[Federal Register Volume 62, Number 250 (Wednesday, December 31, 1997)]
[Rules and Regulations]
[Pages 68152-68154]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33945]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Office of Federal Housing Enterprise Oversight
12 CFR Part 1780
RIN 2550-AA06
Civil Money Penalties
AGENCY: Office of Federal Housing Enterprise Oversight, HUD.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: OFHEO is issuing this final rule to adjust each civil money
penalty within its jurisdiction to account for inflation. This action
is necessary to implement the Federal Civil Penalties Inflation
Adjustment Act of 1990, as amended by the Debt Collection Improvement
Act of 1996.
DATES: This final rule is effective December 31, 1997.
FOR FURTHER INFORMATION CONTACT: Danielle Arigoni, Research Assistant,
Office of Policy Analysis, or Marvin L. Shaw, Senior Counsel, Office of
General Counsel, 1700 G Street, NW, 4th Floor, Washington, DC 20552,
telephone (202) 414-3800 (not a toll-free number). The telephone number
for the Telecommunications Device for the Deaf is (800) 877-8339.
SUPPLEMENTARY INFORMATION:
I. Background
The Office of Federal Housing Enterprise Oversight (OFHEO) was
established by Title XIII of the Housing and Community Development Act
of 1992, Pub. L. 102-550, known as the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (1992 Act). OFHEO is an
independent office within the U.S. Department of Housing and Urban
Development (HUD) with responsibility for ensuring that the Federal
National Mortgage Association (Fannie Mae) and the Federal Home Loan
Mortgage Corporation (Freddie Mac) (collectively, the Enterprises) are
adequately capitalized and operating in a safe and sound manner. The
1992 Act authorizes OFHEO's Director (Director) to impose a civil money
penalty for violations by an Enterprise or its executive officers or
directors of any statute or regulation under OFHEO's jurisdiction.\1\
---------------------------------------------------------------------------
\1\ See 1992 Act, section 1376 (12 U.S.C. 4636).
---------------------------------------------------------------------------
Fannie Mae and Freddie Mac are Government-sponsored enterprises
that provide liquidity to and stability in the secondary market for
residential
[[Page 68153]]
mortgages.\2\ The Enterprises also increase the availability of
mortgage credit benefiting low- and moderate-income families and areas
that are underserved by lending institutions. The Enterprises engage in
two principal businesses: investing in residential mortgages and
guaranteeing residential mortgage securities.
---------------------------------------------------------------------------
\2\ See 1992 Act, secitons 1331-38 (12 U.S.C. 4561-67, 4562
note).
---------------------------------------------------------------------------
II. Debt Collection Improvement Act of 1996
In order to preserve the remedial impact of civil money penalties
and foster compliance with the law, the Federal Civil Penalties
Inflation Adjustment Act of 1990,\3\ as amended by the Debt Collection
Improvement Act of 1996 \4\ (the Debt Collection Improvement Act),
requires Federal agencies to make an initial inflationary adjustment
for all applicable civil money penalties and to make further
adjustments of these penalty amounts at least once every 4 years. The
Debt Collection Improvement Act further stipulates that any resulting
increases in a civil money penalty due to the calculated inflation
adjustments (i) should apply only to violations that occur after
October 23, 1996--the Act's effective date--and (ii) should not exceed
10 percent of the penalty indicated.
---------------------------------------------------------------------------
\3\ Pub. L. 101-410, 28 U.S.C. 2461 note.
\4\ Pub. L. 104-134, seciton 31001(s), 110 Stat. 1321-358
(codified as amended at 28 U.S.C. 2461 note).
---------------------------------------------------------------------------
Under the Debt Collection Improvement Act, the inflation adjustment
for each applicable civil money penalty is determined by increasing the
maximum civil money penalty amount per violation by the cost-of-living
adjustment. The ``cost-of-living'' adjustment is defined by the statute
as the amount by which the Consumer Price Index (CPI) for the month of
June of the calendar year preceding the adjustment exceeds the CPI for
the month of June of the year in which the amount of such civil penalty
was last set or adjusted pursuant to law, divided by the earlier CPI
value. Any calculated increase under this adjustment is subject to a
specific rounding formula \5\ set forth in the Debt Collection
Improvement Act.
