This section of the FEDERAL REGISTER

contains documents other than rules or

proposed rules that are applicable to the

public. Notices of hearings and investigations,

committee meetings, agency decisions and

rulings, delegations of authority, filing of

petitions and applications and agency

statements of organization and functions are

examples of documents appearing in this

section.

Notices Federal Register

2939 

Vol. 78, No. 10 

Tuesday, January 15, 2013 

1Administrative Conference of the United States, 

Recommendation 69–1, ‘‘Statutory Reform of the 

Sovereign Immunity Doctrine,’’ 1 ACUS 23 (1969). 

2Administrative Conference of the United States, 

Recommendation 68–7, ‘‘Elimination of 

Jurisdictional Amount Requirement in Judicial 

Review,’’ 1 ACUS 22 (1968). 

3E.g., Administrative Conference of the United 

States, Recommendation 80–5, Eliminating or 

Simplifying the ‘‘Race to the Courthouse’’ in 

Appeals From Agency Action, 45 FR 84954 (Dec. 

24, 1980); Administrative Conference of the United 

States, Recommendation 82–3, Federal Venue 

Provisions Applicable to Suits Against the United 

States, 47 FR 30706 (June 18, 1982). 

4Section 1500 of Title 28 of the United States 

Code reads in full: 

The United States Court of Federal Claims shall 

not have jurisdiction of any claim for or in respect 

to which the plaintiff or his assignee has pending 

in any other court any suit or process against the 

United States or any person who, at the time when 

Continued 

ADMINISTRATIVE CONFERENCE OF 

THE UNITED STATES 

Adoption of Recommendations 

AGENCY: Administrative Conference of 

the United States. 

ACTION: Notice. 

SUMMARY: The Administrative 

Conference of the United States adopted 

three recommendations at its Fiftyseventh Plenary Session. The appended 

recommendations address reforms to 28 

U.S.C. 1500, third-party programs to 

assess regulatory compliance, and 

inflation adjustment for civil penalties. 

FOR FURTHER INFORMATION CONTACT: For 

Recommendation 2012–6, Emily 

Bremer; for Recommendation 2012–7, 

David Pritzker; for Recommendation 

2012–8, Stephanie J. Tatham. For all 

three recommendations the address and 

phone number are: Administrative 

Conference of the United States, Suite 

706 South, 1120 20th Street NW., 

Washington, DC 20036; Telephone 202– 

480–2080. 

SUPPLEMENTARY INFORMATION: The 

Administrative Conference Act, 5 U.S.C. 

591–596, established the Administrative 

Conference of the United States. The 

Conference studies the efficiency, 

adequacy, and fairness of the 

administrative procedures used by 

Federal agencies and makes 

recommendations for improvements to 

agencies, the President, Congress, and 

the Judicial Conference of the United 

States (5 U.S.C. 594(1)). For further 

information about the Conference and 

its activities, see http://www.acus.gov. 

At its Fifty-seventh Plenary Session, 

held December 6–7, 2012, the Assembly 

of the Conference adopted three 

recommendations. Recommendation 

2012–6, ‘‘Reform of 28 U.S.C. Section 

1500,’’ urges Congress to repeal Section 

1500, which divests the U.S. Court of 

Federal Claims of jurisdiction when a 

plaintiff has claims against the 

government based on substantially the 

same operative facts pending in another 

court, and replace it with a provision 

that would create a presumption that in 

such circumstances, later-filed actions 

would be stayed. The Administrative 

Conference Member from the 

Department of Justice filed a separate 

statement noting the Department’s 

disagreement with the recommendation, 

which is printed following the 

recommendation. 

Recommendation 2012–7 addresses 

issues that arise when agencies develop 

programs in which third parties assess 

whether regulated entities are in 

compliance with regulatory standards 

and other requirements. In some areas of 

regulation, Congress has directed 

agencies to develop a third-party 

program; in others, regulatory agencies 

have developed programs under existing 

statutory authority. The 

recommendation sets forth guidance for 

federal agencies that are establishing, or 

considering establishing, such 

programs. 

Recommendation 2012–8, ‘‘Inflation 

Adjustment Act,’’ addresses agency 

adjustments to civil monetary penalties 

under the Federal Civil Penalties 

Inflation Adjustment Act, codified as 

amended at 28 U.S.C. 2461 note. The 

recommendation urges Congress to 

change the current statutory framework 

by which agencies periodically adjust 

their penalties to address three 

provisions that result in penalty 

adjustments that may not track the 

actual rate of inflation. It also advises 

agencies to adjust their penalties for 

inflation as required by the law. 

The Appendix (below) sets forth the 

full texts of these three 

recommendations. The Conference will 

transmit them to affected agencies and 

to appropriate committees of the United 

States Congress. The recommendations 

are not binding, so the relevant 

agencies, the Congress, and the courts 

will make decisions on their 

implementation. 

The Conference based these 

recommendations on research reports 

that it has posted at: http:// 

www.acus.gov/events/57th-plenarysession/. A video of the Plenary Session 

is available at the same web address, 

and a transcript of the Plenary Session 

will be posted once it is available. 

Dated: January 10, 2013. 

Paul R. Verkuil, 

Chairman. 

Appendix—Recommendations of the 

Administrative Conference of the 

United States 

Administrative Conference Recommendation 

2012–6 

Reform of 28 U.S.C. 1500 

Adopted December 6, 2012 

The Administrative Conference of the 

United States has long had an interest in 

ensuring appropriate judicial review of 

Government actions and in considering 

related questions regarding jurisdiction and 

forum. For example, the Conference’s 

seminal Recommendation 69–1 

recommended amendment of the 

Administrative Procedure Act—subsequently 

enacted by Congress—to waive sovereign 

immunity and thereby permit citizens ‘‘to 

challenge in courts the legality of acts of 

governmental administrators.’’ 1

Recommendation 68–7 encouraged Congress 

to revise the general ‘‘federal question’’ 

provision in Title 28 of the U.S. Code in 

order to eliminate the jurisdictional-amount 

requirement for district court actions seeking 

review of federal administrative actions.2 The 

Conference has also recommended ways to 

improve procedures in suits involving the 

federal government.3

Building upon the principles underlying 

such Recommendations, the Conference 

addresses another bar to judicial review 

which deprives some litigants of their 

rights—28 U.S.C. 1500 (Section 1500). 

Section 1500 prohibits consideration by the 

United States Court of Federal Claims of 

otherwise cognizable claims while the 

plaintiff has litigation against the United 

States or an officer thereof ‘‘pending in any 

other court’’ and arising from substantially 

the same operative facts.4


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the cause of action alleged in such suit or process 

arose, was, in respect thereto, acting or professing 

to act, directly or indirectly under the authority of 

the United States. 

28 U.S.C. 1500 (2012). See also United States v. 

Tohono O’odham Nation, 131 S. Ct. 1723, 1731 

(2011) (‘‘Two suits are for or in respect to the same 

claim, precluding jurisdiction in the [Court of 

Federal Claims], if they are based on substantially 

the same operative facts, regardless of the relief 

sought in each suit.’’). 

