FINAL_3133-0040_SS_FinalRule_012617

SUPPORTING STATEMENT
National Credit Union Administration
Federal Credit Union Occupancy, Planning, and Disposal of
Acquired and Abandoned Premises
12 CFR Part 701.36
OMB No. 3133-0040

SUMMARY
NCUA published a proposed rule on April 27, 2016, at 81 FR 24738, under 12 CFR Part 701,
amending Federal Credit Union Occupancy, Planning and Disposal of Acquired and Abandoned
Premises (occupancy rule). The rule amended §701.36 by eliminating the requirement for a
board resolution containing definitive plans for full occupancy of a premises acquired for future
expansion. The rule was adopted and a final rule was published on December 21, 2016, at
81 FR 93577.
A.

JUSTIFICATION

1.

Necessity of Information Collection
Section 107(4) of the Federal Credit Union Act states in part that a federal credit union
(FCU) shall have the power to purchase, hold, and dispose of property necessary or
incidental to its operations. Section 701.36 of NCUA Rules and Regulations implements
this statute and includes an information collection. Included within the rule is the
opportunity for credit unions to apply for a waiver to any provision if they cannot comply
with the requirements of the rule. NCUA reviews the information contained within the
waiver to determine if the proposed action would adversely affect the financial soundness
of the credit union or pose a risk to the National Credit Union Share Insurance Fund
(NCUSIF). The ability to review actions which are not in compliance with Part 701.36
allows NCUA to provide appropriate oversight of the credit union and prevent risk to
NCUSIF. The types of wavier covered under this section of the proposed rule are:
•

Waiver of requirement for partial occupation. The occupancy rule requires FCUs
that acquire realty for future expansion but fail to at least partially occupy it within
three years, or within six years for unimproved real property, to obtain a waiver from
NCUA. This rule becomes operative only when FCUs decide to acquire real estate
and not partially occupy it within the stated period of time. This part of the
information requirement is submitted for approval. The Federal Credit Union Act
does not permit FCUs to own real estate for purposes other than for providing
financial services to members. This part of the information collection is necessary to
ensure FCUs do not hold and lease realty indefinitely for unauthorized purposes.

•

Waiver of requirement to dispose of abandoned property. The occupancy rule
requires FCUs that abandon property and fail to complete the sale of the property
within 5 years of abandonment to seek written approval from NCUA. This rule
becomes operative only when FCUs decide to abandon property and not complete the

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sale of the abandoned property within the stated period. The Federal Credit Union
Act does not permit FCUs to own real estate for purposes other than for providing
financial services to members. This part of the information collection is necessary to
ensure FCUs do not hold property indefinitely for unauthorized purposes.
•

Waiver of prohibited transaction. The occupancy rule requires FCUs to obtain
written approval from NCUA before acquiring or leasing, for one year or longer,
realty from prohibited parties. This rule becomes operative only when FCUs decide
to acquire real estate from a prohibited party. This part of the information
requirement is submitted for approval. The Federal Credit Union Act does not permit
FCUs to own real estate for purposes other than for providing financial services to
members. This part of the information collection is necessary to ensure FCUs do not
hold or lease realty for unauthorized purposes.

2.

Purpose and Use of the Information Collection
There are three parts to the collection associated with the rule: waiver of requirement for
partial occupation, waiver of requirement to dispose of abandoned property and waiver of
prohibited transactions. NCUA reviews the information contained within the waiver to
determine if the action would adversely affect the financial soundness of the credit union
or pose a risk to the National Credit Union Share Insurance Fund (NCUSIF). NCUA
responds to waivers by either granting the request to operate outside of Part 701.36, by
denying the request or otherwise compromising to meet the needs of the credit union
without raising safety and soundness concerns.

3.

Consideration Given to Information Technology
The information collection associated with Part 701.36 of NCUA Rules and Regulations
would not employ information technology, beyond permission submission via electronic
mail. The waiver requirement is fundamentally manual, since the waiver request must be
specific and unique to the requestor.

4.

Duplication
There is no duplication of information collection. The information collection required to
comply with § 701.36 is specific to the rule. The waiver process comprising the
information collection would not be applicable to any other information collection
process.

5.

Effect on Small Entities
The collection of information may impact small businesses or other small entities. As of
December 31, 2015, 97 percent of federally chartered credit unions held less than $1
billion total assets, 79 percent were below $100 million in total assets, and 33% held less
than $10 million in total assets. These entities would only be required to submit
information if they made strategic decisions to operate outside of current occupancy
guidelines and were required to draft a plan or submit a waiver to NCUA. Therefore, if
the entity operates within guidelines, there are options to avoid information collection.
The majority of credit unions, large and small, would not be expected to submit

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information each year. NCUA estimates that significantly fewer than 1% of credit unions
would request a waiver to any of the three requirements in any particular year.
6.

