[Federal Register Volume 60, Number 110 (Thursday, June 8, 1995)]
[Rules and Regulations]
[Pages 30183-30184]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14008]



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 Rules and Regulations
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  Federal Register / Vol. 60, No. 110 / Thursday, June 8, 1995 / Rules 
and Regulations  

[[Page 30183]]

DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 19

[Docket No. 95-09]
RIN 1557-AB15


Uniform Rules of Practice and Procedure

AGENCY: The Office of the Comptroller of the Currency, Treasury.

ACTION: Final rule.

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SUMMARY: The Office of the Comptroller of the Currency (OCC) is 
amending a provision of the Uniform Rules of Practice and Procedure 
adopted by the OCC (Uniform Rules). The final rule is intended to 
clarify that the Uniform Rules' provisions relating to ex parte 
communications conform to the requirements of the Administrative 
Procedure Act (APA). The final rule is needed to clarify that the 
Uniform Rules' ex parte provisions do not apply to intra-agency 
communications, which are governed by a separate provision of the APA.

EFFECTIVE DATE: July 10, 1995.

FOR FURTHER INFORMATION CONTACT: Daniel Stipano, Director, Enforcement 
and Compliance (202-874-4800), or Daniel Cooke, Attorney, Legislative 
and Regulatory Activities Division (202-874-5090).

SUPPLEMENTARY INFORMATION:

Background

    Section 916 of the Financial Institutions Reform, Recovery and 
Enforcement Act of 1989 (FIRREA), Pub. L. 73, 103 Stat. 183 (1989) 
required the OCC, Board of Governors of the Federal Reserve System 
(Board of Governors), Federal Deposit Insurance Corporation (FDIC), 
Office of Thrift Supervision (OTS), and National Credit Union 
Administration (NCUA) (collectively, the ``agencies'') to develop 
uniform rules and procedures for administrative hearings. The agencies 
issued a joint notice of proposed rulemaking on June 17, 1991 (56 FR 
27790) and issued their final Uniform Rules in August 1991 (OCC, 56 FR 
38024, August 9, 1991; Board of Governors, 56 FR 38052, August 9, 1991; 
FDIC, 56 FR 37975, August 9, 1991; OTS, 56 FR 38317, August 12, 1991; 
and NCUA, 56 FR 37767, August 8, 1991).
    On November 22, 1994 (59 FR 60094), the Board of Governors proposed 
to amend its Uniform Rules relating to ex parte communications to 
clarify that the Uniform Rules parallel the requirements of the APA. 
The OCC issued a similar notice of proposed rulemaking (proposal) on 
December 12, 1994 (59 FR 63936). The OTS, FDIC, and NCUA also proposed 
the amendment (FDIC, 59 FR 60921, November 29, 1994; OTS, 59 FR 62354, 
December 5, 1994; NCUA, 59 FR 67655, December 30, 1994).
    The Board of Governors issued a final rule on December 19, 1994 (59 
FR 65244).
    As adopted in 1991, Sec. 19.9 of the Uniform Rules prohibited a 
party, the party's counsel, or another interested person from making an 
ex parte communication to the Comptroller or other decisional official 
concerning the merits of an adjudicatory proceeding. When the agencies 
proposed the Uniform Rules in 1991, they explained that the section on 
ex parte communications would adopt the rules and procedures set forth 
in the APA (5 U.S.C. 551(14) and 557(d)) regarding ex parte 
communications. The OCC did not intend at that time to impose a rule 
more restrictive than that imposed by the APA.

Scope of the APA

    The APA contains two provisions relating to communications with 
agency decisionmakers. The first, the ex parte communication provision, 
restricts communications between an interested person outside the 
agency, on the one hand, and the agency head, the administrative law 
judge (ALJ), or an agency decisional employee, on the other. 5 U.S.C. 
557(d).
    The second, the intra-agency communications provision, governs the 
separation of functions within an agency. 5 U.S.C. 554(d). That section 
prohibits agency investigative or prosecutorial staff from 
participating or advising in the decision, recommended decision, or 
agency review of an adjudicatory matter pursuant to 5 U.S.C. 557 except 
as witness or counsel. The 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 Uniform Rules as proposed and adopted in 1991, however, do not 
mention the separation of functions concept explicitly. Consequently, 
the Uniform Rules could have been interpreted to apply the ex parte 
communication prohibition to all communications concerning the merits 
of an adjudicatory proceeding between the agency head, ALJ, or 
decisional employee, on one hand, and any party, the party's counsel, 
or another person interested in the proceeding on the other hand.
    This interpretation of Sec. 19.9 would limit an agency's 
investigatory or prosecutorial staff's ability to seek approval of 
amendments to, or terminations of, existing enforcement actions. Thus, 
as adopted in 1991, Sec. 19.9 could be interpreted to expand the ex 
parte communication prohibition beyond the scope of the APA. The OCC 
did not and does not intend that interpretation. The final rule, 
therefore, makes clear that Sec. 19.9 is no broader than the APA.

