[Federal Register Volume 82, Number 75 (Thursday, April 20, 2017)]
[Rules and Regulations]
[Pages 18559-18563]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-08034]


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DEPARTMENT OF EDUCATION

34 CFR Part 36

RIN 1801-AA16
[Docket ID ED-2016-OGC-0051]


Adjustment of Civil Monetary Penalties for Inflation

AGENCY: Department of Education.

ACTION: Final regulations.

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SUMMARY: The Department of Education (Department) issues these final 
regulations to adjust the Department's civil monetary penalties (CMPs) 
for inflation. An initial ``catch-up'' adjustment was required by the 
Federal Civil Penalties Inflation Adjustment Act Improvements Act of 
2015 (2015 Act), which amended the Federal Civil Penalties Inflation 
Adjustment Act of 1990 (Inflation Adjustment Act). These final 
regulations provide the 2017 annual inflation adjustments to the 
initial ``catch-up'' adjustments we made on August 1, 2016, through an 
interim final rule (IFR).

DATES: These regulations are effective April 20, 2017. The adjusted 
CMPs established by these regulations are applicable only to civil 
penalties assessed after April 20, 2017 whose associated violations 
occurred after November 2, 2015. For a description of the CMPs 
applicable under other circumstances, see the SUPPLEMENTARY INFORMATION 
section.

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 Inflation Adjustment Act (28 U.S.C. 2461 note) provides for the 
regular evaluation of 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.
    The 2015 Act (section 701 of Pub. L. 114-74) amended the Inflation 
Adjustment Act to improve the effectiveness of CMPs and to maintain 
their deterrent effect.
    The 2015 Act requires agencies to: (1) Adjust the level of CMPs 
with an initial ``catch-up'' adjustment through an IFR; and (2) make 
subsequent annual adjustments for inflation. Catch-up adjustments are 
based on the percentage 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 percentage change between the October CPI-
U preceding the date of each statutory adjustment, and the prior year's 
October CPI-U.\1\
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    \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.
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    The Department published an IFR with the initial ``catch-up'' 
penalty adjustment amounts on August 1, 2016 (81 FR 50321). These 
adjustments are currently in effect and apply to all CMPs covered by 
the Inflation Adjustment Act. We did not receive any public comments on 
this IFR.
    A CMP is defined in the Inflation Adjustment Act 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 
was required to use, as the baseline for adjusting the CMPs in the IFR, 
the CMP amounts as they were most recently established or adjusted 
under a provision of law other than the Inflation Adjustment Act. In 
accordance with the 2015 Act, we did not use the amounts set out in 34 
CFR part 36 in 2012 in the formula used in the IFR to adjust for 
inflation because those CMP amounts were updated pursuant to the 
Inflation Adjustment Act.\2\ Instead, the baselines we used in the IFR 
were the amounts set out most recently in each of the statutes that 
provide for civil penalties. Using these statutory CMPs, we 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 in 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 were 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.
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    \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.
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    In these final regulations, we adjust each CMP amount provided in 
the IFR by a factor of 1.01636, as directed by OMB Memorandum M-17-11.
    Effective Dates:
    The precise penalty amount that will apply to violations occurring 
before

[[Page 18560]]

April 20, 2017, the effective date of this final rule, depends on when 
the violation occurred and also when we assessed the penalty for the 
violation. For all violations occurring on or before November 2, 2015, 
the applicable penalty amount is the amount set forth in 34 CFR 36.2 
prior to August 1, 2016 (the IFR publication date). For violations 
occurring after November 2, 2015, in general, there are three potential 
amounts that could apply: (1) The amount as set forth in 34 CFR 36.2 
before August 1, 2016; \3\ (2) the amount set forth in 34 CFR 36.2 
after publication of the IFR on August 1, 2016; or (3) the amount set 
forth in 34 CFR 36.2 through this final rule. The following chart shows 
which amount applies based on the assessment date for violations after 
November 2, 2015:
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    \3\ There may be an unusual circumstance where the amount set 
forth in the prior regulations was superseded by a statute before 
August 1, 2016, in which case the statutory amount would apply. 
However, we have been unable to identify an instance where a 
statutory amendment superseded the regulatory amount in this 
timeframe.

----------------------------------------------------------------------------------------------------------------
 
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Date of Assessment...................  Assessment after April   Assessment between       Assessment prior to
                                        20, 2017 (final rule     August 1, 2016 (IFR      August 1, 2016 (IFR
                                        publication date).       publication date) and    publication date).
                                                                 April 20, 2017 (final
                                                                 rule publication date).
Applicable Rule......................  This final rule........  2016 IFR...............  34 CFR 36.2 as it
                                                                                          existed before August
                                                                                          1, 2016.
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The Department's Civil Monetary Penalties

    The following analysis calculates new CMPs 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 that are 
assessed after the effective date of the adjustments, including those 
whose associated violation predated such increase. These regulations 
are effective April 20, 2017. Therefore, the adjustments to the 
Department's CMPs made by these final regulations apply only to 
violations that are assessed after April 20, 2017.

