81 FR 42566 - Small Entity Size Standards Under the Regulatory Flexibility Act
SURFACE TRANSPORTATION BOARD Federal Register Volume 81, Issue 126 (June 30, 2016)
Federal Register Volume 81, Issue 126 (June 30, 2016)
| Page Range | 42566-42568 | |
| FR Document | 2016-15437 |
[Federal Register Volume 81, Number 126 (Thursday, June 30, 2016)] [Rules and Regulations] [Pages 42566-42568] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-15437] ======================================================================= ----------------------------------------------------------------------- SURFACE TRANSPORTATION BOARD 49 CFR Chapter X [Docket No. EP 719] Small Entity Size Standards Under the Regulatory Flexibility Act AGENCY: Surface Transportation Board (Board or STB). ACTION: Final statement of agency policy. ----------------------------------------------------------------------- SUMMARY: On July 11, 2013, the Board issued a notice of proposed size standards for purposes of the Regulatory Flexibility Act, along with a request for public comment. This decision discusses the comment received in response to the proposed size standards [[Page 42567]] and adopts the proposed standard as the final statement of agency policy concerning the definition of ``small business.'' DATES: This policy statement is effective June 30, 2016. FOR FURTHER INFORMATION CONTACT: Amy Ziehm at (202) 245-0391. Assistance for the hearing impaired is available through the Federal Information Relay Service (FIRS) at (800) 877-8339. SUPPLEMENTARY INFORMATION: The Regulatory Flexibility Act (RFA) requires agencies to consider the impact of their regulations on small entities,\1\ analyze effective alternatives that minimize the impact to small entities, and make their analyses available for public comment. The Small Business Administration (SBA) developed ``size standards'' to clarify the term small business and to carry out the purposes of the Small Business Act. Agencies can then use the SBA's size standards for purposes of defining ``small entities'' to comply with the RFA. However, an agency may establish other definitions for small business that are appropriate to the agency's activities after consultation with the SBA's Office of Advocacy and after opportunity for public comment. 5 U.S.C. 601(3). The SBA has promulgated regulations that classify ``Line-Haul Railroads'' with 1,500 or fewer employees and ``Short Line Railroads'' with 500 or fewer employees as small businesses. 13 CFR 121.201 (industry subsector 482). --------------------------------------------------------------------------- \1\ The RFA defines ``small entity'' as having the same meaning as the terms ``small business,'' ``small organization,'' and ``small governmental jurisdiction.'' 5 U.S.C. 601(6). --------------------------------------------------------------------------- On July 16, 2013, the Board served a notice proposing its own small entity size standards for purposes of the RFA, along with a request for comment. 78 FR 42,484 (July 16, 2013). After consulting with the SBA's Office of Advocacy, the Board proposed to establish a small entity size standard based on its longstanding classification system, which classifies freight railroads as Class I, Class II, or Class III based on annual operating revenues.\2\ Specifically, the Board proposed to define ``small business'' as only those rail carriers that would be classified as Class III carriers. The Board stated that it believed that this definition is more realistic and useful than the general definitions previously established by the SBA. The Board also noted that this would create consistency with the Federal Railroad Administration (FRA), which in 2003 adopted the Class III standard as its definition of a small business. --------------------------------------------------------------------------- \2\ Class III carriers have annual operating revenues of $20 million or less in 1991 dollars, or $38,060,383 or less when adjusted for inflation using 2014 data. Class II rail carriers have annual operating revenues of up to $250 million in 1991 dollars or up to $475,754,802 when adjusted for inflation using 2014 data. The Board calculates the revenue deflator factor annually and publishes the railroad revenue thresholds on its Web site. 49 CFR 1201.1-1. --------------------------------------------------------------------------- The American Short Line and Regional Railroad Association (ASLRRA) submitted a comment on August 5, 2013, opposing the Board's proposal. ASLRRA agrees with the SBA's current definition of small business, which uses the number of employees, rather than revenue, as the relevant metric. It maintains that revenue is an unreliable metric for determining whether a railroad is a small business because railroads are ``so capital intensive their revenues must provide a return on that huge investment or they cannot stay in business'' and because ``small railroad revenues are driven largely by the types of commodities they happen to carry.'' (ASLRRA Comment 3) ASLRRA argues that changing the definition would exclude many Class II railroads from the small business designation, and would thus ``strip them from the financial impact review that is the right of small entities during the rulemaking process pursuant to the Regulatory Flexibility Act.'' (Id.) Finally, ASLRRA claims that Class II railroads have little in common with Class I railroads and share more characteristics with the smaller Class III railroads. (Id. at 4.) Despite ASLRRA's objection to the use of our revenue classifications over employee counts to define a small business, we find that it is the more appropriate basis for doing so. Even if, as ASLRRA argues, there is some variation between carriers of similar employment levels due, in part, to the types of commodities being shipped, that alone does not mean that employment level represents the better approach to defining a small business. As the Board explained in the notice, the system of classifying railroads based on revenue is used pervasively by the Board and the railroad industry. The agency has used revenue to classify rail carriers since as