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Proposed Rule2022-04454

Rules of Practice and Procedure

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Published

April 13, 2022

Issuing agencies

Treasury DepartmentComptroller of the CurrencyFederal Reserve SystemFederal Deposit Insurance CorporationNational Credit Union Administration

Abstract

The Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Board), Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA) (collectively, the Agencies) are proposing changes to the Uniform Rules of Practice and Procedure (Uniform Rules) to recognize the use of electronic communications in all aspects of administrative hearings and to otherwise increase the efficiency and fairness of administrative adjudications. The OCC, Board, and FDIC are also proposing to modify their agency-specific rules of administrative practice and procedure (Local Rules). The OCC also proposes to integrate its Uniform Rules and Local Rules so that one set of rules applies to both national banks and Federal savings associations and to amend its rules on organization and functions to address service of process.

Full Text

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<title>Federal Register, Volume 87 Issue 71 (Wednesday, April 13, 2022)</title>
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[Federal Register Volume 87, Number 71 (Wednesday, April 13, 2022)]
[Proposed Rules]
[Pages 22034-22092]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-04454]

[[Page 22033]]

Vol. 87

Wednesday,

No. 71

April 13, 2022

Part II

Department of the Treasury

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Office of the Comptroller of the Currency

Federal Reserve System

Federal Deposit Insurance Corporation

National Credit Union Administration

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12 CFR Parts 3, 4, 6, et al.

Rules of Practice and Procedure; Proposed Rule

Federal Register / Vol. 87 , No. 71 / Wednesday, April 13, 2022 /
Proposed Rules

[[Page 22034]]

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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Parts 3, 4, 6, 19, 108, 109, 112, and 165

[Docket ID OCC-2021-0007]
RIN 1557-AE33

FEDERAL RESERVE SYSTEM

12 CFR Parts 238 and 263

[Docket No. R-1766]
RIN 7100-AG26

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 308

RIN 3064-AF10

NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 747

[NCUA 2021-0079]
RIN 3133-AF37

Rules of Practice and Procedure

AGENCY: Office of the Comptroller of the Currency, Treasury; Board of
Governors of the Federal Reserve System; Federal Deposit Insurance
Corporation; National Credit Union Administration.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Comptroller of the Currency (OCC), Board of Governors of
the Federal Reserve System (Board), Federal Deposit Insurance
Corporation (FDIC), and the National Credit Union Administration (NCUA)
(collectively, the Agencies) are proposing changes to the Uniform Rules
of Practice and Procedure (Uniform Rules) to recognize the use of
electronic communications in all aspects of administrative hearings and
to otherwise increase the efficiency and fairness of administrative
adjudications. The OCC, Board, and FDIC are also proposing to modify
their agency-specific rules of administrative practice and procedure
(Local Rules). The OCC also proposes to integrate its Uniform Rules and
Local Rules so that one set of rules applies to both national banks and
Federal savings associations and to amend its rules on organization and
functions to address service of process.

DATES: Comments must be received on or before June 13, 2022.

ADDRESSES: Comments should be directed to: OCC: Commenters are
encouraged to submit comments through the Federal eRulemaking Portal.
Please use the title ``Uniform Rules of Practice and Procedure'' to
facilitate the organization and distribution of the comments. You may
submit comments by any of the following methods:
[ballot] Federal eRulemaking Portal--<a href="http://Regulations.gov">Regulations.gov</a>: Go to <a href="https://regulations.gov/">https://regulations.gov/</a>. Enter ``Docket ID OCC-2021-0007'' in the Search Box
and click ``Search.'' Public comments can be submitted via the
``Comment'' box below the displayed document information or by clicking
on the document title and then clicking the ``Comment'' box on the top-
left side of the screen. For help with submitting effective comments
please click on ``Commenter's Checklist.'' For assistance with the
<a href="http://Regulations.gov">Regulations.gov</a> site, please call (877) 378-5457 (toll free) or (703)
454-9859 Monday-Friday, 9 a.m.-5 p.m. ET or email
<a href="/cdn-cgi/l/email-protection#e99b8c8e9c85889d8086879aa98c9b9c858c84888280878e818c85998d8c9a82c78a8684">[email&#160;protected]</a>.
[ballot] Mail: Chief Counsel's Office, Attention: Comment
Processing, Office of the Comptroller of the Currency, 400 7th Street
SW, Suite 3E-218, Washington, DC 20219.
[ballot] Hand Delivery/Courier: 400 7th Street SW, Suite 3E-218,
Washington, DC 20219.
Instructions: You must include ``OCC'' as the agency name and
``Docket ID OCC-2021-0007'' in your comment. In general, the OCC will
enter all comments received into the docket and publish the comments on
the <a href="http://Regulations.gov">Regulations.gov</a> website without change, including any business or
personal information provided such as name and address information,
email addresses, or phone numbers. Comments received, including
attachments and other supporting materials, are part of the public
record and subject to public disclosure. Do not include any information
in your comment or supporting materials that you consider confidential
or inappropriate for public disclosure.
You may review comments and other related materials that pertain to
this action by the following method:
[ballot] Viewing Comments Electronically--<a href="http://Regulations.gov">Regulations.gov</a>: Go to
<a href="https://regulations.gov/">https://regulations.gov/</a>. Enter ``Docket ID OCC-2021-0007'' in the
Search Box and click ``Search.'' Click on the ``Documents'' tab and
then the document's title. After clicking the document's title, click
the ``Browse Comments'' tab. Comments can be viewed and filtered by
clicking on the ``Sort By'' drop-down on the right side of the screen
or the ``Refine Results'' options on the left side of the screen.
Supporting materials can be viewed by clicking on the ``Documents'' tab
and filtered by clicking on the ``Sort By'' drop-down on the right side
of the screen or the ``Refine Documents Results'' options on the left
side of the screen.'' For assistance with the <a href="http://Regulations.gov">Regulations.gov</a> site,
please call (877) 378-5457 (toll free) or (703) 454-9859 Monday-Friday,
9 a.m.-5 p.m. ET or email <a href="/cdn-cgi/l/email-protection#e5978082908984918c8a8b96a5809790898088848e8c8b828d8089958180968ecb868a88">[email&#160;protected]</a>.
The docket may be viewed after the close of the comment period in
the same manner as during the comment period.
Board: You may submit comments, identified by Docket No. R-1766 and
RIN 7100-AG26 by any of the following methods:
<bullet> Agency Website: <a href="http://www.federalreserve.gov">http://www.federalreserve.gov</a>. Follow the
instructions for submitting comments at <a href="http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm">http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm</a>.
<bullet> Email: <a href="/cdn-cgi/l/email-protection#21534446520f424e4c4c444f5552614744454453404d534452445357440f464e57">[email&#160;protected]</a>. Include the
docket number in the subject line of the message.
<bullet> Fax: (202) 452-3819.
<bullet> Mail: Ann E. Misback, Secretary, Board of Governors of the
Federal Reserve System, 20th Street and Constitution Avenue NW,
Washington, DC 20551.
All public comments are available from the Board's website at
<a href="http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm">http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm</a> as
submitted, unless modified for technical reasons or to remove
personally identifiable information at the commenter's request.
Accordingly, comments will not be edited to remove any identifying or
contact information. Public comments may also be viewed electronically
or in paper in Room 146, 1709 New York Avenue NW, Washington, DC 20006,
between 9:00 a.m. and 5:00 p.m. on weekdays.
FDIC: You may submit comments, identified by RIN 3064-AF10 by any
of the following methods:
<bullet> FDIC Website: <a href="https://www.fdic.gov/resources/regulations/federal-register-publications/">https://www.fdic.gov/resources/regulations/federal-register-publications/</a>. Follow instructions for submitting
comments on the agency website.
<bullet> Email: <a href="/cdn-cgi/l/email-protection#e5a68a8888808b9196a583818c86cb828a93">[email&#160;protected]</a>. Include RIN 3064-AF10 on the
subject line of the message.
<bullet> Mail: James P. Sheesley, Assistant Executive Secretary,
Attention: Comments, Federal Deposit Insurance Corporation, 550 17th
Street NW, Washington, DC 20429.
<bullet> Hand Delivery to FDIC: Comments may be hand-delivered to
the guard station at the rear of the 550 17th Street NW building
(located on F Street) on business days between 7 a.m. and 5 p.m.

[[Page 22035]]

Please include your name, affiliation, address, email address, and
telephone number(s) in your comment. All statements received, including
attachments and other supporting materials, are part of the public
record and are subject to public disclosure. You should submit only
information that you wish to make publicly available.
Please note: All comments received will be posted generally without
change to <a href="https://www.fdic.gov/resources/regulations/federal-register-publications/">https://www.fdic.gov/resources/regulations/federal-register-publications/</a>, including any personal information provided.
NCUA: You may submit comments, identified by RIN 3133-AF37 by any
of the following methods (please send comments by one method only):
<bullet> Federal eRulemaking Portal: <a href="http://www.regulations.gov">http://www.regulations.gov</a>.
Follow the instructions for submitting comments for docket number NCUA-
2021-0079.
<bullet> Fax: (703) 518-6319. Use the subject line ``[Your name]
Comments on ``Uniform Rules of Practice and Procedure'' on the
transmission cover sheet.
<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: Use the same address as for mailed
comments.
Public Inspection: You can view all public comments on the NCUA
website at: <a href="http://www.ncua.gov/Legal/Regs/Pages/PropRegs.aspx">http://www.ncua.gov/Legal/Regs/Pages/PropRegs.aspx</a> as
submitted, except for those we cannot post for technical reasons. The
NCUA will not edit or remove any identifying or contact information
from the public comments. Due to social distancing measures in effect,
the usual opportunity to inspect paper copies of comments in the NCUA's
law library is not currently available. After social distancing
measures are relaxed, visitors may make an appointment to review paper
copies by calling (703) 518-6540 or emailing <a href="/cdn-cgi/l/email-protection#aae5ede9e7cbc3c6eac4c9dfcb84cdc5dc">[email&#160;protected]</a>.

FOR FURTHER INFORMATION CONTACT: OCC: MaryAnn Nash, Counsel, and Heidi
Thomas, Special Counsel, Chief Counsel's Office, (202) 649-5490. If you
are deaf, hard of hearing, or have a speech disability, please dial 7-
1-1 to access telecommunications relay services. Board: David Williams,
Associate General Counsel, <a href="/cdn-cgi/l/email-protection#0c686d7a6568227b656060656d617f4c6a7e6e226b637a">[email&#160;protected]</a>, (202) 452-3973, and
H[eacute]ctor G. Bladuell, Senior Counsel, Legal Division,
<a href="/cdn-cgi/l/email-protection#650d0006110a174b024b0709040110000909250317074b020a13">[email&#160;protected]</a>, (202) 452-2491. FDIC: Heather M. Walters,
Counsel, Legal Division, <a href="/cdn-cgi/l/email-protection#a7cfc2d0c6cbd3c2d5d4e7c1c3cec489c0c8d1">[email&#160;protected]</a>, (202) 898-6729 and Michael
P. Farrell, Counsel, Legal Division, <a href="/cdn-cgi/l/email-protection#6e03080f1c1c0b02022e080a070d40090118">[email&#160;protected]</a>, (202) 898-3853.
For users of Telecommunications Device for the Deaf (TDD) only, contact
(202) 263-4869. NCUA: Damon P. Frank, Senior Trial Attorney, and John
H. Brolin, Senior Staff Attorney, Office of General Counsel, at (703)
518-6540.

SUPPLEMENTARY INFORMATION:

I. Background

Section 916 of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, Public Law 101-73, 103 Stat. 183 (1989),
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 and OTS each adopted final
Uniform Rules as well as Local Rules specific to each agency.\1\ Based
on the experience gained in administrative hearings, the Agencies,
together with OTS, modified the Uniform Rules and Local Rules in
1996.\2\
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\1\ The Agencies, together with the OTS, issued a joint notice
of proposed rulemaking on June 17, 1991 (56 FR 27790). Each agency
issued a final rule on the following dates: OCC on August 9, 1991
(56 FR 38024); Board on August 9, 1991 (56 FR 38052); FDIC on August
9, 1991 (56 FR 37968); and NCUA on August 8, 1991 (56 FR 37767). The
OTS, whose rules and procedures were transferred to the OCC in 2011,
published its rules on August 12, 1991 (56 FR 38317). The Agencies'
rules are codified at 12 CFR part 19, subpart A (OCC); 12 CFR part
263, subpart A (Board); 12 CFR part 308, subpart A (FDIC); and 12
CFR part 747, subpart A (NCUA).
\2\ 61 FR 20330, May 6, 1996.
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The Uniform Rules and Local Rules have remained largely unchanged
since the 1996 amendments, while the practice of administrative
hearings has changed fundamentally with the introduction of electronic
communication and transmission. The current Uniform Rules were
promulgated at a time when the Agencies accepted only paper pleadings.
However, beginning in 2005, the Office of Financial Institution
Adjudication (OFIA) established a dedicated electronic mailbox to
accept electronic pleadings and service and, by 2006, paper pleadings
were virtually eliminated in administrative hearings. Without rules in
place to address electronic pleadings, the Administrative Law Judges
(ALJs) opted to dictate procedures pertaining to electronic filing and
other items on an ad hoc basis in their scheduling orders.
The Agencies have identified sections of the Uniform Rules that
should be modified to recognize electronic pleadings and communications
in administrative hearings and other sections that require modification
based on the experience of the Agencies in administrative litigation.
The Agencies also propose to remove the remaining references to the
Office of Thrift Supervision (OTS), which was abolished in 2011.\3\ In
addition, the OCC, Board, and FDIC propose to amend certain sections of
their Local Rules that they believe should be updated, improved, or
clarified. Furthermore, the OCC proposes to consolidate its uniform and
local rules by applying part 19 to both national bank- and Federal
savings association-related proceedings and investigations and removing
its separate enforcement-related rules for Federal savings
associations, 12 CFR parts 108, 109, 112, and 165. Finally, the OCC
proposes to amend subpart A of 12 CFR part 4, Organization and
Functions, to add a new Sec. 4.8 that would address service of
process. The Agencies intend that any final rules issued in connection
with this rulemaking will only apply to actions filed after the
effective date of any final rule.
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\3\ The FDIC removed references to the OTS and updated its
definitions by Final Rule on Jan. 30, 2015 (80 FR 5009). The Board
similarly removed references to the OTS from its definitions on
September 13, 2011 (76 FR 56603).
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The Agencies invite comments on all aspects of this joint proposed
rule. Comments on the Local Rules should be sent only to the
appropriate agency.

II. Section-by-Section Discussion of Proposed Amendments to the Uniform
Rules

General Comments

The text of the proposed amendments to the Uniform Rules appears at
the end of the preamble. Agency-specific proposed amendments to the
Uniform Rules and Local Rules appear in the instructions below. Where
appropriate, the Agencies propose to replace gender references such as
``him or her,'' ``his or her,'' and ``himself or herself'' with gender
neutral terminology. Consistent with Federal Register drafting
guidelines,\4\ the Agencies also propose to replace the word ``shall''
throughout the rule with the terms ``must,'' ``will,'' or other
appropriate language. The Agencies are also proposing to use the
abbreviation ``ALJ'' for ``administrative law judge,'' as this
abbreviation is commonly used and understood, and using this
abbreviation will reduce the length of the rules. These changes are
proposed throughout the Uniform Rules and will not be discussed further
in the individual sections below.
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\4\ National Archives, Federal Register Writing Resources for
Federal Agencies: Drafting Legal Documents, <a href="https://www.archives.gov/federal-register/write/legal-docs/clear-writing.html">https://www.archives.gov/federal-register/write/legal-docs/clear-writing.html</a>.

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[[Page 22036]]

Section __.1 Scope
Section __.1 lists the types of adjudicatory proceeding to which
the Uniform Rules apply. To the extent necessary, the Agencies propose
to update the list of civil money penalty proceedings covered by the
Uniform Rules described in Sec. __.1(e) to include section 5, section
9, and section 10 of the Home Owners' Loan Act (HOLA).\5\ These
sections of the HOLA are applicable to Federal savings associations now
supervised by the OCC, State-chartered savings associations now
supervised by the FDIC, and savings and loan holding companies
supervised by the Board. The Agencies also propose to add references to
``the former Office of Thrift Supervision'' in Sec. __.1(e)(10), to
clarify that the Uniform Rules will apply to civil money proceedings
for violations of orders issued, written agreements executed, and
conditions imposed in writing by OTS.
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\5\ The Board made these updates on September 13, 2011 (76 FR
56603).
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Section__.3 Definitions
Section __.3 of the Uniform Rules includes definitions applicable
to the Uniform Rules and, unless otherwise specified, the Local Rules.
The Agencies propose adding a definition of the term ``electronic
signature'' in Sec. __.3. The Agencies are proposing that electronic
signatures be used to satisfy the good faith certification requirement
in Sec. __.7 and, therefore, are including a definition of the term
``electronic signature'' in this section. The OCC, Board, and FDIC are
proposing to replace the definition of violation in Sec. __.3 with a
cross-reference to the identical definition in section 3(v) of the
Federal Deposit Insurance Act (FDIA), 12 U.S.C. 1813(v). To the extent
necessary, the Agencies also propose to remove the legacy reference to
the Office of Thrift Supervision both in the definition of ``OFIA'' and
the definition of ``Uniform Rules'' in Sec. __.3.
The OCC proposes to add the term ``Federal savings association'' to
its definition of ``institution'' in order to make the Uniform Rules
and the OCC's Local Rules in part 19 of title 12 applicable to Federal
savings associations, which have been regulated by the OCC since
2011.\6\
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\6\ As described elsewhere in this Supplementary Information,
the OCC is proposing to remove its Uniform Rules and Local Rules
applicable to Federal savings associations, parts 108, 109, 112, and
165 of title 12.
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The Board proposes to add ``nonbank financial companies'' and
``financial market utilities'' designated by the Financial Stability
Oversight Council to its definition of ``institution'' to clarify that
the Uniform Rules are applicable to these entities, which are
supervised by the Board pursuant to the Dodd-Frank Wall Street Reform
and Consumer Protection Act (Dodd-Frank Act).\7\ In addition, the Board
proposes to clarify that organizations operating under section 25A of
the Federal Reserve Act, Federal and state ``branches,'' as well as
``agencies'' as defined in section 1(b) of the International Banking
Act, and ``any other entity subject to the supervision of the Board,''
are included in its definition of ``institution.'' The Board also
proposes to replace the word ``savings association'' with ``depository
institution'' in 12 CFR 263(f)(6) to conform this language to the
language in 12 U.S.C. 1818(b)(3).
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\7\ Public Law 111-203, 124 Stat. 1376 (2010).
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Section __.5 Authority of the Administrative Law Judge (ALJ)
Section __.5 of the Uniform Rules addresses the authority of the
ALJ. The Agencies propose to amend Sec. __.5(b)(2) to add the term
``other orders'' to the list of specific orders an ALJ is authorized to
issue, quash, or modify. The Agencies are proposing this change to
clarify that the authority of the ALJ to issue orders is not limited to
subpoenas, subpoenas duces tecum, and protective orders and may include
other types of orders that are not enumerated in this section. The
Agencies also propose to amend Sec. __.5(b)(11) to change the term
``presiding officer'' to ``ALJ'' in order to avoid confusion and
clarify that the ALJ has the powers necessary and appropriate to
discharge the duties of this role.
Section __.6 Appearance and Practice in Adjudicatory Proceedings
Section __.6 of the Uniform Rules addresses appearance and practice
in adjudicatory proceedings. The Agencies propose to amend Sec.
__.6(a)(2) to state simply that an individual may appear on their own
behalf. In making this change, the Agencies would eliminate the
additional language that is duplicative and unnecessary to the meaning
of the provision. The Agencies also propose to amend Sec. __.6(a)(3)
to include a requirement that a notice of appearance include a written
acknowledgment that the individual has reviewed and will comply with
the Uniform Rules and Local Rules. The Agencies propose to add this
requirement in order to ensure that representatives appearing in the
proceeding are informed of the rules that govern the proceedings.
Section __.7 Good Faith Certification
Section __.7 of the Uniform Rules addresses the requirement for
good faith certification for every filing or submission of record
following the issuance of a notice. The Agencies propose to amend Sec.
__.7(a) to require that the counsel of record, including an individual
who acts as their own counsel, include a mailing address, an electronic
mail address, and a telephone number with every certification. The
Agencies also propose to amend this section to permit electronic
signatures to satisfy the signature requirements of the certification.
These proposed changes to the rules conform the rules to the current
practice of electronic filing.
Section __.9 Ex Parte Communications
Section __.9 of the Uniform Rules addresses ex parte communications
in administrative proceedings. The Agencies propose to amend Sec.
__.9(c) to clarify that upon the occurrence of ex parte communication,
the ALJ or the Agency Head must determine whether any action in the
form of sanctions should be taken concerning the ex parte
communication. The Agencies also propose to amend Sec. __.9(e)(1) to
better align it with section 5 of the Administrative Procedure Act, 5
U.S.C. 554(d). Specifically, the Agencies propose to add language
stating that the ALJ may not consult with a person or party on a fact
in issue without giving all parties notice and an opportunity to
participate and may not be responsible to or subject to the supervision
or direction of an employee agent engaged in the performance of
investigative or prosecuting functions for any of the Agencies.
Finally, the Agencies propose to amend Sec. __.9(e)(2) to refer to
administrative or judicial proceedings rather than public proceedings.
The Agencies are proposing this change to better describe the type of
proceedings subject to the rule.
Section __.10 Filing of Papers
Section __.10 of the Uniform Rules addresses the requirements for
the filing of papers. The Agencies propose to amend and renumber Sec.
__.10(b) to remove an outdated section on rules governing transmission
by electronic media and replace it with a section stating that filing
may be accomplished by electronic mail or other electronic means
designated by the Agency Head or the ALJ. The Agencies further propose
to amend Sec. __.10(b) to eliminate references to specific carriers
and names of mail delivery services and

