[Federal Register Volume 66, Number 3 (Thursday, January 4, 2001)]
[Rules and Regulations]
[Pages 709-711]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-177]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of Federal Housing Enterprise Oversight

12 CFR Part 1780

RIN 2550-AA17


Rules of Practice and Procedure

AGENCY: Office of Federal Housing Enterprise Oversight, HUD.

ACTION: Final rule.

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SUMMARY: The Office of Federal Housing Enterprise Oversight (OFHEO) is 
issuing this final rule amending its rules of practice and procedure to 
adjust each civil money penalty within its jurisdiction to account for 
inflation. OFHEO is taking this action pursuant to the Federal Civil 
Penalties Inflation Adjustment Act of 1990, as amended by the Debt 
Collection Improvement Act of 1996.

DATES: This rule is effective January 4, 2001.

FOR FURTHER INFORMATION CONTACT: David W. Roderer, Deputy General 
Counsel, (202) 414-6924, Jamey Basham, Counsel (202) 414-8906 (not 
toll-free numbers), 1700 G Street NW., Fourth Floor, Washington, DC 
20552. The telephone number for the Telecommunications Device for the 
Deaf is: (800) 877-8339 (TDD only).

SUPPLEMENTARY INFORMATION:

Background

    Title XIII of the Housing and Community Development Act of 1992, 
Public Law No. 102-550, entitled the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992, established OFHEO. OFHEO is 
an independent office within the Department of Housing and Urban 
Development (HUD) with responsibility for ensuring that Fannie Mae and 
Freddie Mac (collectively, the Enterprises) are adequately capitalized 
and operate safely and in conformity to the requirements of applicable 
laws, rules and regulations, including their respective charter acts. 
The Enterprises are government-sponsored corporations established under 
Federal law to effect specific public purposes.\1\ These include 
providing liquidity to the residential mortgage market and promoting 
the availability of mortgage credit benefiting low- and moderate-income 
families and areas that are underserved by lending institutions.
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    \1\ See Federal Home Loan Mortgage Corporation Act, 12 U.S.C. 
1451 et seq.; Federal National Mortgage Association Charter Act, 12 
U.S.C. 1716 et seq.; Act at 12 U.S.C. 4561-67, 4562 note.
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The Inflation Adjustment Act

    The Federal Civil Penalties Inflation Adjustment Act of 1990, as 
amended by the Debt Collection Improvement Act of 1996 (the Inflation 
Adjustment Act)\2\ requires OFHEO, as well as other Federal agencies 
with the authority to issue civil money penalties (CMPs), to publish 
regulations to adjust each CMP authorized by law that the agency has 
jurisdiction to administer. The purpose of these adjustments is to 
maintain the deterrent effect of CMPs and promote compliance with the 
law. The Inflation Adjustment Act required agencies to make an initial 
adjustment of their CMPs upon the statute's enactment, and further 
requires agencies to make additional adjustments on an ongoing basis, 
at least once every four years following the initial adjustment. In 
1997, OFHEO made the initial adjustment of its CMPs,\3\ with such 
adjustments being applicable to any violation occurring after October 
23, 1996 (the effective date of the Inflation Adjustment Act).
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    \2\ 28 U.S.C. 2461 note.
    \3\ Section 1780.71 of OFHEO's rules and regulations, 12 CFR 
Sec. 1780.71.
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    Under the Inflation Adjustment Act, the inflation adjustment for 
each applicable CMP is determined by increasing the maximum CMP amount 
per violation by a cost-of-living adjustment. As is described in detail 
below, the Inflation Adjustment Act provides that this cost-of-living 
adjustment is to reflect the percentage increase in the Consumer Price 
Index\4\ since the CMPs were last adjusted or established, and rounded 
in accordance with rules provided in the statute.
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    \4\ The Inflation Adjustment Act specifically identifies the 
Consumer Price Index for All Urban Consumers published by the United 
States Department of Labor (CPI-U). The Department of Labor (DOL) 
computes the CPI-U using two different base time periods, 1967 and 
1982-1984. The Inflation Adjustment Act does not specify which of 
these base periods should be used to calculate the inflation 
adjustment. OFHEO calculated the initial adjustment of its CMPs 
using CPI-U data with the 1967 base period. OFHEO is using CPI-U 
data with the 1982-1984 base period for the adjustments adopted in 
this final rule, because such data now reflect the most current 
method of computing the CPI-U.
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Description of the Rule

