Rules of Practice and Procedure; Presentation of Evidence in Commission Proceedings

AGENCY:

Federal Maritime Commission.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The Federal Maritime Commission is proposing to reorganize several subparts of its Rules of Practice and Procedure and revise its rules regarding presentation of evidence in Commission proceedings.

DATES:

Submit comments on or before July 5, 2016.

ADDRESSES:

You may submit comments, identified by the docket number in the heading of this document, by any of the following methods:

• Email: secretary@fmc.gov. Include in the subject line: “Docket No. 16-08, Commenter/Company Name.” Comments should be attached to the email as a Microsoft Word or text-searchable PDF document. Comments containing confidential information should not be submitted by email.
• Mail: Karen V. Gregory, Secretary, Federal Maritime Commission, 800 North Capitol Street NW., Washington, DC 20573-0001.
• Docket: For access to the docket to read background documents or comments received, go to: http://www.fmc.gov/16-08.

FOR FURTHER INFORMATION CONTACT:

Karen V. Gregory, Secretary, Federal Maritime Commission, 800 North Capitol Street NW., Washington, DC 20573-0001, Phone: (202) 523-5725, Email: secretary@fmc.gov.

SUPPLEMENTARY INFORMATION:

The Commission is proposing to update or reorganize several subparts of 46 CFR part 502, its Rules of Practice and Procedure, and to substantively revise the subpart regarding how hearings are conducted to improve guidance concerning the presentation of evidence in Commission proceedings. Certain current rules would also be removed to clarify current practice and eliminate duplication.

Reorganization of Part 502

Part 502 sets out the rules governing procedure in all types of Commission proceedings. However, after years of revisions, some users find the grouping and ordering of the subparts confusing. The Commission proposes to reorder and rename certain subparts to better reflect the chronology of a typical adjudication, and to distinguish other types of proceedings, as enumerated in this table:

Subpart A

In subpart A several cross references would be corrected and current § 502.141 that establishes the Commission may hold hearings that are not part of an adjudicatory process, would be moved to this subpart as general information and retitled.

Subpart D

Cross references are corrected in subpart D.

Subpart E

Subpart E, currently “Proceedings, Pleading, Motions, Replies” would apply only to adjudications of private complaints and Commission investigations and would be renamed “Private Complaints and Commission Investigations.” Revised subpart E would contain the procedures for institution of those proceedings, motions practice, opportunity for settlement, and other related rules. Section 502.61 which opens the subpart would be revised by moving and amending a rule on notice of hearings from subpart J.

Subpart F

Current subpart F addresses Settlement and Prehearing Procedure. Inasmuch as those subject areas are part of the process in adjudicatory proceedings, they would be divided and moved into subpart E and a revised subpart L governing presentation of evidence.

Subpart F would be revised to apply to proceedings other than private complaints and Commission investigations, titled: “Petitions, Exemptions, and Orders to Show Cause.” These types of proceedings are generally distinct from complaint and investigation proceedings. With clear headings, the proposed rules are intended to be easier for the user to locate. Revised subpart F would encompass current §§ 502.73 through 502.77.

Subparts J, and L

The Commission proposes changes to subpart J, “Hearings; Presiding Officers; Evidence”, and subpart L, “Disclosure and Discovery” to more logically and chronologically group the processes conducted in a formal adjudication. Subpart L, Disclosure and Discovery would be moved in its entirety to subpart J. Current subpart J, Hearings, would be revised to encompass all rules governing the presentation of evidence and presented in revised subpart L titled “Presentation of Evidence.” The proposed revisions to subpart J are discussed more extensively below.

Subpart K

The Commission proposes to remove and reserve subpart K, “Shortened Procedure.” Shortened procedure provides that, if the respondent consents, after briefing by the parties, the record is closed and a decision may be issued without discovery or an oral hearing. The procedure has rarely been requested, although parts of the procedure have become standard practice (e.g. not requiring an oral hearing). The procedure has not resulted in an ALJ decision in recent history, as the three proceedings utilizing shortened procedure since 1998 have resulted in settlement. The Commission has made several rule revisions in the past five years that have enhanced the efficiency of formal complaint proceedings including the requirement for initial disclosures in discovery, (current § 502.201), and the establishment of default rules in the absence of an answer, § 502.62(b)(6). Shortened procedure rules are not consistent with the requirement for initial disclosures, which help expedite all proceedings. If parties want to further limit discovery, that is possible without the provisions of Subpart K. Moreover the subparts S and T small claims proceedings may offer a solution to litigants seeking faster resolution of their disputes. The rules governing small claims proceedings are designed to make the litigation process faster and simpler for litigants seeking reparations of $50,000 or less.

