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Daily Rules, Proposed Rules, and Notices of the Federal Government

FEDERAL MARITIME COMMISSION

46 CFR Part 502

[Docket No. 11-05]

RIN 3072-AC43

Commission's Rules of Practice and Procedure

AGENCY: Federal Maritime Commission.
ACTION: Final rule.
SUMMARY: The Federal Maritime Commission revises its rules of practice and procedure to update and clarify the rules and to reduce the burden on parties to proceedings before the Commission. The Commission also amends the regulation with respect to its former employees to reflect changes in a relevant statute and the regulation for filing of documents containing confidential materials.
DATES: Effective: November 12, 2012.
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: I. Background

On March 1, 2012, the Federal Maritime Commission (Commission) published a Notice of Proposed Rulemaking in theFederal Registerproposing to revise Subparts E and L of the Commission's Rules of Practice and Procedure. 77 FR 12528. The Notice was in continuance of the Commission's efforts to modernize its rules for proceedings before the Commission and to reduce the burden on parties to proceedings before the Commission.

II. Comments

Two comments were received by the Commission from Winston & Strawn (Winston) and Cozen O'Connor (Cozen), law firms that have practiced before the Commission for many years. The Commission has reviewed these comments and adopts some recommendations.

Winston & Strawn's Comments

Winston opposes reduction of the time limit for replies to non-dispositive motions from 14 days to 7 days stating that it is “unnecessary, unfair and unduly burdensome” on attorneys who handle many cases and travel as part of their practice. Winston believes that it will do little to shorten the duration of cases and there is no evidence that the present period is responsible for any material delay in Commission proceedings. Winston also opposes the proposed 30 and 15 page limits for dispositive motions and replies, respectively, on the ground that such limits will severely restrict the ability of parties to make their case, particularly those involving complex issues. Winston suggests that no page limits be imposed on non-dispositive motions and that the same limit as exceptions, i.e., 50 pages, be imposed for dispositive motions. Winston also opposes the proposed limits on discovery, arguing such a limit would reduce access to evidence. Winston believes that the proposed limits of 20 depositions and 50 interrogatories are “woefullyinadequate” and unnecessary particularly in major disputes. Winston believes the Commission should maintain its unlimited deposition and interrogatory rule with recourse to a protective order if necessary. Winston requests that the Commission completely abandon its no-reply-to-a-reply rule and permit replies to replies. This change, Winston argues, will address concerns about parties raising arguments for the first time in a reply to which the opposing party has had no opportunity to respond. Winston also suggests that proposed § 502.203(b)(3) be clarified to state that a party may record a deposition using stenographic and “video recordation.” Lastly, Winston requests that the Commission take practical steps to speed the issuance of initial decisions, but does not offer recommendations to achieve such a result.

Independent of Winston's comments, the Commission previously considered the issues raised by Winston with respect to limits on discovery, page limitations, and time limits for replies and believes that the proposed rules reasonably accommodate the needs and requirements of the Commission and the parties to proceedings before the Commission. The Commission believes that the proposed deposition and interrogatory limitations reflect an accommodation recognizing the difference between federal court proceedings and the nature of Commission proceedings which tend to be heard mainly on a written or documentary record.

With respect to the time limit for replies to non-dispositive motions, in view of the new duty to confer prior to filing a non-dispositive motion, the responding party will have advance notice of the motion and the issues raised in the motion. Further, the nature of the subject matter typically involved in such motions often may require expedited consideration. To the extent deviation from such requirements becomes necessary in individual cases, the presiding officer has the requisite authority to issue appropriate orders. The same is true as to the proposed page limitations. Therefore, the Commission does not believe further modification to the proposed rule is needed.

The Commission also believes it unnecessary to further clarify that § 502.203 permits recording depositions both by stenographic and “video recordation.” Revised § 502.203 mirrors Federal Rules of Civil Procedure (FRCP) 30(b)(3)(A), and the conjunction “or” in the proposed rule is meant to operate inclusively.

Cozen O'Connor's Comments

Cozen advocates revising proposed § 502.66 consistent with FRCP 15(a)(1), to permit amendments to pleadings as a matter of right within 21 days of service of the original pleading with a response required within the later of the time left to respond to the original pleading or 14 days after the amended pleading. Cozen supports proposed § 502.72 permitting voluntary dismissal of a complaint, and suggests addition of a provision similar to FRCP 41 also permitting voluntary dismissal of counterclaims, crossclaims, and third-party complaints. Cozen also suggests that when a complainant voluntarily dismisses a complaint and refiles against the same respondent based on the same issues, liability be imposed against the complainant for the respondent's costs in responding to the first complaint. Cozen further recommends that the Commission confirm that a voluntary dismissal under proposed § 502.72 would no longer require Commission approval of any settlement as part of the dismissal.

Cozen supports the limitations on depositions and interrogatories, but believes the Commission should set the limit for depositions at 10, as provided in the FRCP, rather than 20 as proposed by the Commission, and interrogatories at 35, as opposed to 25 as provided in the FRCP or 50 as proposed by the Commission. Cozen further proposes sanctions for failure to appear at scheduled depositions. In addition, Cozen requests that the time limit on discovery be extended from 120 to 180 days. Cozen is concerned that the Commission's proposed § 502.201(b) would require initial disclosures to be made prior to the proposed § 502.201(h) conference; that the time period for disclosure under the Commission's proposed rules would be considerably shorter than those permitted under the FRCP; and that the parties are not permitted to stipulate to a longer period. Cozen suggests revising the proposed rules to require the discovery conference to occur within 21 days after the answer is filed, to require initial disclosures to be made at the earlier of 90 days after the respondent's appearance or 75 days after the filing of the answer, and to permit the parties to stipulate to a longer period for disclosures. Cozen also suggests various clarifications within proposed Rules 201 through 203 which are addressed below.

