Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Rules and Regulations 26489 

Sickles, APHIS’ Information Collection 

Coordinator, at (301) 851–2908. 

List of Subjects in 9 CFR Part 71 

Animal diseases, Livestock, Poultry 

and poultry products, Quarantine, 

Reporting and recordkeeping 

requirements, Transportation. 

Accordingly, we are amending 9 CFR 

part 71 as follows: 

PART 71—GENERAL PROVISIONS 

■ 1. The authority citation for part 71 

continues to read as follows: 

Authority: 7 U.S.C. 8301–8317; 7 CFR 2.22, 

2.80, and 371.4. 

■ 2. Section 71.20 is amended as 

follows: 

■ a. By revising paragraph (a)(7) to read 

set forth below. 

■ b. In paragraph (a)(8), by removing the 

words ‘‘and 85’’ and adding the words 

‘‘85, and 86’’ in their place. 

■ c. In the OMB citation at the end of 

the section, by removing the words 

‘‘number 0579–0258’’ and adding the 

words ‘‘numbers 0579–0258 and 0579– 

0342’’ in their place. 

§ 71.20 Approval of livestock facilities. 

(a) * * * 

(7) Documents such as weight tickets, 

sales slips, and records of origin, 

identification, and destination that 

related to livestock that are in, or that 

have been in, the facility shall be 

maintained by the facility. For poultry 

and swine, such documents must be 

kept for at least 2 years, and for cattle 

and bison, sheep and goats, cervids, and 

equines, for at least 5 years. APHIS 

representatives and State 

representatives shall be permitted to 

review and copy those documents 

during normal business hours. 

* * * * * 

■ 3. Section 71.21 is amended as 

follows: 

■ a. By redesignating paragraphs (a)(l), 

(a)(2), and (a)(3) as paragraphs (a)(2), 

(a)(3), and (a)(4), respectively, and by 

adding a new paragraph (a)(l) to read as 

set forth below. 

■ b. By adding a new paragraph (a)(5) to 

read as set forth below. 

■ c. In the OMB citation at the end of 

the section, by removing the words 

‘‘number 0579–0212’’ and adding the 

words ‘‘numbers 0579–0212 and 0579– 

0342’’ in their place. 

§ 71.21 Tissue and blood testing at 

slaughter. 

(a) * * * 

(1) The owner or operator of the 

establishment must agree, in writing, to 

meet the requirements for a listed 

facility under this section by signing a 

listing agreement. 

* * * * * 

(5) The management of the 

slaughtering or rendering establishment 

agrees that weight tickets, sales slips, 

and records of origin, identification, and 

destination that relate to livestock that 

are in, or have been in, the 

establishment will be maintained by the 

establishment. For poultry and swine, 

such documents must be kept for at 

least 2 years, and for cattle and bison, 

sheep and goats, cervids, and equines, 

for at least 5 years. APHIS, APHIS 

contractors, and State animal health 

representatives will be permitted to 

review and copy or scan these 

documents during normal business 

hours. 

* * * * * 

Done in Washington, DC, this 2nd day of 

May 2013. 

Kevin Shea, 

Acting Administrator, Animal and Plant 

Health Inspection Service. 

[FR Doc. 2013–10825 Filed 5–6–13; 8:45 am] 

BILLING CODE 3410–34–P 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1075 

[Docket No. CFPB–2013–0011] 

RIN 3170–AA38 

Consumer Financial Civil Penalty Fund 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Final rule. 

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 

rule implements the relevant statutory 

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. 

DATES: This rule is effective May 7, 

2013. 

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, 

§ 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 law 

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), 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. 

II. Summary of the Rule 

This rule implements section 

1017(d)(2) of the Dodd-Frank Act, 12 

U.S.C. 5497(d)(2), by specifying 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. In addition, the rule sets forth 

procedures the Bureau will follow for 

allocating and distributing funds from 

the Civil Penalty Fund. 


emcdonald on DSK67QTVN1PROD with RULES
26490 Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Rules and Regulations 

1The criteria are available at: http:// 

files.consumerfinance.gov/f/ 

201207_cfpb_civil_penalty__criteria.pdf. 

First, the rule describes the roles of 

Bureau officials involved in managing 

the Civil Penalty Fund. It establishes the 

position of Civil Penalty Fund 

Administrator (Fund Administrator) and 

provides that the Fund Administrator 

will report to the Chief Financial 

Officer. In addition, the rule provides 

that the Civil Penalty Fund Governance 

Board—the body comprised of senior 

Bureau officials established by the 

Director to advise on matters relating to 

the Civil Penalty Fund—may advise or 

direct the Fund Administrator on the 

administration of the Civil Penalty 

Fund. The Fund Administrator must 

follow any written directions that the 

Civil Penalty Fund Governance Board 

provides. 

Second, the rule identifies the 

category of victims who may receive 

payments from the Civil Penalty Fund 

and sets forth the amounts they may 

receive. Under the 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. In addition, the 

rule effectuates the intent of section 

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

provide Civil Penalty Fund payments 

only to compensate victims for the 

harms they suffered from a violation for 

which penalties were imposed. In 

addition, as envisioned by section 

1017(d)(2), the Bureau will make 

payments to victims from the Civil 

Penalty Fund only to the extent 

practicable. The rule identifies that part 

of victims’ harm that the Bureau 

believes to be potentially practicable to 

calculate, and thus susceptible to 

compensation under section 1017(d)(2). 

The rule also establishes procedures for 

determining that compensable harm. 

When possible, the amount of 

compensable harm that a victim 

suffered from a violation will be 

determined based on the objective terms 

of the order imposing a civil penalty for 

the violation. If the amount of harm 

cannot be determined based on the 

terms of the order alone, a victim’s 

compensable harm is the victim’s outof-pocket loss that resulted from the 

violation, unless that amount would be 

impracticable to determine. 

The rule further provides that the 

Bureau will use funds in the Civil 

Penalty Fund to compensate only 

victims’ uncompensated harm. Under 

the rule, a victim’s uncompensated 

harm is the victim’s compensable harm, 

less any compensation for that harm 

that the victim has received or is 

reasonably expected to receive. 

Third, the rule establishes a two-stage 

procedure for expending money in the 

Civil Penalty Fund. First, the Fund 

Administrator will allocate funds for 

payments to victims and, if appropriate, 

for consumer education and financial 

literacy programs. At the allocation 

stage, the Fund Administrator will 

assign amounts to classes of victims— 

that is, to groups of similarly situated 

victims who suffered the same or 

similar violations for which the Bureau 

obtained relief in an enforcement action. 

The Fund Administrator will allocate 

funds to a class only to the extent that 

payments to class members would be 

practicable. Second, the Fund 

Administrator will designate a 

payments administrator to distribute 

allocated funds to individual victims in 

the classes to which funds have been 

allocated. Again, a payments 

administrator will make payments to 

individual victims only to the extent 

practicable. The rule identifies specific 

ways in which payments to individual 

victims or to a class of victims might be 

impracticable. 

For funds allocated to consumer 

education and financial literacy 

programs, the Bureau has adopted 

criteria 1—not contained in this rule— 

for selecting the particular consumer 

education or financial literacy programs 

to be funded. 

Under the rule, the Fund 

Administrator will allocate funds from 

the Civil Penalty Fund on a six-month 

schedule. The Fund Administrator is 

responsible for establishing the 

schedule of six-month periods. 

Following the end of any given sixmonth period, the funds available for 

allocation are those present in the Civil 

Penalty Fund as of the end of that 

period, minus funds already allocated 

and certain other funds. In general, the 

Fund Administrator may allocate the 

available funds to those classes of 

victims that had uncompensated harm 

as of the end of that six-month period, 

unless making payments to that class 

would be impracticable. If sufficient 

funds are available, the Fund 

Administrator will allocate to all such 

classes of victims enough money to 

provide full compensation to the 

victims in those classes to whom it is 

practicable to make payments. If funds 

remain, the Fund Administrator may 

allocate a portion of those remaining 

funds for consumer education and 

financial literacy programs. 

The Bureau anticipates that at times 

the available funds in the Civil Penalty 

Fund may not be sufficient to provide 

full compensation to all classes of 

victims to which it is practicable to 

make payments. The Bureau has 

endeavored to establish equitable, 

transparent, and efficient procedures for 

allocating funds in those circumstances. 

Under the rule, classes of victims that 

first had uncompensated harm during 

the six-month period that most recently 

ended will receive priority in such 

‘‘lean’’ periods. If funds remain after 

allocating sufficient funds to provide 

full compensation to all victims in those 

classes, classes of victims from the 

previous six-month period will receive 

second priority, and so forth until no 

funds remain. At times, there may not 

be sufficient funds to give full 

compensation to all classes of victims 

from a single six-month period. In those 

circumstances, the rule specifies that 

funds will be allocated in a way 

designed to ensure, to the degree 

possible, that victims in those classes 

will receive compensation—through 

redress and Civil Penalty Fund 

payments—for an equal percentage of 

their compensable harm. 

In addition, to preserve flexibility in 

special circumstances, the rule 

authorizes the Fund Administrator, in 

her discretion, to depart from these 

procedures, including by declining to 

make, or altering the amount of, any 

allocation provided for by the rule. 

However, if the Fund Administrator 

exercises that discretion, funds that 

otherwise would have been allocated to 

a class of victims cannot instead be 

allocated to consumer education and 

financial literacy programs in that 

period. Rather, the Fund Administrator 

may allocate funds to consumer 

education and financial literacy 

programs during that six-month period 

only to the same extent she could have 

had she not exercised that discretion. 

In addition to establishing procedures 

governing the allocation of funds from 

the Civil Penalty Fund, the rule also 

establishes procedures governing the 

distribution of allocated funds to 

eligible victims. In particular, the rule 

directs the Fund Administrator to 

designate a payments administrator to 

distribute payments to eligible victims 

in a class to which Civil Penalty Fund 

funds have been allocated. Under the 

rule, the Fund Administrator will 

instruct the payments administrator to 

propose a plan for distributing the 

payments. The Fund Administrator may 

require the plan to include procedures 

for determining payment amounts, for 

locating and notifying victims, for 

making payments, and for potentially 

eligible victims to contact the payments 

administrator. Upon the Fund 

Administrator’s approval of a 

distribution plan, the payments 


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Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Rules and Regulations 26491 

administrator will distribute payments 

to victims in accordance with the plan 

to the extent practicable. If funds remain 

after distributing payments to victims in 

a class, the payments administrator will 

distribute those remaining allocated 

funds, to the extent practicable, among 

eligible victims in that class up to the 

amount of their remaining 

uncompensated harm. Any remaining 

funds that cannot be distributed among 

victims in the class in that way will be 

returned to the Civil Penalty Fund for 

future allocation. 

