[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]


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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.

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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\
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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 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.
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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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[[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
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                                                            New maximum
                                                           (and minimum,
            Statute                    Description        if applicable)
                                                          penalty amount
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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]
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