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FEDERAL RESERVE BANK OF NEW YORK Circular No. 10830 January 23,1996 PROPOSED AMENDMENTS TO REGULATION S Comments Invited by February 20 ToAll Depository Institutions in the Second Federal Reserve District, and Others Concerned: Printed on the following pages is the text o f a proposal by the Board o f G overnors o f the Federal Reserve System to am end Subpart A o f its R egulation S, “R eim bursem ent for Providing Financial Records; R ecordkeeping R equirem ents for Certain Financial Records,” w hich has been published in the F e d e ra l R e g iste r. The proposed am endm ents update the fees that financial institu tions may charge for assem bling or providing financial records pursuant to the Right to Financial Privacy A ct and stream lines the subpart generally. C om m ents on the proposal should be subm itted by February 20, and may be sent to the Board of Governors, as specified in the B oard’s notice, or to our C om pliance Exam inations Departm ent. W illiam J. M cD onough, President. 65599 Proposed Rules Federal Register Vol. 60, No. 244 W ednesday, December 20, 1995 This section of the FEDERAL REGISTER contains notices to the public of 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. FEDERAL RESERVE SYSTEM 12CFR Part 219 [R egulation S; D ocket No. R-0906] Reimbursement for Providing Financial Records; Recordkeeping Requirements for Certain Financial Records Board of Governors' of the Federal Reserve System. ACTION: Proposed rule. AGENCY: The Board of Governors of the Federal Reserve System (Board) is proposing amendments to Subpart A of Regulation S, which implements the requirement under the Right to Financial Privacy Act (RFPA) that the Board establish the rates and conditions under which payment shall be made by a government authority to a Financial institution for assembling or providing financial records pursuant to RFPA. These proposed amendments update the fees to be charged and streamlines the subpart generally. SUMMARY: DATES: C om m ents m ust b e subm itted on or before February 20, 1996. ADDRESSES: C om m ents sh o u ld refer to D ocket No. R—0 9 0 6 , an d m ay be m ailed to W illiam W. W iles, Secretary, Board of Governors o f the Federal Reserve System , 20th Street and C onstitution A ven u e, N .W ., W ashington, D.C. 20551. C om m ents also m ay be d eliv ered to Room B -2 2 2 2 of the E ccles B u ild in g b etw een 8:45 a.m. and 5:15 p.m . w eek d ays, or to the guard station in the E ccles B uild in g courtyard on 20th Street, N.W. (betw een C onstitution A ven u e and C Street) at any tim e. C om m ents received w ill be available for in sp ectio n in Room M P -5 0 0 o f the Martin B uild in g b etw een 9:00 a.m. and 5:00 p.m . w eek d ays, ex cep t as provided in 12 CFR 261.8 o f the B oard’s rules regarding availab ility o f inform ation. FOR FURTHER INFORMATION CONTACT: Elaine M. Boutilier, Senior Counsel (2 0 2 /4 5 2 —2418), Legal Division, Board of Governors of the Federal Reserve System, Washington, DC 20551. For users o f the T eleco m m u n ica tio n D evice for the D eaf (TDD), p lea se contact Dorothea T h om p son (2 0 2 /4 5 2 -3 5 4 4 ). SUPPLEMENTARY INFORMATION: B ackground S ection 1115 o f the RFPA (12 U.S.C. 3415) requires th e Board to estab lish , by regulation, the rates and co fid itio n s u n d er w h ich p aym en t is m ade by a G overnm ent authority to a financial in stitu tio n for searching for, reproducing, or transporting data required or requested u nder the RFPA. Shortly after the RFPA w as ad op ted , the Board issu ed R egulation S (12 CFR 219) to im p lem en t this p rovision (44 FR 55812, Septem ber 28, 1979). N o changes to the rates have b een m ade sin ce that tim e. In January 1995, the Board ad op ted a n e w Subpart B o f R egulation S (to b ecom e effective on January 1, 1996 ') and d esign ated th is part o f R egulation S as Subpart A. 60 FR 231 (January 3, 1995) N o substantive ch an ges w ere m ade to the n e w ly d esign ated Subpart A. Pursuant to sectio n 303 of the R iegle C om m unity D evelop m en t