[Federal Register Volume 84, Number 62 (Monday, April 1, 2019)]
[Rules and Regulations]
[Pages 12059-12061]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-06260]


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SMALL BUSINESS ADMINISTRATION

13 CFR Parts 107, 120, 142, and 146

RIN 3245-AH03


Civil Monetary Penalties Inflation Adjustments

AGENCY: U.S. Small Business Administration.

ACTION: Final rule.

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SUMMARY: The U.S. 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. The rule also makes a 
technical amendment to ensure that a reference to the penalty amount 
imposed on SBA Supervised Lenders for failure to file reports is 
consistent with current and future adjustments.

DATES: Effective Date: This rule is effective April 1, 2019.

[[Page 12060]]


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

SUPPLEMENTARY INFORMATION: 

I. Background

    On November 2, 2015, the Federal Civil Penalties Inflation 
Adjustment Act Improvements Act of 2015 (the 2015 Inflation Adjustment 
Improvements Act), Public Law 114-74, 129 Stat. 584, was enacted. 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 (hereinafter, both collectively 
referred to as ``the Act''). The Act required agencies to issue a final 
rule by August 1, 2016, to adjust the level of civil monetary penalties 
with an initial ``catch-up'' adjustment, and to annually adjust these 
monetary penalties for inflation by January 15 of each subsequent year. 
The 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 Procedure Act (APA), 5 
U.S.C. 553(b)(3)(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 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 published its initial adjustments to the civil 
monetary penalties, including an initial ``catch-up'' adjustment. 81 FR 
31489. These adjusted penalties became effective on August 1, 2016. SBA 
published its most recent annual adjustments to the monetary penalties 
in the Federal Register on February 21, 2018 (83 FR 7361), with an 
immediate effective date. This rule will establish the penalty amounts 
required to be adjusted in 2019.
    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, and specifically on the change 
between the October CPI-U preceding the date of adjustment and the 
prior year's CPI-U. Based on this methodology, the 2019 civil monetary 
penalty adjustment formula is October 2018 CPI-U (252.885)/October 2017 
CPI-U (246.663) = 1.02522. See, OMB memorandum, M-19-04, Implementation 
of Penalty Inflation Adjustments for 2019, Pursuant to the Federal 
Civil Penalties Inflation Adjustment Act Improvements Act of 2015, 
(December 14, 2018).

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 for each day that it 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.
    This rule amends Sec.  107.665 to adjust the current civil penalty 
from $259 to $266 per day of failure to file. The current civil penalty 
of $259 was multiplied by the multiplier of 1.02522 to reach a product 
of $266, rounded to the nearest dollar.

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

    According to the regulations at Sec.  120.465, any SBA Supervised 
Lender, as defined in 13 CFR 120.10, 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 lender fails to file the 
report, unless the SBA Supervised Lender can show that there is 
reasonable cause for its failure to file. This penalty is authorized by 
section 23(j)(1) of the Small Business Act, 15 U.S.C. 650(j)(1).
    This rule amends Sec.  120.465(b) to adjust the current civil 
penalty from $6,460 to $6,623 per day of failure to file. The current 
civil penalty of $6,460 was multiplied by the multiplier of 1.02522 to 
reach a product of $6,623, rounded to the nearest dollar.

3. 13 CFR 120.1500--Types of Enforcement Actions--SBA Lenders

    Currently, the regulation in 13 CFR 120.1500(c)(4), references the 
penalty amount in Sec.  120.465 and identifies it as $5,000. However, 
due to multiple inflation adjustments the amount has increased, and 
after publication of this rule, it will be further increased to $6,623. 
To resolve the inconsistency between Sec. Sec.  120.1500 and 120.465, 
and to avoid future confusion, SBA is amending Sec.  120.1500(c)(4) to 
remove the reference to the amount of the penalty.

4. 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 regulations 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 $11,181, for each statement or claim. The adjusted 
civil penalty amount was calculated by multiplying the current civil 
penalty of $11,181 by the multiplier of 1.02522 to reach a product of 
$11,463, rounded to the nearest dollar.

5. 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 to 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.
    This rule amends Sec.  146.400(a) and (b) to adjust the current 
civil penalty amounts to ``not less than $20,134 and not more than 
$201,340.'' The current civil penalty amounts of $19,639 and $196,387 
were multiplied by the multiplier of 1.02522 to reach a product of 
$20,134 and $201,340, 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 $20,134, and for second and subsequent offenses, to 
``not less than $20,134 and not more than $201,340.'' The current civil 
penalty amounts of $19,639 and $196,387 were multiplied by the 
multiplier of 1.02522 to reach a product

[[Page 12061]]

of $20,134 and $201,340 respectively, rounded to the nearest dollar.

III. Justification for Final Rule

    The Act provides that agencies shall annually adjust civil monetary 
penalties for inflation notwithstanding Section 553 of the APA. The Act 
also provides a non-discretionary cost-of-living formula for adjusting 
the annual civil monetary penalties. For these reasons, the 
requirements in sections 553(b) and (c) of the APA relating to notice 
and comment are inapplicable.

IV. Justification for Immediate Effective Date

    Section 553(d) of the APA 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 Act has provided SBA 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, 13132, 13771, 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 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. 801.
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 final rule has no federalism implications 
warranting preparation of a federalism assessment.
Executive Order 13771
    This rule is not an Executive Order 13771 regulatory action because 
this rule is not significant under Executive Order 12866.
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 are required. As stated above, SBA has express statutory 
authority to issue this rule without regard to the notice and comment 
requirement of the Administrative Procedure Act. 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 continues 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 ``$259'' and add in its place ``$266''.

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 7, and 697(a) and (e); 
Pub. L. 111-5, 123 Stat. 115, Pub. L. 111-240, 124 Stat. 2504.


Sec.  120.465  [Amended]

0
4. In Sec.  120.465, amend paragraph (b) by removing ``$6,460'' and 
adding in its place ``$6,623''.


Sec.  120.1500  [Amended]

0
 5. In Sec.  120.1500, amend paragraph (c)(4) by removing the words 
``of not more than $5,000 a day''.

PART 142--PROGRAM FRAUD CIVIL REMEDIES ACT REGULATIONS

0
6. 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
7. In Sec.  142.1, amend paragraph (b) by removing ``$11,181'' and 
adding in its place ``$11,463''.

PART 146--NEW RESTRICTIONS ON LOBBYING

0
8. 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
9. In Sec.  146.400, amend paragraphs (a), (b), and (e) by removing 
``$19,639'' wherever it appears and adding in its place ``$20,134'' and 
by removing ``$196,387'' and adding in its place ``$201,340''.

    Dated: March 25, 2019.
Linda E. McMahon,
Administrator.
[FR Doc. 2019-06260 Filed 3-29-19; 8:45 am]
 BILLING CODE 8025-01-P