[Federal Register Volume 62, Number 145 (Tuesday, July 29, 1997)]
[Rules and Regulations]
[Pages 40696-40699]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-19769]
[[Page 40695]]
_______________________________________________________________________
Part V
Department of Labor
_______________________________________________________________________
Pension and Welfare Benefits Administration
_______________________________________________________________________
29 CFR Part 2570
Final Rule Relating to Adjustment of Civil Monetary Penalties
Federal Register / Vol. 62, No. 145 / Tuesday, July 29, 1997 / Rules
and Regulations
[[Page 40696]]
DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
29 CFR Part 2570
RIN 1210-0056
Final Rule Relating to Adjustment of Civil Monetary Penalties
AGENCY: Pension and Welfare Benefits Administration, Department of
Labor.
ACTION: Final rule.
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SUMMARY: This document contains a final rule that adjusts the civil
monetary penalties under Title I of the Employee Retirement Income
Security Act of 1974, as amended (ERISA), pursuant to the requirements
of the Federal Civil Penalties Inflation Adjustment Act of 1990 (the
1990 Act), as amended by the Debt Collection Improvement Act of 1996
(the Act). The Act amended the 1990 Act to require generally the
adjustment of civil monetary penalties for inflation no later than 180
days after enactment of the Act, and at least once every four years
thereafter, in accordance with guidelines specified in the 1990 Act, as
amended.
DATES: This final rule is effective on July 29, 1997. This final rule
applies only to violations occurring after July 29, 1997.
FOR FURTHER INFORMATION CONTACT: Rudy Nuissl, Office of Regulations and
Interpretations, Pension and Welfare Benefits Administration, (202)
219-7461. This is not a toll-free number.
SUPPLEMENTARY INFORMATION: Section 3720E of the Act (Pub. L. 104-134,
110 Stat. 1321-373) amended section 4 of the 1990 Act (Pub. L. 101-410,
104 Stat. 890) to require, with certain exceptions, that, by a
regulation published in the Federal Register, each civil monetary
penalty (CMP) be adjusted in accordance with guidelines specified in
the amendment. The Act specifies that any such increase in a CMP shall
apply only to violations which occur after the date the increase takes
effect. On April 18, 1997, the Department published a notice of
proposed rulemaking in the Federal Register at 62 FR 19078 (the
``proposal'') containing proposed regulations that would adjust the
CMPs under Title I of ERISA pursuant to the 1990 Act, as amended by the
Act. No comments were received from the public in response to the
proposal, and the Department is by this notice promulgating the
regulations as set forth in the proposal adjusting the CMPs under
sections 209(b)(1), 502(c)(1), 502(c)(2) and 502(c)(3) of ERISA (29
U.S.C. 1059(b)(1), 1132(c)(1), 1132(c)(2) and 1132(c)(3)).
The term ``civil monetary penalty'' is defined in the 1990 Act to
mean any penalty, fine or other sanction that--
(A)(i) is for a specific monetary amount as provided by Federal
law; or
(ii) has a maximum amount provided for by Federal law; and
(B) is assessed or enforced by an agency pursuant to Federal law;
and
(C) is assessed or enforced pursuant to an administrative
proceeding or a civil action in the Federal courts.
Only CMPs that are specified by statute or regulation in dollar
amounts are adjusted under the 1990 Act, as amended. CMPs that are
specified as percentages are not adjusted. The statutory citations for
each of the CMPs under Title I of ERISA that are adjusted by the final
rule contained in this Notice are set forth in columns (A) and (B) of
Table A. Column (C) briefly describes the nature of the violations
associated with these citations. Column (D) of Table A indicates the
dollar amount of each CMP to be adjusted, and Column (E) sets forth the
year that each penalty was established by law or last adjusted. Columns
(F), (G), (H), (I), and (J) contain the intermediate results of
applying the series of steps mandated by the 1990 Act, as amended.
Reference should be made to Column (K) of Table A to determine the
dollar amounts of the adjusted penalties that are effected by the final
rule contained in this document pursuant to the requirements of the
1990 Act, as amended.
[[Page 40697]]
Table A.--Inflation Adjustment of Civil Monetary Penalties Under Title I of ERISA
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(E)
Year (G) Penalty (H) (I) (J)
(B) ERISA Title I (C) Nature of (D) Penalty penalty (F) CLA after raw Unrounded Rounded Uncapped (K) Capped
(A) U.S. Code citation section violation amount to be last set factor=456.7/ adjustment=col penalty penalty maximum penalty=min(col J,
adjusted or CPI below D x 456.7/col increase=col increase penalty=col 1.1 x col D)
adjusted F G-col D D+col I
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29 U.S.C. 1059(b)............... 209(b)............. Failure to furnish $10 per employee.. 1974 146.9 $31.09 $21.09 $20 $30 $11 per employee.
or maintain
records.
