20344 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations

1The agencies issued a joint notice of proposed

rulemaking on Monday, June 17, 1991 (56 FR

27790). The agencies promulgated their final rules

on the following dates: OCC on August 9, 1991 (56

FR 38024); Board on August 9, 1991 (56 FR 38052);

FDIC on August 9, 1991 (56 FR 37975); OTS on

August 12, 1991 (56 FR 38317); and NCUA on

August 8, 1991 (56 FR 37767).

party upon payment by that party to the

reporter of the cost of the transcript. The

administrative law judge may order the

record corrected, either upon motion to

correct, upon stipulation of the parties,

or following notice to the parties upon

the administrative law judge’s own

motion.

13. In § 263.37, the section heading

and paragraph (a)(1) are revised to read

as follows:

§ 263.37 Post-hearing filings.

(a) Proposed findings and conclusions

and supporting briefs. (1) Using the

same method of service for each party,

the administrative law judge shall serve

notice upon each party, that the

certified transcript, together with all

hearing exhibits and exhibits introduced

but not admitted into evidence at the

hearing, has been filed. Any party may

file with the administrative law judge

proposed findings of fact, proposed

conclusions of law, and a proposed

order within 30 days following service

of this notice by the administrative law

judge or within such longer period as

may be ordered by the administrative

law judge.

* * * * *

14. Section 263.38 is revised to read

as follows:

§ 263.38 Recommended decision and filing

of record.

(a) Filing of recommended decision

and record. Within 45 days after

expiration of the time allowed for filing

reply briefs under § 263.37(b), the

administrative law judge shall file with

and certify to the Board, for decision,

the record of the proceeding. The record

must include the administrative law

judge’s recommended decision,

recommended findings of fact,

recommended conclusions of law, and

proposed order; all prehearing and

hearing transcripts, exhibits, and

rulings; and the motions, briefs,

memoranda, and other supporting

papers filed in connection with the

hearing. The administrative law judge

shall serve upon each party the

recommended decision, findings,

conclusions, and proposed order.

(b) Filing of index. At the same time

the administrative law judge files with

and certifies to the Board for final

determination the record of the

proceeding, the administrative law

judge shall furnish to the Board a

certified index of the entire record of the

proceeding. The certified index shall

include, at a minimum, an entry for

each paper, document or motion filed

with the administrative law judge in the

proceeding, the date of the filing, and

the identity of the filer. The certified

index shall also include an exhibit

index containing, at a minimum, an

entry consisting of exhibit number and

title or description for: Each exhibit

introduced and admitted into evidence

at the hearing; each exhibit introduced

but not admitted into evidence at the

hearing; each exhibit introduced and

admitted into evidence after the

completion of the hearing; and each

exhibit introduced but not admitted into

evidence after the completion of the

hearing.

By order of the Board of Governors of the

Federal Reserve System, April 26, 1996.

Jennifer J. Johnson,

Secretary of the Board.

[FR Doc. 96–10890 Filed 5–3–96; 8:45 a.m.]

BILLING CODE 6210–01–P

FEDERAL DEPOSIT INSURANCE

CORPORATION

12 CFR Part 308

RIN 3064–AB49

Uniform Rules of Practice and

Procedure

AGENCY: Federal Deposit Insurance

Corporation.

ACTION: Final rule.

SUMMARY: The Federal Deposit

Insurance Corporation (FDIC) is

amending its regulatory provisions

implementing the Uniform Rules of

Practice and Procedure (Uniform Rules).

The final rule is intended to clarify

certain provisions and to increase the

efficiency and fairness of administrative

hearings.

EFFECTIVE DATE: June 5, 1996.

FOR FURTHER INFORMATION CONTACT:

Andrea Winkler, Counsel, Federal

Deposit Insurance Corporation, 550 17th

Street, NW., Washington, DC 20429;

(202) 736–0762.

SUPPLEMENTARY INFORMATION:

A. Background

Section 916 of the Financial

Institutions Reform, Recovery and

Enforcement Act of 1989 (FIRREA), Pub.

L. 101–73, 103 Stat. 183 (1989), required

the FDIC, Office of the Comptroller of

the Currency (OCC), Board of Governors

of the Federal Reserve System (Board),

Office of Thrift Supervision (OTS), and

National Credit Union Administration

(NCUA)(collectively agencies) to

develop uniform rules and procedures

for administrative hearings. The

agencies each adopted final Uniform

Rules in August 1991.1 Based on their

experience, the agencies have identified

sections of the Uniform Rules that

should be modified. Accordingly, the

agencies proposed amendments to the

Uniform Rules on June 23, 1995 (60 FR

32882).

The FDIC received one comment on

the proposal. The commenter generally

supported the proposal, but suggested

improvements. The FDIC also

considered comments received by the

other agencies.

The final rule implements the

proposal with minor changes. The

following section-by-section analysis

summarizes the final rule and highlights

the changes from the proposal that the

FDIC has made after considering the

commenters’ suggestions.

The OTS, OCC, Board and NCUA are

publishing separate final rules that are

substantively identical to the FDIC’s

final rule. The OTS, OCC, and Board

rules appear elsewhere in this Federal

Register.

