Federal Register / Vol. 83, No. 125 / Thursday, June 28, 2018 / Rules and Regulations 30289 

1Appendix B to 12 CFR part 701(‘‘Appendix B’’). 

Federal agency means a Government 

agency such that any liability in tort 

based on the activities of such agency 

would be satisfied by funds 

appropriated by the Congress and paid 

out of the United States Treasury. 

Financial protection means the ability 

to respond in damages for public 

liability and to meet the cost of 

investigating and defending claims and 

settling suits for such damages. 

Government agency means any 

executive department, commission, 

independent establishment, corporation, 

wholly or partly owned by the United 

States of America which is an 

instrumentality of the United States, or 

any board, bureau, division, service, 

office, officer, authority, administration, 

or other establishment in the executive 

branch of the Government. 

Nuclear reactor means any apparatus, 

other than an atomic weapon, designed 

or used to sustain nuclear fission in a 

self-supporting chain reaction. 

Person means: 

(1) Any individual, corporation, 

partnership, firm, association, trust, 

estate, public or private institution, 

group, Government agency other than 

the Commission or the Department, 

except that the Department shall be 

considered a person within the meaning 

of the regulations in this part to the 

extent that its facilities and activities are 

subject to the licensing and related 

regulatory authority of the Commission 

pursuant to section 202 of the Energy 

Reorganization Act of 1974 (88 Stat. 

1244), any State or any political 

subdivision thereof, or any political 

entity within a State, any foreign 

government or nation or any political 

subdivision of any such government or 

nation, or other entity; and 

(2) Any legal successor, 

representative, agent, or agency of the 

foregoing. 

Plutonium processing and fuel 

fabrication plant means a plant in 

which the following operations or 

activities are conducted: 

(1) Operations for manufacture of 

reactor fuel containing plutonium, 

where the license or licenses authorize 

the possession of either five or more 

kilograms of plutonium, excluding that 

contained in sealed sources and welded 

or otherwise sealed unirradiated or 

irradiated fuel rods, at the site of the 

plant or authorize the processing of one 

or more kilograms of plutonium, 

excluding that contained in sealed 

sources and welded or otherwise sealed 

unirradiated or irradiated fuel rods, at 

the plant, including any of the following 

processes: 

(i) Preparation of fuel material; 

(ii) Formation of fuel material into 

desired shapes; 

(iii) Application of protective 

cladding; 

(iv) Recovery of scrap material; and 

(v) Storage associated with such 

operations; or 

(2) Research and development 

activities involving any of the 

operations described in paragraph (1) of 

this definition, except for research and 

development activities where the 

operator is licensed to possess or use 

plutonium in amounts less than those 

specified in paragraph (1). 

Source material means source 

material as defined in the regulations 

contained in part 40 of this chapter. 

Special nuclear material means: 

(1) Plutonium, uranium 233, uranium 

enriched in the isotope 233 or in the 

isotope 235, and any other material 

which the Commission, pursuant to the 

provisions of section 51 of the Act, 

determines to be special nuclear 

material, but does not include source 

material; or 

(2) Any material artificially enriched 

by any of the foregoing, but does not 

include source material. 

Testing reactor means a nuclear 

reactor which is of a type described in 

§ 50.21(c) of this chapter and for which 

an application has been filed for a 

license authorizing operation at: 

(1) A thermal power level in excess of 

10 megawatts; or 

(2) A thermal power level in excess of 

1 megawatt, if the reactor is to contain: 

(i) A circulating loop through the core 

in which the applicant proposes to 

conduct fuel experiments; or 

(ii) A liquid fuel loading; or 

(iii) An experimental facility in the 

core in excess of 16 square inches in 

cross-section. 

Uranium enrichment facility means: 

(1) Any facility used for separating the 

isotopes of uranium or enriching 

uranium in the isotope 235, except 

laboratory scale facilities designed or 

used for experimental or analytical 

purposes only; or 

(2) Any equipment or device, or 

important component part especially 

designed for such equipment or device, 

capable of separating the isotopes of 

uranium or enriching uranium in the 

isotope 235. 

§ 140.13a [Amended] 

■ 24. In § 140.13a(a), in the last 

sentence, add the word ‘‘specified’’ 

before ‘‘in § 140.15’’. 

§ 140.22 [Amended] 

■ 25. In § 140.22, remove the word 

‘‘Committee’’ and add in its place the 

word ‘‘Commission’’. 

Dated at Rockville, Maryland, this 22nd 

day of June 2018. 

For the Nuclear Regulatory Commission. 

Pamela J. Shepherd-Vladimir, 

Acting Chief, Regulatory Analysis and 

Rulemaking Support Branch, Office of 

Nuclear Material Safety and Safeguards. 

