[Federal Register Volume 64, Number 167 (Monday, August 30, 1999)]
[Rules and Regulations]
[Pages 47095-47097]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-22348]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 64, No. 167 / Monday, August 30, 1999 / Rules
and Regulations
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OFFICE OF GOVERNMENT ETHICS
5 CFR Parts 2634 and 2636
RINs 3209-AA00 and 3209-AA13
Civil Monetary Penalties Inflation Adjustments for Ethics in
Government Act Violations
AGENCY: Office of Government Ethics (OGE).
ACTION: Final rule; technical amendments.
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SUMMARY: In accordance with the 1990 Federal Civil Penalties Inflation
Adjustment Act as amended by the 1996 Debt Collection Improvement Act,
these final rule amendments incorporate 10% inflation adjustments for
each of the five civil monetary penalties provided in the Ethics in
Government Act, as reflected in the executive branchwide financial
disclosure and outside employment/activities regulations promulgated by
OGE.
EFFECTIVE DATE: September 29, 1999.
FOR FURTHER INFORMATION CONTACT: William E. Gressman, Senior Associate
General Counsel, Office of Government Ethics; telephone: 202-208-8000;
TDD: 202-208-8025; FAX: 202-208-8037.
SUPPLEMENTARY INFORMATION:
Background
The Office of Government Ethics is issuing these final rule
technical amendments as mandated by the Debt Collection Improvement Act
of 1996, section 31001 of Pub. L. 104-134, 110 Stat. 1321, to adjust
for inflation the civil monetary penalties (CMP) provided in the Ethics
in Government Act of 1978 as amended (the ``Ethics Act''), 5 U.S.C.
appendix. As explained below, all of the Ethics Act penalties are being
raised by 10%, effective September 29, 1999. These adjustments will
bring the Ethics Act CMPs into line with inflation since they were last
adjusted in the 1989 Ethics Reform Act, thereby promoting compliance
with the law.
The Debt Collection Improvement Act revised sections 4 and 5 of,
and added a new section 7 to, the Federal Civil Penalties Inflation
Adjustment Act of 1990, Pub. L. 101-410, 104 Stat. 890, 28 U.S.C. 2461
note, to require Federal agencies to regularly adjust certain statutory
CMPs for inflation. As amended, that statute requires each Federal
agency to make an initial inflation adjustment by regulation published
in the Federal Register for all applicable CMPs provided by law within
its jurisdiction, and to make further adjustments by regulation at
least once every four years thereafter for these penalty amounts. The
inflation adjustments are to be rounded, in pertinent part, to the
nearest multiple of $1,000 for CMPs of greater than $1,000 but less
than or equal to $10,000, such as those provided in the Ethics Act,
subject to a limitation on any initial increase of no more than 10% of
the penalty.
Under the Debt Collection Improvement Act, the increased penalties
only apply to violations that occur after the increase takes effect,
but no earlier than 180 days after the date of enactment (April 26,
1996) of that law, or October 23, 1996. In the case of the Ethics Act
CMPs, the inflation adjustments will not become effective until this
rulemaking takes effect on September 29, 1999.
In addition, OGE notes that a separate Department of Justice
rulemaking also being published in today's issue of the Federal
Register, includes, as part of a broader set of CMP inflation
adjustments, for that Department's Civil Division (which brings Ethics
Act CMP enforcement actions) new regulatory provisions being added in a
new part 85 of 28 CFR which provide for the same penalties, as adjusted
by the same amount and effective on the same date as are also provided
for herein. The Office of Government Ethics and the Justice Department
have, therefore, coordinated in issuance of these two rulemakings.
The Office of Government Ethics emphasizes that only Ethics Act
violations occurring on or after the effective date of this rulemaking,
September 29, 1999, will be subject to the increased civil monetary
penalty amounts. For any violations occurring prior to that date, the
CMP amounts originally specified in the Ethics Act as amended by the
1989 Ethics Reform Act would apply. The modified OGE regulatory
provisions will reflect both the original and adjusted CMP amounts. The
Office of Government Ethics will notify departments and agencies by
memorandum of this rulemaking action and its effect.
