Rules of Practice and Procedure

Federal RegisterDec 28, 2023

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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Parts 3, 4, 6, 19, 108, 109, 112, 150, and 165

[Docket ID OCC-2021-0007]

RIN 1557-AE33

FEDERAL RESERVE SYSTEM

12 CFR Parts 238 and 263

[Docket No. R-1766]

RIN 7100-AG26

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 308

RIN 3064-AF10

NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 747

[NCUA 2021-0079]

RIN 3133-AF37

Rules of Practice and Procedure

AGENCY:

Office of the Comptroller of the Currency, Treasury; Board of Governors of the Federal Reserve System; Federal Deposit Insurance Corporation; National Credit Union Administration.

ACTION:

Final rule.

SUMMARY:

The Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Board), Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA) (collectively, the Agencies) are adopting final changes to the Uniform Rules of Practice and Procedure (Uniform Rules) to recognize the use of electronic communications in all aspects of administrative hearings and to otherwise increase the efficiency and fairness of administrative adjudications. The OCC, Board, and FDIC are also modifying their agency-specific rules of administrative practice and procedure (Local Rules). The OCC also is integrating its Uniform Rules and Local Rules so that one set of rules applies to both national banks and Federal savings associations and amending its rules on organization and functions to address service of process.

DATES:

The rule is effective on April 1, 2024.

FOR FURTHER INFORMATION CONTACT:

OCC:

MaryAnn Nash, Counsel, and Heidi Thomas, Senior Counsel, Chief Counsel's Office, (202) 649-5490.

If you are deaf, hard of hearing, or have a speech disability, please dial 7-1-1 to access telecommunications relay services. Board:

David Williams, Associate General Counsel,

david.williams@frb.gov,

(202) 452-3973, and Héctor G. Bladuell, Senior Counsel, Legal Division,

hector.g.bladuell@frb.gov,

(202) 452-2491.

FDIC:

Heather M. Walters, Counsel, Legal Division,

hewalters@fdic.gov

(202) 898-6729; and Michael P. Farrell, Counsel, Legal Division,

mfarrell@fdic.gov,

(703) 340-9201.

NCUA:

Damon P. Frank, Senior Trial Attorney, and John H. Brolin, Senior Staff Attorney, Office of General Counsel, at (703) 518-6540.

SUPPLEMENTARY INFORMATION:

I. Background

Section 916 of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, Public Law 101-73, 103 Stat. 183 (1989), required the Agencies, together with the Office of Thrift Supervision (OTS), to develop uniform rules and procedures for administrative hearings. In August 1991, the Agencies and OTS each adopted final Uniform Rules as well as Local Rules specific to each agency.

Based on the experience gained in administrative hearings, the Agencies, together with OTS, modified the Uniform Rules and Local Rules in 1996.

The Agencies, together with the OTS, issued a joint notice of proposed rulemaking on June 17, 1991 (56 FR 27790). Each agency issued a final rule 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 37968); and NCUA on August 8, 1991 (56 FR 37767). The OTS, whose rules and procedures were transferred to the OCC, the Board, and the FDIC in 2011, published its rules on August 12, 1991 (56 FR 38317). The Agencies' rules are codified at 12 CFR part 19, subpart A (OCC); 12 CFR part 263, subpart A (Board); 12 CFR part 308, subpart A (FDIC); and 12 CFR part 747, subpart A (NCUA).

61 FR 20330, May 6, 1996.

The Uniform Rules and Local Rules have remained largely unchanged since the 1996 amendments, while the practice of administrative hearings has changed fundamentally with the introduction of electronic communication and transmission. The current Uniform Rules were promulgated at a time when the Agencies accepted only paper pleadings. However, beginning in 2005, the Office of Financial Institution Adjudication (OFIA) established a dedicated electronic mailbox to accept electronic pleadings and service and, by 2006, paper pleadings were virtually eliminated in administrative hearings. Without rules in place to address electronic pleadings, the Administrative Law Judges (ALJs) opted to dictate procedures pertaining to electronic filing and other items on an ad hoc basis in their scheduling orders.

The Agencies issued a proposed rule on April 13, 2022, to update and modernize the Uniform Rules as well as the Local Rules of the OCC, FDIC, NCUA, and the Board. The Agencies did not receive any substantive comments on the Uniform Rules or the Agencies' Local Rules. Therefore, for the reasons stated in the preamble to the proposed rule, the Agencies are publishing the Uniform and Local Rules without substantive change.

Although the proposed rule provided common rule text for the Uniform Rules and line amendments to the Local Rules, this final rule publishes each agency's rule as amended in full.

In this final rule,

• The Agencies are amending the Uniform Rules to recognize electronic pleadings and communications in administrative hearings and to reflect the experience of the Agencies in administrative litigation.

• The OCC and the NCUA are also removing from the Uniform Rules the remaining references to the OTS, which was abolished in 2011.

The FDIC removed references to the OTS and updated its rules to include State savings associations by Final Rule on January 30, 2015 (80 FR 5009). The Board similarly removed references to the OTS from its definitions and updated its rules to include savings and loan holding companies on September 13, 2011 (76 FR 56603).

• The OCC, Board, and FDIC are each amending certain sections of their Local Rules that they believe should be updated, improved, or clarified.

• The OCC is consolidating its Uniform and Local Rules by applying part 19 to both national bank- and Federal savings association-related proceedings and investigations; removing its separate enforcement-related rules for Federal savings associations, 12 CFR parts 108, 109, 112, and 165; and making corresponding technical changes to parts 3, 6, and 150.

• The OCC is amending 12 CFR part 4, subpart A, Organization and Functions, to add a new § 4.8 that addresses service of process.

II. Applicability Date

As indicated in the proposed rule, the amendments made by this final rule to the Uniform Rules as well as to certain provisions of the Agencies' Local Rules will apply to adjudicatory proceedings initiated on or after the effective date of this final rule, April 1, 2024. The Agencies' rules that were in effect prior to April 1, 2024, will continue to apply to adjudicatory proceedings initiated before April 1, 2024. This timing

ensures that parties to Agency adjudicatory proceedings have adequate notice of the rules governing those proceedings.

For the OCC, § 19.0 provides that the rules of practice and procedure set forth in subparts A through D and H, I, J, L, M, N, P, and Q apply to adjudicatory proceedings initiated on or after the effective date of this final rule, April 1, 2024. Rules applicable to national banks, Federal savings associations, or Federal branches and agencies that were in effect prior to April 1, 2024, continue to apply to adjudicatory proceedings initiated before April 1, 2024, unless otherwise stipulated by the parties.

The OCC has made a few technical changes to its proposed transition provision. First, the OCC has moved this provision from proposed subpart R in part 19 to new § 19.0 so that information about applicability of the revised rules for practice and procedure is more prominently placed. Second, the OCC has changed the title of the provision from “effective date” to “applicability date” for accuracy. Third, the OCC has made some minor wording changes for internal consistency. Fourth, the OCC has included the text of part 19 as in effect the day before the final rule's effective date, April 1, 2024, as appendix A to part 19 so that parties may reference the rules that apply to proceedings initiated before April 1, 2024. Lastly, the OCC has amended the transition provision to permit parties to proceedings initiated before April 1, 2024, to stipulate that the revised rules apply to such proceedings so that they are able to take advantage of the updated provisions.

For the Board, the revised Uniform Rules and Local Rules in subpart B of part 263 apply only to adjudicatory proceedings initiated on or after the effective date of this final rule, April 1, 2024. The previous version of these rules, which are included in appendix A to part 263 of this final rule, are applicable to all adjudicatory proceedings initiated before April 1, 2024.

The FDIC included a new § 308.0 as a technical change to clarify the applicability date of the revised Uniform Rules set forth in subpart A. The newly revised Uniform Rules only apply to adjudicatory proceedings initiated on or after the effective date of this final rule, April 1, 2024. Any adjudicatory proceedings initiated before April 1, 2024, continue to be governed by the previous version of the Uniform Rules, which are included in appendix A to part 308 of this final rule.

The NCUA has added to its existing § 747.0, as a technical change, to make clear that the revised Uniform Rules apply to adjudicatory proceedings initiated on or after the effective date of this final rule, April 1, 2024.

III. Section-by-Section Discussion of Amendments to the Uniform Rules

Although the discussion of these amendments is arranged as for a common rule, the Agencies are adopting the amendments individually. The Agencies have codified the Uniform Rules as follows: 12 CFR part 19, subpart A (OCC); 12 CFR part 263, subpart A (Board); 12 CFR part 308, subpart A (FDIC); and 12 CFR part 747, subpart A (NCUA).

General Comments

The final rule replaces gender references such as “him or her,” “his or her,” and “himself or herself” with gender-neutral terminology, where appropriate. Consistent with

Federal Register

drafting guidelines,

the Agencies have replaced the word “shall” throughout the final rule with the terms “must,” “will,” or other appropriate language. Finally, the Agencies have replaced the term “administrative law judge” with the abbreviation “ALJ” for “administrative law judge,” as this abbreviation is commonly used and understood. These changes appear throughout the Uniform Rules and will not be discussed further in the individual sections.

National Archives, Federal Register Writing Resources for Federal Agencies: Drafting Legal Documents,

https://www.archives.gov/federal-register/write/legal-docs/clear-writing.html.

Section __.1 Scope

Section __.1 lists the types of adjudicatory proceeding to which the Uniform Rules apply. The final rule updates the list of civil money penalty proceedings covered by the Uniform Rules described in § __.1(e) to include section 5, section 9, and section 10 of the Home Owners' Loan Act (HOLA).

These sections of the HOLA are applicable to Federal savings associations now supervised by the OCC, State-chartered savings associations now supervised by the FDIC, and savings and loan holding companies supervised by the Board. The final rule also adds a reference to “the former Office of Thrift Supervision” in the OCC's § 19.1(e)(10) to clarify that the Uniform Rules will apply to civil money proceedings for violations of orders issued, written agreements executed, and conditions imposed in writing by OTS.

The Board made these updates on September 13, 2011 (76 FR 56603).

Section __.2 Rules of Construction

Section __.2 of the Uniform Rules sets forth the rules of construction for the Uniform Rules. The final rule amends this section to eliminate § __.2(b), which provides that any use of masculine, feminine, or neuter gender encompasses all three, if such use would be appropriate. The final rule replaces all gender references such as “him or her,” “his or her,” and “himself or herself” with gender-neutral terminology; thus, this provision is no longer necessary.

Section __.3 Definitions

Section __.3 of the Uniform Rules includes definitions applicable to the Uniform Rules and, unless otherwise specified, the Local Rules. The final rule now defines the term “electronic signature” because § __.7 of the final rule provides that electronic signatures may be used to satisfy the good faith certification requirement. In their respective final rules, the Agencies have replaced the definition of violation in § __.3 with a cross-reference to the identical definition in section 3(v) of the Federal Deposit Insurance Act (FDIA), 12 U.S.C. 1813(v).

The final rule also eliminates legacy references to the Office of Thrift Supervision in the definition of “OFIA” and the definition of “Uniform Rules.”

The NCUA included this updated definition of violation in the proposed rule and is adopting the same wording in the final rule. The discussion in the preamble to the proposed rule inadvertently omitted reference to the NCUA making this change along with the OCC, Board, and FDIC.

The definition of “institution” in the OCC's final rule now includes the term “Federal savings association” in order to make the Uniform Rules and the OCC's Local Rules in part 19 of title 12 applicable to Federal savings associations, which have been regulated by the OCC since 2011.

As described elsewhere in this

Supplementary Information,

the OCC is removing its Uniform Rules and Local Rules applicable to Federal savings associations, parts 108, 109, 112, and 165 of title 12.

The Board's final rule adds “nonbank financial companies” and “financial market utilities” designated by the Financial Stability Oversight Council to its definition of “institution” to clarify that the Uniform Rules are applicable to these entities, which are supervised by the Board pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).

In addition, the Board's final rule clarifies that organizations operating under section 25A of the Federal Reserve Act, Federal and State “branches,” as well as

“agencies” as defined in section 1(b) of the International Banking Act, and “any other entity subject to the supervision of the Board,” are included in its definition of “institution.” Finally, the Board's final rule replaces the word “savings association” with “depository institution” in 12 CFR 263(f)(6) to conform this language to the language in 12 U.S.C. 1818(b)(3).

Public Law 111-203, 124 Stat. 1376 (2010).

Section __.5 Authority of the Administrative Law Ludge (ALJ)

Section __.5 of the Uniform Rules addresses the authority of the ALJ. The final rule amends § __.5(b)(2) to add the term “other orders” to the list of specific orders an ALJ is authorized to issue, quash, or modify. This change clarifies that the authority of the ALJ to issue orders is not limited to subpoenas, subpoenas

duces tecum,

and protective orders and may include other types of orders that are not enumerated in this section. The final rule also amends § __.5(b)(11) to change the term “presiding officer” to “ALJ” to avoid confusion and clarify that the ALJ has the powers necessary and appropriate to discharge the duties of this role.

Section __.6 Appearance and Practice in Adjudicatory Proceedings

Section __.6 of the Uniform Rules addresses appearance and practice in adjudicatory proceedings. The final rule amends § __.6(a)(2) to state simply that an individual may appear on their own behalf. This change eliminates language that is duplicative and unnecessary to the meaning of the provision. The final rule also amends § __.6(a)(3) to include a requirement that a notice of appearance include a written acknowledgment that the individual has reviewed and will comply with the Uniform Rules and Local Rules. This requirement ensures that representatives appearing in the proceeding are informed of the rules that govern the proceedings.

Section __.7 Good Faith Certification

Section __.7 of the Uniform Rules addresses the requirement for good faith certification for every filing or submission of record following the issuance of a notice. The final rule amends § __.7(a) to require that the counsel of record, including an individual who acts as their own counsel, include a mailing address, an electronic mail address, and a telephone number with every certification. The final rule also amends this section to permit electronic signatures to satisfy the signature requirements of the certification. These changes conform the rules to the current practice of electronic filing.

Section __.9 Ex Parte Communications

Section __.9 of the Uniform Rules addresses

ex parte

communications in administrative proceedings. The final rule amends § __.9(c) to clarify that upon the occurrence of

ex parte

communication, the ALJ or the Agency Head must determine whether any action in the form of sanctions should be taken concerning the

ex parte

communication. The final rule amends §_.9(e)(1) to better align it with section 5 of the Administrative Procedure Act, 5 U.S.C. 554(d). Specifically, the final rule adds language stating that the ALJ may not consult with a person or party on a fact in issue without giving all parties notice and an opportunity to participate and may not be responsible to or subject to the supervision or direction of an employee agent engaged in the performance of investigative or prosecuting functions for any of the Agencies. Finally, the final rule amends § __.9(e)(2) to refer to administrative or judicial proceedings rather than public proceedings to better describe the type of proceedings subject to the rule.

