Record Retention, 31121-31124 [E6-8491]
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Federal Register / Vol. 71, No. 105 / Thursday, June 1, 2006 / Proposed Rules
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Administrator to deny an application for
accreditation.
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
SUPPLEMENTARY INFORMATION:
PART 162—RULES OF PRACTICE
GOVERNING REVOCATION OR
SUSPENSION OF VETERINARIANS’
ACCREDITATION
Office of Federal Housing Enterprise
Oversight
The Office of Federal Housing
Enterprise Oversight (OFHEO) invites
comments on all aspects of the proposed
regulation, including legal and policy
considerations, and will take all
comments into consideration before
issuing the final regulation. OFHEO
requests that comments submitted in
hard copy also be accompanied by the
electronic version in Microsoft Word
or in portable document format (PDF)
on 3.5″ disk or CD–ROM.
Copies of all comments will be posted
on the OFHEO Internet Web site at
https://www.ofheo.gov. In addition,
copies of all comments received will be
available for examination by the public
on business days between the hours of
10 a.m. and 3 p.m., at the Office of
Federal Housing Enterprise Oversight,
Fourth Floor, 1700 G Street, NW.,
Washington, DC 20552. To make an
appointment to inspect comments,
please call the Office of General Counsel
at (202) 414–6924.
12 CFR Part 1732
11. The authority citation for part 162
would continue to read as follows:
Authority: 7 U.S.C. 8301–8317; 15 U.S.C.
1828; 7 CFR 2.22, 2.80, and 371.4.
12. Section 162.10 would be revised
to read as follows:
§ 162.10 Summary suspension of
accreditation of veterinarians.
In any situation where the
Administrator has reason to believe that
any veterinarian accredited under the
provisions of parts 160 and 161 of this
subchapter has not complied with the
‘‘Standards for Accredited Veterinarian
Duties’’ set forth in § 161.3 of this
subchapter, the Administrator may
summarily suspend the accreditation of
such veterinarian pending final
determination in the proceeding,
effective upon oral or written
notification, whichever is earlier. In the
event of oral notification, a written
confirmation thereof shall be given to
such veterinarian as promptly as
circumstances permit. The
Administrator may take such action if
he or she deems it necessary in order to
prevent the introduction into the United
States or the spread from one State to
another of a contagious, infectious, or
communicable disease of animals, or to
ensure that animals intended or offered
for export to foreign countries are free
from disease, or to maintain the
integrity of the National Veterinary
Accreditation Program.
§ 162.12
[Amended]
13. In § 162.12, paragraphs (b), (c),
and (d) would be redesignated as
paragraphs (c), (d), and (b), respectively.
Done in Washington, DC, this 25th day of
May 2006.
Ron DeHaven,
Administrator, Animal and Plant Health
Inspection Service.
[FR Doc. E6–8493 Filed 5–31–06; 8:45 am]
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BILLING CODE 3410–34–P
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RIN 2550–AA34
Record Retention
Office of Federal Housing
Enterprise Oversight, HUD.
ACTION: Proposed regulation.
AGENCY:
SUMMARY: The Office of Federal Housing
Enterprise Oversight (OFHEO) is issuing
a proposed regulation that would set
forth record retention requirements with
respect to the record management
programs of the Federal National
Mortgage Association and the Federal
Home Loan Mortgage Corporation
(collectively, the Enterprises) consistent
with the safety and soundness
responsibilities of OFHEO under the
Federal Housing Enterprises Financial
Safety and Soundness Act of 1992.
DATES: Written comments on the
proposed regulation must be received by
no later than July 31, 2006.
ADDRESSES: You may submit your
comments on the proposed regulation,
identified by regulatory information
number (RIN) 2550–AA34, by any of the
following methods:
• U.S. Mail, United Parcel Post,
Federal Express, or Other Mail Service:
The mailing address for comments is:
Alfred M. Pollard, General Counsel,
Attention: Comments/RIN 2550–AA34,
Office of Federal Housing Enterprise
Oversight, Fourth Floor, 1700 G Street,
NW., Washington, DC 20552.
• Hand Delivered/Courier: The hand
delivery address is: Alfred M. Pollard,
General Counsel, Attention: Comments/
RIN 2550-AA34, Office of Federal
Housing Enterprise Oversight, Fourth
Floor, 1700 G Street, NW., Washington,
DC 20552. The package should be
logged at the Guard Desk, First Floor, on
business days between 9 a.m. and 5 p.m.
• E-mail: RegComments@OFHEO.gov.
Comments to Alfred M. Pollard, General
Counsel, may be sent by e-mail at
RegComments@OFHEO.gov. Please
include RIN 2550–AA34 in the subject
line of the message.
FOR FURTHER INFORMATION CONTACT: Tina
Dion, Associate General Counsel,
telephone (202) 414–3838 (not a toll-free
number); Office of Federal Housing
Enterprise Oversight, Fourth Floor, 1700
G Street, NW., Washington, DC 20552.
The telephone number for the
Telecommunications Device for the Deaf
is (800) 877–8339.
