Civil Penalties Inflation Adjustments, 31489-31492 [2016-11868]
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31489
Rules and Regulations
Federal Register
Vol. 81, No. 97
Thursday, May 19, 2016
This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents. Prices of
new books are listed in the first FEDERAL
REGISTER issue of each week.
SMALL BUSINESS ADMINISTRATION
13 CFR Parts 107, 120, 121, 124, 125,
126, 127, 142, and 146
RIN 3245–AG80
Civil Penalties Inflation Adjustments
Small Business Administration.
Interim final rule with request
for comments.
AGENCY:
ACTION:
The Small Business
Administration (SBA) is amending its
regulations to adjust for inflation the
amount of certain civil monetary
penalty that is within the jurisdiction of
the agency. This adjustment is required
by the Federal Civil Penalties Inflation
Adjustment Act of 1990, as amended by
the Federal Civil Penalties Inflation
Adjustment Act Improvements Act of
2015. This rule also makes technical
amendments to the regulations
governing misrepresentations in SBA
contracting programs to add a cross
reference to the regulation that contains
the applicable penalty amounts for
misrepresentations and to correct a
citation in the same regulations. Finally,
the rule makes a technical amendment
to an existing regulation governing
small business investment companies to
add a cross reference to a new civil
penalty provision.
DATES: Effective Date: This rule is
effective on August 1, 2016.
Comment Date: Comments must be
received on or before July 18, 2016.
ADDRESSES: You may submit comments,
identified by RIN 3245–AG80 by any of
the following methods:
• Federal Rulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• Mail or Hand Delivery/Courier:
Arlene Embrey, 409 Third Street SW.,
Washington, DC 20416.
SBA will post all comments on https://
www.Regulations.gov. If you wish to
submit confidential business
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SUMMARY:
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information (CBI) as defined in the User
Notice at https://www.Regulations.gov,
please submit the information to Arlene
Embrey, Trial Attorney, 409 Third Street
SW., Washington, DC 20416 and
highlight the information that you
consider to be CBI and explain why you
believe this information should be held
confidential. SBA will review the
information and make a final
determination of whether the
information will be published or not.
FOR FURTHER INFORMATION CONTACT:
Arlene Embrey, 202–205–6976, or at
Arlene.embrey@sba.gov.
SUPPLEMENTARY INFORMATION:
I. Background
On November 2, 2015, the President
signed into law the Federal Civil
Penalties Inflation Adjustment Act
Improvements Act of 2015 (the 2015
Inflation Adjustment Improvements
Act), Public Law 114–74, 129 Stat. 584.
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 Improvements Act requires
agencies to issue an interim final rule
(IFR) to: (1) Adjust the level of civil
monetary penalties with an initial
‘‘catch-up’’ adjustment; and (2) make
subsequent annual adjustments for
inflation beginning January 2017.
Based on the definition of a ‘‘civil
monetary penalty’’ in the 1990 Inflation
Adjustment Act, agencies are to make
adjustments 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. SBA has identified the
civil penalties SBA is responsible for
assessing or enforcing and in this IFR
sets forth the initial adjustments to
those penalties that fall within the
definition of civil monetary penalties.
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 adjusted by this rule.
The formula for making this initial
adjustment under the 2015 Inflation
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Adjustment Improvement Act requires
agencies to use as a base, the Consumer
Price Index for the month of October
preceding the adjustment, which in this
instance is October 2015. SBA has not
previously adjusted any of the penalties
discussed in this rule. Therefore, based
on this formula and the OMB guidance
implementing the inflation adjustment
requirements, for each penalty being
adjusted in this rule, SBA identified the
year and corresponding amounts for
which the maximum penalty level or
range was last established or adjusted.
SBA then modified the applicable
penalty or penalty ranges by (1)
identifying the last date a penalty or
penalty range was modified; (2)
multiplying the current penalty or
penalty range by a multiplier identified
for the applicable year in which the
penalty or penalty range was last
established or modified based on the
Consumer Price Index for October 2015;
and (3) ensuring that the product of (1)
and (2) did not exceed 150% of the
penalty or penalty range that was in
effect on November 2, 2015.
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
SBA licenses, regulates and provides
financial assistance to financial entities
called small business investment
companies (SBICs). Pursuant to section
315 of the Small Business Investment
Act of 1958, 15 U.S.C. 687g, SBA may
impose a penalty on any SBIC that fails
to comply with SBA’s regulations or
directives governing the filing of regular
or special reports. That civil penalty is
not more than $100 for each and every
day of the continuance of the SBIC’s
failure to file such report, unless the
SBIC can show that its failure was due
to a reasonable cause. SBA has not
incorporated this penalty in its
regulation. Therefore, a new section is
being added to 13 CFR part 107 that will
include the adjusted civil penalty.
