[Federal Register Volume 63, Number 98 (Thursday, May 21, 1998)]
[Notices]
[Pages 27934-27937]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-13587]


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DEPARTMENT OF ENERGY


Small Entity Compliance Guidance and Civil Penalty Reduction and 
Waiver Pursuant to the Small Business Regulatory Enforcement Fairness 
Act of 1996; Statement of Policy

AGENCY: Department of Energy.

ACTION: Notice.

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SUMMARY: The Department of Energy today publishes a statement of policy 
regarding guidance to small entities concerning compliance with 
statutory and regulatory requirements and the waiver or reduction of 
civil penalties for small entities that violate statutory and 
regulatory requirements. This policy statement is published to comply 
with sections 213 and section 223 of the Small Business Regulatory 
Enforcement Fairness Act of 1996.

DATES: This policy takes effect on June 22, 1998.

ADDRESSES: Interested persons may submit any comments or suggestions 
with respect to this policy statement to Michael W. Bowers, U.S. 
Department of Energy, Office of General Counsel, GC-74, 1000 
Independence Avenue, SW, Washington, DC 20585, (202) 586-9507.

FOR FURTHER INFORMATION CONTACT: Michael W. Bowers, U.S. Department of 
Energy, Office of General Counsel, GC-74, 1000 Independence Avenue, SW, 
Washington, DC 20585, (202) 586-9507.

SUPPLEMENTARY INFORMATION:

I. Background

    The Small Business Regulatory Enforcement Fairness Act (SBREFA), 
which was enacted as title II of Pub. L. 104-121, was signed into law 
on March 29, 1996. The primary goals of SBREFA as stated in the Act are 
to implement recommendations of the 1995 White House Conference on 
Small Business; provide small entities enhanced opportunities for 
judicial review of final agency action; encourage small business 
participation in the regulatory process; develop more accessible 
sources of information on regulatory and reporting requirements for 
small entities; create a more cooperative regulatory environment for 
small businesses; and make federal regulators more accountable for 
``excessive'' enforcement actions.
    Section 221 of SBREFA, 5 U.S.C. 601 note, defines the term ``small 
entity'' as having the same meaning as in section 601 of the Regulatory 
Flexibility Act (RFA). The RFA defines ``small entity'' as any ``small 
business,'' ``small organization,'' or ``small governmental 
jurisdiction.'' 5 U.S.C. 601(6). Under the RFA, a ``small business'' 
has the same meaning as ``small business concern'' under section 3 of 
the Small Business Act, unless an agency, after consultation with the 
Office of Advocacy of the Small Business Administration (SBA) and after 
an opportunity for public comment, establishes other appropriate 
definitions. 5 U.S.C. 601(3). Under the Small Business Act, a ``small 
business concern'' is one that is independently owned and operated and 
not dominant in its field of operation (15 U.S.C. 632(a)(1)). SBA 
regulations further define ``small business concern'' using number of 
employees or annual income by industry category. 13 CFR part 121. SBA's 
regulations also provide that the affiliates of an enterprise are 
included in determining its size. 13 CFR 121.103. The RFA defines 
``small organization'' as a not-for-profit enterprise which is 
independently owned and operated and not dominant in its field, unless 
an agency, after opportunity for public comment, establishes other 
definitions of the term appropriate to its activities and publishes 
such definitions in the Federal Register. 5 U.S.C. 601(4). The RFA 
defines a ``small governmental jurisdiction'' as governments of cities, 
counties, towns, townships, villages, school districts, or special 
districts with a population of less than 50,000, unless an agency 
establishes other appropriate definitions after opportunity for public 
comment. 5 U.S.C. 601(5). The Department of Energy (DOE or Department) 
has not established alternative definitions of these terms. The RFA 
definitions of these terms are included in Section III of the policy 
statement published today.
    The Department currently does not administer any program that is 
focused principally on the regulation of small entities. DOE does 
administer programs that involve financial assistance to, or 
procurement from, small entities. Moreover, requirements in particular 
rules issued by DOE, which may be enforced by assessment of civil 
penalties, may apply to some small entities as well as large ones. 
Therefore, to comply with sections 213 and 223 of SBREFA, the 
Department has issued the policies set forth in this notice in order to 
provide for: (1) Guidance to small entities concerning compliance with 
statutes and regulations under the Department's jurisdiction, and (2) 
the reduction and waiver of civil penalties for small entities.

