[Federal Register Volume 88, Number 60 (Wednesday, March 29, 2023)]
[Rules and Regulations]
[Pages 18382-18389]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-04109]


=======================================================================
-----------------------------------------------------------------------

CONSUMER FINANCIAL PROTECTION BUREAU

12 CFR Part 1081

[Docket No. CFPB-2022-0009]
RIN 3170-AB08


Rules of Practice for Adjudication Proceedings

AGENCY: Consumer Financial Protection Bureau.

ACTION: Final rule; consideration of comments.

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

SUMMARY: The Rules of Practice for Adjudication Proceedings (Rules of 
Practice) govern adjudication proceedings conducted by the Consumer 
Financial Protection Bureau (Bureau). The Bureau issued a procedural 
rule to update the Rules of Practice (Updated Rules of Practice). The 
Updated Rules of Practice expanded the opportunities for parties in 
adjudication proceedings to conduct depositions. They also made 
amendments concerning timing and deadlines, the content of answers, the 
scheduling conference, bifurcation of proceedings, the process for 
deciding dispositive motions, and requirements for issue exhaustion, as 
well as other technical changes. The Bureau sought to provide the 
parties with earlier access to relevant information and also foster 
greater procedural flexibility, which the Bureau expected would 
ultimately contribute to more effective and efficient proceedings. The 
Bureau invited the public to submit comments on the Updated Rules of 
Practice. After considering the comments, the Bureau has decided to 
retain the amendments.

DATES: This action is effective on March 29, 2023.

FOR FURTHER INFORMATION CONTACT: Kevin E. Friedl or Christopher 
Shelton, Senior Counsel, Legal Division, at 202-435-7700. If you 
require this document in an alternative electronic format, please 
contact [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    The Consumer Financial Protection Act of 2010 (CFPA) establishes 
the Bureau as an independent bureau in the Federal Reserve System and 
assigns the Bureau a range of rulemaking, enforcement, supervision, and 
other authorities.\1\ The Bureau's enforcement powers under the CFPA 
include section 1053, which authorizes the Bureau to conduct 
adjudication proceedings.\2\ The Bureau finalized the original version 
of the Rules of Practice, which govern adjudication proceedings, in 
2012 (2012 Rule).\3\ The Bureau later finalized certain amendments, 
which addressed the issuance of temporary cease-and-desist orders, in 
2014 (2014 Rule).\4\
---------------------------------------------------------------------------

    \1\ Title X of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act, Public Law 111-203, 124 Stat. 1376, 1955-2113 
(2010).
    \2\ 12 U.S.C. 5563; see also section 1052(b), 12 U.S.C. 5562(b) 
(addressing subpoenas).
    \3\ 77 FR 39057 (June 29, 2012); see also 76 FR 45337 (July 28, 
2011) (interim final rule).
    \4\ 79 FR 34622 (June 18, 2014); see also 78 FR 59163 (Sept. 26, 
2013) (interim final rule).
---------------------------------------------------------------------------

II. Overview of the Updated Rules of Practice and Comments Received

    The Bureau issued the Updated Rules of Practice in February 
2022.\5\ The Updated Rules of Practice were exempt from the notice-and-
comment requirements of the Administrative Procedure Act, because they 
were a rule of agency organization, procedure, and practice.\6\ 
Consequently, they were effective upon publication (although no 
adjudication proceedings have occurred under the Updated Rules of 
Practice). The Bureau invited the public to submit comments.
---------------------------------------------------------------------------

    \5\ 87 FR 10028 (Feb. 22, 2022).
    \6\ 5 U.S.C. 553(b).
---------------------------------------------------------------------------

    The Bureau received four comments. These came from a group of trade 
associations, a consumer advocacy organization, a bank holding company, 
and a legal foundation.\7\ The group of trade associations noted that 
administrative adjudication can play an important and valuable role in 
an effective regulatory system by providing an efficient, and equally 
fair, alternative to civil litigation. However, the trade associations 
opposed the changes regarding the content of answers, bifurcation of 
proceedings, rulings on dispositive motions, and issue exhaustion. By 
contrast, the consumer advocacy organization supported the rule, 
stating that it simultaneously strengthens the ability of the agency to 
protect consumers and the rights of respondents subject to agency 
action. The bank holding company expressed support for the trade 
associations' comment. Finally, the legal foundation opposed the issue-
exhaustion provision.
---------------------------------------------------------------------------

    \7\ The Bureau also received other communications on the docket 
that did not relate to the topic of adjudication proceedings.
---------------------------------------------------------------------------

    After carefully considering these comments, the Bureau has decided 
to retain the amendments made in the Updated Rules of Practice. The 
Bureau addresses the comments in more detail below.

III. Legal Authority

    Section 1053(e) of the CFPA provides that the Bureau ``shall 
prescribe rules establishing such procedures as may be necessary to 
carry out'' section 1053.\8\ Additionally, section 1022(b)(1) provides, 
in relevant part, that the Bureau's Director ``may prescribe rules . . 
. as may be necessary or appropriate to enable the Bureau to administer 
and carry out the purposes and objectives of the Federal consumer 
financial laws, and to prevent evasions thereof.'' \9\ The Bureau 
issues this rule based on its authority under section 1053(e) and 
section 1022(b)(1).
---------------------------------------------------------------------------

    \8\ 12 U.S.C. 5563(e). As courts have recognized, the term 
``necessary'' is ``a `chameleon-like' word'' whose meaning can vary 
based on context; in the context of section 1053(e), the Bureau 
interprets ```necessary' to mean `useful,' `convenient' or 
`appropriate' rather than `required' or `indispensable.' '' 
Prometheus Radio Project v. FCC, 373 F.3d 372, 391-94 (3d Cir. 
2004). Section 1053 sets out the fundamental features of Bureau 
adjudications, but it leaves many details open that can only be 
addressed through more specific Bureau procedures. In turn, those 
Bureau procedures could not be effective, or fair to the parties, if 
they were limited to only the most rudimentary steps that would be 
indispensable to holding a skeletal proceeding. Instead, the Bureau 
believes that Congress gave the Bureau room to adopt procedures that 
are useful in carrying out section 1053.
    \9\ 12 U.S.C. 5512(b)(1).
---------------------------------------------------------------------------

IV. Section-by-Section Analysis

1081.114(a) Construction of Time Limits.