The adjusted civil penalty amount
was calculated by multiplying the
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current civil penalty by the multiplier of
7.22912 established under the 2015
Inflation Adjustment Improvements Act
for civil penalties last amended or
established in 1966, to reach a product
of $723 rounded to the nearest dollar.
However, because the adjusted amount
is more than the catch up adjustment
cap of 150% (or $250), the new civil
penalty amount is $250 for each and
every day the SBIC fails to file the
respective report.
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2. 13 CFR 120.465
According to the regulations at
§ 120.465, any small business lending
company (SBLC) that violates a
regulation or written directive issued by
the SBA Administrator regarding the
filing of any regular or special report is
subject to a civil penalty of not more
than $5,000 for each day the company
fails to file the report, unless the small
business lending company can show
that there is reasonable cause for its
failure to file. This penalty, authorized
by section 23(j) of the Small Business
Act, 15 U.S.C. 650(j), was established in
2004.
This rule amends § 120.465(b) to
adjust the civil penalty from not more
than $5,000 for each day of the
continuance of the failure to file the
respective report to not more than
$6,229 for each day the small business
lending company fails to file the report.
The new civil penalty amount was
calculated by multiplying the current
civil penalty by the multiplier of
1.24588 established under the 2015
Inflation Adjustment Improvements Act
for civil penalties last amended or
established in 2004, to reach a product
of $6,229, rounding to the nearest
dollar. The adjusted amount is not more
than the catch up adjustment cap of
150% (or $7,500) allowed.
3. 13 CFR 142.1(b)
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 regulation, 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 $5,000 for
each statement or claim. This penalty is
applicable to violations for making
misrepresentations to obtain benefits
from an SBA financial assistance or
contracting program, has not been
adjusted previously.
This rule amends § 142.1(b) to adjust
the current civil penalty amount from
$5,000 to $10,781 per claim. The
adjusted amount was calculated by
multiplying the current penalty of
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$5,000 by the multiplier established
under the 2015 Inflation Adjustment
Improvements Act of 2.15628 for civil
penalties last established or amended by
statute in 1986, to reach a product of
$10,781, rounding to the nearest dollar.
The adjusted amount is less than the
150% catch-up adjustment cap (or
$12,500) allowed.
4. 13 CFR 146.400(a), (b), (e)
SBA has promulgated regulations at
13 CFR part 146 to 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 imposes penalties on any recipient
that fails to comply with certain
requirements in the part. Specifically,
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. The
regulations at § 146.400(a) and (b)
currently impose ‘‘a civil penalty of not
less than $10,000 and no more than
$100,000’’ for each prohibited
expenditure or failure to file or amend
the disclosure forms. These penalties
have not been adjusted previously.
Notwithstanding the penalties in
paragraphs (a) and (b) described above,
the lobbying regulations at § 146.400(e)
provide that first offenders under those
paragraphs are subject to a maximum
civil penalty of $10,000, absent
aggravating circumstances.
This rule amends § 146.400 (a) and
(b), to adjust the current civil penalty
amounts from ‘‘not less than $10,000
and not more than $100,000’’ to ‘‘not
less than $18,936 and not more than
$189,361.’’ The penalty in paragraph (e)
is being amended from $10,000 to
$18,936. The new civil penalty amounts
were calculated by multiplying the
current civil penalty of $10,000 by the
multiplier of 1.89361 established under
the 2015 Inflation Adjustment
Improvements Act for civil penalties
last established or amended by statute
in 1989 to reach a product of $18,936,
rounding to the nearest dollar. The
current maximum civil penalty of
$100,000 was also adjusted using the
same method and multiplier to reach a
product of $189,361. Each of these
adjusted penalty amounts is less than
the allowed 150% catch-up adjustment
cap (or $25,000 and $250,000,
respectively).
III. Technical Amendments
This rule also makes technical
amendments to six program-specific
regulations that reference the civil
monetary penalties for
misrepresentation by an applicant for
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certain SBA program benefits. Each of
these regulations, with the heading Civil
Penalties, states that program
participants or applicants are subject to
penalties ‘‘under the False Claims Act
and under the Program Fraud Civil
Remedies Act’’ but do not reference
SBA’s PFCRA implementing
regulations. In this rule, SBA amends
each of the following regulations to add
that reference: (1) § 121.108(e)(2) (for
misrepresentation of an applicant’s size
status as a small business); (2)
§ 121.411(i)(2) (for misrepresentation in
SBA’s Section 8(d) Subcontracting
Program); (3) § 124.1015(e)(2) (for
misrepresentation of status as a small
disadvantaged business); (4)
§ 125.29(e)(2) (for misrepresentation of
status as a small disadvantaged veteran
owned small business); (5)
§ 126.900(e)(2) (for misrepresentation of
HUBZone status); and (6) § 127.700(e)(2)
(for misrepresentation of status as either
a Woman Owned Small Business or an
Economically Disadvantaged Woman
Owned Small Business). This rule also
corrects a typographical error in each of
the regulations listed in order to correct
the statutory citation for PFCRA, which
currently reads ‘‘331 U.S.C. 3801’’
instead of ‘‘31 U.S.C. 3801’’.
