Civil Monetary Penalty Inflation Adjustment: an official-source record from 2000

Historical context and authority

The statute provides that first tier CMPs shall not be more than $5,000 for each day the violation continues. Source

The statute provides a maximum second tier CMP of $25,000 for each day the violation, practice or breach continues. Source

For a person other than an insured credit union, under the statute the current maximum third tier CMP is $1,000,000 for each day the violation, practice or breach continues. Source

For an insured credit union, the statute provides a current daily maximum CMP of the lesser of $1,000,000 or 1 percent of the total assets of the credit union. Source

Small Business Regulatory Enforcement Fairness Act The Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. Source

The following chart displays those adjustments, as calculated pursuant to the statute: ------------------------------------------------------------------------ U.S. Source

Scope of the federal rule

A reporting requirement is triggered in instances where NCUA issues a final rule as defined by Section 551 of the Administrative Procedures Act. Source

Accordingly, the NCUA amends 12 CFR part 747 as follows: PART 747--ADMINISTRATIVE ACTIONS, ADJUDICATIVE HEARINGS, RULES OF PRACTICE AND PROCEDURE, AND INVESTIGATIONS 1. Source

In 1996, the National Credit Union Administration (NCUA) issued a final rule to implement the required adjustments to certain CMPs authorized by the Federal Credit Union Act. Source

In order to comply with Congress' mandate to adjust CMPs for inflation at least every four years, NCUA is issuing this final rule to implement the required adjustments to those CMPs. Source

Each Federal agency was required to issue these implementing regulations by October 23, 1996, and at least once every 4 years thereafter. Source

Section 6 of the amended FCPIA Act specifies that inflation-adjusted CMPs will only apply to violations that occur after the effective date of the adjustment. Source

The amount of increase to these CMPs in the final regulation would have been more if this limit did not exist. Source

A credit union that violates such a regulation is subject to a CMP of up to $100 for each day the violation continues. Source

The amount of increase to this CMP in the final regulation would have been more if this limit did not exist. Source

The NCUA Board now adopts this final rule to adjust the forgoing CMPs for the rate of inflation, as required by the FCPIA Act. Source

Regulatory Procedures Regulatory Flexibility Act The NCUA Board certifies that the proposed regulation will not have a significant economic impact on a substantial number of small credit unions. Source

This final rule will apply to all federally-insured credit unions, but it will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. Source

NCUA has determined the final rule does not constitute a policy that has federalism implications for purposes of the Executive Order. Source

Treasury offset procedures

Assessment of Federal Regulations and Policies on Families NCUA has determined that this rule will not affect family well- being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999, Pub. Source

Notice and collection administration

The Office of Management and Budget has reviewed this rule and has determined that for purposes of the Small Business Regulatory Enforcement Fairness Act of 1996 it is not a major rule. Source

Interest, penalties, and charges

----------------------------------------------------------------------- SUMMARY: Congress, in the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 1996, required all federal agencies with the authority to impose civil monetary penalties (CMPs) to regularly evaluate those CMPs to ensure that they continue to maintain their deterrent value. Source

\3\ Section 3(2) of the amended FCPIA 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. Source

Further, the regulation is ministerial and technical and, for these reasons, the NCUA Board 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. Source

abstract":"Congress, in the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 1996, required all federal agencies with the authority to impose civil monetary penalties (CMPs) to regularly evaluate those CMPs to ensure that they continue to maintain their deterrent value. Source

SUPPLEMENTARY INFORMATION: Background: The Debt Collection Improvement Act of 1996 \1\ (DCIA) amended the Federal Civil Penalties Inflation Adjustment Act of 1990 \2\ (FCPIA Act) to require every Federal agency to enact regulations that adjust each civil monetary penalty (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 FCPIA Act. Source

As an example, the provision states, in part, that an increase ``shall be rounded to the nearest * * * multiple of $1,000 in the case of penalties greater than $1,000 but less than or equal to $10,000.'' Section 5(a)(3), FCPIA Act. Source

NCUA understands that some agencies have chosen to determine which rounding rule to follow based upon the amount of the increase, rather than the amount of the penalty. Source

NCUA has chosen to follow the language in the statute and therefore has adopted an interpretation that selects the appropriate rounding rule based upon the amount of the penalty. Source

After the required adjustment for inflation in 1996, the maximum penalty was increased to $5,500 for each day.\6\ Multiplying the current penalty of $5,500 by the factor of 1.06 results in $5,830, an increase of $330. Source

After the required 1996 adjustment for inflation, the maximum penalty was increased to $27,500 per day. Source

Multiplying the current penalty of $27,500 by the factor of 1.06 results in $29,150, an increase of $1,650. Source

Multiplying the current penalty of $1,100,000 by the factor of 1.06 results in $1,166,000, an increase of $66,000. Source

For an inadvertent failure to submit a report or the inadvertent submission of a false or misleading report, the credit union is subject to a penalty of not more than $2,000 for each day the failure continues or such false or misleading information is not corrected. Source

For a non-inadvertent failure to submit a report or for the non-inadvertent submission of a false or misleading report, the credit union is subject to a penalty of not more than $20,000 for each day the failure continues or such false or misleading information is not corrected. Source

Lastly, for a failure to submit a report or the submission of a false or misleading report done knowingly or with reckless disregard, the credit union is subject to a penalty of not more than $1,000,000 or 1 percent of the total assets of the credit union, whichever is less, for each day the failure continues or such false or misleading information is not corrected. Source

