E8-23527. Rules of Practice for Hearings

AGENCY:

Board of Governors of the Federal Reserve System.

ACTION:

Final rule.

SUMMARY:

The Board of Governors of the Federal Reserve System (the Board) is amending its rules of practice and procedure to adjust the maximum amount, as set by statute, of each civil money penalty (CMP) within its jurisdiction to account for inflation. This action is required under the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 1996.

DATES:

Effective Date: October 12, 2008.

FOR FURTHER INFORMATION CONTACT:

Katherine H. Wheatley, Associate General Counsel (202/452-3779), or Jodi C. Remer, Senior Counsel (202/452-6403), Legal Division, Board of Governors of the Federal Reserve System, 20th and C Streets, NW., Washington, DC 20551. For users of Telecommunication Device for the Deaf (TDD) only, contact 202/263-4869.

SUPPLEMENTARY INFORMATION:

The Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 1996, 28 U.S.C. 2461 note (FCPIA Act), requires each Federal agency to adjust each CMP within its jurisdiction by a prescribed cost-of-living adjustment at least once every four years. This cost-of-living adjustment is based on the formula described in section 5(b) of the FCPIA Act. The Board made its last adjustment in October 2004 (see 69 FR 56929).

The required cost-of-living adjustment formula is based on the difference between the Consumer Price Index (CPI) for June of the year preceding the adjustment (in this case, June 2007) and the CPI for June of the year when the CMP was last set or adjusted. To calculate the adjustment, the Board used the Department of Labor, Bureau of Labor Statistics—All Urban Consumers tables, in which the period 1982-84 was equal to 100, to get the CPI values.

The calculations performed for the 2008 adjustment consisted of four categories, depending on the year in which the penalty was last set or adjusted. For penalties that changed in 2004, the relevant CPIs were June 2007 (208.352) and June 2004 (189.7), resulting in a CPI increase of 9.8 percent. For penalties that were last changed in 2000, the relevant CPIs were June 2007 (208.352) and June 2000 (172.4), resulting in a CPI increase of 20.9 percent. For penalties that were last changed in 1996, the relevant CPIs were June 2007 (208.352) and June 1996 (156.7), resulting in a CPI increase of 33.0 percent. One penalty did not exist at the time of the last adjustment and became effective in December 2005. For that penalty, the relevant CPIs were June 2007 (208.352) and June 2005 (194.5), resulting in a CPI increase of 7.1 percent.

Section 5 of the FCPIA Act provides that the adjustment amount must be rounded before adding it to the existing penalty amount. The rounding provision depends on the size of the penalty being adjusted. For example, if the penalty is greater than $100 but less than or equal to $1,000, the increase is rounded to the nearest $100; if it is greater than $1,000 but less than or equal to $10,000, the increase is rounded to the nearest $1,000. Because of this rounding rule, six penalty amounts are not changing at this time. For example, the penalty under 12 U.S.C. 3909(d) prior to the 2008 adjustment was $1,100. As this penalty was last changed in 1996, the 33 percent adjustment would be $363. Rounding that increase to the nearest $1,000 results in an increase of $0. The penalties that are not adjusted at this time because of this rounding formula will be subject to adjustment at the next adjustment cycle to take account of the entire period between the time of their last adjustment (1996, 2000, or 2004) and the next adjustment date. These unadjusted penalties include the inadvertently late or misleading reports under 12 U.S.C. 324; 12 U.S.C. 1832(c); Tier I penalty of 12 U.S.C. 1847(d), 3110(c); 12 U.S.C. 334, 374a, 1884; 12 U.S.C. 3909(d); and 42 U.S.C. 4012(a)(f)(5).

In accordance with section 6 of the FCPIA Act, the increased penalties set forth in this amendment apply only to violations that occur after the date the increase takes effect.

Public Law 104-134, title III, § 31001(s)(2), April 21, 1996, 110 Stat. 1321-272 amended the FCPIA Act and provided that “[t]he first adjustment of a civil monetary penalty * * * may not exceed 10 percent of such penalty.” Although there is one penalty for which an initial adjustment is being made, 12 U.S.C. 1820(k)(6)(A)(ii), due to the effect of the rounding rules, the calculated dollar amount increase in the penalty is the same as a 10 percent increase in this case.