[FR Doc. 2018–13877 Filed 6–27–18; 8:45 am] 

BILLING CODE 7590–01–P 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Part 701 

RIN 3133–AE31 

Chartering and Field of Membership 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Final rule. 

SUMMARY: The NCUA Board (Board) is 

amending its chartering and field of 

membership rules with respect to 

applicants for a community charter 

approval, expansion or conversion. The 

Board will allow the option for an 

applicant to submit a narrative to 

establish the existence of a well-defined 

local community instead of limiting the 

applicant to a presumptive statistical 

community. Also, the Board will hold a 

public hearing for narrative applications 

where the proposed community exceeds 

a population of 2.5 million people. 

Further, for communities that are 

subdivided into metropolitan divisions, 

the Board will permit an applicant to 

designate a portion of the area as its 

community without regard to division 

boundaries. 

DATES: The final rule becomes effective 

September 1, 2018. 

FOR FURTHER INFORMATION CONTACT: For 

program issues: Martha Ninichuck, 

Director; JeanMarie Komyathy, Deputy 

Director; Robert Leonard, Assistant 

Director; or Rita Woods, Assistant 

Director, Office of Credit Union 

Resources and Expansion (CURE), at 

1775 Duke Street, Alexandria, VA 22314 

or telephone (703) 518–1140. For legal 

issues: Marvin Shaw, Staff Attorney, 

Office of General Counsel, at the above 

address or telephone (703) 518–6553. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Overview 

The NCUA’s Chartering and Field of 

Membership Manual, incorporated as 

Appendix B to part 701 of the NCUA 

regulations (‘‘Chartering Manual’’),1


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2 12 U.S.C. 1759. 

3Pub. L. 105–219, § 2, 112 Sta. 913 (Aug 7, 1998). 

4 12 U.S.C. 1759(b)(1). 

5 Id. § 1759(b)(2)(A). 6 Id. § 1759(b)(3). 7 Id. § 1759(g)(1)(A). 8 Id. § 1759(g)(1)(B). 9Appendix B, Ch. 2, section V.A.2. 

10Appendix B, Ch. 2, section V.A.5. 

11 75 FR 36257 (June 25, 2010). 

12 68 FR 18334 (April 15, 2003) ‘‘The well-defined 

local community, neighborhood, or rural district 

may be met if: The area to be served is multiple 

contiguous political jurisdictions, i.e., a city, 

county, or their political equivalent, or any 

contiguous portion thereof and if the population of 

the requested well-defined area does not exceed 

500,000 . . .’’ 

13As explained in the final rule that discontinued 

the use of the narrative 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). 

14Appendix B, Ch. 2, sectionV.A.2. A Chartering 

Manual defines ‘‘single political jurisdiction’’ as ‘‘a 

city, county, or their political equivalent, or any 

single portion thereof.’’ 

15A CBSA is composed of the country’s 

Metropolitan Statistical Areas and Micropolitan 

Statistical Areas. ‘‘Metropolitan Statistical Areas are 

defined by OMB as having ‘‘at least one urbanized 

area of 50,000 or more population, plus adjacent 

territory that has a high degree of social and 

economic integration with the core as measured by 

commuting ties.’’ ‘‘Micropolitan Statistical Areas’’ 

are identical to Metropolitan Statistical Areas 

except that their urbanized areas are smaller, i.e., 

the urbanized area contains at least 10,000 but 

fewer than 50,000 people. A ‘‘Metropolitan 

Division’’ is a subdivision of a large Metropolitan 

Statistical Area. Specifically, a Metropolitan 

Division is ‘‘a county or group of counties within 

a Metropolitan Statistical Area that has a 

population core of at least 2.5 million. OMB 

Bulletin No. 15–01 (July 15, 2015) 

16 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). 

17Appendix B, Ch. 2, § V.A.4. 

18 81 FR 88412 (Dec. 7 2016). 

19 81 FR 78748 (Nov. 9, 2016). 

implements the field of membership 

(‘‘FOM’’) requirements established by 

the Federal Credit Union Act (‘‘Act’’) for 

federal credit unions (‘‘FCU’’).2 An FOM 

consists of those persons and entities 

eligible for membership based on an 

FCU’s type of charter. 

In adopting the Credit Union 

Membership Access Act of 1998 

(‘‘CUMAA’’), Congress reiterated its 

longstanding support for credit unions, 

noting their ‘‘specific 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

Congress has delegated to the Board 

broad authority in the FCU Act to define 

what constitutes a well-defined local 

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 that 

common interests or interaction among 

residents within those boundaries are 

essential features of a local community. 

