[Federal Register Volume 81, Number 147 (Monday, August 1, 2016)]
[Rules and Regulations]
[Pages 50321-50324]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-18179]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF EDUCATION
34 CFR Part 36
RIN 1801-AA16
[Docket ID ED-2015-OGC-0051]
Adjustment of Civil Monetary Penalties for Inflation
AGENCY: Department of Education.
ACTION: Interim final regulations.
-----------------------------------------------------------------------
SUMMARY: The Department of Education (Department) issues these interim
final regulations to adjust the Department's civil monetary penalties
(CMPs) for inflation, as required by the Federal Civil Penalties
Inflation Adjustment Act Improvements Act of 2015 (the 2015 Act), which
further amended the Federal Civil Penalties Inflation Adjustment Act of
1990 (the Inflation Adjustment Act).
DATES: These regulations are effective August 1, 2016. In this rule,
the adjusted civil penalty amounts are applicable only to civil
penalties assessed after August 1, 2016, whose associated violations
occurred after November 2, 2015, the date of enactment of the 2015
Amendments. Therefore, violations occurring on or before November 2,
2015, and assessments made prior to 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
existing regulations at 34 CFR 36.2 (or as set forth by statute if the
amount has not yet been adjusted by regulation).
FOR FURTHER INFORMATION CONTACT: Levon Schlichter, U.S. Department of
Education, Office of the General Counsel, 400 Maryland Avenue SW., Room
6E235, Washington, DC 20202-2241. Telephone: (202) 453-6387 or by
email: [email protected].
If you use a telecommunications device for the deaf or a text
telephone, call the Federal Relay Service, toll free, at 1-800-877-
8339.
Individuals with disabilities can obtain this document in an
accessible format (e.g., braille, large print, audiotape, or compact
disc) on request to the contact person listed in this section.
SUPPLEMENTARY INFORMATION:
Background: The Federal Civil Penalties Inflation Adjustment Act of
1990 (Inflation Adjustment Act) (28 U.S.C. 2461 note) provides for the
regular evaluation of civil monetary penalties (CMPs) to ensure that
they continue to maintain their deterrent value. The Inflation
Adjustment Act required that each agency issue regulations to adjust
its CMPs beginning in 1996 and at least every four years thereafter.
The Department published its most recent cost adjustment to each CMP in
the Federal Register on October 2, 2012 (77 FR 60047), and those
adjustments became effective on the date of publication.
On November 2, 2015, the President signed into law the Federal
Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the
2015 Act) (section 701 of Pub. L. 114-74), which further amended the
Inflation Adjustment Act, to improve the effectiveness of civil
monetary penalties and to maintain their deterrent effect.
The 2015 Act requires agencies to: (1) Adjust the level of civil
monetary penalties with an initial ``catch-up'' adjustment through an
interim final rulemaking (IFR); and (2) make subsequent annual
adjustments for inflation. Catch-up adjustments are based on the
percent change between the Consumer Price Index for all Urban Consumers
(CPI-U) for the month of October in the year the penalty was last
adjusted by a statute other than the Inflation Adjustment Act, and the
October 2015 CPI-U. Annual inflation adjustments are based on the
percent change between the October CPI-U preceding the date of each
statutory adjustment, and the prior year's October CPI-U.\1\
---------------------------------------------------------------------------
\1\ If a statute that created a penalty is amended to change the
penalty amount, the Department does not adjust the penalty in the
year following the adjustment.
---------------------------------------------------------------------------
The Department is required to publish an IFR with the initial
penalty adjustment amounts by July 1, 2016, and the new penalty levels
must take effect no later than August 1, 2016. These adjustments will
apply to all civil monetary penalties covered by the Inflation
Adjustment Act.
A CMP is defined in the statute as any penalty, fine, or other
sanction that is (1) for a specific monetary amount as provided by
Federal law, or has a maximum amount provided for by Federal law; (2)
assessed or enforced by an agency pursuant to Federal law; and (3)
assessed or enforced pursuant to an administrative proceeding or a
civil action in the Federal courts.
