Uniform Rules of Practice and Procedure

SUMMARY: The Office of the Comptroller of the Currency (OCC) is

amending its regulatory provisions implementing the Uniform Rules of

Practice and Procedure (Uniform Rules) and the OCC's agency-specific

rules of administrative practice and procedure (Local Rules).

The final rule is intended to clarify certain provisions and to

increase the efficiency and fairness of administrative hearings. The

final rule is another component of the OCC's Regulation Review Program.

EFFECTIVE DATE: June 5, 1996.

FOR FURTHER INFORMATION CONTACT: Daniel Stipano, Director, Enforcement

and Compliance Division, 202-874-4800, or Daniel Cooke, Attorney,

Legislative and Regulatory Activities, Division, 202-874-5090, Office

of the Comptroller of the Currency, 250 E Street, SW, Washington, DC

20219.

SUPPLEMENTARY INFORMATION:

Background

Section 916 of the Financial Institutions Reform, Recovery and

Enforcement Act of 1989 (FIRREA), Pub. L. 101-73, 103 Stat. 183 (1989),

required the OCC, The Office of Thrift Supervision (OTS), the Federal

Deposit Insurance Corporation (FDIC), the Board of Governors of the

Federal Reserve System (Board), and the National Credit Union

Administration (NCUA) (agencies) to develop uniform rules and

procedures for administrative hearings. The agencies each adopted final

Uniform Rules in August, 1991.1 Based on their experience in using

the rules since then, the agencies have identified sections of the

Uniform Rules that should be modified. Accordingly, the agencies

proposed amendments to the Uniform Rules on June 23, 1995 (60 FR

32882). The OCC also proposed amendments to its Local Rules.

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\1\ The agencies issued a joint notice of proposed rulemaking

on, June 17, 1991 (56 FR 27790). The agencies issued their final

rules on the following dates: OCC on August 9, 1991 (56 FR 38024);

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

37975); OTS on August 12, 1991 (56 FR 38317); and NCUA on August 8,

1991 (56 FR 37767).

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The OCC received two comments on the proposal. Both commenters

generally supported the proposal, but each suggested improvements.

The final rule implements the proposal with certain changes,

including revisions responsive to some of the concerns expressed by the

commenters. The following section-by-section analysis summarizes the

final rule and highlights the changes from the proposal that the OCC

made in response to the commenters' suggestions.

The OTS, FDIC, Board, and NCUA are publishing separate final rules

that are substantively identical to the OCC's final rule.

Section-by-Section Summary and Discussion of Amendments to the Uniform

Rules

Section 19.1 Scope

The proposal added two statutory provisions to the list of civil

money penalty provisions to which the Uniform Rules apply. The two

provisions were enacted by the Riegle Community Development and

Regulatory Improvement Act of 1994 (CDRI), Pub. L. 103-325, 108 Stat.

2160.

The first provision, CDRI section 406, amended the Bank Secrecy Act

(BSA) (31 U.S.C. 5321) to require the Secretary of the Treasury to

delegate authority to the Federal banking agencies (as defined in

section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)) to

impose civil money penalties for BSA violations.

The second, CDRI section 525, amended section 102 the Flood

Disaster Protection Act of 1973 (FDPA) (42 U.S.C. 4012a). Section 102

now gives each ``Federal entity for lending regulation'' authority to

assess civil money penalties against a regulated lending institution if

the institution has a pattern or practice of committing violations

under the FDPA or the notice requirements of the National Flood

Insurance Act of 1968 (NFIA) (42 U.S.C. 4104a). Under the FDPA, the

term ``Federal entity for lending regulation'' includes the agencies

and the Farm Credit Administration.

CDRI section 525 also gave the agencies authority to require a

regulated lending institution to take remedial actions that are

necessary to ensure that the institution complies with the requirements

of the national flood insurance program if: (1) the institution has

engaged in a pattern and practice of noncompliance with regulations

issued pursuant to the FDPA and NFIA; and (2) has not demonstrated

measurable improvement in compliance despite the assessment of civil

money penalties. The final rule adds a new paragraph to the scope

section that reflects this additional authority.

The OCC received no comments on this section, which is adopted as

proposed.

Section 19.6 Appearance and Practice in Adjudicatory Proceedings

The proposal permitted the administrative law judge (ALJ) to

require counsel who withdraws from representing a party to accept

service of papers for that party until either: (1) a new counsel has

filed a notice of appearance; or (2) the party indicates that he or she

will proceed on a pro se basis.

The OCC received one comment on this section. The commenter

suggested that the proposal did not adequately address certain

situations: for example, when counsel withdraws because of a lack of

payment of legal fees that is caused by an agency asset freeze, or

withdraws because the client discharged him or her. The commenter's

implication is that it is unfair to require counsel to continue to

accept service in these situations. Moreover, the commenter expressed

concern that the administrative proceeding may become involved in a

dispute between the client and counsel when the ALJ requires counsel to

continue to accept service after a client discharges counsel. The

commenter suggested that the rule should require that service be given

to both the unreplaced counsel and the party.

The proposal was intended to ensure that a lawyer is always

available to receive service in order to prevent a party from halting

the administrative proceedings simply by evading service. The

regulatory text is clear, however, that the ALJ has the discretion

whether to require former counsel to continue to accept service.

Fairness to counsel is among the factors the ALJ would consider in

exercising this discretion, and the OCC therefore believes that the

provision as proposed is sufficiently flexible to accommodate the

concerns raised by the commenter.

The final rule changes the proposal's reference from ``service of

process'' to ``service'' to clarify that this section applies to all

papers that the party is entitled to receive. This section is otherwise

adopted as proposed.

Section 19.8 Conflicts of Interest

The proposal sought to improve in two ways the provisions governing

the

[[Page 20331]]

conflicts of interest that may arise when counsel represents multiple

persons connected with a proceeding.

First, the proposal sought to protect the interests of individuals

and financial institutions by expanding the circumstances under which

counsel must certify that he or she has obtained a waiver from each

non-party of any potential conflict of interest. The former rule

required counsel to obtain waivers only from non-party institutions

``to which notice of the proceedings must be given.'' The proposal

required counsel to obtain waivers from all parties and non-parties

that counsel represents on a matter relevant to an issue in the

proceeding. It thus ensured that all appropriate party and non-party

individuals and institutions are informed of potential conflicts.

