[Federal Register Volume 78, Number 54 (Wednesday, March 20, 2013)]
[Proposed Rules]
[Pages 17136-17140]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-06352]


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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. 78, No. 54 / Wednesday, March 20, 2013 / 
Proposed Rules

[[Page 17136]]



NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 701

RIN 3133-AE05


Federal Credit Union Ownership of Fixed Assets

AGENCY: National Credit Union Administration (NCUA).

ACTION: Notice of Proposed Rulemaking.

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SUMMARY: The NCUA Board (Board) proposes to amend its regulation 
governing federal credit union (FCU) ownership of fixed assets to help 
FCUs understand and comply with its requirements. The proposed 
amendments do not make any substantive changes to those regulatory 
requirements. Rather, the amendments only clarify the regulation by 
improving its organization, structure, and ease of use.

DATES: Comments must be received on or before May 20, 2013.

ADDRESSES: You may submit comments by any of the following methods 
(Please send comments by one method only):
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     NCUA Web Site: http://www.ncua.gov/RegulationsOpinionsLaws/proposed_regs/proposed_regs.html. Follow the 
instructions for submitting comments.
     Email: Address to regcomments@ncua.gov. Include ``[Your 
name] Comments on Notice of Proposed Rulemaking for Part 701, FCU 
Ownership of Fixed Assets'' 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 DeliveryCourier: 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 Pamela Yu, Staff Attorney, Office of General Counsel, at 
the above address or telephone (703) 518-6593.

SUPPLEMENTARY INFORMATION: 

I. Background
II. Summary of the Proposed Rule
III. Public Comment
IV. Regulatory Procedures

I. Background

    The Federal Credit Union Act (FCU Act) authorizes an FCU to 
purchase, hold, and dispose of property necessary or incidental to its 
operations.\1\ NCUA's fixed assets rule interprets and implements this 
provision of the FCU Act.\2\ In general, an FCU may only invest in 
property it intends to use to transact credit union business or in 
property that supports its internal operations or serves its 
members.\3\ NCUA's fixed assets rule: (1) Limits FCU investments in 
fixed assets; (2) establishes occupancy, planning, and disposal 
requirements for acquired and abandoned premises; and (3) prohibits 
certain transactions.\4\ For purposes of the rule, fixed assets are 
premises, furniture, fixtures, and equipment, including any office, 
branch office, suboffice, service center, parking lot, facility, real 
estate where a credit union transacts or will transact business, office 
furnishings, office machines, computer hardware and software, automated 
terminals, and heating and cooling equipment.\5\
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    \1\ 12 U.S.C. 1757(4).
    \2\ 12 CFR 701.36.
    \3\ 12 CFR 721.3(d).
    \4\ 12 CFR 701.36.
    \5\ 12 CFR 701.36(c).
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A. Why is NCUA proposing this rule?

    The Board has a policy of continually reviewing NCUA's regulations 
to ``update, clarify and simplify existing regulations and eliminate 
redundant and unnecessary provisions.'' \6\ To carry out this policy, 
NCUA identifies one-third of its existing regulations for review each 
year and provides notice of this review so the public may comment. In 
2012, NCUA reviewed its fixed assets rule as part of this process. As a 
result of this review, the Board believes amending the fixed assets 
rule would make it easier for FCUs to understand. The Board also 
believes this proposal is consistent with the spirit of Executive Order 
13579, which directed independent agencies, including NCUA, to consider 
whether they can modify, streamline, expand, or repeal existing rules 
to make their programs more effective and less burdensome.\7\ Further, 
NCUA continually receives questions about the fixed assets rule, 
indicating there is some confusion about its application. For example, 
FCUs have asked for clarification regarding the waiver process, as well 
as the provision that requires an FCU to partially occupy unimproved 
property acquired for future expansion.\8\ Therefore, the Board 
believes it is appropriate to make the proposed amendments to clarify 
the waiver and partial occupation requirements and to improve the fixed 
assets rule overall.
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    \6\ NCUA Interpretive Ruling and Policy Statement (IRPS) 87-2, 
as amended by IRPS 03-2, Developing and Reviewing Government 
Regulations.
    \7\ E.O. 13579 (July 11, 2011).
    \8\ 12 CFR 701.36(b)(2).
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B. How would the proposed rule change the current rule?