The Commission does not believe it should adopt the suggestion to allow amendment of pleadings as a matter of right. Although FRCP 15(a)(1) allows amendment to pleadings as of right in the federal district courts, the Commission's proceedings operate on specific time schedules not analogous to federal court cases. The Commission believes that such a rule could create unnecessary time pressure and further delays. The presiding officer has the requisite authority to permit amendments to pleadings when necessary.

The Commission adopts Cozen's request that the Commission modify proposed § 502.72 consistent with FRCP 41(c) to specify that voluntary dismissal also applies to counterclaims, crossclaims, and third-party claims inasmuch as this was the intent of the proposal.

The Commission believes that it cannot adopt Cozen's suggestion that complainants who voluntarily dismiss cases pay respondents' costs should complainant bring the case again, because the Commission lacks authority under the Shipping Act of 1984 to award such costs. Similarly, the Commission cannot award sanctions as proposed by Cozen for failure to attend a deposition.

As noted, in addition to supporting proposed § 502.72 allowing voluntary dismissals by a complainant, Cozen requests that the Commission confirm that this change was also intended to eliminate the requirement that settlement between private litigants be approved as a condition of dismissal. The Commission did not intend to eliminate the requirement for review of settlement when it proposed the new rule and is not changing its long-standing policy at this time.

As stated above in response to Winston's comments on limits on depositions and interrogatories, the Commission is not revising the limitations set out in the proposed rule.

The Commission believes there is merit to Cozen's suggestion that the 120-day proposed discovery period be increased. Cozen suggests that the time period for discovery be increased an additional 60 days for a total of 180 days for discovery. Cozen has substantial practical experience in this area and its concern comports with the Commission's own understanding of the time generally needed to complete discovery. However, while the Commission agrees that additional time is required, it does not agree that an additional 60 days is needed. Given that the Commission has proposed changing the discovery deadline to run from the service of an answer as opposed to the service of a complaint, ensuring that parties are present in the case to conduct discovery, the Commission increases the proposed 120-day period to 150 days from the date of service ofan answer. This should facilitate completion of discovery within 6 months of the start of a proceeding, and ensure sufficient time for briefing and preparation of an initial decision within the one year deadline. The 150-day discovery period will provide a more realistic and feasible time frame, and because it will eliminate a great number of requests for extension of the discovery deadline, it should facilitate timely conclusion of proceedings.

The Commission does not adopt Cozen's suggestions regarding delaying the discovery conference or submission of initial disclosures as the suggestion is not compatible with the time frame for completing discovery under the Commission's rules, a time limitation that does not exist in the federal rules. As to the question of stipulating to a longer period for initial disclosures, the rule does provide for the possibility of stipulation. However, the purpose for requiring initial disclosures is to facilitate and encourage focused and expeditious use and completion of discovery. Moreover, § 502.201(l) will require that “* * * a stipulation extending the time for any form of discovery must have presiding officer's approval if it would interfere with the time set for completing discovery * * *”

The Commission further agrees that proposed § 502.201(k) should be modified to clarify that the obligation to supplement responses also applies to expert witness information under § 502.201(d). However, the Commission does not adopt Cozen's suggestion that existing § 502.202(e), which gives parties the power to stipulate to the person before whom a deposition may be taken, be retained. Proposed § 502.202 mirrors FRCP 28 which does not allow such a stipulation. Retention of current § 502.202(e) would also conflict with the provisions in proposed § 502.202(c) disqualifying certain individuals. The Commission is unaware of any compelling reason to vary from the FRCP requirements in this instance.

III. Discussion

After consideration of the comments, the Commission has determined to adopt the proposed Rules as final with a few modifications adopting some of the comments' suggestions.

a. Rule 5

Although not included in the Notice of Proposed Rulemaking, the Commission is amending § 502.5(b) to require that when a confidential filing is submitted, an original and two copies of a public version excluding the confidential materials be filed. Currently, only an original and one copy is required. Since some submitted filings are extensive and not easy to reproduce, the Commission has found one copy to be insufficient for proper maintenance of the docket.

b. Rule 32

Although not included in the Notice of Proposed Rulemaking, the Commission also amends § 502.32 to reflect changes in a relevant statute. Current § 502.32(c) is designed to expedite consultation with the Director of the Office of Government Ethics, as required by section 207(j) of Title 18 of the United States Code. Subsection j of 18 U.S.C. 207 was struck from section 207 in 1989 (Pub. L. 101-194 Ethics Reform Act) and replaced with a section on exceptions. Therefore, the statutory authority for the Commission to hold a disciplinary hearing and sanction a former officer or employee as laid out in 46 CFR 502.32(c)(2)-(11) and (d) no longer exists. Additionally, the requirement in 46 CFR 502.32(c)(2)(i) for the Chairman to report to the Director of the Office of Government Ethics (OGE) and to the Criminal Division, Department of Justice substantiated information regarding possible violations of 18 U.S.C. 207 has been superseded by the reporting requirements contained in the OGE regulations at 5 CFR 2641.103(a) and 5 CFR 2638.603 in addition to 28 U.S.C. 535. The Commission notes that 5 CFR 2641.103(a) specifically states that the criminal and civil enforcement of the provisions of 18 U.S.C. 207 is the responsibility of the Department of Justice. Reflecting the statutory change, the Commission revises paragraph (c) of section 502.32.

c. Subpart E—Proceedings; Pleadings; Motions; Replies

The revision to Subpart E is intended both to streamline the current rules for ease of use by the public and to provide parties to Commission proceedings with greater clarity as to the requirements pertaining to the conduct of proceedings, specifically motions, intervention, and dismissals. Also as described below, the revision sets out a new procedure for the conduct of Commission-initiated enforcement proceedings. Minor changes are also made to reorder sections and enhance clarity generally.

