[Federal Register Volume 82, Number 235 (Friday, December 8, 2017)]
[Rules and Regulations]
[Pages 57821-57825]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-26506]


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DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection

19 CFR Part 4

[CBP Dec. 17-20]
RIN 1651-AB15


Civil Monetary Penalty Adjustments for Inflation

AGENCY: U.S. Customs and Border Protection, DHS.

ACTION: Final rule.

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SUMMARY: This rule amends U.S. Customs and Border Protection (CBP) 
regulations to adjust for inflation the amounts that CBP can assess as 
civil monetary penalties for the following three violations--
transporting passengers between coastwise points in the United States 
by a non-coastwise qualified vessel; towing a vessel between coastwise 
points in the United States by a non-coastwise qualified vessel; and 
dealing in or using an empty stamped imported liquor container after it 
has already been used once. These adjustments are being made in in 
accordance with the Federal Civil Penalties Inflation Adjustment Act 
Improvements Act of 2015 (2015 Act) which was enacted on November 2, 
2015. Other CBP civil penalty amounts were adjusted pursuant to this 
2015 Act in previously published rule documents published in the 
Federal Register on July 1, 2016, and January 27, 2017, but the 
adjustments for these three civil penalties were inadvertently left out 
of those documents.

DATES: This rule is effective on December 8, 2017. The adjusted penalty 
amounts will be applicable for penalties assessed after December 8, 
2017 if the associated violations occurred after November 2, 2015.

FOR FURTHER INFORMATION CONTACT: Millie Gleason, Office of Field 
Operations, U.S. Customs and Border Protection. Phone: (202) 325-4291.

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Background

    On November 2, 2015, the President signed into law the Federal 
Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Pub. 
L. 114-74 section 701 (Nov. 2, 2015)) (2015 Act).\1\ The 2015 Act 
amended the Federal Civil Penalties Inflation Adjustment Act of 1990 
(28 U.S.C. 2461 note) (1990 Inflation Adjustment Act) to improve the 
effectiveness of civil monetary penalties and to maintain their 
deterrent effect. The 2015 Act required agencies to: (1) Adjust the 
level of civil monetary penalties with an initial ``catch-up'' 
adjustment through issuance of an interim final rule (IFR) and (2) make 
subsequent annual adjustments for inflation. Through the ``catch-up'' 
adjustment, agencies were required to adjust the maximum amounts of 
civil monetary penalties to more accurately reflect inflation rates. 
The 2015 Act directed the Office of Management and Budget (OMB) to 
issue guidance to agencies on implementing the initial ``catch-up'' 
adjustment. The 2015 Act required that agencies publish their IFRs in 
the Federal Register no later than July 1, 2016 and that the adjusted 
amounts were to take effect no later than August 1, 2016.
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    \1\ The 2015 Act was enacted as part of the Bipartisan Budget 
Act of 2015, Public Law 114-74 (Nov. 2, 2015).
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    For the subsequent annual adjustments, the 2015 Act requires 
agencies to increase the penalty amounts by a cost-of-living 
adjustment. The 2015 Act directs OMB to provide guidance to agencies 
each year to assist agencies in making the annual adjustments. The 2015 
Act requires agencies to make the annual adjustments no later than 
January 15 of each year and to publish the adjustments in the Federal 
Register.
    The Department of Homeland Security (DHS) undertook a review of the 
civil penalties that DHS and its components administer to determine 
which penalties would need adjustments. On July 1, 2016, DHS published 
an IFR adjusting the civil monetary penalties with an initial ``catch-
up'' adjustment, as required by the 2015 Act. See 81 FR 42987. DHS 
calculated the adjusted penalties based upon nondiscretionary 
provisions in the 2015 Act and upon guidance issued by OMB on February 
24, 2016.\2\ The adjusted penalties were effective for civil penalties 
assessed after August 1, 2016 (the effective date of the IFR) whose 
associated violations occurred after November 2, 2015 (the date of 
enactment of the 2015 Act).\3\ On January 27, 2017, DHS published a 
final rule adopting as final the civil monetary penalty adjustment 
methodology from the IFR and making the 2017 annual inflation 
adjustment pursuant to the 2015 Act and upon guidance OMB issued to 
agencies on December 16, 2016.\4\ See 82 FR 8571.
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    \2\ OMB, Implementation of the Federal Civil Penalties Inflation 
Adjustment Act Improvements Act of 2015, February 24, 2016. https://obamawhitehouse.archives.gov/sites/default/files/omb/memoranda/2016/m-16-06.pdf.
    \3\ DHS published a correction to the IFR on August 23, 2016 to 
correct one amendatory instruction. See 81 FR 57442.
    \4\ OMB, Implementation of the 2017 annual adjustment pursuant 
to the Federal Civil Penalties Inflation Adjustment Act Improvements 
Act of 2015, December 16, 2016. https://obamawhitehouse.archives.gov/sites/default/files/omb/memoranda/2017/m-17-11_0.pdf.
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    As discussed in Section II below, three civil monetary penalties 
assessed by CBP and subject to the 2015 Act were inadvertently omitted 
from these DHS rulemakings.

