81 FR 33389 - Civil Monetary Penalty Inflation Adjustment

DEPARTMENT OF DEFENSE
Office of the Secretary

Federal Register Volume 81, Issue 102 (May 26, 2016)

Page Range		33389-33391
FR Document		2016-12365

On November 2, 2015, the President signed into law the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 2015 Act), which further amended the Federal Civil Penalties Inflation Adjustment Act of 1990. The 2015 Act updates the process by which agencies adjust applicable civil monetary penalties for inflation to retain the deterrent effect of those penalties. The 2015 Act requires that not later than July 1, 2016, and not later than January 15 of every year thereafter, the head of each agency must, by regulation published in the Federal Register, adjust each CMP within its jurisdiction by the inflation adjustment described in the 2015 Act. Accordingly, the Department of Defense must adjust the level of all civil monetary penalties under its jurisdiction through an interim final rule and make subsequent annual adjustments for inflation.

Federal Register, Volume 81 Issue 102 (Thursday, May 26, 2016)

[Federal Register Volume 81, Number 102 (Thursday, May 26, 2016)]
[Rules and Regulations]
[Pages 33389-33391]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2016-12365]

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DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 269

[Docket ID: DOD-2016-OS-0045]
RIN 0790-AJ42

Civil Monetary Penalty Inflation Adjustment

AGENCY: Under Secretary of Defense (Comptroller), Department of
Defense.

ACTION: Interim final rule.

-----------------------------------------------------------------------

SUMMARY: On November 2, 2015, the President signed into law the Federal
Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the
2015 Act), which further amended the Federal Civil Penalties Inflation
Adjustment Act of 1990. The 2015 Act updates the process by which
agencies adjust applicable civil monetary penalties for inflation to
retain the deterrent effect of those penalties. The 2015 Act requires
that not later than July 1, 2016, and not later than January 15 of
every year thereafter, the head of each agency must, by regulation
published in the Federal Register, adjust each CMP within its
jurisdiction by the inflation adjustment described in the 2015 Act.
Accordingly, the Department of Defense must adjust the level of all
civil monetary penalties under its jurisdiction through an interim
final rule and make subsequent annual adjustments for inflation.

DATES: This rule is effective May 26, 2016. Comments must be received
by July 25, 2016.

ADDRESSES: You may submit comments, identified by docket number and
title, by any of the following methods:
* Federal Rulemaking Portal: http://www.regulations.gov. Follow the
instructions for submitting comments.
* Mail: Department of Defense, Office of the Deputy Chief
Management Officer, Directorate for Oversight and Compliance, 4800 Mark
Center Drive, Attn: Mailbox 24, Alexandria, VA 22350-1700.
Instructions: All submissions received must include the agency name
and docket number for this Federal Register document. The general
policy for comments and other submissions from members of the public is
to make these submissions available for public viewing on the Internet
at http://www.regulations.gov as they are received without change,
including any personal identifiers or contact information.

FOR FURTHER INFORMATION CONTACT: Brian Banal, 703-571-1652.

SUPPLEMENTARY INFORMATION:
The Federal Civil Penalties Inflation Adjustment Act Improvements
Act of 2015 requires agencies to adjust the level of civil monetary
penalties through an interim final rule in the Federal Register.

Background Information

The Federal Civil Penalties Inflation Adjustment Act of 1990,
Public Law 101-410, 104 Stat. 890, 28 U.S.C. 2461 note, as amended by
the Debt Collection Improvement Act of 1996, Public Law 104-134, April
26, 1996, and further amended by the Federal Civil Penalties Inflation
Adjustment Act Improvements Act of 2015 (the 2015 Act), Public Law 114-
74, November 2, 2015 requires agencies to annually adjust the level of
Civil Monetary Penalties (CMP) for inflation to improve their
effectiveness and maintain their deterrent effect. The 2015 Act
requires that not later than July 1, 2016, and not later than January
15 of every year thereafter, the head of each agency must adjust each
CMP within its jurisdiction by the inflation adjustment described in
the 2015 Act. The inflation adjustment must be determined by increasing
the maximum CMP or the range of minimum and maximum CMPs, as
applicable, for each CMP by the cost-of-living adjustment, rounded to
the nearest multiple of $1. The cost-of-living adjustment is the
percentage (if any) for each CMP by which the Consumer Price Index
(CPI) for the month of October preceding the

[[Page 33390]]

date of the adjustment (January 15), exceeds the CPI for the month of
October in the previous calendar year. The initial adjustment to a CMP
may not exceed 150 percent of the corresponding level in effect on
November 2, 2015.
Any increased penalties will only apply to violations which occur
after the date on which the increase takes effect.
Each CMP subject to the jurisdiction of the Department of Defense
has been adjusted in accordance with the 2015 Act. In compliance with
the 2015 Act, the Department of Defense is amending its CMP penalty
amounts.