5See, e.g., Keene Corp. v. United States, 508 U.S. 

200, 206 (1993). 

6 Id. 

7 Griffin v. United States, 590 F.3d 1291 (Fed. Cir. 

2009). 

8 Vaizburd v. United States, 46 Fed. Cl. 309, 311– 

12 (Fed. Cl. 2000). 

9 Vero Technical Support v. United States, 94 

Fed. Cl. 784 (Fed. Cl. 2010). 

10United States v. County of Cook, 170 F.3d 1084, 

1091–92 (Fed. Cir. 1994). 

11Passamaquoddy Tribe v. United States, 82 Fed. 

Cl. 256 (Fed. Cl. 2008). Notably, if the plaintiff tribe 

had filed its district court action one day later, it 

would have been permitted to proceed 

simultaneously in both the Court of Federal Claims 

and district court under Federal Circuit precedent. 

See Tecon Engineers, Inc. v. United States, 170 Ct. 

Cl. 389 (Ct. Cl. 1965). 

12Emily S. Bremer & Jonathan R. Siegel, The 

Need to Reform 28 U.S.C. § 1500 (2012) (report to 

the Administrative Conference of the U.S.) 

(collecting criticism of Section 1500), available at 

www.acus.gov. 

13Tohono, 131 S. Ct. at 1731. 

14 Id. at 1729. 

15 Id. at 1730. 

16 Id. at 1731. 

17 E.g., 28 U.S.C. 1631; see also Court of Federal 

Claims Technical and Procedural Improvements 

Act, Hearing on S. 2521 Before the S. Comm. on the 

Judiciary, 102nd Cong. 59 (Apr. 29, 1992) 

(statement of Hon. Loren Smith, Chief Judge, U.S. 

Claims Court) (observing that repeal of Section 1500 

would save ‘‘wasteful litigation over non-merits 

issues’’ and that the ‘‘Court can stay duplicative 

litigation, if the matter is being addressed in 

another forum, or proceed with the case, if the 

matter appears to be stalled in the other forum’’). 

18This position comports with that of the Judicial 

Conference of the United States in 1995, which 

dropped its historical opposition to the repeal of 

With its origins in the Reconstruction era, 

the statutory predecessor to Section 1500 

arose against the backdrop of a proliferating 

number of suits, in multiple fora, by 

residents of the Confederacy who sought 

compensation from the United States for 

property (typically, cotton) seized during the 

Civil War.5 To curb this duplicative 

litigation, Congress enacted legislation 

divesting the Court of Claims (the trial court 

predecessor to the Court of Federal Claims) 

of jurisdiction when a plaintiff had a related 

action against the United States or an officer 

thereof pending in another court. This 

legislation was reenacted several times, most 

recently in 1948 as Section 1500 of the 

Judicial Code, and the provision’s 

jurisdictional limitation has remained 

essentially unchanged.6 Though the ‘‘cotton 

claimants’’ are long gone, Section 1500’s 

restrictions on the jurisdiction of the Court of 

Federal Claims remain. 

Application of Section 1500 in the context 

of modern-day federal court jurisdiction and 

complex litigation, however, causes serious 

problems for courts and litigants alike. 

Plaintiffs confront difficult questions of 

forum selection and timing when the same 

set of operative facts arguably gives rise to 

two or more claims against the United 

States—for which Congress has otherwise 

waived sovereign immunity—but the Court 

of Federal Claims has exclusive jurisdiction 

over one or more claims, and another federal 

court has exclusive jurisdiction over the 

other claims. Does a claim sound properly in 

contract (within the exclusive jurisdiction of 

the Court of Federal Claims) or in tort (within 

the exclusive jurisdiction of district courts)? 

Where the answer is not clear or could be 

both, the choice of any other court for an 

initial filing could result in dismissal of a 

claimant’s subsequent suit in the Court of 

Federal Claims under Section 1500. When a 

plaintiff prosecutes a challenge to agency 

action in district court based on the 

Administrative Procedure Act (which may 

necessarily precede pursuit of any monetary 

relief for the same claim in the Court of 

Federal Claims) appellate proceedings on his 

or her Administrative Procedure Act 

litigation could well carry past the Court of 

Federal Claims’ six-year statute of 

limitations. Thus, in conjunction with the 

statute of limitations, Section 1500 may 

foreclose full recovery for plaintiffs 

prosecuting meritorious claims in good faith. 

Section 1500 affects a wide variety of 

plaintiffs with many different kinds of 

claims. Federal employees, property owners, 

businesses, local governments, and Indian 

tribes may be affected. The statute may 

present intractable jurisdictional 

conundrums for sophisticated litigants and 

pro se plaintiffs alike. Examples of the 

diverse parties and claims affected include: 

• A federal employee’s claims under the 

Equal Pay Act were transferred to and 

dismissed by the Court of Federal Claims for 

lack of jurisdiction because the Title VII 

claims with which the action was filed in 

district court were considered ‘‘pending’’ 

under Section 1500, even though the district 

court already had entered summary judgment 

on all non-transferred claims.7

• Characterizing the result as ‘‘neither fair 

nor rational,’’ the Court of Federal Claims 

dismissed a Fifth Amendment-based takings 

claim filed pro se by property owners and 

that had been transferred from a district court 

tort action, despite finding that the uncertain 

legal distinction between tort and takings 

actions made plaintiffs’ confusion about the 

appropriate forum ‘‘understandable.’’ 8

• A government contractor’s bid protest 

action was rejected by the Court of Federal 

Claims as jurisdictionally lacking because the 

plaintiff had previously sued in district court 

under the Administrative Procedure Act— 

even though the district court had already 

dismissed on the ground that the plaintiff’s 

exclusive remedy was in the Court of Federal 

Claims.9

• A local government sued by the United 

States over taxation of certain federal office 

buildings counterclaimed for the taxes it 

believed it was owed. The counterclaims 

were transferred to the Court of Federal 

Claims—and dismissed under Section 

1500.10

• An Indian tribe suing in the Court of 

Federal Claims for breach of trust had its 

claims dismissed under Section 1500 because 

it had filed a related action in the district 

court on the same day.11

Because of the barrier it imposes on some 

plaintiffs pursuing cognizable claims against 

the United States, Section 1500 has been 

strongly criticized by litigants, courts, and 

legal scholars as overly harsh, anachronistic, 

unfair, and in need of reform.12

On the other hand, some of the aims 

attributed to Section 1500 have modern 

relevance. In United States v. Tohono 

O’odham Nation, the Supreme Court held 

that Section 1500 applies to any claim filed 

in the Court of Federal Claims that shares 

substantially the same operative facts as a 

claim pending in another court.13 The 

decision thus reversed Federal Circuit 

precedent that allowed the Court of Federal 

Claims to retain jurisdiction over a claim 

under Section 1500 if a plaintiff sought 

different relief in the Court of Federal Claims 

than it sought in another forum. This had the 

effect of expanding the range of cases to 

which Section 1500 could be found to apply. 

