[Federal Register Volume 65, Number 198 (Thursday, October 12, 2000)]
[Rules and Regulations]
[Pages 60583-60584]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-26080]



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  Federal Register / Vol. 65, No. 198 / Thursday, October 12, 2000 / 
Rules and Regulations  

[[Page 60583]]



FEDERAL RESERVE SYSTEM

12 CFR Part 263

[Docket No. R-1083]


Rules of Practice for Hearings

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule.

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SUMMARY: The Board of Governors of the Federal Reserve System (the 
Board) is amending its rules of practice and procedure to adjust the 
maximum amount, as set by statute, of each civil money penalty (CMP) 
within its jurisdiction to account for inflation. This action is 
required under the Federal Civil Penalties Inflation Adjustment Act of 
1990, as amended by the Debt Collection Improvement Act of 1996.

EFFECTIVE DATE: October 12, 2000.

FOR FURTHER INFORMATION CONTACT: Katherine H. Wheatley, Assistant 
General Counsel (202/452-3779), Legal Division, Board of Governors of 
the Federal Reserve System, 20th and C Streets, NW, Washington, DC 
20551. For users of Telecommunication Device for the Deaf (TDD) only, 
please contact Janice Simms (202/452-4984).

SUPPLEMENTARY INFORMATION: The Federal Civil Penalties Inflation 
Adjustment Act of 1990, as amended by the Debt Collection Improvement 
Act of 1996, 28 U.S.C. 2461 note (FCPIA Act), requires each Federal 
agency to adjust each CMP within its jurisdiction by a prescribed cost-
of-living adjustment at least once every four years. This cost-of-
living adjustment is based on the formula described in section 5(b) of 
the FCPIA Act. The Board made its last adjustment in October 1996 (see 
61 FR 56407).
    The required cost-of-living adjustment formula is based on the 
difference between the Consumer Price Index (CPI) for June of the year 
preceding the adjustment (in this case, June 1999) and the CPI for June 
of the year when the CMP was last set or adjusted (generally, June 
1996).\1\ To calculate the adjustment, the Board used the Department of 
Labor, Bureau of Labor Statistics--All Urban Consumers tables, in which 
the period 1982-84 was equal to 100, to get the CPI values. In this 
case, the CPI was 156.7 for June 1996 and was 166.2 for June 1999, 
resulting in an increase of 6.1 percent.
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    \1\ The 1996 adjustment was based on the June 1995 CPI. In 
calculating the new adjustments, the FCPIA Act requires us to use 
the 3-year period from June 1996 to June 1999 for those penalties 
that were adjusted in 1996.
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    Section 5 of the FCPIA Act provides that the adjustment amount must 
be rounded before adding it to the existing penalty amount. The 
rounding provision depends on the size of the penalty being adjusted. 
For example, if the penalty is greater than $100 but less than or equal 
to $1000, the increase is rounded to the nearest $100; if it is greater 
than $1000 but less than or equal to $10,000, the increase is rounded 
to the nearest $1000. Because of this rounding rule, several penalty 
amounts are not changing at this time. For example, because the Tier I 
penalty under 12 U.S.C. 1818(i)(2) is currently $5,500, the 6.1 percent 
adjustment would be $336. Rounding that increase to the nearest $1000 
results in an increase of $0. The penalties that are not adjusted at 
this time because of this rounding formula will be adjusted at the next 
adjustment cycle to take account of the entire period between the time 
of their last adjustment (generally, 1996) and the next adjustment 
date. These unadjusted penalties are identified in the amended 
regulation at subparagraphs 263.65(b)(1)(ii), (b)(2)(i) and (ii), 
(b)(3), (b)(4), (b)(5)(ii), (b)(6), (b)(7), (b)(8)(i), and (b)(9)(i).
    When the regulation was adopted in 1996, several statutory penalty 
provisions that should have been identified for adjustment were 
inadvertently omitted. Those provisions, which have maximum statutory 
penalties that are identical to provisions that were adjusted, are 12 
U.S.C. 334, 374a, 3110(a), and 3110(c). In order to comply with the 
statutory intent and to provide for uniformity in penalty amounts for 
similar violations, the Board is treating those provisions as though 
they had been previously adjusted in accordance with the FCPIA Act, and 
adjusting them for the second time in this cycle if such adjustment is 
warranted under the calculation called for by the FCPIA.
    In addition, when the regulation was adopted in 1996, several 
penalty amounts did not change from their original statutory values 
because of the effect of the rounding rules in the FCPIA Act. 
Specifically, the penalty for inadvertently late or misleading reports 
under 12 U.S.C. 324, and the Tier I penalties under 12 U.S.C. 1847(d) 
and 3110(c), all of which were set by Congress in 1989 at $2000, were 
unchanged in the initial FCPIA adjustment. Accordingly, these penalties 
must be adjusted in this cycle in a manner that captures inflation from 
1989 to the present. The CPI increase between June 1989 and June 1999 
was 33.9 percent, which when applied to the $2000 penalty amount and 
rounded in accordance with the applicable rounding rule would result in 
an increase of $1000. Because such an increase would exceed the 10 
percent limit imposed by the statute for the initial increase in any 
penalty, these penalties were increased to $2,200. The per-violation 
penalty under 42 U.S.C. 4012a(f)(5) was enacted in 1994 and was also 
not adjusted in 1996 due to the application of the rounding rule. The 
CPI increase of 12.3 percent from June 1994 to June 1999 was used to 
calculate the increase for this penalty; due to the rounding rules, the 
penalty was not adjusted in this cycle either, and remains $350 for 
each violation.
    In accordance with section 6 of the FCPIA Act, the increased 
penalties set forth in this amendment apply only to violations that 
occur after the date the increase takes effect.

