[Federal Register Volume 84, Number 21 (Thursday, January 31, 2019)]
[Rules and Regulations]
[Pages 517-520]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-00488]


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BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1083

[Docket No. CFPB-2018-0034]
RIN 3170-AA62


Civil Penalty Inflation Adjustments

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Final rule.

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SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is 
amending its rule that specifies the time period for which adjusted 
civil penalty amounts would be applied to conduct within its 
jurisdiction and is also adjusting specific civil penalty amounts in 
that rule to account for inflation. On June 14, 2016, the Bureau issued 
an interim final rule (IFR) to implement 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 (Inflation 
Adjustment Act). On October 12, 2018, the Bureau sought notice and 
comment on a proposed amendment to the IFR to specify that the adjusted 
civil penalties only apply to assessments whose associated violations 
occurred on, or after, November 2, 2015 (the date the 2015 Inflation 
Adjustment Act amendments were signed into law). This rule finalizes 
the IFR and proposed amendment; it also adjusts for inflation the 
maximum amount of each civil penalty within the Bureau's jurisdiction.

DATES: This rule is effective on January 31, 2019.

FOR FURTHER INFORMATION CONTACT: Shelley Thompson, Counsel or Monique 
Chenault, Paralegal Specialist, Office of Regulations, at (202) 435-
7700 or https://reginquiries.consumerfinance.gov. If you require this 
document in an alternative electronic format, please contact 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    The Federal Civil Penalties Inflation Adjustment Act of 1990,\1\ as 
amended by the Debt Collection Improvement Act of 1996 \2\ and further 
amended by the Federal Civil Penalties Inflation Adjustment Act 
Improvements Act of 2015 (Inflation Adjustment Act),\3\ directs Federal 
agencies to adjust for inflation the civil penalty amounts within their 
jurisdiction not later than July 1, 2016, and then not later than 
January 15 every year thereafter.\4\ Each agency was required to make 
the 2016 one-time catch-up adjustments through an interim final rule 
published in the Federal Register. On June 14, 2016, the Bureau 
published its interim final rule (IFR) to make the initial catch-up 
adjustments to civil penalties within the Bureau's jurisdiction.\5\ The 
June 2016 IFR created a new part 1083 and in Sec.  1083.1 established 
the inflation-adjusted maximum amounts for each civil penalty within 
the Bureau's jurisdiction.\6\ The Bureau received no comments in 
response to the IFR, which became effective on July 14, 2016.
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    \1\ Public Law 101-410, 104 Stat. 890.
    \2\ Public Law 104-134, section 31001(s)(1), 110 Stat. 1321, 
1321-373.
    \3\ Public Law 114-74, section 701, 129 Stat. 584, 599.
    \4\ 28 U.S.C. 2461 note. Section 1301(a) of the Federal Reports 
Elimination Act of 1998, Public Law 105-362, 112 Stat. 3293, also 
amended the Inflation Adjustment Act by striking section 6, which 
contained annual reporting requirements, and redesignating section 7 
as section 6, but did not alter the civil penalty adjustment 
requirements.
    \5\ 81 FR 38569 (June 14, 2016). Although the Bureau was not 
obligated to solicit comments for the interim final rule, the Bureau 
invited public comment and received none.
    \6\ See 12 CFR 1083.1.
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    The Inflation Adjustment Act also requires subsequent adjustments 
to be made annually and notwithstanding section 553 of the 
Administrative Procedure Act (APA).\7\ The Bureau annually adjusted its 
civil penalty

[[Page 518]]

