[Federal Register Volume 77, Number 222 (Friday, November 16, 2012)]
[Rules and Regulations]
[Pages 68680-68681]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-27857]
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FEDERAL RESERVE SYSTEM
12 CFR Part 263
[Docket No. R-1451]
Rules of Practice for Hearings
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Final rule.
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SUMMARY: The Board of Governors of the Federal Reserve System (the
Board) is amending its rules of practice and procedure to adjust the
amount of each civil money penalty (CMP) provided by law within its
jurisdiction to account for inflation. This action is required under
the Federal Civil Penalties Inflation Adjustment Act of 1990, as
amended by the Debt Collection Improvement Act of 1996.
DATES: This rule is effective November 16, 2012.
FOR FURTHER INFORMATION CONTACT: Katherine H. Wheatley, Associate
General Counsel (202) 452-3779, or Mehrnoush Bigloo, Attorney (202)
475-6361, Legal Division, Board of Governors of the Federal Reserve
System, 20th and C Streets NW., Washington, DC 20551. For users of
Telecommunication Device for the Deaf (TDD) only, contact (202) 263-
4869.
SUPPLEMENTARY INFORMATION:
Federal Civil Penalties Inflation Adjustment Act
The Federal Civil Penalties Inflation Adjustment Act of 1990, 28
U.S.C. 2461 note (``FCPIA Act'' or the ``Act''), as amended by the Debt
Collection Improvement Act of 1996, requires Federal agencies to
adjust, by regulation, the CMPs within their jurisdiction by a
prescribed inflation adjustment at least once every four years. The
Board made its last adjustment to its CMPs on October 6, 2008, see 73
FR 58,032, and on September 13, 2011, it incorporated into its
regulation the penalties applicable to savings and loan holding
companies over which it obtained supervisory authority pursuant to
section 312 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act, see 76 FR 56,604. The Board is issuing this final rule
pursuant to the FCPIA Act to set forth the newly-adjusted CMPs which
will apply to violations that occur after the rule's effective date.
The FCPIA Act defines the inflation adjustment as a cost-of-living
adjustment based on the percentage change in the Consumer Price Index
between June of the calendar year in which the particular CMP was last
set or adjusted and June of the calendar year preceding the current
adjustment (in this case, June 2011). The Act specifies the use of the
Consumer Price Index for All Urban Consumers (CPI-U) published by the
Department of Labor. Accordingly, to obtain the percent inflation
adjustment for each CMP within the Board's jurisdiction, we calculated
the percent change in the CPI-U between June of the year in which the
CMP was last adjusted and June 2011.\1\ Then, using the relevant
percent inflation adjustment, we calculated the inflation increase for
each CMP.\2\ The Act requires the rounding of any calculated increase
pursuant to the method prescribed in Section 5(a) of the Act.\3\ In the
case of the majority of the Board's CMPs, the calculated increase was
rounded down to zero, resulting in no adjustment to the CMP. These
unadjusted penalties include the penalty for certain late, false or
misleading reports under 12 U.S.C. 324, the first and second tier
penalties under 12 U.S.C. 504, 505, 1817(j)(16), 1818(i)(2), and
1972(2)(F), the penalties under 12 U.S.C. 1820(k)(6)(A)(ii), 1832(c),
1847(b), 3110(a), 334, 374a, 1884, 3909(d), 1467a(i)(2), 1467a(i)(3),
and 1467a(r)(2), the second tier penalties under 12 U.S.C. 1847(d) and
3110(c), the penalties under 15 U.S.C.
[[Page 68681]]
78u-2(b)(1) and (2), and the penalty for a natural person under 15
U.S.C. 78u-2(b)(3). The penalties that are not adjusted at this time
because of this rounding formula will be subject to adjustment at the
next adjustment cycle to take account of the entire period since their
last adjustment.
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\1\ This resulted in a 3.2 percent inflation adjustment for
penalties that were last adjusted in 2008, a 19 percent inflation
adjustment for penalties that were last adjusted in 2004, a 30.9
percent inflation adjustment for penalties that were last adjusted
in 2000, and a 44 percent inflation adjustment for penalties that
were last adjusted in 1996.
\2\ Because the Biggert-Waters Flood Insurance Reform Act of
2012, Public Law 112-141, 126 Stat. 405, amended 42 U.S.C.
4012a(f)(5) by increasing the CMP for each violation under 42 U.S.C.
4012a(f) to $2,000, the Board did not calculate an inflation
adjustment for this CMP. It should also be noted that the amendment
to 42 U.S.C. 4012a(f)(5) removed the $100,000 calendar-year limit on
penalties assessed against any regulated lending institution or
enterprise.
\3\ Section 5(a) of the Act requires that any calculated
increase be rounded to the nearest multiple of: $10 in the case of
penalties less than or equal to $100; $100 in the case of penalties
greater than $100 but less than or equal to $1,000; $1,000 in the
case of penalties greater than $1,000 but less than or equal to
$10,000; $5,000 in the case of penalties greater than $10,000 but
less than or equal to $100,000; $10,000 in the case of penalties
greater than $100,000 but less than or equal to $200,000; and
$25,000 in the case of penalties greater than $200,000. 28 U.S.C.
2461 note, Sec. 5(a).
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The following is an example of the methodology for adjusting CMPs,
using the penalty for a first tier violation of 12 U.S.C. 1847(d).