Second, the proposal simplified this provision by eliminating the

requirement for counsel to certify that each client has asserted that

there are no conflicts of interest. The OCC believes that the former

provision was superfluous because the responsibility for identifying

potential conflicts resides with counsel.

The OCC received one comment on this section. The commenter noted

that the proposal may inhibit multiple representation that otherwise

complies with applicable ethics rules. The commenter suggested that the

proposal could inappropriately tilt the proceeding in favor of the

agencies.

The provision does not limit the right of any party to

representation by counsel of the party's choice. Rather, it ensures

that all interested persons are informed of potential conflicts so that

they may avoid the conflict if they choose. In the OCC's view, it is

reasonable to establish a baseline standard requiring the affirmative

waiver of conflicts by all affected persons or entities in order to

ensure the integrity of the administrative adjudication process. State

rules of professional responsibility that impose more stringent ethical

standards are unaffected by this requirement.

In addition, the OCC is unpersuaded by the argument that the

conflicts provision grants the agencies significant advantage in a

proceeding. Persons and entities may be well and vigorously represented

even if they are not all represented by the same counsel.

Therefore, the OCC adopts this section as proposed.

Section 19.11 Service of Papers

The proposal changed this section by permitting parties, the

Comptroller, and ALJs to serve a subpoena on a party by delivering it

to a person of suitable age and discretion at a party's place of work.

The OCC received one comment on this section. The commenter

supported the intent of the proposal, but asserted that the provision

permitting service at a person's place of work was too broad to be

effective, particularly where a bank has numerous branches.

The OCC interpreted the phrase ``person's place of work'' as used

in the proposal to mean the physical location at which an individual

works and not as any office of the corporation or association that

employs the person. To avoid confusion, the OCC has added specific

reference to physical location to the regulatory text. In addition, the

final rule states expressly that only an individual, not a corporation

or association, may be served at a residence or place of work.

The same comment points out, however, that the former Uniform Rules

did not expressly permit certain methods of service that are useful for

serving a corporation or other association. The final rule, therefore,

permits service on a party corporation or other association by delivery

of a copy of a notice to an officer, managing or general agent, or to

any other agent authorized by appointment or by law to receive service

of process. The final rule also provides that, if the agent is one

authorized by a statute to receive service and the statute so requires,

the serving party must also mail a copy to the party. The final rule

also restructures this provision for clarity.

Section 19.12 Construction of Time Limits

The proposal clarified that the additional time allotted for

responding to papers served by mail, delivery service, or electronic

media transmission under Sec. 19.12(c) is not included in determining

whether an act is required to be performed within ten days. The

proposal also clarified that additional time allotted for responding to

papers served by mail, delivery, or electronic media transmission is

counted by calendar days and, therefore, a party must count Saturdays,

Sundays, and holidays when calculating a time deadline.

The OCC received no comments on this section, which is adopted as

proposed.

Section 19.20 Amended Pleadings

The proposal changed this section to permit a party to amend its

pleadings without leave of the ALJ and to permit the ALJ to admit

evidence over the objection that the evidence does not fall directly

within the scope of the issues raised by a notice or answer.

The OCC received one comment on this section. The commenter

asserted that the change could unduly prejudice a party if a notice

were amended to add or delete allegations immediately prior to the

hearing. The commenter expressed concern that the amendment would give

a party insufficient time to seek additional discovery or file for

summary judgment.

The regulatory text gives the ALJ discretion to revise the hearing

schedule to ensure that no prejudice results from last minute

amendments to a notice. The OCC believes this approach is adequate to

avoid prejudice to a party and, therefore, the OCC adopts this section

as proposed.

Section 19.24 Scope of Document Discovery

The former Uniform Rules were silent on the use of interrogatories.

The proposal expressly prohibited parties from using interrogatories on

grounds that other discovery tools are more efficient and less

burdensome and therefore more appropriate to administrative

adjudications.

The proposal also sought to focus document discovery requests so

that they are not unreasonable, oppressive, excessive in scope, or

unduly burdensome to any of the parties.

Accordingly, the proposal preserved the former rule's limitation on

document discovery by permitting discovery only of documents that have

material relevance. However, the proposal specifically provided that a

request should be considered unreasonable, oppressive, excessive in

scope, or unduly burdensome if, among other things: (1) it fails to

include justifiable limitations on the time period covered and the

geographic locations to be searched; (2) the time provided to respond

in the request is inadequate; or (3) the request calls for copies of

documents to be delivered to the requesting party and fails to include

the requestor's written agreement to pay in advance for the copying, in

accordance with Sec. 19.25.

Under the proposal, the scope of permissible document discovery is

not as broad as that allowed under Federal Rule of Civil Procedure

26(b) (28 U.S.C. app.). Historically, given the specialized nature of

enforcement proceedings in regulated industries, discovery in

administrative proceedings has not been as expansive as it is in civil

litigation.

The OCC received no significant comments on this section and,

therefore, adopts it as proposed.

[[Page 20332]]

Section 19.25 Request for Document Discovery From Parties

The OCC proposed several changes to Sec. 19.25. First, the proposal

sought to reduce unnecessary burden by permitting a party to: (1)

respond to document discovery either by producing documents as they are

kept in the ordinary course of business or by organizing them to

correspond to the categories in a document request; and (2) identify

similar documents by category when they are voluminous and are

protected by the deliberative process, attorney-client, or attorney

work-product privilege.

The proposal also amended Sec. 19.25 to permit a party to require

payment in advance for the costs of copying and shipping requested

documents; and clarified that, if a party has stated its intention to

file a timely motion for interlocutory review, the ALJ may not release,

or order a party to produce, documents withheld on grounds of privilege

until the motion for interlocutory review has been decided.

The OCC received two comments on this section. One commenter sought

guidance on when, how, and to whom a party must express an

``intention'' to file a timely motion for interlocutory review.

Because it is the ALJ who may not release or order a party to

produce documents, it was implicit in the proposed regulatory text that

a party must make the intention to seek interlocutory review known to

the ALJ. For clarity, the final rule adds language to this effect.

Another commenter suggested that a request for interlocutory review

should automatically stay the proceeding.

