[Federal Register Volume 85, Number 179 (Tuesday, September 15, 2020)]
[Rules and Regulations]
[Pages 57616-57637]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-18806]
[[Page 57615]]
Vol. 85
Tuesday,
No. 179
September 15, 2020
Part VI
Federal Reserve System
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12 CFR Part 261
Rules Regarding Availability of Information; Final Rule
Federal Register / Vol. 85 , No. 179 / Tuesday, September 15, 2020 /
Rules and Regulations
[[Page 57616]]
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FEDERAL RESERVE SYSTEM
12 CFR Part 261
[Docket No. R-1665; RIN 7100 AF-51]
Rules Regarding Availability of Information
AGENCY: Board of Governors of the Federal Reserve System (``Board'').
ACTION: Final rule.
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SUMMARY: The Board is issuing a final rule revising its rules regarding
availability of information. The revisions clarify and update the
Board's regulations implementing the Freedom of Information Act and the
rules governing the disclosure of confidential supervisory information
and other nonpublic information of the Board.
DATES: This final rule is effective on October 15, 2020.
FOR FURTHER INFORMATION CONTACT: Alye S. Foster, Assistant General
Counsel, (202) 452-5289; Mary Bigloo, Senior Counsel, (202) 475-6361,
or Misty M. Kheterpal, Senior Counsel, (202) 452-2597, Legal Division,
Board of Governors of the Federal Reserve System, 20th and C Streets
NW, Washington, DC 20551.
SUPPLEMENTARY INFORMATION:
I. Background
On June 17, 2019, the Board published a notice of proposed
rulemaking \1\ (``proposal'') in the Federal Register revising its
rules regarding availability of information (the ``Board's Rules'')
found at 12 CFR part 261, with a 60-day public comment period ending on
August 16, 2019. The Board's Rules set forth the procedures for
requesting access to documents that are records of the Board under the
Freedom of Information Act (``FOIA'') as well as the rules governing
the disclosure of the Board's confidential supervisory information and
other nonpublic information. The Board received 15 comment letters
including from supervised financial institutions, industry trade
associations, bar associations, law firms, and individuals. While
commenters were generally supportive of the proposed changes to improve
the efficiency of the Board's Rules, some commenters had concerns
regarding particular provisions and suggested further clarifications
and revisions. With the exception of a few comments that focused on the
FOIA provisions, particularly, the sections referencing the
``competitive harm'' test under Exemption 4 and addressing confidential
treatment requests, most of the comments addressed the rules governing
disclosure of confidential supervisory information. Of particular
concern to a number of commenters was the scope of the term
``confidential supervisory information'' and the provisions concerning
the sharing of confidential supervisory information by supervised
financial institutions with staff, outside legal counsel, auditors,
service providers, the Federal and State banking agencies and the
Bureau of Consumer Financial Protection (``CFPB''). We have made a
number of changes to the proposal to address these and other comments
we received.
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\1\ 84 FR 27976 (June 17, 2019).
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Harmonization With Other Agencies' Regulations
A few commenters recommended that the Federal banking agencies
issue identical or harmonized rules governing confidential supervisory
information and, in particular, sought harmonization in how
confidential supervisory information is defined and to whom supervised
financial institutions may disclose confidential supervisory
information. The commenters noted that their banking organizations are
regulated by multiple regulators including the Board and uniformity of
the regulators' separate confidential supervisory information rules
would be beneficial. In response to the comments, the Board has
explored areas where it would be appropriate to harmonize the final
rule with the rules of the other Federal banking agencies and the CFPB.
A key opportunity for harmonization we noted is the standard for
sharing within and by the organization. In the final rule, we adopted
the Office of the Comptroller of the Currency's (``OCC'') standard to
permit supervised financial institutions to disclose confidential
supervisory information with their directors, officers, and employees
``when necessary or appropriate for business purposes,'' and included a
similar standard permitting disclosures to the supervised financial
institution's outside legal counsel and auditors when the disclosures
are ``necessary or appropriate in connection with the provision of
legal or auditing services.'' Consistent with the OCC's rules, we also
removed the proposed provision that conditioned disclosures to legal
counsel and auditors on their executing specific written agreements
with respect to their use of confidential supervisory information.
Additionally, consistent with the OCC's and the CFPB's rules, we
eliminated the requirement that supervised financial institutions
obtain prior Federal Reserve approval to disclose confidential
supervisory information to their other service providers, such as
consultants, contractors, and contingent workers. Opportunities to
harmonize the Board's definition of confidential supervisory
information with the corresponding definitions of the other agencies
were more limited as those definitions did not contain sufficient
particularity to meet the Board's needs.
Comments Concerning Additional Categories of Disclosure
A few commenters requested that the Board's final rule authorize
additional categories of disclosure which were not addressed in the
Board's proposal. A few commenters proposed that the Board establish
procedures for supervised financial institutions subject to horizontal
reviews to disclose confidential supervisory information amongst each
other. The commenters argued that providing firms the opportunity to
disclose confidential supervisory information relating to the
horizontal reviews would facilitate the enhancement of firms' practices
and allow them to better meet supervisory expectations. The Board did
not adopt these recommendations. These recommendations pose significant
concerns with respect to the protection of the confidentiality of the
information, which may include market-sensitive information that could
be misused by competitor firms. In addition, while the Federal Reserve
looks at a similar business line or control function across firms in a
horizontal examination, the supervisory assessment and feedback
reflects a consideration of the firm's practices in light of the firm's
risk profile and activities. Thus, supervisory feedback provided to one
firm may not be appropriate or relevant for another firm. Permitting
firms to disclose this confidential supervisory information to other
firms would present the risk that the feedback would be inappropriately
interpreted and applied.
One commenter suggested that the Board publish general observations
arising from examinations and other supervisory activities, including
anonymized supervisory feedback regarding horizontal reviews. The
commenter argued that publishing this information in an anonymized
manner would offer institutions the opportunity to strengthen their
compliance programs. Consistent with commenters' suggestions, the
Federal Reserve is committed to ensuring transparency regarding its
supervisory process. The Federal Reserve issues supervisory guidance to
outline supervisory expectations or priorities and to articulate its
general views regarding
[[Page 57617]]
appropriate practices for a given subject area, including compliance.
In addition, the Board publishes its semi-annual Supervision and
Regulation Report to provide transparency regarding Federal Reserve
supervisory programs and approaches. This report includes supervisory
themes and findings drawn from Federal Reserve examinations, including
horizontal reviews.
Other commenters recommended that the Board's Rules address the
disclosure of confidential supervisory information under applicable
securities laws. One commenter in particular recommended permitting
disclosure of confidential supervisory information without the prior
authorization of the Board when a supervised financial institution
determines disclosure is required under securities laws. The Board also
received comments recommending the Board's Rules address disclosure of
confidential supervisory information in the context of merger and
acquisition transactions. One commenter stated that prohibiting access
to confidential supervisory information in the M&A context runs counter
to bank regulatory policies and objectives and frustrates the ability
of acquiring institutions to understand and make plans to address
potential compliance, operational, or other weaknesses of target
institutions. The commenter recommended that the Board issue parameters
for sharing confidential supervisory information in the M&A context in
order to meet the dual objectives of safeguarding confidential
supervisory information from improper disclosure and promoting thorough
due diligence and thoughtful integration planning in connection with a
merger or acquisition. The Board did not adopt either recommendation.
The proposal did not address disclosures in the M&A context or pursuant
to securities laws and guidance establishing parameters for such
disclosures requires additional consideration and should be addressed
on a consistent basis across the Federal and State banking agencies and
the CFPB.
Section-by-Section Analysis of Comments
Sec. 261.1 Authority, Purpose, and Scope
We received one comment on Sec. 261.1. The commenter suggested the
inclusion of a statement of the rules' objectives, the public policy
goals that the rules are designed to achieve, and the potential harm,
if any, they seek to prevent. We considered the request and, after
reviewing the Board's Rules, including the parameters set out for the
disclosure of confidential supervisory information, we determined a
broad statement is not necessary. We did, however, modify Sec.
261.1(a) to note that the Board's Rules establish mechanisms to carry
out the Board's responsibilities relating to the disclosure,
production, or withholding of information ``to facilitate the Board's
interactions with financial institutions and the public.''
Additionally, in the section's reference to the Board's authorities,
the proposal inadvertently omitted a reference to the Freedom of
Information Act. Accordingly, we modified Sec. 261.1 to include a
reference to the ``Freedom of Information Act, 5 U.S.C. 552.''
Sec. 261.2 Definitions
The Board received one comment concerning the term ``nonpublic
information'' and several comments concerning the definition of
``confidential supervisory information.'' One commenter voiced concern
with the Board replacing the term ``exempt information'' with
``nonpublic information.'' The commenter argued that the change
minimizes the protections given to confidential supervisory information
and particularly expressed a concern that courts will not afford
confidential supervisory information sufficient protection if it is
deemed ``confidential'' rather than ``exempt.'' \2\ The Board replaced
the term ``exempt information'' with ``nonpublic information'' as the
term is used throughout the Board's Rules and thus applies not only to
the processing of FOIA requests under subpart B but also to requests
for the disclosure of confidential supervisory information and
confidential information under subpart C. The replacement of the term
``exempt information'' with ``nonpublic information'' effects no change
to the confidentiality afforded to confidential supervisory information
as that information remains exempt under Exemption 8 of the FOIA.
Indeed, in assessing the confidentiality of a document, a court looks
to the document's contents rather than its designation as ``exempt'' or
``nonpublic.'' We note further that to the extent the commenter is
concerned with the protection of confidential supervisory information
that the Board authorizes for use in private litigation, the Board
generally authorizes such use on the condition that the parties enter
into a protective order preserving the confidentiality of the
information, including by requiring any Board information filed in the
case to be filed under seal. The Board's final rule retains the term
``nonpublic information.''
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\2\ While the commenter was concerned with the level of
protection that is afforded ``confidential'' documents, the Board's
definition replaced the term ``exempt information'' with ``nonpublic
information'' We assume the commenter interprets the ``nonpublic''
term as synonymous with ``confidential.''
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Several commenters also commented on the proposed revisions to the
definition of ``confidential supervisory information.'' Commenters
specifically focused on the scope of the term as it regards documents
prepared by or for a financial institution for its own business
purposes. Commenters were concerned that any document prepared by or
for the supervised financial institution for its own business purposes
and in its possession would be confidential supervisory information
irrespective of its contents provided that the document is also
``created or obtained in furtherance of the Board's supervisory,
investigatory, or enforcement activities'' (emphasis added). We agree
that the proposed definition of confidential supervisory information
was not sufficiently clear with respect to documents prepared by or for
a supervised financial institution for its own business purposes and
that are in the institution's possession. The definition is not
intended to encompass internal business documents merely because in the
Federal Reserve's possession such documents are confidential
supervisory information. To address the concerns with the definition of
confidential supervisory information, we revised the definition by
reorganizing paragraph (b)(1) into three separate sentences with
clarifying revisions and also by making some clarifying edits to
paragraph (b)(2).
The first sentence of paragraph (b)(1) provides that:
``Confidential supervisory information means nonpublic information that
is exempt from disclosure pursuant to 5 U.S.C. 552(b)(8) and includes
information that is or was created or obtained in furtherance of the
Board's supervisory, investigatory, or enforcement activities,
including activities conducted by a Federal Reserve Bank (Reserve Bank)
under delegated authority, relating to any supervised financial
institution, and any information derived from or related to such
information.'' In this first sentence, we retained the proposed
language with the exception of edits to the portion of the proposal
stating that confidential supervisory information includes ``any
information derived from, related to, or contained in such documents;''
because ``such'' was intended to refer to confidential supervisory
information generally rather than particular documents, the final rule
replaces
[[Page 57618]]
``documents'' with ``information'' and deletes ``contained in.''
Accordingly, the final rule provides that confidential supervisory
information includes ``any information derived from or related to such
information.''
We also received a few comments on particular phrasing contained in
the first sentence of paragraph (b)(1). One commenter contended that
the term ``related to'' is vague and potentially overly broad. We
decline to delete or modify the ``related to'' wording as it has always
been part of the Board's definition of confidential supervisory
information and, to date, we are not aware of any issues in practice
with the breadth of the language. Another commenter raised concerns
with the phrase ``in furtherance of'' in the provision stating that
confidential supervisory information includes ``information that is or
was created or obtained in furtherance of the Board's supervisory,
investigatory, or enforcement activities.'' The commenter suggested
that the Board clarify the meaning of ``in furtherance of'' as the
language may be construed to include ``business as usual'' documents
created by a supervised financial institution in response to a
supervisory finding that do not refer to Federal Reserve findings or
supervisory communications. The Board declines to incorporate the
requested clarification; given the variety of possible ``business as
usual'' documents, questions about whether particular documents
constitute or contain confidential supervisory information are best
handled on a case-by-case basis between the institution and its Federal
Reserve supervisors.
The second sentence of paragraph (b)(1) provides: ``Examples of
confidential supervisory information include, without limitation,
reports of examination, inspection, and visitation; confidential
operating and condition reports; supervisory assessments; investigative
requests for documents or other information; and supervisory
correspondence or other supervisory communications.'' In this sentence,
we clarified that the kinds of supervisory documents referenced in the
proposed language are ``[e]xamples of confidential supervisory
information.''
The third sentence of paragraph (b)(1) provides: ``Additionally,
any portion of a document in the possession of any person, entity,
agency or authority, including a supervised financial institution that
contains or would reveal confidential supervisory information is
confidential supervisory information.'' In this third sentence, we
modified the phrase in the proposed rule referring to ``portions of
internal documents of a supervised financial institution that contain,
refer to, or would reveal confidential supervisory information,'' which
was too narrowly focused on documents in the possession of supervised
financial institutions. Because confidential supervisory information
may exist in the documents of other third parties, we modified the
phrase to state that confidential supervisory information includes
``any portion of a document in the possession of any person, entity,
agency or authority, including a supervised financial institution that
contains or would reveal confidential supervisory information.''
Additionally, one commenter argued that ``refer to'' is vague and
overly broad and that the ``contains or would reveal'' language is
sufficiently broad. We agree that the ``refer to'' phrase is
unnecessary and covered by the ``contains or would reveal'' language.
Accordingly, we have deleted ``refer to'' in paragraph (b)(1).
We also edited paragraph (b)(2) to specify that documents prepared
by or for a supervised financial institution for its own business
purposes that are in its possession and do not include confidential
supervisory information do not constitute confidential supervisory
information ``even though copies of such documents in the Board's or
Reserve Bank's possession constitute confidential supervisory
information.''
