Rule2023-16217
Civil Monetary Penalties Inflation Adjustments
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 1, 2023
Effective
August 1, 2023
Issuing agencies
Small Business Administration
Abstract
The Small Business Administration (SBA) is amending its regulations to adjust for inflation the amount of certain civil monetary penalties that are within the jurisdiction of the agency. These adjustments comply with the requirement in the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, to make annual adjustments to the penalties.
Full Text
<html>
<head>
<title>Federal Register, Volume 88 Issue 146 (Tuesday, August 1, 2023)</title>
</head>
<body><pre>
[Federal Register Volume 88, Number 146 (Tuesday, August 1, 2023)]
[Rules and Regulations]
[Pages 50003-50005]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-16217]
[[Page 50003]]
=======================================================================
-----------------------------------------------------------------------
SMALL BUSINESS ADMINISTRATION
13 CFR Parts 107, 120, 142, and 146
RIN 3245-AI01
Civil Monetary Penalties Inflation Adjustments
AGENCY: U.S. Small Business Administration.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Small Business Administration (SBA) is amending its
regulations to adjust for inflation the amount of certain civil
monetary penalties that are within the jurisdiction of the agency.
These adjustments comply with the requirement in the Federal Civil
Penalties Inflation Adjustment Act of 1990, as amended by the Federal
Civil Penalties Inflation Adjustment Act Improvements Act of 2015, to
make annual adjustments to the penalties.
DATES: This rule is effective August 1, 2023.
FOR FURTHER INFORMATION CONTACT: Arlene Embrey, 202-205-6976 or at
<a href="/cdn-cgi/l/email-protection#badbc8d6dfd4df94dfd7d8c8dfc3fac9d8db94ddd5cc"><span class="__cf_email__" data-cfemail="6203100e070c074c070f0010071b221100034c050d14">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Background
On November 2, 2015, the Federal Civil Penalties Inflation
Adjustment Act Improvements Act of 2015 (the 2015 Inflation Adjustment
Act), Public Law 114-74, 129 Stat. 584, was enacted. This act amended
the Federal Civil Penalties Inflation Adjustment Act of 1990, Public
Law 101-410, 104 Stat. 890 (the 1990 Inflation Adjustment Act), to
improve the effectiveness of civil monetary penalties and to maintain
their deterrent effect. The 2015 Inflation Adjustment Act required
agencies to issue a final rule by August 1, 2016, to adjust the level
of civil monetary penalties with an initial ``catch-up'' adjustment and
to annually adjust these monetary penalties for inflation by January 15
of each subsequent year.
Based on the definition of a ``civil monetary penalty'' in the 1990
Inflation Adjustment Act, agencies are to make adjustments only to the
civil penalties that (i) are for a specific monetary amount as provided
by Federal law or have a maximum amount provided for by Federal law;
(ii) are assessed or enforced by an agency; and (iii) are enforced or
assessed in an administrative proceeding or a civil action in the
Federal courts. Therefore, penalties that are stated as a percentage of
an indeterminate amount or as a function of a violation (penalties that
encompass actual damages incurred) are not to be adjusted.
SBA published in the Federal Register an interim final rule with
its initial adjustments to the civil monetary penalties, including an
initial ``catch-up'' adjustment, on May 19, 2016, (81 FR 31489) with an
effective date of August 1, 2016. SBA published its first annual
adjustments to the monetary penalties on February 9, 2017 (82 FR 9967),
with an immediate effective date. SBA published its subsequent annual
adjustments for 2018 on February 21, 2018 (83 FR 7361), for 2019 on
April 1, 2019 (84 FR 12059), for 2020 on March 10, 2020 (85 FR 13725),
for 2021 on September 24, 2021 (86 FR 52955), and on May 11, 2022 (87
FR 28756), all with immediate effective dates. This rule will establish
the adjusted penalty amounts for 2023 with an immediate effective date
upon publication.
On December 15, 2022, the Office of Management and Budget (OMB)
published its annual guidance memorandum for 2023 civil monetary
penalties inflation adjustments (M-23-05, Implementation of Penalty
Inflation Adjustments for 2023, Pursuant to the Federal Civil Penalties
Inflation Adjustment Act Improvements Act of 2015). The memorandum
provides the formula for calculating the annual adjustments based on
the Consumer Price Index for all Urban Consumers (CPI-U) for the month
of October preceding the adjustment, and specifically on the change
between the October CPI-U preceding the date of adjustment and the
prior year's CPI-U. Based on this methodology, the 2023 civil monetary
penalty inflation adjustment factor is 1.07745 (October 2022 CPI-U
(298.012)/October 2021 CPI-U (276.589). The annual adjustment amounts
identified in this rule were obtained by applying this multiplier of
1.07745 to those penalty amounts that were published in SBA's 2022
adjustments to civil monetary penalties at 87 FR 28756 (May 11, 2022).
II. Civil Monetary Penalties Adjusted by This Rule
This rule adjusts civil monetary penalties authorized by the Small
Business Act, the Small Business Investment Act of 1958 (SBI Act), the
Program Fraud Civil Remedies Act, and the Byrd Amendment to the Federal
Regulation of Lobbying Act. These penalties and the implementing
regulations are discussed below.
