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Inflation Adjustment of Civil Money Penalty Amounts
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[Federal Register: February 6, 2007 (Volume 72, Number 24)]
[Rules and Regulations]
[Page 5585-5589]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06fe07-8]
[[Page 5586]]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
24 CFR Parts 28, 30, 81, 180, 3282, and 3500
[Docket No. FR-5104-F-01]
RIN 2501-AD30
Inflation Adjustment of Civil Money Penalty Amounts
AGENCY: Office of the Secretary, HUD.
ACTION: Final rule.
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SUMMARY: This final rule revises HUD's civil money penalty regulations
to make inflation adjustments to the civil money penalties imposed by
HUD, as required by statute. The applicable statute mandates the
adjustments and the formula used to calculate them. HUD also takes this
opportunity to delete duplicative language in its regulation for
hearing procedures in civil rights matters.
DATES: Effective Date: March 8, 2007.
FOR FURTHER INFORMATION CONTACT: Dane Narode, Deputy Chief Counsel for
Administrative Proceedings, Departmental Enforcement Center, Department
of Housing and Urban Development, 1250 Maryland Avenue, SW., Suite 200,
Washington, DC 20024; telephone (202) 708-2350 (this is not a toll-free
number). For information regarding the correction to HUD's regulation
for hearing procedures in civil rights matters, contact Joseph
Pelletier, Deputy Assistant General Counsel for Fair Housing
Enforcement, Office of General Counsel, Department of Housing and Urban
Development, 451 Seventh Street, SW., Room 10270, Washington, DC 20410;
telephone (202) 708-0570 (this is not a toll-free number). Hearing- or
speech-impaired individuals may access this number via TTY by calling
the toll-free Federal Information Relay Service at (800) 877-8339.
SUPPLEMENTARY INFORMATION:
I. This Final Rule
A. Inflation Adjustment of Civil Money Penalty Amounts
The changes made by this rule increase the amount of civil money
penalties, consistent with statutory authority.
The Federal Civil Penalties Inflation Adjustment Act of 1990 (28
U.S.C. 2461) (FCPIA Act), as amended by the Debt Collection Improvement
Act of 1996 (31 U.S.C. 3701), requires each federal agency to make
inflation adjustments to its maximum civil money penalties. This rule
raises the maximum penalties that HUD may impose upon violators with
respect to several HUD regulations found in 24 CFR parts 28, 30, 81,
180, 3282, and 3500. For civil money penalties found in some HUD
regulations (e.g., 24 CFR 30.55, 30.68, 3282.10, and 3500.17(m)(2)), no
amendment is necessary because application of the statute's formula
results in no increase to the penalty. The FCPIA Act provides for a
``rounding-off,'' using multiples from $10 to $25,000, of the increase
calculated based on the change in the Consumer Price Index (CPI). (See
28 U.S.C. 2461(5)(a).) Consequently, in those instances in which the
increased dollar amount is determined to be less than the applicable
multiple, the existing penalty is unchanged. The following regulations
are revised by this rule.
In Sec. 28.10, the maximum penalties for making a false claim or
written statement, as described in the regulation, are increased from
$6,500 to $7,500.
In Sec. 30.20(b), the maximum penalty that HUD may impose upon its
employees who improperly disclose funding decisions is increased from
$11,000 to $16,000.
In Sec. 30.25(b), the maximum penalty that HUD may impose upon
applicants for assistance who fail to disclose required information is
increased from $11,000 to $16,000.
In Sec. 30.35(c)(1), the maximum penalties that the Mortgagee
Review Board may impose for a series of violations identified in the
regulations are increased from $6,500 to $7,500 per violation, and from
$1.25 million to $1.375 million for all violations committed during any
one-year period.
In Sec. 30.36(c), the maximum penalty that HUD may impose upon
other participants in Federal Housing Administration programs for
violations identified in the regulation is increased from $5,500 to
$6,050, and from $1.1 million to a maximum of $1.21 million for all
violations committed during any one-year period.
In Sec. 30.40, the maximum penalty that HUD may impose upon a
mortgagee or a holder of a guarantee certificate who violates the
statutory provisions concerning loan guarantees for Indian housing is
increased from $6,000 to $7,000 per violation, and from $1.25 million
to a maximum of $1.375 million for all violations committed during any
one-year period.
