Rules of Practice and Procedure; Adjusting Civil Money Penalties for Inflation

FARM CREDIT ADMINISTRATION

12 CFR Part 622

RIN 3052-AB74

Rules of Practice and Procedure; Adjusting Civil Money Penalties

for Inflation

AGENCY: Farm Credit Administration.

ACTION: Final rule.

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SUMMARY: As required by the Debt Collection Improvement Act of 1996

(DCIA), the Farm Credit Administration (FCA) through the FCA Board

(Board) adopts a final regulation that adjusts each civil money penalty

(CMP) under its jurisdiction by the rate of inflation using the formula

prescribed by DCIA. This statute requires all Federal agencies to

adjust each CMP by the rate of inflation and promulgate implementing

regulations within 180 days after enactment of DCIA and at least once

every 4 years thereafter. Any increase in a CMP shall apply only to

violations that occur after the effective date of this regulation.

EFFECTIVE DATE: October 23, 1996.

[[Page 54729]]

FOR FURTHER INFORMATION CONTACT:

Robert Child, Policy Analyst, Office of Policy Development and Risk

Control, Farm Credit Administration, McLean, VA 22102-5090, (703) 883-

4498, TDD (703) 883-4444; or

Richard Katz, Senior Attorney, Office of General Counsel, Farm Credit

Administration, McLean, VA 22102-5090, (703) 883-4020, TDD (703) 883-

4444.

SUPPLEMENTARY INFORMATION: DCIA 1 amended the Federal Civil

Monetary Penalties Inflation Adjustment Act of 1990 2 (FCMPIA Act)

to require every Federal agency to enact regulations that adjust each

CMP 3 provided by law under its jurisdiction by the rate of

inflation pursuant to the inflation adjustment formula in section 5(b)

of the FCMPIA Act. Each Federal agency is required to issue these

implementing regulations by October 23, 1996, which is 180 days after

the date that DCIA was enacted, and at least once every 4 years

thereafter. Section 7 of the amended FCMPIA Act specifies that only

CMPs for violations that occur after October 23, 1996, will be adjusted

for inflation.

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\1\ Pub. L. 104-134, section 31001(s), 110 Stat. 1321-358,

(Apr. 26, 1996). This provision is codified at 28 U.S.C. 2461 note.

\2\ Pub. L. 101-410, 104 Stat. 890, (Oct. 5, 1990).

\3\ Section 3(2) of the amended FCMPIA Act defines a CMP as any

penalty, fine, or other sanction that: (1) Either is for a specific

monetary amount as provided by Federal law or has a maximum amount

provided for by Federal law; (2) is assessed or enforced by an

agency pursuant to Federal law; and (3) is assessed or enforced

pursuant to an administrative proceeding or a civil action in the

Federal courts.

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The inflation adjustment is based on the percentage increase in the

Consumer Price Index (CPI) 4 for the period from June of the

calendar year when the CMP was last set until June of the calendar year

preceding the adjustment.

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\4\ The CPI is published by the Department of Labor, Bureau of

Statistics.

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Furthermore, each CMP that has been adjusted for inflation must be

rounded to a number prescribed by section 5(a) of the FCMPIA Act.5

Another provision of the DCIA limits the first adjustment of a CMP to

an amount not in excess of 10 percent of the original penalty. The

amount of increase in the final regulation would have been more if this

limit did not exist.

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\5\ For example, an increase that is less than a hundred

dollars would be rounded to the nearest multiple of $10, and an

increase over $100 but less than $1,000 would be rounded to the

nearest multiple of $100.

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Two provisions of section 5.32(a) of the Farm Credit Act of 1971,

as amended (Act) authorize the FCA to impose CMPs on Farm Credit System

(FCS) institutions and their related parties. First, section 5.32(a)

specifies that any FCS institution or any officer, director, employee,

agent, or other person participating in the conduct of the affairs of

an institution who violates the terms of a temporary or permanent cease

and desist order that has become final shall forfeit not more than

$1,000 per day for each day during which such violation continues. This

same statutory provision also states that ``[a]ny such institution or

person who violates any provision of this Act or any regulation issued

under this Act shall forfeit and pay a civil penalty of not more than

$500 per day for each day during which such violation continues.''

After the adjustment for inflation, the maximum penalty that the

FCA can impose under section 5.32(a) of the Act for the violation of a

cease and desist order is $1,100 per day. When the same inflation

adjustment formula is applied to the CMP that section 5.32(a) imposes

on FCS institutions and their affiliated parties for violations of the

Act or regulation, the new maximum penalty amount is $550 per day. The

FCA now adopts final Sec. 622.61 which adjusts these two CMPs to the

rate of inflation, as required by the DCIA.

DCIA provides Federal agencies with no discretion in the adjustment

of CMPs to the rate of inflation, and it also requires the new

regulation to take effect on October 23, 1996. Moreover, the regulation

that the FCA adopts today to implement DCIA is ministerial, minor,

technical, and noncontroversial. For these reasons, the FCA finds good

cause to determine that public notice and comment for this new

regulation is unnecessary, impractical, and contrary to the public

interest, pursuant to the Administrative Procedure Act (APA), 5 U.S.C.

553(a)(3)(B). These same reasons also provide the FCA with good cause

to adopt an effective date for this regulation that is less than 30

days after the date of publication in the Federal Register.

Furthermore, the FCA determines that pursuant to the requirements of

section 5.17(c)(2) of the Act this regulation shall take effect prior

to the expiration of the 30-day Congressional waiting period for final

FCA regulatory action due to the Congressionally mandated effective

date of October 23, 1996.

List of Subjects in 12 CFR Part 622

Administrative practice and procedure, Crime, Investigations,

Penalties.

For the reasons stated in the preamble, part 622 of chapter VI,

title 12 of the Code of Federal Regulations are amended to read as

follows:

PART 622--RULES OF PRACTICE AND PROCEDURE

1. The authority citation for part 622 is revised to read as

follows:

Authority: Secs. 5.9, 5.10, 5.17, 5.25-5.37 of the Farm Credit

Act (12 U.S.C. 2243, 2244, 2252, 2261-2273); Pub. L. 104-134, sec.

31001(s), 110 Stat. 1321-358.

Subpart B--Rules and Procedures for Assessment and Collection of

Civil Money Penalties

2. Subpart B is amended by adding a new Sec. 622.61 to read as

follows:

Sec. 622.61 Adjustment of civil money penalties by the rate of

inflation pursuant to section 31001(s) of the Debt Collection

Improvement Act of 1996.

(a) A civil money penalty imposed pursuant to section 5.32 of the

Act for a violation occurring after October 23, 1996 of a final cease

and desist order issued under section 5.25 or 5.26 of the Act shall not

exceed $1,100 per day for each day the violation continues.

(b) A civil money penalty imposed pursuant to section 5.32 of the

Act for a violation occurring after October 23, 1996 of any provision

of the Act or any regulation issued under the Act shall not exceed $550

per day for each day the violation continues.

Dated: October 17, 1996.

Floyd Fithian,

Secretary, Farm Credit Administration Board.

[FR Doc. 96-27057 Filed 10-21-96; 8:45 am]

BILLING CODE 6705-01-P