10944 Federal Register / Vol. 87, No. 39 / Monday, February 28, 2022 / Rules and Regulations 

1 12 U.S.C. 1751 et seq. 

by the residence to allow for the 

calculation of historical business energy 

use from total energy consumption. 

Comment 21: CROPP would like an 

adjustment to $20,000 or Less Funding 

Pool. 

‘‘With nearly 15 years’ experience 

with REAP applications, we believe that 

increasing the maximum award request 

in the smaller project funding pool is 

long overdue and will significantly 

increase program access and accelerate 

renewable energy projects in rural areas. 

Currently, the average small to midsize Organic Valley dairy requires a 

40kW–50kW RES to offset 100% of the 

farm’s non-renewable energy 

consumption. Our estimation is a solar 

array to service this energy need is in 

the range of $130,000–$150,000, which 

would exceed the threshold of 

maximum allowed cost-share in the 

$20,000 funding pool. We recommend 

increasing the maximum award request 

to $40,000 in the smaller project 

funding pool. A simple adjustment for 

inflation since the program’s start would 

validate an increase and be more 

reflective of the overall needs of farmers 

and rural businesses in this category of 

need. It is our experience that RES in 

the 40kW–50kW range do not receive 

support in the larger, unrestricted 

funding pool. This pool is typically 

obligated to a very small number of 

large RES projects.’’ 

Agency response: The Agency has 

concern that fewer projects would be 

funded by the suggested change. The 

$20,000 or less maximum award request 

limitation would require a statutory 

change. 

Comment 22: CROPP says it has been 

their experience that ‘‘significant delays 

(12+ months) in the obligation of funds 

at the state level is impacting project 

success and farmer interest in the 

program. Historically, the obligation of 

funds has been within a timeframe of 

three to six months. Within the previous 

two years, we have seen the obligation 

timeframe extend to 12+ months. 

Administrative delays need to be 

addressed to ensure that project bids 

and farmer costs remain timely and 

relevant to avoid significant unexpected 

cost and installation burdens. It is 

unacceptable to expect an applicant to 

maintain contractual obligations that 

extend out as far as a year, as material 

and labor costs, as well as service 

availability, fluctuate sometimes 

monthly.’’ 

Agency response: Obligation of funds 

is tied to annual application and 

statutory obligation deadlines. October 

31 is the application deadline for grant 

requests of $20,000 or less that wish to 

compete for the first half of the state 

allocation of set-aside funds. March 31 

is the application deadline for grants 

requests of $20,000 or less that wish to 

compete for the second half of the state 

allocation of set-aside funds. March 31 

is also the deadline for all other REAP 

applications regardless of the size of the 

grant request. Complete and eligible 

projects with completed environmental 

reviews are able to compete for funding. 

Applicants should contact Agency staff 

early in the process to discuss 

application requirements including the 

environmental review process. 

The Agency appreciates the interest of 

the American Biogas Council, 

Agriculture Energy Coalition, Ebenezer 

MGMT, LLC, Environmental Law & 

Policy Center and CROPP Cooperative 

with regard to the Rural Energy for 

America Program final rule and thanks 

them for their submissions. The Agency 

confirms the rule without change. 

Karama Neal, 

Administrator, Rural Business and 

Cooperative Service. 

[FR Doc. 2022–03884 Filed 2–25–22; 8:45 am] 

BILLING CODE 3410–XY–P 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Part 702 

[NCUA–2022–0005] 

RIN 3133–AF19 

Prompt Corrective Action: Earnings 

Retention Waivers and Net Worth 

Restoration Plans 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Interim final rule. 

SUMMARY: The NCUA Board (Board) is 

extending two temporary changes to its 

prompt corrective action (PCA) 

regulations to help ensure that federally 

insured credit unions (FICUs) remain 

operational and liquid during the 

COVID–19 crisis. The first amends these 

regulations to temporarily extend the 

Board’s ability to issue an order 

applicable to all FICUs to waive the 

earnings retention requirement for any 

FICU that is classified as adequately 

capitalized. The second extends a 

provision that modifies the specific 

documentation required for net worth 

restoration plans (NWRPs) for FICUs 

that become undercapitalized. These 

temporary modifications will remain in 

place until March 31, 2023. This rule is 

substantially similar to an interim final 

rule that the Board published on April 

19, 2021 (‘‘2021 PCA interim final’’). 

DATES: This rule is effective on February 

28, 2022. Comments must be received 

on or before April 29, 2022. 

ADDRESSES: You may submit written 

comments, identified by RIN 3133– 

AF19, by any of the following methods. 

Please send comments by one method 

only. 

• Federal eRulemaking Portal: 

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

instructions for submitting comments 

for Docket # NCUA–2022–0055. 

• Fax: (703) 518–6319. Include 

‘‘[Your Name]—Comments on ‘‘Prompt 

Corrective Action: Earnings Retention 

Waivers and Net Worth Restoration 

Plans’’ in the transmittal. 

• Mail: Address to Melane ConyersAusbrooks, 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 the Federal 

eRulemaking Portal at https://

www.regulations.gov as submitted, 

except for those we cannot post for 

technical reasons. The NCUA will not 

edit or remove any identifying or 

contact information from the public 

comments submitted. Due to social 

distancing measures in effect, the usual 

opportunity to inspect paper copies of 

comments in the NCUA’s law library is 

currently unavailable. After social 

distancing measures are relaxed, visitors 

may make an appointment to review 

paper copies by calling (703) 518–6540 

or emailing OGCMail@ncua.gov. 

FOR FURTHER INFORMATION CONTACT: 

Policy and Analysis: Kathryn Metzker, 

Risk Officer, or Victoria Nahrwold, 

Associate Director, Office of 

Examination and Insurance, at (703) 

518–6360; Legal: Marvin Shaw, Senior 

Staff Attorney and Thomas Zells, Senior 

Staff Attorney, Office of General 

Counsel, at (703) 518–6540; or by mail 

at: National Credit Union 

Administration, 1775 Duke Street, 

Alexandria, Virginia 22314. 

