[Federal Register Volume 81, Number 217 (Wednesday, November 9, 2016)]
[Proposed Rules]
[Pages 78748-78756]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-26921]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 701
RIN 3133-AE31
Chartering and Field of Membership Manual
AGENCY: National Credit Union Administration (NCUA).
ACTION: Proposed rule with request for comments.
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SUMMARY: The NCUA Board proposes to amend its chartering and field of
membership rules to give applicants for community charter approval,
expansion or conversion the option, in lieu of a presumptive community,
to submit a narrative to establish common interests or interaction
among residents of the area it proposes to serve, thus qualifying the
area as a well-defined local community. The Board also proposes to
increase up to 10 million the population limit on a community
consisting of a statistical area or a portion thereof. Finally, when
such an area is subdivided into metropolitan divisions, the Board will
permit a credit union to designate a portion of the area as its
community without regard to division boundaries.
DATES: Comments must be received on or before December 9, 2016.
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 [email protected]. Include ``[Your
name] Comments on Notice of Proposed Rulemaking re Community Common
Bond'' in the email subject line.
Fax: (703) 518-6319. Use the subject line described above
for email.
Mail: Address to Gerard S. Poliquin, 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 [email protected].
FOR FURTHER INFORMATION CONTACT: Matthew Biliouris, Deputy Director, or
Robert Leonard, Director, Division of Consumer Access, or Rita Woods,
Director, Division of Consumer Access South, Office of Consumer
Financial Protection and Access, at the above address or telephone
(703) 518-1140; or Senior Staff Attorney Steven Widerman or Staff
Attorney Marvin Shaw, Office of General Counsel, at the above address
or telephone (703) 518-6540.
SUPPLEMENTARY INFORMATION:
I. Background
A. Overview
NCUA's Chartering and Field of Membership Manual, incorporated as
Appendix B to part 701 of its regulations (``Chartering Manual''),\1\
implements the field of membership (``FOM'') requirements established
by the Federal Credit Union Act (``the Act'') for federal credit unions
(each an ``FCU'').\2\ An FOM consists of those persons and entities
eligible for membership according to an FCU's type of charter.
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\1\ Appendix B to 12 CFR part 701 (``Appendix B'').
\2\ 12 U.S.C. 1759.
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In adopting the Credit Union Membership Access Act of 1998
(``CUMAA''), Congress reiterated its longstanding support for credit
unions, noting their ``specif[ic] mission of meeting the credit and
savings needs of consumers, especially persons of modest means.'' \3\
As amended by CUMAA, the FCU Act provides a choice among three charter
types: A single group sharing a single occupational or associational
common bond; \4\ a multiple common bond of groups that each have a
distinct occupational or associational common bond among group members;
\5\ and a community common bond among ``persons or organizations within
a well-defined local community, neighborhood, or rural district.'' \6\
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\3\ Public Law 105-219, Sec. 2, 112 Sta. 913 (Aug 7, 1998).
\4\ 12 U.S.C. 1759(b)(1).
\5\ Id. Sec. 1759(b)(2)(A).
\6\ Id. Sec. 1759(b)(3).
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As amended in 1998, the FCU Act directs the Board to define what
constitutes a well-defined local
[[Page 78749]]
community (``WDLC''), neighborhood, or rural district for purposes of
``making any determination'' regarding a community credit union,\7\ and
to establish applicable criteria for any such determination.\8\ To
qualify as a WDLC, neighborhood, or rural district, the Board requires
the proposed area to have ``specific geographic boundaries,'' such as
those of ``a city, township, county (single or multiple portions of a
county) or their political equivalent, school districts or a clearly
identifiable neighborhood.'' \9\ The boundaries themselves may consist
of political borders, streets, rivers, railroad tracks, or other static
geographical features.\10\ The Board continues to emphasize interaction
or common interests among residents within those boundaries as
essential features of a local community.
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\7\ Id. Sec. 1759(g)(1)(A).
\8\ Id. Sec. 1759(g)(1)(B).
\9\ Appendix B, Ch. 2, section V.A.2.
\10\ Appendix B, Ch. 2, section V.A.5.
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Until 2010, the Chartering Manual required FCUs to submit for NCUA
approval a narrative, supported by documentation, that presents indicia
of common interests or interaction among residents of a proposed
community (the ``narrative model''). In 2010, the Board abandoned the
narrative model in favor of an objective model that gives credit unions
a choice between two ``presumptive communities'' that each by
definition qualifies as a WDLC (the ``presumptive community
model'').\11\ The first of these is a ``Single Political Jurisdiction .