    12 CFR 1081.114(a) (Rule 114(a)) governs the computation of any 
time limit that is prescribed by Rules of Practice, by order of the 
Director or the hearing officer, or by any applicable statute. The 
Updated Rules of Practice amended Rule 114(a) for the purpose of 
simplifying and clarifying it, based on similar amendments made to 
Federal Rule of Civil Procedure 6(a) in 2009.
    As amended by the Updated Rules of Practice, Rule 114(a) provides 
for time periods to be computed in the following manner. First, exclude 
the day of the event that triggers the period. Second, count every day, 
including intermediate Saturdays, Sundays, and Federal holidays. Third, 
include the last day of the period unless it is a Saturday, Sunday, or 
Federal holiday as set forth in 5 U.S.C. 6103(a). When the last day is 
a Saturday, Sunday, or Federal holiday, the period runs until the end 
of the next day that is not a Saturday, Sunday, or Federal holiday.

[[Page 18383]]

    The Updated Rules of Practice also made adjustments to various 
specific deadlines in the Rules of Practice, to roughly compensate for 
the update in computation method. For example, a 10-day period under 
the previous computation method would most frequently correspond to a 
14-day period under the updated computation method, so 10-day periods 
were generally changed to 14 days.
    No comments opposed the amendments to Rule 114(a), and the Bureau 
is retaining them.

1081.115(b) Considerations in Determining Whether To Extend Time Limits 
or Grant Postponements, Adjournments and Extensions.

    12 CFR 1081.115(b) (Rule 115(b)) concerns motions for extensions of 
time. Under the 2012 Rule, the provision stated that the Director or 
the hearing officer should adhere to a policy of strongly disfavoring 
granting motions for extensions of time, except in circumstances where 
the moving party makes a strong showing that the denial of the motion 
would substantially prejudice its case. It then listed factors that the 
Director or hearing officer will consider.
    The Updated Rules of Practice simplified the provision, to state 
only that such motions are generally disfavored, while retaining the 
same list of factors that the Director or hearing officer will 
consider. The preamble explained that the Bureau continues to believe 
that extensions of time should generally be disfavored, but it believes 
that relatively more flexibility than the previous language provided 
may be appropriate.
    No comments opposed the amendment to Rule 115(b), and the Bureau is 
retaining it.

1081.201(b) Content of Answer

    12 CFR 1081.201(b) (Rule 201(b)) requires a respondent to file an 
answer containing, among other things, any affirmative defense.
    The Updated Rules of Practice amended Rule 201(b) to make clear 
that the answer must include any avoidance, including those that may 
not be considered ``affirmative defenses.'' As the Securities and 
Exchange Commission (SEC) explained when it adopted a similar amendment 
to its rules of practice, timely assertion of such theories should help 
focus the use of prehearing discovery, foster early identification of 
key issues and, as a result, make the discovery process more effective 
and efficient.\10\
---------------------------------------------------------------------------

    \10\ 81 FR 50211, 50219-20 (July 29, 2016).
---------------------------------------------------------------------------

    The comment by a group of trade associations opposed the amendment 
to Rule 201(b). The comment stated that the amendment would reduce 
protections for respondent companies in a way that will lead to a 
denial of due process. However, the comment did not articulate why a 
duty to include avoidances in the answer would be a denial of due 
process. The Bureau considers the amendment to Rule 201(b) to be a 
reasonable requirement that promotes early identification of issues, 
and the Bureau notes that the answer can later be amended in 
appropriate circumstances under 12 CFR 1081.202(a) (Rule 202(a)). The 
Bureau is retaining the amendment to Rule 201(b).
1081.203 Scheduling Conference
    12 CFR 1081.203 (Rule 203) requires a scheduling conference with 
all parties and the hearing officer for the purpose of scheduling the 
course and conduct of the proceeding. Before that scheduling 
conference, Rule 203 requires the parties to meet to discuss the nature 
and basis of their claims and defenses, the possibilities for 
settlement, as well as the matters that will be discussed with the 
hearing officer at the scheduling conference. The Updated Rules of 
Practice made certain changes to the details of Rule 203, including 
renumbering its provisions. This discussion cites the provisions as 
renumbered.
    First, the Updated Rules of Practice amended Rule 203(b) to require 
that the parties exchange a scheduling conference disclosure after that 
initial meeting, but before the scheduling conference. That disclosure 
must include a factual summary of the case, a summary of all factual 
and legal issues in dispute, and a summary of all factual and legal 
bases supporting each defense. The disclosure must also include 
information about the evidence that the party may present at the 
hearing, other than solely for impeachment, including (i) the contact 
information for anticipated witnesses, as well as a summary of the 
witness's anticipated testimony; and (ii) the identification of 
documents or other exhibits.
    The Updated Rules of Practice also made certain amendments to Rules 
203(c), (d), and (e). Amended Rule 203(c) provides that a party must 
supplement or correct the scheduling conference disclosure in a timely 
manner if the party acquires other information that it intends to rely 
upon at a hearing. Amended Rule 203(d) provides a harmless-error rule 
for failures to disclose in scheduling conference disclosures. Finally, 
the Updated Rules of Practice made certain minor clarifications to Rule 
203(e), which governs the scheduling conference itself.
    As the preamble to the Updated Rules of Practice stated, these 
amendments to Rule 203 are intended to foster early identification of 
key issues and, as a result, make the adjudication process, including 
any discovery process, more effective and efficient. They are also 
intended to, early in the process, determine whether the parties intend 
to seek the issuance of subpoenas or file dispositive motions so that, 
with input from the parties, the hearing officer can set an appropriate 
hearing date, taking into account the time necessary to complete the 
discovery or decide the anticipated dispositive motions.
    The preamble to the Updated Rules of Practice recognized that, in 
most cases, the deadline for making the scheduling conference 
disclosure will also be the date the Office of Enforcement must 
commence making documents available to the respondent under 12 CFR 
1081.206 (Rule 206). The preamble reiterated a statement from the 
preamble to the 2012 Rule, which was that the Bureau expects that the 
Office of Enforcement will make the material available as soon as 
possible in every case.\11\ And even in cases where the Office of 
Enforcement cannot make those documents available within that time, a 
respondent may request a later hearing date and can move the hearing 
officer to alter the dates for either the scheduling conference or the 
scheduling conference disclosure.
---------------------------------------------------------------------------

    \11\ 77 FR 39057, 39072 (June 29, 2012).
---------------------------------------------------------------------------

    No comments opposed the amendments to Rule 203, and the Bureau is 
retaining them.