Finally, this rule also makes a
technical amendment to § 107.670(b) to
replace the statutory reference to section
315 of the Small Business Investment
Act with a reference to § 107.665, which
is a new section being added by this
rule to implement the penalty
authorized by section 315 of the SBIAct.
IV. Justification for Interim Final Rule
The 2015 Inflation Adjustment
Improvements Act specifically
authorizes agencies to promulgate
rulemaking for the adjustment to their
civil monetary penalties through an
interim final rule.
Compliance With Executive Orders
12866, 12988, and 13132, and the
Paperwork Reduction Act (44 U.S.S. Ch.
35) and the Regulatory Flexibility Act (5
U.S.C. 601–612)
Executive Order 12866
The Office of Management and Budget
(OMB) has determined that this interim
final rule does not constitute 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
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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 interim final rule has no federalism
implications warranting preparation of a
federalism assessment.
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 nonprofit 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 is required. As
stated above, SBA has express statutory
authority to issue an interim final rule.
Since notice and comment is not
required before this rule is issued, SBA
is not required to prepare a regulatory
analysis.
13 CFR Part 125
Government contracts, Government
procurement, Reporting and
recordkeeping requirements, Small
businesses, Technical assistance,
Veterans.
13 CFR Part 126
Administrative practice and
procedure, Government procurement,
Penalties, Reporting and recordkeeping
requirements, Small businesses.
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Administrative practice and
procedure, Government procurement,
Government property, Grant programs—
business, Loan programs—business,
Small businesses.
13 CFR Part 124
Administrative practice and
procedure, Government procurement,
Hawaiian Natives, Indians—business
and finance, Minority businesses,
Reporting and recordkeeping
requirements, Technical assistance.
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5. Paragraph (b) of § 120.465 is
amended by removing ‘‘$5,000’’ and
adding in its place ‘‘$6,299’’.
■
PART 121—SMALL BUSINESS SIZE
REGULATIONS
6. The authority citation for part 121
continues to read as follows:
■
§ 121.108 What are the penalties for
misrepresentation of size status?
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, 121, 124, 125, 126, 127, 142,
and 146 as follows:
PART 107—SMALL BUSINESS
INVESTMENT COMPANIES
1. The authority citation for part 107
is revised to read as follows:
■
Authority: 15 U.S.C. 681 et seq., 683,
687(c), 687b, 687d, 687g, 687m.
2. Add § 107.665 to subpart F to read
as follows:
■
Except as provided in § 107.670, a
Licensee that violates any regulation or
written directive issued by SBA,
requiring the filing of any regular or
special report pursuant to this part,
shall be fined a civil penalty of not more
than $250 for each day the Licensee fails
to file such report. The civil penalties
provided for in this section shall accrue
to the United States and may be
recovered in a civil action brought by
the SBA.
13 CFR Part 121
[Amended]
13 CFR Part 142
Administrative practice and
procedure, Claims, Fraud, Penalties.
§ 107.665
Loan programs—business, Reporting
and recordkeeping requirements, Small
businesses.
§ 120.465
Authority: 15 U.S.C. 632, 634(b)(6), 662,
and 694a(9).
13 CFR Part 107
13 CFR Part 120
111–5, 123 Stat. 115, Public Law 111–240,
124 Stat. 2504.
13 CFR Part 127
Government contracts, Reporting and
recordkeeping requirements, Small
businesses.
List of Subjects
Investment companies, Loan
programs-business, Reporting and
recordkeeping requirements, Small
businesses.
31491
§ 107.670
Civil penalties.
[Amended]
3. In § 107.670(b), remove the words
‘‘provision of section 315(a) of the Act’’
and add in their place the words ‘‘stated
in § 107.665’’.
■
PART 120—BUSINESS LOANS
4. 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); Public Law
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7. Revise § 121.108(e)(2) to read as
follows:
■
*
*
*
*
*
(e) * * *
(2) Civil Penalties. Persons or
concerns are subject to severe penalties
under the False Claims Act, 31 U.S.C.
3729–3733, the Program Fraud Civil
Remedies Act, 31 U.S.C. 3801–3812 and
any other applicable laws or regulations,
including 13 CFR part 142.
*
*
*
*
*
■ 8. Revise § 121.411(i)(2) to read as
follows:
§ 121.411 What are the size procedures for
SBA’s Section 8(d) Subcontracting
Program?
*
*
*
*
*
(i) * * *
(2) Civil Penalties. Persons or
concerns are subject to severe penalties
under the False Claims Act, 31 U.S.C.
3729–3733, the Program Fraud Civil
Remedies Act, 31 U.S.C. 3801–3812 and
any other applicable laws or regulations,
including 13 CFR part 142.