. . or any contiguous portion thereof'' (each an ``SPJ''), regardless
of population.\12\ The other is a single Core Based Statistical Area as
designated by the U.S. Census Bureau (``Census'') or a well-defined
portion thereof (each a ``CBSA''), subject to a 2.5 million population
limit.\13\
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\11\ As explained in the final rule that discontinued use of the
subjective model, the Board ``does not believe it is beneficial to
continue the practice of permitting a community charter applicant to
provide a narrative statement with documentation to support the
credit union's assertion that an area containing multiple political
jurisdictions meets the standards for community interaction and/or
common interests to qualify as a WDLC. As [the proposed rule] noted,
the narrative approach is cumbersome, difficult for credit unions to
fully understand, and time consuming. . . . While not every area
will qualify as a WDLC under the statistical approach, NCUA stated
it believes the consistency of this objective approach will enhance
its chartering policy, assure the strength and viability of
community charters, and greatly ease the burden for any community
charter applicant.'' 75 FR 36257, 36260 (June 25, 2010).
\12\ Appendix B, Ch. 2, section V.A.2.
\13\ Id. ``A total population cap of 2.5 million is appropriate
in a multiple political jurisdiction context to demonstrate cohesion
in the community.'' 75 FR 36257, 36260 (June 25, 2010).
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In the case of a CBSA that the Office of Management and Budget
(``OMB'') has subdivided into metropolitan divisions, a community
consisting of a portion of the CBSA must conform to the boundaries of
such divisions. Under either ``presumptive community'' option, an FCU
must be able to serve its entire proposed community, as demonstrated by
its business and marketing plans that must accompany an application to
approve a new community charter, an expansion or a conversion.\14\
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\14\ Appendix B, Ch. 2, Sec. V.A.4.
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In a final rule published elsewhere in this volume of the Federal
Register, the Board comprehensively overhauled the Chartering Manual.
With respect to community charters, the final rule, among other things,
affirmed the 2.5 million population cap that applies to a ``presumptive
community'' consisting of a CBSA or portion thereof,\15\ and recognized
an OMB-designated Combined Statistical Area or a portion thereof as a
``presumptive community'' subject to the same population limit.\16\
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\15\ The final rule also modified the ``statistical area''
definition to specify that in the case of a community consisting of
a portion of either a CBSA or a Metropolitan Division within, the
portion by itself must have a population of 2.5 million or fewer,
regardless whether the CBSA or Metropolitan Division as a whole
exceeds the limit. Appendix B, Ch. 2, section V.A.2.
\16\ Appendix B, Ch. 2, Sec. V.A.2. OMB Bulletin No. 15-01 to
Heads of Executive Departments and Establishments (July 15, 2015)
at: https://www.whitehouse.gov/sites/default/files/omb/bulletins/2015/15-01.pdf.
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The final rule also permitted the addition of an adjacent area to
an existing ``presumptive community'' based on a narrative presenting
indicia that residents on both sides of the perimeter share common
interests and interact with each other, subject to the same population
limit. The Board narrowly reinstated the narrative model for this
singular purpose. To achieve that purpose, the final rule directed the
Office of Consumer Financial Protection and Access (``OCFPA'') to issue
guidance identifying indicia corresponding to the criteria that an
FCU's narrative should address to support the addition of an adjacent
area,\17\ and which the Board will consider in deciding an FCU's
application to do so.
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\17\ 80 FR 76748, 76772 (Dec. 10, 2015) (referring to the
presence of an economic hub, quasi-governmental agencies, Government
designated programs, shared public services and facilities, and
colleges and universities).
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B. Why is NCUA proposing this rule?
NCUA is proposing this rule to consider three recommendations from
commenters that exceeded the scope of the Board's 2015 proposal to
comprehensively overhaul the Chartering Manual.\18\ First, despite the
ease and convenience of the ``presumptive community'' model as a safe
harbor to establish a WDLC, it may be too limiting if it confines FCUs
to ``presumptive community'' options that may be unsuited to their
purposes and ability, leaving them with no recourse but to accept an
area other than the one they ideally seek to serve. General use of the
narrative model in seeking approval to charter, to expand, or to
convert to, a community charter would address such a dilemma.
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\18\ 80 FR 76748.
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Second, the Board seeks to explore the possibility of increasing up
to 10 million the population limit that applies to a local community
other than an SPJ, to permit approval of a community within that
maximum to the extent of an FCU's ability and commitment to adequately
serve that community without compromising either the safety and
soundness of the FCU's operations or the cohesion of the community.\19\
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\19\ See note 13 supra.
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Finally, when an FCU seeks to serve a portion of a Combined
Statistical Area as its WDLC, that portion is not required to conform
to the boundaries of the CBSA components that form the Combined
Statistical Area. In contrast, when an FCU seeks to serve a portion of
a CBSA as its community--notwithstanding that a CBSA is far more
compact than a Combined Statistical Area--the existing rule nonetheless
requires such portion of a CBSA to conform to the boundaries of the
metropolitan divisions within, if any. Permitting a credit union to
designate a portion of a CBSA as its community without regard to
division boundaries would address this disparity in treatment of a
community consisting of a portion of a CBSA versus that of a Combined
Statistical Area.
Consistent with the Board's responsibility under CUMAA to
facilitate access to credit union services, the objective of the three
proposals in this rule is to give FCUs greater flexibility in providing
services to consumers who are eligible for FCU membership, particularly
those of modest means.