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29 U.S.C. 1132(c)(1)(A)......... 502(c)(1)(A)....... Failure to notify Up to $100 a day.. 1986 327.9 139.28 39.28 40 140 Up to $110 a day.
plan participants
of group health
benefits under
COBRA.
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Failure to notify Up to $100 a day.. 1990 389.1 117.37 17.37 20 120 Up to $110 a day.
participants and
beneficiaries re:
asset transfer.
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29 U.S.C. 1132(c)(1)(B)......... 502(c)(1)(B)....... Refusal to provide Up to $100 a day.. 1974 146.9 310.89 210.89 210 310 Up to $110 a day.
required info in
timely manner.
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29 U.S.C. 1132(c)(2)............ 502(c)(2).......... Failure or refusal Up to $100 a day.. 1987 340.1 1,342.84 342.84 300 1,300 Up to $1,100 a day.
to file an annual
report.
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29 U.S.C. 1132(c)(3)............ 502(c)(3).......... Failure to notify Up to $100 a day.. 1989 371.7 122.87 22.87 20 120 Up to $110 a day.
participants and
beneficiaries re:
failure to meet
minimum funding
requirements.
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Failure to notify Up to $100 a day.. 1990 389.1 117.37 17.37 20 120 Up to $110 a day.
certain persons
re: transfer of
excess pension
assets to health
account.
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[[Page 40698]]
Specifically, the 1990 Act, as amended, provides that the required
inflation adjustment shall be determined by increasing the maximum CMP
amount or the range of maximum and minimum CMP amounts, as applicable,
for each CMP by a cost-of-living adjustment (CLA). The term ``cost-of-
living adjustment'' is defined in the Act as the percentage for each
CMP by which the Consumer Price Index (CPI) for the month of June of
the calendar year preceding the adjustment exceeds the CPI for the
month of June of the calendar year in which the amount of such CMP was
last set or adjusted by law. The term ``Consumer Price Index'' is
defined in the 1990 Act, as amended, to mean the Consumer Price Index
for All-Urban Consumers published by the U.S. Department of Labor.
Accordingly, to calculate the CLA it is necessary to divide the CPI
for June of the calendar year preceding the adjustment by the CPI for
June of the calendar year in which the CMP was last set by law or
adjusted for inflation. (See Column (F) of Table A). In order to
calculate the raw inflation adjustment, it is necessary to multiply the
original penalty amount by the relevant CLA. (See Column (G) of Table
A). The subtraction of the original CMP amount from this product yields
the unrounded penalty increase (See Column (H) of Table A).
Section 5 of the 1990 Act, as amended, sets out the manner in which
inflation adjustments must be rounded. Specifically, any increase in
the maximum CMP or the range of maximum and minimum CMPs, as
applicable, must be rounded to the nearest:
(1) Multiple of $10.00 in the case of penalties less than or equal
to $100;
(2) Multiple of $100.00 in the case of penalties greater than $100
but less than or equal to $1000;
(3) Multiple of $1000 in the case of penalties greater than $1000
but less than or equal to $10,000;
(4) Multiple of $10,000 in the case of penalties greater than
$100,000 but less than or equal to $200,000; or
(5) multiple of $25,000 in the case of penalties greater than
$200,000.
Once the penalty increase has been rounded in accordance with the
procedures set forth in the 1990 Act, as amended (see Column (I) of
Table A), the rounded increase must be added to the original penalty
amount to determine the uncapped maximum penalty. (See Column (J) of
Table A). The first adjustment of a CMP pursuant to the amendment
effected by the Act, however, may not exceed 10% of the penalty being
adjusted. The final adjusted penalty amounts listed in Column (K) of
Table A reflect the application of this statutory cap.
Applying the CLA rules described above, the following CMPs under
Title I of ERISA are being adjusted.\1\ (See Columns (A), (B), and (C)
of Table A):
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\1\ Civil penalty set forth in ERISA section 502(c)(4) for a
failure to provide the information specified in ERISA section
101(f), relating to Medicare and Medicaid coverage data bank
requirements, is not being implemented or enforced. See H.R. Conf.
Rep. No. 103-733, 103rd Cong. 2nd Sess., at 22 (1994).
