[Federal Register Volume 88, Number 7 (Wednesday, January 11, 2023)]
[Rules and Regulations]
[Pages 1505-1507]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-00353]


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DEPARTMENT OF STATE

22 CFR Parts 35, 103, 127, and 138

[Public Notice: 11959]
RIN 1400-AF59


Department of State 2023 Civil Monetary Penalties Inflationary 
Adjustment

AGENCY: Department of State.

ACTION: Final rule.

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SUMMARY: This final rule is issued to adjust the civil monetary 
penalties (CMP) for regulatory provisions maintained and enforced by 
the Department of State. The revised CMP adjusts the amount of civil 
monetary penalties assessed by the Department of State based on the 
December 2022 guidance from the Office of Management and Budget and by 
recent legislation. For penalties adjusted according to the December 
2022 guidance, the new amounts will apply only to those penalties 
assessed on or after the effective date of this rule, regardless of the 
date on which the underlying facts or violations occurred. For the 
penalty adjusted according to recent legislation, the new amounts will 
apply only to those penalties assessed for violations occurring on or 
after December 27, 2022.

DATES: This final rule is effective on January 11, 2023.

FOR FURTHER INFORMATION CONTACT: Alice Kottmyer, Attorney-Adviser, 
Office of Management, [email protected]. ATTN: Regulatory Change, 
CMP Adjustments, (202) 647-2318.

SUPPLEMENTARY INFORMATION: The Federal Civil Penalties Inflation 
Adjustment Act of 1990, Pub. L. 101-410, as amended by the Debt 
Collection Improvement Act of 1996, Pub. L. 104-134, required the head 
of each agency to adjust its CMPs for inflation no later than October 
23, 1996 and required agencies to make adjustments at least once every 
four years thereafter. The Federal Civil Penalties Inflation Adjustment 
Act Improvements Act of 2015, Section 701 of Pub. L. 114-74 (the 2015 
Act) further amended the 1990 Act by requiring agencies to adjust CMPs, 
if necessary, pursuant to a ``catch-up'' adjustment methodology 
prescribed by the 2015 Act, which mandated that the catch-up adjustment 
take effect no later than August 1, 2016. Additionally, the 2015 Act 
required agencies to make annual adjustments to their respective CMPs 
in accordance with guidance issued by the Office of Management and 
Budget (OMB).
    Based on these statutes, the Department of State (the Department) 
published a final rule in June 2016 \1\ to implement the ``catch-up'' 
provisions; and annual updates to its CMPs in January 2017,\2\ January 
2018,\3\ March 2019 (delayed due to the Government shutdown),\4\ 
January 2020,\5\ February 2021 (delayed due to transition issues),\6\ 
and January 2022.\7\
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    \1\ 81 FR 36771 (Jun. 8, 2016).
    \2\ 82 FR 3168 (Jan. 11, 2017).
    \3\ 83 FR 234 (Jan. 3, 2018).
    \4\ 84 FR 9957 (Mar. 19, 2019).
    \5\ 85 FR 2020 (Jan. 14, 2020).
    \6\ 86 FR 7804 (Feb. 2, 2021).
    \7\ 87 FR 1072 (Jan. 10, 2022).
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    On December 15, 2022, OMB notified agencies that the annual cost-
of-living adjustment multiplier for fiscal year (FY) 2023, based on the 
Consumer Price Index, is 1.07745. Additional information may be found 
in OMB Memorandum M-23-05 at: https://www.whitehouse.gov/wp-content/uploads/2022/12/M-23-05-CMP-CMP-Guidance.pdf. This final rule amends 
Department CMPs for fiscal year 2023, with the exception of the CMP for 
violation of 22 U.S.C 2778 at 22 CFR 127.10(a)(1)(i), which is amended 
in accordance with section 9708 of the James M. Inhofe National Defense 
Authorization Act for Fiscal Year 2023, Pub. L. 117-263.

