Rules of Practice and Procedure; Adjusting Civil Money Penalties for Inflation, 1354-1356 [2019-00789]
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Federal Register / Vol. 84, No. 23 / Monday, February 4, 2019 / Rules and Regulations
member of a deposit placement
network.
(v) Reciprocal deposits means
deposits received by an agent institution
through a deposit placement network
with the same maturity (if any) and in
the same aggregate amount as covered
deposits placed by the agent institution
in other network member banks.
*
*
*
*
*
Dated at Washington, DC, on December 18,
2018.
By Order of the Board of Directors.
Federal Deposit Insurance Corporation.
Valerie Best,
Assistant Executive Secretary.
[FR Doc. 2018–28137 Filed 2–1–19; 8:45 am]
BILLING CODE 6714–01–P
FARM CREDIT ADMINISTRATION
12 CFR Part 622
RIN 3052–AD33
Rules of Practice and Procedure;
Adjusting Civil Money Penalties for
Inflation
Farm Credit Administration.
Final rule.
AGENCY:
ACTION:
This regulation implements
inflation adjustments to civil money
penalties (CMPs) that the Farm Credit
Administration (FCA) may impose or
enforce pursuant to the Farm Credit Act
of 1971, as amended (Farm Credit Act),
and pursuant to the Flood Disaster
Protection Act of 1973, as amended by
the National Flood Insurance Reform
Act of 1994 (Reform Act), and further
amended by the Biggert-Waters Flood
Insurance Reform Act of 2012 (BiggertWaters Act).
DATES: Effective date: This regulation is
effective on February 4, 2019.
Applicability date: The inflationadjusted CMP were applicable
beginning January 15, 2019.
FOR FURTHER INFORMATION CONTACT:
Michael T. Wilson, Policy Analyst,
Office of Regulatory Policy, Farm
Credit Administration, McLean, VA
22102–5090, (703) 883–4124, TTY
(703) 883–4056,
Or
Autumn R. Agans, Senior Attorney,
Office of General Counsel, Farm
Credit Administration, McLean, VA
22102–5090, (703) 883–4082, TTY
(703) 883–4056.
SUPPLEMENTARY INFORMATION:
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SUMMARY:
I. Objective
The objective of this regulation is to
adjust the maximum CMPs for inflation
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through a final rulemaking to retain the
deterrent effect of such penalties.
II. Background
A. Introduction
The Federal Civil Penalties Inflation
Adjustment Act of 1990, as amended by
the Debt Collection Improvement Act of
1996 (1996 Act) and the Federal Civil
Penalties Inflation Adjustment Act
Improvements Act of 2015 (2015 Act)
(collectively, 1990 Act, as amended),
requires all Federal agencies with the
authority to enforce CMPs to evaluate
and adjust, if necessary, those CMPs
each year to ensure that they continue
to maintain their deterrent value and
promote compliance with the law.
Section 3(2) of the 1990 Act, as
amended, defines a civil monetary
penalty 1 as any penalty, fine, or other
sanction that: (1) Either is for a specific
monetary amount as provided by
Federal law or has a maximum amount
provided for by Federal law; (2) is
assessed or enforced by an agency
pursuant to Federal law; and (3) is
assessed or enforced pursuant to an
administrative proceeding or a civil
action in the Federal courts.2
The FCA imposes and enforces CMPs
through the Farm Credit Act 3 and the
Flood Disaster Protection Act of 1973, as
amended. FCA’s regulations governing
CMPs are found in 12 CFR parts 622 and
623. Part 622 establishes rules of
practice and procedure applicable to
formal and informal hearings held
before the FCA, and to formal
investigations conducted under the
Farm Credit Act. Part 623 prescribes
rules regarding persons who may
practice before the FCA and the
circumstances under which such
persons may be suspended or debarred
from practice before the FCA.
B. CMPs Issued Under the Farm Credit
Act
The Farm Credit Act provides that
any Farm Credit System (System)
institution or any officer, director,
employee, agent, or other person
participating in the conduct of the
affairs of a System institution who
violates the terms of a cease-and-desist
order that has become final pursuant to
section 5.25 or 5.26 of the Farm Credit
Act must pay up to a maximum daily
1 Note: While the 1990 Act, as amended by 1996
and 2015 Acts, uses the term ‘‘civil monetary
penalties’’ for these penalties or other sanctions, the
Farm Credit Act and the FCA Regulations use the
term ‘‘civil money penalties.’’ Both terms have the
same meaning. Accordingly, this rule uses the term
civil money penalty, and both terms may be used
interchangeably.
