2017-01431. Civil Monetary Penalties Annual Inflation Adjustments

AGENCY:

Federal Election Commission.

ACTION:

Final rules.

SUMMARY:

As required by the Federal Civil Penalties Inflation Adjustment Act of 1990, the Federal Election Commission is adjusting for inflation the civil monetary penalties established under the Federal Election Campaign Act, the Presidential Election Campaign Fund Act, and the Presidential Primary Matching Payment Account Act. The civil monetary penalties being adjusted are those negotiated by the Commission or imposed by a court for certain statutory violations, and those imposed by the Commission for late filing of or failure to file certain reports required by the Federal Election Campaign Act. The adjusted civil monetary penalties are calculated according to a statutory formula and the adjusted amounts will apply to penalties assessed after the effective date of these rules.

DATES:

The final rules are effective on February 2, 2017.

FOR FURTHER INFORMATION CONTACT:

Mr. Neven F. Stipanovic, Acting Assistant General Counsel, or Mr. Eugene J. Lynch, Paralegal, Office of General Counsel, 999 E Street NW., Washington, DC 20463, [phone] or [phone].

SUPPLEMENTARY INFORMATION:

The Federal Civil Penalties Inflation Adjustment Act of 1990 (the “Inflation Adjustment Act”),^[1] as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the “2015 Act”),^[2] requires federal agencies, including the Commission, to adjust for inflation the civil monetary penalties within their jurisdiction according to prescribed formulas. 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 federal court.^[3] Under the Federal Election Campaign Act, 52 U.S.C. 30101-46 (“FECA”), the Commission may seek and assess civil monetary penalties for violations of FECA, the Presidential Election Campaign Fund Act, 26 U.S.C. 9001-13, and the Presidential Primary Matching Payment Account Act, 26 U.S.C. 9031-42.

As required by the 2015 Act,^[4] the Commission recently instituted a one-time “catch-up” inflation adjustment to its civil monetary penalties. Civil Monetary Penalties Inflation Adjustments, 81 FR 41196 (June 24, 2016). Starting in 2017, the Inflation Adjustment Act requires federal agencies to adjust their civil penalties annually, and the adjustments must take effect no later than January 15 of every year.^[5] Pursuant to guidance issued by the Office of Management and Budget,^[6] the Commission is now adjusting its civil monetary penalties for 2017.^[7]

The Commission must adjust for inflation its civil monetary penalties “notwithstanding Section 553” of the Administrative Procedures Act (“APA”).^[8] Thus, the APA's notice-and-comment and delayed effective date requirements in 5 U.S.C. 553(b)-(d) do not apply because Congress has specifically exempted agencies from these requirements.^[9]

Furthermore, because the inflation adjustments made through these final rules are required by Congress and involve no Commission discretion or policy judgments, these rules do not need to be submitted to the Speaker of the House of Representatives or the President of the Senate under the Congressional Review Act, 5 U.S.C. 801 et seq. Moreover, because the APA's notice-and-comment procedures do not apply to these final rules, the Commission is not required to conduct a regulatory flexibility analysis under 5 U.S.C. 603 or 604. See 5 U.S.C. 601(2), 604(a). Nor is the Commission required to submit these revisions for congressional review under FECA. See 5 U.S.C. 30111(d)(1), (4) (providing for congressional review when Commission “prescribe[s]” a “rule of law”).

The new penalty amounts will apply to civil monetary penalties that are assessed after the date the increase takes effect, even if the associated violation predated the increase.^[10]

Explanation and Justification

As amended by the 2015 Act, the Inflation Adjustment Act requires the Commission to annually adjust its civil monetary penalties for inflation by applying a cost-of-living-adjustment (“COLA”) ratio.^[11] The COLA ratio is the percentage that the Consumer Price Index (“CPI”) ^[12] “for the month of October preceding the date of the adjustment” exceeds the CPI for October of the previous year.^[13] To calculate the adjusted penalty, the Commission must increase the most recent civil monetary penalty amount by the COLA ratio.^[14] According to the Office of Management and Budget, the COLA ratio for 2017 is 0.01636, or 1.636%; thus, to calculate the new penalties, the Commission must multiply the most recent civil monetary penalties in force by 1.01636.^[15]