SUPPLEMENTARY INFORMATION: 

I. Legal Authority 

The Board is issuing this interim final 

rule pursuant to its authority under the 

Federal Credit Union Act.1 The Act 

grants the Board a broad mandate to 

issue regulations that govern both 

federal credit unions and, more 

generally, all FICUs. For example, 

Section 120 of the Act is a general grant 

of regulatory authority and authorizes 

the Board to prescribe rules and 


khammond on DSKJM1Z7X2PROD with RULES
Federal Register / Vol. 87, No. 39 / Monday, February 28, 2022 / Rules and Regulations 10945 

2 12 U.S.C. 1766(a). 

3 12 U.S.C. 1789. 

4An example of a provision of the Act that 

provides the Board with specific rulemaking 

authority is Section 207 (12 U.S.C. 1787), which is 

a specific grant of authority over share insurance 

coverage, conservatorships, and liquidations. 

5 12 U.S.C. 1790d(b). 

6Pub. L. 105–219, 112 Stat. 913 (1998). 

7 12 U.S.C. 1790d et seq. 

8 12 U.S.C. 1790d(a)(1). 

9 12 U.S.C. 1790d(m). Part 704, which this 

rulemaking does not affect, applies capital and PCA 

requirements to corporate credit unions. 

10 12 U.S.C. 1790d(e), (f), (g), and (i); 12 U.S.C. 

1786(h)(1)(F); 12 U.S.C. 1786(a)(3)(A)(1). 

11 12 U.S.C. 1790d(b)(1)(A); S. Rep. No. 193, 

105th Cong., 2d Sess. 12 (1998) (S.Rep.); H.R. Rep. 

No. 472, 105th Cong; see also 12 U.S.C. 1831o 

(Section 38 of the Federal Deposit Insurance Act 

setting forth the PCA requirements for banks). 

12 12 U.S.C. 1790d(e). 

13 12 U.S.C. 1790d(e)(1). 

14 12 U.S.C. 1790d(e)(2). 

15 12 U.S.C. 1790d(e)(2)(B). 

16 12 U.S.C. 1790d(f). 

17 65 FR 8560 (Feb. 18, 2000). 

18 12 CFR 702.107(b)(9), which applies to 

undercapitalized FICUs. 

19 64 FR 27090 (May 18, 1999). 

20 85 FR 31952, 31954 (May 28, 2020). 

21The Board notes that 12 U.S.C. 1790d(e)(1) 

requires earnings retention. However, additional 

provisions in 12 CFR part 702, including those 

related to timing and the content of the application, 

supplement this statutory provision. 

22 85 FR 31952 (May 28, 2020) (‘‘2020 PCA 

interim final rule’’). 

23As detailed subsequently in this preamble, the 

NCUA’s 2015 final rule (80 FR 66626 (Oct. 29, 

2015)) on risk-based capital went into effect on 

January 1, 2022, and amended certain provisions in 

part 702. As a result, the earnings retention 

requirement in § 702.201 was moved to § 702.106. 

Accordingly, this interim final rule implements the 

amendment made by the 2020 and 2021 PCA 

interim final rules to § 702.201 in § 702.106. 

24As detailed subsequently in this preamble, the 

NCUA’s 2015 final rule on risk-based capital went 

Continued 

regulations for the administration of the 

Act.2 Section 209 of the Act is a plenary 

grant of regulatory authority to issue 

rules and regulations necessary or 

appropriate for the Board to carry out its 

role as share insurer for all FICUs.3

Other provisions of the Act confer 

specific rulemaking authority to address 

prescribed issues or circumstances.4

Such specific rulemaking authority is 

set forth in Section 216(b) about PCA.5

II. Prompt Corrective Action 

Background 

A. Statutory Provisions 

In 1998, Congress enacted the Credit 

Union Membership Access Act 

(‘‘CUMAA’’).6 CUMAA amended the 

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

require the NCUA to adopt, by 

regulation, a system of PCA consisting 

of minimum capital standards and 

corresponding remedies to improve the 

net worth of federally-insured ‘‘natural 

person’’ credit unions.7 The purpose of 

PCA is to ‘‘resolve the problems of 

insured credit unions at the least 

possible long-term loss to the [National 

Credit Union Share Insurance Fund 

(‘NCUSIF’)].’’ 8 The PCA section of the 

Act does not apply to corporate credit 

unions.9

The statute designated three principal 

components of PCA: (1) A framework 

combining mandatory actions 

prescribed by statute with discretionary 

actions developed by the NCUA; (2) an 

alternative system of PCA to be 

developed by the NCUA for FICUs 

which CUMAA defines as ‘‘new;’’ and 

(3) a risk-based net worth requirement 

to apply to FICUs which the NCUA 

defines as ‘‘complex.’’ Besides those 

FICUs that meet the statutory definition 

of a ‘‘new’’ FICU, CUMAA mandated a 

framework of mandatory and 

discretionary supervisory actions 

indexed to five statutory net worth 

categories. These categories are: ‘‘well 

capitalized,’’ ‘‘adequately capitalized,’’ 

