Agencies Seek Input on Supplementary Leverage Ratio Increase for BHCs

by Shannon Allen

The Office of the Comptroller of the Currency (“OCC”), the Board of Governors of the Federal Reserve System (“Board”), and the Federal Deposit Insurance Corporation (“FDIC”) (collectively,  the “Agencies”) invite public comment on enhanced supplementary leverage ratio standards for certain Bank Holding Companies (“BHCs”).  The Agencies propose to create a “well capitalized” threshold of 6% for any insured depository institution (“IDI”) that is a subsidiary of a covered BHC.  In addition, the Board proposes that a covered BHC that preserves a “leverage buffer of tier 1 capital in an amount greater than 2 percent of its total leverage exposure” would no longer be held to “limitations on distributions and discretionary bonus payments.”

Financial companies had grown so big, leveraged, and interconnected that their collapse destabilized the financial system and the U.S. government responded.  Congress established the International Lending Supervision Act (“ILSA”) and codified its intentions by stating, “It is the policy of the Congress to assure that the economic health and stability of the United States and the other nations of the world shall not be adversely affected or threatened in the future by imprudent lending practices or inadequate supervision.”  This joint notice of proposed rulemaking (“NPRM”), builds on regulatory efforts by “increasing leverage standards” for the “largest and most interconnected U.S. banking organizations.”

The Agencies invite input on all aspects of the proposal and specific comments sought include: 

• How the proposal would contribute to financial stability and economic growth;
• Mitigating public-policy concerns; 
• Tools to prevent the failure of large systemically-important banking organization; 
• Risk-reducing incentives;
• Whether the proposed 6 % well-capitalized standard for subsidiary IDIs should be higher or lower; 
•  Challenges institutions would face in meeting the proposed well-capitalized threshold of 6 % beginning on January 1, 2018; 
• Whether the proposal would enhance the competitive position of U.S. banking organizations or put them at a competitive disadvantage relative to foreign banking organizations; 
•  How the proposal would affect counterparty incentives and behavior; 
•  Whether the proposal could cause a shift in favor of lending to individuals and businesses as opposed to markets- based activity by banking organizations; 
• Whether better capitalized BHCs might improve their ability to serve as a source of credit to the economy during periods of economic stress; 
•  How the proposal creates incentives for banking organizations to shrink or otherwise modify their activities; 
•  Incremental costs to banking organizations compared to currently anticipated costs; 
•  Alternatives to the definition of total leverage exposure; and 
• Rulemaking efforts that should be considered for simplification;

Interested parties are encouraged to submit comments electronically and should submit comments by October 21, 2013.

Comments to the OCC should use the following title:  “Regulatory Capital Rules: Regulatory Capital, Enhanced Supplementary Leverage Ratio Standards for Certain Bank Holding Companies and Their Subsidiary Insured Depository Institutions,”  must include “OCC” as the agency name and “Docket ID OCC-2013-0008” in the comment, and may be submitted by any of the following methods: 

• Federal eRulemaking Portal—“regulations.gov”: Go to http://www.regulations.gov. 
• Email: regs.comments@occ.treas.gov. 
•  Mail: Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, 400 7th Street SW., Suite 3E-218, Mail Stop 9W-11, Washington, DC 20219. 
•  Hand Delivery/Courier: 400 7th Street SW., Suite 3E-218, Mail Stop 9W-11, Washington, DC 20219. 
•  Fax: (571) 465-4326.

Comments to the Board should be identified by Docket No. R-1460 and may be submitted by any of the following methods: 

• Agency Web site: http://www.federalreserve.gov.
• Federal eRulemaking Portal: http://www.regulations.gov. 
•  Email: regs.comments@federalreserve.gov. Include docket number in subject line. 
•  Fax: (202) 452-3819 or (202) 452-3102.
• Mail: Robert de V. Frierson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue NW., Washington, DC 20551.

