Civil Monetary Penalty Inflation Adjustment
| Published date | 06 February 2019 |
| Citation | 84 FR 2052 |
| Record Number | 2019-01123 |
| Section | Rules and Regulations |
| Court | National Credit Union Administration |
Federal Register, Volume 84 Issue 25 (Wednesday, February 6, 2019)
[Federal Register Volume 84, Number 25 (Wednesday, February 6, 2019)]
[Rules and Regulations]
[Pages 2052-2056]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-01123]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 747
RIN 3133-AE92
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 February 6, 2019.
[[Page 2053]]
FOR FURTHER INFORMATION CONTACT: Marvin Shaw, Staff Attorney, at 1775
Duke Street, Alexandria, VA 22314, or telephone: (703) 518-6553.
SUPPLEMENTARY INFORMATION:
I. Legal Background
II. Calculation of Adjustments
III. Regulatory Procedures
I. Legal Background
A. Statutory Requirements and OMB Guidance
The Debt Collection Improvement Act of 1996 \1\ (DCIA) amended the
Federal Civil Penalties Inflation Adjustment Act of 1990 \2\ (FCPIA
Act) to require every federal agency to enact regulations that adjust
each CMP provided by law under its jurisdiction by the rate of
inflation at least once every four years.
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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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In November 2015, Congress further amended the CMP inflation
requirements in 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 an October 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, the NCUA
issued a final rule to satisfy the agency's requirement for the 2018
annual adjustments.\10\ This document satisfies the agency's
requirement for the 2019 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).
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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 2019, an agency must
compare the October 2017 and 2018 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: http://www.bls.gov/cpi/.
\13\ Public Law 114-74, Sec. 701(b)(1)(2)(B), 129 Stat. 584, 600
(Nov. 2, 2015).
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The 2015 amendments also provide that agencies may forgo the
required annual adjustments in certain circumstances. Specifically, in
a subsection titled ``Other Adjustments Made,'' the statute provides
that an agency is not required to make an annual adjustment to a CMP if
it has been increased by an amount greater than the contemplated annual
adjustment in the preceding 12 months.\14\ When these criteria are met,
the agency has discretion not to make the adjustments otherwise
required by the statute.
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\14\ Public Law 114-74, Sec. 701(b)(1), 129 Stat. 584, 600 (Nov.
2, 2015).
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In addition, the 2015 amendments directed the Office of Management
and Budget (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 2019 annual adjustment, did so on
December 14, 2018.\16\ This OMB guidance for the 2019 adjustments
includes an inflationary multiplier (1.02522) to apply to each current
CMP maximum amount to determine the adjusted maximum. The 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\ OMB, Implementation of Penalty Inflation Adjustments for
2019, Pursuant to the Federal Civil Penalties Inflation Adjustment
Act Improvements Act of 2015 (Dec. 14, 2018), available at https://www.whitehouse.gov/wp-content/uploads/2017/11/m_19_04.pdf.
\17\ Id.
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B. Application to the 2019 Adjustments
This section applies the statutory requirements and OMB's guidance
to the NCUA's CMPs, and sets forth the Board's calculation of the 2019
adjustments.
As explained above, the 2015 amendments require the NCUA to adjust
the maximum amounts of its CMPs by the percentage by which the October
2018 CPI-U (252.885) exceeds the October 2017 CPI-U (246.663). The
percentage change is 2.522. This percentage increase can be expressed
as an inflation multiplier (the quotient of the October 2018 figure
divided by the October 2017 figure). Accordingly, each CMP maximum
amount should be multiplied by 1.02522 to determine the adjusted
maximum amount. OMB's guidance identifies the same multiplier.
The Board has considered the exception in the 2015 amendments for
adjustments made in the preceding 12 months, discussed above, and has
determined that it does not apply. All of the adjustments calculated
below are equal to or greater than the adjustments made in January 2018
for each CMP. Accordingly, the exception for greater adjustments in the
preceding 12 months does not apply. Thus, the Board lacks discretion to
decline to make the adjustments calculated below.
The table below presents the adjustment calculations. The current
maximums are found at 12 CFR 747.1001, as adjusted in January 2018.
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 12 CFR 747.1001
under this final rule. The adjusted amounts were applicable January 15,
2019, 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), codified
at 28 U.S.C. 2461 note.
[[Page 2054]]
Table--Calculation of Maximum CMP Adjustments
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Adjusted Maximum
($) (current
Current maximum maximum x
Citation Description/tier \19\ ($) Multiplier multiplier,
rounded to nearest
dollar)
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12 U.S.C. 1782(a)(3)........... Inadvertent failure to 3,928............. 1.02522 4,027.
submit a report or the
inadvertent submission
of a false or
misleading report.