---------------------------------------------------------------------------
\5\ The statute's rounding rules require that an 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.
---------------------------------------------------------------------------
III. OFHEO'S Civil Money Penalties Affected by the Inflation
Adjustment
The following example illustrates how the methodology outlined in
the Debt Collection Improvement Act applies to civil money penalties
assessed by OFHEO. Under section 1376 of the 1992 Act, OFHEO may impose
a daily penalty not to exceed $1,000,000 on either Enterprise or any
executive officer or director of an Enterprise for certain violations.
The first step in determining the inflation adjustment is to calculate
and apply the percentage by which the CPI for all Urban Consumers (CPI-
U) has changed over the period beginning in the year in which the
existing civil money penalty amounts were last statutorily defined
(section 1376 was adopted in 1992, and no adjustments have been made
since) and ending in the calendar year preceding the adjustment. Given
that the current year is 1997, the end of the period is the preceding
year, 1996. The corresponding CPI-U values for the months of June in
1992 and 1996 are 419.9 and 469.5, respectively. Dividing the
difference between the two values by the base year (1992) value yields
a percentage increase of 11.8, which is multiplied by the existing
civil money penalty amount of $1,000,000 to yield an increase of
$118,000.
The second step is to apply the rounding rules in the Debt
Collection Improvement Act which state that, where the increase is
greater than $100,000 but less than or equal to $200,000, the increase
shall be rounded to the nearest multiple of $10,000. As a result, the
increase is rounded up to $120,000. When added to the original civil
money penalty, the adjustment yields a new maximum civil money penalty
of $1,120,000.
Finally, the Debt Collection Improvement Act provides that any
adjustment for inflation of a civil money penalty shall not exceed 10
percent of the existing amount. In this case, the maximum penalty
amount is $100,000. As such, the final increase is adjusted to meet the
10 percent increase limit, since the $120,000 increase resulting from
the calculations exceeds the amount allowed by the Debt Collection
Improvement Act. A final civil money penalty amount is reached by
adding the equivalent of 10 percent of the statutorily defined penalty
($100,000) to the existing civil money penalty amount ($1,000,000),
yielding a figure of $1,100,000. This is the figure which is associated
with the violations previously penalized by a maximum $1,000,000 fine.
This adjustment process has been applied to all of OFHEO's statutory
civil money penalty limits to determine the maximum amounts as listed
in the 1992 Act.
Based on these considerations, OFHEO has decided to amend chapter
XVII of Title 12 of the Code of Federal Regulations by adding subpart
E, titled ``Civil Money Penalties,'' to Part 1780 to reflect the
inflation adjustments mandated by the Debt Collection Improvement Act.
IV. Effective Date
OFHEO finds good cause to make this rule effective upon publication
of this document in the Federal Register under the Administrative
Procedure Act (APA). 5 U.S.C. 553(d). This final rule does not impose
any additional responsibilities on any entity. Instead, it simply
adjusts the civil penalties as directed by the Debt Collection
Improvement Act.
OFHEO also finds for good cause that notice and an opportunity to
comment on this document are unnecessary under the APA. 5 U.S.C. 553.
This rulemaking conforms with and is consistent with the statutory
authority set forth in the Debt Collection Improvement Act, with no
issues of policy discretion. Consequently, because the opportunity for
notice and comment is unnecessary, OFHEO is issuing these requirements
as a final rule.
V. Regulatory Impact Statements
Executive Order 12612, Federalism
Executive Order 12612 requires that Executive departments and
agencies identify regulatory actions that have significant federalism
implications. A regulation has federalism implications if it has
substantial direct effects on the States, on the relationship or
distribution of power between the Federal Government and the States, or
on the distribution of power and responsibilities among various levels
of government. OFHEO has determined that this regulation has no
federalism implications that warrant the preparation of a Federalism
Assessment in accordance with Executive Order 12612.
