[Federal Register Volume 86, Number 183 (Friday, September 24, 2021)]
[Rules and Regulations]
[Pages 52955-52957]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-20602]


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SMALL BUSINESS ADMINISTRATION

13 CFR Parts 107, 120, 142, and 146

RIN 3245-AH57


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 September 24, 2021.

FOR FURTHER INFORMATION CONTACT: Arlene Embrey, 202-567-1164 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 
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. The 2015 Inflation Adjustment 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.
    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.
    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), for 2019 on 
April 1, 2019 (84 FR 12059), and for 2020 on March 10, 2020 (85 FR 
13725), all with immediate effective dates. This rule will establish 
the adjusted penalty amounts for 2021 with an immediate effective date 
upon publication.
    On December 23, 2020, the Office of Management and Budget (OMB) 
published its annual guidance memorandum for 2021 civil monetary 
penalties inflation adjustments (M-21-10, Implementation of Penalty 
Inflation Adjustments for 2021, Pursuant to the Federal Civil Penalties 
Inflation Adjustment Act Improvements Act of 2015). The 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 2021 civil monetary 
penalty inflation adjustment factor is 1.01182 (October 2020 CPI-U 
(260.388)/October 2019 CPI-U (257.346). The annual adjustment amounts 
identified in this rule were obtained by applying this multiplier of 
1.01182 to those penalty amounts that were published in SBA's 2020 
adjustments to civil monetary penalties at 85 FR 13725 (March 10, 2020) 
and to the civil monetary penalty found at 13 CFR 120.1500(b)(2), first 
published March 16, 2020, at 85 FR 14783.

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 $271 to $274 per day of failure to file. The current civil penalty 
of $271 was multiplied by the multiplier of 1.01182 to reach a product 
of $274, rounded to the nearest dollar.

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    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 $6,740 to $6,820 per day of failure to file. The current 
civil penalty of $6,740 was multiplied by the multiplier of 1.01182 to 
reach a product of $6,820, rounded to the nearest dollar.
    3. 13 CFR 120.1500--Types of Formal Enforcement Actions--SBA 
Lenders.
    According to the regulations at Sec.  120.1500(b), SBA may assess a 
civil monetary penalty against a 7(a) Lender. In determining whether to 
assess a civil monetary penalty and, if so, in what amount, SBA may 
consider: the gravity (e.g., severity and frequency) of the violation; 
the history of previous violations; the financial resources and good 
faith of the 7(a) Lender; and any other matters as justice may require. 
This penalty is authorized by the Small Business Act, 15 U.S.C. 
657t(e)(2)(B).
    This rule amends Sec.  120.1500(b)(2) to adjust the current civil 
penalty from $250,000 to $252,955. The current civil penalty of 
$250,000 was multiplied by the multiplier of 1.01182 to reach a product 
of $252,955.
    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 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 $11,665, for each statement or claim.
    This rule amends Sec.  142.1(b) to adjust the current civil penalty 
from $11,665 to $11,803. The adjusted civil penalty amount was 
calculated by multiplying the current civil penalty of $11,665 by the 
multiplier of 1.01182 to reach a product of $11,803, 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 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 $20,731 and not more than 
$207,314.'' The current civil penalty amounts of $20,489 and $204,892 
were multiplied by the multiplier of 1.01182 to reach a product of 
$20,731 and $207,314, 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 $20,731 and to adjust the civil penalty that may be imposed for 
second and subsequent offenses to ``not less than $20,731 and not more 
than $207,314.'' The current civil penalty amounts of $20,489 and 
$204,892 were multiplied by the multiplier of 1.01182 to reach a 
product of $20,731 and $207,314 respectively, rounded to the nearest 
dollar.

Compliance With Executive Orders 12866, 12988, 13132, and the 
Administrative Procedure Act (5 U.S.C. 553), the Congressional Review 
Act (5 U.S.C. 801-808), 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 determined that this final rule 
is not a significant regulatory action under Executive Order 12866.

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 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.

The Administrative Procedure Act (APA)

    The APA requires agencies generally to provide notice and an 
opportunity for public comment before adopting a rule unless the agency 
for good cause finds that notice and comment are impracticable, 
unnecessary, or contrary to the public interest. 5 U.S.C. 553(b). The 
APA also requires agencies to allow at least 30-days after publication 
for a final rule to become effective ``except as otherwise provided by 
the agency for good cause found and published with the rule.'' (5 
U.S.C. 553(d). For the following reasons prior public notice, an 
opportunity for public comment, and a delayed effective date are not 
required for this rule. The 2015 Inflation Adjustment Act directs 
agencies to adjust their civil penalties annually notwithstanding 
section 553 of the APA. 28 U.S.C. 2461 note, sec. 4(b)(2). This 
exemption from the notice and comment, and delayed effective date 
requirements of the APA, in effect provides SBA with the good cause 
justification to promulgate this as a final rule that will become 
effective immediately on the date it is published in the Federal 
Register. Additionally, the 2015 Inflation Adjustment Act provides a 
non-discretionary cost-of-living formula for making the annual 
adjustment to the civil monetary penalties; SBA merely performs the 
ministerial task of calculating the amount of the adjustments. 
Therefore, even without the statutory exemption from the APA, notice 
and comment would be unnecessary.

The Congressional Review Act (CRA)

    The Office of Management and Budget determined that this rule is 
not a major rule under 5 U.S.C. 804(2).

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

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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 ``$271'' and add in its place ``$274''.

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), 636m, 650, 687(f), 696(3), 697, 697a, and 
697e; Public Law 111-5, 123 Stat. 115; Public Law 111-240, 124 Stat. 
2504; Public Law 116-260, 134 Stat. 1182.


Sec.  120.465  [Amended]

0
4. In Sec.  120.465, amend paragraph (b) by removing ``$6,740'' and 
adding in its place ``$6,820''.


Sec.  120.1500   [Amended]

0
5. In Sec.  120.1500, amend paragraph (b)(2) by removing ``$250,000'' 
and adding in its place ``$252,955''.

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 ``$11,665'' and 
adding in its place ``$11,803''.

PART 146--NEW RESTRICTIONS ON LOBBYING

0
8. The authority citation for part 146 is revised to read as follows:

    Authority:  31 U.S.C. 1352 and 15 U.S.C. 634(b)(6).


Sec.  146.400   [Amended]

0
9. Amend Sec.  146.400 by removing ``$20,489'' wherever it appears and 
adding in its place ``$20,731'' and by removing ``$204,892'' wherever 
it appears and adding in its place ``$207,314''.

Isabella Casillas Guzman,
Administrator.
[FR Doc. 2021-20602 Filed 9-23-21; 8:45 am]
BILLING CODE 8026-03-P