[Federal Register Volume 83, Number 10 (Tuesday, January 16, 2018)]
[Rules and Regulations]
[Pages 2071-2073]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-00537]


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NATIONAL FOUNDATION FOR THE ARTS AND HUMANITIES

National Endowment for the Arts

45 CFR Parts 1149 and 1158

RIN 3135-AA33


Civil Penalties Adjustment for 2018

AGENCY: National Endowment for the Arts, National Foundation for the 
Arts and Humanities.

ACTION: Final rule.

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SUMMARY: The National Endowment for the Arts (NEA) is adjusting the 
maximum civil monetary penalties (CMPs) that may be imposed for 
violations of the Program Fraud Civil Remedies Act (PFCRA) and the 
NEA's Restrictions on Lobbying to reflect the requirements of the 
Federal Civil Penalties Inflation Adjustment Act Improvements Act of 
2015 (the 2015 Act). The 2015 Act further amended the Federal Civil 
Penalties Inflation Adjustment Act of 1990 (the Inflation Adjustment 
Act) to improve the effectiveness of civil monetary penalties and to 
maintain their deterrent effect. This final rule provides the 2018 
annual inflation adjustments to the initial ``catch-up'' adjustments 
made on June 15, 2017.

DATES: Effective date: This rule is effective January 15, 2018. 
Applicability date: The adjusted civil monetary penalties established 
by this rule are applicable only to civil penalties assessed after 
January 15, 2018.

FOR FURTHER INFORMATION CONTACT: Aswathi Zachariah, Assistant General 
Counsel, National Endowment for the Arts, 400 7th St., SW, Washington, 
DC 20506, Telephone: 202-682-5418.

SUPPLEMENTARY INFORMATION:

1. Background

    On December 12, 2017 the NEA issued a final rule entitled ``Federal 
Civil Penalties Adjustments'' which finalized the NEA's June 15, 2017 
interim final rule entitled ``Implementing the Federal Civil Penalties 
Adjustment Act Improvements Act'', implementing the 2015 Act (section 
701 of Pub. L. 114-74), which amended the Inflation Adjustment Act (28 
U.S.C. 2461 note) requiring catch-up and annual adjustments to the 
NEA's CMPs. The 2015 Act requires agencies make annual adjustments to 
its CMPs for inflation.
    A CMP is defined in the Inflation Adjustment Act as any penalty, 
fine, or other sanction that is (1) for a specific monetary amount as 
provided by Federal law, or has a maximum amount provided for by 
Federal law; (2) assessed or enforced by an agency pursuant to Federal 
law; and (3) assessed or enforced pursuant to an administrative 
proceeding or a civil action in the Federal courts.
    These annual inflation adjustments are based on the percentage 
change in the Consumer Price Index for all Urban Consumers (CPI-U) for 
the month of October preceding the date of the adjustment, relative to 
the October CPI-U in the year of the previous adjustment. The formula 
for the amount of a CMP inflation adjustment is prescribed by law, as 
explained in OMB Memorandum M-16-06 (February 24, 2016), and therefore 
the amount of the adjustment is not subject to the exercise of 
discretion by the Chairman of the National Endowment for the Arts 
(Chairman).
    The Office of Management and Budget has issued guidance on 
implementing and calculating the 2018 adjustment under the 2015 Act.\1\ 
Per this guidance, the CPI-U adjustment multiplier for this annual 
adjustment in 1.02041. In its prior rules, the NEA identified two civil 
penalties which require adjustment: The penalty for false statements 
under the PFCRA and the penalty for violations of the NEA's 
Restrictions on Lobbying. The NEA adjusts the amount of those CMPs 
amount accordingly.
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    \1\ OMB Memorandum M-18-03 (December 15, 2017).
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2. Effective Dates

    The inflation adjustments contained in this rule shall apply to any 
violations assessed after January 15, 2018, the effective date of this 
rule.

