Proposed Rule2026-06757
Chartering and Field of Membership
Primary source
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Published
April 8, 2026
Issuing agencies
National Credit Union Administration
Abstract
The NCUA Board (Board) proposes to amend the associational common bond provisions of its chartering and field of membership (FOM) rules. The proposed FOM amendment would clarify that requiring the purchase of a product or service as a condition of membership no longer automatically bars eligibility as a recognized association. The Board does not believe such an automatic bar is required under the Federal Credit Union (FCU) Act, and a client-customer relationship as a condition of membership may still be incidental in a manner that permits an evaluation of the group's activities and overall circumstances.
Full Text
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<title>Federal Register, Volume 91 Issue 67 (Wednesday, April 8, 2026)</title>
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[Federal Register Volume 91, Number 67 (Wednesday, April 8, 2026)]
[Proposed Rules]
[Pages 17769-17772]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-06757]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 91, No. 67 / Wednesday, April 8, 2026 /
Proposed Rules
[[Page 17769]]
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 701
RIN 3133-AF93
Chartering and Field of Membership
AGENCY: National Credit Union Administration (NCUA).
ACTION: Proposed rule.
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SUMMARY: The NCUA Board (Board) proposes to amend the associational
common bond provisions of its chartering and field of membership (FOM)
rules. The proposed FOM amendment would clarify that requiring the
purchase of a product or service as a condition of membership no longer
automatically bars eligibility as a recognized association. The Board
does not believe such an automatic bar is required under the Federal
Credit Union (FCU) Act, and a client-customer relationship as a
condition of membership may still be incidental in a manner that
permits an evaluation of the group's activities and overall
circumstances.
DATES: Comments must be received on or before June 8, 2026.
ADDRESSES: You may submit comments by any of the following methods
(Please send comments by one method only):
<bullet> Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
The docket number for this proposed rule is NCUA-2026-0661. Follow the
``Submit a comment'' instructions. If you are reading this document on
<a href="http://federalregister.gov">federalregister.gov</a>, you may use the green ``SUBMIT A PUBLIC COMMENT''
button beneath this rulemaking's title to submit a comment to the
<a href="http://regulations.gov">regulations.gov</a> docket. A plain language summary of the proposed rule
is also available on the docket website.
<bullet> Mail: Address to Melane Conyers-Ausbrooks, Secretary of
the Board, National Credit Union Administration, 1775 Duke Street,
Alexandria, Virginia 22314-3428.
<bullet> Hand Delivery/Courier: Same as mailing address.
Mailed and hand-delivered comments must be received by the close of
the comment period.
Public inspection: Please follow the search instructions on <a href="https://www.regulations.gov">https://www.regulations.gov</a> to view the public comments. Do not include any
personally identifiable information (such as name, address, or other
contact information) or confidential business information that you do
not want publicly disclosed. All comments are public records; they are
publicly displayed exactly as received and will not be deleted,
modified, or redacted. Comments may be submitted anonymously. If you
are unable to access public comments on the internet, you may contact
the NCUA for alternative access by calling (703) 518-6540 or emailing
<a href="/cdn-cgi/l/email-protection#d69991959bb7bfba96b8b5a3b7f8b1b9a0"><span class="__cf_email__" data-cfemail="eea1a9ada38f8782ae808d9b8fc0898198">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: Office of General Counsel: Frank
Kressman, General Counsel or Keisha Brooks, Attorney-Advisor, Office of
General Counsel, at the above address or telephone (703) 518-6540.
SUPPLEMENTARY INFORMATION:
I. Introduction
A. Background
The NCUA's Chartering and Field of Membership Manual, incorporated
as Appendix B to part 701 of its regulations (Chartering Manual)
implements the Federal Credit Union Act (FCU Act) for FCUs.\1\ The
proposed rule would enhance consumer access to financial services by
eliminating language in the Chartering Manual that otherwise creates an
automatic bar rather than permits evaluation of circumstances as
whole.\2\ The Board's goal in proposing this change is to center the
core principles of credit union membership and eliminate an inflexible
bar that goes beyond the requirements of the FCU Act. The proposed
change affects only the requirements for associational common bonds.