Another commenter argued that supervised financial institutions
should be able to make their own judgment about the disclosure and use
of information material to the institution's business, operations, and
condition, and that the Board's restriction on disclosure of
confidential supervisory information interferes with the free flow of
information upon which businesses and markets operate. The commenter
offered an alternative view of what constitutes confidential
supervisory information and suggested limiting confidential supervisory
information to information the Board believes would not be
appropriately evaluated or understood by the public if disclosed and
that the Board has clearly designated as confidential supervisory
information. The commenter asserted such a revision would appropriately
put the burden on the Board to evaluate the impact of possible
disclosure of the information, while permitting supervised financial
institutions to meet their disclosure obligations to third parties. The
Board does not agree with the proposed standard, which is inconsistent
with Exemption 8 of the FOIA and the key purpose of the bank
examination privilege which is to preserve candor in communications
between the agency and supervised financial institutions. In addition,
the proposed standard would be very difficult to implement given that
there is no objective measure for determining what supervisory
information would be appropriately evaluated or understood by the
public.
We did not receive any other comments regarding the proposal's
other revisions to Sec. 261.2 and the final rule adopts those
revisions as proposed with the exception of a change to the definition
of ``records of the Board.'' As noted in the proposal, the Board's
revision to the definition of ``records of the Board'' was made in
order to conform to Board practice and eliminate any ambiguity
regarding the scope of the Board's records as they pertain to Reserve
Banks. The Board has determined that further clarification of the scope
of the term ``records of the Board'' is appropriate for these reasons.
Thus, the Board's final rule revises the definition to state that Board
records include records created or obtained by Reserve Bank officers,
directors, employees, or contractors that either ``constitute[[hairsp]]
confidential supervisory information'' or are ``created or obtained in
the performance of Board functions delegated to the Reserve Bank
pursuant to 12 U.S.C. 248(k).''
Sec. 261.3 Custodian of Records; Certification; Service; Alternative
Authority
We did not receive any comments on proposed Sec. 261.3 and the
final rule adopts the section as proposed.
Sec. 261.4 Prohibition Against Disclosure
We did not receive any comments on Sec. 261.4 and the final rule
adopts the section as proposed.
Sec. 261.10 Published Information
The Board received no comments on Sec. 261.10. In reviewing the
section, however, we noted an outdated reference to the inspection and
copying of hard copy materials in paragraph (c)(2). Consistent with the
FOIA Improvement Act of 2016, we replaced ``inspection and copying at
Reserve Banks'' with ``inspection in electronic format.''
Sec. 261.11 Records Available to the Public Upon Request
The Board did not receive comments on Sec. 261.11 and the final
rule adopts the section as proposed, with one minor edit at the second
sentence of paragraph (b)(3) to delete the article ``the'' before
``fees'' for readability.
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Sec. 261.12 Processing Requests
The Board did not receive comments on Sec. 261.12 and the final
rule adopts the section as proposed.
Sec. 261.13 Responses to Requests
The Board received no comments on Sec. 261.13. The Board is
adopting the proposed section as final with one clarifying revision to
Sec. 261.13(a). Consistent with the Department of Justice's Template
for Agency FOIA Regulations, which supplements its Guidance for Agency
FOIA Regulations (``DOJ guidance''),\3\ the final rule provides that
when the Board receives a perfected request, it will conduct a
reasonable search of Board records ``in its possession'' on the date
the Board's search begins.
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\3\ U.S. Department of Justice, Office of Information Policy,
Template for Agency FOIA Regulations, https://www.justice.gov/oip/template-agency-foia-regulations (last updated Feb. 22, 2017).
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Sec. 261.14 Appeals
The Board did not receive any comments on Sec. 261.14. The final
rule adopts the section as proposed with one minor edit to paragraph
(c)(2). Current Sec. 261.13(i)(2) and proposed Sec. 261.14(c)(2)
provide that ``[a]n initial request for records may not be combined in
the same letter with an appeal.'' To provide further clarity and
consistency, the Board's final rule replaces ``[a]n initial request for
records'' with ``[a] request for records under Sec. 261.11.''
Sec. 261.15 Exemptions From Disclosure
The Board received one comment regarding Sec. 261.15(b)(3), which
provides that ``[e]xcept where disclosure is expressly prohibited by
statute, regulation, or order, the Board may release records that are
exempt from mandatory disclosure whenever the Board or designated Board
members, the Secretary, or the General Counsel determines that such
disclosure would be in the public interest.'' The commenter recommended
that the Board revise Sec. 261.15(b)(3) to provide that the Board will
release records that are exempt from mandatory disclosure only where
the failure to disclose such records would be manifestly contrary to
the public interest. The commenter argued that the suggested added
qualifier will avoid undermining the judicial integrity of the bank
examination privilege by highlighting that the Federal Reserve
recognizes that disclosure of confidential supervisory information is
not to be taken lightly and should meet a robust public interest
standard. In response to the comment, the Board added language to Sec.
261.15(b)(3) to clarify that confidential supervisory information will
only be released as set forth in subpart C. The Board, however, does
not agree with the commenter's additional suggestion that Sec.
261.20(c) of subpart C be revised to provide that the Board will
exercise its discretion to release confidential supervisory information
only where the failure to do so would be manifestly contrary to the
public interest. The suggestion conflicts with the Board's legal
authority as the Board may disclose confidential supervisory
information to ``any . . . person that the Board determines to be
proper.'' 12 U.S.C. 326. Accordingly, Sec. 261.20(c) appropriately
reflects the Board's broad statutory authority to make discretionary
releases of confidential supervisory information.
In addition to the clarification stating that discretionary
releases of confidential supervisory information will only be made as
set forth in subpart C, the Board has made a minor addition to Sec.
261.15(b)(3) to reiterate that the Board will ``provide predisclosure
notice to submitters of confidential information in accordance with
Sec. 261.18(b)(1).''
The Board did not receive any other comments on Sec. 261.15 and
the final rule adopts the remainder of the section as proposed.
Sec. 261.16 Fee Schedules; Waiver of Fees
The Board did not receive any comments on Sec. 261.16 and the
final rule adopts the section as proposed, with a few minor edits. At
paragraph (g)(1), the Board has removed ``federal'' from the proposal's
reference to ``the operation or activities of the federal government''
and has edited ``operation'' to ``operations'' in the plural for
consistency with the FOIA and the DOJ guidance. Additionally, for
clarity and consistency with the DOJ guidance, at paragraph (h)(3)(i),
the Board inserted ``unusual circumstances'' so the subsection now
reads ``[p]rovided timely notice of unusual circumstances to the
requester in accordance with the FOIA.'' The final rule also replaces
the references to ``actual costs'' in the fee schedule with ``direct
costs.'' Finally, while the proposal included the costs for
``[c]omputer search, including computer search time, output, operator's
salary'' for commercial requesters, it failed to specify that these
costs also apply to ``all other requesters.'' We have corrected this
minor omission and the fee schedule now states that the computer search
costs apply to ``all other requesters.''
Sec. 261.17 Request for Confidential Treatment
The Board received a few comments relating to Sec. 261.17. One
commenter noted that the Board's requirement for a submitter of
confidential information ``to identify the specific information for
which confidential treatment is requested and include an affirmative
statement that such information is not available publicly'' imposes a
burden in situations where confidential and non-confidential
information is interwoven and there is no immediate need to make any
information public. The commenter asserted that the requirement could
be read to impose an obligation on a supervised financial institution
to submit a public version of a document each time the institution
seeks confidential treatment under FOIA, similar to the application
context where banking organizations submit to the Board both public and
nonpublic versions of applications. The commenter therefore recommended
that the Board maintain its existing requirement that submitters of
information solely ``state in reasonable detail the facts supporting
the request and its legal justification.'' The Board does not view the
requirement to include an affirmative statement that the information is
not publicly available as burdensome as the requirement is a reasonable
means of ensuring that submitters of information make requests for
confidential treatment only with respect to information that is truly
confidential and not in the public domain. For further consistency with
the DOJ guidance, however, the Board's final rule replaces the
requirement to ``identify the specific information'' with a requirement
that submitters of information ``use good faith efforts to designate by
appropriate markings any portion of the submission for which
confidential treatment is requested.'' The Board believes this change
will eliminate any implication that the submitter needs to do a line-
by-line review for confidential information or submit a public version
of a document each time the submitter seeks confidential treatment.
Another commenter requested the final rule make clear that when a
submission consists entirely of information that is subject to
withholding under Exemption 4, the entire document is entitled to
confidential treatment. The Board does not deem this change necessary
as the submitter is free to request confidential treatment of the whole
document.
The Board also received comments expressing concern over the 10-
year expiration period for designations of
[[Page 57620]]
confidential commercial or financial information pursuant to Sec.
261.15(a)(4). One commenter asked that the Board instead maintain
confidential treatment of supervisory documents in accordance with the
Board's record retention policy. Although the commenter noted that the
DOJ guidance, which also provides for a 10-year expiration period on
confidential treatment requests under Exemption 4, preceded the Supreme
Court's decision in Food Marketing Institute v. Argus Leader Media, 139
S. Ct. 2356 (2019), the commenter did not elaborate on how that
decision bears on the standard 10-year expiration period. The Board
will retain the 10-year expiration period with respect to requests for
confidential treatment under Sec. 261.15(a)(4) as that is the period
provided for in the DOJ guidance. Additionally, the Board does not
believe its record retention policies, which govern the management,
scheduling, and disposition of Board records, are an appropriate
standard to address the confidentiality of information contained in
those Board records.
Another commenter argued that any expiration period is
inappropriate in light of the ongoing and frequent submission by
supervised financial institutions of highly sensitive, nonpublic
information. The commenter further argued that the provision allowing
submitters of information to renew their requests for confidentiality
prior to the 10-year expiration date will not mitigate the risk to
financial institutions given the unlikelihood that institutions will
retain personnel who are adequately familiar with the sensitive
information that was the subject of a request for confidential
treatment submitted years earlier. The Board notes, however, that the
fact that the 10-year period has not expired is not dispositive of
whether information that a submitter has designated confidential in
reliance upon Sec. 261.15(a)(4) will be withheld. Indeed, at the time
of any FOIA request for the information, the Board must make a
determination regarding whether the information is subject to
withholding under Exemption 4 even if the 10-year period has not
expired. Information that may have been confidential at the time
submitted may lose its confidentiality at a later time, whether as a
result of the submitter's public release of the information or other
factors. In any event, under Sec. 261.18(b)(1), when information has
been designated in good faith as protected from disclosure under either
Exemption 4 or 6, the Board will provide written notice to submitters
if their designated confidential information becomes the subject of a
FOIA request and the Board determines that it may be required to
disclose the information. In response, however, to the comments
expressing concerns regarding the requirement that submitters of
information who wish their information to be treated confidentially
beyond the initial 10-year period renew their requests for confidential
treatment, the Board's final rule removes the renewal requirement. The
final rule instead incorporates language from the DOJ guidance to
provide that a request for confidential treatment will expire 10 years
after the date of submission unless the submitter requests and provides
justification for a longer designation period. This revision will
permit a submitter to request a longer designation period at the time
of the initial submission.
In response to comments and for the reasons described below in
connection with Sec. 261.18, the Board's final rule removes the second
sentence of proposed Sec. 261.17(b), which referenced the
``competitive harm'' test under Exemption 4 of the FOIA. The Board did
not receive any comments on other provisions of Sec. 261.17.
Sec. 261.18 Process for Addressing a Submitter's Request for
Confidential Treatment
Three commenters asked that the Board remove all references to
``competitive harm'' in the regulation in light of the Supreme Court's
decision in Food Marketing Institute v. Argus Leader Media, 139 S. Ct.
2356 (2019), which was issued after the Board's proposed rule. In Argus
Leader, the Supreme Court rejected the longstanding ``competitive
harm'' test used to determine whether information is confidential under
Exemption 4. Commenters further asked that the Board provide explicit
assurances of privacy with respect to commercially sensitive
information provided to the Board. In light of Argus Leader, the Board
has removed all references in the rule to the ``competitive harm''
test. Because, however, the Supreme Court did not reach the question of
whether an assurance of confidentiality by the government is a
necessary condition for information to be treated confidentially under
Exemption 4, the Board is not adopting the recommendation to
incorporate an explicit assurance of privacy. Additionally, following
Argus Leader, DOJ issued guidance on Exemption 4 (``DOJ Exemption 4
guidance'') which provides that an assurance of confidentiality by the
government ``can be either explicit or implicit.'' \4\ DOJ also
prepared a step-by-step guide for Exemption 4 analysis which provides
that submitters of confidential information may rely on ``express or
implied'' assurances of confidentiality when submitting commercial or
financial information to an agency.\5\ To ensure consistent analysis
with DOJ Exemption 4 guidance, the Board plans to use the DOJ's step-
by-step guide when analyzing the application of Exemption 4. The Board
did not receive any other comments concerning proposed Sec. 261.18 and
the final rule otherwise adopts the section as proposed.
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\4\ U.S. Department of Justice, Office of Information Policy,
Exemption 4 After the Supreme Court's Ruling in Food Marketing
Institute v. Argus Leader Media, https://www.justice.gov/oip/
exemption-4-after-supreme-courts-ruling-food-marketing-institute-v-
argus-leader-media (last updated Oct. 4, 2019).
\5\ U.S. Department of Justice, Office of Information Policy,
Step-by-Step Guide for Determining if Commercial or Financial
Information Obtained From a Person is Confidential Under Exemption 4
of the FOIA, https://www.justice.gov/oip/step-step-guide-determining-if-commercial-or-financial-information-obtained-person-confidential (last updated Oct. 7, 2019).
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Sec. 261.20 General
The Board received a few comments on Sec. 261.20. Commenters
objected to the prohibition at Sec. 261.20(a) which applies to both
use and disclosure of confidential supervisory information for an
unauthorized purpose. Commenters argued that the prohibition on
unauthorized use introduces ambiguity and will increase the potential
of inadvertent violations including violations by officers, directors,
and employees who may use confidential supervisory information over a
long period of time for varying business purposes. One commenter
asserted that the prohibition on unauthorized disclosure sufficiently
protects the Board's interests. The Board does not agree that the
prohibition on use for an unauthorized purpose is ambiguous or exposes
directors, officers, and employees of supervised financial institutions
to the risk that they will run afoul of the prohibition. The Board's
final rule allows supervised financial institutions to disclose
confidential supervisory information to their directors, officers, and
employees when ``necessary or appropriate for business purposes.''
Accordingly, the use of confidential supervisory information by
directors, officers, and employees for a necessary or appropriate
business purpose consistent with the final rule, in the Board's view,
constitutes use for an authorized purpose. Moreover, the Board believes
the prohibition against use for unauthorized purposes is
[[Page 57621]]
necessary to proscribe impermissible uses such as use of the Board's
confidential information for personal gain.
