Federal Register / Vol. 80, No. 60 / Monday, March 30, 2015 / Proposed Rules 16595 

forms and their instructions. The 

proposals are divided into five 

categories, wherein the petitioners ask 

the Commission to: (1) Eliminate the 

need for ‘‘sophisticated accounting 

techniques’’ by ‘‘add[ing] a single, 

streamlined page to Form 3X for 

reporting all in-kind contributions’’ and 

‘‘clarify[ing] that committees need only 

engage in best efforts to reasonably 

ascertain the value of expenditures 

subject to 24- and 48-hour reports’’; (2) 

revise the forms to ‘‘reflect the existence 

of independent-expenditure only 

committees’’; (3) revise the forms to 

‘‘reflect the existence of Carey funds’’; 

(4) revise the forms to ‘‘recognize that 

corporations and labor organizations 

may make contributions to IE PACs’’; 

and (5) revise the forms to ‘‘confine 

Form 3X to nonconnected committees 

and separate segregated funds, create a 

separate reporting form for political 

party committees, and thoroughly 

redesign Form 3X.’’ 

The Commission seeks comments on 

the petition. The public may inspect the 

Petition for Rulemaking on the 

Commission’s Web site at http://

www.fec.gov/fosers, or in the 

Commission’s Public Records Office, 

999 E Street NW., Washington, DC 

20463, Monday through Friday, from 9 

a.m. to 5 p.m. Interested persons may 

also obtain a copy of the petition by 

dialing the Commission’s Faxline 

service at (202) 501–3413 and following 

its instructions. Request document 

#277. 

The Commission will not consider the 

petition’s merits until after the comment 

period closes. If the Commission 

decides that the petition has merit, it 

may begin a rulemaking proceeding. 

The Commission will announce any 

action that it takes in the Federal 

Register. 

On behalf of the Commission. 

Dated: March 24, 2015. 

Ann M. Ravel, 

Chair, Federal Election Commission. 

[FR Doc. 2015–07176 Filed 3–27–15; 8:45 am] 

BILLING CODE 6715–01–P 

FEDERAL ELECTION COMMISSION 

11 CFR Part 115 

[Notice 2015–06] 

Rulemaking Petition: Federal 

Contractors 

AGENCY: Federal Election Commission. 

ACTION: Rulemaking Petition: Notice of 

availability. 

SUMMARY: On November 18, 2014, the 

Federal Election Commission received a 

Petition for Rulemaking from Public 

Citizen. The petitioner asks the 

Commission to amend its regulations 

regarding federal contractors to include 

certain factors for determining whether 

entities of the same corporate family are 

distinct business entities for purposes of 

the prohibition on contributions by 

federal contractors. The Commission 

seeks comments on this petition. 

DATES: Comments must be submitted on 

or before May 29, 2015. 

ADDRESSES: All comments must be in 

writing. Commenters are encouraged to 

submit comments electronically via the 

Commission’s Web site at http://

www.fec.gov/fosers, reference REG 

2014–09, or by email to 

ContractorPetition@fec.gov. 

Alternatively, commenters may submit 

comments in paper form, addressed to 

the Federal Election Commission, Attn.: 

Amy L. Rothstein, Assistant General 

Counsel, 999 E Street NW., Washington, 

DC 20463. 

Each commenter must provide, at a 

minimum, his or her first name, last 

name, city, state, and zip code. All 

properly submitted comments, 

including attachments, will become part 

of the public record, and the 

Commission will make comments 

available for public viewing on the 

Commission’s Web site and in the 

Commission’s Public Records room. 

Accordingly, commenters should not 

provide in their comments any 

information that they do not wish to 

make public, such as a home street 

address, personal email address, date of 

birth, phone number, social security 

number, or driver’s license number, or 

any information that is restricted from 

disclosure, such as trade secrets or 

commercial or financial information 

that is privileged or confidential. 

FOR FURTHER INFORMATION CONTACT: Mrs. 

Amy L. Rothstein, Assistant General 

Counsel, or Mr. Neven F. Stipanovic, 

Attorney, 999 E Street NW., 

Washington, DC 20463, (202) 694–1650 

or (800) 424–9530. 

SUPPLEMENTARY INFORMATION: On 

November 18, 2014, the Commission 

received a Petition for Rulemaking from 

Public Citizen regarding part 115 of the 

Commission’s regulations. Part 115 

prohibits federal contractors from 

making contributions or expenditures to 

any political party, political committee, 

or federal candidate, or to any person 

for any political purpose or use. 11 CFR 

115.2(a); see also 52 U.S.C. 30119(a)(1) 

(formerly 2 U.S.C. 441c(a)(1)). Part 115 

further prohibits any person from 

knowingly soliciting a contribution from 

any federal contractor. 11 CFR 115.2(c); 

see also 52 U.S.C. 30119(a)(2) (formerly 

2 U.S.C. 441c(a)(2)). The petitioner asks 

the Commission to amend 11 CFR part 

115 to include certain factors for 

determining whether entities of the 

same corporate family are distinct 

business entities for purposes of these 

prohibitions. The Commission seeks 

comments on the petition. 

The public may inspect the Petition 

for Rulemaking on the Commission’s 

Web site at http://www.fec.gov/fosers, or 

in the Commission’s Public Records 

Office, 999 E Street, NW., Washington, 

DC 20463, Monday through Friday, from 

9 a.m. to 5 p.m. Interested persons may 

also obtain a copy of the petition by 

dialing the Commission’s Faxline 

service at (202) 501–3413 and following 

its instructions. Request document 

#276. 

The Commission will not consider the 

petition’s merits until after the comment 

period closes. If the Commission 

decides that the petition has merit, it 

may begin a rulemaking proceeding. 

The Commission will announce any 

action that it takes in the Federal 

Register. 

On behalf of the Commission, 

Dated: March 24, 2015. 

Ann M. Ravel, 

Chair, Federal Election Commission. 

[FR Doc. 2015–07177 Filed 3–27–15; 8:45 am] 

BILLING CODE 6715–01–P 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Part 701 

RIN 3133–AE39 

Federal Credit Union Ownership of 

Fixed Assets 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Proposed rule. 

SUMMARY: The NCUA Board (Board) is 

issuing for public comment this 

proposed rule (2015 proposal) to amend 

its regulation governing federal credit 

union (FCU) ownership of fixed assets. 

To provide regulatory relief to FCUs, the 

2015 proposal eliminates a provision in 

the current fixed assets rule that 

established a five percent aggregate limit 

on investments in fixed assets for FCUs 

with $1,000,000 or more in assets. It 

also eliminates the provisions in the 

current fixed assets rule relating to 

waivers from the aggregate limit. 

Further, instead of applying the 

prescriptive aggregate limit provided by 

regulation in the current fixed assets 

rule, the Board proposes to oversee FCU 

ownership of fixed assets through the 


tkelley on DSK3SPTVN1PROD with PROPOSALS
16596 Federal Register / Vol. 80, No. 60 / Monday, March 30, 2015 / Proposed Rules 

1 12 U.S.C. 1757(4). 

2 12 CFR 701.36. 

3 Id. 

4 12 CFR 701.36(c). 

5 78 FR 17136 (Mar. 20, 2013). 

6 78 FR 57250 (Sept. 18, 2013). 

7 79 FR 46727 (Aug. 11, 2014). 

8The five percent aggregate limit on fixed assets 

is measured in comparison to the FCU’s shares and 

retained earnings. 

supervisory process and guidance. The 

2015 proposal also makes conforming 

amendments to the scope and 

definitions sections of the current fixed 

assets rule to reflect this proposed 

approach, and it amends the title of 

§ 701.36 to more accurately reflect this 

amended scope and applicability. 

