[Federal Register Volume 74, Number 10 (Thursday, January 15, 2009)]
[Rules and Regulations]
[Pages 2340-2342]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-656]


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FARM CREDIT ADMINISTRATION

12 CFR Part 622

RIN 3052-AC47


Rules of Practice and Procedure; Adjusting Civil Money Penalties 
for Inflation

AGENCY: Farm Credit Administration.

ACTION: Final rule.

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SUMMARY: This regulation implements cost-of-living adjustments to civil 
money penalties (CMPs) that the Farm Credit Administration (FCA) may 
impose under the Farm Credit Act of 1971, as amended (Farm Credit Act), 
and under the National Flood Insurance Reform Act of 1994 (Reform Act). 
The Federal Civil Penalties Inflation Adjustment Act of 1990, as 
amended by the Debt Collection Improvement Act of 1996 (FCPIA Act), 
requires all Federal agencies with the authority to impose CMPs to 
evaluate those CMPs periodically to ensure that they continue to 
maintain their deterrent value.

DATES: Effective Date: The regulation will become effective on January 
16, 2009.

FOR FURTHER INFORMATION CONTACT: 
Michael T. Wilson, Policy Analyst, Office of Regulatory Policy, Farm 
Credit Administration, McLean, VA 22102-5090, (703) 883-4124, TTY (703) 
883-4434,
     or
Howard I. Rubin, Senior Counsel, Office of General Counsel, Farm Credit 
Administration, McLean, VA 22102-5090, (703) 883-4029, TTY (703) 883-
4020.

SUPPLEMENTARY INFORMATION: 

I. Objective

    The objective of this regulation is to recalculate the CMP 
inflation adjustments consistent with the FCPIA Act.

II. Background

A. Federal Civil Penalties Inflation Adjustment Act of 1990, as Amended

    The FCPIA Act requires every Federal agency with authority to issue 
CMPs to enact regulations that adjust its CMPs pursuant to the 
inflation adjustment formula in section 5(b) of the FCPIA Act.\1\ Each 
Federal agency was required to issue these regulations by October 23, 
1996, and adjust them when necessary at least once every 4 years 
thereafter. Section 6 of the amended FCPIA Act specifies that 
inflation-adjusted CMPs will apply only to violations that occur after 
the effective date of the adjustment. The inflation adjustment is based 
on the percentage increase in the Consumer Price Index (CPI).\2\ 
Specifically, section 5(b) of the FCPIA Act defines the term ``cost-of-
living adjustment'' as ``the percentage (if any) for each civil 
monetary penalty by which (1) the Consumer Price Index for the month of 
June of the calendar year preceding the adjustment, exceeds (2) the 
Consumer Price Index for the month of June of the calendar year in 
which the amount of such civil monetary penalty was last set or 
adjusted pursuant to law.'' Furthermore, the increase for each CMP that 
is adjusted for inflation must be rounded using a method prescribed by 
section 5(a) of the FCPIA Act.
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    \1\ See 28 U.S.C. 2461 note. Section 3(2) of the amended FCPIA 
Act defines a CMP as any penalty, fine, or other sanction that: (1) 
Either is for a specific monetary amount as provided by Federal law 
or has a maximum amount provided for by Federal law; (2) is assessed 
or enforced by an agency pursuant to Federal law; and (3) is 
assessed or enforced pursuant to an administrative proceeding or a 
civil action in the Federal courts.
    \2\ The CPI is published by the Department of Labor, Bureau of 
Statistics, and is available at its Web site: ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt.
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B. CMPs Issued Under the Farm Credit Act

    Section 5.32(a) of the Farm Credit Act provides that any FCS 
institution or any officer, director, employee, agent, or other person 
participating in the conduct of the affairs of an FCS institution who 
violates the terms of a final order issued under section 5.25 or 5.26 
of the Farm Credit Act must pay up to $1,000 per day for each day 
during which such violation continues. Orders issued by FCA under 
section 5.25 or 5.26 of the Farm Credit Act include