    The Board proposes to: (1) Amend the regulatory text using plain 
language; (2) add an introductory section to define the scope of the 
regulation; (3) reorganize the existing definitions; (4) add several 
new definitions; and (5) clarify the processes for obtaining waivers 
from NCUA. The proposed amendments do not make any substantive changes 
to the regulatory requirements. Rather, they clarify the rule and 
improve its overall organization, structure, and readability.

C. Does the proposed rule create new requirements for FCUs?

    No, the proposed amendments do not create any new requirements for 
FCUs.

[[Page 17137]]

II. Summary of the Proposed Rule

A. How is the proposed rule easier to read and use?

    President Obama signed the Plain Writing Act of 2010 (Pub. L. 111-
274) into law on October 13, 2010 ``to improve the effectiveness and 
accountability of federal agencies to the public by promoting clear 
Government communication that the public can understand and use.'' The 
proposal revises the regulatory text to meet plain writing objectives. 
For example, the proposal uses logical organization, shorter sentences, 
active voice, and common, everyday words. It also uses lists, where 
appropriate.

B. How does the proposal improve the organization of the current rule?

    The proposal adds a new introductory section to clearly define the 
scope and application of the rule. It also reorganizes the definition 
section and moves it to the beginning of the rule. In the current rule, 
the definitions are found at the end, which has proven confusing for 
some FCUs. The Board believes it is more intuitive for readers to look 
to the beginning of a rule for the definitions that are applicable 
throughout the rule.
    The proposal breaks down several regulatory sections into smaller 
sub-sections to improve organization and ease of reading. The proposal 
also introduces definitions for the terms ``partially occupy'' and 
``unimproved land or unimproved real property,'' as discussed in more 
detail below. The Board believes these new definitions will help 
clarify a confusing aspect of the current rule.

C. What are the newly defined terms in the proposal?

    The Board proposes to clarify the provision in the fixed assets 
rule that requires an FCU to partially occupy unimproved property 
acquired for future expansion within a time period set by the rule.\9\ 
Recently, the Board amended the rule to permit an FCU up to six years 
from the date it obtains unimproved real property to meet the partial 
occupancy requirement, unless NCUA grants a waiver.\10\ As noted above, 
some FCUs are confused about how to apply this standard.
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    \9\ 12 CFR 701.36(b)(2).
    \10\ 77 FR 31981 (May 31, 2012). Before this amendment, only an 
FCU designated under the Regulatory Flexibility (RegFlex) program 
had the authority to partially occupy unimproved land within six 
years of acquisition. Non-RegFlex FCUs were required to partially 
occupy acquired unimproved land within three years of acquisition. 
In the final rulemaking, NCUA eliminated the RegFlex program and 
extended the six-year time period to all FCUs.
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    Specifically, the current rule states that ``[p]remises are 
partially occupied when the credit union is using some part of the 
space on a full-time basis.'' \11\ In 2004, the Board described the 
phrase ``partially occupy'' to mean that an FCU is required to ``occupy 
any of the space'' within the regulatory time frame.\12\ Many FCUs find 
this standard vague, however, and would benefit from a more precise 
understanding of it. Accordingly, the Board proposes to clarify the 
meaning of ``unimproved land or unimproved real property'' and 
``partially occupy'' by adding definitions of these terms to the 
regulation. While these terms are not expressly defined in the current 
rule, the proposed definitions reflect NCUA's current interpretation of 
them. The addition of the proposed definitions does not impose any new 
regulatory requirements on FCUs.
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    \11\ 12 CFR 701.36(b)(2).
    \12\ 69 FR 58039, 58041 (Sept. 29, 2004).
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1. Unimproved Land or Unimproved Real Property
    When NCUA initially granted RegFlex FCUs up to six years to 
partially occupy unimproved land, the Board noted the following in the 
2009 rulemaking:

    Where an FCU is acquiring unimproved land, the partial occupancy 
requirement often is more difficult to satisfy than if the FCU were 
purchasing premises with an existing branch building. * * * [M]any 
real estate transactions are complex, time consuming, and can 
involve a host of wide-ranging issues that must be addressed before 
an FCU is ready to occupy the premises. This is especially true in 
the unimproved land context considering the addition of 
construction-related issues.\13\
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    \13\ 74 FR 13082, 13083 (Mar. 26, 2009).