Until 2010, the Chartering Manual 

required FCUs seeking to establish an 

area as a WDLC to submit for NCUA 

approval a narrative, supported by 

documentation, that demonstrated 

indicia of common interests or 

interaction among residents of a 

proposed community (the ‘‘narrative 

model’’) if the community extended 

beyond a single political jurisdiction.11

A WDLC is required to consist of 

contiguous areas, and the Chartering 

Manual previously included the term 

‘‘contiguous’’ in its text.12 In 2010, the 

Board replaced the narrative model in 

favor of an objective model that 

provided credit unions a choice 

between two statistically based 

‘‘presumptive communities’’ that each 

by definition qualifies as a WDLC (the 

‘‘presumptive community model’’).13 In 

doing so, the Board inadvertently 

removed the term ‘‘contiguous’’ from 

the Chartering Manual, but did not 

intend to remove the requirement that 

the relevant areas be contiguous. 

One kind of presumptive community 

is a ‘‘Single Political Jurisdiction . . . or 

any contiguous portion thereof’’ (‘‘SPJ’’), 

regardless of population.14 The second 

is a single Core Based Statistical Area 

(‘‘CBSA’’ 15) as designated by the U.S. 

Census Bureau (‘‘Census’’) or a welldefined portion thereof, which under 

the 2010 final rule was subject to a 2.5 

million population limit.16

Currently, 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 is 

required to conform to the boundaries of 

such divisions. Under either 

‘‘presumptive community’’ option, an 

FCU was required to demonstrate that it 

is 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, expansion or 

conversion.17

B. 2016 Rulemakings 

On October 27, 2016, the Board issued 

two rulemakings relating to the 

Chartering Manual. One was a final rule 

and the other a proposed rule. In the 

final rule,18 the Board comprehensively 

amended the Chartering Manual to 

organize it in a more efficient 

framework and to maximize member 

access to FCU services to the extent 

permitted by law. The final rule 

permitted an applicant to utilize, in 

limited circumstances, a narrative 

approach supported by objective 

documentation to demonstrate that an 

area adjacent to a presumptive 

community qualifies as part of that 

community. 

In the proposed rule, the Board 

proposed three additional changes to 

the community charter provisions.19

Specifically, the Board proposed 

permitting an applicant for a 

community charter to submit a narrative 

to establish the existence of a WDLC, as 

an alternative to selecting a presumptive 

statistical community. The narrative 

would serve the same purpose as in 

years prior to 2010 when the narrative 

model was used exclusively. The Board 

also proposed increasing to 10 million 

the population limit on a community 

consisting of a statistical area or a 

portion thereof. In that regard, the Board 

requested comment on whether there 

should be any population limit at all for 

a statistical area and whether a public 

hearing would be appropriate for areas 

with large populations. Further, the 

Board proposed permitting an FCU to 

designate a portion of a statistical area 

as its community without regard to 

metropolitan division boundaries. The 

Board noted that consistent with its 


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20ABA v. NCUA, 2018 WL 1542049, Case No. 16– 

2394, Mar. 29, 1018 (‘‘FOM Decision’’). 

21A CBSA consists of an urban core, its county, 

and any surrounding counties that are, according to 

OMB, highly socially and economically integrated 

with the core. 81 FR at 88440. 

22Combined Statistical Areas are composed of 

adjacent CBSAs that share what OMB calls 

‘‘substantial employment interchange. OMB 

characterizes CSAs as ‘‘representing larger regions 

that reflect broader social and economic 

interactions, such as wholesaling, commodity 

distribution, and weekend recreational activities, 

and are likely to be of considerable interest to 

regional authorities and the private sector.’’ OMB 

Bulletin No, 15–01. 23 81 FR at 78749. 

24 12 U.S.C. 1759(g)(1)(A) (emphasis added). 

25 Id. § 1759(g)(1)(B). 

responsibility under CUMAA to 

facilitate access to FCU services, the 

proposal sought to provide FCUs greater 

flexibility in that regard. 

The Board received approximately 55 

comments from federal and statechartered credit unions, credit union 

associations, credit union leagues, 

banks, bank trade associations, and 

consultants. The majority of 

commenters were credit union affiliated 

entities, which uniformly supported the 

proposed rule. In contrast, the four 

bank-affiliated commenters uniformly 

opposed the proposal. 

II. Federal District Court Decision 

Several provisions of the 2016 final 

rule were challenged by the American 

Bankers Association. On March 29, 

2018, the U.S. District Court for the 

District of Columbia upheld two 

provisions and vacated two provisions 

of the 2016 final rule addressing 

community charters.20 Specifically, the 

court upheld the provision allowing an 

FCU to serve areas within a CBSA that 

do not include the CBSA’s core.21 The 

court also upheld the provision 

allowing an FCU to add an adjacent area 

to a presumptive community. The court 

vacated the provision permitting 

automatic characterization of any 

individual portion of a combined 

statistical area (‘‘CSA’’) as belonging to 

a local community as long as that 

portion contains no more than 2.5 

million people.22 The court also vacated 

the provision to increase the population 

limit to 1 million people for rural 

districts. 

