[Federal Register Volume 69, Number 217 (Wednesday, November 10, 2004)]
[Rules and Regulations]
[Pages 65067-65069]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-24974]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 19

[Docket No. 04-24]
RIN 1557-AC82


Rules of Practice and Procedure; Civil Money Penalty Inflation 
Adjustments

AGENCY: Office of the Comptroller of the Currency, Treasury.

ACTION: Final rule.

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SUMMARY: The Office of the Comptroller of the Currency (OCC) is 
amending its rules of practice and procedure to adjust the maximum 
amount of each civil money penalty (CMP) within its jurisdiction to 
account for inflation. This action, including the amount of the 
adjustment, is required under the Federal Civil Penalties Inflation 
Adjustment Act of 1990, as amended by the Debt Collection Improvement 
Act of 1996. The OCC is also making a technical correction to resolve 
an error in the numbering of sections in part 19.

DATES: Effective Date: December 10, 2004.

FOR FURTHER INFORMATION CONTACT: Jean Campbell, Senior Attorney, 
Legislative and Regulatory Activities Division, (202) 874-5090, or 
Carolyn Amundson, Counsel, Enforcement and Compliance Division, (202) 
874-4800, Office of the Comptroller of the Currency, 250 E Street, SW., 
Washington, DC 20219.

SUPPLEMENTARY INFORMATION: 

Background

    The Inflation Adjustment Act (Act), 28 U.S.C. 2461 note, requires 
the OCC, as well as other Federal agencies with CMP authority, to 
publish regulations to adjust each CMP authorized by a law that the 
agency has jurisdiction to administer. The purpose of these adjustments 
is to maintain the deterrent effect of CMPs and to promote compliance 
with the law. The Act requires adjustments to be made at least once 
every four years following the initial adjustment. The OCC's prior 
adjustment to each CMP was published in the Federal Register on 
December 11, 2000, 65 FR 77250, and became effective that same day.
    The Act requires that the adjustment reflect the percentage 
increase in the Consumer Price Index between June of the calendar year 
preceding the year in which the adjustment will be made and June of the 
calendar year in which the amount was last set or adjusted. The Act 
defines the Consumer Price Index as the Consumer Price Index for all 
urban consumers (CPI-U) published by the Department of Labor.\1\ See 28 
U.S.C. 2461 note. In addition, the Act provides rules for rounding off 
increases,\2\ and requires that any increase in a CMP apply only to 
violations that occur after the date of the adjustment. Finally, 
section 2 of the Debt Collection Improvement Act, 28 U.S.C. 2461 note, 
limited the initial adjustment of a CMP pursuant to the Act to 10 
percent of the amount set by statute.
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    \1\ The Department of Labor computes the CPI-U using two 
different base time periods, 1967 and 1982-1984, and the Act does 
not specify which of these base periods should be used to calculate 
the inflation adjustment. The OCC, consistent with the other Federal 
banking agencies, has used the CPI-U with 1982-84 as the base 
period.
    \2\ The Act's rounding rules require that an increase be rounded 
to the nearest multiple of: $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. See 28 U.S.C. 2461 note.
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Description of the Final Rule

Inflation Adjustment

    This final rule adjusts the amount for each type of CMP that the 
OCC has jurisdiction to impose in accordance with the statutory 
requirements by revising the table contained in subpart O of 12 CFR 
part 19. The table identifies the statutes that provide the OCC with 
CMP authority, describes the different tiers of penalties provided in 
each statute (as applicable), and sets out the inflation-adjusted 
maximum penalty that the OCC may impose pursuant to each statutory 
provision.
    The Act requires that we compute the inflation adjustment by 
comparing the CPI-U for June of the year in which the CMPs were last 
set or adjusted with the CPI-U for June of the calendar year preceding 
the adjustment. 28 U.S.C. 2461 note. For those CMPs that were adjusted 
in 2000, we compared the CPI-U for June 2003 (183.7) with the CPI-U for 
June 2000 (172.4). This resulted in an inflation adjustment of 6.6 
percent. For those penalties that were last adjusted in 1997, we 
compared the CPI-U for June 1997 (160.3) to the CPI-U for June 2003 
(183.7). This resulted in an inflation increase of 14.6 percent. The 
penalty for failure to require flood insurance or notify the borrower 
of lack of coverage, 42 U.S.C. 4012a(f)(5), has never been adjusted for 
inflation because of application of the rounding rules. For that 
penalty, we compared the CPI-U for June of the year of enactment, 1994 
\3\ (148.0), with the CPI-U for June 2003 (183.7). This resulted in an 
inflation increase of 24.1 percent.
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    \3\ See Riegle Community Development and Regulatory Improvement 
Act of 1994 (RDCRIA), Pub. L. 103-325, Title V, section 525, 108 
Stat. 2260.
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    We multiplied the amount of each CMP by the appropriate percentage 
inflation adjustment and added that amount to the current penalty. We 
rounded the resulting dollar amount up or down according to the 
rounding requirements of the Act. In some cases, rounding resulted in 
no adjustment to the CMP. In the case of the flood insurance penalty, 
the increase was capped at 10 percent because this is the initial 
adjustment. The following table shows both the present CMPs and the 
inflation adjusted CMPs. The table published in Sec.  19.240(a) is 
shorter and shows only the adjusted CMPs, not the calculations.
    New Sec.  19.240(b) states that the adjustments made in Sec.  
19.240(a) apply only to violations that occur after the effective date 
of this final rule.
    The OCC will readjust these amounts in 2008 and every four years 
thereafter, assuming there are no further changes to the mandate 
imposed by the Act.

[[Page 65068]]



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                                                                                                                             Amount of       Adjusted
                                                                              Maximum       Percentage       Amount of      increase--        maximum
            U.S. Code citation                       Description           penalty  (in      increase      increase  (in   rounded  (in    penalty  (in
                                                                             dollars)                        dollars)        dollars)        dollars)
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12 U.S.C. 93(b), 504, 1817(j)(16),          Tier 1......................           5,500            14.6             803           1,000           6,500
 1818(i)(2), and 1972(2)(F).
                                            Tier 2......................          27,500            14.6           4,015           5,000          32,500
                                            Tier 3......................       1,175,000             6.6          77,550          75,000       1,250,000
12 U.S.C. 164 and 3110(c).................  Tier 1......................           2,200             6.6             145               0           2,200
                                            Tier 2......................          22,000            14.6           3,212           5,000          27,000
                                            Tier 3......................       1,175,000             6.6          77,550          75,000       1,250,000
12 U.S.C. 1832(c) and 3909(d)(1)..........  ............................           1,100            14.6             161               0           1,100
12 U.S.C. 1884............................  ............................             110            14.6              16               0             110
12 U.S.C. 3110(a).........................  ............................          27,500            14.6           4,015           5,000          32,500
15 U.S.C. 78u-2(b)........................  Tier 1 (natural person).....           5,500            14.6             803           1,000           6,500
                                            Tier 1 (other person).......          60,000             6.6           3,900           5,000          65,000
                                            Tier 2 (natural person).....          60,000             6.6           3,900           5,000          65,000
                                            Tier 2 (other person).......         300,000             6.6          19,800          25,000         325,000
                                            Tier 3 (natural person).....         120,000             6.6           7,920          10,000         130,000
                                            Tier 3 (other person).......         575,000             6.6          37,950          50,000         625,000
42 U.S.C. 4012a(f)(5).....................  Per violation...............             350            24.1              84              35             385
                                            Per year....................         115,000             6.6           7,475          10,000         125,000
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Technical Correction

    The OCC also is amending 12 CFR 19.240 to make a technical 
correction. When we issued subpart P (pertaining to the removal, 
suspension, and debarment of accountants from performing audit 
services) (68 FR 48265, Aug. 13, 2003), we inadvertently assigned a 
number--Sec.  19.241--that already appears in Subpart O. To correct 
this numbering overlap, the final rule amends subpart O by combining 
Sec. Sec.  19.240 (prescribing the inflation-adjusted CMP amounts) and 
19.241 (specifying when the inflation-adjusted CMP amounts apply) into 
Sec.  19.240 and removes Sec.  19.241 from subpart O. Revised Sec.  
19.240 is divided into paragraphs (a) and (b). Former Sec.  19.240 
becomes paragraph (a) and former Sec.  19.241 becomes paragraph (b). 
Section 19.241 in subpart P is unchanged.

