Departmental Offices; Civil Penalty Assessment for Misuse of Department of the Treasury Names, Symbols, Etc.

DEPARTMENT OF THE TREASURY

31 CFR Part 27

Departmental Offices; Civil Penalty Assessment for Misuse of

Department of the Treasury Names, Symbols, Etc.

AGENCY: Departmental Offices, Treasury.

ACTION: Interim rule.

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SUMMARY: This interim rule sets forth the procedures by which civil

penalties may be imposed for violations of the statutory prohibition

against misuse of Department of the Treasury names, symbols, titles,

abbreviations, initials, seals, or badges. Section 333(c) of title 31,

United States Code, authorizes the Secretary of the Treasury to impose

these civil penalties. These regulations are being promulgated to

ensure that persons assessed a civil penalty under section 333(c) are

accorded due process.

Published in the proposed rules section of this Federal Register,

is a notice of proposed rulemaking inviting comments on the interim

rule for a 60-day period following the publication date of this interim

rule.

EFFECTIVE DATE: The interim regulations are effective August 6, 1997.

FOR FURTHER INFORMATION CONTACT: Karen Wehner, Senior Advisor, Office

of Enforcement, 202-622-0300 (not a toll-free call).

SUPPLEMENTARY INFORMATION:

Introduction

This document sets forth an interim rule implementing 31 U.S.C.

333(c), which authorizes the Secretary of the Treasury to impose a

civil penalty on any person who violates 31 U.S.C. 333(a), which

prohibits the misuse of Department of the Treasury names, symbols, etc.

Section 333(c) was enacted by title III, section 312(l)(1) of the

social Security Independence and Program improvements Act of 1994, Pub.

L. 103-296 (August 15, 1994).

Background

Section 333(a) of title 31, United States Code, prohibits, in

connection with any advertisement, solicitation, business activity, or

product, the unauthorized use (1) of the words, abbreviations,

initials, symbols, or emblems of Treasury or any of its components; (2)

the titles of any officer or employee of the Treasury or any of its

components; or (3) the words ``United States Savings Bond'' or the name

of any other obligation issued by the Treasury. This prohibition

extends to colorable imitations of words, titles, abbreviations,

initials, symbols, and emblems. Section 333(b) provides that the

prohibition applies regardless of whether the violator has used a

disclaimer of affiliation with the United States Government or any

agency thereof.

Section 333(c) provides that Secretary of the Treasury may impose a

civil penalty on any person who violates section 333(a), in an amount

not to exceed $5,000 for each use of material in violation of section

333(a), unless the use is in a broadcast or telecast, in which case the

penalty shall not exceed $25,000 for each use. Section 333(c) imposes a

three-year statute of limitation within which the Secretary of the

Treasury may assess civil penalties, beginning on the date of the

violation of section 333(a). Section 333(c) also imposes a two-year

statute of limitation within which the Secretary of the Treasury may

commence a civil action to recover any civil penalty imposed under

section 333(c), beginning on the date the civil penalty was assessed.

Section 333(d) sets forth criminal penalties for knowing violations

of 333(a). However, section 333(d)(3) provides that no criminal

proceeding may be commenced under its provisions if a civil penalty

previously has been assessed for that violation under section 333(c).

Similarly, section 333(c)(4) provides that no civil penalty may be

assessed under its provisions for a violation if a criminal proceeding

has been commenced for that violation under section 333(d).

These regulations implement the authority of the Secretary of the

Treasury under section 333(c) to impose a civil penalty on any person

who violates section 333(a). The regulations also ensure that any

person assessed with a civil penalty pursuant to section 333(c) is

accorded due process in the civil penalty proceeding. Specifically, the

regulations provide that any person assessed with a civil penalty

pursuant to section 333(c): (1) Shall receive a notice of assessment

citing the statutory provisions which allegedly have been violated, the

factual basis for the allegation, the amount of any proposed civil

monetary penalty and/or any other proposed civil or equitable remedy;

(2)

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shall have the opportunity to provide a written response to the notice

of assessment requesting that the civil monetary penalty not be

imposed, why the penalty should be in a lesser amount than proposed and

or why the terms of a proposed civil or equitable remedy should be

modified; (3) if it is determined that a violation has occurred, shall

receive a final notice citing the statutory provisions found to have

been violated, the facts warranting this conclusion, an analysis of why

the facts and violations justify imposing a civil monetary penalty, the

amount of penalty being imposed and/or the terms of any civil or

equitable remedy imposed; and (4) is advised of the right to judicial

review pursuant to 5 U.S.C. 701 et seq. of any penalty or remedy

imposed. The regulations detail the time frames for issuing a notice of

assessment, filing a written response to the notice, issuing a final

notice of assessment and commencing a civil action to recover or

enforce any penalty or remedy imposed.

