SUPPLEMENTARY INFORMATION:

I. Introduction

A. Background

Part 741 is divided into two subparts. Subpart A contains substantive requirements that apply to both federal credit unions (FCUs) and federally insured state-chartered credit unions (FISCUs) that are not codified elsewhere in the NCUA's regulations. Subpart B, on the other hand, generally does not contain substantive requirements. Its purpose is to list in a centralized way citations to the substantive provisions ( printed page 24746) that apply to FCUs and FISCUs but are set forth elsewhere in the NCUA's regulations. Before 1995, these requirements were dispersed across the NCUA's regulations and within the terms of an Agreement for Insurance of Accounts, which outlined conditions for state-chartered credit unions obtaining and maintaining federal insurance. In 1995, the agency issued a final rule consolidating the requirements for insurance that apply to FISCUs.^[1] That rule did not impose any new requirements. Its purpose was merely to aid FISCUs by simplifying the process of determining which regulations they must follow. The Board now believes that the benefit of removing many of these provisions from part 741 and reducing the length of the NCUA's regulations outweighs the benefit of the cross-referencing function served by these provisions.

The Board may create a reference list outside of its regulations to the extent credit unions feel an aid continues to be helpful.

B. Legal Authority

The Board has the legal authority to issue this proposed rule pursuant to its plenary rulemaking authority under the Federal Credit Union Act and its specific rulemaking authority under the various acts the Board administers.⁴

II. Proposed Rule

Section 741.1 of subpart A sets forth the Board's examination authority. It specifies that the Board is authorized to examine any insured credit union or any credit union applying for insurance. This authority includes access to all records, reports, and other information concerning the credit union's affairs. The section also notes that, to the maximum extent feasible, the NCUA will use examinations conducted by state regulatory agencies. These are statutorily granted functions that do not require additional explanation by regulation.^[2]

Section 741.201 requires any credit union making application for insurance to possess minimum fidelity bond coverage pursuant to the requirements set forth in §§ 713.3, 713.5, and 713.6. Section 741.201 also requires a federally insured credit union (FICU) whose fidelity bond coverage has been terminated to notify the appropriate NCUA regional director not less than 35 days prior to the effective date of such termination. This notification requirement does not appear in part 713. Thus, the Board proposes to transfer this text to § 713.3 with a new paragraph (c) stating, “A federally insured credit union whose fidelity bond coverage is terminated shall notify the appropriate NCUA regional office in writing not less than 35 days prior to the effective date of such termination.” The Board is also proposing to amend § 713.1 to remove that section's reference to § 741.201. Finally, § 741.201 requires corporate credit unions to comply with § 704.18 because part 704 establishes the rules for federally insured corporate credit unions. The Board proposes to remove § 741.201 as it is unnecessary.

Section 741.205 informs FISCUs that are newly chartered or in troubled condition that they must comply with subsection 701.14(c) concerning prior notice and the NCUA's review of a proposed change in official or senior executive officers. Section 741.205 also contains references to coordinating with state supervisory authorities. The Board believes these references serve the important purpose of assuring state regulators of the NCUA's intent to consult with them on these matters. Therefore, the Board proposes to transfer the following text to subsection 701.14(c): “Federally insured state-chartered credit unions must submit required information to both the appropriate NCUA Regional Director and their state supervisor. NCUA will consult with the state supervisor before making its determination. NCUA will notify the state supervisor of its approval/disapproval no later than the time that it notifies the affected individual.”

Section 741.213 informs FISCUs they must adhere to the rules of practice and procedures for administrative actions and adjudicative hearings in part 747, but it also informs them that subpart E of part 747 only applies to FCUs. The Board is requesting feedback on its proposed removal of § 741.213 and whether it should incorporate into subpart E of part 747 affirmative statements that (1) subpart E does not apply to FISCUs, and (2) the language that says subpart E controls over subpart A in the event of a conflict only applies to FCUs.

