Civil Monetary Penalty Inflation Adjustment, 2009-2012 [2020-00309]
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Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Rules and Regulations
By order of the Board of Governors of the
Federal Reserve System, under delegated
authority, January 6, 2020.
Margaret McCloskey Shanks,
Deputy Secretary of the Board.
[FR Doc. 2020–00161 Filed 1–13–20; 8:45 am]
BILLING CODE 6210–01–P
NATIONAL CREDIT UNION
ADMINISTRATION
12 CFR Part 747
RIN 3133–AF09
Civil Monetary Penalty Inflation
Adjustment
National Credit Union
Administration (NCUA).
ACTION: Final rule.
AGENCY:
The NCUA Board (Board) is
amending its regulations to adjust the
maximum amount of each civil
monetary penalty (CMP) within its
jurisdiction to account for inflation.
This action, including the amount of the
adjustments, is required under the
Federal Civil Penalties Inflation
Adjustment Act of 1990, as amended by
the Debt Collection Improvement Act of
1996 and the Federal Civil Penalties
Inflation Adjustment Act Improvements
Act of 2015.
DATES: This final rule is effective
January 14, 2020.
FOR FURTHER INFORMATION CONTACT: Gira
Bose, Staff Attorney, at 1775 Duke
Street, Alexandria, VA 22314, or
telephone: (703) 518–6562.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Legal Background
II. Calculation of Adjustments
III. Regulatory Procedures
I. Legal Background
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A. Statutory Requirements
Every Federal agency, including the
NCUA, is required by law to adjust its
maximum CMP amounts each year to
account for inflation. Prior to this being
an annual requirement, agencies were
required to adjust their CMPs at least
once every four years.
The four-year requirement stemmed
from the Debt Collection Improvement
Act of 1996,1 which amended the
Federal Civil Penalties Inflation
Adjustment Act of 1990.2
The annual requirement stems from
the Bipartisan Budget Act of 2015,3
1 Public Law 104–134, Sec. 31001(s), 110 Stat.
1321–373 (Apr. 26, 1996). The law is codified at 28
U.S.C. 2461 note.
2 Public Law 101–410, 104 Stat. 890 (Oct. 5,
1990), codified at 28 U.S.C. 2461 note.
3 Public Law 114–74, 129 Stat. 584 (Nov. 2, 2015).
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which contains the Federal Civil
Penalties Inflation Adjustment Act
Improvements Act of 2015 (the 2015
amendments).4 This legislation
provided for an initial ‘‘catch-up’’
adjustment of CMPs in 2016, followed
by annual adjustments. The catch-up
adjustment reset CMP maximum
amounts by setting aside the inflation
adjustments that agencies made in prior
years and instead calculated inflation
with reference to the year when each
CMP was enacted or last modified by
Congress. Agencies were required to
publish their catch-up adjustments in an
interim final rule by July 1, 2016 and
make them effective by August 1, 2016.5
The NCUA complied with these
requirements in a June 2016 interim
final rule, followed by a November 2016
final rule to confirm the adjustments as
final.6
The 2015 amendments also specified
how agencies must conduct annual
inflation adjustments after the 2016
catch-up adjustment. Following the
catch-up adjustment, agencies must
make the required adjustments and
publish them in the Federal Register by
January 15 each year.7 For 2017, the
NCUA issued an interim final rule on
January 6, 2017,8 followed by a final
rule issued on June 23, 2017.9 For 2018
and 2019, the NCUA issued a final rule
in each year to satisfy the agency’s
requirement for the 2018 and 2019
annual adjustments.10 This final rule
satisfies the agency’s requirement for
the 2020 annual adjustment.
The law provides that the adjustments
shall be made notwithstanding the
section of the Administrative Procedure
Act (APA) that requires prior notice and
public comment for agency
rulemaking.11 The 2015 amendments
also specify that each CMP maximum
must be increased by the percentage by
which the consumer price index for
urban consumers (CPI–U) 12 for October
of the year immediately preceding the
year the adjustment is made exceeds the
CPI–U for October of the prior year.13
4 129
Stat. 599.
Law 114–74, Sec. 701(b)(1), 129 Stat. 584,
599 (Nov. 2, 2015).
6 81 FR 40152 (June 21, 2016); 81 FR 78028 (Nov.
7, 2016).
7 Public Law 114–74, Sec. 701(b)(1), 129 Stat. 584,
599 (Nov. 2, 2015).
8 82 FR 7640 (Jan. 23, 2017).
9 82 FR 29710 (June 30, 2017).
10 83 FR 2029 (Jan. 16, 2018); 84 FR 2055 (Feb.
6, 2019).
11 Public Law 114–74, Sec. 701(b)(1), 129 Stat.
584, 599 (Nov. 2, 2015).
12 This index is published by the Department of
Labor, Bureau of Labor Statistics, and is available
at its website: https://www.bls.gov/cpi/.
13 Public Law 114–74, Sec. 701(b)(2)(B), 129 Stat.
584, 600 (Nov. 2, 2015).
5 Public
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For example, for the adjustment to be
made in 2020, an agency must compare
the October 2018 and 2019 CPI–U
figures.
An annual adjustment under the 2015
amendments is not required if a CMP
has been amended in the preceding 12
months pursuant to other authority.
Specifically, the statute provides that an
agency is not required to make an
annual adjustment to a CMP if in the
preceding 12 months it has been
increased by an amount greater than the
annual adjustment required by the 2015
amendments.14 The NCUA did not
make any adjustments in the preceding
12 months pursuant to other authority,
therefore, this rulemaking adjusts the
NCUA’s CMPs pursuant to the 2015
amendments.
B. Application to the 2020 Adjustments
and Office of Management and Budget
Guidance
This section applies the statutory
requirements and the Office of
Management and Budget’s (OMB)
guidance to the NCUA’s CMPs, and sets
forth the Board’s calculation of the 2020
adjustments.
