[Federal Register Volume 87, Number 190 (Monday, October 3, 2022)]
[Proposed Rules]
[Pages 59740-59748]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-20927]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 701

[NCUA-2022-0132]
RIN 3133-AF51


Federal Credit Union Bylaws

AGENCY: National Credit Union Administration (NCUA).

ACTION: Notice of proposed rulemaking.

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SUMMARY: On March 15, 2022, Congress enacted the Credit Union 
Governance Modernization Act of 2022 (Governance Modernization Act). 
Under the statute, the NCUA has 18 months following the date of 
enactment to develop a policy by which a federal credit union (FCU) 
member may be expelled for cause by a two-thirds vote of a quorum of 
the FCU's board of directors. The NCUA Board (Board) is now proposing 
to amend the standard FCU bylaws (FCU Bylaws) to adopt such a policy.

DATES: Comments must be received by December 2, 2022.

ADDRESSES: You may submit written comments, identified by RIN 3133-
AF51, by any of the following methods (Please send comments by one 
method only):
     Federal eRulemaking Portal: https://www.regulations.gov. 
The docket number for this proposed rule is NCUA-2022-0132. Follow the 
instructions for submitting comments.
     Mail: Address to Melane Conyers-Ausbrooks, Secretary of 
the Board, National Credit Union Administration, 1775 Duke Street, 
Alexandria, Virginia 22314-3428.
     Hand Delivery/Courier: Same as mail address.
    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 ncua.gov">OGCMail@ncua.gov.

FOR FURTHER INFORMATION CONTACT: Lisa Roberson, Deputy Director, Office 
of Consumer Financial Protection; Paul Dibble, Consumer Access Program 
Officer, Office of Credit Union Resources and Expansion; or Rachel 
Ackmann, Senior Staff Attorney, Office of General Counsel, 1775 Duke 
Street, Alexandria, VA 22314-3428. Lisa Roberson can also be reached at 
(703) 548-2466, Paul Dibble can be reached at (703) 664-3164, and 
Rachel Ackmann can be reached at (703) 548-2601.

SUPPLEMENTARY INFORMATION:

I. Background

    Under the Federal Credit Union Act (FCU Act) and standard FCU 
Bylaws, there are currently only two ways a member may be expelled: (1) 
A two-thirds vote of the membership present at a special meeting called 
for that purpose, and only after the individual is provided an 
opportunity to be heard; and (2) for non-participation in the affairs 
of the credit union, as specified in a policy adopted and enforced by 
the board.\1\ These requirements are set out in the standard FCU Bylaws 
in

[[Page 59741]]

Appendix A to part 701 of the NCUA's regulations.\2\
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    \1\ 12 U.S.C. 1764.
    \2\ 12 CFR part 701, app. A. Section 108 of the FCU Act requires 
the Board to prepare periodically a form of bylaws to be used by FCU 
incorporators and to provide that form to FCU incorporators upon 
request. 12 U.S.C. 1758. FCU incorporators must submit proposed 
bylaws to the NCUA as part of the chartering process. Once the NCUA 
has approved an FCU's proposed bylaws, the FCU must operate 
according to its approved bylaws or seek agency approval for a bylaw 
amendment that is not among permissible options in the standard FCU 
Bylaws. 12 CFR 701.2(a).
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    The FCU Bylaws were last amended by the NCUA Board in 2019 (2019 
Bylaws Final Rule).\3\ The 2019 Bylaws Final Rule was a comprehensive 
update that sought to modernize, clarify, and simplify the FCU Bylaws 
and was the culmination of several years of engagement between the NCUA 
and FCUs. During the 2019 Bylaws Final Rule rulemaking, several 
commenters expressed concern that the FCU Act expulsion provisions 
discussed previously made it difficult to proactively limit security 
threats or financial harm caused by violent, belligerent, disruptive, 
or abusive credit union members. Specifically, commenters were 
concerned about the burden from requiring members to call a special 
meeting to seek to expel such members.
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    \3\ 84 FR 53278 (Oct. 4, 2019).
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    The 2019 Bylaws Final Rule, however, did not modify the procedures 
for expelling an FCU member as the procedures for expelling a member 
are governed by the FCU Act. Instead, the 2019 Bylaws Final Rule added 
a new section to the FCU Bylaws on limiting services for certain 
members. The 2019 Bylaws Final Rule created the concept of a ``member 
in good standing.'' \4\ So long as a member remains in good standing, 
that member retains all of the rights and privileges associated with 
FCU membership. A member not in good standing, however, may be subject 
to an FCU's limitation of services policy. For example, an FCU may 
limit all or most credit union services, such as ATM services, credit 
cards, loans, share draft privileges, preauthorized transfers, and 
access to credit union facilities to a member who has engaged in 
conduct that has caused a loss to the FCU or that threatens the safety 
of credit union staff, facilities, or other members in the FCU or its 
surrounding property.
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    \4\ 12 CFR part 701, app. A. Art. II, sec. 5.
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    The 2019 Bylaws Final Rule was clear that, without question, 
certain actions warrant immediate limitation of services or access to 
credit union facilities, such as violence against other credit union 
members or credit union staff in the credit union facility or the 
surrounding property. The Board also stated clearly that an FCU may 
immediately take actions such as contacting local law enforcement, 
seeking a restraining order, or pursuing other lawful means to protect 
the credit union, credit union members, and staff. Nothing in the FCU 
Act or the FCU Bylaws prevents an FCU from using whatever lawful means 
it deems necessary to address circumstances in which a member poses a 
risk of harm to the FCU, its members, or its staff.
    Even a member deemed not in good standing, however, retains 
fundamental rights as a credit union member. For example, a member not 
in good standing has the right to attend, participate, and vote at the 
annual and special meetings of the members and the right to maintain a 
share account.\5\ Those rights may only be terminated through a 
member's expulsion, and the Board explained in the 2019 Bylaws Final 
Rule that it cannot amend the statutorily prescribed expulsion 
procedures for members.
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    \5\ Assuming there is no restraining or protective order from a 
court in place.
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    In March 2022, however, Congress enacted the Governance 
Modernization Act to revise the FCU Act procedures for expelling 
members.\6\ The legislative history of the Governance Modernization Act 
focused on FCUs' concerns that their ability to address violent and 
aggressive behaviors of certain members was inadequate. Similar to 
comments raised during the 2019 Bylaws Final Rule rulemaking, the 
legislative history included concerns that FCUs lacked the tools to 
adequately protect employees and other members from violent and abusive 
members and included concerns that members had threatened the life of 
an employee or in another case physically attacked a service 
representative. To address these concerns, Congress modified the FCU 
Act to provide FCUs with an option for expelling a member for cause by 
a two-thirds vote of a quorum of the board of directors. Additionally, 
the legislative history also described the need for using this 
authority as a rare option and focused on more extreme examples of 
member behavior. This statutory authority, however, is not self-
enacting. The legislation gave the Board 18 months following the date 
of enactment of the statute to develop and promulgate pursuant to a 
rulemaking a policy that FCUs may adopt to expel members for cause.
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    \6\ Public Law 117-103 (Mar. 15, 2022).
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    The Board notes that it is focused on improving access to financial 
services, in part, through its Advancing Communities through Credit, 
Education, Stability and Support (ACCESS) initiative.\7\ As part of 
this initiative, the NCUA is working to expand the availability of 
credit to stimulate economic growth and improve the financial well-
being of all Americans. The Board believes that the expulsion of 
members is an extreme remedy that may have the effect of denying 
individuals access to financial services. In addition, as financial 
cooperatives, the expulsion of a member-owner by a credit union is an 
expressly significant action. Therefore, the Board concurs with certain 
statements in the legislative history that use of the authority under 
the Governance Modernization Act should be rare and saved for egregious 
examples of member behavior.
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    \7\ https://www.ncua.gov/support-services/access.
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II. The Proposed Rule

