83 FR 2029 - Civil Monetary Penalty Inflation Adjustment

NATIONAL CREDIT UNION ADMINISTRATION

Federal Register Volume 83, Issue 10 (January 16, 2018)

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.

[Federal Register Volume 83, Number 10 (Tuesday, January 16, 2018)]
[Rules and Regulations]
[Pages 2029-2032]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-00488]



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Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
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under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 

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Federal Register / Vol. 83, No. 10 / Tuesday, January 16, 2018 / 
Rules and Regulations

[[Page 2029]]



NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 747

RIN 3133-AE83


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 15, 2018.

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

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

I. Legal Background

A. Statutory Requirements and OMB Guidance

    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.
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    \1\ Public Law 104-134, 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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    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 provided for an 
initial ``catch-up'' adjustment of CMPs in 2016, followed by annual 
adjustments. The catch-up adjustment re-set 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 an October 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\ The 
NCUA issued an interim final rule on January 6, 2017,\8\ followed by a 
final rule issued on June 23, 2017.\9\ This final rule will satisfy the 
agency's requirement for the 2018 annual adjustments.
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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).
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    The statute 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.\10\ 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) \11\ for October of the year immediately 
preceding the year the adjustment is made exceeds the CPI-U for October 
of the prior year.\12\ For example, for the adjustment made in 2018, 
agencies must compare the October 2016 and 2017 CPI-U figures.
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    \10\ Public Law 114-74, Sec. 701(b)(1), 129 Stat. 584, 599 (Nov. 
2, 2015).
    \11\ This index is published by the Department of Labor, Bureau 
of Labor Statistics, and is available at its website: http://www.bls.gov/cpi/.
    \12\ Public Law 114-74, Sec. 701(b)(1)(2)(B), 129 Stat. 584, 600 
(Nov. 2, 2015).
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    The 2015 amendments also provide that agencies may forgo the 
required annual adjustments in certain circumstances. Specifically, in 
a subsection titled ``Other Adjustments Made,'' the statute provides 
that an agency is not required to make an annual adjustment to a CMP if 
it has been increased by a greater amount than the contemplated annual 
adjustment in the preceding 12 months.\13\ When these criteria are met, 
the agency has discretion not to make the adjustments otherwise 
required by the statute.
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    \13\ Public Law 114-74, Sec. 701(b)(1), 129 Stat. 584, 600 (Nov. 
2, 2015).
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    In addition, the 2015 amendments directed the Office of Management 
and Budget (OMB) to issue guidance to agencies on implementing the 
inflation adjustments.\14\ OMB is required to issue its guidance each 
December and did so on December 15, 2017.\15\ This OMB guidance for the 
2018 adjustments includes an inflationary multiplier (1.02041) to apply 
to each current CMP maximum amount to determine the adjusted maximum. 
The guidance also addresses rulemaking procedures and agency reporting 
and oversight requirements for CMPs.\16\
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    \14\ Public Law 114-74, Sec. 701(b)(4), 129 Stat. 584, 601 (Nov. 
2, 2015).
    \15\ Id.; OMB, Implementation of Penalty Inflation Adjustments 
for 2018, Pursuant to the Federal Civil Penalties Inflation 
Adjustment Act Improvements Act of 2015, M-18-03 (Dec. 15, 2017), 
available at https://www.whitehouse.gov/wp-content/uploads/2017/11/M-18-03.pdf (noting that the applicable 2017 CMP-adjustment 
multiplier is 1.02041).
    \16\ Id.
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    The next section sets forth the Board's calculation of the 
adjustments for 2018, in accordance with the foregoing requirements.

B. Application to the 2018 Adjustments

    This section applies the statutory requirements and OMB's guidance 
to the NCUA's CMPs.
    As explained above, the 2015 amendments require the NCUA to adjust

