Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Proposed Rules 26545 

SUMMARY: The comment period for the 

notice of public meeting and availability 

of the Framework Document pertaining 

to the development of energy 

conservation standards for commercial 

and industrial fan and blower 

equipment published on February 1, 

2013, is extended to June 3, 2013. 

DATES: The comment period for the 

notice of public meeting and availability 

of the Framework Document relating to 

commercial and industrial fan and 

blower equipment that published on 

February 1, 2013, (78 FR 7306) is 

extended to June 3, 2013. 

ADDRESSES: Any comments submitted 

must identify the framework document 

for commercial and industrial fans and 

blowers and provide docket number 

EERE–2013–BT–STD–0006 and/or RIN 

number 1904–AC55. Comments may be 

submitted using any of the following 

methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Email: 

CIFB2013STD0006@EE.Doe.Gov. 

Include EERE–2013–BT–STD–0006 in 

the subject line of the message. 

• Mail: Ms. Brenda Edwards, U.S. 

Department of Energy, Building 

Technologies Program, Mailstop EE–2J, 

Framework Document for Commercial 

and Industrial Fans and Blowers, EERE– 

2013–BT–STD–0006, 1000 

Independence Avenue SW., 

Washington, DC 20585–0121. Phone: 

(202) 586–2945. Please submit one 

signed paper original. 

• Hand Delivery/Courier: Ms. Brenda 

Edwards, U.S. Department of Energy, 

Building Technologies Program, 6th 

Floor, 950 L’Enfant Plaza SW., 

Washington, DC 20024. Phone: (202) 

586–2945. Please submit one signed 

paper original. 

Docket: For access to the docket to 

read background documents, or 

comments received, go to the Federal 

eRulemaking Portal at http:// 

www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Charles Llenza, U.S. Department of 

Energy, Office of Energy Efficiency and 

Renewable Energy, Building 

Technologies Office, EE–2J, 1000 

Independence Avenue SW., 

Washington, DC 20585–0121. 

Telephone: (202) 586–2192. Email: 

CIFansBlowers@ee.doe.gov. 

In the office of the General Counsel, 

contact Ms. Francine Pinto, U.S. 

Department of Energy, Office of the 

General Counsel, GC–71, 1000 

Independence Avenue SW., 

Washington, DC 20585–0121. 

Telephone: (202) 586–7432. Email: 

Francine.Pinto@hq.doe.gov. 

SUPPLEMENTARY INFORMATION: The U.S. 

Department of Energy (DOE) published 

a proposed determination that 

commercial and industrial fans and 

blowers (fans) meet the definition of 

covered equipment under the Energy 

Policy and Conservation Act of 1975, as 

amended (76 FR 37628, June 28, 2011). 

As part of its further consideration of 

this determination, DOE is analyzing 

potential energy conservation standards 

for fans. DOE published a notice of 

public meeting and availability of the 

framework document to consider such 

standards (78 FR 7306, Feb. 1, 2013). 

The framework document requested 

public comment from interested parties 

and provided for the submission of 

comments by March 18, 2013. 

Thereafter, Air Movement and Control 

Association International (AMCA), on 

behalf of itself and its affiliates, 

requested an extension of the public 

comment period by 45 days and DOE 

extended the initial comment period 

until May 2, 2013. AMCA further 

requested an additional extension of the 

public comment period by 30 days. 

AMCA stated that the additional time is 

necessary to conduct a rapid and 

intensive research project in order to 

provide DOE with better information at 

an early stage of the regulatory process, 

making subsequent phases more 

efficient and effective. 

Based on AMCA’s request, DOE 

believes that extending the comment 

period to allow additional time for 

interested parties to submit comments is 

appropriate. Therefore, DOE is 

extending the comment period until 

June 3, 2013 to provide interested 

parties additional time to prepare and 

submit comments. Accordingly, DOE 

will consider any comments received by 

June 3, 2013 to be timely submitted. 

Issued in Washington, DC, on May 1, 2013. 

Kathleen B. Hogan, 

Deputy Assistant Secretary for Energy 

Efficiency, Energy Efficiency and Renewable 

Energy. 

[FR Doc. 2013–10734 Filed 5–6–13; 8:45 am] 

BILLING CODE 6450–01–P 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1075 

[Docket No. CFPB–2013–0012] 

RIN 3170–AA38 

Consumer Financial Civil Penalty Fund 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Proposed rule with request for 

public comment. 

SUMMARY: The Dodd-Frank Wall Street 

Reform and Consumer Protection Act 

(Dodd-Frank Act or Act) establishes a 

‘‘Consumer Financial Civil Penalty 

Fund’’ (Civil Penalty Fund) into which 

the Consumer Financial Protection 

Bureau (Bureau) must deposit any civil 

penalty it obtains against any person in 

any judicial or administrative action 

under Federal consumer financial laws. 

Under the Act, funds in the Civil 

Penalty Fund may be used for payments 

to the victims of activities for which 

civil penalties have been imposed under 

Federal consumer financial laws. In 

addition, to the extent that such victims 

cannot be located or such payments are 

otherwise not practicable, the Bureau 

may use funds in the Civil Penalty Fund 

for the purpose of consumer education 

and financial literacy programs. This 

proposal is related to a final rule 

published elsewhere in today’s Federal 

Register. That final rule implements the 

statutory Civil Penalty Fund provisions 

by articulating the Bureau’s 

interpretation of what kinds of 

payments to victims are appropriate and 

by establishing procedures for allocating 

funds for such payments to victims and 

for consumer education and financial 

literacy programs. This notice of 

proposed rulemaking seeks comments 

on possible revisions, adjustments, or 

refinements to the rule. 

DATES: Comments must be received on 

or before July 8, 2013 to be assured of 

consideration. 

ADDRESSES: You may submit comments, 

identified by Docket No. CFPB–2013– 

0012 or Regulatory Identification 

Number (RIN) 3170–AA38, by any of the 

following methods: 

• Electronic: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail/Hand Delivery/Courier: 

Monica Jackson, Office of the Executive 

Secretary, Consumer Financial 

Protection Bureau, 1700 G Street NW., 

Washington, DC 20552. 

Instructions: All submissions should 

include the agency name and docket 

number or RIN for this rulemaking. 

Because paper mail in the Washington, 

DC area and at the Bureau is subject to 

delay, commenters are encouraged to 

submit comments electronically. In 

general, all comments received will be 

posted without change to http:// 

www.regulations.gov. In addition, 

comments will be available for public 

inspection and copying at 1700 G Street 

NW., Washington, DC 20552, on official 

business days between the hours of 10 

a.m. and 5 p.m. Eastern Time. You can 


emcdonald on DSK67QTVN1PROD with PROPOSALS
26546 Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Proposed Rules 

make an appointment to inspect the 

documents by telephoning (202) 435– 

7275. 

All comments, including attachments 

and other supporting materials, will 

become part of the public record and 

subject to public disclosure. Sensitive 

personal information, such as account 

numbers or Social Security numbers, 

should not be included. Comments will 

not be edited to remove any identifying 

or contact information. 

FOR FURTHER INFORMATION CONTACT: 

Kristin Bateman, Attorney-Advisor, 

Legal Division, Bureau of Consumer 

Financial Protection, 1700 G Street NW., 

Washington, DC 20552, at (202) 435– 

7821. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Title X of the Dodd-Frank Act 

established the Bureau with a mandate 

to regulate the offering and provision of 

consumer financial products and 

services under the Federal consumer 

financial laws. Public Law 111–203, 

section 1011(a) (2010), codified at 12 

U.S.C. 5491(a). The Dodd-Frank Act 

authorizes the Bureau, among other 

things, to enforce Federal consumer 

financial laws through judicial actions 

and administrative adjudication 

proceedings. 12 U.S.C. 5563, 5564. In 

those actions and proceedings, a court 

or the Bureau may require a party that 

has violated the law to pay a civil 

penalty. See, e.g., 12 U.S.C. 5565. 

Section 1017(d)(1) of the Dodd-Frank 

Act establishes a separate fund in the 

Federal Reserve, the ‘‘Consumer 

Financial Civil Penalty Fund’’ (Civil 

Penalty Fund or Fund), into which the 

Bureau must deposit civil penalties it 

collects from any person in any judicial 

or administrative action under Federal 

consumer financial laws. 12 U.S.C. 

5497(d)(1). Under the Act, amounts in 

the Fund may be used ‘‘for payments to 

the victims of activities for which civil 

penalties have been imposed under the 

Federal consumer financial laws.’’ 12 

U.S.C. 5497(d)(2). In addition, ‘‘[t]o the 

extent that such victims cannot be 

located or such payments are otherwise 

not practicable,’’ the Bureau may use 

amounts in the Fund for consumer 

education and financial literacy 

programs. Id. 

Today, the Bureau is issuing a final 

rule entitled ‘‘Consumer Financial Civil 

Penalty Fund Rule’’ (Final Rule) that 

implements this section of the DoddFrank Act. Because the Final Rule is 

interpretive and procedural and relates 

to benefits, it is exempt from the noticeand-comment rulemaking requirements 

of the Administrative Procedure Act. 

Nonetheless, the Bureau believes public 

input on the Final Rule would be 

valuable. The Bureau therefore seeks 

comment on the choices reflected in the 

Final Rule and on possible revisions, 

adjustments, refinements, or other 

changes to the rule. This notice of 

proposed rulemaking presents several 

such changes that the Bureau is 

considering. In addition to those 

changes, the Bureau seeks comment on 

all aspects of the Final Rule and 

suggestions for modifications or 

alternatives. 