‘‘undercapitalized,’’ ‘‘significantly 

undercapitalized,’’ and ‘‘critically 

undercapitalized.’’ The mandatory 

actions and conditions triggering 

conservatorship and liquidation are 

expressly prescribed by statute.10 To 

supplement the mandatory actions, the 

statute directed the NCUA to develop 

discretionary actions which are 

‘‘comparable’’ to the ‘‘discretionary 

safeguards’’ available under Section 38 

of the Federal Deposit Insurance Act, 

which is the statute that applies PCA to 

other federally-insured depository 

institutions.11

The Act addresses the earnings 

retention requirement applicable to 

FICUs that are not well capitalized.12

Such FICUs are required to annually set 

aside as net worth an amount equal to 

not less than 0.4 percent of their total 

assets.13 The Board has the authority to 

decrease the earnings retention 

requirement.14 To do this, the Board 

may issue an order if it determines that 

the decrease is necessary to avoid a 

significant redemption of shares and 

further the purpose of that PCA 

provision of the Act. The Act also 

requires the Board to periodically 

review any order issued under that 

section.15

Separately, the Act sets forth 

requirements related to NWRPs, which 

FICUs must submit to the NCUA when 

it becomes undercapitalized.16 The 

regulatory provisions addressing the 

procedures and documentation 

requirements for NWRPs are codified at 

12 CFR 702.111 and are detailed below. 

B. Regulatory Provisions 

In February 2000, the Board adopted 

part 702 and subpart L of part 747 

establishing a comprehensive system of 

PCA that combines mandatory 

supervisory actions prescribed by the 

statute with discretionary supervisory 

actions developed by the NCUA (2000 

final rule).17 Each of these supervisory 

actions is indexed to the five statutory 

net worth categories noted above. The 

2000 final rule also permits the NCUA 

to impose ‘‘other action to better carry 

out the purpose of PCA’’ than any 

discretionary supervisory action 

available in that category.18 In the 

proposal that provided the basis for the 

2000 final rule, the Board noted that 

‘‘[p]art 702 also amplifies the terms of 

the statutory exception to the 0.4 

percent minimum set aside. 

Specifically, the Board stated that it 

interprets the phrase by order to 

indicate that exceptions to the 0.4 

percent statutory minimum are to be 

granted on a case-by-case basis.’’ 19 But 

the Board revisited this interpretation in 

the May 2020 interim final rule on this 

subject, finding that the Act does not 

require FICUs to send a specific 

application or the NCUA to issue 

individual orders for each FICU.20 The 

Board also notes that the current, 

specific requirements on earnings 

retention waivers are based on a 

regulatory provision rather than a 

specific statutory directive.21 Thus, 

issuing a broadly applicable order is 

consistent with the overall statutory 

structure of PCA, which combines both 

mandatory and discretionary provisions. 

During the COVID–19 pandemic, many 

FICUs have broadly faced similar 

economic circumstances that affect net 

worth and earnings. Given these 

experiences, and the potential for 

similar volatility and uncertainty in the 

future, the Board has determined it is 

appropriate to implement the changes in 

this rule to extend the provisions that 

authorize a broadly applicable order to 

decrease the earnings-retention 

requirements for multiple FICUs and to 

allow a streamlined NWRP in certain 

circumstances. 

III. Recent Interim Final Rules 

A. May 2020 Interim Final Rule 

On May 21, 2020, the Board approved 

an interim final rule that temporarily 

amended two provisions in the PCA 

regulations in part 702.22 The first 

amendment addressed the earnings 

retention requirement in § 702.201 for 

FICUs classified as adequately 

capitalized.23 The second amendment 

addressed the NWRPs for FICUs in 

§ 702.206(c) that have become 

undercapitalized.24


khammond on DSKJM1Z7X2PROD with RULES
10946 Federal Register / Vol. 87, No. 39 / Monday, February 28, 2022 / Rules and Regulations 

into effect on January 1, 2022, and amended certain 

provisions in part 702. As a result, the requirements 

for NWRPs in § 702.206(c) were moved to 

§ 702.111(c). Accordingly, this interim final rule 

implements the amendment made by the 2020 and 

2021 PCA interim final rules to § 702.206(c) in 

current § 702.111(c). 

25https://www.ncua.gov/regulation-supervision/ 

letters-credit-unions-other-guidance/temporaryorder-decreasing-earnings-retention-requirement. 

26 12 CFR 702.301. The term consumer FICU is 

being used instead of the term natural person FICU. 

This terminology is being used for clarity, however, 

the term natural person FICU will continue to be 

used for the accompanying regulatory text changes 

for consistency with other sections of the NCUA’s 

regulations. 

27 86 FR 20258 (Apr. 19, 2021). 

28Pub. L. 117–2 (Mar. 11, 2021). 

29Average annual share growth in the 10 years 

preceding the pandemic was only 5.8 percent. 

30 80 FR 66626 (Oct. 29, 2015). 

The May 2020 interim final rule was 

issued in response to the COVID–19 

pandemic and sought to ensure that 

FICUs continue to operate efficiently, to 

ensure that FICUs maintain sufficient 

liquidity, and to account for the 

potential temporary increase in shares 

that FICUs may experience during the 

COVID–19 pandemic. Specifically, the 

Board believed the temporary 

amendments in the interim final rule 

would allow FICUs to better utilize 

resources by reducing the 

administrative burden associated with a 

temporary increase in shares. The Board 

concluded that the amendments would 

provide FICUs with necessary 

additional flexibility in a manner 

consistent with the NCUA’s 

responsibility to maintain the safety and 

soundness of the credit union system. 

The Board made the temporary 

amendments effective upon publication 

and specified that they would remain in 

place through the end of calendar year 

2020. The Board sought comment on the 

interim final rule. 

On June 5, 2020, pursuant to the 

changes made by the May 2020 interim 

final rule, the Board issued a temporary 

order decreasing the earnings retention 

requirement.25 Specifically, the Board 

determined that, due to economic 

circumstances caused by the COVID–19 

pandemic, decreasing the earnings 

retention requirements set forth in the 

NCUA’s regulations was necessary to 

avoid a significant redemption of shares. 

This action would further the purposes 

of the PCA regulations. Accordingly, the 

Board ordered that any consumer FICU 

whose net worth classification, as 

defined in part 702 of the NCUA’s 

regulations, was adequately capitalized 

between March 31, 2020, and December 

31, 2020, could decrease its earnings 

retention requirement to zero as set 

forth in part 702. The order was 

effective through and including 

December 31, 2020.26

As noted, the Board solicited 

comment on the May 2020 interim final 

rule. The Board received comments 

from a credit union trade association, 

two state credit union leagues, and an 

organization of state credit union 

supervisors. All commenters supported 

the interim final rule, and no 

commenter opposed it. All commenters 

stated that the changes were 

appropriate, noting that they provided 

regulatory relief and flexibility to credit 

unions to manage their liquidity and 

address financial hardships caused by 

COVID–19. 