amounts, as required by the Act, through rules issued in January 2017 
and January 2018.\8\
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    \7\ Inflation Adjustment Act section 4, codified at 28 U.S.C. 
2461 note.
    \8\ 82 FR 3601 (Jan. 12, 2017); 83 FR 1525 (Jan. 12, 2018).
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    Specifically, the Act directs Federal agencies to adjust annually 
each civil penalty provided by law within the jurisdiction of the 
agency by the ``cost-of-living adjustment.'' \9\ The ``cost-of-living 
adjustment'' is defined as the percentage (if any) by which the 
Consumer Price Index for all-urban consumers (CPI-U) for the month of 
October preceding the date of the adjustment, exceeds the CPI-U for 
October of the prior year.\10\ The Director of the Office of Management 
and Budget (OMB) is required to issue guidance (OMB Guidance) every 
year by December 15 to agencies on implementing the annual civil 
penalty inflation adjustments. Pursuant to the Inflation Adjustment Act 
and OMB Guidance, agencies must apply the multiplier reflecting the 
``cost-of-living adjustment'' to the current penalty amount and then 
round that amount to the nearest dollar to determine the annual 
adjustments.\11\ The adjustments are designed to keep pace with 
inflation so that civil penalties retain their deterrent effect and 
promote compliance with the law.\12\
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    \9\ Inflation Adjustment Act sections 4 and 5, codified at 28 
U.S.C. 2461 note.
    \10\ Inflation Adjustment Act sections 3 and 5, codified at 28 
U.S.C. 2461 note.
    \11\ Inflation Adjustment Act section 5, codified at 28 U.S.C. 
2461 note; see also Memorandum to the Exec. Dep'ts & Agencies from 
Mick Mulvaney, Director, Office of Mgmt. & Budget (Dec. 14, 2018), 
available at https://www.whitehouse.gov/wp-content/uploads/2017/11/m_19_04.pdf.
    \12\ See Inflation Adjustment Act section 2, codified at 28 
U.S.C. 2461 note.
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    In 2017, OMB issued guidance stating that, ``[f]or the 2018 annual 
adjustment, the new penalty amounts should apply to penalties assessed 
after the effective date of the 2018 annual adjustment--which will be 
no later than January 15, 2018--including, if consistent with agency 
policy, assessments whose associated violations occurred on, or after, 
November 2, 2015'' (i.e., the date the 2015 Amendments were signed into 
law).\13\
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    \13\ Memorandum to the Exec. Dep'ts & Agencies from Mick 
Mulvaney, Director, Office of Mgmt. & Budget, at 4 (Dec. 15, 2017), 
available at https://www.whitehouse.gov/wp-content/uploads/2017/11/M-18-03.pdf. OMB's guidance issued in December 2016 (https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2017/m-17-11_0.pdf) contained similar language.
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    On October 12, 2018, the Bureau proposed to finalize the IFR 
consistent with the 2017 OMB Guidance. Specifically, the Bureau 
proposed to revise Sec.  1083.1(b) to provide that the adjustments in 
paragraph (a) of the section shall apply to civil penalties assessed 
after January 15, 2019, whose associated violations occurred on or 
after November 2, 2015. The Bureau received one relevant comment, from 
an individual commenter, which was supportive of the proposal. This 
rule makes final the 2016 IFR with language consistent with the 2017 
OMB Guidance.
    For the 2019 annual adjustment, the multiplier reflecting the 
``cost-of-living adjustment'' is 1.02522.\14\ Pursuant to the Inflation 
Adjustment Act and OMB Guidance, the Bureau multiplied each of its 
civil penalty amounts by the ``cost-of-living adjustment'' multiplier 
and rounded to the nearest dollar.\15\
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    \14\ Memorandum to the Exec. Dep'ts & Agencies from Mick 
Mulvaney, Director, Office of Mgmt. & Budget (Dec. 14, 2018), 
available at https://www.whitehouse.gov/wp-content/uploads/2017/11/m_19_04.pdf.
    \15\ 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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    The new penalty amounts that apply to civil penalties assessed 
after January 31, 2019, are as follows:

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                                                                      Penalty
                                                                      amounts     OMB ``cost-of-
                  Law                      Penalty description      established       living        New penalty
                                                                    under 2018     adjustment''       amount
                                                                    final rule      multiplier
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Consumer Financial Protection Act, 12   Tier 1 penalty..........          $5,639         1.02522          $5,781
 U.S.C. 5565(c)(2)(A).
Consumer Financial Protection Act, 12   Tier 2 penalty..........          28,195         1.02522          28,906
 U.S.C. 5565(c)(2)(B).
Consumer Financial Protection Act, 12   Tier 3 penalty..........       1,127,799         1.02522       1,156,242
 U.S.C. 5565(c)(2)(C).
Interstate Land Sales Full Disclosure   Per violation...........           1,964         1.02522           2,014
 Act, 15 U.S.C. 1717a(a)(2).
Interstate Land Sales Full Disclosure   Annual cap..............       1,963,870         1.02522       2,013,399
 Act, 15 U.S.C. 1717a(a)(2).
Real Estate Settlement Procedures Act,  Per failure.............              92         1.02522              94
 12 U.S.C. 2609(d)(1).
Real Estate Settlement Procedures Act,  Annual cap..............         184,767         1.02522         189,427
 12 U.S.C. 2609(d)(1).
Real Estate Settlement Procedures Act,  Per failure, where                   185         1.02522             190
 12 U.S.C. 2609(d)(2)(A).                intentional.
SAFE Act, 12 U.S.C. 5113(d)(2)........  Per violation...........          28,474         1.02522          29,192
Truth in Lending Act, 15 U.S.C.         First violation.........          11,279         1.02522          11,563
 1639e(k)(1).
Truth in Lending Act, 15 U.S.C.         Subsequent violations...          22,556         1.02522          23,125
 1639e(k)(2).
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II. Legal Authority

