Proposed Amendments to Guidelines for Appeals of Material Supervisory Determinations

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FDIC Financial Institution Letters › Proposed Amendments to Guidelines for Appeals of Material Supervisory Determinations

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64034

Federal Register / Vol. 87, No. 203 / Friday, October 21, 2022 / Notices

FEDERAL COMMUNICATIONS

COMMISSION

[OMB 3060–1267; FR ID 109572]

Information Collection Being Reviewed

by the Federal Communications

Commission Under Delegated

Authority

AGENCY: Federal Communications

Commission.

ACTION: Notice and request for

comments.

SUMMARY: As part of its continuing effort

to reduce paperwork burdens, and as

required by the Paperwork Reduction

Act (PRA) of 1995, the Federal

Communications Commission (FCC or

the Commission) invites the general

public and other Federal agencies to

take this opportunity to comment on the

following information collection.

Comments are requested concerning:

whether the proposed collection of

information is necessary for the proper

performance of the functions of the

Commission, including whether the

information shall have practical utility;

the accuracy of the Commission’s

burden estimate; ways to enhance the

quality, utility, and clarity of the

information collected; ways to minimize

the burden of the collection of

information on the respondents,

including the use of automated

collection techniques or other forms of

information technology; and ways to

further reduce the information

collection burden on small business

concerns with fewer than 25 employees.

The FCC may not conduct or sponsor a

collection of information unless it

displays a currently valid control

number. No person shall be subject to

any penalty for failing to comply with

a collection of information subject to the

PRA that does not display a valid Office

of Management and Budget (OMB)

control number.

DATES: Written PRA comments should

be submitted on or before December 20,

2022. If you anticipate that you will be

submitting comments, but find it

difficult to do so within the period of

time allowed by this notice, you should

advise the contact listed below as soon

as possible

mation subject to the

PRA that does not display a valid Office

of Management and Budget (OMB)

control number.

DATES: Written PRA comments should

be submitted on or before December 20,

2022. If you anticipate that you will be

submitting comments, but find it

difficult to do so within the period of

time allowed by this notice, you should

advise the contact listed below as soon

as possible.

ADDRESSES: Direct all PRA comments to

Nicole Ongele, FCC, via email PRA@

fcc.gov and to nicole.ongele@fcc.gov.

FOR FURTHER INFORMATION CONTACT: For

additional information about the

information collection, contact Nicole

Ongele, (202) 418–2991.

SUPPLEMENTARY INFORMATION:

OMB Control Number: 3060–1267.

Title: FCC Anti-Harassment Intake

Form.

Form Number: FCC Form 5632.

Type of Review: Extension of a

currently approved collection.

Respondents: Individuals or

households; Federal Government.

Number of Respondents and

Responses: 5 respondents; 5 responses.

Estimated Time per Response: 3

hours.

Frequency of Response: One-time

reporting requirement.

Obligation to Respond: Voluntary.

Statutory authority for these collections

is contained in the Civil Rights Act of

1964 section 7, as amended, 42 U.S.C.

2000e; Age Discrimination in

Employment act of 1967 (ADEA), 29

U.S.C. 621–634; Americans with

Disabilities Act of 1990 (ADA), as

amended, 42 U.S.C. 12101–12213;

Rehabilitation Act of 1973, as amended,

29. U.S.C. 501 et seq.

Total Annual Burden: 18 hours.

Total Annual Cost: $4,050.

Privacy Act Impact Assessment: The

FCC’s Office of Workplace Diversity

(OWD) uses the ServiceNow platform to

maintain EEO complaints, including

harassment complaints. The Privacy

Impact Assessment (PIA) for

ServiceNow is posted on the FCC’s

Privacy Act at https://www.fcc.gov/

managing-director/privacy-

transparency/privacy-act-information.

Nature and Extent of Confidentiality:

Confidentiality of information will be

provided in accordance with the Privacy

Act

WD) uses the ServiceNow platform to

maintain EEO complaints, including

harassment complaints. The Privacy

Impact Assessment (PIA) for

ServiceNow is posted on the FCC’s

Privacy Act at https://www.fcc.gov/

managing-director/privacy-

transparency/privacy-act-information.

Nature and Extent of Confidentiality:

Confidentiality of information will be

provided in accordance with the Privacy

Act. The Commission is not requesting

respondents to submit confidential

information to the Commission. If the

Commission requests respondents to

submit information which respondents

believe is confidential, respondents may

request confidential treatment of such

information pursuant to section 0.459 of

the Commission’s rules, 47 CFR 0.459.

Needs and Uses: FCC employees and

related individuals may seek a forum

through the Anti-Harassment Program

for inquiry and resolution of harassment

claims by completing FCC Form 5632.

Federal Communications Commission.

Marlene Dortch,

Secretary, Office of the Secretary.

[FR Doc. 2022–22911 Filed 10–20–22; 8:45 am]

BILLING CODE 6712–01–P

FEDERAL DEPOSIT INSURANCE

CORPORATION

RIN 3064–ZA20

Guidelines for Appeals of Material

Supervisory Determinations

AGENCY: Federal Deposit Insurance

Corporation.

ACTION: Notice and request for comment.

SUMMARY: The Federal Deposit

Insurance Corporation proposes to

amend its Guidelines for Appeals of

Material Supervisory Determinations,

expanding and clarifying the role of the

agency’s Ombudsman. The proposal

also would require that materials

considered by the Supervision Appeals

Review Committee be shared with both

parties to the appeal, subject to

applicable legal limitations on

disclosure, and would allow insured

depository institutions to request a stay

of a material supervisory determination

while an appeal is pending.

DATES: Written comments must be

received by the FDIC on or before

November 21, 2022 for consideration

considered by the Supervision Appeals

Review Committee be shared with both

parties to the appeal, subject to

applicable legal limitations on

disclosure, and would allow insured

depository institutions to request a stay

of a material supervisory determination

while an appeal is pending.

DATES: Written comments must be

received by the FDIC on or before

November 21, 2022 for consideration.

ADDRESSES: Interested parties are

invited to submit written comments,

identified by RIN 3064–ZA20, by any of

the following methods:

• Agency Website: https://

www.fdic.gov/resources/regulations/

federal-register-publications/. Follow

the instructions for submitting

comments.

• Email: comments@FDIC.gov.

Include ‘‘Guidelines for Appeals of

Material Supervisory Determinations—

RIN 3064–ZA20’’ in the subject line of

the message.

