[Federal Register Volume 66, Number 54 (Tuesday, March 20, 2001)]
[Rules and Regulations]
[Pages 15619-15621]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-6804]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 701


Organization and Operations of Federal Credit Unions

AGENCY: National Credit Union Administration (NCUA).

ACTION: Interim final rule with request for comments.

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SUMMARY: The NCUA Board is amending its chartering and field of 
membership manual to make two changes to ease the burden on applicants 
for community charters, expansions or conversions. First, applicants 
need not submit documentation to establish a community area that is the 
same as one the NCUA has previously determined to be a well-defined 
local community, neighborhood or rural district. Second, the Board is 
deleting the category of common characteristics and background of 
residents from the examples of acceptable documentation because it has 
proven to generate documentation of limited relevance.

DATES: Effective Date: This rule is effective March 20, 2001.
    Comment Date: Comments must be received on or before May 21, 2001.

ADDRESSES: Comments should be directed to Becky Baker, Secretary of the 
Board. Mail or hand deliver comments to: National Credit Union 
Administration, 1775 Duke Street, Alexandria, Virginia 22314-3428. Or,

[[Page 15620]]

you may fax comments to (703) 518-6319, or e-mail comments to 
[email protected]. Please send comments by one method only.

FOR FURTHER INFORMATION CONTACT: J. Leonard Skiles, Chairman, Field of 
Membership Task Force, at (703) 518-6320 or Sheila A. Albin, Associate 
General Counsel, Operations, at (703) 518-6540.

SUPPLEMENTARY INFORMATION:

Background

    NCUA's chartering and field of membership policy is set out in 
Interpretive Ruling and Policy Statement 99-1, Chartering and Field of 
Membership Policy (IRPS 99-1), as amended by IRPS 00-01. The policy is 
incorporated by reference in NCUA's regulations at 12 CFR 701.1. It is 
also published as NCUA's Chartering and Field of Membership Manual 
(Chartering Manual), which is the document most interested parties use 
and to which references in the following discussion are made.
    The Chartering Manual requires community charter applicants to 
establish that an area is a ``well-defined local community, 
neighborhood, or rural district.'' Chartering Manual, Chapter 2, V.A.1. 
It provides that an applicant may submit a letter describing how the 
area meets the standards for interaction or common interest for certain 
geographic and population sizes, namely, a single political 
jurisdiction such as a county with 300,000 or fewer people, or 
multiple, contiguous political jurisdictions with 200,000 or fewer 
people. Applicants must submit maps and information about population 
and the political jurisdiction. Regional directors currently have 
delegated authority to approve charter applications or amendments of 
this size. NCUA Delegations of Authority, Chartering 3A and 3B.
    For larger areas in terms of population and geographic size, the 
Chartering Manual provides for applicants to submit a narrative summary 
and documentation supporting the finding of interaction and common 
interests in the proposed community. The Chartering Manual provides 
examples of the type of documentation that an applicant may submit but 
does not require or specify particular documentation.
    In 2000, the regional offices received 27 community expansions and 
104 community conversion requests. Of these 131 requests, 15 required 
NCUA Board approval.
    Presently, the preparation and processing of a community charter, 
expansion or conversion request that requires NCUA Board approval are 
extensive. Credit unions often take a year or more to prepare a 
community charter application and credit unions may also use outside 
consultants to assist them.
    A significant part of any application requiring Board approval is 
the documentation supporting the finding that the requested area is a 
``well-defined local community, neighborhood, or rural district.'' 
NCUA's Chartering and Field of Membership Manual (Chartering Manual), 
Chapter 2, V.A.2 at p. 2-45. In this regard, applications contain 
detailed information to demonstrate the residents of the proposed area 
have common interests or interact sufficiently to meet the statutory 
``local'' requirement, along with supporting documentation as suggested 
in the Chartering Manual. Often, this portion of an application runs 
hundreds of pages.
    A practice has arisen in which applicants for an area that the 
Board has already approved as a community obtain copies of that portion 
of an earlier application addressing the community requirements and 
resubmit the identical documents as part of their own application. The 
NCUA has processed numerous requests for all or part of approved 
charter applications under the Freedom of Information Act.
    The Chartering Manual provides examples of documentation that 
applicants may consider using to support the area as a community, 
neighborhood or rural district. One of these examples is: ``Common 
characteristics and background of residents (for example, income, 
religious beliefs, primary ethnic groups, similarity of occupations, 
household types, primary age, group, etc.).'' Id. at 2-46. This 
documentation has proven to be of limited relevance in determining 
whether the area meets the community requirements.
    Although this category is only one of eight examples of the type of 
documentation that is acceptable, the Board is aware that applicants 
may feel compelled to provide documentation in all categories. Mere 
statistical data about religious beliefs, ethnicity, age or income may 
encourage questionable assumptions and, as a matter of public policy, 
the Board does not want to encourage the classification of credit union 
members on such bases. To the extent that meaningful similarities exist 
among residents, an applicant may address them under the last suggested 
example of documentation demonstrating that residents share common 
interests or interact.

