Flood Insurance, 60198-60201 [E8-24043]

Download as PDF sroberts on PROD1PC70 with PROPOSALS 60198 Federal Register / Vol. 73, No. 198 / Friday, October 10, 2008 / Proposed Rules (d) Notice of Anticipated Fees in Excess of $100.00. When FHFA determines or estimates that the fees chargeable to you will exceed $100.00, FHFA will notify you of the actual or estimated amount of fees you will incur, unless you earlier indicated your willingness to pay fees as high as those anticipated. When you are notified that the actual or estimated fees exceed $100.00, your FOIA request will not be considered received by FHFA until you agree to pay the anticipated total fee. (e) Advance Payment of Fees. FHFA may request that you pay estimated fees or a deposit in advance of responding to your request. If FHFA requests advance payment or a deposit, your request will not be considered received by FHFA until the advance payment or deposit is received. FHFA will request advance payment or a deposit only if— (1) The fees are likely to exceed $500.00. If it appears that the fees will exceed $500.00, FHFA will notify you of the likely cost and obtain satisfactory assurance of full payment if you have a history of prompt payment of FOIA fees to FHFA. If you do not have a history of payment, or if the estimate of fees exceeds $1,000.00, FHFA may require an advance payment of fees in an amount up to the full estimated charge that will be incurred; or (2) You previously failed to pay a fee to FHFA in a timely fashion, i.e., within 30 calendar days of the date of a billing. FHFA may require you to make advance payment of the full amount of the fees anticipated before processing a new request or finishing processing of a pending request. If you have an outstanding balance due from a prior request, FHFA may require you to pay the full amount owed plus any applicable interest, as provided in paragraph (f) of this section, or demonstrate that the fee owed has been paid, as well as payment of the full amount of anticipated fees before processing your request. (f) Interest. FHFA may charge you interest on an unpaid bill starting on the 31st calendar day following the day on which the bill was sent. Once a fee payment has been received by FHFA, even if not processed, FHFA will stay the accrual of interest. Interest charges shall be assessed at the rate prescribed by 31 U.S.C. 3717 and shall accrue from the date of the billing. (g) FHFA Assistance to Reduce Costs. If FHFA notifies you of estimated fees exceeding $100.00 or requests advance payment or a deposit, you will have an opportunity to consult with FHFA staff to modify or reformulate your request to meet your needs at a lower cost. VerDate Aug<31>2005 18:38 Oct 09, 2008 Jkt 217001 § 1202.12 Is there anything else I need to know about FOIA procedures? The FOIA regulations in this part do not and shall not be construed to create any right or to entitle any person, as of right, to any service or to the disclosure of any record to which such person is not entitled under FOIA. This part only provides procedures for requesting records under FOIA. Dated: September 30, 2008. James B. Lockhart III, Director, Federal Housing Finance Agency. [FR Doc. E8–23517 Filed 10–9–08; 8:45 am] BILLING CODE 8070–01–P FEDERAL HOUSING FINANCE AGENCY 12 CFR Part 1250 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Office of Federal Housing Enterprise Oversight 12 CFR Part 1773 RIN 2590–AA09 Flood Insurance I. Comments Federal Housing Finance Agency; Office of Federal Housing Enterprise Oversight. ACTION: Notice of proposed rulemaking; request for comments. AGENCIES: SUMMARY: The Federal Housing Finance Agency (FHFA) is requesting public comments on issuance of a proposed Flood Insurance regulation. The proposed regulation would codify the authority and responsibility of FHFA to oversee and enforce the statutory requirements affecting the operations of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation under the Flood Disaster Protection Act of 1973, as amended, and to effect congressionally mandated adjustments to the civil money penalties applicable to violations of that law. DATES: Comments on the proposed regulation must be received in writing on or before December 9, 2008. For additional information, see SUPPLEMENTARY INFORMATION. ADDRESSES: You may submit your comments on the proposed regulation, identified by regulatory information number (RIN) 2590–AA09, by any of the following methods: • U.S. Mail, United Parcel Post, Federal Express, or Other Mail Service: The mailing address for comments is: PO 00000 Frm 00007 Fmt 4702 Alfred M. Pollard, General Counsel (Office of Federal Housing Enterprise Oversight (OFHEO)), Attention: Comments/RIN 2590–AA09, Federal Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. • Hand Delivered/Courier: The hand delivery address is: Alfred M. Pollard, General Counsel (OFHEO), Attention: Comments/RIN 2590–AA09, Federal Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. The package should be logged at the Guard Desk, First Floor, on business days between 9 a.m. and 5 p.m. • E-mail: Comments to Alfred M. Pollard, General Counsel (OFHEO) and may be sent by e-mail at RegComments@FHFA.gov. Please include ‘‘RIN 2590–AA09’’ in the subject line of the message. FOR FURTHER INFORMATION CONTACT: Andra Grossman, Counsel, telephone (202) 343–1313 (not a toll-free number); Federal Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. The telephone number for the Telecommunications Device for the Deaf is (800) 877–8339. SUPPLEMENTARY INFORMATION: Sfmt 4702 The Federal Housing Finance Agency (FHFA) invites comments on all aspects of the proposed regulation, and will take all comments into consideration before issuing the final regulation. FHFA requests that comments submitted in hard copy also be accompanied by the electronic version in Microsoft Word or in portable document format (PDF) on 3.5″ disk or CD–ROM. Copies of all comments will be posted on the agency internet Web site at: https://www.ofheo.gov. In addition, copies of all comments received will be available for examination by the public on business days between the hours of 10 a.m. and 3 p.m., at the Federal Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. To make an appointment to inspect comments, please call the Office of General Counsel (OFHEO) at (202) 414–6924. II. Background A. Establishment of the Federal Housing Finance Agency The Housing and Economic Recovery Act of 2008 (HERA), Public Law 110– 289, 122 Stat. 2654, amended the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) (Act) to establish FHFA as an independent agency of the E:\FR\FM\10OCP1.SGM 10OCP1 Federal Register / Vol. 73, No. 198 / Friday, October 10, 2008 / Proposed Rules Federal Government.1 