[Federal Register Volume 64, Number 150 (Thursday, August 5, 1999)]
[Proposed Rules]
[Pages 42797-42807]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19861]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
29 CFR Parts 2520, 2560 and 2570
RIN 1210-AA67 and RIN 1210-AA68
Furnishing Documents to the Secretary of Labor on Request Under
ERISA Section 104(a)(6) and Assessment of Civil Penalties Under ERISA
Section 502(c)(6)
AGENCY: Pension and Welfare Benefits Administration, Department of
Labor.
ACTION: Notice of proposed rulemaking.
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SUMMARY: This document contains a proposed rulemaking under the
Employee Retirement Income Security Act of 1974 (ERISA) that would
implement certain amendments to ERISA added as part of the Taxpayer
Relief Act of 1997. Specifically, the proposed rule would implement the
requirement that the administrator of any employee benefit plan subject
to Part 1 of Title I of ERISA furnish to the Department, on request,
any documents relating to the employee benefit plan. The proposed rule
also would establish procedures relating to the assessment of civil
penalties for failures or refusals by administrators to furnish
requested documents and procedures relating to administrative hearings
in connection with the assessment of such civil penalties.
DATES: Written comments concerning the proposed regulation must be
received by October 4, 1999.
ADDRESSES: Written comments (preferably three copies) should be sent to
the Office of Regulations and Interpretations, Pension and Welfare
Benefits Administration, U.S. Department of Labor, Rm. N-5669, 200
Constitution Avenue, NW, Washington DC, 20210, Attention: ``ERISA
502(c)(6) Project.'' All submissions will be available for public
inspection in the Public Documents Room of the Pension and Welfare
Benefits Administration, U.S. Department of Labor, Room N-5638, 200
Constitution Ave, NW, Washington, DC 20210.
FOR FURTHER INFORMATION CONTACT: Jeffrey J. Turner, Office of
Regulations and Interpretations, Pension and Welfare Benefits
Administration, (202) 219-8671, or Paul D. Mannina, Plan Benefits
Security Division, Office of the Solicitor, (202) 219-9141 (not toll-
free numbers).
SUPPLEMENTARY INFORMATION:
Part I--Background
The Taxpayer Relief Act of 1997 (TRA '97) eliminated the
requirement under ERISA that employee benefit plan administrators file
with the Department copies of the summary plan descriptions (SPDs) and
summaries of material plan modifications (SMMs) that are required to be
furnished to plan participants and beneficiaries. TRA '97 added
paragraph (6) to section 104(a) of ERISA which provides that the
administrator of any employee benefit plan subject to Part 1 of Title I
of ERISA is required to furnish to the Department, on request, any
documents relating to the employee benefit plan, including but not
limited
[[Page 42798]]
to, the latest SPD (including any summaries of plan changes not
contained in the SPD), and the bargaining agreement, trust agreement,
contract, or other instrument under which the plan is established or
operated.1 TRA '97 also added section 502(c)(6) of ERISA
which provides that if, within 30 days of a request by the Department
to a plan administrator for documents under section 104(a)(6), the plan
administrator fails to furnish the material requested to the
Department, the Department may assess a civil penalty against the plan
administrator of up to $100 a day from the date of such failure (but in
no event in excess of $1,000 per request). Section 502(c)(6) of ERISA
also provides that no penalty shall be imposed under that paragraph for
any failure resulting from matters reasonably beyond the control of the
plan administrator.
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\1\ Prior to TRA '97, this authority was in section 104(a)(1) of
ERISA, which stated that ``the administrator shall also furnish to
the Secretary, upon request, any documents relating to the employee
benefit plan, including but not limited to the bargaining agreement,
trust agreement, contract, or other instrument under which the plan
is established or operated.''
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Prior to these TRA '97 amendments, Congress provided in ERISA for
the filing of SPDs and SMMs with the Department in order to ensure that
participants and beneficiaries would have a means by which to obtain a
copy of these documents without having to request them from the plan or
plan sponsor. The elimination of the SPD/SMM filing requirement taken
together with the amendments establishing ERISA section 104(a)(6) and
the civil penalty provision in section 502(c)(6) clearly evidence
Congress' intent that the Department would exercise its authority under
ERISA section 104(a)(6) to obtain a copy of a plan's SPD in response to
requests from participants or beneficiaries. Consistent with that
intent, the Department will request copies of SPDs from plan
administrators on behalf of a requesting participant or beneficiary.
The Department generally will not request SPDs on behalf of persons
other than participants and beneficiaries of the plan for which the SPD
is requested. For this purpose, the Department will treat as a
participant or beneficiary any individual who is: a participant or
beneficiary within the meaning of ERISA sections 3(7) and 3(8),
respectively; an alternate payee under a qualified domestic relations
order (see ERISA section 206(d)(3)(K)) or prospective alternate payee
(spouses, former spouses, children or other dependents), a qualified
beneficiary under COBRA (see ERISA section 607(3)) or prospective
qualified beneficiary (spouse or dependent child); an alternate
recipient under a qualified medical child support order (see ERISA
section 609(a)(2)(C)) or a prospective alternate recipient; or a
representative of any of the foregoing.
The proposed rules described below are intended to implement the
substantive requirements in section 104(a)(6) of ERISA as well as the
related penalty provisions in section 502(c)(6) of ERISA. They would,
if promulgated as a final rules, become effective 60 days after
publication as final rules in the Federal Register.
Part II--Furnishing Documents to the Department on Request Under
Section 104(a)(6)
Proposed Sec. 2520.104a-8 implements the requirements of section
104(a)(6) of ERISA. Paragraph (a)(1) provides that the administrator
(within the meaning of section 3(16)(A) of ERISA) of any employee
benefit plan has an obligation to furnish to the Department, upon
request, any documents relating to the plan. Paragraph (a)(2) clarifies
that multiple requests under section 104(a)(6) and Sec. 2520.104a-8(a)
for the same or similar document or documents shall be considered
separate requests for purposes of penalties under section 502(c)(6) and
Sec. 2560.502c-6(a). For example, if the Department were to receive a
series of requests from several participants for a particular plan's
SPD, the Department could make separate requests for that document on
behalf of each participant to ensure that the participants each receive
the latest updated version of the SPD. A failure by the plan
administrator to comply with any such requests may result in the
assessment of penalties with respect to each such failure. Paragraph
(b) adopts the service of notice rules in proposed Sec. 2560.502c-6(i)
(which adopts the service of notice rules already in effect under
Sec. 2560.502c-2(i)) for purposes of serving the plan administrator
with a request under section 104(a)(6). Paragraph (c) provides that a
document is not considered furnished to the Department until the date
on which such document is received by the Department of Labor at the
address specified in the request.