The interim final rule’s two 

provisions expired on December 31, 

2020. All commenters requested that the 

temporary amendments be extended or 

made permanent. One commenter stated 

that if the economic dislocation caused 

by the pandemic lingers, the regulatory 

relief may be necessary beyond the end 

of 2020. Among the recommendations to 

extend the effective date were: (1) 

Making the rule permanent; (2) 

extending the applicability until the 

COVID–19 pandemic was declared over 

by the Center for Disease Control or 

other Federal agency; or (3) making the 

end date December 31, 2021. 

B. April 2021 Interim Final Rule 

Based on information available in 

December 2020, the Board did not 

extend these provisions but continued 

to consider this issue. In light of new 

facts and circumstances, the Board 

subsequently determined in April 2021 

that it was appropriate to reinstate these 

amendments to the PCA regulations in 

part 702 on a temporary basis.27

Specifically, based on the enactment of 

the American Rescue Plan Act of 2021 28

to provide direct financial relief to 

individual taxpayers, the Board 

expected that credit unions would 

receive a significant increase in deposits 

due to stimulus checks. Accordingly, 

the Board determined that it was 

appropriate to reinstitute the changes to 

the PCA provisions that had been 

adopted in May 2020. The Board also 

sought comments in the April 2021 

interim final rule. 

The NCUA received seven substantive 

comments in response to the interim 

final rule, all of which offered support. 

Commenters stated that the interim final 

rule provides assistance to FICUs that 

have experienced pandemic-related 

hardships; reduces regulatory burden; 

does not unduly increase risk to the 

NCUSIF; allows otherwise healthy 

FICUs to focus on serving members 

without discouraging deposits; provides 

FICUs and the NCUA flexibility during 

a time of unprecedented deposit growth; 

and helps ensure the relief is available 

throughout the pandemic and resulting 

economic turbulence. Commenters also 

addressed the duration of the extension, 

requesting that the termination date 

either be extended beyond March 31, 

2022, or be made permanent. 

C. This Interim Final Rule 

As noted above, the two temporary 

PCA-related provisions are set to expire 

on March 31, 2022. Based on the 

agency’s experience and lessons learned 

during the last two years as well as the 

ongoing economic fallout related to the 

COVID–19 pandemic, the Board has 

determined that it is appropriate to 

issue another interim final rule to 

extend these provisions until March 31, 

2023. Share growth remains unusually 

high compared to pre-pandemic levels. 

Specifically, share growth from 

September 30, 2020, to September 30, 

2021, exceeded 14 percent.29 The 

COVID–19 pandemic and Congressional 

responses to it were the initial impetus 

for the two previous interim final rules 

that temporarily amended the two PCA 

provisions. While the environment that 

precipitated these temporary 

amendments has evolved, substantial 

uncertainties about the continued 

impact of the pandemic and the 

evolving economic environment remain. 

Macroeconomic uncertainty has been 

particularly significant over the last few 

months. Inflation, geopolitical tensions, 

and a new COVID–19 variant have 

introduced new economic challenges. 

Ultimately, the combined effects of 

these factors on share growth and net 

worth ratios could be quite significant, 

leading to potentially greater volatility 

in those measures in the year ahead. 

Also, the flexibilities provided by 

these temporary amendments have 

proven to benefit both the NCUA and 

FICUs. The Board believes the agency 

can use these flexibilities judiciously to 

address challenges posed by the current 

environment and potential issues that 

may arise while the rule remains in 

effect without imposing any additional 

safety and soundness risk. Accordingly, 

the Board believes it is appropriate to 

extend these provisions until March 31, 

2023. The Board requests comments on 

all aspects of this interim final rule. 

The Board notes that this interim final 

rule incorporates new amendatory 

language given that the agency’s 2015 

final rule on risk-based capital amended 

certain provisions in part 702.30

Specifically, that final rule amended 

part 702 by removing §§ 702.201 and 

702.206 and moving them, mostly 

unchanged, to new §§ 702.106 and 


khammond on DSKJM1Z7X2PROD with RULES
Federal Register / Vol. 87, No. 39 / Monday, February 28, 2022 / Rules and Regulations 10947 

31This relief is provided for FICUs that are 

required to retain earnings under §§ 702.106, 

702.107, 702.108, and 702.109. 

32See 1 U.S.C. 1 (providing that unless context 

indicates otherwise, words importing the singular 

also apply to several persons or parties). 

702.111. As a result, the current 

regulatory text does not reflect the April 

2021 interim final rule. Because the 

Board is extending this authority, it is 

revising the affected provisions to 

include these authorities to run from the 

effective date of this interim final rule 

until March 31, 2023, to ensure there is 

no interruption in the flexibility. 

IV. Section-by-Section Analysis 

A. Section 702.106—Earnings Retention 

Requirement for ‘‘Adequately 

Capitalized’’ FICUs 

A FICU that is classified as 

‘‘adequately capitalized’’ or lower must 

increase the dollar amount of its net 

worth quarterly by an amount 

equivalent to at least 1/10th of a percent 

of its total assets and must retain at least 

that amount (for a total of 0.4 percent 

annually) every quarter until it is ‘‘well 

capitalized.’’ 31 The purpose of this 

provision is to restore a FICU that is less 

than well capitalized to a wellcapitalized position in an incremental 

manner. The Board notes that newly 

chartered FICUs are excluded from this 

relief given that the relief is intended for 

FCUs experiencing growth as a result of 

the COVID–19 pandemic. 

As discussed previously, current 

§ 702.106 provides that the Board may 

waive this requirement on a case-bycase basis upon application by an 

affected FICU. The Act provides broader 

authority for the Board to issue an order 

to waive this requirement and does not 

require an application or individual 

orders.32 In response to recent economic 

conditions, there were previous 

infusions of stimulus funds and an 

increased propensity for consumers to 

save due to the variety of pandemicrelated circumstances. Thus, the Board 

has determined that it is appropriate to 

extend its decision to amend § 702.106 

temporarily to provide express 

regulatory authority for the Board to 

issue a single order waiving the earnings 

retention requirement for all FICUs that 

are classified as adequately capitalized 

during this time. As with the previous 

orders issued under the May 2020 and 

April 2021 interim final rules, the Board 

would provide in the order that the 

applicable Regional Director has 

authority to subsequently require an 

application if a particular FICU poses 

undue risk to the NCUSIF or exhibits 

material safety and soundness concerns. 