The FHFA was established to oversee the prudential operations of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation (collectively, Enterprises), and the Federal Home Loan Banks (collectively, Regulated Entities) and to ensure that they operate in a safe and sound manner including being capitalized adequately; foster liquid, efficient, competitive and resilient national housing finance markets; comply with the Act and rules, regulation, guidelines and orders issued under the Act, and the respective authorizing statutes of the Regulated Entities; and carry out their missions through activities authorized and consistent with the Act and their authorizing statutes; and, that the activities and operations of the Regulated Entities are consistent with the public interest. The Office of Federal Housing Enterprise Oversight (OFHEO) and the Federal Housing Finance Board (FHFB) will be abolished one year after enactment of the HERA. However, the Regulated Entities continue to operate under regulations promulgated by OFHEO and FHFB and such regulations are enforceable by the Director of FHFA until such regulations are modified, terminated, set aside, or superseded by the Director of FHFA.2 sroberts on PROD1PC70 with PROPOSALS B. Flood Insurance Responsibilities The National Flood Insurance Act of 1968 3 and the Flood Disaster Protection Act of 1973,4 as amended by the National Flood Insurance Reform Act of 1994 (NFIRA),5 together create a comprehensive National Flood Insurance Program that includes various provisions designed to ensure that structures built in flood plains are covered by statutory minimum amounts of flood insurance. The NFIRA has specific requirements explicitly applicable to the Enterprises.6 It originally designated OFHEO as the Federal agency responsible for determining compliance of the Enterprises’ flood insurance responsibilities and provided OFHEO with the authority to issue any 1 See Division A, titled the ‘‘Federal Housing Finance Regulatory Reform Act of 2008,’’ TITLE I, Section 1101 of HERA. 2 See sec. 1302 and sec. 1312 of HERA. 3 Codified at 42 U.S.C. 4001 et seq. and other scattered sections of 42 U.S.C. 4 Codified at 42 U.S.C. 4002 et seq. and other scattered sections of 42 U.S.C. 5 Title V of the Riegle Community Development and Regulatory Improvement Act of 1994, Public Law 103–325 (Sept. 23, 1994) (codified, as amended, at 42 U.S.C. 4001–4129, and other sections of the United States Code. 6 42 U.S.C. 4012a(b)(3). VerDate Aug<31>2005 18:38 Oct 09, 2008 Jkt 217001 regulations necessary to carry out the applicable provisions of NFIRA.7 The NFIRA also authorized OFHEO to impose civil money penalties upon an Enterprise that fails to implement procedures reasonably designed to ensure that the loans it purchases comply with the mandatory flood insurance purchase requirements.8 Section 1161(e) of HERA amended section 102(f)(3)(A) of the Flood Disaster Protection Act of 1973, as amended (42 U.S.C. 4012a(f)(3)(a)), by replacing OFHEO with FHFA as the agency responsible for determining compliance of the Enterprises’ flood insurance responsibilities. Thus, FHFA is proposing to issue a regulation to codify the authority and responsibility of FHFA to oversee and enforce the statutory requirements affecting the operations of the Enterprises under the Flood Disaster Insurance Act of 1973, as amended, and to effect congressionally mandated adjustments to the civil money penalties applicable to violations of that law. The proposed regulation, when published in its final form, would supersede the OFHEO Flood Insurance regulation, 12 CFR Part 1773. The Enterprises have a key role in the implementation of the Federal government’s flood insurance program, particularly with regard to lenders that are not subject to direct supervision by a Federal regulatory agency. The Enterprises use their seller/servicer guidelines and other quality control review procedures to ensure that lenders with whom they contract comply with the applicable flood insurance laws. More specifically, each Enterprise is required to implement procedures reasonably designed to ensure that any mortgage loan that is purchased and is secured by property located in a designated flood hazard area is covered for the term of the loan by flood insurance in an amount at least equal to the lesser of (1) the outstanding principal balance of the loan or (2) the maximum limit of coverage made available for that type of property.9 C. Adjustment of Civil Money Penalties for Inflation The Flood Disaster Protection Act of 1973, as amended, sets forth the procedures under which the Director of OFHEO could impose civil money penalties against an Enterprise and the amounts of these civil money penalties.10 The proposed regulation 7 42 U.S.C. 4001 note (Pub. L. 103–325, Title V, Sec. 583). 8 42 U.S.C. 4012a(f)(3). 9 42 U.S.C. 4012a(b)(3). 10 42 U.S.C. 4012a(f)(3). PO 00000 Frm 00008 Fmt 4702 Sfmt 4702 60199 would adjust the amounts of these civil money penalties in accordance with the requirements of the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 1996 (Inflation Adjustment Act).11 The proposed increases in maximum civil money penalty amounts do not mandate the amount of any civil money penalty that FHFA may seek for a particular violation. FHFA would continue to determine each civil money penalty on a case-by-case basis in light of the circumstances of the case. The Inflation Adjustment Act requires Federal agencies that have authority to issue civil money penalties to issue regulations that adjust each civil money penalty that the agency has jurisdiction to administer. The purpose of these adjustments is to maintain the deterrent effect of civil money penalties and promote compliance with the law. The Inflation Adjustment Act requires agencies to make an initial adjustment of their civil money penalties upon the statute’s enactment, and to make additional adjustments on an ongoing basis, at least once every four years following the initial adjustment. Under the Inflation Adjustment Act, the inflation adjustment for each applicable civil money penalty is determined by increasing the maximum civil money penalty amount by a costof-living adjustment. As is described in detail below, the Inflation Adjustment Act provides that this cost-of-living adjustment is to reflect the percentage increase in the Consumer Price Index for All Urban Consumers (CPI–U) since the civil money penalties were last adjusted or established. The Inflation Adjustment Act directs Federal agencies to calculate each civil money penalty adjustment as the percentage by which the CPI–U for June of the calendar year preceding the adjustment exceeds the CPI–U for June of the calendar year in which the amount of such civil money penalty was last set or adjusted pursuant to law. When OFHEO issued the Flood Insurance regulation in 2001, the maximum civil money amounts of $350 (for each violation) and $100,000 (maximum annual amount for each Enterprise), found at 42 U.S.C. 4012a(f)(5), were adjusted to $385 and $110,000, respectively.12 OFHEO did not subsequently adjust these civil money penalty amounts. Because FHFA is making this adjustment in calendar year 2008, the inflation amount for each civil money 11 28 12 66 E:\FR\FM\10OCP1.SGM U.S.C. 2461 note. FR 65101 (Dec. 18, 2001); 12 CFR part 1773. 