Many regulatory laws provide for civil – and sometimes even criminal – penalties for noncompliance. Statutes set penalty levels (“XXX dollars per day of violation” for example), at levels intended to provide meaningful deterrence and punishment for noncompliance. But over time, these penalties' stings decline with inflation. To counteract the possibility that less painful penalties reduce incentives for compliance, U.S. law directs most federal agencies to make annual “cost of living” adjustments to the maximum statutory civil penalty levels (there are no provisions for standing periodic adjustments to criminal penalties).
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