Section __.10 Filing of Papers

Section __.10 of the Uniform Rules addresses the requirements for the filing of papers. The final rule amends and renumbers § __.10(b) to remove an outdated section on rules governing transmission by electronic media and replace it with a section stating that filing may be accomplished by electronic mail or other electronic means designated by the Agency Head or the ALJ. The final rule amends §_.10(b) to eliminate references to specific carriers and names of mail delivery services and instead refer generally to same day courier services and overnight delivery services. The final rule amends § __.10(c), which addresses the formal requirements as to papers filed, to require papers to include the mailing address, electronic mail address, and telephone number of the counsel or party making the filing. Finally, the final rule eliminates § __.10(c)(4), which required the filing of an original and one copy of each filing and is no longer necessary, given that the vast majority of papers are filed electronically, consistent with current adjudicatory practice. The final rule retains the existing methods of filing by paper, such as personal service, same day courier, overnight delivery, and mail, with appropriate modifications of the descriptions of those methods to conform to current terminology and standards for delivery.

Section __.11 Service of Papers

Section __.11 of the Uniform Rules addresses the requirements for service of papers. The modifications to § __.11 provide for electronic filing, where appropriate, and simplify and update the descriptions for other, non-electronic, means of filing. The final rule amends § __.11(b) to add service by electronic mail or other electronic means as a method for serving papers, consistent with current practice. The final rule retains the existing methods of service by paper, such as personal service, same day courier, overnight delivery, and mail, and replaces references to specific carriers and delivery services with general references to same day courier service and overnight delivery service. The final rule also amends § __.11(c)(1) to require that all papers required to be served by the Agency Head or the ALJ upon a party that has appeared in the proceeding will be served by electronic mail or other electronic means designated by the Agency Head or the ALJ. For parties that have not appeared in the proceeding in accordance with § __.6, the final rule preserves the option for non-electronic methods of service and modifies the descriptions of some of those methods to conform to current terminology and standards for delivery. Finally, in § __.11(d), the final rule generally retains the existing methods for the service of subpoenas with appropriate modifications to the descriptions of the methods to conform to current terminology and standards for delivery.

Section __.12 Construction of Time Limits

Section __.12 of the Uniform Rules addresses the construction of time limits. The final rule amends § __.12(b), which addresses when papers are deemed to be filed or served, to provide that in the case of transmission by electronic mail or other electronic means, filing and service are deemed to be effective upon transmittal by the serving party. The final rule retains the existing times for non-electronic methods of filing and service and updates the descriptions of these methods to make them consistent with the updated descriptions in §§ __.10 and __.11. The final rule amends § __.12(c), which addresses the calculation of time for service and filing of responsive papers, to provide that in the case of service by electronic mail or other electronic means, the time limits are calculated by adding one calendar

day to the prescribed period. Finally, the final rule provides for the addition of two calendar days, rather than one, in the case of service by overnight delivery service and retains the language providing for the addition of three calendar days for service made by mail.

Section __.14 Witness Fees and Expenses

Section __.14 of the Uniform Rules addresses witness fees and expenses in administrative proceedings. The final rule amends § __.14 to clarify the general rule, in § __.14(a), that all witnesses, including an expert witness who testifies at a deposition or hearing, will be paid the same fees for attendance and mileage as are paid in the United States district courts in proceedings in which the United States is a party. The final rule also adds language in § __.14(b) to clarify that the Agencies are not required to pay witness fees and mileage for testimony by a party. The final rule retains the current language governing the timing of witness payments in a new § __.14(c).

Section __.15 Opportunity for Informal Settlement

Section __.15 of the Uniform Rules addresses the rules and process for informal settlement once a proceeding has been initiated. The final rule revises this section to more plainly express the existing rule that an offer or proposal for informal settlement may only be made to Enforcement Counsel.

Section __.18 Commencement of Proceeding and Contents of Notice

Section __.18(a) of the Uniform Rules governs the commencement of administrative proceedings. The final rule amends § __.18(a)(1)(ii) to provide that Enforcement Counsel serves the notice upon the respondent to begin proceedings.

The final rule also amends this section to provide that Enforcement Counsel may serve the notice upon counsel for the respondent, rather than the respondent, provided that counsel for the respondent has confirmed that counsel represents the respondent in the matter and will accept service of the notice on behalf of the respondent. By requiring counsel to confirm representation of a respondent, the Agencies hope to clarify when it is appropriate to serve notice on an individual who purports to represent the respondent. Finally, the final rule amends § __.18(a)(1)(iii) to make it clear that Enforcement Counsel files the notice with OFIA.

The FDIC has already made this change in its version of the Uniform Rules in connection with amendments that became effective on January 12, 2021.

The NCUA is deleting from part 747 the reference to change-in-control proceedings under 12 U.S.C. 1817(j), which does not apply to credit unions or the NCUA. The NCUA is making the same deletion in § __.33.

Section __.18(b) of the Uniform Rules addresses the contents of the notice in administrative proceedings. The final rule amends § __.18(b) to provide that notice pleading applies in administrative proceedings, meaning that a notice need only provide a short and plain statement of the claim(s) showing that the agency is entitled to relief. The final rule also makes a technical change to § __.18(b)(2) to change the description from “a statement of the matters of fact or law showing the [Agency] is entitled to relief” to simply “matters of fact or law showing that the [Agency] is entitled to relief.” The Agencies believe the reference to “a statement” in this section has no substantive meaning and, thus, have removed it.

Section __.19 Answer

Section __.19 of the Uniform Rules sets out the requirements for an answer in an administrative proceeding. The final rule amends § __.19(c)(2) to provide that if a respondent fails to request a hearing as required by law within the applicable time frame, the notice of assessment constitutes a final and unappealable order, in accordance with 12 U.S.C. 1818(i)(2)(E)(ii) and 12 U.S.C. 1786(k)(2)(E)(ii), without further action by the ALJ. In the past, there has been confusion about whether any additional action on the part of the ALJ is required in this situation, and this language clarifies that no further action is necessary.

Section __.24 Scope of Document Discovery

Section __.24 of the Uniform Rules addresses the scope of discovery in an administrative proceeding and § __.24(a) addresses limitations on discovery. The final rule updates the definition of the term “documents” in § __.24(a)(1) to include not only writings, drawings, graphs, charts, photographs, and recordings, but electronically stored information and data or data compilations stored in any medium from which information can be obtained. This expanded definition of the term “document” is necessary to account for the range of digital information now available. The final rule amends § __.24(a)(3) to clarify that discovery by the use of either interrogatories or requests for admission is not permitted. The final rule moves the paragraph on relevance currently in § __.24(b) to a new § __.24(a)(4) because that provision functions as a limitation on discovery. The final rule amends § __.24(c) to clarify the list of privileges applicable to otherwise discoverable documents. In addition to the attorney-client privilege and the work-product doctrine, the proposed language would also specifically identify the bank examination privilege and the law enforcement privilege and exclude those privileged documents from discovery. Finally, the final rule adds language to § __.24(d) to provide that document discovery, including all responses to discovery requests, must be completed by the date set by the ALJ and no later than 30 days prior to the date scheduled for the commencement of the hearing. This language recognizes the role of the ALJ in establishing a schedule for discovery while also providing for discovery to be completed earlier in the hearing process.

Section __.25 Request for Document Discovery From Parties

Section __.25 of the Uniform Rules addresses requests for document discovery from parties in administrative proceedings. The final rule replaces the heading “General rule” with “Document requests” in § __.25(a) to better identify the subject matter of the section. The final rule amends § __.25(a) to add a paragraph (a)(1) stating that a party may serve on another party a request not only to produce discoverable documents but to permit the requesting party or its representative to inspect or copy discoverable documents that are in the possession, custody, or control of the party upon whom the request is served. It has been the practice of parties in administrative proceedings to permit the inspection and copying of discoverable documents, and this language formalizes that practice. The final rule includes language to provide that a party responding to a request for inspection may produce copies of documents or electronically stored information instead of permitting inspection. In many cases, providing documents or electronically stored information directly is more efficient than permitting inspection, and this amendment preserves the right of a responding party to make that choice. The final rule includes a new paragraph (a)(2) to simplify the language that previously appeared in § __.25(b) regarding the identification of documents to be produced and require that any request describe with reasonable particularity each item or category of items to be inspected and

specify a reasonable time, place, and manner for the inspection or production.

The final rule amends the rules governing production or copying, as set out in a new § __.25(b)(1), to require that, unless a particular form is specified by the ALJ or agreed upon by the parties, the producing party must produce copies of documents as they are kept in the usual course of business or organized to correspond to the categories of the request, and produce electronically stored information in a form in which it is ordinarily maintained or in a reasonably usable form. The Agencies recognize that the ways in which electronically stored information may be stored and transmitted may change over time and are adopting the reasonably usable standard for electronically stored information to provide flexibility.

The final rule simplifies the rules associated with the costs of document production in a new § __.25(b)(2), which requires the producing party to pay its own costs to respond to a discovery request unless otherwise agreed by the parties. This language eliminates the earlier requirement that a requesting party prepay the producing party for certain costs while also allowing the parties to agree to share costs, as appropriate in a particular case.

The final rule modifies the time limits for motions to limit discovery in § __.25(d). In § __.25(d)(1), the final rule extends the time limit for a party to object to a discovery request from within ten to within 20 days of being served with such a request. In § __.25(d)(2), the final rule extends the time limit for a party to file a written response from within five to within ten days of service of the motion. Additional time allows the parties to digest such requests and engage with each other to narrow the scope of the request before having to file a motion with the ALJ. The Agencies believe that parties making motions to limit discovery and responding to motions to limit discovery will benefit from additional time to review and respond to such requests.

Finally, the final rule amends § __.25(e) to specify the available privileges that may be asserted in connection with a request for production. The section now includes attorney-client privilege, attorney work-product doctrine, bank examination privilege, law enforcement privilege, any government deliberative process privilege, other privileges of the Constitution, any applicable act of Congress, and other principles of common law as grounds for withholding documents.

Section __.26 Document Subpoenas to Nonparties

Section __.26 of the Uniform Rules addresses document subpoenas to third parties in administrative proceedings. The final rule amends § __.26(b)(1) to provide that a person to whom a document subpoena is directed may file a motion to quash or modify such subpoena with the ALJ. This amendment clarifies to whom the motion to quash should be directed.

Section __.27 Deposition of Witness Unavailable for Hearing

Section __.27 of the Uniform Rules addresses the deposition of witnesses unavailable for an administrative hearing. The final rule amends § __.27(a)(2) to require that the application for a subpoena state the manner in which the deposition is to be taken, in addition to the time and place, and provide explicitly that a deposition may be taken by remote means. These changes modernize the rules and conform the rules to existing practice. The final rule simplifies § __.27(a)(4) by eliminating unnecessary language related to where subpoenas may be served. In order to further provide for remote depositions, the final rule amends § __. 27(c)(1) to provide that a court reporter or other person authorized to administer an oath may administer the oath remotely without being in the physical presence of the deponent, by stipulation of the parties or order by the ALJ. The final rule amends § __.27(d) to clarify that if a subpoenaed person fails to comply with any subpoena issued pursuant to this section the aggrieved party may apply to the appropriate United States district court for an order requiring compliance with the portions of the subpoena with which the subpoenaed party has not complied. Finally, the final rule replaces an inaccurate cross-reference to paragraph (c)(3) with a correct reference to paragraph (c)(2).

Section __.29 Summary Disposition

Section __.29 of the Uniform Rules addresses summary disposition. The final rule modifies § __.29(c) to provide that a request for a hearing on a motion must be made in writing. The new language formalizes the process of requesting a hearing and increases the clarity of the process.

Section __.31 Scheduling and Prehearing Conferences

Section __.31 of the Uniform Rules addresses scheduling and prehearing conferences. The final rule amends § __.31(a) to clarify that the prehearing conference must be set within 30 days of service of the notice or an order commencing a proceeding and eliminate the option in the current rule for the parties to agree on another time. The final rule also adds language to clarify that it is a schedule for discovery, and not actual discovery, that the parties may determine at the scheduling conference. Finally, the final rule eliminates references to “telephone” conferences in order to make the provision more technologically neutral.

Section __.32 Prehearing Submissions

Section __.32 of the Uniform Rules addresses prehearing submissions. The final rule amends § __.32(a) to extend the time for a party to file prehearing submissions with the ALJ from 14 days to 20 days before the start of the hearing. This change will give the parties more flexibility in completing their filings. The final rule further amends § __.32 to update the required prehearing submissions and § __.32(a)(1) to require the submission of a prehearing statement that states the party's position with respect to the legal issues presented, the statutory and case law upon which the party relies, and the facts the party expects to prove at the hearing. The final rule amends § __.32(a)(2) to require that the final list of witnesses include the name, mailing address, and electronic mail address for each witness and to clarify that the list of witnesses need not identify the exhibits to be relied upon by each witness at the hearing and that the list of exhibits should be a list of exhibits expected to be introduced at the hearing.

Section __.35 Conduct of Hearings

Section __.35 of the Uniform Rules addresses the conduct of administrative hearings. The final rule adds a new § __.35(c) to provide rules governing electronic presentations in a hearing. The new language provides that the ALJ may direct the use of, or any party may use, an electronic presentation during the hearing. If an ALJ requires an electronic presentation, each party will be responsible for their own presentation or related costs unless the parties agree to another manner in which to allocate responsibilities and costs. This new language accounts for electronic presentations that are not addressed in the existing rules but are used routinely in hearings.

Section __.36 Evidence

Section __.36 of the Uniform Rules sets forth the rules governing evidence in an adjudicatory proceeding. The final rule amends § __.36(d)(2) to refer to “direct questioning” rather than “direct interrogation” of witnesses in order to clarify, in plain language, the meaning of this section.

IV. Section-by-Section Discussion of Amendments to the Local Rules of Each Agency

A. Amendments to OCC Local Rules

Part 19, subparts B through P, address local rules of practice and procedure specific to OCC investigations, hearings before the OCC, and other OCC-related proceedings involving national banks. The corresponding rules for Federal savings association-related proceedings and investigations, transferred from the former OTS to the OCC by the Dodd-Frank Act, are set forth at 12 CFR parts 108, 109, 112, and 165. Many of the national bank and Federal savings association-related provisions are similar, but in some cases no corresponding rule exists or one set of rules provides more specificity than the other. The final rule consolidates these rules by applying part 19 to both national bank- and Federal savings association-related proceedings and investigations and removes parts 108, 109, 112, and 165. The final rule also amends the Local Rules to add certain provisions of the Federal savings association rules that are not currently included in part 19 but that the OCC believes should apply to both Federal savings associations and national banks. In addition, the final rule reorganizes certain rules in part 19, including subparts D, E, F, and G relating to actions under the Federal securities laws; adds new provisions addressing the Equal Access to Justice Act (EAJA); and adds a new subpart Q addressing the forfeiture of a national bank, Federal savings association, or Federal branch and agency charter or franchise for certain money laundering or cash transaction offenses.