II. Policy on Compliance Guidance to Small Entities

    Under section 213 of SBREFA, 5 U.S.C. 601 note, each agency that 
regulates the activities of small entities is directed to establish a 
program for responding to inquiries from small entities concerning 
compliance, utilizing existing functions and personnel of the agency to 
the extent practicable. Section 213(a) provides: ``Whenever appropriate 
in the interest of administering statutes and regulations within the 
jurisdiction of an agency which regulates small entities, it shall be 
the practice of the agency to answer inquiries by small entities 
concerning information on, and advice about, compliance with such 
statutes and regulations, interpreting and applying the law to specific 
sets of facts supplied by the small entity. In any civil or 
administrative action against a small entity, guidance given by an 
agency applying the law to facts provided by the small entity may be 
considered as evidence of the reasonableness or appropriateness of any 
proposed fines, penalties or damages sought against such small 
entity.''
    The Department provides a variety of information and guidance to 
persons about compliance with the requirements of the programs it 
administers. Each substantive area under the Department's jurisdiction 
has staff members who respond to inquiries about compliance with 
applicable laws and regulations. If sources of general information are 
insufficient to provide the needed guidance or assistance, DOE staff 
members may provide specific, informal advice, or may advise the 
requester to

[[Page 27935]]

use a more formal method to obtain answers to its inquiry. Following 
are some examples of information and procedures that are available to 
persons, including small entities, subject to particular DOE regulatory 
requirements:
    <bullet> DOE directives, including compliance guides, are available 
on an Internet website (http://www.explorer.doe.gov). These directives 
primarily apply to the Department's management and operation of its 
facilities and to DOE contractors and subcontractors if incorporated 
into contracts. Explorer links to the DOE Technical Standards Program's 
home page (http://apollo.osti.gov/html/techstds/techstds.html), which 
provides access to guides and handbooks pertaining to use of technical 
standards in DOE programs. The Department of Energy home page (<a href="http://
www.doe.gov">http://
www.doe.gov</a>) also includes links to information (e.g., names and 
telephone numbers of contact persons) provided by various program 
offices to assist persons who must comply with regulatory requirements.
    <bullet> DOE has issued a formal policy that addresses issuance of 
guidance documents, including technical standards, to assist 
contractors in implementing environment, safety and health requirements 
at DOE sites (DOE P 450.2A). That policy also commits DOE to provide 
opportunities for public input on guidance relating to nuclear safety 
rules, including publication of notice of the availability of such 
guidance and acceptance of public comments. DOE also has published a 
detailed statement of policy concerning enforcement of nuclear safety 
requirements as an appendix to its procedural rules for DOE nuclear 
activities. 10 CFR part 820, appendix A. This policy statement was 
amended on October 8, 1997 (62 FR 52479).
    <bullet> The Office of Energy Efficiency and Renewable Energy has 
promulgated rules for the Alternative Fuel Transportation Program that 
allow an owner or operator of a fleet of motor vehicles to request an 
interpretive ruling on how DOE's regulations apply to its particular 
facts and circumstances. 10 CFR 490.5. The regulations provide that 
``[n]o person who obtains an interpretive ruling * * * shall be subject 
to an enforcement action for civil penalties or criminal fines for 
actions reasonably taken in reliance thereon * * *'' 10 CFR 490.5(i). 
The Office also issued a ``plain English'' compliance guide when it 
published regulations for the program.
    The Department has not established a separate program specifically 
to provide compliance guidance to small entities. The programs 
administered by DOE generally involve large companies with contracts to 
conduct operations at DOE facilities or regulation of private sector 
companies, such as appliance manufacturers, that are not small 
entities. The Department's policy is that each program office with 
authority to bring enforcement actions against small entities for 
violations of statutory or regulatory requirements should provide 
compliance guidance to small entities to the extent appropriate and 
practicable. Under this policy, DOE usually will answer inquiries of 
small entities concerning compliance if doing so does not interfere 
with a matter that currently is under investigation or the subject of 
governmental proceedings.
    The Department's policy on providing compliance guidance to small 
entities includes several conditions on responding to requests by small 
entities for written guidance applying law to facts they have provided. 
These conditions are necessary because SBREFA provides that agency 
guidance may be considered as evidence in any civil or administrative 
enforcement proceeding. The policy provides that before responding in 
writing to a small entity's request, DOE offices should require the 
person who has requested the written guidance to provide in writing the 
specific facts and circumstances relevant to its request and to 
identify the pertinent statute or regulation. In addition, the policy 
calls for DOE offices to consult with legal counsel, and any other DOE 
office or agency with an interest in the matter, before providing a 
written response to a small entity. With regard to DOE nuclear 
activities, the Secretary has delegated to the General Counsel the 
responsibility for formulating and issuing any interpretation 
concerning the Atomic Energy Act of 1954, other nuclear statute, or a 
DOE nuclear safety requirement. 10 CFR 820.51.