    This final rule adjusts the amount for each type of CMP that OFHEO 
has jurisdiction to impose, in accordance with the requirements of the 
Inflation Adjustment Act. Part 1780 of OFHEO's rules and regulations 
currently sets out the procedural rules under which OFHEO conducts 
proceedings to impose

[[Page 710]]

a civil money penalty. This final rule amends the table contained in 
Sec. 1780.80, which identifies the different tiers of penalties 
provided in 12 U.S.C. 4636--the statute that provides OFHEO with CMP 
authority--and sets out the new adjusted maximum penalty amount that 
OFHEO may impose for that tier. The increases in maximum penalty 
amounts contained in this final rule may not necessarily affect the 
amount of any CMP that OFHEO may seek for a particular violation; OFHEO 
would calculate each CMP on a case-by-case basis in light of a variety 
of factors.
    The Inflation Adjustment Act directs federal agencies to calculate 
each CMP adjustment as the percentage by which the CPI-U for June of 
the calendar year preceding the adjustment exceeds the CPI-U for June 
of the calendar year in which the amount of such CMP was last adjusted. 
Since OFHEO is making this round of adjustments in calendar year 
2000,\5\ and OFHEO made the last round of adjustments in calendar year 
1997, the inflation adjustment amount for each CMP was calculated by 
comparing the CPI-U for June 1997 (160.3) with the CPI-U for June 1999 
(166.2), resulting in an inflation adjustment of 3.7 percent.\6\ For 
each CMP, the product of this inflation adjustment and the previous 
maximum penalty amount was then rounded in accordance with the specific 
requirements of the Inflation Adjustment Act,\7\ then summed with the 
previous maximum penalty amount to determine the new adjusted maximum 
penalty amount. The table below sets out these items accordingly.
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    \5\ Although the adjustment is being made in calendar year 2000, 
the resulting CMP increases do not take effect until publication of 
the rule, and will only apply to conduct occurring after such date.
    \6\ OFHEO's last round of adjustments in 1997 applied an 
inflation factor of 11.8 percent, calculated by comparing June 1992 
CPI-U data to June 1996 CPI-U data. The 1992 data were used as the 
base period in accordance with the Inflation Adjustment Act's 
directive to use CPI-U data from the year of a CMP's enactment if 
the CMP had not been previously adjusted pursuant to law. The 
resulting penalty increase was then rounded in accordance with the 
statutory rules described below and in some cases reduced by the 
statute's ten percent cap on initial CMP adjustments. 62 FR 68152 
(December 31, 1997).
    \7\ The statute's rounding rules require that each increase be 
rounded to the nearest multiple as follows: $10 in the case of 
penalties less than or equal to $100; $100 in the case of penalties 
greater than $100 but less than or equal to $1,000; $1,000 in the 
case of penalties greater than $1,000 but less than or equal to 
$10,000; $5,000 in the case of penalties greater than $10,000 but 
less than or equal to $100,000; $10,000 in the case of penalties 
greater than $100,000 but less than or equal to $200,000; and 
$25,000 in the case of penalties greater than $200,000.

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                                                                                                         New
                                                                Previous    Inflation     Rounded      adjusted
         U.S. Code citation                 Description         maximum      increase    inflation     maximum
                                                                penalty        (3.7       increase     penalty
                                                                 amount      percent)                   amount
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12 U.S.C. 4636(b)(1)................  First Tier............        5,500       203.50            0        5,500
12 U.S.C. 4636(b)(2)................  Second Tier (Executive       11,000          407            0       11,000
                                       Officer or Director).
12 U.S.C. 4636(b)(2)................  Second Tier                  27,500     1,017.50            0       27,500
                                       (Enterprise).
12 U.S.C. 4636(b)(3)................  Third Tier (Executive       110,000        4,070            0      110,000
                                       Officer or Director).
12 U.S.C. 4636(b)(3)................  Third Tier                1,100,000       40,700       50,000    1,150,000
                                       (Enterprise).
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    Section 1780.81 states that the adjustments made in Sec. 1780.80 
apply only to violations that occur after January 4, 2001.