In addition, the 2015 proposal 

simplifies the fixed assets rule’s partial 

occupancy requirements for FCU 

premises acquired for future expansion 

by establishing a single six-year time 

period for partial occupancy of such 

premises and by removing the 30-month 

requirement for partial occupancy 

waiver requests. The Board notes that, 

in July 2014, it issued a proposal 

regarding the fixed assets rule that 

addressed, among other things, the 

partial occupancy provisions of the 

fixed assets rule (July 2014 proposal), 

but NCUA did not finalize that 

proposal. For reasons discussed below, 

the 2015 proposal incorporates similar 

partial occupancy proposed 

amendments from the July 2014 

proposal, with one modification to the 

time period for partial occupancy. 

DATES: Comments must be received on 

or before April 29, 2015. 

ADDRESSES: You may submit comments 

by any of the following methods (Please 

send comments by one method only): 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• NCUA Web site: http://

www.ncua.gov/

RegulationsOpinionsLaws/proposed_

regs/proposed_regs.html. Follow the 

instructions for submitting comments. 

• Email: Address to regcomments@

ncua.gov. Include ‘‘[Your name] 

Comments on Notice of Proposed 

Rulemaking for Part 701, FCU 

Ownership of Fixed Assets’’ in the 

email subject line. 

• Fax: (703) 518–6319. Use the 

subject line described above for email. 

• Mail: Address to Gerard Poliquin, 

Secretary of the Board, National Credit 

Union Administration, 1775 Duke 

Street, Alexandria, Virginia 22314– 

3428. 

• Hand Delivery/Courier: Same as 

mail address. 

Public Inspection: You may view all 

public comments on NCUA’s Web site 

at http://www.ncua.gov/Legal/Regs/

Pages/PropRegs.aspx as submitted, 

except for those we cannot post for 

technical reasons. NCUA will not edit or 

remove any identifying or contact 

information from the public comments 

submitted. You may inspect paper 

copies of comments in NCUA’s law 

library at 1775 Duke Street, Alexandria, 

Virginia 22314, by appointment 

weekdays between 9 a.m. and 3 p.m. To 

make an appointment, call (703) 518– 

6546 or send an email to OGCMail@

ncua.gov. 

FOR FURTHER INFORMATION CONTACT: 

Pamela Yu, Senior Staff Attorney, Office 

of General Counsel, at the above address 

or telephone (703) 518–6540, or Jacob 

McCall, Program Officer, Office of 

Examination and Insurance, at the above 

address or telephone (703) 518–6360. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. 2013 Rule 

B. July 2014 Proposal 

C. Public Comments on the July 2014 

Proposal 

II. Summary of the 2015 Proposal 

III. Request for Public Comment 

IV. Regulatory Procedures 

I. Background 

The Federal Credit Union Act (FCU 

Act) authorizes an FCU to purchase, 

hold, and dispose of property necessary 

or incidental to its operations.1 NCUA’s 

fixed assets rule interprets and 

implements this provision of the FCU 

Act.2 NCUA’s current fixed assets rule: 

(1) Limits FCU investments in fixed 

assets; (2) establishes occupancy, 

planning, and disposal requirements for 

acquired and abandoned premises; and 

(3) prohibits certain transactions.3

Under the current rule, fixed assets are 

defined as premises, furniture, fixtures, 

and equipment, including any office, 

branch office, suboffice, service center, 

parking lot, facility, real estate where a 

credit union transacts or will transact 

business, office furnishings, office 

machines, computer hardware and 

software, automated terminals, and 

heating and cooling equipment.4

A. 2013 Rule 

The Board has a policy of continually 

reviewing NCUA’s regulations to 

update, clarify and simplify existing 

regulations and eliminate redundant 

and unnecessary provisions. To carry 

out this policy, NCUA identifies onethird of its existing regulations for 

review each year and provides notice of 

this review so the public may comment. 

In 2012, NCUA reviewed its fixed assets 

rule as part of this process. As a result 

of that review, in March 2013, the Board 

issued proposed amendments to the 

fixed assets rule to make it easier for 

FCUs to understand it.5 The proposed 

amendments did not make any 

substantive changes to the regulatory 

requirements. Rather, they only clarified 

the rule and improved its overall 

organization, structure, and readability. 

In response to the Board’s request for 

public comment on the March 2013 

proposal, several commenters offered 

suggestions for substantive changes to 

the fixed assets rule, such as increasing 

or eliminating the aggregate limit on 

fixed assets, changing the current 

waiver process, and extending the time 

frames for occupying premises acquired 

for future expansion. These comments, 

however, were beyond the scope of the 

March 2013 proposal, which only 

reorganized and clarified the rule. 

Accordingly, in September 2013, the 

Board adopted the March 2013 proposal 

as final without change except for one 

minor modification.6 In finalizing that 

rule, however, the Board indicated it 

would take the commenters’ substantive 

suggestions into consideration if it were 

to make subsequent amendments to 

NCUA’s fixed assets rule. 

B. July 2014 Proposal 

In July 2014, the Board issued a 

proposed rule to provide regulatory 

relief to FCUs and to allow FCUs greater 

autonomy in managing their fixed 

assets.7 These amendments reflected 

some of the public comments received 

on the March 2013 proposal. 

Specifically, in the July 2014 proposal, 

the Board proposed to allow an FCU to 

exceed the five percent aggregate limit,8

without the need for a waiver, provided 

that the FCU implemented a fixed asset 

management (FAM) program that 

demonstrated appropriate preacquisition analysis to ensure the FCU 

could afford any impact on earnings and 

net worth levels resulting from the 

purchase of fixed assets. Under the July 

2014 proposal, an FCU’s FAM program 

would have been subject to supervisory 

scrutiny and would have had to provide 

for close ongoing oversight of fixed 

assets levels and their effect on the 

FCU’s financial performance. It also 

would have had to include a written 

policy that set an FCU board-established 

limit on the aggregate amount of the 

FCU’s fixed assets. In the July 2014 

proposal, the Board also proposed to 

simplify the partial occupancy 

requirement for premises acquired for 

future expansion by establishing a 

single five-year time period for partial 

occupancy of any premises acquired for 

future expansion, including improved 


tkelley on DSK3SPTVN1PROD with PROPOSALS
Federal Register / Vol. 80, No. 60 / Monday, March 30, 2015 / Proposed Rules 16597 

9 12 CFR 701.36(c). 

and unimproved property, and by 

removing the current fixed assets rule’s 

30-month time limit for submitting a 

partial occupancy waiver request. 

C. Public Comments on the July 2014 

Proposal 

The public comment period for the 

July 2014 proposal ended on October 

10, 2014. NCUA received thirty-six 

comments on the proposal: Two from 

credit union trade associations; one 

from a bank trade association; sixteen 

from state credit union leagues; thirteen 

from FCUs; three from federally insured, 

state-chartered credit unions; and one 

from an individual. While commenters 

generally supported the Board’s efforts 

to provide regulatory relief from the 

requirements concerning FCU fixed 

assets, most commenters advocated 

more relief or suggested alternative 

approaches to achieving that objective. 

One commenter fully supported all 

aspects of the July 2014 proposal. Two 

commenters opposed it, and another 

commenter stated that it represented 

only a marginal improvement over the 

current rule. 

