Rules of Practice for Adjudication Proceedings, 10028-10056 [2022-02863]

Download as PDF 10028 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1081 [Docket No. CFPB–2022–0009] RIN 3170–AB08 Rules of Practice for Adjudication Proceedings Bureau of Consumer Financial Protection. ACTION: Procedural rule; request for public comment. AGENCY: The Consumer Financial Protection Bureau (Bureau) is issuing this procedural rule to update its Rules of Practice for Adjudication Proceedings (Rules of Practice). This rule expands the opportunities for parties in adjudication proceedings to conduct depositions. It also contains various amendments regarding timing and deadlines, the content of answers, the scheduling conference, bifurcation of proceedings, the process for deciding dispositive motions, and requirements for issue exhaustion, as well as other technical changes. Overall, the amendments will provide the parties with earlier access to relevant information and also foster greater procedural flexibility, which should ultimately contribute to more effective and efficient proceedings. The Bureau welcomes comments on this rule, and the Bureau may make further amendments if it receives comments warranting changes. DATES: This procedural rule is effective on February 22, 2022. Comments must be received on or before April 8, 2022. ADDRESSES: You may submit comments, identified by Docket No. CFPB–2022– 0009 or RIN 3170–AB08, by any of the following methods: • Federal eRulemaking Portal: https://www.regulations.gov. Follow the instructions for submitting comments. • Email: 2022-Rules-of-Practice@ cfpb.gov. Include Docket No. CFPB– 2022–0009 or RIN 3170–AB08 in the subject line of the message. • Mail/Hand Delivery/Courier: Comment Intake—Rules of Practice for Adjudication Proceedings, Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552. Instructions: The Bureau encourages the early submission of comments. All submissions should include the agency name and docket number or Regulatory Information Number (RIN) for this rulemaking. Because paper mail in the Washington, DC area and at the Bureau is subject to delay, and in light of difficulties associated with mail and lotter on DSK11XQN23PROD with RULES3 SUMMARY: VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 hand deliveries during the COVID–19 pandemic, commenters are encouraged to submit comments electronically. In general, all comments received will be posted without change to https:// www.regulations.gov. In addition, once the Bureau’s headquarters reopens, comments will be available for public inspection and copying at 1700 G Street NW, Washington, DC 20552, on official business days between the hours of 10 a.m. and 5 p.m. Eastern Time. At that time, you can make an appointment to inspect the documents by telephoning 202–435–7275. All comments, including attachments and other supporting materials, will become part of the public record and subject to public disclosure. Proprietary information or sensitive personal information, such as account numbers or Social Security numbers, or names of other individuals, should not be included. Comments will not be edited to remove any identifying or contact information. FOR FURTHER INFORMATION CONTACT: Kevin E. Friedl or Christopher Shelton, Senior Counsels, Legal Division, at 202– 435–7700. If you require this document in an alternative electronic format, please contact CFPB_Accessibility@ cfpb.gov. SUPPLEMENTARY INFORMATION: I. Background The Consumer Financial Protection Act of 2010 (CFPA) establishes the Bureau as an independent bureau in the Federal Reserve System and assigns the Bureau a range of rulemaking, enforcement, supervision, and other authorities.1 The Bureau’s enforcement powers under the CFPA include section 1053, which authorizes the Bureau to conduct adjudication proceedings.2 The Bureau finalized the original version of the Rules of Practice, which govern adjudication proceedings, in 2012 (2012 Rule).3 The Bureau later finalized certain amendments, which addressed the issuance of temporary cease-anddesist orders, in 2014 (2014 Rule).4 II. Legal Authority Section 1053(e) of the CFPA provides that the Bureau ‘‘shall prescribe rules establishing such procedures as may be 1 Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111–203, 124 Stat. 1376, 1955–2113 (2010). 2 12 U.S.C. 5563; see also section 1052(b), 12 U.S.C. 5562(b) (addressing subpoenas). 3 77 FR 39057 (June 29, 2012); see also 76 FR 45337 (July 28, 2011) (interim final rule). 4 79 FR 34622 (June 18, 2014); see also 78 FR 59163 (Sept. 26, 2013) (interim final rule). PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 necessary to carry out’’ section 1053.5 Additionally, section 1022(b)(1) provides, in relevant part, that the Bureau’s Director ‘‘may prescribe rules . . . as may be necessary or appropriate to enable the Bureau to administer and carry out the purposes and objectives of the Federal consumer financial laws, and to prevent evasions thereof.’’ 6 The Bureau issues this rule based on its authority under section 1053(e) and section 1022(b)(1). III. Section-by-Section Analysis Overview The Bureau is republishing the entire Rules of Practice in the Code of Federal Regulations. The changes that the Bureau is making in this rule, compared to the previous version of the Rules of Practice, are summarized in the sectionby-section analysis below. Also, the Bureau will include an unofficial, informal redline of the changes in the docket for this rule on https:// www.regulations.gov in order to assist stakeholders’ review.7 1081.114(a) Construction of Time Limits The Bureau is amending 12 CFR 1081.114(a) (Rule 114(a)) to simplify and clarify the provisions describing how deadlines are computed. It governs the computation of any time limit in this part, by order of the Director or the hearing officer, or by any applicable statute. These amendments are based on similar amendments made to Federal Rule of Civil Procedure 6(a) in 2009. Under the previous Rule 114(a), a period of ten days or less was computed differently than a longer period. Intermediate Saturdays, Sundays, and Federal holidays were included in computing longer periods, but excluded in computing shorter periods. The previous Rule 114(a) thus made computing deadlines unnecessarily complicated and led to counterintuitive 5 12 U.S.C. 5563(e). As courts have recognized, the term ‘‘necessary’’ is ‘‘a ‘chameleon-like’ word’’ whose meaning can vary based on context; in the context of section 1053(e), the Bureau interprets ‘‘ ‘necessary’ to mean ‘useful,’ ‘convenient’ or ‘appropriate’ rather than ‘required’ or ‘indispensable.’ ’’ Prometheus Radio Project v. FCC, 373 F.3d 372, 391–94 (3d Cir. 2004). Section 1053 sets out the fundamental features of Bureau adjudications, but it leaves many details open that can only be addressed through more specific Bureau procedures. In turn, those Bureau procedures could not be effective, or fair to the parties, if they were limited to only the most rudimentary steps that would be indispensable to holding a skeletal proceeding. Instead, the Bureau believes that Congress gave the Bureau room to adopt procedures that are useful in carrying out section 1053. 6 12 U.S.C. 5512(b)(1). 7 In the event of a conflict between the redline and the version in the Federal Register, the latter controls. E:\FR\FM\22FER3.SGM 22FER3 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations lotter on DSK11XQN23PROD with RULES3 results. For example, a 10-day period and a 14-day period that started on the same day usually ended on the same day—and the 10-day period not infrequently ended later than the 14-day period. Under the amended Rule 114(a), all deadlines stated in days are computed in the same way. The day of the event that triggers the deadline is not counted. All other days—including intermediate Saturdays, Sundays, and Federal holidays—are counted, with one exception: If the period ends on a Saturday, Sunday, or Federal holiday as set forth in 5 U.S.C. 6103(a), then the deadline falls on the next day that is not a Saturday, Sunday, or Federal holiday. Periods previously expressed as ten days or less will be shortened as a practical matter by the decision to count intermediate Saturdays, Sundays, and legal holidays in computing all periods. The Bureau is lengthening many of those periods to compensate for the change.8 The Bureau is also adjusting most of the 10-day periods in the Rules of Practice to account for the change in computation method, by setting 14 days as the new period. A 14-day period corresponds to the most frequent result of a 10-day period under the previous computation method—two Saturdays and two Sundays were excluded, giving 14 days in all. A 14-day period has an additional advantage. The final day falls on the same day of the week as the event that triggered the period—the 14th day after a Monday, for example, is a Monday. This advantage of using weeklong periods also led in many cases to adopting 7-day periods to replace many of the periods with periods using 7-day increments. 1081.115(b) Considerations in Determining Whether To Extend Time Limits or Grant Postponements, Adjournments and Extensions Previously, 12 CFR 1081.115(b) (Rule 115(b)) stated that the Director or the hearing officer should adhere to a policy of strongly disfavoring granting motions for extensions of time, except in circumstances where the moving party makes a strong showing that the denial of the motion would substantially prejudice its case. It then listed factors that the Director or hearing officer will consider. The Bureau is simplifying this provision to state only that such motions are generally disfavored, while retaining the same list of factors that the Director or hearing officer will consider. The Bureau continues to believe that 8 See, e.g., amended 12 CFR 1081.105(c)(2), 1081.200(c), 1081.202(a). VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 extensions of time should generally be disfavored, but it believes that relatively more flexibility than the previous language provided may be appropriate. 1081.201(b) Content of Answer The previous 12 CFR 1081.201(b) (Rule 201(b)) required a respondent to file an answer containing, among other things, any affirmative defense. The Bureau is amending Rule 201(b) to make clear that this includes any avoidance, including those that may not be considered ‘‘affirmative defenses.’’ As the Securities and Exchange Commission (SEC) explained when it adopted a similar amendment to its rules of practice, timely assertion of such theories should help focus the use of prehearing discovery, foster early identification of key issues and, as a result, make the discovery process more effective and efficient.9 1081.203 Scheduling Conference The provision at 12 CFR 1081.203 (Rule 203) requires a scheduling conference with all parties and the hearing officer for the purpose of scheduling the course and conduct of the proceeding. Before that scheduling conference, Rule 203 requires the parties to meet to discuss the nature and basis of their claims and defenses, the possibilities for settlement, as well as the matters that will be discussed with the hearing officer at the scheduling conference. The Bureau is making certain changes to Rule 203, including renumbering of provisions. This discussion cites the provisions as renumbered. First, the Bureau is amending Rule 203(b) to require that the parties exchange a scheduling conference disclosure after that initial meeting, but before the scheduling conference. That disclosure must include a factual summary of the case, a summary of all factual and legal issues in dispute, and a summary of all factual and legal bases supporting each defense. The disclosure must also include information about the evidence that the party may present at the hearing, other than solely for impeachment, including (i) the contact information for anticipated witnesses, as well as a summary of the witness’s anticipated testimony; and (ii) the identification of documents or other exhibits. The Bureau is also adopting certain amendments to Rules 203(c), (d), and (e). Amended Rule 203(c) provides that a party must supplement or correct the scheduling conference disclosure in a timely manner if the party acquires 9 81 PO 00000 FR 50211, 50219–20 (July 29, 2016). Frm 00003 Fmt 4701 Sfmt 4700 10029 other information that it intends to rely upon at a hearing. Amended Rule 203(d) provides a harmless-error rule for failures to disclose in scheduling conference disclosures. Finally, the Bureau is adopting certain minor clarifications to Rule 203(e), which governs the scheduling conference itself. These amendments to Rule 203 are intended to foster early identification of key issues and, as a result, make the adjudication process, including any discovery process, more effective and efficient. They are also intended to, early in the process, determine whether the parties intend to seek the issuance of subpoenas or file dispositive motions so that, with input from the parties, the hearing officer can set an appropriate hearing date, taking into account the time necessary to complete the discovery or decide the anticipated dispositive motions. The Bureau recognizes that, in most cases, the deadline for making the scheduling conference disclosure will also be the date the Office of Enforcement must commence making documents available to the respondent under 12 CFR 1081.206 (Rule 206). As the Bureau explained in the preamble to the 2012 Rule, it is the Bureau’s expectation that the Office of Enforcement will make the material available as soon as possible in every case.10 And even in cases where the Office of Enforcement cannot make those documents available within that time, a respondent may request a later hearing date and can move the hearing officer to alter the dates for either the scheduling conference or the scheduling conference disclosure. 1081.204(c) Bifurcation The Bureau is adding a new 12 CFR 1081.204(c) (Rule 204(c)) to address bifurcation of proceedings. It provides that the Director may order that the proceeding be divided into two or more stages, if the Director determines that it would promote efficiency in the proceeding or for other good cause. For example, the Director may order that the proceeding have two stages, so that at the conclusion of the first stage the Director issues a decision on whether there have been violations of law and at the conclusion of the second stage the Director issues a final decision and order, including with respect to any remedies. The Director may make an order under Rule 204(c) either on the motion of a party or on the Director’s own motion after inviting submissions by the parties. The Director may 10 77 E:\FR\FM\22FER3.SGM FR 39057, 39072 (June 29, 2012). 22FER3 10030 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations include, in that order or in later orders, modifications to the procedures in the Rules of Practice in order to effectuate an efficient division into stages, or the Director may assign such authority to the hearing officer.11 Bifurcation is a standard casemanagement tool available to Federal district courts. The new Rule 204(c) will provide the Bureau with the flexibility to use bifurcation in adjudication proceedings, if warranted by particular cases, and to tailor its procedures to the circumstances of those bifurcated cases. lotter on DSK11XQN23PROD with RULES3 1081.206 Availability of Documents for Inspection and Copying Rule 206 provides that the Bureau’s Office of Enforcement will make certain documents available for inspection and copying. The Bureau is amending Rule 206 to clarify certain categories of documents that may be withheld or information that may be redacted, as well as to make clear that the Office of Enforcement may produce those documents in an electronic format rather than making the documents available for physical inspection and copying. The clarifying amendments regarding documents that may be withheld or information that may be redacted are based on amendments the SEC recently made to its rules of practice. Amended Rule 206(b)(1)(iv) makes clear that the Office of Enforcement need not produce a document that reflects only settlement negotiations between the Office of Enforcement and a person or entity who is not a current respondent in the proceeding. As the SEC explained when it amended its rules of practice, this amendment is consistent with the important public policy interest in candid settlement negotiations, will help to preserve the confidentiality of settlement discussions, and help safeguard the privacy of potential respondents with whom the Office of Enforcement has negotiated.12 Amended Rule 206 also permits the Office of Enforcement to redact from the documents it produces information it is not obligated to produce (Rule 206(b)(2)(i)) and sensitive personal information about persons other than the respondent (Rule 206(b)(2)(ii)). These amendments also track the SEC’s recent amendments to its rules of practice and are designed to provide further protections for sensitive 11 The new provision also clarifies that only the decision and order of the Director after the final stage, and not a decision of the Director after an earlier stage, will be a final decision and order for purposes of specified provisions of the Rules of Practice and section 1053(b) of the CFPA. 12 81 FR 50211, 50222 (July 29, 2016). VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 personal information and to permit the redaction of information that is not required to be produced in the first place. The Bureau is also amending Rule 206(d) to change the date by which the Office of Enforcement must commence making documents available to the respondent, changing that date from seven days after service of the notice of charges to fourteen. This clarification harmonizes these timing provisions with 12 CFR 1081.119 (Rule 119), which protects the rights of third parties who have produced documents under a claim of confidentiality. The previous Rule 119 required a party to give a third party notice at least ten days prior to the disclosure of information obtained from that third party subject to a claim of confidentiality. Under the previous Rules of Practice, that meant that the Office of Enforcement had to provide notice to third parties before it commenced the adjudication proceeding because the Office of Enforcement had to give those third parties at least ten days’ notice before producing the documents and the Office of Enforcement had to commence making documents available seven days after filing. Rule 119 is amended to require parties to notify the third parties at least seven days prior to the disclosure of information the third party produced under a claim of confidentiality. Together, Rules 119 and 206 now require the Office of Enforcement to commence making documents available fourteen days after service of the notice of charges and to notify third parties who produced documents subject to that disclosure requirement under a claim of confidentiality at least seven days before producing those documents. The previous Rule 206(e) provided that the Office of Enforcement must make the documents available for inspection and copying at the Bureau’s office where they are ordinarily maintained. As the preamble to the 2012 Rule explained, the Bureau anticipated providing electronic copies of documents to respondents in most cases.13 The Bureau is amending Rule 206(e) to recognize this practice and expressly provide that the Office of Enforcement may produce those documents in an electronic format rather than making the documents available for inspection and copying. Under the amended Rule 206(e), the Office of Enforcement retains the discretion to make documents available for inspection and copying. 1081.208 Subpoenas and 1081.209 Depositions The Bureau is making certain interrelated changes to 12 CFR 1081.208 and 1081.209 (Rules 208 and 209). Rule 209 previously permitted parties to take depositions only if the witness was unable to attend or testify at a hearing. As the Bureau noted in the preamble to the 2012 Rule, the Bureau’s Rules of Practice were modeled in part on the approach that the SEC took in its rules of practice.14 Since that time, the SEC has amended its rules of practice to permit depositions.15 The Bureau is now amending Rule 209 to permit discovery depositions in addition to depositions of unavailable witnesses. The amendments to Rule 209 allow respondents and the Office of Enforcement to take depositions by oral examination pursuant to subpoena. The amended Rule 209 also permits parties to take a deposition by written questions upon motion and pursuant to a subpoena. If a proceeding involves a single respondent, the amendment allows the respondent and the Office of Enforcement to each depose up to three persons (i.e., up to three depositions per side). If a proceeding involves multiple respondents, the amendment allows respondents to collectively depose up to five persons and the Office of Enforcement to depose up to five persons (i.e., up to five depositions per side). This approach is consistent with the approach the SEC adopted when it amended its rules of practice to allow depositions.16 A party may also move to take additional depositions, though that motion must be filed no later than 28 days prior to the hearing date. Amended Rule 209 also sets forth the procedure for requesting to taking additional depositions. The above amendments to Rule 209 are intended to provide parties with further opportunities to develop arguments and defenses through deposition discovery, which may narrow the facts and issues to be explored during the hearing. Allowing depositions should facilitate the development of the case during the prehearing stage, which may result in more focused prehearing preparations, with issues distilled for the hearing and post-hearing briefing. Under amendments to Rules 208 and 209, a party must request that the hearing officer issue a subpoena for the deposition. If the subpoena is issued, the party must also serve written notice of the deposition. The amendments to 14 77 FR 39057, 39058 (June 29, 2012). FR 50211 (July 29, 2016). 16 Id. at 50216. 15 81 13 77 PO 00000 FR 39057, 39070 (June 29, 2012). Frm 00004 Fmt 4701 Sfmt 4700 E:\FR\FM\22FER3.SGM 22FER3 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations lotter on DSK11XQN23PROD with RULES3 Rule 208, governing the issuance of subpoenas, correspond with the new provisions on depositions in Rule 209 by defining the standards for issuing a subpoena requiring the deposition of a witness. The amendment adds a new Rule 208(e) governing the standard for issuance of subpoenas seeking depositions upon oral examination. Under the amendment, the hearing officer will promptly issue any subpoena requiring the attendance and testimony of witnesses at a deposition only if the subpoena complies with Rule 209 and if the proposed deponent: (i) Is a witness identified in the other party’s scheduling conference disclosure now required under revised Rule 203(b); (ii) a fact witness; 17 (iii) is a designated expert witness under 12 CFR 1081.210(b) (Rule 210(b)); or (iv) a document custodian.18 Fact witnesses, expert witnesses, and document custodians, whose knowledge of relevant facts does not arise from the Bureau’s investigation, the Bureau’s examination, or the proceeding, are the individuals most likely to have information relevant to the issues to be decided. Because the Bureau will also disclose to respondents the documents described in Rule 206 as well as witness statements upon request under 12 CFR 1081.207 (Rule 207), deposing Bureau staff whose only knowledge of relevant facts arose from the investigation, examination, or proceeding is unlikely to shed light on the events underlying the proceeding and will likely lead to impermissible inquiries into the mental processes and strategies of Bureau attorneys or staff under their direction. Not only does this implicate privileges or the work-product doctrine, but deposition of Bureau staff in this manner can be burdensome and disruptive because it embroils the parties in controversies over the scope of those protections. 17 Under amended Rule 209, this type of proposed deponent must have witnessed or participated in any event, transaction, occurrence, act, or omission that forms the basis for any claim asserted by the Office of Enforcement, any defense, or anything else required to be included in an answer pursuant to Rule 201(b), by any respondent in the proceeding (this excludes a proposed deponent whose only knowledge of these matters arises from the Bureau’s investigation, the Bureau’s examination, or the proceeding). 18 This excludes Bureau officers or personnel who have custody of documents or data that was produced from the Office of Enforcement to the respondent. In most circumstances, the Bureau officers or personnel were not the original custodian of the documents. Where the Bureau was the original custodian of the document—for example, a report of examination under 12 CFR 1081.303(d)(2) (Rule 303(d)(2))—there is no need to depose a document custodian as that report is admissible without a sponsoring witness. VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 The amendments to Rule 208 also provide a process for the hearing officer to request more information about the relevance or scope of the testimony sought and to refuse to issue the subpoena or issue it only upon conditions. This provision is intended to foster use of depositions where appropriate and encourage meaningful discovery, within the limits of the number of depositions provided per side. This provision should encourage parties to focus any requested depositions on those persons most likely to yield relevant information and thereby make efficient use of time during the prehearing stage. Rule 208 previously permitted parties to request issuance of subpoenas requiring the attendance and testimony of witnesses at the designated time and place of the hearing, for the production of documentary or other tangible evidence, or for the deposition of a witness who will be unavailable for the hearing. The Rules of Practice also permitted the deposition of expert witnesses under Rule 210. The amendments keep those provisions, making conforming amendments to account for the new provision permitting discovery depositions. A subpoena seeking the deposition of a witness who will be unavailable for the hearing does not count against the number of depositions permitted under Rule 209(a). These new and amended provisions expand the available legitimate mechanisms respondents may use to conduct discovery, providing respondents a clearer understanding of the bases of the Bureau’s factual contentions while reducing the costs and burdens of hearings on all parties. Additionally, the grounds for a hearing officer denying a request to issue a subpoena under Rule 208—that it is ‘‘unreasonable, oppressive, excessive in scope, or unduly burdensome’’—are consistent with well-established judicial standards, and hearing officers will, in their consideration of requests for subpoenas, act diligently and in good faith to implement the standards for refusing or modifying deposition subpoenas set forth under the amended rule. These combined changes are overall less burdensome yet are equally effective in the resolution of the case on the merits. Amended Rule 209 also adds procedures governing the taking of depositions, including depositions by written question. In general, once a subpoena for a deposition is issued, the party seeking the deposition must serve written notice of the deposition. That notice must include several things, PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 10031 including the time and place of the deposition, the identity of the deponent, and the method for recording the deposition. These and other procedural provisions track the SEC’s recent amendments to its rules of practice.19 They govern the process for seeking depositions by written questions and the taking of all depositions, including setting forth the deposition officer’s duties, the process for stating objections, motions to terminate or limit the deposition, and the process for finalizing a transcript. Finally, the Bureau is adding Rule 208(l), which addresses the relationship of subpoenas to the scheduling of the hearing. In the 2012 Rule, one reason why the Bureau did not—as a general matter—permit discovery depositions was because the additional time required for depositions before the hearing could be in tension with the statutory timetable for hearings under section 1053(b) of the CFPA.20 As the preamble to the 2012 Rule noted, prehearing depositions would present extreme scheduling difficulties in those cases in which respondents did not request hearing dates outside the default timeframe under section 1053(b), which provides for the hearing to be held 30 to 60 days after service of the notice of charges, unless an earlier or a later date is set by the Bureau, at the request of any party so served.21 The new Rule 208(l) addresses this scheduling obstacle to depositions and other discovery, by specifying that a respondent’s request for issuance of a subpoena constitutes a request that the hearing not be held until after a reasonable period, determined by the hearing officer, for the completion of discovery.22 This is because a request for discovery reasonably entails a delay for the discovery process to be completed. Given this resolution of the 2012 Rule’s scheduling concern, the Bureau believes that the benefits of discovery depositions under the amended Rule 209, as described earlier, outweigh other concerns expressed in the preamble to the 2012 Rule about the time, expense, 19 81 FR 50211, 50215–17 (July 29, 2016). U.S.C. 5563(b). 21 77 FR 39057, 39076 (June 29, 2012). 22 Rule 208(l) goes on to specify that the hearing officer will decide whether to grant such a request. If the request is granted, the hearing officer will set a deadline for the completion of discovery and schedule the specific date of the hearing, in consultation with the parties. Rule 208(l) does not apply to a subpoena for the attendance and testimony of a witness at the hearing or a subpoena to depose a witness unavailable for the hearing. 20 12 E:\FR\FM\22FER3.SGM 22FER3 10032 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations and risk of collateral disputes arising from depositions.23 1081.211 Interlocutory Review The provision at 12 CFR 1081.211 (Rule 211) governs interlocutory review. Rule 211(e) previously included language that stated that interlocutory review is disfavored, and that the Director will grant a petition to review a hearing officer’s ruling or order prior to the Director’s consideration of a recommended decision only in extraordinary circumstances. The Bureau is simplifying this language to state only that interlocutory review is generally disfavored. This is because, although interlocutory review remains disfavored, the Bureau believes that there can be situations where interlocutory review can contribute to the efficiency of proceedings short of extraordinary circumstances. 1081.212 Dispositive Motions The Bureau is relocating the previous 12 CFR 1081.212(g) and (h) (Rule 212(g) and (h)), which addressed oral argument and decisions on dispositive motions, respectively, to form part of 12 CFR 1081.213 (Rule 213). Rule 213 is discussed in the next section of this section-by-section analysis. Additionally, the Bureau is adopting a new Rule 212(g) to address the relationship of dispositive motions to the scheduling of the hearing, which is codified as Rule 212(g) but unrelated to the previous Rule 212(g). It is analogous to Rule 208(l), discussed above. It specifies that a respondent’s filing of a dispositive motion constitutes a request that the hearing not be held until after the motion is resolved.24 This is because the filing of a dispositive motion, whose purpose is to avoid or limit the need for a hearing, reasonably entails a delay of that hearing so that the motion can be resolved. lotter on DSK11XQN23PROD with RULES3 1081.213 Motions Rulings on Dispositive The Bureau is amending Rule 213 to adopt a new procedure for rulings on dispositive motions, based on a procedure used by the Federal Trade Commission (FTC). The Bureau is also making related technical changes for clarity. Under the Bureau’s existing Rules of Practice, the Director ‘‘may, at any time, direct that any matter be submitted to 23 77 FR 39057, 39076 (June 29, 2012). 212(g) goes on to state that the hearing officer will decide whether to grant such a request. If the request is granted, the hearing officer will schedule the specific date of the hearing, in consultation with the parties. 24 Rule VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 him or her for review.’’ 25 However, there was previously no specific procedure for the Director to exercise this discretion in the context of dispositive motions. The new Rule 213(a) provides that the Director will either rule on a dispositive motion, refer the motion to the hearing officer, or rule on the motion in part and refer it in part. This is based on a similar process under the FTC’s rules of practice.26 The Bureau agrees with the reasoning of the FTC when it adopted this process a decade ago. The FTC explained that the head of the agency has authority and expertise to rule initially on dispositive motions, and doing so can improve the quality of decision-making and expedite the proceeding.27 As the FTC further noted, an erroneous decision by an administrative law judge on a dispositive motion may lead to unnecessary briefing, hearing, and reversal, resulting in substantial costs and delay to the litigants.28 Adopting this process will give the Director the flexibility to decide whether a given dispositive motion would be most efficiently addressed by the hearing officer, with ultimate review by the Director, or simply by the Director. The new Rule 213(b) provides that, if the Director rules on the motion, the Director must do so within 42 days following the expiration of the time for filing all responses and replies, unless there is good cause to extend the deadline. If the Director refers the motion to the hearing officer, the Director may set a deadline for the hearing officer to rule. This is based on the parallel timing requirements under the FTC’s rules of practice.29 Previously, Rule 212(h) provided a 30-day timeframe for the hearing officer to decide dispositive motions, subject to extension.30 But the Bureau believes that the FTC’s somewhat more flexible approach to timing is warranted, given that the Director must first decide whether or not to refer the motion to the hearing officer and also has other responsibilities as the head of the agency. The Bureau believes that the overall efficiency gains to adjudication 25 12 CFR 1081.211(a). CFR 3.22(a). This FTC provision does not specifically discuss a situation where the agency head rules on the motion in part and refers it in part. The Bureau has included language in Rule 213(a) to specifically discuss this situation. 27 74 FR 1803, 1809–10 (Jan. 13, 2009). 28 Id. at 1809–10. 29 16 CFR 3.22(a). This FTC provision includes an interval of 45 days, but as discussed elsewhere in this section-by-section analysis the Bureau is generally adopting time intervals in increments of seven days. 30 See 12 CFR 1081.115 (change of time limits). 26 16 PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 proceedings from the new process, as discussed above, should generally compensate for any delays associated with a more flexible deadline. The new Rule 213(c) provides that, at the request of any party or on the Director or hearing officer’s own motion, the Director or hearing officer (as applicable) may hear oral argument on a dispositive motion. Rule 213(c) is identical to the previous Rule 212(g), except that it is updated to reflect the fact that the Director would be the appropriate official to hear oral argument, if any, to the extent the Director is deciding the motion. Finally, the new Rule 213(d) describes the types of rulings that the Director or hearing officer may make on a dispositive motion. It consolidates language from the previous Rules 212(h) and 213, with updates to reflect the fact that the Director may be the official who decides the motion, as well as other technical changes for clarity. 1081.400(a) Time Period for Filing Preliminary Findings and Conclusions Under the previous 12 CFR 1081.400(a) (Rule 400(a)), subject to possible extensions, the hearing officer was required to file a recommended decision no later than 90 days after the deadline for filing post-hearing responsive briefs pursuant to 12 CFR 1081.305(b) (Rule 305(b)) and in no event later than 300 days after filing of the notice of charges. The Bureau is amending the latter, 300-day interval to 360 days, in light of the amendments to Rule 209 that expand the opportunities for depositions. Additionally, as explained later in this section-bysection analysis, the Bureau is changing terminology from ‘‘recommended decision’’ to ‘‘preliminary findings and conclusions’’ throughout the Rules of Practice. 1081.408 Issue Exhaustion The Bureau is adding a new 12 CFR 1081.408 (Rule 408) to address issue exhaustion. As the Supreme Court has explained: ‘‘Administrative review schemes commonly require parties to give the agency an opportunity to address an issue before seeking judicial review of that question.’’ 31 These requirements can be ‘‘creatures of statute or regulation’’ or else are ‘‘judicially created.’’ 32 It is ‘‘common for an agency’s regulations to require issue exhaustion in administrative appeals. And when regulations do so, courts reviewing agency action regularly 31 Carr v. Saul, 141 S. Ct. 1352, 1358 (2021). 32 Id. E:\FR\FM\22FER3.SGM 22FER3 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations lotter on DSK11XQN23PROD with RULES3 ensure against the bypassing of that requirement by refusing to consider unexhausted issues.’’ 33 Consistent with the Court’s case law, the Administrative Conference of the United States has recommended that agencies address issue exhaustion requirements in their regulations.34 The Bureau is now adopting an express regulation on issue exhaustion. Section 1053 of the CFPA contemplates that the Bureau will conduct a proceeding to decide whether to issue a final order, and then parties may petition courts to review the Bureau’s decision, based on the record that was before the Bureau.35 But if parties do not adequately present their arguments to the Bureau, it frustrates this statutory scheme. Accordingly, the Bureau believes that having procedures to address issue exhaustion in adjudication proceedings is important to carry out section 1053.36 The Bureau also notes that having express procedures on this subject should benefit both the Bureau and the parties, by avoiding any potential confusion about how parties must raise arguments in adjudication proceedings. Rule 408(a) defines the new Rule 408’s scope. It applies to any argument to support a party’s case or defense, including any argument that could be a basis for setting aside Bureau action under 5 U.S.C. 706 or any other source of law. This broad scope ensures that the Bureau has the opportunity to consider any issue affecting its proceedings. Rule 408(b) provides, first, that a party must raise an argument before the hearing officer, or else it is not preserved for later consideration by the Director. Second, a party must raise an argument before the Director, or else it is not preserved for later consideration by a court. This is consistent with the 33 Sims v. Apfel, 530 U.S. 103, 108 (2000) (internal citation omitted). 34 86 FR 6612, 6619 (Jan. 22, 2021) (recommendation 2.k). 35 See generally section 1053(b), 12 U.S.C. 5563(b). 36 Section 1053(e), 12 U.S.C. 5563(e). The issue exhaustion provision is also independently authorized by section 1022(b)(1), 12 U.S.C. 5512(b)(1), based on either of two grounds. First, establishing orderly rules for issue exhaustion is appropriate to enable the Bureau to ‘‘administer and carry out the purposes and objectives of’’ section 1053, for the reasons discussed above and below. Id. Second, these issue-exhaustion rules ‘‘prevent evasions’’ of section 1053 and the Rules of Practice by some parties, who otherwise may not adequately present their arguments to the Bureau. Id.; see Woodford v. Ngo, 548 U.S. 81, 90 (2006) (explaining that ‘‘exhaustion requirements are designed to deal with parties who do not want to exhaust’’). VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 roles of the hearing officer and Director.37 Rule 408(c) provides that an argument must be raised in a manner that complies with the Rules of Practice and that provides a fair opportunity to consider the argument. Finally, Rule 408(d) clarifies that the Director has discretion to consider an unpreserved argument, including by considering it in the alternative. It also clarifies that, if the Director considers an unpreserved argument in the alternative, the argument remains unpreserved. Because issue exhaustion requirements serve to protect the agency’s processes, it is appropriate for the head of the agency to retain discretion to waive those issue exhaustion requirements in appropriate cases.38 If a party believes that there is good cause for the issue exhaustion requirements to not be applied in a particular context, the proper course is to timely request that the Director exercise this discretion. The Director may also do so on the Director’s own initiative. On the other hand, if the Director merely considers an unpreserved argument in the alternative, that should not be construed as a waiver by the Director of the party’s failure to appropriately raise the argument. Global Technical Amendments In addition to the specific changes outlined above, the Bureau is making certain technical amendments throughout the Rules of Practice. First, the Bureau is retitling the hearing officer’s ‘‘recommended decision’’ as ‘‘preliminary findings and conclusions.’’ The Bureau believes that this title is more descriptive of this component of an adjudication proceeding. This is a terminological change, and preliminary findings and conclusions remain a recommended 37 The Bureau notes that in cases where Rule 408(b) interacts with the Bureau’s revisions to Rule 213, it yields a common-sense result. If the Director rules on a dispositive motion under Rule 213 rather than referring it to the hearing officer, then the first sentence of Rule 408(b)—which normally requires parties to raise arguments before the hearing officer in the first instance—would be inapplicable to the Director’s consideration of the motion. This is because the Director’s ruling on the motion would not be ‘‘later’’ consideration by the Director after the hearing officer. On the other hand, the second sentence of Rule 408(b) would be applicable, and arguments not properly raised before the Director in briefing on the motion would not be preserved for later consideration by a court. 38 See, e.g., Am. Farm Lines v. Black Ball Freight Serv., 397 U.S. 532, 539 (1970) (It ‘‘is always within the discretion of . . . an administrative agency to relax or modify its procedural rules adopted for the orderly transaction of business before it when in a given case the ends of justice require it.’’). PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 10033 decision for purposes of the Administrative Procedure Act. Second, the Bureau is making changes to ensure that the language of the Rules of Practice is gender inclusive. Third, consistent with the current Federal Rules of Civil Procedure, the Bureau is replacing use of the term ‘‘shall’’ with the terms ‘‘must,’’ ‘‘may,’’ ‘‘will,’’ or ‘‘should,’’ depending on the context, because the term ‘‘shall’’ can sometimes be ambiguous.39 Fourth, the amendments replace certain uses of the term ‘‘the Bureau’’ with either ‘‘the Director,’’ ‘‘the Office of Administrative Adjudication,’’ or ‘‘the Office of Enforcement,’’ in order to avoid ambiguity about which Bureau organ is being referenced. Fifth, as also discussed in the section-by-section analysis for Rule 114(a), the Bureau is adjusting various time periods in the Rules of Practice. Finally, the Bureau is making technical changes to requirements in 12 CFR 1081.111(a), 1081.113(d)(2), and 1081.405(e) (Rules 111(a), 113(d)(2), and 405(e)) regarding filing of certain papers by the hearing officer and Director and service of those papers by the Office of Administrative Adjudication. IV. Section 1022(b)(2) Analysis In developing this rule, the Bureau has considered the rule’s benefits, costs, and impacts in accordance with section 1022(b)(2)(A) of the CFPA.40 In addition, the Bureau has consulted or offered to consult with the prudential regulators and the FTC, including regarding consistency of this rule with any prudential, market, or systemic objectives administered by those agencies, in accordance with section 1022(b)(2)(B) of the CFPA.41 As with the 2012 Rule, this rule neither imposes obligations on consumers, nor is it expected to affect their access to consumer financial products or services. For purposes of this 1022(b)(2) analysis, the Bureau compares the effect of the rule against the baseline of the Rules of Practice as they currently exist, as established by the 2012 Rule and amended by the 2014 Rule. The Rules of Practice amended by this rule are intended to provide an expeditious decision-making process. An expeditious decision-making process may benefit both consumers and 39 Fed. R. Civ. P. 1, advisory committee’s notes to 2007 amendment. 40 12 U.S.C. 5512(b)(2)(A). 41 12 U.S.C. 5512(b)(2)(B). Whether section 1022(b)(2)(A) and section 1022(b)(2)(A)(B) are applicable to this rule is unclear, but in order to inform the rulemaking more fully the Bureau performed the described analysis and consultations. E:\FR\FM\22FER3.SGM 22FER3 lotter on DSK11XQN23PROD with RULES3 10034 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations covered persons to the extent that it is used in lieu of proceedings initiated in federal district court. A clear and efficient process for the conduct of adjudication proceedings benefits consumers by providing a systematic process for protecting them from unlawful behavior. At the same time, a more efficient process affords covered persons with a cost-effective way to have their cases heard. The 2012 Rule adopted an affirmative disclosure approach to fact discovery, pursuant to which the Bureau makes available to respondents the information obtained by the Office of Enforcement from persons not employed by the Bureau prior to the institution of proceedings, in connection with the investigation leading to the institution of proceedings that is not otherwise privileged or protected from disclosure. This affirmative disclosure obligation was intended to substitute for the traditional civil discovery process, which can be both time-consuming and expensive. By changing this process to allow for a limited number of depositions by both the Office of Enforcement and respondents, the rule will increase the cost of the process in both time and money, relative to the baseline. At the same time, to the extent that a limited number of depositions makes hearings proceed more efficiently, the rule may reduce costs. In addition, since promulgating the 2012 Rule, the Bureau has only brought two cases through the administrative adjudication process from start to finish. As such, the Bureau expects there to be few cases in the future that would have benefited from the more limited deposition procedure in the 2012 Rule. The Bureau expects the amended procedure to still be faster and less expensive than discovery through a Federal district court. To the extent that adding additional discovery enables more cases that would otherwise be initiated in Federal court to instead be initiated through the administrative adjudication process, both consumers and covered persons will benefit. In addition, in the 1022(b)(2) analysis for the 2012 Rule, the Bureau stated that a benefit of the Rule was its similarity to existing rules of the prudential regulators, the FTC, and the SEC. The SEC has since amended its rules, and many of the changes in these amendments will align the Bureau’s rules with the new SEC rules and those of other agencies. The Rule’s similarity to other agencies’ rules should further reduce the expense of administrative adjudication for covered persons. Further, these amendments have no unique impact on insured depository VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 institutions or insured credit unions with less than $10 billion in assets described in section 1026(a) of the CFPA. Finally, the amendments do not have a unique impact on rural consumers. V. Regulatory Requirements As a rule of agency organization, procedure, or practice, this rule is exempt from the notice-and-comment rulemaking requirements of the Administrative Procedure Act.42 However, the Bureau is accepting comments on the rule. If, based on the comments, the Bureau decides to make further amendments, the Bureau requests comment on whether those amendments should apply to any adjudication proceedings that may be pending at that time. Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis.43 Moreover, the Bureau’s Director certifies that this rule will not have a significant economic impact on a substantial number of small entities. Therefore, an analysis is also not required for that reason.44 The rule imposes compliance burdens only on the handful of entities that are respondents in adjudication proceedings or third-party recipients of discovery requests. Some of the handful of affected entities may be small entities under the Regulatory Flexibility Act, but they would represent an extremely small fraction of small entities in consumer financial services markets. Accordingly, the number of small entities affected is not substantial. The Bureau has also determined that this rule does not impose any new or revise any existing recordkeeping, reporting, or disclosure requirements on covered entities or members of the public that would be collections of information requiring approval by the Office of Management and Budget under the Paperwork Reduction Act.45 List of Subjects in 12 CFR Part 1081 Administrative practice and procedure, Banks, Banking, Consumer protection, Credit unions, Law enforcement, National banks, Savings associations, Trade practices. Authority and Issuance For the reasons set forth above, the Bureau revises 12 CFR part 1081 to read as follows: ■ 42 5 U.S.C. 553(b). 43 5 U.S.C. 603, 604. 44 5 U.S.C. 605(b). 45 44 U.S.C. 3501–3521. PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 PART 1081—RULES OF PRACTICE FOR ADJUDICATION PROCEEDINGS Subpart A—General Rules Sec. 1081.100 Scope of the rules of practice. 1081.101 Expedition and fairness of proceedings. 1081.102 Rules of construction. 1081.103 Definitions. 1081.104 Authority of the hearing officer. 1081.105 Assignment, substitution, performance, disqualification of hearing officer. 1081.106 Deadlines. 1081.107 Appearance and practice in adjudication proceedings. 1081.108 Good faith certification. 1081.109 Conflict of interest. 1081.110 Ex parte communication. 1081.111 Filing of papers. 1081.112 Formal requirements as to papers filed. 1081.113 Service of papers. 1081.114 Construction of time limits. 1081.115 Change of time limits. 1081.116 Witness fees and expenses. 1081.117 Bureau’s right to conduct examination, collect information. 1081.118 Collateral attacks on adjudication proceedings. 1081.119 Confidential information; protective orders. 1081.120 Settlement. 1081.121 Cooperation with other agencies. Subpart B—Initiation of Proceedings and Prehearing Rules 1081.200 Commencement of proceeding and contents of notice of charges. 1081.201 Answer and disclosure statement and notification of financial interest. 1081.202 Amended pleadings. 1081.203 Scheduling conference. 1081.204 Consolidation, severance, or bifurcation of proceedings. 1081.205 Non-dispositive motions. 1081.206 Availability of documents for inspection and copying. 1081.207 Production of witness statements. 1081.208 Subpoenas. 1081.209 Depositions. 1081.210 Expert discovery. 1081.211 Interlocutory review. 1081.212 Dispositive motions. 1081.213 Rulings on dispositive motions. 1081.214 Prehearing conferences. 1081.215 Prehearing submissions. 1081.216 Amicus participation. Subpart C—Hearings 1081.300 Public hearings. 1081.301 Failure to appear. 1081.302 Conduct of hearings. 1081.303 Evidence. 1081.304 Record of the hearing. 1081.305 Post-hearing filings. 1081.306 Record in proceedings before hearing officer; retention of documents; copies. Subpart D—Decision and Appeals 1081.400 Preliminary findings and conclusions of the hearing officer. 1081.401 Transmission of documents to Director; record index; certification. E:\FR\FM\22FER3.SGM 22FER3 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations 1081.402 Notice of appeal; review by the Director. 1081.403 Briefs filed with the Director. 1081.404 Oral argument before the Director. 1081.405 Decision of the Director. 1081.406 Reconsideration. 1081.407 Effective date; stays pending judicial review. 1081.408 Issue exhaustion. Subpart E—Temporary Cease-and-Desist Proceedings 1081.500 Scope. 1081.501 Basis for issuance, form, and service. 1081.502 Judicial review, duration. Authority: 12 U.S.C. 5512(b)(1), 5563(e). Subpart A—General Rules § 1081.100 Scope of the rules of practice. This part prescribes rules of practice and procedure applicable to adjudication proceedings authorized by section 1053 of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5563). The rules of practice in this part do not govern the conduct of Bureau investigations, investigational hearings or other proceedings that do not arise from proceedings after a notice of charges. § 1081.101 Expedition and fairness of proceedings. To the extent practicable, consistent with requirements of law, the Bureau’s policy is to conduct such adjudication proceedings fairly and expeditiously. In the conduct of such proceedings, the hearing officer and counsel for all parties must make every effort at each stage of a proceeding to avoid delay. With the consent of the parties, the Director, at any time, or the hearing officer at any time prior to the filing of the hearing officer’s preliminary findings and conclusions, may change any time limit prescribed by this part. lotter on DSK11XQN23PROD with RULES3 § 1081.102 Rules of construction. For the purposes of this part: (a) Any term in the singular includes the plural, and the plural includes the singular, if such use would be appropriate; (b) Any use of a masculine, feminine, or neutral gender encompasses all three, if such use would be appropriate; (c) Unless context requires otherwise, a party’s counsel of record, if any, may, on behalf of that party, take any action required to be taken by the party; and (d) To the extent this part uses terms defined by section 1002 of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5481), such terms have the same meaning as set forth therein, unless defined differently by § 1081.103. VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 § 1081.103 Definitions. For the purposes of this part, unless explicitly stated to the contrary: Adjudication proceeding means a proceeding conducted pursuant to section 1053 of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5563) and intended to lead to the formulation of a final order other than a temporary order to cease and desist issued pursuant to section 1053(c) of that Act (12 U.S.C. 5563(c)). Bureau means the Consumer Financial Protection Bureau. Chief hearing officer means the hearing officer charged with assigning hearing officers to specific proceedings, in the event there is more than one hearing officer available to the Bureau. Counsel means any person representing a party pursuant to § 1081.107. Decisional employee means any employee of the Bureau who has not engaged in an investigative or prosecutorial role in a proceeding and who may assist the Director or the hearing officer, respectively, in preparing orders, preliminary findings and conclusions, decisions, and other documents under this part. Director means the Director of the Bureau or a person authorized to perform the functions of the Director in accordance with the law. Enforcement counsel means any individual who files a notice of appearance as counsel on behalf of the Office of Enforcement in an adjudication proceeding. Final order means an order issued by the Bureau with or without the consent of the respondent, which has become final, without regard to the pendency of any petition for reconsideration or review. General Counsel means the General Counsel of the Bureau or any Bureau employee to whom the General Counsel has delegated authority to act under this part. Hearing officer means an administrative law judge or any other person duly authorized to preside at a hearing. Notice of charges means the pleading that commences an adjudication proceeding, as described in § 1081.200, except that it does not include a stipulation and consent order under § 1081.200(d). Office of Administrative Adjudication means the office of the Bureau responsible for conducting adjudication proceedings. Office of Enforcement means the office of the Bureau responsible for enforcement of Federal consumer PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 10035 financial law or other laws enforceable by the Bureau. Party means the Office of Enforcement, any person named as a party in any notice of charges issued pursuant to this part, and, to the extent applicable, any person who intervenes in the proceeding pursuant to § 1081.119(a) to seek a protective order. Person means an individual, partnership, company, corporation, association (incorporated or unincorporated), trust, estate, cooperative organization, or other entity. Person employed by the Bureau means Bureau employees, contractors, agents, and others acting for or on behalf of the Bureau, or at its direction, including consulting experts. Respondent means the party named in the notice of charges. State means any State, territory, or possession of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, Guam, American Samoa, or the United States Virgin Islands or any federally recognized Indian tribe, as defined by the Secretary of the Interior under section 104(a) of the Federally Recognized Indian Tribe List Act of 1994, 25 U.S.C. 479a–1(a). § 1081.104 Authority of the hearing officer. (a) General rule. The hearing officer will have all powers necessary to conduct a proceeding in a fair and impartial manner and to avoid unnecessary delay. No provision of this part may be construed to limit the powers of the hearing officers provided by the Administrative Procedure Act, 5 U.S.C. 556, 557. (b) Powers. The powers of the hearing officer include but are not limited to the power: (1) To administer oaths and affirmations; (2) To issue subpoenas, subpoenas duces tecum, and protective orders, as authorized by this part, and to quash or modify any such subpoenas or orders; (3) To take depositions or cause depositions to be taken; (4) To receive relevant evidence and to rule upon the admission of evidence and offers of proof; (5) To regulate the course of a proceeding and the conduct of parties and their counsel; (6) To reject written submissions that materially fail to comply with the requirements of this part, and to deny confidential status to documents and testimony without prejudice until a party complies with all relevant rules of this chapter; E:\FR\FM\22FER3.SGM 22FER3 10036 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations (7) To hold conferences for settlement, simplification of the issues, or any other proper purpose and require the attendance at any such conference of at least one representative of each party who has authority to negotiate concerning the resolution of issues in controversy; (8) To inform the parties as to the availability of one or more alternative means of dispute resolution, and to encourage the use of such methods; (9) To certify questions to the Director for the Director’s determination in accordance with the rules of this part; (10) To consider and rule upon, as justice may require, all procedural and other motions appropriate in adjudication proceedings; (11) To issue and file preliminary findings and conclusions; (12) To recuse oneself by motion made by a party or on the hearing officer’s own motion; (13) To issue such sanctions against parties or their counsel as may be necessary to deter repetition of sanctionable conduct or comparable conduct by others similarly situated, as provided for in this part or as otherwise necessary to the appropriate conduct of hearings and related proceedings, provided that no sanction will be imposed before providing the sanctioned person an opportunity to show cause why no such sanction should issue; and (14) To do all other things necessary and appropriate to discharge the duties of a presiding officer. lotter on DSK11XQN23PROD with RULES3 § 1081.105 Assignment, substitution, performance, disqualification of hearing officer. (a) How assigned. In the event that more than one hearing officer is available to the Bureau for the conduct of proceedings under this part, the presiding hearing officer will be designated by the chief hearing officer, who will notify the parties of the hearing officer designated. (b) Interference. Hearing officers will not be subject to the supervision or direction of, or responsible to, any officer, employee, or agent engaged in the performance of investigative or prosecuting functions for the Bureau, and all direction by the Bureau to the hearing officer concerning any adjudication proceedings must appear in and be made part of the record. (c) Disqualification of hearing officers. (1) When a hearing officer deems the hearing officer disqualified to preside in a particular proceeding, the hearing officer must issue a notice stating that the hearing officer is withdrawing from VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 the matter and setting forth the reasons therefore. (2) Any party who has a reasonable, good faith basis to believe that a hearing officer has a personal bias, or is otherwise disqualified from hearing a case, may make a motion to the hearing officer that the hearing officer withdraw. The motion must be accompanied by an affidavit setting forth the facts alleged to constitute grounds for disqualification. Such motion must be filed at the earliest practicable time after the party learns, or could reasonably have learned, of the alleged grounds for disqualification. If the hearing officer does not disqualify the hearing officer within 14 days, the hearing officer must certify the motion to the Director pursuant to § 1081.211, together with any statement the hearing officer may wish to have considered by the Director. The Director must promptly determine the validity of the grounds alleged, either directly or on the report of another hearing officer appointed to conduct a hearing for that purpose, and will either direct the reassignment of the matter or confirm the hearing officer’s continued role in the matter. (d) Unavailability of hearing officer. If the hearing officer withdraws or is otherwise unable to perform the duties of the hearing officer, the chief hearing officer or the Director will designate another hearing officer to serve. § 1081.106 Deadlines The deadlines for action by the hearing officer established by §§ 1081.203, 1081.205, 1081.211, 1081.212, and 1081.400, or elsewhere in this part, confer no substantive rights on respondents. § 1081.107 Appearance and practice in adjudication proceedings. (a) Appearance before the Bureau or a hearing officer—(1) By attorneys. Any member in good standing of the bar of the highest court of any State may represent others before the Bureau if such attorney is not currently suspended or debarred from practice before the Bureau or by a court of the United States or of any State. (2) By non-attorneys. So long as such individual is not currently suspended or debarred from practice before the Bureau: (i) An individual may appear on the individual’s own behalf; (ii) A member of a partnership may represent the partnership; (iii) A duly authorized officer of a corporation, trust, or association may represent the corporation, trust, or association; and PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 (iv) A duly authorized officer or employee of any government unit, agency, or authority may represent that unit, agency, or authority. (3) Notice of appearance. Any individual acting as counsel on behalf of a party, including Enforcement counsel, must file a notice of appearance at or before the time that the individual submits papers or otherwise appears on behalf of a party in the adjudication proceeding. The notice of appearance must include a written declaration that the individual is currently qualified as provided in paragraph (a)(1) or (2) of this section and is authorized to represent the particular party, and if applicable, must include the attorney’s jurisdiction of admission or qualification, attorney identification number, and a statement by the appearing attorney attesting to the attorney’s good standing within the legal profession. By filing a notice of appearance on behalf of a party in an adjudication proceeding, the counsel agrees and represents that counsel is authorized to accept service on behalf of the represented party and that, in the event of withdrawal from representation, counsel will, if required by the hearing officer, continue to accept service until a new counsel has filed a notice of appearance or until the represented party indicates that the party will proceed on a pro se basis. The notice of appearance must provide the representative’s email address, telephone number, and business address and, if different from the representative’s addresses, electronic or other address at which the represented party may be served. (b) Sanctions. Dilatory, obstructionist, egregious, contemptuous, or contumacious conduct at any phase of any adjudication proceeding may be grounds for exclusion or suspension of counsel from the proceeding. An order imposing a sanction must describe the sanctioned conduct and explain the basis for the sanction. (c) Standards of conduct; disbarment. (1) All attorneys practicing before the Bureau must conform to the standards of ethical conduct required by the bars of which the attorneys are members. (2) If for good cause shown, the Director believes that any attorney is not conforming to such standards, or that an attorney or counsel to a party has otherwise engaged in conduct warranting disciplinary action, the Director may issue an order requiring such person to show cause why the attorney should not be suspended or disbarred from practice before the Bureau. The alleged offender will be granted due opportunity to be heard in E:\FR\FM\22FER3.SGM 22FER3 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations the alleged offender’s own defense and may be represented by counsel. Thereafter, if warranted by the facts, the Director may issue against the attorney or counsel an order of reprimand, suspension, or disbarment. lotter on DSK11XQN23PROD with RULES3 § 1081.108 Good faith certification. (a) General requirement. Every filing or submission of record following the issuance of a notice of charges must be signed by at least one counsel of record in counsel’s individual name and must state counsel’s address, email address, and telephone number. A party who acts as the party’s own counsel must sign the party’s individual name and state the party’s address, email address, and telephone number on every filing or submission of record. Papers filed by electronic transmission may be signed with an ‘‘/s/’’ notation, which will be deemed the signature of the party or representative whose name appears below the signature line. (b) Effect of signature. (1) The signature of counsel or a party constitutes a certification that: The counsel or party has read the filing or submission of record; to the best of one’s knowledge, information, and belief formed after reasonable inquiry, the filing or submission of record is well-grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law; and the filing or submission of record is not made for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation. (2) If a filing or submission of record is not signed, the hearing officer must strike the filing or submission of record, unless it is signed promptly after the omission is called to the attention of the filer. (c) Effect of making oral motion or argument. The act of making any oral motion or oral argument by any counsel or party constitutes a certification that to the best of one’s knowledge, information, and belief formed after reasonable inquiry, one’s statements are well-grounded in fact and are warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and are not made for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation. (d) Sanctions. Counsel or a party that fails to abide by the requirements of this section may be subject to sanctions pursuant to § 1081.104(b)(13). VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 § 1081.109 Conflict of interest. (a) Conflict of interest in representation. No person may appear as counsel for another person in an adjudication proceeding if it reasonably appears