The Final Rule

    The final rule conforms the Uniform Rules to the APA by: (1) 
Limiting the prohibition on ex parte communications to communications 
to or from interested persons outside the agency and the ALJ, agency 
head, and agency decisional employees (5 U.S.C. 557(d)); and (2) 
incorporating explicitly the APA's separation of functions provision (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 (ACUS). ACUS, Model Adjudication Rules (December, 
1993).
    In addition, Sec. 19.9(a)(1) of the final rule conforms the 
definition of ``ex parte communication'' to the language of 5 U.S.C. 
557(d), which prohibits ex parte [[Page 30184]] communications 
``relevant to the merits'' of a proceeding. The final rule's definition 
of ex parte communications substitutes the words ``relevant to the 
merits'' of an adjudicatory proceeding for the words ``concerning the 
merits'' of an adjudicatory proceeding, which appear in the current 
rule.
Comment Received

    The OCC received one comment on its proposal. The comment supported 
the proposal and suggested that the OCC explain the so-called ``Chinese 
wall'' that prevents those staff members involved in the prosecutorial 
function from communicating with those who advise the Comptroller on a 
particular matter. The final rule specifically sets out the APA's 
separation of functions provision, which prohibits agency prosecutorial 
personnel in one case from participating in the Comptroller's decision 
on that or a factually related case.
    The final rule prohibits prosecutorial staff from communicating 
about the merits of a case with those staff members who advise the 
Comptroller regarding a final decision in the case. Therefore, the OCC 
believes that it is unnecessary, in a rulemaking, to set out the OCC's 
internal procedures for maintaining the statutorily required 
communication barrier. In conformance with the APA and this rule, OCC 
investigative and prosecutorial staff do not make communications to 
decisional employees that are relevant to the merits of an adjudicatory 
proceeding without putting the communications on the record and without 
giving reasonable prior notice to all parties.

Regulatory Flexibility Act

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

Executive Order 12866

    The OCC has determined that this rule is not a significant 
regulatory action as defined in Executive Order 12866.

Unfunded Mandates Act of 1995

    Section 202 of the Unfunded Mandates Reform Act of 1995, Pub. L. 
104-4 (Unfunded Mandates Act) (signed into law on March 22, 1995) 
requires that an agency prepare a budgetary impact statement before 
promulgating a rule that includes a Federal mandate that may result in 
expenditure by State, local, and tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any one year. If a 
budgetary impact statement is required, section 205 of the Unfunded 
Mandates Act also requires an agency to identify and consider a 
reasonable number of regulatory alternatives before promulgating a 
rule. As discussed in the preamble, this final rule is limited in 
application to the internal procedures of the OCC. The OCC has 
therefore determined that the final rule will not result in 
expenditures by State, local, or tribal governments or by the private 
sector of more than $100 million. Accordingly, the OCC has not prepared 
a budgetary impact statement or specifically addressed the regulatory 
alternatives considered.

List of Subjects in 12 CFR Part 19

    Administrative practice and procedure, Crime, Investigations, 
National banks, Penalties, Securities.

Authority and Issuance

    For the reasons set out in the preamble, part 19 of chapter I of 
title 12 of the Code of Federal Regulations is amended as follows:

PART 19--RULES OF PRACTICE AND PROCEDURE

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

    Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 93(b), 164, 505, 
1817, 1818, 1820, 1831o, 1972, 3102, 3108(a), and 3909; 15 U.S.C. 
78(h) and (i), 78o-4(c), 78o-5, 78q-1, 78u, 78u-2, 78u-3, and 78w; 
and 31 U.S.C. 330.

    2. In Sec. 19.9, paragraphs (a)(1) and (b) are revised and a new 
paragraph (e) is added to read as follows:


Sec. 19.9  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 OCC (including such person's 
counsel); and
    (ii) The administrative law judge handling that proceeding, the 
Comptroller, or a decisional employee.
* * * * *
    (b) Prohibition of ex parte communications. From the time the 
notice is issued by the Comptroller until the date that the Comptroller 
issues his or her final decision pursuant to Sec. 19.40(c):
    (1) No interested person outside the OCC shall make or knowingly 
cause to be made an ex parte communication to the Comptroller, the 
administrative law judge, or a decisional employee; and
    (2) The Comptroller, administrative law judge, or decisional 
employee shall not make or knowingly cause to be made to any interested 
person outside the OCC 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 OCC 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. 19.40, except as witness 
or counsel in public proceedings.

    Dated: June 2, 1995.
Eugene A. Ludwig,
Comptroller of the Currency.
[FR Doc. 95-14008 Filed 6-7-95; 8:45 am]
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