The regulations also cite a nonexclusive list of factors which may

be considered in determining whether to assess or impose a civil

penalty pursuant to section 333(c).

Administrative Procedure Act

The Treasury Department for good cause finds that notice of these

regulations, and public procedure thereon, is contrary to the public

interest and, therefore, is issuing these regulations as an interim

rule, without notice and public procedure under 5 U.S.C. 553(b), and

without being subject to the effective date limitation in Sec. 553(d).

See 5 U.S.C. Sec. 553(b)(B). Providing notice of these regulations and

an opportunity for public procedure thereon is contrary to the public

interest because the purposes of section 333 and these regulations are

to protect the public from commercial activities that convey the false

impression that they are associated with or approved, endorsed,

sponsored or authorized by the Department of the Treasury, and to

ensure that persons alleged to have engaged in any such activity are

accorded due process.

Executive Order 12866

It has been determined that this interim rule is not a significant

regulatory action as defined in E.O. 12866. Therefore, a regulatory

assessment is not required.

Regulatory Flexibility Act

The provisions of the Regulatory Flexibility Act do not apply

because no notice of proposed rulemaking is required by 5 U.S.C. 553 or

any other law. Accordingly, a regulatory flexibility analysis is not

required.

Drafting Information

The principal author of this document is Abigail Roth, Attorney-

Advisor, Office of the Assistant General Counsel (Enforcement).

However, other personnel in the Departmental Offices contributed to

this document both as to substance and style.

List of Subjects in 31 CFR Part 27

Administrative practice and procedure, Penalties.

For the reasons set out in the preamble, Title 31, Subtitle A, Part

27 of the Code of Federal Regulations is added to read as follows:

PART 27--CIVIL PENALTY ASSESSMENT FOR MISUSE OF DEPARTMENT OF THE

TREASURY NAMES, SYMBOLS, ETC.

Sec.

27.1 Purpose.

27.2 Definitions.

27.3 Assessment of civil penalties.

27.4 Factors to be considered.

27.5 Initial Notice of Assessment.

27.6 Written response.

27.7 Final Notice of Assessment.

27.8 Judicial review.

Authority: 31 U.S.C. 321, 333.

Sec. 27.1 Purpose.

(a) The regulations in this part implement the provisions of 31

U.S.C. 333(c), which authorizes the Secretary of the Treasury to assess

a civil penalty against any person who has misused the words, titles,

abbreviations, initials, symbols, emblems, seals, or badges of the

Department of the Treasury or any subdivision thereof in violation of

31 U.S.C. 333(a), in accordance with that section and this part.

(b) The regulations in this part do not apply to the extent that

the Secretary or his/her designee has specifically authorized the

person to manufacture, produce, sell, possess, or use the words,

titles, abbreviations, initials, symbols, emblems, seals, or badges by

written contract, agreement, or letter.

Sec. 27.2 Definitions.

(a) The term ``assessing official'' means:

(1) The head of a bureau or other subdivision of the Department of

the Treasury who has been delegated the authority to assess civil

penalties under 31 U.S.C. 333(c); or

(2) An officer or employee of a bureau or subdivision at the grade

of GS-15 or above to whom such authority has been redelegated by the

head of such bureau or subdivision.

(b) The term ``broadcast'' or ``telecast'' mean widespread

dissemination by electronic transmission or method, whether audio and/

or visual.

(c) The term ``civil penalty'' means:

(1) A civil monetary penalty; and

(2) Any other civil or equitable remedy deemed necessary to rectify

the potential for a continued misuse or harm from an activity found to

have been in violation of 31 U.S.C. 333 or this part.

(d) The term ``date of offense'' means the later of--

(1) The date that the misuse occurred;

(2) The date that the misuse had the effect of conveying the false

impression that the activity was associated with or approved, endorsed,

sponsored or authorized by the Department or any of its subdivisions or

officers or employees; or

(3) If the violation is a continuing one, the date on which the

misuse of the words, titles, abbreviations, initials, symbols, emblems,

seals, or badges protected by this part last occurred.

(e) The term ``days'' means calendar days, unless otherwise stated.

(f) The term ``person'' means an individual, partnership,

association, corporation, company, business, firm, manufacturer, or any

other organization or institution.