Under Sec. 19.28(d) of the Uniform Rules, a party may request that

a proceeding be stayed during the pendency of an interlocutory review,

and the ALJ has the discretion to decide whether a stay is appropriate.

The OCC believes that this procedure adequately protects the parties.

For this reason and to avoid adding unnecessary delays in the

administrative proceedings, the OCC declines to provide for an

automatic stay whenever a party requests interlocutory review.

One commenter asserted that permitting the OCC to require payment

in advance for document copying and shipping costs would give the OCC

an advantage over other creditors if the party is bankrupt following

the administrative hearing. The commenter does not assert that it is a

violation of the bankruptcy laws for the OCC or any other creditor to

require prepayment for products or services. Moreover, the OCC believes

that the situations causing the commenter's concern would be very rare.

Accordingly, the OCC adopts this section as proposed.

Section 19.27 Deposition of Witness Unavailable for Hearing

The proposal clarified that a party may serve a deposition subpoena

on a witness who is unavailable by serving the subpoena on the

witness's authorized representative. The final rule does not include

this proposed change because, in Sec. 19.11(d), the final rule

expressly permits a party to serve a subpoena by delivering the

subpoena to an agent, which includes delivery to an authorized

representative. The proposed change to Sec. 19.27 would be redundant.

The OCC received no comments on this section. The final rule does not,

therefore, change this provision.

Section 19.33 Public Hearings

The proposal changed this section to specify that a party must file

a motion for a private hearing with the Comptroller, and not the ALJ,

but must serve the ALJ with a copy of the motion.

The OCC received no comments on this section, which is adopted as

proposed.

Section 19.34 Hearing Subpoenas

The former Uniform Rules did not specifically require that a party

inform all other parties when a subpoena is issued to a non-party. The

proposal required that, after a hearing subpoena is issued by the ALJ,

the party that applied for the subpoena must serve a copy of it on each

party. Under the proposal, any party may move to quash any hearing

subpoena and must serve the motion on each other party.

The OCC received no comments on this section, which is adopted as

proposed.

Section 19.35 Conduct of Hearings

The proposal limited the number of counsel permitted to examine a

witness and clarified that hearing transcripts may be obtained only

from the court reporter. The former Uniform Rules were silent on these

issues.

The OCC received no comments on this section, which is adopted as

proposed.

Section 19.37 Post-Hearing Filings

The proposal changed the title of this section from ``Proposed

findings and conclusions'' to ``Post-hearing filings'' to describe more

accurately the content of the section.

The proposal also moved, from Sec. 19.35(b) to Sec. 19.37(a), the

provision that requires the ALJ to serve each party with notice of the

filing of the certified transcript of the hearing (including hearing

exhibits). The proposal added a requirement that the ALJ must use the

same method of service for this notice for each recipient.

Finally, the proposal clarified that the ALJ may, when appropriate,

permit parties more than the allotted 30 days to file proposed findings

of fact, proposed conclusions of law, and a proposed order.

The OCC received no comments on this section, which is adopted with

a minor technical change.

Section 19.38 Recommended Decision and Filing of Record

Under the former Uniform Rules, the ALJ was not required to file an

index of the record when he filed the record with the Comptroller. The

proposal added this requirement and reorganized this section to improve

its clarity.

The OCC received no comments on this section, which is adopted as

proposed.

Section-by-Section Summary and Discussion of Proposed Amendments to the

OCC's Local Rules

Section 19.112 Informal Hearing

Section 19.112 governs the conduct of informal hearings requested

by a party who is the subject of a removal, suspension, or prohibition

when a crime is charged or a conviction obtained.

The proposal amended Sec. 19.112(b) so that the District Deputy

Comptroller or Administrator, the Deputy Comptroller for Multinational

Banking, or the Deputy Comptroller or Director for Special Supervision,

whoever is appropriate, fixes the date, time, and place for an informal

hearing and chooses the presiding officer.

The proposal amended Sec. 19.112(c): (1) to clarify that, if a

petitioner waives the opportunity to present an oral argument at a

hearing, the OCC may file written submissions with the presiding

officer no later than the date on which the hearing was to be held; and

(2) to require a petitioner who chooses to waive the opportunity to

present oral argument to submit that waiver at the same time that the

petitioner requests a hearing.

Former Sec. 19.112(d)(3) required that copies of all affidavits,

memoranda, and other written material to be presented at the hearing be

provided to the presiding officer and other parties ten days prior to

the hearing. The final rule conforms Sec. 19.112(d)(3) to the change

made to Sec. 19.112(c), which permits the OCC to file papers on the day

of the hearing. Therefore, as amended, Sec. 19.112(d)

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allows the OCC an additional ten days to file its submissions when a

petitioner chooses to waive its right to an oral hearing. The OCC will

need the additional ten days to prepare its submissions as a response

to the petitioner's submissions because the OCC will not have an

opportunity to present an oral argument.

The OCC received one comment on this section. The commenter sought

clarification of whether waiver of oral argument results in a waiver of

the hearing.

The former rule and the proposal used the term ``hearing'' to refer

to both an oral hearing and a hearing based solely on documents. A

waiver of an oral argument does not result in a waiver of the hearing

itself. Therefore, the OCC believes no further clarification is

necessary and adopts this section with a minor technical change.

Section 19.113 Recommended and Final Decisions

The former Local Rules stated that the Comptroller must issue a

final decision in a removal, suspension, or prohibition case within 60

days of the hearing or within 60 days of receiving the petitioner's

written submission. Section 8(g)(3) of the Federal Deposit Insurance

Act (12 U.S.C. 1818(g)(3)) requires the Comptroller to notify a

petitioner of the Comptroller's final decision within 60 days of the

hearing. Section 8(g)(3) does not state that the Comptroller may use

the date of receipt of the petitioner's written submission as the start

date of the 60-day time limitation.

The proposal clarified that the Local Rules conform to section

8(g)(3) by requiring the Comptroller to issue a final decision on a

removal, suspension, or prohibition case within 60 days of the hearing,

regardless of when the Comptroller received the petitioner's written

submission.

To ensure that the Comptroller can meet this 60-day deadline, the

proposal imposed a clear time deadline on the presiding officer to

issue a recommended decision. The proposal required the presiding

officer to issue a recommended decision within 20 days from the

hearing.

