[Federal Register Volume 62, Number 247 (Wednesday, December 24, 1997)]
[Notices]
[Pages 67369-67372]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33560]


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FEDERAL MARITIME COMMISSION


Small Business Regulatory Enforcement Fairness Act: 
Implementation

AGENCY: Federal Maritime Commission.

ACTION: Notice.

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SUMMARY: On March 29, 1996, Public Law 104-121 was enacted. Title II of 
the bill, called the ``Small Business Regulatory Enforcement Fairness 
Act of 1996'' (``SBREFA''), affects the Federal Maritime Commission's 
(``Commission'') rulemaking procedures and will attach additional 
requirements to other Commission regulatory activity that may impact 
upon small businesses.
    This Notice defines ``small business'' for Commission regulatory 
purposes; announces new procedures for rulemakings affecting small 
businesses; and establishes two programs required by SBREFA: (1) A 
program for responding to certain informal inquiries from small 
businesses; and (2) a policy regarding reduction or waiver of civil 
penalties in certain cases involving small businesses.

EFFECTIVE DATE: December 24, 1997.

FOR FURTHER INFORMATION CONTACT:
Vern W. Hill, Director, Bureau of Enforcement, Federal Maritime 
Commission, 800 North Capitol Street, NW., Washington, DC 20573, (202) 
523-5783.

SUPPLEMENTARY INFORMATION: Sections 202-245, Title II of Public Law 
104-121, effective June 27, 1996, place a number of obligations on the 
Commission whenever it regulates ``small business concerns'' as defined 
by 15 U.S.C. 632 and regulations issued thereunder by the Small 
Business Administration (``SBA'').

``Small Business '' Defined

    Initially, the Commission must decide whether to adopt the SBA's 
definitions of ``small business'' as being appropriate for the 
Commission's regulatory purposes. Alternatively, the Commission may, 
after consultation with the Office of Advocacy of the SBA, and after 
providing opportunity for public comment, establish its own standards 
for determining which of its regulated entities should appropriately be 
considered small businesses within the context of Commission 
regulation,

[[Page 67370]]

and publish such standards in the Federal Register.
    To make that initial determination, the Commission reviewed SBA 
classifications and standards, and consulted with the SBA's Office of 
Advocacy. From these sources, we learned that SBA definitions, 
classifications and standards are intended to be as inclusive of small 
businesses as possible; a purpose which does necessarily coincide with 
the Commission's regulatory mandate.
    The SBA catalogues businesses along industry lines using the 
Standard Industrial Classification Manual (``SIC'') published by the 
Executive Office of the President, Office of Management and Budget. SBA 
then, in accordance with its regulations at 13 CFR 121.201, determines 
which entities in each classification are small business establishments 
based upon the number of their employees or the establishment's annual 
receipts in millions of dollars.
    The Commission identified the following SIC categories and codes as 
falling within our regulatory jurisdiction:

4412  Deep Sea Foreign Transportation of Freight (Vessel Operating 
Common Carriers--``VOCCs'')
4481  Deep Sea Transportation of Passengers (Passenger Vessel 
Operators--``PVOs'')
4491  Marine Cargo Handing (Marine Terminal Operators--``MTOs'')
4731  Arrangement of Transportation of Freight and Cargo (Ocean 
Freight Forwarders--``OFFs''; and Non-Vessel Operating Common 
Carriers--``NVOCCs'')

