81 FR 8639 - Rules of Practice and Procedure; Civil Money Penalty Inflation Adjustment

FEDERAL HOUSING FINANCE AGENCY

Federal Register Volume 81, Issue 34 (February 22, 2016)

Page Range8639-8642
FR Document2016-03631

The Federal Housing Finance Agency (FHFA) is issuing this final rule amending its rules of practice and procedure to adjust each civil money penalty within its jurisdiction to account for inflation, pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 1996.

Federal Register, Volume 81 Issue 34 (Monday, February 22, 2016)
[Federal Register Volume 81, Number 34 (Monday, February 22, 2016)]
[Rules and Regulations]
[Pages 8639-8642]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-03631]


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FEDERAL HOUSING FINANCE AGENCY

12 CFR Parts 1209 and 1250

RIN 2590-AA77


Rules of Practice and Procedure; Civil Money Penalty Inflation 
Adjustment

AGENCY: Federal Housing Finance Agency.

ACTION: Final rule.

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SUMMARY: The Federal Housing Finance Agency (FHFA) is issuing this 
final rule amending its rules of practice and procedure to adjust each 
civil money penalty within its jurisdiction to account for inflation, 
pursuant to the Federal Civil Penalties Inflation Adjustment Act of 
1990, as amended by the Debt Collection Improvement Act of 1996.

DATES: Effective February 22, 2016.

FOR FURTHER INFORMATION CONTACT: Stephen E. Hart, Deputy General 
Counsel, at (202) 649-3053, [email protected], or Frank R. Wright, 
Senior Counsel, at (202) 649-3087, [email protected] (not toll-free 
numbers); Federal Housing Finance Agency, 400 7th Street SW., 
Washington, DC 20219. The telephone number for the Telecommunications 
Device for the Hearing Impaired is: (800) 877-8339 (TDD only).

SUPPLEMENTARY INFORMATION:

I. Background

    The FHFA is an independent agency of the Federal government, and 
the financial safety and soundness regulator of the Federal National 
Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage 
Corporation (Freddie Mac) (collectively, the Enterprises), as well as 
the Federal Home Loan Banks (collectively, the Banks) and the Office of 
Finance under authority granted by the Federal Housing Enterprises 
Financial Safety and Soundness Act of 1992 (Safety and Soundness 
Act).\1\ FHFA oversees the Enterprises and Banks (collectively, the 
regulated entities) to ensure that they operate in a safe and sound 
manner and

[[Page 8640]]

maintain liquidity in the housing finance market in accordance with 
applicable laws, rules and regulations. To that end, FHFA is vested 
with broad supervisory discretion and specific civil administrative 
enforcement powers, similar to such authority granted by Congress to 
the Federal bank regulatory agencies.\2\ In particular, section 1376 of 
the Act (12 U.S.C. 4636) empowers FHFA to impose civil money penalties 
under specific conditions. FHFA's Rules of Practice and Procedure (12 
CFR part 1209) govern cease and desist proceedings, civil money penalty 
assessment proceedings, and other administrative adjudications.\3\ 
FHFA's Flood Insurance regulation (12 CFR part 1250) governs flood 
insurance responsibilities as they pertain to the Enterprises.\4\
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    \1\ See Federal Housing Enterprises Financial Safety and 
Soundness Act of 1992, Public Law 102-550, 106 Stat. 4078 (Oct. 28, 
1992) as amended by the Federal Housing Finance Regulatory Reform 
Act of 2008, Public Law 110-289, 122 Stat. 2654, sections 1101 et 
seq. (July 30, 2008).
    \2\ See Safety and Soundness Act, 12 U.S.C. 4513 and 4631-4641.
    \3\ See 12 CFR part 1209.
    \4\ See 12 CFR part 1250.
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The Inflation Adjustment Act