The Commission assesses two types of civil monetary penalties that must be adjusted for inflation. First are penalties that are either negotiated by the Commission or imposed by a court for violations of FECA, the Presidential Election Campaign Fund Act, or the Presidential Primary Matching Payment Account Act. These civil monetary penalties are set forth at 11 CFR 111.24. Second are the civil monetary penalties assessed through the Commission's Administrative Fines Program for late filing or non-filing of certain reports required by FECA. See 52 U.S.C. 30109(a)(4)(C) (authorizing Administrative Fines Program), 30104(a) (requiring political committee treasurers to report receipts and disbursements within certain time periods). The penalty schedules for these civil monetary penalties are set out at 11 CFR 111.43 and 111.44.

1. 11 CFR 111.24—Civil Penalties

FECA establishes the civil monetary penalties for violations of FECA and the other statutes within the Commission's jurisdiction. See 52 U.S.C. 30109(a)(5), (6), (12). Commission regulations in 11 CFR 111.24 provide the current inflation-adjusted amount for each such civil monetary penalty. To calculate the adjusted civil monetary penalty, the Commission multiplies the most recent penalty amount by the COLA ratio and rounds that figure to the nearest dollar.

The actual adjustment to each civil monetary penalty is shown in the chart below.

Section	Most recent civil penalty	COLA	New civil penalty
11 CFR 111.24(a)(1)	$18,750	1.01636	$19,057
11 CFR 111.24(a)(2)(i)	40,000	1.01636	40,654
11 CFR 111.24(a)(2)(ii)	65,593	1.01636	66,666
11 CFR 111.24(b)	5,609	1.01636	5,701
11 CFR 111.24(b)	14,023	1.01636	14,252

2. 11 CFR 111.43, 111.44—Administrative Fines

FECA authorizes the Commission to assess civil monetary penalties for violations of the reporting requirements of 52 U.S.C. 30104(a) according to the penalty schedules “established and published by the Commission.” 52 U.S.C. 30109(a)(4)(C)(i). The Commission has established two such schedules: The schedule in 11 CFR 111.43(a) applies to reports that are not election sensitive, and the schedule in 11 CFR 111.43(b) applies to reports that are election sensitive.^[16] Each schedule contains two columns of penalties, one for late-filed reports and one for non-filed reports, with penalties based on the level of financial activity in the report and, if late-filed, its lateness.^[17] In addition, 11 CFR 111.43(c) establishes a civil monetary penalty for situations in which a committee fails to file a report and the Commission cannot calculate the relevant level of activity. Finally, 11 CFR 111.44 establishes a civil monetary penalty for failure to file timely reports of contributions received less than 20 days, but more than 48 hours, before an election. See 52 U.S.C. 30104(a)(6).

To determine the adjusted civil monetary penalty amount for each level of activity, the Commission multiplies the most recent penalty amount by the COLA ratio and rounds that figure to the nearest dollar. The new civil monetary penalties are shown in the schedules in the rule text, below.

List of Subjects in 11 CFR Part 111

• Administrative practice and procedures
• Elections
• Law enforcement
• Penalties

For the reasons set out in the preamble, the Federal Election Commission amends subchapter A of chapter I of title 11 of the Code of Federal Regulations as follows:

PART 111—COMPLIANCE PROCEDURE (52 U.S.C. 30109, 30107(a))

1. The authority citation for part 111 continues to read as follows:

Authority: 52 U.S.C. 30102(i), 30109, 30107(a), 30111(a)(8); 28 U.S.C. 2461 note; 31 U.S.C. 3701, 3711, 3716-3719, and 3720A, as amended; 31 CFR parts 285 and 900-904.