Extending this regulatory provision will 

allow the Board to respond to 

circumstances broadly affecting many 

FICUs with a single issuance rather than 

numerous individual waiver approvals. 

This provision will expire on March 31, 

2023. 

In a separate action that will be 

published on the NCUA website after 

this interim final rule becomes effective, 

the Board intends to issue the order 

described above, which will be 

applicable to adequately capitalized 

FICUs and will grant relief from the 

earnings retention requirement without 

requiring those FICUs to submit 

applications and receive individual 

waiver approvals, subject to the 

qualification noted above. 

The Board is exercising this authority 

under 12 U.S.C. 1790d(e)(2) to enhance 

flexibility in the application of the 

earnings retention requirement. The 

Board believes that this relief remains 

necessary to avoid a reduction of shares 

and thus retain system liquidity and 

capital adequacy, thereby furthering the 

purpose of PCA. Economic uncertainty 

caused by the COVID–19 pandemic and 

its effect on the economy have resulted 

in significant asset growth within the 

credit union industry. This growth may 

impact the PCA classification of many 

credit unions, resulting in an increased 

number of credit unions being subject to 

the earnings retention requirement. 

Based on the September 30, 2021, Call 

Report, 223 credit unions are classified 

as less than well capitalized and are 

thus subject to the earnings retention 

requirement. Of those, 42 percent report 

negative earnings as of September 30, 

2021. With continued uncertainty 

caused by the COVID–19 pandemic, the 

credit union system continues to 

experience the effects of pandemicrelated share growth and additional 

credit unions may be subjected to the 

earnings retention requirement. A 

comparison of Call Report data from 

March 31, 2020, to September 30, 2021, 

reveals 101 credit unions experienced a 

decline in their PCA classification from 

‘‘well capitalized’’ to ‘‘adequately 

capitalized’’ from March 31, 2020, 

despite having reported a positive 

return on average assets in September 

2021. This illustrates the continued 

impact of the flight to safety 

experienced by the industry. 

Specifically, during the time period 

that the two interim final rules have 

been effective, the Board issued orders 

providing that any consumer FICU that 

had a net worth classification, as 

defined in part 702 of the NCUA’s 

regulations, of adequately capitalized 

could decrease its earnings-retention 

requirement to zero as set forth in part 

702. These orders enabled FICUs to 

better utilize resources by eliminating 

the need to request a waiver of the 

earnings-retention requirement from 

their Regional Director. While the 

interim final rules and earningsretention orders have been in effect, the 

number of FICUs that benefitted from 

this relief has varied from an estimated 

77 FICUs as of June 2020 to as many as 

179 as of June 30, 2021, based on Call 

Report data. The FICUs benefitting from 

the earnings-retention requirement 

reduction have assets representing less 

than one percent of industry assets as of 

September 30, 2021. Accordingly, the 

Board believes that this amendment and 

the implementing orders have not posed 

an undue risk to the NCUSIF. 

The Board further notes that FICU 

operations continue to be significantly 

disrupted due to social distancing 

practices, remote work, supply chain 

disruption, and related complications. 

Also, the unprecedented amount of 

fiscal stimulus and decreased spending 

opportunities have led to a significant 

increase in the personal saving rate over 

the last two years. This, in turn, has 

resulted in extraordinary share growth, 

leaving net worth ratios artificially 

depressed. 

Given current macroeconomic 

conditions, downward pressure on net 

worth ratios will likely persist in the 

coming year. Although consumer 

spending has rebounded somewhat, the 

amount of excess savings—the 

accumulation of savings over and above 

pre-pandemic levels—remains 

significant and is not likely to abate any 

time soon. Consumer spending on 

services—the most significant share of 

expenditures—continues to lag, as the 

pandemic is resulting in consumers 

spending less on travel and other 

activities that are highly social and 

could potentially expose them to 

COVID–19. Also, strong gains in 

employment are supporting incomes 

and certain loan forbearance programs— 

which decrease debt service payments— 

still remain in effect. 

By avoiding the need for numerous 

waiver applications and responses, the 

simplified procedure that this interim 

final rule extends will reduce the 

administrative burden on FICUs and the 

NCUA. The Board notes qualifications 

in the planned order regarding FICUs 

that pose undue risk or material safety 

and soundness concerns will help 

ensure that the purposes of PCA are 

maintained during this time. 

B. Section 702.111—NWRPs; Contents 

of NWRP 

As for NWRPs, the Act provides a 

broad directive that a FICU that is less 

than adequately capitalized must submit 


khammond on DSKJM1Z7X2PROD with RULES
10948 Federal Register / Vol. 87, No. 39 / Monday, February 28, 2022 / Rules and Regulations 

33 12 CFR part 702. 34 5 U.S.C. 553 35 5 U.S.C. 553(b)(3). 

an applicable NWRP to the NCUA. The 

NCUA, by regulation, has provided 

additional details to supplement this 

statutory provision. Section 702.111(a) 

of the NCUA’s regulations specifies the 

schedule for filing the plan, and 

§ 702.111(c) of the NCUA’s regulations 

outlines the contents of a NWRP. 

The Board has decided that it is 

appropriate to continue waiving the 

NWRP content requirements for FICUs 

that become classified as 

undercapitalized predominantly as a 

result of share growth for Call Reports 

filed for the periods effective March 31, 

2022, June 30, 2022, September 30, 

2022, and December 31, 2022. In these 

cases, the FICU may submit a 

significantly simpler NWRP to the 

applicable Regional Director noting that 

the FICU’s PCA classification fell to 

undercapitalized because of share 

growth. Specifically, a FICU would be 

required to attest that its reduction in 

capital was caused by share growth and 

that such share growth is a temporary 

condition due to the COVID–19 

pandemic. Federally insured, statechartered credit unions must comply 

with applicable state requirements 

when submitting NWRPs for state 

supervisory authority approval. 

When reviewing NWRPs submitted 

under this authority, the Regional 

Director will determine if the decrease 

in the net worth ratio was 

predominantly a result of share growth. 