The 2015 amendments directed OMB
to issue guidance to agencies on
implementing the inflation
adjustments.15 OMB is required to issue
its guidance each December and, with
respect to the 2020 annual adjustment,
did so on December 16, 2019.16 For
2020, Federal agencies must adjust the
maximum amounts of their CMPs by the
percentage by which the October 2019
CPI–U (257.346) exceeds the October
2018 CPI–U (252.885). The resulting
increase can be expressed as an inflation
multiplier (1.01764) to apply to each
current CMP maximum amount to
determine the adjusted maximum. The
OMB guidance also addresses
rulemaking procedures and agency
reporting and oversight requirements for
CMPs.17
The table below presents the
adjustment calculations. The current
maximums are found at 12 CFR
747.1001, as adjusted by the final rule
that the Board approved in January
2019. This amount is multiplied by the
inflation multiplier to calculate the new
maximum in the far right column. Only
these adjusted maximum amounts, and
not the calculations, will be codified at
14 Public Law 114–74, Sec. 701(b)(1), 129 Stat.
584, 600 (Nov. 2, 2015).
15 Public Law 114–74, Sec. 701(b)(4), 129 Stat.
584, 601 (Nov. 2, 2015).
16 See OMB Memorandum M–20–05,
Implementation of Penalty Inflation Adjustments
for 2020, pursuant to the 2015 amendments (Dec.
16, 2019).
17 Id.
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Federal Register / Vol. 85, No. 9 / Tuesday, January 14, 2020 / Rules and Regulations
12 CFR 747.1001 under this final rule.
The adjusted amounts will be effective
upon publication in the Federal
Register, and can be applied to
violations that occurred on or after
November 2, 2015, the date the 2015
amendments were enacted.18
TABLE: CALCULATION OF MAXIMUM CMP ADJUSTMENTS
Citation
Description and tier 19
12 U.S.C. 1782(a)(3) .....
Inadvertent failure to submit a report or the inadvertent submission of a false or misleading
report.
Non-inadvertent failure to submit a report or the
non-inadvertent submission of a false or misleading report.
Failure to submit a report or the submission of
a false or misleading report done knowingly
or with reckless disregard.
Tier 1 CMP for inadvertent failure to submit certified statement of insured shares and
charges due to the National Credit Union
Share Insurance Fund (NCUSIF), or inadvertent submission of false or misleading
statement.
Tier 2 CMP for non-inadvertent failure to submit
certified statement or submission of false or
misleading statement.
Tier 3 CMP for failure to submit a certified
statement or the submission of a false or
misleading statement done knowingly or with
reckless disregard.
Non-compliance with insurance logo requirements.
Non-compliance with NCUA security requirements.
Tier 1 CMP for violations of law, regulation, and
other orders or agreements.
Tier 2 CMP for violations of law, regulation, and
other orders or agreements and for recklessly
engaging in unsafe or unsound practices or
breaches of fiduciary duty.
Tier 3 CMP for knowingly committing the violations under Tier 1 or 2 (natural person).
Tier 3 (same) (CU) .............................................
4,027 ............................
1.01764
4,098.
40,269 ..........................
1.01764
40,979.
Lesser of 2,013,399 or
1% of total CU assets.
3,682 ............................
1.01764
1.01764
Lesser of 2,048,915 or
1% of total CU assets.
3,747.
36,809 ..........................
1.01764
37,458.
Lesser of 1,840,491 or
1% of total CU assets.
1.01764
Lesser of 1,872,957 or
1% of total CU assets.
125 ...............................
1.01764
127.
292 ...............................
1.01764
297.
10,067 ..........................
1.01764
10,245.
50,334 ..........................
1.01764
51,222.
2,013,399 .....................
1.01764
2,048,915.
Lesser of 2,013,399 or
1% of total CU assets.
331,174 ........................
1.01764
1.01764
Lesser of 2,048,915 or
1% of total CU assets.
337,016.
11,563 ..........................
1.01764
11,767.
23,125 ..........................
2,187 ............................
1.01764
1.01764
23,533.
2,226.
12 U.S.C. 1782(a)(3) .....
12 U.S.C. 1782(a)(3) .....
12 U.S.C. 1782(d)(2)(A)
12 U.S.C. 1782(d)(2)(B)
12 U.S.C. 1782(d)(2)(C)
12 U.S.C. 1785(a)(3) .....
12 U.S.C. 1785(e)(3) .....
12 U.S.C. 1786(k)(2)(A)
12 U.S.C. 1786(k)(2)(B)
12 U.S.C. 1786(k)(2)(C)
12 U.S.C. 1786(k)(2)(C)
12 U.S.C.
1786(w)(5)(A)(ii).
15 U.S.C. 1639e(k) .......
15 U.S.C. 1639e(k) .......
42 U.S.C. 4012a(f)(5) ....
Non-compliance with senior examiner post-employment restrictions.
Non-compliance with appraisal independence
standards (first violation).
Subsequent violations of the same ....................
Non-compliance with flood insurance requirements.
Multiplier
In the 2015 amendments, Congress
provided that agencies shall make the
required inflation adjustments in 2017
and subsequent years notwithstanding 5
U.S.C. 553,20 which generally requires
agencies to follow notice-and-comment
procedures in rulemaking and to make
rules effective no sooner than 30 days
after publication in the Federal
Register. The 2015 amendments provide
a clear exception to these
requirements.21 In addition, the Board
finds that notice-and-comment
procedures would be impracticable and
unnecessary under the APA because of
the largely ministerial and technical
nature of the rule, which affords
agencies limited discretion in
promulgating the rule, and the statutory
deadline for making the adjustments.22
In these circumstances, the Board finds
good cause to issue a final rule without
issuing a notice of proposed rulemaking
or soliciting public comments. The
Board also finds good cause to make the
final rule effective upon publication
because of the statutory deadline.
