50270 Federal Register / Vol. 82, No. 208 / Monday, October 30, 2017 / Rules and Regulations 

1The Federal banking agencies include the 

Federal Deposit Insurance Corporation (FDIC), the 

Office of the Comptroller of the Currency (OCC), 

and the Board of Governors of the Federal Reserve 

System (FRB). See 12 U.S.C. 1813(q) (defining 

‘‘appropriate Federal banking agency’’). 

2Public Law 103–325, tit. III, section 309, 108 

Stat. 2160, 2218 (Sept. 23, 1994) (codified at 12 

U.S.C. 4806). 

3 12 U.S.C. 1790d. 

4 12 U.S.C. 4806(b)(1)–(2). 

5 12 U.S.C. 4806(d)(1)–(2). 

6 59 FR 59437 (Nov. 17, 1994). 

7 59 FR 61003 (Nov. 29, 1994). 

8 60 FR 14795 (Mar. 20, 1995). 

9 67 FR 19778 (Apr. 23, 2002). 

10 66 FR 23971 (Nov. 23, 2001). 11 77 FR 31981 (May 31, 2012). 12 76 FR 3674 (Jan. 20, 2011) (interim final IRPS); 

76 FR 23871 (Apr. 29, 2011) (final IRPS). 13 12 CFR 705.2. 14 12 CFR 705.7(g)(2). 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Part 746 

RIN 3133–AE69 

Supervisory Review Committee; 

Procedures for Appealing Material 

Supervisory Determinations 

AGENCY: National Credit Union 

Administration (NCUA). 

ACTION: Final rule. 

SUMMARY: The NCUA Board (Board) is 

adopting regulatory procedures for 

appealing material supervisory 

determinations to the NCUA’s 

Supervisory Review Committee (SRC). 

These procedures significantly expand 

the number of material supervisory 

determinations appealable to the SRC to 

include most agency decisions that 

could significantly affect capital, 

earnings, operating flexibility, or the 

nature or level of supervisory oversight 

of a federally insured credit union 

(FICU). Furthermore, the procedures 

contain a number of safeguards 

designed to provide FICUs with 

enhanced due process and promote 

greater consistency with the practices of 

the Federal banking agencies. 

DATES: This rule is effective January 1, 

2018. 

FOR FURTHER INFORMATION CONTACT: 

Michael J. McKenna, General Counsel, 

Frank S. Kressman, Associate General 

Counsel, or Benjamin M. Litchfield, 

Staff Attorney, National Credit Union 

Administration, 1775 Duke Street, 

Alexandria, Virginia 22314–3428 or 

telephone: (703) 518–6540. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Section 309 of the Riegle Community 

Development and Regulatory 

Improvement Act of 1994 (Riegle Act) 

required the NCUA and the Federal 

banking agencies 1 to establish 

independent intra-agency appeals 

procedures for the review of ‘‘material 

supervisory determinations’’ no later 

than 180 days after September 23, 

1994.2 The Riegle Act defined the term 

‘‘material supervisory determination’’ to 

include agency decisions relating to ‘‘(i) 

examination ratings; (ii) the adequacy of 

loan loss reserve provisions; and (iii) 

loan classifications on loans that are 

significant to the [credit union]’’ and to 

exclude agency decisions to appoint a 

conservator or liquidating agent for a 

FICU, or to take prompt corrective 

action pursuant to section 216 of the 

Federal Credit Union Act (FCU Act).3

When establishing the intra-agency 

appeals procedures, the Riegle Act 

required the NCUA and the Federal 

banking agencies to ensure that (1) any 

appeal of a material supervisory 

determination by an insured depository 

institution or insured credit union is 

heard and decided expeditiously; and 

(2) appropriate safeguards exist for 

protecting the appellant from retaliation 

by agency examiners.4 Furthermore, the 

Riegle Act required the NCUA and the 

Federal banking agencies to appoint an 

agency ombudsman responsible for 

serving as a liaison ‘‘between the agency 

and any affected person with respect to 

any problem such party may have in 

dealing with the agency resulting from 

the regulatory activities of the agency’’ 

and assuring ‘‘that safeguards exist to 

encourage complainants to come 

forward and preserve confidentiality.’’ 5

The Board published a proposed 

Interpretive Ruling and Policy 

Statement (IRPS) setting out intraagency appeals procedures for the 

review of material supervisory 

determinations in the Federal Register 

on November 17, 1994 for a 30-day 

comment period ending on December 

19, 1994.6 The proposed IRPS took the 

form of guidelines that established an 

SRC of five senior NCUA staff members 

consisting of the Executive Director, the 

General Counsel, the Director of the 

Office of Examination and Insurance 

(E&I), one Regional Director, and one 

additional senior staff or Board staff 

member to hear appeals of material 

supervisory determinations. The 

Executive Director was to serve as the 

SRC Chairman. Furthermore, the 

proposed IRPS limited the scope of 

appealable determinations to agency 

decisions specifically defined as 

‘‘material supervisory determinations’’ 

under section 309 of the Riegle Act with 

the appeal of ‘‘examination ratings’’ 

further limited to composite CAMEL 

ratings of 4 and 5. 

The Board extended the comment 

period until January 18, 1995 to allow 

stakeholders additional opportunity to 

comment on the proposed IRPS.7 After 

reviewing and considering the public 

comments, the Board published a final 

IRPS in the Federal Register on March 

20, 1995 as IRPS 95–1 ‘‘Supervisory 

Review Committee.’’ 8 The final IRPS 

took the form of guidelines that 

established an SRC consisting of three 

senior NCUA staff members each 

appointed by the NCUA Chairman. The 

scope of appealable determinations 

remained limited to agency decisions 

specifically defined as ‘‘material 

supervisory determinations’’ under 

section 309 of the Riegle Act, however, 

the final IRPS expanded the ability to 

appeal CAMEL ratings cover composite 

ratings of 3, 4, and 5 as well as all 

component ratings of those composite 

ratings. 

On April 23, 2002, the Board adopted 

IRPS 02–1, which amended IRPS 95–1 

to expand the scope of appealable 

determinations to include a decision by 

a Regional Director to revoke a Federal 

credit union’s (FCU) authority under the 

NCUA’s then-Regulatory Flexibility 

Program (RegFlex).9 RegFlex permitted 

an FCU with advanced levels of net 

worth and consistently strong 

supervisory examination ratings to 

request exemptions, in whole or in part, 

from certain NCUA regulations.10 The 

Board eliminated this program in 2011, 

but made certain regulatory relief 

provisions previously available under 

the program widely available to all 

FCUs.11

The Board adopted IRPS 11–1, which 

contains the current SRC appeals 

procedures, on April 29, 2011.12 IRPS 

11–1 expanded the jurisdiction of the 

SRC to include denials of Technical 

Assistance Grant (TAG) reimbursements 

by the Director of the Office of Small 

Credit Union Initiatives (OSCUI). A 

TAG is an award of money, in such 

amounts and according to such terms 

and conditions as the NCUA may 

establish, to a credit union participating 

in the Community Development 

Revolving Loan Fund that does not have 

to be repaid.13 TAGs are paid on a 

reimbursement basis to cover expenses 

approved in advance by the NCUA and 

supported by adequate documentation. 

In IRPS 11–1, the Board determined that 

the fact-intensive nature of TAG 

reimbursement requests warranted 

review by the SRC. The Board has not 

made material changes to IRPS 11–1 

since 2012 when it removed all 

references to RegFlex to reflect the 

elimination of that program.14


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15 82 FR 26391 (June 7, 2017). 

16 12 U.S.C. 4806(a). 

17 12 U.S.C. 1766(a), 1789(a)(11). 

II. Summary of the Proposed Rule 

On June 7, 2017, the Board published 

a proposed rule in the Federal Register 

formally codifying the SRC appeals 

process as part of the NCUA’s 

regulations.15 The proposed rule also 

included significant amendments to the 

SRC appeals process to enhance due 

process and to be more consistent with 

the Federal banking agencies. The 

proposed rule expanded the number of 

supervisory determinations appealable 

to the SRC and provided FICUs with an 

opportunity to seek review by the 

Director of E&I. To accommodate the 

increased workload of the SRC, the 

Board proposed to expand the size of 

the SRC to include a rotating pool of not 

less than eight senior staff from the 

NCUA’s regional and central offices. 

Central office staff would have included 

high level officials within the Office of 

the Executive Director (OED), the Office 

of Consumer Financial Protection and 

Access (OCFPA), the Office of National 

Examinations and Insurance (ONES), 

and OSCUI. The Secretary of the Board 

was to serve as the permanent SRC 

Chairman and select three individuals 

(one of whom could include the SRC 

Chairman) to hear a particular appeal. 

III. Summary of Comments to the 

Proposed Rule 

The Board received 9 comments on 

the proposed rule from State and 

national credit union trade associations, 

an FCU, a management consulting 

company, a professional association for 

State credit union supervisors, and a 

private individual. Commenters 

generally approved of the proposed rule 

and appreciated the Board’s efforts to 

provide FICUs with enhanced due 

process regarding agency decisions. 

However, commenters raised several 

concerns with various aspects of the 

proposed rule and recommended 

changes to address those concerns. 

Specific comments and 

recommendations are discussed in more 

detail in the Section-by-Section 

Analysis set out in Part V below. 

One commenter requested that the 

Board establish an examination 

outreach officer position to conduct a 

post-examination interview with each 

FICU to determine whether the goals of 

a healthy exam are being met, and if not, 

what parts of the exam can be improved 

upon to achieve those goals. The 

commenter also requested that the 

Board establish an advisory committee 

of senior credit union officials similar to 

the Consumer Financial Protection 

Bureau’s credit union advisory council 

(CUAC) to advise the NCUA on credit 

union matters. These requests are 

outside the scope of the proposed rule 

and, therefore, the Board will not 

address them in this rulemaking. 

IV. Summary of the Final Rule 

The Board is generally adopting the 

rule as proposed, with certain 

modifications based on public 

comments and other considerations as 

discussed in greater detail in the 

section-by-section analyses set out in 

Part V below. The final rule expands the 

scope of appealable determinations to 

include most agency decisions that may 

significantly affect the capital, earnings, 

operating flexibility, or that may 

otherwise affect the nature and level of 

supervisory oversight of a FICU. This 

includes, but is not limited to, a 

composite examination rating of 3, 4, or 

5; a determination relating to the 

adequacy of loan loss reserve 

provisions; the classification of loans 

and other assets that are significant to 

the FICU; a determination relating to 

compliance with Federal consumer 

financial law; and a determination 

relating to a waiver request or 

application for additional authority 

where independent appeals procedures 

have not been specified in other NCUA 

regulations. 

The final rule also creates an optional 

intermediate level of review (at the 

FICU’s option) by the Director of E&I, or 

his or her designee, before a FICU 

appeals an agency decision to the SRC. 

Review by the Director of E&I will be 

based entirely on written submissions 

provided by the appropriate program 

office and the petitioning FICU with no 

opportunity for an oral hearing. The 

Director of E&I will have an 

opportunity, however, to request 

additional information from the parties 

and may consult with them jointly or 

separately before rendering a decision. 

The Director of E&I may also solicit 

input from any other pertinent program 

office, including the Office of General 

Counsel, as necessary. A FICU that 

receives an adverse decision from the 

Director of E&I may appeal that decision 

to the SRC. Under no circumstances, 

however, may either party request 

reconsideration of a decision rendered 

by the Director of E&I. 

Furthermore, the final rule 

restructures the SRC by creating a 

rotating pool of at least eight senior staff 

appointed by the NCUA Chairman from 

NCUA’s central and regional offices 

who may be selected by the SRC 

Chairman to serve on a three-member 

panel to hear a particular appeal. The 

Secretary of the Board will serve as the 

permanent SRC Chairman and will also 

be eligible to serve as one of the three 

members on any particular panel. The 

Special Counsel to the General Counsel 

(Special Counsel), or any senior staff 

within the Office of General Counsel 

assigned such duties, will serve as a 

permanent non-voting advisor to each 

three-member panel to consult on 

procedural and legal matters regarding 

the jurisdiction of the SRC. To avoid 

any real or apparent conflicts of interest, 

the SRC Chairman will not be permitted 

to select individuals for the program 

office that rendered the material 

supervisory determination that is the 

subject of the appeal to serve on the 

three-member panel hearing that appeal. 

V. Section-by-Section Analysis 

Part 746—Appeals Procedures 

Subpart A—Procedures for Appealing 

Material Supervisory Determinations 

The proposed rule, along with a 

companion rule on agency appeals, 

created a comprehensive set of appeals 

procedures to the appeal of most agency 

decisions to the Board. This 

comprehensive set of procedures was to 

be codified in a new part of the NCUA’s 

regulations, part 746, with the SRC 

appeals process codified in subpart A to 

part 746 and the appeals procedures 

codified in subpart B to part 746. The 

Board received one substantive 

comment on this aspect of the proposed 

rule. The commenter requested that the 

Board codify the SRC appeals process in 

part 741, NCUA’s share insurance 

requirements rule, to make the 

procedures more conspicuous for 

federally insured, State-chartered credit 

unions (FISCUs). While the 

commenter’s argument is not without 

merit, the Board believes that codifying 

these procedures in their own part of 

the NCUA’s regulations gives all credit 

unions, regardless of charter, greater 

notice of the procedures for appealing 

most agency decisions. Accordingly, the 

Board is codifying the SRC appeals 

process as subpart A to part 746 as 

proposed. 