Section 741.218 informs FISCUs they must adhere to the “applicable provisions in part 709 . . . .” It further notes that § 709.3 only applies to FCUs. The Board is proposing to remove § 741.218 and requests feedback on this proposal, including whether the Board should consider amending part 709 to clarify which specific sections of part 709 apply to FISCUs. For example, § 709.3, titled “Challenge to revocation of charter and involuntary liquidation,” refers only to FCUs. However, § 709.0 refers to involuntary liquidation but in the context of FICUs, presenting the scope of part 709 as including “the involuntary liquidation and adjudication of creditor claims in all cases involving FICUs.”

The following provisions are straight cross-references to other provisions and do not contain any substantive information that would be helpful to retain. The Board proposes eliminating these outright.

• Section 741.206 informs any federally insured corporate credit union they must comply with part 704.
• Section 741.207 requires those FISCUs that participate in the community development revolving loan program to adhere to the requirements of part 705.^[3]

• Section 741.209 informs FISCUs they must comply with the requirements of part 711 concerning management official interlocks.
• Section 741.210 informs any FICU that is a member of the Central Liquidity Facility that it must comply with the requirements of part 725.
• Section 741.211 refers to the advertising provisions of part 740 that apply to all FICUs.
• Section 741.212 refers to the share insurance provisions of part 745, subparts A and B, that apply to all FICUs.
• Section 741.214 refers to compliance with part 748, the rule that covers Bank Secrecy Act compliance, security program requirements, and catastrophic act reporting.
• Section 741.215 refers to compliance with the record preservation requirements of part 749.
• Section 741.216 references the flood insurance requirements of part 760.
• Section 741.217 refers to the truth in savings requirements of part 707.
• Section 741.220 informs FICUs they must adhere to Regulation P promulgated by the Consumer Financial Protection Bureau to satisfy the consumer financial protection provisions of the Gramm-Leach-Bliley Act.^[4]

• Section 741.224 refers to compliance with part 750 on golden parachute and indemnification payments. ( printed page 24747)
• Section 741.226 refers to compliance with subpart D of part 702 on subordinated debt.

The Board requests feedback on all aspects of this rulemaking, including any consequences or impacts of this proposal not already identified above. The Board is providing a 60-day comment period for this proposed rule to account for the volume of proposed rules the Board is issuing. The longer comment period will avoid placing undue burden on commenters who are trying to review all of the rulemakings.

III. Regulatory Procedures

A. Providing Accountability Through Transparency Act of 2023

The Providing Accountability Through Transparency Act of 2023 (5 U.S.C. 553(b)(4)) requires that a notice of proposed rulemaking include the internet address of a summary of not more than 100 words in length of a proposed rule, in plain language, that shall be posted on the internet website under section 206(d) of the E-Government Act of 2002 (44 U.S.C. 3501 note) (commonly known as regulations.gov).

In summary, the Board is publishing this proposed rule to amend its regulations governing requirements for share insurance. This proposed rule would eliminate numerous provisions that merely point to substantive provisions codified elsewhere in the NCUA's regulations. The intended effect is to simplify the regulatory text and make it easier to navigate without altering the compliance obligations of federally insured credit unions. The Board believes this action is necessary to streamline the agency's regulations and reduce regulatory complexity.

The proposed rule and the required summary are available at https://www.regulations.gov.

B. Executive Orders 12866, 13563, and 14192

Pursuant to Executive Order 12866 (“Regulatory Planning and Review”), as amended by Executive Order 14215, a determination must be made whether a regulatory action is significant and therefore subject to review by the Office of Management and Budget (OMB) in accordance with the requirements of the Executive Order. OMB has determined that this proposed rule is not a “significant regulatory action” as defined in section 3(f)(1) of Executive Order 12866.

Executive Order 13563 (“Improving Regulations and Regulatory Review”) directs executive agencies to analyze regulations that are “outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned.” Executive Order 13563 also directs that, where relevant, feasible, and consistent with regulatory objectives, and to the extent permitted by law, agencies are to identify and consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public. This proposed rule will streamline the NCUA's regulations by removing sections that only serve to reference other, substantive regulations. This proposed rule is consistent with Executive Order 13563.