18 Public Law 114–74, 129 Stat. 600 (Nov. 2,
2015).
19 The table uses condensed descriptions of CMP
tiers. Refer to the U.S. Code citations for complete
descriptions.
20 Public Law 114–74, Sec. 701(b)(1), 129 Stat.
584, 599 (Nov. 2, 2015).
21 See 5 U.S.C. 559; Asiana Airlines v. Fed.
Aviation Admin., 134 F.3d 393, 396–99 (DC Cir.
1998).
22 5 U.S.C. 553(b)(3)(B); see Mid-Tex Elec. Co-op.,
Inc. v. Fed. Energy Regulatory Comm’n, 822 F.2d
1123 (DC Cir. 1987).
III. RegulatoryProcedures
A. Final Rule Under the APA
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Adjusted maximum
($)
(Current maximum ×
multiplier, rounded to
nearest dollar)
Current maximum
($)
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Accordingly, this final rule is issued
without prior notice and comment and
will become effective immediately upon
publication.
B. Regulatory Flexibility Act
The Regulatory Flexibility Act
requires the Board to prepare an
analysis to describe any significant
economic impact a regulation may have
on a substantial number of small
entities.23 For purposes of this analysis,
the Board considers small credit unions
to be those having under $100 million
in assets.24 This final rule will not have
a significant economic impact on a
substantial number of small credit
unions because it affects only the
maximum amounts of CMPs that may be
assessed in individual cases, which are
not numerous and generally do not
involve assessments at the maximum
level. In addition, several of the CMPs
are limited to a percentage of a credit
union’s assets. Finally, in assessing
CMPs, the Board generally must
consider a party’s financial resources.25
Because this final rule will affect few, if
any, small credit unions, the Board
certifies that the final rule will not have
a significant economic impact on a
substantial number of small entities.
C. Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(PRA) applies to rulemakings in which
an agency creates a new paperwork
burden on regulated entities or modifies
an existing burden.26 For purposes of
the PRA, a paperwork burden may take
the form of either a reporting or a
recordkeeping requirement, both
referred to as information collections.
This final rule adjusts the maximum
amounts of certain CMPs that the Board
may assess against individuals, entities,
or credit unions but does not require
any reporting or recordkeeping.
Therefore, this final rule will not create
new paperwork burdens or modify any
existing paperwork burdens.
E. Assessment of Federal Regulations
and Policies on Families
The Board has determined that this
final rule will not affect family wellbeing within the meaning of Section 654
of the Treasury and General
Government Appropriations Act,
1999.27
F. Small Business Regulatory
Enforcement Fairness Act
The Small Business Regulatory
Enforcement Fairness Act of 1996 28
(SBREFA) provides generally for
congressional review of agency rules. A
reporting requirement is triggered in
instances where the Board issues a final
rule as defined by Section 551 of the
APA.29 The NCUA does not believe this
rule is a ‘‘major rule’’ within the
meaning of the relevant sections of
SBREFA. As required by SBREFA, the
NCUA submitted this final rule to OMB
for it to determine if the final rule is a
‘‘major rule’’ for purposes of SBREFA.
OMB determined the final rule was not
a major rule. The NCUA also will file
appropriate reports with Congress and
the Government Accountability Office
so this rule may be reviewed.
List of Subjects in 12 CFR Part 747
Credit unions, Civil monetary
penalties.
By the National Credit Union
Administration Board on January 7, 2020.
Gerard Poliquin,
Secretary of the Board.
For the reasons stated above, the
NCUA Board amends 12 CFR part 747
as follows:
PART 747—ADMINISTRATIVE
ACTIONS, ADJUDICATIVE HEARINGS,
RULES OF PRACTICE AND
PROCEDURE, AND INVESTIGATIONS
1. The authority for part 747
continues to read as follows:
■
Authority: 12 U.S.C. 1766, 1782, 1784,
1785, 1786, 1787, 1790a, 1790d; 15 U.S.C.
1639e; 42 U.S.C. 4012a; Pub. L. 101–410;
Pub. L. 104–134; Pub. L. 109–351; Pub. L.
114–74.
2. Revise § 747.1001 to read as
follows:
■
§ 747.1001 Adjustment of civil monetary
penalties by the rate of inflation.
(a) The NCUA is required by the
Federal Civil Penalties Inflation
Adjustment Act of 1990 (Pub. L. 101–
410, 104 Stat. 890, as amended (28
U.S.C. 2461 note)), to adjust the
maximum amount of each civil
monetary penalty (CMP) within its
jurisdiction by the rate of inflation. The
following chart displays those adjusted
amounts, as calculated pursuant to the
statute:
U.S. code citation
CMP description
(1) 12 U.S.C. 1782(a)(3) .................
Inadvertent failure to submit a report or the inadvertent submission of
a false or misleading report.
Non-inadvertent failure to submit a report or the non-inadvertent submission of a false or misleading report.
Failure to submit a report or the submission of a false or misleading
report done knowingly or with reckless disregard.
(2) 12 U.S.C. 1782(a)(3) .................
(3) 12 U.S.C. 1782(a)(3) .................
(4) 12 U.S.C. 1782(d)(2)(A) ............
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D. Executive Order 13132
Executive Order 13132 encourages
independent regulatory agencies to
consider the impact of their actions on
state and local interests. In adherence to
fundamental federalism principles, the
NCUA, an independent regulatory
agency as defined in 44 U.S.C. 3502(5),
voluntarily complies with the Executive
order. This final rule adjusts the
maximum amounts of certain CMPs that
the Board may assess against
individuals, entities, and federally
insured credit unions, including statechartered credit unions. However, the
final rule does not create any new
authority or alter the underlying
statutory authorities that enable the
Board to assess CMPs. Accordingly, this
final rule will not have a substantial
direct effect on the states, on the
connection between the National
Government and the states, or on the
distribution of power and
responsibilities among the various
levels of government. The Board has
determined that this final rule does not
constitute a policy that has federalism
implications for purposes of the
Executive order.
