Federal Register / Vol. 69, No. 188 / Wednesday, September 29, 2004 / Rules and Regulations 58039

(1) Contain no more than a Type A 

quantity of radioactive material; and

* * * * *

§ 71.41 [Corrected]

■ 6. On page 3794, first column, in 

§ 71.41, paragraph (a), seventh line, 

‘‘105’’ is corrected to read ‘‘105.’’

§ 71.51 [Corrected]

■ 7. On page 3794, third column, in 

§ 71.51, paragraph (d), third line, ‘‘105’’

is corrected to read ‘‘105.’’

■ 8. On page 3800, in Appendix A to part 

71, Paragraphs I and IV(b), and in Tables 

A–1, A–3 and A–4, beginning on page 

3801, are corrected to read as follows: 

Appendix A to Part 71—Determination 

of A1 and A2

I. Values of A1 and A2 for individual 

radionuclides, which are the bases for many 

activity limits elsewhere in these 

regulations, are given in Table A–1. The 

curie (Ci) values specified are obtained by 

converting from the Terabecquerel (TBq) 

value. The Terabecquerel values are the 

regulatory standard. The curie values are for 

information only and are not intended to be 

the regulatory standard. Where values of A1

and A2 are unlimited, it is for radiation 

control purposes only. For nuclear criticality 

safety, some materials are subject to controls 

placed on fissile material.

* * * * *

IV. * * * 

b. For normal form radioactive material, 

the maximum quantity transported in a Type 

A package is as follows:

ΣB(i)/A2 (i) ≤ 1

where B(i) is the activity of radionuclide i, 

and A2(i) is the A2 value for radionuclide 

i.

* * * * *

Table A–1.—A1 and A2 Values for 

Radionuclides 

A new footnote reference ‘‘b’’ is added to 

the headings of the fourth and sixth columns, 

titled A1(Ci)b and A2(Ci)b, and new footnote 

‘‘b’’ text is added to the end of Table A–1 to 

read as follows: b The values of A1 and A2 in Curies (Ci) 

are approximate and for information only; 

the regulatory standard units are 

Terabecquerels (TBq), (see Appendix A to 

part 71—Determination of A1 and A2, Section 

I.). 

For radionuclide Bi-205, the specific 

activity is corrected to 1.5 × 103 TBq/g. 

For radionuclide Cm-248, the specific 

activity is corrected to 1.6 × 10¥4 TBq/g. 

For radionuclide Eu-150 (long lived), the 

A1 value is corrected to 7.0 × 10¥1 TBq. 

For radionuclide Te-132(a), the specific 

activity is corrected to 3.0 × 105 Ci/g.

* * * * *

Table A–3.—General Values for A1 and A2

[Amended] 

The value under the sixth column 

‘‘Activity concentration for exempt material 

(Bq/g)’’ for the first row ‘‘Only beta or gamma 

emitting radionuclides are known to be 

present’’ is corrected to read 1 × 101. 

The value under the seventh column 

‘‘Activity limits for exempt consignments 

(Bq)’’ for the first row ‘‘Only beta or gamma 

emitting radionuclides are known to be 

present.’’ is corrected to read 1 × 104. 

Table A–4.—Activity-Mass Relationships for 

Uranium 

The value under the third column 

‘‘Specific Activity | Ci/g’’ for the ‘‘90’’ row 

‘‘Uranium Enrichment wt% U-235 present’’

is corrected to read 5.8 × 10¥5.

Dated at Rockville, Maryland, this 24th day 

of September, 2004.

For the Nuclear Regulatory Commission. 

Michael T. Lesar, 

Chief, Rules and Directives Branch, Division 

of Administrative Services, Office of 

Administration.

[FR Doc. 04–21763 Filed 9–28–04; 8:45 am] 

BILLING CODE 7590–01–P

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Parts 701 and 742 

Federal Credit Union Ownership of 

Fixed Assets

AGENCY: National Credit Union 

Administration.

ACTION: Final rule.

