[Federal Register Volume 71, Number 225 (Wednesday, November 22, 2006)]
[Rules and Regulations]
[Pages 67439-67441]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-19703]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Parts 745 and 747


Share Insurance Appeals; Clarification of Enforcement Authority 
of the NCUA Board

AGENCY: National Credit Union Administration (NCUA).

ACTION: Interim final rule with request for comments.

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SUMMARY: NCUA is amending its rules to implement amendments to the 
Federal Credit Union Act (FCU Act) made by the Financial Services 
Regulatory Relief Act of 2006 (Reg Relief Act). This interim final rule 
clarifies: that an appeal from a final NCUA Board decision regarding 
share insurance coverage shall be to the appropriate Federal District 
Court; that the NCUA Board may terminate the insured status of any 
insured credit union for violation of any condition imposed by the 
Board in connection with any action on any application, notice, or 
other request by the credit union or an institution-affiliated party; 
and that Orders of Suspension, Prohibition and Removal issued by the 
NCUA Board remain effective against institution-affiliated parties 
regardless of whether they remain institution-affiliated parties at the 
time the Order is considered or issued.

DATES: This interim final rule is effective November 22, 2006. Comments 
must be received by NCUA on or before January 22, 2007.

ADDRESSES: You may submit comments by any of the following methods 
(Please send comments by one method only):
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     NCUA Web site: http://www.ncua.gov/RegulationsOpinionsLaws/proposed_regs/proposed_regs.html. Follow the 
instructions for submitting comments.
     E-mail: Address to [email protected]. Include ``[Your 
name] Comments on Interim Final Rule--Parts 745 and 747'' in the e-mail 
subject line.
     Fax: (703) 518-6319. Use the subject line described above 
for e-mail.
     Mail: Address to Mary Rupp, Secretary of the Board, 
National Credit Union Administration, 1775 Duke Street, Alexandria, VA 
22314-3428.
     Hand Delivery/Courier: Same as mail address.

FOR FURTHER INFORMATION CONTACT: John K. Ianno, Senior Trial Attorney, 
Office of General Counsel, at the above address or telephone: (703) 
518-6540.

SUPPLEMENTARY INFORMATION:

A. Insurance Appeals

    The Reg Relief Act amended section 207(d) of the FCU Act, which 
addresses the resolutions of disputes relating to any claim for 
insurance coverage. 12 U.S.C. 1787(d). This interim rule amends the 
provision in NCUA's regulations, 12 CFR 745.203(c), that sets forth the 
appropriate venue for seeking judicial review of a final determination 
by the Board relating to a claim for insurance coverage.
    The current regulation provides for judicial review by the United 
States Court of Appeals for the District of Columbia or the court of 
appeals for the Federal circuit where the credit union's principal 
place of business is located. The interim rule revises the regulation 
to reflect the statutory change that a final agency determination by 
the Board on a claim for insurance coverage is reviewable by the United 
States district court for the Federal judicial district where the 
principle place of business of the credit union is located.

B. Expansion of Enforcement Authority

    The Reg Relief Act amended three provisions of Section 206 of the 
FCU Act, 12 U.S.C. 1786, to broaden the NCUA Board's authority to take 
enforcement actions for violations of conditions imposed in any action 
on any application, notice, or other request by a credit union or an 
institution-affiliated party. Such violations can serve as a basis for 
cease and desist orders, removal and prohibition orders, and civil 
money penalties. Previously such enforcement actions could only be 
taken upon a violation of conditions imposed in ``the granting of any 
application or other request by the credit union''. The amendments to 
Sections 747.1 and 202 of NCUA's Regulations conform the language of 
the regulation to that of the FCU Act as amended.

[[Page 67440]]

C. Clarification of Suspension, Prohibition and Removal Authority

    The Reg Relief Act amended Section 206(i)(1) of the FCU Act, 12 
U.S.C. 1786(i)(1) to clarify the NCUA Board's authority to issue Orders 
against institution-affiliated parties regardless of whether they 
remain institution-affiliated parties of a credit union when the Order 
is considered or issued. The new statutory language makes clear that 
the NCUA Board has the authority to issue the Order even if the subject 
is no longer affiliated with the institution. The amendments to 
Sections 747.303 and 304 of NCUA's Regulations conform the language of 
the regulation to that of the FCU Act as amended.

D. Interim Final Rule

    The NCUA Board is issuing this rule as an interim final rule 
because there is a strong public interest in assuring that NCUA's Rules 
and Regulations conform to statutory authority. This rule does this by 
making regulatory changes consistent with the statutory amendments in 
the Reg Relief Act. NCUA also finds these reasons are good cause to 
dispense with the 30-day delayed effective date requirement under 
section 553(d)(3) of the Administrative Procedure Act (APA). 
Accordingly, the Board finds that, pursuant to 5 U.S.C. 553(b)(3), 
notice and public procedures are unnecessary and contrary to the public 
interest; and, pursuant to 5 U.S.C. 553(d)(3), the rule will be 
effective upon publication in the Federal Register. Although the rule 
is being issued as an interim final rule and is effective upon 
publication, the 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 rule may have on a 
substantial number of small credit unions, defined as those under ten 
million dollars in assets. This rule clarifies NCUA's enforcement 
authority and identifies the appropriate venue for appeals of final 
share insurance determinations. It does not impose any additional 
regulatory burden. The interim final 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

    NCUA has determined that the interim final rule would not increase 
paperwork requirements under the Paperwork Reduction Act of 1995 and 
regulations of the Office of Management and Budget. 44 U.S.C. 3501 et 
seq.; 5 CFR part 1320.