III. Policy on Reduction and Waiver of Civil Penalties for Small 
Entities

    Section 223(a) of SBREFA, 5 U.S.C. 601 note, provides the following 
general standard for agency reduction and waiver policies: ``Each 
agency regulating the activities of small entities shall 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. 
Under appropriate circumstances, an agency may consider ability to pay 
in determining penalty assessments on small entities.''
    DOE interprets the term ``civil penalites'' in section 223 to mean 
civil money penalties. This interpretation is consistent with the 
provision that an agency may consider a small entity's ``ability to 
pay,'' and the requirement in section 223(c) that each agency report to 
Congress on the ``total amount of penalty reductions and waivers'' 
under its policy or program.
    Section 223(b) provides that agency policies or programs are 
``(s)ubject to the requirements of other statutes'' and, thus, do not 
supersede existing laws on penalties. It provides, moreover, that 
agency policies or programs shall contain conditions or exclusions, 
which may include, but shall not be limited to: (1) Requiring the small 
entity to correct the violation within a reasonable time; (2) limiting 
the applicability to violations discovered through participation by the 
small entity in a compliance assistance or audit program operated or 
supported by the agency or a state; (3) excluding from the program 
small entities that have been subject to multiple enforcement actions 
by the agency; (4) excluding violations involving willful or criminal 
conduct; (5) excluding violations that pose serious health, safety, or 
environmental threats; and (6) requiring a good faith effort to comply 
with the law.
    Several conditions or exclusions suggested in SBREFA are similar to 
provisions of a Presidential memorandum on regulatory reform issued on 
April 21, 1995, which directed executive agencies to modify penalties 
for small businesses. The memorandum provides that agencies shall 
exercise their discretion ``to waive the imposition of all or a portion 
of a penalty when the violation is corrected within a time period 
appropriate to the violation in question * * *. The provisions (of this 
section) shall apply only where there has been a good faith effort to 
comply with applicable regulations and the violation does not involve 
criminal wrongdoing or significant threat to health, safety, or the 
environment.'' Memorandum of the President of the United States to 
Executive Agencies, ``Regulatory Reform--Waiver of Penalties and 
Reduction of Reports'' (April 21, 1995) (5 U.S.C. 601 note).
    The Department has authority to impose civil penalties under 
various statutes. Section 18 of the Price-Anderson Amendments Act of 
1988, 42 U.S.C. 2282a, authorizes DOE to impose civil money penalties 
of up to $110,000 on certain persons for violation of DOE nuclear 
safety requirements in any

[[Page 27936]]