10OCP1 60200 Federal Register / Vol. 73, No. 198 / Friday, October 10, 2008 / Proposed Rules penalty is calculated by comparing the CPI–U for June 2001 (178.00), the calendar year OFHEO last adjusted the civil money penalty, with the CPI–U for June 2007 (208.35), resulting in an inflation adjustment of 17.05 percent. For each civil money penalty, the product of this inflation adjustment and the previous maximum penalty amount is then rounded in accordance with the specific requirements of the Inflation Adjustment Act and added to the previous maximum penalty amount to determine the new adjusted penalty amount.13 Accordingly, the civil money penalty maximum of $385 would be increased to $485 for each violation and the civil money penalty maximum of $110,000 would be increased to $130,000 for the total assessed penalties against any Enterprise during any calendar year. The increase would apply only to violations which occur after the date the increase takes effect. III. Section-by-Section Analysis Section 1250.1 Purpose This section provides that the purpose of the regulation as proposed is to set forth the responsibilities of the Enterprises under the Flood Disaster Protection Act of 1973, as amended (FDPA), and the procedures to be used by FHFA in any proceeding to assess civil money penalties against an Enterprise under FDPA. Section 1250.2 Requirements Procedural sroberts on PROD1PC70 with PROPOSALS Section 1250.2 would set forth the requirement that each Enterprise is to implement procedures reasonably designed to ensure that properties securing particular loans are properly insured in accordance with the National Flood Insurance Act of 1968. Consistent with 42 U.S.C. 4012a(4), it also would set forth that that the procedures need apply only to loans made, increased, extended, or renewed after September 22, 1995. The proposed section further provides that the procedural requirements do not apply to any loan having an original outstanding principal balance of $5,000 or less and a repayment term of one year or less.14 13 The rounding rules of the Inflation Adjustment Act require that each increase be rounded to the nearest multiple as follows: $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 $5,000 in the case of penalties greater than $200,000. 14 42 U.S.C. 4012a(c)(2). VerDate Aug<31>2005 18:38 Oct 09, 2008 Jkt 217001 Section 1250.3 Civil Money Penalties Section 1250.3 would set forth procedures under which the Director of FHFA may impose civil money penalties against an Enterprise. The Director of FHFA would assess a civil money penalty against an Enterprise determined by the Director to have a pattern or practice of purchasing loans in violation of the procedures established pursuant to § 1250.2. The increase shall only apply to violations which occur after the date the increase takes effect. The proposed section also would set forth notice and hearing requirements prior to the imposition of civil money penalties. A civil money penalty may be issued only after notice and an opportunity for a hearing on the record has been provided. In addition, the proposed section would set forth the maximum amount of civil money penalties that may be imposed on an Enterprise under this section. A civil money penalty under this section may not exceed the adjusted statutory amount of $485 for each violation and the total amount of penalties assessed under this section against an Enterprise during any calendar year may not exceed the adjusted statutory cap of $130,000 for total penalties. Furthermore, in accordance with 42 U.S.C. 4012a(f)(8), (9), and (10), § 1250.3 would provide that— (1) Any civil money penalties collected under this section shall be paid into the National Flood Mitigation Fund in accordance with 42 U.S.C. 4104d, (2) Any civil money penalty would be in addition to any civil remedy or criminal penalty otherwise available, and (3) No penalty may be imposed under this section after the expiration of the four-year period beginning on the date of the occurrence of the violation for which the penalty is authorized. Regulatory Impact Paperwork Reduction Act The proposed regulation does not contain any information collection requirement that requires the approval of OMB under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.). Regulatory Flexibility Act The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that a regulation that has a significant economic impact on a substantial number of small entities, small businesses, or small organizations must include an initial regulatory flexibility PO 00000 Frm 00009 Fmt 4702 Sfmt 4702 analysis describing the regulation’s impact on small entities. Such an analysis need not be undertaken if the agency has certified that the regulation will not have a significant economic impact on a substantial number of small entities. 5 U.S.C. 605(b). The FHFA has considered the impact of the proposed regulation under the Regulatory Flexibility Act. The FHFA certifies that the proposed regulation, if adopted, is not likely to have a significant economic impact on a substantial number of small business entities because the regulation is applicable only to the Enterprises, which are not small entities for purposes of the Regulatory Flexibility Act. List of Subjects 12 CFR Part 1250 Government-sponsored enterprises, Flood insurance, Penalties, Reporting and Recordkeeping requirements. 