[Federal Register Volume 82, Number 26 (Thursday, February 9, 2017)]
[Rules and Regulations]
[Pages 9967-9969]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-02657]


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SMALL BUSINESS ADMINISTRATION

13 CFR Parts 107, 120, 142, and 146

RIN 3245-AG83


Civil Monetary Penalties Inflation Adjustments

AGENCY: Small Business Administration.

ACTION: Interim final rule.

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SUMMARY: The Small Business Administration (SBA) is amending its 
regulations to adjust for inflation the amount of certain civil 
monetary penalties that are within the jurisdiction of the agency. 
These adjustments comply with the requirement in the Federal Civil 
Penalties Inflation Adjustment Act of 1990, as amended by the Federal 
Civil Penalties Inflation Adjustment Act Improvements Act of 2015, to 
make annual adjustments to the penalties.

DATES: Effective Date: This rule is effective February 9, 2017.
    Comment Date: Comments must be received on or before April 10, 
2017.

ADDRESSES: You may submit comments, identified by RIN 3245-AG83 by any 
of the following methods:
     Federal Rulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail or Hand Delivery/Courier: Arlene Embrey, 409 Third 
Street SW., Washington, DC 20416.
    SBA will post all comments on http://www.regulations.gov. If you 
wish to submit confidential business information (CBI) as defined in 
the User Notice at http://www.regulations.gov, please submit the 
information to Arlene Embrey, Trial Attorney, 409 Third Street SW., 
Washington, DC 20416, and highlight the information that you consider 
to be CBI and explain why you believe this information should be held 
confidential. SBA will review the information and make a final 
determination as to whether or not the information will be published.

FOR FURTHER INFORMATION CONTACT: Arlene Embrey, 202-205-6976, or at 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    On November 2, 2015, the President signed into law the Federal 
Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 
2015 Inflation Adjustment Improvements Act), Public Law 114-74, 129 
Stat. 584. This act amended the Federal Civil Penalties Inflation 
Adjustment Act of 1990, Public Law 101-410, 104 Stat 890 (the 1990 
Inflation Adjustment Act), to improve the effectiveness of civil 
monetary penalties and to maintain their deterrent effect. The 2015 
Inflation Adjustment Improvements Act requires agencies to issue an 
interim final rule (IFR) to: (1) Adjust the level of civil monetary 
penalties with an initial ``catch-up'' adjustment; and (2) make 
subsequent annual adjustments for inflation no later than January 15 of 
each subsequent year. The 2015 Inflation Adjustment Improvements Act 
also authorizes agencies to implement the annual adjustments without 
regard to the requirements for public notice and comment or delayed 
effective date under the Administrative Procedures Act, 5 U.S.C. 
553(b)(B) and (d)(3), respectively.
    In addition, based on the definition of a ``civil monetary 
penalty'' in the 1990 Inflation Adjustment Act, agencies are to make 
adjustments only to the civil penalties that (i) are for a specific 
monetary amount as provided by federal

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law or have a maximum amount provided for by federal law; (ii) are 
assessed or enforced by an agency; and (iii) are enforced or assessed 
in an administrative proceeding or a civil action in the Federal 
courts. Therefore, penalties that are stated as a percentage of an 
indeterminate amount or as a function of a violation (penalties that 
encompass actual damages incurred) are not to be adjusted.
    On May 19, 2016, SBA complied with the first requirement by 
publishing an IFR with the initial adjustments to the civil penalties 
SBA is responsible for assessing or enforcing. 81 FR 31489. These 
initial adjustments to the penalties became effective on August 1, 
2016. In this rule SBA complies with the second requirement by making 
the first annual inflation adjustment to these penalties.
    Consistent with the 2015 Inflation Adjustment Improvements Act, as 
well as the guidance issued by the Office of Management and Budget in 
M-17-11, Implementation of the 2017 annual adjustment pursuant to the 
Federal Civil Penalties Inflation Act Improvements Act, (December 16, 
2016), the formula for calculating the annual adjustments is based on 
the Consumer Price Index for all Urban Consumers (CPI-U) for the month 
of October preceding the adjustment. Specifically, the change between 
the October CPI-U preceding the date of adjustment and the prior year's 
CPI-U, which for the adjustments in this rule is the percentage change 
between October 2016 CPI-U (241.729) and October 2015 CPI-U (237.838) 
or 1.01636. Therefore, the annual adjustments identified in this rule 
were obtained by applying this multiplier to the most recent penalty 
amounts established in the IFR published in May 2016.

II. Civil Money Penalties Adjusted by This Rule

    This rule makes adjustments to civil monetary penalties authorized 
by the Small Business Act, the Small Business Investment Act of 1958 
(SBIAct), the Program Fraud Civil Remedies Act and the Byrd Amendment 
to the Federal Regulation of Lobbying Act. These penalties and the 
implementing regulations are discussed below.