1. Removal of the Waiver Requirement 

To Exceed the Five Percent Aggregate 

Limit 

Under the current rule, if an FCU has 

$1,000,000 or more in assets, the 

aggregate of all its investments in fixed 

assets must not exceed five percent of 

its shares and retained earnings, unless 

it obtains a waiver from NCUA.9 In the 

July 2014 proposal, the Board proposed 

to amend this requirement to allow an 

FCU to exceed the five percent aggregate 

limit, without a waiver, provided the 

FCU implemented a FAM program to 

manage and monitor the FCU’s fixed 

assets. 

Fifteen commenters supported 

removing the waiver requirement and 

also supported the requirement to adopt 

a FAM program for those FCUs that 

exceed the five percent limit. Five 

commenters, however, supported 

removing the waiver requirement but 

disagreed with the FAM program 

requirement. One commenter did not 

support the removal of the waiver 

requirement. 

a. Five Percent Aggregate Limit 

In the July 2014 proposal, the Board 

did not propose to change the current 

rule’s five percent aggregate limit on an 

FCU’s investment in fixed assets, but 

many commenters nonetheless 

advocated its repeal. At least ten 

commenters suggested that the July 

2014 proposal did not provide sufficient 

regulatory relief and that the five 

percent aggregate limit should be 

eliminated. These commenters noted 

that the aggregate limit is not statutorily 

mandated by the FCU Act and, thus, 

FCUs should be allowed to 

independently manage their own fixed 

assets by setting their own credit union 

board-approved limits. Four 

commenters argued further that FCUs 

should be permitted to set their own 

fixed assets limits without the 

additional requirement of adopting a 

burdensome FAM program. 

One commenter, however, urged 

NCUA not to eliminate the aggregate 

limit because allowing unlimited 

amounts of investments in fixed assets 

could pose a significant safety and 

soundness risk. The same commenter 

observed that the material loss reviews 

of several failed FCUs noted the 

contributory role that excessive fixed 

assets played in those credit union 

failures. 

Other commenters were not opposed 

to an aggregate limit, but argued it 

should be increased. For example, one 

commenter advocated a fifteen percent 

aggregate limit. Another suggested that 

the aggregate limit should be raised to 

at least twenty percent. 

b. Exclusions From the Fixed Assets 

Ratio 

A number of commenters 

recommended that certain investments 

should be excluded from the current 

rule’s fixed assets ratio calculation. Two 

commenters stated generally that the 

fixed assets calculation should reflect 

the greater emphasis placed on 

technology in the current marketplace 

and better account for the need to 

replace obsolete technology and 

equipment. At least four commenters 

stated that investments in information 

technology, including computer 

hardware and software, should be 

excluded from the calculation. One 

commenter indicated that fixed assets 

should be comprised of land and 

buildings only. Another commenter 

stated generally that there should be 

some type of safe harbor or exclusion to 

allow for the purchase of necessary 

equipment. 

2. Fixed Assets Management Program 

Fifteen commenters supported the 

proposed requirement for an FCU to 

adopt a FAM program before choosing 

to exceed the five percent aggregate 

limit. However, most commenters that 

generally supported this aspect of the 

proposal also expressed concerns about 

certain aspects of the requirement. 

Approximately one quarter of the 

commenters opposed the FAM program 

requirement altogether. Of those, several 

commenters argued that it is 

unnecessary or overly burdensome, and 

it would impose additional burdens that 

FCUs are not already subject to under 

the current rule. For example, four 

commenters noted that the requirement 

for annual FCU board review is an 

additional step that is not present under 

the current waiver process. One 

commenter argued that the FAM 

program requirement would create 

unnecessary complications to the 

acquisition of fixed assets over the five 

percent limit, and the requirement 

could serve as a deterrent to the 

acquisition of fixed assets. One 

commenter argued that the proposal 

simply shuffles regulatory burden, 

rather than providing meaningful 

regulatory relief. Another commenter 

also argued that the level of analysis 

that must be included in an FCU’s FAM 

program is beyond what is required 

under the current waiver process and, 

thus, the proposal would not reduce 

regulatory burden. Three commenters 

proffered a similar argument that the 

additional requirements imposed after 

assets are acquired would increase 

FCUs’ compliance responsibilities and 

costs, negating any flexibility gained 

under the proposal. 

a. Minor Acquisitions 

Four commenters requested changes 

to proposed § 701.36(c)(2), which would 

require an FCU to seek FCU board 

approval to make investments in fixed 

assets exceeding the aggregate limit 

‘‘except for the minor acquisitions of 

equipment in the normal course of 

business.’’ A number of commenters 

suggested this language should be 

expanded to include minor acquisitions 

of furniture and fixtures, in addition to 

equipment. One commenter suggested 

‘‘minor acquisitions’’ should 

specifically include purchases of 

desktop technologies, such as computer 

monitors, printers, faxes, scanners, 

copiers, and telephones, upgrades or 

renewals to existing desktop software, 

and ATMs. Another commenter 

suggested that ‘‘minor acquisitions’’ 

should be defined as anything under 

.005 percent of shares and retained 

earnings. 

b. Future Marketability 

At least seven commenters expressed 

concern with the ‘‘future marketability’’ 

element of the FAM program. 

Specifically, proposed § 701.36(2)(iii) 

provided that FCU board oversight of an 

investment in real property that would 

cause the FCU to exceed the five percent 

aggregate limit must reflect the board’s 

consideration of the ‘‘future 


tkelley on DSK3SPTVN1PROD with PROPOSALS
16598 Federal Register / Vol. 80, No. 60 / Monday, March 30, 2015 / Proposed Rules 

10 12 U.S.C. 1757(4) (emphasis added). 

11See 43 FR 58176, 58178 (Dec. 13, 1978) (‘‘Part 

107(4) of the Federal Credit Union Act provides that 

a credit union may purchase, hold, and dispose of 

property necessary or incidental to its operations. 

marketability’’ of the premises. 

Commenters noted that this requirement 

could, in some circumstances, be 

contrary to the best interest of members, 

particularly low-income members and 

members in rural or underserved areas. 

They argued that the decision to 

purchase a branch or office location 

should be based on member service 

needs, not future marketability. At least 

four commenters requested that the 

future marketability provision be 

eliminated because strategic 

considerations beyond marketability 

factor into a decision to acquire fixed 

assets. 

c. Internal Controls 

Proposed § 701.36(c)(3) would have 

required an FCU’s FAM program to 

establish ongoing internal controls to 

monitor and measure the FCU’s 

investments in fixed assets. Two 

commenters disagreed with the 

proposed internal controls requirement, 

noting that the current fixed assets rule 

does not have a specific internal 

controls requirement. These 

commenters argued that internal 

controls to monitor fixed assets 

investments should not be prescribed by 

specific regulatory requirements, but 

rather such internal controls should be 

determined by credit union 

management and subject to examiner 

review during the routine examination 

process. 

d. Appeals 

Eight commenters suggested that any 

final rule should include an appeals 

process to allow, for example, an FCU 

to appeal if an examiner contests an 

FCU’s fixed asset investment or 

disapproves an FCU’s FAM program. 

e. Conclusion Regarding Aggregate 

Limit and FAM Program 

After careful consideration of the 

public comments relating to the fixed 

assets aggregate limit, the Board has 

determined that additional regulatory 

relief beyond what was provided in the 

July 2014 proposal is warranted. 

Therefore, the Board is not adopting the 

July 2014 proposed amendments 

relating to the five percent aggregate 

limit on fixed assets, including any 

FAM program requirements. In 

particular, upon further review, the 

Board has concluded that oversight of 

the purchase of FCU investments in 

fixed assets can be effectively achieved 

through supervisory guidance and the 

examination process, rather than 

through prescriptive regulatory 

limitations. Accordingly, the Board is 

issuing this 2015 proposal to remove 

altogether the five percent aggregate 

limit on fixed assets, as discussed in 

further detail below. 

