83 FR 1173 - Civil Monetary Penalty Inflation Adjustment

MERIT SYSTEMS PROTECTION BOARD

Federal Register Volume 83, Issue 7 (January 10, 2018)

This final rule adjusts the level of civil monetary penalties (CMPs) in regulations maintained and enforced by the Merit Systems Protection Board (MSPB) with an annual adjustment under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 2015 Act) and Office of Management and Budget (OMB) guidance.

[Federal Register Volume 83, Number 7 (Wednesday, January 10, 2018)]
[Rules and Regulations]
[Pages 1173-1174]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-00290]



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Rules and Regulations
                                                Federal Register
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This section of the FEDERAL REGISTER contains regulatory documents 
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under 50 titles pursuant to 44 U.S.C. 1510.

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Federal Register / Vol. 83, No. 7 / Wednesday, January 10, 2018 / 
Rules and Regulations

[[Page 1173]]



MERIT SYSTEMS PROTECTION BOARD

5 CFR Part 1201


Civil Monetary Penalty Inflation Adjustment

AGENCY: Merit Systems Protection Board.

ACTION: Final rule.

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SUMMARY: This final rule adjusts the level of civil monetary penalties 
(CMPs) in regulations maintained and enforced by the Merit Systems 
Protection Board (MSPB) with an annual adjustment under the Federal 
Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 
2015 Act) and Office of Management and Budget (OMB) guidance.

DATES: This final rule is effective on January 10, 2018.

FOR FURTHER INFORMATION CONTACT: Jennifer Everling, Acting Clerk of the 
Board, Merit Systems Protection Board, 1615 M Street NW, Washington, DC 
20419; Phone: (202) 653-7200; Fax: (202) 653-7130; or email: 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    The Federal Civil Penalties Inflation Adjustment Act of 1990 (the 
1990 Act), Public Law 101-410, provided for the regular evaluation of 
CMPs by Federal agencies. Periodic inflationary adjustments of CMPs 
ensure that the consequences of statutory violations adequately reflect 
the gravity of such offenses and that CMPs are properly accounted for 
and collected by the Federal Government. In April 1996, the 1990 Act 
was amended by the Debt Collection Improvement Act of 1996 (the 1996 
Act), Public Law 104-134, which required Federal agencies to adjust 
their CMPs at least once every four years. However, because 
inflationary adjustments to CMPs were statutorily capped at ten percent 
of the maximum penalty amount, but only required to be calculated every 
four years, CMPs in many cases did not correspond with the true measure 
of inflation over the preceding four-year period, leading to a decline 
in the real value of the penalty. To remedy this decline, the 2015 Act 
(section 701 of Pub. L. 114-74) requires agencies to adjust CMP amounts 
with annual inflationary adjustments through a rulemaking using a 
methodology mandated by the legislation. The purpose of these 
adjustments is to maintain the deterrent effect of civil penalties.
    A civil monetary penalty is ``any penalty, fine, or other 
sanction'' that: (1) ``is for a specific amount'' or ``has a maximum 
amount'' under Federal law; and (2) a Federal agency assesses or 
enforces ``pursuant to an administrative proceeding or a civil action 
in the Federal courts.''
    The MSPB is authorized to assess CMPs pursuant to 5 U.S.C. 
1215(a)(3) and 5 U.S.C. 7326 in disciplinary actions brought by the 
Special Counsel. The corresponding MSPB regulation for both CMPs is 5 
CFR 1201.126(a). As required by the 2015 Act, and pursuant to guidance 
issued by the OMB, the MSPB is now making an annual adjustment for 
2018, according to the prescribed formulas.

II. Calculation of Adjustment

    The CMP listed in 5 U.S.C. 1215(a)(3) was established in 1978 with 
the enactment of the Civil Service Reform Act of 1978 (CSRA), Public 
Law 95-454, section 202(a), 92 Stat. 1121-30 (Oct. 13, 1978), and 
originally codified at 5 U.S.C. 1207(b). That CMP was last amended by 
section 106 of the Whistleblower Protection Enhancement Act of 2012, 
Public Law 112-199, 12 Stat. 1468 (Nov. 27, 2012), now codified at 5 
U.S.C. 1215(a)(3), which provided for a CMP ``not to exceed $1,000''. 
The CMP authorized in 5 U.S.C. 7326 was established in 2012 by section 
4 of the Hatch Act Modernization Act of 2012 (Hatch Act), Public Law 
112-230, 126 Stat. 1617 (Dec. 28, 2012), which provided for a CMP ``not 
to exceed $1,000.'' On June 5, 2017, the MSPB issued a final rule which 
increased the maximum CMP allowed under both 5 U.S.C. 1215(a)(3) and 5 
U.S.C. 7326 to $1,045 for the year 2017. See 82 FR 25715 (June 5, 
2017). This increase reflected both a catch-up adjustment and an annual 
increase for the year 2017, as mandated by the 2015 Act. On December 
15, 2017, OMB issued guidance on calculating the annual inflationary 
adjustment for 2018. See Memorandum from Mick Mulvaney, Dir., OMB, to 
Heads of Executive Departments and Agencies re: Implementation of 
Penalty Inflation Adjustments for 2018, Pursuant to the Federal Civil 
Penalties Inflation Adjustment Act Improvements Act of 2015, M-18-03 
(Dec. 15, 2017). Therein, OMB notified agencies that the annual 
adjustment multiplier for 2018, based on the Consumer Price Index for 
All Urban Consumers (CPI-U), is 1.02041 and that the 2018 annual 
adjustment amount is obtained by multiplying the 2017 penalty amount by 
the 2018 annual adjustment multiplier, and rounding to the nearest 
dollar. Therefore, the new maximum penalty under the CSRA and the Hatch 
Act is $1,045 x 1.02041 = $1,066.32, which rounds to $1,066.