12 CFR Part 1773 Administrative practice and procedure, Flood insurance, Penalties, Reporting and Recordkeeping requirements. Authority and Issuance Accordingly, for the reasons stated in the preamble, under the authority of 12 U.S.C. 4526, the Federal Housing Finance Agency proposes to amend chapters XII and XVII of Title 12, Code of Federal Regulations, as follows: CHAPTER XII—FEDERAL HOUSING FINANCE AGENCY 1. Add Subchapter C, consisting of part 1250 to read as follows: Subchapter C—Enterprises PART 1250—FLOOD INSURANCE Sec. 1250.1 1250.2 1250.3 Purpose. Procedural requirements. Civil money penalties. Authority: 12 U.S.C. 4521(a)(4) and 4526; 28 U.S.C. 2461 note; 42 U.S.C. 4001 note; 42 U.S.C. 4012a(f)(3), (4), (5), (8), (9), and (10). § 1250.1 Purpose. The purpose of this part is to set forth the responsibilities of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation (Enterprise) under the Flood Disaster Protection Act of 1973, as amended, (42 U.S.C. 4002 et seq.) and the procedures to be used by the Federal Housing Finance Agency (FHFA) in any proceeding to assess civil money penalties against an Enterprise. E:\FR\FM\10OCP1.SGM 10OCP1 Federal Register / Vol. 73, No. 198 / Friday, October 10, 2008 / Proposed Rules § 1250.2 Procedural requirements. (a) Procedures. An Enterprise shall implement procedures reasonably designed to ensure for any loan that is secured by improved real estate or a mobile home located in an area that has been identified, at the time of the origination of the loan or at any time during the term of the loan, by the Director of the Federal Emergency Management Agency as an area having special flood hazards and in which flood insurance is available under the National Flood Insurance Act of 1968 (42 U.S.C. 4001 et seq.), and purchased by the Enterprise, the building or mobile home and any personal property securing the loan is covered for the term of the loan by flood insurance in an amount at least equal to the lesser of the outstanding principal balance of the loan or the maximum limit of coverage made available with respect to the particular type of property under the National Flood Insurance Act of 1968. (b) Applicability. (1) Paragraph (a) of this section shall apply only with respect to any loan made, increased, extended, or renewed after September 22, 1995. (2) Paragraph (a) of this section shall not apply to any loan having an original outstanding balance of $5,000 or less and a repayment term of one year or less. sroberts on PROD1PC70 with PROPOSALS § 1250.3 Civil Money Penalties. (a) In general. If an Enterprise is determined by the Director of FHFA, or his or designee, to have a pattern or practice of purchasing loans in violation of the procedures established pursuant to § 1250.2, the Director of FHFA, or his or her designee, may assess civil money penalties against such Enterprise in such amount or amounts as deemed to be appropriate under paragraph (c) of this section. (b) Notice and hearing. A civil money penalty under this section may be assessed only after notice and an opportunity for a hearing on the record has been provided to the Enterprise. (c) Amount. The maximum civil money penalty amount is $385 for each violation that occurs before the effective date of this part, with total penalties not to exceed $110,000. For violations that occur on or after the effective date of this part, the civil money penalty under this section may not exceed $485 for each violation, with total penalties assessed under this section against an Enterprise during any calendar year not to exceed $130,000. (d) Deposit of penalties. Any penalties under this section shall be paid into the National Flood Mitigation Fund in accordance with section 1367 of the VerDate Aug<31>2005 18:38 Oct 09, 2008 Jkt 217001 National Flood Insurance Act of 1968 (42 U.S.C. 4104d.). (e) Additional penalties. Any penalty under this section shall be in addition to, and shall not preclude, any civil remedy, or criminal penalty otherwise available. (f) Statute of limitations. No civil money penalty may be imposed under this section after the expiration of the four-year period beginning on the date of the occurrence of the violation for which the penalty is authorized under this section. CHAPTER XVII—OFFICE OF FEDERAL HOUSING ENTERPRISE OVERSIGHT, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT PART 1773—[REMOVED] 2. Remove part 1773. Dated: October 1, 2008. James B. Lockhart III, Director, Federal Housing Finance Agency. [FR Doc. E8–24043 Filed 10–9–08; 8:45 am] BILLING CODE 8070–01–P DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 RIN 2120–AA64 Airworthiness Directives; Piper Aircraft, Inc. Models PA–46–350P, PA– 46R–350T, and PA–46–500TP Airplanes Federal Aviation Administration (FAA), Department of Transportation (DOT). ACTION: Notice of proposed rulemaking (NPRM). AGENCY: SUMMARY: We propose to adopt a new airworthiness directive (AD) for certain Piper Aircraft, Inc. (Piper) Models PA– 46–350P, PA–46R–350T, and PA–46– 500TP airplanes. This proposed AD would require you to install a stall warning heat control modification kit. This proposed AD results from ice forming on the stall vane heater during flights into icing conditions with the landing gear down. We are proposing this AD to prevent ice from forming on the stall vane, which may result in failure of the stall warning system. This failure could result in the pilot being unaware of an approaching stall situation. We must receive comments on this proposed AD by December 9, 2008. DATES: Frm 00010 Fmt 4702 Use one of the following addresses to comment on this proposed AD: • Federal eRulemaking Portal: Go to https://www.regulations.gov. Follow the instructions for submitting comments. • Fax: (202) 493–2251. • Mail: U.S. Department of Transportation, Docket Operations, M– 30, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue, SE., Washington, DC 20590. • Hand Delivery: U.S. Department of Transportation, Docket Operations, M– 30, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. For service information identified in this proposed AD, contact Piper Aircraft, Inc., 2926 Piper Drive, Vero Beach, Florida 32960; telephone: (772) 567–4361; fax: (772) 978–6573; Web site: https://www.newpiper.com/. FOR FURTHER INFORMATION CONTACT: John Lee, Aerospace Engineer, Federal Aviation Administration, Aircraft Certification Office, One Crown Center, 1895 Phoenix Blvd., Suite 450, Atlanta, Georgia 30349; telephone: (770) 994– 6736; fax: (770) 703–6097. SUPPLEMENTARY INFORMATION: ADDRESSES: Comments Invited [Docket No. FAA–2008–1085; Directorate Identifier 2008–CE–057–AD] PO 00000 60201 Sfmt 4702 We invite you to send any written relevant data, views, or arguments regarding this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include the docket number, ‘‘FAA–2008–1085; Directorate Identifier 2008–CE–057–AD’’ at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the proposed AD. We will consider all comments received by the closing date and may amend the proposed AD in light of those comments. We will post all comments we receive, without change, to https:// www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive concerning this proposed AD. Discussion Recently, it was discovered on a Piper Model PA–46–500TP airplane that the stall warning did not activate when expected. Upon landing, the stall vane was found iced over, which temporarily disabled the lift detector. The design of the Model PA–46– 500TP airplane includes a landing gear up-lock switch. When this switch is not E:\FR\FM\10OCP1.SGM 10OCP1