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I. Comments
II. Background
A. Introduction
Title XIII of the Housing and
Community Development Act of 1992,
Pub. L. 102–550, titled the ‘‘Federal
Housing Enterprises Financial Safety
and Soundness Act of 1992’’ (Act) (12
U.S.C. 4501 et seq.), established OFHEO
as an independent office within the
Department of Housing and Urban
Development. OFHEO is statutorily
mandated to ensure that the Federal
National Mortgage Association (Fannie
Mae) and the Federal Home Loan
Mortgage Corporation (Freddie Mac)
(collectively, the Enterprises) are
capitalized adequately and operate in a
safe and sound manner and in
compliance with applicable laws, rules,
and regulations.
The Act provides that the Director of
OFHEO (the Director) is authorized to
make such determinations, take such
actions, and perform such functions as
the Director determines are necessary
regarding his supervisory authorities,
which include examinations of the
Enterprises.1 Under the Act, the Director
is authorized to conduct on-site
examinations of the Enterprises each
year, and any other examinations that
the Director determines are necessary to
ensure their safety and soundness.2
1 12
2 12
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U.S.C. 4513(b)(2).
U.S.C. 4517(a) and (b).
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B. Record Retention and Safe and
Sound Operations
In furtherance of the safety and
soundness authorities of OFHEO, the
proposed regulation would require the
Enterprises to establish and maintain a
record retention program to ensure that
the records are readily accessible for
examination and other supervisory
purposes. OFHEO recognizes that the
effectiveness of the examination process
is dependent upon the prompt
production of complete and accurate
records. OFHEO, through the
supervisory process, must have access
to the records of an Enterprise that are
necessary to determine the financial
condition of the Enterprise or the details
or the purpose of any transaction that
may have a material effect on the
financial condition of the Enterprise.3
Retention of such records not only
facilitates the examination process, but
also allows an Enterprise to manage
more effectively its business and detect
improper behavior that might cause
financial damage to the corporation.
Additionally, such records serve as
documentation for an Enterprise in any
controversy over its business activities
or transactions.
The importance of sound record
retention policies and procedures by
regulated institutions also has been
recognized by Congress and other
federal regulators. Adequate record
retention by the institutions has been
determined to have a high degree of
usefulness in criminal, tax, and
regulatory investigations or proceedings,
and has been identified as a requisite
component of an institution’s operation
and management on a safety and
soundness basis.4
In addition to facilitating the
oversight and enforcement of federal
banking laws, adequate record retention
has been recognized by Congress as
being essential to the oversight and
enforcement of the federal securities
laws. For example, as mandated by
section 802 of the Sarbanes-Oxley Act,5
the U.S. Securities and Exchange
Commission adopted rules requiring
accounting firms to retain for seven
years certain records relevant to their
audits and reviews of issuers’ financial
statements. Records to be retained
include an accounting firm’s
workpapers and certain other
documents that contain conclusions,
3 12
U.S.C. 4632(c).
e.g., 12 U.S.C. 1829b, and the Guidelines
and Interagency Standards for Safety and
Soundness at 12 CFR part 30, Appendix A, II, B.
5 Public Law 107–204, 116 Stat. 745 (2002).
4 See,
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opinions, analyses, or financial data
related to the audit or review.6
As noted above, the importance of
adequate record retention has been
recognized by federal regulators to
facilitate their oversight and
enforcement of Federal laws and
regulations. This proposed regulation
represents a similar recognition by
OFHEO. However, it is noted that the
requirements of the proposal would
have no effect on the policies, rules, or
guidance of other federal agencies that
may require record retention terms or
practices different from those set forth
in the proposal. This proposed
regulation only addresses record
retention requirements for the record
management programs of the
Enterprises under the safety and
soundness responsibilities of OFHEO
under the Act.
III. Analysis of Proposed Regulation
Section 1732.1 would explain that the
proposal is intended to make Enterprise
records readily accessible for OFHEO
examination and supervisory purposes.
Section 1732.2 would define the
terms contained in the proposed
regulation.
Section 1732.5 would require that
each Enterprise establish and maintain
a record retention program, and evaluate
such program. The record retention
program would be required to include a
record retention schedule. Section
1732.6 would provide minimum
requirements for the program, including
requirements relating to a record
retention schedule. Requirements
relating to a record hold, specified in
proposed § 1732.7 would address record
retention methods, record access and
retrieval policies, and notification
procedures for employees. Moreover,
the section would require an Enterprise
employee who is aware of a potential
OFHEO investigation, enforcement
proceeding, or litigation involving the
Enterprise or an employee to notify
immediately the legal department of the
Enterprise and retain any records that
may be relevant to such investigation,
enforcement proceeding, or litigation.
Section 1732.10 would explain that
failure by an Enterprise to comply with
the requirements of the proposed
regulation may subject the Enterprise or
the board members, officers, or
employees to supervisory action by
OFHEO. The section also would provide
that the proposed regulation does not
limit the authority of OFHEO under its
safety and soundness mandate to take
other actions such as conducting
6 17 CFR part 210. See Release Nos. 33–8180; 34–
47241; IC–2591; FR–66; File No. S7–46–02.
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examinations, requiring reports and
disclosures, and enforcing compliance
with applicable laws, rules and
regulations.
Regulatory Impact
Executive Order 12866, Regulatory
Planning and Review
The proposed regulation would not
result in an annual effect on the
economy of $100 million or more or a
major increase in costs or prices for
consumers, individual industries,
Federal, State, or local government
agencies, or geographic regions; or have
significant adverse effects on
competition, employment, investment,
productivity, innovation, or on the
ability of United States-based
enterprises to compete with foreignbased enterprises in domestic or foreign
markets. Accordingly, no regulatory
impact assessment is required.