II. Summary of the Proposal 

Today, the Bureau is issuing a Final 

Rule to implement section 1017(d)(2) of 

the Dodd-Frank Act, 12 U.S.C. 

5497(d)(2). As the Supplementary 

Information to the Final Rule explains 

in greater detail, the Final Rule specifies 

the conditions under which victims will 

be eligible for payment from the Civil 

Penalty Fund and the amounts of the 

payments that the Bureau may make to 

them. The Final Rule also establishes 

procedures for allocating funds for 

payments to victims and for consumer 

education and financial literacy 

programs, and for distributing allocated 

funds to individual victims. This notice 

of proposed rulemaking seeks comment 

on, and proposes to amend, the Final 

Rule. 

First, this notice of proposed 

rulemaking seeks comment on the Final 

Rule’s provision on the category of 

victims who are eligible for payments. 

Under the Final Rule, a victim is eligible 

for payment from the Civil Penalty Fund 

if a final order in a Bureau enforcement 

action imposed a civil penalty for the 

violation or violations that harmed the 

victim. The Bureau is considering 

whether it should make payments to a 

broader category of victims: victims of 

any type of ‘‘activities’’ for which civil 

penalties have been imposed under the 

Federal consumer financial laws, even if 

no enforcement action imposed a civil 

penalty for the particular ‘‘activities’’ 

that harmed the victim. The Bureau also 

seeks comment on how, under this 

alternative approach, it might identify 

the types of ‘‘activities’’ for which civil 

penalties were imposed, and how it 

might identify the victims of those types 

of activities who are eligible to receive 

Civil Penalty Fund payments. 

Second, this notice of proposed 

rulemaking seeks comment on the Final 

Rule’s provisions on the amounts of the 

payments that victims may receive. 

Under the Final Rule, the Bureau will 

use funds in the Civil Penalty Fund for 

payments to compensate eligible 

victims’ uncompensated harm. The 

Bureau is considering whether it should 

instead pay victims a share of the civil 

penalties collected for the particular 

violations that harmed them. This 

notice also sets forth for comment two 

variations on that alternative. Under 

one, the Bureau would pay victims a 

share of the civil penalties collected for 

the particular violations that harmed 

them, but only to the extent that those 

payments do not exceed the victims’ 

uncompensated harm. Under the other 

alternative, victims could receive a 

share of the civil penalties collected for 

the violations that harmed them, as well 

as additional amounts from the Civil 

Penalty Fund, up to the amount of their 

uncompensated harm. Under that 

alternative, when victims of a violation 

for which a civil penalty is obtained had 

already received full compensation, the 

amount of that civil penalty would 

become available for payments to 

victims of other violations who had not 

received full compensation. 

This notice also seeks comment on 

the Final Rule’s provisions regarding 

uncompensated harm. The Final Rule 

provides that a victim’s uncompensated 

harm is the victim’s compensable harm, 

as described in § 1075.104(c), minus any 

compensation for that harm that the 

victim has received or is reasonably 

expected to receive. This notice seeks 

comment on possible amendments to 

the provisions regarding what amounts 

a victim is ‘‘reasonably expected to 

receive’’ and what qualifies as 

compensable harm. The Final Rule 

provides that a victim is ‘‘reasonably 

expected to receive,’’ among other 

things, redress that does not arise from 

a Bureau enforcement action if a party 

has paid such redress to an intermediary 

for distribution to the victim. This 

notice seeks comment on whether the 

Bureau should also deem victims 

reasonably likely to receive any redress 

that a final judgment in a non-Bureau 

action orders a party to pay, unless there 

is some indication that the party will 

not pay it. The notice also seeks 

comment on whether it should change 

what qualifies as a victim’s 

compensable harm in cases where the 

amount of that harm cannot be 

determined based on the terms of a final 

order alone. Under the Final Rule, 

victims’ compensable harm in those 

circumstances is equal to their out-ofpocket losses. This notice seeks 

comment on whether victims’ 

compensable harm in those 

circumstances should instead be 

whatever amount of harm the Fund 

Administrator determines is practicable 

given the facts of the particular case. 

Third, this notice seeks comment on 

the schedule that the Final Rule 

establishes for allocating funds for 


emcdonald on DSK67QTVN1PROD with PROPOSALS
Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Proposed Rules 26547 

payments to victims and for consumer 

education and financial literacy 

programs. Under the Final Rule, the 

Fund Administrator—a Bureau 

employee charged with administering 

the Civil Penalty Fund—will allocate 

funds in the Civil Penalty Fund to 

classes of victims and, as appropriate, to 

consumer education and financial 

literacy programs every six months. 

This seeks comment on whether the 

Fund Administrator should allocate 

funds more or less frequently, or 

whether a different method of timing 

allocations would be appropriate. 

Fourth, this notice seeks comment on 

the procedures for allocating funds to 

classes of victims, i.e., to groups of 

similarly situated victims who suffered 

the same or similar violations for which 

the Bureau obtained relief in an 

enforcement action. In particular, the 

notice seeks comment on possible 

alternatives to the allocation procedures 

that the Final Rule establishes for when 

sufficient funds are not available to 

compensate fully the uncompensated 

harm of all victims to whom it is 

practicable to make payments. 

Under the Final Rule, classes of 

victims are assigned to six-month 

periods based on when they first had 

uncompensated harm, and the Fund 

Administrator will prioritize allocations 

to classes of victims from the most 

recent six-month period. This notice 

describes and seeks comment on several 

alternatives or modifications to these 

allocation procedures. As one option, 

instead of prioritizing allocations to 

certain classes, the Fund Administrator 

might attempt to allocate available 

funds among all classes with 

uncompensated harm. As a second 

alternative, the Fund Administrator 

could prioritize allocations to classes of 

victims from the oldest, rather than 

most recent, six-month periods. As a 

third alternative, the Fund 

Administrator could prioritize 

allocations to classes in which 

individual victims have the greatest 

amount of uncompensated harm. As a 

fourth alternative, at times when 

insufficient funds are available to 

compensate fully the uncompensated 

harm of all victims, the Fund 

Administrator could make a 

discretionary decision about how to 

allocate the limited funds. 

This notice also seeks comment on 

whether it should modify the allocation 

procedures to specify the amounts to be 

allocated to each class when the 

available funds are not sufficient to 

provide full compensation for the 

uncompensated harm of all victims from 

all classes from a single six-month 

period. In particular, the notice seeks 

comment on whether, in those 

circumstances, the Fund Administrator 

should allocate funds to the classes of 

victims from a single six-month period 

in a manner designed to ensure, to the 

extent possible, that the victims in those 

classes to whom it is practicable to 

make payments will receive 

compensation, through redress and Civil 

Penalty Fund payments, for an equal 

percentage of their compensable harm. 

Fifth, this notice seeks comment on 

the provisions governing allocations to 

consumer education and financial 

literacy programs. Under the Final Rule, 

if the Fund Administrator allocates 

sufficient funds to classes of victims to 

provide full compensation for the 

uncompensated harm of all victims to 

whom it is practicable to make 

payments, she may allocate any 

remaining funds to consumer education 

and financial literacy programs. This 

notice seeks comment on whether the 

rule should limit the amount of funds 

that the Fund Administrator may 

allocate to consumer education and 

financial literacy programs in these 

circumstances. 

Sixth, this notice seeks comment on 

possible amendments to the procedures 

that the Final Rule establishes for 

disposing of funds allocated to a class 

of victims that remain undistributed 

after the payments administrator has 

made, or attempted to make, payments 

to the victims in that class. Under the 

Final Rule, such remaining funds will 

be distributed to victims in the class to 

which the funds were allocated, up to 

the amount of the victims’ remaining 

uncompensated harm. The Bureau seeks 

comment on whether it should instead 

require such remaining funds to be 

returned to the Civil Penalty Fund. 

Finally, this notice also generally 

invites comment on all aspects of the 

Final Rule. 

III. Legal Authority 

The Bureau is proposing this rule 

pursuant to its authority under section 

1022(b)(1) of the Dodd-Frank Act, which 

authorizes the Bureau to prescribe rules 

as may be necessary or appropriate to 

enable the Bureau to administer and 

carry out the purposes and objectives of 

Federal consumer financial law, 12 

U.S.C. 5512(b)(1); and under section 

1017(d) of the Dodd-Frank Act, which 

establishes the Civil Penalty Fund and 

authorizes the Bureau to use amounts in 

that Fund for payments to victims and 

for consumer education and financial 

literacy programs. 

IV. Section-by-Section Description 

Section 1075.100 Scope and Purpose 

Section 1075.100 of the Final Rule 

describes the rule’s scope and purpose, 

as explained in greater detail in the 

Supplementary Information to the Final 

Rule. The Bureau is not proposing 

changes to this section. 

Section 1075.101 Definitions 

Section 1075.101 of the Final Rule 

defines terms used in the rule, as 

described in greater detail in the 

SUPPLEMENTARY INFORMATION to the Final 

Rule. The Bureau seeks comment on 

each of the definitions set forth in the 

Final Rule and any suggested 

clarifications, modifications, or 

alternatives. 

Section 1075.102 Fund Administrator 

As discussed in greater detail in the 

Supplementary Information to the Final 

Rule, § 1075.102 of the Final Rule 

establishes within the Bureau the 

position of Civil Penalty Fund 

Administrator (Fund Administrator) and 

describes that person’s role and the role 

of the Civil Penalty Fund Governance 

Board. The Bureau is not proposing 

changes to this section. 