Sec. 27.3 Assessment of civil penalties.

(a) General Rule. An assessing official may impose a civil penalty

on any person--

(1) Who uses in connection with, or as a part of, any

advertisement, solicitation, business activity, or product, whether

alone or with other words, letters, symbols, or emblems;

(i) The words ``Department of the Treasury,'' ``United States

Secret Service,'' ``United States Customs Service,'' ``Internal Revenue

Service,'' ``Bureau of Alcohol, Tobacco and Firearms,'' ``Bureau of the

Public Debt,'' ``Bureau of Engraving and Printing,'' ``Comptroller of

the Currency,'' ``Federal Law Enforcement Training Center,''

``Financial Crimes Enforcement Network,'' ``United States Mint,'' or

the name of any service, bureau, office, or other subdivision of the

Department of the Treasury;

(ii) The titles ``Secretary of the Treasury,'' ``Treasurer of the

United States,'' ``Director of the Secret Service,'' ``Commissioner of

Customs,'' ``Commissioner of Internal Revenue,'' ``Director, Bureau of

Alcohol, Tobacco and Firearms,'' ``Commissioner of the Public Debt,''

``Director of the Bureau of Engraving and Printing,'' ``Comptroller of

the Currency,'' ``Director of the Federal Law Enforcement Training

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Center,'' ``Director of the Financial Crimes Enforcement Network,''

``Director of the United States Mint,'' or the title of any other

officer or employee of the Department of the Treasury or subdivision

thereof;

(iii) The abbreviations or initials of any entity or title referred

to in paragraph (a)(1)(i) or (a)(1)(ii) of this section, including but

not limited to ``USSS,'' ``USCS,'' ``IRS,'' ``ATF,'' or ``BATF,''

``BPD,'' ``FLETC,'' ``FINCEN'' or ``FinCEN,''and ``SBMO'';

(iv) The words ``United States Savings Bond,'' including any

variation thereof, or the name of any other security, obligation, or

financial instrument issued by the Department of the Treasury or any

subdivision thereof;

(v) Any symbol, emblem, seal, or badge of an entity referred to in

paragraph (a)(1)(i) of this section (including the design of any

envelope, stationery, or identification card used by such an entity);

or

(vi) Any colorable imitation of any such words, titles,

abbreviations, initials, symbol, emblem, seal, or badge; and

(2) Where such use is in a manner that could reasonably be

interpreted or construed as conveying the false impression that such

advertisement, solicitation, business activity, or product is in any

manner approved, endorsed, sponsored, or authorized by, or associated

with the Department of the Treasury or any entity referred to in

paragraph (a)(1)(i) of this section, or any officer, or employee

thereof.

(b) Disclaimers. Any determination of whether a person has violated

the provisions of paragraph (a) of this section shall be made without

regard to any use of a disclaimer of affiliation with the United States

Government or any particular agency or instrumentality thereof.

(c) Civil Penalty. An assessing official may impose a civil penalty

on any person who violates the provisions of paragraph (a) of this

section. The amount of a civil monetary penalty shall not exceed $5,000

for each and every use of any material in violation of paragraph (a),

except that such penalty shall not exceed $25,000 for each and every

use if such use is in a broadcast or telecast.

(d) Time Limitations. (1) Civil penalties imposed under this part

must be assessed before the end of the three year period beginning on

the date of offense charged.

(2) An assessing official may commence a civil action to recover or

enforce any civil penalty imposed in a Final Notice of Assessment

issued pursuant to Sec. 27.7 at any time before the end of the two year

period beginning on the date of the Final Notice of Assessment. If

judicial review of the Final Notice of Assessment is sought, the two

year period begins to run from the date that a final and unappealable

court order is issued.

(e) Criminal Proceeding. No civil penalty may be imposed under this

part with respect to any violation of paragraph (a) of this section

after a criminal proceeding on the same violation has been commenced by

indictment or information under 31 U.S.C. 333(d).

Sec. 27.4 Factors to be considered.

The assessing official will consider relevant factors when

determining whether to assess or impose a civil penalty under this

part, and the amount of a civil monetary penalty. Those factors may

include, but are not limited to, the following:

(a) The scope of the misuse;

(b) The purpose and/or nature of the misuse;

(c) The extent of the harm caused by the misuse;

(d) The circumstances of the misuse; and

(e) The benefit intended to be derived from the misuse.

Sec. 27.5 Initial Notice of Assessment.

