28020 Federal Register / Vol. 61, No. 108 / Tuesday, June 4, 1996 / Rules and Regulations

[FR Doc. 96–13856 Filed 6–3–96; 8:45 am]

BILLING CODE 4410–10–C
Federal Register / Vol. 61, No. 108 / Tuesday, June 4, 1996 / Rules and Regulations 28021

1The agencies issued a joint notice of proposed

rulemaking on June 17, 1991 (56 FR 27790). The

agencies issued their final rules on the following

dates: NCUA on August 8, 1991 (56 FR 37767); OCC

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

9, 1991 (56 FR 38052); FDIC on August 9, 1991 (56

FR 37975); and OTS on August 12, 1991 (56 FR

38317).

2On December 30, 1994, NCUA proposed an

amendment to the provision of the Uniforms Rules

which restricts ex parte communications, § 747.9

(59 FR 67655). The other agencies each issued a

similar notice of proposed rulemaking in November

and December 1994. The amendment makes clear

that the scope of § 747.9 conforms to that of the

Administrative Procedure Act. NCUA received two

comments on this proposal, both of which are

addressed below. This final rule implements the

amendment to § 747.9.

3Another provision of the 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 definition

of Federal banking agencies includes the other

agencies, but does not include NCUA. Therefore,

while each of the other agencies has inserted this

provision in its final rule, NCUA has not.

NATIONAL CREDIT UNION

ADMINISTRATION

12 CFR Part 747

Uniform Rules of Practice and

Procedure

AGENCY: National Credit Union

Administration.

ACTION: Final rule.

SUMMARY: The National Credit Union

Administration (NCUA) 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:

Steven W. Widerman, Trial Attorney,

Office of General Counsel, 703/518–

6557, National Credit Union

Administration, 1775 Duke Street,

Alexandria, VA 22314.

SUPPLEMENTARY INFORMATION:

I. 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 NCUA, the Office of the Comptroller

of the Currency (OCC), the Office of

Thrift Supervision (OTS), the Federal

Deposit Insurance Corporation (FDIC),

and the Board of Governors of the

Federal Reserve System (Board)

(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).2

The NCUA received four comments

on the proposal. All commenters

generally supported the proposal, but

each suggested improvements or further

revisions.

The final rule implements the

proposal with certain changes,

including revisions responsive to some

of the concerns expressed by the

commenters. The following section-bysection analysis summarizes the final

rule and highlights the changes from the

proposal that the NCUA made in

response to the commenters’

suggestions.

The OCC, OTS, FDIC and Board have

published separate final rules, effective

June 5, 1996, that are substantively

identical to the NCUA’s final rule (61

FR 20330 et seq.), except as noted below

in regard to §§ 747.1 and 747.9.

II. Section-by-Section Summary and

Discussion of Amendments to the

Uniform Rules

Section 747.1 Scope

The proposal added a statutory

provision to the list of civil money

penalty provisions to which the

Uniform Rules apply. The added

provision was enacted by section 125 of

the Riegle Community Development and

Regulatory Improvement Act of 1994

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

which amended section 102 the Flood

Disaster Protection Act of 1973 (FDPA)

(42 U.S.C. 4012a). Section 102 now

gives 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 under 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 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.3

The NCUA received no comments on

this section, which is adopted as

proposed.

Section 747.6 Appearance and

Practice in Adjudicatory Proceedings

The proposal permitted the

administrative law judge (ALJ) to

require counsel who withdraws from

representing a party to accept service of

papers for that party until either: (1) A

new counsel has filed a notice of

appearance; or (2) the party indicates

that he or she will proceed on a pro se

basis.

The NCUA received one comment on

this section. The commenter suggested

that the proposal did 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. Moreover, the

commenter expressed concern that the

administrative proceeding may become

involved in a dispute between the client

and counsel when the ALJ requires

counsel to continue to accept service

after a client discharges counsel. The

commenter suggested that the rule

should require that service be given to

both the unreplaced counsel and the

party.

The proposal was intended to ensure

that a lawyer is always available to

receive service in order to prevent a

party from halting the administrative

proceedings simply by evading service.

The regulatory text is clear, however,

that the ALJ has 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,

and the NCUA 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 747.8 Conflicts of Interest

The proposal sought to improve in

two ways the provisions governing the

conflicts of interest that may arise when
28022 Federal Register / Vol. 61, No. 108 / Tuesday, June 4, 1996 / Rules and Regulations

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 each non-party 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 NCUA Board

believes that the former provision was

superfluous because the responsibility

for identifying potential conflicts

resides with counsel.

The NCUA 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. In the NCUA’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 NCUA is

unpersuaded by the argument that the

conflicts provision grants the agencies

significant advantage in a proceeding.

Persons and entities may be well and

vigorously represented even if they are

not all represented by the same counsel.

Therefore, the NCUA adopts this

section as proposed.

Section 747.9 Ex parte

Communications

The proposal sought to clarify that the

restriction on ex parte communications

parallels the requirements of the

Administrative Procedure Act (APA).

The current § 747.9(b) prohibits ex parte

communications between a party, the

party’s counsel, or another interested

person, and the NCUA Board or other

decisional employee regarding the

merits of an adjudicatory proceeding.

The agencies’ intention when

adopting the Uniform Rules in 1991 was

that § 747.9 conform to, but not exceed,

the scope of the APA provisions

restricting ex parte communications.

The APA prohibits ex parte

communications between agency

decisionmakers and ‘‘interested persons

outside the agency’’ regarding the merits

of an adjudicatory proceeding. 5 U.S.C.

§ 557(d). It also prohibits enforcement

staff within the agency from

participating or advising in the decision,

recommended decision, or agency

review of an adjudicatory matter except

as witness or counsel. 5 U.S.C. § 554(d).

The APA does not prohibit agency

enforcement staff from seeking approval

to amend a notice of, or to settle or

terminate, a proceeding.

The current § 747.9(b) could in

practice be misinterpreted to expand the

prohibition on ex parte communications

beyond the scope of the APA to prohibit

communications between enforcement

staff and the NCUA Board regarding

approval to amend or to terminate

existing enforcement actions. To insure

against such an unintended result, the

proposed amendment clarifies that the

section is intended to conform to the

provisions of the APA by limiting the

prohibition on ex parte communications

to communications to or from

‘‘interested persons outside the agency,’’

5 U.S.C. 557(d), and by incorporating

explicitly the APA’s separation of

functions provisions, 5 U.S.C. 554(d).

This approach is consistent with the

most recent Model Adjudication Rules

prepared by the Administrative

Conference of the United States (ACUS).

ACUS, Model Adjudication Rules

(December 1993).

The NCUA received two comments on

this section. One commenter supported

the proposal provided that it is limited

to intra-agency communications

concerning amending a notice of

charges or settling or terminating a

proceeding. The other commenter

claimed that ‘‘NCUA has not stated any

compelling need for [the amendment],

and we view the proposed rule as

inconsistent with the fundamental

principles of fairness built into our legal

system.’’ This commenter fails to

recognize that the proposed amendment

allows ex parte communications with

the NCUA Board only on

nonadjudicatory matters, such as when

NCUA enforcement staff seeks NCUA

Board approval to amend a notice of

charges or to settle or terminate an

existing enforcement proceeding. Other

parties to the proceeding are not entitled

to participate in such a decision.

Accordingly, the NCUA adopts this

section as proposed.

Section 747.11 Service of Papers

The proposal changed this section by

permitting parties, the NCUA 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 NCUA received one comment on

this section. The commenter supported

the intent of the proposal, but asserted

that the provision permitting service at

a person’s place of work was too broad

to be effective, particularly where a

financial institution has numerous

branches.

The NCUA 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 NCUA has added

specific reference to physical location to

the regulatory text. In addition, the final

rule states expressly that only an

individual, not a corporation or

association, may be served at a

residence or place of work.