SUMMARY: The National Credit Union 

Administration (NCUA) Board is issuing 

final revisions to its fixed asset rule. The 

fixed asset rule governs Federal credit 

union (FCU) ownership of fixed assets 

and, among other things, limits 

investment in fixed assets to five 

percent of an FCU’s shares and retained 

earnings. This final rule clarifies and 

reorganizes the requirements of the 

current rule to make it easier to 

understand. The only substantive 

changes in the final rule are to: 

Eliminate the requirement that an FCU, 

when calculating its investment in fixed 

assets, include its investments in any 

entity that holds fixed assets used by the 

FCU; and establish a time frame for 

submission of requests for waiver of the 

requirement for partial occupation of 

premises acquired for future expansion.

DATES: This rule is effective October 29, 

2004.

FOR FURTHER INFORMATION CONTACT: Paul 

Peterson, Staff Attorney, Division of 

Operations, Office of General Counsel, 

at the above address or telephone: (703) 

518–6540.

SUPPLEMENTARY INFORMATION: 

A. Background 

The Federal Credit Union Act 

authorizes an FCU to purchase, hold, 

and dispose of property necessary or 

incidental to its operations. 12 U.S.C. 

1757(4). Generally, an FCU may only 

invest in property it intends to use to 

transact credit union business, that is, to 

support its internal operations or serve 

its members. 12 CFR 721.3(d). NCUA’s 

fixed asset rule limits an FCU’s 

investment in fixed assets and imposes 

requirements on the planning for, use 

of, and disposal of real property 

acquired for future expansion. 12 CFR 

701.36. 

The NCUA Board has a policy of 

continually reviewing NCUA 

regulations to ‘‘update, clarify and 

simplify existing regulations and 

eliminate redundant and unnecessary 

provisions.’’ NCUA Interpretive Ruling 

and Policy Statement (IRPS) 87–2, 

Developing and Reviewing Government 

Regulations. As a result of the NCUA’s 

2003 review, the Board determined that 

the fixed asset rule should be updated. 

In April, 2004, the Board published its 

proposed updates for public comment. 

69 FR 21439 (April 21, 2004). 

B. Section-by-Section Analysis of the 

Final Rule 

This final rule does not vary 

significantly from the proposed rule. 

Like the proposed rule, the only 

substantive revisions in the final rule 

from the current rule are to (1) eliminate 

the requirement that an FCU, when 

calculating its investment in fixed 

assets, include its investments in any 

entity that holds fixed assets used by the 

FCU, and (2) establish a time frame for 

submission of requests for waiver of the 

requirement for partial occupation of 

premises acquired for future expansion. 

The final rule also reorganizes the 

paragraph structure and clarifies the 

provisions governing an FCU’s plans for 

future expansion into fixed assets. A 

section-by-section analysis of these 

revisions follows. 

Section 701.36(a) 

The final rule renumbers § 701.36(c), 

Investment in Fixed Assets, as 

§ 701.36(a). The final rule retains the 

requirement that FCUs with $1,000,000 

or more in assets cannot invest in fixed 

assets if the investment would cause the 

aggregate of all the FCU’s fixed assets to 

exceed five percent of the FCU’s shares 

and retained earnings. The final rule 

retains the waiver process that allows 

FCUs to apply for a waiver of the five 

percent limitation and reorganizes the 

waiver provisions to simplify them and 

make them easier to follow.

58040 Federal Register / Vol. 69, No. 188 / Wednesday, September 29, 2004 / Rules and Regulations 

Section 701.36(b) 

The final rule renumbers § 701.36(d), 

Premises, to § 701.36(b). This paragraph 

contains provisions on real property 

owned by an FCU that is not currently 

used to transact credit union business. 

The final rule changes the title of this 

paragraph to ‘‘Premises Not Currently 

Used to Transact Credit Union 

Business’’ to better indicate its scope. 

The final rule clarifies that requests 

for waiver of the partial occupation 

requirement must be in writing and 

submitted to NCUA within 30 months of 

acquisition of the premises. The final 

rule also clarifies that partial use occurs 

when FCU staff occupy some part of the 

space on a full-time basis. 

