20338 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

(1) Contain a statement of the basis for

the disapproval; and

(2) Indicate that the filer may request

a hearing.

(b) Hearing request. Following receipt

of a notice of disapproval, a filer may

request a hearing on the proposed

acquisition. A hearing request must:

(1) Be in writing; and

(2) Be filed with the Hearing Clerk of

the OCC within ten days after service on

the filer of the notice of disapproval. If

a filer fails to request a hearing with a

timely written request, the notice of

disapproval constitutes a final and

unappealable order.

(c) Hearing order. Following receipt of

a hearing request, the Comptroller shall

issue, within 20 days, an order that sets

forth:

(1) The legal authority for the

proceeding and for the OCC’s

jurisdiction over the proceeding;

(2) The matters of fact or law upon

which the disapproval is based; and

(3) The requirement for filing an

answer to the hearing order with OFIA

within 20 days after service of the

hearing order.

(d) Answer. An answer to a hearing

order must specifically deny those

portions of the order that are disputed.

Those portions of the order that the filer

does not specifically deny are deemed

admitted by the filer. Any hearing under

this subpart is limited to those portions

of the order that are specifically denied.

(e) Effect of failure to answer. Failure

of a filer to file an answer within 20

days after service of the hearing order

constitutes a waiver of the filer’s right

to appear and contest the allegations in

the hearing order. If a filer does not file

a timely answer, enforcement counsel

may file a motion for entry of an order

of default. Upon a finding that no good

cause has been shown for the failure to

file a timely answer, the administrative

law judge shall file with the Comptroller

a recommended decision containing the

findings and the relief sought in the

hearing order. Any final order issued by

the Comptroller based upon a filer’s

failure to answer is deemed to be an

order issued upon consent and is a final

and unappealable order.

§ 19.162 [Removed]

20. Section 19.162 is removed.

Subpart I—[Amended]

21. In § 19.170, paragraph (d) is

revised, paragraphs (e) and (f) are

redesignated as paragraphs (f) and (g),

respectively, and a new paragraph (e) is

added to read as follows:

§ 19.170 Discovery depositions.

* * * * *

(d) Conduct of the deposition. The

witness must be duly sworn, and each

party will have the right to examine the

witness with respect to all nonprivileged, relevant, and material

matters of which the witness has

factual, direct, and personal knowledge.

Objections to questions or exhibits must

be in short form and must state the

grounds for the objection. Failure to

object to questions or exhibits is not a

waiver except where the grounds for the

objection might have been avoided if the

objection had been timely presented.

(e) Recording the testimony—(1)

Generally. The party taking the

deposition must have a certified court

reporter record the witness’s testimony:

(i) By stenotype machine or electronic

sound recording device;

(ii) Upon agreement of the parties, by

any other method; or

(iii) For good cause and with leave of

the administrative law judge, by any

other method.

(2) Cost. The party taking the

deposition must bear the cost of the

recording and transcribing the witness’s

testimony.

(3) Transcript. Unless the parties

agree that a transcription is not

necessary, the court reporter must

provide a transcript of the witness’s

testimony to the party taking the

deposition and must make a copy of the

transcript available to each party upon

payment by that party of the cost of the

copy.

* * * * *

22. In § 19.171, paragraph (b) is

revised to read as follows:

§ 19.171 Deposition subpoenas.

* * * * *

(b) Service—(1) Methods of service.

The party requesting the subpoena must

serve it on the person named therein, or

on that person’s counsel, by any of the

methods identified in § 19.11(d).

(2) Proof of service. The party serving

the subpoena must file proof of service

with the administrative law judge.

* * * * *

Subpart J—[Amended]

23. Section 19.184 is revised to read

as follows:

§ 19.184 Service of subpoena and payment

of witness expenses.

(a) Methods of service. Service of a

subpoena may be made by any of the

methods identified in § 19.11(d).

(b) Expenses. A witness who is

subpoenaed will be paid the same

expenses in the same manner as

witnesses in the district courts of the

United States. The expenses need not be

tendered at the time a subpoena is

served.

Dated: April 2, 1996.

Eugene A. Ludwig,

Comptroller of the Currency.

[FR Doc. 96–10331 Filed 5–3–96; 8:45 am]

BILLING CODE 4810–33–P

FEDERAL RESERVE SYSTEM

12 CFR Part 263

[Docket No. R–0878]

Uniform Rules of Practice and

Procedure

AGENCY: Board of Governors of the

Federal Reserve System.

ACTION: Final rule.

SUMMARY: The Board of Governors of the

Federal Reserve System (Board), as a

result of an interagency review

conducted by the Board, the Office of

the Comptroller of the Currency (OCC),

the Office of Thrift Supervision (OTS),

the Federal Deposit Insurance

Corporation (FDIC), and the National

Credit Union Administration (NCUA), is

amending its implementation of the

Uniform Rules of Practice and

Procedure for Administrative Hearings

(Uniform Rules). The Board’s review of

the Uniform Rules was conducted in

accordance with section 303 of the

Riegle Community Development and

Regulatory Improvement Act of 1994.

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:

Katherine H. Wheatley, Assistant

General Counsel, Legal Division (202

452–3779), Douglas B. Jordan, Senior

Attorney, Legal Division, (202 452–

3787), or Ann Marie Kohlligian, Senior

Counsel, Division of Banking

Supervision and Regulation, (202/452–

3528).

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 Board, OCC, FDIC, OTS, and NCUA

(agencies) to develop uniform rules and

procedures for administrative hearings.

The agencies each adopted final

Uniform Rules in August, 1991.1 Based
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations 20339

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).

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).

The Board received two comments on

the proposal. Both commenters

expressed general approval of the

proposal, and one suggested specific

improvements. The Board has also

reviewed the 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

Board has made after considering the

commenters’ suggestions.

The OTS, FDIC, OCC, and NCUA are

publishing separate final rules that are

substantively identical to the Board’s

final rule. The OTS, FDIC, and OCC

rules appear elsewhere in this Federal

Register. The process of amendment of

the Uniform Rules and their adoption in

identical form by the agencies also

meets the requirements of section 303 of

the Riegle Community Development and

Regulatory Improvement Act of 1994.

B. Section-by-Section Summary and

Discussion of Amendments to the

Uniform Rules

Section 263.1 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 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 of committing

violations of the FDPA or the notice

requirements of the National Flood

Insurance Act of 1968 (NFIA). Under the

FDPA, the term ‘‘Federal entity for

lending regulation’’ includes the

agencies and the Farm Credit

Administration.

CDRI section 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 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 Board received no comments on

this section, which is adopted as

proposed.

Section 263.6 Appearance and

Practice in Adjudicatory Proceedings

The proposal permitted the

Administrative Law Judge (ALJ) to

require counsel who withdraws after

filing a notice of appearance on behalf

of 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 Board 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 a

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. 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 the discretion whether

to require former counsel to continue to

accept service. Fairness to counsel is

among the factors that ALJ would

consider in exercising this discretion,

and the Board 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 263.8 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 that counsel certify that

each client has asserted that there are no

conflicts of interest. The Board believes

that the former provision was

superfluous because the responsibility

for identifying potential conflicts

resides with counsel.

The Board 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

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. State rules of professional

responsibility that impose more

stringent ethical standards are

unaffected by this requirement.

In addition, the Board is unpersuaded

by the argument that the provision

grants the agencies any significant

advantage in a proceeding. Persons and

institutions may be well and vigorously
20340 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations

represented even if they are not all

represented by the same counsel.

Therefore, the Board adopts this

section as proposed.

Section 263.11 Service of Papers

The proposal changed this section by

permitting parties, the Board, 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.

The Board received one comment 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 Board 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 at which a person works. To

avoid confusion, the Board has added

specific reference to physical location in

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 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 and that are permitted

under the Federal Rules of Civil

Procedure. 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 263.12 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 § 263.12(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 Board received no comments on

this section, which is adopted as

proposed.

Section 263.20 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 Board 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 Board believes this approach is

adequate to avoid prejudice to a party

and, therefore, adopts this section as

proposed.

Section 263.24 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 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 § 263.25.

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 Board received no significant

comments on this section and, therefore,

adopts this section as proposed.

Section 263.25 Request for Document

Discovery From Parties

The Board proposed several changes

to § 263.25. 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

263.25 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 Board 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 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

automatically stay the proceeding.

