[Federal Register Volume 81, Number 235 (Wednesday, December 7, 2016)]
[Rules and Regulations]
[Pages 88600-88601]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-29314]
[[Page 88599]]
Vol. 81
Wednesday,
No. 235
December 7, 2016
Part VIII
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; Interim Final Rule
Federal Register / Vol. 81 , No. 235 / Wednesday, December 7, 2016 /
Rules and Regulations
[[Page 88600]]
-----------------------------------------------------------------------
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.
-----------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\2\ Notice of Proposed Rulemaking, 81 FR 18950, 18972 (proposed
50 CFR 50.82) (April 1, 2016).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\3\ Public Law 114-74.
\4\ 28 U.S.C. 2461 note.
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
\5\ 5 U.S.C. 601 et seq.
\6\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------
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