• Mail: James P. Sheesley, Assistant

Executive Secretary, Attention:

Comments—RIN 3064–ZA20, Federal

Deposit Insurance Corporation, 550 17th

Street NW, Washington, DC 20429.

• Hand Delivery/Courier: Guard

station at the rear of the 550 17th Street

NW building (located on F Street NW)

on business days between 7:00 a.m. and

5:00 p.m. (EST).

• Public Inspection: Comments

received, including any personal

information provided, may be posted

without change to https://www.fdic.gov/

resources/regulations/federal-register-

publications/. Commenters should

submit only information that the

commenter wishes to make available

publicly. The FDIC may review, redact,

or refrain from posting all or any portion

of any comment that it may deem to be

inappropriate for publication, such as

irrelevant or obscene material. The FDIC

may post only a single representative

example of identical or substantially

identical comments, and in such cases

will generally identify the number of

identical or substantially identical

comments represented by the posted

example

refrain from posting all or any portion

of any comment that it may deem to be

inappropriate for publication, such as

irrelevant or obscene material. The FDIC

may post only a single representative

example of identical or substantially

identical comments, and in such cases

will generally identify the number of

identical or substantially identical

comments represented by the posted

example. All comments that have been

redacted, as well as those that have not

been posted, that contain comments on

the merits of this notice will be retained

in the public comment file and will be

considered as required under all

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Federal Register / Vol. 87, No. 203 / Friday, October 21, 2022 / Notices

1 12 U.S.C. 4806(a).

2 12 U.S.C. 4806(f)(2).

3 12 U.S.C. 4806(b).

4 60 FR 15923 (Mar. 28, 1995).

5 86 FR 6880 (Jan. 25, 2021).

6 87 FR 30942 (May 20, 2022).

applicable laws. All comments may be

accessible under the Freedom of

Information Act.

FOR FURTHER INFORMATION CONTACT:

Sheikha Kapoor, Senior Counsel, Legal

Division, 202–898–3960, skapoor@

fdic.gov; James Watts, Counsel, Legal

Division, 202–898–6678, jwatts@

fdic.gov.

SUPPLEMENTARY INFORMATION: The

Federal Deposit Insurance Corporation

(FDIC) is proposing to amend its

Guidelines for Appeals of Material

Supervisory Determinations

(Guidelines), expanding and clarifying

the role of the FDIC’s Ombudsman in

the supervisory appeals process. The

FDIC is proposing to add the

Ombudsman to the Supervision Appeals

Review Committee (SARC) as a non-

voting member. This is intended to

further balance the perspectives

reflected in the composition of the

SARC, as the Ombudsman is

independent of the supervision function

and has experience in resolving

disputes between insured depository

institutions (IDIs) and the FDIC

peals process. The

FDIC is proposing to add the

Ombudsman to the Supervision Appeals

Review Committee (SARC) as a non-

voting member. This is intended to

further balance the perspectives

reflected in the composition of the

SARC, as the Ombudsman is

independent of the supervision function

and has experience in resolving

disputes between insured depository

institutions (IDIs) and the FDIC. In

addition, the Ombudsman would

monitor the supervision process

following an institution’s submission of

an appeal under the Guidelines. The

proposal also would require materials

considered by the SARC to be shared

with both parties to the appeal, subject

to applicable legal limitations on

disclosure and oversight by the

Ombudsman, and would allow IDIs to

request a stay of a material supervisory

determination while an appeal is

pending.

I. Background

Section 309(a) of the Riegle

Community Development and

Regulatory Improvement Act of 1994

(Riegle Act) required the FDIC (as well

as the other Federal banking agencies

and the National Credit Union

Administration) to establish an

‘‘independent intra-agency appellate

process’’ to review material supervisory

determinations.1 The statute defines the

term ‘‘independent appellate process’’

to mean ‘‘a review by an agency official

who does not directly or indirectly

report to the agency official who made

the material supervisory determination

under review.’’ 2 In the appeals process,

the FDIC is required to ensure that: (1)

an IDI’s appeal of a material supervisory

determination is heard and decided

expeditiously; and (2) appropriate

safeguards exist for protecting

appellants from retaliation by agency

examiners.3

In 1995, the FDIC adopted Guidelines

for Appeals of Material Supervisory

Determinations to implement section

309(a)

er review.’’ 2 In the appeals process,

the FDIC is required to ensure that: (1)

an IDI’s appeal of a material supervisory

determination is heard and decided

expeditiously; and (2) appropriate

safeguards exist for protecting

appellants from retaliation by agency

examiners.3

In 1995, the FDIC adopted Guidelines

for Appeals of Material Supervisory

Determinations to implement section

309(a). At that time, the FDIC’s Board of

Directors established the SARC to

consider and decide appeals of material

supervisory determinations.4 The Board

has modified the composition of the

SARC over the years, but as of 2021, the

SARC included: one inside member of

the FDIC’s Board of Directors (serving as

Chairperson); one deputy or special

assistant to each of the other inside

Board members; and the General

Counsel as a non-voting member.

In January 2021, the FDIC adopted

Guidelines that replaced the SARC as

the final level of review in the appellate

process with a standalone office within

the FDIC, designated the Office of

Supervisory Appeals (Office).5 After

appealing a material supervisory

determination to the relevant Division

Director, an IDI would have had the

option to appeal to the Office. If a

material supervisory determination was

appealed to the Office, a three- or five-

member panel of reviewing officials

would consider the appeal and issue a

written decision to the IDI. The

Guidelines did not provide for

additional review beyond the Office.

Earlier this year, the FDIC revised the

Guidelines by restoring the SARC as the

final level of review of material

supervisory determinations made by the

FDIC.6 The revised Guidelines

reconstituted the SARC as it existed in

2021. The FDIC decided to restore the

SARC based on the agency’s

longstanding practice of ensuring Board-

level review of material supervisory

determinations, noting that this

promotes both independence and

accountability in the appellate process

final level of review of material

supervisory determinations made by the

FDIC.6 The revised Guidelines

reconstituted the SARC as it existed in

2021. The FDIC decided to restore the

SARC based on the agency’s

longstanding practice of ensuring Board-

level review of material supervisory

determinations, noting that this

promotes both independence and

accountability in the appellate process.

Board-level review ensures

accountability for the FDIC’s

supervisory determinations remains

with the FDIC’s Board of Directors,

consistent with sound corporate

governance principles. In addition, the

FDIC noted that restoring the SARC

structure addressed certain staffing

concerns inherent in the Office’s

structure that threatened to hinder the

effectiveness of the appellate process

going forward.