The final clarifies that, after real 

property acquired for future expansion 

has been held for one year, a board 

resolution with definitive plans for full 

utilization must be available for 

inspection by an NCUA examiner. The 

final rule also clarifies that full use 

occurs when the premises are 

completely occupied by the FCU, or by 

some combination of the FCU, credit 

union service corporations (CUSOs), 

and credit union vendors, on a full-time 

basis. CUSO and vendor activities must 

be primarily to support the operations of 

the FCU or serve its members.

The final rule clarifies and simplifies 

the provisions on abandoned premises. 

The final rule revises the provision that 

an FCU ‘‘shall endeavor to dispose of 

‘‘abandoned premises’’ at a price 

sufficient to reimburse the FCU for its 

investment and costs of acquisition’’ to 

state that an FCU must seek fair market 

value for the property. 

Section 701.36(c) 

The final rule renumbers § 701.36(e), 

Prohibited Transactions, to § 701.36(c). 

The rule retains the prohibition on an 

FCU acquiring or leasing property 

(without the prior approval of NCUA) 

from the FCU’s insiders, their family 

members, or corporations and 

partnerships in which the insider has a 

significant ownership interest. To 

ensure that all business forms are 

covered, the rule adds limited liability 

companies and ‘‘other entities’’ to this 

list. 

Section 701.36(d) 

FCUs that qualify for the Regulatory 

Flexibility (RegFlex) Program are 

exempt from the five percent limitation 

on investment in fixed assets. 12 CFR 

part 742. Accordingly, the final rule 

adds a new paragraph (d) to § 701.36 

with a cross-reference to the RegFlex 

Program. The rule also reiterates that 

FCUs that once qualified for the RegFlex 

Program and its associated exemptions 

but no longer qualify for RegFlex must 

comply with all the provisions of the 

fixed asset rule. 

Section 701.36(e) 

The final rule renumbers § 701.36(b), 

Definitions, to § 701.36(e). The rule 

retains the definition of ‘‘investment in 

fixed assets’’ found in subparagraph (4), 

but deletes the subparagraph (4)(iv) 

portion of the definition that includes 

any investments in, and loans to, a 

partnership or corporation, including a 

CUSO, that holds any fixed assets used 

by the FCU. This portion of the 

definition is unnecessary and, in some 

cases, may cause investment in fixed 

assets to be overstated. 

The final rule revises the definition of 

‘‘retained earnings’’ in subparagraph (7) 

to mean ‘‘undivided earnings, regular 

reserve, reserve for contingencies, 

supplemental reserves, reserve for 

losses, and other appropriations from 

undivided earnings as designated by 

management or the Administration.’’

The revision recognizes that reserve 

accounts may be created out of 

undivided earnings consistent with 

generally accepted accounting 

principles. The rule also separates the 

definitions of ‘‘shares’’ and ‘‘retained 

earnings’’ and alphabetizes all the 

definitions to make them easier to 

locate.

Section 742.4(a) 

The final rule includes a technical 

amendment to the RegFlex Program rule 

reflecting the restructuring of the fixed 

asset rule. 

C. Public Comments 

NCUA received 12 comment letters 

regarding the proposed rule. Almost all 

the commenters expressed general 

agreement with the proposed rule, and, 

in particular, the clarifications and 

simplifications. Most of the commenters 

expressed appreciation for NCUA’s 

policy of reviewing its regulations at 

least once every three years. Summaries 

of the comments and the Board’s 

reaction follow. 

Amendment to Definition of Fixed Asset 

Almost all the commenters agree with 

the change in the definition of fixed 

asset to exclude investments in entities 

that hold fixed assets used by the FCU. 

One commenter believes that lease 

payments for fixed assets should also be 

excluded from the calculation of the 

fixed asset limit. The Board does not 

want to exclude lease payments. The 

Board’s longstanding position is that an 

FCU can over-invest in fixed assets 

through binding lease arrangements just 

as it can over-invest through outright 

ownership. See, for example, the 

preamble to the 1989 final fixed asset 

rule. 54 FR 18466 (May 1, 1989). 

Clarification of ‘‘Partially Occupy’’ and 

‘‘Fully Occupy’’ and Associated Time 

Frames 

The proposed rule sought to clarify 

that premises were considered partially 

occupied when the credit union is using 

some part of the space on a full-time 

basis and fully occupied when the 

credit union, or a combination of the 

credit union, CUSOs, or vendors, use 

the entire space on a full-time basis. 

