[Federal Register Volume 78, Number 80 (Thursday, April 25, 2013)]
[Rules and Regulations]
[Pages 24336-24338]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-09807]


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FARM CREDIT ADMINISTRATION

12 CFR Part 622

RIN 3052-AC87


Rules of Practice and Procedure; Adjusting Civil Money Penalties 
for Inflation

AGENCY: Farm Credit Administration.

ACTION: Final rule.

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SUMMARY: This regulation implements inflation adjustments to civil 
money penalties (CMPs) that the Farm Credit Administration (FCA) may 
impose pursuant to the Farm Credit Act of 1971, as amended (Farm Credit 
Act), and pursuant to the Flood Disaster Protection Act of 1973, as 
amended by the National Flood Insurance Reform Act of 1994 (Reform 
Act), and further amended by the Biggert-Waters Flood Insurance Reform 
Act of 2012 (Biggert-Waters Act). The Federal Civil Penalties Inflation 
Adjustment Act of 1990, as amended by the Debt Collection Improvement 
Act of 1996 (Inflation Adjustment Act), requires all Federal agencies 
with the authority to impose CMPs to evaluate those CMPs periodically 
to ensure that they continue to maintain their deterrent value and 
promote compliance with the law.

DATES: This regulation is effective on July 1, 2013.

FOR FURTHER INFORMATION CONTACT: Michael T. Wilson, Policy Analyst, 
Office of Regulatory Policy, Farm Credit Administration, McLean, VA 
22102-5090, (703) 883-4124, TTY (703) 883-4056, or Nancy Tunis, Senior 
Attorney, Office of General Counsel, Farm Credit Administration, 
McLean, VA 22102-5090, (703) 883-4061, TTY (703) 883-4056.

SUPPLEMENTARY INFORMATION: 

I. Objective

    The objectives of this regulation are to:
     Adjust for inflation the maximum amount of CMPs that the 
FCA has jurisdiction to administer pursuant to the Farm Credit Act in 
accordance with the requirements of the Inflation Adjustment Act,\1\ 
and
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    \1\ 28 U.S.C. 2461 note.
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     Implement the provisions for the maximum amount of CMPs 
provided by the Biggert-Waters Act.\2\
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    \2\ Public Law 112-141, 126 Stat. 405 (July 6, 2012).
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II. Background

A. Federal Civil Penalties Inflation Adjustment Act of 1990, as Amended

    The Inflation Adjustment Act requires every Federal agency with 
authority to issue CMPs \3\ to enact regulations that adjust its CMPs 
pursuant to the inflation adjustment formula in section 5(b) of the 
Inflation Adjustment Act. Each Federal agency was required to issue 
these regulations by October 23, 1996, and, thereafter, to evaluate and 
adjust the CMPs when necessary, but at least once every 4 years. 
Section 6 of the amended Inflation Adjustment Act specifies that 
inflation-adjusted CMPs will apply only to violations that occur after 
the effective date of the adjustment. The inflation adjustment is based 
on the percentage increase in the Consumer Price Index (CPI).\4\ 
Specifically, section 5(b) of the Inflation Adjustment Act defines the 
term ``cost-of-living adjustment'' as ``the percentage (if any) for 
each civil monetary penalty by which (1) the Consumer Price Index for 
the month of June of the calendar year preceding the adjustment, 
exceeds (2) the Consumer Price Index for the month of June of the 
calendar year in which the amount of such civil monetary penalty was 
last set or adjusted pursuant to law.'' Furthermore, the increase for 
each CMP adjusted for inflation must be rounded using a method 
prescribed by section 5(a) of the Inflation Adjustment Act. FCA made 
its last adjustments to CMPs in January 2009.
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    \3\ See 28 U.S.C. 2461 note. Section 3(2) of the amended 
Inflation Adjustment Act defines a CMP as any penalty, fine, or 
other sanction that: (1) Either is for a specific monetary amount as 
provided by Federal law or has a maximum amount provided for by 
Federal law; and (2) is assessed or enforced by an agency pursuant 
to Federal law; and (3) is assessed or enforced pursuant to an 
administrative proceeding or a civil action in the Federal courts.
    \4\ The CPI is published by the Department of Labor, Bureau of 
Statistics, and is available at its Web site: ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt.
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B. CMPs Issued Under the Farm Credit Act

    The adjustment requirement affects two provisions of section 
5.32(a) of the

[[Page 24337]]