B. Section-by-Section Summary and

Discussion of Amendments to the

Uniform Rules

Section 308.1 Scope

The proposal added two statutory

provisions to the list of civil money

penalty provisions to which the

Uniform Rules apply. The two

provisions were enacted by the Riegle

Community Development and

Regulatory Improvement Act of 1994

(CDRI), Pub. L. 103–325, 108 Stat. 2160.

The first provision, CDRI section 406,

amended the Bank Secrecy Act (BSA)

(31 U.S.C. 5321), to require the

Secretary of the Treasury to delegate

authority to the Federal banking

agencies (as defined in section 3 of the

Federal Deposit Insurance Act (12

U.S.C. 1813)) to impose civil money

penalties for BSA violations.

The second, CDRI section 525,

amended section 102 of the Flood

Disaster Protection Act of 1973 (FDPA)

(42 U.S.C. 4012a) to give each ‘‘Federal

entity for lending regulation’’ authority

to assess civil money penalties against

a regulated lending institution if the

institution has a pattern or practice of

committing violations of the FDPA or

the notice requirements of the National

Flood Insurance Act of 1968 (NFIA) (42

U.S.C. 4104a). Under the FDPA, the

term ‘‘Federal entity for lending
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations 20345

regulation’’ includes the agencies and

the Farm Credit Administration.

Section 525 of CDRI also gave the

agencies authority to require a regulated

lending institution to take remedial

actions that are necessary to ensure that

the institution complies with the

requirements of the national flood

insurance program if: (1) The institution

has engaged in a pattern or practice of

noncompliance with regulations issued

pursuant to the FDPA and NFIA; and (2)

has not demonstrated measurable

improvement in compliance despite the

assessment of civil money penalties.

The final rule adds a new paragraph to

the scope section that reflects this

additional authority.

The FDIC received no comments on

this section, which is adopted as

proposed with the addition of the

aforementioned paragraph pertaining to

remedial action.

Section 308.6 Appearance and

Practice in Adjudicatory Proceedings

The proposal permitted the

administrative law judge (ALJ) to

require counsel who withdraws from

representing a party to accept service of

papers for that party until either: (1) A

new counsel has filed a notice of

appearance; or (2) the party indicates

that he or she will proceed on a pro se

basis.

The FDIC received one comment on

this section. The commenter suggested

that the proposal does not adequately

address certain situations: for example,

when counsel withdraws because of

lack of payment of legal fees that is

caused by an agency asset freeze, or

withdraws because the client discharged

him or her. The commenter’s

implication is that it is unfair to require

counsel to continue to accept service in

these situations. Moreover, the

commenter expressed concern that the

administrative proceeding may become

involved in a dispute between the client

and counsel when the ALJ requires

counsel to continue to accept service

after a client discharges counsel. The

commenter suggested that the rule

should require that service be given to

both the unreplaced counsel and the

party.

The proposal was intended to ensure

that a lawyer is always available to

receive service in order to prevent a

party from halting the administrative

proceedings simply by evading service.

The regulatory text is clear, however,

that the ALJ has discretion whether to

require former counsel to continue to

accept service. Fairness to counsel is

among the factors the ALJ would

consider in exercising this discretion,

and the FDIC therefore believes that the

provision as proposed is sufficiently

flexible to accommodate the concerns

raised by the commenter.

The final rule changes the proposal’s

reference from ‘‘service of process’’ to

‘‘service’’ to clarify that this section

applies to all papers that the party is

entitled to receive. This section is

otherwise adopted as proposed.

Section 308.8 Conflicts of Interest

The proposal sought to improve in

two ways the provisions governing

conflicts of interest that arise when

counsel represents multiple persons

connected with a proceeding.

First, the proposal sought to protect

the interests of individuals and financial

institutions by expanding the

circumstances under which counsel

must certify that he or she has obtained

a waiver from non-parties of any

potential conflict of interest. The former

rule required counsel to obtain waivers

only from non-party institutions ‘‘to

which notice of the proceedings must be

given’’. The proposal required counsel

to obtain waivers from all parties and

non-parties that counsel represents on a

matter relevant to an issue in the

proceeding. It thus ensured that all

appropriate party and non-party

individuals and institutions are

informed of potential conflicts.

Second, the proposal simplified this

provision by eliminating the

requirement for counsel to certify that

each client has asserted that there are no

conflicts of interest. The FDIC believes

that the former provision was

superfluous because the responsibility

for identifying potential conflicts

resides with counsel.

The FDIC received one comment on

this section. The commenter noted that

the proposal may inhibit multiple

representation that otherwise complies

with applicable ethics rules. The

commenter suggested that the proposal

could inappropriately tilt the

proceeding in favor of the agencies.

The provision does not limit the right

of any party to representation by the

counsel of the party’s choice. Rather, it

ensures that all interested persons are

informed of potential conflicts so that

they may avoid the conflict if they

choose. In the FDIC’s view, it is

reasonable to establish a baseline

standard requiring the affirmative

waiver of conflicts by all affected

persons or entities in order to ensure the

integrity of the administrative

adjudication process. State rules of

professional responsibility that impose

more stringent ethical standards are

unaffected by this requirement.

In addition, the FDIC is unpersuaded

by the argument that the conflicts

provision grants the agencies significant

advantage in a proceeding. Persons and

entities may be well and vigorously

represented even if they are not all

represented by the same counsel.

