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Federal Register / Vol. 86, No. 21 / Wednesday, February 3, 2021 / Rules and Regulations
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an agency to advise the public of the agencys construction of the statutes and rules that it administers,22 whereas general statements of policy, such as supervisory guidance, advise the public of how an agency intends to exercise its discretionary powers.23 To this end, guidance generally reflects an agencys policy views, for example, on practices on safe and sound risk management. On the other hand, interpretive rules generally resolve ambiguities regarding what statutes and regulations require.
Because supervisory guidance and interpretive rules have different characteristics and serve different purposes, the NCUA is adopting the proposed rules coverage of supervisory guidance only.
With respect to the question of whether to adopt ACUSs procedures for allowing the public to request reconsideration or revision of an interpretive rule, this rulemaking, again, does not address interpretive rules. As such, the NCUA is not adding procedures for challenges to interpretive rules through this rulemaking.
In response to the comment that the agencies treat examples in guidance as safe harbors, the NCUA agrees that examples offered in guidance may provide reassurance about practices that, in general, may lead to safe and sound operation and compliance with regulations and statutes. The examples in guidance, however, are typically generalized. The question of whether the employment of the examples meets supervisory goals requires consideration of how an institution applies those examples under the facts and circumstances. In addition, the underlying legal principle of guidance is that it does not created binding legal obligation for either the public or an agency. As such, the NCUA does not intend to deem examples in guidance as categorically setting safe harbors.24
In response to the comment that the proposal may undermine the important role that supervisory guidance can play by informing supervisory criticism and by serving to address conditions before those conditions lead to enforcement 22 Mortgage Bankers Association, 575 U.S. at 97
citing Shalala v. Guernsey Memorial Hospital, 514
U.S. 87, 99 1995; accord Attorney Generals Manual at 30 n.3.
23 See Chrysler v. Brown, 441 U.S. at 302 n.31
quoting Attorney Generals Manual at 30 n.3; see also, e.g., American Mining Congress v. Mine Safety & Health Administration, 995 F.2d 1106, 1112 D.C.
Cir. 1993 outlining tests in the D.C. Circuit for assessing whether an agency issuance is an interpretive rule.
24 The question of whether an example in guidance can provide a safe harbor would also likely not be a logical outgrowth of the proposed rule.

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actions, the NCUA agrees that the appropriate use of guidance supports a more collaborative and constructive regulatory process that supports the safety and soundness of institutions and diminishes the need for enforcement actions. In addition, as noted by ACUS, guidance can make agency decisionmaking more predictable and uniform and shield regulated parties from unequal treatment, unnecessary costs, and unnecessary risk, while promoting compliance with the law. The NCUA
intends, therefore, to continue using guidance to bolster the supervisory process. The NCUA does not view the final rule as weakening the role of guidance in the supervisory process.
Further, the NCUA will continue to use guidance in a robust way to support the safety and soundness of credit unions.
In response to the related question from these commenters, which suggested there is no basis for the rule, the NCUA
notes the question of the role of guidance has been one of interest to regulated parties and other stakeholders over the past few years. The Petition is evidence of this interest. As such, the NCUA believes it will serve the public interest to reaffirm the appropriate role of supervisory guidance.
With respect to the comment that visitorial powers do not provide the authority to issue supervisory criticisms like DORs, the NCUA disagrees. The visitorial powers of financial regulators are well-established. The Supreme Courts decision in Cuomo v. Clearing House Assn L.L.C. explained that the visitation included the exercise of supervisory power. 25 The Court ruled that the power to enforce the law exists separate and apart from the power of visitation. 26 While the Cuomo decision involved the question of which powers may be exercised by state governments and ruled that states could exercise law enforcement powers but could not exercise visitorial powers, the decision did not dispute that the Federal agencies possess both these powers. The Court in Cuomo explained that visitorial powers entailed oversight and supervision, while the Courts earlier decision in Watters v.
Wachovia Bank, N.A. explained that visitorial powers entailed general supervision and control. 27
Accordingly, visitorial powers include the power to issue supervisory criticisms independent of the agencies authority to enforce applicable laws or ensure safety and soundness. For these reasons, the NCUA reaffirms the 25 557

U.S. 519, 536 2009.
at 533.
27 550 U.S. 1, 127 2007.
26 Id.

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statement in the preamble to the Proposed Rule that such visitorial powers have been conferred through statutory examination and reporting authorities, which facilitate the NCUAs identification of supervisory concerns that may not rise to a violation of law, unsafe or unsound practice, or breach of fiduciary duty under 12 U.S.C. 1786. In the case of the federal banking agencies, such statutory examination and reporting authorities pre-existed 12
U.S.C. 1786, which neither superseded nor replaced such authorities. Each of the agencies has been vested with statutory examination and reporting authorities with respect to institutions under its supervision.28
In response to the commenters request regarding guidance issued for public comment, the NCUA notes that it has made clear through the 2018
Statement and in this final rule that supervisory guidance including guidance that goes through public comment does not create binding, enforceable legal obligations. Rather, the NCUA issues guidance for comment in order to improve its understanding of an issue, gather information, or seek ways to achieve a supervisory objective most effectively. Similarly, examples that are included in supervisory guidance are not binding on institutions. Rather, these examples are intended to be illustrative of ways a supervised institution may implement safe and sound practices, appropriate consumer protection, prudent risk management, or other actions to comply with laws or regulations.
With respect to the commenters request that the agencies affirm that they will apply statutory factors while processing applications, the NCUA
affirms that the agency will continue to consider and apply all applicable statutory factors when processing applications.
In response to the question raised by some commenters concerning potential confusion between guidance and interpretive rules, the NCUA notes that interpretive rules are outside the scope of the rulemaking. In addition, as stated earlier, while both guidance and interpretive rules serve different purposes, both lack the force and effect of law. Interpretive rules must be rooted 28 The commenters reading of the agencies examination and reporting authorities would assert that the agencies may examine supervised institutions and require reports, but not make findings based on such examinations and reporting, unless the finding is sufficient to warrant a formal enforcement action under the standard set out in 12
U.S.C. 1818 for banks. This reading is inconsistent with the history of federal financial supervision, including as described in the cases cited in the Proposed Rule.

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