III. 2018 Final Rule 

A. Overview 

This final rule amends the community 

chartering provisions of the Chartering 

Manual. Any modification in this final 

rule is consistent with the District Court 

decision. The rule allows for the general 

use of the narrative model, so that an 

applicant can seek Board approval to 

form, expand, or convert to a 

community charter, provided that the 

applicant provides sufficient supporting 

documentation. The rule also provides 

that the NCUA will conduct a public 

hearing and solicit public comments on 

any community charter application that 

uses the narrative approach for an area 

whose population exceeds 2.5 million 

people. Further, the rule permits an 

FCU to designate a portion of a CBSA 

statistical area as its community without 

regard to metropolitan division 

boundaries. 

With respect to the proposal to raise 

the population limit for a presumptive 

community, the Board has decided not 

to move forward with this amendment 

at this time. 

B. General Applicability of Narrative 

Model To Establish a Well-Defined 

Local Community 

In 2016, the Board proposed to allow 

the general use of the narrative model to 

form, expand, or convert to a 

community charter as an alternative to 

using the ‘‘presumptive community’’ 

model.23

In response to the proposal, nearly 

every credit union-affiliated commenter 

supported allowing the narrative model 

as an alternative to the presumptive 

community model. These commenters 

stated that such an alternative provides 

added flexibility, thus potentially 

allowing FCUs to provide more 

financial services to the public. In 

contrast, bank-affiliated commenters 

opposed this proposal, claiming that it 

was overly subjective. They stated that 

the Board’s 2010 decision to replace this 

approach with an objective one 

enhanced the process because it 

provided greater consistency. 

The Board has determined that it is 

appropriate to permit the narrative 

model as an alternative to the 

presumptive community model. The 

Board believes that a significant 

majority of FCUs will rely on the 

presumptive community model for 

practical reasons. The presumptive 

community model is less costly and 

requires fewer resources for an 

applicant to expend. Further, an 

applicant can rely on a streamlined 

process, thus ensuring a more timely 

determination by utilizing the 

presumptive community model. While 

most applicants will be well served by 

the presumptive community model, the 

Board believes that some FCUs will find 

that using the narrative model will 

provide a better opportunity for them to 

establish that the relevant area is a 

WDLC. As is noted above, prior to 2010, 

a WDLC expressly needed to be 

‘‘contiguous’’ under the narrative 

model. Given that contiguity is still 

required in setting forth the parameters 

of a WDLC and for clarity, the Board 

specifically includes the contiguity 

requirement in the final rule’s 

regulatory text. 

Some commenters stated that certain 

potential communities do not 

necessarily align with CBSAs, SPJs, or 

other recognized statistical areas. The 

Board anticipates that this change to 

allow the narrative model as an 

alternative will be used sparingly, given 

the associated costs in preparing a 

narrative package. As noted in the 

section addressing the Paperwork 

Reduction Act (PRA), CURE estimates 

that there would be approximately 25 

FCUs per year that would use the 

narrative approach based on data from 

the five years preceding 2010. The 

Board notes any such costs are not 

mandated by the NCUA but rather are 

voluntarily assumed by a potential 

applicant. 

The Board has further determined that 

allowing such an alternative to the 

presumptive community model is 

appropriate because it expands the 

delivery of financial services to the 

public, particularly people from 

underserved communities, with no 

significant downside. The Board notes 

that the Act gives the Board broad 

discretion to define a WDLC for 

purposes of ‘‘making any 

determination’’ regarding a community 

credit union,24 and to establish criteria 

to apply to any such determination.25

(Emphasis added) 

Under its statutory authority, the 

Board is adopting, with minor 

modifications from the proposal, a new 

appendix to the Chartering Manual, 

which sets thirteen ‘‘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. The Board has determined 

that establishing such criteria will 

facilitate an applicant’s ability to 

provide justification to support the 

common interest or interaction 

standard. The Board notes that if an 

FCU has successfully established that an 

area is a WDLC through the narrative 

process, then another FCU may adopt 

that exact area as a WDLC without 

submitting a narrative of its own, 

provided it complies with the other 

requirements of the Chartering Manual 

including submitting a business plan 

that demonstrates its ability to serve the 

proposed FOM. 


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26Appendix 6 to Appendix B. 