Agencies

[Federal Register Volume 73, Number 198 (Friday, October 10, 2008)]
[Proposed Rules]
[Pages 60198-60201]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-24043]


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FEDERAL HOUSING FINANCE AGENCY

12 CFR Part 1250

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of Federal Housing Enterprise Oversight

12 CFR Part 1773

RIN 2590-AA09


Flood Insurance

AGENCIES: Federal Housing Finance Agency; Office of Federal Housing 
Enterprise Oversight.

ACTION: Notice of proposed rulemaking; request for comments.

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SUMMARY: The Federal Housing Finance Agency (FHFA) is requesting public 
comments on issuance of a proposed Flood Insurance regulation. The 
proposed regulation would codify the authority and responsibility of 
FHFA to oversee and enforce the statutory requirements affecting the 
operations of the Federal National Mortgage Association and the Federal 
Home Loan Mortgage Corporation under the Flood Disaster Protection Act 
of 1973, as amended, and to effect congressionally mandated adjustments 
to the civil money penalties applicable to violations of that law.

DATES: Comments on the proposed regulation must be received in writing 
on or before December 9, 2008. For additional information, see 
SUPPLEMENTARY INFORMATION.

ADDRESSES: You may submit your comments on the proposed regulation, 
identified by regulatory information number (RIN) 2590-AA09, by any of 
the following methods:
     U.S. Mail, United Parcel Post, Federal Express, or Other 
Mail Service: The mailing address for comments is: Alfred M. Pollard, 
General Counsel (Office of Federal Housing Enterprise Oversight 
(OFHEO)), Attention: Comments/RIN 2590-AA09, Federal Housing Finance 
Agency, Fourth Floor, 1700 G Street, NW., Washington, DC 20552.
     Hand Delivered/Courier: The hand delivery address is: 
Alfred M. Pollard, General Counsel (OFHEO), Attention: Comments/RIN 
2590-AA09, Federal Housing Finance Agency, Fourth Floor, 1700 G Street, 
NW., Washington, DC 20552. The package should be logged at the Guard 
Desk, First Floor, on business days between 9 a.m. and 5 p.m.
     E-mail: Comments to Alfred M. Pollard, General Counsel 
(OFHEO) and may be sent by e-mail at RegComments@FHFA.gov. Please 
include ``RIN 2590-AA09'' in the subject line of the message.

FOR FURTHER INFORMATION CONTACT: Andra Grossman, Counsel, telephone 
(202) 343-1313 (not a toll-free number); Federal Housing Finance 
Agency, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. The 
telephone number for the Telecommunications Device for the Deaf is 
(800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. Comments

    The Federal Housing Finance Agency (FHFA) invites comments on all 
aspects of the proposed regulation, and will take all comments into 
consideration before issuing the final regulation. FHFA requests that 
comments submitted in hard copy also be accompanied by the electronic 
version in Microsoft[supreg] Word or in portable document format (PDF) 
on 3.5 disk or CD-ROM.
    Copies of all comments will be posted on the agency internet Web 
site at: https://www.ofheo.gov. In addition, copies of all comments 
received will be available for examination by the public on business 
days between the hours of 10 a.m. and 3 p.m., at the Federal Housing 
Finance Agency, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. 
To make an appointment to inspect comments, please call the Office of 
General Counsel (OFHEO) at (202) 414-6924.