early as 1911, and the agency's governing statute, precedent, and regulations often impose different requirements depending on the class of carrier involved. The validity of using revenues to define carrier size has thus been sufficiently demonstrated over time. ASLRRA has not demonstrated that using a size standard based on employment levels is superior to the revenue basis the agency and railroad industry have used for decades. We now address whether the definition of small business should or should not include Class II carriers. The Board acknowledges ASLRRA's concerns regarding Class II rail carriers and recognizes the differences between Class I, Class II, and Class III railroads. However, the Board does not believe that Class II carriers should be classified as small businesses. Under the Board's governing statutes and regulations, special exceptions are made for Class III carriers, but not Class II carriers.\3\ The Board's decision to limit the definition of small business solely to Class III carriers is therefore consistent with the broader regulatory scheme and merely formalizes what is already a common understanding of a small business in the railroad industry. --------------------------------------------------------------------------- \3\ For example, the Board created a class exemption for acquisitions of rail lines by Class III carriers (49 CFR Subpart E-- Exempt Transactions Under 49 U.S.C. 10902 for Class III Rail Carriers); Class III carriers are exempt from labor protective conditions for line acquisitions and mergers (49 U.S.C. 11326(c)); and Class III carriers are the only carriers allowed to file Feeder Line applications (49 U.S.C. 10907(a)). --------------------------------------------------------------------------- In addition, the Board also believes there is significant utility in maintaining consistency with the practices of the Federal Railroad Administration, which adopted the same definition of small entity for RFA purposes. Final Policy Statement Concerning Small Entities Subject to the Railroad Safety Laws, 68 FR 24,891 (May 9, 2003); see also Interim Policy Statement Concerning Small Entities Subject to the Railroad Safety Laws, 62 FR 43,024 (Aug. 11, 1997). Having two agencies that play complementary roles in railroad industry regulation use different definitions of small business could result in lack of uniformity in the adoption of Federal regulations. In particular, an entity could be considered a small entity for purposes of FRA rules but not a small entity for purposes of STB rules. Not altering the Board's definition of a small business would also perpetuate the incongruous situation of the FRA relying on the Board's classification system as a basis for defining a small business, but the Board not doing so itself. For the reasons set forth above, the Board will define small business for the purpose of Regulatory Flexibility Act analyses to mean those rail carriers classified as Class III rail carriers under 49 CFR 1201.1-1. It is ordered: 1. For the purpose of Regulatory Flexibility Act analyses, the Board adopts the definition of ``small business'' to mean those rail carriers [[Page 42568]] classified as Class III rail carriers under 49 CFR 1201.1-1. 2. A copy of this decision will be served upon the Chief Counsel for Advocacy, Office of Advocacy, U.S. Small Business Administration. 3. Notice of this decision will be published in the Federal Register. 4. This decision is effective on June 30, 2016. Decided: June 22, 2016. By the Board, Chairman Elliott, Vice Chairman Miller, and Commissioner Begeman. Commissioner Begeman dissented with a separate expression. Tia Delano, Clearance Clerk. COMMISSIONER BEGEMAN, dissenting: I am a strong proponent of the notice and comment process and find it especially important given the Board's extreme ex parte communication restrictions. So when the only comments received are from the stakeholders most affected, and those stakeholders express strong opposition to a Board proposal, I think we are obligated to carefully consider the concerns expressed and reassess the wisdom of our approach. Upon doing so here, I have concluded this proposal should be withdrawn. The American Short Line and Regional Railroad Association (ASLRRA), which represents 550 Class II and Class III rail carriers across the country, filed in strong opposition to the Board's July 2013 proposal to alter its small entity definition for Regulatory Flexibility Act (RFA) purposes. ASLRRA argued that the Board's proposal to use revenue rather than number of employees (the measure developed by the Small Business Administration that agencies can use to comply with the RFA) would effectively lump all Class II carriers with Class I carriers for RFA purposes, an unreasonable outcome given the significant differences between those carrier types. ASLRRA further argued that the Board's proposal would be ``detrimental to Class II carriers.'' I find ASLRRA's concerns alarming. I am not convinced that the action the Board is taking today is necessary or somehow worth the potential harms described by ASLRRA. After all, the majority's decision does not dispute ASLRRA's claims. It appears the driving factor in this decision is the majority's desire to create ``consistency'' with the Federal Railroad Administration. While consistency may be fine, it certainly is not a very compelling reason since the two agencies have used different small business definitions for 13 years without issue. There are a host of stale proceedings piled up at the Board and I am all for the Chairman moving the docket. But if (after three years) the majority was merely going to dismiss the only comment received from representatives of the parties affected, there was no real point in the Board inviting comment in the first place. I dissent. [FR Doc. 2016-15437 Filed 6-29-16; 8:45 am] BILLING CODE 4915-01-P
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other small entities to determine environmental impacts associated with section 701; Pub. L. No: 112–90, section 2;
whether the rule is expected to have a this interim final rule. Pub. L. 101–410, sections 4–6.