applicable rule, regulation or order.\1\ The Department has published a 
statement of enforcement policy for implementing this authority. 10 CFR 
part 820, appendix A. Under the National Defense Authorization Act for 
Fiscal Years 1992 and 1993, DOE may impose civil penalties on any 
contractor of DOE who fails to provide for the training of individuals 
involved in hazardous substance response or emergency response at DOE 
nuclear weapons facilities, or who fails to certifiy such training. 42 
U.S.C. 7274d. The Department also has authority to impose civil 
penalties for violation of certain provisions of the Energy Policy Act, 
42 U.S.C. 13262; the Energy Policy and Conservation Act, 42 U.S.C. 
6303; the Program Fraud Civil Remedies Act, 31 U.S.C. 3801-3812; and 
various other statutes. As mentioned previously, the programs 
administered by DOE generally involve large contractors and companies, 
but DOE rules sometimes apply to individual small entities that may be 
subject to assessment of civil penalties for violation of regulatory 
requirements.
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    \1\ DOE recently revised the civil penalty amounts specified in 
the PAAA and other statutes to comply with the Federal Civil 
Penalties Inflation Adjustment Act of 1990, 28 U.S.C. 2461 note, as 
amended by the Debt Collection Improvement Act of 1996, Pub. L. 104-
134. See Final Rule, Inflation Adjustment of Civil Monetary 
Penalties, 62 FR 46181 (Sept. 2, 1997).
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    DOE will consider whether to reduce or waive civil penalties that 
have been assessed against small entities on a case-by-case basis. 
Under the DOE policy, small entities are not eligible for the reduction 
or waiver of a civil penalty if: (1) The violation involves willful or 
criminal conduct; (2) the small entity has not made a good faith effort 
to comply with the law; or (3) the violation poses a serious threat to 
health, safety, or the environment. These exclusions are given as 
examples in SBREFA and are consistent with the President's memorandum 
on waiver of penalties for small businesses.
    The Department's policy statement includes a non-exclusive list of 
factors that DOE may weigh in deciding whether to reduce or waive a 
civil penalty that has been assessed against an eligible small entity. 
DOE will consider a reduction or waiver of a civil penalty in the 
following circumstances: (1) The small entity has not been subject to 
previous enforcement actions for statutory or regulatory violations; 
(2) the small entity has a low degree of culpability (e.g., violation 
was committed inadvertently or without knowledge of requirements); (3) 
the small entity cooperated fully during the investigation that 
revealed the violation; (4) the small entity engaged in subsequent 
corrective actions to mitigate the effects of the violation and prevent 
future violations; (5) the small entity reasonably relied on misleading 
or erroneous advice given by a DOE officer or employee; and (6) the 
small entity is unable financially to pay the penalty. Each factor does 
not necessarily need to be present for a small entity to qualify for 
reduction or waiver of a civil penalty, and some factors may be weighed 
more heavily than others, depending on the particular circumstances.
    The Department does not intend this policy statement on reduction 
and waiver of civil penalties for small entities to change its current 
policies for enforcing nuclear safety requirements under 10 CFR part 
820. This statement of policy complements, and is not intended to be 
inconsistent with, the statement of enforcement policy in part 820. In 
enforcing nuclear safety requirements, the Department encourages and 
rewards contractors who promptly identify, report, and correct non-
compliant conditions before they become serious health, safety or 
environmental threats. See General Statement of Enforcement Policy, 
appendix A to 10 CFR part 820, ``Procedural Rules for DOE Nuclear 
Activities.'' The Department's policy is to reduce significantly the 
base civil penalty for a DOE contractor who identifies and promptly 
reports a violation to DOE. On the other hand, the policy provides for 
setting a civil penalty assessment above the base civil penalty if a 
covered contractor fails to promptly report and correct potential 
violations.
    The DOE policy concerning the reduction and waiver of civil 
penalties for small entities does not create a right or remedy for any 
person. The Department reserves the right to reduce or waive civil 
penalties in circumstances other than those listed under the policy 
statement if it is legally permissible and in the public interest to do 
so.

IV. Congressional Notification

    Consistent with the Small Business Regulatory Enforcement Fairness 
Act of 1996, DOE will submit to Congress a report regarding the 
issuance of this policy statement prior to the effective date. The 
report will note that the Office of Management and Budget has 
determined that this statement of policy does not constitute a ``major 
rule'' under that Act. 5 U.S.C. 804(2).

    Issued in Washington, D.C., on May 12, 1998.
Mary Anne Sullivan,
Acting General Counsel.

Statement of Policy on Compliance Guidance and Reduction and Waiver 
of Civil Penalties for Small Entities

    The Department of Energy (DOE or Department) has issued this policy 
statement to comply with sections 213 and 223 of the Small Business 
Regulatory Enforcement Fairness Act of 1996 (SBREFA), which was enacted 
as title II of Pub. L. 104-121. Section 213(b) of SBREFA, 5 U.S.C. 601 
note, requires agencies that regulate the activities of small entities 
to establish a program for responding to inquiries from small entities 
concerning information on, and advice about, compliance with statutory 
and regulatory requirements. Section 223 of SBREFA, 5 U.S.C. 601 note, 
requires each agency regulating the activities of small entities to 
establish a program or policy to provide for the reduction, and under 
appropriate circumstances, for the waiver of civil penalties for 
violations of statutory or regulatory requirements by small entities.

