[Federal Register Volume 85, Number 9 (Tuesday, January 14, 2020)]
[Rules and Regulations]
[Pages 2009-2012]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00309]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 747
RIN 3133-AF09
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 14, 2020.
FOR FURTHER INFORMATION CONTACT: Gira Bose, Staff Attorney, at 1775
Duke Street, Alexandria, VA 22314, or telephone: (703) 518-6562.
SUPPLEMENTARY INFORMATION:
I. Legal Background
II. Calculation of Adjustments
III. Regulatory Procedures
I. Legal Background
A. Statutory Requirements
Every Federal agency, including the NCUA, is required by law to
adjust its maximum CMP amounts each year to account for inflation.
Prior to this being an annual requirement, agencies were required to
adjust their CMPs at least once every four years.
The four-year requirement stemmed from the Debt Collection
Improvement Act of 1996,\1\ which amended the Federal Civil Penalties
Inflation Adjustment Act of 1990.\2\
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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), codified
at 28 U.S.C. 2461 note.
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The annual requirement stems from 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 reset 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 a November 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\ For
2017, the NCUA issued an interim final rule on January 6, 2017,\8\
followed by a final rule issued on June 23, 2017.\9\ For 2018 and 2019,
the NCUA issued a final rule in each year to satisfy the agency's
requirement for the 2018 and 2019 annual adjustments.\10\ This final
rule satisfies the agency's requirement for the 2020 annual adjustment.
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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).
\10\ 83 FR 2029 (Jan. 16, 2018); 84 FR 2055 (Feb. 6, 2019).
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The law 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.\11\ 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) \12\ for October of the year immediately preceding the year the
adjustment is made exceeds the CPI-U for October of the prior year.\13\
For example, for the adjustment to be made in 2020, an agency must
compare the October 2018 and 2019 CPI-U figures.
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\11\ Public Law 114-74, Sec. 701(b)(1), 129 Stat. 584, 599 (Nov.
2, 2015).
\12\ This index is published by the Department of Labor, Bureau
of Labor Statistics, and is available at its website: http://www.bls.gov/cpi/.
\13\ Public Law 114-74, Sec. 701(b)(2)(B), 129 Stat. 584, 600
(Nov. 2, 2015).
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An annual adjustment under the 2015 amendments is not required if a
CMP has been amended in the preceding 12 months pursuant to other
authority. Specifically, the statute provides that an agency is not
required to make an annual adjustment to a CMP if in the preceding 12
months it has been increased by an amount greater than the annual
adjustment required by the 2015 amendments.\14\ The NCUA did not make
any adjustments in the preceding 12 months pursuant to other authority,
therefore, this rulemaking adjusts the NCUA's CMPs pursuant to the 2015
amendments.
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\14\ Public Law 114-74, Sec. 701(b)(1), 129 Stat. 584, 600 (Nov.
2, 2015).
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B. Application to the 2020 Adjustments and Office of Management and
Budget Guidance
This section applies the statutory requirements and the Office of
Management and Budget's (OMB) guidance to the NCUA's CMPs, and sets
forth the Board's calculation of the 2020 adjustments.
The 2015 amendments directed OMB to issue guidance to agencies on
implementing the inflation adjustments.\15\ OMB is required to issue
its guidance each December and, with respect to the 2020 annual
adjustment, did so on December 16, 2019.\16\ For 2020, Federal agencies
must adjust the maximum amounts of their CMPs by the percentage by
which the October 2019 CPI-U (257.346) exceeds the October 2018 CPI-U
(252.885). The resulting increase can be expressed as an inflation
multiplier (1.01764) to apply to each current CMP maximum amount to
determine the adjusted maximum. The OMB guidance also addresses
rulemaking procedures and agency reporting and oversight requirements
for CMPs.\17\
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\15\ Public Law 114-74, Sec. 701(b)(4), 129 Stat. 584, 601 (Nov.
2, 2015).
\16\ See OMB Memorandum M-20-05, Implementation of Penalty
Inflation Adjustments for 2020, pursuant to the 2015 amendments
(Dec. 16, 2019).
\17\ Id.
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The table below presents the adjustment calculations. The current
maximums are found at 12 CFR 747.1001, as adjusted by the final rule
that the Board approved in January 2019. 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
[[Page 2010]]
12 CFR 747.1001 under this final rule. The adjusted amounts will be
effective upon publication in the Federal Register, and can be applied
to violations that occurred on or after November 2, 2015, the date the
2015 amendments were enacted.\18\
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\18\ Public Law 114-74, 129 Stat. 600 (Nov. 2, 2015).
Table: Calculation of Maximum CMP Adjustments
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Adjusted maximum
($) (Current
Description and tier Current maximum maximum x
Citation \19\ ($) Multiplier multiplier,
rounded to nearest
dollar)
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12 U.S.C. 1782(a)(3)........... Inadvertent failure to 4,027............. 1.01764 4,098.
submit a report or the
inadvertent submission
of a false or
misleading report.
12 U.S.C. 1782(a)(3)........... Non-inadvertent failure 40,269............ 1.01764 40,979.
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 1.01764 Lesser of
report or the 2,013,399 or 1% 2,048,915 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 3,682............. 1.01764 3,747.
inadvertent failure to
submit certified
statement of insured
shares and charges due
to the National Credit
Union Share Insurance
Fund (NCUSIF), or
inadvertent submission
of false or misleading
statement.
12 U.S.C. 1782(d)(2)(B)........ Tier 2 CMP for non- 36,809............ 1.01764 37,458.
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 1.01764 Lesser of
to submit a certified 1,840,491 or 1% 1,872,957 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 125............... 1.01764 127.
insurance logo
requirements.
