[Federal Register Volume 82, Number 14 (Tuesday, January 24, 2017)]
[Rules and Regulations]
[Pages 8131-8133]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-00627]



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 Rules and Regulations
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  Federal Register / Vol. 82, No. 14 / Tuesday, January 24, 2017 / 
Rules and Regulations  

[[Page 8131]]


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OFFICE OF GOVERNMENT ETHICS

5 CFR Parts 2634 and 2636

RINs 3209-AA00 and 3209-AA38


Civil Monetary Penalties Inflation Adjustments for Ethics in 
Government Act Violations

AGENCY: Office of Government Ethics.

ACTION: Final rule.

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SUMMARY: The U.S. Office of Government Ethics (OGE) is issuing this 
final rule in accordance with the Federal Civil Penalties Inflation 
Adjustment Act Improvements Act of 2015. This rulemaking adopts as 
final prior interim regulations making ``catch-up'' inflationary 
adjustments to each of the five civil monetary penalties provided in 
the Ethics in Government Act, as reflected in the executive branchwide 
financial disclosure and outside employment/activities regulations 
promulgated by OGE. This rulemaking also makes the 2017 annual 
adjustment to the Ethics in Government Act civil monetary penalties 
mandated by the Federal Civil Penalties Inflation Adjustment Act 
Improvements Act of 2015.

DATES: Effective date: This final rule is effective January 24, 2017.
    Applicability date: This final rule is applicable January 15, 2017.

FOR FURTHER INFORMATION CONTACT: Kimberly L. Sikora Panza, Associate 
Counsel, General Counsel and Legal Policy Division, Office of 
Government Ethics, Telephone: 202-482-9300; TTY: 800-877-8339; FAX: 
202-482-9237.

SUPPLEMENTARY INFORMATION: 

I. Background

``Catch-up'' Adjustment to Ethics in Government Act Civil Monetary 
Penalties

    In November 2015, Congress passed the Federal Civil Penalties 
Inflation Adjustment Act Improvements Act of 2015 (Sec. 701 of Pub. L. 
114-74) (the 2015 Act), which further amended the Federal Civil 
Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410). The 2015 
Act required Federal agencies to make inflationary adjustments to the 
civil monetary penalties (CMPs) within their jurisdiction with an 
initial ``catch-up'' adjustment through an interim final rule effective 
no later than August 1, 2016. The 2015 Act further mandates that 
Federal agencies make subsequent annual inflationary adjustments of 
their CMPs, to be effective no later than January 15 of each year.
    In compliance with the 2015 Act and guidance issued by the Office 
of Management and Budget (OMB), on June 28, 2016, the U.S. Office of 
Government Ethics (OGE) published in the Federal Register an interim 
final rule with request for comments, 81 FR 41787 (June 28, 2016). The 
interim final rule, which became effective on August 1, 2016, made 
inflationary adjustments to the five CMPs provided in the Ethics in 
Government Act of 1978 as amended, 5 U.S.C. appendix (the Ethics 
Act).\1\ The Ethics Act provides for penalties that can be assessed by 
an appropriate United States district court, based upon a civil action 
brought by the Department of Justice, for the following five types of 
violations: Knowing and willful failure to file, report required 
information on, or falsification of a public financial disclosure 
report; knowing and willful breach of a qualified trust by trustees and 
interested parties; negligent breach of a qualified trust by trustees 
and interested parties; misuse of a public report; and violation of 
outside employment/activities provisions. See sections 102(f)(6)(C)(i) 
and (ii), 104(a), 105(c)(2) and 504(a) of the Ethics Act, 5 U.S.C. 
appendix, 102(f)(6)(C)(i) and (ii), 104(a), 105(c)(2) and 504(a). These 
penalties are reflected in 5 CFR 2634.701(b), 2634.702(a) and (b), and 
2634.703 of OGE's executive branchwide financial disclosure regulation 
and 5 CFR 2636.104(a) of OGE's executive branchwide covered noncareer 
employee outside employment/activities regulation.
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    \1\ OGE has previously determined, after consultation with the 
Department of Justice, that the $200 late filing fee for public 
financial disclosure reports that are more than 30 days overdue (see 
section 104(d) of the Ethics Act, 5 U.S.C. appendix, 104(d), and 5 
CFR 2634.704 of OGE's regulations thereunder) is not a CMP as 
defined under the Federal Civil Penalties Inflation Adjustment Act, 
as amended. Therefore, that fee is not being adjusted in this 
rulemaking (nor was it adjusted by OGE in previous CMP rulemakings), 
and will remain at its current amount of $200.
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    As explained in the preamble to the interim final rule, the 
increased civil monetary penalty amounts calculated in OGE's ``catch-
up'' adjustment applied only to civil penalties assessed after August 
1, 2016 whose associated violations occurred after November 2, 2015, 
the date of enactment of the 2015 Act. For the sake of clarity, OGE's 
interim final rule stated the original, previously-adjusted and newly-
adjusted Ethics Act CMP amounts. OGE received no comments on the 
interim final rule, and therefore is adopting it as final in this 
rulemaking.

