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Federal Register / Vol. 86, No. 185 / Tuesday, September 28, 2021 / Proposed Rules is an impermissible issuance for federal credit unions.10 To permit longer term issuances of secondary capital would be counter to the Boards concerns and reasons articulated in the aforementioned rules.
III. Regulatory Procedures A. Paperwork Reduction Act The Paperwork Reduction Act of 1995
44 U.S.C. 3501 et seq. requires that the Office of Management and Budget approve all collections of information by a Federal agency from the public before they can be implemented.
Respondents are not required to respond to any collection of information unless it displays a valid Office of Management and Budget control number. This proposed rule extends the time for certain issuances of secondary capital and the corresponding Regulatory Capital treatment of such issuances. As such, this rule would not require any information collection as defined by the Paperwork Reduction Act of 1995.
B. Executive Order 13132
Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. The NCUA, an independent regulatory agency as defined in 44 U.S.C. 35025, voluntarily complies with the Executive Order to adhere to fundamental federalism principles.
This 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 NCUA has therefore determined that this proposed rule does not constitute a policy that has federalism implications for purposes of the Executive Order.
C. 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 654 of the Treasury and General Government Appropriations Act, 1999, Public Law 105277, 112 Stat. 2681 1998.
D. Regulatory Flexibility Act The Regulatory Flexibility Act 11
requires the 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 10 See 86 FR 11071 Feb. 23, 2021 and 85 FR
13986, 14000 Mar. 10, 2020.
11 5 U.S.C. 601 et seq.

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assets.12 This proposed rule would affect a small number of LICUs with approved secondary capital applications for issuances to the U.S. Government or its subdivisions. This rule extends the deadline for such credit unions to complete their issuance of secondary capital. Accordingly, the NCUA certifies that this proposed rule would not have a significant economic impact on a substantial number of small credit unions.
List of Subjects 12 CFR Part 702
Credit unions, Reporting and recordkeeping requirements.
12 CFR Part 741
Bank deposit insurance, Credit unions, Reporting and recordkeeping requirements.
By the NCUA Board on September 23, 2021.
Melane Conyers-Ausbrooks, Secretary of the Board.

For the reasons discussed in the preamble, NCUA proposes to amend 12
CFR parts 702 and 741, as amended by 86 FR 11060 Feb. 23, 2021 and scheduled to become effective on January 1, 2022, as follows:
PART 702CAPITAL ADEQUACY
1. The authority citation for part 702
continues to read as follows:

Authority: 12 U.S.C. 1766a, 1790d.

2. In 702.2 revise the definitions for Grandfathered Secondary Capital and Regulatory Capital to read as follows:

702.2

Definitions.

Grandfathered Secondary Capital means any secondary capital issued under 701.34 of this chapter, before January 1, 2022 or, in the case of a federally insured, state-chartered credit union, with 741.204c of this chapter, before January 1, 2022. 12 CFR 701.34
was recodified as 702.414 as of January 1, 2022. This term also includes issuances of secondary capital to the U.S. Government or any of its subdivisions, under applications approved before January 1, 2022, pursuant to 701.34 or 741.204c of this chapter, irrespective of the date of issuance.

Regulatory Capital means:
1 With respect to an Issuing Credit Union that is a LICU and not a complex credit union, the aggregate outstanding 12 Id.

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principal amount of Subordinated Debt and, until the later of 20 years from the date of issuance or January 1, 2042, Grandfathered Secondary Capital that is included in the credit unions net worth ratio;
2 With respect to an Issuing Credit Union that is a complex credit union and not a LICU, the aggregate outstanding principal amount of Subordinated Debt that is included in the credit unions RBC Ratio;
3 With respect to an Issuing Credit Union that is both a LICU and a Complex Credit Union, the aggregate outstanding principal amount of Subordinated Debt and, until the later of 20 years from the date of issuance or January June 1, 2042, Grandfathered Secondary Capital that is included in its net worth ratio and in its RBC Ratio; and 4 With respect to a new credit union, the aggregate outstanding principal amount of Subordinated Debt and, until the later of 20 years from the date of issuance or January 1, 2042, Grandfathered Secondary Capital that is considered pursuant to 702.207.

3. Revise 702.401 to read as follows:
702.401

Purpose and scope.

a Subordinated Debt. This subpart sets forth the requirements applicable to all Subordinated Debt issued by a federally insured, natural person credit union, including the NCUAs review and approval of that credit unions application to issue or prepay Subordinated Debt. This subpart shall apply to a federally insured, statechartered credit union only to the extent that such federally insured, statechartered credit union is permitted by applicable state law to issue debt instruments of the type described in this subpart. To the extent that such state law is more restrictive than this subpart with respect to the issuance of such debt instruments, that state law shall apply.
Except as provided in the next sentence, any secondary capital, as that term is used in the Federal Credit Union Act, issued after January 1, 2022, is Subordinated Debt and subject to the requirements of this subpart. Issuances of secondary capital, as that term is used in the Federal Credit Union Act, to the U.S. Government or any of its subdivisions, under applications approved before January 1, 2022, pursuant to 701.34 or 741.204c of this chapter, are not subject to the requirements applicable to Subordinated Debt, discussed elsewhere in this subpart, irrespective of the date of issuance.
b Grandfathered Secondary Capital.
Any secondary capital defined as
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