Executive Order 13132

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

The Treasury and General Government Appropriations Act, 1999--
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, Public Law 
105-277, 112 Stat. 2681 (1998).

Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996, 
Public Law 104-121 (SBREFA), 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 APA. 5 U.S.C. 551. NCUA has requested a SBREFA determination from 
the Office of Management and Budget, which is pending. As required by 
SBREFA, NCUA will file the appropriate reports with Congress and the 
General Accounting Office so that the interim rule may be reviewed.

List of Subjects

12 CFR Part 745

    Credit Unions, Share Insurance.

12 CFR Part 747

    Administrative practice and procedure, Bank deposit insurance, 
Claims, Credit unions, Equal access to justice, Investigations, 
Lawyers, Penalties.

    By the National Credit Union Administration Board on November 
16, 2006.
Mary F. Rupp,
Secretary of the Board.

0
Accordingly, NCUA amends 12 CFR part 745 and 747 as follows:

PART 745--SHARE INSURANCE AND APPENDIX

0
1. The authority citation for part 745 is revised to read as follows:

    Authority: 12 U.S.C. 1752(5), 1757, 1765, 1766, 1781, 1782, 
1787, 1789; Title V, Pub. L. 109-351;120 Stat. 1966.


Sec.  745.203  [Amended]

0
2. Section 745.203(c) is amended by removing ``Court of Appeals for the 
District of Columbia or the court of appeals for the Federal judicial 
circuit,'' and adding in its place ``district court for the Federal 
judicial district.''

PART 747--ADMINISTRATIVE ACTIONS, ADJUDICATIVE HEARINGS, RULES OF 
PRACTICE AND PROCEDURE, AND INVESTIGATIONS

0
3. The authority citation for part 747 is revised to read as follows:

    Authority: 12 U.S.C. 1766, 1782, 1784, 1785, 1786, 1787, 1790a, 
1790d; 42 U.S.C. 4012a; Pub. L. 101-410; Pub. L. 104-134; Pub. L. 
109-351; 120 Stat. 1966.


Sec.  747.1  [Amended]

0
4. Section 747.1(c)(3) is amended by removing ``the grant of an 
application or request,'' and adding in its place ``any action on any 
application, notice, or other request by the credit union or 
institution-affiliated party,''.


Sec.  747.202  [Amended]

0
5. Section 747.202(c) is amended by removing ``any application or 
request of the credit union,'' and adding in its place ``any action on 
any application, notice, or other request by the credit union or 
institution-affiliated party,''.

0
6. Section 747.303 is revised to read as follows:


Sec.  747.303  Notice of suspension or prohibition.

    Whenever an institution-affiliated party of an insured credit union 
is charged in any state, Federal or territorial information or 
indictment or complaint with the commission of or participation in a 
crime involving dishonesty or breach of trust, which crime is 
punishable by imprisonment for a term exceeding one year under state or 
Federal law, the NCUA Board may, if continued service or participation 
by the concerned party may pose a threat to the interests of any

[[Page 67441]]

credit union's members or may threaten to impair public confidence in 
any credit union, by written notice served upon such party, suspend him 
or her from office, or prohibit him or her from further participation 
in any manner in the affairs of any credit union, or both. A copy of 
the notice of suspension or prohibition shall also be served upon the 
credit union of which the subject of the order is, or most recently 
was, an institution-affiliated party.

0
7. Section 747.304 is revised to read as follows:


Sec.  747.304  Removal or permanent prohibition.

    (a) In the event that a judgment of conviction or an agreement to 
enter a pretrial diversion or other similar program is entered against 
the institution-affiliated party, and at such time as the judgment, if 
any, is not subject to further appellate review, the NCUA Board may, if 
continued service or participation by such party may pose a threat to 
the interests of any credit union's members or may threaten to impair 
public confidence in any credit union, issue and serve upon the 
individual an order removing him or her from office or prohibiting him 
or her from further participation in any manner in the conduct of the 
affairs of any credit union except with the consent of the NCUA Board. 
A copy of such order will also be served upon the credit union of which 
the subject of the order is, or most recently was, an institution-
affiliated party.
    (b) The NCUA Board may issue such order with respect to an 
individual who is an institution-affiliated party at a credit union at 
the time of the offense without regard to whether such individual is an 
institution-affiliated party at any credit union at the time the order 
is considered or issued by the Board or whether the credit union at 
which the individual was an institution-affiliated party at the time of 
the offense remains in existence at the time the order is considered or 
issued by the board.
    (c) A finding of not guilty or other disposition of the charge will 
not preclude the Board from thereafter instituting proceedings, 
pursuant to the provisions of section 206(g) of the Act (12 U.S.C. 
1786(g)) and subpart A of this part, to remove such director, committee 
member, officer, or other person from office or to prohibit his or her 
further participation in the affairs of the credit union.

 [FR Doc. E6-19703 Filed 11-21-06; 8:45 am]
BILLING CODE 7535-01-P