Civil Monetary Penalty Inflation Adjustment

<RULE> NATIONAL CREDIT UNION ADMINISTRATION <CFR>12 CFR Part 747</CFR> <RIN>RIN 3133-AF65</RIN> <SUBJECT>Civil Monetary Penalty Inflation Adjustment</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> National Credit Union Administration (NCUA). <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The NCUA Board (Board) is amending its regulations to adjust the maximum amount of each civil monetary penalty (CMP) within its jurisdiction to account for inflation. This action, including the amount of the adjustments, is required under the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 1996 and the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This final rule is effective January 15, 2025. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Gira Bose, Senior Staff Attorney, at 1775 Duke Street, Alexandria, VA 22314, via email at <E T="03">gbose@ncua.gov,</E> or by telephone at (703) 518-6562. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <EXTRACT> <FP SOURCE="FP-2">I. Legal Background</FP> <FP SOURCE="FP-2">II. Regulatory Procedures </FP> </EXTRACT> <HD SOURCE="HD1">I. Legal Background</HD> <HD SOURCE="HD2">A. Statutory Requirements</HD> Every Federal agency, including the NCUA, is required by law to adjust its maximum CMP amounts each year to account for inflation. Prior to this being an annual requirement, agencies were required to adjust their CMPs at least once every four years. The previous four-year requirement stemmed from the Debt Collection Improvement Act of 1996, <SU>1</SU> <FTREF/> which amended the Federal Civil Penalties Inflation Adjustment Act of 1990. <SU>2</SU> <FTREF/> <FTNT> <SU>1</SU>  Public Law 104-134, Sec. 31001(s), 110 Stat. 1321-373 (Apr. 26, 1996). The law is codified at 28 U.S.C. 2461 note. </FTNT> <FTNT> <SU>2</SU>  Public Law 101-410, 104 Stat. 890 (Oct. 5, 1990), codified at 28 U.S.C. 2461 note. </FTNT> The current annual requirement stems from the Bipartisan Budget Act of 2015, <SU>3</SU> <FTREF/> which contains the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 2015 amendments). <SU>4</SU> <FTREF/> This legislation provided for an initial “catch-up” adjustment of CMPs in 2016, followed by annual adjustments. The catch-up adjustment reset CMP maximum amounts by setting aside the inflation adjustments that agencies made in prior years and instead calculated inflation with reference to the year when each CMP was enacted or last modified by Congress. Agencies were required to publish their catch-up adjustments in an interim final rule by July 1, 2016, and make them effective by August 1, 2016. <SU>5</SU> <FTREF/> The NCUA complied with these requirements in a June 2016 interim final rule, followed by a November 2016 final rule to confirm the adjustments as final. <SU>6</SU> <FTREF/> <FTNT> <SU>3</SU>  Public Law 114-74, 129 Stat. 584 (Nov. 2, 2015). </FTNT> <FTNT> <SU>4</SU>  129 Stat. 599. </FTNT> <FTNT> <SU>5</SU>  Public Law 114-74, Sec. 701(b)(1), 129 Stat. 584, 599 (Nov. 2, 2015). </FTNT> <FTNT> <SU>6</SU>  81 FR 40152 (June 21, 2016); 81 FR 78028 (Nov. 7, 2016). </FTNT> The 2015 amendments also specified how agencies must conduct annual inflation adjustments after the 2016 catch-up adjustment. Following the catch-up adjustment, agencies must make the required adjustments and publish them in the <E T="04">Federal Register</E> by January 15 each year. <SU>7</SU> <FTREF/> For 2017, the NCUA issued an interim final rule on January 6, 2017, <SU>8</SU> <FTREF/> followed by a final rule issued on June 23, 2017. <SU>9</SU> <FTREF/> For each of the years 2018 through 2024, the NCUA issued a final rule to satisfy the agency's annual requirements. <SU>10</SU> <FTREF/> This final rule satisfies the agency's requirement for the 2025 annual adjustment. <FTNT> <SU>7</SU>  Public Law 114-74, Sec. 701(b)(1), 129 Stat. 584, 599 (Nov. 2, 2015). </FTNT> <FTNT> <SU>8</SU>  82 FR 7640 (Jan. 23, 2017). </FTNT> <FTNT> <SU>9</SU>  82 FR 29710 (June 30, 2017). </FTNT> <FTNT> <SU>10</SU>  83 FR 2029 (Jan. 16, 2018); 84 FR 2052 (Feb. 6, 2019); 85 FR 2009 (Jan. 14, 2020); 86 FR 933 (Jan. 7, 2021); 87 FR 377 (Jan. 5, 2022); 88 FR 1323 (Jan. 10, 2023); 89 FR 1441 (Jan. 10, 2024). </FTNT> The law provides that the adjustments shall be made notwithstanding the section of the Administrative Procedure Act (APA) that requires prior notice and public comment for agency rulemaking. <SU>11</SU> <FTREF/> The 2015 amendments also specify that each CMP maximum must be increased by the percentage by which the consumer price index for urban consumers (CPI-U)  <SU>12</SU> <FTREF/> for October of the year immediately preceding the year the adjustment is made exceeds the CPI-U for October of the prior year. <SU>13</SU> <FTREF/> Thus, for the adjustment to be made in 2025, an agency must compare the October 2023 and October 2024 CPI-U figures. <FTNT> <SU>11</SU>  Public Law 114-74, Sec. 701(b)(1), 129 Stat. 584, 599 (Nov. 2, 2015). </FTNT> <FTNT> <SU>12</SU>  This index is published by the Department of Labor, Bureau of Labor Statistics, and is available at its website: <E T="03">https://www.bls.gov/cpi/.