    The Federal Civil Penalties Inflation Adjustment Act of 1990, as 
amended by the Debt Collection Improvement Act of 1996 (the Inflation 
Adjustment Act) requires FHFA, as well as other Federal agencies with 
the authority to issue civil money penalties (CMPs), to adjust by 
regulation the maximum amount of each CMP authorized by law that the 
agency has jurisdiction to administer.\5\ The Inflation Adjustment Act 
required agencies to make an initial adjustment of their CMPs upon the 
statute's enactment, and further requires agencies to make additional 
adjustments on an ongoing basis, every four years following the initial 
adjustment. The purpose of these periodic adjustments is to maintain 
the deterrent effect of CMPs and promote compliance with the law. 
Subpart E of FHFA's Rules of Practice and Procedure sets forth the 
Civil Money Penalty Inflation Adjustment amounts and prescribes their 
applicability. See 12 CFR 1209.81.\6\
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    \5\ See 28 U.S.C. 2461 note.
    \6\ Periodic inflation adjustments of the FHFA Flood Insurance 
regulation are set forth in 12 CFR 1250.3.
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    Under the Inflation Adjustment Act, the inflation adjustment for 
each applicable CMP is determined by increasing the maximum CMP amount 
per violation by a cost-of-living adjustment. As described in detail 
below, the Inflation Adjustment Act provides that this cost-of-living 
adjustment reflect the percentage increase in the Consumer Price Index 
since the CMPs were last adjusted or established, and rounded in 
accordance with rules provided in the statute.\7\
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    \7\ The Inflation Adjustment Act specifically identifies the 
Consumer Price Index for All Urban Consumers published by the United 
States Department of Labor (CPI-U).
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II. Differences

    When promulgating any regulation that may have future affect 
relating to the Banks, the Director is required by section 1201 of HERA 
to consider the differences between the Banks and the Enterprises with 
respect to the Banks' cooperative ownership structure; mission of 
providing liquidity to members; affordable housing and community 
development mission; capital structure; and joint and several 
liability. See section 1201 Public Law 110-289, 122 Stat. 2782-83 
(amending 12 U.S.C. 4513(f)[sic]).\8\ The Director considered the 
differences between the Banks and the Enterprises, as they relate to 
the above factors, and determined that the rule is appropriate. In sum, 
the five differences identified in section 1201 of HERA do not require 
a different enforcement regulation for the Banks than for the 
Enterprises. Therefore, the comparative analysis under section 1201 of 
HERA undertaken for the proposed rule required no changes.
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    \8\ So in original; no paragraphs (d) and (e) were enacted. See 
12 U.S.C.A. 4513 n 1.
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III. Description of the Rule

    This final rule adjusts the maximum penalty amount within each of 
the three tiers specified in 12 U.S.C. 4636 by amending the table 
contained in 12 CFR 1209.80 to reflect the new adjusted maximum penalty 
amount that FHFA may impose upon a regulated entity or any entity-
affiliated party within each tier. The increases in maximum penalty 
amounts contained in this final rule may not necessarily affect the 
amount of any CMP that FHFA may seek for a particular violation; FHFA 
would calculate each CMP on a case-by-case basis in light of a variety 
of factors.\9\ This final rule also adjusts the maximum penalty amounts 
for violations under the FHFA Flood Insurance regulation by amending 
the text of 12 CFR 1250.3 to reflect the new adjusted maximum penalty 
amount that FHFA may impose for violations under that regulation.
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    \9\ See, e.g., 12 CFR 1209.7(c); FHFA Enforcement Policy, AB 
2013-03 (May 31, 2013).
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    The Inflation Adjustment Act directs federal agencies to calculate 
each CMP adjustment as the percentage by which the CPI-U for June of 
the calendar year preceding the adjustment exceeds the CPI-U for June 
of the calendar year in which the amount of each CMP was last set or 
adjusted. The maximum CMP amounts for FHFA penalties under 12 U.S.C. 
4636 were set in 2008.\10\ Since FHFA is making this round of 
adjustments in calendar year 2016, and the maximum CMP amounts were 
last set in calendar year 2008, the inflation adjustment amount for 
each maximum CMP amount was calculated by comparing the CPI-U for June 
2008 (218.8) with the CPI-U for June 2015 (238.6), resulting in an 
inflation factor of 1.0905. For each maximum CMP amount, the product of 
this inflation adjustment and the previous maximum penalty amount was 
then rounded in accordance with the specific requirements of the 
Inflation Adjustment Act, and was then summed with the previous maximum 
penalty amount to determine the new adjusted maximum penalty 
amount.\11\ The table below sets out these items accordingly.
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    \10\ See 12 U.S.C. 4636.
    \11\ The statute's rounding rules require that each increase be 
rounded to the nearest multiple as follows: $10 in the case of 
penalties less than or equal to $100; $100 in the case of penalties 
greater than $100 but less than or equal to $1,000; $1,000 in the 
case of penalties greater than $1,000 but less than or equal to 
$10,000; $5,000 in the case of penalties greater than $10,000 but 
less than or equal to $100,000; $10,000 in the case of penalties 
greater than $100,000 but less than or equal to $200,000; and 
$25,000 in the case of penalties greater than $200,000.