Part III--Authority to Assess Civil Penalties for Violations of
Section 104(a)(6) of ERISA
In general, proposed regulation Sec. 2560.502c-6 addresses the:
circumstances under which a penalty may be assessed for a failure or
refusal to provide documents requested under section 104(a)(6) of ERISA
(Sec. 2560.502c-6(a)); amount of the penalty (Sec. 2560.502c-6(b));
notice required to be given to the plan administrator of the
Department's intent to assess a penalty (Sec. 2560.502c-6(c)); the
Department's authority to waive the penalty (Sec. 2560.502c-6(d)) upon
a showing that the failure or refusal was the result of matters
reasonably beyond the control of the plan administrator
(Sec. 2560.502c-6(e)); effect of a failure to file a statement under
Sec. 2560.502c-6(e) alleging matters reasonably beyond the
administrator's control (Sec. 2560.502c-6(f)); notice required to be
given to the administrator which sets forth the Department's findings
as to the statement of matters reasonably beyond the control of the
plan administrator (Sec. 2560.503c-6(g)); right to hearings before an
administrative law judge (Sec. 2560.502c-6(h)); service of notices
(Sec. 2560.502c-6(i)); and the liability of the administrator or
administrators for assessed penalties (Sec. 2560.502c-6(j)).
a. General Rule. Proposed Sec. 2560.502c-6(a) addresses the general
application of section 502(c)(6) of ERISA. Paragraph (a)(1) provides
that the administrator, as defined in ERISA section 3(16)(A), of an
employee benefit plan is liable for the civil penalties assessed under
section 502(c)(6) in each case in which there is a failure or refusal
to furnish to the Department any document requested under section
104(a)(6) of ERISA and Sec. 2520.104a-8. Paragraph (a)(2) defines such
a failure or refusal as a failure or refusal, in whole or in part, to
furnish documents at the time and in the manner prescribed in the
request.
b. Amount Assessed. Proposed Sec. 2560.502c-6(b) sets forth the
amount of penalties that may be assessed under section 502(c)(6) of
ERISA. Consistent with the terms of section 502(c)(6) of ERISA,
paragraph (b)(1) provides that the Department may assess a penalty of
up to $100 per day, but not in excess of $1,000 per request.
c. Notice of Intent to Assess a Penalty. Proposed Sec. 2560.502c-
6(c) provides that, prior to the assessment of any penalty under
section 502(c)(6) of ERISA, the Department shall provide the
administrator with written notice indicating the Department's intent to
assess a penalty, the amount of the penalty, the period to which the
penalty applies, and the reason(s) for the penalty. The notice would be
served in accordance with Sec. 2560.502c-6(i) of this proposed
regulation (service of notice provision). Under Sec. 2560.502c-6(f) of
this proposed regulation, the notice would become a final order of the
Department, within the meaning of proposed regulation Sec. 2570.111(g)
(also
[[Page 42799]]
published as part of this rulemaking), within 30 days of the service of
the notice, unless a statement described in Sec. 2560.502c-6(e) is
filed with the Department.
d. Waiver of Penalty. Paragraphs (d), (e), (f), (g), and (h) of
this proposal generally relate to the waiver of penalties under section
502(c)(6) of ERISA. Paragraph (d) provides that the Department may
waive all or part of the penalty to be assessed under section 502(c)(6)
upon a showing by the administrator, under paragraph (e), that the
failure or refusal to comply with a request under section 104(a)(6) and
Sec. 2520.104a-8 was due to matters reasonably beyond the control of
the plan administrator. Under paragraph (e), the administrator has 30
days from receipt of the notice required under Sec. 2560.502c-6(c)
within which to make such a showing or offer other reasons why the
penalty, as calculated, should not be assessed.2
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\2\ In the event that another fiduciary of the plan has custody
of a document requested under section 104(a)(6) and Sec. 2520.104a-
8, or if the administrator of a plan engages a third party to
perform services for the plan and pursuant to the engagement the
third party has custody of documents related to the plan, the
administrator's lack of custody would not be considered by the
Department to be a matter reasonably beyond the administrator's
control.
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Paragraph (f) provides that a failure to file a timely statement
under (e) will constitute a waiver of the right to appear and contest
the facts alleged in the notice (Sec. 2560.502c-(6)(c)) for purposes of
any adjudicatory proceeding involving the assessment of a penalty under
section 502(c)(6) of ERISA.
Paragraph (g)(1) provides that, following a review of the facts
alleged in the statement under (e), the Department shall notify the
administrator of its intention to waive the penalty, in whole or in
part, and/or assess a penalty. If it is the intention of the Department
to assess a penalty, the notice shall indicate the amount of the
penalty. Under paragraph (g)(2), this notice becomes a final order 30
days after the date of service of the notice, except as provided in
paragraph (h). Paragraph (h) provides in general that the notice
described in paragraph (g) shall not become a final order if, within 30
days of the date of service of that notice, the administrator initiates
an adjudicatory proceeding under part 18 of Title 29, as modified by
proposed regulations Secs. 2570.110 through 2570.121 (also published as
part of this rulemaking). Specifically, the administrator would be
required to file, within 30 days of the date of service of the notice
under (g), an answer, as defined in proposed Sec. 2570.111(c), in
accordance with proposed Sec. 2570.112.
e. Service of Notices. Proposed Sec. 2560.502c-6(i) describes the
rules on service of the (1) Department's notice of intent to assess a
penalty (Sec. 2560.502c-6(c)), and (2) Department's notice of
determination on the statement of matters reasonably beyond the control
of the plan administrator (Sec. 2560.502c-6(g)).3 Paragraph
(i) provides that service shall be made in one of three ways: (1) By
delivering a copy at the principal office, place of business, or
residence of the administrator or representative thereof, (2) by
leaving a copy at the principal office, place of business, or residence
of the administrator or representative thereof, or (3) by mailing a
copy to the last known address of the administrator or representative
thereof.
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\3\ As noted above, under proposed Sec. 2520.104a-8(b) these
service rules would also apply to the Department's initial request
for documents under section 104(a)(6) and Sec. 2520.104a-8.
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f. Liability. Proposed Sec. 2560.502c-6(j) is intended to clarify
the liability of the parties for penalties assessed under section
502(c)(6) of ERISA. Paragraph (1) provides that, if more than one
person is responsible as administrator for the failure to furnish
document(s) requested by the Department, all such persons shall be
jointly and severally liable for such failure. Paragraph (2) provides
that any person against whom a penalty is assessed under section
502(c)(6) of ERISA is personally liable for the payment of such
penalty. Paragraph (2) is intended to make clear that liability for the
payment of penalties assessed under section 502(c)(6) of ERISA is a
personal liability of the person against whom the penalty is assessed
and not a liability of the plan. Accordingly, the payment of penalties
assessed under section 502(c)(6) of ERISA from assets of the plan would
not constitute a reasonable expense of the plan for purposes of ERISA
sections 403 and 404.
Part IV--Administrative Law Procedures for the Assessment of Civil
Penalties Under Section 502(c)(6) of ERISA
The proposed regulation contained in this Notice would establish
procedures for hearings before an Administrative Law Judge (ALJ) with
respect to an assessment by the Department of a civility penalty under
section 502(c)(6) and appealing an ALJ decision to the Secretary or her
delegate. In this regard, the Secretary has established the Pension and
Welfare Benefits Administration (PWBA) within the Department for
purposes of carrying out most of the Secretary's responsibilities under
ERISA. See Secretary's Order 1-87, 52 FR 13139 (April 27, 1987).
As noted above, the Department has already published rules of
practice and procedure for administrative hearings before the Office of
Administrative Law Judges at 29 CFR part 18 (48 FR 32538 (1983)). As
explained in 29 CFR 18.1, those provisions generally govern
administrative hearings before ALJs assigned to the Department and are
intended to provide maximum uniformity in the conduct of administrative
hearings. However, in the event of an inconsistency or conflict between
the provisions of 29 CFR part 18 and a rule or procedure required by
statute, executive order or regulation, the latter controls.
The Department has reviewed the applicability of the provisions of
29 CFR part 18 to the assessment of civil penalties under ERISA section
502(c)(6) and has decided to adopt many, though not all, of the
provisions thereunder for ERISA 502(c)(6) proceedings. Accordingly,
adjudications relating to civil penalties under ERISA section 502(c)(6)
will be governed by the following sections of 29 CFR part 18:
Sec.
18.4 Time Computations.
18.5 (c)-(e) Responsive Pleading; answer and request for hearing.