and Regulatory Im provem ent A ct o f 1994, Pub. L. 1 0 3 325 (12 U.S.C. 4803), the Board has rev ie w ed Subpart A o f R egulation S and p ro p o ses to update it through these am en d m en ts. T h ese am endm ents stream line the regulation by elim in a tin g u n n ecessary p ro v isio n s, and they up d ate the rates to be paid and the e x cep tio n s to the p ro v isio n s o f this Subpart. I. D efin itio n s T he d efin itio n s in Subpart A reiterate the statutory d e fin itio n s from the RFPA for the ap p licab le term s of th is Subpart. T he d efin itio n for “ d irectly incurred c o sts” has b een rem oved and incorporated into the sectio n concerning cost reim bursem ent. II. C ost R eim b u rsem en t T h is section has b een stream lined and reorganized to p lace the rates in a separate A p p en d ix A for clarity and ease o f am endm ent w h en updating the rates. T he p rop osed am endm ents also recogn ize that courts issu in g orders or sub p oen as in co n n ectio n w ith grand jury p roceed in gs m ust pay the rates set by Subpart A. 1 In a ru lem aking issued on A u gu st 24, 1995 (GO FR 44144), the e ffe c tiv e date o f Subpart B has been d ela y ed until A p r il 1, 199G. III. R a tes 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 FOIA 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 T he p rop osed fees for search and p rocessin g are separated into tw o categories— cler ic a l/tech n ica l and m anager/supervisory. A n y search for se n sitiv e custom er records is lik ely to in v o lv e both clerical staff and m anagerial staff, w h o are paid at different lev els. T he rates set for this reim bursem ent w ere calcu lated u sin g th e 1994 Bank Cash C om pensation Survey d on e by the Bank A d m in istration Institute. B ased upon th e job d escrip tion s in the Cash C om p en sation Survey, the p o sitio n of Supervisor, B ookkeeping w as u sed to ca lcu la te the m anagerial rate. The ca lcu la tio n w as m ade based u pon the total com p en sation (w ith bonus) for all banks on a national average ($27,600) d iv id e d by 2080 hours, adjusted up by 25% to cover b en efits, and further adjusted by 3% for in flation sin ce 1994. T h e clerical rate w as calcu lated in the sam e w ay, but u sin g an average o f the tw o job p o sitio n s o f Clerk II (B ookkeeping and O perations @ $1 8 ,1 0 0 ) and Clerk I (B ookkeeping and O perations @ $ 1 5,100). The Board is very interested in receivin g com m ents on the rates and the m eth od o f calcu lation . 65600 Federal Register / Vol. 60, No. 244 / Wednesday, December 20, 1995 / Proposed Rules IV. E xception s T his section has b een updated to reflect changes in the ex cep tio n s listed by the RFPA. V. C on dition s fo r P a ym en t a n d P a ym en t P rocedu res N o substantive changes have been m ade to these tw o section s. R egulatory F lex ib ility A ct Pursuant to 5 U.S.C. 605, the Board certifies that th is proposed rule, if adopted, w ill not have a significant eco n o m ic im pact on a substantial num ber o f sm all en tities. .The p rop osed rule confers a benefit on financial in stitu tion s, in clu d in g sm all financial in stitu tion s, by providing for reim bursem ent o f certain costs incurred in com p lyin g w ith a requirem ent to assem ble and produce fin an cial records. P ap erw ork R eduction A ct In accordance w ith sectio n 3506 o f the Paperwork R eduction A ct o f 1995 (44 U.S.C. Ch. 35; 5 CFR 1320 A p p en d ix A .l), the Board rev ie w ed the proposed rule under the authority delegated to the Board by the O ffice o f M anagem ent and Budget. C om m ents on the c o lle c tio n s o f inform ation sh ou ld be sen t to the O ffice o f M anagem ent and B udget, Paperwork R eduction Project (7 1 0 0 -0 2 0 3 ), W ashington, DC 205 0 3 , w ith c o p ies o f su ch com m ents to be sent to Mary M. M cL aughlin, Federal Reserve Board Clearance Officer, D iv isio n o f R esearch and Statistics, M ail Stop 97, Board o f G overnors o f the Federal Reserve System , W ashington, DC 20551. T he Right to F inancial Privacy A ct m andates that each