[[Page 22037]]

instead refer generally to same day courier services and overnight
delivery services. The Agencies propose to amend Sec. __.10(c), which
addresses the formal requirements as to papers filed, to require papers
to include the mailing address, electronic mail address, and telephone
number of the counsel or party making the filing. Finally, the Agencies
propose to strike Sec. __.10(c)(4), which requires the filing of an
original and one copy of each filing. The Agencies believe this
requirement is no longer necessary, especially given that the vast
majority of papers are filed electronically, consistent with current
adjudicatory practice. The Agencies also propose to retain the existing
methods of filing by paper, such as personal service, same day courier,
overnight delivery, and mail, and have modified the descriptions of
those methods to conform to current terminology and standards for
delivery.
Section __.11 Service of Papers
Section __.11 of the Uniform Rules addresses the requirements for
service of papers. The proposed modifications to Sec. __.11 are
intended to provide for electronic filing, where appropriate, and
simplify and update the descriptions for other, non-electronic, means
of filing. The Agencies propose to amend Sec. __.11(b) to add service
by electronic mail or other electronic means as a method for serving
papers, consistent with current practice. The Agencies also propose to
retain the existing methods of service by paper, such as personal
service, same day courier, overnight delivery, and mail, and have
replaced references to specific carriers and delivery services with
general references to same day courier service and overnight delivery
service. The Agencies also propose to amend Sec. __.11(c)(1) to
require that all papers required to be served by the Agency Head or the
ALJ upon a party that has appeared in the proceeding will be served by
electronic mail or other electronic means designated by the Agency Head
or the ALJ. For parties that have not appeared in the proceeding in
accordance with Sec. __.6, the Agencies have preserved the option for
non-electronic methods of service. The Agencies propose to modify the
descriptions of some of those methods to conform to current terminology
and standards for delivery. Finally, in Sec. __.11(d), the Agencies
propose to generally retain the existing methods for the service of
subpoenas with appropriate modifications to the descriptions of the
methods to conform to current terminology and standards for delivery.
Section __.12 Construction of Time Limits
Section __.12 of the Uniform Rules addresses the construction of
time limits. The Agencies propose to amend Sec. __.12(b), which
addresses when papers are deemed to be filed or served, to provide that
in the case of transmission by electronic mail or other electronic
means, filing and service are deemed to be effective upon transmittal
by the serving party. The Agencies also propose to retain the existing
times for non-electronic methods of filing and service and update the
descriptions of these methods to make them consistent with the updated
descriptions in Sec. Sec. __.10 and __.11. The Agencies propose to
amend Sec. __.12(c), which addresses the calculation of time for
service and filing of responsive papers, to provide that in the case of
service by electronic mail or other electronic means, the time limits
are calculated by adding one calendar day to the prescribed period. The
Agencies further propose to modify the rule to provide for the addition
of two calendar days, rather than one, in the case of service by
overnight delivery service and retain the rule providing for the
addition of three calendar days for service made by mail.
Section __.14 Witness Fees and Expenses
Section __.14 of the Uniform Rules addresses witness fees and
expenses in administrative proceedings. The Agencies propose to amend
Sec. __.14 to clarify the general rule, in Sec. __.14(a), that all
witnesses, including an expert witness who testifies at a deposition or
hearing, will be paid the same fees for attendance and mileage as are
paid in the United States district courts in proceedings in which the
United States is a party. The Agencies further propose to add language
in Sec. __.14(b) to clarify that the Agencies are not required to pay
witness fees and mileage for testimony by a party. The Agencies propose
to retain existing language governing the timing of witness payments in
a new Sec. __.14(c).
Section __.15 Opportunity for Informal Settlement
Section __.15 of the Uniform Rules addresses the rules and process
for informal settlement once a proceeding has been initiated. The
Agencies propose to revise the language of this section to more plainly
express the existing rule that an offer or proposal for informal
settlement may only be made to Enforcement Counsel.
Section __.18 Commencement of Poceeding and Contents of Notice
Section __.18(a) of the Uniform Rules governs the commencement of
administrative proceedings. The Agencies propose to amend Sec.
__.18(a)(ii) to provide that Enforcement Counsel serves the notice upon
the respondent to begin proceedings.\8\ The Agencies also propose to
amend this section to provide that Enforcement Counsel may serve the
notice upon counsel for the respondent, rather than the respondent,
provided that counsel for the respondent has confirmed that counsel
represents the respondent in the matter and will accept service of the
notice on behalf of the respondent. By requiring counsel to confirm
representation of a respondent, the Agencies hope to clarify when it is
appropriate to serve notice on an individual who purports to represent
the respondent. The Agencies propose to amend Sec. __.18(a)(iii) to
make it clear that Enforcement Counsel files the notice with OFIA.\9\
---------------------------------------------------------------------------

\8\ The FDIC has already made this change in its version of the
Uniform Rules in connection with amendments that became effective on
January 12, 2021.
\9\ The NCUA proposes to delete the reference to change-in-
control proceedings from part 747 under 12 U.S.C. 1817(j), which
does not apply to credit unions or the NCUA. The NCUA proposes the
same deletion under Sec. __.33.
---------------------------------------------------------------------------

Section __.18(b) of the Uniform Rules addresses the contents of the
notice in administrative proceedings. The Agencies propose to amend
Sec. __.18(b) to provide that notice pleading applies in
administrative proceedings, meaning that a notice need only provide a
short and plain statement of the claim(s) showing that the Agency is
entitled to relief. The Agencies further propose to make a technical
change to Sec. __.18(b)(2) to change the description from ``a
statement of the matters of fact or law showing the [Agency] is
entitled to relief'' to simply ``matters of fact or law showing that
the [Agency] is entitled to relief.'' The Agencies believe the
reference to ``a statement'' in this section has no substantive meaning
and, thus, propose to remove it.
Section __.19 Answer
Section __.19 of the Uniform Rules sets out the requirements for an
answer in an administrative proceeding. The Agencies propose to amend
Sec. __.19(c)(2) to provide that if a respondent fails to request a
hearing as required by law within the applicable time frame, the notice
of assessment constitutes a final and unappealable order, in accordance
with 12 U.S.C. 1818(i)(2)(E)(ii) and 12 U.S.C.

[[Page 22038]]

1786(k)(2)(E)(ii), without further action by the ALJ. In the past,
there has been confusion about whether any additional action on the
part of the ALJ is required in this situation, and the proposed
language clarifies that no further action is necessary.
Section __.24 Scope of Document Discovery
Section __.24 of the Uniform Rules addresses the scope of discovery
in an administrative proceeding and Sec. __.24(a) addresses
limitations on discovery. The Agencies propose to update the definition
of the term ``documents'' in Sec. __.24(a)(1) to include not only
writings, drawings, graphs, charts, photographs, and recordings, but
electronically stored information and data or data compilations stored
in any medium from which information can be obtained. This expanded
definition of the term ``document'' is necessary to account for the
range of digital information now available. The Agencies further
propose to amend Sec. __.24(a)(3) to clarify that discovery by the use
of either interrogatories or requests for admission is not permitted.
The Agencies propose to move the paragraph on relevance currently in
Sec. __.24(b) to a new paragraph Sec. __.24(a)(4) because that
provision functions as a limitation on discovery. The Agencies propose
to amend Sec. __.24(c) to clarify the list of privileges applicable to
otherwise discoverable documents. In addition to the attorney-client
privilege and the work-product doctrine, the proposed language would
also specifically identify the bank examination privilege and the law
enforcement privilege and exclude those privileged documents from
discovery. Finally, the Agencies propose to add language to Sec.
__.24(d) to provide that document discovery, including all responses to
discovery requests, must be completed by the date set by the ALJ and no
later than 30 days prior to the date scheduled for the commencement of
the hearing. This proposed language recognizes the role of the ALJ in
establishing a schedule for discovery while also providing for
discovery to be completed earlier in the hearing process.
Section __.25 Request for Document Discovery by Parties
Section __.25 of the Uniform Rules addresses requests for document
discovery from parties in administrative proceedings. The Agencies
propose to reorganize the section to improve clarity and make
additional changes. The Agencies propose to replace the heading
``General rule'' with ``Document requests'' in Sec. __.25(a) to better
identify the subject matter of the section. The Agencies propose to
amend Sec. __.25(a) to add a paragraph (1) stating that a party may
serve on another party a request to not only produce discoverable
documents but to permit the requesting party or its representative to
inspect or copy discoverable documents that are in the possession,
custody, or control of the party upon whom the request is served. It
has been the practice of parties in administrative proceedings to
permit the inspection and copying of discoverable documents, and the
proposed language formalizes that practice under the rules. The
Agencies propose to include language to provide that a party responding
to a request for inspection may produce copies of documents or
electronically stored information instead of permitting inspection. In
many cases, providing documents or electronically stored information
directly is more efficient than permitting inspection, and the proposed
amendment preserves the right of a responding party to make that
choice. The Agencies further propose to add a new paragraph (2) to
simplify the language that previously appeared in Sec. __.25(b)
regarding the identification of documents to be produced. The proposal
would require that the request describe with reasonable particularity
each item or category of items to be inspected and specify a reasonable
time, place, and manner for the inspection or production.
The Agencies propose to amend the rules governing production or
copying, as set out in a new Sec. __.25(b)(1), to require that, unless
a particular form is specified by the ALJ or agreed upon by the
parties, the producing party must produce copies of documents as they
are kept in the usual course of business or organized to correspond to
the categories of the request, and produce electronically stored
information in a form in which it is ordinarily maintained or in a
reasonably usable form. The Agencies recognize that the ways in which
electronically stored information may be stored and transmitted may
change over time and are adopting the reasonably usable standard for
electronically stored information to provide flexibility.
The Agencies propose to simplify the rules associated with the
costs of document production in a new Sec. __.25(b)(2), which would
require the producing party to pay its own costs to respond to a
discovery request unless otherwise agreed by the parties. This proposed
language would eliminate the earlier requirement that a requesting
party prepay the producing party for certain costs while also allowing
the parties to agree to share costs, as appropriate in a particular
case.
The Agencies propose to modify the time limits for motions to limit
discovery in Sec. __.25(d). In Sec. __.25(d)(1), the Agencies propose
to extend the time limit for a party to object to a discovery request
from within ten to within 20 days of being served with such a request.
In Sec. __.25(d)(2), the Agencies propose to extend the time limit for
a party to file a written response from within five to within ten days
of service of the motion. Additional time allows the parties to digest
such requests and engage with each other to narrow the scope of the
request before having to file a motion with the ALJ. The Agencies
believe that parties making motions to limit discovery and responding
to motions to limit discovery will benefit from additional time to
review and respond to such requests.
Finally, the Agencies propose to amend Sec. __.25(e) to specify
the available privileges that may be asserted in connection with a
request for production. The section includes attorney-client privilege,
attorney work-product doctrine, bank examination privilege, law
enforcement privilege, any government deliberative process privilege,
other privileges of the Constitution, any applicable act of Congress,
and other principles of common law as grounds for withholding
documents.
Section __.26 Document Subpoenas to Non-Parties
Section __.26 of the Uniform Rules addresses document subpoenas to
third parties in administrative proceedings. The Agencies propose to
amend Sec. __.26(b)(1) to provide that a person to whom a document
subpoena is directed may file a motion to quash or modify such subpoena
with the ALJ. This amendment clarifies to whom the motion to quash
should be directed.
Section __.27 Deposition of Witness Unavailable for Hearing
Section __.27 of the Uniform Rules addresses the deposition of
witnesses unavailable for an administrative hearing. The Agencies
propose to amend Sec. __.27(a)(2) to require that the application for
a subpoena state the manner in which the deposition is to be taken, in
addition to the time and place, and provide explicitly that a
deposition may be taken by remote means. These changes modernize the
rules and conform the rules to existing practice. The Agencies propose
to simplify

[[Page 22039]]

Sec. __.27(a)(4) by eliminating unnecessary language related to where
subpoenas may be served. In order to further provide for remote
depositions, the Agencies propose to amend Sec. __. 27(c)(1) to
provide that a court reporter or other person authorized to administer
an oath may administer the oath remotely without being in the physical
presence of the deponent, by stipulation of the parties or order by the
ALJ. The Agencies further propose to amend Sec. __.27(d) to clarify
that if a subpoenaed person fails to comply with any subpoena issued
pursuant to this section the aggrieved party may apply to the
appropriate United States district court for an order requiring
compliance with the portions of the subpoena with which the subpoenaed
party has not complied. Finally, the Agencies are making a correction
to an inaccurate cross-reference in the rule. The cross reference to
paragraph (c)(3) has been changed to correctly reference paragraph
(c)(2).
Section __.29 Summary Disposition
Section __.29 of the Uniform Rules addresses summary disposition.
The Agencies propose to modify Sec. __.29(c) to provide that a request
for a hearing on a motion must be made in writing. This change will
formalize the process of requesting a hearing and increase the clarity
of the process.
Section __.31 Scheduling and Prehearing Conferences
Section __.31 of the Uniform Rules addresses scheduling and
prehearing conferences. The Agencies propose to amend Sec. __.31(a) to
clarify that the prehearing conference must be set within 30 days of
service of the notice or an order commencing a proceeding and eliminate
the option in the current rule for the parties to agree on another
time. The Agencies also propose to add language to clarify that it is a
schedule for discovery, and not actual discovery, that the parties may
determine at the scheduling conference. Finally, the Agencies propose
to eliminate references to ``telephone'' conferences in order to make
the provision more technologically neutral.
Section __.32 Prehearing Submission
Section __.32 of the Uniform Rules addresses prehearing
submissions. The Agencies propose to amend Sec. __.32(a) to extend the
time for a party to file prehearing submissions with the ALJ from 14
days to 20 days before the start of the hearing. The Agencies propose
this change to give the parties more flexibility in completing their
filings. The Agencies propose to further amend Sec. __.32 to update
the required prehearing submissions. The Agencies propose to amend
Sec. __.32(a)(1) to require the submission of a prehearing statement
that states the party's position with respect to the legal issues
presented, the statutory and case law upon which the party relies, and
the facts the party expects to prove at the hearing. The Agencies
propose to amend Sec. __.32(a)(2) to require that the final list of
witnesses include the name, mailing address, and electronic mail
address for each witness and to clarify that the list of witnesses need
not identify the exhibits to be relied upon by each witness at the
hearing and that the list of exhibits should be a list of exhibits
expected to be introduced at the hearing.
Section __.35 Conduct of Hearings
Section __.35 of the Uniform Rules addresses the conduct of
administrative hearings. The Agencies propose to add a new Sec.
__.35(c) to provide rules governing electronic presentations in a
hearing. The new language provides that the ALJ may direct the use of,
or any party may use, an electronic presentation during the hearing. If
an ALJ requires an electronic presentation, each party will be
responsible for their own presentation or related costs unless the
parties agree to another manner in which to allocate responsibilities
and costs. This new language is necessary to account for electronic
presentations that are not addressed in the existing rules but are used
routinely in hearings.
Section __.36 Evidence
Section __.36 of the Uniform Rules sets forth the rules governing
evidence in an adjudicatory proceeding. The Agencies propose to amend
Sec. __.36(b)(2) to refer to ``direct questioning'' rather than
``direct interrogation'' of witnesses in order to clarify, in plain
language, the meaning of this section.

III. Section-by-Section Summary and Discussion of Proposed Amendments
to the Local Rules of Each Agency

A. Proposed Amendments to the OCC Local Rules

Part 19, subparts B through P, address local rules of practice and
procedure specific to OCC investigations, hearings before the OCC, and
other OCC-related proceedings involving national banks. The
corresponding rules for Federal savings association-related proceedings
and investigations, transferred from the former OTS to the OCC by the
Dodd-Frank Act, are set forth at 12 CFR parts 108, 109, 112, and 165.
Many of the national bank and Federal savings association-related
provisions are similar, but in some cases no corresponding rule exists
or one set of rules provides more specificity than the other. The
proposed rule would consolidate these rules by applying part 19 to both
national bank- and Federal savings association-related proceedings and
investigations and remove parts 108, 109, 112, and 165. The proposed
rule also would amend the local rules to add certain provisions of the
Federal savings association rules that are not currently included in
part 19 but that the OCC believes should apply to both Federal savings
associations and national banks. In addition, the OCC proposes to
reorganize certain rules in part 19, including subparts D, E, F, and G
relating to actions under the Federal securities laws; add new
provisions addressing the Equal Access to Justice Act (EAJA); and add a
new subpart O addressing the forfeiture of a national bank, Federal
savings association, or Federal branch and agency charter or franchise
for certain money laundering or cash transaction offenses. As set forth
in proposed subpart R, the revised consolidated rules would apply to
adjudicatory actions filed on or after the effective date of the final
rule resulting from this proposal.
The proposed amendments to the OCC's local rules are discussed
below.
Subpart B--Procedural Rules for OCC Adjudications
19.100--Filing Documents
Sections 19.100 and 109.104(g) require that all filings with or
referred to the Comptroller or ALJ in any proceeding under parts 19 or
109, respectively, be filed with the OCC Hearing Clerk. The two
provisions are substantively the same except that Sec. 19.100 provides
a more detailed description of the types of filings to which the rule
applies. As a result of the proposed application of part 19 to Federal
savings associations and removal of part 109, Sec. 19.100 also would
apply to filings in Federal savings association-related proceedings.
Furthermore, the proposed rule would amend Sec. 19.100 to remove the
OCC filing street address and to require the filing to be made in a
manner prescribed by Sec. 19.10(b) and (c). Section 19.10(b) and (c)
prescribe the permissible filing methods and list form and content
requirements for filing papers with the OCC. As amended by this
proposal, filings would be permitted by electronic mail or other
electronic means designated by the Comptroller or the

[[Page 22040]]