The amendments to the OCC's Local Rules are discussed below.

Subpart B—Procedural Rules for OCC Adjudications

19.100 Filing Documents

Current §§ 19.100 and 109.104(g) require that all filings with or referred to the Comptroller or ALJ in any proceeding under parts 19 or 109, respectively, be filed with the OCC Hearing Clerk. The two provisions are substantively the same except that § 19.100 provides a more detailed description of the types of filings to which the regulation applies. As a result of the final rule's application of part 19 to Federal savings associations and removal of part 109, § 19.100 applies to filings in Federal savings association-related proceedings as of the final rule's effective date, April 1, 2024. Furthermore, the final rule amends § 19.100 to remove the OCC filing street address and to require the filing to be made in a manner prescribed by § 19.10(b) and (c). Sections 19.10(b) and (c) prescribe the permissible filing methods and list form and content requirements for filing papers with the OCC. As amended by this final rule, filings are permitted by electronic mail or other electronic means designated by the Comptroller or the ALJ as of the final rule's effective date, April 1, 2024. Lastly, the final rule amends the current provision to clarify that the materials filed include any attachments or exhibits to the listed documents.

19.101 Delegation to OFIA

Both current §§ 19.101 and 109.101 provide that an ALJ at the Office of Financial Institution Adjudication (OFIA) will conduct actions brought under the respective subpart A rules. As a result of the final rule's application of part 19 to Federal savings associations, § 19.101 applies to adjudicatory actions brought against either national banks or Federal savings associations as of the final rule's effective date, April 1, 2024. The final rule makes one stylistic revision to § 19.101 to remove the passive sentence structure.

19.102 Civil Money Penalties

The final rule adds a new § 19.102 that incorporates parts of § 109.103(b), which provides rules for the payment of civil money penalties. The national bank rules currently do not address this topic with specificity, and the OCC has determined that these provisions, which clarify when parties must pay civil money payments, should apply to both national banks and Federal savings associations. As a result of this amendment, respondents are required to pay civil money penalties assessed pursuant to subpart A of part 19 within 60 days after the issuance of the notice of assessment, unless the OCC requires a different time for payment. If a respondent has made a timely request for a hearing to challenge the assessment of the penalty, the respondent is not required to pay the penalty until the OCC has issued a final order of assessment. In such instances, the respondent is required to pay the penalty within 60 days of service of the final order unless the OCC requires a different time for payment.

Subpart C—Removals, Suspensions, and Prohibitions When a Crime Is Charged or a Conviction Is Obtained

Current subpart C of part 19 includes the rules applicable in hearings brought against any institution-affiliated party

who the OCC has suspended or removed from office or prohibited from further participation in the affairs of a depository institution pursuant to section 8(g) of the FDIA (12 U.S.C. 1818(g)). Part 108 applies similar rules to officers, directors, or other persons participating in the conduct of the affairs of a Federal savings association, Federal savings association subsidiary, or affiliate service corporation, although part 108 differs slightly on certain procedural issues. As described below, the final rule amends subpart C to incorporate certain provisions of part 108 that are helpful to the OCC in these adjudicatory actions, specifically to apply amended subpart C to both national banks and Federal savings associations and remove part 108. Although part 108 does not use the term “institution-affiliated party,” the OCC believes that the scope of part 108 is similar in substance to this term as defined in § 19.3 by reference to the FDIA.

“Institution-affiliated party,” as defined in current § 19.3 and in this final rule by reference to section 3(u) of the FDIA (12 U.S.C. 1813(u)), means: (1) any director, officer, employee, or controlling stockholder (other than a bank holding company or savings and loan holding company) of, or agent for, an insured depository institution; (2) any other person who has filed or is required to file a change-in-control notice with the appropriate Federal banking agency under 12 U.S.C. 1817(j); (3) any shareholder (other than a bank holding company or savings and loan holding company), consultant, joint venture partner, and any other person as determined by the appropriate Federal banking agency who participates in the conduct of the affairs of an insured depository institution; and (4) any independent contractor (including any attorney, appraiser, or accountant) who knowingly or recklessly participates in any violation of any law or regulation, any breach of fiduciary duty, or any unsafe or unsound practice which caused or is likely to cause more than a minimal financial loss to, or a significant adverse effect on, the insured depository institution.

19.110 Scope

The final rule amends § 19.110 to include a definitions section for subpart C similar to the one for Federal savings associations in § 108.2 to enhance the understanding and application of the regulation and simplify the regulatory text. New § 19.110(b) defines “petitioner” to mean an individual who has filed a petition for informal hearing under subpart C; “depository institution” to mean any national bank, Federal savings association, or Federal

branch of a foreign bank; and “OCC Supervisory Office” to mean the Senior Deputy Comptroller or Deputy Comptroller of the OCC department or office responsible for supervision of the depository institution, or, in the case of an individual no longer affiliated with a particular depository institution, the Deputy Comptroller for Special Supervision. Furthermore, the final rule labels the existing paragraph in § 19.110 as § 19.110(a), Scope, and retitles the section heading to account for the addition of definitions.

19.111 Suspension, Removal, or Prohibition

The final rule reorganizes § 19.111 into paragraphs; retitles the section heading, as well as the subpart, to clarify that it applies to institution-affiliated parties; and removes passive sentence structure. In newly designated § 19.111(a), the final rule corrects an omission in current § 19.111, which provides that the Comptroller may serve a notice of suspension or order of removal or prohibition pursuant to 12 U.S.C. 1818(g) on an institution-affiliated party and must serve a copy of this notice or order on the appropriate depository institution. Because 12 U.S.C. 1818(g) also provides for a notice of prohibition, the final rule adds a reference to this notice of prohibition to this paragraph. In addition, as in § 108.4, newly designated § 19.111(a) specifies the manner of service by the Comptroller, providing that the Comptroller serve the notice or order in the manner set forth in § 19.11, Service of papers. The final rule also moves the information regarding a request for a hearing by the institution-affiliated party to a separate § 19.111(b); adds the ability to send the hearing request by same day courier service or overnight delivery service, in addition to by certified mail or by personal service with a signed receipt as provided under the current rule; and adds the caveat that this submission rule applies unless instructed otherwise by the Comptroller. This revision also utilizes the newly defined term “OCC Supervisory Office.”

In addition, the final rule includes in § 19.111(b)(2) a provision similar to § 108.5(b) that requires an institution-affiliated party in a request for a hearing to admit or deny each allegation, or state that they lack sufficient information to admit or deny each allegation, which has the effect of a denial. Section 19.111(b)(2) also provides that denials must fairly meet the substance of each allegation denied and that general denials are not permitted; when the institution-affiliated party denies part of an allegation, that part must be denied and the remainder specifically admitted; and any allegation in the notice or order which is not denied is deemed admitted for purposes of the proceeding. Furthermore, similar to § 108.5(c), § 19.111(b)(2) provides that the request must state with particularity how the institution-affiliated party intends to show that its continued service to or participation in the affairs of the institution would not pose a threat to the interests of the institution's depositors or impair public confidence in any institution. The OCC believes that adopting these provisions from the Federal savings association regulation will help narrow the issues to be contested and make § 19.111 more consistent with the adjudicatory rule in § 19.19.

Furthermore, the final rule adds the default provision included in § 108.8 to § 19.111, as new paragraph (c). Under this new paragraph, if the institution-affiliated party fails to timely file a petition for a hearing pursuant to § 19.111(b), fails to appear at a hearing either in person or by attorney, or fails to submit a written argument where oral argument has been waived pursuant to § 19.112(c), the notice of suspension or prohibition will remain in effect until the information, indictment, or complaint is finally disposed of and the order of removal or prohibition will remain in effect until terminated by the OCC. The OCC believes the application of this provision to national banks will clarify that there are consequences if a petitioner fails to appear or fails to answer.

19.112 Informal Hearing

The final rule makes a number of changes to § 19.112, which provides the procedures for informal suspension or removal hearings before the OCC involving an institution-affiliated party. In § 19.112(a), the final rule updates the name of the OCC's Enforcement and Compliance Division to OCC Enforcement. The final rule also removes the requirement in this paragraph that the OCC Supervisory Office notify the appropriate OCC District Counsel of the hearing, as this is an unnecessary step.

In § 19.112(c)(2), the final rule adds language to clarify that, when responding to a petitioner's submissions, the OCC serves other parties in the manner set forth in § 19.11(c).

In § 19.112(d), the final rule amends paragraph (d)(2), which provides that the informal hearing is not governed by formal rules of evidence, to clarify that these inapplicable formal rules of evidence include the Federal Rules of Evidence, as provided in § 19.36. The final rule also clarifies paragraph (d)(3)(i) by breaking up the first sentence into two sentences. As revised, paragraph (d)(3)(ii) provides that the presiding officer may require, instead of permit as in the current paragraph, a shorter time period in which the parties may request oral testimony or witnesses at a hearing, which is the more accurate action for a presiding officer. As in § 19.27(c), the final rule also amends § 19.112(d)(3)(ii) to provide that, by stipulation of the parties or by order of the presiding officer, a court reporter or other authorized person may administer the required oath to a witness remotely without being in the physical presence of the witness. This amendment updates the current oath requirement for witnesses to account for remote proceedings and conforms this provision to § 19.112(d)(4), which permits electronic presentations at the hearing. In § 19.112(d)(3)(iii), the final rule makes technical changes to the different actions a presiding officer may take related to a suspension or prohibition based on an indictment, information, or complaint and a removal or prohibition with respect to a conviction or pre-trial diversion program to better reflect 12 U.S.C. 1818(g). Throughout paragraph (d) the final rule makes technical corrections by replacing “appointed OCC attorney” with “OCC.”

The final rule also adds a new paragraph (d)(4) to § 19.112 to provide rules governing electronic presentations in the course of a hearing. As in § 19.35(c), this provision provides that, based on the circumstances of each hearing, the presiding officer may direct the use of, or any party may elect to use, an electronic presentation during the hearing. If the presiding officer requires an electronic presentation, each party will be responsible for its own presentation or related costs unless the parties agree to allocate presentation responsibilities and costs differently. This new language is necessary to account for the routine use of electronic presentations in hearings that existing rules do not address.

Throughout § 19.112, the final rule utilizes the newly defined term “OCC Supervisory Office” and removes passive sentence structure.

19.113 Recommended and Final Decisions

The final rule makes a number of changes to § 19.113, which provides the procedures for decisions by the presiding officer and the OCC. The final rule updates § 19.113(c) to permit the Comptroller to notify the petitioner of a

decision by electronic mail or other electronic means, if the petitioner consents, instead of by registered mail. The final rule also makes technical changes to paragraph (c) by replacing “when” with “if” in describing whether the petitioner has waived an oral hearing, replacing the “must” with “will” in describing the Comptroller's notification of the decision, and replacing the “and” with “or” in describing the actions that the Comptroller may affirm, terminate, or modify in its final decision. In § 19.113(d), the final rule clarifies that there could be more than one charge against an institution-affiliated party. In § 19.113(f), the final rule removes the passive sentence structure. Lastly, the final rule adds headings to each paragraph.

Subparts D Through G—Actions Under the Federal Securities Laws

Subparts D, E, F, and G of current part 19 set forth the procedures applicable to actions taken by the OCC with respect to banks pursuant to various provisions of the Federal securities laws, including the Securities Exchange Act of 1934 (Exchange Act). Specifically, subpart D addresses exemption hearings under section 12(h) of the Exchange Act, subpart E addresses disciplinary proceedings, subpart F addresses civil money penalties, and subpart G addresses cease and desist authority. Although these Federal securities laws also apply to Federal savings associations, there are no comparable provisions in OCC regulations for Federal savings associations. Instead, the former OTS relied on the authority granted under the Exchange Act for these actions rather than incorporating the authority into its rules and specified in § 109.100(c) that the Uniform Rules of Practice and Procedure in subpart A of part 109 applied to proceedings under the Exchange Act.

In the final rule, the OCC streamlines the regulation by combining subparts D, E, F, and G into one subpart D entitled “Actions under the Federal Securities Laws” and reserves subparts E, F, and G. The OCC also applies this revised subpart D to Federal savings associations, removes § 109.100(c), and makes other changes as described below.

19.120 Exemption Hearings Under Section 12(h) of the Securities Exchange Act of 1934

The final rule moves the provisions in current subpart D of part 19 to a new § 19.120. Current subpart D governs informal hearings by the Comptroller to determine, pursuant to authority in sections 12(h) and (i) of the Exchange Act (15 U.S.C. 78

(h) and (i)), whether to exempt an issuer or a class of issuers from the provisions of sections 12(g), 13, or 14 of the Exchange Act (15 U.S.C. 78

(g), 78m, or 78n) or whether to exempt any officer, director, or beneficial owner of securities of an issuer from section 16 of the Exchange Act (15 U.S.C. 78p). This subpart currently covers issuers that are banks whose securities are registered pursuant to section 12(g) of the Exchange Act (15 U.S.C. 78

(g)). In addition to applying this provision to issuers that are Federal savings associations, the OCC is making a number of other changes:

Specifically, the final rule clarifies that § 19.120(a) applies to national bank and Federal savings association issued securities that may be subject to registration in addition to those securities already registered. This change permits a national bank or Federal savings association to obtain an exemption from the OCC in advance of registering.

The final rule also provides that when an applicant provides a copy of its newspaper notice of an exemption hearing to its shareholders pursuant to § 19.120(c) it must do so in the same manner as is customary for shareholder communications, which could be through electronic means. This change will make it easier and less burdensome to comply with this notice requirement.

In addition, as in §§ 19.35(c) and 19.112(d)(4), the final rule adds § 19.120(d)(8), governing electronic presentations in the course of an Exchange Act-related hearing. This provision provides that, based on the circumstances of each hearing, the presiding officer may direct the use of, or any party may elect to use, an electronic presentation during the hearing. If the presiding officer requires an electronic presentation during the hearing, each party will be responsible for its own presentation and related costs unless the parties agree to another manner by which to allocate presentation responsibilities and costs. As indicated above, this new language is necessary to account for the routine use of electronic presentations in hearings that the existing rule does not currently address. The final rule makes a conforming change in § 19.120(d)(6) to allow, by stipulation of the parties or by order of the presiding officer, a court reporter or other authorized person to administer the required oath to a witness remotely without being in the physical presence of the witness. Furthermore, the final rule clarifies in § 19.120(d)(9) that a transcript of the hearing may be provided by electronic means.