Section 1075.103 Eligible Victims 

Section 1075.103 of the Final Rule 

provides that a victim is eligible for 

payment from the Civil Penalty Fund if 

a final order in a Bureau enforcement 

action imposed a civil penalty for the 

violation or violations that harmed the 

victim. This implements the DoddFrank Act, which authorizes Civil 

Penalty Fund payments to ‘‘the victims 

of activities for which civil penalties 

have been imposed under the Federal 

consumer financial laws.’’ 12 U.S.C. 

5497(d)(2). The Act does not clearly 

specify whether the particular activities 

that affected a particular victim must 

have been found to be violations in an 

enforcement action before the victim 

may receive payments from the Civil 

Penalty Fund. However, as explained in 

greater detail in the Supplementary 

Information to the Final Rule, the 

Bureau has interpreted section 

1017(d)(2) of the Dodd-Frank Act as 

authorizing such payments only to the 

victims of particular violations for 

which civil penalties were imposed. 

The Bureau seeks comment on the 

criteria for victims’ eligibility for 

payment from the Civil Penalty Fund, as 

well as suggestions for modifications or 

alternatives. The Bureau also 

specifically seeks comment on whether 

it should instead interpret section 

1017(d)(2) of the Dodd-Frank Act more 

broadly to authorize payments to 


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26548 Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Proposed Rules 

victims of any type of ‘‘activities’’ for 

which civil penalties were imposed 

under the Federal consumer financial 

laws, even if no enforcement action 

identified as a violation, or imposed a 

civil penalty for, the particular 

‘‘activities’’ that harmed the victim. 

The Bureau also seeks comment on 

how it might identify the types of 

‘‘activities’’ that would qualify as 

‘‘activities for which civil penalties have 

been imposed’’ under this alternative 

interpretation. One possibility would be 

for such activities to include actions by 

a defendant that are similar to actions 

by the same defendant that gave rise to 

a civil penalty. Another possibility 

would be to define the ‘‘activities’’ for 

which civil penalties are imposed at a 

higher level of generality. Under that 

approach, victims of a particular type of 

activity—for example, deceptive 

marketing of credit card add-on 

products or unlawful collection of 

advance fees in exchange for debt 

settlement services—would qualify as 

victims of ‘‘activities for which civil 

penalties have been imposed’’ so long as 

civil penalties had been imposed for 

those kinds of violations. 

More broadly interpreting ‘‘activities 

for which civil penalties have been 

imposed’’ in either of these ways would 

make more victims eligible for payment 

from the Fund. On the other hand, this 

approach would be harder to 

administer, as it would not be as 

straightforward to identify the 

‘‘activities’’ for which civil penalties 

were imposed as it would be to identify 

the violations for which civil penalties 

were imposed. This approach—and the 

second proposed way of defining the 

‘‘activities’’ for which civil penalties are 

imposed, in particular—could require 

difficult subjective judgments about 

whether activities were sufficiently 

similar to activities that gave rise to civil 

penalties. The Bureau seeks comment 

on ways in which the Bureau might 

mitigate these potential problems. 

Section 1075.104 Payments to Victims 

104(a) In General 

Section 1075.104(a) of the Final Rule 

provides that the Bureau will use funds 

in the Civil Penalty Fund for payments 

to compensate eligible victims’ 

uncompensated harm, as described in 

paragraph (b) of this section. As 

explained in greater detail in the 

Supplementary Information to the Final 

Rule, this provision gives effect to the 

Bureau’s interpretation of section 

1017(d)(2) of the Dodd-Frank Act as 

authorizing payments to victims only up 

to the amount necessary to compensate 

them for the harm they suffered as a 

result of a violation. 

The Bureau requests comment on this 

interpretation and suggestions for 

modifications or alternatives. The 

Bureau also specifically seeks comment 

on possible alternatives proposed here. 

First, the Bureau seeks comment on 

whether it should base payments not on 

the amount of a victim’s uncompensated 

harm, but rather solely on the size of the 

civil penalty paid for the violation that 

harmed the victim. Under that 

alternative, each payment would be a 

share of the civil penalty collected for 

the particular violation that harmed the 

victim receiving the payment, without 

regard to whether the payment was 

more or less than the victim’s 

uncompensated harm. This approach 

would, in effect, take the civil penalty 

collected from one defendant and 

distribute it just to that defendant’s 

victims. This differs from the approach 

taken in the Final Rule, which pools 

civil penalties from multiple cases for 

distribution to classes of eligible victims 

from all cases, as the discussion of 

§ 1075.103 in the Supplementary 

Information to the Final Rule explains 

in further detail. 

The Bureau also seeks comment on 

how, under this alternative approach, it 

would determine the share of a civil 

penalty that a victim would receive. For 

example, victims could receive equal 

shares of the civil penalty collected for 

the violation that harmed them, or they 

could receive shares of the civil penalty 

in proportion to the amount of harm 

they suffered from the violation. 

The proposed alternative approach 

might be easier to administer than the 

approach taken in the Final Rule, 

because the Fund Administrator would 

consider individual civil penalty 

amounts and individual classes of 

victims in isolation. The amount of each 

payment also could be easier to 

calculate if victims simply received 

equal shares of the civil penalty 

imposed for the violation or violations 

that harmed them. In addition, under 

this proposed alternative, payments 

could be made more quickly because 

there would be no reason to wait to 

disburse funds after they are deposited 

in the Fund. Whenever a defendant paid 

a civil penalty into the Fund, the Fund 

Administrator could immediately 

allocate the amount of that penalty for 

distribution to that defendant’s victims. 

On the other hand, this approach 

could undercompensate some victims 

while overcompensating others. Victims 

of defendants with limited financial 

resources, or victims of defendants who 

for other reasons do not or cannot pay 

full redress or large penalties, likely 

would not receive full compensation for 

their harm under this approach. At the 

same time, victims of defendants who 

paid full redress would likely receive 

windfall payments. 

The Bureau is also considering, and 

seeks comment on, two additional 

alternatives that would mitigate one or 

both of these negative consequences. 

First, the Bureau could pay victims a 

share of the civil penalties collected for 

the particular violations that harmed 

them, but only to the extent that those 

payments do not exceed victims’ 

uncompensated harm. This could be 

somewhat more difficult to administer 

than the first proposed alternative 

because it would require calculation of 

victims’ uncompensated harm, but it 

would avoid overcompensating victims. 

It could also lead to undercompensation of some victims, 

however. Under this approach, a victim 

could not receive any more than a share 

of the civil penalty paid for the violation 

that harmed the victim. If a victim’s 

share of the civil penalty paid for the 

violation that harmed the victim was 

not enough to provide full 

compensation for the victim’s 

uncompensated harm, the victim would 

not be eligible for additional payments. 

In cases where the victims of a violation 

for which a civil penalty was imposed 

had already received full compensation, 

the civil penalty amount would not be 

used for payments to victims of other 

violations, but would instead be used 

for consumer education and financial 

literacy programs. 

A second additional alternative would 

avoid overcompensating victims while 

also giving all victims the opportunity 

to receive full compensation for their 

uncompensated harm. Under this 

second alternative, the Bureau could 

first pay victims their share of the civil 

penalty collected for the violation that 

harmed them, up to the amount of their 

uncompensated harm. Remaining 

amounts of that individual civil penalty 

could then go into a common pool of 

funds available for distribution to all 

eligible victims who have not yet 

received compensation for their 

uncompensated harm. Those victims 

could then receive additional amounts 

from that common pool up to the 

amount of their uncompensated harm. 

This approach, like the approach taken 

in the Final Rule, would neither undernor over-compensate victims. Unlike the 

approach taken in the Final Rule, 

however, this alternative would ensure 

that funds from a particular defendant’s 

civil penalty would not be used to pay 

victims of other defendants if the 

victims of that defendant had not yet 

received full compensation. 


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Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Proposed Rules 26549 

104(b) Victims’ Uncompensated Harm 

As noted above and explained in 

further detail in the SUPPLEMENTARY

INFORMATION to the Final Rule, 

§ 1075.104(a) of the Final Rule provides 

that the Bureau will use funds in the 

Civil Penalty Fund for payments to 

compensate eligible victims’ 

uncompensated harm. In addition, some 

of the alternatives to that approach 

discussed above would also base the 

amount of Civil Penalty Fund payments 

in part on the amount of victims’ 

uncompensated harm. Section 

1075.104(b) of the Final Rule describes 

what constitutes victims’ 

uncompensated harm. The Bureau seeks 

comment on this provision, as well as 

suggestions for modifications or 

alternatives. 

Under § 1075.104(b) of the Final Rule, 

a victim’s uncompensated harm is the 

victim’s compensable harm, as 

described in § 1075.104(c), minus any 

compensation for that harm that the 

victim has received or is reasonably 

expected to receive. As the 

Supplementary Information to the Final 

Rule explains in greater detail, the Final 

Rule describes three categories of 

compensation that a victim ‘‘has 

received or is reasonably expected to 

receive’’ for purposes of this provision. 

The Bureau specifically requests 

comment on what categories of 

compensation a victim should be 

deemed ‘‘reasonably expected to 

receive.’’ 