Executive Order 12866, Regulatory Planning and Review
OFHEO's Acting Director has determined that this final rule does
not constitute a ``significant regulatory action'' for the purposes of
Executive Order 12866.
[[Page 68154]]
Executive Order 12988, Civil Justice Reform
Executive Order 12988 sets forth guidelines to promote the just and
efficient resolution of civil claims and to reduce the risk of
litigation to the Federal Government.
The regulation meets the applicable standards of sections 3(a) and
3(b) of Executive Order 12988.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995, 44 U.S.C. chapter 35, requires
that regulations involving the collection of information receive
clearance from OMB. The regulation contains no such collection of
information requiring OMB approval under the Paperwork Reduction Act.
Consequently, no information has been submitted to OMB for review under
the Paperwork Reduction Act.
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 this action is limited to
the adoption of statutory language, without interpretation, notice and
comment on this final rule is unnecessary pursuant to 5 U.S.C.
553(b)(B). Therefore, the Regulatory Flexibility Act does not apply to
this final rule.
Unfunded Mandates Act of 1995
OFHEO has determined that this final rule will not result in
expenditures by State, local, and tribal governments, or by the private
sector of $100 million or more in any one year. Accordingly, this
rulemaking is not subject to the Unfunded Mandates Act of 1995.
List of Subjects in 12 CFR Part 1780
Administrative practice and procedure, Penalties.
Accordingly, for the reasons set forth in the preamble, OFHEO
amends chapter XVII of Title 12 of the Code of Federal Regulations by
adding Part 1780 to read as follows:
PART 1780--UNIFORM RULES OF PRACTICE AND PROCEDURE
Subpart A--[Reserved]
Subpart B--[Reserved]
Subpart C--[Reserved]
Subpart D--[Reserved]
Subpart E--Civil Money Penalty Inflation Adjustments
Sec.
1780.70 Inflation adjustments.
1780.71 Applicability.
Authority: 12 U.S.C. 4513, 4636; 28 U.S.C. 2461 note.
Subpart A--[Reserved]
Subpart B--[Reserved]
Subpart C--[Reserved]
Subpart D--[Reserved]
Subpart E--Civil Money Penalty Inflation Adjustments
Sec. 1780.70 Inflation adjustments.
The maximum amount of each civil money penalty within OFHEO's
jurisdiction is adjusted in accordance with the Debt Collection
Improvement Act of 1996 (28 U.S.C. 2461 note) as follows:
----------------------------------------------------------------------------------------------------------------
Previous New adjusted
U.S. Code citation Description maximum maximum
penalty penalty
----------------------------------------------------------------------------------------------------------------
12 U.S.C. 4636(b)(1).......................... First Tier...................... $5,000 $5,500
12 U.S.C. 4636(b)(2).......................... Second Tier (Executive Officer 10,000 11,000
or Director.
12 U.S.C. 4636(b)(2).......................... Second Tier (Enterprise)........ 25,000 27,500
12 U.S.C. 4636(b)(3).......................... Third Tier (Executive Officer or 100,000 110,000
Director).
12 U.S.C. 4636(b)(3).......................... Third Tier (Enterprise)......... 1,000,000 1,100,000
----------------------------------------------------------------------------------------------------------------
Sec. 1780.71 Applicability.
The inflation adjustments in Sec. 1780.70 apply to civil money
penalties assessed in accordance with the provisions of 12 U.S.C. 4636
for violations occurring after October 23, 1996.
Dated: December 22, 1997.
Mark A. Kinsey,
Acting Director, Office of Federal Housing Enterprise Oversight.
[FR Doc. 97-33945 Filed 12-30-97; 8:45 am]
BILLING CODE 4220-01-P