2 See 28 U.S.C. 2461 note.
3 Public Law 92–181, as amended.
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amount of $1,000 4 during which such
violation continues. This CMP
maximum was set by the Farm Credit
Amendments Act of 1985, which
amended the Farm Credit Act. Orders
issued by the FCA under section 5.25 or
5.26 of the Farm Credit Act include
temporary and permanent cease-anddesist orders. In addition, section
5.32(h) of the Farm Credit Act provides
that any directive issued under sections
4.3(b)(2), 4.3A(e), or 4.14A(i) of the
Farm Credit Act ‘‘shall be treated’’ as a
final order issued under section 5.25 of
the Farm Credit Act for purposes of
assessing a CMP.
Section 5.32(a) of the Farm Credit Act
also states that ‘‘[a]ny such institution or
person who violates any provision of
the [Farm Credit] Act or any regulation
issued under this Act shall forfeit and
pay a civil penalty of not more than
$500 5 per day for each day during
which such violation continues.’’ This
CMP maximum was set by the
Agricultural Credit Act of 1987, which
was enacted in 1988, and amends the
Farm Credit Act. Current, inflationadjusted CMP maximums are set forth
in existing § 622.61 of FCA regulations.6
The FCA also enforces the Flood
Disaster Protection Act of 1973,7 as
amended by the National Flood
Insurance Reform Act of 1994,8 which
requires FCA to assess CMPs for a
pattern or practice of committing certain
specific actions in violation of the
National Flood Insurance Program. The
existing maximum CMP for a violation
under the Flood Disaster Protection Act
of 1973 is $2,000.9 10
C. Federal Civil Penalties Inflation
Adjustment Act Improvements Act of
2015
1. In General
The 2015 Act required all Federal
agencies to adjust the CMPs yearly,
starting January 15, 2017.
Under Section 4(b) of the 1990 Act, as
amended, annual adjustments are to be
4 The inflation-adjusted CMP in effect on January
15, 2018, for a violation of a final order is $2,269
per day, as set forth in § 622.61(a)(1) of FCA
regulations.
5 The inflation-adjusted CMP in effect on January
15, 2018, for a violation of the Farm Credit Act or
a regulation issued under the Farm Credit Act is
$1,026 per day, as set forth in § 622.61(a)(2) of FCA
regulations.
6 Prior adjustments were made under the 1990
Act.
7 42 U.S.C. 4012a.
8 Public Law 103–325, title V, 108 Stat. 2160,
2255–87 (September 23, 1994).
9 Public Law 112–141, 126 Stat. 405 (July 6,
2012).
10 The inflation-adjusted CMP in effect on January
15, 2018, for a flood insurance violation is $2,133,
as set forth in § 622.61(b)of FCA regulations.
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Federal Register / Vol. 84, No. 23 / Monday, February 4, 2019 / Rules and Regulations
made yearly no later than January 15 of
each year.11 Section 6 of the 1990 Act,
as amended, states that any increase to
a civil monetary penalty under this 1990
Act applies only to civil monetary
penalties, including those whose
associated violation predated such
increase, which are assessed after the
date the increase takes effect.
Section 5(b) of the 1990 Act, as
amended, defines the term ‘‘cost-ofliving adjustment’’ as the percentage (if
any) for each civil monetary penalty by
which (1) the Consumer Price Index
(CPI) for the month of October of the
calendar year preceding the adjustment,
exceeds (2) the CPI for the month of
October 1 year before the month of
October referred to in (1) of the calendar
year in which the amount of such civil
monetary penalty was last set or
adjusted pursuant to law.12
The increase for each CMP adjusted
for inflation must be rounded using a
method prescribed by section 5(a) of the
1990 Act, as amended, by the 2015
Act.13
1. New Penalty Amount in § 622.61(a)(1)
The inflation-adjusted CMP currently
in effect for violations of a final order
occurring on or after January 15, 2017,
is a maximum daily amount of $2,269.18
Multiplying the $2,269 CMP by the 2018
OMB multiplier, 1.02522, yields a total
of $2,326.22. When that number is
rounded as required by section 5(a) of
the 1990 Act, as amended, the inflationadjusted maximum increases to $2,326.
Thus, the new CMP maximum is $2,326.
III. Yearly Adjustments
2. New Penalty Amount in § 622.61(a)(2)
The inflation-adjusted CMP currently
in effect for violations of the Farm
Credit Act or regulations issued under
the Farm Credit Act occurring on or
after January 15, 2018, is a maximum
daily amount of $1,026.19 Multiplying
the $1,026 CMP maximum by the 2018
OMB multiplier, 1.02522, yields a total
of $1,051.88. When that number is
rounded as required by section 5(a) of
the 1990 Act, as amended the inflationadjusted maximum increases to $1,052.