    In establishing the six-year time frame, the Board used the term 
``unimproved land'' as it is commonly defined. For purposes of the 
fixed assets rule, the common definition of ``unimproved land'' or 
``unimproved real property'' is raw land or, more specifically, land 
without development, significant buildings, structures, or site 
preparation. Unimproved land or real property also includes land that 
has never had improvements, as well as property that was improved at 
one time but has since functionally reverted to its unimproved state. 
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An NCUA legal opinion issued in 2009 stated:

    [A] piece of land may have improvements so useless or valueless 
to the FCU so as to be the functional equivalent of unimproved land. 
For example, an FCU purchases a piece of land for a future branch 
building that happens to have a decrepit barn on it. In those 
instances, we believe it is appropriate to treat that kind of 
property as unimproved for purposes of the six-year occupancy 
requirement. To receive this treatment, however, an FCU must 
demonstrate through records generated or in existence at the time of 
purchase that the FCU intends to demolish the improvements or 
otherwise treat the improvements as useless or valueless.\14\
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    \14\ OGC Legal Op. 09-0719 (Sept. 15, 2009).

    There is another instance when NCUA will consider improved land as 
unimproved for purposes of the fixed assets rule. Specifically, if the 
improvements, even if functional and intrinsically valuable, serve no 
purpose for the FCU's planned use of the property, then NCUA will 
consider the land unimproved. For example, if an FCU purchases a parcel 
of land that is improved with water and sewer lines for a residential 
townhouse development, but the FCU plans to build a parking garage on 
the parcel, then the improvements have no real value to the FCU. In 
that instance, the parcel will be considered unimproved. The Board 
believes the addition of a definition for the term ``unimproved land or 
unimproved real estate'' will aid FCUs in their understanding of the 
requirements under the fixed assets rule.
2. Partially Occupy
    An FCU's plan to develop unimproved property should indicate how 
the FCU will use the premises as part of its business model. It also 
should provide a detailed description of how the FCU will accomplish 
that, and it should articulate specific time frames for construction 
milestones and completion. Whether an FCU has complied with the six-
year time frame to ``partially occupy'' unimproved real property is 
relative to the FCU's plan for use of the premises. In making that 
determination, NCUA will consider an FCU in compliance only if the FCU 
has completed the improvements to a sufficient extent that the FCU is 
occupying a meaningful portion of the premises consistent with its 
usage plan. In the Board's view, ``meaningful'' means a portion large 
enough that an FCU is occupying the premises in a useful and practical 
way given the scope of the project. This requires an FCU to derive 
practical utility from the occupied portion considering the date of 
acquisition and estimated date of completion. For example, an FCU that 
takes six years to construct a branch location must, at a minimum, 
occupy that branch as a functional office to transact business and 
handle member needs. In this example, a ``functional

[[Page 17138]]

office'' means one that is, at the time of partial occupation, 
providing many or most of the services it will provide when completed. 
As another example, a newly constructed mortgage servicing center must 
be occupied to the extent that the FCU can utilize it for the general 
purposes for which it was built. In both examples, the FCU does not 
need to have totally completed making improvements to the premises, nor 
does it need to occupy the premises to the extent it would be when 
operating at 100% capacity. The partial occupation, however, must be 
sufficient to evidence the FCU has substantially realized its plan 
objectives and is occupying the premises in a manner demonstrating that 
full occupation will be achieved within a reasonable time period.
    The fixed assets rule also imposes a partial occupancy requirement 
on an FCU that acquires improved premises for future expansion.\15\ The 
time frame for partially occupying improved premises an FCU has 
acquired for future expansion may not exceed three years. However, the 
same criteria articulated above for partially occupying unimproved 
property apply to improved premises. Accordingly, an FCU that acquires 
improved premises for future expansion must, within three years, occupy 
a meaningful portion of the premises consistent with its usage plan and 
derive practical utility from the occupied portion. The partial 
occupancy also must be sufficient to evidence that full occupation will 
be achieved within a reasonable time period.
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    \15\ 12 CFR 701.36(b)(2).
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    The Board understands that the spectrum of construction projects in 
which FCUs may engage is broad, and that the nature and scope of those 
projects greatly depend on the particular circumstances and needs of 
the individual FCU. The same is true with respect to improved premises 
an FCU may acquire. Accordingly, the Board recognizes it is impractical 
to attempt to design a one-size-fits-all test for every set of 
circumstances surrounding a project or purchase. However, the Board 
believes the standards articulated in the proposed definition, along 
with the examples of common projects described above, clarifies how 
NCUA interprets the term ``partially occupy.'' The Board also notes 
that an FCU can enhance its likelihood for complying with the fixed 
assets rule by coordinating with its examiner and regional office 
during the expansion or improvement process.