Therefore, the FDIC adopts this

section as proposed.

Section 308.11 Service of Papers

The proposal changed this section by

permitting parties, the Board of

Directors, and ALJs to serve a subpoena

on a party by delivering it to a person

of suitable age and discretion at a

party’s place of work. One comment was

received by the agencies on this section.

The commenter supported the intent of

the proposal, but asserted that

permitting service at a person’s place of

work was too broad to be effective,

particularly where a bank has numerous

branches.

The FDIC interpreted the phrase

‘‘person’s place of work’’ as used in the

proposal to mean the physical location

at which an individual works and not as

any office of the corporation or

association that employs the person. To

avoid confusion, the FDIC has added

specific reference to physical location to

the regulatory text. In addition, the final

rule states expressly that only an

individual, not a corporation or

association, may be served at a

residence or place of work.

The same comment points out,

however, that the former Uniform Rules

did not permit certain methods of

service that are useful for serving a

corporation or other association. The

final rule, therefore, permits service on

a party, corporation or other association

by delivery of a copy of a notice to an

officer, managing or general agent, or to

any other agent authorized by

appointment or by law to receive service

of process. The final rule also provides

that, if the agent is one authorized by

statute to receive service and the statute

so requires, the serving party must also

mail a copy to the party. The final rule

also restructures this provision for

clarity.

Section 308.12 Construction of Time

Limits

The proposal clarified that the

additional time allotted for responding

to papers served by mail, delivery

service, or electronic media

transmission under § 308.12(c) is not

included in determining whether an act

is required to be performed within ten

days. The proposal also clarified that

additional time allotted for responding

to papers served by mail, delivery, or

electronic media transmission is

counted by calendar days and, therefore,

a party must count Saturdays, Sundays,
20346 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations

and holidays when calculating a time

deadline.

The FDIC received no comments on

this section, which is adopted as

proposed.

Section 308.20 Amended Pleadings

The proposal changed this section to

permit a party to amend its pleadings

without leave of the ALJ and to permit

the ALJ to admit evidence over the

objection that the evidence does not fall

directly within the scope of the issues

raised by a notice or answer.

The FDIC received one comment on

this section. The commenter asserted

that the change could unduly prejudice

a party if a notice were amended to add

or delete allegations immediately prior

to the hearing. The commenter

expressed concern that the amendment

would give a party insufficient time to

seek additional discovery or file for

summary judgment.

The regulatory text gives the ALJ

discretion to revise the hearing schedule

to ensure that no prejudice results from

last minute amendments to a notice.

The FDIC believes this approach is

adequate to avoid prejudice to a party

and, therefore, adopts this section as

proposed.

Section 308.24 Scope of Document

Discovery

The former Uniform Rules were silent

on the use of interrogatories. The

proposal expressly prohibited parties

from using interrogatories on the

grounds that other discovery tools are

more efficient and less burdensome and

therefore more appropriate to

administrative adjudications.

The proposal also sought to focus

document discovery requests so that

they are not unreasonable, oppressive,

excessive in scope, or unduly

burdensome to any of the parties.

Accordingly, the proposal preserved

the former rule’s limitation on

document discovery by permitting

discovery only of documents that have

material relevance. However, the

proposal specifically provided that a

request should be considered

unreasonable, oppressive, excessive in

scope, or unduly burdensome if, among

other things: (1) it fails to include

justifiable limitations on the time period

covered and the geographic locations to

be searched; (2) the time provided to

respond in the request is inadequate; or

(3) the request calls for copies of

documents to be delivered to the

requesting party and fails to include the

requestor’s written agreement to pay in

advance for the copying, in accordance

with § 308.25.

Under the proposal, the scope of

permissible document discovery is not

as broad as that allowed under Federal

Rule of Civil Procedure 26(b) (28 U.S.C.

app.). Historically, given the specialized

nature of enforcement proceedings in

regulated industries, discovery in

administrative proceedings has not been

as expansive as it is in civil litigation.

The agencies received no significant

comments on this section and, therefore,

the FDIC adopts it as proposed.

Section 308.25 Request for Document

Discovery From Parties

The FDIC proposed several changes to

§ 308.25. First, the proposal sought to

reduce unnecessary burden by

permitting a party to: (1) respond to

document discovery either by producing

documents as they are kept in the

ordinary course of business or by

organizing them to correspond to the

categories in a document request; and

(2) identify similar documents by

category when they are voluminous and

are protected by the deliberative

process, attorney-client, or attorneywork-product privilege.

The proposal also amended section

308.25 to permit a party to require

payment in advance for the costs of

copying and shipping requested

documents and clarified that, if a party

has stated its intention to file a timely

motion for interlocutory review, the ALJ

may not release, or order a party to

produce, documents withheld on

grounds of privilege until the motion for

interlocutory review has been decided.

The FDIC received one comment on

this section, and one other comment

was received by the agencies. One

commenter sought guidance on when,

how, and to whom a party must express

an ‘‘intention’’ to file a timely motion

for interlocutory review.

Because it is the ALJ who may not

release or order a party to produce

documents, it was implicit in the

proposed regulatory text that a party

must make the intention to seek

interlocutory review known to the ALJ.