18.6 Motions and requests.
18.7 Pre-hearing statements.
18.8 Pre-hearing conferences.
18.11 Consolidation of hearings.
18.12 Amicus Curiae.
18.13 Discovery Methods.
18.15 Protective orders.
18.16 Supplementation of responses.
18.17 Stipulations regarding discovery.
18.18 Written interrogatories to parties.
18.19 Production of documents and other evidence.
18.20 Admissions.
18.21 Motion to compel discovery.
18.22 Depositions.
18.23 Use of depositions at hearings.
18.24 Subpoenas.
18.25 Designation of administrative law judge.
18.27 Notice of hearing.
18.28 Continuances.
18.29 Authority of administrative law judges.
18.30 Unavailability of administrative law judge.
18.31 Disqualification.
18.32 Separation of functions.
18.33 Expedition.
18.34 Representation.
18.35 Legal assistance.
18.36 Standards of conduct.
18.37 Hearing room conduct.
18.38 Ex parte communications.
18.39 Waiver of right to appear and failure to participate or to
appear.
18.40 Motion for summary decision.
[[Page 42800]]
18.43 Formal hearings.
18.44 Evidence.
18.45 Official notice.
18.46 In camera and protective orders.
18.47 Exhibits.
18.48 Records in other proceedings.
18.49 Designation of parts of documents.
18.50 Authenticity.
18.51 Stipulations.
18.52 Record of hearings.
18.53 Closing of hearings.
18.54 Closing of record.
18.55 Receipt of documents after hearing.
18.56 Restricted access.
18.59 Certification of official record.
The regulations proposed herein relate specifically to procedures
for assessing civil penalties under section 502(c)(6) of ERISA and are
controlling to the extent they are inconsistent with any portion of 29
CFR part 18. The proposed regulations are designed to maintain the
rules set forth at 29 CFR part 18 consistent with the need for an
expedited procedure, while recognizing the special characteristics of
proceedings under ERISA section 502(c)(6). For purposes of clarity,
where a particular section of the existing procedural rules would be
affected by the proposed rules the entire section (with appropriate
modifications) has been set out in this document. Thus, only a portion
of the provisions of the procedural regulations set forth below involve
changes from, or additions to, the rules in 29 CFR part 18. The
specific modifications to the rules in 29 CFR part 18, and their
relationship to the conduct of these proceedings generally, are
outlined below.
The general applicability of these procedural rules under section
502(c)(6) is set forth in Sec. 2570.110. Proposed Sec. 2560.502c-6,
also being published today in this Notice, sets forth the procedures
relating to the issuance by PWBA of notices of intent to assess a
penalty under ERISA section 502(c)(6) as well as procedures for agency
determination on statements of matters reasonably beyond the control of
plan administrators filed by persons against whom a penalty would be
assessed. Under the proposed procedural rules contained in this Notice,
an adjudicatory proceeding before an ALJ is commenced only when a
person against whom the Department intends to assess a penalty under
section 502(c)(6) files an ``answer'' to a notice of the agency
determination on a statement of matters reasonably beyond the control
of the plan administrator. See Sec. 2570.111(c) and (d) below, and
proposed regulation Sec. 2560.502c-6(h).
The definition section (Sec. 2570.111) incorporates the basic
adjudicatory principles set forth at 29 CFR part 18, but includes terms
and concepts of specific relevance to proceedings under ERISA section
502(c)(6). In this respect it differs from its more general counterpart
at Sec. 18.2 of Title 29 of the CFR. In particular, Sec. 2570.111
states that the term ``Secretary'' means the Secretary of Labor and
includes various individuals to whom the Secretary may delegate
authority. The Department contemplates that the duties assigned to the
Secretary under the procedural regulation will in fact be discharged by
the Assistant Secretary for Pension and Welfare Benefits.
In general, the burden to initiate adjudicatory proceedings before
an ALJ will be on the party (respondent) against whom the Department is
seeking to assess a civil penalty under ERISA section 502(c)(6).
However, a respondent must comply with the procedures relating to
agency review set forth in proposed regulation Sec. 2560.502c-6 before
initiating adjudicatory proceedings. In this regard, it should be noted
that both the notice of intent to assess a penalty, as described in
proposed regulation Sec. 2560.502c-6(c) and the notice of determination
on a statement of reasonable cause as described in proposed regulation
Sec. 2560.502c-6(g), will be issued by PWBA, the agency responsible for
administration and enforcement of section 502(c)(6) of ERISA, in
accordance with the service of notice provisions described in proposed
Sec. 2560.502c-6(i). Proposed regulation Sec. 2570.111(c) and (d),
together with proposed regulation Sec. 2560.502c-6(h), contemplate that
adjudicatory proceedings will be initiated with the filing of an answer
to a notice of the agency's determination on a statement of matters
reasonably beyond the control of the plan administrator.
The service of documents by the parties to an adjudicatory
proceeding, as well as by the ALJ, will be governed by proposed
regulation Sec. 2570.112.
A section on the consequences of default (Sec. 2570.114) has been
included in these proposed rules to indicate that if the respondent
fails to file an answer to the Department's notice of determination
(Sec. 2560.502c-6(g)) within the 30-day period provided by proposed
Sec. 2560.502c-6(h), such failure shall be deemed to constitute a
waiver of the right to appear and contest the facts alleged in the
notice and an admission of the facts alleged in the notice for purposes
of any proceeding involving the assessment of a civil penalty under
section 502(c)(6). Proposed regulation Sec. 2570.114 makes clear that
in the event of such failure, the assessment of penalty becomes final.
A section on consent orders or settlements (Sec. 2570.115) states
that the ALJ's decision shall include the terms and conditions of any
consent order or settlement which has been agreed to by the parties.
That section also provides that the decision of the ALJ which
incorporates such consent order shall become a final agency action
within the meaning of 5 U.S.C. 704.
The rules in 29 CFR part 18 concerning the computation of time,
pleadings, prehearing conferences and statements, and settlements are
adopted in these procedures for adjudications under ERISA section
502(c)(6). The section on the designation of parties (Sec. 2570.113)
differs from its counterpart under Sec. 18.10 of this title in that it
specifies that the respondent in these proceedings will, as indicated
above, be the party against whom the Department seeks to assess a civil
penalty under ERISA section 502(c)(6).
29 CFR 2570.116 states that discovery may be ordered by the ALJ
only upon a showing of good cause by the party seeking discovery. This
differs from the more liberal standard for discovery contained in 29
CFR 18.14. In cases in which discovery is ordered by the ALJ, the order
shall expressly limit the scope and terms of discovery to that for
which good cause has been shown. To the extent that the order of the
ALJ does not specify rules for the conduct of the discovery permitted
by such order, the rules governing the conduct of discovery from 29 CFR
part 18 are to be applied in any proceeding under section 502(c)(6) of
ERISA. For example, if the order of the ALJ states only that
interrogatories on certain subjects may be permitted, the rules under
29 CFR part 18 concerning the service and answering of such
interrogatories shall apply. The procedures under 29 CFR part 18 for
the submission of facts to the ALJ during the hearing are also to be
applied in proceedings under ERISA section 502(c)(6).
The section on summary decisions (Sec. 2570.117) provides for
requisite authorization for an ALJ to issue a summary decision which
may become final when there are no genuine issues of material fact in a
case arising under ERISA section 502(c)(6). The section concerning the
decision of the ALJ (Sec. 2570.118) differs from its counterpart at
Sec. 18.57 of this title in that it states that the decision of the ALJ
in an ERISA section 502(c)(6) case shall become the final decision of
the Secretary unless a timely appeal is filed.
The procedures for appeals of ALJ decisions under ERISA section
502(c)(6) of ERISA would be governed solely by the proposed rules set
forth in
[[Page 42801]]
Sec. Sec. 2570.119 through 2570.121, and without any reference to the
appellate procedures contained in 29 CFR part 18. Proposed
Sec. 2570.119 would establish the time limit within which such appeals
must be filed and the manner in which the issues for appeal are
determined and the procedure for making the entire record before the
ALJ available to the Secretary. Proposed Sec. 2570.120 provides that
review of the Secretary shall not be on a de novo basis, but rather on
the basis of the record before the ALJ and without an opportunity for
oral argument. Proposed Sec. 2570.121 sets forth the procedure for
establishing a briefing schedule for such appeals and states that the
decision of the Secretary on such an appeal shall be a final agency
action within the meaning of 5 U.S.C. 714. As noted above, the
authority of the Secretary with respect to the appellate procedures has
been delegated to the Assistant Secretary for Pension and Welfare
Benefits. As required by the Administrative Procedure Act (5 U.S.C.
