[Federal Register Volume 73, Number 159 (Friday, August 15, 2008)]
[Proposed Rules]
[Pages 47854-47857]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-18898]
=======================================================================
-----------------------------------------------------------------------
FEDERAL RESERVE SYSTEM
12 CFR Part 219
[Regulation S; Docket No. R-1325]
Reimbursement for Providing Financial Records; Recordkeeping
Requirements for Certain Financial Records
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Proposed rule; request for comments.
-----------------------------------------------------------------------
SUMMARY: 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 take account of
recent advances in electronic document productions.
DATES: Comments must be submitted on or before September 29, 2008.
ADDRESSES: You may submit comments, identified by Docket No. R-1325, by
any of the following methods:
Agency Web Site: http://www.federalreserve.gov. Follow the
instructions for submitting comments at: http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail: [email protected]. Include the
docket number in the subject line of the message.
Fax: (202) 452-3101.
Mail: Jennifer J. Johnson, Secretary, Board of Governors
of the Federal Reserve System, 20th Street and Constitution Avenue,
NW., Washington, DC 20551.
All public comments are available from the Board's Web site at
http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical reasons. Accordingly, your
comments will not be edited to remove any identifying or contact
information. Public comments may also be viewed electronically or in
paper in Room MP-500 of the Board's Martin Building (20th and C
Streets, NW.) between 9 a.m. and 5 p.m. on weekdays.
FOR FURTHER INFORMATION CONTACT: Jason Gonzalez, Senior Attorney (202/
452-3275), Legal Division, Board of Governors of the Federal Reserve
System, Washington, DC 20551. For users of the Telecommunication Device
for the Deaf (TDD), please call (202) 263-4869.
SUPPLEMENTARY INFORMATION:
Background
Section 1115 of the RFPA (12 U.S.C. 3415) requires the Board to
establish, by regulation, the rates and conditions under which payment
is made by a Government authority to a financial institution for
searching for, reproducing, or transporting data required or requested
under the RFPA. Shortly after the RFPA was adopted, the Board issued
Regulation S (12 CFR Part 219) to implement this provision (44 FR
55812, September 28, 1979). These provisions were subsequently
designated Subpart A of Regulation S. In June 1996, the Board revised
Regulation S by updating the fees financial institutions could charge
and streamlining the Subpart generally. 61 FR 29638 (June 12, 1996).
In the twelve years since the last revision, the Board has observed
two significant changes that now require further amendments to Subpart
A of Regulation S. First, increases in salary and benefits have caused
the fees chargeable for reproducing financial records to become
outdated. Furthermore, in recent years, the
[[Page 47855]]
production of electronically stored information during investigations
and in litigation has become increasingly common. Charles Alan Wright,
Arthur R. Miller & Richard L. Marcus, Federal Practice & Procedure,
Sec. 2218 at 449 (2d ed. 2006). Many government agencies now prefer to
receive information in digital formats, thereby easing handling and
analysis. Consequently, the amendments proposed below are intended to
update the existing rates to be paid and provide a reimbursement scheme
that more accurately reflects the costs of producing electronically
stored information in digital formats.
Proposed Amendments
The Board proposes to amend Regulation S in the following manner:
I. Cost Reimbursement
(a) Fees Payable. This section is being clarified to state
specifically that financial institutions are eligible for reimbursement
when producing financial records that have been requested pursuant to
an administrative agency request, as well as by court order or
subpoena. The Board of Governors has received information that some
financial institutions and government agencies may be incorrectly
limiting reimbursement under the Regulation to compelled court or grand
jury subpoenas for customer account information.
(b) Search & Processing Costs. When subpart A was last amended in
1996, document productions were typically made on paper. Consequently,
the reimbursement scheme in place since that time does not fully
address the question of what costs should be reimbursable when
financial institutions retrieve electronically stored records and then
produce them in a digital format, rather than on paper. The current
regulation permits computer time to be reimbursed, but only if
separately itemized. Most financial institutions do not engage in that
task, so computer time is typically not charged separately. The
amendments proposed below do not change this aspect of the regulation,
but instead recognize a new personnel category for computer specialists
when more specialized assistance is necessary. The revised fee schedule
also updates the fees that a financial institution may charge to
account for changes in personnel costs for existing job categories.
Finally, the revised fee schedule includes a ``per electronic
production'' flat charge, rather than the ``per diskette'' charge
included in the existing regulation. The amendments also include a
provision that would permit reimbursement on a per page basis for
production of information only if the government agency requested
production on paper, so that unnecessary costs are not incurred by the
financial institution or the government.
Updating the Existing Labor Rates. Under the existing regulation,
the personnel fees chargeable in Appendix A, which are intended to
cover the cost of searching for, processing and producing financial
records stored electronically, on paper or on microfiche, are separated
into two labor categories--clerical/technical and manager/supervisory.