Another commenter also expressed concern that the Board should not
deem conduct in violation of the rule's prohibition on unauthorized use
and disclosure of confidential supervisory information as within the
purview of 18 U.S.C. 641, which imposes Federal criminal liability on
whoever ``embezzles, steals, purloins, or knowingly converts to his use
or the use of another, or without authority sells, conveys, or disposes
of any record, voucher, money, or thing of value of the United States
or of any department or agency thereof.'' The commenter suggested that
the threat of criminal sanctions for improper sharing of confidential
supervisory information creates a chilling effect on employees of
supervised financial institutions that inhibits beneficial information
sharing internally and with third-party advisors. The Board does not
believe that the prospect of criminal penalties under section 641 will
inhibit disclosures authorized under the Board's Rules, which have been
revised to allow internal disclosures ``when necessary or appropriate
for business purposes.'' In addition, the Board's Rules permit
disclosures to outside legal counsel and auditors ``when necessary or
appropriate'' in connection with the provision of legal or auditing
services and to service providers when the ``disclosure is deemed
necessary'' to the service providers' provision of services. Moreover,
unauthorized disclosures that lack criminal intent, such as those made
inadvertently, would not be subject to prosecution under section 641.
Where the requisite criminal intent to steal or knowingly convert the
information may be present, criminal prosecution may be appropriate.
See, e.g., United States v. Blaszczak, 947 F.3d 19, 39 (2d Cir. 2019);
United States v. Fowler, 932 F.2d 306, 309-10 (4th Cir. 1991); United
States v. Girard, 601 F.2d 69, 70-71 (2d Cir. 1979). In those
instances, the Board cooperates with law enforcement agencies in their
investigations of potential violations of the statute. The commenter
further suggested that the prospect of criminal sanctions may put
supervised financial institutions in the position of having to choose
between complying with congressional subpoenas and refusing to comply
in order to avoid the threat of criminal sanctions for disclosing
confidential supervisory information if the Board does not consent to
the disclosure. The Board's Rules, however, do not sanction supervised
financial institutions' non-compliance with congressional or other
legally enforceable demands. Rather, the Board's Rules set forth a
process for an institution to obtain permission to disclose
confidential supervisory information in response to subpoenas or other
legally enforceable demands including from congressional committees.
As discussed above, one commenter suggested the Board revise Sec.
261.20(c) to provide that the Board will exercise its discretion to
release confidential supervisory information only where the failure to
do so would be manifestly contrary to the public interest. Because the
Board has authority to disclose confidential supervisory information to
``any . . . person that the Board determines to be proper,'' 12 U.S.C.
326, it would not be appropriate to constrain the Board's authority as
proposed by the commenter. Accordingly, the Board did not adopt the
recommended change. The Board did not receive any further comments to
Sec. 261.20.
Sec. 261.21 Confidential Supervisory Information Made Available to
Supervised Financial Institutions
Disclosures to Directors, Officers, and Employees
The Board received several comments on its proposed revisions to
Sec. 261.21(b), addressing disclosures to and by supervised financial
institutions. While many commenters were supportive of expanding the
scope of authorized disclosures to the affiliates of supervised
financial institutions under paragraph (b)(1), they disagreed with the
proposal's qualification conditioning disclosure to the directors,
officers, and employees of supervised financial institutions and their
affiliates on their ``need for the information in the performance of
official duties.'' Commenters argued that there could be ambiguity
regarding the meaning of ``need'' and what qualifies as an individual's
``official duties,'' and that these ambiguities increase the risk of
inconsistent application of the Board's Rules and potentially subject
firms' internal disclosures to the Board's second-guessing. As an
alternative, three commenters suggested that the Board adopt the OCC's
language and permit disclosures that are ``necessary or appropriate for
business purposes.'' The Board agrees. Accordingly, the final rule
permits supervised financial institutions to disclose confidential
supervisory information to their directors, officers, and employees and
to the directors, officers, and employees of their affiliates ``when
necessary or appropriate for business purposes.'' Additionally, one
commenter questioned whether the limitation on sharing confidential
supervisory information applies only to disclosures made to the
directors, officers, or employees of affiliates. The final rule
addresses this concern and makes clear that the ``necessary or
appropriate for business purposes'' standard applies to all directors,
officers, and employees, including at the supervised financial
institution and its affiliates.
A few commenters suggested that the final rule should treat
contingent workers and independent contractors as employees rather than
as service providers for purposes of access to confidential supervisory
information in light of the ``business as usual'' roles these
individuals fulfill. The Board declines to make this change. Instead,
to address the concerns, we streamlined the process for access by all
service providers including contingent workers and independent
contractors. The final rule does not require the Federal Reserve's
prior approval of disclosures to contingent workers or independent
contractors. Where necessary for the provision of the services, the
supervised financial institution may provide the contingent worker or
independent contractor access to confidential supervisory information
if the individual is under a written contract with the supervised
financial institution that includes the confidentiality agreements
specified in the rule.
Disclosures to the FDIC, OCC, CFPB, and State Financial Supervisory
Agencies
The Board also received a number of comments on Sec. 261.21(b)(2),
which proposed to permit supervised financial institutions to disclose
confidential supervisory information directly to the Federal Deposit
Insurance Corporation (``FDIC''), the OCC, the CFPB, and the State
financial supervisory agency that supervises the institution, so long
as the institution's central point of contact at the Reserve Bank or
equivalent supervisory team leader (``CPC'') concurred that the
receiving agency had a legitimate supervisory or regulatory interest in
the information. Commenters suggested the final rule be revised to
eliminate the prior approval requirement for these disclosures arguing
that the requirement is administratively burdensome. Commenters in
particular noted that supervised financial institutions routinely
receive requests from their banking regulators for certain internally-
prepared materials, such as board and committee meeting minutes and
[[Page 57622]]
materials, that reference the confidential supervisory information of
another banking regulator. Commenters alternatively proposed that, at
most, the rule should require supervised financial institutions to
provide CPCs notice and an opportunity to object to the disclosure of
confidential supervisory information to their other banking regulators.
The Board declines to remove the requirement that supervised
financial institutions obtain Federal Reserve approval of disclosures
of confidential supervisory information to the FDIC, the OCC, the CFPB,
and State banking agencies. Because the regulators have different
scopes of authority, Federal Reserve review of proposed disclosures is
necessary to ensure that the information provided is relevant to the
agency's supervisory responsibilities. The Board further notes that the
banking regulators and the CFPB have no parallel provision in their
respective rules that allows supervised entities to disclose nonpublic
information of the agencies to the Board.
The Board, however, has decided that further revisions to paragraph
(b)(2) are warranted both to limit the types of requests that may be
approved under the paragraph and to clarify to whom requests should be
directed. As the provision is intended to enable the expeditious
sharing of supervised financial institutions' internally-prepared
documents, such as board and committee meeting minutes and materials,
with the FDIC, the OCC, the CFPB, and State banking agencies, the Board
revised paragraph (b)(2) to apply only to requests to release
``confidential supervisory information . . . contained in documents
prepared by or for the institution for its own business purposes.'' As
one commenter stated, the supervised financial institutions should not
be required to play a middleperson role between the Board and the other
regulators. The Board agrees and recognizes that to the extent other
documents, including but not limited to, examination reports or
supervisory correspondence, are provided to other agencies, it is the
responsibility of the Federal Reserve, not the supervised financial
institution, to provide that information. The final rule's limitation
on the scope of permitted requests under paragraph (b)(2) balances the
institution's need for a streamlined process to respond to supervisory
requests for internally-prepared documents containing confidential
supervisory information, while recognizing that the institution should
not act as an intermediary between the Board and the other agencies for
the provision of other confidential supervisory information.
Accordingly, all other requests to disclose confidential supervisory
information to the FDIC, the OCC, the CFPB, State banking agency or
other agencies are to be directed to the Board's General Counsel.
In addition, the final rule clarifies to whom requests are
submitted under paragraph (b)(2) in recognition that the appropriate
individual to approve requests may not always be the ``CPC'' or
``equivalent supervisory team leader.'' To that end, the final rule
replaces the term ``CPC'' with ``Reserve Bank Point of Contact'' or
``Reserve Bank POC'' and defines that term to include not only the CPC
or equivalent supervisory team leader but also any ``other designated
Reserve Bank employee.'' Additionally, the final rule omits as
redundant the reference in paragraph (b)(2) of the proposal to a
supervised financial institution that is ``lawfully in possession of
confidential supervisory information about that institution pursuant to
this section.''
Some commenters were concerned that the CPCs (now Reserve Bank
POCs) would not be able to grant blanket approval for recurring
disclosures. Reserve Bank POCs will, when consistent with internal
supervisory procedures, have latitude to approve requests to disclose
confidential supervisory information contained in specified categories
of internally-prepared business documents with the FDIC, the OCC, the
CFPB, and State banking agencies on a recurring basis.
The Board received one comment stating that the Board should
include clear procedures for supervised financial institutions to
appeal a CPC's decision denying a request to disclose confidential
supervisory information. The Board does not agree that the regulation
needs to incorporate such specific procedures. The Board's Rules do not
preclude a supervised financial institution that disagrees with a
Reserve Bank POC's determination from requesting reconsideration.
Additionally, the supervised financial institution whose request is
denied under Sec. 261.21(b)(2) may advise the Federal or State banking
agency to submit a request for the Board's information directly to the
Reserve Bank POC.
Section 261.21(b)(2) also provides, consistent with proposed Sec.
261.21(b)(5), that the Reserve Bank POC's action under Sec.
261.21(b)(2) may require concurrence of other Federal Reserve staff in
accordance with internal supervisory procedures. Commenters expressed
concerns that without common standards such as what circumstances or
topics will require further Federal Reserve consultation, CPCs would
provide different, inconsistent, and potentially arbitrary responses,
and the process would create unnecessary delays that would undermine
any efficiencies that might have resulted from the CPC approval
process. While the Board believes that consultation within the Federal
Reserve as part of the Reserve Bank POC approval process will lead to
more consistent responses and improved efficiencies over time, the
likelihood of achieving these goals is further increased given that
requests under paragraph (b)(2) are now limited to requests to disclose
confidential supervisory information contained in documents prepared by
or for the supervised financial institution for its own business
purposes. The provision acknowledging that concurrence of other Federal
Reserve staff may be necessary reflects that confidential supervisory
information is the Board's information and that in certain
circumstances it will be appropriate for Board staff to review the
specific proposed disclosures, for example, to ensure consistency in
approach.
Two commenters requested that the final rule clarify that
supervised financial institutions are authorized to disclose
confidential supervisory information to State insurance regulators in
accordance with the procedures set forth at Sec. 261.21(b)(2). Another
commenter argued that State financial supervisory agencies often
appoint third-party firms, experts, or consultants to conduct or assist
in examinations of supervised financial institutions, and that Sec.
261.21(b)(2) should be revised to provide for disclosures to such third
parties appointed by the State financial supervisory agency. Three
commenters further proposed that the Board's final rule include
procedures for supervised financial institutions to disclose
confidential supervisory information to foreign bank supervisors. We
decline to incorporate these changes into the final rule. Section
261.21(b)(2) is intended to facilitate the disclosure of confidential
supervisory information to the primary banking agencies and the CFPB--
the regulators with whom the Board interacts most closely in its day-
to-day supervisory activities. All other disclosures are best handled
on an individual basis under Sec. Sec. 261.22(c) or 261.23(c) so that
the Board may conduct an appropriate review to ensure that the
information that is proposed to be shared is needed in connection with
the
[[Page 57623]]
agency's supervisory and other statutory responsibilities.
Disclosures to Legal Counsel and Auditors
The Board also received comments regarding the disclosure of
confidential supervisory information to outside legal counsel and
auditors under Sec. 261.21(b)(3). Commenters remarked favorably on the
elimination of the requirement that legal counsel and auditors view
confidential supervisory information only on the premises of the
supervised financial institution. Commenters, however, raised concerns
with the proposal's requirement that legal counsel and auditors enter
into specific written agreements in which they agree to certain
requirements concerning their handling and use of confidential
supervisory information. Many commenters questioned the need for the
agreements given that legal counsel and auditors are already bound by
professional ethical and confidentiality obligations with one commenter
suggesting that the requirement would conflict with such obligations as
well as with applicable laws and regulations. The same commenter
further noted that the requirement to return or destroy the
confidential supervisory information or to otherwise make electronic
copies inaccessible at the conclusion of the legal counsel's or
auditor's engagement would be burdensome and possibly impractical.
Commenters recommended that the final rule eliminate the requirement
that legal counsel and auditors enter into specific written agreements
and permit supervised financial institutions to disclose confidential
supervisory information to these third parties ``when necessary or
appropriate for business purposes.'' We agree. Accordingly, the final
rule authorizes supervised financial institutions to disclose
confidential supervisory information to their legal counsel and
auditors ``[w]hen necessary or appropriate in connection with the
provision of legal or auditing services to the supervised financial
institution'' without the need for a written agreement addressing the
use and handling of confidential supervisory information.
Some commenters also requested that the Board clarify that
litigation vendors and similar service providers providing services to
legal counsel are authorized to access confidential supervisory
information to the extent necessary in their performance of services
for the financial institution. We agree with this addition. The final
rule provides that the supervised financial institution may also
disclose confidential supervisory information to service providers of
its legal counsel or auditors if the service provider is under a
written agreement with the legal counsel or auditor in which the
service provider agrees to treat the Board's information in accordance
with Sec. 261.20(a) and that it will not use the information for any
purpose other than as necessary to provide services to the supervised
financial institution. The final rule also clarifies that the reference
to service providers--both under paragraphs (b)(3) and (b)(4)--includes
independent contractors, in addition to consultants, contingent
workers, and technology providers. One commenter additionally suggested
that the final rule be revised to permit legal counsel and auditors to
disclose confidential supervisory information to their affiliates in
the performance of legal and auditing services for the financial
institution. We view adoption of this suggestion as unnecessary given
that the need for these types of disclosures do not appear to be common
and thus can be handled on a case-by-case basis.
Disclosures to Other Service Providers
The Board also received a number of comments on Sec. 261.21(b)(4)
regarding the disclosure of confidential supervisory information by
supervised financial institutions to their other service providers,
including consultants and independent contractors. While commenters
appreciated that the proposal would improve efficiency by allowing
firms to submit their requests to their Reserve Bank CPCs rather than
the General Counsel, commenters urged the Board to eliminate any prior
approval requirement and to adopt a rule similar to the OCC's which
permits national banks to disclose nonpublic OCC information to their
consultants subject to certain written confidentiality agreements.
Commenters cited the inefficiencies and burdens associated with a prior
approval requirement and the critical role consultants play in
assisting firms in meeting supervisory and regulatory requirements. One
commenter suggested that the Board require supervised financial
institutions to maintain a log of confidential supervisory information
disclosures to service providers that may be subject to examiner review
in lieu of prior approval. The Board agrees with the comments and has
removed the requirement to obtain CPC approval to disclose confidential
supervisory information to service providers. Under the final rule, a
supervised financial institution is authorized to disclose confidential
supervisory information to a service provider if the service provider
is under a written contract to provide services to the institution, the
disclosure of confidential supervisory information is deemed necessary
to the provision of the services, and the service provider has a
written agreement with the institution that includes the written
agreements set forth at Sec. 261.21(b)(4)(i)(A)-(B).