The Supreme Court faulted the Federal 

Circuit for saying that it ‘‘could not identify 

‘any purpose that § 1500 serves today.’ ’’ 14

The Court remarked that ‘‘the statute’s 

purpose is clear from its origins with the 

cotton claimants—the need to save the 

Government from burdens of redundant 

litigation—and that purpose is no less 

significant today.’’ 15

In Tohono, the Supreme Court also 

observed that ‘‘[i]f indeed the statute leads to 

incomplete relief’’ or causes undue hardship 

for plaintiffs, citizens are ‘‘free to direct their 

complaints to Congress.’’ 16 After careful 

consideration and consultation with affected 

parties over eighteen months, including the 

Department of Justice, the Conference accepts 

the Court’s invitation to approach Congress. 

While Section 1500’s purpose as articulated 

in Tohono has legitimate aspects, the 

Conference’s research reveals that the statute 

is an undesirably blunt tool for reducing the 

duplicative burdens that may arise from 

simultaneous litigation. Federal courts have 

both the authority and the competence to use 

measures such as stays, transfers, and the 

doctrine of preclusion to prevent double 

recoveries and ease the burdens of 

simultaneous litigation on the Government 

without unfairly depriving plaintiffs of the 

opportunity to pursue all potentially 

meritorious claims against the United 

States.17 Replacing Section 1500 with a 

context-specific judicial management tool for 

simultaneous litigation in different fora 

would also better serve Congress’s various 

waivers of sovereign immunity. 

Accordingly, the Administrative 

Conference recommends that Congress repeal 

Section 1500. The Conference further 

recommends that Congress replace Section 

1500 with a provision that permits plaintiffs 

to bring congressionally authorized suits 

arising from the same set of operative facts 

in the Court of Federal Claims and other 

federal courts at the same time, but also 

contains a presumptive stay mechanism to 

mitigate any burden on the courts or parties 

from simultaneous litigation.18 As a general 


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Federal Register / Vol. 78, No. 10 / Tuesday, January 15, 2013 / Notices 2941 

Section 1500 so long as such repeal was 

‘‘accompanied by a provision for stay or transfer of 

duplicative claims.’’ Judicial Conference of the 

United States, Report of the Proceedings of the 

Judicial Conference of the United States 83 (Sept. 

19, 1995). 

19Application of new procedural legislation to 

pending cases is not uncommon in the law. 

Landgraf v. USI Film Prods., 511 U.S. 244, 274 

(1994) (noting that the Court has ‘‘regularly applied 

intervening statutes conferring or ousting 

jurisdiction, whether or not jurisdiction lay when 

the underlying conduct occurred or when the suit 

was filed.’’) 

1Agencies may use third parties in connection 

with regulatory, procurement, and federal 

assistance programs. This recommendation 

addresses use of third parties in regulatory 

programs. 

2The Administrative Conference has addressed 

various approaches in prior recommendations. See, 

e.g., Recommendation 94–1, The Use of Audited 

Self-Regulation as a Regulatory Technique, 59 FR 

44,701 (Aug. 30, 1994); Recommendation 89–1, Peer 

Review and Sanctions in the Medicare Program, 54 

FR 28,965 (Jul. 10, 1989); Recommendation 78–4, 

Federal Agency Interaction with Private StandardSetting Organizations, 44 FR 1357 (Jan. 5, 1979). 

3Office of Mgmt. & Budget, OMB Circular No. A– 

76 (Revised May 29, 2003). 

4See William J. Novak, Public-Private 

Governance: A Historical Introduction, in 

Government by Contract: Outsourcing and 

American Democracy (Freeman and Minow, eds., 

Harvard University Press, 2009); Martha Minow, 

Public and Private Partnerships: Accounting for the 

New Religion, 116 Harv. L. Rev. 1229, 1230 (2002– 

2003); Jody Freeman, Extending Public Law Norms 

through Privatization, 116 Harv. L. Rev. 1285, 

1286–87 (2002–2003); Jody Freeman, Private 

Parties, Public Functions and the New 

Administrative Law, in Recrafting the Rule of Law: 

The Limits of Legal Order 331 (David Dyzenhaus 

ed., Hart, 1999). 

5See Lesley K. McAllister, Regulation by ThirdParty Verification, 53 B.C. L. Rev. 1 (2012). 

rule, the later-filed action should be the 

subject of the presumptive stay. Nonetheless, 

the Administrative Conference recognizes 

that a stay presumption may not be 

appropriate in all situations. In the absence 

of other compelling considerations, the 

presumption of a stay should not apply 

where the parties agree that the later-filed 

action should proceed. 

In various situations, the interests of justice 

may override the presumption favoring a stay 

in the later-filed action. Such a situation 

might exist, for example, where a decision in 

the first-filed action is dependent on the 

outcome of a later-filed action, or where the 

later-filed action requires factual discovery 

from witnesses who might not be available in 

the future. Alternatively, a plaintiff might 

have a strong interest in obtaining prompt 

resolution in the Court of Federal Claims of 

a claim for just compensation stemming from 

an agency decision, even though the ultimate 

validity of the decision remains at issue in 

an earlier-filed district court action. These 

examples are not intended to be exhaustive. 

The Administrative Conference also 

recommends that repeal of the current 

Section 1500 apply to claims pending at the 

time the Recommendation is enacted.19

Elimination of Section 1500’s jurisdictional 

bar for current litigants would directly serve 

their fairness interests, without substantially 

impairing the Government’s reliance interests 

or disrupting the orderly progress of any 

pending litigation. A specific pronouncement 

by Congress on this important issue would 

also avoid unnecessary litigation over the 

application of the repeal legislation. 

Recommendation 

1. Congress should repeal 28 U.S.C. 1500 

(2012). 

2. Congress should enact a new statute as 

follows: 

28 U.S.C. Section 1500. 

Presumption of Stay. Whenever a civil 

action is pending in the United States Court 

of Federal Claims, or on appeal from the 

Court of Federal Claims, and the plaintiff or 

his assignee also has pending in any other 

court (as defined in section 610 of this title) 

any claim against the United States or an 

agency or officer thereof involving 

substantially the same operative facts, the 

court presiding over the later-filed action 

shall stay the action, in whole or in part, 

until the first action is no longer pending. If 

such actions or appeals were filed on the 

same day, regardless of the time of day, the 

United States Court of Federal Claims action 

shall be treated as having been filed first. 

This provision shall not apply if the parties 

otherwise agree or if the stay is not or ceases 

to be in the interest of justice. 

3. The public law that enacts the provision 

in paragraph two should contain the 

following additional provision: 

EFFECTIVE DATE—[The presumptive stay 

provision] shall apply to all claims pending 

on or after the date of its enactment, unless 

the later-filed action is pending in a court of 

appeals or the Supreme Court. No claim in 

a case pending on or after the date of 

enactment of this Act shall be subject to the 

jurisdictional bar previously imposed by 

former Section 1500 of Title 28, United States 

Code prior to the enactment of this Act. 