To assess the reason for the decrease, 

the Regional Director will analyze the 

numerator and denominator of the net 

worth ratio. If there is no change, or if 

there is an increase in the numerator 

and an increase in the denominator, this 

would indicate that the decrease in the 

net worth ratio was due to share growth. 

If there is an increase in the 

denominator and a decrease in the 

numerator, the Regional Director will 

analyze whether the decrease in the 

numerator would have caused the FICU 

to fall to a lower net worth classification 

if there were no change in the 

denominator. If so, the FICU’s net worth 

decline would not be predominantly 

due to share growth, and thus the FICU 

would not be eligible to submit a 

streamlined NWRP. 

The Board has determined it is 

appropriate to extend this regulatory 

flexibility for NWRPs given the 

continued economic disruption and the 

corresponding uncertainty caused by 

the COVID–19 pandemic. 

Since the Board published the interim 

final rule on May 28, 2020, permitting 

FICUs that become classified as 

undercapitalized as a result of share 

growth to submit a streamlined NWRP, 

fourteen credit unions have submitted 

such streamlined NWRPs. Of the 

fourteen streamlined NWRPs submitted, 

nine NWRPs were approved, and five 

streamlined NWRPs were denied. The 

denials of the streamlined NWRPs were 

based on those FICUs’ decline in PCA 

classification being the result of other 

economic factors, and not 

predominantly the result of share 

growth. Further, the Board notes that 

the FICUs submitting streamlined 

NWRPs were generally smaller, or noncomplex credit unions, thus presenting 

limited risk to the NCUSIF. 

Based on September 30, 2021, Call 

Report data, 59 FICUs would require a 

NWRP to be in place or be submitted for 

approval based on their PCA 

classification. This is an increase of over 

22 percent from the 48 credit unions 

required to have a NWRP to be in place 

or be submitted for approval based on 

December 31, 2020, Call Report data, 

illustrating an upward trend. 

The streamlined NWRP will provide 

sufficient information, based on current 

economic conditions, to determine if the 

credit union is prepared to manage the 

volatility associated with the COVID–19 

pandemic and the impact on the FICU’s 

financial and operational position. 

As it concluded in the April 2021 

interim final rule, the Board continues 

to believe it can fulfill its statutory duty 

to evaluate the NWRPs even if the plans 

are more concise and streamlined than 

plans submitted before the COVID–19 

pandemic. Such a streamlined approach 

is acceptable because the more 

extensive information required under 

the current requirements may not be 

practicable or useful under the current 

situation. The Board believes it can 

determine if a plan is acceptable even if 

it lacks some of the detailed 

submissions that the permanent 

regulatory provision requires. 

A FICU’s eligibility to submit a 

streamlined NWRP to the NCUA will be 

determined based on the effective date 

of the credit union’s PCA classification, 

as defined in part 702 of the NCUA’s 

regulations.33 The streamlined NWRP 

will apply on a case-by-case basis to 

FICUs that become classified as 

undercapitalized (those that have a net 

worth ratio of 4 percent to 5.99 percent) 

predominantly as a result of share 

growth. To further clarify, a FICU that 

has a declined PCA classification will 

be permitted to submit a streamlined 

NWRP as reflected in the following 

table. 

Call Report 

effective sate PCA classification sate Streamlined NWRP permissible 

March 31, 2022 ..................................................................... April 30, 2022 ...................................................................... Yes. 

June 30, 2022 ....................................................................... July 30, 2022 ....................................................................... Yes. 

September 30, 2022 .............................................................. October 31, 2022 ................................................................. Yes. 

December 31, 2022 ............................................................... January 30, 2023 ................................................................. Yes. 

March 31, 2023 ..................................................................... April 30, 2023 ...................................................................... No. 

V. Regulatory Procedures 

A. Administrative Procedure Act 

The Board is issuing the interim final 

rule without prior notice and the 

opportunity for public comment and the 

delayed effective date ordinarily 

prescribed by the Administrative 

Procedure Act (APA).34 Pursuant to the 

APA, general notice and the opportunity 

for public comment are not required 

about a rulemaking when an ‘‘agency for 

good cause finds (and incorporates the 

finding and a brief statement of reasons 

therefor in the rules issued) that notice 

and public procedure thereon are 

impracticable, unnecessary, or contrary 

to the public interest.’’ 35

The Board believes the public interest 

is best served by implementing the 

interim final rule immediately upon 

publication in the Federal Register. The 

Board notes that the economic 

disruption caused by the COVID–19 

pandemic is unprecedented. Even after 

nearly two years, the situation continues 

to evolve, thereby making it difficult to 

anticipate how pandemic-induced 

disruptions will manifest themselves 

within the financial system and how 

individual FICUs may be impacted. The 

continued relief measures, including the 

most recent infrastructure legislation, 

combined with the flight to safety and 


khammond on DSKJM1Z7X2PROD with RULES
Federal Register / Vol. 87, No. 39 / Monday, February 28, 2022 / Rules and Regulations 10949 

36 5 U.S.C. 553(d). 

37 5 U.S.C. 801–808. 

38 5 U.S.C. 804(2). 

39 5 U.S.C. 808. 

40Executive Order 13132 on Federalism was 

signed by former President Clinton on August 4, 

1999, and subsequently published in the Federal 

Register on August 10, 1999 (64 FR 43255). 

41 12 U.S.C. 1790d(I). 

42Public Law 105–277, 112 Stat. 2681 (1998). 

43 5 U.S.C. 553(b). 

44 5 U.S.C. 603, 604. 

45NCUA Interpretive Ruling and Policy 

Statement (IRPS) 15–1. 80 FR 57512 (Sept. 24, 

2015). 

46 5 U.S.C. 553(b)(3)(B). 

reduced spending, places a strain on 

FICU net worth. To disrupt or end the 

regulatory relief in place would conflict 

with preserving the safety and 

soundness of the industry. Because the 

unprecedented expansionary monetary 

and fiscal policies, combined with 

precautionary savings, is placing a 

strain on FICU net worth, the Board 

believes it has good cause to determine 

that ordinary notice and public 

procedure are impracticable and that 

moving expeditiously in the form of an 

interim final rule is in the public’s best 

interests and the FICUs that serve that 

public. The temporary regulatory 

changes are necessary steps designed to 

alleviate potential liquidity and 

resource strains including stress on 

capital adequacy and are undertaken 

with expedience to ensure the 

maximum intended effects are in place 

at the earliest opportunity. 