*
*
*
*
*
PART 124—8(a) BUSINESS
DEVELOPMENT/SMALL
DISADVANTAGED BUSINESS STATUS
DETERMINATIONS
9. The authority citation for part 124
continues to read as follows:
■
Authority: 15 U.S.C. 634(b)(6), 636(j),
637(a), 637(d), 644 and Pub. L. 99–661, Pub.
L. 100–656, sec. 1207, Pub. L. 101–37, Pub.
L. 101–574, section 8021, Pub. L. 108–87,
and 42 U.S.C. 9815.
10. Revise § 124.1015(e)(2) to read as
follows:
■
§ 124.1015 What are the requirements for
representing SDB status, and what are the
penalties for misrepresentation?
*
*
*
*
*
(e) * * *
(2) Civil Penalties. Persons or
concerns are subject to severe penalties
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under the False Claims Act, 31 U.S.C.
3729–3733, the Program Fraud Civil
Remedies Act, 31 U.S.C. 3801–3812,
and any other applicable laws or
regulations, including 13 CFR part 142.
*
*
*
*
*
PART 125—GOVERNMENT
CONTRACTING PROGRAMS
11. The authority citation for part 125
continues to read as follows:
■
Authority: 15 U.S.C. 632(p), (q); 634(b)(6),
637, 644, 657f, and 657q.
*
*
*
*
*
(e) * * *
(2) Civil Penalties. Persons or
concerns are subject to severe penalties
under the False Claims Act, 31 U.S.C.
3729–3733, the Program Fraud Civil
Remedies Act, 31 U.S.C. 3801–3812,
and any other applicable laws or
regulations, including 13 CFR part 142.
*
*
*
*
*
PART 142—PROGRAM FRAUD CIVIL
REMEDIES ACT REGULATIONS
12. Revise § 125.29(e)(2) to read as
follows:
■
17. The authority citation for part 142
continues to read as follows:
■
§ 125.29 What are the requirements for
representing SDVO SBC status, and what
are the penalties for misrepresentation?
*
*
*
*
*
(e) * * *
(2) Civil Penalties. Persons or
concerns are subject to severe penalties
under the False Claims Act, 31 U.S.C.
3729–3733, the Program Fraud Civil
Remedies Act, 31 U.S.C. 3801–3812,
and any other applicable laws or
regulations, including 13 CFR part 142.
*
*
*
*
*
Authority: 15 U.S.C. 634(b); 31 U.S.C.
3803(g)(2).
§ 142.1
[Amended]
18. Paragraph (b) of § 142.1 is
amended by removing ‘‘$5,000’’ and
adding in its place ‘‘$10,781’’.
■
PART 146—NEW RESTRICTIONS ON
LOBBYING
19. 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).
PART 126—HUBZONE PROGRAM
13. The authority citation for part 126
continues to read as follows:
■
Authority: 15 U.S.C. 632(a), 632(j), 632(p),
644 and 657a.
14. Revise § 126.900(e)(2) to read as
follows:
■
§ 126.900 What are the requirements for
representing HUBZone status, and what are
the penalties for misrepresentation?
*
*
*
*
*
(e) * * *
(2) Civil Penalties. Persons or
concerns are subject to severe penalties
under the False Claims Act, 31 U.S.C.
3729–3733, the Program Fraud Civil
Remedies Act, 31 U.S.C. 3801–3812,
and any other applicable laws or
regulations, including 13 CFR part 142.
*
*
*
*
*
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§ 127.700 What are the requirements for
representing EDWOSB or WOSB status,
and what are the penalties for
misrepresentation?
§ 146.400
[Amended]
20. Paragraphs (a), (b), and (e) of
§ 146.400 are amended by removing
‘‘$10,000’’ wherever it appears and
adding in its place ‘‘$18,936’’ and by
removing ‘‘$100,000’’ and adding in its
place ‘‘$189,361’’.
■
Maria Contreras-Sweet,
Administrator.
[FR Doc. 2016–11868 Filed 5–18–16; 8:45 am]
BILLING CODE 8025–01–P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
Examining the AD Docket
14 CFR Part 39
[Docket No. FAA–2013–0703; Directorate
Identifier 2013–NM–004–AD; Amendment
39–18518; AD 2016–10–07]
PART 127—WOMEN–OWNED SMALL
BUSINESS FEDERAL CONTRACT
PROGRAM
RIN 2120–AA64
15. The authority citation for part 127
continues to read as follows:
AGENCY:
■
Authority: 15 U.S.C. 632, 634(b)(6),
637(m), and 644.
16. Revise § 127.700(e)(2) to read as
follows:
■
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Airworthiness Directives; Bombardier,
Inc. Airplanes
Federal Aviation
Administration (FAA), Department of
Transportation (DOT).
ACTION: Final rule.
We are adopting a new
airworthiness directive (AD) for certain
SUMMARY:
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Bombardier, Inc. Model DHC–8–102,
–103, –106, –201, –202, –301, –311, and
–315 airplanes. This AD was prompted
by a report of a pilot commanding an inflight engine shut down in response to
a low oil pressure warning indication.