26 44
24 Interpretive
U.S.C. 603(a).
Ruling and Policy Statement 15–1,
80 FR 57512 (Sept. 24, 2015).
25 12 U.S.C. 1786(k)(2)(G)(i).
27 Public
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New maximum amount
Tier 1 CMP for inadvertent failure to submit certified statement of insured shares and charges due to the National Credit Union Share
Insurance Fund (NCUSIF), or inadvertent submission of false or
misleading statement.
23 5
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U.S.C. 3507(d); 5 CFR part 1320.
Law 105–277, 112 Stat. 2681 (Oct. 21,
1998).
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$4,098.
$40,979.
$2,048,915 or 1 percent of the
total assets of the credit union,
whichever is less.
$3,747.
28 Public Law 104–121, 110 Stat. 857 (Mar. 29,
1996).
29 5 U.S.C. 551.
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U.S. code citation
CMP description
(5) 12 U.S.C. 1782(d)(2)(B) ............
Tier 2 CMP for non-inadvertent failure to submit certified statement or
submission of false or misleading statement.
Tier 3 CMP for failure to submit a certified statement or the submission of a false or misleading statement done knowingly or with
reckless disregard.
Non-compliance with insurance logo requirements ..............................
Non-compliance with NCUA security requirements ..............................
Tier 1 CMP for violations of law, regulation, and other orders or
agreements.
Tier 2 CMP for violations of law, regulation, and other orders or
agreements and for recklessly engaging in unsafe or unsound
practices or breaches of fiduciary duty.
Tier 3 CMP for knowingly committing the violations under Tier 1 or 2
(natural person).
Tier 3 CMP for knowingly committing the violations under Tier 1 or 2
(insured credit union).
(6) 12 U.S.C. 1782(d)(2)(C) ............
(7) 12 U.S.C. 1785(a)(3) .................
(8) 12 U.S.C. 1785(e) (3) ................
(9) 12 U.S.C. 1786(k)(2)(A) ............
(10) 12 U.S.C. 1786(k)(2)(A) ..........
(11) 12 U.S.C. 1786(k)(2)(A) ..........
(12) 12 U.S.C. 1786(k)(2)(A) ..........
(13) 12 U.S.C. 1786(w)(5)(ii) ..........
(14) 15 U.S.C. 1639e(k) ..................
Non-compliance with senior examiner post-employment restrictions ...
Non-compliance with appraisal independence requirements ................
(15) 42 U.S.C. 4012a(f)(5) ..............
Non-compliance with flood insurance requirements .............................
(b) The adjusted amounts displayed in
paragraph (a) of this section apply to
civil monetary penalties that are
assessed after the date the increase takes
effect, including those whose associated
violation or violations pre-dated the
increase and occurred on or after
November 2, 2015.
[FR Doc. 2020–00309 Filed 1–13–20; 8:45 am]
BILLING CODE 7535–01–P
BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Part 1083
Civil Penalty Inflation Adjustments
Bureau of Consumer Financial
Protection.
ACTION: Final rule.
AGENCY:
The Bureau of Consumer
Financial Protection (Bureau) is
adjusting for inflation the maximum
amount of each civil penalty within the
Bureau’s jurisdiction. These
adjustments are required by the Federal
Civil Penalties Inflation Adjustment Act
of 1990, as amended by the Debt
Collection Improvement Act of 1996
and further amended by the Federal
Civil Penalties Inflation Adjustment Act
Improvements Act of 2015 (Inflation
Adjustment Act). The inflation
adjustments mandated by the Inflation
Adjustment Act serve to maintain the
deterrent effect of civil penalties and to
promote compliance with the law.
DATES: This final rule is effective
January 15, 2020.
FOR FURTHER INFORMATION CONTACT:
Rachel Ross, Attorney-Advisor; Kristen
Phinnessee, Senior Counsel, Office of
Regulations, at (202) 435–7700. If you
SUMMARY:
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require this document in an alternative
electronic format, please contact CFPB_
Accessibility@cfpb.gov.
SUPPLEMENTARY INFORMATION:
I. Background
The Federal Civil Penalties Inflation
Adjustment Act of 1990,1 as amended
by the Debt Collection Improvement Act
of 1996 2 and further amended by the
Federal Civil Penalties Inflation
Adjustment Act Improvements Act of
2015 (Inflation Adjustment Act),3
directs Federal agencies to adjust for
inflation the civil penalty amounts
within their jurisdiction not later than
July 1, 2016, and then not later than
January 15 every year thereafter.4 Each
agency was required to make the 2016
one-time catch-up adjustments through
an interim final rule published in the
Federal Register. On June 14, 2016, the
Bureau published its interim final rule
(IFR) to make the initial catch-up
adjustments to civil penalties within the
Bureau’s jurisdiction.5 The June 2016
IFR created a new part 1083 and in
§ 1083.1 established the inflationadjusted maximum amounts for each
civil penalty within the Bureau’s
1 Public
Law 101–410, 104 Stat. 890.
Law 104–134, section 31001(s)(1), 110
Stat. 1321, 1321–373.
3 Public Law 114–74, section 701, 129 Stat. 584,
599.
4 Section 1301(a) of the Federal Reports
Elimination Act of 1998, Public Law 105–362, 112
Stat. 3293, also amended the Inflation Adjustment
Act by striking section 6, which contained annual
reporting requirements, and redesignating section 7
as section 6, but did not alter the civil penalty
adjustment requirements; 28 U.S.C. 2461 note.
