[Federal Register Volume 61, Number 196 (Tuesday, October 8, 1996)]
[Rules and Regulations]
[Pages 52704-52706]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-25561]


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FEDERAL MARITIME COMMISSION

46 CFR Part 506

[Docket No. 96-17]


Inflation Adjustment of Civil Monetary Penalties

AGENCY: Federal Maritime Commission.

ACTION: Final rule.

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SUMMARY: This final rule implements the Federal Civil Penalties 
Inflation Adjustment Act of 1990 as amended by the Debt Collection 
Improvement Act of 1996. The rule adjusts the amount of each statutory 
civil penalty subject to Federal Maritime Commission jurisdiction in 
accordance with the requirements of the Act.

EFFECTIVE DATE: November 7, 1996.

FOR FURTHER INFORMATION CONTACT: Vern W. Hill, Director, Bureau of 
Enforcement, Federal Maritime Commission, 800 North Capitol Street, 
NW., Washington, DC 20573, (202) 523-5783.

SUPPLEMENTARY INFORMATION: The Federal Civil Penalties Inflation 
Adjustment Act of 1990 (``1990 Act''), Public Law 101-410, 104 Stat. 
890, 28 U.S.C. 2461 note, as amended by the Debt Collection Improvement 
Act of 1996 (``Act''), Public Law 104-134, April 26, 1996, requires the 
inflation adjustment of Civil Monetary Penalties (``CMP'') to ensure 
that they continue to maintain their deterrent value. The Act requires 
that not later than 180 days after its enactment, October 23, 1996, and 
at least once every 4 years thereafter, the head of each agency shall, 
by regulation published in the Federal Register, adjust each CMP within 
its jurisdiction by the inflation adjustment described in the 1990 Act. 
The inflation adjustment under the Act is to be determined by 
increasing the maximum CMP by the cost-of-living adjustment, rounded 
off as set forth in section 5(a) of the 1990 Act. The cost-of-living 
adjustment is the percentage (if any) for each CMP by which the 
Consumer Price Index (``CPI'') \1\ for the month of June of the 
calendar year preceding the adjustment, exceeds the CPI for the

[[Page 52705]]

month of June of the calendar year in which the amount of such CMP was 
last set or adjusted pursuant to law. The first adjustment to a CMP may 
not exceed 10 percent of such penalty.
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    \1\ CPI is defined as the CPI for all urban consumers published 
annually by the Department of Labor.
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    Any increased penalties shall apply only to violations which occur 
after the date on which the increase takes effect.
    A typical example of an inflation adjustment of a CMP is as 
follows:
    Section 13 of the Shipping Act of 1984 (``1984 Act''), 46 U.S.C. 
app. 1712, imposes a maximum $25,000 penalty for a knowing and willful 
violation of the 1984 Act. The penalty was set in 1984. The CPI for 
June, 1984 was 310.7. The CPI for June, 1996 is 469.5. The inflation 
factor, therefore, is 469.5/310.7 or 1.51. The maximum penalty amount 
after increase and statutory rounding would be $40,000. (1.51 x 25,000) 
The new maximum penalty amount after applying the 10% limit on an 
initial increase is $27,500.
    A similar calculation was done with respect to each CMP subject to 
the jurisdiction of the Federal Maritime Commission (``Commission''). 
In compliance with the Act, the Commission is hereby amending its 
regulations by creating a new part 506 in 46 CFR which will be entitled 
Civil Monetary Penalty Inflation Adjustment.
    Notice and an opportunity for public comment are not necessary 
prior to issuance of this final rule because it implements a definitive 
statutory formula mandated by the Act.
    The Commission certifies pursuant to the Regulatory Flexibility 
Act, 5 U.S.C. 605(b), that this rule will not have a significant 
economic impact on a substantial number of small entities, including 
small businesses, small organizational units, and small governmental 
jurisdictions because it merely increases the maximum statutory civil 
monetary penalty by 10 percent for those entities that commit 
violations after the effective date of this rule. The Commission rarely 
has imposed the statutory maximum civil monetary penalty and, moreover, 
considers ability of a respondent to pay a civil monetary penalty in 
determining its amount. The size of a company necessarily enters into a 
determination of its ability to pay.
    The rule does not contain any collection of information 
requirements as defined by the Paperwork Reduction Act of 1995, as 
amended. Therefore, Office of Management and Budget review is not 
required.

List of Subjects in 46 CFR Part 506

    Administrative practice and procedure, Penalties.
    Part 506 of title 46 of the Code of Federal Regulations is added to 
read as follows:

PART 506--CIVIL MONETARY PENALTY INFLATION ADJUSTMENT

Sec.
506.1  Scope and purpose.
506.2  Definitions.
506.3  Civil Monetary Penalty Inflation Adjustment.
506.4  Cost of Living Adjustments of Civil Monetary Penalties.
506.5  Application of Increase to Violations.

    Authority: 28 U.S.C. 2461.

Sec. 506.1  Scope and purpose.

    The purpose of this Part is to establish a mechanism for the 
regular adjustment for inflation of civil monetary penalties and to 
adjust such penalties in conformity with the Federal Civil Penalties 
Inflation Adjustment Act of 1990, 46 U.S.C. 2461, as amended by the 
Debt Collection Improvement Act of 1996, Public Law 104-134, April 26, 
1996, in order to maintain the deterrent effect of civil monetary 
penalties and to promote compliance with the law.