Nevertheless, the proposed regulation
was submitted to the Office of
Management and Budget for review
under other provisions of Executive
Order 12866 as a significant regulatory
action.
Regulatory Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) requires that a
regulation that has a significant
economic impact on a substantial
number of small entities, small
businesses, or small organizations must
include an initial regulatory flexibility
analysis describing the regulation’s
impact on small entities. Such an
analysis need not be undertaken if the
agency has certified that the regulation
will not have a significant economic
impact on a substantial number of small
entities. 5 U.S.C. 605(b). OFHEO has
considered the impact of the proposed
regulation under the Regulatory
Flexibility Act. The General Counsel of
OFHEO certifies that the proposed
regulation, if adopted, is not likely to
have a significant economic impact on
a substantial number of small business
entities because the regulation is
applicable only to the Enterprises,
which are not small entities for
purposes of the Regulatory Flexibility
Act.
Executive Order 13132, Federalism
Executive Order 13132 requires that
Executive departments and agencies
identify regulatory actions that have
significant federalism implications. A
regulation has federalism implications if
it has substantial direct effects on the
States, on the relationship or
distribution of power between the
Federal Government and the States, or
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on the distribution of power and
responsibilities among various levels of
Government. The Enterprises are
federally chartered corporations
supervised by OFHEO. The proposed
regulation sets forth minimum record
retention requirements with which the
Enterprises must comply for Federal
supervisory purposes and address the
safety and soundness authorities of the
agency. The proposed regulation does
not affect in any manner the powers and
authorities of any State with respect to
the Enterprises or alter the distribution
of power and responsibilities between
State and Federal levels of government.
Therefore, OFHEO has determined that
the proposed regulation has no
federalism implications that warrant the
preparation of a Federalism Assessment
in accordance with Executive Order
13132.
List of Subjects in 12 CFR Part 1732
Government-Sponsored Enterprises,
Reporting and recordkeeping
requirements, Records.
Accordingly, for the reasons stated in
the preamble, OFHEO proposes to add
part 1732 to subchapter C of 12 CFR
chapter XVII to read as follows:
Subchapter C—Safety and Soundness
PART 1732—RECORD RETENTION
Subpart A—General
Sec.
1732.1 Purpose and scope.
1732.2 Definitions.
1732.3–1732.4 [Reserved]
Subpart B—Record Retention Program
1732.5 Establishment and evaluation of
record retention program.
1732.6 Minimum requirements of record
retention program.
1732.7 Record hold.
1732.8—1732.9 [Reserved]
Subpart C—Supervisory Action
1732.10 Supervisory action.
Authority: 12 U.S.C. 4513(a), 4513(b)(1),
4513(b)(5), 4514, 4631, and 4632.
Subpart A—General
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§ 1732.1
Purpose and scope.
In furtherance of the safety and
soundness authorities of OFHEO, this
part sets forth minimum requirements
in connection with the record retention
program of each Enterprise. The
requirements are intended to ensure that
complete and accurate records of an
Enterprise are readily accessible by
OFHEO for examination and other
supervisory purposes.
§ 1732.2
Definitions.
For purposes of this part, the term:
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(a) Act means the Federal Housing
Enterprises Financial Safety and
Soundness Act of 1992, Title XIII of the
Housing and Community Development
Act of 1992, Public Law 102–550,
section 1301, Oct. 28, 1992, 106 Stat.
3672, 3941 through 4012 (1993) (12
U.S.C. 4501 et seq.).
(b) Active record means a document
that is necessary to conduct the current
business of an office or business unit of
an Enterprise and, therefore, is readily
available for consultation and reference.
(c) Director means the Director of
OFHEO, or his or her designee.
(d) Electronic record means a record
created, generated, communicated, or
stored by electronic means.
(e) Employee means any officer or
employee of an Enterprise, any
conservator appointed by OFHEO, or
any agent or independent contractor
acting on behalf of an Enterprise.
(f) Enterprise means the Federal
National Mortgage Association or the
Federal Home Loan Mortgage
Corporation; and the term ‘‘Enterprises’’
means, collectively, the Federal
National Mortgage Association and the
Federal Home Loan Mortgage
Corporation.
(g) E-mail means electronic mail,
which is a method of communication in
which:
(1) Usually text is transmitted (but
sometimes also graphics and/or audio
information);
(2) Operations include sending,
storing, processing, and receiving
information;
(3) Users are allowed to communicate
under specified conditions; and
(4) Messages are held in storage until
called for by the addressee, including
any attachment of separate electronic
files.
(h) Inactive record means a document
that is seldom used but must be retained
by an Enterprise for legislative, fiscal,
legal, archival, historical, or vital
records purposes.
(i) OFHEO means the Office of Federal
Housing Enterprise Oversight.
(j) Record means any document
whether generated internally or received
from outside sources by an Enterprise or
employee in connection with Enterprise
business, regardless of the following:
(1) Form or format, including hard
copy documents (e.g. files, logs, and
reports) and electronic documents (e.g.,
e-mail, databases, spreadsheets,
PowerPoint presentations, electronic
reporting systems, electronic tapes and
back-up tapes, optical discs, CD-ROMS,
and DVDs), and voicemail records;
(2) Where the document is stored or
located, including network servers,
desktop or laptop computers and
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handheld computers, other wireless
devices with text messaging capabilities,
and on-site or off-site at a storage
facility;
(3) Whether the document is
maintained or used on Enterpriseowned equipment, or personal or home
computer systems of an employee; or
(4) Whether the document is active or
inactive.