that such representation may be materially limited by that counsel’s responsibilities to a third person or by the counsel’s own interests. The hearing officer may take corrective measures at any stage of a proceeding to cure a conflict of interest in representation, including the issuance of an order limiting the scope of representation or disqualifying an individual from appearing in a representative capacity for the duration of the proceeding. (b) Certification and waiver. If any person appearing as counsel represents two or more parties to an adjudication proceeding or also represents a nonparty on a matter relevant to an issue in the proceeding, counsel must certify in writing at the time of filing the notice of appearance required by § 1081.107(a)(3): (1) That the counsel has personally and fully discussed the possibility of conflicts of interest with each such party and non-party; and (2) That each such party and/or nonparty waives any right it might otherwise have had to assert any known conflicts of interest or to assert any conflicts of interest during the course of the proceeding. § 1081.110 Ex parte communication. (a) Definitions. (1) For purposes of this section, ex parte communication means any material oral or written communication relevant to the merits of an adjudication proceeding that was neither on the record nor on reasonable prior notice to all parties that takes place between: (i) An interested person not employed by the Bureau (including such person’s counsel); and (ii) The hearing officer handling the proceeding, the Director, or a decisional employee. (2) A request for status of the proceeding does not constitute an ex parte communication. (3) Pendency of an adjudication proceeding means the time from when the Bureau issues a notice of charges, unless the person responsible for the communication has knowledge that a notice of charges will be issued, in which case the pendency of an adjudication will commence at the time of that person’s acquisition of such knowledge, or from when an order by a court of competent jurisdiction remanding a Bureau decision and order for further proceedings becomes effective, until the time the Director PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 10037 enters a final decision and order in the proceeding and the time permitted to seek reconsideration of that decision and order has elapsed. For purposes of this section, an order of remand by a court of competent jurisdiction is deemed to become effective when the Bureau’s right to petition for review or for a writ of certiorari has lapsed without a petition having been filed, or when such a petition has been denied. If a petition for reconsideration of a Bureau decision is filed pursuant to § 1081.406, the matter will be considered to be a pending adjudication proceeding until the time the Bureau enters an order disposing of the petition. (b) Prohibited ex parte communications. During the pendency of an adjudication proceeding, except to the extent required for the disposition of ex parte matters as authorized by law or as otherwise authorized by this part: (1) No interested person not employed by the Bureau will make or knowingly cause to be made to the Director, or to the hearing officer, or to any decisional employee, an ex parte communication; and (2) The Director, the hearing officer, or any decisional employee will not make or knowingly cause to be made to any interested person not employed by the Bureau any ex parte communication. (c) Procedure upon occurrence of ex parte communication. If an ex parte communication prohibited by paragraph (b) of this section is received by the hearing officer, the Director, or any decisional employee, that person must cause all such written communications (or, if the communication is oral, a memorandum stating the substance of the communication) to be placed on the record of the proceeding and served on all parties. All other parties to the proceeding will have an opportunity, within 14 days of receipt of service of the ex parte communication, to file responses thereto and to recommend any sanctions, in accordance with paragraph (d) of this section, that they believe to be appropriate under the circumstances. (d) Sanctions—(1) Adverse action on claim. Upon receipt of an ex parte communication knowingly made or knowingly caused to be made by a party and prohibited by paragraph (b) of this section, the Director or hearing officer, as appropriate, may, to the extent consistent with the interests of justice and the policy of the underlying statutes, require the party to show cause why the party’s claim or interest in the proceeding should not be dismissed, denied, disregarded, or otherwise adversely affected on account of such violation. E:\FR\FM\22FER3.SGM 22FER3 10038 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations (2) Discipline of persons practicing before the Bureau. The Director may, to the extent not prohibited by law, censure, suspend, or revoke the privilege to practice before the Bureau of any person who makes, or solicits the making of, an unauthorized ex parte communication. (e) Separation of functions. Except to the extent required for the disposition of ex parte matters as authorized by law, the hearing officer may not consult a person or party on any matter relevant to the merits of the adjudication, unless upon notice and opportunity for all parties to participate. An employee or agent engaged in the performance of investigative or prosecuting functions for the Bureau in a case, other than the Director, may not, in that or a factually related case, participate or advise in the decision, preliminary findings and conclusions, or agency review of the preliminary findings and conclusions, except as witness or counsel in public proceedings. lotter on DSK11XQN23PROD with RULES3 § 1081.111 Filing of papers. (a) Filing. The following papers must be filed by parties in an adjudication proceeding: The notice of charges, proof of service of the notice of charges, notices of appearance, answer, the disclosure statement required under § 1081.201(e), motion, brief, request for issuance or enforcement of a subpoena, response, opposition, reply, notice of appeal, or petition for reconsideration. The hearing officer or Director (as applicable) will file all written orders, rulings, notices, or requests. Any papers required to be filed must be filed with the Office of Administrative Adjudication, except as otherwise provided in this section. (b) Manner of filing. Unless otherwise specified by the Director or the hearing officer, filing may be accomplished by: (1) Electronic transmission in accordance with guidance issued by the Office of Administrative Adjudication; or (2) Any of the following methods if respondent demonstrates, in accordance with guidance issued by the Office of Administrative Adjudication, that electronic filing is not practicable: (i) Personal delivery; (ii) Delivery to a reliable commercial courier service or overnight delivery service; or (iii) Mailing the papers through the U.S. Postal Service by First Class Mail, Registered Mail, Certified Mail or Express Mail. (c) Papers filed in an adjudication proceeding are presumed to be public. Unless otherwise ordered by the Director or the hearing officer, all papers VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 filed in connection with an adjudication proceeding are presumed to be open to the public. The Bureau may provide public access to and publish any papers filed in an adjudication proceeding except if there is a pending motion for a protective order filed pursuant to § 1081.119, or if there is an order from the Director, hearing officer, or a Federal court authorizing the confidential treatment of the papers filed. § 1081.112 Formal requirements as to papers filed. (a) Form. All papers filed by parties must: (1) Set forth the name, address, telephone number, and email address of the counsel or party making the filing; (2) Be double-spaced (except for single-spaced footnotes and singlespaced indented quotations) and printed or typewritten on 81⁄2 x 11 inch paper in 12-point or larger font; (3) Include at the head of the paper, or on a title page, a caption setting forth the title of the case, the docket number of the proceeding, and a brief descriptive title indicating the purpose of the paper; (4) Be paginated with margins at least one inch wide; and (5) If filed by other than electronic means, be stapled, clipped, or otherwise fastened in a manner that lies flat when opened. (b) Signature. All papers must be dated and signed as provided in § 1081.108. (c) Number of copies. Unless otherwise specified by the Director or the hearing officer, one copy of all documents and papers must be filed if filing is by electronic transmission. If filing is accomplished by any other means, an original and one copy of all documents and papers must be filed, except that only one copy of transcripts of testimony and exhibits must be filed. (d) Authority to reject document for filing. The Office of Administrative Adjudication or the hearing officer may reject a document for filing that materially fails to comply with this part. (e) Sensitive personal information. Sensitive personal information means an individual’s Social Security number, taxpayer identification number, financial account number, credit card or debit card number, driver’s license number, State-issued identification number, passport number, date of birth (other than year), and any sensitive health information identifiable by individual, such as an individual’s medical records. Sensitive personal information must not be included in, and must be redacted or omitted from, filings unless the person filing the paper PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 determines that such information is relevant or otherwise necessary for the conduct of the proceeding. If the person filing a paper determines the sensitive personal information contained in the paper is relevant or necessary to the proceeding, the person must file the paper in accordance with paragraph (f) of this section, including filing an expurgated copy of the paper with the sensitive personal information redacted. (f) Confidential treatment of information in certain filings. A party seeking confidential treatment of information contained in a filing must contemporaneously file either a motion requesting such treatment in accordance with § 1081.119 or a copy of the order from the Director, hearing officer, or Federal court authorizing such confidential treatment. The filing must comply with any applicable order of the Director or hearing officer and must be accompanied by: (1) A complete, sealed copy of the documents containing the materials as to which confidential treatment is sought, with the allegedly confidential material clearly marked as such, and with the first page of the document labeled ‘‘Under Seal.’’ If the movant seeks or has obtained a protective order against disclosure to other parties as well as the public, copies of the documents will not be served on other parties; and (2) An expurgated copy of the materials as to which confidential treatment is sought, with the allegedly confidential materials redacted. The redacted version must indicate any omissions with brackets or ellipses, and its pagination and depiction of text on each page must be identical to that of the sealed version. (g) Certificate of service. Any papers filed in an adjudication proceeding must contain proof of service on all other parties or their counsel in the form of a statement of the date and manner of service and of the names of the persons served, certified by the person who made service. The certificate of service must be affixed to the papers filed and signed in accordance with § 1081.108. § 1081.113 Service of papers. (a) When required. In every adjudication proceeding, each paper required to be filed by § 1081.111 must be served upon each party in the proceeding in accordance with the provisions of this section; provided, however, that absent an order to the contrary, no service is required for motions which are to be heard ex parte. (b) Upon a person represented by counsel. Whenever service is required to E:\FR\FM\22FER3.SGM 22FER3 lotter on DSK11XQN23PROD with RULES3 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations be made upon a person represented by counsel who has filed a notice of appearance pursuant to § 1081.107(a)(3), service shall be made pursuant to paragraph (c) of this section upon counsel, unless service upon the person represented is ordered by the Director or the hearing officer, as appropriate. (c) Method of service. Except as provided in paragraph (d) of this section or as otherwise ordered by the hearing officer or the Director, service must be made by delivering a copy of the filing by one of the following methods: (1) Transmitting the papers by electronic transmission where the persons so serving each other have consented to service by specified electronic transmission and provided the Bureau and the parties with notice of the means for service by electronic transmission (e.g., email address or facsimile number); (2) Handing a copy to the person required to be served; or leaving a copy at the person’s office with a clerk or other person in charge thereof, or, if there is no one in charge, leaving it in a conspicuous place therein; or, if the office is closed or the person to be served has no office, leaving it at the person’s dwelling or usual place of abode with some person of suitable age and discretion then residing therein; (3) Mailing the papers through the U.S. Postal Service by First Cass Mail, Registered Mail, Certified Mail or Express Mail delivery addressed to the person; or (4) Sending the papers through a third-party commercial courier service or express delivery service. (d) Service of certain papers by the Office of Enforcement or the Office of Administrative Adjudication—(1) Service of a notice of charges by the Office of Enforcement—(i) To individuals. Notice of a proceeding shall be made to an individual by delivering a copy of the notice of charges to the individual or to an agent authorized by appointment or by law to receive such notice. Delivery, for purposes of this paragraph (d)(1)(i), means handing a copy of the notice to the individual; or leaving a copy at the individual’s office with a clerk or other person in charge thereof; or leaving a copy at the individual’s dwelling house or usual place of abode with some person of suitable age and discretion then residing therein; or sending a copy of the notice addressed to the individual through the U.S. Postal Service by Registered Mail, Certified Mail or Express Mail delivery, or by third-party commercial carrier, for overnight delivery and obtaining a confirmation of receipt. VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 (ii) To corporations or entities. Notice of a proceeding must be made to a person other than a natural person by delivering a copy of the notice of charges to an officer, managing or general agent, or any other agent authorized by appointment or law to receive such notice, by any method specified in paragraph (d)(1)(i) of this section. (iii) Upon persons registered with the Bureau. In addition to any other method of service specified in paragraph (d)(1)(i) or (ii) of this section, notice may be made to a person currently registered with the Bureau by sending a copy of the notice of charges addressed to the most recent business address shown on the person’s registration form by U.S. Postal Service certified, registered, or Express Mail and obtaining a confirmation of receipt or attempted delivery. (iv) Upon persons in a foreign country. Notice of a proceeding to a person in a foreign country may be made by any method specified in paragraph (d)(1) of this section, or by any other method reasonably calculated to give notice, provided that the method of service used is not prohibited by the law of the foreign country. (v) Record of service. The Office of Enforcement will maintain and file a record of service of the notice of charges on parties, identifying the party given notice, the method of service, the date of service, the address to which service was made, and the person who made service. If service is made in person, the certificate of service must state, if available, the name of the individual to whom the notice of charges was given. If service is made by U.S. Postal Service Registered Mail, Certified Mail, or Express Mail, the Office of Enforcement will maintain the confirmation of receipt or attempted delivery. If service is made to an agent authorized by appointment to receive service, the certificate of service must be accompanied by evidence of the appointment. (vi) Waiver of service. In lieu of service as set forth in paragraph (d)(1)(i) or (ii) of this section, the party may be provided a copy of the notice of charges by First Class Mail or other reliable means if a waiver of service is obtained from the party and placed in the record. (2) Service of papers by the Office of Administrative Adjudication. Unless otherwise ordered by the hearing officer or Director, the Office of Administrative Adjudication must serve papers filed by the hearing officer or Director promptly on each party pursuant to any method of service authorized under paragraph (c) or (d)(1) of this section. Unless PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 10039 otherwise ordered by the hearing officer or Director, if a party is represented by counsel who has filed a notice of appearance pursuant to § 1081.107(a)(3), the Office of Administrative Adjudication serves that party by serving its counsel. § 1081.114 Construction of time limits. (a) General rule. In computing any time period prescribed by this part, by order of the Director or a hearing officer, or by any applicable statute, exclude the day of the event that triggers the period, count every day, including intermediate Saturdays, Sundays, and Federal holidays, and include the last day of the period unless it is a Saturday, Sunday, or Federal holiday as set forth in 5 U.S.C. 6103(a). When the last day is a Saturday, Sunday, or Federal holiday, the period runs until the end of the next day that is not a Saturday, Sunday, or Federal holiday. (b) When papers are deemed to be filed or served. Filing and service are deemed to be effective: (1) In the case of personal service or same day commercial courier delivery, upon actual receipt by person served; (2) In the case of overnight commercial delivery service, Express Mail delivery, First Class Mail, Registered Mail, or Certified Mail, upon deposit in or delivery to an appropriate point of collection; or (3) In the case of electronic transmission, upon transmission. (c) Calculation of time for service and filing of responsive papers. Whenever a time limit is measured by a prescribed period from the service of any notice or paper, the applicable time limits are calculated as follows: (1) If service is made by First Class Mail, Registered Mail, or Certified Mail, add three calendar days to the prescribed period; (2) If service is made by Express Mail or overnight delivery service, add one calendar day to the prescribed period; or (3) If service is made by electronic transmission, add one calendar day to the prescribed period. § 1081.115 Change of time limits. (a) Generally. Except as otherwise provided by law, the hearing officer may, in any proceeding before him or her, for good cause shown, extend the time limits prescribed by this part or by any notice or order issued in the proceedings. After appeal to the Director pursuant to § 1081.402, the Director may grant extensions of the time limits for good cause shown. Extensions may be granted on the motion of a party after notice and opportunity to respond is afforded all non-moving parties or on E:\FR\FM\22FER3.SGM 22FER3 10040 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations the Director’s or the hearing officer’s own motion, as appropriate. (b) Considerations in determining whether to extend time limits or grant postponements, adjournments and extensions. Motions for extensions of time filed pursuant to paragraph (a) of this section are generally disfavored. In determining whether to grant any motions, the Director or hearing officer, as appropriate, will consider, in addition to any other relevant factors: (1) The length of the proceeding to date; (2) The number of postponements, adjournments or extensions already granted; (3) The stage of the proceedings at the time of the motion; (4) The impact of the motion on the hearing officer’s ability to complete the proceeding in the time specified by § 1081.400(a); and (5) Any other matters as justice may require. (c) Time limit. Postponements, adjournments, or extensions of time for filing papers may not exceed 21 days unless the Director or the hearing officer, as appropriate, states on the record or sets forth in a written order the reasons why a longer period of time is necessary. (d) No effect on deadline for preliminary findings and conclusions. The granting of any extension of time pursuant to this section does not affect any deadlines set pursuant to § 1081.400(a). lotter on DSK11XQN23PROD with RULES3 § 1081.116 Witness fees and expenses. Respondents must pay to witnesses subpoenaed for testimony or depositions on their behalf the same fees for attendance and mileage as are paid in the United States district courts in proceedings in which the United States is a party, provided that, in the case of a deposition subpoena addressed to a party, no witness fees or mileage need be paid. Fees for witnesses must be tendered in advance by any respondent requesting the issuance of a subpoena, except that fees and mileage need not be tendered in advance where the Office of Enforcement is the party requesting the subpoena. The Bureau must pay to witnesses subpoenaed for testimony or depositions on behalf of the Office of Enforcement the same fees for attendance and mileage as are paid in the United States district courts in proceedings in which the United States is a party, but the Bureau need not tender such fees in advance. § 1081.117 Bureau’s right to conduct examination, collect information. Nothing contained in this part limits in any manner the right of the Bureau VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 to conduct any examination, inspection, or visitation of any person, to conduct or continue any form of investigation authorized by law, to collect information in order to monitor the market for risks to consumers in the offering or provision of consumer financial products or services, or to otherwise gather information in accordance with law. § 1081.118 Collateral attacks on adjudication proceedings. Unless a court of competent jurisdiction, or the Director for good cause, so directs, if an interlocutory appeal or collateral attack is brought in any court concerning all or any part of an adjudication proceeding, the challenged adjudication proceeding will continue without regard to the pendency of that court proceeding. No default or other failure to act as directed in the adjudication proceeding within the times prescribed in this part will be excused based on the pendency before any court of any interlocutory appeal or collateral attack. § 1081.119 Confidential information; protective orders. (a) Rights of third parties. Any party that intends to disclose information obtained from a third party that is subject to a claim of confidentiality must provide notice to the third party at least seven days prior to the proposed disclosure of such information. In response to such notice, the third party may consent to the disclosure of such information, which may be conditioned on the entry of an appropriate protective order, or may intervene in the proceeding for the limited purpose of moving for a protective order pursuant to this section. Any written filing by a party that contains such confidential information must be accompanied by a certification that proper notice was provided. The act of making any oral motion or oral argument by any counsel or party which contains such confidential information constitutes a certification that proper notice was provided. A third party wishing to intervene for purposes of protecting its confidential information may file a single motion, in conformity with all applicable rules, setting forth the basis of both the third party’s right to intervene and the basis for the protective order, in conformity with paragraph (b) of this section. (b) Procedure. In any adjudication proceeding, a party, including a third party who has intervened pursuant to paragraph (a) of this section, may file a motion requesting a protective order to limit from disclosure to other parties or PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 to the public documents or testimony that contain confidential information. The motion should include a general summary or extract of the documents or testimony without revealing confidential details, and a copy of the proposed protective order. A motion for confidential treatment of documents should be filed in accordance with § 1081.112(f), and all other applicable rules of this chapter. (c) Basis for issuance. Documents and testimony introduced in a public hearing, or filed in connection with an adjudication proceeding, are presumed to be public. A motion for a protective order will be granted: (1) Upon a finding that public disclosure will likely result in a clearly defined, serious injury to the party or third party requesting confidential treatment; (2) After finding that the material constitutes sensitive personal information, as defined in § 1081.112(e); (3) If all parties, including third parties to the extent their information is at issue, stipulate to the entry of a protective order; or (4) Where public disclosure is prohibited by law. (d) Requests for additional information supporting confidentiality. The hearing officer may require a movant under paragraph (b) of this section to furnish in writing additional information with respect to the grounds for confidentiality. Failure to supply the information so requested within seven days from the date of receipt by the movant of a notice of the information required will be deemed a waiver of the objection to public disclosure of that portion of the documents to which the additional information relates, unless the hearing officer otherwise orders for good cause shown at or before the expiration of such seven-day period. (e) Confidentiality of documents pending decision. Pending a determination of a motion under this section, the documents as to which confidential treatment is sought and any other documents that would reveal the confidential information in those documents will be maintained under seal and may be disclosed only in accordance with orders of the hearing officer. Any order issued in connection with a motion under this section will be public unless the order would disclose information as to which a protective order has been granted, in which case that portion of the order that would reveal the protected information will be nonpublic. E:\FR\FM\22FER3.SGM 22FER3 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations lotter on DSK11XQN23PROD with RULES3 § 1081.120 Settlement. (a) Availability. Any respondent in an adjudication proceeding instituted under this part, may, at any time, propose in writing an offer of settlement. (b) Procedure. An offer of settlement must state that it is made pursuant to this section; must recite or incorporate as a part of the offer the provisions of paragraphs (c)(3) and (4) of this section; must be signed by the person making the offer, not by counsel; and must be submitted to enforcement counsel. (c) Consideration of offers of settlement. (1) Offers of settlement will be considered when time, the nature of the proceedings, and the public interest permit. (2) Any settlement offer will be presented to the Director with a recommendation, except that, if the recommendation is unfavorable, the offer will not be presented to the Director unless the person making the offer so requests. (3) By submitting an offer of settlement, the person making the offer waives, subject to acceptance of the offer: (i) All hearings pursuant to the statutory provisions under which the proceeding has been instituted; (ii) The filing of proposed findings of fact and conclusions of law; (iii) Proceedings before, and preliminary findings and conclusions by, a hearing officer; (iv) All post-hearing procedures; (v) Judicial review by any court; and (vi) Any objection to the jurisdiction of the Bureau under section 1053 of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5563). (4) By submitting an offer of settlement the person further waives: (i) Such provisions of this part or other requirements of law as may be construed to prevent any Bureau employee from participating in the preparation of, or advising the Director as to, any order, opinion, finding of fact, or conclusion of law to be entered pursuant to the offer; and (ii) Any right to claim bias or prejudgment by the Director based on the consideration of or discussions concerning settlement of all or any part of the proceeding. (5) If the Director rejects the offer of settlement, the person making the offer will be notified of the Director’s action and the offer of settlement will be deemed withdrawn. The rejected offer will not constitute a part of the record in any proceeding against the person making the offer, provided, however, that rejection of an offer of settlement does not affect the continued validity of VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 waivers pursuant to paragraph (c)(4) of this section with respect to any discussions concerning the rejected offer of settlement. (d) Consent orders. If the Director accepts the offer of settlement, all terms and conditions of a settlement entered into under this section will be recorded in a written stipulation signed by each settling respondent, and a consent order concluding the proceeding as to the settling respondents. The stipulation and consent order must be filed pursuant to § 1081.111, and must recite or incorporate as a part of the stipulation the provisions of paragraphs (c)(3) and (4) of this section. The Director will then issue a consent order, which will be a final order concluding the proceeding as to the settling respondents. § 1081.121 agencies. Cooperation with other It is the policy of the Bureau to cooperate with other governmental agencies to avoid unnecessary overlap or duplication of regulatory functions. Subpart B—Initiation of Proceedings and Prehearing Rules § 1081.200 Commencement of proceeding and contents of notice of charges. (a) Commencement of proceeding. A proceeding governed by subparts A through D of this part is commenced when the Bureau, through the Office of Enforcement, files a notice of charges in accordance with § 1081.111. The notice of charges must be served by the Office of Enforcement upon the respondent in accordance with § 1081.113(d)(1). (b) Contents of a notice of charges. The notice of charges must set forth: (1) The legal authority for the proceeding and for the Bureau’s jurisdiction over the proceeding; (2) A statement of the matters of fact and law showing that the Bureau is entitled to relief; (3) A proposed order or request for an order granting the relief sought; (4) The time and place of the hearing as required by law or regulation; (5) The time within which to file an answer as required by law or regulation; (6) That the answer must be filed and served in accordance with subpart A of this part; and (7) The docket number for the adjudication proceeding. (c) Publication of notice of charges. Unless otherwise ordered by the Director, the notice of charges will be given general circulation by release to the public, by publication on the Bureau’s website and, where directed by the hearing officer or the Director, by PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 10041 publication in the Federal Register. The Bureau may publish any notice of charges after 14 days from the date of service except if there is a pending motion for a protective order filed pursuant to § 1081.119. (d) Commencement of proceeding through a consent order. Notwithstanding paragraph (a) of this section, where the parties agree to settlement before the filing of a notice of charges, a proceeding may be commenced by filing a stipulation and consent order. The stipulation and consent order must be filed pursuant to § 1081.111. The stipulation must contain the information required under § 1081.120(d), and the consent order must contain the information required under paragraphs (b)(1) and (2) of this section. The proceeding will be concluded upon issuance of the consent order by the Director. (e) Voluntary dismissal—(1) Without an order. The Office of Enforcement may voluntarily dismiss an adjudication proceeding without an order entered by a hearing officer by filing either: (i) A notice of dismissal before the respondent(s) serves an answer; or (ii) A stipulation of dismissal signed by all parties who have appeared. (2) Effect. Unless the notice or stipulation states otherwise, the dismissal is without prejudice, and does not operate as an adjudication on the merits. § 1081.201 Answer and disclosure statement and notification of financial interest. (a) Time to file answer. Within 14 days of service of the notice of charges, respondent must file an answer as designated in the notice of charges. (b) Content of answer. An answer must specifically respond to each paragraph or allegation of fact contained in the notice of charges and must admit, deny, or state that the party lacks sufficient information to admit or deny each allegation of fact. A statement of lack of information has the effect of a denial. Denials must fairly meet the substance of each allegation of fact denied; general denials are not permitted. When a respondent denies part of an allegation, that part must be denied and the remainder specifically admitted. Any allegation of fact in the notice of charges which is not denied in the answer is deemed admitted for purposes of the proceeding. A respondent is not required to respond to the portion of a notice of charges that constitutes the request for relief or proposed order. A respondent must affirmatively state in the answer any avoidance or affirmative defense, E:\FR\FM\22FER3.SGM 22FER3 lotter on DSK11XQN23PROD with RULES3 10042 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations including but not limited to res judicata and statute of limitations. Failure to do so will be deemed a waiver. (c) If the allegations of the notice of charges are admitted. If the respondent elects not to contest the allegations of fact set forth in the notice of charges, the answer will consist of a statement that the respondent admits all the material allegations to be true. Such an answer constitutes a waiver of hearings as to the facts alleged in the notice of charges, and together with the notice of charges will provide a record basis on which the hearing officer will issue preliminary findings and conclusions, containing appropriate findings and conclusions and a proposed order disposing of the proceeding. In such an answer, the respondent may, however, reserve the right to submit proposed findings of fact and conclusions of law under § 1081.305. (d) Default. (1) Failure of a respondent to file an answer within the time provided will be deemed to constitute a waiver of the respondent’s right to appear and contest the allegations of the notice of charges and to authorize the hearing officer, without further notice to the respondent, to find the facts to be as alleged in the notice of charges and to enter preliminary findings and conclusions containing appropriate findings and conclusions. In such cases, respondent will have no right to appeal pursuant to § 1081.402, but must instead proceed pursuant to paragraph (d)(2) of this section. (2) A motion to set aside a default must be made within a reasonable time, state the reasons for the failure to appear or defend, and specify the nature of the proposed defense in the proceeding. In order to prevent injustice and on such conditions as may be appropriate, the hearing officer, at any time prior to the filing of the preliminary findings and conclusions, or the Director, at any time, may for good cause shown set aside a default. (e) Disclosure statement and notification of financial interest—(1) Who must file; contents. A respondent, nongovernmental intervenor, or nongovernmental amicus must file a disclosure statement and notification of financial interest that: (i) Identifies any parent corporation, any publicly owned corporation owning ten percent or more of its stock, and any publicly owned corporation not a party to the proceeding that has a financial interest in the outcome of the proceeding and the nature of that interest; or (ii) States that there are no such corporations. VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 (2) Time for filing; supplemental filing. A respondent, nongovernmental intervenor, or nongovernmental amicus must: (i) File the disclosure statement with its first appearance, pleading, motion, response, or other request addressed to the hearing officer or the Bureau; and (ii) Promptly file a supplemental statement if any required information changes. § 1081.202 Amended pleadings. (a) Amendments before the hearing. The notice of charges, answer, or any other pleading may be amended or supplemented only with the opposing party’s written consent or leave of the hearing officer. The respondent must answer an amended notice of charges within the time remaining for the respondent’s answer to the original notice of charges, or within 14 days after service of the amended notice of charges, whichever is later, unless the hearing officer orders otherwise for good cause. (b) Amendments to conform to the evidence. When issues not raised in the notice of charges or answer are tried at the hearing by express or implied consent of the parties, they will be treated in all respects as if they had been raised in the notice of charges or answer, and no formal amendments are required. If evidence is objected to at the hearing on the ground that it is not within the issues raised by the notice of charges or answer, the hearing officer may admit the evidence when admission is likely to assist in adjudicating the merits of the action and the objecting party fails to satisfy the hearing officer that the admission of such evidence would unfairly prejudice that party’s action or defense upon the merits. The hearing officer may grant a continuance to enable the objecting party to meet such evidence. § 1081.203 Scheduling conference. (a) Meeting of the parties before scheduling conference. As early as practicable before the scheduling conference described in paragraph (e) of this section, counsel for the parties must meet to discuss the nature and basis of their claims and defenses and the possibilities for a prompt settlement or resolution of the case. The parties must also discuss and agree, if possible, on the matters set forth in paragraph (e) of this section. (b) Scheduling conference disclosure. After the meeting required in paragraph (a) of this section and at least seven days prior to the scheduling conference described in paragraph (e) of this section, the parties must exchange a PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 scheduling conference disclosure, which must be signed by the party or by the party’s attorney if one has appeared on behalf of the party. The scheduling conference disclosure must include: (1) A factual summary of the case, a summary of all factual and legal issues in dispute, and a summary of all factual and legal bases supporting each defense; and (2) The following information about the evidence that the party may present at the hearing other than solely for impeachment: (i) The name, address, and telephone number of each witness, together with a summary of the witness’s anticipated testimony; and (ii) An identification of each document or other exhibit, including summaries of other evidence, along with a copy of each document or exhibit identified unless the document or exhibit has already been produced to the other party. (c) Duty to supplement. A party must supplement or correct the scheduling conference disclosure in a timely manner if the party acquires other information that it intends to rely upon at a hearing. (d) Failure to disclose—harmless error. In the event that information required to be disclosed in the scheduling conference disclosure is not disclosed, no rehearing or redecision of a proceeding already heard or decided will be required unless the other party establishes that the failure to disclose was not harmless error. (e) Scheduling conference. Within 21 days of service of the notice of charges or such other time as the parties and hearing officer may agree, counsel for all parties must appear before the hearing officer in person at a specified time and place or by electronic means for the purpose of scheduling the course and conduct of the proceeding. This meeting is called a scheduling conference. At the scheduling conference, counsel for the parties must be prepared to address: (1) Determination of the dates and location of the hearing, including, in proceedings under section 1053(b) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5563(b)), whether the hearing should commence later than 60 days after service of the notice of charges, considering, among other factors, whether the respondent intends to file a dispositive motion or to seek the issuance of subpoenas; (2) Simplification and clarification of the issues; (3) Amendments to pleadings; (4) Settlement of any or all issues; (5) Production of documents as set forth in § 1081.206 and of witness E:\FR\FM\22FER3.SGM 22FER3 lotter on DSK11XQN23PROD with RULES3 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations statements as set forth in § 1081.207, and prehearing production of documents in response to subpoenas duces tecum as set forth in § 1081.208; (6) Whether the parties intend to file dispositive motions; (7) Whether the parties intend to seek the issuance of subpoenas, the identity of any anticipated deponents or subpoena recipients, and a schedule for completing that discovery; (8) A schedule for the exchange of expert reports and the taking of expert depositions, if any; and (9) Such other matters as may aid in the orderly disposition of the proceeding. (f) Transcript. The hearing officer may require that a scheduling conference be recorded by a court reporter. A transcript of the conference and any materials filed, including orders, becomes part of the record of the proceeding. A party may obtain a copy of the transcript at that party’s expense. (g) Scheduling order. At or within seven days following the conclusion of the scheduling conference, the hearing officer will serve on each party an order setting forth the date and location of the hearing and any agreements reached and any procedural determinations made. (h) Failure to appear, default. Any person who is named in a notice of charges as a person against whom findings may be made or sanctions imposed and who fails to appear, in person or through counsel, at a scheduling conference of which the person has been duly notified may be deemed in default pursuant to § 1081.201(d)(1). A party may make a motion to set aside a default pursuant to § 1081.201(d)(2). (i) Public access. The scheduling conference will be public unless the hearing officer determines, based on the standard set forth in § 1081.119(c), that the conference (or any part thereof) should be closed to the public. appropriate adjustment to the prehearing schedule may be made to avoid unnecessary expense, inconvenience, or delay. (b) Severance. The hearing officer may, upon the motion of any party, sever the proceeding for separate resolution of the matter as to any respondent only if the hearing officer finds that: (1) Undue prejudice or injustice to the moving party would result from not severing the proceeding; and (2) Such undue prejudice or injustice would outweigh the interests of judicial economy and expedition in the complete and final resolution of the proceeding. (c) Bifurcation. The Director may order that the proceeding be divided into two or more stages, if the Director determines that it would promote efficiency in the proceeding or for other good cause. For example, the Director may order that the proceeding have two stages, so that at the conclusion of the first stage the Director issues a decision on whether there have been violations of law and at the conclusion of the second stage the Director issues a final decision and order, including with respect to any remedies. The Director may make an order under this paragraph (c) either on the motion of a party or on the Director’s own motion after inviting submissions by the parties. The Director may include, in that order or in later orders, modifications to the procedures in this part in order to effectuate an efficient division into stages, or the Director may assign such authority to the hearing officer. Only the decision and order of the Director after the final stage, and not a decision of the Director after an earlier stage, will be a final decision and order for purposes of §§ 1081.110, 1081.405(d) and (e), 1081.407, and 1081.502 and section 1053(b) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5563(b)). § 1081.204 Consolidation, severance, or bifurcation of proceedings. § 1081.205 (a) Consolidation. (1) On the motion of any party, or on the hearing officer’s own motion, the hearing officer may consolidate, for some or all purposes, any two or more proceedings, if each such proceeding involves or arises out of the same transaction, occurrence or series of transactions or occurrences, or involves at least one common respondent or a material common question of law or fact, unless such consolidation would cause unreasonable delay or injustice. (2) In the event of consolidation under paragraph (a)(1) of this section, (a) Scope. This section applies to all motions except motions to dismiss and motions for summary disposition. A non-dispositive motion filed pursuant to another section of this part must comply with any specific requirements of that section and this section to the extent the requirements in this section are not inconsistent. (b) In writing. (1) Unless made during a hearing or conference, an application or request for an order or ruling must be made by written motion. (2) All written motions must state with particularity the relief sought and VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 PO 00000 Non-dispositive motions. Frm 00017 Fmt 4701 Sfmt 4700 10043 must be accompanied by a proposed order. (3) No oral argument may be held on written motions except as otherwise directed by the hearing officer. Written memoranda, briefs, affidavits or other relevant material or documents may be filed in support of or in opposition to a motion. (c) Oral motions. The Director or the hearing officer, as appropriate, may order that an oral motion be submitted in writing. (d) Responses and replies. (1) Except as otherwise provided in this section, within 14 days after service of any written motion, or within such other period of time as may be established by the hearing officer or the Director, as appropriate, any party may file a written response to a motion. The hearing officer will not rule on any oral or written motion before each party has had an opportunity to file a response. (2) Reply briefs, if any, may be filed within seven days after service of the response. (3) The failure of a party to oppose a written motion or an oral motion made on the record is deemed consent by that party to the entry of an order substantially in the form of the order accompanying the motion. (e) Length limitations. No motion subject to this section (together with the brief in support of the motion) or brief in response to the motion may exceed 15 pages in length, exclusive of pages containing the table of contents, table of authorities, and any addendum that consists solely of copies of applicable cases, pertinent legislative provisions or rules, and exhibits. No reply brief may exceed six pages in length, exclusive of pages containing the table of contents, table of authorities, and any addendum that consists solely of copies of applicable cases, pertinent legislative provisions or rules, and exhibits. Motions for leave to file motions and briefs in excess of these limitations are disfavored. (f) Meet and confer requirements. Each motion filed under this section must be accompanied by a signed statement representing that counsel for the moving party has conferred or made a good faith effort to confer with opposing counsel in a good faith effort to resolve by agreement the issues raised by the motion and has been unable to reach such an agreement. If some of the matters in controversy have been resolved by agreement, the statement must specify the matters so resolved and the matters remaining unresolved. (g) Ruling on non-dispositive motions. Unless otherwise provided by a relevant section of this part, a hearing officer will E:\FR\FM\22FER3.SGM 22FER3 10044 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations rule on non-dispositive motions. Such ruling must be issued within 14 days after the expiration of the time period allowed for the filing of all motion papers authorized by this section. The Director, for good cause, may extend the time allowed for a ruling. (h) Proceedings not stayed. A motion under consideration by the Director or the hearing officer does not stay proceedings before the hearing officer unless the Director or the hearing officer, as appropriate, so orders. (i) Dilatory motions. Frivolous, dilatory, or repetitive motions are prohibited. The filing of such motions may form the basis for sanctions. lotter on DSK11XQN23PROD with RULES3 § 1081.206 Availability of documents for inspection and copying. For purposes of this section, the term documents includes any book, document, record, report, memorandum, paper, communication, tabulation, chart, logs, electronic files, or other data or data compilations stored in any medium. (a) Documents to be available for inspection and copying. (1) Unless otherwise provided by this section, or by order of the hearing officer, the Office of Enforcement will make available for inspection and copying by any respondent documents obtained by the Office of Enforcement prior to the institution of proceedings, from persons not employed by the Bureau, in connection with the investigation leading to the institution of proceedings. Such documents will include: (i) Any documents turned over in response to civil investigative demands or other written requests to provide documents or to be interviewed issued by the Office of Enforcement; (ii) All transcripts and transcript exhibits; and (iii) Any other documents obtained from persons not employed by the Bureau. (2) In addition, the Office of Enforcement will make available for inspection and copying by any respondent: (i) Each civil investigative demand or other written request to provide documents or to be interviewed issued by the Office of Enforcement in connection with the investigation leading to the institution of proceedings; and (ii) Any final examination or inspection reports prepared by any other Office of the Bureau if the Office of Enforcement either intends to introduce any such report into evidence or to use any such report to refresh the recollection of, or impeach, any witness. VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 (3) Nothing in paragraph (a) of this section limits the right of the Office of Enforcement to make available any other document, or limits the right of a party to seek access to or production pursuant to subpoena of any other document, or limits the authority of the hearing officer to order the production of any document pursuant to subpoena. (4) Nothing in paragraph (a) of this section requires the Office of Enforcement to produce a final examination or inspection report prepared by any other Office of the Bureau or any other government agency to a respondent who is not the subject of that report. (b) Documents that may be withheld. (1) The Office of Enforcement may withhold a document if: (i) The document is privileged; (ii) The document is an internal memorandum, note, or writing prepared by a person employed by the Bureau or another Government agency, other than an examination or supervision report as specified in paragraph (a)(2)(ii) of this section, or would otherwise be subject to the work product doctrine and will not be offered in evidence; (iii) The document was obtained from a domestic or foreign governmental entity and is either not relevant to the resolution of the proceeding or was provided on condition that the information not be disclosed; (iv) The document would disclose the identity of a confidential source; (v) Applicable law prohibits the disclosure of the document; (vi) The document reflects only settlement negotiations between the Office of Enforcement and a person or entity who is not a current respondent in the proceeding; or (vii) The hearing officer grants leave to withhold a document or category of documents as not relevant to the subject matter of the proceeding or otherwise, for good cause shown. (2) Nothing in paragraph (b)(1) of this section authorizes the Office of Enforcement in connection with an adjudication proceeding to withhold material exculpatory evidence in the possession of the Office that would otherwise be required to be produced pursuant to paragraph (a) of this section. (c) Withheld document list. The hearing officer may require the Office of Enforcement to produce a list of documents or categories of documents withheld pursuant to paragraphs (b)(1)(i) through (vi) of this section or to submit to the hearing officer any document withheld, except for any documents that are being withheld pursuant to paragraph (b)(1)(iii) of this section, in which case the Office of PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 Enforcement must inform the other parties of the fact that such documents are being withheld, but no further disclosures regarding those documents will be required. The hearing officer may determine whether any withheld document should be made available for inspection and copying. When similar documents are withheld pursuant to paragraphs (b)(1)(i) through (vi) of this section, those documents may be identified by category instead of by individual document. The hearing officer retains discretion to determine when an identification by category is insufficient. (d) Timing of inspection and copying. Unless otherwise ordered by the hearing officer, the Office of Enforcement must commence making documents available to a respondent for inspection and copying pursuant to this section no later than 14 days after service of the notice of charges. (e) Place of inspection and copying. Documents subject to inspection and copying pursuant to this section will be made available to the respondent for inspection and copying at the Bureau office where they are ordinarily maintained, or at such other place as the parties, in writing, may agree. A respondent will not be given custody of the documents or leave to remove the documents from the Bureau’s offices pursuant to the requirements of this section other than by written agreement of the Office of Enforcement. Such agreement must specify the documents subject to the agreement, the date they must be returned, and such other terms or conditions as are appropriate to provide for the safekeeping of the documents. If the Office of Enforcement determines that production of some or all the documents required to be produced under this section can be produced in an electronic format, the Office of Enforcement may instead produce the documents in an electronic format. (f) Copying costs and procedures. The respondent may obtain a photocopy of any documents made available for inspection or, at the discretion of the Office of Enforcement, electronic copies of such documents. The respondent is responsible for the cost of photocopying. Unless otherwise ordered, charges for copies made by the Office of Enforcement at the request of the respondent will be at the rate charged pursuant to part 1070 of this chapter. The respondent will be given access to the documents at the Bureau’s offices or such other place as the parties may agree during normal business hours for copying of documents at the respondent’s expense. E:\FR\FM\22FER3.SGM 22FER3 lotter on DSK11XQN23PROD with RULES3 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations (g) Duty to supplement. If the Office of Enforcement acquires information that it intends to rely upon at a hearing after making its disclosures under paragraph (a)(1) of this section, the Office of Enforcement must supplement its disclosures to include such information. (h) Failure to make documents available—harmless error. In the event that a document required to be made available to a respondent pursuant to this section is not made available by the Office of Enforcement, no rehearing or redecision of a proceeding already heard or decided will be required unless the respondent establishes that the failure to make the document available was not harmless error. (i) Disclosure of privileged or protected information or communications; scope of waiver; obligations of receiving party. (1) The disclosure of privileged or protected information or communications by any party during an adjudication proceeding does not operate as a waiver if: (i) The disclosure was inadvertent; (ii) The holder of the privilege or protection took reasonable steps to prevent disclosure; and (iii) The holder promptly took reasonable steps to rectify the error, including notifying any party that received the information or communication of the claim and the basis for it. (2) After being notified, the receiving party must promptly return, sequester, or destroy the specified information and any copies it has; must not use or disclose the information until the claim is resolved; must take reasonable steps to retrieve the information if the party disclosed it before being notified; and may promptly present the information to the hearing officer under seal for a determination of the claim. The producing party must preserve the information until the claim is resolved. (3) The disclosure of privileged or protected information or communications by any party during an adjudication proceeding will waive the privilege or protection, with respect to other parties to the proceeding, as to undisclosed information or communications only if: (i) The waiver is intentional; (ii) The disclosed and undisclosed information or communications concern the same subject matter; and (iii) They ought in fairness to be considered together. § 1081.207 Production of witness statements. (a) Availability. Any respondent may move that the Office of Enforcement VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 produce for inspection and copying any statement of any person called or to be called as a witness by the Office of Enforcement that pertains, or is expected to pertain, to the witness’s direct testimony and that would be required to be produced pursuant to the Jencks Act, 18 U.S.C. 3500, if the adjudication proceeding were a criminal proceeding. For purposes of this section, the term ‘‘statement’’ has the meaning set forth in 18 U.S.C. 3500(e). Such production will be made at a time and place fixed by the hearing officer and will be made available to any party, provided, however, that the production must be made under conditions intended to preserve the items to be inspected or copied. (b) Failure to produce—harmless error. In the event that a statement required to be made available to a respondent pursuant to this section is not made available by the Office of Enforcement, no rehearing or redecision of a proceeding already heard or decided will be required unless the respondent establishes that the failure to make the statement available was not harmless error. § 1081.208 Subpoenas. (a) Availability. In connection with any hearing ordered by the hearing officer or any deposition permitted under § 1081.209, a party may request the issuance of subpoenas requiring the attendance and testimony of witnesses at such depositions or at the designated time and place of the hearing, or the production of documentary or other tangible evidence returnable at any designated time or place. (b) Procedure. Unless made on the record at a hearing, requests for issuance of a subpoena must be made in writing, and filed and served on each party pursuant to subpart A of this part. The request must contain a proposed subpoena and a brief statement showing the general relevance and reasonableness of the scope of testimony or documents sought. (c) Signing may be delegated. A hearing officer may authorize issuance of a subpoena, and may delegate the manual signing of the subpoena to any other person. (d) Standards for issuance of subpoenas requiring the attendance and testimony of witnesses at the hearing or the production of documentary or other tangible evidence. The hearing officer will promptly issue any subpoena requiring the attendance and testimony of witnesses at the designated time and place of the hearing or the production of documentary or other tangible evidence. Where it appears to the PO 00000 Frm 00019 Fmt 4701 Sfmt 4700 10045 hearing officer that the subpoena sought may be unreasonable, oppressive, excessive in scope, or unduly burdensome, the hearing officer may, as a condition precedent to the issuance of the subpoena, require the person seeking the subpoena to show further the general relevance and reasonable scope of the testimony or other evidence sought. If after consideration of all the circumstances, the hearing officer determines that the subpoena or any of its terms is unreasonable, oppressive, excessive in scope, or unduly burdensome, the hearing officer may refuse to issue the subpoena, or issue it only upon such conditions as fairness requires. In making the foregoing determination, the hearing officer may inquire of the other parties whether they will stipulate to the facts sought to be proved. (e) Standards for issuance of subpoenas requiring the deposition of a witness pursuant to § 1081.209. (1) The hearing officer will promptly issue any subpoena requiring the attendance and testimony of witnesses at a deposition only if the subpoena complies with § 1081.209 and if: (i) The proposed deponent is a witness identified in the other party’s scheduling conference disclosure under § 1081.203(b); (ii) The proposed deponent was a witness of or participant in any event, transaction, occurrence, act, or omission that forms the basis for any claim asserted by the Office of Enforcement, any defense, or anything else required to be included in an answer pursuant to § 1081.201(b), by any respondent in the proceeding (this excludes a proposed deponent whose only knowledge of these matters arises from the Bureau’s investigation, the Bureau’s examination, or the proceeding); (iii) The proposed deponent is designated as an ‘‘expert witness’’ under § 1081.210(b); provided, however, that the deposition of an expert who is required to submit a written report under § 1081.210(b) may only occur after such report is served; (iv) The proposed deponent has custody of documents or electronic data relevant to the claims or defenses of any party (this excludes officers or personnel of the Bureau who have custody of documents or data that was produced by the Office of Enforcement to the respondent); or (v) The proposed deponent is unavailable for the hearing as set forth in § 1081.209(c). (2) Where it appears to the hearing officer that the subpoena sought may be unreasonable, oppressive, excessive in scope, or unduly burdensome, the E:\FR\FM\22FER3.SGM 22FER3 lotter on DSK11XQN23PROD with RULES3 10046 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations hearing officer may, as a condition precedent to the issuance of the subpoena, require the person seeking the subpoena to show further the general relevance and reasonable scope of the testimony or other evidence sought. If after consideration of all the circumstances, the hearing officer determines that the subpoena or any of its terms is unreasonable, oppressive, excessive in scope, or unduly burdensome, the hearing officer may refuse to issue the subpoena, or issue it only upon such conditions as fairness requires. In making the foregoing determination, the hearing officer may inquire of the other parties whether they will stipulate to the facts sought to be proved. (f) Service. Upon issuance by the hearing officer, the party making the request will serve the subpoena on the person named in the subpoena and on each party in accordance with § 1081.113(c). Subpoenas may be served in any State, territory, possession of the United States, or the District of Columbia, on any person or company doing business in any State, territory, possession of the United States, or the District of Columbia, or as otherwise permitted by law. (g) Tender of fees required. When a subpoena compelling the attendance of a person at a hearing or a deposition is issued at the request of anyone other than an officer or agency of the United States, service is valid only if the subpoena is accompanied by a tender to the subpoenaed person of the fees for one day’s attendance and mileage specified by § 1081.116. (h) Place of compliance. A subpoena for a deposition may command a person to attend a deposition only as follows: (1) Within 100 miles of where the person resides, is employed, or regularly transacts business in person; (2) Within the State where the person resides, is employed, or regularly transacts business in person, if the person is a party or a party’s officer; (3) At such other location that the parties and proposed deponent stipulate; or (4) At such other location that the hearing officer determines is appropriate. (i) Production of documentary material. Production of documentary material in response to a subpoena must be made under a sworn certificate, in such form as the subpoena designates, by the person to whom the subpoena is directed or, if not a natural person, by any person having knowledge of the facts and circumstances relating to such production, to the effect that all of the documentary material required by the VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 subpoena and in the possession, custody, or control of the person to whom the subpoena is directed has been produced and made available to the custodian. (j) Motion to quash or modify—(1) Procedure. Any person to whom a subpoena is directed, or who is an owner, creator, or the subject of the documents that are to be produced pursuant to a subpoena, or any party may, prior to the time specified therein for compliance, but in no event more than seven days after the date of service of such subpoena, move that the subpoena be quashed or modified. Such motion must be filed and served on all parties pursuant to subpart A of this part. Notwithstanding § 1081.205, the party on whose behalf the subpoena was issued or enforcement counsel may, within seven days of service of the motion, file a response to the motion. Reply briefs are not permitted unless requested by the hearing officer. Filing a motion to modify a subpoena does not stay the movant’s obligation to comply with those portions of the subpoena that the person has not sought to modify. (2) Standards governing motion to quash or modify. If compliance with the subpoena would be unreasonable, oppressive, or unduly burdensome, the hearing officer must quash or modify the subpoena, or may order return of the subpoena only upon specified conditions. These conditions may include but are not limited to a requirement that the party on whose behalf the subpoena was issued make reasonable compensation to the person to whom the subpoena was addressed for the cost of copying or transporting evidence to the place for return of the subpoena. (k) Enforcing subpoenas. If a subpoenaed person fails to comply with any subpoena issued pursuant to this part or any order of the hearing officer which directs compliance with all or any portion of a subpoena, the Bureau’s General Counsel may, on its own motion or at the request of the party on whose behalf the subpoena was issued, apply to an appropriate United States district court, in the name of the Bureau but on relation of such party, for an order requiring compliance with so much of the subpoena as the hearing officer has not quashed or modified, unless, in the judgment of the General Counsel, the enforcement of such subpoena would be inconsistent with law and the policies of the Consumer Financial Protection Act of 2010. Failure to request that the Bureau’s General Counsel seek enforcement of a subpoena constitutes a waiver of any claim of prejudice predicated upon the PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 unavailability of the testimony or evidence sought. (l) Relationship to scheduling of hearing. The parties must disclose at the scheduling conference required under § 1081.203(e) whether they intend to request the issuance of subpoenas under § 1081.209. A respondent’s request for issuance of a subpoena constitutes a request that the hearing not be held until after a