Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Rules and Regulations 80677 

1NCUA’s geo-coding software, known within the 

agency as the ‘‘Low-Income Designation Assessment 

Tool,’’ is currently a stand-alone software program 

developed by NCUA’s Office of the Chief 

Information Officer with guidance from regional 

staff experienced in low-income designation. 

Regional staff as well as Economic Development 

Specialists currently use the tool as needed based 

on requests from credit unions. Eventually, the 

same software rules will be embedded into the 

NCUA AIRES examination software. The current 

version performs 30 different ratio calculations for 

each member based on a variety of factors and data 

to determine whether the member meets the lowincome definition. The variety of ratios is expansive 

in order to provide all of the possible options for 

members to meet the definition. Factors recognize 

the following: (1) Data sources include both 

decennial income data as well as American 

Community Survey income data; (2) different data 

is incorporated for metro vs. non-metro geographic 

areas; and (3) ratio options include comparisons of 

census tract and block group income data, to zip 

code, county, MSA, state, and national data, plus 

comparisons of county income data to CBSA, state, 

and national income data. 

Secretary under delegated authority, 

December 14, 2010. 

Robert deV. Frierson, 

Deputy Secretary of the Board. 

[FR Doc. 2010–31824 Filed 12–22–10; 8:45 am] 

BILLING CODE P 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Part 701 

RIN 3133–AD75 

The Low-Income Definition 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Final rule. 

SUMMARY: NCUA is amending the 

definition of ‘‘low-income members’’ to 

clarify that, in determining if a credit 

union qualifies for a low-income 

designation, the comparison of credit 

union data, whether individual or 

family income data, must be with 

statistical data for the same category. 

The amendment will clarify the 

intention of the original regulatory text 

so it is consistent with the geo-coding 

software the agency uses to make the 

low-income credit union (LICU) 

designation. 

DATES: Effective December 23, 2010 this 

rule finalizes without change, the 

interim final rule published on August 

5, 2010, 75 FR 47171 (Aug. 5, 2010). 

That interim rule was effective upon 

publication on August 5, 2010. 

FOR FURTHER INFORMATION CONTACT: 

Regina Metz, Staff Attorney, Office of 

General Counsel, National Credit Union 

Administration, 1775 Duke Street, 

Alexandria, Virginia 22314–3428, or 

telephone: (703) 518–6540. 

SUPPLEMENTARY INFORMATION: 

Background 

The Federal Credit Union Act (Act) 

authorizes the NCUA Board (Board) to 

define ‘‘low-income members’’ so that 

credit unions with a membership 

consisting of predominantly low-income 

members can benefit from certain 

statutory relief and receive assistance 

from the Community Development 

Revolving Loan Fund. 12 U.S.C. 

1752(5), 1757a(b)(2)(A), 1757a(c)(2)(B), 

1772c–1. This authority has been 

implemented in § 701.34 of NCUA 

regulations, known as the low-income 

rule. 12 CFR 701.34. In April 2008, the 

Board proposed substantial changes to 

the rule, which had previously been 

based on measuring median household 

income, with geographic differentials 

for certain areas with higher costs of 

living. 73 FR 22836 (April 28, 2008). In 

brief, the Board proposed to, and as 

adopted in the final rule, did replace 

median household income with median 

family income or median earnings for 

individuals as better measures, more 

flexible, and in line with standards used 

by other Federal agencies. 73 FR 71909 

(Nov. 26, 2008). 

As discussed in the preamble to the 

final rule, NCUA also undertook as part 

of the regulatory changes to facilitate the 

low-income designation process by 

eliminating the requirement for credit 

unions to apply for the designation. 

NCUA is in the process of implementing 

geo-coding software to make the 

calculation automatically for credit 

unions during the examination process. 

NCUA will make the determination of 

whether a majority of an FCU’s members are 

low-income based on data it obtains during 

the examination process. This will involve 

linking member address information to 

publicly available information from the U.S. 

Census Bureau to estimate member earnings. 