Almost all the commenters agreed that 

the clarifications were helpful. 

Most commenters believe it is 

reasonable that credit unions intending 

to seek a waiver of the requirement for 

partial occupation of premises within 

three years should file the request for 

waiver within 30 months. One 

commenter asks that, instead of 30 

months, the request for waiver be filed 

within 35 months, one month before the 

expiration of the three-year period. One 

commenter objects to the waiver 

provision and believes it should be 

eliminated. This commenter is 

particularly concerned that a credit 

union that loses its eligibility for the 

RegFlex Program should not be granted 

a waiver. 

The final rule retains the 30-month 

notice requirement. Thirty months 

seems a reasonable amount of time to 

prepare a waiver request. The Board 

also believes that the Regional Director 

should have flexibility to grant waivers 

in appropriate cases, and the final rule 

retains this waiver authority. 

Several commenters believe NCUA 

should reduce or eliminate the rule’s 

requirements for both partial and full 

occupation, but particularly for full 

occupation. These commenters contend 

it is difficult for a credit union to obtain 

a building or lease space that is a perfect 

fit for the credit union’s current and 

near term plans and the rule’s 

occupation requirements restrict credit 

union growth and may be 

anticompetitive. One commenter cites 

the perceived difficulty rural and lowincome credit unions have in finding 

appropriate office space, and another 

cites the perceived difficulty a 

continuing credit union in a merger has 

in balancing reduced staffing needs with 

the buildings it inherits in a merger. 

Another commenter stated that office 

construction projects take more than 

three years from first planning to 

building occupation and that it is 

‘‘impractical to write a regulation that 

will inevitably require a waiver.’’ A few 

commenters also believe credit unions

Federal Register / Vol. 69, No. 188 / Wednesday, September 29, 2004 / Rules and Regulations 58041

eligible for the RegFlex program should 

be exempt from any requirements to 

fully occupy a building because of the 

lack of safety and soundness concerns 

for these credit unions. Two 

commenters cite with approval the 

Office of the Comptroller of the 

Currency’s (OCC’s) approach to real 

estate owned by national banks. The 

OCC requires partial occupation of 

bank-owned real estate but not always 

full occupation.

The Board recognizes the difficulties 

associated with the management of real 

estate and other fixed assets but believes 

that the fixed asset rule, as revised by 

this rulemaking, provides maximum 

flexibility to FCUs within the bounds of 

the law and safety and soundness. 

Federal credit unions are chartered for 

the purpose of providing financial 

services to their members and it is not 

permissible for them to engage in real 

estate activities that do not support that 

purpose. 

While it may sometimes be difficult 

for credit unions to find real estate to fit 

their needs or to downsize real estate 

holdings following a merger, the Board 

believes the rule provides enough 

flexibility to meet various 

circumstances. The rule allows an FCU 

to own or lease premises it will not 

occupy immediately but needs for 

future expansion and gives FCUs 

significant leeway on how to achieve 

both partial and full occupation. For 

example, there is no set time period 

within which an FCU must achieve full 

occupation. While the rule requires an 

FCU to develop a definitive plan for full 

occupation, it has an entire year after it 

acquires property to develop the plan. 

Further, with regard to partial 

occupation, the rule permits FCUs to 

hold real estate for significant periods of 

time—up to three years—before the FCU 

has to occupy any of the space. If an 

FCU needs additional time beyond three 

years to achieve partial occupation, it 

may request approval for additional 

time from its Regional Director. The 

Board believes that it would be unusual, 

even when an FCU is constructing its 

own premises, for the FCU not to 

achieve partial occupation within three 

years. Still, if the construction process 

will take more than three years, a waiver 

is appropriate and the credit union 

should obtain it before binding itself 

contractually to the project. 

