[Federal Register Volume 85, Number 9 (Tuesday, January 14, 2020)]
[Rules and Regulations]
[Pages 2009-2012]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00309]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 747

RIN 3133-AF09


Civil Monetary Penalty Inflation Adjustment

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

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SUMMARY: The NCUA Board (Board) is amending its regulations to adjust 
the maximum amount of each civil monetary penalty (CMP) within its 
jurisdiction to account for inflation. This action, including the 
amount of the adjustments, is required under the Federal Civil 
Penalties Inflation Adjustment Act of 1990, as amended by the Debt 
Collection Improvement Act of 1996 and the Federal Civil Penalties 
Inflation Adjustment Act Improvements Act of 2015.

DATES: This final rule is effective January 14, 2020.

FOR FURTHER INFORMATION CONTACT: Gira Bose, Staff Attorney, at 1775 
Duke Street, Alexandria, VA 22314, or telephone: (703) 518-6562.

SUPPLEMENTARY INFORMATION: 
I. Legal Background
II. Calculation of Adjustments
III. Regulatory Procedures

I. Legal Background

A. Statutory Requirements

    Every Federal agency, including the NCUA, is required by law to 
adjust its maximum CMP amounts each year to account for inflation. 
Prior to this being an annual requirement, agencies were required to 
adjust their CMPs at least once every four years.
    The four-year requirement stemmed from the Debt Collection 
Improvement Act of 1996,\1\ which amended the Federal Civil Penalties 
Inflation Adjustment Act of 1990.\2\
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    \1\ Public Law 104-134, Sec. 31001(s), 110 Stat. 1321-373 (Apr. 
26, 1996). The law is codified at 28 U.S.C. 2461 note.
    \2\ Public Law 101-410, 104 Stat. 890 (Oct. 5, 1990), codified 
at 28 U.S.C. 2461 note.
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    The annual requirement stems from the Bipartisan Budget Act of 
2015,\3\ which contains the Federal Civil Penalties Inflation 
Adjustment Act Improvements Act of 2015 (the 2015 amendments).\4\ This 
legislation provided for an initial ``catch-up'' adjustment of CMPs in 
2016, followed by annual adjustments. The catch-up adjustment reset CMP 
maximum amounts by setting aside the inflation adjustments that 
agencies made in prior years and instead calculated inflation with 
reference to the year when each CMP was enacted or last modified by 
Congress. Agencies were required to publish their catch-up adjustments 
in an interim final rule by July 1, 2016 and make them effective by 
August 1, 2016.\5\ The NCUA complied with these requirements in a June 
2016 interim final rule, followed by a November 2016 final rule to 
confirm the adjustments as final.\6\
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    \3\ Public Law 114-74, 129 Stat. 584 (Nov. 2, 2015).
    \4\ 129 Stat. 599.
    \5\ Public Law 114-74, Sec. 701(b)(1), 129 Stat. 584, 599 (Nov. 
2, 2015).
    \6\ 81 FR 40152 (June 21, 2016); 81 FR 78028 (Nov. 7, 2016).
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    The 2015 amendments also specified how agencies must conduct annual 
inflation adjustments after the 2016 catch-up adjustment. Following the 
catch-up adjustment, agencies must make the required adjustments and 
publish them in the Federal Register by January 15 each year.\7\ For 
2017, the NCUA issued an interim final rule on January 6, 2017,\8\ 
followed by a final rule issued on June 23, 2017.\9\ For 2018 and 2019, 
the NCUA issued a final rule in each year to satisfy the agency's 
requirement for the 2018 and 2019 annual adjustments.\10\ This final 
rule satisfies the agency's requirement for the 2020 annual adjustment.
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    \7\ Public Law 114-74, Sec. 701(b)(1), 129 Stat. 584, 599 (Nov. 
2, 2015).
    \8\ 82 FR 7640 (Jan. 23, 2017).
    \9\ 82 FR 29710 (June 30, 2017).
    \10\ 83 FR 2029 (Jan. 16, 2018); 84 FR 2055 (Feb. 6, 2019).
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    The law provides that the adjustments shall be made notwithstanding 
the section of the Administrative Procedure Act (APA) that requires 
prior notice and public comment for agency rulemaking.\11\ The 2015 
amendments also specify that each CMP maximum must be increased by the 
percentage by which the consumer price index for urban consumers (CPI-
U) \12\ for October of the year immediately preceding the year the 
adjustment is made exceeds the CPI-U for October of the prior year.\13\ 
For example, for the adjustment to be made in 2020, an agency must 
compare the October 2018 and 2019 CPI-U figures.
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    \11\ Public Law 114-74, Sec. 701(b)(1), 129 Stat. 584, 599 (Nov. 
2, 2015).
    \12\ This index is published by the Department of Labor, Bureau 
of Labor Statistics, and is available at its website: http://www.bls.gov/cpi/.
    \13\ Public Law 114-74, Sec. 701(b)(2)(B), 129 Stat. 584, 600 
(Nov. 2, 2015).
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    An annual adjustment under the 2015 amendments is not required if a 
CMP has been amended in the preceding 12 months pursuant to other 
authority. Specifically, the statute provides that an agency is not 
required to make an annual adjustment to a CMP if in the preceding 12 
months it has been increased by an amount greater than the annual 
adjustment required by the 2015 amendments.\14\ The NCUA did not make 
any adjustments in the preceding 12 months pursuant to other authority, 
therefore, this rulemaking adjusts the NCUA's CMPs pursuant to the 2015 
amendments.
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    \14\ Public Law 114-74, Sec. 701(b)(1), 129 Stat. 584, 600 (Nov. 
2, 2015).
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B. Application to the 2020 Adjustments and Office of Management and 
Budget Guidance