The OCC received no comments on this section, which is adopted as

proposed.

Section 19.160 Scope

The proposal clarified the provision regarding the time permitted

the OCC to communicate to the proposed acquiring party (filer) the

OCC's disapproval of a change-in-control notice.

Former Sec. 19.160 suggests that the OCC must give written notice

to a filer of the OCC's disapproval within three days of the decision.

Because first class mail can take three days, the proposal stated that

the OCC must mail the written notice within three days of making a

disapproval decision.

The OCC received no comments on this section, which is adopted as

proposed.

Section 19.161 Notice of Disapproval and Hearing Initiation

The proposal changed the title of this section from ``Hearing

request and answer'' to ``Notice of disapproval and hearing

initiation'' in order to describe more accurately the content of the

section.

The proposal changed the initiation procedures for change-in-

control proceedings. Under the former OCC Local Rule, the OCC's notice

of disapproval was both a licensing communication and the initial

pleading in the action.

As proposed, the notice of disapproval would not serve as the OCC's

initial pleading. Under the proposal, the Comptroller issues a hearing

order after receiving a request for a hearing in response to a notice

of disapproval. The hearing order serves as the OCC's pleading document

and states the legal authority for the proceeding, the OCC's

jurisdiction over the proceeding, and the matters of fact or law upon

which the disapproval is based. The hearing order also states that a

filer who seeks a hearing must file an answer to the hearing order with

the Office of Financial Institution Adjudication (OFIA) within 20 days

after service of the order on the filer.

The proposal also made a technical correction by removing the

phrase ``in civil money penalty proceedings'' from the heading of

former paragraph (c)(2).

The OCC received no comments on this section, which is adopted as

proposed with minor technical changes.

Section 19.170 Discovery Depositions

The proposal clarified that a party may have the court reporter

record deposition testimony with a stenotype machine or an electronic

sound recording device. The proposal modified the former rule to state

expressly that, for good cause and with leave of the ALJ or upon

agreement of the parties, a party may have the court reporter use any

other method to record the deposition testimony.

The proposal specified that a written record of the witness's

testimony must be made unless the parties agree otherwise, that all

parties are entitled to receive a transcript of the witness's

testimony, and that the party taking the deposition bears the cost of

the recording and the transcription of that recording.

The OCC received no comments on this section, which is adopted with

one clarifying change. The final rule specifies that each party is

responsible for the cost of the copy of the transcript that the party

receives and that the cost of these additional transcript copies does

not fall on the party that requests the deposition.

Section 19.171 Deposition Subpoenas

The proposal added to the permissible methods of serving a

deposition subpoena under Sec. 19.171 the methods allowed in the

Uniform Rules, Sec. 19.11(d). As amended by this final rule, the

Uniform Rules permit the following methods of service: by delivery to

an agent, by delivery to a person of suitable age and discretion at the

subpoenaed person's residence or place of work, by registered or

certified mail to the person's last known address, or in such other

manner as is reasonably calculated to give actual notice.

The OCC received no comments on this section. The final rule

conforms Sec. 19.184 with Sec. 19.11(d), as adopted in the final rule,

by cross-referencing Sec. 19.11(d).

Section 19.184 Service of Subpoena and Payment of Witness Fees

As in Sec. 19.171, the proposal adopted the methods of service used

in Sec. 19.11(d). The OCC also received no comments on this section.

The final rule conforms this section, as it does Sec. 19.171, to

Sec. 19.11(d) by cross-referencing Sec. 19.11(d).

Technical Changes

The final rule makes several technical changes to the proposal that

make the final rule specific to the OCC. These changes appear

throughout the rule text. For example, bracketed references to the

``agency head'' have been replaced with ``the Comptroller'' and the

blank part designation before each section number has been filled in

with ``19.''

Regulatory Flexibility Act

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

OCC hereby certifies that this final rule will not have a significant

economic impact on a substantial number of small entities. Accordingly,

a regulatory flexibility analysis is not required.

This final rule imposes only procedural requirements in

administrative adjudications. It contains no substantive requirements.

It improves the Uniform Rules of Practice and Procedure and facilitates

the

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orderly determination of administrative proceedings. The changes in

this final rule are primarily clarifications and impose no significant

additional burdens on regulated institutions, parties to administrative

actions, or counsel.

Executive Order 12866 Statement

The OCC has determined that this final rule is not a significant

regulatory action as defined in Executive Order 12866.

Unfunded Mandates Act

Section 202 of the Unfunded Mandates Reform Act of 1995, Pub. L.

104-4 (Unfunded Mandates Act) requires that an agency prepare a

budgetary impact statement before promulgating a rule that includes a

Federal mandate that may result in expenditure by State, local, and

tribal governments, in the aggregate, or by the private sector, of $100

million or more in any one year. If a budgetary impact statement is

required, section 205 of the Unfunded Mandates Act also requires an

agency to identify and consider a reasonable number of regulatory

alternatives before promulgating a rule. As discussed in the preamble,

this final rule is limited in application to procedural amendments to

the rules of administrative practice before the OCC. The OCC has

therefore determined that the final rule will not result in

expenditures by State, local, or tribal governments or by the private

sector of more than $100 million. Accordingly, the OCC has not prepared

a budgetary impact statement or specifically addressed the regulatory

alternatives considered.

Effective Date

Section 302 of the Riegle Community Development and Regulatory

Improvement Act 1994 delays the effective date of regulations

promulgated by the Federal banking agencies that impose additional

reporting, disclosure, or other new requirements to the first date of

the first calendar quarter following publication of the final rule. The

OCC believes that section 302 is not applicable to this final rule,

because the regulation does not impose any additional reporting or

other requirements not already contained in the current version of the

Uniform Rules or the Local Rules.

List of Subjects in 12 CFR Part 19

Administrative practice and procedure, Crime, Investigations,

National banks, Penalties, Securities.

Authority and Issuance

For the reasons set out in the preamble, part 19 of chapter I of

title 12 of the Code of Federal Regulations is amended as set forth

below:

PART 19--RULES OF PRACTICE AND PROCEDURE

1. The authority citation for part 19 is revised to read as

follows:

Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 93(b), 164, 505,

1817, 1818, 1820, 1831o, 1972, 3102, 3108(a), 3909, and 4717; 15

U.S.C. 78 (h) and (i), 78o-4(c), 78o-5, 78q-1, 78u, 78u-2, 78u-3,

and 78w; 31 U.S.C. 330 and 5321; and 42 U.S.C. 4012a.