    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. L. 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 institution of higher education (IHE) to provide 
information on the cost of higher education to the Commissioner of 
Education Statistics. In the IFR, we increased this amount to $36,256.
    New Regulations: The new penalty for this section is $36,849.
    Reason: Using the multiplier of 1.01636 from OMB Memorandum M-17-
11, the new penalty is calculated as follows: $36,256 x 1.01636 = 
$36,849.15, which makes the adjusted penalty $36,849, 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. In the IFR, we increased this amount to $30,200.
    New Regulations: The new penalty for this section is $30,694.
    Reason: Using the multiplier of 1.01636 from OMB Memorandum M-17-
11, the new penalty is calculated as follows: $30,200 x 1.01636 = 
$30,694.07, which makes the adjusted penalty $30,694, 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. In the IFR, we increased this amount to $53,907.
    New Regulations: The new penalty for this section is $54,789.
    Reason: Using the multiplier of 1.01636 from OMB Memorandum M-17-
11, the new penalty is calculated as follows: $53,907 x 1.01636 = 
$54,788.92, which makes the adjusted penalty $54,789, 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. In the IFR, we increased this 
amount to $53,907.
    New Regulations: The new penalty for this section is $54,789.
    Reason: Using the multiplier of 1.01636 from OMB Memorandum M-17-
11, the new penalty is calculated as follows: $53,907 x 1.01636 = 
$54,788.92, which makes the adjusted penalty $54,789, 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. In the IFR, we increased this amount to 
$1,591.
    New Regulations: The new penalty for this section is $1,617.
    Reason: Using the multiplier of 1.01636 from OMB Memorandum M-17-
11, the new penalty is calculated as follows: $1,591 x 1.01636 = 
$1,617.03, which makes the adjusted penalty $1,617, 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. In the IFR, we increased 
these amounts to $18,936 to $189,361.
    New Regulations: The new penalties for these sections are $19,246 
to $192,459.
    Reason: Using the multiplier of 1.01636 from OMB Memorandum M-17-
11, the new minimum penalty is calculated as follows: $18,936 x 1.01636 
= $19,245.79, which makes the adjusted penalty $19,246, when rounded to 
the nearest dollar. The new maximum penalty is calculated as follows: 
$189,361.00 x 1.01636 = $192,458.95,

[[Page 18561]]

which makes the adjusted penalty $192,459, 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. In the IFR, we 
increased this amount to $10,781.
    New Regulations: The new penalty for this section is $10,957.
    Reason: Using the multiplier of 1.01636 from OMB Memorandum M-17-
11, the new penalty is calculated as follows: $10,781 x 1.01636 = 
$10,957.38, which makes the adjusted penalty $10,957, when rounded to 
the nearest dollar.

Executive Orders 12866, 13563, and 13771

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 these final regulations, we have determined that this 
regulatory action will have none of the economic impacts described 
under the Executive order. These final regulations are required by 
statute, the adjusted CMPs are not at the Secretary's discretion, and, 
accordingly, these final regulations do not have any of the policy 
impacts described under the Executive order. Because these final 
regulations are not a significant regulatory action, they are not 
subject to review by OMB under section 3(f) of Executive Order 12866.
    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 these final regulations 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 these 
final regulations are consistent with the principles in Executive Order 
13563.
    Under Executive Order 13771, if the Department proposes for notice 
and comment or otherwise promulgates a new regulation that is a 
significant regulatory action under Executive Order 12866, it must 
identify two existing regulations for elimination. For Fiscal Year 
2017, any new incremental costs associated with the new regulation must 
be fully offset by the elimination of existing costs through the repeal 
of at least two regulations. These final regulations are not a 
significant regulatory action. Therefore, the requirements of Executive 
Order 13771 do not apply.

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

[[Page 18562]]

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 these regulations 
do 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: April 17, 2017.
Betsy DeVos,
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 continues 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. Section 36.2 is amended by revising Table I to read as follows:


Sec.  36.2  Penalty adjustment.

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   Table I, Section 36.2--Civil Monetary Penalty Inflation Adjustments
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                                                        New maximum (and
                                                           minimum, if
            Statute                   Description          applicable)
                                                         penalty amount
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20 U.S.C. 1015(c)(5) (Section   Provides for a fine,    $36,849
 131(c)(5) of the Higher         as set by Congress in
 Education Act of 1965 (HEA)).   1998, of up to
                                 $25,000 for failure
                                 by an institution of
                                 higher education
                                 (IHE) 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,    30,694
 205(a)(3) of the HEA).          as 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    54,789
 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    54,789
 (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    1,617
 (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    19,246 to
 (c)(2)(A).                      penalty, as set by      192,459
                                 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        Provides for a civil    10,957
 (a)(2).                         penalty, as set by
                                 Congress in 1986, of
                                 up to $5,000 for
                                 false claims and
                                 statements made to
                                 the Government.
------------------------------------------------------------------------

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[FR Doc. 2017-08034 Filed 4-19-17; 8:45 am]
BILLING CODE 4000-01-P