    The NCUA is now issuing a proposed rule to adopt a policy by which 
an FCU member may be expelled for cause by a vote of two-thirds of a 
quorum of an FCU's board of directors. The proposed rule would also 
make conforming changes to Article II of the FCU Bylaws regarding 
members in good standing. These proposed changes are discussed in 
detail below.

Member in Good Standing

    As discussed previously, the 2019 Bylaws Final Rule codified the 
concept of a ``member in good standing.'' So long as a member remains 
in good standing, that member retains all of the rights and privileges 
associated with FCU membership.\8\ A member not in good standing, 
however, may be subject to an FCU's limitation of services policy. The 
primary reason for permitting FCUs to adopt a limitation of services 
policy was to provide FCUs with an alternative to holding a special 
meeting to address certain egregious member behavior.\9\ The passage of 
the Governance Modernization Act, however, has provided FCUs' boards of 
directors with direct authority (subject to the NCUA Board promulgating 
a policy) to expel a member for cause.
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    \8\ 12 CFR part 701, app. A. Art. II, sec. 5.
    \9\ 84 FR 53278 (Oct. 4, 2019).
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    The proposed rule would retain the member in good standing 
provisions. The Board believes including both authorities in the FCU 
Bylaws provides additional flexibility for FCUs to address certain 
disruptive member behaviors. First, through a limitation of service 
policy, an FCU may pursue a more targeted approach to deal with certain 
disruptive behaviors that may not otherwise warrant expulsion. As the

[[Page 59742]]

Board noted in the 2019 FCU Bylaws Final Rule, expulsion from 
membership is a very serious remedy, and it may be beneficial for FCUs 
to have the option of choosing other remedies short of expulsion to 
deal with certain disruptive member behaviors. For example, a member 
may have caused losses due to credit card delinquencies. An FCU could 
limit such a member's access to certain credit products, but otherwise 
allow the member to maintain access to share accounts. If the FCU 
expels the same member, their access to both types of accounts would be 
terminated. Or, for example, a member may have repeatedly cursed at 
credit union employees such that the member is prohibited from physical 
access to a branch, but otherwise may electronically access the FCU's 
products and services.
    Second, an FCU may use the limitation of services policy in the 
case of a violent or abusive member who has yet to be expelled. The 
Governance Modernization Act requires certain procedures before a 
member's expulsion, including a 60-day period in which the member may 
request a hearing. As stated in the 2019 Bylaws Final Rule, without 
question, certain actions warrant immediate limitation to FCU services 
or access to credit union facilities, such as violence against other 
credit union members or credit union staff in the credit union facility 
or the surrounding property.\10\ So an FCU may use its limitation of 
services policy, in conjunction with its ability to expel a member for 
cause, to immediately address circumstances in which a member poses a 
risk of harm to the FCU, its staff, or its members. Therefore, the 
proposed rule has retained the member in good standing provisions in 
Article II, Section 5 of the FCU Bylaws. Finally, use of a limitation 
of service policy does not require a board vote. Therefore, it may be 
easier and more expeditious for FCUs to exercise these restrictions.
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    \10\ Further, an FCU may immediately take actions such as 
contacting local law enforcement, seeking a restraining order, or 
pursuing other lawful means to protect the FCU, its members, and 
staff, and nothing in the FCU Act nor the FCU Bylaws prevents an FCU 
from using whatever lawful means it deems necessary to address 
circumstances in which a member poses a risk of harm to the FCU, its 
members, or its staff.
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    The proposed rule would include a few substantive changes to the 
member in good standing provisions. Specifically, the current 
definition of a member not in good standing would be removed. This 
definition includes a list of behaviors that if engaged in by a member 
could trigger limitation to FCU services. However, the Governance 
Modernization Act also includes a list of behaviors that may warrant 
termination of membership. Instead of including two separate lists of 
disruptive, abusive, or violent behaviors, the proposed rule would 
define a member not in good standing as a member who has engaged in any 
of the conduct listed in the Governance Modernization Act, as 
implemented in Article XIV of the FCU Bylaws. The proposed rule would 
also make other technical conforming changes. For example, the proposed 
rule would amend the requirement that the disruptive, violent, or 
abusive behavior have a logical relationship between the objectionable 
activities and the services to be suspended. This provision would be 
removed because it is not included in the Governance Modernization Act. 
The Board expects an FCU board of directors to use appropriate 
discretion and only limit services when necessary; however, the 
proposed rule would remove the express provision related to the nexus 
between the behavior and the limitation of services for consistency.
    Question 1. The Board seeks comments on whether the limitation of 
services policy should remain in the FCU Bylaws. Should the Board 
retain the current language regarding a member not in good standing or 
should the Board reference the for-cause termination provision in 
Article XIV? Should the Board retain the current language regarding a 
logical relationship between the objectionable behavior and limitation 
of services? Should the final rule require the conduct to occur at the 
FCU? Depending on the input the Board receives, it may modify this 
provision in the final rule under one of these alternatives.