Subpart A--[Amended]

2. In Sec. 19.1, paragraph (e)(9) is amended by removing ``and''

after the semicolon, new paragraphs (e)(11) and (e)(12) are added,

paragraph (f) is redesignated as paragraph (g), and new paragraph (f)

is added to read as follows:

Sec. 19.1 Scope.

* * * * *

(e) * * *

(11) Any provision of law referenced in section 102(f) of the Flood

Disaster Protection Act of 1973 (42 U.S.C. 4012a(f)) or any order or

regulation issued thereunder; and

(12) Any provision of law referenced in 31 U.S.C. 5321 or any order

or regulation issued thereunder;

(f) Remedial action under section 102(g) of the Flood Disaster

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

* * * * *

3. In Sec. 19.6, paragraph (a)(3) is revised to read as follows:

Sec. 19.6 Appearance and practice in adjudicatory proceedings.

(a) * * *

(3) Notice of appearance. Any individual acting as counsel on

behalf of a party, including the Comptroller, shall file a notice of

appearance with OFIA at or before the time that the individual submits

papers or otherwise appears on behalf of a party in the adjudicatory

proceeding. The notice of appearance must include a written declaration

that the individual is currently qualified as provided in paragraph

(a)(1) or (a)(2) of this section and is authorized to represent the

particular party. By filing a notice of appearance on behalf of a party

in an adjudicatory proceeding, the counsel agrees and represents that

he or she is authorized to accept service on behalf of the represented

party and that, in the event of withdrawal from representation, he or

she will, if required by the administrative law judge, continue to

accept service until new counsel has filed a notice of appearance or

until the represented party indicates that he or she will proceed on a

pro se basis.

* * * * *

4. In Sec. 19.8, paragraph (b) is revised to read as follows:

Sec. 19.8 Conflicts of interest.

* * * * *

(b) Certification and waiver. If any person appearing as counsel

represents two or more parties to an adjudicatory proceeding or also

represents a non-party on a matter relevant to an issue in the

proceeding, counsel must certify in writing at the time of filing the

notice of appearance required by Sec. 19.6(a):

(1) That the counsel has personally and fully discussed the

possibility of conflicts of interest with each such party and non-

party; and

(2) That each such party and non-party waives any right it might

otherwise have had to assert any known conflicts of interest or to

assert any non-material conflicts of interest during the course of the

proceeding.

5. In Sec. 19.11, paragraphs (c)(2) and (d) are revised to read as

follows:

Sec. 19.11 Service of papers.

* * * * *

(c) * * *

(2) If a party has not appeared in the proceeding in accordance

with Sec. 19.6, the Comptroller or the administrative law judge shall

make service by any of the following methods:

(i) By personal service;

(ii) If the person to be served is an individual, by delivery to a

person of suitable age and discretion at the physical location where

the individual resides or works;

(iii) If the person to be served is a corporation or other

association, by delivery to an officer, managing or general agent, or

to any other agent authorized by appointment or by law to receive

service and, if the agent is one authorized by statute to receive

service and the statute so requires, by also mailing a copy to the

party;

(iv) By registered or certified mail addressed to the person's last

known address; or

(v) By any other method reasonably calculated to give actual

notice.

(d) Subpoenas. Service of a subpoena may be made:

(1) By personal service;

(2) If the person to be served is an individual, by delivery to a

person of suitable age and discretion at the physical location where

the individual resides or works;

(3) By delivery to an agent, which, in the case of a corporation or

other

[[Page 20335]]

association, is delivery to an officer, managing or general agent, or

to any other agent authorized by appointment or by law to receive

service and, if the agent is one authorized by statute to receive

service and the statute so requires, by also mailing a copy to the

party;

(4) By registered or certified mail addressed to the person's last

known address; or

(5) By any other method reasonably calculated to give actual

notice.

* * * * *

6. In Sec. 19.12, paragraphs (a), (c)(1), (c)(2), and (c)(3) are

revised to read as follows:

Sec. 19.12 Construction of time limits.

(a) General rule. In computing any period of time prescribed by

this subpart, the date of the act or event that commences the

designated period of time is not included. The last day so computed is

included unless it is a Saturday, Sunday, or Federal holiday. When the

last day is a Saturday, Sunday, or Federal holiday, the period runs

until the end of the next day that is not a Saturday, Sunday, or

Federal holiday. Intermediate Saturdays, Sundays, and Federal holidays

are included in the computation of time. However, when the time period

within which an act is to be performed is ten days or less, not

including any additional time allowed for in paragraph (c) of this

section, intermediate Saturdays, Sundays, and Federal holidays are not

included.

* * * * *

(c) * * *

(1) If service is made by first class, registered, or certified

mail, add three calendar days to the prescribed period;

(2) If service is made by express mail or overnight delivery

service, add one calendar day to the prescribed period; or

(3) If service is made by electronic media transmission, add one

calendar day to the prescribed period, unless otherwise determined by

the Comptroller or the administrative law judge in the case of filing,

or by agreement among the parties in the case of service.

7. Section 19.20 is revised to read as follows:

Sec. 19.20 Amended pleadings.

(a) Amendments. The notice or answer may be amended or supplemented

at any stage of the proceeding. The respondent must answer an amended

notice within the time remaining for the respondent's answer to the

original notice, or within ten days after service of the amended

notice, whichever period is longer, unless the Comptroller or

administrative law judge orders otherwise for good cause.

(b) Amendments to conform to the evidence. When issues not raised

in the notice or answer are tried at the hearing by express or implied

consent of the parties, they will be treated in all respects as if they

had been raised in the notice or answer, and no formal amendments are

required. If evidence is objected to at the hearing on the ground that

it is not within the issues raised by the notice or answer, the

administrative law judge may admit the evidence when admission is

likely to assist in adjudicating the merits of the action and the

objecting party fails to satisfy the administrative law judge that the

admission of such evidence would unfairly prejudice that party's action

or defense upon the merits. The administrative law judge may grant a

continuance to enable the objecting party to meet such evidence.