II. Background

A. Establishment of the Federal Housing Finance Agency

    The Housing and Economic Recovery Act of 2008 (HERA), Public Law 
110-289, 122 Stat. 2654, amended the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4501 et seq.) 
(Act) to establish FHFA as an independent agency of the

[[Page 60199]]

Federal Government.\1\ The FHFA was established to oversee the 
prudential operations of the Federal National Mortgage Association, the 
Federal Home Loan Mortgage Corporation (collectively, Enterprises), and 
the Federal Home Loan Banks (collectively, Regulated Entities) and to 
ensure that they operate in a safe and sound manner including being 
capitalized adequately; foster liquid, efficient, competitive and 
resilient national housing finance markets; comply with the Act and 
rules, regulation, guidelines and orders issued under the Act, and the 
respective authorizing statutes of the Regulated Entities; and carry 
out their missions through activities authorized and consistent with 
the Act and their authorizing statutes; and, that the activities and 
operations of the Regulated Entities are consistent with the public 
interest.
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    \1\ See Division A, titled the ``Federal Housing Finance 
Regulatory Reform Act of 2008,'' TITLE I, Section 1101 of HERA.
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    The Office of Federal Housing Enterprise Oversight (OFHEO) and the 
Federal Housing Finance Board (FHFB) will be abolished one year after 
enactment of the HERA. However, the Regulated Entities continue to 
operate under regulations promulgated by OFHEO and FHFB and such 
regulations are enforceable by the Director of FHFA until such 
regulations are modified, terminated, set aside, or superseded by the 
Director of FHFA.\2\
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    \2\ See sec. 1302 and sec. 1312 of HERA.
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B. Flood Insurance Responsibilities

    The National Flood Insurance Act of 1968 \3\ and the Flood Disaster 
Protection Act of 1973,\4\ as amended by the National Flood Insurance 
Reform Act of 1994 (NFIRA),\5\ together create a comprehensive National 
Flood Insurance Program that includes various provisions designed to 
ensure that structures built in flood plains are covered by statutory 
minimum amounts of flood insurance. The NFIRA has specific requirements 
explicitly applicable to the Enterprises.\6\ It originally designated 
OFHEO as the Federal agency responsible for determining compliance of 
the Enterprises' flood insurance responsibilities and provided OFHEO 
with the authority to issue any regulations necessary to carry out the 
applicable provisions of NFIRA.\7\ The NFIRA also authorized OFHEO to 
impose civil money penalties upon an Enterprise that fails to implement 
procedures reasonably designed to ensure that the loans it purchases 
comply with the mandatory flood insurance purchase requirements.\8\
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    \3\ Codified at 42 U.S.C. 4001 et seq. and other scattered 
sections of 42 U.S.C.
    \4\ Codified at 42 U.S.C. 4002 et seq. and other scattered 
sections of 42 U.S.C.
    \5\ Title V of the Riegle Community Development and Regulatory 
Improvement Act of 1994, Public Law 103-325 (Sept. 23, 1994) 
(codified, as amended, at 42 U.S.C. 4001-4129, and other sections of 
the United States Code.
    \6\ 42 U.S.C. 4012a(b)(3).
    \7\ 42 U.S.C. 4001 note (Pub. L. 103-325, Title V, Sec. 583).
    \8\ 42 U.S.C. 4012a(f)(3).
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    Section 1161(e) of HERA amended section 102(f)(3)(A) of the Flood 
Disaster Protection Act of 1973, as amended (42 U.S.C. 4012a(f)(3)(a)), 
by replacing OFHEO with FHFA as the agency responsible for determining 
compliance of the Enterprises' flood insurance responsibilities. Thus, 
FHFA is proposing to issue a regulation to codify the authority and 
responsibility of FHFA to oversee and enforce the statutory 
requirements affecting the operations of the Enterprises under the 
Flood Disaster Insurance Act of 1973, as amended, and to effect 
congressionally mandated adjustments to the civil money penalties 
applicable to violations of that law. The proposed regulation, when 
published in its final form, would supersede the OFHEO Flood Insurance 
regulation, 12 CFR Part 1773.
    The Enterprises have a key role in the implementation of the 
Federal government's flood insurance program, particularly with regard 
to lenders that are not subject to direct supervision by a Federal 
regulatory agency. The Enterprises use their seller/servicer guidelines 
and other quality control review procedures to ensure that lenders with 
whom they contract comply with the applicable flood insurance laws. 
More specifically, each Enterprise is required to implement procedures 
reasonably designed to ensure that any mortgage loan that is purchased 
and is secured by property located in a designated flood hazard area is 
covered for the term of the loan by flood insurance in an amount at 
least equal to the lesser of (1) the outstanding principal balance of 
the loan or (2) the maximum limit of coverage made available for that 
type of property.\9\
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    \9\ 42 U.S.C. 4012a(b)(3).
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C. Adjustment of Civil Money Penalties for Inflation

    The Flood Disaster Protection Act of 1973, as amended, sets forth 
the procedures under which the Director of OFHEO could impose civil 
money penalties against an Enterprise and the amounts of these civil 
money penalties.\10\ The proposed regulation would adjust the amounts 
of these civil money penalties in accordance with the requirements of 
the Federal Civil Penalties Inflation Adjustment Act of 1990, as 
amended by the Debt Collection Improvement Act of 1996 (Inflation 
Adjustment Act).\11\ The proposed increases in maximum civil money 
penalty amounts do not mandate the amount of any civil money penalty 
that FHFA may seek for a particular violation. FHFA would continue to 
determine each civil money penalty on a case-by-case basis in light of 
the circumstances of the case.
---------------------------------------------------------------------------

