This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

50094 

Vol. 82, No. 208 

Monday, October 30, 2017 

1 12 CFR part 702, subpart E; 79 FR 24311 (Apr. 

30, 2014). 

2 79 FR 24311, 24312 (Apr. 30, 2014). 

3 Id. 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Part 702 

RIN 3133–AE80 

Capital Planning and Supervisory 

Stress Testing 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Proposed rule. 

SUMMARY: The NCUA Board (‘‘Board’’) 

proposes to amend its regulations 

regarding capital planning and stress 

testing for federally insured credit 

unions with $10 billion or more in 

assets (covered credit unions). The 

proposal would reduce regulatory 

burden by removing some of the capital 

planning and stress testing requirements 

currently applicable to certain covered 

credit unions. The proposal would also 

make the NCUA’s capital planning and 

stress testing requirements more 

efficient for covered credit unions and 

the NCUA by, among other things, 

authorizing credit unions to conduct 

their own stress tests in accordance with 

the NCUA’s requirements and allowing 

those credit unions to incorporate the 

stress test results into their capital plan 

submissions. 

DATES: Comments must be received on 

or before December 29, 2017. 

ADDRESSES: You may submit comments 

by any of the following methods, but 

please send comments by one method 

only: 

• Federal eRulemaking Portal: 

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

the instructions for submitting 

comments. 

• NCUA Web site: https://

www.ncua.gov/regulation-supervision/ 

Pages/rules/proposed.aspx. Follow the 

instructions for submitting comments. 

• Email: Address to regcomments@

ncua.gov. Include ‘‘[Your name]— 

Comments on Proposed Rule—Capital 

Planning and Supervisory Stress 

Testing’’ 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. 

FOR FURTHER INFORMATION CONTACT: 

Technical information: Dale Klein, 

Senior Financial Analyst—CPST, Office 

of National Examinations and 

Supervision, at the above address or 

telephone (703) 518–6629; or legal 

information: John H. Brolin, Senior Staff 

Attorney, Office of General Counsel, at 

the above address or telephone (703) 

518–6540. 

SUPPLEMENTARY INFORMATION: 

I. Background 

In April 2014, the Board issued a final 

rule requiring capital planning and 

stress testing for FICUs with assets of 

$10 billion or more (covered credit 

unions).1 The NCUA recognizes that 

covered credit unions present a 

systemic risk to the National Credit 

Union Share Insurance Fund (NCUSIF) 

thereby necessitating that they be 

subject to more stringent prudential 

standards than apply to other federally 

insured credit unions. This approach is 

consistent with that taken by the Board 

of Governors of the Federal Reserve 

System, the Federal Deposit Insurance 

Corporation, and the Office of the 

Comptroller of the Currency (the other 

banking agencies). Capital planning 

requires covered credit unions to assess 

their financial condition and risks over 

the planning horizon under both 

expected and more adverse conditions. 

Annual supervisory stress testing has 

allowed the NCUA to obtain an 

independent test of these credit unions 

under stress scenarios. By setting a 

regulatory minimum stress test capital 

ratio, the April 2014 final rule requires 

a covered credit union to take corrective 

action before it becomes 

undercapitalized to an extent that it may 

cause a risk of loss to the NCUSIF. 

In July 2015, the Board amended the 

NCUA’s capital planning and stress 

testing regulation to align its annual 

planning and testing schedule with the 

timelines being adopted by the other 

banking agencies. Among the reasons 

for this schedule change was that the 

NCUA’s stress test scenarios are based 

on the supervisory stress test scenarios 

developed by the other banking agencies 

for their regulated institutions. The 

other banking agencies changed their 

schedule for publishing scenarios, 

which precipitated the modification of 

the NCUA’s supervisory stress testing 

schedule. 

Based on the other banking agencies’ 

experiences implementing the annual 

Dodd-Frank Act stress tests (DFAST), 

the NCUA tiered its own capital 

planning expectations for covered credit 

unions during the first three years of its 

program. By ‘‘tiered,’’ we mean that the 

NCUA aligned its capital planning and 

analysis expectations based on the size, 

complexity, and financial condition of 

each covered credit union. As the Board 

expected, credit union capital planning 

practices have evolved over the threeyear period since 2014. Covered credit 

unions, consistent with their size, 

complexity, financial condition, have 

operated under the NCUA’s tiered 

supervisory expectations. The Board 

believes that taking a graduated 

supervisory approach to capital 

planning has been beneficial for credit 

unions, and is consistent with the 

NCUA’s overall supervisory objectives. 

When the NCUA’s current capital 

planning and stress testing rule was 

adopted in April 2014, the Board 

believed it was important for the agency 

to initially conduct all stress tests to 

ensure the NCUA had an independent 

assessment of risk for covered credit 

unions.2 Current § 702.506(c) provides, 

however, that after the NCUA has 

completed three consecutive 

supervisory stress tests of a covered 

credit union, the covered credit union 

may, with the NCUA’s approval, 

conduct the tests described in subpart E 

of part 702. The preamble to the April 

2014 final rule also states that the April 

2014 final rule was not the end of the 

process on stress testing, but just the 

beginning.3 Accordingly, after three 

productive and informative years of 

practical experience implementing the 

current capital planning and stress 

testing regulations, the Board now 

believes it is appropriate for the NCUA 

to revisit those regulations. 


nlaroche on DSK9F9SC42PROD with PROPOSALS
Federal Register / Vol. 82, No. 208 / Monday, October 30, 2017 / Proposed Rules 50095 

II. Summary of the Proposed Rule 

The Board is proposing to amend the 

NCUA’s capital planning and stress 

testing regulations. The proposed 

changes reflect the NCUA’s experiences 

in implementing the current rule’s 

requirements, while also taking into 

consideration the systemic risk that 

covered credit unions pose to the 

NCUSIF. As explained in more detail 

below, these proposed changes are 

intended to reduce regulatory burdens 

by removing some of the more onerous 

capital planning and stress testing 

requirements currently applicable to 

covered credit unions. 

