Rules of Practice and Procedure; Civil Money Penalty Inflation Adjustment, 43965-43968 [2018-18517]
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Federal Register / Vol. 83, No. 168 / Wednesday, August 29, 2018 / Rules and Regulations
1464 1817(a), 1818, 1820, 1821, 1831m,
1831p–1, 1831o, 1833e, 1867, 1951 et seq.,
2601 et seq., 2801 et seq., 2901 et seq., 3101
et seq., 3401 et seq., 5321, 5412, 5414; 15
U.S.C. 77uu(b), 78q(c)(3); 18 U.S.C. 641,
1905, 1906; 29 U.S.C. 1204; 31 U.S.C.
5318(g)(2), 9701; 42 U.S.C. 3601; 44 U.S.C.
3506, 3510; E.O. 12600 (3 CFR, 1987 Comp.,
p. 235).
2. Section 4.6 is amended by revising
paragraph (b)(1) to read as follows:
■
§ 4.6 Frequency of examination of national
banks and Federal savings associations.
*
*
*
*
*
(b) * * *
(1) The bank or Federal savings
association has total assets of less than
$3 billion;
*
*
*
*
*
3. Section 4.7 is amended by revising
paragraph (b)(1)(i) to read as follows:
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PART 211—INTERNATIONAL
BANKING OPERATIONS
(REGULATION K)
(i) Has total assets of less than $3
billion;
*
*
*
*
*
6. The authority citation for part 211
continues to read as follows:
Dated: August 20, 2018.
Joseph M. Otting,
Comptroller of the Currency.
■
Authority: 12 U.S.C. 221 et seq., 1818,
1835a, 1841 et seq., 3101 et seq., 3901 et seq.,
and 5101 et seq.; 15 U.S.C. 1681s, 1681w,
6801 and 6805.
7. Amend § 211.26 by revising
paragraph (c)(2)(i)(A) to read as follows:
■
§ 211.26 Examinations of offices and
affiliates of foreign banks.
*
*
*
*
*
(c) * * *
(2) * * *
(i) * * *
(A) Has total assets of less than $3
billion;
*
*
*
*
*
Federal Deposit Insurance Corporation
§ 4.7 Frequency of examination of Federal
agencies and branches.
*
*
*
*
(b) * * *
(1) * * *
(i) Has total assets of less than $3
billion;
*
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*
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*
PART 337—UNSAFE AND UNSOUND
BANK PRACTICES
Federal Reserve System
8. The authority citation for part 337
continues to read as follows:
■
12 CFR Chapter II
For the reasons set forth in the joint
preamble, the Board amends parts 208
and 211 of chapter II of title 12 of the
Code of Federal Regulations as follows:
Authority: 12 U.S.C. 375a(4), 375b,
1463(a)(1), 1816, 1818(a), 1818(b), 1819,
1820(d), 1828(j)(2), 1831, 1831f, 5412.
PART 208—MEMBERSHIP OF STATE
BANKING INSTITUTIONS IN THE
FEDERAL RESERVE SYSTEM
(REGULATION H)
§ 337.12
4. The authority citation for part 208
continues to read as follows:
■
Authority: 12 U.S.C. 24, 36, 92a, 93a,
248(a), 248(c), 321–338a, 371d, 461, 481–486,
601, 611, 1814, 1816, 1818, 1820(d)(9),
1833(j), 1828(o), 1831, 1831o, 1831p–1,
1831r–1, 1831w, 1831x, 1835a, 1882, 2901–
2907, 3105, 3310, 3331–3351, 3353, and
3906–3909; 15 U.S.C. 78b, 781(b), 78l(i), 780–
4(c)(5), 78q, 78q–1, 78w, 1681s, 1681w, 6801
and 6805, 31 U.S.C. 5318; 42 U.S.C. 4012a,
4104b, 4106, and 4128.
5. Amend § 208.64 by revising
paragraph (b)(1) to read as follows:
■
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12 CFR Chapter III
For the reasons set forth in the joint
preamble, the Board of Directors of the
FDIC amends parts 337 and 347 of
chapter III of title 12 of the Code of
Federal Regulations as follows:
*
§ 208.64
Frequency of examination.
*
*
*
*
*
(b) * * *
(1) The bank has total assets of less
than $3 billion;
*
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*
*
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9. Amend § 337.12 by revising
paragraph (b)(1) to read as follows:
■
Frequency of examination.
*
*
*
*
*
(b) * * *
(1) The institution has total assets of
less than $3 billion;
*
*
*
*
*
PART 347—INTERNATIONAL
BANKING
10. The authority citation for part 347
continues to read as follows:
■
Authority: 12 U.S.C. 1813, 1815, 1817,
1819, 1820, 1828, 3103, 3104, 3105, 3108,
3109; Pub. L. 111–203, section 939A, 124
Stat. 1376, 1887 (July 21, 2010) (codified 15
U.S.C. 78o–7 note).
11. Amend § 347.211 by revising
paragraph (b)(1)(i) to read as follows:
■
§ 347.211 Examination of branches of
foreign banks.
