[Federal Register: January 15, 2009 (Volume 74, Number 10)]
[Rules and Regulations]
[Page 2340-2342]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15ja09-4]
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FARM CREDIT ADMINISTRATION
12 CFR Part 622
RIN 3052-AC47
Rules of Practice and Procedure; Adjusting Civil Money Penalties
for Inflation
AGENCY: Farm Credit Administration.
ACTION: Final rule.
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SUMMARY: This regulation implements cost-of-living adjustments to civil
money penalties (CMPs) that the Farm Credit Administration (FCA) may
impose under the Farm Credit Act of 1971, as amended (Farm Credit Act),
and under the National Flood Insurance Reform Act of 1994 (Reform Act).
The Federal Civil Penalties Inflation Adjustment Act of 1990, as
amended by the Debt Collection Improvement Act of 1996 (FCPIA Act),
requires all Federal agencies with the authority to impose CMPs to
evaluate those CMPs periodically to ensure that they continue to
maintain their deterrent value.
DATES: Effective Date: The regulation will become effective on January
16, 2009.
FOR FURTHER INFORMATION CONTACT:
Michael T. Wilson, Policy Analyst, Office of Regulatory Policy, Farm
Credit Administration, McLean, VA 22102-5090, (703) 883-4124, TTY (703)
883-4434,
or
Howard I. Rubin, Senior Counsel, Office of General Counsel, Farm Credit
Administration, McLean, VA 22102-5090, (703) 883-4029, TTY (703) 883-
4020.
SUPPLEMENTARY INFORMATION:
I. Objective
The objective of this regulation is to recalculate the CMP
inflation adjustments consistent with the FCPIA Act.
II. Background
A. Federal Civil Penalties Inflation Adjustment Act of 1990, as Amended
The FCPIA Act requires every Federal agency with authority to issue
CMPs to enact regulations that adjust its CMPs pursuant to the
inflation adjustment formula in section 5(b) of the FCPIA Act.\1\ Each
Federal agency was required to issue these regulations by October 23,
1996, and adjust them when necessary at least once every 4 years
thereafter. Section 6 of the amended FCPIA Act specifies that
inflation-adjusted CMPs will apply only to violations that occur after
the effective date of the adjustment. The inflation adjustment is based
on the percentage increase in the Consumer Price Index (CPI).\2\
Specifically, section 5(b) of the FCPIA Act defines the term ``cost-of-
living adjustment'' as ``the percentage (if any) for each civil
monetary penalty by which (1) the Consumer Price Index for the month of
June of the calendar year preceding the adjustment, exceeds (2) the
Consumer Price Index for the month of June of the calendar year in
which the amount of such civil monetary penalty was last set or
adjusted pursuant to law.'' Furthermore, the increase for each CMP that
is adjusted for inflation must be rounded using a method prescribed by
section 5(a) of the FCPIA Act.
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\1\ See 28 U.S.C. 2461 note. Section 3(2) of the amended FCPIA
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.
\2\ The CPI is published by the Department of Labor, Bureau of
Statistics, and is available at its Web site: ftp://ftp.bls.gov/pub/
special.requests/cpi/cpiai.txt.
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B. CMPs Issued Under the Farm Credit Act
Section 5.32(a) of the Farm Credit Act provides that any FCS
institution or any officer, director, employee, agent, or other person
participating in the conduct of the affairs of an FCS institution who
violates the terms of a final order issued under section 5.25 or 5.26
of the Farm Credit Act must pay up to $1,000 per day for each day
during which such violation continues. Orders issued by FCA under
section 5.25 or 5.26 of the Farm Credit Act include
[[Page 2341]]
temporary and permanent cease-and-desist orders. In addition, section
5.32(h) provides that any directive issued under sections 4.3(b)(2),
4.3A(e), or 4.14A(i) of the Farm Credit Act ``shall be treated'' as a
final order issued under section 5.25 for purposes of assessing a CMP.
Section 5.32(a) also states that ``[a]ny such institution or person who
violates any provision of the [Farm Credit] Act or any regulation
issued under this Act shall forfeit and pay a civil penalty of not more
that $500 per day for each day during which such violation continues.''
1. Mathematical Calculation
In general, the adjustment calculation is based on the percentage
by which the CPI for June 2008 exceeds the CPI for June of the calendar
year the CMP was last adjusted. The CMP for violation of the terms of a
final order issued under section 5.25 or 5.26 of the Farm Credit Act
was last adjusted in 1996. The CMP for a violation of the Farm Credit
Act, or a regulation issued under the Farm Credit Act, was last
adjusted in 2005. According to the Bureau of Labor Statistics, the CPI
for June 1996 and June 2005 was 156.7 and 194.5, respectively. The CPI
for June 2008 was 218.815, resulting in a percentage change of 39.64
percent from June 1996 and 12.50 percent from June 2005.
2. Penalty Amount Remains the Same in Sec. 622.61(a)(1)
The maximum CMP in Sec. 622.61(a) for a violation of a final order
issued under section 5.25 or 5.26 of the Farm Credit Act is currently
$1,100.\3\
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\3\ See 70 FR 12583 (March 15, 2005).
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Multiplying $1,100 by 39.64 \4\ percent results in an increase of
$436.04. When that number is rounded as required by section 5(a) of the
FCPIA Act, the inflation-adjusted maximum remains $1,100.
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\4\ As a result of the mathematical calculation for the year
2005 and the required rounding application, the penalty amount
remained the same and did not reset. Therefore, in accordance with
the FCPIA Act, the calculation for the 2009 adjustment was
determined by using the June 1996 CPI of 156.7 and the June 2008 CPI
of 218.815 resulting in a percentage change of 39.64 percent.