Comments to the FDIC should be identified by RIN 3064-AE01 and may be submitted by any of the following methods:

•  Agency Web site: http://www.fdic.gov/regulations/laws/federal/propose.html. 
•  Email: Comments@fdic.gov. Include the RIN 3064-AE01 in subject line. 
•  Mail: Robert E. Feldman, Executive Secretary, Attention: Comments, Federal Deposit Insurance Corporation, 550 17th Street NW., Washington, DC 20429. 
• Hand Delivery: Comments may be hand delivered to the guard station at the rear of the 550 17th Street Building (located on F Street) on business days between 7:00 a.m. and 5:00 p.m.

Archives Proposes Amendments to Incorporation by Reference Policy

by Shannon Allen

The National Archives and Records Administration (“NARA”) seeks comment on proposed amendments regulating the process for incorporated by reference (“IBR”) materials into the Code of Federal Regulations (“CFR”).  This notice of proposed rulemaking (“NPRM”) is in response to a petition to amend these regulations received by the Office of the Federal Register (“OFR”) on February 13, 2012.  

This NPRM proposes that agencies include additional details about the “materials incorporated by reference” into the “preambles of their rulemaking documents.”  In addition, the proposed amendments seek to require agencies to state in the preambles “a discussion of” actions taken to make certain the “materials are reasonably available to interested parties” or to “summarize the contents of the materials they wish to incorporate by reference.”

Specifically requested comments, include:

1. Whether "reasonably available" means materials should be for free to anyone online.  Would it create a digital divide by excluding people without internet access? 
2. Does “class of persons affected” need to be defined? If so, how should it be defined?
3. Should agencies bear the cost of making the material available for free online?
4. For example, how would this impact agencies' budget and infrastructure?
5. How would OFR’s review of proposed rules for IBR impact agency rulemaking and policy, given the additional time and possibility of denial of an IBR approval request at the final rule stage of the rulemaking?
6. Should OFR have the authority to deny IBR approval requests if the material is not available online for free?
7. The Administrative Conference of the United States recently issued a recommendation on IBR. 77 FR 2257 (January 17, 2012). In light of this recommendation, should the guidance on this topic be updated instead of amending the regulations?
8. Given that the petition raises policy rather than procedural issues; would the Office of Management and Budget (“OMB”) be a better placed to determine reasonable availability?
9. How would an extended IBR review period at both the NPRM and final rule stages impact agencies?

Other topics for comment include:

• Constitutional Issues.
• Copyright Issues.
• Outdated standards IBR'd into the CFR.
• What standards should be used as guidance not requirements?
• Concerns regarding the misuse of the IBR process.
• Indirect IBR of standards.
• International stance (e.g. trade imbalance, Export Administration Regulations, International Traffic in Arms Regulations).
• OFR mission.

Interested parties should submit comments by December 31, 2013, identified using the subject line of this document (Incorporation By Reference), by any of the following methods:

•  Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
• Email: Fedreg.legal@nara.gov. Include the subject line of this document in the subject line of the message (Incorporation By Reference).
• Mail: the Office of the Federal Register (NF), The National Archives and Records Administration, 8601 Adelphi Road, College Park, MD.
• Hand Delivery/Courier: Office of the Federal Register, 800 North Capitol Street NW., Suite 700, Washington, DC 20001.

DOJ Seeks Input To Improve Workplace Violence Data Collection

by Shannon Allen

The Bureau of Justice Statistics (“BJS”) of the Office of Justice Programs of the Department of Justice (“DOJ”), the National Institute for Occupational Safety and Health (“NIOSH”) of the Centers for Disease Control and Prevention (“CDC”), and the Department of Health and Human Services (“HHS”) are joining together to request input to improve BJS’s data collection and reporting regarding nonfatal workplace violence in the National Crime Victimization Survey (“NCVS”).  The notice document was issues by the CDC and NIOSH and BJS request public comment on these issues.