Using automated, geo-coding software, 

NCUA will use member street addresses 

collected during FCU examinations to 

determine the geographic area and 

metropolitan area for each member account. 

NCUA will then use income information for 

the geographic area from the Census Bureau 

and assign estimated earnings to each 

member. 

73 FR at 71910–11. NCUA’s software 

ensures that the same categories of data 

available for member income at a 

particular credit union are compared 

with like categories of statistical data on 

income from the Census Bureau. In 

particular, individual member earnings 

information is compared to median 

individual earnings data and family 

income information is compared to 

median family income data.1

The final rule in November 2008 also 

provided credit unions, as an alternative 

to relying on NCUA’s geo-coding 

software, the option of providing actual 

income information about their 

members as a basis for qualifying as a 

LICU. Confusion has arisen regarding 

the appropriate comparison of actual 

member information and statistical data 

from the Census Bureau, prompting the 

need for this clarifying amendment. The 

confusion arises from a discussion in 

the preamble to the final rule, where the 

Board stated: 

The rule also provides an alternative basis 

for an FCU to qualify for a LICU designation. 

An FCU may be able to demonstrate the 

actual income of its members based on data 

it has, for example, from loan applications or 

surveys of its members. An FCU may qualify 

as a LICU if it can establish a majority of its 

members meet the low-income formula. For 

example, an FCU with 1,000 members may 

be able to show the actual income of 501 or 

more of its members is equal to or less than 

80% of the MFI for the metropolitan area(s) 

where they live. As a practical matter, the 

Board thinks few FCUs will need this option 

because NCUA’s approach of matching 

member residential information with Census 

Bureau income information will provide an 

estimate very close to members’ actual 

income. 

73 FR at 71911. The rule provides 

median family income or median 

individual earnings as alternatives and, 

as noted above, NCUA’s geo-coding 

software compares like categories of 

data. Unfortunately, the above-quoted 

statement in the preamble indicated 

that, as an alternative to relying on the 

NCUA’s geo-coding, a credit union 

could apply for a low-income 

designation relying on a comparison of 

actual income data for individual 

members to statistical data on median 

family income as the basis for the 

designation. This would not be a valid 

or meaningful comparison. The Board 

believes that, as a matter of logic and 

statistical reasoning, only like categories 

of data may be compared in making the 

determination that a credit union’s 

membership meets the low-income 

definition. Actual individual member 

income information should not be 

measured against median family 

income, but rather, against individual 

median earnings. 

Interim Final Rule and Comments 

In July 2010, the Board issued an 

interim final rule amending 

§ 701.34(a)(1) by clarifying that median 

family income and median earnings for 

individuals are alternative bases on 

which credit union members may 

qualify as low income. 75 FR 47171 

(Aug. 5, 2010). In addition, the interim 

final rule amended the subsection of the 

rule regarding the option for credit 

unions to submit their own information 

mstockstill on DSKH9S0YB1PROD with RULES

80678 Federal Register / Vol. 75, No. 246 / Thursday, December 23, 2010 / Rules and Regulations 

for purposes of qualifying for the 

designation to clarify that actual 

member data must be compared with a 

like category of statistical data. 

NCUA received three comment 

letters: One from a federal credit union 

and two from credit union trade 

associations. All three commenters 

supported the clarification in the 

interim final rule. The two trade 

associations, commenting on an issue 

outside the scope of the interim final 

rule, urged the NCUA to consider 

further amendment of the low-income 

rule to permit credit unions that do not 

qualify under NCUA’s geo-coding 

software to use a statistically valid, 

random sample of member income data 

to support a designation as a lowincome credit union. Concurrent with 

issuing this final rule, the Board is 

separately issuing a proposed rule 

addressing the use of a statistically 

valid, random sample to support the 

low-income designation. 