D. Partial Occupancy 

The July 2014 proposal also would 

have simplified the partial occupancy 

requirement for premises acquired for 

future expansion. Virtually all 

commenters that provided feedback on 

the proposed amendments to the partial 

occupancy requirement supported the 

overall concept of streamlining or 

improving this aspect of the fixed assets 

rule. However, as discussed more fully 

below, most commenters requested 

additional relief beyond that proposed. 

1. Time Period for Partial Occupancy 

Under the current rule, if an FCU 

acquires premises for future expansion 

and does not fully occupy them within 

one year, it must have an FCU board 

resolution in place by the end of that 

year with definitive plans for full 

occupation. In addition, the rule 

requires an FCU to partially occupy the 

premises within a reasonable period, 

but no later than three years after the 

date of acquisition, or six years if the 

premises are unimproved land or 

unimproved real property. In the July 

2014 proposal, the Board proposed to 

simplify this aspect of the fixed assets 

rule by establishing a single time period 

of five years from the date of acquisition 

for partial occupancy of any premises 

acquired for future expansion, 

regardless of whether the premises are 

improved or unimproved. 

Three commenters agreed with the 

proposal to establish a single, uniform 

five-year time period for partial 

occupancy of any premises acquired for 

future expansion. Of those, one 

commenter stated that an increase of 

two years for partial occupancy of 

improved property is a beneficial tradeoff for the one year reduction in the 

timeframe for partial occupancy of 

unimproved property. The same 

commenter noted that a single 

timeframe is easier for compliance 

purposes. 

Two commenters supported a uniform 

time period, but suggested that five 

years is insufficient. They 

recommended that, at a minimum, it 

should be a uniform six years, as 

previously provided for unimproved 

property. Seven commenters suggested 

that the time period for partial 

occupancy should be extended to ten 

years. 

Eight commenters agreed with 

extending the partial occupancy 

requirement for improved premises 

from three to five years, but disagreed 

with reducing the partial occupancy 

requirement for unimproved property 

from six to five years. Of those, two 

commenters posited that reducing the 

timeframe would increase an FCU’s 

regulatory burden. 

One commenter suggested that the 

current partial occupancy requirements 

should be retained, but the rule should 

require an FCU (or a combination of an 

FCU, credit union service organization, 

and/or credit union vendor) to occupy 

at least 51 percent of the premises to 

meet the partial occupancy requirement. 

This commenter argued that relaxing the 

partial occupancy requirement would 

encourage FCUs to maximize nonmission related income by leasing out 

their property. The same commenter 

further stated that because FCUs are not 

subject to unrelated business income 

taxes, they have an incentive to 

maximize leasing income by delaying 

occupancy, and this would be an abuse 

of the credit union tax exempt status. 

Another commenter also supported 

retaining separate timeframes for 

improved and unimproved property, but 

suggested that both time periods should 

be lengthened to five years and eight 

years, respectively. 

Approximately thirteen commenters 

suggested that regulatory timeframes for 

occupancy should be eliminated 

entirely. These commenters generally 

argued that an FCU should have the 

ability to make its own determination, 

in its FAM program or by board policy, 

about how much time it needs to reach 

full or partial occupancy of its property. 

The Board has carefully weighed 

these comments, but disagrees with 

commenters who suggested that 

regulatory timeframes for occupancy 

should be eliminated. 

Unlike the five percent aggregate 

limit, which is a safety and soundness 

safeguard but is not statutorily required, 

the occupancy requirements in the fixed 

assets rule have statutory 

underpinnings. As discussed in the 

preamble to the July 2014 proposal, an 

FCU may not hold (or lease to unrelated 

third parties) real property indefinitely 

without fully occupying the premises. 

Section 107(4) of the FCU Act 

authorizes an FCU to purchase, hold, 

and dispose of property necessary or 

incidental to its operations.10 NCUA has 

long held that this provision means an 

FCU may only invest in property it 

intends to use to transact credit union 

business or in property that supports its 

internal operations or member 

services.11 There is no authority in the 


tkelley on DSK3SPTVN1PROD with PROPOSALS
Federal Register / Vol. 80, No. 60 / Monday, March 30, 2015 / Proposed Rules 16599 

Retaining a piece of property whose only purpose 

is to provide office space to other entities is clearly 

not necessary or incidental to the Federal credit 

union’s operations. Further, investing in, or 

holding, property with the intent of realizing a 

profit from appreciation at a future sale is also 

outside the powers of a Federal credit union.’’); 69 

FR 58039, 58041 (Sept. 29, 2004) (‘‘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.’’) 

12 12 CFR 701.36(b). 

13The Board notes that a single time period 

would be consistent with the Office of the 

Comptroller of the Currency’s (OCC) uniform fiveyear requirement for real estate acquired by banks 

for future expansion. 

14 78 FR 17136 (Mar. 20, 2013); 78 FR 57250 

(Sept. 18, 2013). 

15Under the current rule, if an FCU acquires 

premises for future expansion and does not fully 

occupy them within one year, it must have an FCU 

board resolution in place by the end of that year 

with definitive plans for full occupation. 12 CFR 

701.36(d)(1). The reasonableness of an FCU’s plan 

for full occupation is evaluated through the 

examination process and based upon such factors 

as the defensibility of projection assumptions, the 

operational and financial feasibility of the plan, and 

the overall suitability of the plan relative to the 

FCU’s field of membership. 

FCU Act for an FCU to invest in real 

estate for speculative purposes or to 

otherwise engage in real estate activities 

that do not support its purpose of 

providing financial services to its 

members. While there is no required 

timeframe in the fixed assets rule within 

which an FCU must achieve full 

occupation, the rule requires an FCU to 

partially occupy the premises within a 

time period set by the rule and 

sufficient to show, among other things, 

that the FCU will fully occupy the 

premises within a reasonable time.12

The Board emphasizes that FCUs 

already have significant leeway and 

flexibility in managing real property 

acquired for future use, given that there 

is no required time period for full 

occupation. Moreover, the proposed 

elimination of the 30-month 

requirement for partial occupancy 

waiver requests, which is discussed 

below, would allow FCUs additional 

leeway to apply for a waiver later if it 

deemed appropriate. 

The Board continues to believe that, 

as discussed in the preamble to the July 

2014 proposal, a single time period for 

partial occupancy would simplify and 

improve the rule.13 However, in light of 

commenters’ concerns that shortening 

the time period for unimproved 

property from six to five years would 

increase regulatory burden, the Board 

has decided to maintain the current 

time allowed for partial occupancy of 

unimproved property. Accordingly, the 

Board is proposing a single six-year time 

period for partial occupancy in this 

2015 proposal. The proposed 

amendment therefore retains the current 

time period for unimproved land or 

unimproved real property, and extends 

the current time period for improved 

premises by three years, which the 

Board believes is a significant measure 

of relief for FCUs. 

2. Waivers 

Under the current rule, an FCU must 

submit its request for a waiver from the 

partial occupancy requirement within 

30 months after the property is 

acquired. In the July 2014 proposal, the 

Board proposed to eliminate the 30- 

month requirement and allow FCUs to 

apply for a waiver beyond that time 

frame as appropriate. Seven commenters 

provided feedback on this aspect of the 

proposal, and all supported it. In light 

of the unanimous support from 

commenters on this aspect of the July 

2014 proposal, the Board is restating in 

this 2015 proposal, without change, the 

proposed waiver provision originally 

proposed in the July 2014 proposal. 

