Appraisal Subcommittee; Appraiser Regulation; Freedom of Information Act Implementation

FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL

12 CFR Part 1102

[Docket No. AS94-1]

Appraisal Subcommittee; Appraiser Regulation; Freedom of

Information Act Implementation

AGENCY: Appraisal Subcommittee, Federal Financial Institutions

Examination Council.

ACTION: Final rules.

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SUMMARY: The Appraisal Subcommittee (``ASC'') of the Federal Financial

Institutions Examination Council is adopting amendments to the portion

of its regulations regarding the availability of information to enable

interested persons: To obtain copies of ASC final opinions and orders

in adjudications, statements of general policy not published in the

Federal Register, interpretive, no-action requests and responses and

certain other correspondence related to ASC field reviews; to request

confidential treatment of information subject to a Freedom of

Information Act (``FOIA'') request; and to petition for the issuance,

amendment or repeal of an ASC rule.

EFFECTIVE DATE: February 14, 1994.

FOR FURTHER INFORMATION CONTACT:

Edwin W. Baker, Executive Director, or Marc L. Weinberg, General

Counsel, at (202) 634-6520, Appraisal Subcommittee, 2100 Pennsylvania

Avenue NW., suite 200, Washington, DC 20037.

SUPPLEMENTARY INFORMATION:

I. Background and Authority

FOIA, 5 U.S.C. 552, generally requires each Federal agency to make

available to the public information regarding its organization,

operation, rules of procedure, substantive rules and interpretations of

general applicability and statements of general policy. 5 U.S.C.

552(a)(1). In addition, each agency, in accordance with published

rules, must ``make available for public inspection and copying--(A)

final opinions, * * * as well as orders, made in the adjudication of

cases; (B) those statements of policy and interpretations which have

been adopted by the agency and are not published in the Federal

Register, and (C) administrative staff manuals and instructions to

staff that affect a member of the public * * *.'' 5 U.S.C. 552(a)(2).

Certain documents and portions thereof, however, can be withheld from

disclosure under one or more statutory exemptions set out in FOIA, 5

U.S.C. 552(b), or the Privacy Act of 1974, 5 U.S.C. 552a.\1\

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\1\On December 14, 1992, the ASC adopted 12 CFR part 1102,

subpart D, implementing the ASC's basic program for complying with

FOIA. See 57 FR 60722 (December 22, 1992). And, on August 7, 1992,

the ASC adopted 12 CFR part 1102, subpart C, implementing the

Privacy Act. See 57 FR 36356 (August 13, 1992).

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Executive Order No. (``EO'') 12600, 52 FR 23781 (June 23, 1987),

generally requires each agency subject to FOIA to establish procedures

to notify submitters of records containing confidential commercial

information when those records are requested under FOIA and the agency

determines that the information may be required to disclose that

information.

Paragraph (e) of 5 U.S.C. 553 requires each agency to give an

interested person the right to petition for the issuance, amendment or

repeal of a rule.

On October 13, 1993, the ASC proposed for comment several

amendments to its related regulations in 12 CFR part 1102, subpart D

(1993), to implement these authorities. The comment period closed on

December 9, 1993, and no written comments were received. The ASC,

however, received and incorporated into the final version of the

amendments oral comments of a technical nature from the Office of

Management and Budget (``OMB'').

II. Description of the Final Amendments

The ASC is adopting technical amendments to subpart D--new

Secs. 1102.305, .306 and .307--to implement the provisions summarized

above. In that regard, new Sec. 1102.305 clarifies that certain written

communications, such as the ASC's annual report to Congress; all final

opinions and orders made in the adjudication of cases; all statements

of general policy not published in the Federal Register, and incoming

and outgoing correspondence concerning interpretive, no-action and

State review matters, shall be made publicly available on a routine

basis no sooner than ten business days after the ASC or its staff sends

or gives the item of correspondence to the affected person or persons.

Next, the ASC is adopting Sec. 1102.306, consistent with EO 12600,

to provide predisclosure notification procedures for confidential

commercial information. Under paragraph (a) of the new section, a

submitter of written information to the ASC who wants some or all of

that information to be treated as confidential information under 5

U.S.C. 552(b)(4) may file a request for confidential treatment with the

ASC at the time the information is submitted to the ASC or soon

thereafter. Confidential information means ``trade secrets and

commercial or financial information obtained from a person and

privileged or confidential,'' as stated in section 552(b)(4).

New paragraphs (b) and (c) of Sec. 1102.306 deal with the form of

the request. They require the submitter to include in reasonable detail

the facts and arguments supporting the request and its legal

justification, to designate clearly all information considered

confidential and to separate clearly such information from other non-

confidential information, whenever possible.

Paragraph (d) of the section notes that a request for confidential

treatment will be considered by the ASC only in connection with a FOIA

request for access to the claimed confidential information under FOIA.

