Civil Penalties Adjustment for 2024

<RULE> NATIONAL FOUNDATION ON THE ARTS AND THE HUMANITIES <SUBAGY>National Endowment for the Arts</SUBAGY> <CFR>45 CFR Parts 1149 and 1158</CFR> <RIN>RIN 3135-AA33</RIN> <SUBJECT>Civil Penalties Adjustment for 2024</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> National Endowment for the Arts, National Foundation on the Arts and the Humanities. <HD SOURCE="HED">ACTION:</HD> Final rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> 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 2024 annual inflation adjustments to the initial “catch-up” adjustments made on June 15, 2017, and reflects all other inflation adjustments made in the interim. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> This rule is effective February 9, 2024. </EFFDATE> <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Daniel Fishman, Assistant General Counsel, National Endowment for the Arts, 400 7th St. SW, Washington, DC 20506, Telephone: 202-682-5418. </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">1. Background</HD> On December 12, 2017 the NEA issued a final rule entitled “Federal Civil Penalties Adjustments”  <SU>1</SU> <FTREF/> which finalized the NEA's June 15, 2017 interim final rule entitled “Implementing the Federal Civil Penalties Adjustment Act Improvements Act”, <SU>2</SU> <FTREF/> 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. <FTNT> <SU>1</SU>  82 FR 58348. </FTNT> <FTNT> <SU>2</SU>  82 FR 27431. </FTNT> 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 2024 adjustment under the 2015 Act. <SU>3</SU> <FTREF/> Per this guidance, the CPI-U adjustment multiplier for this annual adjustment is 1.03241. In its prior rules, the NEA identified two CMPs, which require adjustment: the penalty for false statements under the PFCRA and the penalty for violations of the NEA's Restrictions on Lobbying. With this rule, the NEA is adjusting the amount of those CMPs accordingly. <FTNT> <SU>3</SU>  OMB Memorandum M-24-07 (December 19, 2023). </FTNT> <HD SOURCE="HD1">2. Dates of Applicability</HD> The inflation adjustments contained in this rule shall apply to any violations assessed after January 15, 2024. <HD SOURCE="HD1">3. Adjustments</HD> Two CMPs in NEA regulations require adjustment in accordance with the 2015 Act: (1) the penalty associated with the Program Fraud Civil Remedies Act (45 CFR 1149.9) and (2) the penalty associated with Restrictions on Lobbying (45 CFR 1158.400; 45 CFR part 1158, app. A). <HD SOURCE="HD2">A. Adjustments to Penalties Under the NEA's Program Fraud Civil Remedies Act Regulations</HD> The current maximum penalty under the PFCRA for false claims and statements is currently set at $13,507. 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 2022 and October 2023, the CPI-U increased by a multiplier of 103.241%. Therefore, the new post-adjustment maximum penalty under the PFCRA for false statements is $13,507 × 1.03241 = $13,944.76 which rounds to $13,945. Therefore, the maximum penalty under the PFCRA for false claims and statements will be $13,945. <HD SOURCE="HD2">B. Adjustments to Penalties Under the NEA's Restrictions on Lobbying Regulations</HD> The penalty for violations of the Restrictions on Lobbying is currently set at a range of a minimum of $23,714 and a maximum of $237,268. 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 2022 and October 2023, the CPI-U increased by a multiplier of 103.241%. Therefore, the new post-adjustment minimum penalty under the Restrictions on Lobbying is $23,714 × 1.03241 = $24,482.57074, which rounds to $24,483 and the maximum penalty under the Restrictions on Lobbying is $237,268 × 1.03241 = $244,957.86, which rounds to $244,958. Therefore, the range of penalties under the law on the Restrictions on Lobbying shall be between $24,483 and $244,958. <HD SOURCE="HD3">Administrative Procedure Act</HD> 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 <E T="04">Federal Register</E> 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 <E T="04">Federal Register</E> . “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 final rule 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 2015 Act, 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. <HD SOURCE="HD3">Regulatory Planning and Review (Executive Order 12866)</HD> 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 final 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. <HD SOURCE="HD3">Federalism (Executive Order 13132)</HD> This final 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 [N]ational [G]overnment and the States, or on the distribution of power and responsibilities among the various levels of government.” The NEA has determined that this final rule will not have federalism implications within the meaning of E.O. 13132. <HD SOURCE="HD3">Civil Justice Reform (Executive Order 12988)</HD> This final rule 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. <HD SOURCE="HD3">Indian Tribal Governments (Executive Order 13175)</HD> Under the criteria in E.O. 13175, the NEA has evaluated this final rule and determined that it would have no potential e ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 16k characters. 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