[Federal Register Volume 84, Number 21 (Thursday, January 31, 2019)]
[Rules and Regulations]
[Pages 536-537]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-00369]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Parts 36 and 42

RIN 2900-AQ55


Federal Civil Penalties Inflation Adjustment Act Amendments

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: The Department of Veterans Affairs (VA) is providing public 
notice of inflationary adjustments to the maximum civil monetary 
penalties assessed or enforced by VA, as implemented by the Federal 
Civil Penalties Inflation Adjustment Act Improvements Act of 2015, for 
calendar year 2019. VA may impose civil monetary penalties for false 
loan guaranty certifications. Also, VA may impose civil monetary 
penalties for fraudulent claims or written statements made in 
connection with VA programs generally. The Federal Civil Penalties 
Inflation Adjustment Act of 1990, as amended by the Federal Civil 
Penalties Inflation Adjustment Act Improvements Act of 2015, sets forth 
a formula that increases the maximum statutory amounts for civil 
monetary penalties and directs VA to give public notice of the new 
maximum amounts by regulation. Accordingly, VA is providing notice of 
the calendar year 2019 inflationary adjustments that increase maximum 
civil monetary penalties from $22,363 to $22,927 for false loan 
guaranty certifications and from $11,181 to $11,463 for fraudulent 
claims or written statements made in connection with VA programs 
generally.

DATES: Effective Date: This rule is effective January 31, 2019.

FOR FURTHER INFORMATION CONTACT: Michael Shores, Director, Office of 
Regulation Policy and Management (00REG), Department of Veterans 
Affairs, 810 Vermont Avenue NW, Washington, DC 20420, (202) 461-4921. 
(This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: On November 2, 2015, the President signed 
into law the Federal Civil Penalties Inflation Adjustment Act 
Improvements Act of 2015 (2015 Act) (Pub. L. 114-74, sec. 701, 129 
Stat. 599), which amended the Federal Civil Penalties Inflation 
Adjustment Act of 1990 (Pub. L. 101-410, 104 Stat. 890), to improve the 
effectiveness of civil monetary penalties and to maintain their 
deterrent effect. The 2015 Act was codified in a note following 28 
U.S.C. 2461. The 2015 Act requires agencies to publish annual 
adjustments for inflation, based on the percent change between the 
Consumer Price Index for All Urban Consumers (CPI-U) for the month of 
October preceding the date of the adjustment and the prior year's 
October CPI-U. 28 U.S.C. 2461 note, secs. 4(a) and (b) and 5(b)(1). 
This rule implements the 2019 calendar year inflation adjustment 
amounts.
    Under 38 U.S.C. 3710(g)(4)(B), VA is authorized to levy civil 
monetary penalties against private lenders that originate VA-guaranteed 
loans if a lender falsely certifies that they have complied with 
certain credit information and loan processing standards, as set forth 
by chapter 37, title 38 U.S.C. and part 36, title 38 CFR. Under section 
3710(g)(4)(B), any lender who knowingly and willfully makes such a 
false certification shall be liable to the United States Government for 
a civil penalty equal to two times the amount of the Secretary's loss 
on the loan involved or to another appropriate amount, not to exceed 
$10,000, whichever is greater. VA implemented the penalty amount in 38 
CFR 36.4340(k)(1)(i) and (k)(3). On December 14, 2018, OMB issued 
Circular M-19-04. This circular reflects that the October 2017 CPI-U 
was 246.663 and the October 2018 CPI-U was 252.885, resulting in an 
inflation adjustment multiplier of 1.02522. Accordingly, the calendar 
year 2019 inflation revision imposes an adjustment from $22,363 to 
$22,927.
    Under 31 U.S.C. 3802, VA can impose monetary penalties against any 
person who makes, presents, or submits a claim or written statement to 
VA that the person knows or has reason to know is false, fictitious, or 
fraudulent, or who engages in other covered conduct. The statute 
permits, in addition to any other remedy that may be prescribed by law, 
a civil penalty of not more than $5,000 for each claim. 31 U.S.C. 
3802(a)(1) and (2). VA implemented the penalty amount in 38 CFR 
42.3(a)(1) and (b)(1). As previously noted, Circular M-19-04 reflects 
an inflation adjustment multiplier of 1.02522. Therefore, the calendar 
year 2019 inflation revision imposes an adjustment from $11,181 to 
$11,463.
    Accordingly, VA is revising 38 CFR 36.4340(k)(1)(i) and (3) and 38 
CFR 42.3(a)(1)(iv) and (b)(1)(ii) to reflect the 2019 inflationary 
adjustments for civil monetary penalties assessed or enforced by VA.