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3. New Penalty Amount in Sec. 622.61(a)(2)
The maximum CMP in existing Sec. 622.61(a)(2) for a violation of
the Farm Credit Act or regulations issued under the Farm Credit Act is
$650. When multiplying the existing CMP amount by 12.50 percent, this
results in an increase of $81.25. This increase is rounded to $100 as
required by section 5(a) of the FCPIA Act, and the inflation-adjusted
maximum increases to $750.
C. CMPs Issued Under the Reform Act
The Flood Disaster Protection Act of 1973, as amended by the Reform
Act, requires that FCA assess a CMP for a pattern or practice of
committing certain specific actions in violation of the National Flood
Insurance Program.\5\ Under the Reform Act, which became law in 1994,
these CMPs were not to exceed $350 for each violation, and the total
amount of penalties assessed for certain violations of the program
against any single regulated entity during any calendar year was not to
exceed $100,000.\6\
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\5\ See 42 U.S.C. 4012a.
\6\ 42 U.S.C. 4012a(f).
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1. Mathematical Calculation
The adjustment calculation for these CMPs is based on the
percentage by which the CPI for June 2008 exceeds the CPI for June
2005, the calendar the CMPs were last adjusted. As stated above, the
CPI for June 2005 was 194.5, and the CPI for June 2008 was 218.815,
resulting in a percentage change of 12.50.
2. New Penalty Amounts in Sec. 622.61(b)
Multiplying $385 by 12.50 percent yields a $48.13 increase. This
amount is rounded downward to $0.00 under the FCPIA rounding formula.
Accordingly, the CMP maximum for each violation will remain $385.
Similarly, multiplying the $110,000 total cap by 12.50 percent yields a
$13,750 increase. This increase is rounded to $10,000 under the FCPIA
rounding formula, bringing the new cap to $120,000 in total penalties
that may be assessed under the Reform Act against any single regulated
entity during any calendar year.
III. Notice and Comment Not Required by Administrative Procedure Act
The FCPIA Act gives Federal agencies no discretion in the
adjustment of CMPs for the rate of inflation. Further, these revisions
are ministerial, technical, and noncontroversial. For these reasons,
the FCA finds good cause to determine that public notice and an
opportunity to comment are impracticable, unnecessary, and contrary to
the public interest pursuant to the Administrative Procedure Act, 5
U.S.C. 553(b)(B), and adopts this rule in final form. For all of the
foregoing reasons, the FCA also finds good cause to determine that this
regulation should become effective immediately, pursuant to the
Administrative Procedure Act, 5 U.S.C. 553(d).
IV. Regulatory Flexibility Act
Pursuant to section 605(b) of the Regulatory Flexibility Act (5
U.S.C. 601 et seq.), the FCA hereby certifies that the final rule will
not have a significant economic impact on a substantial number of small
entities. Each of the banks in the System, considered together with its
affiliated associations, has assets and annual income in excess of the
amounts that would qualify them as small entities. Therefore, System
institutions are not ``small entities'' as defined in the Regulatory
Flexibility Act.
List of Subjects 12 CFR Part 622
Administrative practice and procedure, Crime, Investigations,
Penalties.
0
For the reasons stated in the preamble, part 622 of chapter VI, title
12 of the Code of Federal Regulations is amended to read as follows:
PART 622--RULES OF PRACTICE AND PROCEDURE
0
1. The authority citation for part 622 continues to read as follows:
Authority: Secs. 5.9, 5.10, 5.17, 5.25-5.37 of the Farm Credit
Act (12 U.S.C. 2243, 2244, 2252, 2261-2273); 28 U.S.C. 2461 note;
and 42 U.S.C. 4012a(f).
Subpart B--Rules and Procedures for Assessment and Collection of
Civil Money Penalties
0
2. Revise Sec. 622.61 to read as follows:
Sec. 622.61 Adjustment of civil money penalties by the rate of
inflation under the Federal Civil Penalties Inflation Adjustment Act of
1990, as amended.
(a) The maximum amount of each civil money penalty within FCA's
jurisdiction is adjusted in accordance with the Federal Civil Penalties
Inflation Adjustment Act of 1990, as amended (28 U.S.C. 2461 note), as
follows:
(1) Amount of civil money penalty imposed under section 5.32 of the
Act for violation of a final order issued under section 5.25 or 5.26 of
the Act: The maximum daily amount is $1,100.
(2) Amount of civil money penalty for violation of the Act or
regulations: The maximum daily amount is $550 for each violation that
occurs before March 16, 2005, $650 for each violation that occurs on or
after March 16, 2005, but before January 16, 2009, and $750 for each
violation that occurs on or after January 16, 2009.
(b) The maximum civil money penalty amount assessed under 42 U.S.C.
4012a(f) is $350 for each violation that
[[Page 2342]]
occurs before March 16, 2005, with total penalties under such statute
not to exceed $110,000 for any single institution during any calendar
year. For violations that occur on or after March 16, 2005, but before
January 16, 2009, the maximum civil money penalty is $385 for each
violation, with total penalties under such statute not to exceed
$110,000 for any single institution during any calendar year. For
violations that occur on or after January 16, 2009, the maximum civil
money penalty is $385 for each violation, with total penalties under
such statute not to exceed $120,000 for any single institution during
any calendar year.
Date: January 9, 2009.
Roland E. Smith,
Secretary, Farm Credit Administration Board.
[FR Doc. E9-656 Filed 1-14-09; 8:45 am]
BILLING CODE 6705-01-P