Fourth, the rule sets forth several 

circumstances in which it will be 

deemed impracticable to make 

payments to victims or to classes of 

victims. 

Finally, the rule requires the Fund 

Administrator to issue regular reports 

on the disposition of funds in the Civil 

Penalty Fund. Those reports will be 

made available on 

www.consumerfinance.gov. 

III. Legal Authority 

The Bureau is issuing 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. 

This rule is in part an interpretative 

rule and in part a rule relating to agency 

procedure and practice. Accordingly, 

the rule is not subject to the 30-day 

delayed effective date for substantive 

rules under section 553(d) of the 

Administrative Procedure Act, 5 U.S.C. 

553(d). Even if this requirement applied, 

the Bureau finds there is good cause for 

this rule to take effect immediately upon 

publication in the Federal Register. The 

principal purpose of delaying an 

effective date is to provide regulated 

persons an opportunity to prepare, such 

as by bringing their operations into 

compliance with new requirements. But 

this rule does not impose any 

obligations or prohibitions on the 

public, and the public therefore needs 

no time to prepare for the rule’s 

effective date. Meanwhile, making the 

rule immediately effective allows the 

Bureau to begin as soon as possible the 

process of allocating funds in the Civil 

Penalty Fund to victims. 

IV. Section-by-Section Description 

Section 1075.100 Scope and Purpose 

This section describes the scope and 

purpose of the rule. It explains that the 

rule implements section 1017(d)(2) of 

the Dodd-Frank Act by describing the 

conditions under which victims will be 

eligible for payment from the Civil 

Penalty Fund and the amounts of the 

payments they may receive. This section 

further explains that this rule 

establishes procedures for allocating 

funds in the Civil Penalty Fund to 

classes of victims and to consumer 

education and financial literacy 

programs, and for distributing allocated 

funds to individual victims. The rule 

also requires the Fund Administrator to 

issue regular reports on the Civil 

Penalty Fund. 

Section 1075.101 Definitions 

This section defines terms used in the 

rule. 

Bureau. The rule provides that the 

term ‘‘Bureau’’ means the Bureau of 

Consumer Financial Protection. 

Bureau enforcement action. The rule 

provides that the term ‘‘Bureau 

enforcement action’’ means any judicial 

or administrative action or proceeding 

in which the Bureau has obtained relief 

with respect to a violation. 

Chief Financial Officer. The rule 

states that the term ‘‘Chief Financial 

Officer’’ means the Chief Financial 

Officer of the Bureau or any Bureau 

employee to whom that officer has 

delegated authority to act under this 

part. The rule further states that, in the 

absence of a Chief Financial Officer, the 

Director shall designate an alternative 

official of the Bureau to perform the 

functions of the Chief Financial Officer 

under this part. 

Civil Penalty Fund. The rule provides 

that the term ‘‘Civil Penalty Fund’’ 

means the Consumer Financial Civil 

Penalty Fund established by 12 U.S.C. 

5497(d). 

Civil Penalty Fund Governance Board. 

The rule provides that the term ‘‘Civil 

Penalty Fund Governance Board’’ refers 

to the body, comprised of senior Bureau 

officials, established by the Bureau’s 

Director to advise on matters relating to 

the Civil Penalty Fund. 

Class of victims. The rule defines the 

term ‘‘class of victims’’ to mean a group 

of similarly situated victims who 

suffered harm from the same or similar 

violations for which the Bureau 

obtained relief in a Bureau enforcement 

action. Under this definition, a single 

Bureau enforcement action could 

involve multiple classes of victims. For 

example, the Bureau might obtain relief 

for multiple different violations in a 

single action. The set of victims harmed 

by one violation might overlap with the 

set of victims harmed by another 

violation, but each set could constitute 

a distinct class for purposes of this rule. 

Defendant. The rule states that the 

term ‘‘defendant’’ means a party in a 

Bureau enforcement action that is found 

or alleged to have committed a 

violation. This includes parties that 

generally are referred to as 

‘‘respondents’’ in administrative 

enforcement actions. 

Final order. The rule provides that the 

term ‘‘final order’’ means a consent 

order or settlement issued by a court or 

by the Bureau, or an appealable order 

issued by a court or by the Bureau as to 

which the time for filing an appeal has 

expired and no appeals are pending. 

The rule makes clear that for purposes 

of this definition, ‘‘appeals’’ include 

petitions for reconsideration, review, 

rehearing, and certiorari. 

This rule’s definition of ‘‘final order’’ 

differs from the definition of that term 

in the Bureau’s Rules of Practice for 

Adjudication Proceedings, which 

provide that an order may be considered 

‘‘final’’ even if a petition for 

reconsideration or review is pending. 

For purposes of this rule, the Bureau has 

chosen to define ‘‘final order’’ as an 

order that is subject to no further review 

because the terms of an order in part 

determine whether victims may receive 

payments from the Civil Penalty Fund 

and, if so, in what amount. Thus, it is 

important that the terms of the final 

order not be subject to change. 

Otherwise, the Bureau would risk 

making Civil Penalty Fund payments 

that might turn out, as a result of 

appellate decisions, to have exceeded 

the amount victims may receive under 

the rule. 

Person. The rule incorporates the 

definition of ‘‘person’’ set forth in 

section 1002(19) of the Dodd-Frank Act. 

Thus, the rule states that the term 

‘‘person’’ means an individual, 

partnership, company, corporation, 

association (incorporated or 

unincorporated), trust, estate, 

cooperative organization, or other 

entity. 

Redress. The rule states that the term 

‘‘redress’’ means any amounts that a 

final order requires a defendant to 

distribute, credit, or otherwise pay to 

those harmed by a violation, or to pay 

to the Bureau or another intermediary 

for distribution to those harmed by the 

defendant’s violation. The rule makes 

clear that redress includes but is not 

limited to restitution, refunds, and 

damages. A case brought by a party 

other than the Bureau—such as another 

federal agency, a state’s attorney 


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26492 Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Rules and Regulations 

2See, e.g., Prudential Ins. Co. of Am. v. S.S. Am. 

Lancer, 870 F.2d 867, 871 (2d Cir. 1989); Reilly v. 

United States, 863 F.2d 149, 165 (1st Cir. 1988); 

Westerman v. Sears, Roebuck & Co., 577 F.2d 873, 

879 (5th Cir. 1978). 3See, e.g., Shearson/Am. Express, Inc. v. 

McMahon, 482 U.S. 220, 241 (1987) (explaining that 

‘‘the antitrust treble-damages provision gives 

private parties an incentive to bring civil suits that 

serve to advance the national interest in a 

competitive economy’’); City of Newport v. Fact 

Concerts, Inc., 453 U.S. 247, 266–67 (1981) 

(‘‘Punitive damages by definition are not intended 

to compensate the injured party, but rather to 

punish the tortfeasor whose wrongful action was 

intentional or malicious, and to deter him and 

others from similar extreme conduct.’’). 

general, or a private plaintiff—may 

result in ‘‘redress’’ as defined by the 

rule. 

Victim. The rule defines ‘‘victim’’ to 

mean a person harmed as a result of a 

violation. 

Violation. The rule provides that the 

term ‘‘violation’’ means any act or 

omission that constitutes a violation of 

law for which the Bureau is authorized 

to obtain relief pursuant to 12 U.S.C. 

5565(a). 

Section 1075.102 Fund Administrator 

102(a) In General 

Section 1075.102(a) establishes within 

the Bureau the position of Civil Penalty 

Fund Administrator (Fund 

Administrator) and provides that the 

Fund Administrator will report to the 

Chief Financial Officer and serve at that 

officer’s pleasure. In addition, the Chief 

Financial Officer may, to the extent 

permitted by applicable law, relieve the 

Fund Administrator of the duties of that 

position without notice, without cause, 

and before naming a successor Fund 

Administrator. 

102(b) Powers and Duties 

Section 1075.102(b) provides that the 

Fund Administrator will have the 

powers and duties assigned to that 

official by this rule. 

102(c) Interpretation of These 

Regulations 

Section 1075.102(c) provides that the 

Civil Penalty Fund Governance Board 

may advise or direct the Fund 

Administrator on the administration of 

the Civil Penalty Fund, including 

regarding the interpretation of this part 

and its application to particular facts 

and circumstances. The Governance 

Board may provide this advice or 

direction on its own initiative or at the 

Fund Administrator’s request. The rule 

makes clear that if the Governance 

Board issues to the Fund Administrator 

written directions regarding the 

administration of the Civil Penalty 

Fund, the Fund Administrator must 

follow those directions. 

102(d) Unavailability of the Fund 

Administrator 

Section 1075.102(d) provides that if 

there is no Fund Administrator or if the 

Fund Administrator is otherwise 

unavailable, the Chief Financial Officer 

will perform the Fund Administrator’s 

functions and duties. In accordance 

with § 1075.101, the Chief Financial 

Officer may delegate to another Bureau 

employee the authority to perform the 

Fund Administrator’s functions and 

duties in these circumstances. 

Section 1075.103 Eligible Victims 

Section 1075.103 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 Dodd-Frank 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, 

the Bureau interprets 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. If section 

1017(d)(2) instead authorized the 

Bureau to make payments to victims of 

activities that are of the same type as 

activities for which civil penalties were 

imposed—even if no civil penalty was 

imposed for the particular activities that 

harmed the victim—it would be difficult 

to identify all such activities, assess 

whether those activities were 

sufficiently similar to activities that 

gave rise to a civil penalty, and identify 

the victims of those activities. By 

contrast, interpreting section 1017(d)(2) 

to authorize payments only to victims of 

particular violations for which civil 

penalties were imposed establishes a 

clear eligibility rule that is 

straightforward to apply. 

A victim’s eligibility for payment 

from the Civil Penalty Fund and, as 

discussed below, the amount of any 

such payment do not depend on the 

amount of the civil penalty imposed or 

paid for the violation that harmed the 

victim. Section 1017 of the Dodd-Frank 

Act instructs the Bureau to deposit all 

amounts received as civil penalties into 

a single Civil Penalty Fund and 

authorizes payments from that Fund to 

the ‘‘victims’’ of ‘‘activities’’ for which 

‘‘penalties’’ have been imposed. By 

creating a single Civil Penalty Fund, the 

statute enables the pooling of penalties 

from multiple actions. The Bureau 

therefore interprets section 1017 to 

make a victim’s eligibility for payments 

from the Civil Penalty Fund depend 

only on whether a final order imposed 

a civil penalty for the violation that 

harmed the victim, and not on whether 

the defendant actually paid the penalty 

imposed or on how much the defendant 

paid. Thus, a victim is not limited to 

receiving some portion of the particular 

civil penalty paid for the violation that 

harmed the victim, but rather may 

receive payment from any funds in the 

Civil Penalty Fund. 