III. Effective Date of Penalties

    The revised CMP amounts will go into effect on January 10, 2018. 
All violations for which CMPs are assessed after the effective date of 
this rule will be assessed at the adjusted penalty level regardless of 
whether the violation occurred before the effective date.

IV. Procedural Requirements

A. Administrative Procedure Act

    Pursuant to 5 U.S.C. 553(b), the MSPB has determined that good 
cause exists for waiving the general notice of proposed rulemaking and 
public comment procedures as to these technical amendments. The notice 
and comment procedures are being waived because Congress has 
specifically exempted agencies from these requirements when 
implementing the 2015 Act. The 2015 Act explicitly requires the agency 
to make subsequent annual adjustments notwithstanding 5 U.S.C. 553, the 
section of the Administrative Procedure Act that normally requires 
agencies to engage in notice and comment. It is also in the public 
interest that the adjusted rates for CMPs under the CSRA and the Hatch 
Act become effective as soon as possible to maintain their effective 
deterrent effect.

[[Page 1174]]

B. Regulatory Impact Analysis: E.O. 12866

    The MSPB has determined that this is not a significant regulatory 
action under E.O. 12866. Therefore, no regulatory impact analysis is 
required.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) requires an agency to prepare 
a regulatory flexibility analysis for rules unless the agency certifies 
that the rule will not have a significant economic impact on a 
substantial number of small entities. The RFA applies only to rules for 
which an agency is required to first publish a proposed rule. See 5 
U.S.C. 603(a) and 604(a). As discussed above, the 2015 Act does not 
require agencies to first publish a proposed rule when adjusting CMPs 
within their jurisdiction. Thus, the RFA does not apply to this final 
rule.

D. Small Business Regulatory Enforcement Fairness Act of 1996

    This rule is not a major rule under the Small Business Regulatory 
Enforcement Fairness Act (5 U.S.C. 804(2)). This rule:
    (a) Does not have an annual effect on the economy of $100 million 
or more;
    (b) Will not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions; and
    (c) Does not have significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
United States-based enterprises to compete with foreign-based 
enterprises.

E. Unfunded Mandates Reform Act of 1995

    This rule does not involve 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 and that such 
rulemaking will not significantly or uniquely affect small governments. 
Therefore, no actions were deemed necessary under the provisions of the 
Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1532).

F. E.O. 12630, Government Actions and Interference With 
Constitutionally Protected Property Rights

    This rule does not have takings implications.

G. E.O. 13132, Federalism

    This rule does not have Federalism implications. The rule does not 
have substantial direct effects on the States, on the relationship 
between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government.

H. E.O. 12988, Civil Justice Reform

    The MSPB has reviewed this rule in light of E.O. 12988 to eliminate 
ambiguity, minimize litigation, establish clear legal standards, and 
reduce burden.

I. E.O. 13175, Consultation and Coordination With Indian Tribal 
Governments

    In accordance with E.O. 13175, the MSPB has evaluated this rule and 
determined that it has no tribal implications.

J. Paperwork Reduction Act

    This document does not contain information collection requirements 
subject to the Paperwork Reduction Act of 1995, Public Law 104-13 (44 
U.S.C. Chapter 35).

List of Subjects in 5 CFR Part 1201

    Administrative practice and procedure, Civil rights, Government 
employees.

    For the reasons set forth above, 5 CFR part 1201 is amended as 
follows:

PART 1201--PRACTICES AND PROCEDURES

0
1. The authority citation for part 1201 continues to read as follows:

    Authority: 5 U.S.C. 1204, 1305, and 7701, and 38 U.S.C. 4331, 
unless otherwise noted.


Sec.  1201.126  [Amended]

0
2. Section 1201.126 is amended in paragraph (a) by removing ``$1,045'' 
and adding in its place ``$1,066.''

Jennifer Everling,
Acting Clerk of the Board.
[FR Doc. 2018-00290 Filed 1-9-18; 8:45 am]
BILLING CODE 7400-01-P