[Federal Register Volume 76, Number 13 (Thursday, January 20, 2011)]
[Notices]
[Pages 3674-3677]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-1090]


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NATIONAL CREDIT UNION ADMINISTRATION

[IRPS 11-1]


Guidelines for the Supervisory Review Committee

AGENCY: National Credit Union Administration (NCUA).

ACTION: Interim final Interpretative Ruling and Policy Statement 11-1, 
``Supervisory Review Committee'' (IRPS 11-1).

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SUMMARY: This policy statement combines two Interpretative Ruling and 
Policy Statements (IRPSs) and adds denials of technical assistance 
grant (TAG) reimbursements to the types of determinations that credit 
unions may appeal to NCUA's Supervisory Review Committee. This new IRPS 
will replace the earlier IRPSs addressing the Supervisory Review 
Committee.

DATES: This IRPS is effective January 20, 2011. Comments must be 
received by February 22, 2011.

ADDRESSES: You may submit comments by any of the following methods 
(Please send comments by one method only):
     NCUA Web site: http://www.ncua.gov/news/proposed_regs/proposed_regs.html. Follow the instructions for submitting comments.
     E-mail: Address to [email protected]. Include ``[Your 
name] Comments on IRPS 11-1'' 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, 
Virginia 22314-3428.
     Hand Delivery/Courier: Same as mail address.
    Public inspection: All public comments are available on the 
agency's Web site at http://www.ncua.gov/RegulationsOpinionsLaws/comments as submitted, except as may not be possible for technical 
reasons. Public comments will not be edited to remove any identifying 
or contact information. Paper copies of comments may be inspected in 
NCUA's law library, at 1775 Duke Street, Alexandria, Virginia 22314, by 
appointment weekdays

[[Page 3675]]

between 9 a.m. and 3 p.m. To make an appointment, call (703) 518-6546 
or send an e-mail to [email protected].

FOR FURTHER INFORMATION CONTACT: Dave Marquis, Executive Director or 
Justin M. Anderson, Staff Attorney, Office of General Counsel, National 
Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 
22314-3428, or telephone: (703) 518-6320 (Dave Marquis) or (703) 518-
6540 (Justin Anderson).

SUPPLEMENTARY INFORMATION:

A. Background

    Pursuant to Section 309(a) of the Riegle Community Development and 
Regulatory Improvement Act of 1994 (Riegle Act), Public Law 103-325, 
Sec.  309(a), 108 Stat. 2160 (1994), the NCUA Board (Board) adopted 
guidelines that established an independent appellate process to review 
material supervisory determinations, entitled ``Supervisory Review 
Committee'' (IRPS 95-1). 60 FR 14795 (March 20, 1995). Through IRPS 95-
1, NCUA established a Supervisory Review Committee (Committee) 
consisting of three senior staff members to hear appeals of material 
supervisory determinations. IRPS 95-1 defined material supervisory 
determinations to include determinations on composite CAMEL ratings of 
3, 4 and 5, all component ratings of those composite ratings, 
significant loan classifications and adequacy of loan loss reserves. 
The Board noted in the preamble to IRPS 95-1, however, that it would 
consider expanding the disputes covered by the Committee's review 
process at a later date. 60 FR 14795, 14796 (March 20, 1995). In 2002, 
the Board amended IRPS 95-1 by issuing IRPS 02-1, which added 
Regulatory Flexibility designation determinations to the list of 
material supervisory determinations credit unions may appeal to the 
Committee.

