[Federal Register Volume 85, Number 133 (Friday, July 10, 2020)]
[Rules and Regulations]
[Pages 41422-41424]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-14661]


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SURFACE TRANSPORTATION BOARD

49 CFR Chapter X

[Docket No. EP 764]


Policy Statement on Factors Considered in Assessing Civil 
Monetary Penalties on Small Entities

AGENCY: Surface Transportation Board.

ACTION: Statement of Board policy.

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SUMMARY: The Surface Transportation Board (STB or Board) is issuing 
this policy statement to provide the public with information on factors 
the Board expects to consider in determining the appropriate level of 
civil monetary penalties on small entities in individual cases.

DATES: This policy statement is effective on July 22, 2020.

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FOR FURTHER INFORMATION CONTACT: Amy Ziehm at (202) 245-0391. 
Assistance for the hearing impaired is available through the Federal 
Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION: In this Policy Statement, the Board provides 
information regarding the factors it expects to consider when 
evaluating the possible reduction, and in appropriate circumstances the 
waiver, of civil monetary penalties for violations of a statutory or 
regulatory requirement by a small entity. Although this Policy 
Statement does not limit the Board's discretion to consider different 
factors in any particular enforcement action, it is appropriate to 
provide the public with general guidance regarding the agency's 
expected approach.

Background

    Section 223 of the Small Business Regulatory Enforcement Fairness 
Act of 1996 (SBREFA), Public Law 104-121, 110 Stat. 847, as amended, 
requires each agency that regulates the activities of small entities 
\1\ 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.'' \2\ Section 223 also provides that ``[u]nder 
appropriate circumstances, an agency may consider ability to pay in 
determining penalty assessments on small entities.''
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    \1\ Section 221 of SBREFA defines the term ``small entity'' as 
having the same meaning as in the Regulatory Flexibility Act (RFA), 
5 U.S.C. 601, which, in turn, allows an agency to establish an 
alternative definition appropriate to the agency's activities, after 
consultation with the Office of Advocacy of the Small Business 
Administration and after opportunity for notice and comment, 5 
U.S.C. 601(3). The Board pursued this route, defining ``small 
entities'' for purposes of implementing the RFA as including only 
those rail carriers classified as Class III rail carriers under 49 
CFR 1201.1-1. Small Entity Size Standards Under the Regulatory 
Flexibility Act, EP 719 (STB served June 30, 2016). The RFA's small 
business size standards (based on number of employees or average 
annual receipts) continue to apply to other non-rail entities under 
the Board's jurisdiction.
    \2\ The Board recently became aware that the agency did not 
establish a formal policy or program in 1997, as required by SBREFA, 
regarding civil penalty enforcement for small entities. Accordingly, 
the Board is issuing this policy statement now.
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    The Interstate Commerce Act, as amended, provides for a variety of 
potential civil monetary penalties. In general, a rail carrier that 
``knowingly violat[es] this part [49 U.S.C. 10101-11908] or an order of 
the Board under this part is liable to the United States Government for 
a civil penalty of not more than $5,000 for each violation.'' 49 U.S.C. 
11901(a).\3\ Similarly, ``[a] person knowingly authorizing, consenting 
to, or permitting a violation of sections 10901 through 10906 of this 
title [dealing with licensing rail line constructions, mergers, and 
abandonments], or of a requirement or a regulation under any of those 
sections, is liable to the United States Government for a civil penalty 
of not more than $5,000.'' 49 U.S.C. 11901(c). There are also civil 
monetary penalties for violations relating to, among other things, 
recordkeeping, reporting, and inspections. See 49 U.S.C. 11901(e).\4\
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    \3\ Under the Federal Civil Penalties Inflation Adjustment Act 
Improvements Act of 2015, enacted as part of the Bipartisan Budget 
Act of 2015, Public Law 114-74, 701, 129 Stat. 584, 599-601, the 
Board adjusts its civil penalties for inflation annually. See, e.g., 
Civil Monetary Penalties--2020 Adjustment, EP 716 (Sub-No. 5) (STB 
served Jan. 8, 2020).
    \4\ The Board's penalty authority related to motor carriers, 
water carriers, brokers, and freight forwarders appears at 49 U.S.C. 
14901-14916. The Board's penalty authority related to pipeline 
carriers appears at 49 U.S.C. 16101-16106.
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Potential Factors for the Reduction or Waiver of Civil Monetary 
Penalties