Although the Board is incorporating the 

same proposed amendments to the 

partial occupancy waiver requirements, 

the Board still invites comments on this 

subject to help inform its decision for 

the final rule. The Board notes that it is 

unnecessary for commenters to the July 

2014 proposal to resubmit their same 

comments again. NCUA has considered 

those previously submitted comments 

and will consider them again before 

finalizing this rule. However, 

commenters with new, different, or 

updated comments should feel free to 

submit them as provided for above. 

3. Definition 

Although the Board did not propose 

amending any current definitions in the 

fixed assets rule, five commenters 

expressed concern about the definition 

of ‘‘partial occupancy,’’ as clarified by 

the March 2013 proposal. Of those, four 

commenters suggested that the 

clarification reduced an FCU’s ability to 

meet partial occupancy requirements, 

particularly with respect to ATMs 

deployed on vacant land purchased for 

future expansion. The commenters 

asked that any subsequent final rule 

correct this. One commenter stated 

generally that any subsequent final rule 

should reinstate the previous definition. 

The Board reiterates that, as indicated 

in the preambles to the March 2013 

proposal and the corresponding final 

rule,14 the clarification of the partial 

occupancy definition did not impose 

any new regulatory requirements on 

FCUs or amend the meaning of that 

term. Rather, it only clarified the partial 

occupancy provisions by reflecting 

NCUA’s interpretation of them. 

Accordingly, the Board is not proposing 

any amendments in this 2015 proposal 

as a result of those comments. 

E. Full Occupancy 

The current rule does not set a 

specific time period within which an 

FCU must achieve full occupation of 

premises acquired for future expansion. 

However, partial occupancy of the 

premises is required within a set 

timeframe and must be sufficient to 

show, among other things, that the FCU 

will fully occupy the premises within a 

reasonable time and consistent with its 

plan for the premises.15 The Board did 

not propose to amend the full 

occupancy requirement in the July 2014 

proposal, but it requested public 

comment on this topic. 

At least four commenters said the 

current rule should be retained, and 

NCUA should not set a specific time 

period for full occupancy. Of those, 

three commenters said FCUs should 

have flexibility under the rule. Three 

commenters noted that FCU boards and 

management should determine the best 

timeframe in which to fully develop 

property. One commenter said there is 

no need to modify the full occupancy 

requirement, but NCUA should consider 

improving the definition of full 

occupancy. 

One commenter stated generally that 

the full occupancy requirement should 

be modified and determined on a caseby-case basis. Another commenter 

suggested that if the requirement is 

modified, at a minimum, the timeframe 

for full occupancy should be six years 

for all property, along with a simple 

extension process. Two commenters 

suggested that the full occupancy 

requirement should be eliminated 

entirely. Three commenters suggested 

that NCUA should replace the ‘‘full’’ 

occupancy requirement with a 

‘‘significant’’ or ‘‘substantial’’ 

occupancy requirement. Of these, one 

commenter said ‘‘substantial 

occupancy’’ should be defined as fiftyone percent occupancy. Another 

commenter suggested ‘‘substantial 

occupancy’’ should be defined as 

‘‘within a reasonable period of time 

consistent with FCU’s usage plan.’’ 

One commenter, however, argued that 

the full occupancy requirement should 

be stricter. This commenter suggested 

that NCUA should require full 

occupancy within three years of 

reaching partial occupancy, to ensure 

that FCUs are not participating in 

impermissible real estate activities. 

Citing OCC guidance, the commenter 

indicated that, historically, three years 


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16 66 FR 40845, 40851 (Aug. 6, 2001). 

17The incidental powers rule defines an 

incidental powers activity as one that is necessary 

or requisite to enable an FCU to carry on effectively 

the business for which it is incorporated. An 

activity meets the definition of an incidental 

powers activity if it: (1) Is convenient or useful in 

carrying out the mission or business of credit 

unions consistent with the FCU Act; (2) is the 

functional equivalent or logical outgrowth of 

activities that are part of the mission or business of 

credit unions; and (3) involves risks similar in 

nature to those already assumed as part of the 

business of credit unions. 12 CFR 721.2. 

18 12 CFR 721.3(e). 

19 Id. 

20 66 FR 40845, 40851 (Aug. 6, 2001). 

21See 12 CFR 701.36(d)(1). 

22As of September 30, 2014, 226 of the total 3,707 

FCUs with assets over $1,000,000 are currently 

above the five percent aggregate limit. 

23 12 CFR 701.36(c). 

24 43 FR 58176 (Dec. 13, 1978). 

25See, e.g., 75 FR 66295, 66297 (Oct. 28, 2010); 

78 FR 57250, 57250 (Sept. 18, 2013); 79 FR 46727 

(Aug. 11, 2014). 

has been a reasonable time for national 

banks to reach full occupancy. 

The Board appreciates these 

comments and, after careful 

consideration of the points raised, it has 

determined to retain the current full 

occupancy provision. Accordingly, the 

Board is not proposing to amend the full 

occupancy requirement in this 2015 

proposal. As discussed above, the 

limited authority in Section 107(4) the 

FCU Act means that an FCU may not 

hold real property indefinitely without 

fully occupying the premises. There is 

no authority for an FCU to invest 

speculatively in real estate or to 

otherwise engage in real estate activities 

that do not support its purpose of 

providing members with financial 

services. The Board reiterates there is no 

required time period within which an 

FCU must achieve full occupation. 

However, the limited authority for FCUs 

to invest in property granted by the FCU 

Act mandates that full occupancy must 

be achieved. The Board believes the 

current rule gives FCUs substantial 

flexibility in managing fixed assets 

acquired for future use within the 

authority granted in the FCU Act, and 

thus, no changes are proposed. 

F. Leasing 

At least five commenters 

recommended that the fixed assets rule 

be amended to allow an FCU to generate 

income from premises. Of those, three 

commenters urged NCUA to consider a 

‘‘de minimis ownership exception’’ 

under which land that is not valued at 

more than three percent of shares and 

retained earnings would not be subject 

to the occupancy requirements. One 

commenter suggested that more 

flexibility is needed for an FCU to retain 

undeveloped property on a long-term 

basis and encouraged NCUA to allow 

2.5 percent to 5 percent of an FCU’s net 

worth to be invested in undeveloped or 

vacant properties. Another commenter 

argued that excess space should not sit 

idle if it could be used to generate value 

for the membership, even if such space 

is not specifically used for member 

business. 

At least seven commenters argued 

that the requirement for full occupancy 

should allow for an FCU to lease or 

sublease a portion of its premises as 

needed. Two of these commenters 

argued that restrictive occupancy 

requirements reduce access to 

commercial space and limit an FCU’s 

ability to acquire space in the most costeffective manner. Four commenters 

cited a number of reasons why an FCU 

might want to lease its property, 

including zoning or retail requirements, 

city entitlement, or other use 

requirements. 

Four commenters discussed credit 

union mergers. They suggested that, in 

a merger, space may be available in an 

existing building if operations are 

combined. The ability to lease or 

sublease this excess space could permit 

an FCU to realize short-term income 

from the lease while retaining property 

that fits into the FCU’s long-term plans 

for member service. Four commenters 

suggested that an FCU should be 

allowed to maximize long-term assets, 

instead of avoiding reasonable 

acquisitions or underutilizing space to 

ensure compliance with occupancy 

requirements. 