Section 746.101 Authority, Purpose, 

and Scope 

Proposed § 746.101 set out the 

authority for issuing the regulation as 

well as the regulation’s purpose and 

scope. Paragraph (a) provided that the 

rule was being issued pursuant to 

section 309 of the Riegle Act 16 and the 

Board’s plenary regulatory authority to 

administer the FCU Act.17 Paragraph (b) 

noted that the purpose of the rule was 

to establish an expeditious review 


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18 5 U.S.C. 704 (permitting judicial review of a 

final agency action). 

19Unlike Federal courts of appeal, which review 

factual determinations by a Federal district court for 

clear error, the Director of E&I, the SRC, and the 

Board review the factual basis of an appeal de novo. 

Accordingly, while the Board encourages a FICU to 

resolve all supervisory disputes at the examiner or 

Regional Office level as often as possible, there is 

little merit to sending an appeal back to the 

reviewing authority that made the determination 

that an agency decision was not a ‘‘material 

supervisory determination.’’ See e.g. Easley v. 

Cromartie, 532 U.S. 234, 243 (2001) (‘‘We are also 

aware that we review the District Court’s findings 

only for ‘clear error.’ In applying this standard, we, 

like any reviewing court, will not reverse a lower 

court’s finding of fact simply because we ‘would 

have decided the case differently.’ ’’). 

process for a FICU to appeal a material 

supervisory determination to an 

independent supervisory panel and, if 

applicable, to the Board. Finally, 

paragraph (c) clarified that the rule only 

applied to the appeal of a material 

supervisory determination made by 

NCUA staff. The proposed rule did not 

apply to a decision to appoint a 

conservator or liquidating agent for a 

FICU, to order a FICU to take prompt 

corrective action, or to enforcementrelated actions and decisions. The Board 

did not receive any comments on 

proposed § 746.101 and is finalizing this 

provision as proposed with minor 

wording changes for clarification. 

Section 746.102 Definitions 

Proposed § 746.102 set out definitions 

for certain terms relevant to the 

proposed rule. The Board received one 

substantive comment on this aspect of 

the proposed rule requesting that the 

Board add a definition of ‘‘senior staff’’ 

to clarify which individuals are eligible 

to be appointed by the NCUA Chairman 

to serve as members of the rotating pool 

of individuals able to be selected by the 

SRC Chairman to hear a particular 

appeal. The commenter expressed 

concerns that many of the procedural 

safeguards in the proposed rule 

designed to prevent conflicts of interest 

might actually result in NCUA staff with 

executive level knowledge and 

experience being ineligible to serve as 

part of the rotating pool. As a result, 

NCUA staff with the same level of 

knowledge and experience as the 

individuals making the initial material 

supervisory determination may be 

called upon to evaluate judgments and 

impressions of their peers which could 

create pressure to affirm that initial 

material supervisory determination. 

The Board appreciates the 

commenter’s concerns and agrees that 

the SRC will function best if the most 

knowledgeable and experienced NCUA 

staff are reviewing appeals to the SRC. 

However, the Board does not believe 

that adding a definition of ‘‘senior staff’’ 

is either the most practical or effective 

solution for ensuring the competency 

and independence of members of the 

rotating pool. A definition of ‘‘senior 

staff’’ would necessarily need to be 

open-ended and vague, as opposed to 

being tied to particular titles or pay 

grades, to account for any operational 

changes at the NCUA, as well as to 

ensure that there is a sufficiently broad 

group of individuals from which the 

NCUA Chairman can select members of 

the rotating pool. As a result, the Board 

believes that any definition of ‘‘senior 

staff’’ would almost certainly lack the 

clarity that the commenter seeks. 

Therefore, the Board will not define 

‘‘senior staff’’ in the final rule. The 

determination of which individuals are 

considered ‘‘senior staff’’ eligible to be 

appointed to the rotating pool will rest 

solely within the discretion of the 

NCUA Chairman. 

The Board did not receive any other 

substantive comments on proposed 

§ 746.102 and is finalizing this 

provision as proposed with minor 

modifications. The Board is removing 

the definitions of ‘‘petitioner’’ and 

‘‘respondent’’ to reflect the fact that a 

program office will no longer be eligible 

to appeal an adverse decision by the 

Director of E&I or the SRC. The Board 

is adopting this policy change in 

response to concerns raised by the 

commenters that are discussed in more 

detail below. The Board has replaced 

the words ‘‘petitioner’’ and 

‘‘respondent’’ with ‘‘insured credit 

union’’ and ‘‘program office’’ where 

appropriate throughout the final rule. 

Section 746.103 Material Supervisory 

Determinations 

Proposed § 746.103 set out a general 

definition of ‘‘material supervisory 

determination’’ and provided a list of 

examples. The proposed rule defined 

‘‘material supervisory determination’’ to 

mean a written decision by a program 

office that may significantly affect the 

capital, earnings, operating flexibility, 

or that may otherwise affect the nature 

or level of supervisory oversight of a 

FICU. The Board intended this general 

definition to be broad, capturing most 

agency decisions where independent 

appeals procedures did not exist, and as 

consistent with the definitions adopted 

by the Federal banking agencies as 

possible taking into consideration any 

operational differences between those 

agencies and the NCUA. Commenters 

generally supported this aspect of the 

proposed rule, highlighting the 

importance of significantly expanding 

the ability of FICUs to appeal agency 

decisions to the SRC and the Board. 

Accordingly, the Board is adopting the 

general definition of ‘‘material 

supervisory determination’’ set out in 

§ 746.103 substantially as proposed with 

modifications for clarity. 

The Board is modifying § 746.103(a) 

to clarify that the SRC appeals 

procedures do not apply to agency 

decisions that have been committed to 

the sole discretion of the appropriate 

program office director. While the Board 

seeks to provide FICUs with the greatest 

possible opportunity to seek agency 

review of material supervisory 

determinations, some agency decisions 

require significant expertise that is 

unique to a particular program office or 

must be made with such finality that the 

SRC appeals procedures would be 

inappropriate. Accordingly, the Board is 

revising the general definition of 

‘‘material supervisory determination’’ in 

the final rule to read ‘‘a written decision 

by a program office (unless ineligible for 

appeal) that may significantly affect the 

capital, earnings, operating flexibility, 

or that may otherwise affect the nature 

or level of supervisory oversight of a 

FICU.’’ In cases where an agency 

decision has been committed to the sole 

discretion of the program office, a FICU 

that receives an adverse decision could 

potentially seek judicial review of the 

agency decision under the 

Administrative Procedure Act (APA).18

The Board is also modifying 

§ 746.103(a) to clarify that a decision by 

the reviewing authority (i.e., the 

appropriate program office director, the 

Director of E&I, the SRC, or the Board) 

to dismiss an appeal will be considered 

a ‘‘material supervisory determination.’’ 

Allowing the reviewing authority to 

dismiss an appeal avoids unnecessary 

administrative burden on the NCUA 

caused by inconsequential disputes and 

reinforces the Board’s longstanding 

policy that supervisory disputes should 

be resolved at the program office level 

as often as possible. However, the Board 

also believes that it is important to 

counterbalance this ability of the 

reviewing authority to dismiss an 

appeal with the right of a FICU to 

appeal a wrongful dismissal. 

Accordingly, should the Director of E&I, 

the SRC, or the Board determine that 

dismissal was inappropriate under the 

circumstances, the reviewing authority 

will address appeal on its merits 

without referring the matter back to the 

original reviewing authority that 

dismissed the appeal.19 The Board is 

making a similar change to § 746.104(b) 

which addresses dismissal and 

withdrawal. 

This clarification is particularly 

necessary to address cases where the 

reviewing authority dismisses an appeal 


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Federal Register / Vol. 82, No. 208 / Monday, October 30, 2017 / Rules and Regulations 50273 

20See e.g. Letter to Credit Unions 16–CU–12 (Dec. 

2016) (announcing an extended examination cycle 

for certain FICUs with a composite examination 

rating of 1 or 2 with a corresponding management 

component rating of 1 or 2). 

21See 12 CFR 327.16. The term ‘‘insured 

depository institution’’ refers to a bank or savings 

association the deposits of which are insured by the 

FDIC under the Federal Deposit Insurance Act. See 

12 U.S.C. 1813(c). 

22 Id. 

23See 12 CFR 327.10. 

24 15 U.S.C. 1601 et seq. 25 12 CFR part 1026. 26The term ‘‘Federal consumer financial law’’ 

means any provision of the Consumer Financial 

Protection Act, enumerated consumer laws, or any 

regulation issued by the Consumer Financial 

Protection Bureau. See 12 U.S.C. 5481(14). The term 

‘‘enumerated consumer laws’’ refer to several 

Federal consumer protections statutes including the 

Consumer Leasing Act of 1976, the Electronic Fund 

Transfer Act, the Equal Credit Opportunity Act, the 

Fair Credit Reporting Act, and the Truth in Lending 

Act. See 12 U.S.C. 5481(12). The NCUA has 

exclusive supervision and enforcement authority 

with respect to the Consumer Financial Protection 

Bureau for compliance with Federal consumer 

financial law for FICUs with assets of $10 billion 

or less. See 12 U.S.C. 5516. 

27Public Law 111–203, tit. X, 124 Stat. 1375, 1955 

(July 21, 2010). 

28 12 U.S.C. 1790d. 

because an agency decision is not a 

‘‘material supervisory determination.’’ 

The threshold test for determining 

whether an agency decision is 

appealable to the SRC is whether it is a 

‘‘material supervisory determination.’’ 

An agency decision is only a ‘‘material 

supervisory determination’’ if it has a 

significant impact on capital, earnings, 

operating flexibility, or the nature or 

level of supervisory oversight of a FICU. 

Terms like ‘‘significant’’ are difficult to 

define in the abstract but an agency 

decision is most likely to be 

‘‘significant’’ if it has an actual effect in 

some direct and immediate way on the 

FICU’s capital, earnings, operating 

flexibility, or the nature or level of 

supervisory oversight of the FICU. An 

agency decision that requires the FICU 

to incur substantial costs would be the 

clearest example of a ‘‘material 

supervisory determination.’’ In contrast, 

an agency decision where the harm is 

more speculative, such as an impact on 

long-term growth strategies, would 

likely not be a ‘‘material supervisory 

determination.’’ In each case, it will be 

the responsibility of the reviewing 

authority to determine whether an 

agency decision meets this threshold 

test. If the agency decision does not, the 

reviewing authority may dismiss the 

appeal. Accordingly, the Board believes 

it is necessary to allow a FICU to appeal 

that agency decision to ensure 

accountability and enhance due process. 

Examination Ratings 

Proposed § 746.103(a)(1) listed a 

composite examination rating of 3, 4, or 

5 as an example of a material 

supervisory determination. Proposed 

§ 746.103(b)(1), however, excluded a 

composite examination rating of 1 or 2 

because the Board did not believe that 

a composite examination rating of 2 

would have a significant impact on the 

supervisory oversight of a FICU. 

Similarly, proposed § 746.103(b)(2) 

excluded component examination 

ratings unless such ratings had a 

significant adverse effect on the nature 

or level of supervisory oversight of a 

FICU. Several commenters objected to 

these aspects of the proposed rule, 

highlighting that the Federal banking 

agencies permit insured depository 

institutions to appeal all composite and 

component examination ratings and 

urging the Board to adopt a similar 

approach. 

However, the Board does not believe 

that adopting an approach that is 

entirely consistent with the Federal 

banking agencies is appropriate. The 

NCUA uses a credit union examination 

as a diagnostic tool to identify potential 

operational vulnerabilities and address 

regulatory compliance concerns that 

could impact the safety and soundness 

of a FICU. While a FICU’s composite 

examination rating may change if an 

NCUA examiner identifies an emerging 

trend that increases a FICU’s risk 

profile, a change in an examination 

rating does not, in and of itself, typically 

have a significant impact on a FICU 

until the FICU reaches a composite 

examination rating of 3, 4, or 5. 

Furthermore, a change in a component 

examination rating hardly impacts a 

FICU unless that particular component 

examination rating is connected with 

some specified regulatory relief 

initiative by the NCUA, such as the 

ability to participate in an extended 

examination cycle.20

In contrast, the FDIC uses composite 

and component examination ratings 

issued by the respective Federal banking 

agencies (including the FDIC) as a basis 

for determining an insured depository 

institution’s Federal deposit insurance 

premium.21 Under FDIC’s risk-based 

assessment system, an insured 

depository institution’s weighted 

average component examination rating 

is used along with other financial ratios 

and risk indicators to determine the 

initial base assessment rate.22 This 

initial base assessment rate is then used 

to determine an insured depository 

institution’s quarterly Federal deposit 

insurance premium which can vary 

within an established range based on 

the institution’s composite examination 

rating.23 As a result of these complex 

formulas, any change in an insured 

depository institution’s composite or 

component examination ratings could 

have a significant impact on the amount 

of its Federal deposit insurance 

premium. 