The Amendments

    The first amendment provides that applicants for an area that is 
the same as one the NCUA has previously determined to be a well-defined 
local community, neighborhood or rural area need not submit a summary 
or any documentation to meet that requirement. The Board believes this 
amendment provides a common sense approach for documentation 
requirements by eliminating redundant proof by subsequent applicants 
for the same exact geographic area that either it or regional directors 
have already addressed. Applicants need only identify in their 
applications the fact of the prior approval and their reliance on the 
summary and documentation already part of the agency's records. 
Nevertheless, applicants may be required to submit their own summary 
and documents if the agency has reason to believe that the documents on 
file from previous applications are no longer accurate or are 
insufficient.
    The second amendment is the deletion of the example of 
documentation for community requirements for common characteristics and 
background of residents. As discussed above, this documentation has 
proven to be of little value and, therefore, is an unnecessary burden 
for applicants and an administrative waste of time for NCUA staff.
    These amendments will help reduce the time involved in the 
community application process, reduce costs for credit unions seeking 
to serve a previously approved community, and reduce regional and Board 
staff time and preparation.
    The Board wants to note that these amendments only apply to 
required documentation to support the proposed area as a community. 
They do not eliminate any of the remaining requirements necessary to 
process a community application, such as addressing safety and 
soundness concerns and the requirement for business and marketing 
plans.
    In conjunction with promulgation of this rule, the Board has 
approved a delegation of authority to regional directors to approve 
applications for new community charters and charter amendments, 
including expansions of existing community charters and conversions of 
any type of federal charter to community charter, regardless of the 
number of residents, where the Board has previously determined that

[[Page 15621]]

the community requirements have been met for the same exact geographic 
area.

Interim Final Rule

    The NCUA Board is issuing this amendment to its chartering 
regulation as an interim final rule because it is an interpretation of 
an existing regulation and merely addresses agency procedures for 
processing chartering applications. The Board believes the amendments 
further the public interest in removing unnecessary regulatory burden 
for the public and promotes the efficient use of agency resources and 
staff. Accordingly, for good cause, the Board finds that, pursuant to 5 
U.S.C. 553(b)(3)(B), notice and public procedures are impracticable, 
unnecessary, and contrary to the public interest; and, pursuant to 5 
U.S.C. 553(d)(3), the rule shall be effective immediately and without 
30 days advance notice of publication. Although the rule is being 
issued as an interim final rule and is effective immediately, the NCUA 
Board encourages interested parties to submit comments.

Regulatory Procedures

Regulatory Flexibility Act

    The Regulatory Flexibility Act requires NCUA to prepare an analysis 
to describe any significant economic impact a regulation may have on a 
substantial number of small credit unions (primarily those under $1 
million in assets). The amendments will not have a significant economic 
impact on a substantial number of small credit unions and therefore, a 
regulatory flexibility analysis is not required.

