31226 Federal Register / Vol. 77, No. 102 / Friday, May 25, 2012 / Proposed Rules 

(e) For MLs, when projected yields 

and unit prices cannot be determined as 

set forth in paragraphs (c) and (d) of this 

section because the data is not available 

or practicable, documentation from 

other reliable sources may be used. 

* * * * * 

PART 764—DIRECT LOAN MAKING 

4. The authority citation for part 764 

continues to read as follows: 

Authority: 5 U.S.C. 301 and 7 U.S.C. 1989. 

§ 764.1 [Amended] 

5. Amend § 764.1 paragraph (b)(2) by 

adding the words ‘‘ML and’’ 

immediately following the word 

‘‘including’’. 

6. Revise § 764.51 paragraph (c) to 

read as follows: 

§ 764.51 Loan application. 

* * * * * 

(c) For an ML request, all of the 

following criteria must be met: 

(1) The loan requested is: 

(i) To pay annual or term operating 

expenses, and 

(ii) $35,000 or less and the applicant’s 

total outstanding Agency OL debt at the 

time of loan closing will be $35,000 or 

less; 

(2) The applicant must submit the 

following: 

(i) Items (1), (2), (3), (6), (7), (9), and 

(11) of paragraph (b) of this section; 

(ii) Financial and production records 

for the most recent production cycle, if 

available, and practicable to project the 

cash flow of the operating cycle, and 

(iv) Verification of all non-farm 

income relied upon for repayment; and 

(3) The Agency may require an ML 

applicant to submit any other 

information listed in paragraph (b) of 

this section upon request when 

specifically needed to make a 

determination on the loan application. 

* * * * * 

7. Amend § 764.101 as follows: 

a. In paragraph (i)(3) at the end of the 

first sentence add the text ‘‘or the 

applicant may have obtained and 

successfully repaid one FSA YouthOL’’; and 

b. Add paragraph (i)(4). 

The addition reads as follows: 

§ 764.101 General eligibility requirements. 

* * * * * 

(i) * * * 

(4) Alternatives for ML. ML applicants 

also may demonstrate managerial ability 

by one of the following: 

(i) Certification of a past association 

with an agriculture-related organization, 

such as 4–H Club or FFA, that 

demonstrates experience in a related 

enterprise; or 

(ii) A written description of a self 

directed apprenticeship for the first 

operating cycle. The applicant will 

agree as a condition of the loan to seek, 

receive, and apply guidance, during the 

first production cycle of production and 

marketing typical to the applicant’s 

specific operation, with an individual 

who is knowledgeable of production 

and marketing practices that are 

pertinent to the applicant’s operation 

and will provide a developmental 

partnership to share knowledge, skills, 

information, and perspective of 

agriculture to foster professional growth. 

The intent of this apprenticeship is to 

provide the applicant with the skills 

and knowledge necessary to manage 

their operation on their own. They may 

continue the apprenticeship beyond the 

first operating cycle, but they are not 

required to do so. 

§ 764.103 [Amended] 

8. Amend § 764.103 as follows: 

a. Amend paragraph (c), by adding 

‘‘ML’’ after the words ‘‘downpayment 

loans’’; and 

b. Amend the last sentence of 

paragraph (e) by removing the words 

‘‘conservation loans’’ and adding, in 

their place, the words ‘‘CL, ML’’. 

9. Amend § 764.251 as follows: 

a. Revise paragraph (a), introductory 

text; and 

b. Revise paragraph (b). 

The revisions read as follows: 

§ 764.251 Operating loan uses. 

(a) OL funds may only be used for: 

* * * * * 

(b) ML funds may be used for any OL 

purpose. 

10. Amend § 764.255 as follows: 

a. Revise paragraph (b), introductory 

text; and 

b. Add paragraph (c). 

The revision and addition read as 

follows: 

§ 764.255 Security requirements. 

* * * * * 

(b) Except for MLs, by a: 

* * * 

(c) For MLs: 

(1) All loans must be secured by 

assets having a security value of at least 

100 percent of the loan amount. 

(2) A lien is required on foundation 

livestock or equipment purchased with 

term ML funds. 

(3) Improvements to farm real estate 

(such as, well drilling, small barns, 

storage sheds, or underground 

irrigation) may be secured by 

equipment, foundation livestock, or 

similar chattel security if available and 

adequate to meet the 100 percent 

security requirement. A lien on real 

estate will only be taken if other 

security is not available to adequately 

meet 100 percent security requirement. 

(4) Crops and livestock products may 

be taken as security for annual operating 

MLs only when other available security 

does not meet the 100 percent security 

requirement. 

Signed on April 27, 2012. 

Bruce Nelson, 

Administrator, Farm Service Agency. 

[FR Doc. 2012–12685 Filed 5–23–12; 8:45 am] 

BILLING CODE P 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1091 

[Docket No. CFPB–2012–0021] 

RIN 3170–AA24 

Procedural Rules To Establish 

Supervisory Authority Over Certain 

Nonbank Covered Persons Based on 

Risk Determination 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Proposed rule; request for 

public comment. 

SUMMARY: This proposed rule 

establishes procedures to implement 

section 1024(a)(1)(C) of Title X of the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act of 2010 (12 

U.S.C. 5514(a)(1)(C)). Pursuant to this 

provision, the Bureau of Consumer 

Financial Protection (Bureau) has the 

authority to supervise a nonbank 

covered person when the Bureau has 

reasonable cause to determine, by order, 

after notice to the person and a 

reasonable opportunity to respond, that 

such person is engaging, or has engaged, 

in conduct that poses risks to consumers 

with regard to the offering or provision 

of consumer financial products or 

services. This proposed rule sets forth 

the procedures by which the Bureau 

may subject a nonbank covered person 

to the Bureau’s supervisory authority 

under 12 U.S.C. 5514(a)(1)(C). Under 12 

U.S.C. 5514, the Bureau is authorized to 

require reports from, and conduct 

examinations of, entities made subject 

to its supervisory authority in this 

manner. 

DATES: Comments must be received on 

or before July 24, 2012. 

ADDRESSES: Interested parties are 

invited to submit written comments 

electronically or in paper form. Because 

paper mail in the Washington, DC area 

and at the Bureau is subject to delay, 

commenters are encouraged to submit 

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Federal Register / Vol. 77, No. 102 / Friday, May 25, 2012 / Proposed Rules 31227 

1Public Law 111–203 (12 U.S.C. 5301 et seq.). 

2See 12 U.S.C. 5515(a). The Bureau also has 

certain authorities relating to the supervision of 

other banks, thrifts, and credit unions. See 12 

U.S.C. 5516(c)(1), (e). 

3The provisions of 12 U.S.C. 5514 apply to 

nondepository (nonbank) covered persons and 

expressly exclude from coverage persons described 

in 12 U.S.C. 5515(a) or 5516(a). A ‘‘covered person’’ 

means ‘‘(A) any person that engages in offering or 

providing a consumer financial product or service; 

and (B) any affiliate of a person described [in (A)] 

if such affiliate acts as a service provider to such 

person.’’ 12 U.S.C. 5481(6); see also 12 U.S.C. 

5481(5) (defining ‘‘consumer financial product or 

service.’’). Under 12 U.S.C. 5514(d), subject to 

certain exceptions, ‘‘to the extent that Federal law 

authorizes the Bureau and another Federal agency 

to * * * conduct examinations, or require reports 

from a [nonbank covered person] under such law 

for purposes of assuring compliance with Federal 

consumer financial law and any regulations 

thereunder, the Bureau shall have the exclusive 

authority to * * * conduct examinations [and] 

require reports * * * with regard to a [nonbank 

covered person], subject to those provisions of 

law.’’ 

4 12 U.S.C. 5514(a)(1)(A), (D), and (E). The 

Bureau’s supervision authority also extends to 

service providers of these entities. See 12 U.S.C. 

5514(e) (establishing the Bureau’s supervisory 

authority relating to service providers); see also, 12 

U.S.C. 5481(26) (defining ‘‘service provider’’). 

5 12 U.S.C. 5514(a)(1)(C). The Bureau also has the 

authority to supervise any ‘‘larger participant of a 

market for other consumer financial products or 

services,’’ as defined by rule by the Bureau. 12 

U.S.C. 5514(a)(1)(B), (a)(2). An initial rule to define 

who is a larger participant in other markets must 

be issued by July 21, 2012; a notice of proposed 

rulemaking for this initial rule was published in the 

Federal Register on February 17, 2012 at 77 FR 

9592. 

6 12 U.S.C. 5514(a)(1)(C). 

7 12 U.S.C. 5514(b)(1); see also 12 U.S.C. 5481(14) 

(defining ‘‘Federal consumer financial law’’). 

comments electronically. You may 

submit comments, identified by Docket 

No. CFPB–2012–0021 or RIN 3170– 

AA24 by any of the following methods: 

• Electronic: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail/Hand Delivery/Courier: 

Monica Jackson, Administrative 

Specialist, Office of the Executive 

Secretary, Bureau of Consumer 

Financial Protection, 1700 G Street NW., 

Washington, DC 20552. 

• Instructions: All comments should 

include the agency name and docket 

number or RIN for this rule making. 

Because paper mail in the Washington, 

DC area and at the bureau is subject to 

delay, commenters are encouraged to 

submit comments electronically. In 

general, all comments received will be 

posted without change to http:// 

www.regulations.gov. Comments will be 

available for public inspection and 

copying at 1700 G Street NW., 

Washington, DC 20552, 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 

will be subject to public disclosure. 

Submit only information that you wish 

to make available publicly. Do not 

include sensitive personal information, 

such as account numbers or Social 

Security numbers. Comments will not 

be edited to remove any identifying or 

contact information, such as name and 

address information, email addresses, or 

telephone numbers. 

FOR FURTHER INFORMATION CONTACT: 

Christopher Young, Senior Counsel, 

Office of Nonbank Supervision, Bureau 

of Consumer Financial Protection, 1700 

G Street NW., Washington, DC 20552, at 

(202) 435–7408. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Title X of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act of 

2010 (Dodd-Frank Act) 1 established the 

Bureau of Consumer Financial 

Protection (Bureau) on July 21, 2010. 

