45168 Federal Register / Vol. 76, No. 145 / Thursday, July 28, 2011 / Rules and Regulations 

1The Act is Title X of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act, as amended, 

Public Law 111–203 (July 21, 2010), Title X, 12 

U.S.C. 5481 et seq. Section 1066 of the Act grants 

the Secretary of the Treasury interim authority to 

perform certain functions of the CFPB. Pursuant to 

that authority, Treasury publishes these Rules on 

behalf of the CFPB. 

PART 84—UNIFORM ADMINISTRATIVE 

REQUIREMENTS FOR GRANTS AND 

AGREEMENTS WITH INSTITUTIONS 

OF HIGHER EDUCATION, HOSPITALS, 

AND OTHER NON-PROFIT 

ORGANIZATIONS 

The authority citation for part 84 

continues to read as follows: 

Authority: 42 U.S.C. 3535(d). 

■ 7. Revise § 84.13(b) to read as follows: 

§ 84.13 Debarment and suspension; DrugFree Workplace. 

* * * * * 

(b) Recipients and subrecipients shall 

comply with the requirements of the 

Drug-Free Workplace Act of 1988 (41 

U.S.C. 701, et seq.), as set forth at 2 CFR 

part 2429. 

PART 1000—NATIVE AMERICAN 

HOUSING ACTIVITIES 

The authority citation for part 1000 

continues to read as follows: 

Authority: 25 U.S.C. 4101 et seq.; 42 U.S.C. 

3535(d). 

■ 9. Revise § 1000.46 to read as follows: 

§ 1000.46 Do drug-free workplace 

requirements apply? 

Yes. In addition to any tribal 

requirements, the Drug-Free Workplace 

Act of 1988 (41 U.S.C. 701, et seq.) and 

HUD’s implementing regulations in 2 

CFR part 2429 apply. 

Dated: July 15, 2011. 

Shaun Donovan, 

Secretary. 

[FR Doc. 2011–19129 Filed 7–27–11; 8:45 am] 

BILLING CODE 4210–67–P 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1080 

[Docket No. CFPB–2011–0007] 

RIN 3170–AA03 

Rules Relating to Investigations 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Interim final rule with request 

for public comment. 

SUMMARY: The Bureau of Consumer 

Financial Protection (‘‘CFPB’’ or 

‘‘Bureau’’), pursuant to the Consumer 

Financial Protection Act of 2010, is 

adopting its Rules Relating to 

Investigations in order to describe the 

Bureau’s procedures for investigations 

pursuant to section 1052 of the Act. The 

Bureau invites interested members of 

the public to submit written comments 

to this interim final rule setting forth 

those rules. 

DATES: This interim final rule is 

effective on July 28, 2011. Written 

comments must be received on or before 

September 26, 2011. 

ADDRESSES: You may submit comments, 

identified by Docket No. CFPB–2011– 

0007, by any of the following methods: 

• Electronic: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail or Hand Delivery/Courier in 

Lieu of Mail: Monica Jackson, Office of 

the Executive Secretary, Consumer 

Financial Protection Bureau, 1801 L 

Street, NW., Washington, DC 20036. 

All submissions must include the 

agency name and docket number or 

Regulatory Information Number (RIN) 

for this rulemaking. In general, all 

comments received will be posted 

without change to http:// 

www.regulations.gov. In addition, 

comments will be available for public 

inspection and copying at 1801 L Street, 

NW., Washington, DC 20036, on official 

business days between the hours of 

10 a.m. and 5 p.m. Eastern Time. You 

can make an appointment to inspect the 

documents by telephoning (202) 435– 

7275. 

All comments, including attachments 

and other supporting materials, will 

become part of the public record and 

subject to public disclosure. Sensitive 

personal information, such as account 

numbers or social security numbers, 

should not be included. Comments will 

not be edited to remove any identifying 

or contact information. 

FOR FURTHER INFORMATION CONTACT: 

Monica Jackson, Office of the Executive 

Secretary, Consumer Financial 

Protection Bureau, 1801 L Street, NW., 

Washington, DC 20036, (202) 435–7275. 

SUPPLEMENTARY INFORMATION: This 

discussion contains the following 

sections: 

(a) Background 

(b) Section-by-Section Summary 

(c) Procedural Requirements 

(a) Background 

The Bureau is adopting Rules Relating 

to Investigations (‘‘Rules’’) that 

implement provisions of the Consumer 

Financial Protection Act of 2010 

(‘‘Act’’) 1 that relate to the Bureau’s 

investigations. Specifically, these Rules 

will govern investigations undertaken 

pursuant to section 1052 of the Act, 12 

U.S.C. 5562, which authorizes the 

Bureau to investigate whether persons 

have engaged in conduct that violates 

any provision of Federal consumer 

financial law. 

In developing these Rules, the Bureau 

considered the investigative procedures 

of other law enforcement agencies. 

Specifically, the Bureau reviewed the 

procedures currently used by the 

Federal Trade Commission (‘‘FTC’’), the 

Securities and Exchange Commission 

(‘‘SEC’’), and the prudential regulators 

for guidance. In light of the similarities 

between section 1052 of the Act and 

section 20 of the Federal Trade 

Commission Act (‘‘FTC Act’’), 15 U.S.C. 

41 et seq., the Bureau drew most heavily 

from the FTC’s nonadjudicative 

procedures in constructing the Rules. 

The Rules describe a number of 

Bureau policies and procedures that 

apply in a nonadjudicative setting. 

Among other things, these Rules set 

forth (1) the Bureau’s authority to 

conduct investigations, and (2) the 

rights of persons from whom the Bureau 

seeks to compel information in 

investigations. 

