[Federal Register Volume 77, Number 222 (Friday, November 16, 2012)]
[Rules and Regulations]
[Pages 68680-68681]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-27857]


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FEDERAL RESERVE SYSTEM

12 CFR Part 263

[Docket No. R-1451]


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 
amount of each civil money penalty (CMP) provided by law 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.

DATES: This rule is effective November 16, 2012.

FOR FURTHER INFORMATION CONTACT: Katherine H. Wheatley, Associate 
General Counsel (202) 452-3779, or Mehrnoush Bigloo, Attorney (202) 
475-6361, 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, contact (202) 263-
4869.

SUPPLEMENTARY INFORMATION: 

Federal Civil Penalties Inflation Adjustment Act

    The Federal Civil Penalties Inflation Adjustment Act of 1990, 28 
U.S.C. 2461 note (``FCPIA Act'' or the ``Act''), as amended by the Debt 
Collection Improvement Act of 1996, requires Federal agencies to 
adjust, by regulation, the CMPs within their jurisdiction by a 
prescribed inflation adjustment at least once every four years. The 
Board made its last adjustment to its CMPs on October 6, 2008, see 73 
FR 58,032, and on September 13, 2011, it incorporated into its 
regulation the penalties applicable to savings and loan holding 
companies over which it obtained supervisory authority pursuant to 
section 312 of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act, see 76 FR 56,604. The Board is issuing this final rule 
pursuant to the FCPIA Act to set forth the newly-adjusted CMPs which 
will apply to violations that occur after the rule's effective date.
    The FCPIA Act defines the inflation adjustment as a cost-of-living 
adjustment based on the percentage change in the Consumer Price Index 
between June of the calendar year in which the particular CMP was last 
set or adjusted and June of the calendar year preceding the current 
adjustment (in this case, June 2011). The Act specifies the use of the 
Consumer Price Index for All Urban Consumers (CPI-U) published by the 
Department of Labor. Accordingly, to obtain the percent inflation 
adjustment for each CMP within the Board's jurisdiction, we calculated 
the percent change in the CPI-U between June of the year in which the 
CMP was last adjusted and June 2011.\1\ Then, using the relevant 
percent inflation adjustment, we calculated the inflation increase for 
each CMP.\2\ The Act requires the rounding of any calculated increase 
pursuant to the method prescribed in Section 5(a) of the Act.\3\ In the 
case of the majority of the Board's CMPs, the calculated increase was 
rounded down to zero, resulting in no adjustment to the CMP. These 
unadjusted penalties include the penalty for certain late, false or 
misleading reports under 12 U.S.C. 324, the first and second tier 
penalties under 12 U.S.C. 504, 505, 1817(j)(16), 1818(i)(2), and 
1972(2)(F), the penalties under 12 U.S.C. 1820(k)(6)(A)(ii), 1832(c), 
1847(b), 3110(a), 334, 374a, 1884, 3909(d), 1467a(i)(2), 1467a(i)(3), 
and 1467a(r)(2), the second tier penalties under 12 U.S.C. 1847(d) and 
3110(c), the penalties under 15 U.S.C.

[[Page 68681]]

78u-2(b)(1) and (2), and the penalty for a natural person under 15 
U.S.C. 78u-2(b)(3). The penalties that are not adjusted at this time 
because of this rounding formula will be subject to adjustment at the 
next adjustment cycle to take account of the entire period since their 
last adjustment.
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    \1\ This resulted in a 3.2 percent inflation adjustment for 
penalties that were last adjusted in 2008, a 19 percent inflation 
adjustment for penalties that were last adjusted in 2004, a 30.9 
percent inflation adjustment for penalties that were last adjusted 
in 2000, and a 44 percent inflation adjustment for penalties that 
were last adjusted in 1996.
    \2\ Because the Biggert-Waters Flood Insurance Reform Act of 
2012, Public Law 112-141, 126 Stat. 405, amended 42 U.S.C. 
4012a(f)(5) by increasing the CMP for each violation under 42 U.S.C. 
4012a(f) to $2,000, the Board did not calculate an inflation 
adjustment for this CMP. It should also be noted that the amendment 
to 42 U.S.C. 4012a(f)(5) removed the $100,000 calendar-year limit on 
penalties assessed against any regulated lending institution or 
enterprise.
    \3\ Section 5(a) of the Act requires that any calculated 
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. 28 U.S.C. 
2461 note, Sec. 5(a).
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    The following is an example of the methodology for adjusting CMPs, 
using the penalty for a first tier violation of 12 U.S.C. 1847(d). 
First, because that CMP was last adjusted in 2000, we calculated the 
percent increase between the CPI-U for June 2000 (172.4) and the CPI-U 
for June 2011 (225.72). We then took that percentage (30.9%) and 
multiplied it by the current CMP amount of $2,200 to obtain an 
inflation increase of $679.80. Because the current CMP amount is 
greater than $1,000 but less than $10,000, the Act requires us to round 
the inflation increase to the nearest multiple of $1,000. Rounding 
$679.80 to the nearest multiple of $1,000 yields $1,000. Accordingly, 
the increase to the $2,200 penalty for a first tier violation of 12 
U.S.C. 1847(d) is $1,000, resulting in an adjusted CMP of $3,200.

