Civil Monetary Penalty Inflation Adjustment, 25715-25716 [2017-11541]

Agencies

• Merit Systems Protection Board

[Federal Register Volume 82, Number 106 (Monday, June 5, 2017)]
[Rules and Regulations]
[Pages 25715-25716]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-11541]



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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 82, No. 106 / Monday, June 5, 2017 / Rules 
and Regulations

[[Page 25715]]



MERIT SYSTEMS PROTECTION BOARD

5 CFR Part 1201


Civil Monetary Penalty Inflation Adjustment

AGENCY: Merit Systems Protection Board.

ACTION: Final rule.

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SUMMARY: This final rule adjusts the level of civil monetary penalties 
(CMPs) in regulations maintained and enforced by the Merit Systems 
Protection Board (MSPB) with both an initial ``catch-up'' and annual 
adjustment under the Federal Civil Penalties Inflation Adjustment Act 
Improvements Act of 2015 (the 2015 Act) and Office of Management and 
Budget (OMB) guidance.

DATES: Effective Date: June 5, 2017.

FOR FURTHER INFORMATION CONTACT: Jennifer Everling, Acting Clerk of the 
Board, Merit Systems Protection Board, 1615 M Street NW., Washington, 
DC 20419; Phone: (202) 653-7200; Fax: (202) 653-7130; or email: 
mspb@mspb.gov.

SUPPLEMENTARY INFORMATION:

I. Background

    The Federal Civil Penalties Inflation Adjustment Act of 1990 (the 
1990 Act), Public Law 101-410, provided for the regular evaluation of 
CMPs by Federal agencies. Periodic inflationary adjustments of CMPs 
ensure that the consequences of statutory violations adequately reflect 
the gravity of such offenses and that CMPs are properly accounted for 
and collected by the Federal government. In April 1996, the 1990 Act 
was amended by the Debt Collection Improvement Act of 1996 (the 1996 
Act), Public Law 104-134, which required Federal agencies to adjust 
their CMPs at least once every four years. However, because 
inflationary adjustments to CMPs were statutorily capped at ten percent 
of the maximum penalty amount, but only required to be calculated every 
four years, CMPs in many cases did not correspond with the true measure 
of inflation over the preceding four-year period, leading to a decline 
in the real value of the penalty. To remedy this decline, the 2015 Act 
(section 701 of Pub. L. 114-74) requires agencies to adjust CMP amounts 
with an initial ``catch-up'' adjustment and make subsequent annual 
inflationary adjustments through a rulemaking using a methodology 
mandated by the legislation. The purpose of these adjustments is to 
maintain the deterrent effect of civil penalties.
    A civil monetary penalty is ``any penalty, fine, or other 
sanction'' that: (1) ``is for a specific amount'' or ``has a maximum 
amount'' under Federal law; and (2) that a Federal agency assesses or 
enforces ``pursuant to an administrative proceeding or a civil action 
in the Federal courts.''
    The MSPB is authorized to assess CMPs pursuant to 5 U.S.C. 
1215(a)(3) and 5 U.S.C. 7326 in disciplinary actions brought by the 
Special Counsel. The corresponding MSPB regulation for both CMPs is 5 
CFR 1201.126(a). As required by the 2015 Act, and pursuant to guidance 
issued by the OMB, the MSPB is now making a one-time catch-up 
adjustment to the CMPs within its jurisdiction, as well as an annual 
adjustment for 2017, according to the prescribed formulas.