12 U.S.C. 1782(a)(3)........... Non-inadvertent failure 39.278............ 1.02522 40,269.
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 1.02522 Lesser of
report or the 1,963,870 or 1% 2,013,399 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 3,591............. 1.02522 3,682.
inadvertent failure to
submit certified
statement of insured
shares and charges due
to NCUSIF, or
inadvertent submission
of false or misleading
statement.
12 U.S.C. 1782(d)(2)(B)........ Tier 2 CMP for non- 35,904............ 1.02522 36,809.
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 1.02522 Lesser of
to submit a certified 1,795,216 or 1% 1,840,491 or 1% of
statement or the of total CU total CU assets.
submission of a false assets.
or misleading
statement done
knowingly or with
reckless disregard.
12 U.S.C. 1785(a)(3)........... Non-compliance with 122............... 1.02522 125.
insurance logo
requirements.
12 U.S.C. 1785(e)(3)........... Non-compliance with 285............... 1.02522 292.
NCUA security
requirements.
12 U.S.C. 1786(k)(2)(A)........ Tier 1 CMP for 9,819............. 1.02522 10,067.
violations of law,
regulation, and other
orders or agreements.
12 U.S.C. 1786(k)(2)(B)........ Tier 2 CMP for 49,096............ 1.02522 50,334.
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 1,963,870......... 1.02522 2,013,399.
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 1.02522 Lesser of
1,963,870 or 1% 2,013,399 or 1%
of total CU of total CU
assets. assets.
12 U.S.C. 1786(w)(5)(A)(ii).... Non-compliance with 323,027........... 1.02522 331,174.
senior examiner post-
employment
restrictions.
15 U.S.C. 1639e(k)............. Non-compliance with 11,279............ 1.02522 11,563.
appraisal independence
standards (first
violation).
15 U.S.C. 1639e(k)............. Subsequent violations 22,556............ 1.02522 23,125.
of the same.
42 U.S.C. 4012a(f)(5).......... Non-compliance with 2,133............. 1.02522 2,187.
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 to the FCPIA Act, Congress provided that
agencies shall make the required inflation adjustments in 2017 and
subsequent years notwithstanding 5 U.S.C. 553,\20\ which 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. 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 (D.C. 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, (D.C. 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 only affects 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
[[Page 2055]]
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 Board has
submitted this final rule to OMB for it to determine whether it is a
``major rule'' within the meaning of the relevant sections of SBREFA,
but the Board does not believe the rule is major.
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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 4,
2019.
Gerard S. 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; Public Law 101-410; Public
Law 104-134; Public Law 109-351; Public Law 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 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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U.S. Code citation CMP description New maximum amount
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(1) 12 U.S.C. 1782(a)(3).... Inadvertent failure $4,027.
to submit a report
or the inadvertent
submission of a
false or misleading
report.
(2) 12 U.S.C. 1782(a)(3).... Non-inadvertent $40,269.
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 $2,013,399 or 1
report or the percent of the
submission of a total assets of the
false or misleading credit union,
report done whichever is less.
knowingly or with
reckless disregard.
(4) 12 U.S.C. 1782(d)(2)(A). Tier 1 CMP for $3,682.
inadvertent failure
to submit certified
statement of
insured shares and
charges due to
NCUSIF, or
inadvertent
submission of false
or misleading
statement.
(5) 12 U.S.C. 1782(d)(2)(B). Tier 2 CMP for non- $36,809.
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 $1,840,491 or 1
failure to submit a percent of the
certified statement total assets of the
or the submission credit union,
of a false or whichever is less.
misleading
statement done
knowingly or with
reckless disregard.
(7) 12 U.S.C. 1785(a)(3).... Non-compliance with $125.
insurance logo
requirements.
(8) 12 U.S.C. 1785(e)(3).... Non-compliance with $292.
NCUA security
requirements.
(9) 12 U.S.C. 1786(k)(2)(A). Tier 1 CMP for $10,067.
violations of law,
regulation, and
other orders or
agreements.
[[Page 2056]]
(10) 12 U.S.C. 1786(k)(2)(A) Tier 2 CMP for $50,334.
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 $2,013,399.
knowingly
committing the
violations under
Tier 1 or 2
(natural person).
(12) 12 U.S.C. 1786(k)(2)(A) Tier 3 CMP for $2,013,399 or 1
knowingly percent of the
committing the total assets of the
violations under credit union,
Tier 1 or 2 whichever is less.
(insured credit
union).
(13) 12 U.S.C. Non-compliance with $331,174.
1786(w)(5)(ii). senior examiner
post-employment
restrictions.
(14) 15 U.S.C. 1639e(k)..... Non-compliance with First violation:
appraisal $11,563 Subsequent
independence violations:
requirements. $23,125.
(15) 42 U.S.C. 4012a(f)(5).. Non-compliance with $2,187.
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 after November 2, 2015.
[FR Doc. 2019-01123 Filed 2-5-19; 8:45 am]
BILLING CODE 7535-01-P