    This section applies the statutory requirements and the Office of 
Management and Budget's (OMB) guidance to the NCUA's CMPs, and sets 
forth the Board's calculation of the 2020 adjustments.
    The 2015 amendments directed OMB to issue guidance to agencies on 
implementing the inflation adjustments.\15\ OMB is required to issue 
its guidance each December and, with respect to the 2020 annual 
adjustment, did so on December 16, 2019.\16\ For 2020, Federal agencies 
must adjust the maximum amounts of their CMPs by the percentage by 
which the October 2019 CPI-U (257.346) exceeds the October 2018 CPI-U 
(252.885). The resulting increase can be expressed as an inflation 
multiplier (1.01764) to apply to each current CMP maximum amount to 
determine the adjusted maximum. The OMB guidance also addresses 
rulemaking procedures and agency reporting and oversight requirements 
for CMPs.\17\
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    \15\ Public Law 114-74, Sec. 701(b)(4), 129 Stat. 584, 601 (Nov. 
2, 2015).
    \16\ See OMB Memorandum M-20-05, Implementation of Penalty 
Inflation Adjustments for 2020, pursuant to the 2015 amendments 
(Dec. 16, 2019).
    \17\ Id.
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    The table below presents the adjustment calculations. The current 
maximums are found at 12 CFR 747.1001, as adjusted by the final rule 
that the Board approved in January 2019. This amount is multiplied by 
the inflation multiplier to calculate the new maximum in the far right 
column. Only these adjusted maximum amounts, and not the calculations, 
will be codified at

[[Page 2010]]

12 CFR 747.1001 under this final rule. The adjusted amounts will be 
effective upon publication in the Federal Register, and can be applied 
to violations that occurred on or after November 2, 2015, the date the 
2015 amendments were enacted.\18\
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    \18\ Public Law 114-74, 129 Stat. 600 (Nov. 2, 2015).