Rule 62Private Party Complaints for Formal Adjudication

Section 502.62 governs the filing of private party complaints for formal adjudication and has been revised for clarification and modernized to request email addresses for parties and their representatives. Rules related to the filing of answers to complaints (currently found at 46 CFR 502.64) and statutes of limitations (currently found at 46 CFR 502.63) have been consolidated into § 502.62. Revised § 502.62 explains more fully what is required in an answer and also provides for the filing of counterclaims, crossclaims, and third-party complaints. Commission rules have not previously addressed these types of claims, though they have been filed and adjudicated. Revised § 502.62 references decisions on default for failure to answer a complaint, counterclaim, crossclaim, or third-party complaint. Administrative Law Judges (ALJs) have adjudicated decisions on default in the past in various fashions, but the final rule better defines when an initial decision on default may be issued. The new default rule is discussed in greater detail below.

Exhibit 1 to Subpart E currently contains a complaint form and a checklist of information required when filing a complaint. The final rule removes this form from the rules as the Commission plans to publish a revision of this form on its Web site along with other forms and further helpful information for complaint filers, with information oriented particularly topro sefilers.

Rule 63Commission Enforcement Action

Section 502.63 provides a new procedure at the initial stages of Commission enforcement proceedings designed to more efficiently utilize Commission resources, provide for expeditious resolution of cases where a respondent defaults or otherwise chooses not to appear, and ensures due process to respondents. Under current procedure, the Commission issues an Order of Investigation and Hearing that advises respondents of the issues under investigation, designates the Commission's Bureau of Enforcement (BOE) as a party to the proceeding to prosecute the case, and assigns the matter to the Office of Administrative Law Judges to conduct the proceeding and issue an initial decision. There is no requirement in the current procedural rules that a respondent answer or otherwise respond to the Order. Typically, the presiding officer issues an initial order to the parties followed by a scheduling order setting forth dates by which certain aspects of the case must be completed and generally setting a schedule for the proceeding. It is not uncommon, however, for a respondent to fail to appear or to initially appearand then cease participating in the case. Under these procedures, there are no Commission rules to address a respondent's failure to appear or comply with procedural requirements. Instead, the presiding officer is required to undertake a number of sequential procedural steps to put the case in a posture where an initial decision can be issued. These necessary procedural steps can consume several months. For example, a motion to compel responses to discovery must be filed after the responses were due; followed by a time period for respondent to reply to the motion; followed by a time period for the ALJ to issue an order; followed by another time period for respondent's compliance; followed by BOE's motion for sanctions for failure to comply with the ALJ's order; followed by a period of time for respondent's reply; followed by issuance of the ALJ's order. Obviously, this process is time consuming and wasteful of limited resources in prosecuting a case which may well turn out to be an uncontested or a default case. The new rule for default is discussed in greater detail below.

Under the revised rule, an enforcement action will continue to be instituted upon the Commission's issuance of an Order of Investigation and Hearing. The Order of Investigation and Hearing will set forth specific facts alleged by BOE supporting an assertion that the respondent has violated the Shipping Act, require an answer from the respondent, and identify the consequences of failure to answer or otherwise respond to the Order. Such a procedure is employed by various other federal agencies in conducting investigative adjudications including the Federal Trade Commission, Commodity Futures Trading Commission, Department of Housing and Urban Development, and the new Consumer Financial Protection Bureau (interim final rules). The Order of Investigation and Hearing will also identify the name and address of each respondent subject to the Order; recite the legal authority and jurisdiction for instituting the proceeding including designation of the statutory provisions and/or Commission regulations alleged to have been violated; include a clear and concise statement of facts sufficient to inform the respondent of the acts or practices alleged to constitute a violation of the law; include a statement of the civil penalties, cease and desist order, and any other appropriate penalty that may be imposed; specify the date or time period by or in which respondent must file an answer with the Commission and serve BOE; and a statement of the consequences for failure to file an answer.

The final rule contains a separate provision addressing the contents of an answer to an Order of Investigation and Hearing. The rule requires that a respondent must file an answer with the Commission and serve the answer on BOE within 25 days after being served with the Order. The rule further provides that the answer must contain a concise statement of the facts upon which each ground of defense is based and an admission, denial, or explanation of each fact alleged in the Order, or, if the respondent does not have sufficient knowledge of the facts to prepare a response, a statement to that effect. Factual allegations in the Order not answered or addressed will be deemed to be admitted.

Rule 64Alternative Dispute Resolution

The new section 502.64 requires parties to a Commission proceeding to participate in a preliminary conference to discuss whether the matter may be resolved through mediation. Under this provision, parties are required to contact the Director of the Office of Consumer Affairs & Dispute Resolution Services (CADRS) within fifteen (15) days of the respondent's filing of an answer to schedule the preliminary conference. The Director of CADRS or his or her designee will conduct the preliminary conference either in person or via telephone, video conference, or other forum convenient to the parties. The designee will have the ability to communicate with the parties prior to the preliminary conference to explore issues and to respond to questions regarding the preliminary conference.

The purpose of the preliminary conference is to provide parties information regarding mediation services, to explain the mediation process, and to explore the willingness of parties to resolve their dispute through mediation, including whether the parties wish to voluntarily agree to mediate. In addition, the new provision allows parties, if they so choose, to reconsider use of mediation at a later time in the proceeding even when a party or parties initially elected not to use mediation or when prior attempts to mediate the dispute were unsuccessful.

The preliminary conference will be subject to the Commission's confidentiality provisions set forth in 46 CFR 502.405 regardless of whether the parties decide to mediate a dispute or whether such mediation is successful in resolving the dispute.