552(a)(2)(A)) all final decisions of the Department under section
502(c)(6) of ERISA shall be compiled in the Public Documents Room of
the Pension and Welfare Benefits Administration, Room N-5638, U.S.
Department of Labor, 200 Constitution Avenue, NW, Washington, DC 20210.
Executive Order 12866 Statement
Under Executive Order 12866, the Department must determine whether
the regulatory action is ``significant'' and therefore subject to the
requirements of the Executive Order and subject to review by the Office
of Management and Budget (OMB). Under section 3(f), the order defines a
``significant regulatory action'' as an action that is likely to result
in a rule (1) Having an annual effect on the economy of $100 million or
more, or adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local or tribal governments or communities (also
referred to as ``economically significant''); (2) creating serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order. Accordingly, the
Department has determined that this regulatory action is not
significant within the meaning of the Executive Order.
The costs of the proposed regulation would be borne by the plan
when responding to requests from the Department for copies of the
latest SPD (including any summaries of plan changes not contained in
the SPD) as well as other documents relating to the plan. It is
expected that most of the costs will be attendant to furnishing SPDs to
the Department to enable the Department to respond to requests from
participants.4 The individual cost of each such request is
estimated to be minimal because each administrator of an employee
pension or welfare benefit plan covered under Title I of ERISA is
required by section 101(a)(1) to furnish a SPD to each participant
covered under the plan and each beneficiary who is receiving benefits
under the plan, and to update the SPD on a regular basis in accordance
with section 104(b)(1). Moreover, many documents other than SPDs that
may be requested are required to be made available to participants and
beneficiaries pursuant to section 104(b)(2). Thus, administrators are
not expected to incur costs in preparing or obtaining these documents
in response to a request from the Department.
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\4\ The Department's authority to request documents under
section 104(a)(6) of ERISA was, prior to TRA '97, codified in
section 104(a)(1) of ERISA. TRA '97 re-codified this authority in
section 104(a)(6) of ERISA and simultaneously eliminated the
requirement to file SPDs/SMMs. It is anticipated that the vast
majority of requests under section 104(a)(6) will stem from
responding to participants' requests for SPDs/SMMs that, in the
absence of TRA '97, would have been filed with Department and
available to the public.
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The proposed regulation is expected to benefit plan participants
and beneficiaries who may have been unable to obtain a current SPD or
other document relating to the plan, and who might otherwise not have
an alternative means of obtaining such documents in the absence of the
requirement for the plan administrator to file such documents with the
Department. The provisions implementing the penalty for failure to
furnish such documents on request may serve to ensure timely compliance
with such requests.
Paperwork Reduction Act
The Department of Labor, as part of its continuing effort to reduce
paperwork and respondent burden, conducts a preclearance consultation
program to provide the general public and Federal agencies with an
opportunity to comment on proposed and continuing collections of
information in accordance with the Paperwork Reduction Act of 1995 (PRA
95) (44 U.S.C. 3506(c)(2)(A)). This helps to ensure that requested data
can be provided in the desired format, reporting burden (time and
financial resources) is minimized, collection instruments are clearly
understood, and the impact of collection requirements on respondents
can be properly assessed.
Currently, the Pension and Welfare Benefits Administration is
soliciting comments concerning the proposed information collection
request (ICR) included in the proposal with respect to Furnishing
Documents To The Secretary of Labor on Request Under ERISA section
104(a)(6) And Assessment Of Civil Penalties Under ERISA section
502(c)(6). A copy of the ICR may be obtained by contacting the office
listed in the addressee section of this proposed regulation. This
proposed regulation would implement the provisions of ERISA section
104(a)(6), which requires plan administrators to provide certain
documents to the Department on request, and section 502(c)(6) of ERISA,
which implements procedures for assessment of civil penalties for
failure to provide the documents requested pursuant to section
104(a)(6).
The Department has submitted a copy of the proposed information
collection to OMB in accordance with 44 U.S.C. 3507(d) for review of
its information collections. The Department and OMB are particularly
interested in comments that:
Evaluate whether the proposed collection of information is
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility;
Evaluate the accuracy of the agency's estimate of the
burden of the proposed collection of information, including the
validity of the methodology and assumptions used;
Enhance the quality, utility, and clarity of the
information to be collected; and
Minimize the burden of the collection of information on
those who are to respond, including through the use of appropriate
automated, electronic, mechanical, or other technological collection
techniques or other forms of information technology, e.g., permitting
electronic submission of responses.
Comments should be sent to the Office of Information and Regulatory
Affairs, Office of Management and Budget, Room 10235, New Executive
Office Building, Washington, DC 20503; Attention: Desk Officer for the
Pension and Welfare Benefits Administration. Although comments may be
submitted through October 4, 1999, OMB requests that comments be
received within 30
[[Page 42802]]
days of publication of the Notice of Proposed Rulemaking to ensure
their consideration.
ADDRESSEE (PRA 95): Gerald B. Lindrew, Office of Policy and Research,
U.S. Department of Labor, Pension and Welfare Benefits Administration,
200 Constitution Avenue, NW, Room N-5647, Washington, DC 20210.
Telephone: (202) 219-4782; Fax: (202) 219-4745. These are not toll-free
numbers.
The ICR included in the proposal involves the gathering and mailing
of plan documents requested by the Department to an address specified
in the request. These requests are expected to be made of plan
administrators as needed to satisfy requests for SPDs and other
documents received from plan participants and beneficiaries. These
requests may be received by the Public Disclosure Room of the Pension
and Welfare Benefits Administration or by the national office and field
offices in the course of providing technical assistance to the public.
The estimate of the number of requests by participants and
beneficiaries is based on the actual rate of requests to the Public
Disclosure Room during the last two years, adjusted for requests
expected to be made with other offices.
It is assumed that approximately 5 minutes of time at non-
professional hourly rates will be required to respond to the
Department's document request within 30 days. Some administrators may
be expected to respond only after receiving notice of the Department's
intent to assess a penalty, and/or to provide additional information
concerning matters reasonably beyond their control which would prevent
or delay the satisfaction of the request. Each of these events would
increase the anticipated burden of providing documents requested by the
Department. The burden estimated here has been adjusted to account for
a portion of plans which by choice or for reasons beyond their control
will satisfy the request in a more burdensome fashion. Mailing costs
are assumed to total $1.00 per request.
The penalty assessment provisions of Sec. 2560.502c-6, and the
procedures for hearings before ALJs and appeals to the Secretary or her
delegate of Secs. 2570.110 through 2570.121, do not contain an
``information collection request'' as defined in 44 U.S.C. 3502(3).
Type of Review: New.
Agency: Pension and Welfare Benefits Administration.
Title: Furnishing Documents To The Secretary of Labor on Request
Under ERISA section 104(a)(6) And Assessment of Civil Penalties Under
ERISA section 502(c)(6).
OMB Number: 1210-NEW.
Affected Public: Individuals or households; Business or other for-
profit; Not-for-profit institutions.
Frequency of Response: On occasion.
Total Respondents: 1,000.
Total Responses: 1,000.
Estimated Burden Hours: 95.
Estimated Annual Costs (Operating and Maintenance): $1,000.
Comments submitted in response to this notice will be summarized
and/or included in the request for OMB approval of the information
collection request; they will also become a matter of public record.
