Delegations to Bureau of Enforcement, Investigations, and Compliance, 23361-23364 [2023-08073]

Agencies

• Federal Maritime Commission

[Federal Register Volume 88, Number 73 (Monday, April 17, 2023)]
[Rules and Regulations]
[Pages 23361-23364]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-08073]


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FEDERAL MARITIME COMMISSION

46 CFR Parts 501 and 502

[Docket No. FMC-2023-0011]
RIN 3072-AC97


Delegations to Bureau of Enforcement, Investigations, and 
Compliance

AGENCY: Federal Maritime Commission

ACTION: Final rule.

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SUMMARY: The Federal Maritime Commission (Commission) is delegating 
authority to the Bureau of Enforcement, Investigations, and Compliance 
(BEIC), to issue Notice(s) of Violations and to compromise civil 
penalty claims subject to review by the Commission. Delegation of 
authority to BEIC provides enhanced efficiency flexibility during the 
enforcement process while maintaining Commission oversight.

DATES: The rule is effective without further action on May 17, 2023.

FOR FURTHER INFORMATION CONTACT: William Cody, Secretary; Phone: (202) 
523-5725; Email: [email protected].

SUPPLEMENTARY INFORMATION: 

I. Introduction

    The Commission's Bureau of Enforcement, Investigations, and 
Compliance (BEIC) is responsible for investigating potential violations 
of the Shipping Act of 1984, as amended, and associated Commission 
regulations, and initiating enforcement actions. The Commission is 
delegating authority to BEIC to issue Notice(s) of Violations (NOV) and 
to compromise civil penalty claims subject to approval by the 
Commission. Delegation of authority to BEIC coupled with Commission 
review of compromise agreements will provide enhanced efficiency and 
flexibility during the enforcement process while maintaining Commission 
oversight.

II. Background

    Pursuant to its authority under the Shipping Act of 1984, as 
amended, Commission regulations currently provide for two types of 
enforcement actions seeking civil penalties, formal enforcement action 
under 46 CFR 502.63 and informal compromise procedures under 46 CFR 
502.604. Currently, both require Commission approval to proceed at 
multiple steps during the process, thereby making the enforcement 
process unnecessarily burdensome and hindering the efficient resolution 
of enforcement matters.
    The current process for BEIC to conduct an enforcement action 
requires: (1) providing notice to the subjects of investigations that 
BEIC intends to recommend that the Commission initiate enforcement 
proceedings and allowing the subject an opportunity to respond before 
BEIC submits those recommendations and responses to the Commission for 
approval; (2) receiving Commission approval before formal or informal 
enforcement action is undertaken, including approval to enter into 
compromise discussions; and (3) receiving Commission approval of any 
proposed compromise agreements. The current process has proven 
procedurally complicated since it involves multiple levels and cycles 
of approval prior to any case culminating in resolution. The rigidity 
of the process combined with the opportunity for respondents to submit 
responses of up to 40 pages has increased time and resource costs in 
enforcement matters both for the Commission and for the entities it 
regulates.

III. Regulatory Changes

    As briefly described in Section II, the Commission is streamlining 
the current process by delegating authority to BEIC to issue Notice(s) 
of Violations setting forth alleged violations and to compromise such 
claims, subject to review by the Commission instead of requiring 
Commission approval at each step under the current approach. Compromise 
agreements will be subject to Commission review after the parties have 
reached an agreement rather than before negotiations begin and again at 
the conclusion, thereby increasing the efficiency of Commission 
enforcement efforts by removing an added level of approval at the 
outset of an informal enforcement action.
    The revised procedure will also give BEIC delegated authority with 
respect to the investigative and initial compromise phases of the 
enforcement process. Specifically, BEIC will have the authority to (1) 
directly enter discussions to compromise civil penalty allegations 
prior to the issuance of an NOV if a party requests to negotiate a 
compromise, (2) issue NOVs providing notice of alleged violations and 
the corresponding civil penalty proposed by BEIC, or (3) recommend that 
the Commission institute a formal adjudicatory proceeding. An NOV will 
provide the opportunity for the subject to either request to enter into 
compromise discussions or to submit a written response, if desired. The 
Commission retains the authority to review any proposed compromise 
agreement reached by the parties pursuant to Sec.  501.11(f)(2); and 
Commission approval continues to be required to initiate a formal 
proceeding pursuant to Sec.  502.63(a). Accordingly, BEIC has the 
flexibility to assess an enforcement matter and to determine the most 
appropriate process given the facts of a particular matter.