Overview of the Areas Affected by This Rule

    Within the Department of State (title 22, Code of Federal 
Regulations), this rule affects four areas:
    (1) Part 35, which implements the Program Fraud Civil Remedies Act 
of 1986 (PFCRA), codified at 31 U.S.C. 3801-3812;
    (2) Part 103, which implements the Chemical Weapons Convention 
Implementation Act of 1998 (CWC Act) (22 U.S.C. 6761);
    (3) Part 127, which implements the penalty provisions of sections 
38(e), 39A(c), and 40(k) of the Arms Export Control Act (AECA) (22 
U.S.C. 2778(e), 2779a(c), and 2780(k)); and
    (4) Part 138, which implements section 319 of Pub. L. 101-121, 
codified at 31 U.S.C. 1352, which prohibits recipients of Federal 
contracts, grants, and loans from using appropriated funds for lobbying 
the executive or legislative branches of the Federal Government in 
connection with a specific contract.

Specific Changes to 22 CFR Made by this Rule

I. Part 35

    The PFCRA, enacted in 1986, authorizes agencies, with approval from 
the Department of Justice, to pursue individuals or firms for false 
claims. Applying the FY 2023 inflationary adjustment of 1.07745, the 
new maximum penalty is $13,508 for each false claim or statement, up to 
a maximum of $405,270.

II. Part 103

    The CWC Act provided domestic implementation of the Convention on 
the Prohibition of the Development, Production, Stockpiling, and Use of 
Chemical Weapons and on Their Destruction. The penalty provisions of 
the CWC Act are codified at 22 U.S.C. 6761. Applying the FY 2023 
multiplier, the new maximum amounts are as follows: prohibited acts 
related to inspections, $45,429; for recordkeeping violations, $9,086.

III. Part 127

    The Assistant Secretary of State for Political-Military Affairs is 
responsible for the imposition of CMPs under the International Traffic 
in Arms Regulations (ITAR), which is administered by the Directorate of 
Defense Trade Controls (DDTC).

[[Page 1506]]

(1) AECA Section 38(e)
    Amended in accordance with section 9708 of Public Law 117-263, the 
new maximum penalty under 22 U.S.C. 2778 (22 CFR 127.10(a)(1)(i)) is 
the greater of $1,200,000 or the amount that is twice the value of the 
transaction that is the basis of the violation with respect to which 
the penalty is imposed.
(2) AECA Section 39A(c)
    Applying the multiplier, the new maximum penalty under 22 U.S.C. 
2779a (22 CFR 127.10(a)(1)(ii)) is $996,685, or five times the amount 
of the prohibited payment, whichever is greater.
(3) AECA Section 40(k)
    Applying the multiplier, the new maximum penalty under 22 U.S.C. 
2780 (22 CFR 127.10(a)(1)(iii)) is $1,186,338.

IV. Part 138

    Section 319 of Public Law 101-121, codified at 31 U.S.C. 1352, 
provides penalties for recipients of Federal contracts, grants, and 
loans who use appropriated funds to lobby the executive or legislative 
branches of the Federal Government in connection with a specific 
contract, grant, or loan. Any person who violates that prohibition is 
subject to a civil penalty. The statute also requires each person who 
requests or receives a Federal contract, grant, cooperative agreement, 
loan, or a Federal commitment to insure or guarantee a loan, to 
disclose any lobbying; there is a penalty for failure to disclose.
    Applying the FY 2023 multiplier, the maximum penalties for both 
improper expenditures and failure to disclose, is: for first offenders, 
$23,343; for others, not less than $23,727, and not more than $237,268.

