E8-25354. Proceedings Before the Commodity Futures Trading Commission

AGENCY:

Commodity Futures Trading Commission.

ACTION:

Final rule.

SUMMARY:

The Commodity Futures Trading Commission (“Commission”) is amending its Rules of Practice and Rules Relating to Reparation Proceedings, respectively, to standardize service and filing by electronic means. The amendments also revise rules regarding formatting requirements of reparations documents filed with the Proceedings Clerk.

DATES:

Effective October 24, 2008.

FOR FURTHER INFORMATION CONTACT:

Thuy Dinh, Office of General Counsel, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581. Telephone: [phone].

SUPPLEMENTARY INFORMATION:

Personal delivery and delivery by U.S. mail are the manners of filing and service authorized in proceedings under 17 CFR Part 12. Since 1998, Part 10 of the Commission Rules has provided an additional means—service by fax. Up to now, neither Parts 10 nor 12 have provided for service by e-mail. In keeping with the demands of today's world, and especially in light of cautionary measures used in the post-September 11 climate that have slowed incoming mail to the agency, the Commission proposes to authorize fax and e-mail as additional manners of filing and service, to: (1) Avoid undue delay; (2) take advantage of technological developments, which will be faster and less costly than the mails; and (3) streamline procedures.

The Commission and the federal government overall are engaged in ongoing efforts to use technology to increase efficiency. Since March 2000, the Commission has allowed customers, clients of Commission registrants and commodity pool participants to sign electronically certain documents required under the Commodity Exchange Act (“CEA”), 7 U.S.C. 1 et seq. and Commission Rules. See, e.g., 17 CFR 1.3(tt) and 1.4 (rules dealing with electronic signatures). In May 2000, the Office of Management and Budget issued a Guide on Implementation of the Government Paperwork Elimination Act (“GPEA”) at 65 FR 255508, 2000 WL 517619. More recently, on July 25, 2007, the Commission, acting on a request made by the National Futures Association (“NFA”), amended 17 CFR 171.9(b) to allow for service by fax and e-mail in appeals from NFA actions. Thus, the amendments complement existing Commission Rules and government policy dealing with electronic submissions.

All of the amendments under Parts 10 and 12 make filing and service by fax and e-mail effective upon transmission. While authorizing these electronic means of filing and service, the Commission wishes to make clear that these options may be used on a case-by-case basis at the discretion of the Presiding Officer, with the parties' consent. Signed documents filed or served by electronic means must be in PDF or other non-alterable form. With respect to Part 12, when a document to be filed requires the concurrent submission of a filing fee, filing is not complete until the fee has been paid. See Commission Rule 12.25.

The Part 12 amended rules also allow filing and service by commercial package delivery service, which is already allowed under the Part 10 rules. To harmonize Parts 10 and 12, when documents are served by mail, the length of time within which a party being served in a Part 10 proceeding may respond is extended from three (3) extra days as Part 10 currently provides, to five (5) extra days, as provided in Part 12.

The amendments affect the Rules' provisions respecting service upon parties by the Proceedings Clerk on behalf of the Commission, i.e., Commission Rules 10.12(b) and 12.10(a)(3), providing that the Commission, in its discretion and with due consideration for the convenience of the parties, may serve documents (i.e., rulings, opinions and orders) to the parties by electronic means.

The amendments also update Commission Rules 12.11(a) and (c) for filing hard copy pleadings. For example, outdated requirements such as references to mimeographed filings are hereby removed from the rule.

Related Matters

A. No Notice Is Required Under 5 U.S.C. 553

The Commission has determined that these amendments are exempt from the provisions of the Administrative Procedure Act, 5 U.S.C. 553, which generally require notice of proposed rulemaking and provide other opportunities for public participation. According to the exemptive language of 5 U.S.C. 553, these amendments pertain to “rules of agency organization, procedure, or practice,” as to which there exists agency discretion not to provide notice. In addition, notice and public procedure are unnecessary in this case because the proposed amendments are self-explanatory. If made effective immediately, they will promote efficiency and facilitate the Commission's core mission without imposing a new burden. For the above reasons, the notice requirements under 5 U.S.C. 553 are inapplicable.

