[Federal Register Volume 77, Number 215 (Tuesday, November 6, 2012)]
[Rules and Regulations]
[Pages 66529-66534]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-27074]



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  Federal Register / Vol. 77, No. 215 / Tuesday, November 6, 2012 / 
Rules and Regulations  

[[Page 66529]]



DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Parts 19 and 109

[Docket ID OCC-2012-0011]
RIN 1557-AD61


Rules of Practice and Procedure; Rules of Practice and Procedure 
in Adjudicatory Proceedings; Civil Money Penalty Inflation Adjustments

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Final rule.

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SUMMARY: The Office of the Comptroller of the Currency (OCC) is 
amending its rules of practice and procedure for national banks and its 
rules of practice and procedure in adjudicatory proceedings for Federal 
savings associations to publish the maximum amount, adjusted for 
inflation, of each civil money penalty (CMP) within its jurisdiction to 
administer. These actions, including the adjustment methodology, are 
required under the Federal Civil Penalties Inflation Adjustment Act of 
1990 (Inflation Adjustment Act or Act), as amended by the Debt 
Collection Improvement Act of 1996 (Debt Collection Improvement Act).

DATES: Effective: December 6, 2012.

FOR FURTHER INFORMATION CONTACT: Jean Campbell, Senior Attorney, 
Legislative and Regulatory Activities Division, (202) 874-5090, or P. 
Holley Roberts, Senior Attorney, Enforcement and Compliance Division, 
(202) 874-4800, Office of the Comptroller of the Currency, 250 E Street 
SW., Washington, DC 20219.

SUPPLEMENTARY INFORMATION:

Background

    The Inflation Adjustment Act (Act), 28 U.S.C. 2461 note, requires 
the OCC, as well as other Federal agencies with CMP authority, 
periodically to evaluate and publish by regulation the inflation-
adjusted maximum assessment for each CMP authorized by a law that the 
agency has jurisdiction to administer. The purpose of these adjustments 
is to maintain the deterrent effect of CMPs and to promote compliance 
with the law. The Act requires evaluations and inflation adjustments to 
be made at least once every four years following the initial 
adjustment.
    The Act provides detailed instructions for calculating the 
inflation adjustment. It specifies that the adjustment shall reflect 
the percentage increase in the Consumer Price Index between June of the 
calendar year preceding the year in which the adjustment will be made 
and June of the calendar year in which the amount was last set or 
adjusted. The Act defines the Consumer Price Index as the Consumer 
Price Index for all urban consumers (CPI-U) published by the Department 
of Labor.\1\ See 28 U.S.C. 2461 note. In addition, the Act provides 
rules for rounding increases \2\ and requires that any increase in a 
CMP maximum apply only to violations that occur after the date of the 
adjustment. Finally, section 2 of the Debt Collection Improvement Act 
amended the Inflation Adjustment Act by limiting the initial adjustment 
of a CMP maximum pursuant to the Inflation Adjustment Act to no more 
than 10 percent of the amount established by statute. See 28 U.S.C. 
2461 note.
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    \1\ The Department of Labor computes the CPI-U using two 
different base time periods, 1967 and 1982-1984, and the Act does 
not specify which of these base periods should be used to calculate 
the inflation adjustment. The OCC, consistent with the other Federal 
banking agencies, has used the CPI-U with 1982-1984 as the base 
period. Data on the CPI-U is available at http://bls.gov.
    \2\ The Act's rounding rules require that an increase be rounded 
to the nearest multiple of: $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. See 28 U.S.C. 2461 note.
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    Pursuant to Title III of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act, Public Law 111-203, 124 Stat. 1376 (2010), 
Congress transferred the powers, authorities, rights, and duties of the 
Office of Thrift Supervision (OTS) to the OCC on July 21, 2011, and the 
OCC assumed all functions of the OTS and the Director of the OTS 
relating to Federal savings associations. Therefore, the OCC now has 
responsibility for the ongoing supervision, examination, and regulation 
of Federal savings associations as of the transfer date. Accordingly, 
the OCC also is amending its rules of practice and procedure in 
adjudicatory proceedings for Federal savings associations, set forth at 
12 CFR 109.103(c), to adjust the maximum amount of each CMP within its 
jurisdiction to administer to account for inflation.\3\
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    \3\ Although we are amending both 12 CFR part 19 and 12 CFR part 
109 at this time, the OCC expects to consolidate these provisions in 
the future as part of its integration of the OCC and OTS rules.
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    The OCC's last adjustments to the maximum assessments of CMPs 
applicable to national banks were published in the Federal Register on 
November 10, 2008, 73 FR 66493, and became effective on December 10, 
2008. The last adjustments to the maximum assessments of CMPs 
applicable to Federal savings associations were published in the 
Federal Register on October 27, 2008, 73 FR 63625, and became effective 
on October 27, 2008.