Expulsion and Withdrawal

    Under the Governance Modernization Act, a member may be expelled 
for cause by a two-thirds vote of a quorum of the FCU's board of 
directors. An FCU may only use this process to expel a member after the 
NCUA has developed and promulgated pursuant to a rulemaking a 
corresponding policy for expulsion and implemented such policy through 
rulemaking within 18 months following the date of enactment and the 
credit union has adopted the standard Bylaw amendment. The proposed 
policy for member expulsion is discussed below.
Notice of the Expulsion Policy
    Under the Governance Modernization Act, an FCU's directors may 
expel a member only if the FCU has provided, in written or electronic 
form, a copy of NCUA's expulsion policy to each member of the credit 
union. As such, before an FCU expels a member under these provisions, 
it must send a copy of its Article XIV to each member. It would be 
insufficient for an FCU to post a copy of Article XIV on its website, 
as the Act states the FCU must provide the policy to ``each member'' 
and also uses the phrase ``distribution of policy to members.'' 
Additionally, the Governance Modernization Act states that the policy 
has to be provided in written or electronic form. Under the proposed 
rule, an FCU could only provide a copy of the policy electronically if 
the member has elected to receive electronic communications from the 
FCU. The Board believes this requirement is a reasonable balance 
between burden on FCUs and transparency to members. Members who have 
not elected to receive electronic communications from the FCU may not 
expect important communications being received electronically and 
therefore may be less inclined to read the notice.
    The proposed rule does not include a standard disclosure form of 
the NCUA expulsion policy outside of the language in Article XIV of the 
FCU Bylaws. However, the proposed rule states that the communication of 
the expulsion policy, along with all notices required under the 
proposed rule, must be legible, written in plain language, and 
reasonably understandable by ordinary members. The Board is not 
including a standard disclosure form in the proposed rule to provide 
FCUs with additional flexibility. The Board understands FCUs may adopt 
variations to their Article XIV. For example, some FCUs may provide 
additional information to members on how the FCU would conduct a 
hearing before the FCU's board of directors and may permit in-person 
attendance at the hearing. Any variation to NCUA's expulsion policy, or 
Article XIV, would constitute a bylaw amendment and is subject to NCUA 
approval.
    Question 2. The Board seeks comments on whether the final rule 
should include a standard disclosure for all FCU members separate and 
apart from the language in Article XIV. The Board requests comments on 
whether FCUs should be required to get NCUA approval for all bylaw 
amendments related to expulsion procedures. Should certain 
modifications be considered fill-in-the-blank type provisions and 
therefore not require NCUA approval? For example, if an FCU opts to 
permit an in-person hearing, should NCUA approval be required? Should 
the Board also consider requiring both mail and electronic delivery of 
notices, even if the consumer has elected to receive electronic 
communications?

[[Page 59743]]

Expulsion Vote and Notice of Pending Expulsion
    The Governance Modernization Act provides that an FCU's board of 
directors may vote to expel a member for cause by a two-thirds vote of 
a quorum of the directors of the credit union. Under the proposed rule, 
if an FCU's board votes to expel a member, the member must be notified 
of the pending expulsion, along with the reason for such expulsion.\11\ 
Such notice shall be provided in person, by mail to the member's 
address, or electronically. Electronic delivery is only permitted if 
the member has elected to receive electronic communications from the 
FCU. The proposed rule would require that the reason for the expulsion 
be specific and not just include conclusory statements. For example, a 
general statement saying the member's behavior has been deemed abusive 
and the member is being subject to expulsion procedures would be 
insufficient as an explanation. Instead, the FCU should include a date 
of the interaction(s) and specific information describing the 
interaction, including a general description of the member's conduct. 
Likewise, a notice stating the member violated the membership agreement 
would also be insufficient as an explanation for the expulsion. The 
notice should include specific information about the how the member 
violated the agreement and include other relevant information as 
appropriate. The Board notes that the member would be relying on the 
provided notice if a hearing is requested. As such, the notice must 
include sufficient detail for the member to understand why he or she is 
being subject to expulsion so that the member has a meaningful 
opportunity to present his or her case against expulsion and an 
opportunity to respond to the FCU's concerns in a requested hearing. 
The notice must also tell the member that any complaints related to 
their potential expulsion should be submitted to the NCUA's 
website.\12\ Finally, the notice must also clearly state the member's 
right to request a hearing, but if a hearing is not requested, 
membership will automatically terminate after 60 calendar days.
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    \11\ As discussed previously, in the case of a violent member or 
a member who threatens violence, the FCU should take immediate 
action to protect its staff, other members, or its premise. An FCU 
may use its limitation of services policy to restrict access to FCU 
facilities or may contact local law enforcement as appropriate.
    \12\ Currently complaints can be submitted to the NCUA at either 
mycreditunion.gov or ncua.gov.
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    Question 3. How prescriptive should the NCUA expulsion policy be 
regarding the content of the notice of expulsion? Would additional 
requirements on the specificity of the notice be necessary or useful to 
include in the policy? It is the Board's intent to balance the 
potential burden to FCUs with concerns regarding transparency and 
fairness for members subject to expulsion.
Hearing
    Under the Governance Modernization Act, a member has 60 calendar 
days from the date of receipt of a notification to request a hearing 
from the board of directors of the FCU. The proposed rule further 
provides that the FCU must maintain a copy of the notice provided for 
its records. The Board notes that the member has 60 calendar days from 
the date of receipt, not the date the FCU provides the notice. The 
member also has 60 calendar days to provide the FCU with their intent 
to have a hearing. Therefore, the member may mail the notice 60 days 
after the notice is received. As such, the FCU may not receive the 
notice within 60 calendar days. Therefore, the Board recommends that 
FCUs provide sufficient time for both the member's receipt and the 
FCU's receipt before expelling a member.
    Question 4. Should the Board require the FCU to maintain a copy of 
the notice provided? Is this proposed requirement burdensome for FCUs?
    If a member does not request a hearing, the member is automatically 
expelled after the end of the 60-day period. If a member requests a 
hearing, the board of directors must provide the member with a hearing. 
The statute is silent on whether the hearing must be in person.\13\ The 
Board does not believe it is necessary to require FCUs provide an in-
person hearing and is concerned that an in-person hearing may be 
problematic in cases of expulsion due to violence or threatened 
violence. Additionally, the Board believes a virtual hearing that 
provides the opportunity for the member to orally present their case is 
sufficient, but FCUs may permit in-person attendance at the hearing.
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    \13\ The Board notes that in other contexts, the use of the term 
``hearing'' under federal law does not necessitate that the hearing 
must be held in person. See generally, Jeremy Graboyes, Legal 
Considerations for Remote Hearings in Agency Adjudications, 
Administrative Conference of the United States (June 2020). As such, 
the Board does not believe that the statute requires an in-person 
hearing. However, as discussed previously, the Board is proposing to 
require that the hearing must provide the member with an opportunity 
to present their case and is soliciting comments on whether the 
final rule should provide for a default mandate that FCUs provide 
in-person hearings, with limited exceptions.
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    Question 5. The Board is proposing that the hearing may take place 
other than in person, but the Board solicits comments on whether 
fairness or other principles or other law may call for an in-person 
hearing. Depending on the input it receives, the Board may modify this 
requirement in the final rule to account for any compelling basis to 
require in-person hearings.
    Under the proposed rule, the FCU may not raise any rationale or 
reason for expulsion that is not explicitly included in the notice to 
the member. This requirement is intended to ensure members are given a 
fair opportunity to present their case against expulsion and an 
opportunity to respond to the FCU's concerns. If additional conduct 
that may warrant expulsion occurs after the expulsion notice is 
provided to the member, then the FCU may either not discuss the 
subsequent conduct at the expulsion meeting or provide the member a new 
notice with a 60-day window to request a hearing that includes the 
subsequent conduct.
    The proposed rule would not include prescriptive requirements 
related to the structure and procedure for the hearing. The only 
requirements included in the proposed rule related to the hearing are 
that it permits the meaningful opportunity for the member to orally 
present their case to the board and that the FCU board does not raise 
any new fact or cause for expulsion. Instead, the Board believes that 
each FCU should have the flexibility to conduct a hearing as it deems 
appropriate. Additionally, the Board expects hearings to be held in a 
fair, reasonable, and consistent manner that provides members a 
reasonable opportunity to present their case. Finally, the member may 
choose to provide a written submission to the credit union board 
instead of a hearing with oral statements.
    Question 6. Should the proposed rule include additional 
requirements related to the structure and procedure of an expulsion 
hearing? Should the rule specifically provide that a member may request 
to provide a written response instead of a hearing with oral 
submissions? Should the final rule include any requirements related to 
appropriate safety procedures for FCUs choosing to do an in-person 
hearing? The Governance Modernization Act does not include an explicit 
appeal right for the member. Should the final rule consider adding an 
appeal right for members? For example, should the supervisory committee 
be required to review records related to expelled members?

