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F ederal R eserve Bank OF DALLAS TONY J . S A L V A G G IO FIR S T V IC E PR ES ID EN T January 19, 1996 DALLAS, TEXAS 75265-5906 Notice 96-07 TO: The Chief Operating Officer of each financial institution in the Eleventh Federal Reserve District SUBJECT Proposed Revision to Regulation S (Reimbursement to Financial Institutions for Assembling or Providing Financial Records) DETAILS The Board of Governors of the Federal Reserve System is requesting public comment on a proposed revision of Subpart A of Regulation S (Reimbursement to Financial Institutions for Assembling or Providing Financial Records). The Board proposes to streamline the regulation by eliminating unnecessary provisions, by updating the rates to be charged for assembling or providing financial records, and by updating the exceptions to the provisions of this Subpart. The Board must receive comments by February 20, 1996. Please address comments to William W. Wiles, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, N.W., Washington, D.C. 20551. All comments should refer to Docket No. R-0906. ATTACHMENT A copy of the Board’s notice as it appears on pages 65599-601, Vol. 60, No. 244, of the Federal Register dated December 20, 1995, is attached. MORE INFORMATION For more information, please contact James D ean at (214) 922-6237. For additional copies of this Bank’s notice, please contact the Public Affairs Departm ent at (214) 922-5254. Sincerely, For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal Reserve Bank of Dallas: Dallas Office (800) 333 -4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; Houston Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) 65599 Proposed Rules Federal Register Vol. 60, No. 244 Wednesday, December 20, 1995 This section of the FEDERAL REGISTER contains notices to the public ot the proposed issuance of rules and regulations. The purpose of these notices is to give interested persons an opportunity to participate in the rule making prior to the adoption of the final rules. users of the Telecommunication Device for the Deaf (TDD), please contact Dorothea Thompson (202/452-3544). SUPPLEMENTARY INFORMATION: Background Section 1115 of the RFPA (12’U.S.C. 3415) requires the Board to establish, by regulation, the rates and conditions FEDERAL RESERVE SYSTEM under which payment is made by a 12 CFR Part 219 Government authority to a financial institution for searching for, [Regulation S; Docket No. R-0906] reproducing, or transporting data Reimbursement for Providing Financial required or requested under the RFPA. Shortly after the RFPA was adopted, the Records; Recordkeeping Board issued Regulation S (12 CFR 219) Requirements for Certain Financial to implement this provision (44 FR Records 55812, September 28,1979). No changes AGENCY: Board of Governors of the to the rates have been made since that Federal Reserve System. time. In January 1995, the Board ACTION: P roposed ru le . adopted a new Subpart B of Regulation S (to become effective on January 1, SUMMARY: The Board of Governors of the 1996 ') and designated this part of Federal Reserve System (Board) is Regulation S as Subpart A. 60 FR 231 proposing amendments to Subpart A of (January 3,1995) No substantive Regulation S, which implements the changes were made to the newly requirement under the Right to designated Subpart A. Pursuant to Financial Privacy Act (RFPA) that the section 303 of the Riegle Community Board establish the rates and conditions Development and Regulatory under which payment shall be made by .Improvement Act of 1994, Pub. L. 103 a government authority to a financial 325 (12 U.S.C. 4803), the Board has institution for assembling or providing reviewed Subpart A of Regulation S and financial records pursuant to RFPA. proposes to update it through these These proposed amendments update the amendments. These amendments fees to be charged and streamlines the streamline the regulation by eliminating subpart generally. unnecessary provisions, and they DATES: Comments must be submitted on update the rates to be paid and the or before February 20,1996. exceptions to the provisions of this ADDRESSES: Comments should refer to Subpart. Docket No. R-0906, and may be mailed I. Definitions to William W. Wiles, Secretary, Board of The definitions in Subpart A reiterate Governors of the Federal Reserve the statutory definitions from the RFPA System, 20th Street and Constitution Avenue, N.W., Washington, D.C. 20551. for the applicable terms of this Subpart. The definition for “directly incurred Comments also may be delivered to costs” has been removed and Room B-2222 of the Eccles Building incorporated into the section concerning between 8:45 a.m. and 5:15 p.m. cost reimbursement. weekdays, or to the guard station in the Eccles Building courtyard on 20th II. Cost Reimbursement Street, N.W. (between Constitution This section has been streamlined and Avenue and C Street) at any time. Comments received will be available for reorganized to place the rates in a separate Appendix A for clarity and inspection in Room MP-500 of the ease of