Section 1075.104 Payments to Victims 

104(a) In General 

Section 1075.104(a) 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. This 

provision gives effect to the Bureau’s 

interpretation 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 

recognizes that section 1017(d)(2) 

authorizes payments to victims but does 

not specify what kinds of payments, in 

what amounts, or for what purposes. 

However, section 1017(d)(1)’s caption, 

‘‘Establishment of Victims Relief Fund,’’ 

suggests that Civil Penalty Fund 

payments should provide relief to 

victims for harm suffered. 

Compensation for harm is a common 

purpose for payments to victims, and 

laws ordinarily do not go beyond that 

purpose to give victims windfall 

recoveries that exceed the harms they 

suffered.2 To be sure, some laws do 

provide for payments to victims in 

excess of harms suffered, usually to 

provide additional incentives for private 

parties to enforce the law or to enhance 

the deterrent effect of such private 

enforcement.3 Providing such payments 

here, however, would not further those 

goals: It would not incentivize victims 

to bring private enforcement actions, 

nor would it have any impact on 

deterrence because the size of the 

payments would not affect the size of 

the civil penalty that the defendant had 

to pay. Moreover, there is no indication 

in section 1017(d)’s text that the Civil 

Penalty Fund should provide victims 

payments beyond the extent of their 

harm. 

The Bureau’s interpretation also gives 

effect to the second sentence of section 


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Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Rules and Regulations 26493 

4The Bureau anticipates it will learn of other 

redress as a matter of course in many cases. For 

example, the Bureau may require a defendant to 

notify the Bureau of any judgment or settlement 

involving violations related to the order. 

5Cf. 40 CFR 230.10(a)(2) (regulation specifying 

that an alternative is ‘‘practicable’’ for purpose of 

the Clean Water Act if ‘‘it is available and capable 

of being done after taking into consideration cost, 

existing technology, and logistics in light of overall 

project purposes’’); Biodiversity Legal Found. v. 

Babbitt, 146 F.3d 1249, 1255–56 (10th Cir. 1998) 

(statutory instruction to adhere to deadline to the 

degree ‘‘practicable’’ permitted agency to vary from 

deadline on the bases of what resources and 

funding were available and of how the agency 

assessed priorities). 

1017(d)(2), which authorizes the Bureau 

to use funds in the Civil Penalty Fund 

for consumer education and financial 

literacy programs to the extent that 

payments to victims are not practicable. 

If the amount of individual victims’ 

payments were not limited in some way, 

any one victim could receive the full 

amount in the Fund. Thus, so long as it 

was practicable to pay at least one 

victim—as it almost certainly always 

will be—funds would never become 

available for consumer education and 

financial literacy programs under 

section 1017(d)(2)’s second sentence. 

Therefore, for all the terms of section 

1017(d)(2) to have effect, payments to 

victims must be subject to reasonable 

limitation. In light of the general 

principles discussed above, the Bureau 

believes that paying victims only to 

compensate them for harms suffered as 

a result of violations effectuates the 

statutory intent. 

104(b) Victims’ Uncompensated Harm 

In general, a victim’s uncompensated 

harm is the amount of the victim’s 

compensable harm, as described in 

§ 1075.104(c) and discussed below, 

minus any compensation for that harm 

that the victim has received or is 

reasonably expected to receive. To 

ensure that Civil Penalty Fund 

payments do not overcompensate 

victims, the Bureau will take account of 

compensation that victims have 

received from other sources. In addition, 

in some cases, some time may elapse 

between when an entity is directed to 

compensate victims, or when funds are 

allocated to compensate victims, and 

when the victims actually receive that 

compensation. The Bureau will take 

account of such compensation, even if 

victims have not yet received it. The 

Bureau understands section 1017(d)(2) 

to create a backstop that could provide 

compensation that victims otherwise 

would not receive. Thus, ‘‘payments to 

victims’’ should not include payments 

that would duplicate compensation that 

the victims are reasonably expected to 

receive in the future. 

Section 1075.104(b)(2) describes three 

categories of compensation that a victim 

‘‘has received or is reasonably expected 

to receive.’’ First, paragraph (b)(2)(i) 

provides that a victim has received or is 

reasonably expected to receive any Civil 

Penalty Fund payment that the victim 

has previously received or will receive 

as a result of a previous allocation from 

the Civil Penalty Fund to the victim’s 

class. 

Second, paragraph (b)(2)(ii) provides 

that a victim has received or is 

reasonably expected to receive any 

redress that a final order in a Bureau 

enforcement action orders to be 

distributed, credited, or otherwise paid 

to the victim, and that has not been 

suspended or waived and that the Chief 

Financial Officer has not determined to 

be uncollectible. The Bureau expects 

that defendants generally will pay the 

redress that they are ordered to pay in 

a Bureau enforcement action. Therefore, 

the Bureau generally considers it 

reasonable to anticipate that victims 

will receive any amount of 

compensation ordered in such an 

action. However, in some circumstances 

it will not be reasonable to expect a 

victim to receive some portion of the 

compensation ordered in a given action. 

In particular, victims will not likely 

receive a redress amount that the 

Bureau has suspended or waived. In 

addition, victims will not likely receive 

a redress amount that the Bureau has 

determined to be uncollectible in whole 

or in part. 

Third, paragraph (b)(2)(iii) provides 

that a victim has received or is 

reasonably expected to receive any other 

redress that the Bureau knows has been 

distributed, credited, or otherwise paid 

to the victim, or has been paid to an 

intermediary for distribution to the 

victim, to the extent that (1) such 

redress compensates the victim for the 

same harm as would be compensated by 

a Civil Penalty Fund payment, and (2) 

it is not unduly burdensome, in light of 

the amounts at stake, to determine the 

amount of that redress or the extent to 

which it compensates the victim for the 

same harm as would be compensated by 

a Civil Penalty Fund payment. 

The ‘‘other redress’’ covered by this 

provision includes redress paid to 

victims as a result of private litigation 

or enforcement actions by other 

regulators. Such redress would be 

subtracted from a victim’s compensable 

harm only if the Bureau knows that the 

defendant has paid the other redress. 

The Bureau would not, pursuant to the 

rule, actively investigate what other 

redress victims have been paid. 

However, to the extent the Bureau does 

learn of other redress, such redress 

should be counted as compensation that 

victims have received.4

In addition, under this provision, a 

victim is not ‘‘reasonably expected to 

receive’’ other redress that a party has 

been ordered to pay, but has not yet 

paid. While many defendants will 

actually pay the full amounts ordered, 

the Bureau recognizes that some may 

not. The Bureau has substantially less 

information about the likelihood that 

defendants will fully comply with the 

orders in actions brought by other 

parties than it does about compliance 

with orders in its own actions. The 

Bureau often will not know, for 

example, whether redress from such a 

non-Bureau action is uncollectible. And 

while the Bureau has the authority to 

seek enforcement of orders it obtains, 

the Bureau usually will not know what 

efforts other parties might undertake to 

enforce the orders obtained in their own 

actions. Given those uncertainties, the 

Bureau will not consider a victim to be 

reasonably likely to receive redress from 

other parties’ actions until the 

defendant has actually paid that redress 

to an intermediary for distribution to the 

victims. 

Finally, the Bureau recognizes that in 

some circumstances it may not be 

practicable to assess the uncompensated 

harm of individual victims. In such 

cases, § 1075.104(b)(3) provides that, for 

purposes of this rule, each individual 

victim’s uncompensated harm will be 

the victim’s share of the aggregate 

uncompensated harm of the victim’s 

class. 

104(c) Victims’ Compensable Harm 

Section 1075.104(c) describes the 

amount of victims’ compensable harm 

for purposes of this rule. As noted 

above, the Bureau interprets section 

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

authorize payments to a victim only up 

to the amount of harm that the victim 

suffered from the violation for which 

the Bureau obtained a civil penalty and 

for which the victim has not received 

and is not reasonably likely to receive 

other compensation. The Bureau also 

interprets that provision as directing the 

Bureau to make payments to victims 

only to the extent practicable. 

The Bureau believes that for payments 

to be ‘‘practicable,’’ it must be feasible 

to carry out all the steps involved in 

making the payments, and to do so 

efficiently and without excessive 

administrative cost in the context of a 

system of making payments to many 

victims of many different activities.5

The Dodd-Frank Act did not establish a 

tribunal or a formal procedure for 

distributing payments pursuant to 


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6The Bureau does not regard out-of-pocket losses 

as a general limitation on what remedy might be 

available to plaintiffs, such as the Bureau, in a given 

action to enforce federal consumer financial law. 

Other measures of harm often will be appropriate, 

depending on the circumstances. Out-of-pocket 

losses simply represents the Bureau’s judgment 

about what would be practicable to calculate in the 

specific context of the Civil Penalty Fund. 

7 If one aspect of out-of-pocket losses is 

impracticable to determine, the Fund Administrator 

need not necessarily conclude that no harm can 

section 1017(d)(2). Indeed, the statute 

does not specify any mechanism for 

making the payments. But, in light of 

section 1017(d)(2)’s placement within a 

statutory section that generally deals 

with the Bureau’s administrative 

operations, the Bureau interprets that 

provision to refer to payments that may 

be made through ordinary 

administrative mechanisms. 

‘‘Practicable,’’ therefore, means capable 

of being carried out through such 

mechanisms. 

Consistent with this interpretation, 

later sections of the rule, discussed 

below, direct the allocation and 

payment of funds only to the extent that 

payments to victims would be 

practicable. In addition, § 1075.109 

identifies circumstances in which 

payment may not be practicable. For 

payments to be practicable, the Bureau 

must be able to take measures that are 

reasonable in the context of the Civil 

Penalty Fund to determine the amount 

of victims’ harm, and thus the amount 

of the payments the victims may 

receive. Given the nature of the Civil 

Penalty Fund and the likely volume of 

payments, making complex 

individualized determinations or 

subjective judgments about the nature or 

extent of victims’ harm would entail 

significant administrative burden and 

delay. Calculating harm based on such 

determinations or judgments therefore 

would not be practicable. Instead, in 

this context, harm is practicable to 

calculate only if the Fund Administrator 

can determine it by applying objective 

standards on a classwide basis. For 

these reasons, the Bureau defines 

‘‘compensable harm’’ to include only 

those amounts of harm that the Bureau 

deems practicable to calculate, in the 

sense just described. Section 

1075.104(c) describes amounts of harm 

that the Bureau believes will be 

practicable to calculate and establishes 

procedures that the Fund Administrator 

will follow to determine compensable 

harm in each of several categories of 

cases. 

The measures of harm described in 

this section will not always correspond 

to the amount of harm for which the 

Bureau or injured victims could obtain 

compensation under the relevant laws 

and regulations and do not in any way 

reflect the Bureau’s view on what kinds 

of harm are or should be compensable 

in litigation. Rather, these objective 

measures simply reflect what is 

practicable for the Fund Administrator 

to determine in the context of the Civil 

Penalty Fund. 