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                                                     Previous                                      New adjusted
                                                      maximum        Inflation        Rounded         maximum
      U.S. Code citation           Description        penalty        increase        inflation        penalty
                                                      amount                         increase         amount
----------------------------------------------------------------------------------------------------------------
12 U.S.C. 4636(b)(1)..........  First Tier......          10,000             905           1,000          11,000
12 U.S.C. 4636(b)(2)..........  Second Tier.....          50,000           4,525           5,000          55,000
12 U.S.C. 4636(b)(4)..........  Third Tier             2,000,000         181,000         175,000       2,175,000
                                 (Entity-
                                 affiliated
                                 party and
                                 Regulated
                                 entity).
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[[Page 8641]]

    The CMP for FHFA penalties under the Flood Insurance regulation 
were set in 2009.\12\ Since FHFA is making this round of adjustments in 
calendar year 2016, and the maximum CMP amounts were last set in 
calendar year 2009, the inflation adjustment amount for each maximum 
CMP amount was calculated by comparing the CPI-U for June 2009 (215.7) 
with the CPI-U for June 2015 (238.6), resulting in an inflation factor 
of 1.1061. The table below sets out these items accordingly.
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    \12\ See 74 FR 2349 (Jan. 15, 2009).

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                                                     Previous                                      New adjusted
                                                      maximum        Inflation        Rounded         maximum
      U.S. Code citation           Description        penalty        increase        inflation        penalty
                                                      amount                         increase         amount
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42 U.S.C. 4012a(f)(5).........  Maximum penalty              485           51.55             100             585
                                 per violation.
42 U.S.C. 4012a(f)(5).........  Maximum total            140,000          14,854          10,000         150,000
                                 penalties
                                 assessed
                                 against an
                                 Enterprise in a
                                 calendar year.
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IV. Regulatory Impact

Administrative Procedure Act

    FHFA finds good cause that notice and an opportunity to comment on 
this document are unnecessary under section 553(b) of the 
Administrative Procedure Act (APA), 5 U.S.C. 553(b). This rulemaking 
conforms with and is consistent with the statutory directive set forth 
in the Inflation Adjustment Act. As a result, there are no issues of 
policy discretion about which to seek public comment. Accordingly, FHFA 
is issuing the amendments as a final rule.
    In addition, FHFA finds good cause to make this rule effective upon 
publication of this document in the Federal Register under the APA. See 
5 U.S.C. 553(d). 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 CMP tier as dictated by the Inflation 
Adjustment Act.

Regulatory Flexibility Act

    Pursuant to the Regulatory Flexibility Act (RFA),\13\ an agency 
must prepare a regulatory flexibility analysis for all proposed and 
final rules that describes the impact of the rule on small entities, 
unless the head of an agency certifies that the rule will not have ``a 
significant economic impact on a substantial number of small 
entities.'' However, the RFA applies only to rules for which an agency 
publishes a general notice of proposed rulemaking pursuant to the 
APA.\14\ As discussed above, FHFA has determined for good cause that 
the APA does not require notice and public comment on this rule and, 
therefore, FHFA is not publishing a general notice of proposed 
rulemaking. Thus, the RFA does not apply to this final rule.
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    \13\ 5 U.S.C. 603.
    \14\ 5 U.S.C. 603(a), 604(a).
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Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. 3501 et seq.) requires that 
regulations involving the collection of information receive clearance 
from the Office of Management and Budget (OMB). This rule contains no 
such collection of information requiring OMB approval under the 
Paperwork Reduction Act. Consequently, no information has been 
submitted to OMB for review.

