[Federal Register Volume 59, Number 247 (Tuesday, December 27, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31792]


[[Page Unknown]]

[Federal Register: December 27, 1994]


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DEPARTMENT OF TRANSPORTATION

Coast Guard

33 CFR Part 1

[CGD 93-079]
RIN 2115-AE68

 

Simplified Alternative Procedure for Resolving Civil Penalty 
Cases

AGENCY: Coast Guard, DOT.

ACTION: Final rule.

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SUMMARY: The Coast Guard is adopting as final, with minor revisions, an 
interim rule allowing for greater delegation by the District Commander 
and for a simplified alternative procedure for resolving civil penalty 
cases. This procedure streamlines the process for resolution of certain 
uncontested oil discharge and pollution prevention civil penalty cases 
by allowing a Coast Guard official to present a notice of violation 
(NOV) and proposed penalty to a party in the field.

EFFECTIVE DATE: January 26, 1995.

ADDRESSES: Unless otherwise indicated, documents referred to in this 
preamble are available for inspection or copying at the office of the 
Executive Secretary, Marine Safety Council (G-LRA/3406), U.S. Coast 
Guard Headquarters, 2100 Second Street SW., room 3406, Washington, DC 
20593-0001 between 8 a.m. and 3 p.m., Monday through Friday, except 
Federal holidays. The telephone number is (202) 267-1477.

FOR FURTHER INFORMATION CONTACT: Lieutenant Jonathan C. Burton, Project 
Manager, Marine Environmental Protection Division (G-MEP), (202) 267-
6714.

SUPPLEMENTARY INFORMATION:

Drafting Information

    The principal persons involved in drafting this document are 
Lieutenant Jonathan C. Burton, Project Manager, Marine Environmental 
Protection Division, and C.G. Green, Project Counsel, Office of the 
Chief Counsel.

Regulatory History

    On April 7, 1994, the Coast Guard published an interim final rule 
in the Federal Register (59 FR 16558) establishing an optional 
alternative civil penalty procedure and announced a six-month pilot 
implementation program to test the new procedure. The Coast Guard 
received 5 letters during the comment period and 4 after the comment 
period was closed. All comments were considered before drafting this 
final rule. No public hearing was requested, and none was held.