The assessing official shall serve an Initial Notice of Assessment

by United States mail or other means upon any person believed to be in

violation of Sec. 27.3 and otherwise subject to a civil penalty. The

notice shall provide the name and telephone number of an agency officer

or employee who can provide information concerning the notice and the

provisions of this part, and shall include the following:

(a) A specific reference to the provisions of Sec. 27.3 violated;

(b) A concise statement of the facts that support the conclusion

that such a violation occurred;

(c) The amount of the penalty proposed, and/or any other proposed

civil or equitable remedy;

(d) A notice informing the person alleged to be in violation of

Sec. 27.3 that he/she:

(1) May, within 30 days of the date of the notice, pay the proposed

civil monetary penalty and consent to each proposed civil or equitable

remedy, thereby waiving the right to make a written response under

Sec. 27.6 and to seek judicial review under Sec. 27.8:

(i) By electronic funds transfer (EFT) in accordance with

instructions provided in the notice, or

(ii) By means other than EFT only with the written approval of the

assessing official;

(2) May make a written response within 30 days of the date of the

notice asserting, as appropriate:

(i) Why a civil monetary penalty and/or other civil or equitable

remedy should not be imposed;

(ii) Why a civil monetary penalty should be in a lesser amount than

proposed; and

(iii) Why the terms of a proposed civil or equitable remedy should

be modified;

(3) May be represented by an attorney or other representative,

provided that a designation of representative signed by the person

alleged to be in violation is received by the assessing official; and

(4) May request, within 20 days of the date of the notice, a copy

of or opportunity to review any documents and/or other evidence

compiled and relied on by the agency in determining to issue the notice

(the assessing official reserves the right to assert privileges

available under law and may decline to disclose certain documents and/

or other evidence); and

(e) The Initial Notice of Assessment shall also inform the person

that:

(1) If no written response is received within the time allowed in

Sec. 27.6(b), a Final Notice of Assessment may be issued without a

presentation by the person;

(2) If a written response has been made and it is deemed necessary,

the assessing official may request, orally or in writing, additional

information from the respondent;

(3) A Final Notice of Assessment may be issued in accordance with

Sec. 27.7 requiring that the civil monetary penalty be paid and

compliance with the terms of any other civil or equitable remedy;

(4) A Final Notice of Assessment is subject to judicial review in

accordance with 5 U.S.C. 701 et seq.; and

(5) All submissions sent in response to the Initial

Notice of Assessment must be transmitted to the address specified

in the notice and include the name, address, and telephone number of

the respondent.

Sec. 27.6 Written response.

(a)(1) A person served with an Initial Notice of Assessment may

make a written response explaining why the civil penalty should not be

imposed, explaining why a civil monetary penalty should be in a lesser

amount than proposed and/or explaining why the terms of a proposed

civil or equitable remedy should be modified. The written response must

provide:

(i) A reference to and specifically identify the Initial Notice of

Assessment involved;

(ii) The full name of the person charged;

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(iii) If not a natural person, the name and title of the head of

the organization charged; and

(iv) If a representative of the person charged is filing the

written response, a copy of the duly executed designation as

representative.

(2) The written response must admit or deny each violation of

Sec. 27.3 charged in the Initial Notice of Assessment. Any charge not

specifically denied will be presumed to be admitted. Where a charge is

denied, the respondent shall specifically set forth the legal or

factual basis upon which the charge is denied. If the basis of the

written response is that the person charged is not the person

responsible for the misuse(s) charged, the written response must set

forth sufficient information to allow the agency to determine the truth

of such an assertion. The written response should include any and all

documents and/or other information that the respondent believes should

be a part of the administrative record on the matter.

(b) Time. (1) Except as provided in paragraph (b)(2) of this

section, any written response made under this paragraph must be

received not later than 30 days after the date of the Initial Notice of

Assessment.

(2) If a request for documents or other evidence is made pursuant

to Sec. 27.5(d)(4), the written response must be received not later

than 20 days after the date of the Department's response to the

request.

(3)(i) In computing the number of days allowed for filing a written

response under this paragraph, the first day counted is the day after

the date of the Initial Notice of Assessment. If the last date on which

the response is required to be filed by this paragraph is a Saturday,

Sunday or Federal holiday, the response will be due on the next weekday

after that date.

(ii) If a response is transmitted by United States mail, it will be

deemed timely filed if postmarked on or before the due date.

(4) The assessing official may extend the period for making a

written response under paragraphs (b)(1) and (b)(2) for good cause

shown. Generally, failure to obtain representation in a timely manner

will not be considered good cause.

(c) Filing. A written response will be considered filed on the date

received at the address specified in the Initial Notice of Assessment.