                                  Table: Calculation of Maximum CMP Adjustments
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                                                                                               Adjusted maximum
                                                                                                 ($) (Current
                                   Description and tier     Current maximum                        maximum x
            Citation                       \19\                   ($)           Multiplier        multiplier,
                                                                                              rounded to nearest
                                                                                                    dollar)
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12 U.S.C. 1782(a)(3)...........  Inadvertent failure to   4,027.............         1.01764  4,098.
                                  submit a report or the
                                  inadvertent submission
                                  of a false or
                                  misleading report.
12 U.S.C. 1782(a)(3)...........  Non-inadvertent failure  40,269............         1.01764  40,979.
                                  to submit a report or
                                  the non-inadvertent
                                  submission of a false
                                  or misleading report.
12 U.S.C. 1782(a)(3)...........  Failure to submit a      Lesser of                  1.01764  Lesser of
                                  report or the            2,013,399 or 1%                     2,048,915 or 1%
                                  submission of a false    of total CU                         of total CU
                                  or misleading report     assets.                             assets.
                                  done knowingly or with
                                  reckless disregard.
12 U.S.C. 1782(d)(2)(A)........  Tier 1 CMP for           3,682.............         1.01764  3,747.
                                  inadvertent failure to
                                  submit certified
                                  statement of insured
                                  shares and charges due
                                  to the National Credit
                                  Union Share Insurance
                                  Fund (NCUSIF), or
                                  inadvertent submission
                                  of false or misleading
                                  statement.
12 U.S.C. 1782(d)(2)(B)........  Tier 2 CMP for non-      36,809............         1.01764  37,458.
                                  inadvertent failure to
                                  submit certified
                                  statement or
                                  submission of false or
                                  misleading statement.
12 U.S.C. 1782(d)(2)(C)........  Tier 3 CMP for failure   Lesser of                  1.01764  Lesser of
                                  to submit a certified    1,840,491 or 1%                     1,872,957 or 1%
                                  statement or the         of total CU                         of total CU
                                  submission of a false    assets.                             assets.
                                  or misleading
                                  statement done
                                  knowingly or with
                                  reckless disregard.
12 U.S.C. 1785(a)(3)...........  Non-compliance with      125...............         1.01764  127.
                                  insurance logo
                                  requirements.
12 U.S.C. 1785(e)(3)...........  Non-compliance with      292...............         1.01764  297.
                                  NCUA security
                                  requirements.
12 U.S.C. 1786(k)(2)(A)........  Tier 1 CMP for           10,067............         1.01764  10,245.
                                  violations of law,
                                  regulation, and other
                                  orders or agreements.
12 U.S.C. 1786(k)(2)(B)........  Tier 2 CMP for           50,334............         1.01764  51,222.
                                  violations of law,
                                  regulation, and other
                                  orders or agreements
                                  and for recklessly
                                  engaging in unsafe or
                                  unsound practices or
                                  breaches of fiduciary
                                  duty.
12 U.S.C. 1786(k)(2)(C)........  Tier 3 CMP for           2,013,399.........         1.01764  2,048,915.
                                  knowingly committing
                                  the violations under
                                  Tier 1 or 2 (natural
                                  person).
12 U.S.C. 1786(k)(2)(C)........  Tier 3 (same) (CU).....  Lesser of                  1.01764  Lesser of
                                                           2,013,399 or 1%                     2,048,915 or 1%
                                                           of total CU                         of total CU
                                                           assets.                             assets.
12 U.S.C. 1786(w)(5)(A)(ii)....  Non-compliance with      331,174...........         1.01764  337,016.
                                  senior examiner post-
                                  employment
                                  restrictions.
15 U.S.C. 1639e(k).............  Non-compliance with      11,563............         1.01764  11,767.
                                  appraisal independence
                                  standards (first
                                  violation).
15 U.S.C. 1639e(k).............  Subsequent violations    23,125............         1.01764  23,533.
                                  of the same.
42 U.S.C. 4012a(f)(5)..........  Non-compliance with      2,187.............         1.01764  2,226.
                                  flood insurance
                                  requirements.
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III. Regulatory Procedures
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    \19\ The table uses condensed descriptions of CMP tiers. Refer 
to the U.S. Code citations for complete descriptions.
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A. Final Rule Under the APA

    In the 2015 amendments, Congress provided that agencies shall make 
the required inflation adjustments in 2017 and subsequent years 
notwithstanding 5 U.S.C. 553,\20\ which generally requires agencies to 
follow notice-and-comment procedures in rulemaking and to make rules 
effective no sooner than 30 days after publication in the Federal 
Register. The 2015 amendments provide a clear exception to these 
requirements.\21\ In addition, the Board finds that notice-and-comment 
procedures would be impracticable and unnecessary under the APA because 
of the largely ministerial and technical nature of the rule, which 
affords agencies limited discretion in promulgating the rule, and the 
statutory deadline for making the adjustments.\22\ In these 
circumstances, the Board finds good cause to issue a final rule without 
issuing a notice of proposed rulemaking or soliciting public comments. 
The Board also finds good cause to make the final rule effective upon 
publication because of the statutory deadline.

[[Page 2011]]

Accordingly, this final rule is issued without prior notice and comment 
and will become effective immediately upon publication.
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    \20\ Public Law 114-74, Sec. 701(b)(1), 129 Stat. 584, 599 (Nov. 
2, 2015).
    \21\ See 5 U.S.C. 559; Asiana Airlines v. Fed. Aviation Admin., 
134 F.3d 393, 396-99 (DC Cir. 1998).
    \22\ 5 U.S.C. 553(b)(3)(B); see Mid-Tex Elec. Co-op., Inc. v. 
Fed. Energy Regulatory Comm'n, 822 F.2d 1123 (DC Cir. 1987).
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B. Regulatory Flexibility Act

