November 9, 2015
On November, 2, 2015, President Obama signed into law the Bipartisan Budget Act of 2015 (“BBA”), a two-year budget deal that funds the government through the 2017 fiscal year. A relatively inconspicuous provision of the BBA, the “Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015” (Section 701), requires federal agencies to make inflationary adjustments to civil monetary penalties. The initial “catch-up adjustment” is to be made through an interim rulemaking under the Administrative Procedures Act (“APA”) and must go into effect by August 1, 2016. Under the “catch-up” provision, the amount by which civil penalties must be adjusted is based on the difference between the Consumer Price Index (“CPI”) in October of the calendar year in which they were last adjusted and the CPI in October 2015, but is capped at 150%. Agencies are also required to make annual adjustments thereafter, also based on changes in the CPI. Unlike the catch-up adjustment, these subsequent adjustments are made automatically and without regard to the rule-making requirements of the APA.

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