In Sec. 30.45(g), the maximum penalty that may be imposed upon a
mortgagor of a multifamily property or on any person in a relationship
with the mortgagor, as described in the regulations at paragraph (c) of
Sec. 30.45, is increased to $37,500 per violation. In addition,
paragraph (g) is corrected to provide expressly for imposition of the
same maximum penalty per violation of paragraph (f), which relates to
section 202 and section 811 projects.
In Sec. 30.50(c), the maximum penalty that may be imposed against
a Government National Mortgage Association issuer or custodian for a
violation of any provision of 12 U.S.C. 1723i(b) or other authorities
cited in the regulations is increased from $6,500 to $7,500 per
violation, and from $1.25 million to $1.375 million for all violations
committed during any one-year period.
In Sec. 30.55(c), the maximum penalty for each violation of any
provision of the Interstate Land Sales Full Disclosure Act (15 U.S.C.
1701 et seq.) remains unchanged at $1,100, but the one-year maximum per
person increases from $1.25 million to $1.375 million.
In Sec. 30.60(c), the maximum penalty that HUD may impose upon any
dealer or loan correspondent for, among other things, falsifying
statements or making false representations in violation of section
2(b)(7) of the National Housing Act (12 U.S.C. 1703(b)(7)), is
increased from $6,500 to $7,500 for each violation, and from $1.25
million to a maximum of $1.375 million during any one-year period.
In Sec. 81.83(b)(1), the maximum penalty that HUD may impose upon
a Government Sponsored Enterprise (GSE) is increased from $30,000 to
$35,000 for each day the GSE fails to submit a timely housing plan.
In Sec. 81.83(b)(2), the maximum penalty that HUD may impose upon
a GSE that fails to submit information required by the Fannie Mae
Charter Act (12 U.S.C. 1716-1723h) or Freddie Mac Act (12 U.S.C. 1451-
59), or that fails to make a good faith effort to comply with its
approved housing plan, is increased from $11,000 to $16,000 for each
day the failure occurs.
In Sec. Sec. 180.671(a) (1), (2), and (3), the maximum penalty
that the Administrative Law Judge may impose upon a respondent who is
found to have engaged in a discriminatory housing practice is increased
from $11,000 to $16,000, from $32,500 to $37,500, and from $60,000 to
$65,000.
In Sec. 3282.10, the maximum penalty for each violation of the
National Manufactured Housing Construction and Safety Standards Act of
1974 (42 U.S.C. 5401 et seq.) remains unchanged at $1,100. The one-year
maximum for any related series of violations occurring within one year
from the date of the first
[[Page 5587]]
violation is increased from $1.25 million to $1.375 million.
In Sec. 3500.17(m)(1), the penalty for a servicer's failure to
submit to a borrower an initial or annual escrow account statement is
increased from $65 to $75 for each such violation. The total of
assessed penalties may not exceed $130,000 (increased from the existing
total of $120,000) for violations not shown to be intentional that
occur during any consecutive 12-month period. However, in Sec.
3500.17(m)(2), the penalty for failure to submit an escrow statement
when the servicer intentionally disregarded the requirement remains
unchanged at $110 for each violation.
B. Correction to 24 CFR 180.670
On December 18, 1997, HUD published a proposed rule (62 FR 66488)
to amend its regulations governing hearing procedures for civil rights
matters. The proposed rule provided for imposition of multiple
penalties for multiple acts of discrimination. In addition, HUD
intended the rule to make clarifying changes by moving paragraphs
governing civil money penalties from the existing Sec. 180.670 to a
new Sec. 180.671 and by updating the penalty paragraphs' text. HUD
received and responded to public comments on the proposed rule and
published an interim rule on February 10, 1999 (64 FR 6744). However, a
typographical error in the amendatory language of the interim rule
caused the penalty paragraphs to remain in Sec. 180.670 while also
establishing the updated paragraphs in the new Sec. 180.671, creating
the appearance of two distinct sets of penalties. After an additional
round of public comment and HUD response, the interim rule was then
adopted as final without change on December 28, 1999 (64 FR 72726). HUD
takes this opportunity to correct this error by deleting the old
paragraphs (b)(3)(iii) (A) through (C) in Sec. 180.670, as intended in
the interim and final rules. The corresponding paragraphs in Sec.
180.671 remain unchanged.
