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Rule

Adjustment of Civil Monetary Penalty Amounts for 2019

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Start Preamble Start Printed Page 9451

AGENCY:

Office of the General Counsel, HUD.

ACTION:

Final rule.

SUMMARY:

This rule provides for 2019 inflation adjustments of civil monetary penalty amounts required by the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.

DATES:

Effective date for 2019 inflation adjustment: April 15, 2019.

Start Further Info

FOR FURTHER INFORMATION CONTACT:

Ariel Pereira, Associate General Counsel, Office of Legislation and Regulations, Department of Housing and Urban Development, 451 7th Street SW, 200, Washington, DC 20024; telephone number 202-402-5138 (this is not a toll-free number). Hearing- or speech-impaired individuals may access this number via TTY by calling the Federal Information Relay Service, toll-free, at 800-877-8339.

End Further Info End Preamble Start Supplemental Information

SUPPLEMENTARY INFORMATION:

I. Background

The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 2015 Act) (Pub. L. 114-74, Sec. 701), which further amended the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410), requires agencies to make annual adjustments to civil monetary penalty (CMP) amounts for inflation “notwithstanding section 553 of title 5, United States Code.” Section 553 refers to the Administrative Procedure Act, which provides for advance notice and public comment on rules. However, as explained in Section III below, HUD has determined that advance notice and public comment on this final rule is unnecessary. This annual adjustment is for 2019.

The annual adjustment is based on the percent change between the U.S. Department of Labor's Consumer Price Index for All Urban Consumers (“CPI-U”) for the month of October preceding the date of the adjustment, and the CPI-U for October of the prior year (28 U.S.C. 2461 note, section (5)(b)(1)). Based on that formula, the cost-of-living adjustment multiplier for 2018 is 1.02522.[1] Pursuant to the 2015 Act, adjustments are rounded to the nearest dollar.[2]

II. This Final Rule

This rule makes the required 2019 inflation adjustment of civil penalty amounts. Since HUD is not applying these adjustments retroactively, the 2019 increases apply to violations occurring on or after this rule's effective date. HUD provides a table showing how, for each component, the penalties are being adjusted for 2019 pursuant to the 2015 Act. In the first column (“Description”), HUD provides a description of the penalty. In the second column (“Statutory Citation”), HUD provides the United States Code statutory citation providing for the penalty. In the third column (“Regulatory Citation”), HUD provides the Code of Federal Regulations citation under title 24 for the penalty. In the fourth column (“Previous Amount”), HUD provides the amount of the penalty pursuant to the rule implementing the 2018 adjustment (83 FR 32790, July 16, 2018). In the fifth column (“2019 Adjusted Amount”), HUD lists the penalty after applying the 2019 inflation adjustment.

DescriptionStatutory citationRegulatory citation (24 CFR)Previous amount2019 adjusted amount
False ClaimsOmnibus Budget Reconciliation Act of 1986 (31 U.S.C. 3802(a)(1))§ 28.10(a)$11,181$11,463.
False StatementsOmnibus Budget Reconciliation Act of 1986 (31 U.S.C. 3802(b)(1))§ 28.10(b)$11,181$11,463.
Advance Disclosure of FundingDepartment of Housing and Urban Development Act (42 U.S.C. 3537a(c))§ 30.20$19,639$20,134.
Disclosure of Subsidy LayeringDepartment of Housing and Urban Development Act (42 U.S.C. 3545(f))§ 30.25$19,639$20,134.
FHA Mortgagees and Lenders ViolationsHUD Reform Act of 1989 (12 U.S.C. 1735f-14(a)(2))§ 30.35Per Violation: $9,819 Per Year: $1,963,870Per Violation: $10,067 Per Year: $2,013,399.
Other FHA Participants ViolationsHUD Reform Act of 1989 (12 U.S.C. 1735f-14(a)(2))§ 30.36Per Violation: $9,819 Per Year: $1,963,870Per Violation: $10,067 Per Year: $2,013,399.
Indian Loan Mortgagees ViolationsHousing Community Development Act of 1992 (12 U.S.C. 1715z-13a(g)(2))§ 30.40Per Violation: $9,819 Per Year: $1,963,870Per Violation: $10,067 Per Year: $2,013,399.
Multifamily & Section 202 or 811 Owners ViolationsHUD Reform Act of 1989 (12 U.S.C. 1735f-15(c)(2))§ 30.45$49,096$50,334.
Ginnie Mae Issuers & Custodians ViolationsHUD Reform Act of 1989 (12 U.S.C. 1723i(b))§ 30.50Per Violation: $9,819 Per Year: $1,963,870Per Violation: $10,067 Per Year: $2,013,399.
Start Printed Page 9452
Title I Broker & Dealers ViolationsHUD Reform Act of 1989 (12 U.S.C. 1703)§ 30.60Per Violation: $9,819 Per Year: $1,963,870Per Violation: $10,067 Per Year: $2,013,399.
Lead Disclosure ViolationTitle X—Residential Lead-Based Paint Hazard Reduction Act of 1992 (42 U.S.C. 4852d(b)(1))§ 30.65$17,395$17,834.
Section 8 Owners ViolationsMultifamily Assisted Housing Reform and Affordability Act of 1997 (42 U.S.C. 1437z-1(b)(2))§ 30.68$38,159$39,121.
Lobbying ViolationThe Lobbying Disclosure Act of 1995 (31 U.S.C. 1352)§ 87.400Min: $19,639 Max: $196,387Min: $20,134 Max: $201,340.
Fair Housing Act Civil PenaltiesFair Housing Act (42 U.S.C. 3612(g)(3))§ 180.671(a)No Priors: $20,521 One Prior: $51,302 Two or More Priors: $102,606No Priors: $21,039 One Prior: $52,596 Two or More Priors: $105,194.
Manufactured Housing Regulations ViolationHousing Community Development Act of 1974 (42 U.S.C. 5410)§ 3282.10Per Violation: $2,852 Per Year: $3,565,045Per Violation: $2,924 Per Year: $3,654,955.