The Commission has determined to exclude the Commission's enforcement proceedings from the mandatory preliminary conference requirement in the final rule.

Rule 65Decision on Default

The new rule on default clarifies the process that will occur when a party fails to participate or respond in a Commission proceeding. The rule is modeled on that of other agencies that employ a similar enforcement procedure. A defaulting respondent may petition the Commission to set aside a decision on default, which may be granted to prevent injustice upon a showing of good cause. The new rule requires that such a motion be filed within 22 days after service of the decision on default to coincide with the current time period for the filing of exceptions to an initial decision.

Rule 68Motion for Leave To Intervene

Section 502.68, addresses motions for leave to intervene previously found in § 502.72. This section has been modernized to reflect intervention of right and permissive intervention as provided in the FRCP. The rule requires that parties seek leave to intervene in proceedings by motion, rather than by petition. The standard recognizes the existing standard of the Commission's rule as well as that in FRCP 24 governing intervention.

The revised rule allows for permissive intervention by a federal or state government department or agency or the Commission's Bureau of Enforcement. The federal or state government or agency or the Commission's Bureau of Enforcement is required to show that its expertise is relevant to one or more issues involved in the proceeding and may assist in the consideration of those issues.

Rule 69Motions

Section 502.69 reorders the subparts from current § 502.73 into a more logical fashion and adds two new paragraphs. Paragraph (f) clarifies when responses to written motions are permitted. Paragraph (g) defines dispositive motions, because dispositive and non-dispositive motions are treated differently pursuant to §§ 502.70 and 71.

Rule 70Procedure for Dispositive Motions

Section 502.70 addresses dispositive motions. Because these motions may dispose of all or part of a proceeding, they are handled differently from non-dispositive motions. Dispositive motions must include specific information. Non-moving parties must file responses within 15 days. The moving party may file a reply within 7 days thereafter. No further reply may befiled unless requested by the presiding officer or upon a showing of extraordinary circumstances. Because these motions may be dispositive, the presiding officer may request additional briefing to ensure a full record. Previously, additional time and briefs were permitted on a case by case basis.

Rule 71Procedures for Non-Dispositive Motions

Section 502.71 addresses non-dispositive motions. These are frequently motions regarding discovery disputes or requesting an extension of a deadline. They do not tend to be as complex and do not require as much time to address as dispositive motions. Therefore, § 502.71 requires the parties to attempt to confer to try to resolve the dispute before filing the motion. If a motion is still required (e.g., to extend a date), the motion must state whether it is opposed. If the motion is opposed, the non-moving party must file a response within 7 days. A reply is only permitted upon a showing of extraordinary circumstances. This will allow non-dispositive motions to be resolved more quickly and efficiently.

Rule 72Dismissals

Section 502.72 clarifies the process for seeking voluntary and involuntary dismissals. Without such a rule, parties were not always certain how to present these dismissals. The rule is similar to FRCP 41.

d. Subpart L—Disclosures and Discovery

The Commission revises its discovery rules found in 46 CFR Subpart L to modernize and more closely conform them to the current version of the FRCP and to encourage focused and expeditious use and completion of discovery. The Shipping Act of 1984 provides that in an investigation or adjudicatory proceeding under the Act, “a party may use depositions, written interrogatories, and discovery procedures under regulations prescribed by the Commission that, to the extent practicable, shall conform to the Federal Rules of Civil Procedure (28 App. U.S.C.).” 46 U.S.C. 41303(a). In 1984, the Commission promulgated discovery rules based on the federal rules as they then existed. The Commission promulgated minor amendments to § 502.203 in 1993 and § 502.201 in 1999, but in all other respects the rules are unchanged since 1984. The FRCP on discovery, on the other hand, has been extensively revised since 1984.

As a general matter, to ensure that FMC proceedings are conducted as efficiently as possible, the Commission is not adopting the various deadlines from the FRCP. To ensure parties are present in the case, revised deadlines would run from the date of the service of the answer, as opposed to the complaint, including the deadline for filing initial disclosures (§ 502.201(b)), completion of discovery (§ 502.201(g)), and initial duty to confer (§ 502.201(h)). The Commission also does not adopt many of those rules that pertain to trials, as trial-type hearings are currently the exception in Commission proceedings. The Commission incorporates references to electronically stored documents and treats those similar to the FRCP in the context of discovery.

Rule 201Duty to Disclose; General Provisions Governing Discovery

Section 502.201 governs discovery generally, defines the scope of discovery and its limits, and provides for limited initial disclosures to be made by all parties to any Commission proceeding within seven days of receipt of respondent's answer. The requirement to make initial disclosures is a new requirement in Commission proceedings. FRCP 26 requires initial disclosures in federal courts, and the procedural rules of other federal agencies, such as the Federal Trade Commission, require initial disclosure in proceedings. Revised § 502.201 requires the parties to confer within 14 days of receipt of respondent's answer, to complete discovery within 150 days of the answer, and requires supplementation of responses to discovery. Currently, discovery must be completed within 120 days of notice of the complaint filing. This time period has proven to be unrealistic, particularly because the actual date of receipt of an answer can vary greatly. Revised § 502.201 adopts the federal rule on the scope of discovery as it currently exists in FRCP 26(b)(1), and increases the time period to complete discovery.

Revised § 502.201 also requires the disclosure of expert witnesses. The substance of the requirement tracks the federal rule, except with respect to the time for disclosures to be provided. The federal rule requires disclosure of experts and their reports no later than 90 days before trial. This deadline is not suitable in view of the Commission's 150 day discovery period. Therefore, parties are required to address expert disclosures and discovery as part of the “duty to confer” requirement and, if experts will be used, schedule disclosure and exchange of reports in their proposed schedule.