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes
certain requirements with respect to Federal rules that are subject to
the notice and comment requirements of section 553(b) of the
Administrative Procedure Act (5 U.S.C. 551 et seq.) and which are
likely to have a significant economic impact on a substantial number of
small entities. If an agency determines that a proposed rule is likely
to have a significant economic impact on a substantial number of small
entities, section 603 of the RFA requires that the agency present an
initial regulatory flexibility analysis at the time of the publication
of the notice of proposed rulemaking describing the impact of the rule
on small entities, and seeking public comment on such impact. Small
entities include small businesses, organizations, and governmental
jurisdictions.
For purposes of analysis under the RFA, PWBA proposes to continue
to consider a small entity to be an employee benefit plan with fewer
than 100 participants. The basis of this definition is found in section
104(a)(2) of ERISA, which permits the Secretary of Labor to prescribe
simplified annual reports for pension plans which cover fewer than 100
participants. Under section 104(a)(3), the Secretary may also provide
for simplified annual reporting and disclosure if the statutory
requirements of Part 1 of Title I of ERISA would otherwise be
inappropriate for welfare benefit plans. Pursuant to the authority of
section 104(a)(3), the Department has previously issued at
Secs. 2520.104-20, 2520.104-21, 2520.104-41, 2520.104-46 and 2520.104b-
10 certain simplified reporting provisions and limited exemptions from
reporting and disclosure requirements for small plans, including
unfunded or insured welfare plans covering fewer than 100 participants
and which satisfy certain other requirements.
Further, while some large employers may have small plans, in
general, most small plans are maintained by small employers. Thus, PWBA
believes that assessing the impact of this proposed rule on small plans
is an appropriate substitute for evaluating the effect on small
entities. The definition of small entity considered appropriate for
this purpose differs, however, from a definition of small business
which is based on size standards promulgated by the Small Business
Administration (SBA) (13 CFR 121.201) pursuant to the Small Business
Act (5 U.S.C. 631 et seq.). PWBA therefore requests comments on the
appropriateness of the size standard used in evaluating the impact of
this proposed rule on small entities.
On this basis, however, PWBA has preliminarily determined that this
proposed regulation will not have a significant economic impact on a
substantial number of small entities. In support of this determination,
and in an effort to provide a sound basis for this conclusion, PWBA has
considered the elements of an initial regulatory flexibility analysis
in the discussion which follows.
This proposed regulation would apply to all small employee benefit
plans covered by Title I of ERISA. Employee benefit plans with fewer
than 100 participants include 631,000 pension plans, 2.6 million health
plans, and 3.4 million non-health welfare plans (mainly life and
disability insurance plans).
The Department believes that responding to a request for a SPD or
other plan document primarily requires clerical skills, although a
professional may read the request and direct others to respond. The
documents to be mailed in response to the request are expected to be
readily available.
The Department does not have information concerning whether the
participants and beneficiaries who request its assistance in obtaining
plan documents are participants in small plans. However, even if it is
assumed that all plans which receive requests for documents pursuant to
section 104(a)(6) are small plans, the number affected in any year is
very small (i.e., 1,000 of approximately 6.6 million plans). The
mailing cost per request satisfied, or per letter exchanged in
providing reasonable cause, is expected to amount to approximately
$1.00, and accumulating the documents is expected to require about 5
minutes. If it is assumed that a cost is incurred for this time at a
rate of $11 per hour, the
[[Page 42803]]
total cost per request is estimated at about $2.00. This is not
expected to constitute a significant impact for any plan.
Further, the proposed regulation is intended to provide sufficient
information to small entities such that they may understand the
request, provide information as to a reasonable cause for failure to
comply if necessary, and receive notice before assessment of a penalty
is initiated.
The Department invites interested persons to submit comments
regarding its preliminary determination that the proposal will not have
a significant economic impact on a substantial number of small
entities. The Department also requests comments from small entities
regarding what, if any, special problems they might encounter if the
proposal were to be adopted, and what changes, if any, could be made to
minimize those problems.
Small Business Regulatory Enforcement Fairness Act
The proposed rule is subject to the provisions of the Small
Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et
seq.) and, if finalized, will be transmitted to Congress and the
Comptroller General for review. The 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, or 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 or export markets.
Unfunded Mandates Reform Act
For purposes of the Unfunded Mandates Reform Act of 1995 (Pub. L.
104-4), as well as Executive Order 12875, this proposed rule does not
include any Federal mandate that may result in expenditures by State,
local, or tribal governments, nor does it include mandates which may
impose an annual burden of $100 million or more on the private sector.
Statutory Authority
These regulations are proposed pursuant to the authority contained
in sections 505, 104(a), and 502(c)(6) of ERISA (Pub. L. 93-406, 88
Stat. 894, 29 U.S.C. 1024, 1132, and 1135).
List of Subjects
29 CFR Part 2520
Accountants, Disclosure requirements, Employee benefit plans,
Employee Retirement Income Security Act, Pension plans, and Reporting
and recordkeeping requirements.
29 CFR Part 2560
Claims, Employee benefit plans, Employee Retirement Income Security
Act, Law enforcement, Pensions.
29 CFR Part 2570
Administrative practice and procedure, Employee benefit plans,
Employee Retirement Income Security Act, Party in interest, Law
enforcement, Pensions, Prohibited transactions.
Proposed Regulations
In view of the foregoing, the Department proposes to amend parts
2520, 2560, and 2570 of Chapter XXV of title 29 of the Code of Federal
Regulations as follows:
PART 2520--RULES AND REGULATIONS FOR REPORTING AND DISCLOSURE
1. The authority citation for part 2520 continues to read as
follows:
Authority: Secs. 101, 102, 103, 104, 105, 109, 110, 111 (b)(2),
111 (c), and 505, Pub. L. 93-406, 88 Stat. 840-52 and 894 (29 U.S.C.
1021-1025, 1029-31, and 1135); Secretary of Labor's Order No. 27-74,
13-76, 1-87, and Labor Management Services Administration Order 2-6.
Sections 2520.102-3, 2520.104b-1, and 2520.104b-3 also are
issued under sec. 101(a), (c), and (g)(4) of Pub. L. 104-191, 110
Stat. 1936, 1939, 1951 and 1955 and, sec. 603 of Pub. L. 104-204,
110 Stat. 2935 (29 U.S.C. 1185 and 1191c).
2. By adding a new Sec. 2520.104a-8 to read as follows:
Sec. 2520.104a-8 Requirement to furnish documents to the Secretary of
Labor on request.
(a) In general. (1) Under section 104(a)(6) of the Act, the
administrator of any employee benefit plan subject to the provisions of
Part 1 of Title I of the Act shall furnish to the Secretary, upon
service of a written request, any documents relating to the employee
benefit plan.
(2) Multiple requests for document(s). Multiple requests under this
section for the same or similar document or documents shall be
considered separate requests for purposes of Sec. 2560.502c-6(a) of
this chapter.
(b) Service of request. Requests under this section shall be served
in accordance with Sec. 2560.502c-6(i) of this chapter.
(c) Furnishing documents. A document is not considered furnished to
the Secretary until the date on which such document is received by the
Department of Labor at the address specified in the request.
PART 2560--RULES AND REGULATIONS FOR ADMINISTRATION AND ENFORCEMENT
3. The authority citation for part 2560 continues to read as
follows:
Section 2560.502-1 also issued under sec. 502(b)(2), 29 U.S.C.
1132(b)(2).
Section 2560.502i-1 also issued under sec. 502(i), 29 U.S.C.
1132(i).
Section 2560.503-1 also issued under sec. 503, 29 U.S.C. 1133.
Authority: Secs. 502, 505 of ERISA, 29 U.S.C. 1132, 1135, and
Secretary's Order 1-87, 52 FR 13139 (April 21, 1987).
4. By adding a new Sec. 2560.502c-6 in the appropriate place to
read as follows:
Sec. 2560.502c-6 Civil Penalties Under section 502(c)(6).
(a) In general. (1) Pursuant to the authority granted the Secretary
under section 502(c)(6) of the Employee Retirement Income Security Act
of 1974, as amended (the Act), the administrator (within the meaning of
section 3(16)(A)) of an employee benefit plan (within the meaning of
section 3(3) and Sec. 2510.3-1 of this chapter) shall be liable for
civil penalties assessed by the Secretary under section 502(c)(6) of
the Act in each case in which there is a failure or refusal to furnish
to the Secretary documents requested under section 104(a)(6) of the Act
and Sec. 2520.104a-8 of this chapter.
(2) For purposes of this section, a failure or refusal to furnish
documents shall mean a failure or refusal to furnish, in whole or in
part, the documents requested under section 104(a)(6) of the Act and
Sec. 2520.104a-8 of this chapter at the time and in the manner
prescribed in the request.
(b) Amount assessed. (1) The amount assessed under section
502(c)(6) shall be an amount up to $100 a day determined by the
Department of Labor, taking into consideration the amount of
willfulness of the failure or refusal to furnish the documents
requested under section 104(a)(6), but in no event in excess of $1,000
per request. Subject to paragraph (b)(2) of this section, the amount
shall be computed from the date of the administrator's failure or
refusal to furnish any document or documents requested by the
Department.
(2) For purposes calculating the amount to be assessed under this
section, the date of a failure or refusal to furnish documents shall
not be earlier than the 30th day after service of the
[[Page 42804]]
request under section 104(a)(6) of ERISA and Sec. 2520.104a-8 of this
chapter.
(c) Notice of intent to assess a penalty. Prior to the assessment
of any penalty under section 502(c)(6), the Department shall provide to
the administrator of the plan a written notice that indicates the
Department's intent to assess a penalty under section 502(c)(6), the
amount of the penalty, the period to which the penalty applies, and the
reason(s) for the penalty.
(d) Waiver of assessed penalty. The Department may waive all or
part of the penalty to be assessed under section 502(c)(6) on a showing
by the administrator that the failure or refusal to furnish a document
or documents requested by the Secretary was the result of matters
reasonably beyond the administrator's control.
(e) Statement showing matters reasonably beyond the control of the
plan administrator. Upon issuance by the Department of a notice of
intent to assess a penalty, the administrator shall have 30 days from
the date of the service of the notice, as described in paragraph (i) of
this section, to file a statement that the failure resulted from
matters reasonably beyond the control of the administrator or that the
penalty, as calculated, should not be assessed. The statement must be
in writing and set forth all the facts alleged as matters reasonably
beyond the control of the administrator. The statement must contain a
declaration by the administrator that the statement is made under the
penalties of perjury.
(f) Failure to file a statement of matters reasonably beyond the
control of the plan administrator. Failure to file a statement of
matters reasonably beyond the control of the administrator within the
30 day period described in paragraph (e) of this section shall be
deemed to constitute a waiver of the right to appear and contest the
facts alleged in the notice, and such failure shall be deemed an
admission of the facts alleged in the notice for purposes of any
proceeding involving the assessment of a civil penalty under section
502(c)(6). Such notice shall then become a final order of the
Secretary, within the meaning of Sec. 2570.111(g) of this chapter.
(g) Notice of determination on statement of matters reasonably
beyond the control of the plan administrator. (1) The Department,
following a review of all of the facts alleged in support of a complete
or partial waiver of the penalty, shall notify the administrator, in
writing, of its intention to waive the penalty, in whole or in part,
and/or assess a penalty. If it is the intention of the Department to
assess a penalty, the notice shall indicate the amount of the penalty,
not to exceed the amount described in paragraph (c) of this section.
This notice is a ``pleading'' for purposes of Sec. 2570.111(m) of this
chapter.
(2) Except as provided in paragraph (h) of this section, a notice
issued pursuant to paragraph (g)(1) of this section indicating the
Department's intention to assess a penalty shall become a final order,
within the meaning of Sec. 2570.111(g) of this chapter, 30 days after
the date of service of the notice.
(h) Administrative hearings. A notice issued pursuant to paragraph
(g)(1) of this section will not become a final order, within the
meaning of Sec. 2570.111(g) of this chapter, if, within 30 days from
the date of service of the notice, an answer, as defined in
Sec. 2570.111(c) of this chapter, is filed in accordance with
Sec. 2570.112 of this chapter.
(i) Service of notice. (1) Service of notice under this section
shall be made by:
(i) Delivering a copy to the administrator or representative
thereof;
(ii) Leaving a copy at the principal office, place of business, or
residence of the administrator or representative thereof; or (iii)
Mailing a copy to the last known address of the administrator or
representative thereof.
(2) If service is accomplished by certified mail, service is
complete upon mailing. If done by regular mail, service is complete
upon receipt by the addressee.
(j) Liability. (1) If more than one person is responsible as
administrator for the failure to furnish the document or documents
requested under section 104(a)(6) and its implementing regulations
(Sec. 2520.104a-8 of this chapter), all such persons shall be jointly
and severally liable with respect to such failure.
(2) Any person, or persons under paragraph (j)(1), against whom a
civil penalty has been assessed under section 502(c)(6) pursuant to a
final order, within the meaning of Sec. 2570.111(g) of this chapter,
shall be personally liable for the payment of such penalty.
(k) Cross reference. See Secs. 2570.110 through 2570-121 of this
chapter for procedural rules relating to administrative hearings under
section 502(c)(6) of the Act.
PART 2570--PROCEDURAL REGULATIONS UNDER THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT
5. Revise the authority citation for part 2570 to read as follow:
Authority: 29 U.S.C. 1108 (a), 1132 (c), 1132 (i), 1135; 5
U.S.C. 8477 (c) (3); Reorganization Plan no. 4 of 1978; Secretary of
Labor's Order 1-87.
Subpart A is also issued under 29 U.S.C. 1132(c)(1).
Subpart F 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.
6. Part 2570 is amended by adding new subpart F to read as follows:
Subpart F--Procedures for the Assessment of Civil Penalties Under ERISA
Section 502(c)(6)
Sec.
2570.110 Scope of rules.
2570.111 Definitions.
2570.112 Service: Copies of documents and pleadings.
2570.113 Parties, how designated.
2570.114 Consequences of default.
2570.115 Consent order or settlement.
2570.116 Scope of discovery.
2570.117 Summary Decisions.
2570.118 Decision of the administrative law judge.
2570.119 Review by the Secretary.
2570.120 Scope of review.
2570.121 Procedures for review by the Secretary.
Subpart F--Procedures for the Assessment of Civil Penalties Under
ERISA Section 502(c)(6)
Sec. 2570.110 Scope of rules.
The rules of practice set forth in this subpart are applicable to
``502(c)(6) civil penalty proceedings'' (as defined in Sec. 2570.111(n)
of this subpart) under section 502(c)(6) of the Employee Retirement
Income Security Act of 1974. The rules of procedure for administrative
hearings published by the Department's Office of Law Judges at part 18
of this title will apply to matters arising under ERISA section
502(c)(6) except as modified by this section. These proceedings shall
be conducted as expeditiously as possible, and the parties shall make
every effort to avoid delay at each stage of the proceedings.
Sec. 2570.111 Definitions.
