[Federal Register Volume 81, Number 114 (Tuesday, June 14, 2016)]
[Rules and Regulations]
[Pages 38569-38572]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-14031]



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  Federal Register / Vol. 81, No. 114 / Tuesday, June 14, 2016 / Rules 
and Regulations  

[[Page 38569]]



BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1083

[Docket No.: CFPB-2016-0028]
RIN 3170-AA62


Civil Penalty Inflation Adjustments

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Interim final rule with request for public comment.

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SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is 
publishing for public comment an interim final rule to adjust the civil 
monetary penalties within the Bureau's jurisdiction for inflation, as 
required by the Federal Civil Penalties Inflation Adjustment Act of 
1990 (the Inflation Adjustment Act or the Act), as amended by the Debt 
Collection Improvement Act of 1996 and further amended by the Federal 
Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (2015 
Act).

DATES: This rule is effective on July 14, 2016. Comments must be 
received on or before July 14, 2016.

ADDRESSES: You may submit comments, identified by Docket No. CFPB-2016-
0028 or RIN 3170-AA62, by any of the following methods:
     Email: FederalRegisterComments @cfpb.gov. Include Docket 
No. CFPB-2016-0028 or RIN 3170-AA62 in the subject line of the email.
     Electronic: http://www.regulations.gov. Follow the 
instructions for submitting comments.
     Mail: Monica Jackson, Office of the Executive Secretary, 
Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC 
20552.
     Hand Delivery/Courier: Monica Jackson, Office of the 
Executive Secretary, Consumer Financial Protection Bureau, 1275 First 
Street NE., Washington, DC 20002.
    Instructions: All submissions should include the agency name and 
docket number or Regulatory Information Number (RIN) for this 
rulemaking. Because paper mail in the Washington, DC area and at the 
Bureau is subject to delay, commenters are encouraged to submit 
comments electronically. In general, all comments received will be 
posted without change to http://www.regulations.gov. In addition, 
comments will be available for public inspection and copying at 1275 
First Street NE., Washington, DC 20002, on official business days 
between the hours of 10 a.m. and 5 p.m. eastern time. You can make an 
appointment to inspect the documents by telephoning (202) 435-7275.
    All comments, including attachments and other supporting materials, 
will become part of the public record and subject to public disclosure. 
Sensitive personal information, such as account numbers or Social 
Security numbers, should not be included. Comments generally will not 
be edited to remove any identifying or contact information.

FOR FURTHER INFORMATION CONTACT: Kristin Bateman, Counsel, Legal 
Division, Consumer Financial Protection Bureau, at (202) 435-7700.

SUPPLEMENTARY INFORMATION: 

I. Background

    The Inflation Adjustment Act, as amended by the 2015 Act, requires 
Federal agencies to adjust the civil penalty amounts within their 
jurisdiction for inflation by July 1, 2016, and then by January 15 
every year thereafter.\1\ Agencies must make the initial 2016 
adjustments through an interim final rulemaking published in the 
Federal Register.\2\ Under the amended Act, any increase in a civil 
penalty made under the Act will apply to penalties assessed after the 
increase takes effect, including penalties whose associated violation 
predated the increase.\3\ The inflation adjustments mandated by the Act 
serve to maintain the deterrent effect of civil penalties and to 
promote compliance with the law.
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    \1\ See 28 U.S.C. 2461 note.
    \2\ The statute also provides that, for the initial 2016 
adjustment, an agency may adjust a civil penalty by less than the 
otherwise required amount if (1) it determines, after publishing a 
notice of proposed rulemaking and providing an opportunity for 
comment, that increasing the civil penalty by the otherwise required 
amount would have a negative economic impact or that the social 
costs of increasing the civil penalty by the otherwise required 
amount outweigh the benefits, and (2) the Director of the Office of 
Management and Budget concurs with that determination. Inflation 
Adjustment Act section 4(c), codified at 28 U.S.C. 2461 note. The 
Bureau has chosen not to make use of this exception.
    \3\ Inflation Adjustment Act section 6, codified at 28 U.S.C. 
2461 note.
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II. Method of Calculation