5 81 FR 38569 (June 14, 2016). Although the
Bureau was not obligated to solicit comments for
the interim final rule, the Bureau invited public
comment and received none.
2 Public
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$37,458.
$1,872,957 or 1 percent of the
total assets of the credit union,
whichever is less.
$127.
$297.
$10,245.
$51,222.
$2,048,915.
$2,048,915 or 1 percent of the
total assets of the credit union,
whichever is less.
$337,016.
First violation: $11,767.
Subsequent violations: $23,533.
$2,226.
jurisdiction.6 The Bureau finalized the
IFR on January 31, 2019.7
The Inflation Adjustment Act also
requires subsequent adjustments to be
made annually, not later than January
15, and notwithstanding section 553 of
the Administrative Procedure Act
(APA).8 The Bureau annually adjusted
its civil penalty amounts, as required by
the Act, through rules issued in January
2017, January 2018, and January 2019.9
Specifically, the Act directs Federal
agencies to adjust annually each civil
penalty provided by law within the
jurisdiction of the agency by the ‘‘costof-living adjustment.’’ 10 The ‘‘cost-ofliving adjustment’’ is defined as the
percentage (if any) by which the
Consumer Price Index for all-urban
consumers (CPI–U) for the month of
October preceding the date of the
adjustment, exceeds the CPI–U for
October of the prior year.11 The Director
of the Office of Management and Budget
(OMB) is required to issue guidance
(OMB Guidance) every year by
6 See
12 CFR 1083.1.
FR 517 (Jan. 31, 2019).
8 Inflation Adjustment Act section 4, codified at
28 U.S.C. 2461 note. As discussed in guidance
issued by the Director of the Office of Management
and Budget (OMB), the APA generally requires
notice, an opportunity for comment, and a delay in
effective date for certain rulemakings, but the
Inflation Adjustment Act provides that these
procedures are not required for agencies to issue
regulations implementing the annual adjustment.
See Memorandum to the Exec. Dep’ts & Agencies
from Russell T. Vought, Acting Director, Office of
Mgmt. & Budget at 4 (Dec. 16, 2019), available at
https://www.whitehouse.gov/wp-content/uploads/
2019/12/M-20-05.pdf.
9 82 FR 3601 (Jan. 12, 2017); 83 FR 1525 (Jan. 12,
2018); 84 FR 517 (Jan. 31, 2019).
10 Inflation Adjustment Act sections 4 and 5,
codified at 28 U.S.C. 2461 note.
11 Inflation Adjustment Act sections 3 and 5,
codified at 28 U.S.C. 2461 note.
7 84
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[Federal Register Volume 85, Number 9 (Tuesday, January 14, 2020)]
[Rules and Regulations]
[Pages 2009-2012]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00309]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 747
RIN 3133-AF09
Civil Monetary Penalty Inflation Adjustment
AGENCY: National Credit Union Administration (NCUA).
ACTION: Final rule.
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SUMMARY: The NCUA Board (Board) is amending its regulations to adjust
the maximum amount of each civil monetary penalty (CMP) within its
jurisdiction to account for inflation. This action, including the
amount of the adjustments, is required under the Federal Civil
Penalties Inflation Adjustment Act of 1990, as amended by the Debt
Collection Improvement Act of 1996 and the Federal Civil Penalties
Inflation Adjustment Act Improvements Act of 2015.
DATES: This final rule is effective January 14, 2020.
FOR FURTHER INFORMATION CONTACT: Gira Bose, Staff Attorney, at 1775
Duke Street, Alexandria, VA 22314, or telephone: (703) 518-6562.
SUPPLEMENTARY INFORMATION:
I. Legal Background
II. Calculation of Adjustments
III. Regulatory Procedures
I. Legal Background
A. Statutory Requirements
Every Federal agency, including the NCUA, is required by law to
adjust its maximum CMP amounts each year to account for inflation.
Prior to this being an annual requirement, agencies were required to
adjust their CMPs at least once every four years.
The four-year requirement stemmed from the Debt Collection
Improvement Act of 1996,\1\ which amended the Federal Civil Penalties
Inflation Adjustment Act of 1990.\2\
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\1\ Public Law 104-134, Sec. 31001(s), 110 Stat. 1321-373 (Apr.
26, 1996). The law is codified at 28 U.S.C. 2461 note.
\2\ Public Law 101-410, 104 Stat. 890 (Oct. 5, 1990), codified
at 28 U.S.C. 2461 note.
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The annual requirement stems from the Bipartisan Budget Act of
2015,\3\ which contains the Federal Civil Penalties Inflation
Adjustment Act Improvements Act of 2015 (the 2015 amendments).\4\ This
legislation provided for an initial ``catch-up'' adjustment of CMPs in
2016, followed by annual adjustments. The catch-up adjustment reset CMP
maximum amounts by setting aside the inflation adjustments that
agencies made in prior years and instead calculated inflation with
reference to the year when each CMP was enacted or last modified by
Congress. Agencies were required to publish their catch-up adjustments
in an interim final rule by July 1, 2016 and make them effective by
August 1, 2016.\5\ The NCUA complied with these requirements in a June
2016 interim final rule, followed by a November 2016 final rule to
confirm the adjustments as final.\6\
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\3\ Public Law 114-74, 129 Stat. 584 (Nov. 2, 2015).
\4\ 129 Stat. 599.
\5\ Public Law 114-74, Sec. 701(b)(1), 129 Stat. 584, 599 (Nov.
2, 2015).
\6\ 81 FR 40152 (June 21, 2016); 81 FR 78028 (Nov. 7, 2016).