Ethics Act CMPs
There are five civil monetary penalties provided for in the Ethics
in Government Act, as amended inter alia by the 1989 Ethics Reform Act.
The law provides for a $10,000 maximum civil penalty that can be
assessed by an appropriate United States district court, based upon a
civil action brought by the Department of Justice, for the following
four types of violations: knowing and willful failure to file, report
required information on, or falsification of a public financial
disclosure report; knowing and willful breach of a qualified trust by
trustees and interested parties; misuse of a public report; and
violation of outside employment/activities provisions. In the case of
outside employment/activities violations, an alternative assessable
maximum penalty, if greater, is the amount of compensation received (if
any) by an individual for prohibited conduct. That alternative penalty
is indirectly affected by the increase in the applicable set dollar CMP
in this rulemaking. In addition, a $5,000 maximum civil monetary
penalty is specified in the Ethics Act for negligent breach of a
qualified trust by trustees and interested parties. See sections
102(f)(6)(C)(i) and (ii), 104(a), 105(c)(2) and 504(a) of the Ethics
Act, 5 U.S.C. appendix, sections 102(f)(6)(C)(i) and (ii), 104(a),
105(c)(2) and 504(a). These penalties are reflected in 5 CFR
2634.701(b), 2634.702 (a) and (b), and 2634.703 of OGE's executive
branchwide financial disclosure regulation and 5 CFR 2636.104(a) of
OGE's executive branchwide covered noncareer employee outside
employment/activities regulation.
Late Filing Fee Not a CMP
The Office of Government Ethics notes that it has determined, after
consultation with the Department of Justice, that the $200 late filing
fee for
[[Page 47096]]
public financial disclosure reports that are more than 30 days overdue
(see section 105(d) of the Ethics Act, 5 U.S.C. appendix, section
105(d), and 5 CFR 2634.704 of OGE's regulations thereunder) is not a
civil monetary penalty as defined under the Federal Civil Penalties
Inflation Adjustment Act, as amended. Therefore, that fee is not being
adjusted and will remain at its current amount of $200.
Calculation of Inflation Adjustments
The Federal Civil Penalties Inflation Adjustment Act, as amended by
the Debt Collection Improvement Act, requires Federal agencies to
adjust CMPs within their respective jurisdictions by the cost-of-living
adjustment set forth in section 5 of that law. The cost-of-living
adjustment is defined as the percentage by which the U.S. Department of
Labor's 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 the penalty was last
set or adjusted pursuant to law, subject to the rounding formula and
initial 10% maximum adjustment noted above. The Ethics Act CMPs were
last set by statute in the Ethics Reform Act of 1989 (with the CMP
provisions becoming effective on January 1, 1991) and have not
previously been administratively adjusted for inflation. The CPI for
June 1989 was 371.7, while that for June 1998 was 488.2. Thus, the
increase was just over 31% (additionally, OGE notes that the CPI for
June 1991 was 407.3, which yields an increase to June 1998 of just
under 20%). Therefore, this first statutorily required adjustment of
the five Ethics Act CMPs is limited to the maximum 10% increase
specified by the Debt Collection Improvement Act.
Applying the 10% increase to the Ethics Act civil monetary
penalties, OGE is amending its above-noted regulatory provisions,
effective September 29, 1999, to increase each of the four $10,000
maximum penalties to a maximum of $11,000 and the one $5,000 maximum
penalty to a maximum of $5,500.
Conclusion
The Office of Government Ethics, in coordination with the Justice
Department will also make future inflation adjustments in accordance
with the statutory formula under the Federal Civil Penalties Inflation
Adjustment Act, as amended. That law provides that civil monetary
penalties are to be adjusted for inflation at least once every four
years after the initial adjustment.
