The Federal Maritime Commission has issued a final rule aimed at providing enhanced efficiency and flexibility during the enforcement process.
The FMC’s Bureau of Enforcement, Investigations, and Compliance is responsible for investigating potential violations of the Shipping Act of 1984 and associated FMC regulations and initiating enforcement actions. FMC 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.
The current process for BEIC to conduct an enforcement action requires (1) providing notice to the subjects of investigations that BEIC intends to recommend that the FMC initiate enforcement proceedings and allowing the subject an opportunity to respond, (2) receiving FMC approval before formal or informal enforcement action is undertaken, including approval to enter into compromise discussions, and (3) receiving FMC approval of any proposed compromise agreements. The FMC states that this process is unnecessarily burdensome and hinders the efficient resolution of enforcement matters.
In response, effective May 17 the FMC will streamline this process by giving BEIC the flexibility to resolve cases where a respondent requests to compromise a civil penalty ahead of the issuance of a notice of violation, as well as authority to enter into compromise discussions after the issuance of an NOV. According to the FMC, this discretion to exercise either option will allow BEIC to conclude cases on an expedited timeline when a respondent is preemptively offering to not only negotiate in good faith but also to provide disclosures that may lead to the opening of other investigations of Shipping Act violations by other entities involved in violations voluntarily disclosed by the respondent. The FMC will retain authority to review any proposed compromise agreement, and FMC approval will continue to be required to initiate a formal proceeding.
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