[Federal Register Volume 76, Number 145 (Thursday, July 28, 2011)]
[Rules and Regulations]
[Pages 45174-45177]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-19034]


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BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1082

[Docket No. CFPB-2011-0005]
RIN 3170-AA02


State Official Notification Rules

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Interim final rule with request for public comment.

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SUMMARY: Section 1042(c) of the Consumer Financial Protection Act of 
2010 (``Act''), requires the Bureau of Consumer Financial Protection 
(``CFPB'' or ``Bureau'') to prescribe rules establishing procedures 
that govern the process, described in section 1042(b) of the Act, by 
which state officials notify the CFPB of actions or proceedings 
undertaken pursuant to the authority granted in section 1042(a) to 
enforce the Act or regulations prescribed thereunder. This interim 
final rule with a request for public comment sets forth those rules.

DATES: This interim final rule is effective on July 28, 2011. Written 
comments are invited and must be received on or before September 26, 
2011.

ADDRESSES: You may submit comments, identified by Docket No. CFPB-2011-
0005, by any of the following methods:
     Electronic: http://www.regulations.gov. Follow the 
instructions for submitting comments.
     Mail or Hand Delivery/Courier in Lieu of Mail: Monica 
Jackson, Office of the Executive Secretary, Consumer Financial 
Protection Bureau, 1801 L Street, NW., Washington, DC 20036.
    All submissions must include the agency name and docket number or 
Regulatory Information Number (RIN) for this rulemaking. In general, 
all comments received will be posted without change to http://www.regulations.gov. In addition, comments will be available for public 
inspection and copying at 1801 L Street, NW., Washington, DC 20036, on 
official business days between the hours of 10 a.m. and 5 p.m. Eastern 
Time. You can make an appointment to inspect the documents by 
telephoning (202) 435-7275.
    All comments, including attachments and other supporting materials, 
will become part of the public record and subject to public disclosure. 
Sensitive personal information, such as account numbers or social 
security numbers, should not be included. Comments will not be edited 
to remove any identifying or contact information.

FOR FURTHER INFORMATION CONTACT: Monica Jackson, Office of the 
Executive Secretary, Consumer Financial Protection Bureau, 1801 L 
Street, NW., Washington, DC 20036, (202) 435-7275.

SUPPLEMENTARY INFORMATION: The CFPB issues these State Official 
Notification Rules (``Rules''), pursuant to sections 1042(b) and (c) of 
the Consumer Financial Protection Act of 2010 (``Act''),\1\ 12 U.S.C. 
5552(b), (c). These Rules are promulgated as an interim final rule with 
a request for comment. The CFPB invites interested members of the 
public to submit written comments addressing the issues raised herein.
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    \1\ The Act is Title X of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act, as amended, Public Law 111-203 (July 21, 
2010), Title X, 12 U.S.C. 5481 et seq. Section 1066 of the Act 
grants the Secretary of the Treasury interim authority to perform 
certain functions of the CFPB. Pursuant to that authority, Treasury 
publishes these Rules on behalf of the CFPB.
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A. Background

    These Rules will govern the process by which state officials notify 
the CFPB of actions or proceedings undertaken under section 1042(a) of 
the Act, 12 U.S.C. 5552(a), to enforce the Act, or regulations 
prescribed thereunder.
    The Rules implement a procedure for the timing and content of the 
notice required to be given to the CFPB, set forth the responsibilities 
of CFPB employees and others who receive the notice, and specify the 
rights of the CFPB to participate in an action brought by a state 
official. In drafting these Rules, the CFPB endeavored to create a 
process that would both provide the CFPB and the relevant prudential 
regulators with timely notice of pending actions and account for the 
investigation and litigation needs of state law enforcement agencies. 
In keeping with this approach, the Rules provide for a default notice 
period of at least 10 days, with exceptions for emergencies and other 
extenuating circumstances, and require substantive notice that is both 
straightforward and comprehensive. The Rules further make clear that 
the CFPB can participate as appropriate in an action brought by state 
officials under the Act or a regulation prescribed thereunder, provide 
for confidential treatment of information disclosed to the CFPB and 
prudential regulators under these Rules, and establish that provision 
of notice shall not constitute a waiver of any applicable privilege. In 
addition, the Rules specify that the notice provisions do not create 
any procedural or substantive rights for parties in litigation against 
the United States or against a state which brings an action under the 
Act or a regulation prescribed thereunder.

B. Section Summary

    The Rules are set forth in a single section, with several 
paragraphs, each of which is addressed below.