    Generally, Congress has given the Board discretion to impose civil 
monetary penalties ``not more than'' a certain amount. See 49 U.S.C. 
11901(a), (c), (d). In determining an appropriate amount in such cases, 
the Board will keep in mind that its main objective is not punishment 
for its own sake but rather to see that the laws it administers are 
followed. With compliance as its ultimate goal, the Board expects to 
look to the following non-exhaustive list of factors when considering 
whether to reduce or waive a penalty for a small entity:
     Self-Reporting: Whether the small entity reported its own 
violation to the Board voluntarily, not under threat of imminent 
disclosure, and in a timely manner.\5\
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    \5\ Pursuant to Executive Order 13,892, Promoting the Rule of 
Law Through Transparency & Fairness in Civil Administrative 
Enforcement & Adjudication, 84 FR 55,239 (Oct. 15, 2019), the Board 
also expects to consider this factor when determining whether to 
reduce or waive penalties for larger entities.
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     Compliance History: Whether the small entity otherwise has 
a record of fully complying with statutory and regulatory requirements, 
as well as Board orders.
     Safeguards: Whether the small entity, at the time of the 
violation, had in place a reasonable mechanism, given the entity's size 
and resources, to prevent, identify, and correct violations, and, if 
possible, to mitigate the effects of any violations that do occur.
     Candor: Whether the small entity forthrightly acknowledged 
the facts and the existence of a violation.
     Cooperation: Whether the small entity cooperated during 
any agency investigation into the violation, such as by freely 
providing documents and access to relevant personnel.
     Good Faith: Whether the small entity had a good-faith 
reason for noncompliance (for those violations that need not be 
committed ``knowingly''), such as reasonable reliance on faulty advice.
     Impact of Violation: Whether the violation resulted in, or 
was likely to result in, little or no actual impact on others, 
including shippers, carriers, and the general public.
     Lack of Benefit to Violator: Whether there was an absence 
of any significant benefit to the small entity from the violation.
     Deterrence: Whether, in light of the small entity's size 
and resources, a reduced or waived penalty would be sufficient to deter 
future violations by both the small entity at issue and similarly 
situated small entities.
     Impact of Penalty: Whether the small entity has 
demonstrated that paying a full penalty would substantially interfere 
with its ability to operate or otherwise have an adverse effect on 
third parties not responsible for the violation, such as shippers.
     Extenuating Circumstances: Any other circumstance not 
covered above that may justify a reduction or waiver of a penalty.
    The Board expects to take into consideration the factors discussed 
above, together with all of the evidence and argument before it, in 
assessing civil monetary penalties on small entities in future cases. 
The Board notes, however, that because there is significant diversity 
among the small entities subject to the Board's jurisdiction, a 
flexible case-by-case approach to penalty waivers and reductions is 
most appropriate.\6\ Parties in individual matters are also free to 
raise additional factors they believe the Board should consider or to 
argue that one of the above-listed factors should not be considered (or 
should be modified).
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    \6\ For example, some small entities are small stand-alone 
switching carriers, whereas others are part of larger corporate 
holding companies with more resources.
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    This action is categorically excluded from environmental review 
under 49 CFR 1105.6(c)(6).

Congressional Review Act

    Pursuant to the Congressional Review Act, 5 U.S.C. 801-808, the 
Office of Information and Regulatory Affairs has designated this policy 
statement as non-major, as defined by 5 U.S.C. 804(2).

    Decided: July 1, 2020.


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    By the Board, Board Members Begeman, Fuchs, and Oberman.
Aretha Laws-Byrum,
Clearance Clerk.
[FR Doc. 2020-14661 Filed 7-9-20; 8:45 am]
BILLING CODE 4915-01-P