In particular, the Bureau invites 

comment on when victims should be 

deemed ‘‘reasonably expected to 

receive’’ redress that does not arise from 

a Bureau enforcement action. Under the 

Final Rule, a victim is reasonably 

expected to receive such ‘‘other’’ redress 

only if a party has paid that redress to 

an intermediary for distribution to the 

victim. As the Supplementary 

Information to the Final Rule explains, 

this does not include amounts that a 

party has been ordered to pay but has 

not yet paid because the Bureau may not 

know whether a party is actually likely 

to pay redress ordered in a case to 

which the Bureau is not a party. As an 

alternative, the Bureau could instead 

deem victims reasonably likely to 

receive redress ordered in a final 

judgment in a non-Bureau action unless 

and until there is some indication that 

the defendant will not pay, such as if 

the defendant fails to pay by the time 

ordered. This approach could decrease 

the chances that a Civil Penalty Fund 

payment would duplicate compensation 

that a victim receives in the future as a 

result of other litigation. 

104(c) Victims’ Compensable Harm 

As explained above, under the Final 

Rule, the Bureau will use funds in the 

Civil Penalty Fund for payments to 

compensate victims for their 

compensable harm, minus any 

compensation for that harm that they 

have received or are reasonably 

expected to receive. Section 1075.104(c) 

of the Final Rule describes the amount 

of victims’ compensable harm for 

purposes of this rule. The Bureau seeks 

comment on this provision, as well as 

suggestions for modifications or 

alternatives. 

As explained further in the 

SUPPLEMENTARY INFORMATION to the Final 

Rule, the Bureau interprets section 

1017(d)(2) of the Dodd-Frank Act as 

directing the Bureau to make payments 

to victims only to the extent that such 

payments are practicable. For payments 

to be practicable, the Bureau must be 

able to determine the amount of the 

payments that the victims may receive— 

which, under the Final Rule, depends 

on the amount of the victims’ harm— 

using means that are reasonable in the 

context of the Civil Penalty Fund. 

Section 1075.104(c) accordingly defines 

‘‘compensable harm’’ to include only 

those amounts of harm that are 

practicable to calculate given the nature 

of the Civil Penalty Fund and the likely 

volume of payments. In particular, 

§ 1075.104(c) of the Final Rule reflects 

the Bureau’s understanding that it will 

be practicable to calculate only those 

harm amounts that can be determined 

by applying objective standards on a 

classwide basis. Section 1075.104(c) 

implements this understanding by 

describing specific measures by which 

harm may practicably be ascertained 

and by establishing procedures that the 

Fund Administrator will follow to 

determine compensable harm in each of 

several categories of cases. 

Under the Final Rule, the amount of 

a victim’s compensable harm will be 

based on the objective terms of a final 

order to the extent possible. 

Specifically, under the Final Rule, the 

Fund Administrator will refer to the 

terms of a final order to determine 

victims’ compensable harm in three 

categories of cases. First, if a final order 

in a Bureau enforcement action ordered 

redress for a class of victims, the 

compensable harm of each victim in 

that class is equal to the victim’s share 

of the total redress ordered, including 

any amounts that have been suspended 

or waived. Second, if the Bureau sought 

redress for a class of victims but a court 

or administrative tribunal denied that 

request for redress in the final order, the 

victims in that class have no 

compensable harm. Third, if the final 

order in a Bureau enforcement action 

neither ordered nor denied redress to 

victims but did specify the amount of 

their harm, including by prescribing a 

formula for calculating that harm, each 

victim’s compensable harm is equal to 

that victim’s share of the amount 

specified. 

The Final Rule also describes how the 

Fund Administrator will determine the 

compensable harm of victims in classes 

for which the final order does not order 

redress, deny a request for redress, or 

specify the amount of harm—and thus 

for which it is not possible to base the 

amount of compensable harm on the 

terms of the final order alone. Under 

§ 1075.104(c)(2)(iii) of the Final Rule, 

the compensable harm of victims of 

such classes is equal to their out-ofpocket losses that resulted from the 

violation or violations for which a civil 

penalty was imposed, except to the 

extent such losses are impracticable to 

determine. As explained further in the 

SUPPLEMENTARY INFORMATION to the Final 

Rule, this measure of harm is what 

would be ‘‘practicable’’ for the Bureau 

to determine in the context of 

disbursing funds from the Civil Penalty 

Fund. In particular, out-of-pocket losses 

generally may be measured by applying 

objective standards on a classwide basis, 

and evidence of such losses generally 

will be straightforward to obtain and 

assess without a need to make complex 

or subjective judgments. 

The Bureau specifically requests 

comment on whether the Final Rule 

appropriately reflects what scope of 

harm would be practicable to calculate 

in cases in which the amount of that 

harm cannot be based on the terms of 

the final order alone. The Bureau also 

seeks suggestions for alternative ways in 

which the Fund Administrator could 

practicably determine victims’ 

compensable harm in such cases, 

including suggestions for alternative 

measures of harm that may be 

practicable to calculate. The Bureau 

specifically requests comment on 

whether, rather than specifying a 

consistent measure of harm that will be 

practicable to determine in most cases, 

it should permit the Fund Administrator 

to decide on a case-by-case basis what 

measure of harm would be practicable 

to calculate given the circumstances of 

the particular case. The Bureau also 

seeks comment on what factors could 

make harm amounts practicable or 

impracticable to calculate. For example, 

harm could be impracticable to 

calculate if the relevant evidence is hard 

to find or gather. It may also be 

impracticable to calculate harm in the 

context of the Civil Penalty Fund if the 


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26550 Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Proposed Rules 

harm or the relevant evidence requires 

subjective evaluation. In some cases, 

calculating harm could be impracticable 

if doing so would involve complex 

calculations, or if developing a formula 

for calculating the amount of harm 

would require substantial economic 

analysis. 

Section 1075.105 Allocating Funds 

from the Civil Penalty Fund—In General 

Section 1075.105 of the Final Rule 

establishes basic procedures that the 

Fund Administrator will follow when 

allocating funds in the Civil Penalty 

Fund to classes of victims and to 

consumer education and financial 

literacy programs. In particular, this 

section describes the schedule for 

making allocations and specifies what 

funds will be available for the 

allocations made on that schedule. The 

Bureau seeks comment on this section 

and suggestions for modifications or 

alternatives. 

105(a) In General 

Section 1075.105(a) of the Final Rule 

provides that the Fund Administrator 

will allocate the funds specified in 

§ 1075.105(c) to classes of victims and, 

as appropriate, to consumer education 

and financial literacy programs 

according to the schedule described in 

§ 1075.105(b) and the guidelines set 

forth in §§ 1075.106 and 1075.107. 

105(b) Schedule for Making Allocations 

Section 1075.105(b)(1) of the Final 

Rule directs the Fund Administrator to 

establish and publish on 

www.consumerfinance.gov a schedule of 

six-month periods. As explained in 

greater detail in the Supplementary 

Information to the Final Rule, that 

schedule will govern when the Fund 

Administrator will allocate funds from 

the Civil Penalty Fund, what amounts 

will be available for allocation, and 

when classes of victims may be 

considered for allocations. 

As the SUPPLEMENTARY INFORMATION to 

the Final Rule explains, the Bureau has 

chosen to make payments on a sixmonth schedule in part because it 

would be less fair to make payments on 

a continual basis, as funds are deposited 

and as classes of victims with 

uncompensated harm arise. If a class 

happened to have uncompensated harm 

for the first time on a day shortly after 

the Bureau had just allocated a 

substantial portion of the Civil Penalty 

Fund to some other class, victims in the 

new class would receive relatively small 

payments. Conversely, if a large amount 

were deposited into the Civil Penalty 

Fund, a class of victims that next had 

uncompensated harm would be 

relatively likely to receive full 

compensation for that harm. In both 

cases, coincidental timing would dictate 

the results. Allocating funds on a sixmonth schedule, by contrast, will give 

equal treatment to all classes from a 

given six-month period. The Bureau 

seeks comment on the proposed 

schedule for making allocations and 

suggestions for modifications or 

alternatives. The Bureau specifically 

requests comment on whether the 

periods under the schedule should be 

longer or shorter than six months, and 

on whether a different method of timing 

allocations would be appropriate. 

105(c) Funds Available for Allocation 

As the SUPPLEMENTARY INFORMATION to 

the Final Rule explains in greater detail, 

§ 1075.105(c) of the Final Rule provides 

that the funds available for allocation 

following the end of a six-month period 

are those funds that were in the Civil 

Penalty Fund on the end date of that 

six-month period, minus (1) any funds 

already allocated, (2) any funds that the 

Fund Administrator determines are 

necessary for authorized administrative 

expenses, and (3) any funds collected 

pursuant to an order that has not yet 

become a final order. The Bureau seeks 

comment on this provision and 

suggestions for modifications or 

alternatives. 

Section 1075.106 Allocating Funds to 

Classes of Victims 

Section 1075.106 of the Final Rule 

describes how funds will be allocated to 

classes of victims and establishes which 

victim classes will get priority and how 

much money the Fund Administrator 

will allocate to victim classes when 

there are not enough funds available to 

provide full compensation to all eligible 

victims who have uncompensated harm. 

The Bureau requests comment on this 

provision and suggestions for 

modifications or alternatives. 

106(a) Allocations When There Are 

Sufficient Funds Available To 

Compensate All Uncompensated Harm 

As the SUPPLEMENTARY INFORMATION to 

the Final Rule explains in greater detail, 

§ 1075.106(a) of the Final Rule provides 

that, if the funds available under 

§ 1075.105(c) are sufficient, the Fund 

Administrator will allocate to each class 

of victims the amount necessary to 

compensate fully the uncompensated 

harm, determined under § 1075.104(b) 

as of the last day of the most recently 

concluded six-month period, of all 

victims in that class to whom it is 

practicable to make payments. 