Section 1082.1(a) Notice Requirement

    This paragraph sets out the timing and process for the provision of 
notice

[[Page 45175]]

by state officials under non-emergency circumstances. The paragraph 
requires state officials to provide notice no later than 10 days prior 
to initiating an action to enforce the Act or any regulation prescribed 
thereunder. The paragraph also identifies to whom and how the notice 
should be sent and sets out an exception to the timing of notice.

Section 1082.1(b) Emergency Actions

    Section 1082.1(b) sets out the process for the provision of notice 
in emergency circumstances. The paragraph lays out the reasons for not 
providing notice in accordance with Sec.  1082.1(a), and establishes a 
deadline to provide notice of no more than 48 hours after the 
initiation of an action. The paragraph also identifies to whom and how 
the notice should be sent, and also sets out an exception to the timing 
of notice.

Section 1082.1(c) Contents of Notice

    In this paragraph, the CFPB specifies the information that must be 
included in the notice provided by state officials. This paragraph also 
details certain additional information that must be provided when 
notice is not given until after an action has been initiated.

Section 1082.1(d) Bureau Response

    Section 1082.1(d) describes how the CFPB may intervene or otherwise 
participate in an action initiated by a state official.

Section 1082.1(e) Confidentiality and Privilege

    Section 1082.1(e) provides that the CFPB and any prudential 
regulator who receives notice shall not disclose any non-public 
information about the notice, and also establishes certain exceptions 
to this requirement. In addition, the paragraph states that the 
provision of notice shall not constitute a waiver of any applicable 
privilege.

Section 1082.1(f) No Private Right of Action or Defense

    This paragraph clarifies that the Rules do not create any right, 
benefit, or defense which is enforceable against the United States or 
state officials enforcing the Act or any regulation prescribed 
thereunder.

C. Procedural Requirements

1. Regulatory Requirements

    The Rules relate solely to ``agency organization, procedure, or 
practice'' and, thus, are not subject to the notice and comment 
requirements of the Administrative Procedure Act (``APA''). See 5 
U.S.C. 551 et seq. Even if these requirements did apply, the CFPB for 
good cause finds that in these circumstances providing advance notice 
and opportunity for comment would be impracticable and contrary to the 
public interest. See 5 U.S.C. 553(b). The Bureau also finds that there 
is good cause to issue this rule effective immediately. See 5 U.S.C. 
553(d). Pursuant to the Act, state officials are permitted to begin 
bringing actions under the Act on July 21, 2011. In order to ensure 
that the CFPB, which is the primary agency responsible for 
administration of the Act and promulgating regulations under the Act, 
is aware of all legal developments related to the Act and situated to 
take appropriate action, it is necessary that the CFPB be informed of 
pending actions. The failure to promptly enact the Rules will leave the 
CFPB without the necessary information to evaluate actions taken 
pursuant to the Act and determine an appropriate response, which may 
impair the efficiency and consistency with which the Act is enforced. 
Thus, the CFPB has determined that this interim rule should be issued, 
effective immediately, without advance notice and opportunity for 
comment. Nevertheless, the CFPB invites public comment on the Rules.
    Because no notice of proposed rulemaking is required, the 
requirements of the Regulatory Flexibility Act, 5 U.S.C. 601(2), do not 
apply.
    The collection of information contained in this rule has been 
approved by the Office of Management and Budget (``OMB'') for review in 
accordance with the Paperwork Reduction Act of 1995, 44 U.S.C. 3507(d), 
under control number 1505-0237. The estimated time per response is 30 
minutes. An agency may not conduct or sponsor and a person is not 
required to respond to a collection of information unless it displays a 
valid OMB control number.