[[Page 2030]]

the maximum amounts of its CMPs by the percentage by which the October 
2017 CPI-U (246.663) exceeds the October 2016 CPI-U (241.729). The 
percentage change is 2.041. This percentage increase can be expressed 
as an inflation multiplier (the quotient of the October 2017 figure 
divided by the October 2016 figure). Accordingly, each CMP maximum 
amount should be multiplied by 1.02041 to determine the adjusted 
maximum amount. OMB's guidance identifies the same multiplier.
    The Board has considered the exception in the 2015 amendments for 
adjustments made in the preceding 12 months, discussed above, and has 
determined that it does not apply. All of the adjustments calculated 
below are equal to or greater than the adjustments made in January 2017 
for each CMP. Accordingly, the exception for greater adjustments in the 
preceding 12 months does not apply. Thus, the Board lacks discretion to 
decline to make the adjustments calculated below.
    The table below presents the adjustment calculations. The current 
maximums are found at 12 CFR 747.1001, as adjusted in January 2017. 
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 12 CFR 747.1001 
under this final rule. The adjusted amounts will be effective January 
15, 2018, and can be applied to violations that occurred on or after 
November 2, 2015, the date the 2015 amendments were enacted. The table 
to be published in the CFR adds a separate row for tier 3 penalties 
against insured credit unions under 12 U.S.C. 1786(k). This is a format 
change to conform the table in the CFR with the table below, which 
lists the tier 3 penalties against credit unions and natural persons 
separately, following the structure of the statute.
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    \17\ The table uses condensed descriptions of CMP tiers. Refer 
to the U.S. Code citations for complete descriptions.

                                  Table--Calculation of Maximum CMP Adjustments
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                                                                                               Adjusted maximum
                                                                                                 ($) (current
                                                            Current maximum                        maximum x
            Citation               Description/tier 17            ($)           Multiplier        multiplier,
                                                                                              rounded to nearest
                                                                                                    dollar)
----------------------------------------------------------------------------------------------------------------
12 U.S.C. 1782(a)(3)...........  Inadvertent failure to   3,849.............         1.02041  3,928.
                                  submit a report or the
                                  inadvertent submission
                                  of a false or
                                  misleading report.
12 U.S.C. 1782(a)(3)...........  Non-inadvertent failure  38,492............         1.02041  39,278.
                                  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                  1.02041  Lesser of
                                  report or the            1,924,589 or 1%                     1,963,870 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           3,519.............         1.02041  3,591.
                                  inadvertent failure to
                                  submit certified
                                  statement of insured
                                  shares and charges due
                                  to NCUSIF, or
                                  inadvertent submission
                                  of false or misleading
                                  statement.
12 U.S.C. 1782(d)(2)(B)........  Tier 2 CMP for non-      35,186............         1.02041  35,904.
                                  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                  1.02041  Lesser of
                                  to submit a certified    1,759,309 or 1%                     1,795,216 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      120...............         1.02041  122.
                                  insurance logo
                                  requirements.
12 U.S.C. 1785(e)(3)...........  Non-compliance with      279...............         1.02041  285.
                                  NCUA security
                                  requirements.
12 U.S.C. 1786(k)(2)(A)........  Tier 1 CMP for           9,623.............         1.02041  9,819.
                                  violations of law,
                                  regulation, and other
                                  orders or agreements.
12 U.S.C. 1786(k)(2)(B)........  Tier 2 CMP for           48,114............         1.02041  49,096.
                                  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           1,924,589.........         1.02041  1,963,870.
                                  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                  1.02041  Lesser of
                                                           1,924,589 or 1%                     1,963,870 or 1%
                                                           of total CU                         of total CU
                                                           assets.                             assets.
12 U.S.C. 1786(w)(5)(A)(ii)....  Non-compliance with      316,566...........         1.02041  323,027.
                                  senior examiner post-
                                  employment
                                  restrictions.
15 U.S.C. 1639e(k).............  Non-compliance with      11,053............         1.02041  11,279.
                                  appraisal independence
                                  standards (first
                                  violation).
15 U.S.C. 1639e(k).............  Subsequent violations    22,105............         1.02041  22,556.
                                  of the same.
42 U.S.C. 4012a(f)(5)..........  Non-compliance with      2,090.............         1.02041  2,133.
                                  flood insurance
                                  requirements.
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[[Page 2031]]