Put differently, a change in a 

composite or component examination 

rating is not a ‘‘material supervisory 

determination’’ for a FICU until the 

FICU reaches a composite examination 

rating of 3, 4, or 5, or unless the 

particular component examination 

rating changes the nature or level of 

supervisory oversight of the FICU. 

Meanwhile, a change in a composite or 

component examination may be a 

‘‘material supervisory determination’’ 

for an insured depository institution 

because it can lead to an increase in that 

institution’s Federal deposit insurance 

premium. In light of this important 

distinction, the Board does not believe 

that absolute consistency with the 

Federal banking agencies is necessary to 

provide FICUs with enhanced due 

process. Accordingly, the Board adopts 

this aspect of § 746.103 as proposed. 

Restitution Orders Pursuant to the Truth 

in Lending Act and Regulation Z 

Proposed § 746.103(a)(4) listed a 

restitution order pursuant to the Truth 

in Lending Act (TILA) 24 and its 

implementing regulation, Regulation 

Z,25 as an example of a material 

supervisory determination. By doing so, 

the Board intended to signal to FICUs 

that any determination by NCUA 

examiners or by OCFPA regarding a 

FICU’s compliance with Federal 

consumer financial law,26 as that term is 

defined in the Consumer Financial 

Protection Act of 2010,27 would be 

appealable to the SRC under the 

proposed rule. However, the Board 

recognizes that by specifically 

discussing restitution orders under 

TILA and Regulation Z, the Board may 

have given the false impression that 

other determinations regarding other 

aspects of TILA and Regulation Z or 

other Federal consumer financial laws 

would not be appealable to the SRC and 

the Board. Accordingly, the Board is 

revising this aspect of proposed 

§ 746.103 to clarify that all agency 

decisions regarding a FICU’s 

compliance with Federal consumer 

financial law are appealable to the SRC 

and the Board. 

Prompt Corrective Action 

Proposed § 746.103(b)(5) excluded 

from the definition of material 

supervisory determination a directive 

imposing prompt corrective action 

under section 216 of the FCU Act.28 One 

commenter objected to this exclusion, 

arguing that the significance and 


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29 12 CFR 747.2002(a)(1) and (f). 

30 12 CFR 747.2002(f). 

31 12 CFR 747.2002(g). 

32See 60 FR 15923 (Mar. 28, 1995) (establishing 

the FDIC’s intra-agency appeals procedures under 

the Riegle Act). The FDIC recently adopted 

amended Guidelines on July 18, 2017 following 

publication of the proposed rule. See 82 FR 34522 

(July 25, 2017). 

33 ‘‘Net worth’’ for prompt corrective action 

purposes is defined principally as a FICU’s retained 

earnings balance at quarter-end as determined 

under U.S. Generally Accepted Accounting 

Principles (U.S. GAAP). See 12 CFR 702.2(f). 34See 12 CFR part 702, subpart A (net worth 

classification). 35 12 U.S.C. 1786. 

potential impact of such a directive 

warrants further review by the SRC to 

provide FICUs with enhanced due 

process. The Board disagrees. The 

current procedures for issuing a 

directive imposing prompt corrective 

action provide FICUs with significant 

procedural safeguards. A FICU may 

present written arguments against a 

proposed directive directly to the Board 

and request that the Board modify or 

rescind an existing directive at any time 

due to changed circumstances.29 Such a 

request is automatically granted if it 

remains outstanding for more than 60 

calendar days after receipt by the 

Board.30 A FICU may also request a 

written recommendation from the 

NCUA Ombudsman, an impartial 

agency official who does not report 

directly or indirectly to any program 

office involved with the issuance of the 

directive, regarding a proposed directive 

or a pending request for modification or 

rescission of an existing directive.31 The 

Board believes that these procedural 

safeguards provide FICUs with even 

more due process than the SRC appeals 

procedures. 

The commenter also argued that 

allowing a FICU to appeal a directive 

imposing prompt corrective action to 

the SRC would be consistent with the 

approach adopted by the FDIC. 

However, proposed § 746.103(b)(5) is 

nearly identical to an exclusion adopted 

by the FDIC in its ‘‘Guidelines for 

Appeal of Material Supervisory 

Determinations,’’ (Guidelines) which 

establishes the FDIC’s Supervisory 

Appeals Review Committee (SARC) and 

sets out procedures for insured 

depository institutions to appeal 

material supervisory determinations by 

FDIC staff.’’ 32 While the FDIC did adopt 

‘‘catch all’’ language in its Guidelines 

that allows an insured depository 

institution to appeal an agency decision 

that may impact the institution’s 

‘‘capital category for prompt corrective 

action purposes,’’ that language does not 

independently authorize an insured 

depository institution to appeal a 

directive imposing prompt corrective 

action. Rather, it allows an insured 

depository institution to appeal an 

underlying agency decision that could 

impact net worth,33 which may cause 

the institution to fall within a lower 

capital classification.34 To avoid this 

kind of confusion, the Board specifically 

omitted this language from its definition 

of ‘‘material supervisory determination’’ 

in the proposed rule. 

Because the Board already provides 

significant procedural safeguards for 

FICUs prior to issuing a directive 

imposing prompt corrective action that 

are more expeditious than the SRC 

appeals process and consistent with the 

practices of the Federal banking 

agencies, the Board does not believe that 

subjecting these agency decisions to the 

SRC appeals process would be 

appropriate. Accordingly, the Board is 

adopting § 746.103(b)(5) as proposed. 

Enforcement Matters 

Proposed § 746.103(b)(6) excluded 

from the definition of ‘‘material 

supervisory determination’’ all 

decisions to initiate formal enforcement 

actions. One commenter objected to this 

exclusion noting that the FDIC recently 

revised its Guidelines to allow insured 

depository institutions to appeal a 

decision regarding the institution’s level 

of compliance with a formal 

enforcement action. The commenter 

argued that the Board should similarly 

expand the definition of material 

supervisory determination for 

consistency with the FDIC. The Board 

disagrees. Compliance with a formal 

enforcement action is monitored by 

high-level NCUA staff within a program 

office in consultation with staff 

attorneys within the Office of General 

Counsel. Accordingly, the Board 

believes that FICUs already have 

significant procedural and structural 

safeguards with respect to formal 

enforcement matters such that 

subjecting these decisions to the SRC 

appeals process would be unnecessarily 

duplicative. 

As the Board noted in the preamble to 

the proposed rule, once a formal 

enforcement action is initiated, the SRC 

appeals process is suspended regardless 

of how far along the FICU may be in that 

process. Once the formal enforcement 

action is resolved, the FICU may 

continue to seek redress through the 

SRC appeals process to the extent that 

any matters remain outstanding and 

were not addressed as part of the formal 

enforcement action. To avoid confusion, 

the Board is adopting a modification in 

the final rule to clarify when a formal 

enforcement action commences. A 

formal enforcement action begins when 

the NCUA provides written notice to the 

FICU of a recommended or proposed 

formal enforcement action under section 

206 of the FCU Act.35 A FICU will be 

notified in writing that the NCUA has 

recommended or proposed a formal 

enforcement action. Other types of 

correspondence from the NCUA, such as 

letters requesting additional information 

or referencing a violation of law without 

an express statement that the NCUA has 

recommended or proposed formal 

enforcement action are not considered 

to constitute notice of a recommended 

or proposed formal enforcement action 

for purposes of the SRC appeals process. 

Other Examples and Exclusions 

Proposed § 746.103 included several 

other examples of and exclusions from 

the general definition of ‘‘material 

supervisory determination.’’ The 

examples and exclusions included 

matters specifically addressed by the 

Riegle Act and preliminary matters such 

as the scope and timing of supervisory 

contacts. The Board did not receive 

substantive comments on these 

examples and exclusions. Accordingly, 

the Board is adopting the examples set 

out in proposed § 746.103(a)(2), (3), and 

(5) and the exclusions set out in 

proposed § 746.103(b)(3), (4), (7), (8), 

(9), and (10) as proposed. 

Section 746.104 General Provisions 

Proposed § 746.104 set out general 

provisions to be applied by each 

reviewing authority during the SRC 

appeals process. The proposed rule 

established an explicit standard of 

review to ensure that the NCUA’s 

policies and procedures were applied 

fairly and consistently. The proposed 

rule also addressed the effect of an 

appeal on the commencement of 

enforcement actions, applications for 

additional authority, and waiver 

requests. The Board received several 

comments on various aspects of 

proposed § 746.104. As discussed in 

more detail below, the Board is adopting 

§ 746.104 as proposed with minor 

modifications for clarity. 

Standard of Review 

Proposed § 746.104(a) established a de 

novo standard of review for each stage 

of the SRC appeals process. The 

standard of review required each 

reviewing authority to make an 

independent decision regarding whether 

the material supervisory determination 

was correct and not just reasonable. If 

the appropriate reviewing authority 

determined that the material 

supervisory determination was 


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36 82 FR 34522, 34526 (July 25, 2017). 

incorrect, they would render a corrected 

determination. Commenters generally 

supported this explicit standard of 

review for each stage of the SRC appeals 

process. However, commenters 

requested that the Board modify 

§ 746.104(a) to explicitly state that a 

decision by a FICU to forgo optional 

review by the Director of E&I would not 

prejudice the FICU in an appeal to the 

SRC or the Board. While the Board 

believes that the retaliation provision in 

proposed § 746.112 was sufficient to 

address this issue, the Board 

understands the commenters’ concerns 

and is adopting a modification to 

§ 746.104(a) in the final rule to clarify 

that a decision to bypass optional 

review by the Director of E&I may not 

be used by the SRC or the Board as a 

basis to deny an otherwise proper 

appeal. 

Commenters also requested that the 

Board clarify what constitutes the 

administrative record to be reviewed by 

the relevant reviewing authority at each 

stage of the SRC appeals process. While 

the Board believes that several sections 

of the proposed rule addressed this 

issue, such as proposed § 746.106(c), 

which outlined the basis for review of 

a material supervisory determination by 

the Director of E&I, the Board recognizes 

that a more general statement regarding 

the administrative record may be 

necessary to provide FICUs with greater 

clarity and enhanced due process. 

Accordingly, the Board is adopting a 

new paragraph in the final rule, 

§ 746.104(f), to explicitly describe what 

information is part of the administrative 

record to be reviewed by the reviewing 

authority at each stage of the SRC 

appeals process. For most appeals, the 

administrative record consists entirely 

of written submissions by the 

petitioning FICU and the appropriate 

program office. In cases involving a 

federally insured, State-chartered credit 

union (FISCU), the administrative 

record may also include written 

submissions by the appropriate State 

supervisory authority (SSA). A decision 

by an intermediate reviewing authority, 

such as the Director of E&I or the SRC, 

is also part of the administrative record. 

Furthermore, the administrative record 

includes a transcript of any oral hearing 

before the SRC or the Board. 

One commenter specifically requested 

that the Board require that any 

consultations between a reviewing 

authority and another party must take 

the form of written submissions that 

would become part of the administrative 

record. The proposed rule explicitly 

allowed the Director of E&I to consult 

with the FICU, the program office, or 

any other party prior to rendering a 

decision. The consultation process was 

meant to allow the Director of E&I to get 

clarification on a written submission or 

seek advice from a program office, such 

as the Office of General Counsel, on a 

technical or legal matter outside of the 

Director of E&I’s area of expertise. In 

fact, the Board anticipates that much of 

the consultation process will involve 

outreach to staff within the Office of 

General Counsel to seek legal opinions 

on various regulatory matters which 

may be subject to one or more 

evidentiary privileges. Accordingly, the 

Board does not believe that it is 

appropriate to include such 

communications as part of the 

administrative record. 

Dismissal and Withdrawal 

Proposed § 746.104(b) set out the 

conditions under which a reviewing 

authority could dismiss the appeal of a 

material supervisory determination. 

Under the proposed rule, a reviewing 

authority could dismiss an appeal if it 

was not timely filed, if the basis for the 

appeal was not discernable, if the 

petitioner asked to withdraw the request 

in writing, or for reasons deemed 

appropriate by the reviewing authority, 

including, for example, if the petitioner 

acted in bad faith by knowingly 

withholding evidence from the 

appropriate reviewing authority. The 

Board cautioned that FICUs are 

encouraged to make good faith efforts to 

resolve supervisory issues at the most 

direct level possible, starting with their 

examinations or program office staff, 

and as efficiently as possible. 

Accordingly, the Board stated that if a 

FICU engaged in bad faith by knowingly 

withholding evidence from an 

examiner, the program office, the 

Director of E&I, the SRC, or the Board, 

withholding that evidence would result 

in dismissal of the appeal. The Board 

did not receive substantive comments 

on this aspect of the proposed rule and 

is adopting § 746.104(b) substantially as 

proposed with one clarification to 

address the appeal of a dismissal for 

failure to state a material supervisory 

determination discussed in the section 

analysis of § 746.103 above. 