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\1\ 12 CFR part 701, app. B.
\2\ The Board has codified the Chartering Manual in 12 CFR part
701, app. B.
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B. Legal Authority
The Board is issuing this proposed rule pursuant to its rulemaking
authority under section 109 of the FCU Act.\3\ Section 109(d)(3)
directs the Board to issue guidelines or regulations, after notice and
opportunity for comment, setting forth the criteria that the Board will
apply in determining under this subsection whether an additional group
may be included within the FOM category of an existing multiple common
bond federal credit union.\4\ Sections 109(a) and 109(f)(2)(E)
reference more general rulemaking authority with respect to
associational groups and federal credit union FOM.\5\ Under the FCU
Act, the NCUA is the chartering and supervisory authority for FCUs and
the federal supervisory authority for federally insured credit
unions.\6\ The FCU Act grants the NCUA a broad mandate to issue
regulations governing both FCUs and all federally insured, state-
chartered credit unions. Section 120 of the FCU Act is a general grant
of regulatory authority and authorizes the Board to prescribe
regulations for the administration of the FCU Act.\7\ Accordingly, the
FCU Act grants the Board broad rulemaking authority to govern FOM
within the confines of the law.
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\3\ 12 U.S.C. 1751 et seq.
\4\ 12 U.S.C. 1759.
\5\ 12 U.S.C. 1759.
\6\ 12 U.S.C. 1752-1775.
\7\ 12 U.S.C. 1766(a).
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The NCUA's FOM policies are based on section 109 of the FCU Act.\8\
This section provides for three types of FCU charters: (1) single
common bond (occupational or associational); (2) multiple common bond
(more than one group, each having a common bond of occupation or
association); and (3) community.\9\ Section 109 also describes the
membership criteria for each of these three types of charters and
grants the Board rulemaking authority with respect to each type.\10\
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\8\ 12 U.S.C. 1759.
\9\ 12 U.S.C. 1759(a).
\10\ 12 U.S.C. 1759(b).
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In adopting the Credit Union Membership Access Act of 1998 (CUMAA),
which amended the FCU Act, Congress reiterated its longstanding support
for credit unions, emphasizing their ``specific mission of meeting the
credit and savings needs of consumers, especially persons of modest
means.'' \11\ Congress enacted CUMAA in part to make clear the
permissibility of
[[Page 17770]]
multiple common bond credit unions after the Supreme Court ruled that
the pre-CUMAA provisions of the FCU Act precluded multiple common
bonds. Through the provisions of CUMAA, Congress directed the Board to
encourage access to financial services for people of modest means,
encourage competition among providers of financial services, and
protect taxpayers by enhancing the safety and soundness of the credit
union system and protecting the National Credit Union Share Insurance
Fund.
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\11\ Public Law 105-219, 112 Stat. 913 (Aug. 7, 1998).
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The Chartering Manual implements the chartering and FOM
requirements that the FCU Act establishes for FCUs.\12\ The Chartering
Manual provides that the NCUA will grant a charter if the FOM
requirements are met, the subscribers are of good character and fit to
represent the proposed FCU, and the establishment of the FCU is
economically advisable.\13\ In addition, ``[i]n unusual circumstances .
. . [the] NCUA may examine other factors, such as other federal law or
public policy, in deciding if a charter should be approved.'' \14\
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\12\ 12 CFR part 701, app. B. The Chartering Manual addresses
all aspects of chartering FCUs. In that respect, it is similar to
the regulations of the Office of the Comptroller of the Currency
applicable to the chartering of national banks or federal savings
associations. 12 CFR part 5.
\13\ See 12 CFR part 701, app. B., Ch. 1, Section I.
\14\ Id.
