The Federal Civil Penalties Inflation Adjustment Act of 1990 (FCPIA) mandates agencies review for inflation regularly to ensure that penalties have a compliance promoting effect; some agencies complied, others did not. On November 2, 2015, President Obama signed and amended the Bipartisan Budget Act of 2015 Section 701, called the Federal Civil Penalties Inflation Adjustments Act Improvements Act of 2015 (also known as the 2015 Adjustment Act) into law. In early July 2016, several agencies published interim final rules increasing civil penalties, significantly increasing the contents of the 2015 Adjustment Act.
The FCPIA was amended by two principal requirements: first, a one-time catch up provision requiring agencies to adjust for inflation calculations from the date a penalty was enacted, capping at a 150% increase based on the November 2, 2015 value and second, agencies must annually provide a review of statutory civil penalties accounting for inflation beginning January 15, 2017. The 2015 Adjustment Act provides agencies the authority to make future annual adjustments without all the rulemaking requirements of the Administrative Procedure Act.
The 2015 Adjustment Act removed the Occupational Safety and Health Administration’s (OSHA) exemption from inflation-based increases; OSHA has not increased penalties since 1990. Penalties will continue to increase substantially into the future. Fees for violations will reflect a 78% increase, effective August 1, 2016 with an open comment period until August 15, 2016. Categories of violations rank as Serious, Other-than-Serious, Posting Requirement, Failure to Abate, Willful, and Repeated. Interested parties subject to a violation on or prior November 2, 2015 or who incurred a penalty assessment for violations after November 2, 2015 but before August 1, 2016 may refer to earlier penalties.
The Environmental Protection Agency (EPA) increases will vary but collectively penalties will reflect a 65% increase taking effect August 1, 2016, with no platform for public comment. For Violation penalties that occurred on or November 2, 2015 or penalty assessments after November 2, 2015 but before August 1, 2016, interested parties should reference the revised Table 2 of 40 C.F.R. § 19.4 of the Comprehensive Environmental Response, Compensation, and Liability Act.
The Department of the Interior (DOI) also increased civil penalties across a range of their bureau agencies. The effective dates engage over mid-July through early August 2016 and if available, offer comment periods that may extend until early September 2016 with increases reflecting a range of 78% – 150%, depending on the agency. A full list of details on penalty tables may be found by consulting the Federal Register.
Finally, agencies are also authorized by the 2015 Adjustment Act to adjust penalty amounts below the maximum rate if the social cost of a penalty would outweigh the benefit or if the required amount would have a negative economic impact.