In particular, the Rules lay out the 

Bureau’s authority to conduct 

investigations before instituting judicial 

or administrative adjudicatory 

proceedings under Federal consumer 

financial law. The Rules authorize the 

Assistant Director of the Division of 

Enforcement to issue civil investigative 

demands for documentary material, 

tangible things, written reports or 

answers to questions, and oral 

testimony, which may be enforced in 

district court by either the General 

Counsel or the Assistant Director of the 

Division of Enforcement. The Rules also 

detail the authority of the Bureau’s 

investigators to conduct investigations 

and hold investigational hearings 

pursuant to civil investigative demands 

for oral testimony. 

Furthermore, the Rules set forth the 

rights of persons from whom the Bureau 

seeks to compel information in an 

investigation. Specifically, the Rules 

describe how such persons should be 

notified of the purpose of the Bureau’s 

investigation. The Rules detail the 

procedures for filing a petition for an 

order modifying or setting aside a civil 

investigative demand, which will be 

ruled upon by the Bureau Director. They 

also describe the process for obtaining 

copies of or access to documents or 

testimony provided to the Bureau. In 

addition, the Rules describe a person’s 

right to counsel at investigational 

hearings. 


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(b) Section-by-Section Summary 

Section 1080.1 Scope 

This section describes the scope of the 

Rules. It makes clear that these Rules 

only apply to investigations under 

section 1052 of the Act. 

Section 1080.2 Definitions 

This section defines several terms 

used throughout the Rules. Many of 

these definitions also may be found in 

section 1051 of the Act. 

Section 1080.3 Policy as to Private 

Controversies 

This section states the Bureau’s policy 

of pursuing investigations that are in the 

public interest. Section 1080.3 is 

consistent with the Bureau’s mission to 

protect consumers by investigating 

potential violations of Federal consumer 

financial law. 

Section 1080.4 By Whom Conducted 

This section explains that Bureau 

investigators are authorized to conduct 

investigations pursuant to section 1052 

of the Act. 

Section 1080.5 Notification of Purpose 

This section provides that a person 

compelled to provide information to the 

Bureau or testify in an investigational 

hearing must be advised of the nature of 

the conduct constituting the alleged 

violation under investigation and the 

applicable provisions of law. This 

section implements the requirements for 

civil investigative demands described in 

section 1052(c)(2) of the Act. 

Section 1080.6 Civil Investigative 

Demands 

This section lays out the Bureau’s 

procedures for issuing civil investigative 

demands. It authorizes the Assistant 

Director of the Division of Enforcement 

to issue civil investigative demands for 

documentary material, tangible things, 

written reports or answers to questions, 

and oral testimony. This section details 

the information that must be included 

in civil investigative demands and the 

requirement that responses be made 

under a sworn certificate. Section 

1080.6 also authorizes the Assistant 

Director of the Division of Enforcement 

to negotiate and approve the terms of 

compliance with civil investigative 

demands and grant extensions for good 

cause. Finally, this section describes the 

procedures for seeking an order to 

modify or set aside a civil investigative 

demand, which will be ruled upon by 

the Bureau Director. 

Section 1080.7 Investigational 

Hearings 

This section describes the procedures 

for investigational hearings initiated 

pursuant to a civil investigative demand 

for oral testimony. It also lays out the 

roles and responsibilities of the Bureau 

investigator conducting the 

investigational hearing, which include 

excluding unauthorized persons from 

the hearing room and ensuring that the 

investigational hearing is transcribed, 

the witness is duly sworn, the transcript 

is a true record of the testimony, and the 

transcript is provided to the designated 

custodian. 

Section 1080.8 Withholding Requested 

Material 

This section describes the procedures 

that apply when persons withhold 

material responsive to a civil 

investigative demand. It requires that 

they assert a privilege by the production 

date and, if so directed in the civil 

investigative demand, also submit a 

detailed schedule of the items withheld. 

Section 1080.8 also sets forth the 

procedures for handling the disclosure 

of privileged or protected information or 

communications. 

Section 1080.9 Rights of Witnesses in 

Investigations 

This section describes the rights of 

persons compelled to submit 

information or provide testimony in an 

investigation. It details the procedures 

for obtaining a copy of submitted 

documents or a copy of or access to a 

transcript of the person’s testimony. 

This section also describes a witness’s 

right to make changes to his or her 

transcript and the rules for signing the 

transcript. 

Section 1080.9 lays out a person’s 

right to counsel at an investigational 

hearing and describes his or her 

counsel’s right to advise the witness as 

to any question posed for which an 

objection may properly be made. It also 

describes the witness’s or counsel’s 

rights to object to questions or requests 

that the witness is privileged to refuse 

to answer. This section states that 

counsel for the witness may not 

otherwise object to questions or 

interrupt the examination to make 

statements on the record but may 

request that the witness have an 

opportunity to clarify any of his or her 

answers. Finally, this section authorizes 

the Bureau investigator to take all 

necessary action during the course of 

the hearing to avoid delay and to 

prevent or restrain disorderly, dilatory, 

obstructionist, or contumacious 

conduct, or contemptuous language. 

Section 1080.10 Noncompliance With 

Civil Investigative Demands 

This section authorizes the Assistant 

Director of the Division of Enforcement, 

the General Counsel, or their delegees, 

to initiate an action to enforce a civil 

investigative demand in connection 

with the failure or refusal of a person to 

comply with, or to obey, a civil 

investigative demand. In addition, they 

are authorized to seek civil contempt or 

other appropriate relief in cases where 

a court order enforcing a civil 

investigative demand has been violated. 

