[Federal Register Volume 59, Number 224 (Tuesday, November 22, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-28757]


[[Page Unknown]]

[Federal Register: November 22, 1994]


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FEDERAL RESERVE SYSTEM

12 CFR PART 263

[Docket No. R-0855]

 

Uniform Rules of Practice and Procedure

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Proposed rule.

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SUMMARY: The Board of Governors of the Federal Reserve System (Board of 
Governors) proposes to amend a provision of the Uniform Rules of 
Practice and Procedure adopted by the Board. The proposal is intended 
to clarify that the rules' provisions relating to ex parte 
communications conform to the requirements of the Administrative 
Procedure Act (APA). In particular, the proposed amendment would 
clarify that the ex parte provisions do not apply to intra-agency 
communications, which are governed by a separate provision of the 
Administrative Procedure Act.

DATES: Comments must be received on or before December 8, 1994.

ADDRESSES: Comments should refer to Docket No. R-0855 and may be mailed 
to William W. Wiles, Secretary, Board of Governors of the Federal 
Reserve System, 20th Street and Constitution Avenue, N.W., Washington, 
D.C. 20551. Comments also may be delivered to Room B-2222 of the Eccles 
Building between 8:45 a.m. and 5:15 p.m. weekdays, or to the guard 
station in the Eccles Building courtyard on 20th Street, N.W. (between 
Constitution Avenue and C Street) at any time. Comments may be 
inspected in Room MP-500 of the Martin Building between 9:00 a.m. and 
5:00 p.m. weekdays, except as provided in 12 CFR 261.8 of the Board's 
rules regarding availability of information.

FOR FURTHER INFORMATION CONTACT: Katherine H. Wheatley, Assistant 
General Counsel, Legal Division (202/452-3779), or Ann Marie 
Kohlligian, Senior Counsel, Division of Banking Supervision and 
Regulation (202/452-3528). For the hearing impaired only, 
Telecommunication Device for the Deaf (TDD), Dorothea Thompson (202/
452-3544).

SUPPLEMENTARY INFORMATION:

I. Background

     In August 1991, the Board of Governors adopted the Uniform Rules 
of Practice and Procedure (``Rules'') (56 FR 38048, Aug. 9, 1991). The 
Comptroller of the Currency (OCC), Federal Deposit Insurance 
Corporation (FDIC), Office of Thrift Supervision (OTS) and National 
Credit Union Administration (NCUA) have also adopted the Rules (OCC, 56 
FR 38024, Aug. 9, 1991; FDIC, 56 FR 37968, Aug. 9, 1991; OTS, 56 FR 
38302, Aug. 12, 1991; and NCUA, 56 FR 37762, Aug. 8, 1991). The Board 
of Governors now proposes to amend one aspect of the Rules relating to 
ex parte communications to clarify that the Rules parallel the 
requirements of the Administrative Procedure Act. The other agencies 
are considering proposing a similar amendment.
    Currently, Sec. 263.9 of the Rules prohibits ``a party, his or her 
counsel, or another interested person'' from making an ex parte 
communication to the Board or other decisional official concerning the 
merits of an adjudicatory proceeding. When the Rules were proposed and 
adopted in 1991, the joint notice of proposed rulemaking (56 FR 27790, 
27793, June 17, 1991) explained that the proposed rule regarding ex 
parte communications ``adopts the rules and procedures set forth in the 
APA regarding ex parte communications.'' There was no intention at that 
time to impose a rule more restrictive than that imposed by the APA 
itself.
    The APA contains two provisions relating to communications with 
agency decision-makers. The APA's ex parte communication provision 
restricts communications between ``interested person[s] outside the 
agency'' and the agency head, the administrative law judge (ALJ), or 
the agency decisional employees. 5 U.S.C. 557(d) (emphasis added). 
Intra-agency communications are governed by the APA's separation of 
functions provision, 5 U.S.C. 554(d). That section prohibits 
investigative or prosecutorial personnel at an agency from 
``participat[ing] or advis[ing] in the decision, recommended decision, 
or agency review'' of an adjudicatory matter pursuant to section 557 of 
the APA except as witness or counsel. The same separation of function 
provision provides that the ALJ in an adjudicatory matter may not 
consult any party on a fact in issue unless the other parties have an 
opportunity to participate.
5 U.S.C. 554(d)(1). The separation of functions provision does not 
prohibit agency investigatory or prosecutorial staff from seeking the 
amendment of a notice or the settlement or termination of a proceeding.
    The rule as proposed and adopted in 1991, however, neglected to 
mention the separation of functions concept explicitly, and appeared to 
apply the ex parte communication prohibition to all communications 
concerning the merits of an adjudicatory proceeding between the agency 
head, ALJ or decisional personnel on the one hand, and any ``party, his 
or her counsel, or another person interested in the proceeding'' on the 
other. The Board of Governors does not interpret this provision as 
limiting agency enforcement staff's ability to seek approval of 
amendments to or terminations of existing enforcement actions. As 
drafted, however, the provision could be misinterpreted to expand the 
ex parte communication prohibition beyond the scope of the APA. The 
Board of Governors did not intend this result.
    The proposed amendment clarifies that the regulation is intended to 
conform to the provisions of the APA by limiting the prohibition on ex 
parte communications to communications to or from ``interested persons 
outside the agency,'' 5 U.S.C. 557(d), and by incorporating explicitly 
the APA's separation of functions provisions, 5 U.S.C. 554(d). This 
approach is also consistent with the most recent Model Adjudication 
Rules prepared by the Administrative Conference of the United States.