Commenters generally supported the 

thirteen criteria. Several commenters 

emphasized that the NCUA should 

evaluate the ‘‘totality of circumstances’’ 

in assessing applications. These 

commenters stated that the criteria 

provided solid evidence of common 

interests and interaction. One 

commenter stated that the NCUA should 

allow consideration of additional 

criteria that are unique to a community. 

Another commenter stated that the 

NCUA should allow consideration of 

‘‘on line communities’’ given the trend 

toward such use. Bank commenters 

opposed the narrative approach, but 

said if it is adopted, then an applicant 

should be required to establish 

compliance with, most if not all, of the 

thirteen criteria. 

The NCUA’s experience with 

community charter applications under 

the pre-2010 narrative model indicates 

that these thirteen criteria were 

generally 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 welldocumented narrative to justify Board 

approval of its application.26 The Board 

reiterates that the proposed area does 

not have to match exactly the entirety of 

the thirteen criteria. Rather, the more a 

proposed area satisfies the criteria to 

establish a WDLC, the stronger the 

applicant’s case. Consistent with this 

approach, Appendix B identifies for 

each of the thirteen criteria three levels 

of persuasiveness: ‘‘most persuasive,’’ 

‘‘persuasive,’’ and ‘‘not persuasive’’ 

with examples of each. 

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 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 QuasiGovernmental 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 area, the 

greater the showing of common interests 

or interaction. 

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 common 

interests or interaction. 

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 or 

interaction. The higher the household 

penetration figures throughout the area, 

the greater the value in showing 

common interests or interaction. 

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 or 

interaction. Objective data on viewer 

and listener audiences in the proposed 


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27The Board is modifying Appendix B to delete 

reference to Metropolitan Divisions in CSAs as a 

result of the District Court decision. 

28 75 FR 36257, 36260. 

29 75 FR 36257, 36259. 

30 80 FR at 76749. 

31 80 FR at 76748–49. 

community can support the existence of 

a community. 

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. 

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 common interests or interaction. 

C. Public Hearing 

In the November 2016 proposal, the 

Board requested comment about 

whether it 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 of 2.5 

million. 

One bank-affiliated commenter 

supported having a public hearing along 

with the opportunity for comment for 

applications for community charters for 

statistical areas exceeding 2.5 million. 

No credit-union affiliated commenter 

addressed this issue. 

The Board has determined that it is 

appropriate to require a public hearing 

along with opportunity for comment for 

charter applications using a narrative 

model over a certain population. The 

Board believes that such a procedure 

will allow applicants to present 

information, including their business 

and marketing plan, in a transparent 

manner. Other interested parties, 

including community groups, 

businesses, and competitors will have 

the opportunity to present their views. 

After further consideration of this issue 

and the comments, the Board has 

decided to modify the use of public 

hearings from what was discussed in the 

proposal. Specifically, the Board 

intends for the NCUA to conduct public 

hearings and solicit public comments on 

any narrative community application 

comprising an area whose population is 

in excess of 2.5 million people. Any 

public comments should be submitted 

to the Board at least twenty business 

days prior to the public hearing. 

The Board intends to delegate to 

CURE the responsibility to conduct the 

public hearings on any narrative 

community applications in excess of 2.5 

million people with assistance from the 

NCUA’s Office of General Counsel 

(OGC). Upon receiving such an 

application, CURE will publish in the 

Federal Register information stating the 

location, time, procedures and other 

relevant information about the hearing 

at least 30 days prior to the hearing date. 

CURE will determine whether the 

hearing will be held at the NCUA’s 

Headquarters in Alexandria, VA or a 

location near the applicant’s anticipated 

community. The public hearing will last 

no more than four hours with interested 

parties being permitted to make 

presentations of no more than 30 

minutes each. The applicant along with 

no more than seven other interested 

parties may request to make 

presentations. The first six entities that 

contact the NCUA in writing will be 

permitted to make such presentations. 

CURE will reserve one additional slot 

which it has the discretion to designate 

as eligible for a presentation by an 

interested party. In addition to the 

presentations, interested parties may 

submit written statements to CURE at 

least twenty business days prior to the 

hearing. 

CURE will take under advisement the 

presentations and written statements 

and will make a determination as to 

whether to approve, deny, or make 

modifications to the application. CURE 

will make this determination based on 

whether the applicant demonstrated 

common interests or interactions among 

residents of the area under 

consideration, thus qualifying the area 

as a WDLC. CURE will make this 

determination no sooner than 30 days 

after the date of the public hearing. 

D. Portion of CBSA as a Well-Defined 

Local Community Regardless of Internal 

Boundaries 

In 2016, the Board proposed to permit 

an FCU to designate a portion of a CBSA 

as its community without regard to 

metropolitan division boundaries. The 

Board noted that when an FCU seeks to 

serve a portion of a single CBSA as its 

WDLC, the existing rule requires such a 

portion to conform to any boundary of 

a metropolitan divisions. In contrast, a 

CSA was not required to conform to any 

metropolitan division boundary, even 

though CSAs cover a wider geographic 

area. For purposes of consistency, the 

Board proposed permitting an FCU to 

designate a portion of a CBSA as its 

community without regard to division 

boundaries. 