    The Bureau issues this final rule pursuant to the Federal Civil 
Penalties Inflation Adjustment Act of 1990,\16\ as amended by the Debt 
Collection Improvement Act of 1996 \17\ and further amended by the 
Federal Civil Penalties Inflation Adjustment Act Improvements Act of 
2015,\18\ which requires the Bureau to adjust for inflation the civil 
penalties within its jurisdiction according to a statutorily prescribed 
formula.
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    \16\ Public Law 101-410, 104 Stat. 890.
    \17\ Public Law 104-134, section 31001(s)(1), 110 Stat. 1321, 
1321-373.
    \18\ Public Law 114-74, section 701, 129 Stat. 584, 599.
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III. Administrative Procedure Act

A. 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,

[[Page 519]]

unnecessary, or contrary to the public interest.\19\ The Bureau so 
finds with respect to the annual adjustment portion of the amendments 
in Sec.  1083.1(a). These adjustments to the civil penalty amounts are 
technical and non-discretionary, and they merely apply the statutory 
method for adjusting civil penalty amounts. These adjustments are 
required by the Inflation Adjustment Act. Moreover, the Inflation 
Adjustment Act directs agencies to adjust civil penalties annually 
notwithstanding section 553 of the APA,\20\ and OMB Guidance reaffirms 
that agencies need not complete a notice-and-comment process before 
making the annual adjustments for inflation.\21\ For these reasons, the 
Bureau has determined that publishing a notice of proposed rulemaking 
and providing opportunity for public comment are unnecessary with 
respect to the annual inflation adjustment portion of this rulemaking. 
Therefore, that portion of the amendment is adopted in final form 
without public comment.
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    \19\ 5 U.S.C. 553(b)(B).
    \20\ Inflation Adjustment Act section 4, codified at 28 U.S.C. 
2461 note.
    \21\ Memorandum to the Exec. Dep'ts & Agencies from Mick 
Mulvaney, Director, Office of Mgmt. & Budget (Dec. 14, 2018), 
available at https://www.whitehouse.gov/wp-content/uploads/2017/11/m_19_04.pdf.
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    As noted above, the Bureau sought notice and comment to finalize 
the IFR with amended language in Sec.  1083.1(b) to specify that the 
adjusted civil penalties only apply to assessments whose associated 
violations occurred on, or after, November 2, 2015 (the date the 2015 
amendments to the Inflation Adjustment Act were signed into law).

B. Effective Date

    Section 553(d) of the APA generally requires publication of a final 
rule not less than 30 days before its effective date, except (1) a 
substantive rule which grants or recognizes an exemption or relieves a 
restriction; (2) interpretive rules and statements of policy; or (3) as 
otherwise provided by the agency for good cause found and published 
with the rule.\22\
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    \22\ 5 U.S.C. 553(d).
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    At a minimum, the Bureau believes the annual adjustments to the 
civil penalty amounts in Sec.  1083.1(a) fall under the third exception 
to section 553(d). The Bureau finds that there is good cause to make 
the amendments effective on January 31, 2019. The amendments to Sec.  
1083.1(a) in this final rule are technical and non-discretionary, and 
they merely apply the statutory method for adjusting civil penalty 
amounts and follow the statutory directive to make annual adjustments 
each year. Moreover, the Inflation Adjustment Act directs agencies to 
adjust the civil penalties annually notwithstanding section 553 of the 
APA,\23\ and OMB Guidance reaffirms that agencies need not provide a 
delay in effective date for the annual adjustments for inflation.\24\
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    \23\ Inflation Adjustment Act section 4, codified at 28 U.S.C. 
2461 note.
    \24\ Memorandum to the Exec. Dep'ts & Agencies from Mick 
Mulvaney, Director, Office of Mgmt. & Budget (Dec. 14, 2018), 
available at https://www.whitehouse.gov/wp-content/uploads/2017/11/m_19_04.pdf.
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    The amendment to Sec.  1083.1(b), to finalize the IFR with language 
to specify that the adjusted civil penalties only apply to assessments 
whose associated violations occurred on, or after, November 2, 2015 
(the date the 2015 amendments to the Inflation Adjustment Act were 
signed into law), similarly satisfies the requirements of section 
553(d) and thus may become effective on January 31, 2019. Because the 
amendment limits penalties that potentially could have been assessed, 
it relieves a restriction against affected parties by potentially 
decreasing the amount of civil penalties an affected party may have to 
pay. The Bureau also finds that there is good cause to make this 
amendment effective on January 31, 2019. The amendment does not 
establish any requirement but instead ensures that penalties are not 
assessed in a manner inconsistent with OMB guidance. Effectuating the 
amendment to Sec.  1083.1(b) on the same day as Sec.  1083.1(a) will 
also minimize confusion among affected parties as to which penalty 
amounts apply. The Bureau received no comments on its proposal to make 
the amendment to Sec.  1083.1(b) effective no sooner than January 15, 
2019.