A. Informal Enforcement Process

    The Commission is revising the informal enforcement process under 
Sec.  502.63(d) to give BEIC discretion to issue an NOV to expedite the 
enforcement process. The current pre-enforcement notice (PEN) process 
requires multiple levels of review and approval for an enforcement case 
to progress, starting with the issuance of a PEN and culminating either 
in a compromise agreement or a formal proceeding. In either instance, 
BEIC's ability to compromise is subject to approval by the Commission. 
Once a PEN is issued, the respondent has 30

[[Page 23362]]

days to submit a written response, limited in length to 40 pages, 
addressing the alleged violations identified in the PEN. If a 
respondent desires to initiate compromise discussions regarding BEIC's 
preliminary determinations instead of proceeding with a written 
submission, BEIC is currently required to obtain Commission approval 
prior to entering such discussions. These regulatory changes are 
intended to provide a basic framework for the new process. Under the 
revised process, the respondent may either request to enter compromise 
discussions (and BEIC would proceed, if appropriate, with these 
discussions immediately without first seeking Commission approval) or 
submit a written response.

B. Delegation of Authority to BEIC

    The Commission is revising Sec.  501.18 to add a new section giving 
BEIC the authority to issue NOVs and informally identify and compromise 
civil penalties, subject to review by the Commission. The grant of 
delegated authority gives BEIC the flexibility to resolve cases where a 
respondent requests to compromise the civil penalty ahead of the 
issuance of a NOV as well as authority to enter into compromise 
discussions after issuance of a NOV. The discretion to exercise either 
option allows BEIC to conclude cases on an expedited timeline where a 
respondent is preemptively offering to not only negotiate in good faith 
but also to provide disclosures that may lead to the opening of other 
investigations of violations of the Shipping Act by other entities 
involved in violations voluntarily disclosed by the respondent. 
Commission oversight is maintained by providing the Commission with the 
opportunity to review all compromise agreements prior to them becoming 
effective.

IV. Rulemaking Analysis and Notices

A. Review Under the Administrative Procedure Act

    The Administrative Procedure Act (APA) requires that a notice of 
proposed rulemaking be published in the Federal Register unless certain 
exceptions apply. 5 U.S.C. 553(b). These exceptions include rules of 
agency procedure or practice, 5 U.S.C. 553(b)(A), as well as rules for 
which the agency finds good cause to waive notice and comment as 
unnecessary, impracticable or contrary to the public interest. 5 U.S.C. 
553(b)(B). This rule amends regulations that set forth the agency's 
internal procedures by delegating to the BEIC the authority to engage 
in the investigative and initial compromise phases of the enforcement 
process while retaining the Commission's authority to review any 
proposed compromise agreement reached by the parties pursuant to Sec.  
501.11(f)(2) and in approving the initiation of a formal proceeding 
pursuant to Sec.  502.63(a). Accordingly, the exception to the notice 
and comment provisions provided under 5 U.S.C. 553(b)(A) applies. 
Similarly, because this rule involves changes to the Commission's 
internal procedures on its administratively handling of enforcement-
related matters, holding notice and comment on these changes would be 
impracticable, unnecessary, and contrary to the public interest since 
it would delay Commission's implementation of these changes and may 
impact the efficiently handling of these matters. For these reasons, 
the Commission also finds that notice and comment on the adoption of 
these internal procedural changes is unnecessary, impracticable and 
contrary to the public interest under 5 U.S.C. 553(b)(B).

B. Congressional Review Act

    This final rule is not a ``rule'' as defined by the Congressional 
Review Act (CRA), codified at 5 U.S.C. 801 et seq., and is not subject 
to the provisions of the CRA. The CRA adopts the Administrative 
Procedure Act's definition of a ``rule'' in 5 U.S.C. 551, subject to 
certain exclusions. See 5 U.S.C. 804(3). In particular, the CRA does 
not apply to rules relating to agency management and personnel and 
rules of agency organization, procedure, and practice that do not 
substantially affect the rights or obligations of non-agency parties. 
Id. This final rule relates to agency management and personnel as well 
as agency organization, procedures, and practices. Specifically, this 
final rule revises internal Commission delegations of investigatory and 
initial settlement authority to BEIC and the regulations governing 
enforcement procedures. The only effect the changes have with respect 
to non-agency parties is to provide parties with an earlier opportunity 
to enter compromise discussions with BEIC. The Commission already 
provides notice and an opportunity to respond in both formal and 
informal enforcement procedures. For informal compromise actions, the 
rule delegates to BEIC the authority to issue a NOV and to enter into 
compromise discussions Accordingly, although the Interim Final Rule may 
affect the timing and manner of non-agency parties' interactions with 
the Commission, it does not affect their underlying rights and 
obligations under the Shipping Act and the Commission's regulations. 
Therefore, this final rule is not a ``rule'' under the CRA and is not 
subject to the CRA's requirements.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (codified as amended at 5 U.S.C. 
601-612) provides that whenever an agency promulgates a final rule 
after being required to publish a notice of proposed rulemaking under 
the APA (5 U.S.C. 553), the agency must prepare and make available a 
final regulatory flexibility analysis (FRFA) describing the impact of 
the rule on small entities. 5 U.S.C. 604. An agency is not required to 
publish an FRFA, however, for the following types of rules, which are 
excluded from the APA's notice-and-comment requirement: interpretative 
rules; general statements of policy; rules of agency organization, 
procedure, or practice; and rules for which the agency for good cause 
finds that notice and comment is impracticable, unnecessary, or 
contrary to public interest. See 5 U.S.C. 553(b).
    As discussed above, this final rule is a rule of agency 
organization, procedure, or practice. Therefore, the APA does not 
require publication of a notice of proposed rulemaking in this 
instance, and the Commission is not required to prepare an FRFA.