Background and Purpose

    The procedures for assessing civil penalties by the Coast Guard are 
contained in 33 CFR 1.07. The civil penalty process begins when an 
alleged violation is detected by, or reported to, a Coast Guard 
official. The alleged violation is investigated and, if it appears that 
the elements for a violation case exist, civil enforcement action is 
normally initiated by preparing a case report with a recommended 
penalty and forwarding it to the appropriate Coast Guard District 
office for review. Since the establishment of the Notice of Violation 
(NOV) option, some cases are now eligible for issuance of a NOV and 
parties are afforded the option of either paying the proposed penalty 
and closing the case, or having the violation processed through normal 
procedures.
    If the case is not eligible for NOV issuance or if the party 
declines the NOV, the District staff reviews the case report to verify 
that there was evidence sufficient to establish a prima facie case and 
that the recommended penalty is appropriate. The case file is then 
transmitted, with a recommended action, to the Hearing Officer. Based 
on the case file, the Hearing Officer independently determines whether 
prima facie evidence of a violation exists and, if so, sends a Letter 
of Notification to the alleged violator. This letter specifies, among 
other matters, the alleged violation(s) and a penalty amount deemed 
appropriate based on the information provided to the Hearing Officer. A 
party can pay the penalty amount specified by the Hearing Officer, 
request an in-person hearing, or provide written evidence or arguments 
in lieu of a hearing. If the party pays the penalty, the case is closed 
and no further action is required. If the party chooses either of the 
latter two options, the Hearing Officer either conducts an in-person 
hearing or reviews the submitted written evidence and arguments. The 
Hearing Officer then issues a written decision assessing a penalty or 
dismissing the case. The Hearing Officer's decision can be 
administratively appealed to the Commandant of the Coast Guard.
    The Notice of Violation option was developed to address the Coast 
Guard's concern that the civil penalty assessment process was too 
lengthy when applied to small (under 100 gallons) oil discharges and 
minor pollution prevention regulation violations. The lengthy process 
time meant that a party frequently would have additional violations 
before being notified by a Hearing Officer of the initiation of action 
for the first violation.
    The NOV option provides for early notification of alleged violators 
and offers early resolution of uncontested small oil spill and 
pollution prevention violations. Early resolution of these minor 
violations saves time and reduces costs of internal reviews, improves 
deterrence, and facilitates corrective action by providing a party with 
earlier notice of violations.
    The interim rule amended 33 CFR 1.07 to add the optional 
alternative procedure and the Coast Guard conducted a pilot program for 
six months in the Captain of the Port zones of Charleston, SC; 
Galveston, TX; and Los Angeles, CA. The result of the pilot program was 
favorable. During the pilot program 197 NOVs were issued for oil spills 
and 21 NOVs were issued for pollution prevention violations with a 
total penalty value of $96,400. As of October 13, 1994, 160 NOVs had 
been paid totaling $57,275 in penalties.
    The optional procedure allows early settlement of cases in which a 
Coast Guard issuing officer issues a NOV. A Coast Guard issuing officer 
is a commissioned, warrant or petty officer with specific training and 
authority to issue a violation notice.
    A party has the option of paying the penalty proposed on the NOV, 
declining the NOV, or taking no action on the NOV. If a party pays the 
proposed penalty indicated on a NOV, the case is closed without further 
processing by a District Program Manager or Hearing Officer. If a party 
declines the NOV or takes no action, the case is processed as if an NOV 
had never been issued. A complete case file, report and recommended 
penalty amount is sent to the District Commander for review prior to 
being forwarded to the Hearing Officer for processing as any other 
civil penalty case. The Hearing Officer's Letter of Notification would 
specify a penalty deemed appropriate based on the case file. The 
proposed penalty is not limited to the amount proposed in the field on 
the NOV.
    The NOV option will be implemented by Coast Guard Captains of the 
Port as soon as sufficient numbers of personnel have been trained in 
the issuance of NOVs. Representatives from each district, marine safety 
office, and detachment are being sent to a ``train the trainer'' course 
on the NOV option at the Coast Guard Reserve Training Center in 
Yorktown, VA. After the initial Yorktown training, each unit will be 
able to properly train additional personnel. Each district will 
publicize the dates when its units will start to use the NOV option.
    Use of the NOV option is initially being limited, by Commandant 
Directive, to violations of specified regulations and statutory 
requirements subject to Class I Administrative Civil Penalties under 
the Federal Water Pollution Control Act (FWPCA), as amended. A NOV can 
be issued for two types of violations: (1) oil discharges in violation 
of the FWPCA, if they are 100 gallons or less, and (2) violations of 
pollution prevention regulations (33 CFR Parts 154, 155, 156) for which 
the current penalty guidelines list a penalty not greater than $2500.
    Coast Guard issuing officers can issue a NOV only in cases that 
meet specific written guidance. Penalty amounts are taken from a 
penalty schedule and may not be increased or decreased by the issuing 
officer. Any case in which aggravating or extenuating circumstances are 
involved, or in which the violations do not meet the specific written 
guidance, is not eligible for NOV issuance and will be processed for 
referral to the Hearing Officer in accordance with normal procedures.

Delegation by the District Commander 33 CFR 1.07-10(b)

    The District Commander now has more flexibility to delegate 
authority for review of alleged violations to any member under the 
District Commander's command. For example, the District Commander may 
now delegate case review authority to the Captain of the Port for 
certain pollution prevention violations, thus eliminating the need for 
review by the District Commander's staff prior to forwarding the case 
to a Hearing Officer. The expanded delegation authority allows District 
Commanders greater flexibility in allocating their personnel resources 
to process violation cases.