One of the Bureau’s key responsibilities 

under the Dodd-Frank Act is the 

supervision of very large banks, thrifts, 

and credit unions, and their affiliates,2

and certain nonbank covered persons.3

Under 12 U.S.C. 5514, the Bureau’s 

supervision authority for nonbank 

covered persons varies by consumer 

financial product or service market. 

Specifically, 12 U.S.C. 5514 grants the 

Bureau authority to supervise nonbank 

covered persons that offer or provide to 

consumers: (1) Origination, brokerage, 

or servicing of residential mortgage 

loans secured by real estate, and related 

mortgage loan modification or 

foreclosure relief services; (2) private 

education loans; and (3) payday loans.4

In addition, the Bureau has the 

authority to supervise any nonbank 

covered person that it ‘‘has reasonable 

cause to determine, by order, after 

notice * * * and a reasonable 

opportunity * * * to respond’’ that 

such covered person ‘‘is engaging, or 

has engaged, in conduct that poses risks 

to consumers with regard to the offering 

or provision of consumer financial 

products or services.’’ 5 The Bureau 

shall base such reasonable cause on 

complaints collected by the Bureau 

under 12 U.S.C. 5493(b)(3), or on 

information collected from other 

sources.6 This Proposal sets forth 

procedures to implement these riskbased provisions. 

The Bureau is authorized to supervise 

nonbank covered persons subject to 12 

U.S.C. 5514 by requiring the submission 

of reports and conducting examinations 

to: (1) Assess compliance with the 

requirements of Federal consumer 

financial law; (2) obtain information 

about such persons’ activities and 

compliance systems or procedures; and 

(3) detect and assess risks to consumers 

and to markets for consumer financial 

products and services.7 The Proposed 

Rule sets forth only procedures by 

which the Bureau may make a nonbank 

covered person subject to its 

supervisory authority under 12 U.S.C. 

5514(a)(1)(C) and would not impose 

new substantive consumer protection 

requirements on any nonbank entity. 

Moreover, nonbank entities are subject 

to the Bureau’s regulatory and 

enforcement authority and any 

applicable Federal consumer financial 

law, regardless of whether they are 

subject to the Bureau’s supervisory 

authority. 

II. Summary of the Proposal 

This Proposed Rule, if adopted, 

would govern the process by which a 

nonbank covered person may become 

subject to the supervisory authority of 

the Bureau pursuant to 12 U.S.C. 

5514(a)(1)(C). In this Proposal, the 

Bureau has endeavored to establish an 

efficient, expeditious, and fair process 

to exercise the Bureau’s authority under 

12 U.S.C. 5514(a)(1)(C). Under the 

proposed process, the Bureau would 

provide a nonbank covered person a 

notice (Notice or Notice of Reasonable 

Cause) stating that the Bureau may have 

reasonable cause to determine that such 

covered person is engaging, or has 

engaged, in conduct that poses risks to 

consumers with regard to the offering or 

provision of consumer financial 

products or services. The Proposal 

establishes mechanisms to provide the 

nonbank covered person a reasonable 

opportunity to respond to the Notice. 

The Bureau believes that the procedures 

established by this Proposed Rule 

would provide a recipient of a Notice 

(respondent) with a more robust process 

than required by Section 1024(a)(1)(C). 

For example, to satisfy the statutory 

requirement that the Bureau provide a 

reasonable opportunity to respond, the 

Bureau need not offer respondents an 

opportunity to participate in a 

supplemental oral response. The 

Proposed Rule, however, if adopted, 

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31228 Federal Register / Vol. 77, No. 102 / Friday, May 25, 2012 / Proposed Rules 

8See 5 U.S.C. 554 and 556 (setting forth APA 

procedures for adjudications determined on the 

record after an opportunity for an agency hearing). 

9 12 CFR 1081.200 sets forth the procedures for 

the commencement of an adjudicative proceeding 

by the Bureau under section 1053 of the DoddFrank Act, 12 U.S.C. 5563, and also the contents of 

the notice of charges in such a proceeding. 10 5 U.S.C. 551 et seq. 

would provide such an opportunity to 

respondents. 

To provide a reasonable opportunity 

to respond to a Notice, the Proposed 

Rule would require that a Notice 

include a description of the basis for the 

assertion that the Bureau may have 

reasonable cause to determine that a 

respondent is a nonbank covered person 

that is engaging, or has engaged, in 

conduct that poses risks to consumers 

with regard to the offering or provision 

of consumer financial products or 

services. A Notice is intended to afford 

a respondent the opportunity to 

evaluate the assertions set forth therein 

and to formulate an appropriate 

response. The Proposed Rule would 

provide a respondent with two 

opportunities to respond to a Notice— 

first in writing and then, if requested by 

a respondent, through a supplemental 

oral response generally to be conducted 

by telephone. Under the Proposed Rule, 

a respondent would be required to 

include with the written response 

records, documents, or other items 

supporting the arguments set forth in 

the response that a respondent wants 

the Bureau’s Assistant Director for 

Nonbank Supervision (Assistant 

Director) and the Bureau’s Director 

(Director) to consider. A supplemental 

oral response, if requested, would 

provide a respondent with the 

opportunity to present arguments to the 

Bureau’s Assistant Director or her or his 

designee. 

Under the Proposed Rule, a Notice of 

Reasonable Cause would not constitute 

a notice of charges for any alleged 

violation of Federal consumer financial 

law or other law. The proceedings under 

the Proposed Rule would be informal 

and would not constitute an 

adjudicatory proceeding under section 

554 of the Administrative Procedure Act 

(APA).8 Appropriately, under the 

informal process that would be 

established by the Proposed Rule if 

made final, no discovery would be 

permitted, a supplemental oral response 

would not constitute a hearing on the 

record, and no witnesses would be 

permitted to be called as part of a 

supplemental oral response. 

Under the Proposed Rule, the 

Bureau’s Deputy Assistant Director for 

Nonbank Supervision (Deputy) would 

commence a proceeding by issuing a 

Notice. The response (both written and 

oral—if any) would then be considered 

by the Bureau’s Assistant Director, who 

would provide to the Bureau’s Director 

a recommended determination. The 

Director would make the final 

determination in any proceeding by 

adopting without revision, modifying, 

or rejecting the Assistant Director’s 

recommended determination. The result 

would be either an order subjecting a 

respondent to the Bureau’s supervisory 

authority under 12 U.S.C. 5514, or a 

notice stating that a respondent is not 

subject, as a result of the proceeding, to 

the Bureau’s supervisory authority. 

In addition, under the Proposed Rule 

there would be two ways in which a 

respondent could consent to the 

Bureau’s supervisory authority. First, 

the Proposed Rules provides for an 

expedited method by which a 

respondent may execute the consent 

agreement form attached to the Notice 

that is served on the respondent and file 

it with the Assistant Director in lieu of 

a response. Second, under the Proposed 

Rule, at any time during a proceeding, 

a respondent may voluntarily consent to 

the Bureau’s supervisory authority 

under such terms as the parties may 

agree. 

The Proposed Rule also generally 

provides that if a determination by the 

Director results in an order bringing a 

respondent within the Bureau’s 

supervisory authority under 12 U.S.C. 

5514, the respondent would be 

permitted, after two years (and no more 

than annually thereafter), to petition the 

Director for the termination of such an 

order. However, under the Proposed 

Rule, where a respondent voluntarily 

consents to the Bureau’s supervisory 

authority for a specified period of time, 

the respondent would not be permitted 

to petition for the termination of 

supervision during the period specified 

in the consent agreement. A petition for 

termination of an order provides a 

method for a respondent to inform the 

Bureau of actions taken and progress 

made to reduce the risks to consumers 

after the issuance of the order. Further, 

the Proposed Rule makes clear that 

nothing in the rule affects the relief the 

Bureau may seek in any civil action or 

administrative adjudication. 

Finally, the Proposed Rule provides 

that if the Bureau otherwise issues a 

notice of charges against a person under 

12 CFR 1081.200,9 the Bureau may, in 

its sole discretion, also provide a notice 

and opportunity to respond as required 

by 12 U.S.C. 5514(a)(1)(C) in the notice 

of charges. In such a circumstance, the 

procedures set forth in proposed 

§ 1091.101—§ 1091.113 would not apply 

to the proceedings. 

III. Legal Authority 

A. Rulemaking Authority 

The Bureau is issuing this Proposed 

Rule pursuant to its authority under: (1) 

12 U.S.C. 5512(b)(1), which grants the 

Bureau the authority to prescribe rules 

as may be necessary and appropriate to 

enable the Bureau to administer and 

carry out the purposes and objectives of 

the Federal consumer financial laws, 

and to prevent evasions of those laws; 

(2) 12 U.S.C. 5514(a)(1)(C), which 

authorizes the Bureau to supervise a 

nonbank covered person when it has 

reasonable cause to determine, by order, 

after notice to the person, and a 

reasonable opportunity to respond, that 

such person is engaging, or has engaged, 

in conduct that poses risks to consumers 

with regard to the offering or provision 

of consumer financial products or 

services; and (3) 12 U.S.C. 5514(b)(7), 

which authorizes the Bureau to 

prescribe rules to facilitate the 

supervision of nonbank covered persons 

under 12 U.S.C. 5514(a)(1). 

B. Effective Date 

The Proposed Rule relates solely to 

agency procedure and practice and, 

thus, is not subject to the 30-day 

delayed effective date for substantive 

rules under section 553(d) of the APA.10

Although not required, the Proposal 

provides that the final rule will be 

effective 30 days after publication in the 

Federal Register. 

IV. Section-by-Section Description 

Section .100 Scope and Purpose 

Proposed § 1091.100 sets forth the 

scope and purpose of the Proposed 

Rule. It states that the part sets forth 

procedures to implement 12 U.S.C. 

5514(a)(1)(C) and to facilitate the 

supervision of nonbank covered persons 

under 12 U.S.C. 5514(b)(7). 

Section 1091.101 Definitions 

Proposed § 1091.101 defines terms 

used in the Proposed Rule. If a term is 

defined in the Dodd-Frank Act, the 

Proposal generally incorporates that 

definition, with clarifications and 

modifications where necessary. The 

Bureau seeks comment on each of the 

definitions set forth in the Proposed 

Rule and any suggested clarification, 

modifications, or alternatives. 