[[Page 59744]]

FCU Board Vote
    After the hearing, the FCU board of directors must hold a vote in a 
timely manner on expelling the member. The proposed rule defines a 
timely manner as within 30 calendar days.
    Question 7. The Board invites comments on whether the rule is too 
prescriptive and instead of a 30-day timeframe for the board vote 
following a hearing, should the timeliness be left to FCUs' discretion?
    The Board notes that if a member requests a hearing or provides a 
written statement, the FCU board must vote twice on the member's 
expulsion. The board of directors would first vote to expel the member, 
which initiates the 60-day period after receipt of the notice, and then 
would vote again after the requested hearing. If a hearing is not 
requested, then the member would automatically be expelled 60-days 
after receipt of the notice and a second board vote would not be 
required.
Notice of Expulsion
    If a member is expelled, either automatically at the end of the 60-
day period after receipt of the notice or after the board votes to 
expel the member after a hearing, the FCU must provide notice of the 
expulsion. Under the proposed rule, the notice must provide information 
on the effect of the expulsion, including information related to 
account access and any withdrawals by the FCU related to amounts due. 
Specifically, the notice should include pertinent information to the 
member, including that expulsion does not relieve a member of any 
liability to the FCU and that the FCU will pay all of the member's 
shares upon their expulsion less any amounts due. The notice should 
include a line-by-line accounting of any deductions related to amounts 
due. The notice should also include when and how the member will 
receive any money in their accounts. The notice must be provided to the 
member in person, by mail to the member's address, in written form or, 
if the member has elected to receive electronic communications from the 
credit union, may be provided electronically.
    Question 8. The FCU Act does not require FCUs to call the members' 
outstanding loans or other obligations if the member is expelled. 
Should the final rule include a minimum amount of time before an FCU is 
permitted to call in an existing obligation or offset amounts owed to 
the FCU? For example, should the rule prohibit any offsets or calling 
of credit for 90 days following a member's expulsion?
For Cause
    Under the Governance Modernization Act, an FCU's board may expel a 
member for cause, which means: (A) a substantial or repeated violation 
of the membership agreement of the credit union; (B) a substantial or 
repeated disruption, including dangerous or abusive behavior (as 
defined by the National Credit Union Administration Board pursuant to a 
rulemaking), to the operations of a credit union; or (C) fraud, 
attempted fraud, or other illegal conduct that a member has been 
convicted of in relation to the credit union, including the credit 
union's employees conducting business on behalf of the credit union.
    Regarding a repeated non-substantial violation of the membership 
agreement, under the proposed rule the FCU must have provided written 
notice to the member at least one time prior to the notice of 
expulsion, and the member must have repeated the violation after having 
been notified of the violation. Further, under the proposed rule, the 
written notice must state the specific nature of the violation and that 
if the conduct occurs again the member may be expelled from the FCU. 
The Board believes this is necessary to ensure members are aware that 
they may be expelled for repeated, non-substantial violations of the 
membership agreement. The Board notes that this warning notice before 
the notice of expulsion is only for potential expulsions related to 
repeated violations that are not deemed substantial. The FCU's board 
may act to expel a member immediately for substantial violations of the 
membership agreement and does not need to provide a warning notice for 
substantial violations of the membership agreement.
    Question 9. Should there be a limit on the time between the FCU's 
notice of a violation and the repeated behavior? Should the Board 
provide, for example, that the repeated behavior must occur within two 
years of the notice? Or should the Board consider another period 
designed to ensure that repeated but insubstantial violations that are 
remote in time do not lead to expulsion under this provision?
    Question 10. What are typical violations of a membership agreement 
that cause concern for FCUs? Do FCUs consider causing a loss to be a 
substantial violation of their membership agreement? Would FCUs 
consider any loss a substantial violation? Or would only material 
losses be considered a substantial violation? If so, the Board is 
interested in commenters' opinions on what threshold constitutes a 
material loss?
    Question 11. Should the Board try to define substantial violations 
versus more minor or immaterial violations? An earlier version of the 
Governance Modernization Act expressly permitted expulsion for causing 
material losses to FCUs. This express authority was removed, which may 
imply that FCUs cannot expel a member for causing a loss. However, 
under the current version of the Governance Modernization Act, members 
may be expelled for substantial or repeated violation of the FCU's 
membership agreement.
    The Board understands that it is customary for membership 
agreements to prohibit members from causing a loss to the FCU. 
Therefore, under the proposed rule, FCUs may expel a member for causing 
a loss. Should the Board consider prohibiting FCUs from expelling 
members for causing a loss outside of fraudulent or other criminal 
acts? The Board understands that FCUs currently may expel a member for 
causing a loss after holding a special meeting of the members. This 
authority would not be impacted by the proposed rule. However, the 
authorities in the Governance Modernization Act provide an expedited 
process for expelling members for more egregious conduct.
    If FCU boards of directors are permitted to expel members for 
causing a loss, should the Board require FCUs to adopt a policy such 
that it is applied consistently across members? If the final rule does 
prohibit FCU board of directors from expelling a member for causing a 
loss, should the Board change the proposed member in good standing 
provision to expressly permit members to be denied services for causing 
a loss? Are there violations of the membership agreement other than 
causing a loss for which FCUs would seek to expel a member?
    Under the proposed rule, a member may also be expelled by an FCU 
board for a substantial or repeated disruption, including dangerous or 
abusive behavior, to the operations of a credit union. The proposed 
rule would define dangerous or abusive behavior as: (1) Violence, 
intimidation, physical threats, harassment, or physical or verbal abuse 
of officials or employees of the credit union, members, or agents of 
the credit union (this includes actions while on FCU premises and 
through use of telephone, mail, email or other electronic method); (2) 
Behavior that causes or threatens damage to FCU property; and (3) 
Unauthorized use or access of FCU property. The proposed rule would 
further provide that expressions of frustration with the FCU