fin an cial in stitu tion m aintain a record o f in sta n ces in w h ic h it releases a con su m er’s financial inform ation to a governm ent agency. G enerally, the in stitu tion m ay not release records u n til the governm ent agency has notified the con su m er o f its intent to request the record, together w ith the reason for the request. N orm ally, the agency m ay not obtain records u n less it has a subpoena, a search warrant, or an authorization from the consum er. T he Federal R eserve m ay n o t co n d u ct or sponsor, and an organization is not required to respond to, th is inform ation co llectio n u n less it d isp la y s a currently valid OMB control num ber. T he OMB control num ber for the R ecordkeeping and D isclosure R equirem ents in C onnection w ith the Right to F inancial Privacy A ct is 7 1 0 0 -0 2 0 3 . B ecause the records w o u ld be m aintained at banks, no issu e of con fid en tiality under the Freedom of Inform ation Act arises. T h is proposed regulation, 12 CFR 219, has no effect upon the paperwork burden associated w ith the R ecordkeeping and D isclosu re R equirem ents in C onnection w ith the Right to F inancial Privacy A ct. That hour burden is estim ated to be 22 m in u tes per response. It is estim ated that the frequency o f resp on se at state m em ber banks is 30 resp on ses per year. T hus the annual hour burden across the 975 state m em ber banks is estim ated to be 10,725 hours. Based on an hourly cost o f $20, the annual cost to the p u b lic is estim ated to be $ 2 14,500. List o f Subjects in 12 CFR Part 219 Banks, banking, Currency, Federal Reserve System, Foreign banking, Reporting and recordkeeping requirements. For the reasons set out in the pream ble, 12 CFR Part 219, as am en d ed at 60 FR 231 and 44144 effective A pril 1 ,1 9 9 6 , is proposed to be am en d ed as set forth below . PART 219— REIMBURSEMENT FOR PROVIDING FINANCIAL RECORDS; RECORDKEEPING REQUIREMENTS FOR CERTAIN FINANCIAL RECORDS (REGULATION) Subpart A— Reimbursement to Financial Institutions for Providing Financial Records 1. The authority citation for Subpart A continues to read as follows: Authority: 12 U.S.C. 3415 2. Subpart A is am en d ed by revising §§ 219.2 through 219.6 to read as follow s: §219.2 D efinitions. For the purposes o f th is subpart, the fo llo w in g d efin ition s sh all apply: C u sto m er m eans any person or authorized representative o f that person w h o u ses any service of a financial in stitu tio n , or for w h om a financial in stitu tio n acts or has acted as a fiduciary in relation to an account m ain tain ed in the p erso n ’s nam e. C ustom er does not in clu d e corporations or partnerships com prised o f more than fiv e persons. F in an cial in stitu tio n m eans any office o f a bank, savings bank, card issu er as d efin ed in section 103 o f the C onsum ers Credit Protection A ct (15 U.S.C. 1602(n)), industrial loan com pany, trust com p an y, savings association , building and loan, or hom estead association (in clu d in g cooperative banks), credit u n io n , or consum er finance* in stitu tion , located in any State or territory o f the U n ited States, the District o f C olum bia, Puerto Rico, Guam, American Samoa, or the Virgin Islands. F in an cial reco rd m eans an original or co p y of, or inform ation k n ow n to have b een derived from, any record held by a financial in stitu tion pertaining to a cu sto m er’s relation sh ip w ith the fin an cial institution. G o vern m en t a u th o rity m eans any agen cy or departm ent o f the U nited States, or any officer, e m p lo y ee or agent thereof. P erson m eans an in d iv id u a l or a partnership o f five or few er in d ivid u als. § 219.3 C ost reim b ursem ent. (a) Fees p a y a b le . E xcept as provided in § 219.4, a governm ent authority, or a court issu in g an order or subpoena in co n n ectio n w ith grand jury p roceed in gs, seek in g a ccess to fin an cial records pertaining to a cu stom er sh all reim burse the financial in stitu tio n for reasonably n ecessary costs directly incurred in search in g for, reproducing or