Executive Summary

On November 2, 2015, the President signed into law the Federal
Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the
2015 Act), which further amended the Federal Civil Penalties Inflation
Adjustment Act of 1990 (the Inflation Adjustment Act). The 2015 Act
updates the process by which agencies adjust applicable civil monetary
penalties for inflation to retain the deterrent effect of those
penalties. Agencies are required to make an initial ``catch-up''
adjustment for civil monetary penalties with the new levels published
in the Federal Register by July 1, 2016, to take effect no later than
August 1, 2016. Thereafter, agencies are required to make annual
inflationary adjustments, starting January 15, 2017, and each year
following, based on Office of Management and Budget (OMB) guidance.
Finally, each year in accordance with OMB Circular A-136, agencies will
report in the Agency Financial Reports the status of adjustments to
civil monetary penalties.

I. Purpose of the Regulatory Action

The Federal Civil Penalties Inflation Adjustment Act Improvements
Act of 2015, Public Law 114-74, requires the Department of Defense to
adjust applicable civil monetary penalties for inflation to improve the
effectiveness and retain the deterrent effect of such penalties. The
implementation of this rule will deter violations of law, encourage
corrective action(s) of existing violations, and prevent waste, fraud,
and abuse within the Department of Defense.

Description of Authority Citation

28 U.S.C. 2461 note, mandates that not later than July 1, 2016, and
not later than January 15 of every year thereafter, the head of each
agency (in this case the Secretary of Defense) must adjust for
inflation each civil monetary penalty provided by law within the
jurisdiction of the Federal agency (in this case the Department of
Defense), except for any penalty (including any addition to tax and
additional amount) under the Internal Revenue Code of 1986 [26 U.S.C. 1
et seq.] or the Tariff Act of 1930 [19 U.S.C. 1202 et seq.], through an
interim final rulemaking; and publish each such adjustment in the
Federal Register.

II. Summary of the Major Provisions of the Regulatory Action in
Question

Previously, the Debt Collection Improvement Act of 1996 required
agencies to adjust civil monetary penalty levels every four years. The
Federal Civil Penalties Inflation Adjustment Act Improvements Act of
2015 (the 2015 Act) Act updates this requirement with annual
adjustments for inflation based on Office of Management and Budget
(OMB) guidance.
In accordance with the 2015 Act, OMB will provide adjustment rate
guidance no later than December 15, 2016, and no later than December 15
for each following year, to adjust for inflation in the Consumer Price
Index for all Urban Consumers as of the most recent October. Agencies
are required to publish annual inflation adjustments in the Federal
Register no later than January 15, starting in 2017, and each
subsequent year.
Agency heads are responsible for implementing this guidance and for
submitting information to OMB annually on applicable civil monetary
penalties through Agency Financial Reports in accordance with OMB
Circular A-136.

III. Costs and Benefits

There are no significant costs associated with the regulatory
revisions that would impose any mandates on the Department of Defense,
Federal, State or local governments, or the private sector. The
Department of Defense anticipates that civil monetary penalty
collections may increase in the future due to new penalty authorities
and other changes in this rule. However, it is difficult to accurately
predict the extent of any increase, if any, due to a variety of
factors, such as budget and staff resources, the number and quality of
civil penalty referrals or leads, and the length of time needed to
investigate and resolve a case.