Discovery 

Proposed § 746.104(c) prohibited 

discovery or any similar process in 

connection with an appeal. Instead, 

each appeal was based entirely on 

written submissions to the reviewing 

authority and, where permitted, oral 

presentations to the SRC and the Board. 

The Board did not receive substantive 

comments on this aspect of the 

proposed rule and is, therefore,. 

Accordingly, the Board is adopting 

§ 746.104(c) as proposed. 

Enforcement Matters 

Proposed § 746.104(d) clarified that 

no provision of the proposed rule was 

intended to affect, delay, or impede any 

formal or informal supervisory or 

enforcement action in progress or affect 

the NCUA’s authority to take any 

supervisory or enforcement action 

against a FICU. The purpose of this 

provision was to ensure that appeals to 

the SRC and enforcement matters 

remained separate processes governed 

by different rules. The Board received 

one comment on this specific aspect of 

the proposed rule. The commenter 

requested that the Board modify 

§ 746.104(d) to allow a FICU to request 

a stay of a supervisory or enforcement 

action during the pendency of an appeal 

consistent with recently adopted 

amendments to the FDIC’s Guidelines. 

The Board has carefully reviewed the 

recent amendments to the FDIC’s 

Guidelines and believes that proposed 

§ 746.104(d) is consistent with the 

overall approach adopted by the FDIC. 

While the FDIC, in response to a public 

comment, noted that the Guidelines do 

not prohibit an insured depository 

institution from requesting a stay from 

a Division Director, the Guidelines make 

abundantly clear that the FDIC does not 

generally stay supervisory actions 

during the pendency of an appeal.36

Similarly, while the proposed rule does 

not explicitly prohibit a FICU from 

requesting a stay of a supervisory or 

enforcement action during the pendency 

of an appeal, such a stay would be 

reluctantly countenanced and rarely 

granted. Accordingly, the Board adopts 

§ 746.104(d) as proposed. 

Additional Authority and Waiver 

Requests During the Pendency of an 

Appeal 

Proposed § 746.104(e) required a 

program office to delay action on a 

waiver request or an application for 

additional authority that could be 

affected by the outcome of an appeal 

unless the FICU specifically requested 

that the waiver request or application 

for additional authority be considered 

notwithstanding the appeal. The 

proposed rule suspended any deadline 

for a program office to make a 

determination on a waiver request or 

application for additional authority set 

out in any part of the NCUA’s 

regulations until the FICU exhausted its 

administrative remedies under the SRC 

appeals process or was no longer 

eligible to pursue an appeal. The 


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37 82 FR 26391, 26395 (June 7, 2017). 38 59 FR 59437 (Nov. 17, 1994). 

purpose of this provision was to avoid 

situations where a FICU receives an 

adverse determination on a waiver 

request or an application for additional 

authority based on a material 

supervisory determination, only to have 

the material supervisory determination 

subsequently reversed by the SRC. It 

also prevented a waiver request or an 

application for additional authority 

from being automatically denied by 

operation of other parts of the NCUA’s 

regulations. The Board did not receive 

comments on § 746.104(e) and is 

adopting this provision as proposed. 

Section 746.105 Procedures for 

Reconsideration From the Appropriate 

Program Office 

Proposed § 746.105 set out procedures 

for a FICU to request reconsideration 

from the appropriate program office. 

Prior to requesting review by the 

Director of E&I or filing an appeal with 

the SRC, the proposed rule required a 

FICU to make a written request for 

reconsideration from the appropriate 

program office within 30 calendar days 

after receiving an examination report or 

other written communication containing 

a material supervisory determination. 

The request for reconsideration needed 

to include a statement of the facts on 

which the request for reconsideration 

was based, a statement of the basis for 

the material supervisory determination 

and the alleged error in the 

determination, and any other evidence 

relied upon by the FICU that was not 

previously provided to the appropriate 

program office making the material 

supervisory determination. 

Under the proposed rule, the 

appropriate program office was required 

to reach a decision on a request for 

reconsideration within 30 calendar days 

after receiving the request. If a written 

decision was not issued within 30 

calendar days after receiving a request 

for reconsideration, the request was 

automatically deemed to have been 

denied. Any subsequent request for 

reconsideration was to be treated as a 

request for review by the Director of E&I 

or an appeal to the SRC as determined 

by the Secretary of the Board after 

consultation with the FICU. As the 

Board explained in the preamble to the 

proposed rule, these procedures largely 

follow NCUA’s long standing policy of 

requiring a FICU to first request 

reconsideration from the program office 

prior to filing an appeal with the SRC. 

This is to encourage a program office 

and a FICU to resolve disputes 

informally and as expeditiously as 

possible.37

Several commenters requested that 

the Board remove the requirement that 

a FICU seek reconsideration from the 

appropriate program office prior to a 

request for review by the Director of E&I 

or an appeal to the SRC. Alternatively, 

some commenters requested that the 

Board permit a FICU to appeal timesensitive matters directly to the SRC. As 

the Board first explained in IRPS 

94–2,38 it is NCUA policy to require a 

FICU to attempt to resolve supervisory 

disputes with the program office before 

invoking the jurisdiction of the SRC. 

Review by the SRC is disruptive to the 

normal organizational structure of 

NCUA and should only be reserved for 

those issues that cannot be resolved in 

good faith between a program office and 

the FICU. Requiring a FICU to request 

reconsideration as a prerequisite before 

obtaining further review under the SRC 

appeals process preserves the ordinary 

relationship between FICUs and 

program offices and ensures that only 

serious disputes are elevated to the SRC. 

Accordingly, the Board is adopting 

§ 746.105 as proposed. 

Section 746.106 Procedures for 

Requesting Review by the Director of 

the Office of Examination and Insurance 

Proposed § 746.106 set out procedures 

for requesting review by the Director of 

E&I, or his or her designee. Prior to 

filing an appeal with the SRC, but after 

receiving a written decision by the 

appropriate program office in response 

to a request for reconsideration, the 

proposed rule allowed a FICU to make 

a written request for review by the 

Director of E&I of the program office’s 

material supervisory determination. The 

proposed rule required such a request to 

be made in writing within 30 calendar 

days after receiving a final decision on 

reconsideration by the appropriate 

program office. The request for review 

needed to include a statement that the 

FICU is requesting review by the 

Director of E&I, a statement of the facts 

on which the request for review was 

based, a statement of the basis for the 

material supervisory determination and 

the alleged error in the determination, 

any evidence relied upon by the FICU 

that was not previously provided to the 

program office making the material 

supervisory determination, and a 

certification from the FICU’s board of 

directors authorizing the request for 

review to be filed. 

Under the proposed rule, review of a 

material supervisory determination by 

the Director of E&I was based on written 

submissions provided with the initial 

documents requesting review. The 

Director of E&I could request additional 

information from any party within 15 

calendar days after the Secretary of the 

Board received the request for review 

and the relevant party had 15 calendar 

days to submit the requested 

information. The Director of E&I also 

had the authority to consult with the 

FICU and the program office jointly or 

separately, and with any other party 

prior to issuing a written decision. The 

proposed rule required the Director of 

E&I to issue a written decision within 30 

calendar days after the Secretary of the 

Board receives the request for review. 

However, the deadline would be 

extended by the time period during 

which the Director of E&I gathered 

additional information from the FICU or 

the program office. If a written decision 

was not issued within 30 calendar days, 

or as extended by any additional time 

during which information was being 

gathered, the request for review was 

automatically deemed to have been 

denied. Any subsequent request for 

review was to be treated as an appeal to 

the SRC. 

The Board received one substantive 

comment regarding the ability of the 

Director of E&I to consult with any 

party, including the FICU or the 

program office, prior to issuing a written 

decision. The commenter requested that 

these consultations take the form of 

written submissions that would become 

part of the administrative record. As the 

Board discussed above in the section 

analysis of § 746.104, the Board does not 

believe that consultations should be part 

of the administrative record. The Board 

sees little merit in including these kinds 

of communications as part of the 

administrative record because they will 

already be reflected in the initial 

submissions of the FICU and the 

program office and the final decision of 

the Director of E&I. Accordingly, the 

Board is adopting § 746.106 as 

proposed. 

Section 746.107 Procedures for 

Appealing to the Supervisory Review 

Committee 

Proposed § 746.107 set out procedures 

for appealing a material supervisory 

determination to the SRC. The proposed 

rule required a FICU to file an appeal 

within 30 calendar days after receiving 

a written decision by the appropriate 

program office on reconsideration or, if 

the FICU requested review by the 

Director of E&I, within 30 calendar days 

after a final decision made by the 

Director of E&I, or his or her designee. 

The appeal documents submitted to the 

SRC needed to include a statement that 

the FICU was filing an appeal with the 

SRC, a statement of the facts on which 


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the appeal is based, a statement of the 

basis for the material supervisory 

determination to which the FICU 

objected and the alleged error in the 

determination, any other evidence 

relied upon by the FICU, and a 

certification that the FICU’s board of 

directors authorized the appeal to be 

filed. 

The conduct of the appeal was 

primarily by oral hearing before the SRC 

at NCUA headquarters in Alexandria, 

Virginia, except where the FICU 

requested that an appeal be based 

entirely on the written record. At the 

oral hearing, the FICU and the 

appropriate program office could 

introduce written evidence or witness 

testimony during each side’s oral 

presentation. The SRC was also 

permitted to ask questions of any 

individual, including witnesses, 

appearing before it. Prior to the oral 

hearing, both the FICU and the program 

office would submit notices of 

appearance identifying no more than 

two individuals who would be 

representing them in the oral hearing, 

including counsel. However, either 

party could request permission from the 

SRC to allow additional individuals to 

appear before the SRC. The SRC was 

required to reach a decision within 30 

calendar days after an oral presentation 

or, if the appeal was based entirely on 

the written record, within 30 calendar 

days from the date of receipt of the 

appeal. If a written decision was not 

issued within 30 calendar days, the 

appeal was automatically deemed to 

have been denied. 

The proposed rule also required the 

SRC to publish its decisions on the 

NCUA’s Web site with appropriate 

redactions to protect confidential or 

exempt information. In cases where 

redaction was insufficient to prevent 

improper disclosure, published 

decisions could be presented in 

summary form. If an appeal involved 

the interpretation of material 

supervisory policy or generally accepted 

accounting principles, the SRC was 

required to notify the Director of E&I 

and solicit input from E&I prior to 

rendering a decision. Likewise, if an 

appeal involved an interpretation of 

NCUA’s regulations, the FCU Act, or 

any other law applicable to FICUs, the 

SRC was required to notify the General 

Counsel and solicit input from the 

Office of General Counsel. Finally, the 

proposed rule authorized the SRC 

Chairman to issue rules governing the 

operations of the SRC, to order that 

material be kept confidential, or to 

consolidate appeals that presented 

similar issues of law or fact. The Board 

is adopting § 746.107 substantially as 

proposed with minor modifications 

discussed below. 

The Board received four substantive 

comments on this aspect of the 

proposed rule. One commenter 

requested that the Board remove the 

ability of the program office to appeal a 

decision by the Director of E&I to the 

SRC. The commenter argued that it 

would be inappropriate to allow a 

program office to challenge a 

determination by the central head of 

examination policy and that only a 

FICU should have the ability to appeal 

a decision by the Director of E&I. The 

Board agrees with the commenter and 

has accordingly removed the ability of 

the program office to appeal a decision 

by the Director of E&I to the SRC in the 

final rule. For the same reasons, the 

Board has also removed the ability of 

the program office to appeal an adverse 

decision by the SRC to the Board under 

§ 746.108. 

Another commenter requested that 

the Board include, as part of the 

publication of a written decision by the 

SRC, a synopsis of each appeal and a 

summary of the final result on NCUA’s 

Web site. The Board agrees with the 

commenter and has accordingly added 

language in the final rule indicating that 

a synopsis of each appeal and a 

summary of the final result will be 

published on NCUA’s Web site along 

with the written decision by the SRC 

with appropriate redactions. The Board 

believes that publishing a synopsis and 

the final result will make it easier for a 

FICU to research previous SRC 

decisions which enhances the 

precedential value of each SRC decision 

and encourages consistent results 

throughout the SRC appeals process. For 

the same reasons, the Board will also 

publish a synopsis of each appeal and 

a summary of the final result for appeals 

from the SRC to the Board under 

§ 746.110. 

A third commenter requested that the 

Board expand the publication of written 

decisions by the SRC to include 

publication of appeals that were rejected 

without being considered by the SRC. 

The commenter argued that allowing 

stakeholders to determine the number of 

petitions granted or rejected enhances 

the ability of stakeholders to evaluate 

the efficacy of the SRC appeals process. 

However, the Board does not believe 

that publishing rejected appeals will 

necessarily achieve either of those goals. 

The Board anticipates that a large 

majority of rejected appeals will involve 

a FICU failing to file a timely appeal. 

The Board sees little merit in publishing 

these determinations on NCUA’s Web 

site because those determinations are of 

little precedential value to FICUs and 

give little, if any, insight into the SRC 

appeals process. Accordingly, neither 

the SRC nor the Board will not publish 

rejected appeals. 

