[Federal Register Volume 59, Number 232 (Monday, December 5, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29762]


[[Page Unknown]]

[Federal Register: December 5, 1994]


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DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 509

[No. 94-252]
RIN 1550-AA80

 

Rules of Practice and Procedure in Adjudicatory Proceedings

AGENCY: Office of Thrift Supervision, Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Office of Thrift Supervision (OTS) is proposing an 
amendment to its Rules of Practice and Procedure in Adjudicatory 
Proceedings. The proposal is intended to clarify that 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 APA.

DATES: Comments must be received by January 4, 1995.

ADDRESSES: Written comments should be submitted to Director, 
Information Services Division, Office of Thrift Supervision, 1700 G 
Street, NW., Washington, DC 20552, Attention: Docket No. 94-252. These 
submissions may be hand delivered to 1700 G Street, NW., from 9:00 a.m. 
to 5:00 p.m. on business days; they may be sent by facsimile 
transmission to FAX number (202) 906-7755. Comments will be available 
for inspection at 1700 G Street, NW., from 1:00 p.m. until 4:00 p.m., 
on business days. Visitors will be escorted to and from the Public 
Reference Room at established intervals.

FOR FURTHER INFORMATION CONTACT: Eliot Goldstein, Senior Enforcement 
Counsel, Division of Enforcement, Chief Counsel's Office (202/906-
7162); or Karen Osterloh, Counsel, Banking and Finance, Regulations and 
Legislation Division, Chief Counsel's Office (202/906-6639), Office of 
Thrift Supervision, 1700 G Street, NW., Washington, DC 20552.

SUPPLEMENTARY INFORMATION:

I. Background

    In August, 1991, the Office of Thrift Supervision (OTS), the 
Comptroller of the Currency (OCC), the Board of Governors of the 
Federal Reserve System (Board of Governors), the Federal Deposit 
Insurance Corporation (FDIC), and the National Credit Union 
Administration (NCUA) adopted Uniform Rules of Practice and Procedure 
for agency adjudicatory proceedings. (OTS, 56 FR 38302, Aug. 12, 1991; 
OCC, 56 FR 38024, Aug. 9, 1991; Board of Governors, 56 FR 38048, Aug. 
9, 1991; FDIC, 56 FR 37968, Aug. 9, 1991; and NCUA, 56 FR 37762, Aug. 
8, 1991). The OTS codified these uniform rules in its Rules of Practice 
and Procedure in Adjudicatory Proceedings at 12 CFR Part 509, Subpart 
A.
    In this Notice, the OTS is proposing to amend one aspect of its 
rules relating to ex parte communications to clarify that the rules 
parallel the requirements of the Administrative Procedure Act (APA). 
The other banking agencies are issuing identical proposals.
    Currently, Sec. 509.9 prohibits ``a party, his or her counsel, or 
another interested person'' from making an ex parte communication to 
the Director or other decisional official concerning the merits of an 
adjudicatory proceeding. When the uniform 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.
    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 
Director, 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 OTS and the other banking agencies do 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 OTS and the other banking agencies 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 
OTS hereby certifies that this notice of proposed rulemaking will not 
have a significant economic impact on a substantial number of small 
entities. Accordingly, a regulatory flexibility analysis is not 
required.
    The 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.

III. Executive Order 12866

    The OTS has determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in Executive Order 
12866.

List of Subjects in 12 CFR Part 509

    Administrative practice and procedures, Penalties.

    For the reasons set forth in the preamble, the Office of Thrift 
Supervision hereby proposes to amend part 509, chapter V, title 12, 
Code of Federal Regulations as set forth below:

SUBCHAPTER A--ORGANIZATION AND PROCEDURES

PART 509--RULES OF PRACTICE AND PROCEDURE IN ADJUDICATORY 
PROCEEDINGS

    1. The authority citation for part 509 continues to read as 
follows:

    Authority: 5 U.S.C. 556; 12 U.S.C. 1464, 1467, 1467a, 1813; 15 
U.S.C. 78l.

    2. Section 509.9 is amended by revising paragraphs (a) and (b) and 
by adding a new paragraph (e) to read as follows:


Sec. 509.9  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 Office (including such 
person's counsel); and
    (ii) The administrative law judge handling that proceeding, the 
Director, 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 Director until the date that the Director 
issues its final decision pursuant to Sec. 509.40(c):
    (1) No interested person outside the Office shall make or knowingly 
cause to be made an ex parte communication to the Director, the 
administrative law judge, or a decisional employee; and
    (2) The Director, administrative law judge, or decisional employee 
shall not make or knowingly cause to be made to any interested person 
outside the Office 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 Office 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 section 509.40 of this Part, 
except as witness or counsel in public proceedings.

    Dated: November 18, 1994.

    By the Office of Thrift Supervision.
Jonathan Fiechter,
Acting Director.
[FR Doc. 94-29762 Filed 12-2-94; 8:45 am]
BILLING CODE 6720-01-P