II. Justification for Final Rulemaking
In general, HUD publishes a rule for public comment before issuing
a rule for effect, in accordance with HUD's regulations on rulemaking
at 24 CFR part 10. Part 10, however, provides in Sec. 10.1 for
exceptions from that general rule where HUD finds good cause to omit
advance notice and public participation. The good cause requirement is
satisfied when the prior public procedure is ``impracticable,
unnecessary or contrary to the public interest.''
HUD finds that good cause exists to publish this rule for effect
without soliciting public comment in that prior public procedure is
unnecessary. The primary purpose of this final rule is merely to
implement the statutory directive in the FCPIA Act to make periodic
increases in HUD's civil money penalties by applying the adjustment
formula established in the statute. Accordingly, because calculation of
the increases is formula-driven, HUD has no discretion in updating the
regulations to reflect the maximum allowable penalties derived from
application of the formula. HUD emphasizes that this rule addresses
only the matter of the calculation of the maximum civil money penalties
for the respective violations described in the regulations. This rule
does not address the issue of the Secretary's discretion to impose or
not to impose a penalty, nor the procedures that HUD must follow in
initiating a civil money penalty action.
The second purpose of this rule is to make corrections to Sec.
180.670 by deleting paragraphs inadvertently left in it as a result of
a typographical error in the 1999 interim rule. The preambles of the
proposed and interim rules made clear that the intent was to update and
move these paragraphs to Sec. 180.671, thereby deleting the old
paragraphs from Sec. 180.670. The specific changes were detailed in
both the proposed and interim rules, and HUD provided two opportunities
for public comment on the changes before adopting the final rule. This
rule merely implements those changes by correcting the typographical
error that prevented deletion of the old paragraphs in Sec. 180.670.
Since HUD is merely correcting a typographical error, public comment is
unnecessary.
III. Findings and Certifications
Impact on Small Entities
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) generally
requires an agency to conduct a regulatory flexibility analysis of any
rule subject to notice and comment rulemaking requirements, unless the
agency certifies that the rule will not have a significant economic
impact on a substantial number of small entities. This final rule does
not establish special procedures that would need to be complied with by
small entities. All entities, small or large, will be subject to the
same penalties as established by statute and implemented by this rule.
Accordingly, the undersigned certifies that this final rule would not
have a significant economic impact on a substantial number of small
entities.
Environmental Impact
This final rule involves a statutorily required rate or cost
determination that does not constitute a development decision affecting
the physical condition of specific project areas or building sites.
Accordingly, under 24 CFR 50.19(c)(6), this final rule is categorically
excluded from environmental review under the National Environmental
Policy Act of 1969 (42 U.S.C. 4321).
Executive Order 13132, Federalism
Executive Order 13132 (entitled ``Federalism'') prohibits an agency
from publishing any rule that has federalism implications if the rule
either imposes substantial direct compliance costs on state and local
governments and is not required by statute, or the rule preempts state
law, unless the agency meets the consultation and funding requirements
of section 6 of the Executive Order. This final rule does not have
federalism implications and does not impose substantial direct
compliance costs on state and local governments nor preempt state law
within the meaning of the Executive Order.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
1531-1538) (UMRA) establishes requirements for federal agencies to
assess the effects of their regulatory actions on state, local, and
tribal governments and the private sector. This final rule does not
impose any federal mandates on any state, local, or tribal governments
or the private sector within the meaning of UMRA.
List of Subjects
24 CFR Part 28
Administrative practice and procedure, Claims, Fraud, Penalties.
24 CFR Part 30
Administrative practice and procedure, Grant programs--housing and
community development, Loan programs--housing and community
development, Mortgages, Penalties.
24 CFR Part 81
Accounting, Mortgages, Reporting and recordkeeping requirements,
Securities.
24 CFR Part 180
Administrative practice and procedure, Aged, Civil Rights, Fair
housing, Individuals with disabilities, Investigations, Mortgages,
Penalties, Reporting and recordkeeping requirements.
[[Page 5588]]
24 CFR Part 3282
Administrative practice and procedure, Consumer protection,
Intergovernmental relations, Investigations, Manufactured homes,
Mortgages, Reporting and recordkeeping requirements.
24 CFR Part 3500
Consumer protection, Housing, Mortgages, Reporting and
recordkeeping requirements.
