81 FR 40523 - Federal Civil Penalties Adjustment Act Amendments

DEPARTMENT OF VETERANS AFFAIRS

Federal Register Volume 81, Issue 120 (June 22, 2016)

The Federal Civil Monetary Penalties Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, sets forth a formula increasing the maximum statutory amounts for civil monetary penalties and requires federal agencies to give notice of the new maximum amounts by regulation. Accordingly, this document gives notice that the Department of Veterans Affairs (VA) is increasing maximum civil monetary penalties from $10,000 to $21,563 for false loan guaranty certifications and from $5,500 to $10,781 for fraudulent claims or fraudulent statements in any VA program.

[Federal Register Volume 81, Number 120 (Wednesday, June 22, 2016)]
[Rules and Regulations]
[Pages 40523-40525]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-14592]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Parts 36 and 42

RIN 2900-AP78


Federal Civil Penalties Adjustment Act Amendments

AGENCY: Department of Veterans Affairs.

ACTION: Interim final rule.

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SUMMARY: The Federal Civil Monetary Penalties Act of 1990, as amended 
by the Federal Civil Penalties Inflation Adjustment Act Improvements 
Act of 2015, sets forth a formula increasing the maximum statutory 
amounts for civil monetary penalties and requires federal agencies to 
give notice of the new maximum amounts by regulation. Accordingly, this 
document gives notice that the Department of Veterans Affairs (VA) is 
increasing maximum civil monetary penalties from $10,000 to $21,563 for 
false loan guaranty certifications and from $5,500 to $10,781 for 
fraudulent claims or fraudulent statements in any VA program.

DATES: Effective Date: This interim final rule is effective June 22, 
2016.
    Comment Date: Comments must be received on or before August 22, 
2016.

ADDRESSES: Written comments may be submitted through 
www.Regulations.gov; by mail or hand-delivery to Director, Regulation 
Policy and Management (02REG), Department of Veterans Affairs, 810 
Vermont Ave. NW., Room 1068, Washington, DC 20420; or by fax to (202) 
273-9026. Comments should indicate that they are submitted in response 
to ``RIN 2900-AP78, Federal Civil Penalties Adjustment Act 
Amendments.'' Copies of comments received will be available for public 
inspection in the Office of Regulation Policy and Management, Room 
1068, between the hours of 8:00 a.m. and 4:30 p.m., Monday through 
Friday (except holidays). Please call (202) 461-4902 (this is not a 
toll-free number) for an appointment. In addition, during the comment 
period, comments may be viewed online through the Federal Docket 
Management System (FDMS) at www.Regulations.gov.

FOR FURTHER INFORMATION CONTACT: Bill Russo, Director, Office of 
Regulations

[[Page 40524]]

Management, Department of Veterans Affairs, 810 Vermont Avenue NW., 
Washington, DC 20420, (202) 386-6406.

SUPPLEMENTARY INFORMATION: On November 2, 2015, the President signed 
into law the Federal Civil Penalties Inflation Adjustment Act 
Improvements Act of 2015 (the 2015 Act) (Sec. 701 of Pub. L. 114-74), 
which amended the Federal Civil Penalties Inflation Adjustment Act of 
1990 (the Inflation Adjustment Act) (Pub. L. 101-410), to improve the 
effectiveness of civil monetary penalties and to maintain their 
deterrent effect.
    The 2015 Act requires agencies to: (1) Adjust the level of civil 
monetary penalties with an initial ``catch-up'' adjustment through an 
interim final rulemaking (IFR); and (2) make subsequent annual 
adjustments for inflation. Catch-up adjustments are to be based on the 
percent change between the Consumer Price Index for all Urban Consumers 
(CPI-U) for the month of October in the year of the previous 
adjustment, and the October 2015 CPI-U. Annual inflation adjustments 
are to be based on the percent change between the October CPI-U 
preceding the date of the adjustment, and the prior year's October CPI-
U.
    The Executive Office of the President Office of Management and 
Budget (OMB) published guidance on February 24, 2016, advising the 
heads of federal agencies how to implement the 2015 Act. See https://www.whitehouse.gov/sites/default/files/omb/memoranda/2016/m-16-06.pdf. 
In the guidance, OMB provided the applicable multipliers that federal 
agencies should use when calculating their first adjustment. Agencies 
may not increase penalty levels by more than 150 percent of the 
corresponding levels in effect on November 2, 2015. Note: The 150 
percent limitation is on the amount of the increase; therefore, the 
adjusted penalty level(s) are up to 250 percent of the level(s) in 
effect on November 2, 2015.

