[Federal Register Volume 62, Number 154 (Monday, August 11, 1997)]
[Notices]
[Pages 43024-43027]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-21155]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Federal Railroad Administration
[FRA Docket No. SBR 97-1, Notice 1]
RIN NO. 2130--AB15
Interim Policy Statement Concerning Small Entities Subject to the
Railroad Safety Laws
AGENCY: Department of Transportation (DOT), Federal Railroad
Administration (FRA).
ACTION: Notice of interim statement of agency policy concerning small
entities subject to the railroad safety laws.
-----------------------------------------------------------------------
SUMMARY: In this notice, FRA explains its communication and enforcement
policies and programs concerning small businesses subject to the
federal railroad safety laws. These policies are being published
pursuant to requirements set forth in the Small Business Regulatory
Enforcement Fairness Act of 1996. FRA has in place programs that devote
special attention to the unique concerns and operations of small
entities in the administration of the national railroad safety
compliance and enforcement program. FRA expects that publication of
these policies and programs will enhance safe operations for small
railroads, contractors, and shippers, and improve communication between
FRA and small entities.
DATES: Effective Date: This Interim Statement of Policy is effective
October 10, 1997.
Written Comments: Written comments must be submitted to FRA before
November 30, 1997.
FOR FURTHER INFORMATION PLEASE CONTACT:
(1) Principal Program Person: Mark Weihofen, Office of Safety,
Planning and Evaluation Staff Director, RRS-21, Federal Railroad
Administration, 400 Seventh Street, SW, Stop 25, Washington, D.C.,
20590; telephone 202-632-3303.
(2) Principal Attorney: Christine Beyer, Office of Chief Counsel,
RCC-11, Federal Railroad Administration, 400 Seventh Street, SW, Stop
10, Washington, D.C., 20590; telephone 202-632-6189.
SUPPLEMENTARY INFORMATION:
I. Legislative Background
The Small Business Regulatory Enforcement Fairness Act of 1996
(Pub. L. No. 104-121) (SBREFA) establishes new requirements for federal
agencies to follow with respect to small businesses, creates new duties
for the Small Business Administration (SBA), and amends portions of the
Regulatory Flexibility Act (5 U.S.C. 601, et seq.) and the Equal Access
to Justice Act (EAJA) (5 U.S.C. 501, et seq.). The primary purposes of
SBREFA are to implement recommendations developed at the 1995 White
House Conference on Small Business, to provide small businesses
enhanced opportunities for judicial review of final agency action, to
encourage small business participation in the regulatory process, to
develop accessible sources of information on regulatory requirements
for small business, to create a cooperative regulatory environment for
small business, and to make federal regulators accountable for
``excessive'' enforcement actions.
In order to accomplish these goals, SBREFA, among other things,
requires federal enforcement agencies to institute two new policies.
The first is a communication policy, described in section 213 of the
legislation, in which each agency must ``answer inquiries by small
entities concerning information on, and advice about, compliance with''
statutes and regulations within the agency's jurisdiction,
``interpreting and applying the law to specific sets of facts supplied
by the small entity.'' The second is an enforcement policy, required by
section 223 of SBREFA, which requires each agency to establish a policy
or program
to provide for the reduction, and under appropriate circumstances
for the waiver, of civil penalties for violations of a statutory or
regulatory requirement by a small entity. Under appropriate
circumstances, an agency may consider ability to pay in determining
assessments on small entities.
This enforcement policy must include conditions or exclusions, such as
requiring a small entity to correct the violation within a reasonable
time; excluding small businesses that have been subject to several
enforcement actions by the agency; excluding actions that involve
willful or criminal conduct; excluding actions that pose serious
health, safety, or environmental threats; and requiring a good faith
effort to comply with the law.
SBREFA incorporates the definition for ``small entity'' that is
established by existing law (5 U.S.C. 601, 15 U.S.C. 632, 13 CFR part
121) for those businesses to be covered by the agency policies.
Generally, a small entity is a business concern that is independently
owned and operated, and is not dominant in its field of operation.
Also, ``small governmental jurisdictions'' that serve populations of
50,000 or less are small entities. (Commuter railroads are governmental
jurisdictions, and some may fit within this statutory delineation
[[Page 43025]]
for small governmental jurisdictions, or small entities.) An agency may
establish one or more other definitions for this term, in consultation
with the SBA and after opportunity for public comment, that are
appropriate to the agency's activities.
II. Definition of Small Entity in the Railroad Industry
Pursuant to its statutory authority, the SBA promulgated
regulations that clarify the term ``small entity'' by industry, using
number of employees or annual income as criteria. 13 CFR 121.101-108,
and 201. In the SBA regulations, main line railroads with 1500 or fewer
employees, and switching or terminal establishments with 500 or fewer
employees constitute small entities. The SBA regulations do not address
hazardous material shippers in the railroad industry.