To the extent possible, the amount of 

a victim’s compensable harm will be 

based on the objective terms of a final 

order. Referring to the terms of a final 

order will be practicable, and following 

the terms of orders will enable the Fund 

Administrator to determine a victim’s 

compensable harm quickly and 

efficiently in most circumstances. In 

addition, by relying on the terms of a 

final order, the Fund Administrator can 

avoid making potentially subjective 

judgments about the nature of the harm 

that a class of victims has suffered and 

how to quantify and calculate that harm. 

There are several categories of cases 

in which the Fund Administrator will 

be able to rely on the terms of a final 

order. First, under paragraph (c)(1), 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, under paragraph (c)(2)(i), 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. A 

court or administrative tribunal’s denial 

of a request for redress presumably 

reflects that body’s conclusion that the 

Bureau has not proven that the victims’ 

harm is legally compensable. 

Third, under paragraph (c)(2)(ii), 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. This paragraph 

will apply in cases where the Bureau 

does not seek any redress for a class of 

victims. For example, if the Bureau 

believed a defendant had too few 

financial resources to provide any 

meaningful redress to its victims, the 

Bureau might choose not to seek such 

redress and instead to pursue injunctive 

relief. However, the final order in such 

a case might still describe amounts of 

harm that victims suffered from the 

violations at issue. Relying on such a 

description would be practicable to the 

same extent as relying on an order of 

redress. When possible, such victims’ 

harm—like the harm of victims for 

whom redress is ordered—will be 

determined according to the objective 

terms of a final order. Only when that 

is not possible will the Bureau look to 

external factors to assess victims’ harm. 

Paragraph (c)(2)(iii) describes the 

amounts of harm that the Bureau 

believes could practicably be 

determined in those circumstances. 

Under this paragraph, each victim’s 

compensable harm is equal to the 

victim’s out-of-pocket 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. 

The restriction to out-of-pocket losses 

effectuates the ‘‘practicable’’ standard 

for payments to victims because those 

losses are what would be ‘‘practicable’’ 

to determine in the context of 

disbursing funds from the Civil Penalty 

Fund. As discussed above, the Bureau 

believes that for payments to be 

‘‘practicable’’ it should be possible for 

the Fund Administrator to calculate the 

appropriate payments on the basis of 

objective standards applicable on a 

classwide basis. In addition, the Fund 

Administrator should be able to obtain 

objective evidence of the harm with 

effort that is reasonable in this context. 

It follows that, when the Fund 

Administrator must assess harm on her 

own because no final order has 

specified an amount of harm, the Fund 

Administrator should assess only the 

amount of out-of-pocket loss. In general, 

the amounts that victims have spent out 

of pocket can be determined on the 

basis of documentary records that are 

straightforward to obtain. If, in 

exchange, victims have received some 

product or service of value, the objective 

value of that product or service should 

generally also be feasible to determine 

on a classwide basis. Measures of harm 

beyond out-of-pocket loss would tend to 

involve more individualized questions 

or more complex judgments than the 

Bureau practicably can make in 

administering the Civil Penalty Fund.6

The Bureau recognizes, however, that 

it may not always be practicable to make 

a complete determination of victims’ 

out-of-pocket losses. For instance, at 

times there may be no objective 

standard for assessing the value of a 

good or service the buyer received. As 

another example, in some cases, there 

may be no centralized records of the 

amounts buyers paid, and it may be too 

costly given the amounts at stake to seek 

that evidence from the individual 

buyers. Thus, under the rule, out-ofpocket losses are compensable harm 

only to the extent that they are 

practicable to determine.7


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Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Rules and Regulations 26495 

practicably be determined for the class. For 

example, if the value of a good or service received 

is impracticable to determine, the Fund 

Administrator may under the rule treat the amounts 

paid as the compensable harm if doing so would 

be reasonable. 

8As explained in greater detail below, the 

schedule also in some cases governs which classes 

of victims will receive priority when there are 

insufficient funds available to compensate all 

victims fully. 

9The Bureau could, in principle, extend this 

principle of equal treatment by allocating funds less 

frequently than every six months. However, doing 

so would mean making payments to victims less 

frequently. The Bureau expects that a six-month 

schedule will eliminate the most significant effects 

of timing while still ensuring that victims receive 

payments reasonably quickly. 

The Bureau recognizes that many 

victims will have suffered harms in 

addition to those that the Civil Penalty 

Fund may compensate under this rule. 

For example, out-of-pocket loss may not 

be a complete measure of a particular 

victim’s harm. But the Bureau does not 

understand the statute to guarantee 

complete compensation for victims. The 

Fund provides compensation only to the 

extent funds are available due to 

defendants’ payment of civil penalties; 

and, pursuant to section 1017(d), the 

Fund provides compensation only to the 

degree ‘‘practicable.’’ The Bureau 

believes the rule faithfully interprets 

section 1017(d), and the rule does not 

preclude victims from receiving 

compensation from other sources in 

amounts greater than the Civil Penalty 

Fund might provide. 

Section 1075.105 Allocating Funds 

from the Civil Penalty Fund—In General 

Section 1075.105 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. 

105(a) In General 

Section 1075.105(a) 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) directs the 

Fund Administrator, within 60 days of 

this rule’s effective date, to establish 

and publish on 

www.consumerfinance.gov a schedule 

for allocating funds in the Civil Penalty 

Fund. That schedule generally will 

establish six-month periods and identify 

the start and end dates of those periods, 

with each period’s start date 

immediately following the end date of 

the previous period. The first two 

periods of this schedule, however, need 

not be six months long. Rather, they 

may be longer or shorter than six 

months so that future six-month periods 

may start and end on dates that better 

serve administrative efficiency. These 

first two periods are considered ‘‘sixmonth periods’’ under this rule 

regardless of their actual length. The 

start date of the first period will be July 

21, 2011. 

The Fund Administrator will allocate 

funds from the Civil Penalty Fund on 

the basis of this schedule. In addition, 

the amounts that will be available for 

allocation and the time when classes of 

victims may be considered for 

allocations will depend on the 

schedule.8 Section 1075.105(b)(2) 

provides that, within 60 days after the 

end of a six-month period, the Fund 

Administrator will allocate available 

funds in the Civil Penalty Fund in 

accordance with §§ 1075.106 and 

1075.107. Consistent with those 

provisions, the Fund Administrator will 

allocate funds (1) to classes of victims 

that had uncompensated harm as of the 

last day of that six-month period and (2) 

to consumer education and financial 

literacy programs as appropriate. 

Thus, the Fund Administrator will 

allocate funds from the Civil Penalty 

Fund only once every six months. The 

Bureau has chosen to make payments on 

a six-month 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, the accidents of timing would 

dictate the results. The Bureau’s method 

of allocating funds on a six-month 

schedule will give equal treatment to all 

classes from a given six-month period.9

The 60-day window for allocating 

funds after a six-month period gives the 

Fund Administrator time to collect and 

analyze available data in order to assess 

which classes of victims are eligible for 

Civil Penalty Fund payments and the 

amounts they may receive and to 

perform the calculations necessary to 

comply with §§ 1075.106 and 1075.107. 

The classes to which funds may be 

allocated are only those classes that had 

uncompensated harm as of the last day 

of the six-month period that most 

recently concluded. Although other 

classes might have come to have 

uncompensated harm between that day 

and the time when the Fund 

Administrator next makes allocations, it 

would be difficult, as a general rule, for 

the Fund Administrator to carry out the 

assessments and calculations necessary 

to quantify the uncompensated harm of 

such classes and to take that harm into 

account in determining how funds will 

be allocated. If the Fund Administrator 

continually had to account for new 

classes of victims with new amounts of 

uncompensated harm after the close of 

a six-month period, her calculations 

would continually change. Constantly 

making new calculations would waste 

resources and could make it difficult for 

the Fund Administrator to allocate 

funds within 60 days of the close of a 

six-month period. For these reasons, the 

Bureau concludes that it would be 

impracticable for the Fund 

Administrator to make payments for 

uncompensated harm that arose after 

the end of a six-month period. 

Accordingly, the Fund Administrator 

will consider a class for an allocation 

only after the end of the six-month 

period in which the class began to have 

uncompensated harm. 

Section 1075.105(b)(3) authorizes the 

Civil Penalty Fund Governance Board to 

change the schedule of six-month 

periods if it determines that a new 

schedule would better serve 

administrative efficiency. Under this 

provision, the Civil Penalty Fund 

Governance Board may change the 

schedule by directing the Fund 

Administrator to publish a new 

schedule on www.consumerfinance.gov. 

Any new schedule must comply with 

paragraph (b)(1)(i) of this section by 

establishing six-month periods and their 

start and end dates, with the start date 

of one period immediately following the 

end date of the preceding period. The 

first period of a new schedule may be 

shorter or longer than six months. That 

first period will constitute a ‘‘six-month 

period’’ under this part regardless of its 

actual length. 

105(c) Funds Available for Allocation 

Section 1075.105(c) provides that the 

funds available for allocation following 

the end of a six-month period are those 


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26496 Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Rules and Regulations 

10See Government Accountability Office, 

Principles of Federal Appropriations Law 4–20 (3d 

ed.) (quoting Comptroller General McCarl to Maj. 

Gen. Anton Stephan, Commanding Officer, District 

of Columbia Militia, 6 Comp. Gen. 619, 621 (1927)) 

(parenthetical explanation). 

11A class’s uncompensated harm could increase 

after the end of a six-month period if, for example, 

the Bureau waives or deems uncollectible an 

amount of redress that the class had been 

reasonably expected to receive. Under the rule, the 

Fund Administrator will take account of any 

increase in a class’s uncompensated harm only after 

the six-month period in which that increase 

occurred. 

12 In many instances, the Fund Administrator will 

not know at the time of allocation whether it is 

practicable to make payments to particular 

individual victims. Sometimes, however, the Fund 

Administrator may have concrete information 

indicating that it will not be practicable to pay 

particular victims. If, for example, the Bureau 

previously distributed payments to a class and, 

despite reasonable efforts, could not locate some 

victims, the Fund Administrator might reasonably 

conclude, when making a further allocation, that it 

is not practicable to make payments to those 

unlocatable victims. 

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. 

Just as additional classes may become 

eligible between the end of a six-month 

period and the time when the Fund 

Administrator allocates funds following 

the end of that period, additional funds 

may be deposited into the Civil Penalty 

Fund during that interval. For the same 

reasons that the Bureau does not intend 

to allocate funds to such classes until 

the succeeding allocation, the Bureau 

likewise will not allocate such newly 

deposited funds until the succeeding 

allocation. Allocating funds involves 

calculations and assessments, and it 

would be difficult for the Fund 

Administrator to make those 

calculations and assessments based on a 

fluctuating, uncertain amount available 

for allocation. 