3. Adjustments

    Two civil penalties in NEA regulations require adjustment in 
accordance with the 2015 Act: (1) The penalty associated with 
Restrictions on Lobbying (45 CFR 1158.400; 45 CFR part 1158, app. A) 
and (2) the penalty associated with the Program Fraud Civil Remedies 
Act (45 CFR 1149.9).

[[Page 2072]]

A. Adjustments to Penalties Under the NEA's Program Fraud Civil 
Remedies Act Regulations

    The current penalty under the PFCRA for false claims and statements 
is currently set at $10,957. The post-adjustment penalty or range is 
obtained by multiplying the pre-adjustment penalty or range by the 
percent change in the CPI-U over the relevant time period and rounding 
to the nearest dollar. Between October 2016 and October 2017, the CPI-U 
increased by 102.041 percent. Therefore, the new post-adjustment 
maximum penalty under the PFCRA for false statements is $10,957 x 
1.02041 = $11,180.63, which rounds to $11,180. Therefore, the maximum 
penalty under the PFCRA for false claims and statements will be 
$11,180.

B. Adjustments to Penalties Under the NEA's Restrictions on Lobbying 
Regulations

    The penalty for violations of the Restrictions on Lobbying is 
currently set at a range of a minimum of $19,246 and a maximum of 
$192,459. The post-adjustment penalty or range is obtained by 
multiplying the pre-adjustment penalty or range by the percent change 
in the CPI-U over the relevant time period and rounding to the nearest 
dollar. Between October 2016 and October 2017, the CPI-U increased by 
102.041 percent. Therefore, the new post-adjustment minimum penalty 
under the Restrictions on Lobbying is $19,246 x 1.02041 = $19,638.81, 
which rounds to $19,639, and the maximum penalty under the Restrictions 
on Lobbying is $192,459 x 1.02041 = $196,387.09, which rounds to 
$196,387. Therefore, range of penalties under the law on the 
Restrictions on Lobbying shall be between $19,639 and $196,387.
Administrative Procedure Act
    Section 553 of the Administrative Procedure Act requires agencies 
to provide an opportunity for notice and comment on rulemaking and also 
requires agencies to delay a rule's effective date for 30 days 
following the date of publication in the Federal Register unless an 
agency finds good cause to forgo these requirements. However, section 
4(b)(2) of the 2015 Act requires agencies to adjust civil monetary 
penalties notwithstanding section 553 of the Administrative Procedure 
Act (APA) and publish annual inflation adjustments in the Federal 
Register. ``This means that the public procedure the APA generally 
requires . . . is not required for agencies to issue regulations 
implementing the annual adjustment.'' OMB Memorandum M-18-03.
    Even if the 2015 Act did not except this rulemaking from section 
553 of the APA, the NEA has good cause to dispense with notice and 
comment. Section 553(b)(B), authorizes agencies to dispense with notice 
and comment procedures for rulemaking if the agency finds good cause 
that notice and comment are impracticable, unnecessary, or contrary to 
public interest. The annual adjustments to civil penalties for 
inflation and the method of calculating those adjustments are 
established by section 5 of the FCPIAA, as amended, leaving no 
discretion for the NEA. Accordingly, public comment would be 
impracticable because the NEA would be unable to consider such comments 
in the rulemaking process.
Regulatory Planning and Review (Executive Order 12866)
    Executive Order 12866 (E.O. 12866) established a process for review 
of rules by the Office of Information and Regulatory Affairs, which is 