The revised Guidelines also included

procedural changes to reflect the

restoration of the SARC structure, such

as granting specific authorities to the

SARC Chairperson. The FDIC also

eliminated a provision that had been

added specifically to accommodate an

independent Office of Supervisory

Appeals, which required

communications between the Office and

either supervisory staff or the appealing

IDI, including materials submitted to the

Office for review, to be shared with the

other party to the appeal.

While the revised Guidelines were

effective on May 17, 2022, the FDIC

invited comments on all aspects of the

revised Guidelines. The FDIC

specifically asked for comments

regarding the inclusion of the

Ombudsman’s perspective in the

supervisory appeals process and for

other ways to enhance the process while

remaining consistent with the

Ombudsman’s role as a neutral liaison

between supervised IDIs and the FDIC.

The comment period closed on June 21,

2022.

II. Discussion of Comments

The FDIC received comment letters

from a think tank, a financial holding

company, a trade association, and a

joint comment letter from six trade

associations

ocess and for

other ways to enhance the process while

remaining consistent with the

Ombudsman’s role as a neutral liaison

between supervised IDIs and the FDIC.

The comment period closed on June 21,

2022.

II. Discussion of Comments

The FDIC received comment letters

from a think tank, a financial holding

company, a trade association, and a

joint comment letter from six trade

associations. The commenters raised a

number of concerns with the restoration

of the SARC structure. A commenter

also raised concerns with the standard

of review for SARC decisions and

recommended a stay of supervisory

actions while an appeal is pending.

These comments are discussed in

further detail below.

Restoration of SARC Structure

Commenters generally disagreed with

the restoration of the SARC structure

and the FDIC’s conclusion that this

would enhance the independence of the

appellate process. A think tank

indicated that the return to the SARC

structure would not further the

independence of decision making

because SARC members, as FDIC

leadership, have an ongoing

relationship with supervisory staff and

must show trust and support for the

same staff whose judgment is being

questioned. The commenter further

stated that if FDIC board members are

setting the agency’s regulatory and

supervisory tone, they could find

themselves questioning their own policy

initiatives. Along these same lines, a

trade association indicated that the

appellate process will be less

independent if the FDIC’s Board has

control over the outcome.

Commenters also raised the concern

that the SARC structure may not

provide the intended balancing of

perspectives, given the current

composition of the FDIC’s Board. The

commenters noted that Congress

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Board has

control over the outcome.

Commenters also raised the concern

that the SARC structure may not

provide the intended balancing of

perspectives, given the current

composition of the FDIC’s Board. The

commenters noted that Congress

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Federal Register / Vol. 87, No. 203 / Friday, October 21, 2022 / Notices

7 See OCC Bulletin 2013–15.

8 12 U.S.C. 4806(f)(2).

provided for a bipartisan Board of five

Senate-confirmed members, but the

FDIC’s Board is currently comprised of

an acting Chairman and two outside

members, all from the same political

party.

Some commenters recommended that

the FDIC restore the Office of

Supervisory Appeals. These

commenters believed that the Office of

Supervisory Appeals provided for

greater independence in decision-

making and that inspired confidence on

the part of supervised institutions.

These commenters also raised concerns

with the process used to restore the

SARC structure, noting that the FDIC

has historically modified the Guidelines

after soliciting comment. A joint

comment letter from several trade

associations stated that the FDIC did not

sufficiently explain why the Office of

Supervisory Appeals structure could or

should no longer function. The

comment further stated that the FDIC

should have considered alternative

solutions if staffing the Office of

Supervisory Appeals was an issue.

Ombudsman’s Role

As noted above, the FDIC solicited

comment on including the

Ombudsman’s perspective in the

supervisory appeals process and ways to

enhance the process while remaining

consistent with the Ombudsman’s role

as a neutral liaison between IDIs and the

FDIC. Commenters supported

expanding the Ombudsman’s role in the

appeals process

Office of

Supervisory Appeals was an issue.

Ombudsman’s Role

As noted above, the FDIC solicited

comment on including the

Ombudsman’s perspective in the

supervisory appeals process and ways to

enhance the process while remaining

consistent with the Ombudsman’s role

as a neutral liaison between IDIs and the

FDIC. Commenters supported

expanding the Ombudsman’s role in the

appeals process. A trade association

stated that it was a strong proponent of

the FDIC’s Office of the Ombudsman,

explaining that Ombudsmen are

experienced professionals specifically

trained in resolving disputes between

bankers and regulators. The commenter

further stated that the Ombudsmen

advocate for a fair and impartial process

at the FDIC, are most familiar with both

sides of the dispute, and would be a

valuable source of information that

would benefit appeals panel

discussions. The commenter ‘‘strongly

urge[d] the role of the Ombudsmen be

clarified and expanded.’’ A financial

holding company also contrasted the

FDIC’s appellate process with that of the

OCC, noting that the OCC allows

national banks to appeal disputes

directly to an Ombudsman who operates

independently from the supervision

process and reports directly to the head

of the agency.

Communications

The revised Guidelines eliminated a

provision that was added specifically to

accommodate the Office of Supervisory

Appeals. This provision required that

any communications between the Office

and supervisory staff be in writing and

shared with an appealing IDI, subject to

limitations on disclosure. Commenters

stated that the requirement to share ex

parte information with both parties is a

fundamental right to assure that both

parties are aware of the information

shared with the decision-maker and

have an opportunity to respond to that

information

unications between the Office

and supervisory staff be in writing and

shared with an appealing IDI, subject to

limitations on disclosure. Commenters

stated that the requirement to share ex

parte information with both parties is a

fundamental right to assure that both

parties are aware of the information

shared with the decision-maker and

have an opportunity to respond to that

information. Another commenter stated

that the FDIC’s elimination of this

provision rendered the appeals process

less effective, suggesting that it is a

reason banks do not utilize the appeals

process.

Standard of Review

A commenter recommended that the

FDIC adopt a de novo standard of

review, asserting that this would be

consistent with the standard adopted by

the Board of Governors of the Federal

Reserve System in its supervisory

appeals process. The commenter stated

that no deference should apply to an

examiner’s interpretation of the law or

factual findings, and explained that a

more robust de novo standard of review

would increase institutions’ confidence

in the process.