Lastly, the OCC is making technical changes to § 19.120. The final rule makes minor, non-substantive changes in provisions redesignated as paragraphs (b) and (c); removes passive sentence structure in text redesignated as paragraph (d)(9); allows for more than one applicant in provisions redesignated as paragraphs (d)(4) and (5) and (e); and changes references in this section to the “Securities and Corporate Practices Division” to “Bank Advisory” to reflect the reorganization of the OCC's Law Department.

19.121 Disciplinary Proceedings Involving the Federal Securities Laws

The final rule moves the provisions in current subpart E of part 19 to a new § 19.121. Current subpart E governs proceedings by the Comptroller to determine whether to take disciplinary actions against banks that are transfer agents, municipal securities dealers, government securities brokers, government securities dealers, or persons associated with or seeking to become associated with these institutions.

The final rule applies this section to Federal savings associations by defining “bank” to mean a national bank or Federal savings association, and, when referring to a government securities broker or government securities dealer, a Federal branch or agency of a foreign bank. In addition, the final rule defines “transfer agent,” “municipal securities dealer,” “government securities broker,” “government securities dealer,” and person associated with a person engaged in these activities or with a bank engaged in these activities by cross-referencing to definitions in the Exchange Act. The final rule also makes technical changes to terms used in this section to correlate them more closely with terms used in the Exchange Act, including the addition to the scope of § 19.121 of any person seeking to become associated with a government securities broker or government securities dealer.

Pursuant to sections 3(a)(34)(G)(i) and 15C(c)(2)(A) of the Exchange Act (15 U.S.C. 78c(a)(34)(G)(i) and 78o-5(c)(2)(A)), the OCC also may take disciplinary actions against Federal branches and agencies of foreign banks that are government securities brokers or government securities dealers or persons associated with or seeking to become associated with these entities.

Furthermore, the final rule removes the reference to the Comptroller's delegate in redesignated paragraph (a)(2). The definition of “Comptroller” in § 19.3, which applies to § 19.121, includes a person delegated to perform

the functions of the Comptroller of the Currency. Therefore, this reference is unnecessary.

Lastly, the final rule replaces the term “party” with the more accurate term “respondent” in redesignated paragraphs (b)(1) and (c)(2).

19.122 Civil Money Penalty Authority Under Federal Securities Laws

The final rule moves the provisions in current subpart F of part 19 to a new § 19.122. Current subpart F governs proceedings by the Comptroller to determine whether to impose a civil money penalty against banks that are transfer agents, municipal securities dealers, government securities brokers, government securities dealers, or persons associated with or seeking to become associated with these institutions.

The final rule applies this provision to Federal savings associations by defining “bank” to mean a national bank or Federal savings association and, when referring to a government securities broker or government securities dealer, a Federal branch or agency of a foreign bank. The final rule also defines “transfer agent,” “municipal securities dealer,” “government securities broker,” “government securities dealer,” and person engaged in these activities or person associated with a bank engaged in these activities by cross-referencing to definitions in the Exchange Act. Lastly, as with § 19.121, the final rule makes other technical changes to terms used in this section to correlate them more closely with terms used in the Exchange Act, including the addition of persons seeking to become associated with a government securities broker or government securities dealer to the scope of this section.

Id.

19.123 Cease and Desist Authority

The final rule moves the provisions in current subpart G of part 19 to a new § 19.123 and applies these provisions to both national banks and Federal savings associations. Current subpart G governs proceedings by the Comptroller to determine whether to initiate cease-and-desist proceedings against a national bank for violations of sections 12, 13, 14(a), 14(c), 14(d), 14(f), and 16 of the Exchange Act (15 U.S.C. 78

78m, 78n(a), 78n(c), 78n(d), 78n(f), and 78p) or implementing regulations. The final rule also updates these provisions by adding violations enacted by, or rules or regulations enacted thereunder, the Sarbanes-Oxley Act in 2002, as amended,

specifically, sections 301

(audit committees), 302 (corporate responsibility for financial reports), 303 (improper influence on conduct of audits), 304 (forfeiture of certain bonuses and profits), 306 (insider trades during pension fund blackout periods), 401(b) (accuracy of financial reports), 404 (management assessment of internal controls), 406 (code of ethics for senior financial officers), and 407 (disclosure of audit committee financial expert)

(15 U.S.C. 78j-1(m), 7241, 7242, 7243, 7244, 7261, 7262, 7264, and 7265).

Public Law 107-204, 116 Stat. 745 (2002).

Adding section 10A(m) to the Exchange Act.

15 U.S.C. 78j-1(m), 7241, 7242, 7243, 7244, 7261, 7262, 7264, and 7265.

Subpart H—Change in Bank Control

The Change in Bank Control Act (CBCA), which added section 7(j) to the FDIA (12 U.S.C. 1817(j)) and which the OCC has implemented at 12 CFR 5.50, provides that no person may acquire control of an insured depository institution unless the appropriate Federal bank regulatory agency has been given prior written notice of the proposed acquisition. If, after investigating and soliciting comment on the proposed acquisition, the agency disapproves the acquisition, the agency must mail a written notification to the filer within three days of the decision. The filer may then request an agency hearing on the proposed acquisition within 10 days of receipt of the disapproval notice. The Uniform Rules in part 19, subpart A, and part 109, subpart A, apply to hearings for filers whose proposed acquisition of a national bank or Federal savings association, respectively, under the CBCA has been disapproved by the OCC. Current subpart H of part 19 provides additional hearing procedures for insured national banks. Section 5.50, which applies to both national banks and Federal savings associations, directs filers who wish to pursue a hearing for a disapproval decision to part 19, subpart H. However, subpart H refers only to national banks.

Because 12 CFR 5.50 applies to both national banks and Federal savings associations, the final rule amends subpart H by adding language that makes the subpart specifically applicable to Federal savings associations in addition to national banks. Furthermore, because 12 CFR 5.50 applies to both

insured and uninsured

institutions and refers all filers who have been disapproved under § 5.50 to the part 19 procedures, the final rule amends subpart H to make it also applicable to uninsured institutions. In addition, the final rule streamlines subpart H by removing a description of the CBCA disapproval process and instead cross-referencing to 12 CFR 5.50 in the scope of § 19.160 and removing current paragraph (a) in § 19.161, which contains provisions relating to disapproval notification that are duplicative of 12 CFR 5.50(f). The final rule also adds section headings to § 19.160 and revises the section heading in § 19.161.

Subpart I—Discovery Depositions and Subpoenas

Current subpart I of part 19 and § 109.102 address the rules applicable to discovery depositions and subpoenas relating to national banks and Federal savings associations, respectively. These provisions are substantively similar but have slightly different wording. The final rule applies part 19, subpart I, to Federal savings associations and removes § 109.102. The final rule also revises the phrase “direct knowledge of matters that are non-privileged, relevant, and material to the proceeding” to “direct knowledge of matters that are non-privileged and of material relevance to the proceeding.” This change clarifies that persons being deposed have information of material relevance to the proceeding and is consistent with the requirements for document discovery in current and revised § 19.24(b). Furthermore, the final rule amends paragraph (a) to specify that a party also may take a deposition of a hybrid fact-expert witness in addition to an expert and a person, including another party, who has direct knowledge of matters that meet the standards of the paragraph, labeled as a “fact witness” by this amendment. This amendment defines a hybrid fact-expert witness as a fact witness who also will provide relevant expert opinion testimony based on the witness' training and experience.

The final rule also adds paragraph (a)(1) to § 19.170 to require a party to produce an expert report for any testifying expert or hybrid fact-expert witness before the witness' deposition and that, unless otherwise provided by the ALJ, the party must produce such report at least 20 days prior to the deposition. This new provision ensures that a deposing party has the benefit of the expert report prior to the deposition of an expert or hybrid fact-expert witness and that the deposing party has sufficient time to review the report prior to the deposition. Furthermore, paragraph (a)(2) of § 19.170 provides that respondents, collectively, are limited to a combined total of five depositions from all fact witnesses and

hybrid fact-expert witnesses. This paragraph also provides that Enforcement Counsel has the same deposition limit. This limit in the number of depositions adds efficiencies to the discovery process and prevents deposition requests from delaying the completion of the proceeding. Lastly, § 19.170(a)(2) provides that a party is entitled to take a deposition of each expert witness designated by an opposing party, codifying the right of a party to depose the opposing party's designated expert witness.

The final rule amends § 19.170(b) to require that a deposition notice provide the manner for taking the deposition in addition to the time and place. The final rule also adds language to § 19.170(b) to indicate that a deposition notice may require the witness to be deposed at any place within a State, territory, or possession of the United States or the District of Columbia in which that witness resides or has a regular place of employment or such other convenient place as agreed by the noticing party and the witness. Paragraph (b) also permits the parties to stipulate, or the ALJ to order, that a deposition be taken by telephone or other remote means. The OCC believes these changes make it easier and perhaps less costly for parties to obtain, and witnesses to provide, depositions, thereby improving the fact-finding process.

In § 19.170(c), the final rule provides that a party may take depositions no later than 20 days before the scheduled hearing date, instead of 10 days as in the current rule, except with permission of the ALJ for good cause shown. Increasing this time before a hearing will allow all parties more time to prepare for the hearing.

As elsewhere in this rulemaking, the final rule amends § 19.170(d), Conduct of a deposition, to provide that, by stipulation of the parties or by order of the ALJ, a court reporter or other authorized person may administer the required oath to a deponent remotely without being in the physical presence of the deponent. This amendment updates the current oath requirement for witnesses to account for remote proceedings and conform this provision to § 19.170(b)(2), which allows depositions to be taken by telephone or other remote means.

The final rule updates § 19.170(e)(1)(i) to allow for the witness' testimony to be recorded by electronic means such as by a video recording device. The current rule only allows for recording by a stenotype machine and electronic sound recording device. This change reflects new technology and adds flexibility to the testimony process.

Lastly, the final rule makes a non-substantive change to the heading in paragraph § 19.170(a) and changes the heading of paragraph (g) from “Fees” to “Expenses” to describe more accurately the subject of the paragraph.

With respect to § 19.171, the final rule amends paragraph (a) to correct a cross-reference and conform the reference to a place located in the United States to that used elsewhere in part 19. The final rule also amends paragraph (b)(2), which requires the party serving a subpoena to file proof of service with the ALJ, to provide that this proof of service is not required if so ordered by the ALJ. The OCC is making this change because, in some OCC proceedings, the ALJ has indicated they did not wish to receive this proof of service. Finally, the final rule amends paragraph (c) to provide that any party, in addition to a person named in a subpoena, may file a motion to quash or modify the subpoena. This amendment ensures that a party has the right to seek to quash or modify a third-party deposition subpoena.

Subpart J—Formal Investigations

Current subpart J of part 19 and part 112 address formal investigations against national banks and Federal savings associations, respectively. The final rule amends subpart J to make it applicable to both national banks and Federal savings associations and removes part 112. Unlike the Federal savings association rule at § 112.7(b), subpart J does not include a provision specifically providing for motions to quash subpoenas. The OCC has determined that it is neither necessary nor appropriate to include this provision in subpart J because the recipient may challenge investigative subpoenas in Federal court. However, the final rule adds a new paragraph (c) to § 19.184 of subpart J that is similar to the Federal savings association rule at § 112.7(c). This new paragraph permits subpoenas that require the attendance and testimony of witnesses or the production of documents, including electronically stored information, to be served on any person or entity within any State, territory, or possession of the United States or the District of Columbia or as otherwise provided by law. This provision also subjects foreign nationals to subpoenas if service is made upon a duly authorized agent located in the United States or in accordance with international requirements for service of subpoenas. The existing rule for national banks is not clear on service of foreign nationals, and the adoption of specific language from the Federal savings association rule will eliminate the disputes that previously have arisen on this issue. Furthermore, the addition of language regarding international subpoena requirements codifies existing OCC practice.

The final rule makes further changes to subpart J. First, the final rule amends § 19.181, Confidentiality of formal investigations. Currently, this provision provides that information or documents obtained in the course of a formal investigation are confidential and may be disclosed only in accordance with the provisions of 12 CFR part 4. The final rule describes in more detail the information or documents that are confidential to better ensure the confidentiality of formal investigations. Specifically, amended § 19.181 states that the entire record of any formal investigative proceeding, including the resolution or order of the Comptroller authorizing or terminating the proceeding; all subpoenas issued by the OCC during the investigation; and all information, documents, and transcripts obtained by the OCC in the course of a formal investigation, are confidential and may be disclosed only in accordance with the provisions of part 4. The final rule also adds that this information may be disclosed pursuant to the OCC discovery obligations under subpart A of part 19.

Second, the final rule amends § 19.182, Order to conduct a formal investigation, to clarify the list of actions persons authorized to conduct an investigation may take. Currently, this section provides that these persons may, among other things, issue subpoenas

duces tecum,

administer oaths, and receive affirmations as to any matter under investigation by the Comptroller. The final rule adds that these authorized persons also may take or cause to be taken testimony under oath, issue subpoenas other than subpoenas

duces tecum,

and modify subpoenas. This amendment makes § 19.182 more consistent with the powers enumerated in the relevant underlying statutes, including 12 U.S.C. 1818(n) and 1820(c). The final rule also makes a technical correction to indicate that authorized persons may administer affirmations rather than receive affirmations. Section 19.182 also currently provides that, upon application and for good cause, the Comptroller may limit, modify, or withdraw the order at any stage of the proceedings. The final rule clarifies that the Comptroller may also terminate the order. Finally, the final rule amends § 19.182 to specifically indicate that the persons conducting the investigation are empowered by the Comptroller to do so.

Third, the final rule amends § 19.183, Rights of witnesses. Current paragraph (a) provides that any person who is compelled or requested to furnish testimony, documentary evidence, or other information with respect to any matter under formal investigation must, on request, be shown the order initiating the investigation. The final rule amends this provision to provide that such persons may not retain copies of the order without first receiving written approval of the OCC. This amendment ensures the confidentiality of the order.