The Bureau requests comment on this 

procedure for allocating funds when the 

available funds are sufficient to 

compensate fully the uncompensated 

harm of all victims to whom it is 

practicable to make payments. The 

Bureau also requests suggestions for 

modifications or alternatives. 

106(b) Allocations When There Are 

Insufficient Funds Available To 

Compensate All Uncompensated Harm 

Section 1075.106(b) of the Final Rule 

establishes the procedures that the Fund 

Administrator will follow when the 

funds available under § 1075.105(c) are 

not sufficient to provide full 

compensation as described by paragraph 

(a). This section groups classes of 

victims according to the six-month 

period in which the victims first had 

uncompensated harm as described in 

§ 1075.104(b). Paragraph (b)(1) specifies 

how classes of victims will receive 

priority according to their respective 

six-month periods. Paragraph (b)(2) 

explains how the Fund Administrator 

will identify the six-month period to 

which a class of victims belongs. 

The Bureau seeks comment on these 

procedures for allocating funds when 

the available funds are not sufficient to 

compensate fully the uncompensated 

harm of all victims to whom it is 

practicable to make payments, and 

suggestions for modifications or 

alternatives. 

106(b)(1) Priority to Classes of Victims 

From the Most Recent Six-Month Period 

Under § 1075.106(b)(1) of the Final 

Rule, when there are insufficient funds 

available to provide all victims full 

compensation as described in paragraph 

(a), the Fund Administrator will 

prioritize allocations to classes of 

victims from the most recent six-month 

period. If funds remain after allocating 

to each class of victims from that sixmonth period the amount necessary to 

compensate fully the uncompensated 

harm, determined under § 1075.104(b) 

as of the last day of the most recently 

concluded six-month period, of all 

victims in that class to whom it is 

practicable to make payments, the Fund 

Administrator next will allocate funds 

to classes of victims from the preceding 

six-month period, and so forth until no 

funds remain. As the Supplementary 

Information to the Final Rule explains 

in greater detail, this process of 

allocating funds to classes of victims 

from one six-month period at a time will 

be more administratively efficient than 

allocating funds to all classes at once 

and will reduce the total administrative 

cost of distributing payments as well as 

the administrative cost per dollar 

distributed to victims. 


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1This chart is provided solely for explanatory 

purposes. The numbers are hypothetical and are not 

based on any actual class of victims that is or may 

be eligible for payment from the Civil Penalty Fund. 

The Bureau seeks comment on this 

provision and suggestions for 

alternatives or modifications. The 

Bureau also specifically seeks comment 

on several proposed alternatives or 

modifications. 

Alternatives to the method for 

prioritizing allocations. First, the 

Bureau specifically seeks comment on 

several alternatives to the method that 

the Final Rule prescribes for prioritizing 

allocations. As one alternative, instead 

of prioritizing allocations to certain 

classes, the Bureau could attempt to 

allocate funds among all classes with 

uncompensated harm. That approach 

could distribute funds more evenly, but 

could result in significantly smaller 

individual payments. 

As another alternative, instead of 

prioritizing allocations to classes of 

victims from more recent six-month 

periods, the Bureau could prioritize 

allocations to classes of victims from 

older six-month periods. On the one 

hand, giving priority to classes of 

victims from more recent six-month 

periods ensures that funds go first to 

victims who have not yet had an 

opportunity to receive payment from the 

Civil Penalty Fund, and next to victims 

who have had only one previous 

opportunity, and so forth. In addition, 

the records on classes of victims from 

more recent periods may be more up-todate than the records on classes from 

older periods, and distributing funds to 

those more recent classes might 

therefore be more successful and require 

less cost and effort. Prioritizing 

allocations to classes from those more 

recent periods thus may result in more 

funds reaching victims. On the other 

hand, giving priority instead to classes 

of victims from older six-month periods 

would enable funds to be distributed to 

the victims in those classes before 

records age further and it becomes more 

difficult and costly to make payments to 

those victims. 

As yet another alternative, the Bureau 

could prioritize allocations based on 

factors other than the six-month period 

in which a class became eligible for 

allocations from the Civil Penalty Fund. 

For example, the Bureau could 

prioritize allocations to the classes in 

which individual victims have the 

greatest amount of uncompensated 

harm. Under such an approach, the 

Bureau could assign classes to tiers 

based on the average uncompensated 

harm of the victims in the class. For 

example, classes of victims with an 

average uncompensated harm of 

$10,000 or more could be one tier; 

classes of victims with an average 

uncompensated harm of $1,000 to 

$9,999 could be another tier; and so 

forth. The Fund Administrator could 

then allocate funds first to the classes in 

the tier with the highest amount of 

average uncompensated harm, and then 

successively to each lower tier to the 

extent funds remain. This approach 

would ensure that victims with the 

largest amount of uncompensated harm 

would get priority. The Bureau seeks 

comment on this possible approach, and 

any modifications or alternatives, and 

on what the dollar thresholds for the 

tiers of average uncompensated harm 

should be under such an approach. 

Another way in which the Bureau 

could prioritize allocations based on 

factors other than a class’s six-month 

period would be to leave it to the Fund 

Administrator’s discretion how to 

allocate funds at times when 

insufficient funds are available to 

compensate fully the uncompensated 

harm of all victims. This approach 

would give the Fund Administrator 

flexibility to consider all relevant 

circumstances to decide how to allocate 

funds most equitably. The Bureau seeks 

comment on all of these possible 

alternatives for prioritizing allocations 

when the available funds are not 

sufficient to compensate fully the 

uncompensated harm of all victims to 

whom it is practicable to make 

payments. 

Modification to prescribe the amounts 

to be allocated. Second, the Bureau also 

specifically seeks comment on whether 

it should modify § 1075.106(b) to 

provide more detail on the amounts to 

be allocated when the available funds 

are not sufficient to provide full 

compensation for the uncompensated 

harm of all victims to whom it is 

practicable to make payments. The Final 

Rule specifies that the Fund 

Administrator will allocate to each class 

of victims from a single six-month 

period the amount necessary to 

compensate fully the uncompensated 

harm, determined under § 1075.104(b) 

as of the last day of the most recently 

concluded six-month period, of all 

victims in that class to whom it is 

practicable to make payments before 

allocating funds to classes from an 

earlier six-month period. The Final Rule 

is silent, however, on how funds will be 

allocated if insufficient funds are 

available to provide such full 

compensation to all classes from a 

single six-month period. 

The Bureau seeks comment on 

whether it should modify § 1075.106(b) 

to prescribe the amounts that the Fund 

Administrator will allocate in those 

circumstances. In particular, the rule 

could direct the Fund Administrator to 

allocate funds to the classes of victims 

from a single six-month period in a 

manner designed to ensure, to the extent 

possible, that the victims in those 

classes to whom it is practicable to 

make payments will receive 

compensation, through redress and Civil 

Penalty Fund payments, for an equal 

percentage of their compensable harm, 

as described in § 1075.104(c). Consistent 

with the approach the Bureau takes 

generally in the Final Rule, that 

allocation would be based on the 

amount of each class’s uncompensated 

harm as of the last day of the most 

recently concluded six-month period. 

This allocation method could also 

apply if the Bureau adopted an 

alternative way of prioritizing 

allocations—other than by six-month 

period—as discussed above. For 

example, if the Bureau instead assigned 

classes of victims to tiers based on the 

average amount of uncompensated harm 

of the victims in the class, and 

prioritized allocations based on those 

tiers, this proposed modification could 

prescribe the amounts that the Fund 

Administrator would allocate to classes 

of victims from a single such tier. 

The following examples illustrate 

how this allocation method would 

work. First, suppose there were two 

classes of victims from the most recent 

six-month period, and there were not 

enough funds to compensate fully the 

uncompensated harm of all victims in 

both classes. Imagine that those classes 

had suffered the harm and had received 

the payments reflected in this table:1


emcdonald on DSK67QTVN1PROD with PROPOSALS
26552 Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Proposed Rules 

Number of 

victims 

Compensable 

harm per 

victim 

Redress paid 

by defendant 

to each victim 

Each victim’s 

uncompensated 

harm 

Total 

uncompensated 

harm of the 

class 

Percent of 

compensable 

harm for which 

each victim 

has received 

compensation 

Class 1 ..................................................... 40 $250 $125 $125 $5,000 50% 

Class 2 ..................................................... 25 400 0 400 10,000 0 

Under the proposed modification, the 

Fund Administrator would allocate 

amounts in the Fund in a way designed 

to equalize, to the extent possible, the 

percentage of compensable harm for 

which each victim would receive 

compensation. Thus, if there were 

$7,500 in the Fund, the Fund 

Administrator would allocate $1,250 to 

Class 1 and $6,250 to Class 2, such that 

the following would result: 

Number of 

victims 

Compensable 

harm per 

victim 

Redress paid 

by defendant 

to each victim 

Amount 

allocated to 

the class from 

CPF 

CPF payment 

to each victim 

Total 

payments 

(redress + 

CPF) to each 

victim 

Percent of 

compensable 

harm for which 

each victim 

will receive 

compensation 

Class 1 ......................... 40 $250 $125 $1,250 $31.25 $156.25 62.5% 

Class 2 ......................... 25 400 0 6,250 250 250.00 62.5 

In some circumstances, it will not be 

possible to equalize the percentage of 

compensable harm for which each 

victim receives compensation because 

one class of victims has already received 

compensation in the form of redress, 

and there are not enough funds in the 

Civil Penalty Fund to give comparable 

compensation to other victim classes. In 

these circumstances, the Fund 

Administrator would not—and, indeed, 

could not—actually achieve the goal of 

equalizing the percentage of 

compensable harm for which all victims 

receive compensation. Instead, under 

the proposed modification, the Fund 

Administrator would simply allocate 

funds in a way that equalizes the level 

of compensation across classes only to 

the extent possible. Thus, for example, 

assume that in the above scenario, the 

defendant paid the victims in Class 1 

$200 each rather than $125 each: 