The Board is aware that the Office of 

the Comptroller of the Currency has a 

different view of the powers of national 

banks under the National Bank Act, but 

the Board has concluded, for both legal 

and safety and soundness reasons, that 

FCUs may not lease real estate to 

unrelated third parties indefinitely. As 

noted above, the acquisition of real 

estate and other fixed assets must 

support the provision of financial 

services to credit union members and 

the Board believes the rule provides 

significant and sufficient flexibility for 

FCUs in how they address any excess 

capacity they may have in fixed assets 

they acquire. 

Fixed Asset Limitation 

The current rule limits an FCU’s fixed 

assets to five percent of shares and 

retained earnings. Credit unions eligible 

for the RegFlex Program are exempt 

from this limitation and there is a 

waiver process that other credit unions 

may use to avoid the five percent 

limitation. 

A few commenters are concerned 

with the proposed rule’s clarification 

that credit unions that lose their 

eligibility for the regulatory flexibility 

program must again comply with the 

fixed asset rule’s five percent limitation. 

One commenter suggests that a credit 

union that loses its status have up to 

five years to dispose of fixed assets, 

citing a similar time frame in the rule 

for disposition of abandoned premises. 

Another commenter suggests that credit 

unions with less than 9% net worth 

should have their RegFlex Program 

status extended for purposes of 

compliance with the fixed asset 

limitation even if they lose their 

RegFlex status for other purposes. One 

commenter suggests that NCUA apply 

the 5% limit on fixed assets to credit 

unions that have a 7% or less net worth 

ratio, and that NCUA modify its rule to 

increase the limit in direct proportion to 

the amount that the net worth ratio 

exceeds 7%. Another commenter 

believes the ratio of fixed assets to a 

combination of deposits and capital is 

not a meaningful test of prudent 

management. 

In addressing these comments, the 

Board first wishes to clarify a statement 

made in the preamble of the proposed 

rule. The preamble stated that an FCU 

eligible for the RegFlex Program with 

fixed assets exceeding five percent of 

shares and retained earnings and that 

subsequently loses its RegFlex eligibility 

must either reduce its fixed asset 

holdings below the five percent level or 

obtain a waiver. The RegFlex Program 

regulation, however, has a grandfather 

provision that states:

Any action by the credit union under the 

RegFlex authority will be grandfathered. Any 

actions subsequent to losing the RegFlex 

authority must meet NCUA’s regulatory 

requirements. This does not diminish 

NCUA’s authority to require a credit union to 

divest its investments or assets for 

substantive safety and soundness reasons.

12 CFR 742.8. Accordingly, an FCU 

that loses its RegFlex eligibility and 

finds itself with fixed assets exceeding 

five percent of shares and retained 

earnings does not have to divest itself of 

any fixed assets unless NCUA 

affirmatively orders it to do so for safety 

and soundness reasons. If the FCU 

wants to acquire additional fixed assets, 

the FCU will need a waiver from the 

Regional Director before the acquisition 

if, after acquisition, the FCU would 

exceed the five percent limit. The Board 

has amended the final rule text to reflect 

this more clearly. 

As stated above, a few commenters 

request modification of the five percent 

limit for FCUs that lose their RegFlex 

eligibility. The Board does not believe 

these credit unions need any special 

variance from the five percent limit. A 

Regional Director has authority to grant 

waivers and set conditions on those 

waivers. For FCUs that lose RegFlex 

eligibility and have or want fixed assets 

that would put them over the five 

percent limit, a Regional Director has 

authority to establish appropriate fixed 

asset levels on a case-by-case basis. 

D. 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 

(those credit unions under ten million 

dollars in assets). NCUA believes that, 

under the current rule, the only burden 

imposed on small credit unions is the 

requirement to submit a waiver request 

if investment in fixed assets exceeds 5% 

of retained shares and earnings. There 

are presently about 4,500 small, 

federally-insured credit unions. Each 

year, only about ten of these credit 

unions submit a waiver request, and 

NCUA estimates each waiver request 

takes about ten hours to prepare. 

Accordingly, and as stated in the 

preamble to the proposed rule, NCUA 

does not believe the rule imposes a 

significant economic impact on a 

substantial number of small entities and 

no flexibility analysis is required. 

NCUA received no comments about this 

conclusion. 