[[Page 2341]]

temporary and permanent cease-and-desist orders. In addition, section 
5.32(h) provides that any directive issued under sections 4.3(b)(2), 
4.3A(e), or 4.14A(i) of the Farm Credit Act ``shall be treated'' as a 
final order issued under section 5.25 for purposes of assessing a CMP. 
Section 5.32(a) also states that ``[a]ny such institution or person who 
violates any provision of the [Farm Credit] Act or any regulation 
issued under this Act shall forfeit and pay a civil penalty of not more 
that $500 per day for each day during which such violation continues.''
1. Mathematical Calculation
    In general, the adjustment calculation is based on the percentage 
by which the CPI for June 2008 exceeds the CPI for June of the calendar 
year the CMP was last adjusted. The CMP for violation of the terms of a 
final order issued under section 5.25 or 5.26 of the Farm Credit Act 
was last adjusted in 1996. The CMP for a violation of the Farm Credit 
Act, or a regulation issued under the Farm Credit Act, was last 
adjusted in 2005. According to the Bureau of Labor Statistics, the CPI 
for June 1996 and June 2005 was 156.7 and 194.5, respectively. The CPI 
for June 2008 was 218.815, resulting in a percentage change of 39.64 
percent from June 1996 and 12.50 percent from June 2005.
2. Penalty Amount Remains the Same in Sec.  622.61(a)(1)
    The maximum CMP in Sec.  622.61(a) for a violation of a final order 
issued under section 5.25 or 5.26 of the Farm Credit Act is currently 
$1,100.\3\
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    \3\ See 70 FR 12583 (March 15, 2005).
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    Multiplying $1,100 by 39.64 \4\ percent results in an increase of 
$436.04. When that number is rounded as required by section 5(a) of the 
FCPIA Act, the inflation-adjusted maximum remains $1,100.
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    \4\ As a result of the mathematical calculation for the year 
2005 and the required rounding application, the penalty amount 
remained the same and did not reset. Therefore, in accordance with 
the FCPIA Act, the calculation for the 2009 adjustment was 
determined by using the June 1996 CPI of 156.7 and the June 2008 CPI 
of 218.815 resulting in a percentage change of 39.64 percent.
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3. New Penalty Amount in Sec.  622.61(a)(2)
    The maximum CMP in existing Sec.  622.61(a)(2) for a violation of 
the Farm Credit Act or regulations issued under the Farm Credit Act is 
$650. When multiplying the existing CMP amount by 12.50 percent, this 
results in an increase of $81.25. This increase is rounded to $100 as 
required by section 5(a) of the FCPIA Act, and the inflation-adjusted 
maximum increases to $750.

C. CMPs Issued Under the Reform Act

    The Flood Disaster Protection Act of 1973, as amended by the Reform 
Act, requires that FCA assess a CMP for a pattern or practice of 
committing certain specific actions in violation of the National Flood 
Insurance Program.\5\ Under the Reform Act, which became law in 1994, 
these CMPs were not to exceed $350 for each violation, and the total 
amount of penalties assessed for certain violations of the program 
against any single regulated entity during any calendar year was not to 
exceed $100,000.\6\
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    \5\ See 42 U.S.C. 4012a.
    \6\ 42 U.S.C. 4012a(f).
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1. Mathematical Calculation
    The adjustment calculation for these CMPs is based on the 
percentage by which the CPI for June 2008 exceeds the CPI for June 
2005, the calendar the CMPs were last adjusted. As stated above, the 
CPI for June 2005 was 194.5, and the CPI for June 2008 was 218.815, 
resulting in a percentage change of 12.50.
2. New Penalty Amounts in Sec.  622.61(b)
    Multiplying $385 by 12.50 percent yields a $48.13 increase. This 
amount is rounded downward to $0.00 under the FCPIA rounding formula. 
Accordingly, the CMP maximum for each violation will remain $385. 
Similarly, multiplying the $110,000 total cap by 12.50 percent yields a 
$13,750 increase. This increase is rounded to $10,000 under the FCPIA 
rounding formula, bringing the new cap to $120,000 in total penalties 
that may be assessed under the Reform Act against any single regulated 
entity during any calendar year.

