Rules of Practice and Procedure; Civil Money Penalty Inflation Adjustment
| Published date | 18 March 2019 |
| Citation | 84 FR 9702 |
| Record Number | 2019-04943 |
| Section | Rules and Regulations |
| Court | Federal Housing Finance Agency |
Federal Register, Volume 84 Issue 52 (Monday, March 18, 2019)
[Federal Register Volume 84, Number 52 (Monday, March 18, 2019)]
[Rules and Regulations]
[Pages 9702-9705]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-04943]
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FEDERAL HOUSING FINANCE AGENCY
12 CFR Parts 1209, 1217, and 1250
RIN 2590-AB01
Rules of Practice and Procedure; Civil Money Penalty Inflation
Adjustment
AGENCY: Federal Housing Finance Agency.
ACTION: Final rule.
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SUMMARY: The Federal Housing Finance Agency (FHFA) is adopting this
final rule amending its Rules of Practice and Procedure and other
agency regulations to adjust each civil money penalty within its
jurisdiction to account for inflation, pursuant to the Federal Civil
Penalties Inflation Adjustment Act of 1990, as amended by the Federal
Civil Penalties Inflation Adjustment Act Improvements Act of 2015.
DATES: Effective date: April 17, 2019.
FOR FURTHER INFORMATION CONTACT: Stephen E. Hart, Deputy General
Counsel, at (202) 649-3053, [email protected], or Frank R. Wright,
Assistant General Counsel, at (202) 649-3087, [email protected]
(not toll-free numbers); Federal Housing Finance Agency, 400 7th Street
SW, Washington, DC 20219. The telephone number for the
Telecommunications Device for the Hearing Impaired is: (800) 877-8339
(TDD only).
SUPPLEMENTARY INFORMATION:
I. Background
FHFA is an independent agency of the Federal government, and the
financial safety and soundness regulator of the Federal National
Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage
Corporation (Freddie Mac) (collectively, the Enterprises), as well as
the Federal Home Loan Banks (collectively, the Banks) and the Office of
Finance under authority granted by the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (Safety and Soundness
Act).\1\ FHFA oversees the Enterprises and Banks (collectively, the
regulated entities) and the Office of Finance to ensure that they
operate in a safe and sound manner and maintain liquidity in the
housing finance market in accordance with applicable laws, rules and
regulations. To that end, FHFA is vested with broad supervisory
discretion and specific civil administrative enforcement powers,
similar to such authority granted by Congress to the Federal bank
regulatory agencies.\2\ Section 1376 of the Safety and Soundness Act
(12 U.S.C. 4636) empowers FHFA to impose civil money penalties under
specific conditions. FHFA's Rules of Practice and Procedure (12 CFR
part 1209) (the Enforcement regulations) govern cease and desist
proceedings, civil money penalty assessment proceedings, and other
administrative adjudications.\3\ FHFA's Flood Insurance regulation (12
CFR part 1250) governs flood insurance responsibilities as they pertain
to the Enterprises.\4\ FHFA's Implementation of the Program Fraud Civil
Remedies Act of 1986 regulation (12 CFR part 1217) sets forth
procedures for imposing civil penalties and assessments under the
Program Fraud Civil Remedies Act (31 U.S.C. 3801 et seq.) on any person
that makes a false claim for property, services or money from FHFA, or
makes a false material statement to FHFA in connection with a claim,
where the amount involved does not exceed $150,000.\5\
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\1\ See Safety and Soundness Act, 12 U.S.C. 4513 and 4631-4641.
\2\ Id.
\3\ See 12 CFR part 1209.
\4\ See 12 CFR part 1250.
\5\ See generally, 31 U.S.C. 3801 et seq.