Thus, the new CMP maximum is $1,052.
A. Mathematical Calculations of 2019
Adjustments
The adjustment requirement affects
two provisions of section 5.32(a) of the
Farm Credit Act. For the 2019 yearly
adjustments to the CMPs set forth by the
Farm Credit Act, the calculation
required by the 2018 White House
Office of Management and Budget
(OMB) guidance 15 is based on the
percentage by which the CPI for October
2018 exceeds the CPIs for October 2017.
The OMB set forth guidance, as required
by the 2015 Act,16 with a multiplier for
3. New Penalty Amounts for Flood
Insurance Violations Under § 622.61(b)
The existing maximum CMP for a
pattern or practice of flood insurance
violations pursuant to 42 U.S.C.
4012a(f)(5) is $2,133. Multiplying
$2,133 by the 2018 OMB multiplier,
1.02522, yields a total of $2,186.79.
When that number is rounded as
required by section 5(a) of the 1990 Act,
as amended, the new maximum
assessment of the CMP for violating 42
U.S.C. 4012a(f)(5) is $2,187. Thus, the
new CMP maximum is $2,187.
2. Other Adjustments
If a civil monetary penalty is subject
to a cost-of-living adjustment under the
1990 Act, as amended, but is adjusted
to an amount greater than the amount of
the adjustment required under the Act
within the 12 months preceding a
required cost-of-living adjustment, the
agency is not required to make the costof-living adjustment to that CMP in that
calendar year.14
11 Public
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calculating the new CMP values.17 The
OMB multiplier for the 2019 CMPs is
1.02522.
The adjustment also affects the CMPs
set by the Flood Disaster Protection Act
of 1973, as amended. The adjustment
multiplier is the same for all FCA
enforced CMPs, set at 1.02522. The
maximum CMPs for violations were
created in 2012 by the Biggert-Waters
Act, which amended the Flood Disaster
Protection Act of 1973.
Law 114–74, sec. 701(b)(1).
12 The CPI is published by the Department of
Labor, Bureau of Statistics, and is available at its
website: ftp://ftp.bls.gov/pub/special.requests/cpi/
cpiai.txt.
13 Pursuant to section 5(a)(3) of the 2015 Act, any
increase determined under the subsection shall be
rounded to the nearest $1.
14 Pursuant to section 4(d) of the 1990 Act, as
amended.
15 OMB Circular M–19–04, Implementation of
Penalty Inflation Adjustments for 2019, Pursuant to
the Federal Civil Penalties Inflation Adjustment Act
Improvements Act of 2015.
16 28 U.S.C. 2461 note, section 7(a).
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IV. Notice and Comment Not Required
by Administrative Procedure Act
The 1990 Act, as amended, gives
Federal agencies no discretion in the
adjustment of CMPs for the rate of
inflation. Further, these revisions are
ministerial, technical, and
17 OMB Circular M–19–04, Implementation of
Penalty Inflation Adjustments for 2019, Pursuant to
the Federal Civil Penalties Inflation Adjustment Act
Improvements Act of 2015.
18 12 CFR 622.61(a)(1).
19 12 CFR 622.61(a)(2).
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1355
noncontroversial. For these reasons, the
FCA finds good cause to determine that
public notice and an opportunity to
comment are impracticable,
unnecessary, and contrary to the public
interest pursuant to the Administrative
Procedure Act, 5 U.S.C. 553(b)(B), and
adopts this rule in final form.
V. Regulatory Flexibility Act
Pursuant to section 605(b) of the
Regulatory Flexibility Act (5 U.S.C. 601
et seq.), the FCA hereby certifies that
this final rule will not have a significant
economic impact on a substantial
number of small entities. Each of the
banks in the System, considered
together with its affiliated associations,
has assets and annual income in excess
of the amounts that would qualify them
as small entities. Therefore, System
institutions are not ‘‘small entities’’ as
defined in the Regulatory Flexibility
Act.
List of Subjects in 12 CFR Part 622
Administrative practice and
procedure, Crime, Investigations,
Penalties.
