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Federal Register / Vol. 86, No. 28 / Friday, February 12, 2021 / Rules and Regulations practice of oversight and cooperative problem-solving between banks and the regulators who support and manage the banking system and would also clearly violate the intent of the law in 12 U.S.C.
1818b. One commenter emphasized the importance of bank supervisors basing their criticisms on imprudent bank practices that may not yet have ripened into violations of laws or rules but could undermine safety and soundness or pose harm to consumers if left unaddressed.
One commenter argued that the agencies should state clearly that guidance can and will be used by supervisors to inform their assessments of banks practices and that it may be cited as, and serve as the basis for, criticisms. According to the commenter, even under the legal principles described in the Proposal, it is permissible for guidance to be used as a set of standards that may inform a criticism, provided that application of the guidance is used for corrective purposes, if not to support an enforcement action.
According to one commenter, the Proposal makes fine conceptual distinctions between, for example, issuing supervisory criticisms on the basis of guidance and issuing supervisory criticisms that make reference to supervisory guidance.
The commenter suggested that is a distinction that it may be difficult for human beings to parse in practice.
According to the commenter, a rule that makes such a distinction is likely to have a chilling effect on supervisors attempting to implement policy in the field. According to another commenter, the language allowing examiners to reference supervisory guidance to provide examples is too vague and threatens to marginalize the role of guidance and significantly reduce its usefulness in the process of issuing criticisms designed to correct deficient bank practices.
E. Legal Authority and Visitorial Powers One commenter questioned the Federal banking agencies reference in the Proposal to visitorial powers as an additional authority for early identification of supervisory concerns that may not rise to a violation of law, unsafe or unsound banking practice, or breach of fiduciary duty under 12 U.S.C.
1818.
F. Issuance and Management of Supervisory Guidance Several commenters made suggestions about how the agencies should issue and manage supervisory guidance.
Some commenters suggested that the
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agencies should delineate clearly between regulations and supervisory guidance. Commenters encouraged the agencies to regularly review, update, and potentially rescind outstanding guidance. One commenter suggested that the agencies rescind outstanding guidance that functions as rule but has not gone through notice and comment.
One commenter suggested that the agencies memorialize their intent to revisit and potentially rescind existing guidance, as well as limit multiple guidance documents on the same topic.
Commenters suggested that supervisory guidance should be easy to find, readily available, online, and in a format that is user-friendly and searchable.
One commenter encouraged the agencies to issue principles-based guidance that avoids the kind of granularity that could be misconstrued as binding expectations. According to this commenter, the agencies can issue separate frequently asked questions with more detailed information, but should clearly identify these as nonbinding illustrations. This commenter also encouraged the agencies to publish proposed guidance for comment when circumstances allow. Another commenter requested that the agencies issue all rules as defined by the APA
through the notice-and-comment process. One commenter expressed concern that the agencies will aim to reduce the issuance of multiple supervisory guidance documents and will thereby reduce the availability of guidance in circumstances where guidance would be valuable.
Responses to Comments As stated in the Proposed Rule, the 2018 Statement was intended to focus on the appropriate use of supervisory guidance in the supervisory process, rather than the standards for supervisory criticisms. The standards for issuing MRAs and other supervisory actions were, therefore, outside the scope of this rulemaking. For this reason, and for reasons discussed earlier, the final rule does not address the standards for MRAs or other supervisory actions. Similarly, because the OCC is not addressing its approach to supervisory criticism in the final rule, including any criticism related to reputation risk, the final rule does not address supervisory criticisms relating to reputation risk.
With respect to the comments on coverage of interpretive rules, the OCC
agrees with the commenter that interpretive rules do not, alone, have the force and effect of law and must be rooted in, and derived from, a statute or
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regulation.17 While interpretive rules and supervisory guidance are similar in lacking the force and effect of law, interpretive rules and supervisory guidance are distinct under the APA
and its jurisprudence and are generally issued for different purposes.18
Interpretive rules are typically issued by an agency to advise the public of the agencys construction of the statutes and rules that it administers,19 whereas general statements of policy, such as supervisory guidance, advise the public of how an agency intends to exercise its discretionary powers.20 To this end, guidance generally reflects an agencys policy views, for example, on safe and sound risk management practices. On the other hand, interpretive rules generally resolve ambiguities regarding requirements imposed by statutes and regulations. Because supervisory guidance and interpretive rules have different characteristics and serve different purposes, the OCC has decided that the final rule will continue to cover supervisory guidance only.
With respect to the question of whether to adopt ACUSs procedures for allowing the public to request reconsideration or revision of an interpretive rule, this rulemaking, again, does not address interpretive rules. As such, the OCC is not adding procedures for challenges to interpretive rules through this rulemaking.
17 See
Mortgage Bankers Association, 575 U.S. at
96.
18 Questions concerning the legal and supervisory nature of interpretive rules are case-specific and have engendered debate among courts and administrative law commentators. The OCC takes no position in this rulemaking on those specific debates. See, e.g., R. Levin, Rulemaking and the Guidance Exemption, 70 Admin. L. Rev. 263 2018
discussing the doctrinal differences concerning the status of interpretive rules under the APA; see also Nicholas R. Parillo, Federal Agency Guidance and the Powder to Bind: An Empirical Study of Agencies and Industries, 36 Yale J. Reg 165, 168 n.6 2019
whether interpretive rules are supposed to be nonbinding is a question subject to much confusion that is not fully settled; see also ACUS, Recommendation 20191, Agency Guidance Through Interpretive Rules Adopted June 13, 2019, available at https www.acus.gov/
recommendation/agency-guidance-throughinterpretive-rules noting that courts and commentators have different views on whether interpretive rules bind an agency and effectively bind the public through the deference given to agencies interpretations of their own rules under Auer v. Robbins, 519 U.S. 452 1997.
19 Mortgage Bankers Association, 575 U.S. at 97
citing Shalala v. Guernsey Memorial Hospital, 514
U.S. 87, 99 1995; accord Attorney Generals Manual at 30 n.3.
20 See Chrysler v. Brown, 441 U.S. at 302 n.31
quoting Attorney Generals Manual at 30 n.3; see also, e.g., American Mining Congress v. Mine Safety & Health Administration, 995 F.2d 1106, 1112 D.C.
Cir. 1993 outlining tests in the D.C. Circuit for assessing whether an agency issuance is an interpretive rule.

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