The formula for the amount of a CMP inflation adjustment is
prescribed by law, as explained in OMB Memorandum M-16-06 (February 24,
2016), and is not subject to the exercise of discretion by the
Secretary of Education (Secretary). Under the 2015 Act, the Department
must use, as the baseline for adjusting the CMPs in this IFR, the CMP
amounts as they were most recently established or adjusted under a
provision of law other than by the Inflation Adjustment Act. In
accordance with the 2015 Act, we are not using the amounts set out in
34 CFR part 36 in 2012 in the formula used to adjust for inflation
because those CMP amounts were updated pursuant to the Inflation
Adjustment Act.\2\ Instead, the baselines we are using are the amounts
set out most recently in each of the statutes that provide for civil
penalties. Using these statutory CMPs, we have determined which year
those amounts were originally enacted by Congress (or the year the
statutory amounts were last amended by the statute that established the
penalty) and used the annual inflation adjustment multiplier
corresponding to that year from Table A of OMB Memorandum M-16-06. We
then rounded the number to the nearest dollar and checked, as required
by the Inflation Adjustment Act, to see if that adjusted amount
exceeded 150 percent of the CMP amount that was established under 34
CFR part 36, and in effect on November 2, 2015. If any of the amounts
exceeded 150 percent, we are required to use the lesser amount (the 150
percent amount). All of the adjusted amounts were less than 150 percent
so we did not have to replace any of the amounts we calculated using
the multiplier from Table A of OMB Memorandum M-16-06 with the lesser
amount.
---------------------------------------------------------------------------
\2\ As originally enacted, the Inflation Adjustment Act limited
the first increased adjustment, which we made through regulation, to
a maximum of 10 percent. This 10 percent limitation affected the
increase we last made in the 2012 rulemaking. In the 2015 Act,
Congress determined that limiting the first adjustments to 10
percent reduced the effectiveness of the penalties, so the 2015 Act
requires us to use the statutory amounts as our baseline.
---------------------------------------------------------------------------
[[Page 50322]]
The Department's Civil Monetary Penalties
The following analysis calculates new civil monetary penalties for
penalty statutes in the order in which they appear in 34 CFR 36.2. The
2015 Act provides that any increase to an agency's CMPs applies only to
CMPs, including those whose associated violation predated such
increase, which are assessed after the effective date of the
adjustments. These regulations are effective August 1, 2016. Therefore,
the adjustments made by this amendment to the Department's CMPs apply
only to violations that are assessed after August 1, 2016.
Statute: 20 U.S.C. 1015(c)(5).
Current Regulations: The CMP for 20 U.S.C. 1015(c)(5) [Section
131(c)(5) of the Higher Education Act of 1965, as amended (HEA)], as
last set out in statute in 1998 (Pub. Law 105-244, title I, Sec.
101(a), Oct. 7, 1998, 112 Stat. 1602), is a fine of up to $25,000 for
failure by an IHE to provide information on the cost of higher
education to the Commissioner of Education Statistics.
New Regulations: The new penalty for this section is $36,256.
Reason: Using the multiplier for 1998 of 1.45023 from OMB
Memorandum M-16-06, the new penalty is calculated as follows: $25,000 x
1.45023 = $36,255.75, which makes the adjusted penalty $36,256, when
rounded to the nearest dollar.
Statute: 20 U.S.C. 1022d(a)(3).
Current Regulations: The CMP for 20 U.S.C. 1022d(a)(3) [Section
205(a)(3) of the HEA], as last set out in statute in 2008 (Pub. L. 110-
315, title II, Sec. 201(2), Aug. 14, 2008, 122 Stat. 3147), provides
for a fine of up to $27,500 for failure by an IHE to provide
information to the State and the public regarding its teacher-
preparation programs.
New Regulations: The new penalty for this section is $30,200.
Reason: Using the multiplier for 2008 of 1.09819 from OMB
Memorandum M-16-06, the new penalty is calculated as follows: $27,500 x
1.09819 = $30,200.23, which makes the adjusted penalty $30,200, when
rounded to the nearest dollar.
Statute: 20 U.S.C. 1082(g).
Current Regulations: The CMP for 20 U.S.C. 1082(g) [Section 432(g)
of the HEA], as last set out in statute in 1986 (Pub. L. 99-498, title
IV, Sec. 402(a), Oct. 17, 1986, 100 Stat. 1401), provides for a fine
of up to $25,000 for violations by lenders and guaranty agencies of
Title IV of the HEA, which authorizes the Federal Family Education Loan
Program.