Current § 19.183(b) provides that a person testifying in a formal investigation may be accompanied, represented, and advised by counsel, and indicates that this right to counsel means that the attorney may be present at all times while the person is testifying and that the attorney may, among other things, question the person briefly at the conclusion of the testimony to clarify answers and make summary notes during the testimony solely for use of the person testifying. The final rule amends this description of permissible attorney activities to provide that the attorney's questioning of the person may be on the record. This ensures a more complete formal record of the proceeding. In addition, the final rule provides that the notes taken by the attorney during testimony may be used solely in representing the person. This change allows the attorney to use these notes and not restrict use of the notes to the person testifying, thereby enabling the attorney to better represent their client.

Section 19.183(c) provides that any person who has given or will give testimony and counsel representing the person may be excluded from the proceedings during the taking of testimony of any other witness. The final rule amends this provision to specify that such person and counsel may be excluded during the testimony of any other person at the discretion of the OCC or the OCC's designated representative. Furthermore, the final rule provides that neither attorney(s) for the institution(s) affiliated with the testifying person nor attorneys for any other interested persons have any right to be present during the testimony of any person not personally represented by such attorney. These changes ensure the confidentiality and integrity of the proceeding by mitigating conflicts of interest and clarify that it is the OCC or OCC's designated representative who makes the decision on exclusion.

Current § 19.183(d) provides that any person who is compelled to give testimony is entitled to inspect any transcript that has been made of the testimony but may not obtain a copy if the Comptroller's representatives conducting the proceedings have cause to believe that the contents should not be disclosed pending completion of the investigation. The final rule removes the burden of proving “cause” included in this provision, as the OCC finds this unnecessary. The final rule also eliminates the language that limits the release of the transcript pending completion of the investigation because the reasons for not disclosing the transcript may persist beyond the conclusion of any pending investigation.

Current § 19.183(e) provides that any designated representative conducting an investigative proceeding must report to the Comptroller any instances where a person has been guilty of dilatory, obstructionist, or insubordinate conduct during the course of the proceeding or any other instance involving a violation of this part. As this paragraph does not pertain to rights of witnesses, and to make clear that this provision applies to all formal investigations covered by subpart J, the final rule redesignates this paragraph as a new § 19.185. The final rule also replaces the phrase “has been guilty of” with “has engaged in” in the redesignated paragraph because the phrase “has been guilty of” is unclear in the context of this provision. Furthermore, the OCC does not believe it is appropriate for a person to be found guilty of this behavior before the designated representative reports this person to the OCC. With this change, the OCC may investigate or take other action with respect to this individual to ensure the fairness and accuracy of the proceeding in a more timely manner. This change also conforms the scope of this provision with the scope of a similar provision, § 19.197, which involves the reporting of certain conduct of an individual practicing before the OCC.

Fourth, the final rule amends § 19.184, Service of subpoena and payment of witness expenses, by removing the specific language in paragraph (b) regarding the payment of witnesses and instead cross-referencing to the more detailed rule for witness payments contained in revised § 19.14, discussed previously.

Lastly, the final rule makes a number of technical changes to subpart J. Specifically, the final rule replaces references to “the Comptroller” with “the OCC” in § 19.183(b) and (d) and in redesignated § 19.185 and replaces the term “representatives” with “designated representatives” in § 19.183(d)” to align the provisions more closely with the statute. The final rule also removes the references to the “Comptroller's delegate” in §§ 19.180 and 19.182 as the definition of “Comptroller” in § 19.3, which applies to subpart J, includes a person delegated to perform the functions of the Comptroller of the Currency. In addition, the final rule adds a reference to Federal branches and agencies in § 19.180 to more completely describe those entities that are subject to the OCC's examination authority. Finally, the final rule adds section headings to § 19.183.

Subpart K—Parties and Representational Practice Before the OCC; Standards of Conduct

Current subpart K of part 19 contains rules relating to parties and representational practice before the OCC. The final rule makes mostly technical changes to this subpart.

First, in § 19.190, Scope, the final rule makes a confirming change to a cross-reference to reflect this rulemaking's amendments to subpart D.

Second, the final rule amends the definition of “practice before the OCC” in § 19.191, Definitions. Currently, the OCC defines the term to include any matters connected with presentations to the OCC or any of its officers or employees relating to a client's rights, privileges, or liabilities under laws or regulations administered by the OCC. The final rule clarifies this statement so that it applies to both written and oral presentations. Section 19.191 also provides that the term “practice before the OCC” does not include work prepared for a bank solely at its request for use in the ordinary course of its business. The final rule amends this statement so that it also includes work prepared for a Federal savings association and a Federal branch or agency of a foreign bank, and changes “bank” to “national bank.” These changes are part of the OCC's application of part 19 to Federal savings associations and the OCC's specific inclusion of Federal branches and agencies in part 19 to clarify the application of part 19 to all entities supervised by the OCC.

Third, the final rule amends § 19.194, Eligibility of attorneys and accountants to practice, by removing the phrase “who is qualified to practice as an attorney” in paragraph (a) and the phrase “who is qualified to practice as a certified public accountant or public accountant” in paragraph (b). Section 19.191 defines the terms “attorney” and “accountant” and these definitions reference qualification requirements. Therefore, these phrases are superfluous.

Fourth, the final rule amends § 19.196, Disreputable conduct, which provides a nonexclusive list of disreputable conduct for which an individual may be censured, debarred, or suspended from practice before the OCC. Paragraph (d) of this section includes on this list disbarment or suspension from practice as an attorney or as a certified public accountant or public accountant by any duly constituted authority of any State, possession, or commonwealth of the United States or the District of Columbia for the conviction of a felony or misdemeanor involving moral turpitude in matters relating to the supervisory responsibilities of the OCC, where the conviction has not been reversed on appeal. The final rule deletes the phrase “in matters relating to the supervisory responsibilities of the OCC” so as not to limit the felony or misdemeanor conviction to only OCC-related matters. The OCC believes that an individual engaged in any of the conduct listed in this section, whether or not related to OCC supervisory matters, should not practice before the OCC.

Fifth, the final rule replaces the reference to the OTS in § 19.196(g) with “the former OTS,” as the OTS no longer exists.

Sixth, the final rule amends § 19.197, which provides the standards and rules for initiating disciplinary proceedings. Paragraph (a) of this section provides that an individual, including any employee of the OCC, who has reason to believe that an individual practicing before the OCC in a representative capacity has engaged in any conduct that would serve as a basis for censure, suspension, or debarment under § 19.192 (such as contemptuous conduct, materially injuring or prejudicing another party, violating a law or order, or unduly delaying proceedings) may report this conduct to the OCC or a person delegated to receive this information by the Comptroller. The final rule broadens the application of this paragraph to conduct under all of subpart K, which includes incompetence (§ 19.195) and disreputable conduct (§ 19.196), instead of conduct only under § 19.192. The OCC believes that an individual found to be incompetent or to have engaged in disreputable conduct also should be subject to a disciplinary proceeding under this section.

Seventh, the final rule amends § 19.198, Conferences, to add the terms “censure” in paragraph (a) and “debarment” in paragraph (b) to correct missing references. The final rule also changes the heading on § 19.198(b) from “Resignation or voluntary suspension” to “Voluntary suspension or debarment” so that it more accurately reflects the subject of the paragraph.

Eighth, the final rule amends § 19.200(a), which provides that if the final order against the respondent is for debarment the individual may not practice before the OCC unless otherwise permitted to do so by the Comptroller, by clarifying that the Comptroller's permission to permit such practice is pursuant to § 19.201. Section 19.201 provides that the Comptroller may entertain a petition for reinstatement after the expiration of the time period designated in the order of debarment and that the Comptroller may grant reinstatement only if satisfied that the petitioner is likely to act in accordance with part 19 and if granting reinstatement would not be contrary to the public interest. Section 19.201 further provides that any request for reinstatement is limited to written submissions unless the Comptroller, in their discretion, affords the petitioner a hearing. The amendment merely confirms that a debarred respondent only may be reinstated pursuant to the process set forth in § 19.201. It makes no substantive change. The final rule also revises the heading of § 19.200 to reflect the order of topics covered by the section.

Ninth, the final rule removes the references to the “Comptroller's delegate” in §§ 19.197(b) and (c), 19.199, and 19.200(d) as the definition of “Comptroller” in § 19.3, which applies to subpart K, includes a person delegated to perform the functions of the Comptroller of the Currency.

Finally, the final rule makes several minor, nonsubstantive wording changes throughout subpart K. In § 19.192(c), the NPR instruction stated that the OCC would replace the phrase “administrative law judge” with “ALJ” in one instance. The final rule replaces that phrase each time it appears in that section.

Subpart L—Equal Access to Justice Act

In general, EAJA,

codified at 5 U.S.C. 504, authorizes the payment of attorney's fees and other expenses to eligible parties who prevail over the United States in certain adversary adjudications, absent a showing by the government that its position was substantially justified or that special circumstances make an EAJA award unjust. EAJA requires each agency to issue rules that establish uniform procedures for the submission and consideration of applications for an EAJA award.

The OCC currently meets this requirement in subpart L of part 19, which provides that EAJA implementing regulations promulgated by the U.S. Department of the Treasury (Treasury), set forth at 31 CFR part 6, are applicable to formal adjudicatory proceedings under part 19. The final rule deletes the cross-reference to the Treasury regulation and amends subpart L to set forth EAJA regulations specifically applicable to certain OCC adversary adjudications conducted under part 19.

Public Law 96-481, title II, sec. 203(a)(1), (c) (1980), revived and amended Public Law 99-80, sec. 1, 6 (1985).

5 U.S.C. 504(c)(1). EAJA also requires that each agency issue its EAJA rule after consultation with the Chairman of ACUS. 5 U.S.C. 504(c)(1). Pursuant to instructions provided by ACUS in the preamble to the ACUS Model Rule,

see

84 FR 38934, the OCC notified the Office of the Chairman of ACUS of the proposed rule. ACUS did not suggest any changes to the OCC's proposal.

The OCC has based subpart L on the revised model rule implementing EAJA published in 2019 by the Administrative Conference of the United States (ACUS) (ACUS Model Rule).

As discussed below, the OCC has customized subpart L in certain places to reflect the OCC's procedures in adversary adjudications, reorganized a few provisions included in the ACUS Model Rule, made other changes based on the Treasury EAJA rule as well as the EAJA rules of the Board and FDIC,

and made non-substantive grammatical or stylistic changes. Although the Treasury, Board, and FDIC EAJA rules are based on earlier versions of the ACUS Model Rule, the OCC believes that these provisions remain useful and clarify the application of EAJA to OCC adversary proceedings.

84 FR 38934 (Aug. 18, 2019). ACUS originally issued an EAJA model rule in 1981 (46 FR 32900 (June 25, 1981)) and previously revised its model rule in 1986 (51 FR 16659 (May 6, 1986) (previously codified at 1 CFR part 315)). ACUS issued its model rule to assist agencies when adopting their EAJA rules and encourages agencies to set out and implement this model rule as part of their own EAJA rules.

Id.

The Treasury EAJA rule is based on the 1981 EAJA model rule.

12 CFR part 263, subpart G (Board) and 12 CFR part 308, subpart P (FDIC). Both the Board and FDIC EAJA rules are based on the earlier versions of the ACUS model rule.

Authority and Scope; Waiver

Section 19.205 describes the general purpose and scope of EAJA. Specifically, an eligible party may receive an award of attorney fees and other expenses when it prevails over an agency in certain administrative proceedings (adversary adjudications) unless the agency's position was substantially justified or special circumstances make an award unjust. Furthermore, as provided in the Treasury regulations, and as determined

by EAJA caselaw, this provision provides that no presumption under this subpart arises that the agency's position was not substantially justified because the agency did not prevail.

See

31 CFR 6.5.

See also

5 U.S.C. 504(a)(2).

31 CFR 6.8(d).

Although not included in EAJA or the ACUS Model Rule, § 19.207(c) provides that, upon receipt of an EAJA application, the OCC will to the extent feasible refer the matter to the official who heard the underlying adversary adjudication. The OCC believes that the official presiding over the adversary proceeding subject to the EAJA application is in the best position to review the EAJA application.

Net Worth Exhibit

Section 19.208 requires specific net worth documentation to accompany certain EAJA applications. This documentation is necessary to determine whether the applicant meets the definition of “party” under § 19.206(c) and therefore may be eligible for an EAJA award. Paragraph (a) requires an applicant, other than an applicant that is a non-profit or a cooperative association, to provide with its EAJA application a detailed exhibit of the applicant's, and where applicable, any of its affiliates', net worth at the time the adversary adjudication was initiated. Unless otherwise required, this paragraph permits this exhibit to be in any form convenient to the applicant that provides full disclosure of the applicant's and affiliates' assets and liabilities sufficient to determine whether the applicant qualifies under the standards of this subpart. Furthermore, this paragraph permits a presiding officer to require an applicant to file additional information to determine its eligibility for an award. These net worth exhibit requirements are taken from § 3.02 of the ACUS Model Rule, except that the final rule requires the net worth information from affiliates, where appropriate. Because of the structure and interrelatedness of many financial institutions, the OCC believes that affiliate net worth will often prove relevant when determining eligibility for an EAJA award. The OCC notes that the EAJA rules issued by Treasury, the Board, and the FDIC require net worth information from affiliates to determine eligibility under EAJA.

See

31 CFR 6.4(f) (Treasury); 12 CFR 263.105 (Board); and 12 CFR 308.177 (FDIC).

Section 19.208 also includes further provisions included in the Board's and the FDIC's EAJA regulations but not included in the ACUS Model Rule.

These provisions provide more detailed information as to what the OCC will accept in satisfaction of the net worth exhibit requirement or pertain specifically to national banks and Federal savings associations. Specifically, paragraph (a)(1) permits the use of unaudited financial statements for individual applicants as well as certain financial statements or reports submitted to a Federal or State agency for determining individual net worth, unless the presiding officer or the OCC otherwise requires. For applicants or affiliates that are not banks or savings associations, paragraph (a)(2) provides that net worth will be considered to be the excess of total assets over total liabilities as of the date the underlying proceeding was initiated. For banks and savings associations, paragraph (a)(3) requires the submission of a Consolidated Report of Condition and Income (Call Report) and provides that net worth is the total equity capital as reported in the Call Report filed for the last reporting date before the initiation of the proceeding.

Id.

Similar to § 3.02 of the ACUS Model Rule, paragraph (b) provides that the net worth exhibit will be included in the public record of the proceeding unless an applicant believes that there are legal grounds for withholding it from disclosure and requests that the documents be filed under seal or otherwise treated as confidential.