Finally, OGE is making a couple of minor clarifying revisions in
the amended sections of its regulations subject to the CMP adjustments,
as set forth below.
Matters of Regulatory Procedure
Administrative Procedure Act
Pursuant to 5 U.S.C. 553(b), as Director of the Office of
Government Ethics, I find that good cause exists for waiving the
general notice of proposed rulemaking and public comment procedures as
to these technical amendments. The notice and comment procedures are
being waived because these amendments, which concern matters of agency
organization, procedure and practice, are being adopted in accordance
with statutorily mandated inflation adjustment procedures of the 1990
Federal Civil Penalties Inflation Adjustment Act, as amended by the
1996 Debt Collection Improvement Act. It is also in the public interest
that the adjusted rates for civil monetary penalties under the Ethics
in Government Act become effective as soon as possible in order to
maintain their deterrent effect. However, OGE notes that, in order to
provide an appropriate period for notification to executive branch
departments and agencies and their employees, these technical
amendments will only take effect 30 days after the date of publication
of this rulemaking in the Federal Register, on September 29, 1999.
Executive Order 12866
In promulgating these technical amendments to its regulations, OGE
has adhered to the regulatory philosophy and the applicable principles
of regulation set forth in section 1 of Executive Order 12866,
Regulatory Planning and Review. These amendments have not been reviewed
by the Office of Management and Budget under that Executive order
because they are not deemed ``significant'' thereunder since they are
limited to the adoption of statutorily mandated inflation adjustments
without interpretation.
Executive Order 12988
As Director of the Office of Government Ethics, I have reviewed
this final amendatory regulation in light of section 3 of Executive
Order 12988, Civil Justice Reform, and certify that it meets the
applicable standards provided therein.
Regulatory Flexibility Act
As Director of the Office of Government Ethics, I certify under the
Regulatory Flexibility Act (5 U.S.C. chapter 6) that this rulemaking
will not have a significant economic impact on a substantial number of
small entities because it primarily affects Federal executive branch
employees and their agencies.
Paperwork Reduction Act
The Paperwork Reduction Act (44 U.S.C. chapter 35) does not apply
because this amendatory rulemaking does not contain any information
collection requirements that require the approval of the Office of
Management and Budget.
List of Subjects
5 CFR Part 2634
Certificates of divestiture, Conflict of interests, Government
employees, Penalties, Reporting and recordkeeping requirements, Trusts
and trustees.
5 CFR Part 2636
Conflict of interests, Government employees, Penalties.
Approved: August 6, 1999.
Stephen D. Potts,
Director, Office of Government Ethics.
Accordingly, for the reasons set forth in the preamble, the Office
of Government Ethics is amending 5 CFR parts 2634 and 2636 as follows:
PART 2634--[AMENDED]
1. The authority citation for part 2634 is revised to read as
follows:
Authority: 5 U.S.C. App. (Ethics in Government Act of 1978); 26
U.S.C. 1043; Pub. L. 101-410, 104 Stat. 890, 28 U.S.C. 2461 note
(Federal Civil Penalties Inflation Adjustment Act of 1990), as
amended by Sec. 31001, Pub. L. 104-134, 110 Stat. 1321 (Debt
Collection Improvement Act of 1996); E.O. 12674, 54 FR 15159, 3 CFR,
1989 Comp., p. 215, as modified by E.O. 12731, 55 FR 42547, 3 CFR,
1990 Comp., p. 306.
2. Section 2634.101 is revised to read as follows:
Sec. 2634.101 Authority.
The regulation in this part is issued pursuant to the authority of
the Ethics in Government Act of 1978, as amended; 26 U.S.C. 1043; the
Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by
the Debt Collection Improvement Act of 1996; and Executive Order 12674
of April 12, 1989, as modified by Executive Order 12731 of October 17,
1990.