ALJ. Lastly, the proposal would amend the current provision to clarify
that the materials filed include any attachments or exhibits to the
listed documents.
19.101 Delegation to OFIA
Both Sec. Sec. 19.101 and 109.101 provide that an ALJ at the
Office of Financial Institution Adjudication (OFIA) will conduct
actions brought under the respective subpart A rules. As a result of
the proposed application of part 19 to Federal savings associations,
Sec. 19.101 would apply to adjudicatory actions brought against either
national banks or Federal savings associations. The proposal would make
one stylistic revision to Sec. 19.101 to remove the passive sentence
structure.
19.102 Civil Money Penalties
The proposed rule would add a new Sec. 19.102 that would
incorporate parts of Sec. 109.103(b), which provides rules for the
payment of civil money penalties. The national bank rules do not
address this topic with specificity, and the OCC has determined that
these provisions, which clarify when parties must pay civil money
payments, should be applicable to both national banks and Federal
savings associations. As a result of this amendment, respondents would
be required to pay civil money penalties assessed pursuant to subpart A
of part 19 within 60 days after the issuance of the notice of
assessment, unless the OCC requires a different time for payment. If a
respondent has made a timely request for a hearing to challenge the
assessment of the penalty, the respondent would not be required to pay
the penalty until the OCC has issued a final order of assessment. In
such instances, the respondent would be required to pay the penalty
within 60 days of service of the final order unless the OCC requires a
different time for payment.
Subpart C--Removals, Suspensions, and Prohibitions When a Crime Is
Charged or a Conviction Is Obtained
Subpart C of part 19 includes the rules applicable in hearings
brought against any institution-affiliated party \10\ who the OCC has
suspended or removed from office or prohibited from further
participation in the affairs a depository institution pursuant to
section 8(g) of the FDIA (12 U.S.C. 1818(g)). Part 108 applies similar
rules to officers, directors, or other persons participating in the
conduct of the affairs of a Federal savings association, Federal
savings association subsidiary, or affiliate service corporation,
although part 108 differs slightly on certain procedural issues. As
described below, the proposed rule would amend subpart C to incorporate
certain provisions of part 108 that would be helpful to the OCC in
these adjudicatory actions, specifically apply amended subpart C to
both national banks and Federal savings associations, and remove part
108. Although part 108 does not use the term ``institution-affiliated
party,'' the OCC believes that the scope of part 108 is similar in
substance to this term as defined in Sec. 19.3 by reference to the
FDIA.
---------------------------------------------------------------------------

\10\ ``Institution-affiliated party,'' as defined in Sec. 19.3
by reference to section 3(u) of the FDIA (12 U.S.C. 1813(u)), means:
(1) Any director, officer, employee, or controlling stockholder
(other than a bank holding company or savings and loan holding
company) of, or agent for, an insured depository institution; (2)
any other person who has filed or is required to file a change-in-
control notice with the appropriate Federal banking agency under 12
U.S.C. 1817(j); (3) any shareholder (other than a bank holding
company or savings and loan holding company), consultant, joint
venture partner, and any other person as determined by the
appropriate Federal banking agency who participates in the conduct
of the affairs of an insured depository institution; and (4) any
independent contractor (including any attorney, appraiser, or
accountant) who knowingly or recklessly participates in any
violation of any law or regulation, any breach of fiduciary duty, or
any unsafe or unsound practice which caused or is likely to cause
more than a minimal financial loss to, or a significant adverse
effect on, the insured depository institution.
---------------------------------------------------------------------------

19.110 Scope
The proposed rule would amend Sec. 19.110 to include a definitions
section for subpart C similar to the one for Federal savings
associations in Sec. 108.2 to enhance the understanding and
application of the rule and simplify the rule text. New Sec. 19.110(b)
would define ``petitioner'' to mean an individual who has filed a
petition for informal hearing under subpart C; ``depository
institution'' to mean any national bank, Federal savings association,
or Federal branch of a foreign bank; and ``OCC Supervisory Office'' to
mean the Senior Deputy Comptroller or Deputy Comptroller of the OCC
department or office responsible for supervision of the depository
institution, or, in the case of an individual no longer affiliated with
a particular depository institution, the Deputy Comptroller for Special
Supervision. Furthermore, the proposal would label the existing
paragraph in Sec. 19.110 as paragraph (a), Scope, and retitle the
section heading to account for the addition of definitions.
19.111 Suspension, Removal, or Prohibition
The proposed rule would reorganize Sec. 19.111 into paragraphs;
retitle the section heading, as well as the subpart, to clarify that it
applies to institution-affiliated parties and remove passive sentence
structure. In newly designated Sec. 19.111(a), the proposal would
correct an omission in current Sec. 19.111, which provides that the
Comptroller may serve a notice of suspension or order of removal or
prohibition pursuant to 12 U.S.C. 1818(g) on an institution-affiliated
party and must serve a copy of this notice or order on the appropriate
depository institution. Because 12 U.S.C. 1818(g) also provides for a
notice of prohibition, the proposed rule would add a reference to this
notice of prohibition to this paragraph. In addition, Sec. 108.4
provides for method of service by the Comptroller. Like Sec. 108.4,
newly designated Sec. 19.111(a) would specify the manner of service by
the Comptroller, providing that the Comptroller serve the notice or
order in the manner set forth in Sec. 19.11(c), Service of papers. The
OCC also proposes to move the information regarding a request for a
hearing by the institution-affiliated party to a separate paragraph
Sec. 19.111(b); add the ability to send the hearing request by same
day courier service or overnight delivery service, in addition to by
certified mail or by personal service with a signed receipt as provided
under the current rule; and add the caveat that this submission rule
applies unless instructed otherwise by the Comptroller. This proposed
revision also utilizes the newly defined term ``OCC Supervisory
Office.''
In addition, the proposed rule would include in Sec. 19.111(b)(2)
a provision similar to Sec. 108.5(b) that requires an institution-
affiliated party in a request for a hearing to admit or deny each
allegation, or state that they lack sufficient information to admit or
deny each allegation, which would be treated as a denial. Proposed
Sec. 19.111(b)(2) also provides that denials must fairly meet the
substance of each allegation denied and that general denials are not
permitted; when the institution-affiliated party denies part of an
allegation, that part must be denied and the remainder specifically
admitted; and any allegation in the notice or order which is not denied
is deemed admitted for purposes of the proceeding. Furthermore, similar
to Sec. 108.5(c), proposed Sec. 19.111(b)(2) provides that the
request must state with particularity how the institution-affiliated
party intends to show that its continued service to or participation in
the affairs of the institution would not pose a threat to the interests
of the institution's depositors or impair public confidence in any
institution. The OCC believes that adopting these provisions from the

[[Page 22041]]

Federal savings association rule should help narrow the issues to be
contested and make this rule more consistent with the adjudicatory rule
in Sec. 19.19.
Furthermore, the proposed rule would add the default provision
included in Sec. 108.8 to Sec. 19.111, as new paragraph (c). Under
this new paragraph, if the institution-affiliated party fails to timely
file a petition for a hearing pursuant to Sec. 19.111(b); fails to
appear at a hearing either in person or by attorney, or fails to submit
a written argument where oral argument has been waived pursuant to
Sec. 19.112(c), the notice of suspension or prohibition would remain
in effect until the information, indictment, or complaint is finally
disposed of and the order of removal or prohibition would remain in
effect until terminated by the OCC. The OCC believes the application of
this provision to national banks should clarify that there are
consequences if a petitioner fails to appear or fails to answer.
19.112 Informal Hearing
The proposal would make a number of changes to Sec. 19.112, which
provides the procedures for informal suspension or removal hearings
before the OCC involving an institution-affiliated party. In Sec.
19.112(a), the proposal would update the name of the OCC's Enforcement
and Compliance Division to OCC Enforcement. The proposal also would
remove the requirement in this paragraph that the OCC Supervisory
Office notify the appropriate OCC District Counsel of the hearing, as
this is an unnecessary step.
In Sec. 19.112(c)(2), the proposal would add language to clarify
that, when responding to a petitioner's submissions, the OCC would
serve other parties in the manner set forth in Sec. 19.11(c).
In Sec. 19.112(d), the proposal would amend paragraph (d)(2),
which provides that the informal hearing is not governed by formal
rules of evidence, to clarify that these inapplicable formal rules of
evidence include the Federal Rules of Evidence, as provided in Sec.
19.36. The proposal also would clarify paragraph (d)(3)(i) by breaking
up the first sentence into two sentences. In paragraph (d)(3)(ii), the
proposal would provide that the presiding officer may require, instead
of permit as in the current paragraph, a shorter time period in which
the parties may request oral testimony or witnesses at a hearing, which
is the more accurate action for a presiding officer. As in Sec.
19.27(c), the proposal also would amend Sec. 19.112(d)(3)(ii) to
provide that, by stipulation of the parties or by order of the
presiding officer, a court reporter or other authorized person may
administer the required oath to a witness remotely without being in the
physical presence of the witness. This amendment would update the
current oath requirement for witnesses to account for remote
proceedings and conform this provision to Sec. 19.112(d)(4), which
permits electronic presentations at the hearing. In paragraph
(d)(3)(iii), the proposal would make technical changes to the different
actions a presiding officer may take related to a suspension or
prohibition based on an indictment, information, or complaint and a
removal or prohibition with respect to a conviction or pre-trial
diversion program to better reflect 12 U.S.C. 1818(g). Throughout
paragraph (d) the proposal would make technical corrections by
replacing ``appointed OCC attorney'' with ``OCC.''
The proposed rule also would add a new paragraph (d)(4) to Sec.
19.112 to provide rules governing electronic presentations in the
course of a hearing. As in proposed Sec. 19.35(c), this provision
would provide that, based on the circumstances of each hearing, the
presiding officer may direct the use of, or any party may elect to use,
an electronic presentation during the hearing. If the presiding officer
requires an electronic presentation, each party would be responsible
for its own presentation or related costs unless the parties agree to
allocate presentation responsibilities and costs differently. This new
language is necessary to account for the routine use of electronic
presentations in hearings that existing rules do not address.
Throughout Sec. 19.112, the proposal would utilize the newly
defined term ``OCC Supervisory Office'' and remove passive sentence
structure.
19.113 Recommended and Final Decisions
The proposed rule would make a number of changes to Sec. 19.113,
which provides the procedures for decisions by the presiding officer
and the OCC. The proposal would update Sec. 19.113(c) to permit the
Comptroller to notify the petitioner of a decision by electronic mail
or other electronic means, if the petitioner consents, instead of by
registered mail. The proposal also would make technical changes to
paragraph (c) by replacing ``when'' with ``if'' in describing whether
the petitioner has waived an oral hearing, replacing the ``must'' with
``will'' in describing the Comptroller's notification of the decision,
and replacing the ``and'' with ``or'' in describing the actions that
the Comptroller may affirm, terminate, or modify in its final decision.
In Sec. 19.113(d), the proposal would clarify that there could be more
than one charge against an institution-affiliated party. In Sec.
19.113(f), the proposal would remove the passive sentence structure.
Lastly, the proposal would add headings to each paragraph.
Subparts D Through G--Actions Under the Federal Securities Laws
Subparts D, E, F, and G of part 19 set forth the procedures
applicable to actions taken by the OCC with respect to banks pursuant
to various provisions of the Federal securities laws, including the
Securities Exchange Act of 1934 (Exchange Act). Specifically, subpart D
addresses exemption hearings under section 12(h) of the Exchange Act,
subpart E addresses disciplinary proceedings, subpart F addresses civil
money penalties, and subpart G addresses cease and desist authority.
Although these Federal securities laws also apply to Federal savings
associations, there are no comparable provisions in OCC regulations for
Federal savings associations. Instead, the former OTS relied on the
authority granted under the Exchange Act for these actions rather than
incorporating the authority into its rules and specified in Sec.
109.100(c) that the Uniform Rules of Practice and Procedure in part
109, subpart A applied to proceedings under the Exchange Act. The OCC
proposes to amend the rules in subparts D, E, F, and G to apply to
Federal savings associations and to make other changes, described
below. To streamline the rules, the OCC also proposes to combine
subparts D, E, F, and G into one subpart D entitled ``Actions under the
Federal Securities Laws,'' reserve subparts E, F and G; and remove
Sec. 109.100(c).
19.120 Exemption Hearings Under Section 12(h) of the Securities
Exchange Act of 1934
The proposed rule would move the provisions in subpart D of part 19
to a new Sec. 19.120. Current subpart D governs informal hearings by
the Comptroller to determine whether, pursuant to authority in sections
12(h) and (i) of the Exchange Act (15 U.S.C. 78l(h) and (i)), to exempt
an issuer or a class of issuers from the provisions of sections 12(g),
13, or 14 of the Exchange Act (15 U.S.C. 78l(g), 78m or 78n) or whether
to exempt any officer, director, or beneficial owner of securities of
an issuer from section 16 of the Exchange Act (15 U.S.C. 78p). This
subpart currently covers issuers that are banks whose securities are
registered pursuant to section 12(g) of the Exchange Act (15 U.S.C.
78l(g)). In addition to proposing to apply this provision to issuers
that

[[Page 22042]]

are Federal savings associations, the OCC proposes the following
changes.
Specifically, the proposal would clarify in proposed Sec.
19.120(a) that this section would apply to national bank and Federal
savings association issued securities that may be subject to
registration in addition to those securities already registered. This
change would permit a national bank or Federal savings association to
obtain an exemption from the OCC in advance of registering.
The OCC also proposes that when an applicant provides a copy of its
newspaper notice of an exemption hearing to its shareholders pursuant
to Sec. 19.120(c) it must do so in the same manner as is customary for
shareholder communications, which could be through electronic means.
This change should make it easier and less burdensome to comply with
this notice requirement.
In addition, as in proposed Sec. Sec. 19.35(c) and 19.112(d)(4),
the proposed rule would add a provision, Sec. 19.120(d)(8), governing
electronic presentations in the course of an Exchange Act-related
hearing. This provision would provide that, based on the circumstances
of each hearing, the presiding officer may direct the use of, or any
party may elect to use, an electronic presentation during the hearing.
If the presiding officer requires an electronic presentation during the
hearing, each party would be responsible for its own presentation and
related costs unless the parties agree to another manner by which to
allocate presentation responsibilities and costs. As indicated above,
this new language is necessary to account for the routine use of
electronic presentations in hearings that the existing rule does not
currently address. The proposed rule would make a conforming change in
Sec. 19.120(d)(6) that would allow, by stipulation of the parties or
by order of the presiding officer, a court reporter or other authorized
person to administer the required oath to a witness remotely without
being in the physical presence of the witness. Furthermore, the
proposed rule would clarify in proposed Sec. 19.120(d)(9) that a
transcript of the hearing may be provided by electronic means.
Lastly, the OCC proposes technical changes to Sec. 19.120. The
proposed rule would make minor, non-substantive changes in provisions
redesignated as paragraphs (b) and (c), remove passive sentence
structure in text redesignated as paragraph (d)(9), allow for more than
one applicant in provisions redesignated as paragraphs (d)(4) and (5)
and (e), and change references in this section to the ``Securities and
Corporate Practices Division'' to ``Bank Advisory'' to reflect the
reorganization of the OCC's Law Department.
19.121 Disciplinary Proceedings Involving the Federal Securities Laws
The proposed rule would move the provisions in subpart E of part 19
to a new Sec. 19.121. Current subpart E governs proceedings by the
Comptroller to determine whether to take disciplinary actions against
banks that are transfer agents, municipal securities dealers,
government securities brokers, government securities dealers, or
persons associated with or seeking to become associated with these
institutions.\11\ The proposal would apply this section to Federal
savings associations by defining ``bank'' to mean a national bank or
Federal savings association, and, when referring to a government
securities broker or government securities dealer, a Federal branch or
agency of a foreign bank. In addition, the proposed rule would define
``transfer agent,'' ``municipal securities dealer,'' ``government
securities broker,'' ``government securities dealer,'' and person
associated with a person engaged in these activities or with a bank
engaged in these activities by cross-referencing to definitions in the
Exchange Act. The proposal also makes conforming changes to these
defined terms throughout the section. The OCC also is proposing
technical changes to terms used in this section to correlate them more
closely with terms used in the Exchange Act, including the addition to
the scope of Sec. 19.121 of any person seeking to become associated
with a government securities broker or government securities dealer.
Furthermore, the OCC proposes to remove the reference to the
Comptroller's delegate in redesignated paragraph (a)(2). The definition
of ``Comptroller'' in Sec. 19.3, which applies to Sec. 19.121,
includes a person delegated to perform the functions of the Comptroller
of the Currency. Therefore, this reference is unnecessary. Lastly, the
OCC proposes a clarifying change to replace the term ``party'' with the
more accurate term ``respondent'' in redesignated paragraphs (b)(1) and
(c)(2).
---------------------------------------------------------------------------

\11\ Pursuant to sections 3(a)(34)(G)(i) and 15C(c)(2)(A) of the
Exchange Act (15 U.S.C. 78c(a)(34)(G)(i) and 78o-5(c)(2)(A), the OCC
also may take disciplinary actions against Federal branches and
agencies of foreign banks that are government securities brokers or
government securities dealers or persons associated with or seeking
to become associated with these entities.
---------------------------------------------------------------------------

19.122 Civil Money Penalty Authority Under Federal Securities Laws
The proposed rule would move the provisions in subpart F of part 19
to a new Sec. 19.122. Current subpart F governs proceedings by the
Comptroller to determine whether to impose a civil money penalty
against banks that are transfer agents, municipal securities dealers,
government securities brokers, government securities dealers, or
persons associated with or seeking to become associated with these
institutions.\12\ As with proposed Sec. 19.121, the proposed rule
would apply this provision to Federal savings associations by defining
``bank'' to mean a national bank or Federal savings association and,
when referring to a government securities broker or government
securities dealer, a Federal branch or agency of a foreign bank. The
OCC also proposes to define ``transfer agent,'' ``municipal securities
dealer,'' ``government securities broker,'' ``government securities
dealer,'' and person engaged in these activities or person associated
with a bank engaged in these activities by cross-referencing to
definitions in the Exchange Act. Lastly, as with proposed Sec. 19.121,
the OCC has made other technical changes to terms used in this section
to correlate them more closely with terms used in the Exchange Act,
including the addition of persons seeking to become associated with a
government securities broker or government securities dealer to the
scope of this section.
---------------------------------------------------------------------------

\12\ Id.
---------------------------------------------------------------------------

19.123 Cease and Desist Authority Under Federal Securities Laws
The proposed rule would move the provisions in subpart G of part 19
to a new Sec. 19.123. Current subpart G governs proceedings by the
Comptroller to determine whether to initiate cease-and-desist
proceedings against a national bank for violations of sections 12, 13,
14(a), 14(c), 14(d), 14(f), and 16 of the Exchange Act (15 U.S.C. 78l,
78m, 78n(a), 78n(c), 78n(d), 78n(f), and 78p) or implementing
regulations. The proposed rule would apply this provision to both
national banks and Federal savings associations. It also would update
this provision by adding violations enacted by, or rules or regulations
enacted thereunder, the Sarbanes-Oxley Act in 2002, as amended,\13\
specifically sections 301 \14\ (audit committees), 302 (corporate
responsibility for financial reports), 303 (improper influence on
conduct of audits), 304 (forfeiture of certain

[[Page 22043]]

bonuses and profits), 306 (insider trades during pension fund blackout
periods), 401(b) (accuracy of financial reports), 404 (management
assessment of internal controls), 406 (code of ethics for senior
financial officers), and 407 (disclosure of audit committee financial
expert) \15\ (15 U.S.C. 78j-1(m), 7241, 7242, 7243, 7244, 7261, 7262,
7264, and 7265).
---------------------------------------------------------------------------

\13\ Public Law 107-204, 116 Stat. 745 (2002).
\14\ Adding section 10A(m) to the Exchange Act.
\15\ 15 U.S.C. 78j-1(m), 7241, 7242, 7243, 7244, 7261, 7262,
7264, and 7265.
---------------------------------------------------------------------------