The proposed changes to the NCUA’s 

capital planning requirements would 

more closely align the agency’s 

regulatory requirements with its current 

supervisory expectations for covered 

credit unions. Under the proposal, 

covered credit unions would be subject 

to new tiered regulatory requirements 

that would further ensure their capital 

plans are tailored to reflect their size, 

complexity, and financial condition. For 

a tier I credit union, which is a covered 

credit union that has completed fewer 

than three capital planning cycles and 

has less than $20 billion in total assets, 

review of its capital plan would be 

incorporated into the NCUA’s 

supervisory oversight of that covered 

credit union. For a tier II credit union, 

which is a covered credit union that has 

completed three or more capital 

planning cycles and has less than $20 

billion in total assets, or is otherwise 

designated as a tier II credit union by 

the NCUA, review of its capital plan 

also would be incorporated into its 

supervisory oversight from the NCUA. 

For a tier III credit union, which is a 

covered credit union that has $20 

billion or more in total assets, or is 

otherwise designated as a tier III credit 

union by the NCUA, review of its 

capital plan would continue to be 

subject to the current requirement that 

the NCUA formally approve or reject it. 

Stress testing requirements under the 

proposal also would be tiered. Tier I 

credit unions would not be subject to 

any stress testing requirements. Once a 

tier I credit union satisfies the criteria 

for becoming a tier II credit union, 

which generally would be three years 

after it reaches total assets of $10 billion 

or more, that covered credit union 

would be required to conduct stress 

testing. Unlike their larger counterparts 

in tier III, however, tier II credit unions 

would not be subject to a 5% minimum 

stress test capital threshold. Further, 

under the proposal, the NCUA would no 

longer conduct the annual supervisory 

stress tests on applicable covered credit 

unions. Rather, the covered credit 

unions themselves would conduct the 

stress tests. Since stress testing 

standards were first adopted in 2014, 

the NCUA has conducted annual 

supervisory stress tests on all covered 

credit unions. 

While the Board recognizes that all 

covered credit unions are of systemic 

importance to the NCUSIF, the Board it 

is appropriate to differentiate the capital 

planning requirements applicable to 

such institutions based on their 

individual characteristics. Specifically, 

size, complexity, and financial 

condition are significant determinants 

regarding each covered credit union’s 

risk to the NCUSIF, as well as to each 

covered credit union’s ability to support 

sound capital planning and supervisory 

stress testing expectations. The 

application of the NCUA’s capital 

planning and stress testing requirements 

defined by size, complexity, and 

financial condition would provide 

certain covered credit unions with a 

more reasonable period of time over 

which they can develop the policies and 

processes necessary to develop sound 

capital plans and analyses. However, 

the Board seeks comments on whether 

these characteristics are the appropriate 

factors, or whether other considerations 

should also be taken into account in 

assessing risk for purposes of 

differentiating capital planning and 

stress testing requirements. 

As noted above, all covered credit 

unions pose a degree of systemic risk to 

the NCUSIF and the credit union 

industry. This proposal, however, seeks 

to balance the higher risk that the larger, 

more complex covered credit unions 

may pose to the NCUSIF, with the time 

and resources these institutions need to 

prepare themselves to meet the NCUA’s 

capital planning and supervisory stress 

testing expectations. The Board also 

seeks to tailor the NCUA’s capital 

planning and stress testing requirements 

in such a manner as to reduce the 

regulatory burden imposed on those 

smaller covered credit unions which 

pose less risk to the NCUSIF. 

Proposed Tiers of Covered Credit 

Unions 

The proposal identifies three tiers of 

covered credit unions and would 

impose varying levels of regulatory 

requirements based on those tiers. In 

brief, the tier comprised of the smallest 

covered credit unions would have the 

least regulatory requirements, with a 

concomitant increase in requirements 

for each tier as the size and complexity 

of those covered credit unions increases. 

The three tiers are as follows: 

• A tier I credit union would be a 

covered credit union that has completed 

fewer than three capital planning cycles 

and has less than $20 billion in total 

assets; 

• A tier II credit union would be a 

covered credit union that has completed 

three or more capital planning cycles 

and has less than $20 billion in total 

assets, or is otherwise designated as a 

tier II credit union by the NCUA; and 

• A tier III credit union would be a 

covered credit union that has $20 

billion or more in total assets, or is 

otherwise designated as a tier III credit 

union by the NCUA. 

Under the proposal, the level of the 

NCUA’s capital planning requirements 

for tier I and tier II credit unions would 

generally decrease from the current 

regulatory requirements, but would 

generally remain the same for tier III 

credit unions. This proposed approach 

would reduce regulatory burdens on tier 

I and tier II credit unions while allowing 

them to focus on establishing sound 

capital planning and capital adequacy 

assessment processes. The tier III credit 

unions, on the other hand, which may 

pose the greatest systemic risk to the 

NCUSIF and which are most capable of 

complying with the current 

requirements, would remain subject to 

most of the current requirements. The 

Board seeks specific comments on 

whether this approach is appropriate 

and whether it sufficiently balances 

regulatory relief for covered credit 

unions with the NCUA’s objective of 

managing risk to the NCUSIF. 

Under the proposal, the NCUA’s 

capital planning and stress testing rule 

would distinguish between a tier II and 

a tier III credit union at the threshold 

level of $20 billion in total assets. 

Setting the threshold level at $20 billion 

would mean that a covered credit union 

would generally not be subject to the 

regulation’s most rigorous requirements 

until it had doubled in size from the 

time it was first classified as a covered 

credit union. Setting the threshold at 

this level should help ensure that 

covered credit unions have adequate 

time to plan and prepare for 

compliance. The Board specifically 

requests comment, however, on whether 

the threshold level should be set higher, 

at $25 billion in total assets, to provide 

covered credit unions with even more 

time to plan and prepare for 

compliance. In addition, the Board 

requests comment on whether setting 

the threshold at this higher level would 

be reasonable and why. 


nlaroche on DSK9F9SC42PROD with PROPOSALS
50096 Federal Register / Vol. 82, No. 208 / Monday, October 30, 2017 / Proposed Rules 

Proposed Revisions to the NCUA’s 

Capital Planning Requirements 

This proposal would retain the 

current requirement that all covered 

credit unions submit capital plans to the 

NCUA no later than May 31st of each 

year. Tier 1 and tier II credit unions, 

however, would no longer be required 

to have their capital plans formally 

approved by the NCUA. Capital plan 

reviews for tier I and tier II credit 

unions would be conducted as part of 

the NCUA’s supervision of the credit 

union, with any deficiencies addressed 

as part of the supervisory process. This 

approach would provide the NCUA 

greater latitude when reviewing capital 

plan submissions. This proposed change 

is also intended to provide the NCUA 

with additional flexibility to use the 

supervisory process to address plan 

deficiencies, especially for credit unions 

newly covered by the NCUA’s capital 

planning requirements. The Board 

believes that any increased risk to the 

NCUSIF that may occur as a result of 

providing regulatory relief can be 

addressed through the supervisory 

process. 