Rule 202Persons Before Whom Depositions May Be Taken Rule 203Depositions by Oral Examination; And Rule 204Depositions by Written Questions

Sections 502.202, 203, and 204 modernize Commission rules on depositions to conform with current FRCP 28, 29, 30, and 31. While the Commission's rules have followed the FRCP in other respects, there are currently no limitations on the number of depositions. The revised rules limit the number of depositions that may be taken without stipulation or leave of the presiding officer to 20.

Rule 205Interrogatories to parties

Section 205 pertains to interrogatories and also conforms to FRCP 33. Under the revised rule, a party will be permitted to serve no more than 50 written interrogatories without stipulation or leave of the presiding officer.

Rule 206Producing Documents, Electronically Stored Information, and Tangible Things, or Entering Onto Land, for Inspection and Other Purposes

Section 502.206 continues to echo FRCP 34, but incorporates reference to production of electronically stored information and establishes that responses to requests are due within 30 days, whereas the current rule does not specify a deadline for such a response.

Rule 207Requests for Admission; And Rule 208Use of Discovery Procedures Directed to Commission Staff Personnel

Section 502.207 generally follows FRCP 36, although it does not allow the award of expenses if a party fails to admit a matter that is later proven true. Section 502.208 remains unchanged.

Rule 209Use of Depositions at Hearings

Section 502.209 continues to follow FRCP 32, but does not reference that rule in its entirety as certain provisions, such as FRCP 32(a)(5) (Limitations on use) are not typically relevant in Commission proceedings. References to the Federal Rules of Evidence are removed as they do not generally apply to administrative proceedings.

Rule 210Motions To Compel Initial Disclosure or Compliance With Discovery Requests; Failure To Comply With Order To Make Disclosure or Answer or Produce Documents; Sanctions; Enforcement

Section 502.210 is revised to more closely conform to FRCP 37(b)(2)(A),and makes the failure to make initial disclosures subject to a motion to compel and sanctions. The revised rule also changes the response period to 7 days in accordance with the general rule applicable to responses to motions.

As this rulemaking only affects the Commission's Rules of Practice and Procedure, this final rule is not subject to the general notice of proposed rulemaking requirements of the Administrative Procedure Act, 5 U.S.C. 553(b)(A). Therefore, this final rule is not subject to the Regulatory Flexibility Act, 5 U.S.C. 601et seq.

This final rule is not a “major rule” under 5 U.S.C. 804(2).

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 stated in the preamble, the Federal Maritime Commission amends 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; 12 U.S.C. 1141j(a); 18 U.S.C. 207; 26 U.S.C. 501(c)(3); 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, 30 FR 6469, 3 CFR 1964-1965 Comp. p. 306; 21 U.S.C. 853a.

2. In § 502.5, amend paragraph (b) by revising the first sentence to read as follows:
§ 502.5 Documents containing confidential materials.

(b) Whenever a confidential filing is submitted, there must also be submitted an original and two copies of a public version of the filing. * * *

3. In § 502.32, revise paragraph (c) to read as follows:
§ 502.32 Former employees.

(c) Reporting possible violations. Possible violations of section 207 of Title 18 of the United States Code, 18 U.S.C. 207, by the Commission's former officers and employees are required to be reported to the Attorney General and the Office of Government Ethics, pursuant to the regulations of the Office of Government Ethics at 5 CFR 2641.103(a) and 5 CFR 2638.603.

4. Revise subpart E to read as follows: Subpart E—Proceedings; Pleadings; Motions; Replies Sec. 502.61 Proceedings. 502.62 Private party complaints for formal adjudication. 502.63 Commission enforcement action. 502.64 Alternative dispute resolution. 502.65 Decision on default. 502.66 Amendments or supplements to pleadings. 502.67 Motion for more definite statement. 502.68 Motion for leave to intervene. 502.69 Motions. 502.70 Procedure for dispositive motions. 502.71 Procedure for non-dispositive motions. 502.72 Dismissals. 502.73 Order to show cause. 502.74 Exemption procedures—general. 502.75 Declaratory orders and fee. 502.76 Petitions—general and fee. 502.77 Proceedings involving assessment agreements. 502.78 Brief of an amicus curiae. Subpart E—Proceedings; Pleadings; Motions; Replies
§ 502.61 Proceedings.

(a) Any person may commence a proceeding by filing a complaint (Rule 62) for a formal adjudication under normal or shortened procedures (subpart K) or by filing a claim for the informal adjudication of small claims (subpart S). A person may also file a petition for a rulemaking (Rule 51), for an exemption (Rule 74), for a declaratory order (Rule 75), or for other appropriate relief (Rule 76), which becomes a proceeding when the Commission assigns a formal docket number to the petition. The Commission may commence a proceeding for a rulemaking, for an adjudication (including Commission enforcement action under § 502.63), or a non-adjudicatory investigation upon petition or on its own initiative by issuing an appropriate order.

(b) In the order instituting a proceeding or in the notice of filing of complaint and assignment, the Commission must establish dates by which the initial decision and the final Commission decision will be issued. These dates may be extended by order of the Commission for good cause shown. [Rule 61.]

§ 502.62 Private party complaints for formal adjudication.

(a)Filing a complaint for formal adjudication.(1) A person may file a sworn complaint alleging violation of the Shipping Act of 1984, 46 U.S.C. 40101 et seq.

(2)Form.Complaints should be drafted in accordance with the rules in this section.

(3)Content of complaint.The complaint must be verified and must contain the following:

(i) The name, street address, and email address of each complainant, and the name, address, and email address of each complainant's attorney or representative, the name, address, and, if known, email address of each person against whom complaint is made;

(ii) A recitation of the legal authority and jurisdiction for institution of the proceeding, with specific designation of the statutory provisions alleged to have been violated;

(iii) A clear and concise factual statement sufficient to inform each respondent with reasonable definiteness of the acts or practices alleged to be in violation of the law; and

(iv) A request for the relief and other affirmative action sought.