Stay of Material Supervisory

Determinations

A financial holding company

recommended that the FDIC stay

supervisory actions during an appeal

because supervisory determinations can

have consequences for an institution,

such as removing an institution from

expedited processing of applications.

The commenter stated that the FDIC

should at least implement a mechanism

whereby a bank could be relieved of

such burdens while an appeal is

pending. The commenter noted that the

OCC’s process allows the Ombudsman

or the appropriate OCC official, upon

written request of the bank, to relieve

the bank of an obligation to comply with

a supervisory decision or action while

an appeal is pending.7

III. Proposed Guidelines

The FDIC appreciates the comments

and further recommendations to

enhance the informal appellate process

consistent with the statute

r noted that the

OCC’s process allows the Ombudsman

or the appropriate OCC official, upon

written request of the bank, to relieve

the bank of an obligation to comply with

a supervisory decision or action while

an appeal is pending.7

III. Proposed Guidelines

The FDIC appreciates the comments

and further recommendations to

enhance the informal appellate process

consistent with the statute. Based on

these recommendations, the FDIC is

proposing to further amend the

Guidelines to address commenters’

concerns, as discussed in further detail

below.

SARC Structure

Review of material supervisory

determinations by a Board-level

committee such as the SARC promotes

greater accountability in the supervisory

appeals process. Ultimate responsibility

for the FDIC’s supervision function is

vested in the agency’s Board of Directors

by statute, and the SARC structure

ensures that the Board remains

accountable for the agency’s supervisory

determinations. Accordingly, the FDIC’s

longstanding practice has been to ensure

Board-level review of material

supervisory determinations with a panel

also including other senior officials. The

Guidelines governing the Office allowed

for reliance on individuals with

previous supervisory experience

recruited from outside the FDIC and

hired for intermittent service on a time-

limited contract basis to make final

supervisory determinations on behalf of

the FDIC.

Hiring individuals from outside the

agency represented a significant

departure from the FDIC’s established

approach for over 25 years of reliance

on a Board-level committee and

undermines accountability for these

supervisory determinations. Moreover,

it is fundamentally inconsistent with

how the other financial regulators have

carried out their responsibilities under

the Riegle Act

DIC.

Hiring individuals from outside the

agency represented a significant

departure from the FDIC’s established

approach for over 25 years of reliance

on a Board-level committee and

undermines accountability for these

supervisory determinations. Moreover,

it is fundamentally inconsistent with

how the other financial regulators have

carried out their responsibilities under

the Riegle Act. While there is some

diversity of approach among the Board

of Governors of the Federal Reserve

System, the Office of the Comptroller of

the Currency, and the National Credit

Union Administration, all of these

agencies utilize full-time internal staff

or Board members to carry out their

appeals processes. The Office of the

Comptroller of the Currency allows

supervisory appeals to be decided by its

Ombudsman, the National Credit Union

Administration allows appeals to a

committee of senior staff or directly to

its Board of Directors, and the Board of

Governors of the Federal Reserve

System utilizes panels of staff from the

Federal Reserve Banks and the Board of

Governors.

Review of material supervisory

determinations by the SARC also

promotes independence from the usual

supervisory or examination channels in

a manner consistent with the Riegle Act.

As provided by the statute, independent

review means review ‘‘by an agency

official who does not directly or

indirectly report to the agency official

who made the material supervisory

determination under review.’’ 8

Members of the FDIC’s Board of

Directors (and their special assistants or

deputies) are agency officials

independent from the staff that carry out

day-to-day supervisory responsibilities.

They also bring important knowledge

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er review.’’ 8

Members of the FDIC’s Board of

Directors (and their special assistants or

deputies) are agency officials

independent from the staff that carry out

day-to-day supervisory responsibilities.

They also bring important knowledge

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Federal Register / Vol. 87, No. 203 / Friday, October 21, 2022 / Notices

9 12 U.S.C. 4806(d). The FDIC notes that the OCC

Ombudsman’s role in deciding supervisory appeals

predates the enactment of the Riegle Act (which

also required the appointment of an Ombudsman).

The House Conference Report accompanying the

legislation stated:

Some of the Federal banking agencies have in

place procedures to settle disputes between the

agency and a financial institution that may satisfy

the requirements of this provision. In addition,

some agencies, for example, the Comptroller of the

Currency, may already have appointed an

ombudsman to hear appeals. Nothing in this section

is intended to interfere with such existing

programs.

H.R. Conf. Rep. 103–652 at 171. The FDIC also

notes that the Ombudsmen at the Board of

Governors of the Federal Reserve System and the

National Credit Union Administration are not

involved in decision making for appeals.

10 The FDIC has previously recognized that

making decisions with respect to supervisory

appeals would result in some tension with the

Ombudsman’s statutory role as a liaison between

supervised institutions and the agency. See 69 FR

41479, 41481 (July 9, 2004).

and experience with current applicable

laws, regulations, and policies when

they consider appeals.

In terms of timing, comment was not

solicited prior to restoring the SARC

structure because, at that time, there

were no pending appeals, and the new

Office had not yet been utilized in any

cases

liaison between

supervised institutions and the agency. See 69 FR

41479, 41481 (July 9, 2004).

and experience with current applicable

laws, regulations, and policies when

they consider appeals.

In terms of timing, comment was not

solicited prior to restoring the SARC

structure because, at that time, there

were no pending appeals, and the new

Office had not yet been utilized in any

cases. The FDIC sought to avoid a

situation in which an appeal might be

filed while these Guidelines and the

appropriate appeals structure were

under review. As indicated in the May

2022 notice, taking action quickly

minimized the potential for confusion

among IDIs with respect to the process

they must follow in the event they wish

to appeal a material supervisory

determination. While the FDIC’s

primary reason for restoring the SARC

structure was promoting independence

and accountability in the process, it

noted that staffing considerations also

favored a return to the SARC structure.

Commenters sought additional detail on

these considerations. The FDIC had

engaged in extensive efforts to recruit

reviewing officials to staff the Office of

Supervisory Appeals, extending the

application postings for these positions

in an attempt to develop a broad pool

of applicants. Three reviewing officials

were hired, but this would have been

insufficient to provide for the minimum

three-member panel if an individual

were unable to participate in the review

of an appeal due to a conflict of interest

or illness, leaving the Office unable to

function.

