Civil Penalty Inflation Adjustments
Published date | 14 January 2020 |
Citation | 85 FR 2012 |
Record Number | 2020-00364 |
Section | Rules and Regulations |
Court | Consumer Financial Protection Bureau |
Federal Register, Volume 85 Issue 9 (Tuesday, January 14, 2020)
[Federal Register Volume 85, Number 9 (Tuesday, January 14, 2020)] [Rules and Regulations] [Pages 2012-2014] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 2020-00364] ----------------------------------------------------------------------- BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1083 Civil Penalty Inflation Adjustments AGENCY: Bureau of Consumer Financial Protection. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: 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 require this document in an alternative electronic format, please contact [email protected]. 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 Sec. 1083.1 established the inflation-adjusted maximum amounts for each civil penalty within the Bureau's jurisdiction.\6\ The Bureau finalized the IFR on January 31, 2019.\7\ --------------------------------------------------------------------------- \1\ Public Law 101-410, 104 Stat. 890. \2\ Public 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. \6\ See 12 CFR 1083.1. \7\ 84 FR 517 (Jan. 31, 2019). --------------------------------------------------------------------------- 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\ --------------------------------------------------------------------------- \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). --------------------------------------------------------------------------- Specifically, the Act directs Federal agencies to adjust annually each civil penalty provided by law within the jurisdiction of the agency by the ``cost-of-living adjustment.'' \10\ The ``cost-of-living 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 [[Page 2013]] December 15 to agencies on implementing the annual civil penalty inflation adjustments. Pursuant to the Inflation Adjustment Act and OMB Guidance, agencies must apply the multiplier reflecting the ``cost-of- living adjustment'' to the current penalty amount and then round that amount to the nearest dollar to determine the annual adjustments.\12\ The adjustments are designed to keep pace with inflation so that civil penalties retain their deterrent effect and promote compliance with the law.\13\ --------------------------------------------------------------------------- \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. \12\ Inflation Adjustment Act section 5, codified at 28 U.S.C. 2461 note; see also Memorandum to the Exec. Dep'ts & Agencies from Russell T. Vought, Acting Director, Office of Mgmt. & Budget (Dec. 16, 2019), available at https://www.whitehouse.gov/wp-content/uploads/2019/12/M-20-05.pdf. \13\ See Inflation Adjustment Act section 2, codified at 28 U.S.C. 2461 note. --------------------------------------------------------------------------- For the 2020 annual adjustment, the multiplier reflecting the ``cost-of-living adjustment'' is 1.01764.\14\ --------------------------------------------------------------------------- \14\ Memorandum to the Exec. Dep'ts & Agencies from Russell T. Vought, Acting Director, Office of Mgmt. & Budget (Dec. 16, 2019), available at https://www.whitehouse.gov/wp-content/uploads/2019/12/M-20-05.pdf. --------------------------------------------------------------------------- II. Adjustment Pursuant to the Inflation Adjustment Act and OMB Guidance, the Bureau multiplied each of its civil penalty amounts by the ``cost-of- living adjustment'' multiplier and rounded to the nearest dollar.\15\ The new penalty amounts that apply to civil penalties assessed after January 15, 2020, are as follows: --------------------------------------------------------------------------- \15\ Inflation Adjustment Act section 4, codified at 28 U.S.C. 2461 note. ---------------------------------------------------------------------------------------------------------------- Penalty amounts OMB ``cost-of- Law Penalty description established living New penalty under 2019 adjustment'' amount final rule multiplier ---------------------------------------------------------------------------------------------------------------- Consumer Financial Protection Act, 12 Tier 1 penalty.......... $5,781 1.01764 $5,883 U.S.C. 5565(c)(2)(A). Consumer Financial Protection Act, 12 Tier 2 penalty.......... 28,906 1.01764 29,416 U.S.C. 5565(c)(2)(B). Consumer Financial Protection Act, 12 Tier 3 penalty.......... 1,156,242 1.01764 1,176,638 U.S.C. 5565(c)(2)(C). Interstate Land Sales Full Disclosure Per violation........... 2,014 1.01764 2,050 Act, 15 U.S.C. 1717a(a)(2). Interstate Land Sales Full Disclosure Annual cap.............. 2,013,399 1.01764 2,048,915 Act, 15 U.S.C. 1717a(a)(2). Real Estate Settlement Procedures Act, Per failure............. 94 1.01764 96 12 U.S.C. 2609(d)(1). Real Estate Settlement Procedures Act, Annual cap.............. 189,427 1.01764 192,768 12 U.S.C. 2609(d)(1). Real Estate Settlement Procedures Act, Per failure, where 190 1.01764 193 12 U.S.C. 2609(d)(2)(A). intentional. SAFE Act, 12 U.S.C. 5113(d)(2)........ Per violation........... 29,192 1.01764 29,707 Truth in Lending Act, 15 U.S.C. First violation......... 11,563 1.01764 11,767 1639e(k)(1). Truth in Lending Act, 15 U.S.C. Subsequent violations... 23,125 1.01764 23,533 1639e(k)(2). ---------------------------------------------------------------------------------------------------------------- III. Procedural Requirements A. Administrative Procedure Act Under the Administrative Procedure Act, 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.