[Federal Register Volume 72, Number 104 (Thursday, May 31, 2007)]
[Rules and Regulations]
[Pages 30245-30247]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-10392]



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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Parts 701, 703, 707, 710, 722, 723, and 742

RIN 3133-AD36


Technical Amendments

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

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SUMMARY: NCUA is amending a number of its regulations by making minor 
technical corrections, clarifications and grammatical changes. Among 
those amendments is the addition of a cross-reference between two 
regulations addressing credit union borrowing authority; addition of a 
statement in the provision on insurance coverage for volunteer 
officials to note, when a federal credit union (FCU) cancels coverage, 
it must comply with any other applicable laws allowing an official to 
continue coverage at his or her own expense; and clarification that 
indemnification for dual employees is limited to activities on behalf 
of the FCU. NCUA is also removing certain regulatory references to 
NCUA's FCU Bylaws that are no longer accurate due to revisions to the 
Bylaws. The amendments generally are improvements alerting users to 
other relevant provisions, responsibilities, or limitations.

DATES: This rule is effective May 31, 2007.

FOR FURTHER INFORMATION CONTACT: Annette Tapia or Frank Kressman, Staff 
Attorneys, Office of General Counsel, National Credit Union 
Administration, 1775 Duke Street, Alexandria, Virginia 22314-3428 or 
telephone: (703) 518-6540.

SUPPLEMENTARY INFORMATION:

A. Background

    NCUA continually reviews its regulations to ``update, clarify and 
simplify existing regulations and eliminate redundant and unnecessary 
provisions.'' NCUA Interpretive Rulings and Policy Statement (IRPS) 87-
2, Developing and Reviewing Government Regulations. Under IRPS 87-2, 
NCUA conducts a rolling review of one-third of its regulations every 
year, involving both internal review and public comment. NCUA's 2006 
review revealed that minor revisions to certain regulations would be 
helpful.

B. Regulatory Changes

Section 701.33

    NCUA's regulations implement the statutory provisions permitting 
FCUs to provide certain insurance for volunteer directors and committee 
members. 12 U.S.C 1761a; 12 CFR 701.33(b)(2)(ii). With respect to 
insurance coverage, the regulation provides that coverage must cease 
immediately when an official is no longer serving in that capacity. The 
amendment to Sec.  701.33(b)(2)(ii) serves as a reminder that, when an 
FCU cancels insurance coverage for an official, other federal or state 
laws may provide departing officials the right to maintain health 
insurance coverage at their own expense.
    The regulation also permits an FCU to indemnify its officials and 
employees under certain conditions. 12 CFR 701.33(c). The amendment 
adds a new subparagraph to Sec.  701.33(c) clarifying that an FCU may 
not indemnify an FCU employee acting in a ``dual employee'' role for 
those duties performed for an entity other than the credit union. For 
example, an FCU employee who also performs duties for a credit union 
service organization (CUSO) is a dual employee and the FCU may only 
indemnify the employee for the functions performed for the FCU, not the 
CUSO.

Section 701.38

    NCUA's regulations permit an FCU to borrow funds from natural 
persons, provided it uses a certificate of indebtedness, which sets 
forth the terms and conditions of the repayment of the borrowing. 12 
CFR 701.38. This borrowing authority is subject to a statutory 
limitation implemented in NCUA's regulations limiting an FCU's maximum 
borrowing authority from any source to 50% of its paid-in and 
unimpaired capital and surplus. 12 U.S.C. 1757(9); 12 CFR 741.2(a). 
NCUA is inserting a cross-reference in Sec.  701.38 to the borrowing 
limitations in Sec.  741.2 to alert users to the regulatory provision 
on maximum borrowing authority.

FCU Bylaws

    NCUA revised the FCU Bylaws in 1999 and 2006. The revised Bylaws 
provide greater clarity and flexibility. Several Bylaw provisions 
include fill-in-the-blank choices that enable an FCU's board of 
directors to select from a range of options best suited to their credit 
union's needs. As a result of those revisions, certain regulatory 
provisions referencing the Bylaws are outdated. The technical 
amendments remove those inaccurate references.