Documentation of Fees and Expenses

As provided in § 3.03 of the ACUS Model Rule, § 19.209 requires applications to be accompanied by adequate documentation of the fees and other expenses incurred after initiation of the adversary adjudication. This information is necessary to determine any EAJA award. Specifically, this section requires a separate itemized statement for each professional firm or individual whose services are covered by the application showing the hours spent in connection with the proceeding by each individual, a description of the specific services provided, the rate at which each fee has been computed, any expenses for which reimbursement is sought, the total amount claimed, and the total amount paid or payable by the applicant or by any other person or entity for the services provided. This section also authorizes a presiding officer to require an applicant to provide vouchers, receipts, or other substantiation for any fees or expenses claimed.

Unlike the ACUS Model Rule, this provision also provides that an application seeking an increase in fees to account for inflation pursuant to § 19.215(d)(1)(i), discussed below, also must include adequate documentation of the change in the consumer price index for the attorney or agent's locality.

Filing and Service of Documents

As in § 4.01 of the ACUS Model Rule, § 19.210 requires applications for an award, or any accompanying documentation related to an application, to be filed and served on all parties to the proceeding in accordance with § 19.11, Service of papers, except for confidential information pursuant to § 19.208(b).

Answer to Application

As provided in § 4.02 of the ACUS Model Rule, § 19.211 provides that Enforcement Counsel may file an answer to an EAJA application within 30 days after service of the application except in cases involving settlement negotiations under § 19.213. This section provides that failure to file an answer within 30 days may be treated as consent to the award requested unless Enforcement Counsel requests an extension of time for filing or files a statement of intent to negotiate a settlement under § 19.213. This section requires the answer to explain in detail any objections to the award requested and identify the facts supporting Enforcement Counsel's position. For any facts not already in the record of the proceeding, this section requires Enforcement Counsel to provide supporting affidavits or a request for further proceedings under § 19.214 with the answer. Unlike the ACUS Model Rule, § 19.211 does not include information related to settlement negotiations and instead cross-references to § 19.213, which discusses settlement of an EAJA award. The OCC believes that, for ease of use, all settlement provisions should be included in the same section of the regulation.

As in § 4.03 of the ACUS Model Rule, § 19.212 permits an applicant to reply within 15 days after service of an answer. For facts not already in the

record, the applicant is required to provide supporting affidavits or a request for further proceedings pursuant to § 19.214 with the answer.

Settlement

As in § 4.04 of the ACUS Model Rule, § 19.213 provides that the applicant and Enforcement Counsel may agree to a proposed settlement before final action on the application, either in connection with a settlement of the underlying proceeding or after conclusion of an underlying proceeding, in accordance with the OCC's standard settlement procedure pursuant to § 19.15, Opportunity for informal settlement. In a case where a prevailing party and Enforcement Counsel agree on a proposed settlement of an award before an EAJA application has been filed, this section requires the application to be filed with the proposed settlement. Section 19.213 also clarifies that, if a proposed settlement of an underlying proceeding provides for each side to pay its own expenses and the settlement is accepted, no application under this subpart may be filed. However, this section differs from § 4.04 of the ACUS Model Rule by including a provision the ACUS Model Rule includes in its section relating to an answer to an application, § 4.02. Specifically, § 19.213 specifies that, if after an application is submitted, Enforcement Counsel and the applicant believe that they can reach a settlement, they may file a joint statement of their intent to negotiate a settlement. Filing this statement will extend the time for filing an answer under § 19.211 for an additional 30 days. Further extensions could be granted by the presiding officer at the joint request of the applicant and Enforcement Counsel. As with § 19.211, the OCC believes that this provision is better placed in § 19.213 so that all settlement information is included in the same section of the regulation.

Further Proceedings

Ordinarily, the determination of an EAJA award would be made on the basis of the written record. However, § 19.214(a) permits an applicant or Enforcement Counsel to request the filing of additional written submissions, an informal conference, oral argument, discovery, or an evidentiary hearing with respect to issues other than whether the OCC's position was substantially justified, such as issues involving the applicant's eligibility or substantiation of fees or expenses. The presiding officer may permit these further proceedings if necessary for a full and fair decision on the application. The presiding officer also may order these additional proceedings on its own initiative. In addition, paragraph (a) requires that further proceedings be held as promptly as possible so as not to delay resolution of the EAJA application. The final rule lists applicant eligibility or substantiation of fees and expenses as examples of permissible issues for further proceedings. Paragraph (a) is based on § 4.05 of the ACUS Model Rule. However, § 19.214 does not contain the ACUS Model Rule's statement regarding the basis for a decision on whether the OCC's position was substantially justified. The OCC believes it is more appropriate to include this statement in § 19.215, Decision. In addition, to compile a more complete list of all available further proceedings, the final rule also permits the applicant or Enforcement Counsel to request an informal conference, which is not listed in the ACUS Model Rule.

As in § 4.05 of the ACUS Model Rule, § 19.214(b) requires that any request for further proceedings specifically identify the information sought or any disputed issues and explain why additional proceedings are necessary to resolve the issues.

Decision

The final rule's section on EAJA decisions, § 19.215, is based on 5 U.S.C. 504(a)(3) and in part on § 4.06 of the ACUS Model Rule. Section 19.215(a) provides that a presiding officer must base its decision on whether the position of the OCC was substantially justified on the administrative record as a whole of the adversary adjudication for which fees and other expenses are sought. The ACUS Model Rule includes this provision in its section on further proceedings, § 19.214. However, the OCC believes this requirement better belongs in the section of the regulation outlining EAJA decisions because it provides parameters for the presiding officer's decision.

As in § 4.06 of the ACUS Model Rule, § 19.215(b) mandates the timing of the presiding officer's decision. It requires the presiding officer to issue a recommended decision in writing on an EAJA application within 90 days after the time for filing a reply or within 90 days of the completion of further proceedings held pursuant to § 19.214.

The ACUS Model Rule provides that an agency may determine the specific time period for this section.

Also, as in § 4.06 of the ACUS Model Rule, paragraph (c) of § 19.215 provides that a decision must include written findings and conclusions on an applicant's eligibility and status as a prevailing party. The decision also must include, if applicable, an explanation of the reasons for any difference between the amount requested and the amount awarded, findings on whether the Enforcement Counsel's or OCC's position was substantially justified, whether the applicant unduly and unreasonably protracted the proceedings, or whether special circumstances make an award unjust. Paragraph (c) differs from § 4.06 of the ACUS Model Rule in that it includes language taken from § 4.05 of the ACUS Model Rule. Specifically, paragraph (c) provides that the presiding officer must determine whether or not the position of the OCC was substantially justified on the basis of the administrative record as a whole of the adversary adjudication for which fees and other expenses are sought. The OCC believes this provision is a better fit in the section of the regulation outlining EAJA decisions.

Section 19.215(d) provides the requirements for EAJA decisions. Paragraphs (d)(1), (2) and (3) of § 19.215 are not included in the ACUS Model Rule but are based on the EAJA statute, provisions included in the FDIC and Board EAJA rules,

and provisions included in the prior ACUS Model Rule that ACUS determined were largely substantive matters beyond the Conference's statutory charge.

The OCC believes that these provisions provide important details on the basis for EAJA award amounts that should apply to all EAJA applications and be included in its EAJA regulation.

12 CFR 263.106, 308.175.

See

84 FR 38934.

Specifically, § 19.215(d)(1) provides that EAJA awards may include the reasonable expenses of expert witnesses; the reasonable cost of any study, analysis, report, test, or project; and reasonable attorney or agent fees incurred after initiation of the adversary adjudication subject to the EAJA application. This paragraph also provides that the presiding officer will base awards on prevailing market rates for the kind and quality of the services furnished, even if the services were provided without charge or at reduced rate to the applicant. However, no award for the fee of an attorney or agent under this subpart may exceed the hourly rate specified in EAJA (5 U.S.C. 504(b)(1)(A)) except, as permitted by EAJA, to account for inflation as requested by the applicant and documented in the EAJA application or if a special factor, such as the limited availability of qualified attorneys or agents for the proceedings involved,

justifies a higher fee.

Pursuant to EAJA, this paragraph also prohibits an award for expert witness fees that exceed the highest rate paid for expert witnesses by the OCC.

5 U.S.C. 504(b)(1)(A).

Id.

Section 19.215(d)(2) provides factors the presiding officer should consider in determining the reasonableness of the attorney, agent, or expert witness fees. These factors are: (1) if in private practice, the attorney's, agent's, or witness' customary fee for similar services; (2) if an employee of the applicant, the fully allocated cost of the attorney's, agent's, or witness' services; (3) the prevailing rate for similar services in the community in which the attorney, agent, or witness ordinarily perform services; (4) the time actually spent in the representation of the applicant; (5) the time reasonably spent in light of the difficulty or complexity of the issues in the proceeding; and (6) any other factors as may bear on the value of the services provided.

Section 19.215(d)(3) provides parameters for the award of costs for any study, analysis, report, test, project, or similar matter. Specifically, the presiding officer may award the reasonable cost of these services prepared on behalf of the applicant to the extent that the charge for the service does not exceed the prevailing rate for similar services and the presiding officer finds that the service was necessary for preparation of the applicant's case.

As in § 4.06 of the ACUS Model Rule, § 19.215(d)(4) permits a presiding officer to reduce the amount to be awarded or deny an award to the extent that the party during the proceedings engaged in conduct that unduly and unreasonably protracted final resolution of the matter in controversy. Unlike § 4.06 of the ACUS Model Rule, paragraph (d)(4) also permits the presiding officer to reduce or deny the award if special circumstances make the award sought unjust. This provision is included in 5 U.S.C. 504(a)(1) and in the Treasury rule

and is noted in the authority and scope section of subpart L, § 19.205(a). The OCC believes it is helpful to include it in § 19.215 as this section is specifically related to the decision making of the presiding officer.

See

31 CFR 6.14.

Finally, § 19.215(e) provides that the Comptroller will issue a final decision on the EAJA application or remand the application to the presiding officer for further proceedings in accordance with § 19.40, Review by the Comptroller. This provision is not included in the ACUS Model Rule. However, the OCC believes that for clarity and completeness its EAJA rule should specify the final agency action on the EAJA application, as delineated in part 19.

Agency Review

As in § 4.07 of the ACUS Model Rule, § 19.216 allows an applicant or Enforcement Counsel to seek review of the presiding officer's decision on the EAJA application, in accordance with § 19.39, Exceptions to recommended decision. However, § 19.216 does not include the provision in the ACUS Model Rule that permits the agency to review the decision on its own initiative. The OCC does not believe that this provision is necessary because the regulation includes a separate provision in § 19.215(e), not included in the Model rule, that provides for a final decision on the EAJA application by the Comptroller or the Comptroller's remand of the application to the presiding officer for further proceedings.

Judicial Review

As provided by 5 U.S.C. 504(c)(2) and in § 4.08 of the ACUS Model Rule, § 19.217 provides for judicial review of final OCC decisions on awards in accordance with 5 U.S.C. 504(c)(2).

Stay of Decision Concerning Award

As in § 4.09 of the ACUS Model Rule, § 19.218 provides for an automatic stay of an EAJA proceeding until the OCC's final disposition of the decision on which the application is based and either the time period for judicial review has expired, or if judicial review is sought, final disposition is made by a court and no further judicial review is available.

Payment of Award

As in § 4.10 of the ACUS Model Rule, § 19.219 provides that an applicant seeking payment of an award must submit to the OCC's Litigation Group a copy of the final decision granting the award accompanied by a certification that the applicant will not seek review of the decision in the United States courts. This section also provides that the OCC pay any amount owed to an applicant within 90 days.

Subpart M—Procedures for Reclassifying an Insured Depository Institution Based on Criteria Other Than Capital

Current subpart M of part 19 and 12 CFR 165.8 set out procedures for reclassifying a national bank or Federal savings association, respectively, to a lower capital category based on criteria other than capital, pursuant to section 38 of the FDIA (12 U.S.C. 1831o) and the prompt corrective action rule, 12 CFR part 6. These procedures are substantively the same, and the final rule amends subpart M to include Federal savings associations in addition to national banks and removes § 165.8. As this subpart currently also applies to insured Federal branches of foreign banks, the final rule specifically includes insured Federal branches in the scope section.

Specifically, the final rule replaces the term “bank” each time it appears in subpart M with the term “insured depository institution,” and defines this term to mean an insured national bank, an insured Federal savings association, an insured Federal savings bank, or an insured Federal branch of a foreign bank. The final rule also replaces the incorrect reference to subpart M with a reference to part 6 in § 19.220. In addition, the final rule makes a conforming change to § 19.221(b)(3) to replace the phrase “a written appeal of the proposed classification” with “a written response to the proposed reclassification,” which is the terminology used elsewhere in this section. Furthermore, as in §§ 19.35, 19.112, and 19.120, the final rule adds paragraph (g)(3) to § 19.221 to provide rules governing electronic presentations in the course of a hearing. Specifically, this provision provides that, based on the circumstances of each hearing, the presiding officer may direct the use of, or any party may elect to use, an electronic presentation during the hearing. If required by the presiding officer, each party will be responsible for its own presentation and related costs unless the parties agree otherwise. As indicated previously, this new language is necessary to account for the routine use of electronic presentations that current part 19 does not address. The final rule also makes a conforming change in paragraph (g)(2) that allows, by stipulation of the parties or by order of the presiding officer, a court reporter or other authorized person to administer the required oath to a witness remotely without being in the physical presence of the witness. Additionally, the final rule revises the heading to subpart M to include insured depository institutions and to describe the subject of the subpart more accurately. Lastly, the final rule makes technical changes to 12 CFR 6.3, 6.4, 6.5, and 6.6 to remove the separate references to § 165.8 with respect to savings associations.

Subpart N—Order To Dismiss a Director or Senior Executive Officer

Current subpart N of part 19 and 12 CFR 165.9 set out procedures associated with an order to dismiss a director or senior executive officer of a national bank or Federal savings association, respectively, pursuant to an order issued under section 38 of the FDIA (12 U.S.C. 1831o) and, with respect to national banks, the prompt corrective action rule, 12 CFR part 6. Subpart N and § 165.9 are substantively the same, and the final rule applies subpart N to Federal savings associations in addition to national banks and removes § 165.9. The final rule also replaces the term “bank” each time it appears in § 19.230 with the term “insured depository institution” and defines the term based on section 3 of the FDIA (12 U.S.C. 1813(c)(2)) to mean an insured national bank, an insured Federal savings association, an insured Federal savings bank, or an insured Federal branch of a foreign bank.

The final rule also amends § 19.231(b). This paragraph currently provides that a director or senior executive officer who has been served with a directive for dismissal has 10 calendar days to file a written request for reinstatement, unless the OCC allows further time as requested of the Respondent. The final rule provides that failure by the Respondent to file this request within the specified time period will constitute a waiver of the opportunity to respond and consent to the dismissal. The OCC is adding this statement to the regulation to clarify the result of a failure to request reinstatement. The final rule also makes a stylistic revision to § 19.231(b) to remove passive sentence structure.