Annual Inflationary Adjustment to the Ethics in Government Act Civil 
Monetary Penalties

    Beginning in 2017, the 2015 Act requires Federal agencies to make 
annual inflationary adjustments to their CMPs. The annual adjustments 
are based on the percent change between the Consumer Price Index for 
all Urban Consumers (CPI-U) for the month of October preceding the date 
of the adjustment, and the prior year's October CPI-U. Pursuant to OMB 
guidance, the cost-of-living adjustment multiplier for 2017, based on 
the CPI-U for October 2016, not seasonally adjusted, is 1.01636. To 
calculate the 2017 annual adjustment, agencies must multiply the most 
recent penalty by the 1.01636 multiplier, and round to the nearest 
dollar.
    Applying the formula established by the 2015 Act and OMB guidance, 
OGE is amending the Ethics Act CMPs through this rulemaking to:
    (1) Increase the three penalties reflected in 5 CFR 2634.702(a), 5 
CFR 2634.703, and 5 CFR 2636.104(a)--which were previously adjusted to 
a maximum of $18,936--to a maximum of $19,246;
    (2) Increase the penalty reflected in 5 CFR 2634.702(b)--which was 
previously adjusted to a maximum of $9,468--to a maximum of $9,623; and
    (3) Increase the penalty reflected in 5 CFR 2634.701(b)--which was 
previously adjusted to a maximum of $56,916--to a maximum of $57,847. 
Consistent with the implementation of the ``catch-up'' penalty 
adjustments, these adjusted penalty amounts will

[[Page 8132]]

apply only to penalties assessed after January 15, 2017 (the 
applicability date of this final rule) whose associated violations 
occurred after November 2, 2015.
    OGE will continue to make future annual inflationary adjustments to 
the Ethics Act CMPs in accordance with the statutory formula set forth 
in the 2015 Act.

II. Matters of Regulatory Procedure

Administrative Procedure Act

    Pursuant to 5 U.S.C. 553(b), as Director of the Office of 
Government Ethics, I find that good cause exists for waiving the 
general notice of proposed rulemaking and public comment procedures as 
to these technical amendments. The notice and comment procedures are 
being waived because these amendments, which concern matters of agency 
organization, procedure and practice, are being adopted in accordance 
with statutorily mandated inflation adjustment procedures of the 2015 
Act, which specifies that agencies shall adjust civil monetary 
penalties notwithstanding Section 553 of the Administrative Procedure 
Act. It is also in the public interest that the adjusted rates for 
civil monetary penalties under the Ethics in Government Act become 
effective as soon as possible in order to maintain their deterrent 
effect.

Regulatory Flexibility Act

    As the Director of the Office of Government Ethics, I certify under 
the Regulatory Flexibility Act (5 U.S.C. chapter 6) that this final 
rule would not have a significant economic impact on a substantial 
number of small entities because it primarily affects current Federal 
executive branch employees.

Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35) does not apply 
because this regulation does not contain information collection 
requirements that require approval of the Office of Management and 
Budget.