II. CBP Penalties

    CBP assesses or enforces penalties under various titles of the 
Unites States Code (U.S.C.) and the Code of Federal Regulations (CFR). 
These penalties include civil monetary penalties for certain violations 
of title 8 of the CFR pursuant to the Immigration and Nationality Act 
of 1952,\5\ as well as certain civil monetary penalties for customs 
violations for laws codified in title 19 of the U.S.C. and the CFR. CBP 
assesses many of the title 19 penalties under the Tariff Act of 1930, 
as amended, and as discussed in the IFR preamble at 81 FR 42987, the 
2015 Act specifically exempts Tariff Act penalties from the inflation 
adjustment requirements in the 2015 Act. For that reason, DHS did not 
list those penalties in the tables of CBP penalty adjustments in the 
DHS rulemakings. There are also various other monetary penalties found 
throughout the U.S.C. and CFR which CBP may seek to issue or enforce 
but which were not included in the tables because they fall within the 
purview of

[[Page 57822]]

another Department or Agency for purposes of the 2015 Act.\6\
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    \5\ Public Law 82-414, as amended (INA). The INA contains 
provisions that impose penalties on persons, including carriers and 
aliens, who violate specified provisions of the INA. While CBP is 
responsible for enforcing various provisions of the INA and 
assessing penalties for violations of those provisions, all the 
penalty amounts CBP can assess for violations of the INA are set 
forth in one section of title 8 of the CFR--8 CFR 280.53. For a 
complete list of the INA sections for which penalties are assessed, 
in addition to a brief description of each violation, see the IFR 
preamble at 81 FR 42989-42990.
    \6\ For example, CBP may enforce the Clean Diamond Trade Act 
penalty set forth in 19 U.S.C. 3907, which falls within the purview 
of the Department of Treasury. See 31 CFR part 501, app. A.
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    However, three non-Tariff Act penalties that are assessed by CBP 
were inadvertently omitted from the DHS rulemakings. The first is a 
penalty set forth at 19 U.S.C. 469, and not reflected in the CBP 
regulations, for dealing in or using already used empty stamped 
imported liquor containers. The other two penalties are set forth in 
title 46 of the U.S.C., 46 U.S.C. 55103 and 46 U.S.C. 55111 and 
reflected in the CBP regulations in 19 CFR part 4. Pursuant to 46 
U.S.C. 55103(b) and 19 CFR 4.80(b)(2), CBP assesses penalties for 
transporting passengers between coastwise points in the United States 
by a non-coastwise qualified vessel. Pursuant to 46 U.S.C. 55111(c) and 
19 CFR 4.92, CBP assesses penalties for towing a vessel between 
coastwise points in the United States by a non-coastwise qualified 
vessel.
    This final rule adjusts these penalty amounts using the same civil 
monetary penalty adjustment methodology that DHS announced in the IFR 
(81 FR 42987) and finalized in the DHS final rule (82 FR 8571), and 
detailed below.