Procedural Issues

1. Notice and Comment Procedure

    Under the Administrative Procedure Act (APA), an agency may 
dispense with public notice and an opportunity for comment if the 
agency finds, for good cause, that these procedural requirements are 
impracticable, unnecessary, or contrary to the public interest. 5 
U.S.C. 553(b)(B). The Act provides the OCC no discretion in calculating 
the amount of the civil penalty adjustment. The OCC, accordingly, 
cannot vary the amount of the adjustment to reflect any views or 
suggestions provided by commenters. In addition, combining Sec. Sec.  
19.240 and 19.241 is technical in nature. Therefore, notice and comment 
are unnecessary and delay in the form of notice and comment procedure 
is contrary to the public interest. Accordingly, good cause exists to 
dispense with this procedure.

2. Delayed Effective Date

    The RCDRIA requires that the effective date of new regulations and 
amendments to regulations that impose additional reporting, 
disclosures, or other new requirements on insured depository 
institutions shall be the first day of a calendar quarter that begins 
on or after the date the regulations are published in final form. See 
12 U.S.C. 4802(b)(1). The RCDRIA does not apply to this final rule 
because the rule merely increases the amount of CMPs that already exist 
and does not impose any additional reporting, disclosures, or other new 
requirements.

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 OCC 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.

Executive Order 12866

    The OCC has determined that this final rule is not a significant 
regulatory action under Executive Order 12866.

Unfunded Mandates Reform Act of 1995

    The OCC 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, a 
budgetary impact statement is not required under section 202 of the 
Unfunded Mandates Reform Act of 1995.

List of Subjects in 12 CFR Part 19

    Administrative practice and procedure, Crime, Equal access to 
justice, Investigations, National banks, Penalties, Securities.

Authority and Issuance

0
For the reasons set out in the preamble, part 19 of chapter I of title 
12 of the Code of Federal Regulations is amended as follows:

PART 19--RULES OF PRACTICE AND PROCEDURE

0
1. The authority citation for part 19 is revised to read as follows:

    Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 93(b), 93a, 164, 
505, 1817, 1818, 1820, 1831m, 1831o, 1972, 3102, 3108(a), 3909, and 
4717; 15 U.S.C. 78(h) and (i), 78o-4(c), 78o-5, 78q-1, 78s, 78u, 
78u-2, 78u-3, and 78w; 28 U.S.C. 2461 note; 31 U.S.C. 330 and 5321; 
and 42 U.S.C. 4012a.


0
2. Section 19.241 of subpart O is removed.
0
3. Section 19.240 of subpart O is revised to read as follows:


Sec.  19.240  Inflation adjustments.

    (a) The maximum amount of each civil money penalty within the OCC's 
jurisdiction is adjusted in accordance with the Federal Civil Penalties 
Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note) as follows:

[[Page 65069]]



------------------------------------------------------------------------
                                                              Maximum
        U.S. Code citation               Description       penalty  (in
                                                             Dollars)
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12 U.S.C. 93(b), 504, 1817(j)(16),  Tier 1..............           6,500
 1818(i)(2), and 1972(2)(F).
                                    Tier 2..............          32,500
                                    Tier 3..............       1,250,000
12 U.S.C. 164 and 3110(c).........  Tier 1..............           2,200
                                    Tier 2..............          27,000
                                    Tier 3..............       1.250,000
12 U.S.C. 1832(c) and 3909(d)(1)..  ....................           1,100
12 U.S.C. 1884....................  ....................             110
12 U.S.C. 3110(a).................  ....................          32,500
15 U.S.C. 78u-2(b)................  Tier 1 (natural                6,500
                                     person).
                                    Tier 1 (other                 65,000
                                     person).
                                    Tier 2 (natural               65,000
                                     person).
                                    Tier 2 (other                325,000
                                     person).
                                    Tier 3 (natural              130,000
                                     person).
                                    Tier 3 (other                625,000
                                     person).
42 U.S.C. 4012a(f)(5).............  Per violation.......             385
                                    Per year............         125,000
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    (b) The adjustments in Sec.  19.240(a) apply to violations that 
occur after December 10, 2004.

    Dated: November 3, 2004.
Julie L. Williams,
Acting Comptroller of the Currency.
[FR Doc. 04-24974 Filed 11-9-04; 8:45 am]
BILLING CODE 4810-33-P