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The Adjustment Improvements Act
The Federal Civil Penalties Inflation Adjustment Act of 1990
(Inflation Adjustment Act), as amended by the Federal Civil Penalties
Inflation Adjustment Act Improvements Act of 2015 (Adjustment
Improvements Act), requires FHFA, as well as other federal agencies
with the authority to issue civil money penalties (CMPs), to adjust by
regulation the maximum amount of each CMP authorized by law that the
agency has jurisdiction to administer.\6\ The Adjustment Improvements
Act required agencies to make an initial ``catch-up'' adjustment of
their CMPs upon the statute's enactment,\7\ and further requires
agencies to make additional adjustments on an annual basis following
the initial adjustment.\8\
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\6\ See 28 U.S.C. 2461 note.
\7\ FHFA promulgated its catch-up adjustment of its CMPs with an
interim final rule published July 1, 2016. 81 FR 43028.
\8\ FHFA promulgated its first annual adjustment of its CMP with
a final rule published August 29, 2018. 83 FR 43965.
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The Adjustment Improvements Act sets forth the formula that
agencies must apply when making annual adjustments, based on the
percent change between the October Consumer Price Index for All Urban
Consumers (the CPI-U) preceding the date of the last adjustment and the
October CPI-U for the year before that.
[[Page 9703]]
II. Description of the Rule
This final rule adjusts the maximum penalty amount within each of
the three tiers specified in 12 U.S.C. 4636 by amending the table
contained in 12 CFR 1209.80 of the Enforcement regulations to reflect
the new adjusted maximum penalty amount that FHFA may impose upon a
regulated entity or any entity-affiliated party within each tier. The
increases in maximum penalty amounts contained in this final rule may
not necessarily affect the amount of any CMP that FHFA may seek for a
particular violation, which may not be the maximum that the law allows;
FHFA would calculate each CMP on a case-by-case basis in light of a
variety of factors.\9\ This rule also adjusts the maximum penalty
amounts for violations under the FHFA Flood Insurance regulation by
amending the text of 12 CFR 1250.3 to reflect the new adjusted maximum
penalty amount that FHFA may impose for violations under that
regulation. This rule also adjusts the maximum amounts for civil money
penalties under the Program Fraud Civil Remedies Act by amending the
text of 12 CFR 1217.3 to reflect the new adjusted maximum penalty
amount that FHFA may impose for violations under that regulation.
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\9\ See, e.g., 12 CFR 1209.7(c); FHFA Enforcement Policy, AB
2013-03 (May 31, 2013).
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The Adjustment Improvements Act directs federal agencies to
calculate each annual CMP adjustment as the percent change between the
CPI-U for the previous October and the CPI-U for October of the
calendar year before.\10\ The maximum CMP amounts for FHFA penalties
under 12 U.S.C. 4636 were last adjusted in 2018.\11\ Since FHFA is
making this round of adjustments in calendar year 2019, and the maximum
CMP amounts were last set in calendar year 2018, the inflation
adjustment amount for each maximum CMP amount was calculated by
comparing the CPI-U for October 2017 with the CPI-U for October 2018,
resulting in an inflation factor of 1.02522. For each maximum CMP
calculation, the product of this inflation adjustment and the previous
maximum penalty amount was then rounded to the nearest whole dollar as
required by the Adjustment Improvements Act, and was then summed with
the previous maximum penalty amount to determine the new adjusted
maximum penalty amount.\12\ The tables below set out these items
accordingly.
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\10\ 28 U.S.C. 2461 note.
\11\ See 83 FR 43965 (August 29, 2018).
\12\ 28 U.S.C. 2461 note.
Enforcement Regulations
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Previous Rounded New adjusted
U.S. Code citation Description maximum inflation maximum
penalty amount increase penalty amount
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12 U.S.C. 4636(b)(1)............... First Tier................. 11,390 287 11,677
12 U.S.C. 4636(b)(2)............... Second Tier................ 56,947 1,436 58,383
12 U.S.C. 4636(b)(4)............... Third Tier (Entity- 2,277,875 57,448 2,335,323
affiliated party or
Regulated entity).