The FDIC is mindful, however, of the

commenters’ concerns regarding the

need for a balance of perspectives to be

reflected in the appellate process, and

agrees that more should be done to

achieve that balance. Adding the

Ombudsman to the SARC may help to

address this balance because the

Ombudsman has a longstanding role as

a neutral advocate for a fair and

impartial process, as recognized by the

commenters

however, of the

commenters’ concerns regarding the

need for a balance of perspectives to be

reflected in the appellate process, and

agrees that more should be done to

achieve that balance. Adding the

Ombudsman to the SARC may help to

address this balance because the

Ombudsman has a longstanding role as

a neutral advocate for a fair and

impartial process, as recognized by the

commenters. The Ombudsman does not

have any ongoing relationship with, or

oversight responsibility for, the agency’s

supervision function, and including the

Ombudsman’s perspective may enhance

independence and address perceptions

of fairness.

The FDIC is proposing to add the

Ombudsman to the SARC as a non-

voting member in order to minimize any

potential for conflict with the

Ombudsman’s statutory role. Under the

Riegle Act, the Ombudsman acts as

liaison between the agency and any

affected person, and assures that

safeguards exist to encourage

complainants to come forward and

preserve confidentiality.9 The FDIC’s

Ombudsman has a longstanding

commitment to neutrality that could be

compromised if the Ombudsman were

to serve as a voting member of the

SARC. If the Ombudsman were a voting

member, he or she might decide a

matter against the institution, and this

possibility could affect IDIs’ willingness

to utilize the Ombudsman’s services.10

Serving as a non-voting member of the

SARC would allow the Ombudsman to

remain independent of the supervision

function. As a non-voting member, the

Ombudsman would be expected to

attend SARC meetings, participate in

discussions, and offer views, opinions,

and advice to the SARC during its

deliberations based on the

Ombudsman’s perspective as a neutral

advocate for a fair process, and as a

party independent of the supervisory

process

d allow the Ombudsman to

remain independent of the supervision

function. As a non-voting member, the

Ombudsman would be expected to

attend SARC meetings, participate in

discussions, and offer views, opinions,

and advice to the SARC during its

deliberations based on the

Ombudsman’s perspective as a neutral

advocate for a fair process, and as a

party independent of the supervisory

process. The FDIC believes the

Ombudsman’s participation in the

SARC as a non-voting member would

balance the views reflected in the

committee’s membership and give

appealing IDIs greater confidence in the

fairness and integrity of the process. The

Ombudsman would also have access to

all materials reviewed by the SARC, as

explained below.

The FDIC recognizes that adding the

Ombudsman to the SARC could cause

IDIs to reconsider whether they should

share confidential information with the

Ombudsman, given that the

Ombudsman could be involved in

deciding a potentially related

supervisory appeal. The Guidelines

provide a mechanism to address this by

allowing a SARC member to designate a

member of his staff to serve on the

SARC on his or her behalf. However, the

authority to designate a staff member,

found in section B of the current

Guidelines, limits designation to ‘‘the

most senior member’’ of the SARC

member’s staff. This may not be

appropriate if, for example, the

Ombudsman’s senior staff has also been

involved in dispute resolution efforts.

The FDIC proposes to broaden this

authority to allow a SARC member to

designate any member of his or her staff

within the member’s area of

responsibility. For example, if the

Ombudsman were unable to serve as a

SARC member with respect to a

particular appeal because of information

learned from meeting with the

institution, he or she might designate a

Regional Ombudsman who has not been

involved in the matter to serve on the

SARC instead

w a SARC member to

designate any member of his or her staff

within the member’s area of

responsibility. For example, if the

Ombudsman were unable to serve as a

SARC member with respect to a

particular appeal because of information

learned from meeting with the

institution, he or she might designate a

Regional Ombudsman who has not been

involved in the matter to serve on the

SARC instead.

Consistent with the proposed addition

of the Ombudsman to the SARC as a

non-voting member, the FDIC also

proposes to make certain conforming

changes to other provisions of the

Guidelines. Specifically, section G.4 of

the Guidelines currently permits both

the Division Director and the

Ombudsman to submit views regarding

the appeal to the SARC. The FDIC

proposes to eliminate the reference to

the Ombudsman in this provision in the

event the Ombudsman becomes a

member of the SARC, as it would no

longer be necessary to provide a

separate mechanism for including the

Ombudsman’s perspective in the

process. For the same reason, the FDIC

proposes to eliminate current section J

of the Guidelines, which states that the

subject matter of a material supervisory

determination is not eligible for

consideration by the Ombudsman.

The FDIC also is proposing to amend

section G.1 of the Guidelines to require

copies of all relevant materials related to

an appeal to be provided to the Office

of the Ombudsman. This change would

ensure that the Ombudsman is aware of

all pertinent information and can

provide neutral oversight of the process.

Commenters also expressed concern

about possible retaliatory actions if an

IDI submits a supervisory appeal. Due to

these concerns, the FDIC is proposing to

amend the Guidelines to require the

Ombudsman to monitor the supervisory

process following an IDI’s submission of

an appeal. The Ombudsman will be

expected to report to the Board on these

matters periodically

versight of the process.

Commenters also expressed concern

about possible retaliatory actions if an

IDI submits a supervisory appeal. Due to

these concerns, the FDIC is proposing to

amend the Guidelines to require the

Ombudsman to monitor the supervisory

process following an IDI’s submission of

an appeal. The Ombudsman will be

expected to report to the Board on these

matters periodically. The FDIC believes

these enhancements to the process may

alleviate some IDIs’ concerns regarding

potential retaliation.

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11 The provision could have been read broadly,

for example, to require the sharing of all

communications about pending or ongoing

enforcement actions in the event a bank were to file

a supervisory appeal.

12 For example, the disclosure of confidential

supervisory information and certain other types of

information is restricted under 12 CFR part 309.

Thus, to the extent that materials shared with the

SARC include such confidential supervisory

information relating to another IDI, for example,

that material could be redacted.

13 86 FR 6880, 6883 (Jan. 25, 2021).

14 Id.

15 See Board of Governors of the Federal Reserve

System Supervision Letter 20–28, section B.7. The

Board noted that this approach may be considered

a de novo standard of review. See 85 FR 15175,

15177 (Mar. 17, 2020).

16 See Board of Governors of the Federal Reserve

System Supervision Letter 20–28, section B.16.

17 See OCC Bulletin 2013–15.

18 See 82 FR 34522, 34526 (July 25, 2017).

Communications

The FDIC understands the

commenters’ concerns regarding the

elimination of the provision of the

Guidelines that generally required

communications between the Office of

Supervisory Appeals and supervisory

staff to be shared with the appealing

institution

System Supervision Letter 20–28, section B.16.