This proposal would retain the 

current requirement for the NCUA to 

formally approve or reject a tier III 

credit union’s capital plan. Because the 

failure of a tier III credit union poses the 

most significant risk to the NCUSIF, the 

Board believes it is prudent to retain the 

current, more formal requirements for 

tier III credit unions. 

The NCUA’s formal rejection of a 

capital plan would be subject to the 

Supervisory Review Committee process. 

The Board specifically requests 

comment on this aspect of the proposal. 

Proposed Revisions to the NCUA’s 

Supervisory Stress Testing 

Requirements 

Credit Union-Conducted Stress Tests. 

Under the current rule, the NCUA is 

required to conduct supervisory stress 

tests for all covered credit unions. When 

the Board approved the current 

regulation in 2014, it believed the 

agency should initially conduct all 

stress tests to ensure the NCUA had an 

independent assessment of risk for 

covered credit unions. The preamble to 

the final rule acknowledged, however, 

that it might be appropriate in the future 

for certain covered credit unions to 

conduct their own supervisory stress 

tests, and the Board adopted a provision 

in the final rule to allow for that. In 

particular, current § 702.506(c) provides 

that after the NCUA has completed three 

consecutive supervisory stress tests of a 

covered credit union, the covered credit 

union may, with the NCUA’s approval, 

conduct the tests described in subpart E 

of part 702 on its own. Having now 

completed three annual stress testing 

cycles, the Board believes that changing 

the NCUA’s regulations to have covered 

credit unions conduct their own 

supervisory stress tests, without needing 

to obtain approval from the NCUA, is 

appropriate. Accordingly, under the 

proposal, the requirement that the 

NCUA conduct supervisory stress tests 

would be eliminated. 

The Board believes that credit unions 

are better informed of risk when they 

perform their own capital analyses. 

Having covered credit unions conduct 

their own supervisory stress tests also 

eliminates any unintentional, negative 

consequences that could result from the 

NCUA conducting those tests, namely 

concerns that a covered credit union 

might abdicate its responsibility to 

perform rigorous capital analyses to the 

NCUA. As a safeguard, however, the 

proposal would retain the provision in 

the current rule that reserves the 

NCUA’s right to conduct the stress tests 

on any covered credit union at any time, 

and to request qualitative and 

quantitative information from the 

covered credit unions that pertains to 

supervisory stress testing. 

Incremental Approach. Running a 

supervisory stress test requires internal 

controls that enable the credit union to 

effectively challenge all material aspects 

of its capital planning and analysis. For 

a covered credit union to develop the 

ability to obtain, cleanse, and manage 

internal and external data, and perform 

adequate capital analyses, it must 

possess a level of experience and 

operational scale that is unlikely to be 

in place or quickly developed by a 

credit union when it first reaches the 

$10 billion threshold. Accordingly, the 

Board is proposing to adopt an 

incremental regulatory approach to 

supervisory stress testing that would 

gradually increase regulatory 

requirements on a covered credit union 

over time without making the 

requirements too burdensome too soon. 

TABLE 1—INCREMENTAL APPROACH

Tier Description Stress test Capital plan review 

I ...................... First three years ............................. Not required ................................................................ Incorporated as part of the 

NCUA’s supervisory oversight. 

II ..................... 3 years or more, but less than $20 

billion in total assets.

Credit unions run stress tests using the NCUA 

stress-test scenarios and NCUA guidance, but are 

not subject to the 5% minimum stress-test ratio.

Incorporated as part of the 

NCUA’s supervisory oversight. 

III .................... $20 billion or more in total assets Credit unions run stress tests using the NCUA 

stress-test scenarios and NCUA guidance, and 

are subject to the 5% minimum stress-test ratio.

The NCUA accepts or rejects credit union capital plans—qualitative 

and quantitative assessment. 

Tier I. Under the proposal, a tier I 

credit union would not be subject to any 

supervisory stress testing requirements, 

nor would it be required to incorporate 

the NCUA’s stress test scenarios within 

its capital plan. This proposed approach 

would allow a tier I credit union time 

after it reaches the $10 billion threshold 

level to obtain the policies and 

processes necessary to develop sound 

capital plans and analyses prior to 

incorporating supervisory stress testing. 

Once the tier I credit union satisfies the 

tier II criteria, which generally would be 

three years after reaching the $10 billion 

threshold, it would then be required to 

comply with all tier II requirements 

described below. 

Tier II. This proposal would require a 

tier II credit union to incorporate the 

NCUA’s annual stress test scenarios into 

its capital plan submissions. The Board 

does not believe this particular 

requirement imposes additional 

regulatory burden on a tier II credit 

union because, as the NCUA has 

observed over the last three years of 

implementing the stress testing 

regulations, covered credit unions 

already incorporate the NCUA’s 

supervisory stress testing scenarios into 

their capital plans even though they are 

not required to do so under the current 

rule. 

Tier III. The proposal would require a 

tier III credit union to incorporate the 

NCUA’s stress test scenarios into its 

capital plan. Because a tier III credit 

union poses the greatest level of 


nlaroche on DSK9F9SC42PROD with PROPOSALS
Federal Register / Vol. 82, No. 208 / Monday, October 30, 2017 / Proposed Rules 50097 

4 12 U.S.C. 1751 et seq. 

5 12 U.S.C. 1766(a). 

6 12 U.S.C. 1784(a). 7 12 U.S.C. 1786(e). 

systemic risk to the NCUSIF, it must 

also submit a plan to build capital or 

mitigate the risk if the credit union 

shows that its stress test capital ratio 

would fall below the 5% minimum 

stress test capital threshold. This is 

consistent with the supervisory stress 

testing requirements in current 

§ 702.506(c). 

The proposal would apply the tier III 

threshold of $20 billion as of the March 

31 measurement date of each year, and 

the threshold would be effective at the 

beginning of the next capital planning 

cycle. The capital planning cycle would 

begin on June 1 of that year and run 

through the capital plan submission 

date of May 31 of the following year. 

