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[Federal Register Volume 77, Number 191 (Tuesday, October 2, 2012)]
[Rules and Regulations]
[Pages 60047-60050]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-24248]

[[Page 60047]]

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DEPARTMENT OF EDUCATION

34 CFR Part 36

RIN 1801-AA12

Adjustment of Civil Monetary Penalties for Inflation

AGENCY: Department of Education.

ACTION: Final regulations.

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SUMMARY: The Department of Education (Department) issues these final 
regulations to adjust the Department's civil monetary penalties (CMPs) 
for inflation, as required by the Federal Civil Penalties Inflation 
Adjustment Act of 1990.

DATES: These regulations are effective October 2, 2012.

FOR FURTHER INFORMATION CONTACT: Peter Wathen-Dunn, Office of the 
General Counsel, U.S. Department of Education, 400 Maryland Avenue SW., 
Room 6E207, Washington, DC 20202-2241. Telephone: (202) 401-8300.
    If you use a telecommunications device for the deaf (TDD) or a text 
telephone (TTY), call the Federal Relay Service (FRS), 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 under FOR FURTHER 
INFORMATION CONTACT.

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 requires 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 January 4, 2005 (70 FR 297), and those 
adjustments became effective on the date of publication. The Department 
previously adjusted its CMPs in 2002. It has been more than four years 
since the last adjustment. Accordingly, the Department is now making 
the necessary adjustments.
    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 and is not subject to the exercise of discretion by 
the Secretary of Education (Secretary). The adjustment reflects the 
percentage increase in the Consumer Price Index for all urban consumers 
(CPI-U) published by the Department of Labor from June of the calendar 
year in which the amount was last adjusted, to June of the calendar 
year preceding the adjustment. The Inflation Adjustment Act also 
requires agencies to round the inflation adjustment based on the amount 
of the penalty when last adjusted.
     For penalties greater than $100 but less than or equal to 
$1,000, the adjusted amount must be rounded to the nearest $100.
     For penalties greater than $1,000 but less than or equal 
to $10,000, the adjusted amount must be rounded to the nearest $1,000.
     For penalties greater than $10,000 but less than or equal 
to $100,000, the adjusted amount must be rounded to the nearest $5,000.
     For penalties greater than $100,000 but less than or equal 
to $200,000, the adjusted amount must be rounded to the nearest 
$10,000.
     For penalties greater than $200,000, the adjusted amount 
must be rounded to the nearest $25,000.

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 
Inflation Adjustment Act provides that adjustments to an agency's CMPs 
apply only to violations that occur after the effective date of the 
adjustments. These regulations become effective upon publication in the 
Federal Register. Therefore, the adjustments made by this amendment to 
the Department's CMPs apply only to violations that occur after the 
date these regulations are published in the Federal Register.

    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 adjusted in 2005, is a fine of up to $27,500 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 $30,000.
    Reason: This CMP was last adjusted in 2005. Therefore, the 
inflation adjustment is the percentage change in the CPI-U from June 
2005 (194.5) through June 2011 (225.722), or 16%. The new penalty is 
calculated as follows: $27,500 x 16% = $4,400, which increases the 
penalty, when rounded to the nearest $5,000, to $30,000.

    Statute: 20 U.S.C. 1027(f)(3)(now 20 U.S.C. 1022d(a)(3)).
    Current Regulations: The CMP for 20 U.S.C. 1027(f)(3) [Section 
207(f)(3) of the HEA], as last adjusted in 2005, 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 $30,000.
    Reason: In 2008, Congress amended the HEA, redesignating this CMP 
as section 205(a)(3) of the HEA (20 U.S.C. 1022d(a)(3)) and setting the 
fine at $27,500. Because Congress reauthorized this penalty in 2008, 
the inflation adjustment for 20 U.S.C. 1022d(a)(3) is the percentage 
change in the CPI-U from June 2008 (218.815) through June 2011 
(225.722), or 3.2%. The new penalty is calculated as follows: $27,500 x 
3.2% = $880, which increases the penalty, when rounded to the nearest 
$5,000, to $30,000.

    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 adjusted in 2002, provides for a fine of up to 
$27,500 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 $35,000.
    Reason: This CMP was last adjusted in 2002. Therefore, the 
inflation adjustment is the percentage change in the CPI-U from June 
2002 (179.9) through June 2011 (225.722), or 25.5%. The new penalty is 
calculated as follows: $27,500 x 25.5% = $7,012.5, which increases the 
penalty, when rounded to the nearest $5,000, to $35,000.

    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 last adjusted in 2002, provides for a fine 
of up to $27,500 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 $35,000.
    Reason: This CMP was last adjusted in 2002. Therefore, the 
inflation adjustment is the percentage change in the CPI-U from June 
2002 (179.9)

[[Page 60048]]

through June 2011 (225.722), or 25.5%. The new penalty is calculated as 
follows: $27,500 x 25.5% = $7,012.5, which increases the penalty, when 
rounded to the nearest $5,000, to $35,000.