The same comment points out,

however, that the former Uniform Rules

did not expressly 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. Even though

a credit union technically may not

satisfy the definition of a corporation or

other association, it is to be treated as

such for purposes of service under this

rule.

The final rule also provides that, if the

agent is one authorized by a 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 747.12 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 § 747.12(c) is not

included in determining whether an act

is required to be performed within ten
Federal Register / Vol. 61, No. 108 / Tuesday, June 4, 1996 / Rules and Regulations 28023

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 NCUA received one comment on

this section, asserting that Saturdays,

Sundays and holidays should be

excluded when calculating a time

deadline because small credit unions

and U.S. Post Offices frequently are not

open on those days. This comment

addresses time deadlines generally,

whereas the proposed amendment

counts Saturdays, Sundays and holidays

only when calculating extra time added

under § 747.12(c) for responding to

papers served by mail, delivery, or

electronic media transmission. The

proposed amendment does not affect the

current rule excluding those days from

deadlines of ten days or less, and

including them in deadlines of more

than ten days. NCUA adopts the section

as proposed.

Section 747.20 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 NCUA 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 NCUA believes this approach is

adequate to avoid prejudice to a party

and, therefore, the NCUA adopts this

section as proposed.

Section 747.24 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. NCUA

received two comments on this

subsection. One urged that

interrogatories not be expressly

prohibited so that they would be

available for use on a limited basis. The

other urged that interrogatories be

expressly permitted without limitation.

Both comments are effectively moot in

failing to recognize that NCUA’s current

Local Rule of Practice and Procedure,

with a single narrow exception, already

expressly prohibits all forms of

discovery other than production of

documents. 12 CFR 747.100.

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 § 747.25.

Under the proposal, the scope of

permissible document discovery is not

as broad as that allowed under Rule

26(b) of the Federal Rules of Civil

Procedure (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 NCUA received one comment on

this subsection, urging that the Federal

Rule 26(b) standard in the current

subsection be retained. The agencies’

experience with document discovery in

their administrative proceedings has

been that substantial time and resources

are squandered on extraneous document

discovery. A standard somewhat more

restrictive than that of Federal Rule

26(b) is needed to reasonably confine

document discovery. Accordingly, the

NCUA adopts this subsection as

proposed.

Section 747.25 Request for Document

Discovery From Parties

The NCUA proposed several changes

to § 747.25. 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 § 747.25

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 NCUA received two comments on

this section. One comment suggested

that a request for interlocutory review

should automatically stay the

proceeding. Under § 747.28(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

NCUA believes that this procedure

adequately protects the parties. For this

reason and to avoid adding unnecessary

delays in the administrative

proceedings, the NCUA declines to

provide for an automatic stay whenever

a party requests interlocutory review.

The second comment asserted that

permitting the NCUA to require

payment in advance for document

copying and shipping costs would give

the NCUA an advantage over other

creditors if the party is bankrupt

following the administrative hearing.

The commenter does not assert that it is

a violation of the bankruptcy laws for

the NCUA or any other creditor to

require prepayment for products or

services. Moreover, the NCUA believes

that the situations causing the

commenter’s concern would be very

rare. Accordingly, the NCUA adopts this

section as proposed.

Section 747.27 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 final rule

does not include this proposed change

because, in § 747.11(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. The proposed

change to § 747.27 would be redundant.

The NCUA received no comments on
28024 Federal Register / Vol. 61, No. 108 / Tuesday, June 4, 1996 / Rules and Regulations

this section. The final rule does not,

therefore, change this provision.

Section 747.33 Public Hearings

The proposal changed this section to

specify that a party must file a motion

for a private hearing with the NCUA

Board, and not the ALJ, but must serve

the ALJ with a copy of the motion.

The NCUA received no comments on

this section, which is adopted as

proposed.

Section 747.34 Hearing Subpoenas

The former Uniform Rules did not

specifically require that a party inform

all other parties when a subpoena is

issued to a non-party. 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 NCUA received no comments on

this section, which is adopted as

proposed.

Section 747.35 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 NCUA received no comments on

this section, which is adopted as

proposed.

Section 747.37 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

§ 747.35(b) to § 747.37(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

for each recipient.

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 NCUA received no comments on

this section, which is adopted with a

minor technical change.

Section 747.38 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 NCUA Board. The proposal added

this requirement and reorganized this

section to improve its clarity.

The NCUA received no comments on

this section, which is adopted as

proposed.

Technical Changes

The final rule makes several technical

changes to the proposal that make the

final rule specific to the NCUA. These

changes appear throughout the rule text.

For example, bracketed references to the

‘‘agency head’’ have been replaced with

‘‘the NCUA Board’’ and the blank part

designation before each section number

has been filled in with ‘‘747.’’

III. Rationale for Expedited Effective

Date

The effective date of NCUA’s final

rule, June 5, 1996, is less than the thirty

days from publication. The APA

requires thirty days’ notice of

effectiveness, but permits that

requirement to be waived upon a

showing of good cause. 5 U.S.C.

553(d)(3). Good cause exists in this case

for making NCUA’s final rule effective

June 5. The Uniform Rules were

originally developed and recently

revised jointly with the other agencies.

The purpose of the June 5 effective date

for NCUA’s final rule adopting the

revisions is to conform to the effective

date of the other agencies’ final rules.

No party to an NCUA administrative

proceeding governed by the Uniform

Rules will be prejudiced by the June 5

effective date because the revisions

adopted in the final rule apply only to

formal administrative proceedings

commenced (through filing of a notice

of charges) after the effective date (see

58 FR 37766). Formal administrative

proceedings pending on or before the

effective date will not be affected by the

revisions.

IV. Regulatory Flexibility Act

Pursuant to section 605(b) of the

Regulatory Flexibility Act, the NCUA

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 imposes only

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.

V. Executive Order 12612

This final rule, like the current part

747 it is replacing, will apply to all

Federally insured credit unions. The

NCUA Board, pursuant to Executive

Order 12612, has determined, however,

that this joint proposed rule will not

have a substantial direct effect on the

states, on the relationship between the

national government and the states, or

on the distribution of power and

responsibilities among various levels of

government. Further, this joint proposed

rule will not preempt provisions of state

law or regulations.

VI. Effective Date

Section 302 of the Riegle Community

Development and Regulatory

Improvement Act 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 date of the first

calendar quarter following publication

of the final rule. The NCUA 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.

Text of the Final Rule

The text of the amendments to 12 CFR

part 747 follows:

NATIONAL CREDIT UNION

ADMINISTRATION

12 CFR Part 747

List of Subjects in 12 CFR Part 747

Administrative Practice and

Procedure, Bank Deposit Insurance,

Claims, Credit Unions, Crime, Equal

Access to Justice, Hearing Procedures,

Investigations, Lawyers, Penalties.

Authority and Issuance

For the reasons set out in the

preamble, part 747 of chapter VII of title

12 of the Code of Federal Regulations is

amended as set forth below:

PART 747—ADMINISTRATIVE

ACTIONS, ADJUDICATIVE HEARINGS,

RULES OF PRACTICE AND

PROCEDURE, AND INVESTIGATIONS

1. The authority citation for part 747

is revised to read as follows:

Authority: 12 U.S.C. 1766, 1786, 1784 and

1787; and 42 U.S.C. 4012a.
Federal Register / Vol. 61, No. 108 / Tuesday, June 4, 1996 / Rules and Regulations 28025

Subpart A—[Amended]

2. In § 747.1, paragraph (c)(2) is

amended by removing ‘‘and’’ after the

semicolon, paragraph (c)(3) is revised,

paragraph (c)(4) is added, paragraph (d)

is redesignated as paragraph (e) and

revised, and new paragraph (d) is added

to read as follows:

§ 747.1 Scope.

* * * * *

(c) * * *

(3) The terms of any final or

temporary order issued under section

206 of the Act or any written agreement

executed by the National Credit Union

Administration (‘‘NCUA’’), any

condition imposed in writing by the

NCUA in connection with the grant of

an application or request, certain unsafe

or unsound practices or breaches of

fiduciary duty, or any law or regulation

not otherwise provided herein, pursuant

to 12 U.S.C. 1786(k); and

(4) 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;

(d) Remedial action under section

102(g) of the Flood Disaster Protection

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

(e) 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 Subparts B through J of this Part.

3. In § 747.6, paragraph (a)(3) is

revised to read as follows:

§ 747.6 Appearance and practice in

adjudicatory proceedings.

(a) * * *

(3) Notice of appearance. Any

individual acting as counsel on behalf of

a party, including the NCUA Board,

shall file a notice of appearance with

OFIA at or before the time that the

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 § 747.8, paragraph (b) is revised

to read as follows:

§ 747.8 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 § 747.6(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 § 747.9, paragraphs (a) and (b)

are revised and a new paragraph (e) is

added to read as follows:

§ 747.9 Ex parte communications.

(a) Definition. (1) Ex parte

communication means any material oral

or written communication relevant to

the merits of an adjudicatory proceeding

that was neither on the record nor on

reasonable prior notice to all parties that

takes place between—

(i) An interested person outside the

NCUA (including such person’s

counsel); and

(ii) The administrative law judge

handling that proceeding, the NCUA

Board, or a decisional employee.

(2) Exception. A request for status of

the proceeding does not constitute an ex

parte communication.

(b) Prohibition of ex parte

communications. From the time the

notice is issued by the NCUA Board

until the date that the NCUA Board

issues its final decision pursuant to

§ 747.40(c):

(1) No interested person outside the

NCUA shall make or knowingly cause to

be made an ex parte communication to

any member of the NCUA Board, the

administrative law judge, or a decisional

employee; and

(2) No member of the NCUA Board,

administrative law judge, or decisional

employee shall make or knowingly

cause to be made to any interested

person outside the NCUA any ex parte

communication.

* * * * *

(e) Separation of functions. Except to

the extent required for the disposition of

ex parte matters as authorized by law,

the administrative law judge may not

consult a person or party on any matter

relevant to the merits of the

adjudication, unless on notice and

opportunity for all parties to participate.

An employee or agent engaged in the

performance of investigative or

prosecuting functions for the NCUA in

a case may not, in that or a factually

related case, participate or advise in the

decision, recommended decision, or

agency review of the recommended

decision under section 747.40, except as

witness or counsel in public

proceedings.

6. In § 747.11, paragraphs (c)(2) and

(d) are revised to read as follows:

§ 747.11 Service of papers.

* * * * *

(c) * * *

(2) If a party has not appeared in the

proceeding in accordance with § 747.6,

the NCUA 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
28026 Federal Register / Vol. 61, No. 108 / Tuesday, June 4, 1996 / Rules and Regulations

(5) By any other method reasonably

calculated to give actual notice.

* * * * *

7. In § 747.12, paragraphs (a), (c)(1),

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

follows:

§ 747.12 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

§ 747.12(c), 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 NCUA

Board or the administrative law judge in

the case of filing, or by agreement

among the parties in the case of service.

8. Section 747.20 is revised to read as

follows:

§ 747.20 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 NCUA 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.

9. In § 747.24, paragraphs (a) and (b)

are revised to read as follows:

§ 747.24 Scope of document discovery.

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

the limitations set out in paragraphs (b),

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

proceeding under this subpart may

obtain document discovery by serving a

written request to produce documents.

For purposes of a request to produce

documents, the term ‘‘documents’’ may

be defined to include drawings, graphs,

charts, photographs, recordings, data

stored in electronic form, and other data

compilations from which information

can be obtained, or translated, if

necessary, by the parties through

detection devices into reasonably usable

form, as well as written material of all

kinds.

