[Federal Register Volume 79, Number 127 (Wednesday, July 2, 2014)]
[Rules and Regulations]
[Pages 37662-37664]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-15533]



46 CFR Part 506

[Docket No. 14-07]
RIN 3072-AC55

Inflation Adjustment of Civil Monetary Penalties

AGENCY: Federal Maritime Commission.

ACTION: Final rule.


SUMMARY: This rule implements the Federal Civil Penalties Inflation 
Adjustment Act of 1990, as amended by the Debt Collection Improvement 
Act of 1996. The rule adjusts for inflation the maximum amount of each 
statutory civil penalty subject to Federal Maritime Commission 
(Commission) jurisdiction in accordance with the requirements of that 

DATES: Effective July 11, 2014.

FOR FURTHER INFORMATION CONTACT: Karen V. Gregory, Secretary, Federal 
Maritime Commission, 800 North Capitol Street NW., Room 1046, 
Washington, DC 20573, (202) 523-5725.

SUPPLEMENTARY INFORMATION: This rule implements the Debt Collection 
Improvement Act of 1996 (DCIA), Public Law 104-134, Title III, section 
31001(s)(1), April 26, 1996, 110 Stat. 1321-373. The DCIA amended the 
Federal Civil Penalties Inflation Adjustment Act of 1990 (FCPIAA), 
Public Law 101-410, Oct. 5, 1990, 104 Stat. 890, 28 U.S.C. 2461 note, 
to require the head of each executive agency to adopt regulations that 
adjust the maximum civil monetary penalties (CMPs) assessable under its 
agency's jurisdiction at least every four years to ensure that they 
continue to maintain their deterrent value.\1\ The Commission last 
adjusted each CMP subject to its jurisdiction effective July 31, 2009. 
(74 FR 38114, July 28, 2009).

    \1\ Increased CMPS are applicable only to violations occurring 
after the increase takes effect.

    The inflation adjustment under the FCPIAA is to be determined by 
increasing the maximum CMP by the cost-of-living, rounded off as set 
forth in section 5(a) of that Act. The cost-of-living adjustment is the 
percentage (if any) for each CMP by which the Consumer Price Index 
(CPI) \2\ for the month of June of the calendar year preceding the 
adjustment, exceeds the CPI for the month of June of the calendar year 
in which the amount of such CMP was last set or adjusted pursuant to 

    \2\ The CPI defined in the FCPIAA is the U.S. Department of 
Labor's Consumer Price Index for all-urban consumers (``CPI-U''). 28 
U.S.C. 2461 note (3)(3).

    One example of an inflation adjustment is as follows. Section 13 of 
the Shipping Act of 1984 (1984 Act), 46 U.S.C. 41107, imposes a maximum 
$25,000 penalty for a knowing and willful violation of the 1984 Act 
which was inflation adjusted in 2009 to $40,000. First, to calculate 
the new CMP amounts under the amendment, we determine the appropriate 
CPI-U for June of the calendar year preceding the adjustment. Given 
that we are adjusting the CMPs in 2013, we use the CPI-U for June of 
2012, which was 229.478. The CPI-U for June of the year the CMP was 
last adjusted for inflation must also be determined. The Commission 
last adjusted this CMP in 2009, therefore we use the CPI-U for June of 
2009, which was 215.693. Using those figures, we calculate the cost-of-
living adjustment by dividing the CPI-U for June of 2012 (229.478) by 
the CPI-U for June of 2009 (215.693). Our result is 1.0639.
    Second, we calculate the raw inflation adjustment (the inflation 
adjustment prior to rounding) by multiplying the maximum penalty amount 
by the cost-of-living adjustment. In our example, $40,000 multiplied by 
the cost-of-living adjustment of 1.0639 equals $42,556.
    Third, we use the rounding rules set forth in Section 5(a) of the 
FCIPAA. In order to round only the increase amount, we subtract the 
current maximum penalty amount ($40,000) from the raw maximum inflation 
adjustment ($42,556), equaling $2,556. Under Section 5(a), if the 
penalty is greater than $10,000 but less than or equal to $100,000, we 
round the increase to the nearest multiple of $5,000. Therefore, the 
maximum penalty increase in our example is $5,000.
    Finally, the rounded increase is added to the maximum penalty 
amount last set or adjusted. Here, $40,000 plus $5,000 equals a maximum 
inflation adjustment penalty amount of $45,000.
    A similar calculation was done with respect to each CMP subject to 
the jurisdiction of the Commission. In compliance with the FCPIAA, as 
amended, the Commission is hereby amending 46 CFR 506.4(d) of its 
regulations which sets forth the newly adjusted maximum penalty 
    This final rule has been issued without prior public notice or

