[Federal Register Volume 80, Number 135 (Wednesday, July 15, 2015)]
[Rules and Regulations]
[Pages 41432-41436]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-17179]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 200

[Release No. 34-75388; File No. S7-07-14]
RIN 3235-AL58


Freedom of Information Act Regulations: Fee Schedule, Addition of 
Appeals Time Frame, and Miscellaneous Administrative Changes

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: The Securities and Exchange Commission (``Commission'') is 
adopting amendments to its regulations under the Freedom of Information 
Act (``FOIA'') to allow the Commission to collect fees that reflect its 
actual costs, add an appeals time frame that will create a more 
practical and systematic administrative process and clarify other 
issues in the regulations.

DATES: Effective Date: August 14, 2015.

FOR FURTHER INFORMATION CONTACT: John Livornese, FOIA/PA Officer, 
Office of FOIA Services, (202) 551-3831; Securities and Exchange 
Commission, 100 F Street NE., Washington, DC 20549-5041.

SUPPLEMENTARY INFORMATION: The Commission is adopting amendments to

[[Page 41433]]

its FOIA regulations at 17 CFR 200.80 and 17 CFR 200.80e.

I. Introduction

    On June 20, 2014 the Commission proposed amendments to its 
regulations under the Freedom of Information Act.\1\ The proposed 
amendments would amend the Commission's FOIA fee schedule for searching 
and reviewing records; establish an appeals time frame; allow for 
submission of appeals by additional methods; and allow the Commission's 
Office of FOIA Services to issue responses to FOIA requests indicating 
that no records were located. The proposing release requested comment 
on all aspects of the proposal.
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    \1\ See Freedom of Information Act Regulations: Fee Schedule, 
Addition of Appeal Time Frame and Miscellaneous Administrative 
Changes, Release No. 34-72440 (June 20, 2014), 79 FR 36443 (June 27, 
2014).
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    The Commission received three comments regarding the proposed 
amendments to its regulations under the Freedom of Information Act.\2\ 
One commenter wholly supported the Commission's amendment of the 
regulations related to its FOIA fee schedule. The other two commenters 
disagreed with the proposed time frame for FOIA appeals, and one also 
objected to the proposed fee amendments. The comments are discussed in 
more detail below. In adopting this final rule, the Commission has 
reviewed and considered all of the comments received.
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    \2\ See letter from Sheldon Mark Patnett (July 14, 2014) (the 
Patnett letter); letter from the National Archives and Records 
Administration's Office of Government Information Services (July 28, 
2014) (the OGIS letter), and letter from David K. Colapinto of Kohn, 
Kohn & Colapinto, LLP (July 28, 2014) (the Colapinto letter).
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II. Discussion of the Final Rules

    As discussed in further detail below, the Commission is adopting 
the rules largely as proposed, with the exception of the provision 
concerning the FOIA appeals time frame, which has been revised in 
response to comments received.