Section 1080.11 Disposition 

This section explains that an 

enforcement action may be instituted in 

federal or state court or through 

administrative proceedings when 

warranted by the facts disclosed by an 

investigation. This section further 

provides that the Bureau may refer 

investigations to appropriate federal, 

state, or foreign government agencies as 

appropriate. It also authorizes the 

Assistant Director of the Division of 

Enforcement to close the investigation 

when the facts of an investigation 

indicate an enforcement action is not 

necessary or warranted in the public 

interest. 

Section 1080.12 Orders Requiring 

Witnesses To Testify or Provide Other 

Information and Granting Immunity 

This section authorizes the Assistant 

Director of the Division of Enforcement 

to request approval from the Attorney 

General for the issuance of an order 

requiring a witness to testify or provide 

other information and granting 

immunity under 18 U.S.C. 6004. It also 

sets forth the Bureau’s right to review 

the exercise of these functions, and 

states that the Bureau will entertain an 

appeal from an order requiring a witness 

to testify or provide other information 

only upon a showing that a substantial 

question is involved, the determination 

of which is essential to serve the 

interests of justice. Finally, this section 

describes the applicable rules and time 

limits for such appeals. 

Section 1080.13 Custodians 

This section describes the procedures 

for designating a custodian and deputy 

custodian for material produced 

pursuant to a civil investigative demand 

in an investigation. It also states that 

these materials are for the official use of 

the Bureau, but, upon notice to the 

custodian, must be made available for 

examination during regular office hours 

by the person who produced them. 


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45170 Federal Register / Vol. 76, No. 145 / Thursday, July 28, 2011 / Rules and Regulations 

2Section 1022(b)(2)(A) addresses the 

consideration of the potential benefits and costs of 

regulation to consumers and industry, including the 

potential reduction of access by consumers to 

consumer financial products or services; the impact 

of proposed rules on depository institutions and 

credit unions with $10 billion or less in total assets 

as described in Section 1026 of the Dodd-Frank Act; 

and the impact on consumers in rural areas. 

3The President’s July 11, 2011, Executive Order 

13579 entitled ‘‘Regulation and Independent 

Regulatory Agencies,’’ asks the independent 

agencies to follow the cost-saving, burden-reducing 

principles in Executive Order 13563; harmonization 

and simplification of rules; flexible approaches that 

reduce costs; and scientific integrity. In the spirit 

of Executive Order 13563, the CFPB has consulted 

with the Office of Management and Budget 

regarding this interim final rule. 

Section 1080.14 Confidential 

Treatment of Demand Material and 

Non-Public Nature of Investigations 

Section 1080.14 explains that 

documentary materials and tangible 

things obtained by the Bureau pursuant 

to a civil investigative demand are 

subject to the requirements and 

procedures relating to disclosure of 

records and information in part 1070 of 

this title. This section also states that 

investigations generally are non-public. 

A Bureau investigator may disclose the 

existence of an investigation to the 

extent necessary to advance the 

investigation. 

(c) Procedural Requirements 

(1) Regulatory Requirements 

The Rules relate solely to agency 

procedure and practice and, thus, are 

not subject to the notice and comment 

requirements of the Administrative 

Procedure Act, 5 U.S.C. 551 et seq. 

Although the Rules are exempt from 

these requirements, the Bureau invites 

comment on them. Because no notice of 

proposed rulemaking is required, the 

requirements of the Regulatory 

Flexibility Act, 5 U.S.C. 601(2) do not 

apply. 

(2) Section 1022(b)(2) Provisions 

The CFPB has conducted an analysis 

of benefits, costs, and impacts 2 and 

consulted with the prudential 

regulators, the Department of Housing 

and Urban Development, the Securities 

and Exchange Commission, the 

Department of Justice, and the Federal 

Trade Commission, including with 

respect to whether the Rules are 

consistent with any relevant prudential, 

market, and systemic objectives 

administered by such agencies.3

The Bureau concludes that, on 

balance, the Rules are beneficial to 

consumers and covered persons alike. 

The Rules do not impose any 

obligations on consumers or have any 

direct impact on their access to credit. 

Conversely, they provide a clear, 

efficient mechanism for investigating 

compliance with the Federal consumer 

financial laws, which benefits 

consumers because the Rules offer a 

systematic process for protecting them 

from unlawful behavior. 

The Rules impose certain obligations 

on covered persons who receive civil 

investigative demands in Bureau 

investigations. Specifically, as described 

above, the Rules set forth the process for 

complying with or objecting to civil 

investigative demands for documentary 

material, tangible things, written reports 

or answers to questions, and oral 

testimony. The obligations in the Rules 

stem from express language in the Act. 

As such, the Rules do not impose 

additional burdens on covered persons 

beyond those Congress imposed in the 

Act. In fact, the Rules implement the 

statutory requirements and provide 

clear guidelines to recipients of civil 

investigative demands, providing a level 

of clarity and certainty that is beneficial 

to those obligated under the Act to 

comply with such demands. Moreover, 

ensuring compliance with Federal 

consumer financial law ultimately 

benefits covered persons by ensuring 

that scrupulous actors are not 

competitively disadvantaged in the 

marketplace. 

Furthermore, because section 1052 of 

the Act and the Rules are largely based 

on section 20 of the FTC Act and its 

corresponding regulations, they present 

an existing, stable model of 

investigatory procedures that should not 

impose new compliance costs. The 

entities subject to the Bureau’s 

jurisdiction are accustomed to 

complying with these or similar 

procedures for responding to demands 

for information or testimony from 

regulators. Thus, they do not face a 

significant cost of adjusting to a new 

procedural landscape for investigations; 

rather, they benefit from the Bureau’s 

adoption of an existing model. 