III. Notice and Comment Not Required by Administrative Procedure Act

    The FCPIA Act gives Federal agencies no discretion in the 
adjustment of CMPs for the rate of inflation. Further, these revisions 
are ministerial, technical, and noncontroversial. For these reasons, 
the FCA finds good cause to determine that public notice and an 
opportunity to comment are impracticable, unnecessary, and contrary to 
the public interest pursuant to the Administrative Procedure Act, 5 
U.S.C. 553(b)(B), and adopts this rule in final form. For all of the 
foregoing reasons, the FCA also finds good cause to determine that this 
regulation should become effective immediately, pursuant to the 
Administrative Procedure Act, 5 U.S.C. 553(d).

IV. Regulatory Flexibility Act

    Pursuant to section 605(b) of the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.), the FCA hereby certifies that the final rule will 
not have a significant economic impact on a substantial number of small 
entities. Each of the banks in the System, considered together with its 
affiliated associations, has assets and annual income in excess of the 
amounts that would qualify them as small entities. Therefore, System 
institutions are not ``small entities'' as defined in the Regulatory 
Flexibility Act.

List of Subjects 12 CFR Part 622

    Administrative practice and procedure, Crime, Investigations, 
Penalties.

0
For the reasons stated in the preamble, part 622 of chapter VI, title 
12 of the Code of Federal Regulations is amended to read as follows:

PART 622--RULES OF PRACTICE AND PROCEDURE

0
1. The authority citation for part 622 continues to read as follows:

    Authority: Secs. 5.9, 5.10, 5.17, 5.25-5.37 of the Farm Credit 
Act (12 U.S.C. 2243, 2244, 2252, 2261-2273); 28 U.S.C. 2461 note; 
and 42 U.S.C. 4012a(f).

Subpart B--Rules and Procedures for Assessment and Collection of 
Civil Money Penalties

0
2. Revise Sec.  622.61 to read as follows:


Sec.  622.61  Adjustment of civil money penalties by the rate of 
inflation under the Federal Civil Penalties Inflation Adjustment Act of 
1990, as amended.

    (a) The maximum amount of each civil money penalty within FCA's 
jurisdiction is adjusted in accordance with the Federal Civil Penalties 
Inflation Adjustment Act of 1990, as amended (28 U.S.C. 2461 note), as 
follows:
    (1) Amount of civil money penalty imposed under section 5.32 of the 
Act for violation of a final order issued under section 5.25 or 5.26 of 
the Act: The maximum daily amount is $1,100.
    (2) Amount of civil money penalty for violation of the Act or 
regulations: The maximum daily amount is $550 for each violation that 
occurs before March 16, 2005, $650 for each violation that occurs on or 
after March 16, 2005, but before January 16, 2009, and $750 for each 
violation that occurs on or after January 16, 2009.
    (b) The maximum civil money penalty amount assessed under 42 U.S.C. 
4012a(f) is $350 for each violation that

[[Page 2342]]

occurs before March 16, 2005, with total penalties under such statute 
not to exceed $110,000 for any single institution during any calendar 
year. For violations that occur on or after March 16, 2005, but before 
January 16, 2009, the maximum civil money penalty is $385 for each 
violation, with total penalties under such statute not to exceed 
$110,000 for any single institution during any calendar year. For 
violations that occur on or after January 16, 2009, the maximum civil 
money penalty is $385 for each violation, with total penalties under 
such statute not to exceed $120,000 for any single institution during 
any calendar year.

    Date: January 9, 2009.
Roland E. Smith,
Secretary, Farm Credit Administration Board.
[FR Doc. E9-656 Filed 1-14-09; 8:45 am]
BILLING CODE 6705-01-P