For clarity’s sake, the final rule adds

language to this effect.

Another commenter suggested that a

request for interlocutory review should

stay the proceeding.

Under § 308.28(d) of the Uniform

Rules, a party may request that a

proceeding be stayed during the

pendency of an interlocutory review

and the ALJ has the discretion to decide

whether a stay is appropriate. The FDIC

believes that this procedure adequately

protects the parties. For this reason and

to avoid adding unnecessary delays in

the administrative proceedings, the

FDIC declines to provide for an

automatic stay whenever a party

requests interlocutory review.

One commenter asserted that

permitting the FDIC to require payment

in advance for document copying and

shipping costs would give the FDIC an

advantage over other creditors if the

party is bankrupt following the

administrative hearing. The FDIC finds

that this situation is rare and therefore

does not outweigh the FDIC’s need to

ensure that it receives payment.

Moreover, the provision does not

preclude other creditors from requiring

prepayment for products or services.

Accordingly, the FDIC adopts this

section as proposed.

Section 308.27 Deposition of Witness

Unavailable for Hearing

The proposal clarified that a party

may serve a deposition subpoena on a

witness who is unavailable by serving

the subpoena on the witness’s

authorized representative. The FDIC

does not include this proposed change

because in § 308.11(d), the final rule

expressly permits a party to serve a

subpoena by delivering the subpoena to

an agent, which includes delivery to an

authorized representative. Therefore,

the proposed change to § 308.27 would

be redundant.

The FDIC received no comments on

this section, and makes no change to it.

Section 308.33 Public Hearings

The proposal changed this section to

specify that a party must file a motion

for a private hearing with the Executive

Secretary and not the ALJ but must

serve the ALJ with a copy of the motion.

The FDIC received no comments on

this section, which is adopted as

proposed.

Section 308.34 Hearing Subpoenas

The former Uniform Rules did not

specifically require that a party inform

all other parties when a subpoena to a

non-party is issued. The proposal

required that, after a hearing subpoena

is issued by the ALJ, the party that

applied for the subpoena must serve a

copy of it on each party. Under the

proposal, any party may move to quash

any hearing subpoena and must serve

the motion on each other party.

The FDIC received no comments on

this section, which is adopted as

proposed.

Section 308.35 Conduct of Hearings

The proposal limited the number of

counsel permitted to examine a witness

and clarified that hearing transcripts

may be obtained only from the court

reporter. The former Uniform Rules

were silent on these issues.
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations 20347

The FDIC received no comments on

this section, which is adopted as

proposed.

Section 308.37 Post-Hearing Filings

The proposal changed the title of this

section from ‘‘Proposed findings and

conclusions’’ to ‘‘Post-hearing filings’’ to

describe more accurately the content of

the section.

The proposal also moved, from

§ 308.35(b) to § 308.37(a), the provision

that requires the ALJ to serve each party

with notice of the filing of the certified

transcript of the hearing (including

hearing exhibits). The proposal added a

requirement that the ALJ must use the

same method of service for this notice.

Finally, the proposal clarified that the

ALJ may, when appropriate, permit

parties more than the allotted 30 days to

file proposed findings of fact, proposed

conclusions of law, and a proposed

order.

The FDIC received no comments on

this section, which is adopted as

proposed.

Section 308.38 Recommended

Decision and Filing of Record

Under the former Uniform Rules, the

ALJ was not required to file an index of

the record when he filed the record with

the Board of Directors. The proposal

added this requirement and reorganized

this section to improve its clarity.

The FDIC received no comments on

this section, which is adopted as

proposed.

C. Regulatory Flexibility Act

Pursuant to section 605(b) of the

Regulatory Flexibility Act, the FDIC

hereby certifies that this final rule will

not have a significant economic impact

on a substantial number of small

entities. Accordingly, a regulatory

flexibility analysis is not required.

This final rule only imposes

procedural requirements in

administrative adjudications. It contains

no substantive requirements. It

improves the Uniform Rules of Practice

and Procedure and facilitates the

orderly determination of administrative

proceedings. The changes in this final

rule are primarily clarifications and

impose no significant additional

burdens on regulated institutions,

parties to administrative actions, or

counsel.

D. Effective Date

Section 302(b) of the Riegle

Community Development and

Regulatory Improvement Act of 1994

(Pub. L. 103–325, September 29, 1994)

provides that new regulations and

amendments to regulations prescribed

by the federal banking agencies shall

take effect on the first day of a calendar

quarter which begins on or after the date

on which the regulation is published in

final form, unless the agency determines

for good cause that the regulation

should become effective at an earlier

date or the regulation is required to

become effective at some other date

determined by law. The Administrative

Procedure Act (5 U.S.C. 551 et seq.)

provides that regulations shall become

effective thirty days after their

publication in the Federal Register. 5

U.S.C. 553. Thus, this amendment to

Part 308 of the FDIC’s regulations shall

become effective on June 5, 1996.

List of Subjects in 12 CFR Part 308

Administrative practice and

procedure, Bank deposit insurance,

Claims, Crime, Equal access to justice,

Investigations, Lawyers, Penalties.

