81 FR 62629 - Civil Monetary Penalty Inflation Adjustment

DEPARTMENT OF DEFENSE
Office of the Secretary

Federal Register Volume 81, Issue 176 (September 12, 2016)

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 (CMP) 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 a final rule and make subsequent annual adjustments for inflation.

[Federal Register Volume 81, Number 176 (Monday, September 12, 2016)]
[Rules and Regulations]
[Pages 62629-62631]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-21878]


=======================================================================
-----------------------------------------------------------------------

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: 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 (CMP) 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 a final rule 
and make subsequent annual adjustments for inflation.

DATES: This rule is effective September 12, 2016.

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

SUPPLEMENTARY INFORMATION: On Thursday, May 26, 2016 (81 FR 33389-
33391), the Department of Defense published an interim final rule 
titled ``Civil Monetary Penalty Inflation Adjustment'' for a 60-day 
public comment period. The public comment period ended on July 25, 
2016. No public comments were received.
    The Federal Civil Penalties Inflation Adjustment Act Improvements 
Act of 2015 requires agencies to adjust the level of civil monetary 
penalties through a 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 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

[[Page 62630]]

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

    Section 4(a) of the Federal Civil Penalties Inflation Adjustment 
Act of 1990, as amended, (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 a 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, requiring 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.

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 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.

[[Page 62631]]


0
Accordingly, the interim final rule published at 81 FR 33389-33391 on 
May 26, 2016 is adopted as a final rule without change.

    Dated: September 7, 2016.
Patricia L. Toppings,
OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2016-21878 Filed 9-9-16; 8:45 am]
 BILLING CODE 5001-06-P