[Federal Register Volume 88, Number 53 (Monday, March 20, 2023)]
[Rules and Regulations]
[Pages 16573-16575]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-05393]


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FEDERAL MARITIME COMMISSION

46 CFR Part 502

[Docket No. FMC-2023-0008]
RIN 3072-AC95


Civil Penalty Amendments to Rules of Practice and Procedure

AGENCY: Federal Maritime Commission.

ACTION: Final rule.

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SUMMARY: The Federal Maritime Commission (Commission) amends its Rules 
of Practice and Procedure governing the compromise, assessment, 
mitigation, settlement, and collection of civil penalties. These 
changes to the Commission regulations align with the statutory changes 
in the Ocean Shipping Reform Act of 2022 on penalties or refunds.

DATES: The effective date is April 19, 2023.

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

SUPPLEMENTARY INFORMATION: 

I. Background and Discussion

    On June 16, 2022, the President signed the Ocean Shipping Reform 
Act of 2022 (``OSRA 2022'') into law,\1\ which amended various 
provisions of the Shipping Act.\2\ Section 8 of OSRA 2022 amended two 
Shipping Act provisions: 46 U.S.C. 41107 for monetary penalties or 
refunds; and 46 U.S.C. 41109 for assessment of penalties.
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    \1\ Public Law 117-146.
    \2\ 46 U.S.C. 40101-41310.
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    Before OSRA 2022, section 41107 stated that any person that 
violates the Shipping Act or a regulation or order of the Commission 
issued under the Shipping Act is liable for a civil penalty. OSRA 2022 
changed the language in this section governing potential liability of a 
violator by adding the phrase ``or, in addition to or in lieu of a 
civil penalty, is liable for the refund of a charge'' immediately after 
the term civil penalty. Accordingly, the Commission may now order that 
a person is liable for ``a civil penalty or, in addition to or in lieu 
of a civil penalty, is liable for the refund of a charge'' for any 
violation of the Shipping Act, Commission regulations, or Commission 
order.
    As a result, the term ``refund'' now appears in two key provisions 
of the Shipping Act. First, in addition to appearing in sections 41107 
and 41109 (as amended by OSRA 2022), the term ``refund'' also appears 
in newly enacted section 41310, which explicitly addresses the issue of 
charge complaints. That provision specifies, among other things, that 
upon a finding by the Commission that a carrier's charges do not comply 
with the Shipping Act, the Commission shall promptly order the refund 
of those charges paid. See 46 U.S.C. 41310(c). Second, the term 
``refund'' appears in 46 U.S.C. 40503, which was not amended by OSRA 
2022. This part of the Shipping Act addresses tariffs and service 
contracts. Under section 40503, the Commission may permit a common 
carrier or a conference to refund a portion of freight charges or to 
waive collection of a portion of such charges from shippers for certain 
errors in tariffs or tariff publications. The Commission's regulation 
at 46 CFR 502.271 (Special docket application for permission to refund 
or waive freight charges) implements this tariff refund provision. This 
provision, however, only applies to a refund or waiver of freight 
charges by a common carrier's own application to the Commission and 
does not include other types of charges. Further, the special docket 
application procedure does not provide for assessment of penalties. 
Therefore, when viewed against this backdrop, it is the Commission's 
opinion that Congress amended section 41107, in part, to make it 
consistent with the Commission's newly enacted authority to order a 
refund of charges paid under a charge complaint proceeding in section 
10 of OSRA 2022, codified at 46 U.S.C. 41310.
    OSRA 2022 also made identical changes to 46 U.S.C. 41109. Section 
41109 provides how to assess civil penalties and how to determine their 
amounts. Section 41109 as amended by OSRA 2022 states that the 
Commission may, after notice and opportunity for a hearing, ``assess a 
civil penalty'' or ``in addition to, or in lieu of a civil penalty . . 
. order a refund of money.'' 46 U.S.C. 41109(a)(1). OSRA 2022 also 
amended section 41109 by specifying the factors in determining ``the 
amount of a civil penalty assessed or refund of money ordered.'' 46 
U.S.C. 41109(b)(1). While section 41109 now applies for assessment of 
penalties or refund, the Commission believes that section 41109's 
revised factors are applicable only to assessment of penalties.
    OSRA 2022 also provided that if the Commission orders a refund of 
money in addition to a civil penalty, the amount of civil penalty must 
be decreased by any additional amounts included in the refund of money 
in excess of the ``actual injury'' as defined in the Shipping Act at 46 
U.S.C. 41305(a). See 46 U.S.C. 41109(b)(2)(A).
    Therefore, the Commission makes conforming amendments to its 
regulations for civil penalties. The Commission is also making one 
technical change to update a term in 46 CFR 502.605(c).

II. Rulemaking Analyses

Administrative Procedure Act

    The Administrative Procedure Act (APA) requires that ``[g]eneral 
notice of proposed rulemaking shall be published in the Federal 
Register, unless persons subject thereto are named and either 
personally served or otherwise have actual notice thereof in accordance 
with law.'' 5 U.S.C. 553(b). The notice of proposed rulemaking 
requirement, however, does not apply to ``interpretative rules, general 
statements of policy, or rules of agency organization, procedure, or 
practice.'' 5 U.S.C. 553(b)(A). The notice requirement does not apply 
to this rule because it only amends the Commission's rules of practice 
and procedure. Thus, the Commission issues this rule as a final rule.