C. Regulatory Procedures

Final Rule Under the Administrative Procedure Act

    Generally, the Administrative Procedure Act (APA) requires a 
federal agency to provide the public with notice and the opportunity to 
comment on agency rulemakings. The amendments in this rule are not 
substantive but technical in that they make minor corrections, merely 
provide clarification or alert users of the regulations to other legal 
requirements or limitations. The APA permits an agency to forego the 
notice and comment period under certain circumstances, such as when a 
rulemaking is technical and not substantive. NCUA finds good cause that 
notice and public comment are unnecessary under Section 553(b)(3)(B) of 
the APA. 5 U.S.C. 553(b)(3)(B). NCUA also finds good cause to dispense 
with the 30-day delayed effective date requirement under Section 
553(d)(3) of the APA. 5 U.S.C. 553(d)(3). The rule will, therefore, be 
effective immediately upon publication.

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 entities (those credit unions under ten 
million dollars in assets). This rule provides minor, technical changes 
and clarifications to certain sections of NCUA's regulations. This rule 
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 this rule will not increase paperwork 
requirements under the Paperwork Reduction Act of 1995 and regulations 
of the Office of Management and Budget.

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. This 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. NCUA has

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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 rule will not affect family well-
being within the meaning of section 654 of the Treasury and General 
Government Appropriations Act, 1999, Pub. L. 105-277, 112 Stat. 2681 
(1998).

Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996 
(Pub. L. 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. The Office of Management and Budget has determined that 
this rule is not a major rule for purposes of SBREFA. As required by 
SBREFA, NCUA will file the appropriate reports with Congress and the 
General Accounting Office so this rule may be reviewed.

List of Subjects

12 CFR Part 701

    Credit unions, indemnity payments, insurance.

12 CFR Part 703

    Credit unions, investments.

12 CFR Part 707

    Advertising, consumer protection, credit unions, reporting and 
recordkeeping requirements, truth in savings.

12 CFR Part 710

    Credit unions, liquidations.

12 CFR Part 722

    Appraisals, credit unions, reporting and recordkeeping 
requirements.

12 CFR Part 723

    Credit, credit unions, reporting and recordkeeping requirements.

12 CFR Part 742

    Credit unions, reporting and recordkeeping requirements.

    By the National Credit Union Administration Board on May 24, 
2007.
Mary Rupp,
Secretary of the Board.

0
For the reasons discussed above, NCUA is amending 12 CFR parts 701, 
703, 707, 710, 722, 723, and 742 as follows:

PART 701--ORGANIZATION AND OPERATIONS OF FEDERAL CREDIT UNIONS

0
1. The authority citation for part 701 continues to read as follows:

    Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1759, 1761a, 
1761b, 1766, 1767, 1782, 1784, 1787, and 1789. Section 701.6 is also 
authorized by 31 U.S.C. 3717. Section 701.31 is also authorized by 
15 U.S.C. 1601 et seq., 42 U.S.C. 1861 and 42 U.S.C. 3601-3610. 
Section 701.35 is also authorized by 42 U.S.C. 4311-4312.


0
2. Section 701.21 is amended as follows:
0
a. In paragraph (a), by replacing the last word, ``part'' with the word 
``chapter''; and
0
b. in paragraph (i)(1),introductory text, by removing the word 
``this.''

0
3. Section 701.33(b)(2)(ii) is amended by adding the phrase ``except 
that a credit union must comply with federal and state laws providing 
departing officials the right to maintain health insurance coverage at 
their own expense'' after ``if any;'' and before ``and'' at the end.

0
4. Section 701.33 is amended by adding a new paragraph (c)(4) to read 
as follows:


Sec.  701.33  Reimbursement, insurance, and indemnification of 
officials and employees.

* * * * *
    (4) Notwithstanding paragraphs (c)(1) through (3) of this section, 
a federal credit union may not indemnify a dual employee for duties 
performed for any employer other than the federal credit union. For 
purposes of this subsection, a dual employee is a federal credit union 
employee who also performs work functions for another entity as part of 
a sharing arrangement between the federal credit union and the other 
entity.