III. Justification for Final Rulemaking for the 2019 Adjustments

HUD generally publishes regulations for public comment before issuing a rule for effect, in accordance with its own regulations on rulemaking in 24 CFR part 10. However, part 10 provides for exceptions to the general rule if the agency finds good cause to omit advanced notice and public participation. The good cause requirement is satisfied when prior public procedure is “impractical, unnecessary, or contrary to the public interest” (see 24 CFR 10.1). As discussed, this final rule makes the required 2019 inflation adjustment, which HUD does not have discretion to change. Moreover, the 2015 Act specifies that a delay in the effective date under the Administrative Procedure Act is not required for annual adjustments under the 2015 Act. HUD has determined, therefore, that it is unnecessary to delay the effectiveness of the 2019 inflation adjustments to solicit public comments.

Section 7(o) of the Department of Housing and Urban Development Act (42 U.S.C. 3535(o)) requires that any HUD regulation implementing any provision of the Department of Housing and Urban Development Reform Act of 1989 that authorizes the imposition of a civil money penalty may not become effective until after the expiration of a public comment period of not less than 60 days. This rule does not authorize the imposition of a civil money penalty—rather, it makes a standard inflation adjustment to penalties that were previously authorized. As noted above, the 2019 inflation adjustments are made in accordance with a statutorily prescribed formula that does not provide for agency discretion. Accordingly, a delay in the effectiveness of the 2019 inflation adjustments in order to provide the public with an opportunity to comment is unnecessary because the 2015 Act exempts the adjustments from the need for delay, the rule does not authorize the imposition of a civil money penalty, and, in any event, HUD would not have the discretion to make changes as a result of any comments.

IV. Findings and Certifications

Regulatory Review—Executive Orders 12866 and 13563

Under Executive Order 12866 (Regulatory Planning and Review), a determination must be made whether a regulatory action is significant and, therefore, subject to review by the Office of Management and Budget (OMB) in accordance with the requirements of the order. Executive Order 13563 (Improving Regulations and Regulatory Review) directs executive agencies to analyze regulations that are “outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned.” Executive Order 13563 also directs that, where relevant, feasible, and consistent with regulatory objectives, and to the extent permitted by law, agencies are to identify and consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public. Executive Order 13771 (Reducing Regulation and Controlling Regulatory Costs) requires that for every new regulation issued, at least two prior regulations be identified for removal, and that the cost of planned regulations be prudently managed and controlled through a budgeting process. As discussed above in this preamble, this final rule adjusts existing civil monetary penalties for inflation by a statutorily required amount.

HUD determined that this rule was not significant under Executive Order 12866 and Executive Order 13563. Moreover, as this rule is not a significant regulatory action under Executive Order 12866, it is not considered an Executive Order 13771 regulatory action.

Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) (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. Because HUD has determined that good cause exists to issue this rule without prior public comment, this rule is not subject to the requirement to publish an initial or final regulatory flexibility analysis under the RFA as part of such action.

