[Federal Register Volume 70, Number 167 (Tuesday, August 30, 2005)]
[Rules and Regulations]
[Pages 51241-51243]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-17232]
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Rules and Regulations
Federal Register
________________________________________________________________________
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Federal Register / Vol. 70, No. 167 / Tuesday, August 30, 2005 /
Rules and Regulations
[[Page 51241]]
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of Federal Housing Enterprise Oversight
12 CFR Part 1780
RIN 2550-AA17
Rules of Practice and Procedure; Civil Money Penalty Inflation
Adjustment
AGENCY: Office of Federal Housing Enterprise Oversight, HUD.
ACTION: Final rule.
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SUMMARY: The Office of Federal Housing Enterprise Oversight 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, 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 on August 30, 2005.
FOR FURTHER INFORMATION CONTACT: David W. Roderer, Deputy General
Counsel, at (202) 414-3804; Charlotte A. Reid, Associate General
Counsel, at (202) 414-3810; or Frank R. Wright, Senior Counsel, at
(202) 414-6439 (not toll-free numbers); Office of Federal Housing
Enterprise Oversight, Fourth Floor, 1700 G Street, NW., Washington, DC
20552. The telephone number for the Telecommunications Device for the
Deaf is: (800) 877-8339 (TDD only).
SUPPLEMENTARY INFORMATION
Background
The Office of Federal Housing Enterprise Oversight (OFHEO), an
independent office within the Department of Housing and Urban
Development (HUD), is the exclusive 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) under the Federal Housing Enterprises Financial Safety
and Soundness Act of 1992 (Act), as amended.\1\ The Enterprises are
government-sponsored corporations chartered to provide liquidity to the
residential mortgage market and to promote the availability of mortgage
credit by investing in residential mortgages and guaranteeing
securities backed by residential mortgages.\2\ OFHEO oversees the
Enterprises to ensure that they remain adequately capitalized and
operate in a safe and sound manner and in accordance with applicable
laws, rules and regulations. To that end OFHEO 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.\3\ In particular, section 1376 of the Act (12
U.S.C. 4636) empowers OFHEO to impose civil money penalties under
specific conditions. OFHEO's Rules of Practice and Procedure (12 CFR
part 1780) govern cease and desist proceedings, civil money penalty
assessment proceedings and other administrative adjudications.\4\
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\1\ See Federal Housing Enterprises Financial Safety and
Soundness Act of 1992, Pub. L. 102-550, Title XIII, Section 1301,
Oct. 28, 1992, 106 Stat. 3672, 3941-4012 (codified at 12 U.S.C. 4501
et seq.).
\2\ 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.
\3\ See Pub. L. No. 102-550, Title XIII, Section 1313 and 1371-
1379B (Subtitle C--Enforcement Provisions) (codified at 12 U.S.C.
4513 and 4631-4641, respectively).
\4\ See 12 CFR 1780.1
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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) requires OFHEO, as well as other Federal agencies with
the authority to issue civil money penalties (CMPs), to publish
regulations to adjust the maximum amount of each CMP authorized by law
that the agency has jurisdiction to administer.\5\ 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, every four years
following the initial adjustment. The purpose of these periodic
adjustments is to maintain the deterrent effect of CMPs and promote
compliance with the law. Subpart E of OFHEO's Rules of Practice and
Procedure sets forth the Civil Money Penalty Inflation Adjustment
amounts and discusses their applicability. See 12 CFR parts 1780.80-81.
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\5\ See 28 U.S.C. 2461 note.
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As required, OFHEO made the initial adjustment to the maximum civil
money penalty amounts in 1997, and provided that such adjustments were
applicable to any violation occurring after October 23, 1996 (the
effective date of the Inflation Adjustment Act).\6\ The last adjustment
was made in 2000, effective January 4, 2001.\7\ OFHEO again is amending
the maximum civil money penalty amount for each tier that OFHEO has
authority to impose under 12 U.S.C. 4636 in accordance with the
Inflation Adjustment Act.
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\6\ See 62 FR 68152, December 31, 1997.
\7\ See 66 FR 709, Jan. 4, 2001.
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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 since the CMPs were last adjusted or established, and rounded in
accordance with rules provided in the statute.\8\
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\8\ 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 maximum penalty amount within each of
the three tiers specified in 12 U.S.C. 4636 by amending the table
contained in 12 CFR part 1780.80 to reflect the new adjusted maximum
penalty amount that OFHEO
[[Page 51242]]
may impose upon an executive officer or director or an Enterprise
within each 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.\9\
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\9\ See, e.g., 12 CFR part 1780.1(c).