Assistant Director. Under the 

Proposal, the term ‘‘Assistant Director’’ 

means the Bureau’s Assistant Director 

for Nonbank Supervision or her or his 

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Federal Register / Vol. 77, No. 102 / Friday, May 25, 2012 / Proposed Rules 31229 

11Under these clauses, the term ‘‘financial 

product or service’’ is generally defined to include, 

subject to certain exclusions: (1) Extending credit 

and servicing loans, 12 U.S.C. 5481(15)(A)(i); (2) 

providing real estate settlement services or 

performing appraisals of real estate or personal 

property, 12 U.S.C. 5481(15)(A)(iii); (3) collecting, 

analyzing, maintaining, or providing consumer 

report information or other account information 

used or expected to be used in connection with any 

decision regarding the offering or provision of a 

consumer financial product or service, 12 U.S.C. 

5481(15)(A)(ix); and (4) collecting debt related to 

any consumer financial product or service, 12 

U.S.C. 5481(15)(A)(x). 

designee. This proposed definition 

provides that, in the event there is no 

Assistant Director, the Director of the 

Bureau may designate an alternative 

Bureau employee to perform the 

functions of the Assistant Director. 

Bureau. The Proposal provides that 

the term ‘‘Bureau’’ means the Bureau of 

Consumer Financial Protection. 

Consumer. The Proposal incorporates 

the definition of the term ‘‘consumer’’ 

set forth in 12 U.S.C. 5481(4), which 

defines ‘‘consumer’’ as an individual or 

an agent, trustee, or representative 

acting on behalf of an individual. 

Consumer financial product or 

service. The Proposal incorporates the 

definition of the term ‘‘consumer 

financial product or service’’ set forth in 

12 U.S.C. 5481(5). The Proposal 

provides that the term ‘‘consumer 

financial product or service’’ means any 

financial product or service as defined 

in 12 U.S.C. 5481(15) that is described 

in one or more categories under: (a) 12 

U.S.C. 5481(15) and is offered or 

provided for use by consumers 

primarily for personal, family, or 

household purposes; or (b) clause (i), 

(iii), (ix), or (x) of 12 U.S.C. 

5481(15)(A) 11 and is delivered, offered, 

or provided in connection with a 

consumer financial product or service 

referred to in (a). 

Decisional employee. The Proposal 

states that the term ‘‘decisional 

employee’’ means any employee of the 

Bureau who has not engaged in: (a) 

assisting the Deputy in either 

determining whether to issue a Notice of 

Reasonable Cause, or presenting the 

Deputy’s position in support of a Notice 

of Reasonable Cause, either in writing or 

in a supplemental oral response, to the 

Assistant Director; or (b) assisting the 

Assistant Director in the preparation of 

a recommended determination. 

Deputy. The Proposal states that the 

term ‘‘Deputy’’ means the Bureau’s 

Deputy Assistant Director for Nonbank 

Supervision or her or his designee. If 

there is no Deputy, the term shall mean 

any alternative Bureau employee 

designated by the Assistant Director or 

Director to fulfill the duties of the 

Deputy under this part. 

Director. The Proposal states that the 

term ‘‘Director’’ means the Director of 

the Bureau or her or his designee. If 

there is no Director, the term shall mean 

a person authorized to perform the 

functions of the Director in accordance 

with the law, of her or his designee. 

Executive Secretary. The Proposal 

states that the term ‘‘Executive 

Secretary’’ means the Executive 

Secretary of the Bureau. 

Nonbank covered person. The 

provisions of 12 U.S.C. 5514 relate to 

‘‘covered persons’’ as defined in 12 

U.S.C. 5481(6) that are not insured 

depository institutions or credit unions, 

or, in the case of such entities with 

assets of more than $10 billion, their 

affiliates, as set forth in 12 U.S.C. 5515 

and 5516. The Proposal therefore 

excludes from the definition of 

‘‘nonbank covered persons’’ persons 

described in 12 U.S.C. 5515(a) and 

5516(a), and provides that the term 

‘‘nonbank covered person’’ means, 

except for persons described in 12 

U.S.C. 5515(a) and 5516(a): (a) any 

person that engages in offering or 

providing a consumer financial product 

or service; and (b) any affiliate of a 

person described in (a) if such affiliate 

acts as a service provider to such 

person. 

Notice of Reasonable Cause and 

Notice. The Proposal states that the 

terms ‘‘Notice of Reasonable Cause’’ and 

‘‘Notice’’ mean a Notice issued under 

§ 1091.102. 

Person. The Proposal incorporates the 

definition of ‘‘person’’ set forth in 12 

U.S.C. 5481(19). The Proposal therefore 

states that the term ‘‘person’’ means an 

individual, partnership, company, 

corporation, association (incorporated 

or unincorporated), trust, estate, 

cooperative organization, or other 

entity. 

Respondent. The Proposal states that 

the term ‘‘respondent’’ means a person 

who has been issued a Notice of 

Reasonable Cause by the Deputy under 

§ 1091.102. 

Response. The Proposal states that the 

term ‘‘response’’ means the response to 

a Notice of Reasonable Cause filed by a 

respondent with the Assistant Director 

under § 1091.105. 

Section 1091.102 Issuance of Notice of 

Reasonable Cause 

Proposed § 1091.102 relates to the 

issuance of a Notice of Reasonable 

Cause, which initiates the proceedings 

that culminate in a determination by the 

Director under § 1091.109 of the 

Proposed Rule, or a respondent’s 

voluntary consent to supervision by the 

Bureau. Section 1091.102 provides that 

the Deputy is authorized to issue a 

Notice of Reasonable Cause and, 

consistent with 12 U.S.C. 5514(a)(1)(C), 

that such Notice shall be based on 

complaints collected by the Bureau, or 

on information from other sources. 

The Bureau seeks comment on the 

issuance of a Notice of Reasonable 

Cause and any suggested modifications 

or alternatives. 

Section 1091.103 Contents of Notice 

Proposed § 1091.103 details the 

required content of a Notice. To ensure 

that a respondent has a reasonable 

opportunity to address the substance of 

a Notice, proposed § 1091.103 provides 

that a Notice must set forth, among 

other things, the basis for the assertion 

that the Bureau may have reasonable 

cause to determine that a respondent is 

a nonbank covered person that is 

engaging, or has engaged, in conduct 

that poses risks to consumers with 

regard to the offering or provision of 

consumer financial products or services. 

Under proposed § 1091.103, a Notice 

must also contain a statement informing 

a respondent how to file a timely 

response, and of the required contents 

of a response. A Notice must also inform 

a respondent that he or she may request 

a supplemental oral response, and that 

a respondent may, in lieu of filing a 

response, voluntarily consent to the 

Bureau’s supervisory authority under 12 

U.S.C. 5514 by filing an executed 

consent form attached to a Notice served 

on a respondent. Section 1091.103 

further provides that a Notice shall 

inform a respondent that a failure to 

respond, as set forth in a Notice, may 

result in a determination by the Director 

without further opportunity to respond 

by the respondent. As set forth in 

proposed § 1091.103, a Notice must also 

inform a respondent of the various 

timelines associated with the process. 

The Bureau seeks comment on the 

proposed contents of a Notice and any 

suggested modifications or alternatives. 

Section 1091.104 Service of Notice 

Proposed § 1091.104 provides that a 

Notice shall be served pursuant to 

methods including electronic 

transmission (where a respondent has 

consented), personal service, first class 

U.S. Mail, or commercial courier or 

express delivery service. Proposed 

§ 1091.104 further requires that the 

Deputy submit a copy of a Notice and 

any attached documents, records or 

other items to the Assistant Director, 

who shall proceed as set forth in the 

Proposal. 

The Bureau seeks comment on the 

proposed requirements relating to the 

service of a Notice and any suggested 

modifications or alternatives. 

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31230 Federal Register / Vol. 77, No. 102 / Friday, May 25, 2012 / Proposed Rules 

Section 1091.105 Response 

Proposed § 1091.105 sets forth the 

requirements for responding to a Notice 

of Reasonable Cause. Specifically, 

§ 1091.105 provides that any response 

must be filed within 20 days of service 

of a Notice, and the failure to file a 

timely response shall result in a waiver 

of a respondent’s right to respond, 

authorize the Assistant Director to issue 

a recommended determination, and the 

Director a final determination, on the 

basis of the Notice. Proposed § 1091.105 

further provides that a respondent may 

respond to a Notice of Reasonable Cause 

either by contesting that it is a nonbank 

covered person that is engaging, or has 

engaged, in conduct that poses risks to 

consumers with regard to the offering or 

provision of consumer financial 

products or services, or by voluntarily 

consenting to the Bureau’s supervisory 

authority under 12 U.S.C. 5514. Where 

a respondent wishes to contest the 

assertions in a Notice, proposed 

§ 1091.105 mandates that the response: 

(1) Set forth the basis for a respondent’s 

contention that the respondent should 

not be subject to supervision pursuant 

to 12 U.S.C. 5514(a)(1)(C); (2) include all 

records, documents, or other items upon 

which a respondent relies; and (3) 

include an affidavit signed by the 

respondent attesting that the 

information contained in the response is 

true, accurate, and without any 

omission that would cause the response 

to be materially misleading. The 

Proposed Rule further provides that 

documents, records or other items 

submitted by a respondent with a 

response shall be deemed confidential 

supervisory information under 12 CFR 

1070.2(i)(1)(iv). In addition, under 

proposed § 1091.105, if a respondent 

wishes also to present arguments in a 

supplemental oral response, the 

respondent must make such a request in 

the response. A failure to do so will 

constitute a waiver of a respondent’s 

opportunity to present a supplemental 

oral response. 

Finally, proposed § 1091.105 states 

that the failure to timely raise an issue 

in, or submit records, documents, or 

other items with, the response 

constitutes a waiver of a respondent’s 

right to raise the issue, or submit the 

records, documents, or other items, at 

any future stage of consideration under 

this Proposed Rule and in any petition 

for judicial review. The Bureau intends 

for the waiver to remove any incentive 

for a respondent to wait until after filing 

a response, such as at a supplemental 

oral response or during judicial review, 

to raise an argument or present 

documents or other information for the 

first time. This will help ensure that the 

Bureau is aware of all relevant issues 

upon which a respondent wishes to rely 

at the earliest opportunity before 

reaching a determination under this 

Proposed Rule. 

