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
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations 20351

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 OTS received no comments on

this section, which is adopted as

proposed.

Section 509.6 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.

One commenter suggested that the

proposal does not adequately address

certain situations: for example, when

counsel withdraws because of lack of

payment of legal fees 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 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

process simply by evading service. The

regulatory text is clear, however, that

the ALJ has the 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.

The OTS, 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. The section is

otherwise adopted as proposed.

Section 509.8 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 OTS believes

that the former provision was

superfluous because the responsibility

for identifying potential conflicts

resides with counsel.

One 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

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 OTS’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 OTS is unpersuaded

by the argument that the conflicts

provision grants the agencies significant

advantage in a proceeding. Persons and

parties may be well and vigorously

represented even if they are not all

represented by the same counsel.

Therefore, the OTS adopts this section

as proposed.

Section 509.11 Service of Papers

The proposal changed this section by

permitting parties, the Director, 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 commenter supported the intent

of the proposal, but asserted that

permitting service on a person at a

person’s place of work was too broad to

be effective, particularly where an

institution has numerous branches.

The OTS 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 OTS 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 commenter points out,

however, that the former Uniform Rules

do 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 509.12 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 § 509.12(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,

and holidays when calculating a time

deadline.

The OTS received no comments on

this section, which is adopted as

proposed.

Section 509.20 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.

One 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
20352 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations

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 OTS believes this approach is

adequate to avoid prejudice to a party

and, therefore, adopts this section as

proposed.

Section 509.24 Scope of Document

Discovery

The former Uniform Rules were silent

on the use of interrogatories. The

proposal expressly prohibited parties

from using interrogatories on 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 § 509.25.

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 OTS received no significant

comments on this section and, therefore,

adopts it as proposed.

Section 509.25 Request for document

discovery from parties

The OTS proposed several changes to

§ 509.25. 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 attorney

work-product privilege.

The proposal also amended § 509.25

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 agencies received two comments

on this section. 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 the ALJ 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

automatically stay the proceeding.

Under § 509.28(d) of the Uniform

Rules, a party may request that a

proceeding be stayed during the

pendency of an interlocutory review.

The ALJ has the discretion to decide

whether a stay is appropriate. The OTS

believes that this procedure adequately

protects the parties. For this reason and

to avoid adding unnecessary delays in

the administrative proceedings, the OTS

declines to provide for an automatic

stay whenever a party requests

interlocutory review.

One commenter asserted that

permitting the OTS to require payment

in advance for document copying and

shipping costs would give the OTS an

advantage over other creditors if the

party is bankrupt following the

administrative hearing. The OTS finds

that this situation is rare and therefore

does not outweigh the OTS’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 OTS adopts this

section as proposed.

Section 509.27 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 or the

witness’s authorized representative. The

OTS received no comments on this

section.

As amended, section 509.11(d)

expressly permits a party to serve a

subpoena by delivering the subpoena to

an agent, which would include delivery

to an authorized representative. The

proposed change to section 509.27 is,

therefore, redundant and has not been

included in the final rule.

Section 509.33 Public Hearings

The proposal changed this section to

specify that a party must file a motion

for a private hearing with the Director

and not the ALJ, but must serve the ALJ

with a copy of the motion.

The OTS received no comments on

this section, which is adopted as

proposed.

Section 509.34 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 OTS received no comments on

this section, which is adopted as

proposed.

Section 509.35 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. The OTS

received no comments on this section,

which is adopted as proposed.

Section 509.37 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

§ 509.35(b) to § 509.37(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.
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations 20353

The OTS received no comments on

this section, which is adopted with a

minor technical change.

Section 509.38 Recommended

decision and filing of record

Under OTS Local Rule § 509.104(h),

the ALJ was required to file an index of

the record when he filed the record with

the Director. The proposal added this

requirement to the Uniform Rules at

§ 509.38, and reorganized this section to

improve its clarity.

The OTS received no comments on

this section, which is adopted as

proposed.