(k) Record retention schedule means a
form that details the categories of
records an Enterprise is required to store
and their corresponding record
retention periods. The record retention
schedule includes reproductions, as
well as all media, including microfilm
and machine-readable computer
records, for each record category.
(l) Retention period means the length
of time that records must be kept before
they are destroyed. Records not
authorized for destruction have a
retention period of ‘‘permanent.’’
(m) Vital records means documents
that are needed to meet operational
responsibilities of an Enterprise under
emergency or disaster conditions
(emergency operating records) or to
protect the legal and financial rights of
an Enterprise and those affected by
Enterprise activities. Emergency
operating records are the type of vital
records essential to the continued
functioning or reconstitution of an
Enterprise during and after an
emergency. A vital record may be both
an emergency operating record and a
legal and financial rights record.
§ 1732.3–1732.4
[Reserved]
Subpart B—Record Retention Program
§ 1732.5 Establishment and evaluation of
record retention program.
(a) Establishment. An Enterprise shall
establish and maintain a written record
retention program and provide a copy of
such program to the Examiner in Charge
of the Enterprise within 120 days of the
effective date of this part, and annually
thereafter, and whenever a significant
revision to the program has been made.
(b) Evaluation. Management of the
Enterprise shall evaluate in writing the
adequacy and effectiveness of the record
retention program at least every three
years and provide a copy of the
evaluation to the board of directors and
the Examiner in Charge of the
Enterprise.
§ 1732.6 Minimum requirements of record
retention program.
(a) Requirements. The record
retention program established and
maintained by an Enterprise under
§ 1732.5 shall:
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(1) Be reasonably designed to assure
that retained records are complete and
accurate;
(2) Be reasonably designed to assure
that the format of retained records and
the retention period—
(i) Are adequate to support litigation
and the administrative, business,
external and internal audit functions of
the Enterprise;
(ii) Comply with requirements of
applicable laws and regulations; and
(iii) Permit ready access by the
Enterprise and, upon request, by the
examination and other staff of OFHEO;
(3) Assign in writing authorities and
responsibilities for record retention
activities;
(4) Include policies and procedures
concerning record holds, consistent
with § 1732.7;
(5) Include an accurate, current, and
comprehensive record retention
schedule that lists records by major
categories, subcategories, record type,
and retention period, which retention
period is appropriate to the specific
record and consistent with applicable
legal, regulatory, fiscal, and
administrative requirements;
(6) Include adequate security and
internal controls to protect records from
unauthorized access and data alteration;
and
(7) Provide for adequate back-up and
recovery of electronic records.
(b) Training. The record retention
program shall provide for training of
and notice to all employees on a
periodic basis on their record retention
responsibilities, including instruction
regarding penalties provided by law for
the unlawful removal or destruction of
records.
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§ 1732.7
Record hold.
(a) Definition. For purposes of this
part, the term ‘‘record hold’’ means a
requirement, an order, or a directive
from an Enterprise or OFHEO that the
Enterprise is to retain records relating to
a particular issue in connection with an
actual or a potential OFHEO
examination, investigation, enforcement
proceeding, or litigation.
(b) Notification by Enterprise. The
record retention program of an
Enterprise shall:
(1) Address how all employees will
receive prompt notification of a record
hold;
(2) Designate an individual to
communicate specific requirements and
instructions, including, when necessary,
the instruction to cease immediately any
otherwise permissible destruction of
records; and
(3) Provide that any employee who is
aware of a potential investigation,
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enforcement proceeding, or litigation by
OFHEO involving the Enterprise or an
employee shall notify immediately the
legal department of the Enterprise and
shall retain any records that may be
relevant in any way to such
investigation, enforcement proceeding,
or litigation.
(c) Method of record retention. The
record retention program of an
Enterprise shall address the method by
which an Enterprise will retain records
during a record hold. Specifically, the
program shall describe the method for
the continued preservation of electronic
records, including e-mails, and the
conversion of records from paper to
electronic format as well as any
alternative storage method.
(d) Access to and retrieval of records.
The record retention program of an
Enterprise shall ensure access to and
retrieval of records by an Enterprise and
access, upon request, by OFHEO, during
a record hold.
§§ 1732.8—1732.9
[Reserved]
Subpart C—Supervisory Action
§ 1732.10
Supervisory action.
(a) Supervisory action. Failure by an
Enterprise to comply with this part may
subject the Enterprise or the board
members, officers, or employees thereof
to supervisory action by OFHEO under
the Act, including but not limited to
cease-and-desist proceedings, temporary
cease-and-desist proceedings, and civil
money penalties.
(b) No limitation of authority. This
part does not limit or restrict the
authority of OFHEO to act under its
safety and soundness mandate, in
accordance with the Act. Such authority
includes, but is not limited to,
conducting examinations, requiring
reports and disclosures, and enforcing
compliance with applicable laws, rules,
and regulations.
Dated: May 24, 2006.