Regulatory Procedures

Executive Order 12866, ``Regulatory Planning and Review'' and Executive
Order 13563, ``Improving Regulation and Regulatory Review''
Executive Orders 13563 and 12866 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distribute impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule has not been designated a ``significant
regulatory action,'' because it does not: (1) Have an annual effect on
the economy of $100 million or more or adversely affect in a material
way the economy; a section of the economy; productivity; competition;
jobs; the environment; public health or safety; or State, local, or
tribal governments or communities; (2) create a serious inconsistency
or otherwise interfere with an action taken or planned by another
Agency; (3) materially alter the budgetary impact of entitlements,
grants, user fees, or loan programs, or the rights and obligations of
recipients thereof; or (4) raise novel legal or policy issues arising
out of legal mandates, the President's priorities, or the principles
set forth in these Executive Orders.
Unfunded Mandates Reform Act (2 U.S.C. Chapter 25)
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) (2
U.S.C. 1532) requires agencies to assess anticipated costs and benefits
before issuing any rule the mandates of which require spending in any
year of $100 million in 1995 dollars, updated annually for inflation.
In 2014, that threshold is approximately $141 million. This rule will
not mandate any requirements for State, local, or tribal governments,
nor will it affect private sector costs.
Public Law 96-354, ``Regulatory Flexibility Act'' (5 U.S.C. Chapter 6)
The Department of Defense certifies that this rule is not subject
to the Regulatory Flexibility Act because it would not, if promulgated,
have a significant economic impact on a substantial number of small
entities. Therefore, the Regulatory Flexibility Act, as amended, does
not require a regulatory flexibility analysis.
Public Law 96-511, ``Paperwork Reduction Act'' (44 U.S.C. Chapter 35)
The Department of Defense certifies that this rule does not trigger
any reporting or recordkeeping requirements under the Paperwork
Reduction Act of 1995.

[[Page 33391]]

Executive Order 13132, ``Federalism''
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. This interim final rule will not have a substantial
effect on State and local governments.

List of Subjects in 32 CFR Part 269

Administrative practice and procedure, Penalties.

Accordingly, 32 CFR part 269 is amended as follows:

PART 269--[AMENDED]

0
1. The authority citation for 32 CFR part 269 is revised to read as
follows:

Authority: 28 U.S.C. 2461 note.

0
2. Revise Sec. 269.1 to read as follows:

Sec. 269.1 Scope and purpose.

The purpose of this part is to establish a mechanism for the
regular adjustment for inflation of civil monetary penalties under the
jurisdiction of the Department of Defense. Applicable civil monetary
penalties must be adjusted in conformity with the Federal Civil
Penalties Inflation Adjustment Act of 1990, 28 U.S.C. 2461 note, as
amended by the Debt Collection Improvement Act of 1996, Public Law 104-
134, April 26, 1996, and further amended by the Federal Civil Penalties
Inflation Adjustment Act Improvements Act of 2015, Public Law 114-74,
November 2, 2015, in order to improve the deterrent effect of civil
monetary penalties and to promote compliance with the law.

Sec. 269.2 [Amended]

0
3. Amend Sec. 269.2 by adding ``and'' after the semicolon in paragraph
(b)(1)(ii).

0
4. Amend Sec. 269.3 by:
0
a. Revising the introductory text.
0
b. In paragraph (a):
0
i. Removing ``By regulation adjustment'' and adding in its place ``By
regulation, adjust.''
0
ii. Removing ``the Department of Defense'' and adding in its place
``the Department.''
The revision reads as follows:

Sec. 269.3 Civil monetary penalty inflation adjustment.

The Department must, not later than July 1, 2016 and not later than
January 15 of every year thereafter--
* * * * *

0
5. Revise Sec. 269.4 to read as follows:

Sec. 269.4 Cost of living adjustments of civil monetary penalties.

(a) The inflation adjustment under Sec. 269.3 must be determined
by increasing the maximum civil monetary penalty or the range of
minimum and maximum civil monetary penalties, as applicable, for each
civil monetary penalty by the cost-of-living adjustment. Any increase
determined under this subsection shall be rounded to the nearest
multiple of $1.
(b) For purposes of paragraph (a) of this section, the term ``cost-
of-living adjustment'' means the percentage (if any) for each civil
monetary penalty by which the Consumer Price Index for the month of
October preceding the date of the adjustment (January 15), exceeds the
Consumer Price Index for the month of October in the previous calendar
year. For example, if the Consumer Price Index for October 2016 is 1.0
and the Consumer Price Index for October 2015 was 0.75, then all
applicable penalties will need to be positively adjusted by 0.25 by
January 15, 2017.
(c) Limitation on initial adjustment. The initial adjustment of
civil monetary penalty pursuant to Sec. 269.3 may not exceed 150
percent of such penalty.
(d) Inflation adjustment. Maximum civil monetary penalties within
the jurisdiction of the Department are adjusted for inflation as
follows:

----------------------------------------------------------------------------------------------------------------
New adjusted
United States Code Civil monetary penalty Maximum penalty amount maximum
description as of 10/23/96 penalty amount
----------------------------------------------------------------------------------------------------------------
National Defense Authorization Act for Unauthorized Activities Not Applicable\1\....... $124,588
FY 2005, 10 U.S.C 113, note. Directed at or Possession of
Sunken Military Craft.
10 U.S.C. 1094(c)(1).................. Unlawful Provision of Health $5,500.................. 10,940
Care.
10 U.S.C. 1102(k)..................... Wrongful Disclosure--Medical
Records:
First Offense................. 3,300................... 6,469
Subsequent Offense............ 22,000.................. 43,126
10 U.S.C. 2674(c)(2).................. Violation of the Pentagon Not Applicable \1\...... 1,782
Reservation Operation and
Parking of Motor Vehicles
Rules and Regulations.
31 U.S.C. 3802(a)(1).................. Violation Involving False 5,500................... 10,781
Claim.
31 U.S.C. 3802(a)(2).................. Violation Involving False 5,500................... 10,781
Statement.
----------------------------------------------------------------------------------------------------------------
\1\ Penalties were not identified in the 1996 publication of this chart and/or were not established by statute
or regulation in 1996.

Sec. 269.5 [Amended]

0
6. Amend Sec. 269.5 by removing ``shall apply only to violations which
occur after the date the increase takes effect'' and adding in its
place ``must apply only to civil monetary penalties, including those
whose associated violation predated such increase, which are assessed
after the date the increase takes effect (i.e., July 1, 2016).''

Dated: May 20, 2016.
Aaron Siegel,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2016-12365 Filed 5-25-16; 8:45 am]
BILLING CODE 5001-06-P

Federal Register / Vol. 81, No. 102 / Thursday, May 26, 2016 / Rules and Regulations 33389