[[Page 59745]]

or its employees through elevated volume and tone; expressions of 
intent to seek lawful recourse, regardless of perceived merit; or 
repeated interactions with FCU employees are insufficient to constitute 
dangerous or abusive behavior. This definition is derived from the 
current definition of a member not in good standing.
    Similar to repeated violations of the membership agreement, if the 
FCU's board acts to expel a member for repeated disruptions that are 
not substantial, the FCU must have first provided written notice to the 
member after an instance of such disruption. In contrast, substantial 
disruptions, including any conduct that would constitute dangerous or 
abusive behavior, may be grounds for immediate action and termination 
of membership. Additionally, as discussed previously in connection with 
limitation of services polices, an FCU may immediately take actions 
such as limiting services, contacting local law enforcement, seeking a 
restraining order, or pursuing other lawful means to protect the credit 
union, credit union members, and staff, and nothing in the FCU Act or 
the FCU Bylaws prevents an FCU from using whatever lawful means it 
deems necessary to address circumstances in which a member poses a risk 
of harm to the FCU, its members, or its staff.
    A member may also be expelled for cause if the member has engaged 
in fraud, attempted fraud, or other illegal conduct that a member has 
been convicted of in relation to the credit union, including the credit 
union's employees conducting business on behalf of the credit union. 
Under the proposed rule, a criminal conviction is not necessary for 
membership expulsion related to fraud or attempted fraud. The Board 
believes that the Governance Modernization Act does not require a 
conviction related to fraud and attempted fraud, and a conviction is 
only required for the catchall category related to any other illegal 
conduct. This interpretation of the Act is reasonable given the concern 
that many factors may affect whether a person is convicted of fraud or 
attempted fraud, including local prosecutorial resources. The Board is 
aware that local authorities are not always able or willing to 
prosecute every instance of fraud or attempted fraud.
    Question 12. Should the Board define fraud or attempted fraud? 
Should FCU boards be permitted to terminate membership only when a 
member has been convicted of fraud or attempted fraud? If a member is 
convicted of other illegal conduct and the conviction is later 
overturned, should the rule provide for automatic reinstatement or 
otherwise include a required procedure to allow for reinstatement in 
this circumstance? Alternatively, does the Governance Modernization 
Act's reinstatement process (discussed in the next section) adequately 
cover this scenario by affording an expelled member the right to seek 
reinstatement?
Reinstatement
    Under the Governance Modernization Act, a member expelled by a two-
thirds vote of an FCU's board of directors must be given an opportunity 
to request reinstatement of membership. The member may be reinstated by 
either a majority vote of a quorum of the directors of the FCU or a 
majority vote of the members of the FCU present at a meeting. Under the 
proposed rule, such a meeting would have to be a special meeting. A 
member would not be entitled to attend the meeting in person, as the 
Governance Modernization Act provides in a rule of construction. But 
the statute also does not bar the FCU from permitting in-person 
attendance. Accordingly, the proposed rule would allow the FCU to 
determine whether to permit in-person attendance. The proposed rule 
would also specify that an FCU is only required to hold a board vote or 
special meeting in response to a reinstatement request once.
    Question 13. Should the Board require FCUs to vote on members' 
reinstatement more than once? For example, should the proposed rule 
state that FCU boards need to reconsider reinstatement requests only 
every six, twelve, or eighteen months?
Class of Members
    Under the Governance Modernization Act, an expulsion of a member by 
an FCU's board of directors must be done individually, on a case-by-
case basis. Further, neither the NCUA Board nor any FCU may expel a 
class of members. All anti-discrimination laws and regulations are 
applicable, and expulsions of a class of members based on any class or 
characteristic such as, but not limited to, race, religion, national 
origin, gender, sexual orientation, age, familial status, or disability 
status, are strictly prohibited. An FCU may have liability if it 
exercises its discretion in a manner that has a discriminatory purpose 
or effect under anti-discrimination laws. In addition, members cannot 
be expelled solely due to or in retaliation for their complaints to the 
NCUA or any other regulatory agency, such as the Consumer Financial 
Protection Bureau, and members who are employees or former employees of 
the FCU cannot be expelled for any protected whistleblower 
activities.\14\
---------------------------------------------------------------------------