[[Page 37663]]

opportunity for public comment. Under the Administrative Procedure Act 
(APA), 5 U.S.C. Sec.  553(b)(B), a final rule may be issued without 
that process ``when the agency for good cause finds (and incorporates 
the finding and a brief statement of reasons therefore in the rules 
issued) that notice and public procedure thereon are impracticable, 
unnecessary, or contrary to the public interest.'' In this instance, 
the Commission finds, for good cause, that solicitation of public 
comment on this final rule is unnecessary and impractical.
    Specifically, the Congress has mandated that the agency 
periodically make the inflation adjustments and does not allow for the 
exercise of Commission discretion regarding the substance of the 
adjustments. The Commission, under the DCIA, is required to make the 
adjustment to the civil monetary penalties according to a formula 
specified in the statute. The regulation requires ministerial, 
technical computations that are noncontroversial. Moreover, the conduct 
underlying the penalties is already illegal under existing law, and 
there is no need to provide thirty days prior to the effectiveness of 
the regulation and amendments to allow for affected parties to correct 
their conduct. Accordingly, the Commission believes that there is good 
cause to make this regulation effective immediately upon publication.
    The Regulatory Flexibility Act (RFA), as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 801 et 
seq., generally requires an agency to prepare a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements, unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
Because the Commission has determined that notice and comment are not 
required under the APA for this rulemaking, the requirements of the RFA 
do not apply and no regulatory flexibility analysis was prepared.
    The rule does not contain any collection of information 
requirements as defined by the Paperwork Reduction Act of 1995, as 
amended. Therefore, Office of Management and Budget review is not 
    This regulatory action is not a major rule as defined under 5 
U.S.C. 804(2).

List of Subjects in 46 CFR Part 506

    Administrative practice and procedure, Penalties.
    Part 506 of title 46 of the Code of Federal Regulations is amended 
as follows:


1. The authority citation for part 506 continues to read as follows:

    Authority: 28 U.S.C. 2461.

2. In Sec.  506.4, revise paragraph (d) to read as follows:

Sec.  506.4  Cost of living adjustments of civil monetary penalties.

* * * * *
    (d) Inflation adjustment. Maximum Civil Monetary Penalties within 
the jurisdiction of the Federal Maritime Commission are adjusted for 
inflation as follows:

    \3\ Application of the statutory rounding resulted in no 
increase to these penalties.
    \4\ Application of the statutory rounding resulted in no 
increase to these penalties.

                                                                                      Current      New adjusted
        United States Code citation           Civil Monetary Penalty description      maximum         maximum
                                                                                  penalty amount  penalty amount
46 U.S.C. 42304............................  Adverse impact on U.S. carriers by        1,500,000       1,600,000
                                              foreign shipping practices.
46 U.S.C. 41107(a).........................  Knowing and Willful violation/               40,000          45,000
                                              Shipping Act of 1984, or
                                              Commission regulation or order.
46 U.S.C. 41107(b).........................  Violation of Shipping Act of 1984,            8,000           9,000
                                              Commission regulation or order,
                                              not knowing and willful.
46 U.S.C. 41108(b).........................  Operating in foreign commerce after          75,000          80,000
                                              tariff suspension.
46 U.S.C. 42104............................  Failure to provide required                   8,000          $9,000
                                              reports, etc./Merchant Marine Act
                                              of 1920.
46 U.S.C. 42106............................  Adverse shipping conditions/              1,500,000       1,600,000
                                              Merchant Marine Act of 1920.
46 U.S.C. 42108............................  Operating after tariff or service            75,000          80,000
                                              contract suspension/Merchant
                                              Marine Act of 1920.
46 U.S.C. 44102............................  Failure to establish financial                8,000           9,000
                                              responsibility for non-performance             300         \3\ 300
                                              of transportation.
46 U.S.C. 44103............................  Failure to establish financial                8,000           9,000
                                              responsibility for death or injury.            300         \4\ 300
31 U.S.C. 3802(a)(1).......................  Program Fraud Civil Remedies Act/             8,000           9,000
                                              makes false claim.
31 U.S.C. 3802(a)(2).......................  Program Fraud Civil Remedies Act/             8,000           9,000
                                              giving false statement.

    By the Commission.
Karen V. Gregory,
[FR Doc. 2014-15533 Filed 7-1-14; 8:45 am]