[Federal Register Volume 85, Number 120 (Monday, June 22, 2020)]
[Rules and Regulations]
[Pages 37331-37333]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-13504]
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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.
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Federal Register / Vol. 85, No. 120 / Monday, June 22, 2020 / Rules
and Regulations
[[Page 37331]]
BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Chapter X
Advisory Opinions Pilot
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Procedural rule.
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SUMMARY: The Bureau of Consumer Financial Protection (Bureau) announces
the establishment of a new pilot advisory opinion program (Pilot AO
Program).
DATES: This procedural rule is applicable on June 22, 2020.
FOR FURTHER INFORMATION CONTACT: For additional information about the
Pilot AO Program, contact Marianne Roth, Chief Risk Officer, Office of
Strategy, at 202-435-7684. If you require this document in an
alternative electronic format, please contact
[email protected].
SUPPLEMENTARY INFORMATION:
I. Background
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act
(Dodd-Frank Act),\1\ the Bureau's ``primary functions'' include issuing
guidance implementing Federal consumer financial law.\2\ The Bureau
believes that providing clear and useful guidance to regulated entities
is an important aspect of facilitating markets that serve consumers.
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\1\ Public Law 111-203, 124 Stat. 2081 (2010).
\2\ 12 U.S.C. 5511(c)(5).
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The Bureau currently issues several types of guidance regarding the
statutes that it administers and regarding the regulations and Official
Interpretations that it normally issues through the notice-and-comment
process. On occasion, the Bureau provides guidance in interpretive
rules or general statements of policy. The Bureau also routinely issues
Compliance Aids that present legal requirements in a manner that is
useful for compliance professionals, other industry stakeholders, and
the public, or include practical suggestions for how entities might
choose to go about complying with those requirements.\3\ Additionally,
the Bureau provides individualized ``implementation support'' to
regulated entities through its Regulatory Inquiries Function (RIF).\4\
Neither Compliance Aids nor the RIF are intended to interpret
ambiguities in legal requirements.
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\3\ See Policy Statement on Compliance Aids, 85 FR 4579 (Jan.
27, 2020).
\4\ See Bureau of Consumer Financial Protection Request for
Information Regarding Bureau Guidance and Implementation Support
(Guidance RFI), 83 FR 13959, 13961-62 (Apr. 2, 2018).
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The Bureau is establishing the Pilot AO Program in response to
feedback received from external stakeholders encouraging the Bureau to
provide written guidance in cases of regulatory uncertainty. The Bureau
received requests of this nature in comments submitted in response to
the Request for Information Regarding Bureau Guidance and
Implementation Support (Guidance RFI). The Guidance RFI noted, among
other things, current Bureau forms of individualized support to
regulated entities--principally the RIF--and asked whether the Bureau
should consider an AO program to provide interpretations, including the
particular scope and benefits of AOs that would be distinct from
generalized frequently asked questions (FAQs), and the types of
questions or issues that could or could not be appropriately dealt with
by AOs.\5\
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\5\ Guidance RFI, at 13964.
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In response to the Guidance RFI, several respondents recommended
the Bureau issue such AOs. Commenters that supported AOs wrote that a
Bureau AO program would reduce ambiguity and increase regulatory
certainty, support proactive consumer protection, and enhance
timeliness of guidance. Several of these commenters suggested that AOs
be binding, ultimately be incorporated into a central location (like
the Official Interpretations to Bureau regulations), and be accessible
and useful to third parties as well as requestors.
Other commenters responded to the Guidance RFI and opposed the
issuance of AOs. They had three primary objections: First, that AOs
will not provide the public with meaningful additional assistance in
understanding legal requirements; second, that AOs could create
confusion; and third, that interpretations are better made via notice
and comment.
Comments on the Bureau's Proposed Policy on No-Action Letters and
the BCFP Product Sandbox \6\ also addressed whether the Bureau should
include an interpretive letter (IL) or AO program to the Compliance
Assistance Sandbox (CAS). Commenters supporting the inclusion of an IL
or AO program to the CAS said that the Bureau could further compliance
and clarify regulatory expectations by issuing interpretive legal
opinions in circumstances warranting further legal clarity on a
particular practice or activity. They noted that other regulatory
agencies provide for opinions of this kind. A commenter opposing the
inclusion of an IL or AO program to the CAS reiterated the objections
made by commenters on the Guidance RFI that AOs could increase
confusion and that interpretations are better made via notice and
comment.
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\6\ See Bureau of Consumer Financial Protection Policy on No-
Action Letters and the BCFP Product Sandbox, 83 FR 64036-64045 (Dec.
13, 2018).