*
*
*
(b) * * *
(1) * * *
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Board of Governors of the Federal Reserve
System, August 22, 2018.
Ann E. Misback,
Secretary to the Board.
Dated at Washington, DC, on August 22,
2018.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2018–18685 Filed 8–28–18; 8:45 am]
BILLING CODE 4810–33–P
FEDERAL HOUSING FINANCE
AGENCY
12 CFR Parts 1209, 1217, and 1250
RIN 2590–AA93
Rules of Practice and Procedure; Civil
Money Penalty Inflation Adjustment
Federal Housing Finance
Agency.
ACTION: Final rule.
AGENCY:
The Federal Housing Finance
Agency (FHFA) is issuing this final rule
amending its Rules of Practice and
Procedure and other agency regulations
to adjust each civil money penalty
within its jurisdiction to account for
inflation, pursuant to the Federal Civil
Penalties Inflation Adjustment Act of
1990, as amended by the Federal Civil
Penalties Inflation Adjustment Act
Improvements Act of 2015.
DATES: Effective date: September 28,
2018.
SUMMARY:
FOR FURTHER INFORMATION CONTACT:
Stephen E. Hart, Deputy General
Counsel, at (202) 649–3053,
Stephen.Hart@fhfa.gov, or Frank R.
Wright, Assistant General Counsel, at
(202) 649–3087, Frank.Wright@fhfa.gov
(not toll-free numbers); Federal Housing
Finance Agency, 400 7th Street SW,
Washington, DC 20219. The telephone
number for the Telecommunications
Device for the Hearing Impaired is: (800)
877–8339 (TDD only).
SUPPLEMENTARY INFORMATION:
I. Background
FHFA is an independent agency of the
Federal government, and the financial
safety and soundness regulator of the
Federal National Mortgage Association
(Fannie Mae) and the Federal Home
Loan Mortgage Corporation (Freddie
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Mac) (collectively, the Enterprises), as
well as the Federal Home Loan Banks
(collectively, the Banks) and the Office
of Finance under authority granted by
the Federal Housing Enterprises
Financial Safety and Soundness Act of
1992 (Safety and Soundness Act).1
FHFA oversees the Enterprises and
Banks (collectively, the regulated
entities) and the Office of Finance to
ensure that they operate in a safe and
sound manner and maintain liquidity in
the housing finance market in
accordance with applicable laws, rules
and regulations. To that end, FHFA is
vested with broad supervisory
discretion and specific civil
administrative enforcement powers,
similar to such authority granted by
Congress to the Federal bank regulatory
agencies.2 Section 1376 of the Safety
and Soundness Act (12 U.S.C. 4636)
empowers FHFA to impose civil money
penalties under specific conditions.
FHFA’s Rules of Practice and Procedure
regulation (12 CFR part 1209) govern
cease and desist proceedings, civil
money penalty assessment proceedings,
and other administrative adjudications.3
FHFA’s Flood Insurance regulation (12
CFR part 1250) governs flood insurance
responsibilities as they pertain to the
Enterprises.4 FHFA’s Implementation of
the Program Fraud Civil Remedies Act
of 1986 regulation (12 CFR part 1217)
sets forth procedures for imposing civil
penalties and assessments under the
Program Fraud Civil Remedies Act (31
U.S.C. 3801 et seq.) on any person that
makes a false claim for property,
services or money from FHFA, or makes
a false material statement to FHFA in
connection with a claim, where the
amount involved does not exceed
$150,000.5
II. The Adjustment Improvements Act
The Federal Civil Penalties Inflation
Adjustment Act of 1990 (‘‘Inflation
Adjustment Act’’), as amended by the
Federal Civil Penalties Inflation
Adjustment Act Improvements Act of
2015 (‘‘Adjustment Improvements
Act’’), requires FHFA, as well as other
Federal agencies with the authority to
issue civil money penalties (CMPs), to
adjust by regulation the maximum
amount of each CMP authorized by law
that the agency has jurisdiction to
administer.6 The Adjustment
Improvements Act required agencies to
make an initial ‘‘catch-up’’ adjustment
of their CMPs upon the statute’s
enactment, and further requires agencies
to make additional adjustments on an
annual basis following the initial
adjustment.7
Annual inflation adjustments under
the Adjustment Improvements Act are
based on the percent change between
the October Consumer Price Index for
All Urban Consumers (the CPI–U)
preceding the date of the adjustment
and the October CPI–U for the year
before that.
III. Description of the Rule
This final rule adjusts the maximum
penalty amount within each of the three
tiers specified in 12 U.S.C. 4636 by
amending the table contained in 12 CFR
1209.80 to reflect the new adjusted
maximum penalty amount that FHFA
may impose upon a regulated entity or
any entity-affiliated party within each
tier. The increases in maximum penalty
amounts contained in this final rule
may not necessarily affect the amount of
any CMP that FHFA may seek for a
particular violation, which may not be
the maximum that the law allows;
FHFA would calculate each CMP on a
Previous
maximum
penalty
amount
U.S. Code citation
Description
12 U.S.C. 4636(b)(1) ......................................
12 U.S.C. 4636(b)(2) ......................................
12 U.S.C. 4636(b)(4) ......................................
First Tier .........................................................
