National Bank Appeals Process:
Frequently Asked Questions about OCC Bulletin 2002-9, “National Bank Appeals Process: Guidance for Bankers”

OCC Bulletin 2002-9, “National Bank Appeals Process, Guidance for Bankers,” dated February 25, 2002, revises the OCC’s procedures for national banks to appeal agency decisions and actions. It replaces OCC Bulletin 96-18 (REV) dated February 23, 1996. In conjunction with this bulletin, the OCC also issued PPM 1000-9 (REV) that updates the guidelines for responding to national bank appeals and procedures for administering the appeals process.

What Are The Major Differences Between OCC Bulletins 2002-9 and 96-18?

The OCC’s Bulletin 2002-9 clarifies and revises OCC Bulletin 96-18 and makes some technical changes to reflect the OCC’s current organizational structure. The main clarifications and revisions are discussed below.

Appealable and Non-Appealable Matters

Bulletin 2002-9 clarifies the types of decisions that can be appealed to the ombudsman or the bank’s immediate supervisory office by allowing banks to appeal supervisory decisions resulting in informal enforcement actions.

In addition, Bulletin 2002-9 clarifies Bulletin 96-18 to make clear that banks cannot seek ombudsman review of agency decisions for which banks are provided with an appeal mechanism by statute or OCC regulation, or where the decision is subject to judicial review. These include agency decisions to pursue formal enforcement action or recommended decisions following formal or informal adjudications pursuant to the Administrative Procedures Act, 5 USC 701 et seq., agency actions that are subject to judicial review and decisions made to disapprove directors and senior executive officers pursuant to Section 914 of the Financial Institutions Reform, Recovery and Enforcement Act of 1989, 12 USC 1831i.

Formal Enforcement-Related Action or Decision Defined

Bulletin 2002-9 also clarifies that “formal enforcement-related actions or decisions” include the underlying facts that form the basis of recommended or pending formal enforcement actions, the acts or practices that are the subject of pending formal enforcement actions and OCC determinations regarding compliance with an existing formal enforcement action. This clarification of the term “enforcement-related decisions” reflects that an enforcement-related decision includes the factual underpinnings of the decision.

Commencement of Formal Enforcement-Related Action or Decision

Bulletin 96-18 provided that when a bank receives notice from the OCC indicating its intention to pursue an enforcement action, the matter is removed from the appeals process. However, Bulletin 96-18 did not specify what type of notice from the OCC was required to remove enforcement actions from the appeals process. In order to achieve agency consistency in the application of this rule and to eliminate confusion as to when a formal enforcement-related action or decision commences and therefore becomes unappealable, Bulletin 2002-9 clarifies that a formal enforcement-related action or decision commences when the OCC’s Supervision Review Committee determines that the OCC will pursue a formal action under applicable statutes, regulations, or published OCC enforcement-related policies.

Procedures for Filing an Appeal

Bulletin 2002-9 added language to clarify that in order to ensure that the bank’s board of directors supports the appeal, the president or chief executive officer must submit the bank’s appeal and disclose in the submission the board’s approval of the action.

Effect of Filing an Appeal

Bulletin 2002-9 revised Bulletin 96-18 to provide that as a general matter, material supervisory determinations and actions are not stayed during the pursuit of an appeal. However, upon written request from the bank, the ombudsman or an appropriate OCC official may relieve the bank of its obligation to comply with the supervisory decision or action while the appeal is pending.

What Is Appealable?

Material Supervisory Determinations

In accordance with 12 USC 4806, Bulletin 2002-9 provides that agency actions or decisions including examination ratings, the adequacy of loan loss reserve provisions, and classifications of loans that are significant to an institution can be appealed by national banks.

Scope of Review in Formal Enforcement Cases

While Bulletin 2002-9 does not allow appeals of the underlying facts of an enforcement action, it does permit material supervisory determinations to be appealed even when an enforcement action has been taken. For example, a bank that is being placed under formal enforcement action can appeal its CAMELSI ratings (composite or individual components), loan classifications or conclusions rendered on the adequacy of its Allowance for Loan and Lease Losses. In such cases, the ombudsman would restrict his review to the factual record, primarily the facts detailed in the Report of Examination and make a determination on whether the Uniform Financial Institution Rating System criteria or other relevant policies have been applied correctly and consistently by the supervisory office. Essentially, the ombudsman would utilize a process similar to that of a federal appeals judge versus the de-novo review process that is customarily employed on non-enforcement related appellate matters.

What Is Not Appealable?

In accordance with 12 USC 4806, Bulletin 2002-9 provides that the following agency actions or decisions are not appealable to the ombudsman or the bank’s immediate supervisory office:

1. Appointments of receivers and conservators;
2. Preliminary examination conclusions communicated to the national bank before a final report of examination or other ritten communication from the OCC is issued;
3. Any formal enforcement-related actions or decisions, including decisions to:
   1. seek the issuance of a formal agreement or cease and desist order, or the assessment of a civil money penalty pursuant to Section 8 of the Federal Deposit Insurance Act (FDIA);
   2. take prompt corrective action pursuant to Section 38 of the 12 USC 1831o);
   3. issue a safety and soundness order pursuant to Section 39 of the FDIA (12 USC 1831p-1); and
   4. commence formal investigations pursuant to 12 USC 481, 1818(n) and 1820(c);
4. Formal and informal rulemakings pursuant to the Administrative Procedure Act (APA), 5 USC 500 et seq.;
5. Decisions or recommended decisions following formal and informal adjudications conducted pursuant to the APA, 5 USC 701 et seq.;
6. Requests for agency records or information under, and submission of information to the OCC that are governed by, the Freedom of Information Act, 5 USC 552, or 12 CFR 4;
7. Decisions made to disapprove directors and senior executive officers pursuant to Section 914 of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) (12 USC 1831i); and,
8. Any other agency decisions that are subject to judicial review.