Reimbursement for Providing Financial Records; Recordkeeping Requirements for Certain Financial Records, 47854-47857 [E8-18898]

Agencies

• FEDERAL RESERVE SYSTEM

[Federal Register Volume 73, Number 159 (Friday, August 15, 2008)]
[Proposed Rules]
[Pages 47854-47857]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-18898]


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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.

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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: https://www.federalreserve.gov. Follow the 
instructions for submitting comments at: https://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: regs.comments@federalreserve.gov. 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 
https://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 
(https://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 
(https://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