reasonable period, determined by the hearing officer, for the completion of discovery. The hearing officer will decide whether to grant such a request. If the request is granted, the hearing officer will set a deadline for the completion of discovery and schedule the specific date of the hearing, in consultation with the parties. This paragraph (l) does not apply to a subpoena for the attendance and testimony of a witness at the hearing or a subpoena to depose a witness unavailable for the hearing. § 1081.209 Depositions. (a) Depositions by oral examination or by written questions. Depositions by oral examination or by written questions may be taken as set forth in this section and must be taken pursuant to subpoena issued under § 1081.208. Any deposition permitted under this section may be taken and submitted on written questions upon motion of any party, for good cause shown, or as stipulated by the parties. No other depositions will be permitted except as provided in paragraph (c) of this section. (1) If the proceeding involves a single respondent, the respondent may depose no more than three persons, and the Office of Enforcement may depose no more than three persons. (2) If the proceeding involves multiple respondents, the respondents collectively may depose no more than five persons, and the Office of Enforcement may depose no more than five persons. The depositions taken under this paragraph (a)(2) cannot exceed a total of five depositions for the Office of Enforcement, and five depositions for all respondents collectively. (3) Any side may file a motion with the hearing officer seeking leave to take up to two additional depositions beyond those permitted pursuant to paragraphs (a)(1) and (2) of this section. (i) Procedure. (A) A motion for additional depositions must be filed no later than 28 days prior to the hearing date. If the moving side proposes to take the additional deposition(s) by written questions, the motion must so state and include the proposed questions. Any party opposing the motion may submit an opposition within seven days after E:\FR\FM\22FER3.SGM 22FER3 lotter on DSK11XQN23PROD with RULES3 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations service of the motion. No reply will be permitted. The motion and any oppositions each must not exceed seven pages in length. (B) Upon consideration of the motion and any opposing papers, the hearing officer will issue an order either granting or denying the motion. The hearing officer will consider the motion on an expedited basis. (ii) Grounds and standards for motion. A motion under paragraph (a)(3) of this section will not be granted unless the additional depositions satisfy § 1081.208(d) and the moving side demonstrates a compelling need for the additional depositions by: (A) Identifying all witnesses the moving side plans to depose under this section; (B) Describing the role of all witnesses; (C) Describing the matters concerning which all witnesses are expected to be questioned, and why the deposition of all witnesses is necessary for the moving side’s arguments, claims, or defenses; and (D) Showing that the additional deposition(s) requested will not be unreasonably cumulative or duplicative. (b) Additional procedure for depositions by written questions. (1) Any motion or stipulation seeking a deposition of a witness by written questions must include the written questions the party seeking the deposition will ask the witness. Within seven days after service of the motion and written questions, any party may file objections to such written questions and any party may file cross-questions. When a deposition is taken by written questions, no persons other than the witness, counsel to the witness, the deposition officer, and, if the deposition officer does not act as reporter, a reporter, may be present at the examination of the witness. No party may be present or represented unless otherwise permitted by order. The deposition officer will propound the questions and cross-questions to the witness in the order submitted. (2) The order for deposition, filing of the deposition, form of the deposition, and use of the deposition in the record will be governed by paragraphs (d) through (l) of this section, except that no cross-examination will be made. (c) Depositions when witness is unavailable. In addition to depositions permitted under paragraph (a) of this section, the hearing officer may grant a party’s request for issuance of a subpoena if the requesting party shows that the prospective witness will likely give testimony material to the proceeding; that it is likely the VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 prospective witness, who is then within the United States, will be unable to attend or testify at the hearing because of age, sickness, infirmity, imprisonment, other disability, or absence from the United States, unless it appears that the absence of the witness was procured by the party requesting the deposition; and that the taking of a deposition will serve the interests of justice. (d) Service and contents of notice. Upon issuance of a subpoena for a deposition, the party taking the deposition must serve a notice on each party pursuant to § 1081.113. A notice of deposition must state that the deposition will be taken before a deposition officer authorized to administer oaths by the laws of the United States or of the place where the deposition is to be held. A notice of deposition also must state: (1) The name and address of the witness whose deposition is to be taken; (2) The time and place of the deposition; and (3) The manner of recording and preserving the deposition. (e) Method of recording—(1) Method stated in the notice. The party who notices the deposition must state in the notice the method for recording the testimony. Unless the hearing officer orders otherwise, testimony may be recorded by audio, audiovisual, or stenographic means. The noticing party bears the recording costs. Any party may arrange to transcribe a deposition, at that party’s expense. Each party will bear its own costs for obtaining copies of any transcripts or audio or audiovisual recordings. (2) Additional method. With prior notice to the deponent and other parties, any party may designate another method for recording the testimony in addition to that specified in the original notice. That party bears the expense of the additional record or transcript unless the hearing officer orders otherwise. (f) By remote means. The parties and the deponent may stipulate—or the hearing officer may on motion order— that a deposition be taken by telephone or other electronic means. For the purpose of this section, the deposition takes place where the deponent answers the questions. (g) Deposition officer’s duties—(1) Before the deposition. The deposition officer must begin the deposition with an on-the-record statement that includes: (i) The deposition officer’s name and business address; (ii) The date, time, and place of the deposition; PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 10047 (iii) The deponent’s name; (iv) The deposition officer’s administration of the oath or affirmation to the deponent; and (v) The identity of all persons present. (2) Conducting the deposition; avoiding distortion. If the deposition is recorded non-stenographically, the deposition officer must repeat the items in paragraphs (g)(1)(i) through (iii) of this section at the beginning of each unit of the recording medium. The deponent’s and attorneys’ appearance or demeanor must not be distorted through recording techniques. (3) After the deposition. At the end of a deposition, the deposition officer must state on the record that the deposition is complete and must set out any stipulations made by the attorneys about custody of the transcript or recording and of the exhibits, or about any other pertinent matters. (h) Order and record of the examination—(1) Order of examination. The examination and cross-examination of a deponent will proceed as they would at the hearing. After putting the deponent under oath or affirmation, the deposition officer must record the testimony by the method designated under paragraph (e) of this section. The testimony must be recorded by the deposition officer personally or by a person acting in the presence and under the direction of the deposition officer. The witness being deposed may have counsel present during the deposition. (2) Form of objections stated during the deposition. An objection at the time of the examination—whether to evidence, to a party’s conduct, to the deposition officer’s qualifications, to the manner of taking the deposition, or to any other aspect of the deposition— must be noted on the record, but the examination may still proceed and the testimony may be taken subject to any objection. An objection must be stated concisely in a nonargumentative and nonsuggestive manner. A person may instruct a deponent not to answer only when necessary to preserve a privilege, to enforce a limitation ordered by the hearing officer, or to present a motion to the hearing officer for a limitation on the questioning in the deposition. (i) Waiver of objections—(1) To the notice. An objection to an error or irregularity in a deposition notice is waived unless promptly served in writing on the party giving the notice. (2) To the deposition officer’s qualification. An objection based on disqualification of the deposition officer before whom a deposition is to be taken is waived if not made: (i) Before the deposition begins; or E:\FR\FM\22FER3.SGM 22FER3 lotter on DSK11XQN23PROD with RULES3 10048 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations (ii) Promptly after the basis for disqualification becomes known or, with reasonable diligence, could have been known. (3) To the taking of the deposition— (i) Objection to competence, relevance, or materiality. An objection to a deponent’s competence—or to the competence, relevance, or materiality of testimony—is not waived by a failure to make the objection before or during the deposition, unless the ground for it might have been corrected at that time. (ii) Objection to an error or irregularity. An objection to an error or irregularity at an oral examination is waived if: (A) It relates to the manner of taking the deposition, the form of a question or answer, the oath or affirmation, a party’s conduct, or other matters that might have been corrected at that time; and (B) It is not timely made during the deposition. (4) To completing and returning the deposition. An objection to how the deposition officer transcribed the testimony—or prepared, signed, certified, sealed, endorsed, sent, or otherwise dealt with the deposition—is waived unless a motion to suppress is made promptly after the error or irregularity becomes known or, with reasonable diligence, could have been known. (j) Duration; cross-examination; motion to terminate or limit—(1) Duration. Unless otherwise stipulated or ordered by the hearing officer, a deposition is limited to one day of seven hours, including cross-examination as provided in this paragraph (j)(1). In a deposition conducted by or for a respondent, the Office of Enforcement will be allowed a reasonable amount of time for cross-examination of the deponent. In a deposition conducted by the Office, the respondents collectively will be allowed a reasonable amount of time for cross-examination of the deponent. The hearing officer may allow additional time if needed to fairly examine the deponent or if the deponent, another person, or any other circumstance impedes or delays the examination. (2) Motion to terminate or limit—(i) Grounds. At any time during a deposition, the deponent or a party may move to terminate or limit it on the ground that it is being conducted in bad faith or in a manner that unreasonably annoys, embarrasses, or oppresses the deponent or party. If the objecting deponent or party so demands, the deposition must be suspended for the time necessary to present the motion to the hearing officer. VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 (ii) Order. Upon a motion under paragraph (j)(2)(i) of this section, the hearing officer may order that the deposition be terminated or may limit its scope. If terminated, the deposition may be resumed only by order of the hearing officer. (k) Review by the witness; changes— (1) Review; statement of changes. On request by the deponent or a party before the deposition is completed, and unless otherwise ordered by the hearing officer, the deponent must be allowed 14 days after being notified by the deposition officer that the transcript or recording is available, unless a longer time is agreed to by the parties or permitted by the hearing officer, in which: (i) To review the transcript or recording; and (ii) If there are changes in form or substance, to sign a statement listing the changes and the reasons for making them. (2) Changes indicated in the deposition officer’s certificate. The deposition officer must note in the certificate prescribed by paragraph (l)(1) of this section whether a review was requested and, if so, must attach any changes the deponent makes during the 14-day period. (l) Certification and delivery; exhibits; copies of the transcript or recording—(1) Certification and delivery. The deposition officer must certify in writing that the witness was duly sworn and that the deposition accurately records the witness’s testimony. The certificate must accompany the record of the deposition. Unless the hearing officer orders otherwise, the deposition officer must seal the deposition in an envelope or package bearing the title of the action and marked ‘‘Deposition of [witness’s name]’’ and must promptly send it to the attorney or party who arranged for the transcript or recording. The attorney or party must store it under conditions that will protect it against loss, destruction, tampering, or deterioration. (2) Documents and tangible things— (i) Originals and copies. Documents and tangible things produced for inspection during a deposition must, on a party’s request, be marked for identification and attached to the deposition. Any party may inspect and copy them. But if the person who produced them wants to keep the originals, the person may: (A) Offer copies to be marked, attached to the deposition, and then used as originals—after giving all parties a fair opportunity to verify the copies by comparing them with the originals; or (B) Give all parties a fair opportunity to inspect and copy the originals after PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 they are marked—in which event the originals may be used as if attached to the deposition. (ii) Order regarding the originals. Any party may move for an order that the originals be attached to the deposition pending final disposition of the case. (3) Copies of the transcript or recording. Unless otherwise stipulated or ordered by the hearing officer, the deposition officer must retain the stenographic notes of a deposition taken stenographically or a copy of the recording of a deposition taken by another method. When paid reasonable charges, the deposition officer must furnish a copy of the transcript or recording to any party or the deponent, as directed by the party or person paying such charges. (m) Presentation of objections or disputes. Any party or deponent seeking relief with respect to disputes over the conduct of a deposition may file a motion with the hearing officer to obtain relief as permitted by this part. § 1081.210 Expert discovery. (a) At a date set by the hearing officer at the scheduling conference, each party must serve the other with a report prepared by each of its expert witnesses. Each party must serve the other parties with a list of any rebuttal expert witnesses and a rebuttal report prepared by each such witness not later than 28 days after the deadline for service of expert reports, unless another date is set by the hearing officer. A rebuttal report must be limited to rebuttal of matters set forth in the expert report for which it is offered in rebuttal. If material outside the scope of fair rebuttal is presented, a party may file a motion not later than seven days after the deadline for service of rebuttal reports, seeking appropriate relief with the hearing officer, including striking all or part of the report, leave to submit a surrebuttal report by the party’s own experts, or leave to call a surrebuttal witness and to submit a surrebuttal report by that witness. (b) No party may call an expert witness at the hearing unless the expert witness has been listed and has provided reports as required by this section, unless otherwise directed by the hearing officer at a scheduling conference. Each side will be limited to calling at the hearing five expert witnesses, including any rebuttal or surrebuttal expert witnesses. A party may file a motion seeking leave to call additional expert witnesses due to extraordinary circumstances. (c) Each report must be signed by the expert and contain a complete statement of all opinions to be expressed and the basis and reasons therefore; the data, E:\FR\FM\22FER3.SGM 22FER3 lotter on DSK11XQN23PROD with RULES3 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations materials, or other information considered by the witness in forming the opinions; any exhibits to be used as a summary of or support for the opinions; the qualifications of the witness, including a list of all publications authored or co-authored by the witness within the preceding ten years; the compensation to be paid for the study and testimony; and a listing of any other cases in which the witness has testified or sought to testify as an expert at trial or hearing, or by deposition within the preceding four years. A rebuttal or surrebuttal report need not include any information already included in the initial report of the witness. (d) A party may depose any person who has been identified as an expert whose opinions may be presented at trial upon subpoena issued under § 1081.208. Unless otherwise ordered by the hearing officer, a deposition of any expert witness will be conducted after the disclosure of a report prepared by the witness in accordance with paragraph (a) of this section, and at least seven days prior to the deadline for submission of rebuttal expert reports. A deposition of an expert witness must be completed no later than 14 days before the hearing unless otherwise ordered by the hearing officer. No expert deposition will exceed seven hours on the record, absent agreement of the parties or an order of the hearing officer for good cause shown. Expert depositions will be conducted pursuant to the procedures set forth in § 1081.209(d) through (l). (e) A party may not discover facts known or opinions held by an expert who has been retained or specifically employed by another party in anticipation of litigation or preparation for the hearing and who is not listed as a witness for the hearing. A party may not discover drafts of any report required by this section, regardless of the form in which the draft is recorded, or any communications between another party’s attorney and any of that other party’s experts, regardless of the form of the communications, except to the extent that the communications: (1) Relate to compensation for the testifying expert’s study or testimony; (2) Identify facts or data that the other party’s attorney provided and that the testifying expert considered in forming the opinions to be expressed; or (3) Identify assumptions that the other party’s attorney provided and that the testifying expert relied on in forming the opinions to be expressed. (f) The hearing officer has the discretion to dispense with the requirement of expert discovery in appropriate cases. VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 § 1081.211 Interlocutory review. (a) Availability. The Director may, at any time, direct that any matter be submitted to the Director for review. Subject to paragraph (c) of this section, the hearing officer may, upon the hearing officer’s motion or upon the motion of any party, certify any matter for interlocutory review by the Director. This section is the exclusive remedy for review of a hearing officer’s ruling or order prior to the Director’s consideration of the entire proceeding. (b) Procedure. Any party’s motion for certification of a ruling or order for interlocutory review must be filed with the hearing officer within seven days of service of the ruling or order, must specify the ruling or order or parts thereof for which interlocutory review is sought, must attach any other portions of the record on which the moving party relies, and must otherwise comply with § 1081.205. Notwithstanding § 1081.205, any response to such a motion must be filed within seven days of service of the motion. The hearing officer must issue a ruling on the motion within seven days of the deadline for filing a response. (c) Certification process. Unless the Director directs otherwise, a ruling or order may not be submitted to the Director for interlocutory review unless the hearing officer, upon the hearing officer’s motion or upon the motion of a party, certifies the ruling or order in writing. The hearing officer will not certify a ruling or order unless: (1) The ruling or order would compel testimony of Bureau officers or employees, or those from another governmental agency, or the production of documentary evidence in the custody of the Bureau or another governmental agency; (2) The ruling or order involves a motion for disqualification of the hearing officer pursuant to § 1081.105(c)(2); (3) The ruling or order suspended or barred an individual from appearing before the Bureau pursuant to § 1081.107(c); or (4) Upon motion by a party, the hearing officer is of the opinion that: (i) The ruling or order involves a controlling question of law as to which there is substantial ground for difference of opinion; and (ii) An immediate review of the ruling or order is likely to materially advance the completion of the proceeding or subsequent review will be an inadequate remedy. (d) Interlocutory review. A party whose motion for certification has been denied by the hearing officer may PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 10049 petition the Director for interlocutory review. (e) Director review. The Director will determine whether or not to review a ruling or order certified under this section or the subject of a petition for interlocutory review. Interlocutory review is generally disfavored. The Director may decline to review a ruling or order certified by a hearing officer pursuant to paragraph (c) of this section or the petition of a party who has been denied certification if the Director determines that interlocutory review is not warranted or appropriate under the circumstances, in which case the Director may summarily deny the petition. If the Director determines to grant the review, the Director will review the matter and issue a ruling and order in an expeditious fashion, consistent with the Bureau’s other responsibilities. (f) Proceedings not stayed. The filing of a motion requesting that the hearing officer certify any of the hearing officer’s prior rulings or orders for interlocutory review or a petition for interlocutory review filed with the Director, and the grant of any such review, will not stay proceedings before the hearing officer unless the hearing officer, or the Director, so orders. The Director will not consider a motion for a stay unless the motion was first been made to the hearing officer. § 1081.212 Dispositive motions. (a) Dispositive motions. This section governs the filing of motions to dismiss and motions for summary disposition. The filing of any such motion does not obviate a party’s obligation to file an answer or take any other action required by this part or by an order of the hearing officer, unless expressly so provided by the hearing officer. (b) Motions to dismiss. A respondent may file a motion to dismiss asserting that, even assuming the truth of the facts alleged in the notice of charges, it is entitled to dismissal as a matter of law. (c) Motion for summary disposition. A party may make a motion for summary disposition asserting that the undisputed pleaded facts, admissions, affidavits, stipulations, documentary evidence, matters as to which official notice may be taken, and any other evidentiary materials properly submitted in connection with a motion for summary disposition show that: (1) There is no genuine issue as to any material fact; and (2) The moving party is entitled to a decision in the moving party’s favor as a matter of law. (d) Filing of motions for summary disposition and responses. (1) After a E:\FR\FM\22FER3.SGM 22FER3 lotter on DSK11XQN23PROD with RULES3 10050 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations respondent’s answer has been filed and documents have been made available to the respondent for inspection and copying pursuant to § 1081.206, any party may move for summary disposition in its favor of all or any part of the proceeding. (2) A motion for summary disposition must be accompanied by a statement of the material facts as to which the moving party contends there is no genuine issue. Such motion must be supported by documentary evidence, which may take the form of admissions in pleadings, stipulations, depositions, investigatory depositions, transcripts, affidavits, and any other evidentiary materials that the moving party contends support the moving party’s position. The motion must also be accompanied by a brief containing the points and authorities in support of the contention of the moving party. Any party opposing a motion for summary disposition must file a statement setting forth those material facts as to which the opposing party contends a genuine dispute exists. Such opposition must be supported by evidence of the same type as may be submitted in support of a motion for summary disposition and a brief containing the points and authorities in support of the contention that summary disposition would be inappropriate. (3) Any affidavit or declaration submitted in support of or in opposition to a motion for summary disposition must set forth such facts as would be admissible in evidence, must show affirmatively that the affiant is competent to testify to the matters stated therein, and must be signed under oath and penalty of perjury. (e) Page limitations for dispositive motions. A motion to dismiss or for summary disposition, together with any brief in support of the motion (exclusive of any declarations, affidavits, or attachments) may not exceed 35 pages in length. Motions for extensions of this length limitation are disfavored. (f) Opposition and reply response time and page limitation. Any party, within 21 days after service of a dispositive motion, or within such period as allowed by the hearing officer, may file a response to such motion. The length limitations set forth in paragraph (e) of this section also apply to such responses. Any reply brief filed in response to an opposition to a dispositive motion must be filed within seven days after service of the opposition. Reply briefs may not exceed ten pages. (g) Relationship to scheduling of hearing. A respondent’s filing of a dispositive motion constitutes a request VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 that the hearing not be held until after the motion is resolved. The hearing officer will decide whether to grant such a request. If the request is granted, the hearing officer will schedule the specific date of the hearing, in consultation with the parties. § 1081.213 Rulings on dispositive motions. (a) Ruling by Director or hearing officer. The Director will rule on a dispositive motion, refer the motion to the hearing officer, or rule on the motion in part and refer it in part. (b) Timing of ruling. If the Director rules on the motion, the Director must do so within 42 days following the expiration of the time for filing all responses and replies, unless there is good cause to extend the deadline. If the Director refers the motion to the hearing officer, the Director may set a deadline for the hearing officer to rule. (c) Oral argument. At the request of any party or on the Director or hearing officer’s own motion, the Director or hearing officer (as applicable) may hear oral argument on a dispositive motion. (d) Types of rulings—(1) Granting motion as to all claims and relief. If the Director or hearing officer (as applicable) determines that dismissal or summary disposition is warranted as to all claims and relief, then (as applicable) the Director will issue a final decision and order or the hearing officer will issue preliminary findings and conclusions. (2) Granting motion as to some claims or relief. If the Director or hearing officer (as applicable) determines that dismissal or summary disposition is warranted as to some issues, but not all claims and relief, the Director or hearing officer will issue an order that directs further proceedings. Where the dispositive motion is a motion for summary disposition, the order will specify the facts that appear without substantial controversy. The facts so specified are be deemed established. (3) Denial of motion. If the Director or hearing officer (as applicable) determines that dismissal or summary disposition is not warranted, the Director or hearing officer may make a ruling denying the motion. If it appears that a party, for good cause shown, cannot present by affidavit, prior to hearing, facts essential to justify opposition to a motion for summary disposition, the Director or hearing officer must deny or defer the motion, or do so in relevant part. § 1081.214 Prehearing conferences. (a) Prehearing conferences. The hearing officer may, in addition to the scheduling conference, upon the PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 hearing officer’s motion or at the request of any party, direct counsel for the parties to meet with the hearing officer (in person or by electronic means) at a prehearing conference for further discussion of the issues outlined in § 1081.203, or for discussion of any additional matters that in the view of the hearing officer will aid in an orderly disposition of the proceeding, including but not limited to: (1) Identification of potential witnesses and limitation on the number of witnesses; (2) The exchange of any prehearing materials including witness lists, statements of issues, exhibits, and any other materials; (3) Stipulations, admissions of fact, and the contents, authenticity, and admissibility into evidence of documents; (4) Matters of which official notice may be taken; and (5) Whether the parties intend to introduce prior sworn statements of witnesses as set forth in § 1081.303(h). (b) Transcript. The hearing officer has discretion to require that a prehearing conference be recorded by a court reporter. A transcript of the conference and any materials filed, including orders, becomes part of the record of the proceeding. A party may obtain a copy of the transcript at that party’s expense. (c) Public access. Any prehearing conferences will be public unless the hearing officer determines, based on the standard set forth in § 1081.119(c), that the conference (or any part thereof) should be closed to the public. § 1081.215 Prehearing submissions. (a) Generally. Within the time set by the hearing officer, but in no case later than 14 days before the start of the hearing, each party must serve on every other party: (1) A prehearing statement, which must include an outline or narrative summary of the party’s case or defense, and the legal theories upon which the party will rely; (2) A final list of witnesses to be called to testify at the hearing, including the name and address of each witness and a short summary of the expected testimony of each witness; (3) Any prior sworn statements that a party intends to admit into evidence pursuant to § 1081.303(h); (4) A list of the exhibits to be introduced at the hearing along with a copy of each exhibit; and (5) Any stipulations of fact or liability. (b) Expert witnesses. Each party who intends to call an expert witness must also serve, in addition to the information required by paragraph (a)(2) E:\FR\FM\22FER3.SGM 22FER3 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations of this section, a statement of the expert’s qualifications, a listing of other proceedings in which the expert has given or sought to give expert testimony at trial or hearing or by deposition within the preceding four years, and a list of publications authored or coauthored by the expert within the preceding ten years, to the extent such information has not already been provided pursuant to § 1081.210. (c) Effect of failure to comply. No witness may testify and no exhibits may be introduced at the hearing if such witness or exhibit is not listed in the prehearing submissions pursuant to paragraph (a) of this section, except for good cause shown. § 1081.216 lotter on DSK11XQN23PROD with RULES3 Subpart C—Hearings Public hearings. All hearings in adjudication proceedings will be public unless a confidentiality order is entered by the VerDate Sep<11>2014 § 1081.301 Failure to appear. Failure of a respondent to appear in person or by a duly authorized counsel at the hearing constitutes a waiver of respondent’s right to a hearing and may be deemed an admission of the facts as alleged and consent to the relief sought in the notice of charges. Without further proceedings or notice to the respondent, the hearing officer will file preliminary findings and conclusions containing findings of fact and addressing the relief sought in the notice of charges. Amicus participation. (a) Availability. An amicus brief may be filed only if: (1) A motion for leave to file the brief has been granted; (2) The brief is accompanied by written consent of all parties; (3) The brief is filed at the request of the Director or the hearing officer, as appropriate; or (4) The brief is presented by the United States or an officer or agency thereof, or by a State or a political subdivision thereof. (b) Procedure. An amicus brief may be filed conditionally with the motion for leave. The motion for leave must identify the interest of the movant and state the reasons why a brief of an amicus curiae is desirable. Except as all parties otherwise consent, any amicus curiae must file its brief within the time allowed the party whose position the amicus will support, unless the Director or hearing officer, as appropriate, for good cause shown, grants leave for a later filing. If a later filing is allowed, the order granting leave to file must specify when an opposing party may reply to the brief. (c) Motions. A motion for leave to file an amicus brief is subject to § 1081.205. (d) Formal requirements as to amicus briefs. Amicus briefs must be filed pursuant to § 1081.111, comply with the requirements of § 1081.112, and are be subject to the length limitation in § 1081.212(e). (e) Oral argument. An amicus curiae may move to present oral argument at any hearing before the hearing officer, but such motions will be granted only for extraordinary reasons. § 1081.300 hearing officer pursuant to § 1081.119 or unless otherwise ordered by the Director on the grounds that holding an open hearing would be contrary to the public interest. 21:43 Feb 18, 2022 Jkt 256001 § 1081.302 Conduct of hearings. All hearings will be conducted in a fair, impartial, expeditious, and orderly manner. Enforcement counsel will present its case-in-chief first, unless otherwise ordered by the hearing officer, or unless otherwise expressly specified by law or regulation. Enforcement counsel will be the first party to present an opening statement and a closing statement, and may make a rebuttal statement after the respondent’s closing statement. If there are multiple respondents, respondents may agree among themselves as to their order of presentation of their cases, but if they do not agree, the hearing officer will fix the order. § 1081.303 Evidence. (a) Burden of proof. Enforcement counsel will have the burden of proof of the ultimate issue(s) of the Bureau’s claims at the hearing. (b) Admissibility. (1) Except as is otherwise set forth in this section, relevant, material, and reliable evidence that is not unduly repetitive is admissible to the fullest extent authorized by the Administrative Procedure Act and other applicable law. Irrelevant, immaterial, and unreliable evidence will be excluded. (2) Evidence, even if relevant, may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice or confusion of the issues; if the evidence would be misleading; or based on considerations of undue delay, waste of time, or needless presentation of cumulative evidence. (3) Evidence that constitutes hearsay may be admitted if it is relevant, material, and bears satisfactory indicia of reliability so that its use is fair. Hearsay is a statement, other than one made by the declarant while testifying at the hearing, offered in evidence to PO 00000 Frm 00025 Fmt 4701 Sfmt 4700 10051 prove the truth of the matter asserted. If otherwise meeting the standards for admissibility described in this section, transcripts of depositions, investigational hearings, prior testimony in Bureau or other proceedings, and any other form of hearsay will be admissible and may not be excluded solely on the ground that they are or contain hearsay. (4) Evidence that would be admissible under the Federal Rules of Evidence is admissible in a proceeding conducted pursuant to this part. Evidence that would be inadmissible under the Federal Rules of Evidence may not be deemed or ruled to be inadmissible in a proceeding conducted pursuant to this part solely on that basis. (c) Official notice. Official notice may be taken of any material fact that is not subject to reasonable dispute in that it is either generally known or capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned. If official notice is requested or is taken of a material fact not appearing in the evidence in the record, the parties, upon timely request, will be afforded an opportunity to disprove such noticed fact. (d) Documents. (1) A duplicate copy of a document is admissible to the same extent as the original, unless a genuine issue is raised as to whether the copy is in some material respect not a true and legible copy of the original. (2) Subject to the requirements of paragraph (b) of this section, any document, including a report of examination, supervisory activity, inspection or visitation, prepared by the Bureau, a prudential regulator, as that term is defined in section 1002(24) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5481(24)), or by a State regulatory agency, is presumptively admissible either with or without a sponsoring witness. (3) Witnesses may use existing or newly created charts, exhibits, calendars, calculations, outlines, or other graphic material to summarize, illustrate, or simplify the presentation of testimony. Such materials may, subject to the hearing officer’s discretion, be used with or without being admitted into evidence. (4) As respondents are in the best position to determine the nature of documents generated by such respondents and which come from their own files, the burden of proof is on the respondent to introduce evidence to rebut a presumption that such documents are authentic and kept in the regular course of business. (e) Objections. (1) Objections to the admissibility of evidence must be timely E:\FR\FM\22FER3.SGM 22FER3 lotter on DSK11XQN23PROD with RULES3 10052 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations made and rulings on all objections must appear on the record. (2) Whenever evidence is excluded from the record, the party offering such evidence may make an offer of proof, which will be included in the record. Rejected exhibits, adequately marked for identification, must be retained pursuant to § 1081.306(b) so as to be available for consideration by any reviewing authority. (3) Failure to object to admission of evidence or to any ruling constitutes a waiver of the objection. (f) Stipulations. (1) The parties may, at any stage of the proceeding, stipulate as to any relevant matters of fact or the authentication of any relevant documents. Such stipulations must be received in evidence at a hearing and are binding on the parties with respect to the matters therein stipulated. (2) Unless the hearing officer directs otherwise, all stipulations of fact and law previously agreed upon by the parties, and all documents, the admissibility of which have been previously stipulated, will be admitted into evidence upon commencement of the hearing. (g) Presentation of evidence. (1) A witness at a hearing for the purpose of taking evidence must testify under oath or affirmation. (2) A party is entitled to present its case or defense by sworn oral testimony and documentary evidence, to submit rebuttal evidence, and to conduct such cross-examination as, in the discretion of the hearing officer, may be required for a full and true disclosure of the facts. (3) An adverse party, or an officer, agent, or employee thereof, and any witness who appears to be hostile, unwilling, or evasive, may be interrogated by leading questions and may also be contradicted and impeached by the party calling him or her. (4) The hearing officer will exercise reasonable control over the mode and order of interrogating witnesses and presenting evidence so as to: (i) Make the interrogation and presentation effective for the ascertainment of the truth; (ii) Avoid needless consumption of time; and (iii) Protect witnesses from harassment or undue embarrassment. (5) The hearing officer may permit a witness to appear at a hearing via electronic means for good cause shown. (h) Introducing prior sworn statements of witnesses into the record. At a hearing, any party wishing to introduce a prior, sworn statement of a witness, not a party, otherwise admissible in the proceeding, may make VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 a motion setting forth the reasons therefore. If only part of a statement is offered in evidence, the hearing officer may require that all relevant portions of the statement be introduced. If all of a statement is offered in evidence, the hearing officer may require that portions not relevant to the proceeding be excluded. A motion to introduce a prior sworn statement may be granted if: (1) The witness is dead; (2) The witness is out of the United States, unless it appears that the absence of the witness was procured by the party offering the prior sworn statement; (3) The witness is unable to attend or testify because of age, sickness, infirmity, imprisonment, or other disability; (4) The party offering the prior sworn statement has been unable to procure the attendance of the witness by subpoena; or (5) In the discretion of the hearing officer, it would be desirable, in the interests of justice, to allow the prior sworn statement to be used. In making this determination, due regard will be given to the presumption that witnesses will testify orally in an open hearing. If the parties have stipulated to accept a prior sworn statement in lieu of live testimony, consideration should also be given to the convenience of the parties in avoiding unnecessary expense. § 1081.304 Record of the hearing. (a) Reporting and transcription. Hearings will be stenographically reported and transcribed under the supervision of the hearing officer, and the original transcript will be a part of the record and the sole official transcript. The live oral testimony of each witness may be video recorded digitally, in which case the video recording and the written transcript of the testimony will be made part of the record. Copies of transcripts will be available from the reporter at prescribed rates. (b) Corrections. Corrections of the official transcript may be made only when they involve errors affecting substance and then only in the manner provided in this paragraph (b). Corrections ordered by the hearing officer or agreed to in a written stipulation signed by all counsel and parties not represented by counsel, and approved by the hearing officer, will be included in the record, and such stipulations, except to the extent they are capricious or without substance, must be approved by the hearing officer. Corrections will not be ordered by the hearing officer except upon notice and opportunity for the hearing of objections. Such corrections must be PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 made by the official reporter by furnishing substitute type pages, under the usual certificate of the reporter, for insertion in the official record. The original uncorrected pages will be retained in the files of the Bureau. (c) Closing of the hearing record. Upon completion of the hearing, the hearing officer will issue an order closing the hearing record after giving the parties seven days to determine if the record is complete or needs to be supplemented. The hearing officer retains the discretion to permit or order correction of the record as provided in paragraph (b) of this section. § 1081.305 Post-hearing filings. (a) Proposed findings and conclusions and supporting briefs. (1) Using the same method of service for each party, the hearing officer will serve notice upon each party that the certified transcript, together with all hearing exhibits and exhibits introduced but not admitted into evidence at the hearing, has been filed promptly after that filing. Any party may file with the hearing officer proposed findings of fact, proposed conclusions of law, and a proposed order within 28 days following service of this notice by the hearing officer or within such longer period as may be ordered by the hearing officer. (2) Proposed findings and conclusions must be supported by citation to any relevant authorities and by page references to any relevant portions of the record. A post-hearing brief may be filed in support of proposed findings and conclusions, either as part of the same document or in a separate document. (b) Responsive briefs. Responsive briefs may be filed within 14 days after the date on which the parties’ proposed findings, conclusions, and order are due. Responsive briefs must be strictly limited to responding to matters, issues, or arguments raised in another party’s papers. A party who has not filed proposed findings of fact and conclusions of law or a post-hearing brief may not file a responsive brief. Unless directed by the hearing officer, reply briefs are not permitted. (c) Order of filing. The hearing officer may not order the filing by any party of any post-hearing brief or responsive brief in advance of the other party’s filing of its post-hearing brief or responsive brief. § 1081.306 Record in proceedings before hearing officer; retention of documents; copies. (a) Contents of the record. The record of the proceeding consists of: E:\FR\FM\22FER3.SGM 22FER3 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations (1) The notice of charges, the answer, and any amendments thereto; (2) Each motion, submission, or other paper filed in the proceedings, and any amendments and exceptions to or regarding them; (3) Each stipulation, transcript of testimony, and any document or other item admitted into evidence; (4) Any transcript of a conference or hearing before the hearing officer; (5) Any amicus briefs filed pursuant to § 1081.216; (6) With respect to a request to disqualify a hearing officer or to allow the hearing officer’s withdrawal under § 1081.105(c), each affidavit or transcript of testimony taken and the decision made in connection with the request; (7) All motions, briefs, and other papers filed on interlocutory appeal; (8) All proposed findings and conclusions; (9) Each written order issued by the hearing officer or Director; and (10) Any other document or item accepted into the record by the hearing officer. (b) Retention of documents not admitted. Any document offered into evidence but excluded will not be considered part of the record. The Office of Administrative Adjudication will retain any such document until the later of the date upon which an order by the Director ending the proceeding becomes final and not appealable, or upon the conclusion of any judicial review of the Director’s order. (c) Substitution of copies. A true copy of a document may be substituted for any document in the record or any document retained pursuant to paragraph (b) of this section. Subpart D—Decision and Appeals lotter on DSK11XQN23PROD with RULES3 § 1081.400 Preliminary findings and conclusions of the hearing officer. (a) Time period for filing preliminary findings and conclusions. Subject to paragraph (b) of this section, the hearing officer must file preliminary findings and conclusions no later than 90 days after the deadline for filing post-hearing responsive briefs pursuant to § 1081.305(b) and in no event later than 360 days after filing of the notice of charges. (b) Extension of deadlines. In the event the hearing officer presiding over the proceeding determines that it will not be possible to issue preliminary findings and conclusions within the time periods specified in paragraph (a) of this section, the hearing officer will submit a written request to the Director for an extension of the time period for VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 filing the preliminary findings and conclusions. This request must be filed no later than 28 days prior to the expiration of the time for issuance of preliminary findings and conclusions. The request will be served on all parties in the proceeding, who may file with the Director briefs in support of or in opposition to the request. Any such briefs must be filed within seven days of service of the hearing officer’s request and may not exceed five pages. If the Director determines that additional time is necessary or appropriate in the public interest, the Director will issue an order extending the time period for filing preliminary findings and conclusions. (c) Content. (1) Preliminary findings and conclusions must be based on a consideration of the whole record relevant to the issues decided, and be supported by reliable, probative, and substantial evidence. Preliminary findings and conclusions must include a statement of findings of fact (with specific page references to principal supporting items of evidence in the record) and conclusions of law, as well as the reasons or basis therefore, as to all the material issues of fact, law, or discretion presented on the record and the appropriate order, sanction, relief or denial thereof. Preliminary findings and conclusions must also state that a notice of appeal may be filed within 14 days after service of the preliminary findings and conclusions and include a statement that, unless a party timely files and perfects a notice of appeal of the preliminary findings and conclusions, the Director may adopt the preliminary findings and conclusions as the final decision and order of the Bureau without further opportunity for briefing or argument. (2) Consistent with paragraph (a) of this section, when more than one claim for relief is presented in an adjudication proceeding, or when multiple parties are involved, the hearing officer may direct the entry of preliminary findings and conclusions as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of preliminary findings and conclusions. (d) By whom made. Preliminary findings and conclusions must be made and filed by the hearing officer who presided over the hearings, except when that hearing officer has become unavailable to the Bureau. (e) Reopening of proceeding by hearing officer; termination of jurisdiction. (1) At any time from the close of the hearing record pursuant to § 1081.304(c) until the filing of the PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 10053 hearing officer’s preliminary findings and conclusions, a hearing officer may reopen the proceeding for the receipt of further evidence for good cause shown. (2) Except for the correction of clerical errors or pursuant to an order of remand from the Director, the jurisdiction of the hearing officer is terminated upon the filing of the hearing officer’s preliminary findings and conclusions with respect to those issues decided pursuant to paragraph (c) of this section. (f) Filing, service, and publication. Upon filing by the hearing officer of preliminary findings and conclusions, the Office of Administrative Adjudication will promptly transmit the preliminary findings and conclusions to the Director and serve them upon the parties. § 1081.401 Transmission of documents to Director; record index; certification. (a) Filing of index. At the same time the Office of Administrative Adjudication transmits preliminary findings and conclusions to the Director, the hearing officer will furnish to the Director a certified index of the entire record of the proceedings. The certified index must include, at a minimum, an entry for each paper, document or motion filed in the proceeding, the date of the filing, and the identity of the filer. The certified index must also include an exhibit index containing, at a minimum, an entry consisting of exhibit number and title or description for each exhibit introduced and admitted into evidence and each exhibit introduced but not admitted into evidence. (b) Retention of record items by the Office of Administrative Adjudication. After the close of the hearing, the Office of Administrative Adjudication will retain originals of any motions, exhibits or any other documents filed with, or accepted into evidence by, the hearing officer, or any other portions of the record that have not already been filed with the Office of Administrative Adjudication. § 1081.402 Director. Notice of appeal; review by the (a) Notice of appeal—(1) Filing. Any party may file exceptions to the preliminary findings and conclusions of the hearing officer by filing a notice of appeal with the Office of Administrative Adjudication within 14 days after service of the preliminary findings and conclusions. The notice must specify the party or parties against whom the appeal is taken and must designate the preliminary findings and conclusions or part thereof appealed from. If a timely notice of appeal is filed by a party, any E:\FR\FM\22FER3.SGM 22FER3 10054 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations other party may thereafter file a notice of appeal within seven days after service of the first notice, or within 14 days after service of the preliminary findings and conclusions, whichever period expires last. (2) Perfecting a notice of appeal. Any party filing a notice of appeal must perfect its appeal by filing its opening appeal brief within 28 days of service of the preliminary findings and conclusions. Any party may respond to the opening appeal brief by filing an answering brief within 28 days of service of the opening brief. Any party may file a reply to an answering brief within seven days of service of the answering brief. These briefs must conform to the requirements of § 1081.403. (b) Director review other than pursuant to an appeal. In the event no party perfects an appeal of the hearing officer’s preliminary findings and conclusions, the Director will, within 42 days after the date of service of the preliminary findings and conclusions, either issue a final decision and order adopting the preliminary findings and conclusions, or order further briefing regarding any portion of the preliminary findings and conclusions. The Director’s order for further briefing must set forth the scope of review and the issues that will be considered and will make provision for the filing of briefs in accordance with the timelines set forth in paragraph (a)(2) of this section (except that that opening briefs will be due within 28 days of service of the order of review) if deemed appropriate by the Director. (c) Exhaustion of administrative remedies. Pursuant to 5 U.S.C. 704, a perfected appeal to the Director of preliminary findings and conclusions pursuant to paragraph (a) of this section is a prerequisite to the seeking of judicial review of a final decision and order, or portion of the final decision and order, adopting the preliminary findings and conclusions. lotter on DSK11XQN23PROD with RULES3 § 1081.403 Briefs filed with the Director. (a) Contents of briefs. Briefs must be confined to the particular matters at issue. Each exception to the findings or conclusions being reviewed should be stated succinctly. Exceptions must be supported by citation to the relevant portions of the record, including references to the specific pages relied upon, and by concise argument including citation of such statutes, decisions, and other authorities as may be relevant. If the exception relates to the admission or exclusion of evidence, the substance of the evidence admitted or excluded must be set forth in the VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 brief, in an appendix thereto, or by citation to the record. Reply briefs must be confined to matters in answering briefs of other parties. (b) Length limitation. Except with leave of the Director, opening and answering briefs may not exceed 30 pages, and reply briefs may not exceed 15 pages, exclusive of pages containing the table of contents, table of authorities, and any addendum that consists solely of copies of applicable cases, pertinent legislative provisions or rules, and exhibits. Motions to file briefs in excess of these limitations are disfavored. § 1081.404 Director. Oral argument before the (a) Availability. The Director will consider appeals, motions, and other matters properly before the Director on the basis of the papers filed by the parties without oral argument unless the Director determines that the presentation of facts and legal arguments in the briefs and record and decisional process would be significantly aided by oral argument, in which case the Director will issue an order setting the date on which argument will be held. A party seeking oral argument must so indicate on the first page of that party’s opening or answering brief. (b) Public arguments; transcription. All oral arguments will be public unless otherwise ordered by the Director. Oral arguments before the Director will be reported stenographically, unless otherwise ordered by the Director. Motions to correct the transcript of oral argument must be made according to the same procedure provided in § 1081.304(b). § 1081.405 Decision of the Director. (a) Upon appeal from or upon further review of preliminary findings and conclusions, the Director will consider such parts of the record as are cited or as may be necessary to resolve the issues presented and, in addition, will, to the extent necessary or desirable, exercise all powers which could have exercised if the Director had made the preliminary findings and conclusions. In proceedings before the Director, the record will consist of all items part of the record in accordance with § 1081.306 as follows: Any notices of appeal or order directing review; all briefs, motions, submissions, and other papers filed on appeal or review; and the transcript of any oral argument held. Review by the Director of preliminary findings and conclusions may be limited to the issues specified in the notice(s) of appeal or the issues, if any, PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 specified in the order directing further briefing. On notice to all parties, however, the Director may, at any time prior to issuance of the Director’s decision, raise and determine any other matters that the Director deems material, with opportunity for oral or written argument thereon by the parties. (b) Decisional employees may advise and assist the Director in the consideration and disposition of the case. (c) In rendering the Director’s decision, the Director will affirm, adopt, reverse, modify, set aside, or remand for further proceedings the preliminary findings and conclusions and will include in the decision a statement of the reasons or basis for the Director’s actions and the findings of fact upon which the decision is predicated. (d) At the expiration of the time permitted for the filing of reply briefs with the Director, the Office of Administrative Adjudication will notify the parties that the case has been submitted for final Bureau decision. The Director will issue and the Office of Administrative Adjudication will serve the Director’s final decision and order within 90 days after such notice, unless within that time the Director orders that the adjudication proceeding or any aspect thereof be remanded to the hearing officer for further proceedings. (e) The Office of Administrative Adjudication will serve copies of a final decision and order of the Director upon each party to the proceeding in accordance with § 1081.113(d)(2); upon other persons required by statute, if any; and, if directed by the Director or required by statute, upon any appropriate State or Federal supervisory authority. A final decision and order will also be published on the Bureau’s website or as otherwise deemed appropriate by the Bureau. § 1081.406 Reconsideration. Within 14 days after service of the Director’s decision and order, any party may file with the Director a petition for reconsideration, briefly and specifically setting forth the relief desired and the grounds in support thereof. Any petition filed under this section must be confined to new questions raised by the decision or order and upon which the petitioner had no opportunity to argue, in writing or orally, before the Director. No response to a petition for reconsideration may be filed unless requested by the Director, who will request such response before granting any petition for reconsideration. The filing of a petition for reconsideration does not operate to stay the effective date of the decision or order or to toll E:\FR\FM\22FER3.SGM 22FER3 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations the running of any statutory period affecting such decision or order unless specifically so ordered by the Director. § 1081.407 Effective date; stays pending judicial review. (a) Other than consent orders, which become effective at the time specified therein, an order to cease and desist or for other affirmative action under section 1053(b) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5563(b)) becomes effective at the expiration of 30 days after the date of service pursuant to § 1081.113(d)(2), unless the Director agrees to stay the effectiveness of the order pursuant to this section. (b) Any party subject to a final decision and order, other than a consent order, may apply to the Director for a stay of all or part of that order pending judicial review. (c) A motion for stay must state the reasons a stay is warranted and the facts relied upon, and must include supporting affidavits or other sworn statements, and a copy of the relevant portions of the record. The motion must address the likelihood of the movant’s success on appeal, whether the movant will suffer irreparable harm if a stay is not granted, the degree of injury to other parties if a stay is granted, and why the stay is in the public interest. (d) A motion for stay must be filed within 28 days of service of the order on the party. Any party opposing the motion may file a response within seven days after receipt of the motion. The movant may file a reply brief, limited to new matters raised by the response, within seven days after receipt of the response. (e) The commencement of proceedings for judicial review of a final decision and order of the Director does not, unless specifically ordered by the Director or a reviewing court, operate as a stay of any order issued by the Director. The Director has discretion, on such terms as the Director finds just, to stay the effectiveness of all or any part of an order pending a final decision on a petition for judicial review of that order. lotter on DSK11XQN23PROD with RULES3 § 1081.408 Issue exhaustion. (a) Scope. This section applies to any argument to support a party’s case or defense, including any argument that could be a basis for setting aside Bureau VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 action under 5 U.S.C. 706 or any other source of law. (b) Duties to raise arguments. A party must raise an argument before the hearing officer, or else it is not preserved for later consideration by the Director. A party must raise an argument before the Director, or else it is not preserved for later consideration by a court. (c) Manner of raising arguments. An argument must be raised in a manner that complies with this part and that provides a fair opportunity to consider the argument. (d) Discretion to consider unpreserved arguments. The Director has discretion to consider an unpreserved argument, including by considering it in the alternative. If the Director considers an unpreserved argument in the alternative, the argument remains unpreserved. Subpart E—Temporary Cease-andDesist Proceedings § 1081.500 Scope. (a) This subpart prescribes the rules of practice and procedure applicable to the issuance of a temporary cease-and-desist order authorized by section 1053(c) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5563(c)). (b) The issuance of a temporary ceaseand-desist order does not stay or otherwise affect the proceedings instituted by the issuance of a notice of charges, which are governed by subparts A through D of this part. § 1081.501 service. Basis for issuance, form, and (a) In general. The Director or the Director’s designee may issue a temporary cease-and-desist order if the Director determines that one or more of the alleged violations specified in a notice of charges, or the continuation thereof, is likely to cause the respondent to be insolvent or otherwise prejudice the interests of consumers before the completion of the adjudication proceeding. A temporary cease-anddesist order may require the respondent to cease and desist from any violation or practice specified in the notice of charges and to take affirmative action to prevent or remedy such insolvency or other condition pending completion of the proceedings initiated by the issuance of a notice of charges. PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 10055 (b) Incomplete or inaccurate records. When a notice of charges specifies, on the basis of particular facts and circumstances, that the books and records of a respondent are so incomplete or inaccurate that the Bureau is unable to determine the financial condition of the respondent or the details or purpose of any transaction or transactions that may have a material effect on the financial condition of the respondent, then the Director or the Director’s designee may issue a temporary order requiring: (1) The cessation of any activity or practice which gave rise, whether in whole or in part, to the incomplete or inaccurate state of the books or records; or (2) Affirmative action to restore such books or records to a complete and accurate state, until the completion of the adjudication proceeding. (c) Content, scope, and form of order. Every temporary cease-and-desist order accompanying a notice of charges must describe: (1) The basis for its issuance, including the alleged violations and the harm that is likely to result without the issuance of an order; and (2) The act or acts the respondent is to take or refrain from taking. (d) Effective and enforceable upon service. A temporary cease-and-desist order is effective and enforceable upon service. (e) Service. Service of a temporary cease-and-desist order will be made pursuant to § 1081.113(d). § 1081.502 Judicial review, duration. (a) Availability of judicial review. Judicial review of a temporary ceaseand-desist order is available solely as provided in section 1053(c)(2) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5563(c)(2)). Any respondent seeking judicial review of a temporary cease-and-desist order issued under this subpart must, not later than ten days after service of the temporary cease-and-desist order, apply to the United States district court for the judicial district in which the residence or principal office or place of business of the respondent is located, or the United States District Court for the District of Columbia, for an injunction setting aside, limiting, or suspending the enforcement, operation, or effectiveness of such order. E:\FR\FM\22FER3.SGM 22FER3 10056 Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / Rules and Regulations lotter on DSK11XQN23PROD with RULES3 (b) Duration. Unless set aside, limited, or suspended by the Director or the Director’s designee, or by a court in proceedings authorized under section 1053(c)(2) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5563(c)(2)), a temporary cease-anddesist order will remain effective and enforceable until: VerDate Sep<11>2014 21:43 Feb 18, 2022 Jkt 256001 (1) The effective date of a final order issued upon the conclusion of the adjudication proceeding. (2) With respect to a temporary ceaseand-desist order issued pursuant to § 1081.501(b) only, the Bureau determines by examination or otherwise that the books and records are accurate and reflect the financial condition of the PO 00000 Frm 00030 Fmt 4701 Sfmt 9990 respondent, and the Director or the Director’s designee issues an order terminating, limiting, or suspending the temporary cease-and-desist order. Rohit Chopra, Director, Bureau of Consumer Financial Protection. [FR Doc. 2022–02863 Filed 2–18–22; 8:45 am] BILLING CODE 4810–AM–P E:\FR\FM\22FER3.SGM 22FER3