B. Technical Assistance Grant Reimbursement Denials Amendment

    Under Part 705 of NCUA's regulations, qualifying credit unions can 
apply for loans or Technical Assistance Grants (TAGs) from the 
Community Development Revolving Loan Fund for Credit Unions. As 
outlined in the 2010 NCUA Office of Small Credit Union Initiatives' 
(OSCUI) Technical Assistance Grant Guidelines (http://www.ncua.gov/Resources/CreditUnionDevelopment/Files/Programs/Grants/2010/GeneralGuidelines.pdf), qualifying credit unions that have applied for 
and been granted a TAG may purchase goods or spend the funds, up to the 
amount of the grant in accordance with the purpose of the grant as 
articulated in the credit union's application. After making 
expenditures, a credit union must submit copies of receipts and proof 
of payment to NCUA for reimbursement. The Director of OSCUI may deny a 
request for reimbursements if the credit union fails to remit the 
necessary documentation, the expenditure is not in furtherance of the 
purpose of the grant, or the expenditure is for a restricted category 
of purchases currently as identified in the 2010 Technical Assistance 
Grant Guidelines. Prior to this IRPS, the decision of the Director of 
OSCUI was final and credit unions did not have a forum to appeal the 
decision within NCUA. This interim final IRPS will allow credit unions 
that disagree with the Director of OSCUI's determination to appeal the 
decision to NCUA's Supervisory Review Committee.
    While the Board recognizes that the Riegle Act requires NCUA to set 
up a Supervisory Review Committee to hear appeals of material 
supervisory determinations, the Board notes that there is nothing in 
the Riegle Act that prohibits it from allowing the Committee to hear 
appeals of other issues. Although denials of TAG reimbursements are 
clearly not a material supervisory determination, the Board believes 
these determinations are important enough to warrant formal appeals to 
the Committee. As such, any credit union that disagrees with the 
Director of OSCUI's determination may, within 30 days from the date of 
the denial, appeal the determination to the Committee. The Committee 
will typically make a decision on a TAG reimbursement denial appeal 
within 30 days from the date the committee receives the appeal. The 
Committee will, however, adjudicate material supervisory determination 
appeals before TAG denial appeals if it is necessary to ensure material 
supervisory determination appeals are adjudicated expeditiously as 
required by the Riegle Act. Committee decisions on TAG appeals are 
final; they are not appealable to the NCUA Board.

C. Replacement of IRPS 95-1 and 02-1

    In order to centralize all applicable guidance on the Committee and 
ensure ease of understanding by credit unions, the Board is combining 
IRPS 95-1 and 02-1 into interim final IRPS 11-1, which will also 
include the TAG reimbursement denial amendments. Interim final IRPS 11-
1 will supersede and replace the previous two IRPS on the Committee. 
The Board also made some minor changes to the IRPS: Position titles are 
made current; the requirement for quarterly meetings is deleted 
(meetings will be held on an as needed basis); and to make timing of 
appeal of Committee decisions to the NCUA Board consistent, all 
decisions appealable to the Board are from the date of receipt of 
decision.\1\
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    \1\ Under IRPS 95-1, decisions were appealable 30 days from the 
date a Committee decision was issued and under IRPS 02-1 decisions 
were appealable 60 days from the appellant's receipt of a decision.
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D. Interim Final IRPS

    The Board is issuing this IRPS as an interim final IRPS pursuant to 
5 U.S.C. Sec.  553(b)(3)(A), which allows agencies to issue rules 
without notice and comment in the case of interpretative rules, general 
statements of policy, or rules of agency organization, procedure, or 
practice. IRPS11-1 is an interpretation of agency procedure granting 
credit unions an appeal mechanism for denials of TAG reimbursements.

Regulatory Procedures

Regulatory Flexibility Act
    The Regulatory Flexibility Act requires NCUA to prepare an analysis 
to describe a significant economic impact agency rulemaking may have on 
a substantial number of small credit unions. For purposes of this 
analysis, credit unions under $1 million in assets are considered small 
credit unions.
    This interim final IRPS expands the types of determinations that 
credit unions may appeal to the NCUA's Supervisory Review Committee and 
combines two previous IRPS. This interim final IRPS imposes no 
additional financial, regulatory or other burden on credit unions. NCUA 
has determined and certifies that this interim final IRPS will not have 
a significant impact on a substantial number of small credit unions. 
Accordingly, NCUA has determined that a Regulatory Flexibility Analysis 
is not required.
Paperwork Reduction Act
    NCUA has determined that this interim final IRPS does 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 regulatory actions on state and local 
interests. In adherence to fundamental federalism

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principles, NCUA, an independent regulatory agency as defined in 44 
U.S.C. 3502(5), voluntarily complies with the executive order. This 
interim final IRPS applies to all credit unions that appeal NCUA 
material supervisory determinations before the NCUA Supervisory 
Committee, but does 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 interim final IRPS 
does not constitute a policy that has federalism implications for 
purposes of the executive order.
Assessment of Federal Regulations and Policies on Families
    NCUA has determined that this interim final IRPS 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 
(Pub. L. 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 APA. 5 U.S.C. 551. 
The Office of Management and Budget is currently reviewing this IRPS, 
but NCUA does not believe the IRPS is a major rule for purposes of the 
Small Business Regulatory Enforcement Fairness Act of 1996.