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The 2015 amendments also specified how agencies must conduct annual
inflation adjustments after the 2016 catch-up adjustment. Following the
catch-up adjustment, agencies must make the required adjustments and
publish them in the Federal Register by January 15 each year.\7\ For
2017, the NCUA issued an interim final rule on January 6, 2017,\8\
followed by a final rule issued on June 23, 2017.\9\ For 2018 and 2019,
the NCUA issued a final rule in each year to satisfy the agency's
requirement for the 2018 and 2019 annual adjustments.\10\ This final
rule satisfies the agency's requirement for the 2020 annual adjustment.
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\7\ Public Law 114-74, Sec. 701(b)(1), 129 Stat. 584, 599 (Nov.
2, 2015).
\8\ 82 FR 7640 (Jan. 23, 2017).
\9\ 82 FR 29710 (June 30, 2017).
\10\ 83 FR 2029 (Jan. 16, 2018); 84 FR 2055 (Feb. 6, 2019).
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The law provides that the adjustments shall be made notwithstanding
the section of the Administrative Procedure Act (APA) that requires
prior notice and public comment for agency rulemaking.\11\ The 2015
amendments also specify that each CMP maximum must be increased by the
percentage by which the consumer price index for urban consumers (CPI-
U) \12\ for October of the year immediately preceding the year the
adjustment is made exceeds the CPI-U for October of the prior year.\13\
For example, for the adjustment to be made in 2020, an agency must
compare the October 2018 and 2019 CPI-U figures.
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\11\ Public Law 114-74, Sec. 701(b)(1), 129 Stat. 584, 599 (Nov.
2, 2015).
\12\ This index is published by the Department of Labor, Bureau
of Labor Statistics, and is available at its website: https://www.bls.gov/cpi/.
\13\ Public Law 114-74, Sec. 701(b)(2)(B), 129 Stat. 584, 600
(Nov. 2, 2015).
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An annual adjustment under the 2015 amendments is not required if a
CMP has been amended in the preceding 12 months pursuant to other
authority. Specifically, the statute provides that an agency is not
required to make an annual adjustment to a CMP if in the preceding 12
months it has been increased by an amount greater than the annual
adjustment required by the 2015 amendments.\14\ The NCUA did not make
any adjustments in the preceding 12 months pursuant to other authority,
therefore, this rulemaking adjusts the NCUA's CMPs pursuant to the 2015
amendments.
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\14\ Public Law 114-74, Sec. 701(b)(1), 129 Stat. 584, 600 (Nov.
2, 2015).
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B. Application to the 2020 Adjustments and Office of Management and
Budget Guidance
This section applies the statutory requirements and the Office of
Management and Budget's (OMB) guidance to the NCUA's CMPs, and sets
forth the Board's calculation of the 2020 adjustments.
The 2015 amendments directed OMB to issue guidance to agencies on
implementing the inflation adjustments.\15\ OMB is required to issue
its guidance each December and, with respect to the 2020 annual
adjustment, did so on December 16, 2019.\16\ For 2020, Federal agencies
must adjust the maximum amounts of their CMPs by the percentage by
which the October 2019 CPI-U (257.346) exceeds the October 2018 CPI-U
(252.885). The resulting increase can be expressed as an inflation
multiplier (1.01764) to apply to each current CMP maximum amount to
determine the adjusted maximum. The OMB guidance also addresses
rulemaking procedures and agency reporting and oversight requirements
for CMPs.\17\
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\15\ Public Law 114-74, Sec. 701(b)(4), 129 Stat. 584, 601 (Nov.
2, 2015).
\16\ See OMB Memorandum M-20-05, Implementation of Penalty
Inflation Adjustments for 2020, pursuant to the 2015 amendments
(Dec. 16, 2019).
\17\ Id.
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The table below presents the adjustment calculations. The current
maximums are found at 12 CFR 747.1001, as adjusted by the final rule
that the Board approved in January 2019. This amount is multiplied by
the inflation multiplier to calculate the new maximum in the far right
column. Only these adjusted maximum amounts, and not the calculations,
will be codified at
[[Page 2010]]
12 CFR 747.1001 under this final rule. The adjusted amounts will be
effective upon publication in the Federal Register, and can be applied
to violations that occurred on or after November 2, 2015, the date the
2015 amendments were enacted.\18\
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\18\ Public Law 114-74, 129 Stat. 600 (Nov. 2, 2015).
Table: Calculation of Maximum CMP Adjustments
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Adjusted maximum
($) (Current
Description and tier Current maximum maximum x
Citation \19\ ($) Multiplier multiplier,
rounded to nearest
dollar)
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12 U.S.C. 1782(a)(3)........... Inadvertent failure to 4,027............. 1.01764 4,098.
submit a report or the
inadvertent submission
of a false or
misleading report.
12 U.S.C. 1782(a)(3)........... Non-inadvertent failure 40,269............ 1.01764 40,979.
to submit a report or
the non-inadvertent
submission of a false
or misleading report.
12 U.S.C. 1782(a)(3)........... Failure to submit a Lesser of 1.01764 Lesser of
report or the 2,013,399 or 1% 2,048,915 or 1%
submission of a false of total CU of total CU
or misleading report assets. assets.
done knowingly or with
reckless disregard.
12 U.S.C. 1782(d)(2)(A)........ Tier 1 CMP for 3,682............. 1.01764 3,747.
inadvertent failure to
submit certified
statement of insured
shares and charges due
to the National Credit
Union Share Insurance
Fund (NCUSIF), or
inadvertent submission
of false or misleading
statement.
12 U.S.C. 1782(d)(2)(B)........ Tier 2 CMP for non- 36,809............ 1.01764 37,458.
inadvertent failure to
submit certified
statement or
submission of false or
misleading statement.