Paperwork Reduction Act 

The proposed rule requested 

comment on the information collection 

requirements contained in the fixed 

asset rule and advised that NCUA was 

seeking the reinstatement of Collection 

of Information, FCU Ownership of Fixed 

Assets, Control Number 3133–0040. No 

comments were received. On July 7,

58042 Federal Register / Vol. 69, No. 188 / Wednesday, September 29, 2004 / Rules and Regulations 

2004, the Office of Management and 

Budget (OMB) approved the 

reinstatement of Control Number 3133–

0040, with revisions as proposed and an 

expiration date of July 31, 2007. 

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. This 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 rule does not 

constitute a policy that has federalism 

implications for purposes of the 

executive order. 

The Treasury and General Government 

Appropriations Act, 1999—Assessment 

of Federal Regulations and Policies on 

Families 

The 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, 1999, Pub. L. 105–

277, 112 Stat. 2681 (1998). 

Small Business Regulatory Enforcement 

Fairness Act 

The Small Business Regulatory 

Enforcement Act of 1996 (Pub. L. 104–

121) provides generally for 

congressional review of agency rules. A 

reporting requirement is triggered in 

instances where NCUA issues a final 

rule as defined by section 551 of the 

Administrative Procedure Act. 5 U.S.C. 

551. The Office of Management and 

Budget has determined that this rule is 

not a major rule for purposes of the 

Small Business Regulatory Enforcement 

Fairness Act of 1996.

List of Subjects 

12 CFR Part 701 

Credit unions. 

12 CFR Part 742 

Credit unions, Reporting and 

recordkeeping requirements.

By the National Credit Union 

Administration Board on September 23, 

2004. 

Mary Rupp, 

Secretary of the Board.

■ Accordingly, the NCUA amends 12 

CFR parts 701 and 742 as follows:

PART 701—ORGANIZATION AND 

OPERATION 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, 1759, 1761a, 1761b, 1766, 1767, 1782, 

1784, 1787, and 1789. Section 701.6 is also 

authorized by 31 U.S.C. 3717. Section 701.31 

is also authorized by 15 U.S.C. 1601 et seq., 

42 U.S.C. 1861 and 42 U.S.C. 3601–3610. 

Section 701.35 is also authorized by 42 

U.S.C. 4311–4312.

■ 2. Revise § 701.36 to read as follows:

§ 701.36 FCU ownership of fixed assets. 

(a) Investment in Fixed Assets. (1) No 

Federal credit union with $1,000,000 or 

more in assets may invest in any fixed 

assets if the investment would cause the 

aggregate of all such investments to 

exceed five percent of the credit union’s 

shares and retained earnings. 

(2) The NCUA may waive the 

prohibition in paragraph (a)(1) of this 

section. 

(i) A Federal credit union desiring a 

waiver must submit a written request to 

the NCUA regional office having 

jurisdiction over the geographical area 

in which the credit union’s main office 

is located. The request must describe in 

detail the contemplated investment and 

the need for the investment. The request 

must also indicate the approximate 

aggregate amount of fixed assets, as a 

percentage of shares and retained 

earnings, that the credit union would 

hold after the investment.

(ii) The regional director will inform 

the requesting credit union, in writing, 

of the date the request was received and 

of any additional documentation that 

the regional director might require in 

support of the waiver request. 

(iii) The regional director will 

approve or disapprove the waiver 

request in writing within 45 days after 

receipt of the request and all necessary 

supporting documentation. If the 

regional director approves the waiver, 

the regional director will establish an 

alternative limit on aggregate 

investments in fixed assets, either as a 

dollar limit or as a percentage of the 

credit union’s shares and retained 

earnings. Unless otherwise specified by 

the regional director, the credit union 

may make future acquisition of fixed 

assets only if the aggregate all of such 

future investments in fixed assets does 

not exceed an additional one percent of 

the shares and retained earnings of the 

credit union over the amount approved 

by the regional director. 

(iv) If the regional director does not 

notify the credit union of the action 

taken on its request within 45 calendar 

days of the receipt of the waiver request 

or the receipt of additional requested 

supporting information, whichever 

occurs later, the credit union may 

proceed with its proposed investment in 

fixed assets. The investment, and any 

future investments in fixed assets, must 

not cause the credit union to exceed the 

aggregate investment limit described in 

its waiver request. 

