81 FR 88600 - Terrorism Risk Insurance Program; Adjustment to Civil Penalty Amount Under the Terrorism Risk Insurance Act of 2002

DEPARTMENT OF THE TREASURY

Federal Register Volume 81, Issue 235 (December 7, 2016)

The Department of the Treasury (Treasury) is amending its regulations to adjust the civil penalty amount provided for under the Terrorism Risk Insurance Act of 2002 (TRIA). This action, including the amount of the adjustment, is required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.

[Federal Register Volume 81, Number 235 (Wednesday, December 7, 2016)]
[Rules and Regulations]
[Pages 88600-88601]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-29314]



[[Page 88599]]

Vol. 81

Wednesday,

No. 235

December 7, 2016

Part VIII





 Department of the Treasury





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 31 CFR Part 50





 Terrorism Risk Insurance Program; Adjustment to Civil Penalty Amount 
Under the Terrorism Risk Insurance Act of 2002; Interim Final Rule

Federal Register / Vol. 81 , No. 235 / Wednesday, December 7, 2016 / 
Rules and Regulations

[[Page 88600]]


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DEPARTMENT OF THE TREASURY

31 CFR Part 50


Terrorism Risk Insurance Program; Adjustment to Civil Penalty 
Amount Under the Terrorism Risk Insurance Act of 2002

AGENCY: Departmental Offices, Department of the Treasury.

ACTION: Interim final rule.

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SUMMARY: The Department of the Treasury (Treasury) is amending its 
regulations to adjust the civil penalty amount provided for under the 
Terrorism Risk Insurance Act of 2002 (TRIA). This action, including the 
amount of the adjustment, is required by the Federal Civil Penalties 
Inflation Adjustment Act Improvements Act of 2015.

DATES: Effective date: December 7, 2016. Comment date: Written comments 
may be submitted on or before January 6, 2017. Early submissions are 
encouraged.

ADDRESSES: Submit comments electronically through the Federal 
eRulemaking Portal: http://www.regulations.gov, or by mail (if hard 
copy, preferably an original and two copies) to the Federal Insurance 
Office, Attention: Richard Ifft, Room 1410 MT, Department of the 
Treasury, 1500 Pennsylvania Avenue NW., Washington, DC 20220. Because 
postal mail may be subject to processing delay, it is recommended that 
comments be submitted electronically. All comments should be captioned 
with ``Terrorism Risk Insurance Program Civil Penalty Adjustment 
Comments.'' Please include your name, group affiliation, address, email 
address and telephone number(s) in your comment. Where appropriate, a 
comment should include a short Executive Summary (no more than five 
single-spaced pages).
    In general, comments received will be posted on http://www.regulations.gov without change, including any business or personal 
information provided. Comments received, including attachments and 
other supporting materials, will be part of the public record and 
subject to public disclosure. Do not enclose any information in your 
comment or supporting materials that you consider confidential or 
inappropriate for public disclosure.

FOR FURTHER INFORMATION CONTACT: Richard Ifft, Senior Insurance 
Regulatory Policy Analyst, Federal Insurance Office, 202-622-2922 (not 
a toll free number) or Kevin Meehan, Senior Insurance Regulatory Policy 
Analyst, Federal Insurance Office, 202-622-7009 (not a toll free 
number).

SUPPLEMENTARY INFORMATION: 

I. Legal Background

    TRIA \1\ requires insurers to ``make available'' terrorism risk 
insurance for commercial property and casualty losses resulting from 
certified acts of terrorism (insured losses), and provides for shared 
public and private compensation for such insured losses through the 
Terrorism Risk Insurance Program (TRIP or Program). The Secretary of 
the Treasury (Secretary) administers the Program; pursuant to the Dodd-
Frank Wall Street Reform and Consumer Protection Act, the Federal 
Insurance Office assists the Secretary in administering the Program.
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    \1\ 15 U.S.C. 6701 note (Pub. L. 107-297, 116 Stat. 2322). 
Because the provisions of TRIA (as amended) appear in a note, 
instead of particular sections, in the United States Code, the 
provisions of TRIA are identified by the sections of the public law.
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    Section 104(e) of TRIA authorizes the Secretary to assess civil 
penalties for certain violations of statutory and regulatory provisions 
concerning the administration of the Terrorism Risk Insurance Program 
and the assertions of claims under the Program by participating 
insurers. The civil penalty amount under TRIA may not exceed the 
greater of $1,000,000 or the amount in dispute in the case of any 
failure to pay, charge, collect, or remit amounts in accordance with 
requirements of TRIA or its implementing regulations. Treasury recently 
proposed implementing regulations for this provision for the first time 
(TRIP Rule).\2\ Treasury has never assessed civil penalties under this 
statute.
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    \2\ Notice of Proposed Rulemaking, 81 FR 18950, 18972 (proposed 
50 CFR 50.82) (April 1, 2016).
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    The Federal Civil Penalties Inflation Adjustment Act Improvements 
Act of 2015 \3\ (Improvements Act) amended the inflation adjustment 
calculation previously required by the Federal Civil Penalties 
Inflation Adjustment Act of 1990, as amended (FCPIA Act).\4\ The 
Improvements Act requires that penalty amounts initially be adjusted 
for inflation pursuant to a catch-up ``cost-of-living adjustment'' 
through an interim final rulemaking. The Improvements Act also requires 
subsequent annual adjustments no later than January 15 of each year 
after 2016.
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    \3\ Public Law 114-74.
    \4\ 28 U.S.C. 2461 note.
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    Section 5(b) of the Improvements Act defines the initial cost-of-
living adjustment as ``the percentage (if any) for each civil monetary 
penalty by which the Consumer Price Index for the month of October 2015 
exceeds the Consumer Price Index for the month of October of the 
calendar year during which the amount of such civil monetary penalty 
was established or adjusted pursuant to law.'' Section 5(a) requires 
that any increase be rounded to the nearest multiple of $1.

