[Federal Register Volume 81, Number 126 (Thursday, June 30, 2016)]
[Rules and Regulations]
[Pages 42552-42554]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-15569]


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

FEDERAL MARITIME COMMISSION

46 CFR Part 506

[Docket No. 16-13]
RIN 3072-AC63


Inflation Adjustment of Civil Monetary Penalties

AGENCY: Federal Maritime Commission.

ACTION: Interim final rule.

-----------------------------------------------------------------------

SUMMARY: This rule implements the Federal Civil Penalties Inflation 
Adjustment Act Improvements Act of 2015 (2015 Act) (Sec. 701 of Pub. L. 
11-74). The rule adjusts the maximum amount of each statutory civil 
penalty subject to Federal Maritime Commission (Commission) 
jurisdiction for inflation, in accordance with the requirements of that 
Act. The 2015 Act requires that agencies publish a catch-up adjustment 
in the penalties in an interim rule by July 1, 2016, and that agencies 
adjust penalties yearly thereafter.

DATES: This rule is effective on August 1, 2016.

FOR FURTHER INFORMATION CONTACT: Tyler Wood, General Counsel, Federal 
Maritime Commission, 800 North Capitol Street NW., Room 1018, 
Washington, DC 20573, (202) 523-5740.

SUPPLEMENTARY INFORMATION: This rule implements the 2015 Act, which 
became effective on November 2, 2015. The 2015 Act further amends the 
Federal Civil Penalties Inflation Adjustment Act of 1990 (FCPIAA), 
Public Law 101-410, 104 Stat. 890 (codified as amended at 28 U.S.C. 
2461 note), in order to improve the effectiveness of civil monetary 
penalties and to maintain their deterrent effect. The Debt Collection 
Improvement Act of 1996 (DCIA), Public Law 104-134, Title III, 
31001(s)(1), 110 Stat. 1321-373, originally amended the FCPIAA and 
required the head of each executive agency to adopt regulations that 
adjust the maximum civil monetary penalties (CMPs) assessable under its 
agency's jurisdiction at least every four years to ensure that they 
continued to maintain their deterrent value.\1\ In accordance with the 
DCIA, the Commission established Part 506 in 1996 and adjusted its 
penalties.\2\ The Commission further adjusted its civil penalty amounts 
in 2000, 2009, and 2014.\3\
---------------------------------------------------------------------------

    \1\ Increased CMPs are applicable only to violations occurring 
after the increase takes effect.
    \2\ 61 FR 52704 (Oct. 8, 1996).
    \3\ 65 FR 49741 (Aug. 15, 2000); 74 FR 38114 (July 28, 2009); 79 
FR 37662 (July 2, 2014).
---------------------------------------------------------------------------

    The 2015 Act requires that agencies publish a catch-up adjustment 
in the penalties in an interim rule by July 1, 2016, to become 
effective no later than August 1, 2016. Following the catch-up 
adjustment, the 2015 Act requires agencies to adjust CMPs under their 
jurisdiction annually beginning in 2017 based on changes in the 
consumer price index using data from October in the previous calendar 
year.
    In order to catch-up CMPs, the 2015 Act requires agencies to 
identify the year the civil penalty was established or last adjusted by 
statute or regulation other than pursuant to the FCPIAA.\4\ Catch-up 
adjustments are based on the percent change between the Consumer Price 
Index for all Urban Consumers (CPI-U) \5\ for the month of October of 
the year in which the CMP was established or adjusted (other than 
through Inflation Adjustment Act adjustments), and the October 2015 
CPI-U. In accordance with the 2015 Act, the Office of Management and 
Budget (OMB) has issued guidance to agencies on implementing the catch-
up adjustments and provided multipliers for agencies to use depending 
on the year a civil penalty was established or adjusted (other than 
inflation adjustments). Agencies look at the multiplier corresponding 
to that year in a table provided by OMB.\6\ Next, agencies multiply the 
amount of the penalty (not adjusted for inflation) by the amount in the 
table.\7\ Under the 2015 Act, however, the catch-up increase cannot 
exceed 150% of the amount that was effective on November 2, 2015.\8\
---------------------------------------------------------------------------