1. 13 CFR 107.665--Civil Penalties

    SBA licenses, regulates and provides financial assistance to 
financial entities called small business investment companies (SBICs). 
Pursuant to section 315 of the SBIAct, 15 U.S.C. 687g, SBA may impose a 
penalty on any SBIC that fails to comply with SBA's regulations or 
directives governing the filing of regular or special reports. The 
penalty for non-compliance is incorporated in Sec.  107.665 of the SBIC 
program regulations.
    The current civil penalty amount for violation of this requirement, 
as adjusted in May 2016, is $250. This amount was multiplied by the 
multiplier of 1.01636 to reach a product of $254, rounded to the 
nearest dollar. Thus, the new civil penalty amount is $254 for each and 
every day an SBIC fails to file a required report.

2. 13 CFR 120.465--Civil Penalty for Late Submission of Required 
Reports

    According to the regulations at Sec.  120.465, any small business 
lending company (SBLC) that violates a regulation or written directive 
issued by the SBA Administrator regarding the filing of any regular or 
special report is subject to the civil penalty amount stated in Sec.  
120.465(b) for each day the company fails to file the report, unless 
the small business lending company can show that there is reasonable 
cause for its failure to file. This penalty, which is authorized by 
section 23(j)(1) of the Small Business Act, 15 U.S.C. 650(j)(1), was 
adjusted in the May 2016 IFR from $5,000 to $6,229. However, due to a 
typographical error, the amount was published incorrectly in the May 
2016 IFR as $6,299. The amount should have been stated as $6,229, the 
product of the then $5,000 penalty multiplied by 1.24588, the 
multiplier established under the 2015 Inflation Adjustment Improvements 
Act.
    In light of this correction, this rule amends Sec.  120.465(b) to 
adjust this civil penalty by multiplying $6,229, the correct product 
under the guidelines for the May 2016 IFR, by the multiplier of 1.01636 
to reach a product of $6,331, rounded to the nearest dollar. Thus, the 
new civil penalty amount is not more than $6,331 for each and every day 
an SBLC fails to file the respective report.

3. 13 CFR 142.1--Overview of Regulations

    SBA has promulgated regulations at 13 CFR part 142 to implement the 
civil penalties authorized by the Program Fraud Civil Remedies Act of 
1986 (PFCRA), 31 U.S.C. 3801-3812. Under the current regulation at 
Sec.  142.1(b), a person who submits, or causes to be submitted, a 
false claim or a false statement to SBA is subject to a civil penalty 
of not more than $10,781, for each statement or claim.
    This rule amends Sec.  142.1(b) to adjust the current civil penalty 
to $10,957 per statement or claim. The adjusted civil penalty amount 
was calculated by multiplying the current civil penalty of $10,781 by 
the multiplier of 1.01636 to reach a product of $10,957, rounded to the 
nearest dollar.

4. 13 CFR 146.400--Penalties

    SBA's regulations at 13 CFR part 146 govern lobbying activities by 
recipients of federal financial assistance. These regulations implement 
the authority in 31 U.S.C. 1352, which was established in 1989 and 
impose penalties on any recipient that fails to comply with certain 
requirements in the part. Specifically, under Sec.  146.400(a) and (b), 
penalties may be imposed on those who make prohibited expenditures or 
fail to file the required disclosure forms or to amend such forms, if 
necessary. The regulations at Sec.  146.400(a) and (b) were amended by 
the May 2016 IFR to adjust the penalty amounts of ``not less than 
$10,000 and no more than $100,000'' to ``not less $18,936 and no more 
than $189,361'' for each prohibited expenditure or failure to file or 
amend the disclosure forms. The May 2016 IFR also amended Sec.  
146.400(e) to (1) adjust the civil penalty that may be imposed for a 
first time violation of Sec.  146.400(a) and (b), to a maximum of 
$18,936, absent aggravating circumstances, and (2) adjust the civil 
penalty that may be imposed for second and subsequent offenses to not 
less $18,936 and no more than $189,361.
    This rule amends Sec.  146.400(a) and (b), to adjust the current 
civil penalty amounts to ``not less than $19,246 and not more than 
$192,459.'' The current civil penalty amounts of $18,936 and $189,361 
were multiplied by the multiplier of 1.01636 to reach a product of 
$19,246 and $192,459, respectively, rounded to the nearest dollar.
    This rule also amends Sec.  146.400(e) to adjust the civil penalty 
that may be imposed for a first time violation of Sec.  146.400(a) and 
(b) to a maximum of $19,246 and to adjust the civil penalty that may be 
imposed for second and subsequent offenses to not less than $19,246 and 
not more than $192,459. The current civil penalty amounts of $18,936 
and $189,361 were multiplied by the multiplier of 1.01636 to reach a 
product of $19,246 and $192,459, respectively, rounded to the nearest 
dollar.