Number of 

victims 

Compensable 

harm per 

victim 

Redress paid 

by defendant 

to each victim 

Each victim’s 

uncompensated 

harm 

Total 

uncompensated 

harm of the 

class 

Percent of 

compensable 

harm that 

each victim 

has had 

compensated 

Class 1 ..................................................... 40 $250 $200 $50 $2,000 80% 

Class 2 ..................................................... 25 400 0 400 10,000 0 

If there were $7,500 in the Fund, 

under the proposed modification, the 

Fund Administrator would allocate it all 

to Class 2, such that the following 

would result: 

Number of 

victims 

Compensable 

harm per 

victim 

Redress paid 

by defendant 

to each victim 

Amount allocated to the 

class from 

CPF 

CPF payment 

to each victim 

Total 

payments 

(redress + 

CPF to each 

victim) 

Percent of 

compensable 

harm that 

each victim 

will have 

compensated 

Case 1 .......................... 40 $250 $200 $0 $0 $200 80% 

Case 2 .......................... 25 400 0 7,500 300 300 75 

This modification would not 

authorize or require the Fund 

Administrator to recover any funds 

already distributed to victims or to 

reverse a previous allocation to a class 

of victims, even if a class of victims 

would receive or had already received 

compensation for a greater percentage of 

their harm than other classes. 

The Bureau seeks comment on this 

possible modification, as well as 

suggestions for other ways in which to 

prescribe the amounts to be allocated 

when insufficient funds are available to 

provide full compensation for the 

uncompensated harm of all victims in 

classes from a single six-month period. 

106(b)(2) Assigning Classes of Victims 

to a Six-Month Period 

As noted above, § 1075.106(b)(1) of 

the Final Rule instruct the Fund 

Administrator to allocate funds among 

classes of victims from a single sixmonth period before allocating funds to 

classes of victims from an earlier sixmonth period. Paragraph (b)(2) of this 

section of the Final Rule explains that 


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Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Proposed Rules 26553 

for purposes of paragraph (b), a class of 

victims is ‘‘from’’ the six-month period 

in which those victims first had 

uncompensated harm as described in 

§ 1075.104(b). The provision further 

specifies how the Fund Administrator 

will determine when a class of victims 

first had such uncompensated harm. 

First, if redress was ordered for a class 

of victims in a Bureau enforcement 

action but suspended or waived in 

whole or in part, the class of victims 

first had uncompensated harm, if it had 

any, on the date the suspension or 

waiver became effective. Second, if 

redress was ordered for a class of 

victims in a Bureau enforcement action, 

but the Chief Financial Officer 

determined that redress to be 

uncollectible in whole or in part, the 

class of victims first had 

uncompensated harm, if it had any, on 

the date the Chief Financial Officer 

made that determination. Finally, if no 

redress was ordered for a class of 

victims in a Bureau enforcement action, 

the class of victims first had 

uncompensated harm, if any, on the 

date the order imposing a civil penalty 

became a final order. As the 

SUPPLEMENTARY INFORMATION to the Final 

Rule explains in further detail, this 

provision corresponds to the definition 

of uncompensated harm in 

§ 1075.104(b). 

The Bureau seeks comment on this 

provision and suggestions for 

modifications or alternatives. 

106(c) No Allocation to a Class of 

Victims If Making Payments Would Be 

Impracticable 

Section 1075.106(c) of the Final Rule 

provides that, notwithstanding any 

other provision in this section, the Fund 

Administrator will not allocate funds 

available under § 1075.105(c) to a class 

of victims if she determines that making 

payments to that class of victims would 

be impracticable. As noted above, the 

Bureau understands the Dodd-Frank Act 

to direct payments from the Civil 

Penalty Fund to victims only to the 

extent that such payments are 

practicable. In some cases, it may be 

impracticable to make payments to an 

entire class of victims; the Fund 

Administrator will not allocate funds to 

such a class. 

The Bureau requests comment on this 

provision and suggestions for 

modifications or alternatives. 

106(d) Fund Administrator’s Discretion 

Section 1075.106(d)(1) of the Final 

Rule provides that, notwithstanding any 

provision in this part, the Fund 

Administrator, in her discretion, may 

depart from the procedures specified by 

this section, including by declining to 

make, or altering the amount of, any 

allocation provided for by this part. As 

the SUPPLEMENTARY INFORMATION to the 

Final Rule explains further, this 

provision is designed to give the Fund 

Administrator the flexibility to depart 

from the allocation procedures 

established by § 1075.106 when the 

circumstances warrant. Because the 

Bureau cannot anticipate all such 

circumstances, the Final Rule does not 

delineate particular circumstances in 

which the Fund Administrator may 

deviate from § 1075.106’s allocation 

procedures, but rather leaves the 

decision to deviate to the Fund 

Administrator’s discretion. Under the 

Final Rule, whenever the Fund 

Administrator exercises this discretion, 

she must provide the Civil Penalty Fund 

Governance Board a written explanation 

of the reasons for departing from the 

allocation procedures specified by this 

section. 

The Final Rule makes clear that 

exercising this discretion cannot 

increase the funds available in a given 

time period for allocation to consumer 

education and financial literacy 

programs. Specifically, § 1075.106(d)(2) 

of the Final Rule provides that, if the 

Fund Administrator, in allocating funds 

during a given time period described by 

§ 1075.105(b)(2), exercises her 

discretion under paragraph (d)(1) of this 

section, she may allocate funds to 

consumer education and financial 

literacy programs under § 1075.107 

during that time period only to the same 

extent she could have absent that 

exercise of discretion. 

The Bureau seeks comment on this 

provision and suggestions for 

modifications or alternatives. 

Section 1075.107 Allocating Funds to 

Consumer Education and Financial 

Literacy Programs 

107(a) 

Section 1075.107(a) of the Final Rule 

implements the second sentence of 

section 1017(d)(2) of the Dodd-Frank 

Act, which authorizes the Bureau to use 

funds in the Civil Penalty Fund for the 

purpose of consumer education and 

financial literacy programs to the extent 

that victims cannot be located or 

payments to victims are otherwise not 

practicable. In particular, § 1075.107(a) 

provides that, if funds available under 

§ 1075.105(c) remain after the Fund 

Administrator allocates funds as 

described in § 1075.106(a), she may 

allocate the remaining funds for 

consumer education and financial 

literacy programs. An allocation under 

§ 1075.106(a) provides full 

compensation for the uncompensated 

harm of all victims to whom it is 

practicable to make payments. Thus, 

any funds remaining after such an 

allocation are available for consumer 

education and financial literacy 

programs. 

The Bureau seeks comment on this 

provision and suggestions for 

modifications or alternatives. The 

Bureau specifically requests comment 

on whether the provision should limit 

the amount of funds that the Fund 

Administrator may allocate to consumer 

education and financial literacy 

programs. In particular, the rule could 

instead authorize the Fund 

Administrator to allocate only some 

portion of remaining funds to such 

programs. Limiting the Fund 

Administrator’s authority to allocate 

remaining funds to consumer education 

and financial literacy programs could 

help ensure that, when funds remain 

after allocating funds to provide full 

compensation to all classes of victims to 

whom it is practicable to make 

payments, a balance will remain in the 

Fund for future victims. This would 

mitigate the risk that the Civil Penalty 

Fund would later lack sufficient funds 

to provide full compensation to classes 

of victims that become eligible for 

allocations in the future. 

The Bureau also requests comment on 

what portion of remaining funds the 

Fund Administrator should be able to 

allocate to consumer education and 

financial literacy programs. One 

possible approach would be to authorize 

the Fund Administrator to allocate a 

certain percentage of remaining funds to 

consumer education and financial 

literacy programs. Another possible 

approach would be to require a 

specified amount to remain in the Fund 

and to authorize the Fund 

Administrator to allocate only the funds 

that exceed that particular ‘‘reserved’’ 

amount to consumer education and 

financial literacy programs. Yet another 

possible approach could cap the amount 

that the Fund Administrator may 

allocate to consumer education and 

financial literacy programs in any given 

period. Other alternatives could 

combine these approaches, for example, 

by authorizing the Fund Administrator 

to allocate a percentage of the funds that 

exceed the reserved amount to 

consumer education and financial 

literacy programs, but only up to a 

particular maximum amount. The 

Bureau also requests comment on what 

the appropriate percentage, reserved 

amount, and maximum amount would 

be under these possible approaches. 


emcdonald on DSK67QTVN1PROD with PROPOSALS
26554 Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Proposed Rules 

107(b) 

Section 1075.107(b) clarifies that the 

Fund Administrator’s authority to 

allocate funds for consumer education 

and financial literacy programs does not 

include the authority to allocate funds 

to particular consumer education or 

financial literacy programs or otherwise 

to select the particular consumer 

education or financial literacy programs 

for which allocated funds will be used. 

Instead, the Fund Administrator’s 

authority is limited to determining the 

amount that is allocated for expenditure 

on those kinds of programs. As the 

Supplementary Information to the Final 

Rule notes, the Bureau has developed, 

and posted at http://files.consumer

finance.gov/f/x200Bx200B;_fpb_

civil_penalty_fund_criteria.pdf, its 

criteria for selecting these programs. 