    The Regulatory Flexibility Act requires the Board to prepare an 
analysis to describe any significant economic impact a regulation may 
have on a substantial number of small entities.\23\ For purposes of 
this analysis, the Board considers small credit unions to be those 
having under $100 million in assets.\24\ This final rule will not have 
a significant economic impact on a substantial number of small credit 
unions because it affects only the maximum amounts of CMPs that may be 
assessed in individual cases, which are not numerous and generally do 
not involve assessments at the maximum level. In addition, several of 
the CMPs are limited to a percentage of a credit union's assets. 
Finally, in assessing CMPs, the Board generally must consider a party's 
financial resources.\25\ Because this final rule will affect few, if 
any, small credit unions, the Board certifies that the final rule will 
not have a significant economic impact on a substantial number of small 
entities.
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    \23\ 5 U.S.C. 603(a).
    \24\ Interpretive Ruling and Policy Statement 15-1, 80 FR 57512 
(Sept. 24, 2015).
    \25\ 12 U.S.C. 1786(k)(2)(G)(i).
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C. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in 
which an agency creates a new paperwork burden on regulated entities or 
modifies an existing burden.\26\ For purposes of the PRA, a paperwork 
burden may take the form of either a reporting or a recordkeeping 
requirement, both referred to as information collections. This final 
rule adjusts the maximum amounts of certain CMPs that the Board may 
assess against individuals, entities, or credit unions but does not 
require any reporting or recordkeeping. Therefore, this final rule will 
not create new paperwork burdens or modify any existing paperwork 
burdens.
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    \26\ 44 U.S.C. 3507(d); 5 CFR part 1320.
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D. Executive Order 13132

    Executive Order 13132 encourages independent regulatory agencies to 
consider the impact of their actions on state and local interests. In 
adherence to fundamental federalism principles, the NCUA, an 
independent regulatory agency as defined in 44 U.S.C. 3502(5), 
voluntarily complies with the Executive order. This final rule adjusts 
the maximum amounts of certain CMPs that the Board may assess against 
individuals, entities, and federally insured credit unions, including 
state-chartered credit unions. However, the final rule does not create 
any new authority or alter the underlying statutory authorities that 
enable the Board to assess CMPs. Accordingly, this final rule will not 
have a substantial direct effect on the states, on the connection 
between the National Government and the states, or on the distribution 
of power and responsibilities among the various levels of government. 
The Board has determined that this final rule does not constitute a 
policy that has federalism implications for purposes of the Executive 
order.

E. Assessment of Federal Regulations and Policies on Families

    The Board has determined that this final rule will not affect 
family well-being within the meaning of Section 654 of the Treasury and 
General Government Appropriations Act, 1999.\27\
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    \27\ Public Law 105-277, 112 Stat. 2681 (Oct. 21, 1998).
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F. Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996 \28\ 
(SBREFA) provides generally for congressional review of agency rules. A 
reporting requirement is triggered in instances where the Board issues 
a final rule as defined by Section 551 of the APA.\29\ The NCUA does 
not believe this rule is a ``major rule'' within the meaning of the 
relevant sections of SBREFA. As required by SBREFA, the NCUA submitted 
this final rule to OMB for it to determine if the final rule is a 
``major rule'' for purposes of SBREFA. OMB determined the final rule 
was not a major rule. The NCUA also will file appropriate reports with 
Congress and the Government Accountability Office so this rule may be 
reviewed.
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    \28\ Public Law 104-121, 110 Stat. 857 (Mar. 29, 1996).
    \29\ 5 U.S.C. 551.
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List of Subjects in 12 CFR Part 747

    Credit unions, Civil monetary penalties.

    By the National Credit Union Administration Board on January 7, 
2020.
Gerard Poliquin,
Secretary of the Board.
    For the reasons stated above, the NCUA Board amends 12 CFR part 747 
as follows:

PART 747--ADMINISTRATIVE ACTIONS, ADJUDICATIVE HEARINGS, RULES OF 
PRACTICE AND PROCEDURE, AND INVESTIGATIONS

0
1. The authority for part 747 continues to read as follows:

    Authority: 12 U.S.C. 1766, 1782, 1784, 1785, 1786, 1787, 1790a, 
1790d; 15 U.S.C. 1639e; 42 U.S.C. 4012a; Pub. L. 101-410; Pub. L. 
104-134; Pub. L. 109-351; Pub. L. 114-74.


0
2. Revise Sec.  747.1001 to read as follows:


Sec.  747.1001   Adjustment of civil monetary penalties by the rate of 
inflation.