For section 502(c)(6) civil penalty proceedings, this section shall
apply in lieu of the definitions in Sec. 18.2 of this title:
(a) Adjudicatory proceeding means a judicial-type proceeding before
an administrative law judge leading to the formulation of a final
order;
(b) Administrative law judge means an administrative law judge
appointed pursuant to the provisions of 5 U.S.C. 3105;
(c) Answer is defined for these proceedings as set forth in
Sec. 18.5(d)(1) of this title;
[[Page 42805]]
(d) Commencement of proceeding is the filing of an answer by the
respondent;
(e) Consent agreement means any written document containing a
specified proposed remedy or other relief acceptable to the Department
and consenting parties;
(f) ERISA means the Employee Retirement Income Security Act of
1974, as amended;
(g) Final order means the final decision or action of the
Department of Labor concerning the assessment of a civil penalty under
ERISA section 502(c)(6) against a particular party. Such final order
may result from a decision of an administrative law judge or the
Secretary, the failure of a party to file a statement of matters
reasonably beyond the control of the plan administrator described in
Sec. 2560.502c-6(e) of this chapter within the prescribed time limits,
or the failure of a party to invoke the procedures for hearings or
appeals under this title within the prescribed time limits. Such a
final order shall constitute final agency action within the meaning of
5 U.S.C. 704;
(h) Hearing means that part of a proceeding which involves the
submission of evidence, either by oral presentation or written
submission, to the administrative law judge;
(i) Order means the whole or any part of a final procedural or
substantive disposition of a matter under ERISA section 502(c)(6);
(j) Party includes a person or agency named or admitted as a party
to a proceeding;
(k) Person includes an individual, partnership, corporation,
employee benefit plan, association, exchange or other entity or
organization;
(l) Petition means a written request, made by a person or party,
for some affirmative action;
(m) Pleading means the notice as defined in Sec. 2560.502c-6(g) of
this chapter, the answer to the notice, any supplement or amendment
thereto, and any reply that may be permitted to any answer, supplement
or amendment;
(n) 502(c)(6) civil penalty proceeding means an adjudicatory
proceeding relating to the assessment of a civil penalty provided for
in section 502(c)(6) of ERISA;
(o) Respondent means the party against whom the Department is
seeking to assess a civil sanction under ERISA section 502(c)(6);
(p) Secretary means the Secretary of Labor and includes, pursuant
to any delegation of authority by the Secretary, any assistant
secretary (including the Assistant Secretary for Pension and Welfare
Benefits), administrator, commissioner, appellate body, board, or other
official; and
(q) Solicitor means the Solicitor of Labor or his or her delegate.
Sec. 2570.112 Service: Copies of documents and pleadings.
For 502(c)(6) penalty proceedings, this section shall apply in lieu
of Sec. 18.3 of this title.
(a) General. Copies of all documents shall be served on all parties
of record. All documents should clearly designate the docket number, if
any, and short title of all matters. All documents to be filed shall be
delivered or mailed to the Chief Docket Clerk, Office of Administrative
Law Judges, 800 K Street, NW, Suite 400, Washington, DC 20001-8002, or
to the OALJ Regional Office to which the proceeding may have been
transferred for hearing. Each document filed shall be clear and
legible.
(b) By parties. All motions, petitions, pleadings, briefs, or other
documents shall be filed with the Office of Administrative Law Judges
with a copy, including any attachments, to all other parties or record.
When a party is represented by an attorney, service shall be made upon
the attorney. Service of any document upon any party may be made by
personal delivery or by mailing a copy to the last known address. The
Department shall be served by delivery to the Associate Solicitor, Plan
Benefits Security Division, ERISA section 502(c)(6) Proceeding, PO Box
1914, Washington, DC 20013. The person serving the document shall
certify to the manner and date of service.
(c) By the Office of Administrative Law Judges. Service of orders,
decisions and all other documents shall be made by regular mail to the
last known address.
(d) Form of pleadings. (1) Every pleading shall contain information
indicating the name of the Pension and Welfare Benefits Administration
(PWBA) as the agency under which the proceeding is instituted, the
title of the proceeding, the docket number (if any) assigned by the
Office of Administrative Law Judges and a designation of the type of
pleading or paper (e.g., notice, motion to dismiss, etc.). The pleading
or paper shall be signed and shall contain the address and telephone
number of the party or person representing the party. Although there
are no formal specifications for documents, they should be typewritten
when possible on standard size 8\1/2\ x 11 inch paper.
(2) Illegible documents, whether handwritten, typewritten,
photocopies, or otherwise, will not be accepted. Papers may be
reproduced by any duplicating process provided all copies are clear and
legible.
Sec. 2570.113 Parties, how designated.
For 502(c)(6) civil penalty proceedings, this section shall apply
in lieu of Sec. 18.10 of this title.
(a) The term ``party'' wherever used in these rules shall include
any natural person, corporation, employee benefit plan, association,
firm, partnership, trustee, receiver, agency, public or private
organization, or government agency. A party against whom a civil
penalty is sought shall be designated as ``respondent.'' The Department
shall be designated as the ``complainant.''
(b) Other persons or organizations shall be permitted to
participate as parties only if the administrative law judge finds that
the final decision could directly and adversely affect them or the
class they represent, that they may contribute materially to the
disposition of the proceedings and their interest is not adequately
represented by existing parties, and that in the discretion of the
administrative law judge the participation of such persons or
organizations would be appropriate.
(c) A person or organization not named as a respondent wishing to
participate as a party under this section shall submit a petition to
the administrative law judge within fifteen (15) days after the person
or organization has knowledge of or should have known about the
proceeding. The petition shall be filed with the administrative law
judge and served on each person or organization who has been made a
party at the time of filing. Such petition shall concisely state:
(1) Petitioner's interest in the proceeding;
(2) How his or her participation as a party will contribute
materially to the disposition of the proceeding;
(3) Who will appear for petitioner;
(4) The issues on which petitioner wishes to participate; and
(5) Whether petitioner intends to present witnesses.
(d) Objections to the petition may be filed by a party within
fifteen (15) days of the filing of the petition. If objections to the
petition are filed, the administrative law judge shall then determine
whether petitioners have the requisite interest to be a party in the
proceedings, as defined in paragraph (b) of this section, and shall
permit or deny participation accordingly. Where petitions to
participate as parties are made by individuals or groups with common
interests, the administrative law judge may request all such
petitioners to designate a single representative, or he or she may
[[Page 42806]]
recognize one or more of such petitioners. The administrative law judge
shall give each such petitioner, as well as the parties, written notice
of the decision on his or her petition. For each petition granted, the
administrative law judge shall provide a brief statement of the basis
of the decision. If the petition is denied, he or she shall briefly
state the grounds for denial and shall then treat the petition as a
request for participation as amicus curiae.
Sec. 2570.114 Consequences of default.
For 502(c)(6) civil penalty proceedings, this section shall apply
in lieu of Sec. 18.5 (a) and (b) of this title. Failure of the
respondent to file an answer to the notice of determination described
in Sec. 2560.502c-6(g) of this chapter within the 30-day period
provided by Sec. 2560.502c-6(h) of this chapter shall be deemed to
constitute a waiver of his or her right to appear and contest the
allegations of the notice of determination, and such failure shall be
deemed to be an admission of the facts as alleged in the notice for
purposes of any proceeding involving the assessment of a civil penalty
under section 502(c)(6) of the Act. Such notice shall then become the
final order of the Secretary.
Sec. 2570.115 Consent order or settlement.
For 502(c)(6) civil penalty proceedings, the following shall apply
in lieu of Sec. 18.9 of this title.
(a) General. At any time after the commencement of a proceeding,
but at least five (5) days prior to the date set for hearing, the
parties jointly may move to defer the hearing for a reasonable time to
permit negotiation of a settlement or an agreement containing findings
and an order disposing of the whole or any part of the proceeding. The
allowance of such a deferral and the duration thereof shall be in the
discretion of the administrative law judge, after consideration of such
factors as the nature of the proceeding, the requirements of the public
interest, the representations of the parties and the probability of
reaching an agreement which will result in a just disposition of the
issues involved.