Second Tier ....................................................
Third Tier (Entity-affiliated party and Regulated entity).
Similarly, the CMP for FHFA
penalties under the Program Fraud Civil
Remedies Act were last adjusted in
2016.12 Since FHFA is making this
round of adjustments in calendar year
2018, and the maximum CMP amounts
were last set in calendar year 2016, the
inflation adjustment amount for each
1 See Safety and Soundness Act, 12 U.S.C. 4513
and 4631–4641.
2 Id.
3 See 12 CFR part 1209.
4 See 12 CFR part 1250.
5 See generally, 31 U.S.C. 3801 et seq.
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6 See
28 U.S.C. 2461 note.
promulgated its catch-up adjustment of
its CMPs with an interim final rule published July
1, 2016. 81 FR 43028.
8 See, e.g., 12 CFR 1209.7(c); FHFA Enforcement
Policy, AB 2013–03 (May 31, 2013).
7 FHFA
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case-by-case basis in light of a variety of
factors.8 This rule also adjusts the
maximum penalty amounts for
violations under the FHFA Flood
Insurance regulation by amending the
text of 12 CFR 1250.3 to reflect the new
adjusted maximum penalty amount that
FHFA may impose for violations under
that regulation. This rule also adjusts
the maximum amounts for civil money
penalties under the Program Fraud Civil
Remedies Act by amending the text of
12 CFR 1217.3 to reflect the new
adjusted maximum penalty amount that
FHFA may impose for violations under
that regulation.
The Adjustment Improvements Act
directs federal agencies to calculate each
annual CMP adjustment as the percent
change between the CPI–U for the
previous October and the CPI–U for
October of the calendar year before.9
The maximum CMP amounts for FHFA
penalties under 12 U.S.C. 4636 were last
adjusted in 2016.10 Since FHFA is
making this round of adjustments in
calendar year 2018, and the maximum
CMP amounts were last set in calendar
year 2016, the inflation adjustment
amount for each maximum CMP amount
was calculated by comparing the CPI–U
for October 2015 with the CPI–U for
October 2016, resulting in an inflation
factor of 1.01636, and then comparing
the CPI–U for October 2016 with the
CPI–U for October 2017, resulting in an
inflation factor of 1.02041. For each
maximum CMP calculation, the product
of this inflation adjustment and the
previous maximum penalty amount was
then rounded to the nearest whole
dollar as required by the Adjustment
Improvements Act, to determine the
new adjusted maximum penalty
amount.11 The table below sets out these
items accordingly.
$10,982
54,910
2,196,380
Rounded
inflation
increase
$408
2,037
81,495
New adjusted
maximum
penalty
amount
$11,390
56,947
2,277,875
maximum CMP amount was calculated
as above by comparing the CPI–U for
October 2015 with the CPI–U for
October 2016, resulting in an inflation
9 This final rule will incorporate the annual
inflation adjustments for 2017 and 2018 by
performing the calculation for 2017, and applying
the 2018 adjustment to that amount.
10 See 81 FR 43028, 43030 (July 1, 2016).
11 28 U.S.C. 2461 note.
12 See 81 FR 43031, 43035 (July 1, 2016).
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factor of 1.01636, and then comparing
the CPI–U for October 2016 with the
CPI–U for October 2017, resulting in an
Previous
maximum
penalty
amount
U.S. Code citation
Description
31 U.S.C. 3802(a)(1) ......................................
31 U.S.C 3802(a)(2) .......................................
Maximum penalty per false claim ..................
Maximum penalty per false statement ...........
Similarly, the CMP for FHFA
penalties under the Flood Insurance
regulation were last adjusted in 2016.13
Since FHFA is making this round of
adjustments in calendar year 2018, and
the maximum CMP amounts were last
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inflation factor of 1.02041. The table
below sets out these items accordingly.
set in calendar year 2016, the inflation
adjustment amount for each maximum
CMP amount was calculated as above by
comparing the CPI–U for October 2015
with the CPI–U for October 2016,
resulting in an inflation factor of
Description
42 U.S.C. 4012a(f)(5) .....................................
42 U.S.C. 4012a(f)(5) .....................................
Maximum penalty per violation ......................
Maximum total penalties assessed against
an Enterprise in a calendar year.
IV. Differences Between the Federal
Home Loan Banks and the Enterprises
When promulgating any regulation
that may have future effect relating to
the Banks, the Director is required by
section 1313(f) of the Safety and
Soundness Act to consider the
differences between the Banks and the
Enterprises with respect to the Banks’
cooperative ownership structure;
mission of providing liquidity to
members; affordable housing and
community development mission;
capital structure; and joint and several
liability (12 U.S.C. 4513(f)).14 The
Director considered the differences
between the Banks and the Enterprises,
as they relate to the above factors, and
determined that this final rule is
appropriate, as the maximum civil
money penalty amounts are set by
statute, as is the manner in which FHFA
is required to adjust those amounts, so
there is no possibility to vary those
provisions in this rule based on
consideration of the factors recited in
section 1313(f). The inflation
adjustments effected by the final rule
are mandated by law, Any imposition of
civil money penalties would only take
place after an enforcement action in
which FHFA would have an
opportunity to consider all relevant
factors. The special features of the
Banks identified in section 1313(f) of
the Safety and Soundness Act can be
accommodated, if appropriate, along
with any other relevant factors, when
determining any actual penalties.