James B. Lockhart III,
Acting Director, Office of Federal Housing
Enterprise Oversight.
[FR Doc. E6–8491 Filed 5–31–06; 8:45 am]
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FEDERAL TRADE COMMISSION
SUMMARY: In a Federal Register notice
published on April 12, 2006, 71 FR
19054, the FTC requested comment on
its Notice of Proposed Rulemaking in
connection with the Business
Opportunity Rule. The Notice stated
that comments must be submitted on or
before June 16, 2006, and that rebuttal
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request for an extension of the comment
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DATES: Comments addressing the
Business Opportunity Rule Notice of
Proposed Rulemaking must be
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Rebuttal comments must be submitted
on or before August 7, 2006.
ADDRESSES: Interested parties are
invited to submit written comments.
Comments should refer to ‘‘Business
Opportunity Rule, R511993’’ to facilitate
the organization of comments. A
comment filed in paper form should
include this reference both in the text
and on the envelope, and should be
mailed or delivered, with two complete
copies, to the following address: Federal
Trade Commission/Office of the
Secretary, Room H–135 (Annex W), 600
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Washington, DC 20580. The FTC is
requesting that any comment filed in
paper form be sent by courier or
overnight service, if possible, because
U.S. postal mail in the Washington area
and at the Commission is subject to
delay due to heightened security
precautions. Moreover, because paper
mail in the Washington area and at the
Agency is subject to delay, please
consider submitting your comments in
electronic form, as prescribed below.
Comments containing confidential
material, however, must be filed in
paper form, must be clearly labeled
‘‘Confidential,’’ and must comply with
Commission Rule 4.9(c).1
Comments filed in electronic form
should be submitted by clicking on the
following Web link: https://
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instructions on the web-based form. To
ensure that the Commission considers
an electronic comment, you must file it
on the web-based form at the https://
secure.commentworks.com/ftc-
16 CFR Part 437
Business Opportunity Rule
Federal Trade Commission.
Extension of period to submit
comments in response to the Notice of
Proposed Rulemaking.
AGENCY:
ACTION:
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1 The comment must be accompanied by an
explicit request for confidential treatment,
including the factual and legal basis for the request,
and must identify the specific portions of the
comment to be withheld from the public record.
The request will be granted or denied by the
Commission’s General Counsel, consistent with
applicable law and the public interest. See
Commission Rule 4.9(c), 16 CFR 4.9(c).
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[Federal Register Volume 71, Number 105 (Thursday, June 1, 2006)]
[Proposed Rules]
[Pages 31121-31124]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-8491]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of Federal Housing Enterprise Oversight
12 CFR Part 1732
RIN 2550-AA34
Record Retention
AGENCY: Office of Federal Housing Enterprise Oversight, HUD.
ACTION: Proposed regulation.
-----------------------------------------------------------------------
SUMMARY: The Office of Federal Housing Enterprise Oversight (OFHEO) is
issuing a proposed regulation that would set forth record retention
requirements with respect to the record management programs of the
Federal National Mortgage Association and the Federal Home Loan
Mortgage Corporation (collectively, the Enterprises) consistent with
the safety and soundness responsibilities of OFHEO under the Federal
Housing Enterprises Financial Safety and Soundness Act of 1992.
DATES: Written comments on the proposed regulation must be received by
no later than July 31, 2006.
ADDRESSES: You may submit your comments on the proposed regulation,
identified by regulatory information number (RIN) 2550-AA34, by any of
the following methods:
U.S. Mail, United Parcel Post, Federal Express, or Other
Mail Service: The mailing address for comments is: Alfred M. Pollard,
General Counsel, Attention: Comments/RIN 2550-AA34, Office of Federal
Housing Enterprise Oversight, Fourth Floor, 1700 G Street, NW.,
Washington, DC 20552.
Hand Delivered/Courier: The hand delivery address is:
Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2550-AA34,
Office of Federal Housing Enterprise Oversight, Fourth Floor, 1700 G
Street, NW., Washington, DC 20552. The package should be logged at the
Guard Desk, First Floor, on business days between 9 a.m. and 5 p.m.
E-mail: RegComments@OFHEO.gov. Comments to Alfred M.
Pollard, General Counsel, may be sent by e-mail at
RegComments@OFHEO.gov. Please include RIN 2550-AA34 in the subject line
of the message.
FOR FURTHER INFORMATION CONTACT: Tina Dion, Associate General Counsel,
telephone (202) 414-3838 (not a toll-free number); Office of Federal
Housing Enterprise Oversight, Fourth Floor, 1700 G Street, NW.,
Washington, DC 20552. The telephone number for the Telecommunications
Device for the Deaf is (800) 877-8339.
SUPPLEMENTARY INFORMATION:
I. Comments
The Office of Federal Housing Enterprise Oversight (OFHEO) invites
comments on all aspects of the proposed regulation, including legal and
policy considerations, and will take all comments into consideration
before issuing the final regulation. OFHEO requests that comments
submitted in hard copy also be accompanied by the electronic version in
Microsoft[reg] Word or in portable document format (PDF) on 3.5'' disk
or CD-ROM.
Copies of all comments will be posted on the OFHEO Internet Web
site at https://www.ofheo.gov. In addition, copies of all comments
received will be available for examination by the public on business
days between the hours of 10 a.m. and 3 p.m., at the Office of Federal
Housing Enterprise Oversight, Fourth Floor, 1700 G Street, NW.,
Washington, DC 20552. To make an appointment to inspect comments,
please call the Office of General Counsel at (202) 414-6924.