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Each type of charter has unique eligibility criteria for persons
and entities eligible for inclusion in the FOM. This rule will not
affect occupational common bond charters, community charters, or
federally insured state-chartered credit unions. It will affect the
current associational common bond requirements for single and multiple
common bond FCUs.\15\
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\15\ The Chartering Manual states that a single common bond FCU
consists of one group having a common bond of occupation or
association. A multiple common bond FCU consists of more than one
group, each of which has a common bond of occupation or association.
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The FOM rules define, in relevant part, an associational common
bond as ``[a] common bond comprised of members . . . of a recognized
association . . . whose members participate in activities developing
common loyalties, mutual benefits, and mutual interests.'' \16\ Before
enactment of CUMAA, the NCUA established the principle that an
associational common bond could not be based primarily on a client or
customer relationship. In 1989, the Board stated that ``associations
based on a client or customer relationship--an insurance company's
customers or a buyer's club, for example,'' do not qualify.\17\ In
1998, the Board implemented CUMAA through Interpretive Ruling and
Policy Statement (IRPS) 99-1.\18\ As part of a larger effort to update
the definition for associational common bonds, the Board added
clarifying language that ``having an incidental client-customer
relationship does not preclude an associational charter as long as the
associational common bond requirements are met.'' \19\ As an example of
an incidental client-customer relationship, the Board also provided
that ``a fraternal association that offers insurance, which is not a
condition of membership, may qualify as a valid associational common
bond.'' \20\
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\16\ See 12 CFR part 701, app. B., Appendix 1--Glossary.
\17\ 54 FR 31166 (July 27, 1989).
\18\ 63 FR 71998, 72008 (Dec. 30, 1998).
\19\ 63 FR 71998, 72028 (Dec. 30, 1998).
\20\ Id.
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While CUMAA resurrected the multiple common bond charter in
response to litigation, neither the FCU Act nor CUMAA specify whether a
client-customer relationship would be automatically disqualifying. At
present, the FOM rules state that ``[a]ssociations based primarily on a
client-customer relationship do not meet associational common bond
requirements.'' \21\ The rules state, as an example of an incidental
client-customer relationship, that ``a fraternal association that
offers insurance, which is not a condition of membership, may qualify
as a valid associational common bond.'' \22\ Thus, current FOM rules
imply that a fraternal association's requirement to purchase insurance
as a condition of membership is automatically disqualifying. This
implication has led to the conclusion that ``a fraternal association
that offers insurance may qualify as a valid associational common bond
only if the purchase is not a condition of membership.'' \23\ If the
fraternal association requires the purchase of insurance as a condition
of membership, it may not qualify regardless of other factors that may
be relevant to determining whether the association is based primarily
on a client-customer relationship. The Board has carefully considered
the legal requirements underlying the proposed rule and believes that
the changes are consistent with the FCU Act while reducing confusion
and unnecessary restraints on eligibility.
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\21\ 12 CFR part 701, app. B., Ch. 2. Section III.A.1.c.
\22\ 12 CFR part 701, app. B., Ch. 2. Section III.A.1.c.
\23\ See NCUA Board Decision, In The Matter Of [Redacted By
Agency] Field Of Membership Appeal, Docket No. BD-03-24, 2024 WL
5245712 at *6-7 (Dec. 1, 2024).
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II. Proposed Rule
The proposed change would clarify that requiring the purchase of a
product or service as a condition of membership does not automatically
disqualify an associational group from eligibility, provided that the
client-customer relationship continues to be incidental to the group's
activities. In reviewing applications to determine eligibility, the
NCUA will consider the entirety of the circumstances, similar its
review of groups under the totality of the circumstances test.\24\ The
particular details of a group's structure, scope and degree of its
activities, and other operational factors will determine whether its
relationship with its members is primarily or incidentally a client-
customer relationship.\25\ While requiring a product or service as a
condition of membership may reduce the likelihood of eligibility, the
NCUA will nevertheless weigh the totality of an associational group's
activities before determining whether the client-customer relationship
is incidental to the common bond as a whole and, therefore, permits
eligibility. Indicators of whether a client-customer relationship is
incidental include whether it is secondary to the primary purpose and
mission of the associational group or the central purpose for which the
group exists. In other words, the client-customer
[[Page 17771]]
relationship may be supportive or supplementary to the associational
group's activities and common bond, but it cannot be the core reason
for its existence. Retail loyalty clubs, for example, have a client-
customer relationship as their core reason for existence and would not
qualify.
