[Federal Register Volume 61, Number 216 (Wednesday, November 6, 1996)]
[Rules and Regulations]
[Pages 57290-57291]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28189]
[[Page 57290]]
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NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 747
Civil Monetary Penalty Inflation Adjustment
AGENCY: National Credit Union Administration.
ACTION: Final rule.
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SUMMARY: Congress, in the Federal Civil Monetary Penalty Inflation
Adjustment Act of 1990, as amended by the Debt Collection Improvement
Act of 1996, required all federal agencies with the authority to impose
civil monetary penalties (CMPs) to regularly evaluate those CMPs to
ensure that they continue to maintain their deterrent value. As a
result of these acts, the head of each agency is required, by October
23, 1996, and at least once every four years thereafter, to adjust its
CMPs for inflation. In order to comply with Congress' mandate, the
National Credit Union Administration is issuing this final rule to
implement the required adjustments to the CMPs authorized by the
Federal Credit Union Act.
EFFECTIVE DATE: November 6, 1996.
FOR FURTHER INFORMATION CONTACT: Allan Meltzer, Associate General
Counsel, or Jon Canerday, Trial Attorney, Office of General Counsel,
NCUA, 1775 Duke Street, Alexandria, Virginia 22314, or telephone (703)
518-6540.
SUPPLEMENTARY INFORMATION: The Debt Collection Improvement Act of 1996
(DCIA) \1\ amended the Federal Civil Monetary Penalty Inflation
Adjustment Act of 1990 \2\ (FCMPIA Act) to require every Federal agency
to enact regulations that adjust each civil monetary penalties (CMPs)
\3\ provided by law under its jurisdiction by the rate of inflation
pursuant to the inflation adjustment formula in section 5(b) of the
FCMPIA Act. Each Federal agency is required to issue these implementing
regulations by October 23, 1996, which is 180 days after the date that
DCIA was enacted, and at least once every 4 years thereafter. Section 7
of the amended FCMPIA Act specifies that inflation-adjusted CMPs will
only apply to violations that occur after October 23, 1996.
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\1\ Pub. L. 104-134, section 31001(s), 110 Stat. 1321-358, (Apr.
26, 1996). The provision is codified at 28 U.S.C. 2461 note.
\2\ Pub. L. 101-410, 104 Stat. 890, (Oct. 5, 1990).
\3\ Section 3(2) of the amended FCMPIA Act defines a CMP as any
penalty, fine, or other sanction that: (1) either is for a specific
monetary amount as provided by Federal law or has a maximum amount
provided for by Federal law; (2) is assessed or enforced by an
agency pursuant to Federal law; and (3) is assessed or enforced
pursuant to an administrative proceeding or a civil action in the
Federal courts.
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The inflation adjustment is based on the percentage increase in the
Consumer Price Index (CPI) \4\ for the period from June of the calendar
year when the CMP was established or last adjusted until June of the
calendar year preceding the adjustment. Furthermore, each CMP that has
been adjusted for inflation must be rounded to a number prescribed by
section 5(a) of the FCMPIA Act.\5\ Another provision of the DCIA limits
the first adjustment of a CMP to an amount not to exceed 10 percent of
the original penalty. The amount of increase in the final regulation
would have been more if this limit did not exist.
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\4\ The CPI is published by the Department of Labor, Bureau of
Statistics.
\5\ For example, an increase that is less than $100 would be
rounded to the nearest multiple of $10, and an increase over $100
but less than $1,000 would be rounded to the nearest multiple of
$100.
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Section 206(k)(2) of the Federal Credit Union Act (12 U.S.C.
1786(k)(2)) authorizes the National Credit Union Administration (NCUA)
to impose three levels or tiers of CMPs upon insured credit unions or
institution-affiliated parties. First tier CMPs, 12 U.S.C.
1786(k)(2)(A), may be imposed for the violation of any law or
regulation, the violation of certain final orders or temporary orders,
the violation of conditions imposed in writing by the NCUA Board, or
the violation of any written agreement between the credit union and
NCUA. The statute presently provides that first tier CMPs shall not be
more than $5,000 for each day the violation continues. After the
required adjustment for inflation, the maximum penalty is increased to
$5,500 for each day.
Second tier CMPs, 12 U.S.C. 1786(k)(2)(B), are authorized for
violations described in first tier CMPs, the reckless engaging in an
unsafe or unsound practice in conducting the affairs of a credit union,
or the breach of any fiduciary duty, when the violation, practice or
breach is part of a pattern of misconduct, or causes or is likely to
cause more than a minimal loss to the credit union, or results in
pecuniary gain or other benefit. The maximum second tier CMP is
currently $25,000 for each day the violation, practice or breach
continues. After the required adjustment for inflation, the maximum
penalty is increased to $27,500 per day.
