[Federal Register Volume 82, Number 114 (Thursday, June 15, 2017)]
[Rules and Regulations]
[Pages 27431-27434]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-12071]


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NATIONAL FOUNDATION FOR THE ARTS AND HUMANITIES

National Endowment for the Arts

45 CFR Parts 1149 and 1158

RIN 3135-AA33


Implementing the Federal Civil Penalties Adjustment Act 
Improvements Act of 2015

AGENCY: National Endowment for the Arts, National Foundation for the 
Arts and Humanities.

ACTION: Interim final rule; request for comments.

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SUMMARY: The National Endowment for the Arts (NEA) is adjusting the 
maximum civil monetary penalties that may be imposed for violations of 
the Program Fraud and Civil Remedies Act (PFCRA) and the NEA's 
Restrictions on Lobbying to reflect the requirements of the Federal 
Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 
2015 Act). The 2015 Act further amended the Federal Civil Penalties 
Inflation Adjustment Act of 1990 (the Inflation Adjustment Act) to 
improve the effectiveness of civil monetary penalties and to maintain 
their deterrent effect.

DATES: 
    Effective date: This rule is effective June 15, 2017.
    Comments date: Submit comments on or before July 17, 2017.

ADDRESSES: You may submit comments, identified by RIN 3135-AA33, by any 
of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Email: [email protected]. Include RIN 3135-AA33 in 
the subject line of the message.
     Mail: National Endowment for the Arts, Office of the 
General Counsel, 400 7th Street SW., Second Floor, Washington, DC 
20506.
     Hand Delivery/Courier: National Endowment for the Arts, 
Office of the General Counsel, 400 7th Street SW., Second Floor, 
Washington, DC 20506.
    Instructions: All submissions received must include the agency name 
and docket number or Regulatory

[[Page 27432]]

Information Number (3135-AA27) for this rulemaking.
    Docket: For access to the docket to read background documents or 
comments received, go to 400 7th Street SW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Aswathi Zachariah, Assistant General 
Counsel, National Endowment for the Arts, 400 7th St. SW., Washington, 
DC 20506, Telephone: 202-682-5418.

SUPPLEMENTARY INFORMATION: 

1. Background

    The 2015 Act requires agencies to: (1) Adjust the level of civil 
monetary penalties with an initial ``catch-up'' adjustment through an 
interim final rulemaking; and (2) make subsequent annual adjustments 
for inflation. Inflation adjustments will be based on the percent 
change in the Consumer Price Index for all Urban Consumers (CPI-U) for 
the month of October preceding the date of the adjustment, relative to 
the October CPI-U in the year of the previous adjustment.
    The Office of Management and Budget has issued two memoranda, 
providing guidance on implementing and calculating adjustments.\1\
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    \1\ OMB Memoranda M-16-06 and M-17-11.
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    The NEA has identified two civil penalties in its regulations that 
require adjustment: (1) The penalty associated with Restrictions on 
Lobbying (45 CFR 1158.400; 45 CFR part 1158, app. A) and (2) the 
penalty associated with the Program Fraud Civil Remedies Act (45 CFR 
1149.9).

2. Method of Calculation

    For the first adjustment made in accordance with the 2015 Act, the 
amount of the adjustment is calculated based on the percent change 
between the CPI-U for October of the last year in which penalties were 
previously adjusted (not including any adjustment made pursuant to the 
Inflation Adjustment Act before November 2, 2015), and the CPI-U for 
October 2015. The 10 percent cap on adjustments imposed by the Debt 
Collection Improvement Act of 1996 has been eliminated by the 2015 Act. 
Instead, the 2015 Act imposes a cap on the amount of this initial 
adjustment, such that the amount of the increase may not exceed 150 
percent of the pre-adjustment penalty amount or range. As a result, the 
total penalty amount or range after the initial adjustment under the 
2015 Act may not exceed 250 percent of the pre-adjustment penalty 
amount or range.
    The 2015 Act also requires agencies to make annual adjustments to 
civil penalty amounts no later than January 15 of each year following 
the initial adjustment described above. For annual adjustments made in 
accordance with the 2015 Act, the amount of the adjustment is based on 
the percent increase between the CPI-U for the month of October 
preceding the date of the adjustment and the CPI-U for the October one 
year prior to the October immediately preceding the date of the 
adjustment. If there is no increase, there is no adjustment of civil 
penalties.
    This interim final rule incorporates the initial adjustment and one 
annual adjustment, and applies those adjustments cumulatively to each 
of the two civil regulatory penalties identified herein.

A. Adjustments to Penalties Under the NEA's Program Fraud and Civil 
Remedies Act Regulations

    For purposes of the initial adjustment under the 2015 Act, Congress 
last set or adjusted the amount of PFCRA civil penalties in 1986. 
Between October 1986 and October 2015, the CPI-U has increased by 
215.628 percent. The post-adjustment penalty amount or range is 
obtained by multiplying the pre-adjustment penalty amount or range by 
the percent change in the CPI-U over the relevant time period, and 
rounding to the nearest dollar. Therefore, this post-adjustment maximum 
penalty under the PFCRA is $5,000 x 2.15628 = $10,781.40, which rounds 
to $10,781. The new, post-adjustment penalty less than 250 percent of 
the pre-adjustment penalty, so the limitation on the amount of the 
adjustment is not implicated. Therefore, the maximum penalty under the 
PFCRA for false claims or statements for purposes of the first 
adjustment will be $10,781.
    This regulation also incorporates the subsequent required annual 
adjustment. The post-adjustment penalty or range is obtained by 
multiplying the pre-adjustment penalty or range by the percent change 
in the CPI-U over the relevant time period and rounding to the nearest 
dollar. Between October 2015 and October 2016, the CPI-U increased by 
101.636 percent. Therefore, the new post-adjustment maximum penalty 
under the PFCRA is $10,781 x 1.01636 = $10,957.38, which rounds to 
$10,957. The new, post-adjustment penalty is less than 250 percent of 
the pre-adjustment penalty, so the limitation on the amount of the 
adjustment is not implicated. Therefore, the maximum penalty under the 
PFCRA will be $10,957.

B. Adjustments to Penalties Under the NEA's Restrictions on Lobbying 
Regulations

    For purposes of the initial adjustment under the 2015 Act, Congress 
last set or adjusted the amount of Restrictions on Lobbying civil 
penalties in 1989. Between October 1989 and October 2015, the CPI-U has 
increased by 189.361 percent. The post-adjustment penalty amount or 
range is obtained by multiplying the pre-adjustment penalty amount or 
range by the percent change in the CPI-U over the relevant time period, 
and rounding to the nearest dollar. Therefore, the post-adjustment 
minimum penalty under the law on Restrictions on Lobbying is $10,000 x 
1.89361 = $18,936.10, which rounds to $18,936, and the post-adjustment 
maximum penalty under law on Restrictions on Lobbying is $100,000 x 
1.89361 = $189,361. The new, post-adjustment penalties are less than 
250 percent of the pre-adjustment penalties, so the limitation on the 
amount of the adjustment is not implicated. Therefore, the range of 
penalties under the law on Restrictions on Lobbying, for purposes of 
the first adjustment shall be between $18,936 and $189,361.
    This regulation also incorporates the subsequent required annual 
adjustment. The post-adjustment penalty or range is obtained by 
multiplying the pre-adjustment penalty or range by the percent change 
in the CPI-U over the relevant time period and rounding to the nearest 
dollar. Between October 2015 and October 2016, the CPI-U increased by 
101.636 percent. Therefore, the post-adjustment minimum penalty under 
the law on Restrictions on Lobbying is $18,936 x 1.01636 = $19,245.79, 
which rounds to $19,246, and the post-adjustment maximum penalty under 
law on Restrictions on Lobbying is $189,361 x 1.01636 = $192,458.95, 
which rounds to $192,459. The new, post-adjustment penalties are less 
than 250 percent of the pre-adjustment penalties, so the limitation on 
the amount of the adjustment is not implicated. Therefore, the range of 
penalties under the law on Restrictions on Lobbying, for purposes of 
the first adjustment shall be between $19,246 and $192,459.