1. 13 CFR 107.665--Civil Penalties
SBA licenses, regulates, and provides financial assistance to
financial entities called small business investment companies (SBICs).
Pursuant to section 315 of the SBI Act, 15 U.S.C. 687g, SBA may impose
a penalty on any SBIC for each day that it fails to comply with SBA's
regulations or directives governing the filing of regular or special
reports. The penalty for non-compliance is incorporated in Sec.
107.665 of the SBIC program regulations.
This rule amends Sec. 107.665 to adjust the current civil penalty
from $291 to $314 per day of failure to file. The current civil penalty
of $291 was multiplied by the multiplier of 1.07745 to reach a product
of $314, rounded to the nearest dollar.
2. 13 CFR 120.465--Civil Penalty for Late Submission of Required
Reports
According to the regulations at Sec. 120.465, any SBA Supervised
Lender, as defined in 13 CFR 120.10, that violates a regulation or
written directive issued by the SBA Administrator regarding the filing
of any regular or special report is subject to the civil penalty amount
stated in Sec. 120.465(b) for each day the company fails to file the
report, unless the SBA Supervised Lender can show that there is
reasonable cause for its failure to file. This penalty is authorized by
section 23(j)(1) of the Small Business Act, 15 U.S.C. 650(j)(1).
This rule amends Sec. 120.465(b) to adjust the current civil
penalty to $7,805 per day of failure to file from $7,244 per day of
failure to file. The current civil penalty of $7,244 was multiplied by
the multiplier of 1.07745 to reach a product of $7,805, rounded to the
nearest dollar.
3. 13 CFR 120.1500--Types of Formal Enforcement Actions--SBA Lenders
According to the regulations at Sec. 120.1500(b), SBA may assess a
civil monetary penalty against a 7(a) Lender. In determining whether to
assess a civil monetary penalty and, if so, in what amount, SBA may
consider: the gravity (e.g., severity and frequency) of the violation;
the history of previous violations; the financial resources and good
faith of the 7(a) Lender; and any other matters as justice may require.
This penalty is authorized by the Small Business Act, 15 U.S.C.
657t(e)(2)(B).
This rule amends Sec. 120.1500(b)(2) to adjust the current civil
penalty from $268,694 to $289,504. The current civil penalty of
$268,694 was multiplied by the multiplier of 1.07745 to reach a product
of $289,504, rounded to the nearest dollar.
4. 13 CFR 142.1--Overview of Regulations
SBA has promulgated regulations at 13 CFR part 142 to implement the
civil penalties authorized by the Program Fraud Civil Remedies Act of
1986
[[Page 50004]]
(PFCRA), 31 U.S.C. 3801-3812. Under the current regulation at 13 CFR
142.1(b), a person who submits, or causes to be submitted, a false
claim or a false statement to SBA is subject to a civil penalty of not
more than $12,537, for each statement or claim.
This rule amends Sec. 142.1(b) to adjust the current civil penalty
from $12,537 to $13,508. The adjusted civil penalty amount was
calculated by multiplying the current civil penalty of $12,537 by the
multiplier of 1.07745 to reach a product of $13,508, rounded to the
nearest dollar.
5. 13 CFR 146.400--Penalties
SBA's regulations at 13 CFR part 146 govern lobbying activities by
recipients of Federal financial assistance. These regulations implement
the authority in 31 U.S.C. 1352 and impose penalties on any recipient
that fails to comply with certain requirements in the part.
Specifically, under Sec. 146.400(a) and (b), penalties may be imposed
on those who make prohibited expenditures or fail to file the required
disclosure forms or to amend such forms, if necessary.
This rule amends Sec. 146.400(a) and (b) to adjust the current
civil penalty amounts to ``not less than $23,727 and not more than
$237,268.'' The current civil penalty amounts of $22,021 and $220,213
were multiplied by the multiplier of 1.07745 to reach a product of
$23,727 and $237,268, respectively, rounded to the nearest dollar.
This rule also amends Sec. 146.400(e) to adjust the civil penalty
that may be imposed for a first-time violation of Sec. 146.400(a) and
(b) to $23,727 and to adjust the civil penalty that may be imposed for
second and subsequent offenses to ``not less than $23,727 and not more
than $237,268.'' The current civil penalty amounts of $22,021 and
$220,213 were multiplied by the multiplier of 1.077455 to reach a
product of $23,727 and $237,268, respectively, rounded to the nearest
dollar.
Compliance With Executive Orders 12866, 12988, 13132, and the
Administrative Procedure Act (5 U.S.C. 553), the Congressional Review
Act (5 U.S.C. 801-808), the Paperwork Reduction Act (44 U.S.C. Ch. 35)
and the Regulatory Flexibility Act (5 U.S.C. 601-612).
Executive Order 12866
The Office of Management and Budget has determined that this final
rule is not a significant regulatory action under Executive Order
12866.