    \4\ 5(b)(2); Memorandum for the Heads of Executive Departments 
and Agencies for the Implementation of the Federal Civil Penalties 
Inflation Adjustment Act, M-16-06, at 4, February 24, 2016 (OMB 
Guidance Memo).
    \5\ 3(3).
    \6\ Id.
    \7\ Id. The amount of the catch-up penalty cannot exceed 250% of 
the amount that was effective on November 2, 2015 which would be 
$112,500 for a violation of Section 13.
    \8\ The 150 percent limitation in the 2015 Act is on the amount 
of the increase. The actual adjusted penalty levels, however are 
capped at 250 percent of the levels in effect on November 2, 2015. 
M-16-06, OMB guidance memo, at 3; also at 5(b)(2)(C).
---------------------------------------------------------------------------

    For example, Section 13 of the Shipping Act of 1984 (1984 Act), 46 
U.S.C. 41107, imposes a maximum $45,000 penalty for a knowing and 
willful violation of the 1984 Act.\9\ The penalty was established in 
1984 for an amount of $25,000 and has only been adjusted pursuant to 
the FCPIAA since then. As a result, the Commission multiplied $25,000 
by 2.25867 (the multiplier provided by OMB for 1984) to obtain an 
adjusted CMP of $55,467.
---------------------------------------------------------------------------

    \9\ The Commission last adjusted its civil penalties pursuant to 
FCPIAA in 2014.
---------------------------------------------------------------------------

    The last time the Commission adjusted its CMP not pursuant to 
FCPIAA varies depending on the penalty.\10\ Accordingly, the Commission 
has looked at the multiplier in the table OMB provided to determine the 
appropriate adjustment for its civil penalties. In order to provide 
some clarity, the table below shows the non-inflation-adjusted penalty, 
the year it was established or adjusted (other than under the FCPIAA), 
the multiplier provided by OMB, and the result of applying the 
multiplier (rounded to the nearest dollar per the statute). The table 
also shows 250% of the amount of the penalty in November 2015 (2015 Act 
Cap). The new adjusted maximum penalty is the lesser of (1) the amount 
using the multiplier and (2) 250% of the amount of the penalty in 
November 2015.
---------------------------------------------------------------------------

    \10\ Current CMPs at the Commission have been effective since 
July 11, 2014. 79 FR 37662 (July 2, 2014).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                           New adjusted
                                                          Non-inflation-                                    Multiplier     2015 Act cap       maximum
                     U.S.C. Section                          adjusted          Year         Multiplier        result      (250% of 11/2/      penalty
                                                              penalty                                                       15 Amount)        amount
--------------------------------------------------------------------------------------------------------------------------------------------------------
46 U.S.C. 42304.........................................       1,000,000            1988         1.97869       1,978,690       4,000,000       1,978,690

[[Page 42553]]