3. Section 2634.701 is amended by revising the last sentence of
paragraph (b) to read as follows:
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Sec. 2634.701 Failure to file or falsifying reports.
* * * * *
(b) * * * The court in which the action is brought may assess
against the individual a civil monetary penalty in any amount, not to
exceed $10,000, as provided by section 104(a) of the Act, for any such
violation occurring before September 29, 1999, as adjusted effective
September 29, 1999 to $11,000 for any such violation occurring on or
after that date, in accordance with the inflation adjustment procedures
prescribed in the Federal Civil Penalties Inflation Adjustment Act of
1990, as amended.
* * * * *
4. Section 2634.702 is amended by revising the respective last
sentences of paragraphs (a) and (b) to read as follows:
Sec. 2634.702 Breaches by trust fiduciaries and interested parties.
(a) * * * The court in which the action is brought may assess
against the individual a civil monetary penalty in any amount, not to
exceed $10,000, as provided by section 102(f)(6)(C)(i) of the Act, for
such violation occurring before September 29, 1999, as adjusted
effective September 29, 1999 to $11,000 for any such violation
occurring on or after that date, in accordance with the inflation
adjustment procedures prescribed in the Federal Civil Penalties
Inflation Adjustment Act of 1990, as amended.
(b) * * * The court in which the action is brought may assess
against the individual a civil monetary penalty in any amount, not to
exceed $5,000, as provided by section 102(f)(6)(C)(ii) of the Act, for
any such violation occurring before September 29, 1999, as adjusted
effective September 29, 1999 to $5,500 for any such violation occurring
on or after that date, in accordance with the inflation adjustment
procedures prescribed in the Federal Civil Penalties Inflation
Adjustment Act of 1990, as amended.
5. Section 2634.703 is amended by revising the second sentence to
read as follows:
Sec. 2634.703 Misuse of public reports.
* * * The court in which the action is brought may assess against
the person a civil monetary penalty in any amount, not to exceed
$10,000, as provided by section 105(c)(2) of the Act, for any such
violation occurring before September 29, 1999, as adjusted effective
September 29, 1999 to $11,000 for any such violation occurring on or
after that date, in accordance with the inflation adjustment procedures
prescribed in the Federal Civil Penalties Inflation Adjustment Act of
1990, as amended. * * *
PART 2636--[AMENDED]
6. The authority citation for part 2636 is revised to read as
follows:
Authority: 5 U.S.C. App. (Ethics in Government Act of 1978);
Pub. L. 101-410, 104 Stat. 890, 28 U.S.C. 2461 note (Federal Civil
Penalties Inflation Adjustment Act of 1990), as amended by Sec.
31001, Pub. L. 104-134, 110 Stat. 1321 (Debt Collection Improvement
Act of 1996); E.O. 12674, 54 FR 15159, 3 CFR, 1989 Comp., p. 215, as
modified by E.O. 12731, 55 FR 42547, 3 CFR, 1990 Comp., p. 306.
7. Section 2636.104 is amended by revising paragraph (a) to read as
follows:
Sec. 2636.104 Civil, disciplinary and other action.
(a) Civil action. Except when the employee engages in conduct in
good faith reliance upon an advisory opinion issued under Sec. 2636.103
of this subpart, an employee who engages in any conduct in violation of
the prohibitions, limitations and restrictions contained in this part
may be subject to civil action under 5 U.S.C. app. 504(a) and a civil
monetary penalty of not more than $10,000 for any such violation
occurring before September 29, 1999, as adjusted effective September
29, 1999 to $11,000 for any such violation occurring on or after that
date, in accordance with the inflation adjustment procedures prescribed
in the Federal Civil Penalties Inflation Adjustment Act of 1990, as
amended, or the amount of the compensation the individual received for
the prohibited conduct, whichever is greater.
* * * * *
[FR Doc. 99-22348 Filed 8-27-99; 8:45 am]
BILLING CODE 6345-01-P
