[Federal Register Volume 82, Number 7 (Wednesday, January 11, 2017)]
[Rules and Regulations]
[Pages 3168-3170]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-00166]


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DEPARTMENT OF STATE

22 CFR Parts 35, 103, 127 and 138

RIN 1400-AE09
Public Notice: 9828]


2017 Civil Monetary Penalties Inflationary Adjustment

AGENCY: Department of State.

ACTION: Final rule.

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SUMMARY: This final rule is issued to adjust the civil monetary 
penalties (CMP) for regulatory provisions maintained and enforced by 
the Department of State. The revised CMP adjusts the amount of civil 
monetary penalties assessed by the Department of State based on the 
December 2016 guidance from the Office of Management and Budget. The 
new amounts will apply only to those penalties assessed on or after the 
effective date of this rule, regardless of the date on which the 
underlying facts or violations occurred.

DATES: This final rule is effective on January 11, 2017.

FOR FURTHER INFORMATION CONTACT: Alice Kottmyer, Attorney-Adviser, 
Office of Management, [email protected]. ATTN: Regulatory Change, 
CMP Adjustments, (202) 647-2318.

SUPPLEMENTARY INFORMATION: The Federal Civil Penalties Inflation 
Adjustment Act of 1990, Public Law 101-410 (the 1990 Act), as amended 
by the Debt Collection Improvement Act of

[[Page 3169]]

1996, Public Law 104-134 (the 1996 Act), required the head of each 
agency to adjust its CMPs for inflation no later than October 23, 1996 
and required agencies to make adjustments at least once every four 
years thereafter. The Federal Civil Penalties Inflation Adjustment Act 
Improvements Act of 2015, Section 701 of Public Law 114-74 (the 2015 
Act) further amended the 1990 Act by requiring agencies to adjust CMPs, 
if necessary, pursuant to a ``catch-up'' adjustment methodology 
prescribed by the 2015 Act, which mandated that the catch-up adjustment 
take effect no later than August 1, 2016. Additionally, the 2015 Act 
required agencies to make annual adjustments to their respective CMPs 
in accordance with guidance issued by the Office of Management and 
Budget (OMB).
    Based on these statutes, the Department of State (the Department) 
published a final rule on June 8, 2016, to implement the ``catch-up'' 
provisions (``June 2016 final rule''). See 81 FR 36791.
    On December 16, 2016, OMB notified agencies that the annual cost-
of-living adjustment multiplier for 2017, based on the Consumer Price 
Index, is 1.01636. Additional information may be found in OMB 
Memorandum M-17-11, which can be found at https://www.whitehouse.gov/sites/default/files/omb/memoranda/2017/m-17-11_0.pdf. This final rule 
amends Department CMPs for fiscal year 2017.
    Within the Department of State (Title 22, Code of Federal 
Regulations), this rule affects four areas:
    (1) Part 35, which implements the Program Fraud Civil Remedies Act 
of 1986 (PFCRA), codified at 31 U.S.C. 3801-3812;
    (2) Part 103, which implements the Chemical Weapons Convention 
Implementation Act of 1998 (CWC Act);
    (3) Part 127, which implements the penalty provisions of sections 
38(e), 39A(c), and 40(k) of the Arms Export Control Act (AECA) (22 
U.S.C. 2778(e), 2779a(c), 2780(k)); and
    (4) Part 138, which implements Section 319 of Public Law 101-121, 
codified at 31 U.S.C. 1352, and prohibits recipients of federal 
contracts, grants, and loans from using appropriated funds for lobbying 
the Executive or Legislative Branches of the federal government in 
connection with a specific contract.

Specific Changes to 22 CFR Made by This Rule

I. Part 35

    The PFRCA, enacted in 1986, authorizes agencies, with approval from 
the Department of Justice, to pursue individuals or firms for false 
claims. According to the June 2016 final rule, the maximum liability 
under the PFRCA is $10,781, up to a maximum of $323,442. Applying the 
2016 multiplier (1.01636) provided by OMB, the new maximum liabilities 
are as follows: $10,957, up to a maximum of $328,734.

II. Part 103

    The CWC Act provided domestic implementation of the Convention on 
the Prohibition of the Development, Production, Stockpiling, and Use of 
Chemical Weapons and on Their Destruction. The penalty provisions of 
the CWC Act are codified at 22 U.S.C. 6761. Based on the June 2016 
final rule, a person violating 22 U.S.C. 6761(a)(1)(A), Prohibited acts 
relating to inspections, is subject to a civil penalty of an amount not 
to exceed $36,256 for each such violation. A person violating 22 U.S.C. 
6761(a)(1)(B), Recordkeeping violations, is subject to a civil penalty 
in an amount not to exceed $7, 251 for each such violation.
    Applying the 2016 multiplier (1.01636), the new maximum amounts are 
as follows: Prohibited acts related to inspections, $36,849; for 
Recordkeeping violations, $7,370.