(v) Shipping Act violation must be alleged. If the complaint fails to indicate the sections of the Act alleged to have been violated or clearly to state facts which support the allegations, the Commission may, on its own initiative, require the complaint to be amended to supply such further particulars as it deems necessary.

(4)Complaints seeking reparation; statute of limitations.A complaint may seek reparation (money damages) for injury caused by violation of the Shipping Act of 1984. (See subpart O of this part.)

(i) Where reparation is sought, the complaint must set forth the injury caused by the alleged violation and the amount of alleged damages.

(ii) Except under unusual circumstances and for good cause shown, reparation will not be awarded upon a complaint in which it is not specifically requested, nor upon a new complaint by or for the same complainant which is based upon a finding in the original proceeding.

(iii) A complaint seeking reparation must be filed within three years after the claim accrues. Notification to the Commission that a complaint may or will be filed for the recovery of reparation will not constitute a filing within the applicable statutory period.

(iv) Civil penalties must not be requested and will not be awarded in complaint proceedings.

(5)Oral hearing.The complaint should designate whether an oral hearing is requested and the desired place for any oral hearing. The presidingofficer will determine whether an oral hearing is necessary.

(6)Filing fee.The complaint must be accompanied by remittance of a $221 filing fee.

(7) A complaint is deemed filed on the date it is received by the Commission.

(b)Answer to a complaint.(1)Time for filing.A respondent must file with the Commission an answer to the complaint and must serve the answer on complainant as provided in subpart H of this part within 25 days after the date of service of the complaint by the Commission unless this period has been extended under § 502.67 or § 502.102, or reduced under § 502.103, or unless motion is filed to withdraw or dismiss the complaint, in which latter case, answer must be filed within 10 days after service of an order denying such motion. For good cause shown, the presiding officer may extend the time for filing an answer.

(2)Contents of answer.The answer must be verified and must contain the following:

(i) The name, address, and email address of each respondent, and the name, address, and email address of each respondent's attorney or representative;

(ii) Admission or denial of each alleged violation of the Shipping Act;

(iii) A clear and concise statement of each ground of defense and specific admission, denial, or explanation of facts alleged in the complaint, or, if respondent is without knowledge or information thereof, a statement to that effect, and a statement showing that the complainant is entitled to relief;

(iv) Any affirmative defenses, including allegations of any additional facts on which the affirmative defenses are based; and

(3)Oral hearing.The answer should designate whether an oral hearing is requested and the desired place for such hearing. The presiding officer will determine whether an oral hearing is necessary.

(4)Counterclaims, crossclaims, and third-party complaints.In addition to filing an answer to a complaint, a respondent may include in the answer a counterclaim against the complainant, a crossclaim against another respondent, or a third-party complaint. A counterclaim, a crossclaim, or a third-party complaint must allege and be limited to violations of the Shipping Act within the jurisdiction of the Commission. The service and filing of a counterclaim, a crossclaim, or a third-party complaint and answers or replies thereto are governed by the rules and requirements of this section for the filing of complaints and answers.

(5) A reply to an answer may not be filed unless ordered by the presiding officer.

(6)Effect of failure to file answer.(i) Failure of a party to file an answer to a complaint, counterclaim, crossclaim, or third-party complaint within the time provided will be deemed to constitute a waiver of that party's right to appear and contest the allegations of the complaint, counterclaim, crossclaim, or third-party complaint to which it has not filed an answer and to authorize the presiding officer to enter an initial decision on default as provide for in 46 CFR 502.65. Well pleaded factual allegations in the complaint not answered or addressed will be deemed to be admitted.

(ii) A party may make a motion for initial decision on default. [Rule 62.]

§ 502.63 Commission enforcement action.

(a) The Commission may issue an Order of Investigation and Hearing commencing an adjudicatory investigation against one or more respondents alleging one or more violations of the statutes that it administers.

(b)Contents of Order of Investigation and Hearing.The Order of Investigation and Hearing must contain the following:

(1) The name, street address, and, if known, email address of each person against whom violations are alleged;

(2) A recitation of the legal authority and jurisdiction for institution of the proceeding, with specific designation of the statutory provisions alleged to have been violated;

(3) A clear and concise factual statement sufficient to inform each respondent with reasonable definiteness of the acts and practices alleged to be in violation of the law;

(4) Notice of penalties, cease and desist order, or other affirmative action sought; and

(5) Notice of the requirement to file an answer and a statement of the consequences of failure to file an answer.

(c)Answer to Order of Investigation and Hearing.(1)Time for filing.A respondent must file with the Commission an answer to the Order of Investigation and Hearing and serve a copy of the answer on the Bureau of Enforcement within 25 days after being served with the Order of Investigation and Hearing unless this period has been extended under § 502.67 or § 502.102, or reduced under § 502.103, or unless motion is filed to withdraw or dismiss the Order of Investigation and Hearing, in which latter case, answer must be filed within 10 days after service of an order denying such motion. For good cause shown, the presiding officer may extend the time for filing an answer.

(2)Contents of answer.The answer must be verified and must contain the following:

(i) The name, address, and email address of each respondent, and the name, address, and email address of each respondent's attorney or representative;

(ii) Admission or denial of each alleged violation of the Shipping Act;

(iii) A clear and concise statement of each ground of defense and specific admission, denial, or explanation of facts alleged in the complaint, or, if respondent is without knowledge or information thereof, a statement to that effect; and

(iv) Any affirmative defenses, including allegations of any additional facts on which the affirmative defenses are based.

(3)Oral hearing.The answer must indicate whether an oral hearing is requested and the desired place for such hearing. The presiding officer will determine whether an oral hearing is necessary.