A. Changes to Fee Regulations

    The fees the Commission charges for searching, reviewing, and 
duplicating records pursuant to FOIA requests are currently set forth 
in 17 CFR 200.80e, Appendix E--Schedule of fees for records services. 
The Commission is updating the fee schedule for searching and reviewing 
records in accordance with Uniform Freedom of Information Act Fee 
Schedule and Guidelines promulgated by the Office of Management and 
Budget.\3\
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    \3\ See 52 FR 10011 (March 27, 1987).
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    The OMB Guidelines, pursuant to the Freedom of Information Reform 
Act of 1986, require that each agency's fees be based upon its ``direct 
reasonable operating costs of providing FOIA services.'' \4\ The 
guidelines state that ``[a]gencies should charge fees that recoup the 
full allowable direct costs they incur.'' \5\ Direct costs include 
``the salary of the employee performing work (the basic rate of pay for 
the employee plus 16 percent of that rate to cover benefits).'' \6\ OMB 
recognized that costs would necessarily vary from agency to agency and 
directed that each agency promulgate regulations specifying the charges 
for search, review, and duplication. The OMB Guidelines state that 
``agencies should charge at the salary rate[s] [i.e. basic pay plus 16 
percent] of the employee[s] making the search'' or, ``where a 
homogeneous class of personnel is used exclusively . . . agencies may 
establish an average rate for the range of grades typically involved.'' 
\7\
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    \4\ Id. at 10015.
    \5\ Id. at 10018.
    \6\ Id. at 10017.
    \7\ Id. at 10018.
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    The Commission's current regulation contains set rates for FOIA 
request search and review activities: $16/hour for grade 11 and below; 
and $28/hour for grade 12 and above. The Commission proposed to revise 
this regulation to reflect the formula contained in the OMB Guidelines 
(basic pay plus 16 percent) rather than setting forth a fixed price. 
The proposal would establish a representative rate for each of the 
three different groups of grades typically involved: Personnel in 
grades SK-8 or below; personnel in grades SK-9 to SK-13; and personnel 
in grades SK-14 or above.\8\ The Commission's Web site will contain 
current rates for search and review fees for each class. The rates will 
be updated as salaries change and will be determined by using the 
formula in the regulation. For the current calendar year, the fees 
would be assessed as follows: SK-8 or below: $29/hour; SK-9 to 13: $61/
hour; and SK-14 or above: $89/hour.\9\ The proposed regulation would 
allow the Commission to charge FOIA requesters in quarter-hour 
increments at the rates established by reference to the OMB 
Guidelines.\10\ The Commission also proposed to remove the first 
sentence of 17 CFR 200.80(e)(1) which provides that up to one half hour 
of staff time devoted to searching for and reviewing Commission records 
will be provided without charge.
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    \8\ In the proposing release, while the preamble set forth these 
three groupings, the draft rule text erroneously listed the 
groupings as: Grades SK-9 or below; Grades SK-10 to SK-14; and 
Grades SK-15 or above. That was a typographical error and was 
inconsistent with the text of the preamble of the proposal. Only one 
commenter addressed the specific amount of the fees, and in making 
its comment, that commenter used the correct grouping as stated in 
the preamble of the proposing release.
    \9\ The SK-8 and below rate is estimated using the maximum and 
minimum annual salary of a Washington, DC-based SK-6 staffer. For 
2014 this is [($41,619 + $63,307)/2][1/2087 hours per year][1.16 OMB 
markup factor] = $29 per hour. Similarly, the SK-9 through SK-13 
category is estimated by using the maximum and minimum annual salary 
of a Washington, DC-based SK-12 staffer, who typically does most of 
the work of a FOIA request. For 2014 this is [($82,037 + $138,211)/
2][1/2087 hours/year][1.16 OMB markup factor] = $61/hour. Finally, 
the SK-14 and above category is estimated by using the maximum and 
minimum salary of a Washington, DC-based SK-15 supervisor. For 2014 
this is [($118,743 + $200,033)/2][1/2087 hours per year][1.16 OMB 
markup factor] = $89/hour.
    \10\ As per the OMB Guidelines, fees for searches of 
computerized records will continue to be based on the actual cost to 
the Commission which includes machine and operator time. 17 CFR 
200.80(e)(9)(i).
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    One commenter asserted, without providing any data, that increasing 
FOIA fees would make it more difficult for individuals to obtain 
information from the SEC and will ``put the FOIA process out of reach 
of the average citizen.'' \11\ All changes to the Commission's FOIA fee 
schedule are in conformity with the FOIA and guidance set forth by the 
Office of Management and Budget. The OMB Guidelines, pursuant to the 
Freedom of Information Reform Act of 1986, require that each agency's 
fees be based upon its ``direct reasonable operating costs of providing 
FOIA services.'' The Commission has not increased its fees for 
processing FOIA requests in over 20 years, despite increased costs to 
the agency.
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    \11\ See Colapinto letter.
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    Under the proposal, fees would not be charged under either the FOIA 
or the Privacy Act where the costs of collecting and processing the fee 
are likely to equal or exceed the amount of the fee or where the 
requester has met the requirements for a statutory fee waiver. The new 
language is based upon that of 5 U.S.C. 552(a)(4)(A)(iv) (providing 
that no fee may be charged if the fee exceeds the costs of collecting 
and processing the fee). No comments addressed this provision, and the 
Commission is adopting the amendments as proposed. Currently, the cost 
of the average fee collection activity is $20, so no fee will be 
charged of $20 or less.
    One commenter also recommended that the Commission allow documents 
to be released generally without any charge or at a reduced charge at 
its discretion and/or if disclosure of the information is in the public 
interest