Discussion of Comments and Changes

I. General Comments

    The Interim rule language of Sec. 1.07-11 and the NOV form used for 
the pilot program left the impression that a party could request a 
hearing on the proposed penalty offered by the NOV. In fact, if a party 
does not wish to accept the NOV, a full case is forwarded to the 
Hearing Officer who then makes an independent determination and issues 
a preliminary assessment letter to which the party can respond. To 
clarify this procedure Sec. 1.07-11 now specifies that the NOV include 
a statement that the party may decline the NOV and, if the NOV is 
declined, the party has the right to a hearing prior to a final 
assessment of a penalty by a Hearing Officer. The NOV also states that 
taking no action on the NOV has the same result as declining the NOV 
but the processing time may increase. Furthermore, the NOV form makes 
it clear that the Hearing Officer is in no way bound by any assessment 
proposed by the NOV. To facilitate understanding of these rights the 
NOV form is reproduced in Figure 1.

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TR27DE94.000


TR27DE94.001


BILLING CODE 4910-14-C
    Two comments received during the pilot program were in favor of the 
regulations and suggested that the NOV option be broadened to include 
other Coast Guard programs.
    The NOV option can be used by other Coast Guard programs that use 
the civil penalty process. Any program that implements use of the NOV 
option will do so by internal policy with prior notification to the 
public in the Federal Register.
    Three comments were in favor of the alternative process but 
suggested different penalty amounts for small oil spills and pollution 
prevention regulation violations.
    The penalty amounts specified for small oil spills and pollution 
prevention regulation violations used during the pilot program were 
based on current Commandant's policy guidelines for assessing Coast 
Guard civil penalties. These penalty amounts are reviewed regularly to 
ensure that they reflect a fair and equitable enforcement policy.
    The pilot program results indicated that the current small oil 
spill penalties were appropriate. However, the Coast Guard has revised 
some penalties for pollution prevention violations. Results of the 
pilot program indicated that using the same penalty amounts for 
pollution prevention violations as those specified in the current 
Commandant's policy guidelines for assessing Coast Guard civil 
penalties provided no incentive to accept an NOV. To encourage 
acceptance of the NOV, pollution prevention violations that have a 
recommended penalty of $2,500 or less under the Commandant's civil 
penalty guidelines will be proposed on an NOV at 75% of the amount 
listed for the specific offense. Pollution prevention violations that 
have a recommended penalty of $2,500 or more under the Commandant's 
civil penalty guidelines are no longer eligible for issuance of an NOV 
and will be sent to the Hearing Officer for a determination. The NOV 
option will be closely monitored to determine if additional spill 
categories or different penalties are needed in the future.
    Two comments asked that the determination of first offense be based 
on the record of each platform or vessel, not the company as a whole.
    The Coast Guard agrees that for purposes of NOV issuance each 
platform, vessel, or unit should be treated separately when determining 
whether or not it is a first offense for the purpose of assessing 
penalties. This is reflected in the NOV implementation guidance.
    One comment indicated that Coast Guard petty officers do not have 
the experience to make a judgment as to when to issue a NOV and that 
any assessment should only be made after review by a higher ranking 
authority.
    The Coast Guard disagrees. Coast Guard Petty Officers selected as 
issuing officers are trained professionals who have demonstrated 
knowledge and ability in their field. Before any Petty Officer 
investigates a violation and issues a NOV, he or she is first given 
proper instruction and is determined to be qualified by his or her 
command. Issuing officers, however, have no discretion in assessing 
penalty amounts. If an NOV is issued, the penalty amount is taken 
directly from the implementing guidance. If the offense does not meet 
specific criteria in the guidance, an NOV cannot be issued.
    One comment stated that a party should be given the right to be 
heard prior to the issuance of a NOV.