The Board is also adopting the suggestion that it require
supervised financial institutions to maintain a log of confidential
supervisory information disclosures to service providers that is
subject to examiner review. The final rule requires supervised
financial institutions to maintain a written account of their
disclosures to service providers under Sec. 261.21(b)(4)(ii) and to
provide the Board or Reserve Bank a copy of the written account upon
request. The written account should allow the supervised financial
institution to identify the actual confidential supervisory information
that was disclosed to the service provider. The written account is
intended to protect the confidentiality of the Board's privileged
information in the hands of a wide array of service providers and also
to ensure accountability and compliance with the rule and the
parameters for appropriately disclosing confidential supervisory
information under Sec. 261.21(b)(4). The firm is expected to have
reasonable assurance of such accountability and compliance through
maintenance of the written account and more broadly through the
policies, procedures, and controls that apply to the disclosure of
confidential supervisory information.
Sec. 261.22 Nonpublic Information Made Available by the Board to
Governmental Agencies and Entities Exercising Governmental Authority
The Board received three comments regarding Sec. 261.22. One
commenter recommended that the Board revise Sec. 261.22(a), which
addresses disclosures by the Federal Reserve to Federal and State
financial supervisory agencies, and Sec. 261.22(b), which addresses
disclosures to certain governmental officials in furtherance of
specific statutory responsibilities, to provide that the Federal
Reserve will disclose confidential supervisory information and other
nonpublic information under those sections only when disclosure would
be appropriate in light of the general factors that govern the General
Counsel's decision to disclose confidential supervisory information to
other governmental agencies under Sec. 261.22(c). Under Sec.
261.22(c), other
[[Page 57624]]
Federal, State, and local agencies and other entities exercising
governmental authority may file written requests with the Board for
access to confidential supervisory information and other nonpublic
information. Section 261.22(c)(2) provides that the General Counsel may
approve such requests if ``[t]he information is needed in connection
with a formal investigation or other official duties of the requesting
agency or entity;'' ``[s]atisfactory assurances of confidentiality have
been given;'' and ``[d]isclosure is consistent with the supervisory and
regulatory responsibilities and policies of the Board.'' The Board does
not agree that the rule should be revised to provide that the Federal
Reserve will disclose confidential supervisory information and other
nonpublic information under paragraphs (a) and (b) only when disclosure
would be appropriate under the factors set forth under paragraph
(c)(2). The specific delegations authorizing the disclosure of
confidential supervisory information to the FDIC, the OCC, the CFPB,
and State financial supervisory agencies and the disclosure of
confidential supervisory information to particular governmental
officials in furtherance of specific statutory responsibilities are
codified at Sec. 261.22(a) and (b) based on the Board's determination
that the authorized disclosures satisfy the considerations set forth at
Sec. 261.22(c)(2)(ii)-(iv). Indeed, the delegations at paragraphs (a)
and (b) were established because the Board determined that the named
agencies and officials in those sections require confidential
supervisory information in connection with their official duties on a
recurring basis and that given the close coordination between the
agencies authorizing disclosures on a case-by-case basis does not
further the Board's supervisory and regulatory responsibilities.
Furthermore, all disclosures under Sec. 261.22, including those made
under paragraphs (a) and (b), are subject to the confidentiality
restrictions set forth in the Board's Rules.
Another commenter recommended that the Board add State insurance
regulatory authorities to the regulators included at Sec. 261.22(a).
The Board declines to make this change. Section 261.22(a) is intended
to delegate information sharing at the staff level in order to
facilitate the disclosure of confidential supervisory information to
the primary banking regulators and the CFPB--the regulators with whom
the Board interacts most closely in its day-to-day supervisory
activities. Disclosures to the other functional regulators, including
State insurance supervisors, are better addressed by the General
Counsel on a case-by-case basis under Sec. 261.22(c) or in accordance
with written memoranda of understanding between the agencies.
The same commenter stated that the Board should confirm that the
Federal Reserve will not, absent an enforceable subpoena or court
order, transfer materials covered by 12 U.S.C. 1828(x) to other
government agencies or third parties, and that the Federal Reserve will
notify supervised financial institutions of any such subpoena or court
order to the extent legally permissible. The commenter also suggested
that the final rule should provide a mechanism for an institution to
challenge the Federal Reserve's transfer of such material. The Board,
however, only transfers attorney-client, work product, or other
privileged materials in accordance with applicable law including 12
U.S.C. 1821(t) and 1828(x). The law does not require prior notice to
the supervised financial institution of a request including an
enforceable subpoena or court order for privileged materials.
Additionally, such notice would not be appropriate as it may reveal
confidential information about an agency's pending actions involving
the supervised financial institution and, in some cases, such as grand
jury subpoenas, would also not be permitted. The Board is cognizant of
the privilege concerns and thus encourages institutions to clearly mark
their attorney-client, work product, or other materials as privileged.
Accordingly, the Board declines to make the proposed changes.
Sec. 261.23 Other Disclosure of Confidential Supervisory Information
The Board received three comments on Sec. 261.23. One commenter
supported the Board's revisions to Sec. 261.23(b)(2)(iii) requiring
requesters ``to provide a narrow and specific description of the
confidential supervisory information the requester seeks to access or
to disclose in the litigation'' and to provide ``the reason why the
information sought, or equivalent information adequate to the needs of
the case, cannot by obtained from any other source,'' but argued that
supervised financial institutions should have the opportunity to
provide input on third-party requests to use confidential supervisory
information in litigation. The commenter asserted that the Board should
grant supervised financial institutions the opportunity to provide
input on such requests because financial institutions are best suited
to address the intent of the requester. The commenter also contended
that there is a potential for the development of mistrust between
financial institutions and the Board if institutions are not afforded
an opportunity to provide input on the disclosure of confidential
supervisory information. The Board does not agree that any change to
the final rule is warranted. The Board's Rules set forth stringent
standards for the disclosure of confidential supervisory information
that recognize the sensitivity of the information and disfavor the
granting of a request absent substantial need. Moreover, the Board may,
on a case-by-case basis, seek the input of supervised financial
institutions if it would be of assistance in resolving specific
requests for access to confidential supervisory information. In many
cases, the institution is a party to the litigation and may provide
input.
Another commenter requested that the Board clarify that third
parties who are authorized to access confidential supervisory
information for litigation purposes are prohibited from further
disclosing the information. The Board does not believe this
clarification is necessary as the Board's Rules state that confidential
supervisory information remains the property of the Board and that no
person to whom the information is made available may use the
information for an unauthorized purpose or disclose the information
without the prior written permission of the General Counsel. In
addition, the Board's authorization letters approving the use of
confidential supervisory information for litigation purposes also
emphasize the restriction on further disclosures and generally require
that the parties obtain a protective order acceptable to the Board.
Lastly, one commenter stated that the Board should affirm that it
will not produce to litigants materials that are covered by 12 U.S.C.
1828(x) and that the Board should otherwise notify supervised financial
institutions so that they may assert privilege or other grounds for
withholding the information if the Board believes that there is a
question as to whether Sec. 1828(x) applies. The Board does not
believe such a clarification to Sec. 261.23 is warranted because these
requests are rare and, when they arise, the Board's Rules provide
sufficient flexibility to address them. Under the Board's Rules, the
litigant must show that ``the information sought, or equivalent
information adequate to the needs of the case, cannot be obtained from
any other source.'' Because the litigant can seek the firm's privileged
material directly from the firm through existing discovery processes,
the Board would not have
[[Page 57625]]
reason to grant the litigant's request. In the rare instance that the
disclosure of privileged materials were necessary, those requests would
generally be handled in consultation with the firm as the Board would
ask the firm to confirm that a court has ordered or the firm has
authorized production of the firm's privileged information. The Board
did not receive any other comments regarding Sec. 261.23 and the final
rule adopts the section as proposed.
Sec. 261.24 Subpoenas, Orders Compelling Production, and Other Process
The Board did not receive any comments on proposed Sec. 261.24 and
the final rule adopts the section as proposed.
III. Administrative Law Matters
Regulatory Flexibility Act
In accordance with the Regulatory Flexibility Act (``RFA''), 5
U.S.C. 601 et seq., the Board published an initial regulatory
flexibility analysis with the proposal. The Board did not receive any
comments on its initial regulatory flexibility analysis. The RFA
requires a Federal agency to prepare a final regulatory flexibility
analysis unless the agency certifies that the rule will not, if
promulgated, have a significant economic impact on a substantial number
of small entities. Based on its analysis, and for the reasons stated
below, the Board certifies that the final rule will not have a
significant economic impact on a substantial number of small
entities.\6\
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\6\ 5 U.S.C. 605(b).
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Under regulations issued by the Small Business Administration, a
small entity includes a bank, bank holding company, or savings and loan
holding company with assets of $600 million or less and trust companies
with annual receipts of $41.5 million or less.\7\ As of March 2020,
there were approximately 2,925 small bank holding companies, 132 small
savings and loan holding companies, and 472 small State member banks.
As of March 2020, the Board does not supervise any small trust
companies.
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\7\ See 13 CFR 121.201; 84 FR 34261 (July 18, 2019).
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As stated in the initial regulatory flexibility analysis, the
requirements set forth in the rule with respect to requests for Board
records under the FOIA and requests to access and disclose confidential
supervisory information apply equally to all persons and to all
entities regardless of their size. The rule, which in part introduces
organizational changes to clarify the Board's FOIA regulation, does not
impose economic effects on FOIA requesters, including any FOIA
requesters that would be small entities. Notably, consistent with the
FOIA, the Board's fees for processing FOIA requests are limited to
reasonable standard charges, and the processing fees have not been
increased by the final rule. Similarly, far from imposing any economic
costs on supervised financial institutions, the Board's clarifications
to the rules governing access to and disclosure of the Board's
confidential supervisory information ease certain outdated restrictions
that hamper supervised financial institutions in their ability to
further disclose confidential supervisory information of the Board
within their organizations as well as with their outside legal counsel,
auditors, and other service providers. The final rule imposes minimal
reporting, recordkeeping, or other compliance requirements, including
the reporting requirements under Sec. Sec. 261.22(c), 261.23(b) and
(c), and 261.24(a)(1); the recordkeeping requirement under Sec.
261.21(b)(4)(ii); and the disclosure requirements under Sec.
261.24(a)(2) and (a)(3). As noted in the discussion of the Paperwork
Reduction Act below, the Board has estimated the reporting,
recordkeeping, and disclosure requirements would impose an annual
burden of approximately 134 hours on all respondents. For these
reasons, the Board certifies that the final rule will not have a
significant economic impact on a substantial of number of small
entities.
Paperwork Reduction Act
The Paperwork Reduction Act (44 U.S.C. 3501-3521) (``PRA'') states
that no agency may conduct or sponsor, nor is the respondent required
to respond to, an information collection unless it displays a currently
valid Office of Management and Budget (``OMB'') control number. On June
15, 1984, OMB delegated to the Board authority under the PRA to approve
and assign OMB control numbers to collections of information conducted
or sponsored by the Board, as well as the authority to temporarily
approve a new collection of information without providing opportunity
for public comment if the Board determines that a change in an existing
collection must be instituted quickly and that public participation in
the approval process would defeat the purpose of the collection or
substantially interfere with the Board's ability to perform its
statutory obligation.
This final rule contains collections of information subject to the
PRA, including certain reporting and disclosure requirements in subpart
C that have not previously been cleared by the Board under the PRA. In
order to accurately account for these requirements pursuant to the PRA,
the Board has temporarily approved new collections of information
titled Information Collections Associated with the Rules Regarding
Availability of Information (FR 4035; OMB No. 7100-NEW).
The Board's delegated authority requires that the Board, after
temporarily approving a collection, solicit public comment to extend
the information collection for a period not to exceed three years.
Therefore, the Board is inviting comment to extend the FR 4035
information collections for three years.
The Board invites public comment on the FR 4035 information
collections, which are being reviewed under authority delegated by the
OMB under the PRA. Comments must be submitted on or before November 16,
2020. Comments are invited on the following:
a. Whether the collections of information are necessary for the
proper performance of the Board's functions, including whether the
information has practical utility;
b. The accuracy of the Board's estimate of the burden of the
information collections, including the validity of the methodology and
assumptions used;
c. Ways to enhance the quality, utility, and clarity of the
information to be collected;
d. Ways to minimize the burden of information collections on
respondents, including through the use of automated collection
techniques or other forms of information technology; and
e. Estimates of capital or startup costs and costs of operation,
maintenance, and purchase of services to provide information.
At the end of the comment period, the comments and recommendations
received will be analyzed to determine the extent to which the Board
should modify the collections.
Final Approval Under OMB Delegated Authority of the Temporary
Implementation of, and Solicitation of Comment To Extend for Three
Years, the Following Information Collection
Collection title: Information Collections Associated with the Rules
Regarding Availability of Information.
Agency form number: FR 4035.
OMB control number: 7100-NEW.
Effective Date: September 15, 2020
Frequency: Event generated.
Respondents:
[[Page 57626]]
Sec. 261.21(b)(4) Supervised financial institutions
Sec. 261.22(c) State, local, and foreign agencies and entities
exercising governmental authority
Sec. 261.23(b) Any person
Sec. 261.23(c) Any person
Sec. 261.24(a) Any person
Estimated number of respondents:
Sec. 261.21(b)(4) 60
Sec. 261.22(c) 20
Sec. 261.23(b) 15
Sec. 261.23(c) 30
Sec. 261.24(a) 3
Estimated average hours per response:
Sec. 261.21(b)(4) 0.25
Sec. 261.22(c) 0.5
Sec. 261.23(b) 1
Sec. 261.23(c) 1
Sec. 261.24(a)(1) 1
Sec. 261.24(a)(2) 1
Sec. 261.24(a)(3) 1
Estimated annual burden hours:
Sec. 261.21(b)(4) 60
Sec. 261.22(c) 20
Sec. 261.23(b) 15
Sec. 261.23(c) 30
Sec. 261.24(a)(1) 3
Sec. 261.24(a)(2) 3
Sec. 261.24(a)(3) 3
General description of information collection:
Subpart C provides for certain reporting, recordkeeping, and
disclosure requirements under the PRA. As discussed in further detail
below, the subpart contains reporting requirements to enable third
parties to request the Board's authorization to access, use, or further
disclose confidential supervisory information or other nonpublic
information of the Board, and to ensure that the Board is informed when
any subpoena or other legally enforceable demand requires production of
the Board's confidential supervisory information or other nonpublic
information in the form of documents or testimony. Additionally, the
subpart contains one recordkeeping requirement related to the provision
that allows supervised financial institutions to disclose the Board's
confidential supervisory information to service providers if the
disclosure is deemed necessary to the service provider's provision of
services. It also contains two disclosure requirements when individuals
are served with a subpoena, order, or other judicial or administrative
process requiring the production of the Board's confidential
supervisory information or other nonpublic information in the form of
documents or testimony.\8\
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\8\ Subpart C of the final rule generally prohibits supervised
financial institutions from disclosing the Board's confidential
supervisory information without prior approval. However, Sec.