II. Summary of the Proposed Rule
A. General Applicability of Narrative Model To Establish a Well-Defined
Local Community
The proposed rule would permit general use of the narrative model--
which the final rule makes available solely to add an adjacent area to
an
[[Page 78750]]
existing or a new community \20\--to seek NCUA approval to initially
form, to expand, or to convert to, a community charter. In lieu of
reliance on a ``presumptive community,'' the proposed rule would permit
an FCU to submit a narrative, supported by appropriate documentation,
to demonstrate that the community it proposes to serve qualifies as a
WDLC based on common interests or interaction among the area's
residents.
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\20\ Appendix B, Ch. 2, Sec. V.A.2.
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The Act gives the Board broad discretion to define a WDLC for
purposes of ``making any determination'' regarding a community credit
union,\21\ and to establish criteria to apply to any such
determination.\22\ Under that authority, the Board proposes, in a new
appendix to the Chartering Manual, a set of ``Narrative Criteria to
Identify a Well-Defined Local Community'' that an FCU should address in
the narrative it submits to support its application to charter, expand,
or convert to, a community credit union.
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\21\ 12 U.S.C. 1759(g)(1)(A) (emphasis added).
\22\ Id. Sec. 1759(g)(1)(B).
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NCUA's experience with community charter applications under the
pre-2010 narrative model indicates that these particular thirteen
criteria generally were the most useful and compelling, when properly
addressed and documented, to demonstrate common interests or
interaction among residents of a proposed community. An area need not
meet all of the narrative criteria to qualify as a local community;
rather, the totality of circumstances within the criteria a credit
union elects to address must indicate a sufficient presence of common
interests or interaction among the area's residents. The new appendix
explains each criterion in order to guide applicants in the prudent use
of their resources, with minimal burden, to assess whether an area
qualifies as a local community and, if so, to develop an effective and
well-documented narrative to justify Board approval of its
application.\23\
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\23\ Appendix 6 to Appendix B.
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Accordingly, the Board will consider the following criteria, and
the supporting documentation for each, in evaluating the presence of
interaction and/or common interest among residents sufficient to
establish that an area is a WDLC:
1. Presence of a Central Economic Hub
The proposed community includes an economic hub. An economic hub is
evident when one political jurisdiction (city or county) within a
proposed local community has a relatively large percentage of the
community's population or is the primary location for employment. The
application needs to identify the major employers and their locations
within the proposed community.
2. Community-Wide Quasi-Governmental Agency Services
The existence of organizations such as economic development
commissions, regional planning boards, and labor or transportation
districts can be important factors to consider. The more closely their
service area matches the entire area, the greater the showing of
interaction and/or common interests.
3. Governmental Designations With Community
Designation of the proposed community by a government agency as a
region or distinct district--such a regional transportation district, a
water district, or a tourism district--is a factor that can be
considered in determining whether the area is a local community. The
more closely the designation matches the area's geographic boundaries,
the greater the value of that evidence in demonstrating interaction
and/or common interests.
4. Shared Public Services and Facilities
The existence of shared services and facilities, such as police,
fire protection, park districts, public transportation, airports, or
public utilities, can contribute to a finding that an area is a
community. The more closely the service area matches the geographic
boundaries of the community, and the higher the percentage of residents
throughout the community using those services or facilities, the more
valuable the data.
5. Hospitals and Major Medical Facility Services
Data on medical facilities should include admittance or discharge
statistics providing the ratio of use by residents of each political
jurisdiction. The greater the percentage of use by residents throughout
the proposed community, the higher the value of this data in showing
interaction. The application can also support the importance of an area
hospital with documentation that correlates the facility's target area
with the proposed local community and/or discusses the relative
distribution of hospitals over a larger area.
6. College and University Enrollment
College enrollment data can be a useful factor in establishing a
local community. The higher the percentages of student enrollment at a
given campus by residents throughout each part of the community, the
greater the value in showing interaction. Additionally, the greater the
participation by the college in community initiatives (e.g., partnering
with local governments), and the greater the service area of these
initiatives, the stronger the value of this factor.
7. Multi-Jurisdictional Mutual Aid Agreements
The existence of written agreements among law enforcement and fire
protection agencies in the area to provide services across multiple
jurisdictions can be an important factor.
8. Organizations' and Clubs' Membership and Services
The more closely the service area of an organization or club
matches the proposed community's boundaries, and the greater the
percentage of membership and services throughout the proposed
community, the more relevant the data.
9. Newspaper Subscriptions
A newspaper that has a substantial subscription base in an area can
be an indication of common interests. The higher the household
penetration figures throughout the area, the greater the value in
showing common interests. Subscription data may include print copies as
well as on-line access.
10. Attendance at Entertainment and Sporting Events
Data to show the percentage of residents from each political
jurisdiction who attend the events. The higher the percentage of
residents from throughout the proposed community, the stronger the
evidence of interaction. For sporting events, as well as some
entertainment events, data on season ticket holders and memberships may
be available. As with overall attendance figures, the higher the
percentage of residents from throughout the proposed community, the
stronger the evidence of interaction.