For the reasons stated in the
preamble, part 622 of chapter VI, title 12
of the Code of Federal Regulations is
amended as follows:
PART 622—RULES OF PRACTICE AND
PROCEDURE
1. The authority citation for part 622
continues to read as follows:
■
Authority: Secs. 5.9, 5.10, 5.17, 5.25–5.37
of the Farm Credit Act (12 U.S.C. 2243, 2244,
2252, 2261–2273); 28 U.S.C. 2461 note; and
42 U.S.C. 4012a(f).
■
2. Revise § 622.61 to read as follows:
§ 622.61 Adjustment of civil money
penalties by the rate of inflation under the
Federal Civil Penalties Inflation Adjustment
Act of 1990, as amended.
(a) The maximum amount of each
civil money penalty within FCA’s
jurisdiction is adjusted in accordance
with the Federal Civil Penalties
Inflation Adjustment Act of 1990, as
amended (28 U.S.C. 2461 note), as
follows:
(1) Amount of civil money penalty
imposed under section 5.32 of the Act
for violation of a final order issued
under section 5.25 or 5.26 of the Act:
The maximum daily amount is $2,326
for violations that occur on or after
January 15, 2019.
(2) Amount of civil money penalty for
violation of the Act or regulations: The
maximum daily amount is $1,052 for
each violation that occurs on or after
January 15, 2019.
(b) The maximum civil money penalty
amount assessed under 42 U.S.C.
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Federal Register / Vol. 84, No. 23 / Monday, February 4, 2019 / Rules and Regulations
4012a(f) is $2,187 for each violation that
occurs on or after January 15, 2019, with
no cap on the total amount of penalties
that can be assessed against any single
institution during any calendar year.
Dated: January 29, 2019.
Dale Aultman,
Secretary, Farm Credit Administration Board.
[FR Doc. 2019–00789 Filed 2–1–19; 8:45 am]
BILLING CODE 6705–01–P
BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Part 1026
RIN 3170–AA93
Truth in Lending Act (Regulation Z)
Adjustment to Asset-Size Exemption
Threshold
Bureau of Consumer Financial
Protection.
ACTION: Final rule; official
interpretation.
AGENCY:
The Bureau of Consumer
Financial Protection (Bureau) is
amending the official commentary that
interprets the requirements of the
Bureau’s Regulation Z (Truth in
Lending) to reflect a change in the assetsize threshold for certain creditors to
qualify for an exemption to the
requirement to establish an escrow
account for a higher-priced mortgage
loan based on the annual percentage
change in the average of the Consumer
Price Index for Urban Wage Earners and
Clerical Workers (CPI–W). Based on the
2.6 percent increase in the average of
the CPI–W for the 12-month period
ending in November 2018, the
exemption threshold is adjusted to
increase to $2.167 billion from $2.112
billion. Therefore, creditors with assets
of less than $2.167 billion (including
assets of certain affiliates) as of
December 31, 2018, are exempt, if other
requirements of Regulation Z also are
met, from establishing escrow accounts
for higher-priced mortgage loans in
2019.
SUMMARY:
Effective date: This rule is
effective February 4, 2019. Applicability
date: This rule is applicable on January
1, 2019, consistent with relevant
statutory or regulatory provisions.
FOR FURTHER INFORMATION CONTACT:
Monique Chenault, Paralegal Specialist,
Office of Regulations, at (202) 435–7700.
If you require this document in an
alternative electronic format, please
contact CFPB_Accessibility@cfpb.gov.
SUPPLEMENTARY INFORMATION:
I. Background
Section 129D of the Truth in Lending
Act (TILA) contains a general
requirement that an escrow account be
established by a creditor to pay for
property taxes and insurance premiums
for certain first-lien higher-priced
mortgage loan transactions. TILA
section 129D also generally permits an
exemption from the higher-priced
mortgage loan escrow requirement for a
creditor that meets certain requirements,
including any asset-size threshold the
Bureau may establish.
In the 2013 Escrows Final Rule,1 the
Bureau established such an asset-size
threshold of $2 billion, which would
adjust automatically each year, based on
the year-to-year change in the average of
the CPI–W for each 12-month period
ending in November, with rounding to
the nearest million dollars.2 In 2015, the
Bureau revised the asset-size threshold
for small creditors and how it applies.
The Bureau included in the calculation
of the asset-size threshold the assets of
the creditor’s affiliates that regularly
extended covered transactions secured
by first liens during the applicable
period and added a grace period to
allow an otherwise eligible creditor that
exceeded the asset limit in the
preceding calendar year (but not in the
calendar year before the preceding year)
to continue to operate as a small
creditor with respect to transactions
with applications received before April
1 of the current calendar year.3 For
2018, the threshold was $2.112 billion.