Farm Credit Act. First, it provides that any Farm Credit System 
(System) institution or any officer, director, employee, agent, or 
other person participating in the conduct of the affairs of a System 
institution who violates the terms of a final order issued under 
section 5.25 or 5.26 of the Farm Credit Act must pay up to $1,000 \5\ 
per day for each day during which such violation continues. Orders 
issued by the FCA under section 5.25 or 5.26 of the Farm Credit Act 
include temporary and permanent cease-and-desist orders. In addition, 
section 5.32(h) provides that any directive issued under sections 
4.3(b)(2), 4.3A(e), or 4.14A(i) of the Farm Credit Act ``shall be 
treated'' as a final order issued under section 5.25 for purposes of 
assessing a CMP. Second, section 5.32(a) also states that ``[a]ny such 
institution or person who violates any provision of the [Farm Credit] 
Act or any regulation issued under this Act shall forfeit and pay a 
civil penalty of not more that $500 \6\ per day for each day during 
which such violation continues.'' The maximum amounts of the CMPs, as 
adjusted pursuant to the Inflation Adjustment Act, are set forth in 
existing Sec.  622.61 of FCA regulations.
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    \5\ The current inflation-adjusted CMP for a violation of a 
final order is $1,100 per day, as set forth in Sec.  622.61(a)(1) of 
FCA regulations.
    \6\ The current inflation-adjusted CMP for a violation of the 
Farm Credit Act or a regulation issued under the Farm Credit Act is 
$750 per day, as set forth in Sec.  622.61(a)(2) of FCA regulations.
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1. Mathematical Calculation
    In general, the adjustment calculation required by the Inflation 
Adjustment Act is based on the percentage by which the CPI for June 
2012 exceeds the CPI for June of the calendar year the maximum amount 
of the CMPs was last adjusted.\7\ The maximum CMPs for violation of the 
terms of a final order issued under section 5.25 or 5.26 of the Farm 
Credit Act was last adjusted in 1996.\8\ The maximum CMPs for a 
violation of the Farm Credit Act, or a regulation issued under the Farm 
Credit Act, was last adjusted in 2009. According to the Bureau of Labor 
Statistics, the CPI for June 1996 and June 2009 was 156.7 and 215.693, 
respectively. The CPI for June 2012 was 229.478, resulting in a 
percentage change of 46.44 percent from June 1996 and 6.39 percent from 
June 2009.
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    \7\ Public Law 101-410, Section 5(b).
    \8\ The CMP inflation adjustment analysis was conducted in 
subsequent intervals following 1996; however, the penalty amount did 
not change in those calculations. The last year the amount was 
actually amended was 1996, as such, that is the year for which we 
refer to the consumer price index.
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2. New Penalty Amount in Sec.  622.61(a)(1)
    The existing maximum CMPs in Sec.  622.61(a) for a violation of a 
final order issued under section 5.25 or 5.26 of the Farm Credit Act is 
$1,100. Multiplying $1,100 by the 46.44 \9\ percent change in CPI from 
June 1996 to June 2012 yields an increase of $510.84. When that number 
is rounded as required by section 5(a) of the Inflation Adjustment 
Act,\10\ the inflation-adjusted maximum increases to $2,100.
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    \9\ As a result of the mathematical calculation for the year 
2009 and the required rounding application, the penalty amount 
remained the same and did not reset. Therefore, in accordance with 
the Inflation Adjustment Act, the calculation for the 2012 
adjustment is determined by using the June 1996 CPI of 156.7 and the 
June 2012 CPI of 229.48, resulting in a percentage change of 46.44 
percent.
    \10\ Per section 5(a)(3) of the Inflation Adjustment Act, any 
increase determined under the subsection shall be rounded to the 
nearest multiple of $1,000 in the case of penalties greater than 
$1,000 but less than or equal to $10,000.
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3. Penalty Amount Remains the Same in Sec.  622.61(a)(2)
    The existing maximum CMPs in Sec.  622.61(a)(2) is $750 for a 
violation of the Farm Credit Act or regulations issued under the Farm 
Credit Act that occurs on or after January 16, 2009. Multiplying the 
existing CMP amount by the 6.39 percent change in CPI from June 2009 to 
June 2012 yields an increase of $47.93. This increase is rounded down 
to $0.00 as required by section 5(a) of the Inflation Adjustment Act 
\11\ and, therefore, the inflation-adjusted maximum remains at $750.
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    \11\ Per section 5(a)(2), any increase determined under this 
subsection shall be rounded to the nearest multiple of $100 in the 
case of penalties greater than $100 but less than or equal to 
$1,000.
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C. CMPs Issued Under the Reform Act