Authority and Issuance

For the reasons set out in the

preamble, part 308 of chapter III of title

12 of the Code of Federal Regulations is

amended as set forth below:

PART 308—RULES OF PRACTICE AND

PROCEDURE

1. The authority citation for part 308

is revised to read as follows:

Authority: 5 U.S.C. 504, 554–557; 12

U.S.C. 93(b), 164, 505, 1817, 1818, 1820,

1831o, 1972, 3102, 3108(a), 3909, 4717; 15

U.S.C. 78 (h) and (i), 78o–4(c), 78o–5, 78q–

1, 78u, 78u–2, 78u–3, and 78w; 31 U.S.C.

330, 5321; 42 U.S.C. 4012a.

Subpart A—[Amended]

2. In § 308.1, paragraph (e)(8) is

amended by removing ‘‘and’’ after the

semicolon, paragraphs (e)(10) and

(e)(11) are added, paragraph (f) is

redesignated as paragraph (g) and

revised, and new paragraph (f) is added

to read as follows:

§ 308.1 Scope.

* * * * *

(e) * * *

(10) Any provision of law referenced

in section 102(f) of the Flood Disaster

Protection Act of 1973 (42 U.S.C.

4012a(f)) or any order or regulation

issued thereunder; and

(11) Any provision of law referenced

in 31 U.S.C. 5321 or any order or

regulation issued thereunder;

(f) Remedial action under section

102(g) of the Flood Disaster Protection

Act of 1973 (42 U.S.C. 4012a(g)); and

(g) This subpart also applies to all

other adjudications required by statute

to be determined on the record after

opportunity for an agency hearing,

unless otherwise specifically provided

for in the Local Rules.

3. In § 308.6, paragraph (a)(3) is

revised to read as follows:

§ 308.6 Appearance and practice in

adjudicatory proceedings.

(a) * * *

(3) Notice of appearance. Any

individual acting as counsel on behalf of

a party, including the FDIC, shall file a

notice of appearance with OFIA at or

before the time that individual submits

papers or otherwise appears on behalf of

a party in the adjudicatory proceeding.

The notice of appearance must include

a written declaration that the individual

is currently qualified as provided in

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

and is authorized to represent the

particular party. By filing a notice of

appearance on behalf of a party in an

adjudicatory proceeding, the counsel

agrees and represents that he or she is

authorized to accept service on behalf of

the represented party and that, in the

event of withdrawal from

representation, he or she will, if

required by the administrative law

judge, continue to accept service until

new counsel has filed a notice of

appearance or until the represented

party indicates that he or she will

proceed on a pro se basis.

* * * * *

4. In § 308.8, paragraph (b) is revised

to read as follows:

§ 308.8 Conflicts of interest.

* * * * *

(b) Certification and waiver. If any

person appearing as counsel represents

two or more parties to an adjudicatory

proceeding or also represents a nonparty on a matter relevant to an issue in

the proceeding, counsel must certify in

writing at the time of filing the notice

of appearance required by § 308.6(a):

(1) That the counsel has personally

and fully discussed the possibility of

conflicts of interest with each such

party and non-party; and

(2) That each such party and nonparty waives any right it might

otherwise have had to assert any known

conflicts of interest or to assert any nonmaterial conflicts of interest during the

course of the proceeding.

5. In § 308.11, paragraphs (c) (2) and

(d) are revised to read as follows:

§ 308.11 Service of papers.

* * * * *

(c) * * *

(2) If a party has not appeared in the

proceeding in accordance with § 308.6,

the Board of Directors or the

administrative law judge shall make

service by any of the following methods:
20348 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations

(i) By personal service;

(ii) If the person to be served is an

individual, by delivery to a person of

suitable age and discretion at the

physical location where the individual

resides or works;

(iii) If the person to be served is a

corporation or other association, by

delivery to an officer, managing or

general agent, or to any other agent

authorized by appointment or by law to

receive service and, if the agent is one

authorized by statute to receive service

and the statute so requires, by also

mailing a copy to the party;

(iv) By registered or certified mail

addressed to the party’s last known

address; or

(v) By any other method reasonably

calculated to give actual notice.

(d) Subpoenas. Service of a subpoena

may be made:

(1) By personal service;

(2) If the person to be served is an

individual, by delivery to a person of

suitable age and discretion at the

physical location where the individual

resides or works;

(3) By delivery to an agent which, in

the case of a corporation or other

association, is delivery to an officer,

managing or general agent, or to any

other agent authorized by appointment

or by law to receive service and, if the

agent is one authorized by statute to

receive service and the statute so

requires, by also mailing a copy to the

party;

(4) By registered or certified mail

addressed to the person’s last known

address; or

(5) In such other manner as is

reasonably calculated to give actual

notice.

* * * * *

6. In § 308.12, paragraphs (a), (c)(1),

(c)(2), and (c)(3) are revised to read as

follows:

§ 308.12 Construction of time limits.

(a) General rule. In computing any

period of time prescribed by this

subpart, 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.

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.

However, 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, intermediate

Saturdays, Sundays, and Federal

holidays are not included.

* * * * *

(c) * * *

(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

media transmission, add one calendar

day to the prescribed period, unless

otherwise determined by the Board of

Directors or the administrative law

judge in the case of filing, or by

agreement among the parties in the case

of service.

7. Section 308.20 is revised to read as

follows:

§ 308.20 Amended pleadings.