261.21(b) of the final rule provides that such institutions may
``disclose'' confidential supervisory information, under certain
circumstances, to various persons, without prior approval. This
provision does not grant positive authority to disclose the Board's
information or impose a separate ``requirement'' under the PRA to
disclose such information. Instead, it defines the scope of the
general prohibition against disclosing confidential supervisory
information without prior approval.
---------------------------------------------------------------------------
Reporting: Pursuant to Sec. 261.22(c), State, local, and foreign
agencies and other entities exercising governmental authority may file
written requests to the General Counsel for access to the Board's
confidential supervisory information and other nonpublic
information.\9\ Such written requests must include the information
specified at Sec. 261.22(c)(1)(i)-(v). Pursuant to Sec. 261.23(b),
any person that seeks to access, use or disclose, or require another
person to disclose the Board's confidential supervisory information in
connection with litigation before a court, board, commission, agency,
or arbitration must file a written request with the General Counsel.
Such a request must include the information specified in Sec.
261.23(b)(2). Additionally, pursuant to Sec. 261.23(c), any other
person seeking to access, use, or disclose the Board's confidential
supervisory information for any other purpose shall file a written
request with the General Counsel. Such a request must describe the
purpose for which access, use, or disclosure is sought and the
requester must provide other information as requested by the General
Counsel. Finally, pursuant to Sec. 261.24(a)(1), any person who is
served with a subpoena, order, or other judicial or administrative
process requiring the production of the Board's confidential
supervisory information or other nonpublic information or requiring the
person's testimony regarding such Board information in any proceeding
is required to promptly inform the General Counsel of the service and
all relevant facts, including the documents, information or testimony
demanded, and any facts relevant to the Board in determining whether
the Board material requested should be made available.
---------------------------------------------------------------------------
\9\ Such a request may also be made by a Federal agency.
However, a Federal agency is not considered a ``person'' under the
PRA. Therefore, the FR 4035 information clearance for Sec.
261.22(c) encompasses only requests by persons other than Federal
agencies.
---------------------------------------------------------------------------
The information provided in written requests made pursuant to the
Sec. 261.22(c) enables the General Counsel to determine, pursuant to
Sec. 261.22(c)(2), whether ``[t]he information is needed in connection
with a formal investigation or other official duties of the requesting
agency or entity;'' whether ``[s]atisfactory assurances of
confidentiality have been given;'' and whether ``[d]isclosure is
consistent with the supervisory and regulatory responsibilities and
policies of the Board.'' The information provided in written requests
pursuant to Sec. 261.23)(b) and (c) allows the Board to determine,
pursuant to Sec. 261.23(d), whether the ``[t]he person seeking access,
or the person to whom access would be provided, has shown a substantial
need to access [the Board's] confidential supervisory information that
outweighs the need to maintain confidentiality'' and whether
``[a]pproval is consistent with the supervisory and regulatory
responsibilities and policies of the Board.'' Finally, the information
provided pursuant to Sec. 261.24(a) allows the Board to determine
whether the Board's confidential supervisory information or other
nonpublic information should be disclosed in response to a subpoena or
other legally enforceable demand.
Recordkeeping: Pursuant to Sec. 261.21(b)(4)(ii), a Board-
supervised financial institution must maintain a written account of the
disclosures of the Board's confidential supervisory information that
the supervised financial institution makes to service providers under
that section and provide the Board or Reserve Bank with a copy of the
written account upon request. The Board has decided to implement this
recordkeeping requirement in light of its decision to eliminate the
longstanding requirement that supervised financial institutions request
the Board's authorization to disclose the Board's confidential
supervisory information to service providers. As explained above, the
Board received public comments requesting that the Board eliminate the
prior approval requirement for service providers, citing the
inefficiencies and burdens associated with requesting and waiting for
Federal Reserve approval before being able to disclose the Board's
confidential supervisory information to service providers, such as
consultants and contingent workers. While supervised financial
institutions will no longer be required to request approval from the
Board to disclose the Board's confidential supervisory information to
their service providers, the new recordkeeping requirement is necessary
to maintain accountability and supervisory oversight with respect to
disclosures of the Board's privileged information to a wide array of
third-party service providers.
Disclosure: In addition to the reporting requirement described
under
[[Page 57627]]
Sec. 261.24(a)(1), Sec. 261.24 also imposes two related disclosure
requirements on persons who are served with a subpoena, order, or other
judicial or administrative process requiring the production of the
Board's confidential supervisory information or other nonpublic
information in the form of documents or testimony. Under Sec.
261.24(a)(2) and (a)(3), the person is required to inform the entity
that issued the process and, at the appropriate time, the relevant
court or tribunal of the substance of the Board's Rules and, in
particular, of the obligation to follow the request procedures in Sec.
261.23(b). These disclosure requirements help to ensure that the
Board's confidential information is not disclosed in proceedings other
than as authorized by the General Counsel.
Current actions:
The Board has temporarily implemented the collections of
information contained within subpart C pursuant to its authority to
approve temporarily a collection of information without providing
opportunity for public comment. The Board has determined that these
collections of information must be instituted quickly and that public
participation in the approval process would defeat the purpose of the
collections and substantially interfere with the Board's ability to
carry out its statutory obligations. In particular, the Board has
determined that because the reporting and disclosure requirements are
existing requirements that facilitate the Board's processing of
requests to access and use the Board's confidential supervisory
information, the Board's ability to perform its statutory
responsibilities relating to the disclosure, production, or withholding
of the Board's information would be diminished if the Board were unable
to enforce the collections of information contained within subpart C
due to possible noncompliance with the PRA. The Board also invites
comment to extend the FR 4035 information collections for three years.
Plain Language
Section 722 of the Gramm-Leach-Bliley Act requires each Federal
banking agency to use plain language in all rules published after
January 1, 2000. In light of this requirement, the Board believes this
final rule is presented in a simple and straightforward manner and is
consistent with this ``plain language'' directive.
List of Subjects in 12 CFR Part 261
Administrative practice and procedure, Confidential business
information, Freedom of information, Reporting and recordkeeping
requirements.
Authority and Issuance
0
For the reasons stated in the preamble, the Board of Governors of the
Federal Reserve System revises 12 CFR part 261 to read as follows:
PART 261--RULES REGARDING AVAILABILITY OF INFORMATION
Subpart A--General
Sec.
261.1 Authority, purpose, and scope.
261.2 Definitions.
261.3 Custodian of records; certification; service; alternative
authority.
261.4 Prohibition against disclosure.
Subpart B--Published Information and Records Available to Public;
Procedures for Requests
261.10 Published information.
261.11 Records available to the public upon request.
261.12 Processing requests.
261.13 Responses to requests.
261.14 Appeals.
261.15 Exemptions from disclosure.
261.16 Fee schedules; waiver of fees.
261.17 Request for confidential treatment.
261.18 Process for addressing a submitter's request for confidential
treatment.
Subpart C--Nonpublic Information Made Available to Supervised Financial
Institutions, Governmental Agencies, and Others in Certain
Circumstances
261.20 General.
261.21 Confidential supervisory information made available to
supervised financial institutions.
261.22 Nonpublic information made available by the Board to
governmental agencies and entities exercising governmental
authority.
261.23 Other disclosure of confidential supervisory information.
261.24 Subpoenas, orders compelling production, and other process.
Authority: 5 U.S.C. 552; 12 U.S.C. 248(i) and (k), 321 et seq.,
611 et seq., 1442, 1467a, 1817(a)(2)(A), 1817(a)(8), 1818(u) and
(v), 1821(o), 1821(t), 1830, 1844, 1951 et seq., 2601, 2801 et seq.,
2901 et seq., 3101 et seq., 3401 et seq.; 15 U.S.C. 77uuu(b),
78q(c)(3); 29 U.S.C. 1204; 31 U.S.C. 5301 et seq.; 42 U.S.C. 3601;
44 U.S.C. 3510.
Subpart A--General
Sec. 261.1 Authority, purpose, and scope.
(a) Authority and purpose. This part establishes mechanisms for
carrying out the Board's statutory responsibilities relating to the
disclosure, production, or withholding of information to facilitate the
Board's interaction with financial institutions and the public. In this
regard, the Board has determined that the Board or its delegees may
disclose nonpublic information of the Board, in accordance with the
procedures set forth in this part, whenever it is necessary or
appropriate to do so in the exercise of any of the Board's authorities,
including but not limited to authority granted to the Board in the
Freedom of Information Act, 5 U.S.C. 552, Federal Reserve Act, 12
U.S.C. 221 et seq., the Bank Holding Company Act, 12 U.S.C. 1841 et
seq., the Home Owners' Loan Act, 12 U.S.C. 1461 et seq., and the
International Banking Act, 12 U.S.C. 3101 et seq. The Board has
determined that all such disclosures made in accordance with the rules
and procedures specified in this part are authorized by law, and are,
as applicable, disclosures to proper persons pursuant to 12 U.S.C. 326.
This part also sets forth the categories of information made available
to the public, the procedures for obtaining information and records,
the procedures for limited release of nonpublic information, and the
procedures for protecting confidential business information.
(b) Scope. (1) This subpart A contains general provisions and
definitions of terms used in this part.
(2) Subpart B implements the Freedom of Information Act (FOIA) (5
U.S.C. 552).
(3) Subpart C sets forth:
(i) The kinds of nonpublic information made available to supervised
financial institutions, governmental agencies, and others in certain
circumstances;
(ii) The procedures for disclosure; and
(iii) The procedures with respect to subpoenas, orders compelling
production, and other process.
Sec. 261.2 Definitions.
For purposes of this part:
(a) Affiliate has the meaning given it in 12 CFR 225.2(a).
(b)(1) Confidential supervisory information means nonpublic
information that is exempt from disclosure pursuant to 5 U.S.C.
552(b)(8) and includes information that is or was created or obtained
in furtherance of the Board's supervisory, investigatory, or
enforcement activities, including activities conducted by a Federal
Reserve Bank (Reserve Bank) under delegated authority, relating to any
supervised financial institution, and any information derived from or
related to such information. Examples of confidential supervisory
information include, without limitation, reports of examination,
inspection, and visitation; confidential operating and condition
reports; supervisory assessments; investigative requests for documents
or other information; and supervisory correspondence or other
supervisory
[[Page 57628]]
communications. Additionally, any portion of a document in the
possession of any person, entity, agency or authority, including a
supervised financial institution, that contains or would reveal
confidential supervisory information is confidential supervisory
information.
(2) Confidential supervisory information does not include:
(i) Documents prepared by or for a supervised financial institution
for its own business purposes that are in its own possession and that
do not include confidential supervisory information as defined in
paragraph (b)(1) of this section, even though copies of such documents
in the Board's or Reserve Bank's possession constitute confidential
supervisory information; or
(ii) Final orders, amendments, or modifications of final orders, or
other actions or documents that are specifically required to be
published or made available to the public pursuant to 12 U.S.C.
1818(u), the Community Reinvestment Act, or other applicable law.
(c) Nonpublic information means information that has not been
publicly disclosed by the Board and that is:
(1) Confidential supervisory information, or
(2) Exempt from disclosure under Sec. 261.15(a).
(d)(1) Records of the Board or Board records means all recorded
information, regardless of form or characteristics, that is created or
obtained by the Board and is under the Board's control. A record is
created or obtained by the Board if it is created or obtained by:
(i) Any Board member or any officer, employee, or contractor of the
Board in the conduct of the Board's official duties, or
(ii) Any officer, director, employee, or contractor of any Reserve
Bank and either constitutes confidential supervisory information as
defined in paragraph (b)(1) of this section or is created or obtained
in the performance of Board functions delegated to the Reserve Bank
pursuant to 12 U.S.C. 248(k).
(2) Records of the Board do not include:
(i) Personal files or notes of Board members, employees, or
contractors; extra copies of documents and library and museum materials
kept solely for reference or exhibition purposes; or unaltered
publications otherwise available to the public in Board publications,
libraries, or established distribution systems;
(ii) Records located at Reserve Banks other than those records
identified in paragraph (d)(1) of this section; or
(iii) Records that belong to or are otherwise under the control of
another entity or agency despite the Board's possession.
(e)(1) Search means a reasonable search of such records of the
Board as seem likely in the particular circumstances to contain
information of the kind requested.
(2) As part of the Board's search for responsive records, the Board
is not obligated to conduct any research, create any document, or
modify an electronic program or automated information system.
(f) Supervised financial institution includes any institution that
is supervised by the Board, including a bank; a bank holding company,
intermediate holding company, or savings and loan holding company
(including their non-depository subsidiaries); an Edge Act or agreement
corporation; a U.S. branch or agency of a foreign bank; any company
designated for Board supervision by the Financial Stability Oversight
Council; or any other entity or service subject to examination by the
Board.
(g) Working day means any day except Saturday, Sunday, or a legal
Federal holiday.
Sec. 261.3 Custodian of records; certification; service; alternative
authority.
(a) Custodian of records. The Secretary of the Board (Secretary) is
the official custodian of all records of the Board.
(b) Certification of record. The Secretary may certify the
authenticity of any Board record, or any copy of such record, for any
purpose, and for or before any duly constituted Federal or State court,
tribunal, or agency.
(c) Service of subpoenas or other process. Subpoenas or other
judicial or administrative process demanding access to any Board
records or making any claim against the Board or against Board members
or staff in their official capacity shall be addressed to and served
upon the Secretary of the Board at the Board's office at 20th Street
and Constitution Avenue NW, Washington, DC 20551. The Board does not
accept service of process on behalf of any employee in respect of
purely private legal disputes.
(d) Alternative authority. Any action or determination required or
permitted by this part to be done by the Board, the Secretary, the
General Counsel, the Director of any Division, or any Reserve Bank, may
be done by any employee who has been duly authorized or designated for
this purpose by the Board, the Secretary, the General Counsel, the
appropriate Director, or the appropriate Reserve Bank, respectively.
Sec. 261.4 Prohibition against disclosure.
Except as provided in this part or as otherwise authorized, no
officer, employee, or agent of the Board or any Reserve Bank shall
disclose or permit the disclosure of any nonpublic information of the
Board to any person other than Board or Reserve Bank officers,
employees, or agents properly entitled to such information for the
performance of official duties.
Subpart B--Published Information and Records Available to Public;
Procedures for Requests
Sec. 261.10 Published information.