Public Comment Not Required

    This rule is not subject to the provisions of 5 U.S.C. 553 
requiring notice, public participation, and deferred effective date. 
The FCPIA Act provides Federal agencies with no discretion in the 
adjustment of CMPs to the rate of inflation, and it also requires that 
adjustments be made at least every four years. Moreover, this 
regulation is ministerial and technical. For these reasons, the Board 
finds good cause to determine that public notice and comment for this 
new regulation is

[[Page 60584]]

unnecessary, impractical, and contrary to the public interest, pursuant 
to the Administrative Procedure Act (APA), 5 U.S.C. 553(b)(3)(B). These 
same reasons also provide the Board with good cause to adopt an 
effective date for this regulation that is less than 30 days after the 
date of publication in the Federal Register, pursuant to the APA, 5 
U.S.C. 553(d).
    Regulatory Flexibility Act: No significant impact.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Ch. 3506; 5 CFR Part 1320 Appendix A.1), the Board reviewed the 
proposed rule under the authority delegated to the Board by the Office 
of Management and Budget. No collections of information pursuant to the 
Paperwork Reduction Act are contained in the final rule.

List of Subjects in 12 CFR Part 263

    Administrative practice and procedure, Claims, Crime, Equal Access 
to Justice, Federal Reserve System, Lawyers, Penalties.

    For the reasons set forth in the preamble, the Board of Governors 
amends 12 CFR part 263 to read as follows:

PART 263--RULES OF PRACTICE FOR HEARINGS

    1. The authority citation for part 263 continues to read as 
follows:

    Authority: 5 U.S.C. 504; 12 U.S.C. 248, 324, 504, 505, 1817(j), 
1818, 1828(c), 1831o, 1831p-1, 1847(b), 1847(d), 1884(b), 
1972(2)(F), 3105, 3107, 3108, 3907, 3909; 15 U.S.C. 21, 78o-4, 78o-
5, 78u-2; and 28 U.S.C. 2461 note.
    2. Section 263.65 is revised to read as follows:


Sec. 263.65  Civil penalty inflation adjustments

    (a) Inflation adjustments. In accordance with the Federal Civil 
Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note), the 
Board has set forth in paragraph (b) of this section adjusted maximum 
penalty amounts for each civil money penalty provided by law within its 
jurisdiction. The adjusted civil penalty amounts provided in paragraph 
(b) of this section replace only the amounts published in the statutes 
authorizing the assessment of penalties and the previously-adjusted 
amounts adopted as of October 24, 1996. The authorizing statutes 
contain the complete provisions under which the Board may seek a civil 
money penalty. The increased penalty amounts apply only to violations 
occurring after the effective date of this rule.
    (b) Maximum civil money penalties. The maximum civil money 
penalties as set forth in the referenced statutory sections are 
adjusted as follows:
    (1) 12 U.S.C. 324:
    (i) Inadvertently late or misleading reports, inter alia--$2200.
    (ii) Other late or misleading reports, inter alia--$22,000.
    (iii) Knowingly or recklessly false or misleading reports, inter 
alia--$1,175,000.
    (2) 12 U.S.C. 504, 505, 1817(j)(16), 1818(i)(2) and 1972(F):
    (i) First tier--$5,500.
    (ii) Second tier--$27,500.
    (iii) Third tier--$1,175,000.
    (3) 12 U.S.C. 1832(c)--$1,100.
    (4) 12 U.S.C. 1847(b), 3110(a)--$27,500.
    (5) 12 U.S.C. 1847(d), 3110(c):
    (i) First tier--$2,200.
    (ii) Second tier--$22,000.
    (iii) Third tier--$1,175,000.
    (6) 12 U.S.C. 334, 374a, 1884--$110.
    (7) 12 U.S.C. 3909(d)--$1,100.
    (8) 15 U.S.C. 78u-2:
    (i) 15 U.S.C. 78u-2(b)(1)--$5,500 for a natural person and $60,000 
for any other person.
    (ii) 15 U.S.C. 78u-2(b)(2)--$60,000 for a natural person and 
$300,000 for any other person.
    (iii) 15 U.S.C. 78u-2(b)(3)--$120,000 for a natural person and 
$575,000 for any other person.
    (9) 42 U.S.C. 4012a(f)(5):
    (i) For each violation--$350.
    (ii) For the total amount of penalties assessed under 42 U.S.C. 
4012a(f)(5) against an institution or enterprise during any calendar 
year--$115,000.

    By order of the Board of Governors of the Federal Reserve 
System, October 5, 2000.
Robert deV. Frierson,
Associate Secretary of the Board.
[FR Doc. 00-26080 Filed 10-11-00; 8:45 am]
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