8. In Sec. 19.24, paragraphs (a) and (b) are revised to read as

follows:

Sec. 19.24 Scope of document discovery.

(a) Limits on discovery. (1) Subject to the limitations set out in

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

under this subpart may obtain document discovery by serving a written

request to produce documents. For purposes of a request to produce

documents, the term ``documents'' may be defined to include drawings,

graphs, charts, photographs, recordings, data stored in electronic

form, and other data compilations from which information can be

obtained, or translated, if necessary, by the parties through detection

devices into reasonably usable form, as well as written material of all

kinds.

(2) Discovery by use of deposition is governed by subpart I of this

part.

(3) Discovery by use of interrogatories is not permitted.

(b) Relevance. A party may obtain document discovery regarding any

matter, not privileged, that has material relevance to the merits of

the pending action. Any request to produce documents that calls for

irrelevant material, that is unreasonable, oppressive, excessive in

scope, unduly burdensome, or repetitive of previous requests, or that

seeks to obtain privileged documents will be denied or modified. A

request is unreasonable, oppressive, excessive in scope, or unduly

burdensome if, among other things, it fails to include justifiable

limitations on the time period covered and the geographic locations to

be searched, the time provided to respond in the request is inadequate,

or the request calls for copies of documents to be delivered to the

requesting party and fails to include the requestor's written agreement

to pay in advance for the copying, in accordance with Sec. 19.25.

* * * * *

9. In Sec. 19.25, paragraphs (a), (b), (e), and (g) are revised to

read as follows:

Sec. 19.25 Request for document discovery from parties.

(a) General rule. Any party may serve on any other party a request

to produce for inspection any discoverable documents that are in the

possession, custody, or control of the party upon whom the request is

served. The request must identify the documents to be produced either

by individual item or by category, and must describe each item and

category with reasonable particularity. Documents must be produced as

they are kept in the usual course of business or must be organized to

correspond with the categories in the request.

(b) Production or copying. The request must specify a reasonable

time, place, and manner for production and performing any related acts.

In lieu of inspecting the documents, the requesting party may specify

that all or some of the responsive documents be copied and the copies

delivered to the requesting party. If copying of fewer than 250 pages

is requested, the party to whom the request is addressed shall bear the

cost of copying and shipping charges. If a party requests 250 pages or

more of copying, the requesting party shall pay for the copying and

shipping charges. Copying charges are the current per-page copying rate

imposed by 12 CFR part 4 implementing the Freedom of Information Act (5

U.S.C. 552). The party to whom the request is addressed may require

payment in advance before producing the documents.

* * * * *

(e) Privilege. At the time other documents are produced, the

producing party must reasonably identify all documents withheld on the

grounds of privilege and must produce a statement of the basis for the

assertion of privilege. When similar documents that are protected by

deliberative process, attorney work-product, or attorney-client

privilege are voluminous, these documents may be identified by category

instead of by individual document. The administrative law judge retains

discretion to determine when the identification by category is

insufficient.

* * * * *

(g) Ruling on motions. After the time for filing responses pursuant

to this section has expired, the administrative

[[Page 20336]]

law judge shall rule promptly on all motions filed pursuant to this

section. If the administrative law judge determines that a discovery

request, or any of its terms, calls for irrelevant material, is

unreasonable, oppressive, excessive in scope, unduly burdensome, or

repetitive of previous requests, or seeks to obtain privileged

documents, he or she may deny or modify the request, and may issue

appropriate protective orders, upon such conditions as justice may

require. The pendency of a motion to strike or limit discovery or to

compel production is not a basis for staying or continuing the

proceeding, unless otherwise ordered by the administrative law judge.

Notwithstanding any other provision in this part, the administrative

law judge may not release, or order a party to produce, documents

withheld on grounds of privilege if the party has stated to the

administrative law judge its intention to file a timely motion for

interlocutory review of the administrative law judge's order to produce

the documents, and until the motion for interlocutory review has been

decided.

* * * * *

10. In Sec. 19.33, paragraph (a) is revised to read as follows:

Sec. 19.33 Public hearings.

(a) General rule. All hearings shall be open to the public, unless

the Comptroller, in the Comptroller's discretion, determines that

holding an open hearing would be contrary to the public interest.

Within 20 days of service of the notice or, in the case of change-in-

control proceedings under section 7(j)(4) of the FDIA (12 U.S.C.

1817(j)(4)), within 20 days from service of the hearing order, any

respondent may file with the Comptroller a request for a private

hearing, and any party may file a reply to such a request. A party must

serve on the administrative law judge a copy of any request or reply

the party files with the Comptroller. The form of, and procedure for,

these requests and replies are governed by Sec. 19.23. A party's

failure to file a request or a reply constitutes a waiver of any

objections regarding whether the hearing will be public or private.

* * * * *

11. In Sec. 19.34, paragraphs (a) and (b)(1) are revised to read as

follows:

Sec. 19.34 Hearing subpoenas.

(a) Issuance. (1) Upon application of a party showing general

relevance and reasonableness of scope of the testimony or other

evidence sought, the administrative law judge may issue a subpoena or a

subpoena duces tecum requiring the attendance of a witness at the

hearing or the production of documentary or physical evidence at the

hearing. The application for a hearing subpoena must also contain a

proposed subpoena specifying the attendance of a witness or the

production of evidence from any state, territory, or possession of the

United States, the District of Columbia, or as otherwise provided by

law at any designated place where the hearing is being conducted. The

party making the application shall serve a copy of the application and

the proposed subpoena on every other party.

(2) A party may apply for a hearing subpoena at any time before the

commencement of a hearing. During a hearing, a party may make an

application for a subpoena orally on the record before the

administrative law judge.

(3) The administrative law judge shall promptly issue any hearing

subpoena requested pursuant to this section. If the administrative law

judge determines that the application does not set forth a valid basis

for the issuance of the subpoena, or that any of its terms are

unreasonable, oppressive, excessive in scope, or unduly burdensome, he

or she may refuse to issue the subpoena or may issue it in a modified

form upon any conditions consistent with this subpart. Upon issuance by

the administrative law judge, the party making the application shall

serve the subpoena on the person named in the subpoena and on each

party.

