[Federal Register Volume 81, Number 102 (Thursday, May 26, 2016)]
[Rules and Regulations]
[Pages 33389-33391]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[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.

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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:

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                                                                                                   New adjusted
          United States Code                Civil monetary penalty       Maximum penalty amount       maximum
                                                  description                as of 10/23/96       penalty amount
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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.
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\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