3. Subsequent Annual Adjustments

    The 2015 Act also requires agencies to make annual adjustments to 
civil penalty amounts no later than January 15 of each year following 
the initial adjustment described above. For subsequent annual 
adjustments made in accordance with the 2015 Act, the amount of the 
adjustment will have the

[[Page 27433]]

same basis as the annual adjustments previously described herein (the 
percent increase between the CPI-U for the month of October preceding 
the date of the adjustment and the CPI-U for the October one year prior 
to the October immediately preceding the date of the adjustment). If 
there is no increase, there is no adjustment of civil penalties. 
Therefore, if the NEA adjusts penalties in January 2018, the adjustment 
will be calculated based on the percent change between the CPI-U for 
October 2017 (the October immediately preceding the date of adjustment) 
and October 2016 (the October one year prior to October 2017). The NEA 
will publish the amount of these annual inflation adjustments in the 
Federal Register no later than January 15 of each year.

4. Compliance

Regulatory Planning and Review (Executive Order 12866)

    Executive Order 12866 (E.O. 12866) established a process for review 
of rules by the Office of Information and Regulatory Affairs, which is 
within the Office of Management and Budget (OMB). Only ``significant'' 
proposed and final rules are subject to review under this Executive 
Order. ``Significant,'' as used in E.O. 12866, means ``economically 
significant.'' It refers to rules with (1) an impact on the economy of 
$100 million; or that (2) were inconsistent or interfered with an 
action taken or planned by another agency; (3) materially altered the 
budgetary impact of entitlements, grants, user fees, or loan programs; 
or (4) raised novel legal or policy issues.
    This interim final rule would not be a significant policy change 
and OMB has not reviewed this interim final rule under E.O. 12866. We 
have made the assessments required by E.O. 12866 and determined that 
this rulemaking: (1) Will not have an effect of $100 million or more on 
the economy; (2) will not adversely affect in a material way the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or Tribal governments or 
communities; (3) will not create a serious inconsistency or otherwise 
interfere with an action taken or planned by another agency; (4) does 
not alter the budgetary effects of entitlements, grants, user fees, or 
loan programs or the rights or obligations of their recipients; and (5) 
does not raise novel legal or policy issues.

Federalism (Executive Order 13132)

    This rulemaking does not have Federalism implications, as set forth 
in E.O. 13132. As used in this order, Federalism implications mean 
``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.'' The NEA 
has determined that this rulemaking will not have Federalism 
implications within the meaning of E.O. 13132.

Civil Justice Reform (Executive Order 12988)

    This Directive meets the applicable standards set forth in section 
3(a) and 3(b)(2) of E.O. 12988. Specifically, this interim final rule 
is written in clear language designed to help reduce litigation.

Indian Tribal Governments (Executive Order 13175)

    Under the criteria in E.O. 13175, we have evaluated this interim 
final rule and determined that it would have no potential effects on 
Federally recognized Indian Tribes.

Takings (Executive Order 12630)

    Under the criteria in E.O. 12630, this rulemaking does not have 
significant takings implications. Therefore, a takings implication 
assessment is not required.

Regulatory Flexibility Act of 1980 (5 U.S.C. 605(b))

    This rulemaking will not have a significant adverse impact on a 
substantial number of small entities, including small businesses, small 
governmental jurisdictions, or certain small not-for-profit 
organizations.

Paperwork Reduction Act of 1995 (44 U.S.C., Chapter 35)

    This rulemaking will not impose any ``information collection'' 
requirements under the Paperwork Reduction Act. Under the act, 
information collection means the obtaining or disclosure of facts or 
opinions by or for an agency by 10 or more nonfederal persons.

Unfunded Mandates Act of 1995 (Section 202, Pub. L. 104-4)

    This rulemaking does not contain a Federal mandate that will result 
in the expenditure by State, local, and tribal governments, in the 
aggregate, or by the private sector of $100 million or more in any one 
year.

National Environmental Policy Act of 1969 (5 U.S.C. 804)

    The interim final rule will not have significant effect on the 
human environment.

Small Business Regulatory Enforcement Fairness Act of 1996 (Sec. 804, 
Pub. L. 104-121)

    This interim final rule would not be a major rule as defined in 
section 804 of the Small Business Regulatory Enforcement Fairness Act 
of 1996. This interim final rule will not result in an annual effect on 
the economy of $100,000,000 or more, a major increase in costs or 
prices, significant adverse effects on competition, employment, 
investment, productivity, innovation, or on the ability of United 
States-based companies to compete with foreign based companies in 
domestic and export markets.