Third tier CMPs, 12 U.S.C. 1786(k)(2)(C), may be imposed for any of
the acts described in second tier CMPs that cause a substantial loss to
the credit union or a substantial pecuniary gain or other benefit. The
amount of third tier CMPs depends upon the status of the respondent
required to pay the CMP (12 U.S.C. 1786(k)(2)(D)). For a person other
than an insured credit union, the current maximum third tier CMP is
$1,000,000 for each day the violation, practice or breach continues.
For an insured credit union, the current daily maximum CMP is the
lesser of $1,000,000 or 1 percent of the total assets of the credit
union. The maximum CMP for a person other than an insured credit union
will be increased for inflation to $1,100,000 per day. The maximum CMP
for an insured credit union will be increased to the lesser of
$1,100,000 or 1 percent of the total assets of the credit union.
The NCUA now adopts this final rule which adjusts these three CMPs
for the rate of inflation, as required by the DCIA. DCIA provides
Federal agencies with no discretion in the adjustment of CMPs for
inflation, and it also requires the new regulation to take effect on
October 23, 1996. Further, the regulation that the NCUA adopts today to
implement DCIA is ministerial and technical. For these reasons, the
NCUA 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(a)(3)(B). These same reasons also provide the NCUA 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.
Furthermore, the NCUA determines that pursuant to the requirements of
section 808 of the Small Business Regulatory Enforcement Fairness Act
of 1996, this regulation shall take effect prior to the expiration of
the 60-day Congressional waiting period for final NCUA regulatory
action due to the Congressionally-mandated effective date of October
23, 1996.
Regulatory Requirements
Regulatory Flexibility Act
The NCUA has determined and certifies that the final rule will not
have a significant impact on a substantial number of small credit
unions (primarily those under $1,000,000 in assets).
Paperwork Reduction Act
No collections of information pursuant to the Paperwork Reduction
Act (44 U.S.C. 3501 et seq.) are contained in the final rule.
Consequently, no information has been
[[Page 57291]]
submitted to the Office of Management and Budget for review.
Executive Order 12612
The NCUA Board, pursuant to Executive Order 12612, has determined
that this final rule will not have a substantial direct effect on the
states, on the relationship between the national government and the
states, or on the distribution of power and responsibilities among the
various levels of government.
List of Subjects in 12 CFR Part 747
Administrative practice and procedure, Credit unions, Penalties.
By the National Credit Union Administration Board on October 28,
1996.
Becky Baker,
Secretary to the Board.
Accordingly, the NCUA amends 12 CFR part 747 as follows:
PART 747--ADMINISTRATIVE ACTIONS, ADJUDICATIVE HEARINGS, RULES OF
PRACTICE AND PROCEDURE, AND INVESTIGATIONS
1. The authority citation for part 747 is revised to read as
follows:
Authority: 12 U.S.C. 1766, 1784, 1786, and 1787; 42 U.S.C.
4012a; Pub. L. 101-410, 104 Stat. 890; Pub. L. 104-134, 110 Stat.
1321-358 (28 U.S.C. 2461 note).
2. Part 747 is amended by adding Subpart K consisting of
Sec. 747.1001 to read as follows:
Subpart K--Inflation Adjustment of Civil Monetary Penalties
Sec. 747.1001 Adjustment of civil money penalties by the rate of
inflation pursuant to section 31001(s) of the Debt Collection
Improvement Act of 1996 (Public Law 104-134, 110 Stat. 1321-358 (28
U.S.C. 2461 note)).
(a) A first tier civil money penalty imposed pursuant to 12 U.S.C.
1786(k)(2)(A), for a violation occurring after October 23, 1996, shall
not exceed $5,500 per day for each day the violation continues.
(b) A second tier civil money penalty imposed pursuant to 12 U.S.C.
1786(k)(2)(B), for a violation, practice or breach occurring after
October 23, 1996, shall not exceed $27,500 per day for each day the
violation, practice or breach continues.
(c) A third tier civil money penalty imposed pursuant to 12 U.S.C.
1786(k)(2)(C) upon any person other than an insured credit union, for a
violation, practice or breach occurring after October 23, 1996, shall
not exceed $1,100,000 per day for each day the violation, practice or
breach continues.
(d) A third tier civil money penalty imposed pursuant to 12 U.S.C.
1786(k)(2)(C) upon an insured credit union, for a violation, practice
or breach occurring after October 23, 1996, shall not exceed the lesser
of--
(1) $1,100,000 per day for each day the violation, practice or
breach continues; or
(2) 1 percent of the total assets of such credit union for each day
the violation, practice or breach continues.
[FR Doc. 96-28189 Filed 11-5-96; 8:45 am]
BILLING CODE 7535-01-P