Separate Statement of Government Member 

Elana Tyrangiel, Acting Assistant Attorney 

General, U.S. Department of Justice 

The preamble to the Administrative 

Conference of the United States (ACUS) 

Recommendation entitled ‘‘Reform of 28 

U.S.C. Section 1500’’ states: ‘‘After careful 

consideration and consultation with affected 

parties over eighteen months, including the 

Department of Justice, the Conference accepts 

the Court’s invitation to approach Congress 

[to recommend replacing the existing Section 

1500 with a substitute provision formulated 

by ACUS].’’ The Department of Justice writes 

separately to make clear that it did not 

support adoption of the recommendation, 

and that the Department believes ACUS’s 

proposed statutory substitute has serious 

flaws. 

Administrative Conference Recommendation 

2012–7 

Agency Use of Third-Party Programs To 

Assess Regulatory Compliance 

Adopted December 6, 2012 

Federal agencies in diverse areas have 

developed third-party programs to assess 

whether regulated entities are in compliance 

with regulatory standards and other 

requirements. Through these programs, third 

parties assess the safety of imported food, 

children’s products, medical devices, cell 

phones and other telecommunications 

equipment, and electrical equipment used in 

workplaces. Third parties also ensure that 

products labeled as organic, energy-efficient, 

and water-efficient meet applicable federal 

standards. In these regulatory third-party 

programs, regulated entities generally 

contract with and pay third parties to carry 

out product testing, facility inspections, and 

other regulatory compliance assessment 

activities in the place of regulatory agencies. 

Regulatory agencies then adopt new roles in 

coordinating and overseeing these thirdparties.1

In some areas of regulation, Congress has 

directed federal agencies to develop a thirdparty program; in others, regulatory agencies 

have developed programs under existing 

statutory authority. A third-party program is 

just one of many regulatory approaches that 

Congress and agencies may adopt.2

Regulatory objectives may, for example, be 

adequately met by requiring regulated 

entities to self-assess and report their 

compliance (sometimes referred to as ‘‘firstparty certification’’). Also, statutory 

restrictions on information disclosure or 

other legal restrictions may preclude an 

agency from using third parties to conduct 

inspections and other compliance assessment 

activities. Some compliance assessment 

activities may be inherently governmental, 

and thus require performance by government 

personnel.3

Several broad reasons support the growing 

use of third-party programs in federal 

regulation. In many areas, federal regulatory 

agencies are faced with assuring the 

compliance of an increasing number of 

entities and products without a 

corresponding growth in agency resources. 

Third-party programs may leverage private 

resources and expertise in ways that make 

regulation more effective and less costly. In 

comparison with other regulatory 

approaches, third-party programs may also 

enable more frequent compliance assessment 

and more complete and reliable compliance 

data. Because agencies can authorize third 

parties located in other countries to 

undertake assessment activities, third-party 

programs may be particularly effective when 

regulated products or processes are 

international in scope. 

Regulatory third-party programs raise a 

host of important questions. Because thirdparty programs represent a partial 

privatization of the public function of 

implementing and enforcing regulatory law, 

they are a form of ‘‘public-private 

governance,’’ in which private actors play 

roles that are traditionally viewed as 

governmental in nature.4 While third-party 

programs may increase regulatory 

compliance or otherwise improve the 

performance of regulated entities and 

products, these programs also pose risks.5 If 

they are not well-conceived and welloperated, they may both undermine the 

achievement of regulatory goals and impose 

unnecessary costs on agencies and regulated 

entities. 

Frequently, regulatory third-party 

programs use the practices and terminology 


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6American National Standards Institute (ANSI), 

National Conformity Assessment Principles for the 

United States, 3, available at http:// 

publicaa.ansi.org/sites/apdl/Documents/ 

News%20and%20Publications/Brochures/ 

NCAP%20second%20edition.pdf. 

7OMB Circular A–119 Revised §§ 8, 13(e) (Feb. 

10, 1998); NIST, Guidance on Federal Conformity 

Assessment Activities, 65 FR 48,894 (Aug. 10, 

2000). 

of a conformity assessment framework that 

has been developed by international privatesector standards organizations. ‘‘Conformity 

assessment’’ is defined in international 

standards as the ‘‘demonstration that 

specified requirements relating to a product, 

process, system, person, or body are 

fulfilled.’’ 6 International standards also set 

forth how the organizations that conduct 

conformity assessment—‘‘conformity 

assessment bodies,’’ which are usually 

private organizations—should operate. 

International standards have been developed 

for various types of conformity assessment 

bodies, including testing bodies, certification 

bodies, and inspection bodies. 

Recognizing the assessment of regulatory 

compliance as a form of conformity 

assessment, many federal agencies that have 

established third-party programs have relied 

on conformity assessment standards and 

bodies. Agencies may require, for example, 

that third parties that certify conformity with 

regulatory requirements operate in 

accordance with the international standards 

for certification bodies. Federal agencies may 

also require that the third parties be 

accredited by accreditation bodies that 

operate in accordance with international 

accreditation standards. Accreditation bodies 

are established in many countries, and they 

may be either private or governmental. 

Agencies that establish third-party 

programs generally cannot or do not delegate 

their regulatory authority to conformity 

assessment bodies. Rather, agencies authorize 

conformity assessment bodies to perform 

certain technical tasks to assess conformity, 

and regulatory agencies rely on these 

assessments in their own enforcement of 

regulatory requirements. The goal is to 

leverage private expertise and resources to 

serve regulatory objectives. Because the 

regulatory agency must remain ultimately 

responsible for achieving regulatory 

objectives, it is vital to provide public 

oversight of third-party assessment activities. 

A key resource for agencies considering a 

regulatory third-party program is the 

National Institute of Standards and 

Technology (NIST), which has the 

responsibility under the National Technology 

Transfer and Advancement Act of 1995 to 

coordinate government conformity 

assessment activities with similar activities 

of private-sector entities, with the goal of 

avoiding unnecessary duplication and 

complexity. Following Office of Management 

and Budget (OMB) Circular A–119, NIST 

published guidance in 2000 for federal 

agencies on conformity assessment 

activities.7 NIST: (1) provides advice, 

solutions, and program support for 

development of technical standards and 

conformity assessment programs to support 

agency missions; and (2) develops and 

conducts customized standards-related 

workshops and educational events for 

government. 

Recognizing the growing use of third 

parties and the issues it raises, the 

Administrative Conference makes this 

recommendation to assist federal agencies in 

determining whether and how to establish 

third-party programs to assess regulatory 

compliance. The recommendation first 

suggests that, when considering a third-party 

program, agencies should consult relevant 

governmental and nongovernmental 

resources. Next, agencies should compare the 

advantages and disadvantages of a third-party 

approach to a more traditional approach of 

direct governmental compliance assessment. 

Also, if an agency is considering a program 

in which regulated entities could choose 

whether to contract with a third party for 

regulatory compliance assessment, it should 

first determine that regulated entities will 

have sufficient incentives to choose to 

contract with a third party. 

The recommendation then sets forth 

considerations for agencies after they have 

decided to establish a third-party program. 