Summary

                       FY 2023 Multiplier: 1.07745
------------------------------------------------------------------------
                                                        New (FY 23) max
       Citation in 22 CFR         FY22 Max penalties       penalties
------------------------------------------------------------------------
Sec.   35.3.....................  $12,537 up to       $13,508 up to
                                   $376,138.           $405,270.
Sec.   103.6(a)(1) Prohibited     $42,163...........  $45,429.
 Acts.
Sec.   103.6(a)(2) Recordkeeping  $8,433............  $9,086.
 Violations.
Sec.   127.10(a)(1)(i)..........  $1,272,251........  the greater of
                                                       $1,200,000 or the
                                                       amount that is
                                                       twice the value
                                                       of the
                                                       transaction that
                                                       is the basis of
                                                       the violation
                                                       with respect to
                                                       which the penalty
                                                       is imposed.
Sec.   127.10(a)(1)(ii).........  $925,041 or five    $996,685, or five
                                   times the amount    times the amount
                                   of the prohibited   of the prohibited
                                   payment,            payment,
                                   whichever is        whichever is
                                   greater.            greater.
Sec.   127.10(a)(1)(iii)........  $1,101,061........  $1,186,338.
Sec.   138.400 First Offenders..  $21,665...........  $23,343.
Sec.   138.400..................  $22,021 up to       $23,727 up to
                                   $220,213.           $237,268.
------------------------------------------------------------------------

Effective Date of Penalties

    The revised CMP amounts for all penalties other than the penalty at 
22 CFR 127.10(a)(1)(i) will go into effect on the date this rule is 
published. All violations for which those CMPs are assessed on or after 
the effective date of this rule, regardless of whether the violation 
occurred before the effective date, will be assessed at the adjusted 
penalty level. For the penalty at 22 CFR 127.10(a)(1)(i) adjusted 
according to section 9708 of Public Law 117-263, the new amounts will 
apply only to those penalties assessed for violations occurring on or 
after December 27, 2022.

Future Adjustments and Reporting

    The 2015 Act directed agencies to undertake an annual review of 
CMPs using a formula prescribed by the statute. Annual adjustments to 
CMPs are made in accordance with the guidance issued by OMB. As in this 
rulemaking, the Department of State will publish notification of annual 
inflation adjustments to CMPs in the Federal Register no later than 
January 15 of each year, with the adjusted amount taking effect 
immediately upon publication.

Regulatory Analysis and Notices

Administrative Procedure Act

    The Department of State is publishing this rule using the ``good 
cause'' exception to the Administrative Procedure Act (5 U.S.C. 
553(b)), as the Department has determined that public comment on this 
rulemaking would be impractical, unnecessary, or contrary to the public 
interest. This rulemaking is mandatory and entirely without agency 
discretion; it implements Public Law 114-74. See 5 U.S.C. 553(d)(3).

Regulatory Flexibility Act

    Because this rulemaking is exempt from 5 U.S.C. 553, a regulatory 
flexibility analysis is not required.

Unfunded Mandates Reform Act of 1995

    This rule does not involve a 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 year and it 
will not significantly or uniquely affect small governments. Therefore, 
no actions were deemed necessary under the provisions of the Unfunded 
Mandates Reform Act of 1995.

Congressional Review Act

    This rule is not a major rule within the meaning of the 
Congressional Review Act, 5 U.S.C. 801 et seq.

Executive Orders 12372 and 13132

    This amendment 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, in accordance with Executive 
Order 13132, it is determined that this amendment does not have 
sufficient federalism implications to require consultations or warrant 
the preparation of a federalism summary impact statement.

Executive Orders 12866 and 13563

    The Department believes that benefits of the rulemaking outweigh 
any costs, and there are no feasible alternatives to this rulemaking. 
Pursuant to M-23-05, the Office of Information and Regulatory Affairs 
(OIRA) has determined that agency regulations that (1) exclusively 
implement the annual adjustment, (2) are consistent with this guidance, 
and (3) have an annual impact of less than $100 million, are generally 
not significant regulatory actions under E.O.

[[Page 1507]]

12866. Therefore, agencies are generally not required to submit 
regulations satisfying those criteria to OIRA for review. This 
regulation satisfies all of those criteria.

Executive Order 12988

    The Department of State has reviewed the amendment in light of 
Executive Order 12988 to eliminate ambiguity, minimize litigation, 
establish clear legal standards, and reduce burden.

Executive Order 13175

    The Department of State has determined that this rulemaking will 
not have tribal implications, will not impose substantial direct 
compliance costs on Indian Tribal governments, and will not preempt 
Tribal law. Accordingly, Executive Order 13175 does not apply to this 
rulemaking.