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Program Fraud Civil Remedies Regulation
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Previous Rounded New adjusted
U.S. Code citation Description maximum inflation maximum
penalty amount increase penalty amount
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31 U.S.C. 3802(a)(1)............... Maximum penalty per false 11,181 282 11,463
claim.
31 U.S.C. 3802(a)(2)............... Maximum penalty per false 11,181 282 11,463
statement.
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Flood Insurance Regulation
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Previous Rounded New adjusted
U.S. Code citation Description maximum inflation maximum
penalty amount increase penalty amount
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42 U.S.C. 4012a(f)(5).............. Maximum penalty per 554 14 568
violation.
42 U.S.C. 4012a(f)(5).............. Maximum total penalties 159,743 4,029 163,772
assessed against an
Enterprise in a calendar
year.
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III. Differences Between the Federal Home Loan Banks and the
Enterprises
When promulgating any regulation that may have future effect
relating to the Banks, the Director is required by section 1313(f) of
the Safety and Soundness Act to consider the differences between the
Banks and the Enterprises with respect to the Banks' cooperative
ownership structure, mission of providing liquidity to members,
affordable housing and community development mission, capital
structure, and joint and several liability (12 U.S.C. 4513(f)).\13\ The
Acting Director considered the differences between the Banks and the
Enterprises, as they relate to the above factors, and determined that
this final rule is appropriate. The inflation adjustments effected by
the final rule are mandated by law, and the special features of the
Banks identified in section 1313(f) of the Safety and Soundness Act can
be accommodated, if appropriate, along with any other relevant factors,
when determining any actual penalties.
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\13\ So in original; no paragraphs (d) and (e) were enacted. See
12 U.S.C.A. 4513 n. 1.
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IV. Regulatory Impact
Administrative Procedure Act
FHFA finds good cause that notice and an opportunity to comment on
this
[[Page 9704]]
final rule are unnecessary under section 553(b) of the Administrative
Procedure Act (APA), 5 U.S.C. 553(b). The Adjustment Improvements Act
states that the annual civil money penalty adjustments shall be made
notwithstanding the rulemaking provisions of 5 U.S.C. 553. Furthermore,
this rulemaking conforms with and is consistent with the statutory
directive set forth in the Adjustment Improvements Act. As a result,
there are no issues of policy discretion about which to seek public
comment. Accordingly, FHFA is adopting these amendments as a final
rule.
Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility Act (RFA),\14\ an agency
must prepare a regulatory flexibility analysis for all proposed and
final rules that describes the impact of the rule on small entities,
unless the head of an agency certifies that the rule will not have ``a
significant economic impact on a substantial number of small
entities.'' However, the RFA applies only to rules for which an agency
publishes a general notice of proposed rulemaking pursuant to the
APA.\15\ As discussed above, FHFA has determined for good cause that
the APA does not require a general notice of proposed rulemaking for
this rule. Thus, the RFA does not apply to this final rule.
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\14\ 5 U.S.C. 603.
\15\ 5 U.S.C. 603(a), 604(a).
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Paperwork Reduction Act
The Paperwork Reduction Act (44 U.S.C. 3501 et seq.) requires that
regulations involving the collection of information receive clearance
from the Office of Management and Budget (OMB). This rule contains no
such collection of information requiring OMB approval under the
Paperwork Reduction Act. Consequently, no information has been
submitted to OMB for review.
Congressional Review Act
In accordance with the Congressional Review Act,\16\ FHFA has
determined that this final rule is not a major rule and has verified
this determination with OMB.
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\16\ See 5 U.S.C. 804(2).
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Lists of Subjects
12 CFR Part 1209
Administrative practice and procedure, Penalties.
12 CFR Part 1217
Civil remedies, Program fraud.
12 CFR Part 1250
Flood insurance, Government-sponsored enterprises, Penalties,
Reporting and recordkeeping requirements.