These criteria are beyond the scope of 

this rule. The Bureau is not proposing 

changes to this section. 

Section 1075.108 Distributing 

Payments to Victims 

As the SUPPLEMENTARY INFORMATION to 

the Final Rule explains, after the Fund 

Administrator allocates funds to a class 

of victims, those funds will be 

distributed to the individual victims in 

that class. Section 1075.108 of the Final 

Rule describes the process for 

distributing payments to victims. 

108(a) Designation of a Payments 

Administrator 

Section 1075.108(a) of the Final Rule 

provides that, upon allocating funds to 

a class of victims under § 1075.106, the 

Fund Administrator will designate a 

payments administrator who will be 

responsible for distributing payments to 

the victims in that class. The payments 

administrator may be any person, 

including a Bureau employee or 

contractor. The Bureau is not proposing 

changes to this paragraph. 

108(b) Distribution Plan 

Section 1075.108(b) of the Final Rule 

requires a payments administrator to 

submit to the Fund Administrator a 

proposed plan for distributing the funds 

that have been allocated to a class of 

victims. The Fund Administrator will 

then approve, approve with 

modifications, or disapprove the 

proposed distribution plan. If the Fund 

Administrator disapproves a proposed 

plan, the payments administrator must 

submit a new proposed plan. The 

Bureau is not proposing changes to this 

paragraph. 

108(c) Contents of Plan 

Section 1075.108(c) of the Final Rule 

indicates that the Fund Administrator 

will instruct the payments administrator 

to prepare a distribution plan and sets 

forth several elements that the Fund 

Administrator may require a 

distribution plan to include. The 

Supplementary Information to the Final 

Rule, and the Final Rule itself, provide 

further detail on the elements that the 

Fund Administrator may require a 

distribution plan to include. The Bureau 

requests comment on the contents of 

distribution plans and suggestions for 

modifications or alternatives. 

108(d) Distribution of Payments 

Section 1075.108(d) of the Final Rule 

provides that the payments 

administrator will make payments to 

victims in a class, except to the extent 

such payments are impracticable, in 

accordance with the distribution plan 

approved under paragraph (b) of this 

section and subject to the Fund 

Administrator’s supervision. The 

Bureau requests comment on this 

provision and suggestions for 

modifications or alternatives. 

108(e) Disposition of Funds Remaining 

After Attempted Distribution to a Class 

of Victims 

Section 1075.108(e) of the Final Rule 

addresses the circumstance in which 

some of the funds allocated to a class of 

victims remain undistributed after the 

payments administrator has made, or 

attempted to make, payments to the 

victims in that class. Funds might 

remain if the payments administrator 

cannot make payments to all victims in 

a class—because some victims cannot be 

located, because some victims do not 

redeem their payments, or because of 

other similar circumstances. To the 

extent practicable, the payments 

administrator will distribute the 

remaining funds to victims in that class 

up to the amount of their remaining 

uncompensated harm as described in 

§ 1075.104(b). As the Supplementary 

Information to the Final Rule explains, 

distributing remaining funds among 

victims in that class will often be the 

most efficient use of remaining funds 

because the payments administrator will 

have up-to-date information on the 

victims to whom it successfully made 

payments, and a second distribution to 

those victims likely will also be 

successful. Then, if funds remain after 

providing full compensation for the 

uncompensated harm of such victims, 

the remaining funds will be returned to 

the Civil Penalty Fund. Those funds 

will then be available for future 

allocation. The Supplementary 

Information to the Final Rule provides 

illustrative examples of how remaining 

funds would be distributed under this 

provision of the Final Rule. 

The Bureau requests comment on this 

provision and any suggestions for 

modifications or alternatives. 

The Bureau also specifically seeks 

comment on whether, instead of 

distributing remaining funds among 

victims in the class who have not yet 

received full compensation, it should 

return remaining funds to the Civil 

Penalty Fund for future allocation. 

Although this approach may not be as 

efficient as the approach taken in the 

Final Rule, it could ensure that victims 

receive the level of compensation that 

an allocation was designed to give them. 

Under this alternative, the happenstance 

of how many victims in a class could 

not practicably be paid would not affect 

the amount that other victims in that 

class would receive. 

Section 1075.109 When Payments to 

Victims Are Impracticable 

As noted above, pursuant §§ 1075.106 

and 1075.108 of the Final Rule, the 

Bureau will not make payments to 

individual victims when doing so 

would be impracticable and will not 

allocate funds to a class of victims to the 

extent making payments to that class 

would be impracticable. Section 

§ 1075.109 of the Final Rule identifies 

circumstances in which payments to 

victims will be deemed not practicable. 

For reasons explained in the 

SUPPLEMENTARY INFORMATION to the Final 

Rule, whether payments to victims are 

practicable depends in part on the costs 

of those payments, in comparison to the 

size of the payments. Section 1075.109 

of the Final Rule contains two 

paragraphs that implement that 

understanding of practicability by 

identifying circumstances in which the 

costs of making payments will likely be 

so great, relative to the size of the 

payments, that making those payments 

would be impracticable. The first 

paragraph discusses payments to 

individual victims, and the second 

relates to payments to entire classes of 

victims. 

The Bureau seeks comment on the 

interpretation of ‘‘practicable’’ 

embodied in this section and 

suggestions for modifications or 

alternatives. It also seeks comment on 

the circumstances in which payments to 

individual victims or a class of victims 

will be impracticable under this 

provision, as well as suggestions for 

modifications or alternatives. 

Section 1075.110 Reporting 

Requirements 

Section 1075.110 requires the Fund 

Administrator to issue regular reports, 


emcdonald on DSK67QTVN1PROD with PROPOSALS
Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Proposed Rules 26555 

2Section 1022(b)(2)(A) of the Dodd-Frank Act, 12 

U.S.C. 55212(b)(2), directs the Bureau, when 

prescribing a rule under the Federal consumer 

financial laws, to consider the potential benefits 

and costs of regulation to consumers and covered 

persons, including the potential reduction of access 

by consumers to consumer financial products or 

services; the impact on insured depository 

institutions and credit unions with $10 billion or 

less in total assets as described in section 1026 of 

the Dodd-Frank Act; and the impact on consumers 

in rural areas. Section 1022(b)(2)(B) of the DoddFrank Act directs the Bureau to consult with 

appropriate prudential regulators or other Federal 

agencies regarding consistency with prudential, 

market, or systemic objectives that those agencies 

administer. The manner and extent to which these 

provisions apply to a rulemaking of this kind that 

does not establish standards of conduct is unclear. 

Nevertheless, to inform this rulemaking more fully, 

the Bureau performed the described analyses and 

consultations. 

3The Bureau has discretion in any rulemaking to 

choose an appropriate scope of analysis with 

respect to potential benefits and costs and the 

appropriate baseline. 

on at least an annual basis, that describe 

how funds in the Civil Penalty Fund 

have been allocated, the basis for those 

allocations, and how funds that have 

been allocated to classes of victims have 

been distributed. The section further 

provides that these reports will be made 

available to the public on 

www.consumerfinance.gov. 

The Bureau requests comment on the 

proposed requirement for the Fund 

Administrator to issue reports on the 

Civil Penalty Fund and on subjects to be 

addressed in the report, as well as 

suggestions for modifications or 

alternatives to this provision. 

V. Request for Comment 

The Bureau invites comment on all 

aspects of the Final Rule, this notice of 

proposed rulemaking, and the specific 

issues upon which comment is solicited 

elsewhere herein, including on any 

appropriate modifications or exceptions 

to the Final Rule. 

V. Section 1022(b)(2) of the Dodd-Frank 

Act 

In developing the proposed rule, the 

Bureau is considering potential benefits, 

costs, and impacts, and has consulted or 

offered to consult with the Board of 

Governors of the Federal Reserve 

System, the Federal Deposit Insurance 

Corporation, the Office of the 

Comptroller of the Currency, the 

National Credit Union Administration, 

and the Federal Trade Commission, 

including with regard to consistency 

with any prudential, market, or systemic 

objectives administered by those 

agencies.2 The analysis considers the 

benefits, costs, and impacts of the 

alternatives discussed in the proposal 

against a baseline that includes the 

Final Rule; that is, the analysis 

evaluates the benefits, costs, and 

impacts of the alternatives discussed as 

compared to the status quo where the 

provisions of the Final Rule remain in 

effect.3

This notice of proposed rulemaking 

seeks comment on several changes or 

amendments to the Final Rule’s 

provisions that the Bureau is 

considering: the category of victims 

eligible for payments; the amounts of 

the payments that victims may receive, 

including the method for determining 

compensable harm; the schedule for 

allocating funds for payments to victims 

and for consumer education and 

financial literacy programs; the 

procedures for allocating funds to 

classes of victims; the allocations to 

consumer education and financial 

literacy programs; and the procedures 

for disposing of certain undistributed 

funds. 

The alternatives discussed in this 

proposal would not impose any 

obligations on consumers or covered 

persons. Nor would the considered 

alternatives have any impact on 

consumers’ access to consumer financial 

products or services. Rather, the 

alternatives discussed would potentially 

affect the total amount of money in the 

Civil Penalty Fund that is available for 

victim payments or for consumer 

education and financial literacy 

programs, as well as the allocation of 

funds between various groups of 

consumers or between payments to 

victims and funding for consumer 

education and financial literacy. 