significant impact on a substantial ■ 2. Section 190.223 is amended by
J. Privacy Act
number of small entities. The provisions revising paragraphs (a) though (d) to
of this interim final rule may apply Anyone is able to search the read as follows:
specifically to all businesses using electronic form of any written
pipelines to transport hazardous liquids, communications and comments § 190.223 Maximum penalties.
gas, and LNG in interstate commerce. received into any of our dockets by the (a) Any person found to have violated
Therefore, PHMSA certifies this rule name of the individual submitting the a provision of 49 U.S.C. 60101 et seq.,
would not have a significant economic document (or signing the document, if or any regulation or order issued
impact on a substantial number of small submitted on behalf of an association, thereunder is subject to an
entities. business, labor union, etc.). You may administrative civil penalty not to
review DOT’s complete Privacy Act exceed $205,638 for each violation for
G. Unfunded Mandates Reform Act of
1995 Statement in the Federal Register each day the violation continues, except
published on April 11, 2000 (Volume that the maximum administrative civil
This rule does not impose unfunded 65, Number 70, pages 19477–78) or penalty may not exceed $2,056,380 for
mandates under the Unfunded online at https:// any related series of violations.
Mandates Reform Act of 1995. It does www.federalregister.gov/articles/2000/ (b) Any person found to have violated
not result in costs of $155,000,000 or 04/11/00–8505/privacy-act-of-1974- a provision of 33 U.S.C. 1321(j) or any
more, adjusted for inflation, in any year systems-of-records or https:// regulation or order issued thereunder is
for either state, local, or tribal www.gpo.gov/fdsys/pkg/FR–2000–04– subject to an administrative civil
governments, in the aggregate, or to the 11/pdf/00–8505.pdf. penalty under 33 U.S.C. 1321(b)(6), as
private sector, and is the least- adjusted by 40 CFR 19.4.
burdensome alternative that achieves K. Executive Order 13609 and (c) Any person found to have violated
the objective of the rule. International Trade Analysis any standard or order under 49 U.S.C.
H. Paperwork Reduction Act Sections 3 and 4 of Executive Order 60103 is subject to an administrative
13609 direct an agency to conduct a civil penalty not to exceed $75,123,
This interim final rule imposes no which may be in addition to other
regulatory analysis and ensure that a
new requirements for recordkeeping or penalties to which such person may be
proposed rule does not cause
reporting. subject under paragraph (a) of this
unnecessary obstacles to foreign trade.
I. Environmental Assessment This requirement applies if a rule section.
constitutes a significant regulatory (d) Any person who is determined to
The National Environmental Policy
action, or if a regulatory evaluation must have violated any standard or order
Act of 1969 (NEPA), as amended (42
be prepared for the rule. This interim under 49 U.S.C. 60129 is subject to an
U.S.C. 4321–4375), requires federal
final rule is not a significant regulatory administrative civil penalty not to
agencies to consider the consequences
action, but a regulatory action under exceed $1,194, which may be in
of major federal actions and prepare a
Section 3(e) of Executive Order 12866. addition to other penalties to which
detailed statement on actions
PHMSA is not required under Executive such person may be subject under
significantly affecting the quality of the
Orders 12866 and 13563 to submit a paragraph (a) of this section.
human environment. When developing
potential regulatory requirements, regulatory analysis. * * * * *
PHMSA evaluates those requirements to L. Regulation Identifier Number (RIN) Issued in Washington, DC, under authority
consider the environmental impact of delegated in 49 CFR Part 1.97.
these amendments. Specifically, A regulation identifier number (RIN) Marie Therese Dominguez,
PHMSA evaluates the risk of release and is assigned to each regulatory action Administrator.
resulting environmental impact; risk to listed in the Unified Agenda of Federal
[FR Doc. 2016–15529 Filed 6–29–16; 8:45 am]
human safety, including any risk to first Regulations. The Regulatory Information
BILLING CODE 4910–60–P
responders; if the proposed regulation Service Center publishes the Unified
would be carried out in a defined Agenda in the spring and fall of each
geographic area; and the resources, year. The RIN contained in the heading
of this document can be used to cross- SURFACE TRANSPORTATION BOARD
especially in environmentally sensitive
areas, that could be impacted by any reference this action in the Unified
49 CFR Chapter X
proposed regulations. Agenda.
