[Federal Register Volume 77, Number 187 (Wednesday, September 26, 2012)]
[Proposed Rules]
[Pages 59137-59139]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-23643]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 77, No. 187 / Wednesday, September 26, 2012 /
Proposed Rules
[[Page 59137]]
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 701
RIN 3133-AE02
Chartering and Field of Membership Manual for Federal Credit
Unions
AGENCY: National Credit Union Administration (NCUA).
ACTION: Proposed rule with request for comments.
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SUMMARY: The NCUA Board (Board) proposes to amend the definition of
``rural district'' in NCUA's Chartering and Field of Membership Manual.
The proposed amendment to the definition of ``rural district'' permits
a geographic area to qualify as a rural district if, among other
criteria, it has a total population that does not exceed the greater of
200,000 people or three percent of the population of the state in which
the majority of the district is located. The current definition limits
the rural district's population to 200,000, regardless of the
population of the state containing the majority of the rural district.
DATES: Comments must be received on or before November 26, 2012.
ADDRESSES: You may submit comments by any of the following methods
(Please send comments by one method only):
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
NCUA Web Site: http://www.ncua.gov/Legal/Regs/Pages/PropRegs.aspx. Follow the instructions for submitting comments.
Email: Address to regcomments@ncua.gov. Include ``[Your
name]--Comments on Notice of Proposed Rulemaking for Chartering and
Field of Membership Manual'' in the email subject line.
Fax: (703) 518-6319. Use the subject line described above
for email.
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: You may view all public comments on NCUA's Web
site at http://www.ncua.gov/Legal/Regs/Pages/PropRegs.aspx as
submitted, except for those we cannot post for technical reasons. NCUA
will not edit or remove any identifying or contact information from the
public comments submitted. You may inspect paper copies of comments in
NCUA's law library at 1775 Duke Street, Alexandria, Virginia 22314, by
appointment weekdays between 9 a.m. and 3 p.m. To make an appointment,
call (703) 518-6546 or send an email to OGCMail@ncua.gov.
FOR FURTHER INFORMATION CONTACT: Frank Kressman, Associate General
Counsel, or Elizabeth Wirick, Staff Attorney, Office of General
Counsel, at the above address or by telephone (703) 518-6545, or Robert
Leonard, Director, Division of Consumer Access, Office of Consumer
Protection, at the above address or by telephone (703) 518-1150.
SUPPLEMENTARY INFORMATION:
I. Background
The Federal Credit Union Act (Act), as amended by the Credit Union
Membership Access Act of 1998 (CUMAA), establishes requirements for
membership in federal credit unions (FCUs). The Act gives the Board
broad rulemaking authority over FCUs. 12 U.S.C. 1766(a). NCUA has
implemented the Act's field of membership requirements in its
Chartering and Field of Membership Manual (Chartering Manual),
incorporated as Appendix B to Part 701 of NCUA's regulations. 12 CFR
Part 701, Appendix B. NCUA also publishes the Chartering Manual as an
Interpretative Ruling and Policy Statement (IRPS). The current version
of the Chartering Manual is set forth as IRPS 08-2, as amended by IRPS
10-1.
Rural District
The Act provides that a community credit union is one organized
around a ``well-defined local community, neighborhood, or rural
district.'' 12 U.S.C. 1759(b)(3). In CUMAA, Congress also specifically
delegated to the Board the authority to define by regulation the
meaning of ``well-defined local community'' (WDLC) and ``rural
district'' for FCU charters. 12 U.S.C. 1759(g).
Since CUMAA's enactment, the agency has gained significant
experience in determining the criteria that establish an area as a WDLC
or rural district by fully analyzing and processing numerous
applications for community charter conversions and expansions. With the
benefit of this extensive experience, the Board is concerned that the
current population limit associated with establishing a rural district
is too restrictive to fulfill the potential of that charter type and is
limiting some FCUs' abilities to serve members in rural America.
II. Proposed Change to the Definition of Rural District
The Chartering Manual currently includes two alternative sets of
criteria to establish a rural district. One set of criteria is:
The district has well-defined, contiguous boundaries;
More than 50% of its population resides in areas the U.S.
Census Bureau designates as rural; and
The district's total population does not exceed 200,000.
The alternate criteria require:
The district has well-defined, contiguous boundaries;
It has a population density of no more than 100 people per
square mile; and
The district's total population does not exceed 200,000.
12 CFR part 701, Appendix B; Chartering Manual, Chapter 2.V.A.2. Thus,
under either alternative, the upper limit on the population of a rural
district is currently 200,000 persons.
The Board believes that the limit of 200,000 persons may, in many
instances, be too low to sustain a viable rural district FCU for
several reasons. A rural area may often be anchored by a small hub city
or town. A relatively high portion of individuals living in the rural
area may periodically travel to that small hub for shopping,
entertainment, medical care or financial services. That hub is
important to the rural district for services, and it is important to be
included in the rural district to enhance an FCU's economic potential.
Unfortunately, when included in the rural district for chartering
purposes, the hub could cause the area to exceed the 200,000 person
population limit
[[Page 59138]]
under the current definition. Additionally, the Board is aware that it
is difficult for an FCU to reach and attract members living in large
rural areas with widely dispersed populations. FCUs often incur greater
expenses to locate, join, and serve these members than members in a
smaller geographic area with a higher population density. Accordingly,
a higher potential population is often necessary to ensure the economic
viability of many rural district charters.
