By Andrew H. Perellis and Craig B. Simonsen
EPA has amended its Civil Monetary Penalty Inflation Adjustment Rule. 78 Fed. Reg. 66643 (Nov. 6, 2013).
Under the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 1996 (DCIA), the EPA is required to amend its regulations for adjusting for inflation the statutory civil monetary penalties that are imposed under the environmental laws. The purpose of the adjustments is to maintain the deterrent effect of civil penalties and to further the policy goals of the underlying statutes. The DCIA requires adjustments to be made at least once every four years following the initial adjustment. Where required under the DCIA, this rule, and specifically Table 1 of 40 CFR section 19.4, adjusts for inflation the maximum and, in some cases, the minimum amount of the statutory civil penalty that may be imposed for violations of EPA administered statutes and regulations.
According to the Agency, the regulatory penalty table was last adjusted for inflation in 2008. Multiplying the applicable 4.87 percent cost-of-living adjustment to the statutory civil penalty amount of $37,500, the raw inflation increase equals only $1,827.40. The DCIA rounding rule requires a raw inflation increase increment to be rounded to the nearest multiple of $5,000 for penalties greater than $10,000 but less than or equal to $100,000. Because this raw inflation increase is not sufficient to be rounded up to a multiple of $5,000, in accordance with the DCIA’s rounding rule, this rule does not increase the $37,500 penalty amount.
Because of the low rate of inflation since 2008, coupled with the application of the DCIA’s rounding rules, only 20 of the 88 statutory civil penalty provisions (such as the maximum penalties) implemented by EPA are being adjusted for inflation under this amendment to the rule.
The increase in penalties only applies to violations which occur after December 6, 2013.