 
46 U.S.C. 41107(a)......................................          25,000            1984         2.25867          56,467         112,500          56,467
46 U.S.C. 41107(b)......................................           5,000            1984         2.25867          11,293          22,500          11,293
46 U.S.C. 41108(b)......................................          50,000            1984         2.25867         112,934         200,000         112,934
46 U.S.C. 42104.........................................           5,000            1990         1.78156           8,908          22,500           8,908
46 U.S.C. 42106.........................................       1,000,000            1990         1.78156       1,781,560       4,000,000       1,781,560
46 U.S.C. 42108.........................................          50,000            1990         1.78156          89,078         200,000          89,078
46 U.S.C. 44102.........................................           5,000            1966         7.22912          36,146          22,500          22,500
                                                                     200                                           1,446             750             750
46 U.S.C. 44103.........................................           5,000            1966         7.22912          36,146          22,500          22,500
                                                                     200                                           1,446             750             750
31 U.S.C. 3802(a)(1)....................................           5,000            1986         2.15628          10,781          22,500          10,781
31 U.S.C. 3802(a)(2)....................................           5,000            1986         2.15628          10,781          22,500          10,781
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The new formula may result in a lower penalty than the current 
penalty. The catch-up penalty for 46 U.S.C. 42104 of $8,908, is 
actually lower than the current penalty of $9,000. This results from 
two things: (1) the lack of a specific penalty for a violation of 46 
U.S.C. 42104 until 1990; and (2) using a multiplier based on the year 
the penalty was established or modified that excludes adjustments due 
to the FCPIAA. The later a penalty was established that excludes 
adjustments due to the FCPIAA, the smaller the multiplier. In this 
example, the latest penalty amount that excludes adjustments due to the 
FCPIAA for violating 46 U.S.C. 42104 is $5,000, established in 1990. 
The $5,000 penalty, therefore, is multiplied by 1.78156 percent to get 
the adjusted penalty of $8,908.
    In contrast, the oldest non-FCPIAA penalty for violating 46 U.S.C. 
44103 was established in 1966 in the amount of $5,000. Accordingly, 
using the required table, such amount is multiplied by 7.22912 percent 
to get the adjusted penalty of $22,500.
    The 2015 Act also requires that agencies round up any increases in 
civil monetary penalties by a dollar regardless of the amount of the 
penalty, which differs from the prior rounding system that was based on 
the amount of a penalty. The penalty in 46 U.S.C. 42104 was between 
$1,000 and $10,000, and increases were therefore rounded to the nearest 
$1,000 (often the next highest $1,000), resulting in higher adjusted 
amounts.\11\
---------------------------------------------------------------------------

    \11\ See 46 CFR 506.4.
---------------------------------------------------------------------------

    The Commission is also making a number of changes to other sections 
in part 506 to reflect the amendments made by the 2015 Act, including 
the frequency and calculation of future increases, how increases are 
rounded, and when they apply.
    This interim final rule is issued without prior public notice or 
opportunity for public comment. Under the Administrative Procedure Act 
(APA), 5 U.S.C. 553(b)(B), a final rule may be issued without notice 
and comment if the agency for good cause finds (and incorporates the 
finding and a brief statement of reasons therefore in the rules issued) 
that notice and public comment thereon are impracticable, unnecessary, 
or contrary to the public interest. In this instance, the Commission 
finds, for good cause, that solicitation of public comment on this 
final rule is unnecessary and impractical.
    Specifically, Congress has mandated that the agency make the catch-
up inflation adjustments through an interim final rule, and agencies 
are not required to conduct notice and comment prior to promulgation. 
The Commission, under the FCPIAA as amended by the 2015 Act, is 
required to make the adjustment to the civil monetary penalties 
according to a formula specified in the statute. The regulation 
requires ministerial, technical computations that are noncontroversial.
    The Regulatory Flexibility Act (RFA), as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 801 et 
seq., generally requires an agency to prepare a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements, unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
Because the Commission has determined that notice and comment are not 
required under the APA for this rulemaking, the requirements of the RFA 
do not apply and no regulatory flexibility analysis was prepared.
    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.
    This regulatory action is not a major rule as defined under 5 
U.S.C. 804(2).

List of Subjects in 46 CFR Part 506

    Administrative practice and procedure, Penalties.

    For the reasons stated in the preamble, Part 506 of title 46 of the 
Code of Federal Regulations is amended as follows:

PART 506--CIVIL MONETARY PENALTY INFLATION ADJUSTMENT

0
1. The authority citation for part 506 continues to read as follows:

    Authority: 28 U.S.C. 2461.
0
2. Revise Sec.  506.1 to read as follows:


Sec.  506.1  Scope and purpose.

    The purpose of this part is to establish a mechanism for the 
regular adjustment for inflation of monetary penalties and to adjust 
such penalties in conformity with the Federal Civil Penalties Inflation 
Adjustment Act of 1990 (28 U.S.C. 2641 note) as originally amended by 
the Debt Collection Improvement Act of 1996, Public Law 104-134, April 
26, 1996, and currently amended by the Federal Civil Penalties 
Inflation Act Adjustment Improvements Act of 2015, Public Law 114-74, 
in order to maintain the deterrent effect of civil monetary penalties 
and to promote compliance with the law.