(a) Amendments. The notice or

answer may be amended or

supplemented at any stage of the

proceeding. The respondent must

answer an amended notice within the

time remaining for the respondent’s

answer to the original notice, or within

ten days after service of the amended

notice, whichever period is longer,

unless the Board of Directors or

administrative law judge orders

otherwise for good cause.

(b) Amendments to conform to the

evidence. When issues not raised in the

notice or answer are tried at the hearing

by express or implied consent of the

parties, they will be treated in all

respects as if they had been raised in the

notice or answer, and no formal

amendments are required. If evidence is

objected to at the hearing on the ground

that it is not within the issues raised by

the notice or answer, the administrative

law judge may admit the evidence when

admission is likely to assist in

adjudicating the merits of the action and

the objecting party fails to satisfy the

administrative law judge that the

admission of such evidence would

unfairly prejudice that party’s action or

defense upon the merits. The

administrative law judge may grant a

continuance to enable the objecting

party to meet such evidence.

8. In § 308.24, paragraphs (a) and (b)

are revised to read as follows:

§ 308.24 Scope of document discovery.

(a) Limits on discovery. (1) Subject to

the limitations set out in paragraphs (b),

(c), and (d) of this section, a party to a

proceeding under this subpart may

obtain document discovery by serving a

written request to produce documents.

For purposes of a request to produce

documents, the term ‘‘documents’’ may

be defined to include drawings, graphs,

charts, photographs, recordings, data

stored in electronic form, and other data

compilations from which information

can be obtained, or translated, if

necessary, by the parties through

detection devices into reasonably usable

form, as well as written material of all

kinds.

(2) Discovery by use of deposition is

governed by subpart I of this part.

(3) Discovery by use of interrogatories

is not permitted.

(b) Relevance. A party may obtain

document discovery regarding any

matter, not privileged, that has material

relevance to the merits of the pending

action. Any request to produce

documents that calls for irrelevant

material, that is unreasonable,

oppressive, excessive in scope, unduly

burdensome, or repetitive of previous

requests, or that seeks to obtain

privileged documents will be denied or

modified. A request is unreasonable,

oppressive, excessive in scope or

unduly burdensome if, among other

things, it fails to include justifiable

limitations on the time period covered

and the geographic locations to be

searched, the time provided to respond

in the request is inadequate, or the

request calls for copies of documents to

be delivered to the requesting party and

fails to include the requestor’s written

agreement to pay in advance for the

copying, in accordance with § 308.25.

* * * * *

9. In § 308.25, paragraphs (a), (b), (e),

and (g) are revised to read as follows:

§ 308.25 Request for document discovery

from parties.

(a) General rule. Any party may serve

on any other party a request to produce

for inspection any discoverable

documents that are in the possession,

custody, or control of the party upon

whom the request is served. The request

must identify the documents to be

produced either by individual item or

by category, and must describe each

item and category with reasonable

particularity. Documents must be

produced as they are kept in the usual

course of business or must be organized

to correspond with the categories in the

request.

(b) Production or copying. The request

must specify a reasonable time, place,

and manner for production and

performing any related acts. In lieu of

inspecting the documents, the

requesting party may specify that all or

some of the responsive documents be

copied and the copies delivered to the

requesting party. If copying of fewer

than 250 pages is requested, the party to

whom the request is addressed shall

bear the cost of copying and shipping
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations 20349

charges. If a party requests 250 pages or

more of copying, the requesting party

shall pay for the copying and shipping

charges. Copying charges are the current

per-page copying rate imposed by 12

CFR part 310 implementing the

Freedom of Information Act (5 U.S.C.

552). The party to whom the request is

addressed may require payment in

advance before producing the

documents.

* * * * *

(e) Privilege. At the time other

documents are produced, the producing

party must reasonably identify all

documents withheld on the grounds of

privilege and must produce a statement

of the basis for the assertion of privilege.

When similar documents that are

protected by deliberative process,

attorney-work-product, or attorneyclient privilege are voluminous, these

documents may be identified by

category instead of by individual

document. The administrative law judge

retains discretion to determine when the

identification by category is insufficient.

* * * * *

(g) Ruling on motions. After the time

for filing responses pursuant to this

section has expired, the administrative

law judge shall rule promptly on all

motions filed pursuant to this section. If

the administrative law judge determines

that a discovery request, or any of its

terms, calls for irrelevant material, is

unreasonable, oppressive, excessive in

scope, unduly burdensome, or repetitive

of previous requests, or seeks to obtain

privileged documents, he or she may

deny or modify the request, and may

issue appropriate protective orders,

upon such conditions as justice may

require. The pendency of a motion to

strike or limit discovery or to compel

production is not a basis for staying or

continuing the proceeding, unless

otherwise ordered by the administrative

law judge. Notwithstanding any other

provision in this part, the administrative

law judge may not release, or order a

party to produce, documents withheld

on grounds of privilege if the party has

stated to the administrative law judge its

intention to file a timely motion for

interlocutory review of the

administrative law judge’s order to

produce the documents, and until the

motion for interlocutory review has

been decided.

* * * * *

10. In § 308.33, paragraph (a) is

revised to read as follows:

§ 308.33 Public hearings.

(a) General rule. All hearings shall be

open to the public, unless the FDIC, in

its discretion, determines that holding

an open hearing would be contrary to

the public interest. Within 20 days of

service of the notice or, in the case of

change-in-control proceedings under

section 7(j)(4) of the FDIA (12 U.S.C.

1817(j)(4)), within 20 days from service

of the hearing order, any respondent

may file with the Executive Secretary a

request for a private hearing, and any

party may file a reply to such a request.

A party must serve on the

administrative law judge a copy of any

request or reply the party files with the

Executive Secretary. The form of, and

procedure for, these requests and replies

are governed by § 308.23. A party’s

failure to file a request or a reply

constitutes a waiver of any objections

regarding whether the hearing will be

public or private.

* * * * *

11. In § 308.34, paragraphs (a) and

(b)(1) are revised to read as follows:

§ 308.34 Hearing subpoenas.

(a) Issuance. (1) Upon application of

a party showing general relevance and

reasonableness of scope of the testimony

or other evidence sought, the

administrative law judge may issue a

subpoena or a subpoena duces tecum

requiring the attendance of a witness at

the hearing or the production of

documentary or physical evidence at the

hearing. The application for a hearing

subpoena must also contain a proposed

subpoena specifying the attendance of a

witness or the production of evidence

from any state, territory, or possession

of the United States, the District of

Columbia, or as otherwise provided by

law at any designated place where the

hearing is being conducted. The party

making the application shall serve a

copy of the application and the

proposed subpoena on every other

party.

(2) A party may apply for a hearing

subpoena at any time before the

commencement of a hearing. During a

hearing, a party may make an

application for a subpoena orally on the

record before the administrative law

judge.

(3) The administrative law judge shall

promptly issue any hearing subpoena

requested pursuant to this section. If the

administrative law judge determines

that the application does not set forth a

valid basis for the issuance of the

subpoena, or that any of its terms are

unreasonable, oppressive, excessive in

scope, or unduly burdensome, he or she

may refuse to issue the subpoena or may

issue it in a modified form upon any

conditions consistent with this subpart.

Upon issuance by the administrative

law judge, the party making the

application shall serve the subpoena on

the person named in the subpoena and

on each party.

(b) Motion to quash or modify. (1)

Any person to whom a hearing

subpoena is directed or any party may

file a motion to quash or modify the

subpoena, accompanied by a statement

of the basis for quashing or modifying

the subpoena. The movant must serve

the motion on each party and on the

person named in the subpoena. Any

party may respond to the motion within

ten days of service of the motion.

* * * * *

12. In § 308.35, paragraph (a)(3) is

redesignated as paragraph (a)(4), a new

paragraph (a)(3) is added, and paragraph

(b) is revised to read as follows:

§ 308.35 Conduct of hearings.

(a) * * *

(3) Examination of witnesses. Only

one counsel for each party may conduct

an examination of a witness, except that

in the case of extensive direct

examination, the administrative law

judge may permit more than one

counsel for the party presenting the

witness to conduct the examination. A

party may have one counsel conduct the

direct examination and another counsel

conduct re-direct examination of a

witness, or may have one counsel

conduct the cross examination of a

witness and another counsel conduct

the re-cross examination of a witness.

* * * * *

(b) Transcript. The hearing must be

recorded and transcribed. The reporter

will make the transcript available to any

party upon payment by that party to the

reporter of the cost of the transcript. The

administrative law judge may order the

record corrected, either upon motion to

correct, upon stipulation of the parties,

or following notice to the parties upon

the administrative law judge’s own

motion.

13. In § 308.37, the section heading

and paragraph (a)(1) are revised to read

as follows:

§ 308.37 Post-hearing filings.

(a) Proposed findings and conclusions

and supporting briefs. (1) Using the

same method of service for each party,

the administrative law judge shall serve

notice upon each party, that the

certified transcript, together with all

hearing exhibits and exhibits introduced

but not admitted into evidence at the

hearing, has been filed. Any party may

file with the administrative law judge

proposed findings of fact, proposed

conclusions of law, and a proposed

order within 30 days following service

of this notice by the administrative law

judge or within such longer period as
20350 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations

1The agencies issued a joint notice of proposed

rulemaking on Monday, June 17, 1991 (56 FR

27790). The agencies promulgated their final rules

on the following dates: OCC on August 9, 1991 (56

FR 38024); Board on August 9, 1991 (56 FR 38052);

FDIC on August 9, 1991 (56 FR 37975); OTS on

August 12, 1991 (56 FR 38317); and NCUA on

August 8, 1991 (56 FR 37767).

may be ordered by the administrative

law judge.

* * * * *

14. Section 308.38 is revised to read

as follows:

§ 308.38 Recommended decision and filing

of record.

(a) Filing of recommended decision

and record. Within 45 days after

expiration of the time allowed for filing

reply briefs under § 308.37(b), the

administrative law judge shall file with

and certify to the Executive Secretary,

for decision, the record of the

proceeding. The record must include

the administrative law judge’s

recommended decision, recommended

findings of fact, recommended

conclusions of law, and proposed order;

all prehearing and hearing transcripts,

exhibits, and rulings; and the motions,

briefs, memoranda, and other

supporting papers filed in connection

with the hearing. The administrative

law judge shall serve upon each party

the recommended decision, findings,

conclusions, and proposed order.

