07-569. Program Fraud Civil Remedies

AGENCY:

Office of the Secretary, DHS.

ACTION:

Final rule.

SUMMARY:

This final rule adopts, without change, the Program Fraud Civil Penalties interim rule published by the Department of Homeland Security (DHS) on October 12, 2005. This rule finalizes uniform administrative procedures for DHS to implement the Program Fraud Civil Remedies Act of 1986 (the Act).

DATES:

The interim rule is adopted as final as of March 12, 2007.

FOR FURTHER INFORMATION CONTACT:

Michael Russell, Acting Deputy Associate General Counsel, Division of General Law, Office of the General Counsel, Department of Homeland Security, Washington, DC 20528. Telephone: [phone] or facsimile: 202-772-9735, not toll free calls; or e-mail: [e-mail].

SUPPLEMENTARY INFORMATION:

I. Background

The Program Fraud Civil Remedies Act of 1986, codified at 31 U.S.C. 3801-3812 and adjusted in accordance with the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410), as amended by the Debt Collection Improvement Act of 1996 (Pub. L. 104-134), establishes an administrative remedy against anyone who makes a false Claim or written Statement to any of certain Federal agencies, including DHS. In brief, any person who submits a Claim or written Statement to an affected agency knowing or having reason to know that it is false, fictitious, or fraudulent, is liable for a penalty of up to $5,500 per false Claim or Statement and, in addition, with respect to Claims, for an assessment of up to double the amount falsely Claimed. The Act requires each affected Federal agency to publish rules and regulations necessary to implement the provisions of the Act. 31 U.S.C. 3809.

The interim rule, published on October 12, 2005, at 70 FR 59209, contains procedures governing the imposition of civil penalties and assessments against persons who make, submit, or present, or cause to be made, submitted, or presented, false, fictitious, or fraudulent Claims or written Statements to DHS or any of its components. The final rule adopts those regulations as final.

II. Comment on the Interim Rule

DHS solicited public comments on the interim rule and the comment period closed on November 15, 2005. DHS received one comment. The commenter expressed concern that the penalty of $5,500 per false Claim or Statement is far too low, because, the commenter asserted, the cost to the government for fraud exceeds this amount. The Act being implemented here limits the penalty and DHS is not authorized to exceed those limitations. The commenter also expressed concerns about how the government gives out money generally; these comments were beyond the scope of the rulemaking because the rule is limited to implementing the Program Fraud and Civil Remedies Act of 1986, and did not address government grant programs generally, or individual eligibility issues.

III. Regulatory Analyses

Executive Order 12866

This final rule is considered by DHS to be a “significant regulatory action” under Executive Order 12866, section 3(f), Regulatory Planning and Review. 58 FR 51735, October 4, 1993 (Executive Order). Under Executive Order 12866 a significant regulatory action is subject to an Office of Management and Budget (OMB) review and to the requirements of the Executive Order. The Executive Order defines “significant regulatory action” as one that is likely to result in a rule that may: (1) Have an annual effect on the economy of $ 100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights or obligations of recipients thereof; (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order. As discussed in the interim rule, because this rule announces procedures for a unique and relatively new cabinet-level department, and because DHS engages in uncommon relief and assistance efforts such as those following Hurricane Katrina, this rule may raise novel policy issues. 70 FR 59209, 59211 (Oct. 12, 2005). Accordingly, the rule was reviewed by the Office of Management and Budget.

Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) mandates that an agency conduct an RFA analysis when an agency is “required by section 553 * * *, or any other law, to publish general notice of proposed rulemaking for any proposed rule, or publishes a notice of proposed rulemaking for interpretative rule involving the internal revenue laws of the United States * * *.” 5 U.S.C. 603(a). RFA analysis is not required when a rule is exempt from notice and comment rulemaking under 5 U.S.C. 553(b). DHS determined that good cause existed under 5 U.S.C. 553(b)(B) to exempt this rule from the notice and comment requirements of 5 U.S.C. 553(b). See 70 FR 59209, 59210 (Oct. 12, 2005). Therefore, no RFA analysis under 5 U.S.C. 603 is required for this rule.

Unfunded Mandates Reform Act of 1995

The Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, UMRA addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. UMRA analysis is not required when a rule is exempt from notice and comment rulemaking under 5 U.S.C. 553(b). DHS determined that good cause existed under 5 U.S.C. 553(b)(B) to exempt this rule from the notice and comment requirements of 5 U.S.C. 553(b). See 70 FR 59209, 59210 (Oct. 12, 2005). Therefore, no UMRA analysis is required for this rule. Nevertheless, DHS does not expect this rule to result in such an expenditure.

Executive Order 13132, Federalism

This final rule will not have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. It will not preempt any state laws. In accordance with section 6 of Executive Order 13132, we determine that this rule will not have federalism implications sufficient to warrant the preparation of a federalism impact statement.

Executive Order 12988, Civil Justice Reform

This final rule meets the applicable standards in section 3(a) and 3(b)(2) of Executive Order 12988.

Paperwork Reduction Act

This final rule will not require or invite any additional record or information maintenance, submission, or collection for the DHS programs. Therefore, this final rule will not invoke the requirements of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.

List of Subjects in 6 CFR Part 13

• Administrative practice and procedure
• Claims
• Fraud
• Penalties

Authority and Issuance

Accordingly, for the reasons stated in the preamble, and pursuant to my authority as Secretary of Homeland Security, the interim rule adding 6 CFR part 13 that was published at 70 FR 59209 on October 12, 2005, is adopted as a final rule without change.

Michael Chertoff,

Secretary.