0
3. In Sec.  506.3, revise the introductory text to read as follows:


Sec.  506.3  Civil monetary penalty inflation adjustment.

    The Commission shall, not later than August 1, 2016, and at least 
every year thereafter--
* * * * *

0
4. Revise Sec.  506.4 to read as follows:

[[Page 42554]]

Sec.  506.4  Cost of living adjustments of civil monetary penalties.

    (a) The inflation adjustment under Sec.  506.3 will initially be 
determined by increasing the maximum civil monetary penalty for each 
civil monetary penalty by the initial cost-of-living adjustment. The 
inflation adjustment will subsequently 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 section 
shall be rounded to the nearest multiple of $1.
    (b) Inflation adjustment. 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 adjustment exceeds the Consumer 
Price Index for the month of October 1 year before the month of October 
preceding the adjustment.
    (c) Initial adjustment. For purposes of paragraph (a) of this 
section, the term `initial 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, 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 under a provision of law of civil monetary penalty. The 
initial cost-of-living adjustment may not exceed 150 percent of such 
penalty on November 2, 2015, the date of the enactment of the Federal 
Civil Penalties Inflation Act Adjustment Improvements Act of 2015.
    (d) Inflation adjustment. Maximum Civil Monetary Penalties within 
the jurisdiction of the Federal Maritime Commission are adjusted for 
inflation as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                                   New adjusted
                                                                                      Maximum         maximum
        United States Code Citation           Civil monetary penalty description  penalty amount  penalty amount
                                                                                     prior to      as of August
                                                                                  August 1, 2016      1, 2016
----------------------------------------------------------------------------------------------------------------
46 U.S.C. 42304............................  Adverse impact on U.S. carriers by        1,600,000       1,978,690
                                              foreign shipping practices.
46 U.S.C. 41107(a).........................  Knowing and Willful violation/               45,000          56,467
                                              Shipping Act of 1984, or
                                              Commission regulation or order.
46 U.S.C. 41107(b).........................  Violation of Shipping Act of 1984,            9,000          11,293
                                              Commission regulation or order,
                                              not knowing and willful.
46 U.S.C. 41108(b).........................  Operating in foreign commerce after          80,000         112,934
                                              tariff suspension.
46 U.S.C. 42104............................  Failure to provide required                   9,000           8,908
                                              reports, etc./Merchant Marine Act
                                              of 1920.
46 U.S.C. 42106............................  Adverse shipping conditions/              1,600,000       1,781,560
                                              Merchant Marine Act of 1920.
46 U.S.C. 42108............................  Operating after tariff or service            80,000          89,078
                                              contract suspension/Merchant
                                              Marine Act of 1920.
46 U.S.C. 44102............................  Failure to establish financial                9,000          22,500
                                              responsibility for non-performance             300             750
                                              of transportation.
46 U.S.C. 44103............................  Failure to establish financial                9,000          22,500
                                              responsibility for death or injury.            300             750
31 U.S.C. 3802(a)(1).......................  Program Fraud Civil Remedies Act/             9,000          10,781
                                              makes false claim.
31 U.S.C. 3802(a)(2).......................  Program Fraud Civil Remedies Act/             9,000          10,781
                                              giving false statement.
----------------------------------------------------------------------------------------------------------------


0
5. Revise Sec.  506.5 to read as follows:


Sec.  506.5  Application of increase to violations.

    Any adjustment in a civil monetary penalty under this part shall 
apply only to civil monetary penalties, including those whose 
associated violation predated such increase, which are assessed after 
the date the adjustment takes effect.

    By the Commission.
Rachel E. Dickon,
Assistant Secretary.
[FR Doc. 2016-15569 Filed 6-29-16; 8:45 am]
BILLING CODE 6731-AA-P