Under § 263.28(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 Board believes that

this procedure adequately protects the

parties. For this reason and to avoid

unnecessary delays in the

administrative proceedings, the Board

declines to provide for an automatic

stay whenever a party requests

interlocutory review.

One commenter asserted that

permitting the Board to require payment

in advance for document copying and

shipping costs would give the Board an
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations 20341

advantage over other creditors if the

party is bankrupt following the

administrative hearing. The Board finds

that this situation is rare and therefore

does not outweigh the Board’s need to

ensure that it receives payment.

Moreover, the provision does not

preclude other creditors from requiring

prepayment for products or services.

The Board adopts this section as

proposed.

Section 263.27 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 Board

does not include this proposed change

because, in § 263.11(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 § 263.27 would

be redundant.

The Board received no comments on

this section, and makes no change to it.

Section 263.33 Public Hearings

The proposal changed this section to

specify that a party must file a motion

for a private hearing with the Board and

not the ALJ, but must serve the ALJ with

a copy of the motion.

The Board received no comments on

this section, which is adopted as

proposed.

Section 263.34 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 Board received no comments on

this section, which is adopted as

proposed.

Section 263.35 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 Board received no comments on

this section, which is adopted as

proposed.

Section 263.37 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

§ 263.35(b) to § 263.37(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 Board received no comments on

this section, which is adopted with a

minor technical change.

Section 263.38 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. The proposal added this

requirement and reorganized this

section to improve its clarity.

The Board 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 Board

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.

List of Subjects in 12 CFR Part 263

Administrative practice and

procedure, Claims, Crime, Equal access

to justice, Federal Reserve System,

Lawyers, Penalties.

For the reasons set out in the

preamble, 12 CFR Part 263 is amended

as set forth below:

PART 263—RULES OF PRACTICE FOR

HEARINGS

1. The authority citation for part 263

is revised to read as follows:

Authority: 5 U.S.C. 504, 554–557; 12

U.S.C. 248, 324, 504, 505, 1817(j), 1818,

1828(c), 1847(b), 1847(d), 1884(b), 1972(2)(F),

3105, 3107, 3108, 3907, 3909, and 4717; 15

U.S.C. 21, 78o-4, 78o-5, and 78u-2; 31 U.S.C.

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

2. In § 263.1, paragraph (e)(9) is

amended by removing ‘‘and’’ after the

semicolon, new paragraphs (e)(11) and

(e)(12) are added, paragraph (f) is

redesignated as paragraph (g) and

revised, and new paragraph (f) is added

to read as follows:

§ 263.1 Scope.

* * * * *

(e) * * *

(11) 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

(12) 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 § 263.6, paragraph (a)(3) is

revised to read as follows:

§ 263.6 Appearance and practice in

adjudicatory proceedings.

(a) * * *

(3) Notice of appearance. Any

individual acting as counsel on behalf of

a party, including the Board, 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 § 263.8, paragraph (b) is revised

to read as follows:
20342 Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations

§ 263.8 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 § 263.6(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 § 263.11, paragraphs (c)(2) and

(d) are revised to read as follows:

§ 263.11 Service of papers.

* * * * *

(c) * * *

(2) If a party has not appeared in the

proceeding in accordance with § 263.6,

the Board 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 as is

reasonably calculated to give actual

notice.

* * * * *

6. In § 263.12, paragraphs (a), (c)(1),

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

follows:

§ 263.12 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 or

the administrative law judge in the case

of filing, or by agreement among the

parties in the case of service.

7. Section 263.20 is revised to read as

follows:

§ 263.20 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 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 § 263.24, paragraphs (a) and (b)

are revised to read as follows:

§ 263.24 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 § 263.53 of subpart B 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 § 263.25.

* * * * *

9. In § 263.25, paragraphs (a), (b), (e),

and (g) are revised to read as follows:
Federal Register / Vol. 61, No. 88 / Monday, May 6, 1996 / Rules and Regulations 20343

§ 263.25 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 by 12

CFR Part 261 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 § 263.33, paragraph (a) is

revised to read as follows:

§ 263.33 Public hearings.

(a) General rule. All hearings shall be

open to the public, unless the Board, in

the Board’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 Board 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

Board. The form of, and procedure for,

these requests and replies are governed

by § 263.23. 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 § 263.34, paragraphs (a) and

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

§ 263.34 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 § 263.35, 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:

§ 263.35 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
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