Unfunded Mandates Reform

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) [3] requires that an agency prepare a budgetary impact statement before promulgating a rule that includes a Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year. If a budgetary impact statement is required, section 205 of UMRA also requires an agency to identity and consider a reasonable number of regulatory alternatives before promulgating a rule.[4] However, the UMRA applies only to rules for which an agency publishes a general notice of proposed rulemaking. As discussed Start Printed Page 9453above, HUD has determined, for good cause, that prior notice and public comment is not required on this rule and, therefore, the UMRA does not apply to this final rule.

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 rule will not have federalism implications and would not impose substantial direct compliance costs on State and local governments or preempt State law within the meaning of the Executive order.

Environmental Review

This final rule does not direct, provide for assistance or loan and mortgage insurance for, or otherwise govern, or regulate, real property acquisition, disposition, leasing, rehabilitation, alteration, demolition, or new construction, or establish, revise, or provide for standards for construction or construction materials, manufactured housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this final rule is categorically excluded from environmental review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321).

Start List of Subjects

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
  • Mortgage insurance
  • Penalties

24 CFR Part 87

  • Government contracts
  • Grant programs
  • Loan programs
  • Lobbying
  • Penalties
  • Reporting and recordkeeping requirements

24 CFR Part 180

  • Administrative practice and procedure
  • Aged
  • Civil rights
  • Fair housing
  • Individuals with disabilities
  • Investigations
  • Mortgages
  • Penalties
  • Reporting and recordkeeping requirements

24 CFR Part 3282

  • Administrative practice and procedure
  • Consumer protection
  • Intergovernmental relations
  • Manufactured homes
  • Reporting and recordkeeping requirements
End List of Subjects

Accordingly, for the reasons described in the preamble, HUD amends 24 CFR parts 28, 30, 87, 180, and 3282 to read as follows:

Start Part

PART 28—IMPLEMENTATION OF THE PROGRAM FRAUD CIVIL REMEDIES ACT OF 1986

End Part Start Amendment Part

1. The authority citation for part 28 continues to read as follows:

End Amendment Part Start Authority

Authority: 28 U.S.C. 2461 note; 31 U.S.C. 3801-3812; 42 U.S.C. 3535(d).

End Authority Start Amendment Part

2. In § 28.10, revise the introductory text of paragraphs (a)(1) and (b)(1) to read as follows:

End Amendment Part
Basis for civil penalties and assessments.

(a) Claims. (1) A civil penalty of not more than $11,463 may be imposed upon any person who makes, presents, or submits, or causes to be made, presented, or submitted, a claim that the person knows or has reason to know:

* * * * *

(b) Statements. (1) A civil penalty of not more than $11,463 may be imposed upon any person who makes, presents, or submits, or causes to be made, presented, or submitted, a written statement that:

* * * * *
Start Part

PART 30—CIVIL MONEY PENALTIES: CERTAIN PROHIBITED CONDUCT

End Part Start Amendment Part

3. The authority citation for part 30 continues to read as follows:

End Amendment Part Start Authority

Authority: 12 U.S.C. 1701q-1, 1703, 1723i, 1735f-14, and 1735f-15; 15 U.S.C. 1717a; 28 U.S.C. 1 note and 2461 note; 42 U.S.C. 1437z-1 and 3535(d).

End Authority Start Amendment Part

4. In § 30.20, revise paragraph (b) to read as follows:

End Amendment Part
Ethical violations by HUD employees.
* * * * *

(b) Maximum penalty. The maximum penalty is $20,134 for each violation.

Start Amendment Part

5. In § 30.25, revise paragraph (b) to read as follows:

End Amendment Part
Violations by applicants for assistance.
* * * * *

(b) Maximum penalty. The maximum penalty is $20,134 for each violation.

Start Amendment Part

6. In § 30.35, revise the first sentence in paragraph (c)(1) to read as follows:

End Amendment Part
Mortgagees and lenders.
* * * * *

(c)(1) Amount of penalty. The maximum penalty is $10,067 for each violation, up to a limit of $2,013,399 for all violations committed during any one-year period. * * *

* * * * *
Start Amendment Part

7. In § 30.36, revise the first sentence in paragraph (c) to read as follows:

End Amendment Part
Other participants in FHA programs.
* * * * *

(c) Amount of penalty. The maximum penalty is $10,067 for each violation, up to a limit of $2,013,399 for all violations committed during any one-year period. * * *

Start Amendment Part

8. In § 30.40, revise the first sentence in paragraph (c) to read as follows:

End Amendment Part
Loan guarantees for Indian housing.
* * * * *

(c) Amount of penalty. The maximum penalty is $10,067 for each violation, up to a limit of $2,013,399 for all violations committed during any one-year period. * * *

Start Amendment Part

9. In § 30.45, revise paragraph (g) to read as follows:

End Amendment Part
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 $50,334.