II. Background
A. Introduction
Title XIII of the Housing and Community Development Act of 1992,
Pub. L. 102-550, titled the ``Federal Housing Enterprises Financial
Safety and Soundness Act of 1992'' (Act) (12 U.S.C. 4501 et seq.),
established OFHEO as an independent office within the Department of
Housing and Urban Development. OFHEO is statutorily mandated to ensure
that the Federal National Mortgage Association (Fannie Mae) and the
Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively, the
Enterprises) are capitalized adequately and operate in a safe and sound
manner and in compliance with applicable laws, rules, and regulations.
The Act provides that the Director of OFHEO (the Director) is
authorized to make such determinations, take such actions, and perform
such functions as the Director determines are necessary regarding his
supervisory authorities, which include examinations of the
Enterprises.\1\ Under the Act, the Director is authorized to conduct
on-site examinations of the Enterprises each year, and any other
examinations that the Director determines are necessary to ensure their
safety and soundness.\2\
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\1\ 12 U.S.C. 4513(b)(2).
\2\ 12 U.S.C. 4517(a) and (b).
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[[Page 31122]]
B. Record Retention and Safe and Sound Operations
In furtherance of the safety and soundness authorities of OFHEO,
the proposed regulation would require the Enterprises to establish and
maintain a record retention program to ensure that the records are
readily accessible for examination and other supervisory purposes.
OFHEO recognizes that the effectiveness of the examination process is
dependent upon the prompt production of complete and accurate records.
OFHEO, through the supervisory process, must have access to the records
of an Enterprise that are necessary to determine the financial
condition of the Enterprise or the details or the purpose of any
transaction that may have a material effect on the financial condition
of the Enterprise.\3\
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\3\ 12 U.S.C. 4632(c).
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Retention of such records not only facilitates the examination
process, but also allows an Enterprise to manage more effectively its
business and detect improper behavior that might cause financial damage
to the corporation. Additionally, such records serve as documentation
for an Enterprise in any controversy over its business activities or
transactions.
The importance of sound record retention policies and procedures by
regulated institutions also has been recognized by Congress and other
federal regulators. Adequate record retention by the institutions has
been determined to have a high degree of usefulness in criminal, tax,
and regulatory investigations or proceedings, and has been identified
as a requisite component of an institution's operation and management
on a safety and soundness basis.\4\
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\4\ See, e.g., 12 U.S.C. 1829b, and the Guidelines and
Interagency Standards for Safety and Soundness at 12 CFR part 30,
Appendix A, II, B.
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In addition to facilitating the oversight and enforcement of
federal banking laws, adequate record retention has been recognized by
Congress as being essential to the oversight and enforcement of the
federal securities laws. For example, as mandated by section 802 of the
Sarbanes-Oxley Act,\5\ the U.S. Securities and Exchange Commission
adopted rules requiring accounting firms to retain for seven years
certain records relevant to their audits and reviews of issuers'
financial statements. Records to be retained include an accounting
firm's workpapers and certain other documents that contain conclusions,
opinions, analyses, or financial data related to the audit or
review.\6\
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\5\ Public Law 107-204, 116 Stat. 745 (2002).
\6\ 17 CFR part 210. See Release Nos. 33-8180; 34-47241; IC-
2591; FR-66; File No. S7-46-02.
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As noted above, the importance of adequate record retention has
been recognized by federal regulators to facilitate their oversight and
enforcement of Federal laws and regulations. This proposed regulation
represents a similar recognition by OFHEO. However, it is noted that
the requirements of the proposal would have no effect on the policies,
rules, or guidance of other federal agencies that may require record
retention terms or practices different from those set forth in the
proposal. This proposed regulation only addresses record retention
requirements for the record management programs of the Enterprises
under the safety and soundness responsibilities of OFHEO under the Act.
III. Analysis of Proposed Regulation
Section 1732.1 would explain that the proposal is intended to make
Enterprise records readily accessible for OFHEO examination and
supervisory purposes.
Section 1732.2 would define the terms contained in the proposed
regulation.
Section 1732.5 would require that each Enterprise establish and
maintain a record retention program, and evaluate such program. The
record retention program would be required to include a record
retention schedule. Section 1732.6 would provide minimum requirements
for the program, including requirements relating to a record retention
schedule. Requirements relating to a record hold, specified in proposed
Sec. 1732.7 would address record retention methods, record access and
retrieval policies, and notification procedures for employees.
Moreover, the section would require an Enterprise employee who is aware
of a potential OFHEO investigation, enforcement proceeding, or
litigation involving the Enterprise or an employee to notify
immediately the legal department of the Enterprise and retain any
records that may be relevant to such investigation, enforcement
proceeding, or litigation.
Section 1732.10 would explain that failure by an Enterprise to
comply with the requirements of the proposed regulation may subject the
Enterprise or the board members, officers, or employees to supervisory
action by OFHEO. The section also would provide that the proposed
regulation does not limit the authority of OFHEO under its safety and
soundness mandate to take other actions such as conducting
examinations, requiring reports and disclosures, and enforcing
compliance with applicable laws, rules and regulations.