III. Inflation Adjustment Methodology Required by 2015 Act

A. Overview

    The 2015 Act provides a new method for calculating inflation 
adjustments. The new method differs substantially from the methods that 
agencies used in the past when conducting inflation adjustments 
pursuant to the 1990 Inflation Adjustment Act. The new method is 
intended to more accurately reflect inflation. Previously, when 
agencies conducted adjustments to civil penalties, they did so under 
rules that required significant rounding of figures. For example, an 
agency would round a penalty increase that was greater than $1,000, but 
less than or equal to $10,000, to the nearest multiple of $1,000. While 
this allowed penalties to be kept at round numbers, it meant that 
agencies would often not increase penalties at all if the inflation 
factor was not large enough. Furthermore, increases to penalties were 
capped at 10 percent, which meant that longer periods without an 
inflation adjustment could cause a penalty to rapidly lose value in 
real terms. Over time, the formula used in the 1990 Inflation 
Adjustment Act calculations frequently caused penalties to lose value 
relative to actual inflation. The 2015 Act removed these rounding 
rules, and instead instructs agencies to round penalties to the nearest 
$1. While this creates penalty values that are no longer round numbers, 
it does ensure that agencies will increase penalties each year to a 
figure commensurate with the actual calculated inflation.
    To better reflect the original impact of civil penalties, the 2015 
Act ``resets'' the inflation calculations by excluding prior 
inflationary adjustments under the Inflation Adjustment Act. To do 
this, the 2015 Act requires agencies to identify, for each penalty, the 
year that Congress originally enacted the maximum penalty level/range 
of minimum and maximum penalty levels or the year that the agency last 
adjusted the penalty amount other than to pursuant to the Inflation 
Adjustment Act, and the corresponding penalty amount(s). The 2015 Act 
then requires agencies to perform an initial ``catch-up'' adjustment, 
using the original amounts of civil penalties as a baseline, so that 
the 2016 penalty levels are equal, in real terms, to the penalty 
amounts as they were originally established. The 2015 Act also requires 
agencies to make subsequent annual adjustments to increase the penalty 
amounts by a cost-of-living adjustment.

B. Catch-Up Adjustment

    This section sets forth the initial ``catch-up'' adjustment for 
three civil monetary penalties assessed by CBP that were inadvertently 
omitted from the DHS rulemakings. The catch-up adjustments for these 
three penalties are listed in Table 1 below. This table shows how DHS 
would have initially increased the penalties pursuant to the 2015 Act. 
The table contains the following information:
     In the first column (penalty name), we provide a 
description of the penalty.
     In the second column (citation), we provide the statutory 
cite from the United States Code (U.S.C.) and the regulatory cite from 
the Code of Federal Regulations (CFR).
     In the third column (current penalty), we list the 
existing penalty in effect on November 2, 2015.
     In the fourth column (baseline penalty (year)), we provide 
the amount and year of the penalty as enacted by Congress or as last 
changed through a mechanism other than pursuant to the Inflation 
Adjustment Act, whichever is later.
     In the fifth column (2016 multiplier), we list the 
multiplier used to adjust the penalty pursuant to the initial OMB 
catch-up guidance. The multiplier is determined by the year of 
enactment or last adjustment of the penalty. The multiplier is based 
upon the Consumer Price Index (CPI-U) for the month of October 2015, 
not seasonally adjusted.
     In the sixth column (preliminary new penalty), we list the 
amount obtained by multiplying the Baseline Penalty from column 4 with 
the Multiplier from column 5. This amount will be the catch-up 
adjustment amount, if, in accordance with the 2015 Act, this level does 
not increase penalty levels by more than 150 percent of the 
corresponding levels in effect on November 2, 2015.
     In the seventh column (adjusted 2016 penalty), we provide 
the number for the penalty as it would have been adjusted for 2016. To 
derive this number, we compare the preliminary new penalty with the 
current penalty from column 3. The adjusted new penalty is the lesser 
of either the preliminary new penalty or an amount equal to 150 percent 
more than the current penalty.