No commenter objected to this 

proposal, and approximately ten credit 

union-affiliated commenters specifically 

supported it. The commenters stated 

that the change would correct a 

disparity in treatment between a 

community consisting of a portion of a 

CBSA and a CSA. The commenters who 

supported it viewed it as affording 

regulatory relief via a common sense 

change to enhance consistency and 

provide flexibility. 

The Board has determined that it is 

appropriate to amend the Chartering 

Manual to designate a portion of a CBSA 

as its community without regard to the 

boundaries of any metropolitan 

divisions within a CBSA.27 This 

modification corrects an inconsistency 

that was never intended. In light of the 

District Court decision, the Board has 

removed reference to Metropolitan 

Divisions with respect to CSAs. 

E. Eliminating the Population Limit for 

a Statistical Area 

As noted above, the Board issued a 

final rule in 2010 recognizing as a 

presumptive community a CBSA as 

designated by the U.S. Census, or a CSA 

as designated by OMB, subject in either 

case to a population limit of 2.5 million 

and proof of the FCU’s ability and 

commitment to serve the entire 

community.28 At the time, the Board 

recognized a 2.5 million population ‘‘as 

a logical breaking point in terms of 

community cohesiveness with respect to 

a multijurisdictional area.’’ 29

In the 2015 proposal, the Board 

decided to retain the existing 2.5 

million population cap as the upper 

limit for a presumptive community, 

although it solicited public comment on 

whether to adjust the amount, and for 

what reasons.30 Specifically, the Board 

stated that a CBSA qualifies as a WDLC 

only if its population does not exceed 

2.5 million, and that ‘‘[b]y design, this 

population limit conforms to the 

population parameter by which [the 

Office of Management and Budget 

(‘‘OMB’’)] recognizes metropolitan 

divisions within a Core Based Statistical 

Area.’’ 31

In their comments to the 2015 

proposal, bankers opposed raising the 

existing population limit. For instance, 

a bank trade association stated that 

‘‘NCUA’s overly broad interpretation of 

what is ‘rural’ or ‘local’ is at odds with 

any reasonable interpretation of those 


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32 80 FR at 78751. 

33 5 U.S.C. 603(a). 

34 80 FR 57512 (Sept. 24, 2015). 

35 44 U.S.C. 3507(d); 5 CFR part 1320. 

terms and makes a mockery of the field 

of membership restrictions’’ 

The 2016 final rule retained the 2.5 

million population limit that applies to 

a community consisting of a CBSA or 

CSA. However, in the November 2016 

proposed rule, the Board requested 

comment on its proposal to increase the 

limit to ‘‘up to 10 million’’ or to 

eliminate it completely. Despite 

affirming the then current 2.5 million 

population limit in that final rule, the 

Board stated that it anticipates that 

many areas that would qualify as a 

WDLC will experience population 

growth over time and that it 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.32

Comments were mixed about the 

proposal on the population cap for 

statistical areas that comprise more than 

a single political jurisdiction. Virtually 

all credit union-affiliated commenters 

urged the Board to eliminate the 

population cap on statistical areas 

altogether. Alternatively, they preferred 

the 10 million cap to the 2.5 million 

cap, if the Board decided to retain a 

population cap. In contrast, bankaffiliated commenters continued to 

oppose increasing the existing 2.5 

million population cap on CBSAs and 

CSAs. The bankers argued that the 

proposal oversteps congressional 

bounds established by the Act, 

particularly with respect to the 

definition of ‘‘local.’’ Specifically, they 

stated that this interpretation of ‘‘local’’ 

would ‘‘allow nearly any federal 

community credit union to serve almost 

any geographic area or population 

center.’’ The bankers further stated that 

a 10 million population cap would 

allow an FCU to serve a statistical area 

with a population that exceeds the 

population of 41 states and would add 

20 additional CSAs to qualify as 

presumptive communities. Thus, they 

stated that all but two CSAs would be 

presumptive communities. In addition, 

these commenters claimed that the 

NCUA provided ‘‘no analysis to support 

this arbitrary, massive increase.’’ 

The Board has determined that 

increasing the population cap for 

presumptive communities is not 

appropriate at this time. The Board is 

evaluating population caps for 

presumptive communities in light of the 

above-referenced District Court 

decision. 