Further investigation revealed the
mounting studs in the engine mounted
alternating current (AC) generator
mounting plate were pulled out of
position and the threaded interface in
the plate was corroded. This AD
requires repetitive inspections for
discrepancies on certain AC generator
mounting adapters, and replacing
discrepant adapters with serviceable
ones. This AD also requires revising the
maintenance program to incorporate a
repetitive task specified in certain
temporary revisions. We are issuing this
AD to detect and correct corrosion in
the AC generator mounting plate, which
could result in a gap between the AC
generator and the generator mounting
plate, and cause loss of engine oil and
consequent engine failure.
DATES: This AD is effective June 23,
2016.
The Director of the Federal Register
approved the incorporation by reference
of certain publications listed in this AD
as of June 23, 2016.
ADDRESSES: For service information
identified in this final rule, contact
Bombardier, Inc., Q-Series Technical
Help Desk, 123 Garratt Boulevard,
Toronto, Ontario M3K 1Y5, Canada;
telephone: 416–375–4000; fax: 416–
375–4539; email: thd.qseries@
aero.bombardier.com; Internet https://
www.bombardier.com. You may view
this referenced service information at
the FAA, Transport Airplane
Directorate, 1601 Lind Avenue SW.,
Renton, WA. For information on the
availability of this material at the FAA,
call 425–227–1221. It is also available
on the Internet at https://
www.regulations.gov by searching for
and locating Docket No. FAA–2013–
0703.
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You may examine the AD docket on
the Internet at https://
www.regulations.gov by searching for
and locating Docket No. FAA–2013–
0703; or in person at the Docket
Management Facility between 9 a.m.
and 5 p.m., Monday through Friday,
except Federal holidays. The AD docket
contains this AD, the regulatory
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E:\FR\FM\19MYR1.SGM
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[Federal Register Volume 81, Number 97 (Thursday, May 19, 2016)]
[Rules and Regulations]
[Pages 31489-31492]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-11868]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
week.
========================================================================
Federal Register / Vol. 81, No. 97 / Thursday, May 19, 2016 / Rules
and Regulations
[[Page 31489]]
SMALL BUSINESS ADMINISTRATION
13 CFR Parts 107, 120, 121, 124, 125, 126, 127, 142, and 146
RIN 3245-AG80
Civil Penalties Inflation Adjustments
AGENCY: Small Business Administration.
ACTION: Interim final rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: The Small Business Administration (SBA) is amending its
regulations to adjust for inflation the amount of certain civil
monetary penalty that is within the jurisdiction of the agency. This
adjustment is required by the Federal Civil Penalties Inflation
Adjustment Act of 1990, as amended by the Federal Civil Penalties
Inflation Adjustment Act Improvements Act of 2015. This rule also makes
technical amendments to the regulations governing misrepresentations in
SBA contracting programs to add a cross reference to the regulation
that contains the applicable penalty amounts for misrepresentations and
to correct a citation in the same regulations. Finally, the rule makes
a technical amendment to an existing regulation governing small
business investment companies to add a cross reference to a new civil
penalty provision.
DATES: Effective Date: This rule is effective on August 1, 2016.
Comment Date: Comments must be received on or before July 18, 2016.
ADDRESSES: You may submit comments, identified by RIN 3245-AG80 by any
of the following methods:
Federal Rulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
Mail or Hand Delivery/Courier: Arlene Embrey, 409 Third
Street SW., Washington, DC 20416.
SBA will post all comments on https://www.Regulations.gov. If you
wish to submit confidential business information (CBI) as defined in
the User Notice at https://www.Regulations.gov, please submit the
information to Arlene Embrey, Trial Attorney, 409 Third Street SW.,
Washington, DC 20416 and highlight the information that you consider to
be CBI and explain why you believe this information should be held
confidential. SBA will review the information and make a final
determination of whether the information will be published or not.
FOR FURTHER INFORMATION CONTACT: Arlene Embrey, 202-205-6976, or at
Arlene.embrey@sba.gov.
SUPPLEMENTARY INFORMATION:
I. Background
On November 2, 2015, the President signed into law the Federal
Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the
2015 Inflation Adjustment Improvements Act), Public Law 114-74, 129
Stat. 584. 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 Improvements Act requires agencies to issue an
interim final rule (IFR) to: (1) Adjust the level of civil monetary
penalties with an initial ``catch-up'' adjustment; and (2) make
subsequent annual adjustments for inflation beginning January 2017.
Based on the definition of a ``civil monetary penalty'' in the 1990
Inflation Adjustment Act, agencies are to make adjustments 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. SBA has identified the civil penalties SBA is
responsible for assessing or enforcing and in this IFR sets forth the
initial adjustments to those penalties that fall within the definition
of civil monetary penalties. 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 adjusted by this rule.