Work related violence is a widespread hazard to employee safety and health.  NIOSH is in charge of “conducting research to prevent workplace injuries and illnesses.”  The DOJ’s BJS collects data on “rape, sexual assault, robbery, aggravated assault, and simple assault against persons age 12 or older” through the NCVS.  The NCVS supplies information about “victims . . . offenders . . . and the nature of the crime . . . .”   And the BJS publishes special reports on workplace violence.

This request for comment is part of a larger “BJS effort to re-design and increase the utility of nonfatal violence data collected through the NCVS.”  In particular, the NIOSH and BJS seek public comment on:

1. methods to identify work-related violence using the existing variable structure within the NCVS;
2. additional suggested enhancements to improve the ability of the NCVS to describe the prevalence, patterns, and trends in workplace violence;
3. the best combination of variables to determine work-relatedness of the violent incident;
4. the first and second best choices for a combination of variables to identify work-related violence and why (see the NCVS crime incident report instrument);
5. any other suggested enhancements to improve the ability of the NCVS to report on workplace violence (the BJS and NIOSH are currently exploring two enhancements); and
6. suggested revisions to the categories of occupations that are used in reports (e.g. sample size and the ability to reliably report on specific occupations).

Interested parties must submit comments, including the agency name and docket number (CDC–2013–0020; NIOSH–269) by November 27, 2013.  Comments may be submitted by any of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments; OR
• Mail: NIOSH Docket Office, Robert A. Taft Laboratories, MS–C34, 4676 Columbia Parkway, Cincinnati, OH 45226.

ABA Endorses S. 1173, the Independent Agency Regulatory Analysis Act

by Lynn White

The American Bar Association recently sent a letter to members of the Senate Committee on Homeland Security & Governmental Affairs endorsing S. 1173, the Independent Agency Regulatory Analysis Act of 2013 by Senator Rob Portman (R-Ohio).  The bill would affirm the authority of the President to issue an executive order requiring independent regulatory agencies to comply, to the extent permitted by law, with regulatory analysis requirements that are currently applicable to executive agencies when adopting new regulations.

Under current law, a number of regulatory agencies like the National Labor Relations Board, Securities and Exchange Commission, and Federal Trade Commission, are excluded from the requirements of Executive Orders 12866 and 13563.  The orders require agencies to conduct an economic analysis of certain costly regulations and obtain approval from the Office of Information and Regulatory Affairs (OIRA) prior to publishing rules.  A Senate aide noted that these regulatory agencies exercise a vast degree of power over huge sectors of the economy and would benefit from having OIRA review the cost benefit analysis of significant rules.

The ABA letter expressed support for greater presidential coordination, review and oversight of the regulatory process for several important reasons.  First, the President is in the best position to centralize and coordinate the regulatory process, a task that has become increasingly important.  Second, the President, unlike administrative officials, is electorally accountable to the people and is the only official in government with a true national constituency.  These characteristics make the President uniquely well-situated to design regulatory policy in a way that is response to the interests of the public as a whole.  Finally, the President by virtue of his accountability and capacity for inter-agency coordination and centralization, has the unique ability to energize and direct regulatory policy in a way that would be impossible if that policy were to be set exclusively by administrative agency officials.  The ABA urged Congress to ensure that implementing the legislation would not impair the ability of regulatory agencies to perform their statutory functions.

S. 1173 contains some of the broader regulatory reforms contained in S. 1029, also sponsored by Senator Portman (H.R. 2122).  S. 1029 would codify some of the core requirements of Executive Orders 12866 and 13563, require greater input from the regulated community early in the rulemaking process for high-impact regulations, and allow for heightened judicial review.  The House Committee on the Judiciary passed the House version of the bill out of committee on July 24, 2013 by a vote of 13 -9.

