02-20284. Civil Monetary Penalty Inflation Adjustment Rule

August 5, 2002.

AGENCY:

Federal Energy Regulatory Commission, Department of Energy.

ACTION:

Final rule.

SUMMARY:

The Federal Energy Regulatory Commission (Commission) is issuing a final rule for a Civil Monetary Penalty Inflation Adjustment as mandated by the Debt Collection Improvement Act of 1996 (DCIA) to adjust the Commission's civil monetary penalties for inflation on a periodic basis. Prior to the enactment of this law, the Commission's penalties had never been adjusted for inflation. This rule will allow the Commission's penalties to keep pace with inflation and thereby maintain the deterrent effect Congress intended when it originally specified penalties.

The first mandatory adjustment, as mandated by the DCIA, increases all of the Commission's penalty provisions by ten percent. The Commission is required to review its penalties again at least once every four years thereafter and adjust them as necessary for inflation according to a specified formula.

DATES:

This final rule is effective August 12, 2002.

FOR FURTHER INFORMATION CONTACT:

Carolyn Van Der Jagt, Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, [phone].

SUPPLEMENTARY INFORMATION:

Before Commissioners: Pat Wood, III, Chairman; William L. Massey, Linda Breathitt, and Nora Mead Brownell.

I. Background

1. The Federal Civil Penalties Inflation Adjustment Act of 1990 ^[1] (Adjustment Act) as amended by the Debt Collection Improvement Act of 1996 ^[2] (DCIA) provided for the regular evaluation of civil monetary penalties (CMP) to ensure that they continued to maintain their deterrent value and that penalty amounts due to the Federal Government were properly accounted for and collected. On April 26, 1996, the Adjustment Act was amended by the DCIA to require that each agency issue regulations to adjust its CMPs for inflation at least every four years. The amendment further provides that any resulting increases in a CMP due to the inflation adjustment should apply only to the violations that occur subsequent to the date of the publication in the Federal Register of the increased amount of the CMP. The first inflation adjustment of any penalty shall not exceed ten percent of such penalty.

II. Discussion

2. A CMP is defined as any penalty, fine, or other sanction that: (1) Is for a specific monetary amount as provided by Federal law, or has a maximum amount provided for by Federal law; (2) is assessed or enforced by an agency pursuant to Federal law; and (3) is assessed or enforced pursuant to an administrative proceeding or a civil action in the Federal courts. This final rule adjusts the civil penalties that are established by law and assessed or enforced by the Commission.

3. Section 5 of the DCIA sets forth the formula for adjusting the penalties for inflation:

The inflation adjustment described under Section 4 [of the DCIA] shall be determined by increasing the maximum CMP or the range of minimum and maximum CMPs as applicable, for each CMP by the cost-of-living adjustment. The term “cost of living” adjustment is the percentage for each CMP by which the Consumer Price Index (CPI) 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 law.

However, the DCIA also sets a ten percent cap on the first adjustment for inflation. Since the Commission's penalties have never previously been adjusted for inflation, this first statutorily required adjustment will be limited to ten percent.

4. The DCIA rounding rules require that an increase be rounded as follows:

1. If the increase is greater than $0 and less than or equal to $100, round to the nearest multiple of $10.

2. If the increase is greater than $100 and less than or equal to $1,000, round to the nearest multiple of $100.

3. If the increase is greater than $1,000 and less than or equal to $10,000, round to the nearest multiple of $1,000.

4. If the increase is greater than $10,000 and less than or equal to $100,000, round to the nearest multiple of $5,000.

5. If the increase is greater than $100,000 and less than or equal to $200,000, round to the nearest multiple of $10,000.

6. If the increase is greater than $200,000, round to the nearest multiple of $25,000.

5. The Commission is implementing the following adjustments:

United States Code citation	Civil Monetary Penalty description	Current maximum penalty amount	New adjusted maximum penalty amount
15 U.S.C. 3414(b)(6)(A)(i), Sec. 504 Natural Gas Policy Act	Failure to comply with NGPA's provisions	$5,000.00	$5,500.00
16 U.S.C. 823b(c), Sec. 31 Federal Power Act	Failure to comply with rule, license, and permit requirements under Subchapter 12	10,000.00 per day	11,000.00 per day
16 U.S.C. 825n(a), Sec. 315 Federal Power Act	Failure to comply with Commission orders and rules, failure to submit required reports	1,000.00	1,100.00
16 U.S.C. 825(o)-1(b), Sec. 316a Federal Power Act	Violation of Sec. 211, 212, 213, 214 of FPA	10,000.00	11,000.00

III. Administrative Findings

6. The Administrative Procedure Act (APA) requires rulemakings to be published in the Federal Register and also mandates that an opportunity for comments be provided when an agency promulgates regulations. However, the APA exempts certain rules of agency procedures from its notice and comment requirements.^[3] The Commission is required by the DCIA to adjust CMPs for inflation. Additionally, the formula for the amount of the penalty adjustment is prescribed by Congress and is not subject to the exercise of discretion by the Commission. The Commission is only required to determine the amount of inflation adjustments by performing administrative computations. Accordingly, the Commission has determined for good cause that public notice and comment are unnecessary, impractical, or contrary to the public interest and that the rule should be published in final form.