Civil Monetary Penalties in the Home Loan Guaranty Program

    The Veterans' Benefits Improvement and Health-Care Authorization 
Act of 1986 authorized VA to levy civil monetary penalties against 
lenders that make false certifications in VA's home loan guaranty 
program. Public Law 99-576, sec. 402, Oct. 28, 1986, codified at 38 
U.S.C. 3710(g)(4). Any lender that knowingly and willfully makes a 
false certification related to VA's credit information and loan 
processing standards is liable to the United States Government for a 
civil penalty equal to two times the amount of the Secretary's loss on 
the loan involved or to another appropriate amount, not to exceed 
$10,000, whichever is greater. See 38 CFR 36.4340(k). The applicable 
multiplier for a law enacted in 1986 is 2.15628. Therefore, this rule 
increases the civil penalty found at 38 CFR 36.4340(k)(1)(i) and 
36.4340(k)(3) to the greater of two times the amount of the Secretary's 
loss on the loan involved or to another appropriate amount, not to 
exceed $21,563.

Program Fraud Civil Remedies

    The Program Fraud Civil Remedies Act of 1986 authorized federal 
agencies to establish civil penalties and assessments against persons 
who commit fraud in federal programs. See Public Law 99-509, secs. 
6101-6104, Oct. 21, 1986. For participants in VA's programs, a person 
is subject to a civil penalty (in addition to any other remedy that may 
be prescribed by law) for making a fraudulent claim or statement, as 
described in 38 CFR 42.3. .
    The Program Fraud Civil Remedies Act of 1986 originally established 
the amount of the civil penalty at $5,000. See Public Law 99-509, secs. 
6101-6104, Oct. 21, 1986. VA increased the amount to $5,500 in 1990, in 
accordance with the Inflation Adjustment Act. VA has not changed the 
amount other than when it implemented the adjustment due to the 
Inflation Adjustment Act.
    As stated above, OMB has advised that the applicable multiplier for 
laws enacted in 1986 is 2.15628. Rather than applying the multiplier to 
$5,500, however, VA is applying the multiplier to the amount originally 
established in the Program Fraud Civil Remedies Act of 1986, $5,000. 
The initial adjustment from $5,000 to $5,500 is not to be taken into 
account. This is because, under the 2015 Act, agencies are to exclude 
from the catch-up prior inflationary adjustments implemented under the 
Inflation Adjustment Act. Therefore, as of the effective date of this 
rule, the amounts found at 38 CFR 42.3(a)(1) and 38 CFR 42.3(b)(1) are 
amended from $5,500 to $10,781.

Updating Authority Section, 38 CFR Part 42

    VA is also updating the language to account for the codification of 
the authority cited by 38 U.S.C. Ch. I, Pt. 41, Refs & Annos. 
Currently, the language states that the cited authorities are ``. . . 
to be codified at 31 U.S.C. 3801-3812.'' The authorities are now 
codified at 31 U.S.C. 3801-3812. Consequently, VA is removing ``to be 
codified'' and replacing it with ``codified''.

Administrative Procedure Act

    In accordance with 5 U.S.C. 553(b)(B) and (d)(3), the Secretary of 
Veterans Affairs finds, with good cause, that notice and public 
procedure thereon are unnecessary. This interim final rule merely 
calculates the adjustment percentages, specified by the 2015 Act, for 
codification as a VA regulation.
    This final rule does not impose any additional responsibilities on 
any entity and therefore requires no adjustment to any entity's current 
operations, policies, or practices. Instead, it simply adjusts the 
amount of each civil monetary penalty as prescribed by the 2015 Act.