I. Compliance Guidance to Small Entities

    The following policies apply to inquiries from small entities 
concerning compliance with applicable statutes and regulations:
    1. Each DOE office with authority to bring enforcement actions 
against small entities for violation of statutory or regulatory 
requirements (hereafter ``DOE office'') should answer inquiries by 
small entities concerning the application of statutes and regulations 
to specific facts or circumstances, unless answering an inquiry may 
interfere with an ongoing investigation or proceeding or otherwise 
would not be appropriate or practicable.
    2. DOE offices should require a small entity that requests DOE to 
provide written guidance applying the law to facts to state the 
specific facts and circumstances relevant to its request and to 
identify the pertinent statute or regulation and the related question 
on which guidance is sought.
    3. DOE offices should consult with Department legal counsel, and 
any other office or agency with an interest in the matter, before 
responding in writing to a request by a small entity for guidance 
regarding how a statute or regulation applies to particular facts and 
circumstances.
    4. DOE offices should deny a request by a small entity for 
compliance guidance if the small entity has not

[[Page 27937]]

provided sufficient information upon which to base a response, or for 
other good cause.

II. Reduction and Waiver of Civil Penalites for Small Entities

    1. DOE offices shall consider on a case-by-case basis whether to 
reduce or waive an initial assessment of a civil penalty against a 
small entity for violation of a statutory or regulatory requirement in 
accordance with the policies that follow.
    2. A small entity that has been assessed a civil penalty by DOE 
shall not be eligible for a reduction or waiver of the penalty if any 
of the following apply:
    (a) The violation involves willful or criminal conduct by the small 
entity;
    (b) The small entity has not made a good faith effort to comply 
with the law; or
    (c) The violation poses a serious threat to health, safety, or the 
environment.
    3. Subject to the exclusions in paragraph 2, DOE offices may 
consider the following factors in deciding whether to reduce or waive a 
civil penalty against a small entity:
    (a) The small entity's history of legal or regulatory violations;
    (b) The degree of culpability of the small entity when it committed 
the violation;
    (c) The extent to which the small entity cooperated during the 
investigation;
    (d) The extent to which the small entity engaged in subsequent 
corrective actions to mitigate the effects of the violation and prevent 
future violations;
    (e) The extent to which the small entity reasonably relied on 
misleading or erroneous advice given by a DOE employee;
    (f) The ability of the small entity to pay the civil penalty, in 
whole or in part; and
    (g) Any other relevant fact.
    4. DOE offices should require a person requesting the reduction or 
waiver of a civil penalty under this policy to establish that it meets 
the definition of ``small entity'' set forth in Section III of this 
statement of policy.
    5. This policy on reduction and waiver of civil penalties for small 
entities complements, and does not supersede, the general statement of 
enforcement policy in 10 CFR part 820, appendix A, which applies to 
enforcement of nuclear safety requirements.
    6. The Department reserves the right to reduce or waive civil 
penalties in appropriate individual circumstances where it determines 
that a reduction or waiver is permitted by law and warranted by the 
public interest.

III. Definition of ``Small Entity''

    For purposes of this policy, small entity means a ``small 
business,'' ``small organization,'' or ``small governmental 
jurisdiction'' as defined by the Regulatory Flexibility Act. 5 U.S.C. 
601. The Regulatory Flexibility Act definitions are as follows:
    (1) Small business has the same meaning as the term ``small 
business concern'' under section 3 of the Small Business Act, unless 
(DOE), after consultation with the Office of Advocacy of the Small 
Business Administration and after opportunity for public comment, 
establishes one or more definitions of such term which are appropriate 
to the activities of (DOE) and publishes such definition(s) in the 
Federal Register;
    (2) Small organization means any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field, 
unless (DOE) establishes, after opportunity for public comment, one or 
more definitions of such term which are appropriate to the activities 
of (DOE) and publishes such definition(s) in the Federal Register; and
    (3) Small governmental jurisdiction means governments of cities, 
counties, towns, townships, villages, school districts, or special 
districts, with a population of less than fifty thousand, unless (DOE) 
establishes, after opportunity for public comment, one or more 
definitions of such term which are appropriate to the activities of 
(DOE) and which are based on such factors as location in rural or 
sparsely populated areas or limited revenues due to the population of 
such jurisdiction, and publishes such definition(s) in the Federal 
Register.

[FR Doc. 98-13587 Filed 5-20-98; 8:45 am]
BILLING CODE 6450-01-P