transporting books, papers, records, or other data as set forth in th is section. T h e reim bursem ent sch ed u le for a fin an cial in stitu tion is set forth in A p p e n d ix A to th is section . If a fin an cial in stitu tion has financial records that are stored at an in d ep en d en t storage facility that charges a fee to search for, reproduce, or transport particular records requested, th ese costs are con sid ered to be directly incurred by the financial in stitu tion and m ay be in clu d ed in the reim bursem ent. (b) Search a n d p ro c e ssin g costs. (1) R eim bursem ent o f search and p rocessin g costs sh all cover the total am ou n t o f personnel tim e sp en t in locatin g, retrieving, reproducing, and preparing financial records for sh ip m en t. Search and p rocessin g costs sh a ll not cover an alysis o f m aterial or legal ad vice. (2) If item ized separately, search and p ro cessin g costs m ay in clu d e the actual cost o f extracting inform ation stored by com p u ter in the format in w h ich it is n orm ally produced, based on com puter tim e and necessary su p p lies; how ever, p erso n n el tim e for com puter search m ay be p aid for on ly at the rates sp ecified in A p p e n d ix A to th is section. (c) R e p ro d u ctio n co sts. T he reim bursem ent rates for reproduction c o sts for requested d o cu m en ts are set forth in A p p en d ix A to th is section. C op ies o f photographs, film s, com puter tapes, and other m aterials not listed in A p p e n d ix A to this section are reim bursed at actual cost. (d) T ran sportation co sts. R eim bursem ent for transportation costs sh a ll be for the reasonably necessary co sts d irectly incurred to transport p erson n el to locate and retrieve the 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 ....................... .15 Paper copies of microfiche, per frame ................................................ Duplicate m icrofiche, per micro fiche .................................................. Computer diskette ........................... Search and Processing: Clerical/Technical, hourly rate ... Manager/Supervisory, hourly rate .................................................... §219.4 .15 .30 5.00 11.00 17.00 E xcep tio ns. A fin an cial in stitu tio n is n ot en titled to reim bursem ent u n d er this subpart for costs incurred in a ssem b lin g or provid in g fin a n cia l records or inform ation related to: (a) S e c u rity in terests, b a n k ru p tc y cla im s, d e b t co llectio n . A ny fin an cial records p rovid ed as an in c id e n t to perfecting a secu rity interest, proving a claim in bankruptcy, or oth erw ise co llectin g on a debt ow in g either to the financial in stitu tio n itse lf or in its role as a fiduciary. (b) G o vern m en t lo a n program s. F in an cial records that are necessary to perm it the appropriate governm ent authority to carry out its resp o n sib ilities under a govern m en t loan , loan guaranty or loan in su ran ce program. (c) N o n id e n tifia b le in fo rm a tio n . F inancial records that are not id en tified w ith or id en tifia b le as b ein g derived from the fin an cial records o f a particular custom er. (d) F in a n cia l su p e r v iso r y agen cies. F inancial records d isc lo se d to a fin an cial su p ervisory agency in the ex ercise o f its su p ervisory, regulatory, or m onetary fu n ctio n s w ith respect to a financial in stitu tio n . (e) In tern a l R even u e su m m o n s. F in an cial records d isc lo se d in accordance w ith p rocedures authorized by the Internal R even u e Code. (f) F e d e ra lly re q u ire d reports. F inancial records required to be reported in accordance w ith any federal statute or rule prom ulgated thereunder. (g) G o vern m en t c iv il or crim in a l litig a tio n . F in an cial records sought by a governm ent authority under the Federal R ules o f C ivil or C rim inal Procedure or com parable ru les o f other courts in co n n ectio n w ith litigation to w h ich the governm ent authority and the custom er are parties. (h) A d m in is tr a tiv e a g en cy su b p o en