Subpart H--Change in Bank Control
The Change in Bank Control Act (CBCA), which added section 7(j) to
the FDIA (12 U.S.C. 1817(j)) and which the OCC has implemented at 12
CFR 5.50, provides that no person may acquire control of an insured
depository institution unless the appropriate Federal bank regulatory
agency has been given prior written notice of the proposed acquisition.
If, after investigating and soliciting comment on the proposed
acquisition, the agency disapproves the acquisition, the agency must
mail a written notification to the filer within three days of the
decision. The filer may then request an agency hearing on the proposed
acquisition within 10 days of receipt of the disapproval notice. The
Uniform Rules in part 19, subpart A, and part 109, subpart A, apply to
hearings for filers whose proposed acquisition of a national bank or
Federal savings association, respectively, under the CBCA has been
disapproved by the OCC. Subpart H of part 19 provides additional
hearing procedures for insured national banks. Section 5.50, which
applies to both national banks and Federal savings associations,
directs filers who wish to pursue a hearing for a disapproval decision
to part 19, subpart H. However, subpart H refers only to national
banks.
Because 12 CFR 5.50 applies to both national banks and Federal
savings associations, the proposed rule would amend subpart H by adding
language that would make it specifically applicable to Federal savings
associations in addition to national banks. Furthermore, because 12 CFR
5.50 applies to both insured and uninsured institutions and refers all
filers who have been disapproved under Sec. 5.50 to the part 19
procedures, the proposed rule would amend subpart H to make it also
applicable to uninsured institutions. In addition, the proposed rule
would streamline subpart H by removing a description of the CBCA
disapproval process and instead cross-referencing to 12 CFR 5.50 in the
scope of Sec. 19.160 and removing current paragraph (a) in Sec.
19.161, which contains provisions relating to disapproval notification
that are duplicative of 12 CFR 5.50(f). The proposal also would add
section headings to Sec. 19.160 and revise the section heading in
Sec. 19.161.
Subpart I--Discovery Depositions and Subpoenas
Subpart I of part 19 and Sec. 109.102 address the rules applicable
to discovery depositions and subpoenas relating to national banks and
Federal savings associations, respectively. These provisions are
substantively similar but have slightly different wording. The proposed
rule would apply part 19, subpart I to Federal savings associations and
remove Sec. 109.102. The OCC also proposes further changes to subpart
I. In Sec. 19.170(a) and (d), the proposal revises the phrase ``direct
knowledge of matters that are non-privileged, relevant, and material to
the proceeding'' to ``direct knowledge of matters that are non-
privileged and of material relevance to the proceeding.'' This change
would clarify that persons being deposed have information of material
relevance to the proceeding and would be consistent with the
requirements for document discovery in current and proposed Sec.
19.24(b). Furthermore, the proposal would amend paragraph (a) to
specify that a party also may take a deposition of a hybrid fact-expert
witness in addition to an expert and a person, including another party,
who has direct knowledge of matters that meet the standards of the
paragraph, labeled as a ``fact witness'' by this amendment. This
amendment would define a hybrid fact-expert witness as a fact witness
who also will provide relevant expert opinion testimony based on the
witness's training and experience.
The proposal also adds a new paragraph (a)(1) to Sec. 19.170 to
require a party to produce an expert report for any testifying expert
or hybrid fact-expert witness before the witness's deposition and that,
unless otherwise provided by the ALJ, the party must produce such
report at least 20 days prior to the deposition. This new provision
would ensure that a deposing party has the benefit of the expert report
prior to the deposition of an expert or hybrid fact-expert witness and
that the deposing party has sufficient time to review the report prior
to the deposition. Furthermore, new paragraph (a)(2) of Sec. 19.170
would provide that respondents, collectively, are limited to a combined
total of five depositions from all fact witnesses and hybrid fact-
expert witnesses. This paragraph also would provide that Enforcement
Counsel has the same deposition limit. This limit in the number of
depositions would add efficiencies to the discovery process and prevent
deposition requests from delaying the completion of the proceeding.
Lastly, proposed Sec. 19.170(a)(2) provides that a party is entitled
to take a deposition of each expert witness designated by an opposing
party. This provision would codify the right of a party to depose the
opposing party's designated expert witness.
The proposal would amend Sec. 19.170(b) to require that a
deposition notice provide the manner for taking the deposition in
addition to the time and place. In addition, the proposal would add
language to Sec. 19.170(b) to indicate that a deposition notice may
require the witness to be deposed at any place within a State,
territory, or possession of the United States or the District of
Columbia in which that witness resides or has a regular place of
employment or such other convenient place as agreed by the noticing
party and the witness. Paragraph (b) also would permit the parties to
stipulate, or the ALJ to order, that a deposition be taken by telephone
or other remote means. The OCC believes these changes would make it
easier and perhaps less costly for parties to obtain, and witnesses to
provide, depositions, thereby improving the fact-finding process.
In Sec. 19.170(c), the proposal would provide that a party may
take depositions no later than 20 days before the scheduled hearing
date, instead of 10 days as in the current rule, except with permission
of the ALJ for good cause shown. Increasing this time before a hearing
will allow all parties more time to prepare for the hearing.
As elsewhere in this proposal, the OCC proposes to amend Sec.
19.170(d), Conduct of a deposition, to provide that, by stipulation of
the parties or by order of the ALJ, a court reporter or other
authorized person may administer the required oath to a deponent
remotely without being in the physical presence of the deponent. This
amendment would update the current oath requirement for witnesses to
account for remote proceedings and conform this provision to Sec.
19.170(b)(ii), which allows depositions to be taken by telephone or
other remote means.
The proposal would update Sec. 19.170(e)(1)(i) to allow for the
witness's testimony to be recorded by electronic means such as by a
video recording device. The current rule only allows for recording by a
stenotype machine and electronic sound recording device. The proposed
change would update the rule to reflect new

[[Page 22044]]

technology and add flexibility to the testimony process.
Lastly, the proposal would make a non-substantive change to the
heading in paragraph (a) and change the heading of paragraph (g) from
``Fees'' to ``Expenses'' to more accurately describe the subject of the
paragraph.
With respect to Sec. 19.171, the proposal would amend paragraph
(a) to correct a cross-reference and conform the reference to a place
located in the United States to that used elsewhere in part 19. The
proposal also would amend paragraph (b)(2), which requires the party
serving a subpoena to file proof of service with the ALJ, to provide
that this proof of service is not required if so ordered by the ALJ.
The OCC is proposing this change because, in some OCC proceedings, the
ALJ indicated they did not wish to receive this proof of service.
Finally, the proposal would amend paragraph (c) to provide that any
party, in addition to a person named in a subpoena, may file a motion
to quash or modify the subpoena. This amendment would ensure that a
party has the right to seek to quash or modify a third-party deposition
subpoena.
Subpart J--Formal Investigations
Subpart J of part 19 and part 112 address formal investigations
against national banks and Federal savings associations, respectively.
The proposed rule would amend subpart J to make it applicable to both
national banks and Federal savings associations and remove part 112.
Unlike the Federal savings association rule at Sec. 112.7(b), subpart
J does not include a provision specifically providing for motions to
quash subpoenas. The OCC has determined that it is neither necessary
nor appropriate to include this provision because the recipient may
challenge investigative subpoenas in Federal court. However, the
proposal would add a new paragraph (c) to Sec. 19.184 of subpart J
that is similar to the Federal savings association rule at Sec.
112.7(c). This new paragraph would permit subpoenas that require the
attendance and testimony of witnesses or the production of documents,
including electronically stored information, to be served on any person
or entity within any State, territory, or possession of the United
States or the District of Columbia or as otherwise provided by law.
This proposed provision also would subject foreign nationals to
subpoenas if service is made upon a duly authorized agent located in
the United States or in accordance with international requirements for
service of subpoenas. The existing rule for national banks is not clear
on service of foreign nationals, and the adoption of specific language
from the Federal savings association rule should eliminate the disputes
that previously have arisen on this issue. Furthermore, the addition of
language regarding international subpoena requirements would codify
existing OCC practice.
The OCC also proposes further changes to subpart J. First, the OCC
is proposing to amend Sec. 19.181, Confidentiality of formal
investigations. Currently, this provision provides that information or
documents obtained in the course of a formal investigation are
confidential and may be disclosed only in accordance with the
provisions of 12 CFR part 4. The OCC proposes to describe in more
detail the information or documents that are confidential to better
ensure the confidentiality of formal investigations. Specifically,
proposed Sec. 19.181 would state that the entire record of any formal
investigative proceeding, including the resolution or order of the
Comptroller authorizing or terminating the proceeding; all subpoenas
issued by the OCC during the investigation; and all information,
documents, and transcripts obtained by the OCC in the course of a
formal investigation, are confidential and may be disclosed only in
accordance with the provisions of part 4. The proposal also would add
that this information may be disclosed pursuant to the OCC discovery
obligations under subpart A of part 19.
Second, the OCC proposes to amend Sec. 19.182, Order to conduct a
formal investigation, to clarify the list of actions persons authorized
to conduct an investigation may take. Currently, this section provides
that these persons may, among other things, issue subpoenas duces
tecum, administer oaths, and receive affirmations as to any matter
under investigation by the Comptroller. The proposal would add that
these authorized persons also may take or cause to be taken testimony
under oath, issue subpoenas other than subpoenas duces tecum, and
modify subpoenas. This amendment would make this section more
consistent with the powers enumerated in the relevant underlying
statutes, including 12 U.S.C. 1818(n) and 1820(c). The proposal also
would make a technical correction to indicate that authorized persons
may administer affirmations rather than receive affirmations. Section
19.182 also currently provides that, upon application and for good
cause, the Comptroller may limit, modify, or withdraw the order at any
stage of the proceedings. The proposal would clarify that the
Comptroller may also terminate the order. Finally, the proposal would
amend Sec. 19.182 to specifically indicate that the persons conducting
the investigation are empowered by the Comptroller to do so.
Third, the proposed rule would amend Sec. 19.183, Rights of
witnesses. Current paragraph (a) provides that any person who is
compelled or requested to furnish testimony, documentary evidence, or
other information with respect to any matter under formal investigation
must, on request, be shown the order initiating the investigation. The
proposal would amend this provision to provide that such persons may
not retain copies of the order without first receiving written approval
of the OCC. This amendment would ensure the confidentiality of the
order.
Current paragraph (b) of Sec. 19.183 provides that a person
testifying in a formal investigation may be accompanied, represented,
and advised by counsel, and indicates that this right to counsel means
that the attorney may be present at all times while the person is
testifying and that the attorney may, among other things, question the
person briefly at the conclusion of the testimony to clarify answers
and make summary notes during the testimony solely for use of the
person testifying. The proposal would amend this description of
permissible attorney activities to provide that the attorney's
questioning of the person may be on the record. This change would
ensure a more complete formal record of the proceeding. In addition,
the proposal would provide that the notes taken by the attorney during
testimony may be used solely in representing the person. This change
would allow the attorney to use these notes and not restrict use of the
notes to the person testifying thereby enabling the attorney to better
represent their client.
Current paragraph (c) of Sec. 19.183 provides that any person who
has given or will give testimony and counsel representing the person
may be excluded from the proceedings during the taking of testimony of
any other witness. The proposal would amend this provision to specify
that such person and counsel may be excluded during the testimony of
any other person at the discretion of the OCC or the OCC's designated
representative. Furthermore, the proposal would provide that neither
attorney(s) for the institution(s) affiliated with the testifying
person nor attorneys for any other interested persons have any right to
be present during the testimony of any person not personally
represented by such attorney. These changes would ensure the
confidentiality and integrity

[[Page 22045]]

of the proceeding by mitigating conflicts of interest and clarify that
it is the OCC or OCC's designated representative who makes the decision
on exclusion.
Current paragraph (d) of Sec. 19.183 provides that any person who
is compelled to give testimony is entitled to inspect any transcript
that has been made of the testimony but may not obtain a copy if the
Comptroller's representatives conducting the proceedings have cause to
believe that the contents should not be disclosed pending completion of
the investigation. The proposal would remove the burden of proving
``cause'' included in this provision, as the OCC finds this
unnecessary. The proposal also would eliminate the language that limits
the release of the transcript pending completion of the investigation
because the reasons for not disclosing the transcript may persist
beyond the conclusion of any pending investigation.
Paragraph (e) of Sec. 19.183 provides that any designated
representative conducting an investigative proceeding must report to
the Comptroller any instances where a person has been guilty of
dilatory, obstructionist, or insubordinate conduct during the course of
the proceeding or any other instance involving a violation of this
part. As this paragraph does not pertain to rights of witnesses, and to
make clear that this provision applies to all formal investigations
covered by subpart J, the OCC proposes to redesignate this paragraph as
a new Sec. 19.185. In redesignated Sec. 19.185, the OCC proposes
replacing the phrase ``has been guilty of'' with ``has engaged in.''
The phrase ``has been guilty of'' is unclear in the context of this
rule. Furthermore, the OCC does not believe it is appropriate for a
person to be found guilty of this behavior before the designated
representative reports this person to the OCC. With this change, the
OCC may investigate or take other action with respect to this
individual to ensure the fairness and accuracy of the proceeding in a
more timely manner. This change also conforms the scope of this
provision with the scope of a similar provision, Sec. 19.197, which
involves the reporting of certain conduct of an individual practicing
before the OCC.
Fourth, the proposal would amend Sec. 19.184, Service of subpoena
and payment of witness expenses, by removing the specific language in
paragraph (b) regarding the payment of witnesses and instead cross-
reference to the more detailed rule for witness payments contained in
revised Sec. 19.14, discussed previously.
Lastly, the OCC proposes technical changes to subpart J. The
proposal would replace references to ``the Comptroller'' with ``the
OCC'' in Sec. 19.183(b) and (d) and in redesignated Sec. 19.185 and
replace the term ``representatives'' with ``designated
representatives'' in Sec. 19.183(d)'' to align the provisions more
closely with the statute. The proposal also would remove the references
to the ``Comptroller's delegate'' in Sec. Sec. 19.180 and 19.182 as
the definition of ``Comptroller'' in Sec. 19.3, which applies to
subpart J, includes a person delegated to perform the functions of the
Comptroller of the Currency. In addition, the proposal would add
reference to Federal branches and agencies in Sec. 19.180 to more
completely describe those entities that are subject to the OCC's
examination authority. Finally, the proposal would add section headings
to Sec. 19.183.
Subpart K--Parties and Representational Practice Before the OCC;
Standards of Conduct
Subpart K of part 19 contains rules relating to parties and
representational practice before the OCC. The OCC is proposing mostly
technical changes to this subpart.
First, in Sec. 19.190, Scope, the proposal would make a confirming
change to a cross-reference to reflect this rulemaking's proposed
amendments to subpart D.
Second, the proposal would amend the definition of ``practice
before the OCC'' in paragraph (a) of Sec. 19.191, Definitions.
Currently, the OCC defines the term to include any matters connected
with presentations to the OCC or any of its officers or employees
relating to a client's rights, privileges, or liabilities under laws or
regulations administered by the OCC. The proposed rule would clarify
this statement so that it applies to both written and oral
presentations. Section 19.191(a) also provides that the term ``practice
before the OCC'' does not include work prepared for a bank solely at
its request for use in the ordinary course of its business. The
proposal would amend this statement so that it also includes work
prepared for a Federal savings association and a Federal branch or
agency of a foreign bank, and change ``bank'' to ``national bank.''
These changes are part of the OCC's application of part 19 to Federal
savings associations and the OCC's specific inclusion of Federal
branches and agencies in part 19 to clarify the application of part 19
to all entities supervised by the OCC.
Third, the proposal would amend Sec. 19.194, Eligibility of
attorneys and accountants to practice, by removing the phrase ``who is
qualified to practice as an attorney'' in paragraph (a) and the phrase
``who is qualified to practice as a certified public accountant or
public accountant'' in paragraph (b). Section 19.191 defines the terms
``attorney'' and ``accountant'' and these definitions reference
qualification requirements. Therefore, these phrases are superfluous.
Fourth, the proposal would amend Sec. 19.196, Disreputable
conduct, which provides a nonexclusive list of disreputable conduct for
which an individual may be censured, debarred, or suspended from
practice before the OCC. Paragraph (d) of this section includes on this
list disbarment or suspension from practice as an attorney or as a
certified public accountant or public accountant by any duly
constituted authority of any State, possession, or commonwealth of the
United States or the District of Columbia for the conviction of a
felony or misdemeanor involving moral turpitude in matters relating to
the supervisory responsibilities of the OCC, where the conviction has
not been reversed on appeal. The proposed rule would delete the phrase
``in matters relating to the supervisory responsibilities of the OCC''
so as not to limit the felony or misdemeanor conviction to only OCC-
related matters. The OCC believes that an individual engaged in any of
the conduct listed in this section, whether or not related to OCC
supervisory matters, should not practice before the OCC.
Fifth, the proposal would replace the reference to the OTS in Sec.
19.196(g) with ``the former OTS,'' as the OTS no longer exists.
Sixth, the proposal would amend Sec. 19.197, which provides the
standards and rules for initiating disciplinary proceedings. Paragraph
(a) of this section provides that an individual, including any employee
of the OCC, who has reason to believe that an individual practicing
before the OCC in a representative capacity has engaged in any conduct
that would serve as a basis for censure, suspension, or debarment under
Sec. 19.192 (such as contemptuous conduct, materially injuring or
prejudicing another party, violating a law or order, or unduly delaying
proceedings) may report this conduct to the OCC or a person delegated
to receive this information by the Comptroller. The OCC is proposing to
broaden the application of this paragraph to conduct under all of
subpart K, which includes incompetence (Sec. 19.195) and

[[Page 22046]]

disreputable conduct (Sec. 19.196), instead of conduct only under
Sec. 19.192. The OCC believes that an individual found to be
incompetent or to have engaged in disreputable conduct also should be
subject to a disciplinary proceeding under this section.
Seventh, the proposal would amend Sec. 19.198, Conferences, to add
the terms ``censure'' in paragraph (a) and ``debarment'' in paragraph
(b) to correct missing references. The proposal also would change the
heading on Sec. 19.198(b) from ``Resignation or voluntary suspension''
to ``Voluntary suspension or debarment'' so that it more accurately
reflects the subject of the paragraph.
Eighth, the proposal would amend paragraph (a) of Sec. 19.200,
which provides that if the final order against the respondent is for
debarment, the individual may not practice before the OCC unless
otherwise permitted to do so by the Comptroller, by clarifying that the
Comptroller's permission to permit such practice is pursuant to Sec.
19.201. Section 19.201 provides that the Comptroller may entertain a
petition for reinstatement after the expiration of the time period
designated in the order of debarment and that the Comptroller may grant
reinstatement only if satisfied that the petitioner is likely to act in
accordance with part 19 and if granting reinstatement would not be
contrary to the public interest. Section 19.201 further provides that
any request for reinstatement is limited to written submissions unless
the Comptroller, in their discretion, affords the petitioner a hearing.
The amendment merely confirms that a debarred respondent only may be
reinstated pursuant to the process set forth in Sec. 19.201. It makes
no substantive change. The proposal also would revise the heading of
Sec. 19.200 to reflect the order of topics covered by the section.
Ninth, the proposal would remove the references to the
``Comptroller's delegate'' in Sec. Sec. 19.197(b) and (c), 19.199, and
19.200(d) as the definition of ``Comptroller'' in Sec. 19.3, which
applies to subpart K, includes a person delegated to perform the
functions of the Comptroller of the Currency.
Finally, the proposal would make several minor, nonsubstantive
wording changes throughout subpart K.
Subpart L--Equal Access to Justice Act
In general, EAJA,\16\ codified at 5 U.S.C. 504, authorizes the
payment of attorney's fees and other expenses to eligible parties who
prevail over the United States in certain adversary adjudications,
absent a showing by the government that its position was substantially
justified or that special circumstances make an EAJA award unjust. EAJA
requires each agency to issue rules that establish uniform procedures
for the submission and consideration of applications for an EAJA
award.\17\ The OCC currently meets this requirement in subpart L of
part 19, which provides that EAJA implementing regulation promulgated
by the U.S. Department of the Treasury (Treasury), set forth at 31 CFR
part 6, are applicable to formal adjudicatory proceedings under part
19. The OCC is proposing to delete the cross-reference to the Treasury
regulation and amend subpart L to set forth EAJA regulations
specifically applicable to certain OCC adversary adjudications
conducted under part 19.
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\16\ Public Law 96-481, title II, sec. 203(a)(1), (c) (1980),
revived and amended Public Law 99-80, sec. 1, 6 (1985).
\17\ 5 U.S.C. 504(c)(1). EAJA also requires that each agency
issue its EAJA rule after consultation with the Chairman of ACUS. 5
U.S.C. 504(c)(1). Pursuant to instructions provided by ACUS in the
preamble to the Model Rule, the OCC will notify the Office of the
Chairman of ACUS of the proposed rule and will consider any comments
provided by ACUS when drafting a final rule. See 84 FR 38934.
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The OCC has based proposed subpart L on the revised model rule
implementing EAJA published in 2019 by the Administrative Conference of
the United States (ACUS) (Model Rule).\18\ As discussed below, the OCC
has customized the proposed rule in certain places to reflect the OCC's
procedures in adversary adjudications, reorganized a few provisions
included in the Model Rule, made other changes based on the Treasury
EAJA rule as well as the EAJA rules of the Board and FDIC \19\ and made
non-substantive grammatical or stylistic changes. Although the
Treasury, Board, and FDIC EAJA rules are based on earlier versions of
the ACUS model rule, the OCC believes that these provisions remain
useful and clarify the application of EAJA to OCC adversary
proceedings.
---------------------------------------------------------------------------

