[Federal Register Volume 85, Number 9 (Tuesday, January 14, 2020)]
[Rules and Regulations]
[Pages 2012-2014]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00364]


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BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1083


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 
adjusting for inflation the maximum amount of each civil penalty within 
the Bureau's jurisdiction. These adjustments are 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 (Inflation Adjustment Act). The inflation adjustments mandated by 
the Inflation Adjustment Act serve to maintain the deterrent effect of 
civil penalties and to promote compliance with the law.

DATES: This final rule is effective January 15, 2020.

FOR FURTHER INFORMATION CONTACT: Rachel Ross, Attorney-Advisor; Kristen 
Phinnessee, Senior Counsel, Office of Regulations, at (202) 435-7700. 
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 finalized the IFR on January 
31, 2019.\7\
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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\ 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; 28 
U.S.C. 2461 note.
    \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.
    \7\ 84 FR 517 (Jan. 31, 2019).
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    The Inflation Adjustment Act also requires subsequent adjustments 
to be made annually, not later than January 15, and notwithstanding 
section 553 of the Administrative Procedure Act (APA).\8\ The Bureau 
annually adjusted its civil penalty amounts, as required by the Act, 
through rules issued in January 2017, January 2018, and January 
2019.\9\
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    \8\ Inflation Adjustment Act section 4, codified at 28 U.S.C. 
2461 note. As discussed in guidance issued by the Director of the 
Office of Management and Budget (OMB), the APA generally requires 
notice, an opportunity for comment, and a delay in effective date 
for certain rulemakings, but the Inflation Adjustment Act provides 
that these procedures are not required for agencies to issue 
regulations implementing the annual adjustment. See Memorandum to 
the Exec. Dep'ts & Agencies from Russell T. Vought, Acting Director, 
Office of Mgmt. & Budget at 4 (Dec. 16, 2019), available at https://www.whitehouse.gov/wp-content/uploads/2019/12/M-20-05.pdf.
    \9\ 82 FR 3601 (Jan. 12, 2017); 83 FR 1525 (Jan. 12, 2018); 84 
FR 517 (Jan. 31, 2019).
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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.'' \10\ 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.\11\ The Director of the Office of Management 
and Budget (OMB) is required to issue guidance (OMB Guidance) every 
year by

[[Page 2013]]

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.\12\ 
The adjustments are designed to keep pace with inflation so that civil 
penalties retain their deterrent effect and promote compliance with the 
law.\13\
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    \10\ Inflation Adjustment Act sections 4 and 5, codified at 28 
U.S.C. 2461 note.
    \11\ Inflation Adjustment Act sections 3 and 5, codified at 28 
U.S.C. 2461 note.
    \12\ Inflation Adjustment Act section 5, codified at 28 U.S.C. 
2461 note; see also Memorandum to the Exec. Dep'ts & Agencies from 
Russell T. Vought, Acting Director, Office of Mgmt. & Budget (Dec. 
16, 2019), available at https://www.whitehouse.gov/wp-content/uploads/2019/12/M-20-05.pdf.
    \13\ See Inflation Adjustment Act section 2, codified at 28 
U.S.C. 2461 note.
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    For the 2020 annual adjustment, the multiplier reflecting the 
``cost-of-living adjustment'' is 1.01764.\14\
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    \14\ Memorandum to the Exec. Dep'ts & Agencies from Russell T. 
Vought, Acting Director, Office of Mgmt. & Budget (Dec. 16, 2019), 
available at https://www.whitehouse.gov/wp-content/uploads/2019/12/M-20-05.pdf.
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II. Adjustment

    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\ 
The new penalty amounts that apply to civil penalties assessed after 
January 15, 2020, are as follows:
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    \15\ Inflation Adjustment Act section 4, codified at 28 U.S.C. 
2461 note.