1081.204(c) Bifurcation

    The Updated Rules of Practice added a new 12 CFR 1081.204(c) (Rule 
204(c)) to address bifurcation of proceedings. It provides that the 
Director may order that the proceeding be divided into two or more 
stages, if the Director determines that it would promote efficiency in 
the proceeding or for other good cause. For example, the Director may 
order that the proceeding have two stages, so that at the conclusion of 
the first stage the Director issues a decision on whether there have 
been violations of law and at the conclusion of the second stage the 
Director issues a final decision and order, including with respect to 
any remedies. The Director may make an order under Rule 204(c) either 
on the motion of a party or on the Director's own motion after inviting 
submissions by the parties. The Director may include, in that order or 
in later

[[Page 18384]]

orders, modifications to the procedures in the Rules of Practice in 
order to effectuate an efficient division into stages, or the Director 
may assign such authority to the hearing officer.\12\
---------------------------------------------------------------------------

    \12\ The new provision also clarifies that only the decision and 
order of the Director after the final stage, and not a decision of 
the Director after an earlier stage, will be a final decision and 
order for purposes of specified provisions of the Rules of Practice 
and section 1053(b) of the CFPA.
---------------------------------------------------------------------------

    The preamble to the Updated Rules of Practice noted that 
bifurcation is a standard case-management tool available to Federal 
district courts. It explained that Rule 204(c) will provide the Bureau 
with the flexibility to use bifurcation in adjudication proceedings, if 
warranted by particular cases, and to tailor its procedures to the 
circumstances of those bifurcated cases.
    The comment by a consumer advocacy organization supported Rule 
204(c). According to the organization's comment, separating the 
determination of whether there has been a violation of law from the 
issue of remedies would help promote the development of legal precedent 
and also save resources by the Bureau and respondents.
    The comment by a group of trade associations opposed Rule 204(c). 
This comment argued that assigning too much authority to the Director 
risked depriving respondents of due process, because, in the 
commenters' view, the Director is insufficiently impartial. However, it 
is unclear why the decision to bifurcate a proceeding is any different 
from the many other decisions that the Director makes in an 
adjudication. The Director can and will adjudicate matters fairly, 
whether in bifurcated or non-bifurcated proceedings. As courts have 
consistently held, heads of executive agencies can perform adjudicative 
functions, and such adjudications provide due process of law. 
Accordingly, the Bureau is retaining Rule 204(c).

1081.206 Availability of Documents for Inspection and Copying

    12 CFR 1081.206 (Rule 206) provides that the Bureau's Office of 
Enforcement will make certain documents available for inspection and 
copying. The Updated Rules of Practice amended Rule 206 to clarify 
certain categories of documents that may be withheld or information 
that may be redacted, as well as to make clear that the Office of 
Enforcement may produce those documents in an electronic format rather 
than making the documents available for physical inspection and 
copying.
    As the preamble to the Updated Rules of Practice explained, the 
clarifying amendments regarding documents that may be withheld or 
information that may be redacted are based on amendments the SEC 
recently made to its rules of practice. Amended Rule 206(b)(1)(iv) 
makes clear that the Office of Enforcement need not produce a document 
that reflects only settlement negotiations between the Office of 
Enforcement and a person or entity who is not a current respondent in 
the proceeding. As the SEC explained when it amended its rules of 
practice, this amendment is consistent with the important public policy 
interest in candid settlement negotiations, will help to preserve the 
confidentiality of settlement discussions, and help safeguard the 
privacy of potential respondents with whom the Office of Enforcement 
has negotiated.\13\ Amended Rule 206 also permits the Office of 
Enforcement to redact from the documents it produces information it is 
not obligated to produce (Rule 206(b)(2)(i)) and sensitive personal 
information about persons other than the respondent (Rule 
206(b)(2)(ii)). These amendments also track the SEC's recent amendments 
to its rules of practice and are designed to provide further 
protections for sensitive personal information and to permit the 
redaction of information that is not required to be produced in the 
first place.
---------------------------------------------------------------------------

    \13\ 81 FR 50211, 50222 (July 29, 2016).
---------------------------------------------------------------------------

    The Updated Rules of Practice also amended Rule 206(d) to change 
the date by which the Office of Enforcement must commence making 
documents available to the respondent, changing that date from seven 
days after service of the notice of charges to fourteen. This 
clarification harmonizes these timing provisions with 12 CFR 1081.119 
(Rule 119), which protects the rights of third parties who have 
produced documents under a claim of confidentiality. The previous Rule 
119 required a party to give a third party notice at least ten days 
prior to the disclosure of information obtained from that third party 
subject to a claim of confidentiality. Under the previous Rules of 
Practice, that meant that the Office of Enforcement had to provide 
notice to third parties before it commenced the adjudication proceeding 
because the Office of Enforcement had to give those third parties at 
least ten days' notice before producing the documents and the Office of 
Enforcement had to commence making documents available seven days after 
filing. The Updated Rules of Practice amended Rule 119 to require 
parties to notify the third parties at least seven days prior to the 
disclosure of information the third party produced under a claim of 
confidentiality. Together, Rules 119 and 206 now require the Office of 
Enforcement to commence making documents available fourteen days after 
service of the notice of charges and to notify third parties who 
produced documents subject to that disclosure requirement under a claim 
of confidentiality at least seven days before producing those 
documents.
    Under the 2012 Rule, Rule 206(e) provided that the Office of 
Enforcement must make the documents available for inspection and 
copying at the Bureau's office where they are ordinarily maintained. 
The preamble to the 2012 Rule explained that the Bureau anticipated 
providing electronic copies of documents to respondents in most 
cases.\14\ Subsequently, the Updated Rules of Practice amended Rule 
206(e) to recognize this practice and expressly provide that the Office 
of Enforcement may produce those documents in an electronic format 
rather than making the documents available for inspection and copying. 
Under the amended Rule 206(e), the Office of Enforcement retains the 
discretion to make documents available for inspection and copying.
---------------------------------------------------------------------------

    \14\ 77 FR 39057, 39070 (June 29, 2012).
---------------------------------------------------------------------------

    No comments opposed the amendments to Rule 206, and the Bureau is 
retaining them.