\16\ The adjustments to the civil penalty amounts are technical and non-discretionary, and they merely apply the statutory method for adjusting civil penalty amounts. These adjustments are required by the Inflation Adjustment Act. Moreover, the Inflation Adjustment Act directs agencies to adjust civil penalties annually notwithstanding section 553 of the APA,\17\ and OMB Guidance reaffirms that agencies need not complete a notice-and-comment process before making the annual adjustments for inflation.\18\ For these reasons, the Bureau has determined that publishing a notice of proposed rulemaking and providing opportunity for public comment are unnecessary. The amendments therefore are adopted in final form. --------------------------------------------------------------------------- \16\ 5 U.S.C. 553(b)(B). \17\ Inflation Adjustment Act section 4, codified at 28 U.S.C. 2461 note. \18\ Memorandum to the Exec. Dep'ts & Agencies from Russell T. Vought, Acting Director, Office of Mgmt. & Budget (Dec. 16, 2019), available at https://www.whitehouse.gov/wp-content/uploads/2019/12/M-20-05.pdf. --------------------------------------------------------------------------- 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.\19\ At minimum, the Bureau believes the annual adjustments to the civil penalty amounts in Sec. 1083.1(a) fall under the third exception to section 553(d). The Bureau finds that there is good cause to make the amendments effective on January 15, 2020. The amendments to Sec. [thinsp]1083.1(a) in this final rule are technical and non-discretionary, and they merely apply the statutory method for adjusting civil penalty amounts and follow the statutory directive to make annual adjustments each year. Moreover, the Inflation Adjustment Act directs agencies to adjust the civil penalties annually notwithstanding section 553 of the APA,\20\ and OMB Guidance reaffirms that agencies need not provide a delay in effective date for the annual adjustments for inflation.\21\ --------------------------------------------------------------------------- \19\ 5 U.S.C. 553(d). \20\ Inflation Adjustment Act section 4, codified at 28 U.S.C. 2461 note. \21\ [thinsp]Memorandum to the Exec. Dep'ts & Agencies from Russell T. Vought, Acting Director, Office of Mgmt. & Budget (Dec. 16, 2019), available at https://www.whitehouse.gov/wp-content/uploads/2019/12/M-20-05.pdf. --------------------------------------------------------------------------- B. Regulatory Flexibility Act Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis.\22\ --------------------------------------------------------------------------- \22\ 5 U.S.C. 603(a), 604(a). --------------------------------------------------------------------------- C. Paperwork Reduction Act The Bureau has determined that this final rule does not impose any new or revise any existing recordkeeping, reporting, or disclosure requirements on covered entities or members of the public that would be collections of information requiring approval by the [[Page 2014]] Office of Management and Budget under the Paperwork Reduction Act.\23\ --------------------------------------------------------------------------- \23\ 44 U.S.C. 3501-3521. --------------------------------------------------------------------------- D. Congressional Review Act Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), the Bureau will submit a report containing this rule and other required information to the United States Senate, the United States House of Representatives, and the Comptroller General of the United States prior to the rule taking effect. The Office of Information and Regulatory Affairs (OIRA) has designated this rule as not a ``major rule'' as defined by 5 U.S.C. 804(2). List of Subjects in 12 CFR Part 1083 Administrative practice and procedure, Consumer protection, Penalties. Authority and Issuance For the reasons set forth in the preamble, the Bureau amends 12 CFR part 1083 as set forth below: PART 1083--CIVIL PENALTY ADJUSTMENTS 0 1. The authority citation for part 1083 continues to read as follows: Authority: 12 U.S.C. 2609(d); 12 U.S.C. 5113(d)(2); 12 U.S.C. 5565(c); 15 U.S.C. 1639e(k); 15 U.S.C. 1717a(a); 28 U.S.C. 2461 note. 0 2. Section 1083.1 is revised to read as follows: Sec. 1083.1 Adjustment of civil penalty amounts. (a) The maximum amount of each civil penalty within the jurisdiction of the Consumer Financial Protection Bureau to impose is adjusted in accordance with 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 (28 U.S.C. 2461 note), as follows: ------------------------------------------------------------------------ Adjusted maximum Law Penalty description civil penalty amount ------------------------------------------------------------------------ 12 U.S.C. 5565(c)(2)(A)....... Tier 1 penalty....... $5,883 12 U.S.C. 5565(c)(2)(B)....... Tier 2 penalty....... 29,416 12 U.S.C. 5565(c)(2)(C)....... Tier 3 penalty....... 1,176,638 15 U.S.C. 1717a(a)(2)......... Per violation........ 2,050 15 U.S.C. 1717a(a)(2)......... Annual cap........... 2,048,915 12 U.S.C. 2609(d)(1).......... Per failure.......... 96 12 U.S.C. 2609(d)(1).......... Annual cap........... 192,768 12 U.S.C. 2609(d)(2)(A)....... Per failure, where 193 intentional. 12 U.S.C. 5113(d)(2).......... Per violation........ 29,707 15 U.S.C. 1639e(k)(1)......... First violation...... 11,767 15 U.S.C. 1639e(k)(2)......... Subsequent violations 23,533 ------------------------------------------------------------------------ (b) The adjustments in paragraph (a) of this section shall apply to civil penalties assessed after January 15, 2020, whose associated violations occurred on or after November 2, 2015. Dated: January 8, 2020. Thomas Pahl, Policy Associate Director, Bureau of Consumer Financial Protection. [FR Doc. 2020-00364 Filed 1-13-20; 8:45 am] BILLING CODE 4810-AM-P