The Bureau seeks comment on the 

proposed contents of and requirements 

relating to the response and any 

suggested modifications or alternatives. 

Section 1091.106 Supplemental Oral 

Response 

Proposed § 1091.106 provides that a 

respondent may request a supplemental 

oral response and sets forth the 

procedures for the conduct of a 

supplemental oral response. Under 

proposed § 1091.106, supplemental oral 

responses will generally be held via 

telephone. In the Bureau’s view, 

conducting such oral responses by 

telephone allows for more flexibility 

and is less burdensome than conducting 

an in person response. 

Proposed § 1091.106 further provides 

that the Assistant Director may impose 

limitations on the conduct of a 

supplemental oral response and 

provides a non-exhaustive set of such 

limitations. The Bureau believes that 

providing the Assistant Director with 

authority to impose such limitations 

will help ensure that a supplemental 

oral response focuses on a respondent’s 

and Deputy’s arguments supporting 

their respective legal and factual 

assertions in the matter. 

Proposed § 1091.106 further makes 

clear that no discovery will be 

permitted, and no witnesses will be 

called, in connection with a 

supplemental oral response. This 

limitation is appropriate given the 

informal nature of the procedures set 

forth in this Proposed Rule. The 

prohibition on discovery and the calling 

of witnesses in connection with a 

supplemental oral response also furthers 

the Bureau’s objective of providing a 

timely and efficient determination 

process, saving both the Bureau and 

respondents the time and expenses 

typically expended on discovery. 

Proposed § 1091.106 also prescribes 

the timing of a supplemental oral 

response. Specifically, under the 

proposed section, within 14 days of 

receiving a respondent’s request for a 

supplemental oral response, the 

Assistant Director shall serve on a 

respondent a notice advising of the date, 

time, and relevant information relating 

to the conduct of a supplemental oral 

response, with a copy to the Deputy. To 

allow a respondent and the Deputy 

sufficient time to prepare for a 

supplemental oral response, and to 

make arrangements to participate, 

proposed § 1091.106 provides that a 

supplemental oral response shall be 

scheduled not less than ten days after 

the date of such service. Finally, 

proposed § 1091.106 states that if a 

respondent fails to participate in a 

scheduled supplemental oral response, 

such a failure constitutes a respondent’s 

waiver of the opportunity to present a 

supplemental oral response. 

The Bureau seeks comment on the 

proposed procedures for a supplemental 

oral response and any suggested 

modifications or alternatives. 

Section 1091.107 Manner of Filing 

Papers 

Proposed 1091.107 provides for filing 

of papers in a proceeding under the 

Proposed Rule by electronic 

transmission under such conditions as 

specified by the Assistant Director or 

Director. This section also authorizes 

other methods of filing and service if a 

respondent demonstrates electronic 

filing is not practicable and the 

Assistant Director or Director permits an 

alternative method of filing or service. 

The Bureau seeks comment on the 

proposed manner of filing papers and 

any suggested modifications or 

alternatives. 

Section 1091.108 Recommended 

Determination 

Proposed § 1091.108 provides that the 

Assistant Director shall make a 

recommended determination and 

submit to the Director either a proposed 

order that would bring a respondent 

within the Bureau’s supervisory 

authority under 12 U.S.C. 5514, or a 

proposed notification containing the 

determination that a respondent is not 

subject to the Bureau’s supervisory 

authority under 12 U.S.C. 5514 on the 

basis of the proceeding. Under proposed 

§ 1091.108, if a respondent has not 

voluntarily consented to the Bureau’s 

supervisory authority, and has not 

requested the opportunity to present a 

supplemental oral response, a 

recommended determination shall be 

made not later than 45 days from the 

receipt of a timely-filed response, or not 

later than 45 days after the service of a 

Notice of Reasonable Cause when a 

respondent fails to file a timely 

response. If a respondent has requested 

the opportunity to present a 

supplemental oral response, a 

recommended determination shall be 

made not later than 90 days after the 

service of a Notice of Reasonable Cause. 

Proposed § 1091.108 further sets forth 

the required content of the Assistant 

Director’s recommended determination, 

and the documents and items that must 

accompany the recommended 

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12 12 CFR 1081.200 sets forth the procedures for 

the commencement of an adjudicative proceeding 

by the Bureau under 12 U.S.C. 5563, and also the 

contents of the notice of charges in such a 

proceeding. 

determination sent to the Director by the 

Assistant Director. 

The Bureau seeks comment on the 

proposed content of, and procedures 

relating to, the recommended 

determination and any suggested 

modifications or alternatives. 

Section 1091.109 Determination by the 

Director 

Proposed § 1091.109 provides that, 

not later than 45 days after receipt of the 

Assistant Director’s recommended 

determination, the Director shall make a 

final determination by adopting without 

revision, modifying, or rejecting the 

Assistant Director’s recommended 

determination. Under the proposed 

section, the Director shall issue to a 

respondent, with copies to the Assistant 

Director and Deputy, an order bringing 

a respondent within the Bureau’s 

supervisory authority under 12 U.S.C. 

5514, or a notification containing the 

determination that a respondent is not 

subject to the Bureau’s supervisory 

authority under 12 U.S.C. 5514 on the 

basis of the proceeding. Proposed 

§ 1091.109 also provides that the 

Director may rely on the assistance and 

advice only of decisional employees in 

reaching a final determination. 

The Bureau seeks comment on the 

proposed content of, and procedures 

relating to, the determination and any 

suggested modifications or alternatives. 

Section 1091.110 Petition for 

Termination of Order 

Proposed § 1091.110 provides that a 

respondent may petition the Director for 

the termination of an order bringing a 

respondent within the Bureau’s 

supervisory authority under 12 U.S.C. 

5514, and sets forth the required 

contents of such a petition. Under 

proposed § 1091.110, a respondent may 

so petition no sooner than two years 

after the issuance of the order, and no 

more frequently than annually 

thereafter, except that in the case of a 

voluntary consent to supervision, a 

respondent may not petition for early 

termination of the supervisory authority 

period set forth in the consent 

agreement. A petition is a respondent’s 

opportunity to inform the Bureau of the 

actions taken and the progress made to 

reduce risk to consumers after the 

issuance of an order. A petition should 

set forth the reasons supporting a 

respondent’s petition for the 

termination of the order. Under 

proposed § 1091.110, the Deputy would 

be permitted to file a response to a 

petition for termination setting forth the 

Deputy’s recommendation to terminate 

or modify the order, or to deny the 

petition, and the reasons supporting 

such a recommendation within 30 days 

of her or his receipt of a copy of a 

petition. Proposed § 1091.110 further 

provides that within 90 days of a 

respondent submitting a petition for 

termination, the Director shall either 

terminate or modify the order, or deny 

the petition. This section also specifies 

the manner in which a petition for 

termination must be filed. 

The Bureau seeks comment on the 

proposed content of, and procedures 

relating to, the petition for termination 

of an order and any suggested 

modifications or alternatives. 

Section 1091.111 Construction of Time 

Limits 

Proposed § 1091.111 provides 

common rules for computing time 

limits, taking into account the effect of 

weekends and holidays on time periods 

that are ten days or less. This section 

also sets forth when filing or service is 

effective. With regard to time limits for 

responsive papers, proposed § 1091.111 

incorporates a three-day extension for 

mail service, and a one-day extension 

for overnight delivery and electronic 

transmission. A one-day extension for 

service by electronic transmission 

reflects that electronic transmissions 

may result in delays in actual receipt by 

the person served. 

The Bureau seeks comment on the 

proposed construction of time limits 

and any suggested modifications or 

alternatives. 

Section 1091.112 Change of Time 

Limits and Effect of Deadlines 

Proposed § 1091.112 provides that 

requests for the extension of time may 

be granted in the limited circumstances 

in which the extension is necessary to 

prevent substantial prejudice. The 

Bureau intends for this section to 

further the Bureau’s goal of ensuring the 

timely conclusion of matters. 

Accordingly, the section provides that 

requests for the extension of time are 

strongly disfavored and may only be 

granted when a party makes a strong 

showing that the denial of the request 

would substantially prejudice the party. 

Finally, proposed § 1091.112 states that 

deadlines for action by the Assistant 

Director or Director established in this 

Proposed Rule confer no substantive 

rights on respondents. 

The Bureau seeks comment on the 

proposed procedures relating to the 

change of time limits and effect of 

deadlines and any suggested 

modifications or alternatives. 

Section 1091.113 Voluntary Consent to 

Bureau’s Authority 

Proposed § 1091.113 provides that 

nothing in the Proposed Rule shall 

affect a person’s ability to voluntarily 

consent, at any time, to the Bureau’s 

supervisory authority under 12 U.S.C. 

5514 as mutually agreed to by the 

parties. Voluntary consent under this 

section is an alternative to voluntarily 

consenting to the Bureau’s supervision 

as provided under proposed 

§ 1091.103(b), which allows a 

respondent to execute and file a consent 

agreement form in lieu of filing a 

written response. Proposed § 1091.113 

also provides that a consent agreement 

that specifies the period during which 

the person will be subject to the 

Bureau’s supervisory authority 

precludes such a person from 

petitioning for the termination of the 

order under proposed § 1091.110 during 

the agreed-to supervisory period. 

Additionally, proposed § 1091.113 

provides that a person entering into a 

consent agreement waives any right to 

judicial review of that agreement. 

The Bureau seeks comment on the 

proposed procedures relating to a 

respondent’s voluntary consent to the 

Bureau’s authority under 12 U.S.C. 5514 

and any suggested modifications or 

alternatives. 