C. Section-by-Section Summary and

Discussion of Proposed Amendments to

the OTS Local Rules

Section 509.102 Discovery

The OTS proposed to revise its local

rule at § 509.102(g)(2) which governs the

service of discovery deposition

subpoenas. The current rule permits

service of deposition subpoenas only by

personal service, certified mail, or

overnight delivery service. The

proposed rule, however, would have

permitted parties to serve deposition

subpoenas by any of the methods listed

in Uniform Rule § 509.11(d). The OTS

received no comments on this proposal.

It is adopted without change.

Current § 509.102(g)(2) requires a

party to serve a deposition subpoena on

‘‘the person named therein and a copy

on that person’s counsel, or on that

person’s counsel.’’ The OTS proposed to

revise this provision to require a party

to serve a deposition subpoena on the

person named therein or on that

person’s counsel. The proposed change

would conform the OTS Local Rule to

the OCC Local Rule at 12 CFR 19.171.

One commenter suggested that the

OTS should require a party to serve both

the deponent and the deponent’s

counsel. The OTS rejects this

suggestion. Initially, a party may not be

able to comply with the commenter’s

proposed requirement. For example,

where the witness to be deposed is a

non-party, the party issuing the

subpoena may not know whether the

witness is represented by counsel and

the identity of counsel. Where a party is

to be deposed, however, counsel of

record will always receive notice of the

deposition under § 509.102(a).

This commenter suggests that it may

be a violation of an attorney’s ethics for

counsel to serve a deponent, but not the

deponent’s attorney. The OTS Local

Rule does not limit the ability of any

party to make service upon a deponent’s

attorney where required by local ethics

rules. State rules of professional

responsibility that impose more

stringent ethical standards are

unaffected by this Local Rule.

The proposed changes to

§ 509.102(g)(2) are adopted with certain

clarifying changes.

Section 509.104 Additional

Procedures

As amended today, § 509.38

incorporates OTS Local Rule at

§ 509.104(h). Accordingly, the local rule

is deleted.

D. Regulatory Flexibility Act

Pursuant to section 605(b) of the

Regulatory Flexibility Act, the OTS

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.

E. Executive Order 12866

The OTS has determined that this

final rule is not a significant regulatory

action as defined in Executive Order

12866.

F. Unfunded Mandates Act of 1995

Section 202 of the Unfunded

Mandates Reform Act of 1995, Pub. L.

104–4 (Unfunded Mandates Act)

requires that an agency prepare a

budgetary impact statement before

promulgating a rule that includes a

Federal mandate that may result in

expenditure by State, local, and tribal

governments, in the aggregate, or by the

private sector, of $100 million or more

in any one year. If a budgetary impact

statement is required, Section 205 of the

Unfunded Mandates Act also requires

an agency to identify and consider a

reasonable number of regulatory

alternatives before promulgating a rule.

As discussed in the preamble, this final

rule is limited in application to

procedural amendments to the rules of

administrative practice before the OTS.

The OTS has therefore determined that

the final rule will not result in

expenditures by State, local, or tribal

governments or by the private sector of

more than $100 million. Accordingly,

the OTS has not prepared a budgetary

impact statement or specifically

addressed the regulatory alternatives

considered.

G. Effective Date

Section 302 of the Riegle Community

Development and Regulatory

Improvement Act of 1994 delays the

effective date of regulations

promulgated by the Federal banking

agencies that impose additional

reporting, disclosure, or other new

requirements to the first day of the first

calendar quarter following publication

of the final rule. The OTS believes that

section 302 is not applicable to this final

rule, because the regulation does not

impose any additional reporting or other

requirements not already contained in

the current version of the Uniform Rules

or the Local Rules.

List of Subjects in 12 CFR Part 509

Administrative practice and

procedure, Penalties.

For the reasons set out in the

preamble, part 509 of chapter V of title

12 of the Code of Federal Regulations is

amended as set forth below.