During the 12-month period ending in
November 2018, the average of the CPI–
W increased by 2.6 percent. As a result,
the exemption threshold is increased to
$2.167 billion for 2019. Thus, if the
creditor’s assets together with the assets
of its affiliates that regularly extended
first-lien covered transactions during
calendar year 2018 are less than $2.167
billion on December 31, 2018, and it
meets the other requirements of
§ 1026.35(b)(2)(iii), it will be exempt
from the escrow-accounts requirement
for higher-priced mortgage loans in 2019
and will also be exempt from the
escrow-accounts requirement for higherpriced mortgage loans for purposes of
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DATES:
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1 78
FR 4726 (Jan. 22, 2013).
12 CFR 1026.35(b)(2)(iii)(C).
3 See 80 FR 59943, 59951 (Oct. 2, 2015). The
Bureau also issued an interim final rule in March
2016 to revise certain provisions in Regulation Z to
effectuate the Helping Expand Lending Practices in
Rural Communities Act’s amendments to TILA
(Pub. L. 114–94, section 89003, 129 Stat. 1312,
1800–01 (2015)). The rule broadened the cohort of
creditors that may be eligible under TILA for the
special provisions allowing origination of balloonpayment qualified mortgages and balloon-payment
high-cost mortgages, as well as for the escrow
exemption. See 81 FR 16074 (Mar. 25, 2016).
2 See
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any loan consummated in 2020 with
applications received before April 1,
2020. The adjustment to the escrows
asset-size exemption threshold will also
increase the threshold for small-creditor
portfolio and balloon-payment qualified
mortgages under Regulation Z. The
requirements for small-creditor portfolio
qualified mortgages at
§ 1026.43(e)(5)(i)(D) reference the asset
threshold in § 1026.35(b)(2)(iii)(C).
Likewise, the requirements for balloonpayment qualified mortgages at
§ 1026.43(f)(1)(vi) reference the asset
threshold in § 1026.35(b)(2)(iii)(C).
Under § 1026.32(d)(1)(ii)(C), balloonpayment qualified mortgages that satisfy
all applicable criteria in
§ 1026.43(f)(1)(i) through (vi) and (f)(2),
including being made by creditors that
have (together with certain affiliates)
total assets below the threshold in
§ 1026.35(b)(2)(iii)(C), are also excepted
from the prohibition on balloon
payments for high-cost mortgages.
II. Procedural Requirements
A. Administrative Procedure Act
Under the Administrative Procedure
Act (APA), notice and opportunity for
public comment are not required if the
Bureau finds that notice and public
comment are impracticable,
unnecessary, or contrary to the public
interest. 5 U.S.C. 553(b)(B). Pursuant to
this final rule, comment 35(b)(2)(iii)–1
in Regulation Z is amended to update
the exemption threshold. The
amendment in this final rule is
technical and merely applies the
formula previously established in
Regulation Z for determining any
adjustments to the exemption threshold.
For these reasons, the Bureau has
determined that publishing a notice of
proposed rulemaking and providing
opportunity for public comment are
unnecessary. Therefore, the amendment
is adopted in final form.
Section 553(d) of the APA generally
requires publication of a final rule not
less than 30 days before its effective
date, except (1) a substantive rule which
grants or recognizes an exemption or
relieves a restriction; (2) interpretive
rules and statements of policy; or (3) as
otherwise provided by the agency for
good cause found and published with
the rule. 5 U.S.C. 553(d). At a minimum,
the Bureau believes the amendments fall
under the third exception to section
553(d). The Bureau finds that there is
good cause to make the amendments
effective on February 4, 2019. The
amendment in this final rule is
technical and non-discretionary, and it
applies the method previously
established in the agency’s regulations
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]]>Agencies
[Federal Register Volume 84, Number 23 (Monday, February 4, 2019)]
[Rules and Regulations]
[Pages 1354-1356]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-00789]
=======================================================================
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FARM CREDIT ADMINISTRATION
12 CFR Part 622
RIN 3052-AD33
Rules of Practice and Procedure; Adjusting Civil Money Penalties
for Inflation
AGENCY: Farm Credit Administration.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This regulation implements inflation adjustments to civil
money penalties (CMPs) that the Farm Credit Administration (FCA) may
impose or enforce pursuant to the Farm Credit Act of 1971, as amended
(Farm Credit Act), and pursuant to the Flood Disaster Protection Act of
1973, as amended by the National Flood Insurance Reform Act of 1994
(Reform Act), and further amended by the Biggert-Waters Flood Insurance
Reform Act of 2012 (Biggert-Waters Act).
