In 2015, Congress amended the Federal Civil Penalties Inflation Adjustment Act of 1990 to require agencies like EPA to change the way that they adjust maximum civil penalty levels to account for inflation. In the past, EPA has only adjusted penalty levels for inflation once every several years, but the new law requires EPA to apply two new adjustments—an initial “catch-up” adjustment, and then annual adjustments beginning January 15, 2017. The Act mandates federal agencies, including EPA, to publish notice of the initial adjustments in the form of “interim final rules” by July 1, 2016.

Accordingly, EPA has just released an interim final rule implementing the initial catch-up adjustments based on the percentage increase in the October 2015 Consumer Price Index for all Urban Consumers (CPI-U) as compared to the last time EPA adjusted its penalties (2013). Since some of the penalty levels have not been updated in a long time, some of the increases are substantial, although the new law caps the initial catch-up increases at 150 percent of the level in effect on November 2, 2015.  For example, the rule increases the Clean Air Act penalty amounts for civil judicial enforcement, which were originally set at $25,000 per violation per day and had previously been increased to $37,500 in 2009, to a new maximum level of $93,750—the maximum increase of 150% that is allowed under the rule. In accordance with the Act, EPA has published the changes as an “interim final rule,” without opportunity for public review and comment.

The interim final rule can be accessed here: EPA Civil Monetary Penalty Inflation Adjustment Rule.  For more information, contact Mack McGuffey or Buck Dixon.