(a) Federal Register. The Board publishes in the Federal Register
for the guidance of the public:
(1) Descriptions of the Board's central and field organization;
(2) Statements of the general course and method by which the
Board's functions are channeled and determined, including the nature
and requirements of procedures;
(3) Rules of procedure, descriptions of forms available and the
place where they may be obtained, and instructions on the scope and
contents of all papers, reports, and examinations;
(4) Substantive rules, interpretations of general applicability,
and statements of general policy;
(5) Every amendment, revision, or repeal of the foregoing in
paragraphs (a)(1) through (4) of this section; and
(6) Other notices as required by law.
(b) Publications. The Board maintains a list of publications on its
website (at www.federalreserve.gov/publications). Most publications
issued by the Board, including available back issues, may be downloaded
from the website; some may be obtained through an order form located on
the website (at www.federalreserve.gov/files/orderform.pdf) or by
contacting Board Printing & Fulfillment, Federal Reserve Board,
Washington, DC 20551. Subscription or other charges may apply for some
publications.
(c) Publicly available information--(1) Electronic reading room.
The Board makes the following records available in its electronic
reading room, http://www.federalreserve.gov/foia/readingrooms.htm#rr1.
(i) Final opinions, including concurring and dissenting opinions,
as well as final orders and written agreements, made in the
adjudication of cases;
(ii) Statements of policy and interpretations adopted by the Board
[[Page 57629]]
that are not published in the Federal Register;
(iii) Administrative staff manuals and instructions to staff that
affect the public;
(iv) Copies of all records, regardless of form or format--
(A) That have been released to any person under Sec. 261.11; and
(B)(1) That because of the nature of their subject matter, the
Board has determined have become or are likely to become the subject of
subsequent requests for substantially the same records; or
(2) That have been requested three or more times;
(v) A general index of the records referred to in paragraph
(c)(1)(iv) of this section; and
(vi) The public section of Community Reinvestment Act examination
reports.
(2) Inspection in electronic format at Reserve Banks. The Board may
determine that certain classes of publicly available filings shall be
made available for inspection in electronic format only at the Reserve
Bank where those records are filed.
(3) Privacy protection. The Board may delete identifying details
from any public record to prevent a clearly unwarranted invasion of
personal privacy.
Sec. 261.11 Records available to the public upon request.
(a) Procedures for requesting records. (1) Requesters are
encouraged to submit requests electronically by filling out the
required information at https://www.federalreserve.gov/secure/forms/efoiaform.aspx. Alternatively, requests may be submitted in writing to
the Office of the Secretary, Board of Governors of the Federal Reserve
System, Attn: FOIA Requests, 20th Street and Constitution Avenue NW,
Washington, DC 20551; or sent by facsimile to the Office of the
Secretary, (202) 872-7565. Clearly mark the request FREEDOM OF
INFORMATION ACT REQUEST.
(2) A request may not be combined with any other request or with
any matter presented to the Board such as a protest on a pending
application or a comment on a public rulemaking. It may, however, be
combined with a request for records under the Privacy Act pursuant to
12 CFR 261a.5(a) or a request for discretionary release of confidential
supervisory information pursuant to Sec. 261.23.
(b) Contents of request. A request must include:
(1) The requester's name, address, daytime telephone number, and an
email address if available.
(2) A description of the records that enables the Board's staff to
identify and produce the records with reasonable effort and without
unduly burdening or significantly interfering with any of the Board's
operations. Whenever possible, the request should include specific
information about each record sought, such as the date, title or name,
author, recipient, and subject matter of the record.
(3) A statement agreeing to pay the applicable fees. If the
information requested is not intended for a commercial use (as defined
in Sec. 261.16(d)(1)) and the requester seeks a reduction or waiver of
fees because he or she is either a representative of the news media, an
educational institution, or a noncommercial scientific institution, the
requester should include the information called for in Sec.
261.16(g)(2).
(c) Perfected and defective requests. (1) The Board will consider
the request to be perfected on the date the Office of the Secretary
receives a request that contains all of the information required by
paragraphs (b)(1) through (3) of this section.
(2) The Board need not accept or process a request that does not
reasonably describe the records requested or that does not otherwise
comply with the requirements of this section.
(3) The Board may return a defective request, specifying the
deficiency. The requester may submit a corrected request, which will be
treated as a new request.
Sec. 261.12 Processing requests.
(a) Receipt of requests. Upon receipt of any request that satisfies
the requirements set forth in Sec. 261.11, the Office of the Secretary
shall assign the request to the appropriate processing schedule,
pursuant to paragraph (b) of this section. The date of receipt for any
request, including one that is addressed incorrectly or that is
referred to the Board by another agency or by a Reserve Bank, is the
date the Office of the Secretary actually receives the request.
(b) Multitrack processing. (1) The Board provides different levels
of processing for categories of requests under this section.
(i) Requests for records that are readily identifiable by the
Office of the Secretary and that have already been cleared for public
release or can easily be cleared for public release may qualify for
simple processing.
(ii) All other requests shall be handled under normal processing
procedures, unless expedited processing has been granted pursuant to
paragraph (c) of this section.
(2) The Office of the Secretary will make the determination whether
a request qualifies for simple processing. A requester may contact the
Office of the Secretary to learn whether a particular request has been
assigned to simple processing. If the request has not qualified for
simple processing, the requester may limit the scope of the request in
order to qualify for simple processing by contacting the Office of the
Secretary in writing, by letter or email, or by telephone.
(c) Expedited processing. (1) A request for expedited processing
may be made at any time. A request for expedited processing must be
clearly labeled ``Expedited Processing Requested.'' The Board will
process requests and appeals on an expedited basis whenever it is
determined that they involve:
(i) Circumstances in which the lack of expedited processing could
reasonably be expected to pose an imminent threat to the life or
physical safety of an individual; or
(ii) An urgency to inform the public about an actual or alleged
Federal Government activity, if made by a person who is primarily
engaged in disseminating information.
(2) A requester who seeks expedited processing must submit a
statement, certified to be true and correct, explaining in detail the
basis for making the request for expedited processing. For example,
under paragraph (c)(1)(ii) of this section, a requester who is not a
full-time member of the news media must establish that the requester is
a person whose primary professional activity or occupation is
information dissemination, though it need not be the requester's sole
occupation. Such a requester also must establish a particular urgency
to inform the public about the government activity involved in the
request--one that extends beyond the public's right to know about
Federal Government activity generally. The existence of numerous
articles published on a given subject can be helpful in establishing
the requirement that there be an ``urgency to inform'' the public on
the topic. As a matter of administrative discretion, the Board may
waive the formal certification requirement.
(3) Within 10 calendar days of receipt of a request for expedited
processing, the Board will notify the requester of its decision on the
request. A denial of expedited processing may be appealed to the Board
in accordance with Sec. 261.14. The Board will respond to the appeal
within 10 working days of receipt of the appeal.
[[Page 57630]]
(d) Priority of responses. The Office of the Secretary will
normally process requests in the order they are received in the
separate processing tracks, except when expedited processing is granted
in which case the request will be processed as soon as practicable.
(e) Time limits. The time for response to requests shall be 20
working days from when a request is perfected. Exceptions to the 20-day
time limit are only as follows:
(1) In the case of expedited treatment under paragraph (c) of this
section, the Board shall give the expedited request priority over non-
expedited requests and shall process the expedited request as soon as
practicable.
(2) Where the running of such time is suspended for a requester to
address fee requirements pursuant to Sec. 261.16(c)(1) or (2).
(3) In unusual circumstances, as defined in 5 U.S.C. 552(a)(6)(B),
the Board may--
(i) Extend the 20-day time limit for a period of time not to exceed
10 working days, where the Board has provided written notice to the
requester setting forth the reasons for the extension and the date on
which a determination is expected to be dispatched; and
(ii) Extend the 20-day time limit for a period of more than 10
working days where the Board has provided the requester with an
opportunity to modify the scope of the FOIA request so that it can be
processed within that time frame or with an opportunity to arrange an
alternative time frame for processing the original request or a
modified request, and has notified the requester that the Board's FOIA
Public Liaison is available to assist the requester for this purpose
and in the resolution of any disputes between the requester and the
Board and of the requester's right to seek dispute resolution services
from the Office of Government Information Services.
Sec. 261.13 Responses to Requests.
(a) When the Board receives a perfected request, it will conduct a
reasonable search of Board records in its possession on the date the
Board's search begins and will review any responsive information it
locates.
(b) If a request covers documents that were created by, obtained
from, or classified by another agency, the Board may refer the request
for such documents to that agency for a response and inform the
requester promptly of the referral.
(c) In responding to a request, the Board will withhold information
under this section only if--
(1) The Board reasonably foresees that disclosure would harm an
interest protected by an exemption described in Sec. 261.15(a); or
(2) Disclosure is prohibited by law.
(d) The Board will take reasonable steps necessary to segregate and
release nonexempt information.
(e) The Board will notify the requester of:
(1) The Board's determination of the request;
(2) The reasons for the determination;
(3) An estimate of the amount of information withheld, if any. An
estimate is not required if the amount of information is otherwise
indicated by deletions marked on records that are disclosed in part or
if providing an estimate would harm an interest protected by an
applicable exemption;
(4) The right of the requester to seek assistance from the Board's
FOIA Public Liaison; and
(5) When an adverse determination is made, the Board will advise
the requester in writing of that determination and will further advise
the requester of:
(i) The right of the requester to appeal any adverse determination
within 90 calendar days after the date of the determination as
specified in Sec. 261.14;
(ii) The right of the requester to seek dispute resolution services
from the Board's FOIA Public Liaison or the Office of Government
Information Services; and
(iii) The name and title or position of the person responsible for
the adverse determination.
(f) Adverse determinations, or denials of requests, include
decisions that the requested record is exempt, in whole or in part; the
request does not reasonably describe the records sought; the
information requested is not a record subject to the FOIA; the
requested record does not exist, cannot be located, or has been
destroyed; or the requested record is not readily reproducible in the
form or format sought by the requester. Adverse determinations also
include denials involving fees or fee waiver matters or denials of
requests for expedited treatment.
(g) The Board will normally send responsive, nonexempt documents to
the requester by email but may use other means as arranged between the
Board and the requester or as determined by the Board. The Board will
attempt to provide records in the format requested by the requester.
Sec. 261.14 Appeals.
(a) Appeal of adverse determination. If the Board makes an adverse
determination as defined in Sec. 261.13(f), the requester may file a
written appeal with the Board, as follows:
(1) The appeal should prominently display the phrase FREEDOM OF
INFORMATION ACT APPEAL on the first page, and should be sent directly
to [email protected] or, if sent by mail, addressed to the Office of
the Secretary, Board of Governors of the Federal Reserve System, Attn:
FOIA Appeals, 20th Street & Constitution Avenue NW, Washington, DC
20551; or sent by facsimile to the Office of the Secretary, (202) 872-
7565. If the requester is appealing the denial of expedited treatment,
the appeal should clearly be labeled ``Appeal for Expedited
Processing.''
(2) A request for records under Sec. 261.11 may not be combined in
the same letter with an appeal.
(3) To be considered timely, an appeal must be postmarked, or in
the case of electronic submissions, transmitted, within 90 calendar
days after the date of the adverse determination.
(b) Except as provided in Sec. 261.12(c)(3), the Board shall make
a determination regarding any appeal within 20 working days of actual
receipt of the appeal by the Office of the Secretary. If an adverse
determination is upheld on appeal, in whole or in part, the
determination letter shall notify the appealing party of the right to
seek judicial review and of the availability of dispute resolution
services from the Office of Government Information Services as a
nonexclusive alternative to litigation.
(c) The Board may reconsider an adverse determination, including
one on appeal, if intervening circumstances or additional facts not
known at the time of the adverse determination come to the attention of
the Board.
Sec. 261.15 Exemptions from disclosure.
(a) Types of records exempt from disclosure. Pursuant to 5 U.S.C.
552(b), the following records of the Board are exempt from disclosure
under this part:
(1) Any information that is specifically authorized under criteria
established by an executive order to be kept secret in the interest of
national defense or foreign policy and is in fact properly classified
pursuant to the executive order.
(2) Any information related solely to the internal personnel rules
and practices of the Board.
(3) Any information specifically exempted from disclosure by
statute to the extent required by 5 U.S.C. 552(b)(3).
(4) Any matter that is a trade secret or that constitutes
commercial or financial
[[Page 57631]]
information obtained from a person and that is privileged or
confidential.
(5) Inter- or intra-agency memorandums or letters that would not be
available by law to a party other than an agency in litigation with the
Board, provided that the deliberative process privilege shall not apply
to records that were created 25 years or more before the date on which
the records were requested.
(6) Any information contained in personnel and medical files and
similar files the disclosure of which would constitute a clearly
unwarranted invasion of personal privacy.
(7) Any records or information compiled for law enforcement
purposes, to the extent permitted under 5 U.S.C. 552(b)(7).
(8) Any matter that is contained in or related to examination,
operating, or condition reports prepared by, on behalf of, or for the
use of an agency responsible for the regulation or supervision of
financial institutions, including a State financial institution
supervisory agency.
(b) Release of nonpublic information. (1) The Board may make any
nonpublic information furnished in connection with an application for
Board approval of a transaction available to the public in response to
a request in accordance with Sec. 261.11, and may, without prior
notice and to the extent it deems necessary, comment on such
information in any opinion or statement issued to the public in
connection with a Board action to which such information pertains.
(2) The fact that the Board has determined to release particular
nonpublic information does not waive the Board's ability to withhold
similar nonpublic information in response to the same or a different
request.
(3) Except where disclosure is expressly prohibited by statute,
regulation, or order, the Board may release records that are exempt
from mandatory disclosure whenever the Board or designated Board
members, the Secretary, or the General Counsel determines that such
disclosure would be in the public interest. The Board will provide
predisclosure notice to submitters of confidential information in
accordance with Sec. 261.18(b)(1). Confidential supervisory
information may only be released as set forth in subpart C.
(c) Delayed release. Except as required by law, publication in the
Federal Register or availability to the public of certain information
may be delayed if immediate disclosure would likely:
(1) Interfere with accomplishing the objectives of the Board in the
discharge of its statutory functions;
(2) Interfere with the orderly conduct of the foreign affairs of
the United States;
(3) Permit speculators or others to gain unfair profits or other
unfair advantages by speculative trading in securities or otherwise;
(4) Result in unnecessary or unwarranted disturbances in the
securities markets;
(5) Interfere with the orderly execution of the objectives or
policies of other government agencies; or
(6) Impair the ability to negotiate any contract or otherwise harm
the commercial or financial interest of the United States, the Board,
any Reserve Bank, or any department or agency of the United States.
Sec. 261.16 Fee schedules; waiver of fees.
(a) Fee schedules. Consistent with the limitations set forth in 5
U.S.C. 552(a)(4)(A)(viii), the fees applicable to a request for records
pursuant to Sec. 261.11 are set forth in table 1 to this section.