Finally, a commenter objected to the 

ability of the SRC Chairman to issue 

supplemental rules governing the 

operations of the SRC. The commenter 

argued that while the SRC Chairman 

may use this authority to ensure the 

SRC appeals process operates 

efficiently, the broad authority to adopt 

supplemental rules invites potential 

misuse of that authority. The Board 

disagrees. The substantive appellate 

rights of each FICU are set out in the 

final rule. The SRC Chairman may not 

adopt any supplemental rules that 

would limit or alter those rights in any 

way. For example, the SRC Chairman 

could not adopt a supplemental rule 

that would conflict with the 

requirement in § 746.107(b) to submit 

certain information as part of an appeal 

to the SRC. Instead, the SRC Chairman 

may only adopt rules that further define, 

clarify, or simplify the SRC appeals 

process. For example, the SRC 

Chairman could adopt a supplemental 

rule to allow a FICU to make an oral 

presentation through video conference 

rather than in person at NCUA 

headquarters in Alexandria, Virginia. As 

a result, the Board sees little 

opportunity for the SRC Chairman to 

misuse the authority to adopt 

supplemental rules and declines to limit 

the authority of the SRC Chairman to 

issue such rules. Should a FICU believe 

that a particular rule adopted by the 

SRC Chairman is an inappropriate 

exercise of the SRC Chairman’s 

authority, the FICU may appeal that rule 

to the Board as part of its appeal of the 

SRC decision. 

Section 746.108 Composition of the 

Supervisory Review Committee 

Proposed § 746.108 set out rules 

governing the formation and 

composition of the SRC. Under the 

proposed rule, the NCUA Chairman 

would appoint not less than eight 

individuals from among the NCUA’s 

central and regional offices to serve 

along with the SRC Chairman as a 

rotating pool from which individual 

members could be selected by the SRC 

Chairman to serve as the three-member 

SRC for a particular appeal. Each 

member of the rotating pool, with the 

exception of the SRC Chairman, was to 

serve a one year term with eligibility to 

be reappointed by the NCUA Chairman 

for additional terms. Certain 

individuals, however, such as the 

General Counsel and Executive Director, 

were ineligible to serve as members of 

the rotating pool and, accordingly, 


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39 12 U.S.C. 3303(a)(6), 3306. 

could not be selected by the SRC 

Chairman to serve on the SRC for any 

particular appeal. 

The Secretary of the Board was to 

serve as permanent SRC Chairman and 

the Special Counsel was to serve as a 

permanent non-voting member of each 

SRC to offer advice to the SRC on 

procedural and legal matters. When 

selecting SRC members to hear a 

particular appeal, the SRC Chairman 

was required to consider any real or 

apparent conflicts of interest that could 

impact the SRC member’s objectivity as 

well as that individual’s experience 

with the subject matter of the appeal. 

Members of the program office that 

rendered the material supervisory 

determination that was the subject of 

the appeal were ineligible to serve as 

SRC members for that appeal. Likewise, 

E&I staff were ineligible to serve as SRC 

members for appeals where the FICU 

appealed a decision by the Director of 

E&I. Commenters generally favored this 

aspect of the proposed rule but raised 

some concerns and offered suggested 

modifications discussed below. With 

the exception of a minor modification to 

grant the NCUA additional flexibility 

and the increase of the term limits for 

members of the rotating pool, the Board 

is adopting § 746.108 as proposed. 

Formation and Composition of the 

Committee Pool 

Proposed § 746.108(a) established a 

rotating pool of at least eight senior staff 

appointed by the NCUA Chairman from 

NCUA’s central and regional offices 

who may be selected by the SRC 

Chairman to serve on a three-member 

panel to hear a particular appeal. The 

Board received several comments on 

this aspect of the proposed rule. One 

commenter requested that the Board 

include a representative from an SSA as 

part of the rotating pool similar to the 

representative from the State Liaison 

Committee who serves on the Federal 

Financial Institutions Examination 

Council (FFIEC).39 Another commenter 

requested that the Board allow senior 

credit union executives to serve as part 

of the rotating pool similar to 

establishing a jury of credit union peers 

to judge appeals of material supervisory 

determinations. The Board appreciates 

the commenters’ suggestions but 

believes that review by senior NCUA 

staff who are not involved in the 

material supervisory determination at 

issue is more consistent with the Riegle 

Act, which requires the Board to 

establish an independent intra-agency 

appellate process. 

The Board is adopting one 

modification to proposed § 746.108(a), 

however, to address the closure and 

consolidation of various program offices 

to avoid the need for future technical 

corrections to the SRC appeals rule. The 

proposed rule specifically listed several 

central offices from which the NCUA 

Chairman could select senior staff to 

serve on the rotating pool. However, on 

July 21, 2017, the Board announced a 

major restructuring initiative including 

the consolidation of two Regional 

Offices and the creation of the Office of 

Credit Union Resources and Expansion 

which could eliminate at least one 

central office listed in the proposed 

rule. Accordingly, the Board is 

modifying § 746.108(a) in the final rule 

to eliminate any reference to specific 

central offices. Instead, the regulatory 

text will refer, generally, to senior staff 

in the central and regional offices to 

allow for additional agency flexibility. 

Term of Office for Members of the 

Committee Pool 

Proposed § 746.108(b) limited each 

member of the rotating pool to a one 

year term with the option of being 

reappointed by the NCUA Chairman for 

additional terms. This was to ensure 

greater accountability among members 

of the rotating pool. However, one 

commenter expressed concerns that 

such an approach could lead to a lack 

of consistency in SRC decisions and 

requested that the Board modify this 

provision to establish permanent 

members of the rotating pool with the 

ability to appoint alternatives in the 

event of a conflict of interest. Another 

commenter requested that the Board 

adopt a minimum five year term for 

members of the rotating pool. The Board 

is mindful of commenters’ concerns 

regarding the need to retain experienced 

senior staff as part of the rotating pool 

to ensure greater consistency in SRC 

decisions. Accordingly, the Board is 

adjusting the term limit in § 746.108(b) 

to a two-year term with the option of 

reappointment by the NCUA Chairman 

after the expiration of the two-year term. 

Selection Criteria 

Proposed § 746.108(d) required the 

SRC Chairman when selecting members 

from the rotating pool to serve as the 

SRC for a particular appeal to consider 

any real or apparent conflicts of interest 

that may impact the objectivity of the 

member as well as the individual’s 

experience with the subject matter of 

the appeal. One commenter requested 

that the Board also include language 

requiring the SRC Chairman to also 

consider any perceived conflict of 

interest, in addition to a real or apparent 

conflict of interest, in selecting members 

of the rotating pool to hear a particular 

appeal. Functionally, this would allow 

a FICU to veto the selection of a member 

of the SRC panel that the FICU 

subjectively feels cannot render an 

impartial decision. While the Board 

seeks to adopt a process that is 

transparent and provides FICUs 

enhanced due process, adopting such a 

subjective disqualification standard 

would unnecessarily complicate the 

SRC appeals process by opening every 

SRC decision to challenge from a FICU 

that subjectively felt that a particular 

member of the SRC panel was biased 

against the FICU regardless of any 

objective evidence to indicate a real or 

potential conflict of interest. 

Accordingly, the Board is adopting 

§ 746.108(d) as proposed. 

Section 746.109 Procedures for 

Appealing to the NCUA Board 

Proposed § 746.109 set out procedures 

for appealing an adverse decision by the 

SRC to the Board. The proposed rule 

required a FICU or program office to file 

an appeal within 30 calendar days after 

receiving an adverse decision from the 

SRC. Under the proposed rule, an 

appeal to the Board was not an 

automatic right. Instead, the proposed 

rule required at least one Board Member 

to agree to hear an appeal within 20 

calendar days of receiving a request for 

an appeal to the Board. If at least one 

Board Member did not agree to hear an 

appeal within 20 calendar days, the 

request for an appeal was automatically 

deemed to have been denied. If a FICU 

or program office failed to file an appeal 

within 30 calendar days after receiving 

an adverse decision from the SRC, the 

FICU was deemed to have waived all 

claims pertaining the subject matter of 

the appeal. Consistent with IRPS 12–1, 

an adverse decision by the SRC on the 

denial of a TAG reimbursement was not 

reviewable by the Board. 

The appeal documents submitted to 

the Board needed to include a statement 

of the facts on which the appeal was 

based, a statement of the basis for the 

material supervisory determination to 

which the FICU or program office 

objected and the alleged error in the 

determination, and (for FICUs) a 

certification that the FICU’s board of 

directors authorized the appeal to be 

filed with the Board. For a FICU or 

program office requesting an oral 

hearing, the appeal documents also 

needed to include a separate written 

document requesting an oral hearing 

and demonstrating good cause why an 

appeal could not be presented 

adequately in writing. A FICU or 

program office could amend or 


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40The commenter also suggested that the Board 

does not have the authority to delegate the ability 

to render a final agency decision to a subordinate 

official. It is a settled principle of Federal 

administrative law that a Federal agency has the 

authority to subdelegate responsibilities to a 

subordinate official absent affirmative evidence of 

a contrary Congressional intent. See U.S. Telecom. 

Ass’n v. F.C.C., 359 F.3d 554, 565 (D.C. Cir. 2004) 

(citing United States v. Giordano, 416 U.S. 505 

(1974)). 

41 82 FR 26391, 26397 (June 7, 2017). 

supplement its appeal in writing within 

15 calendar days from the date the 

Secretary of the Board received the 

appeal. If the FICU amended or 

supplemented its appeal, the program 

office was permitted to file responsive 

materials within 15 calendar days from 

the date the Secretary of the Board 

received the amended or supplemental 

information. 

The Board received one substantive 

comment regarding this aspect of the 

proposed rule. The commenter argued 

that a FICU should be allowed to appeal 

all adverse decisions from the SRC to 

the Board as a matter of right rather than 

at the discretion of one Board Member. 

The commenter reasoned that requiring 

the Board to hear all appeals would 

serve an important agency goal of 

alerting the Board to emerging trends in 

supervisory policy.40 The Board 

disagrees. As the Board stated in the 

preamble to the proposed rule, the 

purpose of this provision is to reserve 

Board review only for those cases 

involving significant issues of 

supervisory policy that cannot be 

addressed at a lower appellate level or 

that may require further Board action 

such a rulemaking to clarify an 

ambiguity in one of the NCUA’s 

regulations.41 For all other supervisory 

issues, the Director of E&I, the central 

office responsible for supervisory 

policy, is in the best position to respond 

to emerging trends through the issuance 

of guidance documents. Accordingly, 

the Board is adopting § 746.109 as 

proposed. 

Section 746.110 Administration of the 

Appeal 

Proposed § 746.110 set out procedures 

for appealing an adverse decision from 

the SRC to the Board based solely on the 

written record. Under the proposed rule, 

the Board or the Special Counsel could 

request additional information to be 

provided in writing from either party 

within 15 calendar days after: (1) Either 

the FICU or the program office filed an 

appeal with the Secretary of the Board; 

(2) either the FICU or the program office 

filed an amendment or supplemental 

information; or (3) either the FICU or 

the program office filed responsive 

materials, whichever was later. The 

Board was required to reach a decision 

within 90 calendar days from the date 

of receipt of the appeal. If a written 

decision was not issued within 90 

calendar days, the appeal was 

automatically deemed to have been 

denied. The proposed rule also required 

the Board to publish its decisions on the 

NCUA’s Web site with appropriate 

redactions to protect confidential or 

exempt information. In cases where 

redaction was insufficient to prevent 

improper disclosure, published 

decisions could be presented in 

summary form. The Board did not 

receive substantive comments on this 

aspect of the proposed rule and is 

adopting § 746.110 with a slight 

modification to the provision regarding 

publication of decisions as discussed in 

the section analysis of § 746.107. 

Section 746.111 Oral Hearing 

Proposed § 746.111 set out procedures 

for appealing an adverse decision from 

the SRC to the Board through an oral 

hearing. Under the proposed rule, a 

petitioner was required to request an 

oral hearing before the Board as part of 

the initial appeal documents submitted 

in accordance with § 746.109. The 

proposed rule required the request for 

an oral hearing to take the form of a 

separate written document titled 

‘‘Request for Oral Hearing’’ and show 

good cause why the appeal could not be 

presented adequately in writing. Similar 

to a decision to hear an appeal, the 

proposed rule required at least one 

Board Member to approve an oral 

hearing within 20 days after receiving 

the request for an oral hearing and 

direct the Secretary of the Board to serve 

notice of the Board’s determination in 

writing to both the FICU and the 

program office. In the event that a 

request for an oral hearing was denied, 

the Board could review an appeal based 

entirely on the written record provided 

that at least one Board Member agreed 

to hear the appeal. 

The proposed rule required the 

Secretary of the Board to notify the 

parties of the date and time for the oral 

hearing making sure to provide 

reasonable lead time and scheduling 

accommodations. In most cases the oral 

hearing was to be held at NCUA 

headquarters in Alexandria, Virginia. 

However, the proposed rule allowed the 

NCUA Chairman to permit an oral 

hearing to be conducted through 

teleconference or video conference in 

his or her sole discretion. The parties 

were required to submit a notice of 

appearance identifying the individuals 

who would be representing them in the 

oral hearing with each party designating 

no more than two individuals without 

the prior consent of the NCUA 

Chairman. The oral hearing was to 

consistent entirely of oral presentations. 