This interim final rule would be [Docket No. EP 719]
List of Subjects in 49 CFR Part 190
generally applicable to pipeline
operators, and would not be carried out Administrative practice and Small Entity Size Standards Under the
in a defined geographic area. The procedure, Penalties, Pipeline safety. Regulatory Flexibility Act
adjusted, increased civil penalties listed In consideration of the foregoing, AGENCY: Surface Transportation Board
in this interim final rule may act as a PHMSA is amending 49 CFR part 190 as (Board or STB).
deterrent to those violating the Federal follows: ACTION: Final statement of agency
Pipeline Safety Laws, or any PHMSA policy.
regulation or order issued thereunder. PART 190—PIPELINE SAFETY
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This may result in a positive ENFORCEMENT AND REGULATORY SUMMARY: On July 11, 2013, the Board
environmental impact as a result of PROCEDURES issued a notice of proposed size
increased compliance with the Federal standards for purposes of the Regulatory
Pipeline Safety Laws and any PHMSA ■ 1. The authority citation for part 190 Flexibility Act, along with a request for
regulations or orders issued thereunder. is revised to read as follows: public comment. This decision
Based on the above discussion, PHMSA Authority: 33 U.S.C. 1321(b); 49 U.S.C. discusses the comment received in
concludes there are no significant 60101 et seq.; 49 CFR 1.97; Pub. L. 114–74, response to the proposed size standards
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classified as Class III rail carriers under to a Board proposal, I think we are ‘‘detrimental to Class II carriers.’’ I find
49 CFR 1201.1–1. obligated to carefully consider the ASLRRA’s concerns alarming.
2. A copy of this decision will be concerns expressed and reassess the I am not convinced that the action the
served upon the Chief Counsel for wisdom of our approach. Upon doing so Board is taking today is necessary or
Advocacy, Office of Advocacy, U.S. here, I have concluded this proposal somehow worth the potential harms
Small Business Administration. should be withdrawn. described by ASLRRA. After all, the
3. Notice of this decision will be majority’s decision does not dispute
published in the Federal Register. The American Short Line and
ASLRRA’s claims. It appears the driving
4. This decision is effective on June Regional Railroad Association factor in this decision is the majority’s
30, 2016. (ASLRRA), which represents 550 Class desire to create ‘‘consistency’’ with the
Decided: June 22, 2016. II and Class III rail carriers across the Federal Railroad Administration. While
By the Board, Chairman Elliott, Vice
country, filed in strong opposition to the consistency may be fine, it certainly is
Chairman Miller, and Commissioner Board’s July 2013 proposal to alter its not a very compelling reason since the
Begeman. Commissioner Begeman dissented small entity definition for Regulatory two agencies have used different small
with a separate expression. Flexibility Act (RFA) purposes. business definitions for 13 years
Tia Delano, ASLRRA argued that the Board’s without issue.
Clearance Clerk. proposal to use revenue rather than There are a host of stale proceedings
COMMISSIONER BEGEMAN, number of employees (the measure piled up at the Board and I am all for
dissenting: developed by the Small Business the Chairman moving the docket. But if
I am a strong proponent of the notice Administration that agencies can use to (after three years) the majority was
and comment process and find it comply with the RFA) would effectively merely going to dismiss the only
especially important given the Board’s lump all Class II carriers with Class I comment received from representatives
extreme ex parte communication carriers for RFA purposes, an of the parties affected, there was no real
restrictions. So when the only unreasonable outcome given the point in the Board inviting comment in
comments received are from the significant differences between those the first place. I dissent.
stakeholders most affected, and those carrier types. ASLRRA further argued [FR Doc. 2016–15437 Filed 6–29–16; 8:45 am]
stakeholders express strong opposition that the Board’s proposal would be BILLING CODE 4915–01–P
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Document Created: 2018-02-08 07:45:10
Document Modified: 2018-02-08 07:45:10
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final statement of agency policy. | |
| Dates | This policy statement is effective June 30, 2016. | |
| Contact | Amy Ziehm at (202) 245-0391. Assistance for the hearing impaired is available through the Federal Information Relay Service (FIRS) at (800) 877-8339. | |
| FR Citation | 81 FR 42566 |
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