2. Section 1022(b)(2) Provisions

    The CFPB has conducted an analysis of benefits, costs, and impacts 
\2\ and consulted with the prudential regulators, the Department of 
Housing and Urban Development, the Securities and Exchange Commission, 
the Department of Justice, and the Federal Trade Commission, including 
with respect to whether the Rules are consistent with any relevant 
prudential, market, and systemic objectives administered by such 
agencies.\3\
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    \2\ Section 1022(b)(2)(A) addresses the consideration of the 
potential benefits and costs of regulation to consumers and 
industry, including the potential reduction of access by consumers 
to consumer financial products or services; the impact of proposed 
rules on depository institutions and credit unions with $10 billion 
or less in total assets as described in Section 1026 of the Dodd-
Frank Act; and the impact on consumers in rural areas.
    \3\ The President's July 11, 2011, Executive Order 13579 
entitled ``Regulation and Independent Regulatory Agencies,'' asks 
the independent agencies to follow the cost-saving, burden-reducing 
principles in Executive Order 13563; harmonization and 
simplification of rules; flexible approaches that reduce costs; and 
scientific integrity. In the spirit of Executive Order 13563, the 
CFPB has consulted with the Office of Management and Budget 
regarding this interim final rule.
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    The CFPB concludes that the Rules will benefit consumers and 
covered persons alike. The Rules do not impose any obligations on 
consumers or covered persons, nor do they have any direct relevance to 
consumers' access to consumer financial products and services. Rather, 
they provide for notice to the CFPB and prudential regulators when a 
state initiates an action under the Act, or a regulation prescribed 
thereunder. The notice provided to the CFPB may result in a CFPB 
decision to join an enforcement action, which may result in marginal 
additional costs to the relevant covered person. On the other hand, the 
Rules will help ensure more efficient and consistent implementation of 
the Act, which benefits both consumers and covered persons.
    Further, the Rules have no unique impact on insured depository 
institutions or insured credit unions with less than $10 billion in 
assets described in section 1026(a) of the Act, and do not have a 
unique impact on rural consumers.

List of Subjects in 12 CFR Part 1082

    Banks, Banking, Consumer protection, Credit, Credit unions, Federal 
Reserve System, Investigations, Law enforcement, National banks, 
Savings associations, State and local governments, Trade practices.

    For the reasons set forth above, the Bureau of Consumer Financial 
Protection adds part 1082 to Chapter X in Title 12 of the Code of 
Federal Regulations to read as set forth below.

TITLE 12--BANKS AND BANKING

CHAPTER X--BUREAU OF CONSUMER FINANCIAL PROTECTION

PART 1082--STATE OFFICIAL NOTIFICATION RULES

    Authority: Pub. L. 111-203, Title X.


Sec.  1082.1  Procedures for notifying the Bureau of Consumer Financial 
Protection when a state official takes an action to enforce the 
Consumer Financial Protection Act of 2010.

    (a) Notice requirement.
    (1) Pursuant to 12 U.S.C. 5552(b) and except as discussed in 
paragraph (b) of

[[Page 45176]]