1081.208 Subpoenas and 1081.209 Depositions

    The Updated Rules of Practice made certain interrelated changes to 
12 CFR 1081.208 and 1081.209 (Rules 208 and 209).
    Under the 2012 Rule, Rule 209 permitted parties to take depositions 
only if the witness was unable to attend or testify at a hearing. As 
the Bureau noted in the preamble to the 2012 Rule, the Bureau's Rules 
of Practice were modeled in part on the approach that the SEC took in 
its rules of practice.\15\ Since that time, the SEC has amended its 
rules of practice to permit discovery depositions.\16\
---------------------------------------------------------------------------

    \15\ 77 FR 39057, 39058 (June 29, 2012).
    \16\ 81 FR 50211 (July 29, 2016).
---------------------------------------------------------------------------

    The Updated Rules of Practice amended Rule 209 to permit discovery 
depositions--either by oral examination or written questions--in 
addition to depositions of unavailable witnesses. If a proceeding 
involves a single respondent, amended Rule 209(a)(1) allows the 
respondent and the Office of Enforcement to each depose up to three 
persons (i.e., up to three depositions per side). If a proceeding 
involves multiple respondents, amended Rule 209(a)(2) allows 
respondents to collectively

[[Page 18385]]

depose up to five persons and the Office of Enforcement to depose up to 
five persons (i.e., up to five depositions per side). This approach is 
consistent with the approach the SEC adopted when it amended its rules 
of practice to allow depositions.\17\ Under Rule 209(a)(3), a party may 
also move to take additional depositions, though that motion must be 
filed no later than 28 days prior to the hearing date. Amended Rule 
209(a)(3) also sets forth the procedure for requesting to taking 
additional depositions.
---------------------------------------------------------------------------

    \17\ Id. at 50216.
---------------------------------------------------------------------------

    The preamble to the Updated Rules of Practice explained that the 
above amendments to Rule 209 are intended to provide parties with 
further opportunities to develop arguments and defenses through 
deposition discovery, which may narrow the facts and issues to be 
explored during the hearing. Allowing depositions should facilitate the 
development of the case during the prehearing stage, which may result 
in more focused prehearing preparations, with issues distilled for the 
hearing and post-hearing briefing.
    Under amended Rules 208(a) and 209(a), a party must request that 
the hearing officer issue a subpoena for the deposition. If the 
subpoena is issued, under amended Rule 209(d) the party must also serve 
written notice of the deposition. New Rule 208(e) governs the standard 
for issuance of subpoenas seeking depositions upon oral examination. 
Under Rule 208(e), the hearing officer will promptly issue any subpoena 
requiring the attendance and testimony of witnesses at a deposition 
only if the subpoena complies with Rule 209 and if the proposed 
deponent: (i) is a witness identified in the other party's scheduling 
conference disclosure now required under revised Rule 203(b); (ii) a 
fact witness; \18\ (iii) is a designated expert witness under 12 CFR 
1081.210(b) (Rule 210(b)); or (iv) a document custodian.\19\ The 
preamble to the Updated Rules of Practice explained that fact 
witnesses, expert witnesses, and document custodians, whose knowledge 
of relevant facts does not arise from the Bureau's investigation, the 
Bureau's examination, or the proceeding, are the individuals most 
likely to have information relevant to the issues to be decided. 
Because the Bureau will also disclose to respondents the documents 
described in Rule 206 as well as witness statements upon request under 
12 CFR 1081.207 (Rule 207), deposing Bureau staff whose only knowledge 
of relevant facts arose from the investigation, examination, or 
proceeding is unlikely to shed light on the events underlying the 
proceeding and will likely lead to impermissible inquiries into the 
mental processes and strategies of Bureau attorneys or staff under 
their direction. Not only does this implicate privileges or the work-
product doctrine, but deposition of Bureau staff in this manner can be 
burdensome and disruptive because it embroils the parties in 
controversies over the scope of those protections.
---------------------------------------------------------------------------

    \18\ Under amended Rule 208(e), this type of proposed deponent 
must have witnessed or participated in any event, transaction, 
occurrence, act, or omission that forms the basis for any claim 
asserted by the Office of Enforcement, any defense, or anything else 
required to be included in an answer pursuant to Rule 201(b), by any 
respondent in the proceeding (this excludes a proposed deponent 
whose only knowledge of these matters arises from the Bureau's 
investigation, the Bureau's examination, or the proceeding).
    \19\ This excludes Bureau officers or personnel who have custody 
of documents or data that was produced from the Office of 
Enforcement to the respondent. In most circumstances, the Bureau 
officers or personnel were not the original custodian of the 
documents. Where the Bureau was the original custodian of the 
document--for example, a report of examination under 12 CFR 
1081.303(d)(2) (Rule 303(d)(2))--there is no need to depose a 
document custodian as that report is admissible without a sponsoring 
witness.
---------------------------------------------------------------------------

    The Updated Rules of Practice also amended Rule 208(e)(2) to 
provide a process for the hearing officer to request more information 
about the relevance or scope of the testimony sought and to refuse to 
issue the subpoena or issue it only upon conditions. The preamble to 
the Updated Rules of Practice explained that this provision is intended 
to foster use of depositions where appropriate and encourage meaningful 
discovery, within the limits of the number of depositions provided per 
side. The provision should encourage parties to focus any requested 
depositions on those persons most likely to yield relevant information 
and thereby make efficient use of time during the prehearing stage.
    Under the 2012 Rule, Rule 208(a) permitted parties to request 
issuance of subpoenas requiring the attendance and testimony of 
witnesses at the designated time and place of the hearing, for the 
production of documentary or other tangible evidence, or for the 
deposition of a witness who will be unavailable for the hearing. Rule 
210 also permitted the deposition of expert witnesses. The Updated 
Rules of Practice kept these provisions, making conforming amendments 
to account for the new provision permitting discovery depositions. A 
subpoena seeking the deposition of a witness who will be unavailable 
for the hearing does not count against the number of depositions 
permitted under Rule 209(a).
    As the preamble to the Updated Rules of Practice explained, the 
above amendments expand the available legitimate mechanisms respondents 
may use to conduct discovery, providing respondents a clearer 
understanding of the bases of the Bureau's factual contentions while 
reducing the costs and burdens of hearings on all parties. 
Additionally, the grounds for a hearing officer denying a request to 
issue a subpoena under Rule 208(e)--that it is ``unreasonable, 
oppressive, excessive in scope, or unduly burdensome''--are consistent 
with well-established judicial standards, and hearing officers will, in 
their consideration of requests for subpoenas, act diligently and in 
good faith to implement the standards for refusing or modifying 
deposition subpoenas set forth under the amended rule. These combined 
changes are overall less burdensome yet are equally effective in the 
resolution of the case on the merits.
    Amended Rule 209 also includes additional procedures governing the 
taking of depositions. For example, once a subpoena for a deposition is 
issued, the party seeking the deposition must serve written notice of 
the deposition pursuant to Rule 209(d). That notice must include 
several things, including the time and place of the deposition, the 
identity of the deponent, and the method for recording the deposition. 
The preamble to the Updated Rules of Practice explained that these 
procedural provisions track the SEC's recent amendments to its rules of 
practice.\20\ They govern the process for seeking depositions by 
written questions and the taking of all depositions, including setting 
forth the deposition officer's duties, the process for stating 
objections, motions to terminate or limit the deposition, and the 
process for finalizing a transcript.
---------------------------------------------------------------------------

    \20\ 81 FR 50211, 50215-17 (July 29, 2016).
---------------------------------------------------------------------------