The response may be sent by personal delivery, United States mail or

commercial delivery. At the discretion of the assessing official,

filing may be accomplished by facsimile or any other method deemed

appropriate.

(d) The assessing official will fully consider the facts and

arguments submitted by the respondent in the written response and any

other documents filed pursuant to this paragraph in determining whether

to issue a Final Notice of Assessment under Sec. 27.7, the appropriate

amount of the civil monetary penalty imposed and the terms of any other

appropriate civil or equitable remedy.

Sec. 27.7 Final Notice of Assessment.

(a) In making a final determination whether to impose a penalty,

the assessing official shall take into consideration all available

information in the administrative record on the matter, including all

information provided in or with a written response timely filed by the

respondent and any additional information provided pursuant to

Sec. 27.5(e)(2). The assessing official will determine whether:

(1) The facts warrant a conclusion that no violation has occurred;

or

(2) The facts warrant a conclusion that one or more violations have

occurred; and

(3) The facts and violations found justify the conclusion that a

civil penalty should be imposed.

(b) If the assessing official determines that no violation has

occurred, the official shall promptly send a letter indicating that

determination to the person served with an Initial Notice of Assessment

and to any designated representative of such person.

(c)(1) If it has been determined that a violation has occurred, the

assessing official shall issue a Final Notice of Assessment to the

person served with an Initial Notice of Assessment and to any

designated representative of such person.

(2) The assessing official may, in his/her discretion:

(i) Impose a civil monetary penalty and/or any civil or equitable

remedy deemed necessary to rectify the potential for a continued misuse

or harm from the violation(s);

(ii) Not impose a civil monetary penalty and/or civil or equitable

remedy; or

(iii) Impose a civil monetary penalty and/or civil or equitable

remedy and condition payment of the civil monetary penalty on the

violator's future compliance with 31 U.S.C. 333, this part and any

civil or equitable remedy contained in the Final Notice of Assessment.

If a civil monetary penalty is imposed, the assessing official shall

determine the appropriate amount of the penalty in accordance with 31

U.S.C. 333(c)(2).

(3) The Final Notice of Assessment shall:

(i) Include:

(A) A specific reference to the provisions of Sec. 27.3 found to

have been violated;

(B) A concise statement of the facts warranting a conclusion that a

violations has occurred;

(C) An analysis of how the facts and violation(s) justify the

conclusion that a civil monetary penalty and/or civil or equitable

remedy should be imposed; and

(D) The amount of each civil monetary penalty imposed, a statement

as to how the amount of each penalty was determined, and the terms of

any civil or equitable remedy deemed necessary to rectify the potential

for a continued misuse or harm from the violation(s); and

(ii) Inform the person that:

(A) Payment of a civil monetary penalty imposed by the Final Notice

of Assessment must be made within 30 days of the date of the notice,

and that any civil or equitable remedy imposed must be complied with as

provided in the Final Notice of Assessment;

(B) Payment of a civil monetary penalty imposed by the Final Notice

of Assessment shall be by EFT in accordance with instructions provided

in the notice, unless the assessing official has given written approval

to have payment made by other means;

(C) payment of a civil monetary penalty imposed by the Final Notice

of Assessment constitutes consent by the person to comply with the

terms of any civil or equitable remedy contained in the notice;

(D) If payment of a civil monetary penalty imposed by the Final

Notice of Assessment has been waived on the condition that the person

comply with the terms of any civil or equitable remedy contained in the

notice or comply in the future with 31 U.S.C. 333 and this part,

failure by the person to so comply will make the civil monetary penalty

payable on demand;

(E) If a civil monetary penalty is not paid within 30 days of the

date of the Final Notice of Assessment (or on demand under paragraph

(C)(3)(ii)(D) of this sectiion), or if a civil or equitable remedy is

not complied with in accordance with the terms of the notice, a civil

action to collect the penalty or enforce compliance may be commenced at

any time within two years of the date of the Final Notice of

Assessment; and

(F) Any civil monetary penalty and civil or equitable remedy

imposed by the Final Notice of Assessment may be subject to judicial

review in accordance with 5 U.S.C. 70 et seq.

[[Page 42216]]

Sec. 27.8 Judicial review.

A final Notice of Assessment issued under this party may be subject

to judicial review pursuant to 5 U.S.C. 701 et seq.

Dated: July 18, 1997.

Raymond W. Kelly,

Under Secretary for Enforcement.

[FR Doc. 97-20646 Filed 8-5-97; 8:45 am]

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