within the Office of Management and Budget (OMB). Only ``significant'' 
proposed and final rules are subject to review under this Executive 
Order. ``Significant,'' as used in E.O. 12866, means ``economically 
significant.'' It refers to rules with (1) an impact on the economy of 
$100 million; or that (2) were inconsistent or interfered with an 
action taken or planned by another agency; (3) materially altered the 
budgetary impact of entitlements, grants, user fees, or loan programs; 
or (4) raised novel legal or policy issues.
    This final rule would not be a significant policy change and OMB 
has not reviewed this final rule under E.O. 12866. The NEA has made the 
assessments required by E.O. 12866 and determined that this rule: (1) 
Will not have an effect of $100 million or more on the economy; (2) 
will not adversely affect in a material way the economy, productivity, 
competition, jobs, the environment, public health or safety, or State, 
local, or Tribal governments or communities; (3) will not create a 
serious inconsistency or otherwise interfere with an action taken or 
planned by another agency; (4) does not alter the budgetary effects of 
entitlements, grants, user fees, or loan programs or the rights or 
obligations of their recipients; and (5) does not raise novel legal or 
policy issues.
Executive Order 13771
    Executive Order 13771 section 5 requires that agencies, in most 
circumstances, remove or rescind two regulations for every regulatory 
action (such as the promulgation of regulations) unless they request 
and are specifically exempted from that order's requirements by the 
Director of the Office of Management and Budget (the Director).
    This rule is not subject to the requirements of Executive Order 
13771 because this rule is not significant under Executive Order 12866. 
Per OMB guidance, annual inflation adjustments ``are not significant 
regulatory actions under E.O. 12866, they are not considered E.O. 13771 
regulatory actions.'' \2\ Furthermore, the NEA has requested and has 
received an exemption from the requirement that the agency rescind two 
regulations for every regulation it promulgate from the Director.
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    \2\ Id.
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Federalism (Executive Order 13132)
    This rule does not have Federalism implications, as set forth in 
E.O. 13132. As used in this order, Federalism implications mean 
``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.'' The NEA 
has determined that this rulemaking will not have Federalism 
implications within the meaning of E.O. 13132.
Civil Justice Reform (Executive Order 12988)
    This Directive meets the applicable standards set forth in section 
3(a) and 3(b)(2) of E.O. 12988. Specifically, this final rule is 
written in clear language designed to help reduce litigation.
Indian Tribal Governments (Executive Order 13175)
    Under the criteria in E.O. 13175, the NEA has evaluated this final 
rule and determined that it would have no potential effects on 
Federally recognized Indian Tribes.
Takings (Executive Order 12630)
    Under the criteria in E.O. 12630, this rule does not have 
significant takings implications. Therefore, a takings implication 
assessment is not required.
Regulatory Flexibility Act of 1980 (5 U.S.C. 605(b))
    This rulemaking will not have a significant adverse impact on a 
substantial number of small entities, including small businesses, small 
governmental jurisdictions, or certain small not-for-profit 
organizations.