(2) Discovery by use of deposition is

governed by subpart I of this part.

(3) Discovery by use of interrogatories

is not permitted.

(b) Relevance. A party may obtain

document discovery regarding any

matter, not privileged, that has material

relevance to the merits of the pending

action. Any request to produce

documents that calls for irrelevant

material, that is unreasonable,

oppressive, excessive in scope, unduly

burdensome, or repetitive of previous

requests, or that seeks to obtain

privileged documents will be denied or

modified. A request is unreasonable,

oppressive, excessive in scope, or

unduly burdensome if, among other

things, it fails to include justifiable

limitations on the time period covered

and the geographic locations to be

searched, the time provided to respond

in the request is inadequate, or the

request calls for copies of documents to

be delivered to the requesting party and

fails to include the requester’s written

agreement to pay in advance for the

copying, in accordance with § 747.25.

* * * * *

10. In § 747.25, paragraphs (a), (b), (e),

and (g) are revised to read as follows:

§ 747.25 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 4 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
Federal Register / Vol. 61, No. 108 / Tuesday, June 4, 1996 / Rules and Regulations 28027

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.

* * * * *

11. In § 747.33, paragraph (a) is

revised to read as follows:

§ 747.33 Public hearings.

(a) General rule. All hearings shall be

open to the public, unless the NCUA

Board, in its discretion, determines that

holding an open hearing would be

contrary to the public interest. Within

20 days of service of the notice, any

respondent may file with the NCUA

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

NCUA Board. The form of, and

procedure for, these requests and replies

are governed by § 747.23. 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.

* * * * *

12. In § 747.34, paragraphs (a) and

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

§ 747.34 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.

* * * * *

13. In § 747.35, 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:

§ 747.35 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.

14. In § 747.37, the section heading

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

as follows:

§ 747.37 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.

* * * * *

15. Section 747.38 is revised to read

as follows:

§ 747.38 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 § 747.37(b), the

administrative law judge shall file with

and certify to the NCUA 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 NCUA Board for

final determination the record of the

proceeding, the administrative law

judge shall furnish to the NCUA 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
28028 Federal Register / Vol. 61, No. 108 / Tuesday, June 4, 1996 / Rules and Regulations

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.

Dated: May 28, 1996.

Becky Baker,

Secretary of the Board, National Credit Union

Administration.

[FR Doc. 96–13814 Filed 6–3–96; 8:45 am]

BILLING CODE 7535–01–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 95–NM–188–AD; Amendment

39–9642; AD 96–11–18]

RIN 2120–AA64

Airworthiness Directives; McDonnell

Douglas Model DC–9–80 Series

Airplanes, and Model MD–88 and MD–

90 Airplanes

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Final rule.

SUMMARY: This amendment adopts a

new airworthiness directive (AD),

applicable to certain McDonnell

Douglas Model DC–9–80 series

airplanes, and Model MD–88 and MD–

90 airplanes, that requires a one-time

measurement of the length of the oxygen

mask lanyards of the passenger service

unit (PSU), and modification of lanyards

that are longer than the proper length.

This amendment is prompted by a

report that the length of the oxygen

mask lanyards of the PSU were found to

be too long, apparently due to improper

installation during production. The

actions specified by this AD are

intended to ensure that the length of

these oxygen mask lanyards is correct,

so that the oxygen canister will be

properly activated when needed during

an emergency.

DATES: Effective July 9, 1996.

The incorporation by reference of

certain publications listed in the

regulations is approved by the Director

of the Federal Register as of July 9, 1996.