    \14\ See 12 U.S.C. 1790b.
---------------------------------------------------------------------------

    Further, under the proposed official staff commentary, the 
prohibition on expelling a class of members would explicitly include an 
FCU board acting to remove all members who engaged in a certain 
violation of the membership agreement, or all delinquent members or a 
class of delinquent members in one action. For example, an FCU board 
may not remove all members who have caused a loss of $500 to the FCU or 
have been delinquent for 90 days or more. The Board would interpret 
such action as removing a class of members and therefore prohibited by 
the statutory requirement that expulsions through a vote of directors 
of the credit union be done individually, on a case-by-case basis.
    FCUs also should be aware of the potential for disparate treatment 
among members. An FCU must ensure that its implementation of the 
authority to expel members for cause is done consistently and does not 
violate anti-discrimination laws or regulations. FCUs may consider 
adopting a policy related to when its board should expel members, 
especially if the FCU intends to expel members for violations of the 
membership agreement. To enable NCUA examiners to review relevant 
information related for cause expulsions, the proposed rule would 
require FCUs to maintain records relating to expelled members for five 
years. The rule would not specify necessary documents for the record, 
but the Board notes it would expect a record to include general 
documents related to the member, such as their last known contact 
information, membership agreement, or loan files, and specific 
documents related to the cause of the member's termination.
    Question 14. Should the possibility of FCUs expelling some members 
but not others for engaging in certain behavior be a cause for concern?
    Question 15. Should the Board include a record retention 
requirement related to expelled members? Do commenters suggest any 
alternative to a record retention requirement? Should the Board choose 
a shorter or longer retention period than five years? If so, how long 
should the Board require FCUs to retain their expulsion records, and 
why? The Board seeks comments on whether it should specify certain 
documents or information that FCUs are required to maintain.
Implementation
    If the proposed rule is issued as a final rule, FCUs will have the 
option to

[[Page 59746]]

amend their bylaws to provide their boards of directors with authority 
to expel members for cause. FCUs seeking to adopt these authorities 
would amend their bylaws through a two-thirds vote of their boards of 
directors. Such FCUs would not need to submit the amendment to the NCUA 
for its approval provided the amendment is identical to the language 
included in any final rule issued by the Board. However, the amendment 
included in the proposed rule is optional, and FCUs would not need to 
amend their bylaws or take any other action in response to any final 
rule issued.
Past Member Conduct as Grounds for Expulsion
    FCUs cannot use member conduct that occurred prior to the effective 
date of the final rule as grounds for expelling members. For example, 
if a member caused a loss to the FCU before the effective date of the 
final rule, the FCU may not expel the member due to that loss. The FCU 
could only expel the member if additional conduct that warrants 
expulsion occurs after the effective date of the final rule.
    Question 16. Should the Board consider alternative dates for which 
member conduct may be considered as grounds for expulsion? Should the 
date be related to when notice of the policy is provided to members, 
when the FCU board adopts the Bylaws, or when the Governance 
Modernization Act was enacted?

III. Request for Comments

    The Board welcomes comment on all aspects of the proposal.

IV. Regulatory Procedures

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in 
which an agency creates a new or amends existing information collection 
requirements.\15\ For purposes of the PRA, an information collection 
requirement may take the form of a reporting, recordkeeping, or a 
third-party disclosure requirement. The NCUA may not conduct or 
sponsor, and the respondent is not required to respond to an 
information collection unless it displays a valid Office of Management 
and Budget (OMB) control number. The current information collection 
requirements for FCU Bylaws are approved under OMB control number 3133-
0052.
---------------------------------------------------------------------------

    \15\ 44 U.S.C. 3507(d); 5 CFR part 1320.
---------------------------------------------------------------------------

    The notice requirements to be provided to the member are: (1) the 
notice of potential expulsion for cause, (2) the notice of expulsion, 
and (3) the notice of expulsion due to repeated, non-substantial 
violations of the membership agreement or repeated disruptions for non-
substantial conduct. These notices will be provided to the member by 
the FCU as prescribed by proposed Sections 2 and 3 of Article XIV of 
Appendix A to Part 701. The information collection requirements 
associated with these disclosure notices vary depending on the number 
of respondents. It is estimated a total number 3,997 responses will be 
generated, taking an hour per response, for a total of 3,997 burden 
hours associated with the notice requirements. Additionally, FCUs are 
required to retain and maintain all records associated with the 
proposed expulsion policy and is estimated average 30 minutes per FCU 
for a total annual burden of 1,230 hours. Therefore, there is a total 
burden of 5,227 hours associated with this proposed rulemaking. The 
total burden associated with OMB Control Number: 3133-0052 is as 
follows:
    OMB Control Number: 3133-0052.
    Title of information collection: Federal Credit Union Bylaws, 
Appendix A to Part 701.
    Estimated number respondents: 3,076.
    Estimated number of responses per respondent: 347.
    Estimated total annual responses: 1,066,603.
    Estimated total annual burden hours per response: 0.35.
    Estimated total annual burden hours: 376,033.
    The NCUA invites comments on: (a) Whether the proposed collection 
of information is necessary for the proper performance of the functions 
of the agency, including whether the information will have practical 
utility; (b) the accuracy of the agency's estimate of the burden of the 
proposed collection of information, including the validity of the 
methodology and assumptions used; (c) ways to enhance the quality, 
utility and clarity of the information to be collected; and (d) ways to 
minimize the burden of the collection of information on those who are 
to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology; and (e) estimates of capital or 
start-up costs and cost of operation, maintenance, and purchase of 
services to provide information.
    All comments are a matter of public record. Interested persons are 
invited to submit written comments to (1) www.reginfo.gov/public/do/PRAMain. Find this particular information collection by selecting the 
Agency under ``Currently under Review'' and to (2) Dawn Wolfgang, 
National Credit Union Administration, 1775 Duke Street, Suite 6032, 
Alexandria, Virginia 22314-3428; Fax No. 703-519-8579; or email at 
ncua.gov">PRAComments@ncua.gov. Given the limited in-house staff because of the 
COVID-19 pandemic, email comments are preferred.