    \10\ 42 U.S.C. 4012a(f)(3).
    \11\ 28 U.S.C. 2461 note.
---------------------------------------------------------------------------

    The Inflation Adjustment Act requires Federal agencies that have 
authority to issue civil money penalties to issue regulations that 
adjust each civil money penalty that the agency has jurisdiction to 
administer. The purpose of these adjustments is to maintain the 
deterrent effect of civil money penalties and promote compliance with 
the law. The Inflation Adjustment Act requires agencies to make an 
initial adjustment of their civil money penalties upon the statute's 
enactment, and to make additional adjustments on an ongoing basis, at 
least once every four years following the initial adjustment.
    Under the Inflation Adjustment Act, the inflation adjustment for 
each applicable civil money penalty is determined by increasing the 
maximum civil money penalty amount by a cost-of-living adjustment. As 
is described in detail below, the Inflation Adjustment Act provides 
that this cost-of-living adjustment is to reflect the percentage 
increase in the Consumer Price Index for All Urban Consumers (CPI-U) 
since the civil money penalties were last adjusted or established.
    The Inflation Adjustment Act directs Federal agencies to calculate 
each civil money penalty adjustment as the percentage by which the CPI-
U for June of the calendar year preceding the adjustment exceeds the 
CPI-U for June of the calendar year in which the amount of such civil 
money penalty was last set or adjusted pursuant to law. When OFHEO 
issued the Flood Insurance regulation in 2001, the maximum civil money 
amounts of $350 (for each violation) and $100,000 (maximum annual 
amount for each Enterprise), found at 42 U.S.C. 4012a(f)(5), were 
adjusted to $385 and $110,000, respectively.\12\
---------------------------------------------------------------------------

    \12\ 66 FR 65101 (Dec. 18, 2001); 12 CFR part 1773.
---------------------------------------------------------------------------

    OFHEO did not subsequently adjust these civil money penalty 
amounts. Because FHFA is making this adjustment in calendar year 2008, 
the inflation amount for each civil money

[[Page 60200]]

penalty is calculated by comparing the CPI-U for June 2001 (178.00), 
the calendar year OFHEO last adjusted the civil money penalty, with the 
CPI-U for June 2007 (208.35), resulting in an inflation adjustment of 
17.05 percent. For each civil money penalty, the product of this 
inflation adjustment and the previous maximum penalty amount is then 
rounded in accordance with the specific requirements of the Inflation 
Adjustment Act and added to the previous maximum penalty amount to 
determine the new adjusted penalty amount.\13\ Accordingly, the civil 
money penalty maximum of $385 would be increased to $485 for each 
violation and the civil money penalty maximum of $110,000 would be 
increased to $130,000 for the total assessed penalties against any 
Enterprise during any calendar year. The increase would apply only to 
violations which occur after the date the increase takes effect.
---------------------------------------------------------------------------

    \13\ The rounding rules of the Inflation Adjustment Act require 
that each increase be rounded to the nearest multiple as follows: 
$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 $5,000 in the case of penalties greater than $200,000.
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III. Section-by-Section Analysis

Section 1250.1 Purpose

    This section provides that the purpose of the regulation as 
proposed is to set forth the responsibilities of the Enterprises under 
the Flood Disaster Protection Act of 1973, as amended (FDPA), and the 
procedures to be used by FHFA in any proceeding to assess civil money 
penalties against an Enterprise under FDPA.

Section 1250.2 Procedural Requirements

    Section 1250.2 would set forth the requirement that each Enterprise 
is to implement procedures reasonably designed to ensure that 
properties securing particular loans are properly insured in accordance 
with the National Flood Insurance Act of 1968. Consistent with 42 
U.S.C. 4012a(4), it also would set forth that that the procedures need 
apply only to loans made, increased, extended, or renewed after 
September 22, 1995. The proposed section further provides that the 
procedural requirements do not apply to any loan having an original 
outstanding principal balance of $5,000 or less and a repayment term of 
one year or less.\14\
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    \14\ 42 U.S.C. 4012a(c)(2).
---------------------------------------------------------------------------

Section 1250.3 Civil Money Penalties

    Section 1250.3 would set forth procedures under which the Director 
of FHFA may impose civil money penalties against an Enterprise. The 
Director of FHFA would assess a civil money penalty against an 
Enterprise determined by the Director to have a pattern or practice of 
purchasing loans in violation of the procedures established pursuant to 
Sec.  1250.2. The increase shall only apply to violations which occur 
after the date the increase takes effect.
    The proposed section also would set forth notice and hearing 
requirements prior to the imposition of civil money penalties. A civil 
money penalty may be issued only after notice and an opportunity for a 
hearing on the record has been provided.
    In addition, the proposed section would set forth the maximum 
amount of civil money penalties that may be imposed on an Enterprise 
under this section. A civil money penalty under this section may not 
exceed the adjusted statutory amount of $485 for each violation and the 
total amount of penalties assessed under this section against an 
Enterprise during any calendar year may not exceed the adjusted 
statutory cap of $130,000 for total penalties.
    Furthermore, in accordance with 42 U.S.C. 4012a(f)(8), (9), and 
(10), Sec.  1250.3 would provide that--
    (1) Any civil money penalties collected under this section shall be 
paid into the National Flood Mitigation Fund in accordance with 42 
U.S.C. 4104d,
    (2) Any civil money penalty would be in addition to any civil 
remedy or criminal penalty otherwise available, and
    (3) No penalty may be imposed under this section after the 
expiration of the four-year period beginning on the date of the 
occurrence of the violation for which the penalty is authorized.