11. Local Television and Radio Audiences
A television or radio station broadcasting in an area can be an
indication of common interests. Objective data on viewer and listener
audiences in the proposed community can support the existence of a
community.
[[Page 78751]]
12. Community-Wide Shopping Patterns
The narrative must identify the location of the major shopping
centers and malls and include the percentage of shoppers coming from
each part of the community. The larger the percentage of shoppers from
throughout the community, the stronger the case for interaction. While
of lesser value than the shopping data, identification of the shopping
center's target area can be persuasive. The target area should closely
match the geographic boundaries of the proposed community.
13. Geographic Isolation
Some communities face varying degrees of geographic isolation. As
such, travel outside the community can be limited by mountain ranges,
forests, national parks, deserts, bodies of waters, etc. This factor,
and the relative degree of isolation, may help bolster a finding of
interaction or common interests.
B. Increase in Statistical Area Population Limit to 10 Million
The proposed rule would increase to 10 million the 2.5 million
population limit that presently applies to a community consisting of a
CBSA or Combined Statistical Area (each a ``statistical area'') or
other area an FCU designates, subject to an FCU's ability and
commitment to adequately serve the area. Despite having just affirmed a
2.5 million population limit, the Board anticipates that many areas
that would qualify as a WDLC will experience population growth over
time. The Board therefore believes that its policy should anticipate
and accommodate inevitable growth, to the extent permissible under the
Act, in order to maximize the potential membership base available to
community credit unions.
Three grounds justify a population limit of 10 million. First, it
would conform to the population of the most populous SPJ the Board has
approved (Los Angeles County) and, notwithstanding that an SPJ is not
subject to a population cap, the FCU that serves that community has not
experienced adverse safety or soundness consequences attributable to
its population size.\24\
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\24\ The FCU that serves the Los Angeles County community has
approximately 32,000 members, representing a community penetration
rate of 3 percent.
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Second, the Board believes the population limit on a community
consisting of a statistical area must be sufficiently accommodating to
minimize the disparity between such communities and those comprised of
an SPJ, which is unbound by any population limit. Third, a 10 million
population limit would narrow the inherent imbalance between the
population cap that applies to FCUs and the uncapped state credit
unions in at least the nine states with a population between 2.5 and 10
million. The laws of these states allow their credit unions to serve a
state-wide FOM.
To fully consider an increase in the population limit on a
community consisting of a statistical area, the Board seeks the benefit
of public comments addressing the following issues affecting a
statistical area--
Whether to apply any population limit at all if the area
is completely or primarily urban according to Census data.
Whether to designate a particular metric on which to rely
in setting and adjusting a population limit.
Whether to apply any population limit at all to a CBSA or
Statistical Area given that neither one is defined, by the Census or
OMB respectively, according to maximum population.
Whether to apply a population limit equivalent to the most
populous/largest SPJ NCUA has approved (i.e., Los Angeles County, as
explained above).
Whether to apply a population limit equivalent to either
the average or median population among either all CBSAs with a
population in excess of 2.5 million, or all Combined Statistical Areas
with population in excess of 2.5 million.
Whether to apply a population limit equivalent to the
greater of either 2.5 million or a specific percentage of the
population of the CBSA or Combined Statistical Area, and if so, what
the percentage should be.
Whether to apply a population limit equivalent to the most
populous/largest Metropolitan Statistical Area that is totally or
partially encompassed by the proposed community.
Whether to apply a population limit equivalent to the most
populous/largest SPJ that is totally or partially encompassed by the
proposed community.
Whether to apply a population limit that, to ensure
service to persons of modest means, excludes individuals living in a
household that either is low- or moderate-income; that earns less than
200 percent of the national poverty level; or in which the principal
wage-earner earns no more than the federal minimum wage (based on a 40-
hour work week for 50 weeks per year); or is based on a combination of
these metrics.
Whether to delegate to NCUA staff the authority to set a
population limit not exceeding a specified ceiling, and what that
ceiling population should be (e.g., 2.5 million, 5 million, 10
million), with the Board retaining authority to approve a limit in
excess of the delegated ceiling.
Whether to apply the same population limit regardless
whether an FCU's initial application to charter, or to convert to, a
community credit union includes an area adjacent to its statistical
area, versus a subsequent application to expand an FCU's existing
community to add such an adjacent area.
Whether NCUA should establish a process to give the public
notice and an opportunity to comment on an FCU's application for
approval of a statistical area with a population in excess 2.5 million.
Whether, in view of technological advances since CUMAA,
such as the internet, the Board should consider whether, and how,
online social communities qualify as WDLCs.
Whether there are other definitions of ``community'' that
would be a relevant gauge for community credit unions (e.g., the area's
student population eligible to attend its local community college, the
population eligible to benefit from its quasi-government agency
services and facilities).
Whether to reinstate the narrative model for use by FCUs
seeking approval serve a statistical area within certain population
parameters (e.g., between 2.5 and 10 million).