As discussed above, NCUA’s longstanding interpretation is that the 

limited statutory authority for FCUs to 

invest in property mandates that full 

occupancy must be achieved, and there 

is no authority for an FCU to engage in 

real estate activities that do not support 

its purpose of providing financial 

services to its members. The Board has 

also long recognized, however, that in 

planning for future expansion, FCUs 

should be able to sell or lease their 

excess capacity as a matter of good 

business practice.16 Indeed, the 

incidental powers rule permits the sale 

or lease of excess capacity in FCU fixed 

assets.17 Excess capacity is the excess 

use or capacity remaining in facilities, 

equipment, or services that an FCU 

properly invested in with the good faith 

intent to serve its members, and where 

the FCU reasonably anticipates that the 

excess capacity will be taken up by the 

future expansion of services to its 

members.18 An FCU’s sale or lease of 

excess capacity may, for example, 

involve leasing excess office space, 

sharing employees, or using data 

processing systems to process 

information for third parties.19

However, in adopting the excess 

capacity provision in the incidental 

powers rule, the Board noted in 2001 

that: 

NCUA has consistently held the position 

that an FCU has limited authority in the 

leasing of fixed assets and the sale of excess 

data processing capacity. FCUs are not in the 

business of providing others with data 

processing capacity or any other service that 

is not within their express or incidental 

powers; rather, they are cooperative financial 

institutions organized to provide financial 

services to their members.20

Accordingly, the Board emphasizes 

that an FCU already has the authority 

under the incidental powers rule to 

obtain short-term income by leasing 

excess capacity in its fixed assets to 

third parties. However, there are limits 

to that authority. The fixed assets must 

have been acquired by an FCU, in good 

faith, for the purpose of providing 

financial services to its members, and 

the FCU must reasonably anticipate, and 

plan,21 that the excess capacity will be 

fully occupied by the FCU in the future. 

II. Summary of the 2015 Proposal 

As discussed above, because of the 

public comments received in response 

to the July 2014 proposal, the Board is 

issuing this 2015 proposal to address 

commenters’ requests for additional 

regulatory relief from the aggregate limit 

on fixed assets. The Board is also 

incorporating similar partial occupancy 

requirements from the July 2014 

proposal, with one modification to the 

proposed single time period for partial 

occupancy, to provide additional relief 

to FCUs. 

A. Aggregate Limit On Investments in 

Fixed Assets 

Section 701.36(c) of the current fixed 

assets rule establishes an aggregate limit 

on investments in fixed assets for FCUs 

with $1,000,000 or more in assets.22 For 

an FCU meeting this asset threshold, the 

aggregate of all its investments in fixed 

assets is limited to five percent of its 

shares and retained earnings, unless 

NCUA grants a waiver establishing a 

higher limit.23 The aggregate limit is not 

statutorily required by the FCU Act. 

Rather, it was established by regulation 

in 1978 as a safety and soundness 

measure to prevent losses or impaired 

operations of FCUs from overinvestment 

in non-income producing fixed assets.24

In the past few years, and most 

recently in response to the July 2014 

proposal, FCUs have asked the Board to 

consider increasing or eliminating the 

aggregate limit.25 In addition to the 


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26See 43 FR 26317 (June 19, 1978) (‘‘This 

regulation is intended to ensure that the officials of 

FCUs have considered all relevant factors prior to 

committing large sums of members’ funds to the 

acquisition of fixed assets.’’); 49 FR 50365, 50366 

(Dec. 28, 1984) (‘‘The intent of the regulation is to 

prevent, or at least curb, excessive investments in 

fixed assets and the related costs and expenses that 

may be beyond the financial capability of the credit 

union.’’); 54 FR 18466, 18467 (May 1, 1989) (‘‘[T]he 

purpose of the regulation is to provide some control 

on the potential risk of excess investment and/or 

commitment to invest substantial sums in fixed 

assets.’’). 

27This figure includes all FCUs over $1,000,000 

in assets. FCUs under that asset threshold and 

federally insured, state-chartered credit unions are 

not subject to the aggregate limit and therefore 

excluded from this figure. 

28Since 2004, approximately 94 percent of 

waivers were for levels of fixed assets less than 10 

percent of total assets. 29The RegFlex Program was established in 2002, 

66 FR 58656 (Nov. 23, 2001), and eliminated in 

2012, 77 FR 31981 (May 31, 2012). RegFlex relieved 

FCUs from certain regulatory restrictions and 

granted them additional powers if they 

demonstrated sustained superior performance as 

measured by CAMEL ratings and net worth 

classification. One of the flexibilities enjoyed by 

RegFlex FCUs at one time was relief from the 

aggregate limit on fixed assets. 

30As of December 31, 2013, in 95 of those 120 

FCU (80 percent), fixed assets levels had declined 

to under 5 percent. 

31See NCUA Examiner’s Guide, Chapter 8. 

32The credit union’s board needs to approve 

plans for any investment in fixed assets that will 

materially affect the credit union’s earnings. Credit 

union management should only purchase fixed 

assets in compliance with policy approved by the 

credit union’s board. 

comments discussed above, FCUs have 

repeatedly mentioned that the five 

percent limit is too low for FCUs to 

effectively manage their investments in 

fixed assets and to achieve growth. They 

have argued that the current limit does 

not allow FCUs adequate flexibility in 

acquiring fixed assets to serve their 

members’ needs. 

As discussed in the preamble to the 

July 2014 proposal, the objective of the 

fixed assets rule is to place reasonable 

limits on the risk associated with 

excessive or speculative acquisition of 

fixed assets.26 Upon further review and 

consideration, the Board believes this 

objective can be effectively achieved 

through the supervisory process as 

opposed to a regulatory limit. 

Accordingly, the Board proposes to 

eliminate the five percent aggregate 

limit on FCU investments in fixed 

assets. It also proposes to eliminate the 

related provisions governing waivers of 

the aggregate limit because those 

provisions will no longer be necessary 

in the absence of a prescriptive 

regulatory limit. 

An FCU’s ability to afford a given 

level of fixed assets depends on a 

variety of factors, including its level of 

net worth and earnings, its operational 

efficiency, and risks to its future 

earnings and growth inherent in the 

FCU’s balance sheet and strategic plans. 

Excessive levels of fixed assets can 

create earnings and capital 

accumulation problems for an FCU, and 

lead to greater losses to the National 

Credit Union Share Insurance Fund 

(NCUSIF), if the FCU fails and its fixed 

assets cannot be sold at or above their 

recorded value. Fixed assets not only 

hold member funds in non-income 

producing assets, but they also typically 

involve a material increase in FCU 

operating expenses, such as 

depreciation, maintenance, and other 

related expenses. According to NCUA 

data, excessive levels of fixed assets 

have contributed to the failure of some 

credit unions. Of the 63 FCU failures 27

that resulted in a loss to the NCUSIF 

since 2009, excessive levels of fixed 

assets contributed in part to the failures 

in 10 of those cases (16 percent), and 

were a primary contributor in 3 cases (5 

percent). However, overall, excessive 

fixed asset levels have not been a 

disproportionate contributor to FCU 

failures. In many cases, FCUs have 

effectively managed elevated levels of 

fixed assets to safely achieve member 

service and growth objectives. For the 

264 FCUs with fixed assets ratios 

exceeding five percent as of December 

2004, 197 (74.62 percent) were still 

active as of December 2013. In 

comparison, the total number of credit 

unions from December 2004 to 2013 

went from 9,128 to 6,554, representing 

a 71.8 percent survival rate. Thus, the 

level of consolidation in FCUs with 

elevated fixed assets levels has been no 

higher than for FCUs with lower levels. 

Also, CAMEL rating and net worth ratio 

distributions were not significantly 

different for FCUs with elevated fixed 

assets levels than for those without. 

