[Federal Register Volume 60, Number 90 (Wednesday, May 10, 1995)]
[Rules and Regulations]
[Pages 24761-24762]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-11481]



 ========================================================================
 Rules and Regulations
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains regulatory documents 
 having general applicability and legal effect, most of which are keyed 
 to and codified in the Code of Federal Regulations, which is published 
 under 50 titles pursuant to 44 U.S.C. 1510.
 
 The Code of Federal Regulations is sold by the Superintendent of Documents. 
 Prices of new books are listed in the first FEDERAL REGISTER issue of each 
 week.
 
 ========================================================================
 

  Federal Register / Vol. 60, No. 90 / Wednesday, May 10, 1995 / Rules 
and Regulations  
[[Page 24761]]

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 308

RIN 3064-AB52


Uniform Rules of Practice and Procedure

AGENCY: Federal Deposit Insurance Corporation (FDIC).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The FDIC is amending a provision of the Uniform Rules of 
Practice and Procedure (Rules) adopted by the Board of Directors. The 
final rule is intended to clarify that the Rules' provisions relating 
to ex parte communications conform to the requirements of the 
Administrative Procedure Act (APA). The Board of Governors of the 
Federal Reserve System (FRB) has adopted such an amendment, the 
Comptroller of the Currency (OCC), the Office of Thrift Supervision 
(OTS), and the National Credit Union Administration (NCUA) have 
proposed similar amendments. In particular, the 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.

EFFECTIVE DATE: June 9, 1995.

FOR FURTHER INFORMATION CONTACT: Andrea Winkler (202/898-3764) or 
Grovetta Gardineer (202/898-3905), Counsel, Legal Division, Compliance 
and Enforcement Section.

SUPPLEMENTARY INFORMATION:

I. Background

    In August 1991, the FDIC adopted the Uniform Rules of Practice and 
Procedure (Rules) (56 FR 37975, Aug. 9, 1991). The Comptroller of the 
Currency (OCC), Board of Governors of the Federal Reserve System (Board 
of Governors), Office of Thrift Supervision (OTS) and National Credit 
Union Administration (NCUA) have also adopted the Rules (OCC, 56 FR 
38024, Aug. 9, 1991; Board of Governors, 56 FR 38048, Aug. 9, 1991; 
OTS, 56 FR 38302, Aug. 12, 1991; and NCUA, 56 FR 37762, Aug. 8, 1991). 
The FDIC is amending one aspect of the Rules relating to ex parte 
communications to ensure that the Rules conform to the requirements of 
the APA. The Board of Governors has adopted such an amendment (59 FR 
65244, Dec. 19, 1994), and the other agencies have proposed a similar 
amendment (OCC, 59 FR 63936, Dec. 12, 1994; OTS, 59 FR 62354, Dec. 5, 
1994; NCUA, 59 FR 67655, Dec. 30, 1994). The FDIC issued this amendment 
as a proposed rule on November 29, 1994 (59 FR 60921, Nov. 29, 1994). 
It is now adopting the rule in the form proposed.
    Currently, Sec. 308.9 of the FDIC's Rules of Practice and Procedure 
(which was adopted as part of the Uniform Rules) prohibits ``a party, 
his or her counsel, or another person interested in the proceeding'' 
from making an ex parte communication to any member of the Board of 
Directors (Board) 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) 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 FDIC 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 FDIC did not intend this 
result.
    The 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.
    The FDIC received one comment on the proposed rule, which supported 
it. The commenter suggested that the FDIC explain the so-called 
``Chinese wall'' that prevents those staff members involved in the 
prosecutorial function from communicating with those who advise the 
Board on a particular matter. The amended rule specifically sets out 
the APA's separation of function provision, which prohibits agency 
prosecutorial personnel in one case from participating in the Board's 
decision on that or a factually-related case. This provision clearly 
prevents prosecutorial staff from communicating [[Page 24762]] about 
the merits of a case with those staff members who advise the Board 
regarding a final decision in the case. It is unnecessary to set out 
internal procedures implementing this statutory prohibition in a formal 
rulemaking, and to do so could limit the Board's flexibility with 
respect to internal organization.

II. Regulatory Flexibility Act

    Pursuant to section 605(b) of the Regulatory Flexibility Act, the 
FDIC hereby certifies that the final rule will not have a significant 
economic impact on a substantial number of small entities. Accordingly, 
a regulatory flexibility analysis is not required.
    The final 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 308

    Administrative practice and procedure, Claims, Equal access to 
justice, Lawyers, Penalties.

Authority and Issuance

    For the reasons set out in the preamble, 12 CFR part 308 is amended 
as set forth below:

PART 308--RULES OF PRACTICE AND PROCEDURE

    1. The authority citation for part 308 is revised to read as 
follows:

    Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 1815(e), 1817(a), 
1818(j), 1818, 1820, 1828(j), 1829, 1831i, 1831o; 15 U.S.C. 781(h), 
78m, 78n(a), 78n(c), 78n(d), 78n(f), 78o, 78o-4(c)(5), 78p, 78q, 
78q-1, 78s.

    2. In Sec. 308.9, paragraphs (a) and (b) are revised and a new 
paragraph (e) is added to read as follows:


Sec. 308.9  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 FDIC (including such person's 
counsel); and
    (ii) The administrative law judge handling that proceeding, the 
Board of Directors, 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 FDIC until the date that the Board of Directors 
issues its final decision pursuant to Sec. 308.40(c):
    (1) No interested person outside the FDIC shall make or knowingly 
cause to be made an ex parte communication to any member of the Board 
of Directors, the administrative law judge, or a decisional employee; 
and
    (2) No member of the Board of Directors, no administrative law 
judge, or decisional employee shall make or knowingly cause to be made 
to any interested person outside the FDIC 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 FDIC 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. 308.40 except as witness 
or counsel in public proceedings.

    By Order of the Board of Directors.

    Dated at Washington, DC, this 24th day of April, 1995.

    Federal Deposit Insurance Corporation.
Robert E. Feldman,
Acting Executive Secretary.
[FR Doc. 95-11481 Filed 5-9-95; 8:45 am]
BILLING CODE 6714-01-P