Whether to discard the ``presumptive community'' model and
reinstate the narrative model for general applicability, or to give
FCUs the option to elect either model to support the area each proposes
to serve as its community.
Whether to add certain criteria to, or to delete or modify
certain ones from, the new appendix of ``Narrative Criteria to Identify
a Well-Defined Local Community,'' and how to evaluate the narrative
criteria to determine whether an area qualifies as a WDLC.
C. Portion of CBSA as a Well-Defined Local Community Regardless of
Internal Boundaries
When an FCU seeks to serve a portion of a single CBSA as its WDLC,
the existing rule requires such portion to conform to the boundaries of
the Metropolitan Divisions, if any, within the CBSA. In contrast, when
an FCU seeks to serve a portion of a Combined Statistical Area as its
WDLC--notwithstanding that it is far more expansive than a CBSA--that
portion is not required to conform to the boundaries of the adjoining
CBSAs that form a Combined Statistical Area, nor to the boundaries of
any Metropolitan
[[Page 78752]]
Divisions within those CBSAs. To correct this inconsistency in the
treatment of a portion of a CBSA versus that of a Combined Statistical
Area, the proposed rule would permit a credit union to designate a
portion of a CBSA as its community without regard to division
boundaries.
III. Regulatory Procedures
Regulatory Flexibility Act
The Regulatory Flexibility Act requires NCUA to prepare an analysis
to describe any significant economic impact a regulation may have on a
substantial number of small entities.\25\ For purposes of this
analysis, NCUA considers small credit unions to be those having under
$100 million in assets.\26\ Although this rule is anticipated to
economically benefit FCUs that choose to charter, expand or convert to
a community charter, NCUA certifies that it will not have a significant
economic impact on small credit unions.
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\25\ 5 U.S.C. 603(a).
\26\ 80 FR 57512 (Sept. 24, 2015).
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Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) applies to collections of
information through which an agency creates a paperwork burden on
regulated entities or the public, or modifies an existing burden.\27\
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. The Office of Management and Budget (OMB)
previously approved the current information collection requirements for
the Chartering and Field of Membership Manual and assigned them control
number 3133-0015.
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\27\ 44 U.S.C. 3507(d); 5 CFR part 1320.
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Regarding a community common bond, the proposed rule gives
community charter applicants the option, in lieu of a presumptive
community, to submit a narrative to establish common interests and
interaction among residents of the area it proposes to serve, thus
qualifying the area as a well-defined local community. For that
purpose, the rule includes guidance in identifying compelling indicia
of interaction or common interests that would be relevant in drafting a
narrative summarizing the indicia that community residents meet the
requirements of a well-defined local community. In addition, the
proposed rule increases to as much as 10 million the population limit
on a community consisting of a statistical area, and when such an area
is subdivided into Metropolitan Divisions, the rule permits a credit
union to designate a portion of the area as its community without
regard to division boundaries.
NCUA has determined that the procedure for an FCU to assemble and
document a narrative summarizing the evidence to support its community
charter application would create a new information collection
requirement. As required, NCUA is applying to OMB for approval to amend
the current information collection to account for the new procedure.
Prior to 2010, when NCUA moved to an objective model of presumptive
communities, FCUs had the following three choices for a community
charter: Previously approved areas; single political jurisdictions; and
multiple political jurisdictions. For applications involving multiple
statistical areas, NCUA required FCUs to submit for NCUA approval a
narrative, supported by documentation, that presents indicia of common
interests or interaction among residents of the proposed community.
In the five-year period preceding the move to an objective model of
presumptive communities, NCUA processed an average of twenty-five FOM
applications involving multiple statistical areas. Based on this
historical trend, NCUA estimates that, on average, it would take an
FCU's staff approximately 160 hours to collect the evidence of
interaction or common interests and to develop a narrative to support
its application to expand or to convert. Accordingly, NCUA estimates
the aggregate information collection burden on existing and would-be
FCUs that elect to use the narrative option to form, expand, or convert
to a community charter would be 160 hours times 25 FCUs for a total of
4,000 hours. NCUA is proposing to amend the current information
collection control number 3133-0015 to account for these additional
burden hours.
Organizations and individuals wishing to submit comments on this
information collection requirement should direct them to the Office of
Information and Regulatory Affairs, OMB, Attn: Shagufta Ahmed, Room
10226, New Executive Office Building, Washington, DC 20503, with a copy
to the Secretary of the Board, National Credit Union Administration,
1775 Duke Street, Alexandria, Virginia 22314-3428.
NCUA will consider comments by the public on this proposed
collection of information in:
Evaluating whether the proposed collection of information
is necessary for the proper performance of the functions of the NCUA,
including whether the information will have a practical use;
Evaluating the accuracy of NCUA's estimate of the burden
of the proposed collection of information, including the validity of
the methodology and assumptions used;
Enhancing the quality, usefulness, and clarity of the
information to be collected; and
Minimizing the burden of 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 (e.g., permitting
electronic submission of responses).