Regulatory Impact
Executive Order 12866, Regulatory Planning and Review
The proposed regulation would not result in an annual effect on the
economy of $100 million or more or a major increase in costs or prices
for consumers, individual industries, Federal, State, or local
government agencies, or geographic regions; or have significant adverse
effects on competition, employment, investment, productivity,
innovation, or on the ability of United States-based enterprises to
compete with foreign-based enterprises in domestic or foreign markets.
Accordingly, no regulatory impact assessment is required. Nevertheless,
the proposed regulation was submitted to the Office of Management and
Budget for review under other provisions of Executive Order 12866 as a
significant regulatory action.
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that
a regulation that has a significant economic impact on a substantial
number of small entities, small businesses, or small organizations must
include an initial regulatory flexibility analysis describing the
regulation's impact on small entities. Such an analysis need not be
undertaken if the agency has certified that the regulation will not
have a significant economic impact on a substantial number of small
entities. 5 U.S.C. 605(b). OFHEO has considered the impact of the
proposed regulation under the Regulatory Flexibility Act. The General
Counsel of OFHEO certifies that the proposed regulation, if adopted, is
not likely to have a significant economic impact on a substantial
number of small business entities because the regulation is applicable
only to the Enterprises, which are not small entities for purposes of
the Regulatory Flexibility Act.
Executive Order 13132, Federalism
Executive Order 13132 requires that Executive departments and
agencies identify regulatory actions that have significant federalism
implications. A regulation has federalism implications if it has
substantial direct effects on the States, on the relationship or
distribution of power between the Federal Government and the States, or
[[Page 31123]]
on the distribution of power and responsibilities among various levels
of Government. The Enterprises are federally chartered corporations
supervised by OFHEO. The proposed regulation sets forth minimum record
retention requirements with which the Enterprises must comply for
Federal supervisory purposes and address the safety and soundness
authorities of the agency. The proposed regulation does not affect in
any manner the powers and authorities of any State with respect to the
Enterprises or alter the distribution of power and responsibilities
between State and Federal levels of government. Therefore, OFHEO has
determined that the proposed regulation has no federalism implications
that warrant the preparation of a Federalism Assessment in accordance
with Executive Order 13132.
List of Subjects in 12 CFR Part 1732
Government-Sponsored Enterprises, Reporting and recordkeeping
requirements, Records.
Accordingly, for the reasons stated in the preamble, OFHEO proposes
to add part 1732 to subchapter C of 12 CFR chapter XVII to read as
follows:
Subchapter C--Safety and Soundness
PART 1732--RECORD RETENTION
Subpart A--General
Sec.
1732.1 Purpose and scope.
1732.2 Definitions.
1732.3-1732.4 [Reserved]
Subpart B--Record Retention Program
1732.5 Establishment and evaluation of record retention program.
1732.6 Minimum requirements of record retention program.
1732.7 Record hold.
1732.8--1732.9 [Reserved]
Subpart C--Supervisory Action
1732.10 Supervisory action.
Authority: 12 U.S.C. 4513(a), 4513(b)(1), 4513(b)(5), 4514,
4631, and 4632.
Subpart A--General
Sec. 1732.1 Purpose and scope.
In furtherance of the safety and soundness authorities of OFHEO,
this part sets forth minimum requirements in connection with the record
retention program of each Enterprise. The requirements are intended to
ensure that complete and accurate records of an Enterprise are readily
accessible by OFHEO for examination and other supervisory purposes.
Sec. 1732.2 Definitions.
For purposes of this part, the term:
(a) Act means the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992, Title XIII of the Housing and Community
Development Act of 1992, Public Law 102-550, section 1301, Oct. 28,
1992, 106 Stat. 3672, 3941 through 4012 (1993) (12 U.S.C. 4501 et
seq.).
(b) Active record means a document that is necessary to conduct the
current business of an office or business unit of an Enterprise and,
therefore, is readily available for consultation and reference.
(c) Director means the Director of OFHEO, or his or her designee.
(d) Electronic record means a record created, generated,
communicated, or stored by electronic means.
(e) Employee means any officer or employee of an Enterprise, any
conservator appointed by OFHEO, or any agent or independent contractor
acting on behalf of an Enterprise.
(f) Enterprise means the Federal National Mortgage Association or
the Federal Home Loan Mortgage Corporation; and the term
``Enterprises'' means, collectively, the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation.
(g) E-mail means electronic mail, which is a method of
communication in which:
(1) Usually text is transmitted (but sometimes also graphics and/or
audio information);
(2) Operations include sending, storing, processing, and receiving
information;
(3) Users are allowed to communicate under specified conditions;
and
(4) Messages are held in storage until called for by the addressee,
including any attachment of separate electronic files.
(h) Inactive record means a document that is seldom used but must
be retained by an Enterprise for legislative, fiscal, legal, archival,
historical, or vital records purposes.
(i) OFHEO means the Office of Federal Housing Enterprise Oversight.
(j) Record means any document whether generated internally or
received from outside sources by an Enterprise or employee in
connection with Enterprise business, regardless of the following:
(1) Form or format, including hard copy documents (e.g. files,
logs, and reports) and electronic documents (e.g., e-mail, databases,
spreadsheets, PowerPoint presentations, electronic reporting systems,
electronic tapes and back-up tapes, optical discs, CD-ROMS, and DVDs),
and voicemail records;
(2) Where the document is stored or located, including network
servers, desktop or laptop computers and handheld computers, other
wireless devices with text messaging capabilities, and on-site or off-
site at a storage facility;
(3) Whether the document is maintained or used on Enterprise-owned
equipment, or personal or home computer systems of an employee; or
(4) Whether the document is active or inactive.