III. Part 127

    The Assistant Secretary of State for Political-Military Affairs is 
responsible for the imposition of CMPs under the International Traffic 
in Arms Regulations (ITAR), which is administered by the Directorate of 
Defense Trade Controls (DDTC).
    (1) AECA section 38(e):
    According to the June 2016 final rule, the new maximum penalty 
under 22 U.S.C. 2778(e), or Section 38(e) of the AECA, is $1,094,010 
per violation. Applying the 2016 multiplier (1.01636), the new maximum 
penalty is $1,111,908.
    (2) AECA section 39A(c):
    According to the June 2016 final rule, the new maximum adjusted 
penalty for 22 U.S.C. 2779a(c), or Section 39A(c) of the AECA, is 
$795,445 per violation. Applying the 2016 multiplier (1.01636), the new 
maximum penalty is $808,458.
    (3) AECA section 40(k):
    According to the June 2016 final rule, the maximum penalty for 22 
U.S.C. 2780(k), or Section 40(k) of the AECA, is $946,805 per 
violation. Applying the 2016 multiplier (1.01636), the new maximum 
penalty is $962,295.

IV. Part 138

    Section 319 of Public Law 101-121, codified at 31 U.S.C. 1352, 
provides penalties for recipients of federal contracts, grants, and 
loans who use appropriated funds to lobby the Executive or Legislative 
Branches of the federal government in connection with a specific 
contract, grant, or loan. Any person who violates that prohibition is 
subject to a civil penalty. The statute also requires each person who 
requests or receives a federal contract, grant, cooperative agreement, 
loan, or a federal commitment to insure or guarantee a loan, to 
disclose any lobbying; there is a penalty for failure to disclose.
    The June 2016 final rule raised the maximum penalties for both 
improper expenditures and failure to disclose, to not less than $18,936 
and not more than $189,361. Applying the 2016 multiplier (1.01636), the 
new maximum penalty under 31 U.S.C. 1352 is: not less than $19,246, and 
not more than $192,459.
Effective Date of Penalties
    The revised CMP amounts will go into effect on the date this rule 
is published. All violations for which CMPs are assessed on or after 
the effective date of this rule, regardless of whether the violation 
occurred before the effective date, will be assessed at the adjusted 
penalty level.
Future Adjustments and Reporting
    The 2015 Act directed agencies to undertake an annual review of 
CMPs using a formula prescribed by the statute. Annual adjustments to 
CMPs are made in accordance with the guidance issued by OMB. As in this 
rulemaking, the Department of State will publish notification of annual 
inflation adjustments to CMPs in the Federal Register no later than 
January 15 of each year, with the adjusted amount taking effect 
immediately upon publication.

Regulatory Analysis and Notices

Administrative Procedure Act

    The Department of State is publishing this rule using the ``good 
cause'' exception to the Administrative Procedure Act (5 U.S.C. 
553(b)), as the Department has determined that public comment on this 
rulemaking would be impractical, unnecessary, or contrary to the public 
interest. This rulemaking is mandatory; it implements Public Law 114-
74.

Regulatory Flexibility Act

    Because this rulemaking is exempt from Section 553 of the 
Administrative Procedures Act, a Regulatory Flexibility Analysis is not 
required.

Unfunded Mandates Reform Act of 1995

    This rule does not involve a mandate that will result in the 
expenditure by State, local, and tribal governments, in

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the aggregate, or by the private sector, of $100 million or more in any 
year and it 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.

Small Business Regulatory Enforcement Fairness Act of 1996

    This rule has been found not to be a major rule within the meaning 
of the Small Business Regulatory Enforcement Fairness Act of 1996.

Executive Orders 12372 and 13132

    This amendment will 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. Therefore, in accordance with Executive 
Order 13132, it is determined that this amendment does not have 
sufficient federalism implications to require consultations or warrant 
the preparation of a federalism summary impact statement.

Executive Orders 12866 and 13563

    The Department believes that benefits of the rulemaking outweigh 
any costs, and there are no feasible alternatives to this rulemaking. 
It is the Department's position that this rulemaking is not an 
economically significant rule under the criteria of Executive Order 
12866, and is consistent with the provisions of Executive Order 13563.