The Rules contemplate that the 

Bureau will exercise its discretion to 

modify demands or extend the time for 

compliance for good cause. The Bureau 

can assess the cost of compliance with 

a civil investigative demand in a 

particular circumstance and take 

appropriate steps to mitigate any 

unreasonable compliance burden, a 

process providing flexibility that 

benefits covered persons. 

Further, the Rules have no unique 

impact on insured depository 

institutions or insured credit unions 

with less than $10 billion in assets 

described in section 1026(a) of the Act, 

and do not have a unique impact on 

rural consumers. 

List of Subjects in 12 CFR Part 1080 

Administrative practice and 

procedure, Banks, Banking, Consumer 

protection, Credit, Credit unions, 

Federal Reserve System, Investigations, 

Law enforcement, National banks, 

Savings associations, Trade practices. 

For the reasons set forth above, the 

Bureau of Consumer Financial 

Protection adds part 1080 to Chapter X 

in Title 12 of the Code of Federal 

Regulations to read as set forth below. 

TITLE 12—BANKS AND BANKING 

CHAPTER X—BUREAU OF CONSUMER 

FINANCIAL PROTECTION 

PART 1080—RULES RELATING TO 

INVESTIGATIONS 

Sec. 

1080.1 Scope. 

1080.2 Definitions. 

1080.3 Policy as to private controversies. 

1080.4 By whom conducted. 

1080.5 Notification of purpose. 

1080.6 Civil investigative demands. 

1080.7 Investigational hearings. 

1080.8 Withholding requested material. 

1080.9 Rights of witnesses in investigations. 

1080.10 Noncompliance with civil 

investigative demands. 

1080.11 Disposition. 

1080.12 Orders requiring witnesses to 

testify or provide other information and 

granting immunity. 

1080.13 Custodians. 

1080.14 Confidential treatment of demand 

material and non-public nature of 

investigations. 

Authority: Pub. L. 111–203, Title X. 

§ 1080.1 Scope. 

The rules of this part apply to Bureau 

investigations conducted pursuant to 

section 1052 of the Act, 12 U.S.C. 5562. 

§ 1080.2 Definitions. 

For the purposes of this part, unless 

explicitly stated to the contrary: 

Act means the Consumer Financial 

Protection Act of 2010, as amended, 

Public Law 111–203 (July 21, 2010), 

Title X, 12 U.S.C. 5481 et seq. 

Assistant Director of the Division of 

Enforcement means the head of the 

Division of Enforcement or any Bureau 

employee to whom the Assistant 

Director of the Division of Enforcement 

has delegated authority to act under this 

part. 

Bureau means the Bureau of 

Consumer Financial Protection. 

Bureau investigation means any 

inquiry conducted by a Bureau 

investigator for the purpose of 

ascertaining whether any person is or 

has been engaged in any conduct that is 

a violation. 

Bureau investigator means any 

attorney or investigator employed by the 


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Bureau who is charged with the duty of 

enforcing or carrying into effect any 

Federal consumer financial law. 

Custodian means the custodian or any 

deputy custodian designated by the 

Bureau for the purpose of maintaining 

custody of information produced 

pursuant to this part. 

Director means the Director of the 

Bureau or a person authorized to 

perform the functions of the Director in 

accordance with the law. 

Division of Enforcement means the 

division of the Bureau responsible for 

enforcement of Federal consumer 

financial law. 

Documentary material means the 

original or any copy of any book, 

document, record, report, 

memorandum, paper, communication, 

tabulation, chart, logs, electronic files, 

or other data or data compilations stored 

in any medium, including 

electronically-stored information. 

Electronically stored information (ESI) 

means any information stored in any 

electronic medium from which 

information can be obtained either 

directly or, if necessary, after translation 

by the responding party into a 

reasonably usable form. 

General Counsel means the General 

Counsel of the Bureau or any Bureau 

employee to whom the General Counsel 

has delegated authority to act under this 

part. 

Person means an individual, 

partnership, company, corporation, 

association (incorporated or 

unincorporated), trust, estate, 

cooperative organization, or other 

entity. 

Violation means any act or omission 

that, if proved, would constitute a 

violation of any provision of Federal 

consumer financial law. 

§ 1080.3 Policy as to private controversies. 

The Bureau shall act only in the 

public interest and will not initiate an 

investigation or take other enforcement 

action when the alleged violation is 

merely a matter of private controversy 

and does not tend to affect adversely the 

public interest. 

§ 1080.4 By whom conducted. 

Bureau investigations are conducted 

by Bureau investigators designated and 

duly authorized under section 1052 of 

the Act, 12 U.S.C. 5562, to conduct such 

investigations. 

§ 1080.5 Notification of purpose. 

Any person compelled to furnish 

documentary material, tangible things, 

written reports or answers to questions, 

oral testimony, or any combination of 

such material, answers, or testimony to 

the Bureau shall be advised of the 

nature of the conduct constituting the 

alleged violation that is under 

investigation and the provisions of law 

applicable to such violation. 

§ 1080.6 Civil investigative demands. 

(a) In general. In accordance with 

section 1052(c) of the Act, the Assistant 

Director of the Division of Enforcement 

may issue a civil investigative demand 

in any Bureau investigation directing 

the person named therein to produce 

documentary material for inspection 

and copying or reproduction in the form 

or medium requested by the Bureau; to 

submit tangible things; to provide a 

written report or answers to questions; 

to appear before a designated 

representative at a designated time and 

place to testify about documentary 

material, tangible things, or other 

information; and to furnish any 

combination of such material, things, 

answers, or testimony. 

(1) Documentary material. 

(i) Civil investigative demands for the 

production of documentary material 

shall describe each class of material to 

be produced with such definiteness and 

certainty as to permit such material to 

be fairly identified, prescribe a return 

date or dates that will provide a 

reasonable period of time within which 

the material so demanded may be 

assembled and made available for 

inspection and copying or reproduction, 

and identify the custodian to whom 

such material shall be made available. 