    By the National Credit Union Administration Board on January 13, 
2011.
Mary F. Rupp,
Secretary of the Board.
    Accordingly, for the reasons set forth in the preamble, IRPS 11-1 
is established as follows:

    [Note:  The following ruling will not appear in the Code of 
Federal Regulations.]

    1. Authority: Section 309 of the Riegle Community Development and 
Regulatory Improvement Act of 1994, Public Law 103-325.
    2. IRPS 11-1 is established as follows:

Interpretive Ruling and Policy Statement 11-1--Supervisory Review 
Committee

    Section 309 of the Riegle Community Development and Regulatory 
Improvement Act of 1994 (Riegle Act) requires that NCUA establish an 
independent intra-agency appellate process to review material 
supervisory determinations. The NCUA Board hereby establishes a 
Supervisory Review Committee (Committee) to implement Section 309.
    It is NCUA policy to maintain good communication with all credit 
unions it supervises. Credit unions, examiners and regional and 
central office staff are encouraged to resolve disagreements 
informally and expeditiously. The NCUA Board expects that most 
disputes will be handled in that manner. The Committee and other 
appeals processes are available for certain disputes that cannot be 
resolved informally.

A--Committee Structure, Scope and Procedures

    The Committee shall consist of three regular members of the 
NCUA's senior staff as appointed by the NCUA Chairman. None of the 
members shall be currently serving as a Regional Director, Associate 
Regional Director, Executive Director, Director of the Office of 
Small Credit Union Initiatives, or Senior Policy Advisor or Chief of 
Staff to a Board Member. One member shall be designated by the NCUA 
Chairman as chairperson. All three Committee members shall serve for 
one year terms and may be reappointed for additional terms. Each 
member of the Committee shall have one vote and a quorum (two 
members) shall be present at each Committee meeting. Meetings may be 
held in person or via teleconference. A majority vote of the full 
Committee (two votes) is required for action on an appeal. Meetings 
will be scheduled, as appropriate, by the chairperson on an as 
needed basis.
    Appeals of material supervisory determinations made by NCUA may 
be made by all federally insured credit unions (federal credit 
unions (FCUs) and federally-insured, state chartered credit unions 
(FISCUs). Appeals of denials of Technical Assistance Grant (TAG) 
reimbursements may be made by any ``Participating Credit Union'' as 
defined by 12 CFR 705.3(b).
    Material supervisory determinations are limited to: (1) 
Composite CAMEL ratings of 3, 4, and 5 and all component ratings of 
those composite ratings; (2) adequacy of loan loss reserve 
provisions; (3) loan classifications on loans that are significant 
as determined by the appealing credit union; and (4) revocations of 
Regulatory Flexibility Program (RegFlex) authority. Subject to the 
requirements discussed below, credit unions may also appeal to the 
Committee a decision of the Director of the Office of Small Credit 
Union Initiatives (OSCUI) to deny Technical Assistance Grant (TAG) 
reimbursements.
    An FCU, other than a corporate FCU, must contact the regional 
office regarding the examiner's decision within 30 days of the 
examiner's final determination. The decision must be appealed to 
(postmarked or received by) the Committee either 30 days after a 
regional determination or 60 days after the regional office has been 
contacted if it has not made a determination.
    An FISCU, other than a corporate FISCU, must contact the 
Regional Office within 30 days of the NCUA examiner's final 
decision. The Region will verify that the determination being 
appealed was made by an NCUA examiner. If the decision was made by 
the state, the appeal will be turned over to the state for 
appropriate action. If the decision was made by the NCUA examiner, 
the dispute will be handed by the Region and become appealable to 
the Committee either 30 days after a regional determination or 60 
days after the regional office has been contacted if it has not made 
a determination. The Committee chairperson will reverify that the 
determination was made by NCUA. Regional staff and the Committee 
will notify and consult with the state supervisory authority in 
appropriate cases.
    All federally insured corporate credit unions (FCUs and FISCUs) 
must contact the Office of Corporate Credit Unions concerning its 
examiner's final determination and then the Committee within the 
same time frames. Staff from the Office of Corporate Credit Unions 
and the Committee will consult with the state supervisory authority 
in appropriate cases involving corporate FISCUs.
    If a Regional Director revokes a credit union's RegFlex 
authority, in whole or in part, upon written notice to the credit 
union, the credit union may appeal the revocation to the Committee 
within 60 days from the date of the Region's determination. The 
RegFlex revocation is effective as soon as the credit union receives 
the notice and it remains in effect pending a decision from the 
Committee.
    All ``Participating Credit Unions'' must appeal a determination 
of the Director of OSCUI to deny a TAG reimbursement to the 
Committee within 30 days from the date of the denial.
    The board of directors of the appealing credit union must 
authorize that the appeal be filed. Appeals must be submitted in 
writing and mailed or delivered to Chairman, Supervisory Review 
Committee, NCUA, 1775 Duke Street, Alexandria, VA 22314-3428.
    Appeals may be made by letter, and must include the name of the 
appellant credit union, the determination or denial being appealed 
and the reasons for the appeal. Appellants are encouraged to submit 
all information and supporting documentation relevant to the matter 
in dispute.
    Appellants are entitled to a personal appearance before the 
Committee. The Committee chairperson reserves the right, however, to 
attempt to work out the dispute through teleconference.
    The determination or denial remains in effect pending appeal. 
The appeal does not prevent the NCUA from taking any action, either 
formal or informal, that it deems appropriate during the pendency of 
the appeal.
    The Committee may request additional information from the 
appellant and/or the Regional Office, Office of Corporate Credit 
Unions, or OSCUI within 15 days of its receipt of the appeal. The 
information must be submitted to the Committee within 15 days of 
receipt of the Committee request. The Committee shall make a 
determination on the appeal within 30 days from the date of the 
receipt of an appeal by the Committee or of its receipt of any 
requested additional information. These time requirements are 
subject to adjustment by the Committee, whether on its own or upon 
request of the appellant or the Region or other office