Department of Education Seeks to Clarify IDEA Regulations

by Shannon Allen

The Secretary of the Department of Education (“ED”) issued a notice of proposed rulemaking (“NPRM”) proposing to amend regulations under Part B of the Individuals with Disabilities Act (“IDEA”).  The Assistance to States for the Education of Children with Disabilities program is governed by these regulations.  The ED seeks public comment to help clarify current policy.

Under Part B of the IDEA, the ED offers grants to States to “assist them in providing special education and related services to children with disabilities.”  The purpose of Part B regulations is to:

1. make certain all children with disabilities have access to free appropriate public education (“FAPE”) emphasizing unique needs and preparation for further education, employment, and independent living;
2. ensure that the rights of children with disabilities and their parents are protected;
3. assist States, localities, educational service agencies, and Federal agencies with providing education to all children with disabilities; and
4. assess and ensure the effectiveness of efforts to educate children with disabilities.

Part B funding is aimed at helping States and local educational agencies (“LEAs”) meet their “financial obligation to provide special education and related services to eligible children with disabilities.”  States must apply to the Secretary of the ED and LEAs must apply to their states in order to obtain funds.  “The statute and its regulations impose conditions on Part B grants, including a maintenance of State financial support provision and a maintenance of effort (“MOE”) provision for LEAs.”  This NPRM is only focused on proposed amendments to the LEA MOE provision.

The ED’s proposed amendments include;

• clarifying the compliance standard;
• explaining the eligibility standard;
• addressing the level of effort required of an LEA in the year after it fails to maintain effort under the IDEA;
• specifying the consequence for a failure to maintain local effort; and
• deciding whether States and LEAs or other interested parties think these proposed amendments will be helpful in increasing understanding of, and ensuring compliance with, the current local maintenance of effort requirements.

The ED “continues to receive questions on these complex requirements” and “has found that a significant lack of understanding regarding the local MOE requirements persists.”  Thus, the ED invites comment from States and LEAs “to identify where they are experiencing the most problems in implementing the maintenance of effort requirements and whether these proposed regulations will help to address those problems.”  In addition, the ED invites comments on decreasing “potential costs” or increasing “potential benefits while preserving the effective and efficient administration of the IDEA Part B program.”

Interested parties must submit comments by December 2, 2013.  Comments should include the Docket ID: ED-2012-OSERS-0020-0001 at the top of the comments and may be submitted by any of the following methods:

• Electronically:  Go to http://www.regulations.gov to submit your comments; OR
• Postal Mail, Commercial Delivery, or Hand Delivery: Address comments to Mary Louise Dirrigl, U.S. Department of Education, 400 Maryland Avenue SW., room 5103, Potomac Center Plaza, Washington, DC 20202-2600.
• NOTE: The ED will not accept comments by fax or by email.

Meet Rob Quinan, Managing Attorney, Administrative Law Division

by Nina Hart

Meet Rob Quinan, Managing Attorney for the Administrative Law Division of the Office of the Attorney General of Massachusetts.  Below, he discusses his diverse experiences with administration law and advice for attorneys interacting with or hoping to work for government agencies.

1. What led you to a career in law?

I was a Government major in college with a concentration in international relations.  I had thought about trying to enter the Foreign Service and applied to Georgetown University’s Master of Science in Foreign Service program.  My father, who is a lawyer, convinced me to apply to Georgetown’s joint JD/MS program.  Once in that program, I discovered that pursuing a law career appealed to me more than a Foreign Service career would.

2. What experiences with administrative or regulatory law have you had?

After a short stint in an entry-level law firm job in Washington, DC, which first exposed me to regulatory law issues, I worked for a major Boston law firm as a general commercial litigator for nearly 5 years.  I then spent three years as deputy general counsel to the Massachusetts Department of Children & Families (DCF) before joining the Attorney General’s Administrative Law Division 15 years ago.  DCF operates under an extensive regulatory scheme and conducts hundreds of administrative adjudications each year.  My current job exposes me to administrative law issues on a daily basis, but I gained a deeper appreciation of such issues when I began editing the Manual for Conducting Administrative Adjudicatory Hearings [a copy of which can be accessed for free at http://tinyurl.com/cdzrz8d].