DATES: Effective date: This regulation is effective on February 4,
2019. Applicability date: The inflation-adjusted CMP were applicable
beginning January 15, 2019.
FOR FURTHER INFORMATION CONTACT:
Michael T. Wilson, Policy Analyst, Office of Regulatory Policy, Farm
Credit Administration, McLean, VA 22102-5090, (703) 883-4124, TTY (703)
883-4056,
Or
Autumn R. Agans, Senior Attorney, Office of General Counsel, Farm
Credit Administration, McLean, VA 22102-5090, (703) 883-4082, TTY (703)
883-4056.
SUPPLEMENTARY INFORMATION:
I. Objective
The objective of this regulation is to adjust the maximum CMPs for
inflation through a final rulemaking to retain the deterrent effect of
such penalties.
II. Background
A. Introduction
The Federal Civil Penalties Inflation Adjustment Act of 1990, as
amended by the Debt Collection Improvement Act of 1996 (1996 Act) and
the Federal Civil Penalties Inflation Adjustment Act Improvements Act
of 2015 (2015 Act) (collectively, 1990 Act, as amended), requires all
Federal agencies with the authority to enforce CMPs to evaluate and
adjust, if necessary, those CMPs each year to ensure that they continue
to maintain their deterrent value and promote compliance with the law.
Section 3(2) of the 1990 Act, as amended, defines a civil monetary
penalty \1\ as any penalty, fine, or other sanction that: (1) Either is
for a specific monetary amount as provided by Federal law or has a
maximum amount provided for by Federal law; (2) is assessed or enforced
by an agency pursuant to Federal law; and (3) is assessed or enforced
pursuant to an administrative proceeding or a civil action in the
Federal courts.\2\
---------------------------------------------------------------------------
\1\ Note: While the 1990 Act, as amended by 1996 and 2015 Acts,
uses the term ``civil monetary penalties'' for these penalties or
other sanctions, the Farm Credit Act and the FCA Regulations use the
term ``civil money penalties.'' Both terms have the same meaning.
Accordingly, this rule uses the term civil money penalty, and both
terms may be used interchangeably.
\2\ See 28 U.S.C. 2461 note.
---------------------------------------------------------------------------
The FCA imposes and enforces CMPs through the Farm Credit Act \3\
and the Flood Disaster Protection Act of 1973, as amended. FCA's
regulations governing CMPs are found in 12 CFR parts 622 and 623. Part
622 establishes rules of practice and procedure applicable to formal
and informal hearings held before the FCA, and to formal investigations
conducted under the Farm Credit Act. Part 623 prescribes rules
regarding persons who may practice before the FCA and the circumstances
under which such persons may be suspended or debarred from practice
before the FCA.
---------------------------------------------------------------------------
\3\ Public Law 92-181, as amended.
---------------------------------------------------------------------------
B. CMPs Issued Under the Farm Credit Act
The Farm Credit Act provides that any Farm Credit System (System)
institution or any officer, director, employee, agent, or other person
participating in the conduct of the affairs of a System institution who
violates the terms of a cease-and-desist order that has become final
pursuant to section 5.25 or 5.26 of the Farm Credit Act must pay up to
a maximum daily amount of $1,000 \4\ during which such violation
continues. This CMP maximum was set by the Farm Credit Amendments Act
of 1985, which amended the Farm Credit Act. Orders issued by the FCA
under section 5.25 or 5.26 of the Farm Credit Act include temporary and
permanent cease-and-desist orders. In addition, section 5.32(h) of the
Farm Credit Act provides that any directive issued under sections
4.3(b)(2), 4.3A(e), or 4.14A(i) of the Farm Credit Act ``shall be
treated'' as a final order issued under section 5.25 of the Farm Credit
Act for purposes of assessing a CMP.
---------------------------------------------------------------------------
\4\ The inflation-adjusted CMP in effect on January 15, 2018,
for a violation of a final order is $2,269 per day, as set forth in
Sec. 622.61(a)(1) of FCA regulations.
---------------------------------------------------------------------------
Section 5.32(a) of the Farm Credit Act also states that ``[a]ny
such institution or person who violates any provision of the [Farm
Credit] Act or any regulation issued under this Act shall forfeit and
pay a civil penalty of not more than $500 \5\ per day for each day
during which such violation continues.'' This CMP maximum was set by
the Agricultural Credit Act of 1987, which was enacted in 1988, and
amends the Farm Credit Act. Current, inflation-adjusted CMP maximums
are set forth in existing Sec. 622.61 of FCA regulations.\6\
---------------------------------------------------------------------------
\5\ The inflation-adjusted CMP in effect on January 15, 2018,
for a violation of the Farm Credit Act or a regulation issued under
the Farm Credit Act is $1,026 per day, as set forth in Sec.