    (a) The NCUA is required by the Federal Civil Penalties Inflation 
Adjustment Act of 1990 (Pub. L. 101-410, 104 Stat. 890, as amended (28 
U.S.C. 2461 note)), to adjust the maximum amount of each civil monetary 
penalty (CMP) within its jurisdiction by the rate of inflation. The 
following chart displays those adjusted amounts, as calculated pursuant 
to the statute:

------------------------------------------------------------------------
                                                           New maximum
      U.S. code citation            CMP description          amount
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(1) 12 U.S.C. 1782(a)(3)......  Inadvertent failure to  $4,098.
                                 submit a report or
                                 the inadvertent
                                 submission of a false
                                 or misleading report.
(2) 12 U.S.C. 1782(a)(3)......  Non-inadvertent         $40,979.
                                 failure to submit a
                                 report or the non-
                                 inadvertent
                                 submission of a false
                                 or misleading report.
(3) 12 U.S.C. 1782(a)(3)......  Failure to submit a     $2,048,915 or 1
                                 report or the           percent of the
                                 submission of a false   total assets of
                                 or misleading report    the credit
                                 done knowingly or       union,
                                 with reckless           whichever is
                                 disregard.              less.
(4) 12 U.S.C. 1782(d)(2)(A)...  Tier 1 CMP for          $3,747.
                                 inadvertent failure
                                 to submit certified
                                 statement of insured
                                 shares and charges
                                 due to the National
                                 Credit Union Share
                                 Insurance Fund
                                 (NCUSIF), or
                                 inadvertent
                                 submission of false
                                 or misleading
                                 statement.

[[Page 2012]]

 
(5) 12 U.S.C. 1782(d)(2)(B)...  Tier 2 CMP for non-     $37,458.
                                 inadvertent failure
                                 to submit certified
                                 statement or
                                 submission of false
                                 or misleading
                                 statement.
(6) 12 U.S.C. 1782(d)(2)(C)...  Tier 3 CMP for failure  $1,872,957 or 1
                                 to submit a certified   percent of the
                                 statement or the        total assets of
                                 submission of a false   the credit
                                 or misleading           union,
                                 statement done          whichever is
                                 knowingly or with       less.
                                 reckless disregard.
(7) 12 U.S.C. 1785(a)(3)......  Non-compliance with     $127.
                                 insurance logo
                                 requirements.
(8) 12 U.S.C. 1785(e) (3).....  Non-compliance with     $297.
                                 NCUA security
                                 requirements.
(9) 12 U.S.C. 1786(k)(2)(A)...  Tier 1 CMP for          $10,245.
                                 violations of law,
                                 regulation, and other
                                 orders or agreements.
(10) 12 U.S.C. 1786(k)(2)(A)..  Tier 2 CMP for          $51,222.
                                 violations of law,
                                 regulation, and other
                                 orders or agreements
                                 and for recklessly
                                 engaging in unsafe or
                                 unsound practices or
                                 breaches of fiduciary
                                 duty.
(11) 12 U.S.C. 1786(k)(2)(A)..  Tier 3 CMP for          $2,048,915.
                                 knowingly committing
                                 the violations under
                                 Tier 1 or 2 (natural
                                 person).
(12) 12 U.S.C. 1786(k)(2)(A)..  Tier 3 CMP for          $2,048,915 or 1
                                 knowingly committing    percent of the
                                 the violations under    total assets of
                                 Tier 1 or 2 (insured    the credit
                                 credit union).          union,
                                                         whichever is
                                                         less.
(13) 12 U.S.C. 1786(w)(5)(ii).  Non-compliance with     $337,016.
                                 senior examiner post-
                                 employment
                                 restrictions.
(14) 15 U.S.C. 1639e(k).......  Non-compliance with     First violation:
                                 appraisal               $11,767.
                                 independence           Subsequent
                                 requirements.           violations:
                                                         $23,533.
(15) 42 U.S.C. 4012a(f)(5)....  Non-compliance with     $2,226.
                                 flood insurance
                                 requirements.
------------------------------------------------------------------------

    (b) The adjusted amounts displayed in paragraph (a) of this section 
apply to civil monetary penalties that are assessed after the date the 
increase takes effect, including those whose associated violation or 
violations pre-dated the increase and occurred on or after November 2, 
2015.

[FR Doc. 2020-00309 Filed 1-13-20; 8:45 am]
 BILLING CODE 7535-01-P