[[Page 2073]]

Paperwork Reduction Act of 1995 (44 U.S.C., Chapter 35)
    This rulemaking will not impose any ``information collection'' 
requirements under the Paperwork Reduction Act. Under the act, 
information collection means the obtaining or disclosure of facts or 
opinions by or for an agency by 10 or more nonfederal persons.
Unfunded Mandates Act of 1995 (Section 202, Pub. L. 104-4)
    This rulemaking does not contain a Federal 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 one 
year.
National Environmental Policy Act of 1969 (5 U.S.C. 804)
    The final rule will not have significant effect on the human 
environment.
Small Business Regulatory Enforcement Fairness Act of 1996 (Sec. 804, 
Pub. L. 104-121)
    This final rule would not be a major rule as defined in section 804 
of the Small Business Regulatory Enforcement Fairness Act of 1996. This 
final rule will not result in an annual effect on the economy of 
$100,000,000 or more, a major increase in costs or prices, significant 
adverse effects on competition, employment, investment, productivity, 
innovation, or on the ability of United States-based companies to 
compete with foreign based companies in domestic and export markets.
E-Government Act of 2002 (44 U.S.C. 3504)
    Section 206 of the E-Government Act requires agencies, to the 
extent practicable, to ensure that all information about that agency 
required to be published in the Federal Register is also published on a 
publicly accessible website. All information about the NEA required to 
be published in the Federal Register may be accessed at www.arts.gov. 
This Act also requires agencies to accept public comments on their 
rules ``by electronic means.'' See heading ``Public Participation'' for 
directions on electronic submission of public comments on this final 
rule.
    Finally, the E-Government Act requires, to the extent practicable, 
that agencies ensure that a publicly accessible Federal Government 
website contains electronic dockets for rulemakings under the 
Administrative Procedure Act of 1946 (5 U.S.C. 551 et seq.). Under this 
Act, an electronic docket consists of all submissions under section 
553(c) of title 5, United States Code; and all other materials that by 
agency rule or practice are included in the rulemaking docket under 
section 553(c) of title 5, United States Code, whether or not submitted 
electronically. The website https://www.regulations.gov contains 
electronic dockets for the NEA's rulemakings under the Administrative 
Procedure Act of 1946.
Plain Writing Act of 2010 (5 U.S.C. 301)
    Under this Act, the term ``plain writing'' means writing that is 
clear, concise, well-organized, and follows other best practices 
appropriate to the subject or field and intended audience. To ensure 
that this rule has been written in plain and clear language so that it 
can be used and understood by the public, the NEA has modeled the 
language of this rule on the Federal Plain Language Guidelines.
Public Participation
    The NEA encourages public participation by ensuring its 
documentation is understandable by the general public, and has written 
this final rule in compliance with E.O. 13563 by ensuring its 
accessibility, consistency, simplicity of language, and overall 
comprehensibility.

List of Subjects in 45 CFR Parts 1149 and 1158

    Administrative practice and procedure, Government contracts, Grant 
programs, Loan programs, Lobbying, Penalties.

    For the reasons stated in the preamble, the NEA amends 45 CFR 
chapter XI, subchapter B, as follows:

PART 1149--PROGRAM FRAUD CIVIL REMEDIES ACT REGULATIONS

0
1. The authority citation for part 1149 continues to read as follows:

    Authority: 5 U.S.C. App. 8G(a)(2); 20 U.S.C. 959; 28 U.S.C. 2461 
note; 31 U.S.C. 3801-3812.


0
2. Revise Sec.  1149.9(a)(1) to read as follows:


Sec.  1149.9  What civil penalties and assessments may I be subjected 
to?

    (a) * * *
    (1) A civil penalty of not more than $10,957 for each false, 
fictitious or fraudulent statement or claim; and
* * * * *

PART 1158--NEW RESTRICTIONS ON LOBBYING

0
3. The authority citation for part 1158 continues to read as follows:

    Authority:  20 U.S.C. 959; 28 U.S.C. 2461; 31 U.S.C. 1352.


0
4. Revise Sec.  1158.400(a), (b), and (e) to read as follows:


Sec.  1158.400  Penalties.

    (a) Any person who makes an expenditure prohibited herein shall be 
subject to a civil penalty of not less than $19,639 and not more than 
$196,387 for each such expenditure.
    (b) Any person who fails to file or amend the disclosure form (see 
appendix B of this part) to be filed or amended if required herein, 
shall be subject to a civil penalty of not less than $19,639 and not 
more than $196,387 for each such failure.
* * * * *
    (e) First offenders under paragraph (a) or (b) of this section 
shall be subject to a civil penalty of $19,639, absent aggravating 
circumstances. Second and subsequent offenses by persons shall be 
subject to an appropriate civil penalty between $19,639 and $196,387, 
as determined by the agency head or his or her designee.
* * * * *

Appendix A to Part 1158 [Amended]

0
5. Amend appendix A to part 1158 by:
0
a. Removing ``$19,246'' and adding in its place ``$19,639'' each place 
it appears.
0
b. Removing ``$192,459'' and adding in its place ``$196,387'' each 
place it appears.

    Dated: January 9, 2018.
Jillian Miller,
Director of Guidelines and Panel Operations, Administrative Services, 
National Endowment for the Arts.
[FR Doc. 2018-00537 Filed 1-12-18; 8:45 am]
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