(4)Effect of failure to file answer.(i) Failure of a respondent to file an answer to an Order of Investigation and Hearing within the time provided will be deemed to constitute a waiver of the respondent's right to appear and contest the allegations in the Order of Investigation and Hearing and to authorize the presiding officer to enter a decision on default as provided for in 46 CFR 502.65. Well pleaded factual allegations in the Order of Investigation and Hearing not answered or addressed will be deemed to be admitted.

(ii) The Bureau of Enforcement may make a motion for decision on default. [Rule 63.]

§ 502.64 Alternative dispute resolution.

(a)Mandatory preliminary conference.(1)Participation.Subsequent to service of a Complaint, parties must participate in a preliminary conference with the Commission's Office of Consumer Affairs and Dispute Resolution Services (CADRS) as to whether the matter may be resolved through mediation. The preliminary conference may be conducted either in person or via telephone, video conference, or other forum.

(2)Timing.Within fifteen (15) days of the filing of an answer, the parties must contact the Director of CADRS to schedule the preliminary conference. The Director of CADRS or his/her designees will conduct the preliminaryconference and may confer with each party separately at any time.

(b)Continued availability of dispute resolution services to resolve procedural and other disputes.Pursuant to subpart U of this part, the parties mutually may agree, at any time prior to the termination of a Commission proceeding, to initiate or reopen a mediation proceeding to explore resolution of procedural or substantive issues.

(c)Proceeding not stayed during dispute resolution process.Unless otherwise ordered by the presiding officer, a mediation proceeding does not stay or delay the procedural time requirements set forth by rule or order of the presiding officer.

(d)Confidentiality.The preliminary conference will be confidential. [Rule 64.]

§ 502.65 Decision on default.

(a) A party to a proceeding may be deemed to be in default if that party fails:

(1) To appear, in person or through a representative, at a hearing or conference of which that party has been notified;

(2) To answer, to respond to a dispositive motion within the time provided, or otherwise to defend the proceeding; or

(3) To cure a deficient filing within the time specified by the Commission or the presiding officer.

(b) When a party is found to be in default, the Commission or the presiding officer may issue a decision on default upon consideration of the record, including the complaint or Order of Investigation and Hearing.

(c) The presiding officer may require additional information or clarification when needed to issue a decision on default, including a determination of the amount of reparations or civil penalties where applicable.

(d) A respondent who has defaulted may file with the Commission a petition to set aside a decision on default. Such a petition must be made within 22 days of the service date of the decision, state in detail the reasons for failure to appear or defend, and specify the nature of the proposed defense. In order to prevent injustice, the Commission may for good cause shown set aside a decision on default. [Rule 65.]

§ 502.66 Amendments or supplements to pleadings.

(a) Amendments or supplements to any pleading (complaint, Order of Investigation and Hearing, counterclaim, crossclaim, third-party complaint, and answers thereto) will be permitted or rejected, either in the discretion of the Commission or presiding officer. No amendment will be allowed that would broaden the issues, without opportunity to reply to such amended pleading and to prepare for the broadened issues. The presiding officer may direct a party to state its case more fully and in more detail by way of amendment.

(b) A response to an amended pleading must be filed and served in conformity with the requirements of subpart H and § 502.69 of this part, unless the Commission or the presiding officer directs otherwise. Amendments or supplements allowed prior to hearing will be served in the same manner as the original pleading, except that the presiding officer may authorize the service of amended complaints directly by the parties rather than by the Secretary of the Commission.

(c) Whenever by the rules in this part a pleading is required to be verified, the amendment or supplement must also be verified. [Rule 66.]

§ 502.67 Motion for more definite statement.

If a pleading (including a complaint, counterclaim, crossclaim, or third-party complaint filed pursuant to § 502.62) to which a responsive pleading is permitted is so vague or ambiguous that a party cannot reasonably prepare a response, the party may move for a more definite statement before filing a responsive pleading. The motion must be filed within 15 days of the pleading and must point out the defects complained of and the details desired. If the motion is granted and the order of the presiding officer is not obeyed within 10 days after service of the order or within such time as the presiding officer sets, the presiding officer may strike the pleading to which the motion was directed or issue any other appropriate order. If the motion is denied, the time for responding to the pleading must be extended to a date 10 days after service of the notice of denial. [Rule 67.]

§ 502.68 Motion for leave to intervene.

(a)Filing.A motion for leave to intervene may be filed in any proceeding.

(b)Procedure for intervention.(1) Upon request, the Commission will furnish a service list to any member of the public pursuant to part 503 of this chapter.

(2) The motion must:

(i) Comply with all applicable provisions of subpart A of this part;

(ii) Indicate the type of intervention sought;

(iii) Describe the interest and position of the person seeking intervention, and address the grounds for intervention set forth in paragraph (c) of this section;

(iv) Describe the nature and extent of its proposed participation, including the use of discovery, presentation of evidence, and examination of witnesses;

(v) State the basis for affirmative relief, if affirmative relief is sought; and

(vi) Be served on existing parties by the person seeking intervention pursuant to subpart H of this part.

(3) A response to a motion to intervene must be served and filed within 15 days after the date of service of the motion.

(c)(1)Intervention of right.The presiding officer or Commission must permit anyone to intervene who claims an interest relating to the property or transaction that is subject of the proceeding, and is so situated that disposition of the proceeding may as a practical matter impair or impede the ability of such person to protect its interest, unless existing parties adequately represent that interest.

(2)Permissive intervention.(i)In general.The presiding officer or Commission may permit anyone to intervene who shows that a common issue of law or fact exists between such person's interest and the subject matter of the proceeding; that intervention would not unduly delay or broaden the scope of the proceeding, prejudice the adjudication of the rights, or be duplicative of the positions of any existing party; and that such person's participation may reasonably be expected to assist in the development of a sound record.