    Business entities in Categories 4412 and 4481, VOCCs and PVOs, are 
evaluated by SBA according to their number of employees. The SBA has 
determined that if such business establishments have less than 500 
employees, they qualify as a small businesses for SBA purposes. 
Business establishments in Categories 4491 and 4731, NVOCCs, OFFs and 
MTOs, are evaluated by their annual receipts in millions of dollars. 
For these categories, SBA determined that business establishments with 
annual receipts (gross annual revenues) or less than $18.5 million are 
small businesses.
    As stated, the Commission could accept these SBA standards and 
treat VOCCs and PVOs having fewer than 500 employees, and MTOs, OFFs 
and NVOCCS having less than $18.5 million in gross annual revenues, as 
small businesses; or, following established procedures, we could 
develop our own standards more closely oriented to the Commission's 
regulatory framework.
    The dilemma is that, unlike other agencies which may choose to 
develop their own standards, the Commission neither collects nor 
maintains any data regarding the number of employees or gross annual 
revenues of the entities it regulates. Indeed, we have no preexisting 
regulatory purpose for doing so. Thus, for the Commission to create 
standards by which to define ``small businesses'', and to determine 
which regulated entities fall within those standards, a major 
collection of data from all industry segments would have to be 
undertaken. Moreover, many of the Commission's regulated entities are 
foreign domiciles from whom such data is not readily accessible. Even 
assuming sufficient data could be obtained by the Commission, the 
collection and requisite economic analysis of that data would entail an 
unfeasible expenditure of time and resources. For these reasons, the 
Commission has determined to adopt the SBA's inclusive standards. Thus, 
in the future, the Commission will be considering the small business 
impact of many of its regulatory undertakings.
    However, it is apparent that many Commission regulated entities are 
VOCCs, PVOs and MTOs which generally are very large companies with far 
in excess of 500 employees, in the case of VOCCs and PVOs, and $18.5 
million in gross revenues in the case of MTOs. These companies, as well 
as conferences or associations of such companies, generally represented 
by retained counsel, frequently raise, informally, complex issues 
responding to which involves considerable Commission time and effort. 
Such entities are not the intended small business beneficiaries of 
SBREFA.
    Accordingly, the Commission is making a rebuttable presumption that 
VOCCs and PVOs, as well as conferences and associations comprised of 
VOCC and PVO members, have more than 500 employees, and that MTOs at 
United States ports, as well as conferences and associations of such 
MTOs, earn gross revenues in excess of $18.5 million per year. Thus, 
VOCCs, PVOs and MTOs are presumed not to be small businesses 
encompassed within the programs and policies mandated by SBREFA.
    Nevertheless, any VOCC or PVO with fewer than 500 employees, or any 
MTO with less than $18.5 million in gross annual revenues, that seeks 
to be treated as a small business for Commission regulatory purposes, 
may submit a request to such treatment to the Secretary of the 
Commission, along with payroll or gross annual revenues evidence, as 
applicable, sufficient to substantiate its claim and rebut the 
presumption.

Rulemaking Affecting Small Businesses

    Section 241 of Title II amends the Regulatory Flexibility Act 
(``RFA''), 5 U.S.C. 603, and sets forth additional requirements 
applicable to rulemaking proceedings that will have a significant 
economic impact on a substantial number of small businesses. Under 
section 242, small businesses now can seek judicial review of 
Commission compliance with RFA requirements.

Compliance Guides

    As required by section 212, each rule promulgated by the Commission 
in the future that significantly affects a substantial number of small 
businesses will include a ``compliance guide'' to assist small 
businesses in complying with that rule. The content of the compliance 
guide may be taken into account by a reviewing court ``as evidence of 
the reasonableness or appropriateness'' of any proposed penalties for 
noncompliance with the rule.

Negative Certifications and Regulatory Flexibility Analyses

    The RFA requires federal agencies either to certify that a `` * * * 
rule will not have a significant economic impact on a substantial 
number of small entities'', or to prepare a regulatory flexibility 
analysis. Because there are no developed standards or decisional 
guidelines available for measuring ``significant economic impact'' or 
``substantial number of small entities'', the meaning of those terms 
will be developed on a case by case basis.
    If a proposed rule will not have a significant economic impact on a 
substantial number of small entities, either adverse or beneficial, an 
initial regulatory flexibility analysis is not required. In these 
instances, the RFA authorizes the Commission's Chairman to make a 
negative certification with respect to that rulemaking. To make this 
threshold determination, the Commission will undertake a preliminary 
analysis to evaluate the economic impact of a proposed rule on small 
business entities. Once this preliminary analysis is completed, the 
Commission either will make a negative certification or undertake an 
initial regulatory flexibility analysis. A certification of a finding 
of no significant impact on a substantial number of entities will be 
published with the proposed rule in the Federal Register and will be 
accompanied by an explanation of the factual and economic bases for the 
certification. The negative