Section 1091.114 Notice and Response 

Included in Adjudication Proceeding 

Otherwise Brought by the Bureau 

Proposed § 1091.114 provides that if 

the Bureau issues a notice of charges 

against a person under 12 CFR 

1081.200,12 the Bureau may, in its sole 

discretion, also provide the notice and 

opportunity to respond required by 12 

U.S.C. 5514(a)(1)(C) in the notice of 

charges. In such a circumstance, the 

procedures set forth in proposed 

§ 1091.101–§ 1091.113 would not apply 

to the proceedings. The Bureau intends 

to use the administrative adjudication 

proceedings set forth in 12 CFR 

1081.200 to provide notice and a 

reasonable opportunity to respond as 

required by 12 U.S.C. 5514(a)(1)(C) only 

in certain cases where the Bureau has 

otherwise brought an administrative 

action against a respondent. The Bureau 

believes that the flexibility provided by 

this section would enhance efficiency 

and reduce burdens to respondents and 

the Bureau by allowing a determination 

under 12 U.S.C. 5514(a)(1)(C) and an 

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31232 Federal Register / Vol. 77, No. 102 / Friday, May 25, 2012 / Proposed Rules 

13 5 U.S.C. 553(b)(A). 

14The provisions of 12 U.S.C. 5512(b)(2)(A) 

address the consideration of the potential benefits 

and costs of regulation to consumers and covered 

persons, including the potential reduction of access 

by consumers to consumer financial products or 

services; the impact on depository institutions and 

credit unions with $10 billion or less in total assets 

as described in 12 U.S.C. 5516; and the impact on 

consumers in rural areas. The provisions of 12 

U.S.C. 5512(b)(2)(B) further address consultation 

between the Bureau and other federal agencies 

during the rulemaking process. The manner and 

extent to which these provisions apply to 

procedural rules and to benefits, costs and impacts 

that are compelled by statutory changes rather than 

discretionary Bureau action is unclear. 

Nevertheless, to inform this rulemaking more fully, 

the Bureau performed the described analyses and 

consultations. 

15The Bureau notes that there is little publicly 

available data with which to effectively measure or 

quantify the benefits, costs, and impacts of the 

Proposed Rule. Where benefits or costs are not 

readily quantifiable or where data is not reasonably 

available, the Bureau will conduct qualitative 

analyses relying on information from available 

sources. 

16 5 U.S.C. 601(3). The Bureau may establish an 

alternative definition after consultation with the 

Small Business Administration and an opportunity 

for public comment. 17 5 U.S.C. 609. 18 5 U.S.C. 601(2) (‘‘the term ‘rule’ means any rule 

for which the agency publishes a general notice of 

proposed rulemaking pursuant to section 553(b) of 

this title, or any other law * * *.’’) 

adjudicative proceeding to be handled 

in a single forum. 

The Bureau seeks comment on the 

proposed procedures relating to 

providing notice and a reasonable 

opportunity to respond under 12 U.S.C. 

5514(a)(1)(C) in an adjudicative 

proceeding brought by the Bureau 

pursuant to 12 part CFR 1081.200 and 

any suggested modifications or 

alternatives. 

Section 1091.115 No Limitation on 

Relief Sought in Civil Action or 

Administrative Adjudication 

This section clarifies that nothing in 

this part shall be construed to limit the 

relief the Bureau may seek in any civil 

action or administrative adjudication. 

The Bureau seeks comment on this 

section and any suggested modifications 

or alternatives. 

V. Request for Comment 

The Proposed Rule relates solely to 

agency procedure and practice and, 

thus, is not subject to the notice-andcomment requirements of the APA.13

Although the Proposed Rule is exempt 

from these requirements, the Bureau 

invites comment on all aspects of this 

notice of proposed rulemaking and on 

the specific issues upon which 

comment is solicited elsewhere herein, 

including on any appropriate 

modifications or exceptions to the 

Proposed Rule. 

VI. Section 1022(b)(2) of the DoddFrank Act (12 U.S.C. 5512(b)(2)) 

In developing the Proposed Rule, the 

Bureau has considered the potential 

benefits, costs, and impacts, and has 

consulted or offered to consult with the 

prudential regulators and the Federal 

Trade Commission, including with 

regard to consistency with any 

prudential market, or systemic 

objectives administered by such 

agencies.14

Under 12 U.S.C. 5514(a)(1)(C), the 

Bureau has the authority to supervise 

any nonbank covered person that it ‘‘has 

reasonable cause to determine, by order, 

after notice * * * and a reasonable 

opportunity * * * to respond’’ that 

such covered person ‘‘is engaging, or 

has engaged, in conduct that poses risks 

to consumers with regard to the offering 

or provision of consumer financial 

products or services.’’ The Proposed 

Rule is intended to provide an efficient, 

expeditious, and fair process to 

implement 12 U.S.C. 5514(a)(1)(C).15

Although a rule is not necessary to 

implement this statutory provision, the 

Proposed Rule, if adopted, establish a 

consistent procedure applicable to all 

affected entities, and provide 

transparency regarding the applicable 

process prior to commencement of a 

proceeding. Absent the Proposed Rule, 

the public would lack any guidance 

regarding the Bureau’s process under 12 

U.S.C. 5514(a)(1)(C). Nonbank covered 

persons will incur certain costs in 

considering and responding to a Notice 

from the Bureau under the rule, but 

these costs would generally exist in the 

absence of the rule. 

For major provisions of the Proposal, 

the Bureau considered the benefits and 

costs of certain alternatives. For 

example, the Proposed Rule would 

provide respondents an opportunity to 

participate in a supplementary oral 

response, which would generally be 

conducted via telephone. The Bureau 

believes that the proposed approach, if 

adopted, would benefit covered persons 

by offering an additional method of 

responding to a Notice compared with 

the alternative of not permitting any oral 

response. At the same time, the Bureau 

believes that the proposed approach 

would be less costly than the alternative 

of requiring that all oral responses be 

conducted in person at a designated 

location. Also in connection with 

supplemental oral responses, the 

Proposed Rule would permit, but not 

require, a respondent to be represented 

by counsel. The Bureau considered 

requiring representation by counsel, but 

opted to provide respondents with the 

opportunity to receive the benefits of 

representation, while not mandating 

that respondents incur the costs of such 

representation. 

The Proposed Rule also permits 

respondents to consent to the Bureau’s 

supervisory authority under standard 

terms in lieu of filing a response, or to 

enter into a negotiated agreement at any 

time consenting to the Bureau’s 

supervisory authority. The Bureau 

believes that this approach, if adopted, 

would provide a streamlined resolution 

process that would reduce the costs to 

the Bureau and those respondents who 

wish to consent to the Bureau’s 

supervisory authority, compared to the 

alternative of permitting only negotiated 

consent agreements. 

The Proposed Rule will have no 

unique impact on insured depository 

institutions or insured credit unions 

with $10 billion or less in assets as 

described in 12 U.S.C. 5516(a). Nor 

would the Proposed Rule have a unique 

impact on rural consumers. 

The Bureau requests comments on the 

potential benefits, costs, and impacts of 

the Proposed Rule. 

VII. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA), 

as amended by the Small Business 

Regulatory Enforcement Fairness Act of 

1996, requires each agency to consider 

the potential impact of its regulations on 

small entities, including small 

businesses, small governmental units, 

and small not-for-profit organizations. 

The RFA defines a ‘‘small business’’ as 

a business that meets the size standard 

developed by the Small Business 

Administration pursuant to the Small 

Business Act.16

The RFA generally requires an agency 

to conduct an initial regulatory 

flexibility analysis (IRFA) and a final 

regulatory flexibility analysis (FRFA) of 

any rule subject to notice-and-comment 

rulemaking requirements, unless the 

agency certifies that the rule will not 

have a significant economic impact on 

a substantial number of small entities. 

The Bureau also is subject to certain 

additional procedures under the RFA 

involving the convening of a panel to 

consult with small business 

representatives prior to proposing a rule 

for which an IRFA is required.17

As discussed above in section V, a 

notice of proposed rulemaking is not 

required for this rulemaking. The 

Proposed Rule therefore is not a ‘‘rule’’ 

as defined by the RFA.18 Nevertheless, 

the Bureau opted to issue a notice of 

proposed rulemaking to receive public 

comment. 

An IRFA would not otherwise be 

required because the Proposed Rule, if 

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adopted, would not have a significant 

economic impact on any small entities. 

The Proposed Rule sets forth only 

procedures by which a nonbank covered 

person may become subject to the 

Bureau’s current supervisory authority 

pursuant to 12 U.S.C. 5514(a)(1)(C). The 

Proposed Rule establishes a transparent 

and streamlined process by which the 

Bureau would exercise its existing legal 

authority and would not impose new 

substantive requirements. Accordingly, 

the undersigned certifies that this 

Proposed Rule will not have a 

significant impact on a substantial 

number of small entities. 

VIII. Paperwork Reduction Act 

The Bureau has determined that the 

Rule does not impose any new 

recordkeeping, reporting or disclosure 

requirements on covered entities or 

members of the public that would be 

collections of information requiring 

OMB approval under 44 U.S.C. 3501, et 

seq. 

List of Subjects in 12 CFR Part 1091 

Administrative practice and 

procedures, Consumer protection, 

Credit, Trade practices. 

Authority and Issuance 

For the reasons set forth above, the 

Bureau proposes to add part 1091 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 1091—PROCEDURAL RULES TO 

ESTABLISH SUPERVISORY 

AUTHORITY OVER CERTAIN 

NONBANK COVERED PERSONS 

BASED ON RISK DETERMINATION 

Sec. 

1091.100 Scope and purpose. 

1091.101 Definitions. 

1091.102 Issuance of Notice of Reasonable 

Cause. 

1091 103 Contents of Notice. 

1091.104 Service of Notice. 

1091 105 Response. 

1091 106 Supplemental oral response. 

1091.107 Manner of filing and serving 

papers. 

1091.108 Recommended determination. 

1091.109 Determination by the Director. 

1091.110 Petition for termination of order. 

1091.111 Construction of time limits. 

1091.112 Change of time limits and effect of 

deadlines. 

1091.113 Voluntary consent to Bureau’s 

authority. 

1091.114 Notice and response included in 

adjudication proceeding otherwise 

brought by the Bureau. 

1091.115 No limitation on relief sought in 

civil action or administrative 

adjudication. 

Authority: Sections 1022(b)(1), 

1024(a)(1)(C), and 1024(b)(7) of Title X of the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act of 2010, Pub. L. 

111–203 (12 U.S.C. 5512(b)(1), 5514(a)(1)(C), 

and 5514(b)(7)). 

§ 1091.100 Scope and purpose. 