a s. F in an cial records sought by a governm ent authority pursuant to an adm inistrative su b p oen a issu ed by an adm inistrative la w judge in an adjudicatory p ro ceed in g subject to 5 U.S.C. 554, and to w h ich the governm ent authority and the custom er are parties. (i) In vestig a tio n o f fin a n c ia l in stitu tio n or its n o n cu sto m er. F inancial records sought by a governm ent authority in c o n n ectio n w ith a law fu l p roceeding, in v estig a tio n , exam in ation , or in sp ectio n d irected at the fin an cial in stitu tion in p o sse ssio n o f su ch records, or at an en tity that is not a custom er as d efin ed in § 219.2. (j) G eneral A c c o u n tin g O ffice requ ests. Financial records sought by the General Accounting Office pursuant to an authorized proceeding, investigation, examination, or audit directed at a government authority. (k) F ederal H o u sin g F in an ce B oard requ ests. F in a n cia l records or inform ation sou gh t b y the Federal H ousing F in an ce Board (FHFB) or any o f the Federal h o m e loan banks in the ex ercise o f the FH FB’s authority to exten d credit to fin a n cia l in stitu tio n s or others. (l) D ep a rtm en t o f V eteran s A ffairs. T he d isclosu re o f the nam e and address o f any cu stom er to th e D epartm ent of V eterans Affairs w h ere su ch d isclosu re is necessary to, an d u sed so le ly for, the proper ad m in istration o f benefits programs under la w s adm inistered by that Departm ent. §219.5 C o n d itio n s fo r paym ent. (a) D irect co sts. Paym ent sh a ll be m ade o n ly for co sts that are both d irectly incurred an d reasonably n ecessary to p ro v id e requested m aterial. Search and p rocessin g, reproduction, and transportation co sts sh all be con sid ered separately w h en determ ining w h eth er the costs are reasonably n ecessary. (b) C o m p lia n ce w ith leg a l p ro cess, requ est, or a u th o riza tio n . N o paym ent m ay be m ade to a fin an cial in stitu tion u n til it satisfactorily co m p lies w ith the legal process, the form al w ritten request, or the cu stom er authorization. W hen the legal p rocess or form al w ritten request is w ithdraw n, or the cu stom er authorization is revok ed , or w here the custom er su c c e ssfu lly ch allen ges d isclosu re to a grand jury or governm ent authority, the fin an cial in stitu tion shall be reim bursed for the reasonably necessary costs incurred in assem bling the requested fin an cial records prior to the tim e the fin an cial in stitu tio n is n otified o f su ch even t. (c) I te m ize d b ill o r in vo ice. No reim bursem ent is required u n less a financial in stitu tio n su b m its an item ized b ill or in v o ic e sp ecifica lly 65601 detailing its search and p rocessing, reproduction, and transportation costs. §219.6 P aym ent p rocedures. (a) N o tic e to su b m it in vo ice. Prom ptly fo llo w in g a serv ice o f legal p rocess or request, the court or governm ent authority sh a ll n o tify the financial in stitu tio n that it m u st subm it an item ized b ill or in v o ic e in order to obtain p aym en t and sh a ll furnish an address for th is purpose. (b) S p e c ia l n o tic e . If a grand jury or governm ent authority w ith d raw s the legal p rocess or form al w ritten request, or if the cu stom er revok es the authorization, or if the legal p rocess or request has b een su c cessfu lly ch a llen g ed by th e cu stom er, the grand jury or govern m en t authority sh all prom ptly n o tify th e fin an cial in stitu tion o f th ese facts, and sh a ll also n otify the financial in stitu tio n that it m ust subm it an item ized b ill or in v o ic e in order to obtain p aym en t o f co sts incurred prior to the tim e df th e n o tice to the financial in stitu tio n receiv es th is n otice. 3. S ection 2 19.7 is rem oved. By order o f the Board of Governors of the Federal Reserve System , December 13, 1995. William W. Wiles, Secretary of the Board. [FR Doc. 9 5 -3 0 7 2 5 Filed 1 2 -1 9 -9 5 ; 8:45 am] BILLING CODE 621 0-0 1-P
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