[[Page 67371]]

certification is subject to judicial review.
    When a proposed rule is expected to have a significant economic 
impact, beneficial or adverse, on a substantial number of small 
entities, an initial regulatory flexibility analysis will be prepared. 
The initial regulatory flexibility analysis or a summary of it will be 
published in the Federal Register with the proposed rule.
    Under section 603(b) of the RFA, each initial regulatory 
flexibility analysis is required to address: (1) reasons why the agency 
is considering the action, (2) the objectives and legal basis for the 
proposed rule, (3) the kind and number of small entities to which the 
proposed rule will apply, (4) the projected reporting, record keeping 
and other compliance requirements of the proposed rule, and (5) federal 
rules that may duplicate, overlap or conflict with the proposed rule. 
In addition, each initial regulatory flexibility analysis must describe 
any significant alternatives to the proposal that accomplish the 
statutory objectives and minimize the significant negative economic 
impact of the proposal on small entities.
    When the Commission issues a final rule, it will prepare a final 
regulatory flexibility analysis or certify that the rule will not have 
a significant economic impact on a substantial number of small 
entities. A final regulatory flexibility analysis will discuss the 
comments received, the alternatives considered and the rationale for 
the final rule. The analysis itself or a summary thereof will be 
published in the Federal Register with the final rule. The final 
regulatory flexibility analysis is subject to judicial review.

Programs and Policies To Address Small Business Concerns

    SBREFA requires:
    (1) That the Commission establish a program for responding to 
informal compliance inquiries from small businesses (section 213); and 
(2) That the Commission establish a policy or program for reduction or 
waiver of civil penalties for violations by small businesses of 
statutory or regulatory requirements (section 223).

Program to Respond To Informal Inquiries From Small Businesses

    The staff of the Commission has always responded informally to 
telephonic inquiries from the regulated public. Such inquiries are 
received daily, and often are handled routinely. Many inquiries involve 
simple questions regarding matters such as tariff filings, licensing 
and bonding, as well as procedural matters. Others are far more complex 
and time consuming, involving contingencies and variables that must be 
clarified or resolved even before the precise issue can be identified. 
Most often, the latter type inquiries, and those requiring lengthy 
discussions and follow-up discussions, are from VOCCs, PVOs and MTOs 
through their retained counsel. For the same reasons discussed above, 
the Commission does not consider inquiries from these sources to be 
within the contemplation of the informal inquiry program required by 
SBREFA.
    While the Commission will continue to provide informal assistance 
to all persons subject to its jurisdiction, with respect to inquiries 
from small businesses, current practices are being augmented because of 
SBREFA's new requirements that:
    (1) After 2 years, the Commission must report on the scope of the 
Commission's program and the achievements of the program in assisting 
small businesses to comply with agency statutes and regulations; and
    (2) The agency may be held accountable for the content of its 
advice regarding an inquirer's compliance with statutory or regulatory 
requirements. The substance of such advice can be raised in any 
subsequent appeal of a civil penalty imposed against a participating 
small business entity.
    In accordance with SBREFA, and because of its reporting and 
accountability provisions, the Commission is establishing the following 
procedures:
    Small businesses subject to Commission jurisdiction are invited to 
make informal inquiries regarding the lawfulness of their own 
activities. This program will apply to those small busineses that, at 
the time fo the inquiry, identify themselves and the type of their 
business operations, for example, NVOCC or OFF.
    Inquiries may be submitted by telephone, letter or e-mail depending 
upon the nature and complexity of the inquiry as determined, 
ultimately, by the person receiving the inquiry. Additional information 
may be required and requested. Responses will be prvovided by 
telephone, letter or e-mail, as appropriate in the opinion of the 
person responding.
    The program goal is to provide prompt telephonic advice when 
possible, or a written response within 20 days of the date that all 
necessary information has been received. The Commission will make and 
retain records of each informal inquiry made under this program in 
order to document the name and description of the inquirer, relevant 
dates, and the substance of the inquiry and the response thereto.
    Depending on subject matter, inquiries by entities that are small 
businesses shall be submitted to the following individuals at the 
Federal Maritime Commission, 800 North Capitol Street, N.W., 
Washington, D.C. 20573-0001; or at the telephone number or e-mail 
address listed below:
PASSENGER VESSEL CERTIFICATION
Theodore A. Zook............................202-523-5856; T[email protected]
Curt L. Ohlsson.............................202-523-5856; C[email protected]
OCEAN FREIGHT FORWARDERS
Betty J. Bennett...........................202-523-5843; B[email protected]
Elnora V. Howard...........................202-523-5843; E[email protected]
VOCC, NVOCC and MTO TARIFF MATTERS
James G. Cannon............................202-523-5818; J[email protected]
Roland E. Ramlow..........................202-523-5818; R[email protected]
Martin W. Wilson..........................202-523-5818; M[email protected]
Ernest L. Estes...........................202-523-5818; E[email protected]
James H. McEachin.........................202-523-5818; J[email protected]
SERVICE CONTRACT MATTERS
Theodore A. Zook............................202-523-5856; T[email protected]
Mamie H. Black.............................202-523-5856; M[email protected]
Roland E. Ramlow..........................202-523-5856; R[email protected]
AUTOMATED TARIFF FILING AND INFORMATION (``ATFI'') REGISTRATIONS
Anne E. Trotter..............................202-523-5818; A[email protected]
Hattie R. Broadnax........................202-523-5818; H[email protected]
ATFI ACCESS, USE AND FEES
Pat N. Gorski.................................202-523-5834; P[email protected]
AGREEMENT MATTERS
Jeremiah D. Hospital.....................202-523-5793; J[email protected]
TRADE MONITORING MATTERS
Frank J. Schwarz...........................202-523-5845; F[email protected]
    The Office of Informal Inquiries, Complaints and Informal Dockets 
(``OIIC'') (Telephone: 202-523-5807, E-mail: J[email protected]) will 
continue to receive informal complaints and will attempt informally to 
resolve related disputes. OIIC also will be the