(b) Premises Not Currently Used To 

Transact Credit Union Business. (1) 

When a Federal credit union acquires 

premises for future expansion and does 

not fully occupy the space within one 

year, the credit union 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 credit union, or a combination 

of the credit union, CUSOs, or vendors, 

use the entire space on a full-time basis. 

CUSOs and vendors must be using the 

space primarily to support the credit 

union or to serve the credit union’s 

members. The credit union must make 

any plans for full occupation available 

to an NCUA examiner upon request. 

(2) When a Federal credit union 

acquires premises for future expansion, 

the credit union must partially occupy 

the premises within a reasonable period, 

not to exceed three years. Premises are 

partially occupied when the credit 

union is using some part of the space on 

a full-time basis. The NCUA may waive 

this partial occupation requirement in 

writing upon written request. The 

request must be made within 30 months 

after the property is acquired. 

(3) A Federal credit union must make 

diligent efforts to dispose of abandoned 

premises and any other real property 

not intended for use in the conduct of 

credit union business. The 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 credit union must publicly 

advertise the property for sale. Unless 

otherwise approved in writing by the 

NCUA, the credit union must complete 

the sale within five years of 

abandonment. 

(c) Prohibited Transactions. (1) 

Without the prior written approval of 

the NCUA, no federal credit union may 

invest in premises through an 

acquisition or a lease of one year or 

longer from any of the following: 

(i) A director, member of the credit 

committee or supervisory committee, or 

senior management employee of the 

federal credit union, or immediate 

family member of any such individual. 

(ii) A corporation in which any 

director, member of the credit 

committee or supervisory committee, 

Federal Register / Vol. 69, No. 188 / Wednesday, September 29, 2004 / Rules and Regulations 58043

official, or senior management 

employee, or immediate family 

members of any such individual, is an 

officer or director, or has a stock interest 

of 10 percent or more. 

(iii) A partnership, limited liability 

company, or other entity in which any 

director, member of the credit 

committee or supervisory committee, or 

senior management employee, or 

immediate family members of any such 

individual, is a general partner, or a 

limited partner or entity member with 

an interest of 10 percent or more.

(2) The prohibition contained in 

paragraph (c)(1) of this section also 

applies to a lease from any other 

employee if the employee is directly 

involved in investments in fixed assets 

unless the board of directors determines 

that the employee’s involvement does 

not present a conflict of interest. 

(3) All transactions with business 

associates or family members not 

specifically prohibited by this paragraph 

(c) must be conducted at arm’s length 

and in the interest of the credit union. 

(d) Regulatory Flexibility Program.

Federal credit unions that qualify for the 

Regulatory Flexibility Program provided 

for in part 742 of this chapter are 

exempt from the five percent limitation 

described in paragraph (a) of this 

section. For Federal credit unions 

eligible for the Regulatory Flexibility 

Program that subsequently lose 

eligibility: 

(1) Section 742.8 of this chapter 

provides that NCUA may require the 

credit union to divest any existing fixed 

assets for substantive safety and 

soundness reasons; and 

(2) The credit union may not make 

any new investments in fixed assets if, 

after the investment, the credit union’s 

total investments in fixed assets would 

exceed the five percent limitation 

described in paragraph (a) of this 

section. The regional director may 

waive this prohibition to allow for new 

investments. 

(e) Definitions—As used in this 

section: 

(1) Abandoned premises means real 

property previously used to transact 

credit union business but no longer 

used for that purpose and real property 

originally acquired for future expansion 

for which the credit union no longer 

contemplates such use. 

(2) Fixed assets means premises, 

furniture, fixtures and equipment. 

(3) Furniture, fixtures, and equipment

means all office furnishings, office 

machines, computer hardware and 

software, automated terminals, and 

heating and cooling equipment. 

(4) Investments in fixed assets means: 

(i) Any investment in improved or 

unimproved real property which is 

being used or is intended to be used as 

premises; 

(ii) Any leasehold improvement on 

premises; 

(iii) The aggregate of all capital and 

operating lease payments on fixed 

assets, without discounting 

commitments for future payments to 

present value; and 

(iv) Any investment in furniture, 

fixtures and equipment. 