[[Page 41434]]

because it is likely to contribute significantly to public 
understanding of the operations or activities of the government and is 
not primarily in the commercial interest of the requester.\12\ 17 CFR 
200.80(e)(4)(i) allows the Commission's Office of Freedom of 
Information and Privacy Act [Services] to waive or reduce search, 
review, and duplication fees if: (1) Disclosure of the requested 
records is in the public interest because it is likely to contribute 
significantly to public understanding of the operations or activities 
of the government; and (2) Disclosure is not primarily in the 
commercial interest of the requester. Thus, much of what the commenter 
suggested is already allowed by existing rules. Possible changes to 
that section, including allowing for purely discretionary waivers or 
reduction of fees as suggested by the commenter, are not the subject of 
this rulemaking. This portion of the rule will be adopted as proposed.
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    \12\ See OGIS letter.
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B. Changes to FOIA Appeals Time Frames

    The FOIA requires federal agencies to notify requesters of their 
right to appeal any adverse determination. 5 U.S.C. 552(a)(6)(A)(i). 
Although the FOIA does not require agencies to establish an appeals 
time frame, neither does it preclude them from doing so. The Commission 
proposed to establish an appeals time frame of 30 days in order to 
allow more efficient and improved appeals processing by the 
Commission's Office of the General Counsel. Under the proposal, an 
appeal from an adverse decision ``must be received within thirty (30) 
calendar days of the date of the adverse decision.'' The proposing 
release noted that the implementation of a 30 day appeals time frame is 
consistent with the practices of a number of other federal agencies. 
Commission staff has reviewed the practices at twenty-two separate 
federal agencies. Of these, ten have a FOIA appeals time frame of 30 
days, one has a 30 business day time frame, one has a 35 day time 
frame, two have a 45 day time frame, seven have a 60 day time frame and 
one has a 90 day time frame.\13\
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    \13\ Independent financial agencies comparable to the SEC (CFTC 
and FTC) have 30 calendar day appeals time frames. The FDIC has a 30 
business day appeals time frame.
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    Two comment letters opposed the 30 day time frame. One suggested 
that the Commission consider allowing a 60 day time frame for 
appeals.\14\ The sole reason offered was the commenter's observation 
that mail screening by Federal agencies can slow the amount of time it 
takes appeals to reach their destination. Another commenter similarly 
objected to the imposition of a 30 day time frame in which to file an 
appeal as too short and asserted that it ``does not afford individuals 
(such as whistleblowers and individual investors) sufficient time to 
find legal representation or to file a substantive appeal.'' \15\ The 
commenter also noted that the likelihood of missing the 30 day deadline 
``is high.''
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    \14\ See OGIS letter.
    \15\ See Colapinto letter.
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    In response to these concerns, the Office of FOIA Services staff 
referred to the above-referenced review of the FOIA appeals procedures 
at twenty-two federal agencies. It was noted that over half of those 
agencies have appeals time frames longer than 30 days. To permit FOIA 
requesters ample opportunity to fully address any complex issues 
related to their appeal, the Commission has determined to adopt a 90 
day time frame for filing an appeal. The longer time frame should also 
obviate any concerns about delays resulting from mail screening. The 90 
day time frame being adopted today is among the longest of those 
identified at other federal agencies. Accordingly, the Commission 
believes that an appeals time frame of 90 days is appropriate.

C. Submission of FOIA Appeals by Email and Facsimile

    The Commission proposed to revise 17 CFR 200.80(d)(6)(ii) to allow 
appeals to be submitted by facsimile or email as well as through the 
mail. No commenter addressed this issue, and the Commission is adopting 
it as proposed.

D. Responses to FOIA Requests Indicating No Records Could Be Located

    The Commission proposed to amend 17 CFR 200.80(d)(5)(i) by adding a 
sentence to provide for responses to FOIA requests that indicate that 
no responsive records were located.\16\ This proposed amendment would 
make clear that a possible response to a FOIA request is that no 
responsive records could be located. No commenter addressed this issue, 
and the new sentence would be adopted as proposed.
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    \16\ The draft amended rule text of 17 CFR 200.80(d)(5)(i) 
published in the proposed rule inadvertently omitted the penultimate 
sentence from existing paragraph (d)(5)(i). That language is 
included in amendatory text of this final rule.
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III. Economic Analysis

    The Commission is sensitive to the economic effects, including the 
costs and benefits, that result from its rules, and Section 23(a)(2) of 
the Exchange Act requires the Commission, in making rules pursuant to 
any provision of the Exchange Act, to consider among other matters the 
impact any such rule would have on competition.
    As the Commission explained in the proposal, the rules are intended 
to help align the Commission's fees related to FOIA requests with its 
direct reasonable operating costs of providing FOIA services and to 
allow more efficient processing of requests. In the proposal, the 
Commission explained that although the Commission believed that the 
proposed rules were unlikely to have a significant impact on the 
economy, the proposed rules would benefit the Commission and the 
public. In particular, compared to the baseline, which includes the 
current fee structure outlined above, the Commission believed that the 
proposed rules would permit the Commission to charge fees that more 
closely reflect the direct costs the Commission incurs to provide FOIA 
services. Additionally, as the Commission explained, the proposed rules 
would provide increased flexibility to FOIA requesters by expressly 
permitting appeals by email and facsimile and would also improve 
efficiency in the appeal process by establishing a time frame for FOIA 
appeals that, in light of potential alternatives, is consistent with 
the practice of other federal agencies.
    The Commission also recognized in the proposal that the proposed 
rules may impose costs. Specifically, the Commission explained that the 
proposed rules may impose additional costs on individuals who wish to 
obtain access to Commission records and may impose a burden on 
requesters who would be required to appeal a decision within 30 days. 
The Commission noted, however, that those costs would be insignificant. 
Additionally, the Commission noted that the proposed rules would not 
burden competition and that the Commission believed that any potential 
burden on competition imposed by the proposed rules would be 
appropriate in furtherance of purposes of the Exchange Act.
    The Commission requested comment on all aspects of the benefits and 
costs of the proposal, including any anticipated impacts on 
competition. No commenter addressed the economic analysis contained in 
the proposal, although, as discussed above, one commenter noted that 
the proposed rules would increase costs for FOIA requesters. After 
reviewing the comments, the Commission continues to believe that the 
rules will result in the economic effects described in the proposal and 
notes that the 90 day appeal time frame will likely impose

[[Page 41435]]

less of a burden on requesters compared to the proposed 30 day time 
frame. In addition, the Commission continues to believe that the rules 
will have a minimal economic effect and that any potential burden on 
competition imposed by the amended rules would be appropriate in 
furtherance of purposes of the Exchange Act.

IV. Regulatory Flexibility Act Certification

    Pursuant to Section 605(b) of the Regulatory Flexibility Act,\17\ 
the Commission certified that, when adopted, the amendments to 17 CFR 
200.80 would not have a significant economic impact on a substantial 
number of small entities. This certification, including our basis for 
the certification, was included in the proposing release. The 
Commission solicited comments on the appropriateness of its 
certification, but received none. The Commission is adopting the final 
rules as proposed. Accordingly, there have been no changes to the 
proposal that would alter the basis upon which the certification was 
made.
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    \17\ 5 U.S.C. 605(b).
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V. Other Administrative Law Matters

    These amendments do not contain any collection of information 
requirement as defined by the Paperwork Reduction Act of 1995, as 
amended.\18\
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    \18\ 44 U.S.C. 3501-3520.
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VI. Statutory Authority and Text of Rule Amendments

    The amendments contained herein have been made under the authority 
set forth in 5 U.S.C. 552 and 15 U.S.C. 78d-1.

List of Subjects in 17 CFR Part 200

    Administrative practice and procedure, Freedom of information.

Text of Amendments

    For the reasons stated in the preamble, title 17, chapter II of the 
Code of Federal Regulations is amended as follows:

PART 200--ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION AND 
REQUESTS

Subpart D--Information and Requests

0
1. The authority citation for part 200, subpart D, is revised to read, 
in part, as follows:

    Authority: 5 U.S.C. 552, as amended, 15 U.S.C. 77f(d), 77s, 
77ggg(a), 77sss, 78m(F)(3), 78w, 80a-37, 80a-44(a), 80a-44(b), 80b-
10(a), and 80b-11, unless otherwise noted.
* * * * *

0
2. Amend Sec.  200.80 by:
0
a. Revising paragraphs (d)(5)(i), (d)(6)(i) and (ii), and (e) 
introductory text; and
0
b. Removing the first sentence of paragraph (e)(1).
    The revisions read as follows:


Sec.  200.80  Commission records and information.