III. Regulatory Procedures

A. Final Rule Under the APA

    In the 2015 amendments to the FCPIA Act, Congress provided that 
agencies shall make the required inflation adjustments in 2017 and 
subsequent years notwithstanding 5 U.S.C. 553,\18\ which 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.\19\ 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.\20\ 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. Accordingly, this final 
rule is issued without prior notice and comment and will become 
effective immediately upon publication.
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    \18\ Public Law 114-74, Sec. 701(b)(1), 129 Stat. 584, 599 (Nov. 
2, 2015).
    \19\ See 5 U.S.C. 559; Asiana Airlines v. Fed. Aviation Admin., 
134 F.3d 393, 396-99 (D.C. Cir. 1998).
    \20\ 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, 1133-34 (D.C. 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.\21\ For purposes of 
this analysis, the Board considers small credit unions to be those 
having under $100 million in assets.\22\ This final rule will not have 
a significant economic impact on a substantial number of small credit 
unions because it only affects 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.\23\ 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 small entities.
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    \21\ 5 U.S.C. 603(a).
    \22\ Interpretive Ruling and Policy Statement 15-1, 80 FR 57512 
(Sept. 24, 2015).
    \23\ 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.\24\ 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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    \24\ 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.\25\
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    \25\ 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 \26\ 
(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.\27\ The Board has 
submitted this final rule to OMB for it to determine whether it is a 
``major rule'' within the meaning of the relevant sections of SBREFA.
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    \26\ Public Law 104-121, 110 Stat. 857 (Mar. 29, 1996).
    \27\ 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 9, 
2018.
Gerard S. 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.

Subpart K--Inflation Adjustment of Civil Monetary Penalties

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 within its jurisdiction by the rate of inflation. The following 
chart displays those adjusted amounts, as calculated pursuant to the 
statute:

[[Page 2032]]



------------------------------------------------------------------------
     U.S. Code citation          CMP description     New maximum amount
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(1) 12 U.S.C. 1782(a)(3)....  Inadvertent failure   $3,928.
                               to submit a report
                               or the inadvertent
                               submission of a
                               false or misleading
                               report.
(2) 12 U.S.C. 1782(a)(3)....  Non-inadvertent       $39,278.
                               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   $1,963,870 or 1
                               report or the         percent of the
                               submission of a       total assets of the
                               false or misleading   credit union,
                               report done           whichever is less.
                               knowingly or with
                               reckless disregard.
(4) 12 U.S.C. 1782(d)(2)(A).  Tier 1 CMP for        $3,591.
                               inadvertent failure
                               to submit certified
                               statement of
                               insured shares and
                               charges due to
                               NCUSIF, or
                               inadvertent
                               submission of false
                               or misleading
                               statement.
(5) 12 U.S.C. 1782(d)(2)(B).  Tier 2 CMP for non-   $35,904.
                               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        $1,795,216 or 1
                               failure to submit a   percent of the
                               certified statement   total assets of the
                               or the submission     credit union,
                               of a false or         whichever is less.
                               misleading
                               statement done
                               knowingly or with
                               reckless disregard.
(7) 12 U.S.C. 1785(a)(3)....  Non-compliance with   $122.
                               insurance logo
                               requirements.
(8) 12 U.S.C. 1785(e) (3)...  Non-compliance with   $285.
                               NCUA security
                               requirements.
(9) 12 U.S.C. 1786(k)(2)(A).  Tier 1 CMP for        $9,819.
                               violations of law,
                               regulation, and
                               other orders or
                               agreements.
(10) 12 U.S.C. 1786(k)(2)(A)  Tier 2 CMP for        $49,096.
                               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        $1,963,870.
                               knowingly
                               committing the
                               violations under
                               Tier 1 or 2
                               (natural person).
(12) 12 U.S.C. 1786(k)(2)(A)  Tier 3 CMP for        $1,963,870 or 1
                               knowingly             percent of the
                               committing the        total assets of the
                               violations under      credit union,
                               Tier 1 or 2           whichever is less.
                               (insured credit
                               union).
(13) 12 U.S.C.                Non-compliance with   $323,027.
 1786(w)(5)(ii).               senior examiner
                               post-employment
                               restrictions.
(14) 15 U.S.C. 1639e(k).....  Non-compliance with   First violation:
                               appraisal             $11,279.
                               independence         Subsequent
                               requirements.         violations:
                                                     $22,556.
(15) 42 U.S.C. 4012a(f)(5)..  Non-compliance with   $2,133.
                               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 after November 2, 2015.

[FR Doc. 2018-00488 Filed 1-12-18; 8:45 am]
 BILLING CODE 7535-01-P