Further, over the last 10 years, NCUA 

has granted approximately 500 waivers 

to FCUs to operate at levels of fixed 

assets above the five percent aggregate 

limit, including some above 20 percent 

of total assets.28

In addition, the experience with FCUs 

operating with higher fixed assets ratios 

under NCUA’s former Regulatory 

Flexibility Program (RegFlex) 29

indicates that the risks associated with 

investment in fixed assets are 

manageable through supervision. Out of 

the 149 former RegFlex FCUs with fixed 

assets over the five percent aggregate 

limit, 120 FCUs (80 percent) were still 

operating nearly a decade later.30 By 

comparison, as noted above, the overall 

survival rate for all credit unions during 

the same time period was 71.8 percent. 

Further, 25 of those 120 FCUs (20 

percent) have continued to operate 

effectively above the five percent 

aggregate limit, indicating that some 

FCUs can safely maintain elevated 

levels of fixed assets over time. 

Therefore, upon further analysis, the 

Board has determined that oversight of 

FCU investments in fixed assets would 

be effectively achieved through the 

supervisory process, and evaluated on a 

case-by-case basis. The Board 

emphasizes, however, that NCUA’s 

supervisory expectations remain high. 

The Board cautions that the proposed 

elimination of the aggregate limit should 

not be interpreted as an invitation for 

FCUs to make excessive, speculative, or 

otherwise irresponsible investments in 

fixed assets. Rather, the 2015 proposal 

reflects the Board’s recognition that 

relief from the prescriptive limit on 

fixed assets is appropriate, but FCU 

investments in fixed assets are, and will 

continue to be, subject to supervisory 

review. If an FCU has an elevated level 

of fixed assets, NCUA will maintain 

close oversight to ensure it conducts 

prudent planning and analysis with 

respect to fixed assets acquisitions, can 

afford any such acquisitions, and 

properly manages any ongoing risk to its 

earnings and capital. 

If the Board finalizes this 2015 

proposal, NCUA will issue updated 

supervisory guidance to examiners that 

will be shared with FCUs. The guidance 

will reflect current supervisory 

expectations 31 that require an FCU to 

demonstrate appropriate due diligence, 

ongoing board and management 

oversight,32 and prudent financial 

analysis to ensure the FCU can afford 

any impact on earnings and net worth 

levels caused by its purchase of fixed 

assets. The guidance will ensure 

examiners effectively identify any risks 

to safety and soundness due to an FCU’s 

excessive investment in fixed assets. It 

will focus on evaluating the quality of 

an FCU’s fixed assets management 

relative to its planning for fixed assets 

acquisitions and controlling the related 

financial risks. The guidance will also 

focus on evaluating an FCU’s quality of 

earnings and capital relative to its 

projected performance under both 

baseline (expected) and stressed 

scenarios. 

B. Partial Occupancy 

For the reasons discussed above, the 

Board is incorporating, with one change, 

the proposed amendments in the July 

2014 proposal relating to the partial 

occupancy requirements for FCU 

premises acquired for future expansion. 

Specifically, the Board is proposing to 

require an FCU to partially occupy any 

premises acquired for future expansion, 


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33 44 U.S.C. 3507(d); 5 CFR part 1320. 

regardless of whether the premises are 

improved or unimproved property, 

within six years from the date of the 

FCU’s acquisition of those premises. In 

the July 2014 proposal, the Board had 

proposed to require partial occupancy 

within a uniform five years. However, as 

discussed above, in response to public 

comments, this 2015 proposal provides 

six years rather than five years for 

partial occupancy, which retains the 

current time period for unimproved 

land or unimproved real property and 

extends the current time period for 

improved premises by three years. In 

addition, the Board is reissuing in this 

2015 proposal, without change, the 

amendment in the July 2014 proposal to 

eliminate the requirement that an FCU 

that wishes to apply for a waiver of the 

partial occupancy requirement must do 

so within 30 months of acquisition of 

the property acquired for future 

expansion. 

C. Conforming Amendments 

The Board is also proposing to make 

conforming amendments to the fixed 

assets rule’s scope and definitions 

sections. Specifically, the Board 

proposes to amend § 701.36(a) of the 

current fixed assets rule to remove 

reference to the aggregate limit on FCU 

investments in fixed assets. This 

language is unnecessary with the 

proposed removal of the aggregate limit. 

This 2015 proposal also amends 

§ 701.36(b) of the current fixed assets 

rule to remove the regulatory definitions 

of the following terms: ‘‘fixed assets,’’ 

‘‘furniture, fixtures, and equipment,’’ 

‘‘investments in fixed assets,’’ ‘‘retained 

earnings,’’ and ‘‘shares.’’ These 

definitions are included in the current 

rule to provide meaning to certain terms 

used in the regulatory provision 

establishing the aggregate limit on fixed 

assets. With the proposed removal of the 

aggregate limit, however, inclusion of 

these regulatory definitions is no longer 

necessary. 

D. Amended Title 

Finally, the Board proposes to amend 

the title of the regulation to more 

accurately reflect its amended scope and 

applicability. Currently, the rule is titled 

‘‘Federal credit union ownership of 

fixed assets.’’ If the 2015 proposal is 

finalized, the rule will be retitled 

‘‘Federal credit union occupancy, 

planning, and disposal of acquired and 

abandoned premises.’’ 

E. Effect on Existing Waivers 

Should the 2015 proposal become 

finalized as proposed, any existing 

waiver of the five percent aggregate 

limit on fixed assets will be rendered 

moot as of the effective date of the final 

rule. 

III. Request for Public Comment 

Because the proposed amendments 

are intended to grant regulatory relief to 

FCUs, and the Board perceives no 

reason to delay their implementation, 

the Board is issuing the 2015 proposal 

for a 30-day public comment period 

instead of NCUA’s customary 60 days. 

Additionally, the Board already 

solicited comments on this subject in 

the July 2014 proposal. The Board 

invites comment on all issues discussed 

in this 2015 proposal; however, as noted 

earlier, it is not necessary for 

commenters to resubmit any comments 

they previously submitted in response 

to the July 2014 proposal. NCUA has 

already reviewed those comments and 

will consider them again before 

finalizing this rule. 

IV. Regulatory Procedures 

A. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

generally requires that, in connection 

with a notice of proposed rulemaking, 

an agency prepare and make available 

for public comment an initial regulatory 

flexibility analysis that describes the 

impact of a proposed rule on small 

entities. A regulatory flexibility analysis 

is not required, however, if the agency 

certifies that the rule will not have a 

significant economic impact on a 

substantial number of small entities 

(defined for purposes of the RFA to 

include credit unions with assets less 

than $50 million) and publishes its 

certification and a short, explanatory 

statement in the Federal Register 

together with the rule. The 2015 

proposal would provide regulatory relief 

to help FCUs better manage their 

investments in fixed assets. NCUA 

certifies that the 2015 proposal will not 

have a significant economic impact on 

a substantial number of small credit 

unions. 

B. Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(PRA) applies to rulemakings in which 

an agency by rule creates a new 

paperwork burden on regulated entities 

or modifies an existing burden.33 For 

purposes of the PRA, a paperwork 

burden may take the form of either a 

reporting or a recordkeeping 

requirement, both referred to as 

information collections. The 2015 

proposal provides regulatory relief to 

FCUs by eliminating the requirement 

that, for an FCU with $1,000,000 or 

more in assets, the aggregate of all its 

investments in fixed assets must not 

exceed five percent of its shares and 

retained earnings, unless it obtains a 

waiver from NCUA. The 2015 proposal 

does not impose new paperwork 

burdens. However, the 2015 proposal 

would relieve FCUs from the current 

requirement to obtain a waiver to 

exceed the five percent aggregate limit 

on investments in fixed assets. 