    The Coast Guard disagrees. A party is not entitled to a hearing 
prior to initiation of civil penalty action. Under Coast Guard 
procedures, the ``initiation of civil penalty action'' occurs with the 
Letter of Notification from a Hearing Officer, or in some cases with 
the NOV. The NOV does not take away any rights a party has to a 
hearing. The NOV procedure is voluntary, and the recipient of an NOV 
may opt to have the case processed under ordinary procedures which 
include the right to a hearing before disposition on the case.
    Three comments expressed general confusion over how the NOV option 
will work and concern about the protection of rights for a party issued 
an NOV.
    The NOV is an opportunity to use an optional procedure for 
processing civil penalty cases. It may be declined by a party. The NOV 
form states that a party may decline the NOV, which will immediately 
result in a violation case being forwarded through the appropriate 
district to a Hearing Officer for determination. The form also states 
that taking no action on the NOV has the same result as declining the 
NOV. A ``no action'' response will, however, delay the referral of the 
case to the District for review because the 45-day from issuance period 
must elapse before the Coast Guard begins processing the case under 
normal procedures. A change has been made to Sec. 1.07-11(b)(6) to 
reflect this procedure.
    Three comments expressed concern that the implementing guidance was 
not provided to the public during the pilot program.
    A number of individuals requested, and were provided, the Coast 
Guard's NOV guidance during the pilot program. A copy of current 
implementing guidance is available by writing to:
    Marine Environmental Protection Division (G-MEP), U.S. Coast Guard 
Headquarters, 2100 Second Street SW., room 3406, Washington, DC 20593-
0001.
    Three comments felt that a notice of proposed rulemaking (NPRM) 
should have been published instead of an interim final rule (IFR).
    The changes to 33 CFR 1.07 are procedural and provide a benefit to 
the public. Thus, under 5 U.S.C. 553(b)(3) a NPRM was not necessary. An 
IFR was published to provide a regulatory basis to conduct the pilot 
program. Comments were encouraged and a six month comment period was 
established. All comments were considered in implementing this final 
rule. The NOV procedure is optional and use of the procedure provides a 
benefit to the public. The IFR, however, requested comments both on the 
procedure and on its implementation. Those comments were considered 
before issuing this Final Rule, however no comments resulted in 
substantial change to the IFR.
    One comment expressed concern that Coast Guard personnel would be 
over-zealous in their prosecution of civil penalty cases against small 
business.
    The NOV option has safeguards built in to protect from such an 
occurrence. The criteria for using an NOV is based on the size of a 
spill and the violation history of the party to whom it may be issued. 
Issuing officers may not deviate from this criteria.
    One comment encouraged the Coast Guard to proceed with a final rule 
but make sure that all rights of a party are preserved and that ``no 
response'' should not be interpreted as acceptance of a penalty.
    As previously discussed, ``no response'' will result in processing 
of a violation through ordinary procedures as if a NOV had never been 
issued.
    One comment asked that the NOV be provided to an officer of the 
company that is being cited rather than an employee who may not pass it 
to the appropriate official. The comment also suggested that 60 days is 
a more reasonable time to respond.
    Since the purpose of the NOV option is to provide immediate 
notification of a settlement offer, it is impractical to always deliver 
the NOV to a company officer. Further, the NOV may be against an 
individual, not a company. Every effort is made to ensure that the 
correct responsible party is identified.
    As to the length of time to pay an NOV, the Coast Guard agrees that 
30 days was too short a period. As a result of the pilot program the 
Coast Guard had already decided to lengthen the time a party has to 
respond to an NOV. During the pilot program the number of NOVs paid 
within 30 days was approximately 65%, while payment before 45 days 
exceeded 85%. Therefore, the deadline for payment of a penalty in a NOV 
in order to avoid submission of the case to the Hearing Officer 
established in Sec. 1.07-11(b)(4) has been changed from 30 to 45 days.

Regulatory Evaluation

    No comments were received on the draft regulatory evaluation. This 
rule is not a significant regulatory action under section 3(f) of 
Executive Order 12866 and does not require an assessment of potential 
costs and benefits under section 6(a)(3) of that order. It is not 
significant under the ``Department of Transportation Regulatory 
Policies and Procedures'' (44 FR 11040; February 26, 1979). The Coast 
Guard expects there to be minimal economic impact from this procedural 
rule and a full Regulatory Evaluation is unnecessary. The total annual 
cost to the public from civil penalties is not increased by this rule. 
Both the public and the government should realize savings from the 
reduction in administrative processing costs through eliminating the 
need for review by the District Commander and action by the Hearing 
Officer in those cases in which the penalty specified in a NOV is paid 
within the allowed time by the party.

Small Entities

    Only one comment was received on the impact of the interim rule on 
small entities. That comment concerned potential over-zealous 
enforcement and is discussed in the comment section of this preamble. 
Under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), the Coast 
Guard considered whether this rulemaking would have a significant 
economic impact on a substantial number of small entities. ``Small 
entities'' include independently owned and operated small businesses 
that are not dominant in their field and that otherwise qualify as 
``small business concerns'' under section 3 of the Small Business Act 
(15 U.S.C. 632). This rule is administrative in nature, making final an 
alternate method of processing violation cases. The total number of 
civil penalties levied against the public does not substantially change 
as the result of this regulation. Therefore, the Coast Guard certifies 
under section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601 et 
seq.) that this rule will not have a significant economic impact on a 
substantial number of small entities.

Collection of Information

    This rulemaking contains no collection of information requirements 
under the Paperwork Reduction Act (44 U. S. C. 3501 et seq.).

Federalism

    No comments were received on the federalism implications of the 
interim rule. The Coast Guard has analyzed this rule under the 
principles and criteria contained in Executive Order 12612 and has 
determined that this rule does not have sufficient federalism 
implications to warrant the preparation of a Federalism Assessment.

Environment

    No comments were received on the environmental impact of the 
interim rule. The Coast Guard considered the environmental impact of 
this rulemaking and concluded that, under section 2.B.2 of Commandant 
Instruction M16475.lB, this rule is categorically excluded from further 
environmental documentation. Procedural rules do not require 
environmental impact studies.

List of Subjects in 33 CFR Part 1

    Administrative practice and procedure, Authority delegations 
(Government agencies), Freedom of Information, Penalties.

    Accordingly, the interim rule amending 33 CFR Part 1 which was 
published at 59 FR 16560 on April 7, 1994, is adopted as a final rule 
with the following change:

PART 1--[AMENDED]

    1. The authority citation for Subpart 1.01 continues to read as 
follows:

    Authority: 14 U.S.C. 633; 49 CFR 1.46.

Subpart 1.07--Enforcement; Civil and Criminal Penalty Proceedings

    2. Section 1.07-11 is revised to read as follows:


Sec. 1.07-11   Notice of violation.

    (a) After investigation and evaluation of an alleged violation has 
been completed, an issuing officer may issue a Notice of Violation to 
the party.
    (b) The Notice of Violation will contain the following information:
    (1) The alleged violation and the applicable law or regulations 
violated;
    (2) The amount of the maximum penalty that may be assessed for each 
violation;
    (3) The amount of proposed penalty that appears to be appropriate;
    (4) A statement that payment of the proposed penalty within 45 days 
will settle the case;
    (5) The place to which, and the manner in which, payment is to be 
made;
    (6) A statement that the party may decline the Notice of Violation 
and that if the Notice of Violation is declined, the party has the 
right to a hearing prior to a final assessment of a penalty by a 
Hearing Officer.
    (c) The Notice of Violation may be hand delivered to the party or 
an employee of the party, or may be mailed to the business address of 
the party.
    (d) If a party declines a Notice of Violation or takes no action on 
the Notice of Violation within 45 days, the case file will be sent to 
the District Commander for processing under the procedures described in 
Sec. 1.07-10(b).

    Dated: December 21, 1994.
J.C. Card,
Rear Admiral, U.S. Coast Guard, Chief, Office of Marine Safety, 
Security and Environmental Protection.
[FR Doc. 94-31792 Filed 12-23-94; 8:45 am]
BILLING CODE 4910-14-P