On December 28, 2023, the National Credit Union Administration (NCUA), together with the Comptroller of the Currency, Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation, (collectively, the Agencies) published a final rule to amend the Uniform Rules of Practice and Procedure (Uniform Rules). This action was listed on NCUA’s Spring 2023 Unified Agenda of Regulatory and Deregulatory Actions. NCUA has codified the Uniform Rules in 12 CFR Part 747.
Part 747 of the NCUA regulations outlines the uniform rules of practice and procedure applicable to adjudicatory proceedings that NCUA is required to conduct on the record after opportunity for a hearing related to: an assessment of civil money penalties by the NCUA Board for certain violations; cease-and-desist proceedings if a credit union is about to engage in practices considered unsafe or unsound, or for violations of the law, rules, or regulations, or other specific circumstances; removal and prohibition proceedings of directors, volunteers, officers, or employees who have violated certain laws or regulations, breached a fiduciary duty, or other acts which may injure the credit union; and other activities described in the Federal Credit Union Act.
The current Uniform Rules and agency-specific rules reflect a time when the Agencies only accepted paper pleadings and Administrative Law Judges dictated procedures pertaining to electronic filings on an ad hoc basis. This final rule amends the Uniform Rules and agency-specific rules to recognize the fundamental changes to the administrative hearing process due to the introduction of electronic communications and transmission.
The Financial Institutions Reform, Recovery and Enforcement Act of 1989 had required the Agencies, together with the Office of Thrift Supervision (OTS), to develop uniform rules and procedures for administrative hearings. In August 1991, the Agencies adopted final Uniform Rules as well as rules specific to each agency. Based on the experience gained in administrative hearings, the Agencies and OTS modified the Uniform Rules and their agency-specific rules in 1996 and they have remained largely unchanged since then.
The 2023 final rule replaces gender references such as “him or her” with gender-neutral terminology wherever possible. The definition of an electronic signature is added to Section 747.3 because the final rule now provides that electronic signatures may be used to satisfy the good faith certification requirements. NCUA has also updated the definition of violation with a cross-reference to the identical definition in the Federal Deposit Insurance Act. The final rule also addresses what actions in the form of sanctions might be taken in the event of an ex parte communication. The current practice of permitting electronic service of papers and electronic filing of papers is also codified. The scope of document discovery in a hearing along with the definition of the term “document” is updated to account for the range of digital information now available.
Other changes to the Uniform Rules include allowing for remote depositions under specific circumstances, new rules for expert and hybrid fact-expert witnesses, updates to time limits for extension of time for good cause shown, and other amendments to Part 747.
Credit unions should update their policies and procedures to ensure that counsel is aware of the updated changes to Part 747 that will apply to NCUA adjudicatory proceedings initiated on or after the effective date of this final rule, April 1, 2024. The NCUA’s rules that were in effect prior to April 1, 2024, will continue to apply to adjudicatory proceedings initiated before April 1, 2024.