This part implements section 

1024(a)(1)(C) of Title X of the DoddFrank Wall Street Reform and Consumer 

Protection Act of 2010, Public Law 111– 

203 (12 U.S.C. 5514(a)(1)(C)) (DoddFrank Act), and establishes rules to 

facilitate the Bureau’s supervision 

authority over certain nonbank covered 

persons pursuant to section 1024(b)(7) 

of the Dodd-Frank Act (12 U.S.C. 

5514(b)(7)). 

§ 1091.101 Definitions. 

For the purposes of this part, the 

following definitions apply: 

Assistant Director means the Bureau’s 

Assistant Director for Nonbank 

Supervision or her or his designee. If 

there is no Assistant Director, the 

Director may designate an alternative 

Bureau employee to fulfill the duties of 

the Assistant Director under this part. 

Bureau means the Bureau of 

Consumer Financial Protection. 

Consumer means an individual or an 

agent, trustee, or representative acting 

on behalf of an individual. 

Consumer financial product or service 

means any financial product or service, 

as defined in 12 U.S.C. 5481(15) that is 

described in one or more categories 

under: 

(1) 12 U.S.C. 5481(15) and is offered 

or provided for use by consumers 

primarily for personal, family, or 

household purposes; or 

(2) Clause (i), (iii), (ix), or (x) of 12 

U.S.C. 5481(15)(A) and is delivered, 

offered, or provided in connection with 

a consumer financial product or service 

referred to in subparagraph (1) of this 

paragraph. 

Decisional employee means any 

employee of the Bureau who has not 

engaged in: 

(1) Assisting the Deputy in either 

determining whether to issue a Notice of 

Reasonable Cause, or presenting the 

Deputy’s position in support of a Notice 

of Reasonable Cause, either in writing or 

in a supplemental oral response, to the 

Assistant Director; or 

(2) Assisting the Assistant Director in 

the preparation of a recommended 

determination. 

Deputy means the Bureau’s Deputy 

Assistant Director for Nonbank 

Supervision or her or his designee. If 

there is no Deputy, the term shall mean 

any alternative Bureau employee 

designated by the Assistant Director or 

Director to fulfill the duties of the 

Deputy under this part. 

Director means the Director of the 

Bureau or her or his designee. If there 

is no Director, the term shall mean a 

person authorized to perform the 

functions of the Director in accordance 

with the law, or her or his designee. 

Executive Secretary means the 

Executive Secretary of the Bureau. 

Nonbank covered person means, 

except for persons described in 12 

U.S.C. 5515(a) and 5516(a): 

(1) Any person that engages in 

offering or providing a consumer 

financial product or service; and 

(2) Any affiliate of a person described 

in subparagraph (1) of this paragraph if 

such affiliate acts as a service provider 

to such person. 

Notice of Reasonable Cause and 

Notice mean a Notice issued under 

§ 1091.102. 

Person means an individual, 

partnership, company, corporation, 

association (incorporated or 

unincorporated), trust, estate, 

cooperative organization, or other 

entity. 

Respondent means a person who has 

been issued a Notice of Reasonable 

Cause under § 1091.102. 

Response means the response to a 

Notice of Reasonable Cause filed by a 

respondent with the Assistant Director 

under § 1091.105. 

§ 1091.102 Issuance of Notice of 

Reasonable Cause. 

(a) The Deputy is authorized to issue 

a Notice of Reasonable Cause to a 

nonbank covered person stating that the 

Bureau may have reasonable cause to 

determine that the nonbank covered 

person is engaging, or has engaged, in 

conduct that poses risks to consumers 

with regard to the offering or provision 

of consumer financial products or 

services. 

(b) A Notice of Reasonable Cause shall 

be based on: 

(1) Complaints collected through the 

system under 12 U.S.C. 5493(b)(3); or 

(2) Information from other sources. 

(c) Except as provided in § 1091.114, 

a notice required under 12 U.S.C. 

5514(a)(1)(C) shall contain the 

information set forth in § 1091.103, and 

be served on respondent as described in 

§ 1091.104. 

§ 1091.103 Contents of Notice. 

(a) A Notice of Reasonable Cause shall 

contain the following: 

(1) A description of the basis for the 

assertion that the Bureau may have 

reasonable cause to determine that a 

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31234 Federal Register / Vol. 77, No. 102 / Friday, May 25, 2012 / Proposed Rules 

respondent is a nonbank covered person 

that is engaging, or has engaged, in 

conduct that poses risks to consumers 

with regard to the offering or provision 

of consumer financial products or 

services; and 

(2) A statement informing a 

respondent that: 

(i) A respondent may file with the 

Assistant Director a written response to 

a Notice of Reasonable Cause no later 

than 20 days after a Notice is served on 

a respondent; 

(ii) The written response shall include 

the elements addressed in § 1091.105(b): 

(iii) A respondent may request in its 

response to a Notice an opportunity to 

present a supplemental oral response to 

the Assistant Director as set forth in 

§ 1091.106; 

(iv) A failure to timely file a response 

to a Notice shall constitute a waiver of 

a respondent’s right to respond, and 

may result in a default determination by 

the Director, based on the Notice, that 

a respondent is a nonbank covered 

person that is engaging, or has engaged, 

in conduct that poses risks to consumers 

with regard to the offering or provision 

of consumer financial products or 

services and the issuance of a decision 

and order subjecting a respondent to the 

Bureau’s supervisory authority pursuant 

to 12 U.S.C. 5514(a)(1)(C); 

(v) The Assistant Director shall serve 

a respondent with a notice of the date 

and time of a supplemental oral 

response, if a respondent has requested 

the opportunity to present a 

supplemental oral response, within 14 

days of the Assistant Director’s receipt 

of a timely-filed response; and 

(vi) If a respondent has not requested 

the opportunity to present a 

supplemental oral response, the 

Assistant Director shall, not later than 

45 days of receiving a timely-filed 

response, or not later than 45 days after 

the service of a Notice of Reasonable 

Cause when a respondent fails to file a 

timely response, provide a 

recommended determination to the 

Director including either a proposed 

decision and order subjecting a 

respondent to the Bureau’s supervisory 

authority pursuant to 12 U.S.C. 

5514(a)(1)(C), or a proposed notification 

that the Bureau has determined not to 

subject a respondent to the Bureau’s 

supervisory authority at that time, 

pursuant to § 1091.108. 

(b) A Notice shall be accompanied by 

a form of consent agreement by which 

a respondent may voluntarily consent to 

the Bureau’s authority to supervise a 

respondent under 12 U.S.C. 5514. A 

completed and executed form of consent 

agreement under this paragraph: 

(1) Shall not constitute an admission 

that a respondent is a nonbank covered 

person that has engaged, or is engaging, 

in conduct that poses risks to consumers 

with regard to the offering or provision 

of consumer financial products or 

services; 

(2) Shall result in an order by the 

Director that a respondent is subject to 

the Bureau’s supervisory authority 

under 12 U.S.C. 5514 for a period of two 

years from the date of such order; and 

(3) Shall include a provision that a 

respondent entering into a consent 

agreement waives any right to judicial 

review of such consent agreement. 

(c) Nothing in this section shall be 

construed as requiring the Bureau to 

produce any documents or information 

to a respondent other items than as set 

forth in this section. 

§ 1091.104 Service of Notice. 

(a) A Notice shall be served on a 

respondent as follows: 

(1) To individuals. A Notice shall be 

served on a respondent that is an 

individual by delivering a copy of the 

Notice to the individual or to an agent 

authorized by appointment or by law to 

receive such a Notice. Delivery, for 

purposes of this paragraph, means 

handing a copy of a Notice to the 

individual; or leaving a copy at the 

individual’s office with a clerk or other 

person in charge thereof; or leaving a 

copy at the individual’s dwelling house 

or usual place of abode with some 

person of suitable age and discretion 

then residing therein; or sending a copy 

of a Notice addressed to the individual 

through the U.S. Postal Service by 

Registered Mail, Certified Mail or 

Express Mail delivery, or by third-party 

commercial carrier, for overnight 

delivery and obtaining a confirmation of 

receipt. 

(2) To corporations or entities. Notice 

shall be served on a person other than 

an individual by delivering a copy of a 

Notice to an officer, managing or general 

agent, or any other agent authorized by 

appointment or law to receive such a 

Notice, by any method specified in 

paragraph (a)(1) of this section. 

(3) Upon persons registered with the 

Bureau. In addition to any other method 

of service specified in paragraph (a)(1) 

or (a)(2) of this section, Notice may be 

served on a person currently registered 

with the Bureau by sending a copy of a 

Notice addressed to the most recent 

business address shown on the person’s 

registration form by U.S. Postal Service 

certified, registered or Express Mail and 

obtaining a confirmation of receipt or 

attempted delivery. 

(4) Upon persons in a foreign country. 

Notice may be served on a person in a 

foreign country by any method specified 

in paragraph (a)(1) or (2) of this section, 

or by any other method reasonably 

calculated to give notice, provided that 

the method of service used is not 

prohibited by the law of the foreign 

country. 

(5) Record of service. The Bureau 

shall maintain and file a record of 

service of a Notice on a respondent, 

identifying the party given Notice, the 

method of service, the date of service, 

the address to which service was made, 

and the person who made service. If 

service is made in person, the certificate 

of service shall state, if available, the 

name of the individual to whom a 

Notice was given. If service is made by 

U.S. Postal Service Registered Mail, 

Certified Mail or Express Mail, the 

Bureau shall maintain the confirmation 

of receipt or attempted delivery. 

(6) Waiver of service. In lieu of service 

as set forth in paragraph (a)(1) or (a)(2) 

of this section, the party may be 

provided a copy of a Notice by First 

Class Mail or other reliable means if a 

waiver of service is obtained from the 

party. 

(b) The Deputy shall promptly submit 

a copy of a Notice and a copy of the 

certificate of service to the Assistant. 

The Assistant Director shall proceed as 

set forth in this Proposal upon receipt 

of a Notice. 

§ 1091.105 Response. 

(a) Timing. Within 20 days of service 

of a Notice, a respondent shall file any 

response with the Assistant Director 

according to the instructions set forth in 

a Notice. 

(b) Content of the response. (1) The 

response shall set forth the basis for a 

respondent’s contention that the 

respondent is not a nonbank covered 

person that is engaging, or has engaged, 

in conduct that poses risks to consumers 

with regard to the offering or provision 

of consumer financial products or 

services. 