Regulatory Procedures 

Regulatory Flexibility Act 

The Regulatory Flexibility Act 

requires NCUA to prepare an analysis to 

describe any significant economic 

impact any regulation may have on a 

substantial number of small entities. 5 

U.S.C. 603(a). For purposes of this 

analysis, NCUA considers credit unions 

having under $10 million in assets small 

entities. Interpretive Ruling and Policy 

Statement 03–2, 68 FR 31949 (May 29, 

2003). As of December 31, 2007, out of 

approximately 8,410 federally insured 

credit unions, 3,599 had less than $10 

million in assets. This interim final rule 

merely clarifies the existing low-income 

rule and, therefore, an analysis is not 

required. NCUA, however, provided an 

analysis when it issued the final rule in 

November 2008, concluding that the 

economic impact on entities affected by 

the rule would not be significant. 73 FR 

71911–12. 

Small Business Regulatory Enforcement 

Fairness Act 

The Small Business Regulatory 

Enforcement Fairness Act (SBREFA) of 

1996, Public Law 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 Procedures 

Act. 5 U.S.C. 551. The Office of 

Information and Regulatory Affairs has 

determined that this final rule is not a 

major rule for purposes of SBREFA. 

Paperwork Reduction Act 

This clarifying amendment does not 

change the collection requirements 

under the Paperwork Reduction Act of 

1995 (PRA), 44 U.S.C. 3501 et seq. 

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. The final rule will not have 

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 this final 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 

NCUA has determined that this final 

rule will not affect family well-being 

within the meaning of section 654 of the 

Treasury and General Government 

Appropriations Act, 1999, Public Law 

105–277, 112 Stat. 2681 (1998). 

List of Subjects in 12 CFR Part 701 

Credit unions, Federal credit unions, 

Low income, Nonmember deposits, 

Secondary capital, Shares. 

By the National Credit Union 

Administration Board, on December 16, 

2010. 

Mary F. Rupp, 

Secretary of the Board. 

■ For the reasons stated above, NCUA 

amends 12 CFR part 701 as follows: 

PART 701—ORGANIZATION AND 

OPERATIONS OF FEDERAL CREDIT 

UNIONS 

■ Accordingly, the interim final rule 

amending 12 CFR part 701 which was 

published at 75 FR 47171 on August 5, 

2010, is adopted as a final rule without 

change. 

[FR Doc. 2010–32130 Filed 12–22–10; 8:45 am] 

BILLING CODE 7535–01–P 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Parts 708a and 708b 

RIN 3133–AD84; 3133–AD85 

Conversions of Insured Credit Unions 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Interim final rule with request 

for comments. 

SUMMARY: NCUA is issuing final 

amendments to revise the definition of 

the phrase ‘‘Regional Director’’ in 

NCUA’s rule on credit union to mutual 

savings bank conversions and to add the 

same revised definition of that phrase to 

NCUA’s rule on conversions to 

nonfederal deposit insurance. 

DATES: The rule is effective December 

23, 2010. Comments must be received 

by January 24, 2011. 

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/Resources/RegulationsOpinions

Laws/FinalRegulations.aspx. Follow the 

instructions for submitting comments. 

E-mail: Address to 

regcomments@ncua.gov. Include ‘‘[Your 

name] Comments on ‘‘Interim Final 

Rulemaking for Parts 708a and 708b— 

Definition of ‘‘Regional Director’’ in the 

e-mail subject line. 

Fax: (703) 518–6319. Use the subject 

line described above for e-mail. 

Mail: Address to Mary Rupp, 

Secretary of the Board, National Credit 

Union Administration, 1775 Duke 

Street, Alexandria, Virginia 22314– 

3428. 

Hand Delivery/Courier: Same as mail 

address. 

Public Inspection: All public 

comments are available on the agency’s 

Web site at http://www.ncua.gov/ 

Resources/RegulationsOpinionsLaws/ 

FinalRegulations.aspx as submitted, 

except as may not be possible for 

technical reasons. Public comments will 

not be edited to remove any identifying 

or contact information. Paper copies of 

comments may be inspected 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 e-mail to 

OGCMail@ncua.gov. 

FOR FURTHER INFORMATION CONTACT: 

Jacqueline Lussier, Staff Attorney, 

Office of General Counsel, at the address 

above or telephone (703) 518–6540. 

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