The provision does not permit reallocation of funds that the Fund 

Administrator has already allocated. 

Although funds might remain on 

deposit in the Civil Penalty Fund for a 

period of time after they are allocated to 

a class of victims or to consumer 

education and financial literacy 

programs, such funds remain allocated 

and are not available for reallocation. 

In addition, this provision makes 

unavailable for allocation any funds that 

the Fund Administrator determines are 

necessary for authorized administrative 

purposes. The Bureau interprets section 

1017(d)(2) of the Dodd-Frank Act, 12 

U.S.C. 5497(d)(2), to authorize the 

Bureau to use funds in the Civil Penalty 

Fund not only for the actual payments 

to victims themselves, but also for the 

administrative expenses incurred to 

make those payments. Nothing in 

section 1017 or any other provision of 

law bars the Bureau from using funds in 

the Civil Penalty Fund for such 

administrative expenses, nor is there 

any indication that such expenditures 

are allowed only with express 

authorization. In addition, no other 

source of funding more specifically 

provides for those expenses. The Bureau 

may therefore use funds in the Civil 

Penalty Fund for administrative 

expenses that it determines are 

necessary or incident to making 

payments to victims.10 To ensure that 

sufficient funds remain in the Civil 

Penalty Fund to pay such administrative 

expenses, the Bureau will exclude from 

the allocation process those funds that 

the Fund Administrator deems 

necessary for those expenses. 

Finally, this provision also makes 

unavailable for allocation any funds that 

the Bureau collected pursuant to an 

order that has not yet become a final 

order. This ensures that the Bureau does 

not allocate or spend amounts that it 

could have to return to the payer. In 

particular, a defendant in a Bureau 

enforcement action could pay a civil 

penalty into the Civil Penalty Fund 

before the order imposing the civil 

penalty becomes a final order. In such 

a case, if the defendant appealed and a 

court reversed the imposition of the 

civil penalty, the Bureau would have to 

pay the amount of the civil penalty back 

to the defendant. 

Section 1075.106 Allocating Funds to 

Classes of Victims 

Section 1075.106 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. 

106(a) Allocations When There Are 

Sufficient Funds Available To 

Compensate All Uncompensated Harm 

Section 1075.106(a) 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. 

This provision contains two 

limitations on the extent to which the 

Fund Administrator will allocate funds 

to compensate fully all victims. First, 

the Fund Administrator will not allocate 

funds to compensate uncompensated 

harm that arose after the end of the most 

recent six-month period.11 As explained 

above, it would be impracticable for the 

Fund Administrator to make timely 

allocations if she had to revise the 

calculations continually to take account 

of newly arising uncompensated harm. 

Second, the Fund Administrator will 

allocate to each class only an amount 

sufficient to compensate the 

uncompensated harm of all victims in 

the class to whom it is practicable to 

make payments. As noted above, section 

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

for payments to victims only to the 

degree that such payments are 

practicable. The Bureau recognizes that 

even if it is practicable to calculate the 

uncompensated harm of a class of 

victims, it may nonetheless be 

impracticable, in some circumstances, 

to make payments to particular victims 

in the class. Section 1075.109 describes 

a number of such circumstances, which 

will be discussed below in more detail. 

Pursuant to § 1075.106(a), the Fund 

Administrator is authorized to take 

account of such circumstances at the 

time of allocation by reducing the 

allocation to a class on the ground that 

payments to some victims in the class 

will be impracticable.12

106(b) Allocations When There Are 

Insufficient Funds Available To 

Compensate All Uncompensated Harm 

Section 1075.106(b) establishes the 

procedures 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. 

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

From the Most Recent Six-Month Period 

Under § 1075.106(b)(1), when there 

are insufficient funds available to 

provide all victims full compensation as 

described in paragraph (a), the Fund 


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Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Rules and Regulations 26497 

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 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, the Fund Administrator next 

will allocate funds to classes of victims 

from the preceding six-month period, 

and so forth until no funds remain. The 

Bureau has specified this tiered 

allocation process because it will be 

more administratively efficient to 

determine the appropriate allocations 

for classes from single six-month 

periods than to determine the 

appropriate allocations for all classes at 

once. 

In addition, this process will result in 

lower administrative costs, both as an 

absolute matter and in terms of 

administrative cost per dollar 

distributed, than would a process 

requiring funds to be allocated among 

all classes. First, allocating the limited 

funds to a limited number of classes 

will mean that there will be fewer 

payments to make—and lower 

associated costs—than if the limited 

funds were allocated to more classes. 

Second, allocating the limited funds to 

a smaller number of classes generally 

will result in payments of greater 

amounts than if the Fund Administrator 

had instead allocated the limited funds 

more thinly among more classes. 

Making larger payments generally will 

be more cost-effective—in terms of 

administrative cost per dollar 

distributed—than making smaller 

payments. 

106(b)(2) Assigning Classes of Victims 

to a Six-Month Period 

As explained above, § 1075.106(b)(1) 

instructs the Fund Administrator to 

allocate funds among classes of victims 

from a single six-month period before 

allocating funds to classes of victims 

from an earlier six-month period. 

Paragraph (b)(2) explains that 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). 

This 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. 

This provision corresponds to 

§ 1075.104(b), which defines a victim’s 

uncompensated harm. As noted above, 

that section provides that a victim’s 

uncompensated harm is the victim’s 

compensable harm, minus any 

compensation for that harm that the 

victim has received or is reasonably 

expected to receive. In all cases, a class 

of victims will first have compensable 

harm under this rule, if any, as of the 

date an order in a Bureau enforcement 

action becomes final because, under 

§ 1075.104(c), the terms of the final 

order determine the amount of victims’ 

compensable harm or how that harm 

will be ascertained. In cases where no 

redress is ordered, victims also often 

will have uncompensated harm as of the 

date the order in the Bureau 

enforcement action becomes final 

because, at the time of the order, they 

will not be reasonably expected to 

receive redress for their compensable 

harm. In cases where redress is ordered, 

however, victims generally will have no 

uncompensated harm at the time of the 

order because at that time they generally 

will be reasonably expected to receive 

the redress ordered. Later events, 

however, could make it no longer 

reasonable to expect the victims to 

receive compensation. In particular, 

under § 1075.104(b), a victim will no 

longer be reasonably expected to receive 

redress amounts if the Bureau waives or 

suspends those amounts or deems them 

uncollectible. Thus, a victim may begin 

to have uncompensated harm when 

such an event occurs. 

106(c) No Allocation to a Class of 

Victims If Making Payments Would Be 

Impracticable 

Section 1075.106(c) 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 interprets 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. 

106(d) Fund Administrator’s Discretion 

106(d)(1) 

Section 1075.106(d)(1) 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 section. This 

provision gives the Fund Administrator 

discretion to depart from the allocation 

procedures specified by § 1075.106; it is 

not intended to authorize the Fund 

Administrator otherwise to depart from 

the provisions in this part, for example 

by giving victims payments greater than 

their uncompensated harm. With this 

provision, the Bureau simply aims to 

give the Fund Administrator the 

flexibility to depart from the allocation 

procedures established by § 1075.106 

when the circumstances warrant. For 

example, the Fund Administrator might 

choose to deviate from § 1075.106’s 

allocation procedures if insufficient 

information is available, at the end of a 

given six-month period, to assess the 

total uncompensated harm for a class 

from that period. The Fund 

Administrator might choose to postpone 

allocating funds to that class until such 

time as the Fund Administrator has the 

necessary information. When the Fund 

Administrator does allocate funds to 

that class, she may, pursuant to this 

paragraph, prioritize the class for 

receiving allocations even though, 

according to § 1075.106(b)(2), the class’s 

uncompensated harm arose some time 

previously. 

As another example, a class of victims 

might have had uncompensated harm in 

an earlier six-month period, but the 

amount of the class’s uncompensated 

harm might increase in a later six-month 

period. For example, the Bureau might 

suspend some amount of redress on one 

date, at which point the class could 

have uncompensated harm equal to that 

suspended amount. Then, the Chief 

Financial Officer might later deem part 

of the non-suspended amount 

uncollectible, at which point the class 

could have additional uncompensated 

harm equal to that uncollectible 

amount. The Fund Administrator might 

prioritize the class with respect to the 

additional amount of uncompensated 


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13The Bureau notes that when the Fund 

Administrator determines that payments to some 

victims in a class or to an entire class would be 

impracticable, the Fund Administrator’s decision to 

allocate fewer funds or no funds to the class is not 

an exercise of discretion under paragraph (d)(1). 

Consistent with section 1017(d)(2) of the DoddFrank Act, the Bureau will not make or attempt to 

make payments that would be impracticable. 

harm, even though pursuant to 

§ 1075.106(b)(2) the class would be from 

the six-month period when it first had 

uncompensated harm. 

Because the Bureau cannot anticipate 

all the situations in which it may be 

reasonable to deviate from § 1075.106’s 

allocation procedures, it leaves the 

decision to deviate to the Fund 

Administrator’s discretion. However, 

the Fund Administrator must provide 

the Civil Penalty Fund Governance 

Board a written explanation of the 

reason for departing from the ordinary 

allocation procedures. 

106(d)(2) 

Section 1075.106(d)(2) 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. While the Fund 

Administrator may, exercising the 

discretion authorized by paragraph 

(d)(1), adjust the distribution of funds 

among various classes, she cannot 

increase the amount available in a given 

time period for consumer education and 

financial literacy programs.13

The limitation on allocating funds to 

consumer education and financial 

literacy programs applies only to an 

allocation that occurs in the same time 

period described in § 1075.105(b)(2) in 

which the Fund Administrator exercises 

her discretion under § 1075.106(d)(1). 

This reflects the Bureau’s interpretation 

of 12 U.S.C. 5497(d)(2) as authorizing it 

to use funds in the Civil Penalty Fund 

for consumer education and financial 

literacy programs whenever it is not 

currently practicable to use those funds 

for payments to victims instead. Under 

§ 1017(d)(2), funds may be used for 

consumer education and financial 

literacy programs even if it would have 

been practicable at some time in the 

past to use those funds for payments to 

victims. 

Section 1075.107 Allocating Funds to 

Consumer Education and Financial 

Literacy Programs 

107(a) 

Section 1075.107(a) 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 allocation to 

consumer education and financial 

literacy programs. The Fund 

Administrator is not required to allocate 

such remaining funds to consumer 

education and financial literacy 

programs and instead may keep some or 

all funds in reserve for future allocation. 

In the future, the Bureau may limit 

the amount of funds that the Fund 

Administrator may allocate to consumer 

education and financial literacy 

programs under this provision. In a 

notice of proposed rulemaking 

published in today’s Federal Register, 

the Bureau seeks comment on whether 

it should impose any limits and, if so, 

what those limits should be. 