III. Justification for Interim Final Rule

    The 2015 Inflation Adjustment Improvements Act specifically 
authorizes agencies to promulgate rulemaking for the annual adjustment 
to their civil monetary penalties, ``notwithstanding section 553 of 
title 5, United States Code,'' which generally requires agencies to 
provide the public with an opportunity to comment on the

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rule making before the rule can be effective. 5 U.S.C. 553(b)

IV. Justification for Immediate Effective Date

    Section 553(d) requires agencies to publish their rules at least 30 
days before their effective dates, except if the agency finds for good 
cause that the delay is impracticable, unnecessary, or contrary to the 
public interest. By expressly exempting this rule from section 553, the 
2015 Inflation Adjustment Improvements Act has provided the agency with 
the good cause justification for this rule to become effective on the 
date it is published in the Federal Register.

Compliance With Executive Orders 12866, 12988, and 13132, and the 
Paperwork Reduction Act (44 U.S.C. Ch. 35) and the Regulatory 
Flexibility Act (5 U.S.C. 601-612)

Executive Order 12866
    The Office of Management and Budget has determined that this 
interim final rule is not a significant regulatory action under 
Executive Order 12866. This is also not a major rule under the 
Congressional Review Act, 5 U.S.C. 800.
Executive Order 12988
    This action meets applicable standards set forth in Sections 3(a) 
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize 
litigation, eliminate ambiguity, and reduce burden. The action does not 
have retroactive or preemptive effect.
Executive Order 13132
    For the purpose of Executive Order 13132, SBA has determined that 
the rule 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, this interim final rule has no federalism 
implications warranting preparation of a federalism assessment.
Paperwork Reduction Act
    SBA has determined that this rule does not impose additional 
reporting or recordkeeping requirements.
Regulatory Flexibility Act (RFA)
    The RFA requires agencies to consider the effect of their 
regulatory actions on small entities, including small non-profit 
businesses, and small local governments. Pursuant to the RFA, when an 
agency issues a rule the agency must prepare an analysis that describes 
whether the impact of the rule will have a significant economic impact 
on a substantial number of such small entities. However, the RFA 
requires such analysis only where notice and comment rulemaking is 
required. As stated above, SBA has express statutory authority to issue 
this rule without regard to the notice and comment. Since notice and 
comment is not required before this rule is issued, SBA is not required 
to prepare a regulatory analysis.

List of Subjects

13 CFR Part 107

    Investment companies, Loan programs--business, Reporting and 
recordkeeping requirements, Small businesses.

13 CFR Part 120

    Loan programs--business, Reporting and recordkeeping requirements, 
Small businesses.

13 CFR Part 142

    Administrative practice and procedure, Claims, Fraud, Penalties.

13 CFR Part 146

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

    For the reasons set forth in the preamble, SBA amends 13 CFR parts 
107, 120, 142, and 146 as follows:

PART 107--SMALL BUSINESS INVESTMENT COMPANIES

0
1. The authority citation for part 107 is revised to read as follows:

    Authority: 15 U.S.C. 681, 683, 687(c), 687b, 687d, 687g, 687m.


Sec.  107.665  [Amended]

0
2. In Sec.  107.665, remove ``$250'' and add in its place ``$254''.

PART 120--BUSINESS LOANS

0
3. The authority citation for part 120 continues to read as follows:

    Authority: 15 U.S.C. 634(b)(6), (b)(7), (b)(14), (h), and note, 
636(a), (h) and (m), 650, 687(f), 696(3), and 697(a) and (e); Public 
Law 111-5, 123 Stat. 115, Public Law 111-240, 124 Stat. 2504; Public 
Law 114-113, 129 Stat. 2242.


Sec.  120.465  [Amended]

0
4. Paragraph (b) of Sec.  120.465 is amended by removing ``$6,299'' and 
adding in its place ``$6,331''.

PART 142--PROGRAM FRAUD CIVIL REMEDIES ACT REGULATIONS

0
5. The authority citation for part 142 continues to read as follows:

    Authority: 15 U.S.C. 634(b); 31 U.S.C. 3803(g)(2).


Sec.  142.1  [Amended]

0
6. Paragraph (b) of Sec.  142.1 is amended by removing ``$10,781'' and 
adding in its place ``$10,957''.

PART 146--NEW RESTRICTIONS ON LOBBYING

0
7. The authority citation for part 146 continues to read as follows:

    Authority: Section 319, Pub. L. 101-121 (31 U.S.C. 1352); 15 
U.S.C. 634(b)(6).


Sec.  146.400  [Amended]

0
8. Paragraphs (a), (b), and (e) of Sec.  146.400 are amended by 
removing ``$18,936'' wherever it appears and adding in its place 
``$19,246'' and by removing ``$189,361'' and adding in its place 
``$192,459''.

    Dated: February 3, 2017.
Joseph P. Loddo,
Acting Administrator.
[FR Doc. 2017-02657 Filed 2-8-17; 8:45 am]
 BILLING CODE 8025-01-P