(b) Content. Any agreement containing consent findings and an order
disposing of a proceeding or any part thereof shall also provide:
(1) That the order shall have the same force and effect as an order
made after full hearing;
(2) That the entire record on which any order may be based shall
consist solely of the notice and the agreement;
(3) A waiver of any further procedural steps before the
administrative law judge;
(4) A waiver of any right to challenge or contest the validity of
the order and decision entered into in accordance with the agreement;
and
(5) That the order and decision of the administrative law judge
shall be final agency action.
(c) Submission. On or before the expiration of the time granted for
negotiations, but, in any case, at least five (5) days prior to the
date set for hearing, the parties or their authorized representative or
their counsel may:
(1) Submit the proposed agreement containing consent findings and
an order to the administrative law judge; or
(2) Notify the administrative law judge that the parties have
reached a full settlement and have agreed to dismissal of the action
subject to compliance with the terms of the settlement; or
(3) Inform the administrative law judge that agreement cannot be
reached.
(d) Disposition. In the event a settlement agreement containing
consent findings and an order is submitted within the time allowed
therefore, the administrative law judge shall issue a decision
incorporating such findings and agreement within thirty (30) days of
his receipt of such document. The decision of the administrative law
judge shall incorporate all of the findings, terms, and conditions of
the settlement agreement and consent order of the parties. Such
decision shall become final agency action within the meaning of 5
U.S.C. 704.
(e) Settlement without consent of all parties. In cases in which
some, but not all, of the parties to a proceeding submit a consent
agreement to the administrative law judge, the following procedure
shall apply:
(1) If all of the parties have not consented to the proposed
settlement submitted to the administrative law judge, then such non-
consenting parties must receive notice, and a copy, of the proposed
settlement at the time it is submitted to the administrative law judge;
(2) Any non-consenting party shall have fifteen (15) days to file
any objections to the proposed settlement with the administrative law
judge and all other parties;
(3) If any party submits an objection to the proposed settlement,
the administrative law judge shall decide within thirty (30) days after
receipt of such objections whether he shall sign or reject the proposed
settlement. Where the record lacks substantial evidence upon which to
base a decision or there is a genuine issue of material fact, then the
administrative law judge may establish procedures for the purpose of
receiving additional evidence upon which a decision on the contested
issues may reasonably be based;
(4) If there are no objections to the proposed settlement, or if
the administrative law judge decides to sign the proposed settlement
after reviewing any such objections, the administrative law judge shall
incorporate the consent agreement into a decision meeting the
requirements of paragraph (d) of this section.
Sec. 2570.116 Scope of discovery.
For 502(c)(6) civil penalty proceedings, this section shall apply
in lieu of Sec. 18.14 of this title.
(a) A party may file a motion to conduct discovery with the
administrative law judge. The motion for discovery shall be granted by
the administrative law judge only upon a showing of good cause. In
order to establish ``good cause'' for the purposes of this section, a
party must show that the discovery requested relates to a genuine issue
as to a material fact that is relevant to the proceeding. The order of
the administrative law judge shall expressly limit the scope and terms
of discovery to that for which ``good cause'' has been shown, as
provided in this paragraph.
(b) A party may obtain discovery of documents and tangible things
otherwise discoverable under paragraph (a) of this section and prepared
in anticipation of or for the hearing by or for another party's
representative (including his or her attorney, consultant, surety,
indemnitor, insurer, or agent) only upon showing that the party seeking
discovery has substantial need of the materials or information in the
preparation of his or her case and that he or she is unable without
undue hardship to obtain the substantial equivalent of the materials or
information by other means. In ordering discovery of such materials
when the required showing has been made, the administrative law judge
shall protect against disclosure of the mental impressions,
conclusions, opinions, or legal theories of an attorney or other
representatives of a party concerning the proceeding.
Sec. 2570.117 Summary decision.
For 502(c)(6) civil penalty proceedings, this section shall apply
in lieu of Sec. 18.41 of this title.
(a) No genuine issue of material fact. (1) Where no issue of a
material fact is found to have been raised, the administrative law
judge may issue a
[[Page 42807]]
decision which, in the absence of an appeal pursuant to Secs. 2570.119
through 2570.121 of this subpart, shall become a final order.
(2) A decision made under this paragraph shall include a statement
of:
(i) Findings of fact and conclusions of law, and the reasons
therefor, on all issues presented; and
(ii) Any terms and conditions of the rule or order.
(3) A copy of any decision under this paragraph shall be served on
each party.
(b) Hearings on issues of fact. Where a genuine question of a
material fact is raised, the administrative law judge shall, and in any
other case may, set the case for an evidentiary hearing.
Sec. 2570.118 Decision of the administrative law judge.
For section 502(c)(6) civil penalty proceedings, this section shall
apply in lieu of Sec. 18.57 of this title.
(a) Proposed findings of fact, conclusions, and order. Within
twenty (20) days of the filing of the transcript of the testimony, or
such additional time as the administrative law judge may allow, each
party may file with the administrative law judge, subject to the
judge's discretion, proposed findings of fact, conclusions of law, and
order together with a supporting brief expressing the reasons for such
proposals. Such proposals and briefs shall be served on all parties,
and shall refer to all portions of the record and to all authorities
relied upon in support of each proposal.
(b) Decision of the administrative law judge. Within a reasonable
time after the time allowed for the filing of the proposed findings of
fact, conclusions of law, and order, or within thirty (30) days after
receipt of an agreement containing consent findings and order disposing
of the disputed matter in whole, the administrative law judge shall
make his or her decision. The decision of the administrative law judge
shall include findings of fact and conclusions of law with reasons
therefor upon each material issue of fact or law presented on the
record. The decision of the administrative law judge shall be based
upon the whole record. In a contested case in which the Department and
the Respondent have presented their positions to the administrative law
judge pursuant to the procedures for 502(c)(6) civil penalty
proceedings as set forth in this subpart, the penalty (if any) which
may be included in the decision of the administrative law judge shall
be limited to the penalty expressly provided for in section 502(c)(6)
of ERISA. It shall be supported by reliable and probative evidence. The
decision of the administrative law judge shall become final agency
action within the meaning of 5 U.S.C. 704 unless an appeal is made
pursuant to the procedures set forth in Secs. 2570.119 through
2570.121.
Sec. 2570.119 Review by the Secretary.
(a) The Secretary may review a decision of an administrative law
judge. Such a review may occur only when a party files a notice of
appeal from a decision of an administrative law judge within twenty
(20) days of the issuance of such decision. In all other cases, the
decision of the administrative law judge shall become final agency
action within the meaning of 5 U.S.C. 704.
(b) A notice of appeal to the Secretary shall state with
specificity the issue(s) in the decision of the administrative law
judge on which the party is seeking review. Such notice of appeal must
be served on all parties of record.
(c) Upon receipt of a notice of appeal, the Secretary shall request
the Chief Administrative Law Judge to submit to him or her a copy of
the entire record before the administrative law judge.
Sec. 2570.120 Scope of review.
The review of the Secretary shall not be de novo proceeding but
rather a review of the record established before the administrative law
judge. There shall be no opportunity for oral argument.
Sec. 2570.121 Procedures for review by the Secretary.
(a) Upon receipt of the notice of appeal, the Secretary shall
establish a briefing schedule which shall be served on all parties of
record. Upon motion of one or more of the parties, the Secretary may,
in his or her discretion, permit the submission of reply briefs.
(b) The Secretary shall issue a decision as promptly as possible
after receipt of the briefs of the parties. The Secretary may affirm,
modify, or set aside, in whole or in part, the decision on appeal and
shall issue a statement of reasons and bases for the action(s) taken.
Such decision by the Secretary shall be final agency action within the
meaning of 5 U.S.C. 704.
Signed at Washington, DC, this 28th day of July 1999.
Richard M. McGahey,
Assistant Secretary, Pension and Welfare Benefits Administration,
Department of Labor.
[FR Doc. 99-19861 Filed 8-4-99; 8:45 am]
BILLING CODE 4510-29-P