In addition, the final rule amends § 19.231(c), which currently requires that the OCC issue an order directing an informal hearing to commence no later than 30 days after receipt of the request for a hearing unless the respondent requests a later date. The final rule amends this provision to provide that a later hearing date may occur only if permitted by the OCC, and, therefore, the request for an extension will not be automatically approved. This change allows the OCC some discretion as to how far into the future a hearing may take place.

The final rule amends § 19.231(d) to provide rules governing electronic presentations in the course of a hearing. Specifically, the amendment provides that, based on the circumstances of each hearing, the presiding officer may direct the use of, or any party may elect to use, an electronic presentation during the hearing. If required by the presiding officer, each party will be responsible for its own presentation and related costs unless the parties agree otherwise. This new language is necessary to account for the routine use of electronic presentations that current part 19 does not address. The final rule also makes a conforming change in § 19.231(d)(5) to allow, by stipulation of the parties or by order of the presiding officer, a court reporter or other authorized person to administer the required oath to a witness remotely without being in the physical presence of the witness. The final rule also makes a clarifying change in paragraph (d)(1), Hearing procedures. Among other things, this paragraph currently provides that a Respondent has the right to introduce relevant written materials and to present oral argument. The final rule clarifies that these written materials and oral arguments may be made at the hearing. This clarification ensures that the Respondent is aware that this right is provided during the hearing and not outside of the hearing context. The final rule also moves the sentence regarding oral testimony and witnesses in paragraph (d)(1) to paragraph (d)(5) to better organize paragraph (d) and adds paragraph headings.

Furthermore, the final rule revises the heading of subpart N to describe the subject of the subpart more accurately.

Lastly, the final rule makes technical changes to 12 CFR 6.6 to remove the separate reference to § 165.9 with respect to Federal savings associations. Because §§ 165.8 and 165.9 are the only sections in current part 165, the final rule removes part 165 in its entirety.

Subpart O—Civil Money Penalty Inflation Adjustments

Current part 19, subpart O, and § 109.103 provide the statutorily required formula to calculate inflation adjustments for civil money penalties assessed against national banks and Federal savings associations, respectively. These sections also indicate that the OCC will publish, on or before January 15 of each calendar year, an annual notice in the

Federal Register

of the maximum penalties the OCC may assess. The final rule retains subpart O and removes § 109.103. No amendments are necessary to apply subpart O to Federal savings associations. The final rule amends the section heading to be more descriptive and makes a stylistic revision in paragraph (a) to remove passive sentence structure.

Subpart Q—Forfeiture of Franchise for Money Laundering or Cash Transaction Reporting Offenses

Twelve U.S.C. 93(d)(1) provides that the Comptroller will, after receiving notification from the U.S. Attorney General of a conviction of a criminal offense under section 1956 or 1957 of title 18 (18 U.S.C. 1956, 1957) or may, after receiving notification for the U.S. Attorney General of a conviction of a criminal offense under section 5322 or 5324 of title 31 (31 U.S.C. 5322, 5324), issue to the convicted national bank or Federal branch or agency of foreign bank a notice of the Comptroller's intent to terminate all rights, privileges and franchises of the bank or Federal branch or agency and to schedule a pretermination hearing. The offenses include financial crimes, including money laundering (18 U.S.C. 1956), engaging in monetary transactions in criminally derived property (18 U.S.C. 1957), and structuring transactions to evade reporting requirements (31 U.S.C. 5324). Twelve U.S.C. 1464(w) imposes the same requirement with respect to convicted Federal savings associations.

Part 19 currently does not include specific procedures for a charter pretermination hearing. The final rule adds a new subpart Q that sets forth Administrative Procedure Act (APA) compliant procedures for pretermination hearings, which will be conducted before a presiding officer appointed by the Comptroller. These procedures are largely analogous to the deposit insurance termination hearing procedures instituted by the FDIC and NCUA for insured State depository institutions and federally insured credit unions, respectively, that are convicted of the same offenses.

Specifically, § 19.250 makes subpart A applicable, except as provided in new subpart Q, to proceedings by the Comptroller to determine whether, pursuant to 12 U.S.C. 93(d) or 12 U.S.C. 1464(w), as applicable, to terminate all rights, privileges, and franchises of a national bank, Federal savings association, or Federal branch or agency convicted of a criminal offense under 18 U.S.C. 1956 or 1957 or 31 U.S.C. 5322 or 5324.

Section 19.251(a) provides that, after receiving written notification from the U.S. Attorney General of a conviction of a criminal offense under sections 18 U.S.C. 1956 or 1957 or 31 U.S.C. 5322 or 5324, the Comptroller will issue a written notice of intent to terminate all rights, privileges and franchises to the convicted national bank, Federal savings association, or Federal branch or agency and schedule a pretermination

hearing. Section 19.251(b) details the requisite contents of the notice and § 19.251(c) provides that failure to answer the notice will be deemed consent to the termination and that the Comptroller may order the termination. This notice of intent to terminate is similar to the notice in § 19.18 except that the subpart Q notice of intent lists the basis of termination pursuant to factors listed in § 19.253 instead of the statement of matters of fact or law; the time within which to file an answer in response to the notice of intent will be established by the presiding officer instead of by law or regulation; and the answer must be filed with the OCC instead of with OFIA. Section 19.251(d) provides that the OCC will serve the notice upon the national bank, Federal savings association, or Federal branch or agency in the manner set forth in § 19.11(c).

Section 19.252 provides that the Comptroller will designate a presiding officer to conduct the pretermination hearing. The presiding officer has the same powers set forth in § 19.5, including the discretion necessary to conduct the pretermination hearing in a manner that avoids unnecessary delay. Section 19.252 also provides that the presiding officer may limit the use of discovery and limit opportunities to file written memoranda, briefs, affidavits, or other materials or documents to avoid relitigating facts already stipulated to by the parties, conceded to by the institution, or otherwise already firmly established by the underlying criminal conviction.

Section 19.253 provides the factors the Comptroller will take into account when determining whether or not to terminate a franchise as set forth in 12 U.S.C. 93(d) and 1464(w). The factors are: (1) the extent to which directors or senior executive officials knew of or were involved in the criminal offense, (2) the extent to which the offense occurred despite the existence of policies and procedures within the institution designed to prevent the occurrence of the offense, (3) the extent to which the institution fully cooperated with law enforcement authorities regarding the investigation of the offense, (4) the extent to which the institution has implemented additional internal controls since the commission of the offense to prevent a reoccurrence, and (5) the extent to which the interest of the local community in having adequate deposit and credit services available would be threatened by the forfeiture of the franchise.

Lastly, § 19.254 delineates the right of judicial review under 12 U.S.C. 1818(h) of a termination order as required by 12 U.S.C. 93(d)(1)(C) and 1464(w)(1)(C).

Technical Changes

In addition to the technical changes discussed elsewhere in this

SUPPLEMENTARY INFORMATION

, the final rule makes technical changes throughout parts B through P by: (1) replacing the word “shall” with “must,” “will,” or other appropriate language, which is the more current rule writing convention for imposing an obligation and is the recommended drafting style of the

Federal Register

; (2) conforming citation styles and providing more detailed references to the cited statutes; (3) conforming abbreviations, including replacing the use of the term “administrative law judge” with “ALJ; (4) replacing gender references such as “him,” “his” or “her” with gender-neutral terminology; and (5) making other non-substantive grammatical, clarifying, organizational, and stylistic changes. The final rule also makes a technical change to 12 CFR 3.405, which references cease and desist proceedings with respect to minimum capital ratios, to remove the reference to part 109 for savings associations and replace it with part 19 because this final rule removes part 109 and applies part 19 to Federal savings associations. Similarly, this final rule makes a new technical change to § 150.570, which sets forth the rules governing the conduct of a hearing required under 12 U.S.C. 1464(n)(10)(B) for revocation of fiduciary powers, to replace the reference to part 109 with a reference to part 19.

B. Amendments to the Board's Local Rules—Final Rules

The Board is adopting a final rule to amend subpart B of part 263—the Board Local Rules Supplementing the Uniform Rules—and to create a new subpart K (§§ 263.450 through 263.457) establishing new rules governing all Board formal investigations. The new subpart K replaces subpart L of Regulation LL (12 CFR part 238), which is eliminated. The Board did not receive any comments on its proposed changes to the Local Rules and is adopting the proposed amendments.

The revised Local Rules in subpart B apply only to adjudicatory proceedings initiated on or after the effective date of this final rule, April 1, 2024. The previous version of the Local Rules in subpart B, which are included in appendix A to part 263 of this final rule, are applicable to all adjudicatory proceedings initiated before, April 1, 2024.

The Board revised its Local Rules to conform them to the changes in the Uniform Rules and to facilitate the use of electronic communications and technology in Board proceedings. In addition, to promote transparency and fairness, the Board added the new subpart K establishing rules governing all Board formal investigations and a new section in subpart B (§ 263.57) establishing rules for the imposition of sanctions in administrative proceedings. Because these new sections are modeled on the rules already adopted by other banking regulators, they promote uniformity in the rules of banking regulators. Subparts C through J of part 263 have not been amended and remain in effect.

Subpart B—Board Local Rules Supplementing the Uniform Rules

Section 263.52 Address for Filing

Section 263.52 provides an electronic mail address for papers to be filed electronically with the Secretary of the Board.

Section 263.53 Discovery Depositions

Section 263.53 requires parties to state in the application for a discovery deposition the manner (

e.g.,

remote means, in person) of the deposition, to note that the ALJ can consider the manner of the deposition in determining whether to grant or modify it, and to clarify that depositions can be conducted by remote means and witnesses can be sworn remotely.

Section 263.55 Board as Presiding Officer

Section 263.55 clarifies that when the Board designates itself, one of its members, or an authorized officer, to serve as presiding officer in a formal hearing, the authority of the Board or its designee will include all the authority provided to an ALJ under the rules governing formal hearings.

Section 263.57 Sanctions Related to Conduct in Adjudicatory Proceedings

Section 263.57 is a new section that establishes the rules governing the imposition of sanctions against parties or persons participating in administrative adjudicatory proceedings. The new section: (a) explicitly authorizes the ALJ to impose sanctions against parties or persons; (b) describes the sanctions the ALJ may impose; (c) describes procedures for imposing sanctions; and (d) establishes that the ALJ or the Board may impose other sanctions authorized by applicable statute or regulation.

Subpart K—Formal Investigative Proceedings

Subpart K is a new subpart that establishes a single set of rules governing formal investigations for all Board-regulated organizations and any other entity or individual that the Board has authority to investigate or bring an enforcement action against. Subpart K, which is modeled on the investigative procedures of other Federal financial industry enforcement agencies, defines a formal investigative proceeding by the Board and its scope; delineates some of the powers of the Board's designated representatives conducting formal investigative proceedings; requires the confidentiality of formal investigative proceedings; provides for certain rights of witnesses in formal investigative proceedings; and establishes investigative subpoena procedures. Subpart K governs only the conduct of formal investigations; administrative adjudicatory proceedings continue to be governed by the Board's Uniform Rules and Local Rules (12 CFR part 263, subparts A and B).

C. Amendments to the FDIC's Local Rules—Final Rules

The FDIC is adopting a final rule to amend its Local Rules set forth at 12 CFR part 308, subpart B, General Rules of Procedure, which supplement the Uniform Rules set forth in 12 CFR part 308, subpart A. The FDIC did not receive any comments to the Local Rules and for the reasons stated herein and in the proposed rule, the FDIC is adopting the amendments as proposed.

The FDIC included a new § 308.100 as a technical change to clarify the applicability date of the revised Local Rules set forth in subpart B of this part. The newly revised rules only apply to adjudicatory proceedings initiated on or after the effective date of this final rule, April 1, 2024. Any adjudicatory proceedings initiated before April 1, 2024, continue to be governed by the previous version of the Local Rules included in appendix A in part 308 of this final rule.

The FDIC revised its Local Rules to reflect the current processes and procedures routinely ordered by the administrative law judges (ALJs) that mirror procedures followed in the Federal court system. The FDIC also added new provisions regarding modern discovery practices, depositions, and disclosure of expert witness testimony to promote cooperation, fairness, and transparency. Similar to the changes in the Uniform Rules, the FDIC updated the language throughout its Local Rules to reflect the modernized language used in rulemaking.

Section 308.100 Applicability Date

Section 308.100 was a technical change created to explain the applicability date of its revised Local Rules.

Section 308.102 Authority of Board of Directors and Administrative Officer

Section 308.102 was updated to reflect the current internal organization of the FDIC.

Section 308.103 Assignment to Administrative Law Judge (ALJ)

Section 308.103 was renamed to better reflect additional changes to how matters are assigned to an ALJ.

Section 308.104 Filings With the Board of Directors

Section 308.104 provides an electronic mail address for the FDIC's Administrative Officer, who is the official custodian of the record for administrative proceedings, and with whom all parties must file an electronic copy of all pleadings.

Section 308.107 Supplemental Discovery Rules

Section 308.107 was renamed to reflect the updates to the FDIC's discovery processes to include modern discovery practices and procedural orders issued by the ALJs and to allow for limited depositions.

Section 308.107(a) Scope of Discovery

Section 308.107(a) describes the permitted scope of discovery. The FDIC adopted the concept of “proportionality” in discovery production and set forth limits on electronically-stored information (ESI).

Section 308.107(b) Joint Discovery Plan

Section 308.107(b) adds a Joint Discovery Plan to the discovery process.

Section 308.107(c) Document and Electronically Stored Information (ESI) Discovery

Section 308.107(c) integrates the Local Rules with the Uniform Rules.

Section 308.107(d) Expert Witness Disclosures

Section 308.107(d) describes the required disclosures for expert witness testimony. Section 308.107(d)(2)(i) applies to professional experts who generally do not work for a party but are specifically engaged for the purpose of providing expert testimony. Section 308.107(d)(2)(ii) applies to those individuals whose expertise comes from the person's regular course of business such as, a commissioned bank examiner or bank personnel, who will be offered as an expert witness at the hearing.

Section 308.107(e) Depositions

Section 308.107(e) allows parties to pursue limited discovery depositions of individuals with direct knowledge of facts relevant to the proceeding and individuals designated as expert witnesses. Section 308.107(e)(1) authorizes deposition discovery only to the extent that it is proportional to the needs of the case and the information sought from the depositions cannot be obtained from another source that is more convenient, less burdensome, or less expensive. In the absence of extraordinary circumstances, depositions are limited to individuals expected to testify at the hearing.