The formula for making this initial adjustment under the 2015
Inflation Adjustment Improvement Act requires agencies to use as a
base, the Consumer Price Index for the month of October preceding the
adjustment, which in this instance is October 2015. SBA has not
previously adjusted any of the penalties discussed in this rule.
Therefore, based on this formula and the OMB guidance implementing the
inflation adjustment requirements, for each penalty being adjusted in
this rule, SBA identified the year and corresponding amounts for which
the maximum penalty level or range was last established or adjusted.
SBA then modified the applicable penalty or penalty ranges by (1)
identifying the last date a penalty or penalty range was modified; (2)
multiplying the current penalty or penalty range by a multiplier
identified for the applicable year in which the penalty or penalty
range was last established or modified based on the Consumer Price
Index for October 2015; and (3) ensuring that the product of (1) and
(2) did not exceed 150% of the penalty or penalty range that was in
effect on November 2, 2015.
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
SBA licenses, regulates and provides financial assistance to
financial entities called small business investment companies (SBICs).
Pursuant to section 315 of the Small Business Investment Act of 1958,
15 U.S.C. 687g, SBA may impose a penalty on any SBIC that fails to
comply with SBA's regulations or directives governing the filing of
regular or special reports. That civil penalty is not more than $100
for each and every day of the continuance of the SBIC's failure to file
such report, unless the SBIC can show that its failure was due to a
reasonable cause. SBA has not incorporated this penalty in its
regulation. Therefore, a new section is being added to 13 CFR part 107
that will include the adjusted civil penalty.
The adjusted civil penalty amount was calculated by multiplying the
[[Page 31490]]
current civil penalty by the multiplier of 7.22912 established under
the 2015 Inflation Adjustment Improvements Act for civil penalties last
amended or established in 1966, to reach a product of $723 rounded to
the nearest dollar. However, because the adjusted amount is more than
the catch up adjustment cap of 150% (or $250), the new civil penalty
amount is $250 for each and every day the SBIC fails to file the
respective report.
2. 13 CFR 120.465
According to the regulations at Sec. 120.465, any small business
lending company (SBLC) that violates a regulation or written directive
issued by the SBA Administrator regarding the filing of any regular or
special report is subject to a civil penalty of not more than $5,000
for each day the company fails to file the report, unless the small
business lending company can show that there is reasonable cause for
its failure to file. This penalty, authorized by section 23(j) of the
Small Business Act, 15 U.S.C. 650(j), was established in 2004.
This rule amends Sec. 120.465(b) to adjust the civil penalty from
not more than $5,000 for each day of the continuance of the failure to
file the respective report to not more than $6,229 for each day the
small business lending company fails to file the report. The new civil
penalty amount was calculated by multiplying the current civil penalty
by the multiplier of 1.24588 established under the 2015 Inflation
Adjustment Improvements Act for civil penalties last amended or
established in 2004, to reach a product of $6,229, rounding to the
nearest dollar. The adjusted amount is not more than the catch up
adjustment cap of 150% (or $7,500) allowed.
3. 13 CFR 142.1(b)
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 regulation, 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 $5,000 for each
statement or claim. This penalty is applicable to violations for making
misrepresentations to obtain benefits from an SBA financial assistance
or contracting program, has not been adjusted previously.
This rule amends Sec. 142.1(b) to adjust the current civil penalty
amount from $5,000 to $10,781 per claim. The adjusted amount was
calculated by multiplying the current penalty of $5,000 by the
multiplier established under the 2015 Inflation Adjustment Improvements
Act of 2.15628 for civil penalties last established or amended by
statute in 1986, to reach a product of $10,781, rounding to the nearest
dollar. The adjusted amount is less than the 150% catch-up adjustment
cap (or $12,500) allowed.
4. 13 CFR 146.400(a), (b), (e)
SBA has promulgated regulations at 13 CFR part 146 to 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 imposes penalties on any recipient that fails
to comply with certain requirements in the part. Specifically,
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. The regulations at Sec. 146.400(a) and (b) currently impose
``a civil penalty of not less than $10,000 and no more than $100,000''
for each prohibited expenditure or failure to file or amend the
disclosure forms. These penalties have not been adjusted previously.
Notwithstanding the penalties in paragraphs (a) and (b) described
above, the lobbying regulations at Sec. 146.400(e) provide that first
offenders under those paragraphs are subject to a maximum civil penalty
of $10,000, absent aggravating circumstances.
This rule amends Sec. 146.400 (a) and (b), to adjust the current
civil penalty amounts from ``not less than $10,000 and not more than
$100,000'' to ``not less than $18,936 and not more than $189,361.'' The
penalty in paragraph (e) is being amended from $10,000 to $18,936. The
new civil penalty amounts were calculated by multiplying the current
civil penalty of $10,000 by the multiplier of 1.89361 established under
the 2015 Inflation Adjustment Improvements Act for civil penalties last
established or amended by statute in 1989 to reach a product of
$18,936, rounding to the nearest dollar. The current maximum civil
penalty of $100,000 was also adjusted using the same method and
multiplier to reach a product of $189,361. Each of these adjusted
penalty amounts is less than the allowed 150% catch-up adjustment cap
(or $25,000 and $250,000, respectively).