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After considering these comments, the Bureau is establishing the
Pilot AO Program to provide guidance with interpretive content that is:
Focused on regulatory uncertainty identified by requestors; reliable
for the requestor and all similarly situated parties as the Bureau's
authoritative interpretation of the law; and publicly released for the
awareness of all affected persons. The Bureau appreciates the concerns
raised by some commenters on the Guidance RFI and the CAS about an AO
program. With respect to concerns that AOs would not provide meaningful
assistance to stakeholders regarding the interpretation of legal
requirements, the Bureau believes that the comments described above
indicate that there is meaningful demand for the resolution of
regulatory uncertainty beyond the Bureau's existing tools for issuing
guidance. Accordingly, the Pilot AO Program can help enhance
compliance. With respect to comments that AOs could create confusion,
the Bureau believes that clear communication of the status of AOs
issued under the Pilot AO Program as interpretive rules under the
Administrative Procedure Act (APA) will minimize potential for
confusion as
[[Page 37332]]
to the significance of different types of guidance. Further, AOs will
be signed by the Director, addressing concerns that an AO program could
lead to the proliferation of conflicting staff-level opinions.
With respect to comments regarding the importance of notice and
comment, the Bureau agrees that broad stakeholder input is valuable in
many contexts. As explained below, the Bureau does not intend to issue
advisory opinions on issues that are better addressed through the
notice-and-comment process. However, as the APA contemplates by
exempting interpretive rules from notice-and-comment requirements, the
Bureau also believes that there are contexts where it is appropriate to
interpret the applicable law through timely guidance without needing to
engage in a sometimes-lengthy notice-and-comment process.
The Bureau is initiating its program for AOs in the form of a
pilot, which will allow the Bureau to gain additional experience with
AOs. Public comments on the Bureau's concurrent proposal, together with
the Bureau's experience with the pilot, will inform how the Bureau uses
AOs in the future.
II. Parameters of the Pilot AO Program
A. Overview
The primary purpose of the Pilot AO Program is to provide a
mechanism through which the Bureau may more effectively carry out its
statutory purposes and objectives by better enabling compliance in the
face of regulatory uncertainty. Under the program, parties will be able
to request interpretive guidance, in the form of an AO, to resolve such
regulatory uncertainty.\7\
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\7\ For convenience, this document uses the term ``regulatory
uncertainty'' to encompass uncertainty with respect to regulatory
or, where applicable, statutory provisions.
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B. Submission and Content of Requests
Requests may be submitted via email to [email protected], or
through other means designated by the Bureau.\8\ Requests must identify
the requestor.\9\ Where information submitted to the Bureau is
information the requestor would not normally make public, the Bureau
intends to treat it as confidential pursuant to its rule, Disclosure of
Records and Information,\10\ to the extent applicable. The Bureau
encourages requestors to identify any such information to the extent
they choose to include it in their submissions. For the pilot program,
requestors will be limited to covered persons or service providers that
are subject to the Bureau's supervisory authority under sections 1024,
1025, or 1026(e) of the Dodd-Frank Act or subject to the Bureau's
enforcement authority under subtitle E of the Dodd-Frank Act.\11\ The
Bureau will not accept requests from third parties, such as trade
associations or law firms, on behalf of unnamed entities as part of the
pilot program.
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\8\ Applications should not include sensitive personal
information, such as account numbers or Social Security numbers, or
names of other individuals.
\9\ The Bureau notes that during the Pilot AO Program,
requestors are not required to include the additional information
set out in the Bureau's separate Federal Register document regarding
the Proposed AO Program.
\10\ 12 CFR 1070.
\11\ 12 U.S.C. 5514, 5515, 5516(e), 5561-5567.
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C. Characteristics of AOs
AOs under the pilot program will be interpretive rules under the
APA \12\ that respond to a specific request for clarity on an
interpretive question. The Bureau will publish AOs in the Federal
Register and on consumerfinance.gov, including the Bureau's summary of
the material facts and the Bureau's legal analysis of the issue.\13\
Unless otherwise stated, each AO will be applicable to the requestor
and to similarly situated parties to the extent that their situations
conform to the Bureau's summary of material facts in the AO.\14\
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\12\ 5 U.S.C. 553(b).
\13\ An AO will not necessarily adopt any proposed
interpretation offered by the requestor. The Bureau retains the
discretion to answer requests with its own interpretation regardless
of the proposed interpretation of the requestor.
\14\ Accordingly, the initial request drafted by the requestor
is not necessarily a reliable guide to the scope or terms of an AO;
the scope and terms of an AO will be set out in the AO itself.
Moreover, the Bureau will not normally investigate the underlying
facts of the requestor's situation, and an AO is not applicable to
the requestor if the underlying facts of the requestor's situation
do not conform to the Bureau's summary of material facts.
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Where a statutory safe harbor is applicable to an AO, the AO will
explain that fact. The Truth in Lending Act (TILA), Equal Credit
Opportunity Act (ECOA), Electronic Fund Transfer Act (EFTA), and Real
Estate Settlement Procedures Act (RESPA) provide certain protections
from liability for acts or omissions done in good faith in conformity
with an interpretation by the Bureau.\15\ The Fair Debt Collection
Practices Act (FDCPA) contains similar protections, specifically using
the term ``advisory opinion.'' \16\
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\15\ See 15 U.S.C. 1640(f) (TILA); 15 U.S.C. 1691e(e) (ECOA); 15
U.S.C. 1693m(d) (EFTA); 12 U.S.C. 2617, 12 CFR 1024.4 (RESPA).
