OMB M-26-11 Cancels 2026 Penalty Inflation Adjustments Under Federal Civil Penalties Act

     

THE DIRECTOR 

 C\        \J flfo fl  flfufldjfl  1  fofl fr   rtfl 2     3 fr      djfo    

fl   fi    §  fldj dj  fidj           fldj dj  fo  

levels as applicable. The purpose of this guidance is to inform agencies of the cancellation of the inflation adjustment for 2026 based on the lack of October 2025 CPI-U data due to the lapse in appropriations.

Identifying Applicable Penalties

Agencies are responsible for identifying the civil monetary penalties that fall under the statutes and regulations within their jurisdiction. The Inflation Adjustment Act defines "civil monetary penalty" as any penalty, fine, or other sanction that - (A) (i) is for a specific monetary amount as provided by Federal law; or (ii) has a maximum amount provided for by Federal law; and (B) is assessed or enforced by an agency pursuant to Federal law; and in (C) is assessed or enforced pursuant to an administrative proceeding or a civil action the Federal courts 5 The Office of Information and Regulatory Affairs (OIRA) has determined agency regulations that (1) exclusively implement an annual adjustment, (2) are consistent with this guidance, and (3) have an annual impact of less than $100 million are generally not significant regulatory actions under Executive Order 12866. Therefore, agencies are generally not required to submit regulations satisfying those criteria to OIRA for review.

Publishing in the Federal Register

Agencies are required to publish annual inflation adjustments in the Federal Register each year. In accordance with the 2015 Act, when issuing regulations implementing the annual adjustment, agencies are not required to follow the public notice and comment procedures generally required by the Administrative Procedure Act (AP A). Specific penalty amounts that 6 are codified in the Code of Federal Regulations (CFR) should be updated through regulations amending the CFR Some agencies have chosen to remove their specific penalty amounts from the CFR and have instead codified the statutory formula for inflation adjustments. Regardless of 7

The Act mandates that the annual civil monetary penalties cost-of-living adjustment be based on BLS data from the month of 4 October of the prior year and does not provide for an alternative calculation in the unusual event that there is not October data. Thus, as a matter of statutory interpretation, there is not authority to use an alternative method of calculation. Moreover, 0MB has determined that any effort to do so, contra the statute, would. subject revised penalty calculations to significant and disruptive litigation risks. Federal Civil Penalties Inflation Adjustment Act of 1990, Pub. L. No. 101-410, § 3(2), 104 Stat. 890 (codified at 28 U.S.C. 5 § 2461 note). Id. § 4(b )(2) (providing that the head of an agency "shall make the adjustment notwithstanding section 553 of title 5, United 6 States Code"). See, e.g., Soc. Sec. Admin., Penalty Inflation Adjustments for Civil Monetary Penalties, 81 Fed. Reg. 41438 (June 27, 2016) 7 § 498.103(g)). ( codified at 20 C.F.R.

whether the application of the statutory formula results in a change to penalty amounts for a given year, agencies must still publish a notice in the Federal Register reflecting the outcome of the annual adjustment. 8 Performing Agency Oversight Under the 2015 Act, agency heads are responsible for tracking information on civil monetary penalties within their jurisdiction. Agencies must maintain and report updates to civil monetary penalties on an annual basis through their AFRs, as directed by 0MB Circular A-136.

1 C.F.R 1.1, 5.2(c). §§ 8