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involved. If time constraints do not permit all appeals to be 
adjudicated within the above time frames, the Committee will 
adjudicate material supervisory determination appeals before appeals 
of TAG reimbursement denials regardless of the order in which the 
Committee received the appeals.
    Committee decisions on the denial of a TAG reimbursement are the 
final decisions of NCUA and are not appealable to the NCUA Board. If 
a RegFlex revocation is the basis of the appeal, the credit union 
may appeal the Committee's decision to the NCUA Board within 60 days 
from the appellant's receipt of the Committee's decision. All other 
appealable decisions must be appealed to the NCUA Board within 30 
days of the appellant's receipt by the party of the Committee's 
decision.

B--Other Appeals

    Procedures for various formal and informal adjudicative and non-
adjudicative actions and proceedings not covered by the Supervisory 
Review Committee are found in Parts 709 (creditor claim appeals), 
745 (share insurance appeals), 792 (Freedom of Information Act 
appeals) and 747 (appeals of various administrative and enforcement 
actions) of the NCUA Rules and Regulations (12 CFR 709, 745, 792, 
and 747). These parts should be reviewed to determine the procedures 
which apply for a particular appeal. In addition, the NCUA Board 
serves as the final administrative decision maker for major disputes 
that are not otherwise covered by this IRPS or Parts 709, 745, 792 
or 747. These include disputes over chartering, insurance 
applications, field of membership expansion, merger, certain 
corporate credit union matters, charter changes and letters of 
understanding and agreement. These issues should first be pursued 
through the appropriate Regional Office or the Office of Corporate 
Credit Unions. Appeals concerning these matters should be addressed 
to the NCUA Board and submitted through the appropriate Regional 
Office or the Office of Corporate Credit Unions.

C--Retaliation

    Alleged acts of retaliation should be reported to NCUA's 
Inspector General, who is authorized by Congress, under the 
Inspector General Act, to receive and investigate complaints and 
other information regarding abuse in agency programs and operations.
    Any retaliation by NCUA staff against a credit union making any 
type of appeal will subject the employee to appropriate disciplinary 
or remedial action by the appropriate supervisor. Such disciplinary 
or remedial action may include oral or written warning or 
admonishment, reprimand, suspension or separation from employment, 
change in assigned duties, or disqualification from a particular 
assignment, including prohibition from participating in any 
examination of the credit union that was the subject of the 
retaliation.

[FR Doc. 2011-1090 Filed 1-19-11; 8:45 am]
BILLING CODE 7535-01-P