Agencies

[Federal Register Volume 87, Number 35 (Tuesday, February 22, 2022)]
[Rules and Regulations]
[Pages 10028-10056]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-02863]



[[Page 10027]]

Vol. 87

Tuesday,

No. 35

February 22, 2022

Part VI





Bureau of Consumer Financial Protection





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12 CFR Part 1081





Rules of Practice for Adjudication Proceedings; Final Rule

Federal Register / Vol. 87, No. 35 / Tuesday, February 22, 2022 / 
Rules and Regulations

[[Page 10028]]


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BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1081

[Docket No. CFPB-2022-0009]
RIN 3170-AB08


Rules of Practice for Adjudication Proceedings

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Procedural rule; request for public comment.

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SUMMARY: The Consumer Financial Protection Bureau (Bureau) is issuing 
this procedural rule to update its Rules of Practice for Adjudication 
Proceedings (Rules of Practice). This rule expands the opportunities 
for parties in adjudication proceedings to conduct depositions. It also 
contains various amendments regarding timing and deadlines, the content 
of answers, the scheduling conference, bifurcation of proceedings, the 
process for deciding dispositive motions, and requirements for issue 
exhaustion, as well as other technical changes. Overall, the amendments 
will provide the parties with earlier access to relevant information 
and also foster greater procedural flexibility, which should ultimately 
contribute to more effective and efficient proceedings. The Bureau 
welcomes comments on this rule, and the Bureau may make further 
amendments if it receives comments warranting changes.

DATES: This procedural rule is effective on February 22, 2022. Comments 
must be received on or before April 8, 2022.

ADDRESSES: You may submit comments, identified by Docket No. CFPB-2022-
0009 or RIN 3170-AB08, by any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Email: [email protected]. Include Docket No. 
CFPB-2022-0009 or RIN 3170-AB08 in the subject line of the message.
     Mail/Hand Delivery/Courier: Comment Intake--Rules of 
Practice for Adjudication Proceedings, Consumer Financial Protection 
Bureau, 1700 G Street NW, Washington, DC 20552.
    Instructions: The Bureau encourages the early submission of 
comments. All submissions should include the agency name and docket 
number or Regulatory Information Number (RIN) for this rulemaking. 
Because paper mail in the Washington, DC area and at the Bureau is 
subject to delay, and in light of difficulties associated with mail and 
hand deliveries during the COVID-19 pandemic, commenters are encouraged 
to submit comments electronically. In general, all comments received 
will be posted without change to https://www.regulations.gov. In 
addition, once the Bureau's headquarters reopens, comments will be 
available for public inspection and copying at 1700 G Street NW, 
Washington, DC 20552, on official business days between the hours of 10 
a.m. and 5 p.m. Eastern Time. At that time, you can make an appointment 
to inspect the documents by telephoning 202-435-7275.
    All comments, including attachments and other supporting materials, 
will become part of the public record and subject to public disclosure. 
Proprietary information or sensitive personal information, such as 
account numbers or Social Security numbers, or names of other 
individuals, should not be included. Comments will not be edited to 
remove any identifying or contact information.

FOR FURTHER INFORMATION CONTACT: Kevin E. Friedl or Christopher 
Shelton, Senior Counsels, Legal Division, at 202-435-7700. If you 
require this document in an alternative electronic format, please 
contact [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    The Consumer Financial Protection Act of 2010 (CFPA) establishes 
the Bureau as an independent bureau in the Federal Reserve System and 
assigns the Bureau a range of rulemaking, enforcement, supervision, and 
other authorities.\1\ The Bureau's enforcement powers under the CFPA 
include section 1053, which authorizes the Bureau to conduct 
adjudication proceedings.\2\ The Bureau finalized the original version 
of the Rules of Practice, which govern adjudication proceedings, in 
2012 (2012 Rule).\3\ The Bureau later finalized certain amendments, 
which addressed the issuance of temporary cease-and-desist orders, in 
2014 (2014 Rule).\4\
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    \1\ Title X of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act, Public Law 111-203, 124 Stat. 1376, 1955-2113 
(2010).
    \2\ 12 U.S.C. 5563; see also section 1052(b), 12 U.S.C. 5562(b) 
(addressing subpoenas).
    \3\ 77 FR 39057 (June 29, 2012); see also 76 FR 45337 (July 28, 
2011) (interim final rule).
    \4\ 79 FR 34622 (June 18, 2014); see also 78 FR 59163 (Sept. 26, 
2013) (interim final rule).
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II. Legal Authority

    Section 1053(e) of the CFPA provides that the Bureau ``shall 
prescribe rules establishing such procedures as may be necessary to 
carry out'' section 1053.\5\ Additionally, section 1022(b)(1) provides, 
in relevant part, that the Bureau's Director ``may prescribe rules . . 
. as may be necessary or appropriate to enable the Bureau to administer 
and carry out the purposes and objectives of the Federal consumer 
financial laws, and to prevent evasions thereof.'' \6\ The Bureau 
issues this rule based on its authority under section 1053(e) and 
section 1022(b)(1).
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    \5\ 12 U.S.C. 5563(e). As courts have recognized, the term 
``necessary'' is ``a `chameleon-like' word'' whose meaning can vary 
based on context; in the context of section 1053(e), the Bureau 
interprets `` `necessary' to mean `useful,' `convenient' or 
`appropriate' rather than `required' or `indispensable.' '' 
Prometheus Radio Project v. FCC, 373 F.3d 372, 391-94 (3d Cir. 
2004). Section 1053 sets out the fundamental features of Bureau 
adjudications, but it leaves many details open that can only be 
addressed through more specific Bureau procedures. In turn, those 
Bureau procedures could not be effective, or fair to the parties, if 
they were limited to only the most rudimentary steps that would be 
indispensable to holding a skeletal proceeding. Instead, the Bureau 
believes that Congress gave the Bureau room to adopt procedures that 
are useful in carrying out section 1053.
    \6\ 12 U.S.C. 5512(b)(1).
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III. Section-by-Section Analysis

Overview

    The Bureau is republishing the entire Rules of Practice in the Code 
of Federal Regulations. The changes that the Bureau is making in this 
rule, compared to the previous version of the Rules of Practice, are 
summarized in the section-by-section analysis below. Also, the Bureau 
will include an unofficial, informal redline of the changes in the 
docket for this rule on https://www.regulations.gov in order to assist 
stakeholders' review.\7\
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    \7\ In the event of a conflict between the redline and the 
version in the Federal Register, the latter controls.
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1081.114(a) Construction of Time Limits

    The Bureau is amending 12 CFR 1081.114(a) (Rule 114(a)) to simplify 
and clarify the provisions describing how deadlines are computed. It 
governs the computation of any time limit in this part, by order of the 
Director or the hearing officer, or by any applicable statute. These 
amendments are based on similar amendments made to Federal Rule of 
Civil Procedure 6(a) in 2009.
    Under the previous Rule 114(a), a period of ten days or less was 
computed differently than a longer period. Intermediate Saturdays, 
Sundays, and Federal holidays were included in computing longer 
periods, but excluded in computing shorter periods. The previous Rule 
114(a) thus made computing deadlines unnecessarily complicated and led 
to counterintuitive

[[Page 10029]]

results. For example, a 10-day period and a 14-day period that started 
on the same day usually ended on the same day--and the 10-day period 
not infrequently ended later than the 14-day period.
    Under the amended Rule 114(a), all deadlines stated in days are 
computed in the same way. The day of the event that triggers the 
deadline is not counted. All other days--including intermediate 
Saturdays, Sundays, and Federal holidays--are counted, with one 
exception: If the period ends on a Saturday, Sunday, or Federal holiday 
as set forth in 5 U.S.C. 6103(a), then the deadline falls on the next 
day that is not a Saturday, Sunday, or Federal holiday.
    Periods previously expressed as ten days or less will be shortened 
as a practical matter by the decision to count intermediate Saturdays, 
Sundays, and legal holidays in computing all periods. The Bureau is 
lengthening many of those periods to compensate for the change.\8\
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    \8\ See, e.g., amended 12 CFR 1081.105(c)(2), 1081.200(c), 
1081.202(a).
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    The Bureau is also adjusting most of the 10-day periods in the 
Rules of Practice to account for the change in computation method, by 
setting 14 days as the new period. A 14-day period corresponds to the 
most frequent result of a 10-day period under the previous computation 
method--two Saturdays and two Sundays were excluded, giving 14 days in 
all. A 14-day period has an additional advantage. The final day falls 
on the same day of the week as the event that triggered the period--the 
14th day after a Monday, for example, is a Monday. This advantage of 
using week-long periods also led in many cases to adopting 7-day 
periods to replace many of the periods with periods using 7-day 
increments.

