81 FR 78028 - Civil Monetary Penalty Inflation Adjustment

NATIONAL CREDIT UNION ADMINISTRATION

Federal Register Volume 81, Issue 215 (November 7, 2016)

On June 21, 2016, the NCUA Board (Board) published an interim final rule 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. This final rule confirms those amendments while making a clarification regarding the prospective effect of the 2015 legislation.

[Federal Register Volume 81, Number 215 (Monday, November 7, 2016)]
[Rules and Regulations]
[Pages 78028-78029]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-26712]


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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 747

RIN 3133-AE59


Civil Monetary Penalty Inflation Adjustment

AGENCY: National Credit Union Administration (NCUA).

ACTION: Final rule.

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SUMMARY: On June 21, 2016, the NCUA Board (Board) published an interim 
final rule 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. This final rule confirms those amendments while making a 
clarification regarding the prospective effect of the 2015 legislation.

DATES: Effective date: November 7, 2016.

FOR FURTHER INFORMATION CONTACT: Ian Marenna, Senior Trial Attorney, at 
1775 Duke Street, Alexandria, VA 22314, or telephone: (703) 518-6540.

SUPPLEMENTARY INFORMATION: 

I. Background
II. Regulatory Procedures

I. Background

A. June 2016 Interim Final Rule

    The Debt Collection Improvement Act of 1996 \1\ (DCIA) amended the 
Federal Civil Penalties Inflation Adjustment Act of 1990 \2\ (FCPIA 
Act) to require every federal agency to enact regulations that adjust 
each CMP provided by law under its jurisdiction by the rate of 
inflation at least once every four years. In November 2015, Congress 
further amended the CMP inflation requirements in 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 provides for an initial ``catch-up'' adjustment of CMPs in 
2016, followed by annual adjustments. The catch-up adjustment re-sets 
CMP maximum amounts by setting aside the inflation adjustments that 
agencies made in prior years and instead calculating inflation with 
reference to the year when each CMP was enacted or last modified by 
Congress. For 2017 and subsequent years, the Board will be required to 
adjust maximum levels to account for annual inflation.\5\
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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), also 
codified at 28 U.S.C. 2461 note.
    \3\ Public Law 114-74, 129 Stat. 584 (Nov. 2, 2015).
    \4\ 129 Stat. 599.
    \5\ Public Law 114-74, 129 Stat. 584 (Nov. 2, 2015).
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    On June 21, 2016, in compliance with the 2015 amendments, the Board 
published an interim final rule with a request for comments in the 
Federal Register.\6\ In calculating the adjustments, the Board reviewed 
and applied government-wide guidance issued by the Office of Management 
and Budget (OMB).\7\ In accordance with the

[[Page 78029]]

procedures and calculations prescribed by the 2015 amendments and OMB's 
guidance, the Board adjusted the maximum level of each of the CMPs that 
NCUA has authority to assess. NCUA is not, however, required to assess 
at the new maximum levels and retains discretion to assess at lower 
levels, as it has done historically.\8\
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    \6\ 81 FR 40152 (June 21, 2016).
    \7\ Office of Mgmt. & Budget, Exec. Office of the President, OMB 
Memorandum No. M-16-06, Implementation of the Federal Civil 
Penalties Inflation Adjustment Act Improvements Act of 2015 (2016).
    \8\ 81 FR 40152, 40156 (June 21, 2016).
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    The interim final rule became effective on July 21, 2016. The Board 
received no comments on the rule.

B. Prospective Effect of Adjustments

    Although the Board received no comments on the interim final rule, 
it wishes to clarify its intended use of adjusted maximums for 
violations that occurred prior to the adjustment. As described in the 
interim final rule, the 2015 amendments provide that increased maximum 
CMP amounts apply to penalties assessed after the adjustments take 
effect, including those for which the associated violation occurred 
before the adjustment became effective.\9\ The Board adopted this 
provision in the interim final rule consistent with the statute.\10\
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    \9\ Public Law 114-74, 129 Stat. 600 (Nov. 2, 2015), codified at 
28 U.S.C. 2461 note.
    \10\ 81 FR 40152, 40156 (June 21, 2016).
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    The Board has observed that agencies have appeared to vary in their 
adoption of this provision. Some agencies' interim final rules provide 
that the adjusted maximums apply only to violations occurring after 
November 2, 2015, when the 2015 amendments became law.\11\ Other 
agencies' rules, like the NCUA's interim final rule, do not specify 
whether the adjusted maximums would apply to violations that occurred 
before the 2015 amendments were enacted.\12\ To avoid confusion, the 
Board clarifies that it interprets the 2015 amendments as applying only 
prospectively. If NCUA assesses CMPs at the maximum level, it would not 
apply the new maximums to violations that occurred before the statute 
was amended on November 2, 2015. As noted above, nothing in the 2015 
amendments or the final rule requires application of maximum-level 
CMPs. Further, as explained in the interim final rule, NCUA generally 
must consider mitigating factors, including financial resources, in 
assessing a CMP.\13\
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    \11\ See, e.g., Dep't of Justice, Civil Monetary Penalties 
Inflation Adjustment, 81 FR 42491, 42499 June 30, 2106).
    \12\ See, e.g., Dep't of Defense, Civil Monetary Penalty 
Inflation Adjustment, 81 FR 33389, 33390 (May 26, 2016).
    \13\ 81 FR 40152, 40156 (June 21, 2016).
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    Apart from this clarification, the Board adopts the interim final 
rule as final without changes.

II. Regulatory Procedures

    Section III of the Supplementary Information in the June 2016 
interim final rule sets forth the Board's analyses under the 
Administrative Procedure Act, the Regulatory Flexibility Act, the 
Paperwork Reduction Act of 1995, the Small Business Enforcement 
Fairness Act, Executive Order 13132, and the Treasury and General 
Government Appropriations Act. See 81 FR 40156-40157. Because the final 
rule confirms the interim final rule and does not alter the substance 
of the analyses and determinations accompanying the interim final rule, 
the Board continues to rely on those analyses and determinations for 
purposes of this rulemaking. The Board notes that OMB determined that 
the interim final rule is not a ``major rule'' within the meaning of 
the Small Business Enforcement Fairness Act.

List of Subjects in 12 CFR Part 747

    Credit unions, Civil monetary penalties.

    By the National Credit Union Administration Board on October 27, 
2016.
Gerard S. Poliquin,
Secretary of the Board.

    For the reasons stated above, the interim final rule amending 12 
CFR part 747, published at 81 FR 40152 (June 21, 2016), is adopted as a 
final rule without change.

[FR Doc. 2016-26712 Filed 11-4-16; 8:45 am]
 BILLING CODE 7535-01-P