Those alternatives discussed in the 

proposal that would alter the cost of 

administering the Fund, either directly 

or indirectly, could potentially alter the 

total amount available for payments to 

victims and for consumer education and 

financial literacy programs. For 

example, under the Final Rule, victims’ 

compensable harm is, in some cases, 

equal to their out-of-pocket losses. This 

notice seeks comment on whether 

victims’ compensable harm in those 

circumstances should instead be 

whatever amount of harm the Fund 

Administrator concludes is practicable 

to determine given the facts of the 

particular case. Such discretion 

regarding the method of determination 

could make it more (or less) costly to 

administer victim payments, and with 

expenses paid from the Fund, could 

leave less (or more) money for other 

payments. Similarly, this notice seeks 

comment on whether the Bureau should 

pay victims a share of the civil penalties 

collected for the particular violations 

that harmed them, rather than the 

amount of their uncompensated harm. 

Calculating the amounts that victims 

would receive under that alternative 

could be less costly than calculating the 

amounts that victims will receive under 

the Final Rule, and accordingly could 

reduce the overall cost of administering 

the Fund. As a final example, under the 

Final Rule, when there are not enough 

funds available to provide full 

compensation to all eligible victims who 

have uncompensated harm, the Fund 

Administrator will prioritize allocations 

to classes of victims from the most 

recent six-month period. If the Bureau 

instead allocated funds among all 

classes of eligible victims, or prioritized 

allocations to classes of victims from 

older six-month periods, that could 

increase the costs of administering the 

fund and thereby impact the amounts 

available for payments to victims or for 

funding for consumer education or 

financial literacy. 

Rather than impact overall 

distributions from the Fund, most of the 

alternatives discussed in this proposal 

would alter the allocation of funds 

among various groups of consumers, 

either as payments to victims or as 

funding for consumer education or 

financial literacy programs. In the 

absence of specific cases to analyze 

(since by definition, future cases have 

yet to be administered), this analysis 

cannot assess precise changes to the 

allocation: instead, it assesses broader 

categories of changes. For example, 

amendments that would allow the 

Bureau to make payments to a broader 

category of victims, (e.g., victims of 

types of ‘‘activities’’ for which civil 

penalties have been imposed under the 

Federal consumer financial laws, even if 

no enforcement action identified those 

specific ‘‘activities’’ as violations and 

imposed civil penalties for them) would 

possibly transfer some funds among 

consumers: specifically, from victims in 

cases where to the Bureau has imposed 

civil penalties to consumers in this 

broader category of victims. 

Amendments that would alter the 

amounts of the payments that any group 

of victims would receive could leave 

other victims with more or less 

compensation from the Fund, assuming 

the overall level of money in the Fund 

is unchanged. For example, were the 

Bureau to alter the rule to pay victims 

a share of the civil penalties collected 

for the particular violations that harmed 

them, some consumers would receive 

more or less money than under the 

current rule. Similarly, any changes to 

the allocation procedures established for 

when sufficient funds are not available 

to compensate fully the uncompensated 

harm of all victims to whom it is 


emcdonald on DSK67QTVN1PROD with PROPOSALS
26556 Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Proposed Rules 

4 5 U.S.C. 601(3). The Bureau may establish an 

alternative definition after consultation with the 

Small Business Administration and an opportunity 

for public comment. 

5 5 U.S.C. 603–605. 

6 5 U.S.C. 609. 

practicable to make payments could 

alter the total payments received by 

various consumers. As a final example, 

any changes that limit the amount of 

funds that the Fund Administrator may 

allocate to consumer education and 

financial literacy programs would shift 

potential benefits from consumers who 

benefit from these programs to other 

consumers. 

The revisions to the Final Rule 

discussed in this rule would not have a 

unique impact on rural consumers. 

Since the amendments would not have 

any impact on covered persons, they 

also have no impact on insured 

depository institutions or insured credit 

unions with less than $10 billion in 

assets as described in section 1026(a) of 

the Dodd-Frank Act. 

VI. Regulatory Requirements 

The Regulatory Flexibility Act (RFA), 

as amended by the Small Business 

Regulatory Enforcement Fairness Act of 

1996, requires each agency to consider 

the potential impact of its regulations on 

small entities, including small 

businesses, small governmental units, 

and small not-for-profit organizations. 

The RFA defines a ‘‘small business’’ as 

a business that meets the size standard 

developed by the Small Business 

Administration pursuant to the Small 

Business Act.4

The RFA generally requires an agency 

to conduct an initial regulatory 

flexibility analysis (IRFA) and a final 

regulatory flexibility analysis (FRFA) of 

any rule subject to notice-and-comment 

rulemaking requirements, unless the 

agency certifies that the rule will not 

have a significant economic impact on 

a substantial number of small entities.5

The Bureau also is subject to certain 

additional procedures under the RFA 

involving the convening of a panel to 

consult with small business 

representatives prior to proposing a rule 

for which an IRFA is required.6

The undersigned certifies that this 

proposed rule would not have a 

significant impact on a substantial 

number of small entities. The Final Rule 

and proposed alternatives set forth only 

what Civil Penalty Fund payments the 

Bureau will make to victims and the 

procedures for allocating funds for such 

payments and for consumer education 

and financial literacy programs. The 

rule would not impose any substantive 

requirements on any small entities. 

VII. Paperwork Reduction Act 

The Bureau has determined that 

neither the Final Rule nor any of the 

alternatives proposed in this notice of 

proposed rulemaking imposes any new 

recordkeeping, reporting, or disclosure 

requirements on covered entities or 

members of the public that would 

constitute collections of information 

requiring approval under the Paperwork 

Reduction Act, 44 U.S.C. 3501 et seq. 

Comments on this determination may be 

submitted to the Bureau as instructed in 

the ADDRESSES section of this notice and 

to the attention of the Paperwork 

Reduction Act Officer. 

List of Subjects in 12 CFR Part 1075 

Administrative practice and 

procedure, Authority delegations, 

Consumer Financial Civil Penalty Fund, 

Consumer protection, Organization and 

functions. 

Dated: April 26, 2013. 

Richard Cordray, 

Director, Bureau of Consumer Financial 

Protection. 

[FR Doc. 2013–10318 Filed 5–6–13; 8:45 am] 

BILLING CODE 4810–25–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2012–0756; Directorate 

Identifier 2012–CE–012–AD] 

RIN 2120–AA64 

Airworthiness Directives; Piper 

Aircraft, Inc. Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Proposed rule; withdrawal. 

SUMMARY: This document withdraws a 

notice of proposed rulemaking (NPRM) 

that would have applied to all Piper 

Aircraft, Inc. (type certificate previously 

held by The New Piper Aircraft Inc.) 

Models PA–18 and PA–19 airplanes. 

The proposed airworthiness directive 

(AD) would have required either moving 

all toggle-style magneto switches 

located on the left cabin panel, adjacent 

to the front seat, away from this 

position; or replacing these switches 

with FAA-approved, non-keyed, rotarystyle switches. Since issuance of the 

NPRM, the FAA has re-evaluated this 

airworthiness concern and determined 

that an unsafe condition does not exist 

that would warrant AD action. This 

withdrawal does not prevent the FAA 

from initiating future rulemaking on this 

subject. 

FOR FURTHER INFORMATION CONTACT: Gary 

Wechsler, Aerospace Engineer, FAA, 

Atlanta Aircraft Certification Office, 

1701 Columbia Avenue, College Park, 

Georgia 30337; phone: (404) 474–5575; 

fax: (404) 474–5606; email: 

gary.wechsler@faa.gov. 

SUPPLEMENTARY INFORMATION: 

Discussion 

We issued a notice of proposed 

rulemaking (NPRM) to amend 14 CFR 

part 39 to include an AD that would 

apply to the specified products. That 

NPRM published in the Federal 

Register on July 19, 2012 (77 FR 42455). 

That NPRM proposed to require you to 

either move all toggle-style magneto 

switches located on the left cabin panel, 

adjacent to the front seat, away from this 

position; or replace these switches with 

FAA-approved, non-keyed, rotary-style 

switches. 

Because of the comments received on 

the NPRM (77 FR 42455, July 19, 2012), 

the FAA re-evaluated the data collected 

on the safety concern and concluded 

that: 

• an unsafe condition warranting AD 

action does not exist; and 

• the associated level of risk does not 

warrant AD action. 

To mitigate the safety concern from 

recurring, the FAA may take another 

airworthiness action such as a special 

airworthiness information bulletin 

(SAIB) to recommend the actions 

contained in the proposed rule and 

capture the concerns identified by the 

public during the NPRM (77 FR 42455, 

July 19, 2012) comment period. 

Withdrawal of this NPRM (77 FR 

42455, July 19, 2012) constitutes only 

such action and does not preclude the 

agency from issuing future rulemaking 

on this issue, nor does it commit the 

agency to any course of action in the 

future. 

Regulatory Findings 

Since this action only withdraws an 

NPRM, it is neither a proposed nor a 

final rule and therefore, is not covered 

under Executive Order 12866, the 

Regulatory Flexibility Act, or DOT 

Regulatory Policies and Procedures (44 

FR 11034, February 26, 1979). 

List of Subjects in 14 CFR Part 39 

Air transportation, Aircraft, Aviation 

safety, Incorporation by reference, 

Safety. 

The Withdrawal 

Accordingly, the notice of proposed 

rulemaking (NPRM), FAA–2012–0756, 

published in the Federal Register on 

July 19, 2012 (77 FR 42455), is 

withdrawn. 


emcdonald on DSK67QTVN1PROD with PROPOSALS