    Finally, the Updated Rules of Practice added a new Rule 208(l), 
which addresses the relationship of subpoenas to the scheduling of the 
hearing. In the 2012 Rule, one reason why the Bureau did not--as a 
general matter--permit discovery depositions was because the additional 
time required for depositions before the hearing could be in tension 
with the statutory timetable for hearings under section 1053(b) of the 
CFPA.\21\ As the preamble to the 2012 Rule noted, prehearing 
depositions would present extreme scheduling difficulties in those 
cases in which respondents did not request hearing dates outside the 
default timeframe under section 1053(b), which provides for the hearing 
to be held 30

[[Page 18386]]

to 60 days after service of the notice of charges, unless an earlier or 
a later date is set by the Bureau, at the request of any party so 
served.\22\ The new Rule 208(l) addresses this scheduling obstacle to 
depositions and other discovery, by specifying that a respondent's 
request for issuance of a subpoena constitutes a request that the 
hearing not be held until after a reasonable period, determined by the 
hearing officer, for the completion of discovery.\23\ This is because a 
request for discovery reasonably entails a delay for the discovery 
process to be completed.
---------------------------------------------------------------------------

    \21\ 12 U.S.C. 5563(b).
    \22\ 77 FR 39057, 39076 (June 29, 2012).
    \23\ Rule 208(l) goes on to specify that the hearing officer 
will decide whether to grant such a request. If the request is 
granted, the hearing officer will set a deadline for the completion 
of discovery and schedule the specific date of the hearing, in 
consultation with the parties. Rule 208(l) does not apply to a 
subpoena for the attendance and testimony of a witness at the 
hearing or a subpoena to depose a witness unavailable for the 
hearing.
---------------------------------------------------------------------------

    The preamble to the Updated Rules of Practice explained that, given 
this resolution of the 2012 Rule's scheduling concern, the Bureau 
believes that the benefits of discovery depositions under the amended 
Rule 209, as described earlier, outweigh other concerns expressed in 
the preamble to the 2012 Rule about the time, expense, and risk of 
collateral disputes arising from depositions.\24\
---------------------------------------------------------------------------

    \24\ 77 FR 39057, 39076 (June 29, 2012).
---------------------------------------------------------------------------

    The comment that the Bureau received from a consumer advocacy 
organization supported the amendments to Rules 208 and 209. The 
consumer advocacy organization stated that discovery depositions would 
allow respondents to further develop their cases, which should lead to 
a more informed and deliberative process. It also stated that the 
amendments should prevent disruption from surprise witnesses. No 
comments opposed the amendments to Rules 208 and 209, and the Bureau is 
retaining them.

1081.211 Interlocutory Review

    12 CFR 1081.211 (Rule 211) governs interlocutory review by the 
Director. Under the 2012 Rule, the provision included language stating 
that interlocutory review is disfavored, and that the Director will 
grant a petition to review a hearing officer's ruling or order prior to 
the Director's consideration of a recommended decision only in 
extraordinary circumstances. The Updated Rules of Practice simplified 
this language to state only that interlocutory review is generally 
disfavored. The preamble explained that, although interlocutory review 
remains disfavored, the Bureau believes that there can be situations 
where interlocutory review can contribute to the efficiency of 
proceedings short of extraordinary circumstances.
    No comments opposed the amendment to Rule 211, and the Bureau is 
retaining it.

1081.212 Dispositive Motions

    The Updated Rules of Practice relocated the previous 12 CFR 
1081.212(g) and (h) (Rule 212(g) and (h)), which addressed oral 
argument and decisions on dispositive motions, respectively, to form 
part of 12 CFR 1081.213 (Rule 213). Rule 213 is discussed in the next 
section of this section-by-section analysis.
    Additionally, the Updated Rules of Practice added new Rule 212(g) 
to address the relationship of dispositive motions to the scheduling of 
the hearing. It is codified as Rule 212(g) but unrelated to the 
previous Rule 212(g). It is analogous to Rule 208(l), discussed above. 
It specifies that a respondent's filing of a dispositive motion 
constitutes a request that the hearing not be held until after the 
motion is resolved.\25\ This is because the filing of a dispositive 
motion, whose purpose is to avoid or limit the need for a hearing, 
reasonably entails a delay of that hearing so that the motion can be 
resolved.
---------------------------------------------------------------------------

    \25\ Rule 212(g) goes on to state that the hearing officer will 
decide whether to grant such a request. If the request is granted, 
the hearing officer will schedule the specific date of the hearing, 
in consultation with the parties.
---------------------------------------------------------------------------

    No comments opposed the amendments to Rule 212, and the Bureau is 
retaining them.

1081.213 Rulings on Dispositive Motions

    The Updated Rules of Practice amended Rule 213 to adopt a new 
procedure for rulings on dispositive motions, based on a procedure used 
by the Federal Trade Commission (FTC). The Bureau also made related 
technical changes for clarity.
    Under the 2012 Rule, the Director could, ``at any time, direct that 
any matter be submitted to him or her for review.'' \26\ However, prior 
to the Updated Rules of Practice, there was no specific procedure for 
the Director to exercise this discretion in the context of dispositive 
motions.
---------------------------------------------------------------------------

    \26\ 12 CFR 1081.211(a).
---------------------------------------------------------------------------

    As amended by the Updated Rules of Practice, Rule 213(a) provides 
that the Director will either rule on a dispositive motion, refer the 
motion to the hearing officer, or rule on the motion in part and refer 
it in part. This is based on a similar process under the FTC's rules of 
practice.\27\ The preamble to the Updated Rules of Practice noted that 
Bureau agrees with the reasoning of the FTC when it adopted this 
process a decade ago. The FTC explained that the head of the agency has 
authority and expertise to rule initially on dispositive motions, and 
doing so can improve the quality of decision-making and expedite the 
proceeding.\28\ As the FTC further noted, an erroneous decision by an 
administrative law judge on a dispositive motion may lead to 
unnecessary briefing, hearing, and reversal, resulting in substantial 
costs and delay to the litigants.\29\ The preamble to the Updated Rules 
of Practice explained that adopting this process will give the Director 
the flexibility to decide whether a given dispositive motion would be 
most efficiently addressed by the hearing officer, with ultimate review 
by the Director, or simply by the Director.
---------------------------------------------------------------------------

    \27\ 16 CFR 3.22(a). This FTC provision does not specifically 
discuss a situation where the agency head rules on the motion in 
part and refers it in part. The Bureau has included language in Rule 
213(a) to specifically discuss this situation.
    \28\ 74 FR 1803, 1809-10 (Jan. 13, 2009).
    \29\ Id. at 1809-10.
---------------------------------------------------------------------------