New Regulation: The new penalty for this section is $53,907.
Reason: Using the multiplier for 1986 of 2.15628 from OMB
Memorandum M-16-06, the new penalty is calculated as follows: $25,000 x
2.15628 = $53,907.00, which makes the adjusted penalty $53,907, when
rounded to the nearest dollar.
Statute: 20 U.S.C. 1094(c)(3)(B).
Current Regulations: The CMP for 20 U.S.C. 1094(c)(3)(B) [Section
487(c)(3)(B) of the HEA], as set out in statute in 1986 (Pub. L. 99-
498, title IV, Sec. 407(a), Oct. 17, 1986, 100 Stat. 1488), provides
for a fine of up to $25,000 for an IHE's violation of Title IV of the
HEA or its implementing regulations. Title IV authorizes various
programs of student financial assistance.
New Regulations: The new penalty for this section is $53,907.
Reason: Using the multiplier for 1986 of 2.15628 from OMB
Memorandum M-16-06, the new penalty is calculated as follows: $25,000 x
2.15628 = $53,907.00, which makes the adjusted penalty $53,907, when
rounded to the nearest dollar.
Statute: 20 U.S.C. 1228c(c)(2)(E).
Current Regulations: The CMP for 20 U.S.C. 1228c(c)(2)(E) [Section
429 of the General Education Provisions Act], as set out in statute in
1994 (Pub. L. 103-382, title II, Sec. 238, Oct. 20, 1994, 108 Stat.
3918), provides for a fine of up to $1,000 for an educational
organization's failure to disclose certain information to minor
students and their parents.
New Regulations: The new penalty for this section is $1,591.
Reason: Using the multiplier for 1994 of 1.59089 from OMB
Memorandum M-16-06, the new penalty is calculated as follows: $1,000 x
1.59089 = $1,590.89, which makes the adjusted penalty $1,591, when
rounded to the nearest dollar.
Statute: 31 U.S.C. 1352(c)(1) and (c)(2)(A).
Current Regulations: The CMPs for 31 U.S.C. 1352(c)(1) and
(c)(2)(A), as set out in statute in 1989, provide for a fine of $10,000
to $100,000 for recipients of Government grants, contracts, etc. that
improperly lobby Congress or the Executive Branch with respect to the
award of Government grants and contracts.
New Regulations: The new penalties for these sections are $18,936
to $189,361.
Reason: Using the multiplier for 1989 of 1.89361 from OMB
Memorandum M-16-06, the new minimum penalty is calculated as follows:
$10,000 x 1.89361 = $18,936.10, which makes the adjusted penalty
$18,936, when rounded to the nearest dollar. The new maximum penalty is
calculated as follows: $100,000 x 1.89361 = $189,361.00, which makes
the adjusted penalty $189,361, when rounded to the nearest dollar.
Statute: 31 U.S.C. 3802(a)(1) and (a)(2).
Current Regulations: The CMPs for 31 U.S.C. 3802(a)(1) and (a)(2),
as set out in statute in 1986 (Pub. L. 99-509, title VI, Sec. 6103(a),
Oct. 21, 1986, 100 Stat. 1937), provide for a fine of up to $5,000 for
false claims and statements made to the Government.
New Regulations: The new penalty for this section is $10,781.
Reason: Using the multiplier for 1986 of 2.15628 from OMB
Memorandum M-16-06, the new penalty is calculated as follows: $5,000 x
2.15628 = $10,781.40, which makes the adjusted penalty $10,781, when
rounded to the nearest dollar.
Executive Orders 12866 and 13563
Regulatory Impact Analysis
Under Executive Order 12866, the Secretary must determine whether
this regulatory action is ``significant'' and, therefore, subject to
the requirements of the Executive order and subject to review by the
Office of Management and Budget (OMB). Section 3(f) of Executive Order
12866 defines a significant regulatory action as an action likely to
result in a rule that may--
(1) Have an annual effect on the economy of $100 million or more,
or adversely affect a sector of the economy; productivity; competition;
jobs; the environment; public health or safety; or State, local, or
tribal governments or communities in a material way (also referred to
as ``economically significant'' regulations);
(2) Create serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impacts of entitlement grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles stated in the
Executive order.