Executive Order 12988
This action meets applicable standards set forth in sections 3(a)
and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize
litigation, eliminate ambiguity, and reduce burden. The action does not
have retroactive or preemptive effect.
Executive Order 13132
For the purpose of Executive Order 13132, SBA determined that the
rule will not have substantial direct effects on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government. Therefore, this final rule has no federalism implications
warranting preparation of a federalism assessment.
The Administrative Procedure Act (APA)
The APA requires agencies generally to provide notice and an
opportunity for public comment before adopting a rule unless the agency
for good cause finds that notice and comment are impracticable,
unnecessary, or contrary to the public interest. 5 U.S.C. 553(b). The
APA also requires agencies to allow at least 30 days after publication
for a final rule to become effective ``except as otherwise provided by
the agency for good cause found and published with the rule.'' 5 U.S.C.
553(d). For the following reasons prior public notice, an opportunity
for public comment, and a delayed effective date are not required for
this rule. The 2015 Inflation Adjustment Act directs agencies to adjust
their civil penalties annually notwithstanding section 553 of the APA.
28 U.S.C. 2461 note, sec. 4(b)(2).
This exemption from the notice and comment, and delayed effective
date requirements of the APA, in effect provides SBA with the good
cause justification to promulgate this as a final rule that will become
effective immediately on the date it is published in the Federal
Register. Additionally, the 2015 Inflation Adjustment Act provides a
non-discretionary cost-of-living formula for making the annual
adjustment to the civil monetary penalties; SBA merely performs the
ministerial task of calculating the amount of the adjustments.
Therefore, even without the statutory exemption from the APA, notice
and comment would be unnecessary.
The Congressional Review Act (CRA)
The Office of Management and Budget determined that this rule is
not a major rule under 5 U.S.C. 804(2).
Paperwork Reduction Act
SBA has determined that this rule does not impose additional
reporting or recordkeeping requirements.
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) requires agencies to consider
the effect of their regulatory actions on small entities, including
small non-profit businesses, and small local governments. Pursuant to
the RFA, when an agency issues a rule, the agency must prepare an
analysis that describes whether the impact of the rule will have a
significant economic impact on a substantial number of such small
entities. However, the RFA requires such analysis only where notice and
comment rulemaking are required. As stated above, SBA has express
statutory authority to issue this rule without regard to the notice and
comment requirement of the APA. Since notice and comment is not
required before this rule is issued, SBA is not required to prepare a
regulatory analysis.
List of Subjects
13 CFR Part 107
Investment companies, Loan programs--business, Reporting and
recordkeeping requirements, Small businesses.
13 CFR Part 120
Loan programs--business, Reporting and recordkeeping requirements,
Small businesses.
13 CFR Part 142
Administrative practice and procedure, Claims, Fraud, Penalties.
13 CFR Part 146
Government contracts, Grant programs, Loan programs, Lobbying,
Penalties, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, SBA amends 13 CFR parts
107, 120, 142, and 146 as follows:
PART 107--SMALL BUSINESS INVESTMENT COMPANIES
0
1. The authority citation for part 107 continues to read as follows:
Authority: 15 U.S.C. 681, 683, 687(c), 687b, 687d, 687g, 687m.
Sec. 107.665 [Amended]
0
2. In Sec. 107.665, remove ``$291'' and add in its place ``$314''.
PART 120--BUSINESS LOANS
0
3. The authority citation for part 120 continues to read as follows:
[[Page 50005]]
Authority: 15 U.S.C. 634(b)(6), (b)(7), (b)(14), (h), and note,
636(a), (h), and (m), and note, 636m, 650, 657t, and note, 657u, and
note, 687(f), 696(3), and (7), and note, 697, 697a and e, and note;
Public Law 116-260, 134 Stat. 1182.
Sec. 120.465 [Amended]
0
4. In Sec. 120.465, amend paragraph (b) by removing ``$7,244'' and
adding in its place ``$7,805''.
Sec. 120.1500 [Amended]
0
5. In Sec. 120.1500, amend paragraph (b)(2) by removing ``$268,694''
and adding in its place ``289,504''.
PART 142--PROGRAM FRAUD CIVIL REMEDIES ACT REGULATIONS
0
6. The authority citation for part 142 continues to read as follows:
Authority: 15 U.S.C. 634(b); 31 U.S.C. 3803(g)(2).
Sec. 142.1 [Amended]
0
7. In Sec. 142.1, amend paragraph (b) by removing ``$12,537'' and
adding in its place ``$13,508''.
PART 146--NEW RESTRICTIONS ON LOBBYING
0
8. The authority citation for part 146 is revised to read as follows:
Authority: 31 U.S.C. 1352 and 15 U.S.C. 634(b)(6).
Sec. 146.400 [Amended]
0
9. Amend Sec. 146.400 by removing ``$22,021'' wherever it appears and
adding in its place ``$23,727'' and by removing ``$220,213'' wherever
it appears and adding in its place ``$237,268''.
Isabella Casillas Guzman,
Administrator.
[FR Doc. 2023-16217 Filed 7-31-23; 8:45 am]
BILLING CODE 8026-09-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on August 1, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.