PART 509—RULES OF PRACTICE AND

PROCEDURE IN ADJUDICATORY

PROCEEDINGS

1. The authority citation for part 509

is revised to read as follows:

Authority: 5 U.S.C. 504, 554–557; 12

U.S.C. 1464, 1467, 1467a, 1468, 1817(j), 1818,

3349, 4717; 15 U.S.C. 78(l), 78o–5, 78u–2; 31

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

Subpart A—Uniform Rules of Practice

and Procedure

2. Section 509.1 is amended in

paragraph (e)(7) by removing the word

‘‘and’’ after the semicolon, adding

paragraphs (e)(9) and (e)(10),

redesignating paragraph (f) as paragraph

(g) and revising it, and adding new

paragraph (f) read as follows:

§ 509.1 Scope.

* * * * *

(e) * * *

(9) Any provision of law referenced in

section 102 of the Flood Disaster

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

4012a(f)) or any order or regulation

issued thereunder; and

(10) Any provision of law referenced

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

regulation issued thereunder;

(f) Remedial action under section 102

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,
20354 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations

unless otherwise specifically provided

for in the Local Rules.

3. Section 509.6 is amended by

revising paragraph (a)(3) to read as

follows:

§ 509.6 Appearance and practice in

adjudicatory proceedings.

(a) * * *

(3) Notice of appearance. Any

individual acting as counsel on behalf of

a party, including the Director, 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. Section 509.8 is amended by

revising paragraph (b) to read as follows:

§ 509.8 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 § 509.6(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. Section 509.11 is amended by

revising paragraphs (c)(2) and (d) to read

as follows:

§ 509.11 Service of papers.

* * * * *

(c) * * *

(2) If a party has not appeared in the

proceeding in accordance with § 509.6

of this subpart, the Director or the

administrative law judge shall make

service by any of the following methods:

(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 person’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) By any other method reasonably

calculated to give actual notice.

* * * * *

6. Section 509.12 is amended by

revising paragraphs (a), (c)(1), (c)(2), and

(c)(3) to read as follows:

§ 509.12 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 Director or

the administrative law judge in the case

of filing, or by agreement among the

parties in the case of service.

7. Section 509.20 is revised to read as

follows:

§ 509.20 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 Director 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. Section 509.24 is amended by

revising paragraphs (a) and (b) to read

as follows:

§ 509.24 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
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations 20355

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 § 509.102 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 § 509.25 of

this subpart.

* * * * *

9. Section 509.25 is amended by

revising paragraphs (a), (b), (e), and (g)

to read as follows:

§ 509.25 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

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 under 12

CFR 502.7 for requests under 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. Section 509.33 is amended by

revising paragraph (a) to read as follows:

§ 509.33 Public hearings.

(a) General rule. All hearings shall be

open to the public, unless the Director,

in the Director’s 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 Director 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

Director. The form of, and procedure

for, these requests and replies are

governed by § 509.23 of this subpart. 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. Section 509.34 is amended by

revising paragraphs (a) and (b)(1) to read

as follows:

§ 509.34 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
20356 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations

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. Section 509.35 is amended by

redesignating paragraph (a)(3) as

paragraph (a)(4), by adding a new

paragraph (a)(3), and by revising

paragraph (b) to read as follows:

§ 509.35 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. Section 509.37 is amended by

revising the section heading and

paragraph (a)(1) to read as follows:

§ 509.37 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 509.38 is revised to read

as follows:

§ 509.38 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 § 509.37(b) of this

subpart, the administrative law judge

shall file with and certify to the

Director, 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 Director for final

determination the record of the

proceeding, the administrative law

judge shall furnish to the Director 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.

Subpart B—Local Rules

15. Section 509.102 is amended by

revising paragraph (g)(2) to read as

follows:

§ 509.102 Discovery.

* * * * *

(g) * * *

(2) Service. The party requesting the

subpoena must serve it on the person

named therein or upon that person’s

counsel, by any of the methods

identified in § 509.11(d) of this part. The

party serving the subpoena must file

proof of service with the administrative

law judge.

* * * * *

§ 509.104 [Amended]

16. Section 509.104 is amended by

removing paragraph (h) and by

redesignating paragraph (i) as paragraph

(h).

By the Office of Thrift Supervision.

Dated: April 4, 1996.

Jonathan L. Fiechter,

Acting Director.

[FR Doc. 96–10342 Filed 5–3–96; 8:45 am]

BILLING CODE 6720–01–P