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                                                                      Penalty
                                                                      amounts     OMB ``cost-of-
                  Law                     Penalty  description      established       living        New penalty
                                                                    under 2019     adjustment''       amount
                                                                    final rule      multiplier
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Consumer Financial Protection Act, 12   Tier 1 penalty..........          $5,781         1.01764          $5,883
 U.S.C. 5565(c)(2)(A).
Consumer Financial Protection Act, 12   Tier 2 penalty..........          28,906         1.01764          29,416
 U.S.C. 5565(c)(2)(B).
Consumer Financial Protection Act, 12   Tier 3 penalty..........       1,156,242         1.01764       1,176,638
 U.S.C. 5565(c)(2)(C).
Interstate Land Sales Full Disclosure   Per violation...........           2,014         1.01764           2,050
 Act, 15 U.S.C. 1717a(a)(2).
Interstate Land Sales Full Disclosure   Annual cap..............       2,013,399         1.01764       2,048,915
 Act, 15 U.S.C. 1717a(a)(2).
Real Estate Settlement Procedures Act,  Per failure.............              94         1.01764              96
 12 U.S.C. 2609(d)(1).
Real Estate Settlement Procedures Act,  Annual cap..............         189,427         1.01764         192,768
 12 U.S.C. 2609(d)(1).
Real Estate Settlement Procedures Act,  Per failure, where                   190         1.01764             193
 12 U.S.C. 2609(d)(2)(A).                intentional.
SAFE Act, 12 U.S.C. 5113(d)(2)........  Per violation...........          29,192         1.01764          29,707
Truth in Lending Act, 15 U.S.C.         First violation.........          11,563         1.01764          11,767
 1639e(k)(1).
Truth in Lending Act, 15 U.S.C.         Subsequent violations...          23,125         1.01764          23,533
 1639e(k)(2).
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III. Procedural Requirements

A. Administrative Procedure Act

    Under the Administrative Procedure Act, 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.\16\ The 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,\17\ and OMB Guidance reaffirms 
that agencies need not complete a notice-and-comment process before 
making the annual adjustments for inflation.\18\ For these reasons, the 
Bureau has determined that publishing a notice of proposed rulemaking 
and providing opportunity for public comment are unnecessary. The 
amendments therefore are adopted in final form.
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    \16\ 5 U.S.C. 553(b)(B).
    \17\ Inflation Adjustment Act section 4, codified at 28 U.S.C. 
2461 note.
    \18\ Memorandum to the Exec. Dep'ts & Agencies from Russell T. 
Vought, Acting Director, Office of Mgmt. & Budget (Dec. 16, 2019), 
available at https://www.whitehouse.gov/wp-content/uploads/2019/12/M-20-05.pdf.
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    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.\19\ At 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 15, 2020. The 
amendments to Sec.  [thinsp]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,\20\ and OMB Guidance reaffirms 
that agencies need not provide a delay in effective date for the annual 
adjustments for inflation.\21\
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    \19\ 5 U.S.C. 553(d).
    \20\ Inflation Adjustment Act section 4, codified at 28 U.S.C. 
2461 note.
    \21\ [thinsp]Memorandum to the Exec. Dep'ts & Agencies from 
Russell T. Vought, Acting Director, Office of Mgmt. & Budget (Dec. 
16, 2019), available at https://www.whitehouse.gov/wp-content/uploads/2019/12/M-20-05.pdf.
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B. 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.\22\
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    \22\ 5 U.S.C. 603(a), 604(a).
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C. Paperwork Reduction Act

    The Bureau has determined that this final rule does not impose any 
new or revise any existing recordkeeping, reporting, or disclosure 
requirements on covered entities or members of the public that would be 
collections of information requiring approval by the

[[Page 2014]]

Office of Management and Budget under the Paperwork Reduction Act.\23\
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    \23\ 44 U.S.C. 3501-3521.
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D. Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Bureau 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 in the preamble, 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  Adjustment 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 Civil Penalties 
Inflation Adjustment Act Improvements Act of 2015 (28 U.S.C. 2461 
note), as follows:

------------------------------------------------------------------------
                                                       Adjusted  maximum
              Law                Penalty description     civil penalty
                                                             amount
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12 U.S.C. 5565(c)(2)(A).......  Tier 1 penalty.......             $5,883
12 U.S.C. 5565(c)(2)(B).......  Tier 2 penalty.......             29,416
12 U.S.C. 5565(c)(2)(C).......  Tier 3 penalty.......          1,176,638
15 U.S.C. 1717a(a)(2).........  Per violation........              2,050
15 U.S.C. 1717a(a)(2).........  Annual cap...........          2,048,915
12 U.S.C. 2609(d)(1)..........  Per failure..........                 96
12 U.S.C. 2609(d)(1)..........  Annual cap...........            192,768
12 U.S.C. 2609(d)(2)(A).......  Per failure, where                   193
                                 intentional.
12 U.S.C. 5113(d)(2)..........  Per violation........             29,707
15 U.S.C. 1639e(k)(1).........  First violation......             11,767
15 U.S.C. 1639e(k)(2).........  Subsequent violations             23,533
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    (b) The adjustments in paragraph (a) of this section shall apply to 
civil penalties assessed after January 15, 2020, whose associated 
violations occurred on or after November 2, 2015.

    Dated: January 8, 2020.
Thomas Pahl,
Policy Associate Director, Bureau of Consumer Financial Protection.
[FR Doc. 2020-00364 Filed 1-13-20; 8:45 am]
 BILLING CODE 4810-AM-P