    Statute: 20 U.S.C. 1228c(c)(2)(E).
    Current Regulations: None.
    New Regulations: The new penalty for this section is $1,100.
    Reason: The CMP for 20 U.S.C. 1228c(c)(2)(E) [Section 429 of the 
General Education Provisions Act] was established in 1994 and has not 
been adjusted. It provides a penalty of up to $1,000 for an educational 
organization's failure to disclose certain information to minor 
students and their parents.
    The Inflation Adjustment Act was passed in 1990 and required 
agencies to first adjust their CMPs in 1996. Although the percentage 
change in the CPI-U from June 1994 through June 2011 is greater than 
10%, the 1996 statute that amended the Inflation Adjustment Act also 
limited the first adjustment of a CMP to no more than 10 percent of the 
original penalty. Because the Department has never adjusted the CMP for 
20 U.S.C. 1228c(c)(2)(E), the Department is limited to a maximum 
inflation adjustment of 10%, rounded to the nearest $100. The new 
penalty is calculated as follows: $1,000 x 10%, which increases the 
penalty, when rounded to the nearest $100, to $1,100.

    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 last adjusted in 2002, provide for a fine of $11,000 to 
$110,000 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 $15,000 
to $140,000.
    Reason: These CMPs were last adjusted in 2002. Therefore, the 
inflation adjustment is the percentage change in the CPI-U from June 
2002 (179.9) through June 2011 (225.722), or 25.5%. The new penalties 
are calculated as follows: For the minimum fine of $11,000, $11,000 x 
25.5% = $2,805, which increases the minimum penalty, when rounded to 
the nearest $5,000, to $15,000. For the maximum penalty of $110,000, 
$110,000 x 25.5% = $28,050, which increases the maximum penalty, when 
rounded to the nearest $10,000, of $140,000.

    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 last adjusted in 2002, provide for a fine of up to $5,500 for false 
claims and statements made to the Government.
    New Regulations: The new penalty for this section is $7,000.
    Reason: This CMP was last adjusted in 2002. Therefore, the 
inflation adjustment is the percentage change in the CPI-U from June 
2002 (179.9) through June 2011 (225.722), or 25.5%. The new penalty is 
calculated as follows: $5,500 x 25.5% = $1,402, which increases the 
penalty, when rounded to the nearest $1,000, to $7,000.

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 final regulation, we have determined that this final 
regulatory action will have none of the economic impacts described 
under the Executive order. These final regulations are required by 
statute, are not at the Secretary's discretion, and, accordingly, do 
not have any of the policy impacts described under the Executive order. 
Because this final regulatory action is not a significant regulatory 
action, it is not subject to review by OMB under section 3(f) of 
Executive Order 12866.
    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 these final regulations 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 these 
final regulations are 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

[[Page 60049]]

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'' when the agency is issuing a minor 
rule in which the public is not particularly interested. It applies 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 do not 
establish or affect substantive policy. 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 these final 
regulations do 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 Adobe 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.

(Catalog of Federal Domestic Assistance Number does not apply)

List of Subjects in 34 CFR Part 36

    Claims, Fraud, Penalties.

    Dated: September 27, 2012.
Arne Duncan,
Secretary of Education.

    For the reasons discussed in the preamble, the Secretary amends 
part 36 in 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, 
unless otherwise noted.

0
2. The authority citation for Sec.  36.1 is revised to read as follows:

Sec.  36.2  Purpose.

* * * * *

(Authority: 20 U.S.C. 1221e-3 and 3474; 28 U.S.C. 2461 note, unless 
otherwise noted)

0
3. Section 36.2 is amended by revising Table I and the authority 
citation to read as follows:

Sec.  36.2  Penalty adjustment.

* * * * *

   Table I, Section 36.2--Civil Monetary Penalty Inflation Adjustments
------------------------------------------------------------------------
                                                      New maximum (and
                                                         minimum, if
           Statute                 Description      applicable)  penalty
                                                           amount
------------------------------------------------------------------------
20 U.S.C. 1015(c)(5)          Provides for a fine,  $30,000.
 (Section 131(c)(5) of the     as last adjusted,
 Higher Education Act of       of up to $27,500
 1965 (HEA)).                  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)         Provides for a fine,  $30,000.
 (Section 205(a)(3) of the     as set by Congress
 HEA).                         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  $35,000.
 432(g) of the HEA).           penalty, as last
                               adjusted, of up to
                               $27,500 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  $35,000.
 (Section 487(c)(3)(B) of      penalty, as last
 the HEA).                     adjusted, of up to
                               $27,500 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  $1,100.
 (Section 429 of the General   penalty of up to
 Education Provisions Act).    $1,000 for an
                               educational
                               organization's
                               failure to disclose
                               certain information
                               to minor students
                               and their parents.

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31 U.S.C. 1352(c)(1) and      Provides for a civil  $15,000 to $140,000.
 (c)(2)(A).                    penalty, as last
                               adjusted, of
                               $11,000 to $110,000
                               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      Provides for a civil  $7,000.
 (a)(2).                       penalty, as last
                               adjusted, of up to
                               $5,500 for false
                               claims and
                               statements made to
                               the Government.
------------------------------------------------------------------------

(Authority: 20 U.S.C. 1221e-3 and 3474; 28 U.S.C. 2461 note, unless 
otherwise noted)

[FR Doc. 2012-24248 Filed 10-1-12; 8:45 am]
BILLING CODE 4000-01-P
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