1081.115(b) Considerations in Determining Whether To Extend Time Limits 
or Grant Postponements, Adjournments and Extensions

    Previously, 12 CFR 1081.115(b) (Rule 115(b)) stated that the 
Director or the hearing officer should adhere to a policy of strongly 
disfavoring granting motions for extensions of time, except in 
circumstances where the moving party makes a strong showing that the 
denial of the motion would substantially prejudice its case. It then 
listed factors that the Director or hearing officer will consider. The 
Bureau is simplifying this provision to state only that such motions 
are generally disfavored, while retaining the same list of factors that 
the Director or hearing officer will consider. The Bureau continues to 
believe that extensions of time should generally be disfavored, but it 
believes that relatively more flexibility than the previous language 
provided may be appropriate.

1081.201(b) Content of Answer

    The previous 12 CFR 1081.201(b) (Rule 201(b)) required a respondent 
to file an answer containing, among other things, any affirmative 
defense. The Bureau is amending Rule 201(b) to make clear that this 
includes any avoidance, including those that may not be considered 
``affirmative defenses.'' As the Securities and Exchange Commission 
(SEC) explained when it adopted a similar amendment to its rules of 
practice, timely assertion of such theories should help focus the use 
of prehearing discovery, foster early identification of key issues and, 
as a result, make the discovery process more effective and 
efficient.\9\
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    \9\ 81 FR 50211, 50219-20 (July 29, 2016).
---------------------------------------------------------------------------

1081.203 Scheduling Conference

    The provision at 12 CFR 1081.203 (Rule 203) requires a scheduling 
conference with all parties and the hearing officer for the purpose of 
scheduling the course and conduct of the proceeding. Before that 
scheduling conference, Rule 203 requires the parties to meet to discuss 
the nature and basis of their claims and defenses, the possibilities 
for settlement, as well as the matters that will be discussed with the 
hearing officer at the scheduling conference. The Bureau is making 
certain changes to Rule 203, including renumbering of provisions. This 
discussion cites the provisions as renumbered.
    First, the Bureau is amending Rule 203(b) to require that the 
parties exchange a scheduling conference disclosure after that initial 
meeting, but before the scheduling conference. That disclosure must 
include a factual summary of the case, a summary of all factual and 
legal issues in dispute, and a summary of all factual and legal bases 
supporting each defense. The disclosure must also include information 
about the evidence that the party may present at the hearing, other 
than solely for impeachment, including (i) the contact information for 
anticipated witnesses, as well as a summary of the witness's 
anticipated testimony; and (ii) the identification of documents or 
other exhibits.
    The Bureau is also adopting certain amendments to Rules 203(c), 
(d), and (e). Amended Rule 203(c) provides that a party must supplement 
or correct the scheduling conference disclosure in a timely manner if 
the party acquires other information that it intends to rely upon at a 
hearing. Amended Rule 203(d) provides a harmless-error rule for 
failures to disclose in scheduling conference disclosures. Finally, the 
Bureau is adopting certain minor clarifications to Rule 203(e), which 
governs the scheduling conference itself.
    These amendments to Rule 203 are intended to foster early 
identification of key issues and, as a result, make the adjudication 
process, including any discovery process, more effective and efficient. 
They are also intended to, early in the process, determine whether the 
parties intend to seek the issuance of subpoenas or file dispositive 
motions so that, with input from the parties, the hearing officer can 
set an appropriate hearing date, taking into account the time necessary 
to complete the discovery or decide the anticipated dispositive 
motions.
    The Bureau recognizes that, in most cases, the deadline for making 
the scheduling conference disclosure will also be the date the Office 
of Enforcement must commence making documents available to the 
respondent under 12 CFR 1081.206 (Rule 206). As the Bureau explained in 
the preamble to the 2012 Rule, it is the Bureau's expectation that the 
Office of Enforcement will make the material available as soon as 
possible in every case.\10\ And even in cases where the Office of 
Enforcement cannot make those documents available within that time, a 
respondent may request a later hearing date and can move the hearing 
officer to alter the dates for either the scheduling conference or the 
scheduling conference disclosure.
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    \10\ 77 FR 39057, 39072 (June 29, 2012).
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1081.204(c) Bifurcation

    The Bureau is adding a new 12 CFR 1081.204(c) (Rule 204(c)) to 
address bifurcation of proceedings. It provides that the Director may 
order that the proceeding be divided into two or more stages, if the 
Director determines that it would promote efficiency in the proceeding 
or for other good cause. For example, the Director may order that the 
proceeding have two stages, so that at the conclusion of the first 
stage the Director issues a decision on whether there have been 
violations of law and at the conclusion of the second stage the 
Director issues a final decision and order, including with respect to 
any remedies. The Director may make an order under Rule 204(c) either 
on the motion of a party or on the Director's own motion after inviting 
submissions by the parties. The Director may

[[Page 10030]]

include, in that order or in later orders, modifications to the 
procedures in the Rules of Practice in order to effectuate an efficient 
division into stages, or the Director may assign such authority to the 
hearing officer.\11\
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    \11\ The new provision also clarifies that only the decision and 
order of the Director after the final stage, and not a decision of 
the Director after an earlier stage, will be a final decision and 
order for purposes of specified provisions of the Rules of Practice 
and section 1053(b) of the CFPA.
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    Bifurcation is a standard case-management tool available to Federal 
district courts. The new Rule 204(c) will provide the Bureau with the 
flexibility to use bifurcation in adjudication proceedings, if 
warranted by particular cases, and to tailor its procedures to the 
circumstances of those bifurcated cases.

1081.206 Availability of Documents for Inspection and Copying

    Rule 206 provides that the Bureau's Office of Enforcement will make 
certain documents available for inspection and copying. The Bureau is 
amending Rule 206 to clarify certain categories of documents that may 
be withheld or information that may be redacted, as well as to make 
clear that the Office of Enforcement may produce those documents in an 
electronic format rather than making the documents available for 
physical inspection and copying.
    The clarifying amendments regarding documents that may be withheld 
or information that may be redacted are based on amendments the SEC 
recently made to its rules of practice. Amended Rule 206(b)(1)(iv) 
makes clear that the Office of Enforcement need not produce a document 
that reflects only settlement negotiations between the Office of 
Enforcement and a person or entity who is not a current respondent in 
the proceeding. As the SEC explained when it amended its rules of 
practice, this amendment is consistent with the important public policy 
interest in candid settlement negotiations, will help to preserve the 
confidentiality of settlement discussions, and help safeguard the 
privacy of potential respondents with whom the Office of Enforcement 
has negotiated.\12\ Amended Rule 206 also permits the Office of 
Enforcement to redact from the documents it produces information it is 
not obligated to produce (Rule 206(b)(2)(i)) and sensitive personal 
information about persons other than the respondent (Rule 
206(b)(2)(ii)). These amendments also track the SEC's recent amendments 
to its rules of practice and are designed to provide further 
protections for sensitive personal information and to permit the 
redaction of information that is not required to be produced in the 
first place.
---------------------------------------------------------------------------

    \12\ 81 FR 50211, 50222 (July 29, 2016).
---------------------------------------------------------------------------

    The Bureau is also amending Rule 206(d) to change the date by which 
the Office of Enforcement must commence making documents available to 
the respondent, changing that date from seven days after service of the 
notice of charges to fourteen. This clarification harmonizes these 
timing provisions with 12 CFR 1081.119 (Rule 119), which protects the 
rights of third parties who have produced documents under a claim of 
confidentiality. The previous Rule 119 required a party to give a third 
party notice at least ten days prior to the disclosure of information 
obtained from that third party subject to a claim of confidentiality. 
Under the previous Rules of Practice, that meant that the Office of 
Enforcement had to provide notice to third parties before it commenced 
the adjudication proceeding because the Office of Enforcement had to 
give those third parties at least ten days' notice before producing the 
documents and the Office of Enforcement had to commence making 
documents available seven days after filing. Rule 119 is amended to 
require parties to notify the third parties at least seven days prior 
to the disclosure of information the third party produced under a claim 
of confidentiality. Together, Rules 119 and 206 now require the Office 
of Enforcement to commence making documents available fourteen days 
after service of the notice of charges and to notify third parties who 
produced documents subject to that disclosure requirement under a claim 
of confidentiality at least seven days before producing those 
documents.
    The previous Rule 206(e) provided that the Office of Enforcement 
must make the documents available for inspection and copying at the 
Bureau's office where they are ordinarily maintained. As the preamble 
to the 2012 Rule explained, the Bureau anticipated providing electronic 
copies of documents to respondents in most cases.\13\ The Bureau is 
amending Rule 206(e) to recognize this practice and expressly provide 
that the Office of Enforcement may produce those documents in an 
electronic format rather than making the documents available for 
inspection and copying. Under the amended Rule 206(e), the Office of 
Enforcement retains the discretion to make documents available for 
inspection and copying.
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    \13\ 77 FR 39057, 39070 (June 29, 2012).
---------------------------------------------------------------------------

1081.208 Subpoenas and 1081.209 Depositions

    The Bureau is making certain interrelated changes to 12 CFR 
1081.208 and 1081.209 (Rules 208 and 209).
    Rule 209 previously permitted parties to take depositions only if 
the witness was unable to attend or testify at a hearing. As the Bureau 
noted in the preamble to the 2012 Rule, the Bureau's Rules of Practice 
were modeled in part on the approach that the SEC took in its rules of 
practice.\14\ Since that time, the SEC has amended its rules of 
practice to permit depositions.\15\
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    \14\ 77 FR 39057, 39058 (June 29, 2012).
    \15\ 81 FR 50211 (July 29, 2016).
---------------------------------------------------------------------------

    The Bureau is now amending Rule 209 to permit discovery depositions 
in addition to depositions of unavailable witnesses. The amendments to 
Rule 209 allow respondents and the Office of Enforcement to take 
depositions by oral examination pursuant to subpoena. The amended Rule 
209 also permits parties to take a deposition by written questions upon 
motion and pursuant to a subpoena. If a proceeding involves a single 
respondent, the amendment allows the respondent and the Office of 
Enforcement to each depose up to three persons (i.e., up to three 
depositions per side). If a proceeding involves multiple respondents, 
the amendment allows respondents to collectively depose up to five 
persons and the Office of Enforcement to depose up to five persons 
(i.e., up to five depositions per side). This approach is consistent 
with the approach the SEC adopted when it amended its rules of practice 
to allow depositions.\16\ A party may also move to take additional 
depositions, though that motion must be filed no later than 28 days 
prior to the hearing date. Amended Rule 209 also sets forth the 
procedure for requesting to taking additional depositions.
---------------------------------------------------------------------------

    \16\ Id. at 50216.
---------------------------------------------------------------------------

    The above amendments to Rule 209 are intended to provide parties 
with further opportunities to develop arguments and defenses through 
deposition discovery, which may narrow the facts and issues to be 
explored during the hearing. Allowing depositions should facilitate the 
development of the case during the prehearing stage, which may result 
in more focused prehearing preparations, with issues distilled for the 
hearing and post-hearing briefing.
    Under amendments to Rules 208 and 209, a party must request that 
the hearing officer issue a subpoena for the deposition. If the 
subpoena is issued, the party must also serve written notice of the 
deposition. The amendments to

[[Page 10031]]

Rule 208, governing the issuance of subpoenas, correspond with the new 
provisions on depositions in Rule 209 by defining the standards for 
issuing a subpoena requiring the deposition of a witness. The amendment 
adds a new Rule 208(e) governing the standard for issuance of subpoenas 
seeking depositions upon oral examination. Under the amendment, the 
hearing officer will promptly issue any subpoena requiring the 
attendance and testimony of witnesses at a deposition only if the 
subpoena complies with Rule 209 and if the proposed deponent: (i) Is a 
witness identified in the other party's scheduling conference 
disclosure now required under revised Rule 203(b); (ii) a fact witness; 
\17\ (iii) is a designated expert witness under 12 CFR 1081.210(b) 
(Rule 210(b)); or (iv) a document custodian.\18\ Fact witnesses, expert 
witnesses, and document custodians, whose knowledge of relevant facts 
does not arise from the Bureau's investigation, the Bureau's 
examination, or the proceeding, are the individuals most likely to have 
information relevant to the issues to be decided. Because the Bureau 
will also disclose to respondents the documents described in Rule 206 
as well as witness statements upon request under 12 CFR 1081.207 (Rule 
207), deposing Bureau staff whose only knowledge of relevant facts 
arose from the investigation, examination, or proceeding is unlikely to 
shed light on the events underlying the proceeding and will likely lead 
to impermissible inquiries into the mental processes and strategies of 
Bureau attorneys or staff under their direction. Not only does this 
implicate privileges or the work-product doctrine, but deposition of 
Bureau staff in this manner can be burdensome and disruptive because it 
embroils the parties in controversies over the scope of those 
protections.
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    \17\ Under amended Rule 209, this type of proposed deponent must 
have witnessed or participated in any event, transaction, 
occurrence, act, or omission that forms the basis for any claim 
asserted by the Office of Enforcement, any defense, or anything else 
required to be included in an answer pursuant to Rule 201(b), by any 
respondent in the proceeding (this excludes a proposed deponent 
whose only knowledge of these matters arises from the Bureau's 
investigation, the Bureau's examination, or the proceeding).
    \18\ This excludes Bureau officers or personnel who have custody 
of documents or data that was produced from the Office of 
Enforcement to the respondent. In most circumstances, the Bureau 
officers or personnel were not the original custodian of the 
documents. Where the Bureau was the original custodian of the 
document--for example, a report of examination under 12 CFR 
1081.303(d)(2) (Rule 303(d)(2))--there is no need to depose a 
document custodian as that report is admissible without a sponsoring 
witness.
---------------------------------------------------------------------------

    The amendments to Rule 208 also provide a process for the hearing 
officer to request more information about the relevance or scope of the 
testimony sought and to refuse to issue the subpoena or issue it only 
upon conditions. This provision is intended to foster use of 
depositions where appropriate and encourage meaningful discovery, 
within the limits of the number of depositions provided per side. This 
provision should encourage parties to focus any requested depositions 
on those persons most likely to yield relevant information and thereby 
make efficient use of time during the prehearing stage.
    Rule 208 previously permitted parties to request issuance of 
subpoenas requiring the attendance and testimony of witnesses at the 
designated time and place of the hearing, for the production of 
documentary or other tangible evidence, or for the deposition of a 
witness who will be unavailable for the hearing. The Rules of Practice 
also permitted the deposition of expert witnesses under Rule 210. The 
amendments keep those provisions, making conforming amendments to 
account for the new provision permitting discovery depositions. A 
subpoena seeking the deposition of a witness who will be unavailable 
for the hearing does not count against the number of depositions 
permitted under Rule 209(a).
    These new and amended provisions expand the available legitimate 
mechanisms respondents may use to conduct discovery, providing 
respondents a clearer understanding of the bases of the Bureau's 
factual contentions while reducing the costs and burdens of hearings on 
all parties. Additionally, the grounds for a hearing officer denying a 
request to issue a subpoena under Rule 208--that it is ``unreasonable, 
oppressive, excessive in scope, or unduly burdensome''--are consistent 
with well-established judicial standards, and hearing officers will, in 
their consideration of requests for subpoenas, act diligently and in 
good faith to implement the standards for refusing or modifying 
deposition subpoenas set forth under the amended rule. These combined 
changes are overall less burdensome yet are equally effective in the 
resolution of the case on the merits.
    Amended Rule 209 also adds procedures governing the taking of 
depositions, including depositions by written question. In general, 
once a subpoena for a deposition is issued, the party seeking the 
deposition must serve written notice of the deposition. That notice 
must include several things, including the time and place of the 
deposition, the identity of the deponent, and the method for recording 
the deposition. These and other procedural provisions track the SEC's 
recent amendments to its rules of practice.\19\ They govern the process 
for seeking depositions by written questions and the taking of all 
depositions, including setting forth the deposition officer's duties, 
the process for stating objections, motions to terminate or limit the 
deposition, and the process for finalizing a transcript.
---------------------------------------------------------------------------

    \19\ 81 FR 50211, 50215-17 (July 29, 2016).
---------------------------------------------------------------------------

    Finally, the Bureau is adding Rule 208(l), which addresses the 
relationship of subpoenas to the scheduling of the hearing. In the 2012 
Rule, one reason why the Bureau did not--as a general matter--permit 
discovery depositions was because the additional time required for 
depositions before the hearing could be in tension with the statutory 
timetable for hearings under section 1053(b) of the CFPA.\20\ As the 
preamble to the 2012 Rule noted, prehearing depositions would present 
extreme scheduling difficulties in those cases in which respondents did 
not request hearing dates outside the default timeframe under section 
1053(b), which provides for the hearing to be held 30 to 60 days after 
service of the notice of charges, unless an earlier or a later date is 
set by the Bureau, at the request of any party so served.\21\ The new 
Rule 208(l) addresses this scheduling obstacle to depositions and other 
discovery, by specifying that a respondent's request for issuance of a 
subpoena constitutes a request that the hearing not be held until after 
a reasonable period, determined by the hearing officer, for the 
completion of discovery.\22\ This is because a request for discovery 
reasonably entails a delay for the discovery process to be completed.
---------------------------------------------------------------------------

    \20\ 12 U.S.C. 5563(b).
    \21\ 77 FR 39057, 39076 (June 29, 2012).
    \22\ Rule 208(l) goes on to specify that the hearing officer 
will decide whether to grant such a request. If the request is 
granted, the hearing officer will set a deadline for the completion 
of discovery and schedule the specific date of the hearing, in 
consultation with the parties. Rule 208(l) does not apply to a 
subpoena for the attendance and testimony of a witness at the 
hearing or a subpoena to depose a witness unavailable for the 
hearing.
---------------------------------------------------------------------------

    Given this resolution of the 2012 Rule's scheduling concern, the 
Bureau believes that the benefits of discovery depositions under the 
amended Rule 209, as described earlier, outweigh other concerns 
expressed in the preamble to the 2012 Rule about the time, expense,

[[Page 10032]]

and risk of collateral disputes arising from depositions.\23\
---------------------------------------------------------------------------

    \23\ 77 FR 39057, 39076 (June 29, 2012).
---------------------------------------------------------------------------

1081.211 Interlocutory Review

    The provision at 12 CFR 1081.211 (Rule 211) governs interlocutory 
review. Rule 211(e) previously included language that stated that 
interlocutory review is disfavored, and that the Director will grant a 
petition to review a hearing officer's ruling or order prior to the 
Director's consideration of a recommended decision only in 
extraordinary circumstances. The Bureau is simplifying this language to 
state only that interlocutory review is generally disfavored. This is 
because, although interlocutory review remains disfavored, the Bureau 
believes that there can be situations where interlocutory review can 
contribute to the efficiency of proceedings short of extraordinary 
circumstances.

1081.212 Dispositive Motions

    The Bureau is relocating the previous 12 CFR 1081.212(g) and (h) 
(Rule 212(g) and (h)), which addressed oral argument and decisions on 
dispositive motions, respectively, to form part of 12 CFR 1081.213 
(Rule 213). Rule 213 is discussed in the next section of this section-
by-section analysis.
    Additionally, the Bureau is adopting a new Rule 212(g) to address 
the relationship of dispositive motions to the scheduling of the 
hearing, which is codified as Rule 212(g) but unrelated to the previous 
Rule 212(g). It is analogous to Rule 208(l), discussed above. It 
specifies that a respondent's filing of a dispositive motion 
constitutes a request that the hearing not be held until after the 
motion is resolved.\24\ This is because the filing of a dispositive 
motion, whose purpose is to avoid or limit the need for a hearing, 
reasonably entails a delay of that hearing so that the motion can be 
resolved.
---------------------------------------------------------------------------

    \24\ Rule 212(g) goes on to state that the hearing officer will 
decide whether to grant such a request. If the request is granted, 
the hearing officer will schedule the specific date of the hearing, 
in consultation with the parties.
---------------------------------------------------------------------------

1081.213 Rulings on Dispositive Motions

    The Bureau is amending Rule 213 to adopt a new procedure for 
rulings on dispositive motions, based on a procedure used by the 
Federal Trade Commission (FTC). The Bureau is also making related 
technical changes for clarity.
    Under the Bureau's existing Rules of Practice, the Director ``may, 
at any time, direct that any matter be submitted to him or her for 
review.'' \25\ However, there was previously no specific procedure for 
the Director to exercise this discretion in the context of dispositive 
motions.
---------------------------------------------------------------------------

    \25\ 12 CFR 1081.211(a).
---------------------------------------------------------------------------

    The new Rule 213(a) provides that the Director will either rule on 
a dispositive motion, refer the motion to the hearing officer, or rule 
on the motion in part and refer it in part. This is based on a similar 
process under the FTC's rules of practice.\26\ The Bureau agrees with 
the reasoning of the FTC when it adopted this process a decade ago. The 
FTC explained that the head of the agency has authority and expertise 
to rule initially on dispositive motions, and doing so can improve the 
quality of decision-making and expedite the proceeding.\27\ As the FTC 
further noted, an erroneous decision by an administrative law judge on 
a dispositive motion may lead to unnecessary briefing, hearing, and 
reversal, resulting in substantial costs and delay to the 
litigants.\28\ Adopting this process will give the Director the 
flexibility to decide whether a given dispositive motion would be most 
efficiently addressed by the hearing officer, with ultimate review by 
the Director, or simply by the Director.
---------------------------------------------------------------------------

    \26\ 16 CFR 3.22(a). This FTC provision does not specifically 
discuss a situation where the agency head rules on the motion in 
part and refers it in part. The Bureau has included language in Rule 
213(a) to specifically discuss this situation.
    \27\ 74 FR 1803, 1809-10 (Jan. 13, 2009).
    \28\ Id. at 1809-10.
---------------------------------------------------------------------------

    The new Rule 213(b) provides that, if the Director rules on the 
motion, the Director must do so within 42 days following the expiration 
of the time for filing all responses and replies, unless there is good 
cause to extend the deadline. If the Director refers the motion to the 
hearing officer, the Director may set a deadline for the hearing 
officer to rule. This is based on the parallel timing requirements 
under the FTC's rules of practice.\29\ Previously, Rule 212(h) provided 
a 30-day timeframe for the hearing officer to decide dispositive 
motions, subject to extension.\30\ But the Bureau believes that the 
FTC's somewhat more flexible approach to timing is warranted, given 
that the Director must first decide whether or not to refer the motion 
to the hearing officer and also has other responsibilities as the head 
of the agency. The Bureau believes that the overall efficiency gains to 
adjudication proceedings from the new process, as discussed above, 
should generally compensate for any delays associated with a more 
flexible deadline.
---------------------------------------------------------------------------

    \29\ 16 CFR 3.22(a). This FTC provision includes an interval of 
45 days, but as discussed elsewhere in this section-by-section 
analysis the Bureau is generally adopting time intervals in 
increments of seven days.
    \30\ See 12 CFR 1081.115 (change of time limits).
---------------------------------------------------------------------------

    The new Rule 213(c) provides that, at the request of any party or 
on the Director or hearing officer's own motion, the Director or 
hearing officer (as applicable) may hear oral argument on a dispositive 
motion. Rule 213(c) is identical to the previous Rule 212(g), except 
that it is updated to reflect the fact that the Director would be the 
appropriate official to hear oral argument, if any, to the extent the 
Director is deciding the motion.
    Finally, the new Rule 213(d) describes the types of rulings that 
the Director or hearing officer may make on a dispositive motion. It 
consolidates language from the previous Rules 212(h) and 213, with 
updates to reflect the fact that the Director may be the official who 
decides the motion, as well as other technical changes for clarity.

1081.400(a) Time Period for Filing Preliminary Findings and Conclusions

    Under the previous 12 CFR 1081.400(a) (Rule 400(a)), subject to 
possible extensions, the hearing officer was required to file a 
recommended decision no later than 90 days after the deadline for 
filing post-hearing responsive briefs pursuant to 12 CFR 1081.305(b) 
(Rule 305(b)) and in no event later than 300 days after filing of the 
notice of charges. The Bureau is amending the latter, 300-day interval 
to 360 days, in light of the amendments to Rule 209 that expand the 
opportunities for depositions. Additionally, as explained later in this 
section-by-section analysis, the Bureau is changing terminology from 
``recommended decision'' to ``preliminary findings and conclusions'' 
throughout the Rules of Practice.

1081.408 Issue Exhaustion

    The Bureau is adding a new 12 CFR 1081.408 (Rule 408) to address 
issue exhaustion.
    As the Supreme Court has explained: ``Administrative review schemes 
commonly require parties to give the agency an opportunity to address 
an issue before seeking judicial review of that question.'' \31\ These 
requirements can be ``creatures of statute or regulation'' or else are 
``judicially created.'' \32\ It is ``common for an agency's regulations 
to require issue exhaustion in administrative appeals. And when 
regulations do so, courts reviewing agency action regularly

[[Page 10033]]

ensure against the bypassing of that requirement by refusing to 
consider unexhausted issues.'' \33\ Consistent with the Court's case 
law, the Administrative Conference of the United States has recommended 
that agencies address issue exhaustion requirements in their 
regulations.\34\
---------------------------------------------------------------------------

    \31\ Carr v. Saul, 141 S. Ct. 1352, 1358 (2021).
    \32\ Id.
    \33\ Sims v. Apfel, 530 U.S. 103, 108 (2000) (internal citation 
omitted).
    \34\ 86 FR 6612, 6619 (Jan. 22, 2021) (recommendation 2.k).
---------------------------------------------------------------------------

    The Bureau is now adopting an express regulation on issue 
exhaustion. Section 1053 of the CFPA contemplates that the Bureau will 
conduct a proceeding to decide whether to issue a final order, and then 
parties may petition courts to review the Bureau's decision, based on 
the record that was before the Bureau.\35\ But if parties do not 
adequately present their arguments to the Bureau, it frustrates this 
statutory scheme. Accordingly, the Bureau believes that having 
procedures to address issue exhaustion in adjudication proceedings is 
important to carry out section 1053.\36\ The Bureau also notes that 
having express procedures on this subject should benefit both the 
Bureau and the parties, by avoiding any potential confusion about how 
parties must raise arguments in adjudication proceedings.
---------------------------------------------------------------------------

    \35\ See generally section 1053(b), 12 U.S.C. 5563(b).
    \36\ Section 1053(e), 12 U.S.C. 5563(e). The issue exhaustion 
provision is also independently authorized by section 1022(b)(1), 12 
U.S.C. 5512(b)(1), based on either of two grounds. First, 
establishing orderly rules for issue exhaustion is appropriate to 
enable the Bureau to ``administer and carry out the purposes and 
objectives of'' section 1053, for the reasons discussed above and 
below. Id. Second, these issue-exhaustion rules ``prevent evasions'' 
of section 1053 and the Rules of Practice by some parties, who 
otherwise may not adequately present their arguments to the Bureau. 
Id.; see Woodford v. Ngo, 548 U.S. 81, 90 (2006) (explaining that 
``exhaustion requirements are designed to deal with parties who do 
not want to exhaust'').
---------------------------------------------------------------------------

    Rule 408(a) defines the new Rule 408's scope. It applies to any 
argument to support a party's case or defense, including any argument 
that could be a basis for setting aside Bureau action under 5 U.S.C. 
706 or any other source of law. This broad scope ensures that the 
Bureau has the opportunity to consider any issue affecting its 
proceedings.
    Rule 408(b) provides, first, that a party must raise an argument 
before the hearing officer, or else it is not preserved for later 
consideration by the Director. Second, a party must raise an argument 
before the Director, or else it is not preserved for later 
consideration by a court. This is consistent with the roles of the 
hearing officer and Director.\37\
---------------------------------------------------------------------------

    \37\ The Bureau notes that in cases where Rule 408(b) interacts 
with the Bureau's revisions to Rule 213, it yields a common-sense 
result. If the Director rules on a dispositive motion under Rule 213 
rather than referring it to the hearing officer, then the first 
sentence of Rule 408(b)--which normally requires parties to raise 
arguments before the hearing officer in the first instance--would be 
inapplicable to the Director's consideration of the motion. This is 
because the Director's ruling on the motion would not be ``later'' 
consideration by the Director after the hearing officer. On the 
other hand, the second sentence of Rule 408(b) would be applicable, 
and arguments not properly raised before the Director in briefing on 
the motion would not be preserved for later consideration by a 
court.
---------------------------------------------------------------------------

    Rule 408(c) provides that an argument must be raised in a manner 
that complies with the Rules of Practice and that provides a fair 
opportunity to consider the argument.
    Finally, Rule 408(d) clarifies that the Director has discretion to 
consider an unpreserved argument, including by considering it in the 
alternative. It also clarifies that, if the Director considers an 
unpreserved argument in the alternative, the argument remains 
unpreserved. Because issue exhaustion requirements serve to protect the 
agency's processes, it is appropriate for the head of the agency to 
retain discretion to waive those issue exhaustion requirements in 
appropriate cases.\38\ If a party believes that there is good cause for 
the issue exhaustion requirements to not be applied in a particular 
context, the proper course is to timely request that the Director 
exercise this discretion. The Director may also do so on the Director's 
own initiative. On the other hand, if the Director merely considers an 
unpreserved argument in the alternative, that should not be construed 
as a waiver by the Director of the party's failure to appropriately 
raise the argument.
---------------------------------------------------------------------------

    \38\ See, e.g., Am. Farm Lines v. Black Ball Freight Serv., 397 
U.S. 532, 539 (1970) (It ``is always within the discretion of . . . 
an administrative agency to relax or modify its procedural rules 
adopted for the orderly transaction of business before it when in a 
given case the ends of justice require it.'').
---------------------------------------------------------------------------

Global Technical Amendments

    In addition to the specific changes outlined above, the Bureau is 
making certain technical amendments throughout the Rules of Practice.
    First, the Bureau is retitling the hearing officer's ``recommended 
decision'' as ``preliminary findings and conclusions.'' The Bureau 
believes that this title is more descriptive of this component of an 
adjudication proceeding. This is a terminological change, and 
preliminary findings and conclusions remain a recommended decision for 
purposes of the Administrative Procedure Act.
    Second, the Bureau is making changes to ensure that the language of 
the Rules of Practice is gender inclusive. Third, consistent with the 
current Federal Rules of Civil Procedure, the Bureau is replacing use 
of the term ``shall'' with the terms ``must,'' ``may,'' ``will,'' or 
``should,'' depending on the context, because the term ``shall'' can 
sometimes be ambiguous.\39\ Fourth, the amendments replace certain uses 
of the term ``the Bureau'' with either ``the Director,'' ``the Office 
of Administrative Adjudication,'' or ``the Office of Enforcement,'' in 
order to avoid ambiguity about which Bureau organ is being referenced. 
Fifth, as also discussed in the section-by-section analysis for Rule 
114(a), the Bureau is adjusting various time periods in the Rules of 
Practice. Finally, the Bureau is making technical changes to 
requirements in 12 CFR 1081.111(a), 1081.113(d)(2), and 1081.405(e) 
(Rules 111(a), 113(d)(2), and 405(e)) regarding filing of certain 
papers by the hearing officer and Director and service of those papers 
by the Office of Administrative Adjudication.
---------------------------------------------------------------------------

    \39\ Fed. R. Civ. P. 1, advisory committee's notes to 2007 
amendment.
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IV. Section 1022(b)(2) Analysis

    In developing this rule, the Bureau has considered the rule's 
benefits, costs, and impacts in accordance with section 1022(b)(2)(A) 
of the CFPA.\40\ In addition, the Bureau has consulted or offered to 
consult with the prudential regulators and the FTC, including regarding 
consistency of this rule with any prudential, market, or systemic 
objectives administered by those agencies, in accordance with section 
1022(b)(2)(B) of the CFPA.\41\
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    \40\ 12 U.S.C. 5512(b)(2)(A).
    \41\ 12 U.S.C. 5512(b)(2)(B). Whether section 1022(b)(2)(A) and 
section 1022(b)(2)(A)(B) are applicable to this rule is unclear, but 
in order to inform the rulemaking more fully the Bureau performed 
the described analysis and consultations.
---------------------------------------------------------------------------

    As with the 2012 Rule, this rule neither imposes obligations on 
consumers, nor is it expected to affect their access to consumer 
financial products or services. For purposes of this 1022(b)(2) 
analysis, the Bureau compares the effect of the rule against the 
baseline of the Rules of Practice as they currently exist, as 
established by the 2012 Rule and amended by the 2014 Rule.
    The Rules of Practice amended by this rule are intended to provide 
an expeditious decision-making process. An expeditious decision-making 
process may benefit both consumers and

[[Page 10034]]

covered persons to the extent that it is used in lieu of proceedings 
initiated in federal district court. A clear and efficient process for 
the conduct of adjudication proceedings benefits consumers by providing 
a systematic process for protecting them from unlawful behavior. At the 
same time, a more efficient process affords covered persons with a 
cost-effective way to have their cases heard. The 2012 Rule adopted an 
affirmative disclosure approach to fact discovery, pursuant to which 
the Bureau makes available to respondents the information obtained by 
the Office of Enforcement from persons not employed by the Bureau prior 
to the institution of proceedings, in connection with the investigation 
leading to the institution of proceedings that is not otherwise 
privileged or protected from disclosure. This affirmative disclosure 
obligation was intended to substitute for the traditional civil 
discovery process, which can be both time-consuming and expensive. By 
changing this process to allow for a limited number of depositions by 
both the Office of Enforcement and respondents, the rule will increase 
the cost of the process in both time and money, relative to the 
baseline. At the same time, to the extent that a limited number of 
depositions makes hearings proceed more efficiently, the rule may 
reduce costs. In addition, since promulgating the 2012 Rule, the Bureau 
has only brought two cases through the administrative adjudication 
process from start to finish. As such, the Bureau expects there to be 
few cases in the future that would have benefited from the more limited 
deposition procedure in the 2012 Rule. The Bureau expects the amended 
procedure to still be faster and less expensive than discovery through 
a Federal district court. To the extent that adding additional 
discovery enables more cases that would otherwise be initiated in 
Federal court to instead be initiated through the administrative 
adjudication process, both consumers and covered persons will benefit.
    In addition, in the 1022(b)(2) analysis for the 2012 Rule, the 
Bureau stated that a benefit of the Rule was its similarity to existing 
rules of the prudential regulators, the FTC, and the SEC. The SEC has 
since amended its rules, and many of the changes in these amendments 
will align the Bureau's rules with the new SEC rules and those of other 
agencies. The Rule's similarity to other agencies' rules should further 
reduce the expense of administrative adjudication for covered persons.
    Further, these amendments have no unique impact on insured 
depository institutions or insured credit unions with less than $10 
billion in assets described in section 1026(a) of the CFPA. Finally, 
the amendments do not have a unique impact on rural consumers.

V. Regulatory Requirements

    As a rule of agency organization, procedure, or practice, this rule 
is exempt from the notice-and-comment rulemaking requirements of the 
Administrative Procedure Act.\42\ However, the Bureau is accepting 
comments on the rule. If, based on the comments, the Bureau decides to 
make further amendments, the Bureau requests comment on whether those 
amendments should apply to any adjudication proceedings that may be 
pending at that time.
---------------------------------------------------------------------------

    \42\ 5 U.S.C. 553(b).
---------------------------------------------------------------------------

    Because no notice of proposed rulemaking is required, the 
Regulatory Flexibility Act does not require an initial or final 
regulatory flexibility analysis.\43\ Moreover, the Bureau's Director 
certifies that this rule will not have a significant economic impact on 
a substantial number of small entities. Therefore, an analysis is also 
not required for that reason.\44\ The rule imposes compliance burdens 
only on the handful of entities that are respondents in adjudication 
proceedings or third-party recipients of discovery requests. Some of 
the handful of affected entities may be small entities under the 
Regulatory Flexibility Act, but they would represent an extremely small 
fraction of small entities in consumer financial services markets. 
Accordingly, the number of small entities affected is not substantial.
---------------------------------------------------------------------------

    \43\ 5 U.S.C. 603, 604.
    \44\ 5 U.S.C. 605(b).
---------------------------------------------------------------------------

    The Bureau has also determined that this rule does not impose any 
new or revise any existing recordkeeping, reporting, or disclosure 
requirements on covered entities or members of the public that would be 
collections of information requiring approval by the Office of 
Management and Budget under the Paperwork Reduction Act.\45\
---------------------------------------------------------------------------

    \45\ 44 U.S.C. 3501-3521.
---------------------------------------------------------------------------

List of Subjects in 12 CFR Part 1081

    Administrative practice and procedure, Banks, Banking, Consumer 
protection, Credit unions, Law enforcement, National banks, Savings 
associations, Trade practices.

Authority and Issuance

0
For the reasons set forth above, the Bureau revises 12 CFR part 1081 to 
read as follows:

PART 1081--RULES OF PRACTICE FOR ADJUDICATION PROCEEDINGS

Subpart A--General Rules
Sec.
1081.100 Scope of the rules of practice.
1081.101 Expedition and fairness of proceedings.
1081.102 Rules of construction.
1081.103 Definitions.
1081.104 Authority of the hearing officer.
1081.105 Assignment, substitution, performance, disqualification of 
hearing officer.
1081.106 Deadlines.
1081.107 Appearance and practice in adjudication proceedings.
1081.108 Good faith certification.
1081.109 Conflict of interest.
1081.110 Ex parte communication.
1081.111 Filing of papers.
1081.112 Formal requirements as to papers filed.
1081.113 Service of papers.
1081.114 Construction of time limits.
1081.115 Change of time limits.
1081.116 Witness fees and expenses.
1081.117 Bureau's right to conduct examination, collect information.
1081.118 Collateral attacks on adjudication proceedings.
1081.119 Confidential information; protective orders.
1081.120 Settlement.
1081.121 Cooperation with other agencies.
Subpart B--Initiation of Proceedings and Prehearing Rules
1081.200 Commencement of proceeding and contents of notice of 
charges.
1081.201 Answer and disclosure statement and notification of 
financial interest.
1081.202 Amended pleadings.
1081.203 Scheduling conference.
1081.204 Consolidation, severance, or bifurcation of proceedings.
1081.205 Non-dispositive motions.
1081.206 Availability of documents for inspection and copying.
1081.207 Production of witness statements.
1081.208 Subpoenas.
1081.209 Depositions.
1081.210 Expert discovery.
1081.211 Interlocutory review.
1081.212 Dispositive motions.
1081.213 Rulings on dispositive motions.
1081.214 Prehearing conferences.
1081.215 Prehearing submissions.
1081.216 Amicus participation.
Subpart C--Hearings
1081.300 Public hearings.
1081.301 Failure to appear.
1081.302 Conduct of hearings.
1081.303 Evidence.
1081.304 Record of the hearing.
1081.305 Post-hearing filings.
1081.306 Record in proceedings before hearing officer; retention of 
documents; copies.
Subpart D--Decision and Appeals
1081.400 Preliminary findings and conclusions of the hearing 
officer.
1081.401 Transmission of documents to Director; record index; 
certification.

[[Page 10035]]

1081.402 Notice of appeal; review by the Director.
1081.403 Briefs filed with the Director.
1081.404 Oral argument before the Director.
1081.405 Decision of the Director.
1081.406 Reconsideration.
1081.407 Effective date; stays pending judicial review.
1081.408 Issue exhaustion.
Subpart E--Temporary Cease-and-Desist Proceedings
1081.500 Scope.
1081.501 Basis for issuance, form, and service.
1081.502 Judicial review, duration.

    Authority: 12 U.S.C. 5512(b)(1), 5563(e).

Subpart A--General Rules


Sec.  1081.100  Scope of the rules of practice.

    This part prescribes rules of practice and procedure applicable to 
adjudication proceedings authorized by section 1053 of the Consumer 
Financial Protection Act of 2010 (12 U.S.C. 5563). The rules of 
practice in this part do not govern the conduct of Bureau 
investigations, investigational hearings or other proceedings that do 
not arise from proceedings after a notice of charges.


Sec.  1081.101  Expedition and fairness of proceedings.

    To the extent practicable, consistent with requirements of law, the 
Bureau's policy is to conduct such adjudication proceedings fairly and 
expeditiously. In the conduct of such proceedings, the hearing officer 
and counsel for all parties must make every effort at each stage of a 
proceeding to avoid delay. With the consent of the parties, the 
Director, at any time, or the hearing officer at any time prior to the 
filing of the hearing officer's preliminary findings and conclusions, 
may change any time limit prescribed by this part.


Sec.  1081.102  Rules of construction.