D. How does the proposed rule clarify the waiver process?

    Under the current rule, several provisions are subject to waiver 
including: (1) The aggregate investment limit (current Sec.  
701.36(a)); (2) the partial occupation requirements (current Sec.  
701.36(b)(2)); (3) the requirement to dispose of abandoned premises 
(current Sec.  701.36(b)(3)); and (4) the prohibition on certain 
transactions (current Sec.  701.36(c)(1)). The Board proposes to amend 
the rule to clarify the waiver provisions. The proposed changes are 
intended to better articulate NCUA's expectations for FCUs requesting 
waivers and NCUA's obligations in reviewing such requests.
    The current rule addresses the waiver requirements somewhat 
inconsistently. For example, in some instances the express terms 
``waive'' or ``waiver'' are used. In other instances, the rule uses 
more ambiguous language such as ``[u]nless otherwise approved in 
writing by NCUA'' or ``[w]ithout the prior written approval of the 
NCUA.'' While articulated differently, in those instances, those 
provisions are subject to waiver by NCUA. The Board believes the rule 
would be easier to understand if all waiver provisions are referenced 
with the same unambiguous terminology. The proposal revises the 
regulatory text accordingly. Specifically, the word ``waiver'' is 
included in the regulatory text in each instance that a particular 
requirement or limitation is subject to waiver by NCUA.
    The current rule also describes the waiver processes somewhat 
inconsistently. The Board notes that each process varies depending on 
the particular requirement or limit being waived. Nevertheless, the 
Board believes greater uniformity in the description of each waiver 
process would be helpful to FCUs. As such, under the proposal, each 
provision in the rule that is subject to waiver describes: (1) The 
FCU's obligations when submitting a waiver request; (2) NCUA's 
obligations in reviewing a waiver request; and (3) any other applicable 
conditions for a waiver.
    The Board is aware of concerns that NCUA's current waiver process, 
in general, is uneven and, in some circumstances, overly burdensome to 
the practical needs of some FCUs. The Board emphasizes that NCUA is 
committed to making the agency's waiver process more consistent and 
user friendly and welcomes public comment on ways of doing so.

III. Request for Comment

    The Board encourages public comment on all aspects of this proposed 
rule. In particular, the Board requests feedback regarding any 
additional ways to enhance the readability and usefulness of the fixed 
assets rule.

IV. Regulatory Procedures

Regulatory Flexibility Act

    The Regulatory Flexibility Act requires NCUA to prepare an analysis 
to describe any significant economic impact a proposed rule may have on 
a substantial number of small entities (primarily those under fifty 
million dollars in assets). This proposed rule would improve the 
regulation to help FCUs understand its requirements. The proposed 
amendments do not make any substantive changes to the regulatory 
requirements. They are intended to improve the rule's organization, 
structure, and ease of use. NCUA has determined 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 modifies an existing burden.\16\ 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. 
As noted above, the proposed amendments would make the rule easier to 
understand, but would not impose new paperwork burdens.
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    \16\ 44 U.S.C. 3507(d); 5 CFR part 1320.
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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. Because the fixed assets regulation 
applies only to federal credit unions, this proposed rule would not 
have a 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. 
As such, NCUA has determined that this rule does not constitute a 
policy that has federalism implications for purposes of the executive 
order.

[[Page 17139]]

Assessment of Federal Regulations and Policies on Families

    NCUA has determined that this rule will not affect family well-
being within the meaning of Section 654 of the Treasury and General 
Government Appropriations Act of 1999.\17\
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    \17\ Public Law 105-277, 112 Stat. 2681 (1998).
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List of Subjects in 12 CFR Part 701

    Credit unions, Reporting and recordkeeping requirements.