    The Inflation Adjustment Act prescribes a specific method for 
calculating the inflation adjustments.\4\ As amended by the 2015 Act, 
the Act provides that the maximum (and minimum, if applicable) amounts 
for each civil penalty must be increased by the ``cost-of-living 
adjustment,'' a term that the Act defines. For purposes of the initial 
adjustments that agencies must make by July 1, 2016, the ``cost-of-
living adjustment'' is defined as the percentage increase in the 
Consumer Price Index between (1) October of the calendar year during 
which the civil penalty amount was established or adjusted under a 
provision of law other than the Inflation Adjustment Act and (2) 
October 2015. The Consumer Price Index to be used for purposes of this 
calculation is the Consumer Price Index for all urban consumers (CPI-U) 
published by the Department of Labor.\5\ The Office of Management and 
Budget (OMB) has published guidance for implementing this 
requirement.\6\ OMB's guidance memorandum provides multipliers that 
agencies should use to adjust penalty amounts based on the year the 
penalty was established or last adjusted under authority other than the 
Inflation Adjustment Act.
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    \4\ Inflation Adjustment Act section 5, codified at 28 U.S.C. 
2461 note.
    \5\ U.S. Dep't of Labor, Bureau of Labor Statistics, CPI Tables, 
http://www.bls.gov/cpi/#tables.
    \6\ Memorandum from Shaun Donovan, Director, Office of 
Management and Budget, to the Heads of Executive Departments and 
Agencies (Feb. 24, 2016), https://www.whitehouse.gov/sites/default/files/omb/memoranda/2016/m-16-06.pdf.
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    To determine the new penalty amount, the agency must apply the 
multiplier reflecting the ``cost-of-living adjustment'' \7\ to the 
penalty amount as it was most recently established or adjusted under a 
provision of law other

[[Page 38570]]

than the Inflation Adjustment Act. The agency must then round that 
amount to the nearest dollar.\8\ The increase made by this initial 
adjustment may not exceed 150 percent of the penalty amount in effect 
on the date the 2015 Act was enacted, November 2, 2015.
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    \7\ The multipliers reflecting the ``cost-of-living adjustment'' 
that OMB provides are rounded to five decimal places. The Bureau has 
used the OMB multipliers in calculating its civil penalty 
adjustments.
    \8\ In rounding to the nearest dollar, the Bureau has rounded 
down where the digit immediately following the decimal point is less 
than 5 and has rounded up where the digit immediately following the 
decimal point is 5 or greater.
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III. Description of the Interim Final Rule

    This interim final rule establishes the inflation-adjusted maximum 
amounts for each civil penalty within the Bureau's jurisdiction. The 
following table lists the civil penalties within the Bureau's 
jurisdiction and summarizes the relevant information needed to 
calculate the inflation adjustments pursuant to the statutory method.

----------------------------------------------------------------------------------------------------------------
                                                             Penalty amount     Year penalty
                                                             as established    established or
                                                            or last adjusted    last adjusted    Penalty amount
                                                                 under a           under a        in effect on
                Law                   Penalty description    provision other  provision  other     November 2,
                                                                than the          than the            2015
                                                                inflation         inflation
                                                             adjustment act    adjustment act
----------------------------------------------------------------------------------------------------------------
Consumer Financial Protection Act,   Tier 1 penalty.......            $5,000           \9\2010        \10\$5,000
 12 U.S.C. 5565(c)(2)(A).
Consumer Financial Protection Act,   Tier 2 penalty.......            25,000          \11\2010        \12\25,000
 12 U.S.C. 5565(c)(2)(B).
Consumer Financial Protection Act,   Tier 3 penalty.......         1,000,000          \13\2010     \14\1,000,000
 12 U.S.C. 5565(c)(2)(C).
Interstate Land Sales Full           Per violation........             1,000          \15\1989         \16\1,000
 Disclosure Act, 15 U.S.C.
 1717a(a)(2).
Interstate Land Sales Full           Annual cap...........         1,000,000          \17\1989     \18\1,000,000
 Disclosure Act, 15 U.S.C.
 1717a(a)(2).
Real Estate Settlement Procedures    Per failure..........                50          \19\1990            \20\50
 Act, 12 U.S.C. 2609(d)(1).
Real Estate Settlement Procedures    Annual cap...........           100,000          \21\1990       \22\100,000
 Act, 12 U.S.C. 2609(d)(1).
Real Estate Settlement Procedures    Per failure, where                  100          \23\1990           \24\100
 Act, 12 U.S.C. 2609(d)(2)(A).        intentional.
SAFE Act, 12 U.S.C. 5113(d)(2).....  Per violation........            25,000          \25\2008        \26\25,000
Truth in Lending Act, 15 U.S.C.      First violation......            10,000          \27\2010        \28\10,000
 1639e(k)(1).
Truth in Lending Act, 15 U.S.C.      Subsequent violations            20,000          \29\2010        \30\20,000
 1639e(k)(2).
----------------------------------------------------------------------------------------------------------------

