Rule · FDIC · 12 Jan 2021 · 2020-27944
The Federal Deposit Insurance Corporation issued a final rule amending 12 CFR Part 308 to codify the appointment of an Administrative Officer as the inferior officer responsible for key adjudicative functions. This amendment replaces outdated references to the Executive Secretary with current position titles and aligns FDIC adjudicative practices with the Supreme Court’s Lucia decision by explicitly confirming Board appointment authority. Effective January 12, 2021, the technical revisions streamline procedural filings and motions without substantially altering non-agency parties’ rights, permitting immediate implementation without prior public notice.
1 5 U.S.C. 801(a)(1)(A).
2 5 U.S.C. 804(3).
FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Part 308 RIN 3064–AF69 FDIC Rules of Practice and Procedure; Technical Revisions AGENCY: Federal Deposit Insurance Corporation. ACTION: Final rule. SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is amending its rules of practice and procedure to codify the agency’s longstanding practice of having certain adjudicative functions performed by an inferior officer of the United States appointed by the FDIC’s Board of Directors (Board). Additionally, the FDIC is making other technical edits to its rules of practice and procedure to update references to certain positions within the FDIC Legal Division whose titles are outdated. DATES: The final rule is effective on January 12, 2021. FOR FURTHER INFORMATION CONTACT:
Romulus A. Johnson, Counsel, Legal Division, (202) 898–3820, romjohnson@ fdic.gov; Josephine M. Bahn, Senior Attorney, Legal Division, (202) 898– 6576, jbahn@fdic.gov; or Nicholas S. Kazmerski, Counsel, Legal Division, (202) 898–3524, nkazmerski@fdic.gov. SUPPLEMENTARY INFORMATION:
I. Background
Administrative enforcement proceedings brought by the FDIC are subject to the Administrative Procedure Act (APA), 5 U.S.C. 551 et seq., and the FDIC Rules of Practice and Procedure, 12 CFR part 308. Under part 308, evidentiary hearings and related proceedings are generally presided over by an Administrative Law Judge (ALJ). See generally, 5 U.S.C. 556; 12 CFR 308.5, and 308.3. Additionally, part 308 provides that certain procedural and adjudicative functions are reserved to the Executive Secretary of the FDIC. These functions include but are not limited to: (1) Serving in place of an ALJ when no ALJ has jurisdiction over an administrative proceeding; (2) issuing rulings in certain administrative proceedings; and (3) serving as the custodian of records for administrative proceedings. See generally, 12 CFR 308.102(b) and 308.105. On June 21, 2018, the U.S. Supreme Court held that the ALJs employed by the U.S. Securities and Exchange Commission (SEC) were ‘‘inferior officers’’ of the United States under the Appointments Clause of the United States Constitution because these ALJs hold a continuing office established by law, and they exercise ‘‘significant discretion’’ in connection with certain ‘‘important functions’’ when presiding over administrative hearings. Lucia v. SEC, 138 S. Ct. 2044, 2053–2054 (2018) (Lucia). As inferior officers, the Supreme Court held that the SEC’s ALJs are ‘‘subject to the Appointments Clause and as such, can only be appointed by the President, ‘‘Courts of Law’’ or ‘‘Heads of Departments.’’ See, Lucia, 138 S. Ct. 2044, 2046. Although the Lucia decision did not directly affect the FDIC or the ALJs for the FDIC, the Board nevertheless elected to formally appoint the ALJs that preside over FDIC enforcement proceedings. The ALJs who were serving at the time of the Lucia decision were appointed by the Board on July 19,
2018. See FDIC Board Resolution
085152. Since that time, the Board has
appointed all ALJs that preside over FDIC enforcement proceedings. Since the Lucia decision, the FDIC has received questions regarding whether the FDIC’s Executive Secretary was also appointed in a manner consistent with the Supreme Court’s ruling in Lucia. In fact, the Board duly appointed the FDIC’s current Executive Secretary as an inferior officer on June 22, 1997, pursuant to Article II of the United States Constitution and 12 U.S.C. 1819(a) (Fifth) (allowing the FDIC to ‘‘appoint by its Board of Directors such officers and employees as are not otherwise provided for in this chapter’’). Nonetheless, in the interest of transparency and to assuage any outstanding concerns about this issue, we are amending part 308 to clarify and to expressly provide that such adjudicative functions will continue to be performed by an inferior officer of the United States (Administrative Officer) that has been duly appointed by the Board. In addition to clarifying that these adjudicative functions are performed by an Administrative Officer that is duly appointed by the Board, the FDIC is making technical changes to part 308 to update outdated references to certain position titles.