Unfunded Mandates Reform Act

    For purposes of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
chapter 5, subchapter II), this rule would not significantly or 
uniquely affect small governments and will not result in increased 
expenditures by State, local, and tribal governments, in the aggregate, 
or by the private sector, of $100 million or more (as adjusted for 
inflation) in any one year.

Executive Order 13563 and Executive Order 12866

    Executive Orders 13563 and 12866 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select the regulatory approaches that 
maximize net benefits (including economic, environmental, public health 
and safety effects, distributive 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. 
The Office of Management and Budget has determined that rulemakings 
such as this implementing annual inflationary adjustments under the 
2015 Act are not significant regulatory actions under Executive Order 
12866.

Executive Order 12988

    As Director of the Office of Government Ethics, I have reviewed 
this rule in light of section 3 of Executive Order 12988, Civil Justice 
Reform, and certify that it meets the applicable standards provided 
therein.

List of Subjects

5 CFR Part 2634

    Certificates of divestiture, Conflict of interests, Government 
employees, Penalties, Reporting and recordkeeping requirements, Trusts 
and trustees.

5 CFR Part 2636

    Conflict of interests, Government employees, Penalties.

    Dated: January 9, 2017.
Walter M. Shaub, Jr.,
Director, U.S. Office of Government Ethics.

    Accordingly, for the reasons set forth in the preamble, the U.S. 
Office of Government Ethics is adopting the interim final rule 
published at 81 FR 41787 (June 28, 2016) as a final rule with the 
following changes:

PART 2634--EXECUTIVE BRANCH FINANCIAL DISCLOSURE, QUALIFIED TRUSTS, 
AND CERTIFICATES OF DIVESTITURE

0
1. The authority citation for part 2634 continues to read as follows:

    Authority:  5 U.S.C. App. (Ethics in Government Act of 1978); 26 
U.S.C. 1043; Pub. L. 101-410, 104 Stat. 890, 28 U.S.C. 2461 note 
(Federal Civil Penalties Inflation Adjustment Act of 1990), as 
amended by Sec. 31001, Pub. L. 104-134, 110 Stat. 1321 (Debt 
Collection Improvement Act of 1996) and Sec. 701, Pub. L. 114-74 
(Federal Civil Penalties Inflation Adjustment Act Improvements Act 
of 2015); E.O. 12674, 54 FR 15159, 3 CFR, 1989 Comp., p. 215, as 
modified by E.O. 12731, 55 FR 42547, 3 CFR, 1990 Comp., p. 306.

0
2. Section 2634.701 is amended by revising paragraph (b) to read as 
follows:


Sec.  2634.701   Failure to file or falsifying reports.

* * * * *
    (b) Civil action. The Attorney General may bring a civil action in 
any appropriate United States district court against any individual who 
knowingly and willfully falsifies or who knowingly and willfully fails 
to file or report any information required by filers of public reports 
under subpart B of this part. The court in which the action is brought 
may assess against the individual a civil monetary penalty in any 
amount, not to exceed the amounts set forth below, as provided by 
section 104(a) of the Act, as amended, and as adjusted in accordance 
with the inflation adjustment procedures prescribed in the Federal 
Civil Penalties Inflation Adjustment Act of 1990, as amended:

------------------------------------------------------------------------
                      Date of violation                         Penalty
------------------------------------------------------------------------
Violation occurring between Sept. 14, 2007 and Nov. 2, 2015..    $50,000
Violation occurring after Nov. 2, 2015.......................     57,847
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* * * * *

0
3. Section 2634.702 is revised to read as follows:


Sec.  2634.702  Breaches by trust fiduciaries and interested parties.