this section, every State attorney general and State regulator 
(collectively ``State Official'') shall provide the notice described in 
paragraph (c) of this section to the Division of Enforcement of the 
Bureau of Consumer Financial Protection (``Bureau''), the division of 
the Bureau responsible for enforcement of Federal consumer financial 
law pursuant to the Consumer Financial Protection Act of 2010, as 
amended, Public Law 111-203 (July 21, 2010), Title X, 12 U.S.C. 5481 et 
seq. (``Act''), and the Office of the Executive Secretary of the Bureau 
at least 10 days prior to initiating any action or proceeding in any 
court or other administrative or regulatory proceeding against any 
covered person to enforce any provision of the Act or any regulation 
prescribed thereunder, including but not limited to the filing of a 
complaint, motion for relief, or other document which initiates an 
action or proceeding.
    (2) Notice shall be provided to the Division of Enforcement and the 
Office of the Executive Secretary, or their successor offices, via 
electronic mail to [email protected] and [email protected]. In the 
event of technical problems preventing the delivery of notice, the 
Division of Enforcement or its successor entity should be contacted.
    (3) On the same date that notice is provided to the Division of 
Enforcement and the Office of the Executive Secretary pursuant to 
paragraph (a)(1) of this section, a copy of the notice shall be sent to 
the relevant prudential regulator, if any, or the designee thereof, by 
mail or electronic mail.
    (4) Notice shall be deemed to have been provided as of the date of 
mailing the materials described in paragraph (c) of this section.
    (5) The Division of Enforcement, or its successor entity, in 
consultation with a State Official, may provide, for good cause shown, 
an alternative deadline for the notice described in paragraph (a)(1) of 
this section.
    (b) Emergency actions.
    (1) Pursuant to 12 U.S.C. 5552(b), in the event that a State 
Official initiates or intends to initiate an action or proceeding and, 
in order to protect the public interest or prevent irreparable and 
imminent harm, is unable to provide timely notice as described in 
paragraph (a) of this section, the State Official shall provide the 
notice described in paragraph (c) of this section as soon as is 
practicable and not later than 48 hours after initiation of the action 
or proceeding.
    (2) Notice shall be provided in accordance with the procedures set 
forth in paragraphs (a)(2) through (a)(4) of this section.
    (3) The Division of Enforcement, or its successor entity, in 
consultation with a State Official, may provide, for good cause shown, 
an alternative deadline for the notice described in paragraph (b)(1) of 
this section.
    (c) Contents of notice.
    (1) Pursuant to 12 U.S.C. 5552(b), the notice required under 
paragraphs (a) and (b) of this section shall include a written 
description of the anticipated action or proceeding, including:
    (i) The court or body in which the action or proceeding is to be 
initiated;
    (ii) The identity of the parties to the action or proceeding;
    (iii) The nature of the action or proceeding to be initiated;
    (iv) The anticipated date of initiating the action or proceeding;
    (v) The alleged facts underlying the action or proceeding;
    (vi) A contact name, electronic mail address, and phone number of 
an individual involved with the matter in the office of the State 
Official with whom the Bureau may consult; and
    (vii) A determination as to whether there may be a need to 
coordinate the prosecution of the action or proceeding so as not to 
interfere with any action, including any rulemaking, undertaken by the 
Bureau, a prudential regulator, or another Federal agency.
    (2) The notice required under paragraphs (a) and (b) of this 
section shall further include a complete and unredacted copy of any 
complaint, motion for relief, or similar document that is the subject 
of the notice, in its form as of the date the notice is provided. To 
the extent the complaint, motion for relief, or similar document 
contains the information described in paragraph (c)(1) of this section, 
provision of the complaint, motion for relief, or similar document 
shall be deemed sufficient notice of that information.
    (3) In the event that notice is provided after the initiation of an 
action or proceeding, the written description shall also include the 
following, in addition to the information described in paragraph (c)(1) 
of this section:
    (i) A brief description of any proceeding that occurred as a result 
of the initiation of the action or proceeding, including any orders 
issued by a court or other body;
    (ii) Any case number, matter number, or designation assigned to the 
action or proceeding; and
    (iii) Information on scheduled court or other administrative or 
regulatory proceedings.
    (4) In the event that notice is provided after the initiation of an 
action or proceeding, in addition to the requirements set forth in 
paragraph (c)(3) of this section, the notice shall further include a 
complete, unredacted copy of any document filed by any party in 
relation to the action or proceeding and any orders issued by the court 
or other body.
    (5) If the State Official, after providing the notice described in 
paragraphs (c)(1) and (c)(2) of this section, intends to file a 
complaint, motion for relief, or similar document that is materially 
different from the document included with the notice, the State 
Official shall provide a copy of that document prior to filing, in 
accordance with the method described in paragraph (a)(2) of this 
section.
    (d) Bureau response. In any action or proceeding described in 
paragraphs (a) and (b) of this section, the Bureau may:
    (1) Intervene in the action or proceeding as a party;
    (2) Upon intervening,
    (i) Remove the action to the appropriate United States district 
court, if the action or proceeding was not originally brought there; 
and
    (ii) Be heard on all matters arising in the action;
    (3) Appeal any order or judgment, to the same extent as any other 
party in the proceeding may; and
    (4) Otherwise participate in the action as appropriate.
    (e) Confidentiality and privilege.
    (1) Unless and until such information becomes publically available, 
the substance and fact of the notice described in paragraph (c) of this 
section, including the complaint, motion for relief, or other document, 
shall not be disclosed by the Bureau or any relevant prudential 
regulator who received the notice except as permitted by paragraphs 
(e)(3) and (e)(4) of this section or as required by law.
    (2) Provision of notice by a State Official and disclosure of 
notice pursuant to paragraphs (e)(3) and (e)(4) of this section shall 
not be deemed a waiver of any applicable privilege.
    (3) Notwithstanding paragraph (e)(1) of this section, the Bureau 
and any relevant prudential regulator who received the notice described 
in paragraph (c) of this section may share the substance or fact of the 
notice with another entity pursuant to the consent of the State 
Official who provided the notice.
    (4) Notwithstanding paragraphs (e)(1) and (e)(3) of this section, 
the Bureau may share the substance and fact of the notice described in 
paragraph (c) of this section with another state or federal government 
entity when necessary to protect the public interest, after

[[Page 45177]]

consultation with the State Official who provided the notice.
    (f) No private right of action or defense. The requirements set 
forth in this section are not intended to, do not, and may not be 
relied upon to create any right, benefit, or defense, substantive or 
procedural, enforceable at law by a party against the United States or 
any State enforcing the provisions of the Act or any regulation 
prescribed thereunder.

    Dated: July 22, 2011.
Sam Valverde,
Deputy Executive Secretary, Department of the Treasury.
[FR Doc. 2011-19034 Filed 7-25-11; 4:15 pm]
BILLING CODE 4810-25-P