Subpart M

The Commission proposes to revise subpart M to cover only matters that occur after conclusion of the parties' presentations in proceedings (i.e., decisions, appeals and exceptions). The rules concerning briefs would be moved into revised subpart L, “Presentation of Evidence.” However, rules governing briefs to accompany exceptions will remain in subpart M. Current § 502.153, Appeal from ruling of presiding officer other than orders or dismissal in whole or in part, would be moved into subpart M as it concerns an appeal.

Subpart J, Hearings—Presentation of Evidence

Currently subpart J, Hearings, presents the Commission's rules on hearings and presentation of evidence. The Commission proposes that these rules governing presentation of evidence be revised and presented in revised subpart L. The proposed revisions are intended to reflect the procedures currently used by the Commission, to utilize current language and standards set by the Federal Rules of Civil Procedure where appropriate, and to clarify and simplify rules where possible. Several rules currently in the subpart would be removed in their entirety to eliminate duplication and reflect current practice. The proposed revisions to subpart J are enumerated in the table below:

Following is a more detailed description of each proposed rule that would appear in revised subpart L.

Proposed § 502.201, Applicability and Scope

Proposed § 502.201 is derived and moved from current § 502.142 and sets out the proceedings for which the rules in the subpart will apply. The term hearing would be defined as “a formal adjudicatory proceeding in which evidence is presented orally, or through written statement, or by combination thereof” to reflect the broader and more inclusive meaning of the term in current administrative practice.

Proposed § 502.202, Rights of Parties as to Presentation of Evidence

Proposed § 502.202 is derived and moved from current § 502.154 but would be revised to reflect that the presiding officer may limit introduction of evidence if it is “irrelevant, immaterial, or unduly repetitious” mirroring the Administrative Procedure Act.

Proposed § 502.203, Burden of Proof

Proposed § 502.203 is derived and moved from current § 502.155 and clarifies the language to include reference to motions for ease of understanding the burden of proof.

Proposed § 502.204, Evidence Admissible

Currently § 502.156 states “[u]nless inconsistent with the requirements of the Administrative Procedure Act and these Rules, the Federal Rules of Evidence . . . will also be applicable.” The proposed revision would simplify the standard. Proposed § 502.204 would revise § 502.156 by restating the Administrative Procedure Act (APA) standard for admissibility that allows admission of all evidence which is relevant, material, reliable, and probative, and not unduly repetitious or cumulative, and by stating that the Presiding Officer may also look to the Federal Rules of Evidence (FRE) for guidance. The Commission is particularly interested to receive comment from the public on this particular revision and the applicability of the Federal Rules of Evidence.

The Commission adopted the original language in § 502.156 in 1976, shortly after the FRE went into effect. 41 FR 20585, 20588 (May 19, 1976). In the 1975 notice proposing the language, the Commission stated that the FRE could be of great use to the Commission's ALJs in disposing of evidentiary issues that arise in Commission proceedings, so long as they were consistent with the requirements of the APA. 40 FR 43295, 43927 (September 24, 1975). The Commission went on to assert that, as a general matter, the FRE did not appear to be inconsistent with the APA. Id.

In the years since the Commission promulgated this section, however, it has been generally acknowledged that there are, in fact, meaningful distinctions between the FRE and the APA. Specifically, the FRE are exclusionary in nature and were designed for jury trials in order to allow a presiding officer to determine what evidence a body of lay jurors should consider. See, e.g., Richard J. Pierce, Jr., 2 Admin. Law Treatise 909, Section 10, Evidence, 5th Ed. (2010). The APA, on the other hand, is founded on the principle that the presiding officer who is the decision maker is qualified to determine what evidence is relevant, probative and substantial.

The inconsistences between the FRE and APA standards were evidently not apparent to the Commission when it adopted the language in § 502.156 in 1976. The rulemaking notices and the regulatory text reflect the assumption that both the APA and FRE could be applied in most circumstances without issue. Since promulgation of the section, however, the Commission “has recognized the liberal standards of admissibility of evidence in administrative proceedings and has repeatedly `. . . identified the need for considerable relaxation of the rules of evidence followed by the federal courts in proceedings before the Commission.' ” Eurousa Shipping, Inc., et al—Possible Violations, 31 S.R.R. 540, 547 (FMC 2008) (quoting Pacific Champion Express Co., Ltd.—Possible Violations, 28 S.R.R. 1102, 1105-06 (ALJ 1999). Given the divergence between the FRE and APA standards, the section's attempt to apply both standards simultaneously creates a tension in the regulation and could be confusing to parties.

