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Rule

Civil Monetary Penalty Inflation Adjustment

A Rule by the Merit Systems Protection Board on 07/22/2025

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• Document Details Published Content - Document Details Agency Merit Systems Protection Board CFR 5 CFR 1201 Document Citation 90 FR 34347 Document Number 2025-13707 Document Type Rule Pages 34347-34348
  (2 pages) Publication Date 07/22/2025 Published Content - Document Details

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• Document Details Published Content - Document Details Agency Merit Systems Protection Board CFR 5 CFR 1201 Document Citation 90 FR 34347 Document Number 2025-13707 Document Type Rule Pages 34347-34348
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• Document Dates Published Content - Document Dates Effective Date 2025-07-22 Dates Text This final rule is effective on July 22, 2025. Published Content - Document Dates

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  • AGENCY:
  • ACTION:
  • SUMMARY:
  • DATES:
  • FOR FURTHER INFORMATION CONTACT:
  • SUPPLEMENTARY INFORMATION:
  • I. Background
  • II. Calculation of Adjustment
  • III. Effective Date of Penalties
  • IV. Procedural Requirements
  • A. Administrative Procedure Act
  • B. Regulatory Impact Analysis: Executive Order 12866
  • C. Regulatory Flexibility Act
  • D. Paperwork Reduction Act
  • E. Congressional Review Act
  • List of Subjects in 5 CFR Part 1201
  • PART 1201—PRACTICES AND PROCEDURES Enhanced Content - Table of Contents

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Merit Systems Protection Board

1. 5 CFR Part 1201

AGENCY:

Merit Systems Protection Board.

ACTION:

Final rule.

SUMMARY:

This final rule adjusts the level of civil monetary penalties (CMPs) in regulations maintained and enforced by the Merit Systems Protection Board (MSPB) with an annual adjustment under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 2015 Act) and Office of Management and Budget (OMB) guidance.

DATES:

This final rule is effective on July 22, 2025.

FOR FURTHER INFORMATION CONTACT:

Gina K. Grippando, Clerk of the Board, Merit Systems Protection Board, 1615 M Street NW, Washington, DC 20419; phone: (202) 653-7200; fax: (202) 653-7130; or email: mspb@mspb.gov.

SUPPLEMENTARY INFORMATION:

I. Background

The Federal Civil Penalties Inflation Adjustment Act of 1990 (the 1990 Act), Pub. L. 101-410, provided for the regular evaluation of CMPs by Federal agencies. Periodic inflationary adjustments of CMPs ensure that the consequences of statutory violations adequately reflect the gravity of such offenses and that CMPs are properly accounted for and collected by the Federal Government. In April 1996, the 1990 Act was amended by the Debt Collection Improvement Act of 1996 (the 1996 Act), Pub. L. 104-134, requiring Federal agencies to adjust their CMPs at least once every four years. However, because inflationary adjustments to CMPs were statutorily capped at ten percent of the maximum penalty amount, but only required to be calculated every four years, CMPs in many cases did not correspond with the true measure of inflation over the preceding four-year period, leading to a decline in the real value of the penalty. To remedy this decline, the 2015 Act (section 701 of Pub. L. 114-74) requires agencies to adjust CMP amounts with annual inflationary adjustments through a rulemaking using a methodology mandated by the legislation. The purpose of these adjustments is to maintain the deterrent effect of civil penalties.

A civil monetary penalty is “any penalty, fine, or other sanction” that: (1) “is for a specific amount” or “has a maximum amount” under Federal law; and (2) a Federal agency assesses or enforces “pursuant to an administrative proceeding or a civil action in the Federal courts.” 28 U.S.C. 2461 note.

The MSPB is authorized to assess CMPs pursuant to 5 U.S.C. 1215(a)(3) and 5 U.S.C. 7326 in disciplinary actions brought by the Special Counsel. The corresponding MSPB regulation for both CMPs is 5 CFR 1201.126(a). As required by the 2015 Act, and pursuant to guidance issued by OMB, MSPB is now making an annual adjustment for 2025, according to the prescribed formulas.

II. Calculation of Adjustment

The CMP listed in 5 U.S.C. 1215(a)(3) was established in 1978 with the enactment of the Civil Service Reform Act of 1978 (CSRA), Pub. L. 95-454, section 202(a), 92 Stat. 1121-30 (Oct. 13, 1978), and originally codified at 5 U.S.C. 1207(b). That CMP was last amended by section 106 of the Whistleblower Protection Enhancement Act of 2012, Pub. L. 112-199, 12 Stat. 1468 (Nov. 27, 2012), now codified at 5 U.S.C. 1215(a)(3), which provided for a CMP “not to exceed $1,000.” The CMP authorized in 5 U.S.C. 7326 was established in 2012 by section 4 of the Hatch Act Modernization Act of 2012 (Hatch Act), Pub. L. 112-230, 126 Stat. 1617 (Dec. 28, 2012), which provided for a CMP “not to exceed $1,000.” On February 14, 2024, MSPB issued a final rule which increased the maximum CMP allowed under both 5 U.S.C. 1215(a)(3) and 5 U.S.C. 7326 to $1,330 for the year 2024. See 89 FR 11163 (February 14, 2024). This increase reflected the annual increase for the year 2024 mandated by the 2015 Act.

On December 17, 2024, OMB issued guidance on calculating the annual inflationary adjustment for 2025. See Memorandum from Shalanda D. Young, Director, OMB, to Heads of Executive Departments and Agencies re: Implementation of Penalty Inflation Adjustments for 2025, Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, M-25-02 (Dec. 17, 2024). Therein, OMB notified agencies that the annual adjustment multiplier for 2025, based on the Consumer Price Index for All Urban Consumers (CPI-U), is 1.02598 and that the 2025 annual adjustment amount is obtained by multiplying the 2024 penalty amount by the 2025 annual adjustment multiplier, and rounding to the nearest dollar. Therefore, the new maximum penalty under the CSRA and the Hatch Act is $1,330 × 1.02598 = $1,365.00.

III. Effective Date of Penalties

The revised CMP amounts will go into effect on July 22, 2025. All violations for which CMPs are assessed after the effective date of this rule will be assessed at the adjusted penalty level regardless of whether the violation occurred before the effective date.

IV. Procedural Requirements

A. Administrative Procedure Act

Pursuant to 5 U.S.C. 553(b), MSPB has determined that good cause exists for waiving the general notice of proposed rulemaking and public comment procedures as to these technical amendments. The notice and comment procedures are being waived because Congress has specifically exempted agencies from these requirements when implementing the 2015 Act. The 2015 Act explicitly requires the agency to make subsequent annual adjustments notwithstanding 5 U.S.C. 553, the section of the Administrative Procedure Act that normally requires agencies to engage in notice and comment. It is also in the public interest that the adjusted rates for CMPs under the CSRA and the Hatch Act become effective as soon as possible to maintain their effective deterrent effect.

B. Regulatory Impact Analysis: Executive Order 12866

The MSPB has determined that this is not a significant regulatory action under ( printed page 34348) E.O. 12866. Therefore, no regulatory impact analysis is required.

C. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) requires an agency to prepare a regulatory flexibility analysis for rules unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. The RFA applies only to rules for which an agency is required to first publish a proposed rule. See 5 U.S.C. 603(a) and 604(a). As discussed above, the 2015 Act does not require agencies to first publish a proposed rule when adjusting CMPs within their jurisdiction. Thus, the RFA does not apply to this final rule.

D. Paperwork Reduction Act

This document does not contain information collection requirements subject to the Paperwork Reduction Act of 1995, Pub. L. 104-13 (44 U.S.C. Chapter 35).

E. Congressional Review Act

Pursuant to the Congressional Review Act (5 U.S.C. 801, et seq.), the Office of Information and Regulatory Affairs designated this rule as not a “major rule” as defined by 5 U.S.C. 804(2).

List of Subjects in 5 CFR Part 1201

• Administrative practice and procedure
• Civil rights
• Government employees For the reasons set forth above, 5 CFR part 1201 is amended as follows:

PART 1201—PRACTICES AND PROCEDURES

1. The authority citation for part 1201 continues to read as follows:

Authority: 5 U.S.C. 1204, 1305, and 7701, and 38 U.S.C. 4331, unless otherwise noted.

§ 1201.126 [Amended] 2. Amend § 1201.126, in paragraph (a), by removing “$1,330” and adding in its place “$1,365”.

Gina K. Grippando,

Clerk of the Board.

[FR Doc. 2025-13707 Filed 7-21-25; 8:45 am]

BILLING CODE 7401-01-P

Published Document: 2025-13707 (90 FR 34347)