13 See
81 FR 43028, 43031 (July 1, 2016).
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V. Regulatory Impact
Administrative Procedure Act
FHFA finds good cause that notice
and an opportunity to comment on this
final rule are unnecessary under section
553(b)(B) of the Administrative
Procedure Act (APA), 5 U.S.C.
553(b)(B). The Adjustment
Improvements Act states that the annual
civil money penalty adjustments shall
be made notwithstanding the
rulemaking provisions of 5 U.S.C. 553.
Furthermore, this rulemaking conforms
with and is consistent with the statutory
directive set forth in the Adjustment
Improvements Act. As a result, there are
no issues of policy discretion about
which to seek public comment.
Accordingly, FHFA is issuing these
amendments as a final rule.
Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility
Act (RFA),15 an agency must prepare a
regulatory flexibility analysis for all
proposed and final rules that describes
the impact of the rule on small entities,
unless the head of an agency certifies
that the rule will not have ‘‘a significant
economic impact on a substantial
number of small entities.’’ However, the
RFA applies only to rules for which an
agency publishes a general notice of
proposed rulemaking pursuant to the
14 So in original; no paragraphs (d) and (e) were
enacted. See 12 U.S.C.A. 4513 n 1.
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$10,781
10,781
New adjusted
maximum
penalty
amount
$400
400
$11,181
11,181
1.01636, and then comparing the CPI–U
for October 2016 with the CPI–U for
October 2017, resulting in an inflation
factor of 1.02041. The table below sets
out these items accordingly.
Previous
maximum
penalty
amount
U.S. Code citation
Rounded
inflation
increase
Rounded
inflation
increase
$534
154,028
New adjusted
maximum
penalty
amount
$20
5,715
$554
159,743
APA.16 As discussed above, FHFA has
determined for good cause that the APA
does not require a general notice of
proposed rulemaking for this rule. Thus,
the RFA does not apply to this final
rule.
Paperwork Reduction Act
The Paperwork Reduction Act (44
U.S.C. 3501 et seq.) requires that
regulations involving the collection of
information receive clearance from the
Office of Management and Budget
(OMB). This rule contains no such
collection of information requiring OMB
approval under the Paperwork
Reduction Act. Consequently, no
information has been submitted to OMB
for review.
Congressional Review Act
FHFA has determined that this
regulatory action does not qualify as
either a ‘‘rule’’ or a ‘‘major rule’’ under
the Congressional Review Act. See 5
U.S.C. 804(2), (3).
List of Subjects
12 CFR Part 1209
Administrative practice and
procedure, Penalties.
12 CFR Part 1217
Civil remedies, Program fraud.
15 5
16 5
U.S.C. 603.
U.S.C. 603(a), 604(a).
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Title 12 of the Code of Federal
Regulations as follows:
12 CFR Part 1250
Flood insurance, Governmentsponsored enterprises, Penalties,
Reporting and recordkeeping
requirements.
SUBCHAPTER A—ORGANIZATION AND
OPERATIONS
Accordingly, for the reasons stated in
the SUPPLEMENTARY INFORMATION and
under the authority of 12 U.S.C. 4513b
and 12 U.S.C. 4526, the Federal Housing
Finance Agency hereby amends
subchapters A and C of chapter XII of
■
2. Revise § 1209.80 to read as follows:
§ 1209.80
PART 1209—RULES OF PRACTICE
AND PROCEDURE
1. The authority citation for part 1209
continues to read as follows:
■
Authority: 5 U.S.C. 554, 556, 557, and 701
et seq.; 12 U.S.C. 1430c(d); 12 U.S.C. 4501,
Inflation adjustments.
The maximum amount of each civil
money penalty within FHFA’s
jurisdiction, as set by the Safety and
Soundness Act and thereafter adjusted
in accordance with the Inflation
Adjustment Act, is as follows:
New adjusted
maximum
penalty
amount
U.S. Code citation
Description
12 U.S.C. 4636(b)(1) ..................................................................
12 U.S.C. 4636(b)(2) ..................................................................
12 U.S.C. 4636(b)(4) ..................................................................
First Tier .....................................................................................
Second Tier ................................................................................
Third Tier (Regulated Entity or Entity-Affiliated party) ...............
■
3. Revise § 1209.81 to read as follows:
§ 1209.81
Applicability.
The inflation adjustments set out in
§ 1209.80 shall apply to civil money
penalties assessed in accordance with
the provisions of the Safety and
Soundness Act, 12 U.S.C. 4636, and
subparts B and C of this part, for
violations occurring after September 28,
2018.