\16\ See 15 U.S.C. 1692(k)(e) (FDCPA).
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D. Factors in Bureau Selection of Topics for AOs
The Bureau intends to consider the following factors as part of its
consideration of whether to address topics through AOs.\17\ The Bureau
will prioritize open questions within the Bureau's purview that can
legally be addressed through an interpretive rule, where an AO is an
appropriate tool relative to other Bureau tools for resolving that
question. Initial factors weighing for the appropriateness of an AO
include: That the interpretive issue has been noted during prior Bureau
examinations as one that might benefit from additional regulatory
clarity; that the issue is one of substantive importance or impact or
one whose clarification would provide significant benefit; and/or that
the issue concerns an ambiguity that the Bureau has not previously
addressed through an interpretive rule or other authoritative source.
Factors weighing strongly for a presumption that an AO is not an
appropriate tool include: That the interpretive issue is the subject of
an ongoing Bureau investigation or enforcement action; that the
interpretive issue is the subject of an ongoing or planned rulemaking;
that the issue is better suited for the notice-and-comment process;
that the issue could be addressed effectively through a Compliance Aid;
or that there is clear Bureau or court precedent that is already
available to the public on the issue.
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\17\ The following are factors that the Bureau intends to weigh
when deciding which topics to prioritize in the AO program, based on
all of the information available to the Bureau. AO requests need not
address these factors in order to be fully considered by the Bureau.
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The Bureau intends to further evaluate potential topics for AOs
based on additional factors, including: Alignment with the Bureau's
statutory objectives; size of the benefit offered to consumers by
resolution of the interpretive issue; known impact on the actions of
other regulators; and impact on available Bureau resources. The Pilot
AO Program will primarily focus on the following statutory objectives
of the Bureau: (1) That consumers are provided with timely and
understandable information to make responsible decisions about
financial transactions; (2) that outdated, unnecessary, or unduly
burdensome regulations are regularly identified and addressed in order
to reduce unwarranted regulatory burdens; (3) that Federal consumer
financial law is enforced consistently, without regard to the status of
a person as a depository
[[Page 37333]]
institution, in order to promote fair competition; and (4) that markets
for consumer financial products and services operate transparently and
efficiently to facilitate access and innovation.\18\
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\18\ See 12 U.S.C. 5511(b)(1), (3)-(5). The Bureau has a further
statutory objective, that consumers are protected from unfair,
deceptive, or abusive acts and practices (UDAAPs) and from
discrimination. 12 U.S.C. 5511(b)(2). The Bureau considers this
objective to be at least as important as its other objectives, and
it does not plan to issue an AO that is in conflict with this
objective. But because other regulatory tools are often more
suitable for addressing UDAAPs and discrimination, the Bureau has
chosen not to highlight this objective as a primary focus when
selecting issues for the Pilot AO Program.
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The Pilot AO Program will focus primarily on clarifying ambiguities
in the Bureau's regulations, although AOs may clarify statutory
ambiguities. The Bureau will not issue AOs on issues that require
notice-and-comment rulemaking under the APA,\19\ or that are better
addressed through that process. For example, the Bureau does not intend
to issue an advisory opinion that would change a regulation. Similarly,
where a regulation or statute establishes a general standard that can
only be applied through highly fact-intensive analysis, the Bureau does
not intend to replace it with a bright-line standard that eliminates
all of the required analysis. Highly fact-intensive applications of
general standards, such as of the statutory prohibition on unfair,
deceptive, or abusive acts or practices, pose particular challenges for
issuing advisory opinions, although there may be times when the Bureau
is able to offer advisory opinions that provide additional clarity on
the meaning of such standards.
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\19\ 5 U.S.C. 553(b).
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III. Regulatory Requirements
The Bureau has concluded that the Pilot AO Program constitutes a
rule of agency organization, procedure, or practice, and that it is,
therefore, exempt from the notice-and-comment rulemaking requirements
of the APA.\20\ For the same reason, it is not subject to the 30-day
delayed effective date for substantive rules under section 553(d) of
the APA.\21\ Because no notice of proposed rulemaking is required, the
Regulatory Flexibility Act does not require an initial or final
regulatory flexibility analysis.\22\
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\20\ 5 U.S.C. 553(b).
\21\ 5 U.S.C. 553(d).
\22\ 5 U.S.C. 603(a), 604(a).
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IV. Signing Authority
The Director of the Bureau, having reviewed and approved this
document, is delegating the authority to electronically sign this
document to Laura Galban, a Bureau Federal Register Liaison, for
purposes of publication in the Federal Register.
Dated: June 18, 2020.
Laura Galban,
Federal Register Liaison, Bureau of Consumer Financial Protection.
[FR Doc. 2020-13504 Filed 6-19-20; 8:45 am]
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