These fees cover only the full allowable direct costs of search,
duplication, and review. No fees will be charged where the average cost
of collecting the fee (calculated at $5.00) exceeds the amount of the
fee.
(b) For purposes of computing fees. (1) Search time includes all
time spent looking for material that is responsive to a request,
including line-by-line identification of material within documents.
Such activity is distinct from ``review'' of material to determine
whether the material is exempt from disclosure.
(2) Direct costs mean those expenditures that the Board actually
incurs in searching for, reviewing, and duplicating records in response
to a request made under Sec. 261.11, as shown in table 1 to this
section.
(3) Duplication refers to the process of making a copy, in any
format, of a document.
(4) Review refers to the process of examining documents that have
been located as being potentially responsive to a request for records
to determine whether any portion of a document is exempt from
disclosure. It includes doing all that is necessary to prepare the
documents for release, including the redaction of exempt information.
It does not include time spent resolving general legal or policy issues
regarding the application of exemptions.
(c) Payment procedures. The Board may assume that a person
requesting records pursuant to Sec. 261.11 will pay the applicable
fees, unless the request includes a limitation on fees to be paid or
seeks a waiver or reduction of fees pursuant to paragraph (g) of this
section.
(1) Advance notification of fees. If the estimated charges are
likely to exceed the amount authorized by the requester, the Office of
the Secretary shall notify the requester of the estimated amount. Upon
receipt of such notice, the requester may confer with the Office of the
Secretary to reformulate the request to lower the costs or may
authorize a higher amount. The time period for responding to requests
under Sec. 261.12(e) and the processing of the request will be
suspended until the requester agrees in writing to pay the applicable
fees.
(2) Advance payment. The Board may require advance payment of any
fee estimated to exceed $250. The Board may also require full payment
in advance where a requester has previously failed to pay a fee in a
timely fashion. The time period for responding to a request under Sec.
261.12(e) and the processing of the request will be suspended until the
Office of the Secretary receives the required payment.
(3) Late charges. The Board may assess interest charges when fee
payment is not made within 30 days of the date on which the billing was
sent. Interest is at the rate prescribed in 31 U.S.C. 3717 and accrues
from the date of the billing.
(d) Categories of uses. The fees assessed depend upon the intended
use for the records requested. In determining which category is
appropriate, the Board will look to the intended use set forth in the
request for records. Where a requester's description of the use is
insufficient to make a determination, the Board may seek additional
clarification before categorizing the request.
(1) A commercial use requester is one who requests records for a
use or purpose that furthers the commercial, trade, or profit interests
of the requester or the person on whose behalf the request is made,
which can include furthering those interests through litigation.
(2) Representative of the news media is any person or entity that
gathers information of potential interest to a segment of the public,
uses its editorial skills to turn the raw materials into a distinct
work, and distributes that work to an audience, including organizations
that disseminate solely on the internet. The term ``news'' means
information that is about current events or that would be of current
interest to the public. A non-affiliated journalist who demonstrates a
solid basis for expecting publication through a news media
[[Page 57632]]
entity, such as a publishing contract or past publication record, will
be considered as a representative of the news media.
(3) Educational institution is any school that operates a program
of scholarly research. A requester in this fee category must show that
the request is made in connection with his or her role at the
educational institution. The Board may seek verification from the
requester that the request is in furtherance of scholarly research.
(4) Noncommercial scientific institution is an institution that is
not operated on a ``commercial'' basis, as defined in paragraph (d)(1)
of this section, and that is operated solely for the purpose of
conducting scientific research the results of which are not intended to
promote any particular product or industry. A requester in this
category must show that the request is authorized by and is made under
the auspices of a qualifying institution and that the records are
sought to further scientific research and are not for a commercial use.
(5) Fees table. Please refer to table 1 to this section to
determine what fees apply for different categories of users.
(e) Nonproductive search. Fees for search and review may be charged
even if no responsive documents are located or if the request is
denied.
(f) Aggregated requests. A requester may not file multiple requests
at the same time, solely in order to avoid payment of fees. If the
Board reasonably believes that a requester is separating a single
request into a series of requests for the purpose of evading the
assessment of fees, the Board may aggregate any such requests and
charge accordingly. It is considered reasonable for the Board to
presume that multiple requests of this type made within a 30-day period
have been made to avoid fees.
(g) Waiver or reduction of fees. A request for a waiver or
reduction of the fees, and the justification for the waiver, shall be
included with the request for records to which it pertains. If a waiver
is requested and the requester has not indicated in writing an
agreement to pay the applicable fees if the waiver request is denied,
the time for response to the request for documents, as set forth in
Sec. 261.12(e), shall not begin until either a waiver has been granted
or, if the waiver is denied, until the requester has agreed to pay the
applicable fees.
(1) The Board will grant a waiver or reduction of fees where it is
determined both that disclosure of the information is in the public
interest because it is likely to contribute significantly to public
understanding of the operations or activities of the government, and
that the disclosure of information is not primarily in the commercial
interest of the requester. In making this determination, the Board will
consider the following factors:
(i) Whether the subject of the records would shed light on
identifiable operations or activities of the government with a
connection that is direct and clear, not remote or attenuated; and
(ii) Whether disclosure of the information is likely to contribute
significantly to public understanding of those operations or
activities. This factor is satisfied when the following criteria are
met:
(A) Disclosure of the requested records must be meaningfully
informative about government operations or activities. The disclosure
of information that already is in the public domain, in either the same
or a substantially identical form, would not be meaningfully
informative if nothing new would be added to the public's
understanding.
(B) The disclosure must contribute to the understanding of a
reasonably broad audience of persons interested in the subject, as
opposed to the individual understanding of the requester. A requester's
expertise in the subject area as well as the requester's ability and
intention to effectively convey information to the public must be
considered. The Board will presume that a representative of the news
media will satisfy this consideration.
(iii) The disclosure must not be primarily in the commercial
interest of the requester. A commercial interest includes any
commercial, trade, profit, or litigation interest.
(2) A request for a waiver or reduction of fees must include:
(i) A clear statement of the requester's interest in the documents;
(ii) The use proposed for the documents and whether the requester
will derive income or other benefit for such use;
(iii) A statement of how the public will benefit from such use and
from the Board's release of the documents;
(iv) A description of the method by which the information will be
disseminated to the public; and
(v) If specialized use of the information is contemplated, a
statement of the requester's qualifications that are relevant to that
use.
(3) The requester has the burden to present evidence or information
in support of a request for a waiver or reduction of fees.
(4) The Board will notify the requester of its determination on the
request for a waiver or reduction of fees. The requester may appeal a
denial in accordance with Sec. 261.14(a).
(5) Where only some of the records to be released satisfy the
requirements for a waiver of fees, a waiver must be granted for those
records.
(6) A request for a waiver or reduction of fees should be made when
the request for records is first submitted to the Board and should
address the criteria referenced above. A requester may submit a fee
waiver request at a later time so long as the underlying record request
is pending or on administrative appeal. When a requester who has
committed to pay fees subsequently asks for a waiver of those fees and
that waiver is denied, the requester must pay any costs incurred up to
the date the fee waiver request was received.
(h) Restrictions on charging fees. (1) If the Board fails to comply
with the FOIA's time limits in which to respond to a request, the Board
may not charge search fees, or, in the instances of requests from
requesters described in paragraphs (d)(2) through (4) of this section,
may not charge duplication fees, except as permitted under paragraphs
(h)(2) through (4) of this section.
(2) If the Board determines that unusual circumstances exist, as
described in 5 U.S.C. 552(a)(6)(B), and has provided timely written
notice to the requester and subsequently responds within the additional
10 working days as provided in Sec. 261.12(e)(3), the Board may charge
search fees, or, in the case of requesters described in paragraphs
(d)(2) through (4) of this section, may charge duplication fees.
(3) If the Board determines that unusual circumstances exist, as
described in 5 U.S.C. 552(a)(6)(B), and more than 5,000 pages are
necessary to respond to the request, then the Board may charge search
fees, or, in the case of requesters described in paragraphs (d)(2)
through (4) of this section, may charge duplication fees, if the Board
has:
(i) Provided timely written notice of unusual circumstances to the
requester in accordance with the FOIA; and
(ii) Discussed with the requester via written mail, email, or
telephone (or made not less than three good-faith attempts to do so)
how the requester could effectively limit the scope of the request in
accordance with 5 U.S.C. 552(a)(6)(B)(ii).
(4) If a court has determined that exceptional circumstances exist,
as defined by the FOIA, a failure to comply
[[Page 57633]]
with the time limits shall be excused for the length of time provided
by the court order.
(i) Employee requests. In connection with any request by an
employee, former employee, or applicant for employment, for records for
use in prosecuting a grievance or complaint of discrimination against
the Board, fees shall be waived where the total charges (including
charges for information provided under the Privacy Act of 1974 (5
U.S.C. 552a)) are $50 or less; but the Board may waive fees in excess
of that amount.
(j) Special services. The Board may agree to provide, and set fees
to recover the costs of, special services not covered by the FOIA, such
as certifying records or information and sending records by special
methods such as express mail or overnight delivery.
Table 1 to Sec. 261.16--Fees
----------------------------------------------------------------------------------------------------------------
Type of requester Search costs per hour Review costs per hour Duplication costs
----------------------------------------------------------------------------------------------------------------
Commercial........................... Clerical/Technical Clerical/Technical Photocopy per standard
staff--$20. staff--$20. page--.10.
Professional/ Professional/ Other types of
Supervisory staff--$40. Supervisory staff--$40. duplication--Direct
Costs.
Manager/Senior Manager/Senior
professional staff-- professional staff--
$65. $65.
Computer search,
including computer
search time, output,
operator's salary--
Direct Costs.
Educational; or Non-commercial Costs waived........... Costs waived........... First 100 pages free,
scientific; or News media. then: Photocopy per
standard page--.10.
Other types of
duplication--Direct
Costs.
All other requesters................. First 2 hours free, Costs waived........... First 100 pages free,
then: Clerical/ then: Photocopy per
Technical staff--$20. standard page--.10.
Professional/ Other types of
Supervisory staff--$40. duplication--Direct
Costs.
Manager/Senior
professional staff--
$65.
Computer search,
including computer
search time, output,
operator's salary--
Direct Costs.
----------------------------------------------------------------------------------------------------------------
Sec. 261.17 Request for confidential treatment.
(a) Submission of request. Any submitter of information to the
Board who desires that such information be withheld pursuant to Sec.
261.15(a)(4) or (6) shall file a request for confidential treatment
with the Board (or in the case of documents filed with a Reserve Bank,
with that Reserve Bank) at the time the information is submitted or
within 10 working days thereafter.
(b) Form of request. Each request for confidential treatment shall
state in reasonable detail the facts supporting the request, provide
the legal justification, use good faith efforts to designate by
appropriate markings any portion of the submission for which
confidential treatment is requested, and include an affirmative
statement that such information is not available publicly. A
submitter's request for confidentiality in reliance upon Sec.
261.15(a)(4) generally expires 10 years after the date of the
submission unless the submitter requests and provides justification for
a longer designation period.
(c) Designation and separation of confidential material. All
information considered confidential by a submitter shall be clearly
designated CONFIDENTIAL in the submission and separated from
information for which confidential treatment is not requested. Failure
to segregate confidential information from other material may result in
release of the unsegregated material to the public without notice to
the submitter.
(d) Exceptions. This section does not apply to:
(1) Data items collected on forms that are approved pursuant to the
Paperwork Reduction Act (44 U.S.C. 3501 et seq.) and deemed
confidential by the Board. Any such data items deemed confidential by
the Board shall so indicate on the face of the form or in its
instructions. The data may, however, be disclosed in aggregate form in
such a manner that individual company data is not disclosed or
derivable.
(2) Any comments submitted by a member of the public on
applications and regulatory proposals being considered by the Board,
unless the Board determines that confidential treatment is warranted.
(3) A determination by the Board to comment upon information
submitted to the Board in any opinion or statement issued to the public
as described in Sec. 261.15(b)(1).
(e) Special procedures. The Board may establish special procedures
for particular documents, filings, or types of information by express
provisions in this part or by instructions on particular forms that are
approved by the Board. These special procedures shall take precedence
over this section.
Sec. 261.18 Process for addressing a submitter's request for
confidential treatment.
(a) Resolving requests for confidential treatment. In general, a
request by a submitter for confidential treatment of any information
shall be considered in connection with a request for access to that
information. At its discretion, the Board may act on a request for
confidentiality prior to any request for access to the documents.
(b) Notice to the submitter. (1) When the Board receives a FOIA
request for information for which a submitter has requested
confidential treatment, the Board shall promptly provide written notice
of the request to the submitter if the Board determines that it may be
required to disclose the records, provided:
(i) The requested information has been designated in good faith by
the submitter as information considered protected from disclosure under
5 U.S.C. 552(b)(4) or (b)(6); and
(ii) The Board has reason to believe that the requested information
may be
[[Page 57634]]
protected from disclosure, but has not yet determined whether the
information may be protected from disclosure.
(2) Where a submitter has not requested confidential treatment but
the Board reasonably believes the requested information may be
protected from disclosure under 5 U.S.C. 552(b)(4) or (b)(6), the Board
may notify a submitter of the receipt of a request for access to that
information and provide the submitter an opportunity to respond.
(3) The notice given to the submitter shall:
(i) Describe the information that has been requested or include a
copy of the requested records or portions of records containing the
information. In cases involving a voluminous number of submitters, the
Board may post or publish a notice in a place or manner reasonably
likely to inform the submitters of the proposed disclosure, instead of
sending individual notifications; and
(ii) Give the submitter a reasonable opportunity, not to exceed 10
working days from the date of notice, to submit written objections to
disclosure of the information.
(c) Exceptions to notice to submitter. Notice to the submitter need
not be given if:
(1) The Board determines that the information is exempt under the
FOIA and, therefore, will not be disclosed;
(2) The requested information has been lawfully published or has
been officially made available to the public;
(3) Disclosure of the information is required by a statute (other
than 5 U.S.C. 552) or by a regulation issued in accordance with the
requirements of Executive Order 12600 of June 23, 1987; or
(4) The submitter's claim of confidentiality appears obviously
frivolous or has already been denied by the Board. In such case, the
Board shall give the submitter written notice of the determination to
disclose the information at least five working days prior to
disclosure.
(d) Notice to requester. The requester shall be notified whenever:
(1) The submitter is provided with notice and an opportunity to
object to disclosure under paragraph (b) of this section;
(2) The submitter is notified of the Board's intention to disclose
the requested information; or
(3) The submitter files a lawsuit to prevent the disclosure of
information.