The proposed rule expressly prohibited 

the introduction of written evidence or 

witness testimony at the oral hearing. 

The proposed rule also required the oral 

hearing to be on the record and 

transcribed by a stenographer, who was 

to prepare a transcript of the 

proceedings. Finally, the proposed rule 

required the Board to maintain the 

confidentiality of any information or 

materials submitted in the course of the 

proceedings subject to applicable 

Federal disclosure laws. 

The Board received one comment on 

this specific aspect of the proposed rule. 

The commenter raised concerns 

regarding the limitation on the 

introduction of written evidence or 

witness testimony at the oral hearing. 

The commenter argued that an oral 

presentation cannot provide the same 

level of detail as a written brief on the 

merits of a particular appeal and, 

therefore, the Board should permit the 

introduction of written evidence at the 

oral hearing. Furthermore, the 

commenter argued that the Board 

should permit witness testimony, where 

appropriate, to accommodate 

circumstances where an expert may 

have special knowledge that could assist 

the Board with a particular appeal. The 

commenter’s arguments are misplaced. 

The proposed rule did not prohibit the 

submission of a written brief on the 

merits or expert testimony. Instead, the 

proposed rule simply required a written 

brief or expert testimony to be 

submitted as part of the initial appeal 

documents provided to the Secretary of 

the Board in accordance with § 746.109. 

The purpose of the prohibition on 

submitting written evidence or witness 

testimony at the oral hearing was to 

avoid conducting a full administrative 

trial in front of the Board. Rather, the 

Board was to serve as an appellate body 

hearing oral arguments and deciding a 

case on the administrative record and 

the written submissions of the parties, 

which could include written briefs and 

expert testimony presented before the 

oral hearing. 

The Board is not convinced that a full 

administrative trial, including the 

submission of written evidence and 

witness testimony, is necessary to 

provide FICUs with enhanced due 

process. At various stages of the SRC 

appeals process, a FICU will have the 

opportunity to provide the appropriate 

reviewing authority with written and 

oral evidence which may include 

written briefs or expert testimony. This 

information should already be part of 

the administrative record presented to 


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42 12 U.S.C. 1766, 1784, 1789, and 1795b. 

43 5 U.S.C. 603(a). 

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

45 44 U.S.C. 3518(c)(1)(B)(ii). 

the Board on appeal and it would be 

unnecessarily duplicative to allow the 

reintroduction of this kind of evidence 

at an oral hearing. The Board has 

reserved ample authority, either on its 

own initiative or through the Special 

Counsel, to request additional 

information from an expert witness or to 

request supplemental briefings from 

either party. Furthermore, allowing a 

full administrative trial would frustrate 

the overarching policy goal of the SRC 

appeals process to allow a FICU with an 

expeditious and fair method for 

appealing material supervisory 

determinations while also encouraging 

the FICU to work out most disputes at 

the examiner or program office-level. 

Accordingly, the Board is adopting 

§ 746.111 as proposed. 

Section 746.112 Retaliation Prohibited 

Proposed § 746.112 allowed a FICU to 

file a complaint with the NCUA Office 

of Inspector General regarding 

retaliation, abuse, or retribution by 

NCUA staff in connection with an 

appeal to the SRC. The proposed rule 

required a complaint to include an 

explanation of the factual circumstances 

surrounding the complaint and any 

evidence of retaliation. Information 

submitted as part of a complaint would 

be kept strictly confidential. If the Office 

of Inspector General concluded that any 

NCUA staff had retaliated against a 

FICU for filing an appeal with the SRC, 

that staff member would be subject to 

disciplinary or remedial action by his or 

her appropriate supervisor including 

reprimand, suspension, or separation 

from employment depending on the 

facts and circumstances. The Board did 

not receive substantive comments on 

this aspect of the proposed rule and is 

adopting § 746.112 as proposed. 

Section 746.113 Coordination With 

State Supervisory Authority 

Proposed § 746.113 set out a 

framework for the appropriate reviewing 

authority to cooperate with the SSA 

regarding an appeal of a material 

supervisory determination by a FISCU 

that was the joint product of the NCUA 

and the SSA. The proposed rule 

required the reviewing authority to 

promptly notify the SSA of the appeal, 

provide the SSA with a copy of the 

appeal and any other related materials, 

solicit the SSA’s views regarding the 

merits of the appeal before rendering a 

decision, and notify the SSA of the 

reviewing authority’s decision. Once the 

NCUA reviewing authority had issued 

its decision, any other issues remaining 

between the FISCU and the SSA were 

left to those parties to resolve. The 

Board received one comment regarding 

this aspect of the proposed rule. The 

commenter argued that the Board 

should permit an SSA to comment on 

an appeal in all cases involving a FISCU 

and not only when the appeal involves 

a material supervisory determination 

that is the joint product of the NCUA 

and the SSA. The Board disagrees. 

Congress vested the NCUA with 

exclusive authority to administer the 

FCU Act.42 Accordingly, the Board 

believes that it would be inappropriate 

to allow an SSA to comment on matters 

that fall exclusively within the NCUA’s 

exercise of its supervisory powers under 

the FCU Act. As a practical matter, the 

Board also finds little value in soliciting 

input from an SSA on matters that 

involve legal or factual issues that are 

entirely the result of an NCUA 

examination or exclusively involve 

matters of Federal law. 

The commenter also argued that the 

Board should permit an SSA to make 

written submissions similar to amicus 

briefs that would become part of the 

administrative record. The proposed 

rule did not prohibit an SSA from 

expressing its views regarding the 

merits of an appeal in the form of 

written submissions. In fact, the Board 

anticipated that most comments from an 

SSA would be submitted in writing and 

become part of the administrative record 

reviewed by each successive reviewing 

authority before rendering a decision on 

appeal. While the Board believes that 

clarifications regarding the 

administrative record discussed above 

in the section analysis of § 746.104 may 

be sufficient to address commenter’s 

concerns, the Board is also adopting a 

modification to § 746.113 to clarify that 

a reviewing authority is required to 

solicit an SSA’s written views regarding 

the merits of an appeal before rendering 

a decision. Under § 746.104(f), the 

written submissions of the SSA will 

become part of the administrative record 

reviewed on appeal by the appropriate 

reviewing authority. 

VI. Withdrawal of IRPS 12–1 

‘‘Supervisory Review Committee’’ 

IRPS 11–1 ‘‘Supervisory Review 

Committee,’’ as amended by IRPS 12–1, 

sets out the current guidelines for 

appealing a material supervisory 

determination to the SRC. With the 

issuance of this final rule, the Board is 

withdrawing IRPS 11–1 effective 

January 1, 2018. IRPS 11–1 shall remain 

on the NCUA’s Web site and govern the 

appeal of all material supervisory 

determinations appealed prior to 

January 1, 2018. The final rule will not 

have retroactive effect and will only 

apply to material supervisory 

determinations appealed after January 1, 

2018. 

VII. Regulatory Procedures 

Regulatory Flexibility Act 

The Regulatory Flexibility Act 

requires NCUA to prepare an analysis to 

describe any significant economic 

impact a regulation may have on a 

substantial number of small entities 

(primarily those under $100 million in 

assets).43 This rule has no economic 

impact on small credit unions because 

it only impacts internal NCUA 

procedures and provides voluntary 

options for credit unions. Accordingly, 

NCUA certifies the final rule will not 

have a significant economic impact on 

a substantial number of small credit 

unions. 

Small Business Regulatory Enforcement 

Fairness Act 

The Small Business Regulatory 

Enforcement Fairness Act of 1996 

(Pub. L. 104–121) (SBREFA) 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 Administrative Procedure 

Act. NCUA does not believe this final 

rule is a ‘‘major rule’’ within the 

meaning of the relevant sections of 

SBREFA. As required by SBREFA, 

NCUA has filed the appropriate reports 

so that this final rule may be reviewed. 

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 increases an existing burden.44 For 

purposes of the PRA, a paperwork 

burden may take the form of a reporting 

or recordkeeping requirement, both 

referred to as information collections. 

Information collected as part of a civil 

action or administrative action, 

investigation, or audit, however, is not 

considered an information collection for 

purposes of the PRA. Subpart A to part 

746 establishes procedures for appealing 

material supervisory determinations to 

the NCUA Supervisory Review 

Committee. Because the only paperwork 

burden in this final rule relates to 

activities that are not considered to be 

information collections, NCUA has 

determined that this rule is exempt from 

the requirements of the PRA.45


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46Public Law 105–277, section 654, 112 Stat. 

2681, 2681–581 (1998). 

47 64 FR 43255 (Aug. 4, 1999). 

Assessment of Federal Regulations and 

Policies on Families 

The NCUA has determined that this 

final rule will not affect family wellbeing within the meaning of section 654 

of the Treasury and General 

Government Appropriations Act, 

1999.46

Executive Order 13132 

Executive Order 13132 encourages 

independent regulatory agencies to 

consider the impact of their actions on 

State and local interests.47 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 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 NCUA has 

therefore determined that this final rule 

does not constitute a policy that has 

federalism implications for purposes of 

the executive order. 

List of Subjects in 12 CFR Part 746 

Administrative practice and 

procedure, Claims, Credit Unions, 

Investigations. 

By the National Credit Union 

Administration Board on October 19, 2017. 

Gerard Poliquin, 

Secretary of the Board. 

For the reasons discussed above, the 

NCUA Board adds 12 CFR part 746 to 

read as follows: 

PART 746—APPEALS PROCEDURES 

Subpart A—Procedures for Appealing 

Material Supervisory Determinations 

Sec. 

746.101 Authority, purpose, and scope. 

746.102 Definitions. 

746.103 Material supervisory 

determinations. 

746.104 General provisions. 

746.105 Procedures for reconsideration 

from the appropriate program office. 

746.106 Procedures for requesting review 

by the Director of the Office of 

Examination and Insurance. 

746.107 Procedures for appealing to the 

Supervisory Review Committee. 

746.108 Composition of Supervisory 

Review Committee. 

746.109 Procedures for appealing to the 

NCUA Board. 

746.110 Administration of the appeal. 

746.111 Oral hearing. 

746.112 Retaliation prohibited. 

746.113 Coordination with State 

supervisory authority. 

Subpart B [Reserved] 

Authority: 12 U.S.C. 1766, 1787, and 1789. 

Subpart A—Procedures for Appealing 

Material Supervisory Determinations 

§ 746.101 Authority, purpose, and scope. 

(a) Authority. This subpart is issued 

pursuant to section 309 of the Riegle 

Community Development and 

Regulatory Improvement Act of 1994 (12 

U.S.C. 4806), which requires the NCUA 

Board to establish an independent intraagency appeals process to review 

appeals of material supervisory 

determinations made by NCUA staff, 

and sections 120 and 209 of the Federal 

Credit Union Act (12 U.S.C. 1766, 1789). 

(b) Purpose. The purpose of this 

subpart is to establish an expeditious 

review process for insured credit unions 

to appeal material supervisory 

determinations made by NCUA staff to 

an independent supervisory panel and, 

if applicable, to the NCUA Board. This 

subpart is also intended to establish 

appropriate safeguards for protecting 

insured credit unions from retaliation 

by NCUA staff. 

(c) Scope. This subpart applies to the 

appeal of material supervisory 

determinations made by NCUA staff. 

This subpart does not apply to the 

appeal of determinations for which an 

independent right to appeal exists such 

as a decision to appoint a conservator or 

liquidating agent for an insured credit 

union or to take prompt corrective 

action pursuant to section 216 of the 

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

1790d) and part 702 of this chapter. 

This subpart also does not apply to 

enforcement-related actions and 

decisions, including determinations and 

the underlying facts and circumstances 

that form the basis of a pending 

enforcement action. 

§ 746.102 Definitions. 

For purposes of this subpart: 

Board means the NCUA Board. 

Committee means the Supervisory 

Review Committee. 

Director of the Office of Examination 

and Insurance has the same meaning as 

used in § 790.2 of this chapter but also 

includes individuals designated by the 

Director of the Office of Examination 

and Insurance from among senior staff 

in the Office of Examination and 

Insurance to handle requests for review 

pursuant to § 746.106 of this subpart. 

Material Supervisory Determination is 

defined in § 746.103 of this subpart. 

Program office means the office 

within NCUA responsible for rendering 

a material supervisory determination. 

Special Counsel to the General 

Counsel or Special Counsel means an 

individual within the Office of General 

Counsel providing legal or procedural 

advice to the Committee in accordance 

with the procedures set forth in this 

subpart. 

§ 746.103 Material supervisory 

determinations. 

(a) Material supervisory 

determination. The term ‘‘material 

supervisory determination’’ means a 

written decision by a program office 

(unless ineligible for appeal) that may 

significantly affect the capital, earnings, 

operating flexibility, or that may 

otherwise affect the nature or level of 

supervisory oversight of an insured 

credit union. The term includes, but is 

not limited to: 

(1) A composite examination rating of 

3, 4, or 5; 

(2) A determination relating to the 

adequacy of loan loss reserve 

provisions; 

(3) The classification of loans and 

other assets that are significant to an 

insured credit union; 

(4) A determination regarding an 

insured credit union’s compliance with 

Federal consumer financial law; 

(5) A determination on a waiver 

request or an application for additional 

authority where independent appeal 

procedures have not been specified in 

other NCUA regulations; and 

(6) A determination by the relevant 

reviewing authority that an appeal filed 

under this subchapter does not raise a 

material supervisory determination. 