Based on the number and amount of penalties imposed under the CMPs
amended in this IFR, we have determined that this regulatory action
will have none of the economic impacts described under the Executive
order. This IFR is required by statute, the adjusted CMPs are not at
the Secretary's discretion, and, accordingly, this IFR does not have
any of the policy impacts described under the Executive order. Because
this IFR is not a significant regulatory action, it is not subject to
review by OMB under section 3(f) of Executive Order 12866.
[[Page 50323]]
We have also reviewed these regulations under Executive Order
13563, which supplements and explicitly reaffirms the principles,
structures, and definitions governing regulatory review established in
Executive Order 12866. To the extent permitted by law, Executive Order
13563 requires that an agency--
(1) Propose or adopt regulations only upon a reasoned determination
that their benefits justify their costs (recognizing that some benefits
and costs are difficult to quantify);
(2) Tailor its regulations to impose the least burden on society,
consistent with obtaining regulatory objectives and taking into
account, among other things, and to the extent practicable, the costs
of cumulative regulations;
(3) In choosing among alternative regulatory approaches, select
those approaches that maximize net benefits (including potential
economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity);
(4) To the extent feasible, specify performance objectives, rather
than the behavior or manner of compliance a regulated entity must
adopt; and
(5) Identify and assess available alternatives to direct
regulation, including economic incentives--such as user fees or
marketable permits--to encourage the desired behavior, or providing
information that enables the public to make choices.
Executive Order 13563 also requires an agency ``to use the best
available techniques to quantify anticipated present and future
benefits and costs as accurately as possible.'' The Office of
Information and Regulatory Affairs of OMB has emphasized that these
techniques may include ``identifying changing future compliance costs
that might result from technological innovation or anticipated
behavioral changes.''
We are issuing this IFR as required by statute. The Secretary has
no discretion to consider alternative approaches as delineated in the
Executive order. Based on this analysis and the reasons stated in the
preamble, the Department believes that this IFR is consistent with the
principles in Executive Order 13563.
Waiver of Rulemaking and Delayed Effective Date
Under the Administrative Procedure Act (APA) (5 U.S.C. 553), the
Department generally offers interested parties the opportunity to
comment on proposed regulations. However, the APA provides that an
agency is not required to conduct notice-and-comment rulemaking when
the agency, for good cause, finds that notice and public comment
thereon are impracticable, unnecessary, or contrary to the public
interest (5 U.S.C. 553(b)(B)). There is good cause to waive rulemaking
here as unnecessary.
Rulemaking is ``unnecessary'' in those situations in which ``the
administrative rule is a routine determination, insignificant in nature
and impact, and inconsequential to the industry and to the public.''
Utility Solid Waste Activities Group v. EPA, 236 F.3d 749, 755 (D.C.
Cir. 2001), quoting U.S. Department of Justice, Attorney General's
Manual on the Administrative Procedure Act 31 (1947) and South Carolina
v. Block, 558 F. Supp. 1004, 1016 (D.S.C. 1983).
These regulations merely implement the statutory mandate to adjust
CMPs for inflation. The regulations reflect administrative computations
performed by the Department as prescribed by the statute and the
Secretary has no discretion in determining the new penalties.
The APA also generally requires that regulations be published at
least 30 days before their effective date, unless the agency has good
cause to implement its regulations sooner (5 U.S.C. 553(d)(3)). Again,
because these final regulations merely implement non-discretionary
administrative computations, there is good cause to make them effective
on the day they are published.
Regulatory Flexibility Act Certification
The Secretary certifies that these regulations will not have a
significant economic impact on a substantial number of small entities.
The formula for the amount of the inflation adjustments is prescribed
by statute and is not subject to the Secretary's discretion. These CMPs
are infrequently imposed by the Secretary, and the regulations do not
involve any special considerations that might affect the imposition of
CMPs on small entities.
Paperwork Reduction Act of 1995
These regulations do not contain any information collection
requirements.
Intergovernmental Review
This program is not subject to Executive Order 12372 and the
regulations in 34 CFR part 79.
Assessment of Educational Impact
Based on our own review, we have determined that this IFR does not
require transmission of information that any other agency or authority
of the United States gathers or makes available.
