2026-21088: Powers of Federal Credit Unions

A. Background

The Federal Credit Union Act (FCU Act) expressly grants FCUs the power to, among other activities, purchase, hold, and dispose of property; make loans to members; make certain investments; accept share, share draft, and share certificate accounts; and sell and cash negotiable instruments.\1\ The accompanying incidental powers provision states that an FCU may ``exercise such incidental powers as shall be necessary or requisite to enable it to carry on effectively the business for which it is incorporated.'' \2\ --------------------------------------------------------------------------- \1\ 12 U.S.C. 1757(4)-(7), (12), (15). \2\ 12 U.S.C. 1757(17). --------------------------------------------------------------------------- In 2001, the NCUA adopted regulations providing that FCUs could seek advisory opinions from the NCUA's General Counsel as to whether a proposed incidental powers activity fits into one of the preapproved categories of incidental powers under Sec. 721.3 of the NCUA's regulations.\3\ It also established a process for FCUs to petition the NCUA to approve new activities or categories of activities.\4\ It is clear from the preamble to the 2001 rulemaking that seeking a legal opinion from the NCUA's General Counsel is optional.\5\ A great deal of confusion has arisen, however, regarding whether FCUs are required to obtain an advisory opinion from the NCUA's Office of General Counsel before petitioning the Board. --------------------------------------------------------------------------- \3\ 66 FR 40845 (Aug. 6, 2001). \4\ Id. \5\ See, Id. at 40855 (providing ``An FCU is not required to obtain an opinion from the NCUA's Office of General Counsel . . .''). --------------------------------------------------------------------------- The Board periodically amends rules to clarify confusing information. Consistent with confusion experienced by FCUs as a result of the language in Sec. 721.4(a) regarding obtaining legal opinion letters, this proposed rule would remove the language regarding obtaining an advisory opinion before petitioning the Board. The Board invites comments on all aspects of this proposal.

B. Legal Authority

The Board has the legal authority to issue this proposed rule pursuant to its plenary rulemaking authority under the FCU Act and its specific rulemaking authority under the various acts the Board administers.\6\ --------------------------------------------------------------------------- \6\ 12 U.S.C. 1766, 1757, 1789. ---------------------------------------------------------------------------

A. 721.1 What activities does this part cover?

Current Sec. 721.1 provides, among other things, that part 721 describes how interested parties may request a legal opinion from the NCUA's Office of General Counsel on whether an activity is within an FCU's incidental powers or apply to add new activities or categories to the regulation. The section provides further that an activity determined to be an incidental power for an FCU in an NCUA legal opinion to an interested party, or as a result of an application by an interested party to add new activities or categories, is recognized as an incidental powers activity for all FCUs. For reasons explained in more detail in the part of the preamble on Sec. 721.4, the NCUA is proposing to remove from Sec. 721.1 the language regarding obtaining legal opinions from the NCUA. This information has caused confusion for the credit union industry in the past and is unnecessary. Accordingly, the proposal would amend Sec. 721.1 to provide that part 721 authorizes an FCU to engage in activities incidental to its business as set out in part 721. The section would provide further that part 721 also describes how interested parties may apply to add new activities or categories to the regulation. The section would also provide that an activity approved as a result of an application by an interested party to add new activities or categories is recognized as an incidental powers activity for all FCUs. Finally, the section would provide that part 721 does not apply to the activities of corporate credit unions.

B. Sec. 721.4 How may a credit union apply to engage in an activity

that is not preapproved as within a credit union's incidental powers? Current Sec. 721.4(a) provides, among other things, that to engage in an activity that may be within an FCU's incidental powers but that does not fall within a preapproved category listed in Sec. 721.3, an FCU may submit an application to the Board. Paragraph (a) also outlines what information an application must contain and states that before an FCU engages in the petition process it should seek an advisory opinion from the NCUA's Office of General Counsel as to whether a proposed activity fits into one of the authorized categories or is otherwise [[Page 65480]] within the FCU's incidental powers without filing a petition to amend the regulation.\7\ The last sentence in paragraph (a) and its use of the word ``should'' has caused confusion for FCUs wishing to petition the Board to engage in a non-preapproved incidental power. FCUs are often unsure whether seeking an advisory opinion is mandatory or optional. As the NCUA made clear in its 2001 final rule regarding incidental powers, an FCU is not required to obtain an opinion from the NCUA's Office of General Counsel before petitioning the Board.\8\ Moreover, credit unions are always able to ask the NCUA's Office of General Counsel questions on any provisions within the NCUA's regulations, not just with regard to part 721. It is commonly known throughout the credit union industry that credit unions, members, and other interested parties can contact the NCUA's Office of General Counsel, and the contact information for the office is easy to find and clearly displayed on the NCUA's website. Accordingly, consistent with other parts of the NCUA's regulations, the proposed rule would remove the last sentence of Sec. 721.4(a) to clarify that FCUs are not required to obtain an advisory opinion from the NCUA's General Counsel's Office before submitting an application to the Board. --------------------------------------------------------------------------- \7\ (emphasis added). \8\ 66 FR 40855 (providing ``An FCU is not required to obtain an opinion from the NCUA's Office of General Counsel . . .''). ---------------------------------------------------------------------------

A. Providing Accountability Through Transparency Act of 2023

The Providing Accountability Through Transparency Act of 2023 (5 U.S.C. 553(b)(4)) (Act) 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 proposed rule would amend the NCUA's regulations regarding incidental powers to clarify that FCUs are not required to seek a legal opinion from the NCUA's Office of General Counsel before petitioning the Board to engage in an activity that does not fall within an FCU's preapproved incidental powers. The proposal and the required summary can be found at https://www.regulations.gov.