(2) The response shall include all 

documents, records or other evidence a 

respondent wishes to use to support the 

arguments or assertions set forth in the 

response. Documents, records or other 

items submitted by a respondent with a 

response shall be deemed confidential 

supervisory information under 12 CFR 

1070.2(i)(1)(iv). 

(3) Any request to present a 

supplemental oral response must be 

included in the response. A 

respondent’s failure to request to 

present a supplemental oral response 

shall constitute the respondent’s waiver 

of the opportunity to present a 

supplemental oral response. 

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Federal Register / Vol. 77, No. 102 / Friday, May 25, 2012 / Proposed Rules 31235 

(4) A response shall include an 

affidavit or declaration, made by the 

individual respondent if a natural 

person, or, if a corporate or other entity 

that is not a natural person, by an 

officer, managing or general member or 

partner authorized to represent the 

respondent, affirming that the response 

is true and accurate and does not 

contain any omissions that would cause 

the response to be materially 

misleading. 

(5) Notwithstanding any other 

provisions of this paragraph, a 

respondent may respond by voluntarily 

consenting to the Bureau’s authority to 

supervise the respondent under 12 

U.S.C. 5514 by completing and 

executing the consent agreement form 

provided to the respondent with a 

Notice of Reasonable Cause in 

accordance with § 1091.103(b). 

(c) Default. Failure of a respondent to 

file a response within the time period 

set forth in paragraph (a) of this section 

shall constitute a waiver of the 

respondent’s right to respond, and shall, 

based on the Notice, authorize the 

Assistant Director, without further 

notice to the respondent, to issue a 

proposed decision and order as 

provided in § 1091.108(c)(1) and the 

Director to issue a decision and order as 

provided in § 1091.109(a)(1). 

(d) Waiver. A respondent shall be 

deemed to have waived the right, at any 

future stage of the Assistant Director’s or 

the Director’s consideration of the 

matter and in any petition for judicial 

review, to rely on any argument, record, 

document, or other information that the 

respondent does not raise or include in 

its response. 

(e) No Discovery. There shall be no 

discovery in connection with a 

response. 

§ 1091.106 Supplemental oral response. 

(a) A respondent may request in a 

response under § 1091.105 the 

opportunity to present to the Assistant 

Director a supplemental oral response in 

support of a respondent’s assertion that 

the respondent is not a nonbank covered 

person that is engaging, or has engaged, 

in conduct that poses risks to consumers 

with regard to the offering or provision 

of consumer financial products or 

services. 

(b) The conduct of a supplemental 

oral response shall be subject to the 

following procedures: 

(1) A supplemental oral response 

shall be conducted by telephone unless 

the Assistant Director directs that it be 

conducted in some other manner. 

(2) The Assistant Director may impose 

any limitations on the conduct of a 

supplemental oral response, including 

but not limited to establishing a time 

limit for the presentation of a 

supplemental oral response, and 

limiting the subjects to be addressed in 

a supplemental oral response. 

(3) There shall be no discovery 

permitted or witnesses called in 

connection with a supplemental oral 

response. 

(4) If a respondent is a corporate or 

other entity, and not a natural person, 

the respondent shall be represented in 

any supplemental oral response by: 

(i) An officer, managing or general 

member or partner authorized to 

represent the respondent; or 

(ii) An attorney in good standing of 

the bar of the highest court of any state. 

(5) If a respondent is a natural person, 

the respondent shall be represented in 

any supplemental oral response by: 

(i) Herself or himself; or 

(ii) An attorney in good standing of 

the bar of the highest court of any state. 

(6) The Assistant Director shall cause 

a recording of a supplemental oral 

response to be made. A respondent may 

purchase a copy or transcript of the 

recording at the respondent’s own 

expense. 

(c) The Deputy may participate in any 

supplemental oral response conducted 

under this section. 

(d) The Assistant Director shall serve 

on a respondent, within 14 days after 

the Assistant Director receives the 

respondent’s timely-filed response 

requesting a supplemental oral 

response, a notice setting forth the date, 

time and general information relating to 

the conduct of a supplemental oral 

response. The date of a supplemental 

oral response shall be scheduled not 

less than ten days after the date the 

respondent is served with the notice of 

supplemental oral response. 

(e) The notice of supplemental oral 

response shall be served on a 

respondent pursuant to § 1091.107. 

(f) The Assistant Director shall send a 

copy of the notice of supplemental oral 

response to the Deputy. 

(g) A respondent’s failure to 

participate in a supplemental oral 

response scheduled by the Assistant 

Director shall constitute the 

respondent’s waiver of the opportunity 

to present a supplemental oral response. 

§ 1091.107 Manner of filing and serving 

papers. 

Unless otherwise specified by the 

Assistant Director or Director, a 

respondent shall file the response and 

any other paper with the Executive 

Secretary at the mailing or electronic 

address provided by the Bureau, and the 

Assistant Director and Director shall 

serve any paper, other than a Notice as 

set forth in § 1091.104, on a respondent, 

by: 

(a) Electronic transmission upon any 

condition specified by the Assistant 

Director or Director; or 

(b) Any of the following methods if a 

respondent demonstrates electronic 

filing is not practicable and the 

Assistant Director or Director permits: 

(1) Personal delivery; 

(2) Delivery through a reliable 

commercial courier service or overnight 

delivery service; or 

(3) Mailing the papers by first class, 

registered, certified, or Express mail. 

§ 1091.108 Recommended determination. 

(a) If a respondent did not voluntarily 

consent to the Bureau’s supervision 

authority, and did not request the 

opportunity to present a supplemental 

oral response, not later than 45 days 

after receipt of a timely-filed response, 

or not later than 45 days after the 

service of a Notice of Reasonable Cause 

when a respondent fails to file a timely 

response, the Assistant Director shall 

make a recommended determination 

whether there is reasonable cause for 

the Bureau to determine that the 

respondent is a nonbank covered person 

that is engaging, or has engaged, in 

conduct that poses risks to consumers 

with regard to the offering or provision 

of consumer financial products or 

services which should result in an order 

subjecting the respondent to the 

Bureau’s authority under 12 U.S.C. 

5514(a)(1)(C). 

(b) If a respondent did request the 

opportunity to present a supplemental 

oral response, not later than 90 days 

after service of a Notice of Reasonable 

Cause, the Assistant Director shall make 

a recommended determination whether 

there is reasonable cause for the Bureau 

to determine that the respondent is a 

nonbank covered person that is 

engaging, or has engaged, in conduct 

that poses risks to consumers with 

regard to the offering or provision of 

consumer financial products or services 

which should result in an order 

subjecting the respondent to the 

Bureau’s authority under 12 U.S.C. 

5514(a)(1)(C). 

(c) Upon making the recommended 

determination described in paragraphs 

(a) and (b) of this section, the Assistant 

Director shall submit to the Director 

either: 

(1) A proposed decision and order 

that would subject a respondent to the 

Bureau’s supervisory authority pursuant 

to 12 U.S.C. 5514(a)(1)(C) if adopted by 

the Director; or 

(2) A proposed notification that a 

respondent should not be subjected to 

the Bureau’s supervisory authority 

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31236 Federal Register / Vol. 77, No. 102 / Friday, May 25, 2012 / Proposed Rules 

under 12 U.S.C. 5514(a)(1)(C) based on 

the proceedings. Such a notification 

shall have no precedential effect and 

shall not prevent the issuance of another 

Notice of Reasonable Cause pursuant to 

either § 1091.102, or the procedures set 

forth in § 1091.114, at any time, or from 

issuance of a decision and order 

subjecting a respondent to the Bureau’s 

authority pursuant to either of those 

sections. 

(d) Any proposed decision and order 

issued by the Assistant Director 

pursuant to paragraph (c)(1) of this 

section shall set forth: 

(1) A statement that the Assistant 

Director has preliminarily determined 

based on reasonable cause that a 

respondent is a nonbank covered person 

that is engaging, or has engaged, in 

conduct that poses risks to consumers 

with regard to the offering or provision 

of consumer financial products or 

services; 

(2) The basis for the Assistant 

Director’s determination; and 

(3) A proposed order directing that, 

pursuant to this determination, as of a 

specified date a respondent shall be 

subject to the Bureau’s supervisory 

authority under 12 U.S.C. 5514. 

(e)(1) The Assistant Director shall 

include with the recommended 

determination submitted to the Director 

copies of the following: 

(i) The Notice of Reasonable Cause; 

(ii) The record of service of a Notice 

of Reasonable Cause; 

(iii) A respondent’s response and any 

documents, records or other items filed 

with the written response; 

(iv) Any document, record, or other 

item considered by the Assistant 

Director to be material in making a 

recommended determination; and 

(v) A recording of a supplemental oral 

response, if a supplemental oral 

response was conducted, and/or a 

transcript if a transcript was prepared at 

a respondent’s request or if requested by 

the Director. 

(2) The requirement that the Assistant 

Director provide to the Director the 

items described in subparagraph (1) of 

this paragraph shall confer no 

substantive rights on a respondent and 

any omission of an item may be cured 

by the Assistant Director to the extent 

applicable. 

§ 1091.109 Determination by the Director. 

(a) Not later than 45 days after receipt 

of the Assistant Director’s recommended 

determination, the Director shall, after 

considering the recommended 

determination and all documents, 

records, and other items submitted 

therewith by the Assistant Director, 

make a determination either adopting 

without revision, modifying, or rejecting 

the Assistant Director’s recommended 

determination, and shall issue to 

respondent, with copies to the Assistant 

Director and the Deputy: 

(1) A decision and order subjecting 

the respondent to the Bureau’s 

supervisory authority pursuant to 12 

U.S.C. 5514(a)(1)(C); or 

(2) A notification that the Director has 

determined that the respondent is not 

subject to the Bureau’s supervisory 

authority under 12 U.S.C. 5514(a)(1)(C) 

as a result of the proceedings. Such 

notification shall have no precedential 

effect and shall not prevent the issuance 

of another Notice of Reasonable Cause 

pursuant to either § 1091.102, or the 

procedures set forth in § 1091.114, at 

any time, or the issuance of an order 

subjecting the respondent to the 

Bureau’s authority pursuant to either of 

those sections. 