III. Technical Amendments
This rule also makes technical amendments to six program-specific
regulations that reference the civil monetary penalties for
misrepresentation by an applicant for certain SBA program benefits.
Each of these regulations, with the heading Civil Penalties, states
that program participants or applicants are subject to penalties
``under the False Claims Act and under the Program Fraud Civil Remedies
Act'' but do not reference SBA's PFCRA implementing regulations. In
this rule, SBA amends each of the following regulations to add that
reference: (1) Sec. 121.108(e)(2) (for misrepresentation of an
applicant's size status as a small business); (2) Sec. 121.411(i)(2)
(for misrepresentation in SBA's Section 8(d) Subcontracting Program);
(3) Sec. 124.1015(e)(2) (for misrepresentation of status as a small
disadvantaged business); (4) Sec. 125.29(e)(2) (for misrepresentation
of status as a small disadvantaged veteran owned small business); (5)
Sec. 126.900(e)(2) (for misrepresentation of HUBZone status); and (6)
Sec. 127.700(e)(2) (for misrepresentation of status as either a Woman
Owned Small Business or an Economically Disadvantaged Woman Owned Small
Business). This rule also corrects a typographical error in each of the
regulations listed in order to correct the statutory citation for
PFCRA, which currently reads ``331 U.S.C. 3801'' instead of ``31 U.S.C.
3801''.
Finally, this rule also makes a technical amendment to Sec.
107.670(b) to replace the statutory reference to section 315 of the
Small Business Investment Act with a reference to Sec. 107.665, which
is a new section being added by this rule to implement the penalty
authorized by section 315 of the SBIAct.
IV. Justification for Interim Final Rule
The 2015 Inflation Adjustment Improvements Act specifically
authorizes agencies to promulgate rulemaking for the adjustment to
their civil monetary penalties through an interim final rule.
Compliance With Executive Orders 12866, 12988, and 13132, and the
Paperwork Reduction Act (44 U.S.S. Ch. 35) and the Regulatory
Flexibility Act (5 U.S.C. 601-612)
Executive Order 12866
The Office of Management and Budget (OMB) has determined that this
interim final rule does not constitute 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
[[Page 31491]]
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 interim final rule has no federalism
implications warranting preparation of a federalism assessment.
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 is
required. As stated above, SBA has express statutory authority to issue
an interim final rule. 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 121
Administrative practice and procedure, Government procurement,
Government property, Grant programs--business, Loan programs--business,
Small businesses.
13 CFR Part 124
Administrative practice and procedure, Government procurement,
Hawaiian Natives, Indians--business and finance, Minority businesses,
Reporting and recordkeeping requirements, Technical assistance.
13 CFR Part 125
Government contracts, Government procurement, Reporting and
recordkeeping requirements, Small businesses, Technical assistance,
Veterans.
13 CFR Part 126
Administrative practice and procedure, Government procurement,
Penalties, Reporting and recordkeeping requirements, Small businesses.
13 CFR Part 127
Government contracts, 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, 121, 124, 125, 126, 127, 142, and 146 as follows:
PART 107--SMALL BUSINESS INVESTMENT COMPANIES
0
1. The authority citation for part 107 is revised to read as follows:
Authority: 15 U.S.C. 681 et seq., 683, 687(c), 687b, 687d,
687g, 687m.
0
2. Add Sec. 107.665 to subpart F to read as follows:
Sec. 107.665 Civil penalties.
Except as provided in Sec. 107.670, a Licensee that violates any
regulation or written directive issued by SBA, requiring the filing of
any regular or special report pursuant to this part, shall be fined a
civil penalty of not more than $250 for each day the Licensee fails to
file such report. The civil penalties provided for in this section
shall accrue to the United States and may be recovered in a civil
action brought by the SBA.
Sec. 107.670 [Amended]
0
3. In Sec. 107.670(b), remove the words ``provision of section 315(a)
of the Act'' and add in their place the words ``stated in Sec.
107.665''.
PART 120--BUSINESS LOANS
0
4. 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); Public
Law 111-5, 123 Stat. 115, Public Law 111-240, 124 Stat. 2504.
Sec. 120.465 [Amended]
0
5. Paragraph (b) of Sec. 120.465 is amended by removing ``$5,000'' and
adding in its place ``$6,299''.
PART 121--SMALL BUSINESS SIZE REGULATIONS
0
6. The authority citation for part 121 continues to read as follows:
Authority: 15 U.S.C. 632, 634(b)(6), 662, and 694a(9).
0
7. Revise Sec. 121.108(e)(2) to read as follows:
Sec. 121.108 What are the penalties for misrepresentation of size
status?