[[Page 16574]]

Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601-612, provides that 
whenever an agency publishes a notice of proposed rulemaking under the 
APA, 5 U.S.C. 553, the agency must prepare and make available for 
public comment a regulatory flexibility analysis (RFA) describing the 
impact of the rule on small entities, unless the head of the agency 
certifies that the rulemaking will not have a significant economic 
impact on a substantial number of small entities. 5 U.S.C. 603-605. As 
stated above, however, the APA notice requirement does not apply to 
this rulemaking for the Commission's practice and procedure. Therefore, 
the APA does not require the Commission to publish a notice of proposed 
rulemaking in this instance, and the Commission did not prepare an RFA.

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. This rule amends the Commission's 
rules of practice and procedure at 46 CFR part 502. This rule thus 
falls within the categorical exclusion for matters related solely to 
``[p]romulgation of procedural rules pursuant to 46 CFR part 502.'' 46 
CFR 504.4(a)(4). 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) 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 
proposed rules to OMB in conjunction with the publication of the notice 
of proposed rulemaking. 5 CFR 1320.11. This rule does not contain any 
collections of information as defined by 44 U.S.C. 3502(3) and 5 CFR 
1320.3(c).

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 https://www.reginfo.gov/public/do/eAgendaMain.

List of Subjects in 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 in the preamble, the Federal Maritime 
Commission amends 46 CFR part 502 as follows:

PART 502--RULES OF PRACTICE AND PROCEDURE

0
1. The authority citation for part 502 is revised to read as follows:

    Authority: 5 U.S.C. 504, 551, 552, 553, 556(c), 559, 561-569, 
571-584; 591-596; 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, 41301-41310, 44101-44106; 5 CFR part 2635.


0
2. Revise Sec.  502.601 to read as follows:


Sec.  502.601  Purpose and scope.

    The purpose of this subpart is to implement the statutory 
provisions of section 19 of the Merchant Marine Act, 1920 (46 U.S.C. 
42101-42109), section 13 of the Shipping Act of 1984 as amended (46 
U.S.C. 41107-41109), and sections 2(c) and 3(c) of Public Law 89-777 
(46 U.S.C. 44104) by establishing rules and regulations governing the 
compromise, assessment, settlement and collection of civil penalties 
arising under certain designated provisions of the Merchant Marine Act, 
1920, the Shipping Act of 1984, Public Law 89-777, and/or any order, 
rule, or regulation (except for procedural rules and regulations 
contained in this part) issued or made by the Commission in the 
exercise of its powers, duties and functions under those statutes.

0
3. In Sec.  502.602, revise paragraph (h) to read as follows:


Sec.  502.602  Definitions.

* * * * *
    (h) Violation includes any violation of sections 19(f)(4), 19(g)(4) 
and 19(k) of the Merchant Marine Act, 1920 (46 U.S.C. 42104(a), 
42104(d), and 42108); any provision of the Shipping Act of 1984 as 
amended (46 U.S.C. 40101-41310); sections 2 and 3 of Public Law 89-777 
(46 U.S.C. 44101-44106); and/or any order, rule or regulation (except 
for procedural rules and regulations contained in this part) issued or 
made by the Commission in the exercise of its powers, duties and 
functions under the Merchant Marine Act, 1920, the Shipping Act of 1984 
as amended, or Public Law 89-777.
* * * * *

0
4. In Sec.  502.603, revise paragraphs (a) and (b) to read as follows:


 Sec.  502.603  Assessment of civil penalties: Procedure; criteria for 
determining amount; limitations; relation to compromise.

    (a) Procedure for assessment of penalty. The Commission may assess 
a civil penalty or, in addition to or in lieu of a civil penalty, a 
refund of a charge, only after notice and opportunity for hearing. 
Civil penalty assessment proceedings, including settlement 
negotiations, shall be governed by the Commission's Rules of Practice 
and Procedure in this part. All settlements must be approved by the 
Presiding Officer. The full text of any settlement must be included in 
the final order of the Commission.
    (b) Determination of amount--(1) Factors for consideration. In 
determining the amount of a civil penalty assessed pursuant to 
paragraph (a) of this section, the Federal Maritime Commission shall 
take into consideration:
    (i) The nature, circumstances, extent, and gravity of the violation 
committed;
    (ii) With respect to the violator:
    (A) The degree of culpability;
    (B) Any history of prior offenses;
    (C) The ability to pay; and
    (D) Such other matters as justice may require; and
    (iii) The amount of any refund of money ordered under 46 U.S.C. 
41310.
    (2) Commensurate reduction in civil penalty--(i) In general. In any 
case in which the Federal Maritime Commission orders a refund of money 
in addition to assessing a civil penalty, the amount of the civil 
penalty assessed shall be decreased by any additional amounts included 
in the refund of money in excess of the actual injury (as defined in 46 
U.S.C. 41305(a)).
    (ii) Treatment of refunds. A refund of money ordered shall be:
    (A) Considered to be compensation paid to the applicable claimant; 
and
    (B) Deducted from the total amount of damages awarded to that 
claimant in a civil action against the violator relating to the 
applicable violation.
* * * * *

0
5. In Sec.  502.605, revise paragraph (c) to read as follows:


Sec.  502.605  Payment of penalty: Method; default.

* * * * *
    (c) Default in payment. Where a respondent fails or refuses to pay 
a penalty properly assessed under

[[Page 16575]]

Sec.  502.603, or compromised and agreed to under Sec.  502.604, 
appropriate collection efforts will be made by the Commission, 
including, but not limited to referral to the Department of Justice for 
collection. Where such defaulting respondent is a licensed ocean 
transportation intermediary, such default also may be grounds for 
revocation or suspension of the respondent's license, after notice and 
opportunity for hearing, unless such notice and hearing have been 
waived by the respondent in writing.

    By the Commission.
William Cody,
Secretary.
[FR Doc. 2023-05393 Filed 3-17-23; 8:45 am]
BILLING CODE 6730-02-P