\18\ 84 FR 38934 (Aug. 18, 2019). ACUS originally issued an EAJA
model rule in 1981 (46 FR 32900 (June 25, 1981)) and previously
revised its model rule in 1986 (51 FR 16659 (May 6, 1986)
(previously codified at 1 CFR 315)). ACUS issued its model rule to
assist agencies when adopting their EAJA rules and encourages
agencies to set out and implement this model rule as part of their
own EAJA rules. Id. The Treasury EAJA rule is based on the 1981 EAJA
model rule.
\19\ 12 CFR 263, subpart G (Board) and 12 CFR 308, subpart P
(FDIC). Both the Board and FDIC EAJA rules are based on the earlier
versions of the ACUS model rule.
---------------------------------------------------------------------------

Authority and scope; waiver. Proposed Sec. 19.205 describes the
general purpose and scope of EAJA. Specifically, an eligible party may
receive an award of attorney fees and other expenses when it prevails
over an agency in certain administrative proceedings (adversary
adjudications) unless the agency's position was substantially justified
or special circumstances make an award unjust. Furthermore, as provided
in the Treasury regulations, and as determined by EAJA caselaw, this
proposed provision provides that no presumption under this subpart
arises that the agency's position was not substantially justified
because the agency did not prevail.\20\
---------------------------------------------------------------------------

\20\ See 31 CFR 6.5. See also, e.g., Pierce v. Underwood, 487
U.S. 552 (1988); Miles v. Bowen, 632 F. Supp. 282 (M.D. Ala. 1986).
---------------------------------------------------------------------------

The proposed rule does not contain the provision in the Model Rule
that permits an eligible party, even if not a prevailing party, to
receive an award under EAJA when it successfully defends against an
excessive demand made by the agency. Although EAJA permits excessive
demand awards, EAJA specifically provides that excessive demand awards
be paid ``only as a consequence of appropriations provided in
advance.'' \21\ Because the OCC is not an appropriated agency and
instead receives its funding through assessments on the institutions it
regulates, the OCC believes that this EAJA excessive demand provision
does not apply to the OCC. Consequently, the OCC's proposed EAJA rule
does not include provisions in the Model Rule specifically related to
excessive demand awards.
---------------------------------------------------------------------------

\21\ 5 U.S.C. 504(a)(4).
---------------------------------------------------------------------------

As provided in proposed Sec. 19.205(b), the OCC has determined
that proceedings listed in Sec. Sec. 19.1, 19.110, 19.120, 19.190,
19.230, and 19.241 meet the EAJA definition of ``adjudicatory
adjudications'' and are covered by subpart L.
Paragraph (c) of Sec. 19.205 provides that after reasonable notice
to the parties, the presiding officer or OCC may waive, for good cause
shown, any provision contained in subpart L as long as the waiver is
consistent with the terms and purpose of the EAJA. Although this
provision is not included in the ACUS model rule, the OCC finds that
this provision would provide useful discretion to the presiding officer
and the OCC, as relevant, during the EAJA process and would provide for
the smoother conduct of EAJA proceedings should Congress subsequently
amend EAJA and the OCC has not yet updated its corresponding EAJA
implementing regulations.
Definitions. Proposed Sec. 19.206 sets forth definitions of terms
used in this subpart. Unless otherwise noted, these

[[Page 22047]]

definitions are substantively identical to the definitions in the Model
Rule and based on the definitions in EAJA.
Paragraph (a) would define ``adversary adjudication'' to mean an
adjudication under 5 U.S.C. 554 in which the position of the OCC is
represented by Enforcement Counsel.\22\ With certain exceptions,
section 554 applies to adjudications required by statute to be
determined on the record after opportunity for an agency hearing.\23\
19.230, and 19.241. Unlike EAJA and the Model Rule, the OCC's proposed
definition would not specifically exclude from this definition
adjudications related to setting rates, licensing decisions, contract
appeals, and the Religious Freedom Restoration Act of 1993.\24\ These
categories of adjudications are not covered by part 19 and therefore a
specific exclusion in the OCC rule is not necessary.
---------------------------------------------------------------------------

\22\ See 5 U.S.C. 504(b)(1)(C) and Sec. 2.01(b) of the Model
Rule.
\23\ Section 554 of title 5 does not apply to: (1) A matter
subject to a subsequent trial of the law and the facts de novo in a
court; (2) the selection or tenure of an employee, except a [sic]
administrative law judge appointed under section 3105 of this title;
(3) proceedings in which decisions rest solely on inspections,
tests, or elections; (4) the conduct of military or foreign affairs
functions; (5) cases in which an agency is acting as an agent for a
court; or (6) the certification of worker representatives. 5 U.S.C.
504(a).
\24\ EAJA and the Model Rule specifically (i) exclude an
adjudication for the purpose of establishing or fixing a rate or for
the purpose of granting or renewing a license, (ii) any appeal of a
decision made pursuant to section 7103 of title 41 before an agency
board of contract appeals as provided in section 7105 of title 41,
(iii) any hearing conducted under chapter 38 of title 31, and (iv)
the Religious Freedom Restoration Act of 1993.
---------------------------------------------------------------------------

Paragraph (b) would define ``final disposition'' as the date on
which a decision or order disposing of the merits of the proceeding, or
any other complete resolution of the proceeding such as a settlement or
voluntary dismissal becomes final and unappealable, both within the OCC
and to the courts.\25\
---------------------------------------------------------------------------

\25\ See Sec. 2.01(e) of the Model Rule.
---------------------------------------------------------------------------

Paragraph (c) would define ``party'' to mean a party, defined in 5
U.S.C. 551(3),\26\ that is (1) an individual whose net worth did not
exceed $2,000,000 at the time that the adversary adjudication was
initiated or (2) any owner of an unincorporated businesses, or any
partnership, corporation, unit of local government or organization with
a net worth not exceeding $7,000,000 and no more than 500 employees at
the time that the adversary adjudication was initiated, except that the
net worth limitation does not apply to certain tax-exempt organizations
described in section 501(c)(3) of the Internal Revenue Code of 1986 or
a cooperative association as defined in section 15(a) of the
Agricultural Marketing Act.\27\ This proposed definition also provides
that the net worth and number of employees of the applicant and, where
appropriate, any of its affiliates must be aggregated when determining
the applicability of this definition. The OCC is including this
aggregation provision, which is not included in the Model Rule,
because, as discussed below, the OCC is proposing to require
information on affiliates for certain parties.
---------------------------------------------------------------------------

\26\ Section 551(3) defines ``party'' to include a person or
agency named or admitted as a party, or properly seeking and
entitled as of right to be admitted as a party, in an agency
proceeding, and a person or agency admitted by an agency as a party
for limited purposes.
\27\ See 5 U.S.C. 504(b)(1)(B) and Sec. 2.01(f) of the Model
Rule.
---------------------------------------------------------------------------

Paragraph (d) would define ``position of the OCC'' to mean the
OCC's position in an adversary adjudication as well as the action or
failure to act by the OCC upon which the adversary adjudication is
based. This paragraph also would provide that fees and other expenses
may not be awarded to a party for any portion of the adversary
adjudication if the party has unreasonably drawn out the
proceeding.\28\
---------------------------------------------------------------------------

\28\ See 5 U.S.C. 504(b)(1)(E) and Sec. 2.01(g) of the Model
Rule.
---------------------------------------------------------------------------

Paragraph (e) would define ``presiding officer'' as an official,
whether an administrative law judge or otherwise, that presided over
the adversary adjudication or the official presiding over an EAJA
proceeding.\29\ As noted below in proposed Sec. 19.207, upon receipt
of an EAJA application, the OCC will, to the extent feasible, refer the
matter to the official who heard the underlying adversary adjudication.
---------------------------------------------------------------------------

\29\ See the definition of ``adjudicative officer'' in 5 U.S.C.
504(b)(1)(D) and Sec. 2.01(a) of the Model Rule. The OCC has chosen
to use the term ``presiding officer'' instead of ``adjudicative
officer'' as that is the term used elsewhere in part 19.
---------------------------------------------------------------------------

Application requirements. Proposed Sec. 19.207 sets out
application requirements for a party seeking an award under EAJA. This
section would require a party to file an application with the OCC
within 30 days after the OCC's final disposition of the adversary
adjudication. It would require the application to include (1) the
identity of the applicant and the adjudicatory proceeding for which an
award is sought; (2) a showing that the applicant has prevailed and
identification of the OCC position that the applicant alleges was not
substantially justified; (3) the basis for the applicant's belief that
the position was not substantially justified; (4) unless the applicant
is an individual, the number of employees of the applicant and a brief
description of the type and purpose of the organization or business;
(5) a showing of how the applicant meets the definition of ``party''
under proposed Sec. 19.206(e), including documentation of net worth
pursuant to proposed Sec. 19.208; (6) documentation of the fees and
expenses sought per proposed Sec. 19.209; (7) signature by the
applicant or the applicant's authorized officer or attorney; (8) any
other matter the applicant wishes the OCC to consider in determining
whether and in what amount an award should be made; and (9) written
verification under penalty of perjury that the information contained in
the information provided is true and correct. These application
requirements are based on Sec. 3.01 of the Model Rule,\30\ except for
the provision, taken from the Treasury rule,\31\ providing that the
applicant may include other matters for the OCC to consider. The OCC
believes that this further information could assist the presiding
officer when reviewing the EAJA claim and, by including this
information at the application stage, may make the EAJA process more
efficient.
---------------------------------------------------------------------------

\30\ See also 5 U.S.C. 504(a)(2).
\31\ 31 CFR 6.8(d).
---------------------------------------------------------------------------

Although not included in EAJA or the Model Rule, proposed Sec.
19.207(c) provides that, upon receipt of an EAJA application, the OCC
will to the extent feasible refer the matter to the official who heard
the underlying adversary adjudication. The OCC is proposing this
provision because it believes that the official presiding over the
adversary proceeding subject to the EAJA application is in the best
position to review the EAJA application, and that this referral
directive should be included in the proposed rule for clarity.
Net worth exhibit. Proposed Sec. 19.208 requires specific net
worth documentation to accompany certain EAJA applications. This
documentation is necessary to determine whether the applicant meets the
definition of ``party'' under proposed Sec. 19.206(c) and therefore be
eligible for an EAJA award. Paragraph (a) would require an applicant,
other than an applicant that is a non-profit or a cooperative
association, to provide with its EAJA application a detailed exhibit of
the applicant's, and where applicable, any of its affiliates' net worth
at the time the adversary adjudication was initiated. Unless otherwise
required, this paragraph would permit this exhibit to be in any form
convenient to the applicant that provides full disclosure of the
applicant's and affiliates' assets and liabilities sufficient to
determine whether the applicant qualifies under

[[Page 22048]]

the standards of this subpart. Furthermore, this paragraph would permit
a presiding officer to require an applicant to file additional
information to determine its eligibility for an award. These net worth
exhibit requirements are taken from Sec. 3.02 of the Model Rule,
except that the proposal would require the net worth information from
affiliates, where appropriate. Because of the structure and
interrelatedness of many financial institutions, the OCC believes that
affiliate net worth will often prove relevant when determining
eligibility for an EAJA award. The OCC notes that the EAJA rules issued
by Treasury, the Board, and the FDIC require net worth information from
affiliates to determine eligibility under EAJA.\32\
---------------------------------------------------------------------------

\32\ See 31 CFR 6.4(f) (Treasury); 12 CFR part 263.105 (Board);
and 12 CFR part 308.177 (FDIC).
---------------------------------------------------------------------------

Proposed Sec. 19.208 also includes further provisions included in
the Board's and the FDIC's EAJA regulation but not included in the
Model Rule.\33\ These provisions provide more detailed information as
to what the OCC will accept in satisfaction of the net worth exhibit
requirement or pertain specifically to national banks and Federal
savings associations. Specifically, paragraph (a)(1) would permit the
use of unaudited financial statements for individual applicants as well
as certain financial statements or reports submitted to a Federal or
State agency for determining individual net worth, unless the presiding
officer or the OCC otherwise requires. For applicants or affiliates
that are not banks or savings associations, paragraph (a)(2) provides
that net worth will be considered to be the excess of total assets over
total liabilities as of the date the underlying proceeding was
initiated. For banks and savings associations, paragraph (a)(3) would
require the submission of a Consolidated Report of Condition and Income
(Call Report) and would provide that net worth would be the total
equity capital as reported in the Call Report filed for the last
reporting date before the initiation of the proceeding.
---------------------------------------------------------------------------

\33\ Id.
---------------------------------------------------------------------------

Similar to Sec. 3.02 of the model rule, paragraph (b) would
provide that the net worth exhibit will be included in the public
record of the proceeding unless an applicant believes that there are
legal grounds for withholding it from disclosure and requests that the
documents be filed under seal or otherwise treated as confidential.
Documentation of fees and expenses. As provided in the Sec. 3.03
of the Model Rule, proposed Sec. 19.209 would require applications to
be accompanied by adequate documentation of the fees and other expenses
incurred after initiation of the adversary adjudication. This
information is necessary to determine any EAJA award. Specifically,
this section would require a separate itemized statement for each
professional firm or individual whose services are covered by the
application showing the hours spent in connection with the proceeding
by each individual, a description of the specific services provided,
the rate at which each fee has been computed, any expenses for which
reimbursement is sought, the total amount claimed, and the total amount
paid or payable by the applicant or by any other person or entity for
the services provided. This section also would authorize a presiding
officer to require an applicant to provide vouchers, receipts, or other
substantiation for any fees or expenses claimed.
Unlike the Model Rule, this provision also provides that an
application seeking an increase in fees to account for inflation
pursuant to proposed Sec. 19.215(d)(1)(i), discussed below, also must
include adequate documentation of the change in the consumer price
index for the attorney or agent's locality.
Filing and service of documents. As in Sec. 4.01 of the Model
Rule, proposed Sec. 19.210 requires that applications for an award, or
any accompanying documentation related to an application, be filed and
served on all parties to the proceeding in accordance with Sec. 19.11,
Service of papers, except for confidential information pursuant to
proposed Sec. 19.208(b).
Answer to application. As provided in Sec. 4.02 of the Model Rule,
proposed Sec. 19.211 provides that Enforcement Counsel may file an
answer to an EAJA application within 30 days after service of the
application except in cases involving settlement negotiations under
proposed Sec. 19.213. This section would provide that failure to file
an answer within 30 days may be treated as consent to the award
requested unless Enforcement Counsel requests an extension of time for
filing or files a statement of intent to negotiate a settlement under
proposed Sec. 19.213. This section would require the answer to explain
in detail any objections to the award requested and identify the facts
supporting Enforcement Counsel's position. For any facts not already in
the record of the proceeding, Enforcement Counsel would be required to
provide supporting affidavits or a request for further proceedings
under proposed Sec. 19.214 with the answer. Unlike the Model Rule,
proposed Sec. 19.211 does not include information related to
settlement negotiations and instead cross-references to Sec. 19.213,
which discusses settlement of an EAJA award. The OCC believes that, for
ease of use, all settlement provisions should be included in the same
section of the regulation.
Reply. As in Sec. 4.03 of the Model Rule, proposed Sec. 19.212
would permit an applicant to reply within 15 days after service of an
answer. For facts not already in the record, the applicant would be
required to provide supporting affidavits or a request for further
proceedings pursuant to Sec. 19.214 with the answer.
Settlement. As in Sec. 4.04 of the Model Rule, proposed Sec.
19.213 would provide that the applicant and Enforcement Counsel may
agree to a proposed settlement before final action on the application,
either in connection with a settlement of the underlying proceeding or
after conclusion of an underlying proceeding, in accordance with the
OCC's standard settlement procedure pursuant to Sec. 19.15,
Opportunity for informal settlement. In a case where a prevailing party
and Enforcement Counsel agree on a proposed settlement of an award
before an EAJA application has been filed, this section would require
the application to be filed with the proposed settlement. Proposed
Sec. 19.213 also would clarify that, if a proposed settlement of an
underlying proceeding provides for each side to pay its own expenses
and the settlement is accepted, no application under this subpart may
be filed. However, this section differs from Sec. 4.04 of the Model
Rule by including a provision the Model Rule includes in its section
relating to an answer to an application, Sec. 4.02. Specifically,
proposed Sec. 19.213 would specify that, if after an application is
submitted, Enforcement Counsel and the applicant believe that they can
reach a settlement, they may file a joint statement of their intent to
negotiate a settlement. Filing this statement would extend the time for
filing an answer under proposed Sec. 19.211 for an additional 30 days.
Further extensions could be granted by the presiding officer at the
joint request of the applicant and Enforcement Counsel. As indicated
above, the OCC believes that this provision is better placed in Sec.
19.213 so that all settlement information is included in the same
section of the regulation.
Further Proceedings. Ordinarily, the determination of an EAJA award
would be made on the basis of the written record. However, proposed
Sec. 19.214(a) would permit an applicant or Enforcement Counsel to
request the

[[Page 22049]]

filing of additional written submissions, an informal conference, oral
argument, discovery, or an evidentiary hearing with respect to issues
other than whether the OCC's position was substantially justified, such
as issues involving the applicant's eligibility or substantiation of
fees or expenses. The presiding officer may permit these further
proceedings if necessary for a full and fair decision on the
application. The presiding officer also may order these additional
proceedings on its own initiative. In addition, paragraph (a) would
require that further proceedings be held as promptly as possible so as
not to delay resolution of the EAJA application. The proposed rule
lists applicant eligibility or substantiation of fees and expenses as
examples of permissible issues for further proceedings. Paragraph (a)
is based on Sec. 4.05 of the Model Rule. However, proposed Sec.
19.214 does not contain the Model Rule's statement regarding the basis
for a decision on whether the OCC's position was substantially
justified. The OCC believes it is more appropriate to include this
statement in Sec. 19.215, Decisions. In addition, to list all possible
further proceedings available more completely, the proposed rule also
permits the applicant or Enforcement Counsel to request an informal
conference, which is not listed in the Model Rule.
As in Sec. 4.05 of the Model Rule, paragraph (b) of proposed Sec.
19.214 would require that any request for further proceedings
specifically identify the information sought or any disputed issues and
explain why additional proceedings are necessary to resolve the issues.
Decision. The OCC's proposed section on EAJA decisions, Sec.
19.215, is based on 5 U.S.C. 504(a)(3) and in part on Sec. 4.06 of the
Model Rule. Proposed paragraph (a) of Sec. 19.215 provides that a
presiding officer must base its decision on whether the position of the
OCC was substantially justified on the administrative record as a whole
of the adversary adjudication for which fees and other expenses are
sought. The Model Rule includes this provision in its section on
further proceedings, Sec. 19.214. However, the OCC believes this
requirement better belongs in the section of the rule outlining EAJA
decisions because it provides parameters for the presiding officer's
decision.
As in Sec. 4.06 of the Model Rule, proposed paragraph (b) of Sec.
19.215 would mandate the timing of the presiding officer's decisions.
It would require the presiding officer to issue a recommended decision
in writing on an EAJA application within 90 days after the time for
filing a reply or within 90 days of the completion of further
proceedings held pursuant to proposed Sec. 19.214.\34\
---------------------------------------------------------------------------

\34\ The Model Rule provides that an agency may determine the
specific time period for this section.
---------------------------------------------------------------------------

