Civil Monetary Penalties Inflation Adjustment for 2017

AGENCY:

Department of Justice.

ACTION:

Final rule.

SUMMARY:

The Department of Justice is adjusting for inflation the civil monetary penalties assessed or enforced by components of the Department, in accordance with the provisions of the Bipartisan Budget Act of 2015, for penalties assessed after February 3, 2017, whose associated violations occurred after November 2, 2015.

DATES:

Effective date: This rule is effective February 3, 2017.

Applicability date: The adjusted civil penalty amounts are applicable only to civil penalties assessed after February 3, 2017, whose associated violations occurred after November 2, 2015.

FOR FURTHER INFORMATION CONTACT:

Robert Hinchman, Senior Counsel, Office of Legal Policy, U.S. Department of Justice, Room 4252 RFK Building, 950 Pennsylvania Avenue NW., Washington, DC 20530, telephone (202) 514-8059 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

I. Statutory Process for Implementing Annual Inflation Adjustments

Section 701 of the Bipartisan Budget Act of 2015, Public Law 114-74 (Nov. 2, 2015), titled the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the “2015 Amendments”), 28 U.S.C. 2461 note, substantially revised the prior provisions of the Federal Civil Monetary Penalties Inflation Adjustment Act of 1990, Public Law 101-410 (the “Inflation Adjustment Act”), and substituted a different statutory formula for calculating inflation adjustments on an annual basis.

In accordance with the provisions of the 2015 Amendments, on June 30, 2016 (81 FR 42491), the Department of Justice published an interim rule (“2016 interim rule”) to adjust for inflation the civil monetary penalties assessed by components of the Department after August 1, 2016, whose associated violations occurred after November 2, 2015 (the so-called “catch-up” adjustments). See 28 CFR 85.5. Readers may refer to the Supplementary Information (also known as the preamble) of the Department's 2016 interim rule for additional background information regarding the statutory authority for adjustments of civil monetary penalty amounts to take account of inflation and the Department's past implementation of inflation adjustments. After considering the public comments submitted in response to the 2016 interim rule, the Department will finalize the 2016 interim rule.

II. Inflation Adjustments Made by This Rule

The 2015 Amendments also provide for agencies to adjust for inflation their civil penalty amounts by January 15, 2017, and not later than January 15 of each year thereafter. Accordingly, the Department is publishing this final rule to adjust the civil penalty amounts that were most recently adjusted as of August 1, 2016.

This rule provides the current inflation adjustments being made in 2017. This rule adjusts the civil penalty amounts as established in the 2016 interim rule (which added 28 CFR 85.5), rounded to the nearest dollar. This means that the maximum civil monetary penalty or the range of minimum and maximum civil monetary penalties, as applicable, for each civil monetary penalty is increased by the cost-of-living adjustment, which is the “percentage (if any) for each civil monetary penalty by which—(A) the Consumer Price Index for the month of October preceding the date of [this] adjustment, exceeds (B) the Consumer Price Index for the month of October 1 year before the month of October referred to in subparagraph (A).” Inflation Adjustment Act, as amended, sec. 5(b)(1), 28 U.S.C. 2461 note.

As provided in the 2015 Amendments, the adjustments made by this rule are based on the Bureau of Labor Statistics' Consumer Price Index for October 2016. The inflation factor used in calculating the adjustments was provided to all federal agencies in the OMB Memorandum for the Heads of Executive Departments and Agencies M-17-11 (December 16, 2016). https://www.whitehouse.gov/sites/default/files/omb/memoranda/2017/m-17-11_0.pdf (last visited December 22, 2016). The applicable inflation factor for this adjustment is 1.01636.

An example of how the adjustment is calculated using this inflation factor is set forth below.

Example:

The Program Fraud Civil Remedies Act penalty was increased to $10,781 in 2016, in accordance with the catch-up adjustment requirement of the 2015 Amendments. This amount is then multiplied by the inflation factor, as shown below:

$10,781 × 1.01636 = $10,957.38

When rounded to the nearest dollar, the new penalty is $10,957.