IV. Regulatory Flexibility Statement

7. The Regulatory Flexibility Act (RFA), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996,^[4] (SBREFA) 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 notice and opportunity for comment are not required by 5 U.S.C. 553, or any other law, a Regulatory Flexibility Analysis is not required and was not prepared for purposes of the RFA.

8. This action will not have a significant impact on a substantial number of small entities. As stated, the Commission is required by the DCIA to adjust civil monetary penalties for inflation. The formula for the amount of the penalty adjustment is prescribed by Congress and is not subject to the exercise of discretion by the Commission. The Commission's action implements this statutory mandate and does not substantively alter the existing regulatory framework. This rule does not affect mechanisms already in place, including statutory provisions and the Commission's policies, that address the special circumstances of small entities when assessing penalties in enforcement actions.

V. Effective Date

9. For the same reasons the Commission has determined that public notice and comment is unnecessary, impractical, and contrary to the public interest, the Commission finds that it has good cause to adopt an effective date that is less than 30 days after the date of publication in the Federal Register pursuant to the APA,^[5] and therefore, the regulation is effective upon publication.

VI. Congressional Review Act

10. The Congressional Review Act,^[6] as added by the SBREFA, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. The Commission will submit a report containing the rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. A major rule cannot take effect until 60 days after it is published in the Federal Register. The Commission has concluded, with the concurrence of the Administrator of the Office of Information and Regulatory Affairs at the Office of Management and Budget (OMB), that this is not a “major rule” as defined in section 251 of the SBREFA. Therefore, for the reasons outlined above, this action will take effect August 12, 2002.

VII. Information Collection Statement

11. The OMB regulations require that OMB approve certain information collection requirements imposed by agency rules.^[7] However, this final rule contains no information reporting requirements, and therefore is not subject to OMB approval.

VIII. Environmental Assessment

12. Commission regulations describe the circumstances where preparation of an environmental assessment or an environmental impact statement will be required.^[8] The Commission has categorically excluded certain actions from this requirement as not having a significant effect on the human environment.^[9] This final rule promulgates a procedural rule that is considered a categorical exclusion under section 380.4(a)(2)(ii) of the Commission's regulations. Therefore, no environmental assessment or environmental impact statement is necessary.

IX. Document Availability

13. In addition to publishing the full text of this document in the Federal Register, the Commission provides all interested persons an opportunity to view and/or print the contents of this document via the Internet through FERC's Home Page (http://www.ferc.gov) and in FERC's Public Reference Room during normal business hours (8:30 a.m. to 5 p.m. Eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426.

14. From FERC's Home Page on the Internet, this information is available in the Federal Energy Regulatory Records Information System (FERRIS). The full text of this document is available on FERRIS in PDF and WordPerfect format for viewing, printing, and/or downloading. To access this document in FERRIS, type the docket number excluding the last three digits of this document in the docket number field.

15. User assistance is available for FERRIS and the FERC's website during normal business hours from our Help line at [phone] or the Public Reference Room at [phone] Press 0, TTY [phone]. E-mail the Public Reference Room at [e-mail].

List of Subjects in 18 CFR Part 385

• Administrative practice and procedure
• Electric power
• Penalties
• Pipelines
• Reporting and recordkeeping requirements

By the Commission.

Linwood A. Watson, Jr.,

Deputy Secretary.

In consideration of the foregoing, the Commission is amending Part 385, Title 18 of the Code of Federal Regulations, as follows:

PART 385—RULES OF PRACTICE AND PROCEDURE

1. The authority citation for part 385 is revised to read as follows:

Authority: 5 U.S.C. 551-557; 15 U.S.C. 717-717z, 3301-3432; 16 U.S.C. 791a-825r, 2601-2645; 28 U.S.C. 2461; 31 U.S.C. 3701, 9701; 42 U.S.C. 7101-7352; 49 U.S.C. 60502; 49 App. U.S.C. 1-85 (1988).

2. In part 385, subpart P is added to read as follows:

Subpart P—Civil Monetary Penalty Inflation Adjustment

385.1601

Scope and purpose (Rule 1601).

385.1602

Civil penalties, as adjusted (Rule 1602).

§ 385.1601

Scope and purpose (Rule 1601).

The purpose of this subpart is to make inflation adjustments to the civil monetary penalties provided by law within the jurisdiction of the Commission. These penalties shall be subject to review and adjustment as necessary at least every four years in accordance with the Federal Civil Penalties Inflation Act of 1990, as amended.

§ 385.1602

Civil penalties, as adjusted (Rule 1602).

The civil monetary penalties provided by law within the jurisdiction of the Commission are:

(a) 15 U.S.C. 3414(b)(6)(A)(1), Natural Gas Policy Act: from $5,000 to $5,500.

(b) 16 U.S.C. 823b(c), Federal Power Act: from $10,000 to $11,000.

(c) 16 U.S.C. 825n(a), Federal Power Act: from $1,000 to $1,100.

(d) 16 U.S.C. 825(o)-1(b), Federal Power Act: from $10,000 to $11,000.

Footnotes

1.  28 U.S.C. 2461.

2.  31 U.S.C. 3701.

3.  5 U.S.C. 553(b).

4.  5 U.S.C. 801 et seq.

5.  5 U.S.C. 553(b)(3)(B).

6.  5 U.S.C. 801 et seq.

7.  5 CFR Part 1320.

8.  Regulations Implementing National Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), codified at 18 CFR Part 380.

9.  18 CFR 380.4.