However, another provision of the FCPIA Act limits the first adjustment of a CMP to an amount not to exceed 10 percent of the original penalty.\10\ The amount of increase to these CMPs in the final regulation would have been more if this limit did not exist. Source

After the required adjustment for inflation, the maximum penalty is increased by 10%, or $200, to $2,200 per day. Source

After the required adjustment for inflation, the maximum penalty is increased by 10%, or $2,000, to $22,000 per day. Source

After the required adjustment for inflation, the maximum penalty is increased by 10%, or $100,000, to $1,100,000 or 1 percent of the total assets of the credit union, whichever is less, per day. Source

However, as noted previously, another provision of the FCPIA Act limits the first adjustment of a CMP to an amount not to exceed 10 percent of the original penalty. Source

However, as discussed previously, the FCPIA Act limits the first adjustment of a CMP to an amount not to exceed 10 percent of the original penalty. Source

After the required adjustment for inflation, the maximum penalty is increased by 10%, or $10, to $110 per day. Source

The total amount of penalties assessed against any credit union during any calendar year may not exceed $100,000. Source

After the required adjustment for inflation, the maximum penalty is increased by 10%, or $35, to $385 per violation. Source

The annual maximum penalty is also increased by 10%, or $10,000, to $110,000 per calendar year. Source

Executive Order 13132 Executive Order 13132 encourages independent regulatory agencies to consider the impact of their regulatory actions on state and local interests. Source

List of Subjects in 12 CFR Part 747 Credit unions, Civil monetary penalties. Source

Government obligations and implementation

As a result of these acts, the head of each agency was required, by October 23, 1996, and at least once every four years thereafter, to adjust its CMPs for inflation. Source

Since that time, NCUA has discovered several more CMPs that should also be adjusted for inflation. Source

FOR FURTHER INFORMATION CONTACT: Allan Meltzer, Associate General Counsel, or Jon Canerday, Trial Attorney, Office of General Counsel, NCUA, 1775 Duke Street, Alexandria, Virginia 22314, or telephone (703) 518-6540. Source

In other words, the forgoing rounding provision would only be applied if the amount of the adjustment was more than $1,000 but less than $10,000. Source

Therefore, the current adjustment will be the percentage by which the CPI for the month of June 1999 exceeds the CPI for the month of June 1996. Source

According to the Bureau of Labor Statistics, the CPI for the month of June 1999 was 166.2 and the CPI for the month of June 1996 was 156.7. Source

When that number is rounded as required by the FCPIA Act,\7\ the inflation-adjusted maximum for a first tier CMP remains $5,500. Source

Therefore, $330 is rounded to the nearest multiple of $1,000 or to $0. Source

When that number is rounded as required by the FCPIA Act,\8\ the inflation-adjusted maximum for a second tier CMP remains $27,500. Source

Therefore, $1,650 is rounded to the nearest multiple of $5,000 or to $0. Source

In 1996, the maximum CMP for a person other than an insured credit union was increased for inflation to $1,100,000 per day. Source

At the same time, the maximum CMP for an insured credit union was increased to the lesser of $1,100,000 or 1 percent of the total assets of the credit union. Source

When that number is rounded as required by the FCPIA Act,\9\ the new inflation-adjusted third tier CMP becomes $1,175,000. Source

Therefore, $66,000 is rounded to the nearest multiple of $25,000 or to $75,000. Source

The failure to submit a required report or the submission of a false or misleading report subjects a credit union to three levels of CMPs, depending upon the reasons for noncompliance. Source

Therefore, the current adjustment will be the percentage by which the CPI for the month of June 1999 exceeds the CPI for the month of June 1989. Source

According to the Bureau of Labor Statistics, the CPI for the month of June 1999 was 166.2 and the CPI for the month of June 1989 was 124.1. Source

The failure to submit a required certified statement or the submission of a false or misleading statement subjects a credit union to three tiers of CMPs, depending upon the reasons for noncompliance. Source

Therefore, the current adjustment will be the percentage by which the CPI for the month of June 1999 exceeds the CPI for the month of June 1991. Source

Therefore, the current adjustment will be the percentage by which the CPI for the month of June 1999 exceeds the CPI for the month of June 1970. Source

According to the Bureau of Labor Statistics, the CPI for the month of June 1999 was 166.2 and the CPI for the month of June 1970 was 38.8. Source

A credit union that engages in such violations is subject to a CMP of up to $350 for each violation. Source

Therefore, the current adjustment will be the percentage by which the CPI for the month of June 1999 exceeds the CPI for the month of June 1994. Source

According to the Bureau of Labor Statistics, the CPI for the month of June 1999 was 166.2 and the CPI for the month of June 1994 was 148.0. Source

The FCPIA Act provides federal agencies with no discretion in the adjustment of CMPs for inflation, and it also requires such adjustments for inflation to occur at least every four years. Source

Small credit unions are defined by NCUA, pursuant to its authority to define ``small organizations,'' as those credit unions with assets of $1 million or less. Source

By the National Credit Union Administration Board on September 6, 2000. Source

Inadvertent failure $2,200 to submit a report or the inadvertent submission of a false or misleading report. Source

Non-inadvertent $22,000 failure to submit a report or the non- inadvertent submission of a false or misleading report. Source

Failure to submit a $1,100,000 or 1 report or the percent of the submission of a total assets of the false or misleading credit union, report done whichever is less knowingly or with reckless disregard. Source

Definitions and regulatory provisions