IV. Regulatory Flexibility Act

    The Regulatory Flexibility Act (the RFA), as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996, requires each 
agency to consider the potential impact of its regulations on small 
entities, including small businesses, small governmental units, and 
small nonprofit organizations. The RFA defines a ``small business'' as 
a business that meets the size standard developed by the Small Business 
Administration pursuant to the Small Business Act.
    The RFA generally requires an agency to conduct an initial 
regulatory flexibility analysis (IRFA) and a final regulatory 
flexibility analysis (FRFA) of any rule subject to notice-and-comment 
rulemaking requirements. An IRFA or FRFA is not required if the agency 
certifies that the rule will not have a significant economic impact on 
a substantial number of small entities.\25\ The Bureau also is subject 
to certain additional procedures under the RFA involving the convening 
of a panel to consult with small business representatives prior to 
proposing a rule for which an IRFA is required.\26\
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    \25\ See 5 U.S.C. 601 et seq.
    \26\ See 5 U.S.C. 609.
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    At the proposed rule stage, the Bureau determined that an IRFA was 
not required because the proposal, if adopted, would not have had a 
significant economic impact on a substantial number of small entities. 
No comments were received with respect to that determination. For this 
final rule, the Bureau continues to believe that that determination is 
accurate. The rule simply specifies that increased penalty amounts 
apply only to violations that occurred on or after November 2, 2015, 
rather than also to violations that occurred prior to November 2, 2015. 
Because it would limit the civil penalties covered persons may pay, the 
rule would not impose any additional costs on them. Nor does the rule 
impose any new, affirmative duty on any small entity or change any 
existing requirements on small entities, and thus no small entity who 
is currently complying with the laws that the Bureau enforces will 
incur any expense from the final rule.
    Accordingly, the Bureau's Director, by signing below, certifies 
that this rule will not have a significant economic impact on a 
substantial number of small entities.

V. Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et 
seq.), Federal agencies are generally required to seek the Office of 
Management and Budget (OMB) approval for information collection 
requirements prior to implementation. According to the PRA, the Bureau 
may not conduct or sponsor, and, notwithstanding any other provision of 
law, a person is not required to respond to an information collection 
unless the information collection displays currently a valid control 
number assigned by OMB. The Bureau has determined that this policy 
contains no information collections and that the revisions to this 
Policy do not create any new collections of information.

VI. Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Bureau

[[Page 520]]

will submit a report containing this rule and other required 
information to the United States Senate, the United States House of 
Representatives, and the Comptroller General of the United States prior 
to the rule taking effect. The Office of Information and Regulatory 
Affairs (OIRA) has designated this rule as not a ``major rule'' as 
defined by 5 U.S.C. 804(2).

List of Subjects in 12 CFR Part 1083

    Administrative practice and procedure, Consumer protection, 
Penalties.

Authority and Issuance

    For the reasons set forth above, the Bureau amends 12 CFR part 1083 
as set forth below:

PART 1083--CIVIL PENALTY ADJUSTMENTS

0
1. The authority citation for part 1083 continues to read as follows:

    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.

0
2. Section 1083.1 is revised to read as follows:


Sec.  1083.1  Adjustments of civil penalty amounts.

    (a) The maximum amount of each civil penalty within the 
jurisdiction of the Bureau of Consumer Financial Protection 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 Civil Penalties 
Inflation Adjustment Act Improvements Act of 2015 (28 U.S.C. 2461 
note), as follows:

                        Table 1 to Paragraph (a)
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                                                             Adjusted
        U.S. Code citation              Civil penalty      maximum civil
                                         description      penalty amount
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12 U.S.C. 5565(c)(2)(A)...........  Tier 1 penalty......          $5,781
12 U.S.C. 5565(c)(2)(B)...........  Tier 2 penalty......          28,906
12 U.S.C. 5565(c)(2)(C)...........  Tier 3 penalty......       1,156,242
15 U.S.C. 1717a(a)(2).............  Per violation.......           2,014
15 U.S.C. 1717a(a)(2).............  Annual cap..........       2,013,399
12 U.S.C. 2609(d)(1)..............  Per failure.........              94
12 U.S.C. 2609(d)(1)..............  Annual cap..........         189,427
12 U.S.C. 2609(d)(2)(A)...........  Per failure, where               190
                                     intentional.
12 U.S.C. 5113(d)(2)..............  Per violation.......          29,192
15 U.S.C. 1639e(k)(1).............  First violation.....          11,563
15 U.S.C. 1639e(k)(2).............  Subsequent                    23,125
                                     violations.
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    (b) The adjustments in paragraph (a) of this section shall apply to 
civil penalties assessed after January 31, 2019, whose associated 
violations occurred on or after November 2, 2015.

    Dated: January 6, 2019.
Kathleen L. Kraninger,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2019-00488 Filed 1-29-19; 4:15 pm]
 BILLING CODE 4810-AM-P