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\24\ See OGC Legal Opinion No. 13-044 (May 2013), <a href="https://ncua.gov/regulation-supervision/legal-opinions/2013/electric-cooperatives">https://ncua.gov/regulation-supervision/legal-opinions/2013/electric-cooperatives</a> (``The NCUA considers all of these factors together. No
one factor alone is determinative of membership eligibility as an
association. This includes whether the cooperative requires its
members to purchase electricity from it . . . The totality of the
circumstances controls over any individual factor.''); NCUA Board
Decision, In The Matter Of Tri-State Federal Credit Union, Docket
BD-18-10, 2010 WL 11814914 (December 1, 2010) (after reviewing the
totality of the circumstance, concluding that ``[a]lthough the YMCA
is a non-profit organization, the monthly membership fees at the
YMCA are indicative of a client-customer relationship'').
\25\ In 2015, the NCUA amended the Chartering Manual to allow
automatic qualification under the associational common bond rules to
certain categories of groups, including fraternal organizations
whose members have voting rights. 80 FR 25924 (May 6, 2015). The
Board clarified in the preamble ``that when a group `automatically'
satisfies the associational common bond requirements, it means that
the group will not be reviewed under the totality of the
circumstances test. The Chartering Manual's other prerequisites for
an FCU's charter expansion, including an FCU's capitalization level
and safety and soundness record, must still be satisfied.'' 80 FR at
25927. The Board notes, here, for further clarity, that if a group
is within the pre-approved categories listed in the Chartering
Manual, no further inquiry into the circumstances of a client-
customer relationship or the purpose of the group's formation
applies.
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The Board invites comments on all aspects of the proposed rule.
Specifically, the Board seeks comment on other relevant factors to
determine whether an association's relationship with its members is
primarily or incidentally a client-customer relationship.
III. Regulatory Procedures
A. Providing Accountability Through Transparency Act of 2023
The Providing Accountability Through Transparency Act of 2023 \26\
(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 \27\
(commonly known as <a href="http://regulations.gov">regulations.gov</a>). The Act, under its terms, applies
to notices of proposed rulemaking and does not expressly include other
types of documents that the Board publishes voluntarily for public
comment, such as notices and interim-final rules that request comment
despite invoking ``good cause'' to forgo such notice and public
procedure. The Board, however, has elected to address the Act's
requirement in these types of documents in the interests of
administrative consistency and transparency.
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\26\ 5 U.S.C. 553(b)(4).
\27\ 44 U.S.C. 3501 note.
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In summary, the Board proposes to amend the associational common
bond provisions of its chartering and FOM rules. The proposed FOM
amendment would clarify that requiring the purchase of a product or
service as a condition of membership no longer automatically bars
eligibility as a recognized association. The Board does not believe
such an automatic bar is required under the FCU Act, and a client-
customer relationship as a condition of membership may still be
incidental in a manner that permits a holistic evaluation of the
group's activities and circumstances.
The proposal and the required summary can be found at <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
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.\28\ 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.\29\ This proposed rule was drafted and reviewed in accordance
with Executive Order 12866 and Executive Order 13563. This proposed
rule eliminates an excessively burdensome, bright-line rule to allow a
principles-based determination consistent with the parameters of the
FCU Act and is consistent with Executive Order 13563. OMB has
determined that this proposed rule is not a ``significant regulatory
action'' as defined in section 3(f)(1) of Executive Order 12866.
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\28\ 58 FR 51735 (Oct. 4, 1993).
\29\ 76 FR 3821 (Jan.21, 2011).
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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.\30\ This proposed rule is expected to be a deregulatory
action for purposes of Executive Order 14192.