Electronic Access to This Document: The official version of this
document is the document published in the Federal Register. Free
Internet access to the official edition of the Federal Register and the
Code of Federal Regulations is available via the Federal Digital System
at: www.gpo.gov/fdsys. At this site you can view this document, as well
as all other documents of this Department published in the Federal
Register, in text or Portable Document Format (PDF). To use PDF you
must have Adobe Acrobat Reader, which is available free at the site.
You may also access documents of the Department published in the
Federal Register by using the article search feature at:
www.federalregister.gov. Specifically, through the advanced search
feature at this site, you can limit your search to documents published
by the Department.
List of Subjects in 34 CFR Part 36
Claims, Fraud, Penalties.
Dated: July 27, 2016.
John B. King, Jr.,
Secretary of Education.
For the reasons discussed in the preamble, the Secretary amends
part 36 of title 34 of the Code of Federal Regulations as follows:
PART 36--ADJUSTMENT OF CIVIL MONETARY PENALTIES FOR INFLATION
0
1. The authority citation for part 36 is revised to read as follows:
Authority: 20 U.S.C. 1221e-3 and 3474; 28 U.S.C. 2461 note, as
amended by Sec. 701 of Pub. Law 114-74, unless otherwise noted.
0
2. In Sec. 36.1, revise the authority citation to read as follows:
Sec. 36.1 Purpose.
* * * * *
(Authority: 20 U.S.C. 1221e-3 and 3474; 28 U.S.C. 2461 note, as
amended by Sec. 701 of Pub. Law 114-74.)
0
3. Section 36.2 is amended by revising Table I and the authority
citation to read as follows:
Sec. 36.2 Penalty adjustment.
* * * * *
[[Page 50324]]
Table I, Section 36.2--Civil Monetary Penalty Inflation Adjustments
------------------------------------------------------------------------
New maximum
(and minimum,
Statute Description if applicable)
penalty amount
------------------------------------------------------------------------
20 U.S.C. 1015(c)(5) (Section Provides for a fine, as $36,256
131(c)(5) of the Higher set by Congress in
Education Act of 1965 (HEA)). 1998, of up to $25,000
for failure by an
institute of higher
education to provide
information on the
cost of higher
education to the
Commissioner of
Education Statistics.
20 U.S.C. 1022d(a)(3) (Section Provides for a fine, as 30,200
205(a)(3) of the HEA). set by Congress in
2008, of up to $27,500
for failure by an IHE
to provide information
to the State and the
public regarding its
teacher-preparation
programs.
20 U.S.C. 1082(g) (Section Provides for a civil 53,907
432(g) of the HEA). penalty, as set by
Congress in 1986, of
up to $25,000 for
violations by lenders
and guaranty agencies
of Title IV of the
HEA, which authorizes
the Federal Family
Education Loan Program.
20 U.S.C. 1094(c)(3)(B) Provides for a civil 53,907
(Section 487(c)(3)(B) of the penalty, as set by
HEA). Congress in 1986, of
up to $25,000 for an
IHE's violation of
Title IV of the HEA,
which authorizes
various programs of
student financial
assistance.
20 U.S.C. 1228c(c)(2)(E) Provides for a civil 1,591
(Section 429 of the General penalty, as set by
Education Provisions Act). Congress in 1994, of
up to $1,000 for an
educational
organization's failure
to disclose certain
information to minor
students and their
parents.
31 U.S.C. 1352(c)(1) and Provides for a civil 18,936
(c)(2)(A). penalty, as set by to 189,361
Congress in 1989, of
$10,000 to $100,000
for recipients of
Government grants,
contracts, etc. that
improperly lobby
Congress or the
Executive Branch with
respect to the award
of Government grants
and contracts.
31 U.S.C. 3802(a)(1) and (a)(2) Provides for a civil 10,781
penalty, as set by
Congress in 1986, of
up to $5,000 for false
claims and statements
made to the Government.
------------------------------------------------------------------------
(Authority: 20 U.S.C. 1221e-3 and 3474; 28 U.S.C. 2461 note, as
amended by Sec. 701 of Pub. Law 114-74).
[FR Doc. 2016-18179 Filed 7-29-16; 8:45 am]
BILLING CODE 4000-01-P