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 
Administrative Procedure Act 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. 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 considers credit unions with assets less 
than $100 million to be small entities.\16\ A regulatory flexibility 
analysis is not required, however, if the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities and publishes its certification and a short, 
explanatory statement in the Federal Register together with the rule.
---------------------------------------------------------------------------

    \16\ NCUA IRPS 15-1, 80 FR 57512 (Sept. 24, 2015).
---------------------------------------------------------------------------

    The Board does not believe the proposed rule will result in any 
burden to small entities. First, adoption of the flexibilities included 
in the proposed rule is optional, and FCUs would not be required to 
amend their bylaws. Additionally, even if FCUs revise their bylaws in 
response to the proposed rule, it is within FCUs' discretion to 
exercise the authority provided in the proposed rule to expel a member. 
As such, the proposed rule includes no affirmative requirements for 
small credit unions and will not affect the competitive balance between 
small and large credit unions. Therefore, the Board certifies that the 
proposed rule will not have a significant economic impact on a 
substantial number of small entities.

Executive Order 13132

    Executive Order 13132 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.

[[Page 59747]]

    This proposed rule only applies to FCUs and would 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 NCUA 
has therefore determined that this rule does not constitute a policy 
that has federalism implications for purposes of the executive order.

Assessment of Federal Regulations and Policies on Families

    The NCUA has determined that this proposed rule would not affect 
family well-being within the meaning of section 654 of the Treasury and 
General Government Appropriations Act, 1999.\17\
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    \17\ Public Law 105-277, 112 Stat. 2681 (1998).
---------------------------------------------------------------------------

List of Subjects in 12 CFR Part 701

    Credit, Credit Unions, Federal Credit Union Bylaws.

    By the NCUA Board on September 22, 2022.
Melane Conyers-Ausbrooks,
Secretary of the Board.

    For the reasons discussed in the preamble, the Board proposes to 
amend 12 CFR part 701 as follows:

PART 701--ORGANIZATION AND OPERATION 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, 1758, 1759, 
1761a, 1761b, 1766, 1767, 1782, 1784, 1785, 1786, 1787, 1788, 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 42 U.S.C. 4311-4312.

0
2. In Appendix A to part 701:
0
a. Revise Article II, Section 5;
0
b. Revise Article XIV;
0
c. Revise Official NCUA Commentary--Federal Credit Union Bylaws, 
Article II(iii); and
0
d. Revise Official NCUA Commentary--Federal Credit Union Bylaws, 
Article XIV.
    The revisions read as follows:

Appendix A to Part 701--Federal Credit Union Bylaws

* * * * *

Article II. Qualifications for Membership

    Section 5. Member in good standing. A member in good standing 
retains all their rights and privileges in the credit union. A 
member not in good standing may be subject to a policy that limits 
credit union services. A member not in good standing is one who has 
engaged in any of the conduct in Article XIV, Section 3 related to 
for-cause termination of membership. In the event of a suspension of 
service, the member will be notified of what accounts or services 
have been discontinued. Subject to Article XIV and any applicable 
limitation of services policy approved by the board, members not in 
good standing retain their right to attend, participate, and vote at 
the annual and special meetings of the members and maintain a share 
account.
* * * * *

Article XIV. Expulsion and Withdrawal

    Section 1. Expulsion procedure. A credit union may expel a 
member in one of three ways. The first way is through a special 
meeting. Under this option, a credit union may: call a special 
meeting of the members, provide the member the opportunity to be 
heard, and obtain a two-thirds vote of the members present at the 
special meeting. The second way to expel a member is under a 
nonparticipation policy given to each member that follows the 
requirements found in the Act. The third way to expel a member is by 
a two-thirds vote of a quorum of the directors of the credit union 
for cause. A credit union can only expel a member through a vote of 
the directors of the credit union if it follows the policy for 
expulsion in section 2.
    Section 2. A credit union's directors may vote to expel a member 
for cause only if the credit union has provided, in written or 
electronic form, if the member has elected to receive electronic 
communications from the credit union, a copy of this Article to each 
member of the credit union. The communication of the policy, along 
with all notices required under this section, must be legible, 
written in plain language, and reasonably understandable by ordinary 
members.
    If a member will be subject to expulsion, the member shall be 
notified of the expulsion, along with the reason for such expulsion. 
The notice must include sufficient detail for the member to 
understand the grounds for expulsion and cannot include only 
conclusory statements regarding the reason for the member's 
expulsion. The notice must also tell the member that any complaints 
related to their potential expulsion should be submitted to the 
NCUA's website. The FCU must maintain a copy of the provided notice 
for its records. The notice must clearly state the member's right to 
request a hearing, and if a hearing is not requested membership will 
automatically terminate after 60 calendar days. The notice shall be 
provided in person, by mail to the member's address, or, if the 
member has elected to receive electronic communications from the 
credit union, may be provided electronically.
    A member shall have 60 calendar days from the date of receipt of 
a notification to request a hearing from the board of directors of 
credit union. A member is not entitled to attend the hearing in 
person, but the member must be provided a meaningful opportunity to 
orally present their case to the FCU board. The member may choose to 
provide a written submission to the Board instead of a hearing with 
oral statements. If a member does not request a hearing, the member 
shall be expelled after the end of the 60-day period after receipt 
of the notice. If a member requests a hearing, the board of 
directors must provide the member with a hearing. At the hearing, 
the board of directors may not raise any rationale or reason for 
expulsion that is not explicitly included in the notice to the 
member.
    After the hearing, the board of directors of the credit union 
must hold a vote within 30 calendar days on expelling the member. If 
a member is expelled, either through the expiration of the 60-day 
period or a vote to expel the member after a hearing, notice of the 
expulsion must be provided to the member in person, by mail to the 
member's address, in written form or, if the member has elected to 
receive electronic communications from the credit union, may be 
provided electronically. The notice must provide information on the 
effect of the expulsion, including information related to account 
access and any deductions by the credit union related to amounts 
due. The notice must also tell the member that any complaints 
related to their potential expulsion should be submitted to the 
NCUA's website. The notice must also state that the member has an 
opportunity to request reinstatement by either a majority vote of a 
quorum of the directors of the credit union or a majority vote of 
the members of the credit union present at a special meeting.
    A member expelled under this authority must be given an 
opportunity to request reinstatement of membership and may be 
reinstated by either a majority vote of a quorum of the directors of 
the credit union or a majority vote of the members of the credit 
union present at a special meeting. An FCU is only required to hold 
a board vote or special meeting in response to a member's first 
reinstatement request following expulsion. FCUs are required to 
maintain records related to any member expelled through a vote of 
the directors of the credit union for five years.
    Section 3. The term cause in this Article means (A) a 
substantial or repeated violation of the membership agreement of the 
credit union; (B) a substantial or repeated disruption, including 
dangerous or abusive behavior, to the operations of a credit union, 
as defined below; or (C) fraud, attempted fraud, or other illegal 
conduct that a member has been convicted of in relation to the 
credit union, including the credit union's employees conducting 
business on behalf of the credit union.
    If the FCU is considering expulsion for a member due to repeated 
non-substantial violations of the membership agreement or repeated 
disruptions to the credit union's operations, the credit union must 
provide written notice to the member at least one time prior to the 
notice of expulsion, and the violation or conduct must be repeated 
after having been notified of the violation.
    The written notice must state the exact nature of the violation 
or conduct and that if the violation or conduct occurs again the 
member may be expelled from the credit union.