     By the National Credit Union Administration Board, on March 14, 
2013.
Mary F. Rupp,
Secretary of the Board.

    For the reasons stated above, NCUA proposes to amend 12 CFR part 
701 as follows:

PART 701--ORGANIZATION AND OPERATIONS OF FEDERAL CREDIT UNIONS

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

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

0
2. Revise Sec.  701.36 to read as follows:


Sec.  701.36  Federal credit union ownership of fixed assets.

    (a) Scope.
    Section 107(4) of the Federal Credit Union Act (12 U.S.C. 1757(4)) 
authorizes a federal credit union to purchase, hold, and dispose of 
property necessary or incidental to its operations. This section 
interprets and implements that provision and it:
    (1) limits investments in fixed assets;
    (2) establishes occupancy, planning, and disposal requirements for 
acquired and abandoned premises; and
    (3) prohibits certain transactions. This section applies only to 
federal credit unions.
    (b) Definitions.
    For purposes of this section:
    Abandoned premises means real property previously used to transact 
credit union business, but no longer used for that purpose. It also 
means real property originally acquired for future credit union 
expansion, but no longer intended for that purpose.
    Fixed assets means premises and furniture, fixtures, and equipment.
    Furniture, fixtures, and equipment means all office furnishings, 
office machines, computer hardware and software, automated terminals, 
and heating and cooling equipment.
    Investments in fixed assets means:
    (1) any investment in improved or unimproved real property which a 
federal credit union is using, or intends to use, as premises;
    (2) any leasehold improvement on premises;
    (3) the aggregate of all capital and operating lease payments on 
fixed assets, without discounting commitments for future payments to 
present value; or
    (4) any investment in furniture, fixtures, and equipment.
    Immediate family member means a spouse or other family member 
living in the same household.
    Partially occupy means occupation, on a full-time basis, of a 
portion of the premises that is:
    (1) consistent with the federal credit union's usage plan for the 
premises;
    (2) significant enough that the federal credit union is deriving 
practical utility from the occupied portion, relative to the scope of 
the usage plan; and
    (3) sufficient to show that the federal credit union will fully 
occupy the premises within a reasonable time.
    Premises means any office, branch office, suboffice, service 
center, parking lot, other facility, or real estate where the federal 
credit union transacts or will transact business.
    Senior management employee means the federal credit union's chief 
executive officer, any assistant chief executive officers, and the 
chief financial officer. For example, these individuals typically hold 
the title of President or Treasurer/Manager, Assistant President, Vice 
President or Assistant Treasurer/Manager, and Comptroller.
    Shares means regular shares, share drafts, share certificates, or 
other savings.
    Retained earnings means undivided earnings, regular reserve, 
reserve for contingencies, supplemental reserves, reserve for losses, 
and other appropriations from undivided earnings as designated by the 
federal credit union's management or NCUA.
    Unimproved land or unimproved real property means:
    (1) raw land or land without development, significant buildings, 
structures, or site preparation;
    (2) land that has never had improvements;
    (3) land that was improved at one time but has functionally 
reverted to its unimproved state; or
    (4) land that has been improved, but the improvements serve no 
purpose for the federal credit union's planned use of the property and 
are of little value relative to the project.
    (c) Limits on Investment in Fixed Assets.
    (1) If a federal credit union has $1,000,000 or more in assets, the 
aggregate of all its investments in fixed assets must not exceed five 
percent of its shares and retained earnings. NCUA may waive this 
aggregate limit.
    (i) To seek a waiver, a federal credit union must submit a written 
request to its regional office. The request must:
    (1) describe the proposed investment;
    (2) indicate the approximate aggregate amount of fixed assets the 
federal credit union would hold after the investment (as a percentage 
of shares and retained earnings); and
    (3) fully explain why the federal credit union needs the waiver.
    (ii) The regional director will inform the federal credit union, in 
writing, of the date its request was received and of any additional 
documentation needed.
    (iii) Within 45 days of the receipt of the federal credit union's 
waiver request or all necessary documentation, whichever is later, the 
regional director will provide the federal credit union a written 
response, either approving or disapproving the request. The regional 
director's decision will be based on safety and soundness 
considerations.
    (iv) If a waiver is approved, the regional director will set an 
alternative limit on the federal credit union's aggregate investments 
in fixed assets, either as a dollar limit or as a percentage of its 
shares and retained earnings. Unless the regional director specifies 
otherwise, the federal credit union's future investments in fixed 
assets must not exceed an additional one percent of its shares and 
retained earnings over the amount approved.
    (v) If the regional director does not respond in writing within the 
timeframe specified in clause (iii) above, the federal credit union may 
proceed with its proposed investment. However, the federal credit 
union's investment in fixed assets, and any such future investments, 
must not exceed the aggregate limit it requested.
    (d) Premises Not Currently Used To Transact Credit Union Business.
    (1) If a federal credit union acquires premises for future 
expansion and does not fully occupy them within one year, it must have 
a board resolution in place by the end of that year with definitive 
plans for full occupation. Premises are fully occupied when the federal 
credit union (or the federal credit union and a credit union service 
organization or a vendor) uses the entire space on a full-time basis. 
Credit union service organizations and vendors must use the space 
primarily to support the federal credit union or to serve the federal 
credit union's members. The federal credit union must make its plans 
for full occupation available to NCUA upon request.

