[Federal Register Volume 85, Number 47 (Tuesday, March 10, 2020)]
[Rules and Regulations]
[Pages 13725-13727]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-04278]


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SMALL BUSINESS ADMINISTRATION

13 CFR Parts 107, 120, 142, and 146

RIN 3245-AH24


Civil Monetary Penalties Inflation Adjustments

AGENCY: U.S. Small Business Administration.

ACTION: 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: This rule is effective March 10, 2020.

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 Act), Public Law 114-74, 
129 Stat. 584, was enacted. The 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 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 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

[[Page 13726]]

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.
    SBA published in the Federal Register an interim final rule with 
its initial adjustments to the civil monetary penalties, including an 
initial ``catch-up'' adjustment, on May 19, 2016 (81 FR 31489), with an 
effective date of August 1, 2016. SBA published its first annual 
adjustments to the monetary penalties on February 9, 2017 (82 FR 9967), 
with an immediate effective date. SBA published its subsequent annual 
adjustments for 2018 on February 21, 2018 (83 FR 7361), and for 2019 on 
April 1, 2019 (84 FR 12059), both with immediate effective dates. This 
rule will establish the adjusted penalty amounts for 2020 with 
immediate effective date upon publication.
    On December 16, 2019, the Office of Management and Budget published 
its annual guidance memorandum for 2020 civil monetary penalties 
inflation adjustments (M-20-05, Implementation of Penalty Inflation 
Adjustments for 2020, Pursuant to the Federal Civil Penalties Inflation 
Adjustment Act Improvements Act of 2015). The guidance memorandum 
provides the formula for calculating the annual adjustments 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 2020 civil monetary 
penalty inflation adjustment is October 2019 CPI-U (257.346)/October 
2018 CPI-U (252.885) = 1.01764. The annual adjustments identified in 
this rule were obtained by applying this multiplier of 1.01764 to the 
most recently adjusted penalty amounts that were published in SBA's 
2019 adjustments to civil monetary penalties (84 FR 12059, April 1, 
2019).

II. Civil Money Penalties Adjusted by This Rule

    This rule adjusts 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 $266 to $271 per day of failure to file. The current civil penalty 
of $266 was multiplied by the multiplier of 1.01764 to reach a product 
of $271, 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 company 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 $6,623 to $6,740 per day of failure to file. The current 
civil penalty of $6,623 was multiplied by the multiplier of 1.01764 to 
reach a product of $6,740, rounded to the nearest dollar.

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 13 
CFR 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 $11,463, for each statement or claim. The adjusted civil 
penalty amount was calculated by multiplying the current civil penalty 
of $11,463 by the multiplier of 1.01764 to reach a product of $11,665, 
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.
    This rule amends Sec.  146.400(a) and (b) to adjust the current 
civil penalty amounts to ``not less than $20,489 and not more than 
$204,892.'' The current civil penalty amounts of $20,134 and $201,340 
were multiplied by the multiplier of 1.01764 to reach a product of 
$20,489 and $204,892, 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 $20,489 and to adjust the civil penalty that may be imposed for 
second and subsequent offenses to ``not less than $20,489 and not more 
than $204,892.'' The current civil penalty amounts of $20,134 and 
$201,340 were multiplied by the multiplier of 1.01764 to reach a 
product of $20,489 and $204,892 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. 
Additionally, the Act provides a non-discretionary cost-of-living 
formula for annual adjustment of the civil monetary penalties. For 
these reasons, the requirements in sections 553(b), (c), and (d) of the 
APA, relating to notice and comment and requiring that a rule be 
effective 30 days after publication in the Federal Register, are 
inapplicable.

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 
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.

[[Page 13727]]

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. 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 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

    The Regulatory Flexibility Act (``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 APA. 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 ``$266'' and add in its place ``$271''.

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); 
Pub. L. 111-5, 123 Stat. 115, Pub. L. 111-240, 124 Stat. 2504; Pub. 
L. 114-38, 129 Stat.437.


Sec.  120.465  [Amended]

0
4. In Sec.  120.465, amend paragraph (b) by removing ``$6,623'' and 
adding in its place ``$6,740''.

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. In Sec.  142.1, amend paragraph (b) by removing ``$11,463'' and 
adding in its place ``$11,665''.

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. Amend Sec.  146.400 by removing ``$20,134'' wherever it appears and 
adding in its place ``$20,489'' and by removing ``$201,340'' wherever 
it appears and adding in its place ``$204,892''.

    Dated: February 24, 2020.
Jovita Carranza,
Administrator.
[FR Doc. 2020-04278 Filed 3-9-20; 8:45 am]
 BILLING CODE 8026-03-P