Civil Monetary Penalties Inflation Adjustment, 13520-13525 [2019-06732]

Agencies

• Department of Justice

[Federal Register Volume 84, Number 66 (Friday, April 5, 2019)]
[Rules and Regulations]
[Pages 13520-13525]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-06732]


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DEPARTMENT OF JUSTICE

28 CFR Parts 20, 22, 36, 68, 71, 76, and 85

[Docket No. OAG 148; AG Order No. 4424-2019]


Civil Monetary Penalties Inflation Adjustment

AGENCY: Department of Justice.

ACTION: Final rule.

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SUMMARY: The Department of Justice is finalizing without change an 
interim rule published on June 30, 2016, adjusting for inflation the 
civil monetary penalties assessed or enforced by components of the 
Department, in accordance with the provisions of the Bipartisan Budget 
Act of 2015.

DATES: Effective date: This rule is effective April 5, 2019.

FOR FURTHER INFORMATION CONTACT: Robert Hinchman, Senior Counsel, 
Office of Legal Policy, U.S. Department of Justice, Room 4252 RFK 
Building, 950 Pennsylvania Avenue NW, Washington, DC 20530, telephone 
(202) 514-8059 (not a toll-free number).

SUPPLEMENTARY INFORMATION: In this final rule, the Department of 
Justice (Department) finalizes the interim rule that was published on 
June 30, 2016 (81 FR 42491). Readers may refer to the Supplementary 
Information (also known as the preamble) of the Department's interim 
rule for additional background information regarding the statutory 
authority for adjustments of civil monetary penalty amounts for 
inflation and the Department's past implementation of inflation 
adjustments. After consideration of the public comments submitted in 
response to the interim rule, the Department is finalizing the interim 
rule without change for the reasons discussed below.
    This final rule makes no change in the amount of the civil 
penalties as adjusted in the 2016 interim rule, which is applicable to 
civil penalties assessed after August 1, 2016. Since the publication of 
the interim rule, the Department has twice published other rules that 
have further adjusted the amounts for civil penalties assessed in 
subsequent calendar years, as required by law. On February 3, 2017 (82 
FR 9131), the Department published a final rule adjusting for inflation 
the civil monetary penalties that it assesses or enforces for penalties 
assessed after February 3, 2017, and on January 29, 2018 (83 FR 3944), 
the Department published a final rule adjusting for inflation the civil 
monetary penalties that it assesses or enforces for penalties assessed 
after January 29, 2018. But since this final rule finalizes the 
provisions of the 2016 interim rule without change, there is no need 
for any revisions to the adjusted civil penalty amounts that are 
applicable for penalties assessed in 2016, 2017, or 2018.

I. Revised Statutory Process for Implementing Annual Inflation 
Adjustments

    Section 701 of the Bipartisan Budget Act of 2015, Public Law 114-74 
(Nov. 2, 2015), titled the Federal Civil Penalties Inflation Adjustment 
Act Improvements Act of 2015 (``2015 Amendments''), 28 U.S.C. 2461 
note, substantially revised the prior provisions of the Federal Civil 
Monetary Penalties Inflation Adjustment Act of 1990, Public Law 101-410 
(``Inflation Adjustment Act''), and substituted a different statutory 
formula for calculating inflation adjustments on an annual basis.
    In accordance with the provisions of the 2015 Amendments, on June 
30, 2016 (81 FR 42491), the Department of Justice published an interim 
final rule with request for comments (``interim rule'') to adjust for 
inflation the civil monetary penalties assessed or enforced by 
components of the Department.
    As discussed in greater detail in the preamble to the interim rule, 
the 2015 Amendments set forth a new method of calculation for the 
initial adjustment following the 2015 Amendments. For the initial 
adjustment, the ``cost-of-living adjustment,'' which sets the amount by 
which the maximum civil