                                Table 1--U.S. Customs and Border Protection Civil Penalties Initial Catch-Up Adjustments
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                                                                                                                                         Adjusted 2016
                                                                                                                   Preliminary new    penalty  [increase
          Penalty name                  Citation         Current penalty    Baseline  penalty *       2016          penalty  [2016      capped at 150%
                                                                                   (year)         Multiplier **      multiplier x     more than  current
                                                                                                                  baseline  penalty]       penalty]
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Penalty for dealing in or using   19 U.S.C. 469......  $200...............  $200 (1879)........        23.54832  $4,710.............  $500.
 empty stamped imported liquor
 containers.

[[Page 57823]]

 
Penalty for transporting          46 U.S.C. 55103(b)   $300...............  $200 (1898)........        23.54832  $4,710.............  $750.
 passengers between coastwise      19 CFR 4.80(b)(2).
 points in the United States by
 a non-coastwise qualified
 vessel.
Penalty for towing a vessel       46 U.S.C. 55111(c)   $350-$1100, plus     $250-$1000, plus           16.98843  $4,247-$16,988,      $875-$2,750, plus
 between coastwise points in the   19 CFR 4.92.         $60 per ton.         $50 per ton (1940).                  plus $849 per ton.   $150 per ton.
 United States by a non-
 coastwise qualified vessel.
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* The amount of the penalty and the year when the penalty was established or last adjusted in statute or regulation other than pursuant to the Inflation
  Adjustment Act of 1990.
** OMB, Implementation of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Table A: 2016 Civil Monetary Penalty Catch-Up
  Adjustment Multiplier by Calendar Year, February 24, 2016. https://obamawhitehouse.archives.gov/sites/default/files/omb/memoranda/2016/m-16-06.pdf.

C. 2017 Adjustments

    This final rule also makes the 2017 annual inflation adjustment 
pursuant to the 2015 Act and the guidance OMB issued to agencies on 
December 16, 2016.\7\ Pursuant to 28 U.S.C. 2461 note sec. 6, as 
amended by the 2015 Act, the penalty amounts adjusted by this final 
rule will be applicable for penalties assessed after December 8, 2017 
where the associated violation occurred after November 2, 2015 (i.e., 
the date the 2015 Act was signed into law). Consistent with OMB 
guidance, the 2015 Act does not change previously assessed penalties 
that the agency is actively collecting or has collected.
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    \7\ See footnote 4.
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    In Table 2 below, we show: (1) The civil penalty (or penalties) 
name, (2) the penalty statutory and/or regulatory citation, (3) the 
penalty amount as it would have been adjusted in 2016 (see Table 1), 
(4) the cost-of-living adjustment multiplier for 2017 that OMB provided 
in its December 16, 2016 guidance, and (5) the new 2017 adjusted 
penalty.
    Additionally, we have made conforming edits to the regulatory text 
for the new adjusted penalty amounts in 19 CFR 4.80(b)(2) and 19 CFR 
4.92. Because the 19 U.S.C. 469 penalty is not included in the CFR, 
there are no conforming edits to be made to the regulatory text. 
However, this penalty is listed in Table 2 for informational purposes.

                  Table 2--U.S. Customs and Border Protection Civil Penalties 2017 Adjustments
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                                                              Adjusted 2016        2017        New  penalty as
           Penalty name                   Citation         penalty  (see Table  Multiplier    adjusted  by this
                                                                   1)                *           final rule
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Penalty for dealing in or using     19 U.S.C. 469.......  $500................     1.01636  $508.**
 empty stamped imported liquor
 containers.
Penalty for transporting            46 U.S.C. 55103(b)    $750................     1.01636  $762.
 passengers between coastwise        19 CFR 4.80(b)(2).
 points in the United States by a
 non-coastwise qualified vessel.
Penalty for towing a vessel         46 U.S.C. 55111(c)    $875-$2,750, plus        1.01636  $889-$2,795, plus
 between coastwise points in the     19 CFR 4.92.          $150 per ton.                     $152 per ton.
 United States by a non-coastwise
 qualified vessel.
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* OMB, Implementation of the 2017 annual adjustment pursuant to the Federal Civil Penalties Inflation Adjustment
  Act Improvements Act of 2015, December 16, 2016. https://obamawhitehouse.archives.gov/sites/default/files/omb/memoranda/2017/m-17-11_0.pdf.
** No applicable conforming edit to regulatory text.

