[Federal Register Volume 84, Number 196 (Wednesday, October 9, 2019)]
[Rules and Regulations]
[Pages 54037-54040]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-21640]



46 CFR Parts 501 and 502

[Docket No. 19-07]
RIN 3072-AC78

Delegations to Bureau of Enforcement and Enforcement Procedures

AGENCY: Federal Maritime Commission.

ACTION: Direct final rule; request for comments.


SUMMARY: The Federal Maritime Commission (Commission) is revising its 
delegations to the Bureau of Enforcement and its procedures for 
initiating enforcement action in order to facilitate Commission 

DATES: The rule is effective without further action on December 23, 
2019, unless significant adverse comments are filed prior to November 
8, 2019. If significant adverse comments are received, the Commission 
will publish a timely withdrawal of the rule in the Federal Register no 
later than November 25, 2019.

ADDRESSES: You may submit comments, identified by Docket No. 19-07, by 
the following methods:
     Email: [email protected]. For comments, include in the 
subject line: ``Docket No. 19-07, Comments on Delegations to Bureau of 
Enforcement and Enforcement Procedures.'' Comments should be attached 
to the email as a Microsoft Word or text-searchable PDF document. Only 
non-confidential and public versions of confidential comments should be 
submitted by email.
     Mail: Rachel E. Dickon, Secretary, Federal Maritime 
Commission, 800 North Capitol Street NW, Washington, DC 20573-0001.
    Instructions: For detailed instructions on submitting comments, 
including requesting confidential treatment of comments, and additional 
information on the rulemaking process, see the Public Participation 
heading of the Supplementary Information section of this document. Note 
that all comments received will be posted without change to the 
Commission's website, unless the commenter has requested confidential 
    Docket: For access to the docket to read background documents or 
comments received, go to the Commission's Electronic Reading Room at: 
https://www2.fmc.gov/readingroom/proceeding/19-07/, or to the Docket 
Activity Library at 800 North Capitol Street NW, Washington, DC 20573, 
between 9:00 a.m. and 5:00 p.m., Monday through Friday, except Federal 
holidays. Telephone: (202) 523-5725.

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


I. Introduction

    The Commission's Bureau of Enforcement (BOE) is responsible for 
investigating potential violations of the Shipping Act of 1984 and 
Commission regulations, and initiating enforcement actions. Such 
actions include formal Commission proceedings and informal compromises 
of civil penalties. While Commission approval is necessary to initiate 
formal Commission proceedings, BOE currently has broad delegated 
authority with respect to informal enforcement action. Specifically, 
BOE has the authority, with the approval of the Commission's Managing 
Director, to send out Notice and Demand Letters (NDLs) describing 
alleged violations and demanding civil penalties, and to enter

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into agreements with the respondents compromising the penalties 
(compromise agreements).
    These activities may currently be conducted without input from or 
approval by the Commission, thereby denying the Commissioners--the 
policy officers for the Commission--the opportunity to provide ongoing 
oversight and guidance to BOE enforcement priorities or to approve 
final settlement agreements. In order to improve such oversight, the 
Commission is revising the delegations to BOE and the regulations 
governing formal enforcement action and informal compromise procedures.
    These revised procedures include a single pre-enforcement process 
that will: (1) Provide notice to the subjects of investigations that 
BOE intends to recommend that the Commission initiate enforcement 
proceedings and allow them an opportunity to respond before BOE submits 
those recommendations; (2) require Commission approval before formal or 
informal enforcement action is undertaken; and (3) require Commission 
approval of any proposed compromise agreements.

II. Background

    The 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. Both types of actions begin with a BOE investigation of 
potential violations.
    BOE does not have delegated authority to initiate formal 
enforcement action under Sec.  502.63; when BOE determines that such 
action is warranted, BOE recommends to the Commission that it issue an 
Order of Investigation and Hearing initiating an adjudicatory 
investigation before a Commission Administrative Law Judge. The 
Commission then votes on the recommendation. There is no current 
requirement, however, that BOE notify the subject of the investigation 
or allow them to submit their written views on the investigation prior 
to BOE making a recommendation to the Commission.
    BOE does, however, have delegated authority under Sec. Sec.  
501.5(i)(2), 501.28, and 502.604(g) to initiate informal compromise 
procedures under Sec.  502.604, subject to the prior approval of the 
Commission's Managing Director. Those procedures begin with the 
issuance of an NDL to the person believed to have committed one or more 
violations. See Sec.  502.604(b). The NDL describes: (1) The 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; (2) 
the amount of the penalty demanded; (3) the availability of alternative 
dispute resolution; and (4) the names of Commission personnel with whom 
the demand may be discussed, if the person desires to compromise the 
penalty. Id. The NDL also states the deadlines for the institution and 
completion of compromise negotiations and the consequences of failure 
to compromise. Id.
    Any person receiving an NDL may, within the time period specified 
in the NDL, deny the violation or submit matters explaining, mitigating 
or showing extenuating circumstances, and may also make voluntary 
disclosures of information and documents. Sec.  502.604(c). Civil 
penalties demanded by an NDL may be compromised based on specific 
criteria, and the person receiving the NDL may enter into a compromise 
agreement with the Commission that includes certain specified terms. 
Sec.  502.604(d)-(e). BOE currently has delegated authority to 
negotiate the terms of compromise agreements, but both the BOE Director 
and the Managing Director must approve and sign the compromise 
agreement for it to be effective. Sec.  502.604(g).