    For the purposes of this part:
    (a) Any term in the singular includes the plural, and the plural 
includes the singular, if such use would be appropriate;
    (b) Any use of a masculine, feminine, or neutral gender encompasses 
all three, if such use would be appropriate;
    (c) Unless context requires otherwise, a party's counsel of record, 
if any, may, on behalf of that party, take any action required to be 
taken by the party; and
    (d) To the extent this part uses terms defined by section 1002 of 
the Consumer Financial Protection Act of 2010 (12 U.S.C. 5481), such 
terms have the same meaning as set forth therein, unless defined 
differently by Sec.  1081.103.


Sec.  1081.103  Definitions.

    For the purposes of this part, unless explicitly stated to the 
contrary:
    Adjudication proceeding means a proceeding conducted pursuant to 
section 1053 of the Consumer Financial Protection Act of 2010 (12 
U.S.C. 5563) and intended to lead to the formulation of a final order 
other than a temporary order to cease and desist issued pursuant to 
section 1053(c) of that Act (12 U.S.C. 5563(c)).
    Bureau means the Consumer Financial Protection Bureau.
    Chief hearing officer means the hearing officer charged with 
assigning hearing officers to specific proceedings, in the event there 
is more than one hearing officer available to the Bureau.
    Counsel means any person representing a party pursuant to Sec.  
1081.107.
    Decisional employee means any employee of the Bureau who has not 
engaged in an investigative or prosecutorial role in a proceeding and 
who may assist the Director or the hearing officer, respectively, in 
preparing orders, preliminary findings and conclusions, decisions, and 
other documents under this part.
    Director means the Director of the Bureau or a person authorized to 
perform the functions of the Director in accordance with the law.
    Enforcement counsel means any individual who files a notice of 
appearance as counsel on behalf of the Office of Enforcement in an 
adjudication proceeding.
    Final order means an order issued by the Bureau with or without the 
consent of the respondent, which has become final, without regard to 
the pendency of any petition for reconsideration or review.
    General Counsel means the General Counsel of the Bureau or any 
Bureau employee to whom the General Counsel has delegated authority to 
act under this part.
    Hearing officer means an administrative law judge or any other 
person duly authorized to preside at a hearing.
    Notice of charges means the pleading that commences an adjudication 
proceeding, as described in Sec.  1081.200, except that it does not 
include a stipulation and consent order under Sec.  1081.200(d).
    Office of Administrative Adjudication means the office of the 
Bureau responsible for conducting adjudication proceedings.
    Office of Enforcement means the office of the Bureau responsible 
for enforcement of Federal consumer financial law or other laws 
enforceable by the Bureau.
    Party means the Office of Enforcement, any person named as a party 
in any notice of charges issued pursuant to this part, and, to the 
extent applicable, any person who intervenes in the proceeding pursuant 
to Sec.  1081.119(a) to seek a protective order.
    Person means an individual, partnership, company, corporation, 
association (incorporated or unincorporated), trust, estate, 
cooperative organization, or other entity.
    Person employed by the Bureau means Bureau employees, contractors, 
agents, and others acting for or on behalf of the Bureau, or at its 
direction, including consulting experts.
    Respondent means the party named in the notice of charges.
    State means any State, territory, or possession of the United 
States, the District of Columbia, the Commonwealth of Puerto Rico, the 
Commonwealth of the Northern Mariana Islands, Guam, American Samoa, or 
the United States Virgin Islands or any federally recognized Indian 
tribe, as defined by the Secretary of the Interior under section 104(a) 
of the Federally Recognized Indian Tribe List Act of 1994, 25 U.S.C. 
479a-1(a).


Sec.  1081.104  Authority of the hearing officer.

    (a) General rule. The hearing officer will have all powers 
necessary to conduct a proceeding in a fair and impartial manner and to 
avoid unnecessary delay. No provision of this part may be construed to 
limit the powers of the hearing officers provided by the Administrative 
Procedure Act, 5 U.S.C. 556, 557.
    (b) Powers. The powers of the hearing officer include but are not 
limited to the power:
    (1) To administer oaths and affirmations;
    (2) To issue subpoenas, subpoenas duces tecum, and protective 
orders, as authorized by this part, and to quash or modify any such 
subpoenas or orders;
    (3) To take depositions or cause depositions to be taken;
    (4) To receive relevant evidence and to rule upon the admission of 
evidence and offers of proof;
    (5) To regulate the course of a proceeding and the conduct of 
parties and their counsel;
    (6) To reject written submissions that materially fail to comply 
with the requirements of this part, and to deny confidential status to 
documents and testimony without prejudice until a party complies with 
all relevant rules of this chapter;

[[Page 10036]]

    (7) To hold conferences for settlement, simplification of the 
issues, or any other proper purpose and require the attendance at any 
such conference of at least one representative of each party who has 
authority to negotiate concerning the resolution of issues in 
controversy;
    (8) To inform the parties as to the availability of one or more 
alternative means of dispute resolution, and to encourage the use of 
such methods;
    (9) To certify questions to the Director for the Director's 
determination in accordance with the rules of this part;
    (10) To consider and rule upon, as justice may require, all 
procedural and other motions appropriate in adjudication proceedings;
    (11) To issue and file preliminary findings and conclusions;
    (12) To recuse oneself by motion made by a party or on the hearing 
officer's own motion;
    (13) To issue such sanctions against parties or their counsel as 
may be necessary to deter repetition of sanctionable conduct or 
comparable conduct by others similarly situated, as provided for in 
this part or as otherwise necessary to the appropriate conduct of 
hearings and related proceedings, provided that no sanction will be 
imposed before providing the sanctioned person an opportunity to show 
cause why no such sanction should issue; and
    (14) To do all other things necessary and appropriate to discharge 
the duties of a presiding officer.


Sec.  1081.105  Assignment, substitution, performance, disqualification 
of hearing officer.

    (a) How assigned. In the event that more than one hearing officer 
is available to the Bureau for the conduct of proceedings under this 
part, the presiding hearing officer will be designated by the chief 
hearing officer, who will notify the parties of the hearing officer 
designated.
    (b) Interference. Hearing officers will not be subject to the 
supervision or direction of, or responsible to, any officer, employee, 
or agent engaged in the performance of investigative or prosecuting 
functions for the Bureau, and all direction by the Bureau to the 
hearing officer concerning any adjudication proceedings must appear in 
and be made part of the record.
    (c) Disqualification of hearing officers. (1) When a hearing 
officer deems the hearing officer disqualified to preside in a 
particular proceeding, the hearing officer must issue a notice stating 
that the hearing officer is withdrawing from the matter and setting 
forth the reasons therefore.
    (2) Any party who has a reasonable, good faith basis to believe 
that a hearing officer has a personal bias, or is otherwise 
disqualified from hearing a case, may make a motion to the hearing 
officer that the hearing officer withdraw. The motion must be 
accompanied by an affidavit setting forth the facts alleged to 
constitute grounds for disqualification. Such motion must be filed at 
the earliest practicable time after the party learns, or could 
reasonably have learned, of the alleged grounds for disqualification. 
If the hearing officer does not disqualify the hearing officer within 
14 days, the hearing officer must certify the motion to the Director 
pursuant to Sec.  1081.211, together with any statement the hearing 
officer may wish to have considered by the Director. The Director must 
promptly determine the validity of the grounds alleged, either directly 
or on the report of another hearing officer appointed to conduct a 
hearing for that purpose, and will either direct the reassignment of 
the matter or confirm the hearing officer's continued role in the 
matter.
    (d) Unavailability of hearing officer. If the hearing officer 
withdraws or is otherwise unable to perform the duties of the hearing 
officer, the chief hearing officer or the Director will designate 
another hearing officer to serve.

Sec.  1081.106 Deadlines

    The deadlines for action by the hearing officer established by 
Sec. Sec.  1081.203, 1081.205, 1081.211, 1081.212, and 1081.400, or 
elsewhere in this part, confer no substantive rights on respondents.


Sec.  1081.107  Appearance and practice in adjudication proceedings.

    (a) Appearance before the Bureau or a hearing officer--(1) By 
attorneys. Any member in good standing of the bar of the highest court 
of any State may represent others before the Bureau if such attorney is 
not currently suspended or debarred from practice before the Bureau or 
by a court of the United States or of any State.
    (2) By non-attorneys. So long as such individual is not currently 
suspended or debarred from practice before the Bureau:
    (i) An individual may appear on the individual's own behalf;
    (ii) A member of a partnership may represent the partnership;
    (iii) A duly authorized officer of a corporation, trust, or 
association may represent the corporation, trust, or association; and
    (iv) A duly authorized officer or employee of any government unit, 
agency, or authority may represent that unit, agency, or authority.
    (3) Notice of appearance. Any individual acting as counsel on 
behalf of a party, including Enforcement counsel, must file a notice of 
appearance at or before the time that the individual submits papers or 
otherwise appears on behalf of a party in the adjudication proceeding. 
The notice of appearance must include a written declaration that the 
individual is currently qualified as provided in paragraph (a)(1) or 
(2) of this section and is authorized to represent the particular 
party, and if applicable, must include the attorney's jurisdiction of 
admission or qualification, attorney identification number, and a 
statement by the appearing attorney attesting to the attorney's good 
standing within the legal profession. By filing a notice of appearance 
on behalf of a party in an adjudication proceeding, the counsel agrees 
and represents that counsel is authorized to accept service on behalf 
of the represented party and that, in the event of withdrawal from 
representation, counsel will, if required by the hearing officer, 
continue to accept service until a new counsel has filed a notice of 
appearance or until the represented party indicates that the party will 
proceed on a pro se basis. The notice of appearance must provide the 
representative's email address, telephone number, and business address 
and, if different from the representative's addresses, electronic or 
other address at which the represented party may be served.
    (b) Sanctions. Dilatory, obstructionist, egregious, contemptuous, 
or contumacious conduct at any phase of any adjudication proceeding may 
be grounds for exclusion or suspension of counsel from the proceeding. 
An order imposing a sanction must describe the sanctioned conduct and 
explain the basis for the sanction.
    (c) Standards of conduct; disbarment. (1) All attorneys practicing 
before the Bureau must conform to the standards of ethical conduct 
required by the bars of which the attorneys are members.
    (2) If for good cause shown, the Director believes that any 
attorney is not conforming to such standards, or that an attorney or 
counsel to a party has otherwise engaged in conduct warranting 
disciplinary action, the Director may issue an order requiring such 
person to show cause why the attorney should not be suspended or 
disbarred from practice before the Bureau. The alleged offender will be 
granted due opportunity to be heard in

[[Page 10037]]

the alleged offender's own defense and may be represented by counsel. 
Thereafter, if warranted by the facts, the Director may issue against 
the attorney or counsel an order of reprimand, suspension, or 
disbarment.


Sec.  1081.108  Good faith certification.

    (a) General requirement. Every filing or submission of record 
following the issuance of a notice of charges must be signed by at 
least one counsel of record in counsel's individual name and must state 
counsel's address, email address, and telephone number. A party who 
acts as the party's own counsel must sign the party's individual name 
and state the party's address, email address, and telephone number on 
every filing or submission of record. Papers filed by electronic 
transmission may be signed with an ``/s/'' notation, which will be 
deemed the signature of the party or representative whose name appears 
below the signature line.
    (b) Effect of signature. (1) The signature of counsel or a party 
constitutes a certification that: The counsel or party has read the 
filing or submission of record; to the best of one's knowledge, 
information, and belief formed after reasonable inquiry, the filing or 
submission of record is well-grounded in fact and is warranted by 
existing law or a good faith argument for the extension, modification, 
or reversal of existing law; and the filing or submission of record is 
not made for any improper purpose, such as to harass or to cause 
unnecessary delay or needless increase in the cost of litigation.
    (2) If a filing or submission of record is not signed, the hearing 
officer must strike the filing or submission of record, unless it is 
signed promptly after the omission is called to the attention of the 
filer.
    (c) Effect of making oral motion or argument. The act of making any 
oral motion or oral argument by any counsel or party constitutes a 
certification that to the best of one's knowledge, information, and 
belief formed after reasonable inquiry, one's statements are well-
grounded in fact and are warranted by existing law or a good faith 
argument for the extension, modification, or reversal of existing law, 
and are not made for any improper purpose, such as to harass or to 
cause unnecessary delay or needless increase in the cost of litigation.
    (d) Sanctions. Counsel or a party that fails to abide by the 
requirements of this section may be subject to sanctions pursuant to 
Sec.  1081.104(b)(13).


Sec.  1081.109  Conflict of interest.

    (a) Conflict of interest in representation. No person may appear as 
counsel for another person in an adjudication proceeding if it 
reasonably appears that such representation may be materially limited 
by that counsel's responsibilities to a third person or by the 
counsel's own interests. The hearing officer may take corrective 
measures at any stage of a proceeding to cure a conflict of interest in 
representation, including the issuance of an order limiting the scope 
of representation or disqualifying an individual from appearing in a 
representative capacity for the duration of the proceeding.
    (b) Certification and waiver. If any person appearing as counsel 
represents two or more parties to an adjudication proceeding or also 
represents a non-party on a matter relevant to an issue in the 
proceeding, counsel must certify in writing at the time of filing the 
notice of appearance required by Sec.  1081.107(a)(3):
    (1) That the counsel has personally and fully discussed the 
possibility of conflicts of interest with each such party and non-
party; and
    (2) That each such party and/or non-party waives any right it might 
otherwise have had to assert any known conflicts of interest or to 
assert any conflicts of interest during the course of the proceeding.


Sec.  1081.110  Ex parte communication.

    (a) Definitions. (1) For purposes of this section, ex parte 
communication means any material oral or written communication relevant 
to the merits of an adjudication proceeding that was neither on the 
record nor on reasonable prior notice to all parties that takes place 
between:
    (i) An interested person not employed by the Bureau (including such 
person's counsel); and
    (ii) The hearing officer handling the proceeding, the Director, or 
a decisional employee.
    (2) A request for status of the proceeding does not constitute an 
ex parte communication.
    (3) Pendency of an adjudication proceeding means the time from when 
the Bureau issues a notice of charges, unless the person responsible 
for the communication has knowledge that a notice of charges will be 
issued, in which case the pendency of an adjudication will commence at 
the time of that person's acquisition of such knowledge, or from when 
an order by a court of competent jurisdiction remanding a Bureau 
decision and order for further proceedings becomes effective, until the 
time the Director enters a final decision and order in the proceeding 
and the time permitted to seek reconsideration of that decision and 
order has elapsed. For purposes of this section, an order of remand by 
a court of competent jurisdiction is deemed to become effective when 
the Bureau's right to petition for review or for a writ of certiorari 
has lapsed without a petition having been filed, or when such a 
petition has been denied. If a petition for reconsideration of a Bureau 
decision is filed pursuant to Sec.  1081.406, the matter will be 
considered to be a pending adjudication proceeding until the time the 
Bureau enters an order disposing of the petition.
    (b) Prohibited ex parte communications. During the pendency of an 
adjudication proceeding, except to the extent required for the 
disposition of ex parte matters as authorized by law or as otherwise 
authorized by this part:
    (1) No interested person not employed by the Bureau will make or 
knowingly cause to be made to the Director, or to the hearing officer, 
or to any decisional employee, an ex parte communication; and
    (2) The Director, the hearing officer, or any decisional employee 
will not make or knowingly cause to be made to any interested person 
not employed by the Bureau any ex parte communication.
    (c) Procedure upon occurrence of ex parte communication. If an ex 
parte communication prohibited by paragraph (b) of this section is 
received by the hearing officer, the Director, or any decisional 
employee, that person must cause all such written communications (or, 
if the communication is oral, a memorandum stating the substance of the 
communication) to be placed on the record of the proceeding and served 
on all parties. All other parties to the proceeding will have an 
opportunity, within 14 days of receipt of service of the ex parte 
communication, to file responses thereto and to recommend any 
sanctions, in accordance with paragraph (d) of this section, that they 
believe to be appropriate under the circumstances.
    (d) Sanctions--(1) Adverse action on claim. Upon receipt of an ex 
parte communication knowingly made or knowingly caused to be made by a 
party and prohibited by paragraph (b) of this section, the Director or 
hearing officer, as appropriate, may, to the extent consistent with the 
interests of justice and the policy of the underlying statutes, require 
the party to show cause why the party's claim or interest in the 
proceeding should not be dismissed, denied, disregarded, or otherwise 
adversely affected on account of such violation.

[[Page 10038]]

    (2) Discipline of persons practicing before the Bureau. The 
Director may, to the extent not prohibited by law, censure, suspend, or 
revoke the privilege to practice before the Bureau of any person who 
makes, or solicits the making of, an unauthorized ex parte 
communication.
    (e) Separation of functions. Except to the extent required for the 
disposition of ex parte matters as authorized by law, the hearing 
officer may not consult a person or party on any matter relevant to the 
merits of the adjudication, unless upon notice and opportunity for all 
parties to participate. An employee or agent engaged in the performance 
of investigative or prosecuting functions for the Bureau in a case, 
other than the Director, may not, in that or a factually related case, 
participate or advise in the decision, preliminary findings and 
conclusions, or agency review of the preliminary findings and 
conclusions, except as witness or counsel in public proceedings.


Sec.  1081.111  Filing of papers.

    (a) Filing. The following papers must be filed by parties in an 
adjudication proceeding: The notice of charges, proof of service of the 
notice of charges, notices of appearance, answer, the disclosure 
statement required under Sec.  1081.201(e), motion, brief, request for 
issuance or enforcement of a subpoena, response, opposition, reply, 
notice of appeal, or petition for reconsideration. The hearing officer 
or Director (as applicable) will file all written orders, rulings, 
notices, or requests. Any papers required to be filed must be filed 
with the Office of Administrative Adjudication, except as otherwise 
provided in this section.
    (b) Manner of filing. Unless otherwise specified by the Director or 
the hearing officer, filing may be accomplished by:
    (1) Electronic transmission in accordance with guidance issued by 
the Office of Administrative Adjudication; or
    (2) Any of the following methods if respondent demonstrates, in 
accordance with guidance issued by the Office of Administrative 
Adjudication, that electronic filing is not practicable:
    (i) Personal delivery;
    (ii) Delivery to a reliable commercial courier service or overnight 
delivery service; or
    (iii) Mailing the papers through the U.S. Postal Service by First 
Class Mail, Registered Mail, Certified Mail or Express Mail.
    (c) Papers filed in an adjudication proceeding are presumed to be 
public. Unless otherwise ordered by the Director or the hearing 
officer, all papers filed in connection with an adjudication proceeding 
are presumed to be open to the public. The Bureau may provide public 
access to and publish any papers filed in an adjudication proceeding 
except if there is a pending motion for a protective order filed 
pursuant to Sec.  1081.119, or if there is an order from the Director, 
hearing officer, or a Federal court authorizing the confidential 
treatment of the papers filed.


Sec.  1081.112  Formal requirements as to papers filed.

    (a) Form. All papers filed by parties must:
    (1) Set forth the name, address, telephone number, and email 
address of the counsel or party making the filing;
    (2) Be double-spaced (except for single-spaced footnotes and 
single-spaced indented quotations) and printed or typewritten on 8\1/2\ 
x 11 inch paper in 12-point or larger font;
    (3) Include at the head of the paper, or on a title page, a caption 
setting forth the title of the case, the docket number of the 
proceeding, and a brief descriptive title indicating the purpose of the 
paper;
    (4) Be paginated with margins at least one inch wide; and
    (5) If filed by other than electronic means, be stapled, clipped, 
or otherwise fastened in a manner that lies flat when opened.
    (b) Signature. All papers must be dated and signed as provided in 
Sec.  1081.108.
    (c) Number of copies. Unless otherwise specified by the Director or 
the hearing officer, one copy of all documents and papers must be filed 
if filing is by electronic transmission. If filing is accomplished by 
any other means, an original and one copy of all documents and papers 
must be filed, except that only one copy of transcripts of testimony 
and exhibits must be filed.
    (d) Authority to reject document for filing. The Office of 
Administrative Adjudication or the hearing officer may reject a 
document for filing that materially fails to comply with this part.
    (e) Sensitive personal information. Sensitive personal information 
means an individual's Social Security number, taxpayer identification 
number, financial account number, credit card or debit card number, 
driver's license number, State-issued identification number, passport 
number, date of birth (other than year), and any sensitive health 
information identifiable by individual, such as an individual's medical 
records. Sensitive personal information must not be included in, and 
must be redacted or omitted from, filings unless the person filing the 
paper determines that such information is relevant or otherwise 
necessary for the conduct of the proceeding. If the person filing a 
paper determines the sensitive personal information contained in the 
paper is relevant or necessary to the proceeding, the person must file 
the paper in accordance with paragraph (f) of this section, including 
filing an expurgated copy of the paper with the sensitive personal 
information redacted.
    (f) Confidential treatment of information in certain filings. A 
party seeking confidential treatment of information contained in a 
filing must contemporaneously file either a motion requesting such 
treatment in accordance with Sec.  1081.119 or a copy of the order from 
the Director, hearing officer, or Federal court authorizing such 
confidential treatment. The filing must comply with any applicable 
order of the Director or hearing officer and must be accompanied by:
    (1) A complete, sealed copy of the documents containing the 
materials as to which confidential treatment is sought, with the 
allegedly confidential material clearly marked as such, and with the 
first page of the document labeled ``Under Seal.'' If the movant seeks 
or has obtained a protective order against disclosure to other parties 
as well as the public, copies of the documents will not be served on 
other parties; and
    (2) An expurgated copy of the materials as to which confidential 
treatment is sought, with the allegedly confidential materials 
redacted. The redacted version must indicate any omissions with 
brackets or ellipses, and its pagination and depiction of text on each 
page must be identical to that of the sealed version.
    (g) Certificate of service. Any papers filed in an adjudication 
proceeding must contain proof of service on all other parties or their 
counsel in the form of a statement of the date and manner of service 
and of the names of the persons served, certified by the person who 
made service. The certificate of service must be affixed to the papers 
filed and signed in accordance with Sec.  1081.108.


Sec.  1081.113  Service of papers.

    (a) When required. In every adjudication proceeding, each paper 
required to be filed by Sec.  1081.111 must be served upon each party 
in the proceeding in accordance with the provisions of this section; 
provided, however, that absent an order to the contrary, no service is 
required for motions which are to be heard ex parte.
    (b) Upon a person represented by counsel. Whenever service is 
required to

[[Page 10039]]

be made upon a person represented by counsel who has filed a notice of 
appearance pursuant to Sec.  1081.107(a)(3), service shall be made 
pursuant to paragraph (c) of this section upon counsel, unless service 
upon the person represented is ordered by the Director or the hearing 
officer, as appropriate.
    (c) Method of service. Except as provided in paragraph (d) of this 
section or as otherwise ordered by the hearing officer or the Director, 
service must be made by delivering a copy of the filing by one of the 
following methods:
    (1) Transmitting the papers by electronic transmission where the 
persons so serving each other have consented to service by specified 
electronic transmission and provided the Bureau and the parties with 
notice of the means for service by electronic transmission (e.g., email 
address or facsimile number);
    (2) Handing a copy to the person required to be served; or leaving 
a copy at the person's office with a clerk or other person in charge 
thereof, or, if there is no one in charge, leaving it in a conspicuous 
place therein; or, if the office is closed or the person to be served 
has no office, leaving it at the person's dwelling or usual place of 
abode with some person of suitable age and discretion then residing 
therein;
    (3) Mailing the papers through the U.S. Postal Service by First 
Cass Mail, Registered Mail, Certified Mail or Express Mail delivery 
addressed to the person; or
    (4) Sending the papers through a third-party commercial courier 
service or express delivery service.
    (d) Service of certain papers by the Office of Enforcement or the 
Office of Administrative Adjudication--(1) Service of a notice of 
charges by the Office of Enforcement--(i) To individuals. Notice of a 
proceeding shall be made to an individual by delivering a copy of the 
notice of charges to the individual or to an agent authorized by 
appointment or by law to receive such notice. Delivery, for purposes of 
this paragraph (d)(1)(i), means handing a copy of the notice to the 
individual; or leaving a copy at the individual's office with a clerk 
or other person in charge thereof; or leaving a copy at the 
individual's dwelling house or usual place of abode with some person of 
suitable age and discretion then residing therein; or sending a copy of 
the notice addressed to the individual through the U.S. Postal Service 
by Registered Mail, Certified Mail or Express Mail delivery, or by 
third-party commercial carrier, for overnight delivery and obtaining a 
confirmation of receipt.
    (ii) To corporations or entities. Notice of a proceeding must be 
made to a person other than a natural person by delivering a copy of 
the notice of charges to an officer, managing or general agent, or any 
other agent authorized by appointment or law to receive such notice, by 
any method specified in paragraph (d)(1)(i) of this section.
    (iii) Upon persons registered with the Bureau. In addition to any 
other method of service specified in paragraph (d)(1)(i) or (ii) of 
this section, notice may be made to a person currently registered with 
the Bureau by sending a copy of the notice of charges addressed to the 
most recent business address shown on the person's registration form by 
U.S. Postal Service certified, registered, or Express Mail and 
obtaining a confirmation of receipt or attempted delivery.
    (iv) Upon persons in a foreign country. Notice of a proceeding to a 
person in a foreign country may be made by any method specified in 
paragraph (d)(1) of this section, or by any other method reasonably 
calculated to give notice, provided that the method of service used is 
not prohibited by the law of the foreign country.
    (v) Record of service. The Office of Enforcement will maintain and 
file a record of service of the notice of charges on parties, 
identifying the party given notice, the method of service, the date of 
service, the address to which service was made, and the person who made 
service. If service is made in person, the certificate of service must 
state, if available, the name of the individual to whom the notice of 
charges was given. If service is made by U.S. Postal Service Registered 
Mail, Certified Mail, or Express Mail, the Office of Enforcement will 
maintain the confirmation of receipt or attempted delivery. If service 
is made to an agent authorized by appointment to receive service, the 
certificate of service must be accompanied by evidence of the 
appointment.
    (vi) Waiver of service. In lieu of service as set forth in 
paragraph (d)(1)(i) or (ii) of this section, the party may be provided 
a copy of the notice of charges by First Class Mail or other reliable 
means if a waiver of service is obtained from the party and placed in 
the record.
    (2) Service of papers by the Office of Administrative Adjudication. 
Unless otherwise ordered by the hearing officer or Director, the Office 
of Administrative Adjudication must serve papers filed by the hearing 
officer or Director promptly on each party pursuant to any method of 
service authorized under paragraph (c) or (d)(1) of this section. 
Unless otherwise ordered by the hearing officer or Director, if a party 
is represented by counsel who has filed a notice of appearance pursuant 
to Sec.  1081.107(a)(3), the Office of Administrative Adjudication 
serves that party by serving its counsel.


Sec.  1081.114  Construction of time limits.

    (a) General rule. In computing any time period prescribed by this 
part, by order of the Director or a hearing officer, or by any 
applicable statute, exclude the day of the event that triggers the 
period, count every day, including intermediate Saturdays, Sundays, and 
Federal holidays, and include the last day of the period unless it is a 
Saturday, Sunday, or Federal holiday as set forth in 5 U.S.C. 6103(a). 
When the last day is a Saturday, Sunday, or Federal holiday, the period 
runs until the end of the next day that is not a Saturday, Sunday, or 
Federal holiday.
    (b) When papers are deemed to be filed or served. Filing and 
service are deemed to be effective:
    (1) In the case of personal service or same day commercial courier 
delivery, upon actual receipt by person served;
    (2) In the case of overnight commercial delivery service, Express 
Mail delivery, First Class Mail, Registered Mail, or Certified Mail, 
upon deposit in or delivery to an appropriate point of collection; or
    (3) In the case of electronic transmission, upon transmission.
    (c) Calculation of time for service and filing of responsive 
papers. Whenever a time limit is measured by a prescribed period from 
the service of any notice or paper, the applicable time limits are 
calculated as follows:
    (1) If service is made by First Class Mail, Registered Mail, or 
Certified Mail, add three calendar days to the prescribed period;
    (2) If service is made by Express Mail or overnight delivery 
service, add one calendar day to the prescribed period; or
    (3) If service is made by electronic transmission, add one calendar 
day to the prescribed period.


Sec.  1081.115  Change of time limits.

    (a) Generally. Except as otherwise provided by law, the hearing 
officer may, in any proceeding before him or her, for good cause shown, 
extend the time limits prescribed by this part or by any notice or 
order issued in the proceedings. After appeal to the Director pursuant 
to Sec.  1081.402, the Director may grant extensions of the time limits 
for good cause shown. Extensions may be granted on the motion of a 
party after notice and opportunity to respond is afforded all non-
moving parties or on

[[Page 10040]]

the Director's or the hearing officer's own motion, as appropriate.
    (b) Considerations in determining whether to extend time limits or 
grant postponements, adjournments and extensions. Motions for 
extensions of time filed pursuant to paragraph (a) of this section are 
generally disfavored. In determining whether to grant any motions, the 
Director or hearing officer, as appropriate, will consider, in addition 
to any other relevant factors:
    (1) The length of the proceeding to date;
    (2) The number of postponements, adjournments or extensions already 
granted;
    (3) The stage of the proceedings at the time of the motion;
    (4) The impact of the motion on the hearing officer's ability to 
complete the proceeding in the time specified by Sec.  1081.400(a); and
    (5) Any other matters as justice may require.
    (c) Time limit. Postponements, adjournments, or extensions of time 
for filing papers may not exceed 21 days unless the Director or the 
hearing officer, as appropriate, states on the record or sets forth in 
a written order the reasons why a longer period of time is necessary.
    (d) No effect on deadline for preliminary findings and conclusions. 
The granting of any extension of time pursuant to this section does not 
affect any deadlines set pursuant to Sec.  1081.400(a).


Sec.  1081.116  Witness fees and expenses.

    Respondents must pay to witnesses subpoenaed for testimony or 
depositions on their behalf the same fees for attendance and mileage as 
are paid in the United States district courts in proceedings in which 
the United States is a party, provided that, in the case of a 
deposition subpoena addressed to a party, no witness fees or mileage 
need be paid. Fees for witnesses must be tendered in advance by any 
respondent requesting the issuance of a subpoena, except that fees and 
mileage need not be tendered in advance where the Office of Enforcement 
is the party requesting the subpoena. The Bureau must pay to witnesses 
subpoenaed for testimony or depositions on behalf of the Office of 
Enforcement the same fees for attendance and mileage as are paid in the 
United States district courts in proceedings in which the United States 
is a party, but the Bureau need not tender such fees in advance.


Sec.  1081.117  Bureau's right to conduct examination, collect 
information.

    Nothing contained in this part limits in any manner the right of 
the Bureau to conduct any examination, inspection, or visitation of any 
person, to conduct or continue any form of investigation authorized by 
law, to collect information in order to monitor the market for risks to 
consumers in the offering or provision of consumer financial products 
or services, or to otherwise gather information in accordance with law.


Sec.  1081.118  Collateral attacks on adjudication proceedings.

    Unless a court of competent jurisdiction, or the Director for good 
cause, so directs, if an interlocutory appeal or collateral attack is 
brought in any court concerning all or any part of an adjudication 
proceeding, the challenged adjudication proceeding will continue 
without regard to the pendency of that court proceeding. No default or 
other failure to act as directed in the adjudication proceeding within 
the times prescribed in this part will be excused based on the pendency 
before any court of any interlocutory appeal or collateral attack.


Sec.  1081.119  Confidential information; protective orders.

    (a) Rights of third parties. Any party that intends to disclose 
information obtained from a third party that is subject to a claim of 
confidentiality must provide notice to the third party at least seven 
days prior to the proposed disclosure of such information. In response 
to such notice, the third party may consent to the disclosure of such 
information, which may be conditioned on the entry of an appropriate 
protective order, or may intervene in the proceeding for the limited 
purpose of moving for a protective order pursuant to this section. Any 
written filing by a party that contains such confidential information 
must be accompanied by a certification that proper notice was provided. 
The act of making any oral motion or oral argument by any counsel or 
party which contains such confidential information constitutes a 
certification that proper notice was provided. A third party wishing to 
intervene for purposes of protecting its confidential information may 
file a single motion, in conformity with all applicable rules, setting 
forth the basis of both the third party's right to intervene and the 
basis for the protective order, in conformity with paragraph (b) of 
this section.
    (b) Procedure. In any adjudication proceeding, a party, including a 
third party who has intervened pursuant to paragraph (a) of this 
section, may file a motion requesting a protective order to limit from 
disclosure to other parties or to the public documents or testimony 
that contain confidential information. The motion should include a 
general summary or extract of the documents or testimony without 
revealing confidential details, and a copy of the proposed protective 
order. A motion for confidential treatment of documents should be filed 
in accordance with Sec.  1081.112(f), and all other applicable rules of 
this chapter.
    (c) Basis for issuance. Documents and testimony introduced in a 
public hearing, or filed in connection with an adjudication proceeding, 
are presumed to be public. A motion for a protective order will be 
granted:
    (1) Upon a finding that public disclosure will likely result in a 
clearly defined, serious injury to the party or third party requesting 
confidential treatment;
    (2) After finding that the material constitutes sensitive personal 
information, as defined in Sec.  1081.112(e);
    (3) If all parties, including third parties to the extent their 
information is at issue, stipulate to the entry of a protective order; 
or
    (4) Where public disclosure is prohibited by law.
    (d) Requests for additional information supporting confidentiality. 
The hearing officer may require a movant under paragraph (b) of this 
section to furnish in writing additional information with respect to 
the grounds for confidentiality. Failure to supply the information so 
requested within seven days from the date of receipt by the movant of a 
notice of the information required will be deemed a waiver of the 
objection to public disclosure of that portion of the documents to 
which the additional information relates, unless the hearing officer 
otherwise orders for good cause shown at or before the expiration of 
such seven-day period.
    (e) Confidentiality of documents pending decision. Pending a 
determination of a motion under this section, the documents as to which 
confidential treatment is sought and any other documents that would 
reveal the confidential information in those documents will be 
maintained under seal and may be disclosed only in accordance with 
orders of the hearing officer. Any order issued in connection with a 
motion under this section will be public unless the order would 
disclose information as to which a protective order has been granted, 
in which case that portion of the order that would reveal the protected 
information will be nonpublic.

[[Page 10041]]

Sec.  1081.120  Settlement.

    (a) Availability. Any respondent in an adjudication proceeding 
instituted under this part, may, at any time, propose in writing an 
offer of settlement.
    (b) Procedure. An offer of settlement must state that it is made 
pursuant to this section; must recite or incorporate as a part of the 
offer the provisions of paragraphs (c)(3) and (4) of this section; must 
be signed by the person making the offer, not by counsel; and must be 
submitted to enforcement counsel.
    (c) Consideration of offers of settlement. (1) Offers of settlement 
will be considered when time, the nature of the proceedings, and the 
public interest permit.
    (2) Any settlement offer will be presented to the Director with a 
recommendation, except that, if the recommendation is unfavorable, the 
offer will not be presented to the Director unless the person making 
the offer so requests.
    (3) By submitting an offer of settlement, the person making the 
offer waives, subject to acceptance of the offer:
    (i) All hearings pursuant to the statutory provisions under which 
the proceeding has been instituted;
    (ii) The filing of proposed findings of fact and conclusions of 
law;
    (iii) Proceedings before, and preliminary findings and conclusions 
by, a hearing officer;
    (iv) All post-hearing procedures;
    (v) Judicial review by any court; and
    (vi) Any objection to the jurisdiction of the Bureau under section 
1053 of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5563).
    (4) By submitting an offer of settlement the person further waives:
    (i) Such provisions of this part or other requirements of law as 
may be construed to prevent any Bureau employee from participating in 
the preparation of, or advising the Director as to, any order, opinion, 
finding of fact, or conclusion of law to be entered pursuant to the 
offer; and
    (ii) Any right to claim bias or prejudgment by the Director based 
on the consideration of or discussions concerning settlement of all or 
any part of the proceeding.
    (5) If the Director rejects the offer of settlement, the person 
making the offer will be notified of the Director's action and the 
offer of settlement will be deemed withdrawn. The rejected offer will 
not constitute a part of the record in any proceeding against the 
person making the offer, provided, however, that rejection of an offer 
of settlement does not affect the continued validity of waivers 
pursuant to paragraph (c)(4) of this section with respect to any 
discussions concerning the rejected offer of settlement.
    (d) Consent orders. If the Director accepts the offer of 
settlement, all terms and conditions of a settlement entered into under 
this section will be recorded in a written stipulation signed by each 
settling respondent, and a consent order concluding the proceeding as 
to the settling respondents. The stipulation and consent order must be 
filed pursuant to Sec.  1081.111, and must recite or incorporate as a 
part of the stipulation the provisions of paragraphs (c)(3) and (4) of 
this section. The Director will then issue a consent order, which will 
be a final order concluding the proceeding as to the settling 
respondents.


Sec.  1081.121  Cooperation with other agencies.

    It is the policy of the Bureau to cooperate with other governmental 
agencies to avoid unnecessary overlap or duplication of regulatory 
functions.

Subpart B--Initiation of Proceedings and Prehearing Rules


Sec.  1081.200  Commencement of proceeding and contents of notice of 
charges.

    (a) Commencement of proceeding. A proceeding governed by subparts A 
through D of this part is commenced when the Bureau, through the Office 
of Enforcement, files a notice of charges in accordance with Sec.  
1081.111. The notice of charges must be served by the Office of 
Enforcement upon the respondent in accordance with Sec.  
1081.113(d)(1).
    (b) Contents of a notice of charges. The notice of charges must set 
forth:
    (1) The legal authority for the proceeding and for the Bureau's 
jurisdiction over the proceeding;
    (2) A statement of the matters of fact and law showing that the 
Bureau is entitled to relief;
    (3) A proposed order or request for an order granting the relief 
sought;
    (4) The time and place of the hearing as required by law or 
regulation;
    (5) The time within which to file an answer as required by law or 
regulation;
    (6) That the answer must be filed and served in accordance with 
subpart A of this part; and
    (7) The docket number for the adjudication proceeding.
    (c) Publication of notice of charges. Unless otherwise ordered by 
the Director, the notice of charges will be given general circulation 
by release to the public, by publication on the Bureau's website and, 
where directed by the hearing officer or the Director, by publication 
in the Federal Register. The Bureau may publish any notice of charges 
after 14 days from the date of service except if there is a pending 
motion for a protective order filed pursuant to Sec.  1081.119.
    (d) Commencement of proceeding through a consent order. 
Notwithstanding paragraph (a) of this section, where the parties agree 
to settlement before the filing of a notice of charges, a proceeding 
may be commenced by filing a stipulation and consent order. The 
stipulation and consent order must be filed pursuant to Sec.  1081.111. 
The stipulation must contain the information required under Sec.  
1081.120(d), and the consent order must contain the information 
required under paragraphs (b)(1) and (2) of this section. The 
proceeding will be concluded upon issuance of the consent order by the 
Director.
    (e) Voluntary dismissal--(1) Without an order. The Office of 
Enforcement may voluntarily dismiss an adjudication proceeding without 
an order entered by a hearing officer by filing either:
    (i) A notice of dismissal before the respondent(s) serves an 
answer; or
    (ii) A stipulation of dismissal signed by all parties who have 
appeared.
    (2) Effect. Unless the notice or stipulation states otherwise, the 
dismissal is without prejudice, and does not operate as an adjudication 
on the merits.


Sec.  1081.201  Answer and disclosure statement and notification of 
financial interest.

    (a) Time to file answer. Within 14 days of service of the notice of 
charges, respondent must file an answer as designated in the notice of 
charges.
    (b) Content of answer. An answer must specifically respond to each 
paragraph or allegation of fact contained in the notice of charges and 
must admit, deny, or state that the party lacks sufficient information 
to admit or deny each allegation of fact. A statement of lack of 
information has the effect of a denial. Denials must fairly meet the 
substance of each allegation of fact denied; general denials are not 
permitted. When a respondent denies part of an allegation, that part 
must be denied and the remainder specifically admitted. Any allegation 
of fact in the notice of charges which is not denied in the answer is 
deemed admitted for purposes of the proceeding. A respondent is not 
required to respond to the portion of a notice of charges that 
constitutes the request for relief or proposed order. A respondent must 
affirmatively state in the answer any avoidance or affirmative defense,

[[Page 10042]]

including but not limited to res judicata and statute of limitations. 
Failure to do so will be deemed a waiver.
    (c) If the allegations of the notice of charges are admitted. If 
the respondent elects not to contest the allegations of fact set forth 
in the notice of charges, the answer will consist of a statement that 
the respondent admits all the material allegations to be true. Such an 
answer constitutes a waiver of hearings as to the facts alleged in the 
notice of charges, and together with the notice of charges will provide 
a record basis on which the hearing officer will issue preliminary 
findings and conclusions, containing appropriate findings and 
conclusions and a proposed order disposing of the proceeding. In such 
an answer, the respondent may, however, reserve the right to submit 
proposed findings of fact and conclusions of law under Sec.  1081.305.
    (d) Default. (1) Failure of a respondent to file an answer within 
the time provided will be deemed to constitute a waiver of the 
respondent's right to appear and contest the allegations of the notice 
of charges and to authorize the hearing officer, without further notice 
to the respondent, to find the facts to be as alleged in the notice of 
charges and to enter preliminary findings and conclusions containing 
appropriate findings and conclusions. In such cases, respondent will 
have no right to appeal pursuant to Sec.  1081.402, but must instead 
proceed pursuant to paragraph (d)(2) of this section.
    (2) A motion to set aside a default must be made within a 
reasonable time, state the reasons for the failure to appear or defend, 
and specify the nature of the proposed defense in the proceeding. In 
order to prevent injustice and on such conditions as may be 
appropriate, the hearing officer, at any time prior to the filing of 
the preliminary findings and conclusions, or the Director, at any time, 
may for good cause shown set aside a default.
    (e) Disclosure statement and notification of financial interest--
(1) Who must file; contents. A respondent, nongovernmental intervenor, 
or nongovernmental amicus must file a disclosure statement and 
notification of financial interest that:
    (i) Identifies any parent corporation, any publicly owned 
corporation owning ten percent or more of its stock, and any publicly 
owned corporation not a party to the proceeding that has a financial 
interest in the outcome of the proceeding and the nature of that 
interest; or
    (ii) States that there are no such corporations.
    (2) Time for filing; supplemental filing. A respondent, 
nongovernmental intervenor, or nongovernmental amicus must:
    (i) File the disclosure statement with its first appearance, 
pleading, motion, response, or other request addressed to the hearing 
officer or the Bureau; and
    (ii) Promptly file a supplemental statement if any required 
information changes.