PART 1217—PROGRAM FRAUD CIVIL
REMEDIES ACT
4. The authority citation for part 1217
continues to read as follows:
■
Authority: 12 U.S.C. 4501; 12 U.S.C. 4526;
28 U.S.C. 2461 note; 31 U.S.C. 3801–3812.
5. Amend § 1217.3 by revising
paragraphs (a)(1) introductory text and
(b)(1) introductory text to read as
follows:
■
§ 1217.3 Basis for civil penalties and
assessments.
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4502, 4503, 4511, 4513, 4513b, 4517, 4526,
4566(c)(1) and (c)(7), 4581–4588, 4631–4641;
and 28 U.S.C. 2461 note.
SUBCHAPTER C—ENTERPRISES
PART 1250—FLOOD INSURANCE
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§ 1250.3
Civil money penalties.
*
*
*
*
*
(c) Amount. The maximum civil
money penalty amount is $534 for each
violation that occurs before September
28, 2018, with total penalties not to
exceed $154,028. For violations that
occur on or after September 28, 2018,
the civil money penalty under this
section may not exceed $554 for each
violation, with total penalties assessed
under this section against an Enterprise
during any calendar year not to exceed
$159,743.
*
*
*
*
*
Dated: August 15, 2018.
Melvin L. Watt,
Director, Federal Housing Finance Agency.
BILLING CODE 8070–01–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 71
[Docket No. FAA–2018–0062; Airspace
Docket No. 18–ASO–3]
RIN 2120–AA66
Amendment of Class D and Class E
Airspace; Pensacola, FL, and
Establishment of Class E Airspace;
Milton, FL
Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule.
AGENCY:
6. The authority citation for part 1250
continues to read as follows:
VerDate Sep<11>2014
7. Amend § 1250.3 by revising
paragraph (c) to read as follows:
■
[FR Doc. 2018–18517 Filed 8–28–18; 8:45 am]
(a) * * * (1) A civil penalty of not
more than $11,181 may be imposed
upon a person who makes a claim to
FHFA for property, services, or money
where the person knows or has reason
to know that the claim:
*
*
*
*
*
(b) * * * (1) A civil penalty of up to
$11,181 may be imposed upon a person
who makes a written statement to FHFA
with respect to a claim, contract, bid or
proposal for a contract, or benefit from
FHFA that:
*
*
*
*
*
■
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).
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$11,390
56,947
2,277,875
This action amends Class D
airspace and Class E airspace extending
upward from 700 feet above the surface
at Choctaw Naval Outlying Field
(NOLF), Milton, FL, by changing the
city associated with the airport name in
the above airspace classes and adjusting
the geographic coordinates of the airport
and the Santa Rosa TACAN navigation
aid to match the FAA’s aeronautical
database. Additionally, Class E surface
airspace is established at Choctaw
NOLF for the safety of aircraft landing
and departing the airport when the air
traffic control tower is closed. Also, an
editorial change is made to the Class D
airspace legal description replacing
‘‘Airport/Facility Directory’’ with the
term ‘‘Chart Supplement’’. This action
enhances the safety and management of
instrument flight rules (IFR) operations
at this airport.
DATES: Effective 0901 UTC, November 8,
2018. The Director of the Federal
Register approves this incorporation by
reference action under title 1, Code of
Federal Regulations, part 51, subject to
the annual revision of FAA Order
7400.11 and publication of conforming
amendments.
ADDRESSES: FAA Order 7400.11B,
Airspace Designations and Reporting
Points, and subsequent amendments can
be viewed online at https://www.faa.gov/
air_traffic/publications/. For further
information, you can contact the
Airspace Policy Group, Federal Aviation
Administration, 800 Independence
Avenue SW, Washington, DC 20591;
telephone: (202) 267–8783. The Order is
also available for inspection at the
National Archives and Records
Administration (NARA). For
information on the availability of FAA
Order 7400.11B at NARA, call (202)
741–6030, or go to https://
SUMMARY:
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]]>Agencies
[Federal Register Volume 83, Number 168 (Wednesday, August 29, 2018)]
[Rules and Regulations]
[Pages 43965-43968]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-18517]
=======================================================================
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FEDERAL HOUSING FINANCE AGENCY
12 CFR Parts 1209, 1217, and 1250
RIN 2590-AA93
Rules of Practice and Procedure; Civil Money Penalty Inflation
Adjustment
AGENCY: Federal Housing Finance Agency.
ACTION: Final rule.
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SUMMARY: The Federal Housing Finance Agency (FHFA) is issuing this
final rule amending its Rules of Practice and Procedure and other
agency regulations to adjust each civil money penalty within its
jurisdiction to account for inflation, pursuant to the Federal Civil
Penalties Inflation Adjustment Act of 1990, as amended by the Federal
Civil Penalties Inflation Adjustment Act Improvements Act of 2015.
DATES: Effective date: September 28, 2018.
FOR FURTHER INFORMATION CONTACT: Stephen E. Hart, Deputy General
Counsel, at (202) 649-3053, [email protected], or Frank R. Wright,
Assistant General Counsel, at (202) 649-3087, [email protected]
(not toll-free numbers); Federal Housing Finance Agency, 400 7th Street
SW, Washington, DC 20219. The telephone number for the
Telecommunications Device for the Hearing Impaired is: (800) 877-8339
(TDD only).