(b) Exclusions from coverage. The 

term ‘‘material supervisory 

determination’’ does not include: 

(1) A composite examination rating of 

1 or 2; 

(2) A component examination rating 

unless the component rating has a 

significant adverse effect on the nature 

or level of supervisory oversight of an 

insured credit union; 

(3) The scope and timing of 

supervisory contacts; 

(4) A decision to appoint a 

conservator or liquidating agent for an 

insured credit union; 

(5) A decision to take prompt 

corrective action pursuant to section 

216 of the Federal Credit Union Act (12 

U.S.C. 1790d) and part 702 of this 

chapter; 

(6) Enforcement-related actions and 

decisions, including determinations and 

the underlying facts and circumstances 

that form the basis of a pending 

enforcement action; 

(7) Preliminary examination 

conclusions communicated to an 

insured credit union before a final exam 


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50282 Federal Register / Vol. 82, No. 208 / Monday, October 30, 2017 / Rules and Regulations 

report or other written communication 

is issued; 

(8) Formal and informal rulemakings 

pursuant to the Administrative 

Procedure Act (5 U.S.C. 500 et seq.); 

(9) Requests for NCUA records or 

information under the Freedom of 

Information Act (5 U.S.C. 552) and part 

792 of this chapter and the submission 

of information to NCUA that is governed 

by this statute and this regulation; and 

(10) Determinations for which other 

appeals procedures exist. 

§ 746.104 General provisions. 

(a) Standard of review. Each 

reviewing authority shall make an 

independent decision regarding whether 

a material supervisory determination by 

the program office subject to appeal was 

appropriate. The reviewing authority 

shall give no deference to the legal or 

factual conclusions of the program 

office or a subordinate reviewing 

authority; provided, however, that the 

burden of showing an error in a material 

supervisory determination shall rest 

solely with the insured credit union. An 

insured credit union shall not be 

prejudiced in any respect by electing to 

forgo optional review by the Director of 

the Office of Examination and Insurance 

pursuant to § 746.106 of this subpart. 

(b) Dismissal and withdrawal. Any 

appeal under this subpart may be 

dismissed by written notice if it is not 

timely filed; if the basis for the appeal 

is not discernable; if an insured credit 

union asks to withdraw the request in 

writing; if an insured credit union fails 

to provide additional information 

requested pursuant to any authority 

granted in this subpart; if an insured 

credit union engages in bad faith; if the 

appeal fails to state a material 

supervisory determination as defined in 

§ 746.103 of this subpart; or for reasons 

deemed appropriate by the reviewing 

authority. 

(c) Discovery. No provision of this 

subpart is intended to create any right 

to discovery or similar process. 

(d) Supervisory or enforcement 

actions not affected. No provision of 

this subpart is intended to affect, delay, 

or impede any formal or informal 

supervisory or enforcement action in 

progress or affect NCUA’s authority to 

take any supervisory or enforcement 

action against an insured credit union. 

For purposes of this subpart, a 

supervisory or enforcement action is 

considered to be commenced when 

NCUA provides an insured credit union 

with written notice of a recommended 

or proposed enforcement action under 

the Federal Credit Union Act or other 

applicable law. 

(e) Additional authority and waiver 

requests during the pendency of an 

appeal. A program office will not 

consider a waiver request or an 

application for additional authority that 

could be affected by the outcome of an 

appeal of a material supervisory 

determination unless specifically 

requested by an insured credit union 

appealing the material supervisory 

determination. Any deadline for a 

program office to decide a waiver 

request or an application for additional 

authority set forth in any part of this 

chapter shall be suspended until an 

insured credit union appealing a 

material supervisory determination has 

exhausted its administrative remedies 

under this subpart or may no longer 

appeal the material supervisory 

determination, whichever is later. 

(f) Administrative record. A decision 

by the reviewing authority pursuant to 

this subpart shall be based exclusively 

on the administrative record. The 

administrative record shall consist of all 

written submissions by an insured 

credit union and a program office, 

decisions by subordinate reviewing 

authorities, and (where applicable) 

transcripts of an oral hearing before the 

SRC. For appeals where consultation 

with the appropriate State supervisory 

authority is required pursuant to 

§ 746.113, the administrative record 

shall also consist of any written 

submissions by the State supervisory 

authority. 

§ 746.105 Procedures for reconsideration 

from the appropriate program office. 

(a) Reconsideration. An insured credit 

union must make a written request for 

reconsideration from the appropriate 

program office prior to requesting 

review by the Director of the Office of 

Examination and Insurance pursuant to 

§ 746.106 or filing an appeal with the 

Committee pursuant to § 746.107. Such 

a request must be made within 30 

calendar days after receiving an 

examination report containing a 

material supervisory determination or 

other official written communication of 

a material supervisory determination. A 

request for reconsideration must be in 

writing and filed with the appropriate 

program office. 

(b) Content of request. Any request for 

reconsideration must include: 

(1) A statement of the facts on which 

the request for reconsideration is based; 

(2) A statement of the basis for the 

material supervisory determination to 

which the insured credit union objects 

and the alleged error in such 

determination; and 

(3) Any other evidence relied upon by 

the insured credit union that was not 

previously provided to the appropriate 

program office making the material 

supervisory determination. 

(c) Decision. Within 30 calendar days 

after receiving a request for 

reconsideration, the appropriate 

program office shall issue a written 

decision, stating the reasons for the 

decision, and provide written notice of 

the right to file a request for review by 

the Director of the Office of Examination 

and Insurance pursuant to § 746.106 or 

file an appeal with the Committee 

pursuant to § 746.107. If a written 

decision is not issued within 30 

calendar days, the request for 

reconsideration will be deemed to have 

been denied. 

(d) Subsequent requests for 

reconsideration. Any subsequent 

request for reconsideration following an 

initial request made pursuant to this 

section will be treated as a request for 

review by the Director of the Office of 

Examination and Insurance pursuant to 

§ 746.106 or an appeal to the Committee 

pursuant to § 746.107 as determined by 

the Secretary of the Board after 

consultation with the insured credit 

union. 

§ 746.106 Procedures for requesting 

review by the Director of Office of 

Examination and Insurance. 

(a) Request for review. Prior to filing 

an appeal with the Committee pursuant 

to § 746.107, but after receiving a 

written decision by the appropriate 

program office in response to a request 

for reconsideration pursuant to 

§ 746.105, an insured credit union may 

make a written request for review by the 

Director of the Office of Examination 

and Insurance of the program office’s 

material supervisory determination. 

Such a request must be made within 30 

calendar days after a final decision on 

reconsideration is made by the 

appropriate program office. A request 

for review must be in writing and filed 

with the Secretary of the Board, 

National Credit Union Administration, 

1775 Duke Street, Alexandria, VA 

22314–3428. 

(b) Content of request. Any request for 

review by an insured credit union must 

include: 

(1) A statement that the insured credit 

union is requesting review by the 

Director of the Office of Examination 

and Insurance; 

(2) A statement of the facts on which 

the request for review is based; 

(3) A statement of the basis for the 

material supervisory determination to 

which the insured credit union objects 

and the alleged error in such 

determination; 


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(4) Any other evidence relied upon by 

the insured credit union that was not 

previously provided to the appropriate 

program office making the material 

supervisory determination; and 

(5) A certification that the board of 

directors of the insured credit union has 

authorized the request for review to be 

filed. 

(c) Conduct of review. Review of a 

material supervisory determination 

shall be based on the written 

submissions provided under paragraph 

(b) of this section. The Director of the 

Office of Examination and Insurance 

may request additional information 

from the appropriate program office or 

the insured credit union within 15 

calendar days after the Secretary of the 

Board receives a request for review by 

the Director of the Office of Examination 

and Insurance. The relevant party must 

submit the requested information to the 

Director of the Office of Examination 

and Insurance within 15 calendar days 

after receiving such request for 

additional information. The Director of 

the Office of Examination and Insurance 

may consult with the parties jointly or 

separately before rendering a decision 

and may solicit input from any other 

pertinent program office as necessary. 

(d) Decision. Within 30 calendar days 

after the Secretary of the Board receives 

a request for review, the Director of the 

Office of Examination and Insurance 

shall issue a written decision, stating 

the reasons for the decision, and 

provide written notice of the right to file 

an appeal with the Committee pursuant 

to § 746.107. The 30 calendar day 

deadline is extended by the time period 

during which the Director of the Office 

of Examination and Insurance is 

gathering additional information. If a 

written decision is not issued within 30 

calendar days, as extended by 

additional time during which the 

information is being gathered, the 

request for review will be deemed to 

have been denied. 

(e) Subsequent requests for review. No 

party may request reconsideration of the 

decision rendered by the Director of the 

Office of Examination and Insurance. 

Any subsequent request for review 

following the rendering of a decision by 

the Director of the Office of Examination 

and Insurance will be treated as an 

appeal to the Committee. 

§ 746.107 Procedures for appealing to the 

Supervisory Review Committee. 

(a) Request for appeal. After receiving 

a written decision by the appropriate 

program office in response to a request 

for reconsideration pursuant to 

§ 746.105, an insured credit union may 

file an appeal with the Committee. Such 

an appeal must be filed within 30 

calendar days after receiving a written 

decision by the appropriate program 

office on reconsideration or, if the 

insured credit union requests review by 

the Director of the Office of Examination 

and Insurance pursuant to § 746.106, 

within 30 calendar days after a final 

decision is made by the Director of the 

Office of Examination and Insurance. 

An appeal must be in writing and filed 

with the Secretary of the Board, 

National Credit Union Administration, 

1775 Duke Street, Alexandria, VA 

22314–3428. 

(b) Content of appeal. Any appeal 

must include: 

(1) A statement that the insured credit 

union is filing an appeal with the 

Committee; 

(2) A statement of the facts on which 

the appeal is based; 

(3) A statement of the basis for the 

determination to which the insured 

credit union objects and the alleged 

error in such determination; 

(4) Any other evidence relied upon by 

the insured credit union that was not 

previously provided to the appropriate 

program office or, if applicable, the 

Director of the Office of Examination 

and Insurance; and 

(5) A certification that the board of 

directors of the insured credit union has 

authorized the appeal to be filed. 

(c) Conduct of appeal. The following 

procedures shall govern the conduct of 

an appeal to the Committee: 

(1) Submission of written materials. 

The Committee may request additional 

information from either of the parties 

within 15 calendar days after the filing 

of an appeal. The parties must submit 

the requested information to the 

Committee within 15 calendar days after 

receiving a request for additional 

information. 

(2) Oral hearing; duration; location. 

Except where an insured credit union 

has requested that an appeal be based 

entirely on the written record, an appeal 

shall also consist of oral presentations to 

the Committee at NCUA headquarters. 

The introduction of written evidence or 

witness testimony may also be 

permitted at the oral hearing. The 

insured credit union shall argue first. 

Each side shall be allotted a specified 

and equal amount of time for its 

presentation, of which a portion may be 

reserved for purposes of rebuttal. This 

time limit shall be set by the Committee 

and will be based on the complexity of 

the appeal. Committee members may 

ask questions of any individual 

appearing before it. 

(3) Appearances; representation. The 

parties shall submit a notice of 

appearance identifying the individual(s) 

who will be representing them in the 

oral presentation. The insured credit 

union shall designate not more than two 

officers, employees, or other 

representatives including counsel, 

unless authorized by the Committee. 

The program office shall designate not 

more than two individuals, one of 

whom may be an enforcement attorney 

from NCUA’s Office of General Counsel, 

unless authorized by the Committee. 

(d) Decision. Within 30 calendar days 

after the oral presentation of the appeal 

to the Committee, the Committee shall 

issue a decision in writing, stating the 

reasons for the decision, and provide 

the insured credit union with written 

notice of the right to file an appeal with 

the NCUA Board (if applicable). If an 

insured credit union has requested that 

an appeal be entirely based on the 

written record, the Committee shall 

issue a decision within 30 calendar days 

from the date of receipt of an appeal by 

the Secretary of the Board. The 30 

calendar day deadline to decide an 

appeal based entirely on the written 

record is extended by any time period 

during which the Committee is 

gathering additional information 

pursuant to paragraph (c)(1) of this 

section. 

(e) Publication. The Committee shall 

publish its decisions on NCUA’s Web 

site with appropriate redactions to 

protect confidential or exempt 

information. In cases where redaction is 

insufficient to prevent improper 

disclosure, published decisions may be 

presented in summary form. Published 

decisions may be cited as precedent in 

appeals to the Committee. Publication 

shall include a synopsis of each appeal 

and a summary of the final result. 