Paperwork Reduction Act

    The NCUA Board has determined that this interim final rule does not 
increase, and will in fact reduce, paperwork requirements under the 
Paperwork Reduction Act and regulations of the Office of Management and 
Budget.

Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996 
(Public Law 104-121) provides generally for congressional review of 
agency rules. A reporting requirement is triggered in instances where 
NCUA issues a final rule as defined by Section 551 of the 
Administrative Procedures Act. 5 U.S.C. 551. The rule has been 
submitted to the Office of Management and Budget for its determination 
of whether this is a major rule.

Executive Order 13132

    Executive Order 13132 encourages independent regulatory agencies to 
consider the impact of their regulatory actions on state and local 
interests. In adherence to fundamental federalism principles, NCUA, an 
independent regulatory agency as defined in 44 U.S.C. 3502(5), 
voluntarily complies with the executive order. This rule will apply to 
some state-chartered credit unions, but it will not have substantial 
direct effect on the states, on the relationship between the national 
government and the states, or on the distribution of power and 
responsibilities among the various levels of government. NCUA has 
determined that this rule does not constitute a policy that has 
federalism implications for purposes of the executive order.

Agency Regulatory Goal

    NCUA's goal is clear, understandable regulations that impose a 
minimal regulatory burden. We request your comments on whether the 
proposed amendments are understandable and minimally intrusive if 
implemented as proposed.

List of Subjects in 12 CFR Part 701

    Credit, Credit unions, Reporting and recordkeeping requirements.

    By the National Credit Union Administration Board on March 8, 
2001.
Becky Baker,
Secretary of the Board.


    Accordingly, NCUA amends 12 CFR part 701 as follows:

PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS

    1. The authority citation for part 701 continues to read as 
follows:

    Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1759, 1761a, 
1761b, 1766, 1767, 1782, 1784, 1787, 1789. Section 701.6 is also 
authorized by 15 U.S.C. 3717. Section 701.31 is also authorized by 
15 U.S.C. 1601 et seq., 42 U.S.C. 1981 and 3601-3610. Section 701.35 
is also authorized by 12 U.S.C. 4311-4312.


    2. Section 701.1 is revised to read as follows:


Sec. 701.1  Federal credit union chartering, field of membership 
modifications, and conversions.

    National Credit Union Administration policies concerning 
chartering, field of membership modifications, and conversions are set 
forth in Interpretive Ruling and Policy Statement 99-1, Chartering and 
Field of Membership Policy (IRPS 99-1), as amended by IRPS 00-1 and 
IRPS 01-1. Copies may be obtained by contacting NCUA at the address 
found in Sec. 792.2(g)(1) of this chapter. The combined IRPS are 
incorporated into this section.

(Approved by the Office of Management and Budget under control 
number 3133-0015.)

    Note: The text of the Interpretive Ruling and Policy Statement 
(IRPS 99-1) does not, and the following amendments will not, appear 
in the Code of Federal Regulations.


    3. Amend IRPS 99-1, Chapter 2, Section V. A.2 by adding the 
following paragraph as the eleventh paragraph in the section, 
immediately before the paragraph that begins ``A community credit union 
is frequently * * *'' as follows:
    An applicant need not submit a narrative summary or documentation 
to support a proposed community charter, amendment or conversion as a 
well-defined local community, neighborhood, or rural district if the 
NCUA has previously determined that the same exact geographic area 
meets that requirement in connection with consideration of a prior 
application. Applicants may contact the appropriate regional office to 
find out if the area they are interested in has already been determined 
to meet the community requirements. If the area is the same as a 
previously approved area, an applicant need only include a statement to 
that effect in the application. Applicants may be required to submit 
their own summary and documentation regarding the community 
requirements if NCUA has reason to believe that prior submissions are 
not sufficient or are no longer accurate.

    4. Amend IRPS 99-1, Chapter 2, Section V. A.2 by removing from the 
tenth paragraph in the section the seventh bulleted item that begins 
with the words ``common characteristics.''

[FR Doc. 01-6804 Filed 3-19-01; 8:45 am]
BILLING CODE 7535-01-U