bottom of page 1. If paper filing is §§ 458.66 through 458.92, and in the DATES: This rule is effective May 26,
permitted, trustees should sign and date interim the affairs of the organization 2016. Comments must be received by
the Form LM–2 in the space below the shall be conducted by the officers July 25, 2016.
officers’ signatures in Items 70 and 71. elected or in such other manner as its ADDRESSES: You may submit comments,
5. Amend instructions for Form LM– constitution and bylaws may provide. identified by docket number and title,
2 Labor Organization Annual Report, (c) When the Chief, DOE supervises by any of the following methods:
Item 36 (Dues and Agency Fees) to an election pursuant to an order of the * Federal Rulemaking Portal: http://
remove the term ‘‘either’’ in the third Administrative Review Board issued www.regulations.gov. Follow the
sentence of the second paragraph and under § 458.70 or § 458.91, he shall instructions for submitting comments.
adding ‘‘the reporting’’ in its place. The certify to the Administrative Review * Mail: Department of Defense, Office
sentence would read as follows: Board the names of the persons elected. of the Deputy Chief Management
For example, if the intermediate body or The Administrative Review Board shall Officer, Directorate for Oversight and
parent body retained $500 of the reporting thereupon issue an order declaring such Compliance, 4800 Mark Center Drive,
organization’s dues checkoff as payment for persons to be the officers of the labor Attn: Mailbox 24, Alexandria, VA
supplies purchased from that body by the organization. 22350–1700.
reporting organization, this should be Instructions: All submissions received
explained in Item 69, but the $500 should not § 458.70 [Amended] must include the agency name and
be reported as a receipt or disbursement on ■ 5. In § 458.70, amend the last sentence docket number for this Federal Register
the reporting organization’s Form LM–2. document. The general policy for
by removing the term ‘‘he’’ and adding
List of Subjects in its place ‘‘it’’. comments and other submissions from
Signed in Washington, DC, this 9th day of members of the public is to make these
29 CFR Part 403 submissions available for public
May, 2016.
Labor unions, Reporting and Michael J. Hayes, viewing on the Internet at http://
recordkeeping requirements. Director, Office of Labor-Management
www.regulations.gov as they are
Standards. received without change, including any
29 CFR Part 458 personal identifiers or contact
[FR Doc. 2016–11611 Filed 5–25–16; 8:45 am]
Administrative practice and information.
BILLING CODE 4510–CP–P
procedure, Government employees, FOR FURTHER INFORMATION CONTACT:
Labor unions, Reporting and Brian Banal, 703–571–1652.
recordkeeping requirements.
DEPARTMENT OF DEFENSE SUPPLEMENTARY INFORMATION:
For reasons stated in the preamble, 29 The Federal Civil Penalties Inflation
CFR parts 403 and 458 are corrected by Office of the Secretary Adjustment Act Improvements Act of
the following amendments: 2015 requires agencies to adjust the
32 CFR Part 269 level of civil monetary penalties through
PART 403—LABOR ORGANIZATION
[Docket ID: DOD–2016–OS–0045] an interim final rule in the Federal
ANNUAL FINANCIAL REPORTS
Register.
RIN 0790–AJ42
■ 1. The authority citation for part 403 Background Information
continues to read as follows: Civil Monetary Penalty Inflation The Federal Civil Penalties Inflation
Authority: Secs. 201, 207, 208, 301, 73 Adjustment Adjustment Act of 1990, Public Law
Stat. 524, 529, 530 (29 U.S.C. 431, 437, 438, 101–410, 104 Stat. 890, 28 U.S.C. 2461
461); Secretary’s Order No. 03–2012, 77 FR AGENCY: Under Secretary of Defense
(Comptroller), Department of Defense. note, as amended by the Debt Collection
69376, November 16, 2012.
ACTION: Interim final rule. Improvement Act of 1996, Public Law
§ 403.4 [Amended] 104–134, April 26, 1996, and further
SUMMARY: On November 2, 2015, the amended by the Federal Civil Penalties
■ 2. In § 403.4, in paragraph (a)(1),
President signed into law the Federal Inflation Adjustment Act Improvements
remove the term ‘‘$200,000’’ and add in
Civil Penalties Inflation Adjustment Act Act of 2015 (the 2015 Act), Public Law
its place ‘‘$250,000’’.
Improvements Act of 2015 (the 2015 114–74, November 2, 2015 requires
PART 458—STANDARDS OF Act), which further amended the agencies to annually adjust the level of
CONDUCT Federal Civil Penalties Inflation Civil Monetary Penalties (CMP) for
Adjustment Act of 1990. The 2015 Act inflation to improve their effectiveness
■ 3. The authority citation for part 458 updates the process by which agencies and maintain their deterrent effect. The
continues to read as follows: adjust applicable civil monetary 2015 Act requires that not later than
penalties for inflation to retain the July 1, 2016, and not later than January
Authority: 5 U.S.C. 7105, 7111, 7120, deterrent effect of those penalties. The 15 of every year thereafter, the head of
7134; 22 U.S.C. 4107, 4111, 4117; 2 U.S.C.
1351(a)(1); Secretary’s Order No. 03–2012, 77
2015 Act requires that not later than each agency must adjust each CMP
FR 69376, November 16, 2012; Secretary’s July 1, 2016, and not later than January within its jurisdiction by the inflation
Order No. 02–2012, 77 FR 69378, November 15 of every year thereafter, the head of adjustment described in the 2015 Act.
16, 2012. each agency must, by regulation The inflation adjustment must be
■ 4. In § 458.65, revise paragraphs (b) published in the Federal Register, determined by increasing the maximum
and (c) to read as follows: adjust each CMP within its jurisdiction CMP or the range of minimum and
sradovich on DSK3TPTVN1PROD with RULES

by the inflation adjustment described in maximum CMPs, as applicable, for each
§ 458.65 Procedures following actionable the 2015 Act. Accordingly, the CMP by the cost-of-living adjustment,
complaint. Department of Defense must adjust the rounded to the nearest multiple of $1.
* * * * * level of all civil monetary penalties The cost-of-living adjustment is the
(b) The challenged election shall be under its jurisdiction through an interim percentage (if any) for each CMP by
presumed valid pending a final decision final rule and make subsequent annual which the Consumer Price Index (CPI)
thereon as hereinafter provided in adjustments for inflation. for the month of October preceding the

VerDate Sep<11>2014 17:45 May 25, 2016 Jkt 238001 PO 00000 Frm 00031 Fmt 4700 Sfmt 4700 E:\FR\FM\26MYR1.SGM 26MYR1

Document Created: 2016-05-26 01:14:09
Document Modified: 2016-05-26 01:14:09

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Rules and Regulations
Action		Interim final rule.
Dates		This rule is effective May 26, 2016. Comments must be received by July 25, 2016.
Contact		Brian Banal, 703-571-1652.
FR Citation		81 FR 33389
RIN Number		0790-AJ42
CFR Associated		Administrative Practice and Procedure and Penalties

81 FR 33389 - Civil Monetary Penalty Inflation Adjustment

DEPARTMENT OF DEFENSEOffice of the Secretary

Federal Register Volume 81, Issue 102 (May 26, 2016)

DEPARTMENT OF DEFENSE
Office of the Secretary