[Federal Register: November 18, 2002 (Volume 67, Number 222)]
[Rules and Regulations]               
[Page 69653-69655]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[[Page 69653]]


Part V

Department of Education


34 CFR Parts 36 and 668

Adjustment of Civil Monetary Penalties for Inflation; Final Rule

[[Page 69654]]



34 CFR Parts 36 and 668

Adjustment of Civil Monetary Penalties for Inflation

AGENCY: Department of Education.

ACTION: Final regulations.


SUMMARY: The Department of Education (Department) issues these final 
regulations to adjust the Department's civil monetary penalties (CMPs) 
for inflation. These are the first such adjustments made by the 
Department, and all of the increases are limited to 10 percent.

DATES: These regulations are effective November 18, 2002.

FOR FURTHER INFORMATION CONTACT: Kenneth C. Depew, Office of the 
General Counsel, U.S. Department of Education, 400 Maryland Avenue, 
SW., room 6E227, Washington, DC 20202-2241. Telephone: (202) 401-8300.
    If you use a telecommunications device for the deaf (TDD), you may 
call the Federal Information Relay Service (FIRS) at 1-800-877-8339.
    Individuals with disabilities may obtain this document in an 
alternative format (e.g., Braille, large print, audiotape, or computer 
diskette) on request to the contact person listed under FOR FURTHER 

SUPPLEMENTARY INFORMATION: The Federal Civil Penalties Adjustment Act 
of 1990 (Inflation Adjustment Act) (28 U.S.C. 2461 note), as amended by 
the Debt Collection Improvement Act of 1996 (DCIA) (31 U.S.C. 3701 
note), provides for the regular evaluation of CMPs to ensure that they 
continue to maintain their deterrent value. As amended by the DCIA, the 
Inflation Adjustment Act requires that each agency issue regulations to 
adjust its CMPs beginning in 1996 and at least every 4 years 
thereafter. The first adjustment of any CMP is limited to 10 percent of 
the amount of the penalty.
    A CMP is defined in the statute as any penalty, fine, or other 
sanction that is (1) for a specific monetary amount as provided by 
Federal law, or has a maximum amount provided for by Federal law; (2) 
assessed or enforced by an agency pursuant to Federal law; and (3) 
assessed or enforced pursuant to an administrative proceeding or a 
civil action in the Federal courts.
    The formula for the amount of a CMP inflation adjustment is 
prescribed by law and is not subject to the exercise of discretion by 
the Secretary of the Department of Education (Secretary). The 
adjustment reflects the percentage increase in the Consumer Price Index 
for all urban consumers (CPI-U) published by the Department of Labor 
from June of the calendar year in which the amount was last set or 
adjusted pursuant to law, to June of the calendar year preceding the 
    The Department did not adjust its CMPs for inflation in 1996 and 
since then has not adjusted the CMPs that were in effect in 1996. By 
statute the Department's first adjustment of a CMP may not exceed 10 
percent of such a penalty, and, therefore, we are adjusting those CMPs 
by no more than 10 percent. The Department is precluded from making 
subsequent adjustments to these CMPs until 2004, and even then, the 
Department may adjust these CMPs only for percentage increases in the 
CPI-U after June 2002.\1\

    \1\ It will be 2004 before the Department can determine whether 
the percentage of the CPI-U for June of the calendar year preceding 
the adjustment exceeds that for June of 2002, which would be the 
June of the calendar year in which the CMPs' amount was last set or 
adjusted pursuant to law. Until 2004, any adjustment by the 
Department would be unable to compare the CPI-U for June of 2002 
with that for a subsequent year.

    Two of the Department's CMPs were enacted as part of the Higher 
Education Amendments of 1998 (Pub. L. 105-244). These CMPs are 20 
U.S.C. 1015(c)(5), which provides for a fine of up to $25,000 for 
failure by an institution of higher education (IHE) to provide 
information on the cost of higher education to the Commissioner of 
Education Statistics, and 20 U.S.C. 1027(f)(3), which provides for a 
fine of up to $25,000 for failure by an IHE to provide information to 
the State and the public regarding its teacher preparation programs. 
Although 4 years have passed since enactment of these penalties, not 
enough inflation has occurred to require an adjustment under the 
Inflation Adjustment Act.
    Two additional points regarding the Department's adjustments are 
worth noting. First, the Department is using the following CPI-U 
figures: 109.5 for June 1986; 124.1 for June 1989; 163 for June 1998; 
and 178 for June 2001. And second, the increases to the Department's 
CMPs due to these inflation adjustments apply only to violations that 
occur after the effective date of the adjustments.

Waiver of Proposed Rulemaking

    Under the Administrative Procedure Act (5 U.S.C. 553), the 
Department generally offers interested parties the opportunity to 
comment on proposed regulations. However, these regulations merely 
implement the statutory mandate to adjust CMPs for inflation. The 
regulations reflect administrative computations performed by the 
Department as prescribed by the statute and do not establish or affect 
substantive policy. Therefore, under 5 U.S.C. 553(b)(B), the Secretary 
has determined that public notice and comment are impracticable, 
unnecessary, and contrary to the public interest.

Regulatory Flexibility Act Certification

    The Secretary certifies that these regulations will not have a 
significant economic impact on a substantial number of small entities. 
The formula for the amount of the inflation adjustments is prescribed 
by statute and is not subject to the exercise of discretion by the 
Secretary. These CMPs are infrequently imposed by the Secretary, and 
the regulations do not involve any special considerations that might 
affect the imposition of CMPs on small entities.

Paperwork Reduction Act of 1995

    These regulations do not contain any information collection 

Assessment of Educational Impact

    Based on our own review, we have determined that these final 
regulations do not require transmission of information that any other 
agency or authority of the United States gathers or makes available.

Electronic Access to This Document

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    Note: The official version of this document is the document 
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official edition of the Federal Register and the Code of Federal 
Regulations is available on GPO Access at: http://

(Catalog of Federal Domestic Assistance Number does not apply)

List of Subjects

34 CFR Part 36

    Administrative practice and procedure, Claims, Fraud, Penalties.

[[Page 69655]]

34 CFR Part 668

    Administrative practice and procedure, Colleges and universities, 
Education, Loan programs-education, Student aid.

    Dated: November 12, 2002.
Rod Paige,
Secretary of Education.

    For the reasons discussed in the preamble, the Secretary 
establishes a new part 36 and amends part 668 in title 34 of the Code 
of Federal Regulations as follows:
    1. A new part 36 is added to title 34 to read as follows:


36.1 Purpose.
36.2 Penalty adjustment.

    Authority: 28 U.S.C. 2461 note and 31 U.S.C. 3701 note, unless 
otherwise noted.

Sec.  36.1  Purpose.

    The purpose of this part is to make inflation adjustments to the 
civil monetary penalties within the jurisdiction of the Department of 
Education. These penalties are subject to review and adjustment as 
necessary at least once every 4 years in accordance with the Federal 
Civil Penalties Inflation Adjustment Act of 1990, as amended.

(Authority: 28 U.S.C. 2461 note and 31 U.S.C. 3701 note)

Sec.  36.2  Penalty adjustment.

    The citations for the adjusted penalty provisions, a brief 
description of the penalty, and the adjusted maximum (and minimum, if 
applicable) penalty amounts are listed in Table I.

                       Table I, Section 36.2--Civil Monetary Penalty Inflation Adjustments
                                                                                 New maximum (and minimum, if
                Statute                             Description                   applicable) penalty amount
20 U.S.C. 1082(g).....................  Provides for a civil penalty of up   $27,500.
                                         to $25,000 for violations by
                                         lenders and guaranty agencies of
                                         Title IV-B of the Higher Education
                                         Act of 1965, as amended (HEA),
                                         which authorizes the Federal
                                         Family Education Loan Program.
20 U.S.C. 1094(c)(3)(B)...............  Provides for a civil penalty of up   $27,500.
                                         to $25,000 for an institution of
                                         higher education's violation of
                                         Title IV of the Higher Education
                                         Act of 1965, as amended, which
                                         authorizes various programs of
                                         student financial assistance.
31 U.S.C. 1352(c)(1) and (c)(2)(A)....  Provides for a civil penalty of      $11,000 to $110,000.
                                         $10,000 to $100,000 for recipients
                                         of Government grants, contracts,
                                         etc. that lobby Congress or the
                                         Executive Branch with respect to
                                         the award of Government grants and
31 U.S.C. 3802(a)(1) and (a)(2).......  Provides for a civil penalty of up   $5,500.
                                         to $5,000 for false claims and
                                         statements made to the Government.

(Authority: 28 U.S.C. 2461 note and 31 U.S.C. 3701 note)


    2. The authority citation for part 668 continues to read as 

    Authority: 20 U.S.C. 1001, 1002, 1003, 1085, 1091, 1091b, 1092, 
1094, 1099c, and 1099c-1, unless otherwise noted.

    3. Section 668.84 is amended by removing ``$25,000'' in paragraph 
(a)(1) introductory text, and adding, in its place, ``$27,500 \1\'' and 
adding footnote 1 following the section to read as follows:

Sec.  668.84  Fine proceedings.

* * * * *

    As adjusted in accordance with the Federal Civil Penalties 
Inflation Adjustment Act of 1990, as amended (28 U.S.C. 2461 note).

[FR Doc. 02-29219 Filed 11-15-02; 8:45 am]