Prior to the SBA regulations establishing size categories, the
Interstate Commerce Commission (ICC) developed a classification system
for freight railroads as Class I, II or III, based on annual operating
revenue. (The detailed, qualifying criteria for these classifications
are set forth in 49 CFR part 1201.) The Department of Transportation's
Surface Transportation Board, which succeeded the ICC, has not changed
these classifications. The ICC classification system has been used
pervasively by FRA and the railroad industry to identify entities by
size. The SBA recognizes this classification system as a sound one, and
concurs with FRA's decision to continue using it, provided the public
has notice of the classification system in use for any particular
proceeding and an opportunity to comment on it. FRA has decided to
define ``small entity,'' on an interim basis, to include only those
entities whose revenues would bring them within the Class III
definition. FRA believes this definition is a much more realistic and
useful place to draw the line for safety purposes than the general SBA
definition, but that several other possible definitions deserve
consideration. Therefore, for purposes of the Interim Statement of
Policy at this point in time, FRA wishes to clarify that small entities
are: the Class III railroads; the hazardous material shippers that meet
the income level established for Class III railroads (those with annual
operating revenues of $20 million per year or less, as set forth in 49
CFR 1201.1-1); railroad contractors that meet the income level
established for Class III railroads; and commuter railroads or small
governmental jurisdictions that serve populations of 50,000 or less.
The principles concerning the aggregation of company affiliates set
forth in DOT's regulations at 49 C.F.R. 6.7(f) apply to this definition
for purposes of claims brought under EAJA. However, FRA intends to
develop a new definition for the term ``small entity'' for the railroad
industry that will apply to the programs set forth in this Policy
Statement.
Therefore, FRA now invites comment from the public on potential,
alternative definitions for the term ``small entity.'' Suggested new
definitions should be accompanied by supportable rationale, including
economic and employee data, operating concerns, and an explanation of
how SBREFA's legislative intent would be met by the adoption of a
particular definition. The comments should also include how the
proposed definition would apply to railroads, shippers, commuter
railroads, and contractors working in the railroad industry.
FRA is contemplating several potential new definitions at this
time: fifteen employees subject to the hours of service laws, which was
established by Congress as a benchmark for small business exemptions in
the Hours of Service Act, 49 U.S.C. 20102, 21101-21107, 21303-4;
400,000 person/hours worked annually, which equates to approximately
200 employees and which FRA has used as a size classification in
regulatory programs in the past; the Class III income designation
currently in use; the employee delineations established by SBA
regulation for main line and switching railroads; any combination of
these; and entirely new designations. FRA invites comments from all
individuals and entities subject to the railroad safety laws and other
members of the public on these potential designations for ``small
entity'' or any additional classifications that have not yet been
discussed. After reviewing comments submitted, FRA will conduct a
public meeting to further discuss and consider potential designations
with all interested parties. Commenters should be aware that the
``small entity'' definition FRA adopts here on an interim basis and the
one it ultimately adopts will determine the entities that will be
considered small for purposes of Regulatory Flexibility Act analysis,
the Equal Access to Justice Act, and FRA's small business enforcement
policy and communication program. However, whatever ``small entity''
definition FRA adopts, FRA will retain the authority to use different
criteria to tailor the applicability of any regulations it issues to
address appropriately the specific safety problem at issue. For
example, even if FRA decides to retain the interim Class III standard
for ``small entity,'' it may issue a rule that applies only to
railroads with more than a certain number of annual person/hours or to
all railroads, regardless of size.
III. FRA's Small Business Communication and Enforcement Programs
FRA's purpose in publishing this notice and policy statement is to
formally announce and explain its communication and enforcement
policies concerning small entities in the railroad industry. FRA is
hopeful that this publication will, aside from achieving compliance
with the SBREFA requirements, enhance railroad safety in several ways:
the number of small entities that participate cooperatively in the
safety compliance and enforcement program will increase; small
businesses will gain a greater understanding of railroad safety
requirements; small entities will be encouraged to communicate more
freely with agency personnel to alleviate potential safety risks before
they become hazardous; and FRA's understanding of small operations will
improve.
FRA's small business communication program has existed for some
time, and continues to grow to meet the needs of our customers in the
railroad industry. FRA Office of Safety and Office of Chief Counsel
personnel, at the headquarters, regional and local level, devote a
great deal of attention to the inquiries and concerns of small
entities. FRA's program is flexible and responsive to the particular
need expressed. The agency's response takes a variety of forms: verbal
and written answers to questions received, training sessions for new or
existing small businesses on the substance of railroad safety
regulations, and advice on a particular standard or interpretation of a
standard. Some of the FRA Regional Administrators have established
programs in which small entities in the region meet with FRA regional
specialists on a regular basis to discuss new regulations, persistent
safety concerns, developing technology, and ongoing compliance issues.