     
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    \9\ Dodd-Frank Wall Street Reform and Consumer Protection Act, 
Public Law 111-203, section 1055(c)(2)(A), 124 Stat. 1376, 2030 
(2010).
    \10\ 12 U.S.C. 5565(c)(2)(A) (2015).
    \11\ Dodd-Frank Wall Street Reform and Consumer Protection Act, 
Public Law 111-203, section 1055(c)(2)(B), 124 Stat. 1376, 2030 
(2010).
    \12\ 12 U.S.C. 5565(c)(2)(B) (2015).
    \13\ Dodd-Frank Wall Street Reform and Consumer Protection Act, 
Public Law 111-203, section 1055(c)(2)(C), 124 Stat. 1376, 2030 
(2010).
    \14\ 12 U.S.C. 5565(c)(2)(C) (2015).
    \15\ Department of Housing and Urban Development Reform Act, 
Public Law 101-235, section 111, 103 Stat. 1987, 2014 (1989).
    \16\ 15 U.S.C. 1717a(a)(2) (2015).
    \17\ Department of Housing and Urban Development Reform Act, 
Public Law 101-235, section 111, 103 Stat. 1987, 2014 (1989).
    \18\ 15 U.S.C. 1717a(a)(2) (2015).
    \19\ Cranston-Gonzalez National Affordable Housing Act, Public 
Law 101-625, section 942(a)(2), 104 Stat. 4079, 4412 (1990).
    \20\ 12 U.S.C. 2609(d)(1) (2015).
    \21\ Cranston-Gonzalez National Affordable Housing Act, Public 
Law 101-625, section 942(a)(2), 104 Stat. 4079, 4412 (1990).
    \22\ 12 U.S.C. 2609(d)(1) (2015).
    \23\ Cranston-Gonzalez National Affordable Housing Act, Public 
Law 101-625, section 942(a)(2), 104 Stat. 4079, 4412 (1990).
    \24\ 12 U.S.C. 2609(d)(2)(A) (2015).
    \25\ Housing and Economic Recovery Act of 2008, Public Law 110-
289, section 1514(d)(2), 122 Stat. 2654, 2823 (2008).
    \26\ 12 U.S.C. 5113(d)(2) (2015).
    \27\ Dodd-Frank Wall Street Reform and Consumer Protection Act, 
Public Law 111-203, section 1472(a), 124 Stat. 1376, 2189 (2010).
    \28\ 15 U.S.C. 1639e(k)(1) (2015).
    \29\ Dodd-Frank Wall Street Reform and Consumer Protection Act, 
Public Law 111-203, section 1472(a), 124 Stat. 1376, 2190 (2010).
    \30\ 15 U.S.C. 1639e(k)(2) (2015).
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    The Bureau followed the procedure outlined above in part II to 
calculate the adjusted civil penalty amounts. In accordance with the 
statutory requirements and OMB guidance, the Bureau multiplied each 
penalty amount as established or last adjusted under a provision other 
than the Inflation Adjustment Act by the OMB multiplier corresponding 
to the appropriate year, and then rounded that amount to the nearest 
dollar, to calculate the new, inflation-adjusted civil penalty amount. 
The Bureau then confirmed that the amount by which each civil penalty 
increased did not exceed 150 percent of the corresponding civil penalty 
level in effect on November 2, 2015. None of the increases exceeded 
this 150-percent threshold. The following chart summarizes the results 
of these calculations:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   Penalty amount     Year penalty
                                                                                   as established    established or
                                                                                  or last adjusted    last adjusted    OMB  ``cost-of-
                                                                                       under a           under a           living          New penalty
                      Law                              Penalty description         provision other  provision  other    adjustment''         amount
                                                                                      than the          than the         multiplier
                                                                                      inflation         inflation
                                                                                   adjustment act    adjustment act
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Financial Protection Act, 12 U.S.C.    Tier 1 penalty..................            $5,000              2010           1.08745            $5,437
 5565(c)(2)(A).
Consumer Financial Protection Act, 12 U.S.C.    Tier 2 penalty..................            25,000              2010           1.08745            27,186
 5565(c)(2)(B).