SUPPLEMENTARY INFORMATION:
I. Background
FHFA is an independent agency of the Federal government, and the
financial safety and soundness regulator of the Federal National
Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage
Corporation (Freddie
[[Page 43966]]
Mac) (collectively, the Enterprises), as well as the Federal Home Loan
Banks (collectively, the Banks) and the Office of Finance under
authority granted by the Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (Safety and Soundness Act).\1\ FHFA oversees
the Enterprises and Banks (collectively, the regulated entities) and
the Office of Finance to ensure that they operate in a safe and sound
manner and maintain liquidity in the housing finance market in
accordance with applicable laws, rules and regulations. To that end,
FHFA is vested with broad supervisory discretion and specific civil
administrative enforcement powers, similar to such authority granted by
Congress to the Federal bank regulatory agencies.\2\ Section 1376 of
the Safety and Soundness Act (12 U.S.C. 4636) empowers FHFA to impose
civil money penalties under specific conditions. FHFA's Rules of
Practice and Procedure regulation (12 CFR part 1209) govern cease and
desist proceedings, civil money penalty assessment proceedings, and
other administrative adjudications.\3\ FHFA's Flood Insurance
regulation (12 CFR part 1250) governs flood insurance responsibilities
as they pertain to the Enterprises.\4\ FHFA's Implementation of the
Program Fraud Civil Remedies Act of 1986 regulation (12 CFR part 1217)
sets forth procedures for imposing civil penalties and assessments
under the Program Fraud Civil Remedies Act (31 U.S.C. 3801 et seq.) on
any person that makes a false claim for property, services or money
from FHFA, or makes a false material statement to FHFA in connection
with a claim, where the amount involved does not exceed $150,000.\5\
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\1\ See Safety and Soundness Act, 12 U.S.C. 4513 and 4631-4641.
\2\ Id.
\3\ See 12 CFR part 1209.
\4\ See 12 CFR part 1250.
\5\ See generally, 31 U.S.C. 3801 et seq.
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II. The Adjustment Improvements Act
The Federal Civil Penalties Inflation Adjustment Act of 1990
(``Inflation Adjustment Act''), as amended by the Federal Civil
Penalties Inflation Adjustment Act Improvements Act of 2015
(``Adjustment Improvements Act''), requires FHFA, as well as other
Federal agencies with the authority to issue civil money penalties
(CMPs), to adjust by regulation the maximum amount of each CMP
authorized by law that the agency has jurisdiction to administer.\6\
The Adjustment Improvements Act required agencies to make an initial
``catch-up'' adjustment of their CMPs upon the statute's enactment, and
further requires agencies to make additional adjustments on an annual
basis following the initial adjustment.\7\
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\6\ See 28 U.S.C. 2461 note.
\7\ FHFA promulgated its catch-up adjustment of its CMPs with an
interim final rule published July 1, 2016. 81 FR 43028.
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Annual inflation adjustments under the Adjustment Improvements Act
are based on the percent change between the October Consumer Price
Index for All Urban Consumers (the CPI-U) preceding the date of the
adjustment and the October CPI-U for the year before that.
III. Description of the Rule
This final rule adjusts the maximum penalty amount within each of
the three tiers specified in 12 U.S.C. 4636 by amending the table
contained in 12 CFR 1209.80 to reflect the new adjusted maximum penalty
amount that FHFA may impose upon a regulated entity or any entity-
affiliated party within each tier. The increases in maximum penalty
amounts contained in this final rule may not necessarily affect the
amount of any CMP that FHFA may seek for a particular violation, which
may not be the maximum that the law allows; FHFA would calculate each
CMP on a case-by-case basis in light of a variety of factors.\8\ This
rule also adjusts the maximum penalty amounts for violations under the
FHFA Flood Insurance regulation by amending the text of 12 CFR 1250.3
to reflect the new adjusted maximum penalty amount that FHFA may impose
for violations under that regulation. This rule also adjusts the
maximum amounts for civil money penalties under the Program Fraud Civil
Remedies Act by amending the text of 12 CFR 1217.3 to reflect the new
adjusted maximum penalty amount that FHFA may impose for violations
under that regulation.
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\8\ See, e.g., 12 CFR 1209.7(c); FHFA Enforcement Policy, AB
2013-03 (May 31, 2013).
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The Adjustment Improvements Act directs federal agencies to
calculate each annual CMP adjustment as the percent change between the
CPI-U for the previous October and the CPI-U for October of the
calendar year before.\9\ The maximum CMP amounts for FHFA penalties
under 12 U.S.C. 4636 were last adjusted in 2016.\10\ Since FHFA is
making this round of adjustments in calendar year 2018, and the maximum
CMP amounts were last set in calendar year 2016, the inflation
adjustment amount for each maximum CMP amount was calculated by
comparing the CPI-U for October 2015 with the CPI-U for October 2016,
resulting in an inflation factor of 1.01636, and then comparing the
CPI-U for October 2016 with the CPI-U for October 2017, resulting in an
inflation factor of 1.02041. For each maximum CMP calculation, the
product of this inflation adjustment and the previous maximum penalty
amount was then rounded to the nearest whole dollar as required by the
Adjustment Improvements Act, to determine the new adjusted maximum
penalty amount.\11\ The table below sets out these items accordingly.