An agency should design conformity 

assessment programs to be proportional to 

the risks associated with regulatory 

noncompliance. When regulatory 

noncompliance implies serious risk to public 

health, safety, or other important values, 

third-party program rules should guarantee a 

high degree of rigor and independence. When 

possible, the agency should incorporate 

existing conformity assessment standards, 

which may avoid unnecessary duplication 

and create efficiencies for both agencies and 

regulated entities. The agency should also 

ensure appropriate government and public 

access to information about program 

operation. Finally, the agency should 

undertake appropriate oversight activities to 

ensure that the third-party program fulfills its 

regulatory purpose. 

Recommendation 

A. Considerations for a Federal Agency When 

Deciding Whether To Develop a Third-Party 

Program To Assess Regulatory Compliance 

1. Resources. When considering whether to 

develop a third-party program to assess 

regulatory compliance, the agency should 

consult governmental and non-governmental 

resources relating to third-party conformity 

assessment, as appropriate. These include, 

but are not limited to, the National Institute 

of Standards and Technology (NIST); private 

conformity assessment standards, 

particularly the standards of the International 

Organization for Standardization (ISO); and 

conformity assessment bodies, for practical 

input on feasibility and the impacts on the 

regulated entities. 

2. Compare Regulatory Approaches. The 

agency should compare a third-party 

approach with direct governmental 

assessment of compliance. In choosing 

between them, the agency should evaluate 

the advantages and disadvantages of these 

approaches, with consideration of: 

(a) whether third-party conformity 

assessment is likely to be effective in practice 

and as a technical matter for the applicable 

regulatory standards and context; 

(b) the costs and potential delay that may 

result from developing and establishing a 

third-party program; 

(c) the capacity of the agency to perform 

effective oversight and its related costs; 

(d) the potential for the agency to achieve 

efficiencies through reducing its direct 

compliance assessment costs and resource 

needs; 

(e) the costs to regulated entities of paying 

third parties to perform conformity 

assessment activities, which are likely to be 

of particular concern to small businesses; 

(f) the potential for development of a wellfunctioning market in third-party conformity 

assessment services; and 

(g) the benefits that may accrue to 

regulated entities by, for example, receiving 

regulatory approval to market their products 

more quickly or simultaneously satisfying the 

regulatory requirements of other agencies to 

which they are subject, including state 

agencies or agencies in other countries. (See 

Administrative Conference of the United 

States, Recommendation 2011–6, 

International Regulatory Cooperation, 77 FR 

2257, 2259 (Jan. 17, 2012); Exec. Order 

13,609 (May 1, 2012); Exec. Order 13,563 

(Jan. 18, 2011)). 

3. Evaluate Incentives. If an agency is 

contemplating a third-party program in 

which regulated entities would have the 

choice of either contracting with third parties 

or being assessed directly by the agency, the 

agency should evaluate whether sufficient 

incentives exist or can be created to attract 

the participation of regulated entities in the 

third-party program. Incentives for regulated 

entities to utilize third parties may include: 

(a) exemption from a governmental fee that 

would otherwise be applicable; or 

(b) the ability to satisfy the regulatory 

requirements of multiple jurisdictions 

through a single third-party conformity 

assessment engagement. 

B. Considerations for a Federal Agency When 

Establishing a Third-Party Program to Assess 

Regulatory Compliance 

4. Proportionality to the Risk. An agency 

that has decided to establish a third-party 

program to assess regulatory compliance, or 

is directed by statute or other provision of 

law to do so, should design its conformity 

assessment program to be proportional to the 

risks associated with regulatory 

noncompliance. When the risks are high, a 

conformity assessment program should be 

characterized by high degrees of rigor and 

independence. When the risks associated 

with noncompliance are lower, the regulatory 

objective may be achievable with less rigor 

and independence. Types of rules that may 

be established by the agency to help ensure 

rigor and independence include: 

(a) accreditation rules that set high 

standards of competence for the accreditation 

of third parties; 

(b) selection rules that pertain to how 

regulated entities select third parties, 

requiring, for example, that third parties 

disclose conflicts of interests or that 

regulated entities contract with a different 

third party after a specified number of 

assessments; 


srobinson on DSK4SPTVN1PROD with 
Federal Register / Vol. 78, No. 10 / Tuesday, January 15, 2013 / Notices 2943 

1 Federal Civil Penalties Inflation Adjustment Act 

of 1987: Hearing on S.1014 Before the Subcomm. 

on Oversight of Gov’t Mgmt. of the S. Comm. on 

Gov’t Affairs, 101st Cong. 41 (1988) (statement of 

Joseph Wright Jr., Deputy Director of the Office of 

Management and Budget) [hereinafter 1988 Senate 

Hearing]. 

2ACUS, Recommendation 84–7, Administrative 

Settlement of Tort and Other Monetary Claims 

Against the Government, 49 FR 49840 (Dec. 24, 

1984). 

3ACUS, Recommendation 79–3, Agency 

Assessment and Mitigation of Civil Money 

Penalties, 44 FR 38824 (July 3, 1979). 

4Public Law 101–410, 104 Stat. 890 (1990) 

(codified as amended at 28 U.S.C. 2461 note § 2(a)). 

5 Id. § 2(b). See also 1988 Senate Hearing, supra 

note 1, at 3 (statement of Senator Levin) (discussing 

the need to increase penalties to account for 

inflation and improve deterrence and noting that 

civil monetary penalties collected were over $400 

million per year). 

6 Id. §§ 4–5. 

(c) performance rules that require third 

parties to perform a rigorous set of 

assessment activities; and 

(d) reporting rules that require third parties 

to provide sufficient information to the 

agency and the public about the process and 

outcomes of assessment activities. 

5. Use of Existing Conformity Assessment 

Standards. The agency should consider 

relying on existing conformity assessment 

standards, particularly international 

standards that set forth requirements for 

conformity assessment and accreditation 

bodies. Incorporating existing standards may 

reduce costs for the agency and for the 

regulated entities. To evaluate the suitability 

of using existing standards, the agency 

should take into account the following 

considerations: 

(a) When an agency incorporates existing 

conformity assessment standards into its 

program requirements, important concerns 

may arise about the public availability of 

those standards due to the costs of obtaining 

copyrighted materials. When an agency 

considers incorporating copyrighted material 

by reference, the agency should be cognizant 

of issues relating to incorporation by 

reference. (See Administrative Conference of 

the United States, Recommendation 2011–5, 

Incorporation by Reference, 77 FR 2257 (Jan. 

17, 2012)); 

(b) An agency that anticipates the use of 

conformity assessment bodies in other 

countries may particularly benefit by 

recognizing accreditation bodies that operate 

in accordance with international standards 

rather than the agency itself accrediting 

conformity assessment bodies; 

(c) When an agency incorporates existing 

standards into its requirements for third 

parties, it can supplement those standards 

with program-specific rules. An agency may 

require, for example, that in addition to being 

accredited to an international standard, a 

conformity assessment body must satisfy 

accreditation rules specific to the third-party 

program; and 

(d) Agencies should also be aware that 

existing conformity assessment standards 

may include confidentiality provisions that 

apply to information collected during the 

assessment. Agencies should consider when 

disclosure to agencies and/or the public is 

necessary and when confidentiality may be 

justified. Program-specific reporting rules, as 

discussed in section 6 below, may be 

necessary to enable appropriate 

governmental or public access to such 

information. 