E-Government Act of 2002 (44 U.S.C. 3504)

    Section 206 of the E-Government Act requires agencies, to the 
extent practicable, to ensure that all information about that agency 
required to be published in the Federal Register is also published on a 
publicly accessible Web site. All information about the NEA required to 
be published in the Federal Register may be accessed at www.arts.gov. 
This Act also requires agencies to accept public comments on their 
rules ``by electronic means.'' See heading ``Public Participation'' for 
directions on electronic submission of public comments on this interim 
final rule.
    Finally, the E-Government Act requires, to the extent practicable, 
that agencies ensure that a publicly accessible Federal Government Web 
site contains electronic dockets for rulemakings under the 
Administrative Procedure Act of 1946 (5 U.S.C. 551 et seq.). Under this 
Act, an electronic docket consists of all submissions under section 
553(c) of title 5, United States Code; and all other materials that by 
agency rule or practice are included in the rulemaking docket under 
section 553(c) of title 5, United States Code, whether or not submitted 
electronically. The Web site https://www.regulations.gov contains 
electronic dockets for the NEA's rulemakings under the Administrative 
Procedure Act of 1946.

Plain Writing Act of 2010 (5 U.S.C. 301)

    Under this Act, the term ``plain writing'' means writing that is 
clear, concise, well-organized, and follows other best practices 
appropriate to the subject or field and intended audience. To ensure 
that this rulemaking has been written in plain and clear language so 
that it can be used and understood by the public, the NEA has modeled 
the

[[Page 27434]]

language of this rule on the Federal Plain Language Guidelines.

Public Participation

    The NEA has written this interim final rule in compliance with E.O. 
13563 by ensuring its accessibility, consistency, simplicity of 
language, and overall comprehensibility. In addition, the public 
participation goals of this order are also satisfied by the NEA's 
participation in a process in which its views and information are made 
public to the extent feasible, and before any decisions are actually 
made. This will allow the public the opportunity to react to the 
comments, arguments, and information of others during the rulemaking 
process. The NEA initiates its participation in an open exchange by 
posting the regulation and its rulemaking docket on https://www.regulations.gov.
    Finally, Section 2 of E.O. 13563 directs agencies, where feasible 
and appropriate, to seek the views of those who are likely to be 
affected by rulemaking. This provision emphasizes the importance of 
prior consultation with ``those who are likely to benefit from and 
those who are potentially subject to such rulemaking.'' One goal is to 
solicit ideas about alternatives, relevant costs and benefits (both 
quantitative and qualitative), and potential flexibilities. The NEA 
reaches out to interested and affected parties by soliciting comments.

List of Subjects in 45 CFR Parts 1149 and 1158

    Administrative practice and procedure, Government contracts, Grant 
programs, Loan programs, Lobbying, Penalties.

    For the reasons stated in the preamble, the NEA amends 45 CFR parts 
1149 and 1158 as follows:

PART 1149--PROGRAM FRAUD CIVIL REMEDIES ACT REGULATIONS

0
1. The authority citation for part 1149 is revised to read as follows:

    Authority:  5 U.S.C. App. 8G(a)(2); 20 U.S.C. 959; 28 U.S.C. 
2461 note; 31 U.S.C. 3801-3812.


Sec.  1149.9   [Amended]

0
2. Amend Sec.  1149.9(a)(1) by removing ``$5,000'' and adding in its 
place ``$10,957''.

PART 1158--NEW RESTRICTIONS ON LOBBYING

0
3. The authority citation for part 1158 is revised to read as follows:

    Authority:  20 U.S.C. 959; 28 U.S.C. 2461; 31 U.S.C. 1352.


Sec.  1158.400   [Amended]

0
4. Amend Sec.  1158.400(a) and (b) by:
0
a. Removing ``$10,000'' and adding in its place ``$19,246'' each place 
it appears.
0
b. Removing ``$100,000'' and adding in its place ``$192,459'' each 
place it appears.

Appendix A to Part 1158 [Amended]

0
5. Amend appendix A to part 1158 by:
0
a. Removing ``$10,000'' and adding in its place ``$19,246'' each place 
it appears.
0
b. Removing ``$100,000'' and adding in its place ``$192,459'' each 
place it appears.

    Dated: June 7, 2017.
Kathy N. Daum,
Director, Administrative Services Office.
[FR Doc. 2017-12071 Filed 6-14-17; 8:45 am]
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