IV. Administrative Procedure Act

    The Administrative Procedure Act (APA) generally requires agencies 
to publish a notice of proposed rulemaking in the Federal Register (5 
U.S.C. 553(b)) and to provide interested persons with the opportunity 
to submit comments (5 U.S.C. 553(c)). The APA also requires agencies to 
provide a delayed effective date (of not less than 30 days) for 
substantive rules. 5 U.S.C. 553(d). The 2015 Act, however, specifically 
instructed that agencies are to make the required annual adjustments 
notwithstanding section 553 of title 5, United States Code.
    DHS is promulgating this final rule to ensure that the amount of 
civil penalties that CBP assesses or enforces that was inadvertently 
omitted from the DHS rulemakings reflects the statutorily mandated 
ranges as adjusted for inflation. The 2015 Act provides a clear 
nondiscretionary formula for adjustment of the civil penalties; DHS and 
CBP have been charged only with performing ministerial computations to 
determine the amounts of adjustments for inflation to civil monetary 
penalties. Additionally, although the 2015 Act requires publication of 
an IFR to take effect not later than August 1, 2016, that date has 
passed and publishing a separate IFR to account for these inadvertently 
omitted penalty adjustments would cause unnecessary delay. Further, 
this final rule merely applies the adjustment methodology

[[Page 57824]]

that DHS provided for public comment in the 2016 IFR and finalized in 
the 2017 final rule. DHS finds that it is unnecessary to seek further 
public comment regarding the application of the finalized methodology 
to these three penalties. For these reasons, and as specified in the 
2015 Act, DHS finds good cause to promulgate these CBP civil monetary 
penalty adjustments as a final rule and finds that the prior public 
notice-and-comment procedures and delayed effective date requirements 
of the APA are unnecessary and do not apply to this rule.
    As described in Section I above, the 2015 Act requires agencies to 
make annual adjustments to civil monetary penalties no later than 
January 15 of each year and to publish the adjustments in the Federal 
Register. DHS will make future annual inflation adjustments required 
pursuant to the 2015 Act by final rule notwithstanding the notice-and-
comment and delayed effective date requirements of the APA, as required 
by the 2015 Act. For future annual adjustments, DHS will update the 
penalty amounts by applying a cost-of-living adjustment multiplier 
pursuant to OMB guidance. DHS will publish a final rule that provides a 
table with the adjusted penalty amounts and that updates the numbers in 
the regulatory text accordingly. DHS will incorporate the three CBP 
penalties adjusted in this final rule into such future annual 
adjustment final rules.

V. Regulatory Analyses

A. Executive Orders 12866, 13563, and 13771

    Executive Orders 12866 (``Regulatory Planning and Review'') and 
13563 (``Improving Regulation and Regulatory Review'') direct agencies 
to assess the costs and benefits of available regulatory alternatives 
and, if regulation is necessary, to select regulatory approaches that 
maximize net benefits (including potential 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. Executive Order 13771 (``Reducing Regulation and 
Controlling Regulatory Costs'') directs agencies to reduce regulation 
and control regulatory costs and provides that ``for every one new 
regulation issued, at least two prior regulations be identified for 
elimination, and that the cost of planned regulations be prudently 
managed and controlled through a budgeting process.''
    OMB has not designated this rule a significant regulatory action 
under section 3(f) of Executive Order 12866. Accordingly, OMB has not 
reviewed it. As this rule is not a significant regulatory action it is 
not subject to the requirements of Executive Order 13771. See OMB's 
Memorandum, ``Guidance Implementing Executive Order 13771, Titled 
`Reducing Regulation and Controlling Regulatory Costs''' (April 5, 
2017) at Q2.
    This final rule makes nondiscretionary adjustments to existing 
civil monetary penalties in accordance with the 2015 Act and OMB 
guidance.\8\ DHS therefore did not consider alternatives and does not 
have the flexibility to alter the adjustments of the civil monetary 
penalty amounts as provided in this rule. To the extent this final rule 
increases civil monetary penalties, it would result in an increase in 
transfers from persons or entities assessed a civil monetary penalty to 
the government.
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    \8\ See footnotes 2 and 4.
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B. Regulatory Flexibility Act

    The Regulatory Flexibility Act applies only to rules for which an 
agency publishes a notice of proposed rulemaking pursuant to 5 U.S.C. 
553(b). See 5 U.S.C. 601-612. The Regulatory Flexibility Act does not 
apply to this final rule because a notice of proposed rulemaking was 
not required for the reasons stated above.

C. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531-1538, 
requires Federal agencies to assess the effects of their discretionary 
regulatory actions. In particular, the Act addresses actions that may 
result in the expenditure by a State, local, or Tribal government, in 
the aggregate, or by the private sector of $100,000,000 (adjusted for 
inflation) or more in any one year. This final rule will not result in 
such an expenditure.

D. Paperwork Reduction Act

    The provisions of the Paperwork Reduction Act of 1995, 44 U.S.C. 
chapter 35, and its implementing regulations, 5 CFR part 1320, do not 
apply to this final rule, because this final rule does not trigger any 
new or revised recordkeeping or reporting.

VI. Signing Authority

    The signing authority for this document falls under 19 CFR 0.2(a). 
Accordingly, this document is signed by the Secretary of Homeland 
Security.

List of Subjects in 19 CFR Part 4

    Customs duties and inspection, Exports, Freight, Harbors, Maritime 
carriers, Oil pollution, Reporting and recordkeeping requirements, 
Vessels.

Amendments to the Regulations

    For the reasons stated in the preamble, CBP amends 19 CFR part 4 as 
follows:

PART 4--VESSELS IN FOREIGN AND DOMESTIC TRADES

0
1. The authority citation for part 4 continues to read in part as 
follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1431, 1433, 1434, 1624, 
2071 note; 46 U.S.C. 501, 60105.
* * * * *
    Sections 4.80, 4.80a, and 4.80b also issued under 19 U.S.C. 
1706a; 28 U.S.C. 2461 note; 46 U.S.C. 12112, 12117, 12118, 50501-
55106, 55107, 55108, 55110, 55114, 55115, 55116, 55117, 55119, 
56101, 55121, 56101, 57109; Pub. L. 108-7, Division B, Title II, 
Sec.  211;
* * * * *
    Section 4.92 also issued under 28 U.S.C. 2461 note; 46 U.S.C. 
55111;
* * * * *

0
2. Revise Sec.  4.80(b)(2) to read as follows:


Sec.  4.80  Vessels entitled to engage in coastwise trade.

* * * * *
    (b) * * *
    (2) The penalty imposed for the unlawful transportation of 
passengers between coastwise points is $300 for each passenger so 
transported and landed on or before November 2, 2015, and $762 for each 
passenger so transported and landed after November 2, 2015 (46 U.S.C. 
55103, as adjusted by the Federal Civil Penalties Inflation Adjustment 
Act Improvements Act of 2015).
* * * * *

0
3. Revise Sec.  4.92 to read as follows:


Sec.  4.92  Towing.

    No vessel other than a vessel documented for the coastwise trade, 
or which would be entitled to be so documented except for its tonnage 
(see Sec.  4.80), may tow a vessel other than a vessel in distress 
between points in the U.S. embraced within the coastwise laws, or for 
any part of such towing (46 U.S.C. 55111). The penalties for violation 
of this provision occurring on or before November 2, 2015, are a fine 
of from $350 to $1100 against the owner or master of the towing vessel 
and a further penalty against the towing vessel of $60 per ton of the 
towed vessel. The penalties for violation of this provision occurring 
after November 2, 2015, are a

[[Page 57825]]

fine of from $889 to $2,795 against the owner or master of the towing 
vessel and a further penalty against the towing vessel of $152 per ton 
of the towed vessel (46 U.S.C. 55111, as adjusted by the Federal Civil 
Penalties Inflation Adjustment Act Improvements Act of 2015).

    Dated: December 5, 2017.
Elaine C. Duke,
Acting Secretary of Homeland Security.
[FR Doc. 2017-26506 Filed 12-7-17; 8:45 am]
BILLING CODE 9111-14-P