II. Exemption From Public Notice and
Comment
Section 553 of the Administrative
Procedure Act (APA) (5 U.S.C. 553) sets forth requirements for providing the general public notice of, and the opportunity to comment on, proposed agency rules. However, unless notice or hearing is required by statute, those requirements do not apply to interpretive rules, general statements of policy, or rules of agency organization, procedure, or practice. See 5 U.S.C. 553(b)(A). The FDIC is updating part 308, its rules of practice and procedure, to substitute the Administrative Officer for the Executive Secretary in multiple places. Since the changes relate to agency organization, procedure, or practice, the rules are being published in final form without public notice and comment.
III. Regulatory Analysis
A. Congressional Review Act Under the Congressional Review Act (CRA), ‘‘[b]efore a rule can take effect, the Federal agency promulgating such rule shall submit to each House of the Congress and to the Comptroller General a report containing—(i) a copy of the rule; (ii) a concise general statement relating to the rule, including whether it is a major rule; and (iii) the proposed effective date of the rule.’’ 1 The CRA further defines the term ‘‘rule’’ as having ‘‘the meaning given such term in
section 551, except that such term does
not include—(A) any rule of particular applicability . . . ; (B) any rule relating to agency management or personnel; or (C) any rule of agency organization, procedure, or practice that does not substantially affect the rights or obligations of non-agency parties.’’ 2 The FDIC is updating part 308, its rules of practice and procedure, to clarify that certain adjudicative functions, specified in part 308 as being performed by the FDIC’s Executive Secretary or Assistant Executive Secretary, will be performed by an ‘‘Administrative Officer’’ or ‘‘Assistant Administrative Officer’’ who has been duly appointed by the Board. Additionally, the FDIC is updating outdated references to certain position titles in part 308. These amendments do not constitute substantive changes, but merely conform the titles in the
3 12 U.S.C. 4802(a).
4 12 U.S.C. 4802.
5 12 U.S.C. 4809. regulation to the current titles of these positions. The clarifications relate to agency management and personnel, and to agency practice and procedure. Further, to the extent that non-agency parties are impacted by the amended rules (i.e., they may be required to submit requests and documents to the attention of the Administrative Officer rather than the Executive Secretary), their rights and obligations will not be substantially affected. As such, submission to Congress and the Comptroller General is not required for the rules to become effective. B. Paperwork Reduction Act This rule does not propose new or revisions to existing ‘‘collection[s] of information’’ as that term is defined under the Paperwork Reduction Act of 1995, Public Law 104–13, 44 U.S.C.
chapter 35, and its implementing
regulations, 5 CFR part 1320.
C. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601–612) does not apply to a rulemaking where a general notice of proposed rulemaking is not required. (5 U.S.C. 603 and 604). As noted previously, the FDIC has determined that it is unnecessary to publish a notice of proposed rulemaking for the final rule amending part 308. Accordingly, the RFA’s requirements relating to an initial and final regulatory flexibility analysis do not apply to this rulemaking for part 308. D. Riegle Community Development and Regulatory Improvement Act of 1994 Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act (RCDRIA),3 in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions (IDIs), each Federal banking agency must consider, consistent with the principle of safety and soundness and the public interest, any administrative burdens that the regulations would place on depository institutions, including small depository institutions and customers of depository institutions, as well as the benefits of the regulations. In addition, section 302(b) of RCDRIA requires new regulations and amendments to regulations that impose additional reporting, disclosures, or other new requirements on IDIs generally to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form.4 The FDIC has determined that the rule would not impose additional reporting, disclosure, or other requirements; therefore the requirements of the RCDRIA do not apply. E. Plain Language
Section 722 of the Gramm-LeachBliley Act 5 requires the Federal banking
agencies to use ‘‘plain language’’ in all proposed and final rules published after January 1, 2000. In light of this requirement, the FDIC has sought to present the final rule in a simple and straightforward manner. List of Subjects in 12 CFR Part 308 Administrative practice and procedure, Bank deposit insurance, Banks, banking, Claims, Crime, Equal access to justice, Fraud, Investigations, Lawyers, Penalties, Savings associations. 12 CFR Chapter III Authority and Issuance For the reasons stated in the preamble, the FDIC amends 12 CFR part 308 as follows:
PART 308—RULES OF PRACTICE AND
PROCEDURE
Administrative Officer means an inferior officer of the Federal Deposit Insurance Corporation, duly appointed by the Board of Directors of the Federal Deposit Insurance Corporation to serve as the Board’s designee to hear certain motions or requests in an adjudicatory proceeding and to be the official custodian of the record for the Federal Deposit Insurance Corporation.