[[Page 38571]]

 
Consumer Financial Protection Act, 12 U.S.C.    Tier 3 penalty..................         1,000,000              2010           1.08745         1,087,450
 5565(c)(2)(C).
Interstate Land Sales Full Disclosure Act, 15   Per violation...................             1,000              1989           1.89361             1,894
 U.S.C. 1717a(a)(2).
Interstate Land Sales Full Disclosure Act, 15   Annual cap......................         1,000,000              1989           1.89361         1,893,610
 U.S.C. 1717a(a)(2).
Real Estate Settlement Procedures Act, 12       Per failure.....................                50              1990           1.78156                89
 U.S.C. 2609(d)(1).
Real Estate Settlement Procedures Act, 12       Annual cap......................           100,000              1990           1.78156           178,156
 U.S.C. 2609(d)(1).
Real Estate Settlement Procedures Act, 12       Per failure, where intentional..               100              1990           1.78156               178
 U.S.C. 2609(d)(2)(A).
SAFE Act, 12 U.S.C. 5113(d)(2)................  Per violation...................            25,000              2008           1.09819            27,455
Truth in Lending Act, 15 U.S.C. 1639e(k)(1)...  First violation.................            10,000              2010           1.08745            10,875
Truth in Lending Act, 15 U.S.C. 1639e(k)(2)...  Subsequent violations...........            20,000              2010           1.08745            21,749
--------------------------------------------------------------------------------------------------------------------------------------------------------

    This rule codifies these civil penalty amounts by adding new part 
1083 to title 12 of the CFR and new Sec.  1083.1 therein.

IV. Legal Authority and Effective Date

    The Bureau issues this rule under the Federal Civil Penalties 
Inflation Adjustment Act of 1990,\31\ as amended by the Debt Collection 
Improvement Act of 1996,\32\ and further amended by the Federal Civil 
Penalties Inflation Adjustment Act Improvements Act of 2015,\33\ which 
requires the Bureau to adjust the civil penalties within its 
jurisdiction for inflation according to a statutorily prescribed 
formula.
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    \31\ Public Law 101-410, 104 Stat. 890 (1990).
    \32\ Public Law 104-134, section 31001(s)(1), 110 Stat. 1321, 
1321-373 (1996).
    \33\ Public Law 114-74, section 701, 129 Stat. 584, 599 (2015).
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    The Administrative Procedure Act (APA) generally requires an agency 
to publish a rule at least 30 days before its effective date.\34\ This 
rule satisfies that requirement.
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    \34\ See 5 U.S.C. 553(d).
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V. Request for Comment

    Although notice and comment rulemaking procedures are not required, 
the Bureau invites comments on this notice. Commenters are specifically 
encouraged to identify any technical issues raised by the rule.

