B-151995, AUGUST 1, 1963, 43 COMP. GEN. 110

B-151995: Aug 1, 1963

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WHICH PROCESSING IS NOT ONLY TIME CONSUMING BUT REQUIRES SPECIAL EQUIPMENT TO PRODUCE THE COPIES. WHICH IS ADMISSIBLE UNDER 28 U.S.C. 1732 (B). YOUR OFFICE HAD QUESTIONED THE PROPRIETY OF PAYING A PART OF THESE EXPENSES WHICH ARE INCIDENT TO THE EXTRA LABOR AND EQUIPMENT REQUIRED FOR PROCESSING WHERE THE RECORDS ARE PRESERVED ON MICROFILM. WHERE A BANK IS RELUCTANT TO RELEASE THE ORIGINAL RECORD YOUR AGENCY PAYS A REASONABLE CHARGE FOR PHOTOSTATIC COPIES OF THE RECORDS. YOUR INVESTIGATORS HAVE FOUND THAT MANY BANK RECORDS ARE ON MICROFILM AND A TIME CONSUMING SCREENING PROCESS IS INVOLVED PRIOR TO THE RECORDS BEING AVAILABLE FOR PHOTOSTATING. IT IS YOUR CONTENTION. YOU POINT TO TWO DECISIONS OF THIS OFFICE WHEREIN IT IS RECOGNIZED THAT EXPENSES INCURRED BY THE PARTY IN COMPLYING WITH A SUBPOENA DUCES TECUM ISSUED ON BEHALF OF THE GOVERNMENT MAY BE PAID ON THE BASIS THAT SUCH EXPENSES ARE NECESSARY AND INCIDENT TO THE PROCUREMENT OF THE DOCUMENTARY EVIDENCE CALLED FOR BY THE SUBPOENA AND NEEDED BY THE GOVERNMENT (1 COMP.

B-151995, AUGUST 1, 1963, 43 COMP. GEN. 110

RECORDS - MICROFILM, ETC. - EXPENSES IN PREPARING FOR GOVERNMENT USE BY NONLITIGANTS THE SCREENING AND PROCESSING OF MICROFILM RECORDS OF A BANK IN COMPLIANCE WITH A SUBPOENA DUCES TECUM FOR DOCUMENTARY EVIDENCE TO BE USED BY THE GOVERNMENT IN AN ADMINISTRATIVE OR JUDICIAL PROCEEDING NOT INVOLVING THE BANK, WHICH PROCESSING IS NOT ONLY TIME CONSUMING BUT REQUIRES SPECIAL EQUIPMENT TO PRODUCE THE COPIES, PLACES A FINANCIAL BURDEN ON THE BANK FOR THE BENEFIT OF THE GOVERNMENT AND, THEREFORE, REASONABLE EXPENSES INCIDENT TO THE PREPARATION OF REPRODUCTIONS OBTAINED FROM MICROFILM, WHICH IS ADMISSIBLE UNDER 28 U.S.C. 1732 (B), MAY BE PAID FROM APPROPRIATED FUNDS OF THE AGENCY CONDUCTING THE INVESTIGATION.

TO ARTHUR KICSAR, SECURITIES AND EXCHANGE COMMISSION, AUGUST 1, 1963:

YOUR LETTER OF JULY 2, 1963, FORWARDED FOR OUR CONSIDERATION A QUESTION CONCERNING THE PAYMENT OF A CLAIM PRESENTED BY THE FIRST STATE BANK, ABILENE, TEXAS IN THE AMOUNT OF $48.50 FOR REIMBURSEMENT OF SERVICES RENDERED BY THE BANK DURING AN INVESTIGATION CONDUCTED BY THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION. YOUR OFFICE HAD QUESTIONED THE PROPRIETY OF PAYING A PART OF THESE EXPENSES WHICH ARE INCIDENT TO THE EXTRA LABOR AND EQUIPMENT REQUIRED FOR PROCESSING WHERE THE RECORDS ARE PRESERVED ON MICROFILM.