In 1986, the Administrative Conference of the United States (ACUS) published recommendations regarding the use of the FRE in administrative proceedings. ACUS compared three general categories of agency evidentiary rules. 1986 ACUS 6, 51 FR 25642. The category that is most analogous to § 502.156 included “rules that require presiding officers to apply the [FRE] `so far as practicable.' ” Id. ACUS identified four significant disadvantages with respect to this standard including:

(1) Courts seem confused as to what it means or how to enforce it; (2) instructing presiding officers to exclude evidence based on the standard forces them to undertake a difficult and hazardous task; (3) excluding evidence on the basis that it is inadmissible in a jury trial is totally unnecessary to insure that agencies act only on the basis of reliable evidence; and (4) agencies, like other experts, should be permitted to rely on classes of evidence broader than those that can be considered by lay jurors.

Id. Accordingly, ACUS recommended that “Congress should not require agencies to apply the [FRE], with or without the qualification `so far as practicable,' to limit the discretion of presiding officers to admit evidence in formal adjudications.” Id. ACUS also recognized, however, the disadvantages of relying on the APA standard alone, and the Commission has tentatively concluded that the FRE can be useful as a guide for litigants and presiding officers. Accordingly, the Commission is proposing to explicitly provide that presiding officers may look to the FRE for guidance when determining the admissibility of evidence.

The text of current § 502.152 has been modernized to clarify the procedures governing when and how to make an offer of proof. The rule is moved into revised § 502.204 as paragraph (b) as a logical part of the rule governing admissibility of evidence.

Proposed §§ 502.205 and 502.206, Documents Incorporated Into the Record by Reference

Revising current § 502.160 (proposed § 502.205) allows documents in another Commission proceeding to be incorporated into the record by reference. Proposed § 502.206 would allow material in any document on file with the Commission that is also available to the public to be incorporated into the record by reference.

Proposed § 502.207, Stipulations

Current § 502.162 allows for stipulation. The Commission proposes to move the rule to § 502.207 and to revise the language of that rule for clarity.

Proposed § 502.208, Objection to Public Disclosure of Information

Proposed § 502.208 would revise current § 502.167, Objection to public disclosure of information. The proposed change would add a cross reference to § 502.5 where the Commission recently spelled out its requirements for submission of confidential material in a final rule. 80 FR 14318 (March 19, 2015).

Proposed §§ 502.209 and 502.210, Prehearing Conference and Statements

Current §§ 502.94 and 502.95 would be moved from subpart E as they pertain to hearings. No substantive revisions would be made to the content of these rules.

Proposed §§ 502.211 Through 502.213, Oral Hearings

Proposed §§ 502.211 through 502.213 would deal with oral hearings and would consist of the provisions found in current §§ 502.144, 502.151, and 502.165. Current § 502.165, Official transcript, requires revision as it currently contains a description of section 11 of the Federal Advisory Committee Act (FACA) and the Office of Management and Budget's (OMB) interpretation of that section, which are the basis for the Commission's regulations with respect to obtaining copies of transcripts. In order to simplify these provisions, the Commission is proposing to include in the new § 502.213 only the relevant requirements and to delete the aforementioned references to FACA and OMB's interpretation.

Proposed §§ 502.214 and 502.215, Briefs

Sections 502.221 and 502.222 concerning briefs would be included in this subpart and renumbered as §§ 502.214 and 502.215. The last sentence of § 502.221(a), which requires that the period of time for filing briefs will be the same for both parties, would be removed as setting time is within the powers of the presiding officer as established in recently revised § 502.25. Section 502.221(c) would be deleted as it is not current practice for the Presiding Officer to “require the Bureau of Enforcement to file a request for findings of fact and conclusions within a reasonable time prior to the filing of briefs.” Generally, the Commission's Bureau of Enforcement (BOE) files the first brief unless concurrent briefs are appropriate for the particular case; this is more appropriate to address in the scheduling order issued in each particular proceeding.

Proposed § 502.216, Supplementing the Record

Current § 502.230(a), Motion to Reopen, would be renumbered, renamed and revised to provide instructions concerning submission of evidence after final presentations in a proceeding and prior to issuance of an initial decision. The language of the proposed rule and the proposed heading “Supplementing the record” is more descriptive of the current practice before the Commission's Administrative Law Judges but does not substantively revise the process or rights of a party to a proceeding.

§ 502.217, Record of Decision

Current § 502.169 would be moved to subpart L and the reference to “filing and motions” instead of “paper and requests.”