Paperwork Reduction Act

    This rulemaking does not impose or revise any information 
collections subject to 44 U.S.C. Chapter 35.

List of Subjects

22 CFR Part 35

    Administrative practice and procedure, Claims, Fraud, Penalties.

22 CFR Part 103

    Administrative practice and procedure, Chemicals, Classified 
information, Foreign relations, Freedom of information, International 
organization, Investigations, Penalties, Reporting and recordkeeping 
requirements.

22 CFR Part 127

    Arms and munitions, Crime, Exports, Penalties, Seizures and 
forfeitures.

22 CFR Part 138

    Government contracts, Grant programs, Loan programs, Lobbying, 
Penalties, Reporting and recordkeeping requirements.

    For the reasons set forth above, 22 CFR parts 35, 103, 127, and 138 
are amended as follows:

PART 35--PROGRAM FRAUD CIVIL REMEDIES

0
1. The authority citation for part 35 continues to read as follows:

    Authority:  22 U.S.C. 2651a; 31 U.S.C. 3801 et seq.; Pub. L. 
114-74, 129 Stat. 584.


Sec.  35.3  [Amended]

0
2. In Sec.  35.3:
0
a. Remove ``$12,537''and add in its place ``$13,508'', wherever it 
occurs.
0
b. In paragraph (f), remove ``$376,138'' and add in its place 
``$405,270''.

PART 103--REGULATIONS FOR IMPLEMENTATION OF THE CHEMICAL WEAPONS 
CONVENTION AND THE CHEMICAL WEAPONS CONVENTION IMPLEMENTATION ACT 
OF 1998 ON THE TAKING OF SAMPLES AND ON ENFORCEMENT OF REQUIREMENTS 
CONCERNING RECORDKEEPING AND INSPECTIONS

0
3. The authority citation for part 103 continues to read as follows:

    Authority:  22 U.S.C. 2651a; 22 U.S.C. 6701 et seq.; Pub. L. 
114-74, 129 Stat. 584.


Sec.  103.6  [Amended]

0
4. In Sec.  103.6:
0
a. In paragraph (a)(1), remove ``$42,163'' and add in its place 
``$45,429''; and
0
b. In paragraph (a)(2), remove ``$8,433'' and add in its place 
``$9,086''.

PART 127--VIOLATIONS AND PENALTIES

0
5. The authority citation for part 127 continues to read as follows:

    Authority:  Sections 2, 38, and 42, Pub. L. 90-629, 90 Stat. 744 
(22 U.S.C. 2752, 2778, 2791); 22 U.S.C. 401; 22 U.S.C. 2651a; 22 
U.S.C. 2779a; 22 U.S.C. 2780; E.O. 13637, 78 FR 16129; Pub. L. 114-
74, 129 Stat. 584.


Sec.  127.10   [Amended]

0
6. In Sec.  127.10:
0
a. In paragraph (a)(1)(i), remove ``$1,272, 251'' and add in its place 
``the greater of $1,200,000 or the amount that is twice the value of 
the transaction that is the basis of the violation with respect to 
which the penalty is imposed'';
0
b. In paragraph (a)(1)(ii), remove ``$925,041'' and add in its place 
``$996,685''; and
0
c. In paragraph (a)(1)(iii), remove ``$1,101,061'' and add in its place 
``$1,186,338''.

PART 138--RESTRICTIONS ON LOBBYING

0
7. The authority citation for part 138 continues to read as follows:

    Authority: 22 U.S.C. 2651a; 31 U.S.C. 1352; Pub. L. 114-74, 129 
Stat. 584.


Sec.  138.400  [Amended]

0
8. In Sec.  138.400:
0
a. Remove ``$22,021'' and ``$220,213'' and add in their place 
``$23,727'' and ``$237,268'', respectively, wherever they occur.
0
b. In paragraph (e), remove ``$21,665'' and add in its place 
``$23,343''.

Kevin E. Bryant,
Deputy Director, Office of Directives Management, Department of State.
[FR Doc. 2023-00353 Filed 1-10-23; 8:45 am]
BILLING CODE 4710-10-P