YOU INDICATED THE EXPENSE IN QUESTION RESULTED FROM AN INVESTIGATION ACTIVITY OF YOUR COMMISSION WHICH MAY RESULT IN AN ADMINISTRATIVE HEARING OR CIVIL OR CRIMINAL TRIAL. IN THE COURSE OF THIS INVESTIGATION, CERTAIN EVIDENCE MUST BE OBTAINED FROM BANKS THROUGHOUT THE COUNTRY PERTAINING TO THE FINANCIAL ACTIVITIES OF THEIR CUSTOMERS FOR USE IN THE HEARING OR TRIAL. IN MOST INSTANCES THE INFORMATION MAY BE OBTAINED ONLY BY THE USE OF A SUBPOENA DUCES TECUM. WHERE A BANK IS RELUCTANT TO RELEASE THE ORIGINAL RECORD YOUR AGENCY PAYS A REASONABLE CHARGE FOR PHOTOSTATIC COPIES OF THE RECORDS. RECENTLY, YOUR INVESTIGATORS HAVE FOUND THAT MANY BANK RECORDS ARE ON MICROFILM AND A TIME CONSUMING SCREENING PROCESS IS INVOLVED PRIOR TO THE RECORDS BEING AVAILABLE FOR PHOTOSTATING. THE FIRST STATE BANK CONTENDS, WITH WHICH YOU AGREE, THAT PRODUCTION OF THE MICROFILM REPRESENTS FULL COMPLIANCE WITH THE SUBPOENA. IT IS YOUR CONTENTION, THEREFORE, THAT THE LABOR INCIDENT TO THE SCREENING OF THE MICROFILM TO OBTAIN THE SELECTED MATERIAL FOR PHOTOSTATING WOULD BE A PROPER ITEM OF EXPENSE.

YOU POINT TO TWO DECISIONS OF THIS OFFICE WHEREIN IT IS RECOGNIZED THAT EXPENSES INCURRED BY THE PARTY IN COMPLYING WITH A SUBPOENA DUCES TECUM ISSUED ON BEHALF OF THE GOVERNMENT MAY BE PAID ON THE BASIS THAT SUCH EXPENSES ARE NECESSARY AND INCIDENT TO THE PROCUREMENT OF THE DOCUMENTARY EVIDENCE CALLED FOR BY THE SUBPOENA AND NEEDED BY THE GOVERNMENT (1 COMP. GEN. 442 AND 8 ID. 19), BUT EXPRESS SOME DOUBT AS TO WHETHER IT WOULD BE WITHIN THE DISCRETION OF THE SECURITIES AND EXCHANGE COMMISSION TO ALLOW THE EXPENSE HERE INVOLVED.

THE PRACTICE OF MAINTAINING RECORDS IN BUSINESS OR PROFESSIONAL ACTIVITIES ON MICROFILM IS ONE WHICH HAS OF RECENT YEARS GAINED RECOGNITION AS BENEFICIAL AND DESIRABLE, PARTICULARLY, WHERE THE GENERATION OF DOCUMENTS IS LARGE AND STORAGE OF SUCH RECORDS MUST BE ACCOMPLISHED IN A MINIMUM OF SPACE. THE USE OF MICROFILM RECORDS PERMITS THE DESTRUCTION OF THE ORIGINAL IN ORDER TO ACCOMPLISH ITS INTENDED PURPOSE OF REDUCING THE VOLUME OF RECORDS. WE FIND EVIDENCE OF THE ACCEPTANCE OF THIS PRACTICE IN THE FOLLOWING INSTANCE. THE SUBSTITUTION OF THE ENLARGED REPRODUCED COPIES OF BUSINESS AND PUBLIC RECORDS FROM THE MICROFILM HAS BEEN RECOGNIZED UNDER THE LAWS OF MANY OF THE STATES AND THE UNITED STATES AS TANTAMOUNT TO THE FURNISHING OF THE ORIGINAL RECORDS INSOFAR AS THEIR ADMISSIBILITY UNDER THE RULES OF EVIDENCE ARE CONCERNED. SEE ANNOTATIONS IN 76 ALR2D 1377 REGARDING THE UNIFORM PHOTOGRAPHIC COPIES OF BUSINESS AND PUBLIC RECORDS AS EVIDENCE ACT.