(b) Filing of index. At the same time

the administrative law judge files with

and certifies to the Executive Secretary

for final determination the record of the

proceeding, the administrative law

judge shall furnish to the Executive

Secretary a certified index of the entire

record of the proceeding. The certified

index shall include, at a minimum, an

entry for each paper, document or

motion filed with the administrative law

judge in the proceeding, the date of the

filing, and the identity of the filer. The

certified index shall also include an

exhibit index containing, at a minimum,

an entry consisting of exhibit number

and title or description for: Each exhibit

introduced and admitted into evidence

at the hearing; each exhibit introduced

but not admitted into evidence at the

hearing; each exhibit introduced and

admitted into evidence after the

completion of the hearing; and each

exhibit introduced but not admitted into

evidence after the completion of the

hearing.

By order of the Board of Directors.

Dated at Washington, D.C. this 3rd day of

April 1996.

Federal Deposit Insurance Corporation.

Jerry L. Langley,

Executive Secretary.

[FR Doc. 96–10471 Filed 5–3–96; 8:45 am]

BILLING CODE 6714–01–P

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 509

[No. 96–30]

RIN 1550–AA79

Uniform Rules of Practice and

Procedure

AGENCY: Office of Thrift Supervision,

Treasury.

ACTION: Final rule.

SUMMARY: The Office of Thrift

Supervision (OTS) is amending its Rules

of Practice and Procedure in

Adjudicatory Proceedings. The final

rule is intended to clarify certain

provisions and to increase the efficiency

and fairness of administrative hearings.

EFFECTIVE DATE: June 5, 1996.

FOR FURTHER INFORMATION CONTACT:

Karen A. Osterloh, Counsel (Banking

and Finance), Regulations and

Legislation Division, Chief Counsel’s

Office, (202) 906–6639, or Eliot

Goldstein, Counsel, Division of

Enforcement, Chief Counsel’s Office,

(202) 906–7162, Office of Thrift

Supervision, 1700 G Street, NW.,

Washington, DC 20552.

SUPPLEMENTARY INFORMATION:

A. Background

Section 916 of the Financial

Institutions Reform, Recovery and

Enforcement Act of 1989 (FIRREA), Pub.

L. 101–73, 103 Stat. 183 (1989), required

the OTS, the Office of the Comptroller

of the Currency (OCC), the Board of

Governors of the Federal Reserve

System (Board), the Federal Deposit

Insurance Corporation (FDIC) and the

National Credit Union Administration

(NCUA) (agencies) to develop uniform

rules and procedures for administrative

hearings. The agencies each adopted

final Uniform Rules in August, 1991.1

Based on their experience in using the

rules since then, the agencies have

identified sections of the Uniform Rules

that should be modified. Accordingly,

the agencies proposed amendments to

the Uniform Rules on June 23, 1995 (60

FR 32882). These changes affect OTS

Uniform Rules at 12 CFR Part 509

(Subpart A). The OTS also proposed

amendments to its agency-specific

procedural rules at 12 CFR Part 509

(Subpart B) (Local Rules).

The OTS received one comment

which expressed general approval of the

proposal and suggested specific

improvements. The OTS has also

considered comments submitted to the

other agencies on the proposed rule.

The final rule implements the

proposal with minor changes. The

following section-by-section analysis

summarizes the final rule and highlights

the changes that the OTS has made after

considering the commenters’

suggestions.

The OCC, FDIC, Board and NCUA are

publishing separate final rules that are

substantively identical to the OTS’s

final rule. The OCC, FDIC, and Board

rules appear elsewhere in this Federal

Register.

B. Section-by-Section Summary and

Discussion of Amendments to the

Uniform Rules

Section 509.1 Scope

The proposal added two statutory

provisions to the list of civil money

penalty provisions to which the

Uniform Rules apply. The two

provisions were enacted by the Riegle

Community Development and

Regulatory Improvement Act of 1994

(CDRI), Pub. L. 103–325, 108 Stat. 2160.

The first provision, CDRI section 406,

amended the Bank Secrecy Act (BSA)

(31 U.S.C. 5321) to require the Secretary

of the Treasury to delegate authority to

the Federal banking agencies (as defined

in section 3 of the Federal Deposit

Insurance Act (12 U.S.C. 1813)) to

impose civil money penalties for BSA

violations.

The second provision, CDRI section

525, amended section 102 of the Flood

Disaster Protection Act of 1973 (FDPA)

(42 U.S.C. 4012a) to give each ‘‘Federal

entity for lending regulation’’ authority

to assess civil money penalties against

a regulated lending institution if the

institution has a pattern or practice of

committing violations of the FDPA or

the notice requirements of the National

Flood Insurance Act of 1968 (NFIA) (42

U.S.C. 4104a). Under the FDPA, the

term ‘‘Federal entity for lending

regulation’’ includes the agencies and

the Farm Credit Administration.

CDRI § 525 also gave the agencies

authority to require a regulated lending

institution to take remedial actions that

are necessary to ensure that the

institution complies with the

requirements of the national flood

insurance program if: (1) the institution

has engaged in a pattern and practice of

noncompliance with regulations issued

pursuant to the FDPA; and (2) has not