? Accordingly, for the reasons described in the preamble, HUD amends 24
CFR parts 28, 30, 81, 180, 3282, and 3500 to read as follows:
PART 28--IMPLEMENTATION OF THE PROGRAM FRAUD CIVIL REMEDIES ACT OF 1986
? 1. The authority citation for part 28 continues to read as follows:
Authority: 28 U.S.C. 2461 note; 31 U.S.C. 3801; 42 U.S.C. 3535(d).
? 2. Revise Sec. Sec. 28.10 (a)(1) introductory text and (b)(1)
introductory text to read as follows:
Sec. 28.10 Basis for civil penalties and assessments.
(a) Claims. (1) A civil penalty of not more than $7,500 may be
imposed upon a person who makes a claim that the person knows or has
reason to know:
* * * * *
(b) Statements. (1) A civil penalty of up to $7,500 may be imposed
upon a person who makes a written statement that:
* * * * *
PART 30--CIVIL MONEY PENALTIES: CERTAIN PROHIBITED CONDUCT
? 3. The authority citation for part 30 continues to read as follows:
Authority: 12 U.S.C. 1701q-1, 1703, 1723i, 1735f-14, 1735f-15;
15 U.S.C. 1717a; 28 U.S.C. 2461 note; 42 U.S.C. 1437z-1 and 3535(d).
? 4. Revise Sec. 30.20(b) to read as follows:
Sec. 30.20 Ethical violations by HUD employees.
* * * * *
(b) Maximum Penalty. The maximum penalty is $16,000 for each violation.
? 5. Revise Sec. 30.25(b) to read as follows:
Sec. 30.25 Violations by applicants for assistance.
* * * * *
(b) Maximum penalty. The maximum penalty for each violation is $16,000.
? 6. Revise Sec. 30.35(c)(1) to read as follows:
Sec. 30.35 Mortgagees and lenders.
* * * * *
(c) Amount of penalty--(1) Maximum penalty. Except as provided in
paragraph (c)(2) of this section, the maximum penalty is $7,500 for
each violation, up to a limit of $1,375,000 for all violations
committed during any one-year period. Each violation shall constitute a
separate violation as to each mortgage or loan application.
* * * * *
? 7. Revise Sec. 30.36(c) to read as follows:
Sec. 30.36 Other participants in FHA programs.
* * * * *
(c) Amount of penalty. The maximum penalty is $6,050 for each
violation, up to a limit of $1,210,000 for all violations committed
during any one-year period. Each violation shall constitute a separate
violation as to each mortgage or loan application.
? 8. Revise Sec. 30.40(c) to read as follows:
Sec. 30.40 Loan guarantees for Indian housing.
* * * * *
(c) Amount of penalty. The maximum penalty is $7,000 for each
violation, up to a limit of $1,375,000 for all violations committed
during any one-year period. Each violation shall constitute a separate
violation as to each mortgage or loan application.
? 9. Revise Sec. 30.45(g) to read as follows:
Sec. 30.45 Multifamily and Section 202 or 811 mortgagors.
* * * * *
(g) Maximum penalty. The maximum penalty for each violation under
paragraphs (c) and (f) of this section is $37,500.
* * * * *
? 10. Revise Sec. 30.50(c) to read as follows:
Sec. 30.50 GNMA issuers and custodians.
* * * * *
(c) Amount of penalty. The maximum penalty is $7,500 for each
violation, up to a limit of $1,375,000 during any one-year period. Each
violation shall constitute a separate violation with respect to each
pool of mortgages.
? 11. Revise Sec. 30.55(c) to read as follows:
Sec. 30.55 Interstate Land Sales violations.
* * * * *
(c) Amount of penalty. The maximum penalty is $1,100 for each
violation, up to a limit for any particular person of $1,375,000 during
any one-year period. Each violation shall constitute a separate
violation as to each sale or lease or offer to sell or lease.
? 12. Revise Sec. 30.60(c) to read as follows:
Sec. 30.60 Dealers or loan correspondents.
* * * * *
(c) Amount of penalty. The maximum penalty is $7,500 for each
violation, up to a limit for any particular person of $1,375,000 during
any one-year period.