amendment when updating the Martin Building between 9:00 a.m. and rates. The proposed amendments also 5:00 p.m. weekdays, except as provided recognize that courts issuing orders or in 12 CFR 261.8 of the Board’s rules subpoenas in connection with grand regarding availability of information. jury proceedings must pay the rates set FOR FURTHER INFORMATION CONTACT: by Subpart A. Elaine M. Boutilier, Senior Counsel (202/452-2418), Legal Division, Board 1 In a rulemaking issued on August 24,1995 (60 of Governors of the Federal Reserve FR 44144), the effective date of Subpart B has been System, Washington, DC 20551. For delayed until A pril 1,1996. III. Rates The Board is particularly interested in receiving comments on the rates proposed in Appendix A. It is difficult to establish rates to be applied across all geographic regions and to all depository institutions, regardless of size. While recognizing this difficulty, the Board nevertheless proposes a uniform rate in the belief that administration of a complex fee schedule would be difficult. A. Reproduction The rates proposed for reproduction are the same rates used by the Board to charge requesters seeking documents under the Freedom of Information Act (FOIA). The Board establishes its FOLA fees based upon the actual costs of making such reproductions and believes that these costs are similar to those incurred by other entities. The Board welcomes comments on the appropriateness of the proposed fees and any suggested alternative methods of determining the fees. B. Search and Processing The proposed fees for search and processing are separated into two categories—clerical/technical and manager/supervisory. Any search for sensitive customer records is likely to involve both clerical staff and managerial staff, who are paid at different levels. The rates set for this reimbursement were calculated using the 1994 Bank Cash Compensation Survey done by the Bank Administration Institute. Based upon the job descriptions in the Cash Compensation Survey, the position of Supervisor, Bookkeeping was used to calculate the managerial rate. The calculation was made based upon the total compensation (with bonus) for all banks on a national average ($27,600) divided by 2080 hours, adjusted up by 25% to cover benefits, and further adjusted by 3% for inflation since 1994. The clerical rate was calculated in the same way, but using an average of the two job positions of Clerk II (Bookkeeping and Operations @ $18,100) and Clerk I (Bookkeeping and Operations @$15,100). The Board is very interested in receiving comments on the rates and the method of calculation. 65600 Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Proposed Rules This proposed regulation, 12 CFR 219, Puerto Rico, Guam, American Samoa, or the Virgin Islands. has no effect upon the paperwork Financial record means an original or burden associated with the copy of, or information known to have Recordkeeping and Disclosure been derived from, any record held by Requirements in Connection with the a financial institution pertaining to a V. Conditions for Payment and Payment Right to Financial Privacy Act. That customer’s relationship with the Procedures hour burden is estimated to be 22 financial institution. minutes per response. It is estimated No substantive changes have been Government authority means any that the frequency of response at state made to these two sections. agency or department of the United member banks is 30 responses per year. Regulatory Flexibility Act Thus the annual hour burden across the States, or any officer, employee or agent thereof. 975 state member banks is estimated to Pursuant to 5 U.S.C. 605, the Board Person means-an individual or a be 10,725 hours. Based on an hourly certifies that this proposed rule, if cost of $20, the annual cost to the public partnership of five or fewer individuals. adopted, will not have a significant is estimated to be $214,500. economic impact on a substantial § 219.3 Cost reimbursement number of small entities. The proposed (a) Fees payable. Except as provided List o f Subjects in 12 CFR Part 219 rule confers a benefit on financial in § 219.4, a government authority, or a Banks, banking, Currency, Federal institutions, including small financial court issuing an order or subpoena in Reserve System, Foreign banking, institutions, by providing for connection with grand jury proceedings, Reporting and recordkeeping reimbursement of certain costs incurred seeking access to financial records requirements. in complying with a requirement to pertaining to a customer shall reimburse For the reasons set out in the assemble and produce financial records. the financial institution for reasonably preamble, 12 CFR Part 219, as amended necessary costs directly incurred in Paperwork Reduction Act at 60 FR 231 and 44144 effective April searching for, reproducing or .1,1996, is proposed to be amended as In accordance with section 3506 of transporting books, papers, records, or set forth below. the Paperwork Reduction Act of 1995 other data as set forth in this section. (44 U.S.C. Ch. 35; 5 CFR 1320 Appendix The