Federal Register / Vol. 66, No. 81 / Thursday, April 26, 2001 / Notices 21019

Cite/reference Total

respondents

Frequency

(weeks)

Total

responses

Average

time per

response

(hours)

Burden

Clerical ..................................................................................................... 2 50 100 0.25 25

Totals ............................................................................................ .................... .................... 100 .................... 800

Total Burden Cost (capital/startup):

None.

Total Burden Cost (operating/

maintaining): None.

Comments submitted in response to

this notice will be summarized and/or

included in the request for Office of

Management and Budget approval of the

information collection request; they will

also become a matter of public record.

Dated: April 20, 2001.

Brenda C. Teaster,

Acting Chief, Records Management Division.

[FR Doc. 01–10419 Filed 4–25–01; 8:45 am]

BILLING CODE 4510–43–M

NATIONAL CREDIT UNION

ADMINISTRATION

Central Liquidity Facility

AGENCY: National Credit Union

Administration (NCUA).

ACTION: Final Interpretive Ruling and

Policy Statement (IRPS) 01–2, ‘‘Central

Liquidity Facility Advance Policy.’’

SUMMARY: This policy statement clarifies

the role of the Central Liquidity Facility

(CLF) and the circumstances when the

CLF will approve a Regular or Agent

Member’s request for a CLF advance.

DATES: The IRPS is effective May 29,

2001.

ADDRESSES: National Credit Union

Administration, 1775 Duke Street,

Alexandria, VA 22314–3428.

FOR FURTHER INFORMATION CONTACT: J.

Owen Cole, Jr., Vice President, CLF, at

the above address, or telephone: (703)

518–6360 or Frank S. Kressman, Staff

Attorney, at the above address, or

telephone: (703) 518–6540.

SUPPLEMENTARY INFORMATION:

A. Background

The CLF operates in accordance with

Title III of the Federal Credit Union Act

(Act) and Part 725 of NCUA’s

regulations, which implements Title III.

12 U.S.C. 1795–1795k; 12 CFR part 725.

It was created in 1979 to improve the

general financial stability of the credit

union industry by helping to meet the

liquidity needs of individual credit

unions. This improved stability

encourages savings, supports consumer

and mortgage lending, and helps

provide basic financial resources to all

segments of the economy. In continuing

to fulfill this mission, the CLF

previously published proposed IRPS

00–2 to clarify its function and

limitations in an ever-changing financial

services environment. 65 FR 63892,

October 25, 2000; 65 FR 65884,

November 2, 2000. NCUA has received

public comments on the proposal and

has incorporated some of those

comments into the IRPS. NCUA has

renumbered IRPS 00–2 as 01–2 and

adopts the below revised IRPS as final.

IRPS 01–2 supersedes IRPS 80–4.

B. Summary of Comments

NCUA received thirteen comment

letters regarding the proposed IRPS. Six

from credit union trade associations,

four from corporate credit unions, one

from a natural person federal credit

union, one from a banking trade

association, and one from an association

of state credit union supervisors. All of

the commenters generally supported the

proposed IRPS, except for the banking

trade association. Some commenters

offered suggested revisions.

Seven commenters noted that the

proposed IRPS states that a CLF loan

officer may require a borrowing credit

union to prepare a liquidity restoration

plan to detail the action and time

required to restore the credit union’s net

funds position to the point where it is

no longer dependent on CLF advances.

These commenters suggested that the

IRPS would be more useful if NCUA

provided examples of circumstances

under which a loan officer might require

a plan. The loan officer’s decision to

require a plan is greatly dependent on

the unique circumstances of the

borrowing credit union. Factors that

may contribute to this decision include:

(1) The credit union consistently

provides incomplete, vague, or untimely

information needed to approve or

monitor an advance; (2) the loan officer

develops concerns about the borrowing

credit union’s financial condition and

ability to repay; (3) the credit union

appears to have used an advance for

inappropriate purposes; and (4) the

credit union appears to be unreasonably

dependent on advances without making

progress towards implementing

programs to manage its liquidity risk.

These factors are only a few of many

that a loan officer may consider before

requiring a liquidity restoration plan.

This clarification has been incorporated

into the final IRPS.

Four commenters noted that the

proposed IRPS lists examples of

appropriate circumstances for seeking

CLF advances. These commenters

suggested that NCUA should more

clearly indicate that there may also be

other appropriate circumstances for

seeking CLF advances in addition to

those listed. NCUA acknowledges that

the list is meant to be illustrative, not

exhaustive. NCUA has incorporated this

clarification into the final IRPS.