The fees for these categories were originally derived from the 1994
Bank Cash Compensation Survey (BCCS), which is produced by the Banking
Administration Institute. Although the BCCS is still in existence, the
Board proposes to update the fees using comparable data maintained by
the Bureau of Labor Statistics (BLS) as generated by the Occupational
Employment Statistics Program. BLS provides an aggregate of data taken
from 2004 to 2007. Unlike the BCCS, the BLS sample size is
comprehensive and, therefore, reduces the risk of having an
unrepresentative sample.
The Board proposes to update the current managerial/supervisory
rate found in Appendix A ($17.00) using the rate for first-line
supervisors/managers of office found in the BLS industry category known
as Credit Intermediation and Related Activities ($22.02) adjusted for
benefits using the standard benefit formula set out in the BLS survey
(32.2%). This result in a $30 per hour charge (rounded to the next
highest dollar). The Board also proposes to update the rate for the
clerical/technical job category found in Appendix A ($11.00) to the
average of the rates established for Information Records Clerk and
Computer Operator found within the same BLS industry category ($16.09),
adjusted for benefits (32.2%). This results in a $22 per hour charge
(rounded to the next highest dollar). The Board is interested in
receiving comments on the updated rates and the method of calculation.
New Labor Rate for Specialized Computer Support. It is expected
that, from time to time, the government will request financial
institutions to reproduce electronically stored records in a format
that requires more specialized computer expertise than would ordinarily
be part of the job responsibilities of a clerical/technical employee,
or of a manager/supervisor. Therefore, the Board proposes to add a new
job category to the fee schedule that would allow financial
institutions to charge for any additional technical assistance that is
needed to locate, retrieve, prepare or reproduce electronically stored
financial records. Under this new job category financial institutions
may charge a rate of $28.00 per hour. This figure is based on the labor
cost associated with employing a person under the computer support
specialist job category found in the BLS industry category known as
Credit Intermediation and Related Activities ($22.03), as adjusted for
benefits (32.2%). This results in a charge of $30 per hour (rounded to
the next highest dollar).
The Board is interested in receiving comments on the newly proposed
rate for specialized computer support for electronic document
productions. 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.
Automatic Labor Rate Adjustment. The proposed regulation also
includes a mechanism to periodically adjust the Search and Processing
reimbursement rates for personnel costs set out in the fee schedule,
based on changes in the BLS compensation survey data. The proposed
mechanism would adjust the hourly rates contained in the fee schedule
at fixed five-year periods, using the most recent data available for
each job category. The Board is interested in receiving comments on the
mechanism chosen. If the automatic adjustment is adopted, the Board
intends to issue a press release setting out the new rates before they
become effective and making technical changes to the fee schedule for
the convenience of the industry.
(c) Reproduction Costs. The Board believes the reproduction rates
for diskettes ($5.00) should be eliminated. Instead, the Board proposes
to allow financial institutions to charge a flat fee of $5.00 per
request to cover cost of all compact disks, other electronic media, or
e-mail transmissions necessary to respond to a request. The Board also
requests comments on whether the inclusion of fees for microfiche
duplication should be eliminated as outdated.
While financial institutions may continue to seek reimbursement for
photocopies at the existing rate ($.25 per page), Sec. 219.3(c), this
fee would only be chargeable when: (1) The institution is merely
reproducing information that is already stored only in paper form, or
(2) where the party making the request has
[[Page 47856]]
specifically asked for printed copies of information that is stored
electronically.
The Board welcomes comments on the appropriateness of the proposed
fees and any suggested alternative methods of determining the fees.
II. Conditions for Payment
This section is being changed to identify the direct costs that may
be charged when a financial institution produces financial records in
paper, electronic form or both. As explained above, photocopying and
microfiche charges are only applicable if the institution has
reproduced financial records that are not maintained electronically
(i.e., on paper or in microfiche), or where the government authority
making the request has specifically asked for printed copies of
electronically stored information.
Solicitation of Comments Regarding the Use of ``Plain Language''
Section 722 of the Gramm-Leach-Bliley Act of 1999 requires the
Board to use ``plain language'' in all proposed and final rules
published after January 1, 2000. The Board invites comments on whether
the proposed rules are clearly stated and effectively organized, and
how the Board might make the proposed text easier to understand.
Regulatory Flexibility Act
Pursuant to 5 U.S.C. 605, the Board certifies that this proposed
rule, if adopted, will not have a significant economic impact on a
substantial number of small entities. The proposed rule confers a
benefit on financial institutions, including small financial
institutions, by providing for reimbursement of certain costs incurred
in complying with a requirement to assemble and reproduce financial
records.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
Ch. 3506; 5 CFR 1320 Appendix A.1), the Board reviewed the proposed
rule under the authority delegated to the Board by the Office of
Management and Budget. No collections of information pursuant to the
Paperwork Reduction Act are contained in the proposed rule.
List of Subjects in 12 CFR Part 219
Banks, Banking, Currency, Federal Reserve System, Foreign banking,
Reporting and recordkeeping requirements.
Authority and Issuance
For the reasons set out in the preamble, 12 CFR part 219 is
proposed to be amended as set forth below.