II. Proposed Rulemaking

    In the TRIP Rule, Treasury proposed, among other provisions, 
adjusting the civil penalties amount based on the formula required by 
the FCPIA Act before its amendment by the Improvements Act. Adoption of 
the amount proposed in the TRIP Rule would not comply with the 
requirements of the Improvement Act. Therefore, when Treasury issues 
the final TRIP Rule provisions respecting the assessment of civil 
penalties, the civil penalty amount authorized under Section 104(e) of 
TRIA will remain the amount reflected in this adjustment.
    Because the Improvements Act requires that civil penalty amounts be 
adjusted by an interim final rulemaking issued no later than July 1, 
2016, Treasury is issuing this interim final rule to adjust the 
existing civil penalty amount under TRIA from $1,000,000 to $1,311,850. 
This adjustment will take effect upon publication of this interim final 
rule.
    This interim final rule also provides for the annual readjustment 
of the civil penalty amount under TRIA as required by the Improvements 
Act. Although currently numbered as 31 CFR 50.86, we anticipate that 
the provisions contained in this interim final rule will be renumbered 
as 31 CFR 50.83 and included in any TRIP final rules as ultimately 
issued, pursuant to Treasury's April 1, 2016 Notice of Proposed 
Rulemaking.

III. Calculation of Inflation Adjustment

    Under the Improvements Act, Treasury is required to adjust the 
level of the TRIA civil monetary penalty with an initial ``catch up'' 
adjustment through this interim final rulemaking. The calculation is 
based upon the percentage by which the Consumer Price Index (CPI-U) for 
October 2002 (the year the TRIA civil penalty was established) exceeds 
the October 2015 CPI-U. That calculation results in a multiplier of 
1.31185, meaning that the CPI-U from 2015 exceeds the CPI-U from 2002 
by 31.185%. Based on the original $1,000,000 civil penalty amount, 
Treasury is adjusting the current civil penalty amount (with an 
increase rounded to the nearest dollar, as required by the Improvements 
Act) to $1,311,850.

[[Page 88601]]

IV. Request for Comments

    Treasury invites comments on this notice. Commenters are 
specifically encouraged to identify any technical issues raised by the 
rule.

Procedural Requirements

    Under the Improvements Act, civil penalties are to be adjusted by 
interim final rule. Because Treasury must adjust the civil penalties 
provision of TRIA according to a statutory formula and because the law 
mandates use of an interim final rule to make the adjustment, Treasury 
finds that good cause exists to forego publishing a notice of proposed 
rulemaking and providing opportunity for public comment under the 
Administrative Procedure Act. 5 U.S.C. 553(b)(3)(B). Because the 
statute provides for these adjustments to go into effect by August 1, 
2016, Treasury finds that good cause exists for this interim final rule 
to go into effect upon publication. 5 U.S.C. 553(d)(3). Because these 
adjustments are mandated by statute and do not involve the exercise of 
Treasury's discretion or any policy judgments, public notice and 
comment before adopting these amendments as final is unnecessary. 
Because no general notice of proposed rulemaking is required, the 
requirements of the Regulatory Flexibility Act \5\ do not apply. 
Finally, this rule does not contain any collection of information 
requirements as defined by the Paperwork Reduction Act of 1995 as 
amended.\6\
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    \5\ 5 U.S.C. 601 et seq.
    \6\ 44 U.S.C. 3501 et seq.
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List of Subjects in 31 CFR Part 50

    Insurance, Terrorism.

    For the reasons stated in the preamble, the Department of the 
Treasury amends 31 CFR part 50 as follows:

PART 50--TERRORISM RISK INSURANCE PROGRAM

0
1. The authority citation for part 50 is revised to read as follows:

    Authority: 5 U.S.C. 301; 31 U.S.C. 321; Title I, Pub. L. 107-
297, 116 Stat. 2322, as amended by Public Law 109-144, 119 Stat. 
2660, Pub. L. 110-160, 121 Stat. 1839 and Pub. L. 114-1, 129 Stat. 3 
(15 U.S.C. 6701 note); Pub. L. 114-74, 129 Stat. 601, Title VII (28 
U.S.C. 2461 note).

Subpart I--Federal Cause of Action; Approval of Settlements

0
2. Section 50.86 is added to read as follows:


Sec.  50.86   Adjustment of civil monetary penalty amount.

    (a) Catch-up adjustment. Any penalty under the Act and these 
regulations may not exceed the greater of $1,311,850 and, in the case 
of any failure to pay, charge, collect, or remit amounts in accordance 
with the Act or these regulations such amount in dispute.
    (b) Annual adjustment. The maximum penalty amount that may be 
assessed under this section will be adjusted in accordance with the 
Federal Civil Penalties Inflation Adjustment Act Improvements Act of 
2015, 28 U.S.C. 2461 note, by January 15 of each year and the updated 
amount will be posted in the Federal Register and on the Treasury Web 
site at https://www.treasury.gov/resource-center/fin-mkts/Pages/program.aspx.

    Dated: December 1, 2016.
Amias Moore Gerety,
Acting Assistant Secretary for Financial Institutions.
[FR Doc. 2016-29314 Filed 12-6-16; 8:45 am]
BILLING CODE 4810-25-P