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\9\ This final rule will incorporate the annual inflation
adjustments for 2017 and 2018 by performing the calculation for
2017, and applying the 2018 adjustment to that amount.
\10\ See 81 FR 43028, 43030 (July 1, 2016).
\11\ 28 U.S.C. 2461 note.
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Previous Rounded New adjusted
U.S. Code citation Description maximum inflation maximum
penalty amount increase penalty amount
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12 U.S.C. 4636(b)(1).................. First Tier.............. $10,982 $408 $11,390
12 U.S.C. 4636(b)(2).................. Second Tier............. 54,910 2,037 56,947
12 U.S.C. 4636(b)(4).................. Third Tier (Entity- 2,196,380 81,495 2,277,875
affiliated party and
Regulated entity).
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Similarly, the CMP for FHFA penalties under the Program Fraud Civil
Remedies Act were last adjusted in 2016.\12\ Since FHFA is making this
round of adjustments in calendar year 2018, and the maximum CMP amounts
were last set in calendar year 2016, the inflation adjustment amount
for each maximum CMP amount was calculated as above by comparing the
CPI-U for October 2015 with the CPI-U for October 2016, resulting in an
inflation
[[Page 43967]]
factor of 1.01636, and then comparing the CPI-U for October 2016 with
the CPI-U for October 2017, resulting in an inflation factor of
1.02041. The table below sets out these items accordingly.
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\12\ See 81 FR 43031, 43035 (July 1, 2016).
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Previous Rounded New adjusted
U.S. Code citation Description maximum inflation maximum
penalty amount increase penalty amount
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31 U.S.C. 3802(a)(1).................. Maximum penalty per $10,781 $400 $11,181
false claim.
31 U.S.C 3802(a)(2)................... Maximum penalty per 10,781 400 11,181
false statement.
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Similarly, the CMP for FHFA penalties under the Flood Insurance
regulation were last adjusted in 2016.\13\ Since FHFA is making this
round of adjustments in calendar year 2018, and the maximum CMP amounts
were last set in calendar year 2016, the inflation adjustment amount
for each maximum CMP amount was calculated as above by comparing the
CPI-U for October 2015 with the CPI-U for October 2016, resulting in an
inflation factor of 1.01636, and then comparing the CPI-U for October
2016 with the CPI-U for October 2017, resulting in an inflation factor
of 1.02041. The table below sets out these items accordingly.
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\13\ See 81 FR 43028, 43031 (July 1, 2016).
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Previous Rounded New adjusted
U.S. Code citation Description maximum inflation maximum
penalty amount increase penalty amount
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42 U.S.C. 4012a(f)(5)................. Maximum penalty per $534 $20 $554
violation.
42 U.S.C. 4012a(f)(5)................. Maximum total penalties 154,028 5,715 159,743
assessed against an
Enterprise in a
calendar year.
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IV. Differences Between the Federal Home Loan Banks and the Enterprises
When promulgating any regulation that may have future effect
relating to the Banks, the Director is required by section 1313(f) of
the Safety and Soundness Act to consider the differences between the
Banks and the Enterprises with respect to the Banks' cooperative
ownership structure; mission of providing liquidity to members;
affordable housing and community development mission; capital
structure; and joint and several liability (12 U.S.C. 4513(f)).\14\ The
Director considered the differences between the Banks and the
Enterprises, as they relate to the above factors, and determined that
this final rule is appropriate, as the maximum civil money penalty
amounts are set by statute, as is the manner in which FHFA is required
to adjust those amounts, so there is no possibility to vary those
provisions in this rule based on consideration of the factors recited
in section 1313(f). The inflation adjustments effected by the final
rule are mandated by law, Any imposition of civil money penalties would
only take place after an enforcement action in which FHFA would have an
opportunity to consider all relevant factors. The special features of
the Banks identified in section 1313(f) of the Safety and Soundness Act
can be accommodated, if appropriate, along with any other relevant
factors, when determining any actual penalties.
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\14\ So in original; no paragraphs (d) and (e) were enacted. See
12 U.S.C.A. 4513 n 1.
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V. Regulatory Impact
Administrative Procedure Act
FHFA finds good cause that notice and an opportunity to comment on
this final rule are unnecessary under section 553(b)(B) of the
Administrative Procedure Act (APA), 5 U.S.C. 553(b)(B). The Adjustment
Improvements Act states that the annual civil money penalty adjustments
shall be made notwithstanding the rulemaking provisions of 5 U.S.C.
553. Furthermore, this rulemaking conforms with and is consistent with
the statutory directive set forth in the Adjustment Improvements Act.
As a result, there are no issues of policy discretion about which to
seek public comment. Accordingly, FHFA is issuing these amendments as a
final rule.
Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility Act (RFA),\15\ an agency
must prepare a regulatory flexibility analysis for all proposed and
final rules that describes the impact of the rule on small entities,
unless the head of an agency certifies that the rule will not have ``a
significant economic impact on a substantial number of small
entities.'' However, the RFA applies only to rules for which an agency
publishes a general notice of proposed rulemaking pursuant to the
APA.\16\ As discussed above, FHFA has determined for good cause that
the APA does not require a general notice of proposed rulemaking for
this rule. Thus, the RFA does not apply to this final rule.
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\15\ 5 U.S.C. 603.
\16\ 5 U.S.C. 603(a), 604(a).
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Paperwork Reduction Act
The Paperwork Reduction Act (44 U.S.C. 3501 et seq.) requires that
regulations involving the collection of information receive clearance
from the Office of Management and Budget (OMB). This rule contains no
such collection of information requiring OMB approval under the
Paperwork Reduction Act. Consequently, no information has been
submitted to OMB for review.
Congressional Review Act
FHFA has determined that this regulatory action does not qualify as
either a ``rule'' or a ``major rule'' under the Congressional Review
Act. See 5 U.S.C. 804(2), (3).
List of Subjects
12 CFR Part 1209
Administrative practice and procedure, Penalties.
12 CFR Part 1217
Civil remedies, Program fraud.
[[Page 43968]]
12 CFR Part 1250
Flood insurance, Government-sponsored enterprises, Penalties,
Reporting and recordkeeping requirements.
Accordingly, for the reasons stated in the SUPPLEMENTARY
INFORMATION and under the authority of 12 U.S.C. 4513b and 12 U.S.C.
4526, the Federal Housing Finance Agency hereby amends subchapters A
and C of chapter XII of Title 12 of the Code of Federal Regulations as
follows:
SUBCHAPTER A--ORGANIZATION AND OPERATIONS
PART 1209--RULES OF PRACTICE AND PROCEDURE
0
1. The authority citation for part 1209 continues to read as follows:
Authority: 5 U.S.C. 554, 556, 557, and 701 et seq.; 12 U.S.C.
1430c(d); 12 U.S.C. 4501, 4502, 4503, 4511, 4513, 4513b, 4517, 4526,
4566(c)(1) and (c)(7), 4581-4588, 4631-4641; and 28 U.S.C. 2461
note.
0
2. Revise Sec. 1209.80 to read as follows:
Sec. 1209.80 Inflation adjustments.
The maximum amount of each civil money penalty within FHFA's
jurisdiction, as set by the Safety and Soundness Act and thereafter
adjusted in accordance with the Inflation Adjustment Act, is as
follows:
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New adjusted
U.S. Code citation Description maximum
penalty amount
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12 U.S.C. 4636(b)(1)........... First Tier............. $11,390
12 U.S.C. 4636(b)(2)........... Second Tier............ 56,947
12 U.S.C. 4636(b)(4)........... Third Tier (Regulated 2,277,875
Entity or Entity-
Affiliated party).
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0
3. Revise Sec. 1209.81 to read as follows:
Sec. 1209.81 Applicability.
The inflation adjustments set out in Sec. 1209.80 shall apply to
civil money penalties assessed in accordance with the provisions of the
Safety and Soundness Act, 12 U.S.C. 4636, and subparts B and C of this
part, for violations occurring after September 28, 2018.
PART 1217--PROGRAM FRAUD CIVIL REMEDIES ACT
0
4. The authority citation for part 1217 continues to read as follows:
Authority: 12 U.S.C. 4501; 12 U.S.C. 4526; 28 U.S.C. 2461 note;
31 U.S.C. 3801-3812.
0
5. Amend Sec. 1217.3 by revising paragraphs (a)(1) introductory text
and (b)(1) introductory text to read as follows:
Sec. 1217.3 Basis for civil penalties and assessments.
(a) * * * (1) A civil penalty of not more than $11,181 may be
imposed upon a person who makes a claim to FHFA for property, services,
or money where the person knows or has reason to know that the claim:
* * * * *
(b) * * * (1) A civil penalty of up to $11,181 may be imposed upon
a person who makes a written statement to FHFA with respect to a claim,
contract, bid or proposal for a contract, or benefit from FHFA that:
* * * * *
SUBCHAPTER C--ENTERPRISES
PART 1250--FLOOD INSURANCE
0
6. The authority citation for part 1250 continues to read as follows:
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).
0
7. Amend Sec. 1250.3 by revising paragraph (c) to read as follows:
Sec. 1250.3 Civil money penalties.
* * * * *
(c) Amount. The maximum civil money penalty amount is $534 for each
violation that occurs before September 28, 2018, with total penalties
not to exceed $154,028. For violations that occur on or after September
28, 2018, the civil money penalty under this section may not exceed
$554 for each violation, with total penalties assessed under this
section against an Enterprise during any calendar year not to exceed
$159,743.
* * * * *
Dated: August 15, 2018.
Melvin L. Watt,
Director, Federal Housing Finance Agency.
[FR Doc. 2018-18517 Filed 8-28-18; 8:45 am]
BILLING CODE 8070-01-P