0
5. Section 701.38 is amended by adding new paragraph (b) to read as 
follows:


Sec.  701.38  Borrowed funds from natural persons.

* * * * *
    (b) Federal credit unions must comply with the maximum borrowing 
authority of Sec.  741.2 of this chapter.

PART 703--INVESTMENT AND DEPOSIT ACTIVITIES

0
6. The authority citation for part 703 continues to read as follows:

    Authority: 12 U.S.C. 1757(7), 1757(8), 1757(15).


0
7. Section 703.4 is amended by replacing references to ``Sec.  701.12'' 
wherever they appear with references to ``Sec.  715.4.''

PART 707--TRUTH IN SAVINGS

0
8. The authority citation for part 707 continues to read as follows:

    Authority: 12 U.S.C. 4311.


0
9. Appendix B to Part 707 is amended as follows:
0
a. Section B-3 is amended by replacing the ``d'' with ``c'' in the 
topic heading.
0
b. Section B-6 is amended by removing the phrase ``, but must be at 
least 6 months''.
0
c. Section B-6, paragraph 12, in the ``Note:'' portion is amended by 
removing the sentence, ``If this were a passbook account, then the 
requirements of Art. IV, Receipting for Money--Passbooks, in the NCUA 
Standard FCU Bylaws would also be included in item no. 9.''
0
d. Section B-6, paragraph 12, in the ``Note:'' portion is amended by 
removing the phrase ``, and Art. XIV, Sec.  3 of the NCUA Standard FCU 
Bylaws''.
0
e. Section B-7, paragraph 9 is amended by removing the phrase ``, but 
must be at least 6 months''.
0
f. Section B-11 in the ``Note:'' portion is amended by removing the 
phrase ``, except for the overdraft transfer fee of $1.00 per overdraft 
and the excessive share transfer fee of $1.00 per item, which are set 
in the NCUA Standard FCU Bylaws, Art. III, Sec.  4 and Sec.  5(f), 
respectively''.

0
10. Appendix C to Part 707 is amended as follows:
0
a. Section 707.4(b)(2)(ii)(1) is amended by removing the parenthetical 
``(members have at least six months to replenish membership share 
before membership terminates and account is deemed closed)''.
0
b. Section 707.7(b)(3) is amended by removing the parenthetical 
``(members have at least 6 months to replenish membership share before 
membership can terminate and the account is deemed closed)''.
0
c. Section 707.11(b)(5) is amended by removing the open quotation marks 
between the words ``overdrafts'' and ``created.''

PART 710--VOLUNTARY LIQUIDATION

0
11. The authority citation for part 710 continues to read as follows:

    Authority: 12 U.S.C. 1766(a), 1786, and 1787.


0
12. Section 710.3(a) introductory text is amended by removing the 
phrase ``,

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in accordance with the provisions of Article V of the Federal Credit 
Union Bylaws''.

PART 722--APPRAISALS

0
13. The authority citation for part 722 continues to read as follows:

    Authority: 12 U.S.C. 1766, 1789, and 3339.


0
14. Section 722.3(d) is amended by adding ``and (a)(5)'' after the 
words ``paragraphs (a)(1).''

PART 723--MEMBER BUSINESS LOANS

0
15. The authority citation for part 723 continues to read as follows:

    Authority: 12 U.S.C. 1756, 1757, 1757A, 1766, 1785, 1789.


0
16. Section 723.7(a) introductory text is amended by changing the 
reference to ``Sec.  723.4'' to read ``Sec.  723.3''.

PART 742--REGULATORY FLEXIBILITY PROGRAM

0
17. The authority citation for part 742 continues to read as follows:

    Authority: 12 U.S.C. 1756 and 1766.


0
18. Section 742.4(a)(3) is amended by removing ``(b) and (c)'' after 
``701.36(a)''.

[FR Doc. E7-10392 Filed 5-30-07; 8:45 am]
BILLING CODE 7535-01-P