D. National Environmental Policy Act

    The Commission's regulations categorically exclude certain 
rulemakings from any
    requirement to prepare an environmental assessment or an 
environmental impact statement because they do not increase or decrease 
air, water or noise pollution or the use of fossil fuels, recyclables, 
or energy. 46 CFR 504.4. This rule revises internal Commission 
delegations of investigatory and initial settlement authority to BEIC 
and the regulations governing enforcement procedures with respect to 
potential Shipping Act violations. This rulemaking thus falls within 
the categorical exclusions for procedural rules pursuant to 46 CFR part 
502 (Sec.  504.4(a)(4)), investigatory and adjudicatory proceedings, 
the purpose of which is to ascertain past violations of the Shipping 
Act of 1984 (Sec.  504.4(a)(22)), and matters related to Commission 
personnel (Sec.  504.4(a)(28)).
    Therefore, no environmental assessment or environmental impact 
statement is required.

E. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) (PRA) 
requires an agency to seek and receive approval from the Office of 
Management and

[[Page 23363]]

Budget (OMB) before collecting information from the public. 44 U.S.C. 
3507. The agency must submit collections of information in rules to OMB 
in conjunction with the publication of the notice of proposed 
rulemaking. 5 CFR 1320.11. This final rule does not contain any 
collections of information as defined by 44 U.S.C. 3502(3) and 5 CFR 
1320.3(c).

F. Executive Order 12988 (Civil Justice Reform)

    This rule meets the applicable standards in E.O. 12988 titled, 
``Civil Justice Reform,'' to minimize litigation, eliminate ambiguity, 
and reduce burden.

G. Regulation Identifier Number

    The Commission assigns a regulation identifier number (RIN) to each 
regulatory action listed in the Unified Agenda of Federal Regulatory 
and Deregulatory Actions (Unified Agenda). The Regulatory Information 
Service Center publishes the Unified Agenda in April and October of 
each year. You may use the RIN contained in the heading at the 
beginning of this document to find this action in the Unified Agenda, 
available at https://www.reginfo.gov/public/do/eAgendaMain.

List of Subjects

46 CFR Part 501

    Administrative practice and procedure, Authority delegations 
(Government agencies), Organization and functions (Government 
agencies).

46 CFR Part 502

    Administrative practice and procedure, Claims, Equal access to 
justice, Investigations, Lawyers, Maritime carriers, Penalties, 
Reporting and recordkeeping requirements.

    For the reasons set forth above, the Federal Maritime Commission 
amends 46 CFR parts 501 and 502 of chapter IV of Title 46, Code of 
Federal Regulations as set forth below:

PART 501--THE FEDERAL MARITIME COMMISSION--GENERAL

0
1. Revise the authority citation for part 501 to read as follows:

    Authority: 5 U.S.C. 551-557, 701-706, 2903 and 6304; 31 U.S.C. 
3721; 41 U.S.C. 414 and 418; 44 U.S.C. 501-520 and 3501-3520; 46 
U.S.C. 40101-41309, 42101-42109, 44101-44106, 46101-46108; Pub. L. 
89-56, 70 Stat. 195; 5 CFR part 2638; Pub. L. 104-320, 110 Stat. 
3870.


0
2. Add Sec.  501.18 to subpart B to read as follows:


Sec.  501.18  Delegation to the Director, Bureau of Enforcement, 
Investigations, and Compliance.

    As set forth in Sec. Sec.  502.63(d) and 502.604, the Director, 
Bureau of Enforcement, Investigations, and Compliance (BEIC) has 
delegated authority to issue Notice(s) of Violations (NOV) and to 
compromise civil penalty claims subject to review by the Commission 
pursuant to Sec.  501.11(f)(2). This delegation shall include the 
authority to compromise claims relating to the retention, suspension, 
or revocation of ocean transportation intermediary licenses.