III. Regulatory Changes

    As described briefly above, the Commission is amending its 
delegations of authority and enforcement procedures in order to 
increase Commission oversight over the institution of enforcement 
proceedings and to allow the subjects of investigations an opportunity 
to respond to BOE's allegations prior to a recommendation for 
enforcement action being submitted to the Commission. This process is 
based on the Wells Process used by the Securities and Exchange 
Commission's (SEC) Division of Enforcement. See SEC, Division of 
Enforcement, Enforcement Manual section 2.4 (Nov. 28, 2017).\1\

    \1\ Available at https://www.sec.gov/divisions/enforce/enforcementmanual.pdf.

A. Delegation of Authority to BOE

    Similar to the current process for formal Commission enforcement 
action, the Commission is revising its delegations of authority in 
Sec. Sec.  501.5(i), 501.28, and 502.604 to require Commission approval 
to initiate informal compromise procedures and Commission approval of 
any compromise agreement before it becomes effective.

B. Pre-Enforcement Process

    The Commission is adding a new paragraph to Sec.  502.63 to reflect 
a new pre-enforcement process that includes notice to the subject of an 
investigation that BOE is planning to recommend that the Commission 
initiate enforcement action, and an opportunity for the subject of the 
investigation to submit a written statement to BOE that will be 
included in BOE's recommendation to the Commission. The regulatory 
changes are intended to provide a basic framework for the new process; 
the Commission may issue additional guidance or internal enforcement 
policies to facilitate implementation.
    Because the new process includes notice and an opportunity to 
respond, the Commission is eliminating the NDL and response provisions 
in Sec.  502.604(b) and (c) as duplicative. The Commission is making 
other conforming amendments to Sec. Sec.  502.603 and 502.604 to 
reflect the changes in Sec.  502.63.

IV. Public Participation

How do I prepare and submit comments?

    Your comments must be written and in English. To ensure that your 
comments are correctly filed in the docket, please include the docket 
number of this document in your comments.
    You may submit your comments via email to the email address listed 
above under ADDRESSES. Please include the docket number associated with 
this notice and the subject matter in the subject line of the email. 
Comments should be attached to the email as a Microsoft Word or text-
searchable PDF document. Only non-confidential and public versions of 
confidential comments should be submitted by email.
    You may also submit comments by mail to the address listed above 

How do I submit confidential business information?

    The Commission will provide confidential treatment for identified 
confidential information to the extent allowed by law. If your comments 
contain confidential information, you must submit the following by mail 
to the address listed above under ADDRESSES:
     A transmittal letter requesting confidential treatment 
that identifies the specific information in the comments for which 
protection is sought and

[[Page 54039]]

demonstrates that the information is a trade secret or other 
confidential research, development, or commercial information.
     A confidential copy of your comments, consisting of the 
complete filing with a cover page marked ``Confidential-Restricted,'' 
and the confidential material clearly marked on each page. You should 
submit the confidential copy to the Commission by mail.
     A public version of your comments with the confidential 
information excluded. The public version must state ``Public Version--
confidential materials excluded'' on the cover page and on each 
affected page, and must clearly indicate any information withheld. You 
may submit the public version to the Commission by email or mail.

Will the Commission consider late comments?

    The Commission will consider all comments received before the close 
of business on the comment closing date indicated above under DATES. 
Because this is a direct final rule that will go into effect as 
specified in the DATES section in the absence of significant adverse 
comment received during the comment period, the Commission will not 
consider any comments filed after the comment closing date.

How can I read comments submitted by other people?

    You may read the comments received by the Commission at the 
Commission's Electronic Reading Room or the Docket Activity Library at 
the addresses listed above under ADDRESSES.

V. Rulemaking Analyses and Notices

Direct Final Rule Justification

    Under the Administrative Procedure Act (APA), 5 U.S.C. 553(b)(A), 
rules of agency organization, procedure, or practice do not require 
notice and comment. This direct final rule relates to the Commission's 
organization, procedures, and practices; it revises internal Commission 
delegations of authority to BOE and the regulations governing 
enforcement procedures.
    This rule will therefore become effective on the date listed in the 
DATES section, unless the Commission receives significant adverse 
comments within the specified period. The Commission recognizes that 
parties may have information that could impact the Commission's views 
and intentions with respect to the revised regulations, and the 
Commission intends to consider any comments filed. Filed comments that 
are not adverse may be considered for modifications to the Commission's 
regulations at a future date. If no significant adverse comments are 
received, the rule will become effective without additional action by 
the Commission. If significant adverse comments are received, the 
Commission will withdraw the rule by the date specified in the DATES 