First, because that CMP was last adjusted in 2000, we calculated the
percent increase between the CPI-U for June 2000 (172.4) and the CPI-U
for June 2011 (225.72). We then took that percentage (30.9%) and
multiplied it by the current CMP amount of $2,200 to obtain an
inflation increase of $679.80. Because the current CMP amount is
greater than $1,000 but less than $10,000, the Act requires us to round
the inflation increase to the nearest multiple of $1,000. Rounding
$679.80 to the nearest multiple of $1,000 yields $1,000. Accordingly,
the increase to the $2,200 penalty for a first tier violation of 12
U.S.C. 1847(d) is $1,000, resulting in an adjusted CMP of $3,200.
Administrative Procedure Act
This rule is not subject to the provisions of the Administrative
Procedure Act (APA), 5 U.S.C. 553, requiring notice, public
participation, and deferred effective date. The FCPIA Act provides
Federal agencies with no discretion in the adjustment of CMPs to the
rate of inflation, and it also requires that adjustments be made at
least every four years. Moreover, this regulation is ministerial and
technical. For these reasons, the Board finds good cause to determine
that public notice and comment for this new regulation is unnecessary,
impracticable, and contrary to the public interest, pursuant to the
APA, 5 U.S.C. 553(b)(3)(B). These same reasons also provide the Board
with good cause to adopt an effective date for this regulation that is
less than 30 days after the date of publication in the Federal
Register, pursuant to the APA, 5 U.S.C. 553(d)(3).
Regulatory Flexibility Act
The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., applies only
to rules for which an agency publishes a general notice of proposed
rulemaking. Because the Board has determined for good cause that a
notice of proposed rulemaking for this rule is unnecessary, the
Regulatory Flexibility Act does not apply to this final rule.
Paperwork Reduction Act
There is no collection of information required by this final rule
that would be subject to the Paperwork Reduction Act of 1995, 44 U.S.C.
3501 et seq.
List of Subjects in 12 CFR Part 263
Administrative practice and procedure, Claims, Crime, Equal Access
to Justice, Lawyers, Penalties.
Authority and Issuance
For the reasons set forth in the preamble, the Board of Governors
amends 12 CFR part 263 as follows:
PART 263--RULES OF PRACTICE FOR HEARINGS
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1. The authority citation for part 263 continues to read as follows:
Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 248, 324, 504, 505,
1464, 1467, 1467a, 1468, 1817(j), 1818, 1820(k), 1828(c), 1829(e),
1831o, 1831p-1, 1847(b), 1847(d), 1884(b), 1972(2)(F), 3105, 3107,
3108, 3349, 3907, 3909, 4717; 15 U.S.C. 21, 78(1), 78o-4, 78o-5,
78u-2; 28 U.S.C. 2461 note; 31 U.S.C. 5321; and 42 U.S.C. 4012a.
0
2. Section 263.65 is revised to read as follows:
Sec. 263.65 Civil penalty inflation adjustments.
(a) Inflation Adjustments. In accordance with the Federal Civil
Penalties Inflation Adjustment Act of 1990, 28 U.S.C. 2461 note, the
Board has set forth in paragraph (b) of this section the adjusted
maximum amounts for each civil money penalty provided by law within the
Board's jurisdiction. The authorizing statutes contain the complete
provisions under which the Board may seek a civil money penalty. The
adjusted civil money penalties apply only to violations occurring after
the effective date of this rule.
(b) Maximum civil money penalties. The maximum civil money
penalties as set forth in the referenced statutory sections are as
follows:
(1) 12 U.S.C. 324:
(i) Inadvertently late, false or misleading reports, inter alia--
$3,200.
(ii) Other late, false or misleading reports, inter alia--$32,000.
(iii) Knowingly or recklessly false or misleading reports, inter
alia--$1,425,000.
(2) 12 U.S.C. 504, 505, 1817(j)(16), 1818(i)(2) and 1972(2)(F):
(i) First tier--$7,500.
(ii) Second tier--$37,500.
(iii) Third tier--$1,425,000.
(3) 12 U.S.C. 1820(k)(6)(A)(ii)--$275,000.
(4) 12 U.S.C. 1832(c)--$1,100.
(5) 12 U.S.C. 1847(b), 3110(a)--$37,500.
(6) 12 U.S.C. 1847(d), 3110(c):
(i) First tier--$3,200.
(ii) Second tier--$32,000.
(iii) Third tier--$1,425,000.
(7) 12 U.S.C. 334, 374a, 1884--$110.
(8) 12 U.S.C. 3909(d)--$1,100.
(9) 15 U.S.C. 78u-2:
(i) 15 U.S.C. 78u-2(b)(1)--$7,500 for a natural person and $70,000
for any other person.
(ii) 15 U.S.C. 78u-2(b)(2)--$70,000 for a natural person and
$350,000 for any other person.
(iii) 15 U.S.C. 78u-2(b)(3)--$140,000 for a natural person and
$700,000 for any other person.
(10) 42 U.S.C. 4012a(f)(5)--$2,000.
(11) 12 U.S.C. 1467a(i):
(i) 12 U.S.C. 1467a(i)(2)--$32,500.
(ii) 12 U.S.C. 1467a(i)(3)--$32,500.
(12) 12 U.S.C. 1467a(r):
(i) 12 U.S.C. 1467a(r)(1)--$3,200.
(ii) 12 U.S.C. 1467a(r)(2)--$32,500.
(iii) 12 U.S.C. 1467a(r)(3)--$1,425,000.
By order of the Board of Governors of the Federal Reserve
System, November 9, 2012.
Robert deV. Frierson,
Secretary of the Board.
[FR Doc. 2012-27857 Filed 11-15-12; 8:45 am]
BILLING CODE 6210-01-P