The association of state credit union

supervisors suggested that NCUA

should adopt a policy not to advance

funds to a state chartered, federally

insured credit union without first

consulting with the credit union’s state

supervisory authority (SSA). NCUA

does not believe this is an appropriate

action for it to take, but recognizes that

an SSA may wish to require its

regulated credit unions to notify it

before making application to CLF.

The banking trade association

suggested that NCUA withdraw the

IRPS and re-issue it as a regulation so

that it would have the force of law. We

note that the IRPS was issued in

compliance with the Administrative

Procedure Act (APA) and has the same

force of law as a regulation. 5 U.S.C.

551. The banking trade association also

stated that CLF should not provide

financial assistance to financially

troubled credit unions. We agree. CLF is

intended only as a liquidity provider

and that is how it functions. Finally, the

banking trade association stated that

CLF is prohibited from making advances

the intent of which is to expand credit

union portfolios and therefore can not

make advances to address an

unexpected surge of credit demands. We

agree that CLF is prohibited from

making advances the intent of which is

to expand credit union portfolios, but

believe that an unexpected surge of

credit demands is a legitimate liquidity

need for the CLF to meet.

21020 Federal Register / Vol. 66, No. 81 / Thursday, April 26, 2001 / Notices

Regulatory Procedures

Regulatory Flexibility Act

The Regulatory Flexibility Act

requires NCUA to prepare an analysis to

describe any significant economic

impact agency rulemaking may have on

a substantial number of small credit

unions. For purposes of this analysis,

credit unions under $1 million in assets

are considered small credit unions.

This final IRPS clarifies the role of the

CLF and the circumstances when the

CLF will approve advances. This final

IRPS imposes no additional financial,

regulatory, or other burden whatsoever

on credit unions transacting business

with the CLF. The NCUA has

determined and certifies that this final

IRPS will not have a significant

economic impact on a substantial

number of small credit unions.

Accordingly, the NCUA has determined

that a Regulatory Flexibility Analysis is

not required.

Paperwork Reduction Act

NCUA has determined that this final

IRPS does not increase paperwork

requirements under the Paperwork

Reduction Act of 1995 and regulations

of the Office of Management and

Budget.

Executive Order 13132

Executive Order 13132 encourages

independent regulatory agencies to

consider the impact of their regulatory

actions on state and local interests. In

adherence to fundamental federalism

principles, NCUA, an independent

regulatory agency as defined in 44

U.S.C. 3502(5), voluntarily complies

with the executive order. This final

IRPS applies to all credit unions doing

business with the CLF, but does not

have 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. NCUA has

determined that this final IRPS does not

constitute a policy that has federalism

implications for purposes of the

executive order.

Assessment of Federal Regulations and

Policies on Families

NCUA has determined that this final

IRPS will not affect family well-being

within the meaning of Section 654 of

the Treasury and General Government

Appropriations Act, 1999, Pub. L. 105–

277, 112 Stat. 2681 (1998).

Small Business Regulatory Enforcement

Fairness Act

The Small Business Regulatory

Enforcement Fairness Act of 1996 (Pub.

L. 104–121) provides generally for

congressional review of agency rules. A

reporting requirement is triggered in

instances where NCUA issues a final

rule as defined by Section 551 of the

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

Management and Budget has

determined that this final IRPS is not a

major rule for purposes of the Small

Business Regulatory Enforcement

Fairness Act of 1996.

By the National Credit Union

Administration Board, on April 19, 2001.

Becky Baker,

Secretary of the Board.

For the reasons stated above, IRPS 01–

2 is revised to read as follows:

Authority: 12 U.S.C. 1795–1795f.

2. IRPS 01–2 is revised to read as

follows:

Interpretive Ruling And Policy Statement

No. 01–2

Central Liquidity Facility Advance Policy

Purpose

Congress established the Central Liquidity

Facility (CLF) in 1979 and authorized the

NCUA Board, acting as the CLF Board, to

prescribe the manner in which the general

business of the CLF is to be conducted. The

CLF was created to improve the general

financial stability of the credit union

industry by meeting the liquidity needs of

individual credit unions. This improved

stability encourages savings, supports

consumer and mortgage lending, and helps

provide basic financial resources to all

segments of the economy. This policy

statement is intended to clarify the role of the

CLF and the circumstances under which the

CLF will approve a Regular or Agent

Member’s request for a CLF advance.

Liquidity Needs

The liquidity needs of natural person

credit unions for which CLF advances are

appropriate are limited to:

A. Short-term adjustment credit available

to assist in meeting temporary requirements

for funds or to cushion more persistent

outflows of funds pending an orderly

readjustment of credit union assets and

liabilities;

B. Seasonal credit available for longer

periods to assist in meeting seasonal needs

for funds arising from a combination of

expected patterns of movement in share and

deposit accounts and loans; and

C. Protracted adjustment credit available in

the event of unusual or emergency

circumstances of a longer-term nature

resulting from national, regional or local

difficulties.

