The Administrative Conference of the United States (ACUS) approved three recommendations at its 57th Plenary Session on December 6 – 7, 2012:
- Reform of 28 U.S.C. § 1500;
- Third-Party Programs for Regulatory Compliance; and
- Civil Monetary Penalty Inflation Adjustment.
This blog previously posted the agenda recommendations and reports. Why Congress, the agencies, and practitioners should consider these authoritative final recommendations carefully follows the jump.
Procedural Traps: 28 U.S.C. § 1500 divides jurisdiction between the United States Court of Federal Claims and the United States District Courts in adjudicating claims against the United States by barring the former from proceeding if a case is pending in the latter. A small number (debated) of “mixed” multiple claims cases arising from the same act may be trapped on a jurisdictional divide between the United States District Courts and the Court of Federal Claims unless practitioners are aware of the details of this Reconstruction Era provision.
The Department of Justice (DOJ) offered two amendments: (1) to delay consideration for a year, and (2) to make substantive changes. The former failed after some debate, but the Conference agreed that DOJ had offered some improvement and, with modifications, agreed in part to DOJ’s second amendment, and approved the amended recommendation.
♦While this recommendation affects only a small number of cases, the issue is whether a 150-year-old procedural bar should deprive the unwary from a day in court.
Third Party Inspections: A number of Federal agencies use private third parties to inspect and verify that regulated entities comply with federal regulatory standards and other requirements. Much of the debate on this recommendation focused on the risk values involved in the use of third party inspections – particularly a perceived higher risk in the regulations of health and safety issues. ACUS approved the recommendation with amendments tightening the language.
♦The functioning of third party programs will always pose some risks different from agency direct oversight – the value judgment is relative risk to cost to benefit. These recommendations provide a framework for Congress in deciding whether to require a third party compliance assessment program and for agencies and the Office of Management and Budget (OMB) in assessing regulatory development of such a program. Currently OMB can use these recommendations in assessing the Department of Health and Human Services (HHS) Food and Drug Administration (FDA) food safety third party inspection rule.
Civil Monetary Penalty Inflation Adjustment: Congress has provided agencies with the ability to adjust civil monetary penalties (CMPs) to reflect inflation and the fact that inflation weakens the deterrent value of such penalties over time. CMPs are penalties paid for violation of statutory and regulatory requirements and the inflation adjustment was mandated in 1996, however imperfectly. ACUS recommends the Congress eliminate the inflation gap created by the statutory 10% cap on adjustments, the asynchronous, but mandatory, use of the Consumer Price Index (CPI-U) against actual inflation creating another gap, and a statutory “rounding error” gap. If enacted by Congress and implemented by the agencies, the effect would be substantially more than ACUS’ meager budget.
ACUS recommends correction of the most fundamental statutorily created problems of the adjusting civil monetary penalties. Agencies can resolve process issues, such as the inherent gap created by the time requirements of the rulemaking process, by carefully structuring initial adjustment rules to permit later arithmetic adjustment by final rules.
♦These recommendation may seem somewhat bureaucratic, but Congressional and agency adoption can increase government receipts. More accurate and more current CMPs could contribute to the budget bottom line, thereby slightly reducing the budget deficit, slightly helping Congress and the President avoid the fiscal cliff, and slightly reducing the growth of the national debt.
Disclosure: The author is a consultant to ACUS on another project not before this Plenary Session.