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designated recipient of inquiries from small businesses under SBREFA 
with respect to subjects not specified above.
    Questions regarding the Commission's Rules of Practice and 
Procedure, 46 CFR Part 502, do not fall within the scope of this 
program and should be directed to the Office of the Secretary (202-523-
5725). Other requests for assistance from persons not covered by 
SBREFA, as in the past, may be directed, as applicable, to the Office 
of the General Counsel (202-523-5740), Bureau of Enforcement (202-523-
5783), Bureau of Economics and Agreement Analysis (202-523-5787) or the 
Bureau of Tariffs, Certification and Licensing (202-523-5796; 
[email protected]).

Reduction or Waiver Of Civil Penalties for Violations by Small 
Business

    As stated above, SBREFA (Sec. 223) requires that the Commission 
establish a policy for reduction or waiver of civil penalties for 
statutory or regulatory violations by small businesses. Within two 
years, the Commission must report to four Congressional Committees on: 
(1) The scope of the policy or program; (2) the number of enforcement 
actions that qualified or failed to quality for the program or policy; 
and (3) the total amount of penalty reductions and waivers granted. 
SBREFA and its legislative history suggest certain approaches, i.e., 
consider ability to pay; consider good faith shown by the small 
business; require that the violation be discovered through an agency 
supported compliance assistance program; and allow for violations to be 
corrected within a reasonable time. Repeat offenses or violations 
involving willful or criminal conduct are not intended to be included 
within the policy.

Reduction of Civil Penalties

    The Commission already is subject to statutory requirements with 
regard to civil penalties, including consideration of a respondent's 
ability to pay, as well as its size and financial condition and the 
circumstances of the violation. The Commission has followed those 
requirements in the past and will continue to do so in the future. In 
addition, appropriate records will be maintained so that the Commission 
can fulfill its responsibility to file requisite reports to Congress.

Voluntary Compliance and Waiver of Civil Penalties

    The Commission has established an internal policy, to be used in 
appropriate cases, to obtain ``voluntary'' compliance by, and waiver of 
civil penalties against, small businesses found to be violating 
Commission statutes or regulations.
    Under this program, each subject of an investigation will be 
evaluated to determine whether, in the circumstances of that particular 
case, a demand for civil penalties, or compliance and waiver of civil 
penalties, would be the more effective regulatory tool. In making this 
determination, the following factors will be considered:
    1. Whether the violation was knowing and willful, involved fraud or 
financial gain or caused injury to the public;
    2. The subject's history of prior offenses;
    3. Extent to which the subject demonstrates a good faith desire to 
comply with Commission requirements in the future; and
    4. The subject's ability to pay a civil penalty.
    Appropriate records will be maintained in order for the Commission 
to fulfill its responsibility for filing required reports to Congress.

    By the Commission.
Ronald D. Murphy,
Assistant Secretary.
[FR Doc. 97-33560 Filed 12-23-97; 8:45 am]
BILLING CODE 6730-01-M