FRA regional offices hold yearly conferences, in which specific blocks
of time are set aside to meet with small businesses and hear their
concerns. In addition, FRA has instituted new, innovative programs that
expand our existing communication policy for small entities. The
Railroad Safety Advisory Committee and Technical Resolution Committees,
which play an integral role in the development of railroad safety
regulations and the clarification of regulatory interpretations,
include representatives of small businesses.
[[Page 43026]]
Similarly, FRA's enforcement program devotes special attention to
ensuring that the limited financial resources of small entities are
considered during the enforcement process. FRA inspectors have and
utilize discretion when determining whether a civil penalty citation or
other enforcement action should be taken against a small entity. Staff
attorneys in FRA's Office of Chief Counsel regularly assess information
provided by a company concerning the degree to which fines will impact
the viability of a small business, and the extent to which a fine may
prevent the business from improving the safety of its operation. In
fact, the federal railroad safety laws include the requirement that
agency personnel consider a respondent's ability to pay in any civil
penalty action taken. Staff attorneys regularly invite small entities
to present information concerning financial status and other factors
that may result in a reduction or waiver of penalty assessments. FRA
has instituted a new enforcement program, the Safety Assurance and
Compliance Program (SACP), that also benefits small entities, and it is
described in more detail in the interim policy statement set forth
below.
FRA anticipates that when this interim policy statement becomes
final, it will be codified in the Code of Federal Regulations as an
appendix to 49 CFR part 209, so that all members of the public have
access to it as needed. The terms ``small business'' and ``small
entity'' have identical meaning for purposes of this document, and are
used interchangeably throughout.
Comments Requested
FRA invites written comment on the definition of ``small entity,''
potential alternative definitions, and supporting rationale for
suggested alternative definitions. Please direct all written comments
in triplicate to the Docket Clerk, FRA, 400 Seventh Street, SW, Stop
10, Washington, D.C. 20590 before November 30, 1997.
Federal Railroad Administration Interim Statement of Agency Policy
Concerning Small Entities
This interim policy statement explains FRA's communication and
enforcement policies concerning small entities subject to the federal
railroad safety laws. These policies have been developed to take into
account the unique concerns and operations of small businesses in the
administration of the national railroad safety program, and will
continue to evolve to meet the needs of our customers in the railroad
industry. For purposes of this policy statement, Class III railroads,
contractors and hazardous materials shippers meeting the economic
criteria established for Class III railroads in 49 CFR 1201.1-1, and
commuter railroads that serve populations of 50,000 or less constitute
the class of organizations considered ``small entities'' or ``small
businesses.''
FRA understands that small entities in the railroad industry have
significantly different characteristics than large carriers and
shippers. FRA believes that these differences necessitate careful
consideration in order to ensure that those entities receive
appropriate treatment on compliance and enforcement matters, and
enhance the safety of railroad operations. Therefore, FRA has developed
programs to respond to compliance-related inquiries of small entities,
and to ensure proper handling of civil penalty and other enforcement
actions against small businesses.
Small Entity Communication Policy
It is FRA's policy that all agency personnel respond in a timely
and comprehensive fashion to the inquiries of small entities concerning
rail safety statutes, safety regulations, and interpretations of these
statutes and regulations. Also, FRA personnel provide guidance to small
entities, as needed, in applying the law to specific facts and
situations that arise in the course of railroad operations. These
agency communications take many forms, and are tailored to meet the
needs of the requesting party.
FRA inspectors provide training on the requirements of all railroad
safety statutes and regulations for new and existing small businesses
upon request. Also, FRA inspectors often provide impromptu training
sessions in the normal course of their inspection duties. FRA believes
that this sort of preventive, rather than punitive, communication
greatly enhances railroad safety. FRA's Office of Safety and Office of
Chief Counsel regularly provide verbal and written responses to
questions raised by small entities concerning the plain meaning of the
railroad safety standards, statutory requirements, and interpretations
of the law. As required by the Small Business Regulatory Enforcement
and Fairness Act of 1996 (SBREFA), when FRA issues a final rule that
has a significant impact on a substantial number of small entities, FRA
will also issue a compliance guide for small entities concerning that
rule.
It is FRA's policy to maintain frequent and open communications
with the national representatives of the primary small entity
associations and to consult with these organizations before embarking
on new policies that may impact the interests of small businesses. In
some regions of the country where the concentration of small entities
is particularly high, FRA Regional Administrators have established
programs in which all small entities in the region meet with FRA
regional specialists on a regular basis to discuss new regulations,
persistent safety concerns, emerging technology, and compliance issues.