Executive Order 14192 (“Unleashing Prosperity Through Deregulation”) was issued on January 31, 2025. Section 3(c) of Executive Order 14192 requires that any new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least 10 prior regulations. This proposed rule is expected to be a deregulatory action for purposes of Executive Order 14192.

C. The Regulatory Flexibility Act

The Regulatory Flexibility Act generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities.⁵ If the agency makes such a certification, it shall publish the certification at the time of publication of either the proposed rule or the final rule, along with a statement providing the factual basis for such certification.⁶ For purposes of this analysis, the NCUA considers small credit unions to be those having under $100 million in assets.⁷ The Board fully considered the potential economic impacts of the regulatory amendments on small credit unions. The proposed rule repeals unnecessary sections of the NCUA's regulations.

Accordingly, the NCUA certifies that the proposed rule would not have a significant economic impact on a substantial number of small credit unions.

D. The Paperwork Reduction Act

The Paperwork Reduction Act of 1995 (PRA) generally provides that an agency may not conduct or sponsor, and not withstanding any other provision of law, a person is not required to respond to, a collection of information, unless it displays a currently valid Office of Management and Budget control number. The PRA applies to rulemakings in which an agency creates a new or amends existing information collection requirements. For purposes of the PRA, an information-collection requirement may take the form of a reporting, recordkeeping, or a third-party disclosure requirement. The NCUA has determined that the changes addressed in this notice do not create a new information collection or revise an existing information collection as defined by the PRA.

E. Analysis on Executive Order 13132 on Federalism

Executive Order 13132 encourages certain agencies to consider the impact of their actions on state and local interests. The NCUA, an agency as defined in 44 U.S.C. 3502(5), complies with the executive order to adhere to fundamental federalism principles. This proposed rule is intended to remove regulatory sections that only serve to reference other, substantive regulations. While it is intended to aid FISCUs in understanding their regulatory obligations, it is not intended to affect the division of responsibilities between the NCUA and state regulatory authorities.

F. Assessment of Federal Regulations and Policies on Families

The NCUA has determined that this proposed rule would not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999. The proposed rule removes duplicative provisions from the NCUA's regulations, and any effect on family well-being is expected to be indirect.

For the reasons stated in the preamble, the NCUA Board proposes to amend 12 CFR parts 701, 713, and 741 as follows:

1. The authority citation for part 701 continues to read as follows:

Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759, 1761a, 1761b, 1766, 1767, 1782, 1784, 1785, 1786, 1787, 1788, 1789. Section 701.6 is also authorized by 15 U.S.C. 3717. Section 701.31 is also authorized by 15 U.S.C. 1601 et seq.;42 U.S.C. 1981 and 3601-3610. Section 701.35 is also authorized by 42 U.S.C. 4311-4312.

2. Amend § 701.14 by adding paragraph (c)(4) to read as follows:

1. The authority citation for part 713 continues to read as follows:

Authority: 12 U.S.C. 1761a, 1761b, 1766(a), 1766(h), 1789(a)(11).

2. Revise § 713.1 to read as follows:

3. Amend § 713.3 by adding paragraph (c) to read as follows:

1. The authority citation for part 741 continues to read as follows:

Authority: 12 U.S.C. 1757, 1766(a), 1781-1790, and 1790d; 31 U.S.C. 3717.

2. Remove and reserve § 741.1.

3. Remove and reserve § 741.201.

4. Remove and reserve § 741.205.

5. Remove and reserve § 741.206.

6. Remove and reserve § 741.207.

7. Remove and reserve § 741.209.

8. Remove and reserve § 741.210.

9. Remove and reserve § 741.211.

10. Remove and reserve § 741.212.

11. Remove and reserve § 741.213.

12. Remove and reserve § 741.214.

13. Remove and reserve § 741.215.

14. Remove and reserve § 741.216.

15. Remove and reserve § 741.217.

16. Remove and reserve § 741.218.

17. Remove and reserve § 741.220.

18. Remove and reserve § 741.224.

19. Remove and reserve § 741.226.

91 FR 24745