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Rules and Regulations
Federal Register Vol. 86, No. 20
Tuesday, February 2, 2021

This section of the FEDERAL REGISTER
contains regulatory documents having general applicability and legal effect, most of which are keyed to and codified in the Code of Federal Regulations, which is published under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.

MERIT SYSTEMS PROTECTION
BOARD
5 CFR Part 1201
Civil Monetary Penalty Inflation Adjustment AGENCY:

Merit Systems Protection
Board.
ACTION:

Final rule.

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SUMMARY: This final rule adjusts the level of civil monetary penalties CMPs in regulations maintained and enforced by the Merit Systems Protection Board MSPB with an annual adjustment under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 the 2015 Act and Office of Management and Budget OMB
guidance.
DATES: This final rule is effective on February 2, 2021.
FOR FURTHER INFORMATION CONTACT:
Jennifer Everling, Acting Clerk of the Board, Merit Systems Protection Board, 1615 M Street NW, Washington, DC
20419; Phone: 202 6537200; Fax:
202 6537130; or email: mspb@
mspb.gov.
SUPPLEMENTARY INFORMATION:

I. Background The Federal Civil Penalties Inflation Adjustment Act of 1990 the 1990 Act, Public Law 101410, provides for the regular evaluation of CMPs by Federal agencies. Periodic inflationary adjustments of CMPs ensure that the consequences of statutory violations adequately reflect the gravity of such offenses and that CMPs are properly accounted for and collected by the Federal Government. In April 1996, the 1990 Act was amended by the Debt Collection Improvement Act of 1996
the 1996 Act, Public Law 104134, requiring Federal agencies to adjust their CMPs at least once every four years. However, because inflationary adjustments to CMPs were statutorily capped at ten percent of the maximum
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penalty amount, but only required to be calculated every four years, CMPs in many cases did not correspond with the true measure of inflation over the preceding four-year period, leading to a decline in the real value of the penalty.
To remedy this decline, the 2015 Act section 701 of Pub. L. 11474 requires agencies to adjust CMP amounts with annual inflationary adjustments through a rulemaking using a methodology mandated by the legislation. The purpose of these adjustments is to maintain the deterrent effect of civil penalties.
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 a Federal agency assesses or enforces pursuant to an administrative proceeding or a civil action in the Federal courts. 28 U.S.C. 2461 note.
The MSPB is authorized to assess CMPs pursuant to 5 U.S.C. 1215a3
and 5 U.S.C. 7326 in disciplinary actions brought by the Special Counsel.
The corresponding MSPB regulation for both CMPs is 5 CFR 1201.126a. As required by the 2015 Act, and pursuant to guidance issued by the OMB, the MSPB is now making an annual adjustment for 2021, according to the prescribed formulas.
II. Calculation of Adjustment The CMP listed in 5 U.S.C. 1215a3
was established in 1978 with the enactment of the Civil Service Reform Act of 1978 CSRA, Public Law 95454, section 202a, 92 Stat. 112130 Oct.
13, 1978, and originally codified at 5
U.S.C. 1207b. That CMP was last amended by section 106 of the Whistleblower Protection Enhancement Act of 2012, Public Law 112199, 12
Stat. 1468 Nov. 27, 2012, now codified at 5 U.S.C. 1215a3, which provided for a CMP not to exceed $1,000. The CMP authorized in 5 U.S.C. 7326 was established in 2012 by section 4 of the Hatch Act Modernization Act of 2012
Hatch Act, Public Law 112230, 126
Stat. 1617 Dec. 28, 2012, which provided for a CMP not to exceed $1,000. On March 4, 2020, the MSPB
issued a final rule which increased the maximum CMP allowed under both 5
U.S.C. 1215a3 and 5 U.S.C. 7326 to $1,112 for the year 2020. See 85 FR
12723 Mar. 4, 2020. This increase
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reflected the annual increase for the year 2020 mandated by the 2015 Act.
On December 23, 2020, OMB issued guidance on calculating the annual inflationary adjustment for 2021. See Memorandum from Russell T. Vought, Dir., OMB, to Heads of Executive Departments and Agencies re:
Implementation of Penalty Inflation Adjustments for 2021, Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, M2110 Dec. 23, 2020. Therein, OMB notified agencies that the annual adjustment multiplier for 2021, based on the Consumer Price Index for All Urban Consumers CPIU, is 1.01182
and that the 2021 annual adjustment amount is obtained by multiplying the 2020 penalty amount by the 2021
annual adjustment multiplier, and rounding to the nearest dollar.
Therefore, the new maximum penalty under the CSRA and the Hatch Act is $1,112 1.01182 = $1,125.14, which rounds to $1,125.
III. Effective Date of Penalties The revised CMP amounts will go into effect on February 2, 2021. All violations for which CMPs are assessed after the effective date of this rule will be assessed at the adjusted penalty level regardless of whether the violation occurred before the effective date.
IV. Procedural Requirements A. Administrative Procedure Act Pursuant to 5 U.S.C. 553b, the MSPB
has determined 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 Congress has specifically exempted agencies from these requirements when implementing the 2015 Act. The 2015 Act explicitly requires the agency to make subsequent annual adjustments notwithstanding 5
U.S.C. 553, the section of the Administrative Procedure Act that normally requires agencies to engage in notice and comment. It is also in the public interest that the adjusted rates for CMPs under the CSRA and the Hatch Act become effective as soon as possible to maintain their effective deterrent effect.

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