III. Regulatory Procedures 

Regulatory Flexibility Act 

The Regulatory Flexibility Act 

requires the NCUA to prepare an 

analysis to describe any significant 

economic impact a regulation may have 

on a substantial number of small 

entities.33 For purposes of this analysis, 

the NCUA considers small credit unions 

to be those having under $100 million 

in assets.34 Although this rule is 

anticipated to economically benefit 

FCUs that choose to charter, expand or 

convert to a community charter, the 

NCUA certifies that it will not have a 

significant economic impact on a 

substantial number of small credit 

unions. 

Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(PRA) applies to collections of 

information through which an agency 

creates a paperwork burden on 

regulated entities or the public, or 

modifies an existing burden.35 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. OMB 

previously approved the current 

information collection requirements for 

the Chartering Manual and assigned 

them control number 3133–0015. 

Regarding a community charter, the 

rule gives community charter applicants 

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 WDLC. For that purpose, the 

rule includes guidance in identifying 

compelling indicia of common interests 

or interaction that would be relevant in 

drafting a narrative summarizing how 

the community meets the requirements 

of a WDLC. In addition, when a CBSA 

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. 

The 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, the NCUA applied to OMB for 

approval to amend the current 

information collection to account for the 

new procedure. 

Prior to 2010, when the 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, the 

NCUA required FCUs to submit for the 

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, the NCUA 

processed an average of twenty FOM 

applications involving multiple 

statistical areas. From 2010 to 2018, the 

NCUA processed 2 applicants for 

multiple statistical areas that exceeded 

2.5 million people. Based on this 

historical trend, the NCUA estimates 

that, on average, it would take an FCU’s 

staff approximately 160 hours to collect 

the evidence of common interests or 

interaction and to develop a narrative to 

support its application to expand or to 

convert. Accordingly, the 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 10 FCUs for a total 

of 1600 hours. The NCUA is amending 

the current information collection 

control number 3133–0015 to account 

for these additional burden hours. 

In the proposal, the Board directed 

organizations and individuals who 

wished to submit comments on this 

information collection requirement to 

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. 

The NCUA considered comments by 

the public on the proposed collection of 

information in: 

• Evaluating whether the 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 the 

NCUA’s estimate of the burden of the 

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 


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36Public Law 105–277, 112 Stat. 2681 (1998). 

• 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. The 

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. The 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 

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, 1999.36

List of Subjects in 12 CFR Part 701 

Credit, Credit unions, Reporting and 

recordkeeping requirements. 

By the National Credit Union 

Administration Board on June 21, 2018. 

Gerard Poliquin, 

Secretary of the Board. 

For the reasons stated above, the 

NCUA amends 12 CFR part 701, 

Appendix B, as follows: 

PART 701—ORGANIZATION AND 

OPERATION OF FEDERAL CREDIT 

UNIONS 

■ 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. 

■ 2. In appendix B to part 701, section 

V.A.2 of chapter 2 is revised and 

appendix 6 is added to read as follows: 

Appendix B to Part 701—Chartering 

and Field of Membership Manual 

* * * * * 

Chapter 2—Field of Membership 

Requirements for Federal Credit Unions 

* * * * * 

V—Community Charter Requirements 

* * * * * 

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. 

For an applicant seeking a community 

charter for an area with multiple political 

jurisdictions with a population of 2.5 million 

people or more, the Office of Credit Union 

Resources and Expansion (CURE) shall 

publish a notice in the Federal Register 

seeking comment from interested parties 

about the proposed community and (2) 

conduct a public hearing about this 

application. 

‘‘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. 

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 a Core-Based 

Statistical Area (CBSA) designated by the 

U.S. Census Bureau, including a 

Metropolitan Statistical Area. To meet the 

well-defined local community requirement, 

the CBSA or a portion thereof, must be 

contiguous and have a population of 2.5 

million or less people. 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. 

• Compelling Evidence of Common 

Interests or Interaction—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. Under this option, the 

credit union must demonstrate that the areas 

in question are contiguous and further 

demonstrate a sufficient level of common 

interests or interaction 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. 

* * * * * 

BILLING CODE 7535–01–P 


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APPENDIX6 

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. 

At least 25 percent of the workers living in the proposed community 

commute to work in the central economic hub. 

Over 15 percent of the workers living in the proposed community 

commute to work in the central economic hub. 

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 area, the greater the showing of interaction and/or common 

interests. 

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 and/or · · of life. 

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. 
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Nof.Persuasive The quasi-governmental agency does not match the proposed community 

and carries out only incidentally relevant objectives or carries out 

meanin ful ob"ectives in localized sections ofthe ro osed communi . 

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 ofthat evidence in 

demonstrating interaction and/or common interests. 

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 

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 the residents of the service area. 

A division of a federal or state agency designates an area as a coverage 

area that ses 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. 