</E> </FTNT> <FTNT> <SU>13</SU>  Public Law 114-74, Sec. 701(b)(2)(B), 129 Stat. 584, 600 (Nov. 2, 2015). </FTNT> An annual adjustment under the 2015 amendments is not required if a CMP has been amended in the preceding 12 months pursuant to other authority. Specifically, the statute provides that an agency is not required to make an annual adjustment to a CMP if in the preceding 12 months it has been increased by an amount greater than the annual adjustment required by the 2015 amendments. <SU>14</SU> <FTREF/> The NCUA did not make any adjustments in the preceding 12 months pursuant to other authority. Therefore, this rulemaking adjusts all of the NCUA's CMPs pursuant to the 2015 amendments. <FTNT> <SU>14</SU>  Public Law 114-74, Sec. 701(b)(1), 129 Stat. 584, 600 (Nov. 2, 2015). </FTNT> <HD SOURCE="HD2">B. Application to the 2025 Adjustments and Office of Management and Budget Guidance</HD> This section applies the statutory requirements and the Office of Management and Budget's (OMB) guidance to the NCUA's CMPs and sets forth the Board's calculation of the 2025 adjustments. The 2015 amendments directed OMB to issue guidance to agencies on implementing the inflation adjustments. <SU>15</SU> <FTREF/> OMB is required to issue its guidance each December and, with respect to the 2025 annual adjustment, did so on December 17, 2024. <SU>16</SU> <FTREF/> For 2025, Federal agencies must adjust the maximum amounts of their CMPs by the percentage by which the October 2024 CPI-U (315.664) exceeds the October 2023 CPI-U (307.671). The resulting increase can be expressed as an inflation multiplier (1.02598) to apply to each current CMP maximum amount to determine the adjusted maximum. The OMB guidance also addresses rulemaking procedures and agency reporting and oversight requirements for CMPs. <SU>17</SU> <FTREF/> <FTNT> <SU>15</SU>  Public Law 114-74, Sec. 701(b)(4), 129 Stat. 584, 601 (Nov. 2, 2015). </FTNT> <FTNT> <SU>16</SU>   <E T="03">See</E> OMB Memorandum M-25-02, Implementation of Penalty Inflation Adjustments for 2025, Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Dec. 17, 2024). </FTNT> <FTNT> <SU>17</SU>   <E T="03">Id.</E> </FTNT> The following table presents the adjustment calculations. The current maximums are found at 12 CFR 747.1001, as adjusted by the final rule that the Board approved in January 2024. This amount is multiplied by the inflation multiplier to calculate the new maximum in the far-right column. Only these adjusted maximum amounts, and not the calculations, will be codified at 12 CFR 747.1001 under this final rule. The adjusted amounts will be effective upon publication in the <E T="04">Federal Register</E> and can be applied to violations that occurred on or after November 2, 2015, the date the 2015 amendments were enacted. <SU>18</SU> <FTREF/> <FTNT> <SU>18</SU>  Public Law 114-74, 129 Stat. 600 (Nov. 2, 2015). </FTNT> <GPOTABLE COLS="5" OPTS="L2,nj,p7,7/8,i1" CDEF="s30,r50,r25,12,r25"> <TTITLE>Table—Calculation of Maximum CMP Adjustments</TTITLE> <CHED H="1">Citation</CHED> <CHED H="1"> Description and tier  <SU>19</SU> </CHED> <CHED H="1"> Current maximum <ENT I="01">12 U.S.C. 1782(a)(3)</ENT> <ENT>Inadvertent failure to submit a report or the inadvertent submission of a false or misleading report</ENT> <ENT>4,899</ENT> <ENT>1.02598</ENT> <ENT>5,026.</ENT> </ROW> <ROW> <ENT I="01">12 U.S.C. 1782(a)(3)</ENT> <ENT>Non-inadvertent failure to submit a report or the non-inadvertent submission of a false or misleading report</ENT> <ENT>48,992</ENT> <ENT>1.02598</ENT> <ENT>50,265.</ENT> </ROW> <ROW> <ENT I="01">12 U.S.C. 1782(a)(3)</ENT> <ENT>Failure to submit a report or the submission of a false or misleading report done knowingly or with reckless disregard</ENT> <ENT>Lesser of 2,449,575 or 1% of total credit union (CU) assets</ENT> <ENT>1.02598</ENT> <ENT>Lesser of 2,513,215 or 1% of total CU assets.</ENT> </ROW> <ROW> <ENT I="01">12 U.S.C. 1782(d)(2)(A)</ENT> <ENT>Tier 1 CMP for inadvertent failure to submit certified statement of insured shares and charges due to the National Credit Union Share Insurance Fund (NCUSIF), or inadvertent submission of false or misleading statement</ENT> <ENT>4,480</ENT> <ENT>1.02598</ENT> <ENT>4,596.</ENT> </ROW> <ROW> <ENT I="01">12 U.S.C. 1782(d)(2)(B)</ENT> <ENT>Tie ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 27k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━