§ 111.24

[Amended]

2. In the table below for § 111.24, for each paragraph indicated in the left column, remove the number indicated in the middle column, and add in its place the number indicated in the right column.

Paragraph	Remove	Add
(a)(1)	$18,750	$19,057
(a)(2)(i)	40,000	40,654
(a)(2)(ii)	65,593	66,666
(b)	5,609	5,701
(b)	14,023	14,252

3. Section 111.43 is amended by revising paragraphs (a), (b), and (c) to read as follows:

§ 111.43

What are the schedules of penalties?

(a) The civil money penalty for all reports that are filed late or not filed, except election sensitive reports and pre-election reports under 11 CFR 104.5, shall be calculated in accordance with the following schedule of penalties:

If the level of activity in the report was:	And the report was filed late, the civil money penalty is:	Or the report was not filed, the civil money penalty is:
$1-4,999.99 1	[$33 + ($6 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$326 × [1 + (.25 × Number of previous violations)].
$5,000-9,999.99	[$65 + ($6 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$392 × [1 + (.25 × Number of previous violations)].
$10,000-24,999.99	[$139 + ($6 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$654 × [1 + (.25 × Number of previous violations)].
$25,000-49,999.99	[$277 + ($26 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$1176 × [1 + (.25 × Number of previous violations)].
$50,000-74,999.99	[$417 + ($105 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$3751 × [1 + (.25 × Number of previous violations)].
$75,000-99,999.99	[$556 + ($139 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$4862 × [1 + (.25 × Number of previous violations)].
$100,000-149,999.99	[$833 + ($174 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$6252 × [1 + (.25 × Number of previous violations)].
$150,000-199,999.99	[$1112 + ($208 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$7641 × [1 + (.25 × Number of previous violations)].
$200,000-249,999.99	[$1389 + ($243 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$9030 × [1 + (.25 × Number of previous violations)].
$250,000-349,999.99	[$2084 + ($277 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$11,114 × [1 + (.25 × Number of previous violations)].
$350,000-449,999.99	[$2779 + ($277 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$12,503 × [1 + (.25 × Number of previous violations)].
$450,000-549,999.99	[$3473 + ($277 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$13,197 × [1 + (.25 × Number of previous violations)].
$550,000-649,999.99	[$4168 + ($277 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$13,893 × [1 + (.25 × Number of previous violations)].
$650,000-749,999.99	[$4862 + ($277 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$14,587 × [1 + (.25 × Number of previous violations)].
$750,000-849,999.99	[$5557 + ($277 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$15,282 × [1 + (.25 × Number of previous violations)].
$850,000-949,999.99	[$6252 + ($277 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$15,976 × [1 + (.25 × Number of previous violations)].
$950,000 or over	[$6946 + ($277 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$16,671 × [1 + (.25 × Number of previous violations)].
1 The civil money penalty for a respondent who does not have any previous violations will not e×ceed the level of activity in the report.

(b) The civil money penalty for election sensitive reports that are filed late or not filed shall be calculated in accordance with the following schedule of penalties:

If the level of activity in the report was:	And the report was filed late, the civil money penalty is:	Or the report was not filed, the civil money penalty is:
$1-$4,999.99 1	[$65 + ($13 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$654 × [1 + (.25 × Number of previous violations)].
$5,000-$9,999.99	[$131 + ($13 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$784 × [1 + (.25 × Number of previous violations)].
$10,000-24,999.99	[$196 + ($13 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$1176 × [1 + (.25 × Number of previous violations)].
$25,000-49,999.99	[$417 + ($33 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$1829 × [1 + (.25 × Number of previous violations)].
$50,000-74,999.99	[$625 + ($105 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$4168 × [1 + (.25 × Number of previous violations)].
$75,000-99,999.99	[$833 + ($139 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$5557 × [1 + (.25 × Number of previous violations)].
$100,000-149,999.99	[$1250 + ($174 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$6946 × [1 + (.25 × Number of previous violations)].
$150,000-199,999.99	[$1667 + ($208 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$8335 × [1 + (.25 × Number of previous violations)].
$200,000-249,999.99	[$2084 + ($243 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$10,420 × [1 + (.25 × Number of previous violations)].
$250,000-349,999.99	[$3126 + ($277 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$12,503 × [1 + (.25 × Number of previous violations)].
$350,000-449,999.99	[$4168 + ($277 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$13,893 × [1 + (.25 × Number of previous violations)].
$450,000-549,999.99	[$5210 + ($277 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$15,282 × [1 + (.25 × Number of previous violations)].
$550,000-649,999.99	[$6252 + ($277 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$16,671 × [1 + (.25 × Number of previous violations)].
$650,000-749,999.99	[$7293 + ($277 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$18,061 × [1 + (.25 × Number of previous violations)].
$750,000-849,999.99	[$8335 + ($277 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$19,449 × [1 + (.25 × Number of previous violations)].
$850,000-949,999.99	[$9378 + ($277 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$20,838 × [1 + (.25 × Number of previous violations)].
$950,000 or over	[$10,420 + ($277 × Number of days late)] × [1 + (.25 × Number of previous violations)]	$22,228 × [1 + (.25 × Number of previous violations)].
1 The civil money penalty for a respondent who does not have any previous violations will not exceed the level of activity in the report.

(c) If the respondent fails to file a required report and the Commission cannot calculate the level of activity under paragraph (d) of this section, then the civil money penalty shall be $7,641.

* * * * *

§ 111.44

[Amended]

4. Amend paragraph (a)(1) of § 111.44 by removing “$137” and adding, in its place, “$139”.

On behalf of the Commission.

Dated: January 5, 2017.

Matthew S. Petersen,

Commissioner, Federal Election Commission.

Footnotes

1.  Public Law 101-410, 104 Stat. 890 (codified at 28 U.S.C. 2461 note), amended by Debt Collection Improvement Act of 1996, Public Law 104-134, sec. 31001(s)(1), 110 Stat. 1321, 1373; Federal Reports Elimination Act of 1998, Public Law 105-362, sec. 1301, 112 Stat. 3280.

2.  Public Law 114-74, section 701, 129 Stat. 584, 599.

3.  Inflation Adjustment Act, section 3(2).

4.  Inflation Adjustment Act, section 4(b)(1).

5.  Inflation Adjustment Act, section 4(a).

6.  See Inflation Adjustment Act section 7(a) (requiring OMB to “issue guidance to agencies on implementing the inflation adjustments required under this Act”); see also Memorandum from Shaun Donovan, Director, Office of Management and Budget, to Heads of Executive Departments and Agencies, M-17-11 (Dec. 16, 2016), https://www.whitehouse.gov/​sites/​default/​files/​omb/​memoranda/​2016/​m-16-06.pdf (“OMB Memorandum”).

7.  Inflation Adjustment Act, section 5.

8.  Inflation Adjustment Act, section 4(b)(2).

9.  See, e.g., Asiana Airlines v. FAA, 134 F.3d 393, 396-99 (D.C. Cir. 1998) (finding APA “notice and comment” requirement not applicable where Congress clearly expressed intent to depart from normal APA procedures).

10.  Inflation Adjustment Act, section 6.

11.  The COLA ratio must be applied to the most recent civil monetary penalties, which include the recent catch-up adjustments. Inflation Adjustment Act, section 4(a); see also OMB Memorandum at 2.

12.  The Inflation Adjustment Act, sec. 3, uses the CPI “for all-urban consumers published by the Department of Labor.”

13.  Inflation Adjustment Act, section 5(b)(1).

14.  Inflation Adjustment Act, section 5(a), (b)(1).

15.  OMB Memorandum at 1.

16.  Election sensitive reports are certain reports due shortly before an election. See 11 CFR 111.43(d)(1).

17.  A report is considered to be “not filed” if it is never filed or is filed more than a certain number of days after its due date. See 11 CFR 111.43(e).