II. Regulatory Flexibility Act

    Pursuant to section 605(b) of the Regulatory Flexibility Act, the 
Board of Governors hereby certifies that this proposed rule is not 
expected to have a significant economic impact on a substantial number 
of small entities. Accordingly, a regulatory flexibility analysis is 
not required.
    This proposed rule makes a minor amendment to a rule of practice 
already in place, and affects intra-agency procedure exclusively. Thus, 
it should not result in additional burden for regulated institutions. 
The purpose of the revised regulation is to conform the provisions of 
the regulation to those imposed by statute.

List of Subjects in 12 CFR Part 263

    Administrative practice and procedure, Claims, Crime, Equal access 
to justice, Federal Reserve System, Lawyers, Penalties.

    For the reasons set forth in the preamble, the Board of Governors 
proposes to amend 12 CFR Part 263 as set forth below:

PART 263--RULES OF PRACTICE FOR HEARINGS

    1. The authority citation for part 263 is revised to read as 
follows:

    Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 248, 324, 504, 505, 
1817(j), 1818, 1828(c), 1847(b), 1847(d), 1884(b), 1972(2)(F), 3105, 
3107, 3108, 3907, and 3909; 15 U.S.C. 21, 78o-4, 78o-5, and 78u-2.

    2. Section 263.9 would be amended by revising paragraphs (a) and 
(b) and adding a new paragraph (e) to read as follows:


Sec. 263.9  Ex parte communications.

    (a) Definition--(1) Ex parte communication means any material oral 
or written communication relevant to the merits of an adjudicatory 
proceeding that was neither on the record nor on reasonable prior 
notice to all parties that takes place between:
     (i) An interested person outside the Board (including such 
person's counsel); and
     (ii) The administrative law judge handling that proceeding, a 
member of the Board, or a decisional employee.
    (2) Exception. A request for status of the proceeding does not 
constitute an ex parte communication.
    (b) Prohibition of ex parte communications. From the time the 
notice is issued by the Board until the date that the Board issues its 
final decision pursuant to Sec. 263.40(c):
    (1) No interested person outside the Federal Reserve System shall 
make or knowingly cause to be made an ex parte communication to a 
member of the Board, the administrative law judge, or a decisional 
employee; and
    (2) A member of the Board, administrative law judge, or decisional 
employee shall not make or knowingly cause to be made to any interested 
person outside the Federal Reserve System any ex parte communication.
* * * * *
    (e) Separation of functions. Except to the extent required for the 
disposition of ex parte matters as authorized by law, the 
administrative law judge may not consult a person or party on any 
matter relevant to the merits of the adjudication, unless on notice and 
opportunity for all parties to participate. An employee or agent 
engaged in the performance of investigative or prosecuting functions 
for the Board in a case may not, in that or a factually related case, 
participate or advise in the decision, recommended decision, or agency 
review of the recommended decision under Sec. 263.40, except as witness 
or counsel in public proceedings.

    By order of the Board of Governors of the Federal Reserve 
System, November 17, 1994.
William W. Wiles,
Secretary of the Board.
[FR Doc. 94-28757 Filed 11-21-94; 8:45am]
BILLING CODE 6210-01-P