Also, as in Sec. 4.06 of the Model Rule, proposed paragraph (c) of
Sec. 19.215 provides that a decision must include written findings and
conclusions on an applicant's eligibility and status as a prevailing
party. The decision must also include, if applicable, an explanation of
the reasons for any difference between the amount requested and the
amount awarded, findings on whether the OCC's position was
substantially justified, whether the applicant unduly and unreasonably
protracted the proceedings, or whether special circumstances would make
an award unjust. Paragraph (c) differs from Sec. 4.06 of the Model
Rule in that it includes language taken from Sec. 4.05 of the Model
Rule. Specifically, paragraph (c) provides that the presiding officer
must determine whether or not the position of the OCC was substantially
justified on the basis of the administrative record as a whole of the
adversary adjudication for which fees and other expenses are sought.
Proposed paragraph (d) of Sec. 19.215 would provide the
requirements for EAJA decisions. Paragraphs (d)(1), (2) and (3) of
proposed Sec. 19.215 are not included in the Model Rule but are based
on the EAJA statute, provisions included in the FDIC and Board EAJA
rules,\35\ and provisions included in the prior ACUS model rule that
ACUS determined were largely substantive matters beyond the
Conference's statutory charge.\36\ The OCC believes that these
provisions provide important details on the basis for EAJA award
amounts that should apply to all EAJA applications and be included in
its EAJA regulation.
---------------------------------------------------------------------------

\35\ 12 CFR 263.106, 308.175.
\36\ See 84 FR 38934.
---------------------------------------------------------------------------

Specifically, proposed Sec. 19.215(d)(1) provides that EAJA awards
may include the reasonable expenses of expert witnesses; the reasonable
cost of any study, analysis, report, test, or project; and reasonable
attorney or agent fees incurred after initiation of the adversary
adjudication subject to the EAJA application. This paragraph also
provides that the presiding officer will base awards on prevailing
market rates for the kind and quality of the services furnished, even
if the services were provided without charge or at reduced rate to the
applicant. However, no award for the fee of an attorney or agent under
this subpart may exceed the hourly rate specified in EAJA (5 U.S.C.
504(b)(1)(A)) except, as permitted by EAJA, to account for inflation as
requested by the applicant and documented in the EAJA application or if
a special factor, such as the limited availability of qualified
attorneys or agents for the proceedings involved, justifies a higher
fee.\37\ Pursuant to EAJA, this paragraph also would prohibit an award
for expert witness fees that exceed the highest rate paid for expert
witnesses by the OCC.\38\
---------------------------------------------------------------------------

\37\ 5 U.S.C. 504(b)(1)(A).
\38\ Id.
---------------------------------------------------------------------------

Proposed Sec. 19.215(d)(2) would provide factors the presiding
officer should consider in determining the reasonableness of the
attorney, agent, or expert witness fees. These factors are: (1) If in
private practice, the attorney's, agent's, or witness's customary fee
for similar services; (2) if an employee of the applicant, the fully
allocated cost of the attorney's, agent's, or witness's services; (3)
the prevailing rate for similar services in the community in which the
attorney, agent, or witness ordinarily perform services; (4) the time
actually spent in the representation of the applicant; (5) the time
reasonably spent in light of the difficulty or complexity of the issues
in the proceeding; and (6) any other factors as may bear on the value
of the services provided.
Proposed Sec. 19.215(d)(3) would provide parameters for the award
of costs for any study, analysis, report, test, project, or similar
matter. Specifically, the presiding officer may award the reasonable
cost of these services prepared on behalf of the applicant to the
extent that the charge for the service does not exceed the prevailing
rate for similar services and the presiding officer finds that the
service was necessary for preparation of the applicant's case.
As in Sec. 4.06 of the Model Rule, proposed paragraph (d)(4) would
permit a presiding officer to reduce the amount to be awarded or deny
an award to the extent that the party during the proceedings engaged in
conduct that unduly and unreasonably protracted final resolution of the
matter in controversy. Unlike Sec. 4.06 of the Model Rule, paragraph
(d)(4) also would permit the presiding officer to reduce or deny the
award if special circumstances would make the award sought unjust. This
provision is included in 5 U.S.C. 504(a)(1) and in the Treasury rule
\39\ and is noted in the authority and scope section of this rule,
proposed

[[Page 22050]]

Sec. 19.205(a). The OCC believes it would be helpful to include it in
Sec. 19.215 as this section is specifically related to the decision
making of the presiding officer.
---------------------------------------------------------------------------

\39\ See 31 CFR 6.14.
---------------------------------------------------------------------------

Finally, proposed paragraph (e) of Sec. 19.215 would provide that
the Comptroller will issue a final decision on the EAJA application or
remand the application to the presiding officer for further proceedings
in accordance with Sec. 19.40, Review by the Comptroller. This
provision is not included in the Model Rule. However, the OCC believes
for clarity and completeness that its proposed EAJA rule should specify
the final agency action on the EAJA application, as delineated in part
19.
Agency review. As in Sec. 4.07 of the Model Rule, proposed Sec.
19.216 allows an applicant or Enforcement Counsel to seek review of the
presiding officer's decision on the EAJA application, in accordance
with Sec. 19.39, Exceptions to recommended decision. However, proposed
Sec. 19.216 does not include the provision in the Model Rule that
permits the agency to review the decision on its own initiative. The
OCC does not believe that this provision is necessary because the
proposed rule includes a separate provision in Sec. 19.215(d) that is
not included in the Model rule that provides for a final decision on
the EAJA application by the Comptroller or the Comptroller's remand of
the application to the presiding officer for further proceedings.
Judicial review. As provided by 5 U.S.C. 504(c)(2) and in Sec.
4.08 of the Model Rule, proposed Sec. 19.217 provides for judicial
review of final OCC decisions on awards in accordance with 5 U.S.C.
504(c)(2).
Stay of decision concerning award. As in Sec. 4.09 of the Model
Rule, proposed Sec. 19.218 provides for an automatic stay of an EAJA
proceeding until the OCC's final disposition of the decision on which
the application is based and either the time period for judicial review
has expired, or if judicial review is sought, final disposition is made
by a court and no further judicial review is available.
Payment of award. As in Sec. 4.10 of the Model Rule, proposed
Sec. 19.219 provides that an applicant seeking payment of an award
must submit to the OCC's Litigation Group a copy of the final decision
granting the award accompanied by a certification that the applicant
will not seek review of the decision in the United States courts. This
proposed section also would provide that the OCC pay any amount owed to
an applicant within 90 days.
Subpart M--Procedures for Reclassifying an Insured Depository
Institution Based on Criteria Other Than Capital
Subpart M of part 19 and 12 CFR 165.8 set out procedures for
reclassifying a national bank or Federal savings association,
respectively, to a lower capital category based on criteria other than
capital, pursuant to section 38 of the FDIA (12 U.S.C. 1831o) and the
prompt corrective action rule, 12 CFR part 6. These procedures are
substantively the same, and the proposed rule would amend subpart M to
include Federal savings associations in addition to national banks and
remove Sec. 165.8. As this subpart currently also applies to insured
Federal branches of foreign banks, the proposed rule would specifically
include insured Federal branches in the scope section. Specifically,
the proposal would replace the term ``bank'' each time it appears in
subpart M with the term ``insured depository institution,'' and define
this term to mean an insured national bank, an insured Federal savings
association, an insured Federal savings bank, and an insured Federal
branch of a foreign bank. The proposal also would replace the incorrect
reference to subpart M with a reference to part 6 in Sec. 19.220. In
addition, the proposal would make a conforming change to Sec.
19.221(b)(3) to replace the phrase ``a written appeal of the proposed
classification'' with ``a written response to the proposed
reclassification,'' which is the terminology used elsewhere in this
section. Furthermore, as in proposed Sec. Sec. 19.35, 19.112, and
19.120, the OCC proposes to add a new paragraph (3) to Sec. 19.221(g)
to provide rules governing electronic presentations in the course of a
hearing. Specifically, this provision would provide that, based on the
circumstances of each hearing, the presiding officer may direct the use
of, or any party may elect to use, an electronic presentation during
the hearing. If required by the presiding officer, each party would be
responsible for its own presentation and related costs unless the
parties agree otherwise. As indicated previously, this new language is
necessary to account for the routine use of electronic presentations
that current part 19 does not address. The OCC also proposes a
conforming change in paragraph (g)(2) that would allow, by stipulation
of the parties or by order of the presiding officer, a court reporter
or other authorized person to administer the required oath to a witness
remotely without being in the physical presence of the witness.
Additionally, the proposal would revise the heading to subpart M to
include insured depository institutions and to describe the subject of
the subpart more accurately. Lastly, the proposal would make technical
changes to 12 CFR 6.3, 6.4, and 6.5 to remove the separate references
to Sec. 165.8 with respect to savings associations.
Subpart N--Order To Dismiss a Director or Senior Executive Officer
Subpart N of part 19 and 12 CFR 165.9 set out procedures associated
with an order to dismiss a director or senior executive officer of a
national bank or Federal savings association, respectively, pursuant to
an order issued under section 38 of the FDIA (12 U.S.C. 1831o) and,
with respect to national banks, the prompt corrective action rule, 12
CFR part 6. Subpart N and Sec. 165.9 are substantively the same, and
the proposed rule would apply subpart N to Federal savings associations
in addition to national banks and remove Sec. 165.9. The proposal also
would replace the term ``bank'' each time it appears in Sec. 19.230
with the term ``insured depository institution'' and define the term
based on section 3 of the FDIA (12 U.S.C. 1813(c)(2)) to mean an
insured national bank, an insured Federal savings association, an
insured Federal savings bank, or an insured Federal branch of a foreign
bank.
The OCC also is proposing to amend paragraph (b) of Sec. 19.231
This paragraph provides that a director or senior executive officer who
has been served with a directive for dismissal has 10 calendar days to
file a written request for reinstatement, unless the OCC allows further
time as requested of the Respondent. The proposal would provide that
failure by the Respondent to file this request within the specified
time period will constitute a waiver of the opportunity to respond and
consent to the dismissal. The OCC is proposing to add this statement to
the rule to clarify the result of a failure to request reinstatement.
The OCC also is proposing a stylistic revision to Sec. 19.231(b) to
remove passive sentence structure.
In addition, the proposal would amend Sec. 19.231(c), which
requires that the OCC issue an order directing an informal hearing to
commence no later than 30 days after receipt of the request for a
hearing unless the respondent requests a later date. The proposed
amendment would provide that a later hearing date may occur only if
permitted by the OCC, and, therefore, the request for an extension
would not be automatically approved. This change would allow the OCC
some discretion as

[[Page 22051]]

to how far into the future a hearing may take place.
The OCC also proposes to amend Sec. 19.231(d) to provide rules
governing electronic presentations in the course of a hearing.
Specifically, this provision would provide that, based on the
circumstances of each hearing, the presiding officer may direct the use
of, or any party may elect to use, an electronic presentation during
the hearing. If required by the presiding officer, each party would be
responsible for its own presentation and related costs unless the
parties agree otherwise. This new language is necessary to account for
the routine use of electronic presentations that current part 19 does
not address. The OCC also proposes a conforming change in Sec.
19.231(d)(5) that would allow, by stipulation of the parties or by
order of the presiding officer, a court reporter or other authorized
person to administer the required oath to a witness remotely without
being in the physical presence of the witness. The proposed rule also
would make a clarifying change in paragraph (d)(1), Hearing procedures.
Among other things, this paragraph provides that a Respondent has the
right to introduce relevant written materials and to present oral
argument. The proposal would clarify that these written materials and
oral arguments would be made at the hearing. This clarification ensures
that the Respondent is aware that this right is provided during the
hearing and not outside of the hearing context. The proposed rule also
would move the sentence regarding oral testimony and witnesses in
paragraph (d)(1) to paragraph (d)(5) to better organize paragraph (d)
and add paragraph headings.
Furthermore, the proposal would revise the heading of subpart N to
describe the subject of the subpart more accurately.
Lastly, the proposal would make technical changes to 12 CFR 6.6 to
remove the separate reference to Sec. 165.9 with respect to Federal
savings associations.
Because Sec. Sec. 165.8 and 165.9 are the only sections in current
part 165, the proposal would remove part 165 in its entirety.
Subpart O--Civil Money Penalty Inflation Adjustments
Subpart O of part 19 and Sec. 109.103 provide the statutorily
required formula to calculate inflation adjustments for civil money
penalties assessed against national banks and savings associations,
respectively. These sections also indicate that the OCC will publish,
on or before January 15 of each calendar year, an annual notice in the
Federal Register of the maximum penalties the OCC may assess. The OCC
is proposing to retain subpart O and remove Sec. 109.103. No
amendments are necessary to apply subpart O to Federal savings
associations. The proposal would amend the section heading to be more
descriptive and make a stylistic revision in paragraph (a) to remove
passive sentence structure.
Subpart Q--Forfeiture of Franchise for Money Laundering or Cash
Transaction Reporting Offenses
Twelve U.S.C. 93(d)(1) requires the Comptroller, after receiving
notification from the U.S. Attorney General of a conviction of a
criminal offense under section 1956 or 1957 of title 18 (18 U.S.C.
1956, 1957) or under section 5322 or 5324 of title 31 (31 U.S.C. 5322,
5324), to issue to the convicted national bank or Federal branch or
agency of foreign bank a notice of the Comptroller's intent to
terminate all rights, privileges and franchises of the bank or Federal
branch or agency and to schedule a pretermination hearing. The offenses
include financial crimes, including money laundering (18 U.S.C. 1956),
engaging in monetary transactions in criminally derived property (18
U.S.C. 1957), and structuring transactions to evade reporting
requirements (31 U.S.C. 5324). Twelve U.S.C. 1464(w) imposes the same
requirement with respect to convicted Federal savings associations.
Part 19 currently does not include specific procedures for a
charter pretermination hearing. The OCC proposes adding a new subpart Q
that sets forth APA compliant procedures for pretermination hearings,
which will be conducted before a presiding officer appointed by the
Comptroller. The proposed procedures are largely analogous to the
deposit insurance termination hearing procedures instituted by the FDIC
and NCUA for insured State depository institutions and Federally
insured credit unions, respectively, that are convicted of the same
offenses.
Specifically, proposed Sec. 19.250 makes subpart A applicable,
except as provided in new subpart Q, to proceedings by the Comptroller
to determine whether, pursuant to 12 U.S.C. 93(d) or 12 U.S.C. 1464(w),
as applicable, to terminate all rights, privileges, and franchises of a
national bank, Federal savings association, or Federal branch or agency
convicted of a criminal offense under 18 U.S.C. 1956 or 1957 or 31
U.S.C. 5322 or 5324.
Proposed Sec. 19.251(a) provides that, after receiving written
notification from the U.S. Attorney General of a conviction of a
criminal offense under sections 18 U.S.C. 1956 or 1957 or 31 U.S.C.
5322 or 5324, the Comptroller will issue a written notice of intent to
terminate all rights, privileges and franchises to the convicted
national bank, Federal savings association, or Federal branch or agency
and schedule a pretermination hearing. Proposed Sec. 19.251(b) details
the requisite contents of the notice and proposed Sec. 19.251(c)
provides that failure to answer the notice would be deemed consent to
the termination and that the Comptroller may order the termination. The
proposed notice of intent to terminate is similar to the notice in
Sec. 19.18 except that the subpart Q notice of intent would list the
basis of termination pursuant to factors listed in proposed Sec.
19.253 instead of the statement of matters of fact or law; the time
within which to file an answer in response to the notice of intent will
be established by the presiding officer instead of by law or
regulation; and the answer must be filed with the OCC instead of with
OFIA. Proposed Sec. 19.251(d) provides that the OCC will serve the
notice upon the national bank, Federal savings association, or Federal
branch or agency in the manner set forth in Sec. 19.11(c).
Proposed Sec. 19.252 provides that the Comptroller will designate
a presiding officer to conduct the pretermination hearing. The
presiding officer would have the same powers set forth in Sec. 19.5,
including the discretion necessary to conduct the pretermination
hearing in a manner that avoids unnecessary delay. Proposed Sec.
19.252 also provides that the presiding officer may limit the use of
discovery and limit opportunities to file written memoranda, briefs,
affidavits, or other materials or documents to avoid relitigating facts
already stipulated to by the parties, conceded to by the institution,
or otherwise already firmly established by the underlying criminal
conviction.
Proposed Sec. 19.253 provides the factors the Comptroller will
take into account when determining whether or not to terminate a
franchise as set forth in 12 U.S.C. 93(d)(1)(C)(2) and
1464(w)(1)(C)(2). The factors are the extent to which directors or
senior executive officials knew of or were involved in the criminal
offense; the extent to which the offense occurred despite the existence
of policies and procedures within the institution designed to prevent
the occurrence of the offense; the extent to which the institution
fully cooperated with law enforcement authorities regarding the

[[Page 22052]]

investigation of the offense; the extent to which the institution has
implemented additional internal controls since the commission of the
offense to prevent a reoccurrence; and the extent to which the interest
of the local community in having adequate deposit and credit services
available would be threatened by the forfeiture of the franchise.
Lastly, proposed Sec. 19.254 delineates the right of judicial
review under 12 U.S.C. 1818(h) of a termination order as required by 12
U.S.C. 93(d)(1)(C) and 1464(w)(1)(C).
Subpart R--Effective Date
The OCC is proposing a new subpart R to part 19 to address
questions about the effective date of the amendments to part 19 and
their application to proceedings and investigations in progress.
Specifically, subpart R provides that the rules of practice and
procedure set forth in subparts A through E and H, I, J, L, M, N, P,
and Q (as revised or added by this rulemaking) would apply to
adjudicatory proceedings initiated on or after the effective date of a
final rule. Rules applicable to national banks, Federal savings
associations, or Federal branches and agencies in effect prior to this
effective date would continue to govern actions initiated and in
process prior to this effective date. This timing would ensure that
parties to adjudicatory proceedings involving national banks, Federal
savings associations, or Federal branches and agencies would have
adequate notice of the rules governing those proceedings.
Technical Changes
The proposed rule would make technical changes throughout parts B
through P by (1) replacing the word ``shall'' with ``must,'' ``will,''
or other appropriate language, which is the more current rule writing
convention for imposing an obligation and is the recommended drafting
style of the Federal Register; (2) conforming citation styles and
providing more detailed references to the cited statutes; (3)
conforming abbreviations, including replacing the use of the term
``administrative law judge'' with ``ALJ; (4) replacing gender
references such as ``him,'' ``his'' or ``her'' with gender neutral
terminology; and (5) and making other non-substantive grammatical,
clarifying, organizational, and stylistic changes. The proposal also
makes a technical change to 12 CFR 3.405 to correct the reference to
part 19 and remove the reference to part 109 with respect to savings
associations because this rulemaking proposes to remove part 109 and
apply part 19 to Federal savings associations.

