[Federal Register Volume 60, Number 103 (Tuesday, May 30, 1995)]
[Rules and Regulations]
[Pages 28033-28035]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-13117]
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DEPARTMENT OF THE TREASURY
12 CFR Part 509
[No. 95-102]
RIN 1550-AA80
Rules of Practice and Procedure in Adjudicatory Proceedings
AGENCY: Office of Thrift Supervision, Treasury.
ACTION: Final rule.
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SUMMARY: The Office of Thrift Supervision (OTS) is amending its Rules
[[Page 28034]] of Practice and Procedure in Adjudicatory Proceedings.
The final rule is intended to clarify provisions relating to ex parte
communications to conform to the requirements of the Administrative
Procedure Act (APA). In particular, the amendment clarifies that the ex
parte provisions do not apply to intra-agency communications, which are
governed by a separate provision of the APA.
EFFECTIVE DATE: July 1, 1995.
FOR FURTHER INFORMATION CONTACT: Karen Osterloh, Counsel, Banking and
Finance, Regulations and Legislation Division, Chief Counsel's Office
(202/906-6639), Office of Thrift Supervision, 1700 G Street, NW.,
Washington, DC 20552.
SUPPLEMENTARY INFORMATION:
I. Background
In August, 1991, the Office of Thrift Supervision (OTS), the
Comptroller of the Currency (OCC), the Board of Governors of the
Federal Reserve System (Board of Governors), the Federal Deposit
Insurance Corporation (FDIC), and the National Credit Union
Administration (NCUA) adopted Uniform Rules of Practice and Procedure
for agency adjudicatory proceedings.1 The OTS codified these
uniform rules in its Rules of Practice and Procedure in Adjudicatory
Proceedings at 12 CFR Part 509, Subpart A.
\1\ OTS, 56 FR 38302, Aug. 12, 1991; OCC, 56 FR 38024, Aug. 9,
1991; Board of Governors, 56 FR 38048, Aug. 9, 1991; FDIC, 56 FR
37968, Aug. 9, 1991; and NCUA, 56 FR 37762, Aug. 8, 1991.
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By notice published December 5, 1994 (59 FR 62354), the OTS
proposed to amend one aspect of its rules on ex parte communications to
clarify that the rules parallel the requirements of the Administrative
Procedure Act (APA). The other banking agencies have issued identical
proposals.2 The Board of Governors has published a final rule on
this matter.3
\2\ Board of Governors, 59 FR 60094, Nov. 22, 1994; FDIC, 59 FR
60921, Nov. 29, 1994; OCC, 59 FR 63936, Dec. 12, 1994; and NCUA, 59
FR 67655, Dec. 30, 1994.
\3\ 59 FR 65244, Dec. 19, 1994.
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Currently, section 509.9 prohibits ``a party, his or her counsel,
or another interested person'' from making an ex parte communication to
the Director or other decisional official concerning the merits of an
adjudicatory proceeding. When the uniform rules were proposed and
adopted in 1991, the joint notice of proposed rulemaking explained that
the proposed rule regarding ex parte communications ``adopts the rules
and procedures set forth in the APA regarding ex parte
communications.'' 4 There was no intention to impose a rule more
restrictive than that imposed by the APA.
\4\ 56 FR 27790, 27793, June 17, 1991.
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The APA contains two provisions relating to communications with
agency decision-makers. The APA's ex parte communication provision, 5
U.S.C. 557(d), restricts communications between ``interested person[s]
outside the agency'' and the agency head, the administrative law judge
(ALJ), or the agency decisional employees. Intra-agency communications
are governed by the APA's separation-of-functions provision, 5 U.S.C.
554(d). That section prohibits investigative or prosecutorial personnel
at an agency from ``participat[ing] or advis[ing] in the decision,
recommended decision, or agency review'' of an adjudicatory matter
pursuant to section 557 of the APA except as witness or counsel. The
same separation-of-functions provision provides that the ALJ in an
adjudicatory matter may not consult any party on a fact in issue unless
the other parties have an opportunity to participate.5 It does not
prohibit agency investigatory or prosecutorial staff from seeking the
amendment of a notice or the settlement or termination of a proceeding.
\5\ 5 U.S.C. 554(d)(1).
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The rule as proposed and adopted in 1991, however, neglected to
mention the separation-of-functions concept explicitly, and appeared to
apply the ex parte communication prohibition to all communications
concerning the merits of an adjudicatory proceeding between the
Director, ALJ or decisional personnel on the one hand, and any ``party,
his or her counsel, or another person interested in the proceeding'' on
the other. The OTS and the other banking agencies have never
interpreted this provision as limiting agency enforcement staff's
ability to seek approval of amendments to or terminations of existing
enforcement actions. As drafted, however, the provision could be
misinterpreted to expand the ex parte communication prohibition beyond
the scope of the APA. The OTS and the other banking agencies did not
intend this result.
The amendment clarifies that the regulation is intended to conform
to the provisions of the APA by limiting the prohibition on ex parte
communications to communications to or from ``interested persons
outside the agency,'' 5 U.S.C. 557(d), and by incorporating explicitly
the APA's separation-of-functions provision, 5 U.S.C. 554(d). This
approach is also consistent with the most recent Model Adjudication
Rules prepared by the Administrative Conference of the United States.