    The Flood Disaster Protection Act of 1973,\12\ as amended by the 
National Flood Insurance Reform Act of 1994,\13\ requires that FCA 
assess CMPs for a pattern or practice of committing certain specific 
actions in violation of the National Flood Insurance Program. Pursuant 
to section 100208 of the Biggert Waters Act, which further amends the 
Flood Disaster Protection Act of 1973, FCA is amending the maximum CMPs 
prescribed in 42 U.S.C. 4012a(f)(5).\14\ In that statute, Congress 
increased the maximum CMPs per violation of the National Flood 
Insurance Program from $385 to $2,000 and eliminated the cap on the 
total amount of penalties assessed against a single regulated lender in 
any calendar year.
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    \12\ 42 U.S.C. 4012a.
    \13\ Public Law 103-325, title V, 108 Stat. 2160, 2255-87 
(September 23, 1994).
    \14\ Section 100208 Enforcement: Section 102(f)(5) of the Flood 
Disaster Protection Act of 1973 (42 U.S.C. 4012a(f)(5) is amended: 
(1) In the first sentence, by striking ``$350'' and inserting 
$2,000; and (2) by striking the second sentence.
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1. Mathematical Calculation
    As a result of the provisions of the Biggert-Waters Act, the CMPs 
for violating the National Flood Insurance Program are not subject to 
an inflation adjustment at this time.
2. New Penalty Amounts in Sec.  622.61(b)
    As required by the Biggert-Waters Act, the maximum assessment of 
the CMP for violating 42 U.S.C. 4012a(f)(5) is $2,000 per violation, 
and the cap on penalties is eliminated.

III. Notice and Comment Not Required by Administrative Procedure Act

    The Inflation Adjustment Act gives Federal agencies no discretion 
in the adjustment of CMPs for the rate of inflation. In addition, the 
Biggert-Waters Act gives Federal agencies no discretion in the amount 
of CMPs for violations of the National Flood Insurance Program. 
Further, these revisions are ministerial, technical, and 
noncontroversial. For these reasons, the FCA finds good cause to 
determine that public notice and an opportunity to comment are 
impracticable, unnecessary, and contrary to the public interest 
pursuant to the Administrative Procedure Act, 5 U.S.C. 553(b)(B), and 
adopts this rule in final form.

IV. Regulatory Flexibility Act

    Pursuant to section 605(b) of the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.), the FCA hereby certifies that this final rule will 
not have a significant economic impact on a substantial number of small 
entities. Each of the banks in the System, considered together with its 
affiliated associations, has assets and annual income in excess of the 
amounts that would qualify them as small entities. Therefore, System 
institutions are not ``small entities'' as defined in the Regulatory 
Flexibility Act.

List of Subjects in 12 CFR Part 622

    Administrative practice and procedure, Crime, Investigations, 
Penalties.
    For the reasons stated in the preamble, part 622 of chapter VI, 
title 12 of the Code of Federal Regulations is amended as follows:

PART 622--RULES OF PRACTICE AND PROCEDURE

0
1. The authority citation for part 622 continues to read as follows:

    Authority: Secs. 5.9, 5.10, 5.17, 5.25-5.37 of the Farm Credit 
Act (12 U.S.C. 2243, 2244,

[[Page 24338]]

2252, 2261-2273); 28 U.S.C. 2461 note; and 42 U.S.C. 4012a(f).

0
2. Revise Sec.  622.61 to read as follows:


Sec.  622.61  Adjustment of civil money penalties by the rate of 
inflation under the Federal Civil Penalties Inflation Adjustment Act of 
1990, as amended.

    (a) The maximum amount of each civil money penalty within FCA's 
jurisdiction is adjusted in accordance with the Federal Civil Penalties 
Inflation Adjustment Act of 1990, as amended (28 U.S.C. 2461 note), as 
follows:
    (1) Amount of civil money penalty imposed under section 5.32 of the 
Act for violation of a final order issued under section 5.25 or 5.26 of 
the Act: The maximum daily amount is $1,100 for violations occurring 
before July 1, 2013, and $2,100 for violations that occur on or after 
July 1, 2013.
    (2) Amount of civil money penalty for violation of the Act or 
regulations: the maximum daily amount is $650 for each violation that 
occurs on or after March 16, 2005, but before January 16, 2009, and 
$750 for each violation that occurs on or after January 16, 2009.
    (b) The maximum civil money penalty amount assessed under 42 U.S.C. 
4012a(f) is: $385 for each violation that occurs on or after March 16, 
2005, but before January 16, 2009, with total penalties under such 
statute not to exceed $110,000 for any single institution during any 
calendar year; $385 for each violation that occurs on or after January 
16, 2009, but before July 1, 2013, with total penalties under such 
statute not to exceed $120,000 for any single institution during any 
calendar year; and $2,000 for each violation that occurs on or after 
July 1, 2013, with no cap on the total amount of penalties that can be 
assessed against any single institution during any calendar year.

    Dated: April 19, 2013.
Dale Aultman,
Secretary, Farm Credit Administration Board.
[FR Doc. 2013-09807 Filed 4-24-13; 8:45 am]
BILLING CODE 6705-01-P