Since first defining the term rural district in 2010, NCUA has seen
only modest usage of the rural district charter. In fact, currently
there are fewer than 50 FCUs operating as a rural district charter. For
the reasons noted above, the Board believes a higher population limit
for an area to be considered a rural district is appropriate. Rather
than simply imposing a larger numerical limit to attempt to fit all
circumstances, the Board proposes to permit an area to qualify as a
rural district if its population does not exceed the greater of (1)
200,000; or (2) three percent of the total population of the state in
which the majority of the district is located.
The Board believes the addition of the three percent of state
population component is broad enough to enhance an FCU's ability to
serve individuals living in rural America, who often suffer from a lack
of affordable financial services. The Board also believes that this
component is sufficiently limited to permit the designation of a rural
district only in geographic areas that are truly rural. Specifically,
the enhanced definition will only affect FCUs seeking a rural district
located in states with a population above approximately 6.67 million.
This is because three percent of the population of states with fewer
than 6.67 million people would already be less than the current 200,000
person limit. There are 13 states of this size. This will protect
against having a rural district that is unreasonably large in relation
to the size and population of a state. The Board has considered using a
higher limit but is concerned that a higher limit could result in
overly large rural districts. For example, if the limit were set at
four percent, then that would affect FCUs seeking rural districts
located in states with populations greater than approximately 5
million. This is because four percent of the population of states with
fewer than 5 million people would already be less than the current
200,000 person limit. There are 22 states of this size. NCUA believes
this higher limit could result in rural districts disproportionately
large in relation to states of this size. Nonetheless, NCUA would
appreciate receiving comments on this aspect of the proposal.
Additionally, even with the proposed amendment to the definition, the
other criteria in the definition not related to total population remain
in place and help ensure the definition as a whole does not exceed
appropriate boundaries. Although NCUA is not proposing changes to the
other criteria in the definition of rural district at this time, NCUA
welcomes comments on these aspects of the definition as well.
For FCUs seeking a rural district that includes portions of two or
more states, the three percent state population component will be based
on the population of the state containing the majority of the proposed
rural district. The majority of a multi-state rural district will be
based on population rather than geographic areas. For example, if an
FCU applies to serve a district with two counties and 100,000 residents
in one state, plus one county and 200,000 residents in a second state,
the combined population of 300,000 could not exceed three percent of
the population of the second state.
FCUs with current rural district charters are grandfathered, but
they would also be able to apply to amend their charters based on the
proposed criteria. As with all community charters, FCUs serving more
populated rural districts must develop business and marketing plans
that demonstrate how they will serve their entire community.
III. Regulatory Procedures
Regulatory Flexibility Act
The Regulatory Flexibility Act requires NCUA to prepare an analysis
to describe any significant economic impact a rule may have on a
substantial number of small credit unions (primarily those under $10
million in assets). This proposed rule does not impose any requirements
on small credit unions. NCUA has determined that this proposed rule
will not have a significant economic impact on a substantial number of
small credit unions.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in
which an agency by rule creates a new paperwork burden on regulated
entities or increases an existing burden. 44 U.S.C. 3507(d); 5 CFR part
1320. For purposes of the PRA, a paperwork burden may take the form of
either a reporting or a recordkeeping requirement, both referred to as
information collections. NCUA has determined that this proposed rule
does not impose a new information collection requirement or increase an
existing burden.
Executive Order 13132
Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests.
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. This proposed 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
determined that this proposed rule does not constitute a policy that
has federalism implications for purposes of the executive order.
Treasury and General Government Appropriations Act, 1999
NCUA has determined that this proposed rule will not affect family
well-being within the meaning of section 654 of the Treasury and
General Government Appropriations Act, 1999, Public Law 105-277, 112
Stat. 2681 (1998).
List of Subjects
12 CFR Part 701
Credit, Credit unions, Reporting and recordkeeping requirements.
By the National Credit Union Administration Board on September
20, 2012.
Mary Rupp,
Secretary of the Board.
For the reasons set forth above, NCUA proposes to amend Appendix B
of 12 CFR part 701 as follows:
PART 701--ORGANIZATION AND OPERATIONS OF FEDERAL CREDIT UNIONS
1. The authority citation for part 701 continues to read as
follows:
Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759,
1761a, 1761b, 1766, 1767, 1782, 1784, 1786, 1787, 1789. Section
701.31 is also authorized by 15 U.S.C. 1601, et seq., 42 U.S.C. 1981
and 3601-3610. Section 701.35 is also authorized by 12 U.S.C. 4311-
4312.
Appendix B [Amended]
2. Revise the fifth paragraph of Section V.A.2 of Chapter 2 of
Appendix B to part 701 to read as follows:
[[Page 59139]]
Chapter 2
V.A.2--Definition of Well-Defined Local Community and Rural District
* * * * *
The rural district requirement is met if:
Rural District--
The district has well-defined, contiguous geographic
boundaries;
More than 50% of the district's population resides in
census blocks or other geographic areas that are designated as rural
by the United State Census Bureau; and
The total population of the district does not exceed
the greater of 200,000 people or three percent of the population of
the state in which the majority of the district is located; or
The district has well-defined, contiguous geographic
boundaries;
The district does not have a population density in
excess of 100 people per square mile; and
The total population of the district does not exceed
the greater of 200,000 people or three percent of the population of
the state in which the majority of the district is located.
* * * * *
[FR Doc. 2012-23643 Filed 9-25-12; 8:45 am]
BILLING CODE 7535-01-P