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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 each CMP was last adjusted.
The CMP for Third Tier penalties by an Enterprise was adjusted in 2000,
and every other CMP was last adjusted in 1997.\10\ Since OFHEO is
making this round of adjustments in calendar year 2005, and OFHEO made
the last round of adjustments in calendar year 2000, the inflation
adjustment amount for each CMP that was adjusted in 2000 was calculated
by comparing the CPI-U for June 2000 (172.4) with the CPI-U for June
2004 (189.7), resulting in an inflation adjustment of 10.0 percent.\11\
For each CMP that was last adjusted in 1997, the inflation adjustment
amount was calculated by comparing the CPI-U for June 1997 (160.3) with
the CPI-U for June 2004 (189.7), resulting in an inflation adjustment
of 18.3 percent. 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, and was
then summed with the previous maximum penalty amount to determine the
new adjusted maximum penalty amount.\12\ The table below sets out these
items accordingly.
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\10\ See 66 FR 709, Jan. 4, 2001; 62 FR 68152, Dec. 31, 1997.
\11\ OFHEO's last round of adjustments in 2000 applied an
inflation factor of 3.7 percent, calculated by comparing June 1997
data to June 1999 data. The 1997 data was used as the base period in
accordance with the Inflation Adjustment Act's directive to use CPI-
U data from the year of the CMP's previous adjustment. The resulting
penalty was then rounded in accordance with the statutory rules
described below. 66 FR 709, January 4, 2001. Although the adjustment
is being made in calendar year 2005, the resulting CMP increases do
not take effect until publication of the rule, and will only apply
to conduct occurring after such data.
\12\ 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 Rounded adjusted
U.S. code citation Description maximum Inflation inflation maximum
penalty increase increase penalty
amount amount
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12 U.S.C. 4636(b)(1).................... First Tier........ 5,500 1,006.50 1,000 6,500
12 U.S.C. 4636(b)(2).................... Second Tier 11,000 2,013 0 11,000
(Executive
Officer or
Director).
12 U.S.C. 4636(b)(2).................... Second Tier 27,500 5,032.50 5,000 32,500
(Enterprise).
12 U.S.C. 4636(b)(3).................... Third Tier 110,000 20,130 20,000 130,000
(Executive
Officer or
Director).
12 U.S.C. 4636(b)(3).................... Third Tier 1,150,000 115,000 125,000 1,275,000
(Enterprise).
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Section 1780.81 states that the adjustments made in Sec. 1780.80
apply only to violations that occur after the effective date, August
30, 2005.
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, 5
U.S.C. 551-559, as amended (APA). 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. Accordingly, OFHEO is issuing the
amendments as a final rule.
In addition, OFHEO finds good cause to make this rule effective
upon publication of this document in the Federal Register under the
APA. See 5 U.S.C. 553(d). This final rule does not impose any
additional responsibilities on any entity. Instead, it simply adjusts
the amount of each CMP tier 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
The rule contains 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.
0
Accordingly, for the reasons set out in the preamble, the Office of
Federal
[[Page 51243]]
Housing Enterprise Oversight hereby amends 12 CFR part 1780 as follows:
PART 1780--RULES OF PRACTICE AND PROCEDURE
0
1. The authority citation for part 1780 is revised to read as follows:
Authority: 12 U.S.C. 4501, 4513(b), 4517, 4521, 4631-4641.
0
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:
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New adjusted
U.S. code citation Description maximum penalty
amount
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12 U.S.C. 4636(b)(1)......................................... First Tier..................... 6,500
12 U.S.C. 4636(b)(2)......................................... Second Tier (Executive Officer 11,000
or Director).
12 U.S.C. 4636(b)(2)......................................... Second Tier (Enterprise)....... 32,500
12 U.S.C. 4636(b)(3)......................................... Third Tier (Executive Officer 130,000
or Director).
12 U.S.C. 4636(b)(3)......................................... Third Tier (Enterprise)........ 1,275,000
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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 the effective date, August 30, 2005.
Dated: August 25, 2005.
Stephen A. Blumenthal,
Acting Director, Office of Federal Housing Enterprise Oversight.
[FR Doc. 05-17232 Filed 8-29-05; 8:45 am]
BILLING CODE 4220-01-U