Accordingly, for the reasons stated in the SUPPLEMENTARY
INFORMATION and under the authority of 12 U.S.C. 4513b and 12 U.S.C.
4526, the Federal Housing Finance Agency hereby amends subchapters A
and C of chapter XII of title 12 of the Code of Federal Regulations as
follows:
SUBCHAPTER A--ORGANIZATION AND OPERATIONS
PART 1209--RULES OF PRACTICE AND PROCEDURE
0
1. The authority citation for part 1209 continues to read as follows:
Authority: 5 U.S.C. 554, 556, 557, and 701 et seq.; 12 U.S.C.
1430c(d); 12 U.S.C. 4501, 4502, 4503, 4511, 4513, 4513b, 4517, 4526,
4566(c)(1) and (c)(7), 4581-4588, 4631-4641; and 28 U.S.C. 2461
note.
0
2. Revise Sec. 1209.80 to read as follows:
Sec. 1209.80 Inflation adjustments.
The maximum amount of each civil money penalty within FHFA's
jurisdiction, as set by the Safety and Soundness Act and thereafter
adjusted in accordance with the Inflation Adjustment Act, is as
follows:
------------------------------------------------------------------------
New adjusted
U.S. Code citation Description maximum
penalty amount
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12 U.S.C. 4636(b)(1)........... First Tier............. $11,677
12 U.S.C. 4636(b)(2)........... Second Tier............ 58,383
12 U.S.C. 4636(b)(4)........... Third Tier (Regulated 2,335,323
Entity or Entity-
Affiliated party).
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0
3. Revise Sec. 1209.81 to read as follows:
Sec. 1209.81 Applicability.
The inflation adjustments set out in Sec. 1209.80 shall apply to
civil money penalties assessed in accordance with the provisions of the
Safety and Soundness Act, 12 U.S.C. 4636, and subparts B and C of this
part, for violations occurring after April 17, 2019.
PART 1217--PROGRAM FRAUD CIVIL REMEDIES ACT
0
4. The authority citation for part 1217 continues to read as follows:
Authority: 12 U.S.C. 4501; 12 U.S.C. 4526, 28 U.S.C. 2461 note;
31 U.S.C. 3801-3812.
0
5. Amend Sec. 1217.3 by revising paragraphs (a)(1) introductory text
and (b)(1) introductory text to read as follows:
Sec. 1217.3 Basis for civil penalties and assessments.
(a) * * * (1) A civil penalty of not more than $11,463 may be
imposed upon a person who makes a claim to FHFA for property, services,
or money where the person knows or has reason to know that the claim:
* * * * *
(b) * * * (1) A civil penalty of up to $11,463 may be imposed upon
a person who makes a written statement to FHFA with respect to a claim,
contract, bid or proposal for a contract, or benefit from FHFA that:
* * * * *
SUBCHAPTER C--ENTERPRISES
PART 1250--FLOOD INSURANCE
0
6. The authority citation for part 1250 continues to read as follows:
Authority: 12 U.S.C. 4521(a)(4) and 4526; 28 U.S.C. 2461 note;
42 U.S.C. 4001 note; 42 U.S.C. 4012a(f)(3), (4), (5), (8), (9), and
(10).
0
7. Amend Sec. 1250.3 by revising paragraph (c) to read as follows:
Sec. 1250.3 Civil money penalties.
* * * * *
(c) Amount. The maximum civil money penalty amount is $554 for each
violation that occurs before April 17, 2019, with total penalties not
to exceed $159,743. For violations that occur on or after April 17,
2019, the civil money penalty under this section may not exceed $568
for each violation, with total penalties assessed under this
[[Page 9705]]
section against an Enterprise during any calendar year not to exceed
$163,772.
* * * * *
Dated: March 7, 2019.
Joseph M. Otting,
Acting Director, Federal Housing Finance Agency.
[FR Doc. 2019-04943 Filed 3-15-19; 8:45 am]
BILLING CODE 8070-01-P