12 U.S.C. 1782(d)(2)(C)........ Tier 3 CMP for failure Lesser of 1.01764 Lesser of
to submit a certified 1,840,491 or 1% 1,872,957 or 1%
statement or the of total CU of total CU
submission of a false assets. assets.
or misleading
statement done
knowingly or with
reckless disregard.
12 U.S.C. 1785(a)(3)........... Non-compliance with 125............... 1.01764 127.
insurance logo
requirements.
12 U.S.C. 1785(e)(3)........... Non-compliance with 292............... 1.01764 297.
NCUA security
requirements.
12 U.S.C. 1786(k)(2)(A)........ Tier 1 CMP for 10,067............ 1.01764 10,245.
violations of law,
regulation, and other
orders or agreements.
12 U.S.C. 1786(k)(2)(B)........ Tier 2 CMP for 50,334............ 1.01764 51,222.
violations of law,
regulation, and other
orders or agreements
and for recklessly
engaging in unsafe or
unsound practices or
breaches of fiduciary
duty.
12 U.S.C. 1786(k)(2)(C)........ Tier 3 CMP for 2,013,399......... 1.01764 2,048,915.
knowingly committing
the violations under
Tier 1 or 2 (natural
person).
12 U.S.C. 1786(k)(2)(C)........ Tier 3 (same) (CU)..... Lesser of 1.01764 Lesser of
2,013,399 or 1% 2,048,915 or 1%
of total CU of total CU
assets. assets.
12 U.S.C. 1786(w)(5)(A)(ii).... Non-compliance with 331,174........... 1.01764 337,016.
senior examiner post-
employment
restrictions.
15 U.S.C. 1639e(k)............. Non-compliance with 11,563............ 1.01764 11,767.
appraisal independence
standards (first
violation).
15 U.S.C. 1639e(k)............. Subsequent violations 23,125............ 1.01764 23,533.
of the same.
42 U.S.C. 4012a(f)(5).......... Non-compliance with 2,187............. 1.01764 2,226.
flood insurance
requirements.
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III. Regulatory Procedures
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\19\ The table uses condensed descriptions of CMP tiers. Refer
to the U.S. Code citations for complete descriptions.
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A. Final Rule Under the APA
In the 2015 amendments, Congress provided that agencies shall make
the required inflation adjustments in 2017 and subsequent years
notwithstanding 5 U.S.C. 553,\20\ which generally requires agencies to
follow notice-and-comment procedures in rulemaking and to make rules
effective no sooner than 30 days after publication in the Federal
Register. The 2015 amendments provide a clear exception to these
requirements.\21\ In addition, the Board finds that notice-and-comment
procedures would be impracticable and unnecessary under the APA because
of the largely ministerial and technical nature of the rule, which
affords agencies limited discretion in promulgating the rule, and the
statutory deadline for making the adjustments.\22\ In these
circumstances, the Board finds good cause to issue a final rule without
issuing a notice of proposed rulemaking or soliciting public comments.
The Board also finds good cause to make the final rule effective upon
publication because of the statutory deadline.
[[Page 2011]]
Accordingly, this final rule is issued without prior notice and comment
and will become effective immediately upon publication.
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\20\ Public Law 114-74, Sec. 701(b)(1), 129 Stat. 584, 599 (Nov.
2, 2015).
\21\ See 5 U.S.C. 559; Asiana Airlines v. Fed. Aviation Admin.,
134 F.3d 393, 396-99 (DC Cir. 1998).
\22\ 5 U.S.C. 553(b)(3)(B); see Mid-Tex Elec. Co-op., Inc. v.
Fed. Energy Regulatory Comm'n, 822 F.2d 1123 (DC Cir. 1987).
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B. Regulatory Flexibility Act
The Regulatory Flexibility Act requires the Board to prepare an
analysis to describe any significant economic impact a regulation may
have on a substantial number of small entities.\23\ For purposes of
this analysis, the Board considers small credit unions to be those
having under $100 million in assets.\24\ This final rule will not have
a significant economic impact on a substantial number of small credit
unions because it affects only the maximum amounts of CMPs that may be
assessed in individual cases, which are not numerous and generally do
not involve assessments at the maximum level. In addition, several of
the CMPs are limited to a percentage of a credit union's assets.
Finally, in assessing CMPs, the Board generally must consider a party's
financial resources.\25\ Because this final rule will affect few, if
any, small credit unions, the Board certifies that the final rule will
not have a significant economic impact on a substantial number of small
entities.
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\23\ 5 U.S.C. 603(a).
\24\ Interpretive Ruling and Policy Statement 15-1, 80 FR 57512
(Sept. 24, 2015).
\25\ 12 U.S.C. 1786(k)(2)(G)(i).
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C. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in
which an agency creates a new paperwork burden on regulated entities or
modifies an existing burden.\26\ For purposes of the PRA, a paperwork
burden may take the form of either a reporting or a recordkeeping
requirement, both referred to as information collections. This final
rule adjusts the maximum amounts of certain CMPs that the Board may
assess against individuals, entities, or credit unions but does not
require any reporting or recordkeeping. Therefore, this final rule will
not create new paperwork burdens or modify any existing paperwork
burdens.
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\26\ 44 U.S.C. 3507(d); 5 CFR part 1320.
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D. Executive Order 13132
Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests. In
adherence to fundamental federalism principles, the NCUA, an
independent regulatory agency as defined in 44 U.S.C. 3502(5),
voluntarily complies with the Executive order. This final rule adjusts
the maximum amounts of certain CMPs that the Board may assess against
individuals, entities, and federally insured credit unions, including
state-chartered credit unions. However, the final rule does not create
any new authority or alter the underlying statutory authorities that
enable the Board to assess CMPs. Accordingly, this final rule will not
have a substantial direct effect on the states, on the connection
between the National Government and the states, or on the distribution
of power and responsibilities among the various levels of government.