6. Access to Information. The agency 

should ensure that both the government and 

the public will have appropriate access to 

information about program operations. An 

agency’s development of third-party program 

rules and guidance should include notice 

and an opportunity for public participation. 

Also, the agency should provide information 

to the public about the roles and identities 

of the third parties associated with a 

regulatory program. Finally, the agency 

should establish reporting rules that require 

third parties to provide information to the 

agency based on the following 

considerations: 

(a) The reporting rules should facilitate 

transparency. Information about the 

compliance of regulated entities should be 

available from the agency to the public, 

comparable to what would be available in the 

absence of a third-party program. Agencies 

may also be able to provide additional 

compliance information to the public that 

was not available before the third-party 

program; 

(b) The reporting rules should facilitate 

appropriate agency oversight. For example, 

conformity assessment bodies can be 

required to report to the agency potential 

conflicts of interest before performing a 

conformity assessment, or provide the dates 

of their assessment activities so that the 

agency can conduct site visits; 

(c) In certain circumstances, the agency 

might have reporting rules that require 

conformity assessment bodies to send 

assessment results directly to the agency; and 

(d) The agency might require conformity 

assessment bodies and/or regulated entities 

to report electronically, which may facilitate 

the provision of information to the public. 

7. Agency Oversight. The agency has a duty 

to exercise oversight to ensure that the thirdparty program is fulfilling its regulatory 

purpose. An agency should generally set 

forth how it intends to conduct such 

oversight. For example, it may annually audit 

a certain number of accreditations or 

conformity assessments, or carry out a market 

surveillance program to test regulated 

products off-the-shelf. In exercising 

oversight, the agency should also take into 

account the following considerations: 

(a) Beyond conducting direct oversight, an 

agency can require third parties to conduct 

additional assessment activities that provide 

further information to the agency about 

program operation. For example, an agency 

may require accreditation bodies annually to 

audit a certain number of conformity 

assessments, or it may require conformity 

assessment bodies to conduct particular 

types of surveillance on products they assess; 

(b) The agency should establish procedures 

for receiving and responding to public 

complaints regarding potential 

noncompliance or other aspects of program 

operation. The agency could, for example, 

require a third party that has assessed the 

conformity of a regulated product or entity to 

investigate a complaint of noncompliance. In 

any event, the agency should ensure that 

complaints are resolved in an appropriate 

and timely manner; and 

(c) The agency should make clear the 

possible adverse actions that it may take 

against third parties that do not comply with 

program rules. A key adverse action is 

removing third parties from the program. 

Third parties may be removed temporarily 

through a suspension of accreditation, or 

permanently through a withdrawal of 

accreditation. 

Administrative Conference Recommendation 

2012–8 

Inflation Adjustment Act 

Adopted December 7, 2012 

Civil monetary penalties are used by the 

Congress and federal agencies to enforce and 

promote compliance with federal laws and 

regulations by deterring violations. These 

laws and regulations serve vital public 

purposes such as ensuring workplace or 

transportation safety, preserving the 

environment, and protecting consumers from 

dangerous products. As the then Deputy 

Director of the Office of Management and 

Budget testified to Congress regarding an 

earlier version of the Federal Civil Penalties 

Inflation Adjustment Act of 1990 (‘‘the Act’’ 

or ‘‘the Inflation Adjustment Act’’), civil 

monetary penalties ‘‘do more than recover 

funds and sanction wrongdoers. They often 

serve as an effective alternative to court 

prosecutions and provide added deterrence 

to would be wrongdoers intending to defraud 

or abuse government programs.’’ 1

This Recommendation and the supporting 

Report build upon important earlier 

Administrative Conference works on agency 

authority to adjust and impose civil monetary 

penalties or on inflation adjustment. For 

example, in Recommendation 84–7, 

Administrative Settlement of Tort and Other 

Monetary Claims Against the Government, 

the Conference encouraged Congress to 

‘‘systematically raise ceilings on all agency 

authority to settle claims where inflation has 

rendered obsolete the present levels.’’ 2

Recommendation 79–3, Agency Assessment 

and Mitigation of Civil Money Penalties, 

examined agency civil monetary penalty 

assessment and mitigation practices.3

Congress enacted the Federal Civil 

Penalties Inflation Adjustment Act of 1990 in 

recognition that ‘‘the power of Federal 

agencies to impose civil monetary penalties 

for violations of Federal law and regulations 

plays an important role in deterring 

violations and furthering the policy goals 

embodied in such laws and regulations.’’ 4

Congress sought to ‘‘improve the collection 

by the Federal Government of civil monetary 

penalties’’ given that ‘‘inflation has 

weakened the deterrent effect of such 

penalties’’ and that the government did not 

‘‘maintain comprehensive, detailed 

accounting of the efforts of Federal agencies 

to assess and collect civil monetary 

penalties.’’ 5 The 1990 statute required the 

President to report annually to Congress on 

federal civil monetary penalties covered by 

the law, and to calculate a cost-of-living 

adjustment for those penalties.6 At the time, 


srobinson on DSK4SPTVN1PROD with 
2944 Federal Register / Vol. 78, No. 10 / Tuesday, January 15, 2013 / Notices 

7Public Law 104–134, 110 Stat. 1321 (1996) 

(excluding penalties under the Internal Revenue 

Code, the Occupational Safety and Health Act, the 

Social Security Act, and the Tariff Act). 8 James Ming Chen, Inflation Based Adjustments 

in Federal Civil Monetary Penalties (2012) (report 

to the Administrative Conference of the U.S.), 

available at www.acus.gov [hereinafter Chen 

Report]; see also United States General Accounting 

Office (GAO), GAO–03–409, Civil Penalties: 

Agencies Unable to Fully Adjust Penalties for 

Inflation Under Current Law (2003). 

9Public Law 104–134, § 31001(s)(1), 110 Stat. 

1321, 1373 (1996). 

10Chen Report, supra at III.A. 

11 Inflation Adjustment Act, supra note 4, § 5. 

12See Chen Report, supra note 8, at II (providing 

an extensive discussion of the legislative history 

and the evolution of the Act’s cost-of-living 

adjustment methodology). 

13 Id. at III.B. 

14 Inflation Adjustment Act, supra note 4, § 5(a); 

Chen Report, supra note 8, at III.C. 

15Chen Report, supra note 8, at III.C. 

16 Id. 

17See Department of Homeland Security, Civil 

Monetary Penalties Inflation Adjustment, 76 FR 

74625, 74,627–28 (Dec. 1, 2011). It is important to 

note, however, that several penalties adjusted in 

2011 had not previously been adjusted or had not 

been adjusted for many years. As a result, the 

distortions caused by the Inflation Adjustment Act 

may have been magnified. 

18 Id. 

agencies did not have legal authority to 

adjust civil monetary penalties directly. Any 

such modification had to be made by the 

passage of new legislation. Due to the slow 

pace of amendments of agency organic 

statutes in recent years, substantial periods of 

time could elapse between specific statutory 

adjustments of civil monetary penalty 

amounts, and the deterrent effect of the 

penalties could be diminished by the effects 

of inflation in the interim period. 

Accordingly, Congress considered adoption 

of a freestanding provision that would 

establish a procedure through which 

regulatory agencies could modify the 

amounts of the penalties they may assess 

without further legislative action. 

In 1996, Congress amended the Federal 

Civil Penalties Inflation Adjustment Act to 

authorize and require the agencies, with 

limited exceptions for four statutory 

programs, to adjust their civil monetary 

penalties for inflation.7 However, the 

implementation data demonstrate that under 

the mechanisms adopted by Congress, the 

adjustments regulatory agencies are 

authorized to make have not allowed the 

penalties to keep pace with the rate of 

inflation that has been experienced.8 The 

existing pattern of adjustments has several 

anomalous features that may not have been 

apparent to the members of Congress when 

they adopted the 1996 legislation. These 

results raise two questions: whether the 

current pattern of penalty adjustments carries 

out the purposes of the statute, and whether 

Congress should adopt a modified 

adjustment procedure under which future 

changes in penalties would more closely 

track the actual rate of inflation. 

Three statutory provisions account for why 

the adjustments lag behind the actual 

inflation rate. First, the Inflation Adjustment 

Act imposes a ten percent cap on initial 

penalty adjustments.9 That cap creates an 

‘‘inflation gap’’ which reflects the sometimes 

considerable difference between penalties, as 

adjusted under the Act, and the levels that 

such penalties would reach if the first 

adjustment had been based on changes in the 

cost of living that had actually occurred. This 

gap, once established in the first capped 

adjustment, grows over time as subsequent 

adjustments are made and can never be 

closed under the current statutory scheme.10

Second, the Act directs federal agencies to 

use Consumer Price Index (‘‘CPI’’) data in 

ways that are out of sync with inflation. 

Because of the Act’s definition of ‘‘cost-ofliving adjustment,’’ agencies must use CPI 

data that are at least seven months old, and 

sometimes as much as 18 months old in their 

adjustments, depending on when the agency 

chooses to update its penalties.11 Adjustment 

of penalties using out-dated data creates a 

phenomenon known as ‘‘CPI lag.’’ The 

legislative history of the Act suggests that the 

‘‘CPI lag’’ may have resulted from changes 

introduced during the iterative legislative 

drafting process, rather than by conscious 

design.12 As with the ‘‘inflation gap’’ issue, 

CPI-based adjustments prescribed by the Act 

result in chronic underadjustment of civil 

monetary penalties relative to actual 

inflation.13

Third, the Act’s elaborate rounding rules 

effectively prevent a second inflation 

adjustment for some penalties until inflation 

has increased by a total of at least 45 

percent.14 In an apparent scrivener’s error, 

the Act ties the rounding of civil monetary 

penalty increases to the amount of the 

underlying civil penalty, rather than the base 

amount of the increase.15 Over time, the 

rounding mechanism has the effect of 

deferring increases for certain penalties, only 

to unleash dramatic penalty increases after a 

long latency period (in some instances 

greater than the actual increase in inflation). 

For example, at an inflation rate of 2.5 

percent, the rounding provisions, coupled 

with the 10 percent initial cap, could prevent 

an agency from adjusting its penalties for 

inflation for 15 years or more.16 As with 

nonadjustment or under-adjustment, overadjustment may also alter the intended effect 

of civil monetary penalties. 

The Department of Homeland Security’s 

2011 adjustment of a host of penalties for 

violations of the Immigration and Nationality 

Act offers an excellent illustration of how the 

Inflation Adjustment Act works in action and 

why Congress should consider revisiting the 

operation of these procedures.17 These 

penalties relate to a number of serious legal 

violations, including: failure to depart the 

U.S. voluntarily, failure to comply with 

removal orders or to remove alien 

stowaways, failure to report an illegal 

landing or desertion of an alien crewmen or 

passenger, or failure to prevent the 

unauthorized landing of aliens.18 The 

following table, which is based on the 

Department’s 2011 inflation adjustment, 

displays: 

• The current penalty amount; 

• The raw amount by which each penalty 

would be increased if adjusted for actual 

inflation; 

• The effect of the Inflation Adjustment 

Act’s constraint on inflation adjustment 

through, for example, capping the penalty 

adjustment at a maximum of a ten percent 

increase; 

• The amount of the penalty increase 

prescribed the Act; and 

• The distortion created by the variance 

between the raw adjusted penalty and the 

adjustment prescribed by the Act. 

Although aggregate data are not available, 

the following example illustrates that the 

distortions created by the Act are 

considerable, particularly when considered 

in relation to the size of the unadjusted 

penalty. 

DEPARTMENT OF HOMELAND SECURITY, IMMIGRATION AND NATIONALITY ACT CIVIL MONETARY PENALTIES INFLATION

ADJUSTMENT (2011) 19

[A] [B] [C] [D] [E] [F] [G] [H] [I] [J] 

INA § Statute Current 

penalty 

Year last 

adjusted 

CPI factor 

(2011) 

(%) 

Raw 

increase 

(2011) 

[B × D] 

Rounder [Inflation 

Adjustment Act 

constraint] 

Rounded increase 

[Inflation 

Adjustment 

Act 

increase] 

Raw 

adjusted 

penalty* 

[B + E] 

Adjusted 

penalty [per 

IAA] 

[B + G] 

Inflation 

Adjustment 

Act 

distortion* 

[I–H] 

INA § 231(g); 8 

U.S.C. 1221(g).

$1,000.00 Enacted 2002 .. 21.16 $211.60 10% statutory cap .. $100.00 $1,211.60 $1,100.00 ¥$111.60 

INA § 234; 8 U.S.C. 

1224.

$2,200.00 1999 ................ 31.15 $685.30 $1,000.00 [rounder] $1,000.00 $2,885.30 $3,200.00 +$314.70 

INA § 243(c)(1)(A); 8 

U.S.C. 

1253(c)(1)(A).

$2,000.00 Enacted 1996 .. 39.10 $782.00 10% statutory cap .. $200.00 $2,782.00 $2,200.00 ¥$582.00 


srobinson on DSK4SPTVN1PROD with 
Federal Register / Vol. 78, No. 10 / Tuesday, January 15, 2013 / Notices 2945 

19This table presents a subset of four penalties 

from the table of penalty adjustments contained in 

the 2011 Federal Register notice from the 

Department of Homeland Security, id., together 

with two additional columns ([H] and [J], denoted 

by a *) from the Chen Report, supra note 8, at IV.C. 

20E.g., GAO, GAO–02–1084R, Compliance with 

the Inflation Adjustment Act (2002) (reporting that 

the Farm Credit Administration had rounded its 

penalty increase by the size of the increase rather 

than the penalty size); GAO, GAO–02–1085R, 

DEPARTMENT OF COMMERCE: COMPLIANCE WITH THE

INFLATION ADJUSTMENT ACT (2002) (reporting that the 

Department of Commerce had rounded its penalty 

increase by the size of the increase rather than the 

penalty size). 

21 E.g., Department of Agriculture, Department of 

Agriculture Civil Monetary Penalties Adjustment, 

75 FR 17555 (Apr. 7, 2010) (remedying erroneous 

exclusion of some civil monetary penalties from 

earlier rounds of adjustments); Department of 

Transportation, Civil Penalties, 75 FR 5244 (Feb. 2, 

2010) (reporting last inflation adjustment six years 

ago, rather than four years ago as the Act’s 

quadrennial interval prescribes). 22See supra notes 20 and 21. 

DEPARTMENT OF HOMELAND SECURITY, IMMIGRATION AND NATIONALITY ACT CIVIL MONETARY PENALTIES INFLATION

ADJUSTMENT (2011) 19—Continued 

[A] [B] [C] [D] [E] [F] [G] [H] [I] [J] 

INA § Statute Current 

penalty 

Year last 

adjusted 

CPI factor 

(2011) 

(%) 

Raw 

increase 

(2011) 

[B × D] 

Rounder [Inflation 

Adjustment Act 

constraint] 

Rounded in- crease 

[Inflation 

Adjustment 

Act 

increase] 

Raw 

adjusted 

penalty* 

[B + E] 

Adjusted 

penalty [per 

IAA] 

[B + G] 

Inflation 

Adjustment 

Act 

distortion* 

[I–H] 

INA § 243(c) (1)B); 8 

U.S.C. 1253(c) 

(1)(B).

$5,000.00 Enacted 1996 .. 39.10 $1,955.00 10% statutory cap .. $500.00 $6,955.00 $5,500.00 ¥$1,455.00 

* * * * * 

The issues with the Federal Civil Penalties 

Inflation Adjustment Act described above 

arise from its plain language, and federal 

regulatory agencies may not themselves 

adjust the penalty levels to track the inflation 

rate more closely. As the Government 

Accountability Office has found, some 

agencies have attempted to adjust civil 

monetary penalties in common-sense ways 

that better reflect the real economic impact 

of inflation.20 However, these good faith 

efforts objectively did not comply with the 

plain language of the Inflation Adjustment 

Act. They also subjected agencies to the risk 

of legal challenges to penalty adjustments. 

Review of Federal Register notices also 

shows that several agencies have failed to 

comply with the statutory requirement to 

review and, if necessary, adjust penalties at 

least once every four years.21 Regular penalty 

adjustments ensure the continued deterrent 

effect of civil monetary penalties. This is 

especially important where maximum 

penalties are imposed by agencies to punish 

the worst offenders. It is essential to 

enforcement policy that the penalties have 

their intended deterrent effect and are not 

simply viewed as a cost of doing business. 

The Administrative Conference therefore 

recommends that Congress reexamine the 

procedures set forth in the Inflation 

Adjustment Act and make such changes to 

the Act as are appropriate. The 

Recommendation also advises agencies to 

comply with the letter of the law, by 

applying the rounding adjustment based on 

the size of the penalty, rather than the size 

of the increase, and by making adjustments 

every four years. Agencies should be mindful 

of the financial or other adverse 

consequences of failing to adjust civil 

monetary penalties regularly, in compliance 

with the Inflation Adjustment Act, or of 

failing to comply with the adjustment 

provisions currently set forth in the Act.22

The current Recommendation is 

intentionally circumscribed in scope. The 

underlying research commissioned by the 

Conference examined only the existing 

statutory process for inflation adjustments 

under the Inflation Adjustment Act. The 

Recommendation does not address other 

potential issues involving the current 

process, including: The appropriateness of 

the Act’s existing exemption for civil 

monetary penalties under four statutes or 

whether additional agency programs should 

be exempt; the effectiveness of selfenforcement by federal agencies; obligations 

for reporting compliance; the lack of a central 

authority for administering the Act; 

alternative metrics for measuring inflation; or 

alternative forms of civil monetary penalties 

(e.g., percentages rather than fixed values). 

These important issues warrant thoughtful 

consideration and may lead to future 

Conference recommendations. 

Recommendation 

A. Recommendation to Congress 

1. Congress should change the current 

statutory framework by which agencies must 

make periodic inflation adjustments to civil 

monetary penalties set forth in the Federal 

Civil Penalties Inflation Adjustment Act, 

codified as amended at 28 U.S.C. 2461 note 

(2012), as appropriate in light of the 

distortions resulting from: 

(a) The ‘‘inflation gap’’ created by a ten 

percent cap on the initial penalty adjustment, 

which grows over time and can never be 

closed under the current statutory provision. 

(b) The ‘‘CPI lag’’ that results from the 

statute’s definition of the term ‘‘cost-of-living 

adjustment,’’ which directs agencies to base 

their adjustments on CPI data that are at least 

seven months old and may be as much as 18 

months old, and thus lag behind the actual 

inflation rate. 

(c) The rounding rules that tie rounding of 

increases to the size of the penalty, rather 

than the size of the increase, and that may 

result in significant periods of nonadjustment 

of civil monetary penalties followed by 

abrupt and substantial increases. 

B. Recommendation to Agencies 

2. Federal agencies subject to the Inflation 

Adjustment Act should review and, if 

necessary, adjust their civil monetary 

penalties for inflation at least once every four 

years, as required by the Act. Agencies 

should review their implementation 

procedures and practices to ensure that 

inflation adjustments comply with the plain 

language of the Act, and particularly its 

rounding provisions. 

[FR Doc. 2013–00674 Filed 1–14–13; 8:45 am] 

BILLING CODE 6110–01–P 

DEPARTMENT OF AGRICULTURE 

Submission for OMB Review; 

Comment Request 

January 9, 2013. 

The Department of Agriculture has 

submitted the following information 

collection requirement(s) to OMB for 

review and clearance under the 

Paperwork Reduction Act of 1995, 

Public Law 104–13. Comments 

regarding (a) Whether the collection of 

information is necessary for the proper 

performance of the functions of the 

agency, including whether the 

information will have practical utility; 

(b) the accuracy of the agency’s estimate 

of burden including the validity of the 

methodology and assumptions used; (c) 

ways to enhance the quality, utility and 

clarity of the information to be 

collected; (d) ways to minimize the 

burden of the collection of information 

on those who are to respond, including 

through the use of appropriate 

automated, electronic, mechanical, or 

other technological collection 

techniques or other forms of information 

technology should be addressed to: Desk 

Officer for Agriculture, Office of 

Information and Regulatory Affairs, 

Office of Management and Budget 

(OMB), 

OIRA_Submission@OMB.EOP.GOV or 

fax (202) 395–5806 and to Departmental 

Clearance Office, USDA, OCIO, Mail 

Stop 7602, Washington, DC 20250– 


srobinson on DSK4SPTVN1PROD with