Short-term adjustment credit advances

generally are available for maturity periods of

up to 90 days. Seasonal credit advances are

available for periods of up to 270 days.

Seasonal credit is generally restricted to

institutions that can demonstrate a pattern of

recurring need. Seasonal credit advance

requests must be supported by an analysis

that includes at least two years of detailed

seasonal flow of funds data. Protracted

adjustment credit advances that are available

for periods in excess of 270 days are only

made when exceptional circumstances are

adversely affecting an individual institution.

CLF loan officers exercise considerable

discretion in extending protracted

adjustment credit and may consult with

NCUA supervisory authorities to address any

concerns over the credit union’s ability to

restore liquidity and remain viable. As is the

case with short-term adjustment credit and

seasonal credit, CLF may decline a credit

union’s request for protracted adjustment

credit for creditworthiness reasons. It may

also refer the credit union to the appropriate

NCUA Regional Director for possible NCUSIF

special assistance under section 208 of the

Act. 12 U.S.C. 1788.

Role of the CLF

Historically, CLF advances have been

intended only to help maintain financial

stability for credit unions that were

experiencing liquidity difficulties or

expected to experience liquidity difficulties

in the immediate future. In most instances,

CLF makes advances when the borrower’s

primary sources of liquidity are inadequate,

impracticable or otherwise unavailable at the

time of need. CLF is prohibited by statute

from making an advance the intent of which

is to expand credit union portfolios. 12

U.S.C. 1795e(a)(1).

NCUA acknowledges the need for the CLF

to operate in a flexible manner. While NCUA

recognizes that CLF is not to be considered

the ‘‘lender of last resort,’’ NCUA also

understands that CLF is not to be used as a

conventional funding facility or standard

market alternative for borrowing credit

unions. Rather, NCUA’s long-standing

position is that the CLF was established to be

used sparingly as a stabilizing agent in times

when liquidity needs threaten to disrupt

credit unions’ ability to provide basic

financial resources to their members.

Accordingly, NCUA’s long-held policy that

the CLF is a backup liquidity provider

remains unchanged.

Although CLF advances are available when

appropriate, NCUA emphasizes the

importance of liquidity planning and

contingency funding. NCUA expects credit

unions to have in place adequate programs

and procedures to manage their liquidity

risk. Each credit union’s liquidity

management program should be appropriate

for the overall level of risk incurred,

considering its asset size, complexity, capital

adequacy, and products or services offered.

Inadequate liquidity can cause disruptions in

member services and diminish public

confidence. It can also increase a credit

union’s vulnerability to other market and

operational risks. The failure to understand

and manage liquidity risk adequately could

easily place a credit union in an unsafe and

unsound financial position.

As part of normal contingency planning,

credit unions are expected to develop

Federal Register / Vol. 66, No. 81 / Thursday, April 26, 2001 / Notices 21021

funding plans that include credit lines that

are accessible on a timely basis. This may be

accomplished with a corporate credit union

or other source. The appropriateness of

granting a CLF advance depends on the

circumstances of the credit union at the time

of the liquidity need. Appropriate

circumstances for seeking CLF advances may

include, but are not limited to, borrowing:

• To meet an unexpected loss in shares or

nonmember funds;

• To address an unexpected surge of credit

demands within the credit union’s

membership; and

• To meet liquidity needs due to forces

beyond the immediate control of the credit

union such as an internal operating problem

or a natural disaster.

Among other circumstances, borrowing

from CLF is not appropriate:

• To take advantage of a differential

between the rate of a CLF advance and the

rate of alternative sources of funds known as

spread arbitrage;

• To substitute CLF credit for normal,

short-term, interest-sensitive shares such as

certificates or money market shares; or

• To support a planned increase in loans

or investment holdings or new loan product

offerings.

CLF will monitor, as necessary, the

frequency and duration of a credit union’s

CLF borrowings to make certain that the

credit union is taking appropriate measures

to diminish reliance on CLF advances and

verify that a more serious liquidity problem

does not exist. Borrowers are expected to

initiate appropriate actions to restore

adequate liquidity within a reasonable period

of time. Facility loan officers, at their

discretion, may require a borrowing credit

union to prepare a liquidity restoration plan

to detail the action and time required to

restore its net funds position to the point

where it is no longer dependent on CLF

advances. A loan officer’s decision to require

a plan is greatly dependent on the unique

circumstances of the borrowing credit union.