Description of the Final Rule

    This final rule sets forth the inflation-adjusted maximum 
assessment for each CMP that the OCC has jurisdiction to impose in 
accordance with the statutory requirements by revising the table 
contained in 12 CFR 19.240(a) with respect to national banks and the 
table contained in 12 CFR 109.103(c) with respect to Federal savings 
associations. Each table identifies the statutes that authorize the OCC 
to assess CMPs, describes the different tiers of penalties provided in 
each statute (as applicable), and sets out the inflation-adjusted 
maximum penalty that the OCC may impose pursuant to each statutory 
provision.
    The Act requires that we compute the inflation factor by comparing 
the CPI-U for June of the calendar year preceding the adjustment with 
the CPI-U for June of the year in which the CMPs were last

[[Page 66530]]

set or increased.\4\ See 28 U.S.C. 2461 note. The vast majority of CMPs 
applicable to national banks and Federal savings associations were last 
increased in 2008. For those CMPs, we compared the CPI-U for June 2011 
(225.722) with the CPI-U for June 2008 (218.815), resulting in an 
inflation factor of 3.2 percent. A few penalties were last increased in 
2000. For those penalties, we compared the CPI-U for June 2011 (225.7) 
with the CPI-U for June 2000 (172.4), resulting in an inflation factor 
of 30.9 percent. Finally, a few penalties were last increased in 1997. 
For those penalties, we compared the CPI-U for June 2011 (225.7) with 
the CPI-U for June 1997 (160.3), resulting in an inflation factor of 
40.8 percent.
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    \4\ As a general matter, if a preliminary calculated increase 
for a given CMP maximum fails to reach the level warranting an 
actual increase under the rounding rules prescribed by statute, then 
the maximum for that CMP does not change. In that case, the 
calculation in subsequent years would use an inflation adjustment 
factor reflecting changes in the Consumer Price Index since that CMP 
was last established or increased, whichever is more recent.
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    To obtain the inflation-adjusted CMP maximums, we multiplied the 
current amount of each CMP maximum by the appropriate percentage 
inflation factor (as calculated above) to determine the preliminary 
increase amount, rounded the preliminary increase amount up or down 
according to the rounding requirements of the Act, and then added the 
rounded increase amount to the current penalty maximum. In some cases, 
application of the rounding rules resulted in zero increase and no 
change to a CMP maximum.\5\ In addition, we are providing in this 
preamble two worksheets showing the calculations for each national bank 
CMP and each Federal savings association CMP (see below). These 
worksheets explain step-by-step how we calculated the inflation 
adjustment for each penalty. Accordingly, this rule replaces the CMP 
charts at Sec. Sec.  19.240(a) and 109.103(c) with revised charts 
reflecting the maximum CMP amounts that will be in effect as of the 
effective date of this final rule.
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    \5\ For example, there is no inflation adjustment for the 
maximum penalty prescribed by 12 U.S.C. 164 for tier 2. The current 
amount of that penalty is $32,000. Because it was last adjusted in 
2008, the appropriate percentage increase is 3.2 percent. The amount 
of the current penalty ($32,000) multiplied by 3.2 percent equals a 
preliminary increase of $1,024. The rounding rules specify that a 
penalty greater than $10,000 but less than or equal to $100,000 
should be rounded to the nearest $5,000. In order to round up to 
$5,000, the preliminary increase would need to be at least $2,500, 
which it is not. Therefore, the maximum penalty is not being 
adjusted.
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    Pursuant to Sec.  100208 of the Biggert-Waters Flood Insurance 
Reform Act of 2012,\6\ we are amending the maximum CMP prescribed in 42 
U.S.C. 4012a(f)(5).\7\ In that statute, Congress increased the maximum 
CMP per violation from $385 to $2,000 and eliminated the $135,000 cap 
on the total amount of penalties assessed against a single regulated 
lender in any calendar year. As a result of that amendment, this CMP is 
not subject to adjustment at this time. Accordingly, in the worksheets 
below and the amended charts at Sec. Sec.  19.240(a) and 109.103(c), 
the maximum assessment of the penalty for violating 42 U.S.C. 
4012a(f)(5) is the new maximum of $2,000 per violation.
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    \6\ Public Law 112-141, 126 Stat. 405 (July 6, 2012).
    \7\ 42 U.S.C. 4012a(f) requires the OCC to assess civil money 
penalties against a national bank or Federal savings association 
that is found to have a pattern or practice of committing certain 
violations of the Flood Disaster Protection Act.
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    Finally, we are amending Sec. Sec.  19.240(a) and 109.103(c), 
consistent with the statute, to state that the adjustments made in 
Sec. Sec.  19.240(a) and 109.103(c) apply only to violations that occur 
after the effective date of this final rule.
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[[Page 66532]]