reimbursement schedule for a PART 219—REIMBURSEMENT FOR A.l), the Board reviewed the proposed financial institution is set forth in rule under the authority delegated to the PROVIDING FINANCIAL RECORDS; Appendix A to this section. If a RECORDKEEPING REQUIREMENTS Board by the Office of Management and financial institution has financial Budget. Comments on the collections of FOR CERTAIN FINANCIAL RECORDS records that are stored at an (REGULATION) information should be sent to the Office independent storage facility that charges of Management and Budget, Paperwork a fee to search ior, reproduce, or Subpart A—Reimbursement to Reduction Project (7100-0203), transport particular records requested, Financial Institutions for Providing Washington, DC 20503, with copies of these costs are considered to be directly Financial Records such comments to be sent to Mary M. incurred by the financial institution and McLaughlin, Federal Reserve Board may be included in the reimbursement. 1. The authority citation for Subpart Clearance Officer, Division of Research (b) Search and processing costs. (1) A continues to read as follows: and Statistics, Mail Stop 97, Board of Reimbursement of search and Authority: 12 U.S.C. 3415 Governors of the Federal Reserve processing costs shall cover the total System, Washington, DC 20551. 2. Subpart A is amended by revising amount of personnel time spent in The Right to Financial Privacy Act §§ 219.2 through 219.6 to read as locating, retrieving, reproducing, and mandates that each financial institution follows: preparing financial records for maintain a record of instances in which shipment. Search and processing costs §219.2 Definitions. it releases a consumer’s financial shall not cover analysis of material or For the purposes of this subpart, the information to a government agency. legal advice. following definitions shall apply: Generally, the institution may not (2) If itemized separately, search and Customer means any person or release records until the government processing costs may include the actual authorized representative of that person cost of extracting information stored by agency has notified the consumer of its who uses any service of a financial intent to request the record, together computer in the format in which it is institution, or for whom a financial with the reason for the request. normally produced, based on computer institution acts or has acted as a Normally, the agency may not obtain time and necessary supplies; however, records unless it has a subpoena, a fiduciary in relation to an account personnel lime for computer search may ^search warrant, or an authorization from maintained in the person’s name. be paid for only at the rates specified in Customer does not include corporations Appendix A to this section. the consumer. The Federal Reserve may not conduct or partnerships comprised of more than (c) Reproduction costs. The five persons. or sponsor, and an organization is not reimbursement rates for reproduction Financial institution means any office costs for requested documents are set required to respond to, this information of a bank, savings bank, card issuer as collection unless it displays a currently forth in Appendix A to this section. defined in section 103 of the Consumers Copies of photographs, films, computer valid OMB control number. The OMB control number for the Recordkeeping Credit Protection Act (15 U.S.C. tapes, and other materials not listed in 1602(n)), industrial loan company, trust Appendix A to this section are and Disclosure Requirements in Connection with the Right to Financial reimbursed at actual cost. company, savings association, building (d) Transportation costs. Privacy Act is 7100-0203. and loan, or homestead association Reimbursement for transportation costs (including cooperative banks), credit Because the records would be shall be for the reasonably necessary union, or consumer finance institution, maintained at banks, no issue of costs directly incurred to transport located in any State or territory of the confidentiality under the Freedom of personnel to locate and retrieve the United States, the District of Columbia, Information Act arises. IV. Exceptions This section has been updated to reflect changes in the exceptions listed by the RFPA. Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Proposed Rules requested information, and to convey such material to the place of examination. Appendix A to §219.3— Reimbursement Schedule Reproduction: Photocopy, per page ..................... Paper copies of microfiche, per frame ............................................ Duplicate microfiche, per micro fiche .............................................. Computer d isk ette......................... Search and Processing: Clerical/Technical, hourly rate ... Manager/Supervisory, hourly rate................................................ §219.4 .15 .15 .30 5.00 11.00 17.00 Exceptions. A financial institution is not entitled to reimbursement under this subpart for costs incurred in assembling or providing financial records or information related to: (a) Security interests, bankruptcy claims, debt collection. Any financial records provided as an incident to perfecting a security interest, proving a claim in bankruptcy, or otherwise collecting on a debt owing either to the financial institution itself or in its role as a fiduciary. (b) Government loan programs. Financial records that are necessary to permit the appropriate government authority to carry out its responsibilities under a government loan, loan guaranty or loan insurance program. (c) Nonidentifiable information. Financial records that are not identified with or identifiable as being derived from the financial records of a particular customer. (d) Financial supervisory agencies. Financial records disclosed to a financial supervisory agency in the exercise of its supervisory, regulatory, or monetary functions with respect to a financial institution. (e) internal Revenue summons. Financial records disclosed in accordance with procedures authorized by the Internal Revenue Code. ' (f) Federally required reports. Financial records required to be reported in accordance with any federal statute or rule promulgated thereunder. (g) Government civil or criminal litigation. Financial records sought by a government authority under the Federal Rules of Civil or Criminal Procedure or comparable rules of other courts in connection with litigation to which the government authority and the customer are parties. (h) Administrative agency subpoenas. Financial records sought by a government authority pursuant to an administrative subpoena issued by an administrative law judge in an adjudicatory proceeding subject to 5 U.S.C. 554, and to which the government authority and the customer are parties. (i) Investigation o f financial institution or its noncustomer. Financial records sought by a government authority in connection with a lawful proceeding, investigation, examination, or inspection directed at the financial institution in possession of such records, or at an entity that is not a customer as defined in § 219.2. (j) General Accounting Office requests. Financial records sought by the General Accounting Office pursuant to an authorized proceeding, investigation, examination, or audit directed at a government authority. (k) Federal Housing Finance Board requests. Financial records or information sought by the Federal Housing Finance Board (FHFB) or any of the Federal home loan banks in the exercise of the FHFB’s authority to extend credit to financial institutions or others. (1) Department o f Veterans Affairs. The disclosure of the name and address of any customer to the Department of Veterans Affairs where such disclosure is necessary to, and used solely for, the proper administration of benefits programs under laws administered by that Department. § 219.5 Conditions for payment (a) Direct costs. Payment shall be made only for costs that are both directly incurred and reasonably necessary to provide requested material. Search and processing, reproduction, and transportation costs shall be considered separately when determining whether the costs are reasonably necessary. (b) Compliance with legal process, request, or authorization. No payment may be made to a financial institution until it satisfactorily complies with the legal process, the formal written request, or the customer authorization. When the legal process or formal written request is withdrawn, or the customer authorization is revoked, or where the customer successfully challenges disclosure to a grand jury or government authority, the financial institution shall be reimbursed for the reasonably necessary costs incurred in assembling the requested financial records prior to the time the financial institution is notified of such event. (c) Itemized bill or invoice. No reimbursement is required unless a financial institution submits an itemized bill or invoice specifically 65601 detailing its search and processing, reproduction, and transportation costs. §219.6 Payment procedures. (a) Notice to submit invoice. Promptly following a service of legal process or request, the court or government authority shall notify the financial institution that it must submit an itemized bill or invoice in order to obtain payment and shall furnish an address for this purpose. (b) Special notice. If a grand jury or government authority withdraws the legal process or formal written request, or if the customer revokes the authorization, or if the legal process or request has been successfiilly challenged by the customer, the grand jury or government authority shall promptly notify the financial institution of these facts, and shall also notify the financial institution that it must submit an itemized bill or invoice in order to obtain payment of costs incurred prior to the time of the notice to the financial institution receives this notice. 3. Section 219.7 is removed. By order of the Board of Governors of the Federal Reserve System, December 13,1995. William W. Wiles, Secretary o f the Board. [FR Doc. 95-30725 Filed 12-19-95; 8:45 am] BILUNG CODE 6 2 1 0 -0 1 -P
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