B. Regulatory Flexibility Act

The Regulatory Flexibility Act (“RFA”), 5 U.S.C. 601 et seq., requires agencies with rulemaking authority to consider the impact those rules will have on small businesses. With respect to persons seeking Commission review of final exchange and NFA decisions, and initial decisions in reparation and administrative enforcement matters, the amendments impose no additional burden and in fact ease existing burdens by providing more options, greater certainty and increased predictability concerning filing and service. Accordingly, the Acting Chairman, on behalf of the Commission, hereby certifies, pursuant to 5 U.S.C. 605(b), that the amendments will not have a significant economic impact on a substantial number of small businesses.

C. Paperwork Reduction Act

The amendments to Parts 10 and 12 do not impose a burden within the meaning and intent of the Paperwork Reduction Act of 1980, 44 U.S.C. 3501, et seq.

D. Cost-Benefit Analysis

Section 15(a) of the Act, 7 U.S.C. 19(a), requires the Commission to consider the costs and benefits of its action before issuing a new regulation. The Commission understands that, by its terms, Section 15(a) does not require the Commission to quantify the costs and benefits of a new regulation or to determine whether the benefits of the proposed regulation outweigh its costs. Nor does it require that each proposed rule be analyzed in isolation when that rule is a component of a larger package of rules or rule revisions. Rather, Section 15(a) simply requires the Commission to “consider the costs and benefits” of its action.

Section 15(a) further specifies that costs and benefits shall be evaluated in light of five broad areas of market and public concern: (1) Protection of market participants and the public; (2) efficiency, competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations. Accordingly, the Commission can, in its discretion, give greater weight to any one of the five enumerated areas of concern and can, in its discretion, determine that notwithstanding its costs, a particular rule is necessary or appropriate to protect the public interest or to effectuate any of the provisions, or accomplish any of the purposes, of the Commodity Exchange Act.

The amendments to Parts 10 and 12 will not create any significant change in the Commission's adjudicatory process. In fact, the amendments will enhance the protection of market participants and the public by making filing and service more certain, faster and cheaper. The amendments do not bear directly upon the risk-benefit factors but simply increase the efficiency of litigation that arises pursuant to the operation of futures markets.

List of Subjects in 17 CFR Parts 10 and 12

• Administrative practice and procedure
• Commodity futures

In consideration of the foregoing, the Commission amends Chapter I of Title 17 of the Code of Federal Regulations as follows:

PART 10—RULES OF PRACTICE

1. The authority citation for Part 10 is revised read as follows:

Authority: Pub. L. 93-463, sec. 101(a)(11), 88 Stat. 1391; 7 U.S.C. 2(a)(12).

2. Section 10.12 is amended by revising paragraphs (a)(2), (b) and (d)(1) to read as follows:

§ 10.12

Service and filing of documents; form and execution

(a) * * *

(2) How service is made. Service shall be made by:

(i) Personal service;

(ii) First-class or a more expeditious form of United States mail or a similar commercial package delivery service;

(iii) Transmitting the documents via facsimile machine (“fax”); or

(iv) Via electronic mail (“e-mail”).

(v) Service shall be complete at the time of personal service; upon deposit in the mail or with a similar commercial package delivery service of a properly addressed document for which all postage or delivery service fees have been paid; or upon transmission by fax or e-mail. Where a party effects service by mail or similar package delivery service (but not by fax or e-mail), the time within which the party being served may respond shall be extended by five (5) days. Service by fax or e-mail shall be permitted at the discretion of the Presiding Officer, with the parties' consent. Signed documents that are served by e-mail must be in PDF or other non-alterable form.

* * * * *

(b) Service of decisions and orders. A copy of all rulings, opinions and orders of the Administrative Law Judge and the Commission shall be served by the Proceedings Clerk on each of the parties. The Commission, in its discretion and with due consideration for the convenience of the parties, may serve the aforementioned documents to the parties by electronic means.

* * * * *

(d) Filing of documents with the Proceedings Clerk. (1) All documents which are required to be served upon a party shall be filed concurrently with the Proceedings Clerk. A document shall be filed by delivering it in person or by certified or registered mail with return receipt requested to Proceedings Clerk, Office of Proceedings, Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581; or faxing the document to [phone] or e-mailing it to ([e-mail]) in accordance with the conditions set forth in paragraph (a)(2) of this section.

* * * * *

PART 12—RULES RELATING TO REPARATION PROCEEDINGS

1. The authority citation for Part 12 shall read as follows:

Authority: 7 U.S.C. 2(a)(12), 12a(5), and 18.