[[Page 13521]]

monetary penalty or the range of minimum and maximum civil monetary 
penalties, as applicable, would be increased, is defined as ``the 
percentage (if any) for each civil monetary penalty by which the 
Consumer Price Index for the month of October 2015 exceeds the Consumer 
Price Index for the month of October of the calendar year during which 
the amount of such civil monetary penalty was established or adjusted 
under a provision of law other than this Act.'' Public Law 114-74, sec. 
701(b)(2)(B) (amending section 5(b) of the Inflation Adjustment Act). 
This adjustment is to be applied to ``the amount of the civil monetary 
penalty as it was most recently established or adjusted under a 
provision of law other than this Act,'' and ``shall not exceed 150 
percent of the amount of that civil monetary penalty on the date of 
enactment of'' the 2015 Amendments. Id.
    The 2015 Amendments authorized the Department, with the concurrence 
of the Director of the Office of Management and Budget, to make a 
determination in certain circumstances to increase a civil penalty by 
less than the otherwise required amount. However, the interim rule did 
not invoke that authority. The adjustments to existing civil monetary 
penalties set forth in the interim rule were calculated pursuant to the 
statutory formula.
    The 2015 Amendments also amended section 6 of the Inflation 
Adjustment Act to provide that ``[a]ny increase under this Act in a 
civil monetary penalty shall apply only to civil monetary penalties, 
including those whose associated violation predated such increase, 
which are assessed after the date the increase takes effect.''

II. Adjustments Made in the Department's June 2016 Interim Rule for 
Civil Monetary Penalties

    In accordance with the 2015 Amendments, the adjustments made by the 
Department's interim rule were based on the Bureau of Labor Statistics' 
Consumer Price Index for October 2015. The inflation factors used in 
Table A in the preamble of the interim rule were provided to all 
federal agencies in the Office of Management and Budget Memorandum for 
the Heads of Executive Departments and Agencies M-16-06 (Feb. 24, 
2016), https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/memoranda/2016/m-16-06.pdf (last visited February 26, 2019). Table A in 
the preamble of the interim rule provided the new penalties, as 
adjusted for inflation by the interim rule, as well as the calculations 
upon which the inflation adjustments were made.
    The interim rule revised 28 CFR 85.3 to provide that the inflation 
adjustments set forth in that section continue to apply to violations 
occurring on or before November 2, 2015, the date of enactment of the 
2015 Amendments, as well as to assessments made before August 1, 2016, 
whose associated violations occurred after November 2, 2015. Other 
existing Department regulations provided for inflation adjustments of 
other civil penalties under prior law, such as the civil penalties 
under certain provisions of the immigration laws in 28 CFR 68.52. Those 
other existing regulations were also revised to provide that the 
preexisting regulatory inflation adjustments continue to apply to 
violations occurring on or before November 2, 2015, as well as to 
assessments made before August 1, 2016, whose associated violations 
occurred after November 2, 2015.
    The interim rule added a new provision, 28 CFR 85.5, adjusting for 
inflation the civil monetary penalties within the jurisdiction of the 
Department of Justice for purposes of the Inflation Adjustment Act, as 
amended by the 2015 Amendments.
    Other agencies are responsible for the inflation adjustments of 
certain other civil monetary penalties that the Department's litigating 
components bring suit to collect. The reader should consult the 
regulations of those other agencies for inflation adjustments to those 
penalties.

III. Inflation Adjustments for Future Years

    This rule finalizes the interim rule that implemented the initial 
adjustments of civil penalty amounts for civil penalties, effective on 
August 1, 2016. After the initial adjustments made in 2016, the 2015 
Amendments provide a different process for annual adjustments in future 
years. The Department will be implementing the adjustment of civil 
penalties for future years in subsequent actions to be published in the 
Federal Register. As noted above, the Department has already published 
rules on February 3, 2017, and January 29, 2018, making the required 
annual adjustments in civil penalty amounts.

IV. Comments Received on the Interim Rule

    Before the interim rule's comment period closed on August 29, 2016, 
the Department received comments from six commenters. The Department 
has carefully considered all the comments, which are grouped and 
discussed below by subject with the Department's responses.

A. Rounding of the Adjusted Civil Penalty Amounts

    One comment asked the Department to simplify civil penalty 
adjustments by using more even amounts. In particular, the interim rule 
adjusted the False Claims Act civil penalties to a minimum of $10,781 
and a maximum of $21,563, and the commenter suggested rounding those 
amounts to $10,750 and $21,500, respectively.
    In response, the Department notes that the 2015 Amendments require 
that the adjusted civil penalties be calculated under the statutory 
formula to the nearest multiple of $1. See Public Law 114-74, sec. 
701(b)(2)(A) (amending section 5(a) of the Inflation Adjustment Act). 
Accordingly, unlike the approach of the former statutory process, the 
Department is not authorized to round the adjusted civil penalties to 
the nearest $50 or $100 or some other amount.