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\30\ 90 FR 9065 (Feb. 6, 2025),
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C. 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.\31\ 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.\32\ For purposes of this
analysis, the NCUA considers small credit unions to be those having
under $100 million in assets.\33\ The Board fully considered the
potential economic impacts of the regulatory amendments on small credit
unions.
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\31\ 5 U.S.C. 601 et seq.
\32\ 5 U.S.C. 605(b).
\33\ 80 FR 57512 (Sept. 24, 2015).
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The proposed amendments would alleviate burden and provide
regulatory relief to single associational groups and multiple common
bond FCUs of all sizes. The regulatory relief is difficult to quantify
and creates only a limited additional flexibility with respect to
applications to add associational groups to the FOM.
Accordingly, based on its best assessment at this time, 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 addressed in this proposed rule 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. 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 would only apply to FCUs. The NCUA expects that any effect on
states or on the distribution of power and responsibilities among the
various levels of government will be minor. The proposed changes would
mainly clarify and provide relief with respect to the existing
regulations and guidance in this area and are not intended to affect
the division of responsibilities between the NCUA and state regulatory
authorities with oversight of federally insured, state-chartered credit
unions. The rulemaking would therefore not have direct effect on the
states, the relationship between the national government and the
states, or on the distribution of power and responsibilities among the
various levels of government.
[[Page 17772]]
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.\34\ The proposed rule
relates to associational groups seeking to form single common bond FCUs
and multiple common bond FCUs seeking to add associational groups to
their FOMs. Any effect on family well-being is expected to be indirect.
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\34\ Public Law 105-277, 112 Stat. 2681 (1998).
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List of Subjects in 12 CFR Part 701
Advertising, Aged, Civil rights, Credit, Credit unions, Fair
housing, Individuals with disabilities, Insurance, Marital status
discrimination, Mortgages, Religious discrimination, Reporting and
recordkeeping requirements, Sex discrimination, Signs and symbols,
Surety bonds.
By the National Credit Union Administration Board, this 6th day
of April, 2026.
Melane Conyers-Ausbrooks,
Secretary of the Board.
For the reasons stated in the preamble, the NCUA Board proposes to
amend 12 CFR part 701, Appendix B as follows:
PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS
0
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, 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.
Appendix B to Part 701--Chartering and Field of Membership Manual
[Amended]
2. In appendix B to part 701, amend chapter 2 by revising
section III to read as follows:
Chapter 2--Field of Membership Requirements for Federal Credit Unions
* * * * *
III--Associational Common Bond
* * * * *
III.A.1.c--Additional Information
A support group whose members are continually changing or whose
duration is temporary may not meet the single associational common
bond criteria. Each class of member will be evaluated based on the
totality of the circumstances. Individuals or honorary members who
only make donations to the association are not eligible to join the
credit union.
Student groups (e.g., students enrolled at a public, private, or
parochial school) may constitute either an associational or
occupational common bond. For example, students enrolled at a church
sponsored school could share a single associational common bond with
the members of that church and may qualify for a federal credit
union charter. Similarly, students enrolled at a university, as a
group by itself, or in conjunction with the faculty and employees of
the school, could share a single occupational common bond and may
qualify for a federal credit union charter.
Tenant groups, consumer groups, and other groups of persons
having an ``interest in'' a particular cause and certain consumer
cooperatives may also qualify as an association.
Associations based primarily on a client-customer relationship
do not meet associational common bond requirements. Health clubs are
an example of a group not meeting associational common bond
requirements, including YMCAs. However, having an incidental client-
customer relationship does not preclude an associational charter as
long as the associational common bond requirements are met. The
particular details of a group's structure, scope and degree of its
activities, and other factors surrounding its operation will
determine if its relationship with its members is primarily or
incidentally a client-customer relationship. For example, an
association that offers insurance, even as a condition of
membership, may qualify as a valid associational common bond,
provided that the client-customer relationship is still incidental
in relation to the association's activities and overall
circumstances.
* * * * *
[FR Doc. 2026-06757 Filed 4-7-26; 8:45 am]
BILLING CODE 7535-01-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.