3. How did you become interested in pursuing a career in administrative law?

My major field of study in college, combined with my administrative law course in law school, and the fact that administrative law surrounds practically all budding lawyers in Washington, DC, first sparked my interest in administrative law.  The position I took in the Massachusetts Attorney General’s Administrative Law Division proved to be an excellent platform for expanding my horizons and experiencing many of the different ways in which administrative law affects the lives of millions of U.S. citizens.

4. Do you have any advice about “best practices” for attorneys, particularly for those whose work requires frequent interaction with government agencies?

Before filing a court pleading that rests on principles of administrative law, take the time to consult a good treatise on administrative law.  The Massachusetts Practice series, for example, includes a three-volume treatise on administrative law.  An inordinate amount of time is wasted advancing arguments that either contravene or do not satisfy basic principles of administrative law.  In any area of the law that’s currently unfamiliar to you, take the time to scope out the lay of the land and view the big picture by consulting treatises or handbooks before delving into the minutiae of the issue that most concerns your client.  Cultivate acquaintances in the legal departments of the agencies you are most likely to deal with.  Join the public law section of your bar association.

5. What do you think are the biggest challenges facing administrative law practitioners?

If you represent a private client or plaintiff challenging an administrative decision, a major challenge is to craft an argument that will overcome most judges’ natural inclination to defer to the greater subject-matter expertise of agency decision-makers.  If you represent a government defendant, an often-daunting challenge in controversial cases is to persuade a reviewing court that the agency’s interpretation of law is correct and reasonable and that the court must defer to it.  Another challenge for all admin law practitioners is to master and then be able to distill cogently the more arcane aspects of the governing legal scheme.  Legislators and regulators are not known to be masters of clear, concise, easy-to-understand language.

6. As someone who has worked in the public and private sectors, do you have any advice for attorneys looking to transition between the two areas?  Is there a different skill or mindset that attorneys need to bring or develop in government work that may not be as crucial in a more traditional litigation practice and vice versa?

Private sector lawyers looking to break into government service should be on the lookout for pro bono opportunities that will bring them into contact with government lawyers and/or familiarize them with public law issues.  For example, an associate interested in child welfare law might sign up for the court-appointed special advocate program, join a foster-care review team, or explore whether the state Office of Child Advocate could use some research assistance.  Join and become active in the public law section of your bar association.  Work on an amicus brief that touches on issues of concern to government entities.  The culture of private law firms usually differs considerably from the public law office environment.  The former is often more bottom-line driven and the latter more issues oriented, so it helps if you can undergo experiences that give you a broader outlook than you’re likely to get as an associate in a law firm.  In the public sector position, you are likely to have greater responsibilities but more flexibility in managing your own time.

7. For law students or new attorneys considering a career in administrative law, what do you think would be a good way of familiarizing themselves with the field?

Probably nothing beats interning or volunteering in a public law office.  Serving as a research assistant to a professor of administrative law or volunteering to help those responsible for publications in the field, including treatises and the above-mentioned Manual, might also be invaluable opportunities.  Although the opportunities might not arise that frequently, keep your eyes peeled for conferences sponsored by the public law section of your bar association.  Inquire as to whether your law school is associated with any public service fellowship programs.

8. Outside of the law, what are your favorite activities or hobbies?

Notwithstanding my decision to veer away from a Foreign Service career, I still enjoy traveling overseas and gaining exposure to foreign languages and cultures.  I’m taking a refresher advanced French class this fall.  I try to watch a couple of foreign language movies each season and I am interested in the music that’s popular overseas.  Closer to home, I enjoy nature hikes, kayaking, swimming, and generally being outdoors in clement weather.  I like to read biographies, historical novels, and all about politics and current affairs.  And I visit museums and the theater fairly regularly.