Public Notice and Comment and Delayed Effective Date Not Required

    OFHEO finds good cause that notice and an opportunity to comment on 
this document are unnecessary under the Administrative Procedure Act 
(APA), and OFHEO is issuing these requirements as a final rule. 5 
U.S.C. 553. This rulemaking conforms with and is consistent with the 
statutory directive set forth in the Inflation Adjustment Act, with no 
issues of policy discretion, and public comment is impracticable and 
unnecessary.
    In addition, OFHEO finds good cause to make this rule effective 
upon publication of this document in the Federal Register under the 
Administrative Procedure Act (APA). 5 U.S.C. 553(d). This final rule 
does not impose any additional responsibilities on any entity. Instead, 
it simply adjusts CMPs as dictated by the Inflation Adjustment Act.

Regulatory Impact

Executive Order 12866, Regulatory Planning and Review

    This final rule is not classified as a significant rule under 
Executive Order 12866 because it will not result in an annual effect on 
the economy of $100 million or more or a major increase in costs or 
prices for consumers, individual industries, Federal, State, or local 
government agencies, or geographic regions; or have significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or on the ability of United States-based Enterprises to 
compete with foreign-based enterprises in domestic or foreign markets. 
Accordingly, no regulatory impact assessment is required and this final 
rule has not been submitted to the Office of Management and Budget for 
review.

Unfunded Mandates Reform Act of 1995

    This final rule does not include a Federal mandate that may result 
in the expenditure by State, local, and tribal governments, in the 
aggregate, or by the private sector, of $100,000,000 or more (adjusted 
annually for inflation) in any one year. As a result, the final rule 
does not warrant the preparation of an assessment statement in 
accordance with the Unfunded Mandates Reform Act of 1995.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) only applies 
to rules for which an agency publishes a general notice of proposed 
rulemaking pursuant to 5 U.S.C. 553(b) (see 5 U.S.C. 601(2)). OFHEO has 
determined for good cause that the APA does not require a general 
notice of proposed rulemaking for this regulatory action. The 
Regulatory Flexibility Act does not apply to this final rule.

Paperwork Reduction Act of 1995

    These proposed rules contain no information collection requirements 
that require the approval of the Office of Management and Budget 
pursuant to the Paperwork Reduction Act, 44 U.S.C. 3501-3520.

List of Subjects in 12 CFR Part 1780

    Administrative practice and procedure, Penalties.

    Accordingly, for the reasons set out in the preamble, the Office of 
Federal

[[Page 711]]

Housing Enterprise Oversight proposes to amend 12 CFR part 1780 as 
follows:

PART 1780--RULES OF PRACTICE AND PROCEDURE

    1. The authority citation for part 1780 is revised to read as 
follows:

    Authority: 12 U.S.C. 4501, 4513, 4517, 4521, 4631-4641.


    2. Revise subpart E of part 1780 to read as follows:

Subpart E--Civil Money Penalty Inflation Adjustments


Sec. 1780.80  Inflation adjustments.

    The maximum amount of each civil money penalty within OFHEO's 
jurisdiction is adjusted in accordance with 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) as follows:

------------------------------------------------------------------------
                                                  New  adjusted  maximum
      U.S. Code citation          Description        penalty  amount
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12 U.S.C. 4636(b)(1).........  First tier......                    5,500
12 U.S.C. 4636(b)(2).........  Second tier                        11,000
                                (Executive
                                Officer or
                                Director).
12 U.S.C. 4636(b)(2).........  Second Tier                        27,500
                                (Enterprise).
12 U.S.C. 4636(b)(3).........  Second Tier                       110,000
                                (Executive
                                Officer or
                                Director).
12 U.S.C. 4636(b)(3).........  Second Tier                     1,150,000
                                (Enterprise).
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Sec. 1780.81  Applicability.

    The inflation adjustments in Sec. 1780.80 apply to civil money 
penalties assessed in accordance with the provisions of 12 U.S.C. 4636 
for violations occurring after January 4, 2001.

    Dated: December 28, 2000.
Armando Falcon, Jr.,
Director, Office of Federal Housing Enterprise Oversight.
[FR Doc. 01-177 Filed 1-3-01; 8:45 am]
BILLING CODE 4220-01-U