    Rule 213(b) was amended to provide that, if the Director rules on 
the motion, the Director must do so within 42 days following the 
expiration of the time for filing all responses and replies, unless 
there is good cause to extend the deadline. If the Director refers the 
motion to the hearing officer, the Director may set a deadline for the 
hearing officer to rule. This was based on the parallel timing 
requirements under the FTC's rules of practice.\30\ Under the 2012 
Rule, Rule 212(h) provided a 30-day timeframe for the hearing officer 
to decide dispositive motions, subject to extension.\31\ But the 
preamble to the Updated Rules of Practice stated that the FTC's 
somewhat more flexible approach to timing is warranted, given that the 
Director must first decide whether or not to refer the motion to the 
hearing officer and also has other responsibilities as the head of the 
agency. The preamble stated that that the overall efficiency gains to 
adjudication proceedings from the new process, as discussed above, 
should generally compensate for any delays associated with a more 
flexible deadline.
---------------------------------------------------------------------------

    \30\ 16 CFR 3.22(a). This FTC provision includes an interval of 
45 days, but the Updated Rules of Practice generally adopted time 
intervals in increments of seven days.
    \31\ See 12 CFR 1081.115 (change of time limits).
---------------------------------------------------------------------------

    Rule 213(c) was amended to provide that, at the request of any 
party or on the Director or hearing officer's own motion, the Director 
or hearing officer

[[Page 18387]]

(as applicable) may hear oral argument on a dispositive motion. The 
amended Rule 213(c) was identical to the previous Rule 212(g), except 
that it was updated to reflect the fact that the Director would be the 
appropriate official to hear oral argument, if any, to the extent the 
Director is deciding the motion.
    Finally, Rule 213(d) was amended to describe the types of rulings 
that the Director or hearing officer may make on a dispositive motion. 
It consolidated language from the previous Rules 212(h) and 213, with 
updates to reflect the fact that the Director may be the official who 
decides the motion, as well as other technical changes for clarity.
    The comment by a group of trade associations opposed the amendments 
to Rule 213. This comment argued that having the Director decide 
dispositive motions is inconsistent with due process. It asserted that 
the Director is not impartial, since the Director would have previously 
authorized the Office of Enforcement to file the notice of charges. The 
comment further argued that Directors can change depending on the 
administration, so vesting authority in the Director would lead to 
instability in legal doctrine.
    The Bureau disagrees. The Director can and will act fairly in 
performing his or her adjudicative functions. The Director's ability to 
do so is unaffected by whether he or she decides that a dispositive 
motion would be most efficiently addressed by the hearing officer, with 
ultimate review by the Director, or simply by the Director. Also, as 
noted, it was already the case under the 2012 Rule that the Director 
could, ``at any time, direct that any matter be submitted to him or her 
for review.'' The adoption of a specific process for review of 
dispositive motions does not substantively change the Director's 
adjudicative role. In sum, Rule 213 is entirely consistent with due 
process principles.
    The Bureau also disagrees with the suggestion that the changes to 
Rule 213 will lead to instability in legal doctrine. Commenters' 
observation that leadership of the agency will change over time, 
including as presidential administrations change, is true regardless of 
whether the Director or the hearing officer reviews a dispositive 
motion in the first instance. It is also true of many other agencies 
that use adjudication proceedings, including both single-head and 
multimember agencies.
    Accordingly, the Bureau is retaining the amendments to Rule 213.

1081.400(a) Time Period for Filing Preliminary Findings and Conclusions

    12 CFR 1081.400(a) (Rule 400(a)) sets the deadline for the hearing 
officer to file preliminary findings and conclusions. Under the 2012 
Rule, subject to possible extensions, the hearing officer was required 
to file a recommended decision (now known as ``preliminary findings and 
conclusions'') no later than 90 days after the deadline for filing 
post-hearing responsive briefs pursuant to 12 CFR 1081.305(b) (Rule 
305(b)) and in no event later than 300 days after filing of the notice 
of charges. The Updated Rules of Practice extended the latter, 300-day 
interval to 360 days, in light of the amendments to Rule 209 that 
expanded the opportunities for depositions. The Updated Rules of 
Practice also changed terminology from ``recommended decision'' to 
``preliminary findings and conclusions'' throughout the Rules of 
Practice, as discussed later in this section-by-section analysis.
    The comment by a consumer advocacy organization supported the 
extension of the 300-day deadline to 360 days. It noted that the 
extension would benefit respondents by giving them more time to develop 
their cases and would provide for a more informed and deliberative 
agency process. Other commenters did not address the amendments to Rule 
400(a), and the Bureau is retaining them.

1081.408 Issue Exhaustion

    The Updated Rules of Practice added a new 12 CFR 1081.408 (Rule 
408), which addresses issue exhaustion.
    As the Supreme Court has explained: ``Administrative review schemes 
commonly require parties to give the agency an opportunity to address 
an issue before seeking judicial review of that question.'' \32\ These 
requirements can be ``creatures of statute or regulation'' or else are 
``judicially created.'' \33\ It is ``common for an agency's regulations 
to require issue exhaustion in administrative appeals. And when 
regulations do so, courts reviewing agency action regularly ensure 
against the bypassing of that requirement by refusing to consider 
unexhausted issues.'' \34\ Consistent with the Court's case law, the 
Administrative Conference of the United States has recommended that 
agencies address issue exhaustion requirements in their 
regulations.\35\
---------------------------------------------------------------------------

    \32\ Carr v. Saul, 141 S. Ct. 1352, 1358 (2021).
    \33\ Id.
    \34\ Sims v. Apfel, 530 U.S. 103, 108 (2000) (internal citation 
omitted).
    \35\ 86 FR 6612, 6619 (Jan. 22, 2021) (recommendation 2.k).
---------------------------------------------------------------------------

    The Updated Rules of Practice adopted Rule 408, which is an express 
regulation on issue exhaustion. Section 1053 of the CFPA contemplates 
that the Bureau will conduct a proceeding to decide whether to issue a 
final order, and then parties may petition courts to review the 
Bureau's decision, based on the record that was before the Bureau.\36\ 
But if parties do not adequately present their arguments to the Bureau, 
it frustrates this statutory scheme. Accordingly, having procedures to 
address issue exhaustion in adjudication proceedings is important to 
carry out section 1053.\37\ Additionally, having express procedures on 
this subject should benefit both the Bureau and the parties, by 
avoiding any potential confusion about how parties must raise arguments 
in adjudication proceedings.
---------------------------------------------------------------------------

    \36\ See generally section 1053(b), 12 U.S.C. 5563(b).
    \37\ Section 1053(e), 12 U.S.C. 5563(e). The issue exhaustion 
provision is also independently authorized by section 1022(b)(1), 12 
U.S.C. 5512(b)(1), based on either of two grounds. First, 
establishing orderly rules for issue exhaustion is appropriate to 
enable the Bureau to ``administer and carry out the purposes and 
objectives of'' section 1053, for the reasons discussed above and 
below. Id. Second, these issue-exhaustion rules ``prevent evasions'' 
of section 1053 and the Rules of Practice by some parties, who 
otherwise may not adequately present their arguments to the Bureau. 
Id.; see Woodford v. Ngo, 548 U.S. 81, 90 (2006) (explaining that 
``exhaustion requirements are designed to deal with parties who do 
not want to exhaust'').
---------------------------------------------------------------------------

    Rule 408(a) defines the new Rule 408's scope. It applies to any 
argument to support a party's case or defense, including any argument 
that could be a basis for setting aside Bureau action under 5 U.S.C. 
706 or any other source of law. This broad scope ensures that the 
Bureau has the opportunity to consider any issue affecting its 
proceedings.
    Rule 408(b) provides, first, that a party must raise an argument 
before the hearing officer, or else it is not preserved for later 
consideration by the Director. Second, a party must raise an argument 
before the Director, or else it is not preserved for later 
consideration by a court. This is consistent with the roles of the 
hearing officer and Director.\38\
---------------------------------------------------------------------------

    \38\ The Bureau notes that in cases where Rule 408(b) interacts 
with the Bureau's revisions to Rule 213, it yields a common-sense 
result. If the Director rules on a dispositive motion under Rule 213 
rather than referring it to the hearing officer, then the first 
sentence of Rule 408(b)--which normally requires parties to raise 
arguments before the hearing officer in the first instance--would be 
inapplicable to the Director's consideration of the motion. This is 
because the Director's ruling on the motion would not be ``later'' 
consideration by the Director after the hearing officer. On the 
other hand, the second sentence of Rule 408(b) would be applicable, 
and arguments not properly raised before the Director in briefing on 
the motion would not be preserved for later consideration by a 
court.

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

[[Page 18388]]

    Rule 408(c) provides that an argument must be raised in a manner 
that complies with the Rules of Practice and that provides a fair 
opportunity to consider the argument.
    Finally, Rule 408(d) clarifies that the Director has discretion to 
consider an unpreserved argument, including by considering it in the 
alternative. It also clarifies that, if the Director considers an 
unpreserved argument in the alternative, the argument remains 
unpreserved. Because issue exhaustion requirements serve to protect the 
agency's processes, it is appropriate for the head of the agency to 
retain discretion to waive those issue exhaustion requirements in 
appropriate cases.\39\ If a party believes that there is good cause for 
the issue exhaustion requirements to not be applied in a particular 
context, the proper course is to timely request that the Director 
exercise this discretion. The Director may also do so on the Director's 
own initiative. On the other hand, if the Director merely considers an 
unpreserved argument in the alternative, that should not be construed 
as a waiver by the Director of the party's failure to appropriately 
raise the argument.
---------------------------------------------------------------------------

    \39\ See, e.g., Am. Farm Lines v. Black Ball Freight Serv., 397 
U.S. 532, 539 (1970) (It ``is always within the discretion of . . . 
an administrative agency to relax or modify its procedural rules 
adopted for the orderly transaction of business before it when in a 
given case the ends of justice require it.'').
---------------------------------------------------------------------------

    Comments by the group of trade associations and by the legal 
foundation opposed Rule 408. The trade associations stated that the 
provision would reduce access to Federal courts. The legal foundation 
argued that Rule 408 should not cover ``structural'' constitutional 
claims. According to the legal foundation, Rule 408 strips courts of 
the power to police the separation of powers and denies respondents any 
forum to litigate structural constitutional claims.\40\
---------------------------------------------------------------------------

    \40\ The legal foundation's comment also cites Carr v. Saul, 141 
S. Ct. 1352 (2021), a case where the Supreme Court held that social 
security claimants were not required to exhaust Appointments Clause 
claims before Social Security Administration ALJs. The comment 
argues that this means that issue exhaustion does not apply to 
structural constitutional claims. However, this reflects a 
misreading of Carr. The Court emphasized that it was addressing a 
situation where ``statutes and regulations are silent,'' and so the 
question presented in Carr was whether the Court should ``impose a 
judicially created issue-exhaustion requirement.'' Id. at 1358 
(emphasis added). Even in that context, the Court relied on several 
factors ``taken together,'' only one of which related to the 
constitutional nature of the claims. See id. at 1358-62. Carr does 
not stand for the proposition that an issue-exhaustion regulation 
cannot address constitutional claims.
---------------------------------------------------------------------------

    However, Rule 408 does not foreclose respondents from raising any 
claim in Federal court, including constitutional claims. Like any 
issue-exhaustion regulation, it merely requires them to give the agency 
a fair opportunity to address the issue first, before invoking it to 
attack the agency's decision after the fact. For these reasons and the 
reasons explained in the Updated Rules of Practice, the Bureau is 
retaining Rule 408.

Global Technical Amendments

    In addition to the specific changes outlined above, the Updated 
Rules of Practice made certain technical amendments throughout the 
Rules of Practice.
    First, the Updated Rules of Practice retitled the hearing officer's 
``recommended decision'' as ``preliminary findings and conclusions.'' 
The preamble explained that the new title is more descriptive of this 
component of an adjudication proceeding. The preamble also emphasized 
that this is a terminological change, and preliminary findings and 
conclusions remain a recommended decision for purposes of the 
Administrative Procedure Act.
    Second, the Updated Rules of Practice made changes to ensure that 
the language of the Rules of Practice is gender inclusive.
    Third, consistent with the current Federal Rules of Civil 
Procedure, the Updated Rules of Practice replaced used of the term 
``shall'' with the terms ``must,'' ``may,'' ``will,'' or ``should,'' 
depending on the context, because the term ``shall'' can sometimes be 
ambiguous.\41\
---------------------------------------------------------------------------

    \41\ Fed. R. Civ. P. 1, advisory committee's notes to 2007 
amendment.
---------------------------------------------------------------------------

    Fourth, the Updated Rules of Practice replaced certain uses of the 
term ``the Bureau'' with either ``the Director,'' ``the Office of 
Administrative Adjudication,'' or ``the Office of Enforcement,'' in 
order to avoid ambiguity about which Bureau organ is being referenced.
    Fifth, as discussed in the section-by-section analysis for Rule 
114(a), the Updated Rules of Practice adjusted various time periods in 
the Rules of Practice.
    Finally, the Updated Rules of Practice made technical changes to 
requirements in 12 CFR 1081.111(a), 1081.113(d)(2), and 1081.405(e) 
(Rules 111(a), 113(d)(2), and 405(e)) regarding filing of certain 
papers by the hearing officer and Director and service of those papers 
by the Office of Administrative Adjudication.
    No comments opposed these technical amendments, and the Bureau is 
retaining them.

V. Section 1022(b)(2) Analysis

    In developing the Updated Rules of Practice and this rule, the 
Bureau has considered the rule's benefits, costs, and impacts in 
accordance with section 1022(b)(2)(A) of the CFPA.\42\ In addition, the 
Bureau has consulted or offered to consult with the prudential 
regulators and the FTC, including regarding consistency of the Updated 
Rules of Practice and this rule with any prudential, market, or 
systemic objectives administered by those agencies, in accordance with 
section 1022(b)(2)(B) of the CFPA.\43\
---------------------------------------------------------------------------

    \42\ 12 U.S.C. 5512(b)(2)(A).
    \43\ 12 U.S.C. 5512(b)(2)(B). Whether section 1022(b)(2)(A) and 
section 1022(b)(2)(A)(B) are applicable to this rule is unclear, but 
in order to inform the rulemaking more fully the Bureau performed 
the described analysis and consultations.
---------------------------------------------------------------------------

    The Updated Rules of Practice included the below analysis of costs, 
benefits, or impacts. No commenter addressed that analysis, and this 
rule adopts the Updated Rules of Practice without change, so the Bureau 
is adopting the same analysis for this rule.
    As with the 2012 Rule, the Updated Rules of Practice neither impose 
obligations on consumers, nor are expected to affect their access to 
consumer financial products or services. For purposes of this 
1022(b)(2) analysis, the Bureau compares the effect of the Updated 
Rules of Practice against the baseline of the Rules of Practice as they 
existed before the Updated Rules of Practice, as established by the 
2012 Rule and amended by the 2014 Rule.
    The Rules of Practice are intended to provide an expeditious 
decision-making process. An expeditious decision-making process may 
benefit both consumers and covered persons to the extent that it is 
used in lieu of proceedings initiated in Federal district court. A 
clear and efficient process for the conduct of adjudication proceedings 
benefits consumers by providing a systematic process for protecting 
them from unlawful behavior. At the same time, a more efficient process 
affords covered persons with a cost-effective way to have their cases 
heard. The 2012 Rule adopted an affirmative disclosure approach to fact 
discovery, pursuant to which the Bureau makes available to respondents 
the information obtained by the Office of Enforcement from persons not 
employed by the Bureau prior to the institution of proceedings,

[[Page 18389]]

in connection with the investigation leading to the institution of 
proceedings that is not otherwise privileged or protected from 
disclosure. This affirmative disclosure obligation was intended to 
substitute for the traditional civil discovery process, which can be 
both time-consuming and expensive. By changing this process to allow 
for a limited number of depositions by both the Office of Enforcement 
and respondents, the Updated Rules of Practice increases the cost of 
the process in both time and money, relative to the baseline. At the 
same time, to the extent that a limited number of depositions makes 
hearings proceed more efficiently, the rule may reduce costs. In 
addition, since promulgating the 2012 Rule, the Bureau has only brought 
two cases through the administrative adjudication process from start to 
finish. As such, the Bureau expects there to be few cases in the future 
that would have benefited from the more limited deposition procedure in 
the 2012 Rule. The Bureau expects the amended procedure to still be 
faster and less expensive than discovery through a Federal district 
court. To the extent that adding additional discovery enables more 
cases that would otherwise be initiated in Federal court to instead be 
initiated through the administrative adjudication process, both 
consumers and covered persons will benefit.
    In addition, in the 1022(b)(2) analysis for the 2012 Rule, the 
Bureau stated that a benefit of the Rule was its similarity to existing 
rules of the prudential regulators, the FTC, and the SEC. The SEC has 
since amended its rules, and many of the changes in these amendments 
will align the Bureau's rules with the new SEC rules and those of other 
agencies. The similarity of the Updated Rules of Practice to other 
agencies' rules should further reduce the expense of administrative 
adjudication for covered persons.
    Further, the Updated Rules of Practice 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 CFPA. 
Finally, the Updated Rules of Practice do not have a unique impact on 
rural consumers.

VI. Regulatory Requirements

    The preamble to the Updated Rules of Practice explained that, as a 
rule of agency organization, procedure, or practice, it was exempt from 
the notice-and-comment rulemaking requirements of the Administrative 
Procedure Act.\44\ However, the Bureau accepted comments on the rule 
and is issuing this rule after considering those comments.\45\
---------------------------------------------------------------------------

    \44\ 5 U.S.C. 553(b).
    \45\ The comment by the group of trade associations requested 
that the Bureau propose a new rule based on their objections to 
aspects of the Updated Rules of Practice. However, the Bureau has 
considered these objections and does not agree with them for the 
reasons discussed in the section-by-section analysis, so the Bureau 
is not issuing a new proposal based on them.
---------------------------------------------------------------------------

    Because no notice of proposed rulemaking was required, the 
Regulatory Flexibility Act does not require an initial or final 
regulatory flexibility analysis for this rule.\46\ Moreover, the 
Bureau's Director certifies that this rule will not have a significant 
economic impact on a substantial number of small entities. Therefore, 
an analysis is also not required for that reason.\47\ The rule imposes 
compliance burdens only on the handful of entities that are respondents 
in adjudication proceedings or third-party recipients of discovery 
requests. Some of the handful of affected entities may be small 
entities under the Regulatory Flexibility Act, but they would represent 
an extremely small fraction of small entities in consumer financial 
services markets. Accordingly, the number of small entities affected is 
not substantial.
---------------------------------------------------------------------------

    \46\ 5 U.S.C. 603, 604.
    \47\ 5 U.S.C. 605(b).
---------------------------------------------------------------------------

    The Bureau has also determined that this rule does not impose any 
new or revise any existing recordkeeping, reporting, or disclosure 
requirements on covered entities or members of the public that would be 
collections of information requiring approval by the Office of 
Management and Budget under the Paperwork Reduction Act.\48\
---------------------------------------------------------------------------

    \48\ 44 U.S.C. 3501-3521.
---------------------------------------------------------------------------

List of Subjects in 12 CFR Part 1081

    Administrative practice and procedure, Banks, banking, Consumer 
protection, Credit unions, Law enforcement, National banks, Savings 
associations, Trade practices.

Rohit Chopra,
Director, Consumer Financial Protection Bureau.
[FR Doc. 2023-04109 Filed 3-28-23; 8:45 am]
BILLING CODE 4810-AM-P