Assistant Administrative Officer means an inferior officer of the Federal Deposit Insurance Corporation, duly appointed by the Board of Directors of the Federal Deposit Insurance Corporation to serve as the Board’s designee to hear certain motions or requests in an adjudicatory proceeding upon the designation or unavailability of the Administrative Officer.
Decisional employee means any member of the Federal Deposit Insurance Corporation’s or administrative law judge’s staff who has not engaged in an investigative or prosecutorial role in a proceeding and who may assist the Board of Directors, the administrative law judge, or the Administrative Officer, or the Assistant Administrative Officer, in preparing orders, recommended decisions, decisions, and other documents under the Uniform Rules.
Person means an individual, sole proprietor, partnership, corporation, unincorporated association, trust, joint venture, pool, syndicate, agency, or other entity or organization, including an institution as defined in this section.
(c) Filing of motions. Motions must be filed with the administrative law judge, except that following the filing of the recommended decision, motions must
be filed with the Administrative Officer for disposition by the Board of Directors. (d) Responses. (1) Except as otherwise provided in this paragraph (d), within ten days after service of any written motion, or within such other period of time as may be established by the administrative law judge or the Administrative Officer, any party may file a written response to a motion. The administrative law judge shall not rule on any oral or written motion before each party has had an opportunity to file a response. (2) The failure of a party to oppose a written motion or an oral motion made on the record is deemed a consent by that party to the entry of an order substantially in the form of the order accompanying the motion.
(b) * * *
(1) The Enforcement Counsel shall promptly after issuance of the notice file
the matter with the Office of Financial Institution Adjudication (‘‘OFIA’’) which shall secure the appointment of an administrative law judge to hear the proceeding.
(b) * * *
(2) Any person appearing or practicing before the FDIC who is the subject of an order, judgment, decree, or finding of the types set forth in paragraph (b)(1) of this section shall promptly file with the Administrative Officer a copy thereof, together with any related opinion or statement of the agency or tribunal involved. Any person who fails to so file a copy of the order, judgment, decree, or finding within 30 days after the entry of the order, judgment, decree, or finding or the date such person initiates practice before the FDIC, for that reason alone may be disqualified from practicing before the FDIC until such time as the appropriate filing shall be made. Failure to file any such paper shall not impair the operation of any other provision of this
section.
(3) A suspension or disbarment under paragraph (b)(1) of this section from practice before the FDIC shall continue until the applicant has been reinstated by the Board of Directors for good cause shown, provided that any person suspended or disbarred under paragraph (b)(1) of this section shall be automatically reinstated by the Administrative Officer, upon appropriate application, if all the grounds for suspension or disbarment under paragraph (b)(1) of this section are subsequently removed by a reversal of the conviction (or the passage of time since the conviction) or termination of the underlying suspension or disbarment. An application for reinstatement on any other grounds by any person suspended or disbarred under paragraph (b)(1) of this section may be filed no sooner than one year after the suspension or disbarment, and thereafter, a new request for reinstatement may be made no sooner than one year after the counsel’s most recent reinstatement application. The application must comply with the requirements of § 303.3 of this chapter. An applicant for reinstatement under this provision may, in the Board of Directors’ sole discretion, be afforded a hearing.
(c) * * *
(1) Inform the petitioner that a written request for a hearing, stating the relief desired and the grounds therefore, may be filed with the Administrative Officer within 15 days after the receipt of the denial; and
officer or the Administrative Officer may order a later hearing date.
(c) * * *
(1) The hearing shall be held in Washington, DC or at another designated place, before a presiding officer designated by the Administrative Officer. * * * (9) The presiding officer shall forward his or her recommendation to the Administrative Officer who shall promptly certify the entire record, including the recommendation to the Board of Directors or its designee. The Administrative Officer’s certification shall close the record.
(f) Decision by Board of Directors or its designee. Within 45 days following the Administrative Officer’s certification of the record to the Board of Directors or its designee, the Board of Directors or its designee shall notify the affected individual whether the denial of the notice will be continued, terminated, or otherwise modified. The notification shall state the basis for any decision of the Board of Directors or its designee that is adverse to the petitioner. The Board of Directors or its designee shall promptly rescind or modify the denial where the decision is favorable to the petitioner.
(c) * * *
(1) The hearing shall be held in Washington, DC, or at another designated place, before a presiding officer designated by the Administrative Officer. * * * (9) The presiding officer shall forward his or her recommendation to the Administrative Officer who shall promptly certify the entire record, including the recommendation to the Board of Directors or its designee. The Administrative Officer certification shall close the record.