Web site Instructions. If the Board 

adopts a final rule on this matter, the 

NCUA will publish on its Web site 

instructions for tier II and tier III credit 

unions on how to administer their own 

supervisory stress tests. The Board 

believes that a covered credit union’s 

ability to maintain independence and 

flexibility is essential to the overall 

success of the NCUA’s supervisory 

stress testing program. Accordingly, 

under the proposal, tier II and tier III 

credit unions would be required to 

conduct their own stress tests in 

accordance with the instructions 

provided by the NCUA. The standards 

for conducting the tests would differ for 

tier II and tier III credit unions and 

would be commensurate with their level 

of systemic risk to the NCUSIF. 

Conforming and Clarifying 

Amendments. Finally, the proposal 

would also make a number of minor 

conforming and clarifying amendments 

to the current rule. These conforming 

and clarifying amendments would 

include removing, changing, and adding 

certain definitions, and making other 

small amendments to various provisions 

in subpart E to part 702. 

The proposed changes outlined above 

are discussed in more detail in the 

Section-by-Section Analysis below. 

III. Legal Authority 

The NCUA is issuing this proposal 

pursuant to its authority under the 

Federal Credit Union Act (FCUA).4

Section 120(a) of the FCUA authorizes 

the Board to ‘‘prescribe rules and 

regulations for the administration of’’ 

the FCUA.5 Section 204 of the FCUA 

authorizes the Board, through its 

examiners, ‘‘to examine any [federally] 

insured credit union . . . to determine 

the condition of any such credit union 

for insurance purposes.’’ 6 Section 

206(e) of the FCUA authorizes the Board 

to take certain actions against a federally 

insured credit union, if, in the opinion 

of the Board, the credit union ‘‘is 

engaging or has engaged, or the Board 

has reasonable cause to believe that the 

credit union or any institution affiliated 

party is about to engage, in any unsafe 

or unsound practice in conducting the 

business of such credit union.’’ 7

IV. Section-by-Section Analysis 

This proposed rule would retain most 

of the current language in subpart E of 

part 702. In particular, current 

§§ 702.501, and 702.503 would remain 

unchanged under this proposal. The 

proposed changes to §§ 702. 502, 

702.504, 702.505, and 702.506 are 

described and explained in more detail 

below. 

Section 702.502 Definitions 

The proposal would retain most of the 

definitions from current § 702.502, 

without change, with the following 

exceptions. 

Adverse Scenario 

The proposal would remove the 

definition of ‘‘adverse scenario’’ from 

§ 702.502 and replace this term 

throughout subpart E with terms more 

commonly used within the financial 

services industry. This change is 

intended to reduce confusion for 

covered credit unions. No substantive 

changes to the requirements of subpart 

E are intended by this change. 

Capital Planning Cycle 

The proposal would add a definition 

for the new term ‘‘capital planning 

cycle’’ to § 702.502. The proposal would 

provide that ‘‘capital planning cycle’’ 

means a complete round of capital 

planning over a one year period. The 

definition would provide further that 

the capital planning cycle begins on 

June 1st of a given year and ends on 

May 31st of the following year when the 

capital plan submission is due. This 

change is intended to reduce confusion 

for covered credit unions regarding 

when they would be subject to certain 

stress testing and other requirements, 

which are discussed in more detail 

below. 

Covered Credit Union 

The proposal would make conforming 

amendments to the current definition of 

‘‘covered credit union’’ in § 702.502. In 

particular, the proposed definition 

would remove the words ‘‘capital 

planning and stress testing’’ from the 

second sentence in the definition and 

add in their place the word 

‘‘applicable.’’ The proposed definition 

would provide that ‘‘covered credit 

union’’ means a federally insured credit 

union whose assets are $10 billion or 

more. The definition would provide 

further that a credit union that crosses 

that asset threshold as of March 31st of 

a given calendar year is subject to the 

applicable requirements of subpart E in 

the capital planning cycle that begins on 

June 1st of that calendar year. As 

explained in more detail below, this 

change would help clarify that a 

covered credit union is only subject to 

the applicable requirements of subpart 

E. 

Scenarios 

The proposal would make conforming 

amendments to the current definition of 

‘‘scenarios’’ in § 702.502. In particular, 

the proposal would remove the words 

‘‘adverse, and severely adverse’’ from 

the current definition and add in their 

place the words ‘‘scenarios, and stress.’’ 

The revised definition would provide 

that ‘‘scenarios’’ are those sets of 

conditions that affect the U.S. economy 

or the financial condition of a covered 

credit union that serve as the basis for 

stress testing, including, but not limited 

to, NCUA-established baseline 

scenarios, and stress scenarios. 

Severely Adverse Scenario 

The proposal would delete the 

definition of ‘‘severely adverse 

scenario’’ from § 702.502 and replace 

this term throughout subpart E with 

terms more commonly used within the 

financial services industry. This change 

is intended to reduce confusion for 

covered credit unions. No substantive 

changes to the requirements of subpart 

E are intended by this change. 

Stress Scenario 

The proposal would add the 

definition ‘‘stress scenario’’ to § 702.502. 

The definition would provide that 

‘‘stress scenario’’ means a scenario that 

is more adverse than that associated 

with the baseline scenario. 

Tier I Credit Union 

The proposal would add the 

definition of ‘‘tier I credit union’’ to 

§ 702.502. The definition would provide 

that ‘‘tier I credit union’’ means a 

covered credit union that has completed 

fewer than three capital planning cycles 

and has less than $20 billion in total 

assets. Generally, a covered credit union 

would be categorized as a tier I credit 

union for the first three years after its 

total assets reached $10 billion or more. 

After three years, a tier I credit union 


nlaroche on DSK9F9SC42PROD with PROPOSALS
50098 Federal Register / Vol. 82, No. 208 / Monday, October 30, 2017 / Proposed Rules 

would become a tier II credit union with 

the corresponding requirements. 

The definition of a tier I credit union 

would provide regulatory relief for 

qualifying covered credit unions. The 

Board believes it is appropriate to adjust 

the expectations for credit unions that 

newly meet the criteria for covered 

credit unions. As noted earlier, the 

NCUA has conducted the review and 

assessment of covered credit union 

capital planning activities in a phased 

manner since inception of the final rule 

in 2014. The proposed creation of the 

tier I distinction would allow the NCUA 

to better align regulatory expectations 

based on the size, complexity, and 

financial condition of each covered 

credit union. 