Sec.  1081.202  Amended pleadings.

    (a) Amendments before the hearing. The notice of charges, answer, 
or any other pleading may be amended or supplemented only with the 
opposing party's written consent or leave of the hearing officer. The 
respondent must answer an amended notice of charges within the time 
remaining for the respondent's answer to the original notice of 
charges, or within 14 days after service of the amended notice of 
charges, whichever is later, unless the hearing officer orders 
otherwise for good cause.
    (b) Amendments to conform to the evidence. When issues not raised 
in the notice of charges or answer are tried at the hearing by express 
or implied consent of the parties, they will be treated in all respects 
as if they had been raised in the notice of charges or answer, and no 
formal amendments are required. If evidence is objected to at the 
hearing on the ground that it is not within the issues raised by the 
notice of charges or answer, the hearing officer may admit the evidence 
when admission is likely to assist in adjudicating the merits of the 
action and the objecting party fails to satisfy the hearing officer 
that the admission of such evidence would unfairly prejudice that 
party's action or defense upon the merits. The hearing officer may 
grant a continuance to enable the objecting party to meet such 
evidence.


Sec.  1081.203  Scheduling conference.

    (a) Meeting of the parties before scheduling conference. As early 
as practicable before the scheduling conference described in paragraph 
(e) of this section, counsel for the parties must meet to discuss the 
nature and basis of their claims and defenses and the possibilities for 
a prompt settlement or resolution of the case. The parties must also 
discuss and agree, if possible, on the matters set forth in paragraph 
(e) of this section.
    (b) Scheduling conference disclosure. After the meeting required in 
paragraph (a) of this section and at least seven days prior to the 
scheduling conference described in paragraph (e) of this section, the 
parties must exchange a scheduling conference disclosure, which must be 
signed by the party or by the party's attorney if one has appeared on 
behalf of the party. The scheduling conference disclosure must include:
    (1) A factual summary of the case, a summary of all factual and 
legal issues in dispute, and a summary of all factual and legal bases 
supporting each defense; and
    (2) The following information about the evidence that the party may 
present at the hearing other than solely for impeachment:
    (i) The name, address, and telephone number of each witness, 
together with a summary of the witness's anticipated testimony; and
    (ii) An identification of each document or other exhibit, including 
summaries of other evidence, along with a copy of each document or 
exhibit identified unless the document or exhibit has already been 
produced to the other party.
    (c) Duty to supplement. A party must supplement or correct the 
scheduling conference disclosure in a timely manner if the party 
acquires other information that it intends to rely upon at a hearing.
    (d) Failure to disclose--harmless error. In the event that 
information required to be disclosed in the scheduling conference 
disclosure is not disclosed, no rehearing or redecision of a proceeding 
already heard or decided will be required unless the other party 
establishes that the failure to disclose was not harmless error.
    (e) Scheduling conference. Within 21 days of service of the notice 
of charges or such other time as the parties and hearing officer may 
agree, counsel for all parties must appear before the hearing officer 
in person at a specified time and place or by electronic means for the 
purpose of scheduling the course and conduct of the proceeding. This 
meeting is called a scheduling conference. At the scheduling 
conference, counsel for the parties must be prepared to address:
    (1) Determination of the dates and location of the hearing, 
including, in proceedings under section 1053(b) of the Consumer 
Financial Protection Act of 2010 (12 U.S.C. 5563(b)), whether the 
hearing should commence later than 60 days after service of the notice 
of charges, considering, among other factors, whether the respondent 
intends to file a dispositive motion or to seek the issuance of 
subpoenas;
    (2) Simplification and clarification of the issues;
    (3) Amendments to pleadings;
    (4) Settlement of any or all issues;
    (5) Production of documents as set forth in Sec.  1081.206 and of 
witness

[[Page 10043]]

statements as set forth in Sec.  1081.207, and prehearing production of 
documents in response to subpoenas duces tecum as set forth in Sec.  
1081.208;
    (6) Whether the parties intend to file dispositive motions;
    (7) Whether the parties intend to seek the issuance of subpoenas, 
the identity of any anticipated deponents or subpoena recipients, and a 
schedule for completing that discovery;
    (8) A schedule for the exchange of expert reports and the taking of 
expert depositions, if any; and
    (9) Such other matters as may aid in the orderly disposition of the 
proceeding.
    (f) Transcript. The hearing officer may require that a scheduling 
conference be recorded by a court reporter. A transcript of the 
conference and any materials filed, including orders, becomes part of 
the record of the proceeding. A party may obtain a copy of the 
transcript at that party's expense.
    (g) Scheduling order. At or within seven days following the 
conclusion of the scheduling conference, the hearing officer will serve 
on each party an order setting forth the date and location of the 
hearing and any agreements reached and any procedural determinations 
made.
    (h) Failure to appear, default. Any person who is named in a notice 
of charges as a person against whom findings may be made or sanctions 
imposed and who fails to appear, in person or through counsel, at a 
scheduling conference of which the person has been duly notified may be 
deemed in default pursuant to Sec.  1081.201(d)(1). A party may make a 
motion to set aside a default pursuant to Sec.  1081.201(d)(2).
    (i) Public access. The scheduling conference will be public unless 
the hearing officer determines, based on the standard set forth in 
Sec.  1081.119(c), that the conference (or any part thereof) should be 
closed to the public.


Sec.  1081.204  Consolidation, severance, or bifurcation of 
proceedings.

    (a) Consolidation. (1) On the motion of any party, or on the 
hearing officer's own motion, the hearing officer may consolidate, for 
some or all purposes, any two or more proceedings, if each such 
proceeding involves or arises out of the same transaction, occurrence 
or series of transactions or occurrences, or involves at least one 
common respondent or a material common question of law or fact, unless 
such consolidation would cause unreasonable delay or injustice.
    (2) In the event of consolidation under paragraph (a)(1) of this 
section, appropriate adjustment to the prehearing schedule may be made 
to avoid unnecessary expense, inconvenience, or delay.
    (b) Severance. The hearing officer may, upon the motion of any 
party, sever the proceeding for separate resolution of the matter as to 
any respondent only if the hearing officer finds that:
    (1) Undue prejudice or injustice to the moving party would result 
from not severing the proceeding; and
    (2) Such undue prejudice or injustice would outweigh the interests 
of judicial economy and expedition in the complete and final resolution 
of the proceeding.
    (c) Bifurcation. The Director may order that the proceeding be 
divided into two or more stages, if the Director determines that it 
would promote efficiency in the proceeding or for other good cause. For 
example, the Director may order that the proceeding have two stages, so 
that at the conclusion of the first stage the Director issues a 
decision on whether there have been violations of law and at the 
conclusion of the second stage the Director issues a final decision and 
order, including with respect to any remedies. The Director may make an 
order under this paragraph (c) either on the motion of a party or on 
the Director's own motion after inviting submissions by the parties. 
The Director may include, in that order or in later orders, 
modifications to the procedures in this part in order to effectuate an 
efficient division into stages, or the Director may assign such 
authority to the hearing officer. Only the decision and order of the 
Director after the final stage, and not a decision of the Director 
after an earlier stage, will be a final decision and order for purposes 
of Sec. Sec.  1081.110, 1081.405(d) and (e), 1081.407, and 1081.502 and 
section 1053(b) of the Consumer Financial Protection Act of 2010 (12 
U.S.C. 5563(b)).


Sec.  1081.205  Non-dispositive motions.

    (a) Scope. This section applies to all motions except motions to 
dismiss and motions for summary disposition. A non-dispositive motion 
filed pursuant to another section of this part must comply with any 
specific requirements of that section and this section to the extent 
the requirements in this section are not inconsistent.
    (b) In writing. (1) Unless made during a hearing or conference, an 
application or request for an order or ruling must be made by written 
motion.
    (2) All written motions must state with particularity the relief 
sought and must be accompanied by a proposed order.
    (3) No oral argument may be held on written motions except as 
otherwise directed by the hearing officer. Written memoranda, briefs, 
affidavits or other relevant material or documents may be filed in 
support of or in opposition to a motion.
    (c) Oral motions. The Director or the hearing officer, as 
appropriate, may order that an oral motion be submitted in writing.
    (d) Responses and replies. (1) Except as otherwise provided in this 
section, within 14 days after service of any written motion, or within 
such other period of time as may be established by the hearing officer 
or the Director, as appropriate, any party may file a written response 
to a motion. The hearing officer will not rule on any oral or written 
motion before each party has had an opportunity to file a response.
    (2) Reply briefs, if any, may be filed within seven days after 
service of the response.
    (3) The failure of a party to oppose a written motion or an oral 
motion made on the record is deemed consent by that party to the entry 
of an order substantially in the form of the order accompanying the 
motion.
    (e) Length limitations. No motion subject to this section (together 
with the brief in support of the motion) or brief in response to the 
motion may exceed 15 pages in length, exclusive of pages containing the 
table of contents, table of authorities, and any addendum that consists 
solely of copies of applicable cases, pertinent legislative provisions 
or rules, and exhibits. No reply brief may exceed six pages in length, 
exclusive of pages containing the table of contents, table of 
authorities, and any addendum that consists solely of copies of 
applicable cases, pertinent legislative provisions or rules, and 
exhibits. Motions for leave to file motions and briefs in excess of 
these limitations are disfavored.
    (f) Meet and confer requirements. Each motion filed under this 
section must be accompanied by a signed statement representing that 
counsel for the moving party has conferred or made a good faith effort 
to confer with opposing counsel in a good faith effort to resolve by 
agreement the issues raised by the motion and has been unable to reach 
such an agreement. If some of the matters in controversy have been 
resolved by agreement, the statement must specify the matters so 
resolved and the matters remaining unresolved.
    (g) Ruling on non-dispositive motions. Unless otherwise provided by 
a relevant section of this part, a hearing officer will

[[Page 10044]]

rule on non-dispositive motions. Such ruling must be issued within 14 
days after the expiration of the time period allowed for the filing of 
all motion papers authorized by this section. The Director, for good 
cause, may extend the time allowed for a ruling.
    (h) Proceedings not stayed. A motion under consideration by the 
Director or the hearing officer does not stay proceedings before the 
hearing officer unless the Director or the hearing officer, as 
appropriate, so orders.
    (i) Dilatory motions. Frivolous, dilatory, or repetitive motions 
are prohibited. The filing of such motions may form the basis for 
sanctions.


Sec.  1081.206  Availability of documents for inspection and copying.

    For purposes of this section, the term documents includes any book, 
document, record, report, memorandum, paper, communication, tabulation, 
chart, logs, electronic files, or other data or data compilations 
stored in any medium.
    (a) Documents to be available for inspection and copying. (1) 
Unless otherwise provided by this section, or by order of the hearing 
officer, the Office of Enforcement will make available for inspection 
and copying by any respondent documents obtained by the Office of 
Enforcement prior to the institution of proceedings, from persons not 
employed by the Bureau, in connection with the investigation leading to 
the institution of proceedings. Such documents will include:
    (i) Any documents turned over in response to civil investigative 
demands or other written requests to provide documents or to be 
interviewed issued by the Office of Enforcement;
    (ii) All transcripts and transcript exhibits; and
    (iii) Any other documents obtained from persons not employed by the 
Bureau.
    (2) In addition, the Office of Enforcement will make available for 
inspection and copying by any respondent:
    (i) Each civil investigative demand or other written request to 
provide documents or to be interviewed issued by the Office of 
Enforcement in connection with the investigation leading to the 
institution of proceedings; and
    (ii) Any final examination or inspection reports prepared by any 
other Office of the Bureau if the Office of Enforcement either intends 
to introduce any such report into evidence or to use any such report to 
refresh the recollection of, or impeach, any witness.
    (3) Nothing in paragraph (a) of this section limits the right of 
the Office of Enforcement to make available any other document, or 
limits the right of a party to seek access to or production pursuant to 
subpoena of any other document, or limits the authority of the hearing 
officer to order the production of any document pursuant to subpoena.
    (4) Nothing in paragraph (a) of this section requires the Office of 
Enforcement to produce a final examination or inspection report 
prepared by any other Office of the Bureau or any other government 
agency to a respondent who is not the subject of that report.
    (b) Documents that may be withheld. (1) The Office of Enforcement 
may withhold a document if:
    (i) The document is privileged;
    (ii) The document is an internal memorandum, note, or writing 
prepared by a person employed by the Bureau or another Government 
agency, other than an examination or supervision report as specified in 
paragraph (a)(2)(ii) of this section, or would otherwise be subject to 
the work product doctrine and will not be offered in evidence;
    (iii) The document was obtained from a domestic or foreign 
governmental entity and is either not relevant to the resolution of the 
proceeding or was provided on condition that the information not be 
disclosed;
    (iv) The document would disclose the identity of a confidential 
source;
    (v) Applicable law prohibits the disclosure of the document;
    (vi) The document reflects only settlement negotiations between the 
Office of Enforcement and a person or entity who is not a current 
respondent in the proceeding; or
    (vii) The hearing officer grants leave to withhold a document or 
category of documents as not relevant to the subject matter of the 
proceeding or otherwise, for good cause shown.
    (2) Nothing in paragraph (b)(1) of this section authorizes the 
Office of Enforcement in connection with an adjudication proceeding to 
withhold material exculpatory evidence in the possession of the Office 
that would otherwise be required to be produced pursuant to paragraph 
(a) of this section.
    (c) Withheld document list. The hearing officer may require the 
Office of Enforcement to produce a list of documents or categories of 
documents withheld pursuant to paragraphs (b)(1)(i) through (vi) of 
this section or to submit to the hearing officer any document withheld, 
except for any documents that are being withheld pursuant to paragraph 
(b)(1)(iii) of this section, in which case the Office of Enforcement 
must inform the other parties of the fact that such documents are being 
withheld, but no further disclosures regarding those documents will be 
required. The hearing officer may determine whether any withheld 
document should be made available for inspection and copying. When 
similar documents are withheld pursuant to paragraphs (b)(1)(i) through 
(vi) of this section, those documents may be identified by category 
instead of by individual document. The hearing officer retains 
discretion to determine when an identification by category is 
insufficient.
    (d) Timing of inspection and copying. Unless otherwise ordered by 
the hearing officer, the Office of Enforcement must commence making 
documents available to a respondent for inspection and copying pursuant 
to this section no later than 14 days after service of the notice of 
charges.
    (e) Place of inspection and copying. Documents subject to 
inspection and copying pursuant to this section will be made available 
to the respondent for inspection and copying at the Bureau office where 
they are ordinarily maintained, or at such other place as the parties, 
in writing, may agree. A respondent will not be given custody of the 
documents or leave to remove the documents from the Bureau's offices 
pursuant to the requirements of this section other than by written 
agreement of the Office of Enforcement. Such agreement must specify the 
documents subject to the agreement, the date they must be returned, and 
such other terms or conditions as are appropriate to provide for the 
safekeeping of the documents. If the Office of Enforcement determines 
that production of some or all the documents required to be produced 
under this section can be produced in an electronic format, the Office 
of Enforcement may instead produce the documents in an electronic 
format.
    (f) Copying costs and procedures. The respondent may obtain a 
photocopy of any documents made available for inspection or, at the 
discretion of the Office of Enforcement, electronic copies of such 
documents. The respondent is responsible for the cost of photocopying. 
Unless otherwise ordered, charges for copies made by the Office of 
Enforcement at the request of the respondent will be at the rate 
charged pursuant to part 1070 of this chapter. The respondent will be 
given access to the documents at the Bureau's offices or such other 
place as the parties may agree during normal business hours for copying 
of documents at the respondent's expense.

[[Page 10045]]

    (g) Duty to supplement. If the Office of Enforcement acquires 
information that it intends to rely upon at a hearing after making its 
disclosures under paragraph (a)(1) of this section, the Office of 
Enforcement must supplement its disclosures to include such 
information.
    (h) Failure to make documents available--harmless error. In the 
event that a document required to be made available to a respondent 
pursuant to this section is not made available by the Office of 
Enforcement, no rehearing or redecision of a proceeding already heard 
or decided will be required unless the respondent establishes that the 
failure to make the document available was not harmless error.
    (i) Disclosure of privileged or protected information or 
communications; scope of waiver; obligations of receiving party. (1) 
The disclosure of privileged or protected information or communications 
by any party during an adjudication proceeding does not operate as a 
waiver if:
    (i) The disclosure was inadvertent;
    (ii) The holder of the privilege or protection took reasonable 
steps to prevent disclosure; and
    (iii) The holder promptly took reasonable steps to rectify the 
error, including notifying any party that received the information or 
communication of the claim and the basis for it.
    (2) After being notified, the receiving party must promptly return, 
sequester, or destroy the specified information and any copies it has; 
must not use or disclose the information until the claim is resolved; 
must take reasonable steps to retrieve the information if the party 
disclosed it before being notified; and may promptly present the 
information to the hearing officer under seal for a determination of 
the claim. The producing party must preserve the information until the 
claim is resolved.
    (3) The disclosure of privileged or protected information or 
communications by any party during an adjudication proceeding will 
waive the privilege or protection, with respect to other parties to the 
proceeding, as to undisclosed information or communications only if:
    (i) The waiver is intentional;
    (ii) The disclosed and undisclosed information or communications 
concern the same subject matter; and
    (iii) They ought in fairness to be considered together.


Sec.  1081.207  Production of witness statements.

    (a) Availability. Any respondent may move that the Office of 
Enforcement produce for inspection and copying any statement of any 
person called or to be called as a witness by the Office of Enforcement 
that pertains, or is expected to pertain, to the witness's direct 
testimony and that would be required to be produced pursuant to the 
Jencks Act, 18 U.S.C. 3500, if the adjudication proceeding were a 
criminal proceeding. For purposes of this section, the term 
``statement'' has the meaning set forth in 18 U.S.C. 3500(e). Such 
production will be made at a time and place fixed by the hearing 
officer and will be made available to any party, provided, however, 
that the production must be made under conditions intended to preserve 
the items to be inspected or copied.
    (b) Failure to produce--harmless error. In the event that a 
statement required to be made available to a respondent pursuant to 
this section is not made available by the Office of Enforcement, no 
rehearing or redecision of a proceeding already heard or decided will 
be required unless the respondent establishes that the failure to make 
the statement available was not harmless error.


Sec.  1081.208  Subpoenas.

    (a) Availability. In connection with any hearing ordered by the 
hearing officer or any deposition permitted under Sec.  1081.209, a 
party may request the issuance of subpoenas requiring the attendance 
and testimony of witnesses at such depositions or at the designated 
time and place of the hearing, or the production of documentary or 
other tangible evidence returnable at any designated time or place.
    (b) Procedure. Unless made on the record at a hearing, requests for 
issuance of a subpoena must be made in writing, and filed and served on 
each party pursuant to subpart A of this part. The request must contain 
a proposed subpoena and a brief statement showing the general relevance 
and reasonableness of the scope of testimony or documents sought.
    (c) Signing may be delegated. A hearing officer may authorize 
issuance of a subpoena, and may delegate the manual signing of the 
subpoena to any other person.
    (d) Standards for issuance of subpoenas requiring the attendance 
and testimony of witnesses at the hearing or the production of 
documentary or other tangible evidence. The hearing officer will 
promptly issue any subpoena requiring the attendance and testimony of 
witnesses at the designated time and place of the hearing or the 
production of documentary or other tangible evidence. Where it appears 
to the hearing officer that the subpoena sought may be unreasonable, 
oppressive, excessive in scope, or unduly burdensome, the hearing 
officer may, as a condition precedent to the issuance of the subpoena, 
require the person seeking the subpoena to show further the general 
relevance and reasonable scope of the testimony or other evidence 
sought. If after consideration of all the circumstances, the hearing 
officer determines that the subpoena or any of its terms is 
unreasonable, oppressive, excessive in scope, or unduly burdensome, the 
hearing officer may refuse to issue the subpoena, or issue it only upon 
such conditions as fairness requires. In making the foregoing 
determination, the hearing officer may inquire of the other parties 
whether they will stipulate to the facts sought to be proved.
    (e) Standards for issuance of subpoenas requiring the deposition of 
a witness pursuant to Sec.  1081.209. (1) The hearing officer will 
promptly issue any subpoena requiring the attendance and testimony of 
witnesses at a deposition only if the subpoena complies with Sec.  
1081.209 and if:
    (i) The proposed deponent is a witness identified in the other 
party's scheduling conference disclosure under Sec.  1081.203(b);
    (ii) The proposed deponent was a witness of or participant in any 
event, transaction, occurrence, act, or omission that forms the basis 
for any claim asserted by the Office of Enforcement, any defense, or 
anything else required to be included in an answer pursuant to Sec.  
1081.201(b), by any respondent in the proceeding (this excludes a 
proposed deponent whose only knowledge of these matters arises from the 
Bureau's investigation, the Bureau's examination, or the proceeding);
    (iii) The proposed deponent is designated as an ``expert witness'' 
under Sec.  1081.210(b); provided, however, that the deposition of an 
expert who is required to submit a written report under Sec.  
1081.210(b) may only occur after such report is served;
    (iv) The proposed deponent has custody of documents or electronic 
data relevant to the claims or defenses of any party (this excludes 
officers or personnel of the Bureau who have custody of documents or 
data that was produced by the Office of Enforcement to the respondent); 
or
    (v) The proposed deponent is unavailable for the hearing as set 
forth in Sec.  1081.209(c).
    (2) Where it appears to the hearing officer that the subpoena 
sought may be unreasonable, oppressive, excessive in scope, or unduly 
burdensome, the

[[Page 10046]]

hearing officer may, as a condition precedent to the issuance of the 
subpoena, require the person seeking the subpoena to show further the 
general relevance and reasonable scope of the testimony or other 
evidence sought. If after consideration of all the circumstances, the 
hearing officer determines that the subpoena or any of its terms is 
unreasonable, oppressive, excessive in scope, or unduly burdensome, the 
hearing officer may refuse to issue the subpoena, or issue it only upon 
such conditions as fairness requires. In making the foregoing 
determination, the hearing officer may inquire of the other parties 
whether they will stipulate to the facts sought to be proved.
    (f) Service. Upon issuance by the hearing officer, the party making 
the request will serve the subpoena on the person named in the subpoena 
and on each party in accordance with Sec.  1081.113(c). Subpoenas may 
be served in any State, territory, possession of the United States, or 
the District of Columbia, on any person or company doing business in 
any State, territory, possession of the United States, or the District 
of Columbia, or as otherwise permitted by law.
    (g) Tender of fees required. When a subpoena compelling the 
attendance of a person at a hearing or a deposition is issued at the 
request of anyone other than an officer or agency of the United States, 
service is valid only if the subpoena is accompanied by a tender to the 
subpoenaed person of the fees for one day's attendance and mileage 
specified by Sec.  1081.116.
    (h) Place of compliance. A subpoena for a deposition may command a 
person to attend a deposition only as follows:
    (1) Within 100 miles of where the person resides, is employed, or 
regularly transacts business in person;
    (2) Within the State where the person resides, is employed, or 
regularly transacts business in person, if the person is a party or a 
party's officer;
    (3) At such other location that the parties and proposed deponent 
stipulate; or
    (4) At such other location that the hearing officer determines is 
appropriate.
    (i) Production of documentary material. Production of documentary 
material in response to a subpoena must be made under a sworn 
certificate, in such form as the subpoena designates, by the person to 
whom the subpoena is directed or, if not a natural person, by any 
person having knowledge of the facts and circumstances relating to such 
production, to the effect that all of the documentary material required 
by the subpoena and in the possession, custody, or control of the 
person to whom the subpoena is directed has been produced and made 
available to the custodian.
    (j) Motion to quash or modify--(1) Procedure. Any person to whom a 
subpoena is directed, or who is an owner, creator, or the subject of 
the documents that are to be produced pursuant to a subpoena, or any 
party may, prior to the time specified therein for compliance, but in 
no event more than seven days after the date of service of such 
subpoena, move that the subpoena be quashed or modified. Such motion 
must be filed and served on all parties pursuant to subpart A of this 
part. Notwithstanding Sec.  1081.205, the party on whose behalf the 
subpoena was issued or enforcement counsel may, within seven days of 
service of the motion, file a response to the motion. Reply briefs are 
not permitted unless requested by the hearing officer. Filing a motion 
to modify a subpoena does not stay the movant's obligation to comply 
with those portions of the subpoena that the person has not sought to 
modify.
    (2) Standards governing motion to quash or modify. If compliance 
with the subpoena would be unreasonable, oppressive, or unduly 
burdensome, the hearing officer must quash or modify the subpoena, or 
may order return of the subpoena only upon specified conditions. These 
conditions may include but are not limited to a requirement that the 
party on whose behalf the subpoena was issued make reasonable 
compensation to the person to whom the subpoena was addressed for the 
cost of copying or transporting evidence to the place for return of the 
subpoena.
    (k) Enforcing subpoenas. If a subpoenaed person fails to comply 
with any subpoena issued pursuant to this part or any order of the 
hearing officer which directs compliance with all or any portion of a 
subpoena, the Bureau's General Counsel may, on its own motion or at the 
request of the party on whose behalf the subpoena was issued, apply to 
an appropriate United States district court, in the name of the Bureau 
but on relation of such party, for an order requiring compliance with 
so much of the subpoena as the hearing officer has not quashed or 
modified, unless, in the judgment of the General Counsel, the 
enforcement of such subpoena would be inconsistent with law and the 
policies of the Consumer Financial Protection Act of 2010. Failure to 
request that the Bureau's General Counsel seek enforcement of a 
subpoena constitutes a waiver of any claim of prejudice predicated upon 
the unavailability of the testimony or evidence sought.
    (l) Relationship to scheduling of hearing. The parties must 
disclose at the scheduling conference required under Sec.  1081.203(e) 
whether they intend to request the issuance of subpoenas under Sec.  
1081.209. A respondent's request for issuance of a subpoena constitutes 
a request that the hearing not be held until after a reasonable period, 
determined by the hearing officer, for the completion of discovery. The 
hearing officer will decide whether to grant such a request. If the 
request is granted, the hearing officer will set a deadline for the 
completion of discovery and schedule the specific date of the hearing, 
in consultation with the parties. This paragraph (l) does not apply to 
a subpoena for the attendance and testimony of a witness at the hearing 
or a subpoena to depose a witness unavailable for the hearing.


Sec.  1081.209  Depositions.

    (a) Depositions by oral examination or by written questions. 
Depositions by oral examination or by written questions may be taken as 
set forth in this section and must be taken pursuant to subpoena issued 
under Sec.  1081.208. Any deposition permitted under this section may 
be taken and submitted on written questions upon motion of any party, 
for good cause shown, or as stipulated by the parties. No other 
depositions will be permitted except as provided in paragraph (c) of 
this section.
    (1) If the proceeding involves a single respondent, the respondent 
may depose no more than three persons, and the Office of Enforcement 
may depose no more than three persons.
    (2) If the proceeding involves multiple respondents, the 
respondents collectively may depose no more than five persons, and the 
Office of Enforcement may depose no more than five persons. The 
depositions taken under this paragraph (a)(2) cannot exceed a total of 
five depositions for the Office of Enforcement, and five depositions 
for all respondents collectively.
    (3) Any side may file a motion with the hearing officer seeking 
leave to take up to two additional depositions beyond those permitted 
pursuant to paragraphs (a)(1) and (2) of this section.
    (i) Procedure. (A) A motion for additional depositions must be 
filed no later than 28 days prior to the hearing date. If the moving 
side proposes to take the additional deposition(s) by written 
questions, the motion must so state and include the proposed questions. 
Any party opposing the motion may submit an opposition within seven 
days after

[[Page 10047]]

service of the motion. No reply will be permitted. The motion and any 
oppositions each must not exceed seven pages in length.
    (B) Upon consideration of the motion and any opposing papers, the 
hearing officer will issue an order either granting or denying the 
motion. The hearing officer will consider the motion on an expedited 
basis.
    (ii) Grounds and standards for motion. A motion under paragraph 
(a)(3) of this section will not be granted unless the additional 
depositions satisfy Sec.  1081.208(d) and the moving side demonstrates 
a compelling need for the additional depositions by:
    (A) Identifying all witnesses the moving side plans to depose under 
this section;
    (B) Describing the role of all witnesses;
    (C) Describing the matters concerning which all witnesses are 
expected to be questioned, and why the deposition of all witnesses is 
necessary for the moving side's arguments, claims, or defenses; and
    (D) Showing that the additional deposition(s) requested will not be 
unreasonably cumulative or duplicative.
    (b) Additional procedure for depositions by written questions. (1) 
Any motion or stipulation seeking a deposition of a witness by written 
questions must include the written questions the party seeking the 
deposition will ask the witness. Within seven days after service of the 
motion and written questions, any party may file objections to such 
written questions and any party may file cross-questions. When a 
deposition is taken by written questions, no persons other than the 
witness, counsel to the witness, the deposition officer, and, if the 
deposition officer does not act as reporter, a reporter, may be present 
at the examination of the witness. No party may be present or 
represented unless otherwise permitted by order. The deposition officer 
will propound the questions and cross-questions to the witness in the 
order submitted.
    (2) The order for deposition, filing of the deposition, form of the 
deposition, and use of the deposition in the record will be governed by 
paragraphs (d) through (l) of this section, except that no cross-
examination will be made.
    (c) Depositions when witness is unavailable. In addition to 
depositions permitted under paragraph (a) of this section, the hearing 
officer may grant a party's request for issuance of a subpoena if the 
requesting party shows that the prospective witness will likely give 
testimony material to the proceeding; that it is likely the prospective 
witness, who is then within the United States, will be unable to attend 
or testify at the hearing because of age, sickness, infirmity, 
imprisonment, other disability, or absence from the United States, 
unless it appears that the absence of the witness was procured by the 
party requesting the deposition; and that the taking of a deposition 
will serve the interests of justice.
    (d) Service and contents of notice. Upon issuance of a subpoena for 
a deposition, the party taking the deposition must serve a notice on 
each party pursuant to Sec.  1081.113. A notice of deposition must 
state that the deposition will be taken before a deposition officer 
authorized to administer oaths by the laws of the United States or of 
the place where the deposition is to be held. A notice of deposition 
also must state:
    (1) The name and address of the witness whose deposition is to be 
taken;
    (2) The time and place of the deposition; and
    (3) The manner of recording and preserving the deposition.
    (e) Method of recording--(1) Method stated in the notice. The party 
who notices the deposition must state in the notice the method for 
recording the testimony. Unless the hearing officer orders otherwise, 
testimony may be recorded by audio, audiovisual, or stenographic means. 
The noticing party bears the recording costs. Any party may arrange to 
transcribe a deposition, at that party's expense. Each party will bear 
its own costs for obtaining copies of any transcripts or audio or 
audiovisual recordings.
    (2) Additional method. With prior notice to the deponent and other 
parties, any party may designate another method for recording the 
testimony in addition to that specified in the original notice. That 
party bears the expense of the additional record or transcript unless 
the hearing officer orders otherwise.
    (f) By remote means. The parties and the deponent may stipulate--or 
the hearing officer may on motion order--that a deposition be taken by 
telephone or other electronic means. For the purpose of this section, 
the deposition takes place where the deponent answers the questions.
    (g) Deposition officer's duties--(1) Before the deposition. The 
deposition officer must begin the deposition with an on-the-record 
statement that includes:
    (i) The deposition officer's name and business address;
    (ii) The date, time, and place of the deposition;
    (iii) The deponent's name;
    (iv) The deposition officer's administration of the oath or 
affirmation to the deponent; and
    (v) The identity of all persons present.
    (2) Conducting the deposition; avoiding distortion. If the 
deposition is recorded non-stenographically, the deposition officer 
must repeat the items in paragraphs (g)(1)(i) through (iii) of this 
section at the beginning of each unit of the recording medium. The 
deponent's and attorneys' appearance or demeanor must not be distorted 
through recording techniques.
    (3) After the deposition. At the end of a deposition, the 
deposition officer must state on the record that the deposition is 
complete and must set out any stipulations made by the attorneys about 
custody of the transcript or recording and of the exhibits, or about 
any other pertinent matters.
    (h) Order and record of the examination--(1) Order of examination. 
The examination and cross-examination of a deponent will proceed as 
they would at the hearing. After putting the deponent under oath or 
affirmation, the deposition officer must record the testimony by the 
method designated under paragraph (e) of this section. The testimony 
must be recorded by the deposition officer personally or by a person 
acting in the presence and under the direction of the deposition 
officer. The witness being deposed may have counsel present during the 
deposition.
    (2) Form of objections stated during the deposition. An objection 
at the time of the examination--whether to evidence, to a party's 
conduct, to the deposition officer's qualifications, to the manner of 
taking the deposition, or to any other aspect of the deposition--must 
be noted on the record, but the examination may still proceed and the 
testimony may be taken subject to any objection. An objection must be 
stated concisely in a nonargumentative and nonsuggestive manner. A 
person may instruct a deponent not to answer only when necessary to 
preserve a privilege, to enforce a limitation ordered by the hearing 
officer, or to present a motion to the hearing officer for a limitation 
on the questioning in the deposition.
    (i) Waiver of objections--(1) To the notice. An objection to an 
error or irregularity in a deposition notice is waived unless promptly 
served in writing on the party giving the notice.
    (2) To the deposition officer's qualification. An objection based 
on disqualification of the deposition officer before whom a deposition 
is to be taken is waived if not made:
    (i) Before the deposition begins; or

[[Page 10048]]

    (ii) Promptly after the basis for disqualification becomes known 
or, with reasonable diligence, could have been known.
    (3) To the taking of the deposition--(i) Objection to competence, 
relevance, or materiality. An objection to a deponent's competence--or 
to the competence, relevance, or materiality of testimony--is not 
waived by a failure to make the objection before or during the 
deposition, unless the ground for it might have been corrected at that 
time.
    (ii) Objection to an error or irregularity. An objection to an 
error or irregularity at an oral examination is waived if:
    (A) It relates to the manner of taking the deposition, the form of 
a question or answer, the oath or affirmation, a party's conduct, or 
other matters that might have been corrected at that time; and
    (B) It is not timely made during the deposition.
    (4) To completing and returning the deposition. An objection to how 
the deposition officer transcribed the testimony--or prepared, signed, 
certified, sealed, endorsed, sent, or otherwise dealt with the 
deposition--is waived unless a motion to suppress is made promptly 
after the error or irregularity becomes known or, with reasonable 
diligence, could have been known.
    (j) Duration; cross-examination; motion to terminate or limit--(1) 
Duration. Unless otherwise stipulated or ordered by the hearing 
officer, a deposition is limited to one day of seven hours, including 
cross-examination as provided in this paragraph (j)(1). In a deposition 
conducted by or for a respondent, the Office of Enforcement will be 
allowed a reasonable amount of time for cross-examination of the 
deponent. In a deposition conducted by the Office, the respondents 
collectively will be allowed a reasonable amount of time for cross-
examination of the deponent. The hearing officer may allow additional 
time if needed to fairly examine the deponent or if the deponent, 
another person, or any other circumstance impedes or delays the 
examination.
    (2) Motion to terminate or limit--(i) Grounds. At any time during a 
deposition, the deponent or a party may move to terminate or limit it 
on the ground that it is being conducted in bad faith or in a manner 
that unreasonably annoys, embarrasses, or oppresses the deponent or 
party. If the objecting deponent or party so demands, the deposition 
must be suspended for the time necessary to present the motion to the 
hearing officer.
    (ii) Order. Upon a motion under paragraph (j)(2)(i) of this 
section, the hearing officer may order that the deposition be 
terminated or may limit its scope. If terminated, the deposition may be 
resumed only by order of the hearing officer.
    (k) Review by the witness; changes--(1) Review; statement of 
changes. On request by the deponent or a party before the deposition is 
completed, and unless otherwise ordered by the hearing officer, the 
deponent must be allowed 14 days after being notified by the deposition 
officer that the transcript or recording is available, unless a longer 
time is agreed to by the parties or permitted by the hearing officer, 
in which:
    (i) To review the transcript or recording; and
    (ii) If there are changes in form or substance, to sign a statement 
listing the changes and the reasons for making them.
    (2) Changes indicated in the deposition officer's certificate. The 
deposition officer must note in the certificate prescribed by paragraph 
(l)(1) of this section whether a review was requested and, if so, must 
attach any changes the deponent makes during the 14-day period.
    (l) Certification and delivery; exhibits; copies of the transcript 
or recording--(1) Certification and delivery. The deposition officer 
must certify in writing that the witness was duly sworn and that the 
deposition accurately records the witness's testimony. The certificate 
must accompany the record of the deposition. Unless the hearing officer 
orders otherwise, the deposition officer must seal the deposition in an 
envelope or package bearing the title of the action and marked 
``Deposition of [witness's name]'' and must promptly send it to the 
attorney or party who arranged for the transcript or recording. The 
attorney or party must store it under conditions that will protect it 
against loss, destruction, tampering, or deterioration.
    (2) Documents and tangible things--(i) Originals and copies. 
Documents and tangible things produced for inspection during a 
deposition must, on a party's request, be marked for identification and 
attached to the deposition. Any party may inspect and copy them. But if 
the person who produced them wants to keep the originals, the person 
may:
    (A) Offer copies to be marked, attached to the deposition, and then 
used as originals--after giving all parties a fair opportunity to 
verify the copies by comparing them with the originals; or
    (B) Give all parties a fair opportunity to inspect and copy the 
originals after they are marked--in which event the originals may be 
used as if attached to the deposition.
    (ii) Order regarding the originals. Any party may move for an order 
that the originals be attached to the deposition pending final 
disposition of the case.
    (3) Copies of the transcript or recording. Unless otherwise 
stipulated or ordered by the hearing officer, the deposition officer 
must retain the stenographic notes of a deposition taken 
stenographically or a copy of the recording of a deposition taken by 
another method. When paid reasonable charges, the deposition officer 
must furnish a copy of the transcript or recording to any party or the 
deponent, as directed by the party or person paying such charges.
    (m) Presentation of objections or disputes. Any party or deponent 
seeking relief with respect to disputes over the conduct of a 
deposition may file a motion with the hearing officer to obtain relief 
as permitted by this part.


Sec.  1081.210  Expert discovery.

    (a) At a date set by the hearing officer at the scheduling 
conference, each party must serve the other with a report prepared by 
each of its expert witnesses. Each party must serve the other parties 
with a list of any rebuttal expert witnesses and a rebuttal report 
prepared by each such witness not later than 28 days after the deadline 
for service of expert reports, unless another date is set by the 
hearing officer. A rebuttal report must be limited to rebuttal of 
matters set forth in the expert report for which it is offered in 
rebuttal. If material outside the scope of fair rebuttal is presented, 
a party may file a motion not later than seven days after the deadline 
for service of rebuttal reports, seeking appropriate relief with the 
hearing officer, including striking all or part of the report, leave to 
submit a surrebuttal report by the party's own experts, or leave to 
call a surrebuttal witness and to submit a surrebuttal report by that 
witness.
    (b) No party may call an expert witness at the hearing unless the 
expert witness has been listed and has provided reports as required by 
this section, unless otherwise directed by the hearing officer at a 
scheduling conference. Each side will be limited to calling at the 
hearing five expert witnesses, including any rebuttal or surrebuttal 
expert witnesses. A party may file a motion seeking leave to call 
additional expert witnesses due to extraordinary circumstances.
    (c) Each report must be signed by the expert and contain a complete 
statement of all opinions to be expressed and the basis and reasons 
therefore; the data,

[[Page 10049]]

materials, or other information considered by the witness in forming 
the opinions; any exhibits to be used as a summary of or support for 
the opinions; the qualifications of the witness, including a list of 
all publications authored or co-authored by the witness within the 
preceding ten years; the compensation to be paid for the study and 
testimony; and a listing of any other cases in which the witness has 
testified or sought to testify as an expert at trial or hearing, or by 
deposition within the preceding four years. A rebuttal or surrebuttal 
report need not include any information already included in the initial 
report of the witness.
    (d) A party may depose any person who has been identified as an 
expert whose opinions may be presented at trial upon subpoena issued 
under Sec.  1081.208. Unless otherwise ordered by the hearing officer, 
a deposition of any expert witness will be conducted after the 
disclosure of a report prepared by the witness in accordance with 
paragraph (a) of this section, and at least seven days prior to the 
deadline for submission of rebuttal expert reports. A deposition of an 
expert witness must be completed no later than 14 days before the 
hearing unless otherwise ordered by the hearing officer. No expert 
deposition will exceed seven hours on the record, absent agreement of 
the parties or an order of the hearing officer for good cause shown. 
Expert depositions will be conducted pursuant to the procedures set 
forth in Sec.  1081.209(d) through (l).
    (e) A party may not discover facts known or opinions held by an 
expert who has been retained or specifically employed by another party 
in anticipation of litigation or preparation for the hearing and who is 
not listed as a witness for the hearing. A party may not discover 
drafts of any report required by this section, regardless of the form 
in which the draft is recorded, or any communications between another 
party's attorney and any of that other party's experts, regardless of 
the form of the communications, except to the extent that the 
communications:
    (1) Relate to compensation for the testifying expert's study or 
testimony;
    (2) Identify facts or data that the other party's attorney provided 
and that the testifying expert considered in forming the opinions to be 
expressed; or
    (3) Identify assumptions that the other party's attorney provided 
and that the testifying expert relied on in forming the opinions to be 
expressed.
    (f) The hearing officer has the discretion to dispense with the 
requirement of expert discovery in appropriate cases.