VI. Regulatory Requirements

Notice and Comment

    Under the APA, notice and opportunity for public comment are not 
required if the Bureau finds that notice and public comment are 
impracticable, unnecessary, or contrary to the public interest.\35\ 
This interim final rule adjusts the civil penalty amounts within the 
Bureau's jurisdiction for inflation, as required by the Federal Civil 
Penalties Inflation Adjustment Act of 1990, as amended by the Debt 
Collection Improvement Act of 1996 and further amended by the Federal 
Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The 
amendments in this interim final rule are technical, and they merely 
apply the statutory method for adjusting civil penalty amounts. For 
these reasons, the Bureau has determined that publishing a notice of 
proposed rulemaking and providing opportunity for public comment are 
unnecessary. Moreover, the statute expressly requires the Bureau to 
make these initial adjustments through an interim final rulemaking to 
be published by July 1, 2016,\36\ and OMB's guidance confirms that 
agencies need not complete a notice-and-comment process before 
promulgating the rule.\37\ Therefore, the amendments are adopted in 
final form.
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    \35\ 5 U.S.C. 553(b)(B).
    \36\ Inflation Adjustment Act, section 4(b)(1)(A), codified at 
28 U.S.C. 2461 note.
    \37\ Memorandum from Shaun Donovan, Director, Office of 
Management and Budget, to the Heads of Executive Departments and 
Agencies 3 (Feb. 24, 2016), https://www.whitehouse.gov/sites/default/files/omb/memoranda/2016/m-16-06.pdf.
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Regulatory Flexibility Act

    Because no notice of proposed rulemaking is required, the 
Regulatory Flexibility Act does not require an initial or final 
regulatory flexibility analysis.\38\
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    \38\ 5 U.S.C. 603(a), 604(a).
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Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995,\39\ the 
Bureau reviewed this interim final rule. No collections of information 
pursuant to the Paperwork Reduction Act are contained in the interim 
final rule.
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    \39\ 44 U.S.C. 3506; 5 CFR 1320.
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List of Subjects in 12 CFR Part 1083

    Administrative practice and procedure, Consumer protection, 
Penalties.

Authority and Issuance

    For the reasons set forth in the preamble, the Bureau adds part 
1083 to chapter X in title 12 of the Code of Federal Regulations to 
read as set forth below:

PART 1083--CIVIL PENALTY ADJUSTMENTS

Sec.
1083.1 Adjustments of civil penalty amounts.


    Authority: 12 U.S.C. 2609(d); 12 U.S.C. 5113(d)(2); 12 U.S.C. 
5565(c); 15 U.S.C. 1639e(k); 15 U.S.C. 1717a(a); 28 U.S.C. 2461 
note.


Sec.  1083.1  Adjustments of civil penalty amounts.

    (a) The maximum amount of each civil penalty within the 
jurisdiction of the Consumer Financial Protection Bureau to impose is 
adjusted in accordance with the Federal Civil Penalties Inflation 
Adjustment Act of 1990, as amended by the Debt Collection Improvement 
Act of 1996 and further amended by the Federal

[[Page 38572]]

Civil Penalties Inflation Adjustment Act Improvements Act of 2015, (28 
U.S.C. 2461 note) as follows:

------------------------------------------------------------------------
                                                        Adjusted maximum
      U.S. code citation            Civil penalty        civil penalty
                                     description             amount
------------------------------------------------------------------------
12 U.S.C. 5565(c)(2)(A).......  Tier 1 penalty.......             $5,437
12 U.S.C. 5565(c)(2)(B).......  Tier 2 penalty.......             27,186
12 U.S.C. 5565(c)(2)(C).......  Tier 3 penalty.......          1,087,450
15 U.S.C. 1717a(a)(2).........  Per violation........              1,894
15 U.S.C. 1717a(a)(2).........  Annual cap...........          1,893,610
12 U.S.C. 2609(d)(1)..........  Per failure..........                 89
12 U.S.C. 2609(d)(1)..........  Annual cap...........            178,156
12 U.S.C. 2609(d)(2)(A).......  Per failure, where                   178
                                 intentional.
12 U.S.C. 5113(d)(2)..........  Per violation........             27,455
15 U.S.C. 1639e(k)(1).........  First violation......             10,875
15 U.S.C. 1639e(k)(2).........  Subsequent violations             21,749
------------------------------------------------------------------------

    (b) The adjustments in paragraph (a) of this section shall apply to 
civil penalties assessed after July 14, 2016, regardless of when the 
violation for which the penalty is assessed occurred.

    Dated: June 7, 2016.
Richard Cordray,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2016-14031 Filed 6-13-16; 8:45 am]
 BILLING CODE 4810-AM-P