17 See OCC Bulletin 2013–15.

18 See 82 FR 34522, 34526 (July 25, 2017).

Communications

The FDIC understands the

commenters’ concerns regarding the

elimination of the provision of the

Guidelines that generally required

communications between the Office of

Supervisory Appeals and supervisory

staff to be shared with the appealing

institution. While the FDIC believes that

the existing provision was too broad for

use in the SARC structure,11 it agrees

that basic notions of fairness support a

requirement that both parties to the

appeal are aware of the information

considered by the decision-maker. The

FDIC therefore proposes to add a

provision to the Guidelines, section G.8,

requiring that all materials considered

by the SARC are shared with both

parties to the appeal, subject to

applicable legal limitations on

disclosure.12 The Ombudsman would

verify that both parties have received all

materials considered by the SARC.

Standard of Review

As noted above, a commenter

recommended that the FDIC adopt a de

novo standard of review, asserting that

this would be consistent with the

standard adopted by the Board of

Governors of the Federal Reserve

System in its supervisory appeals

process. In 2021, the FDIC amended the

Guidelines to provide that the Division

Director’s standard of review would be

substantially similar to the standard of

review employed by the Federal

Reserve’s initial review panels.13 The

FDIC explained that under this

standard, the Division Director would

have discretion to consider examination

workpapers and other materials

developed by staff during an

examination, but would make an

independent supervisory determination,

without deferring to the judgments of

either party.14 This standard of review

remains unchanged in the current

Guidelines

initial review panels.13 The

FDIC explained that under this

standard, the Division Director would

have discretion to consider examination

workpapers and other materials

developed by staff during an

examination, but would make an

independent supervisory determination,

without deferring to the judgments of

either party.14 This standard of review

remains unchanged in the current

Guidelines.

The FDIC believes that the standards

of review set forth in its process are

consistent with those used by the

Federal Reserve, in that neither standard

provides that the decision maker will

defer to the judgment of agency staff

that made the material supervisory

determination under review. The

Federal Reserve’s initial review panels

review determinations for consistency

‘‘with applicable laws, regulations, and

policy, and supported by a

preponderance of the evidence in the

record . . . the panel shall make its own

supervisory determination and shall not

defer to the judgment of the Reserve

Bank staff that made the material

supervisory determination.’’ 15 This is

similar to the FDIC’s review by a

Division Director, in which the Director

considers ‘‘whether the material

supervisory determination is consistent

with applicable laws, regulations, and

policy, [and] make[s] his or her own

supervisory determination without

deferring to the judgments of either

party.’’ This approach may be

considered a de novo standard of review

but lays out with more specificity the

actual considerations to be applied.

Neither agency’s process provides for

a de novo standard at the final level of

review. Rather, the Federal Reserve’s

final review panels ‘‘determine whether

the decision of the initial review panel

is reasonable . .

to the judgments of either

party.’’ This approach may be

considered a de novo standard of review

but lays out with more specificity the

actual considerations to be applied.

Neither agency’s process provides for

a de novo standard at the final level of

review. Rather, the Federal Reserve’s

final review panels ‘‘determine whether

the decision of the initial review panel

is reasonable . . . and whether there has

been a clear error of judgment.’’ 16

Similarly, the SARC reviews an appeal

‘‘for consistency with the policies,

practices, and mission of the FDIC and

the overall reasonableness of, and the

support offered for, the positions

advanced.’’

Stay of Material Supervisory

Determinations

As noted above, a financial holding

company recommended that the FDIC

stay supervisory actions during an

appeal because supervisory

determinations can have consequences

for an institution, such as removing an

institution from expedited processing of

applications. The commenter stated that

the FDIC should at least implement a

mechanism whereby a bank could be

relieved of such burdens while an

appeal is pending. The commenter

noted that the OCC’s process allows the

Ombudsman or the appropriate OCC

official, upon written request of the

bank, to relieve the bank of an

obligation to comply with a supervisory

decision or action while an appeal is

pending.17

The FDIC has previously stated that

IDIs may request a stay of supervisory

actions from the appropriate Division

Director during the pendency of an

appeal,18 but agrees that it would be

useful to address this aspect of the

process expressly in the Guidelines.

There may be situations where a stay is

appropriate to mitigate consequences of

a determination during appellate

review. Amending the Guidelines to

expressly permit IDIs to request a stay

of an action or determination would

better ensure that IDIs are aware of the

ability to request a stay

t agrees that it would be

useful to address this aspect of the

process expressly in the Guidelines.

There may be situations where a stay is

appropriate to mitigate consequences of

a determination during appellate

review. Amending the Guidelines to

expressly permit IDIs to request a stay

of an action or determination would

better ensure that IDIs are aware of the

ability to request a stay. The FDIC

therefore proposes to amend the

Guidelines to allow an IDI to request a

stay of a supervisory action or

determination from the appropriate

Division Director while its appeal is

pending. The request must be in writing

and include the reasons for the stay. The

Division Director would have discretion

to grant a stay, and would generally

decide whether a stay is granted within

21 days of receiving the IDI’s request.

The Division Director could grant a stay

subject to certain conditions where

appropriate; for example, a stay could

be time-limited.

Request for Comment

The FDIC invites comment on this

proposal, particularly the role of the

Ombudsman, sharing of appeal

materials, and the ability of an IDI to

request a stay of a supervisory action.

For the reasons set out in the

preamble, the Federal Deposit Insurance

Corporation proposes to adopt

Guidelines for Appeals of Material

Supervisory Determinations as set forth

below.

Guidelines for Appeals of Material

Supervisory Determinations

A. Introduction

Section 309(a) of the Riegle

Community Development and

Regulatory Improvement Act of 1994

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

Act) required the Federal Deposit

Insurance Corporation (FDIC) to

establish an independent intra-agency

appellate process to review material

supervisory determinations made at

insured depository institutions that it

supervises. The Guidelines for Appeals

of Material Supervisory Determinations

(Guidelines) describe the types of

determinations that are eligible for

review and the process by which

appeals will be considered and decided

rporation (FDIC) to

establish an independent intra-agency

appellate process to review material

supervisory determinations made at

insured depository institutions that it

supervises. The Guidelines for Appeals

of Material Supervisory Determinations

(Guidelines) describe the types of

determinations that are eligible for

review and the process by which

appeals will be considered and decided.

The procedures set forth in these

Guidelines establish an appeals process

for the review of material supervisory

determinations by the Supervision

Appeals Review Committee (SARC).