Sec. 506.2  Definitions.

    (a) Commission means the Federal Maritime Commission.
    (b) Civil Monetary Penalty means any penalty, fine, or other 
sanction that:
    (1)(i) Is for a specific monetary amount as provided by Federal 
law; or
    (ii) Has a maximum amount provided by Federal law;
    (2) Is assessed or enforced by the Commission pursuant to Federal 
law; and
    (3) Is assessed or enforced pursuant to an administrative 
proceeding or a civil action in the Federal Courts.
    (c) Consumer Price Index means the Consumer Price Index for all 
urban consumers published by the Department of Labor.


Sec. 506.3  Civil Monetary Penalty Inflation Adjustment.

    The Commission shall, not later than October 23, 1996, and at least 
once every 4 years thereafter--
    (a) By regulation adjust each civil monetary penalty provided by 
law within the jurisdiction of the Commission by the inflation 
adjustment described in Sec. 506.4; and
    (b) Publish each such regulation in the Federal Register.


Sec. 506.4  Cost of Living Adjustments of Civil Monetary Penalties.

    (a) The inflation adjustment under Sec. 506.3 shall be determined 
by increasing the maximum civil monetary penalty for each civil 
monetary penalty by the cost-of-living adjustment. Any increase 
determined under this subsection shall be rounded to the nearest:
    (1) Multiple of $10 in the case of penalties less than or equal to 
$100;
    (2) Multiple of $100 in the case of penalties greater than $100 but 
less than or equal to $1,000;
    (3) Multiple of $1,000 in the case of penalties greater than $1,000 
but less than or equal to $10,000;
    (4) Multiple of $5,000 in the case of penalties greater than 
$10,000 but less than or equal to $100,000;
    (5) Multiple of $10,000 in the case of penalties greater than 
$100,000 but less than or equal to $200,000; and
    (6) Multiple of $25,000 in the case of penalties greater than 
$200,000.
    (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 
June of the calendar year preceding the adjustment, exceeds the 
Consumer Price Index for the month of June of the calendar year in 
which the amount of such civil monetary penalty was last set or 
adjusted pursuant to law.
    (c) Limitation on initial adjustment. The first adjustment of civil 
monetary penalty pursuant to Sec. 506.3 may not exceed 10 percent of 
such penalty.
    (d) Inflation adjustment. Maximum Civil Monetary Penalties within 
the jurisdiction of the Federal Maritime Commission are adjusted for 
inflation as follows:

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                                                                                      Maximum      New adjusted 
          United States Code Citation                Civil Monetary Penalty       penalty amount      maximum   
                                                           description            as of 10/23/96  penalty amount
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46 U.S.C. app. sec. 817d......................  Failure to establish financial             5,000           5,500
                                                 responsibility for death or                 200             220
                                                 injury.                                                        
46 U.S.C. app. sec. 817e......................  Failure to establish financial             5,000           5,500
                                                 responsibility for                          200             220
                                                 nonperformance of                                              
                                                 transportation.                                                

[[Page 52706]]

                                                                                                                
46 U.S.C. app. sec. 876.......................  Failure to provide required                5,000           5,500
                                                 reports, etc.--Merchant Marine                                 
                                                 Act of 1920.                                                   
46 U.S.C. app. sec. 876.......................  Adverse shipping conditions/           1,000,000       1,100,000
                                                 Merchant Marine Act of 1920.                                   
46 U.S.C. app. sec. 876.......................  Operating after tariff                    50,000          55,000
                                                 suspension/Merchant Marine Act                                 
                                                 of 1920.                                                       
46 U.S.C. app. sec. 1707a.....................  Failure to pay ATFI Fee.........           5,000           5,500
46 U.S.C. app. sec. 1710a.....................  Adverse impact on U.S. carriers        1,000,000       1,100,000
                                                 by foreign shipping practices.                                 
46 U.S.C. app. sec. 1712......................  Operating in foreign commerce             50,000          55,000
                                                 after tariff suspension.                                       
46 U.S.C. app. sec. 1712......................  Knowing and willful violation/            25,000          27,500
                                                 Shipping Act of 1984 or                                        
                                                 Commission regulation or order.                                
46 U.S.C. app. sec. 1712......................  Violation of Shipping Act of               5,000           5,500
                                                 1984, Commission regulation or                                 
                                                 order, not knowing and willful.                                
46 U.S.C. app. sec. 1714......................  Failure to file anti-rebate                5,000           5,500
                                                 certification/Shipping Act of                                  
                                                 1984.                                                          
31 U.S.C. sec. 3802(a)(1).....................  Program Fraud Civil Remedies Act/          5,000           5,500
                                                 giving false statement.                                        
31 U.S.C. sec. 3802(a)(2).....................  Program Fraud Civil Remedies Act/          5,000           5,500
                                                 giving false statement.                                        
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Sec. 506.5  Application of Increase to Violations.

    Any increase in a civil monetary penalty under this part shall 
apply only to violations which occur after the date the increase takes 
effect.

    By the Commission.
Joseph C. Polking,
Secretary.
[FR Doc. 96-25561 Filed 10-7-96; 8:45 am]
BILLING CODE 6730-01-M