Executive Order 13132
Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests. In
adherence to fundamental federalism principles, NCUA, an independent
regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies
with the executive order. Primarily because this rule applies to FCUs
exclusively, it will not have a substantial direct effect on the
states, on the connection 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 rule does
not constitute a policy that has federalism implications for purposes
of the executive order.
Assessment of Federal Regulations and Policies on Families
NCUA has determined that this proposed rule will not affect family
well-being within the meaning of Section 654 of the Treasury and
General Government Appropriations Act, 1999.\28\
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\28\ Public Law 105-277, 112 Stat. 2681 (1998).
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List of Subjects in 12 CFR Part 701
Credit, Credit unions, Reporting and recordkeeping requirements.
By the National Credit Union Administration Board on October 27,
2016.
Gerard S. Poliquin,
Secretary of the Board.
For the reasons stated above, NCUA proposes to amend 12 CFR part
701, Appendix B as follows:
[[Page 78753]]
PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS
0
1. The authority 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
701.6 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. Appendix B to part 701 is amended as follows:
0
a. Section V.A.2. of Chapter 2 is revised.
0
b. Appendix 6 to Appendix B is added.
The revision and addition read as follows:
Appendix B to Part 701--Chartering and Field of Membership Manual
* * * * *
V.A.2--Definition of Well-Defined Local Community and Rural
District
In addition to the documentation requirements in Chapter 1 to
charter a credit union, a community credit union applicant must
provide additional documentation addressing the proposed area to be
served and community service policies.
An applicant has the burden of demonstrating to NCUA that the
proposed community area meets the statutory requirements of being:
(1) Well-defined, and (2) a local community or rural district.
``Well-defined'' means the proposed area has specific geographic
boundaries. Geographic boundaries may include a city, township,
county (single, multiple, or portions of a county) or a political
equivalent, school districts, or a clearly identifiable
neighborhood. Although state boundaries are well-defined areas,
states themselves do not meet the requirement that the proposed area
be a local community.
The well-defined local community requirement is met if:
Single Political Jurisdiction--The area to be served is
a recognized Single Political Jurisdiction, i.e., a city, county, or
their political equivalent, or any single portion thereof.
Statistical Area--A statistical area is all or an
individual portion of one of the following:
A Core-Based Statistical Area designated by the U.S.
Census Bureau, including a Metropolitan Statistical Area, with a
population of 10 million or fewer; or
A Combined Statistical Area designated by the U.S.
Office of Management and Budget, with a population of 10 million or
fewer.
To meet the well-defined local community requirement,
an individual portion of a statistical area need not conform to
internal boundaries within the area, such as metropolitan division
boundaries within a Core-Based Statistical Area, and the boundaries
of adjoining Core-Based Statistical Areas that form a Combined
Statistical Area.
Compelling Evidence of Interaction or Common
Interests--In lieu of a statistical area as defined above, this
option is available when a credit union seeks to initially charter a
community credit union; to expand an existing community; or to
convert to a community charter, subject in any case to the same
population limit established for a statistical area. Under this
option, the credit union must demonstrate a sufficient level of
interaction or common interests among area residents to qualify the
area as a local community. For that purpose, an applicant must
submit for NCUA approval a narrative, supported by appropriate
documentation, establishing that the area's residents meet the
requirements of a local community.
To assist a credit union in developing its narrative, Appendix 6
of this Manual identifies criteria a narrative should address, and
which NCUA will consider in deciding a credit union's application
to: Initially charter a community credit union; to expand an
existing community, including by an adjacent area addition; or to
convert to a community charter. In any case, the credit union must
demonstrate, through its business and marketing plans, its ability
and commitment to serve the entire community for which it seeks NCUA
approval.
* * * * *
Appendix 6
Narrative Criteria To Identify a Well-Defined Local Communty
This Appendix applies when the community a federal credit union
(``FCU'') proposes to serve is not a ``presumptive community'',
under either option in chapter 2, section V.A.2. of Appendix B to
Part 701, and thus would not qualify as a well-defined local
community (``WDLC''). In that event, this Appendix prescribes the
criteria an FCU should address in the narrative it develops and
submits to the Board to demonstrate that residents of the community
it proposes to serve share common interests and/or interact with
each other. The narrative should address the criteria below as the
FCU deems appropriate, as well as any other criteria it believes are
persuasive, to establish to the Board's satisfaction the presence,
among residents of the proposed community, of indicia of common
interests and/or interaction sufficient to qualify the area as a
WDLC.
1. Central Economic Hub
The proposed community includes an economic hub. An economic hub
is evident when one political jurisdiction (city or county) within a
proposed local community has a relatively large percentage of the
community's population or is the primary location for employment.
The application needs to identify the major employers and their
locations within the proposed community.
------------------------------------------------------------------------
------------------------------------------------------------------------
Most Persuasive................... At least 25 percent of the workers
living in the proposed community
commute to work in the central
economic hub.
Persuasive........................ Over 15 percent of the workers
living in the proposed community
commute to work in the central
economic hub.