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B. SARC Membership

The following individuals comprise

the three (3) voting members of the

SARC: (1) One inside FDIC Board

member, either the Chairperson, the

Vice Chairperson, or the FDIC Director

(Appointive), as designated by the FDIC

Chairperson (this person would serve as

the Chairperson of the SARC); and (2)

one deputy or special assistant to each

of the inside FDIC Board members who

are not designated as the SARC

Chairperson. The General Counsel and

the Ombudsman are non-voting

members of the SARC. The FDIC

Chairperson may designate alternate

member(s) to the SARC if there are

vacancies so long as the alternate

member was not involved in making or

affirming the material supervisory

determination under review. A member

of the SARC may designate and

authorize a member of his or her staff

within the member’s area of

responsibility related to cases before the

SARC to act on his or her behalf.

hairperson may designate alternate

member(s) to the SARC if there are

vacancies so long as the alternate

member was not involved in making or

affirming the material supervisory

determination under review. A member

of the SARC may designate and

authorize a member of his or her staff

within the member’s area of

responsibility related to cases before the

SARC to act on his or her behalf.

C. Institutions Eligible To Appeal

The Guidelines apply to the insured

depository institutions that the FDIC

supervises (i.e., insured State

nonmember banks, insured branches of

foreign banks, and state savings

associations), and to other insured

depository institutions for which the

FDIC makes material supervisory

determinations.

D. Determinations Subject To Appeal

An institution may appeal any

material supervisory determination

pursuant to the procedures set forth in

these Guidelines.

(1) Material supervisory

determinations include:

(a) CAMELS ratings under the

Uniform Financial Institutions Rating

System;

(b) IT ratings under the Uniform

Rating System for Information

Technology;

Interagency Trust Rating System;

(d) CRA ratings under the Revised

Uniform Interagency Community

Reinvestment Act Assessment Rating

System;

(e) Consumer compliance ratings

under the Uniform Interagency

Consumer Compliance Rating System;

(f) Registered transfer agent

examination ratings;

(g) Government securities dealer

examination ratings;

(h) Municipal securities dealer

examination ratings;

(i) Determinations relating to the

appropriateness of loan loss reserve

provisions;

(j) Classifications of loans and other

assets in dispute the amount of which,

individually or in the aggregate, exceeds

10 percent of an institution’s total

capital;

er agent

examination ratings;

(g) Government securities dealer

examination ratings;

(h) Municipal securities dealer

examination ratings;

(i) Determinations relating to the

appropriateness of loan loss reserve

provisions;

(j) Classifications of loans and other

assets in dispute the amount of which,

individually or in the aggregate, exceeds

10 percent of an institution’s total

capital;

(k) Determinations relating to

violations of a statute or regulation that

may affect the capital, earnings, or

operating flexibility of an institution, or

otherwise affect the nature and level of

supervisory oversight accorded an

institution;

(l) Truth in Lending Act (Regulation

Z) restitution;

(m) Filings made pursuant to 12 CFR

303.11(f), for which a request for

reconsideration has been granted, other

than denials of a change in bank control,

change in senior executive officer or

board of directors, or denial of an

application pursuant to section 19 of the

Federal Deposit Insurance Act (FDI Act),

12 U.S.C. 1829 (which are contained in

12 CFR 308, subparts D, L, and M,

respectively), if the filing was originally

denied by the Director, Deputy Director,

or Associate Director of the Division of

Depositor and Consumer Protection

(DCP) or the Division of Risk

Management Supervision (RMS);

(n) Decisions to initiate informal

enforcement actions (such as

memoranda of understanding);

(o) Determinations regarding the

institution’s level of compliance with a

formal enforcement action; however, if

the FDIC determines that the lack of

compliance with an existing formal

enforcement action requires an

additional formal enforcement action,

the proposed new enforcement action is

not appealable;

(p) Matters requiring board attention;

and

uch as

memoranda of understanding);

(o) Determinations regarding the

institution’s level of compliance with a

formal enforcement action; however, if

the FDIC determines that the lack of

compliance with an existing formal

enforcement action requires an

additional formal enforcement action,

the proposed new enforcement action is

not appealable;

(p) Matters requiring board attention;

and

(q) Any other supervisory

determination (unless otherwise not

eligible for appeal) that may affect the

capital, earnings, operating flexibility,

or capital category for prompt corrective

action purposes of an institution, or that

otherwise affects the nature and level of

supervisory oversight accorded an

institution.

(2) Material supervisory

determinations do not include:

(a) Decisions to appoint a conservator

or receiver for an insured depository

institution, and other decisions made in

furtherance of the resolution or

receivership process, including but not

limited to determinations pursuant to

parts 370, 371, and 381, and § 360.10 of

the FDIC’s rules and regulations;

(b) Decisions to take prompt

corrective action pursuant to section 38

of the FDI Act, 12 U.S.C. 1831o;

appeals procedures exist (such as

determinations of deposit insurance

assessment risk classifications and

payment calculations); and

(d) Formal enforcement-related

actions and decisions, including

determinations and the underlying facts

and circumstances that form the basis of

a recommended or pending formal

enforcement action.

I Act, 12 U.S.C. 1831o;

appeals procedures exist (such as

determinations of deposit insurance

assessment risk classifications and

payment calculations); and

(d) Formal enforcement-related

actions and decisions, including

determinations and the underlying facts

and circumstances that form the basis of

a recommended or pending formal

enforcement action.

(3) A formal enforcement-related

action or decision commences, and

becomes unappealable, when the FDIC

initiates a formal investigation under 12

U.S.C. 1820(c) (Order of Investigation),

issues a notice of charges or a notice of

assessment under 12 U.S.C. 1818 or

other applicable laws (Notice of

Charges), provides the institution with a

draft consent order, or otherwise

provides written notice to the

institution that the FDIC is reviewing

the facts and circumstances presented to

determine if a formal enforcement

action is merited under applicable

statutes or published enforcement-

related policies of the FDIC, including

written notice of a referral to the

Attorney General pursuant to the Equal

Credit Opportunity Act (ECOA) or a

notice to the Secretary of Housing and

Urban Development (HUD) for

violations of ECOA or the Fair Housing

Act (FHA). Such notice may be

provided in the transmittal letter

accompanying a Report of Examination.

