Inflation Adjustment of Civil Money Penalty Amounts, 4057-4060 [2013-01070]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 78, Number 13 (Friday, January 18, 2013)]
[Rules and Regulations]
[Pages 4057-4060]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-01070]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Parts 28, 30, and 180

[Docket No. FR-5662-F-01]
RIN 2501-AD59


Inflation Adjustment of Civil Money Penalty Amounts

AGENCY: Office of the Secretary, HUD.

ACTION: Final rule.

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SUMMARY: This final rule amends HUD's civil money penalty and civil 
penalty regulations by making inflation adjustments that are required 
by the Federal Civil Penalties Inflation Adjustment Act of 1990 (28 
U.S.C. 2461 note) (FCPIA Act). The FCPIA Act mandates the adjustments 
and the formula used to calculate them. Also in this final rule, HUD is 
taking the opportunity to update an outdated cross-reference in its 
civil money penalty regulations.

DATES: Effective Date: February 19, 2013.

FOR FURTHER INFORMATION CONTACT: Dane Narode, Associate General 
Counsel, Office of Program Enforcement, Department of Housing and Urban 
Development, 1250 Maryland Avenue SW., Suite 200, Washington, DC 20024; 
telephone number 202-245-4141 (this is not a toll-free number). 
Hearing- or speech-impaired individuals may access this number via TTY 
by calling the toll-free Federal Information Relay Service at 800-877-
8339.

SUPPLEMENTARY INFORMATION: 

I. Background

    The Federal Civil Penalties Inflation Adjustment Act of 1990 (28 
U.S.C. 2461 note) (FCPIA Act), as amended by the Debt Collection 
Improvement Act of 1996 (31 U.S.C. 3701) (DCIA), requires each federal 
agency to make inflation adjustments to its maximum civil money 
penalties and civil penalties. The formula for determining the specific 
adjustment of such penalties for inflation is nondiscretionary and is 
determined by section 5 of the FCPIA Act. The adjustment is based on 
the change in the cost-of-living increase, which is defined in the 
statute as based on the percentage change, if any, in the Consumer 
Price Index (CPI). The statute also states specific rules for rounding 
off, first-time adjustments and provides that adjusted civil money 
penalties and civil penalties can only be applied prospectively; that 
is, only to violations that occur after the date that the increase 
takes effect.

II. This Final Rule

A. Inflation Adjustment of Civil Money Penalty and Civil Penalty 
Amounts

    The changes made by this final rule increase the amount of civil 
money penalties, consistent with statutory authority for 24 CFR parts 
28 and 30 and civil penalties consistent with 24 CFR part 180. 
Additionally, no amendment is necessary to civil money penalties and 
civil penalties found in some HUD regulations (e.g., 24 CFR parts 
30.20, 30.25, and 180.671(a)(1)) because application of the statute's

[[Page 4058]]