Rulemaking Analyses and Notices

Regulatory Flexibility Act

The Regulatory Flexibility Act (codified as amended at 5 U.S.C. 601-612) provides that whenever an agency is required to publish a notice of proposed rulemaking under the Administrative Procedure Act (APA) (5 U.S.C. 553), the agency must prepare and make available for public comment an initial regulatory flexibility analysis (IRFA) describing the impact of the proposed rule on small entities. 5 U.S.C. 603. An agency is not required to publish an IRFA, 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.

Although the Commission has elected to seek public comment on its proposed regulatory amendments to part 502, these amendments concern the Commission's and procedures. 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 IRFA.

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. The Commission is not proposing any collections of information, as defined by 44 U.S.C. 3502(3) and 5 CFR 1320.3(c), as part of this proposed rule.

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 in 46 CFR Part 502

• Administrative practice and procedure
• Archives and records
• Business and industry
• Classified information
• Confidential business information
• Consumer protection
• Freedom of information
• Government in the Sunshine Act
• Government publications
• Health records
• Information
• Newspapers and magazines
• Paperwork requirements
• Printing, publications
• Privacy
• Public meetings
• Record retention
• Records
• Reporting and recordkeeping requirements
• Trade names
• Trade practices

For the reasons stated in the preamble, the Federal Maritime Commission proposes to amend 46 CFR part 502 as follows:

PART 502—RULES OF PRACTICE AND PROCEDURE

1. 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, 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; E.O. 11222 of May 8, 1965.

2. Amend § 502.5:

a. In the introductory text, by removing the phrase “502.167, 502.201(j)(1)(vii)” and adding in its place the phrase “502.141(j)(1)(vii), 502.208”, and by removing the reference “§ 502.201(j)” and adding in its place the reference “§ 502.141(j)”; and

b. In paragraph (b) by removing the reference “§ 502.201(j)(1)(vii)” and adding in its place the reference “§ 502.141(j)(1)(vii)”.

3. Amend § 502.6(c) by removing the phrase “§ 502.203 or § 502.204” and adding in its place the phrase “§ 502.143 or § 502.144”.

4. Amend § 502.10 by removing the reference “502.153” and adding in its place the reference “502.221”.

Subpart D—Rulemaking

5. Amend § 502.52 by removing the citation “§ 502.143” and adding in its place the citation “§ 502.61(c)”.

6. Amend § 502.53(a) by removing the reference “subpart J” and adding in its place the reference “subpart L”.

Subpart E—Private Complaints and Commission Investigations

7. Revise the subpart E heading to read as set forth above.

8. Amend § 502.61 by removing the words “under normal or shortened procedures (subpart K)” and the last sentence from paragraph (a); redesignating paragraph (b) as paragraph (d) and adding a new paragraph (b) and paragraph (c) to read as follows:

9. Amend § 502.69(f) by removing “shortened procedure (subpart K of this part)” and removing the citation “§ 502.221” and adding in its place the citation “§ 502.214”.

Subpart F—Petitions, Exemptions, and Orders To Show Cause

10. Revise the subpart F heading to read as set forth above.

11. Remove §§ 502.91 through 502.95.

12. Redesignate §§ 502.73 through 502.77 as §§ 502.91 through 502.95, respectively, and place them under subpart F.

13. Redesignate §§ 502.78 and 502.79 as §§ 502.73 and 502.74, respectively, in subpart E.

14. Add a new § 502.75 to subpart E to read as follows:

15. Revise the newly redesignated § 502.91 to read as follows:

Exhibit No. 1 to Subpart F of Part 502 [Removed]

16. Remove heading, “Exhibit No. 1 to Subpart F of Part 502”.

Subpart H—Service of Documents

17. Amend § 502.114(a) by removing the citation “§ 502.145” and adding in its place the citation “§ 502.131”.

18. Remove § 502.118.

Subpart I—Subpoenas

19. Amend § 502.132(c) by removing the citation “§ 502.203” and adding in its place the citation “§ 502.143”.

20. Amend § 502.136 by removing the citation “§ 502.210(b)” and adding in its place the citation “§ 502.150(b)”.

Subpart J—Disclosures and Discovery

21. Revise the subpart J heading to read as set forth above.

22. Redesignate § 502.141 as § 502.14, place it under subpart A, and revise the section heading to read as follows:

23. Remove §§ 502.142 through 502.150.

24. Redesignate §§ 502.201 through 502.210 as §§ 502.141 through 502.150, respectively, and place them under subpart J.

25. Amend newly redesignated § 502.143:

a. In paragraph (a)(1) by removing the citation “§ 502.203(a)(2)” and adding in its place the citation “§ 502.143(a)(2);

