Collection of Civil Money Penalty Debt

AGENCY:

Federal Deposit Insurance Corporation.

ACTION:

Final rule.

SUMMARY:

The Federal Deposit Insurance Corporation (FDIC) is amending the FDIC's Procedures for Corporate Debt Collection to include delinquent civil money penalties within the debt covered by those procedures.

DATES:

The final rule is effective on February 10, 2021.

FOR FURTHER INFORMATION CONTACT:

Graham N. Rehrig, Senior Attorney (202) 898-3829, grehrig@fdic.gov;

Gabrielle A.J. Beam, Counsel (Team Leader) (816) 234-8503, gabeam@fdic.gov; or Michael P. Farrell, Counsel (202) 898-3853, mfarrell@fdic.gov.

SUPPLEMENTARY INFORMATION:

I. Policy Objectives

The Debt Collection Improvement Act of 1996 (DCIA) requires Federal agencies to collect debts owed to the United States in accordance with regulations that either adopt, or at least are consistent with, standards prescribed by the Department of Justice (DOJ) and Department of the Treasury (Treasury). Treasury has issued regulations applicable to collection under the DCIA, and these regulations, known as the Federal Claims Collection Standards (FCCS), became effective on December 22, 2000. The purpose of the DCIA is to enhance the efficiency and effectiveness of the Federal Government's efforts to collect debt owed to the United States. A principal feature of the DCIA was the creation of the Treasury Offset Program (TOP), a Government-wide database of delinquent debtors that offsets (reduces) Federal payments to recipients who also owe delinquent debt to the United States and that remits the offset amount to the creditor agency.

The FDIC is amending its regulations, in accordance with the DCIA, to add the collection of civil money penalty (CMP) debt to the FDIC's existing debt-collection regulations found in 12 CFR part 313. Part 313 does not currently provide for collection of CMP debt. The amendments would allow the FDIC to refer debts arising from its enforcement-related activities to Treasury for collection, thereby improving the effectiveness of the FDIC's debt-collection efforts.

II. Background

In 2002, the FDIC, in compliance with the DCIA, promulgated 12 CFR part 313 governing the collection of certain debts owed to the FDIC in its corporate capacity by Federal employees, including FDIC employees, and certain third parties. The FDIC amended part 313 in 2006 to include criminal restitution debt. Part 313, in its present form, applies only to debts owed to and payments made by the FDIC acting in its corporate capacity, and criminal restitution debt owed to the FDIC in either its corporate capacity or its receivership capacity.

The DCIA authorizes the FDIC to collect delinquent CMP debts that arise from its supervision and enforcement functions, but the current part 313 does not apply—aside from criminal restitution debt noted above—to “debts owed to or payments made by the FDIC in connection with the FDIC's liquidation, supervision, enforcement, or insurance responsibilities.”

III. Discussion of the Amendments to Part 313

The rule amends FDIC regulations to provide for the collection of CMP debt. It will do so by adopting existing Treasury regulations concerning debt-collection procedures as to the collection of CMP debt. It will improve the effectiveness of the FDIC's debt-collection efforts, primarily by allowing the FDIC to refer debts arising from its enforcement-related activities to Treasury for collection. The rule will not affect the FDIC's existing authority under part 313 to collect other forms of debt, including debt owed to the FDIC in its corporate capacity or for the collection of criminal restitution debt.

The legal authority for the amendments is found, in part, in the DCIA itself. The DCIA's definition of “debt” includes “any amount of funds or property that has been determined by an appropriate official of the Federal Government to be owed to the United States by a person, organization or entity other than another Federal agency.” The FDIC is amending part 313 in accordance with the FDIC's authority under 12 U.S.C. 1819(a) to prescribe rules and regulations governing its operations.

Accordingly, the FDIC is amending part 313 as follows:

Section 313.1 (Scope) is revised to include CMP debt in part 313. This section also notes that subparts B through G of part 313 do not apply to the collection of CMP debt.