This rule adjusts for inflation the civil monetary penalties assessed by components of the Department of Justice for purposes of the Inflation Adjustment Act, as amended. Other agencies are responsible for the inflation adjustments of certain other civil monetary penalties that the Department's litigating components bring suit to collect. The reader should consult the regulations of those other agencies for inflation adjustments to those penalties.

III. Effective Date of Adjusted Civil Penalty Amounts

The adjusted civil penalty amounts added by this rule are applicable only to civil penalties assessed after February 3, 2017, whose associated violations occurred after November 2, 2015, the date of enactment of the 2015 Amendments.

The penalty amounts set forth in 28 CFR 85.5, as added by the June 30, 2016, interim rule are applicable only to civil penalties assessed after August 1, 2016, and on or before February 3, 2017, whose associated violations occurred after November 2, 2015. For convenient reference, this rule amends the table in 28 CFR 85.5 to include both the adjusted penalty amounts as added by the 2016 interim rule as well as the new adjusted civil penalty amounts being adopted in this final rule.

Violations occurring on or before November 2, 2015, and assessments made on or before August 1, 2016, whose associated violations occurred after November 2, 2015, will continue to be subject to the civil monetary penalty amounts set forth in the Department's regulations 28 CFR parts 20, 22, 36, 68, 71, 76 and 85 as such regulations existed prior to August 1, 2016 (or as set forth by statute if the amount had not yet been adjusted by regulation prior to August 1, 2016).

Statutory and Regulatory Analyses

Administrative Procedure Act

The Inflation Adjustment Act, as amended by the 2015 Amendments, provides that for the second adjustment made after the date of enactment of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, and each adjustment thereafter, the head of an agency shall adjust civil monetary penalties and shall make the adjustment notwithstanding 5 U.S.C. 553. See Public Law 114-74, sec. 701(b)(1)(D) (amending section 4(b)(2) of the Inflation Adjustment Act). Accordingly, this rule is being issued as a final rule without prior notice and public comment, and without a 30-day delayed effective date.

Regulatory Flexibility Act

Only those entities that are determined to have violated federal law and regulations would be affected by the increase in the civil penalty amounts made by this rule. A Regulatory Flexibility Act analysis is not required for this rule because publication of a notice of proposed rulemaking was not required. See 5 U.S.C. 603(a).

Executive Orders 12866 and 13563—Regulatory Review

This final rule has been drafted in accordance with Executive Order 12866, “Regulatory Planning and Review,” section 1(b), The Principles of Regulation, and in accordance with Executive Order 13563, “Improving Regulation and Regulatory Review” section 1, General Principles of Regulation. Executive Orders 12866 and 13563 direct agencies, in certain circumstances, to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity).

The Department of Justice has determined that this rule is not a “significant regulatory action” under Executive Order 12866, Regulatory Planning and Review, section 3(f), and, accordingly, this rule has not been reviewed by the Office of Management and Budget. This final rule implements the 2015 Amendments by making an across-the-board adjustment of the civil penalty amounts to account for inflation since the adoption of the 2016 interim rule. The 2016 interim rule itself was determined not to be a significant regulatory action under Executive Order 12866.

Executive Order 13132—Federalism

This 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. Therefore, in accordance with Executive Order 13132, it is determined that this rule does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment.

Executive Order 12988—Civil Justice Reform

This regulation meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988.

Unfunded Mandates Reform Act of 1995

This rule will not result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

Congressional Review Act

This rule is not a major rule as defined by the Congressional Review Act, 5 U.S.C. 804. It will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets.

List of Subjects in 28 CFR Part 85

• Administrative practice and procedure
• Penalties

Accordingly, for the reasons set forth in the preamble, chapter I of title 28 of the Code of Federal Regulations is amended as follows:

PART 85—CIVIL MONETARY PENALTIES INFLATION ADJUSTMENT

1. The authority citation for part 85 continues to read as follows:

Authority: 5 U.S.C. 301, 28 U.S.C. 503; Pub. L. 101-410, 104 Stat. 890, as amended by Pub. L. 104-134, 110 Stat. 1321; Pub. L. 114-74, section 701, 28 U.S.C. 2461 note.

2. Section 85.5 is revised to read as follows: