Cost Reimbursement Under the RFPA

Government authorities requesting records under the RFPA are obligated to reimburse the financial institution from which the records are requested for costs associated with providing the records. Costs are those reasonably necessary and which have been directly incurred in searching for, reproducing, or transporting books, papers, records or other data required or requested to be produced. [12 USC 3415] The RFPA authorizes the Federal Reserve Board to issue regulations establishing the rates and conditions for the reimbursement. The Federal Reserve Board’s Regulation S (12 CFR 219.1 et seq.) does this.

Regulation S—general reimbursement rules

Regulation S allows for reimbursement of reasonably necessary costs directly incurred in searching for, reproducing or transporting books, papers, records, or other data. If a financial institution has financial records that are stored at an independent storage facility that charges a fee to search for, reproduce, or transport particular records requested, these costs are considered to be directly incurred by the financial institution and may be included in the reimbursement. [12 CFR 219.3(a)]

Directly incurred costs are broken down into three categories: (1) search and processing costs; (2) reproduction costs; and (3) transportation costs.

Search and processing costs are the costs of having persons locate, retrieve, reproduce, and prepare financial records for shipment. [12 CFR 219.3(b)(1)] These costs are reimbursed at a rate of $22 per hour for clerical/technical time, $30 per hour for manager/supervisory time, and $30 per hour for computer support specialist time. [12 CFR 219.3, Appendix A] Search and processing costs do not cover analysis of material or legal advice. [12 CFR 219.3(b)(1)] Search and processing costs may include the actual cost of retrieving information from a computer, if you separately itemize the computer time and necessary supplies. [12 CFR 219.3(b)(2)]

Reproduction costs are the costs incurred making copies of documents requested. Photocopies are reimbursed at the rate of 25 cents per page, as are paper copies of microfiche, per frame. Duplicate microfiches are reimbursed at 50 cents per microfiche. Computer storage media are reimbursed based on actual cost. [12 CFR 219.3, Appendix A] Photographs, films, and other materials not listed in Appendix A are reimbursed at actual cost. [12 CFR 219.3(c)]

Transportation or delivery costs include costs necessary for transporting people to locate and retrieve the information requested and costs to convey the requested material to the place of examination.

Exceptions to the reimbursement rules

Reimbursement is not available for costs incurred in responding to requests that are within the group of exceptions to coverage under the RFPA that we listed earlier. Here’s the complete list of requests for which Regulation S does not provide reimbursement.
  1. Security interests, bankruptcy claims, and collection of debts. Costs incurred by the financial institution in providing financial records to government authorities for the purpose of perfecting security interests, proving claims in bankruptcy, or collecting on debts are not reimbursable. [12 CFR 219.4(a)]
  2. Government loan programs. Costs incurred in supplying records to a government authority in connection with a government loan, loan guaranty, or loan insurance agreement are not reimbursable. [12 CFR 219.4(b)]
  3. Nonidentifiable information. Costs incurred in supplying records that are not identified with or identifiable as being derived from the financial records of a particular customer are not reimbursable. [12 CFR 219.4(c)]
  4. Financial Supervisory agencies. Costs incurred in supplying records to a financial supervisory agency in its supervisory, regulatory, or monetary functions with respect to a financial institution are not reimbursable. [12 CFR 219.4(d)]
  5. Internal Revenue Service summons. Costs incurred in supplying records to the IRS pursuant to procedures under the Internal Revenue Code are not reimbursable. [12 CFR 219.4(e)]
  6. Other federally required reports. Costs incurred in supplying records pursuant to other federal statutes (such as the Bank Secrecy Act) or rules are not reimbursable. [12 CFR 219.4(f)]
  7. Government civil or criminal litigation. Costs incurred in supplying records in connection with litigation to which both the government authority and the customer are parties are not reimbursable. [12 CFR 219.4(g)]
  8. Administrative agency subpoenas. Costs incurred in supplying records in response to an administrative agency subpoena issued by an administrative law judge in a proceeding to which both the government authority and the customer are parties are not reimbursable. [12 CFR 219.4(h)]
  9. Investigation of financial institution or its noncustomers. Costs incurred in supplying records of customers where the government authority’s investigation is directed at the financial institution or a noncustomer entity are not reimbursable. [12 CFR 219.4(i)]
  10. Requests from the General Accounting Office. Costs incurred in supplying records in response to a request from the General Accounting Office, pursuant to an investigation directed at a government authority, are not reimbursable. [12 CFR 219.4(j)]
  11. Federal Housing Finance Board requests. Costs incurred in supplying financial records or information sought by the Federal Housing Finance Board (FHFB) or any of the Federal Home Loan Banks in the exercise of the FHFB’s authority to extend credit to financial institutions or others are not reimbursable. [12 CFR 219.4(k)]
  12. Department of Veterans Affairs. The disclosure of the name and address of any customer to the Department of Veterans Affairs where such disclosure is necessary to, and used solely for, the proper administration of benefits programs under laws administered by that department is not reimbursable. [12 CFR 219.4(l)]

As you can see, these situations closely track the exceptions to coverage under the RFPA. However, the two lists are not identical, and so, if you have supplied records in a situation which is an exception from the general coverage of the RFPA but is not listed here, you should still be able to obtain cost reimbursement from the government authority.

Miscellaneous reimbursement rules

Maybe it goes without saying, but Regulation S provides that you can only be reimbursed for supplying records which were required or requested by the government authority. In other words, if you supply the government authority with more records than it requested, you will only be entitled to reimbursement for the costs related to the records that the government authority requested. [12 CFR 219.5(a)]

No reimbursement will be made unless you submit an itemized bill or invoice specifically detailing your search and processing, reproduction and transportation costs. Search and processing time must be billed in 15 minute increments [12 CRF 219.5(c)] The court or government authority must notify you about this requirement to submit the itemized bill or invoice, and must furnish you with an address for this purpose. [12 CFR 219.6(a)]

Costs will only be reimbursed to the extent that they are “reasonably necessary.” In making this determination, the three components of the total cost—search and processing costs, reproduction costs, and transportation costs—will be considered separately. In other words, your total bill will not be looked at to decide whether it is reasonable. Each component of your bill will be separately evaluated. [12 CFR 219.5(a)]

You will not be reimbursed until you have complied with the records request. However, if the request is withdrawn, or the customer successfully challenges the disclosure before you comply, you can be reimbursed for reasonable costs incurred in assembling the material requested. If the request is withdrawn, or the customer successfully challenges, the government authority is obligated to notify you promptly of that fact and tell you that you must submit an itemized bill or invoice to be reimbursed for costs incurred to that point. [12 CFR 219.6(b)]