B. Executive Orders 12866, 13563, 14192

Pursuant to Executive Order 12866 (``Regulatory Planning and Review''), a determination must be made whether a regulatory action is significant and therefore subject to review by the Office of Information and Regulatory Affairs (OIRA), within the Office of Management and Budget (OMB) in accordance with the requirements of the Executive Order.\9\ Executive Order 13563 (``Improving Regulation and Regulatory Review'') supplements and reaffirms the principles, structures, and definitions governing contemporary regulatory review established in Executive Order 12866.\10\ This proposed rule was drafted and reviewed in accordance with Executive Order 12866 and Executive Order 13563. OIRA has determined that this proposed rule is not a ``significant regulatory action'' as defined by section 3(f) of Executive Order 12866. --------------------------------------------------------------------------- \9\ 58 FR 51735 (Oct. 4, 1993). \10\ 76 FR 3821 (Jan.21, 2011). --------------------------------------------------------------------------- Executive Order 14192 (``Unleashing Prosperity Through Deregulation'') 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.\11\ This proposed rule is not an Executive Order 14192 regulatory action because this rule is not significant under Executive Order 12866. --------------------------------------------------------------------------- \11\ 90 FR 9065 (Feb. 6, 2025). ---------------------------------------------------------------------------

C. Regulatory Flexibility Act

The Regulatory Flexibility Act \12\ 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. 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.\13\ For purposes of this analysis, the NCUA considers small credit unions to be those having under $100 million in assets.\14\ The Board fully considered the potential economic impacts of the regulatory amendments on small credit unions. --------------------------------------------------------------------------- \12\ 5 U.S.C. 601 et seq. \13\ 5 U.S.C. 605(b). \14\ 80 FR 57512 (Sept. 24, 2015). --------------------------------------------------------------------------- This proposed rule would amend the NCUA's incidental powers regulation to remove references to an optional process for FCUs wishing to apply to the Board to engage in an activity that does not fall within an FCU's preapproved incidental powers. This proposal would not impose any requirements on interested parties. The NCUA certifies the proposed rule would not have a significant economic impact on a substantial number of small credit unions.

D. 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 described in this notice do not create a new information collection or revise an existing information collection as defined by the PRA.

E. Executive Order 13132 on Federalism

Executive Order 13132 encourages certain agencies to consider the impact of their actions on state and local interests.\15\ The proposed rule does not have substantial direct effects on the states, on the relationship between the National Government and the states, or on the distribution of power and responsibilities among the various levels of government. The proposed rule does not create or alter existing rights or requirements that apply to federally insured, state-chartered credit unions or affect the ability of state regulatory agencies to examine, supervise, or regulate such credit unions. Part 721 applies solely to FCUs. The NCUA has therefore determined that this proposed rule does not constitute a policy that has federalism implications for purposes of the executive order. --------------------------------------------------------------------------- \15\ ``Federalism,'' E.O. 13,132 (Aug. 10, 1999). ---------------------------------------------------------------------------

F. Assessment of Federal Regulations and Policies on Families

The NCUA has determined that this rule will not affect family well- being within the meaning of section 654 of the Treasury and General Government Appropriations Act.\16\ The proposed [[Page 65481]] rule merely removes confusing regulatory provisions, which discusses an optional process for FCUs to obtain advisory opinions from the NCUA's Office of General Counsel. --------------------------------------------------------------------------- \16\ Public Law 105-277, sec. 654, 112 Stat. 2681, 2681-528 (1998). --------------------------------------------------------------------------- List of Subjects in 12 CFR Part 721 Credit Unions. By the National Credit Union Administration Board, this 13th day of October, 2026. Melane Conyers-Ausbrooks, Secretary of the Board. For the reasons discussed in the preamble, the Board proposes to amend 12 CFR part 721 as follows: PART 721--INCIDENTAL POWERS 0

1. The authority section continues to read as follows:

Authority: 12 U.S.C. 1757(17), 1766 and 1789. 0

2. Revise Sec. 721.1 to read as follows:

Sec. 721.1 What does this part cover? This part authorizes a federal credit union (you) to engage in activities incidental to your business as set out in this part. This part also describes how interested parties may apply to add new activities or categories to the regulation. An activity approved as a result of an application by an interested party to add new activities or categories is recognized as an incidental powers activity for all federal credit unions. This part does not apply to the activities of corporate credit unions. Sec. 721.4 [Amended] 0

3. In Sec. 721.4, remove the last sentence in paragraph (a).

[FR Doc. 2026-21088 Filed 10-14-26; 8:45 am] BILLING CODE 7535-01-P