Documentary material for which a civil 

investigative demand has been issued 

shall be made available as prescribed in 

the civil investigative demand. 

(ii) Production of documentary 

material in response to a civil 

investigative demand shall be made 

under a sworn certificate, in such form 

as the demand designates, by the person 

to whom the demand is directed or, if 

not a natural person, by any person 

having knowledge of the facts and 

circumstances relating to such 

production, to the effect that all of the 

documentary material required by the 

demand and in the possession, custody, 

or control of the person to whom the 

demand is directed has been produced 

and made available to the custodian. 

(2) Tangible things. 

(i) Civil investigative demands for 

tangible things shall describe each class 

of tangible things to be produced with 

such definiteness and certainty as to 

permit such things to be fairly 

identified, prescribe a return date or 

dates which will provide a reasonable 

period of time within which the things 

so demanded may be assembled and 

submitted, and identify the custodian to 

whom such things shall be submitted. 

(ii) Submissions of tangible things in 

response to a civil investigative demand 

shall be made under a sworn certificate, 

in such form as the demand designates, 

by the person to whom the demand is 

directed or, if not a natural person, by 

any person having knowledge of the 

facts and circumstances relating to such 

production, to the effect that all of the 

tangible things required by the demand 

and in the possession, custody, or 

control of the person to whom the 

demand is directed have been submitted 

to the custodian. 

(3) Written reports or answers to 

questions. 

(i) Civil investigative demands for 

written reports or answers to questions 

shall propound with definiteness and 

certainty the reports to be produced or 

the questions to be answered, prescribe 

a date or dates at which time written 

reports or answers to questions shall be 

submitted, and identify the custodian to 

whom such reports or answers shall be 

submitted. 

(ii) Each reporting requirement or 

question in a civil investigative demand 

shall be answered separately and fully 

in writing under oath. Responses to a 

civil investigative demand for a written 

report or answers to questions shall be 

made under a sworn certificate, in such 

form as the demand designates, by the 

person to whom the demand is directed 

or, if not a natural person, by any person 

responsible for answering each 

reporting requirement or question, to 

the effect that all of the information 

required by the demand and in the 

possession, custody, control, or 

knowledge of the person to whom the 

demand is directed has been submitted 

to the custodian. 

(4) Oral testimony. 

(i) Civil investigative demands for the 

giving of oral testimony shall prescribe 

a date, time, and place at which oral 

testimony shall be commenced, and 

identify a Bureau investigator who shall 

conduct the investigation and the 

custodian to whom the transcript of 

such investigation shall be submitted. 

Oral testimony in response to a civil 

investigative demand shall be taken in 

accordance with the procedures for 

investigational hearings prescribed by 

§§ 1080.7 and 1080.9 of this part. 

(ii) Where a civil investigative 

demand requires oral testimony from an 

entity, the civil investigative demand 

shall describe with reasonable 

particularity the matters for examination 

and the entity must designate one or 

more officers, directors, or managing 

agents, or designate other persons who 

consent to testify on its behalf. Unless 


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a single individual is designated by the 

entity, the entity must designate the 

matters on which each designee will 

testify. The individuals designated must 

testify about information known or 

reasonably available to the entity and 

their testimony shall be binding on the 

entity. 

(b) Manner and form of production of 

ESI. When a civil investigative demand 

requires the production of ESI, it shall 

be produced in accordance with the 

instructions provided by the Bureau 

regarding the manner and form of 

production. Absent any instructions as 

to the form for producing ESI, ESI must 

be produced in the form in which it is 

ordinarily maintained or in a reasonably 

usable form. 

(c) Compliance. The Assistant 

Director of the Division of Enforcement 

is authorized to negotiate and approve 

the terms of satisfactory compliance 

with civil investigative demands and, 

for good cause shown, may extend the 

time prescribed for compliance. 

(d) Petition for order modifying or 

setting aside demand—in general. Any 

petition for an order modifying or 

setting aside a civil investigative 

demand shall be filed with the 

Executive Secretary of the Bureau with 

a copy to the Assistant Director of the 

Division of Enforcement within twenty 

(20) days after service of the civil 

investigative demand, or, if the return 

date is less than twenty (20) days after 

service, prior to the return date. Such 

petition shall set forth all assertions of 

privilege or other factual and legal 

objections to the civil investigative 

demand, including all appropriate 

arguments, affidavits, and other 

supporting documentation. The attorney 

who objects to a demand must sign any 

objections. 

(1) Statement. Each petition shall be 

accompanied by a signed statement 

representing that counsel for the 

petitioner has conferred with counsel 

for the Bureau in a good-faith effort to 

resolve by agreement the issues raised 

by the petition and has been unable to 

reach such an agreement. If some of the 

matters in controversy have been 

resolved by agreement, the statement 

shall specify the matters so resolved and 

the matters remaining unresolved. The 

statement shall recite the date, time, and 

place of each such conference between 

counsel, and the names of all parties 

participating in each such conference. 

(2) Extensions of time. The Assistant 

Director of the Division of Enforcement 

is authorized to rule upon requests for 

extensions of time within which to file 

such petitions. Requests for extension of 

time are disfavored. 

(3) Disposition. The Director has the 

authority to rule upon a petition for an 

order modifying or setting aside a civil 

investigative demand. 

(e) Stay of compliance period. The 

timely filing of a petition for an order 

modifying or setting aside a civil 

investigative demand shall stay the time 

permitted for compliance with the 

portion challenged. If the petition is 

denied in whole or in part, the ruling 

will specify a new return date. 