(b) Motion to quash or modify. (1) Any person to whom a hearing

subpoena is directed or any party may file a motion to quash or modify

the subpoena, accompanied by a statement of the basis for quashing or

modifying the subpoena. The movant must serve the motion on each party

and on the person named in the subpoena. Any party may respond to the

motion within ten days of service of the motion.

* * * * *

12. In Sec. 19.35, paragraph (a)(3) is redesignated as paragraph

(a)(4), a new paragraph (a)(3) is added, and paragraph (b) is revised

to read as follows:

Sec. 19.35 Conduct of hearings.

(a) * * *

(3) Examination of witnesses. Only one counsel for each party may

conduct an examination of a witness, except that in the case of

extensive direct examination, the administrative law judge may permit

more than one counsel for the party presenting the witness to conduct

the examination. A party may have one counsel conduct the direct

examination and another counsel conduct re-direct examination of a

witness, or may have one counsel conduct the cross examination of a

witness and another counsel conduct the re-cross examination of a

witness.

* * * * *

(b) Transcript. The hearing must be recorded and transcribed. The

reporter will make the transcript available to any party upon payment

by that party to the reporter of the cost of the transcript. The

administrative law judge may order the record corrected, either upon

motion to correct, upon stipulation of the parties, or following notice

to the parties upon the administrative law judge's own motion.

13. In Sec. 19.37, the section heading and paragraph (a)(1) are

revised to read as follows:

Sec. 19.37 Post-hearing filings.

(a) Proposed findings and conclusions and supporting briefs. (1)

Using the same method of service for each party, the administrative law

judge shall serve notice upon each party that the certified transcript,

together with all hearing exhibits and exhibits introduced but not

admitted into evidence at the hearing, has been filed. Any party may

file with the administrative law judge proposed findings of fact,

proposed conclusions of law, and a proposed order within 30 days

following service of this notice by the administrative law judge or

within such longer period as may be ordered by the administrative law

judge.

* * * * *

14. Section 19.38 is revised to read as follows:

Sec. 19.38 Recommended decision and filing of record.

(a) Filing of recommended decision and record. Within 45 days after

expiration of the time allowed for filing reply briefs under

Sec. 19.37(b), the administrative law judge shall file with and certify

to the Comptroller, for decision, the record of the proceeding. The

record must include the administrative law judge's recommended

decision, recommended findings of fact, recommended conclusions of law,

and proposed order; all prehearing and hearing transcripts, exhibits,

and rulings; and the motions, briefs, memoranda, and other supporting

papers filed in connection with the hearing. The administrative law

judge shall serve upon each party the recommended decision, findings,

conclusions, and proposed order.

(b) Filing of index. At the same time the administrative law judge

files with and certifies to the Comptroller for final determination the

record of the proceeding, the administrative law judge shall furnish to

the Comptroller a

[[Page 20337]]

certified index of the entire record of the proceeding. The certified

index shall include, at a minimum, an entry for each paper, document or

motion filed with the administrative law judge in the proceeding, the

date of the filing, and the identity of the filer. The certified index

shall also include an exhibit index containing, at a minimum, an entry

consisting of exhibit number and title or description for: Each exhibit

introduced and admitted into evidence at the hearing; each exhibit

introduced but not admitted into evidence at the hearing; each exhibit

introduced and admitted into evidence after the completion of the

hearing; and each exhibit introduced but not admitted into evidence

after the completion of the hearing.

Subpart B--[Amended]

15. Section 19.100 is revised to read as follows:

Sec. 19.100 Filing documents.

All materials required to be filed with or referred to the

Comptroller or the administrative law judge in any proceeding under

this part must be filed with the Hearing Clerk, Office of the

Comptroller of the Currency, 250 E Street, SW, Washington, DC 20219.

Filings to be made with the Hearing Clerk include the notice and

answer; motions and responses to motions; briefs; the record filed by

the administrative law judge after the issuance of a recommended

decision; the recommended decision filed by the administrative law

judge following a motion for summary disposition (except that in

removal and prohibition cases the administrative law judge will file

the record and the recommended decision with the Board of Governors of

the Federal Reserve System); referrals by the administrative law judge

of motions for interlocutory review; exceptions and requests for oral

argument; and any other papers required to be filed with the

Comptroller or the administrative law judge under this part.

Subpart C--[Amended]

16. In Sec. 19.112, paragraphs (a), (b), (c) and (d)(3)(i) are

revised to read as follows:

Sec. 19.112 Informal hearing.

(a) Issuance of hearing order. After receipt of a request for

hearing, the District Deputy Comptroller or Administrator, the Deputy

Comptroller for Multinational Banking, or the Deputy Comptroller or

Director for Special Supervision, as appropriate, must notify the

petitioner requesting the hearing, the OCC's Enforcement and Compliance

Division, and the appropriate OCC District Counsel of the date, time,

and place fixed for the hearing. The hearing must be scheduled to be

held not later than 30 days from the date when a request for hearing is

received unless the time is extended in response to a written request

of the petitioner. The District Deputy Comptroller or Administrator,

the Deputy Comptroller for Multinational Banking, or the Deputy

Comptroller or Director for Special Supervision, as appropriate, may

extend the hearing date only for a specific period of time and must

take appropriate action to ensure that the hearing is not unduly

delayed.

(b) Appointment of presiding officer. The District Deputy

Comptroller or Administrator, the Deputy Comptroller for Multinational

Banking, or the Deputy Comptroller or Director for Special Supervision,

as appropriate, must appoint one or more OCC employees as the presiding

officer to conduct the hearing. The presiding officer(s) may not have

been involved in the proceeding, a factually related proceeding, or the

underlying enforcement action in a prosecutorial or investigative role.

(c) Waiver of oral hearing--(1) Petitioner. When the petitioner

requests a hearing, the petitioner may elect to have the matter

determined by the presiding officer solely on the basis of written

submissions by serving on the District Deputy Comptroller or

Administrator, the Deputy Comptroller for Multinational Banking, or the

Deputy Comptroller or Director for Special Supervision, as appropriate,

and all parties, a signed document waiving the statutory right to

appear and make oral argument. The petitioner must present the written

submissions to the presiding officer, and serve the other parties, not

later than ten days prior to the date fixed for the hearing, or within

such shorter time period as the presiding officer may permit.

(2) OCC. The OCC may respond to the petitioner's submissions by

presenting the presiding officer with a written response, and by

serving the other parties, not later than the date fixed for the

hearing, or within such other time period as the presiding officer may

require.