(b) Any decision and order issued by 

the Director pursuant to paragraph (a)(1) 

of this section shall set forth: 

(1) That the Director adopts the 

Assistant Director’s proposed decision 

and order without revision as the 

Director’s decision and order; or that the 

Director rejects or modifies the Assistant 

Director’s proposed determination for 

reasons set forth by the Director; 

(2) A statement that the Director has 

determined that the Bureau has 

reasonable cause to determine that a 

respondent is a nonbank covered person 

that is engaging, or has engaged, in 

conduct that poses risks to consumers 

with regard to the offering or provision 

of consumer financial products or 

services; 

(3) The basis for the Director’s 

determination, which may be an 

adoption of the basis set forth in 

Assistant Director’s proposed decision; 

and 

(4) An order directing that, pursuant 

to this determination, as of a specified 

date a respondent shall be subject to the 

Bureau’s supervisory authority under 12 

U.S.C. 5514 and informing a respondent 

that a respondent may petition for 

termination of the Bureau’s supervisory 

authority after two years from the date 

of the order, and no more than annually 

thereafter. 

(c) Only decisional employees may 

advise and assist the Director in the 

consideration and disposition of a 

proceeding under this part. 

(d) A decision and order issued 

pursuant to paragraph (a)(1) of this 

section shall constitute final agency 

action under 5 U.S.C. 704. 

(e) Any item required to be served on 

a respondent under this section shall be 

served pursuant to § 1091.107. 

§ 1091.110 Petition for termination of 

order. 

(a) Any person subject to an order 

issued pursuant to § 1091.109(a)(1) may, 

no sooner than two years after issuance 

of such an order and no more frequently 

than annually thereafter, petition the 

Director for termination of the order. 

(b) A petition for termination 

submitted pursuant to paragraph (a) of 

this section shall set forth the reasons 

supporting termination of the order, 

including any actions taken by a 

respondent since issuance of the order 

to address the conduct that led to 

issuance of the order, and may include 

any supporting information or evidence 

that the petitioner believes is relevant to 

the Director’s determination of the 

matter. 

(c) A petition for termination shall be 

filed by the petitioner with the 

Executive Secretary at the mailing or 

electronic address provided by the 

Bureau. 

(d) The Director shall, promptly upon 

receipt of a petition for termination, 

send a copy of same to the Deputy. 

(1) The Deputy may, within 30 days 

of her or his receipt of a copy of a 

petition for termination, file with the 

Director a response to the petition 

stating whether the Deputy recommends 

that the order should be terminated, 

modified, or that the petition for 

termination should be denied and the 

basis for such recommendation. 

(2) The Deputy shall serve a copy of 

the response to a petition for 

termination on the petitioner at the time 

of filing it with the Director. 

(e) Not later than 90 days after 

submission of a petition under 

paragraph (a) of this section, the 

Director shall issue a written decision 

either terminating or modifying the 

order, or denying the petition. If the 

Director modifies the order or denies the 

petition, the Director shall explain the 

basis for his or her decision with respect 

to the petition and send the written 

decision to the petitioner and the 

Deputy. 

(1) The Director shall serve the 

written decision on a petition for 

termination of order on a respondent 

pursuant to § 1091.107. 

(2) The Director shall send a copy of 

the written decision on a petition for 

termination of order to the Assistant 

Director and Deputy promptly upon 

issuing the written decision. 

(f) Any item required to be served on 

a petitioner in this section shall be 

served pursuant to § 1091.107. 

(g) The decision of the Director made 

pursuant to paragraph (e) of this section 

shall constitute final agency action 

under 5 U.S.C. 704. 

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Federal Register / Vol. 77, No. 102 / Friday, May 25, 2012 / Proposed Rules 31237 

§ 1091.111 Construction of time limits. 

(a) General rule. In computing any 

period of time prescribed by this part, 

or by order of the Assistant Director or 

Director, the date of the act or event that 

commences the designated period of 

time is not included. The last day so 

computed is included unless it is a 

Saturday, Sunday, or Federal holiday as 

set forth in 5 U.S.C. 6103(a). When the 

last day is a Saturday, Sunday, or 

Federal holiday, the period runs until 

the end of the next day that is not a 

Saturday, Sunday, or Federal holiday. 

Intermediate Saturdays, Sundays, and 

Federal holidays are included in the 

computation of time, except when the 

time period within which an act is to be 

performed is ten days or less, not 

including any additional time allowed 

for in paragraph (c) of this section. 

(b) Filing or service of papers. Filing 

and service are deemed to be effective: 

(1) In the case of personal service or 

same day commercial courier delivery, 

upon actual receipt by the person 

served; 

(2) In the case of overnight 

commercial delivery service, U.S. 

Express Mail delivery, or first class, 

registered, or certified mail, upon 

deposit in or delivery to an appropriate 

point of collection; or 

(3) In the case of electronic 

transmission, including email, upon 

transmission. 

(c) Calculation of time for service and 

filing of responsive papers. Whenever a 

time limit is measured by a prescribed 

period from the service of any notice or 

paper, the applicable time limits are 

calculated as follows: 

(1) If service is made by first class, 

registered, or certified mail, add three 

calendar days to the prescribed period; 

(2) If service is made by express mail 

or overnight delivery service, add one 

calendar day to the prescribed period; or 

(3) If service is made by electronic 

transmission, add one calendar day to 

the prescribed period. 

§ 1091.112 Change of time limits and effect 

of deadlines. 

(a) Except as otherwise provided by 

law, the Assistant Director until the 

issuance of a recommended 

determination, or the Director at any 

time thereafter, may extend the time 

limits prescribed by this part or by any 

notice or order issued pursuant to this 

part. Any request for an extension of a 

time limit by a respondent must be for 

good cause shown, in writing, and filed 

with the Assistant Director or Director, 

as appropriate. The mere filing of a 

written request for an extension does 

not alleviate a respondent of the 

obligation to meet an applicable time 

limit absent written confirmation that 

an extension has been granted. 

(b) In considering all requests for 

extensions of time filed pursuant to 

paragraph (a) of this section, the 

Assistant Director or Director, as 

appropriate, shall adhere to a policy of 

strongly disfavoring such requests, 

except in circumstances where the 

requesting party makes a strong showing 

that the denial of the request would 

substantially prejudice its case. 

(c) Deadlines for action by the Deputy, 

Assistant Director or the Director 

established in this part confer no 

substantive rights on respondents. 

§ 1091.113 Voluntary consent to Bureau’s 

authority. 

(a) Notwithstanding any other 

provision, pursuant to a consent 

agreement agreed to by the Bureau, a 

person may voluntarily consent to the 

Bureau’s supervisory authority under 12 

U.S.C. 5514, and such voluntary consent 

agreement shall not be subject to any 

right to judicial review. 

(b) The consent agreement of any 

person, pursuant to paragraph (a) of this 

section, that specifies the duration of 

time that such person will be subject to 

the Bureau’s authority under 12 U.S.C. 

5514 shall not be eligible for a petition 

for termination of order pursuant to 

§ 1091.110, and a respondent entering 

into a consent agreement waives any 

right to judicial review of such consent 

agreement. 

§ 1091.114 Notice and response included 

in adjudication proceeding otherwise 

brought by the Bureau. 

(a) Notwithstanding sections 

§ 1091.102 through § 1091.104, the 

Bureau may, in its sole discretion, 

provide the notice and opportunity to 

respond required by 12 U.S.C. 

5514(a)(1)(C) in a notice of charges 

otherwise brought by the Bureau 

pursuant to 12 CFR 1081.200 and the 

adjudication proceedings pursuant to 

that part. 

(b) If the Bureau chooses to proceed 

in the manner described in paragraph 

(a) of this section, it shall so indicate in 

the notice of charges, and any order of 

the Director resulting from the notice of 

charges shall constitute the order 

referred to in 12 U.S.C. 5514(a)(1)(C). 

(c) If the Bureau proceeds pursuant to 

paragraph (a) of this section, the 

provisions of § 1091.100 through 

§ 1091.113 will be inapplicable to such 

proceeding. If the Bureau proceeds 

pursuant to this part, then the 

provisions of 12 CFR part 1081 shall be 

inapplicable to such proceedings. 

§ 1091.115 No limitation on relief sought in 

civil action or administrative adjudication. 

Nothing in this part shall be 

construed to limit the relief the Bureau 

may seek in any civil action or 

administrative adjudication, including 

but not limited to, seeking an order to 

have a person deemed subject to the 

Bureau’s supervisory authority under 12 

U.S.C. 5514 for the reasons set forth in 

12 U.S.C. 5514(a)(1)(C) or otherwise. 

Dated: May 20, 2012. 

Richard Cordray, 

Director, Bureau of Consumer Financial 

Protection. 

[FR Doc. 2012–12718 Filed 5–24–12; 8:45 am] 

BILLING CODE 4810–AM–P 

LIBRARY OF CONGRESS 

Copyright Office 

37 CFR Part 201 

[Docket No. RM 2012–4] 

Electronic Filing in the Copyright 

Office of Notices of Intention To Obtain 

a Section 115 Compulsory License 

AGENCY: Copyright Office, Library of 

Congress. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Copyright Office is 

proposing to amend its regulations for 

filing Notices of Intention to obtain a 

Section 115 compulsory license with 

the Copyright Office to provide an 

option for electronically filing the 

notice. By law, such notices may be 

filed in the Office only when the public 

records of the Copyright Office do not 

identify the copyright owner of the 

musical work and include an address at 

which notice can be served. In addition, 

the Copyright Office is proposing to 

clarify in its regulations that it does not 

examine Notices of Intention filed with 

the Office for legal sufficiency and to 

include a Privacy Act Advisory 

Statement. 

DATES: Comments are due no later than 

5:00 p.m. Eastern Daylight Time July 9, 

2012. 

ADDRESSES: The Copyright Office 

strongly prefers that comments be 

submitted electronically. A rulemaking 

page containing a comment form is 

posted on the Copyright Office Web site 

at http://copyright.gov/docs/section115/ 

efilings/comments/. The Web site 

interface requires submitters to 

complete a form specifying name and 

organization, as applicable, and to 

upload comments as an attachment via 

a browse button. To meet accessibility 

standards, all comments must be 

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