Not Persuasive.................... Less than 15 percent of the workers
living in the proposed community
commute to work in the central
economic hub.
------------------------------------------------------------------------
2. Quasi-Governmental Agencies
The existence of organizations such as economic development
commissions, regional planning boards, and labor or transportation
districts can be important factors to consider. The more closely
their service area matches the entire area, the greater the showing
of interaction and/or common interests.
------------------------------------------------------------------------
------------------------------------------------------------------------
Most Persuasive................... The quasi-governmental agency covers
the proposed community exclusively
and in its entirety, derives its
leadership from the area,
represents collaboration that
transcends traditional county
boundaries, and has meaningful
objectives that advance the
residents' common interests in
economic development and/or
improving quality of life.
Persuasive........................ The quasi-governmental agency
substantially matches the proposed
community and carries out
objectives that affect the relevant
common interests for the entire
area's residents.
Not Persuasive.................... The quasi-governmental agency does
not match the proposed community
and carries out only incidentally
relevant objectives or carries out
meaningful objectives in localized
sections of the proposed community.
------------------------------------------------------------------------
[[Page 78754]]
3. Governmental Designations
Designation of the proposed community by a government agency as
a region or distinct district--such a regional transportation
district, a water district, or a tourism district--is a factor that
can be considered in determining whether the area is a local
community. The more closely the designation matches the area's
geographic boundaries, the greater the value of that evidence in
demonstrating interaction and/or common interests.
------------------------------------------------------------------------
------------------------------------------------------------------------
Most Persuasive................... A division of a federal or state
agency specifically designates the
proposed service area as its area
of coverage or as a target area for
specific programs.
Persuasive........................ A division of a federal or state
agency designates a regional area
that includes the coverage area,
but offers special programs
tailored to the common interests
shared by the residents of the
proposed service area.
Not Persuasive.................... A division of a federal or state
agency designates an area as a
coverage area that encompasses
several local communities.
------------------------------------------------------------------------
4. Shared Public Services/Facilities
The existence of shared services and facilities, such as police,
fire protection, park districts, public transportation, airports, or
public utilities, can contribute to a finding that an area is a
community. The more closely the service area matches the geographic
boundaries of the community, and the higher the percentage of
residents throughout the community using those services or
facilities, the more valuable the data.
------------------------------------------------------------------------
------------------------------------------------------------------------
Most Persuasive................... Statistical evidence documents how
residents from the entire proposed
service area mutually benefit from
a public facility.
Formal agreements exist that
transcend traditional county lines
and provide for a common need
shared by all of the residents,
such as common police or fire
protection.
Persuasive........................ Public facilities exist that cross
county lines and cover the majority
of the area's population, but do
not cover the area in its entirety.
Not Persuasive.................... The applicant cites public
facilities that serve areas that do
not correlate with the proposed
service area.
------------------------------------------------------------------------
5. Hospitals and Major Medical Facilities
Data on medical facilities should include admittance or
discharge statistics providing the ratio of use by residents of each
political jurisdiction. The greater the percentage of use by
residents throughout the proposed community, the higher the value of
this data in showing interaction. The application can also support
the importance of an area hospital with documentation that
correlates the facility's target area with the proposed local
community and/or discusses the relative distribution of hospitals
over a larger area.
------------------------------------------------------------------------
------------------------------------------------------------------------
Most Persuasive................... The applicant provides statistics
demonstrating residents from
throughout the proposed community
use hospitals in the major
population or employment center.
Persuasive........................ Statistical data are not available,
but the application demonstrates
through other documentation a
medical facility is the only viable
option for a significant portion of
the proposed community's residents.
Not Persuasive.................... The area has multiple health care
facilities at geographically
dispersed locations with
duplicative services.
------------------------------------------------------------------------
6. Colleges and Universities
College enrollment data can be a useful factor in establishing a
local community. The higher the percentages of student enrollment at
a given campus by residents throughout each part of the community,
the greater the value in showing interaction. Additionally, the
greater the participation by the college in community initiatives
(e.g., partnering with local governments), and the greater the
service area of these initiatives, the stronger the value of this
factor.
------------------------------------------------------------------------
------------------------------------------------------------------------
Most Persuasive................... The application provides statistical
data showing the institutions of
higher learning cited attract
significant numbers of students
from throughout the proposed
community.
Persuasive........................ The statistical data regarding where
students live is either
inconclusive or unavailable.
However, qualitative information
exists to demonstrate the
institutions' relevance to the
entire proposed community, such as
unique educational initiatives to
support economic objectives
benefiting all residents and/or
partnerships with local businesses
or high schools.
Not Persuasive.................... The statistical data tends to
support the institutions recruit
students from a broad based area
transcending the proposed
community's boundaries.
------------------------------------------------------------------------
7. Mutual Aid Agreements
The existence of written agreements among law enforcement and
fire protection agencies in the area to provide services across
multiple jurisdictions can be an important factor.
------------------------------------------------------------------------
------------------------------------------------------------------------
Most Persuasive................... The mutual aid agreements cover the
proposed community exclusively and
in its entirety, represents
collaboration that transcends
political boundaries such as city
or county limits.