Statistical evidence documents how residents from the entire proposed 

service area mutually benefit from a public facility. 

service area. 
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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. 

The applicant provides statistics demonstrating residents from 

throughout the proposed community use hospitals in the major 

ve 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 ofthese initiatives, the stronger the value ofthis factor. 

The application provides statistical data showing the institutions of 

higher learning cited attract significant numbers of students from 

the · 

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 · with local businesses or schools. 

The statistical data tends to support the institutions recruit students from 

a broad based area · the · 's boundaries. 
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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. 

The mutual aid agreements cover the proposed community exclusively 

and in its entirety, represents collaboration that transcends political 

boundaries such as · or limits. 

The mutual aid agreements substantially matches the proposed 

do not match the 

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. 

Statistical data supports that organizations with meaningful objectives 

serve the entire sed · 

Other qualitative documentation exists to support that organizations with 

ectives serve the entire 

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 

· · 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. 

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 

· boundaries. 
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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. 

Statistical data exist to support that the venue attracts residents from 

the 

Statistical evidence is not available, but other qualitative information 

documents the · the venue has for the · 

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. 

12. Shopping 

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 

boundaries. 

The narrative must identify the location ofthe 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 application provides statistics from a reliable third party source that 

demonstrates the major shopping facility cited in the application is the 

for the residents of the entire area. 
Federal Register / Vol. 83, No. 125 / Thursday, June 28, 2018 / Rules and Regulations 30301 

1 82 FR 26605 (June 8, 2017). 

[FR Doc. 2018–13869 Filed 6–27–18; 8:45 am] 

BILLING CODE 7535–01–C 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Parts 701 and 708b 

RIN 3133–AE73 

Bylaws; Voluntary Mergers of 

Federally Insured Credit Unions 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Final rule. 

SUMMARY: The NCUA Board (Board) is 

revising the procedures a federally 

insured credit union (FICU) must follow 

to merge voluntarily with another FICU. 

The changes: Revise and clarify the 

contents and format of the member 

notice; require merging credit unions to 

disclose certain merger-related financial 

arrangements for covered persons; 

increase the minimum member notice 

period; and provide a method for 

members and others to submit 

comments to the NCUA regarding the 

proposed merger. In addition, the NCUA 

has replaced its Merger Manual with 

revised model forms that conform to the 

requirements of this rule. The 

regulations now includes these forms. 

DATES: This rule is effective October 1, 

2018. 

FOR FURTHER INFORMATION CONTACT: 

Elizabeth Wirick, Senior Staff Attorney, 

Office of General Counsel, 1775 Duke 

Street, Alexandria, VA 22314–3428 or 

telephone (703) 518–6540. 

SUPPLEMENTARY INFORMATION: 

I. Background 

In June 2017, the Board issued 

proposed revisions to the NCUA’s 

voluntary merger rule.1 The proposed 

rule was designed to address 

shortcomings in the current rule which 

did not always provide credit union 

members sufficient time to consider the 

merger or adequately communicate all 

information relevant to the merger 

decision. 

The proposed revisions addressed the 

timing and contents of the notice 

provided to members of a merging 

federal credit union (FCU), provided 

FCU members with an opportunity to 

make their views known to the general 

membership, clarified the material that 

must be submitted to the NCUA for 

review, and revised definitions. In 

addition, the proposed rule reorganized 

the current rule to improve readability 

and clarity. These revisions were 

designed to ensure that a merging FCU’s 

member-owners have more complete 

and accurate information regarding a 

proposed merger, including disclosure 

of financial arrangements that could 

create potential conflicts of interest. The 

proposal also sought comments on 

whether the final rule should apply to 

all merging FICUs rather than only to 

merging FCUs. 

The Board is now finalizing the 

proposed rule, with some changes. The 

changes significantly narrow the 

definition of a ‘‘merger-related financial 

arrangement’’ that is subject to 

disclosure, adopt a less burdensome 

method for members to communicate 

their views on the merger, and apply the 

entire rule to all FICUs. 

The Board received 84 comments on 

the proposed rule. Seventy of the 

commenters opposed the rule. Of the 

remaining 14 commenters, eight 

supported the proposed rule, four 

supported the proposed rule except for 

the member-to-member communication 

provision, one addressed only the 

question of whether the rule should 

apply to federally insured, statechartered credit unions (FISCUs), and 

one requested an extension of the 

comment period. 

In addition to the comments on the 

proposed rule, the Board has also been 

informed by a more thorough review of 

voluntary merger proposals since early 

2017 (merger review). NCUA staff 

reviewed the member disclosure 

documents and ballot for every merger 

application submitted by an FCU, with 

an eye toward identifying ongoing 

issues. The direction of the final rule 


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