The OTS received two comments on the proposed rule. One commenter
argued that the separation-of-functions provision of the APA prohibits
agency investigatory or prosecutorial staff from seeking the amendment
of a notice or termination of a proceeding, without notice and
opportunity for other parties to be heard. The commenter further
suggests that the separation-of-functions provision prohibits the
Director from acting on such a request. The case law, however, does not
support the commenter's assertions. Prosecuting staff may advise agency
heads ex parte with respect to initiating a new action against a party
in a pending proceeding, adding new parties to an ongoing case,
enlarging or clarifying issues in a pending case, and reopening a
closed proceeding.6
\6\ See RSR Corp. v. F.T.C., 656 F.2d 718 (D.C. Cir. 1981);
Environmental Defense Fund v. E.P.A., 548 F.2d 998, 1006, n.20 (D.C.
Cir. 1976), cert. denied, 431 U.S. 925 (1977); Environmental Defense
Fund v. E.P.A., 510 F.2d 1292, 1305 (D.C. Cir. 1975).
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Another commenter suggested that the OTS explain the so-called
``Chinese wall'' between staff members who prosecute an administrative
proceeding and staff members who advise the Director on disposition of
that matter. The amended rule specifically sets out the APA separation-
of-functions provision that prohibits agency prosecutorial personnel in
one case from participating in the Director's decision on that or a
factually related case. This provision clearly prevents prosecutorial
staff from communicating about the merits of a case with those staff
members who advise the Director on the final decision in the case. It
is unnecessary to set out internal procedures implementing this
statutory prohibition in a formal rulemaking. To do so may limit the
OTS's flexibility with regard to its internal operations.
II. Regulatory Flexibility Act
Pursuant to section 605(b) of the Regulatory Flexibility Act, the
OTS hereby certifies that this final rule will not have a significant
economic impact on a substantial number of small entities. Accordingly,
a regulatory flexibility analysis is not required.
The final rule makes a minor amendment to conform an existing rule
of procedure to current intra-agency practices. Because the change
affects intra-agency procedures only, it should not result in
additional burden for regulated institutions. The purpose of the
revised regulation is to conform the provisions of the regulation to
those imposed by statute. [[Page 28035]]
III. Executive Order 12866
The OTS has determined that this final rule is not a significant
regulatory action as defined in Executive Order 12866.
IV. Unfunded Mandates Reform Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995, 104 Pub.
L. 104-4 (signed into law on March 22, 1995) requires that an agency
prepare a budgetary impact statement before promulgating a rule that
includes a Federal mandate that may result in expenditure by State,
local, and tribal governments, in the aggregate, or by the private
sector of $100 million or more in one year. If the budgetary impact
statement is required, section 205 of the Act also requires an agency
to identify and consider a reasonable number of regulatory alternatives
before promulgating a rule. As discussed in the preamble, this final
rule is limited in application to the internal procedures of OTS. The
OTS has therefore determined that the final rule will not result in
expenditure by State, local, or tribal governments or by the private
sector of more than $100 million. Accordingly, the OTS has not prepared
a budgetary impact statement or specifically addressed the regulatory
alternatives considered.
List of Subjects in 12 CFR Part 509
Administrative practice and procedures, Penalties.
For the reasons set forth in the preamble, the Office of Thrift
Supervision hereby amends part 509, chapter V, title 12, Code of
Federal Regulation as set forth below:
SUBCHAPTER A--ORGANIZATION AND PROCEDURES
PART 509--RULES OF PRACTICE AND PROCEDURE IN ADJUDICATORY
PROCEEDINGS
1. The authority citation for part 509 continues to read as
follows:
Authority: 5 U.S.C. 556; 12 U.S.C. 1464, 1467, 1467a, 1813; 15
U.S.C. 78l.
2. Section 509.9 is amended by revising paragraphs (a) and (b) and
by adding a new paragraph (e) to read as follows:
Sec. 509.9 Ex parte communications.
(a) Definition--(1) Ex parte communication means any material oral
or written communication relevant to the merits of an adjudicatory
proceeding that was neither on the record nor on reasonable prior
notice to all parties that takes place between:
(i) An interested person outside the Office (including such
person's counsel); and
(ii) The administrative law judge handling that proceeding, the
Director, or a decisional employee.
(2) Exception. A request for status of the proceeding does not
constitute an ex parte communication.
(b) Prohibition of ex parte communications. From the time the
notice is issued by the Director until the date that the Director
issues the final decision pursuant to Sec. 509.40(c) of this subpart:
(1) No interested person outside the Office shall make or knowingly
cause to be made an ex parte communication to the Director, the
administrative law judge, or a decisional employee; and
(2) The Director, administrative law judge, or decisional employee
shall not make or knowingly cause to be made to any interested person
outside the Office any ex parte communication.
* * * * *
(e) Separation-of-functions. Except to the extent required for the
disposition of ex parte matters as authorized by law, the
administrative law judge may not consult a person or party on any
matter relevant to the merits of the adjudication, unless on notice and
opportunity for all parties to participate. An employee or agent
engaged in the performance of investigative or prosecuting functions
for the Office in a case may not, in that or a factually related case,
participate or advise in the decision, recommended decision, or agency
review of the recommended decision under Sec. 509.40 of this subpart,
except as witness or counsel in public proceedings.
Dated: May 23, 1995.
By the Office of Thrift Supervision.
Jonathan L. Fiechter,
Acting Director.
[FR Doc. 95-13117 Filed 5-26-95; 8:45 am]
BILLING CODE 6720-01-P