(d) * * *

(3) Presentation. (i) The OCC may appear and the petitioner may

appear personally or through counsel at the hearing to present relevant

written materials and oral argument. Except as permitted in paragraph

(c) of this section, each party, including the OCC, must file a copy of

any affidavit, memorandum, or other written material to be presented at

the hearing with the presiding officer and must serve the other parties

not later than ten days prior to the hearing or within such shorter

time period as permitted by the presiding officer.

* * * * *

17. In Sec. 19.113, paragraphs (a) and (b) are revised, paragraph

(c), (d), and (e) are redesignated as paragraphs (d), (e), and (f),

respectively, and new paragraph (c) is added, to read as follows:

Sec. 19.113 Recommended and final decisions.

(a) The presiding officer must issue a recommended decision to the

Comptroller within 20 days of the conclusion of the hearing or, when

the petitioner has waived an oral hearing, within 20 days of the date

fixed for the hearing. The presiding officer must serve promptly a copy

of the recommended decision on the parties to the proceeding. The

decision must include a summary of the facts and arguments of the

parties.

(b) Each party may, within ten days of being served with the

presiding officer's recommended decision, submit to the Comptroller

comments on the recommended decision.

(c) Within 60 days of the conclusion of the hearing or, when the

petitioner has waived an oral hearing, within 60 days from the date

fixed for the hearing, the Comptroller must notify the petitioner by

registered mail whether the suspension or removal from office, and

prohibition from participation in any manner in the affairs of the

bank, will be affirmed, terminated, or modified. The Comptroller's

decision must include a statement of reasons supporting the decision.

The Comptroller's decision is a final and unappealable order.

* * * * *

Subpart H--[Amended]

Sec. 19.160 [Amended]

18. In Sec. 19.160, paragraph (a) is amended in the second sentence

by revising the phrase ``notify the acquiring party in writing'' to

read ``mail a written notification to the proposed acquiring person''.

19. Section 19.161 is revised to read as follows:

Sec. 19.161 Notice of disapproval and hearing initiation.

(a) Notice of disapproval. The OCC's written disapproval of a

proposed acquisition of control of a national bank must:

[[Page 20338]]

(1) Contain a statement of the basis for the disapproval; and

(2) Indicate that the filer may request a hearing.

(b) Hearing request. Following receipt of a notice of disapproval,

a filer may request a hearing on the proposed acquisition. A hearing

request must:

(1) Be in writing; and

(2) Be filed with the Hearing Clerk of the OCC within ten days

after service on the filer of the notice of disapproval. If a filer

fails to request a hearing with a timely written request, the notice of

disapproval constitutes a final and unappealable order.

(c) Hearing order. Following receipt of a hearing request, the

Comptroller shall issue, within 20 days, an order that sets forth:

(1) The legal authority for the proceeding and for the OCC's

jurisdiction over the proceeding;

(2) The matters of fact or law upon which the disapproval is based;

and

(3) The requirement for filing an answer to the hearing order with

OFIA within 20 days after service of the hearing order.

(d) Answer. An answer to a hearing order must specifically deny

those portions of the order that are disputed. Those portions of the

order that the filer does not specifically deny are deemed admitted by

the filer. Any hearing under this subpart is limited to those portions

of the order that are specifically denied.

(e) Effect of failure to answer. Failure of a filer to file an

answer within 20 days after service of the hearing order constitutes a

waiver of the filer's right to appear and contest the allegations in

the hearing order. If a filer does not file a timely answer,

enforcement counsel may file a motion for entry of an order of default.

Upon a finding that no good cause has been shown for the failure to

file a timely answer, the administrative law judge shall file with the

Comptroller a recommended decision containing the findings and the

relief sought in the hearing order. Any final order issued by the

Comptroller based upon a filer's failure to answer is deemed to be an

order issued upon consent and is a final and unappealable order.

Sec. 19.162 [Removed]

20. Section 19.162 is removed.

Subpart I--[Amended]

21. In Sec. 19.170, paragraph (d) is revised, paragraphs (e) and

(f) are redesignated as paragraphs (f) and (g), respectively, and a new

paragraph (e) is added to read as follows:

Sec. 19.170 Discovery depositions.

* * * * *

(d) Conduct of the deposition. The witness must be duly sworn, and

each party will have the right to examine the witness with respect to

all non-privileged, relevant, and material matters of which the witness

has factual, direct, and personal knowledge. Objections to questions or

exhibits must be in short form and must state the grounds for the

objection. Failure to object to questions or exhibits is not a waiver

except where the grounds for the objection might have been avoided if

the objection had been timely presented.

(e) Recording the testimony--(1) Generally. The party taking the

deposition must have a certified court reporter record the witness's

testimony:

(i) By stenotype machine or electronic sound recording device;

(ii) Upon agreement of the parties, by any other method; or

(iii) For good cause and with leave of the administrative law

judge, by any other method.

(2) Cost. The party taking the deposition must bear the cost of the

recording and transcribing the witness's testimony.

(3) Transcript. Unless the parties agree that a transcription is

not necessary, the court reporter must provide a transcript of the

witness's testimony to the party taking the deposition and must make a

copy of the transcript available to each party upon payment by that

party of the cost of the copy.

* * * * *

22. In Sec. 19.171, paragraph (b) is revised to read as follows:

Sec. 19.171 Deposition subpoenas.

* * * * *

(b) Service--(1) Methods of service. The party requesting the

subpoena must serve it on the person named therein, or on that person's

counsel, by any of the methods identified in Sec. 19.11(d).

(2) Proof of service. The party serving the subpoena must file

proof of service with the administrative law judge.

* * * * *

Subpart J--[Amended]

23. Section 19.184 is revised to read as follows:

Sec. 19.184 Service of subpoena and payment of witness expenses.

(a) Methods of service. Service of a subpoena may be made by any of

the methods identified in Sec. 19.11(d).

(b) Expenses. A witness who is subpoenaed will be paid the same

expenses in the same manner as witnesses in the district courts of the

United States. The expenses need not be tendered at the time a subpoena

is served.

Dated: April 2, 1996.

Eugene A. Ludwig,

Comptroller of the Currency.

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

BILLING CODE 4810-33-P