    (a) The Attorney General may bring a civil action in any 
appropriate United States district court against any individual who 
knowingly and willfully violates the provisions of Sec.  2634.408(d)(1) 
or (e)(1). The court in which the action is brought may assess against 
the individual a civil monetary penalty in any amount, not to exceed 
the amounts set forth below, as provided by section 102(f)(6)(C)(i) of 
the Act and as adjusted in accordance with the inflation adjustment 
procedures prescribed in the Federal Civil Penalties Inflation 
Adjustment Act of 1990, as amended:

------------------------------------------------------------------------
                      Date of violation                         Penalty
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Violation occurring between Sept. 29, 1999 and Nov. 2, 2015..    $11,000
Violation occurring after Nov. 2, 2015.......................     19,246
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    (b) The Attorney General may bring a civil action in any 
appropriate United States district court against any individual who 
negligently violates the provisions of Sec.  2634.408(d)(1) or (e)(1). 
The court in which the action is brought

[[Page 8133]]

may assess against the individual a civil monetary penalty in any 
amount, not to exceed the amounts set forth below, as provided by 
section 102(f)(6)(C)(ii) of the Act and as adjusted in accordance with 
the inflation adjustment procedures of the Federal Civil Penalties 
Inflation Adjustment Act of 1990, as amended:

------------------------------------------------------------------------
                      Date of violation                         Penalty
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Violation occurring between Sept. 29, 1999 and Nov. 2, 2015..     $5,500
Violation occurring after Nov. 2, 2015.......................      9,623
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0
4. Section 2634.703 is revised to read as follows:


Sec.  2634.703  Misuse of public reports.

    (a) The Attorney General may bring a civil action against any 
person who obtains or uses a report filed under this part for any 
purpose prohibited by section 105(c)(1) of the Act, as incorporated in 
Sec.  2634.603(f). The court in which the action is brought may assess 
against the person a civil monetary penalty in any amount, not to 
exceed the amounts set forth below, as provided by section 105(c)(2) of 
the Act and as adjusted in accordance with the inflation adjustment 
procedures prescribed in the Federal Civil Penalties Inflation 
Adjustment Act of 1990, as amended:

------------------------------------------------------------------------
                      Date of violation                         Penalty
------------------------------------------------------------------------
Violation occurring between Sept. 29, 1999 and Nov. 2, 2015..    $11,000
Violation occurring after Nov. 2, 2015.......................     19,246
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    (b) This remedy shall be in addition to any other remedy available 
under statutory or common law.

PART 2636--LIMITATIONS ON OUTSIDE EARNED INCOME, EMPLOYMENT AND 
AFFILIATIONS FOR CERTAIN NONCAREER EMPLOYEES

0
5. The authority citation for part 2636 continues to read as follows:

    Authority:  5 U.S.C. App. (Ethics in Government Act of 1978); 
Pub. L. 101-410, 104 Stat. 890, 28 U.S.C. 2461 note (Federal Civil 
Penalties Inflation Adjustment Act of 1990), as amended by Sec. 
31001, Pub. L. 104-134, 110 Stat. 1321 (Debt Collection Improvement 
Act of 1996) and Sec. 701, Pub. L. 114-74 (Federal Civil Penalties 
Inflation Adjustment Act Improvements Act of 2015); E.O. 12674, 54 
FR 15159, 3 CFR, 1989 Comp., p. 215, as modified by E.O. 12731, 55 
FR 42547, 3 CFR, 1990 Comp., p. 306.


0
6. Section 2636.104 is amended by revising paragraph (a) to read as 
follows:


Sec.  2636.104   Civil, disciplinary and other action.

    (a) Civil action. Except when the employee engages in conduct in 
good faith reliance upon an advisory opinion issued under Sec.  
2636.103, an employee who engages in any conduct in violation of the 
prohibitions, limitations and restrictions contained in this part may 
be subject to civil action under 5 U.S.C. app. 504(a) and a civil 
monetary penalty of not more than the amounts set forth below, as 
adjusted in accordance with the inflation adjustment procedures 
prescribed in the Federal Civil Penalties Inflation Adjustment Act of 
1990, as amended, or the amount of the compensation the individual 
received for the prohibited conduct, whichever is greater.

------------------------------------------------------------------------
                      Date of violation                         Penalty
------------------------------------------------------------------------
Violation occurring between Sept. 29, 1999 and Nov. 2, 2015..    $11,000
Violation occurring after Nov. 2, 2015.......................     19,246
------------------------------------------------------------------------

* * * * *
[FR Doc. 2017-00627 Filed 1-23-17; 8:45 am]
 BILLING CODE 6345-03-P