II. Calculation of Adjustment

A. Initial Catch-Up Adjustment

    Shortly after enactment of the 2015 Act, OMB issued guidance on 
calculating the catch-up adjustment. See Memorandum from Shaun Donovan, 
Dir., OMB, to Heads of Executive Departments and Agencies re: 
Implementation of the Federal Civil Penalties Inflation Adjustment Act 
Improvements Act of 2015, M-16-06 (Feb. 24, 2016). Pursuant to this 
guidance, the MSPB has identified applicable civil monetary penalties 
and calculated the catch-up adjustment. The calculated catch-up 
adjustment is based on the percent change between the Consumer Price 
Index for all Urban Consumers (CPI-U) for the month of October in the 
year of the previous adjustment of the CMP (or in the year of its 
establishment, if no adjustment has been made) and the October 2015 
CPI-U.
    Nevertheless, the 2015 Act specifies that the catch-up adjustment 
amount will in no case exceed 150% of the penalty amount which was in 
force at the enactment date of the 2015 Act. Therefore, the total 
catch-up penalty amount will not exceed 250% of the total maximum 
penalty amount on November 2, 2015.
    The CMP listed in 5 U.S.C. 1215(a)(3) was established in 1978 with 
the enactment of the Civil Service Reform Act of 1978 (CSRA), Public 
Law 95-454, section 202(a), 92 Stat. 1121-30 (Oct. 13, 1978), and 
originally codified at 5 U.S.C. 1207(b). That CMP was last amended by 
section 106 of the Whistleblower Protection Enhancement Act of 2012, 
Public Law 112-199, 12 Stat. 1468 (Nov. 27, 2012), now codified at 5 
U.S.C. 1215(a)(3), which provided for a CMP ``not to exceed $1,000''. 
Thus, the 2012 amendment of the CSRA serves as the base figure for the 
inflation calculation. Between October 2012 and October 2015, the CPI-U 
has increased by 102.819 percent. The post-catch-up adjustment penalty 
amount is obtained by multiplying the pre-adjustment penalty amount by 
the percent change in the CPI-U over the relevant time period, and 
rounding to the nearest dollar. Therefore, the maximum post-catch-up 
adjustment penalty under the CSRA is $1,000 x 1.02819 = $1,028.19, 
which rounds to $1,028. The post-catch-up adjustment penalty is less 
than 250 percent of the pre-adjustment penalty, so the limitation on 
the amount of the adjustment under section 4(b) of the 2015 Act is not 
implicated.
    The CMP authorized in 5 U.S.C. 7326 was established in 2012 by 
section 4 of the Hatch Act Modernization Act of 2012 (Hatch Act), 
Public Law 112-230, 126 Stat. 1617 (Dec. 28, 2012), which provided for 
a CMP ``not to exceed $1,000.'' Thus, the maximum post-catch-up 
adjustment penalty under the Hatch Act is $1,028.

B. 2017 Annual Adjustment

    OMB also issued guidance on calculating the annual inflationary 
adjustment for 2017. See Memorandum from Shaun Donovan, Dir., OMB, to 
Heads of Executive Departments and Agencies re: Implementation of the 
2017 Annual Adjustment Pursuant to the Federal Civil Penalties 
Inflation Adjustment Act Improvements Act of

[[Page 25716]]

2015, M-17-11 (Dec. 16, 2016). Therein, OMB notified agencies that the 
annual adjustment multiplier for 2017, based on the CPI-U, is 1.01636 
and that the 2017 annual adjustment amount is obtained by multiplying 
the catch-up adjustment penalty amount by the 2017 annual adjustment 
multiplier, and rounding to the nearest dollar. Therefore, the new 
maximum penalty under the CSRA and the Hatch Act is $1,028 x 1.01636 = 
$1,044.81, which rounds to $1,045.

III. Effective Date of Penalties

    The revised CMP amounts will go into effect on June 5, 2017. All 
violations for which CMPs are assessed after the effective date of this 
rule will be assessed at the adjusted penalty level regardless of 
whether the violation occurred before the effective date.