TITLE 28 U.S.C., SECTION 1732 (B) AUTHORIZES, IN JUDICIAL AND ADMINISTRATION PROCEEDINGS, THE RECOGNITION OF THE REPRODUCED COPY, WHEN SO IDENTIFIED, AS ADMISSIBLE IN EVIDENCE AS THE ORIGINAL ITSELF. WHILE THIS LAW PERMITS THE FURNISHING OF REPRODUCED COPIES FROM THE MICROFILM RECORDS IN LIEU OF THE ORIGINALS WHICH HAVE BEEN DESTROYED, THERE IS NOTHING CONTAINED THEREIN AS TO WHO IS TO BEAR THE COST OF FURNISHING THE PHOTOGRAPHIC COPIES. NOR IS THERE ANYTHING WHICH SHEDS ANY LIGHT ON THE QUESTION AS TO WHETHER COMPLIANCE WITH A SUBPOENA DUCES TECUM WOULD REQUIRE MORE THAN THE FURNISHING OF THE MICROFILM, SUCH AS THE SCREENING AND PROCESSING OF THE MICROFILM RECORDS. YOUR LETTER INDICATES THAT IN THE INSTANT CASE THE SCREENING OF THE MICROFILM MATERIAL TO OBTAIN THE SELECTED MATERIAL FOR PHOTOSTATING IS TIME CONSUMING REQUIRING THE USE OF SPECIAL EQUIPMENT TO PRODUCE THE REQUIRED COPIES. UNDER THESE CIRCUMSTANCES, THERE IS SUFFICIENT BASIS FOR DETERMINING THAT SUCH PROCESSING OF MICROFILM RECORDS PLACES A FINANCIAL BURDEN UPON THE BANK FOR THE BENEFIT OF THE FEDERAL GOVERNMENT. THIS OFFICE, IN 1 COMP. GEN. 442, RECOGNIZED THAT THE EXPENSES INCIDENT TO COMPLIANCE WITH A SUBPOENA DUCES TECUM WHEN BURDENSOME TO THE PARTY TO WHOM DIRECTED AND SUCH PARTY IS NOT A PARTY TO THE SUIT OR PROCEEDING, SHOULD BE BORNE BY THE GOVERNMENT WHERE THE DOCUMENTS NEEDED WILL SERVE A GOVERNMENT PURPOSE. SEE ALSO FOX V. HOUSE, 27 F.SUPP. 673 AND SHEPHERD V. CASTLE, 20 F.R.D. 184, WHEREIN UNREASONABLE AND OPPRESSIVE COSTS OF COMPLYING WITH A SUBPOENA DUCES TECUM AS TO A NONLITIGANT PARTY WAS HELD TO BE A PROPER COST OF THE LITIGANT OR LITIGANTS INVOLVED.

UNDER THE CIRCUMSTANCES IN THIS CASE WHERE THE DOCUMENTS SUBPOENAED SERVE A GOVERNMENT PURPOSE AND WHERE REPRODUCTIONS OF SUCH RECORDS ARE OBTAINED FROM MICROFILM, AS RECOGNIZED UNDER THE PROVISIONS IN 28 U.S.C. 1732 (B), SUPRA, THIS OFFICE WILL NOT OBJECT TO THE REIMBURSEMENT BY THE GOVERNMENT, TO A PARTY NOT INVOLVED IN THE PROCEEDINGS AND TO WHOM A SUBPOENA IS ADDRESSED, FOR REASONABLE PROCESSING EXPENSES INCIDENT TO THE PREPARATION OF THE REPRODUCTIONS OF SUCH MICROFILM RECORDS. THE CLAIM OF THE FIRST STATE BANK OF ABILENE MAY BE PAID IN THE AMOUNT CLAIMED, IF OTHERWISE CORRECT.