(ii)By a government department, agency, or the Commission's Bureau of Enforcement.The presiding officer or Commission may permit intervention by a Federal or State government department or agency or the Commission's Bureau of Enforcement upon a showing that its expertise is relevant to one or more issues involved in the proceeding and may assist in the consideration of those issues.

(3) The timeliness of the motion will also be considered in determining whether a motion will be granted under paragraph (b)(2) of this section and should be filed no later than 30 days after publication in theFederal Registerof the Commission's order instituting the proceeding or the notice of the filing of the complaint. Motions filed after that date must show good cause for the failure to file within the 30-day period.

(d)Use of discovery by an intervenor.(1) Absent good cause shown, an intervenor desiring to utilize the discovery procedures provided insubpart L must commence doing so no more than 15 days after its motion for leave to intervene has been granted.

(2) The Commission or presiding officer may impose reasonable limitations on an intervenor's participation in order to:

(i) Restrict irrelevant or duplicative discovery, evidence, or argument;

(ii) Have common interests represented by a spokesperson; and

(iii) Retain authority to determine priorities and control the course of the proceeding.

(3) The use of discovery procedures by an intervenor whose motion was filed more than 30 days after publication in theFederal Registerof the Commission's order instituting the proceeding or the notice of the filing of the complaint will not be allowed if the presiding officer determines that the use of the discovery by the intervenor will unduly delay the proceeding. [Rule 68.]

§ 502.69 Motions.

(a) In any adjudication, an application or request for an order or ruling not otherwise specifically provided for in this part must be by motion. After the assignment of a presiding officer to a proceeding and before the issuance of his or her recommended or initial decision, all motions must be addressed to and ruled upon by the presiding officer unless the subject matter of the motion is beyond his or her authority, in which event the matter must be referred to the Commission. If the proceeding is not before the presiding officer, motions must be designated aspetitionsand must be addressed to and ruled upon by the Commission.

(b) Motions must be in writing, except that a motion made at a hearing may be sufficient if stated orally upon the record.

(c) Oral argument upon a written motion may be permitted at the discretion of the presiding officer or the Commission.

(d) A repetitious motion will not be entertained.

(e) All written motions must state clearly and concisely the purpose of and the relief sought by the motion, the statutory or principal authority relied upon, and the facts claimed to constitute the grounds supporting the relief requested; and must conform with the requirements of subpart H of this part.

(f) Any party may file and serve a response to any written motion, pleading, petition, application, etc., permitted under this part except as otherwise provided respecting answers (§ 502.62), shortened procedure (subpart K of this part), briefs (§ 502.221), exceptions (§ 502.227), and reply to petitions for attorney fees under the Equal Access to Justice Act (§ 502.503(b)(1)).

(g)Dispositive and non-dispositive motions defined.For the purpose of these rules,dispositive motionmeans a motion for decision on the pleadings; motion for summary decision or partial summary decision; motion to dismiss all or part of a proceeding or party to a proceeding; motion for involuntary dismissal; motion for initial decision on default; or any other motion for a final determination of all or part of a proceeding. All other motions, including all motions related to discovery, are non-dispositive motions. [Rule 69.]

§ 502.70 Procedure for dispositive motions.

(a) A dispositive motion as defined in § 502.69(g) of this subpart must include a concise statement of the legal basis of the motion with citation to legal authority and a statement of material facts with exhibits as appropriate.

(b) A response to a dispositive motion must be served and filed within 15 days after the date of service of the motion. The response must include a concise statement of the legal basis of the response with citation to legal authority and specific responses to any statements of material facts with exhibits as appropriate.

(c) A reply to the response to a dispositive motion may be filed within 7 days after the date of service of the response to the motion. A reply may not raise new grounds for relief or present matters that do not relate to the response and must not reargue points made in the opening motion.

(d) The non-moving party may not file any further reply unless requested by the Commission or presiding officer, or upon a showing of extraordinary circumstances.

(e)Page limits.Neither the motion nor the response may exceed 30 pages, excluding exhibits or appendices, without leave of the presiding officer. A reply may not exceed 15 pages. [Rule 70.]

§ 502.71 Procedure for non-dispositive motions.

(a)Duty to confer.Before filing a non-dispositive motion as defined in § 502.69(g) of this subpart, the parties must attempt to discuss the anticipated motion with each other in a good faith effort to determine whether there is any opposition to the relief sought and, if there is opposition, to narrow the areas of disagreement. The moving party must state within the body of the motion what attempt was made or that the discussion occurred and whether the motion is opposed.

(b)Response to a non-dispositive motion.A response to a non-dispositive motion must be served and filed within 7 days after the date of service of the motion.

(c)Response replies.The moving party may not file a reply to a response to a non-dispositive motion unless requested by the Commission or presiding officer, or upon a showing of extraordinary circumstances.

(d)Page limits.Neither the motion nor the response may exceed 10 pages, excluding exhibits or appendices, without leave of the presiding officer. [Rule 71.]

§ 502.72 Dismissals.

(a)Voluntary dismissal.(1)By the complainant.The complainant may dismiss an action without an order from the presiding officer by filing a notice of dismissal before the opposing party serves either an answer, a motion to dismiss, or a motion for summary decision; or a stipulation of dismissal signed by all parties who have appeared. Unless the notice or stipulation states otherwise, the dismissal is without prejudice.

(2)By order of the presiding officer.Except as provided in paragraph (a)(1) of this section, an action may be dismissed at the complainant's request only by order of the presiding officer or the Commission, on terms the presiding officer considers proper. If a respondent has pleaded a counterclaim before being served with the complainant's motion to dismiss, the action may be dismissed over the respondent's objection only if the counterclaim can remain pending for independent adjudication. Unless the order states otherwise