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Office of Workers' Compensation Programs

Division of Longshore and Harbor Workers' Compensation (DLHWC)

CHAPTER 9-700 — SMALL BUSINESS REGULATORY ENFORCEMENT FAIRNESS ACT

  1. Purpose and Scope. This Chapter describes the district office requirements for reporting annually on their penalty reduction and technical assistance efforts as required under the provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA).
  2. SBREFA requires agencies regulating small businesses to implement a guidance program, whereby agencies provide technical assistance to and answer inquiries by small businesses concerning compliance with their statutes and regulations as it applies to those businesses. Agencies are also to establish programs to provide for the reduction, and under appropriate circumstances for a waiver, of civil penalties for violations of a statutory requirement by a small business. Finally, agencies are required to report annually to Congress on these two SBREFA requirements.
  3. "Small Business". There is no simple definition of "small business" under SBREFA. However, it is described in general in the Small Business Act (15 U.S.C. section 632) as one which is independently owned and operated and which is not dominant in its field of operation. Further, under the Small Business Act, the Small Business Administration sets "size standards" to determine what is a small business. It makes that determination for each industry based on the number of employees and/or sales. What constitutes a small business therefore varies from industry to industry. The Small Business Administration has produced a list of industries and businesses at 13 C.F.R. section 121.201 that indicates for each the maximum number of employees and/or sales allowed for a business and its affiliates to be considered "small". Industries and businesses are classified in the list using "Standard Industrial Classification" (SIC) codes. Following are SIC codes and size standards for several major business categories covered under the LHWCA. Size standards are given in number of employees or millions of dollars in gross sales receipts. Businesses equal to or smaller than these size standards should be considered to be "small businesses."

    SIC Codes

     

    Size Standards

    1302

    Oil and Gas Field Exploration Services

    $ 5,000,000

    3731

    Shipbuilding and Repair

    1,000 employees

    4491

    Marine Cargo Handling

    $18,500,000

    6331

    Fire, Marine and Casualty Insurance

    1,500 employees

    8744

    Facilities Support Management Services

    $20,000,000

    A degree of judgment will be necessary when making determinations on whether or not a business is "small." When applying the SIC standards to a particular business, keep in mind the general definition of small business as one independently owned and operated. Also bear in mind that the Small Business Administration counts the gross receipts or number of employees of a business and all of its affiliates in determining its size. Therefore, the size of a shipyard or insurance company should be considered in conjunction with all its affiliates. Under the Small Business Act businesses are affiliates of each other when one controls or has power to control the other, or a third party controls or has the power to control both. Taking affiliations into consideration, therefore, most insurance companies and self-insured employers are not "small businesses" under SBREFA.
  4. Penalties. SBREFA requires agencies to consider the waiver or reduction of civil penalties for violations of statutory requirements by small businesses. There are three civil penalties under the LHWCA: Section 14(g), late notice of final payment; section 30(e), late report of injury; and section 49, discrimination against employees who bring proceedings.
    1. Section 14(g). Chapter 8-301 describes in detail the procedures for handling penalties for violations under section 14(g). However, in this Chapter it should be noted that the provisions of SBREFA for reduction or waiver of the penalty do not apply when there is a violation under section 14(g). Section 14(g) requires the employer to submit a notice of final payment within 16 days and states that, "If the employer fails to so notify the deputy commissioner within such time the Secretary shall assess against such employer a civil penalty in the amount of $100." ($110 for all violations on or after November 17, 1997). The amount of the penalty is mandatory. If the notice is late the Secretary "shall assess" the penalty and assess it in the prescribed amount. Therefore, it cannot be reduced or waived.
    2. Section 30(e) and Section 49. Chapters 8-302 and 8-400 describe in detail the procedures for handling penalties for violations under section 30(e) and section 49 respectively, including guidelines for consideration of reductions of penalties under the provisions of SBREFA. Here, however, it must be noted that both section 30(e) and section 49 indicate that if it is determined that a violation has occurred, the violator "shall be" subject to the civil penalty. There is no allowance under the LHWCA for waiver of the penalty. However, since the LHWCA does not specify a fixed amount of penalty for violations of these sections of the LHWCA, the provisions of SBREFA for reduction of these two civil penalties may be applied.
  5. Penalty Log. Each district office is required to maintain a penalty log (Exhibit 20, PM Chapter 10-300) recording each penalty assessment. An inquiry response box is provided on the log specifically asking whether or not the penalty is being assessed against a small business. Using the guidance provided in paragraph 3, above, in each instance a penalty is assessed make a determination of whether or not it is being assessed against a small business and indicate "yes" or "no" in the space provided on the log. If "yes", indicate in the dollar amount of the reduction, if any, in the "Comments" column provided on the penalty log. This information is necessary for preparation of the annual SBREFA report described in paragraph 7., below.
  6. Guidance Program. SBREFA requires agencies regulating small businesses to implement a small business guidance program, whereby agencies "answer inquiries by small entities concerning information on, and advice about, compliance . . . with statutes and regulations, interpreting and applying the law to specific sets of facts supplied by the small entity." DLHWC has such a program. The program's offices provide technical advice and assistance on compliance and other issues to small businesses through an active seminar program, by written instructions on standard forms, and through general publications. Telephone numbers and addresses for specific inquiries are listed. The program responds to all telephone and written inquiries about specific provisions of the statute, regulations and procedures affecting entities having coverage under the statute or carrying on regular business with the program. The Longshore program also maintains an active home page on the Internet.
  7. Annual Report. Each agency is required to report annually to Congress on their SBREFA penalty reduction program and SBREFA guidance program. The report is due each calendar year in January, covering activity during the prior calendar year.
    1. Report for SBREFA Penalty Reduction Program. During the first week of each calendar year, using the data on their penalty logs for the previous 12 months, district directors shall count:
      1. The total number of section 30(e) and section 49 penalties assessed against small businesses;
      2. The number of such penalties assessed against small businesses in which the amount of the penalty was reduced taking into account the fact that it was a small business; and
      3. The total dollar amount of penalty reductions in which penalties were assessed against small businesses.
      Each district director shall submit a report on the penalty reductions for small businesses, including counts in each of the above three categories, to the Director, DLHWC by COB January 15 of each year.
    2. Report for SBREFA Guidance Program. An actual count of each small business contact during the year will not be necessary. Instead, a two-week survey count will be carried out and the NO will calculate annual projections from the two-week survey results. Therefore, each year during the period November 1 through November 15, district office shall maintain a count of all contacts (telephone, letter or in person) in which the DO's personnel provided guidance to small businesses concerning compliance with the LHWCA, its regulations or procedures. The DD for each DO shall submit his/her office's survey results to the Director, DLHWC by COB November 20 of each year.