(5) Immediate family member means 

a spouse or other family members living 

in the same household. 

(6) Premises means any office, branch 

office, suboffice, service center, parking 

lot, other facility, or real estate where 

the credit union transacts or will 

transact business. 

(7) Senior management employee

means the credit union’s chief executive 

officer (typically this individual holds 

the title of President or Treasurer/

Manager), any assistant chief executive 

officers (e.g., Assistant President, Vice 

President or Assistant Treasurer/

Manager) and the chief financial officer 

(Comptroller). 

(8) Shares means regular shares, share 

drafts, share certificates, other savings. 

(9) Retained earnings means 

undivided earnings, regular reserve, 

reserve for contingencies, supplemental 

reserves, reserve for losses, and other 

appropriations from undivided earnings 

as designated by management or the 

Administration.

PART 742—REGULATORY 

FLEXIBILITY PROGAM

■ 3. The authority citation for part 742 

continues to read as follows:

Authority: 12 U.S.C 1756 and 1766.

■ 4. Revise § 742.4(a) to read as follows:

§ 742.4 From what NCUA regulations will I 

be exempt? 

(a) RegFlex credit unions are exempt 

from the provisions of the following 

NCUA regulations without restrictions 

or limitations: § 701.25, § 701.32(b) and 

(c), § 701.36(a), § 703.5(b)(1)(ii) and (2), 

§ 703.12(c), § 703.16(b), and § 723.7(b) of 

this chapter.

* * * * *

[FR Doc. 04–21757 Filed 9–28–04; 8:45 am] 

BILLING CODE 7535–01–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. 2002–NM–126–AD; Amendment 

39–13808; AD 2004–20–03] 

RIN 2120–AA64 

Airworthiness Directives; Bombardier 

Model DHC–8–101, –102, –103, –106, 

–201, –202, –301, –311, and –315 

Airplanes

AGENCY: Federal Aviation 

Administration, DOT.

ACTION: Final rule.

SUMMARY: This amendment adopts a 

new airworthiness directive (AD), 

applicable to all Bombardier Model 

DHC–8–101, –102, –103, –106, –201, 

–202, –301, –311, and –315 airplanes. 

This amendment requires a detailed 

inspection of the wing leading edge deicer boots to determine if they comply 

with certain patch limits in the critical 

zone; and corrective action, if necessary. 

This action is necessary to prevent 

reduced aerodynamic smoothness of the 

wing leading edge de-icer boots and 

possible reduced stall margin, which 

could result in a significant increase in 

stall speeds, leading to a possible stall 

prior to activation of the stall warning. 

This action is intended to address the 

identified unsafe condition.

DATES: Effective November 3, 2004.

ADDRESSES: The service information 

referenced in this AD may be obtained 

from Bombardier, Inc., Bombardier 

Regional Aircraft Division, 123 Garratt 

Boulevard, Downsview, Ontario M3K 

1Y5, Canada. This information may be 

examined at the Federal Aviation 

Administration (FAA), Transport 

Airplane Directorate, Rules Docket, 

1601 Lind Avenue, SW., Renton, 

Washington; or at the FAA, New York 

Aircraft Certification Office, 1600 

Stewart Avenue, suite 410, Westbury, 

New York.

FOR FURTHER INFORMATION CONTACT: Ezra 

Sasson, Aerospace Engineer, Systems 

and Flight Test Branch, ANE–172, FAA, 

New York Aircraft Certification Office, 

1600 Stewart Avenue, suite 410, 

Westbury, New York, 11590; telephone 

(516) 228–7320; fax (516) 794–5531.

SUPPLEMENTARY INFORMATION: A 

proposal to amend part 39 of the Federal 

Aviation Regulations (14 CFR part 39) to 

include an airworthiness directive (AD) 

that is applicable to all Bombardier 

Model DHC–8–101, –102, –103, –106, 

–201, –202, –301, –311, and –315 

airplanes was published in the Federal 

Register on December 18, 2003 (68 FR