formula would not result in an increase to the penalty.
    Applying the statutory formula to determine the amount of the 
adjustment is a four-step process. The first step entails determining 
the inflation adjustment factor. This is done by calculating the 
percentage increase by which the CPI for all urban consumers (CPI-U) 
for the month of June of the calendar year preceding the adjustment 
(i.e., June 2012) exceeds the CPI-U for the month of June of the 
calendar year in which the amount of such civil monetary penalty was 
last set or adjusted. CPI-U values are available at a Department of 
Labor, Bureau of Labor Statistics file transfer protocol site, ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt. Once the inflation 
adjustment factor is determined, the second step is to calculate the 
inflation increase. That is done by multiplying the inflation 
adjustment factor by the current civil penalty amount. The third step 
is to round off the inflation increase according to Section 5(a) of the 
FCPIA Act, as amended by the DCIA. The FCPIA Act provides for a 
``rounding-off,'' using multiples from $10 to $25,000, of the increase 
calculated based on the change in the CPI. See 28 U.S.C. 2461(5)(a). 
Once the inflation increase has been rounded, the last step is to add 
the rounded inflation increase to the current civil penalty amount, to 
obtain the new inflation-adjusted civil penalty amount. Consequently, 
in those instances in which the increased dollar amount is determined 
to be less than the applicable multiple, the existing penalty is 
unchanged. The first time the civil penalty amount is adjusted, the 
FCPIA Act limits any increase of the civil penalty to no more than 10 
percent.
    In Sec.  28.10, the maximum penalties for making a false claim or 
written statement, as described in the regulation, is increased from 
$7,500 to $8,500.
    In Sec.  30.35(c)(1), the maximum penalties that the Mortgagee 
Review Board may impose for a series of violations identified in the 
regulations are increased from $7,500 to $8,500 per violation, and from 
$1,375,000 to $1,525,000 for all violations committed during any one-
year period.
    In Sec.  30.36(c), the maximum penalty that HUD may impose upon 
participants in Federal Housing Administration (FHA) programs for 
violations identified in the regulation is increased from $6,050 to 
$7,050, and from $1,210,000 to a maximum of $1,335,000 for all 
violations committed during any one-year period.
    In Sec.  30.40(c), the maximum penalty that HUD may impose upon a 
mortgagee or a holder of a guarantee certificate that violates the 
statutory provisions concerning loan guarantees for Indian housing is 
increased from $7,000 to $8,000 per violation, and from $1,375,000 to a 
maximum of $1,525,000 for all violations committed during any one-year 
period.
    In Sec.  30.45(g), the maximum penalty that may be imposed upon a 
mortgagor of a multifamily property or upon any person in a 
relationship with the mortgagor, as described in the regulations, is 
increased from $37,500 to $42,500 per violation.
    In Sec.  30.50(c), the maximum penalty that may be imposed against 
a Government National Mortgage Association (GNMA) issuer or custodian 
for a violation of any provision of 12 U.S.C. 1723i(b) or other 
authorities cited in the regulations is increased from $7,500 to $8,500 
per violation, and from $1,375,000 to $1,525,000 for all violations 
committed during any one-year period.
    In Sec.  30.60(c), the maximum penalty that HUD may impose upon any 
dealer or sponsored third-party originator for, among other things, 
falsifying statements or making false representations in violation of 
section 2(b)(7) of the National Housing Act (12 U.S.C. 1703(b)(7)) is 
increased from $7,500 to $8,500 for each violation, and from $1,375,000 
to a maximum of $1,525,000 during any one-year period.
    In Sec.  30.68(c), the maximum penalty that may be imposed against 
any owner, any general partner of a partnership owner, or any agent, as 
described in the regulation, that provides a knowing and material 
breach of a housing assistance payments contract, is increased from 
$25,000 to $27,500 per violation.
    In Sec.  180.671(a)(2) and (3), the maximum penalties that the 
Administrative Law Judge may impose upon a respondent who is found to 
have engaged in a discriminatory housing practice is increased from 
$37,500 to $42,500, and from $65,000 to $70,000, respectively. The 
maximum penalty of $16,000 at Sec.  180.671(a)(1) does not increase 
under the formula.

B. Correction to 24 CFR 30.90

    On December 17, 2008, HUD published a final rule (73 FR 76832) to 
amend its regulations governing hearing procedures for administrative 
sanction hearings pursuant to 2 CFR part 2424 and with respect to 
determinations by the Multifamily Participation Review Committee 
pursuant to 24 CFR part 200, subpart H. The final rule replaced and 
reorganized Part 26. As a result, the cross-references to Part 26 in 
Sec.  30.90 are outdated. This final rule takes the opportunity to 
correct that by updating the cross-references in Sec.  30.90(c).

III. Justification for Final Rulemaking

    In general, HUD publishes a rule for public comment before issuing 
a rule for effect, in accordance with HUD's regulations on rulemaking 
at 24 CFR part 10. Part 10, however, provides in Sec.  10.1 for 
exceptions from that general rule where HUD finds good cause to omit 
advance notice and public participation. The good cause requirement is 
satisfied when the prior public procedure is ``impracticable, 
unnecessary or contrary to the public interest.''
    HUD finds that good cause exists to publish this rule for effect 
without first soliciting public comment because prior public comment is 
unnecessary. This final rule merely follows the statutory directive in 
the FCPIA Act allowing for periodic increases in HUD's civil money 
penalties and civil penalties by applying the adjustment formula 
established in the statute. Accordingly, because calculation of the 
increases is formula-driven, HUD has no discretion in updating its 
regulations to reflect the maximum allowable penalties derived from 
application of the formula. HUD emphasizes that this rule addresses 
only the matter of the calculation of the maximum civil money penalties 
or civil penalties for the respective violations described in the 
regulations. This rule does not address the issue of the Secretary's 
discretion to impose or not to impose a penalty, nor the procedures 
that HUD must follow in initiating a civil money penalty action, or in 
seeking a civil penalty in a Fair Housing Act case.

IV. Findings and Certifications

Regulatory Review--Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if the 
regulation is necessary, to select the regulatory approach that 
maximizes net benefits. As discussed above in this preamble, this final 
rule updates an incorrect cross reference and revises the civil money 
penalty and civil penalty regulations to make inflation adjustments 
required by the FCPIA Act. As a result, this rule was determined to be 
not a significant regulatory action under section 3(f) of Executive 
Order 12866, Regulatory Planning and Review, and therefore was not 
reviewed by the Office of Management and Budget (OMB).

[[Page 4059]]

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 605(b)) generally requires 
an agency to conduct regulatory flexibility analysis of any rule 
subject to notice and comment rulemaking requirements, unless the 
agency certifies that the rule will not have a significant economic 
impact on a substantial number of small entities. This final rule has 
no economic impact on entities that are in compliance with relevant 
laws and HUD regulations. This final rule does not establish special 
procedures that would need to be complied with by small entities. All 
entities, small or large, could be subject to the same penalties as 
established by statute and implemented by this rule, but only if they 
violate a relevant statute or regulation and become subject to civil 
money penalties or civil penalties. Accordingly, the undersigned 
certifies that this final rule would not have a significant economic 
impact on a substantial number of small entities.

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on state and local 
governments and is not required by statute, or the rule preempts state 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive Order. This final rule will not have 
federalism implications and would not impose substantial direct 
compliance costs on state and local governments or preempt state law 
within the meaning of the Executive Order.

Environmental Review

    This rule does not direct, provide for assistance or loan and 
mortgage insurance for, or otherwise govern, or regulate, real property 
acquisition, disposition, leasing, rehabilitation, alteration, 
demolition, or new construction, or establish, revise, or provide for 
standards for construction or construction materials, manufactured 
housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this rule 
is categorically excluded from environmental review under the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321).

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (UMRA) establishes requirements for federal agencies to 
assess the effects of their regulatory actions on state, local, and 
tribal governments, and the private sector. This rule does not impose 
any federal mandates on any state, local, or tribal government, or the 
private sector within the meaning of UMRA.

List of Subjects

24 CFR Part 28

    Administrative practice and procedure, Claims, Fraud, Penalties.

24 CFR Part 30

    Administrative practice and procedure, Grant programs--housing and 
community development, Loan programs--housing and community 
development, Mortgages, Penalties.

24 CFR Part 180

    Administrative practice and procedure, Aged, Civil rights, Fair 
housing, Individuals with disabilities, Investigations, Mortgages, 
Penalties, Reporting and recordkeeping requirements.

    Accordingly, for the reasons described in the preamble, HUD amends 
24 CFR parts 28, 30, and 180 to read as follows:

PART 28--IMPLEMENTATION OF THE PROGRAM FRAUD CIVIL REMEDIES ACT OF 
1986

0
1. The authority citation for part 28 is revised to read as follows:

    Authority:  28 U.S.C. 2461 note; 31 U.S.C. 3801-3812; 42 U.S.C. 
3535(d).


0
2. Revise Sec.  28.10 (a)(1) introductory text and (b)(1) introductory 
text to read as follows:


Sec.  28.10  Basis for civil penalties and assessments.

    (a) Claims. (1) A civil penalty of not more than $8,500 may be 
imposed upon a person who makes a claim that the person knows or has 
reason to know:
* * * * *
    (b) Statements. (1) A civil penalty of up to $8,500 may be imposed 
upon a person who makes a written statement that:
* * * * *

PART 30--CIVIL MONEY PENALTIES: CERTAIN PROHIBITED CONDUCT

0
3. The authority citation for part 30 continues to read as follows:

    Authority:  12 U.S.C. 1701q-1, 1703, 1723i, 1735f-14, 1735f-15; 
15 U.S.C. 1717a; 28 U.S.C. 2461 note; 42 U.S.C. 1437z-1 and 3535(d).