622.61(a)(2) of FCA regulations.
\6\ Prior adjustments were made under the 1990 Act.
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The FCA also enforces the Flood Disaster Protection Act of 1973,\7\
as amended by the National Flood Insurance Reform Act of 1994,\8\ which
requires FCA to assess CMPs for a pattern or practice of committing
certain specific actions in violation of the National Flood Insurance
Program. The existing maximum CMP for a violation under the Flood
Disaster Protection Act of 1973 is $2,000.\9 10\
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\7\ 42 U.S.C. 4012a.
\8\ Public Law 103-325, title V, 108 Stat. 2160, 2255-87
(September 23, 1994).
\9\ Public Law 112-141, 126 Stat. 405 (July 6, 2012).
\10\ The inflation-adjusted CMP in effect on January 15, 2018,
for a flood insurance violation is $2,133, as set forth in Sec.
622.61(b)of FCA regulations.
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C. Federal Civil Penalties Inflation Adjustment Act Improvements Act of
2015
1. In General
The 2015 Act required all Federal agencies to adjust the CMPs
yearly, starting January 15, 2017.
Under Section 4(b) of the 1990 Act, as amended, annual adjustments
are to be
[[Page 1355]]
made yearly no later than January 15 of each year.\11\ Section 6 of the
1990 Act, as amended, states that any increase to a civil monetary
penalty under this 1990 Act applies only to civil monetary penalties,
including those whose associated violation predated such increase,
which are assessed after the date the increase takes effect.
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\11\ Public Law 114-74, sec. 701(b)(1).
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Section 5(b) of the 1990 Act, as amended, defines the term ``cost-
of-living adjustment'' as the percentage (if any) for each civil
monetary penalty by which (1) the Consumer Price Index (CPI) for the
month of October of the calendar year preceding the adjustment, exceeds
(2) the CPI for the month of October 1 year before the month of October
referred to in (1) of the calendar year in which the amount of such
civil monetary penalty was last set or adjusted pursuant to law.\12\
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\12\ The CPI is published by the Department of Labor, Bureau of
Statistics, and is available at its website: ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt.
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The increase for each CMP adjusted for inflation must be rounded
using a method prescribed by section 5(a) of the 1990 Act, as amended,
by the 2015 Act.\13\
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\13\ Pursuant to section 5(a)(3) of the 2015 Act, any increase
determined under the subsection shall be rounded to the nearest $1.
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2. Other Adjustments
If a civil monetary penalty is subject to a cost-of-living
adjustment under the 1990 Act, as amended, but is adjusted to an amount
greater than the amount of the adjustment required under the Act within
the 12 months preceding a required cost-of-living adjustment, the
agency is not required to make the cost-of-living adjustment to that
CMP in that calendar year.\14\
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\14\ Pursuant to section 4(d) of the 1990 Act, as amended.
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III. Yearly Adjustments
A. Mathematical Calculations of 2019 Adjustments
The adjustment requirement affects two provisions of section
5.32(a) of the Farm Credit Act. For the 2019 yearly adjustments to the
CMPs set forth by the Farm Credit Act, the calculation required by the
2018 White House Office of Management and Budget (OMB) guidance \15\ is
based on the percentage by which the CPI for October 2018 exceeds the
CPIs for October 2017. The OMB set forth guidance, as required by the
2015 Act,\16\ with a multiplier for calculating the new CMP values.\17\
The OMB multiplier for the 2019 CMPs is 1.02522.
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\15\ OMB Circular M-19-04, Implementation of Penalty Inflation
Adjustments for 2019, Pursuant to the Federal Civil Penalties
Inflation Adjustment Act Improvements Act of 2015.
\16\ 28 U.S.C. 2461 note, section 7(a).
\17\ OMB Circular M-19-04, Implementation of Penalty Inflation
Adjustments for 2019, Pursuant to the Federal Civil Penalties
Inflation Adjustment Act Improvements Act of 2015.
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The adjustment also affects the CMPs set by the Flood Disaster
Protection Act of 1973, as amended. The adjustment multiplier is the
same for all FCA enforced CMPs, set at 1.02522. The maximum CMPs for
violations were created in 2012 by the Biggert-Waters Act, which
amended the Flood Disaster Protection Act of 1973.