(f) Public disclosure. All such 

petitions and the responses thereto are 

part of the public records of the Bureau 

unless the Bureau determines otherwise 

for good cause shown. 

§ 1080.7 Investigational hearings. 

(a) Investigational hearings, as 

distinguished from hearings in 

adjudicative proceedings, may be 

conducted pursuant to a civil 

investigative demand for the giving of 

oral testimony in the course of any 

Bureau investigation, including 

inquiries initiated for the purpose of 

determining whether or not a 

respondent is complying with an order 

of the Bureau. 

(b) Investigational hearings shall be 

conducted by any Bureau investigator 

for the purpose of hearing the testimony 

of witnesses and receiving documentary 

material, tangible things, or other 

information relating to any subject 

under investigation. Such hearings shall 

be under oath or affirmation and 

stenographically reported, and a 

transcript thereof shall be made a part 

of the record of the investigation. The 

Bureau investigator conducting the 

investigational hearing also may direct 

that the testimony be recorded by audio, 

audiovisual, or other means, in which 

case the recording shall be made a part 

of the record of the investigation as 

well. 

(c) In investigational hearings, the 

Bureau investigators shall exclude from 

the hearing room all persons except the 

person being examined, his or her 

counsel, the officer before whom the 

testimony is to be taken, any 

investigator or representative of an 

agency with which the Bureau is 

engaged in a joint investigation, and any 

individual transcribing or recording 

such testimony. At the discretion of the 

Bureau investigator, and with the 

consent of the person being examined, 

persons other than those listed in this 

paragraph may be present in the hearing 

room. The Bureau investigator shall 

certify or direct the individual 

transcribing the testimony to certify on 

the transcript that the witness was duly 

sworn and that the transcript is a true 

record of the testimony given by the 

witness. A copy of the transcript shall 

be forwarded promptly by the Bureau 

investigator to the custodian designated 

in § 1080.13. 

§ 1080.8 Withholding requested material. 

(a) Any person withholding material 

responsive to a civil investigative 

demand or any other request for 

production of material shall assert a 

claim of privilege not later than the date 

set for the production of material. Such 

person shall, if so directed in the civil 

investigative demand or other request 

for production, submit, together with 

such claim, a schedule of the items 

withheld which states, as to each such 

item, the type, specific subject matter, 

and date of the item; the names, 

addresses, positions, and organizations 

of all authors and recipients of the item; 

and the specific grounds for claiming 

that the item is privileged. The person 

who submits the schedule and the 

attorney stating the grounds for a claim 

that any item is privileged must sign it. 

(b) A person withholding material 

solely for reasons described in this 

subsection shall comply with the 

requirements of this subsection in lieu 

of filing a petition for an order 

modifying or setting aside a civil 

investigative demand pursuant to 

§ 1080.6(d). 

(c) Disclosure of privileged or 

protected information or 

communications produced pursuant to a 

civil investigative demand shall be 

handled as follows: 

(1) The disclosure of privileged or 

protected information or 

communications shall not operate as a 

waiver if: 

(i) The disclosure was inadvertent; 

(ii) The holder of the privilege or 

protection took reasonable steps to 

prevent disclosure; and 

(iii) The holder promptly took 

reasonable steps to rectify the error, 

including notifying a Bureau 

investigator of the claim and the basis 

for it. 

(2) After being notified, the Bureau 

investigator must promptly return, 

sequester, or destroy the specified 

information and any copies; must not 

use or disclose the information until the 

claim is resolved; must take reasonable 

steps to retrieve the information if he or 

she disclosed it before being notified; 

and, if appropriate, may sequester such 

material until such time as a hearing 

officer or court rules on the merits of the 

claim of privilege or protection. The 

producing party must preserve the 

information until the claim is resolved. 

(3) The disclosure of privileged or 

protected information or 

communications shall waive the 


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Federal Register / Vol. 76, No. 145 / Thursday, July 28, 2011 / Rules and Regulations 45173 

privilege or protection as to undisclosed 

information or communications only if: 

(i) The waiver is intentional; 

(ii) The disclosed and undisclosed 

information or communications concern 

the same subject matter; and 

(iii) They ought in fairness to be 

considered together. 

§ 1080.9 Rights of witnesses in 

investigations. 

(a) Any person compelled to submit 

documentary material, tangible things, 

or written reports or answers to 

questions to the Bureau, or to testify in 

an investigational hearing, shall be 

entitled to retain a copy or, on payment 

of lawfully prescribed costs, request a 

copy of the materials, things, reports, or 

written answers submitted, or a 

transcript of his or her testimony. The 

Bureau, however, may for good cause 

deny such a request and limit the 

witness to inspection of the official 

transcript of the testimony. Upon 

completion of transcription of the 

testimony of the witness, the witness 

shall be offered an opportunity to read 

the transcript of his or her testimony. 

Any changes in form or substance that 

the witness desires to make shall be 

entered and identified upon the 

transcript by the Bureau investigator 

with a statement of the reasons given by 

the witness for making such changes. 

The transcript shall then be signed by 

the witness unless the witness cannot be 

found, is ill, waives in writing his or her 

right to signature, or refuses to sign. If 

the transcript is not signed by the 

witness within thirty (30) days of being 

afforded a reasonable opportunity to 

review it, the Bureau investigator, or the 

individual transcribing the testimony 

acting at the Bureau investigator’s 

direction, shall sign the transcript and 

state on the record the fact of the 

waiver, illness, absence of the witness, 

or the refusal to sign, together with any 

reasons given for the failure to sign. 