12 U.S.C. 1785(e)(3)........... Non-compliance with 292............... 1.01764 297.
NCUA security
requirements.
12 U.S.C. 1786(k)(2)(A)........ Tier 1 CMP for 10,067............ 1.01764 10,245.
violations of law,
regulation, and other
orders or agreements.
12 U.S.C. 1786(k)(2)(B)........ Tier 2 CMP for 50,334............ 1.01764 51,222.
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 2,013,399......... 1.01764 2,048,915.
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 1.01764 Lesser of
2,013,399 or 1% 2,048,915 or 1%
of total CU of total CU
assets. assets.
12 U.S.C. 1786(w)(5)(A)(ii).... Non-compliance with 331,174........... 1.01764 337,016.
senior examiner post-
employment
restrictions.
15 U.S.C. 1639e(k)............. Non-compliance with 11,563............ 1.01764 11,767.
appraisal independence
standards (first
violation).
15 U.S.C. 1639e(k)............. Subsequent violations 23,125............ 1.01764 23,533.
of the same.
42 U.S.C. 4012a(f)(5).......... Non-compliance with 2,187............. 1.01764 2,226.
flood insurance
requirements.
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III. Regulatory Procedures
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\19\ The table uses condensed descriptions of CMP tiers. Refer
to the U.S. Code citations for complete descriptions.
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A. Final Rule Under the APA
In the 2015 amendments, Congress provided that agencies shall make
the required inflation adjustments in 2017 and subsequent years
notwithstanding 5 U.S.C. 553,\20\ which generally 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.\21\ 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.\22\ 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.
[[Page 2011]]
Accordingly, this final rule is issued without prior notice and comment
and will become effective immediately upon publication.
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\20\ Public Law 114-74, Sec. 701(b)(1), 129 Stat. 584, 599 (Nov.
2, 2015).
\21\ See 5 U.S.C. 559; Asiana Airlines v. Fed. Aviation Admin.,
134 F.3d 393, 396-99 (DC Cir. 1998).
\22\ 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 (DC 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.\23\ For purposes of
this analysis, the Board considers small credit unions to be those
having under $100 million in assets.\24\ This final rule will not have
a significant economic impact on a substantial number of small credit
unions because it affects only 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.\25\ 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 a substantial number of small
entities.
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\23\ 5 U.S.C. 603(a).
\24\ Interpretive Ruling and Policy Statement 15-1, 80 FR 57512
(Sept. 24, 2015).
\25\ 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.\26\ 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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\26\ 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.\27\
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\27\ 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 \28\
(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.\29\ The NCUA does
not believe this rule is a ``major rule'' within the meaning of the
relevant sections of SBREFA. As required by SBREFA, the NCUA submitted
this final rule to OMB for it to determine if the final rule is a
``major rule'' for purposes of SBREFA. OMB determined the final rule
was not a major rule. The NCUA also will file appropriate reports with
Congress and the Government Accountability Office so this rule may be
reviewed.
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\28\ Public Law 104-121, 110 Stat. 857 (Mar. 29, 1996).
\29\ 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 7,
2020.
Gerard 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.
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 (CMP) within its jurisdiction by the rate of inflation. The
following chart displays those adjusted amounts, as calculated pursuant
to the statute:
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New maximum
U.S. code citation CMP description amount
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(1) 12 U.S.C. 1782(a)(3)...... Inadvertent failure to $4,098.
submit a report or
the inadvertent
submission of a false
or misleading report.
(2) 12 U.S.C. 1782(a)(3)...... Non-inadvertent $40,979.
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 $2,048,915 or 1
report or the percent of the
submission of a false total assets of
or misleading report the credit
done knowingly or union,
with reckless whichever is
disregard. less.
(4) 12 U.S.C. 1782(d)(2)(A)... Tier 1 CMP for $3,747.
inadvertent failure
to submit certified
statement of insured
shares and charges
due to the National
Credit Union Share
Insurance Fund
(NCUSIF), or
inadvertent
submission of false
or misleading
statement.
[[Page 2012]]
(5) 12 U.S.C. 1782(d)(2)(B)... Tier 2 CMP for non- $37,458.
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 failure $1,872,957 or 1
to submit a certified percent of the
statement or the total assets of
submission of a false the credit
or misleading union,
statement done whichever is
knowingly or with less.
reckless disregard.
(7) 12 U.S.C. 1785(a)(3)...... Non-compliance with $127.
insurance logo
requirements.
(8) 12 U.S.C. 1785(e) (3)..... Non-compliance with $297.
NCUA security
requirements.
(9) 12 U.S.C. 1786(k)(2)(A)... Tier 1 CMP for $10,245.
violations of law,
regulation, and other
orders or agreements.
(10) 12 U.S.C. 1786(k)(2)(A).. Tier 2 CMP for $51,222.
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 $2,048,915.
knowingly committing
the violations under
Tier 1 or 2 (natural
person).
(12) 12 U.S.C. 1786(k)(2)(A).. Tier 3 CMP for $2,048,915 or 1
knowingly committing percent of the
the violations under total assets of
Tier 1 or 2 (insured the credit
credit union). union,
whichever is
less.
(13) 12 U.S.C. 1786(w)(5)(ii). Non-compliance with $337,016.
senior examiner post-
employment
restrictions.
(14) 15 U.S.C. 1639e(k)....... Non-compliance with First violation:
appraisal $11,767.
independence Subsequent
requirements. violations:
$23,533.
(15) 42 U.S.C. 4012a(f)(5).... Non-compliance with $2,226.
flood insurance
requirements.
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(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 on or after November 2,
2015.
[FR Doc. 2020-00309 Filed 1-13-20; 8:45 am]
BILLING CODE 7535-01-P