That is, the ASC will not determine whether the request for

confidential treatment should be granted or denied, in whole or in

part, when the request is received by the ASC. The ASC, however, will

process the request upon receipt to ensure that it is complete and

would place it with the related information submission. If a FOIA

request were made respecting that information, the ASC then will be

required to send written notices to the submitter and the FOIA

requester. The submitter will have no longer than ten business days to

file written objections to the ASC's disclosure of the information. The

ASC may provide a submitter with a notice even if the submitter did not

request confidential treatment of the requested information.\2\

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\2\If the ASC required the submitter to provide the requested

information, the ASC would need to have substantial reason to

believe that disclosure of the requested information would result in

substantial competitive harm to the submitter. On the other hand, if

the submitter provided the information voluntarily to the ASC, the

ASC would need to believe that the information is of a kind that the

submitter would not customarily make available to the public. See

Critical Mass Energy Project v. Nuclear Regulatory Commission, 975

F.2d 871 (D.C. Cir. 1992), cert. denied 113 S. Ct. 1579 (1993).

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These notice requirements will not have to be followed under

certain stated circumstances, such as if the ASC determines under this

subpart that the information should not be disclosed. The ASC must

carefully consider the issues involved and, if disclosure of the

requested information is warranted, a written notice containing a brief

description of why the submitter's objections were not sustained must

be forwarded to the submitter within ten business days. The time for

response may be extended up to ten additional business days, as

provided in 5 U.S.C. 552(a)(6)(B), of for other periods by agreement

between the requester and the ASC. This notice shall be provided to the

submitter at least five business days prior to release of the requested

information. Last, the ASC will be required to notify a submitter

promptly of any filing of any suit against the ASC pursuant to 5 U.S.C.

552 to compel disclosure of documents or information covered by the

submitter's request for confidential treatment, and conversely, will be

required to notify the requester of the documents or information of any

suit filed by the submitter against the ASC to enjoin disclosure.

Finally, Sec. 1102.307 would provide an interested person with the

right to petition the ASC for the issuance, amendment or repeal of a

rule, thus implementing 5 U.S.C. 553(e).

III. Conclusion

For the reasons stated above, the ASC has determined to adopt the

amendments to subpart D of part 1102 to implement 5 U.S.C. 552 and

553(e) and EO 12600.

IV. Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1980, 44 U.S.C.

35, forms, reporting and recordkeeping requirements included in 12 CFR

part 1102, subpart D, Secs. 1102.305, 1102.306 and 1102.307 were

submitted for review and approval to OMB. See 58 FR 54153 (October 20,

1993). OMB approved these sections, as revised by this final rule,

until December 31, 1996, and assigned them control number 3139-0006.

The public reporting burden for the collection of information

requirements contained in these sections are estimated to include the

time for reviewing instructions, searching existing data sources,

gathering and maintaining the data needed and completing and reviewing

the collection of information. The sections would enhance the ASC's

FOIA program, would conform the ASC's rules and regulations to EO

12600, and would specifically provide for the public's petition rights

under 5 U.S.C. 553(e). The estimated number of respondents each year is

100 for Sec. 1102.305, two for Sec. 1102.306 and one for Sec. 1102.307,

with an estimated average reporting burden of .5 hours per response and

an estimated annual total reporting burden of 51.5 hours.

V. Regulatory Flexibility Act Statement

Pursuant to section 605(b) of the Regulatory Flexibility Act, the

ASC certifies that Secs. 1102.305, 1102.306 and 1102.307 are not

expected to have a significant economic impact on a substantial number

of small entities. The rules will fully implement FOIA, EO 12600 and 5

U.S.C. 553(e). None of these authorities addresses business or

corporate entities. Accordingly, a regulatory flexibility analysis is

not required.

VI. EO 12866 Statement

These rules were reviewed by the Office of Information and

Regulatory Affairs of OMB.

List of Subjects in 12 CFR Part 1102

Administrative practice and procedure, Appraisers, Banks, Banking,

Freedom of information, Mortgages, Reporting and recordkeeping

requirements.

Text of the Rule

Chapter XI, title 12, part 1102, subpart D of the Code of Federal

Regulations is amended as set forth below:

PART 1102--APPRAISER REGULATION

Subpart D--Description of Office, Procedures, Public Information

1. The authority citation for subpart D is revised to read as

follows:

Authority: 5 U.S.C. 552, 553(e); and Executive Order 12600, 52

FR 23781 (3 CFR, 1987 Comp., p. 235).

2. New sections 1102.305, 1102.306 and 1102.307 are added to read

as follows:

Sec. 1102.305 Availability of interpretive, no-action and other

written communications.

(a) In general. Subject to the provisions of Sec. 1102.304 and

subpart C of this part, certain types of ASC written communications

shall be made publicly available upon request.

(b) Types of written communications. The following types of written

communications shall be subject to paragraph (a) of this section:

(1) The ASC's annual report to Congress;

(2) All final opinions and orders made in the adjudication of

cases;

(3) All statements of general policy not published in the Federal

Register.