Factors that may contribute to this decision

include: (1) The credit union consistently

provides incomplete, vague, or untimely

information needed to approve or monitor an

advance; (2) the loan officer develops

concerns about the borrowing credit union’s

financial condition and ability to repay; (3)

the credit union appears to have used an

advance for inappropriate purposes; and (4)

the credit union appears to be unreasonably

dependent on advances without making

progress towards implementing programs to

manage its liquidity risk. These factors are

only a few of many that a loan officer may

consider before requiring a liquidity

restoration plan.

[FR Doc. 01–10308 Filed 4–25–01; 8:45 am]

BILLING CODE 7535–01–U

NUCLEAR REGULATORY

COMMISSION

[Docket Nos. 50–255, 72–005, License No.

DPR–20]

Consumers Energy Company

(Palisades Plant); Order Approving

Transfer of Operating Authority and

Conforming Amendment

I

Consumers Energy Company (CEC or

the licensee) is the holder of Facility

Operating License No. DPR–20, which

authorizes operation of the Palisades

Plant (Palisades or the facility). The

facility is located in Van Buren County,

Michigan. The license authorizes CEC to

possess, use, and operate Palisades.

II

By application dated November 21,

2000, the Commission was informed

that CEC entered into an Operating

Services Agreement with Nuclear

Management Company, LLC (NMC).

Under the proposed transaction, NMC

will be designated as the licensee

authorized to use and operate Palisades

in accordance with the terms and

conditions of the license. The

transaction involves no change in plant

ownership. The licensee requested

approval of the proposed transfer of

operating authority under the Palisades

Facility Operating License to NMC. The

application also requested a conforming

amendment to reflect the transfer. The

proposed amendment would add NMC

to the license and reflect that NMC is

exclusively authorized to use and

operate Palisades. As a result of the

transfer of the license with respect to

operating authority thereunder and the

conforming license amendment, NMC

will also become and act as the general

licensee for the Independent Spent Fuel

Storage Installation (ISFSI) at Palisades

pursuant to 10 CFR 72.210.

According to the application for

approval filed by CEC, NMC would

become the licensee authorized to use

and operate Palisades following

approval of the proposed license

transfer. NMC will assume exclusive

responsibility for the operation and

maintenance of Palisades. Ownership of

Palisades will not be affected by the

proposed transfer of operating authority.

CEC will retain its current ownership

interest. NMC will not own any portion

of Palisades. Likewise, CEC’s

entitlement to capacity and energy from

Palisades will not be affected by the

transfer of operating authority. No

physical changes to the Palisades

facility were proposed in the

application.

Approval of the transfer of operating

authority under the Facility Operating

License and conforming license

amendment was requested by CEC

pursuant to 10 CFR 50.80 and 10 CFR

50.90. Notice of the application for

approval and an opportunity for a

hearing was published in the Federal

Register on December 19, 2000 (65 FR

79431). No hearing requests or written

comments were received.

Pursuant to 10 CFR 50.80, no license,

or any right thereunder, shall be

transferred, directly or indirectly,

through transfer of control of the

license, unless the Commission shall

give its consent in writing. After

reviewing the information in the

application by CEC and other

information before the Commission, and

relying upon the representations and

agreements contained in the

application, the NRC staff has

determined that NMC is qualified to

hold the operating authority under the

license, and that the transfer of the

operating authority under the license to

NMC is otherwise consistent with

applicable provisions of law,

regulations, and orders issued by the

Commission, subject to the conditions

set forth below. The NRC staff has

further found that the application for

the proposed license amendment

complies with the standards and

requirements of the Atomic Energy Act

of 1954, as amended, and the

Commission’s rules and regulations set

forth in 10 CFR Chapter I; the facility

will operate in conformity with the

application, the provisions of the Act,

and the rules and regulations of the

Commission; there is reasonable

assurance that the activities authorized

by the proposed license amendment can

be conducted without endangering the

health and safety of the public and that

such activities will be conducted in

compliance with the Commission’s

regulations; the issuance of the

proposed license amendment will not

be inimical to the common defense and

security or the health and safety of the

public; and the issuance of the proposed

amendment will be in accordance with

10 CFR part 51 of the Commission’s

regulations and all applicable

requirements have been satisfied. The

foregoing findings are supported by a

safety evaluation dated April 19, 2001.

III

Accordingly, pursuant to sections

161b, 161i, and 184 of the Atomic

Energy Act of 1954, as amended, 42

U.S.C. 2201(b), 2201(i), and 2234, and

10 CFR 50.80, it is hereby ordered that

the transfer of operating authority under

the license, as described herein, to NMC