Executive Order 12988

    The Department of State has reviewed the proposed amendment in 
light of Executive Order 12988 to eliminate ambiguity, minimize 
litigation, establish clear legal standards, and reduce burden.

Executive Order 13175

    The Department of State has determined that this rulemaking will 
not have tribal implications, will not impose substantial direct 
compliance costs on Indian tribal governments, and will not preempt 
tribal law. Accordingly, Executive Order 13175 does not apply to this 
rulemaking.

Paperwork Reduction Act

    This rulemaking does not impose or revise any information 
collections subject to 44 U.S.C. Chapter 35.

List of Subjects

22 CFR Part 35

    Administrative practice and procedure, Claims, Fraud, Penalties.

22 CFR Part 103

    Administrative practice and procedure, Chemicals, Classified 
information, Foreign relations, Freedom of information, International 
organization, Investigations, Penalties, Reporting and recordkeeping 
requirements.

22 CFR Part 127

    Arms and munitions, Exports.

22 CFR Part 138

    Government contracts, Grant programs, Loan programs, Lobbying, 
Penalties, Reporting and recordkeeping requirements.

    For the reasons set forth above, 22 CFR parts 35, 103, 127, and 138 
are amended as follows:

PART 35--PROGRAM FRAUD CIVIL REMEDIES

0
1. The authority citation for part 35 continues to read as follows:

    Authority:  22 U.S.C. 2651a; 31 U.S.C. 3801 et seq.; Pub. L. 
114-74, 129 Stat. 584.


Sec.  35.3   [Amended]

0
2. In Sec.  35.3:
0
a. Remove ``$10,781'' and add in its place ``$10,957'', wherever it 
occurs.
0
b. In paragraph (f), remove ``$323,442'' and add in its place 
``$328,734''.

PART 103--REGULATIONS FOR IMPLEMENTATION OF THE CHEMICAL WEAPONS 
CONVENTION AND THE CHEMICAL WEAPONS CONVENTION IMPLEMENTATION ACT 
OF 1998 ON THE TAKING OF SAMPLES AND ON ENFORCEMENT OF REQUIREMENTS 
CONCERNING RECORDKEEPING AND INSPECTIONS

0
3. The authority citation for part 103 continues to read as follows:

    Authority:  22 U.S.C. 2651a; 22 U.S.C. 6701 et seq.; Pub. L. 
114-74, 129 Stat. 584.


Sec.  103.6   [Amended]

0
4. Amend Sec.  103.6 to remove ``$36,256'' and add in its place 
``$36,849'' in paragraph (a)(1), and to remove ``$7,251'' and add in 
its place ``$7,370'' in paragraph (a)(2).

PART 127--VIOLATIONS AND PENALTIES

0
5. The authority citation for part 127 continues to read as follows:

    Authority:  Sections 2, 38, and 42, Pub. L. 90-629, 90 Stat. 744 
(22 U.S.C. 2752, 2778, 2791); 22 U.S.C. 401; 22 U.S.C. 2651a; 22 
U.S.C. 2779a; 22 U.S.C. 2780; E.O. 13637, 78 FR 16129; Pub. L. 114-
74, 129 Stat. 584.


Sec.  127.10   [Amended]

0
6. Section 127.10 is amended as follows:
0
a. In paragraph (a)(1)(i), remove ``$1,094,010'' and add in its place 
``$1,111,908'';
0
b. In paragraph (a)(1)(ii), remove ``$795,445'' and add in its place 
``$808,458''; and
0
c. In paragraph (a)(1)(iii), remove ``$946,805'' and add in its place 
``962,295.''

PART 138--RESTRICTIONS ON LOBBYING

0
7. The authority citation for part 138 continues to read as follows:

    Authority:  22 U.S.C. 2651a; 31 U.S.C. 1352; Pub. L. 114-74, 129 
Stat. 584.

0
8. Revise the heading of part 138 to read as set forth above.


Sec.  138.400   [Amended]

0
9. Amend Sec.  138.400 by removing ``$18,936'' and ``$189,361'' and 
adding in their place ``$19,246'' and ``$192,459'', respectively, 
wherever they occur.

    Dated: January 4, 2017.
Alicia Frechette,
Executive Director, Office of the Legal Adviser & Bureau of Legislative 
Affairs, Department of State.
[FR Doc. 2017-00166 Filed 1-10-17; 8:45 am]
 BILLING CODE 4710-08-P