Section 313.3 (Definitions) is amended to include CMP debtors among the list of debtors, under paragraph (u), to whom a creditor agency (the FDIC) may send a written notice that, among other statements, claims a debt and informs the debtor that the creditor agency intends to collect the debt by administrative offset. The rule makes a technical revision to paragraph (d) to substitute “the Bureau of the Fiscal Service” as the successor Treasury entity to “FMS” (Treasury's former Financial Management Service) and to note that the FDIC has the statutory authority, under 12 U.S.C. 1818(i)(2)(F), to compromise, modify, or remit any CMP that the FDIC may assess or has already assessed under 12 U.S.C. 1818(i)(2)(A)-(C). Section 313.3 is also revised at paragraphs (j), (m), (n), and (q) to include three divisions of the FDIC, as well as the directors of those divisions (or their designees), since the enforcement and supervisory activities of those divisions may result in the assessment of CMPs.

Section 313.4 (Delegations of authority) contains technical amendments to clarify the following delegations: (1) Authority to collect debt, other than criminal restitution debt and CMP debt, on behalf of the FDIC in its corporate capacity is delegated to the Director of the Division of Administration or Director of the Division of Finance, as applicable, or to the applicable Director's designee; and (2) authority to collect criminal restitution debt on behalf of the FDIC in either its receivership or corporate capacity is delegated to the Director of the Division of Resolutions and Receiverships, or to her or his designee.

The rule creates a new part 313, subpart H, which concerns the collection of CMP debt. Section 313.181 (Scope) states that subpart H establishes FDIC procedures for the collection of CMP debt. Section 313.182 (Purpose) notes that the purpose of subpart H is to implement Federal statutes and regulatory standards authorizing the FDIC to collect delinquent CMPs. Section 313.183 (Definitions) indicates that the definitions provided at section 313.3 apply to subpart H to the extent they are applicable.

Section 313.184 outlines how the FDIC will collect CMP debt. Paragraph (a) states that the FDIC will follow Treasury regulations set forth at 31 CFR part 285, as applicable and consistent with subpart H, for the collection of CMP debt, including centralized offset of Federal payments to collect non-tax debts that may be owed to the FDIC. Paragraph (b) notes that nothing in subpart H shall be construed to require the FDIC to provide duplicate notice or other procedural protections that have already been provided or afforded to a CMP debtor in the course of administrative or judicial litigation or otherwise. Paragraph (c) says that, for CMP debtors, and for purposes of 31 U.S.C. 3716(b)(1), the FDIC adopts without change the regulations on collection by administrative offset set forth at 31 CFR 901.3 and other relevant sections of the FCCS applicable to such offset, to the extent those regulations are consistent with subpart H. Finally, paragraph (d) states that nothing in subpart H precludes the collection of debts through any other available means or precludes the FDIC from engaging in litigation or the compromise of debt as provided under 12 U.S.C. 1818(i) or any other applicable law or regulation.

IV. Expected Effects

The FDIC is amending part 313 in accordance with the FDIC's authority under 12 U.S.C. 1819(a) to prescribe rules and regulations governing its operations. The rule would not directly affect any FDIC-supervised institutions. The rule could indirectly affect FDIC-insured instructions and individuals who are delinquent with respect to CMPs that have been assessed against them by the FDIC. According to the FDIC's information, the sum of delinquent CMPs owed to the FDIC amounts to approximately $1 million. The delinquent CMP funds represent a preexisting obligation owed by the individuals or institutions; therefore, the rule will have no effect on these obligations. However, the rule, as amended, could increase the portion of these obligations that is ultimately collected under part 313.

V. Alternatives Considered

As discussed previously, part 313 does not currently apply to the collection of delinquent CMPs. The FDIC believes that it can increase the effectiveness of its delinquent CMP collection efforts through the use of administrative offset. The DCIA states that agencies, before collecting a claim by administrative offset, must either adopt the FCCS without change or prescribe agency regulations for collecting debts by administrative offset that are consistent with the FCCS. The FDIC has considered these two approaches and has decided to adopt the FCCS without change for the collection of delinquent CMPs.

