Summary: This summer, many federal agencies increased civil monetary penalties as much as 150 percent in response to new legislation mandating that federal agencies "catch up" with inflation and remedy past government failures to adopt periodic penalty increases. Interested parties should be aware of these higher penalties, when they take effect, and whether there is still time to comment.

Legislative Background

The Federal Civil Penalties Inflation Adjustment Act of 1990 (FCPIA) requires agencies to review statutory civil penalties and ensure they are regularly adjusted for inflation and have a deterrent, compliance-promoting effect.1 In practice, some agencies followed this mandate while others did not. On November 2, 2015, President Obama signed into law the Bipartisan Budget Act of 2015.2 Section 701 of that Act, named the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 2015 Adjustment Act), significantly amended the FCPIA.3 Pursuant to these amendments, on or around July 1, 2016, many federal agencies published interim final rules increasing civil penalties. The new penalty increases merit attention because they are significantly amplified by the contents of the 2015 Adjustment Act.

The 2015 Adjustment Act amended the FCPIA by adding two principal requirements. First, the 2015 amendment added a one-time catch-up provision that requires agencies to adjust their penalties to account for inflation by applying the inflation calculations from the date a penalty amount was statutorily enacted or adjusted.4 Increases under the catch-up provision are capped at 150% of a penalty’s November 2, 2015 value. The 2015 amendment requires agencies to publish the catch-up adjustments in the Federal Register by

July 1, 2016. Second, beginning January 15, 2017, agencies must annually review statutory civil penalties and make adjustments to account for inflation. Previously, some agencies went many years without adjusting for inflation and others were exempt. The 2015 Adjustment Act specifically authorizes agencies

to make these subsequent annual adjustments without following the rulemaking requirements of the Administrative Procedure Act.

Occupational Safety and Health Administration

OSHA penalties are increasing substantially and will continue to increase in the future. The 2015 Adjustment Act uniquely affects OSHA penalties because it removed OSHA’s exemption from inflation-based increases.5 OSHA has not increased statutory civil penalties since 1990. Now, maximum civil penalties for “Serious,” “Other-Than-Serious,” “Posting Requirement,” and “Failure to Abate” violations will increase from $7,000 to $12,471.6 The maximum civil penalty for “Willful” or “Repeated” violations will increase from $70,000 to $124,709. These numbers represent a 78% increase in penalties for all OSHA violations. Parties should continue to refer to the earlier penalties if they are (1) subject to penalties for a violation that occurred on or before November 2, 2015, or (2) incurred a penalty assessment before August 1, 2016 for violations after November 2, 2015. The increased penalties are effective August 1, 2016, and a comment period is open until August 15, 2016.

Environmental Protection Agency

Some EPA penalty increases differ based on the particular environmental provision the agency implements. For example, maximum Clean Water Act (CWA) § 1319(d) penalties increase from $25,000 to $51,570.7 However, maximum CWA penalties under § 1321(b)(7)(D) increase from $25,000 to $44,539. Other EPA penalties are increased evenly across whole statutes. The maximum Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) penalties are all adjusted from $25,000 to $53,907 or $75,000 to $161,721. Overall, EPA published more than 65 penalty increases across the various environmental statutes. To learn more, interested parties should visit the revised Table 2 of 40 C.F.R. § 19.4. However, parties should still refer to Table 1 of 40 C.F.R. § 19.4 if they are (1) subject to penalties for a violation that occurred on or before November 2, 2015, or (2) incurred a penalty assessment before August 1, 2016 for violations after November 2, 2015. The increased penalties are effective August 1, 2016, and there is no opportunity for public comment.

Department of the Interior

Several DOI agencies increased civil penalties as a result of the 2015 Adjustment Act. Interested parties may consult the Federal Register notices or appropriate regulations noted below for complete, revised penalty tables.

  • The Bureau of Ocean Energy Management adjusted civil penalty amounts in 30 C.F.R. Parts 550 and 553.8 The maximum daily penalty for each violation under § 550.1403 rises from $40,000 to $42,017. Section 553.51(a) penalties rise from $25,000 to $44,539. The increased penalties are effective August 1, 2016, and a comment period is open until August 30, 2016.
  • The Bureau of Safety and Environmental Enforcement increased the maximum daily civil penalty for each violation under 30 C.F.R. Part 250 from $40,000 to $42,017.9 The increased penalties are effective July 28, 2016, and a comment period is open until August 29, 2016.
  • The Office of Natural Resources Revenue increased all civil penalties under 30 C.F.R. Part 1241 by about 135%.10 For example, the maximum penalty for a violation of 30 C.F.R. § 1241.53(a) increased from $500 to $1,177. The increased penalties are effective July 11, 2016, and a comment period is open until August 8, 2016.
  • The Bureau of Land Management increased all civil penalties under 43 C.F.R. Part 3160 by about 106%.11 For example, the maximum daily penalty under 43 C.F.R. § 3163.2(b) for a major violation increased from $10,000 to $20,628. The increased penalties are effective July 28, 2016, and a comment period is open until August 29, 2016.
  • The Fish and Wildlife Service increased the civil penalties for various violations under 50 C.F.R. Part 11.12 Increases varied, with some reaching 150% of originally enacted values. For example, the maximum civil penalty for any violation under the Bald and Golden Eagle Protection Act was set at $5,000 in 1972. It now jumps to $12,500. The increased penalties are effective July 28, 2016, and a comment period is open until August 29, 2016.
  • The Office of Surface Mining Reclamation and Enforcement increased civil penalties under 30 C.F.R. §§ 723.14, 724.14, 845.14, and 846.14.13 All of the statutory penalties, originally set in 1979, were multiplied by 3.16. For example, 30 C.F.R. § 846.14(b) originally had a maximum penalty of $5,000. Now, the same violations are fined up to $17,395. The increased penalties are effective August 1, 2016, and a comment period is open until September 6, 2016.
  • The Bureau of Indian Affairs adjusted 17 sections of Title 25 C.F.R.14 Increases varied, with the largest being 150% more than the former penalties. For example, the penalty for trading in Indian country without a license rose from $500 to $1,250. The increased penalties are effective August 1, 2016, and a comment period is open until August 29, 2016.
  • The National Indian Gaming Commission increased the $25,000 maximum penalty for violations to $49,467.15 There is no comment period.
  • The Department of the Interior increased all Native American Graves Protection and Repatriation Act penalties by about 78%.16 The increased penalties are effective July 28, 2016, and a comment period is open until August 29, 2016.

The 2015 Adjustment Act authorizes an agency head to adjust the civil penalty amounts below the maximum rates prescribed “if the otherwise required amount will have a negative economic impact” or “the social costs of increasing the civil monetary penalty by the otherwise required amount outweigh the benefits. . . .”17 Affected parties should consider comments on the agency interim final rules that address these two issues.