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. The Bureau 

has developed, and posted at http:// 

files.consumerfinance.gov/f/ 

201207_cfpb_civil_penalty_

fund_criteria.pdf, its criteria for 

selecting these programs. These criteria 

are beyond the scope of this rule. 

Section 1075.108 Distributing 

Payments to Victims 

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 describes the process for 

distributing payments to victims. 

108(a) Designation of a Payments 

Administrator 

Section 1075.108(a) 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. 

108(b) Distribution Plan 

Section 1075.108(b) 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. 

108(c) Contents of Plan 

Section 1075.108(c) 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. Specifically, the Fund 

Administrator may require a 

distribution plan to include: 

1. Procedures for determining the 

amount each victim will receive. Such 

procedures may, but need not, include 

a process for submitting and approving 

claims. The Bureau anticipates that a 

process for submitting and approving 

claims will not be required when it 

receives adequate data from a defendant 

to assess how much uncompensated 

harm each victim suffered. 

2. Procedures for locating and 

notifying victims eligible or potentially 

eligible for payment. These procedures 

can include contacts by mail, telephone, 

electronic communications, or other 

means that may be practicable to 

employ. 

3. The method or methods by which 

the payments will be made. Payment 

methods could include paper checks, 

electronic funds transfers, or other 

methods that may be practicable to 

employ. 


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14This 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. 

4. The method or methods by which 

potentially eligible victims may contact 

the payments administrator. Such 

methods can include a telephone 

number, email address, or other 

methods. 

5. Any other provisions that the Fund 

Administrator deems appropriate. 

108(d) Distribution of Payments 

Section 1075.108(d) 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. 

108(e) Disposition of Funds Remaining 

After Attempted Distribution to a Class 

of Victims 

Section 1075.108(e) 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). The 

Bureau believes that doing so will often 

be the most efficient use of remaining 

funds. The payments administrator will 

have recent and up-to-date information 

on the victims to whom it successfully 

made payments, and a second 

distribution to those victims would 

likely also be successful. 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. 

For example, assume a class is 

comprised of 100 victims who have 

suffered $200 in uncompensated harm 

each, for a total $20,000 uncompensated 

harm for the class. The following chart 

shows how remaining funds would be 

distributed under four different 

scenarios 14: 

Amount allocated to the 

class 

Payment 

amount (each 

victim’s share 

of the 

allocated 

amount) 

Number of 

victims to 

whom payments 

successfully 

made 

Total funds 

distributed 

(Payment 

amount × 

Number of 

victims to 

whom payments made) 

Allocated 

funds that 

remain 

(Amount allocated¥Total 

funds distributed) 

Disposition of remaining funds 

$10,000 .......................... $100 75 $7,500 $2,500 Distributed among the 75 victims in the class to 

whom payments can successfully be made. 

The additional payments will be $33.33 each, 

giving victims a total of $133.33 each. 

10,000 ............................ 100 96 9,600 400 Returned to the Civil Penalty Fund. If the remaining funds were distributed among the 96 

victims in the class to whom payments could 

successfully be made, each payment would 

be only $4.17. Given the cost of making a 

payment, it is likely not practicable to distribute payments of that amount. 

20,000 ............................ 200 75 15,000 5,000 Returned to Civil Penalty Fund. The 75 victims 

to whom payments were successfully made 

have already received $200, which is full 

compensation for their uncompensated harm. 

16,000 ............................ 160 75 12,000 4,000 $3,000 is distributed among the 75 victims to 

whom payments can successfully be made. 

That gives each victim an additional $40, for a 

total of $200, full compensation. The remaining $1,000 will then be returned to the Civil 

Penalty Fund. 

Section 1075.109 When Payments to 

Victims Are Impracticable 

As noted above, section 1017(d)(2) of 

the Dodd-Frank Act authorizes the 

Bureau to use funds in the Civil Penalty 

Fund for consumer education and 

financial literacy programs to the extent 

that payments to victims are not 

‘‘practicable.’’ Accordingly, pursuant to 

§§ 1075.106 and 1075.108 of this 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. This section 

identifies circumstances in which 

payments to victims will be deemed not 

practicable. 

In identifying these circumstances, 

the Bureau has considered the ordinary 

meaning of ‘‘practicable’’: ‘‘reasonably 

capable of being accomplished; 

feasible.’’ Black’s Law Dictionary (9th 

ed. 2009). As a general matter, 

‘‘practicability’’ is a flexible concept. 

What is practicable for an agency to 

accomplish depends, among other 

things, on the context and on the 

purpose the agency seeks to fulfill. As 

noted above, the Bureau will make Civil 

Penalty Fund payments to compensate 

many victims of many different 

activities for harm suffered from 

violations of law. Because, as discussed 

above, the Civil Penalty Fund pays for 

the administrative expenses incurred 

making payments to victims as well as 

for the payments themselves, 

administrative expenses should not be 

excessive. Therefore, the Bureau 


emcdonald on DSK67QTVN1PROD with RULES
26500 Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Rules and Regulations 

15Cf. Consolidated Edison v. Bodman, 477 F. 

Supp. 2d 198, 201–02 (D.D.C. 2007) (instruction to 

make payments ‘‘insofar as practicable’’ permitted 

agency to adjust payment schedule so that it would 

not be making small payments to a large number 

of claimants). 

16Section 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. 

concludes that in assessing whether 

payments to victims are practicable in 

this context, one factor it should 

consider is the cost of administering the 

payments relative to the amounts of the 

payments.15

This section has two paragraphs that 

implement this understanding of 

practicability by identifying 

circumstances in which the costs of 

making payments would 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. 

109(a) Individual Payments 

Section 1075.109(a) sets forth several 

circumstances in which payments to 

individual victims will be deemed 

impracticable. This section draws in 

part on class-action case law that 

examines when it is not practicable to 

locate class members or to make 

payments to them. Under this section, it 

will be deemed impracticable to make a 

payment to an individual victim if: 

1. The payment to the victim would 

be of such a small amount that the 

victim would not be likely to redeem 

the payment. 

2. The payment to the victim is too 

small to justify the cost of locating the 

victim and making the payment. For 

example, if it will cost $10 to locate and 

make a payment to a victim, the Fund 

Administrator may deem it 

impracticable to make a $10 or $15 

payment to that victim. 

3. The victim cannot be located with 

effort that is reasonable in light of the 

amount of the payment. This provision 

acknowledges that there are different 

methods a payments administrator 

could employ to attempt to locate a 

victim, and that each additional effort 

will carry additional cost. At some 

point, the additional cost is not 

reasonable given the amount of the 

payment that the victim would receive. 

In these circumstances, it will not be 

practicable to make a payment to the 

victim. 

4. The victim does not timely submit 

information that a distribution plan 

requires to be submitted before a 

payment will be made. For example, in 

some cases, the Bureau may not be able 

to get complete information from a 

defendant identifying the victims of a 

violation and the amounts of their harm. 

In those cases, a distribution plan may 

require that victims make claims for 

payment by submitting relevant 

information. If a victim fails to submit 

that information as required by the 

distribution plan, the payments 

administrator will not be able to 

determine whether the person is a 

victim and, if so, the amount of that 

person’s uncompensated harm. In those 

circumstances, it will not be practicable 

to make a payment to that victim. 

5. The victim does not redeem the 

payment within a reasonable time. For 

example, if payments are made by 

check, the check will indicate that it 

will be void after a certain amount of 

time. If a victim does not redeem the 

payment within that amount of time, it 

may not be practicable to make a 

payment to that victim. 

6. The Fund Administrator 

determines that other circumstances 

make it unreasonable to make a 

payment to the victim. The Bureau 

acknowledges that there may be 

situations other than those specifically 

enumerated in which the costs of 

making a payment will not be 

reasonable in light of the benefits. 

109(b) Payments to a Class of Victims 

Section 1075.109(b) sets forth several 

circumstances in which making 

payments to a class of victims will be 

deemed impracticable. Under this 

section, it will be deemed impracticable 

to make payments to a class of victims 

if: 

1. The expected aggregate actual 

payment to the class of victims is too 

small to justify the costs of locating the 

victims in the class and making 

payments to them. This could occur, for 

example, in some circumstances where 

the Fund Administrator expects to have 

limited success in distributing payments 

to a class. For instance, suppose that 

there are 1,000 victims in a class who 

each have $50 in uncompensated harm, 

and that it will cost $10 per victim to 

distribute payments. In addition, the 

Fund Administrator has information 

indicating she is likely to be able to 

locate only 100 victims, but she does 

not know which 100 victims. Thus, it 

would cost $10,000 to attempt to make 

payments to the class, and in the end 

victims would receive an aggregate 

payment of only $5,000 (100 victims × 

$50 each). In those circumstances, the 

costs of attempting to make payments to 

the class may be too great in light of the 

aggregate actual payment to the class. 

2. It would be impracticable under 

paragraph (a) of this section to make a 

payment to any victim in the class. This 

situation could arise, for example, 

where each victim’s payment would be 

$10 or less and it would cost $10 or 

more per victim to distribute payments. 

3. The Fund Administrator 

determines that other circumstances 

make it unreasonable to make payments 

to the class. 

Section 1075.110 Reporting 

Requirements 

Section 1075.110 requires the Fund 

Administrator to issue regular reports, 

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. 

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

Act 

A. Overview 

In developing the final rule, the 

Bureau has considered potential 

benefits, costs, and impacts, and 

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.16

The rule establishes the position of 

Fund Administrator and delegates to 

that official certain powers and 

responsibilities relating to the 

administration of the Civil Penalty 

Fund. The rule also describes the 

victims who are eligible for payments 

from the Civil Penalty Fund and the 

amounts of payments they may receive. 

In particular, the rule explains the 

Bureau’s understanding of what 


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17The Bureau has discretion in any rulemaking 

to choose an appropriate scope of analysis with 

respect to potential benefits and costs and the 

appropriate baseline. 

payments would be ‘‘practicable,’’ 

within the meaning of the word as used 

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

Act. The rule sets forth the procedures 

by which the Fund Administrator will 

allocate funds to classes of victims and, 

when funds are available, to programs 

for consumer education and financial 

literacy and provides mechanisms for 

paying the allocated funds to victims. 

Finally, the rule requires the Fund 

Administrator to report periodically on 

disbursements from the Civil Penalty 

Fund. 

B. Potential Benefits and Costs to 

Consumers and Covered Persons 

The analysis considers the benefits, 

costs, and impacts of the rule against a 

statutory baseline. That is, the analysis 

evaluates the benefits, costs, and 

impacts of the rule as compared to the 

statute without an implementing rule.17

The rule does not impose any 

obligations on consumers or covered 

persons. The rule provides expeditious 

procedures for allocating funds from the 

Civil Penalty Fund to implement section 

1017(d) of the Dodd-Frank Act. 

Although a rule is not necessary to 

implement this statutory provision, the 

rule establishes consistent procedures 

applicable with respect to all victims 

who might receive payments from the 

Civil Penalty Fund. By explaining how 

funds will be allocated and distributed, 

the rule provides clarity and 

predictability to those consumers who 

are victims of unlawful activity and 

might anticipate payments from the 

Fund. 

Moreover, the efficiency of the rule’s 

procedures should help keep the 

administrative costs of making 

payments relatively low. Because, as 

discussed above, the Bureau may pay 

such administrative expenses from the 

Civil Penalty Fund, reducing those costs 

will generally increase the amount of 

money available for payments to victims 

and, when appropriate, for consumer 

education and financial literacy 

programs. In addition, adopting a rule, 

instead of permitting the Fund 

Administrator to distribute payments to 

victims on an ad hoc basis, may have 

some distributional impacts. The Fund 

Administrator’s case-by-case decisions 

might, by comparison to the results 

prescribed by the rule, lead to payments 

to different consumers of differing 

amounts, or could lead to greater or 

lesser amounts being available for 

consumer education and financial 

literacy programs. 

C. Potential Specific Impacts of the 

Proposed Rule 

The final rule does not have a unique 

impact on rural consumers or 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. Nor is 

the rule expected to reduce consumers’ 

access to consumer financial products 

or services. 

VI. Regulatory Requirements 

This rule relates to benefits, namely 

payments that victims may receive from 

the Civil Penalty Fund. Pursuant to 5 

U.S.C. 553(a)(2), this rule is therefore 

exempt from the notice and comment 

rulemaking requirements of the 

Administrative Procedure Act (APA). In 

addition, this rule concerns matters of 

agency organization, procedure, and 

practice, and in part articulates the 

Bureau’s interpretations of the DoddFrank Act. It is therefore also exempt 

from the APA’s notice and comment 

rulemaking requirements pursuant to 5 

U.S.C. 553(b). 

Because no notice of proposed 

rulemaking is required, the Regulatory 

Flexibility Act does not require an 

initial or final regulatory flexibility 

analysis. 5 U.S.C. 603(a), 604(a). 

VII. Paperwork Reduction Act 

The Bureau has determined that this 

final rule does not impose 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. 

List of Subjects in 12 CFR Part 1075 

Administrative practice and 

procedure, Authority delegations, 

Consumer Financial Civil Penalty Fund, 

Consumer protection, Organization and 

functions. 

Authority and Issuance 

■ For the reasons set forth in the 

preamble, the Bureau amends Chapter X 

in Title 12 of the Code of Federal 

Regulations by adding part 1075 to read 

as follows: 

PART 1075—CONSUMER FINANCIAL 

CIVIL PENALTY FUND RULE 

Sec. 

1075.100 Scope and purpose. 

1075.101 Definitions. 

1075.102 Fund administrator. 

1075.103 Eligible victims. 

1075.104 Payments to victims. 

1075.105 Allocating funds from the Civil 

Penalty Fund—in general. 

1075.106 Allocating funds to classes of 

victims. 

1075.107 Allocating funds to consumer 

education and financial literacy 

programs. 

1075.108 Distributing payments to victims. 

1075.109 When payments to victims are 

impracticable. 

1075.110 Reporting requirements. 

Authority: 12 U.S.C. 5512(b)(1), 5497(d). 

§ 1075.100 Scope and purpose. 

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

Wall Street Reform and Consumer 

Protection Act of 2010, Public Law 111– 

203, 124 Stat. 1978 (12 U.S.C. 5497(d)) 

(Dodd-Frank Act) establishes the 

‘‘Consumer Financial Civil Penalty 

Fund.’’ This part describes the 

conditions under which victims will be 

eligible for payments from the 

Consumer Financial Civil Penalty Fund 

and the amounts of the payments they 

may receive. This part also establishes 

procedures and guidelines for allocating 

funds from the Consumer Financial 

Civil Penalty Fund to classes of victims 

and distributing such funds to 

individual victims, and for allocating 

funds to consumer education and 

financial literacy programs. This part 

also establishes reporting requirements. 

§ 1075.101 Definitions. 

For the purposes of this part, the 

following definitions apply: 

Bureau means the Bureau of 

Consumer Financial Protection. 

Bureau enforcement action means any 

judicial or administrative action or 

proceeding in which the Bureau has 

obtained relief with respect to a 

violation. 

Chief Financial Officer means the 

Chief Financial Officer of the Bureau or 

any Bureau employee to whom that 

officer has delegated authority to act 

under this part. In the absence of a Chief 

Financial Officer of the Bureau, the 

Director shall designate an alternative 

official of the Bureau to perform the 

functions of the Chief Financial Officer 

under this part. 

Civil Penalty Fund means the 

Consumer Financial Civil Penalty Fund 

established by 12 U.S.C. 5497(d). 

Civil Penalty Fund Governance Board 

means the body, comprised of senior 

Bureau officials, established by the 

Director of the Bureau to advise on 

matters relating to the Civil Penalty 

Fund. 

Class of victims means a group of 

similarly situated victims who suffered 

harm from the same or similar 

violations for which the Bureau 

obtained relief in a Bureau enforcement 

action. 


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Defendant means a party in a Bureau 

enforcement action that is found or 

alleged to have committed a violation. 

Final order means a consent order or 

settlement issued by a court or by the 

Bureau, or an appealable order issued 

by a court or by the Bureau as to which 

the time for filing an appeal has expired 

and no appeals are pending. For 

purposes of this definition, ‘‘appeals’’ 

include petitions for reconsideration, 

review, rehearing, and certiorari. 

Person means an individual, 

partnership, company, corporation, 

association (incorporated or 

unincorporated), trust, estate, 

cooperative organization, or other 

entity. 

Redress means any amounts— 

including but not limited to restitution, 

refunds, and damages—that a final order 

requires a defendant: 

(1) To distribute, credit, or otherwise 

pay to those harmed by a violation; or 

(2) To pay to the Bureau or another 

intermediary for distribution to those 

harmed by the violation. 

Victim means a person harmed as a 

result of a violation. 

Violation means any act or omission 

that constitutes a violation of law for 

which the Bureau is authorized to 

obtain relief pursuant to 12 U.S.C. 

5565(a). 

§ 1075.102 Fund administrator. 

(a) In general. There is established the 

position of Civil Penalty Fund 

Administrator (Fund Administrator). 

The Fund Administrator will report to 

the Chief Financial Officer. The Chief 

Financial Officer may, to the extent 

permitted by applicable law, relieve the 

Fund Administrator of the duties of that 

position without notice, without cause, 

and prior to the naming of a successor 

Fund Administrator. 

(b) Powers and duties. The Fund 

Administrator will have the powers and 

duties assigned to that official in this 

part. 

(c) Interpretation of these regulations. 

(1) On its own initiative or at the Fund 

Administrator’s request, the Civil 

Penalty Fund Governance Board may 

advise or direct the Fund Administrator 

on the administration of the Civil 

Penalty Fund, including regarding the 

interpretation of this part and its 

application to particular facts and 

circumstances. 

(2) The Fund Administrator must 

follow any written directions that the 

Civil Penalty Fund Governance Board 

provides pursuant to paragraph (c)(1) of 

this section. 

(d) Unavailability of the Fund 

Administrator. If there is no Fund 

Administrator or if the Fund 

Administrator is otherwise unavailable, 

the Chief Financial Officer will perform 

the functions and duties of the Fund 

Administrator. 

§ 1075.103 Eligible victims. 

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. 

§ 1075.104 Payments to victims. 

(a) In general. The Bureau will use 

funds in the Civil Penalty Fund for 

payments to compensate eligible 

victims’ uncompensated harm, as 

described in to paragraph (b) of this 

section. 

(b) Victims’ uncompensated harm. (1) 

A victim’s uncompensated harm is the 

victim’s compensable harm, as 

described in paragraph (c) of this 

section, minus any compensation for 

that harm that the victim has received 

or is reasonably expected to receive. 

(2) For purposes of paragraph (b)(1) of 

this section, a victim has received or is 

reasonably expected to receive 

compensation in the amount of: 

(i) Any Civil Penalty Fund payment 

that the victim has previously received 

or will receive as a result of a previous 

allocation from the Civil Penalty Fund 

to the victim’s class; 

(ii) Any redress that a final order in 

a Bureau enforcement action orders to 

be distributed, credited, or otherwise 

paid to the victim, and that has not been 

suspended or waived and that the Chief 

Financial Officer has not determined to 

be uncollectible; and 

(iii) Any other redress that the Bureau 

knows that has been distributed, 

credited, or otherwise paid to the 

victim, or has been paid to an 

intermediary for distribution to the 

victim, to the extent that: 

(A) That redress compensates the 

victim for the same harm as would be 

compensated by a Civil Penalty Fund 

payment; and 

(B) It is not unduly burdensome, in 

light of the amounts at stake, to 

determine the amount of that redress or 

the extent to which it compensates the 

victim for the same harm as would be 

compensated by a Civil Penalty Fund 

payment. 

(3) If the Fund Administrator deems 

it impracticable to assess the 

uncompensated harm of individual 

victims in a class, each individual 

victim’s uncompensated harm will be 

the victim’s share of the aggregate 

uncompensated harm of the victim’s 

class. 

(c) Victims’ compensable harm. 

Victims’ compensable harm for 

purposes of this part is as follows: 

(1) If a final order in a Bureau 

enforcement action ordered redress for a 

class of victims, the compensable harm 

of each victim in the class is equal to 

that victim’s share of the total redress 

ordered, including any amounts that are 

suspended or waived. 

(2) If a final order in a Bureau 

enforcement action does not order 

redress for a class of victims, those 

victims’ compensable harm is as 

follows: 

(i) 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. 

(ii) Except as provided in paragraph 

(c)(2)(i) of this section, if the final order 

in the Bureau enforcement action 

specifies the amount of the victims’ 

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. 

(iii) Except as provided in paragraph 

(c)(2)(i) of this section, if the final order 

in the Bureau enforcement action does 

not specify the amount of the victims’ 

harm, each victim’s compensable harm 

is equal to the victim’s out-of-pocket 

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. 

§ 1075.105 Allocating funds from the Civil 

Penalty Fund—in general. 

(a) In general. The Fund 

Administrator will allocate Civil Penalty 

Fund funds specified in paragraph (c) of 

this section to classes of victims and to 

consumer education and financial 

literacy programs as appropriate 

according to the schedule established in 

paragraph (b) of this section and the 

guidelines established in §§ 1075.106 

and 1075.107. 

(b) Schedule for making allocations. 