0
4. Revise Sec.  30.35(c)(1) to read as follows:


Sec.  30.35  Mortgagees and lenders.

* * * * *
    (c)(1) Amount of penalty. The maximum penalty is $8,500 for each 
violation, up to a limit of $1,525,000 for all violations committed 
during any one-year period. Each violation shall constitute a separate 
violation as to each mortgage or loan application.
* * * * *

0
5. Revise Sec.  30.36(c) to read as follows:


Sec.  30.36  Other participants in FHA programs.

* * * * *
    (c) Amount of penalty. The maximum penalty is $7,050 for each 
violation, up to a limit of $1,335,000 for all violations committed 
during any one-year period. Each violation shall constitute a separate 
violation as to each mortgage or loan application.

0
6. Revise Sec.  30.40(c) to read as follows:


Sec.  30.40  Loan guarantees for Indian housing.

* * * * *
    (c) Amount of penalty. The maximum penalty is $8,000 for each 
violation, up to a limit of $1,525,000 for all violations committed 
during any one-year period. Each violation shall constitute a separate 
violation as to each mortgage or loan application.

0
7. Revise Sec.  30.45(g) to read as follows:


Sec.  30.45  Multifamily and Section 202 or 811 mortgagors.

* * * * *
    (g) Maximum penalty. The maximum penalty for each violation under 
paragraphs (c) and (f) of this section is $42,500.
* * * * *

0
8. Revise Sec.  30.50(c) to read as follows:


Sec.  30.50  GNMA issuers and custodians.

* * * * *
    (c) Amount of penalty. The maximum penalty is $8,500 for each 
violation, up to a limit of $1,525,000 during any one-year period. Each 
violation shall constitute a separate violation with respect to each 
pool of mortgages.

0
9. Revise Sec.  30.60(c) to read as follows:


Sec.  30.60  Dealers or sponsored third-party originators.

* * * * *
    (c) Amount of penalty. The maximum penalty is $8,500 for each 
violation, up to a limit for any particular person of $1,525,000 during 
any one-year period.

0
10. Revise Sec.  30.68(c) to read as follows:


Sec.  30.68  Section 8 owners.

* * * * *

[[Page 4060]]

    (c) Maximum penalty. The maximum penalty for each violation under 
this section is $27,500.
* * * * *

0
11. Revise Sec.  30.90(c) to read as follows:


Sec.  30.90  Response to the complaint.

* * * * *
    (c) Filing with the administrative law judges. HUD shall file the 
complaint and response with the Docket Clerk, Office of Administrative 
Law Judges, in accordance with Sec.  26.38 of this chapter. If no 
response is submitted, then HUD may file a motion for default judgment, 
together with a copy of the complaint, in accordance with Sec.  26.41 
of this title.

PART 180--CONSOLIDATED HUD HEARING PROCEDURES FOR CIVIL RIGHTS 
MATTERS

0
12. The authority citation for part 180 continues to read as follows:

    Authority:  29 U.S.C. 794; 42 U.S.C. 2000d-1, 3535(d), 3601-
3619, 5301-5320, and 6103.

0
13. Revise Sec.  180.671 (a)(2) and (3) to read as follows:


Sec.  180.671  Assessing civil penalties for Fair Housing Act cases.

    (a) * * *
    (2) $42,500, if the respondent has been adjudged in any 
administrative hearing or civil action permitted under the Fair Housing 
Act, or under any state or local fair housing law, or in any licensing 
or regulatory proceeding conducted by a federal, state, or local 
government agency, to have committed one other discriminatory housing 
practice and the adjudication was made during the 5-year period 
preceding the date of filing of the charge.
    (3) $70,000, if the respondent has been adjudged in any 
administrative hearings or civil actions permitted under the Fair 
Housing Act, or under any state or local fair housing law, or in any 
licensing or regulatory proceeding conducted by a federal, state, or 
local government agency, to have committed two or more discriminatory 
housing practices and the adjudications were made during the 7-year 
period preceding the date of filing of the charge.
* * * * *

    Dated: January 8, 2013.
Shaun Donovan,
Secretary.
[FR Doc. 2013-01070 Filed 1-17-13; 8:45 am]
BILLING CODE 4210-67-P