1. New Penalty Amount in Sec. 622.61(a)(1)
The inflation-adjusted CMP currently in effect for violations of a
final order occurring on or after January 15, 2017, is a maximum daily
amount of $2,269.\18\ Multiplying the $2,269 CMP by the 2018 OMB
multiplier, 1.02522, yields a total of $2,326.22. When that number is
rounded as required by section 5(a) of the 1990 Act, as amended, the
inflation-adjusted maximum increases to $2,326. Thus, the new CMP
maximum is $2,326.
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\18\ 12 CFR 622.61(a)(1).
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2. New Penalty Amount in Sec. 622.61(a)(2)
The inflation-adjusted CMP currently in effect for violations of
the Farm Credit Act or regulations issued under the Farm Credit Act
occurring on or after January 15, 2018, is a maximum daily amount of
$1,026.\19\ Multiplying the $1,026 CMP maximum by the 2018 OMB
multiplier, 1.02522, yields a total of $1,051.88. When that number is
rounded as required by section 5(a) of the 1990 Act, as amended the
inflation-adjusted maximum increases to $1,052. Thus, the new CMP
maximum is $1,052.
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\19\ 12 CFR 622.61(a)(2).
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3. New Penalty Amounts for Flood Insurance Violations Under Sec.
622.61(b)
The existing maximum CMP for a pattern or practice of flood
insurance violations pursuant to 42 U.S.C. 4012a(f)(5) is $2,133.
Multiplying $2,133 by the 2018 OMB multiplier, 1.02522, yields a total
of $2,186.79. When that number is rounded as required by section 5(a)
of the 1990 Act, as amended, the new maximum assessment of the CMP for
violating 42 U.S.C. 4012a(f)(5) is $2,187. Thus, the new CMP maximum is
$2,187.
IV. Notice and Comment Not Required by Administrative Procedure Act
The 1990 Act, as amended, gives Federal agencies no discretion in
the adjustment of CMPs for the rate of inflation. Further, these
revisions are ministerial, technical, and noncontroversial. For these
reasons, the FCA finds good cause to determine that public notice and
an opportunity to comment are impracticable, unnecessary, and contrary
to the public interest pursuant to the Administrative Procedure Act, 5
U.S.C. 553(b)(B), and adopts this rule in final form.
V. Regulatory Flexibility Act
Pursuant to section 605(b) of the Regulatory Flexibility Act (5
U.S.C. 601 et seq.), the FCA hereby certifies that this final rule will
not have a significant economic impact on a substantial number of small
entities. Each of the banks in the System, considered together with its
affiliated associations, has assets and annual income in excess of the
amounts that would qualify them as small entities. Therefore, System
institutions are not ``small entities'' as defined in the Regulatory
Flexibility Act.
List of Subjects in 12 CFR Part 622
Administrative practice and procedure, Crime, Investigations,
Penalties.
For the reasons stated in the preamble, part 622 of chapter VI,
title 12 of the Code of Federal Regulations is amended as follows:
PART 622--RULES OF PRACTICE AND PROCEDURE
0
1. The authority citation for part 622 continues to read as follows:
Authority: Secs. 5.9, 5.10, 5.17, 5.25-5.37 of the Farm Credit
Act (12 U.S.C. 2243, 2244, 2252, 2261-2273); 28 U.S.C. 2461 note;
and 42 U.S.C. 4012a(f).
0
2. Revise Sec. 622.61 to read as follows:
Sec. 622.61 Adjustment of civil money penalties by the rate of
inflation under the Federal Civil Penalties Inflation Adjustment Act of
1990, as amended.
(a) The maximum amount of each civil money penalty within FCA's
jurisdiction is adjusted in accordance with the Federal Civil Penalties
Inflation Adjustment Act of 1990, as amended (28 U.S.C. 2461 note), as
follows:
(1) Amount of civil money penalty imposed under section 5.32 of the
Act for violation of a final order issued under section 5.25 or 5.26 of
the Act: The maximum daily amount is $2,326 for violations that occur
on or after January 15, 2019.
(2) Amount of civil money penalty for violation of the Act or
regulations: The maximum daily amount is $1,052 for each violation that
occurs on or after January 15, 2019.
(b) The maximum civil money penalty amount assessed under 42 U.S.C.
[[Page 1356]]
4012a(f) is $2,187 for each violation that occurs on or after January
15, 2019, with no cap on the total amount of penalties that can be
assessed against any single institution during any calendar year.
Dated: January 29, 2019.
Dale Aultman,
Secretary, Farm Credit Administration Board.
[FR Doc. 2019-00789 Filed 2-1-19; 8:45 am]
BILLING CODE 6705-01-P