Also, FRA regional offices hold periodic conferences, in which specific
blocks of time are set aside to meet with small businesses and hear
their concerns.
In addition to these communication practices, FRA has recently
instituted innovative partnership programs that expand the extent to
which small entities participate in the development of policy and
process. The Railroad Safety Advisory Committee (RSAC) has been
established to advise the agency on the development and revision of
railroad safety standards. The committee consists of a wide range of
industry representatives, including organizations that represent the
interests of small business. The small entity representative groups
that sit on the RSAC may appoint members of their choice to participate
in the development of new safety standards. This reflects FRA's policy
that small business interests must be heard and considered in the
development of new standards to ensure that FRA does not impose
unnecessary economic burdens, and to create more effective standards.
Similarly, FRA has established Technical Resolution Committees for each
railroad safety discipline, which meet throughout the country to
discuss, refine, and clarify compliance policies and interpretations of
existing safety standards. These committees generally include small
business representation and provide another avenue of communication
between FRA and small entities. Finally, FRA has established a home
page on the Internet and makes pertinent agency information available
to the public in that medium. FRA's internet address is http://
www.fra.dot.gov and any particular FRA employee can be reached by
entering the following: first name.last [email protected].
FRA's longstanding policy of open communication with small entities
is apparent in these practices. FRA will make every effort to develop
new and equally responsive communication procedures as is warranted by
new developments in the railroad industry.
[[Page 43027]]
Small Entity Enforcement Policy
FRA has adopted an enforcement policy that addresses the unique
nature of small entities in the imposition of civil penalties and
resolution of those assessments. Pursuant to FRA's statutory authority
and as described in 49 CFR part 209, Appendix A, it is FRA's policy to
consider a variety of factors in determining whether to take
enforcement action against persons, including small entities, who have
violated the safety laws and regulations. In addition to the
seriousness of the violation and the person's history of compliance,
FRA inspectors consider ``such other factors as the immediate
circumstances make relevant.'' In the context of violations by small
entities, those factors include whether the violations were made in
good faith (e.g., based on an honest misunderstanding of the law) and
whether the small entity has moved quickly and thoroughly to remedy the
violation(s). In general, the presence of both good faith and prompt
remedial action militates against taking a civil penalty action,
especially if the violations are isolated events. On the other hand,
violations involving willful actions and/or posing serious health,
safety, or environmental threats should ordinarily result in
enforcement actions, regardless of the entity's size.
Once FRA has assessed a civil penalty, it collects at least the
statutory minimum amount ($250 for hazardous materials violations and
$500 for all others) unless it must terminate the claim for some
reason. However, civil penalties may be reduced from the initial
assessment based on the consideration of a variety of criteria found in
the railroad safety statutes and SBREFA: the severity of the safety,
health or environmental risk presented; the existence of alternative
methods of eliminating the safety hazard; the entity's culpability; the
entity's compliance history; the entity's ability to pay the
assessment; the impacts an assessment might exact on the entity's
continued business; and evidence that the entity acted in good faith.
FRA staff attorneys regularly invite small entities to present any
information related to these factors, and reduce civil penalty
assessments based on the value and integrity of the information
presented. Staff attorneys conduct conference calls or meet with small
entities to discuss pending violations, and explain the merits of any
defenses or mitigating factors presented that may have resulted or
failed to result in penalty reductions. Among the ``other factors'' FRA
considers at this stage is the promptness and thoroughness of the
entity's remedial action to correct the violations and prevent a
recurrence. Small entities should be sure to address these factors in
communications with FRA concerning civil penalty cases. Such long-term
solutions to compliance problems will be given great weight in FRA's
determinations of a final settlement offer.
Finally, under FRA's Safety Assurance and Compliance Program
(SACP), FRA identifies systemic safety hazards that continue to occur
in a carrier or shipper operation, and in cooperation with the subject
business, develops an improvement plan to eliminate those safety
concerns. Typically, the plan provides small entities with a reasonable
time frame in which to make improvements without the threat of civil
penalty. If FRA determines that the entity has failed to comply with
the improvement plan, however, enforcement action is initiated.
FRA's small entity enforcement policy is flexible and
comprehensive. FRA's first priority in its compliance and enforcement
activities is public and employee safety. However, FRA is obtaining
compliance and enhancing safety with reasoned, fair methods that do not
inflict undue hardship on small entities.
Submitted in Washington, DC, on August 6, 1997.
Donald M. Itzkoff,
Deputy Administrator.
[FR Doc. 97-21155 Filed 8-8-97; 8:45 am]
BILLING CODE 4910-06-P