PART 81--THE SECRETARY OF HUD'S REGULATION OF THE FEDERAL NATIONAL
MORTGAGE ASSOCIATION (FANNIE MAE) AND THE FEDERAL HOME LOAN
MORTGAGE CORPORATION (FREDDIE MAC)
? 13. The authority citation for part 81 continues to read as follows:
Authority: 12 U.S.C. 1451 et seq., 1716-1723h, and 4501-4641; 28
U.S.C. 2461 note; 42 U.S.C. 3535(d) and 3601-3619.
? 14. Revise Sec. Sec. 81.83 (b)(1) and (b)(2) to read as follows:
Sec. 81.83 Civil money penalties.
* * * * *
(b) * * *
(1) For any failure described in paragraph (a)(1) of this section,
$35,000 for each day that the failure occurs; and
(2) For any failure described in paragraphs (a)(2) or (a)(3) of
this section, $16,000 for each day that the failure occurs.
* * * * *
PART 180--CONSOLIDATED HUD HEARING PROCEDURES FOR CIVIL RIGHTS MATTERS
? 15. The authority citation for part 180 continues to read as follows:
Authority: 29 U.S.C. 794; 42 U.S.C. 2000d-1, 3535(d), 3601-3619,
5301-5320, and 6103.
? 16. Revise Sec. 180.670(b)(3)(iii) to read as follows:
Sec. 180.670 Initial Decision of ALJ.
* * * * *
(b) * * *
(3) * * *
(iii) Assessing a civil penalty against any respondent to vindicate
the public interest in accordance with Sec. 180.671.
* * * * *
? 17. Revise Sec. Sec. 180.671(a)(1), (2), and (3) to read as follows:
Sec. 180.671 Assessing civil penalties for Fair Housing Act cases.
(a) * * *
(1) $16,000, if the respondent has not been adjudged in any
administrative hearing or civil action permitted under the Fair Housing
Act or any state or local fair housing law, or in any licensing or
regulatory proceeding
[[Page 5589]]
conducted by a federal, state, or local governmental agency, to have
committed any prior discriminatory housing practice.
(2) $37,500, if the respondent has been adjudged in any
administrative hearing or civil action permitted under the Fair Housing
Act, or under any state or local fair housing law, or in any licensing
or regulatory proceeding conducted by a federal, state, or local
government agency, to have committed one other discriminatory housing
practice and the adjudication was made during the five-year period
preceding the date of filing of the charge.
(3) $65,000, if the respondent has been adjudged in any
administrative hearings or civil actions permitted under the Fair
Housing Act, or under any state or local fair housing law, or in any
licensing or regulatory proceeding conducted by a federal, state, or
local government agency, to have committed two or more discriminatory
housing practices and the adjudications were made during the seven-year
period preceding the date of filing of the charge.
* * * * *
PART 3282--MANUFACTURED HOME PROCEDURAL AND ENFORCEMENT REGULATIONS
? 18. The authority citation for part 3282 continues to read as follows:
Authority: 28 U.S.C. 2461 note; 42 U.S.C. 5424; and 42 U.S.C. 3535(d).
? 19. Revise Sec. 3282.10 to read as follows:
Sec. 3282.10 Civil and criminal penalties.
Failure to comply with these regulations may subject the party in
question to the civil and criminal penalties provided for in section
611 of the Act, 42 U.S.C. 5410. The maximum amount of penalties imposed
under section 611 of the Act shall be $1,100 for each violation, up to
a maximum of $1,375,000 for any related series of violations occurring
within one year from the date of the first violation.
PART 3500--REAL ESTATE SETTLEMENT PROCEDURES ACT
? 20. The authority citation for part 3500 continues to read as follows:
Authority: 12 U.S.C. 2601 et seq.; 42 U.S.C. 3535(d).
? 21. Revise Sec. 3500.17(m)(1) to read as follows:
Sec. 3500.17 Escrow accounts.
* * * * *
(m) Penalties. (1) A servicer's failure to submit to a borrower an
initial or annual escrow account statement meeting the requirements of
this part shall constitute a violation of section 10(d) of RESPA (12
U.S.C. 2609(d)) and this section. For each such violation, the
Secretary shall assess a civil penalty of 75 dollars ($75), except that
the total of the assessed penalties shall not exceed $130,000 for any
one servicer for violations that occur during any consecutive 12-month
period.
* * * * *
Dated: January 26, 2007.
Roy A. Bernardi,
Deputy Secretary.
[FR Doc. E7-1941 Filed 2-5-07; 8:45 am]
BILLING CODE 4210-67-P