News from Dr. Kimberly Bauman of Mississippi Lime Company, Chairwoman of AIM’s Environmental Committee:
On November 2, 2015, the President signed into law the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 2015 Act) (Sec. 701 of Public Law 114-74), which further amended the Federal Civil Penalties Inflation Adjustment Act of 1990 (the Inflation Adjustment Act) (Public Law 101-410), to improve the effectiveness of civil monetary penalties and to maintain their deterrent effect. The 2015 Act requires agencies to: (1) adjust the level of civil monetary penalties with an initial “catch-up” adjustment through an interim final rulemaking (IFR); and (2) make subsequent annual adjustments for inflation [beginning in 2017]. Additionally, agencies are required to publish interim final rules with the initial penalty adjustment amounts by July 1, 2016, and the new penalty levels must take effect no later than August 1, 2016. Citation: Memorandum for the Heads of Executive Departments and Agencies, Shaun Donovan, Executive Office of the President, Office of Management and Budget, February 24, 2016 (attached). As noted by Heather Palmer with Bracewell LLP, the U.S. Environmental Protection Agency (EPA), the Occupational Safety and Health Administration (OSHA), the Pipeline and Hazardous Materials Safety Administration (PHMSA), the Bureau of Safety and Environmental Enforcement (BSEE), and the Bureau of Land Management (BLM) have all announced penalty increases. The effective date of the penalty increases varies based on when the interim final rule was published in the Federal Register. For BLM and BSEE, the interim final rule will take effect on July 28, 2016. The interim final rule for USEPA, OSHA and PHMSA becomes effective on August 1, 2016. Moreover, not all agencies agree on the applicability of the adjustment to violations that occurred prior to the effective date of the interim final rule. For example, BSEE stated in the preamble to its interim final rule that the new maximum civil penalty amount will apply to civil penalties assessed after the date the increase takes effect, even when the associated violations predate such increase. USEPA will apply the new maximum civil penalties to all statutory civil penalties assessed on or after August 1, 2016, for violations that occurred after November 2, 2015 (when the Act was enacted). EPA’s existing civil penalty levels will continue to apply to: (i) violations that occurred on or before November 2, 2015, and (ii) violations that occurred after November 2, 2015, where the penalty assessment was made prior to August 1, 2016. Similar to EPA, any citations issued by OSHA after August 1, 2016 will be subject to the new maximum civil penalties if the related violations occurred after November 2, 2015. In contrast, PHMSA has stated that its adjusted civil penalties will only apply to violations occurring on or after August 1, 2016, the effective date of the interim final rule. BLM’s interim final rule is silent on this point. The link to Heather Palmer’s article, which includes links to the interim final rules and their associated effective dates, is here:http://www.energylegalblog.com/blog/2016/07/01/watch-your-wallet-%E2%80%93-federal-civil-penalties-are-going. The Federal Register notice concerning the USEPA’s Civil Monetary Penalty Inflation Adjustment Rule is attached. Federal Register – Civil Monetary Penalty inflation Adjustment RuleLetter from OMB Director For additional information, members are encouraged to review the appropriate federal regulations applicable to their operations.