Administrative Procedure Act

    The Secretary of Veterans Affairs finds that there is good cause 
under 5 U.S.C. 553(b)(B) and (d)(3) to dispense with the opportunity 
for prior notice and public comment and to publish this rule with an 
immediate effective date. The 2015 Act requires agencies to make annual 
adjustments for inflation to the allowed amounts of civil monetary 
penalties ``notwithstanding section 553 of title 5, United States 
Code.'' 28 U.S.C. 2461 note, sec. 4(a) and (b). The penalty 
adjustments, and the methodology used to determine the adjustments, are 
set by the terms of the 2015 Act. VA has no discretion to make changes 
in those areas. Therefore, an opportunity for prior notice and public 
comment and a delayed effective date is unnecessary.

Executive Orders 12866, 13563, and 13771

    Executive Orders 12866 and 13563 direct agencies to assess the 
costs and benefits of available regulatory alternatives and, when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, and other advantages; distributive impacts; 
and equity). Executive Order 13563 (Improving Regulation and Regulatory 
Review) emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
Executive Order 12866 (Regulatory Planning and Review) defines a 
``significant regulatory action'' requiring review by OMB, unless OMB 
waives such review, as any regulatory action that is likely to result 
in a rule that may: (1) Have an annual effect on the economy of $100 
million or more or adversely affect in a material way the economy, a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or tribal 
governments or communities; (2) Create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) Materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    The economic, interagency, budgetary, legal, and policy 
implications of this regulatory action

[[Page 537]]

have been examined, and it has been determined not to be a significant 
regulatory action under Executive Order 12866. VA's impact analysis can 
be found as a supporting document at http://www.regulations.gov, 
usually within 48 hours after the rulemaking document is published. 
Additionally, a copy of the rulemaking and its impact analysis are 
available on VA's website at http://www.va.gov/orpm/, by following the 
link for ``VA Regulations Published From FY 2004 Through Fiscal Year to 
Date.'' This rule is not an Executive Order 13771 regulatory action 
because this rule is not significant under Executive Order 12866.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any one year. This final rule will have no such effect on 
State, local, and tribal governments, or on the private sector.

Paperwork Reduction Act

    This final rule contains no provisions constituting a collection of 
information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3521).

Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq. (RFA), imposes 
certain requirements on Federal agency rules that are subject to the 
notice and comment requirements of the Administrative Procedure Act 
(APA), 5 U.S.C. 553(b). This final rule is exempt from the notice and 
comment requirements of the APA because the 2015 Act directed the 
Department to issue the annual adjustments without regard to section 
553 of the APA. Therefore, the requirements of the RFA applicable to 
notice and comment rulemaking do not apply to this rule. Accordingly, 
the Department is not required either to certify that the final rule 
would not have a significant economic impact on a substantial number of 
small entities or to conduct a regulatory flexibility analysis.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance number and title for the 
program affected by this document is 64.114, Veterans Housing 
Guaranteed and Insured Loans.

List of Subjects

38 CFR Part 36

    Condominiums, Housing, Individuals with disabilities, Loan 
programs--housing and community development, Loan programs--veterans, 
Manufactured homes, Mortgage insurance, Reporting and recordkeeping 
requirements, Veterans.

38 CFR Part 42

    Administrative practice and procedure, Claims, Fraud, Penalties.

Signing Authority

    The Secretary of Veterans Affairs approved this document and 
authorized the undersigned to sign and submit the document to the 
Office of the Federal Register for publication electronically as an 
official document of the Department of Veterans Affairs. Robert L. 
Wilkie, Secretary, Department of Veterans Affairs, approved this 
document on January 23, 2019, for publication.

    Dated: January 23, 2019.
Jeffrey M. Martin,
Assistant Director, Office of Regulation Policy & Management, Office of 
the Secretary, Department of Veterans Affairs.
    For the reasons stated in the preamble, the Department of Veterans 
Affairs amends 38 CFR parts 36 and 42 as set forth below:

PART 36--LOAN GUARANTY

0
1. The authority citation for part 36 continues to read as follows:

    Authority: 38 U.S.C. 501 and 3720.


Sec.  36.4340   [Amended]

0
2. In Sec.  36.4340, amend paragraphs (k)(1)(i) introductory text and 
(k)(3) by removing ``$22,363'' and adding in its place ``$22,927''.

PART 42--STANDARDS IMPLEMENTING THE PROGRAM FRAUD CIVIL REMEDIES 
ACT

0
3. The authority citation for part 42 continues to read as follows:

    Authority:  Pub. L. 99-509, secs. 6101-6104, 100 Stat. 1874, 
codified at 31 U.S.C. 3801-3812.


Sec.  42.3   [Amended]

0
4. In Sec.  42.3, amend paragraphs (a)(1)(iv) and (b)(1)(ii) by 
removing ``$11,181'' and adding in its place ``$11,463''.

[FR Doc. 2019-00369 Filed 1-30-19; 8:45 am]
 BILLING CODE 8320-01-P