B. Proposed Amendments to the Board's Local Rules

Part 263, subparts B through J, contain rules specific to Board
proceedings. The Board proposes several amendments to subpart B that
supplement the Uniform Rules, the creation of a new subpart K
establishing rules governing all Board formal investigations, and the
elimination of subpart L of Regulation LL (12 CFR part 238), which
would be replaced by the new subpart K. The proposed amendments are
described below. The Board invites comments on all aspects of this
proposal.
Subpart B--Board Local Rules Supplementing the Uniform Rules
Technical Changes
The proposal makes three general non-substantive changes to the
language of the Board's Local Rules (12 CFR 265.50-263.56). First,
consistent with Federal Register drafting guidelines, the proposal
replaces the word ``shall'' throughout the Local Rules with the terms
``must,'' ``will,'' or other appropriate language. Second, the proposal
replaces gender specific references with gender neutral language. And
third, the proposal replaces the term ``administrative law judge'' with
the abbreviation ``ALJ'' as this shortened form is commonly used and
understood. These changes are proposed throughout the Local Rules and
will not be discussed in the individual sections below.
Section 263.52 Address for Filing
The proposal adds a second sentence providing an electronic mail
address (<a href="/cdn-cgi/l/email-protection#87c8d4c2c4aacbeef3eee0e6f3eee8e9c7e1f5e5a9e0e8f1">[email&#160;protected]</a>) for papers to be filed electronically
with the Secretary of the Board. The Board recognizes that electronic
filings have become more frequent and deems it appropriate to identify
the electronic mail address that must be used to file papers
electronically with the Board.
Section 263.53 Discovery Depositions
The proposal makes four changes to this section to provide for the
increasing frequency of depositions by remote means. First, the
proposal changes Sec. 263.53(b) to require parties to state in the
application the manner (e.g., remote means, in person) in which the
deposition is to be taken, in addition to the place and time. Second,
the proposal changes Sec. 263.53(c) to include the proposed manner of
the deposition as a factor to be considered by the ALJ in determining
whether a deposition is unnecessary, unreasonable, oppressive,
excessive in scope or unduly burdensome. Third, the proposal adds that
a deposition subpoena may require the witness to be deposed where the
witness resides or has a regular place of employment, by remote means,
or such other convenient place or manner as the ALJ fixes. This
language is consistent with Sec. 263.27(a)(2) and provides explicitly
for depositions by remote means. And fourth, the proposal adds a
sentence in Sec. 263.53(f) indicating that, by stipulation of the
parties or order by the ALJ, a deponent may be sworn remotely and is
not required to be in the physical presence of the person administering
the oath. The Board believes these changes would facilitate discovery
by making depositions more flexible and less burdensome.
Section 263.55 Board as Presiding Officer
Section 263.55 authorizes the Board to designate itself, one or
more of its members, or an authorized officer, to act as presiding
officer in a formal hearing. The proposal adds a sentence clarifying
that when such designations occur, the authority of the Board or its
designee will include all the authority provided to an ALJ under the
rules governing formal hearings. This ensures that the authority of the
Board or its designee will include all powers vested in the ALJ by the
language of the rules.
Section 263.57 Sanctions Related to Conduct in Adjudicatory Proceedings
Several sections of the Uniform Rules authorize the ALJ to impose
sanctions for particular types of misconduct.\40\ However, the Uniform
Rules do not specify the rules and procedures governing the sanctions
available where a party generally engages in contemptuous conduct.
Sanctions provisions are instead found in the local rules of other
banking regulators.\41\ To date, the Board has not adopted a similar
sanctions provision. The proposal fills this void by adding a new
section establishing the rules governing the imposition of sanctions
against parties or persons participating in administrative adjudicatory
proceedings. The proposed new section: (a) Explicitly authorizes the
ALJ to impose sanctions against parties or persons; (b) describes the
sanctions the ALJ may impose; (c) describes

[[Page 22053]]

procedures for imposing sanctions: And (d) establishes that the ALJ or
the Board may impose other sanctions authorized by applicable statute
or regulation.
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\40\ See, e.g., 12 CFR 263.6(b) (authorizing the exclusion or
suspension of counsel for misconduct); 12 CFR 263.9 (authorizing
various sanctions against a party or counsel for ex parte
communications); 12 CFR 263.23(e) (authorizing sanctions for
dilatory conduct).
\41\ See 12 CFR 308.108 (FDIC); 12 CFR 19.192 (OCC).
---------------------------------------------------------------------------

First, subsection (a) establishes that the ALJ may impose sanctions
against any party or person who violates a statute, regulation, or
order. In addition, sanctions may only be imposed where such violation
constitutes contemptuous conduct, materially injures another party,
amounts to a clear and unexcused violation, or unduly delays the
proceedings.
Second, subsection (b) describes the sanctions the ALJ may impose
against parties or persons. Appropriate sanctions include: (1) Issuing
an order making findings against a party; (2) rejecting or striking
testimony or other evidence offered by a party; (3) precluding the
party from contesting specific issues or findings, offering or
challenging certain evidence, or making late filings or conditioning
such late filings; (4) assessing reasonable expenses incurred by the
other party as a result of the misconduct; and (5) excluding the party
or person from the adjudicatory proceeding. This list is non-
exhaustive. As expressed in subsection (d), the ALJ or the Board may
impose other sanctions authorized by an applicable statute or
regulation.
Third, subsection (c) describes procedures for imposing and
reviewing sanctions. First, sanctions could be imposed upon the motion
of any party or upon the ALJ's own motion, although the ALJ would be
required to submit to the Board any sanction that includes a final
order on the merits. Second, no sanction beyond refusal to accept late
filings may imposed without affording the party or person to be
sanctioned the opportunity to be heard. And third, an order imposing
sanctions would be subject to interlocutory review like any other
order. Finally, subsection (d) clarifies that an ALJ or the Board may
also impose any other restriction or sanction authorized by another
applicable statute or regulation.
The Board believes that this new proposed section promotes fairness
and transparency in adjudicatory proceedings by providing clear
standards governing the authority of the ALJ to manage the conduct of
the proceedings when presented with contemptuous conduct.\42\ In
addition, because this proposed section is modeled on the sanctions
provisions already adopted by other banking regulators, it promotes
uniformity in the rules of banking regulators.
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\42\ The Board believes that the power to impose sanctions is
inherent in the ALJ's power to ``regulate the course of a
proceeding,'' 5 U.S.C. 556(c)(5), and to ``do all things necessary
and appropriate to discharge the duties of a presiding officer.'' 12
CFR 263.5(b)(11).
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Subpart K--Formal Investigative Proceedings
Under section 8(n) of the Federal Deposit Insurance Act and other
statutory provisions, the Board has authority to conduct formal
investigations, including authority to administer oaths, take
depositions, and issue subpoenas in connection with the Board's
examination and enforcement authority.\43\ In 2011, the Board adopted
regulations previously issued by the OTS which govern formal
investigations of savings and loan holding companies and their
subsidiaries under Home Owners' Loan Act.\44\ These regulations, which
are found in subpart L of Regulation LL (12 CFR part 238), do not
govern formal investigations of other banking institutions or
individuals under the Board's jurisdiction. While the Board has long-
standing practices concerning the conduct of formal administrative
investigations involving other banking organizations or individuals
within its jurisdiction, these practices have heretofore not been
incorporated in regulations governing such formal investigations.
---------------------------------------------------------------------------

\43\ 12 U.S.C. 1818(n).
\44\ In 2011, pursuant to section 312 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act (``Dodd-Frank Act'') (12
U.S.C. 5412), the responsibility for the supervision and regulation
of savings and loan holding companies and their non-savings
association subsidiaries transferred from the former-OTS to the
Board. Shortly thereafter, the Board adopted an interim final rule
that provided for the corresponding transfer of certain OTS
regulations necessary for the Board to administer the statutes
relating to supervision of savings and loan holding companies,
including provisions governing formal investigative proceedings set
forth at subpart L of Regulation LL (12 CFR 238.111-117) (see 76 FR
56508 (September 13, 2011)).
---------------------------------------------------------------------------

The Board now proposes to codify and clarify its long-standing
practices concerning the conduct of formal administrative
investigations and promulgate rules governing all formal investigations
of organizations and individuals within the Board's jurisdiction. The
proposal deletes subpart L of Regulation LL and replaces it with a new
section (subpart K to 12 CFR part 263). This new section establishes a
single set of rules governing formal investigations for all Board-
regulated organizations, including but not limited to state member
banks, foreign banks, bank holding companies and their subsidiaries,
savings and loan holding companies and their subsidiaries, Edge Act and
agreement corporations, nonbank financial companies that the Financial
Stability Oversight Council has determined should be supervised by the
Board pursuant to section 113 of the Dodd-Frank Act (nonbank financial
companies) or any subsidiaries of such companies,\45\ and any other
entity or individual that the Board has authority to investigate or
bring an enforcement action against. Proposed subpart K would govern
only the conduct of formal investigations; administrative adjudicatory
proceedings would continue to be governed by the Board's Uniform Rules
and Local Rules (subparts A and B of 12 CFR 263).
---------------------------------------------------------------------------

\45\ 12 U.S.C. 5323; 12 U.S.C. 5362.
---------------------------------------------------------------------------

Proposed subpart K is modeled on the investigative procedures of
other Federal financial industry enforcement agencies, including the
FDIC and OCC. Like the existing rules of these agencies, proposed
subpart K would, among other things, define a formal investigative
proceeding by the Board and its scope; delineate some of the powers of
the Board's designated representatives conducting formal investigative
proceedings; require the confidentiality of formal investigative
proceedings; provide for certain rights of witnesses in formal
investigative proceedings; and establish investigative subpoena
procedures.
The proposed rules authorize the Board or the General Counsel or
the General Counsel's designee (in accordance with 12 CFR 265.6) to
commence a formal investigation by issuing an order of investigation
which designates both the purpose of the investigation and the
``designated representatives'' of the Board. These designated
representatives would be authorized to administer oaths, to take and
preserve testimony under oath, and to issue subpoenas ad testificandum
and subpoenas duces tecum and to apply to the appropriate court to
enforce such subpoenas.
The proposed rules also set forth the rights of persons from whom
the Board seeks to compel information in a formal investigation.
Specifically, the proposed rules describe a person's right to counsel
during investigative testimony, an attorney's ability to advise and
question a witness during investigative testimony, and the ability of a
witness to obtain a copy of any testimony the witness provided. The
proposed rules would also require the confidentiality of formal
investigative proceedings and generally require sequestration of
witnesses.
Proposed subpart K generally incorporates the substantive
provisions currently contained in subpart L of Regulation LL with two
major exceptions. First, the proposed subpart

[[Page 22054]]

K does not include provisions (currently found in 12 CFR part
238.117(b)) providing for the filing and resolution of applications
seeking to quash or modify subpoenas within 10 days of their service.
Since the Board already vests with the General Counsel or his or her
designee the authority to quash, modify, or revoke subpoenas that have
been issued,\46\ any person or entity to whom a subpoena is directed
may seek a modification or revocation of a subpoena by application to
the General Counsel. A separate procedure is not necessary.
---------------------------------------------------------------------------

\46\ See 12 CFR part 265.6.
---------------------------------------------------------------------------

Second, the proposed subpart K provides that the officer
supervising a formal investigative proceeding may, in certain
circumstances, deny a written request for a copy of a transcript. Both
subpart L of Regulation LL and the proposed rules (see 12 CFR part
238.114 and proposed rule 263.456(b)) provide that a witness may
inspect a copy of the transcript without retaining a copy. Similarly,
both subpart L of Regulation LL and the proposed rules (see 12 CFR part
238.114 and proposed rule 263.456(c)) provide that any request for a
copy of a transcript may be denied. Although subpart L of Regulation LL
vests the Board with the authority to deny a witness's request to
inspect a copy of a transcript (see 12 CFR part 238.114), proposed
subpart K vests the officer supervising a formal investigative
proceeding with the authority to deny such request if provision of the
transcript may infringe the privacy of third persons involved in the
investigation, or impede or interfere with the conduct of any Board
investigation.
The proposed subpart K also reorganizes or re-orders provisions
currently found in subpart L of Regulation LL. For example, subpart L
of Regulation LL had a separate provision regarding transcripts of
investigative testimony (12 CFR part 238.114) that provides, among
other things, that a witness may inspect the transcript of the
witness's testimony. Proposed subpart K instead places the provision to
permit inspection of a transcript of a witness's testimony in the
proposed rule concerning the rights of witnesses (see proposed subpart
K rule 263.456). Other provisions of proposed subpart K conform
provisions of subpart L of Regulation LL to current practices followed
in Board investigations. For example, proposed subpart K rule 263.457,
governing service of subpoenas in formal investigations, conforms to
the current rules governing service of subpoenas in adjudicatory
proceedings, 12 CFR part 263.11(d). These technical modifications are
not intended to affect the substantive rights of parties.
In summary, proposed subpart K clarifies and centralizes the
Board's existing investigative practices by codifying those procedures
uniformly across all Board formal investigations.

C. Proposed Amendments to the FDIC's Local Rules

When the Uniform Rules were adopted in 1991, each Agency also
adopted Local Rules to address procedures to supplement the Uniform
Rules or otherwise facilitate the processing of administrative
enforcement actions within an Agency. The Local Rules at issue here are
set forth at 12 CFR part 308, subpart B: General Rules of Procedure,
and supplement the Uniform Rules and procedures set forth in 12 CFR
part 308, subpart A.
The FDIC requests comment on proposed amendments to the FDIC's
Local Rules at subpart B. These revisions are intended to enhance the
Uniform Rules and to further modernize and streamline the discovery
process in administrative enforcement actions brought by the FDIC. The
FDIC proposes changes that reflect the current processes and procedures
routinely ordered by the administrative law judges (ALJs) that mirror
procedures followed in the Federal court system. The FDIC also proposes
to add new provisions regarding modern discovery practices,
depositions, and disclosure of expert witness testimony to promote
cooperation, fairness, and transparency.
Since the Local Rules were last updated, the development and
utilization of electronically stored information has drastically
increased the amount of potentially discoverable materials. In 2015,
the Federal Rules of Civil Procedure (FRCP) were amended, in part, to
address concerns regarding the volume of available materials and the
effort and expense in processing those materials for discovery
purposes. Although neither the FRCP, nor the Federal Rules of Evidence,
apply to administrative proceedings at the FDIC, they do provide
guidance and direction. Additionally, the FRCP are thoroughly vetted
and considered to be best practices and procedures by the legal
community. The FDIC is not adopting the FRCP; however, there are
certain best practices and procedures that the FDIC believes would be
advantageous to all parties to the administrative proceedings. Over the
past few years, the ALJs have implemented, on a case-by-case basis,
certain case management orders related to discovery procedures and
requirements that mirror certain provisions of the FRCP. The FDIC
wishes to formalize these procedures in the Local Rules to provide
notice and clarity of the discovery rules applicable to administrative
proceedings.
Similar to the changes in the Uniform Rules, the FDIC also proposes
to update the language throughout its Local Rules to reflect the
modernized language used in rulemaking. Where appropriate, the FDIC
proposes to replace the term ``shall'' with ``must'' or ``will'' to
reflect the current convention for a legal requirement and changes made
to the FRCP in 2000. Additionally, the FDIC proposes to provide
shortened references to ``administrative law judge'' (ALJ) and
``electronically stored information'' (ESI) because the shortened terms
are well understood and the repetition of the shortened terms reduces
the length of the regulations. These changes are proposed throughout
the Local Rules and will not be discussed further in the individual
sections below.
Section 308.102 Authority of Board of Directors and Administrative
Officer
Section 308.102 contains minor changes to reflect the current
internal organization of the FDIC.
Section 308.103 Assignment to Administrative Law Judge (ALJ)
Section 308.103 is being renamed to better reflect additional
changes to how matters are currently assigned to an ALJ.
Section 308.104 Filings With the Board of Directors
Section 308.104 provides an electronic mail address for the FDIC's
Administrative Officer, who is the official custodian of the record for
administrative proceedings, and with whom all parties must file an
electronic copy of all pleadings.
Section 308.107 Supplemental Discovery Rules
Section 308.107 is being renamed to reflect the updates to the
FDIC's discovery processes to include modern discovery practices and
procedural orders issued by the ALJs and to allow for limited
depositions.
Section 308.107(a) Scope of Discovery
Section 308.107(a) is a new section that describes the permitted
scope of discovery. The FDIC proposes to adopt the concept of
``proportionality'' in discovery production and set forth limits on
ESI, both of which were added to the FRCP in 2015. Because the FDIC
maintains the data collected from failed insured depository
institutions in its

[[Page 22055]]

role as Receiver, it has custody and control of voluminous amounts of
failed bank data. Generally, the vast majority of this information
would not be materially relevant to an administrative enforcement
proceeding. Instituting a requirement that discovery be proportional
will decrease unnecessary expenditures and promote a more efficient
process for all parties to the administrative proceedings.
Section 308.107(b) Joint Discovery Plan
Section 308.107(b) sets forth the FDIC's proposal to add a Joint
Discovery Plan to the discovery process. Currently, the ALJs routinely
require both parties agree to an ESI Plan that governs the production
of ESI. The FDIC proposes to combine the current practice with certain
provisions similar to the FRCP Rule 26(f)(3). This new section would
require the parties to meet and confer at the beginning of the
discovery process to facilitate communication and cooperation on
discovery matters. The purpose is to develop a Joint Discovery Plan
that meets the parties' needs, decreases discovery disputes, encourages
collegiality, and conserves resources. If necessary, this section
provides a mechanism for resolution of discovery disputes.
Section 308.107(c) Document and Electronically Stored Information (ESI)
Discovery
Section 308.107(c) was created to integrate the proposed provisions
of the Local Rules with the Uniform Rules. Additionally, the provisions
related to the production of documents now include modern concepts from
the FRCP related to the production of ESI.
Section 308.107(d) Expert Witness Disclosures
Section 308.107(d) is a new section mirroring the 1993 updates to
the FRCP 26(a)(2) that describe the proposed disclosures for expert
witness testimony. The vast majority of modern administrative
enforcement proceedings involve expert testimony; however, there are
currently no rules governing how expert testimony is fairly and
properly disclosed to the opposing party. As a result, the ALJs began
issuing orders, on a case-by-case basis, requiring disclosure of expert
testimony similar to the requirements set forth in FRCP 26(a)(2). The
FDIC proposes to incorporate these expert witness disclosure
requirements into the written rules to improve transparency and promote
fairness. Similar to the 1993 and 2010 revisions to the FRCP 26(a)(2),
Sec. 308.107(d) provides two categories of expert witnesses with two
different levels of required disclosures. Section 308.107(d)(2)(i) is
intended for professional experts who generally do not work for a party
but are specifically engaged for the purpose of providing expert
testimony. Section 308.107(d)(2)(ii) is intended to cover those
individuals whose expertise comes from the person's regular course of
business such as, a commissioned bank examiner or bank personnel, who
will be offered as an expert witness at the hearing. Consistent with
the FRCP 26(a)(2), these rules are intended as disclosure requirements.
Similar to the Federal rules of evidence and case law, these documents
are prior written disclosures of future opinion testimony to be offered
at the hearing to assist the ALJ. Neither category of written
disclosures is intended to serve as substitutes for expert witness
testimony at the hearing. Moreover, occasionally the ALJ orders
mandated more disclosure from expert witnesses than the FRCP 26(a)(2)
required. The FDIC believes that the FRCP 26(a)(2) created a two-tier
system for disclosure that represents a legitimate and reasonable
divide between the two categories of expert witnesses. Those
individuals who are not in the business of providing professional
expert testimony do not need to provide a heightened level of
disclosures. As the Federal Rules Committee notes stated in the 2010
Amendments ``[c]ourts must take care against requiring undue detail,
keeping in mind that these witnesses have not been specially retained
and may not be as responsive to counsel as those who have.''
Section 308.107(e) Depositions
Section 308.107(e) is a new section that provides for the
possibility of depositions during the discovery process in cases where
such discovery is appropriate. The FDIC does not currently allow for
deposition discovery in its enforcement matters, and parties are not
legally entitled to take depositions in administrative actions under
the Administrative Procedure Act.\47\ Nonetheless, the FDIC has
observed that the OCC, the Board, and other Federal agencies have
voluntarily provided respondents in administrative proceedings with an
opportunity for limited depositions in appropriate cases.\48\ For these
reasons, the FDIC proposes adding the option for the parties to pursue
limited depositions of individuals with direct knowledge of facts
relevant to the proceeding and individuals designated as an expert in
cases where such discovery is appropriate and proportional to the needs
of the case.
---------------------------------------------------------------------------

\47\ See, e.g., Starr Comm'r of Internal Revenue, 226 F.2d
721,722 (7th Cir. 1955), cert. denied, 350 U.S. 993 (1955);
McClelland v. Andrus, 606 F.2d 1278, 1285 (D.C. Cir. 1979); Jones
Total Health Care Pharmacy, LLC v. Drug Enforcement Administration,
881 F.3d 823, 834 (C.A.11, 2018).
\48\ Until recently, the rules of practice governing
administrative actions before the Securities and Exchange Commission
(SEC) were similar to those in the Uniform Rules, allowing for the
taking of depositions only upon a showing that a deponent will be
unlikely to be able to attend and testify at a hearing. In 2016, the
SEC amended its rules of practice to remove this restriction and to
allow parties with broader, albeit still limited, access to
depositions in administrative proceedings. 81 FR 50211 (July 13,
2016).
---------------------------------------------------------------------------

Under Sec. 308.107(e)(1), the FDIC is proposing limitations to
ensure that any depositions that do take place do not cause undue delay
or burden. Under the FDIC's proposed rules, any deposition discovery
would be limited by the requirement that discovery be proportional to
the needs of the case, as required for all discovery under Sec.
308.107(a). Additionally, depositions would only be allowed where the
information sought from the depositions cannot be obtained from another
source that is more convenient, less burdensome, or less expensive.
Finally, the FDIC is proposing that, in the absence of extraordinary
circumstances, depositions will be limited to individuals expected to
testify at the hearing. The FDIC believes that the limitations proposed
strike an appropriate balance between the potential for a demonstrable
need for depositions in some cases and the interest in resolving cases
efficiently.
The remainder of the Sec. 308.107(e) sets forth various procedural
rules that will apply to any deposition discovery, including notices,
transcription, timing and duration of depositions. These provisions are
largely adapted from procedures under the FRCP and those used by the
OCC and the Board.
Section 308.107(f) Discovery Motions
Section 308.107(f) is a new section aimed at clarifying certain
matters related to discovery motions. Section 308.107(f)(1) clarifies
that the ALJ must limit inappropriate discovery either on motion, or on
their own initiative. Section 308.107(f)(2) provides that parties may
move to terminate depositions that are being conducted in bad faith or
an inappropriate manner. Section 308.107(f)(3) clarifies that the
provisions of Sec. 308.25(f), governing motions to compel document
discovery, apply equally to all motions to compel discovery.