(e) Written objections by submitter. (1) Upon receipt of the notice
referenced in paragraph (b) of this section, a submitter that has any
objections to disclosure should provide a detailed written statement
that specifies all grounds for withholding the particular information
under any exemption identified in Sec. 261.15(a). A submitter relying
on Sec. 261.15(a)(4) as the basis for nondisclosure must explain why
the information constitutes a trade secret or commercial or financial
information that is confidential and must explain the consequences of
disclosure of the information.
(2) A submitter who fails to respond within the time period
specified in the notice will be considered to have no objection to
disclosure of the information. The Board is not required to consider
any information received after the date of any disclosure decision. Any
information provided by a submitter under this subpart, including a
written request for confidential treatment, may itself be subject to
disclosure under the FOIA.
(f) Analysis of objections. The Board's determination to disclose
any information for which confidential treatment has been requested
shall be communicated to the submitter immediately. If the Board
determines to disclose the information and the submitter has objected
to such disclosure pursuant to paragraph (e) of this section, the Board
shall provide the submitter with the reasons for disclosure and shall
delay disclosure for 10 working days from the date of the
determination.
(g) Notice of lawsuit. The Board shall promptly notify any
submitter of information covered by this section of the filing of any
legal action against the Board to compel disclosure of such
information.
Subpart C--Nonpublic Information Made Available to Supervised
Financial Institutions, Governmental Agencies, and Others in
Certain Circumstances
Sec. 261.20 General.
(a) All confidential supervisory information and other nonpublic
information, including but not limited to information made available
under this subpart, remains the property of the Board, and except as
otherwise provided in this regulation, no person, entity, agency, or
authority to whom the information is made available or who otherwise
possesses the information, including any officer, director, employee,
or agent thereof, may use any such information for an unauthorized
purpose or disclose any such information without the prior written
permission of the General Counsel.
(b) The disclosure of confidential supervisory information or other
nonpublic information in accordance with this subpart shall not
constitute a waiver by the Board of any applicable privileges.
(c) Nothing in this subpart shall be construed to limit or restrict
the authority of the Board to impose any additional conditions or
limitations on the use and disclosure of confidential supervisory
information or other nonpublic information. Further, nothing in this
subpart shall be construed to limit or restrict the authority of the
Board to make discretionary disclosures of confidential supervisory
information or other nonpublic information in addition to the
disclosures expressly provided for in this subpart.
Sec. 261.21 Confidential supervisory information made available to
supervised financial institutions.
(a) Disclosure of confidential supervisory information to
supervised financial institutions. The Board or the appropriate Reserve
Bank may disclose confidential supervisory information concerning a
supervised financial institution to that supervised financial
institution.
(b) Disclosure of confidential supervisory information by
supervised financial institutions--(1) General. Any supervised
financial institution lawfully in possession of confidential
supervisory information pursuant to this section may when necessary or
appropriate for business purposes disclose such information to its
directors, officers, or employees, and to the directors, officers, or
employees of its affiliates.
(2) Federal Deposit Insurance Corporation, Office of the
Comptroller of the Currency, Bureau of Consumer Financial Protection,
and State financial supervisory agencies. Any supervised financial
institution may, with the concurrence of the institution's central
point of contact at the Reserve Bank, equivalent supervisory team
leader, or other designated Reserve Bank employee (hereinafter,
``Reserve Bank Point of Contact'' or ``Reserve Bank POC''), disclose
confidential supervisory information about the institution that is
contained in documents prepared by or for the institution for its own
business purposes to the Federal Deposit Insurance Corporation, the
Office of the Comptroller of the Currency, the Bureau of Consumer
Financial Protection, and the State financial supervisory agency that
supervises that institution when the Reserve Bank POC determines that
the receiving agency has a legitimate supervisory or regulatory
interest in the information. A Reserve Bank POC's
[[Page 57635]]
action under this paragraph may require concurrence of other Federal
Reserve staff in accordance with internal supervisory procedures.
Requests to disclose any other confidential supervisory information to
these or other agencies should be directed to the General Counsel under
Sec. 261.22(c) or Sec. 261.23(c).
(3) Legal counsel and auditors. When necessary or appropriate in
connection with the provision of legal or auditing services to the
supervised financial institution, the supervised financial institution
may disclose confidential supervisory information to its legal counsel
or auditors. The supervised financial institution may also disclose
confidential supervisory information to service providers (such as
consultants, contractors, contingent workers, and technology providers)
of its legal counsel or auditors if the service provider is under a
written agreement with the legal counsel or auditor in which the
service provider agrees that:
(i) It will treat the confidential supervisory information in
accordance with Sec. 261.20(a); and
(ii) It will not use the confidential supervisory information for
any purpose other than as necessary to provide the services to the
supervised financial institution.
(4) Other service providers. (i) A supervised financial institution
may disclose confidential supervisory information to other service
providers engaged by the supervised financial institution if the
service provider is under a written contract to provide services to the
institution, the disclosure of the confidential supervisory information
is deemed necessary to the service provider's provision of services,
and the service provider has a written agreement with the institution
in which the service provider has agreed that:
(A) It will treat the confidential supervisory information in
accordance with Sec. 261.20(a); and
(B) It will not use the confidential supervisory information for
any purpose other than as provided under its contract to provide
services to the supervised financial institution.
(ii) A supervised financial institution shall maintain a written
account of the disclosures of confidential supervisory information that
the supervised financial institution makes to service providers under
this section and provide the Board or Reserve Bank with a copy of such
written account upon the Board's or Reserve Bank's request.
Sec. 261.22 Nonpublic information made available by the Board to
governmental agencies and entities exercising governmental authority.
(a) Disclosure to Federal and State financial institution
supervisory agencies. The Director of the Division of Supervision and
Regulation, the Director of the Division of Consumer and Community
Affairs, the General Counsel, or the appropriate Reserve Bank may, for
legitimate supervisory or regulatory purposes and with or without a
request, disclose confidential supervisory information and other
nonpublic information to the Office of the Comptroller of the Currency,
the Federal Deposit Insurance Corporation, the Bureau of Consumer
Financial Protection, and a State financial institution supervisory
agency.
(b) Disclosures pursuant to the Equal Credit Opportunity Act, the
Fair Housing Act, and the Employee Retirement Income Security Act. The
Director of the Division of Supervision and Regulation, the Director of
the Division of Consumer and Community Affairs, or the General Counsel
may disclose confidential supervisory information and other nonpublic
information concerning a supervised financial institution to:
(1) The Attorney General or to the Secretary of the Department of
Housing and Urban Development related to the enforcement of the Equal
Credit Opportunity Act (15 U.S.C. 1691 et seq.) or the Fair Housing Act
(42 U.S.C. 3601 et seq.); and
(2) The Secretary of the Department of Labor and the Secretary of
the Department the Treasury in accordance with section 3004(b) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1204(b)).
(c) Disclosure to other governmental agencies and entities
exercising governmental authority. Except as provided in paragraph (d)
or (e) of this section, other Federal, State, and local agencies,
including law enforcement agencies, and other entities exercising
governmental authority, may file written requests with the Board for
access to confidential supervisory information and other nonpublic
information under this section, including information in the form of
testimony and interviews from current or former Federal Reserve System
staff. Properly accredited foreign law enforcement agencies and other
foreign government agencies may also file written requests with the
Board in accordance with this paragraph, except that provision of
confidential supervisory information to foreign bank regulatory or
supervisory authorities is governed by 12 CFR 211.27.
(1) Contents of request. To obtain access to confidential
supervisory information or other nonpublic information under this
section, including information in the possession of a person other than
the Board, the requester shall address a letter request to the Board's
General Counsel, specifying:
(i) The particular information, kinds of information, and where
possible, the particular documents to which access is sought;
(ii) The reasons why such information cannot be obtained from the
supervised financial institution in question or another source rather
than from the Board;
(iii) A statement of the law enforcement purpose or other statutory
purpose for which the information shall be used;
(iv) A commitment that the information requested shall not be
disclosed to any person outside the requesting agency or entity without
the written permission of the General Counsel; and
(v) If the document or information requested includes customer
account information subject to the Right to Financial Privacy Act, as
amended (12 U.S.C. 3401 et seq.), any Federal agency request must
include a statement that such customer account information need not be
provided, or a statement as to why the Act does not apply to the
request, or a certification that the requesting Federal agency has
complied with the requirements of the Act.
(2) Action on request. The General Counsel may approve the request
upon determining that:
(i) The request complies with this section;
(ii) The information is needed in connection with a formal
investigation or other official duties of the requesting agency or
entity;
(iii) Satisfactory assurances of confidentiality have been given;
and
(iv) Disclosure is consistent with the supervisory and regulatory
responsibilities and policies of the Board.
(d) Federal and State grand jury, criminal trial, and government
administrative subpoenas. The General Counsel shall review and may
approve the disclosure of nonpublic information pursuant to Federal and
State grand jury, criminal trial, and government administrative
subpoenas.
(e) Conditions or limitations; written agreements. The General
Counsel may impose any conditions or limitations on disclosure that the
General Counsel determines to be necessary to effect the purposes of
this regulation, including
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the protection of the confidentiality of the Board's information, or to
ensure compliance with applicable laws or regulations. In addition,
Board or Reserve Bank staff may make disclosures pursuant to any
written agreement entered into by the Board when authorized by the
express terms of such agreement or by the General Counsel.
Sec. 261.23 Other disclosure of confidential supervisory information.
(a) Board policy. (1) It is the Board's policy regarding
confidential supervisory information that such information is
confidential and privileged. Accordingly, the Board does not normally
disclose confidential supervisory information to the public or
authorize third parties in possession of confidential supervisory
information to further use or disclose the information. When
considering a request to access, use, or to disclose confidential
supervisory information under this section, the Board will not
authorize access, use, or disclosure unless the requesting person is
able to show a substantial need to access, use, or disclose such
information that outweighs the need to maintain confidentiality.
(2) Notwithstanding any other provision of this part, the Board
will not authorize access to or disclosure of any suspicious activity
report (SAR), or any information that would reveal the existence of a
SAR, except as necessary to fulfill official duties consistent with
Title II of the Bank Secrecy Act. For purposes of this part, ``official
duties'' shall not include the disclosure of a SAR, or any information
that would reveal the existence of a SAR, in response to a request for
disclosure of nonpublic information or a request for use in a private
legal proceeding, including a request pursuant to this section.
(b) Requests in connection with litigation. Except as provided in
Sec. Sec. 261.21 and 261.22:
(1) In connection with any proposed use of confidential supervisory
information in litigation before a court, board, commission, agency, or
arbitration, any person who--
(i) Seeks access to confidential supervisory information from the
Board or a Reserve Bank (including the testimony of present or former
Board or Reserve Bank employees on matters involving confidential
supervisory information, whether by deposition or otherwise),
(ii) Seeks to use confidential supervisory information in its
possession or to disclose such information to another party, or
(iii) Seeks to require a person to disclose confidential
supervisory information to a party, shall file a written request with
the General Counsel.
(2) The request shall include:
(i) The judicial or administrative action, including the case
number and court or adjudicative body and a copy of the complaint or
other pleading setting forth the assertions in the case;
(ii) A description of any prior judicial or other decisions or
pending motions in the case that may bear on the asserted relevance of
the requested information;
(iii) A narrow and specific description of the confidential
supervisory information the requester seeks to access or to disclose
for use in the litigation including, whenever possible, the specific
documents the requester seeks to access or disclose;
(iv) The relevance of the confidential supervisory information to
the issues or matters raised by the litigation;
(v) The reason why the information sought, or equivalent
information adequate to the needs of the case, cannot be obtained from
any other source; and
(vi) A commitment to obtain a protective order acceptable to the
Board from the judicial or administrative tribunal hearing the action
preserving the confidentiality of any information that is provided.
(3) In the case of requests covered by paragraph (b)(1)(ii) of this
section, the Board may require the party to whom disclosure would
ultimately be made to substantiate its need for the information prior
to acting on any request.
(c) All other requests. Any other person seeking to access, use, or
disclose confidential supervisory information for any other purpose
shall file a written request with the General Counsel. A request under
this paragraph (c) shall describe the purpose for which access, use, or
disclosure is sought and the requester shall provide other information
as requested by the General Counsel.
(d) Action on request--(1) Determination of approval. The General
Counsel may approve a request made under this section provided that he
or she determines that:
(i) The person seeking access, or the person to whom access would
be provided, has shown a substantial need to access confidential
supervisory information that outweighs the need to maintain
confidentiality; and
(ii) Approval is consistent with the supervisory and regulatory
responsibilities and policies of the Board.
(2) Conditions or limitations. The General Counsel may, in
approving a request, impose such conditions or limitations on use of
any information disclosed as is deemed necessary to protect the
confidentiality of the Board's information.
(e) Exhaustion of administrative remedies for discovery purposes in
civil, criminal, or administrative action. Action on a request under
this section by the General Counsel is necessary in order to exhaust
administrative remedies for discovery purposes in any civil, criminal,
or administrative proceeding. A request made pursuant to Sec. 261.11
of this regulation does not exhaust administrative remedies for
discovery purposes. Therefore, it is not necessary to file a request
pursuant to Sec. 261.11 to exhaust administrative remedies under this
section.
Sec. 261.24 Subpoenas, orders compelling production, and other
process.
(a) Advice by person served. Any person (including any officer,
employee, or agent of the Board or any Reserve Bank) who is served with
a subpoena, order, or other judicial or administrative process
requiring the production of confidential supervisory information or
other nonpublic information of the Board or requiring the person's
testimony regarding such Board information in any proceeding, shall:
(1) Promptly inform the Board's General Counsel of the service and
all relevant facts, including the documents, information or testimony
demanded, and any facts relevant to the Board in determining whether
the material requested should be made available;
(2) Inform the entity issuing the process of the substance of these
rules and, in particular, of the obligation to follow the request
procedures in Sec. 261.23(b); and
(3) At the appropriate time inform the court or tribunal that
issued the process of the substance of these rules.
(b) Appearance by person served. Unless authorized by the Board or
as ordered by a Federal court in a judicial proceeding in which the
Board has had the opportunity to appear and oppose discovery, any
person who is required to respond to a subpoena or other legal process
concerning Board confidential supervisory information or other
nonpublic Board information shall attend at the time and place required
and respectfully decline to disclose or to give any testimony with
respect to the information, basing such refusal upon the provisions of
this regulation. If the court or other body orders the
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disclosure of the information or the giving of testimony, the person
having the information shall continue to decline to disclose the
information and shall promptly report the facts to the Board for such
action as the Board may deem appropriate.
(c) Civil requests for production. A litigant or non-party who is
served with a civil request for production of documents calling for
production of confidential supervisory information should proceed under
Sec. 261.23 rather than this section.
By order of the Board of Governors of the Federal Reserve
System, August 21, 2020.
Ann E. Misback,
Secretary of the Board.
[FR Doc. 2020-18806 Filed 9-14-20; 8:45 am]
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