Regulatory Impact

Paperwork Reduction Act

    The proposed regulation does not contain any information collection 
requirement that requires the approval of OMB under the Paperwork 
Reduction Act (44 U.S.C. 3501 et seq.).

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that 
a regulation that has a significant economic impact on a substantial 
number of small entities, small businesses, or small organizations must 
include an initial regulatory flexibility analysis describing the 
regulation's impact on small entities. Such an analysis need not be 
undertaken if the agency has certified that the regulation will not 
have a significant economic impact on a substantial number of small 
entities. 5 U.S.C. 605(b). The FHFA has considered the impact of the 
proposed regulation under the Regulatory Flexibility Act. The FHFA 
certifies that the proposed regulation, if adopted, is not likely to 
have a significant economic impact on a substantial number of small 
business entities because the regulation is applicable only to the 
Enterprises, which are not small entities for purposes of the 
Regulatory Flexibility Act.

List of Subjects

12 CFR Part 1250

    Government-sponsored enterprises, Flood insurance, Penalties, 
Reporting and Recordkeeping requirements.

12 CFR Part 1773

    Administrative practice and procedure, Flood insurance, Penalties, 
Reporting and Recordkeeping requirements.

Authority and Issuance

    Accordingly, for the reasons stated in the preamble, under the 
authority of 12 U.S.C. 4526, the Federal Housing Finance Agency 
proposes to amend chapters XII and XVII of Title 12, Code of Federal 
Regulations, as follows:

CHAPTER XII--FEDERAL HOUSING FINANCE AGENCY

    1. Add Subchapter C, consisting of part 1250 to read as follows:

Subchapter C--Enterprises

PART 1250--FLOOD INSURANCE

Sec.
1250.1 Purpose.
1250.2 Procedural requirements.
1250.3 Civil money penalties.

    Authority: 12 U.S.C. 4521(a)(4) and 4526; 28 U.S.C. 2461 note; 
42 U.S.C. 4001 note; 42 U.S.C. 4012a(f)(3), (4), (5), (8), (9), and 
(10).


Sec.  1250.1  Purpose.

    The purpose of this part is to set forth the responsibilities of 
the Federal National Mortgage Association and the Federal Home Loan 
Mortgage Corporation (Enterprise) under the Flood Disaster Protection 
Act of 1973, as amended, (42 U.S.C. 4002 et seq.) and the procedures to 
be used by the Federal Housing Finance Agency (FHFA) in any proceeding 
to assess civil money penalties against an Enterprise.

[[Page 60201]]

Sec.  1250.2  Procedural requirements.

    (a) Procedures. An Enterprise shall implement procedures reasonably 
designed to ensure for any loan that is secured by improved real estate 
or a mobile home located in an area that has been identified, at the 
time of the origination of the loan or at any time during the term of 
the loan, by the Director of the Federal Emergency Management Agency as 
an area having special flood hazards and in which flood insurance is 
available under the National Flood Insurance Act of 1968 (42 U.S.C. 
4001 et seq.), and purchased by the Enterprise, the building or mobile 
home and any personal property securing the loan is covered for the 
term of the loan by flood insurance in an amount at least equal to the 
lesser of the outstanding principal balance of the loan or the maximum 
limit of coverage made available with respect to the particular type of 
property under the National Flood Insurance Act of 1968.
    (b) Applicability.
    (1) Paragraph (a) of this section shall apply only with respect to 
any loan made, increased, extended, or renewed after September 22, 
1995.
    (2) Paragraph (a) of this section shall not apply to any loan 
having an original outstanding balance of $5,000 or less and a 
repayment term of one year or less.


Sec.  1250.3  Civil Money Penalties.

    (a) In general. If an Enterprise is determined by the Director of 
FHFA, or his or designee, to have a pattern or practice of purchasing 
loans in violation of the procedures established pursuant to Sec.  
1250.2, the Director of FHFA, or his or her designee, may assess civil 
money penalties against such Enterprise in such amount or amounts as 
deemed to be appropriate under paragraph (c) of this section.
    (b) Notice and hearing. A civil money penalty under this section 
may be assessed only after notice and an opportunity for a hearing on 
the record has been provided to the Enterprise.
    (c) Amount. The maximum civil money penalty amount is $385 for each 
violation that occurs before the effective date of this part, with 
total penalties not to exceed $110,000. For violations that occur on or 
after the effective date of this part, the civil money penalty under 
this section may not exceed $485 for each violation, with total 
penalties assessed under this section against an Enterprise during any 
calendar year not to exceed $130,000.
    (d) Deposit of penalties. Any penalties under this section shall be 
paid into the National Flood Mitigation Fund in accordance with section 
1367 of the National Flood Insurance Act of 1968 (42 U.S.C. 4104d.).
    (e) Additional penalties. Any penalty under this section shall be 
in addition to, and shall not preclude, any civil remedy, or criminal 
penalty otherwise available.
    (f) Statute of limitations. No civil money penalty may be imposed 
under this section after the expiration of the four-year period 
beginning on the date of the occurrence of the violation for which the 
penalty is authorized under this section.

CHAPTER XVII--OFFICE OF FEDERAL HOUSING ENTERPRISE OVERSIGHT, 
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

PART 1773--[REMOVED]

    2. Remove part 1773.

    Dated: October 1, 2008.
James B. Lockhart III,
Director, Federal Housing Finance Agency.
[FR Doc. E8-24043 Filed 10-9-08; 8:45 am]
BILLING CODE 8070-01-P
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