Congressional Review Act

    The direct 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 direct final rule relates to agency management 
and personnel as well as agency organization, procedures, and 
practices. Specifically, the direct final rule revises internal 
Commission delegations of authority to BOE and the regulations 
governing enforcement procedures. The only effect the changes have with 
respect to non-agency parties is to provide parties with notice of 
alleged violations and an opportunity to respond prior to the 
initiation of enforcement action by the Commission. The Commission 
already provides notice and an opportunity to respond in both formal 
and informal enforcement procedures. For formal enforcement action, the 
rule merely adds an additional opportunity for parties to respond prior 
to the Commission decision on whether to initiate enforcement action. 
For informal compromise actions, the rule merely shifts the timing of 
the notice and opportunity for response so that these steps occur prior 
to the Commission's decision to pursue a compromise agreement. 
Accordingly, although the direct 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, the direct final rule 
is not a ``rule'' under the CRA and is not subject to the CRA's 

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 direct 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.

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. The direct final rule revises 
internal Commission delegations of authority to BOE 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.

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 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 direct final rule 
does not contain any collections of information as defined by 44 U.S.C. 
3502(3) and 5 CFR 1320.3(c).

[[Page 54040]]

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.

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 http://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 

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 as follows:


 1. The authority citation for part 501 continues 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. 301-307, 40101-41309, 42101-42109, 44101-44106; Pub. L. 89-
56, 70 Stat. 195; 5 CFR part 2638; Pub. L. 104-320, 110 Stat. 3870.

2. Amend Sec.  501.5 by:
 a. Revising paragraph (i)(2);
b. Redesignating paragraphs (i)(4) and (5) as paragraphs (i)(3) and 
(4), respectively; and
 c. Revising newly redesignated paragraphs (i)(3) and (4).
    The revisions read as follows:

Sec.  501.5  Functions of the organizational components of the Federal 
Maritime Commission.

* * * * *
    (i) * * *
    (2) Subject to the prior approval of the Commission, negotiates the 
informal compromise of civil penalties under Sec.  502.604 of this 
chapter, prepares and presents compromise agreements for Commission 
approval, and represents the Commission in proceedings and 
circumstances as designated;
    (3) Subject to consultation with and guidance of the General 
Counsel, coordinates with other bureaus and offices to provide legal 
advice, attorney liaison, and prosecution, as warranted, in connection 
with enforcement matters; and
    (4) Conducts investigations and recommends enforcement action.
* * * * *

Sec.  501.28  [Removed]

3. Remove Sec.  501.28


4. The authority citation for part 502 continues 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. 305, 40103-40104, 40304, 40306, 40501-40503, 
40701-40706, 41101-41109, 41301-41309, 44101-44106; 5 CFR part 2635.

5. Amend Sec.  502.63 by revising paragraph (c)(4)(ii) and adding 
paragraph (d) to read as follows:

Sec.  502.63  Commission enforcement action.

* * * * *
    (c) * * *
    (4) * * *
    (ii) The Bureau of Enforcement may make a motion for decision on 
    (d) Pre-enforcement process. (1) Prior to recommending formal 
enforcement action under this section or informal compromise procedures 
under Sec.  502.604, the Bureau of Enforcement will advise the person 
or persons who are the subject of an investigation that:
    (i) The Bureau of Enforcement has made a preliminary determination 
to recommend that the Commission initiate enforcement action against 
    (ii) Identifies the specific violations that the Bureau of 
Enforcement has preliminarily determined to include in the 
recommendation; and
    (iii) Provides notice that the person may make a written submission 
to the Bureau of Enforcement concerning the proposed recommendation, 
including the deadline for the submission and any other relevant 
information (e.g., how and where to send such statements).
    (2) Persons notified of such investigations may submit a written 
statement to the Bureau of Enforcement setting forth their interests 
and positions regarding the subject matter of the investigation.
    (3) The Bureau of Enforcement will consider any written statements 
submitted under paragraph (d)(2) of this section when making 
recommendations to the Commission and will attach such written 
statements to the Bureau's recommendations. [Rule 63.]

Sec.  502.603  [Amended]

6. Amend Sec.  [thinsp]502.603(c) by removing the citation ``Sec.  
[thinsp]502.604(e)'' and adding in its place the citation ``Sec.  

7. Amend Sec.  502.604 by:
a. Revising paragraph (a);
 b. Removing paragraphs (b), (c), and (g); and
 c. Redesignating paragraphs (d), (e), and (f) as paragraphs (b), (c), 
and (d), respectively.
    The revision reads as follows:

Sec.  502.604  Compromise of penalties: Relation to assessment 

    (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 after observing the procedures in Sec.  
* * * * *

    By the Commission.
Rachel Dickon,
[FR Doc. 2019-21640 Filed 10-8-19; 8:45 am]