PART 502--RULES OF PRACTICE AND PROCEDURE

0
3. Revise the authority citation for part 502 to read as follows:

    Authority: 5 U.S.C. 504, 551, 552, 553, 556(c), 559, 561-569, 
571-596; 5 U.S.C. 571-584; 18 U.S.C. 207; 28 U.S.C. 2112(a); 31 
U.S.C. 9701; 46 U.S.C. 40103-40104, 40304, 40306, 40501-40503, 
40701-40706, 41101-41109, 41301-41309, 44101-44106, 46105; 5 CFR 
part 2635.


0
4. In Sec.  502.63, revise paragraphs (a), paragraph (d) paragraph 
heading and (d)(1) to read as follows:


Sec.  502.63  Commission enforcement action.

    (a) The Commission may issue an Order of Investigation and Hearing 
commencing an adjudicatory investigation against one or more 
respondents alleging one or more violations of the statutes that it 
administers. Prior to recommending the issuance of an Order of 
Investigation and Hearing, BEIC will provide a respondent with notice 
of BEIC's intent and provide the respondent with the opportunity to 
make a written submission within 15 days for consideration by the 
Commission.
* * * * *
    (d) Informal enforcement process. (1) BEIC may issue a Notice of 
Violations (NOV) to provide the person or persons with notice of the 
alleged violations and provide the opportunity for informal resolution 
of such claims pursuant to the procedures in Sec.  502.604. [Rule 63.]
* * * * *

0
5. Revise Sec.  502.604 to read as follows:


Sec.  502.604  Compromise of penalties: Relation to assessment 
proceedings.

    (a) Scope. Except in pending civil penalty assessment proceedings 
provided for in Sec.  502.603, the Commission, when it has reason to 
believe a violation has occurred, may invoke the informal compromise 
procedures of this section.
    (b) Notice. When the Commission considers it appropriate to afford 
an opportunity for the compromise of a civil penalty, it will, except 
when circumstances render it unnecessary, send a Notice of Violations 
(NOV) to the respondent by electronic and registered or certified mail, 
or by other means reasonably calculated to give notice. The NOV will 
describe specific violation(s) on which the claim is based, including 
the particular facts, dates, and other elements necessary for the 
respondent to identify the specific conduct constituting the alleged 
violation; the amount of the penalty demanded; and the names of 
Commission personnel with whom the demand may be discussed, if the 
person desires to compromise the penalty. The NOV also will state the 
deadlines for the institution and completion of compromise 
negotiations. If a compromise agreement is not reached between the 
parties and BEIC intends to recommend that the Commission institute a 
formal proceeding pursuant to Sec.  502.63(a), then BEIC shall provide 
notice of its intent to the respondent and provide the respondent with 
the opportunity to make a written submission within 15 days for 
consideration by the Commission.
    (c) Request for compromise. Any person receiving an NOV provided 
for in paragraph (b) of this section may, within the time specified, 
request opportunity for informal resolution, deny the violation, or 
submit materials explaining, mitigating, or showing extenuating 
circumstances, as well as make voluntary disclosures of information and 
documents.
    (d) Criteria for compromise. In addition to the factors set forth 
in Sec.  502.603(b), in compromising a penalty claim, the Commission 
may consider litigative concerns, the cost of collecting the claim, and 
enforcement policy.
    (e) Disposition of claims in compromise procedures. (1) When a 
penalty is compromised and the respondent agrees to settle, a 
compromise agreement shall be executed by the respondent. This 
agreement, after reciting the nature of the claim, will include a 
statement evidencing the respondent's agreement to the compromise of 
the Commission's penalty claim for the amount set forth in the 
agreement and will also embody an approval and acceptance provision 
which is to be signed by the appropriate Commission official subsequent 
to Commission review under Sec.  501.11, if any. Upon compromise of the 
penalty in the agreed amount, a duplicate original of the fully 
executed agreement shall be furnished to the respondent.

[[Page 23364]]

    (2) Upon completion of the compromise, the Commission may issue a 
public notice thereof, the terms and language of which are not subject 
to negotiation.
    (f) Relation to assessment proceedings. Except by order of the 
Commission, no compromise procedure shall be initiated or continued 
after institution of a Commission assessment proceeding directed to the 
same violations. Any offer of compromise submitted by the respondent 
pursuant to this section shall be deemed to have been furnished by the 
respondent without prejudice and shall not be used against the 
respondent in any proceeding.
    (g) Delegation of compromise authority. The compromise authority 
set forth in this subpart is delegated to the Director, Bureau of 
Enforcement, Investigations, and Compliance. The Director, Bureau of 
Enforcement, Investigations, and Compliance, has the authority to 
negotiate the terms of compromise agreements, provided that any 
compromise agreement shall not become effective until the Commission 
has had the opportunity to review pursuant to Sec.  501.11(f)(2). [Rule 
604.]

    By the Commission.
William Cody,
Secretary.
[FR Doc. 2023-08073 Filed 4-14-23; 8:45 am]
BILLING CODE 6730-02-P