Sec.  1081.211  Interlocutory review.

    (a) Availability. The Director may, at any time, direct that any 
matter be submitted to the Director for review. Subject to paragraph 
(c) of this section, the hearing officer may, upon the hearing 
officer's motion or upon the motion of any party, certify any matter 
for interlocutory review by the Director. This section is the exclusive 
remedy for review of a hearing officer's ruling or order prior to the 
Director's consideration of the entire proceeding.
    (b) Procedure. Any party's motion for certification of a ruling or 
order for interlocutory review must be filed with the hearing officer 
within seven days of service of the ruling or order, must specify the 
ruling or order or parts thereof for which interlocutory review is 
sought, must attach any other portions of the record on which the 
moving party relies, and must otherwise comply with Sec.  1081.205. 
Notwithstanding Sec.  1081.205, any response to such a motion must be 
filed within seven days of service of the motion. The hearing officer 
must issue a ruling on the motion within seven days of the deadline for 
filing a response.
    (c) Certification process. Unless the Director directs otherwise, a 
ruling or order may not be submitted to the Director for interlocutory 
review unless the hearing officer, upon the hearing officer's motion or 
upon the motion of a party, certifies the ruling or order in writing. 
The hearing officer will not certify a ruling or order unless:
    (1) The ruling or order would compel testimony of Bureau officers 
or employees, or those from another governmental agency, or the 
production of documentary evidence in the custody of the Bureau or 
another governmental agency;
    (2) The ruling or order involves a motion for disqualification of 
the hearing officer pursuant to Sec.  1081.105(c)(2);
    (3) The ruling or order suspended or barred an individual from 
appearing before the Bureau pursuant to Sec.  1081.107(c); or
    (4) Upon motion by a party, the hearing officer is of the opinion 
that:
    (i) The ruling or order involves a controlling question of law as 
to which there is substantial ground for difference of opinion; and
    (ii) An immediate review of the ruling or order is likely to 
materially advance the completion of the proceeding or subsequent 
review will be an inadequate remedy.
    (d) Interlocutory review. A party whose motion for certification 
has been denied by the hearing officer may petition the Director for 
interlocutory review.
    (e) Director review. The Director will determine whether or not to 
review a ruling or order certified under this section or the subject of 
a petition for interlocutory review. Interlocutory review is generally 
disfavored. The Director may decline to review a ruling or order 
certified by a hearing officer pursuant to paragraph (c) of this 
section or the petition of a party who has been denied certification if 
the Director determines that interlocutory review is not warranted or 
appropriate under the circumstances, in which case the Director may 
summarily deny the petition. If the Director determines to grant the 
review, the Director will review the matter and issue a ruling and 
order in an expeditious fashion, consistent with the Bureau's other 
responsibilities.
    (f) Proceedings not stayed. The filing of a motion requesting that 
the hearing officer certify any of the hearing officer's prior rulings 
or orders for interlocutory review or a petition for interlocutory 
review filed with the Director, and the grant of any such review, will 
not stay proceedings before the hearing officer unless the hearing 
officer, or the Director, so orders. The Director will not consider a 
motion for a stay unless the motion was first been made to the hearing 
officer.


Sec.  1081.212  Dispositive motions.

    (a) Dispositive motions. This section governs the filing of motions 
to dismiss and motions for summary disposition. The filing of any such 
motion does not obviate a party's obligation to file an answer or take 
any other action required by this part or by an order of the hearing 
officer, unless expressly so provided by the hearing officer.
    (b) Motions to dismiss. A respondent may file a motion to dismiss 
asserting that, even assuming the truth of the facts alleged in the 
notice of charges, it is entitled to dismissal as a matter of law.
    (c) Motion for summary disposition. A party may make a motion for 
summary disposition asserting that the undisputed pleaded facts, 
admissions, affidavits, stipulations, documentary evidence, matters as 
to which official notice may be taken, and any other evidentiary 
materials properly submitted in connection with a motion for summary 
disposition show that:
    (1) There is no genuine issue as to any material fact; and
    (2) The moving party is entitled to a decision in the moving 
party's favor as a matter of law.
    (d) Filing of motions for summary disposition and responses. (1) 
After a

[[Page 10050]]

respondent's answer has been filed and documents have been made 
available to the respondent for inspection and copying pursuant to 
Sec.  1081.206, any party may move for summary disposition in its favor 
of all or any part of the proceeding.
    (2) A motion for summary disposition must be accompanied by a 
statement of the material facts as to which the moving party contends 
there is no genuine issue. Such motion must be supported by documentary 
evidence, which may take the form of admissions in pleadings, 
stipulations, depositions, investigatory depositions, transcripts, 
affidavits, and any other evidentiary materials that the moving party 
contends support the moving party's position. The motion must also be 
accompanied by a brief containing the points and authorities in support 
of the contention of the moving party. Any party opposing a motion for 
summary disposition must file a statement setting forth those material 
facts as to which the opposing party contends a genuine dispute exists. 
Such opposition must be supported by evidence of the same type as may 
be submitted in support of a motion for summary disposition and a brief 
containing the points and authorities in support of the contention that 
summary disposition would be inappropriate.
    (3) Any affidavit or declaration submitted in support of or in 
opposition to a motion for summary disposition must set forth such 
facts as would be admissible in evidence, must show affirmatively that 
the affiant is competent to testify to the matters stated therein, and 
must be signed under oath and penalty of perjury.
    (e) Page limitations for dispositive motions. A motion to dismiss 
or for summary disposition, together with any brief in support of the 
motion (exclusive of any declarations, affidavits, or attachments) may 
not exceed 35 pages in length. Motions for extensions of this length 
limitation are disfavored.
    (f) Opposition and reply response time and page limitation. Any 
party, within 21 days after service of a dispositive motion, or within 
such period as allowed by the hearing officer, may file a response to 
such motion. The length limitations set forth in paragraph (e) of this 
section also apply to such responses. Any reply brief filed in response 
to an opposition to a dispositive motion must be filed within seven 
days after service of the opposition. Reply briefs may not exceed ten 
pages.
    (g) Relationship to scheduling of hearing. A respondent's filing of 
a dispositive motion constitutes a request that the hearing not be held 
until after the motion is resolved. The hearing officer will decide 
whether to grant such a request. If the request is granted, the hearing 
officer will schedule the specific date of the hearing, in consultation 
with the parties.


Sec.  1081.213  Rulings on dispositive motions.

    (a) Ruling by Director or hearing officer. The Director will rule 
on a dispositive motion, refer the motion to the hearing officer, or 
rule on the motion in part and refer it in part.
    (b) Timing of ruling. If the Director rules on the motion, the 
Director must do so within 42 days following the expiration of the time 
for filing all responses and replies, unless there is good cause to 
extend the deadline. If the Director refers the motion to the hearing 
officer, the Director may set a deadline for the hearing officer to 
rule.
    (c) Oral argument. At the request of any party or on the Director 
or hearing officer's own motion, the Director or hearing officer (as 
applicable) may hear oral argument on a dispositive motion.
    (d) Types of rulings--(1) Granting motion as to all claims and 
relief. If the Director or hearing officer (as applicable) determines 
that dismissal or summary disposition is warranted as to all claims and 
relief, then (as applicable) the Director will issue a final decision 
and order or the hearing officer will issue preliminary findings and 
conclusions.
    (2) Granting motion as to some claims or relief. If the Director or 
hearing officer (as applicable) determines that dismissal or summary 
disposition is warranted as to some issues, but not all claims and 
relief, the Director or hearing officer will issue an order that 
directs further proceedings. Where the dispositive motion is a motion 
for summary disposition, the order will specify the facts that appear 
without substantial controversy. The facts so specified are be deemed 
established.
    (3) Denial of motion. If the Director or hearing officer (as 
applicable) determines that dismissal or summary disposition is not 
warranted, the Director or hearing officer may make a ruling denying 
the motion. If it appears that a party, for good cause shown, cannot 
present by affidavit, prior to hearing, facts essential to justify 
opposition to a motion for summary disposition, the Director or hearing 
officer must deny or defer the motion, or do so in relevant part.


Sec.  1081.214  Prehearing conferences.

    (a) Prehearing conferences. The hearing officer may, in addition to 
the scheduling conference, upon the hearing officer's motion or at the 
request of any party, direct counsel for the parties to meet with the 
hearing officer (in person or by electronic means) at a prehearing 
conference for further discussion of the issues outlined in Sec.  
1081.203, or for discussion of any additional matters that in the view 
of the hearing officer will aid in an orderly disposition of the 
proceeding, including but not limited to:
    (1) Identification of potential witnesses and limitation on the 
number of witnesses;
    (2) The exchange of any prehearing materials including witness 
lists, statements of issues, exhibits, and any other materials;
    (3) Stipulations, admissions of fact, and the contents, 
authenticity, and admissibility into evidence of documents;
    (4) Matters of which official notice may be taken; and
    (5) Whether the parties intend to introduce prior sworn statements 
of witnesses as set forth in Sec.  1081.303(h).
    (b) Transcript. The hearing officer has discretion to require that 
a prehearing conference be recorded by a court reporter. A transcript 
of the conference and any materials filed, including orders, becomes 
part of the record of the proceeding. A party may obtain a copy of the 
transcript at that party's expense.
    (c) Public access. Any prehearing conferences will be public unless 
the hearing officer determines, based on the standard set forth in 
Sec.  1081.119(c), that the conference (or any part thereof) should be 
closed to the public.


Sec.  1081.215  Prehearing submissions.

    (a) Generally. Within the time set by the hearing officer, but in 
no case later than 14 days before the start of the hearing, each party 
must serve on every other party:
    (1) A prehearing statement, which must include an outline or 
narrative summary of the party's case or defense, and the legal 
theories upon which the party will rely;
    (2) A final list of witnesses to be called to testify at the 
hearing, including the name and address of each witness and a short 
summary of the expected testimony of each witness;
    (3) Any prior sworn statements that a party intends to admit into 
evidence pursuant to Sec.  1081.303(h);
    (4) A list of the exhibits to be introduced at the hearing along 
with a copy of each exhibit; and
    (5) Any stipulations of fact or liability.
    (b) Expert witnesses. Each party who intends to call an expert 
witness must also serve, in addition to the information required by 
paragraph (a)(2)

[[Page 10051]]

of this section, a statement of the expert's qualifications, a listing 
of other proceedings in which the expert has given or sought to give 
expert testimony at trial or hearing or by deposition within the 
preceding four years, and a list of publications authored or co-
authored by the expert within the preceding ten years, to the extent 
such information has not already been provided pursuant to Sec.  
1081.210.
    (c) Effect of failure to comply. No witness may testify and no 
exhibits may be introduced at the hearing if such witness or exhibit is 
not listed in the prehearing submissions pursuant to paragraph (a) of 
this section, except for good cause shown.


Sec.  1081.216  Amicus participation.

    (a) Availability. An amicus brief may be filed only if:
    (1) A motion for leave to file the brief has been granted;
    (2) The brief is accompanied by written consent of all parties;
    (3) The brief is filed at the request of the Director or the 
hearing officer, as appropriate; or
    (4) The brief is presented by the United States or an officer or 
agency thereof, or by a State or a political subdivision thereof.
    (b) Procedure. An amicus brief may be filed conditionally with the 
motion for leave. The motion for leave must identify the interest of 
the movant and state the reasons why a brief of an amicus curiae is 
desirable. Except as all parties otherwise consent, any amicus curiae 
must file its brief within the time allowed the party whose position 
the amicus will support, unless the Director or hearing officer, as 
appropriate, for good cause shown, grants leave for a later filing. If 
a later filing is allowed, the order granting leave to file must 
specify when an opposing party may reply to the brief.
    (c) Motions. A motion for leave to file an amicus brief is subject 
to Sec.  1081.205.
    (d) Formal requirements as to amicus briefs. Amicus briefs must be 
filed pursuant to Sec.  1081.111, comply with the requirements of Sec.  
1081.112, and are be subject to the length limitation in Sec.  
1081.212(e).
    (e) Oral argument. An amicus curiae may move to present oral 
argument at any hearing before the hearing officer, but such motions 
will be granted only for extraordinary reasons.

Subpart C--Hearings


Sec.  1081.300  Public hearings.

    All hearings in adjudication proceedings will be public unless a 
confidentiality order is entered by the hearing officer pursuant to 
Sec.  1081.119 or unless otherwise ordered by the Director on the 
grounds that holding an open hearing would be contrary to the public 
interest.


Sec.  1081.301  Failure to appear.

    Failure of a respondent to appear in person or by a duly authorized 
counsel at the hearing constitutes a waiver of respondent's right to a 
hearing and may be deemed an admission of the facts as alleged and 
consent to the relief sought in the notice of charges. Without further 
proceedings or notice to the respondent, the hearing officer will file 
preliminary findings and conclusions containing findings of fact and 
addressing the relief sought in the notice of charges.


Sec.  1081.302  Conduct of hearings.

    All hearings will be conducted in a fair, impartial, expeditious, 
and orderly manner. Enforcement counsel will present its case-in-chief 
first, unless otherwise ordered by the hearing officer, or unless 
otherwise expressly specified by law or regulation. Enforcement counsel 
will be the first party to present an opening statement and a closing 
statement, and may make a rebuttal statement after the respondent's 
closing statement. If there are multiple respondents, respondents may 
agree among themselves as to their order of presentation of their 
cases, but if they do not agree, the hearing officer will fix the 
order.


Sec.  1081.303  Evidence.

    (a) Burden of proof. Enforcement counsel will have the burden of 
proof of the ultimate issue(s) of the Bureau's claims at the hearing.
    (b) Admissibility. (1) Except as is otherwise set forth in this 
section, relevant, material, and reliable evidence that is not unduly 
repetitive is admissible to the fullest extent authorized by the 
Administrative Procedure Act and other applicable law. Irrelevant, 
immaterial, and unreliable evidence will be excluded.
    (2) Evidence, even if relevant, may be excluded if its probative 
value is substantially outweighed by the danger of unfair prejudice or 
confusion of the issues; if the evidence would be misleading; or based 
on considerations of undue delay, waste of time, or needless 
presentation of cumulative evidence.
    (3) Evidence that constitutes hearsay may be admitted if it is 
relevant, material, and bears satisfactory indicia of reliability so 
that its use is fair. Hearsay is a statement, other than one made by 
the declarant while testifying at the hearing, offered in evidence to 
prove the truth of the matter asserted. If otherwise meeting the 
standards for admissibility described in this section, transcripts of 
depositions, investigational hearings, prior testimony in Bureau or 
other proceedings, and any other form of hearsay will be admissible and 
may not be excluded solely on the ground that they are or contain 
hearsay.
    (4) Evidence that would be admissible under the Federal Rules of 
Evidence is admissible in a proceeding conducted pursuant to this part. 
Evidence that would be inadmissible under the Federal Rules of Evidence 
may not be deemed or ruled to be inadmissible in a proceeding conducted 
pursuant to this part solely on that basis.
    (c) Official notice. Official notice may be taken of any material 
fact that is not subject to reasonable dispute in that it is either 
generally known or capable of accurate and ready determination by 
resort to sources whose accuracy cannot reasonably be questioned. If 
official notice is requested or is taken of a material fact not 
appearing in the evidence in the record, the parties, upon timely 
request, will be afforded an opportunity to disprove such noticed fact.
    (d) Documents. (1) A duplicate copy of a document is admissible to 
the same extent as the original, unless a genuine issue is raised as to 
whether the copy is in some material respect not a true and legible 
copy of the original.
    (2) Subject to the requirements of paragraph (b) of this section, 
any document, including a report of examination, supervisory activity, 
inspection or visitation, prepared by the Bureau, a prudential 
regulator, as that term is defined in section 1002(24) of the Consumer 
Financial Protection Act of 2010 (12 U.S.C. 5481(24)), or by a State 
regulatory agency, is presumptively admissible either with or without a 
sponsoring witness.
    (3) Witnesses may use existing or newly created charts, exhibits, 
calendars, calculations, outlines, or other graphic material to 
summarize, illustrate, or simplify the presentation of testimony. Such 
materials may, subject to the hearing officer's discretion, be used 
with or without being admitted into evidence.
    (4) As respondents are in the best position to determine the nature 
of documents generated by such respondents and which come from their 
own files, the burden of proof is on the respondent to introduce 
evidence to rebut a presumption that such documents are authentic and 
kept in the regular course of business.
    (e) Objections. (1) Objections to the admissibility of evidence 
must be timely

[[Page 10052]]

made and rulings on all objections must appear on the record.
    (2) Whenever evidence is excluded from the record, the party 
offering such evidence may make an offer of proof, which will be 
included in the record. Rejected exhibits, adequately marked for 
identification, must be retained pursuant to Sec.  1081.306(b) so as to 
be available for consideration by any reviewing authority.
    (3) Failure to object to admission of evidence or to any ruling 
constitutes a waiver of the objection.
    (f) Stipulations. (1) The parties may, at any stage of the 
proceeding, stipulate as to any relevant matters of fact or the 
authentication of any relevant documents. Such stipulations must be 
received in evidence at a hearing and are binding on the parties with 
respect to the matters therein stipulated.
    (2) Unless the hearing officer directs otherwise, all stipulations 
of fact and law previously agreed upon by the parties, and all 
documents, the admissibility of which have been previously stipulated, 
will be admitted into evidence upon commencement of the hearing.
    (g) Presentation of evidence. (1) A witness at a hearing for the 
purpose of taking evidence must testify under oath or affirmation.
    (2) A party is entitled to present its case or defense by sworn 
oral testimony and documentary evidence, to submit rebuttal evidence, 
and to conduct such cross-examination as, in the discretion of the 
hearing officer, may be required for a full and true disclosure of the 
facts.
    (3) An adverse party, or an officer, agent, or employee thereof, 
and any witness who appears to be hostile, unwilling, or evasive, may 
be interrogated by leading questions and may also be contradicted and 
impeached by the party calling him or her.
    (4) The hearing officer will exercise reasonable control over the 
mode and order of interrogating witnesses and presenting evidence so as 
to:
    (i) Make the interrogation and presentation effective for the 
ascertainment of the truth;
    (ii) Avoid needless consumption of time; and
    (iii) Protect witnesses from harassment or undue embarrassment.
    (5) The hearing officer may permit a witness to appear at a hearing 
via electronic means for good cause shown.
    (h) Introducing prior sworn statements of witnesses into the 
record. At a hearing, any party wishing to introduce a prior, sworn 
statement of a witness, not a party, otherwise admissible in the 
proceeding, may make a motion setting forth the reasons therefore. If 
only part of a statement is offered in evidence, the hearing officer 
may require that all relevant portions of the statement be introduced. 
If all of a statement is offered in evidence, the hearing officer may 
require that portions not relevant to the proceeding be excluded. A 
motion to introduce a prior sworn statement may be granted if:
    (1) The witness is dead;
    (2) The witness is out of the United States, unless it appears that 
the absence of the witness was procured by the party offering the prior 
sworn statement;
    (3) The witness is unable to attend or testify because of age, 
sickness, infirmity, imprisonment, or other disability;
    (4) The party offering the prior sworn statement has been unable to 
procure the attendance of the witness by subpoena; or
    (5) In the discretion of the hearing officer, it would be 
desirable, in the interests of justice, to allow the prior sworn 
statement to be used. In making this determination, due regard will be 
given to the presumption that witnesses will testify orally in an open 
hearing. If the parties have stipulated to accept a prior sworn 
statement in lieu of live testimony, consideration should also be given 
to the convenience of the parties in avoiding unnecessary expense.


Sec.  1081.304  Record of the hearing.

    (a) Reporting and transcription. Hearings will be stenographically 
reported and transcribed under the supervision of the hearing officer, 
and the original transcript will be a part of the record and the sole 
official transcript. The live oral testimony of each witness may be 
video recorded digitally, in which case the video recording and the 
written transcript of the testimony will be made part of the record. 
Copies of transcripts will be available from the reporter at prescribed 
rates.
    (b) Corrections. Corrections of the official transcript may be made 
only when they involve errors affecting substance and then only in the 
manner provided in this paragraph (b). Corrections ordered by the 
hearing officer or agreed to in a written stipulation signed by all 
counsel and parties not represented by counsel, and approved by the 
hearing officer, will be included in the record, and such stipulations, 
except to the extent they are capricious or without substance, must be 
approved by the hearing officer. Corrections will not be ordered by the 
hearing officer except upon notice and opportunity for the hearing of 
objections. Such corrections must be made by the official reporter by 
furnishing substitute type pages, under the usual certificate of the 
reporter, for insertion in the official record. The original 
uncorrected pages will be retained in the files of the Bureau.
    (c) Closing of the hearing record. Upon completion of the hearing, 
the hearing officer will issue an order closing the hearing record 
after giving the parties seven days to determine if the record is 
complete or needs to be supplemented. The hearing officer retains the 
discretion to permit or order correction of the record as provided in 
paragraph (b) of this section.


Sec.  1081.305  Post-hearing filings.

    (a) Proposed findings and conclusions and supporting briefs. (1) 
Using the same method of service for each party, the hearing officer 
will serve notice upon each party that the certified transcript, 
together with all hearing exhibits and exhibits introduced but not 
admitted into evidence at the hearing, has been filed promptly after 
that filing. Any party may file with the hearing officer proposed 
findings of fact, proposed conclusions of law, and a proposed order 
within 28 days following service of this notice by the hearing officer 
or within such longer period as may be ordered by the hearing officer.
    (2) Proposed findings and conclusions must be supported by citation 
to any relevant authorities and by page references to any relevant 
portions of the record. A post-hearing brief may be filed in support of 
proposed findings and conclusions, either as part of the same document 
or in a separate document.
    (b) Responsive briefs. Responsive briefs may be filed within 14 
days after the date on which the parties' proposed findings, 
conclusions, and order are due. Responsive briefs must be strictly 
limited to responding to matters, issues, or arguments raised in 
another party's papers. A party who has not filed proposed findings of 
fact and conclusions of law or a post-hearing brief may not file a 
responsive brief. Unless directed by the hearing officer, reply briefs 
are not permitted.
    (c) Order of filing. The hearing officer may not order the filing 
by any party of any post-hearing brief or responsive brief in advance 
of the other party's filing of its post-hearing brief or responsive 
brief.


Sec.  1081.306  Record in proceedings before hearing officer; retention 
of documents; copies.

    (a) Contents of the record. The record of the proceeding consists 
of:

[[Page 10053]]

    (1) The notice of charges, the answer, and any amendments thereto;
    (2) Each motion, submission, or other paper filed in the 
proceedings, and any amendments and exceptions to or regarding them;
    (3) Each stipulation, transcript of testimony, and any document or 
other item admitted into evidence;
    (4) Any transcript of a conference or hearing before the hearing 
officer;
    (5) Any amicus briefs filed pursuant to Sec.  1081.216;
    (6) With respect to a request to disqualify a hearing officer or to 
allow the hearing officer's withdrawal under Sec.  1081.105(c), each 
affidavit or transcript of testimony taken and the decision made in 
connection with the request;
    (7) All motions, briefs, and other papers filed on interlocutory 
appeal;
    (8) All proposed findings and conclusions;
    (9) Each written order issued by the hearing officer or Director; 
and
    (10) Any other document or item accepted into the record by the 
hearing officer.
    (b) Retention of documents not admitted. Any document offered into 
evidence but excluded will not be considered part of the record. The 
Office of Administrative Adjudication will retain any such document 
until the later of the date upon which an order by the Director ending 
the proceeding becomes final and not appealable, or upon the conclusion 
of any judicial review of the Director's order.
    (c) Substitution of copies. A true copy of a document may be 
substituted for any document in the record or any document retained 
pursuant to paragraph (b) of this section.

Subpart D--Decision and Appeals


Sec.  1081.400  Preliminary findings and conclusions of the hearing 
officer.

    (a) Time period for filing preliminary findings and conclusions. 
Subject to paragraph (b) of this section, the hearing officer must file 
preliminary findings and conclusions no later than 90 days after the 
deadline for filing post-hearing responsive briefs pursuant to Sec.  
1081.305(b) and in no event later than 360 days after filing of the 
notice of charges.
    (b) Extension of deadlines. In the event the hearing officer 
presiding over the proceeding determines that it will not be possible 
to issue preliminary findings and conclusions within the time periods 
specified in paragraph (a) of this section, the hearing officer will 
submit a written request to the Director for an extension of the time 
period for filing the preliminary findings and conclusions. This 
request must be filed no later than 28 days prior to the expiration of 
the time for issuance of preliminary findings and conclusions. The 
request will be served on all parties in the proceeding, who may file 
with the Director briefs in support of or in opposition to the request. 
Any such briefs must be filed within seven days of service of the 
hearing officer's request and may not exceed five pages. If the 
Director determines that additional time is necessary or appropriate in 
the public interest, the Director will issue an order extending the 
time period for filing preliminary findings and conclusions.
    (c) Content. (1) Preliminary findings and conclusions must be based 
on a consideration of the whole record relevant to the issues decided, 
and be supported by reliable, probative, and substantial evidence. 
Preliminary findings and conclusions must include a statement of 
findings of fact (with specific page references to principal supporting 
items of evidence in the record) and conclusions of law, as well as the 
reasons or basis therefore, as to all the material issues of fact, law, 
or discretion presented on the record and the appropriate order, 
sanction, relief or denial thereof. Preliminary findings and 
conclusions must also state that a notice of appeal may be filed within 
14 days after service of the preliminary findings and conclusions and 
include a statement that, unless a party timely files and perfects a 
notice of appeal of the preliminary findings and conclusions, the 
Director may adopt the preliminary findings and conclusions as the 
final decision and order of the Bureau without further opportunity for 
briefing or argument.
    (2) Consistent with paragraph (a) of this section, when more than 
one claim for relief is presented in an adjudication proceeding, or 
when multiple parties are involved, the hearing officer may direct the 
entry of preliminary findings and conclusions as to one or more but 
fewer than all of the claims or parties only upon an express 
determination that there is no just reason for delay and upon an 
express direction for the entry of preliminary findings and 
conclusions.
    (d) By whom made. Preliminary findings and conclusions must be made 
and filed by the hearing officer who presided over the hearings, except 
when that hearing officer has become unavailable to the Bureau.
    (e) Reopening of proceeding by hearing officer; termination of 
jurisdiction. (1) At any time from the close of the hearing record 
pursuant to Sec.  1081.304(c) until the filing of the hearing officer's 
preliminary findings and conclusions, a hearing officer may reopen the 
proceeding for the receipt of further evidence for good cause shown.
    (2) Except for the correction of clerical errors or pursuant to an 
order of remand from the Director, the jurisdiction of the hearing 
officer is terminated upon the filing of the hearing officer's 
preliminary findings and conclusions with respect to those issues 
decided pursuant to paragraph (c) of this section.
    (f) Filing, service, and publication. Upon filing by the hearing 
officer of preliminary findings and conclusions, the Office of 
Administrative Adjudication will promptly transmit the preliminary 
findings and conclusions to the Director and serve them upon the 
parties.


Sec.  1081.401  Transmission of documents to Director; record index; 
certification.

    (a) Filing of index. At the same time the Office of Administrative 
Adjudication transmits preliminary findings and conclusions to the 
Director, the hearing officer will furnish to the Director a certified 
index of the entire record of the proceedings. The certified index must 
include, at a minimum, an entry for each paper, document or motion 
filed in the proceeding, the date of the filing, and the identity of 
the filer. The certified index must also include an exhibit index 
containing, at a minimum, an entry consisting of exhibit number and 
title or description for each exhibit introduced and admitted into 
evidence and each exhibit introduced but not admitted into evidence.
    (b) Retention of record items by the Office of Administrative 
Adjudication. After the close of the hearing, the Office of 
Administrative Adjudication will retain originals of any motions, 
exhibits or any other documents filed with, or accepted into evidence 
by, the hearing officer, or any other portions of the record that have 
not already been filed with the Office of Administrative Adjudication.


Sec.  1081.402  Notice of appeal; review by the Director.

    (a) Notice of appeal--(1) Filing. Any party may file exceptions to 
the preliminary findings and conclusions of the hearing officer by 
filing a notice of appeal with the Office of Administrative 
Adjudication within 14 days after service of the preliminary findings 
and conclusions. The notice must specify the party or parties against 
whom the appeal is taken and must designate the preliminary findings 
and conclusions or part thereof appealed from. If a timely notice of 
appeal is filed by a party, any

[[Page 10054]]

other party may thereafter file a notice of appeal within seven days 
after service of the first notice, or within 14 days after service of 
the preliminary findings and conclusions, whichever period expires 
last.
    (2) Perfecting a notice of appeal. Any party filing a notice of 
appeal must perfect its appeal by filing its opening appeal brief 
within 28 days of service of the preliminary findings and conclusions. 
Any party may respond to the opening appeal brief by filing an 
answering brief within 28 days of service of the opening brief. Any 
party may file a reply to an answering brief within seven days of 
service of the answering brief. These briefs must conform to the 
requirements of Sec.  1081.403.
    (b) Director review other than pursuant to an appeal. In the event 
no party perfects an appeal of the hearing officer's preliminary 
findings and conclusions, the Director will, within 42 days after the 
date of service of the preliminary findings and conclusions, either 
issue a final decision and order adopting the preliminary findings and 
conclusions, or order further briefing regarding any portion of the 
preliminary findings and conclusions. The Director's order for further 
briefing must set forth the scope of review and the issues that will be 
considered and will make provision for the filing of briefs in 
accordance with the timelines set forth in paragraph (a)(2) of this 
section (except that that opening briefs will be due within 28 days of 
service of the order of review) if deemed appropriate by the Director.
    (c) Exhaustion of administrative remedies. Pursuant to 5 U.S.C. 
704, a perfected appeal to the Director of preliminary findings and 
conclusions pursuant to paragraph (a) of this section is a prerequisite 
to the seeking of judicial review of a final decision and order, or 
portion of the final decision and order, adopting the preliminary 
findings and conclusions.


Sec.  1081.403  Briefs filed with the Director.

    (a) Contents of briefs. Briefs must be confined to the particular 
matters at issue. Each exception to the findings or conclusions being 
reviewed should be stated succinctly. Exceptions must be supported by 
citation to the relevant portions of the record, including references 
to the specific pages relied upon, and by concise argument including 
citation of such statutes, decisions, and other authorities as may be 
relevant. If the exception relates to the admission or exclusion of 
evidence, the substance of the evidence admitted or excluded must be 
set forth in the brief, in an appendix thereto, or by citation to the 
record. Reply briefs must be confined to matters in answering briefs of 
other parties.
    (b) Length limitation. Except with leave of the Director, opening 
and answering briefs may not exceed 30 pages, and reply briefs may not 
exceed 15 pages, exclusive of pages containing the table of contents, 
table of authorities, and any addendum that consists solely of copies 
of applicable cases, pertinent legislative provisions or rules, and 
exhibits. Motions to file briefs in excess of these limitations are 
disfavored.


Sec.  1081.404  Oral argument before the Director.

    (a) Availability. The Director will consider appeals, motions, and 
other matters properly before the Director on the basis of the papers 
filed by the parties without oral argument unless the Director 
determines that the presentation of facts and legal arguments in the 
briefs and record and decisional process would be significantly aided 
by oral argument, in which case the Director will issue an order 
setting the date on which argument will be held. A party seeking oral 
argument must so indicate on the first page of that party's opening or 
answering brief.
    (b) Public arguments; transcription. All oral arguments will be 
public unless otherwise ordered by the Director. Oral arguments before 
the Director will be reported stenographically, unless otherwise 
ordered by the Director. Motions to correct the transcript of oral 
argument must be made according to the same procedure provided in Sec.  
1081.304(b).


Sec.  1081.405  Decision of the Director.

    (a) Upon appeal from or upon further review of preliminary findings 
and conclusions, the Director will consider such parts of the record as 
are cited or as may be necessary to resolve the issues presented and, 
in addition, will, to the extent necessary or desirable, exercise all 
powers which could have exercised if the Director had made the 
preliminary findings and conclusions. In proceedings before the 
Director, the record will consist of all items part of the record in 
accordance with Sec.  1081.306 as follows: Any notices of appeal or 
order directing review; all briefs, motions, submissions, and other 
papers filed on appeal or review; and the transcript of any oral 
argument held. Review by the Director of preliminary findings and 
conclusions may be limited to the issues specified in the notice(s) of 
appeal or the issues, if any, specified in the order directing further 
briefing. On notice to all parties, however, the Director may, at any 
time prior to issuance of the Director's decision, raise and determine 
any other matters that the Director deems material, with opportunity 
for oral or written argument thereon by the parties.
    (b) Decisional employees may advise and assist the Director in the 
consideration and disposition of the case.
    (c) In rendering the Director's decision, the Director will affirm, 
adopt, reverse, modify, set aside, or remand for further proceedings 
the preliminary findings and conclusions and will include in the 
decision a statement of the reasons or basis for the Director's actions 
and the findings of fact upon which the decision is predicated.
    (d) At the expiration of the time permitted for the filing of reply 
briefs with the Director, the Office of Administrative Adjudication 
will notify the parties that the case has been submitted for final 
Bureau decision. The Director will issue and the Office of 
Administrative Adjudication will serve the Director's final decision 
and order within 90 days after such notice, unless within that time the 
Director orders that the adjudication proceeding or any aspect thereof 
be remanded to the hearing officer for further proceedings.
    (e) The Office of Administrative Adjudication will serve copies of 
a final decision and order of the Director upon each party to the 
proceeding in accordance with Sec.  1081.113(d)(2); upon other persons 
required by statute, if any; and, if directed by the Director or 
required by statute, upon any appropriate State or Federal supervisory 
authority. A final decision and order will also be published on the 
Bureau's website or as otherwise deemed appropriate by the Bureau.


Sec.  1081.406  Reconsideration.

    Within 14 days after service of the Director's decision and order, 
any party may file with the Director a petition for reconsideration, 
briefly and specifically setting forth the relief desired and the 
grounds in support thereof. Any petition filed under this section must 
be confined to new questions raised by the decision or order and upon 
which the petitioner had no opportunity to argue, in writing or orally, 
before the Director. No response to a petition for reconsideration may 
be filed unless requested by the Director, who will request such 
response before granting any petition for reconsideration. The filing 
of a petition for reconsideration does not operate to stay the 
effective date of the decision or order or to toll

[[Page 10055]]

the running of any statutory period affecting such decision or order 
unless specifically so ordered by the Director.


Sec.  1081.407  Effective date; stays pending judicial review.

    (a) Other than consent orders, which become effective at the time 
specified therein, an order to cease and desist or for other 
affirmative action under section 1053(b) of the Consumer Financial 
Protection Act of 2010 (12 U.S.C. 5563(b)) becomes effective at the 
expiration of 30 days after the date of service pursuant to Sec.  
1081.113(d)(2), unless the Director agrees to stay the effectiveness of 
the order pursuant to this section.
    (b) Any party subject to a final decision and order, other than a 
consent order, may apply to the Director for a stay of all or part of 
that order pending judicial review.
    (c) A motion for stay must state the reasons a stay is warranted 
and the facts relied upon, and must include supporting affidavits or 
other sworn statements, and a copy of the relevant portions of the 
record. The motion must address the likelihood of the movant's success 
on appeal, whether the movant will suffer irreparable harm if a stay is 
not granted, the degree of injury to other parties if a stay is 
granted, and why the stay is in the public interest.
    (d) A motion for stay must be filed within 28 days of service of 
the order on the party. Any party opposing the motion may file a 
response within seven days after receipt of the motion. The movant may 
file a reply brief, limited to new matters raised by the response, 
within seven days after receipt of the response.
    (e) The commencement of proceedings for judicial review of a final 
decision and order of the Director does not, unless specifically 
ordered by the Director or a reviewing court, operate as a stay of any 
order issued by the Director. The Director has discretion, on such 
terms as the Director finds just, to stay the effectiveness of all or 
any part of an order pending a final decision on a petition for 
judicial review of that order.


Sec.  1081.408  Issue exhaustion.

    (a) Scope. This section applies to any argument to support a 
party's case or defense, including any argument that could be a basis 
for setting aside Bureau action under 5 U.S.C. 706 or any other source 
of law.
    (b) Duties to raise arguments. A party must raise an argument 
before the hearing officer, or else it is not preserved for later 
consideration by the Director. A party must raise an argument before 
the Director, or else it is not preserved for later consideration by a 
court.
    (c) Manner of raising arguments. An argument must be raised in a 
manner that complies with this part and that provides a fair 
opportunity to consider the argument.
    (d) Discretion to consider unpreserved arguments. The Director has 
discretion to consider an unpreserved argument, including by 
considering it in the alternative. If the Director considers an 
unpreserved argument in the alternative, the argument remains 
unpreserved.

Subpart E--Temporary Cease-and-Desist Proceedings


Sec.  1081.500  Scope.

    (a) This subpart prescribes the rules of practice and procedure 
applicable to the issuance of a temporary cease-and-desist order 
authorized by section 1053(c) of the Consumer Financial Protection Act 
of 2010 (12 U.S.C. 5563(c)).
    (b) The issuance of a temporary cease-and-desist order does not 
stay or otherwise affect the proceedings instituted by the issuance of 
a notice of charges, which are governed by subparts A through D of this 
part.


Sec.  1081.501  Basis for issuance, form, and service.

    (a) In general. The Director or the Director's designee may issue a 
temporary cease-and-desist order if the Director determines that one or 
more of the alleged violations specified in a notice of charges, or the 
continuation thereof, is likely to cause the respondent to be insolvent 
or otherwise prejudice the interests of consumers before the completion 
of the adjudication proceeding. A temporary cease-and-desist order may 
require the respondent to cease and desist from any violation or 
practice specified in the notice of charges and to take affirmative 
action to prevent or remedy such insolvency or other condition pending 
completion of the proceedings initiated by the issuance of a notice of 
charges.
    (b) Incomplete or inaccurate records. When a notice of charges 
specifies, on the basis of particular facts and circumstances, that the 
books and records of a respondent are so incomplete or inaccurate that 
the Bureau is unable to determine the financial condition of the 
respondent or the details or purpose of any transaction or transactions 
that may have a material effect on the financial condition of the 
respondent, then the Director or the Director's designee may issue a 
temporary order requiring:
    (1) The cessation of any activity or practice which gave rise, 
whether in whole or in part, to the incomplete or inaccurate state of 
the books or records; or
    (2) Affirmative action to restore such books or records to a 
complete and accurate state, until the completion of the adjudication 
proceeding.
    (c) Content, scope, and form of order. Every temporary cease-and-
desist order accompanying a notice of charges must describe:
    (1) The basis for its issuance, including the alleged violations 
and the harm that is likely to result without the issuance of an order; 
and
    (2) The act or acts the respondent is to take or refrain from 
taking.
    (d) Effective and enforceable upon service. A temporary cease-and-
desist order is effective and enforceable upon service.
    (e) Service. Service of a temporary cease-and-desist order will be 
made pursuant to Sec.  1081.113(d).


Sec.  1081.502  Judicial review, duration.

    (a) Availability of judicial review. Judicial review of a temporary 
cease-and-desist order is available solely as provided in section 
1053(c)(2) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 
5563(c)(2)). Any respondent seeking judicial review of a temporary 
cease-and-desist order issued under this subpart must, not later than 
ten days after service of the temporary cease-and-desist order, apply 
to the United States district court for the judicial district in which 
the residence or principal office or place of business of the 
respondent is located, or the United States District Court for the 
District of Columbia, for an injunction setting aside, limiting, or 
suspending the enforcement, operation, or effectiveness of such order.

[[Page 10056]]

    (b) Duration. Unless set aside, limited, or suspended by the 
Director or the Director's designee, or by a court in proceedings 
authorized under section 1053(c)(2) of the Consumer Financial 
Protection Act of 2010 (12 U.S.C. 5563(c)(2)), a temporary cease-and-
desist order will remain effective and enforceable until:
    (1) The effective date of a final order issued upon the conclusion 
of the adjudication proceeding.
    (2) With respect to a temporary cease-and-desist order issued 
pursuant to Sec.  1081.501(b) only, the Bureau determines by 
examination or otherwise that the books and records are accurate and 
reflect the financial condition of the respondent, and the Director or 
the Director's designee issues an order terminating, limiting, or 
suspending the temporary cease-and-desist order.

Rohit Chopra,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2022-02863 Filed 2-18-22; 8:45 am]
BILLING CODE 4810-AM-P


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