The Board values public input in its 

rulemakings and, to that end, believes 

that regulations are enhanced when the 

public has the opportunity to comment. 

Accordingly, the Board is soliciting 

comments on this interim final rule. The 

amendments made by the interim final 

rule will automatically expire on March 

31, 2023 and are limited in number and 

scope. For these reasons, the Board 

finds there is good cause consistent with 

the public interest to issue the rule 

without advance notice and comment. 

The APA also requires a 30-day 

delayed effective date, except for (1) 

substantive rules which grant or 

recognize an exemption or relieve a 

restriction; (2) interpretative rules and 

statements of policy; or (3) as otherwise 

provided by the agency for good 

cause.36 Because the rule relieves 

currently codified limitations and 

restrictions, the interim final rule is 

exempt from the APA’s delayed 

effective date requirement. As an 

alternative to making the rule effective 

without the 30-day delayed effective 

date, the Board finds there is good cause 

to do so for the same reasons set forth 

above regarding advance notice and 

opportunity for comment. 

B. Congressional Review Act. 

For purposes of the Congressional 

Review Act (CRA),37 the Office of 

Management and Budget (OMB) decides 

whether a final rule constitutes a 

‘‘major’’ rule. If the OMB deems a rule 

to be ‘‘major,’’ the CRA generally 

provides that the rule may not take 

effect until at least 60 days following its 

publication. 

The CRA defines a ‘‘major rule’’ as 

any rule that the Administrator of the 

OMB’s Office of Information and 

Regulatory Affairs finds has resulted in, 

or is likely to result in, (A) an annual 

effect on the economy of $100,000,000 

or more; (B) a major increase in costs or 

prices for consumers, individual 

industries, Federal, State, or local 

government agencies or geographic 

regions; or (C) significant adverse effects 

on competition, employment, 

investment, productivity, innovation, or 

on the ability of United States-based 

enterprises to compete with foreignbased enterprises in domestic and 

export markets.38

For the same reasons noted above, the 

Board is adopting the interim final rule 

without the delayed effective date 

generally prescribed under the CRA. 

The delayed effective date required by 

the CRA does not apply to any rule for 

which an agency for good cause finds 

(and incorporates the finding and a brief 

statement of reasons therefor in the rule 

issued) that notice and public procedure 

thereon are impracticable, unnecessary, 

or contrary to the public interest.39 In 

light of current market uncertainty, the 

Board believes that delaying the 

effective date of the rule would be 

contrary to the public interest for the 

same reasons discussed above. 

As required by the CRA, the Board 

will submit the final rule and other 

appropriate reports to Congress and the 

Government Accountability Office for 

review. 

C. Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.) requires OMB to 

approve all collections of information 

by a Federal agency from the public 

before they can be implemented. 

Respondents are not required to respond 

to any collection of information unless 

it displays a valid OMB control number. 

The information collection requirements 

prescribed by the May 2020 interim 

final rule under PCA remains in effect 

and are cleared under OMB control 

number 3133–0154. 

D. Executive Order 13132 

Executive Order 13132 40 encourages 

independent regulatory agencies to 

consider the impact of their actions on 

state and local interests. The 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. The interim final rule will 

not have substantial direct effects on the 

states, on the relationship between the 

National Government and the states, or 

on the distribution of power and 

responsibilities among the various 

levels of government. The Board has 

thus determined that this rule does not 

constitute a policy that has federalism 

implications for purposes of the 

Executive order. But the Board notes 

that it has consulted with state 

regulators, as described in the PCA 

section of the Act, and will continue to 

do so during the comment period and 

implementation of this interim final 

rule.41

E. Assessment of Federal Regulations 

and Policies on Families 

The NCUA has determined that this 

interim final rule will not affect family 

well-being within the meaning of 

Section 654 of the Treasury and General 

Government Appropriations Act, 

1999.42

F. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

generally requires that when an agency 

issues a proposed rule or a final rule 

pursuant to the APA 43 or another law, 

the agency must prepare a regulatory 

flexibility analysis that meets the 

requirements of the RFA and publish 

such analysis in the Federal Register.44

Specifically, the RFA normally requires 

agencies to describe the impact of a 

rulemaking on small entities by 

providing a regulatory impact analysis. 

For purposes of the RFA, the Board 

considers FICUs with assets less than 

$100 million to be small entities.45

As discussed previously, consistent 

with the APA,46 the Board has 

determined for good cause that general 

notice and opportunity for public 

comment is unnecessary, and thus, the 

Board is not issuing a notice of 

proposed rulemaking. Rules that are 

exempt from notice and comment 

procedures are also exempt from the 

RFA requirements, including 

conducting a regulatory flexibility 

analysis, when among other things the 

agency for good cause finds that notice 

and public procedure are impracticable, 

unnecessary, or contrary to the public 

interest. Accordingly, the Board has 

concluded that the RFA’s requirements 


khammond on DSKJM1Z7X2PROD with RULES
10950 Federal Register / Vol. 87, No. 39 / Monday, February 28, 2022 / Rules and Regulations 

relating to initial and final regulatory 

flexibility analysis do not apply. 

Nevertheless, the Board seeks 

comment on whether, and to what 

extent, the interim final rule would 

affect a significant number of small 

entities. 

List of Subjects in 12 CFR Part 702 

Credit unions, Reporting and 

recordkeeping requirements. 

By the NCUA Board, this 17th day of 

February 2022. 

Melane Conyers-Ausbrooks, 

Secretary of the Board. 

For the reasons set forth in the 

preamble, the Board is amending 12 

CFR part 702 as follows: 

PART 702—CAPITAL ADEQUACY 

■ 1. The authority citation for part 702 

continues to read as follows: 

Authority: 12 U.S.C. 1766(a), 1790d. 