(1) Within 60 days of May 7, 2013, the 

Fund Administrator will establish, and 

publish on www.consumerfinance.gov, a 

schedule for allocating funds in the 

Civil Penalty Fund, in accordance with 

the following: 

(i) The schedule will establish sixmonth periods and identify the start and 

end dates of those periods. The start 

date of one period will be the day 

immediately after the end date of the 

preceding period. 

(ii) Notwithstanding paragraph 

(b)(1)(i) of this section, the first and 

second periods may be longer or shorter 

than six months to allow future sixmonth periods to start and end on dates 

that better serve administrative 


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efficiency. The first and second periods 

will constitute ‘‘six-month periods’’ 

under this part regardless of their actual 

length. 

(iii) The start date of the first period 

is July 21, 2011. 

(2) Within 60 days after the end of a 

six-month period, the Fund 

Administrator will allocate available 

funds in the Civil Penalty Fund in 

accordance with §§ 1075.106 and 

1075.107. 

(3) If the Civil Penalty Fund 

Governance Board determines that the 

schedule established under paragraph 

(b)(1) of this section should be changed 

to better serve administrative efficiency, 

it may change that schedule by directing 

the Fund Administrator to publish the 

new schedule on 

www.consumerfinance.gov. Any new 

schedule must comply with paragraph 

(b)(1)(i) of this section. The first period 

of any new schedule may be shorter or 

longer than six months. That first period 

will constitute a ‘‘six-month period’’ 

under this part regardless of its actual 

length. 

(c) Funds available for allocation. 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. 

§ 1075.106 Allocating funds to classes of 

victims. 

(a) Allocations when there are 

sufficient funds available to compensate 

all uncompensated harm. 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. 

(b) Allocations when there are 

insufficient funds available to 

compensate all uncompensated harm. If 

the funds available under § 1075.105(c) 

are not sufficient to make the allocations 

described in paragraph (a) of this 

section, the Fund Administrator will 

allocate the available funds to classes of 

victims as follows: 

(1) Priority to classes of victims from 

the most recent six-month period. The 

Fund Administrator will first allocate 

funds to classes of victims from the 

most recently concluded six-month 

period, as determined under paragraph 

(b)(2) of this section. If funds remain 

after allocating to each class of victims 

from that 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, the Fund Administrator next 

will allocate funds to classes of victims 

from the preceding six-month period, 

and so forth until no funds remain. 

(2) Assigning classes of victims to a 

six-month period. For purposes of this 

paragraph (b), the Fund Administrator 

will assign each class of victims to the 

six-month period in which the victims 

first had uncompensated harm as 

described in § 1075.104(b). When a class 

of victims first had uncompensated 

harm as described in § 1075.104(b) will 

be determined as follows: 

(i) 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 as 

described in § 1075.104(b) on the date 

the suspension or waiver became 

effective. 

(ii) If redress was ordered for a class 

of victims in a Bureau enforcement 

action but determined by the Chief 

Financial Officer to be uncollectible in 

whole or in part, the class of victims 

first had uncompensated harm as 

described in § 1075.104(b) on the date 

the Chief Financial Officer made that 

determination. 

(iii) If no redress was ordered for a 

class of victims in a Bureau enforcement 

action, the class of victims first had 

uncompensated harm as described in 

§ 1075.104(b) on the date the order 

imposing a civil penalty became a final 

order. 

(c) No allocation to a class of victims 

if making payments would be 

impracticable. 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. 

(d) Fund Administrator’s discretion. 

(1) 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 section. Whenever 

the Fund Administrator exercises this 

discretion, she will provide the Civil 

Penalty Fund Governance Board a 

written explanation of the reason for 

departing from the procedures specified 

by this section. 

(2) If, in allocating funds during a 

given time period described in 

§ 1075.105(b)(2), the Fund 

Administrator 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. 

§ 1075.107 Allocating funds to consumer 

education and financial literacy programs. 

(a) If funds available under 

§ 1075.105(c) remain after the Fund 

Administrator allocates funds as 

described in § 1075.106(a), the Fund 

Administrator may allocate those 

remaining funds for consumer 

education and financial literacy 

programs. 

(b) The Fund Administrator shall not 

have 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. 

§ 1075.108 Distributing payments to 

victims. 

(a) Designation of a payments 

administrator. Upon allocating Civil 

Penalty Fund funds to a class of victims 

pursuant to § 1075.106, the Fund 

Administrator will designate a 

payments administrator who will be 

responsible for distributing payments to 

the victims in that class. A payments 

administrator may be any person, 

including a Bureau employee or 

contractor. 

(b) Distribution plan. The payments 

administrator must submit to the Fund 

Administrator a proposed plan for the 

distribution of funds allocated to a class 

of victims. The Fund Administrator will 

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. 

(c) Contents of plan. The Fund 

Administrator will instruct the 

payments administrator to prepare a 

distribution plan and may require that 

plan to include: 

(1) Procedures for determining the 

amount each victim will receive. Such 

procedures may, but need not, include 

a process for submitting and approving 

claims. 


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26504 Federal Register / Vol. 78, No. 88 / Tuesday, May 7, 2013 / Rules and Regulations 

(2) Procedures for locating and 

notifying victims eligible or potentially 

eligible for payment. 

(3) The method or methods by which 

the payments will be made. 

(4) The method or methods by which 

potentially eligible victims may contact 

the payments administrator. 

(5) Any other provisions that the 

Fund Administrator deems appropriate. 

(d) Distribution of payments. 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. 

(e) Disposition of funds remaining 

after attempted distribution to a class of 

victims. If funds allocated to a class of 

victims remain after a payments 

administrator distributes payments to 

that class, the payments administrator 

will distribute those remaining funds as 

follows: 

(1) To the extent practicable, the 

payments administrator will distribute 

those remaining funds to victims in that 

class up to the amount of their 

remaining uncompensated harm as 

described in § 1075.104(b). 

(2) Any remaining funds that cannot 

be distributed pursuant to paragraph 

(e)(1) of this section will be returned to 

the Civil Penalty Fund. 

§ 1075.109 When payments to victims are 

impracticable. 

(a) Individual payments. Making a 

payment to an individual victim will be 

deemed impracticable if: 

(1) The payment to the victim would 

be of such a small amount that the 

victim would not be likely to redeem 

the payment; 

(2) The payment to the victim is too 

small to justify the cost of locating the 

victim and making the payment; 

(3) The victim cannot be located with 

effort that is reasonable in light of the 

amount of the payment; 

(4) The victim does not timely submit 

information that a distribution plan 

requires to be submitted before a 

payment will be made; 

(5) The victim does not redeem the 

payment within a reasonable time; or 

(6) The Fund Administrator 

determines that other circumstances 

make it unreasonable to make a 

payment to the victim. 

(b) Payments to a class of victims. 

Making payments to a class of victims 

will be deemed impracticable if: 

(1) The expected aggregate actual 

payment to the class of victims is too 

small to justify the costs of locating the 

victims in the class and making 

payments to them; 

(2) It would be impracticable under 

paragraph (a) of this section to make a 

payment to any victim in the class; or 

(3) The Fund Administrator 

determines that other circumstances 

make it unreasonable to make payments 

to the class. 

§ 1075.110 Reporting requirements. 

The Fund Administrator must issue 

regular reports, 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. These 

reports will be made available on 

www.consumerfinance.gov. 

Dated: April 26, 2013. 

Richard Cordray, 

Director, Bureau of Consumer Financial 

Protection. 

[FR Doc. 2013–10320 Filed 5–6–13; 8:45 am] 

BILLING CODE 4810–AM–P 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 127 

RIN 3245–AG55 

Women-Owned Small Business 

Federal Contract Program 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Interim final rule. 

SUMMARY: The U.S. Small Business 

Administration (SBA) is amending its 

regulations to implement Section 1697 

of the National Defense Authorization 

Act for Fiscal Year 2013 (NDAA). 

Section 1697 of the NDAA removed the 

statutory limitation on the dollar 

amount of a contract that women-owned 

small businesses can compete for under 

the Women-Owned Small Business 

(WOSB) Program. As a result, 

contracting officers may now set-aside 

contracts under the WOSB Program at 

any dollar level, as long as the other 

requirements for a set-aside under the 

program are met. 

DATES: Effective Date: This rule is 

effective on May 7, 2013. 

Applicability Date: This rule applies 

to all solicitations issued on or after the 

effective date. 

Comment Date: Comments must be 

received on or before June 6, 2013. 

ADDRESSES: You may submit comments, 

identified by RIN 3245–AG55 by any of 

the following methods: 

• Federal Rulemaking Portal: http:// 

www.regulations.gov and follow the 

instructions for submitting comments. 

• Mail, for paper, disk, or CD–ROM 

submissions: LeAnn Delaney, Assistant 

Director, Office of Contract Assistance, 

409 Third Street SW., Washington, DC 

20416. 

• Hand Delivery/Courier: LeAnn 

Delaney, Assistant Director, Office of 

Contract Assistance. 

SBA will post all comments on http:// 

www.Regulations.gov. If you wish to 

submit confidential business 

information (CBI) as defined in the User 

Notice at http://www.Regulations.gov, 

please submit the information to LeAnn 

Delaney and highlight the information 

that you consider to be CBI and explain 

why you believe this information 

should be held confidential. SBA will 

review the information and make a final 

determination of whether the 

information will be published or not. 

FOR FURTHER INFORMATION CONTACT: 

LeAnn Delaney, Assistant Director, 

Office of Contract Assistance, at (202) 

205–6460 or by email at wosb@sba.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Women-Owned Small Business 

(WOSB) Program, set forth in section 

8(m) of the Small Business Act, 15 

U.S.C. 637(m), authorizes Federal 

contracting officers to restrict 

competition to eligible Women-Owned 

Small Businesses (WOSBs) or 

Economically Disadvantaged WomenOwned Small Business (EDWOSBs) for 

Federal contracts in certain industries. 

Section 8(m) of the Small Business Act 

(Act) sets forth certain criteria for the 

WOSB Program, including the eligibility 

and contract requirements for the 

program. For example, the Act had 

stated that contracting officers could 

only set-aside a requirement under the 

program if the anticipated award price 

of the contract did not exceed $5 

million in the case of manufacturing 

contracts and $3 million in the case of 

all other contracts. Recently, SBA had 

amended its regulations to adjust these 

statutory thresholds for inflation so that 

the anticipated award price of the 

contract awarded under the WOSB 

Program must not exceed $6.5 million 

in the case of manufacturing contracts 

and $4 million in the case of all other 

contracts. See 77 FR 1861 (Jan. 12, 

2012). 

Even with this adjustment for 

inflation, these dollar value restrictions 

on awards under the program limited a 

contracting officer’s ability to set-aside 

contracts for WOSBs or EDWOSBs. As 

a result, Section 1697 of the National 

Defense Authorization Act for Fiscal 

Year 2013, Public Law 112–239, 

amended the Small Business Act and 


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