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess the 
costs and benefits of available regulatory alternatives and, when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, and other advantages; distributive impacts; 
and equity). Executive Order 13563 (Improving Regulation and Regulatory 
Review) emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
Executive Order 12866 (Regulatory Planning and Review) defines a 
``significant regulatory action,'' which requires review by OMB, as 
``any regulatory action that is likely to result in a rule that may: 
(1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities; (2) Create a serious inconsistency or otherwise interfere 
with an action taken or planned by another agency; (3) Materially alter 
the budgetary impact of entitlements, grants, user fees, or loan 
programs or the rights and obligations of recipients thereof; or (4) 
Raise novel legal or policy issues arising out of legal mandates, the 
President's priorities, or the principles set forth in this Executive 
Order.''
    The economic, interagency, budgetary, legal, and policy 
implications of this regulatory action have been examined, and it has 
been determined that it is not a significant regulatory action under 
Executive Order 12866.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that

[[Page 40525]]

agencies prepare an assessment of anticipated costs and benefits before 
issuing any rule that may result in expenditure by State, local, and 
tribal governments, in the aggregate, or by the private sector, of $100 
million or more (adjusted annually for inflation) in any one year. This 
interim final rule will have no such effect on State, local, and tribal 
governments, or on the private sector.

Paperwork Reduction Act

    This interim final rule contains no provisions constituting a 
collection of information under the Paperwork Reduction Act of 1995 (44 
U.S.C. 3501-3521).

Regulatory Flexibility Act

    The Secretary hereby certifies that this final rule will not have a 
significant economic impact on a substantial number of small entities 
as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-
612. Accordingly, no proposed rulemaking was required in connection 
with the adoption of this final rule. Pursuant to 5 U.S.C. 605(b), this 
final rule is exempt from the initial and final regulatory flexibility 
analyses requirements of sections 603 and 604.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance number and title for the 
program affected by this document is 64.114, Veterans Housing--
Guaranteed and Insured Loans.

Signing Authority

    The Secretary of Veterans Affairs, or designee, approved this 
document and authorized the undersigned to sign and submit the document 
to the Office of the Federal Register for publication electronically as 
an official document of the Department of Veterans Affairs. Robert D. 
Snyder, Chief of Staff, Department of Veterans Affairs, approved this 
document on May 31, 2016, for publication.

    Dated: June 16, 2016.
Jeffrey Martin,
Office Program Manager, Office of Regulation Policy & Management, 
Office of the Secretary, Department of Veterans Affairs.

List of Subjects in 38 CFR Part 36

    Condominiums, Housing, Individuals with disabilities, Loan 
programs-housing and community development, Loan programs-veterans, 
Manufactured homes, Mortgage insurance, Reporting and recordkeeping 
requirements, Veterans.

    For the reasons set out in the preamble, VA amends 38 CFR parts 36 
and 42 as follows:

PART 36--LOAN GUARANTY

0
1. The authority citation for part 36 continues to read as follows:

    Authority: 38 U.S.C. 501 and as otherwise noted.


0
2. In Sec.  36.4340, amend paragraphs (k)(1)(i) and (k)(3) by removing 
``$10,000'' and adding, in its place, ``$21,563'' and by revising the 
authority citation at the end of the section to read as follows:


Sec.  36.4340  Underwriting standards, processing procedures, lender 
responsibility, and lender certification.

* * * * *

(Authority: 28 U.S.C. 2461; 38 U.S.C. 3710)

PART 42--STANDARDS IMPLEMENTING THE PROGRAM FRAUD CIVIL REMEDIES 
ACT

0
3. The authority citation for part 42 is revised to read as follows:

    Authority: Pub. L. 99-509, secs. 6101-6104, 100 Stat. 1874, 
codified at 31 U.S.C. 3801-3812.


0
4. In Sec.  42.3, amend paragraphs (a)(1) and (b)(1) by removing 
``$5,500'' and adding, in its place, ``$10,781'', and by revising the 
authority citation at the end of the section, to read as follows:


Sec.  42.3  Basis for Civil Penalties and Assessments.

* * * * *

(Authority: 28 U.S.C. 2461; 31 U.S.C. 3802)


[FR Doc. 2016-14592 Filed 6-21-16; 8:45 am]
 BILLING CODE 8320-01-P