■ 2. Amend § 702.106 by redesignating 

paragraphs (b)(1) and (2) as paragraphs 

(b)(1)(i) and (ii), respectively, and 

adding a new paragraph (b)(2) to read as 

follows: 

§ 702.106 Prompt corrective action for 

adequately capitalized credit unions. 

* * * * * 

(b) * * * 

(2) Notwithstanding paragraph (a) of 

this section, from February 28, 2022, 

until March 31, 2023, for a credit union 

that is adequately capitalized: 

(i) The NCUA Board may issue an 

administrative order specifying 

temporary revisions to the earnings 

retention requirement, to the extent the 

NCUA Board determines that such 

lesser amount— 

(A) Is necessary to avoid a significant 

redemption of shares; and 

(B) Would further the purpose of this 

part. 

(ii) Despite the issuance of an 

administrative order under paragraph 

(b)(2) of the section, the Regional 

Director may require a credit union to 

submit an earnings retention waiver 

under paragraph (b)(1) if the credit 

union poses an undue risk the National 

Credit Union Share Insurance Fund or 

exhibits material safety and soundness 

concerns. 

* * * * * 

■ 3. Amend § 702.111 by adding 

paragraph (c)(4) to read as follows: 

§ 702.111 Net worth restoration plans 

(NWRP). 

* * * * * 

(c) * * * 

(4) Notwithstanding paragraphs (c)(1), 

(2), and (3) of this section, the Board 

may permit a credit union that is 

undercapitalized to submit to the 

Regional Director a streamlined NWRP 

attesting that its reduction in capital 

was caused by share growth and that 

such share growth is a temporary 

condition due to the COVID–19 

pandemic. A streamlined NWRP plan 

may be accepted from February 28, 

2022, until March 31, 2023. 

* * * * * 

[FR Doc. 2022–03845 Filed 2–25–22; 8:45 am] 

BILLING CODE 7535–01–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2021–0729; Project 

Identifier MCAI–2021–00364–R; Amendment 

39–21948; AD 2022–04–06] 

RIN 2120–AA64 

Airworthiness Directives; Bell Textron 

Canada Limited Helicopters 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule. 

SUMMARY: The FAA is superseding 

Airworthiness Directive (AD) 2021–06– 

06, which applied to certain Bell 

Textron Canada Limited Model 505 

helicopters. AD 2021–06–06 required 

repetitive fluorescent penetrant 

inspections (FPIs) of the pilot collective 

stick and grip assembly and revising the 

existing Rotorcraft Flight Manual (RFM) 

for your helicopter. Since the FAA 

issued AD 2021–06–06, the pilot 

collective stick and grip assembly has 

been redesigned. This AD retains certain 

requirements of AD 2021–06–06, 

requires modifying your helicopter to 

include the improved pilot collective 

stick tube and adds a terminating action 

for the repetitive FPIs. This AD also 

prohibits installing any pilot collective 

stick and grip assembly unless certain 

requirements of this AD are met. The 

FAA is issuing this AD to address the 

unsafe condition on these products. 

DATES: This AD is effective April 4, 

2022. 

The Director of the Federal Register 

approved the incorporation by reference 

of a certain publication listed in this AD 

as of April 4, 2022. 

The Director of the Federal Register 

approved the incorporation by reference 

of certain other publications listed in 

this AD as of March 31, 2021 (86 FR 

14366, March 16, 2021). 

ADDRESSES: For service information 

identified in this final rule, contact Bell 

Textron Canada Limited, 12,800 Rue de 

l’Avenir, Mirabel, Quebec J7J1R4; 

telephone 1–450–437–2862 or 1–800– 

363–8023; fax 1–450–433–0272; email 

productsupport@bellflight.com; or at 

https://www.bellflight.com/support/ 

contact-support. You may view this 

service information at the FAA, Office 

of the Regional Counsel, Southwest 

Region, 10101 Hillwood Pkwy, Room 

6N–321, Fort Worth, TX 76177. For 

information on the availability of this 

material at the FAA, call (817) 222– 

5110. Service information that is 

incorporated by reference is also 

available at https://www.regulations.gov 

by searching for and locating Docket No. 

FAA 2021–0729. 

Examining the AD Docket 

You may examine the AD docket at 

https://www.regulations.gov by 

searching for and locating Docket No. 

FAA–2021–0729; or in person at Docket 

Operations between 9 a.m. and 5 p.m., 

Monday through Friday, except Federal 

holidays. The AD docket contains this 

final rule, the Transport Canada AD, any 

comments received, and other 

information. The address for Docket 

Operations is U.S. Department of 

Transportation, Docket Operations, M– 

30, West Building Ground Floor, Room 

W12–140, 1200 New Jersey Avenue SE, 

Washington, DC 20590. 

FOR FURTHER INFORMATION CONTACT: Hal 

Jensen, Aerospace Engineer, Operational 

Safety Branch, Compliance & 

Airworthiness Division, FAA, 950 

L’Enfant Plaza N SW, Washington, DC 

20024; telephone (202) 267–9167; email 

hal.jensen@faa.gov. 

SUPPLEMENTARY INFORMATION: 

Background 

The FAA issued a notice of proposed 

rulemaking (NPRM) to amend 14 CFR 

part 39 to supersede AD 2021–06–06, 

Amendment 39–21473 (86 FR 14366, 

March 16, 2021) (AD 2021–06–06), for 

Bell Textron Canada Limited Model 505 

helicopters, serial number (S/N) 65011 

and subsequent. The NPRM published 

in the Federal Register on September 

14, 2021 (86 FR 51035). In the NPRM, 

the FAA proposed to retain some of the 

requirements of AD 2021–06–06, 

including, before further flight, revising 

Section 1, the Limitations section of the 

existing RFM for your helicopter to 

prohibit single pilot operations from the 

right crew seat, require the pilot in 

command (PIC) to occupy the left crew 

seat for dual pilot operations, and 

depending on configuration, prohibit 

the use of SPLIT–COM mode. The 

NPRM also proposed to require, before 

further flight, and thereafter at intervals 


khammond on DSKJM1Z7X2PROD with RULES