B. Comments With Regard to Possible Assessment of Large Amounts of 
Civil Penalties for Many Minor Violations; Concerns About ``Grossly 
Excessive'' Penalties and ``Excessive Fines''

    Several comments expressed concerns that many penalties are 
assessed on a ``per violation'' basis without considering the magnitude 
of the harm or damage; they object that, if there are a large number of 
minor violations, a very large penalty could result that far exceeds 
the loss attributable to those violations. The comments also raised 
concerns about penalty amounts possibly being so high as to violate the 
limits under the Due Process Clause's prohibition of penalties that are 
``grossly excessive'' or the Eighth Amendment's prohibition against 
``excessive fines.''
    These concerns were particularly focused on the assessment of 
penalties under the False Claims Act, 31 U.S.C. 3729 et seq., although 
commenters also expressed similar concerns that the interim rule 
resulted in a near doubling of adjusted civil penalties under other 
laws including the Anti-Kickback Act, the Americans With Disabilities 
Act, and the Controlled Substances Act.\1\ For

[[Page 13522]]

these reasons, commenters suggested that the Department should not be 
increasing the applicable civil penalties as set forth in the interim 
rule.
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    \1\ With regard to the Americans With Disabilities Act penalties 
in particular, the Department notes that the civil penalty amounts 
for violations of that law had already been adjusted by regulation 
pursuant to the prior inflation adjustment formula, for example, 
from a maximum of $55,000, for first violations occurring on or 
after September 29, 1999, to a maximum of $75,000 for first 
violations occurring on or after April 28, 2014. Because of this 
2014 increase, the adjusted civil penalty maximum amount of $89,078 
in the interim rule for first violations, effective for civil 
penalty assessments after August 1, 2016, represents an increase of 
less than 19 percent from the 2014 level of $75,000 and not a near 
doubling as asserted by the comment. Compare 28 CFR 36.504(a)(3)(i), 
with 81 FR 42491, at 42495 (June 30, 2016).
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    For the reasons explained below, the Department has considered 
these arguments but has decided not to invoke the authority under the 
2015 Amendments to set the civil penalty amounts at levels less than 
those adjustments as provided under the interim rule. Under the 2015 
Amendments, the relevant civil penalty amounts were adjusted to conform 
to the levels of inflation since the penalties were last established or 
adjusted under a provision of law other than the Inflation Adjustment 
Act. (The only exceptions to that straight inflation adjustment were 
the result of the statutory cap on adjustments that Congress provided 
to keep certain adjusted civil penalty amounts from increasing by more 
than 150 percent of existing levels.)
    The Department understands the general concern that there may be a 
potential for imposition of a large penalty that, under the particular 
circumstances of specific violations, might be argued to be 
disproportionate or excessive. The Department notes, however, that the 
2016 interim rule being finalized by this final rule only established 
the maximum amount (and, for some penalties, the minimum amount) that 
could be imposed for violations. This rule does not require the 
Department to seek the maximum number or amount of penalties that may 
be available in any particular case.
    In particular, the commenters' concerns about the potential 
imposition of numerous large civil penalty amounts for a series of 
small dollar-amount violations can be addressed in how the civil 
penalty provisions are administered in individual cases rather than by 
adjusting the amount of each civil penalty by less than the statutory 
formula requires. One commenter gave the example of the potential 
imposition of 1,000 separate civil penalties totaling over $21 million 
in response to a series of 1,000 false claims for prescriptions of $10 
each (i.e., where the loss to the government totaled $10,000); another 
commenter offered a hypothetical where a series of 15,000 occurrences 
of a $2.50 billing mistake might lead to a healthcare institution being 
subject to multiple penalties totaling over $161 million. In these 
examples, the concern is about the application of the civil penalties 
to particular circumstances.
    The Department has concluded that the prospect of this kind of 
potential imposition of multiple separate penalties in particular cases 
does not support an across-the-board reduction in the inflation 
adjustment for the individual penalties in all instances in which they 
may be imposed. The statutory civil penalties as provided by Congress, 
and as adjusted pursuant to the 2015 Amendments, are applicable to all 
statutory violations--regardless of the amounts at issue for particular 
violations. To the extent that commenters are objecting that the civil 
penalty amounts set by the False Claims Act or other statutes were 
already disproportionately high, i.e., prior to the enactment of the 
2015 Amendments, and offering that as a reason for not adopting the 
inflation adjustments called for by the 2015 Amendments, the crux of 
their complaint lies in the amount initially established or adjusted by 
Congress, not in how the penalties are adjusted for inflation pursuant 
to the 2015 Amendments.
    Instead of lowering the inflation adjustment amount for a 
particular civil penalty across the board, which would affect all 
applications, whether they involved large or small dollar amounts, the 
Department believes that a fair result can be achieved in how civil 
penalties are sought in particular cases, as well as during settlement 
discussions, where the parties have an opportunity to discuss 
individual circumstances, the severity of the damage or harm caused by 
the violation, and any mitigating factors in favor of a less-than-
maximum penalty. Moreover, in cases that proceed to litigation, the 
Department may elect to pursue fewer than the maximum number of 
actionable penalties or an amount less than the maximum penalty amount. 
Finally, we note that the parties will continue to be able to challenge 
the imposition of particular civil penalty assessments in court that 
they regard as disproportionate or excessive given the circumstances of 
the particular case.
    Finally, the Department notes that the statute only permits 
applying a lower inflation adjustment in certain circumstances (i.e., 
where the head of the agency determines that ``(A) increasing the civil 
monetary penalty by the otherwise required amount will have a negative 
economic impact; or (B) the social costs of increasing the civil 
monetary penalty by the otherwise required amount outweigh the 
benefits'' and the Director of the Office of Management and Budget 
concurs). The Department has considered the concerns presented in the 
public comments and continues to believe that these circumstances are 
not present with respect to these inflation adjustments.
    For the foregoing reasons, the Department is not reducing the 
inflation adjustments in the 2016 interim rule for violations of the 
statutory provisions in question.