(4) Requests for the ASC or its staff to provide interpretive

advice with respect to the meaning or application of any statute

administered by the ASC or any rule or regulation adopted thereunder

and any ASC responses thereto;

(5) Requests for a statement that, on the basis of the facts

presented in such a request, the ASC would not take any enforcement

action pertaining to the facts as represented and any ASC responses

thereto: and

(6) Correspondence between the ASC and a State appraiser regulatory

agency arising out of the ASC's field review of the State agency's

appraiser regulatory program.

(c) Embargo period. Unless the ASC determines otherwise, the

written communications in paragraph (b) of this section shall be made

publicly available no sooner than ten business days after a written

response has been sent or given to the affected person or persons.

Sec. 1102.306 Confidential treatment procedures.

(a) In general. Any submitter of written information to the ASC who

desires that some or all of his or her submission be afforded

confidential treatment under 5 U.S.C. 552(b)(4) (i.e., trade secrets

and commercial or financial information obtained from a person and

privileged or confidential) shall file a request for confidential

treatment with the Executive Director of the ASC at the time the

written information is submitted to the ASC or within ten business days

thereafter. Nothing in this section limits the authority of the ASC and

its staff to make determinations regarding access to documents under

this subpart.

(b) Form of request. A request for confidential treatment shall be

submitted in a separate letter or memorandum conspicuously entitled,

``Request for Confidential Treatment.'' Each request shall state in

reasonable detail the facts and arguments supporting the request and

its legal justification. If the submitter had been required by the ASC

to provide the particular information, conclusory statements that the

information would be useful to competitors or would impair sales or

similar statements generally will not be considered sufficient to

justify confidential treatment. When the submitter had voluntarily

provided the particular information to the ASC, the submitter must

specifically identify the documents or information which are of a kind

the submitter would not customarily make available to the public.

(c) Designation and separation of confidential material. Submitters

shall clearly designate all information considered confidential and

shall clearly separate such information from other non-confidential

information, whenever possible.

(d) ASC action on request. A request for confidential treatment of

information will be considered only in connection with a request for

access to the information under FOIA as implemented by this subpart.

Upon the receipt of a request for access, the Executive Director or his

or her designee (``ASC Officer'') as soon as possible shall provide the

submitter with a written notice describing the request and shall

provide the submitter with a reasonable opportunity, no longer than ten

business days, to submit written objections to disclosure of the

information. Notice may be given orally, and such notice shall be

promptly confirmed in writing. The ASC Officer may provide a submitter

with a notice if the submitter did not request confidential treatment

of the requested information. If the ASC required the submitter to

provide the requested information, the ASC Officer would need

substantial reason to believe that disclosure of the requested

information would result in substantial competitive harm to the

submitter. If the submitter provided the information voluntarily to the

ASC, the ASC officer would need to believe that the information is of a

kind the submitter would not customarily make available to the public.

The ASC Officer similarly shall notify the person seeking disclosure of

the information under FOIA of the existence of a request for

confidential treatment. These notice requirements need not be followed

if the ASC Officer determines under this subpart that the information

should not be disclosed; the information has been published or has been

officially made available to the public; disclosure of the information

is required by law (other than FOIA); or the submitter's request for

confidential treatment appears obviously frivolous, in such instance

the submitter shall be given written notice of the determination to

disclose the information at least five business days prior to release.

The ASC Officer shall carefully consider the issues involved, and if

disclosure of the requested information is warranted, a written notice,

containing a brief description of why the submitter's objections were

not sustained, must be forwarded to the submitter within ten business

days. The time for response may be extended up to ten additional

business days, as provided in 5 U.S.C. 552(a)(6)(B), or for other

periods by agreement between the requester and the ASC Officer. This

notice shall be provided to the submitter at least five business days

prior to release of the requested information.

(e) Notice of lawsuit. The ASC Officer shall notify a submitter of

any filing of any suit against the ASC pursuant to 5 U.S.C. 552 to

compel disclosure of documents or information covered by the

submitter's request for confidential treatment within ten business days

of service of the suit. The ASC Officer also shall notify the requester

of the documents or information of any suit filed by the submitter

against the ASC to enjoin their disclosure within ten business days of

service of the suit.

Sec. 1102.307 Right to petition for issuance, amendment and repeal of

rules of general application.

Any person desiring the issuance, amendment or repeal of a rule of

general application may file a petition for those purposes with the

Executive Director of the ASC. The petition shall include a statement

setting forth the text or substance of any proposed rule or amendment

desired or shall specify the rule for which repeal is desired. The

petitioner also shall state the nature of his or her interest and the

reasons for seeking ASC action. The Executive Director shall

acknowledge receipt of the petition within ten business days of

receipt. As soon as reasonably practicable, the ASC shall consider the

petition and related staff recommendations and shall take such action

as it deems appropriate. The Executive Director shall notify the

petitioner in writing of the ASC action within ten business days of the

action.

By the Appraisal Subcommittee of the Federal Financial

Institutions Examination Council.

Dated: January 5, 1994.

Fred D. Finke,

Chairperson.

[FR Doc. 94-813 Filed 1-12-94; 8:45 am]

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