Administrative Procedure Act

    This rule is not subject to the provisions of the Administrative 
Procedure Act (APA), 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 unnecessary, 
impracticable, and contrary to the public interest, pursuant to the 
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)(3).

Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., applies only 
to rules for which an agency publishes a general notice of proposed 
rulemaking. Because the Board has determined for good cause that a 
notice of proposed rulemaking for this rule is unnecessary, the 
Regulatory Flexibility Act does not apply to this final rule.

Paperwork Reduction Act

    There is no collection of information required by this final rule 
that would be subject to the Paperwork Reduction Act of 1995, 44 U.S.C. 
3501 et seq.

List of Subjects in 12 CFR Part 263

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

Authority and Issuance

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

PART 263--RULES OF PRACTICE FOR HEARINGS

0
1. The authority citation for part 263 continues to read as follows:

    Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 248, 324, 504, 505, 
1464, 1467, 1467a, 1468, 1817(j), 1818, 1820(k), 1828(c), 1829(e), 
1831o, 1831p-1, 1847(b), 1847(d), 1884(b), 1972(2)(F), 3105, 3107, 
3108, 3349, 3907, 3909, 4717; 15 U.S.C. 21, 78(1), 78o-4, 78o-5, 
78u-2; 28 U.S.C. 2461 note; 31 U.S.C. 5321; and 42 U.S.C. 4012a.


0
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 the adjusted 
maximum amounts for each civil money penalty provided by law within the 
Board's jurisdiction. The authorizing statutes contain the complete 
provisions under which the Board may seek a civil money penalty. The 
adjusted civil money penalties 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 as 
follows:
    (1) 12 U.S.C. 324:
    (i) Inadvertently late, false or misleading reports, inter alia--
$3,200.
    (ii) Other late, false or misleading reports, inter alia--$32,000.
    (iii) Knowingly or recklessly false or misleading reports, inter 
alia--$1,425,000.
    (2) 12 U.S.C. 504, 505, 1817(j)(16), 1818(i)(2) and 1972(2)(F):
    (i) First tier--$7,500.
    (ii) Second tier--$37,500.
    (iii) Third tier--$1,425,000.
    (3) 12 U.S.C. 1820(k)(6)(A)(ii)--$275,000.
    (4) 12 U.S.C. 1832(c)--$1,100.
    (5) 12 U.S.C. 1847(b), 3110(a)--$37,500.
    (6) 12 U.S.C. 1847(d), 3110(c):
    (i) First tier--$3,200.
    (ii) Second tier--$32,000.
    (iii) Third tier--$1,425,000.
    (7) 12 U.S.C. 334, 374a, 1884--$110.
    (8) 12 U.S.C. 3909(d)--$1,100.
    (9) 15 U.S.C. 78u-2:
    (i) 15 U.S.C. 78u-2(b)(1)--$7,500 for a natural person and $70,000 
for any other person.
    (ii) 15 U.S.C. 78u-2(b)(2)--$70,000 for a natural person and 
$350,000 for any other person.
    (iii) 15 U.S.C. 78u-2(b)(3)--$140,000 for a natural person and 
$700,000 for any other person.
    (10) 42 U.S.C. 4012a(f)(5)--$2,000.
    (11) 12 U.S.C. 1467a(i):
    (i) 12 U.S.C. 1467a(i)(2)--$32,500.
    (ii) 12 U.S.C. 1467a(i)(3)--$32,500.
    (12) 12 U.S.C. 1467a(r):
    (i) 12 U.S.C. 1467a(r)(1)--$3,200.
    (ii) 12 U.S.C. 1467a(r)(2)--$32,500.
    (iii) 12 U.S.C. 1467a(r)(3)--$1,425,000.

    By order of the Board of Governors of the Federal Reserve 
System, November 9, 2012.
Robert deV. Frierson,
Secretary of the Board.
[FR Doc. 2012-27857 Filed 11-15-12; 8:45 am]
BILLING CODE 6210-01-P