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Agencies must increase civil penalties under Bipartisan Budget Act of 2015

November 24th, 2015  |  David Stephanides

Under the Bipartisan Budget Act of 2015 (BBA), signed into law by President Obama on November 2, the heads of all federal agencies will be required to annually adjust their civil penalties based on the Consumer Price Index. The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, incorporated into the BBA at Section 701, also contains a catch-up provision, which could adjust penalties by up to 150 percent by mid-2016.
Initial inflation adjustment. The Act provides that not later than July 1, 2016, and not later than January 15 of every subsequent year, every agency head must adjust civil penalties through interim final rulemaking. Interim final rules are to reflect a cost-of-living adjustment taking into account the percentage for each penalty by which the Consumer Price Index for the month of October 2015 exceeds the Consumer Price Index for the month of October of the calendar year during which the amount of the penalty was established or adjusted under a provision of law other than under the Act. However, the amount of the increase may not exceed 150 percent of the amount of a penalty in effect on November 2, 2015. Adjustments must take effect not later than August 1, 2016.
Exception. Adjustments by less than this otherwise-required amount may be made only if an agency head, after publishing a notice of proposed rulemaking and providing an opportunity for comment, determines in a final rule that increasing the penalty will have a negative economic impact, or the social costs of increasing the penalty outweigh the benefits. The Director of the Office of Management and Budget must concur with the agency under this exception.
Agency heads, such as the Assistant Secretary of Labor for OSHA, Dr. David Michaels, have advocated for stiffer penalties for some time. Dr. Michaels stated last month before the Committee on Education and the Workforce, Subcommittee on Workforce Protections: “Simply put, OSHA penalties must be increased to provide a real disincentive for employers accepting injuries and worker deaths as a cost of doing business.”

Under the Bipartisan Budget Act of 2015 (BBA), signed into law by President Obama on November 2, the heads of all federal agencies will be required to annually adjust their civil penalties based on the Consumer Price Index. The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, incorporated into the BBA at Section 701, also contains a catch-up provision, which could adjust penalties by up to 150 percent by mid-2016.

Initial inflation adjustment. The Act provides that not later than July 1, 2016, and not later than January 15 of every subsequent year, every agency head must adjust civil penalties through interim final rulemaking. Interim final rules are to reflect a cost-of-living adjustment taking into account the percentage for each penalty by which the Consumer Price Index for the month of October 2015 exceeds the Consumer Price Index for the month of October of the calendar year during which the amount of the penalty was established or adjusted under a provision of law other than under the Act. However, the amount of the increase may not exceed 150 percent of the amount of a penalty in effect on November 2, 2015. Adjustments must take effect not later than August 1, 2016.

Exception. Adjustments by less than this otherwise-required amount may be made only if an agency head, after publishing a notice of proposed rulemaking and providing an opportunity for comment, determines in a final rule that increasing the penalty will have a negative economic impact, or the social costs of increasing the penalty outweigh the benefits. The Director of the Office of Management and Budget must concur with the agency under this exception.

Agency heads, such as the Assistant Secretary of Labor for OSHA, Dr. David Michaels, have advocated for stiffer penalties for some time. Dr. Michaels stated last month before the Committee on Education and the Workforce, Subcommittee on Workforce Protections: “Simply put, OSHA penalties must be increased to provide a real disincentive for employers accepting injuries and worker deaths as a cost of doing business.”

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