2. Section 12.10 is amended by revising paragraphs (a)(2), (a)(3) and (b) to read as follows:

§ 12.10

Service.

(a) * * *

(2) Filing with the Proceedings Clerk; proof of service. All documents which are required to be served upon a party shall be filed concurrently with the Proceedings Clerk, and shall meet the requirements as to form prescribed by §§ 12.11 and 12.12 of this part. Unless otherwise provided in these rules, a document shall be filed by:

(i) Delivering it in person;

(ii) Mailing it by first-class or a more expeditious form of United States mail, or delivering it to a similar commercial package delivery service;

(iii) Transmitting the documents via facsimile machine (“fax”); or

(iv) Via electronic mail (“e-mail.”)

(v) Mailed documents must be addressed to: Proceedings Clerk, Office of Proceedings, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581. Faxed documents should be sent to [phone] and e-mailed documents to ([e-mail]), directed to the Proceedings Clerk. Electronic filing and service in a given case shall be at the discretion of the Presiding Officer, with the parties' consent. Signed documents that are served by e-mail attachment must be in PDF or other non-alterable form. To be timely filed under this part, a document must be delivered; mailed by first-class or a more expeditious form of United States mail or a similar commercial package delivery service; or faxed or e-mailed to the Proceedings Clerk within the time prescribed for filing. Proof of filing shall be made by attaching to the document to be filed an affidavit certifying that the attached document was either deposited in the mail or with the commercial package delivery service, with postage or delivery service fees prepaid, addressed to the Proceedings Clerk, Office of Proceedings, Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581; or faxed or e-mailed to the Proceeding Clerk on the date specified in the affidavit. Proof of service of a document shall be made by filing with the Proceedings Clerk, simultaneously with the filing of the required document, an affidavit of service executed by any person 18 years of age or older or a certificate of service executed by an attorney-at-law qualified to practice before the Commission. The proof of service shall identify the persons served, state that service has been made, set forth the date of service, and recite the manner of service.

(3) Service of orders and decisions. A copy of all notices, rulings, opinions, and orders of the Proceedings Clerk, the Director of the Office of Proceedings, a Judgment Officer, Administrative Law Judge, the Deputy General Counsel for Opinions and Review or the Commission shall be served by the Proceedings Clerk on each of the parties. The Commission, in its discretion and with due consideration for the convenience of the parties, may serve the aforementioned documents to the parties by electronic means.

(b) How service is made. (1) Service shall be made by:

(i) Personal service;

(ii) First-class or a more expeditious form of United States mail or a similar commercial package delivery service;

(iii) Fax; or

(iv) E-mail in accordance with the conditions set forth in paragraph (a)(2) of this section.

(v) Service shall be complete at the time of personal service upon deposit in the mail or with a commercial package delivery service of a properly addressed document for which postage or delivery service fees have been prepaid; or upon transmission by fax or e-mail. Where service is effected by mail or a commercial package delivery service (but not by fax or e-mail), the time within which the person served may respond thereto shall be increased by five (5) days. Signed documents that are served by e-mail attachment must be in PDF or other non-alterable form. For the purposes of this Rule, service of any document by the Proceedings Clerk upon the Commission shall be regarded as service by mail.

* * * * *

3. Section 12.11 is amended by revising paragraphs (a) and (c) to read as follows:

§ 12.11

Formalities of filing of documents with the Proceedings Clerk.

(a) Number of copies. Unless otherwise specifically provided, or unless filed by fax or e-mail in accordance with the requirements of § 12.10(a)(2), an original and one conformed copy of all documents shall be filed with the Proceedings Clerk.

* * * * *

(c) Format. All documents filed under the Reparation Rules shall be typewritten, printed, or, if a party is not represented by counsel, in plainly legible handwriting. Documents sent in hardcopy must be on good quality white paper, 81/2 by 111/2 inches and bound at the top only. Documents e-mailed in accordance with the requirements of § 12.10(a)(2) must be in PDF or other non-alterable form. All documents must be double-spaced, except for quotations more than 3 lines and footnotes, both of which should be single-spaced.

* * * * *

Issued in Washington, DC, on the 8th of October 2008, by the Commission.

David A. Stawick,

Secretary of the Commission.