IV. Procedural Requirements

A. Administrative Procedures Act

    Pursuant to 5 U.S.C. 553(b), the MSPB has determined that good 
cause exists for waiving the general notice of proposed rulemaking and 
public comment procedures as to these technical amendments. The notice 
and comment procedures are being waived because Congress has 
specifically exempted agencies from these requirements when 
implementing the 2015 Act. The 2015 Act requires agencies to adjust 
CMPs with an initial catch-up adjustment through an interim final rule, 
which does not require the agency to complete a notice and comment 
process prior to promulgating the interim final rule. The 2015 Act also 
explicitly requires the agency to make subsequent annual adjustments 
notwithstanding 5 U.S.C. 553, the section of the Administrative 
Procedure Act that normally requires agencies to engage in notice and 
comment. It is also in the public interest that the adjusted rates for 
CMPs under the CSRA and the Hatch Act become effective as soon as 
possible to maintain their effective deterrent effect.

B. Regulatory Impact Analysis: Executive Order 12866

    The MSPB has determined that this is not a significant regulatory 
action under Executive Order 12866. Therefore, no regulatory impact 
analysis is required.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) requires an agency to prepare 
a regulatory flexibility analysis for rules unless the agency certifies 
that the rule will not have a significant economic impact on a 
substantial number of small entities. The RFA applies only to rules for 
which an agency is required to first publish a proposed rule. See 5 
U.S.C. 603(a) and 604(a). As discussed above, the 2015 Act does not 
require agencies to first publish a proposed rule when adjusting CMPs 
within their jurisdiction.
    Thus, the RFA does not apply to this final rule.

D. Small Business Regulatory Enforcement Fairness Act of 1996

    This rule is not a major rule under the Small Business Regulatory 
Enforcement Fairness Act (5 U.S.C. 804(2)). This rule:
    (a) Does not have an annual effect on the economy of $100 million 
or more;
    (b) Will not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions; and
    (c) Does not have significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
United States-based enterprises to compete with foreign-based 
enterprises.

E. Unfunded Mandate Reform Act of 1995

    This rule does not involve a Federal mandate that may result in the 
expenditure by State, local, or tribal governments, in the aggregate, 
or by the private sector, of $100 million or more and that such 
rulemaking will not significantly or uniquely affect small governments. 
Therefore, no actions were deemed necessary under the provisions of the 
Unfunded Mandate Reform Act of 1995 (2 U.S.C. 1532).

F. Executive Order 12630, Government Actions and Interference With 
Constitutionally Protected Property Rights

    This rule does not have takings implications.

G. Executive Order 13132, Federalism

    This rule does not have federalism implications. The rule does 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.

H. Executive Order 12988, Civil Justice Reform

    The MSPB has reviewed this rule in light of Executive Order 12988 
to eliminate ambiguity, minimize litigation, establish clear legal 
standards, and reduce burden.

I. Executive Order 13175, Consultation and Coordination With Indian 
Tribal Governments

    In accordance with Executive Order 13175, the MSPB has evaluated 
this rule and determined that it has no tribal implications.

J. Paperwork Reduction Act

    This document does not contain information collection requirements 
subject to the Paperwork Reduction Act of 1995, Public Law 104-13 (44 
U.S.C. Chapter 35).

List of Subjects in 5 CFR Part 1201

    Administrative practice and procedure, Civil rights, Government 
employees.

    For the reasons set forth above, 5 CFR part 1201 is amended as 
follows:

PART 1201--PRACTICES AND PROCEDURES

0
1. The authority citation for part 1201 continues to read as follows:

    Authority: 5 U.S.C. 1204, 1305, and 7701, and 38 U.S.C. 4331, 
unless otherwise noted.


Sec.  1201.126   [Amended]

0
2. Section 1201.126 is amended in paragraph (a) by removing ``$1,000'' 
and adding in its place ``$1,045'' and removing ``5 U.S.C. 1215(a)(3)'' 
and in its place adding ``5 U.S.C. 1215(a)(3), 7326; 28 U.S.C. 2461 
note''.

Jennifer Everling,
Acting Clerk of the Board.
[FR Doc. 2017-11541 Filed 6-2-17; 8:45 am]
BILLING CODE 7400-01-P