The Board has determined that this final rule does not constitute a
policy that has federalism implications for purposes of the Executive
order.
E. Assessment of Federal Regulations and Policies on Families
The Board has determined that this final rule will not affect
family well-being within the meaning of Section 654 of the Treasury and
General Government Appropriations Act, 1999.\27\
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\27\ Public Law 105-277, 112 Stat. 2681 (Oct. 21, 1998).
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F. Small Business Regulatory Enforcement Fairness Act
The Small Business Regulatory Enforcement Fairness Act of 1996 \28\
(SBREFA) provides generally for congressional review of agency rules. A
reporting requirement is triggered in instances where the Board issues
a final rule as defined by Section 551 of the APA.\29\ The NCUA does
not believe this rule is a ``major rule'' within the meaning of the
relevant sections of SBREFA. As required by SBREFA, the NCUA submitted
this final rule to OMB for it to determine if the final rule is a
``major rule'' for purposes of SBREFA. OMB determined the final rule
was not a major rule. The NCUA also will file appropriate reports with
Congress and the Government Accountability Office so this rule may be
reviewed.
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\28\ Public Law 104-121, 110 Stat. 857 (Mar. 29, 1996).
\29\ 5 U.S.C. 551.
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List of Subjects in 12 CFR Part 747
Credit unions, Civil monetary penalties.
By the National Credit Union Administration Board on January 7,
2020.
Gerard Poliquin,
Secretary of the Board.
For the reasons stated above, the NCUA Board amends 12 CFR part 747
as follows:
PART 747--ADMINISTRATIVE ACTIONS, ADJUDICATIVE HEARINGS, RULES OF
PRACTICE AND PROCEDURE, AND INVESTIGATIONS
0
1. The authority for part 747 continues to read as follows:
Authority: 12 U.S.C. 1766, 1782, 1784, 1785, 1786, 1787, 1790a,
1790d; 15 U.S.C. 1639e; 42 U.S.C. 4012a; Pub. L. 101-410; Pub. L.
104-134; Pub. L. 109-351; Pub. L. 114-74.
0
2. Revise Sec. 747.1001 to read as follows:
Sec. 747.1001 Adjustment of civil monetary penalties by the rate of
inflation.
(a) The NCUA is required by the Federal Civil Penalties Inflation
Adjustment Act of 1990 (Pub. L. 101-410, 104 Stat. 890, as amended (28
U.S.C. 2461 note)), to adjust the maximum amount of each civil monetary
penalty (CMP) within its jurisdiction by the rate of inflation. The
following chart displays those adjusted amounts, as calculated pursuant
to the statute:
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New maximum
U.S. code citation CMP description amount
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(1) 12 U.S.C. 1782(a)(3)...... Inadvertent failure to $4,098.
submit a report or
the inadvertent
submission of a false
or misleading report.
(2) 12 U.S.C. 1782(a)(3)...... Non-inadvertent $40,979.
failure to submit a
report or the non-
inadvertent
submission of a false
or misleading report.
(3) 12 U.S.C. 1782(a)(3)...... Failure to submit a $2,048,915 or 1
report or the percent of the
submission of a false total assets of
or misleading report the credit
done knowingly or union,
with reckless whichever is
disregard. less.
(4) 12 U.S.C. 1782(d)(2)(A)... Tier 1 CMP for $3,747.
inadvertent failure
to submit certified
statement of insured
shares and charges
due to the National
Credit Union Share
Insurance Fund
(NCUSIF), or
inadvertent
submission of false
or misleading
statement.
[[Page 2012]]
(5) 12 U.S.C. 1782(d)(2)(B)... Tier 2 CMP for non- $37,458.
inadvertent failure
to submit certified
statement or
submission of false
or misleading
statement.
(6) 12 U.S.C. 1782(d)(2)(C)... Tier 3 CMP for failure $1,872,957 or 1
to submit a certified percent of the
statement or the total assets of
submission of a false the credit
or misleading union,
statement done whichever is
knowingly or with less.
reckless disregard.
(7) 12 U.S.C. 1785(a)(3)...... Non-compliance with $127.
insurance logo
requirements.
(8) 12 U.S.C. 1785(e) (3)..... Non-compliance with $297.
NCUA security
requirements.
(9) 12 U.S.C. 1786(k)(2)(A)... Tier 1 CMP for $10,245.
violations of law,
regulation, and other
orders or agreements.
(10) 12 U.S.C. 1786(k)(2)(A).. Tier 2 CMP for $51,222.
violations of law,
regulation, and other
orders or agreements
and for recklessly
engaging in unsafe or
unsound practices or
breaches of fiduciary
duty.
(11) 12 U.S.C. 1786(k)(2)(A).. Tier 3 CMP for $2,048,915.
knowingly committing
the violations under
Tier 1 or 2 (natural
person).
(12) 12 U.S.C. 1786(k)(2)(A).. Tier 3 CMP for $2,048,915 or 1
knowingly committing percent of the
the violations under total assets of
Tier 1 or 2 (insured the credit
credit union). union,
whichever is
less.
(13) 12 U.S.C. 1786(w)(5)(ii). Non-compliance with $337,016.
senior examiner post-
employment
restrictions.
(14) 15 U.S.C. 1639e(k)....... Non-compliance with First violation:
appraisal $11,767.
independence Subsequent
requirements. violations:
$23,533.
(15) 42 U.S.C. 4012a(f)(5).... Non-compliance with $2,226.
flood insurance
requirements.
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(b) The adjusted amounts displayed in paragraph (a) of this section
apply to civil monetary penalties that are assessed after the date the
increase takes effect, including those whose associated violation or
violations pre-dated the increase and occurred on or after November 2,
2015.
[FR Doc. 2020-00309 Filed 1-13-20; 8:45 am]
BILLING CODE 7535-01-P