According to NCUA records, as of 

September 30, 2014, there were 3,707 

FCUs with assets over $1,000,000 and 

subject to the five percent aggregate 

limit on fixed assets. Of those, 

approximately 150 FCUs would prepare 

and file a new waiver request to exceed 

the five percent aggregate limit. This 

effort, which is estimated to create 15 

hours burden per waiver, would no 

longer be required under the 2015 

proposal. Accordingly, the reduction to 

existing paperwork burdens that would 

result from the 2015 proposal is 

analyzed below: 

Estimate of the Reduced Burden by 

Eliminating the Waiver Requirement 

Estimated FCUs which will no longer 

be required to prepare a waiver request 

and file a waiver request: 150. 

Frequency of waiver request: Annual. 

Reduced hour burden: 15. 

150 FCUs × 15 hours = 2250 hours 

annual reduced burden 

In accordance with the requirements 

of the PRA, NCUA intends to obtain a 

modification of its OMB Control 

Number, 3133–0040, to support these 

changes. NCUA is submitting a copy of 

the 2015 proposal to OMB, along with 

an application for a modification of the 

OMB Control Number. 

The PRA and OMB regulations 

require that the public be provided an 

opportunity to comment on the 

paperwork requirements, including an 

agency’s estimate of the burden of the 

paperwork requirements. The Board 

invites comment on: (1) Whether the 

paperwork requirements are necessary; 

(2) the accuracy of NCUA’s estimates on 

the burden of the paperwork 

requirements; (3) ways to enhance the 

quality, utility, and clarity of the 

paperwork requirements; and (4) ways 

to minimize the burden of the 

paperwork requirements. 

Comments should be sent to the 

NCUA Contact and the OMB Reviewer 

listed below: 

NCUA Contact: Amanda Wallace, 

National Credit Union Administration, 

1775 Duke Street, Alexandria, Virginia 

22314–3428, Fax No. 703–837–2861, 

Email: OCIOPRA@ncua.gov. 

OMB Contact: Office of Management 

and Budget, ATTN: Desk Officer for the 


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34Public Law 105–277, 112 Stat. 2681 (1998). 

National Credit Union Administration, 

Office of Information and Regulatory 

Affairs, Washington, DC 20503. 

C. Executive Order 13132 

Executive Order 13132 encourages 

independent regulatory agencies to 

consider the impact of their actions on 

state and local interests. NCUA, an 

independent regulatory agency, as 

defined in 44 U.S.C. 3502(5), voluntarily 

complies with the executive order to 

adhere to fundamental federalism 

principles. Because the fixed assets 

regulation applies only to FCUs, the 

2015 proposal would not have a 

substantial direct effect on the states, on 

the relationship between the national 

government and the states, or on the 

distribution of power and 

responsibilities among the various 

levels of government. As such, NCUA 

has determined that this rule does not 

constitute a policy that has federalism 

implications for purposes of the 

executive order. 

D. Assessment of Federal Regulations 

and Policies on Families 

NCUA has determined that this rule 

will not affect family well-being within 

the meaning of Section 654 of the 

Treasury and General Government 

Appropriations Act of 1999.34

List of Subjects in 12 CFR Part 701 

Credit unions, Reporting and 

recordkeeping requirements. 

By the National Credit Union 

Administration Board, on March 19, 2015. 

Gerard Poliquin, 

Secretary of the Board. 

For the reasons stated above, NCUA 

proposes to amend 12 CFR 701.36 as 

follows: 

PART 701—ORGANIZATION AND 

OPERATION OF FEDERAL CREDIT 

■ 1. The authority for part 701 

continues to read as follows: 

Authority: 12 U.S.C. 1752(5), 1757, 1765, 

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 § 701.36 revise the section 

heading and paragraph (a) to read as 

follows: 

§ 701.36 Federal credit union occupancy, 

planning, and disposal of acquired and 

abandoned premises. 

(a) Scope. Section 107(4) of the 

Federal Credit Union Act (12 U.S.C. 

1757(4)) authorizes a federal credit 

union to purchase, hold, and dispose of 

property necessary or incidental to its 

operations. This section interprets and 

implements that provision by 

establishing occupancy, planning, and 

disposal requirements for acquired and 

abandoned premises, and by prohibiting 

certain transactions. 

This section applies only to federal 

credit unions. 

* * * * * 

■ 3. Revise § 701.36 paragraph (b) by 

removing the following definitions: 

‘‘fixed assets’’, ‘‘furniture, fixtures, and 

equipment’’, ‘‘investments in fixed 

assets’’, ‘‘retained earnings’’, and 

‘‘shares’’. 

■ 4. Remove § 701.36 paragraph (c). 

■ 5. Revise § 701.36 paragraph (d)(2) to 

read as follows: 

(d) * * * 

(2) If a federal credit union acquires 

premises for future expansion, 

including unimproved land or 

unimproved real property, it must 

partially occupy them within a 

reasonable period, but no later than six 

years after the date of acquisition. 

NCUA may waive the partial occupation 

requirements. To seek a waiver, a 

federal credit union must submit a 

written request to its Regional Office 

and fully explain why it needs the 

waiver. The Regional Director will 

provide the federal credit union a 

written response, either approving or 

disapproving the request. The Regional 

Director’s decision will be based on 

safety and soundness considerations. 

* * * * * 

■ 6. In § 701.36 redesignate paragraph 

(d) as paragraph (c) and paragraph (e) as 

paragraph (d). 

[FR Doc. 2015–06816 Filed 3–27–15; 8:45 am] 

BILLING CODE 7535–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2015–0674; Directorate 

Identifier 2014–SW–019–AD] 

RIN 2120–AA64 

Airworthiness Directives; Airbus 

Helicopters Deutschland GmbH 

(Previously Eurocopter Deutschland 

GmbH) Helicopters 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: We propose to supersede 

airworthiness directive (AD) 2014–05– 

06 for certain Eurocopter Deutschland 

GmbH (ECD) (now Airbus Helicopters 

Deutschland GmbH) Model EC135 and 

MBB–BK 117 C–2 helicopters to correct 

an error. AD 2014–05–06 currently 

requires inspecting the flight-control 

bearings repetitively, replacing any 

loose bearing with an airworthy flightcontrol bearing, and installing bushings 

and washers. This proposed AD would 

require the same actions. This proposed 

AD results from the discovery of an 

error in the compliance time for AD 

2014–05–06. These proposed actions are 

intended to prevent the affected control 

lever from shifting, contacting the 

helicopter structure, and reducing 

control of the helicopter. 

DATES: We must receive comments on 

this proposed AD by May 29, 2015. 

ADDRESSES: You may send comments by 

any of the following methods: 

• Federal eRulemaking Docket: Go to 

http://www.regulations.gov. Follow the 

online instructions for sending your 

comments electronically. 

• Fax: 202–493–2251. 

• Mail: Send comments to the U.S. 

Department of Transportation, Docket 

Operations, M–30, West Building 

Ground Floor, Room W12–140, 1200 

New Jersey Avenue SE., Washington, 

DC 20590–0001. 

• Hand Delivery: Deliver to the 

‘‘Mail’’ address between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal holidays. 

Examining the AD Docket 

You may examine the AD docket on 

the Internet at http://

www.regulations.gov or in person at the 

Docket Operations Office between 9 

a.m. and 5 p.m., Monday through 

Friday, except Federal holidays. The AD 

docket contains this proposed AD, the 

European Aviation Safety Agency 


tkelley on DSK3SPTVN1PROD with PROPOSALS