List of Subjects

12 CFR Part 1209

    Administrative practice and procedure, Penalties.

12 CFR Part 1250

    Flood insurance, Government-sponsored enterprises, Penalties, 
Reporting and recordkeeping requirements.

    Accordingly, for the reasons stated in the SUPPLEMENTARY 
INFORMATION and under the authority of 12 U.S.C. 4513b and 12 U.S.C. 
4526, the Federal Housing Finance Agency hereby amends subchapters A 
and C of chapter XII of Title 12 of the Code of Federal Regulations as 
follows:

SUBCHAPTER A--ORGANIZATION AND OPERATIONS

PART 1209--RULES OF PRACTICE AND PROCEDURE

0
1. The authority citation for part 1209 continues to read as follows:

    Authority:  5 U.S.C. 554, 556, 557, and 701 et seq.; 12 U.S.C. 
1430c(d); 12 U.S.C. 4501, 4502, 4503, 4511, 4513, 4513b, 4517, 4526, 
4566(c)(1) and (c)(7), 4581-4588, 4631-4641; and 28 U.S.C. 2461 
note.


0
2. Revise Sec.  1209.80 to read as follows:


Sec.  1209.80  Inflation adjustments.

    The maximum amount of each civil money penalty within FHFA's 
jurisdiction, as set by the Safety and Soundness Act and thereafter 
adjusted in accordance with the Inflation Adjustment Act, is as 
follows:

------------------------------------------------------------------------
                                                           New adjusted
                                                              maximum
       U.S. Code citation              Description            penalty
                                                              amount
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12 U.S.C. 4636(b)(1)...........  First Tier.............         $11,000
12 U.S.C. 4636(b)(2)...........  Second Tier............          55,000
12 U.S.C. 4636(b)(4)...........  Third Tier (Entity-           2,175,000
                                  Affiliated party).
12 U.S.C. 4636(b)(4)...........  Third Tier (Regulated         2,175,000
                                  entity).
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0
3. Revise Sec.  1209.81 to read as follows:


Sec.  1209.81  Applicability.

    The inflation adjustments set out in Sec.  1209.80 shall apply to 
civil money penalties assessed in accordance with the provisions of the 
Safety and Soundness Act, 12 U.S.C. 4636, and subparts B and C of this 
part, for

[[Page 8642]]

violations occurring after February 22, 2016.

SUBCHAPTER C--ENTERPRISES

PART 1250--FLOOD INSURANCE

0
4. The authority citation for part 1250 continues to read as follows:

    Authority:  12 U.S.C. 4521(a)(4) and 4526; 28 U.S.C. 2461 note; 
42 U.S.C. 4001 note; 42 U.S.C. 4012a(f)(3), (4), (5), (8), (9), and 
(10).


0
5. Revise Sec.  1250.3(c) to read as follows:


Sec.  1250.3  Civil money penalties.

* * * * *
    (c) Amount. The maximum civil money penalty amount is $485 for each 
violation that occurs before February 22, 2016, with total penalties 
not to exceed $140,000. For violations that occur on or after February 
22, 2016, the civil money penalty under this section may not exceed 
$585 for each violation, with total penalties assessed under this 
section against an Enterprise during any calendar year not to exceed 
$150,000.
* * * * *

    Dated: February 15, 2016.
Melvin L. Watt,
Director, Federal Housing Finance Agency.
[FR Doc. 2016-03631 Filed 2-19-16; 8:45 am]
 BILLING CODE 8070-01-P


Current View
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionFinal rule.
DatesEffective February 22, 2016.
ContactStephen E. Hart, Deputy General Counsel, at (202) 649-3053, [email protected], or Frank R. Wright, Senior Counsel, at (202) 649-3087, [email protected] (not toll-free numbers); Federal Housing Finance Agency, 400 7th Street SW., Washington, DC 20219. The telephone number for the Telecommunications Device for the Hearing Impaired is: (800) 877-8339 (TDD only).
FR Citation81 FR 8639 
RIN Number2590-AA77
CFR Citation12 CFR 1209
12 CFR 1250
CFR AssociatedAdministrative Practice and Procedure; Penalties; Flood Insurance; Government-Sponsored Enterprises and Reporting and Recordkeeping Requirements

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