[[Page 22056]]

IV. Discussion of OCC Changes to Part 4, Service of Process

The OCC proposes to amend subpart A of 12 CFR part 4, Organization
and Functions, to add a new Sec. 4.8 that would address service of
process. This new provision would put private parties on notice of the
established process they should use in serving the OCC, Comptroller, or
officers or employees of the OCC in a private action. Codifying this
process in the rule should help avoid possible confusion as to where
and how private parties serve the OCC, Comptroller, or officers or
employees of the OCC, which should ensure that the OCC has adequate
notice to respond to a complaint or other filing. The proposal provides
that ``officers'' are officials who are not employees of the OCC, such
as an ALJ.
Specifically, proposed Sec. 4.8(a) provides that paragraphs (b),
(c), and (d) of this section apply to service of process upon the OCC,
the Comptroller acting in his official capacity, officers or employees
of the OCC who are sued in their official capacity, and officers or
employees of the OCC who are sued in an individual capacity for an act
or omission occurring in connection with duties performed on the behalf
of the OCC. Proposed Sec. 4.8(b) provides that service of process for
actions in Federal courts should be made upon the OCC, the Comptroller,
or officers or employees of the OCC by serving the United States under
the procedures set forth in the Federal Rules of Civil Procedure
governing the service of process upon the United States and its
agencies, corporations, officers, or employees.\49\ Proposed Sec.
4.8(c) provides that service of process for actions brought in State
courts should be made upon the OCC, the Comptroller, or officers or
employees of the OCC by sending copies of the summons and complaint by
registered or certified mail to the Chief Counsel, Office of the
Comptroller of the Currency, Washington, DC 20219. Proposed Sec.
4.8(c) also encourages parties to provide copies of the summons and
complaint to the appropriate United States Attorney in accordance with
the procedures set forth in the Federal Rules of Civil Procedure
governing the service of process upon the United States and its
agencies, corporations, officers, or employees.\50\ Proposed Sec.
4.8(d) provides that only the Washington, DC headquarters office of the
OCC is authorized to accept service of a summons or complaint and that
the OCC, the Comptroller, or officers or employees of the OCC should be
served with a copy of the summons or complaint at the Washington, DC
headquarters office in accordance with Sec. 4.8(b) or (c). This
provision would clarify that a summons or complaint should not be sent
to another office of the OCC.
---------------------------------------------------------------------------

\49\ See Rule 4(i) of the Federal Rules of Civil Procedure.
\50\ Id.
---------------------------------------------------------------------------

Finally, proposed Sec. 4.8(e) provides that the OCC is not an
agent for service of process upon a national bank, Federal savings
association, or Federal branch or agency of a foreign bank. Instead, it
directs parties to serve a summons or complaint upon the institution in
accordance with the laws and procedures for the court in which the
action has been filed. The OCC intends this provision to prevent
further instances of parties attempting to serve a national bank
through the OCC.

V. Regulatory Analysis

A. Regulatory Flexibility Act

OCC: The Regulatory Flexibility Act (RFA) \51\ requires an agency,
in connection with a proposed rule, to prepare an Initial Regulatory
Flexibility Analysis (IRFA) describing the impact of the rule on small
entities (defined by the Small Business Administration (SBA) for
purposes of the RFA to include commercial banks and savings
institutions with total assets of $600 million or less and trust
companies with total assets of $41.5 million or less) \52\ or to
certify that the proposed rule would not have a significant economic
impact on a substantial number of small entities.
---------------------------------------------------------------------------

\51\ 5 U.S.C. 601 et seq.
\52\ See the SBA's size thresholds for commercial banks and
savings institutions, and trust companies, 13 CFR 121.201.
---------------------------------------------------------------------------

The OCC currently supervises approximately 1,122 institutions
(commercial banks, trust companies, Federal savings associations, and
branches or agencies of foreign banks, collectively banks), of which
669 are small entities.\53\ The rule could impact any OCC-supervised
institution, including any of these small entities. However, it is
unlikely that the proposed rule, if implemented, would impact more than
a de minimis number of OCC-supervised institutions in any given
year.\54\ Furthermore, the proposed rule would facilitate the orderly
determination of administrative proceedings and its proposed changes
are primarily updates and clarifications of administrative procedure
and in general reflect current practices. Therefore, the OCC concludes
that the proposed rule would not impose more than minimal costs on
institutions that may be impacted. Because the OCC estimates that
expenditures, if any, associated with the proposed rule would be de
minimis, the OCC certifies that the proposed rule would not have a
significant economic impact on a substantial number of small entities
supervised by the OCC. Accordingly, an IRFA is not required.
---------------------------------------------------------------------------

\53\ Consistent with the General Principles of Affiliation 13
CFR 121.103(a), the OCC counts the assets of affiliated financial
institutions when determining if it should classify an institution
as a small entity. The OCC used December 31, 2020, to determine size
because a ``financial institution's assets are determined by
averaging the assets reported on its four quarterly financial
statements for the preceding year.'' See footnote 8 of the SBA's
Table of Size Standards.
\54\ Based on activity during the past five years, approximately
23 banks (an average of less than 5 per year) would be impacted by
the proposed changes to part 19 subparts A, B, C, I, L, and M.
Furthermore, during the past five years the OCC has not received any
Equal Access to Justice Act (EAJA) applications from a bank for the
payment of attorney's fees.
---------------------------------------------------------------------------

Board: The RFA generally requires an agency to consider the impact
of the agency's proposed rules on small entities and to conduct an IRFA
of any rule subject to notice-and-comment rulemaking requirements,
unless the head of the agency certifies that the rule will not, if
promulgated, have a significant economic impact on a substantial number
of small entities.\55\ An IRFA must contain (1) a description of the
reasons why action by agency is being considered; (2) a succinct
statement of the objectives of, and legal basis for, the proposed rule;
(3) a description of, and where feasible, an estimate of the number of
small entities to which the proposed rule will apply; (4) a description
of the projected reporting, recordkeeping, and other compliance
requirements of the proposed rule; (5) an identification, to the extent
practicable, of all relevant Federal rules which may duplicate, overlap
with, or conflict with the proposed rule; and (6) a description of any
significant alternatives to the proposed rule which accomplish its
stated objectives.
---------------------------------------------------------------------------

\55\ 5 U.S.C. 601-612.
---------------------------------------------------------------------------

As stated in this notice of proposed rulemaking, the Agencies are
proposing amendments to the Uniform Rules and to their local rules to
recognize the use of electronic communications in all aspects of
administrative hearings and to otherwise increase the efficiency and
fairness of administrative adjudications. In addition, the Board is
proposing to establish a single set of rules governing all formal
investigations. The proposed rules only establish procedures

[[Page 22057]]

governing Board formal investigations and adjudicatory proceedings. The
proposed rules would not impose any requirement on regulated entities,
and regulated entities would not need to take any action in response to
the proposed rules. As such, the proposed rules will not have a
significant economic impact on a substantial number of small entities.
The proposed rules will not duplicate, overlap with, or conflict with
other Federal rules, as they would only apply to Board formal
investigations and administrative adjudications. Finally, the Board
believes there are no significant alternatives to the proposed rules.
The Board welcomes comments on this analysis.
FDIC: The RFA requires that, in connection with a notice of
proposed rulemaking, an agency prepare and make available for public
comment an initial regulatory flexibility analysis that describes the
impact of the proposed rule on small entities.\56\ However, a
regulatory flexibility analysis is not required if the agency certifies
that the rule will not have a significant economic impact on a
substantial number of small entities, and publishes its certification
and a short explanatory statement in the Federal Register together with
the rule. The SBA has defined ``small entities'' to include banking
organizations with total assets of less than or equal to $600
million.\57\ Generally, the FDIC considers a significant effect to be a
quantified effect in excess of 5 percent of total annual salaries and
benefits per institution, or 2.5 percent of total noninterest expenses.
The FDIC believes that effects in excess of these thresholds typically
represent significant effects for FDIC-supervised institutions.
---------------------------------------------------------------------------

\56\ 5 U.S.C. 601, et seq.
\57\ The SBA defines a small banking organization as having $600
million or less in assets, where ``a financial institution's assets
are determined by averaging the assets reported on its four
quarterly financial statements for the preceding year.'' See 13 CFR
121.201 (as amended by 84 FR 34261, effective August 19, 2019).
``SBA counts the receipts, employees, or other measure of size of
the concern whose size is at issue and all of its domestic and
foreign affiliates.'' See 13 CFR 121.103. Following these
regulations, the FDIC uses a covered entity's affiliated and
acquired assets, averaged over the preceding four quarters, to
determine whether the FDIC-supervised institution is ``small'' for
the purposes of RFA.
---------------------------------------------------------------------------

As of the quarter ending March 31, 2021, the FDIC supervised 3,215
depository institutions,\58\ of which 2,333 were considered small for
the purposes of the RFA.\59\ As previously discussed, the Agencies are
proposing changes to the Uniform Rules to recognize the use of
electronic communications in all aspects of administrative hearings and
to otherwise increase the efficiency and fairness of administrative
adjudications. The FDIC is also proposing to modify the Local Rules of
administrative practice and procedure. If adopted, the proposed
amendments would apply to administrative proceedings held by the FDIC
and would not impose any requirement on regulated entities. Further,
the FDIC typically brings less than five formal administrative
proceedings annually. Finally, the proposed amendments are primarily
updates and clarifications of administrative procedure and impose no
significant additional burdens on small entities. Therefore, the FDIC
concludes that the proposed rule will not have a significant impact on
a substantial number of small entities. For the reasons described above
and pursuant to 5 U.S.C. 605(b), the FDIC certifies that the proposed
rule will not have a significant economic impact on a substantial
number of small entities. The FDIC invites comments on all aspects of
the supporting information provided in this RFA section. In particular,
would this proposed rule have any significant effects on small entities
that the FDIC has not identified?
---------------------------------------------------------------------------

\58\ FDIC-supervised institutions are set forth in 12 U.S.C.
1813(q)(2).
\59\ FDIC Call Report data, March 31, 2021.
---------------------------------------------------------------------------

NCUA: The RFA generally requires that, in connection with a notice
of proposed rulemaking, an agency prepare and make available for public
comment an initial regulatory flexibility analysis that describes the
impact of a proposed rule on small entities. A regulatory flexibility
analysis is not required, however, if the agency certifies that the
rule will not have a significant economic impact on a substantial
number of small entities (defined for purposes of the RFA to include
Federally insured credit unions with assets less than $100 million) and
publishes its certification and a short, explanatory statement in the
Federal Register together with the rule. The proposed rule would amend
the Uniform Rules to recognize the use of electronic communications in
all aspects of administrative hearings and to otherwise increase the
efficiency and fairness of administrative adjudications. The proposed
changes consist of updates and clarifications of administrative
procedure and impose no significant new burdens on credit unions,
parties to administrative actions, or counsel. Accordingly, the NCUA
certifies that the proposed rule will not have a significant economic
impact on a substantial number of small credit unions.

B. Paperwork Reduction Act

The Paperwork Reduction Act of 1995 \60\ (PRA) states that no
agency may conduct or sponsor, nor is the respondent required to
respond to, an information collection unless it displays a currently
valid Office of Management and Budget (OMB) control number. The
Agencies have reviewed this proposed rule and determined that it does
not create any information collection or revise any existing collection
of information. Accordingly, no PRA submissions to OMB will be made
with respect to this proposed rule. The Board reviewed the rule under
the authority delegated to the Board by OMB.
---------------------------------------------------------------------------

\60\ 44 U.S.C. 3501-3521.
---------------------------------------------------------------------------

C. OCC Unfunded Mandates Reform Act of 1995

The OCC analyzed the proposed rule under the factors set forth in
the Unfunded Mandates Reform Act of 1995.\61\ Under this analysis, the
OCC considered whether the proposal includes a Federal mandate that may
result in the expenditure by State, local, and Tribal governments, in
the aggregate, or by the private sector, of $100 million or more in any
one year ($158 million as adjusted for inflation). The UMRA does not
apply to regulations that incorporate requirements specifically set
forth in law.
---------------------------------------------------------------------------

\61\ 2 U.S.C. 1532.
---------------------------------------------------------------------------

As discussed above, the OCC estimates that expenditures, if any,
associated with the proposed rule would be de minimis. Therefore, the
OCC concludes that the proposed rule would not result in an expenditure
of $158 million or more annually by State, local, and tribal
governments, or by the private sector. Because the proposed rule does
not trigger the UMRA cost threshold, the OCC has not prepared the
written statement described in section 202 of the UMRA.

D. Riegle Community Development and Regulatory Improvement Act

Pursuant to section 302(a) of the Riegle Community Development and
Regulatory Improvement Act (RCDRIA),\62\ in determining the effective
date and administrative compliance requirements for new regulations
that impose additional reporting, disclosure, or other requirements on
insured depository institutions (IDIs), the OCC, Board, and FDIC must
consider, consistent with principles of safety and

[[Page 22058]]

soundness and the public interest: (1) Any administrative burdens that
such regulations would place on depository institutions, including
small depository institutions, and customers of depository
institutions; and (2) the benefits of such regulations. In addition,
section 302(b) of RCDRIA requires new regulations and amendments to
regulations that impose additional reporting, disclosures, or other new
requirements on IDIs generally to take effect on the first day of a
calendar quarter that begins on or after the date on which the
regulations are published in final form.\63\ The Agencies invite
comments that will further inform their consideration of RCDRIA.
---------------------------------------------------------------------------

\62\ 12 U.S.C. 4802(a).
\63\ 12 U.S.C. 4802.
---------------------------------------------------------------------------

E. Plain Language

Section 722 of the Gramm-Leach-Bliley Act \64\ requires the OCC,
Board, and FDIC to use plain language in all proposed and final rules
published after January 1, 2000. The Agencies have sought to present
the proposed rule in a simple and straightforward manner and invite
comment on the use of plain language. For example:
---------------------------------------------------------------------------

\64\ Public Law 106-102, section 722, 113 Stat. 1338, 1471
(1999), 12 U.S.C. 4809.
---------------------------------------------------------------------------

<bullet> Have the Agencies organized the material to inform your
needs? If not, how could the Agencies present the proposed rule more
clearly?
<bullet> Are the requirements in the proposed rule clearly stated?
If not, how could the proposed rule be more clearly stated?
<bullet> Does the proposed rule contain technical language or
jargon that is not clear? If so, which language requires clarification?
<bullet> Would a different format (grouping and order of sections,
use of headings, paragraphing) make the proposed rule easier to
understand? If so, what changes would achieve that?
<bullet> Is this section format adequate? If not, which of the
sections should be changed and how?
<bullet> What other changes can the Agencies incorporate to make
the proposed rule easier to understand?

F. NCUA Executive Order 13132

Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests. In
adherence to fundamental federalism principles, the NCUA, an
independent regulatory agency as defined in 44 U.S.C. 3502(5),
voluntarily complies with the principles of the executive order. This
rulemaking will not have a substantial direct effect on the states, on
the connection between the National Government and the states, or on
the distribution of power and responsibilities among the various levels
of government. The NCUA has determined that this proposed rule does not
constitute a policy that has federalism implications for purposes of
the executive order.

G. NCUA Assessment of Federal Regulations and Policies on Families

The NCUA has determined that this proposed rule will not affect
family well-being within the meaning of section 654 of the Treasury and
General Government Appropriations Act, 1999.\65\
---------------------------------------------------------------------------

\65\ Public Law 105-277, 112 Stat. 2681 (1998).
---------------------------------------------------------------------------

Common Text of Proposed Uniform Rules (All Agencies)

Subpart A--Uniform Rules of Practice and Procedure
Sec.
__.1 [Reserved]
__.2 Rules of construction.
__.3 [Reserved]
__.4 Authority of the [Agency Head].
__.5 Authority of the administrative law judge.
__.6 Appearance and practice in adjudicatory proceedings.
__.7 Good faith certification.
__.8 Conflicts of interest.
__.9 Ex parte communications.
__.10 Filing of papers.
__.11 Service of papers.
__.12 Construction of time limits.
__.13 Change of time limits.
__.14 Witness fees and expenses.
__.15 Opportunity for informal settlement.
__.16 [AGENCY]'s right to conduct examination.
__.17 Collateral attacks on adjudicatory proceeding.
__.18 Commencement of proceeding and contents of notice.
__.19 Answer.
__.20 Amended pleadings.
__.21 Failure to appear.
__.22 Consolidation and severance of actions.
__.23 Motions.
__.24 Scope of document discovery.
__.25 Request for document discovery from parties.
__.26 Document subpoenas to nonparties.
__.27 Deposition of witness unavailable for hearing.
__.28 Interlocutory review.
__.29 Summary disposition.
__.30 Partial summary disposition.
__.31 Scheduling and prehearing conferences.
__.32 Prehearing submissions.
__.33 Public hearings.
__.34 Hearing subpoenas.
__.35 Conduct of hearings.
__.36 Evidence.
__.37 Post-hearing filings.
__.38 Recommended decision and filing of record.
__.39 Exceptions to recommended decision.
__.40 Review by the [Agency Head].
__.41 Stays pending judicial review.

Subpart A--Uniform Rules of Practice and Procedure

Sec. __.1 [Reserved]

Sec. __.2 Rules of construction.

For purposes of this part:
(a) Any term in the singular includes the plural, and the plural
includes the singular, if such use would be appropriate;
(b) Any use of a masculine, feminine, or neuter gender encompasses
all three, if such use would be appropriate;
(c) The term counsel includes a non-attorney representative; and
(d) Unless the context requires otherwise, a party's counsel of
record, if any, may, on behalf of that party, take any action required
to be taken by the party.

Sec. __.3 [Reserved]

Sec. __.4 Authority of the [Agency Head].

The [Agency Head] may, at any time during the pendency of a
proceeding, perform, direct the performance of, or waive performance
of, any act which could be done or ordered by the ALJ.

Sec. __.5 Authority of the administrative law judge (ALJ).

(a) General rule. All proceedings governed by this part must be
conducted in accordance with the provisions of chapter 5 of title 5 of
the United States Code. The ALJ has all powers necessary to conduct a
proceeding in a fair and impartial manner and to avoid unnecessary
delay.
(b) Powers. The ALJ has all powers necessary to conduct the
proceeding in accordance with paragraph (a) of this section, including
the following powers:
(1) To administer oaths and affirmations;
(2) To issue subpoenas, subpoenas duces tecum, protective orders,
and other orders, as authorized by this part, and to quash or modify
any such subpoenas and orders;
(3) To receive relevant evidence and to rule upon the admission of
evidence

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