VI. Administrative Law Matters

A. Administrative Procedure Act

The FDIC is issuing this final rule without prior notice and the opportunity for public comment ordinarily prescribed by the Administrative Procedure Act (APA). Pursuant to section 553(b)(A) of the APA, general notice and the opportunity for public comment are not required with respect to a rule of “agency organization, procedure, or practice.”

As discussed above, this final rule amends the FDIC regulations to provide for the collection of CMP debt. It will do so by adopting existing Treasury regulations concerning debt-collection procedures as to the collection of CMP debt. These amendments relate solely to agency procedure and practice. For this reason, the FDIC finds that general notice and opportunity for public comment are not required under the APA.

B. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) requires an agency to consider whether the rules it proposes will have a significant economic impact on a substantial number of small entities. The RFA applies only to rules for which an agency publishes a general notice of proposed rulemaking pursuant to 5 U.S.C. 553(b). As discussed previously, consistent with section 553(b)(A) of the APA, the FDIC has determined that general notice and opportunity for public comment is not required as the final rule is a rule of agency procedure and practice. Accordingly, the FDIC has concluded that the RFA's requirements relating to initial and final regulatory flexibility analysis do not apply.

C. Paperwork Reduction Act

In accordance with the requirements of the Paperwork Reduction Act of 1995 (PRA), the FDIC may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a currently-valid Office of Management and Budget (OMB) control number. The final rule does not create new or modify existing information collection requirements. Accordingly, no submission to OMB will be made with respect to the final rule.

D. Riegle Community Development and Regulatory Improvement Act of 1994

Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act (RCDRIA), in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions (IDIs), each Federal banking agency must consider, consistent with principles of safety and soundness and the public interest, any administrative burdens that such regulations would place on depository institutions, including small depository institutions, and customers of depository institutions, as well as the benefits of such regulations. In addition, section 302(b) of RCDRIA requires new regulations and amendments to regulations that impose additional reporting, disclosures, or other new requirements on IDIs generally to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form. Because the final rule does not impose any reporting, disclosure, or other new requirements on insured depository institutions, the requirements of RCDRIA do not apply.

E. Congressional Review Act

For purposes of the Congressional Review Act (CRA), OMB makes a determination as to whether a final rule constitutes a “major” rule. If a rule is deemed a “major rule” by the OMB, the CRA generally provides that the rule may not take effect until at least 60 days following its publication.

The CRA defines a “major rule” as any rule that the Administrator of the Office of Information and Regulatory Affairs of the OMB finds has resulted in or is likely to result in (1) an annual effect on the economy of $100,000,000 or more; (2) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies or geographic regions, or (3) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets.

The OMB has determined that this final rule is not a major rule for purposes of the CRA. As required by the CRA, the FDIC will submit the final rule and other appropriate reports to Congress and the Government Accountability Office for review.

F. Plain Language

Section 722 of the Gramm-Leach-Bliley Act requires each Federal banking agency to use plain language in all of its proposed and final rules published after January 1, 2000. The FDIC has sought to present the final rule in a simple and straightforward manner.

List of Subjects in 12 CFR Part 313

• Administrative practice and procedure
• Authority delegations (Government agencies)
• Claims
• Government employees
• Wages

Authority and Issuance

For the reasons stated in the preamble and under the authority of 12 U.S.C. 1819 (Seventh and Tenth), the FDIC amends 12 CFR part 313 as follows:

PART 313—PROCEDURES FOR COLLECTION OF CORPORATE DEBT, CRIMINAL RESTITUTION DEBT, AND CIVIL MONEY PENALTY DEBT

1. Revise the authority citation for part 313 to read as follows:

Authority: 5 U.S.C. 5514; 12 U.S.C. 1818(i), 1819(a); Pub. L. 104-134, 110 Stat. 1321 (31 U.S.C. 3701, 3711, 3716).

2. Revise the heading for part 313 to read as set forth above.

3. Revise subpart A to read as follows:

Subpart A—Scope, Purpose, Definitions, and Delegations of Authority

4. Add subpart H to read as follows:

Subpart H—Civil Money Penalty Debt