[[Page 17140]]

    (2) If a federal credit union acquires premises for future 
expansion, it must partially occupy them within a reasonable period, 
but no later than three years after the date of acquisition. If the 
premises are unimproved land or unimproved real property, however, the 
three-year partial occupation requirement is extended to six years. 
NCUA may waive the partial occupation requirements. To seek a waiver, a 
federal credit union must submit a written request to its regional 
office within 30 months after the property is acquired and fully 
explain why it needs the waiver. The regional director will provide the 
federal credit union a written response, either approving or 
disapproving the request. The regional director's decision will be 
based on safety and soundness considerations.
    (3) A federal credit union must make diligent efforts to dispose of 
abandoned premises and any other real property it does not intend to 
use in transacting business. The federal credit union must seek fair 
market value for the property, and record its efforts to dispose of 
abandoned premises. After premises have been abandoned for four years, 
the federal credit union must publicly advertise the property for sale. 
The federal credit union must complete the sale within five years of 
abandonment, unless NCUA waives this requirement. To seek a waiver, a 
federal credit union must submit a written request to its regional 
office and fully explain why it needs the waiver. The regional director 
will provide the federal credit union a written response, either 
approving or disapproving the request. The regional director's decision 
will be based on safety and soundness considerations.
    (e) Prohibited Transactions.
    (1) A federal credit union must not acquire, or lease for one year 
or longer, premises from any of the following, unless NCUA waives this 
prohibition:
    (i) A member of the federal credit union's board of directors, 
credit committee, supervisory committee, or senior management, or an 
immediate family member of such individual;
    (ii) A corporation in which a member of the federal credit union's 
board of directors, credit committee, supervisory committee, or senior 
management, or an immediate family member of such individual, is an 
officer or director, or has a stock interest of 10 percent or more; or
    (iii) A partnership, limited liability company, or other entity in 
which a member of the federal credit union's board of directors, credit 
committee, supervisory committee, or senior management, or an immediate 
family member of such individual, is a general partner, or a limited 
partner or entity member with an interest of 10 percent or more.
    (2) A federal credit union must not lease for one year or longer 
premises from any of its employees if the employee is directly involved 
in investments in fixed assets, unless the federal credit union's board 
of directors determines the employee's involvement is not a conflict of 
interest.
    (3) All transactions with business associates or family members not 
specifically prohibited by this section must be conducted at arm's 
length and in the interest of the federal credit union.
    (4) To seek a waiver from any of the prohibitions in this section 
(e), a federal credit union must submit a written request to its 
regional office and fully explain why it needs the waiver. Within 45 
days of the receipt of the waiver request or all necessary 
documentation, whichever is later, the regional director will provide 
the federal credit union a written response, either approving or 
disapproving its request. The regional director's decision will be 
based on safety and soundness considerations and a determination as to 
whether a conflict of interest exists.

[FR Doc. 2013-06352 Filed 3-19-13; 8:45 am]
BILLING CODE 7535-01-P