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Procedural Issues

Notice and Comment Procedure

    Under the Administrative Procedure Act (APA), an agency may 
dispense with public notice and an opportunity for comment if the 
agency finds, for good cause, that these procedural requirements are 
impracticable, unnecessary, or contrary to the public interest. 5 
U.S.C. 553(b)(B). The Act provides the OCC no discretion in calculating 
the amount of the civil penalty adjustment. The OCC, accordingly, 
cannot vary the methodology used to calculate the adjustment or the 
amount of the adjustment to reflect any views or suggestions provided 
by commenters. For this reason, the OCC has concluded that notice and 
comment procedures are unnecessary and that good cause exists for 
dispensing with them.

Delayed Effective Date

    The Riegle Community Development and Regulatory Improvement Act of 
1994 (RCDRIA) requires that the effective date of new regulations and 
amendments to regulations that impose additional reporting, 
disclosures, or other new requirements on insured depository 
institutions shall be the first day of a calendar quarter that begins 
on or after the date the regulations are published in final form. See 
12 U.S.C. 4802(b)(1). The RCDRIA does not apply to this final rule 
because the rule merely increases the amount of CMPs that already exist 
and does not impose any additional reporting, disclosures, or other new 
requirements.
    The APA generally requires an agency to publish a rule 30 days 
prior to its effective date. See 4 U.S.C. 553(d). This rule satisfies 
that requirement.

Regulatory Flexibility Act

    The Regulatory Flexibility Act applies only 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). Because the OCC has determined for 
good cause that the APA does not require public notice and comment on 
this final rule, we are not publishing a general notice of proposed 
rulemaking. Thus, the Regulatory Flexibility Act does not apply to this 
final rule.

Unfunded Mandates Reform Act of 1995

    Section 202 of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 
1532, requires that an agency prepare a budgetary impact statement 
before promulgating any rule likely to result in 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 million or more, as 
adjusted for inflation, in any one year. The Unfunded Mandates Reform 
Act only applies when an agency issues a general notice of proposed 
rulemaking. Because we are not publishing a notice of proposed 
rulemaking, this final rule is not subject to section 2020 of the 
Unfunded Mandates Reform Act.

List of Subjects

12 CFR Part 19

    Administrative practice and procedure, Crime, Equal access to 
justice, Investigations, National banks, Penalties, Securities.

12 CFR Part 109

    Administrative practice and procedure, Penalties.

[[Page 66533]]

Authority and Issuance

    For the reasons set out in the preamble, parts 19 and 109 of 
chapter I of title 12 of the Code of Federal Regulations are amended as 
follows:

PART 19--RULES OF PRACTICE AND PROCEDURE

0
1. The authority citation for part 19 continues to read as follows:

    Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 93(b), 93a, 164, 
505, 1817, 1818, 1820, 1831m, 1831o, 1972, 3102, 3108(a), 3909, and 
4717; 15 U.S.C. 78(h) and (i), 78o-4(c), 78o-5, 78q-1, 78s, 78u, 
78u-2, 78u-3, and 78w; 28 U.S.C. 2461 note; 31 U.S.C. 330 and 5321; 
and 42 U.S.C. 4012a.



0
2. Section 19.240 is revised to read as follows:


Sec.  19.240  Inflation adjustments.

    (a) The maximum amount of each civil money penalty within the OCC's 
jurisdiction is adjusted in accordance with the Federal Civil Penalties 
Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note) as follows:
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[[Page 66534]]


    (b) The adjustments in paragraph (a) of this section apply to 
violations that occur after December 6, 2012.

PART 109--RULES OF PRACTICE AND PROCEDURE IN ADJUDICATORY 
PROCEEDINGS

0
3. The authority citation for part 109 continues to read as follows:

    Authority:  5 U.S.C. 504, 554-557; 12 U.S.C. 1464, 1467, 1467a, 
1468, 1817(j), 1818, 1820(k), 1829(e), 3349, 4717, 5412(b)(2)(B); 15 
U.S.C. 78(l), 78o-5, 78u-2; 28 U.S.C. 2461 note; 31 U.S.C. 5321; and 
42 U.S.C. 4012a.


0
4. Section 109.103(c) is amended by revising the last sentence of the 
introductory text and the chart to read as follows:


Sec.  109.103  Civil money penalties.

* * * * *
    (c) * * * The amounts in this chart apply to violations that occur 
after December 6, 2012:
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    Dated: October 26, 2012.
Thomas J. Curry,
Comptroller of the Currency.
[FR Doc. 2012-27074 Filed 11-5-12; 8:45 am]
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