* * * * *
Start Amendment Part

10. In § 30.50, revise the first sentence in paragraph (c) to read as follows:

End Amendment Part
GNMA issuers and custodians.
* * * * *

(c) Amount of penalty. The maximum penalty is $10,067 for each violation, up to a limit of $2,013,399 during any one-year period. * * *

Start Amendment Part

11. In § 30.60, revise paragraph (c) to read as follows:

End Amendment Part
Dealers or sponsored third-party originators.
* * * * *

(c) Amount of penalty. The maximum penalty is $10,067 for each violation, up to a limit for any particular person of $2,013,399 during any one-year period.

Start Amendment Part

12. In § 30.65, revise paragraph (b) to read as follows:

End Amendment Part
Failure to disclose lead-based paint hazards.
* * * * *

(b) Amount of penalty. The maximum penalty is $17,834 for each violation

Start Printed Page 9454 Start Amendment Part

13. In § 30.68, revise paragraph (c) to read as follows:

End Amendment Part
Section 8 owners.
* * * * *

(c) Maximum penalty. The maximum penalty for each violation under this section is $39,121.

* * * * *
Start Part

PART 87—NEW RESTRICTIONS ON LOBBYING

End Part Start Amendment Part

14. The authority citation for part 87 continues to read as follows:

End Amendment Part Start Authority

Authority: 28 U.S.C. 1 note; 31 U.S.C. 1352; 42 U.S.C. 3535(d).

End Authority Start Amendment Part

15. In § 87.400, revise paragraphs (a), (b), and (e) to read as follows:

End Amendment Part
Penalties.

(a) Any person who makes an expenditure prohibited herein shall be subject to a civil penalty of not less than $20,134 and not more than $201,340 for each such expenditure.

(b) Any person who fails to file or amend the disclosure form (see appendix B of this part) to be filed or amended if required herein, shall be subject to a civil penalty of not less than $20,134 and not more than $201,340 for each such failure.

* * * * *

(e) First offenders under paragraph (a) or (b) of this section shall be subject to a civil penalty of $20,134, absent aggravating circumstances. Second and subsequent offenses by persons shall be subject to an appropriate civil penalty between $20,134 and $201,340 as determined by the agency head or his or her designee.

* * * * *
Start Part

PART 180—CONSOLIDATED HUD HEARING PROCEDURES FOR CIVIL RIGHTS MATTERS

End Part Start Amendment Part

16. The authority citation for part 180 continues to read as follows:

End Amendment Part Start Authority

Authority: 28 U.S.C. 1 note; 29 U.S.C. 794; 42 U.S.C. 2000d-1, 3535(d), 3601-3619, 5301-5320, and 6103.

End Authority Start Amendment Part

17. In § 180.671, revise paragraphs (a)(1) through (3) to read as follows:

End Amendment Part
Assessing civil penalties for Fair Housing Act cases.

(a) * * *

(1) $21,039, 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 conducted by a federal, state, or local governmental agency, to have committed any prior discriminatory housing practice.

(2) $52,596, 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 5-year period preceding the date of filing of the charge.

(3) $105,194, 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 7-year period preceding the date of filing of the charge.

* * * * *
Start Part

PART 3282—MANUFACTURED HOME PROCEDURAL AND ENFORCEMENT REGULATIONS

End Part Start Amendment Part

18. The authority citation for part 3282 is revised to read as follows:

End Amendment Part Start Authority

Authority: 28 U.S.C. 1 note; 28 U.S.C. 2461 note; 42 U.S.C. 3535(d) and 5424.

End Authority Start Amendment Part

19. Revise § 3282.10 to read as follows:

End Amendment Part
Civil and criminal penalties.

Failure to comply with this part 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 $2,924 for each violation, up to a maximum of $3,654,955 for any related series of violations occurring within one year from the date of the first violation.

Start Signature

Dated: March 12, 2019.

J. Paul Compton, Jr.,

General Counsel.

End Signature End Supplemental Information

Footnotes

1.  Office of Management and Budget, M-19-04, Memorandum for the Heads of Executive Departments and Agencies, Implementation of Penalty Inflation Adjustments for 2019, Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. (https://www.whitehouse.gov/​wp-content/​uploads/​2017/​11/​m_​19_​04.pdf). (October 2018 CPI-U (252.885)/October 2017 CPI-U (246.663) = 1.02522.)

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[FR Doc. 2019-04898 Filed 3-14-19; 8:45 am]

BILLING CODE 4210-67-P