* * * * *
    (d) * * *
    (5) Initial determination; multi-track processing, and denials--(i) 
Time within which to respond. When a request complies with the 
procedures in this section for requesting records under the Freedom of 
Information Act, a response shall be sent within 20 business days from 
the date the Office of FOIA Services receives the request, except as 
described in paragraphs (d)(5)(ii) and (iii) of this section. If that 
Office has identified the requested records, the response shall state 
that the records are being withheld, in whole or in part, under a 
specific exemption or are being released. If that Office cannot locate 
any requested records, the response shall advise the requester 
accordingly.
* * * * *
    (6) * * *
    (i) Time limits and content of appeal. Appeals shall be clearly and 
prominently identified at the top of the first page with the legend 
``Freedom of Information Act Appeal'' and shall provide the assigned 
request number. Copies of the request and the SEC's response, if any, 
should be included with the appeal. If an appeal is from an adverse 
decision, it must be received within ninety (90) calendar days of the 
date of the adverse decision. If only a portion of the decision is 
appealed, the requester must specify which part of the decision is 
being appealed. An appeal from an adverse decision should also identify 
the name of the deciding official, the date of the decision, and the 
precise subject matter of the appeal. An appeal is not perfected until 
the SEC receives the information identified in this paragraph 
(d)(6)(i).
    (ii) How to file and address a written appeal. The appeal must be 
sent to both the General Counsel and the Office of FOIA Services at 100 
F Street NE., Washington, DC 20549. The SEC accepts facsimiles (faxes) 
and emails as written FOIA appeals. Information regarding where to fax 
or email a FOIA appeal is available on the SEC's FOIA home page on the 
Commission's Web site at http://www.sec.gov/foia.shtml. A legible 
return address must be included with the FOIA appeal. The requester may 
also include other contact information, such as a telephone number and/
or an email address.
* * * * *
    (e) Fees for records services. Information pertaining to search and 
review services, including locating, reviewing, and making records 
available, attestations and copying, appears in appendix E to this 
subpart, Sec.  200.80e. A schedule of fees is located at the 
Commission's Web site at http://www.sec.gov/foia/feesche.htm.
* * * * *

0
3. Amend Sec.  200.80e by:
0
a. Adding introductory text; and
0
b. Revising the paragraph that begins, ``Search and review services:''.
    The addition and revision read as follows:


Sec.  200.80e  Appendix E--Schedule of fees for records services.

    The requester will be charged search, review, and duplication fees 
according to his or her fee category. In addition, the SEC will charge 
the requester for any special handling or services performed in 
processing the request and/or appeal. Duplication fees also are 
applicable to records provided in response to requests made under the 
Privacy Act. Fees will not be charged under either the FOIA or the 
Privacy Act where the costs of collecting and processing the fee are 
likely to equal or exceed the amount of the fee or where the requester 
has met the requirements for a statutory fee waiver. Fees will be 
determined as follows:
    Search and review services (review applies to commercial-use 
requesters only): (1) The Commission will establish and charge average 
rates for the groups of grades typically involved in search and review. 
Those groups will consist of employees at:
    (i) Grades SK-8 or below;
    (ii) Grades SK-9 to SK-13; and
    (iii) Grades SK-14 or above.
    (2) The average rates will be based on the hourly salary (i.e., 
basic salary plus locality payment), plus 16 percent for benefits, of 
employees who routinely perform those services. Fees will be charged in 
quarter-hour increments. The average hourly rates are listed on the 
Commission's Web site at http://www.sec.gov/foia/feesche.htm and will 
be updated as salaries change.
* * * * *

    By the Commission.


[[Page 41436]]


    Dated: July 8, 2015.
Brent J. Fields,
Secretary.
[FR Doc. 2015-17179 Filed 7-14-15; 8:45 am]
 BILLING CODE 8011-01-P