Inflation Adjustment Act Impacts Civil Monetary Penalties
Civil monetary penalties (including penalties for violations of CERCLA, the Clean Air Act, and RCRA) increased on August 1, 2016. The Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the Inflation Adjustment Act) seeks to bring civil monetary penalties in line with current rates of inflation. The Inflation Adjustment Act mandates a “catch-up” adjustment in which penalties will be increased - sometimes dramatically - in accordance with a published formula. After the initial increase, penalties will be adjusted annually to keep pace with inflation.
The adjustment formula takes into account the last time the penalty was adjusted and uses an inflation multiplier to calculate the new monetary penalty. The adjusted penalty amount cannot exceed 250 percent of the listed penalty on the date the law was signed into effect (November 2, 2015). The adjustment formula applies to both minimum and maximum penalty amounts, but does not affect non-numerical penalty values such as, “full cost of restoration,” or “twice the value of the transaction.”
The Environmental Protection Agency (EPA) lists the exact amounts of the initial “catch-up” adjustments in Table 2 of its interim final rule. 81 Fed. Reg. 43091 (Jul. 1, 2016). Some examples of the new maximum penalty amounts are:
- Clean Air Act violations under 42 U.S.C. 7524(c)(1) will increase from $200,000 to $356,312; and
- Clean Water Act NPDES and Section 404 violations under 33 U.S.C. 1319(d) will increase from $37,500/day to $51,570/day.
The EPA does not have to assess penalties at the maximum value, and reserves the right to consider fact-specific, mitigating factors such as, “the seriousness of the violation, the violator’s good faith efforts to comply…and a violator’s ability to pay” when assessing monetary penalties. 81 Fed. Reg. 43091.
The Occupational Safety and Health Administration (OSHA) is also affected by the Inflation Adjustment Act. By using the adjustment formula, an OSHA “Serious" and "Other-Than-Serious" violation maximum penalty will increase from $7,000 per violation to $12,471 per violation, and an OSHA “Willful or Repeated Violation” maximum penalty will increase from $70,000 per violation to $124,709 per violation. 81 Fed. Reg. 43430.
For additional information concerning the Inflation Adjustment Act and its impact on civil monetary penalties, please contact Jonathan Rinde at 484-430-2325.