(b) Any witness compelled to appear 

in person at an investigational hearing 

may be accompanied, represented, and 

advised by counsel as follows: 

(1) Counsel for a witness may advise 

the witness, in confidence and upon the 

initiative of either counsel or the 

witness, with respect to any question 

asked of the witness for which an 

objection pursuant to paragraph (b) (2) 

of this section may properly be made. If 

the witness refuses to answer a 

question, counsel may briefly state on 

the record if he or she has advised the 

witness not to answer the question and 

the legal grounds for such refusal. 

(2) Where it is claimed that a witness 

is privileged to refuse to answer a 

question or to produce other evidence, 

the witness or counsel for the witness 

shall object on the record to the 

question or requirement and may state 

briefly and precisely the ground 

therefor. The witness and his or her 

counsel shall not otherwise object to or 

refuse to answer any question, and they 

shall not otherwise interrupt the oral 

examination. 

(3) Any objections made under the 

rules in this part will be treated as 

continuing objections and preserved 

throughout the further course of the 

hearing without the necessity for 

repeating them as to any similar line of 

inquiry. Cumulative objections are 

unnecessary. Repetition of the grounds 

for any objection will not be allowed. 

(4) Counsel for a witness may not, for 

any purpose or to any extent not 

allowed by paragraphs (b)(1) and (2) of 

this section, interrupt the examination 

of the witness by making any objections 

or statements on the record. Petitions 

challenging the Bureau’s authority to 

conduct the investigation or the 

sufficiency or legality of the civil 

investigative demand shall be addressed 

to the Bureau in advance of the hearing. 

Copies of such petitions may be filed as 

part of the record of the investigation 

with the Bureau investigator conducting 

the investigational hearing, but no 

arguments in support thereof will be 

allowed at the hearing. 

(5) Following completion of the 

examination of a witness, counsel for 

the witness may, on the record, request 

that the Bureau investigator conducting 

the investigational hearing permit the 

witness to clarify any of his or her 

answers. The grant or denial of such 

request shall be within the sole 

discretion of the Bureau investigator 

conducting the hearing. 

(6) The Bureau investigator 

conducting the hearing shall take all 

necessary action to regulate the course 

of the hearing to avoid delay and to 

prevent or restrain disorderly, dilatory, 

obstructionist, or contumacious 

conduct, or contemptuous language. 

Such Bureau investigator shall, for 

reasons stated on the record, 

immediately report to the Bureau any 

instances where an attorney has 

allegedly refused to comply with his or 

her obligations under the rules in this 

part, or has allegedly engaged in 

disorderly, dilatory, obstructionist, or 

contumacious conduct, or 

contemptuous language in the course of 

the hearing. The Bureau will thereupon 

take such further action, if any, as the 

circumstances warrant, including 

suspension or disbarment of the 

attorney from further practice before the 

Bureau or exclusion from further 

participation in the particular 

investigation. 

§ 1080.10 Noncompliance with civil 

investigative demands. 

(a) In cases of failure to comply in 

whole or in part with Bureau civil 

investigative demands, appropriate 

action may be initiated by the Bureau, 

including actions for enforcement. 

(b) The Assistant Director of the 

Division of Enforcement and the 

General Counsel are authorized to: 

(1) Institute, on behalf of the Bureau, 

an enforcement proceeding in the 

district court of the United States for 

any judicial district in which a person 

resides, is found, or transacts business, 

in connection with the failure or refusal 

of such person to comply with, or to 

obey, a civil investigative demand in 

whole or in part if the return date or any 

extension thereof has passed; and 

(2) Seek civil contempt or other 

appropriate relief in cases where a court 

order enforcing a civil investigative 

demand has been violated. 

§ 1080.11 Disposition. 

(a) When the facts disclosed by an 

investigation indicate that an 

enforcement action is warranted, further 

proceedings may be instituted in federal 

or state court or pursuant to the 

Bureau’s administrative adjudicatory 

process. Where appropriate, the Bureau 

also may refer investigations to 

appropriate federal, state, or foreign 

governmental agencies. 

(b) When the facts disclosed by an 

investigation indicate that an 

enforcement action is not necessary or 

would not be in the public interest, the 

investigational file will be closed. The 

matter may be further investigated, at 

any time, if circumstances so warrant. 

(c) The Assistant Director of the 

Division of Enforcement is authorized to 

close Bureau investigations. 

§ 1080.12 Orders requiring witnesses to 

testify or provide other information and 

granting immunity. 

(a) The Assistant Director of the 

Division of Enforcement is hereby 

authorized to request approval from the 

Attorney General of the United States 

for the issuance of an order requiring a 

witness to testify or provide other 

information granting immunity under 

18 U.S.C. 6004. 

(b) The Bureau retains the right to 

review the exercise of any of the 

functions delegated under paragraph (a) 

of this section. Appeals to the Bureau 

from an order requiring a witness to 

testify or provide other information will 

be entertained by the Bureau only upon 

a showing that a substantial question is 

involved, the determination of which is 


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45174 Federal Register / Vol. 76, No. 145 / Thursday, July 28, 2011 / Rules and Regulations 

1The Act is Title X of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act, as amended, 

Public Law 111–203 (July 21, 2010), Title X, 12 

U.S.C. 5481 et seq. Section 1066 of the Act grants 

the Secretary of the Treasury interim authority to 

perform certain functions of the CFPB. Pursuant to 

that authority, Treasury publishes these Rules on 

behalf of the CFPB. 

essential to serve the interests of justice. 

Such appeals shall be made on the 

record and shall be in the form of a brief 

not to exceed fifteen (15) pages in length 

and shall be filed within five (5) days 

after notice of the complained of action. 

The appeal shall not operate to suspend 

the hearing unless otherwise 

determined by the Bureau investigator 

conducting the hearing or ordered by 

the Bureau. 

§ 1080.13 Custodians. 

(a) The Bureau shall designate a 

custodian and one or more deputy 

custodians for material to be delivered 

pursuant to a civil investigative demand 

in an investigation. The custodian shall 

have the powers and duties prescribed 

by section 1052 of the Act, 12 U.S.C. 

5562. Deputy custodians may perform 

all of the duties assigned to custodians. 

(b) Material produced pursuant to a 

civil investigative demand, while in the 

custody of the custodian, shall be for the 

official use of the Bureau in accordance 

with the Act; but such material shall 

upon reasonable notice to the custodian 

be made available for examination by 

the person who produced such material, 

or his or her duly authorized 

representative, during regular office 

hours established for the Bureau. 

§ 1080.14 Confidential treatment of 

demand material and non-public nature of 

investigations. 

(a) Documentary materials and 

tangible things the Bureau receives 

pursuant to a civil investigative demand 

are subject to the requirements and 

procedures relating to the disclosure of 

records and information set forth in part 

1070 of this chapter. 

(b) Bureau investigations generally are 

non-public. Bureau investigators may 

disclose the existence of an 

investigation to potential witnesses or 

third parties to the extent necessary to 

advance the investigation. 

Dated: July 22, 2011. 

Sam Valverde, 

Deputy Executive Secretary, Department of 

the Treasury. 

[FR Doc. 2011–19035 Filed 7–25–11; 4:15 pm] 

BILLING CODE 4810–25–P 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1082 

[Docket No. CFPB–2011–0005] 

RIN 3170–AA02 

State Official Notification Rules 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Interim final rule with request 

for public comment. 

SUMMARY: Section 1042(c) of the 

Consumer Financial Protection Act of 

2010 (‘‘Act’’), requires the Bureau of 

Consumer Financial Protection (‘‘CFPB’’ 

or ‘‘Bureau’’) to prescribe rules 

establishing procedures that govern the 

process, described in section 1042(b) of 

the Act, by which state officials notify 

the CFPB of actions or proceedings 

undertaken pursuant to the authority 

granted in section 1042(a) to enforce the 

Act or regulations prescribed 

thereunder. This interim final rule with 

a request for public comment sets forth 

those rules. 

DATES: This interim final rule is 

effective on July 28, 2011. Written 

comments are invited and must be 

received on or before September 26, 

2011. 

ADDRESSES: You may submit comments, 

identified by Docket No. CFPB–2011– 

0005, by any of the following methods: 

• Electronic: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail or Hand Delivery/Courier in 

Lieu of Mail: Monica Jackson, Office of 

the Executive Secretary, Consumer 

Financial Protection Bureau, 1801 L 

Street, NW., Washington, DC 20036. 

All submissions must include the 

agency name and docket number or 

Regulatory Information Number (RIN) 

for this rulemaking. In general, all 

comments received will be posted 

without change to http:// 

www.regulations.gov. In addition, 

comments will be available for public 

inspection and copying at 1801 L Street, 

NW., Washington, DC 20036, on official 

business days between the hours of 

10 a.m. and 5 p.m. Eastern Time. You 

can make an appointment to inspect the 

documents by telephoning (202) 435– 

7275. 

All comments, including attachments 

and other supporting materials, will 

become part of the public record and 

subject to public disclosure. Sensitive 

personal information, such as account 

numbers or social security numbers, 

should not be included. Comments will 

not be edited to remove any identifying 

or contact information. 

FOR FURTHER INFORMATION CONTACT: 

Monica Jackson, Office of the Executive 

Secretary, Consumer Financial 

Protection Bureau, 1801 L Street, NW., 

Washington, DC 20036, (202) 435–7275. 

SUPPLEMENTARY INFORMATION: The CFPB 

issues these State Official Notification 

Rules (‘‘Rules’’), pursuant to sections 

1042(b) and (c) of the Consumer 

Financial Protection Act of 2010 

(‘‘Act’’),1 12 U.S.C. 5552(b), (c). These 

Rules are promulgated as an interim 

final rule with a request for comment. 

The CFPB invites interested members of 

the public to submit written comments 

addressing the issues raised herein. 

A. Background 

These Rules will govern the process 

by which state officials notify the CFPB 

of actions or proceedings undertaken 

under section 1042(a) of the Act, 12 

U.S.C. 5552(a), to enforce the Act, or 

regulations prescribed thereunder. 

The Rules implement a procedure for 

the timing and content of the notice 

required to be given to the CFPB, set 

forth the responsibilities of CFPB 

employees and others who receive the 

notice, and specify the rights of the 

CFPB to participate in an action brought 

by a state official. In drafting these 

Rules, the CFPB endeavored to create a 

process that would both provide the 

CFPB and the relevant prudential 

regulators with timely notice of pending 

actions and account for the investigation 

and litigation needs of state law 

enforcement agencies. In keeping with 

this approach, the Rules provide for a 

default notice period of at least 10 days, 

with exceptions for emergencies and 

other extenuating circumstances, and 

require substantive notice that is both 

straightforward and comprehensive. The 

Rules further make clear that the CFPB 

can participate as appropriate in an 

action brought by state officials under 

the Act or a regulation prescribed 

thereunder, provide for confidential 

treatment of information disclosed to 

the CFPB and prudential regulators 

under these Rules, and establish that 

provision of notice shall not constitute 

a waiver of any applicable privilege. In 

addition, the Rules specify that the 

notice provisions do not create any 

procedural or substantive rights for 

parties in litigation against the United 

States or against a state which brings an 

action under the Act or a regulation 

prescribed thereunder. 

B. Section Summary 

The Rules are set forth in a single 

section, with several paragraphs, each of 

which is addressed below. 

Section 1082.1(a) Notice Requirement 

This paragraph sets out the timing 

and process for the provision of notice 


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