(f) Consultation with Office of 

Examination and Insurance or Office of 

General Counsel Required. If an appeal 

involves the interpretation of material 

supervisory policy or generally accepted 

accounting principles, the Committee 

shall notify the Director of the Office of 

Examination and Insurance of the 

appeal and solicit input from the Office 

of Examination and Insurance. If an 

appeal involves the interpretation of 

legal requirements, including NCUA’s 

regulations, the Committee shall notify 

the General Counsel of the appeal and 

solicit input from the Office of General 

Counsel. 

(g) Supplemental procedures 

authorized. In addition to the 

procedures contained in this subpart, 

the Committee Chairman may adopt 

supplemental procedures governing the 

operations of the Committee, order that 

material be kept confidential, or 

consolidate appeals that present similar 

issues of law or fact. 


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§ 746.108 Composition of Supervisory 

Review Committee. 

(a) Formation and composition of 

committee pool. The NCUA Chairman 

shall select not less than eight members 

from among senior staff in NCUA’s 

regional and central offices as a 

Committee pool from which the 

Committee Chairman may select 

Committee members. None of the 

members appointed by the NCUA 

Chairman shall also serve as a Regional 

Director, Associate Regional Director, 

Executive Director, Deputy Executive 

Director, General Counsel, Director of 

the Office of Examination and 

Insurance, or a senior policy advisor or 

chief of staff to a Board Member. 

(b) Term of office for members of 

Committee pool. Each member of the 

Committee pool shall serve for a twoyear term and may be reappointed by 

the NCUA Chairman for additional 

terms. 

(c) Designation and role of Committee 

Chairman. The Secretary of the Board 

shall serve as permanent Committee 

Chairman. The Committee Chairman 

shall be responsible for designating 

three Committee members (one of whom 

may be the Committee Chairman) from 

among the Committee pool to hear a 

particular appeal. 

(d) Selection criteria. When selecting 

Committee members to hear an appeal 

pursuant to paragraph (c) of this section, 

the Committee Chairman shall consider 

any real or apparent conflicts of interest 

that may impact the objectivity of the 

Committee member as well as that 

individual’s experience with the subject 

matter of the appeal. 

(e) Interested staff ineligible. Members 

of the Committee pool from the program 

office that made the material 

supervisory determination that is the 

subject of the appeal are ineligible to 

serve on the Committee for that appeal. 

Members of the Committee pool from 

the Office of Examination and Insurance 

are ineligible to serve on the Committee 

for appeals where the insured credit 

union previously requested review by 

the Director of the Office of Examination 

and Insurance pursuant to § 746.106. 

(f) Role of the Special Counsel. The 

Special Counsel to the General Counsel 

shall serve as a permanent nonvoting 

member of the Committee to advise on 

procedural and legal matters. 

(g) Quorum; meetings. A quorum of 

two Committee members (excluding the 

Special Counsel to the General Counsel) 

shall be present at each Committee 

meeting and a majority vote of a quorum 

is required for an action on an appeal. 

Meetings of the Committee will not be 

open to the public. 

§ 746.109 Procedures for appealing to the 

NCUA Board. 

(a) Request for appeal. An insured 

credit union may file an appeal with the 

Board challenging a decision by the 

Committee within 30 calendar days after 

receiving that decision. An appeal must 

be in writing and filed with the 

Secretary of the Board, National Credit 

Union Administration, 1775 Duke 

Street, Alexandria, VA 22314–3428. 

(b) Granting an appeal. At least one 

Board Member must agree to consider 

an appeal from a decision by the 

Committee. If a request for an oral 

hearing pursuant to § 746.111 is granted, 

the Secretary of the Board will notify 

the parties of the time and location 

where the oral hearing shall be heard. 

Except in unusual circumstances, any 

appeal shall be held at NCUA 

headquarters. If at least one Board 

Member does not agree to consider an 

appeal from a decision by the 

Committee within 20 days of receiving 

a request, the request will be deemed to 

have been denied. 

(c) Failure to file a timely appeal. An 

insured credit union that fails to file an 

appeal within the specified 30-day 

period shall be deemed to have waived 

all claims pertaining to the matters in 

issue. 

(d) Certain actions not reviewable. 

Notwithstanding any other provision of 

this subpart, Committee decisions on 

the denial of a technical assistance grant 

reimbursement are final decisions of 

NCUA and may not be appealed to the 

Board. 

(e) Content of appeal. Any request for 

appeal must include: 

(1) A statement of the facts on which 

the appeal is based; 

(2) A statement of the basis for the 

determination to which the insured 

credit union objects and the alleged 

error in such determination; and 

(3) A certification that the board of 

directors of the insured credit union has 

authorized the appeal to be filed. 

(f) Amending or supplementing the 

appeal. The insured credit union may 

amend or supplement the appeal in 

writing within 15 calendar days from 

the date the Secretary of the Board 

receives an appeal. If the insured credit 

union amends or supplements the 

appeal, the program office will be 

permitted to file responsive materials 

within 15 calendar days. 

(g) Request for oral hearing. In 

accordance with § 746.111, the insured 

credit union may request an opportunity 

to appear before the Board to make an 

oral presentation in support of the 

appeal. 

§ 746.110 Administration of the appeal. 

(a) Conduct of appeal. Except as 

otherwise provided in § 746.111, the 

following procedures shall govern the 

conduct of an appeal to the Board: 

(1) Review based on written record. 

The appeal of a material supervisory 

determination shall be entirely based on 

the written record. 

(2) Submission of written materials. 

The Board or the Special Counsel to the 

General Counsel may request additional 

information to be provided in writing 

from either of the parties within 15 

calendar days after the filing of an 

appeal, any amendments or 

supplementary information to the 

appeal documents by the insured credit 

union, or any responsive materials by 

the program office, whichever is later. 

The parties must submit the requested 

information to the Board or the Special 

Counsel within 15 calendar days of 

receiving a request for additional 

information. 

(b) Decision. The Board shall issue a 

decision within 90 calendar days, 

unless there is an oral hearing, from the 

date of receipt of an appeal by the 

Secretary of the Board. The decision by 

the Board shall be in writing, stating the 

reasons for the decision, and shall 

constitute a final agency action for 

purposes of chapter 7 of title 5 of the 

United States Code. Failure by the 

Board to issue a decision on an appeal 

within the 90-day period, unless there is 

an oral hearing, shall be deemed to be 

a denial of the appeal. 

(c) Publication. The Board shall 

publish its decisions on NCUA’s Web 

site with appropriate redactions to 

protect confidential or exempt 

information. In cases where redaction is 

insufficient to prevent improper 

disclosure, published decisions may be 

presented in summary form. Published 

decisions may be cited as precedent. 

Publication shall include a synopsis of 

each appeal and a summary of the final 

result. 

§ 746.111 Oral hearing. 

(a) Request for oral hearing. The 

insured credit union may request to 

appear before the Board to make an oral 

presentation in support of the appeal. 

The request must be submitted with the 

initial appeal documents and should be 

in the form of a separate written 

document titled ‘‘Request for Oral 

Hearing.’’ The request must show good 

cause for an oral presentation and state 

reasons why the appeal cannot be 

presented adequately in writing. 

(b) Action on the request. The Board 

shall determine whether to grant the 

request for oral hearing and shall direct 

the Secretary of the Board to serve 


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notice of the Board’s determination in 

writing to the parties. A request for oral 

hearing shall be granted with the 

approval of any Board Member within 

20 days of receiving a request for an oral 

hearing. 

(c) Effect of denial. In the event a 

request for an oral hearing is denied, the 

appeal shall be reviewed by the Board 

on the basis of the written record. 

(d) Procedures for oral hearing. The 

following procedures shall govern the 

conduct of any oral hearing: 

(1) Scheduling of oral hearing; 

location. The Secretary of the Board 

shall notify the parties of the date and 

time for the oral hearing, making sure to 

provide reasonable lead time and 

schedule accommodations. The oral 

hearing will be held at NCUA 

headquarters; provided, however, that 

on its own initiative or at the request of 

the insured credit union, the NCUA 

Chairman may in his or her sole 

discretion allow for an oral hearing to be 

conducted via teleconference or video 

conference facilities. 

(2) Appearances; representation. The 

parties shall submit a notice of 

appearance identifying the individual(s) 

who will be representing them in the 

oral presentation. The insured credit 

union shall designate not more than two 

officers, employees, or other 

representatives including counsel, 

unless authorized by the NCUA 

Chairman. The program office shall 

designate not more than two individuals 

one of whom may be an enforcement 

attorney from NCUA’s Office of General 

Counsel, unless authorized by the 

NCUA Chairman. 

(3) Conduct of oral hearing. The oral 

hearing shall consist entirely of oral 

presentations. The introduction of 

written evidence or witness testimony 

shall not be permitted at the oral 

hearing. The insured credit union shall 

argue first. Each side shall be allotted a 

specified and equal amount of time for 

its presentation, of which a portion may 

be reserved for purposes of rebuttal. 

This time limit shall be set by the Board 

and will be based on the complexity of 

the appeal. Members of the Board may 

ask questions of any individual 

appearing before the Board. 

(4) Transcript. The oral hearing shall 

be on the record and transcribed by a 

stenographer, who will prepare a 

transcript of the proceedings. The 

stenographer will make the transcript 

available to the insured credit union 

upon payment of the cost thereof. 

(e) Confidentiality. An oral hearing as 

provided for herein constitutes a 

meeting of the Board within the 

meaning of the Government in the 

Sunshine Act (5 U.S.C. 552b). The 

Chairman shall preside over the conduct 

of the oral hearing. The meeting will be 

closed to the public to the extent that 

one or more of the exemptions from 

public meetings apply as certified by 

NCUA’s Office of General Counsel. The 

Board shall maintain the confidentiality 

of any information or materials 

submitted or otherwise obtained in the 

course of the procedures outlined 

herein, subject to applicable law and 

regulations. 

(f) Conclusion of the oral hearing. The 

Board shall take the oral presentations 

under advisement. The Board shall 

render its decision on the appeal in 

accordance with § 746.110. 

§ 746.112 Retaliation prohibited. 

(a) Retaliation prohibited. NCUA staff 

may not retaliate against an insured 

credit union making any type of appeal. 

Alleged acts of retaliation should be 

reported to the NCUA Office of 

Inspector General, which is authorized 

to receive and investigate complaints 

and other information regarding abuse 

in agency programs and operations. 

(b) Submission of complaints. Insured 

credit unions may submit complaints of 

suspected retaliation to the NCUA 

Office of Inspector General, 1775 Duke 

Street, Alexandria, VA 22314–3428. 

Complaints should include an 

explanation of the circumstances 

surrounding the complaint and 

evidence of any retaliation. Information 

submitted as part of a complaint shall be 

kept confidential. 

(c) Disciplinary action. Any 

retaliation by NCUA staff will subject 

the employee to appropriate 

disciplinary or remedial action by the 

appropriate supervisor. Such 

disciplinary or remedial action may 

include oral or written warning or 

admonishment, reprimand, suspension 

or separation from employment, change 

in assigned duties, or disqualification 

from a particular assignment, including 

prohibition from participating in any 

examination of the insured credit union 

that was the subject of the retaliation. 

§ 746.113 Coordination with State 

supervisory authority. 

(a) Coordination when request for 

review by the Director of the Office of 

Examination and Insurance filed. In the 

event that a material supervisory 

determination subject to a request for 

review by the Director of the Office of 

Examination and Insurance is the joint 

product of NCUA and a State 

supervisory authority, the Director of 

the Office of Examination and Insurance 

will promptly notify the appropriate 

State supervisory authority of the 

request for review, provide the State 

supervisory authority with a copy of the 

request for review and any other related 

materials, solicit the State supervisory 

authority’s views regarding the merits of 

the request for review before making a 

determination, and notify the State 

supervisory authority of the Director’s 

determination. 

(b) Coordination when appeal to 

Supervisory Review Committee filed. In 

the event that a material supervisory 

determination appealed to the 

Committee is the joint product of NCUA 

and a State supervisory authority, the 

Committee will promptly notify the 

State supervisory authority of the 

appeal, provide the State supervisory 

authority with a copy of the appeal and 

any other related materials, solicit the 

State supervisory authority’s views 

regarding the merits of the appeal before 

making a determination, and notify the 

State supervisory authority of the 

Committee’s determination. Once the 

Committee has issued its determination, 

any other issues that may remain 

between the insured credit union and 

the State supervisory authority will be 

left to those parties to resolve. 

(c) Coordination when appeal to 

board filed. In the event that a material 

supervisory determination appealed to 

the Board is the joint product of NCUA 

and a State supervisory authority, the 

Board will promptly notify the State 

supervisory authority of the appeal, 

provide the State supervisory authority 

with a copy of the appeal and any other 

related materials, solicit the State 

supervisory authority’s views regarding 

the merits of the appeal before making 

a determination, and notify the State 

supervisory authority of the Board’s 

determination. Once the Board has 

issued its determination, any other 

issues that may remain between the 

insured credit union and the State 

supervisory authority will be left to 

those parties to resolve. 

Subpart B—[Reserved] 

[FR Doc. 2017–23213 Filed 10–27–17; 8:45 am] 

BILLING CODE 7535–01–P 


sradovich on DSK3GMQ082PROD with RULES3