PART 219--REIMBURSEMENT FOR PROVIDING FINANCIAL RECORDS;
RECORDKEEPING REQUIREMENTS FOR CERTAIN FINANCIAL RECORDS
(REGULATION S)
1. The authority citation for part 219 continues to read as
follows:
Authority: 12 U.S.C. 3415.
2. Section 219.3 is amended as follows:
a. Revise paragraphs (a) and (b)(2).
b. Add new paragraph (b)(3).
c. Revise paragraphs (c) and (d), and Appendix A to Sec. 219.3.
Sec. 219.3 Cost reimbursement.
(a) Fees payable. Except as provided in Sec. 219.4, a government
authority seeking access to financial records pertaining to a customer,
by written request, through: A court order, a subpoena issued pursuant
to the Federal Rules of Criminal Procedure or the Federal Rules of
Civil Procedure, or other agency administrative procedures, including
administrative subpoenas, voluntary requests, or other process shall
reimburse the financial institution for reasonably necessary costs
directly incurred in searching for, reproducing or transporting books,
papers, records, or other data as set forth in this section. The
reimbursement schedule for a financial institution is set forth in
Appendix A to this section. If a financial institution has financial
records that are stored at an independent storage facility that charges
a fee to search for, reproduce, or transport particular records
requested, these costs are considered to be directly incurred by the
financial institution and may be included in the reimbursement.
(b) * * *
(2) If itemized separately, search and processing costs may include
the actual cost of extracting electronically stored records, based on
computer time and necessary supplies; however, personnel time for
computer searches may be paid for at the rates set for computer support
specialist, specified in Appendix A to this section, but only when
compliance with the request for information requires that the financial
institution use programming or other higher level technical services of
a computer support specialist in order to reproduce electronically
stored information in the format requested by the government authority.
(3) Rates for Search and Processing in Appendix A shall be
recalculated as follows on April 1, 2012 and on April 1 of each
subsequent five-year period utilizing Bureau of Labor Statistics
(``BLS'') data by replacing the existing hourly rates with the sum of:
(i) Base Labor rate recalculation--Using the most recently
available wage data from the Occupational Employment Statistics program
(http://www.bls.gov/oes/home.htm) for the BLS industry category
``Credit Intermediation and Related Activities'' (NAICS Code Number
522000) (or successor category):
(A) [Clerical/Technical category] the average of the median hourly
rates for the ``Information and Records Clerk'' and ``Computer
Operator'' job categories (SOC Code Number 43-4199 and 43-9011) (or any
successor job categories);
(B) [Manager/Supervisor category] the median hourly rate for the
``first-line supervisors/managers of office'' job category (SOC Code
Number 43-1011) (or successor category), and
(C) [Computer Support Specialist category] the median hourly rate
for the ``computer support specialist'' job category (SOC Code Number
15-1041) (or successor category); plus
(ii) Benefits Adjustment--an amount for each hourly rate category
that is equal to the product of:
(A) The hourly rates set forth in paragraph (b)(3)(i) of this
section, and
(B) The most recently available ``percent of total compensation''
represented by ``total benefits'' for the ``Credit Intermediation and
Related Activities'' industry category (private sector) set out in the
Employment Cost Trends section of the National Compensation Survey
(http://data.bls.gov/PDQ/outside.jsp?survey=cm); and
(iii) If the recalculated rates for Search and Processing
(including the Base labor rate and the benefits adjustment) are not a
multiple of $1, the recalculated rates shall be rounded up to the next
multiple of $1.
(c) Reproduction costs. The reimbursement rates for reproduction
costs for requested information are set forth in Appendix A to this
section, subject to the Conditions for Payment set forth in Sec.
219.5. Copies of photographs, films and other materials not listed in
Appendix A to this section are reimbursed at actual cost.
(d) Transportation costs. Reimbursement for transportation costs
shall be for the reasonably necessary costs directly incurred to
transport personnel to locate and retrieve the requested information,
and to convey such material to the place of examination.
[[Page 47857]]
Appendix A to Sec. 219.3--Reimbursement Schedule
Reproduction:
Photocopy, per page........................................ $0.25
Paper Copies of Microfiche, per frame...................... 0.25
Duplicate Microfiche, per microfiche....................... 0.50
Electronic Productions, per request........................ 5.00
Search and Processing:
Clerical/Technical, hourly rate............................ 22.00
Computer Support Specialist, hourly rate................... 30.00
Manager/Supervisory, hourly rate........................... 30.00
3. Section 219.5 is amended by revising paragraph (a) to read as
follows:
Sec. 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. Photocopying or microfiche charges are reasonably
necessary only if the institution has reproduced financial records that
were not stored electronically (i.e., where the information requested
was stored only on paper or in microfiche), or where the government
authority making the request has specifically asked for printed copies
of electronically stored records.
* * * * *
By order of the Board of Governors of the Federal Reserve
System, August 12, 2008.
Robert deV. Frierson,
Deputy Secretary of the Board.
[FR Doc. E8-18898 Filed 8-14-08; 8:45 am]
BILLING CODE 6210-01-P