ADDRESSES: The service information

referenced in this AD may be obtained

from McDonnell Douglas Corporation,

3855 Lakewood Boulevard, Long Beach,

California 90846, Attention: Technical

Publications Business Administration,

Department C1–L51 (2–60). This

information may be examined at the

Federal Aviation Administration (FAA),

Transport Airplane Directorate, Rules

Docket, 1601 Lind Avenue, SW.,

Renton, Washington; or at the FAA, Los

Angeles Aircraft Certification Office,

Transport Airplane Directorate, 3960

Paramount Boulevard, Lakewood,

California; or at the Office of the Federal

Register, 800 North Capitol Street, NW.,

suite 700, Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Walter Eierman, Aerospace Engineer,

Systems and Equipment Branch, ANM–

130L, FAA, Los Angeles Aircraft

Certification Office, 3960 Paramount

Boulevard, Lakewood, California 90712;

telephone (310) 627–5336; fax (310)

627–5210.

SUPPLEMENTARY INFORMATION: A

proposal to amend part 39 of the Federal

Aviation Regulations (14 CFR part 39) to

include an airworthiness directive (AD)

that is applicable to certain McDonnell

Douglas Model DC–9–80 series

airplanes, and Model MD–88 and MD–

90 airplanes was published in the

Federal Register on February 12, 1996

(61 FR 5334). That action proposed to

require, for Model DC–9–80 series

airplanes and Model MD–88 airplanes,

a one-time measurement of the length of

the oxygen mask lanyards of the PSU,

and modification, if necessary. For

Model MD–90 airplanes, the action

proposed to require modification of the

oxygen mask lanyards of the PSU.

Interested persons have been afforded

an opportunity to participate in the

making of this amendment. Due

consideration has been given to the

comments received.

Support for the Proposal

Several commenters support the

proposed rule.

Request To Extend Compliance Time

Two commenters request that the

compliance time be extended from the

proposed 24 months to 36 months. One

of these commenters states that it would

have to special schedule its fleet of

airplanes in order to accomplish the

proposed measurement and

modification within the proposed

compliance time; this would entail

considerable additional expenses and

schedule disruptions.

The FAA does not concur. In

developing an appropriate compliance

time for this action, the FAA considered

not only the degree of urgency

associated with addressing the subject

unsafe condition, but the practical

aspect of completing the required

modification within an interval of time

that parallels normal scheduled

maintenance for the majority of affected

operators. However, under the

provisions of paragraph (c) of the final

rule, the FAA may approve requests for

adjustments to the compliance time if

data are submitted to substantiate that

such an adjustment would provide an

acceptable level of safety.

Request To Provide Time Frame of

Improper Installation

One commenter maintains that the

unsafe condition occurred because

correct procedures were not followed

during aircraft production. In light of

this, the commenter requests that the

proposal be revised to provide a time

frame during which the addressed

problem occurred and allow operators

to inspect a sampling of airplanes

produced during that time to determine

if the lanyard problem is present on

those airplanes.

The FAA does not concur with the

commenter’s request. The FAA is

unable to determine the time frame

during which the apparent improper

installation occurred because the

manufacturing procedures that existed

during the production of all of the

affected airplanes did not contain

provisions for monitoring the length of

the lanyard. Therefore, all airplanes

listed in the applicability of the final

rule may be subject to the addressed

unsafe condition.

Conclusion

After careful review of the available

data, including the comments noted

above, the FAA has determined that air

safety and the public interest require the

adoption of the rule as proposed.

Cost Impact

There are approximately 1,200

McDonnell Douglas Model DC–9–80

series airplanes, Model MD–88

airplanes, and Model MD–90 airplanes

of the affected design in the worldwide

fleet. The FAA estimates that 650

airplanes of U.S. registry will be affected

by this AD.

For airplanes on which inspection of

the lanyard is required, it will take

approximately 81 work hours per

airplane to accomplish the required

inspection, at an average labor rate of

$60 per work hour. Based on these

figures, the cost impact of the inspection

required by this AD on U.S. operators is

estimated to be $4,860 per airplane.

For airplanes on which modification

of the lanyard is required, it will take

approximately 121 work hours per

airplane to accomplish the required

modification at an average labor rate of

$60 per work hour. Based on these

figures, the cost impact of the