[[Page 59748]]

    Dangerous or abusive behavior includes: (1) Violence, 
intimidation, physical threats, harassment, or physical or verbal 
abuse of officials or employees of the credit union, members, or 
agents of the credit union. This includes actions while on credit 
union premises and through use of telephone, mail, email, or other 
electronic method; (2) Behavior that causes or threatens damage to 
credit union property; or (3) Unauthorized use or access of credit 
union property. Expressions of frustration with the credit union or 
its employees through elevated volume and tone; expressions of 
intent to seek lawful recourse, regardless of perceived merit; or 
repeated interactions with credit union employees is insufficient to 
constitute dangerous or abusive behavior.
    Section 4. Expulsion or withdrawal does not relieve a member of 
any liability to the credit union. The credit union will pay all of 
the member's shares upon their expulsion or withdrawal less any 
amounts due to this credit union.
    Section 5. An expulsion of a member pursuant to section 2 shall 
be done individually, on a case-by-case basis, and neither the NCUA 
Board nor any credit union may expel a class of members.
* * * * *

Official NCUA Commentary--Federal Credit Union Bylaws

Article II. Qualifications for Membership

* * * * *
    (iii) Violent, belligerent, disruptive, or abusive members: Many 
credit unions have confronted the issue of handling a violent, 
belligerent, disruptive, or abusive individual. Doing so is not a 
simple matter insofar as it requires the credit union to balance the 
need to preserve the safety of individual staff, other members, and 
the integrity of the workplace, on one hand, with the rights of the 
affected member on the other. In accordance with the Act and 
applicable legal interpretations, there is a reasonably wide range 
within which FCUs may fashion a policy that works in their case.
    Thus, an individual who has become violent, belligerent, 
disruptive, or abusive may be prohibited from entering the premises 
or making telephone contact with the credit union, and the 
individual may be severely restricted in terms of eligibility for 
products or services. So long as the individual is not barred from 
exercising the right to vote at annual meetings and is allowed to 
maintain a regular share account, the FCU may fashion and implement 
a policy that is reasonably designed to preserve the safety of its 
employees and the integrity of the workplace. The policy need not be 
identical nor applied uniformly in all cases; there is room for 
flexibility and a customized approach to fit the particular 
circumstances. In fact, the NCUA anticipates that in some 
circumstances, such as violence or a credible threat of violence 
against another member or credit union staff in the FCU or its 
surrounding property, an FCU may take immediate action to restrict 
most, if not all, services to the member. This may occur along a 
parallel track as the credit union begins the process of expelling 
the member under Article XIV. In other situations, such as a member 
who frequently writes checks with insufficient funds, the FCU may 
attempt to resolve the matter with the member before limiting check 
writing services. Once a limitation of services policy is adopted or 
revised, members must receive notice. The FCU should disclose the 
policy to new members when they join and notify existing members of 
the policy at least 30 days before it becomes effective. The credit 
union's board has the option to adopt the optional amendment 
addressing members in good standing.
* * * * *

Article XIV. Expulsion and Withdrawal

    As noted in the commentary to Article II, there is a fairly wide 
range of measures available to the credit union in responding to 
abusive or unreasonably disruptive members. A credit union can limit 
services under Article II for a member not in good standing. A 
credit union may also expel the member for cause after two-thirds 
vote of the credit union's directors.\11\ Dangerous and abusive 
behavior is considered any violent, belligerent, unreasonably 
disruptive, or abusive behavior. Examples of dangerous and abusive 
conduct include, but are not limited to, a member threatening 
physical harm to employees, a member repeatedly purchasing gifts for 
or asking tellers on dates, a member repeatedly cursing at 
employees, and a member threatening to follow a loan officer home 
for a denying loan.
---------------------------------------------------------------------------

    \11\ See 12 U.S.C. 1764.
---------------------------------------------------------------------------

    A credit union must provide notice to the member of the 
expulsion. The notice must include the reason for the expulsion. The 
notice must be specific and not just include conclusory statements 
regarding the reason for the member's expulsion. For example, a 
general statement that the member's behavior has been deemed abusive 
and the member is being subject to expulsion procedures would 
generally be insufficient as an explanation. A credit union is 
prohibited from expelling a class of members under this provision. 
That would include a board acting to remove all delinquent members 
or class of delinquent members.
    If a special meeting of the members is called to expel the 
member, only in-person voting is permitted in conjunction with the 
special meeting, so that the affected member has an opportunity to 
present their case and respond to the credit union's concerns. 
However, an in-person meeting is not required if a member is 
expelled by a two-thirds vote of the board of directors. In 
addition, FCUs should consider the commentary under Article XVI 
about members using accounts for unlawful purposes.

[FR Doc. 2022-20927 Filed 9-30-22; 8:45 am]
BILLING CODE 7535-01-P