Public Comment Not Required

This rule is not subject to the provisions of 5 U.S.C. 553 requiring notice, public participation, and deferred effective date. The FCPIA Act provides Federal agencies with no discretion in the adjustment of CMPs to the rate of inflation, and it also requires that adjustments be made at least every four years. Moreover, this regulation is ministerial and technical. For these reasons, the Board finds good cause to determine that public notice and comment for this new regulation is unnecessary, impractical, and contrary to the public interest, pursuant to the Administrative Procedure Act (APA), 5 U.S.C. 553(b)(3)(B). These same reasons also provide the Board with good cause to adopt an effective date for this regulation that is less than 30 days after the date of publication in the Federal Register, pursuant to the APA, 5 U.S.C. 553(d).

Regulatory Flexibility Act

The Regulatory Flexibility Act applies only to rules for which an agency publishes a general notice of proposed rulemaking pursuant to 5 U.S.C. 553(b). See 5 U.S.C. 601(2). Because the Board has determined for good cause that the APA does not require public notice and comment on this final rule, we are not publishing a general notice of proposed rulemaking. Thus, the Regulatory Flexibility Act does not apply to this final rule.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Ch. 35; 5 CFR Part 1320 Appendix A.1), the Board reviewed the final rule under the authority delegated to the Board by the Office of Management and Budget. No collections of information pursuant to the Paperwork Reduction Act are contained in the final rule.

List of Subjects in 12 CFR Part 263

• Administrative practice and procedure
• Claims
• Crime
• Equal Access to Justice
• Lawyers
• Penalties

Authority and Issuance

For the reasons set forth in the preamble, the Board of Governors amends 12 CFR part 263 to read as follows:

PART 263—RULES OF PRACTICE FOR HEARINGS

1. The authority citation for part 263 is revised to read as follows:

Authority: 5 U.S.C. 504; 12 U.S.C. 248, 324, 504, 505, 1817(j), 1818, 1820(k), 1828(c), 1831o, 1831p-1, 1847(b), 1847(d), 1884(b), 1972(2)(F), 3105, 3107, 3108, 3907, 3909; 15 U.S.C. 21, 78o-4, 78o-5, 78u-2; and 28 U.S.C. 2461 note.

2. Section 263.65 is revised to read as follows:

§ 263.65

Civil penalty inflation adjustments.

(a) Inflation adjustments. In accordance with the Federal Civil Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note), the Board has set forth in paragraph (b) of this section adjusted maximum penalty amounts for each civil money penalty provided by law within its jurisdiction. The adjusted civil penalty amounts provided in paragraph (b) of this section replace only the amounts published in the statutes authorizing the assessment of penalties and the previously-adjusted amounts adopted as of October 12, 2004, October 12, 2000, and October 24, 1996. The authorizing statutes contain the complete provisions under which the Board may seek a civil money penalty. The increased penalty amounts apply only to violations occurring after the effective date of this rule.

(b) Maximum civil money penalties. The maximum civil money penalties as set forth in the referenced statutory sections are as follows:

(1) 12 U.S.C. 324:

(i) Inadvertently late or misleading reports, inter alia—$2,200.

(ii) Other late or misleading reports, inter alia—$32,000.

(iii) Knowingly or recklessly false or misleading reports, inter alia—$1,375,000.

(2) 12 U.S.C. 504, 505, 1817(j)(16), 1818(i)(2) and 1972(2)(F):

(i) First tier—$7,500.

(ii) Second tier—$37,500.

(iii) Third tier—$1,375,000.

(3) 12 U.S.C. 1820(k)(6)(A)(ii)—$275,000.

(4) 12 U.S.C. 1832(c)—$1,100.

(5) 12 U.S.C. 1847(b), 3110(a)—$37,500.

(6) 12 U.S.C. 1847(d), 3110(c):

(i) First tier—$2,200.

(ii) Second tier—$32,000.

(iii) Third tier—$1,375,000.

(7) 12 U.S.C. 334, 374a, 1884—$110.

(8) 12 U.S.C. 3909(d)—$1,100.

(9) 15 U.S.C. 78u-2:

(i) 15 U.S.C. 78u-2(b)(1)—$7,500 for a natural person and $70,000 for any other person.

(ii) 15 U.S.C. 78u-2(b)(2)—$70,000 for a natural person and $350,000 for any other person.

(iii) 15 U.S.C. 78u-2(b)(3)—$140,000 for a natural person and $675,000 for any other person.

(10) 42 U.S.C. 4012a(f)(5):

(i) For each violation—$385.

(ii) For the total amount of penalties assessed under 42 U.S.C 4012a(f)(5) against an institution or enterprise during any calendar year—$135,000.

By order of the Board of Governors of the Federal Reserve System, October 1, 2008.

Jennifer J. Johnson,

Secretary of the Board.