Consequences of Not Conducting Collection
These requirements are necessary to allow the NCUA to supervise federal credit unions
for compliance with the Federal Credit Union Act (FCU Act), which authorizes federal
credit unions to purchase, hold, and dispose of property necessary or incidental to its
operations. If the information is not collected, the consequence would be that NCUA
would be unable to assess compliance with the FCU Act.

7.

Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)
There are no special circumstances. This collection is consistent with the guidelines in 5
CFR 1320.5(d)(2).

8.

Consultations Outside the Agency
A proposed rule was published April 27, 2016, at 81 FR 24738, soliciting comment on
the proposed revisions to the information collection requirements associated with this
rule.
The large majority of commenters strongly supported removing the full occupancy
requirement, thus eliminating the need for a waiver request. However, two commenters
opposed this particular aspect of the proposed rule. Commenters that disagreed with the
elimination of the full occupancy requirement expressed concern that FCUs will be more
likely to venture into real estate activities that are beyond the scope of credit union
operations envisioned by Congress.
In the proposed rule, the Board emphasized that maintaining the requirement that an FCU
must partially occupy real property it obtains will reduce the likelihood and opportunity
for speculative investments. The Board reaffirms this position and also notes that NCUA
will diligently oversee FCUs’ activities in this area to ensure that FCUs are not engaging
in speculative investments or other real estate activities that are not permitted under the
Act. Any FCU in violation of these requirements could be subject to all administrative
remedies available to the agency. Therefore, the Board does not believe this final rule
will result in FCUs operating beyond the scope of their authority as Congress provided
for in the Act.
NCUA published the final rule on December 21, 2016, at 81 FR 93577, adopting the
proposed amendments.

9.

Payment or Gift
There is no payment or gifts provided to respondents to this information collection.

10.

Confidentiality
Credit union examination reports and any documents related thereto are exempt from the
Freedom of Information Act disclosure, pursuant to exemption 8, 5 U.S.C. 552(b)(8).

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11.

Sensitive Questions
No questions of a sensitive nature are asked. No personally identifiable information (PII)
is collected.

12.

Burden of Information Collection
•

Annualized hour burdens for collections of information.
Frequency of
Response
Information
(Annual (1),
Number
Burden
Collection
Number of
Quarterly
of
Hours per
Activity
Respondents
(4), etc.)
Responses
Response
(A)
(B)
(C)
(D)
Waiver
of
1.
15
1
15
15 Hours

Annual
Hourly
Burden
(E)
225 Hours

2.

requirement for
partial
occupation
Waiver of
requirement to
dispose of
abandoned
property
Waiver of
prohibited
transactions

3.

Total (Sum)
•

10

1

10

10 Hours

100 Hours

3

1

3

10 Hours

30 Hours

28

28

355 Hours

Annualized cost to respondents.

Information Collection Activity
1. Waiver of requirement for partial
2.

occupation
Waiver of requirement to dispose of
abandoned property
Waiver of prohibited transactions

3.
Total (Sum)

Annual Hourly
Burden
225 Hours

Hourly $ Rate
per Response
$ 31.89

Total $
Amount
$ 7,175.25

100 Hours

$ 31.89

$ 3,189.00

30 Hours
355 Hours

$ 31.89
$ 31.89

$
956.70
$ 11,320.95

(see 12 above, item E)

13.

Capital start-up costs and operation and maintenance costs.
There are no capital start-up or ongoing operation and maintenance costs associated with
this information collection.

14.

Costs to Federal Government
The NCUA would likely spend an average of 8 man-hours processing each waiver
request and 2 man-hours reviewing that processing. The wage rate is about $55 an hour.
The total NCUA cost for each waiver request is then 28 x 8 x $55 plus 28 x 2 x $55, or
$15,400.

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15.

Changes in Burden
The program change resulted in a reduction in overall burden by 225 hours. The removal
of the provision of §701.36, which required a plan for full occupancy if a federal credit
union cannot fully occupy a premises acquired for future expansion within one year,
removes the need for a waiver.

16.

Information Collection Planned for Statistical Purposes
The information collection is not used for statistical purposes.

17.

Approval to Omit OMB Expiration Date
The waivers are triggered by specific events in which FCUs generate their requests as
prescribed by regulation. If the expiration date of the OMB approval is contained in
regulations, it may be confusing to respondent believing that a regulation may have
sunset.

18.

Exceptions to Certification for Paperwork Reduction Act Submissions
This collection complies with the requirements in 5 CFR 1320.9.

B.

COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS

This collection does not involve statistical methods.

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