(k) Record retention schedule means a form that details the
categories of records an Enterprise is required to store and their
corresponding record retention periods. The record retention schedule
includes reproductions, as well as all media, including microfilm and
machine-readable computer records, for each record category.
(l) Retention period means the length of time that records must be
kept before they are destroyed. Records not authorized for destruction
have a retention period of ``permanent.''
(m) Vital records means documents that are needed to meet
operational responsibilities of an Enterprise under emergency or
disaster conditions (emergency operating records) or to protect the
legal and financial rights of an Enterprise and those affected by
Enterprise activities. Emergency operating records are the type of
vital records essential to the continued functioning or reconstitution
of an Enterprise during and after an emergency. A vital record may be
both an emergency operating record and a legal and financial rights
record.
Sec. 1732.3-1732.4 [Reserved]
Subpart B--Record Retention Program
Sec. 1732.5 Establishment and evaluation of record retention program.
(a) Establishment. An Enterprise shall establish and maintain a
written record retention program and provide a copy of such program to
the Examiner in Charge of the Enterprise within 120 days of the
effective date of this part, and annually thereafter, and whenever a
significant revision to the program has been made.
(b) Evaluation. Management of the Enterprise shall evaluate in
writing the adequacy and effectiveness of the record retention program
at least every three years and provide a copy of the evaluation to the
board of directors and the Examiner in Charge of the Enterprise.
Sec. 1732.6 Minimum requirements of record retention program.
(a) Requirements. The record retention program established and
maintained by an Enterprise under Sec. 1732.5 shall:
[[Page 31124]]
(1) Be reasonably designed to assure that retained records are
complete and accurate;
(2) Be reasonably designed to assure that the format of retained
records and the retention period--
(i) Are adequate to support litigation and the administrative,
business, external and internal audit functions of the Enterprise;
(ii) Comply with requirements of applicable laws and regulations;
and
(iii) Permit ready access by the Enterprise and, upon request, by
the examination and other staff of OFHEO;
(3) Assign in writing authorities and responsibilities for record
retention activities;
(4) Include policies and procedures concerning record holds,
consistent with Sec. 1732.7;
(5) Include an accurate, current, and comprehensive record
retention schedule that lists records by major categories,
subcategories, record type, and retention period, which retention
period is appropriate to the specific record and consistent with
applicable legal, regulatory, fiscal, and administrative requirements;
(6) Include adequate security and internal controls to protect
records from unauthorized access and data alteration; and
(7) Provide for adequate back-up and recovery of electronic
records.
(b) Training. The record retention program shall provide for
training of and notice to all employees on a periodic basis on their
record retention responsibilities, including instruction regarding
penalties provided by law for the unlawful removal or destruction of
records.
Sec. 1732.7 Record hold.
(a) Definition. For purposes of this part, the term ``record hold''
means a requirement, an order, or a directive from an Enterprise or
OFHEO that the Enterprise is to retain records relating to a particular
issue in connection with an actual or a potential OFHEO examination,
investigation, enforcement proceeding, or litigation.
(b) Notification by Enterprise. The record retention program of an
Enterprise shall:
(1) Address how all employees will receive prompt notification of a
record hold;
(2) Designate an individual to communicate specific requirements
and instructions, including, when necessary, the instruction to cease
immediately any otherwise permissible destruction of records; and
(3) Provide that any employee who is aware of a potential
investigation, enforcement proceeding, or litigation by OFHEO involving
the Enterprise or an employee shall notify immediately the legal
department of the Enterprise and shall retain any records that may be
relevant in any way to such investigation, enforcement proceeding, or
litigation.
(c) Method of record retention. The record retention program of an
Enterprise shall address the method by which an Enterprise will retain
records during a record hold. Specifically, the program shall describe
the method for the continued preservation of electronic records,
including e-mails, and the conversion of records from paper to
electronic format as well as any alternative storage method.
(d) Access to and retrieval of records. The record retention
program of an Enterprise shall ensure access to and retrieval of
records by an Enterprise and access, upon request, by OFHEO, during a
record hold.
Sec. Sec. 1732.8--1732.9 [Reserved]
Subpart C--Supervisory Action
Sec. 1732.10 Supervisory action.
(a) Supervisory action. Failure by an Enterprise to comply with
this part may subject the Enterprise or the board members, officers, or
employees thereof to supervisory action by OFHEO under the Act,
including but not limited to cease-and-desist proceedings, temporary
cease-and-desist proceedings, and civil money penalties.
(b) No limitation of authority. This part does not limit or
restrict the authority of OFHEO to act under its safety and soundness
mandate, in accordance with the Act. Such authority includes, but is
not limited to, conducting examinations, requiring reports and
disclosures, and enforcing compliance with applicable laws, rules, and
regulations.
Dated: May 24, 2006.
James B. Lockhart III,
Acting Director, Office of Federal Housing Enterprise Oversight.
[FR Doc. E6-8491 Filed 5-31-06; 8:45 am]
BILLING CODE 4220-01-P
