of the RFA and publish such
analysis in the Federal Register.\39\ Specifically, the RFA normally
requires agencies to describe the impact of a rulemaking on small
entities by providing a regulatory impact analysis. For purposes of the
RFA, the Board
[[Page 20264]]
considers FICUs with assets less than $100 million to be small
entities.\40\
---------------------------------------------------------------------------
\38\ 5 U.S.C. 553(b).
\39\ 5 U.S.C. 603, 604.
\40\ NCUA IRPS 15-1. 80 FR 57512 (Sept. 24, 2015).
---------------------------------------------------------------------------
As discussed previously, consistent with the APA,\41\ the Board has
determined for good cause that general notice and opportunity for
public comment is unnecessary, and therefore the Board is not issuing a
notice of proposed rulemaking. Rules that are exempt from notice and
comment procedures are also exempt from the RFA requirements, including
conducting a regulatory flexibility analysis, when among other things
the agency for good cause finds that notice and public procedure are
impracticable, unnecessary, or contrary to the public interest.
Accordingly, the Board has concluded that the RFA's requirements
relating to initial and final regulatory flexibility analysis do not
apply.
---------------------------------------------------------------------------
\41\ 5 U.S.C. 553(b)(3)(B).
---------------------------------------------------------------------------
Nevertheless, the Board seeks comment on whether, and the extent to
which, the interim final rule would affect a significant number of
small entities.
List of Subjects in 12 CFR Part 702
Credit unions, Reporting and recordkeeping requirements.
By the NCUA Board.
Melane Conyers-Ausbrooks,
Secretary of the Board.
For the reasons set forth in the preamble, the Board amends 12 CFR
part 702 as follows:
PART 702--CAPITAL ADEQUACY
0
1. The authority citation for part 702 continues to read as follows:
Authority: 12 U.S.C. 1766(a), 1790d.
0
2. In Sec. 702.201, revise and republish the introductory text of
paragraph (b)(2) to read as follows:
Sec. 702.201 Prompt corrective action for ``adequately capitalized''
credit unions.
* * * * *
(b) * * *
(2) Notwithstanding paragraph (a) of this section, starting on
April 19, 2021 and ending on March 31, 2022, for a credit union that is
adequately capitalized:
* * * * *
0
3. In Sec. 702.206, revise and republish paragraph (c)(4) to read as
follows:
Sec. 702.206 Net worth restoration plans.
* * * * *
(c) * * *
(4) Notwithstanding paragraphs (c)(1), (2), and (3) of this
section, the Board may permit a credit union that is undercapitalized
to submit to the Regional Director a streamlined NWRP plan attesting
that its reduction in capital was caused by share growth and that such
share growth is a temporary condition due to the COVID-19 pandemic. A
streamlined NWRP plan is permitted between April 19, 2021 and March 31,
2022.
* * * * *
[FR Doc. 2021-08027 Filed 4-16-21; 8:45 am]
BILLING CODE 7535-01-P