C. Comments Concerning the Calculation of the Adjustments for the False 
Claims Act

    Two comments challenged the Department's calculation of the 
inflation adjustments for violations of the False Claims Act (FCA), 
contending that the Department erred by overlooking the 2009 amendments 
to the FCA in the Fraud Enforcement and Recovery Act of 2009 (FERA), 
Public Law 111-21, sec. 4 (2009). These commenters assert that the base 
year for making the inflation adjustment calculations should be 2009, 
rather than 1986, because in their view the 2009 amendments to the FCA 
constitute the last time the FCA penalties were ``established or 
adjusted'' by law other than the Inflation Adjustment Act. See Public 
Law 114-74, sec. 701(b)(2)(B) (amending section 5(b) of the Inflation 
Adjustment Act).
    In support of their argument, the commenters point to statutory 
language added to the FCA in 2009 to clarify that the 1986 penalty 
amounts are subject to adjustment by the Inflation Adjustment Act. 
Specifically, the FCA was amended in 2009 to state that a defendant is 
liable to the United States ``for a civil penalty of not less than 
$5,000 and not more than $10,000, as adjusted by the [Inflation 
Adjustment Act].'' Public Law 111-21, sec. 4(a)(1) (emphasis added). 
The commenters note that, at the time the FCA was amended in 2009, the 
original statutory penalties ranging from $5,000-$10,000 had been 
adjusted for inflation by regulation to a range of $5,500-$11,000. The 
commenters suggest that because the 2009 amendments clarified that the 
$5,000-$10,000 range should be adjusted by the Inflation Adjustment 
Act, and, because the range had already been adjusted for inflation by 
regulation to $5,500-$11,000, the 2009 amendments to the FCA represent 
a time when Congress ``established or adjusted'' the penalty amount 
``under a provision of law other than'' the Inflation Adjustment Act. 
See Public Law 114-74, sec. 701(b)(2)(B) (amending section 5(b) of the 
Inflation Adjustment Act). The commenters contend that, therefore, the 
Department's inflation adjustment for 2016 should use a base year of 
2009 for the inflation calculations for the FCA, instead of 1986 when 
the civil penalties

[[Page 13523]]

of $5,000 to $10,000 were originally established by Congress. The 
commenters note that using 2009 as the base year would yield a 
substantially smaller increase in the civil penalty range in the 2016 
interim rule for each FCA violation.
    The Department does not find the commenters' analysis persuasive. 
The 2015 Amendments make clear that the base year for the ``cost-of-
living adjustment'' for the initial inflation adjustment is the 
``calendar year during which the amount of [the relevant] civil 
monetary penalty was established or adjusted under a provision of law 
other than [the Inflation Adjustment] Act.'' Public Law 114-74, sec. 
701(b)(2)(B) (amending section 5(b) of the Inflation Adjustment Act). 
The relevant question, then, is whether the 2009 amendments to the FCA 
``established or adjusted'' the FCA civil monetary penalties ``under a 
provision of law other than'' the Inflation Adjustment Act. We conclude 
that they did not.
    The statutory amendments enacted by Congress in 2009 did not 
specify the amounts of $5,500 to $11,000 as the range of the adjusted 
civil penalty amounts at that time, and, following these amendments, 
the civil penalty amounts remained exactly the same as they had been 
before the 2009 amendments, as did the methodology for calculating 
those amounts. The statutory text added to the FCA in 2009 did not 
``establish[] or adjust[]'' the civil monetary penalties pursuant to 
the FERA, rather it merely provided clarification that the 1986 penalty 
amounts of $5,000 and $10,000 were intended to remain subject to 
previous and future inflation adjustments under the Inflation 
Adjustment Act. Moreover, if pre-2015 applications of the Inflation 
Adjustment Act itself do not qualify as ``establish[ing] or 
adjust[ing]'' the civil penalty amounts for purposes of the 2015 
Amendments--as the 2015 Amendments make quite clear--then a statutory 
provision merely clarifying the continued applicability of the 
Inflation Adjustment Act to the 1986 penalty amounts also should not 
qualify as ``establish[ing] or adjust[ing]'' the civil penalty amounts 
for purposes of the 2015 Amendments. For these reasons, we conclude 
that the interim rule correctly used 1986, instead of 2009, as the 
appropriate base year for the adjustment of the relevant penalties.

D. Comments on Penalty Adjustments of ``Immigration-Related Penalties''

    The Department received several related comments concerning the 
application of the inflation adjustments to penalties for violations of 
the requirements in section 274A of the Immigration and Nationality Act 
(INA), 8 U.S.C. 1324a, for verifying the identity and employment 
authorization of individuals hired for employment in the United States.
    As background, the Department notes that the process for imposition 
of civil penalties for violations of section 274A of the INA is divided 
between two separate Departments. The Department of Homeland Security 
(DHS)'s Immigration and Customs Enforcement (ICE) is responsible for 
enforcing the requirements of section 274A of the INA and of DHS's 
implementing regulations at 8 CFR part 274a. If, however, the subject 
of a civil penalty sought by ICE requests a hearing, the hearing is 
conducted and adjudicated by an administrative law judge (ALJ) in the 
Office of the Chief Administrative Hearing Officer (OCAHO), which is 
part of the Department's Executive Office for Immigration Review 
(EOIR). The Department's rules for conduct of such ALJ hearings are 
contained in 28 CFR part 68, and the civil penalty provisions are set 
forth in 28 CFR 68.52. Consistent with the statutory structure 
providing for EOIR to issue final decisions in cases where a hearing is 
sought, the Department's 2016 interim rule adjusted the civil penalty 
amounts set forth in Sec.  68.52. DHS published its own rule on July 1, 
2016 (81 FR 42987), that adjusted civil penalty amounts set forth in 
the DHS regulations, including adjustment of the applicable civil 
penalties in 8 CFR part 274a.
    The comments on the Department's interim rule included the 
following contentions, and are accompanied by the Department's 
responses:
     The Department should refrain from increasing the civil 
penalty for the failure to notify the government if an employee 
continues to work after a final non-confirmation of the employee's 
employment eligibility in E-Verify, until the Department of Labor (DOL) 
issues a revised regulation addressing the ``practical application of 
the `failure to notify' rule.''
    In response, the Department notes that this concern pertains not to 
the amount of the 2016 inflation adjustment to the civil penalty in 
question, as such, but instead to how employers who use the E-Verify 
system can provide the appropriate notification to the government of 
the employer's actions with respect to a non-confirmed employee. This 
is an operational issue pertaining to the applicable legal 
requirements, and the Department has concluded that this concern does 
not warrant a reduction in the otherwise-applicable inflation 
adjustments for the civil penalty in question.
    This comment also contended that, as a notification process for 
final non-confirmations is built into E-Verify, and considering the 
very limited situations in which an employer would continue to employ 
the individual following a final non-confirmation, it may not even be 
necessary to raise this penalty. In response, the Department notes that 
any such relevant concerns can be presented to the extent they may 
arise in individual cases, but concludes that these considerations do 
not warrant a change in the calculations of the applicable civil 
penalty adjustments as provided by the 2015 Amendments.
     The Department should not increase the civil penalties for 
employment eligibility verification violations under 8 U.S.C. 
1324a(e)(5) (otherwise known as ``Form I-9 violations'' or ``paperwork 
violations''), to avoid unduly penalizing employers for innocent 
mistakes, and to avoid burdening the Department with increased 
litigation before OCAHO.
    In response, the Department believes it is appropriate to follow 
the statutory formula with respect to the 2016 interim rule's 
adjustment of these penalties. In the case of civil penalties for so-
called paperwork violations under 8 U.S.C. 1324a(e)(5), Congress in 
1986 had set a minimum penalty of $100 and a maximum penalty of $1,000. 
Under the previous formula for inflation adjustments, these penalties 
had only been adjusted for inflation by 10 percent (to $110 and $1,100, 
respectively), since they were first enacted in 1986. See 28 CFR 
68.52(c)(5) (2016). (These particular penalties fell below the 
``rounding threshold'' under the former provisions of the Inflation 
Adjustment Act at the time other immigration-related civil penalties 
were adjusted in 2008, despite a 25-percent increase in inflation since 
the adoption of the 10 percent inflation adjustment in 1999. See 73 FR 
10130, 10133 (Feb. 26, 2008).) As a result, the penalties had lost much 
of their deterrent effect relative to the deterrent effect of the 
penalty amounts originally established by Congress thirty years ago. 
The adjustments to the civil penalties for paperwork violations 
promulgated in the 2016 interim rule simply restored the present-day 
deterrent effect of the relevant penalties to the deterrent effect of 
the penalty levels originally set by Congress by adjusting the 
penalties for the inflation that has occurred since the penalties were 
originally set.
    Moreover, as the commenter notes, Congress has already provided a 
response to the concerns voiced by the commenter regarding innocent 
mistakes,

[[Page 13524]]

by enacting section 411(b) of the Illegal Immigration Reform and 
Immigrant Responsibility Act of 1996, which allows a good faith defense 
for technical and procedural violations unless the employer failed to 
correct errors within 10 business days after notice, or there was a 
pattern or practice of violations. In the course of OCAHO hearings, the 
ALJs are able to take account of such contentions regarding innocent 
mistakes in setting the civil penalties to be imposed in individual 
cases. The Department does not agree that these arguments would warrant 
a decision not to adjust the civil penalties here for inflation, 
particularly since setting the civil penalties at a lower level would 
be applicable to all violations, whether intentional or innocent.
    It is speculative to suggest that increased penalties will lead to 
increased litigation before OCAHO, but OCAHO continuously evaluates its 
caseload and staffing needs, and pursues staffing and resource changes 
whenever necessary and appropriate. The prospect of increased 
litigation is not a convincing reason for the Department not to abide 
by the statutory formula.
    Finally, as the Department believes it is appropriate for the 2016 
interim rule to follow the statutory formula with respect to the civil 
penalties for employment eligibility verification violations, the 
Department respectfully declines to invoke the authority, under section 
4(c) of the Inflation Adjustment Act, to increase these penalties by 
less than the required amount. See Public Law 114-74, sec. 701(b)(1)(D) 
(adding Section 4(c) to the Inflation Adjustment Act). The Department 
similarly declined to invoke this authority in the 2016 interim rule 
adjusting these civil monetary penalties. See 81 FR 42491, 42493.
     The Department's increases in the civil penalty amounts 
should be delayed until DHS publishes its final rule on technical and 
substantive violations pertaining to Form I-9 and issues its new Form 
I-9.
    In response, as noted above, the Department believes it is 
appropriate to follow the statutory formula with respect to these 
penalties, among other things, in order to maintain the penalties' 
deterrent effect, and the Department does not believe that invoking the 
authority of section 4(c) of the Inflation Adjustment Act is 
appropriate in this context. As the commenter notes, guidance on the 
distinction between technical and substantive violations is already 
available to the public, both in memoranda adopted or issued by ICE and 
in numerous published precedent decisions from OCAHO. The fact that DHS 
has not yet issued its final rule on technical versus substantive 
violations does not justify delaying implementation or adjusting the 
penalty by less than the statutory formula requires. Moreover, since 
the commenter has submitted this comment, DHS has published its revised 
Form I-9. (See Revised Form I-9, issued Nov. 14, 2016; see also Revised 
Form I-9, issued July 17, 2017). To the extent that the commenter has 
comments or concerns about DHS's revisions to the Form I-9, those are 
appropriately raised with DHS pursuant to the public comment process 
for information collections under the Paperwork Reduction Act. 
Accordingly, the Department does not believe that the increase in the 
civil penalty amounts should be delayed, or set at amounts less than 
the amounts set forth in the 2016 interim rule, which follow the 
statutory formula set forth in the 2015 Amendments.
     The Department and DHS should increase the civil penalties 
for paperwork violations by no more than 20 percent of the preexisting 
civil penalties, and no more than 10 percent for violations under 8 
U.S.C. 1324a(e)(5) where the employer can produce documentation 
demonstrating that the employee was verified through the E-Verify 
system.
    In response, the Department notes that this is an alternative to 
the commenter's prior arguments, which contended that the inflation 
adjustments for paperwork violations should be eliminated. This 
alternative argument is that if the relevant penalties are adjusted for 
inflation pursuant to the 2015 Amendments, the inflation adjustments as 
set in the 2016 interim rule should be capped at 20 percent generally, 
and at 10 percent where the employer can produce documentation 
demonstrating that the relevant employees were verified through the E-
Verify system. As explained above, the Department does not agree with 
the commenter's contentions that the inflation adjustments of the civil 
penalties for these violations of the employment eligibility 
verification requirements should be eliminated altogether. The 
Department views the relevant adjustments derived from the statutory 
formula as appropriate, and has concluded that invoking its authority 
to reduce the adjustments pursuant to section 4(c) of the Inflation 
Adjustment Act would not be appropriate in this context.
     The Department should use any additional funds generated 
by the inflation adjustment for Form I-9 paperwork violations to 
increase staffing and training throughout the relevant agencies.
    In response, the Department notes that it does not itself collect 
the penalties assessed under the relevant provisions of section 274A of 
the INA, 8 U.S.C. 1324a, and thus it cannot dictate how any additional 
funds will be used.

E. Comment Asserting That the Inflation Adjustments in the Interim Rule 
Should Not Be Applicable to Violations Occurring Prior to the Effective 
Date of the Rule

    The Department received a comment asserting that inflation 
adjustments adopted in the 2016 interim rule should have been made 
applicable only with respect to violations occurring on or after August 
1, 2016, the effective date of the rule, rather than with respect to 
violations occurring after November 2, 2015. The commenter suggests 
that the approach of the interim rule constitutes retroactive 
application of the adjusted penalty amounts.
    In response, the Department declines to adopt this comment's 
suggestion. The 2015 Amendments amended section 6 of the Inflation 
Adjustment Act to provide that ``[a]ny increase under this Act in a 
civil monetary penalty shall apply only to civil monetary penalties, 
including those whose associated violation predated such increase, 
which are assessed after the date the increase takes effect.'' 
(emphasis added). Congress's specific reference to applying the 
adjustments to civil monetary penalties ``whose associated violation 
predated'' the effective date of the adjustment clearly contemplates 
that the inflation adjustments under the 2015 Amendments can be applied 
to violations occurring prior to the effective date of the increased 
civil penalty amounts--but only if the civil penalties are ``assessed 
after the date the increase takes effect.'' This is precisely the 
approach the interim rule takes.
    The interim rule became effective August 1, 2016. The adjusted 
civil penalty amounts in the interim rule are applicable only to civil 
penalties assessed after August 1, 2016, whose associated violations 
occurred after November 2, 2015, the date of enactment of the 2015 
Amendments. The Department has concluded that this approach is a 
permissible interpretation of the language of section 6 as amended and 
does not result in an impermissible retroactive application of the 
inflation adjustments. Accordingly, this approach is adopted in the 
final rule without change.

[[Page 13525]]

V. Statutory and Regulatory Analyses

Administrative Procedure Act

    Because the statute requires that the catch-up adjustment be done 
through an interim final rulemaking and that subsequent adjustments be 
done notwithstanding the requirements of 5 U.S.C. 553 (see section 
4(b)(1) & (2) of the Inflation Adjustment Act), the Act can be read to 
provide that the requirement in section 553(d) for a 30-day delayed 
effective date does not apply to finalizing the interim final rule 
regarding the catch-up adjustment, particularly where this final rule 
makes no change to the interim final rule. Alternatively, to the extent 
section 553(d) may be applicable, the Department finds that there is 
good cause to make the rule effective immediately pursuant to 5 U.S.C. 
553(d)(3), given that any delay is unnecessary since the rule is 
already in effect as an interim final rule and this final rule makes no 
change to it.

Regulatory Flexibility Act

    Only those entities that are determined to have violated federal 
law and regulations would be affected by the increase in the civil 
penalty amounts made by this rule. A Regulatory Flexibility Act 
analysis is not required for this rule because publication of a notice 
of proposed rulemaking was not required. See 5 U.S.C. 603(a).

Executive Orders 12866 and 13563--Regulatory Review

    This final rule has been drafted in accordance with Executive Order 
12866, ``Regulatory Planning and Review,'' section 1(b), The Principles 
of Regulation, and in accordance with Executive Order 13563, 
``Improving Regulation and Regulatory Review'' section 1, General 
Principles of Regulation. Executive Orders 12866 and 13563 direct 
agencies, in certain circumstances, to assess all costs and benefits of 
available regulatory alternatives, and, if regulation is necessary, to 
select regulatory approaches that maximize net benefits (including 
potential economic, environmental, public health and safety effects, 
distributive impacts, and equity).
    The Department of Justice has determined that this rule is not a 
``significant regulatory action'' under Executive Order 12866, 
``Regulatory Planning and Review,'' section 3(f), and accordingly this 
rule has not been reviewed by the Office of Management and Budget. This 
final rule adopts without change the provisions of the 2016 interim 
rule, which itself was determined not to be a significant regulatory 
action under Executive Order 12866.

Executive Order 13132--Federalism

    This rule will not have substantial direct effects on the States, 
on the relationship between the national government and the States, or 
on the distribution of power and responsibilities among the various 
levels of government. Therefore, in accordance with Executive Order 
13132, it is determined that this rule does not have sufficient 
federalism implications to warrant the preparation of a Federalism 
Assessment.

Executive Order 12988--Civil Justice Reform

    This regulation meets the applicable standards set forth in 
sections 3(a) and 3(b)(2) of Executive Order 12988.

Unfunded Mandates Reform Act of 1995

    This rule will not result in the expenditure by State, local, and 
tribal governments, in the aggregate, or by the private sector, of $100 
million or more in any one year, and it will not significantly or 
uniquely affect small governments. Therefore, no actions were deemed 
necessary under the provisions of the Unfunded Mandates Reform Act of 
1995.

Congressional Review Act

    This rule is not a major rule as defined by section 251 of the 
Congressional Review Act, 5 U.S.C. 804. It will not result in an annual 
effect on the economy of $100 million or more; a major increase in 
costs or prices for consumers, individual industries, federal, state, 
or local government agencies, or geographic regions; or significant 
adverse effects on competition, employment, investment, productivity, 
innovation, or on the ability of United States-based enterprises to 
compete with foreign-based enterprises in domestic and export markets.

List of Subjects

28 CFR Part 20

    Classified information, Crime, Intergovernmental relations, 
Investigations, Law Enforcement, Penalties, Privacy, Research, and 
Statistics.

28 CFR Part 22

    Crime, Juvenile delinquency, Penalties, Privacy, Research, and 
Statistics.

28 CFR Part 36

    Administrative practice and procedure, Alcoholism, Americans with 
disabilities, Buildings and facilities, Business and industry, Civil 
rights, Consumer protection, Drug abuse, Handicapped, Historic 
preservation, Individuals with disabilities, Penalties, Reporting and 
recordkeeping requirements.

28 CFR Part 68

    Administrative practice and procedure, Aliens, Citizenship and 
naturalization, Civil Rights, Discrimination in employment, Employment, 
Equal employment opportunity, Immigration, Nationality, Non-
discrimination.

28 CFR Part 71

    Administrative practice and procedure, Claims, Fraud, Organization 
and function (Government agencies), Penalties.

28 CFR Part 76

    Administrative practice and procedure, Drug abuse, Drug traffic 
control, Penalties.

28 CFR Part 85

    Administrative practice and procedure, Penalties.

    Accordingly, for the reasons set forth in the preamble, the interim 
rule amending 28 CFR parts 20, 22, 36, 68, 71, 76, and 85, which was 
published at 81 FR 42491 on June 30, 2016, is adopted as a final rule 
without change.

    Dated: April 1, 2019.
William P. Barr,
Attorney General.
[FR Doc. 2019-06732 Filed 4-4-19; 8:45 am]
 BILLING CODE 4410-19-P