Section 308.107(f) Discovery Motions

Section 308.107(f) clarifies certain matters related to discovery motions. Section 308.107(f)(1) clarifies that the ALJ must limit inappropriate discovery either on motion, or on their own initiative. Section 308.107(f)(2) provides that parties may move to terminate depositions that are being conducted in bad faith or an inappropriate manner. Section 308.107(f)(3) clarifies that the provisions of § 308.25(f), governing motions to compel document discovery, apply equally to all motions to compel discovery.

V. Discussion of OCC Changes to Part 4, Service of Process

The final rule amends subpart A of 12 CFR part 4, Organization and Functions, to add a new § 4.8 that addresses service of process. This new provision puts private parties on notice of the established process they should use in serving the OCC, Comptroller, or officers or employees of the OCC in a private action. The OCC is codifying this process in the final rule to help avoid possible confusion as to where and how private parties serve the OCC, Comptroller, or officers or employees of the OCC and to ensure that the OCC has adequate notice to respond to a complaint or other filing. The final rule provides that “officers” are officials who are not employees of the OCC, such as an ALJ.

Specifically, § 4.8(a) provides that § 4.8(b), (c), and (d) apply to service of process upon the OCC, the Comptroller acting in their official capacity, officers or employees of the OCC who are sued in their official capacity, and officers or employees of the OCC who are sued in an individual capacity for an act or omission occurring in connection with

duties performed on the behalf of the OCC. Section 4.8(b) provides that service of process for actions in Federal courts should be made upon the OCC, the Comptroller, or officers or employees of the OCC by serving the United States under the procedures set forth in the Federal Rules of Civil Procedure governing the service of process upon the United States and its agencies, corporations, officers, or employees.

Section 4.8(c) provides that service of process for actions brought in State courts should be made upon the OCC, the Comptroller, or officers or employees of the OCC by sending copies of the summons and complaint by registered or certified mail to the Chief Counsel, Office of the Comptroller of the Currency, Washington, DC 20219. Section 4.8(c) also encourages parties to provide copies of the summons and complaint to the appropriate United States Attorney in accordance with the procedures set forth in the Federal Rules of Civil Procedure governing the service of process upon the United States and its agencies, corporations, officers, or employees.

Section 4.8(d) provides that only the Washington, DC headquarters office of the OCC is authorized to accept service of a summons or complaint and that the OCC, the Comptroller, or officers or employees of the OCC should be served with a copy of the summons or complaint at the Washington, DC headquarters office in accordance with § 4.8(b) or (c). This provision clarifies that a summons or complaint should not be sent to another office of the OCC.

See

Rule 4(i) of the Federal Rules of Civil Procedure.

Id.

Finally, § 4.8(e) provides that the OCC is not an agent for service of process upon a national bank, Federal savings association, or Federal branch or agency of a foreign bank. Instead, it directs parties to serve a summons or complaint upon the institution in accordance with the laws and procedures for the court in which the action has been filed. The OCC intends this provision to prevent further instances of parties attempting to serve a national bank through the OCC.

As indicated above, the OCC did not receive any comments on the proposed amendments to part 4 and is adopting them as proposed with one technical correction. The proposed rule set forth the incorrect authority section for part 4. The final rule includes the correct authority section, which is unchanged from the current rule.

VI. Regulatory Analysis

A. Regulatory Flexibility Act

OCC:

The Regulatory Flexibility Act (RFA)

requires an agency, in connection with a rule, to prepare a Final Regulatory Flexibility Analysis (FRFA) describing the impact of the rule on small entities (defined by the Small Business Administration (SBA) for purposes of the RFA to include commercial banks and savings institutions with total assets of $850 million or less and trust companies with total assets of $47 million or less)

or to certify that the final rule would not have a significant economic impact on a substantial number of small entities.

5 U.S.C. 601

et seq.

See

the SBA's size thresholds for commercial banks and savings institutions, and trust companies, 13 CFR 121.201.

The OCC currently supervises approximately 1,070 institutions (commercial banks, trust companies, Federal savings associations, and branches or agencies of foreign banks, collectively banks), of which 661 are small entities.

The final rule could impact any OCC-supervised institution, including any of these small entities. However, it is unlikely that the rule would impact more than a

de minimis

number of OCC-supervised institutions in any given year.

Furthermore, the rule would facilitate the orderly determination of administrative proceedings and its proposed changes are primarily updates and clarifications of administrative procedure and in general reflect current practices. Therefore, the OCC concludes that the final rule would not impose more than minimal costs on institutions that may be impacted. Because the OCC estimates that expenditures, if any, associated with the final rule would be

de minimis,

the OCC certifies that the final rule does not have a significant economic impact on a substantial number of small entities supervised by the OCC. Accordingly, an FRFA is not required.

Consistent with the General Principles of Affiliation 13 CFR 121.103(a), the OCC counts the assets of affiliated financial institutions when determining if it should classify an institution as a small entity. The OCC used December 31, 2022, to determine size because a “financial institution's assets are determined by averaging the assets reported on its four quarterly financial statements for the preceding year.”

See

footnote 8 of the SBA's

Table of Size Standards.

Based on activity during the past five years, approximately 23 banks (an average of less than 5 per year) would be impacted by the proposed changes to part 19, subparts A, B, C, I, L, and M. Furthermore, during the past five years the OCC has not received any Equal Access to Justice Act (EAJA) applications from a bank for the payment of attorney's fees.

Board:

In accordance with the Regulatory Flexibility Act (RFA),

the Board published an initial regulatory flexibility analysis in the notice of proposed rulemaking. The Board did not receive any comments on its initial regulatory flexibility analysis. The RFA also requires an agency to prepare a final regulatory flexibility analysis generally describing the impact of the rule on small entities, unless the agency certifies that the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.

Under regulations issued by the Small Business Administration, a small entity includes a bank, bank holding company, or savings and loan holding company with assets of $850 million or less and trust companies with annual receipts of $47 million or less.

5 U.S.C. 601

et seq.

5 U.S.C. 604; 605(b).

13 CFR 121.201.

Consistent with the analysis included in the initial regulatory flexibility analysis, the Board certifies that the final rule will not have a significant economic impact on a substantial number of small entities. As explained above, the Agencies are amending the Uniform Rules and their local rules to recognize the use of electronic communications in all aspects of administrative hearings and to otherwise increase the efficiency and fairness of administrative adjudications. In addition, the Board is establishing a single set of rules governing all formal investigations. These rules only establish procedures governing Board formal investigations and adjudicatory proceedings. The rules do not impose any requirement on regulated entities, and regulated entities would not need to take any action in response to the proposed rules. The rules will only apply to regulated entities if they become parties to administrative adjudications or are subject to formal investigations, which is unusual. Therefore, the rules will not have a significant economic impact on a substantial number of small entities.

FDIC:

The RFA requires that, in connection with a final rule, an agency prepare and make available for public comment a final regulatory flexibility analysis that describes the impact of the final rule on small entities.

However, a regulatory flexibility analysis is not required if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities, and publishes its certification and a short explanatory

statement in the

Federal Register

together with the rule. The SBA has defined “small entities” to include banking organizations with total assets of less than or equal to $850 million.

Generally, the FDIC considers a significant effect to be a quantified effect in excess of 5 percent of total annual salaries and benefits per institution, or 2.5 percent of total noninterest expenses. The FDIC believes that effects in excess of one or more of these thresholds typically represent significant effects for FDIC-supervised institutions.

5 U.S.C. 601

et seq.

The SBA defines a small banking organization as having $850 million or less in assets, where “a financial institution's assets are determined by averaging the assets reported on its four quarterly financial statements for the preceding year.” See 13 CFR 121.201 (as amended by 87 FR 69118, effective December 19, 2022). “SBA counts the receipts, employees, or other measure of size of the concern whose size is at issue and all of its domestic and foreign affiliates.” See 13 CFR 121.103. Following these regulations, the FDIC uses a covered entity's affiliated and acquired assets, averaged over the preceding four quarters, to determine whether the FDIC-supervised institution is “small” for the purposes of RFA.

As of the quarter ending December 30, 2022, the FDIC supervised 3,038 depository institutions,

of which 2,325 were considered small for the purposes of the RFA.

FDIC-supervised institutions are set forth in 12 U.S.C. 1813(q)(2).

FDIC Call Report data, December 31, 2022.

As previously discussed, the Agencies are amending the Uniform Rules to recognize the use of electronic communications in all aspects of administrative hearings and to otherwise increase the efficiency and fairness of administrative adjudications. The FDIC is also modifying the Local Rules of administrative practice and procedure. The amendments apply to administrative proceedings held by the FDIC and impose no significant additional burdens on small entities. Further, the FDIC typically brings less than five formal administrative proceedings annually. Therefore, the FDIC concludes that the final rule will not have a significant impact on a substantial number of small entities. For the reasons described above and pursuant to 5 U.S.C. 605(b), the FDIC certifies that the final rule will not have a significant economic impact on a substantial number of small entities.

NCUA:

The RFA generally requires that, in connection with a rulemaking, an agency prepare and make available for public comment regulatory flexibility analysis that describes the impact of a proposed rule on small entities. A regulatory flexibility analysis is not required, however, if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities (defined for purposes of the RFA to include federally insured credit unions with assets less than $100 million) and publishes its certification and a short, explanatory statement in the

Federal Register

together with the rule. The final rule amends the Uniform Rules to recognize the use of electronic communications in all aspects of administrative hearings and to otherwise increase the efficiency and fairness of administrative adjudications. The changes consist of updates and clarifications of administrative procedure and impose no significant new burdens on credit unions, parties to administrative actions, or counsel. Also, only a small number of federally insured credit unions and institution-affiliated parties are subject to actions that the final rule will govern, as the NCUA currently has only one pending proceeding and generally files a small number of cases. Accordingly, the NCUA certifies that the final rule will not have a significant economic impact on a substantial number of small credit unions.

B. Paperwork Reduction Act

The Paperwork Reduction Act of 1995

(PRA) states that no agency may conduct or sponsor, nor is the respondent required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The Agencies have reviewed this final rule and determined that it does not create any information collection or revise any existing collection of information. Accordingly, no PRA submissions will be made to the OMB with respect to this final rule. The Board reviewed the rule under the authority delegated to the Board by the OMB.

44 U.S.C. 3501-3521.

C. OCC Unfunded Mandates Reform Act of 1995

The OCC analyzed the rule under the factors set forth in the Unfunded Mandates Reform Act of 1995 (UMRA).

Under this analysis, the OCC considered whether the final rule includes a Federal mandate that may result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year ($182 million as adjusted for inflation). The UMRA does not apply to regulations that incorporate requirements specifically set forth in law.

2 U.S.C. 1532.

As discussed above, the OCC estimates that expenditures, if any, associated with the final rule would be

de minimis.

Therefore, the OCC concludes that the proposed rule would not result in an expenditure of $182 million or more annually by State, local, and Tribal governments, or by the private sector. Because the final rule does not trigger the UMRA cost threshold, the OCC has not prepared the written statement described in section 202 of the UMRA.

D. Riegle Community Development and Regulatory Improvement Act

Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act (RCDRIA),

in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions (IDIs), the OCC, Board, and FDIC

must consider, consistent with principles of safety and soundness and the public interest: (1) any administrative burdens that such regulations would place on depository institutions, including small depository institutions, and customers of depository institutions; and (2) the benefits of such regulations. In addition, section 302(b) of RCDRIA requires new regulations and amendments to regulations that impose additional reporting, disclosures, or other new requirements on IDIs generally to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form.

12 U.S.C. 4802(a).

RCDRIA does not apply to the NCUA.

12 U.S.C. 4802.

With respect to administrative compliance requirements, the OCC, Board, and FDIC have considered the administrative burdens and the benefits of this final rule and believes that any burdens are necessary for proper OCC, Board, and FDIC supervision and also to update and conform the OCC's, Board's and FDIC's rules to current practices. As examples, the final rule allows for electronic filing of documents and expands the definition of the term “document” in discovery to account for the range of digital information now available. The final rule's benefits include clarifying existing requirements, codifying existing practice, removing unnecessary provisions, and updating and modernizing certain provisions. Further discussion of the consideration

by the OCC, Board, and FDIC of these administrative compliance requirements is found in other sections of the final rule's

SUPPLEMENTARY INFORMATION

section.

Because this final rule is published on December 28, 2023, the April 1, 2024, effective date complies with the RCDRIA requirement that a rule take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form.

E. Plain Language

Section 722 of the Gramm-Leach-Bliley Act

requires the OCC, Board, and FDIC

to use plain language in all proposed and final rules published after January 1, 2000. The Agencies have sought to present the final rule in a simple and straightforward manner. The Agencies received no comments on the use of plain language in the proposed rule.

Public Law 106-102, section 722, 113 Stat. 1338, 1471 (1999), 12 U.S.C. 4809.

This requirement does not apply to the NCUA.

F. NCUA Executive Order 13132

Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on State and local interests. In adherence to fundamental federalism principles, the NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the principles of the Executive Order. This rulemaking will not have a substantial direct effect on the states, on the connection between the National Government and the states, or on the distribution of power and responsibilities among the various levels of government. The final rule amends the Uniform Rules to recognize the use of electronic communications in all aspects of administrative hearings and to otherwise increase the efficiency and fairness of administrative adjudications. The NCUA does not believe these changes will affect or alter the NCUA's relationship with State agencies or bodies that supervise federally insured, State-chartered credit unions or the division of supervisory responsibilities between the NCUA and these agencies or bodies. For example, the final rule does not affect the NCUA's requirement to provide notice to the commission, board, or authority having supervision of a State-chartered credit union of the NCUA's intent to institute certain enforcement actions and the grounds for them.

The NCUA has determined that this final rule does not constitute a policy that has federalism implications for purposes of the Executive Order.

See, e.g.,

12 U.S.C. 1786(o).

G. NCUA Assessment of Federal Regulations and Policies on Families

The NCUA has determined that this final rule will not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999.

As discussed in the preceding regulatory procedure paragraphs, the final rule makes changes to procedural rules that apply to federally insured credit unions and institution-affiliated parties. These rules have no direct connection to families and their well-being, and the NCUA historically has brought only a small number of cases under these rules.

Public Law 105-277, 112 Stat. 2681 (1998).

H. The Congressional Review Act

For purposes of the Congressional Review Act,

the Office of Management and Budget (OMB) makes a determination as to whether a final rule constitutes a “major” rule. If a rule is deemed a “major rule” by the OMB, the Congressional Review Act generally provides that the rule may not take effect until at least 60 days following its publication.

The Congressional Review Act defines a “major rule” as any rule that the Administrator of the Office of Information and Regulatory

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