For the purposes of these Guidelines,

remarks in a Report of Examination do

not constitute written notice that the

FDIC is reviewing the facts and

circumstances presented to determine if

a proposed enforcement action is

merited. Commencement of a formal

enforcement-related action or decision

will not suspend or otherwise affect a

pending request for review or appeal

that was submitted before the

commencement of the formal

enforcement-related action or decision.

(4) Additional Appeal Rights:

hat the

FDIC is reviewing the facts and

circumstances presented to determine if

a proposed enforcement action is

merited. Commencement of a formal

enforcement-related action or decision

will not suspend or otherwise affect a

pending request for review or appeal

that was submitted before the

commencement of the formal

enforcement-related action or decision.

(4) Additional Appeal Rights:

(a) In the case of any written notice

from the FDIC to the institution that the

FDIC is determining whether a formal

enforcement action is merited, the FDIC

must issue an Order of Investigation,

issue a Notice of Charges, or provide the

institution with a draft consent order

within 120 days of such a notice, or the

most recent submission of information

from the institution, whichever is later,

or appeal rights will be made available

pursuant to these Guidelines. If the

FDIC timely provides the institution

with a draft consent order and the

institution rejects the draft consent

order in writing, the FDIC must issue an

Order of Investigation or a Notice of

Charges within 90 days from the date on

which the institution rejects the draft

consent order in writing or appeal rights

will be made available pursuant to these

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Guidelines. The FDIC may extend these

periods, with the approval of the SARC

Chairperson, after the FDIC notifies the

institution that the relevant Division

Director is seeking formal authority to

take an enforcement action.

(b) In the case of a referral to the

Attorney General for violations of the

ECOA, beginning on the date the referral

is returned to the FDIC, the FDIC must

proceed in accordance within paragraph

(a), including within the specified

timeframes, or appeal rights will be

made available pursuant to these

Guidelines.

ivision

Director is seeking formal authority to

take an enforcement action.

(b) In the case of a referral to the

Attorney General for violations of the

ECOA, beginning on the date the referral

is returned to the FDIC, the FDIC must

proceed in accordance within paragraph

(a), including within the specified

timeframes, or appeal rights will be

made available pursuant to these

Guidelines.

HUD for violations of the ECOA or the

FHA, beginning on the date the notice

is provided, the FDIC must proceed in

accordance within paragraph (a),

including within the specified

timeframes, or appeal rights will be

made available pursuant to these

Guidelines.

(d) Written notification will be

provided to the institution within 10

days of a determination that appeal

rights have been made available under

this section.

(e) The relevant FDIC Division and

the institution may mutually agree to

extend the timeframes in paragraphs (a),

(b), and (c) if the parties deem it

appropriate.

E. Good-Faith Resolution

An institution should make a good-

faith effort to resolve any dispute

concerning a material supervisory

determination with the on-site examiner

and/or the appropriate Regional Office.

The on-site examiner and the Regional

Office will promptly respond to any

concerns raised by an institution

regarding a material supervisory

determination. Informal resolution of

disputes with the on-site examiner and

the appropriate Regional Office is

encouraged, but seeking such a

resolution is not a condition to filing a

request for review with the appropriate

Division, either DCP, RMS, or the

Division of Complex Institution

Supervision and Resolution (CISR), or to

filing a subsequent appeal with the

SARC under these Guidelines.

F. Filing a Request for Review With the

Appropriate Division

ner and

the appropriate Regional Office is

encouraged, but seeking such a

resolution is not a condition to filing a

request for review with the appropriate

Division, either DCP, RMS, or the

Division of Complex Institution

Supervision and Resolution (CISR), or to

filing a subsequent appeal with the

SARC under these Guidelines.

F. Filing a Request for Review With the

Appropriate Division

(1) An institution may file a request

for review of a material supervisory

determination with the Division that

made the determination, either the

Director, DCP, the Director, RMS, or the

Director, CISR (Director or Division

Director), 550 17th Street NW, Room F–

4076, Washington, DC 20429, within 60

calendar days following the institution’s

receipt of a report of examination

containing a material supervisory

determination or other written

communication of a material

supervisory determination. Requests for

review also may be submitted

electronically. To ensure

confidentiality, requests should be

submitted through securemail.fdic.gov,

directing the message to

DirectorReviewRequest@fdic.gov. A

request for review must be in writing

and must include:

(a) A detailed description of the issues

in dispute, the surrounding

circumstances, the institution’s position

regarding the dispute and any

arguments to support that position

(including citation of any relevant

statute, regulation, policy statement, or

other authority), how resolution of the

dispute would materially affect the

institution, and whether a good-faith

effort was made to resolve the dispute

with the on-site examiner and the

Regional Office; and

cumstances, the institution’s position

regarding the dispute and any

arguments to support that position

(including citation of any relevant

statute, regulation, policy statement, or

other authority), how resolution of the

dispute would materially affect the

institution, and whether a good-faith

effort was made to resolve the dispute

with the on-site examiner and the

Regional Office; and

(b) A statement that the institution’s

board of directors or senior management

has considered the merits of the request

and has authorized that it be filed.

Senior management is defined as the

core group of individuals directly

accountable to the board of directors for

the sound and prudent day-to-day

management of the institution. If an

institution’s senior management files an

appeal, it must inform the board of

directors of the substance of the appeal

before filing and keep the board of

directors informed of the appeal’s

status.

(2) Within 45 calendar days after

receiving a request for review described

in paragraph (1), the Division Director

will:

(a) review the appeal, considering

whether the material supervisory

determination is consistent with

applicable laws, regulations, and policy,

make his or her own supervisory

determination without deferring to the

judgments of either party, and issue a

written determination on the request for

review, setting forth the grounds for that

determination; or

(1), the Division Director

will:

(a) review the appeal, considering

whether the material supervisory

determination is consistent with

applicable laws, regulations, and policy,

make his or her own supervisory

determination without deferring to the

judgments of either party, and issue a

written determination on the request for

review, setting forth the grounds for that

determination; or

(b) refer the request for review to the

SARC for consideration as an appeal

under section G and provide written

notice to the institution that the request

for review has been referred to the

SARC.

(3) No appeal to the SARC will be

allowed unless an institution has first

filed a timely request for review with

the appropriate Division Director.

(4) In any decision issued pursuant to

paragraph (2)(a) of this section, the

Director will inform the institution of

the 30-day time period for filing with

the SARC and will provide the mailing

address for any appeal the institution

may wish to file.

(5) The Division Director may request

guidance from the SARC Chairperson or

the Legal Division as to procedural or