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(1) the per capita CMP of $10.00 set by ERISA section 209(b) (29
U.S.C. 1059(b)) for a failure to furnish the employee benefit plan
information or to maintain the plan records specified in ERISA section
209(a);
(2) the CMP of up to $100.00 a day (as determined in the discretion
of a court) set by section 502(c)(1)(A) (29 U.S.C. 1132(c)(1)(A)) for a
failure or refusal by a plan administrator to meet the requirements of
ERISA section 101(e)(1) (29 U.S.C. 1021(e)(1)) (concerning notice with
regard to a transfer or excess pension assets) or ERISA section 606(4)
(29 U.S.C. 1166(4)) (concerning notice with regard to the occurrence of
qualifying events), or to comply with a request for information which
such administrator is required by Title I of ERISA to furnish to a
participant or beneficiary;
(3) the CMP of up to $100.00 a day (as determined the discretion of
a court) set by ERISA section 502(c)(1)(B) (29 U.S.C. 1132(c)(1)(B))
for a failure or refusal to comply with a request for information which
a plan administrator is required by Title I of ERISA to furnish a
participant or beneficiary;
(4) the CMP of up to $1,000.00 a day set by ERISA section 502(c)(2)
(29 U.S.C. 1132(c)(2)) for the failure on the part of a plan
administrator to file the annual report required to be filed under
ERISA section 101(b)(4) (29 U.S.C. 1021(b)(4));
(5) the CMP of up to $100.00 a day (as determined in the discretion
of a court) set by ERISA section 502(c)(3) (29 U.S.C. 1132(c)(3)) for
the failure on the part of an employer to meet the requirements of
ERISA section 101(d) (29 U.S.C. 1021(d)); (concerning provision of
notice to participants and beneficiaries for failure to meet the
minimum funding requirements) or ERISA section 101(3)(2) (29 U.S.C.
1021(e)(2)) (concerning provision of notice regarding transfers of
excess pension assets).
The final rule contained in this document amends Part 2570
(``Procedural Regulations Under the Employee Retirement Income Security
Act'') of Title 29 of the Code of Federal Regulations (CFR) by adding a
new ``Subpart E--Adjustment of Civil Penalties Under ERISA Title I.''
New Subpart E contains five new regulations effecting the adjustment
for inflation of the civil monetary penalties discussed above.
Executive Order 12866
The Department has determined that this regulatory action is not a
``significant rule'' within the meaning of Executive Order 12866
concerning federal regulations, because it is not likely to result in:
(1) An annual effect on the economy of $100 million or more, or an
adverse and material effect on a sector of the economy, productivity,
competition, jobs, the environment, public health or safety, or State,
local or tribal governments or communities; (2) the creation of a
serious inconsistency or interference with an action taken or planned
by another agency; (3) a material alteration in the budgetary impacts
of entitlement, grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) the raising of novel legal or
policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in Executive Order 12866.
Regulatory Flexibility Act
When a Federal agency promulgates a final rule under 5 U.S.C. 553
after being required to publish a proposed rule, the Regulatory
Flexibility Act (RFA), 5 U.S.C. 601 et seq., requires the agency to
perform a final regulatory flexibility analysis unless the head of the
agency certifies that the rule will not, if promulgated, have a
significant economic impact on a substantial number of small entities.
Small entities include small businesses, organizations, and
governmental jurisdictions. In conjunction with the publication of the
notice of proposed rulemaking on April 18, 1997 (62 FR 19078), the
undersigned certified that the rule, if promulgated as proposed, would
not have a significant effect on a substantial number of small
entities.
Because the final rule is identical to the proposed rule and
because no comments were received from the public in response to the
April 18, 1997, notice of proposed rulemaking, there is no basis for
modification of the determination that the rule will not have a
significant impact on a substantial number of small entities.
Accordingly, the Department is not required to conduct a final
regulatory flexibility analysis.
[[Page 40699]]
Paperwork Reduction Act
This final rule contains no information collection requirements
which are subject to review and approval by the Office of Management
and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C.
3500 et seq.).
Unfunded Mandates Reform Act
For purposes of Title II of the Unfunded Mandates Reform Act of
1995, 5 U.S.C. 1531-1538, as well as Executive Order 12875, this final
rule does not contain any federal mandate that may result in increased
expenditures in either Federal, State, local, and tribal governments in
the aggregate, or impose an annual burden exceeding $100 million on the
private sector.
Congressional Review
The Department has determined that this final rule is not a ``major
rule'' as that term is defined in 5 U.S.C. 804, because it is not
likely to result in (1) An annual effect on the economy of $100 million
or more; (2) a major increase in costs or prices for consumers,
individual industries, federal, State or local government agencies, or
geographic regions; or (3) significant adverse effects on competition,
employment, investment, productivity, innovation, or on the ability of
United States-based enterprises to compete with foreign-based
enterprises in domestic and export markets.
Statutory Authority
This final regulation is adopted pursuant to authority contained in
section 4 of the Federal Civil Penalties Adjustment Act of 1990, Pub.
L. 101-410, 104 Stat. 890, 28 U.S.C. 2461 note, as amended by the Debt
Collection Improvement Act of 1996, Pub. L. 104-134, Title III, section
31001(s)(1), 110 Stat. 1321-373, and contained in sections 209(b),
502(c)(1) and 505 of ERISA, 29 U.S.C. 1059(b), 1132(c)(1) and 1135.
List of Subjects in 29 CFR Part 2570
Administrative practice and procedure, Employee benefit plans,
Employee Retirement Income Security Act, Penalties, Pensions.
Final Rule
In view of the foregoing, Part 2570 of Chapter XXV of Title 29 of
the Code of Federal Regulations is amended as set forth below:
PART 2570--PROCEDURAL REGULATIONS UNDER THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT
1. The authority citation for Part 2570 is revised to read as
follows:
Authority: 5 U.S.C. 8477(c)(3); 29 U.S.C. 1108, 1135;
Reorganization Plan No. 4 of 1978; 5 U.S.C. 8477(c)(3); Secretary of
Labor Order No. 1-87.
Subpart A is also issued under 29 U.S.C. 1132(c)(1).
Subpart E is also issued under sec. 4, Pub. L. 101-410, 104
Stat. 890 (28 U.S.C. 2461 note), as amended by sec. 31001(s)(1),
Pub. L. 104-134, 110 Stat. 1321-373.
2. Part 2570 is amended by adding a new Subpart E to read as
follows:
Subpart E--Adjustment of Civil Penalties Under ERISA Title I
Sec.
2570.100 In general.
2570.209b-1 Adjusted civil penalty under section 209(b).
2570.502c-1 Adjusted civil penalty under section 502(c)(1).
2570.502c-2 Adjusted civil penalty under section 502(c)(2).
2570.502c-3 Adjusted civil penalty under section 502(c)(3).
Subpart E--Adjustment of Civil Penalties Under ERISA Title I
Sec. 2570.100 In general.
Section 3720E of the Debt Collection Improvement Act of 1996 (the
Act, Pub. L. 104-134, 110 Stat. 1321-373) amended the Federal Civil
Penalties Inflation Adjustment Act of 1990 (the 1990 Act, Pub. L. 101-
410, 104 Stat. 890) to require generally that the head of each federal
agency adjust the civil monetary penalties subject to its jurisdiction
for inflation within 180 days after enactment of the Act and at lease
once every four years thereafter.
Sec. 2570.209b-1 Adjusted civil penalty under section 209(b).
In accordance with the requirements of the 1990 Act, as amended,
the amount of the civil monetary penalty established by section 209(b)
of the Employee Retirement Income Security Act of 1974, as amended
(ERISA), is hereby increased from $10 for each employee to $11 for each
employee. This adjusted penalty applies only to violations occurring
after July 29, 1997.
Sec. 2570.502c-1 Adjusted civil penalty under section 502(c)(1).
In accordance with the requirements of the 1990 Act, as amended,
the maximum amount of the civil monetary penalty established by section
502(c)(1) of the Employee Retirement Income Security Act of 1974, as
amended (ERISA), is hereby increased from $100 a day to $110 a day.
This adjusted penalty applies only to violations occurring after July
29, 1997.
Sec. 2570.502c-2 Adjusted civil penalty under section 502(c)(2).
In accordance with the requirements of the 1990 Act, as amended,
the maximum amount of the civil monetary penalty established by section
502(c)(2) of the Employee Retirement Income Security Act of 1974, as
amended (ERISA), is hereby increased from $1000 a day to $1100 a day.
This adjusted penalty applies only to violations occurring after July
29, 1997.
Sec. 2570.502c-3 Adjusted civil penalty under section 502(c)(3).
In accordance with the requirements of the 1990 Act, as amended,
the maximum amount of the civil monetary penalty established by section
502(c)(3) of the Employee Retirement Income Security Act of 1974, as
amended (ERISA), is hereby increased from $100 a day to $110 a day.
This adjusted penalty applies only to violations occurring after July
29, 1997.
Signed at Washington, DC this 22nd day of July 1997.
Olena Berg,
Assistant Secretary, Pension and Welfare Benefits Administration, U.S.
Department of Labor.
[FR Doc. 97-19769 Filed 7-28-97; 8:45 am]
BILLING CODE 4510-29-M