Tier II Credit Union 

The proposal would add the 

definition of ‘‘tier II credit union’’ to 

§ 702.502. The definition would provide 

that ‘‘tier II credit union’’ means a 

covered credit union that has completed 

three or more capital planning cycles 

and has less than $20 billion in total 

assets, or is otherwise designated as a 

tier II credit union by NCUA. The tier 

II credit union definition would 

recognize the iterative nature of the 

NCUA’s capital planning and stress 

testing processes, and acknowledge that 

covered credit unions get better at 

developing and implementing their 

capital plans over time and through 

repetition. The Board believes these 

proposed changes would provide 

regulatory relief for tier II credit unions. 

Tier III Credit Union 

The proposal would add the 

definition of ‘‘tier III credit union’’ to 

§ 702.502. The definition would provide 

that ‘‘tier III credit union’’ means a 

covered credit union that has $20 

billion or more in total assets, or is 

otherwise designated as a tier III credit 

union by NCUA. The proposal identifies 

credit unions with total assets of $20 

billion or more as posing the highest 

degree of risk to the NCUSIF. While the 

Board considers qualitative and 

quantitative capital plan supervision 

and credit union-run stress test review 

to be appropriate for covered credit 

unions with less than $20 billion in 

total assets, it does not for larger 

covered credit unions. For covered 

credit unions with total assets of $20 

billion or more, the Board believes it is 

prudent, given the size of the NCUSIF 

and the potential loss associated with 

the failure of a credit union that large, 

to establish formal triggers requiring the 

NCUA and credit union actions to 

further mitigate NCUSIF risk exposure. 

Unless otherwise delegated to the 

NCUA’s staff, the Board would retain 

the authority to designate a covered 

credit union as a tier II credit union or 

tier III credit union, respectively. The 

Board invites comment on what criteria 

would be appropriate to apply when 

considering such a designation. 

Section 702.504 Capital Planning 

(a) Annual Capital Planning 

(a)(1) 

The proposal would retain most of 

current § 702.504 without change, with 

the following exceptions. Proposed 

§ 702.504(a)(1) would no longer include 

the last sentence in current 

§ 702.504(a)(1), which provides that the 

NCUA will assess whether the capital 

planning and analysis process is 

sufficiently robust in determining 

whether to accept a credit union’s 

capital plan. Given the other changes in 

this proposal, this sentence would no 

longer be necessary. Proposed 

§ 702.504(a)(1) would provide that a 

covered credit union must develop and 

maintain a capital plan. It also would 

provide that a covered credit union 

must submit this plan and its capital 

policy to the NCUA by May 31 each 

year, or such later date as directed by 

the NCUA. It also would provide that 

the plan must be based on the covered 

credit union’s financial data as of 

December 31 of the preceding calendar 

year, or such other date as directed by 

the NCUA. 

(b) Mandatory Elements 

(b)(4) 

The proposal would delete current 

§ 702.504(b)(4) from the regulation. 

Current § 702.504(b)(4) provides that if 

a credit union conducts its own stress 

test under § 702.506(c), its capital plan 

must include a discussion of how the 

credit union will maintain a stress test 

capital ratio of 5 percent or more under 

baseline, adverse, and severely adverse 

conditions in each quarter of the 9- 

quarter horizon. This sentence would no 

longer be necessary in this section 

because it would be fully addressed in 

proposed § 702.506(f). 

Section 702.505 NCUA Action on 

Capital Plans 

(a) Timing 

The proposal would amend current 

§ 702.505(a) by dividing paragraph (a) 

into two subparts. Proposed 

§ 702.505(a)(1) would provide that the 

NCUA will address any deficiencies in 

the capital plans submitted by tier I and 

tier II credit unions through the 

supervisory process. The intent of this 

change is to provide regulatory relief to 

tier I and tier II credit unions by 

removing the regulatory review and 

regulatory ‘‘accept or reject’’ assessment 

of their capital plans. It also provides 

the NCUA with additional flexibility in 

addressing plan deficiencies. 

Proposed § 702.505(a)(2) would 

continue to require that the NCUA 

accept or reject tier III credit unions’ 

capital plans. The Board is not 

proposing to remove this requirement 

for Tier III credit unions at this time for 

the reasons discussed above. 

Accordingly, proposed § 702.505(a)(2) 

would provide that the NCUA will 

notify tier III credit unions of the 

acceptance or rejection of their capital 

plans by August 31 of the year in which 

their plan is submitted. 

The proposal also would make 

additional conforming changes 

throughout § 702.505 to clarify that only 

tier III credit unions would be required 

to operate under a capital plan formally 

accepted by the NCUA. No substantive 

changes, other than those discussed 

above, are intended. 

Section 702.506 Annual Supervisory 

Stress Testing 

Much of the substance of current 

§ 702.506 would remain unchanged 

under the proposal. Each of the 

proposed substantive amendments are 

discussed in detail below. The proposal 

also would make a number of nonsubstantive conforming amendments to 

address certain changes in terminology. 

(a) General Requirements 

The proposal would amend current 

§ 702.506(a) by adding a new clarifying 

sentence to the beginning of proposed 

paragraph (a). The new sentence would 

provide that only tier II and tier III 

credit unions are required to conduct 

supervisory stress tests. The Board 

believes that exempting tier I credit 

unions from supervisory stress testing 

provides prudent regulatory relief and 

enables tier I credit union time to 

develop their own capital adequacy 

assessments. The Board considers the 

supervisory stress testing exemption for 

tier I credit unions, which generally 

would be three years, after which the 

tier I credit union becomes a tier II 

credit union, to be sufficient time to 

develop internal capabilities to perform 

credit union-run supervisory stress 

tests. 

NCUA-Run Tests 

The proposal would delete current 

§ 702.506(b), which, because of the 

other changes being proposed to part 

702, would be overridden. The NCUA 

already reserves, in proposed 


nlaroche on DSK9F9SC42PROD with PROPOSALS
Federal Register / Vol. 82, No. 208 / Monday, October 30, 2017 / Proposed Rules 50099 

8 5 U.S.C. 603(a); 12 U.S.C. 1787(c)(1). 

§ 702.506(b)(3), the right to conduct 

stress tests on covered credit unions if 

it deems such action necessary. 

(b) Credit Union-Run Supervisory Stress 

Tests 

The proposal would make significant 

revisions to current § 702.506(c) to 

require tier II and tier III credit unions 

to conduct their own stress tests instead 

of first having to get approval from the 

NCUA. Proposal § 702.506(b) would be 

split into three new subparagraphs, each 

of which is described in more detail 

below. 

(b)(1) General 

Proposed § 702.506(b)(1) would 

provide that all supervisory stress tests 

must be conducted according to the 

NCUA’s instructions. The Board is 

proposing to add this requirement to 

ensure that supervisory stress tests 

performed by tier II and tier III credit 

unions are conducted in a manner that 

promotes consistency and 

comparability. Credit union-run stress 

tests must adhere to these principles in 

order for the NCUA to assess inherent 

risk in the portfolios of covered credit 

unions and establish supervisory 

benchmarks. The NCUA will publish 

credit union-run supervisory stress test 

instructions each year on its Web site. 

The instructions will contain general 

directives, and where appropriate, 

differentiate between tier II and tier III 

requirements. 

(b)(2) Tier III Credit Unions 

Proposed § 702.506(b)(2) would 

provide that when conducting its stress 

test, a tier III credit union must apply 

the minimum stress test capital ratio to 

all time periods in the planning horizon. 

The Board believes this requirement of 

the current remains pertinent, but only 

for tier III credit unions. 

(b)(3) NCUA Tests 

Proposed § 702.506(b)(3) would retain 

the last two sentences in current 

§ 702.506(c), without change. Proposed 

§ 702.506(b)(3) would provide that the 

NCUA reserves the right to conduct the 

tests described in this section on any 

covered credit union at any time. 

Proposed paragraph (b)(3) would 

provide further that where both the 

NCUA and a covered credit union have 

conducted the tests, the results of the 

NCUA’s tests will determine whether 

the covered credit union has met the 

requirements of part 702. No substantive 

changes are being proposed with regard 

to these two sentences. 

(f) Supervisory Actions 

The proposal would retain much of 

the language in current § 702.506(g), but 

would insert some additional language. 

The section would also be broken into 

three subsections, each of which is 

discussed in more detail below. 

(f)(1) 

Proposed § 702.506(f)(1) would 

provide that if a credit union-run stress 

test shows a tier III credit union does 

not have the ability to maintain a stress 

test capital ratio of 5 percent or more 

under expected and stressed conditions 

in each quarter of the planning horizon, 

the credit union must incorporate into 

its capital plan a stress test capital 

enhancement plan showing how it will 

meet that target. 

(f)(2) 

This section of the proposal would 

retain the language from the first 

sentence in current § 702.506(g) and 

limit the application of paragraph (f)(2) 

to tier III credit unions. Proposed 

paragraph (f)(2) would provide that if an 

NCUA-run stress test shows that a tier 

III credit union does not have the ability 

to maintain a stress test capital ratio of 

5 percent or more under expected and 

stressed conditions in each quarter of 

the planning horizon, the credit union 

must provide the NCUA, by November 

30 of the calendar year in which the 

NCUA conducted the tests, a stress test 

capital enhancement plan showing how 

it will meet that target. As explained 

above, the NCUSIF risk exposure to a 

tier I and tier II credit union is 

sufficiently mitigated through 

qualitative and quantitative supervision 

of the credit union’s capital planning 

and capital adequacy analysis. 

Accordingly, the proposed rule offers 

regulatory relief as tier 1 and tier II 

credit unions would no longer be 

subject to the minimum stress test 

capital ratio. 

(f)(3) 

This section of the proposal would 

retain the language in the last sentence 

in current § 702.506(g) and move it to 

proposed § 702.506(f)(3). The proposal 

also would limit the application of this 

section to only tier III credit unions. 

Proposed § 702.506(f)(3) would provide 

that a tier III credit union operating 

without an NCUA-approved stress test 

capital enhancement plan required 

under this section may be subject to 

supervisory action. A tier III credit 

union operating without an accepted 

capital plan or an approved stress test 

capital enhancement plan will be 

considered poorly managed and/or 

operating with insufficient capital to 

support the credit union’s risk profile. 

The Board believes it is prudent to 

subject a tier III credit union to 

heightened regulatory scrutiny under 

such circumstances. 

IV. Regulatory Procedures 

1. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

requires the NCUA to prepare an 

analysis of any significant economic 

impact any proposed regulation may 

have on a substantial number of small 

entities (primarily those under $100 

million in assets).8 The proposed rule 

and its requirements will apply to only 

the largest credit unions, those with $10 

billion or more in total assets. 

Accordingly, the Board certifies that it 

will not have a significant economic 

impact on a substantial number of small 

entities. 

2. 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 (44 

U.S.C. 3507(d)). For purposes of the 

PRA, a paperwork burden may take the 

form of a reporting, recordkeeping, or a 

third-party disclosure requirement, 

referred to as information collections. 

The NCUA is seeking comments on 

proposed revisions to the information 

collection requirements contained in 

Subpart E of part 702, which has been 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval OMB control number 3133– 

0199. The information collection 

requirements are found in § 702.504, 

that requires FICUs with assets of at 

least $10 billion (covered credit unions) 

to develop, maintain, and submit capital 

plans annually to NCUA. Proposed 

change amend § 702.506 to require tier 

2 and 3 credit unions to conduct stress 

tests in a manner prescribed by NCUA. 

This reporting requirement will have an 

effect on five credit unions by 

increasing the information collection 

burden by an estimated 100 hours for 

each. 

Estimated number of respondents: 7. 

Estimated number of responses per 

respondent: 1. 

Estimated total annual responses: 7. 

Estimated burden per response: 393 

hours. 

Total annual burden: 2,750 hours. 

Comments are invited on: (1) Whether 

the proposed collection of information 

is necessary for the proper performance 

of the functions of the agency, including 


nlaroche on DSK9F9SC42PROD with PROPOSALS
50100 Federal Register / Vol. 82, No. 208 / Monday, October 30, 2017 / Proposed Rules 

whether the information will have 

practical utility; (2) the accuracy of the 

agency’s estimate of the burden of the 

proposed collection of information, 

including the validity of the 

methodology and assumptions used; (3) 

ways to enhance the quality, utility and 

clarity of the information to be 

collected; and (4) ways to minimize the 

burden of the collection of information 

on those who are to respond, including 

through the use of appropriate 

automated, electronic, mechanical, or 

other technological collection 

techniques or other forms of information 

technology. 

Comments on the proposed 

information collection requirements 

may be sent to the 1. Office of 

Information and Regulatory Affairs, 

Office of Management and Budget, 

Attention: Desk Officer for NCUA, New 

Executive Office Building, Room 10235, 

Washington, DC 20503, or email at 

OIRA_Submission@OMB.EOP.gov and 

2. NCUA PRA Clearance Officer, 1775 

Duke Street, Alexandria, VA 22314, 

Suite 5067, or email at PRAComments@

ncua.gov. 

3. Executive Order 13132 

Executive Order 13132 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 proposed rule does 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, 

therefore, determined that this proposal 

does not constitute a policy that has 

federalism implications for purposes of 

the executive order. 

4. Assessment of Federal Regulations 

and Policies on Families 

The Board has determined that this 

proposed rule will not affect family 

well-being within the meaning of § 654 

of the Treasury and General 

Government Appropriations Act, 1999, 

Public Law 105–277, 112 Stat. 2681 

(1998). 

List of Subjects in 12 CFR Part 702 

Credit unions, Reporting and record 

keeping requirements. 

By the National Credit Union 

Administration Board, on October 19, 2017. 

Gerard Poliquin, 

Secretary of the Board. 

For the reasons discussed above, the 

National Credit Union Administration 

proposes to amend 12 CFR part 702 as 

follows: 

PART 702—CAPITAL ADEQUACY 

■ 1. Revise the authority citation for part 

702 to read as follows: 

Authority: 12 U.S.C. 1766(a), 1784(a), 

1786(e), 1790d. 

Subpart E—Capital Planning and 

Stress Testing 

■ 2. Amend § 702.502 as follows: 

■ a. Remove the definition of ‘‘adverse 

scenario’’; 

■ b. Add the definition of ‘‘capital 

planning cycle’’; 

■ c. Remove from the definition of 

‘‘covered credit union’’ the words 

‘‘capital planning and stress testing’’ 

and add in their place the word 

‘‘applicable’’; 

■ d. Remove from the definition of 

‘‘scenarios’’ the words ‘‘adverse and 

severely adverse’’ and add in their place 

the words ‘‘scenarios and stress’’; 

■ e. Remove the definition of ‘‘severely 

adverse scenario’’; 

■ f. Add the definition of ‘‘stress 

scenario’’; and 

■ g. Add the definitions of ‘‘tier I credit 

union’’, ‘‘tier II credit union’’, and ‘‘tier 

III credit union’’. 

The additions and revisions read as 

follows: 

§ 702.502 Definitions. 

* * * * * 

Capital planning cycle means a 

complete round of capital planning over 

a one year period. The capital planning 

cycle begins on June 1 of a calendar year 

and ends on May 31, the capital plan 

submission date, of the following 

calendar year. 

* * * * * 

Stress scenario means a scenario that 

is more adverse than that associated 

with the baseline scenario. 

* * * * * 

Tier I credit union means a covered 

credit union that has completed fewer 

than three capital planning cycles and 

has less than $20 billion in total assets. 

Tier II credit union means a covered 

credit union that has completed three or 

more capital planning cycles and has 

less than $20 billion in total assets, or 

is otherwise designated as a tier II credit 

union by NCUA. 

Tier III credit union means a covered 

credit union that has $20 billion or more 

in total assets, or is otherwise 

designated as a tier III credit union by 

NCUA. 

§ 702.504 [Amended] 

■ 3. Amend § 702.504 as follows: 

■ a. Remove the last sentence in 

paragraph (a)(1); 

■ b. Remove paragraph (b)(4); and 

■ c. Redesignate paragraphs (b)(5) and 

(6) as paragraphs (b)(4) and (5), 

respectively. 

■ 4. Amend § 702.505 as follows: 

■ a. Revise paragraph (a); 

■ b. In paragraph (d) introductory text, 

add the words ‘‘tier III’’ before the 

words ‘‘credit union’s capital plan,’’; 

and 

■ c. In paragraph (e), remove the word 

‘‘covered’’ and add in its place the 

words ‘‘tier III’’. 

The revision reads as follows: 

§ 702.505 NCUA action on capital gains. 

(a) Timing—(1) Tier I & tier II credit 

unions. NCUA will address any 

deficiencies in the capital plans 

submitted by tier I and tier II credit 

unions through the supervisory process. 

(2) Tier III credit unions. NCUA will 

notify tier III credit unions of the 

acceptance or rejection of their capital 

plans by August 31 of the year in which 

their plan is submitted. 

* * * * * 

■ 5. Section 702.506 is revised to read 

as follows: 

§ 702.506 Annual supervisory stress 

testing. 

(a) General requirements. Only tier II 

and tier III credit unions are required to 

conduct supervisory stress tests. The 

supervisory stress tests consist of a 

baseline scenario, and stress scenarios, 

which NCUA will provide by February 

28 of each year. The tests will be based 

on the credit union’s financial data as of 

December 31 of the preceding calendar 

year, or such other date as directed by 

NCUA. The tests will take into account 

all relevant exposures and activities of 

the credit union to evaluate its ability to 

absorb losses in specified scenarios over 

a planning horizon. The minimum 

stress test capital ratio is 5 percent. 

(b) Credit union-run supervisory stress 

tests—(1) General. All supervisory stress 

tests must be conducted according to 

NCUA’s instructions. 

(2) Tier III Credit Unions. When 

conducting its stress test, a tier III credit 

union must apply the minimum stress 

test capital ratio to all time periods in 

the planning horizon. 

(3) NCUA tests. NCUA reserves the 

right to conduct the tests described in 

this section on any covered credit union 

at any time. Where both NCUA and a 


nlaroche on DSK9F9SC42PROD with PROPOSALS
Federal Register / Vol. 82, No. 208 / Monday, October 30, 2017 / Proposed Rules 50101 

covered credit union have conducted 

the tests, the results of NCUA’s tests 

will determine whether the covered 

credit union has met the requirements 

of this subpart. 

(c) Potential impact on capital. In 

conducting stress tests under this 

subpart, NCUA or the credit union will 

estimate the following for each scenario 

during each quarter of the planning 

horizon: 

(1) Losses, pre-provision net revenues, 

loan and lease loss provisions, and net 

income; and 

(2) The potential impact on the stress 

test capital ratio, incorporating the 

effects of any capital action over the 

planning horizon and maintenance of an 

allowance for loan losses appropriate for 

credit exposures throughout the 

horizon. NCUA or the credit union will 

conduct the stress tests without 

assuming any risk mitigation actions on 

the part of the credit union, except those 

existing and identified as part of the 

credit union’s balance sheet, or offbalance sheet positions, such as 

derivative positions, on the date of the 

stress test. 

(d) Information collection. Upon 

request, the credit union must provide 

NCUA with any relevant qualitative or 

quantitative information requested by 

NCUA pertinent to the stress tests under 

this subpart. 

(e) Stress test results. A credit union 

required to conduct stress tests under 

this section must incorporate the results 

of its tests in its capital plan. 

(f) Supervisory actions. (1) If a credit 

union-run stress test shows a tier III 

credit union does not have the ability to 

maintain a stress test capital ratio of 5 

percent or more under expected and 

stressed conditions in each quarter of 

the planning horizon, the credit union 

must incorporate, into its capital plan, 

a stress test capital enhancement plan 

that shows how it will meet that target. 

(2) If an NCUA-run stress test shows 

that a tier III credit union does not have 

the ability to maintain a stress test 

capital ratio of 5 percent or more under 

expected and stressed conditions in 

each quarter of the planning horizon, 

the credit union must provide NCUA, 

by November 30 of the calendar year in 

which NCUA conducted the tests, a 

stress test capital enhancement plan 

showing how it will meet that target. 

(3) A tier III credit union operating 

without an NCUA approved stress test 

capital enhancement plan required 

under this section may be subject to 

supervisory actions. 

(g) Consultation on proposed action. 

Before taking any action under this 

section against a federally insured, statechartered credit union, NCUA will 

consult and work cooperatively with the 

appropriate State official. 

[FR Doc. 2017–23212 Filed 10–27–17; 8:45 am] 

BILLING CODE 7535–01–P 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

50 CFR Part 622 

[Docket No. 170828813–7813–01] 

RIN 0648–BH15 

Snapper-Grouper Fishery of the South 

Atlantic Region; Temporary Measures 

To Reduce Overfishing of Golden 

Tilefish 

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce. 

ACTION: Proposed temporary rule; 

request for comments. 

SUMMARY: This proposed temporary rule 

would implement interim measures to 

reduce overfishing of golden tilefish in 

Federal waters of the South Atlantic. 

Beginning in 2018, this temporary rule 

would reduce the total annual catch 

limit (ACL), the commercial and 

recreational sector ACLs, and the quotas 

for the hook-and-line and longline 

components of the commercial sector. 

This proposed temporary rule would be 

effective for 180 days, although NMFS 

may extend the temporary rule’s 

effectiveness for a maximum of an 

additional 186 days. The intended effect 

of this proposed temporary rule is to 

reduce overfishing of golden tilefish 

while the South Atlantic Fishery 

Management Council develops longterm management measures. 

DATES: Written comments must be 

received by November 14, 2017. 

ADDRESSES: You may submit comments 

on the proposed temporary rule, 

identified by ‘‘NOAA–NMFS–2017– 

0111,’’ by either of the following 

methods: 

• Electronic submission: Submit all 

electronic public comments via the 

Federal e-Rulemaking Portal: http://

www.regulations.gov. Go to 

www.regulations.gov/ 

#!docketDetail;D=NOAA-NMFS-2017- 

0111 click the ‘‘Comment Now!’’ icon, 

complete the required fields, and enter 

or attach your comments. 

• Mail: Submit written comments to 

Karla Gore, NMFS Southeast Regional 

Office, 263 13th Avenue South, St. 

Petersburg, FL 33701. 

Instructions: Comments sent by any 

other method, to any other address or 

individual, or received after the end of 

the comment period, may not be 

considered by NMFS. All comments 

received are a part of the public record 

and will generally be posted for public 

viewing on www.regulations.gov 

without change. All personal identifying 

information (e.g., name, address, etc.), 

confidential business information, or 

otherwise sensitive information 

submitted voluntarily by the sender will 

be publicly accessible. NMFS will 

accept anonymous comments (enter 

‘‘N/A’’ in required fields if you wish to 

remain anonymous). 

Electronic copies of an environmental 

assessment (EA) supporting these 

interim measures may be obtained from 

the Southeast Regional Office Web site 

at http://sero.nmfs.noaa.gov/ 

sustainable_fisheries/s_atl/sg/2017/ 

golden_tilefish_interim/index.html. The 

EA includes a Regulatory Flexibility Act 

(RFA) analysis. 

FOR FURTHER INFORMATION CONTACT: 

Karla Gore, NMFS Southeast Regional 

Office, telephone: 727–551–5753, or 

email: karla.gore@noaa.gov. 

SUPPLEMENTARY INFORMATION: The 

snapper-grouper fishery in the South 

Atlantic region is managed under the 

Fishery Management Plan for SnapperGrouper Fishery of the South Atlantic 

Region (FMP) and includes golden 

tilefish, along with other snappergrouper species. The FMP was prepared 

by the South Atlantic Fishery 

Management Council (Council) and is 

implemented by NMFS through 

regulations at 50 CFR part 622 under 

authority of the Magnuson-Stevens 

Fishery Conservation and Management 

Act (Magnuson-Stevens Act). 

Background 

The Magnuson-Stevens Act requires 

that NMFS and regional fishery 

management councils prevent 

overfishing and achieve, on a 

continuing basis, the optimum yield 

from federally managed fish stocks. 

These mandates are intended to ensure 

that fishery resources are managed for 

the greatest overall benefit to the nation, 

particularly with respect to providing 

food production and recreational 

opportunities, and protecting marine 

ecosystems. 

Golden tilefish are harvested by both 

commercial and recreational fishermen 

throughout the South Atlantic, although 

total landings are dominated by the 

commercial sector using bottom 

longline gear. Golden tilefish are also 

harvested commercially using hookand-line gear, while the recreational 


nlaroche on DSK9F9SC42PROD with PROPOSALS