* * * * *
(e) * * *
(2) Civil Penalties. Persons or concerns are subject to severe
penalties under the False Claims Act, 31 U.S.C. 3729-3733, the Program
Fraud Civil Remedies Act, 31 U.S.C. 3801-3812 and any other applicable
laws or regulations, including 13 CFR part 142.
* * * * *
0
8. Revise Sec. 121.411(i)(2) to read as follows:
Sec. 121.411 What are the size procedures for SBA's Section 8(d)
Subcontracting Program?
* * * * *
(i) * * *
(2) Civil Penalties. Persons or concerns are subject to severe
penalties under the False Claims Act, 31 U.S.C. 3729-3733, the Program
Fraud Civil Remedies Act, 31 U.S.C. 3801-3812 and any other applicable
laws or regulations, including 13 CFR part 142.
* * * * *
PART 124--8(a) BUSINESS DEVELOPMENT/SMALL DISADVANTAGED BUSINESS
STATUS DETERMINATIONS
0
9. The authority citation for part 124 continues to read as follows:
Authority: 15 U.S.C. 634(b)(6), 636(j), 637(a), 637(d), 644 and
Pub. L. 99-661, Pub. L. 100-656, sec. 1207, Pub. L. 101-37, Pub. L.
101-574, section 8021, Pub. L. 108-87, and 42 U.S.C. 9815.
0
10. Revise Sec. 124.1015(e)(2) to read as follows:
Sec. 124.1015 What are the requirements for representing SDB status,
and what are the penalties for misrepresentation?
* * * * *
(e) * * *
(2) Civil Penalties. Persons or concerns are subject to severe
penalties
[[Page 31492]]
under the False Claims Act, 31 U.S.C. 3729-3733, the Program Fraud
Civil Remedies Act, 31 U.S.C. 3801-3812, and any other applicable laws
or regulations, including 13 CFR part 142.
* * * * *
PART 125--GOVERNMENT CONTRACTING PROGRAMS
0
11. The authority citation for part 125 continues to read as follows:
Authority: 15 U.S.C. 632(p), (q); 634(b)(6), 637, 644, 657f,
and 657q.
0
12. Revise Sec. 125.29(e)(2) to read as follows:
Sec. 125.29 What are the requirements for representing SDVO SBC
status, and what are the penalties for misrepresentation?
* * * * *
(e) * * *
(2) Civil Penalties. Persons or concerns are subject to severe
penalties under the False Claims Act, 31 U.S.C. 3729-3733, the Program
Fraud Civil Remedies Act, 31 U.S.C. 3801-3812, and any other applicable
laws or regulations, including 13 CFR part 142.
* * * * *
PART 126--HUBZONE PROGRAM
0
13. The authority citation for part 126 continues to read as follows:
Authority: 15 U.S.C. 632(a), 632(j), 632(p), 644 and 657a.
0
14. Revise Sec. 126.900(e)(2) to read as follows:
Sec. 126.900 What are the requirements for representing HUBZone
status, and what are the penalties for misrepresentation?
* * * * *
(e) * * *
(2) Civil Penalties. Persons or concerns are subject to severe
penalties under the False Claims Act, 31 U.S.C. 3729-3733, the Program
Fraud Civil Remedies Act, 31 U.S.C. 3801-3812, and any other applicable
laws or regulations, including 13 CFR part 142.
* * * * *
PART 127--WOMEN-OWNED SMALL BUSINESS FEDERAL CONTRACT PROGRAM
0
15. The authority citation for part 127 continues to read as follows:
Authority: 15 U.S.C. 632, 634(b)(6), 637(m), and 644.
0
16. Revise Sec. 127.700(e)(2) to read as follows:
Sec. 127.700 What are the requirements for representing EDWOSB or
WOSB status, and what are the penalties for misrepresentation?
* * * * *
(e) * * *
(2) Civil Penalties. Persons or concerns are subject to severe
penalties under the False Claims Act, 31 U.S.C. 3729-3733, the Program
Fraud Civil Remedies Act, 31 U.S.C. 3801-3812, and any other applicable
laws or regulations, including 13 CFR part 142.
* * * * *
PART 142--PROGRAM FRAUD CIVIL REMEDIES ACT REGULATIONS
0
17. 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
18. Paragraph (b) of Sec. 142.1 is amended by removing ``$5,000'' and
adding in its place ``$10,781''.
PART 146--NEW RESTRICTIONS ON LOBBYING
0
19. 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
20. Paragraphs (a), (b), and (e) of Sec. 146.400 are amended by
removing ``$10,000'' wherever it appears and adding in its place
``$18,936'' and by removing ``$100,000'' and adding in its place
``$189,361''.
Maria Contreras-Sweet,
Administrator.
[FR Doc. 2016-11868 Filed 5-18-16; 8:45 am]
BILLING CODE 8025-01-P