Persuasive........................ The mutual aid agreements
substantially matches the proposed
community.
Not Persuasive.................... The mutual aid agreements do not
match the proposed community.
------------------------------------------------------------------------
8. Organizations and Clubs
The more closely the service area of an organization or club
matches the proposed community's boundaries, and the greater the
percentage of membership and services throughout the proposed
community, the more relevant the data.
[[Page 78755]]
------------------------------------------------------------------------
------------------------------------------------------------------------
Most Persuasive................... Statistical data supports that
organizations with meaningful
objectives serve the entire
proposed community.
Persuasive........................ Other qualitative documentation
exists to support that
organizations with meaningful
objectives serve the entire
proposed community.
Not Persuasive.................... The applicant lists organizations
that either do not cover the
proposed community in its entirety
or have objectives that are too
limited to have a meaningful impact
on the residents' common interests.
------------------------------------------------------------------------
9. Community Newspaper
A newspaper that is widely read in an area can be an indication
of common interests. The higher the household penetration
circulation figures throughout the area, the greater the value in
showing common interests. Circulation data may include print copies
as well as on-line access.
------------------------------------------------------------------------
------------------------------------------------------------------------
Most Persuasive................... Statistical evidence indicates a
significant portion of residents
from throughout the proposed
community read the local general
interest newspaper. The paper has
local stories focusing on the
proposed community and has a
marketing target area consistent
with the proposed community
boundaries.
Persuasive........................ Local newspapers and periodicals
specifically cater to the proposed
community.
Not Persuasive.................... The area lacks a general newspaper
that covers the proposed community.
There are no specialized
publications catering to the entire
proposed community.
------------------------------------------------------------------------
10. Entertainment and Sporting Events
Data to show the percentage of residents from each political
jurisdiction who attend the events. The higher the percentage of
residents from throughout the proposed community, the stronger the
evidence of interaction. For sporting events, as well as some
entertainment events, data on season ticket holders and memberships
may be available. As with overall attendance figures, the higher the
percentage of residents from throughout the proposed community, the
stronger the evidence of interaction.
------------------------------------------------------------------------
------------------------------------------------------------------------
Most Persuasive................... Statistical data exist to support
that the venue attracts residents
from throughout the proposed
community.
Persuasive........................ Statistical evidence is not
available, but other qualitative
information documents the
importance the venue has for the
proposed community.
Not Persuasive.................... The applicant lists local venues
without discussing where users
originate from or otherwise
documenting the relevance for the
residents of the entire area.
------------------------------------------------------------------------
11. Local Television and Radio Stations
A television or radio station broadcasting in an area can be an
indication of common interests. Data on viewership or listenership
in the proposed community can support the existence of a community.
------------------------------------------------------------------------
------------------------------------------------------------------------
Most Persuasive................... Statistical evidence indicates a
significant portion of residents
from throughout the proposed
community view or listen to the
local television and radio
stations. The media has local
stories focusing on the proposed
community and has a marketing
target area consistent with the
proposed community boundaries.
Persuasive........................ The television and radio stations
provide news and sports coverage
specifically catering to the
proposed community.
Not Persuasive.................... The area lacks television or radio
stations serving the proposed
community.
------------------------------------------------------------------------
12. Shopping
The narrative must identify the location of the major shopping
centers and malls and include the percentage of shoppers coming from
each part of the community. The larger the percentage of shoppers
from throughout the community, the stronger the case for
interaction. While of lesser value than the shopping data,
identification of the shopping center's target area can be
persuasive. The target area should closely match the geographic
boundaries of the proposed community.
------------------------------------------------------------------------
------------------------------------------------------------------------
Most Persuasive................... The application provides statistics
from a reliable third party source
that demonstrates the major
shopping facility cited in the
application is the major shopping
facility for the residents of the
entire area.
Persuasive........................ The applicant provides documentation
supporting how the area's shopping
facilities cluster within the
area's hub and residents do not
have other realistic alternatives
to meet their shopping needs.
Not Persuasive.................... The applicant lists large shopping
facilities without providing
statistics or other documentation
that demonstrates relevance to the
proposed community.
------------------------------------------------------------------------
13. Geography
Some communities face varying degrees of geographic isolation.
As such, travel outside the community can be limited by mountain
ranges, forests, national parks, deserts, bodies of waters, etc.
This factor, and the relative degree of isolation, may help bolster
a finding of interaction or common interests.
------------------------------------------------------------------------
------------------------------------------------------------------------
Most Persuasive................... Area is geographically isolated and/
or distinct from immediate
surrounding area.
Persuasive........................ Area has geographic commonalities
that influence other aspects of the
residents' lives (i.e., tourism,
allocation of government
resources).
Not Persuasive.................... The area's geographic features do
not appear to influence other
social or economic characteristics
of the area.
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[[Page 78756]]
[FR Doc. 2016-26921 Filed 11-8-16; 8:45 am]
BILLING CODE 7535-01-P