(f) Decision by Board of Directors or its designee. Within 60 days following the Administrative Officer’s certification of the record to the Board of Directors or its designee, the Board of Directors or its designee shall notify the affected person whether the person shall remain barred under section 19. The notification shall state the basis for any decision of the Board of Directors or its designee that is adverse to the applicant.
(c) * * *
(1) Inform the institution-affiliated party that a written request for a hearing, stating the relief desired and grounds therefore, and any supporting evidence, may be filed with the Administrative Officer within 30 days after service of the written notice or order; and
(d) To obtain a hearing, the institution-affiliated party shall file with the Administrative Officer a written request for a hearing within 30 days after service of the notice of suspension or prohibition or the order of removal or prohibition, which shall:
(b) * * *
(1) The hearing shall be held in Washington, DC, or at another designated place, before a presiding officer designated by the Administrative Officer. * * * (9) The presiding officer shall forward his or her recommendation to the Administrative Officer who shall promptly certify the entire record, including the recommendation to the Board of Directors. The Administrative Officer’s certification shall close the record.
(e) Decision by Board of Directors or its designee. Within 60 days following the Administrative Officer’s certification of the record to the Board of Directors or its designee, the Board of Directors or its designee shall notify the institutionaffiliated party whether the notice of suspension or prohibition or the order of removal or prohibition will be continued, terminated, or otherwise modified. The notification shall state the basis for any decision of the Board of Directors or its designee that is adverse to the institution-affiliated party. The Board of Directors or its designee shall promptly rescind or modify a notice of suspension or prohibition or an order of removal or prohibition where the decision is favorable to the institution-affiliated party.
(d) Referral. Upon receipt of an application, the Administrative Officer shall refer the matter to the administrative law judge who heard the underlying adversary proceeding, provided that if the original administrative law judge is unavailable, or the Administrative Officer determines, in his or her sole discretion, that there is cause to refer the matter to a different administrative law judge, the matter shall be referred to a different administrative law judge.
time for filing or files a statement of intent to negotiate under § 308.179, failure to file an answer within the 20- day period will be treated as a consent to the award requested.
(c) * * *
(3) Petition to stay. Any accountant or accounting firm immediately suspended from performing audit services in accordance with paragraph (c)(1) of this
section may, within 10 calendar days
after service of the notice of immediate suspension, file a petition with the Administrative Officer for a stay of such immediate suspension. If no petition is filed within 10 calendar days, the immediate suspension shall remain in effect. (4) Hearing on petition. Upon receipt of a stay petition, the Administrative Officer will designate a presiding officer who will fix a place and time (not more than 10 calendar days after receipt of the petition, unless extended at the request of petitioner) at which the immediately suspended party may appear, personally or through counsel, to submit written materials and oral argument. Any FDIC employee engaged in investigative or prosecuting functions for the FDIC in a case may not, in that or a factually related case, serve as a presiding officer or participate or advise in the decision of the presiding officer or of the FDIC, except as witness or counsel in the proceeding. In the sole discretion of the presiding officer, upon a specific showing of compelling need, oral testimony of witnesses also may be presented. Enforcement counsel may represent the agency at the hearing. In hearings held pursuant to this paragraph (c)(4) there shall be no discovery, and the provisions of §§ 308.6 through 308.12, 308.16, and 308.21 will apply. (5) Decision on petition. Within 30 calendar days after the hearing, the presiding officer will issue a decision. The presiding officer will grant a stay upon a demonstration that a substantial likelihood exists of the respondent’s success on the issues raised by the notice of intention and that, absent such relief, the respondent will suffer immediate and irreparable injury, loss, or damage. In the absence of such a demonstration, the presiding officer will notify the parties that the immediate suspension will be continued pending the completion of the administrative proceedings pursuant to the notice of intention. The presiding officer will serve a copy of the decision on, and simultaneously certify the record to, the Administrative Officer. (6) Review of presiding officer’s decision. The parties may seek review of the presiding officer’s decision by filing a petition for review with the Administrative Officer within 10 calendar days after service of the decision. Replies must be filed within 10 calendar days after the petition filing date. Upon receipt of a petition for review and any reply, the Administrative Officer will promptly certify the entire record to the Board of Directors. Within 60 calendar days of the Administrative Officer’s certification, the Board of Directors will issue an order notifying the affected party whether or not the immediate suspension should be continued or reinstated. The order will state the basis of the Board’s decision. Federal Deposit Insurance Corporation. By order of the Board of Directors. Dated at Washington, DC, on December 15, 2020. James P. Sheesley, Assistant Executive Secretary. [FR Doc. 2020–27944 Filed 1–11–21; 8:45 am] BILLING CODE
6714–01–P
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