b. In paragraph (a)(2)(i) by removing the citation “§ 502.204” and adding in its place the citation “§ 502.144”;

c. In paragraph (b)(2) by removing the citation “§ 502.206” and adding in its place the citation “§ 502.146”;

d. In paragraph (b)(5)(i) by removing the citation “§ 502.202” and adding in its place the citation“§ 502.142”;

e. In paragraph (b)(5)(ii) by removing the citation “§ 502.203(b)(5)(i)(A)” and adding in its place the citation “§ 502.143(b)(5)(i)(A)”;

f. In paragraph (c)(1) by removing the citation “§ 502.154” and adding in its place the citation “§ 502.202” and by removing the citation “§ 502.203(b)(3)” and adding in its place the citation “§ 502.143(b)(3)”;

g. In paragraph (c)(2) by removing the citation “§ 502.203(d)(2)” and adding in its place the citation “§ 502.143(d)(2)”;

h. In paragraph (d)(1) by removing the citation “§ 502.201(e)(2)” and adding in its place the citation “§ 502.141(e)”;

i. In paragraph (d)(2)(ii) by removing the citation “§ 502.201(j)” and adding in its place the citation “§ 502.141(j)”; and

j. In paragraph (e)(2) by removing the citation “§ 502.203(f)(1)” and adding in its place the citation “§ 502.143(f)(1)”.

26. Amend newly redesignated § 502.144:

a. In paragraph (a)(2)(i) by removing the citation“§ 502.203” and adding in its place the citation “§ 502.143”;

b. In paragraph (1)(4) by removing the citation “§ 502.203(b)(6)” and adding in its place the citation “§ 502.143(b)(6)”.

27. Amend newly redesignated § 502.145:

a. In paragraph (a)(1) by removing the citation “§ 502.201(e)(2)” and adding in its place the citation “§ 502.141(e)(2)”;

b. In paragraph (a)(2) by removing the citation “§ 502.201(e) and (f)” and adding in its place the citation “§ 502.141(e) and (f)” ; and

c. In paragraph (b)(2) by removing the citation “§ 502.201(l)” and adding in its place the citation “§ 502.141(l)”.

28. Amend newly redesignated § 502.146:

a. In paragraph (a) by removing the citation “§ 502.201(e) and (f)” and adding in its place the citation “§ 502.141(e) and (f)”; and

b. In paragraph (b)(2) by removing the citation “§ 502.201(l)” and adding in its place the citation “§ 502.141(l)”.

29. Amend newly redesignated § 502.147(a)(3) by removing the citation “§ 502.201(l)” and adding in its place the citation “§ 502.141(l)”.

30. Amend newly redesignated § 502.148(a) by removing the citation “§§ 502.202 through 502.207” and adding in its place the citation “§§ 502.142 through 502.147”.

31. Amend newly redesignated § 502.149:

a. In paragraph (a)(1)(iii) by removing the citation “§ 502.209(a)(2) through (7)” and adding in its place the citation“§ 502.149(a)(2) through (7)”;

b. In paragraph (a)(2) by removing the citation “§ 502.156 of subpart J” and adding in its place the citation “§ 502.204 of subpart L”;

c. In paragraph (a)(3) by removing the phrase “§ 502.203(b)(6) or § 502.204(a)(4)” and adding in its place the phrase “§ 502.143(b)(6) or § 502.144(a)(4);

d. In paragraph (a)(7) by removing the citation “§ 502.156 of subpart J” and adding in its place the citation “§ 502.204 of subpart L”;

e. In paragraph (b) by removing the phrase “§ 502.202(b) and § 502.209(d)(3)” and adding in its place the phrase “§ 502.142(b) and § 502.149(d)(3)”; and

f. In paragraph (d)(3)(iii) by removing the citation “§ 502.204” and adding in its place the citation “§ 502.144”.

32. Amend newly redesignated § 502.150(a)(1) by removing the citation “§ 502.201” and adding in its place the citation “§ 502.141” and by removing the citation “§ 502.206” and adding in its place the citation “§ 502.146”.

33. Remove and reserve §§ 502.151 through 502.169.

Subpart K [Removed and reserved]

34. Remove and reserve subpart K, consisting of §§ 502.181 through 502.187.

35. Revise subpart L to read as follows:

Subpart L—Presentation of Evidence

Subpart M—Decisions; Appeals; Exceptions

36. Revise the subpart M heading to read as set forth above.

37. Revise § 502.221 to read as follows:

38. Remove and reserve § 502.222.

39. Revise § 502.230 to read as follows: