[Title 29 CFR ]
[Code of Federal Regulations (annual edition) - July 1, 2003 Edition]
[From the U.S. Government Printing Office]



[[Page i]]

          

                    29


          Part 1927 to End

                         Revised as of July 1, 2003

Labor





          Containing a codification of documents of general 
          applicability and future effect
          As of July 1, 2003
          With Ancillaries
          Published by
          Office of the Federal Register
          National Archives and Records
          Administration

A Special Edition of the Federal Register



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                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2003



  For sale by the Superintendent of Documents, U.S. Government Printing 
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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 29:
    Subtitle B--Regulations Relating to Labor (Continued)
          Chapter XVII--Occupational Safety and Health 
          Administration, Department of Labor (Continued)            5
          Chapter XX--Occupational Safety and Health Review 
          Commission                                               247
          Chapter XXV--Employee Benefits Security 
          Administration, Department of Labor                      315
          Chapter XXVII--Federal Mine Safety and Health Review 
          Commission                                               675
          Chapter XL--Pension Benefit Guaranty Corporation         719
  Finding Aids:
      Material Approved for Incorporation by Reference........     977
      Table of CFR Titles and Chapters........................     979
      Alphabetical List of Agencies Appearing in the CFR......     997
      List of CFR Sections Affected...........................    1007



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                     ----------------------------

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus,  29 CFR 1928.1 
                       refers to title 29, part 
                       1928, section 1.

                     ----------------------------

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                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, July 1, 2003), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 2001, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, 1973-1985, or 1986-2000, published in 11 separate 
volumes. For the period beginning January 1, 2001, a ``List of CFR 
Sections Affected'' is published at the end of each CFR volume.

INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
established by statute and allows Federal agencies to meet the 
requirement to publish regulations in the Federal Register by referring 
to materials already published elsewhere. For an incorporation to be 
valid, the Director of the Federal Register must approve it. The legal 
effect of incorporation by reference is that the material is treated as 
if it were published in full in the Federal Register (5 U.S.C. 552(a)). 
This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    Properly approved incorporations by reference in this volume are 
listed in the Finding Aids at the end of this volume.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed in 
the Finding Aids of this volume as an approved incorporation by 
reference, please contact the agency that issued the regulation 
containing that incorporation. If, after contacting the agency, you find 
the material is not available, please notify the Director of the Federal 
Register, National Archives and Records Administration, Washington DC 
20408, or call (202) 741-6010.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
Authorities and Agency Rules (Table I). A list of CFR titles, chapters, 
and parts and an alphabetical list of agencies publishing in the CFR are 
also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

[[Page vii]]


REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-741-6000 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, Washington, DC 20408 or e-mail 
[email protected].

SALES

    The Government Printing Office (GPO) processes all sales and 
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ELECTRONIC SERVICES

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Government Manual, the Federal Register, Public Laws, Public Papers, 
Weekly Compilation of Presidential Documents and the Privacy Act 
Compilation are available in electronic format at www.access.gpo.gov/
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Phone 202-512-1530, or 888-293-6498 (toll-free). E-mail, 
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    The Office of the Federal Register also offers a free service on the 
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information. Connect to NARA's web site at www.archives.gov/federal--
register. The NARA site also contains links to GPO Access.

                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

July 1, 2003.



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                               THIS TITLE

    Title 29--Labor is composed of nine volumes. The parts in these 
volumes are arranged in the following order: parts 0-99, parts 100-499, 
parts 500-899, parts 900-1899, parts 1900-1910.999, part 1910.1000-End, 
parts 1911-1925, part 1926, and part 1927 to end. The contents of these 
volumes represent all current regulations codified under this title as 
of July 1, 2003.

    The OMB control numbers for title 29 CFR part 1910 appear in 
Sec. 1910.8. For the convenience of the user, Sec. 1910.8 appears in the 
Finding Aids section of the volume containing Sec. 1910.1000 to the end.

    Subject indexes appear following the occupational safety and health 
standards (part 1910), and following the safety and health regulations 
for: Longshoring (part 1918), Gear Certification (part 1919), and 
Construction (part 1926).

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

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                             TITLE 29--LABOR




                  (This book contains part 1927 to End)

  --------------------------------------------------------------------
                                                                    Part

          SUBTITLE B--Regulations Relating to Labor (Continued)

chapter xvii--Occupational Safety and Health Administration, 
  Department of Labor (Continued)...........................        1928

chapter xx--Occupational Safety and Health Review Commission        2200

chapter xxv--Employee Benefits Security Administration, 
  Department of Labor.......................................        2509

chapter xxvii--Federal Mine Safety and Health Review 
  Commission................................................        2700

chapter xl--Pension Benefit Guaranty Corporation............        4000

Cross References: Railroad Retirement Board: See Employees' Benefits, 20 
  CFR chapter II.

  Social Security Administration, Department of Health and Human 
Services: See Employees' Benefits, 20 CFR chapter III.

  Other regulations issued by the Department of Labor appear in 20 CFR 
chapters I, IV, V, VI and VII; 41 CFR chapters 50, 60, and 61; and 48 
CFR chapter 29. For ``Standards for a Merit System of Personnel 
Administration'': See 5 CFR part 900, subpart F.

[[Page 3]]

          Subtitle B--Regulations Relating to Labor (Continued)

[[Page 5]]



CHAPTER XVII--OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION, DEPARTMENT 
                          OF LABOR (CONTINUED)




  --------------------------------------------------------------------
Part                                                                Page
1927

[Reserved]

1928            Occupational safety and health standards for 
                    agriculture.............................           7
1949            Office of Training and Education, 
                    Occupational Safety and Health 
                    Administration..........................          15
1952            Approved State plans for enforcement of 
                    State standards.........................          16
1953            Changes to State plans......................         123
1954            Procedures for the evaluation and monitoring 
                    of approved State plans.................         129
1955            Procedures for withdrawal of approval of 
                    State plans.............................         135
1956            State plans for the development and 
                    enforcement of State standards 
                    applicable to State and local government 
                    employees in States without approved 
                    private employee plans..................         146
1960            Basic program elements for Federal employee 
                    occupational safety and health programs 
                    and related matters.....................         162
1975            Coverage of employers under the Williams-
                    Steiger Occupational Safety and Health 
                    Act of 1970.............................         189
1977            Discrimination against employees exercising 
                    rights under the Williams-Steiger 
                    Occupational Safety and Health Act of 
                    1970....................................         193
1978            Rules for implementing section 405 of the 
                    Surface Transportation Assistance Act of 
                    1982 (STAA).............................         199
1979            Procedures for the handling of 
                    discrimination complaints under section 
                    519 of the Wendell H. Ford Aviation 
                    Investment and Reform Act for the 21st 
                    Century.................................         205

[[Page 6]]

1980            Procedures for the handling of 
                    discrimination complaints under section 
                    806 of the Corporate and Criminal Fraud 
                    Accountability Act of 2002, Title VIII 
                    of the Sarbanes-Oxley Act of 2002.......         213
1990            Identification, classification, and 
                    regulation of potential occupational 
                    carcinogens.............................         220

[[Page 7]]

                          PART 1927 [RESERVED]



PART 1928--OCCUPATIONAL SAFETY AND HEALTH STANDARDS FOR AGRICULTURE--Table of Contents




                           Subpart A--General

Sec.
1928.1  Purpose and scope.

                  Subpart B--Applicability of Standards

1928.21  Applicable standards in 29 CFR part 1910.

               Subpart C--Roll-Over Protective Structures

1928.51  Roll-over protective structures (ROPS) for tractors, used in 
          agricultural operations.

Appendix A to Subpart C--Employee Operating Instructions

              Subpart D--Safety for Agricultural Equipment

1928.57  Guarding of farm field equipment, farmstead equipment, and 
          cotton gins.

Subparts E-H [Reserved]

                Subpart I--General Environmental Controls

1928.110  Field sanitation.

Subparts J-L [Reserved]

                     Subpart M--Occupational Health

1928.1027  Cadmium.

    Authority: Secs. 4, 6, 8, Occupational Safety and Health Act of 1970 
(29 U.S.C. 653, 655, 657); Secretary of Labor's Order Nos. 12-71 (36 FR 
8754), 8-76 (41 FR 25059), 9-83 (48 FR 35736), or 1-90 (55 FR 9033), as 
applicable; 29 CFR part 1911.
    Section 1928.21 also issued under Sec. 29, Hazardous Materials 
Transportation Uniform Safety Act of 1990 (Public Law 101-615, 104 Stat. 
3244 (49 U.S.C. 1801-1819 and 5 U.S.C. 553).

    Source: 40 FR 18257, Apr. 25, 1975, unless otherwise noted.



                           Subpart A--General



Sec. 1928.1  Purpose and scope.

    This part contains occupational safety and health standards 
applicable to agricultural operations.



                  Subpart B--Applicability of Standards



Sec. 1928.21  Applicable standards in 29 CFR part 1910.

    (a) The following standards in part 1910 of this chapter shall apply 
to agricultural operations:
    (1) Temporary labor camps--Sec. 1910.142;
    (2) Storage and handling of anhydrous ammonia--Sec. 1910.111 (a) and 
(b);
    (3) Logging operations--Sec. 1910.266;
    (4) Slow-moving vehicles--Sec. 1910.145;
    (5) Hazard communication--Sec. 1910.1200;
    (6) Cadmium--Sec. 1910.1027.
    (7) Retention of DOT markings, placards and labels --Sec. 1910.1201.
    (b) Except to the extent specified in paragraph (a) of this section, 
the standards contained in subparts B through T and subpart Z of part 
1910 of this title do not apply to agricultural operations.

(Section 1928.21 contains a collection of information which has been 
approved by the Office of Management and Budget under OMB control number 
1218-0072)

[40 FR 18257, Apr. 25, 1975, as amended at 42 FR 38569, July 29, 1977; 
52 FR 31886, Aug. 24, 1987; 59 FR 36700, July 19, 1994; 59 FR 51748, 
Oct. 12, 1994; 61 FR 5510, Feb. 13, 1996; 61 FR 9255, Mar. 7, 1996]



               Subpart C--Roll-Over Protective Structures



Sec. 1928.51  Roll-over protective structures (ROPS) for tractors used in agricultural operations.

    (a) Definitions. As used in this subpart--
    Agricultural tractor means a two-or four-wheel drive type vehicle, 
or track vehicle, of more than 20 engine horsepower, designed to furnish 
the power to pull, carry, propel, or drive implements that are designed 
for agriculture. All self-propelled implements are excluded.
    Low profile tractor means a wheeled tractor possessing the following 
characteristics:
    (1) The front wheel spacing is equal to the rear wheel spacing, as 
measured from the centerline of each right wheel to the centerline of 
the corresponding left wheel.

[[Page 8]]

    (2) The clearance from the bottom of the tractor chassis to the 
ground does not exceed 18 inches.
    (3) The highest point of the hood does not exceed 60 inches, and
    (4) The tractor is designed so that the operator straddles the 
transmission when seated.
    Tractor weight includes the protective frame or enclosure, all 
fuels, and other components required for normal use of the tractor. 
Ballast shall be added as necessary to achieve a minimum total weight of 
110 lb. (50.0 kg.) per maximum power take-off horsepower at the rated 
engine speed or the maximum gross vehicle weight specified by the 
manufacturer, whichever is the greatest. Front end weight shall be at 
least 25 percent of the tractor test weight. In case power take-off 
horsepower is not available, 95 percent of net engine flywheel 
horsepower shall be used.
    (b) General requirements. Agricultural tractors manufactured after 
October 25, 1976, shall meet the following requirements:
    (1) Roll-over protective structures (ROPS). A roll-over protective 
structures (ROPS) shall be provided by the employer for each tractor 
operated by an employee. Except as provided in paragraph (b)(5) of this 
section, ROPS used on wheel-type tractors shall meet the test and 
performance requirements of the American Society of Agricultural 
Engineers Standard (ASAE) Standard S306.3-1974 entitled ``Protective 
Frame for Agricultural Tractors--Test Procedures and Performance 
Requirements'' and Society of Automotive Engineers (SAE) Standard J334-
1970, entitled ``Protective Frame Test Procedures and Performance 
Requirements'' (formerly codified in 29 CFR 1928.52); or ASAE Standard 
S336.1-1974, entitled ``Protective Enclosures for Agricultural Tractors-
-Test Procedures and Performance Requirements'' and SAE J168-1970, 
entitled ``Protective Enclosures--Test Procedures and Performance 
Requirements'' (formerly codified in 29 CFR 1928.53) 1; or 
Sec. 1926.1002 of OSHA's construction standards. These ASAE and SAE 
standards are incorporated by reference and have been approved by the 
Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 
1 CFR part 51. Copies may be obtained from either the American Society 
of Agricultural Engineers Standard, 2950 Niles Road, Post Office Box 
229, St. Joseph, MI 49085, or the Society of Automotive Engineers, 485 
Lexington Avenue, New York, NY 10017. Copies may be inspected at the 
OSHA Docket Office, U.S. Department of Labor, 200 Constitution Ave., 
NW., Room N2634, or at the Office of the Federal Register, 800 North 
Capitol St., NW., Suite 700, Washington, D.C. ROPS used on track-type 
tractors shall meet the test and performance requirements of 
Sec. 1926.1001 of this title.
---------------------------------------------------------------------------

    \1\ In March 1977, the American Society of Agricultural Engineers 
merged S306 and S336, along with Standard 305, entitled ``Operator 
Protection for Wheel Type Agricultural Tractors,'' into ASAE S383, which 
addresses ROPS for wheeled agricultural tractors.
---------------------------------------------------------------------------

    (2) Seatbelts. (i) Where ROPS are required by this section, the 
employer shall:
    (A) Provide each tractor with a seatbelt which meets the 
requirements of this paragraph;
    (B) Ensure that each employee uses such seatbelt while the tractor 
is moving; and
    (C) Ensure that each employee tightens the seatbelt sufficiently to 
confine the employee to the protected area provided by the ROPS.
    (ii) Each seatbelt shall meet the requirements set forth in Society 
of Automotive Engineers Standard SAE J4C, 1965 Motor Vehicle Seat Belt 
Assemblies, \2\ except as noted hereafter:
---------------------------------------------------------------------------

    \2\ Copies may be obtained from the Society of Automotive Engineers, 
400 Commonwealth Drive, Warrendale, PA 15096.
---------------------------------------------------------------------------

    (A) Where a suspended seat is used, the seatbelt shall be fastened 
to the movable portion of the seat to accommodate a ride motion of the 
operator.
    (B) The seatbelt anchorage shall be capable of withstanding a static 
tensile load of 1,000 pounds (453.6 kg) at 45 degrees to the horizontal 
equally divided between the anchorages. The seat mounting shall be 
capable of withstanding this load plus a load equal to four times the 
weight of all applicable seat components applied at 45 degrees to the 
horizontal in a forward and upward direction. In addition, the seat

[[Page 9]]

mounting shall be capable of withstanding a 500 pound (226.8 kg) belt 
load plus two times the weight of all applicable seat components both 
applied at 45 degrees to the horizontal in and upward and rearward 
direction. Floor and seat deformation is acceptable provided there is 
not structural failure or release of the seat adjusted mechanism or 
other locking device.
    (C) The seatbelt webbing material shall have a resistance to acids, 
alkalies, mildew, aging, moisture, and sunlight equal to or better than 
that of untreated polyester fiber.
    (3) Protection from spillage. Batteries, fuel tanks, oil reservoirs, 
and coolant systems shall be constructed and located or sealed to assure 
that spillage will not occur which may come in contact with the operator 
in the event of an upset.
    (4) Protection from sharp surfaces. All sharp edges and corners at 
the operator's station shall be designed to minimize operator injury in 
the event of an upset.
    (5) Exempted uses. Paragraphs (b)(1) and (b)(2) of this section do 
not apply to the following uses:
    (i) Low profile tractors while they are used in orchards, vineyards 
or hop yards where the vertical clearance requirements would 
substantially interfere with normal operations, and while their use is 
incidental to the work performed therein.
    (ii) Low profile tractors while used inside a farm building or 
greenhouse in which the vertical clearance is insufficient to allow a 
ROPS equipped tractor to operate, and while their use is incidental to 
the work performed therein.
    (iii) Tractors while used with mounted equipment which is 
incompatible with ROPS (e.g. cornpickers, cotton strippers, vegetable 
pickers and fruit harvesters).
    (6) Remounting. Where ROPS are removed for any reason, they shall be 
remounted so as to meet the requirements of this paragraph.
    (c) Labeling. Each ROPS shall have a label, permanently affixed to 
the structure, which states:
    (1) Manufacturer's or fabricator's name and address;
    (2) ROPS model number, if any;
    (3) Tractor makes, models, or series numbers that the structure is 
designed to fit; and
    (4) That the ROPS model was tested in accordance with the 
requirements of this subpart.
    (d) Operating instructions. Every employee who operates an 
agricultural tractor shall be informed of the operating practices 
contained in appendix A of this part and of any other practices dictated 
by the work environment. Such information shall be provided at the time 
of initial assignment and at least annually thereafter.

[40 FR 18257, Apr. 25, 1975, as amended at 61 FR 9255, Mar. 7, 1996]

  Appendix A to Subpart C of Part 1928--Employee Operating Instructions

1. Securely fasten your seat belt if the tractor has a ROPS.
2. Where possible, avoid operating the tractor near ditches, 
          embankments, and holes.
3. Reduce speed when turning, crossing slopes, and on rough, slick, or 
          muddy surfaces.
4. Stay off slopes too steep for safe operation.
5. Watch where you are going, especially at row ends, on roads, and 
          around trees.
6. Do not permit others to ride.
7. Operate the tractor smoothly--no jerky turns, starts, or stops.
8. Hitch only to the drawbar and hitch points recommended by tractor 
          manufacturers.
9. When tractor is stopped, set brakes securely and use park lock if 
          available.



              Subpart D--Safety for Agricultural Equipment



Sec. 1928.57  Guarding of farm field equipment, farmstead equipment, and cotton gins.

    (a) General--(1) Purpose. The purpose of this section is to provide 
for the protection of employees from the hazards associated with moving 
machinery parts of farm field equipment, farmstead equipment, and cotton 
gins used in any agricultural operation.
    (2) Scope. Paragraph (a) of this section contains general 
requirements which apply to all covered equipment. In addition, 
paragraph (b) of this section applies to farm field equipment, paragraph 
(c) of this section applies to

[[Page 10]]

farmstead equipment, and paragraph (d) of this section applies to cotton 
gins.
    (3) Application. This section applies to all farm field equipment, 
farmstead equipment, and cotton gins, except that paragraphs (b)(2), 
(b)(3), and (b)(4)(ii)(A), and (c)(2), (c)(3), and (c)(4)(ii)(A) do not 
apply to equipment manufactured before October 25, 1976.
    (4) Effective date. This section takes effect on October 25, 1976, 
except that paragraph (d) of this section is effective on June 30, 1977.
    (5) Definitions--Cotton gins are systems of machines which condition 
seed cotton, separate lint from seed, convey materials, and package lint 
cotton.
    Farm field equipment means tractors or implements, including self-
propelled implements, or any combination thereof used in agricultural 
operations.
    Farmstead equipment means agricultural equipment normally used in a 
stationary manner. This includes, but is not limited to, materials 
handling equipment and accessories for such equipment whether or not the 
equipment is an integral part of a building.
    Ground driven components are components which are powered by the 
turning motion of a wheel as the equipment travels over the ground.
    A guard or shield is a barrier designed to protect against employee 
contact with a hazard created by a moving machinery part.
    Power take-off shafts are the shafts and knuckles between the 
tractor, or other power source, and the first gear set, pulley, 
sprocket, or other components on power take-off shaft driven equipment.
    (6) Operating instructions. At the time of initial assignment and at 
least annually thereafter, the employer shall instruct every employee in 
the safe operation and servicing of all covered equipment with which he 
is or will be involved, including at least the following safe operating 
practices:
    (i) Keep all guards in place when the machine is in operation;
    (ii) Permit no riders on farm field equipment other than persons 
required for instruction or assistance in machine operation;
    (iii) Stop engine, disconnect the power source, and wait for all 
machine movement to stop before servicing, adjusting, cleaning, or 
unclogging the equipment, except where the machine must be running to be 
properly serviced or maintained, in which case the employer shall 
instruct employees as to all steps and procedures which are necessary to 
safely service or maintain the equipment;
    (iv) Make sure everyone is clear of machinery before starting the 
engine, engaging power, or operating the machine;
    (v) Lock out electrical power before performing maintenance or 
service on farmstead equipment.
    (7) Methods of guarding. Except as otherwise provided in this 
subpart, each employer shall protect employees from coming into contact 
with hazards created by moving machinery parts as follows:
    (i) Through the installation and use of a guard or shield or 
guarding by location;
    (ii) Whenever a guard or shield or guarding by location is 
infeasible, by using a guardrail or fence.
    (8) Strength and design of guards. (i) Where guards are used to 
provide the protection required by this section, they shall be designed 
and located to protect against inadvertent contact with the hazard being 
guarded.
    (ii) Unless otherwise specified, each guard and its supports shall 
be capable of withstanding the force that a 250 pound individual, 
leaning on or falling against the guard, would exert upon that guard.
    (iii) Guards shall be free from burrs, sharp edges, and sharp 
corners, and shall be securely fastened to the equipment or building.
    (9) Guarding by location. A component is guarded by location during 
operation, maintenance, or servicing when, because of its location, no 
employee can inadvertently come in contact with the hazard during such 
operation, maintenance, or servicing. Where the employer can show that 
any exposure to hazards results from employee conduct which constitutes 
an isolated and unforeseeable event, the component shall also be 
considered guarded by location.
    (10) Guarding by railings. Guardrails or fences shall be capable of 
protecting

[[Page 11]]

against employees inadvertently entering the hazardous area.
    (11) Servicing and maintenance. Whenever a moving machinery part 
presents a hazard during servicing or maintenance, the engine shall be 
stopped, the power source disconnected, and all machine movement stopped 
before servicing or maintenance is performed, except where the employer 
can establish that:
    (i) The equipment must be running to be properly serviced or 
maintained;
    (ii) The equipment cannot be serviced or maintained while a guard or 
guards otherwise required by this standard are in place; and
    (iii) The servicing or maintenance can be safely performed.
    (b) Farm field equipment--(1) Power take-off guarding. (i) All power 
take-off shafts, including rear, mid- or side-mounted shafts, shall be 
guarded either by a master shield, as provided in paragraph (b)(1)(ii) 
of this section, or by other protective guarding.
    (ii) All tractors shall be equipped with an agricultural tractor 
master shield on the rear power take-off except where removal of the 
tractor master shield is permitted by paragraph (b)(1)(iii) of this 
section. The master shield shall have sufficient strength to prevent 
permanent deformation of the shield when a 250 pound operator mounts or 
dismounts the tractor using the shield as a step.
    (iii) Power take-off driven equipment shall be guarded to protect 
against employee contact with positively driven rotating members of the 
power drive system. Where power take-off driven equipment is of a design 
requiring removal of the tractor master shield, the equipment shall also 
include protection from that portion of the tractor power take-off shaft 
which protrudes from the tractor.
    (iv) Signs shall be placed at prominent locations on tractors and 
power take-off driven equipment specifying that power drive system 
safety shields must be kept in place.
    (2) Other power transmission components. (i) The mesh or nip-points 
of all power driven gears, belts, chains, sheaves, pulleys, sprockets, 
and idlers shall be guarded.
    (ii) All revolving shafts, including projections such as bolts, 
keys, or set screws, shall be guarded, except smooth shaft ends 
protruding less than one-half the outside diameter of the shaft and its 
locking means.
    (iii) Ground driven components shall be guarded in accordance with 
paragraphs (b)(2)(i) and (b)(2)(ii) of this section if any employee may 
be exposed to them while the drives are in motion.
    (3) Functional components. Functional components, such as snapping 
or husking rolls, straw spreaders and choppers, cutterbars, flail 
rotors, rotary beaters, mixing augers, feed rolls, conveying augers, 
rotary tillers, and similar units, which must be exposed for proper 
function, shall be guarded to the fullest extent which will not 
substantially interfere with normal functioning of the component.
    (4) Access to moving parts. (i) Guards, shields, and access doors 
shall be in place when the equipment is in operation.
    (ii) Where removal of a guard or access door will expose an employee 
to any component which continues to rotate after the power is 
disengaged, the employer shall provide, in the immediate area, the 
following:
    (A) A readily visible or audible warning of rotation; and
    (B) A safety sign warning the employee to:
    (1) Look and listen for evidence of rotation; and
    (2) Not remove the guard or access door until all components have 
stopped.
    (c) Farmstead equipment--(1) Power take-off guarding. (i) All power 
take-off shafts, including rear, mid-, or side-mounted shafts, shall be 
guarded either by a master shield as provided in paragraph (b)(1)(ii) of 
this section or other protective guarding.
    (ii) Power take-off driven equipment shall be guarded to protect 
against employee contact with positively driven rotating members of the 
power drive system. Where power take-off driven equipment is of a design 
requiring removal of the tractor master shield, the equipment shall also 
include protection from that portion of the tractor power take-off shaft 
which protrudes from the tractor.

[[Page 12]]

    (iii) Signs shall be placed at prominent locations on power take-off 
driven equipment specifying that power drive system safety shields must 
be kept in place.
    (2) Other power transmission components. (i) The mesh or nip-points 
of all power driven gears, belts, chains, sheaves, pulleys, sprockets, 
and idlers shall be guarded.
    (ii) All revolving shafts, including projections such as bolts, 
keys, or set screws, shall be guarded, with the exception of:
    (A) Smooth shafts and shaft ends (without any projecting bolts, 
keys, or set screws), revolving at less than 10 rpm, on feed handling 
equipment used on the top surface of materials in bulk storage 
facilities; and
    (B) Smooth shaft ends protruding less than one-half the outside 
diameter of the shaft and its locking means.
    (3) Functional components. (i) Functional components, such as 
choppers, rotary beaters, mixing augers, feed rolls, conveying augers, 
grain spreaders, stirring augers, sweep augers, and feed augers, which 
must be exposed for proper function, shall be guarded to the fullest 
extent which will not substantially interfere with the normal 
functioning of the component.
    (ii) Sweep arm material gathering mechanisms used on the top surface 
of materials within silo structures shall be guarded. The lower or 
leading edge of the guard shall be located no more than 12 inches above 
the material surface and no less than 6 inches in front of the leading 
edge of the rotating member of the gathering mechanism. The guard shall 
be parallel to, and extend the fullest practical length of, the material 
gathering mechanism.
    (iii) Exposed auger flighting on portable grain augers shall be 
guarded with either grating type guards or solid baffle style covers as 
follows:
    (A) The largest dimensions or openings in grating type guards 
through which materials are required to flow shall be 4\3/4\ inches. The 
area of each opening shall be no larger than 10 square inches. The 
opening shall be located no closer to the rotating flighting than 2\1/2\ 
inches.
    (B) Slotted openings in solid baffle style covers shall be no wider 
than 1\1/2\ inches, or closer than 3\1/2\ inches to the exposed 
flighting.
    (4) Access to moving parts. (i) Guards, shields, and access doors 
shall be in place when the equipment is in operation.
    (ii) Where removal of a guard or access door will expose an employee 
to any component which continues to rotate after the power is 
disengaged, the employer shall provide, in the immediate area, the 
following:
    (A) A readily visible or audible warning of rotation; and
    (B) A safety sign warning the employee to:
    (1) Look and listen for evidence of rotation; and
    (2) Not remove the guard or access door until all components have 
stopped.
    (5) Electrical disconnect means. (i) Application of electrical power 
from a location not under the immediate and exclusive control of the 
employee or employees maintaining or servicing equipment shall be 
prevented by:
    (A) Providing an exclusive, positive locking means on the main 
switch which can be operated only by the employee or employees 
performing the maintenance or servicing; or
    (B) In the case of material handling equipment located in a bulk 
storage structure, by physically locating on the equipment an electrical 
or mechanical means to disconnect the power.
    (ii) All circuit protection devices, including those which are an 
integral part of a motor, shall be of the manual reset type, except 
where:
    (A) The employer can establish that because of the nature of the 
operation, distances involved, and the amount of time normally spent by 
employees in the area of the affected equipment, use of the manual reset 
device would be infeasible;
    (B) There is an electrical disconnect switch available to the 
employee within 15 feet of the equipment upon which maintenance or 
service is being performed; and
    (C) A sign is prominently posted near each hazardous component which 
warns the employee that, unless the electrical disconnect switch is 
utilized, the motor could automatically reset

[[Page 13]]

while the employee is working on the hazardous component.
    (d) Cotton ginning equipment--(1) Power transmission components. (i) 
The main drive and miscellaneous drives of gin stands shall be 
completely enclosed, guarded by location, or guarded by railings 
(consistent with the requirements of paragraph (a)(7) of this section). 
Drives between gin stands shall be guarded so as to prevent access to 
the area between machines.
    (ii) When guarded by railings, any hazardous component within 15 
horizontal inches of the rail shall be completely enclosed. Railing 
height shall be approximately 42 inches off the floor, platform, or 
other working surface, with a midrail between the toprail and the 
working surface. Panels made of materials conforming to the requirements 
in Table D-1, or equivalent, may be substituted for midrails. Guardrails 
shall be strong enough to withstand at least 200 pounds force on the 
toprail.
    (iii) Belts guarded by railings shall be inspected for defects at 
least daily. The machinery shall not be operated until all defective 
belts are replaced.

  Table D-1--Examples of Minimum Requirements for Guard Panel Materials
------------------------------------------------------------------------
                                                    Largest
                                 Clearance from     mesh or     Minimum
                                 moving part at     opening   gage (U.S.
           Material              all points (in    allowable   standard)
                                     inches)          (in         or
                                                    inches)    thickness
------------------------------------------------------------------------
Woven wire....................  Under 2.........       \3/8\          16
                                2 to 4..........       \1/2\          16
                                4 to 15.........           2          12
Expanded metal................  Under 4.........       \1/2\          18
                                4 to 15.........           2          13
Perforated metal..............  Under 4.........       \1/2\          20
                                4 to 15.........           2          14
Sheet metal...................  Under 4.........  ..........          22
                                4 to 15.........  ..........          22
Plastic.......................  Under 4.........  ..........       (\1\)
                                4 to 15.........  ..........       (\1\)
------------------------------------------------------------------------
\1\ Tensile strength of 10,000 lb/in[hairsp][hairsp]\2\

    (iv) Pulleys of V-belt drives shall be completely enclosed or 
guarded by location whether or not railings are present. The open end of 
the pulley guard shall be not less than 4 inches from the periphery of 
the pulleys.
    (v) Chains and sprockets shall be completely enclosed, except that 
they may be guarded by location if the bearings are packed or if 
accessible extension lubrication fittings are used.
    (vi) Where complete enclosure of a component is likely to cause a 
fire hazard due to excessive deposits of lint, only the face section of 
nip-point and pulley guards is required. The guard shall extend at least 
6 inches beyond the rim of the pulley on the in-running and off-running 
sides of the belt, and at least 2 inches from the rim and face of the 
pulley in all other directions.
    (vii) Projecting shaft ends not guarded by location shall present a 
smooth edge and end, shall be guarded by non-rotating caps or safety 
sleeves, and may not protrude more than one-half the outside diameter of 
the shaft.
    (viii) In power plants and power development rooms where access is 
limited to authorized personnel, guard railings may be used in place of 
guards or guarding by location. Authorized employees having access to 
power plants and power development rooms shall be instructed in the safe 
operation and maintenance of the equipment in accordance with paragraph 
(a)(6) of this section.
    (2) Functional components. (i) Gin stands shall be provided with a 
permanently installed guard designed to preclude contact with the gin 
saws while in motion. The saw blades in the roll box shall be considered 
guarded by location if they do not extend through the ginning ribs into 
the roll box when the breast is in the out position.
    (ii) Moving saws on lint cleaners which have doors giving access to 
the saws shall be guarded by fixed barrier guards or their equivalent 
which prevent direct finger or hand contact with the saws while the saws 
are in motion.
    (iii) An interlock shall be installed on all balers so that the 
upper gates cannot be opened while the tramper is operating.
    (iv) Top panels of burr extractors shall be hinged and equipped with 
a sturdy positive latch.
    (v) All accessible screw conveyors shall be guarded by substantial 
covers or gratings, or with an inverted horizontally slotted guard of 
the trough type, which will prevent employees from coming into contact 
with the screw conveyor. Such guards may consist of horizontal bars 
spaced so as to allow material to be fed into the conveyor, and 
supported by arches which

[[Page 14]]

are not more than 8 feet apart. Screw conveyors under gin stands shall 
be considered guarded by location.
    (3) Warning device. A warning device shall be installed in all gins 
to provide an audible signal which will indicate to employees that any 
or all of the machines comprising the gin are about to be started. The 
signal shall be of sufficient volume to be heard by employees, and shall 
be sounded each time before starting the gin.

[41 FR 10195, Mar. 9, 1976; 41 FR 11022, Mar. 16, 1976; 41 FR 22268, 
June 2, 1976, as amended at 41 FR 46598, Oct. 22, 1976]

Subparts E-H [Reserved]



                Subpart I--General Environmental Controls



Sec. 1928.110  Field sanitation.

    (a) Scope. This section shall apply to any agricultural 
establishment where eleven (11) or more employees are engaged on any 
given day in hand-labor operations in the field.
    (b) Definitions. Agricultural employer means any person, 
corporation, association, or other legal entity that:
    (i) Owns or operates an agricultural establishment;
    (ii) Contracts with the owner or operator of an agricultural 
establishment in advance of production for the purchase of a crop and 
exercises substantial control over production; or
    (iii) Recruits and supervises employees or is responsible for the 
management and condition of an agricultural establishment.
    Agricultural establishment is a business operation that uses paid 
employees in the production of food, fiber, or other materials such as 
seed, seedlings, plants, or parts of plants.
    Hand-labor operations means agricultural activities or agricultural 
operations performed by hand or with hand tools. Except for purposes of 
paragraph (c)(2)(iii) of this section, hand-labor operations also 
include other activities or operations performed in conjunction with 
hand labor in the field. Some examples of hand-labor operations are the 
hand-cultivation, hand-weeding, hand-planting and hand-harvesting of 
vegetables, nuts, fruits, seedlings or other crops, including mushrooms, 
and the hand packing of produce into containers, whether done on the 
ground, on a moving machine or in a temporary packing shed located in 
the field. Hand-labor does not include such activities as logging 
operations, the care or feeding of livestock, or hand-labor operations 
in permanent structures (e.g., canning facilities or packing houses).
    Handwashing facility means a facility providing either a basin, 
container, or outlet with an adequate supply of potable water, soap and 
single-use towels.
    Potable water means water that meets the standards for drinking 
purposes of the state or local authority having jurisdiction or water 
that meets the quality standards prescribed by the U.S. Environmental 
Protection Agency's National Interim Primary Drinking Water Regulations, 
published in 40 CFR part 141.
    Toilet facility means a fixed or portable facility designed for the 
purpose of adequate collection and containment of the products of both 
defecation and urination which is supplied with toilet paper adequate to 
employee needs. Toilet facility includes biological, chemical, flush and 
combustion toilets and sanitary privies.
    (c) Requirements. Agricultural employers shall provide the following 
for employees engaged in hand-labor operations in the field, without 
cost to the employee:
    (1) Potable drinking water. (i) Potable water shall be provided and 
placed in locations readily accessible to all employees.
    (ii) The water shall be suitably cool and in sufficient amounts, 
taking into account the air temperature, humidity and the nature of the 
work performed, to meet the needs of all employees.
    (iii) The water shall be dispensed in single-use drinking cups or by 
fountains. The use of common drinking cups or dippers is prohibited.
    (2) Toilet and handwashing facilities. (i) One toilet facility and 
one handwashing facility shall be provided for each twenty (20) 
employees or fraction thereof, except as stated in paragraph (c)(2)(v) 
of this section.
    (ii) Toilet facilities shall be adequately ventilated, appropriately

[[Page 15]]

screened, have self-closing doors that can be closed and latched from 
the inside and shall be constructed to insure privacy.
    (iii) Toilet and handwashing facilities shall be accessibly located 
and in close proximity to each other. The facilities shall be located 
within a one-quarter-mile walk of each hand laborer's place of work in 
the field.
    (iv) Where due to terrain it is not feasible to locate facilities as 
required above, the facilities shall be located at the point of closest 
vehicular access.
    (v) Toilet and handwashing facilities are not required for employees 
who perform field work for a period of three (3) hours or less 
(including transportation time to and from the field) during the day.
    (3) Maintenance. Potable drinking water and toilet and handwashing 
facilities shall be maintained in accordance with appropriate public 
health sanitation practices, including the following:
    (i) Drinking water containers shall be constructed of materials that 
maintain water quality, shall be refilled daily or more often as 
necessary, shall be kept covered and shall be regularly cleaned.
    (ii) Toilet facilities shall be operational and maintained in clean 
and sanitary condition.
    (iii) Handwashing facilities shall be refilled with potable water as 
necessary to ensure an adequate supply and shall be maintained in a 
clean and sanitary condition; and
    (iv) Disposal of wastes from facilities shall not cause unsanitary 
conditions.
    (4) Reasonable use. The employer shall notify each employee of the 
location of the sanitation facilities and water and shall allow each 
employee reasonable opportunities during the workday to use them. The 
employer also shall inform each employee of the importance of each of 
the following good hygiene practices to minimize exposure to the hazards 
in the field of heat, communicable diseases, retention of urine and 
agrichemical residues:
    (i) Use the water and facilities provided for drinking, handwashing 
and elimination;
    (ii) Drink water frequently and especially on hot days;
    (iii) Urinate as frequently as necessary;
    (iv) Wash hands both before and after using the toilet; and
    (v) Wash hands before eating and smoking.
    (d) Dates--(1) Effective date. This standard shall take effect on 
May 30, 1987.
    (2) Startup dates. Employers must comply with the requirements of 
paragraphs:
    (i) Paragraph (c)(1), to provide potable drinking water, by May 30, 
1987;
    (ii) Paragraph (c)(2), to provide handwashing and toilet facilities, 
by July 30, 1987;
    (iii) Paragraph (c)(3), to provide maintenance for toilet and 
handwashing facilities, by July 30, 1987; and
    (iv) Paragraph (c)(4), to assure reasonable use, by July 30, 1987.

[52 FR 16095, May 1, 1987]

Subparts J-L [Reserved]



                     Subpart M--Occupational Health



Sec. 1928.1027  Cadmium.

    See Sec. 1910.1027, Cadmium.

[61 FR 9255, Mar. 7, 1996]



PART 1949--OFFICE OF TRAINING AND EDUCATION, OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION--Table of Contents




                   Subpart A--OSHA Training Institute

Sec.
1949.1  Policy regarding tuition fees.
1949.2  Definitions.
1949.3  Schedule of fees.
1949.4  Procedure for payment.
1949.5  Refunds.

    Authority: Secs. 8, 26, Occupational Safety and Health Act of 1970 
(29 U.S.C. 657, 670); 31 U.S.C. 9701; Secretary of Labor's Order No. 9-
83 (48 FR 35736).

    Source: 49 FR 32066, Aug. 10, 1984, unless otherwise noted.



                   Subpart A--OSHA Training Institute



Sec. 1949.1  Policy regarding tuition fees.

    (a) The OSHA Training Institute shall charge tuition fees for all 
private

[[Page 16]]

sector students attending Institute courses.
    (b) The following private sector students shall be exempt from the 
payment of tuition fees.
    (1) Associate members of Field Federal Safety and Health Councils.
    (2) Students who are representatives of foreign governments.
    (3) Students attending courses which are required by OSHA for the 
student to maintain an existing designation of OSHA certified outreach 
trainer.
    (c) Additional exemptions may be made by the Director of the OSHA 
Training Institute on a case by case basis if it is determined that the 
students exempted are employed by a nonprofit organization and the 
granting of an exemption from tuition would be in the best interest of 
the occupational safety and health program. Individuals or organizations 
wishing to be considered for this exemption shall make application to 
the Director of the OSHA Training Institute in writing stating the 
reasons for an exemption from payment of tuition.

[56 FR 28076, June 19, 1991]



Sec. 1949.2  Definitions.

    Any term not defined herein shall have the same meaning as given it 
in the Act. As used in this subpart:
    Private sector students means those students attending the Institute 
who are not employees of Federal, State, or local governments.



Sec. 1949.3  Schedule of fees.

    (a) Tuition fees will be computed on the basis of the cost to the 
Government for the Institute conduct of the course, as determined by the 
Director of the Institute.
    (b) Total tuition charges for each course will be set forth in the 
course announcement.



Sec. 1949.4  Procedure for payment.

    (a) Applications for Institute courses shall be submitted to the 
Institute Registrar's office in accordance with instructions issued by 
the Institute.
    (b) Private sector personnel shall, upon notification of their 
acceptance by the Institute, submit a check payable to ``U.S. Department 
of Labor'' in the amount indicated by the course announcement prior to 
the commencement of the course.



Sec. 1949.5  Refunds.

    An applicant may withdraw an application and receive full 
reimbursement of the fee provided that written notification to the 
Institute Registrar is mailed no later than 14 days before the 
commencement of the course for which registration has been submitted.



PART 1952--APPROVED STATE PLANS FOR ENFORCEMENT OF STATE STANDARDS--Table of Contents




              Subpart A--General Provisions and Conditions

Sec.
1952.1  Purpose and scope.
1952.2  Definitions.
1952.3  Developmental plans.
1952.4  Injury and illness recording and reporting requirements.
1952.5  Availability of the plans.
1952.6  Partial approval of State plans.
1952.7  Product standards.
1952.8  Variations, tolerances, and exemptions affecting the national 
          defense.
1952.9  Variances affecting multi-state employers.
1952.10  Requirements for approval of State posters.
1952.11  State and local government employee programs.

Subpart B [Reserved]

                        Subpart C--South Carolina

1952.90  Description of the plan as initially approved.
1952.91  Developmental schedule.
1952.92  Completion of developmental steps and certification.
1952.93  Compliance staffing benchmarks.
1952.94  Final approval determination.
1952.95  Level of Federal enforcement.
1952.96  Where the plan may be inspected.
1952.97  Changes to approved plan.

                            Subpart D--Oregon

1952.100  Description of the plan as initially approved.
1952.101  Developmental schedule.
1952.102  Completion of developmental steps and certification.
1952.103  Compliance staffing benchmarks.
1952.104  [Reserved]
1952.105  Level of Federal enforcement.
1952.106  Where the plan may be inspected.
1952.107  Changes to approved plans.

[[Page 17]]

                             Subpart E--Utah

1952.110  Description of the plan as initially approved.
1952.111  Developmental schedule.
1952.112  Completion of developmental steps and certification.
1952.113  Compliance staffing benchmarks.
1952.114  Final approval determination.
1952.115  Level of Federal enforcement.
1952.116  Where the plan may be inspected.
1952.117  Changes to approved plans.

                          Subpart F--Washington

1952.120  Description of the plan.
1952.121  Where the plan may be inspected.
1952.122  Level of Federal enforcement.
1952.123  Developmental schedule.
1952.124  Completion of developmental steps and certification.
1952.125  Changes to approved plans.

Subparts G-H [Reserved]

                        Subpart I--North Carolina

1952.150  Description of the plan as initially approved.
1952.151  Developmental schedule.
1952.152  Completion of developmental steps and certification.
1952.153  Compliance staffing benchmarks.
1952.154  Final approval determination.
1952.155  Level of Federal enforcement.
1952.156  Where the plan may be inspected.
1952.157  Changes to approved plan.

                             Subpart J--Iowa

1952.160  Description of the plan as initially approved.
1952.161  Developmental schedule.
1952.162  Completion of developmental steps and certification.
1952.163  Compliance staffing benchmarks.
1952.164  Final approval determination.
1952.165  Level of Federal enforcement.
1952.166  Where the plan may be inspected.
1952.167  Changes to approved plans.

                          Subpart K--California

1952.170  Description of the plan.
1952.171  Where the plan may be inspected.
1952.172  Level of Federal enforcement.
1952.173  Developmental schedule.
1952.174  Completion of developmental steps and certification.
1952.175  Changes to approved plans.

Subparts L-M [Reserved]

                          Subpart N--Minnesota

1952.200  Description of the plan as initially approved.
1952.201  Developmental schedule.
1952.202  Completion of developmental steps and certification.
1952.203  Compliance staffing benchmarks.
1952.204  Final approval determination.
1952.205  Level of Federal enforcement.
1952.206  Where the plan may be inspected.
1952.207  Changes to approved plans.

                           Subpart O--Maryland

1952.210  Description of the plan as initially approved.
1952.211  Developmental schedule.
1952.212  Completion of developmental steps and certification.
1952.213  Compliance staffing benchmarks.
1952.214  Final approval determination.
1952.215  Level of Federal enforcement.
1952.216  Where the plan may be inspected.
1952.217  Changes to approved plans.

                          Subpart P--Tennessee

1952.220  Description of the plan as initially approved.
1952.221  Developmental schedule.
1952.222  Completed developmental steps.
1952.223  Compliance staffing benchmarks.
1952.224  Final approval determination.
1952.225  Level of Federal enforcement.
1952.226  Where the plan may be inspected.
1952.227  Changes to approved plans.

                           Subpart Q--Kentucky

1952.230  Description of the plan as initially approved.
1952.231  Developmental schedule.
1952.232  Completion of developmental steps and certification.
1952.233  Compliance staffing benchmarks.
1952.234  Final approval determination.
1952.235  Level of Federal enforcement.
1952.236  Where the plan may be inspected.
1952.237  Changes to approved plans.

                            Subpart R--Alaska

1952.240  Description of the plan as initially approved.
1952.241  Developmental schedule.
1952.242  Completed developmental steps.
1952.243  Final approval determination.
1952.244  Level of Federal enforcement.
1952.245  Where the plan may be inspected.
1952.246  Changes to approved plans.

                      Subpart S--The Virgin Islands

1952.250  Description of the plan as initially approved.
1952.251  Developmental schedule.
1952.252  Completion of developmental steps and certification.
1952.253  Final approval determination.
1952.254  Level of Federal enforcement.
1952.255  Where the plan may be inspected.
1952.256  Changes to approved plans.

[[Page 18]]

                           Subpart T--Michigan

1952.260  Description of the plan as initially approved.
1952.261  Developmental schedule.
1952.262  Completion of developmental steps and certification.
1952.263  Compliance staffing benchmarks.
1952.264  [Reserved]
1952.265  Level of Federal enforcement.
1952.266  Where the plan may be inspected.
1952.267  Changes to approved plans.

                           Subpart U--Vermont

1952.270  Description of the plan.
1952.271  Where the plan may be inspected.
1952.272  Level of Federal enforcement.
1952.273  Developmental schedule.
1952.274  Completion of developmental steps and certification.
1952.275  Changes to approved plans.

Subpart V [Reserved]

                            Subpart W--Nevada

1952.290  Description of the plan as initially approved.
1952.291  Developmental schedule.
1952.292  Completion of developmental steps and certification.
1952.293  Compliance staffing benchmarks.
1952.294  Final approval determination.
1952.295  Level of Federal enforcement.
1952.296  Where the plan may be inspected.
1952.297  Changes to approved plans.

Subpart X [Reserved]

                            Subpart Y--Hawaii

1952.310  Description of the plan as initially approved.
1952.311  Developmental schedule.
1952.312  Completion of developmental steps and certification.
1952.313  Final approval determination.
1952.314  Level of Federal enforcement.
1952.315  Where the plan may be inspected.
1952.316  Changes to approved plans.

                           Subpart Z--Indiana

1952.320  Description of the plan as initially approved.
1952.321  Developmental schedule.
1952.322  Completion of developmental steps and certification.
1952.323  Compliance staffing benchmarks.
1952.324  Final approval determination.
1952.325  Level of Federal enforcement.
1952.326  Where the plan may be inspected.
1952.327  Changes to approved plans.

Subpart AA [Reserved]

                           Subpart BB--Wyoming

1952.340  Description of the plan as initially approved.
1952.341  Developmental schedule.
1952.342  Completion of developmental steps and certification.
1952.343  Compliance staffing benchmarks.
1952.344  Final approval determination.
1952.345  Level of Federal enforcement.
1952.346  Where the plan may be inspected.
1952.347  Changes to approved plans.

                           Subpart CC--Arizona

1952.350  Description of the plan as initially approved.
1952.351  Developmental schedule.
1952.352  Completion of developmental steps and certification.
1952.353  Compliance staffing benchmarks.
1952.354  Final approval determination.
1952.355  Level of Federal enforcement.
1952.356  Where the plan may be inspected.
1952.357  Changes to approved plans.

                         Subpart DD--New Mexico

1952.360  Description of the plan as initially approved.
1952.361  Developmental schedule.
1952.362  Completion of developmental steps and certification.
1952.363  Compliance staffing benchmarks.
1952.364  [Reserved]
1952.365  Level of Federal enforcement.
1952.366  Where the plan may be inspected.
1952.367  Changes to approved plans.

                          Subpart EE--Virginia

1952.370  Description of the plan as initially approved.
1952.371  Developmental schedule.
1952.372  Completion of developmental steps and certification.
1952.373  Compliance staffing benchmarks.
1952.374  Final approval determination.
1952.375  Level of Federal enforcement.
1952.376  Where the plan may be inspected.
1952.377  Changes to approved plans.

                         Subpart FF--Puerto Rico

1952.380  Description of the plan.
1952.381  Where the plan may be inspected.
1952.382  Level of Federal enforcement.
1952.383  Completion of developmental steps and certification.
1952.384  Completed developmental steps.
1952.385  Changes to approved plans.

    Authority: Sec. 18, 84 Stat. 1608 (29 U.S.C. 667); Secretary of 
Labor's Order No. 3-2000 (65 FR 50017, August 16, 2000).

[[Page 19]]



              Subpart A--General Provisions and Conditions

    Source: 37 FR 25931, Dec. 6, 1972, unless otherwise noted.



Sec. 1952.1  Purpose and scope.

    (a) This part sets forth the Assistant Secretary's approval of State 
plans submitted under section 18 of the Act and part 1902 of this 
chapter. Each approval of a State plan is based on a determination by 
the Assistant Secretary that the plan meets the requirements of section 
18(c) of the Act and the criteria and indices of effectiveness specified 
in part 1902.
    (b) This subpart contains general provisions and conditions which 
are applicable to all State plans, regardless of the time of their 
approval. Separate subparts are used for the identification of specific 
State plans, indication of locations where the full plan may be 
inspected and copied, and setting forth any special conditions and 
special policies which may be applicable to a particular plan.



Sec. 1952.2  Definitions.

    (a) Act means the Occupational Safety and Health Act of 1970 (29 
U.S.C. 651 et seq.).
    (b) Assistant Secretary means the Assistant Secretary of Labor for 
Occupational Safety and Health.



Sec. 1952.3  Developmental plans.

    Any developmental plan; that is, a plan not fully meeting the 
criteria set forth in Sec. 1902.3 of this chapter at the time of 
approval, must meet the requirements of Sec. 1902.2(b) of this chapter.



Sec. 1952.4  Injury and illness recording and reporting requirements.

    (a) Injury and illness recording and reporting requirements 
promulgated by State-Plan States must be substantially identical to 
those in 29 CFR part 1904 ``Recording and Reporting Occupational 
Injuries and Illnesses.'' State-Plan States must promulgate recording 
and reporting requirements that are the same as the Federal requirements 
for determining which injuries and illnesses will be entered into the 
records and how they are entered. All other injury and illness recording 
and reporting requirements that are promulgated by State-Plan States may 
be more stringent than, or supplemental to, the Federal requirements, 
but, because of the unique nature of the national recordkeeping program, 
States must consult with OSHA and obtain approval of such additional or 
more stringent reporting and recording requirements to ensure that they 
will not interfere with uniform reporting objectives. State-Plan States 
must extend the scope of their regulation to State and local government 
employers.
    (b) A State may not grant a variance to the injury and illness 
recording and reporting requirements for private sector employers. Such 
variances may only be granted by Federal OSHA to assure nationally 
consistent workplace injury and illness statistics. A State may only 
grant a variance to the injury and illness recording and reporting 
requirements for State or local government entities in that State after 
obtaining approval from Federal OSHA.
    (c) A State must recognize any variance issued by Federal OSHA.
    (d) A State may, but is not required, to participate in the Annual 
OSHA Injury/Illness Survey as authorized by 29 CFR 1904.41. A 
participating State may either adopt requirements identical to 1904.41 
in its recording and reporting regulation as an enforceable State 
requirement, or may defer to the Federal regulation for enforcement. 
Nothing in any State plan shall affect the duties of employers to comply 
with 1904.41, when surveyed, as provided by section 18(c)(7) of the Act.

[66 FR 6135, Jan. 19, 2001]



Sec. 1952.5  Availability of the plans.

    (a) A complete copy of each State plan including any supplements 
thereto, shall be kept at:
    (1) Office of Federal and State Operations, OSHA, Room 305, Railway 
Labor Building, 400 First Street, NW., U.S. Department of Labor, 
Washington, DC 20210; and
    (2) The office of the nearest Regional Administrator, Occupational 
Safety and Health Administration. The addresses of the Regional 
Administrators

[[Page 20]]

are listed in the ``United States Government Organization Manual,'' 
1972/73, p. 310. The copy shall be available for public inspection and 
copying.
    (b) A complete copy of the State plan of a particular State, 
including any supplements thereto, shall be kept at the office of the 
State office listed in the appropriate subpart of this part 1952.



Sec. 1952.6  Partial approval of State   plans.

    (a) The Assistant Secretary may partially approve a plan under part 
1902 of this chapter whenever:
    (1) The portion to be approved meets the requirements of part 1902;
    (2) The plan covers more than one occupational safety and health 
issue; and
    (3) Portions of the plan to be approved are reasonably separable 
from the remainder of the plan.
    (b) Whenever the Assistant Secretary approves only a portion of a 
State plan, he may give notice to the State of an opportunity to show 
cause why a proceeding should not be commenced for disapproval of the 
remainder of the plan under subpart C of part 1902 before commencing 
such a proceeding.



Sec. 1952.7  Product standards.

    (a) Under section 18(c)(2) of the Act, a State plan must not include 
standards for products which are distributed or used in interstate 
commerce which are different from Federal standards for such products 
unless such standards are required by compelling local conditions and do 
not unduly burden interstate commerce. In Sec. 1902.3(c)(2) of this 
chapter this is interpreted as not being applicable to customized 
products, or parts not normally available on the open market, or to the 
optional parts, or additions to products which are ordinarily available 
with such optional parts, or additions.
    (b) In situations where section 18(c)(2) is considered applicable, 
and provision is made for the adoption of product standards, the 
requirements of section 18(c)(2), as they relate to undue burden on 
interstate commerce, shall be treated as a condition subsequent in light 
of the facts and circumstances which may be involved.



Sec. 1952.8  Variations, tolerances, and exemptions affecting the national defense.

    (a) The power of the Secretary of Labor under section 16 of the Act 
to provide reasonable limitations and variations, tolerances, and 
exemptions to and from any or all provisions of the Act as he may find 
necessary and proper to avoid serious impairment of the national defense 
is reserved.
    (b) No action by a State under a plan shall be inconsistent with 
action by the Secretary under this section of the Act.



Sec. 1952.9  Variances affecting multi-state employers.

    (a) Where a State standard is identical to a Federal standard 
addressed to the same hazard, an employer or group of employers seeking 
a temporary or permanent variance from such standard, or portion 
thereof, to be applicable to employment or places of employment in more 
than one State, including at least one State with an approved plan, may 
elect to apply to the Assistant Secretary for such variance under the 
provisions of 29 CFR part 1905, as amended.
    (b) Actions taken by the Assistant Secretary with respect to such 
application for a variance, such as interim orders, with respect 
thereto, the granting, denying, or issuing any modification or extension 
thereof, will be deemed prospectively an authoritative interpretation of 
the employer or employers' compliance obligations with regard to the 
State standard, or portion thereof, identical to the Federal standard, 
or portion thereof, affected by the action in the employment or places 
of employment covered by the application.
    (c) Nothing herein shall affect the option of an employer or 
employers seeking a temporary or permanent variance with applicability 
to employment or places of employment in more than one State to apply 
for such variance either to the Assistant Secretary or the individual 
State agencies involved. However, the filing with, as well as granting, 
denial, modification, or revocation of a variance request or interim 
order by, either authority (Federal or State) shall preclude any further 
substantive

[[Page 21]]

consideration of such application on the same material facts for the 
same employment or place of employment by the other authority.
    (d) Nothing herein shall affect either Federal or State authority 
and obligations to cite for noncompliance with standards in employment 
or places of employment where no interim order, variance, or 
modification or extension thereof, granted under State or Federal law 
applies, or to cite for noncompliance with such Federal or State 
variance action.

[40 FR 25450, June 16, 1975]



Sec. 1952.10  Requirements for approval of State posters.

    (a)(1) In order to inform employees of their protections and 
obligations under applicable State law, of the issues not covered by 
State law, and of the continuing availability of Federal monitoring 
under section 18(f) of the Act, States with approved plans shall develop 
and require employers to post a State poster meeting the requirements 
set out in paragraph (a)(5) of this section.
    (2) Such poster shall be substituted for the Federal poster under 
section 8(c)(1) of the Act and Sec. 1903.2 of this chapter where the 
State attains operational status for the enforcement of State standards 
as defined in Sec. 1954.3(b) of this chapter.
    (3) Where a State has distributed its poster and has enabling 
legislation as defined in Sec. 1954.3(b)(1) of this chapter but becomes 
nonoperational under the provisions of Sec. 1954.3(f)(1) of this chapter 
because of failure to be at least as effective as the Federal program, 
the approved State poster may, at the discretion of the Assistant 
Secretary, continue to be substituted for the Federal poster in 
accordance with paragraph (a)(2) of this section.
    (4) A State may, for good cause shown, request, under 29 CFR part 
1953, approval of an alternative to a State poster for informing 
employees of their protections and obligations under the State plans, 
provided such alternative is consistent with the Act, 29 CFR 
1902.4(c)(2)(iv) and applicable State law. In order to qualify as a 
substitute for the Federal poster under this paragraph, such alternative 
must be shown to be at least as effective as the Federal poster 
requirements in informing employees of their protections and obligations 
and address the items listed in paragraph (a)(5) of this section.
    (5) In developing the poster, the State shall address but not be 
limited to the following items:
    (i) Responsibilities of the State, employers and employees;
    (ii) The right of employees or their representatives to request 
workplace inspections;
    (iii) The right of employees making such requests to remain 
anonymous;
    (iv) The right of employees to participate in inspections;
    (v) Provisions for prompt notice to employers and employees when 
alleged violations occur;
    (vi) Protection for employees against discharge or discrimination 
for the exercise of their rights under Federal and State law;
    (vii) Sanctions;
    (viii) A means of obtaining further information on State law and 
standards and the address of the State agency;
    (ix) The right to file complaints with the Occupational Safety and 
Health Administration about State program administration;
    (x) A list of the issues as defined in Sec. 1902.2(c) of this 
chapter which will not be covered by State plan;
    (xi) The address of the Regional Office of the Occupational Safety 
and Health Administration; and
    (xii) Such additional employee protection provisions and obligations 
under State law as may have been included in the approved State plan.
    (b) Posting of the State poster shall be recognized as compliance 
with the posting requirements in section 8(c)(1) of the Act and 
Sec. 1903.2 of this chapter, provided that the poster has been approved 
in accordance with subpart B of part 1953. Continued Federal recognition 
of the State poster is also subject to pertinent findings of 
effectiveness with regard to the State program under 29 CFR part 1954.

[39 FR 39036, Nov. 5, 1974]

[[Page 22]]



Sec. 1952.11  State and local government employee programs.

    (a) Each approved State plan must contain satisfactory assurances 
that the State will, to the extent permitted by its law, establish and 
maintain an effective and comprehensive occupational safety and health 
program applicable to all employees of public agencies of the State and 
its political subdivisions which program is as effective as the 
standards contained in an approved plan.
    (b) This criteria for approved State plans is interpreted to require 
the following elements with regard to coverage, standards, and 
enforcement:
    (1) Coverage. The program must cover all public employees over which 
the State has legislative authority under its constitution. ``To the 
extent permitted by its law,'' specifically recognizes the situation 
where local governments exclusively control their own employees, such as 
under certain ``home rule'' charters.
    (2) Standards. The program must be as effective as the standards 
contained in the approved plan applicable to private employers. Thus, 
the same criteria and indices of standards effectiveness contained in 
Secs. 1902.3(c) and 1902.4 (a) and (b) of this chapter would apply to 
the public employee program. Where hazards are unique to public 
employment, all appropriate indices of effectiveness, such as those 
dealing with temporary emergency standards, development of standards, 
employee information, variances, and protective equipment, would be 
applicable to standards for such hazards.
    (3) Enforcement. Although section 18(c)(6) of the Act requires State 
public employee programs to be ``as effective as standards'' contained 
in the State plan, minimum enforcement elements are required to ensure 
an ``effective and comprehensive'' public employee program as follows: 
(See notice of approval of the North Carolina Plan, 38 FR 3041).
    (i) Regular inspections of workplaces, including inspections in 
response to valid employee complaints;
    (ii) A means for employees to bring possible violations to the 
attention of inspectors;
    (iii) Notification to employees, or their representatives, of 
decisions that no violations are found as a result of complaints by such 
employees or their representatives, and informal review of such 
decisions;
    (iv) A means of informing employees of their protections and 
obligations under the Act;
    (v) Protection for employees against discharge of discrimination 
because of the exercise of rights under the Act;
    (vi) Employee access to information on their exposure to toxic 
materials or harmful physical agents and prompt notification to 
employees when they have been or are being exposed to such materials or 
agents at concentrations or levels above those specified by the 
applicable standards;
    (vii) Procedures for the prompt restraint or elimination of imminent 
danger situations;
    (viii) A means of promptly notifying employers and employees when an 
alleged violation has occurred, including the proposed abatement 
requirements;
    (ix) A means of establishing timetables for the correction of 
violations;
    (x) A program for encouraging voluntary compliance; and
    (xi) Such other additional enforcement provisions under State law as 
may have been included in the State plan.
    (c) In accordance with Sec. 1902.3(b)(3), the State agency or 
agencies designated to administer the plan throughout the State must 
retain overall responsibility for the entire plan. Political 
subdivisions may have the responsibility and authority for the 
development and enforcement of standards: Provided, That the designated 
State agency or agencies have adequate authority by statute, regulation, 
or agreement to insure that the commitments of the State under the plan 
will be fulfilled.

These commitments supersede and control any delegation of authority to 
State or local agencies. (See Notice of Approval of Colorado Plan, 38 FR 
25172.)

[40 FR 58451, Dec. 17, 1975]

Subpart B [Reserved]

[[Page 23]]



                        Subpart C--South Carolina

    Source: 51 FR 8820, Mar. 14, 1986, unless otherwise noted.



Sec. 1952.90  Description of the plan as initially approved.

    (a) The plan identifies the South Carolina Department of Labor as 
the State agency designated to administer the plan. It adopts the 
definition of occupational safety and health issues expressed in 
Sec. 1902.2(c)(1) of this chapter. The plan states that the Department 
of Labor has been promulgating safety and health standards. The South 
Carolina Commissioner of Labor is promulgating all standards and 
amendments thereto which have been promulgated by the Secretary of 
Labor, except those found in Secs. 1910.13; 1910.14; 1910.15; and 
1910.16 of this chapter (ship repairing, shipbuilding, shipbreaking, and 
longshoring). The plan describes procedures for the development and 
promulgation of additional standards, enforcement of such standards, and 
the prompt restraint or elimination of imminent danger situations. The 
South Carolina Legislature passed enabling legislation in 1971, a copy 
of which was submitted with the original plan. Section 40-261 through 
40-274 South Carolina Code of Laws, 1962. The amendments to the plan 
include proposed amendments to this legislation to more fully bring the 
plan into conformity with the requirements of part 1902. Under the 
amended legislation, the South Carolina Department of Labor will have 
full authority to administer and enforce all laws, rules, and orders 
protecting employee safety and health in all places of employment in the 
State.
    (b) The plan includes a statement of the Governor's support for the 
legislative amendments and a legal opinion that the amended act will 
meet the requirements of the Occupational Safety and Health Act of 1970 
and is consistent with the constitution and laws of South Carolina. The 
plan sets out goals and provides a timetable for bringing it into full 
conformity with part 1902 upon enactment of the proposed legislative 
amendments.



Sec. 1952.91  Developmental schedule.

    The South Carolina plan is developmental. The following is the 
schedule of the developmental steps provided by the plan:
    (a) Introduction of the above-mentioned legislative amendments in 
the legislative session following approval of the plan.
    (b) Public hearings and adoption of Federal standards to be 
completed by December 1972.
    (c) A management information system to be completed by no later than 
June 30, 1974.
    (d) A voluntary compliance program to be completed by no later than 
June 30, 1974.
    (e) An occupational safety and health program for public employees 
to be completed by no later than June 30, 1974.
    (f) A program for the coverage of agriculture workers to be 
completed no later than June 30, 1973.
    (g) An approved merit system covering employees implementing the 
plan to be effective 90 days following approval of the plan.
    (h) A revised compliance manual to be completed within 6 months 
following approval of the plan.



Sec. 1952.92  Completion of developmental steps and certification.

    (a) In accordance with Sec. 1952.91(a) legislative amendments were 
introduced into the 1973 South Carolina General Assembly and were 
enacted effective June 12, 1973. The amendments have been supplemented 
by State commitments to:
    (1) Take action on all employee discrimination complaints within 90 
days, and
    (2) Limit the duration of temporary variances to a maximum of two 
years, inclusive of any renewals.
    (b) In accordance with Sec. 1952.91(b) the South Carolina 
occupational safety and health standards, identical to Federal standards 
(through December 3, 1974), have been promulgated and were approved by 
the Assistant Regional Director for Occupational Safety and Health 
effective April 10, 1975 (40 FR 16257).
    (c) In accordance with Sec. 1952.91(d) a voluntary compliance 
program, to be

[[Page 24]]

known as the Taxpayers' Assistant Program, has been developed.
    (d) In accordance with Sec. 1952.91(f) coverage of agricultural 
workers began on July 1, 1973, and was initiated directly by the South 
Carolina Department of Labor. (The State plan has been amended to delete 
the proposal to delegate such responsibility to the State Department of 
Agriculture.)
    (e) In accordance with Sec. 1952.91(g) the State plan has been 
amended to show extensions of merit system coverage to the South 
Carolina Department of Labor, Division of Occupational Safety and 
Health. Agreement with the Department of Health and Environmental 
Control requires that all health personnel cooperating in the State 
occupational safety and health program be likewise covered by the State 
merit system.
    (f) In accordance with the requirements of Sec. 1952.10 the South 
Carolina Safety and Health Poster for private and public employees was 
approved by the Assistant Secretary on February 19, 1976.
    (g) In accordance with Sec. 1952.91(c) development of a management 
information system designed to provide the data required by the 
Assistant Secretary and information necessary for internal management of 
resources and evaluation of State program performance has been 
completed.
    (h) The State plan has been amended to include the details of a 
public employee program. State and local government employees will be 
afforded protection identical to that of employees in the private 
sector.
    (i) The South Carolina plan has been amended to include an expanded 
radiation health effort. The Division of Radiological Health, South 
Carolina Department of Health and Environmental Control, under contract 
to the South Carolina Department of Labor will make inspections to 
provide coverage of radiation hazards not subject to regulation under 
the Atomic Energy Act of 1954.
    (j) In accordance with plan commitments, South Carolina regulations 
for enforcement of standards and review of contested cases, Article IV, 
were revised and repromulgated on June 5, 1975. Further amendment to 
section 4.00K (September 26, 1975) and a January 15, 1976, letter of 
supplemental assurances from Commissioner Edgar L. McGowan are 
considered integral parts of the approved South Carolina review 
procedures. On March 11, 1976, the State of South Carolina promulgated 
the necessary changes to Article IV to fulfill the commitments contained 
in their January 15, 1976, letter of supplemental assurances.
    (k) The State plan has been amended to include an Affirmative Action 
Plan in which the State outlines its policy of equal employment 
opportunity.
    (l) In accordance with Sec. 1952.91(h) the State has developed and 
amended a Compliance Manual which defines the procedures and guidelines 
to be used by the South Carolina compliance and consultation staff in 
carrying out the goals of the program.
    (m) In accordance with Sec. 1902.34 of this chapter, the South 
Carolina occupational safety and health plan was certified, effective 
August 3, 1976, as having completed all developmental steps specified in 
the plan as approved on November 30, 1972, on or before December 31, 
1975.



Sec. 1952.93  Compliance staffing benchmarks.

    Under the terms of the 1978 Court Order in AFL-CIO v. Marshall 
compliance staffing levels (benchmarks) necessary for a ``fully 
effective'' enforcement program were required to be established for each 
State operating an approved State plan. In September 1984 South 
Carolina, in conjunction with OSHA, completed a reassessment of the 
levels initially established in 1980 and proposed revised compliance 
staffing benchmarks of 17 safety and 12 health compliance officers. 
After opportunity for public comment and service on the AFL-CIO, the 
Assistant Secretary approved these revised staffing requirements on 
January 17, 1986.



Sec. 1952.94  Final approval determination.

    (a) In accordance with section 18(e) of the Act and procedures in 29 
CFR part 1902, and after determination that the State met the ``fully 
effective'' compliance staffing benchmarks as revised in 1984 in 
response to a Court Order in

[[Page 25]]

AFL-CIO v. Marshall (CA 74-406), and was satisfactorily providing 
reports to OSHA through participation in the Federal-State Integrated 
Management Information System, the Assistant Secretary evaluated actual 
operations under the South Carolina State plan for a period of at least 
one year following certification of completion of developmental steps 
(41 FR 32424). Based on the 18(e) Evaluation Report for the period of 
December 1, 1985, through January 31, 1987, and after opportunity for 
public comment, the Assistant Secretary determined that in operation the 
State of South Carolina's occupational safety and health program is at 
least as effective as the Federal program in providing safe and 
healthful employment and places of employment and meets the criteria for 
final State plan approval in section 18(e) of the Act and implementing 
regulations at 29 CFR part 1902. Accordingly, the South Carolina plan 
was granted final approval and concurrent Federal enforcement authority 
was relinquished under section 18(e) of the Act effective December 15, 
1987.
    (b) Except as otherwise noted, the plan which has received final 
approval covers all activities of employers and all places of employment 
in South Carolina. The plan does not cover private sector maritime 
employment; military bases; Federal government employers and employees; 
the U.S. Postal Service (USPS), including USPS employees, and contract 
employees and contractor-operated facilities engaged in USPS mail 
operations; private sector employment at Area D of the Savannah River 
Site (power generation and transmission facilities operated by South 
Carolina Electric and Gas) and at the Three Rivers Solid Waste 
Authority; the enforcement of the field sanitation standard, 29 CFR 
1928.110, and the temporary labor camps standard, 29 CFR 1910.142, with 
respect to any agricultural establishment where employees are engaged in 
``agricultural employment'' within the meaning of the Migrant and 
Seasonal Agricultural Worker Protection Act, 29 U.S.C. 1802(3), 
regardless of the number of employees, including employees engaged in 
hand packing of produce into containers, whether done on the ground, on 
a moving machine, or in a temporary packing shed, except that South 
Carolina retains enforcement responsibility over agricultural temporary 
labor camps for employees engaged in egg, poultry, or red meat 
production, or the post-harvest processing of agricultural or 
horticultural commodities.
    (c) South Carolina is required to maintain a State program which is 
at least as effective as operations under the Federal program; to submit 
plan supplements in accordance with 29 CFR part 1953; to allocate 
sufficient safety and health enforcement staff to meet the benchmarks 
for State staffing established by the U.S. Department of Labor, or any 
revisions to those benchmarks; and, to furnish such reports in such form 
as the Assistant Secretary may from time to time require.

[52 FR 48111, Dec. 18, 1987, as amended at 62 FR 2560, Jan. 17, 1997; 65 
FR 36619, June 9, 2000]



Sec. 1952.95  Level of Federal enforcement.

    (a) As a result of the Assistant Secretary's determination granting 
final approval to the South Carolina plan under section 18(e) of the 
Act, effective December 15, 1987, occupational safety and health 
standards which have been promulgated under section 6 of the Act do not 
apply with respect to issues covered under the South Carolina plan. This 
determination also relinquishes concurrent Federal OSHA authority to 
issue citations for violations of such standards under sections 5(a)(2) 
and 9 of the Act; to conduct inspections and investigations under 
section 8 (except those necessary to conduct evaluation of the plan 
under section 18(f) and other inspections, investigations, or 
proceedings necessary to carry out Federal responsibilities not 
specifically preempted by section 18(e)); to conduct enforcement 
proceedings in contested cases under section 10; to institute 
proceedings to correct imminent dangers under section 13; and to propose 
civil penalties or initiate criminal proceedings for violations of the 
Federal Act under section 17. The Assistant Secretary retains 
jurisdiction under the above provisions in any proceeding commenced 
under section 9 or 10 before

[[Page 26]]

the effective date of the 18(e) determination.
    (b)(1) In accordance with section 18(e), final approval relinquishes 
Federal OSHA authority only with regard to occupational safety and 
health issues covered by the South Carolina plan. OSHA retains full 
authority over issues which are not subject to State enforcement under 
the plan. Thus, Federal OSHA retains its authority relative to safety 
and health in private sector maritime activities, and will continue to 
enforce all provisions of the Act, rules or orders, and all Federal 
standards, current or future, specifically directed to maritime 
employment (29 CFR Part 1915, shipyard employment; Part 1917, marine 
terminals; Part 1918, longshoring; Part 1919, gear certification), as 
well as provisions of general industry and construction standards (29 
CFR Parts 1910 and 1926) appropriate to hazards found in these 
employments; employment on military bases; and private sector employment 
at Area D of the Savannah River Site (power generation and transmission 
facilities operated by South Carolina Electric and Gas) and at the Three 
Rivers Solid Waste Authority. Federal jurisdiction is retained and 
exercised by the Employment Standards Administration, U.S. Department of 
Labor, (Secretary's Order 5-96, dated December 27, 1996) with respect to 
the field sanitation standard, 29 CFR 1928.110, and the enforcement of 
the temporary labor camps standard, 29 CFR 1910.142, in agriculture, as 
described in Sec. 1952.94(b). Federal jurisdiction is also retained with 
respect to Federal government employers and employees; and the U.S. 
Postal Service (USPS), including USPS employees, and contract employees 
and contractor-operated facilities engaged in USPS mail operations.
    (2) In addition, any hazard, industry, geographical area, operation 
or facility over which the State is unable to effectively exercise 
jurisdiction for reasons not related to the required performance or 
structure of the plan shall be deemed to be an issue not covered by plan 
which has received final approval, and shall be subject to Federal 
enforcement. Where enforcement jurisdiction is shared between Federal 
and State authorities for a particular area, project, or facility, in 
the interest of administrative practicability Federal jurisdiction may 
be assumed over the entire project or facility. In either of the two 
aforementioned circumstances, Federal enforcement may be exercised 
immediately upon agreement between Federal OSHA and the State designated 
agency.
    (c) Federal authority under provisions of the Act not listed in 
section 18(e) is unaffected by final approval of the plan. Thus, for 
example, the Assistant Secretary retains his authority under section 
11(c) of the Act with regard to complaints alleging discrimination 
against employees because of the exercise of any right afforded to the 
employee by the Act, although such complaints may be referred to the 
State for investigation. The Assistant Secretary also retains his 
authority under section 6 of the Act to promulgate, modify or revoke 
occupational safety and health standards which address the working 
conditions of all employees, including those in States which have 
received an affirmative 18(e) determination, although such standards may 
not be federally applied. In the event that the State's 18(e) status is 
subsequently withdrawn and Federal authority reinstated, all Federal 
standards, including any standards promulgated or modified during the 
18(e) period, would be federally enforceable in that State.
    (d) As required by section 18(f) of the Act, OSHA will continue to 
monitor the operations of the South Carolina State program to assure 
that the provisions of the State plan are substantially complied with 
and that the program remains at least as effective as the Federal 
program. Failure by the State to comply with its obligations may result 
in the revocation of the final determination under section 18(e), 
resumption of Federal enforcement, and/or proceedings for withdrawal of 
plan approval.

[52 FR 48111, Dec. 18, 1987, as amended at 62 FR 2560, Jan. 17, 1997; 65 
FR 36619, June 9, 2000]



Sec. 1952.96  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected

[[Page 27]]

and copied during normal business hours at the following locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, 200 Constitution Avenue NW, Room N3700, 
Washington, DC 20210;
Office of the Regional Administrator, Occupational Safety and Health 
Administration, U.S. Department of Labor, Atlanta Federal Center, 61 
Forsyth Street, SW, Room 6T50, Atlanta, Georgia 30303; and
Office of the Director, South Carolina Department of Labor, Licensing 
and Regulation, Koger Office Park, Kingstree Building, 110 Centerview 
Drive, P.O. Box 11329, Columbia, South Carolina 29210.

[65 FR 36619, June 9, 2000]



Sec. 1952.97  Changes to approved plan.

    (a) Legislation. (1) On March 29, 1994, the Assistant Secretary 
approved South Carolina's revised statutory penalty levels which are the 
same as the revised Federal penalty levels contained in section 17 of 
the Act as amended on November 5, 1990.
    (2) [Reserved]
    (b) The Voluntary Protection Program. On June 24, 1994, the 
Assistant Secretary approved South Carolina's plan supplement, which is 
generally identical to the Federal STAR Voluntary Protection Program. 
South Carolina's ``Palmetto'' VPP is limited to the STAR Program in 
general industry, excludes the MERIT AND DEMONSTRATION Programs and 
excludes the construction industry. Also, injury rates must be at or 
below 50 percent of the State industry average rather than the National 
industry average.
    (c) Temporary labor camps/field sanitation. Effective February 3, 
1997, the Assistant Secretary approved South Carolina's plan amendment, 
dated August 1, 1996, relinquishing coverage for the issues of field 
sanitation (29 CFR 1928.110) and temporary labor camps (29 CFR 1910.142) 
in agriculture (except for agricultural temporary labor camps associated 
with egg, poultry or red meat production, or the post-harvest processing 
of agricultural or horticultural commodities.) The Employment Standards 
Administration, U.S. Department of Labor, has assumed responsibility for 
enforcement of these Federal OSHA standards in agriculture in South 
Carolina pursuant to Secretary of Labor's Order 5-96, dated December 27, 
1996.

[59 FR 39257, Aug. 2, 1994, as amended at 62 FR 2560, Jan. 17, 1997]



                            Subpart D--Oregon



Sec. 1952.100  Description of the plan as initially approved.

    (a)(1) The plan identifies the Oregon Workmen's Compensation Board 
as the State agency designated to administer the plan. It adopts the 
definition of occupational safety and health issues expressed in 
Sec. 1902.2(c)(1) of this chapter. The plan contains a standards 
comparison of existing and proposed State standards with Federal 
standards. All proposed standards except those found in Secs. 1910.13, 
1910.14, 1910.15, and 1910.16 (ship repairing, shipbuilding, ship 
breaking and longshoring) will be adopted and enforced after public 
hearings within 1 year following approval of the plan.
    (2) The plan provides a description of personnel employed under a 
merit system; the coverage of employees of political subdivisions; 
procedures for the development and promulgation of standards; procedures 
for prompt and effective standards setting action for the protection of 
employees against new and unforeseen hazards; and procedures for the 
prompt restraint of imminent danger situations.
    (b)(1) The plan includes proposed draft legislation to be considered 
by the Oregon Legislature during its 1973 session amending chapter 654 
of Oregon Revised Statutes to bring it into conformity with the 
requirements of part 1902 of this chapter. Under the proposed 
legislation, the workmen's compensation board will have full authority 
to enforce and administer all laws and rules protecting employee health 
and safety in all places of employment in the State. The legislation 
further proposes to bring the State into conformity in areas such as 
variances and protection of employees from hazards.
    (2) The legislation is also intended to insure inspections in 
response to complaints; employer and employee representatives' 
opportunity to accompany inspectors and to call attention to possible 
violations before, during and after inspections; notification of

[[Page 28]]

employees or their representatives when no compliance action is taken as 
a result of alleged violations, including informal review; notification 
of employees of their protections; protection of employees against 
discharge or discrimination in terms and conditions of employment; 
adequate safeguards to protect trade secrets; provision for prompt 
notice to employers and employees of alleged violations of standards and 
abatement requirements; effective sanctions against employers for 
violations of standards and orders; employer right of review of alleged 
violations, abatement periods and proposed penalties to the workmen's 
compensation board and employee participation in review proceedings. The 
plan also proposes to develop a program to encourage voluntary 
compliance by employers and employees.
    (c) The plan includes a statement of the Governor's support for the 
legislative amendments and legal opinion that the draft legislation will 
meet the requirements of the Occupational Safety and Health Act of 1970 
and is consistent with the constitution and laws of Oregon. The plan 
sets out goals and provides a timetable for bringing it into full 
conformity with part 1902 upon enactment of the proposed legislation.
    (d) The Oregon plan includes the following documents as of the date 
of approval:
    (1) The plan description document with appendices.
    (2) Appendix G, the standards comparison.
    (3) Letter from M. Keith Wilson, Chairman, Workmen's Compensation 
Board to the Assistant Secretary, June 30, 1972, on product standards.
    (4) Letter from M. Keith Wilson to James Lake, Regional 
Administrator, June 30, 1972, clarifying employee sanction provisions.
    (5) Letter with attachments from M. Keith Wilson to the Assistant 
Secretary, September 5, 1972, clarifying several issues raised during 
the review process.
    (6) Letter from the commissioners of the workmen's compensation 
board to the Assistant Secretary, December 4, 1972, clarifying the 
remaining issues raised during the review process.
    (e) Also available for inspection and copying with the plan 
documents will be the public comments received and a transcript of the 
public hearing held September 27, 1972.

[37 FR 28630, Dec. 28, 1972. Redesignated at 52 FR 9162, Mar. 23, 1987, 
as amended at 59 FR 42495, Aug. 18, 1994]



Sec. 1952.101  Developmental schedule.

    The Oregon plan is developmental. The schedule of developmental 
steps as described in the plan is revised in a letter dated November 27, 
1973, from M. Keith Wilson, Chairman, Workman's Compensation Board to 
James Lake, Assistant Regional Director for OSHA and includes:
    (a) Introduction of the legislative amendments in the legislative 
session following approval of the plan. The legislation was passed and 
became effective July 1, 1973.
    (b) Complete revision of all occupational safety and health codes as 
proposed within one year after the proposed standards are found to be at 
least as effective by the Secretary of Labor.
    (c) Development of administrative rules and procedures, including 
rights and responsibilities of employers, employees and the Workmen's 
Compensation Board including regulations on variances, exposure to 
hazards and access to information on exposure to hazards by July 1, 
1974.
    (d) Training of present inspection personnel of the accident 
prevention division and the occupational health section by July 1, 1973. 
Selection and training of additional inspectors within one year of the 
effective date of the 1973-1975 budget.
    (e) Establishment of specific occupational safety and health goals 
by July 1, 1974. These goals will be reviewed and revised biannually.
    (f) Development and implementation of an affirmative action program 
by July 1, 1973.
    (g) Development and implementation of administrative rules relative 
to an on-site voluntary compliance consultation program by July 1, 1974.

[39 FR 11881, Apr. 1, 1974. Redesignated at 52 FR 9162, Mar. 23, 1987, 
and further redesignated at 59 FR 42495, Aug. 18, 1994]

[[Page 29]]



Sec. 1952.102  Completion of developmental steps and certification.

    (a)(1) In accordance with Sec. 1952.108(a), the Oregon Safe 
Employment Act, Senate Bill 44, amending Oregon Revised Statutes 654 and 
446 and other miscellaneous provisions, was signed by the Governor on 
July 22, 1973, and carried an effective date of July 1, 1973.
    (2) The following differences between the program described in 
Sec. 1952.105(b)(1) and the program authorized by the State law are 
approved:
    (i) By promulgation of the appropriate regulatory provision, Rule 
46-331, and by including a mandatory consultation requirement in its 
Field Compliance Manual, Oregon provides for employee participation, 
when there is no employee representative, by requiring the inspector to 
consult with employees.
    (ii) In accordance with ORS, 654.062(3), an additional written 
request from an employee is required in order to obtain a statement of 
the reasons why no citation was issued as a result of an employee 
complaint of unsafe work conditions, which will be subject to evaluation 
in its administration.
    (iii) Section 18 of Oregon's legislation authorizes a stay of the 
abatement date by operation of law pending a final order of the Board 
for nonserious violations and for serious violations when the abatement 
date of the serious violation is specifically contested. An expedited 
hearing will be requested for serious violations when the abatement date 
is contested.
    (3) The Oregon Safe Employment Act as last amended in the 1981 
legislative session included changes renaming the designated enforcement 
agency, establishment of a director for that agency, authority for 
requiring certain employers to establish safety and health committees, 
and limiting penalties for other-than-serious violations in temporary 
labor camps. The Assistant Secretary approved the amended legislation on 
September 15, 1982.
    (b) In accordance with the requirements of 29 CFR 1952.10 the Oregon 
State Poster with assurance submitted on September 2, 1975, was approved 
by the Assistant Secretary on November 5, 1975. The State's revised 
poster which implemented the assurance was approved by the Assistant 
Secretary on September 15, 1982.
    (c) In accordance with Sec. 1952.108(d) Oregon has completed the 
training as described.
    (d) Oregon has developed and implemented a computerized Management 
Information System.
    (e) In accordance with Sec. 1952.108(f) Oregon has developed and 
implemented an Affirmative Action Plan.
    (f) In accordance with Sec. 1952.108(e) a Statement of Goals and 
Objectives has been developed by the State and was approved by the 
Assistant Secretary on June 24, 1977.
    (g) The Oregon State Compliance Manual which is modeled after the 
Federal Field Operations Manual has been developed by the State, and was 
approved by the Assistant Secretary on June 24, 1977.
    (h) In accordance with the requirements of Sec. 1952.4, Oregon State 
recordkeeping and reporting regulations adopted on June 4, 1974, and 
subsequently revised, were approved by the Assistant Secretary on August 
28, 1980.
    (i) In accordance with Sec. 1952.108 (c) and (g), the Oregon 
Workers' Compensation Department adopted administrative regulations 
providing procedures for conduct and scheduling of inspections, 
extension of abatement dates, variances, employee complaints, posting of 
citations and notices, and voluntary compliance consultation in the 
public sector, effective July 1, 1974, with revisions incorporated in 
rules effective August 1, 1982 and August 13, 1982. These regulations 
with supplemental assurances were approved by the Assistant Secretary on 
September 15, 1982.
    (j) In accordance with Sec. 1952.108(c) the Oregon Workers' 
Compensation Board adopted rules effective December 20, 1973, governing 
practice and procedures for contested cases with revisions incorporated 
in rules effective August 2, 1982. These rules were approved by the 
Assistant Secretary on September 15, 1982.
    (k) The Oregon Workers' Compensation Department submitted rules of 
the Oregon Bureau of Labor and Industries, the agency assigned 
responsibility for

[[Page 30]]

investigation of complaints of discrimination under the Oregon Safe 
Employment Act. These regulations and rule effective June 21, 1982, and 
March 12, 1982 with supplemental assurance were approved by the 
Assistant Secretary on September 15, 1982.
    (l) In accordance with Sec. 1902.34 of this chapter, the Oregon 
occupational safety and health plan was certified effective September 
15, 1982, as having completed all developmental steps specified in the 
plan as approved on December 28, 1972, on or before December 28, 1975. 
This certification attests to structural completion, but does not render 
judgment on adequacy of performance.

[40 FR 24523, June 9, 1975, as amended at 41 FR 8955, Mar. 2, 1976; 41 
FR 23671, June 11, 1976; 42 FR 34281, July 29, 1977; 45 FR 60430, Sept. 
12, 1980; 47 FR 42104, 42106, Sept. 24, 1982. Redesignated at 52 FR 
9162, Mar. 23, 1987, and further redesignated at 59 FR 42495, Aug. 18, 
1994]



Sec. 1952.103  Compliance staffing benchmarks.

    Under the terms of the 1978 Court Order in AFL-CIO v. Marshall, 
compliance staffing levels (``benchmarks'') necessary for a ``fully 
effective'' enforcement program were required for each State operating 
an approved State plan. In October 1992, Oregon completed, in 
conjunction with OSHA, a reassessment of the health staffing level 
initially established in 1980 and proposed a revised health benchmark of 
28 health compliance officers. Oregon elected to retain the safety 
benchmark level established in the 1980 Report to the Court of the U.S. 
District Court for the District of Columbia in 1980 of 47 safety 
compliance officers. After opportunity for public comment and service on 
the AFL-CIO, the Assistant Secretary approved these revised staffing 
requirements on August 11, 1994.

[59 FR 42495, Aug. 18, 1994]



Sec. 1952.104  [Reserved]



Sec. 1952.105  Level of Federal enforcement.

    (a) Pursuant to Secs. 1902.20(b)(1)(iii) and 1954.3 of this chapter 
under which an operational status agreement has been entered into with 
Oregon, effective January 23, 1975, and as amended, effective December 
12, 1983 and November 27, 1991; and based on a determination that Oregon 
is operational in the issues covered by the Oregon occupational safety 
and health plan, discretionary Federal enforcement authority under 
section 18(e) of the Act, 29 U.S.C. 667(c), will not be initiated with 
regard to Federal occupational safety and health standards in issues 
covered under 29 CFR parts 1910, 1926 and 1928 except as provided in 
this section. The U.S. Department of Labor will continue to exercise 
authority among other things with regard to:
    (1) Complaints filed with the U.S. Department of Labor alleging 
discrimination under section 11(c) of the Act (29 U.S.C. 660(c));
    (2) Standards in the maritime issues covered by 29 CFR Parts 1915, 
1917, 1918, and 1919 (shipyards, marine terminals, longshoring, and gear 
certification), and enforcement of general industry and construction 
standards (29 CFR Parts 1910 and 1926) appropriate to hazards found in 
these employments, which have been specifically excluded from coverage 
under the plan. This includes: employment on the navigable waters of the 
U.S.; shipyard and boatyard employment on or immediately adjacent to the 
navigable waters--including floating vessels, dry docks, graving docks 
and marine railways--from the front gate of the work site to the U.S. 
statutory limits; longshoring, marine terminal and marine grain terminal 
operations, except production or manufacturing areas and their storage 
facilities; construction activities emanating from or on floating 
vessels on the navigable waters of the U.S.; commercial diving 
originating from an object afloat a navigable waterway; and all other 
private sector places of employment on or adjacent to navigable waters 
whenever the activity occurs on or from the water;
    (3) Enforcement of new Federal standards until the State adopts a 
comparable standard;
    (4) Enforcement in situations where the State is refused entry and 
is unable to obtain a warrant or enforce its right of entry;
    (5) Enforcement of unique and complex standards as determined by the 
Assistant Secretary;

[[Page 31]]

    (6) Enforcement in situations when the State is unable to exercise 
its enforcement authority fully or effectively;
    (7) Enforcement of occupational safety and health standards at all 
private sector establishments, including tribal and Indian-owned 
enterprises, on all Indian and non-Indian lands within the currently 
established boundaries of all Indian reservations, including the Warm 
Springs and Umatilla reservations, and on lands outside these 
reservations that are held in trust by the Federal government for these 
tribes. (Businesses owned by Indians or Indian tribes that conduct work 
activities outside the tribal reservation or trust lands are subject to 
the same jurisdiction as non-Indian owned businesses.);
    (8) Enforcement of occupational safety and health standards at 
worksites located within Federal military reservations, except private 
contractors working on U.S. Army Corps of Engineers dam construction 
projects, including reconstruction of docks or other appurtenances;
    (9) Investigations and inspections for the purpose of the evaluation 
of the plan under sections 18(e) and (f) of the Act (29 U.S.C. 667(e) 
and (f)); and
    (10) Enforcement of occupational safety and health standards with 
regard to all Federal government employers and employees; and the U.S. 
Postal Service (USPS), including USPS employees, and contract employees 
and contractor-operated facilities engaged in USPS mail operations.
    (b) The Regional Administrator for Occupational Safety and Health 
will make a prompt recommendation for resumption of exercise of Federal 
enforcement authority under section 18(e) of the Act (29 U.S.C. 667(e)) 
whenever, and to the degree, necessary to assure occupational safety and 
health protection to employees in the State of Oregon.

[51 FR 27024, July 29, 1986. Redesignated at 52 FR 9162, Mar. 23, 1987, 
and further redesignated at 59 FR 42495, Aug. 18, 1994; 62 FR 49909, 
Sept. 24, 1997; 65 FR 36619, June 9, 2000]



Sec. 1952.106  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected and copied during normal business hours at the following 
locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, Room N3700, 200 Constitution Avenue, N.W., 
Washington, D.C. 20210;
Office of the Regional Administrator, Occupational Safety and Health 
Administration, U.S. Department of Labor, Suite 715, 1111 Third Avenue, 
Seattle, Washington 98101-3212; and
Oregon Occupational Safety and Health Division, Department of Consumer 
and Business Services, Room 430, Labor and Industries Building, 350 
Winter Street NE, Salem, Oregon 97310.

[59 FR 42495, Aug. 18, 1994]



Sec. 1952.107  Changes to approved plans.

    In accordance with part 1953 of this chapter, the following Oregon 
plan changes were approved by the Assistant Secretary:
    (a) The State submitted a revised field operations manual patterned 
after the Federal field operations manual, including modifications, in 
effect February 11, 1985, which superseded the State's previously 
approved manual. The Assistant Secretary approved the manual on July 29, 
1986.
    (b) The State submitted an industrial hygiene technical manual 
patterned after the Federal manual, including modifications, in effect 
March 30, 1984. The Assistant Secretary approved the manual on July 29, 
1986.
    (c) The State submitted an inspection scheduling system which 
schedules inspections based on lists of employers with a high incidence 
of workers compensation claims, whose operations are within industries 
with high injury rates, or which have a high potential for health 
problems. The Assistant Secretary approved the supplement on July 29, 
1986.
    (d) The State submitted several changes to its administrative 
regulations concerning personal sampling, petition to modify abatement 
dates, penalties for repeat violations, and recordkeeping exemptions. 
The Assistant Secretary approved these changes on July 29, 1986.

[[Page 32]]

    (e) Legislation. (1) On March 29, 1994, the Acting Assistant 
Secretary approved Oregon's revised statutory penalty levels as enacted 
subject to further action by the State in 1995 to correct the State's 
omission of revisions of the penalty for posting violations. Aside from 
posting penalties, Oregon's revised penalty levels are the same as the 
revised Federal penalty levels contained in section 17 of the Act as 
amended on November 5, 1990.
    (2) [Reserved]
    (f) Oregon's State plan changes excluding coverage under the plan of 
all private sector employment (including tribal and Indian-owned 
enterprises) on Umatilla Indian reservation or trust lands, by letters 
of April 29 and July 14, 1997 (see Secs. 1952.105); extending coverage 
under the plan to Superfund sites and private contractors working on 
U.S. Army Corps of Engineers dam construction projects, as noted in a 
1992 Memorandum of Understanding; and specifying four (4) unusual 
circumstances where Federal enforcement authority may be exercised, as 
described in a 1991 addendum to the State's operational status 
agreement, were approved by the Acting Assistant Secretary on September 
24, 1997.
    (g) Oregon's State plan changes extending Federal enforcement 
jurisdiction to shore side shipyard and boatyard employment, as 
described in a 1998 Memorandum of Understanding and addendum to the 
State's operational status agreement; and to all private sector 
employment, including tribal and Indian-owned enterprises, on all Indian 
reservations, including establishments on trust lands outside of 
reservations, as described in a separate 1998 addendum, were approved by 
the Assistant Secretary on January 6, 1999.

[51 FR 27025, July 29, 1986. Redesignated at 52 FR 9162, Mar. 23, 1987, 
as amended at 59 FR 14555, Mar. 29, 1994. Further redesignated at 59 FR 
42495, Aug. 18, 1994; 62 FR 49910, Sept. 24, 1997; 65 FR 36620, June 9, 
2000]



                             Subpart E--Utah



Sec. 1952.110  Description of the plan as initially approved.

    (a) The plan identifies the Utah State Industrial Commission as the 
State agency designated to administer the plan throughout the State. It 
defines the covered occupational safety and health issues as defined by 
the Secretary of Labor in 29 CFR 1902.2(c)(1). The plan states that the 
Utah Industrial Commission currently is exercising statewide inspection 
authority to enforce many State standards. It describes procedures for 
the development and promulgation of additional safety standards, rule 
making power for enforcement of standards, laws, and orders in all 
places of employment in the State; the procedures for prompt restraint 
or elimination of imminent danger conditions; and procedures for 
inspection in response to complaints. The plan includes proposed draft 
legislation to be considered by the Utah Legislature during its 1973 
session amending title 35, chapter 1 of the Utah State Code and related 
provisions, to bring them into conformity with the requirements of part 
1902. Under this legislation all occupational safety and health 
standards and amendments thereto which have been promulgated by the 
Secretary of Labor, except those found in 29 CFR 1910.13, 1910.14, 
1910.15, and 1910.16 (ship repairing, shipbuilding, shipbreaking, and 
longshoring) will, after public hearing by the Utah agency be adopted 
and enforced by that agency. The plan sets forth a timetable for the 
proposed adoption of standards. The legislation will give the Utah 
Industrial Commission full authority to administer and enforce all laws, 
rules, and orders protecting employee safety and health in all places of 
employment in the State. It also proposes to bring the plan into 
conformity in procedures for providing prompt and effective standards 
for the protection of employees against new and unforeseen hazards and 
for furnishing information to employees on hazards, precautions, 
symptoms, and emergency treatment; and procedures for variances and the 
protection of employees from hazards. The proposed legislation will 
ensure employer and employee representatives an opportunity to accompany 
inspectors and call attention to possible violations before, during, and 
after inspections; protection of employees against discharge

[[Page 33]]

or discrimination in terms and conditions of employment; notice to 
employees of their protections and obligations; adequate safeguards to 
protect trade secrets; prompt notice to employers and employees of 
alleged violations of standards and abatement requirements; effective 
sanctions against employers; and employer's right to review alleged 
violations, abatement periods, and proposed penalties with opportunity 
for employee participation in the review proceedings.
    (b) Included in the plan is a statement of the Governor's support 
for the proposed legislation and a statement of legal opinion that it 
will meet the requirements of the Occupational Safety and Health Act of 
1970, and is consistent with the Constitution and laws of Utah. The plan 
sets out goals and provides a timetable for bringing it into full 
conformity with part 1902 of this chapter upon enactment of the proposed 
legislation by the State legislature.
    (c) The plan includes the following documents as of the date of 
approval:
    (1) The plan with appendixes.
    (2) A letter from Carlyle F. Gronning, Chairman of the Utah 
Industrial Commission to the Office of State Programs with an attached 
memo sheet of clarifications dated October 27, 1972.
    (3) A letter from Carlyle F. Gronning to the Office of State 
Programs dated December 3, 1972, clarifying issues raised in the plan 
review.
    (4) A letter from Carlyle F. Gronning to the Office of Federal and 
State Operations dated December 11, 1972, clarifying the remaining 
issues raised in the review process.

[38 FR 1179, Jan. 10, 1973, as amended at 50 FR 28780, July 16, 1985]



Sec. 1952.111  Developmental schedule.

    The Utah plan is developmental. The following is the schedule of 
developmental steps provided by the plan:
    (a) Introduction of resulting legislation in State Legislature 
during January 1973.
    (b) Expected enactment of the enabling legislation by March 1973.
    (c) Formal adoption of Federal standards and revocation of existing 
Utah State standards by September 1, 1973.
    (d) Adoption of safety standards for agriculture by September 1, 
1974.
    (e) Formal adoption of parts 1903, 1904, and 1905 of this chapter as 
rules and regulations of Utah by July 1974.
    (f) Effective date of new standards, commencement of State 
enforcement by September 1973.
    (g) A management information system by July 1, 1974.

[38 FR 1179, Jan. 10, 1973. Redesignated at 50 FR 28780, July 16, 1985]



Sec. 1952.112  Completion of developmental steps and certification.

    (a) In accordance with the requirements of 29 CFR 1952.110, the Utah 
State poster was approved by the Assistant Secretary on January 7, 1976.
    (b) In accordance with Sec. 1952.113(g), the State has developed and 
implemented a Management Information System.
    (c) In accordance with the requirements of 29 CFR 1952.110(b), the 
Utah Occupational Safety and Health Act, (chapter 9 of title 35 of the 
Utah State Code) effective July 1, 1973, was approved July 30, 1974.
    (d) In accordance with the requirements of 29 CFR 1952.113(e), State 
regulations substantially identical to 29 CFR parts 1903, 1904, and 
1905, have been adopted by the State and approved by the Assistant 
Secretary on March 3, 1976.
    (e) The State has developed and implemented rules of procedure for 
its review commission, consistent with present law.
    (f) The State plan has been amended to include an Affirmative Action 
Plan outlining the State's policy of equal employment opportunity.
    (g) In accordance with 29 CFR 1952.113 Utah has promulgated 
standards at least as effective as comparable Federal standards as set 
out in 41 FR 11635, regarding all issues covered by the plan.
    (h) In accordance with Sec. 1902.34 of this chapter, the Utah 
occupational safety and health plan was certified, effective as of the 
date of publication on November 19, 1976, as having completed all 
developmental steps specified in the plan

[[Page 34]]

as approved on January 4, 1973 on or before January 3, 1976.

[41 FR 1904, Jan. 13, 1976, as amended at 41 FR 10064, Mar. 9, 1976; 41 
FR 15005, Apr. 9, 1976; 41 FR 46599, Oct. 22, 1976; 41 FR 51016, Nov. 
19, 1976. Redesignated and amended at 50 FR 28780, July 16, 1985]



Sec. 1952.113  Compliance staffing benchmarks.

    Under the terms of the 1978 Court Order in AFL-CIO v. Marshall, 
compliance staffing levels (benchmarks) necessary for a ``fully 
effective'' enforcement program were required to be established for each 
State operating an approved State plan. In September 1984, Utah, in 
conjunction with OSHA, completed a reassessment of the levels initially 
established in 1980 and proposed revised compliance staffing benchmarks 
of 10 safety and 9 health compliance officers. After opportunity for 
public comments and service on the AFL-CIO, the Assistant Secretary 
approved these revised staffing requirements effective July 16, 1985.

[50 FR 28780, July 16, 1985]



Sec. 1952.114  Final approval determination.

    (a) In accordance with section 18(e) of the Act and procedures in 29 
CFR part 1902, and after determination that the State met the ``fully 
effective'' compliance staffing benchmarks as revised in 1984 in 
response to a Court Order in AFL-CIO v. Marshall (CA 74-406), and was 
satisfactorily providing reports to OSHA through participation in the 
Federal-State Unified Management Information System, the Assistant 
Secretary evaluated actual operations under the Utah State plan for a 
period of at least one year following certification of completion of 
developmental steps (41 FR 51014). Based on the 18(e) Evaluation Report 
for the period of October 1, 1982 through March 31, 1984, and after 
opportunity for public comment, the Assistant Secretary determined that 
in operation the State of Utah's occupational safety health program is 
at least as effective as the Federal program in providing safe and 
healthful employment and places of employment and meets the criteria for 
final State plan approval in section 18(e) of the Act and implementing 
regulations at 29 CFR part 1902. Accordingly, the Utah plan was granted 
final approval and concurrent Federal enforcement authority was 
relinquished under section 18(e) of the Act effective July 16, 1985.
    (b) Except as otherwise noted, the plan which has received final 
approval covers all activities of employers and all places of employment 
in Utah. The plan does not cover private sector maritime employment; 
employment on Hill Air Force Base; Federal government employers and 
employees; the U.S. Postal Service (USPS), including USPS employees, and 
contract employees and contractor-operated facilities engaged in USPS 
mail operations; the enforcement of the field sanitation standard, 29 
CFR 1928.110, and the enforcement of the temporary labor camps standard, 
29 CFR 1910.142, with respect to any agricultural establishment where 
employees are engaged in ``agricultural employment'' within the meaning 
of the Migrant and Seasonal Agricultural Worker Protection Act, 29 
U.S.C. 1802(3), regardless of the number of employees, including 
employees engaged in hand packing of produce into containers, whether 
done on the ground, on a moving machine, or in a temporary packing shed, 
except that Utah retains enforcement responsibility over agricultural 
temporary labor camps for employees engaged in egg, poultry, or red meat 
production, or the post-harvest processing of agricultural or 
horticultural commodities.
    (c) Utah is required to maintain a State program which is at least 
as effective as operations under the Federal program; to submit plan 
supplements in accordance with 29 CFR part 1953; to allocate sufficient 
safety and health enforcement staff to meet the benchmarks for State 
staffing established by the U.S. Department of Labor, or any revisions 
to those benchmarks; and, to furnish such reports in such form as the 
Assistant Secretary may from time to time require.

[50 FR 28780, July 16, 1985, as amended at 62 FR 2560, Jan. 17, 1997; 65 
FR 36620, June 9, 2000]

[[Page 35]]



Sec. 1952.115  Level of Federal enforcement.

    (a) As a result of the Assistant Secretary's determination granting 
final approval of the Utah plan under section 18(e) of the Act, 
effective July 16, 1985, occupational safety and health standards which 
have been promulgated under section 6 of the Act do not apply with 
respect to issues covered under the Utah plan. This determination also 
relinquishes concurrent Federal OSHA authority to issue citations for 
violations of such standards under sections 5(a)(2) and (9) of the Act; 
to conduct inspections and investigations under section 8 (except those 
necessary to conduct evaluation of the plan under section 18(f) and 
other inspections, investigations, or proceedings necessary to carry out 
Federal responsibilities not specifically preempted by section 18(e)); 
to conduct enforcement proceedings in contested cases under section 10; 
to institute proceedings to correct imminent dangers under section 13; 
and to propose civil penalties or initiate criminal proceedings for 
violations of the Federal Act under section 17. The Assistant Secretary 
retains jurisdiction under the above provisions in any proceeding 
commenced under section 9 or 10 before the effective date of the 18(e) 
determination.
    (b) In accordance with section 18(e), final approval relinquishes 
Federal OSHA authority only with regard to occupational safety and 
health issues covered by the Utah plan. OSHA retains full authority over 
issues which are not subject to State enforcement under the plan. Thus, 
Federal OSHA retains its authority relative to safety and health 
enforcement in private sector maritime activities and will continue to 
enforce all provisions of the Act, rules or orders, and all Federal 
standards, current or future, specifically directed to maritime 
employment (29 CFR Part 1915, shipyard employment; Part 1917, marine 
terminals; Part 1918, longshoring; Part 1919, gear certification), as 
well as provisions of general industry and construction standards (29 
CFR Parts 1910 and 1926) appropriate to hazards found in these 
employments. Federal jurisdiction is retained and exercised by the 
Employment Standards Administration, U.S. Department of Labor, 
(Secretary's Order 5-96, dated December 27, 1996) with respect to the 
field sanitation standard, 29 CFR 1928.110, and the enforcement of the 
temporary labor camps standard, 29 CFR 1910.142, in agriculture, as 
described in Sec. 1952.114(b). Federal jurisdiction is also retained 
with regard to: all employment on the Hill Air Force Base; Federal 
government employers and employees; and the U.S. Postal Service (USPS), 
including USPS employees, and contract employees and contractor-operated 
facilities engaged in USPS mail operations. In addition, any hazard, 
industry, geographical area, operation or facility over which the State 
is unable to effectively exercise jurisdiction for reasons not related 
to the required performance or structure of the plan shall be deemed to 
be an issue not covered by the finally approved plan, and shall be 
subject to Federal enforcement. Where enforcement jurisdiction is shared 
between Federal and State authorities for a particular area, project, or 
facility, in the interest of administrative practicability, Federal 
jurisdiction may be assumed over the entire project or facility. In 
either of the two aforementioned circumstances, Federal enforcement may 
be exercised immediately upon agreement between Federal and State OSHA.
    (c) Federal authority under provisions of the Act not listed in 
section 18(e) is unaffected by final approval of the plan. Thus, for 
example, the Assistant Secretary retains his authority under section 
11(c) of the Act with regard to complaints alleging discrimination 
against employees because of the exercise of any right afforded to the 
employee by the Act, although such complaints may be referred to the 
State for investigation. The Assistant Secretary also retains his 
authority under section 6 of the Act to promulgate, modify or revoke 
occupational safety and health standards which address the working 
conditions of all employees, including those in States which have 
received an affirmative 18(e) determination, although such standards may 
not be Federally applied. In the event that the State's 18(e) status is 
subsequently withdrawn and Federal authority reinstated, all

[[Page 36]]

Federal standards, including any standards promulgated or modified 
during the 18(e) period, would be Federally enforceable in that State.
    (d) As required by section 18(f) of the Act, OSHA will continue to 
monitor the operations of the Utah State program to assure that the 
provisions of the State plan are substantially complied with and that 
the program remains at least as effective as the Federal program. 
Failure by the State to comply with its obligations may result in the 
revocation of the final determination under section 18(e), resumption of 
Federal enforcement and/or proceedings for withdrawal of plan approval.

[50 FR 28780, July 16, 1985, as amended at 62 FR 2560, Jan. 17, 1997; 65 
FR 36620, June 9, 2000]



Sec. 1952.116  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected and copied during normal business hours at the following 
locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, 200 Constitution Avenue NW., Room N3700, 
Washington, DC 20210;
Office of the Regional Administrator, Occupational Safety and Health 
Administration, U.S. Department of Labor, 1999 Broadway Suite 1690, 
Denver, Colorado 80202-5716; and
Office of the Commissioner, Labor Commission of Utah, 160 East 300 
South, 3rd Floor, P.O. Box 146650, Salt Lake City, Utah 84114-6650.

[65 FR 36620, June 9, 2000]



Sec. 1952.117  Changes to approved plans.

    In accordance with part 1953 of this chapter, the following Utah 
plan changes were approved by the Assistant Secretary:
    (a) Legislation. (1) The State submitted an amendment to the Utah 
Administrative Rulemaking Act (chapter 46a, title 63, Utah Code 
Annotated 1953), which became effective on April 29, 1985, which 
provides for rulemaking procedures similar to those of Federal OSHA in 
sections pertaining to expansion of definitions; availability of 
proposed rule to the public; a set time period allowed for public 
comment; the time period provided for a requested hearing to be held; 
and, provisions for determining the validity or applicability of a rule 
in an action for declaratory judgment. The Assistant Secretary approved 
the amendment on October 24, 1988.
    (2) The State submitted amendments to its Occupational Safety and 
Health Act (chapter 69, Utah Code Annotated 1953), which became 
effective on April 29, 1985, which provide for seeking administrative 
warrants, clarify review procedures for the hearing examiner, provide 
for issuing a permanent standard no later than 120 days after 
publication of an emergency standard, and remove inconsistent 
requirements for adopting rules and regulations. The Assistant Secretary 
approved the amendments on October 24, 1988.
    (3) On March 29, 1994, the Assistant Secretary approved Utah's 
revised statutory penalty levels which are the same as the revised 
Federal penalty levels contained in section 17 of the Act as amended on 
November 5, 1990.
    (b) The Voluntary Protection Program. On December 30, 1993, the 
Assistant Secretary approved Utah's plan supplement, which is generally 
identical to the Federal Voluntary Protection Program.
    (c) Temporary labor camps/field sanitation. Effective February 3, 
1997, the Assistant Secretary approved Utah's plan amendment, dated July 
31, 1996, relinquishing coverage for the issues of field sanitation (29 
CFR 1928.110) and temporary labor camps (29 CFR 1910.142) in agriculture 
(except for agricultural temporary labor camps associated with egg, 
poultry or red meat production, or the post-harvest processing of 
agricultural or horticultural commodities.) The Employment Standards 
Administration, U.S. Department of Labor, has assumed responsibility for 
enforcement of these Federal OSHA standards in agriculture in Utah 
pursuant to Secretary of Labor's Order 5-96, dated December 27, 1996.

[53 FR 43689, Oct. 28, 1988, as amended at 59 FR 2295, Jan. 14, 1994; 59 
FR 14555, Mar. 29, 1994; 62 FR 2561, Jan. 17, 1997]

[[Page 37]]



                          Subpart F--Washington

    Source: 38 FR 2422, Jan. 26, 1973, unless otherwise noted.



Sec. 1952.120  Description of the plan.

    (a)(1) The plan identifies the Department of Labor and Industries as 
the State agency designated to administer the plan throughout the State. 
It adopts the definition of occupational safety and health issues 
expressed in Sec. 1902.2(c)(1) of this chapter. The plan contains a 
standards comparison of existing and proposed State standards with 
Federal standards. All standards, except those found in 29 CFR parts 
1915, 1916, 1917, and 1918 (ship repairing, shipbuilding, shipbreaking 
and longshoring) will be adopted and enforced after public hearings 
within 1 year after the standards are found to be at least as effective 
by the Secretary of Labor.
    (2) The plan provides a description of personnel employed under a 
merit system; the coverage of employees of political subdivisions, 
procedures for the development and promulgation of standards, including 
standards for protection of employees against new and unforeseen 
hazards; and procedures for prompt restraint or elimination of imminent 
danger situations.
    (b)(1) The plan includes proposed draft legislation to be considered 
by the Washington Legislature during its 1973 legislative session 
creating a new chapter in title 49, Revised Code of Washington and 
repealing existing provisions, to bring it into conformity with the 
requirements of part 1902. Under the proposed legislation the Department 
of Labor and Industries will have full authority to enforce and 
administer laws respecting safety and health of employees in all 
workplaces of the State. The legislation further proposes to bring the 
State into conformity in areas such as variances and protection of 
employees from hazards.
    (2) The legislation is also intended to insure inspections in 
response to complaints; give employer and employee representatives an 
opportunity to accompany inspectors in order to aid inspections; 
notification of employees or their representatives when no compliance 
action is taken as a result of alleged violations, including informal 
review; notification of employees of their protections and obligations; 
protection of employees against discharge or discrimination in terms and 
conditions of employment; adequate safeguards to protect trade secrets; 
provision for prompt notice to employers and employees of alleged 
violations of standards and abatement requirements; effective sanctions 
against employers for violations of standards and orders; employer right 
of review to the Board of Industrial Insurance Appeals and then to the 
courts, and employee participation in review proceedings. The plan also 
proposes to develop a program to encourage voluntary compliance by 
employers and employees, including provision for on-site consultations.
    (c) The plan includes a statement of the Governor's support for the 
legislation and a legal opinion from the State attorney general that the 
legislation will meet the requirements of the Occupational Safety and 
Health Act of 1970 and is consistent with the Constitution and laws of 
Washington. The plan sets out goals and provides a timetable for 
bringing it into full conformity with part 1902 upon enactment of the 
proposed legislation.
    (d) The Washington plan includes the following documents as of the 
date of approval:
    (1) The plan description documents including draft legislation and 
appendices in two volumes;
    (2) Appendix 18, Standards Comparison;
    (3) Letter from William C. Jacobs, Director, Department of Labor and 
Industries to James W. Lake, Assistant Regional Director, OSHA, August 
11, 1972, submitting justifications for discretionary sanctions for 
serious violations and changing section 18(5) of WISHA to conform to the 
mandatory civil penalty for posting violations under OSHA;
    (4) Letter from John E. Hillier, Supervisor of Safety, Department of 
Labor and Industries to Thomas C. Brown, Director, Office of Federal and 
State Operations, August 19, 1972, submitting justifications on the 
sanction system and the review procedure in the Washington plan;
    (5) Letter from William C. Jacobs to Thomas C. Brown, September 19, 
1972,

[[Page 38]]

justifying the sanction system as proposed by Washington;
    (6) Letter from John E. Hillier to Thomas C. Brown, October 2, 1972, 
providing a detailed explanation of the procedure for review of 
citations proposed by Washington;
    (7) Letter from Stephen C. Way, Assistant Attorney General to Thomas 
C. Brown, October 19, 1972, clarifying several issues raised during the 
review process including revision in the draft legislation;
    (8) Letter from Stephen C. Way to the Assistant Secretary, January 
5, 1973, clarifying most of the remaining issues raised during the 
review process;
    (9) Letter from William C. Jacobs to the Assistant Secretary, 
January 12, 1973, revising the penalty structure in the draft 
legislation.
    (e) The public comments will also be available for inspection and 
copying with the plan documents.



Sec. 1952.121  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected and copied during normal business hours at the following 
locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, 200 Constitution Avenue NW., Room N3700, 
Washington, DC 20210;
Office of the Regional Administrator, Occupational Safety and Health 
Administration, U.S. Department of Labor, Suite 715, 1111 Third Avenue, 
Seattle, Washington, 98101-3212;
Office of the Director, Washington Department of Labor and Industries, 
General Administration Building, P.O. Box 44001, Olympia, Washington 
98504-4001; and
Office of the Director, Washington Department of Labor and Industries, 
General Administration Building, 7273 Linderson Way, SW., Tumwater, 
Washington, 98502.

[65 FR 36620, June 9, 2000]



Sec. 1952.122  Level of Federal enforcement.

    (a) Pursuant to Secs. 1902.20(b)(1)(iii) and 1954.3 of this chapter 
under which an agreement has been entered into with Washington, 
effective May 30, 1975, and amended several times effective October 2, 
1979, May 29, 1981, April 3, 1987, and October 27, 1989; and based on a 
determination that Washington is operational in the issues covered by 
the Washington occupational safety and health plan, discretionary 
Federal enforcement authority under section 18(e) of the Act (29 U.S.C. 
667(e)) will not be initiated with regard to Federal occupational safety 
and health standards in issues covered under 29 CFR Parts 1910 and 1926, 
except as provided in this section. The U.S. Department of Labor will 
continue to exercise authority, among other things, with regard to:
    (1) Enforcement of new Federal standards until the State adopts a 
comparable standard;
    (2) Enforcement of all Federal standards, current and future, in the 
maritime issues covered by 29 CFR Parts 1915, 1917, 1918, and 1919 
(shipyards, marine terminals, longshoring, and gear certification), and 
enforcement of general industry and construction standards (29 CFR Parts 
1910 and 1926) appropriate to hazards found in these employments, as 
they relate to employment under the exclusive jurisdiction of the 
Federal government on the navigable waters of the United States, 
including but not limited to dry docks or graving docks, marine railways 
or similar conveyances (e.g., syncrolifts and elevator lifts), fuel 
operations, drilling platforms or rigs, dredging and pile driving, and 
diving;
    (3) Complaints and violations of the discrimination provisions of 
section 11(c) of the Act (29 U.S.C. 660(c));
    (4) Enforcement in situations where the State is refused entry and 
is unable to obtain a warrant or enforce its right of entry;
    (5) Enforcement of unique and complex standards as determined by the 
Assistant Secretary;
    (6) Enforcement in situations when the State is unable to exercise 
its enforcement authority fully or effectively;
    (7) Enforcement of occupational safety and health standards within 
the borders of all military reservations;
    (8) Enforcement at establishments of employers who are enrolled 
members of the Yakima Indian Nation, where such employers' 
establishments are located within the Yakima reservation;
    (9) Enforcement at Tribally-owned establishments or at 
establishments

[[Page 39]]

owned by enrolled members of the Colville Confederated Tribes, where 
such establishments are located within the Colville reservation;
    (10) Investigations and inspections for the purpose of evaluation of 
the Washington plan under sections 18(e) and (f) of the Act (29 U.S.C. 
667(e) and (f)); and
    (11) Enforcement of occupational safety and health standards with 
regard to all Federal government employers and employees; and the U.S. 
Postal Service (USPS), including USPS employees, and contract employees 
and contractor-operated facilities engaged in USPS mail operations.
    (b) The OSHA Regional Administrator will make a prompt 
recommendation for the resumption of the exercise of Federal enforcement 
authority under section 18(e) of the Act (29 U.S.C. 667(e)) whenever, 
and to the degree, necessary to assure occupational safety and health 
protection to employees in Washington.

[65 FR 36621, June 9, 2000]



Sec. 1952.123  Developmental schedule.

    The Washington State plan is developmental. The following is the 
developmental schedule as provided by the plan:
    (a) Introduction of the legislation in the 1973 Legislative Session;
    (b) Public hearings and promulgation of occupational safety and 
health standards within 1 year after the proposed standards are found to 
be at least as effective by the Secretary of Labor;
    (c) Promulgation and adoption of rules and regulations concerning 
procedures for assuming all obligations and functions arising from the 
legislation within 1 year of its effective date;
    (d) Development and implementation of a data processing system 
(M.I.S.) 6 months after approval of the plan;
    (e) Achievement of training objectives by December 31, 1973;
    (f) Upgrading of the Division of Safety personnel following 
legislative action on recommendations submitted to the 1973 Legislature.



Sec. 1952.124  Completion of developmental steps and certification.

    (a) In accordance with the requirements of Sec. 1952.123(a) the 
Washington Industrial Safety and Health Act of 1973, hereinafter 
referred to as WISHA (S.B. 2386, RCW chapter 49.17), signed by the 
Governor on March 9, 1973, effective on June 7, 1973, was approved July 
3, 1974 (39 FR 25326).
    (b) In accordance with the requirements of Sec. 1952.10, the 
Washington State Poster submitted on October 6, 1975, was approved by 
the Assistant Secretary on December 17, 1975. In accordance with the 
State's formal assurance, the poster was revised, effective June 1, 
1982, to specify that public employees can only file discrimination 
complaints with the State because Federal jurisdiction under section 
11(c) of the Act does not apply to State public employees. This revised 
poster was approved by the Assistant Secretary on August 3, 1983.
    (c) The Washington State Compliance Operations Manual, modeled after 
the Federal Field Operations Manual, was developed by the State and was 
approved by the Assistant Secretary on March 19, 1976. The manual was 
subsequently revised on July 23, October 20, and December 1980, and was 
approved by the Assistant Secretary on January 26, 1982. A March 1, 
1983, revision to the manual which provided clarification of the 
difference between temporary and permanent variances in accordance with 
State formal assurances was approved by the Assistant Secretary on 
August 3, 1983.
    (d) In accordance with Sec. 1952.123(c), Washington regulations 
covering Reassumption of Jurisdiction were adopted by June 7, 1974, and 
were approved by the Assistant Secretary on March 19, 1976.
    (e) In accordance with Sec. 1952.123(e) Washington has completed the 
training as described in this section.
    (f) In accordance with Sec. 1952.123(d) Washington has developed and 
implemented a computerized Management Information System.
    (g) In accordance with Sec. 1952.123(f) Washington has completed the 
upgrading of salaries of safety personnel.
    (h) In accordance with Sec. 1952.123(c) Washington has adopted rules 
and regulations covering recordkeeping and reporting requirements.
    (i) An industrial hygiene operations manual, effective March 1, 
1980, with

[[Page 40]]

revisions effective July 1 and September 21, 1981, modeled after the 
Federal manual was approved by the Assistant Secretary on January 26, 
1982.
    (j) In accordance with Sec. 1952.123(c), the Washington Department 
of Labor and Industries adopted administrative regulations providing 
procedures for conduct and scheduling of inspections, extension of 
abatement dates, variances, employee complaints of hazards and 
discrimination, posting of citations and notices, effective May 14, 
1975, and revisions effective December 31, 1980, and July 22, 1981. 
Likewise, the Washington Board of Industrial Insurance Appeals adopted 
rules effective April 4, 1975, governing practice and procedure for 
contested cases with revision effective March 26, 1976. These 
regulations and rules were approved by the Assistant Secretary on 
January 26, 1982. In accordance with State formal assurances the State 
added provision to the regulations effective July 11, 1982, to require 
posting of redetermination notices, settlements, notices related to 
appeals; deleting an incorrect reference to administrative hearing 
procedures used in workers compensation cases; requiring settlement 
agreements to address abatement dates and penalty payments; and deleting 
a requirement to put discrimination complaints in writing. These changes 
were approved by the Assistant Secretary on August 3, 1983.
    (k) In accordance with Sec. 1902.34 of this chapter, the Washington 
occupational safety and health plan was certified effective January 26, 
1982, as having completed all developmental steps specified in the plan 
as approved on January 26, 1973 on or before January 26, 1976. This 
certification attests to structural completion, but does not render 
judgment on adequacy of performance.

[40 FR 59345, Dec. 23, 1975, as amended at 41 FR 12655, Mar. 26, 1976; 
41 FR 17549, Apr. 27, 1976; 41 FR 23672, June 11, 1976; 41 FR 51016, 
Nov. 19, 1976; 47 FR 5889, 5891, Feb. 9, 1982; 48 FR 37025, Aug. 16, 
1983]



Sec. 1952.125  Changes to approved plans.

    (a) In accordance with part 1953 of this chapter, the following 
Washington plan changes were approved by the Assistant Secretary on 
August 4, 1980.
    (b) In accordance with subpart E of part 1953 of this chapter, the 
Assistant Secretary has approved the participation of the Washington 
Department of Labor and Industries in its November 17, 1989, agreement 
with the Colville Confederated Tribes, concerning an internal 
occupational safety and health program on the Colville reservation. 
Under this agreement, Washington exercises enforcement authority over 
non-Indian-owned workplaces under the legal authority set forth in its 
State plan. (Federal OSHA will exercise enforcement authority over 
Indian-owned or Tribal workplaces, as provided in 29 CFR 1952.122.)
    (c) Legislation. (1) On March 29, 1994, the Assistant Secretary 
approved Washington's revised statutory penalty levels which are the 
same as the revised Federal penalty levels contained in section 17 of 
the Act as amended on November 5, 1990.

[45 FR 53459, Aug. 12, 1980, as amended at 55 FR 37467, Sept. 12, 1990; 
59 FR 14555, Mar. 29, 1994; 67 FR 60129, Sept. 25, 2002]

Subparts G-H [Reserved]



                        Subpart I--North Carolina



Sec. 1952.150  Description of the plan as initially approved.

    (a) The Department of Labor has been designated by the Governor of 
North Carolina to administer the plan throughout the State. The 
Department of Labor has entered into an agreement with the State Board 
of Health whereby the State Board of Health is to assist the Department 
of Labor in the administration and enforcement of occupational health 
standards. However, full authority for the promulgation and enforcement 
of occupational safety and health standards remains with the Department 
of Labor. The plan defines the covered occupational safety and health 
issues as defined by the Secretary of Labor in Sec. 1902.2(c)(1) of this 
chapter. Moreover, it is understood that the plan will cover all 
employers and employees in the State except those whose working 
conditions are not covered by the Federal act by virtue of section 
4(b)(1) thereof, dockside maritime and domestic workers. The

[[Page 41]]

Department of Labor is currently exercising statewide inspection 
authority to enforce many State standards. The plan describes procedures 
for the development and promulgation of additional laws, and orders in 
all places of employment in the State; the procedures for prompt 
restraint or elimination of imminent danger conditions; and procedures 
for inspections in response to complaints.
    (b) The plan includes proposed draft legislation to be considered by 
the North Carolina General Assembly during its 1973 session. Such 
legislation is designed to implement major portions of the plan and to 
bring it into conformity with the requirements of part 1902 of this 
chapter.
    (c) Under this legislation, all occupational safety and health 
standards and amendments thereto which have been promulgated by the 
Secretary of Labor, except those found in parts 1915, 1916, 1917, and 
1918 of this chapter (ship repairing, shipbuilding, shipbreaking, and 
longshoring) will be adopted upon ratification of the proposed 
legislation. Enforcement of such standards will take place 90 days 
thereafter.
    (d) The legislation will give the Department of Labor full authority 
to administer and enforce all laws, rules and orders protecting employee 
safety and health in all places of employment in the State. It also 
proposes to bring the plan into conformity in procedures for providing 
prompt and effective standards for the protection of employees against 
new and unforeseen hazards and for furnishing information to employees 
on hazards, precautions, symptoms, and emergency treatment; and 
procedures for variances.
    (e) The proposed legislation will insure employer and employee 
representatives an opportunity to accompany inspectors and to call 
attention to possible violations before, during, and after inspections; 
protection of employees against discharge or discrimination in terms and 
conditions of employment; notice to employees of their protections and 
obligations; adequate safeguards to protect trade secrets; prompt notice 
to employers and employees of alleged violations of standards and 
abatement requirements; effective sanctions against employers; and 
employer's right to review of alleged violations, abatement periods, and 
proposed penalties with opportunity for employee participation in the 
review proceedings.
    (f) The Plan also provides for the development of a program to 
encourage voluntary compliance by employers and employees.
    (g) The Plan includes a statement of the Governor's support for the 
proposed legislation and a statement of legal opinion that it will meet 
the requirements of the Occupational Safety and Health Act of 1970, and 
is consistent with the constitution and laws of North Carolina. The Plan 
sets out goals and provides a timetable for bringing it into full 
conformity with part 1902 upon enactment of the proposed legislation by 
the State legislature.
    (h) The North Carolina Plan includes the following documents as of 
the date of approval:
    (1) The Plan description document with appendixes.
    (2) Telegram from the Governor of North Carolina, James E. 
Holshouser, Jr., expressing his full support for the Occupational Safety 
and Health Act of North Carolina and his anticipation of its passage 
during the 1973 session of the North Carolina General Assembly.
    (3) Letter from W. C. Creel, Commissioner, North Carolina Department 
of Labor, to Mr. Thomas C. Brown, Director, Federal and State 
Operations, clarifying several issues raised during the review process.
    (4) Also available for inspection and copying with the Plan 
documents will be the public comments received during the review 
process.

[38 FR 3042, Feb. 1, 1973, as amended at 51 FR 2488, Jan. 17, 1986]



Sec. 1952.151  Developmental schedule.

    The North Carolina Plan is developmental. The following is the 
schedule of the developmental steps provided by the Plan:
    (a) It is estimated that the draft bill will be enacted by April 1, 
1973.
    (b) The Federal standards will be adopted on the date the bill is 
ratified.
    (c) A refresher course for inspectors will begin sixty (60) days 
after the enactment of the draft bill.

[[Page 42]]

    (d) Merit system examinations of current department of labor 
personnel will be completed within sixty (60) days after Federal 
acceptance of the State Plan.
    (e) The hiring of new personnel in both the department of labor and 
the State board of health will begin thirty (30) days after the 
department is assured that State and Federal funds are available. 
Tentative plans provide for both agencies to be fully staffed within six 
(6) months after the enactment of the bill.
    (f) All new personnel will receive official OSHA training in the 
National Institute of Training. Employment dates will generally 
correspond to dates established for the Institute schools.
    (g) Employers and employees will be notified of the availability of 
consultative services within ninety (90) days after ratification of the 
draft bill.
    (h) The Department of Labor will initiate a developmental plan for a 
``Management Information System'' on the date of Plan approval. This 
program is to be fully implemented in ninety (90) days after enactment 
of the proposed legislation.
    (i) The enforcement of standards will begin ninety (90) days after 
ratification of the draft bill.
    (j) A State Compliance Operations Manual is to be completed ninety 
(90) days after ratification of the draft bill.
    (k) The Commissioner will begin issuing administrative ``rules and 
regulations'' when necessary as stated in the draft bill ninety (90) 
days after ratification of the draft bill. Meanwhile, the Federal rules 
and regulations will be adopted and applied until the State rules and 
regulations are acceptable.
    (l) Safety programs for State employees will begin one (1) year and 
ninety (90) days after ratification of the draft bill, with full 
implementation scheduled a year later.
    (m) Safety programs for large counties and municipalities with over 
10,000 population will be initiated ninety (90) days after draft bill 
ratification. Full implementation will occur one (1) year later.
    (n) Safety programs for other counties and municipalities with 4,000 
to 10,000 population will be initiated within two (2) years and ninety 
(90) days after Plan grant is approved. Full implementation will occur 
three (3) years after grant award.
    (o) Safety programs for towns and other governing units having 
between 1,000 and 4,000 population will be initiated within two (2) 
years and ninety (90) days after Plan grant is approved, with full 
implementation within three years after grant award.
    (p) A State ``Safety and Health'' poster will be prepared within 
ninety (90) days after ratification of the draft bill.
    (q) The State of North Carolina will be fully operational with 
respect to agriculture 1 year and 90 days after enactment of the draft 
bill.

[38 FR 3042, Feb. 1, 1973. Redesignated at 51 FR 2488, Jan. 17, 1986]



Sec. 1952.152  Completion of developmental steps and certification.

    (a) In accordance with Sec. 1952.153(a) the Occupational Safety and 
Health Act of North Carolina (S.B. 342, Chapter 295) was enacted by the 
State legislature on May 1, 1973, and became effective on July 1, 1973.
    (b) In accordance with Sec. 1952.153(b), the North Carolina 
occupational safety and health standards identical to Federal standards 
(thru 12-3-74) have been promulgated and approved, as revised, by the 
Assistant Regional Director on March 11, 1975 (40 FR 11420).
    (c)(1) In accordance with Sec. 1952.153(p) and the requirements of 
29 CFR 1952.10, the North Carolina poster for private employers was 
approved by the Assistant Secretary on April 17, 1975.
    (2) In accordance with Sec. 1952.153(p) and the requirements of 29 
CFR 1952.10, the North Carolina poster for public employees was approved 
by the Assistant Secretary on April 20, 1976.
    (d) In accordance with Sec. 1952.153(q) full coverage of 
agricultural workers by the North Carolina Department of Labor began on 
April 1, 1974.
    (e) The State plan has been amended to include an Affirmative Action 
Plan in which the State outlines its policy of equal employment 
opportunity.
    (f) In accordance with Sec. 1952.153(c) all North Carolina 
compliance personnel have completed refresher training courses.

[[Page 43]]

    (g) In accordance with Sec. 1952.153(d) all occupational safety and 
health personnel in the North Carolina Department of Labor are covered 
by the State merit system which the U.S. Civil Service Commission (by 
letter dated January 22, 1976) has found to be in substantial conformity 
with the ``Standards for a Merit System of Personel Administration.'' 
Agreement with the North Carolina Department of Human Resources 
specifies that all health personnel cooperating in the State 
occupational safety and health program are likewise covered by the State 
merit system.
    (h) In accordance with Sec. 1952.153(f) all North Carolina 
compliance personnel have attended basic training courses at the OSHA 
Institute in Chicago.
    (i) In accordance with Sec. 1952.153(g) the North Carolina 
Department of Labor has publicly disseminated information on the 
availability of consultative services.
    (j) In accordance with Sec. 1952.153(h) a manual Management 
Information System which provides the quarterly statistical reports 
required by the Assistant Secretary as well as internal management data 
has been developed and is fully operational.
    (k) In accordance with Sec. 1952.153(i) State enforcement of 
standards began on July 1, 1973.
    (l) In accordance with Sec. 1952.153(k) the State has promulgated 
the following administrative ``rules and regulations'':
    (1) Regulation 7B.0100: Inspections, Citations and Proposed 
Penalties.
    (2) Regulation 7B.0300: Recording and Reporting of Occupational 
Injuries and Illnesses.
    (3) Regulation 7B.0400: Rules of Practice for Variances.
    (4) Regulation 7B.0500: Rules of Procedure for Promulgating, 
Modifying or Revoking Occupational Safety and Health Standards.
    (5) Regulation 7B.0700: State Advisory Council on Occupational 
Safety and Health.
    (m) The North Carolina Occupational Safety and Health Review Board 
has adopted Rules of Procedure governing its review of contested cases.
    (n) In accord with Sec. 1952.153(l), Safety programs for State 
employees were initiated and implemented.
    (o) In accord with Sec. 1952.153(m), Safety programs for large 
counties and municipalities with over 10,000 population were initiated 
and implemented.
    (p) In accord with Sec. 1952.153(n), Safety programs for other 
counties and municipalities with 4,000 to 10,000 population were 
initiated and implemented.
    (q) In accord with Sec. 1952.153(o), Safety programs for towns and 
other governing units having between 1,000 and 4,000 population were 
initiated and implemented.
    (r) In accord with Sec. 1952.153(e) and Sec. 1902.3(d) the North 
Carolina occupational safety and health program has been fully staffed.
    (s) In accordance with Sec. 1952.153(j) the State has developed and 
amended a Compliance Operations Manual which defines the procedures and 
guidelines to be used by the North Carolina compliance staff in carrying 
out the goals of the program.
    (t) In accordance with Sec. 1902.34 of this chapter, the North 
Carolina occupational safety and health plan was certified, effective 
October 5, 1976, as having completed on or before March 31, 1976 all 
development steps specified in the plan as approved on January 26, 1973.

[40 FR 18429, Apr. 28, 1975, as amended at 41 FR 17547, Apr. 27, 1976; 
41 FR 22562, June 4, 1976; 41 FR 41083, Sept. 21, 1976; 41 FR 43897-
43900, 43902, Oct. 5, 1976. Redesignated at 51 FR 2488, Jan. 17, 1986]



Sec. 1952.153  Compliance staffing benchmarks.

    Under the terms of the 1978 Court Order in AFL-CIO v. Marshall, 
compliance staffing levels (``benchmarks'') necessary for a ``fully 
effective'' enforcement program were required for each State operating 
an approved State plan. In September 1984, North Carolina, in 
conjunction with OSHA, completed a reassessment of the levels initially 
established in 1980 and proposed revised benchmarks of 50 safety and 27 
health compliance officers. After opportunity for public comment and 
service on the AFL-CIO, the Assistant Secretary approved these revised 
staffing requirements on January 17, 1986. In

[[Page 44]]

June 1990, North Carolina reconsidered the information utilized in the 
initial revision of its 1980 benchmarks and determined that changes in 
local conditions and improved inspection data warranted further revision 
of its benchmarks to 64 safety inspectors and 50 industrial hygienists. 
After opportunity for public comment and service on the AFL-CIO, the 
Assistant Secretary approved these revised staffing requirements on June 
4, 1996.

[61 FR 28055, June 4, 1996]



Sec. 1952.154  Final approval determination.

    (a) In accordance with section 18(e) of the Act and procedures in 29 
CFR part 1902, and after determination that the State met the ``fully 
effective'' compliance staffing benchmarks as revised in 1984 and 1996 
in response to a court order in AFL-CIO v. Marshall, 570 F.2d 1030 (D.C. 
Cir. 1978), and was satisfactorily providing reports to OSHA through 
participation in the Federal-State Integrated Management Information 
System, the Assistant Secretary evaluated actual operations under the 
North Carolina State plan for a period of at least one year following 
certification of completion of developmental steps (41 FR 43896). Based 
on the Biennial Evaluation Report covering the period of October 1, 
1993, through September 30, 1995, an 18(e) Evaluation Report covering 
the period October 1, 1995, through June 30, 1996, and after opportunity 
for public comment, the Assistant Secretary determined that in operation 
the State of North Carolina's occupational safety and health program is 
at least as effective as the Federal program in providing safe and 
healthful employment and places of employment and meets the criteria for 
final State plan approval in section 18(e) of the Act and implementing 
regulations at 29 CFR part 1902. Accordingly, the North Carolina plan 
was granted final approval and concurrent Federal enforcement authority 
was relinquished under section 18(e) of the Act effective December 10, 
1996.
    (b) Except as otherwise noted, the plan which has received final 
approval covers all activities of employers and all places of employment 
in North Carolina. The plan does not cover Federal government employers 
and employees; the U.S. Postal Service (USPS), including USPS employees, 
and contract employees and contractor-operated facilities engaged in 
USPS mail operations; the American National Red Cross; private sector 
maritime activities; employment on Indian reservations; enforcement 
relating to any contractors or subcontractors on any Federal 
establishment where the land has been ceded to the Federal Government; 
railroad employment; and enforcement on military bases.
    (c) North Carolina is required to maintain a State program which is 
at least as effective as operations under the Federal program; to submit 
plan supplements in accordance with 29 CFR part 1953; to allocate 
sufficient safety and health enforcement staff to meet the benchmarks 
for State staffing established by the U.S. Department of Labor, or any 
revisions to those benchmarks; and, to furnish such reports in such form 
as the Assistant Secretary may from time to time require.

[61 FR 66601, Dec. 18, 1996, as amended at 65 FR 36621, June 9, 2000; 65 
FR 62612, Oct. 19, 2000]



Sec. 1952.155  Level of Federal enforcement.

    (a) As a result of the Assistant Secretary's determination granting 
final approval to the North Carolina State plan under section 18(e) of 
the Act, effective December 10, 1996, occupational safety and health 
standards which have been promulgated under section 6 of the Act do not 
apply with respect to issues covered under the North Carolina Plan. This 
determination also relinquishes concurrent Federal OSHA authority to 
issue citations for violations of such standards under sections 5(a)(2) 
and 9 of the Act; to conduct inspections and investigations under 
section 8 (except those necessary to conduct evaluation of the plan 
under section 18(f) and other inspections, investigations, or 
proceedings necessary to carry out Federal responsibilities not 
specifically preempted by section 18(e)); to conduct enforcement 
proceedings in contested cases under section 10; to institute 
proceedings to correct imminent dangers under section

[[Page 45]]

13; and to propose civil penalties or initiate criminal proceedings for 
violations of the Federal OSH Act under section 17. The Assistant 
Secretary retains jurisdiction under the above provisions in any 
proceeding commenced under section 9 or 10 before the effective date of 
the 18(e) determination.
    (b)(1) In accordance with section 18(e), final approval relinquishes 
Federal OSHA authority only with regard to occupational safety and 
health issues covered by the North Carolina plan. OSHA retains full 
authority over issues which are not subject to State enforcement under 
the plan. Thus, Federal OSHA retains its authority relative to safety 
and health in private sector maritime activities and will continue to 
enforce all provisions of the Act, rules or orders, and all Federal 
standards, current or future, specifically directed to private sector 
maritime activities (occupational safety and health standards comparable 
to 29 CFR Parts 1915, shipyard employment; 1917, marine terminals; 1918, 
longshoring; and 1919; gear certification, as well as provisions of 
general industry and construction standards (29 CFR Parts 1910 and 1926) 
appropriate to hazards found in these employments); employment on Indian 
reservations; enforcement relating to any contractors or subcontractors 
on any Federal establishment where the land has been ceded to the 
Federal Government; railroad employment, not otherwise regulated by 
another Federal agency; and enforcement on military bases. Federal 
jurisdiction is also retained with respect to Federal government 
employers and employees; the U.S. Postal Service (USPS), including USPS 
employees, and contract employees and contractor-operated facilities 
engaged in USPS mail operations; and the American National Red Cross.
    (2) In addition, any hazard, industry, geographical area, operation 
or facility over which the State is unable to effectively exercise 
jurisdiction for reasons which OSHA determines are not related to the 
required performance or structure of the plan shall be deemed to be an 
issue not covered by the State plan which has received final approval, 
and shall be subject to Federal enforcement. Where enforcement 
jurisdiction is shared between Federal and State authorities for a 
particular area, project, or facility, in the interest of administrative 
practicability Federal jurisdiction may be assumed over the entire 
project or facility. In any of the aforementioned circumstances, Federal 
enforcement authority may be exercised after consultation with the State 
designated agency.
    (c) Federal authority under provisions of the Act not listed in 
section 18(e) is unaffected by final approval of the North Carolina 
State plan. Thus, for example, the Assistant Secretary retains his 
authority under section 11(c) of the Act with regard to complaints 
alleging discrimination against employees because of the exercise of any 
right afforded to the employee by the Act, although such complaints may 
be referred to the State for investigation. The Assistant Secretary also 
retains his authority under section 6 of the Act to promulgate, modify 
or revoke occupational safety and health standards which address the 
working conditions of all employees, including those in States which 
have received an affirmative 18(e) determination, although such 
standards may not be Federally applied. In the event that the State's 
18(e) status is subsequently withdrawn and Federal authority reinstated, 
all Federal standards, including any standards promulgated or modified 
during the 18(e) period, would be Federally enforceable in that State.
    (d) As required by section 18(f) of the Act, OSHA will continue to 
monitor the operations of the North Carolina State program to assure 
that the provisions of the State plan are substantially complied with 
and that the program remains at least as effective as the Federal 
program. Failure by the State to comply with its obligations may result 
in the revocation of the final approval determination under section 
18(e), resumption of Federal enforcement, and/or proceedings for 
withdrawal of plan approval.

[61 FR 66601, Dec. 18, 1996, as ameded at 65 FR 36621, June 9, 2000; 65 
FR 62612, Oct. 19, 2000]



Sec. 1952.156  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected

[[Page 46]]

and copied during normal business hours at the following locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, 200 Constitution Avenue NW, Room N3700, 
Washington, DC 20210;
Office of the Regional Administrator, Occupational Safety and Health 
Administration, U.S. Department of Labor, Atlanta Federal Center, 61 
Forsyth Street, SW, Room 6T50, Atlanta, Georgia 30303; and
Office of the Commissioner, North Carolina Department of Labor, 4 West 
Edenton Street, Raleigh, North Carolina 27601-1092.

[65 FR 36621, June 9, 2000]



Sec. 1952.157  Changes to approved plan.

    (a) Legislation. (1) On March 29, 1994, the Assistant Secretary 
approved North Carolina's revised statutory penalty levels which are the 
same as the revised Federal penalty levels contained in section 17 of 
the Act as amended on November 5, 1990.
    (2) [Reserved]
    (b) The Voluntary Protection Program. On June 24, 1994, the 
Assistant Secretary approved North Carolina's plan supplement, which is 
generally identical to the Federal STAR Voluntary Protection Program. 
North Carolina's ``Carolina'' VVP is limited to the STAR Program, and 
excludes the MERIT and DEMONSTRATION Programs. Also, injury rates must 
be at or below 50 percent of the State injury average rather than the 
National injury average.

[59 FR 39257, Aug. 2, 1994]



                             Subpart J--Iowa



Sec. 1952.160  Description of the plan as initially approved.

    (a)(1) The plan identifies the Bureau of Labor as the State agency 
designated to administer the plan throughout the State. Its 
responsibilities include both occupational safety and occupational 
health, the latter on a developmental basis. The plan defines the 
covered occupational safety and health issues as defined by the 
Secretary of Labor in 29 CFR 1902.2(c)(i). Under existing occupational 
safety and health legislation, effective July 1, 1972, Iowa has adopted 
as interim standards all the occupational safety and health standards 
and amendments thereto which had been promulgated by the Secretary of 
Labor, except those found in 29 CFR parts 1915, 1916, 1917 and 1918 
(Ship repairing, ship building, ship breaking and longshoring). Hearings 
have been held on the adoption, as permanent standards, of the standards 
in 29 CFR parts 1910 and 1926. Under its existing legislation, the 
Bureau of Labor has exercised statewide inspection authority to enforce 
State standards which are identical to Federal standards. The 
legislation covers all employers including the State and its political 
subdivisions and gives the Iowa Bureau of Labor full authority to 
administer and enforce all laws, rules, and orders protecting employee 
safety and health in all places of employment in the State.
    (2) The legislation contains procedures for the promulgation of 
standards, including standards for the prompt protection of employees 
against new and unforeseen hazards; furnishing information to employees 
on hazards, precautions, symptoms, and emergency treatment; procedures 
for granting temporary and permanent variances; and for the protection 
of employees from hazards. The law provides for inspections including 
inspections in response to complaints; ensures employer and employee 
representatives an opportunity to accompany inspectors and call 
attention to possible violations before, during and after inspections; 
protection of employees against discharge or discrimination in terms or 
conditions of employment through court suits brought by the Bureau of 
Labor; notice to employees of their protections and obligations under 
the State law; imminent danger abatement through court injunctions; 
safeguards to protect trade secrets; prompt notice to employers and 
employees of alleged violations of standards and abatement requirements; 
effective sanctions against employers; employer right to review of 
alleged violations, abatement periods, and proposed penalties with an 
opportunity for employee participation as parties; and employee review 
of any citation issued to the employee, in review proceedings before the 
independent Review Commission.

[[Page 47]]

    (3) The plan is developmental in the establishment of a compliance 
program for agriculture, mercantile and service employees; development 
of an occupational health program; developing a management information 
system; and hiring and training of staff under the existing State merit 
system.
    (b) Included in the plan is a statement of the Governor's support 
for the plan and a statement of legal opinion that the legislation will 
meet the requirements of the Occupational Safety and Health Act of 1970 
and is consistent with the Constitution and laws of Iowa. The plan sets 
out goals and provides a timetable for bringing it into full conformity 
with part 1902 at the end of three years after the commencement of 
operations under the plan.
    (c) The plan includes the following documents as of the date of 
approval:
    (1) The plan document with appendices;
    (2) Letters from Jerry L. Addy, Commissioner of Labor, dated January 
2, 1973, and March 21, 1973, with clarifications and modifications of 
the plan;
    (3) Iowa has also submitted the following regulations adopted by the 
State:
    (i) Chapter 3 of the Iowa Bureau of Labor Administrative Rules 
dealing with inspections, citations, and proposed penalties, adopted 
July 25, 1972;
    (ii) Chapter 4 of the Iowa Bureau of Labor Administrative Rules 
dealing with recording and reporting occupational injuries and illnesses 
adopted July 11, 1973, and amended July 25, 1972;
    (iii) Chapter 5 of the Iowa Bureau of Labor Administrative Rules 
dealing with rules of practice for variances, limitations, variations, 
tolerances, and exemptions adopted July 25, 1972, and amended October 5, 
1972.

These adopted rules and regulations which were not part of the plan as 
originally submitted will be evaluated in accordance with the review of 
completions of developmental steps in State plans.

[37 FR 19370, July 20, 1973, as amended at 50 FR 27243, July 2, 1985]



Sec. 1952.161  Developmental schedule.

    The Iowa State plan is developmental. The following is the 
developmental schedule as amended and provided by the plan:
    (a) Enabling legislation becomes effective (Chapter 88 of Iowa 
Code)--July 1972.
    (b) Corrective amendments to Chapter 88 of Iowa Code become 
effective--July 1975.
    (c) Adoption of Federal Standards as interim State standards--July 
1972.
    (d) Promulgation of Federal Standards as permanent State standards--
July 1973.
    (e) Development of training program for employers and employees--
October 1974.
    (f) Complete hiring of additional staff--April 1975.
    (g) Basic training of staff--May 1975.
    (h) Development of approved Manual MIS--July 1972.
    (i) Commencement of compliance activities--July 1972.
    (j) Development of compliance programs in Agriculture, Mercantile, 
and Services--August 1975.
    (k) Development of on-site consultation program--September 1975.
    (l) Development of State poster--August 1975.

[41 FR 18836, May 7, 1976. Redesignated at 50 FR 27243, July 2, 1985]



Sec. 1952.162  Completion of developmental steps and certification.

    (a) In accordance with the requirements of Sec. 1952.10, the Iowa 
State poster was approved by the Assistant Secretary on August 26, 1975.
    (b) In accordance with the requirements of Sec. 1952.163(b), the 
Iowa Occupational Safety and Health Act of 1972 (Iowa S.F. 1218--Chapter 
88) is amended by Iowa Act S.F. 92, with an effective date of July 1, 
1975.
    (c) In accordance with the commitment contained in Sec. 1952.163(a), 
the State of Iowa enacted occupational safety and health enabling 
legislation which became effective on July 1, 1972.
    (d) In accordance with the commitment contained in Sec. 1952.163(f), 
the State of Iowa, as of April 24, 1974, hired a sufficient number of 
qualified safety and health personnel under the approved Iowa Merit 
Employment Department system.
    (e) In accordance with the commitment contained in Sec. 1952.163(g), 
all basic

[[Page 48]]

training of Iowa compliance personnel was completed as of May 9, 1975.
    (f) In accordance with the commitment contained in Sec. 1952.163(e), 
a program of education and training of employers and employees was 
developed with local community colleges as of October 1974.
    (g) In accordance with the commitment contained in Sec. 1952.163(h), 
the Iowa Bureau of Labor developed an approved manual Management 
Information System as of July 1972.
    (h) In accordance with the commitment contained in Sec. 1952.163(k), 
the Iowa Bureau of Labor initiated an approved program of on-site 
consultation as of September 1975.
    (i) In accordance with the commitment contained in Sec. 1952.163(c), 
the State of Iowa adopted Federal standards as interim State standards 
under chapter 88 of the Iowa Code, effective on July 1, 1972.
    (j) In accordance with the commitment contained in Sec. 1952.163(d), 
the State of Iowa promulgated Federal occupational safety and health 
standards (29 CFR parts 1910 and 1926) as permanent State Standards as 
of August 16, 1973.
    (k) In accordance with the commitment contained in Sec. 1952.163(i), 
the Iowa Bureau of Labor began its compliance activities in July 1973.
    (l) In accordance with the commitment contained in Sec. 1952.163(j), 
the Iowa Bureau of Labor implemented compliance programs in the 
agriculture, mercantile, and service issues by July 1975.
    (m) In accordance with Sec. 1902.34 of this chapter, the Iowa safety 
and health plan program was certified on September 14, 1976 as having 
completed all developmental steps in its plan with regard to those 
occupational safety and health issues specified in the plan on or before 
July 20, 1976.
    (n) Amendment to Chapter 4, Recording and Reporting Occupational 
Injuries and Illnesses. Clarifications of the Iowa recordkeeping and 
reporting rules.
    (o) Amendment to Chapter 6, IOSH Consultative Services and Training. 
Detailed procedures for safety consultants when they find a serious or 
imminent danger hazard.
    (p) Modifications to the Iowa Plan. Minor revisions to the Iowa plan 
dealing with present staffing, position statements, legislative changes, 
and current responsibilities of divisions in the Iowa Bureau of Labor.

[40 FR 40157, Sept. 2, 1975, as amended at 41 FR 23671, June 11, 1976; 
41 FR 39028, Sept. 14, 1976; 44 FR 11067, Feb. 27, 1979. Redesignated 
and amended at 50 FR 27243, July 2, 1985]



Sec. 1952.163  Compliance staffing benchmarks.

    Under the terms of the 1978 Court Order in AFL-CIO v. Marshall, 
compliance staffing levels (benchmarks) necessary for a ``fully 
effective'' enforcement program were required to be established for each 
State operating an approved State plan. In September 1984, Iowa, in 
conjunction with OSHA, completed a reassessment of the levels initially 
established in 1980 and proposed revised compliance staffing benchmarks 
of 16 safety and 13 health compliance officers. After opportunity for 
public comment and service on the AFL-CIO, the Assistant Secretary 
approved these revised staffing requirements effective July 2, 1985.

[50 FR 27243, July 2, 1985]



Sec. 1952.164  Final approval determination.

    (a) In accordance with section 18(e) of the Act and procedures in 29 
CFR part 1902, and after determination that the State met the ``fully 
effective'' compliance staffing benchmarks as revised in 1984 in 
response to a Court Order in AFL-CIO v. Marshall (CA 74-406), and was 
satisfactorily providing reports to OSHA through participation in the 
Federal-State Unified Management Information System, the Assistant 
Secretary evaluated actual operations under the Iowa State plan for a 
period of at least one year following certification of completion of 
developmental steps (41 FR 39027). Based on the 18(e) Evaluation Report 
for the period of October 1982 through March 1984, and after opportunity 
for public comment, the Assistant Secretary determined that in 
operation, the State of Iowa occupational safety and health program is 
at least as effective as the Federal

[[Page 49]]

program in providing safe and healthful employment and places of 
employment and meets the criteria for final State plan approval in 
section 18(e) of the Act and implementing regulations at 29 CFR part 
1902. Accordingly, the Iowa plan was granted final approval and 
concurrent Federal enforcement authority was relinquished under section 
18(e) of the Act effective July 2, 1985.
    (b) Except as otherwise noted, the plan which has received final 
approval covers all activities of employers and all places of employment 
in Iowa. The plan does not cover private sector maritime employment; 
Federal government-owned, contractor-operated military/munitions 
facilities; Federal government employers and employees; the U.S. Postal 
Service (USPS), including USPS employees, and contract employees and 
contractor-operated facilities engaged in USPS mail operations; bridge 
construction projects spanning the Mississippi and Missouri Rivers 
between Iowa and other States; the enforcement of the field sanitation 
standard, 29 CFR 1928.110, and the enforcement of the temporary labor 
camps standard, 29 CFR 1910.142, with respect to any agricultural 
establishment where employees are engaged in ``agricultural employment'' 
within the meaning of the Migrant and Seasonal Agricultural Worker 
Protection Act, 29 U.S.C. 1802(3), regardless of the number of 
employees, including employees engaged in hand packing of produce into 
containers, whether done on the ground, on a moving machine, or in a 
temporary packing shed, except that Iowa retains enforcement 
responsibility over agricultural temporary labor camps for employees 
engaged in egg, poultry, or red meat production, or the post-harvest 
processing of agricultural or horticultural commodities.
    (c) Iowa is required to maintain a State program which is at least 
as effective as operations under the Federal program; to submit plan 
supplements in accordance with 29 CFR part 1953; to allocate sufficient 
safety and health enforcement staff to meet the benchmarks for State 
staffing established by the U.S. Department of Labor, or any revisions 
to those benchmarks; and, to furnish such reports in such form as the 
Assistant Secretary may from time to time require.

[50 FR 27243, July 2, 1985, as amended at 62 FR 2561, Jan. 17, 1997; 65 
FR 36622, June 9, 2000]



Sec. 1952.165  Level of Federal enforcement.

    (a) As a result of the Assistant Secretary's determination granting 
final approval of the Iowa plan under section 18(e) of the Act, 
effective July 2, 1985, occupational safety and health standards which 
have been promulgated under section 6 of the Act do not apply with 
respect to issues covered under the Iowa plan. This determination also 
relinquishes concurrent Federal OSHA authority to issue citations for 
violations of such standards under section 5(a)(2) and 9 of the Act; to 
conduct inspections and investigations under section 8 (except those 
necessary to conduct evaluation of the plan under section 18(f) and 
other inspections, investigations, or proceedings necessary to carry out 
Federal responsibilities not specifically preempted by section 18(e)); 
to conduct enforcement proceedings in contested cases under section 10; 
to institute proceedings to correct imminent dangers under section 13; 
and to propose civil penalties or initiate criminal proceedings for 
violations of the Federal Act under section 17. The Assistant Secretary 
retains jurisdiction under the above provisions in any proceeding 
commenced under section 9 or 10 before the effective date of the 18(e) 
determination.
    (b)(1) In accordance with section 18(e), final approval relinquishes 
Federal OSHA authority only with regard to occupational safety and 
health issues covered by the Iowa plan. OSHA retains full authority over 
issues which are not subject to State enforcement under the plan. Thus, 
Federal OSHA retains its authority relative to safety and health in 
private sector maritime activities and will continue to enforce all 
provisions of the Act, rules or orders, and all Federal standards, 
current or future, specifically directed to maritime employment (29 CFR 
Part 1915, shipyard employment; Part 1917, marine terminals; Part 1918, 
longshoring; Part 1919, gear certification), as well as

[[Page 50]]

provisions of general industry and construction standards (29 CFR Parts 
1910 and 1926) appropriate to hazards found in these employments; 
Federal government-owned, contractor-operated military/munitions 
facilities; bridge construction projects spanning the Mississippi and 
Missouri Rivers between Iowa and other States. Federal jurisdiction is 
retained and exercised by the Employment Standards Administration, U.S. 
Department of Labor, (Secretary's Order 5-96, dated December 27, 1996) 
with respect to the field sanitation standard, 29 CFR 1928.110, and the 
enforcement of the temporary labor camps standard, 29 CFR 1910.142, in 
agriculture, as described in Sec. 1952.164(b). Federal OSHA will also 
retain authority for coverage of all Federal government employers and 
employees; and of the U.S. Postal Service (USPS), including USPS 
employees, and contract employees and contractor-operated facilities 
engaged in USPS mail operations.
    (2) In addition, any hazard, industry, geographical area, operation 
or facility over which the State is unable to effectively exercise 
jurisdiction for reasons not related to the required performance or 
structure of the plan shall be deemed to be an issue not covered by the 
finally approved plan, and shall be subject to Federal enforcement. 
Where enforcement jurisdiction is shared between Federal and State 
authorities for a particular area, project, or facility, in the interest 
of administrative practicability, Federal jurisdiction may be assumed 
over the entire project or facility. In either of the two aforementioned 
circumstances, Federal enforcement may be exercised immediately upon 
agreement between Federal and State OSHA.
    (c) Federal authority under provisions of the Act not listed in 
section 18(e) is unaffected by final approval of the plan. Thus, for 
example, the Assistant Secretary retains his authority under section 
11(c) of the Act with regard to complaints alleging discrimination 
against employees because of the exercise of any right afforded to the 
employee by the Act, although such complaints may be referred to the 
State for investigation. The Assistant Secretary also retains his 
authority under section 6 of the Act to promulgate, modify or revoke 
occupational safety and health standards which address the working 
conditions of all employees, including those in States which have 
received an affirmative 18(e) determination, although such standards may 
not be Federally applied. In the event that the State's 18(e) status is 
subsequently withdrawn and Federal authority reinstated, all Federal 
standards, including any standards promulgated or modified during the 
18(e) period, would be federally enforceable in that State.
    (d) As required by section 18(f) of the Act, OSHA will continue to 
monitor the operations of the Iowa State program to assure that the 
provisions of the State plan are substantially complied with and that 
the program remains at least as effective as the Federal program. 
Failure by the State to comply with its obligations may result in the 
revocation of the final determination under section 18(e), resumption of 
Federal enforcement, and/or proceedings for withdrawal of plan approval.

[50 FR 27243, July 2, 1985, as amended at 62 FR 2561, Jan. 17, 1997; 65 
FR 36622, June 9, 2000]



Sec. 1952.166  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected and copied during normal business hours at the following 
locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, 200 Constitution Avenue NW, Room N3700, 
Washington, DC 20210;
Office of the Regional Administrator, Occupational Safety and Health 
Administration, U.S. Department of Labor, City Center Square, 1100 Main 
Street, Suite 800, Kansas City, Missouri 64105; and
Office of the Commissioner, Iowa Division of Labor , 1000 E. Grand 
Avenue, Des Moines, Iowa 50319.

[65 FR 36622, June 9, 2000]



Sec. 1952.167  Changes to approved plans.

    (a) Legislation. (1) On March 29, 1994, the Assistant Secretary 
approved Iowa's revised statutory penalty levels which are the same as 
the revised Federal penalty levels contained in section

[[Page 51]]

17 of the Act as amended on November 5, 1990.
    (2)  [Reserved]
    (b) Temporary labor camps/field sanitation. Effective February 3, 
1997, the Assistant Secretary approved Iowa's plan amendment, dated 
August 2, 1996, relinquishing coverage for the issues of field 
sanitation (29 CFR 1928.110) and temporary labor camps (29 CFR 1910.142) 
in agriculture (except for agricultural temporary labor camps associated 
with egg, poultry or red meat production, or the post-harvest processing 
of agricultural or horticultural commodities). The Employment Standards 
Administration, U.S. Department of Labor, has assumed responsibility for 
enforcement of these Federal OSHA standards in agriculture in Iowa 
pursuant to Secretary of Labor's Order 5-96, dated December 27, 1996.

[59 FR 14555, Mar. 29, 1994, as amended at 62 FR 2561, Jan. 17, 1997]



                          Subpart K--California



Sec. 1952.170  Description of the plan.

    (a) The State's program will be enforced by the Division of 
Industrial Safety of the Department of Industrial Relations of the 
California Agriculture and Services Agency. Current safety and health 
standards will be continued unless amended by a State occupational 
safety and health standards board to be created. This board will take 
the amending action necessary to assure that State standards are as 
effective as those established under the Federal program. Appeals from 
the granting or denial of requests for variances will also come within 
the jurisdiction of this board. Administrative adjudications will be the 
responsibility of the California Occupational Safety and Health Appeals 
Board.
    (b) The State program is expected to extend its protection to all 
employees in the State (including those employed by it and its political 
subdivisions) except those employed by Federal agencies, certain 
maritime workers, household domestic service workers, and railroad 
workers not employed in railroad shops. (It is assumed that activities 
excluded from the Occupational Safety and Health Act's jurisdiction by 
section 4(b)(1) (29 U.S.C. 653(b)(1)) will also be excluded from the 
State's jurisdiction under this plan.)
    (c) The plan includes procedures for providing prompt and effective 
standards for the protection of employees against new and unforeseen 
hazards and for furnishing information to employees on hazards, 
precautions, symptoms, and emergency treatment; and procedures for 
variances and the protection of employee from hazards. It provides 
employer and employee representatives an opportunity to accompany 
inspectors and call attention to possible violations before, during, and 
after inspections, protection of employees against discharge or 
discrimination in terms and conditions of employment, notice to 
employees or their representatives when no compliance action is taken 
upon complaints, including informal review, notice to employees of their 
protections and obligations, adequate safeguards to protect trade 
secrets, prompt notice to employers and employees of alleged violations 
of standards and abatement requirements, effective remedies against 
employers, and the right to review alleged violations, abatement 
periods, and proposed penalties with opportunity for employee 
participation in the review proceedings; procedures for prompt restraint 
or elimination of imminent danger conditions, and procedures for 
inspection in response to complaints.
    (d) Based on an analysis of California's standards comparison, the 
State's standards corresponding to subparts F and K of this part, and 
Sec. 1910.263 of this (chapter) in subpart R of this part, of the OSHA 
standards have been determined to be at least as effective. These State 
standards contain no product standards corresponding to subpart F 
State's developmental schedule provides that the remaining subparts will 
be covered by corresponding State standards which are at least as 
effective within 1 year of plan approval.
    (e) The plan includes a statement of the Governor's support for the 
proposed legislation and a statement of legal opinion that it will meet 
the requirements of the Occupational Safety and Health Act of 1970, and 
is consistent with the constitution and laws of California. The plan 
sets out goals and provides a timetable for bringing it

[[Page 52]]

into full conformity with part 1902 of this chapter upon enactment of 
the proposed legislation by the State legislature. A merit system of 
personnel administration will be used. In addition, efforts to achieve 
voluntary compliance by employers and employees will include both on- 
and off-site consultations. The plan is supplemented by letters dated 
March 21, 1973, and April 10, 1973, from A. J. Reis, Assistant Secretary 
for Occupational Safety and Health of the Agriculture and Service Agency 
of the State of California.

[38 FR 10719, May 1, 1973]



Sec. 1952.171  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected and copied during normal business hours at the following 
locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, 200 Constitution Avenue NW, Room N3700, 
Washington, DC 20210;
Office of the Regional Administrator, Occupational Safety and Health 
Administration, U.S. Department of Labor, 71 Stevenson Street, 4th 
Floor, San Francisco, California 94105; and
Office of the Director, California Department of Industrial Relations, 
455 Golden Gate Avenue, 10th Floor, San Francisco 94102.

[65 FR 36622, June 9, 2000]



Sec. 1952.172  Level of Federal enforcement.

    (a) Pursuant to Secs. 1902.20(b)(1)(iii) and 1952.3 of this chapter, 
under which a revised agreement has been entered into between Frank 
Strasheim, OSHA Regional Administrator, and Ron Rinaldi, Director, 
California Department of Industrial Relations, effective October 5, 
1989, and based on a determination that California is operational in the 
issues covered by the California occupational safety and health plan, 
discretionary Federal enforcement authority under section 18(e) of the 
Act (29 U.S.C. 667(e)) will not be initiated with regard to Federal 
occupational safety and health standards in issues covered under 29 CFR 
part 1910, 29 CFR part 1926, and 29 CFR part 1928, except as set forth 
below.
    (b) The U.S. Department of Labor will continue to exercise 
authority, among other things, with regard to:
    (1) Specific Federal standards which the State has not yet adopted 
or with respect to which the State has not amended its existing State 
standards when the Federal standard provides a significantly greater 
level of worker protection than the corresponding Cal/OSHA standard, 
enforcement of new permanent and temporary emergency Federal standards 
until such time as the State shall have adopted equivalent standards, 
and enforcement of unique and complex standards as determined by the 
Assistant Secretary.
    (2) The following maritime activities:
    (i) Longshore operations on vessels from the shore side of the means 
of access to said vehicles.
    (ii) Marine vessels construction operations (from the means of 
access of the shore).
    (iii) All afloat marine ship building and repair from the foot of 
the gangway.
    (iv) All ship building and repair in graving docks or dry docks.
    (v) All ship repairing done in marine railways or similar 
conveyances used to haul vessels out of the water.
    (vi) All floating fuel operations.
    (vii) All afloat dredging and pile driving and similar operations.
    (viii) All diving from vessels afloat on the navigable waters.
    (ix) All off-shore drilling rigs operating outside the 3-mile limit.
    (3) Any hazard, industry, geographical area, operation or facility 
over which the State is unable to exercise jurisdiction fully or 
effectively.
    (4) Private contractors on Federal installations where the Federal 
agency claims exclusive Federal jurisdiction, challenges State 
jurisdiction and/or refuses entry to the State; such Federal enforcement 
will continue at least until the jurisdictional question is resolved at 
the National level between OSHA and the cognizant Federal agency.
    (5) Complaints filed with Federal OSHA alleging discrimination under 
section 11(c) of the OSH Act.
    (6) Completion of Federal enforcement actions initiated prior to the 
effective date of the agreement.

[[Page 53]]

    (7) Situations where the State is refused entry and is unable to 
obtain a warrant or enforce the right of entry.
    (8) Enforcement in situations where the State temporarily is unable 
to exercise its enforcement authority fully or effectively.
    (9) Federal government employers and employees; and the U.S. Postal 
Service (USPS), including USPS employees, and contract employees and 
contractor-operated facilities engaged in USPS mail operations.
    (c) As required by section 18(f) of the Act, OSHA will continue to 
monitor the operations of the California State program to assure that 
the provisions of the State plan are substantially complied with and 
that the program remains at least as effective as the Federal program. 
The Regional Administrator for Occupational Safety and Health will make 
a prompt recommendation for the resumption of the exercise of Federal 
enforcement authority under section 18(e) of the Act (29 U.S.C. 667(e)) 
whenever, and to the degree, necessary to assure occupational safety and 
health protection to employees in California.

[55 FR 28613, July 12, 1990, as amended at 65 FR 36622, June 9, 2000]



Sec. 1952.173  Developmental schedule.

    (a) Within 1 year following plan approval, legislation will be 
enacted authorizing complete implementation of the plan and enforcement 
rules and regulations will be promulgated, and an operations manual be 
completed.
    (b) By October 31, 1975, present standards will be amended or new 
standards promulgated which are as effective and comprehensive as those 
set forth in chapter XVII of this title 29 of the Code of Federal 
Regulations;
    (c) An exception to paragraphs (a) and (b) of this section exists 
relative to radiation machines and other non-Atomic Energy Act sources 
of radiation. The standards and enforcement program in this area will be 
developed within 2 years of plan approval.
    (d) Inter-agency agreements to provide technical support to the 
program will be fully functioning within 1 year of plan approval.
    (e) Inservice training plans for enforcement personnel will be 
developed within 18 months of plan approval.
    (f) A program of consultation with employers and employees will be 
functioning within 6 months of plan approval.
    (g) Within 3 years of plan approval all developmental steps will be 
fully implemented.
    (h) The Inspection Scheduling System will be fully implemented and 
in operation March 31, 1975.

[38 FR 10719, May 1, 1973, as amended at 40 FR 18429, Apr. 28, 1975; 40 
FR 40156, Sept. 2, 1975]



Sec. 1952.174  Completion of developmental steps and certification.

    (a)(1) In accordance with Sec. 1952.173(a), The California 
Occupational Safety and Health Act (Assembly Bill No. 150) was enacted 
in September 1973 and filed with the California Secretary of State 
October 2, 1973.
    (2) The following difference between the program described in 
Sec. 1952.170(a) and the program authorized by the State law is 
approved: Authority to grant or deny temporary variances rests with the 
Division of Industrial Safety, and such authority for permanent 
variances is with the Occupational Safety and Health Standards Board. 
The Board hears appeals from the Division of Industrial Safety's 
decisions on temporary variances.
    (b) In accordance with Sec. 1952.173(d) formal interagency 
agreements were negotiated and signed between the Department of 
Industrial Relations and the State Department of Health (June 28, 1973) 
and between the State Department of Industrial Relations and the State 
Fire Marshal (August 14, 1973).
    (c) In accordance with Sec. 1952.173(f), a program of consultation 
with employers and employees was fully functioning in January 1974.
    (d) In accordance with the requirements of Sec. 1952.10, the 
California State poster was approved by the Assistant Secretary on 
August 27, 1975.
    (e) The Occupational Safety and Health Standards Board began 
functioning in January 1974.
    (f) The initial major training and education of employers, employees 
and

[[Page 54]]

the general public was completed by 1974.
    (g) In accordance with Sec. 1952.173(a), recordkeeping and reporting 
requirements were extended to State and local governments effective 
January 1, 1975.
    (h) The Management Information System was established by November 
1974.
    (i) The Occupational Safety and Health Appeals Board began 
functioning in early 1974. The Rules of Procedure for the Board were 
approved by the Assistant Secretary on November 19, 1975.
    (j) In accordance with Sec. 1952.173(a), enforcement rules and 
regulations were promulgated by January 1974, and were approved by the 
Assistant Secretary on September 28, 1976.
    (k) Recordkeeping and reporting requirements for private employers 
were promulgated by November 1974, and were approved by the Assistant 
Secretary on September 28, 1976.
    (l) In accordance with Sec. 1952.173(h), the Inspection Scheduling 
System was fully implemented and in operation by June 1975.
    (m) In accordance with Sec. 1952.173(a), an operations manual was 
published, and was approved by the Assistant Secretary on September 28, 
1976.
    (n) In accordance with Sec. 1952.173(e), in-service training 
Programs for safety and health enforcement personnel were implemented 
within 18 months of plan approval.
    (o) Enforcement of standards pertaining to temporary labor camps was 
implemented in March 1977.
    (p) In accordance with Sec. 1903.34 of this chapter, the California 
occupational safety and health plan was certified, effective August 12, 
1977, as having completed all developmental steps specified in the plan 
as approved on April 24, 1973, on or before June 1, 1976, with the 
exception that temporary labor camp standards development and 
enforcement program was completed on March 11, 1977.

[40 FR 18427, Apr. 28, 1975, as amended at 40 FR 40156, Sept. 2, 1975; 
40 FR 54426, Nov. 24, 1975; 41 FR 43405, Oct. 1, 1976; 41 FR 51013, Nov. 
19, 1976; 42 FR 37549, July 22, 1977; 42 FR 41858, Aug. 19, 1977]



Sec. 1952.175  Changes to approved plans.

    (a) In accordance with part 1953 of this chapter, the California 
carcinogen program implemented on January 1, 1977, was approved by the 
Assistant Secretary on March 6, 1978.
    (b) On January 1, 1978, the California Department of Industrial 
Relations became the agency designated to administer the California 
Occupational Safety and Health Plan.
    (c) In accordance with part 1953 of this chapter, California amended 
its employer recordkeeping and reporting requirements effective November 
4, 1978, so as to provide employee access to the employer's log and 
summary of occupational injuries and illnesses.
    (d) In accordance with part 1953 of this chapter, California's 
liaison with the Occupational Health Centers, implemented on April 25, 
1979, was approved by the Assistant Secretary on July 25, 1980.
    (e) In accordance with part 1953 of this chapter, the California 
Hazard Alert System, implemented in July 1979, was approved by the 
Assistant Secretary on July 25, 1980.
    (f) In accordance with part 1953 of this chapter, the revised 
stratification of the Safety Engineer Series, adopted by California on 
July 1, 1979, was approved by the Assistant Secretary on January 12, 
1981.
    (g) In accordance with part 1953 of this chapter, California's Small 
Employer Voluntary Compliance Program, implemented on March 1, 1981, was 
approved by the Assistant Secretary on August 2, 1983.
    (h) In accordance with part 1953 of this chapter, the California 
Cooperative Self-Inspection Program was approved by the Assistant 
Secretary on August 1, 1986.
    (i) Legislation. (1) On March 29, 1994, the Assistant Secretary 
approved California's revised statutory penalty levels which are the 
same as the revised Federal penalty levels contained in section 17 of 
the Act as amended on November 5, 1990.

[43 FR 9807, Mar. 10, 1978, as amended at 44 FR 36385, June 22, 1979; 45 
FR 8594, Feb. 8, 1980; 45 FR 51766, Aug. 5, 1980; 46 FR 3861, Jan. 16, 
1981; 48 FR 34951, Aug. 2, 1983; 51 FR 27535, Aug. 1, 1986; 59 FR 14556, 
Mar. 29, 1994; 67 FR 60129, Sept. 25, 2002]

[[Page 55]]

Subparts L-M [Reserved]



                          Subpart N--Minnesota



Sec. 1952.200  Description of the plan as initially approved.

    (a) The Department of Labor and Industry is the State agency 
designated by the Governor to administer the plan throughout the State. 
The plan defines the covered occupational safety and health issues as 
defined by the Secretary of Labor in 29 CFR 1902.2(c)(1). The 
commissioner of the Department of Labor and Industry adopted Federal 
standards promulgated as of October 1972, effective in Minnesota, 
February 1973. The commissioner will continue to adopt Federal standards 
and will retain those Minnesota standards not covered by Federal 
standards. The plan contains a list of the Federal standards adopted and 
the State standards that will be retained. These standards will be 
enforced according to current legislative authority in Minnesota prior 
to the effective date of Minnesota's enabling legislation submitted as 
part of the plan.
    (b)(1) The plan includes legislation enacted by the Minnesota 
legislature during its 1973 session. Under the legislation the 
Department of Labor and Industry will have full authority to enforce and 
administer laws respecting safety and health of employees in all 
workplaces of the State, including coverage of public employees, with 
the exception of maritime workers in the areas of exclusive Federal 
jurisdiction, employees of the United States, and employees whose 
working conditions are regulated by Federal agencies other than the U.S. 
Department of Labor under the provisions of section 4(b)(1) of the 
Occupational Safety and Health Act of 1970.
    (2) The legislation further proposed to bring the plan into 
conformity with the requirements of 29 CFR part 1902 in areas such as 
procedures for granting or denying temporary and permanent variances by 
the commissioner; protection of employees from hazards; procedures for 
the development and promulgation of standards by the commissioner, 
including emergency temporary standards; and procedures for prompt 
restraint or elimination of imminent danger situations by issuance of a 
``red-tag'' order effective for 3 days as well as by court injunction.
    (3) The legislation is also intended to insure inspections in 
response to complaints; give employer and employee representatives an 
opportunity to accompany inspectors in order to aid inspections and that 
loss of any privilege or payment to an employee as a result of aiding 
such inspection would constitute discrimination; notification of 
employees or their representatives where no compliance action is taken 
as a result of alleged violations, including informal review; 
notification of employees of their protections and obligations; 
protection of employees against discharge or discrimination in terms and 
conditions of employment by filing complaints with the commissioner and 
hearings by the review commission; adequate safeguards to protect trade 
secrets; provision for prompt notice to employers and employees of 
alleged violations of standards and abatement requirements through the 
issuance and posting of citations; a system of sanctions against 
employers for violation of standards; employer right of review and 
employee participation in review proceedings, before an independent 
review commission; and coverage of employees of the State and political 
subdivisions in the same manner as private employees.
    (c) Included in the plan is a statement of the Governor's support 
for the legislation and a statement of legal opinion that it will meet 
the requirements of the Occupational Safety and Health Act of 1970 and 
is consistent with the constitution and laws of Minnesota. The plan sets 
out goals and provides a timetable for bringing it into full conformity 
with part 1902 at the end of 3 years after commencement of operations 
under the plan. Personnel will be employed under the existing State 
merit system and the voluntary compliance program for onsite 
consultation for private and public employers meets the conditions set 
forth in the issues discussed in the Washington decision (38 FR 2421, 
January 26, 1973).
    (d) The plan includes the following documents as of the date of 
approval:

[[Page 56]]

    (1) The plan document and appendices;
    (2) Revised legislation, submitted January 25, 1973;
    (3) Compliance manual and supplements to the plan document, February 
15, 1973;
    (4) Letters from the Department of Labor and Industry dated February 
8, 1973, and April 9, 1973.

[38 FR 15077, June 8, 1973, as amended at 50 FR 30831, July 30, 1985]



Sec. 1952.201  Developmental schedule.

    (a) Retraining of present occupational safety and health personnel 
during March-May 1973;
    (b) Training sessions for public employers and employees during 
April-June 1973;
    (c) Effective date of legislation, August 1, 1973;
    (d) Regulations on variances, August 1973;
    (e) Management information system, August 1973;
    (f) Staff increases in Department of Labor and Industry and 
Department of Health 1973-74;
    (g) Voluntary compliance program implemented by January 1975;
    (h) Coverage and enforcement of standards regarding agriculture, 
July 1975.

[38 FR 15077, June 8, 1973. Redesignated at 50 FR 30831, July 30, 1985]



Sec. 1952.202  Completion of developmental steps and certification.

    (a) In accordance with the requirements of Sec. 1952.10, the 
Minnesota State poster was approved by the Assistant Secretary on March 
7, 1975.
    (b) In accordance with Sec. 1952.203(g), the Minnesota voluntary 
compliance program became effective on January 1, 1975, and was approved 
by the Assistant Secretary on April 24, 1975.
    (c) State occupational safety and health personnel were retrained 
during March-May 1973.
    (d) Training sessions for public employers and employees were held 
during April-June 1973.
    (e) The Minnesota enabling legislation became effective on August 1, 
1973. In addition, amendments to the legislation which concerned 
employee discrimination complaints and violations became effective on 
July 1, 1975, and a second amendment concerning the definition of a 
serious violation, posting of citations and penalties, right of 
employees to contest a citation and penalty, and furnishing copies of 
citations and notices of penalties to employer representatives and, in 
the case of a fatality, to the next of kin or a designated 
representative, became effective on August 1, 1975.
    (f) Regulations on variances were promulgated on February 20, 1974, 
and were approved with assurances by the Assistant Secretary on August 
31, 1976.
    (g) The management information system became operable in August 
1973.
    (h) Coverage and enforcement of agricultural standards commenced on 
July 1, 1975.
    (i) The Rules of Procedure of the Minnesota Occupational Safety and 
Health Review Commission, chapter 20, Minnesota Occupational Safety and 
Health Code, and regulations concerning inspections, citations, and 
proposed penalties, chapter 21, Minnesota Occupational Safety and Health 
Code, were approved by the Assistant Secretary on August 31, 1976.
    (j) The downward revision of the projected increase in personnel for 
fiscal year 1976 due to a lesser than anticipated increase of funding by 
the Minnesota legislature, was approved by the Assistant Secretary as 
meeting current required staffing on August 31, 1976.
    (k) The State poster approved on March 25, 1975 (40 FR 13211) which 
was revised in response to legislative amendments described above, to 
provide that citations and notices of penalties must be posted at or 
near the place of the alleged violation for 15 days or until the 
violation is corrected, whichever is later, and which lists additional 
Minnesota area offices, was approved by the Assistant Secretary on 
August 31, 1976.
    (l) In accordance with Sec. 1902.34 of this chapter, the Minnesota 
occupational safety and health plan was certified, effective September 
28, 1976, as having completed all developmental steps specified in the 
plan as approved on May 29, 1973, on or before June 30, 1976.

[40 FR 13212, Mar. 25, 1975, as amended at 40 FR 18996, May 1, 1975. 
Redesignated at 50 FR 30831, July 30, 1985]

[[Page 57]]



Sec. 1952.203  Compliance staffing benchmarks.

    Under the terms of the 1978 Court Order in AFL-CIO v. Marshall, 
compliance staffing levels (benchmarks) necessary for a ``fully 
effective'' enforcement program were required to be established for each 
State operating an approved State plan. In September 1984 Minnesota, in 
conjunction with OSHA, completed a reassessment of the levels initially 
established in 1980 and proposed revised compliance staffing benchmarks 
of 31 safety and 12 health compliance officers. After opportunity for 
public comment and service on the AFL-CIO, the Assistant Secretary 
approved these revised staffing requirements on July 30, 1985.

[50 FR 30832, July 30, 1985]



Sec. 1952.204  Final approval determination.

    (a) In accordance with section 18(e) of the Act and procedures in 29 
CFR part 1902, and after determination that the State met the ``fully 
effective'' compliance staffing benchmarks as revised in 1984 in 
response to a Court Order in AFL-CIO v. Marshall (CA 74-406), and was 
satisfactorily providing reports to OSHA through participation in the 
Federal-State Unified Management Information System, the Assistant 
Secretary evaluated actual operations under the Minnesota State plan for 
a period of at least one year following certification of completion of 
developmental steps (41 FR 42659). Based on the 18(e) Evaluation Report 
for the period of October 1982 through March 1984, and after opportunity 
for public comment, the Assistant Secretary determined that in operation 
the State of Minnesota's occupational safety and health program is at 
least as effective as the Federal program in providing safe and 
healthful employment and places of employment and meets the criteria for 
final State plan approval in section 18(e) of the Act and implementing 
regulations at 29 CFR part 1902. Accordingly, the Minnesota plan was 
granted final approval, and concurrent Federal enforcement authority was 
relinquished under section 18(e) of the Act effective July 30, 1985.
    (b) Except as otherwise noted, the plan which has received final 
approval covers all activities of employers and all places of employment 
in Minnesota. The plan does not cover private sector offshore maritime 
employment on the navigable waters of the United States; employment at 
the Twin Cities Army Ammunition Plant; Federal government employers and 
employees; the U.S. Postal Service (USPS), including USPS employees, and 
contract employees and contractor-operated facilities engaged in USPS 
mail operations; any tribal or private sector employment within any 
Indian reservation in the State; the enforcement of the field sanitation 
standard, 29 CFR 1928.110, and the enforcement of the temporary labor 
camps standard, 29 CFR 1910.142, with respect to any agricultural 
establishment where employees are engaged in ``agricultural employment'' 
within the meaning of the Migrant and Seasonal Agricultural Worker 
Protection Act, 29 U.S.C. 1802(3), regardless of the number of 
employees, including employees engaged in hand packing of produce into 
containers, whether done on the ground, on a moving machine, or in a 
temporary packing shed, except that Minnesota retains enforcement 
responsibility over agricultural temporary labor camps for employees 
engaged in egg, poultry, or red meat production, or the post-harvest 
processing of agricultural or horticultural commodities.
    (c) Minnesota is required to maintain a State program which is at 
least as effective as operations under the Federal program; to submit 
plan supplements in accordance with 29 CFR part 1953; to allocate 
sufficient safety and health enforcement staff to meet the benchmarks 
for State staffing established by the U.S. Department of Labor, or any 
revisions to those benchmarks; and, to furnish such reports in such form 
as the Assistant Secretary may from time to time require.

[50 FR 30832, July 30, 1985, as amended at 62 FR 2561, Jan. 17, 1997; 65 
FR 36622, June 9, 2000]



Sec. 1952.205  Level of Federal enforcement.

    (a) As a result of the Assistant Secretary's determination granting 
final

[[Page 58]]

approval to the Minnesota plan under section 18(e) of the Act, effective 
July 30, 1985, occupational safety and health standards which have been 
promulgated under section 6 of the Act do not apply with respect to 
issues covered under the Minnesota plan. This determination also 
relinquishes concurrent Federal OSHA authority to issue citations for 
violations of such standards under sections 5(a)(2) and 9 of the Act; to 
conduct inspections and investigations under section 8 (except those 
necessary to conduct evaluation of the plan under section 18(f) and 
other inspections, investigations, or proceedings necessary to carry out 
Federal responsibilities not specifically preempted by section 18(e)); 
to conduct enforcement proceedings in contested cases under section 10; 
to institute proceedings to correct imminent dangers under section 13; 
and to propose civil penalties or initiate criminal proceedings for 
violations of the Federal Act under section 17. The Assistant Secretary 
retains jurisdiction under the above provisions in any proceeding 
commenced under section 9 or 10 before the effective date of the 18(e) 
determination.
    (b)(1) In accordance with section 18(e), final approval relinquishes 
Federal OSHA authority only with regard to occupational safety and 
health issues covered by the Minnesota plan. OSHA retains full authority 
over issues which are not subject to State enforcement under the plan. 
Thus, Federal OSHA retains its authority relative to safety and health 
in private sector offshore maritime activities and will continue to 
enforce all provisions of the Act, rules or orders, and all Federal 
standards, current or future, specifically directed to maritime 
employment (29 CFR Part 1915, shipyard employment; Part 1917, marine 
terminals; Part 1918, longshoring; Part 1919, gear certification) as 
well as provisions of general industry and construction standards (29 
CFR Parts 1910 and 1926) appropriate to hazards found in these 
employments, as they relate to employment under the exclusive 
jurisdiction of the Federal government on the navigable waters of the 
United States. Federal jurisdiction is retained and exercised by the 
Employment Standards Administration, U.S. Department of Labor, 
(Secretary's Order 5-96, dated December 27, 1996) with respect to the 
field sanitation standard, 29 CFR 1928.110, and the enforcement of the 
temporary labor camps standard, 29 CFR 1910.142, in agriculture, as 
described in Sec. 1952.204(b). Federal jurisdiction is also retained 
over the Twin Cities Army Ammunition Plant; over Federal government 
employers and employees; over any tribal or private sector employment 
within any Indian reservation in the State; and over the U.S. Postal 
Service (USPS), including USPS employees, and contract employees and 
contractor-operated facilities engaged in USPS mail operations.
    (2) In addition, any hazard, industry, geographical area, operation 
or facility over which the State is unable to effectively exercise 
jurisdiction for reasons not related to the required performance or 
structure of the plan shall be deemed to be an issue not covered by the 
finally approved plan, and shall be subject to Federal enforcement. 
Where enforcement jurisdiction is shared between Federal and State 
authorities for a particular area, project, or facility, in the interest 
of administrative practicability, Federal jurisdiction may be assumed 
over the entire project or facility. In either of the two aforementioned 
circumstances, Federal enforcement may be exercised immediately upon 
agreement between Federal and State OSHA.
    (c) Federal authority under provisions of the Act not listed in 
section 18(e) is unaffected by final approval of the plan. Thus, for 
example, the Assistant Secretary retains his authority under section 
11(c) of the Act with regard to complaints alleging discrimination 
against employees because of the exercise of any right afforded to the 
employee by the Act, although such complaints may be referred to the 
State for investigation. The Assistant Secretary also retains his 
authority under section 6 of the Act to promulgate, modify or revoke 
occupational safety and health standards which address the working 
conditions of all employees, including those in States which have 
received an affirmative 18(e) determination, although such

[[Page 59]]

standards may not be Federally applied. In the event that the State's 
18(e) status is subsequently withdrawn and Federal authority reinstated, 
all Federal standards, including any standards promulgated or modified 
during the 18(e) period, would be Federally enforceable in that State.
    (d) As required by section 18(f) of the Act, OSHA will continue to 
monitor the operations of the Minnesota State program to assure that the 
provisions of the State plan are substantially complied with and that 
the program remains at least as effective as the Federal program. 
Failure by the State to comply with its obligations may result in the 
revocation of the final determination under section 18(e), resumption of 
Federal enforcement, and/or proceedings for withdrawal of plan approval.

[50 FR 30832, July 30, 1985, as amended at 62 FR 2562, Jan. 17, 1997; 65 
FR 36623, June 9, 2000]



Sec. 1952.206  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected and copied during normal business hours at the following 
locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, 200 Constitution Avenue NW, Room N3700, 
Washington, DC 20210;
Office of the Regional Administrator, Occupational Safety and Health 
Administration, U.S. Department of Labor, 230 S. Dearborn Street, 32nd 
Floor, Room 3244, Chicago, Illinois 60604; and
Office of the Commissioner, Minnesota Department of Labor and Industry, 
443 Lafayette Road, St. Paul, Minnesota 55155.

[65 FR 36623, June 9, 2000]



Sec. 1952.207  Changes to approved plans.

    (a) Legislation. (1) On March 29, 1994, the Assistant Secretary 
approved Minnesota's revised statutory penalty levels which are the same 
as the revised Federal penalty levels contained in section 17 of the Act 
as amended on November 5, 1990.
    (2)  [Reserved]
    (b) Temporary labor camps/field sanitation. Effective February 3, 
1997, the Assistant Secretary approved Minnesota's plan amendment, dated 
July 24, 1996, relinquishing coverage for the issues of field sanitation 
(29 CFR 1928.110) and temporary labor camps (29 CFR 1910.142) in 
agriculture (except for agricultural temporary labor camps associated 
with egg, poultry or red meat production, or the post-harvest processing 
of agricultural or horticultural commodities). The Employment Standards 
Administration, U.S. Department of Labor, has assumed responsibility for 
enforcement of these Federal OSHA standards in agriculture in Minnesota 
pursuant to Secretary of Labor's Order 5-96, dated December 27, 1996.

[59 FR 14556, Mar. 29, 1994, as amended at 62 FR 2562, Jan. 17, 1997]



                           Subpart O--Maryland



Sec. 1952.210  Description of the plan as initially approved.

    (a) The Division of Labor and Industry in the Department of 
Licensing and Regulation is the State agency designated by the Governor 
to administer the plan throughout the State. The plan defines the 
covered occupational safety and health issues on the basis of Major 
Groups in the Standard Industrial Classification (SIC) Manual of the 
Office of Management and Budget of the Executive Office of the 
President. The Commissioner of the Division of Labor and industry 
promulgated the Federal standards existing as of February 2, 1973. These 
standards were effective in Maryland as of March 8, 1973, and they will 
be enforced according to current State legislative authority prior to 
the effective date of Maryland's enabling legislation, July 1, 1973. 
Maryland also intends to adopt those Federal standards applicable to 
ship repairing, ship building, ship breaking and longshoring except 
where prohibited by exclusive Federal maritime jurisdiction. Subsequent 
revisions to Federal standards will be considered by the State 
Occupational Safety and Health Advisory Board which will make 
recommendations on adoption of at least as effective standards to the 
Commissioner within 6 months after Federal promulgation. Maryland also 
includes in its plan State boiler and elevator standards where 
applicable.

[[Page 60]]

    (b)(1) The plan included draft legislation which has been passed by 
the State legislature and signed by the Governor. The legislation as 
enacted has been included as a supplement to the plan. Under the 
legislation, effective July 1, 1973, the Division of Labor and Industry 
in the Department of Licensing and Regulation has full authority to 
enforce and administer laws respecting safety and health of employees in 
all workplaces of the State, including coverage of public employees, 
with the exception of maritime workers in the areas of exclusive Federal 
jurisdiction; employees of the United States; and employees whose 
working conditions are protected under enumerated Federal laws.
    (2) The legislation brings the plan into conformity with the 
requirements of 29 CFR part 1902 in areas such as procedures for 
granting or denying temporary and permanent variances to rules, 
regulations or standards by the Commissioner; protection of employees 
from hazards including provision for medical examinations made available 
by the employer or at his cost; procedures for the development of 
standards by the Occupational Safety and Health Advisory Board; 
promulgation of these standards as recommended by the Commissioner; 
promulgation of emergency temporary standards by the Commissioner with 
referral to the Board to develop a permanent standard; procedures for 
prompt restraint or elimination of imminent danger situations by 
issuance of a ``red-tag'' order with court review as well as by court 
injunction.
    (3) The legislation provides for inspections in response to 
complaints; gives employer and employee representatives an opportunity 
to accompany inspectors in order to aid inspections; notification of 
employees or their representatives when no compliance action is taken as 
a result of alleged violations, including informal review; protection of 
employees against discharge or discrimination in terms and conditions of 
employment by filing complaints with the Commissioner who will seek 
court action; adequate safeguards to protect trade secrets; provision 
for prompt notice to employers and employees of alleged violations of 
standards and abatement requirements through the issuance and posting of 
citations; a system of sanctions against employers for violations of 
standards; employer right of review and employee participation in review 
proceedings before the Commissioner with subsequent judicial review; and 
coverage of employees of the State and political subdivisions in a 
separate program supervised by the Commissioner in accordance with the 
requirements described in the North Carolina decision (38 FR 3041).
    (c) Included in the plan is a statement of legal opinion that the 
law, which was supported by the Governor in accordance with the 
requirements of part 1902, meets the requirements of the Occupational 
Safety and Health Act of 1970 and is consistent with the Constitution 
and laws of Maryland. The plan sets out goals and provides a timetable 
for bringing it into full conformity with part 1902 at the end of three 
years after the commencement of operations under the plan. Personnel 
will be employed under the existing State merit system with the 
revisions in qualifications as stated in supplements to the plan, and 
the voluntary compliance program for on-site consultation meets the 
conditions set forth in the issues discussed in the Washington decision 
(38 FR 2421).
    (d) The plan includes the following documents as of the date of 
approval.
    (1) The plan document in two volumes.
    (2) Maryland Occupational Safety and Health Act of 1973, effective 
July 1, 1973.
    (3) ``A Program for Control of Occupational Health Hazards in 
Maryland'' by Johns Hopkins University Department of Environmental 
Medicine.
    (4) Letters from the Division of Labor and Industry dated February 
9, 1973; March 6, 1973; March 22, 1973; May 2, 1973 and May 21, 1973.
    (5) Maryland's Administrative Procedure Act Article 41 sections 244 
et seq.

[38 FR 17837, July 5, 1973, as amended at 50 FR 29219, July 18, 1985]



Sec. 1952.211  Developmental schedule.

    (a) Occupational health study accepted and implementation begun 
July, 1973;

[[Page 61]]

    (b) Compliance Manual developed by July, 1973;
    (c) Management Information System, December, 1975;
    (d) Training in compliance procedures by August, 1973;
    (e) Promulgation of standard-setting procedures, August, 1973;
    (f) Inspection and enforcement program, except as provided in 
paragraph (k), in September, 1973;
    (g) Staff of hearing examiners and review procedures set up in 
September, 1973;
    (h) Variance procedures and emergency temporary standard-setting 
procedures promulgated October, 1973;
    (i) Review of appeal procedures to see if it should be continued or 
modified, July, 1974;
    (j) Review of job qualifications within one year of plan approval;
    (k) Inspection and enforcement of agriculture standards by December, 
1974;
    (l) Fully operational occupational health program, July, 1975;
    (m) Fully implemented public employees program, December, 1975;

[38 FR 17837, July 5, 1973, as amended at 41 FR 45564, Oct. 15, 1976. 
Redesignated at 50 FR 29219, July 18, 1985]



Sec. 1952.212  Completion of developmental steps and certification.

    (a) In accordance with part 1953 of this chapter, the Maryland 
occupational safety and health standards were approved by OSHA on 
October 3, 1974.
    (b) In accordance with the requirements of 29 CFR 1952.10, the 
Maryland State poster was approved by the Assistant Secretary on June 6, 
1975.
    (c) In accordance with the commitment expressed in Sec. 1952.213(l), 
the State of Maryland developed and implemented an occupational health 
plan by December 31, 1975.
    (d) In accordance with the commitment expressed in Sec. 1952.213(n), 
the designee developed a fully operational Management Information System 
by May 1, 1975.
    (e) In accordance with 29 CFR 1952.213(d), training of Maryland 
compliance personnel in compliance procedure was completed by December 
31, 1975.
    (f) In accordance with 29 CFR 1952.213(f), the Maryland inspection 
and enforcement program was implemented by September 1973.
    (g) In accordance with 29 CFR 1952.213(j), review of the appeal 
procedures to see if they should be continued or modified was conducted 
by the State by May 1975.
    (h) In accordance with 29 CFR 1952.213(b), Maryland completed 
development of a Compliance Manual.
    (i) In accordance with 29 CFR 1952.213(e), the State has promulgated 
acceptable standard-setting procedures.
    (j) In accordance with 29 CFR 1952.213(h), Maryland promulgated 
acceptable variance procedures and emergency temporary standard-setting 
procedures.
    (k) In accordance with 29 CFR 1952.213(j), review of the job 
qualifications of State personnel was conducted by the State.
    (l) In accordance with 29 CFR 1952.213(m), the State of Maryland has 
developed and implemented a safety and health program for public 
employees
    (m) In accordance with 29 CFR 1952.213(a), the State submitted an 
occupational health study, and the State's occupational health plan is 
being implemented.
    (n) In accordance with 29 CFR 1952.213(g), the State established a 
staff of hearing examiners and review procedures.
    (o) In accordance with 29 CFR 1952.213(k), agricultural standards 
are being enforced by the Maryland Department of Labor and Industry.
    (p) In accordance with Sec. 1902.34 of this chapter, the Maryland 
occupational safety and health plan was certified effective February 15, 
1980, as having completed all developmental steps specified in the plan 
as approved on July 5, 1973, on or before August 31, 1976. This 
certification attests to structural completion, but does not render 
judgment on adequacy of performance.

[40 FR 25207, June 13, 1975, as amended at 41 FR 45564, Oct. 15, 1976; 
42 FR 10988, Feb. 25, 1977; 44 FR 28326, 28327, May 15, 1979; 45 FR 
10337, Feb. 15, 1980. Redesignated at 50 FR 29219, July 18, 1985, as 
amended at 67 FR 60129, Sept. 25, 2002]

[[Page 62]]



Sec. 1952.213  Compliance staffing benchmarks.

    Under the terms of the 1978 Court Order in AFL-CIO v. Marshall 
compliance staffing levels (benchmarks) necessary for a ``fully 
effective'' enforcement program were required to be established for each 
State operating an approved State plan. In September 1984 Maryland, in 
conjunction with OSHA, completed a reassessment of the levels initially 
established in 1980 and proposed revised compliance staffing benchmarks 
of 36 safety and 18 health compliance officers. After opportunity for 
public comment and service on the AFL-CIO, the Assistant Secretary 
approved these revised staffing requirements on July 18, 1985.

[50 FR 29219, July 18, 1985]



Sec. 1952.214  Final approval determination.

    (a) In accordance with section 18(e) of the Act and procedures in 29 
CFR part 1902, and after determination that the State met the ``fully 
effective'' compliance staffing benchmarks as revised in 1984 in 
response to a Court Order in AFL-CIO v. Marshall (CA 74-406), and was 
satisfactorily providing reports to OSHA through participation in the 
Federal-State Unified Management Information System, the Assistant 
Secretary evaluated actual operations under the Maryland State plan for 
a period of at least one year following certification of completion of 
developmental steps (45 FR 10335). Based on the 18(e) Evaluation Report 
for the period of October 1982 through March 1984, and after opportunity 
for public comment, the Assistant Secretary determined that in operation 
the State of Maryland's occupational safety and health program is at 
least as effective as the Federal program in providing safe and 
healthful employment and places of employment and meets the criteria for 
final State plan approval in section 18(e) of the Act and implementing 
regulations at 29 CFR part 1902. Accordingly, the Maryland plan was 
granted final approval and concurrent Federal enforcement authority was 
relinquished under section 18(e) of the Act effective July 18, 1985.
    (b) Except as otherwise noted, the plan which has received final 
approval covers all activities of employers and all places of employment 
in Maryland. The plan does not cover private sector maritime employment; 
Federal government employers and employees; the U.S. Postal Service 
(USPS), including USPS employees, and contract employees and contractor-
operated facilities engaged in USPS mail operations; and employment on 
military bases.
    (c) Maryland is required to maintain a State program which is at 
least as effective as operations under the Federal program; to submit 
plan supplements in accordance with 29 CFR part 1953; to allocate 
sufficient safety and health enforcement staff to meet the benchmarks 
for State staffing established by the U.S. Department of Labor, or any 
revisions to those benchmarks; and, to furnish such reports in such form 
as the Assistant Secretary may from time to time require.

[50 FR 29220, July 18, 1985, as amended at 65 FR 36623, June 9, 2000]



Sec. 1952.215  Level of Federal enforcement.

    (a) As a result of the Assistant Secretary's determination granting 
final approval to the Maryland plan under section 18(e) of the Act, 
effective July 18, 1985, occupational safety and health standards which 
have been promulgated under section 6 of the Act do not apply with 
respect to issues covered under the Maryland plan. This determination 
also relinquishes concurrent Federal OSHA authority to issue citations 
for violations of such standards under sections 5(a)(2) and 9 of the 
Act; to conduct inspections and investigations under section 8 (except 
those necessary to conduct evaluation of the plan under section 18(b) 
and other inspections, investigations, or proceedings necessary to carry 
out Federal responsibilities not specifically preempted by section 
18(e)); to conduct enforcement proceedings in contested cases under 
section 10; to institute proceedings to correct imminent dangers under 
section 13; and to propose civil penalties or initiate criminal 
proceedings for violations of the Federal Act under section 17. The 
Assistant Secretary retains jurisdiction under

[[Page 63]]

the above provisions in any proceeding commenced under section 9 or 10 
before the effective date of the 18(e) determination.
    (b)(1) In accordance with section 18(e), final approval relinquishes 
Federal OSHA authority only with regard to occupational safety and 
health issues covered by the Maryland plan. OSHA retains full authority 
over issues which are not subject to State enforcement under the plan. 
Thus, Federal OSHA retains its authority relative to safety and health 
in private sector maritime activities and will continue to enforce all 
provisions of the Act, rules or orders, and all Federal standards, 
current or future, specifically directed to private sector maritime 
employment (29 CFR Part 1915, shipyard employment; Part 1917, marine 
terminals; Part 1918, longshoring; Part 1919, gear certification), as 
well as provisions of general industry and construction standards (29 
CFR Parts 1910 and 1926) appropriate to hazards found in these 
employments; and employment on military bases. Federal jurisdiction is 
also retained with respect to Federal government employers and 
employees; and the U.S. Postal Service (USPS), including USPS employees, 
and contract employees and contractor-operated facilities engaged in 
USPS mail operations.
    (2) In addition, any hazard, industry, geographical area, operation 
or facility over which the State is unable to effectively exercise 
jurisdiction for reasons not related to the required performance or 
structure of the plan shall be deemed to be an issue not covered by the 
finally approved plan, and shall be subject to Federal enforcement. 
Where enforcement jurisdiction is shared between Federal and State 
authorities for a particular area, project, or facility, in the interest 
of administrative practicability Federal jurisdiction may be assumed 
over the entire project or facility. In either of the two aforementioned 
circumstances, Federal enforcement may be exercised immediately upon 
agreement between Federal and State OSHA.
    (c) Federal authority under provisions of the Act not listed in 
section 18(e) is unaffected by final approval of the plan. Thus, for 
example, the Assistant Secretary retains his authority under section 
11(c) of the Act with regard to complaints alleging discrimination 
against employees because of the exercise of any right afforded to the 
employee by the Act, although such complaints may be referred to the 
State for investigation. The Assistant Secretary also retains his 
authority under section 6 of the Act to promulgate, modify or revoke 
occupational safety and health standards which address the working 
conditions of all employees, including those in States which have 
received an affirmative 18(e) determination, although such standards may 
not be Federally applied. In the event that the State's 18(e) status is 
subsequently withdrawn and Federal authority reinstated, all Federal 
standards, including any standards promulgated or modified during the 
18(e) period, would be Federally enforceable in that State.
    (d) As required by section 18(f) of the Act, OSHA will continue to 
monitor the operations of the Maryland State program to assure that the 
provisions of the State plan are subtantially complied with and that the 
program remains at least as effective as the Federal program. Failure by 
the State to comply with its obligations may result in the revocation of 
the final determination under section 18(e), resumption of Federal 
enforcement, and/or proceedings for withdrawal of plan approval.

[50 FR 29220, July 18, 1985, as amended at 65 FR 36623, June 9, 2000]



Sec. 1952.216  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected and copied during normal business hours at the following 
locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, 200 Constitution Avenue NW, Room N3700, 
Washington, DC 20210;
Office of the Regional Administrator, Occupational Safety and Health 
Administration, U.S. Department of Labor, The Curtis Center, 170 South 
Independence Mall West--Suite 740 West, Philadelphia, Pennsylvania 
19106-3309; and
Office of the Commissioner, Maryland Division of Labor and Industry, 
Department of

[[Page 64]]

Labor, Licensing and Regulation, 1100 N. Eutaw Street, Room 613, 
Baltimore, Maryland 21201-2206.

[65 FR 36623, June 9, 2000]



Sec. 1952.217  Changes to approved plans.

    (a) Legislation. (1) On March 29, 1994, the Assistant Secretary 
approved Maryland's revised statutory penalty levels which are the same 
as the revised Federal penalty levels contained in section 17 of the Act 
as amended on November 5, 1990.
    (2)  [Reserved]
    (b)  [Reserved]

[59 FR 14556, Mar. 29, 1994]



                          Subpart P--Tennessee



Sec. 1952.220  Description of the plan as initially approved.

    (a) The plan identifies the Department of Labor and the Department 
of Health as the agencies designated to administer the plan throughout 
the State. It adopts the definition of occupational safety and health 
issues expressed in Sec. 1902.2(c)(1) of this chapter. All standards, 
except those found in 29 CFR parts 1915, 1916, 1917, and 1918 (ship 
repairing, ship building, ship breaking and longshoring) will be adopted 
and enforced immediately upon approval of the plan by the Assistant 
Secretary.
    (b)(1) The plan includes legislation passed by the Tennessee 
Legislature during its 1972 session which became effective July 1, 1972. 
Under the law, the Department of Labor and the Department of Public 
Health will have full authority to enforce and administer laws 
respecting safety and health of employees in all workplaces of the State 
with the exception of employees of the United States or employees 
protected under other Federal occupational safety and health laws such 
as the Atomic Energy Act of 1959 (42 U.S.C. 2011 et seq.). The Federal 
Coal Mine Safety Act of 1969 (30 U.S.C. 801), the Federal Metal and 
Nonmetallic Mine Safety Act (30 U.S.C. 721 et seq.) railroad employees 
covered by the Federal Safety Appliances Act (45 U.S.C. 1 et seq.) and 
the Federal Railroad Safety Act (45 U.S.C. 421 et seq.), the 
Longshoremen's and Harbor Workers' Compensation Act, as amended (33 
U.S.C. 901 et seq.), domestic workers, and any employee engaged in 
agriculture who is employed on a family farm. The Act further provides 
for the protection of employees from hazards, procedures for the 
development and promulgation of standards, including standards for 
protection of employees against new and unforeseen hazards; procedures 
for prompt restraint or elimination of imminent danger situations.
    (2) The Act also insures inspections in response to complaints; 
employer and employee representatives an opportunity to accompany 
inspectors in order to aid inspections; notification of employees or 
their representative when no compliance action is taken as a result of 
alleged violations, including informal review; notification of employees 
of their protections and obligations; adequate safeguards to protect 
trade secrets; provisions for prompt notice to employers and employees 
of alleged violations of standards and abatement requirements; a system 
of sanctions against employers for violations of standards; employer 
right of review with employee participation in review proceedings, and 
coverage of employees of political subdivisions. Legislation which 
became effective on April 5, 1973, providing for ``stop orders'' for 
cases of imminent danger situations is also included.
    (c)(1) The plan further includes proposed amendments submitted by 
the State which will be presented to the 1974 session of the State 
legislature to bring its Occupational Safety and Health Act into 
conformity with the requirements of 29 CFR part 1902. These amendments 
pertain to such areas as permanent variances, employee protection 
against discharge or discrimination in terms and conditions of 
employment, imminent danger situations, sanctions, and walkaround. A 
statement of the Governor's support for the proposed amandments and a 
statement of legal opinion that they will meet the requirements of the 
Occupational Safety and Health Act of 1970 and is consistent with the 
Constitution and laws of the State are included in the plan.
    (2) The plan provides a comprehensive description of personnel 
employed

[[Page 65]]

under the State's merit system and assurances of sufficient resources. 
The plan further sets out goals and provides a timetable to bring it 
into full conformity with the requirements of part 1902 of this chapter.
    (d) The Tennessee plan includes the following documents as of the 
date of approval:
    (1) The plan description documents including the Tennessee 
Occupational Safety and Health Act, the proposed amendments to the Act 
and appendices in three (3) volumes;
    (2) Letter from Ben O. Gibbs, Commissioner of Labor to Henry J. 
Baker, Project Officer, Office of State and Federal Operations, February 
14, 1973, submitting additions and deletions to the plan.
    (3) Letter from Edward C. Nichols, Jr., Staff Attorney for the 
Department of Labor, to Henry Baker, May 30, 1973, submitting a ``red 
tag'' provision which was signed into law by the Governor of Tennessee 
on April 5, 1973.
    (4) Letter from Ben O. Gibbs, Commissioner of Labor and Eugene W. 
Fowinkle, Commissioner of Public Health, to Thomas C. Brown, Director, 
Office of Federal and State Operations, June 15, 1973, submitting 
proposed amendments and clarifications to the plan.
    (e) The public comments will also be available for inspection and 
copying with the plan documents.

[38 FR 17840, July 5, 1973, as amended at 50 FR 29669, July 22, 1985]



Sec. 1952.221  Developmental schedule.

    The Tennessee state plan is developmental. The following is the 
developmental schedule as provided by the plan:
    (a) Formal adoption of Federal standards immediately upon approval 
of State plan. (Existing State standards were repealed by the enabling 
legislation). Enforcement of standards commences immediately upon 
promulgation.
    (b) Amendments to legislation to be submitted to 1974 State 
legislative session.
    (c) Regulations for recordkeeping and reporting will be promulgated 
upon plan approval.
    (d) Regulations for inspections, citations, and proposed penalties 
will be promulgated immediately upon plan approval.
    (e) Variances regulations will be promulgated within 60 days of plan 
approval.
    (f) Manual Management data system operational July 1, 1973. 
Automated Management data system operational January 1, 1974.

[38 FR 17840, July 5, 1973. Redesignated at 50 FR 29669, July 22, 1985]



Sec. 1952.222  Completed developmental steps.

    (a) In accordance with Sec. 1952.223(b), the Tennessee Occupational 
Safety and Health Act of 1972 was amended by Chapter 585, Public Acts of 
1974, on March 20, 1974, with an effective date of July 1, 1974 and 
approved by the Secretary of Labor in August 15, 1975 (40 FR 36556). 
Further State-initiated amendments to the Act transferring all 
occupational safety and health responsibility to the Commissioner of 
Labor were promulgated effective July 1, 1977, and approved by the 
Assistant Secretary on May 3, 1978.
    (b) In accordance with Sec. 1952.223(d), regulations governing 
inspections, citations, and proposed penalties were originally 
promulgated by the Commissioner of Labor on July 2, 1973 (effective July 
13, 1973) and approved by the Assistant Secretary on August 15, 1975 (40 
FR 36556). These regulations were subsequently codified as Tennessee 
Department of Labor Chapter 0800-1-4 and reapproved by the Assistant 
Secretary, as amended, on May 3, 1978. The Tennessee Commissioner of 
Public Health promulgated parallel regulations on April 3, 1974 
(effective May 3, 1974) which were also approved on August 15, 1975. 
These Department of Public Health regulations became inoperative on July 
1, 1977.
    (c) In accordance with Sec. 1952.223(e), regulations governing 
temporary variances were promulgated by the Commissioner of Labor on 
July 2, 1973 (effective July 13, 1973) and approved by the Assistant 
Secretary on August 15, 1975, (40 FR 36566). These regulations, which 
were subsequently codified as Tennessee Department of Labor Chapter 
0800-1-2, were expanded to include

[[Page 66]]

permanent variances, and amended in response to Federal comment, and 
reapproved by the Assistant Secretary on May 3, 1978. The Commissioner 
of Public Health promulgated regulations dealing with temporary 
variances on April 3, 1974, (effective May 3, 1974) which were also 
approved by the Secretary on August 15, 1975. These Department of Public 
Health regulations became inoperative on July 1, 1977.
    (d) In accordance with the requirements of 29 CFR 1952.10, the 
Tennessee occupational safety and health poster for private employers 
and local government employers choosing to be treated as private 
employers was approved by the Assistant Secretary on August 15, 1975. In 
addition, a Tennessee occupational safety and health poster for public 
employees was approved by the Assistant Secretary on May 3, 1978.
    (e) In accordance with Sec. 1952.223(a) the Tennessee occupational 
safety and health standards identical to Federal standards (through 
December 26, 1974) have been promulgated and approved, as revised, by 
the Assistant Regional Director on March 31, 1975 (40 FR 14383).
    (f) In accordance with Sec. 1952.223(f) Tennessee implemented a 
manual management information system in July 1973, and converted to an 
automated system in July 1975.
    (g) In accordance with plan commitments, regulations governing 
Occupational Safety and Health Recordkeeping and Reporting (Chapter 
0800-1-3) were promulgated by the Tennessee Department of Labor on June 
10, 1974, and subsequently amended on April 15, 1976, July 14, 1977, 
August 15, 1977 and February 13, 1978. These regulations, which contain 
requirements essentially identical to the Federal 29 CFR part 1904, were 
approved by the Assistant Secretary on May 3, 1978.
    (h) In accordance with plan commitments, the Tennessee Occupational 
Safety and Health Review Commission promulgated regulations governing 
its operation on May 5, 1974 (Chapters 1030-1 through 1030-7). These 
regulations were subsequently amended in response to Federal comment on 
February 13, 1978, and approved by the Assistant Secretary on May 3, 
1978.
    (i) In accordance with plan commitments, Tennessee revised its 
original Compliance Operations Manual on May 19, 1975. The manual which 
was subsequently amended in response to Federal comment and to reflect 
all Federal procedures in effect as of December 1, 1976, was approved by 
the Assistant Secretary on May 3, 1978.
    (j) In accordance with State plan commitments, a Tennessee Public 
Employee plan and implementing regulations (Tennessee Department of 
Labor Chapter 0800-1-5) have been adopted and were approved by the 
Assistant Secretary on May 3, 1978.
    (k) In accordance with Sec. 1902.34 of this chapter, the Tennessee 
occupational safety and health plan received certification, effective 
May 3, 1978, as having completed all developmental steps specified in 
its plan as approved on June 28, 1973, on or before July 1, 1976.

[40 FR 36567, Aug. 21, 1975, as amended at 42 FR 58747, Nov. 11, 1977; 
43 FR 20982-20986, May 16, 1978. Redesignated at 50 FR 29669, July 22, 
1985]



Sec. 1952.223  Compliance staffing benchmarks.

    Under the terms of the 1978 Court Order in AFL-CIO v. Marshall 
compliance staffing levels (benchmarks) necessary for a ``fully 
effective'' enforcement program were required to be established for each 
State operating an approved State plan. In September 1984 Tennessee, in 
conjunction with OSHA, completed a reassessment of the levels initially 
established in 1980 and proposed revised compliance staffing benchmarks 
of 22 safety and 14 health compliance officers. After opportunity for 
public comment and service on the AFL-CIO, the Assistant Secretary 
approved these revised staffing requirements on July 22, 1985.

[50 FR 29669, July 22, 1985]



Sec. 1952.224  Final approval determination.

    (a) In accordance with section 18(e) of the Act and procedures in 29 
CFR part 1902, and after determination that the State met the ``fully 
effective'' compliance staffing benchmarks as revised in 1984 in 
response to a Court Order in AFL-CIO v. Marshall (CA 74-406), and was 
satisfactorily providing reports to OSHA through participation in the

[[Page 67]]

Federal-State Unified Management Information System, the Assistant 
Secretary evaluated actual operations under the Tennessee State plan for 
a period of at least one year following certification of completion of 
developmental steps (43 FR 20980). Based on the 18(e) Evaluation Report 
for the period of October 1982 through March 1984, and after opportunity 
for public comment, the Assistant Secretary determined that in operation 
the State of Tennessee's occupational safety health program is at least 
as effective as the Federal program in providing safe and healthful 
employment and places of employment and meets the criteria for final 
State plan approval in section 18(e) of the Act and implementing 
regulations at 29 CFR part 1902. Accordingly, the Tennessee plan was 
granted final approval and concurrent Federal enforcement authority was 
relinquished under section 18(e) of the Act effective July 22, 1985.
    (b) Except as otherwise noted, the plan which has received final 
approval covers all activities of employers and all places of employment 
in Tennessee. The plan does not cover private sector maritime 
employment; Federal government employers and employees; the U.S. Postal 
Service (USPS), including USPS employees, and contract employees and 
contractor-operated facilities engaged in USPS mail operations; railroad 
employment; employment at Tennessee Valley Authority facilities and on 
military bases, as well as any other properties ceded to the United 
States Government.
    (c) Tennessee is required to maintain a State program which is at 
least as effective as operations under the Federal program; to submit 
plan supplements in accordance with 29 CFR part 1953; to allocate 
sufficient safety and health enforcement staff to meet the benchmarks 
for State staffing established by the U.S. Department of Labor, or any 
revisions to those benchmarks; and, to furnish such reports in such form 
as the Assistant Secretary may from time to time require.

[50 FR 29669, July 22, 1985, as amended at 65 FR 36624, June 9, 2000]



Sec. 1952.225  Level of Federal enforcement.

    (a) As a result of the Assistant Secretary's determination granting 
final approval to the Tennessee plan under section 18(e) of the Act, 
effective July 22, 1985, occupational safety and health standards which 
have been promulgated under section 6 of the Act do not apply with 
respect to issues covered under the Tennessee plan. This determination 
also relinquishes concurrent Federal OSHA authority to issue citations 
for violations of such standards under sections 5(a)(2) and 9 of the 
Act; to conduct inspections and investigations under section 8 (except 
those necessary to conduct evaluation of the plan under section 18(b) 
and other inspections, investigations, or proceedings necessary to carry 
out Federal responsibilities not specifically preempted by section 
18(e)); to conduct enforcement proceedings in contested cases under 
section 10; to institute proceedings to correct imminent dangers under 
section 13; and to propose civil penalties or initiate criminal 
proceedings for violations of the Federal Act under section 17. The 
Assistant Secretary retains jurisdiction under the above provisions in 
any proceeding commenced under section 9 or 10 before the effective date 
of the 18(e) determination.
    (b)(1) In accordance with section 18(e), final approval relinquishes 
Federal OSHA authority only with regard to occupational safety and 
health issues covered by the Tennessee plan. OSHA retains full authority 
over issues which are not subject to State enforcement under the plan. 
Thus, Federal OSHA retains its authority relative to safety and health 
in private sector maritime activities and will continue to enforce all 
provisions of the Act, rules or orders, and all Federal standards, 
current or future, specifically directed to maritime employment (29 CFR 
Part 1915, shipyard employment; Part 1917, marine terminals; Part 1918, 
longshoring; Part 1919, gear certification) as well as provisions of 
general industry and construction standards (29 CFR Parts 1910 and 1926) 
appropriate to hazards found in these employments; railroad employment, 
not otherwise regulated by another Federal agency;

[[Page 68]]

employment at Tennessee Valley Authority facilities and on military 
bases. Federal jurisdiction is also retained with respect to Federal 
government employers and employees, and the U.S. Postal Service (USPS), 
including USPS employees, and contract employees and contractor-operated 
facilities engaged in USPS mail operations.
    (2) In addition, any hazard, industry, geographical area, operation 
or facility over which the State is unable to effectively exercise 
jurisdiction for reasons not related to the required performance or 
structure of the plan shall be deemed to be an issue not covered by the 
finally approved plan, and shall be subject to federal enforcement. 
Where enforcement jurisdiction is shared between Federal and State 
authorities for a particular area, project, or facility, in the interest 
of administrative practicability Federal jurisdiction may be assumed 
over the entire project or facility. In either of the two aforementioned 
circumstances, Federal enforcement may be exercised immediately upon 
agreement between Federal and State OSHA.
    (c) Federal authority under provisions of the Act not listed in 
section 18(e) is unaffected by final approval of the plan. Thus, for 
example, the Assistant Secretary retains his authority under section 
11(c) of the Act with regard to complaints alleging discrimination 
against employees because of the exercise of any right afforded to the 
employee by the Act, although such complaints may be referred to the 
State for investigation. The Assistant Secretary also retains his 
authority under section 6 of the Act to promulgate, modify or revoke 
occupational safety and health standards which address the working 
conditions of all employees, including those in States which have 
received an affirmative 18(e) determination, although such standards may 
not be federally applied. In the event that the State's 18(e) status is 
subsequently withdrawn and Federal authority reinstated, all Federal 
standards, including any standards promulgated or modified during the 
18(e) period, would be federally enforceable in that State.
    (d) As required by section 18(f) of the Act, OSHA will continue to 
monitor the operations of the Tennessee State program to assure that the 
provisions of the State plan are substantially complied with and that 
the program remains at least as effective as the Federal program. 
Failure by the State to comply with its obligations may result in the 
revocation of the final determination under section 18(e), resumption of 
Federal enforcement, and/or proceedings for withdrawal of plan approval.

[50 FR 29670, July 22, 1985, as amended at 65 FR 36624, June 9, 2000]



Sec. 1952.226  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected and copied during normal business hours at the following 
locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, 200 Constitution Avenue NW, Room N3700, 
Washington, DC 20210;
Office of the Regional Administrator, Occupational Safety and Health 
Administration, U.S. Department of Labor, Atlanta Federal Center, 61 
Forsyth Street, SW, Room 6T50, Atlanta, Georgia 30303; and
Office of the Commissioner, Tennessee Department of Labor, 710 James 
Robertson Parkway, Nashville, Tennessee 37243-0659.

[65 FR 36624, June 9, 2000]



Sec. 1952.227  Changes to approved plans.

    (a) Legislation. (1) On March 29, 1994, the Assistant Secretary 
approved Tennessee's revised statutory penalty levels which are the same 
as the revised Federal penalty levels contained in section 17 of the Act 
as amended on November 5, 1990.
    (2)  [Reserved]
    (b) The Voluntary Protection Program. On October 24, 1996, the 
Assistant Secretary approved Tennessee's plan supplement, which is 
generally identical to the Federal Voluntary Protection Program, with 
the exception that the State's VPP is limited to the ``Star'' level 
participation for general industry firms.

[59 FR 14556, Mar. 29, 1994, as amended at 61 FR 55099, Oct. 24, 1996]

[[Page 69]]



                           Subpart Q--Kentucky

    Source: 50 FR 24896, June 13, 1985, unless otherwise noted.



Sec. 1952.230  Description of the plan as initially approved.

    (a) The plan designates the Department of Labor as the agency 
responsible for administering the Plan throughout the State. It proposes 
to define the occupational safety and health issue covered by it as 
defined by the Secretary of Labor in Sec. 1902.2(c)(1) of this chapter. 
All occupational safety and health standards promulgated by the United 
States Secretary of Labor have been adopted under the Plan as well as a 
certain standard deemed to be ``as effective as'' the Federal standard, 
except those found in parts 1915, 1916, 1917 and 1918 of this chapter 
(ship repairing, ship building, ship breaking and longshoring). All 
Federal standards adopted by the State became effective on December 29, 
1972.
    (b) Within the plan there is enabling legislation revising chapter 
338 of the Kentucky Revised Statutes which became law on March 27, 1972; 
as well as legislation enacted and approved in a Special Session of the 
Legislature in 1972 amending the enabling legislation. The law as 
enacted and modified gives the Department of Labor, Division of 
Occupational Safety and Health, the statutory authority to implement an 
occupational safety and health plan modeled after the Federal Act. There 
are provisions within it granting the Commissioner of Labor the 
authority to inspect workplaces and to issue citations for the abatement 
of violations and there is also included a prohibition against advance 
notice of such inspections. The law is also intended to insure employer 
and employee representatives an opportunity to accompany inspectors and 
to call attention to possible violations; notification of employees or 
their representatives when no compliance action is taken as a result of 
employee alleged violations; protection of employees against 
discrimination in terms and conditions of employment; and adequate 
safeguards to protect trade secrets. There is provision made for the 
prompt restraint of imminent danger situations and a system of penalties 
for violation of the statute. There are also provisions creating the 
Kentucky Occupational Safety and Health Standards Board and the Kentucky 
Occupational Safety and Health Review Board. The Law has further 
provision that the Department of Labor will enter into an agreement with 
the Public Service Commission (PSC) which shall serve as the State 
agency in the administration of all matters relating to occupational 
safety and health with respect to employees of public utilities.
    (c) The plan includes an opinion from the Attorney General that the 
Law is consistent with the Constitution of the State. There is also set 
forth in the Plan a Time Schedule for the Development of a Public 
Employee Program. The Plan also contains a comprehensive description of 
personnel employed under the State's merit system as well as its 
proposed budget and resources.
    (d) The Kentucky plan includes the following documents as of the 
date of approval:
    (1) The plan description documents, including the Kentucky 
Occupational Safety and Health Act, and appendices in three (3) volumes;
    (2) Letter for James R. Yocum, Commissioner of the Kentucky 
Department of Labor, to Basil A. Needham, Jr., Regional Administrator, 
Atlanta, Georgia Office, Occupational Safety and Health Administration, 
June 14, 1973, submitting additions and clarifications to the plan.
    (3) Letter from James R. Yocum to the Assistant Secretary of Labor, 
John H. Stender, July 13, 1973, submitting assurances that the State 
will submit certain amendments to the 1974 Session of its Legislature.
    (e) The public comments will also be available for inspection and 
copying with the plan documents.

[38 FR 20324, July 31, 1973, as amended at 50 FR 24896, June 13, 1985]



Sec. 1952.231  Developmental schedule.

    The Kentucky state plan is developmental. The following is the 
developmental schedule as provided by the plan:
    (a) A comprehensive public employee program will be developed within 
three years of plan approval.

[[Page 70]]

    (b) Within six months after plan approval, the procedure for the 
promulgation of standards will be revised.
    (c) An affirmative action program will be submitted to the Assistant 
Secretary as well as clearance of possible inconsistencies of the State 
Merit System by the Civil Service Commission within six months after 
grant approval.
    (d) Revision of various regulations, including those pertaining to 
employee access to information on their exposure to toxic materials or 
harmful physical agents and contests before the Review Commission will 
be undertaken within six months after plan approval.
    (e) Submission of amendments to KRS chapter 338 in 1974 General 
Assembly, to provide temporary variance authority and incorporate in 
that chapter penalties for willful violations causing death.

[38 FR 20324, July 31, 1973. Redesignated at 50 FR 24896, June 13, 1985]



Sec. 1952.232  Completion of developmental steps and certification.

    (a) In accordance with the requirements of Sec. 1952.10 the Kentucky 
Safety and Health Poster for private and public employees was approved 
by the Assistant Secretary on May 20, 1976.
    (b) Amendments in the Kentucky enabling legislation were enacted to 
include (1) a division of occupational safety and health compliance and 
a division of education and training (KRS 333.153(a)) and (2) authority 
and procedures for granting temporary variances. Penalties for willful 
violations causing death of an employee are covered under KRS chapters 
434, 503 and 534.
    (c) An amended Kentucky Administrative Procedure Act (KRS chapter 
13) provides procedures for promulgation of standards and administrative 
regulations including emergency temporary standards.
    (d) Kentucky regulations governing recordkeeping and reporting 
(parallel to the Federal 29 CFR part 1904), inspections, citations, 
proposed penalties (parallel to the Federal 29 CFR part 1903) and 
variances (parallel to the Federal 29 CFR part 1905) were initially 
approved with the State plan on July 31, 1973. These regulations were 
expanded to provide for:
    (1) Penalties for failure to correct violations;
    (2) Mandatory penalties for failure to post a citation;
    (3) Procedures for petition for modification of abatement dates and
    (4) Procedures for granting temporary variances.

In addition, Kentucky adopted regulations pertaining to employee access 
to information on exposure to toxic materials or harmful physical 
agents.
    (e) A manual Management Information System was implemented in July, 
1975, and converted to an automated system in July, 1977.
    (f) The personnel operations of the Kentucky Department of Labor and 
the servicing merit system agency have been found to be in substantial 
conformity with the ``Standards for a Merit System of Personnel 
Administration'' by letter of the Secretary of Labor dated May 17, 1977. 
In addition, a Kentucky Department of Labor affirmative action plan to 
promote equal employment opportunity has been judged acceptable by the 
Regional Office of Personnel Management by letter dated February 12, 
1979.
    (g) Kentucky revised regulations governing the operation of the 
Kentucky Occupational Safety and Health Review Commission were 
promulgated in December, 1975.
    (h) A revised Kentucky Compliance Manual was initially submitted in 
July, 1976, and subsequently amended in response to Federal comment to 
reflect changes in Federal procedures through December 20, 1976.
    (i) By executive orders 74-374 and 77-573 dated May 15, 1974, and 
June 30, 1977, respectively, the Governor of Kentucky made the following 
changes in the organization of the Kentucky Occupational Safety and 
Health Program:
    (1) All occupational health functions except laboratory services 
were transferred from Kentucky Department of Human Resources to the 
Kentucky Department of Labor.
    (2) Responsibilities for coverage of employees of public utilities 
were transferred from the Kentucky Public Service Commission to the 
Kentucky Department of Labor.
    (j) A Kentucky Public Employee plan has been adopted by the State.

[[Page 71]]

    (k) In accordance with Sec. 1902.34 of this chapter, the Kentucky 
occupational safety and health plan received certification, effective 
February 8, 1980, as having completed all developmental steps specified 
in its plan as approved on July 31, 1973, on or before July 31, 1976. 
This certification attests to structural completion, but does not render 
judgment on adequacy of performance.

[41 FR 21774, May 28, 1976, as amended at 41 FR 34252, Aug. 13, 1976; 45 
FR 8596, 8598, Feb. 8, 1980. Redesignated at 50 FR 24896, June 13, 1985]



Sec. 1952.233  Compliance staffing benchmarks.

    Under the terms of the 1978 Court Order in AFL-CIO v. Marshall 
compliance staffing levels (benchmarks) necessary for a ``fully 
effective'' enforcement program were required to be established for each 
State operating an approved State plan. In September 1984 Kentucky, in 
conjunction with OSHA, completed a reassessment of the levels initially 
established in 1980 and proposed revised compliance staffing benchmarks 
of 23 safety and 14 health compliance officers. After opportunity for 
public comment and service on the AFL-CIO, the Assistant Secretary 
approved these revised staffing requirements on June 13, 1985.



Sec. 1952.234  Final approval determination.

    (a) In accordance with section 18(e) of the Act and procedures in 29 
CFR part 1902, and after determination that the State met the ``fully 
effective'' compliance staffing benchmarks as revised in 1984 in 
response to a Court Order in AFL-CIO v. Marshall (CA 74-406), and was 
satisfactorily providing reports to OSHA through participation in the 
Federal-State Unified Management Information System, the Assistant 
Secretary evaluated actual operations under the Kentucky State plan for 
a period of at least one year following certification of completion of 
developmental steps (45 FR 8596). Based on the 18(e) Effectiveness 
Report for the period of October 1982 through March 1984, and after 
opportunity for public comment, the Assistant Secretary determined that 
in operation the State of Kentucky's occupational safety health program 
is at least as effective as the Federal program in providing safe and 
healthful employment and places of employment and meets the criteria for 
final State plan approval in section 18(e) of the Act and implementing 
regulations at 29 CFR part 1902. Accordingly, the Kentucky plan was 
granted final approval and concurrent Federal enforcement authority was 
relinquished under section 18(e) of the Act effective June 13, 1985.
    (b) Except as otherwise noted, the plan which has received final 
approval covers all activities of employers and all places of employment 
in Kentucky. The plan does not cover private sector maritime employment; 
employment at Tennessee Valley Authority facilities; military bases; 
properties ceded to the U.S. Government; Federal government employers 
and employees; the U.S. Postal Service (USPS), including USPS employees, 
and contract employees and contractor-operated facilities engaged in 
USPS mail operations; the enforcement of the field sanitation standard, 
29 CFR 1928.110, and the enforcement of the temporary labor camps 
standard, 29 CFR 1910.142, with respect to any agricultural 
establishment where employees are engaged in ``agricultural employment'' 
within the meaning of the Migrant and Seasonal Agricultural Worker 
Protection Act, 29 U.S.C. 1802(3), regardless of the number of 
employees, including employees engaged in hand packing of produce into 
containers, whether done on the ground, on a moving machine, or in a 
temporary packing shed, except that Kentucky retains enforcement 
responsibility over agricultural temporary labor camps for employees 
engaged in egg, poultry, or red meat production, or the post-harvest 
processing of agricultural or horticultural commodities.
    (c) Kentucky is required to maintain a State program which is at 
least as effective as operations under the Federal program; to submit 
plan supplements in accordance with 29 CFR part 1953; to allocate 
sufficient safety and health enforcement staff to meet the benchmarks 
for State staffing established by the U.S. Department of Labor, or any 
revisions to those benchmarks; and, to furnish such reports in such form 
as

[[Page 72]]

the Assistant Secretary may from time to time require.

[50 FR 24896, June 13, 1985, as amended at 62 FR 2562, Jan. 17, 1997; 65 
FR 36624, June 9, 2000]



Sec. 1952.235  Level of Federal enforcement.

    (a) As a result of the Assistant Secretary's determination granting 
final approval to the Kentucky plan under section 18(e) of the Act, 
effective June 13, 1985, occupational safety and health standards which 
have been promulgated under section 6 of the Act do not apply with 
respect to issues covered under the Kentucky plan. This determination 
also relinquishes concurrent Federal OSHA authority to issue citations 
for violations of such standards under sections 5(a)(2) and 9 of the 
Act; to conduct inspections and investigations under section 8 (except 
those necessary to conduct evaluation of the plan under section 18(b) 
and other inspections, investigations, or proceedings necessary to carry 
out Federal responsibilities not specifically preempted by section 
18(e)); to conduct enforcement proceedings in contested cases under 
section 10; to institute proceedings to correct imminent dangers under 
section 13; and to propose civil penalties or initiate criminal 
proceedings for violations of the Federal Act under section 17. The 
Assistant Secretary retains jurisdiction under the above provisions in 
any proceeding commenced under section 9 or 10 before the effective date 
of the 18(e) determination.
    (b)(1) In accordance with section 18(e), final approval relinquishes 
Federal OSHA authority only with regard to occupational safety and 
health issues covered by the Kentucky plan. OSHA retains full authority 
over issues which are not subject to State enforcement under the plan. 
Thus, Federal OSHA retains its authority relative to safety and health 
in private sector maritime activities and will continue to enforce all 
provisions of the Act, rules or orders, and all Federal standards, 
current or future, specifically directed to maritime employment (29 CFR 
Part 1915, shipyard employment; Part 1917, marine terminals; Part 1918, 
longshoring; Part 1919, gear certification) as well as provisions of 
general industry and construction standards (29 CFR Parts 1910 and 1926) 
appropriate to hazards found in these employments; employment at 
Tennessee Valley Authority facilities and on all military bases, as well 
as any other properties ceded to the U.S. Government. Federal 
jurisdiction is retained and exercised by the Employment Standards 
Administration, U.S. Department of Labor, (Secretary's Order 5-96, dated 
December 27, 1996) with respect to the field sanitation standard, 29 CFR 
1928.110, and the enforcement of the temporary labor camps standard, 29 
CFR 1910.142, in agriculture, as described in Sec. 1952.234(b). Federal 
jurisdiction is also retained with respect to Federal government 
employers and employees; and the U.S. Postal Service (USPS), including 
USPS employees, and contract employees and contractor-operated 
facilities engaged in USPS mail operations.
    (2) In addition, any hazard, industry, geographical area, operation 
or facility over which the State is unable to effectively exercise 
jurisdiction for reasons not related to the required performance or 
structure of the plan shall be deemed to be an issue not covered by the 
finally approved plan, and shall be subject to Federal enforcement. 
Where enforcement jurisdiction is shared between Federal and State 
authorities for a particular area, project, or facility, in the interest 
of administrative practicability, Federal jurisdiction may be assumed 
over the entire project or facility. In either of the two aforementioned 
circumstances, Federal enforcement may be exercised immediately upon 
agreement between Federal and State OSHA.
    (c) Federal authority under provisions of the Act not listed in 
section 18(e) is unaffected by final approval of the plan. Thus, for 
example, the Assistant Secretary retains his authority under section 
11(c) of the Act with regard to complaints alleging discrimination 
against employees because of the exercise of any right afforded to the 
employee by the Act, although such complaints may be referred to the 
State for investigation. The Assistant Secretary also retains his 
authority under section 6 of the Act to promulgate, modify or revoke 
occupational

[[Page 73]]

safety and health standards which address the working conditions of all 
employees, including those in States which have received an affirmative 
18(e) determination, although such standards may not be Federally 
applied. In the event that the State's 18(e) status is subsequently 
withdrawn and Federal authority reinstated, all Federal standards, 
including any standards promulgated or modified during the 18(e) period, 
would be Federally enforceable in that State.
    (d) As required by section 18(f) of the Act, OSHA will continue to 
monitor the operations of the Kentucky State program to assure that the 
provisions of the State plan are substantially complied with and that 
the program remains at least as effective as the Federal program. 
Failure by the State to comply with its obligations may result in the 
revocation of the final determination under section 18(e), resumption of 
Federal enforcement, and/or proceedings for withdrawal of plan approval.

[50 FR 24896, June 13, 1985, as amended at 62 FR 2562, Jan. 17, 1997; 65 
FR 36624, June 9, 2000]



Sec. 1952.236  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected and copied during normal business hours at the following 
locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, 200 Constitution Avenue NW, Room N3700, 
Washington, DC 20210;
Office of the Regional Administrator, Occupational Safety and Health 
Administration, U.S. Department of Labor, Atlanta Federal Center, 61 
Forsyth Street, SW., Room 6T50, Atlanta, Georgia 30303; and
Office of the Secretary, Kentucky Labor Cabinet, 1047 U.S. Highway 127 
South, Suite 4, Frankfort, Kentucky 40601.

[65 FR 36625, June 9, 2000]



Sec. 1952.237  Changes to approved plans.

    (a) Legislation. (1) On March 29, 1994, the Assistant Secretary 
approved Kentucky's revised statutory penalty levels which are the same 
as the revised Federal penalty levels contained in section 17 of the Act 
as amended on November 5, 1990.
    (2)  [Reserved]
    (b) The Voluntary Protection Program. On October 24, 1996, the 
Assistant Secretary approved Kentucky's plan supplement, which is 
generally identical to the Federal Voluntary Protection Program, with 
the exception that the State's VPP is limited to the ``Star'' level 
participation for general industry firms.
    (c) Temporary labor camps/field sanitation. Effective February 3, 
1997, the Assistant Secretary approved Kentucky's plan amendment, dated 
July 29, 1996, relinquishing coverage for the issues of field sanitation 
(29 CFR 1928.110) and temporary labor camps (29 CFR 1910.142) in 
agriculture (except for agricultural temporary labor camps associated 
with egg, poultry or red meat production, or the post-harvest processing 
of agricultural or horticultural commodities.) The Employment Standards 
Administration, U.S. Department of Labor, has assumed responsibility for 
enforcement of these Federal OSHA standards in agriculture in Kentucky 
pursuant to Secretary of Labor's Order 5-96, dated December 27, 1996.

[59 FR 14556, Mar. 29, 1994, as amended at 61 FR 55099, Oct. 24, 1996; 
62 FR 2563, Jan. 17, 1997]



                            Subpart R--Alaska



Sec. 1952.240  Description of the plan as initially approved.

    (a) The Department of Labor is the State agency designated by the 
Governor to administer the plan throughout the State. The plan defines 
the covered occupational safety and health issues as defined by the 
Secretary of Labor in Sec. 1902.2(c)(1) of this chapter under four major 
codes for general safety, industrial housing, electrical hazards, and 
occupational health and environmental controls. The plan also includes 
vertical special industry codes for construction, wood products, 
petroleum, and fishing. Appendix G of the plan contains a time-table for 
adoption of the standards beginning with the effective date of the grant 
approved under section 23(g) of the Act. The timetable requires from 6 
to 36 months for completion of the standard-setting

[[Page 74]]

process with most of the standards to be adopted within 6 months of the 
effective date of the grant.
    (b)(1) The plan included draft legislation which has been passed by 
the State legislature and signed by the Governor amending chapter 18 of 
the Alaska Statutes. Under the legislation, effective July 24, 1973, the 
Department of Labor has full authority to enforce and administer laws 
respecting safety and health of employees in all workplaces of the 
State, including coverage of public employees, with the exceptions of 
maritime workers in the area of exclusive Federal jurisdiction; 
employees of the United States; employees protected by State agencies 
under the Atomic Energy Act of 1954, (42 U.S.C. 2021); and employees 
whose working conditions are regulated by Federal agencies other than 
the U.S. Department of Labor under the provisions of section 4(b)(1) of 
the Occupational Safety and Health Act of 1970. (84 Stat. 1592, 29 
U.S.C. 653(b)(1)).
    (2) The legislation brings the plan into conformity with the 
requirements of part 1902 of this chapter in areas such as procedures 
for granting or denying permanent and temporary variances to standards 
by the Commissioner; protection of employees from hazards; promulgation 
of standards by the Commissioner prescribing requirements ``at least as 
effective'' as the requirements for Federal Standards including medical 
examinations and monitoring and measuring of hazards; imminent danger 
abatement by administrative order and court injunction; protection of 
employees against discharge or discrimination in terms or conditions of 
employment by filing complaints with the Commissioner who will seek 
court action through the State Attorney General; and adequate safeguards 
to protect trade secrets.
    (3) The legislation provides for inspections, including inspections 
in response to complaints; gives employers and employee representatives 
an opportunity to accompany inspectors in order to aid inspections and 
provides for payment to employees for time spent in aiding an 
inspection; notification of employees or their representatives when no 
compliance action is taken as a result of an alleged violation, 
including informal review; notification of employees of their 
protections and obligations through legislative requirements on posting; 
provision for prompt notice to employers and employees of alleged 
violations of standards, and abatement requirements, through the 
issuance and posting of citations; a system of sanctions against 
employers for violations of standards; employer right of review to the 
Occupational Safety and Health Review Board; and employee participation 
in the review procedure with compensation for time spent by the 
employee.
    (c) Included in the plan is a statement of legal opinion that the 
law, which was supported by the Governor in accordance with the 
requirements of part 1902 of this chapter, is consistent with the 
Constitution and laws of Alaska. The plan sets out goals and provides a 
timetable for bringing it into full conformity with part 1902 of this 
chapter at the end of three years after commencement of operations under 
the plan. Personnel will be employed under the existing State merit 
system and the voluntary compliance program for on-site consultation 
meets the conditions set forth in the Washington decision (38 FR 2421). 
The plan also includes the State Administrative Procedure Act which 
authorizes the Commissioner to promulgate emergency temporary standards 
and issue rules and regulations necessary for the implementation of the 
safety and health law.
    (d) The plan includes the following documents as of the date of 
approval:
    (1) The plan document and appendices A through V.
    (2) Alaska legislation as enacted amending chapter 18 of the Alaska 
Statutes.
    (3) Letters from the Commissioner of Labor dated May 25, 1973, June 
15, 1973, and July 10, 1973.

[38 FR 21630, Aug. 10, 1973, as amended at 49 FR 38261, Sept. 28, 1984]



Sec. 1952.241  Developmental schedule.

    The Alaska plan is developmental. The Schedule of developmental 
steps (described in the plan as revised in letters dated September 17, 
1975, February 10, 1976, and April 15, 1976, from Edmond N. Orbeck, 
Commissioner, Alaska

[[Page 75]]

Department of Labor, to James Lake, Regional Administrator for 
Occupational Safety and Health) follows:
    (a) Promulgation of occupational safety and health standards, as 
effective as corresponding Federal standards promulgated under chapter 
XVII of title 29, Code of Federal Regulations by September 1976.
    (b) A Compliance Operations Manual for the guidance of compliance 
personnel will be developed and printed by February 1, 1974.
    (c) A Management Information System (MIS) will be developed by 
October 1, 1974.
    (d) An interim training schedule (appendix M) will be initiated by 
April 1, 1974. An extended training plan of substantially permanent form 
will be developed and adopted by October 1, 1976.
    (e) Complete hiring of industrial health staff by October 1, 1976.
    (f) Provide for an Industrial Health laboratory capacity by October 
1, 1976.
    (g) Adoption of the following regulations by January 30, 1975:
    (1) Recordkeeping and Reporting;
    (2) Variances;
    (3) Exceptions to the prohibitions against advance notice (such 
exceptions to be no broader than those contained in 29 CFR part 1903);
    (4) Clarification of the appropriate parties for employers to notify 
in order to file a notice of contest;
    (5) A definition of imminent danger that mirrors the Federal 
definition;
    (6) A regulation to allow affected employees to participate as 
parties in hearings.

[41 FR 56315, Dec. 28, 1976. Redesignated at 49 FR 38261, Sept. 28, 
1984]



Sec. 1952.242  Completed developmental steps.

    (a) In accordance with Sec. 1952.243(d) Alaska completed its interim 
training program by April 1, 1974, and has developed and adopted an 
extended training program by October 1, 1976 (41 FR 36206).
    (b) In accordance with Sec. 1952.243(c) Alaska has developed and 
implemented a manual Management Information System by October 1, 1974 
(41 FR 36206).
    (c) In accordance with the requirements of Sec. 1952.10 the Alaska 
Safety and Health Poster for private and public employees was approved 
by the Assistant Secretary on September 28, 1976 (41 FR 43405).
    (d) In accordance with Sec. 1952.243(e) Alaska has completed hiring 
of its industrial health staff by October 1, 1976 (41 FR 52556).
    (e) In accordance with Sec. 1952.243(f) Alaska has provided for an 
Industrial Health Laboratory capacity by October 1, 1976 (41 FR 36206).
    (f) In accordance with Sec. 1952.243(g) Alaska has adopted 
regulations covering inspections, citations, and proposed penalties, 
Alaska Occupational Safety and Health Review Board procedures; recording 
and reporting occupational injuries and illnesses; variances; and 
consulting and training which were approved by the Assistant Secretary 
on August 2, 1977.
    (g) In accordance with Sec. 1952.243(b) Alaska has developed a 
Compliance Manual which is modeled after the Federal Field Operations 
Manual and was approved by the Assistant Secretary on August 2, 1977.
    (h) In accordance with Sec. 1902.34 of this chapter, the Alaska 
occupational safety and health plan was certified, effective September 
9, 1977, as having completed on or before October 1, 1976, all 
developmental steps specified in the plan as approved on July 31, 1973.

[41 FR 56315, Dec. 28, 1976, as amended at 42 FR 40196, Aug, 9, 1977; 42 
FR 45907, Sept 13, 1977. Redesignated at 49 FR 38261, Sept. 28, 1984]



Sec. 1952.243  Final approval determination.

    (a) In accordance with section 18(e) of the Act and procedures in 29 
CFR part 1902, and after a determination that the State met the ``fully 
effective'' compliance staffing benchmarks as established in 1980 in 
response to a Court Order in AFL-CIO v. Marshall, (CA 74-406), and was 
satisfactorily providing reports to OSHA through participation in the 
Federal-State Unified Management Information, System, the Assistant 
Secretary evaluated actual operations under the Alaska State plan for a 
period of at least one year following certification of completion of 
developmental steps (Sept. 9, 1977, 42 FR 54905). Based on the 
Evaluation Report for FY 1983 and available FY 1984 data, and

[[Page 76]]

after opportunity for public comment and an informal public hearing held 
on June 7, 1984 in Anchorage, Alaska, the Assistant Secretary determined 
that in actual operations, the State of Alaska occupational safety and 
health program is at least as effective as the Federal program in 
providing safe and healthful employment and places of employment and 
meets the criteria for final States plan approval in section 18(e) of 
the Act and implementing regulations at 29 CFR part 1902. Accordingly, 
the Alaska plan was granted final approval and concurrent Federal 
enforcement authority was relinquised under section 18(e) of the Act 
effective September 26, 1984.
    (b) Except as otherwise noted, the plan which has received final 
approval covers all activities of employers and all places of employment 
in Alaska. The plan does not cover private sector maritime employment; 
worksites located on the navigable waters, including artificial islands; 
operations of private sector employers within the Metlakatla Indian 
Community on the Annette Islands; operations of private sector employers 
within Denali (Mount McKinley) National Park; Federal government 
employers and employees; the U.S. Postal Service (USPS), including USPS 
employees, and contract employees and contractor-operated facilities 
engaged in USPS mail operations; or the enforcement of the field 
sanitation standard, 29 CFR 1928.110, and the enforcement of the 
temporary labor camps standard, 29 CFR 1910.142, with respect to any 
agricultural establishment where employees are engaged in ``agricultural 
employment'' within the meaning of the Migrant and Seasonal Agricultural 
Worker Protection Act, 29 U.S.C. 1802(3), regardless of the number of 
employees, including employees engaged in hand packing of produce into 
containers, whether done on the ground, on a moving machine, or in a 
temporary packing shed, except that Alaska retains enforcement 
responsibility over agricultural temporary labor camps for employees 
engaged in egg, poultry, or red meat production, or the post-harvest 
processing of agricultural or horticultural commodities.
    (c) Alaska is required: To maintain a State program which is at 
least as effective as operations under the Federal program; to submit 
plan supplements in accordance with 29 CFR part 1953; to allocate 
sufficient safety and health enforcement staff to meet the benchmarks 
for State staffing established by the U.S. Department of Labor, or any 
revisions to those benchmarks; and, to furnish such reports in such form 
as the Assistant Secretary may from time to time require.

[49 FR 38261, Sept. 28, 1984, as amended at 54 FR 115, Jan. 4, 1989; 62 
FR 2563, Jan. 17, 1997; 65 FR 36625, June 9, 2000]



Sec. 1952.244  Level of Federal enforcement.

    (a) As a result of the Assistant Secretary's determination granting 
final approval to the Alaska plan under section 18(e) of the Act, 
effective September 26, 1984, occupational safety and health standards 
which have been promulgated under section 6 of the Act do not apply with 
respect to issues covered under the Alaska plan. This determination also 
relinquishes concurrent Federal OSHA authority to issue citations for 
violation of such standards under sections 5(a)(2) and 9 of the Act; to 
conduct inspections and investigations under section 8 (except those 
necessary to conduct evaluation of the plan under section 18(b) and 
other inspections, investigations, or proceedings necessary to carry out 
Federal responsibilities not specifically preempted by section 18(e)); 
to conduct enforcement proceedings in contested cases under section 10; 
to institute proceedings to correct imminent dangers under section 13; 
and to propose civil penalties or inititate criminal proceedings for 
violations of the Federal Act under section 17. The Assistant Secretary 
may retain jurisdiction under the above provisions in any proceeding 
commenced under section 9 or 10 before the effective date of the 18(e) 
determination.
    (b) In accordance with section 18(e), final approval relinquishes 
Federal OSHA authority only with regard to occupational safety and 
health issues covered by the Alaska plan. OSHA retains full authority 
over issues which are not subject to State enforcement under the plan. 
Thus, Federal OSHA retains its authority relative to safety

[[Page 77]]

and health in private sector maritime activities and will continue to 
enforce all provisions of the Act, rules or orders, and all Federal 
standards, current or future, specifically directed to maritime 
employment (29 CFR Part 1915, shipyard employment; Part 1917, marine 
terminals; Part 1918, longshoring; Part 1919, gear certification) as 
well as provisions of general industry and construction standards (29 
CFR Parts 1910 and 1926) appropriate to hazards found in these 
employments. Federal jurisdiction will be retained over marine-related 
private sector employment at worksites on the navigable waters, such as 
floating seafood processing plants, marine construction, employments on 
artificial islands, and diving operations in accordance with section 
4(b)(1) of the Act. Federal jurisdiction is also retained and exercised 
by the Employment Standards Administration, U.S. Department of Labor 
(Secretary's Order 5-96, December 27, 1996) with respect to the field 
sanitation standard, 29 CFR 1928.110, and the enforcement of the 
temporary labor camps standard, 29 CFR 1910.142, in agriculture, as 
described in Sec. 1952.243(b). Federal jurisdiction is also retained for 
private sector worksites located within the Annette Islands Reserve of 
the Metlakatla Indian Community, for private sector worksites located 
within the Denali (Mount McKinley) National Park, for Federal government 
employers and employees, and for the U.S. Postal Service (USPS), 
including USPS employees, and contract employees and contractor-operated 
facilities engaged in USPS mail operations.
    (c) Federal authority under provisions of the Act not listed in 
section 18(e) is unaffected by final approval of the plan. Thus, for 
example, the Assistant Secretary retains his authority under section 
11(c) of the Act with regard to complaints alleging discrimination 
against employees because of the exercise of any right afforded to the 
employee by the Act, although such complaints may be referred to the 
State for investigation. The Assistant Secretary also retains his 
authority under section 6 of the Act to promulgate, modify or revoke 
occupational safety and health standards which address the working 
conditions of all employees, including those in States which have 
received an affirmative 18(e) determination, although such standards may 
not be Federally applied. In the event that the State's 18(e) status is 
subsequently withdrawn and Federal authority reinstated, all Federal 
standards, including any standards promulgated or modified during the 
18(e) period, would be Federally enforceable in that State.
    (d) As required by section 18(f) of the Act, OSHA will continue to 
monitor the operations of the Alaska State program to assure that the 
provisions of the State plan are substantially complied with and that 
the program remains at least as effective as the Federal program. 
Failure by the State to comply with its obligations may result in the 
revocation of the final determination under section 18(e), resumption of 
Federal enforcement, and/or proceedings for withdrawal of plan approval.

[49 FR 38261, Sept. 28, 1984, as amended at 54 FR 115, Jan. 4, 1989; 62 
FR 2563, Jan. 17, 1997; 65 FR 36625, June 9, 2000]



Sec. 1952.245  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected and copied during normal business hours at the following 
locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, 200 Constitution Avenue NW, Room N3700, 
Washington, DC 20210;
Office of the Regional Administrator, Occupational Safety and Health 
Administration, U.S. Department of Labor, Suite 715, 1111 Third Avenue, 
Seattle, Washington, 98101-3212; and
Office of the Commissioner, Alaska Department of Labor, 1111 W. 8th 
Street, Room 306, P.O. Box 24119, Juneau, Alaska 99802-1149.

[65 FR 36625, June 9, 2000]



Sec. 1952.246  Changes to approved plans.

    (a) In accordance with part 1953 of this chapter, the following 
Alaska plan changes were approved by the Assistant Secretary:
    (1) The State submitted a revised field operations manual patterned 
after and responsive to modifications to the

[[Page 78]]

Federal field operations manual in effect February 11, 1985 which 
superseded its earlier approved manual. The Assistant Secretary approved 
the manual on October 24, 1985.
    (2) The State submitted an industrial hygiene technical manual 
patterned after and responsive to modifications to the Federal manual in 
effect October 29, 1984. The Assistant Secretary approved the manual on 
October 24, 1985.
    (3) The State submitted an inspection scheduling system patterned 
after and responsive to the Federal system in effect October 29, 1984. 
The Assistant Secretary approved the supplement on October 24, 1985.
    (4) The State submitted an amendment to its legislation and field 
procedures which provided for issuance of an onsite notice of violations 
which serves to require correction of other than serious violations in 
lieu of a citation. The Assistant Secretary approved these changes on 
October 24, 1985.
    (5) The State submitted several changes on its administrative and 
review rules concerning personal sampling, ex parte warrants, petition 
to modify abatement dates, withdrawal of contest, recordkeeping 
penalties and exemptions, exemption from scheduled inspections after 
consultation, renaming the division of the State agency directly 
enforcing standards, and the address for filing contests. The Assistant 
Secretary approved these changes on October 24, 1985.
    (b) Legislation. (1) On March 29, 1994, the Assistant Secretary 
approved Alaska's revised statutory penalty levels which are the same as 
the revised Federal penalty levels contained in section 17 of the Act as 
amended on November 5, 1990.
    (2)  [Reserved]
    (c) Temporary labor camps/field sanitation. Effective February 3, 
1997, the Assistant Secretary approved Alaska's plan amendment, dated 
October 1, 1996, relinquishing coverage for the issues of field 
sanitation (29 CFR 1928.110) and temporary labor camps (29 CFR 1910.142) 
in agriculture (except for agricultural temporary labor camps associated 
with egg, poultry or red meat production, or the post-harvest processing 
of agricultural or horticultural commodities.) The Employment Standards 
Administration, U.S. Department of Labor, has assumed responsibility for 
enforcement of these Federal OSHA standards in agriculture in Alaska 
pursuant to Secretary of Labor's Order 5-96, dated December 27, 1996.

[50 FR 43133, Oct. 24, 1985, as amended at 59 FR 14556, Mar. 29, 1994; 
59 FR 50793, Oct. 5, 1994; 62 FR 2563, Jan. 17, 1997]



                      Subpart S--The Virgin Islands



Sec. 1952.250  Description of the plan as initially approved.

    (a) The Virgin Islands Occupational Safety and Health program will 
be administered and enforced by the Virgin Islands Department of Labor 
(hereafter called the agency). It will cover all activities of employees 
and places of private and public employment except those subject to 
subpart G of part 1910 and subpart D of part 1926 of this chapter 
relating to occupational health and environmental control and 
Secs. 1910.13--1910.16 and parts 1915--1918 of this chapter relating to 
maritime employment.
    (b)(1) The Plan requires employers of one or more employees to 
furnish them employment and a place of employment which are free from 
recognized hazards that are causing or are likely to cause death or 
serious physical harm, and to comply with all occupational safety and 
health standards promulgated or issued by the agency. The standards 
adopted by the United States Department of Labor covering issues within 
the scope of the plan will be adopted by the agency. The Plan also 
directs employees to comply with all occupational safety and health 
standards and regulations that are applicable to their own actions and 
conduct.
    (2) The Plan also requires each owner, lessor, agent or manager of 
any premises used in whole or in part as a place of employment to comply 
with safety and health standards and regulations established under the 
program.
    (c) The Plan includes procedures for providing prompt and effective 
standards for the protection of employees against new and unforeseen 
hazards and for furnishing information to employees on hazards, 
precautions, symptoms, and emergency treatment; and

[[Page 79]]

procedures for variances and the protection of employees from hazards. 
It provides employer and employee representatives an opportunity to 
accompany inspectors and call attention to possible violations, before, 
during, and after inspections, protection of employees against discharge 
or discrimination in terms and conditions of employment, notice to 
employees or their representatives when no compliance action is taken 
upon complaints, including informal review, notice to employees of their 
protections and obligations, adequate safeguards to protect trade 
secrets, prompt notice to employers and employees of alleged violations 
of standards and abatement requirements, effective remedies against 
employers and owners, and the right to review alleged violations, 
abatement periods, and proposed penalties with opportunity for employee 
participation in the review proceedings; procedures for prompt restraint 
or elimination of imminent danger conditions, and procedures for 
inspection in response to complaints.
    (d)(1) The Plan includes a legal opinion that it will meet the 
requirements of the Occupational Safety and Health Act of 1970, and is 
consistent with the laws of the Virgin Islands.
    (2) A merit system of personnel administration will be used.
    (3) A program of education, training, and consultation for employers 
and employees will be developed.
    (4) The Plan is supplemented by the inclusion of implementing 
legislation (Virgin Islands Act No. 3421) and bill number 6003 to 
correct section 14(e) thereof and a revised implementation time table.

[38 FR 24896, Sept. 11, 1973, as amended at 49 FR 16775, Apr. 20, 1984]



Sec. 1952.251  Developmental schedule.

    The following is a summary of the major developmental steps provided 
by the plan:
    (a) Commencement of recruitment and staff training--September 10, 
1973.
    (b) Effective date of implementing legislation--October 1, 1973.
    (c) Procedural and interpretative, regulations and standards to 
become effective--January 1, 1974.
    (d) Enforcement program to be operational--January 1, 1974.
    (e) Public employee program to be operational--July 15, 1974.
    (f) Program to be fully implemented--July 1, 1975.

[38 FR 24896, Sept. 11, 1973. Redesignated at 49 FR 16775, Apr. 20, 
1984]



Sec. 1952.252  Completion of developmental steps and certification.

    (a) In accordance with Sec. 1952.253(b), amendments to the Virgin 
Island legislation were passed March 11, and February 26, 1974.
    (b) In accordance with Sec. 1952.253(c), the Virgin Islands 
occupational safety and health standards were promulgated on March 21, 
1974.
    (c) In accordance with Sec. 1952.253(a) the Virgin Islands has 
completed the training as described therein.
    (d) The Virgin Islands has developed and implemented a manual 
Management Information System.
    (e) In accordance with the requirements of Sec. 1952.10 the Virgin 
Islands safety and health posters for private and public employees were 
approved by the Assistant Secretary on September 28, 1976.
    (f) The Virgin Islands has developed and implemented an effective 
Public Information Program.
    (g) The Virgin Islands amended its legislation to:
    (i) Delete reference to ``political subdivisions'' and substitute 
the term ``department,'' and
    (ii) To add new sections:
    (1) ``Variations, Tolerances and Exemptions,'' and
    (2) ``Disclosure of Confidential Trade Secrets.''
    (h) The Virgin Islands' Field Operations Manual (FOM) modeled after 
the Federal FOM has been developed by the State, and approved by the 
Assistant Secretary.
    (i) The Virgin Islands has developed:
    (1) An acceptable organizational chart;
    (2) Job descriptions for V.I. occupational safety and health 
employees which meet the necessary requirements;
    (3) A procedure to correct a problem of understaffing in the V.I. in 
terms of plan commitment;

[[Page 80]]

    (4) A procedure for rating and ranking candidates; and
    (5) An Affirmative Action Plan for Equal Employment Opportunity 
acceptable to CSC.
    (j) In accordance with Sec. 1952.253(e), the Virgin Islands 
implemented the public employee program in July 1975.
    (k) In accordance with Sec. 1952.253(c), the Virgin Islands adopted 
the Administrative Regulations on March 11, 1974.
    (l) In accordance with Sec. 1952.253(d), the safety enforcement 
program in the Virgin Islands was operation in April 1974.

The supplement was approved by the Assistant Secretary on August 3, 
1981.
    (m) In accordance with Sec. 1902.34 of this chapter, the Virgin 
Islands' occupational safety and health plan was certified effective 
September 22, 1981 as having completed all developmental steps specified 
in the plan as approved on September 11, 1973, on or before August 31, 
1976.

This certification attests to structural completion, but does not render 
judgment on adequacy of performance.

[40 FR 11352, Mar. 11, 1975, as amended at 41 FR 43406, Oct. 1, 1976; 42 
FR 40195, Aug. 9, 1977; 44 FR 76783, Dec. 28, 1979; 45 FR 56054, Aug. 
22, 1980; 46 FR 41046, Aug. 14, 1981; 46 FR 46808, Sept 22, 1981. 
Redesignated at 49 FR 16775, Apr. 20, 1984]



Sec. 1952.253  Final approval determination.

    (a) In accordance with section 18(e) of the Act and procedures in 29 
CFR part 1902, and after a determination that the State met the ``fully 
effective'' compliance staffing benchmarks established in response to a 
Court Order in AFL-CIO v. Marshall (CA 74-406), and was satisfactorily 
providing reports to OSHA through participation in the Federal/State 
Unified Management Information System, the Assistant Secretary evaluated 
actual operations under the Virgin Islands State plan for a period of at 
least one year following certification of completion of developmental 
steps (Sept. 21, 1981, 46 FR 46807). Based on the Evaulation Report for 
FY 1982 and available FY 1983 data and after opportunity for public 
comment and an informal public hearing held on June 29, 1983, in St. 
Thomas, Virgin Islands, the Assistant Secretary determined that in 
actual operations, the Virgin Islands State plan is at least as 
effective as the Federal program in providing safe and healthful 
employment and places of employment and meets the criteria for final 
State plan approval in section 18(e) of the Act and implementing 
regulations at 29 CFR part 1902. Accordingly, the Virgin Islands plan 
was granted final approval and concurrent Federal enforcement authority 
was relinquished under section 18(e) of the Act effective April 17, 
1984. Note: The Virgin Islands final approval status under section 18(e) 
of the Act was suspended and Federal concurrent enforcement authority 
reinstated on November 13, 1995.
    (b) Except as otherwise noted, the plan which has received final 
approval covers all activities of employers and all places of employment 
in the Virgin Islands. The plan does not cover private sector maritime 
employment; Federal government employers and employees; the U.S. Postal 
Service (USPS), including USPS employees, and contract employees and 
contractor-operated facilities engaged in USPS mail operations; the 
enforcement of the field sanitation standard, 29 CFR 1928.110, and the 
enforcement of the temporary labor camps standard, 29 CFR 1910.142, with 
respect to any agricultural establishment where employees are engaged in 
``agricultural employment'' within the meaning of the Migrant and 
Seasonal Agricultural Worker Protection Act, 29 U.S.C. 1802(3), 
regardless of the number of employees, including employees engaged in 
hand packing of produce into containers, whether done on the ground, on 
a moving machine, or in a temporary packing shed, except that the Virgin 
Islands retains enforcement responsibility over agricultural temporary 
labor camps for employees engaged in egg, poultry, or red meat 
production, or the post-harvest processing of agricultural or 
horticultural commodities.
    Note: The Virgin Islands' final approval status under section 18(e) 
of the Act was suspended and full Federal concurrent enforcement 
authority reinstated on November 13, 1995.
    (c) The Virgin Islands is required to maintain a State program which 
is at least as effective as operations under

[[Page 81]]

the Federal program; to submit plan supplements in accordance with 29 
CFR part 1953; to allocate sufficient safety and health enforcement 
staff to meet the benchmarks for State staffing established by the U.S. 
Department of Labor, or any revision to those benchmarks; and, to 
furnish such reports in such form as the Assistant Secretary may from 
time to time require.
    (d) As a result of Federal monitoring of the U.S. Virgin Islands 
State Plan and after opportunity for public comment, the Assistant 
Secretary for Occupational Safety and Health has determined that the 
State Plan no longer meets the criteria for final approval under section 
18(e). As a result the final approval status has been suspended and the 
State Plan reverts to ``initial approval'' status effective November 13, 
1995. Concurrent Federal enforcement authority over occupational safety 
issues in the U.S. Virgin Islands has been reinstituted pending the 
necessary corrective action by the State Plan to again meet the criteria 
for an 18(e) final approval determination. Concurrent Federal 
enforcement authority will be exercised in the U.S. Virgin Islands 
effective November 13, 1995, and will continue until further notice.

[49 FR 16775, Apr. 20, 1984, as amended at 60 FR 56951, Nov. 13, 1995; 
62 FR 2563, Jan. 17, 1997; 65 FR 36625, June 9, 2000]



Sec. 1952.254  Level of Federal enforcement.

    (a) As a result of the Assistant Secretary's determination to 
suspend the final approval determination under section 18(e) for the 
Virgin Islands state plan, effective November 13, 1995, Federal 
occupational safety standards which have been promulgated under section 
6 of the Act now apply to all covered employers in the Virgin Islands. 
Until subsequent determinations are made by Federal OSHA affecting the 
level of Federal enforcement in the Virgin Islands, discretionary 
Federal concurrent enforcement authority will be exercised in the 
following manner. Federal OSHA will exercise the full range of 
enforcement authority available under the Act, including but not limited 
to, issuance of citations under section 9 for violations of any 
requirement of section 5, of any standard, rule or order promulgated 
pursuant to section 6, or of any regulation prescribed pursuant to the 
Act; conduct of inspections and investigations under section 8; conduct 
of enforcement proceedings in contested cases under section 10; 
institution of proceedings to correct imminent dangers under section 13; 
and proposal of civil penalties or initiation of criminal proceedings 
for violations of the Act under section 17 with regard to occupational 
safety issues in the private sector. The Virgin Islands retains full 
authority under its approved State plan to continue to adopt and enforce 
occupational safety standards including issuing citations for violations 
thereof, proposing penalties and adjudicating contested cases under 
State law. Where State and Federal compliance officers conduct joint 
inspections, enforcement actions may be either Federal or State.
    (b) Federal OSHA also continues to retain full authority over issues 
which have not been subject to State enforcement under the Virgin 
Islands plan. Thus, OSHA retains authority to enforce all provisions of 
the Act, Federal standards, rules, or orders which relate to 
occupational health in private sector employment in the Virgin Islands. 
OSHA also retains its authority relative to safety and health in private 
sector maritime activities and will continue to enforce all provisions 
of the Act, Federal standards, rules, or orders specifically directed to 
maritime employment (e.g., 29 CFR Part 1915, shipyard employment; 29 CFR 
Part 1917, marine terminals; 29 CFR Part 1918, longshoring; 29 CFR Part 
1919, gear certification), as well as provisions of general industry and 
construction standards (29 CFR Parts 1910 and 1926) appropriate to 
hazards found in these employments. Federal jurisdiction is retained 
with respect to Federal government employers and employees; and the U.S. 
Postal Service (USPS), including USPS employees, and contract employees 
and contractor-operated facilities engaged in USPS mail operations. 
Federal jurisdiction is also retained and exercised by the Employment 
Standards Administration, U.S. Department of Labor,

[[Page 82]]

(Secretary's Order 5-96, dated December 27, 1996) with respect to the 
field sanitation standard, 29 CFR 1928.110, and the enforcement of the 
temporary labor camps standard, 29 CFR 1910.142, in agriculture, as 
described in Sec. 1952.253(b).
    (c) The Assistant Secretary retains his authority under section 
11(c) of the Act with regard to complaints alleging discrimination 
against employees because of the exercise of any right afforded to the 
employee by the Act. The Assistant Secretary also retains his authority 
under section 6 of the Act to promulgate, modify or revoke occupational 
safety and health standards which address the working conditions of all 
employees. Any Federal standards, including any standards promulgated or 
modified during the period of the Virgin Islands final approval under 
section 18(e), are now enforceable by Federal OSHA.
    (d) The Assistant Secretary also retains authority to continue to 
conduct investigations and inspections for the purpose of the evaluation 
of the Virgin Islands State plan under section 18 (e) and (f) of the 
Act. The Regional Administrator will closely monitor State performance 
and corrective action and make prompt recommendation to the Assistant 
Secretary for either reinstatement of the Virgin Islands final approval 
status or initiation of plan withdrawal action. Federal enforcement 
authority will continue to be exercised to the extent necessary to 
assure occupational safety and health protection to employees in the 
Virgin Islands until further notice.

[60 FR 56951, Nov. 13, 1995, as amended at 62 FR 2563, Jan. 17, 1997; 65 
FR 36626, June 9, 2000]



Sec. 1952.255  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected and copied during normal business hours at the following 
locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, 200 Constitution Avenue NW, Room N3700, 
Washington, DC 20210;
Regional Administrator, Occupational Safety and Health Administration, 
U.S. Department of Labor, 201 Varick Street, Room 670, New York, New 
York 10014.
Office of the Commissioner, Virgin Islands Department of Labor, 16-AB 
Church Street, St. Croix, Virgin Islands 00820-4666.

[65 FR 36626, June 9, 2000]



Sec. 1952.256  Changes to approved plans.

    (a) Legislation. (1) On March 29, 1994, the Assistant Secretary 
approved Virgin Islands' revised statutory penalty levels which are the 
same as the revised Federal penalty levels contained in section 17 of 
the Act as amended on November 5, 1990.
    (2)  [Reserved]
    (b) Temporary labor camps/field sanitation. Effective February 3, 
1997, the Assistant Secretary approved the Virgin Island's plan 
amendment, dated July 31, 1996, relinquishing coverage for the issues of 
field sanitation (29 CFR 1928.110) and temporary labor camps (29 CFR 
1910.142) in agriculture (except for agricultural temporary labor camps 
associated with egg, poultry or red meat production, or the post-harvest 
processing of agricultural or horticultural commodities.) The Employment 
Standards Administration, U.S. Department of Labor, has assumed 
responsibility for enforcement of these Federal OSHA standards in 
agriculture in the Virgin Islands pursuant to Secretary of Labor's Order 
5-96, dated December 27, 1996.

[59 FR 14556, Mar. 29, 1994, as amended at 62 FR 2564, Jan. 17, 1997]



                           Subpart T--Michigan



Sec. 1952.260  Description of the plan as initially approved.

    (a) The plan identifies the Michigan Department of Labor and the 
Department of Public Health as the agencies to be responsible for 
administering the plan throughout the State. The Department of Labor 
will be responsible for promulgating and enforcing general safety and 
construction safety standards while the Department of Public Health will 
be responsible for the promulgation and enforcement of occupational 
health standards. Two independent commissions within the Department of 
Labor, the Construction Safety Commission and the Occupational Safety 
Standards Commission

[[Page 83]]

will promulgate general and construction safety standards while the 
Director of Public Health will promulgate health standards. Applications 
for variances to standards will be handled by the two Departments. 
Administrative adjudications will be the responsibility of the 
Occupational Safety Compliance and Appeals Board, the Construction 
Safety Compliance and Appeals Board, and the Occupational Health Review 
Commission.
    (b) The State program is expected to extend its protection to all 
employees in the State (including those employed by it and its political 
subdivisions) except those employed by Federal agencies, maritime 
workers, household domestic workers, and mine workers.
    (c) The Plan provides that the State agencies will have full 
authority to administer and to enforce all laws, rules and orders 
protecting employee safety and health in all places of employment in the 
State. It also proposes procedures for providing prompt and effective 
standards for the protection of employees against new and unforseen 
hazards, and for furnishing information to employees on hazards, 
precautions, symptoms, and emergency treatment, and procedures for 
variances and the protection of employees from hazards. It further, 
provides employer and employee representatives an opportunity to 
accompany inspectors and call attention to possible violations before, 
during and after inspections, protection of employees against discharge 
or discrimination in terms and conditions of employment, notice to 
employees or their representatives when no compliance action is taken 
upon complaints, including informal review, notice to employees of their 
protections and obligations, adequate safeguards to protect trade 
secrets, prompt notice to employers and employees of alleged violations 
of standards and abatement requirements, effective remedies against 
employers, and the right to review alleged violations, abatement 
periods, and proposed penalties with opportunity for employee 
participation in the review proceeding, procedures for prompt restraint 
or elimination of imminent danger conditions, provision for the issuance 
of cease operation orders in cases where employers fail to comply with 
final orders for abatement, and provision for inspections in response to 
complaints.
    (d) The State intends to promulgate standards for all of the issues 
contained in 29 CFR parts 1910 and 1926 with the exception of Ship 
Repairing (Sec. 1910.13), Shipbuilding (Sec. 1910.14), Shipbreaking 
(Sec. 1910.15) and Longshoring (Sec. 1910.16), which standards are to be 
as effective as Federal standards. Michigan had originally not intended 
to promulgate a standard covering cooperage machinery comparable to 29 
CFR 1910.214, but it has now provided assurances that it will promulgate 
such standard if the hazards covered by the Federal cooperage standard 
are found to exist in Michigan. The State has already promulgated 
standards as effective as subparts F, K, M, Q and S and the remaining 
subparts are to be covered by State standards which are to be 
promulgated by June 1975.
    (e) The Plan includes a statement of the Governor's support for the 
proposed legislation and a statement of legal opinion that it will meet 
the requirements of the Occupational Safety and Health Act of 1970, and 
is consistent with the Constitution and laws of Michigan. The Plan sets 
out goals and provides a timetable for bringing it into full conformity 
with part 1902 of this title upon enactment of the proposed legislation 
by the State legislature. A merit system of personnel administration 
will be used. In addition, health and safety education and training 
programs are to be carried on for the benefit of employers and 
employees. The Department of Labor will also be conducting a Safety 
Director Program wherein companies which are found to have high injury 
incident rates will be assisted in developing safety programs.

[38 FR 27391, Oct. 3, 1973, as amended at 60 FR 20193, Apr. 25, 1995]



Sec. 1952.261  Developmental schedule.

    (a) Enactment of the Michigan Occupational Safety and Health Act by 
December 1973.
    (b) Promulgation of occupational safety and health standards as 
effective and comprehensive as those set forth in chapter XVII of this 
title 29 of the Code of Federal Regulations by June 1975.

[[Page 84]]

    (c) Completion of the Michigan Compliance Manual within one year 
after passage of the state legislation.
    (d) Promulgation of regulations similar to parts 1903, 1905, and 
2200 of this title within one year after passage of the state 
legislation.
    (e) Promulgation of 29 CFR part 1904 as a State regulation, 
including any amendments to part 1904, within one (1) year following 
passage of the proposed legislation.
    (f) Development of a new coordination agreement between the Michigan 
Departments of Labor and Public Health within three months following the 
passage of the proposed state legislation.
    (g) Implementation of the state's public employee program within one 
year following passage of the proposed legislation.
    (h) Within three years of plan approval all developmental steps will 
be fully implemented.

This certification attests to structural completion, but does not render 
judgment on adequacy of performance.

[38 FR 27391, Oct. 3, 1973, as amended at 46 FR 3865, Jan. 16, 1981. 
Redesignated and amended at 60 FR 20193, Apr. 25, 1995]



Sec. 1952.262  Completion of developmental steps and certification.

    (a) In accordance with Sec. 1952.263(a), the Michigan Occupational 
Safety and Health Act was enacted on June 18, 1974 and is effective 
January 1, 1975. This legislation, Act 154 of Michigan Public Acts of 
1974, was submitted to the Assistant Secretary on June 19, 1974 and 
approved on February 21, 1975.
    (b) In accordance with Sec. 1952.263(f) the Michigan Department of 
Labor and the Michigan Department of Public Health have entered into a 
new interagency agreement on September 23, 1974. The agreement was 
submitted to the Assistant Secretary on October 28, 1974, and approved 
on February 21, 1975.
    (c) In accordance with the requirements of Sec. 1952.10, the 
Michigan State poster was approved by the Assistant Secretary on 
September 22, 1975.
    (d) In accordance with Sec. 1952.263(g) Michigan's public employee 
program was implemented with an effective date of July 1, 1975, and 
approved by the Assistant Secretary on October 17, 1977.
    (e) In accordance with Sec. 1952.263(d), Procedural Rules for the 
granting of Variances, Regulations for Inspections and Investigations, 
Citations, and Proposed Penalties and Procedural Rules for the Board of 
Health and Safety Compliance and Appeals, were approved by the Assistant 
Secretary on January 12, 1981.
    (f) In accordance with prior commitments, the Michigan Occupational 
Safety and Health Act as amended by Act 149 of the Public Acts of 1979, 
was approved by the Assistant Secretary on January 12, 1981.
    (g) In accordance with Sec. 1952.263(c), Manuals for Compliance 
Operations of the Michigan Department of Labor and Public Health were 
approved by the Assistant Secretary on January 13, 1981.
    (h) In accordance with Sec. 1952.263(e), Rules for Recording and 
Reporting of Occupational Injuries and Illnesses, were approved by the 
Assistant Secretary on January 13, 1981.
    (i) In accordance with Sec. 1902.34 of this chapter, the Michigan 
occupational safety and health plan was certified effective January 13, 
1981 as having completed all developmental steps specified in the plan 
as approved on September 24, 1973, on or before September 24, 1976.

[40 FR 8556, Feb. 28, 1975, as amended at 40 FR 44132, Sept. 25, 1975; 
42 FR 57123, Nov. 1, 1977; 46 FR 3862, 3863, Jan. 16, 1981. Redesignated 
and amended at 60 FR 20193, Apr. 25, 1995]



Sec. 1952.263  Compliance staffing benchmarks.

    Under the terms of the 1978 Court Order in AFL-CIO v. Marshall, 
compliance staffing levels (``benchmarks'') necessary for a ``fully 
effective'' enforcement program were required for each State operating 
an approved State plan. In 1992, Michigan completed, in conjunction with 
OSHA, a reassessment of the levels initially established in 1980 and 
proposed revised benchmarks of 56 safety and 45 health compliance 
officers. After opportunity for public comment and service on the AFL-
CIO, the Assistant Secretary approved these revised staffing 
requirements on April 20, 1995.

[60 FR 20193, Apr. 25, 1995]

[[Page 85]]



Sec. 1952.264  [Reserved]



Sec. 1952.265  Level of Federal enforcement.

    Pursuant to Secs. 1902.20(b)(1)(iii) and 1954.3 of this chapter 
under which an agreement has been entered into with Michigan, effective 
January 6, 1977, and based on a determination that Michigan is 
operational in the issues covered by the Michigan occupational safety 
and health plan, discretionary Federal enforcement activity under 
section 18(e) of the Act (29 U.S.C. 667(e)) will not be initiated with 
regard to Federal occupational safety and health standards in issues 
covered under 29 CFR Parts 1910 and 1926, except as provided in this 
section. The U.S. Department of Labor will continue to exercise 
authority, among other things, with regard to: Complaints filed with the 
U.S. Department of Labor about violations of the discrimination 
provisions of section 11(c) of the Act (29 U.S.C. 660(c)); Federal 
standards promulgated subsequent to the agreement where necessary to 
protect employees, as in the case of temporary emergency standards 
promulgated under section 6(c) of the Act (29 U.S.C. 655(c)), in the 
issues covered under the plan and the agreement until such time as 
Michigan shall have adopted equivalent standards in accordance with 
subpart C of 29 CFR Part 1953; private sector maritime activities and 
will continue to enforce all provisions of the Act, rules or orders, and 
all Federal standards, current or future, specifically directed to 
maritime employment (29 CFR Part 1915, shipyard employment; Part 1917, 
marine terminals; Part 1918, longshoring; Part 1919, gear certification) 
as well as provisions of general industry and construction standards (29 
CFR Parts 1910 and 1926) appropriate to hazards found in these 
employments; which issues have been specifically excluded from coverage 
under the Michigan plan; and investigations and inspections for the 
purpose of the evaluation of the Michigan plan under sections 18(e) and 
(f) of the Act (29 U.S.C. 667(e) and (f)). Federal OSHA will also retain 
authority for coverage of Federal government employers and employees; 
and of the U.S. Postal Service (USPS), including USPS employees, and 
contract employees and contractor-operated facilities engaged in USPS 
mail operations. The OSHA Regional Administrator will make a prompt 
recommendation for the resumption of the exercise of Federal enforcement 
authority under section 18(e) of the Act (29 U.S.C. 667(e)) whenever, 
and to the degree, necessary to assure occupational safety and health 
protection to employees in Michigan.

[65 FR 36626, June 9, 2000]



Sec. 1952.266  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected and copied during normal business hours at the following 
locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, 200 Constitution Avenue, NW, Room N3700, 
Washington, DC 20210;
Office of the Regional Administrator, Occupational Safety and Health 
Administration, U.S. Department of Labor, 230 S. Dearborn Street, 32nd 
Floor, Room 3244, Chicago, Illinois 60604;
Office of the Director, Michigan Department of Consumer and Industry 
Services, 4th Floor, Law Building, 525 West Ottawa Street, Lansing, 
Michigan 48933 (Mailing address: P.O. Box 30004, Lansing, Michigan 
48909).

[65 FR 36626, June 9, 2000]



Sec. 1952.267  Changes to approved plans.

    (a) Legislation. (1) On March 29, 1994, the Assistant Secretary 
approved Michigan's revised statutory penalty levels which are the same 
as the revised Federal penalty levels contained in section 17 of the Act 
as amended on November 5, 1990.
    (2)  [Reserved]
    (b)  [Reserved]

[59 FR 14556, Mar. 29, 1994. Redesignated at 60 FR 20193, Apr. 25, 1995]



                           Subpart U--Vermont

    Source: 38 FR 28659, Oct. 16, 1973, unless otherwise noted.



Sec. 1952.270  Description of the plan.

    (a) The State's program will be administered and enforced by the 
Department of Labor and Industry. Safety standards are to be promulgated 
by the

[[Page 86]]

Commissioner of Labor and Industry while the Secretary of the Agency of 
Human Services is to promulgate health standards. The Division of 
Industrial Hygiene, within the Department of Labor and Industry, will 
then have the responsibility of inspecting workplaces for violations of 
health standards. However, enforcement of the Vermont Occupational 
Safety and Health Act, including the issuance of citations for all 
violations, rests with the Department of Labor and Industry. 
Administrative adjudications will be the responsibility of an 
independent State Occupational Safety and Health Review Board.
    (b) The State program will protect all employees within the state 
including those employed by the State and its political subdivisions. 
Public employees are to be granted the same protections as are afforded 
employees in the private sector. Specific administrative procedures for 
implementing the plan within the State agencies are to be drafted by the 
Vermont Agency of Administration.
    (c) Vermont has adopted all Federal standards promulgated before 
December 31, 1972. Future permanent Federal standards will be adopted by 
the state within one year after promulgation by the Secretary of Labor.
    (d) The State enabling legislation became law on July 1, 1972. The 
Act sets forth the general authority and scope for implementing the 
plan. The plan also contains proposed amendments to the Act which are 
designed to bring the legislation into full conformity with section 
18(c) of the Federal Act and part 1902. The State has also adopted 
regulations patterned after 29 CFR parts 1903, 1904 and 1905.
    (e) The Vermont Act and the regulations drafted pursuant to it 
provide procedures for prompt and effective standards-setting for the 
protection of employees against new and unforeseen hazards and for 
furnishing information to employees on hazards, precautions, symptoms, 
and emergency treatment; variances; the giving to employer and employee 
representatives an opportunity to accompany inspectors and to call 
attention to possible violations before, during, and after inspections; 
the protection of employees against discharge or discrimination in terms 
or conditions of employments; notice to employees or their 
representatives when no compliance action is taken upon complaints, 
including informal review; notice to employees of their protections and 
obligations; adequate safeguards to protect trade secrets; prompt notice 
to employers and employees of alleged violations of standards and 
abatement requirements; effective sanctions against employers; the right 
to review alleged violations, abatement periods, and proposed penalties 
with the opportunity for employee participation in the review 
proceedings; prompt restraint or elimination of imminent danger 
conditions; and the development of a program to encourage voluntary 
compliance by employers and employees.
    (f) The plan includes a statement of the Governor's support of it 
and of the proposed amendments to its legislation. It sets out goals and 
provides a timetable for bringing the plan into full conformity with 
part 1902. Personnel hired under the state's merit system will carry out 
the program.



Sec. 1952.271  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected and copied during normal business hours at the following 
locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, 200 Constitution Avenue, NW, Room N3700, 
Washington, DC 20210;
Office of the Regional Administrator, Occupational Safety and Health 
Administration, U.S. Department of Labor, John F. Kennedy Federal 
Building, Room E-340, Boston, Massachusetts 02203; and
Office of the Commissioner, Vermont Department of Labor and Industry, 
National Life Building-Drawer 20, 120 State Street, Montpelier, Vermont 
05620-3401.

[65 FR 36626, June 9, 2000]



Sec. 1952.272  Level of Federal enforcement.

    Pursuant to Secs. 1902.20(b)(1)(iii) and 1954.3 of this chapter 
under which an agreement has been entered into with Vermont, effective 
February 19, 1975, and based on a determination that

[[Page 87]]

Vermont is operational in issues covered by the Vermont occupational 
safety and health plan, discretionary Federal enforcement authority 
under section 18(e) of the Act (29 U.S.C. 667(e)) will not be initiated 
with regard to Federal occupational safety and health standards in 
issues covered under 29 CFR Parts 1910 and 1926, except as provided in 
this section. The U.S. Department of Labor will continue to exercise 
authority, among other things, with regard to: Complaints filed with the 
U.S. Department of Labor about violations of the discrimination 
provisions of section 11(c) of the Act (29 U.S.C. 660(c)); federal 
standards promulgated subsequent to the agreement where necessary to 
protect employees, as in the case of temporary emergency standards 
promulgated under section 6(c) of the Act (29 U.S.C. 665(c)), in the 
issues covered under the plan and the agreement until such time as 
Vermont shall have adopted equivalent standards in accordance with 
Subpart C of 29 CFR Part 1953; in private sector offshore maritime 
activities and will continue to enforce all provisions of the Act, rules 
or orders, and all Federal standards, current or future, specifically 
directed to maritime employment (29 CFR Part 1915, shipyard employment; 
Part 1917, marine terminals; Part 1918, longshoring; Part 1919, gear 
certification) as well as provisions of general industry and 
construction standards (29 CFR Parts 1910 and 1926) appropriate to 
hazards found in these employments, as they relate to employment under 
the exclusive jurisdiction of the Federal government on the navigable 
waters of the United States, including dry docks, graving docks, and 
marine railways; and investigations and inspections for the purpose of 
the evaluation of the Vermont plan under sections 18(e) and (f) of the 
Act (29 U.S.C. 667(e) and (f)). Federal OSHA will also retain authority 
for coverage of Federal government employers and employees; and of the 
U.S. Postal Service (USPS), including USPS employees, and contract 
employees and contractor-operated facilities engaged in USPS mail 
operations. The OSHA Regional Administrator will make a prompt 
recommendation for the resumption of the exercise of Federal enforcement 
authority under Section 18(e) of the Act (29 U.S.C. 667(e)) whenever, 
and to the degree, necessary to assure occupational safety and health 
protection to employees in Vermont.

[65 FR 36627, June 9, 2000]



Sec. 1952.273  Developmental schedule.

    (a) Introduction and enactment of amendments to the Vermont 
Occupational Safety and Health Act in the 1974 session of the State 
legislature;
    (b) Completion of the State's Compliance Manual;
    (c) Drafting of rules governing the operation of the Occupational 
Safety and Health Review Board;
    (d) Development of specific administrative procedures for 
implementing the occupational safety and health program within the State 
agencies by January 1974;
    (e) Development of the State's Voluntary Compliance Program for 
Employers and Employees by January 1974;
    (f) Appointment of advisory committees for safety and health 
standards upon plan approval;
    (g) Within three years of plan approval all developmental steps will 
be fully implemented.



Sec. 1952.274  Completion of developmental steps and certification.

    (a) In accordance with Sec. 1952.273(a), amendments to the Vermont 
Occupational Safety and Health Act were passed by the legislature and 
signed by the Governor on April 3, 1974.
    (b) In accordance with Sec. 1952.273(c), rules governing the 
operation of the Occupational Safety and Health Review Board have been 
adopted, under section 230 of the Vermont Act, effective January, 1974.
    (c) In accordance with 29 CFR 1952.273(f), the Vermont Standards 
Advisory Council was established in January 1974.
    (d) In accordance with 29 CFR 1952.273(g), the following 
developmental steps have been implemented.
    (1) The health and safety enforcement program in the State of 
Vermont including enforcement of the State's occupational safety and 
health standards and regulations, was implemented on November 12, 1973.

[[Page 88]]

    (2) The Vermont Occupational Safety and Health Review Board has been 
in operation since October 1973, under rules and regulations formally 
promulgated on February 4, 1974 and approved on December 16, 1974 (39 FR 
44201, December 23, 1974).
    (3) Recordkeeping and reporting requirements, as approved on October 
1, 1973 (38 FR 28658), were implemented for both the private and public 
sectors on November 12, 1973.
    (4) Written procedures for coordination between Vermont's Division 
of Occupational Safety and Division of Occupational Health were 
formulated in June 1975, and revised in September 1975.
    (e) In accordance with the requirements of Sec. 1952.10 the Vermont 
Safety and Health Poster for private and public employees as amended by 
the attachment informing the public of its right to complain about State 
program administration, was approved by the Assistant Secretary on 
February 9, 1977.
    (f) In accordance with 29 CFR 1952.273(b), the State has developed a 
Field Operations Manual which defines the procedures and guidelines to 
be used by the Vermont compliance staff in carrying out the goals of the 
program and other local government workplaces and which has been 
approved by the Assistant Secretary on February 22, 1977.
    (g) In accordance with 29 CFR 1952.273(d), the State has developed 
and implemented a State Agency Program by July 1, 1974 and a Public 
Agency (local and municipal) Enforcement Program by November 12, 1973, 
which has been approved by the Assistant Secretary on February 22, 1977.
    (h) In accordance with 29 CFR 1952.273(e), the State of Vermont has 
developed and implemented its voluntary Compliance Program, including a 
training program for employers and employees, by February 1974, which 
has been approved by the Assistant Secretary as completion of 
developmental step on February 22, 1977.
    (i) In accordance with 29 CFR 1902.34, the Vermont occupational 
safety and health plan was certified, effective as of the date of 
publication on March 4, 1977, as having completed all developmental 
steps specified in the plan (as approved on October 1, 1973) on or 
before September 30, 1976.

[39 FR 44202, Dec. 23, 1974, as amended at 42 FR 2313, Jan. 11, 1977; 42 
FR 9169, Feb. 15, 1977; 42 FR 10989, Feb. 25, 1977, 42 FR 12428, Mar. 4, 
1977]



Sec. 1952.275  Changes to approved plans.

    (a) Legislation. (1) On March 29, 1994, the Assistant Secretary 
approved Vermont's revised statutory penalty levels which are the same 
as the revised Federal penalty levels contained in section 17 of the Act 
as amended on November 5, 1990.
    (2)  [Reserved]
    (b)  [Reserved]

[59 FR 14556, Mar. 29, 1994]

Subpart V [Reserved]



                            Subpart W--Nevada



Sec. 1952.290  Description of the plan as initially approved.

    (a) The Nevada Occupational Safety and Health program will be 
administered and enforced by the Department of Occupational Safety and 
Health of the Nevada Industrial Commission. Administrative adjudications 
of proposed penalties will be the responsibility of an independent five 
member review board appointed by the Governor.
    (b) The program will cover all activities of employees and places of 
private and public employment except those involving Federal employment, 
highway motor vehicles, and railroads, subject to the exercise of 
jurisdiction under other Federal safety and health programs. It requires 
employers of one or more employees (including those employed by the 
State and its political subdivisions) to furnish them employment and a 
place of employment which are free from recognized hazards that are 
causing or are likely to cause death or serious physical harm, and to 
comply with all occupational safety and health standards promulgated or 
issued by the agency. Moreover, all safety and health standards adopted 
by the United States Department of Labor shall be deemed Nevada 
Occupational Safety

[[Page 89]]

and Health standards. The Plan also directs employees to comply with all 
occupational safety and health standards and regulations that are 
applicable to their own actions and conduct.
    (c) The Plan includes procedures for providing prompt and effective 
standards for the protection of employees against new and unforeseen 
hazards and for furnishing information to employees on hazards, 
precautions, symptoms, and emergency treatment; and procedures for the 
issuance of variances. It provides employer and employee representatives 
an opportunity to accompany inspectors and call attention to possible 
violations, before, during, and after inspections; protection of 
employees against discharge or discrimination in terms and conditions of 
employment; notice to employees or their representatives when no 
compliance action is taken upon complaints, including informal review; 
notice to employees of their protections and obligations; adequate 
safeguards to protect trade secrets; prompt notice to employers and 
employees of alleged violations of standards and abatement requirements; 
effective remedies against employers and the right to review alleged 
violations, abatement periods, and proposed penalties with opportunity 
for employee participation in the review proceedings; procedures for 
prompt restraint or elimination of imminent danger conditions, and 
procedures for inspection in response to complaints.
    (d)(1) The Plan includes a legal opinion that it will meet the 
requirements of the Occupational Safety and Health Act of 1970, and is 
consistent with the Constitution and laws of the State of Nevada.
    (2) A merit system of personnel administration will be used.
    (3) The Plan provides a program of education, training, and 
consultation for employers and employees.
    (4) The Plan is supplemented by the inclusion of implementing 
legislation and letters dated July 26, August 10, and November 5, 1973, 
and a telegram dated December 5, 1973.

[39 FR 1009, Jan. 4, 1974, as amended at 39 FR 8613, Mar. 6, 1974]



Sec. 1952.291  Developmental schedule.

    The following is a summary of the major developmental steps provided 
by the plan:
    (a) Training of enforcement personnel to be completed--July 1, 1974.
    (b) Application of the program to State and local employees to take 
effect--July 1, 1974.
    (c) Not less than two industrial hygiene experts shall participate 
in the program--July 1, 1975.
    (d) Proposed amendments to the Nevada Occupational Safety and Health 
Act to have been adopted and to take effect--July 1, 1975.
    (e) System of recordkeeping and reporting fully developed and 
operational--January 1, 1977.
    (f) Program to be fully implemented--January 1, 1977.

[39 FR 1009, Jan. 4, 1974. Redesignated at 52 FR 34383, Sept. 11, 1987]



Sec. 1952.292  Completion of developmental steps and certification.

    (a) A separate and autonomous on-site consultation program became 
effective on July 1, 1975, and was approved by the Assistant Secretary 
on February 26, 1976.
    (b) In accordance with Sec. 1952.293(c), as amended, the Nevada 
health program was submitted on December 3, 1976 and has been 
implemented.
    (c) In accordance with the requirements of Sec. 1952.10, the Nevada 
poster for private employers was approved by the Assistant Secretary on 
December 23, 1977.
    (d) In accordance with Sec. 1952.293(a), initial training of Nevada 
personnel has been completed.
    (e) Nevada began participation in the Bureau of Labor Statistics 
annual survey of occupational injuries and illnesses on July 19, 1976.
    (f) Standards identical to Federal standards promulgated through 
January 18, 1977 were adopted by the State and approved by the Regional 
Administrator in a notice published in the Federal Register on July 26, 
1977 (42 FR 38026).
    (g) Regulations concerning the Rules of Occupational Safety and 
Health Recordkeeping Requirements were submitted on September 16, 1976, 
revised effective January 9, 1981, and approved

[[Page 90]]

by the Assistant Secretary on August 13, 1981.
    (h) Regulations concerning the Rules of Procedures of Occupational 
Safety and Health Review Commission; Rules of Practice for Variances; 
and Rules for Inspections, Citations, and Proposed Penalties were 
submitted on June 24, 1975, revised effective January 9, 1981, and 
approved by the Assistant Secretary on August 13, 1981.
    (i) Regulations concerning the Public Employee Program were 
submitted on June 24, 1975, revised effective February 15, 1979, and 
approved by the Assistant Secretary on August 13, 1981.
    (j) In accordance with the requirements of Sec. 1952.10, the revised 
poster was submitted on April 7, 1980, and approved by the Assistant 
Secretary on August 13, 1981.
    (k) Amendments to the State's legislation were submitted on June 24, 
1975 and July 1, 1977, became effective on July 1, 1975 and July 1, 
1977, and approved by the Assistant Secretary on August 13, 1981.
    (l) The Nevada Field Operations Manual was submitted on June 24, 
1975, revised to reflect those changes made in the Federal Field 
Operations Manual through March, 1981, and approved by the Assistant 
Secretary on August 13, 1981.
    (m) In accordance with Sec. 1902.34 of this chapter, the Nevada 
occupational safety and health plan was certified, effective August 13, 
1981 as having completed all developmental steps specified in the plan 
as approved on December 28, 1973, on or before January 1, 1977. This 
certification attests to structural completion, but does not render 
judgment on adequacy of performance.

[41 FR 8955, Mar. 2, 1976, as amended at 42 FR 64627, Dec. 27, 1977; 46 
FR 42844, 42846, Aug. 25, 1981. Redesignated at 52 FR 34383, Sept. 11, 
1987]



Sec. 1952.293  Compliance staffing benchmarks.

    Under the terms of the 1978 Court Order in AFL-CIO v. Marshall 
compliance staffing levels (benchmarks) necessary for a ``fully 
effective'' enforcement program were required to be established for each 
State operating an approved State plan. In July 1986 Nevada, in 
conjunction with OSHA, completed a reassessment of the levels initially 
established in 1980 and proposed revised compliance staffing benchmarks 
of 11 safety and 5 health compliance officers. After opportunity for 
public comment and service on the AFL-CIO, the Assistant Secretary 
approved these revised staffing requirements on September 2, 1987.

[52 FR 34383, Sept. 11, 1987]



Sec. 1952.294  Final approval determination.

    (a) In accordance with section 18(e) of the Act and procedures in 29 
CFR Part 1902, and after determination that the State met the ``fully 
effective'' compliance staffing benchmarks as revised in 1986 in 
response to a court order in AFL-CIO v. Marshall, 570 F.2d 1030 (D.C. 
Cir 1978), and was satisfactorily providing reports to OSHA through 
participation in the Federal-State Integrated Management Information 
System, the Assistant Secretary evaluated actual operations under the 
Nevada State plan for a period of at least one year following 
certification of completion of developmental steps. Based on an 18(e) 
Evaluation Report covering the period July 1, 1995 through March 31, 
1999, and after opportunity for public comment, the Assistant Secretary 
determined that in operation the State of Nevada's occupational safety 
and health program is at least as effective as the Federal program in 
providing safe and healthful employment and places of employment and 
meets the criteria for final State plan approval in section 18(e) of the 
Act and implementing regulations at 29 CFR Part 1902. Accordingly, the 
Nevada plan was granted final approval and concurrent Federal 
enforcement authority was relinquished under section 18(e) of the Act 
effective April 18, 2000.
    (b) Except as otherwise noted, the plan which has received final 
approval covers all activities of employers and all places of employment 
in Nevada. The plan does not cover Federal government employers and 
employees; any private sector maritime activities; employment on Indian 
land; any contractors or subcontractors on any Federal

[[Page 91]]

establishment where the land is determined to be exclusive Federal 
jurisdiction; and the U.S. Postal Service (USPS), including USPS 
employees, contract employees, and contractor-operated facilities 
engaged in USPS mail operations.
    (c) Nevada is required to maintain a State program which is at least 
as effective as operations under the Federal program; to submit plan 
supplements in accordance with 29 CFR Part 1953; to allocate sufficient 
safety and health enforcement staff to meet the benchmarks for State 
staffing established by the U.S. Department of Labor, or any revisions 
to those benchmarks; and, to furnish such reports in such form as the 
Assistant Secretary may from time to time require.

[65 FR 20742, Apr. 18, 2000, as amended at 65 FR 36627, June 9, 2000]



Sec. 1952.295  Level of Federal enforcement.

    (a) As a result of the Assistant Secretary's determination granting 
final approval to the Nevada State plan under section 18(e) of the Act, 
effective April 18, 2000, occupational safety and health standards which 
have been promulgated under section 6 of the Act do not apply with 
respect to issues covered under the Nevada Plan. This determination also 
relinquishes concurrent Federal OSHA authority to issue citations for 
violations of such standards under section 5(a)(2) and 9 of the Act; to 
conduct inspections and investigations under section 8 (except those 
necessary to conduct evaluation of the plan under section 18(f) and 
other inspections, investigations, or proceedings necessary to carry out 
Federal responsibilities not specifically preempted by section 18(e)); 
to conduct enforcement proceedings in contested cases under section 10; 
to institute proceedings to correct imminent dangers under section 13; 
and to propose civil penalties or initiate criminal proceedings for 
violations of the Federal OSH Act under section 17. The Assistant 
Secretary retains jurisdiction under the above provisions in any 
proceeding commenced under section 9 or 10 before the effective date of 
the 18(e) determination.
    (b)(1) In accordance with section 18(e), final approval relinquishes 
Federal OSHA authority only with regard to occupational safety and 
health issues covered by the Nevada plan. OSHA retains full authority 
over issues which are not subject to State enforcement under the plan. 
Thus, Federal OSHA retains its authority relative to safety and health 
in private sector maritime activities and will continue to enforce all 
provisions of the Act, rules or orders, and all Federal standards, 
current or future, specifically directed to any private sector maritime 
activities (occupational safety and health standards comparable to 29 
CFR Parts 1915, shipyard employment; 1917, marine terminals; 1918, 
longshoring; and 1919, gear certification, as well as provisions of 
general industry and construction standards (29 CFR Parts 1910 and 1926) 
appropriate to hazards found in these employments), employment on Indian 
land, and any contractors or subcontractors on any Federal establishment 
where the land is determined to be exclusive Federal jurisdiction. 
Federal jurisdiction is also retained with respect to Federal government 
employers and employees. Federal OSHA will also retain authority for 
coverage of the U.S. Postal Service (USPS), including USPS employees, 
contract employees, and contractor-operated facilities engaged in USPS 
mail operations.
    (2) In addition, any hazard, industry, geographical area, operation 
or facility over which the State is unable to effectively exercise 
jurisdiction for reasons which OSHA determines are not related to the 
required performance or structure of the plan shall be deemed to be an 
issue not covered by the State plan which has received final approval, 
and shall be subject to Federal enforcement. Where enforcement 
jurisdiction is shared between Federal and State authorities for a 
particular area, project, or facility, in the interest of administrative 
practicability Federal jurisdiction may be assumed over the entire 
project or facility. In any of the aforementioned circumstances, Federal 
enforcement authority may be exercised after consultation with the State 
designated agency.

[[Page 92]]

    (c) Federal authority under provisions of the Act not listed in 
section 18(e) is unaffected by final approval of the Nevada State plan. 
Thus, for example, the Assistant Secretary retains his authority under 
section 11(c) of the Act with regard to complaints alleging 
discrimination against employees because of the exercise of any right 
afforded to the employee by the Act, although such complaints may be 
referred to the State for investigation. The Assistant Secretary also 
retains his authority under section 6 of the Act to promulgate, modify 
or revoke occupational safety and health standards which address the 
working conditions of all employees, including those in States which 
have received an affirmative 18(e) determination, although such 
standards may not be Federally applied. In the event that the State's 
18(e) status is subsequently withdrawn and Federal authority reinstated, 
all Federal standards, including any standards promulgated or modified 
during the 18(e) period, would be Federally enforceable in that State.
    (d) As required by section 18(f) of the Act, OSHA will continue to 
monitor the operations of the Nevada State program to assure that the 
provisions of the State plan are substantially complied with and that 
the program remains at least as effective as the Federal program. 
Failure by the State to comply with its obligations may result in the 
suspension or revocation of the final approval determination under 
Section 18(e), resumption of Federal enforcement, and/or proceedings for 
withdrawal of plan approval.

[65 FR 20742, Apr. 18, 2000, as amended at 65 FR 36627, June 9, 2000]



Sec. 1952.296  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected and copied during normal business hours at the following 
locations: Office of State Programs, Directorate of Federal-State 
Operations, Occupational Safety and Health Administration, U.S. 
Department of Labor, 200 Constitution Avenue NW, Room N3700, Washington, 
DC 20210; Office of the Regional Administrator, Occupational Safety and 
Health Administration, Room 415, 71 Stevenson Street, San Francisco, 
California 94105; Office of the State Designee, Administrator, Nevada 
Division of Industrial Relations, 400 West King Street, Suite 400, 
Carson City, Nevada 89703.

[65 FR 20743, Apr. 18, 2000]



Sec. 1952.297  Changes to approved plans.

    (a) Legislation. (1) On March 29, 1994, the Assistant Secretary 
approved Nevada's revised statutory penalty levels which are the same as 
the revised Federal penalty levels contained in section 17 of the Act as 
amended on November 5, 1990.
    (2)  [Reserved]
    (b) Notices of violation. The State submitted a procedure for 
issuing notices of violation in lieu of citations for certain other than 
serious violations which the employer agrees to abate. The procedure as 
modified was approved by the Assistant Secretary on August 24, 1995.
    (c) Legislation. The State submitted amendments to its Occupational 
Safety and Health Act, enacted in 1981, which: provide for notices of 
violation in lieu of citations for certain other than serious 
violations; delete the authority for temporary variances for other than 
new standards; allow the Nevada Occupational Safety and Health Appeals 
Board to employ legal counsel; allow penalty collection actions to be 
brought in any court of competent jurisdiction; and ensure 
confidentiality to employees making statements to the Division of 
Occupational Safety and Health. Further amendments, enacted in 1989: 
require the maintenance of specific logs relating to complaints; provide 
public access to records on complaints, except for confidential 
information; provide confidentiality for those employees who file 
complaints or make statements, as well as for files relating to open 
cases; allow representatives of employees and former employees access to 
any records which indicate their exposure to toxic materials or harmful 
physical agents; define representative of employees or former employees; 
allow health care providers and government employees in the field of 
public safety, to file complaints; allow for oral complaints; require 
the

[[Page 93]]

division to respond to valid complaints of serious violations 
immediately and of other violations within 14 days; provide that an 
employee who accompanies a compliance officer on the inspection is 
entitled to be paid for the time spent, but that only one employee may 
accompany the compliance officer during the inspection; allow the 
Administrator of the Division of Occupational Safety and Health to issue 
an emergency order to restrain an imminent danger situation; and, double 
maximum authorized penalty levels. Amendments enacted in 1993 reflect 
the new State organizational structural by designating the previous 
Divisions as sections in the Division of Industrial Relations of the 
Department of Business and Industry. The Assistant Secretary approved 
these amendments on August 24, 1995.
    (d) Field Operations Manual. The State's Field Operations Manual, 
comparable to the Federal Field Operations Manual, through Change 4, was 
approved by the Assistant Secretary on August 24, 1995.
    (e) Consultation Manual. The State's Training and Consultation 
Section Policies and Procedures Manual was approved by the Assistant 
Secretary on August 24, 1995.
    (f) Occupational Safety and Health Administration Technical Manual. 
The State's adoption of the Federal OSHA Technical Manual, through 
Change 3, with a cover sheet adapting Federal references to the State's 
administrative structure, was approved by the Assistant Secretary on 
August 24, 1995.
    (g) Pre-construction conferences. A State regulations requiring pre-
construction conferences with the Division of Industrial Relations for 
certain types of construction projects was approved by the Assistant 
Secretary on August 24, 1995.
    (h) Reorganized Plan. The reorganization of the Nevada plan was 
approved by the Assistant Secretary on August 24, 1995.

[59 FR 14556, Mar. 29, 1994, as amended at 60 FR 43972, Aug. 24, 1995]

Subpart X [Reserved]



                            Subpart Y--Hawaii



Sec. 1952.310  Description of the plan as initially approved.

    (a) The plan designates the Department of Labor and Industrial 
Relations as the agency responsible for administering the plan 
throughout the State. It proposes to define the occupational safety and 
health issues covered by it as defined by the Secretary of Labor in 29 
CFR 1902.2(c)(1). All occupational safety and health standards 
promulgated by the U.S. Secretary of Labor will be adopted under the 
plan as well as certain standards deemed to be ``as effective as'' the 
Federal standards, except those found in 29 CFR parts 1915, 1916, 1917, 
and 1918 (ship repairing, shipbuilding, shipbreaking and longshoring).
    (b) Within the plan there is the Hawaii Occupational Safety and 
Health Law which became law on May 16, 1972. The law as enacted gives 
the Department of Labor and Industrial Relations the authority to 
inspect workplaces and to issue citations for the abatement of 
violations and there is also included a prohibition against advance 
notice of such inspections. The law is also intended to insure employer 
and employee representatives an opportunity to accompany inspectors and 
to call attention to possible violations; notification of employees or 
their representatives when no compliance action is taken as a result of 
alleged violations; protection of employees against discharge or 
discrimination in terms and conditions of employment; adequate 
safeguards to protect trade secrets. There is provision made for the 
prompt restraint of imminent danger situations and a system of penalties 
for violation of the law.
    (c) The plan also includes proposed amendments to be considered by 
the Hawaii Legislature during its 1974 session amending the Occupational 
Safety and Health Law, and related provisions, to bring them into 
conformity with the requirements of part 1902.
    (d) The Hawaii plan includes the following documents as of the date 
of approval:
    (1) The plan description documents, including the Hawaii 
Occupational Safety and Health Law, the proposed

[[Page 94]]

amendments to the Law and appendices in three (3) volumes;
    (2) Letter from Robert K. Hasegawa, Director of the Department of 
Labor and Industrial Relations, to Jay Arnoldus, Project Officer, Office 
of Federal and State Operations, December 10, 1973, submitting 
clarifications to the plan.
    (3) Letters from Robert C. Gilkey, Deputy Director of the Department 
of Labor and Industrial Relations, to Jay Arnoldus, December 3, 1973 and 
December 4, 1973 submitting clarifications and deletion to the plan.
    (4) Letters from Robert K. Hasegawa to Gabriel Gillotti, Assistant 
Regional Director, January 30, 1973, and June 28, 1973.
    (5) Letter from Robert A. Gilkey to John H. Stender, Assistant 
Secretary of Labor, October 30, 1973.
    (6) Letters from Robert K. Hasegawa to John H. Stender, Assistant 
Secretary of Labor, November 7, 1973 and September 14, 1973 submitting 
proposed legislative amendments and modifications and clarifications to 
the plan.

[39 FR 1012, Jan. 4, 1974, as amended at 49 FR 19192, May 4, 1984]



Sec. 1952.311  Developmental schedule.

    (a) Introduction of Legislative amendments to State Legislature 
January 1974.
    (b) Hearings on standards promulgation March 1974.
    (c) Implementation of the Management Information System by December 
1975.
    (d) Complete implementation of the occupational health program by 
July 1975.
    (e) Complete State plan implementation December 1976.

[39 FR 1013, Jan. 4, 1974. Redesignated and amended at 39 FR 44752, Dec. 
27, 1974; 40 FR 28792, July 9, 1975. Further redesignated at 49 FR 
19192, May 4, 1984]



Sec. 1952.312  Completion of developmental steps and certification.

    (a) In accordance with Sec. 1952.313(i), specific Legislative 
amendments were enacted by the State Legislature and signed by the 
Acting Governor on June 7, 1974, and amended by Act 95 of the 1976 
Hawaii Legislative Session.
    (b) In accordance with Sec. 1952.313(d), as amended, the Hawaii 
Occupational Health Plan was submitted to the Assistant Secretary on 
April 16, 1974, and approved on December 20, 1974, incorporating 
assurances from the State, by letter dated November 19, 1974.
    (c) In accordance with Sec. 1952.313(b), as amended, the Hawaii 
occupational safety and health standards were promulgated on April 18, 
22, 23, 24, and 25, 1975.
    (d) In accordance with the requirements of 29 CFR 1952.10, the 
Hawaii State poster was approved by the Assistant Secretary on February 
4, 1975.
    (e) In accordance with 29 CFR 1952.313(d), as amended, the Hawaii 
occupational health program was implemented on July 1, 1975.
    (f) The Rules of Procedure of the Hawaii Division of Occupational 
Safety and Health were promulgated in September, 1972, and revised in 
January, 1974. These rules include: Regulations on inspections, 
citations, and proposed penalties (chapter 102); regulations for 
recording and reporting occupational injuries and illnesses (chapter 
103); rules of practice for variances (chapter 104); regulations 
concerning administration witnesses and documents in private litigation 
(chapter 105); and regulations for promulgating, modifying, or revoking 
occupational safety and health standards (chapter 106).
    (g) In accordance with 29 CFR 1952.313(c), as amended, the Hawaii 
Management Information System was completed and in operation by December 
31, 1975.
    (h) In accordance with Sec. 1902.34 of this chapter, the Hawaii 
occupational safety and health plan was certified, effective April 26, 
1978 as having completed all developmental steps specified in the plan 
as approved on December 28, 1973, on or before December 31, 1976.

[39 FR 44203, Dec. 23, 1974, as amended at 39 FR 44752, Dec. 27, 1974; 
40 FR 6336, Feb. 11, 1975; 41 FR 26218, June 25, 1976; 43 FR 5821, Feb. 
10, 1978; 43 FR 19851, May 9, 1978. Redesignated at 49 FR 19192, May 4, 
1984]



Sec. 1952.313  Final approval determination.

    (a) In accordance with section 18(e) of the Act and procedures in 29 
CFR part 1902, and after a determination that

[[Page 95]]

the State met the ``fully effective'' compliance staffing benchmarks 
established in response to a Court Order in AFL-CIO v. Marshall, (CA 74-
406), and was satisfactorily providing reports to OSHA through 
participation in the Federal-State Unified Management Information 
System, the Assistant Secretary evaluated actual operations under the 
Hawaii State plan for a period of at least one year following 
certification of completion of developmental steps (May 9, 1978, 43 FR 
19849). Based on the Evaluation Report for FY 1982 and available FY 1983 
data, and after opportunity for public comment and an informal public 
hearing held on October 27, 1983, in Honolulu, Hawaii, the Assistant 
Secretary determined that in actual operations, Hawaii is at least as 
effective as the Federal program in providing safe and healthful 
employment and places of employment and meets the criteria for final 
State plan approval in section 18(e) of the Act and implementing 
regulations at 29 CFR part 1902. Accordingly, the Hawaii plan was 
granted final approval and concurrent Federal enforcement authority was 
relinquished under section 18(e) of the Act effective April 30, 1984.
    (b) Except as otherwise noted, the plan which has received final 
approval covers all activities of employers and all places of employment 
in Hawaii. The plan does not cover maritime employment in the private 
sector; Federal government employers and employees; enforcement relating 
to any contractors or subcontractors on any Federal establishment where 
the land is determined to be exclusive Federal jurisdiction; and the 
U.S. Postal Service (USPS), including USPS employees, and contract 
employees and contractor-operated facilities engaged in USPS mail 
operations.
    (c) Hawaii is required: To maintain a State program which is at 
least as effective as operations under the Federal program; to submit 
plan supplements in accordance with 29 CFR part 1953; to allocate 
sufficient safety and health enforcement staff to meet the benchmarks 
for State staffing established by the U.S. Department of Labor, or any 
revisions to those benchmarks; and, to furnish such reports in such form 
as the Assistant Secretary may from time to time require.

[49 FR 19192, May 4, 1984, as amended at 65 FR 36627, June 9, 2000]



Sec. 1952.314  Level of Federal enforcement.

    (a) As a result of the Assistant Secretary's determination granting 
final approval to the Hawaii plan under section 18(e) of the Act, 
effective April 30, 1984, occupational safety and health standards which 
have been promulgated under section 6 of the Act do not apply with 
respect to issues covered under the Hawaii plan. This determination also 
relinquishes concurrent Federal OSHA authority to issue citations for 
violation of such standards under sections 5(a)(2) and 9 of the Act; to 
conduct inspections and investigations under section 8 (except those 
necessary to conduct evaluation of the plan under section 18(f), and 
other inspections, investigations or proceedings necessary to carry out 
Federal responsibilities not specifically preempted by section 18(e)); 
to conduct enforcement proceedings in contested cases under section 10; 
to institute proceedings to correct imminent dangers under section 13; 
and to propose civil penalties or initiate criminal proceedings for 
violations of the Federal Act under section 17. The Assistant Secretary 
may retain jurisdiction under the above provisions in any proceeding 
commenced under section 9 or 10 before the effective date of the 18(e) 
determination.
    (b) In accordance with section 18(e), final approval relinquishes 
Federal OSHA authority only with regard to occupational safety and 
health issues covered by the Hawaii plan. OSHA retains full authority 
over issues which are not subject to State enforcement under the plan. 
Thus, Federal OSHA retains its authority relative to safety and health 
in private sector maritime activities and will continue to enforce all 
provisions of the Act, rules or orders, and all Federal standards, 
current or future, specifically directed to maritime employment (29 CFR 
Part 1915, shipyard employment; Part 1917, marine terminals; Part 1918, 
longshoring; Part 1919, gear certification) as well as provisions of 
general industry and construction standards (29 CFR Parts 1910

[[Page 96]]

and 1926) appropriate to hazards found in these employments. Federal 
jurisdiction also remains in effect with respect to Federal government 
employers and employees, enforcement relating to any contractors or 
subcontractors on any Federal establishment where the land is determined 
to be exclusive Federal jurisdiction; and the U.S. Postal Service 
(USPS), including USPS employees, and contract employees and contractor-
operated facilities engaged in USPS mail operations.
    (c) Federal authority under provisions of the Act not listed in 
section 18(e) is unaffected by final approval of the plan. Thus, for 
example, the Assistant Secretary retains his authority under section 
11(c) of the Act with regard to complaints alleging discrimination 
against employees because of the exercise of any right afforded to the 
employee by the Act. The Assistant Secretary also retains his authority 
under section 6 of the Act to promulgate, modify or revoke occupational 
safety and health standards which address the working conditions of all 
employees, including those in States which have received an affirmative 
18(e) determination, although such standards may not be Federally 
applied. In the event that the State's 18(e) status is subsequently 
withdrawn and Federal authority reinstated, all Federal standards, 
including any standards promulgated or modified during the 18(e) period, 
would be Federally enforceable in that State.
    (d) As required by section 18(f) of the Act, OSHA will continue to 
monitor the operations of the Hawaii State program to assure that the 
provisions of the State plan are substantially complied with and that 
the program remains at least as effective as the Federal program. 
Failure by the State to comply with its obligations may result in the 
revocation of the final determination under section 18(e), resumption of 
Federal enforcement, and/or proceedings for withdrawal of plan approval.

[49 FR 19192, May 4, 1984, as amended at 65 FR 36627, June 9, 2000]



Sec. 1952.315  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected and copied during normal business hours at the following 
locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, 200 Constitution Avenue, NW, Room N3700, 
Washington, DC 20210;
Office of the Regional Administrator, Occupational Safety and Health 
Administration, U.S. Department of Labor, 71 Stevenson Street, 4th 
Floor, San Francisco, California 94105; and
Office of the Director, Hawaii Department of Labor and Industrial 
Relations, 830 Punchbowl Street, Honolulu, Hawaii 96831.

[65 FR 36628, June 9, 2000]



Sec. 1952.316  Changes to approved plans.

    (a) Legislation. (1) On March 29, 1994, the Assistant Secretary 
approved Hawaii's revised statutory penalty levels which are the same as 
the revised Federal penalty levels contained in section 17 of the Act as 
amended on November 5, 1990.
    (2) [Reserved]
    (b)(1) Regulations. The State's regulation on the Division of 
Occupational Safety and Health's Access to Employee Medical Records, and 
amendments to State regulations covering the Labor and Industrial 
Relations Appeals Board; General Provisions and Definitions; Recording 
and Reporting Occupational Injuries and Illnesses; Inspections, 
Citations, and Proposed Penalties; and Variances, promulgated by the 
State through March 22, 1991, were approved by the Assistant Secretary 
on February 20, 1995.
    (2) [Reserved]
    (c) Legislation. (1) An amendment to the Hawaii Occupational Safety 
and Health Law, enacted in 1987, which expands the type of information 
that is protected from disclosure in any discovery or civil action 
arising out of enforcement or administration of the law, was approved by 
the Assistant Secretary on February 20, 1995.
    (2) [Reserved]
    (d) Consultation Manual. The State's Consultation Policies and 
Procedures

[[Page 97]]

Manual was approved by the Assistant Secretary on February 20, 1995.
    (e) Occupational Safety and Health Administration Technical Manual. 
The State's adoption of the Federal OSHA Technical Manual, through 
Change 1, was approved by the Assistant Secretary on February 20, 1995.
    (f) Reorganized Plan. The reorganization of the Hawaii plan was 
approved by the Assistant Secretary on February 20, 1995.

[59 FR 14556, Mar. 29, 1994 as amended at 60 FR 12419, Mar. 7, 1995]



                           Subpart Z--Indiana



Sec. 1952.320  Description of the plan as initially approved.

    (a)(1) The plan identifies the Indiana Division of Labor as the 
State agency designated to implement and carry out the State plan. 
Within this structure, the Occupational Safety Standards Commission has 
the responsibility to adopt standards and dispose of variance 
applications; the Commissioner of Labor is charged with the 
administration and enforcement of the Act; and the Board of Safety 
Review is to conduct and decide contested cases. The State Board of 
Health, Industrial Hygiene Division, pursuant to an agreement with the 
Division of Labor will provide laboratory services and will conduct 
occupational health inspections as scheduled by the Division of Labor.
    (2) The plan defines the covered occupational safety and health 
issues as defined by the Secretary of Labor in 29 CFR 1902.2(c)(1). 
Further, Indiana has adopted all Federal safety and health standards 
contained in 29 CFR parts 1910 and 1926. The State program is to extend 
its protection to all employees in the State including those employed by 
it and its political subdivisions.
    (b) The plan includes existing enabling legislation and the Indiana 
Occupational Safety and Health Act (IC 1971, 22-8-1.1 et seq.) as well 
as amendments to this Act which were passed and became effective on May 
1, 1973. Under the Act as amended the Division of Labor has authority to 
administer and enforce the provisions of the State plan.
    (c) The legislation provides procedures for the promulgation of 
standards; furnishing information to employees on hazardous and toxic 
substances; and procedures for granting temporary and permanent 
variances. The law also contains procedures for inspections including 
inspections in response to complaints; ensures employer and employee 
representatives an opportunity to accompany inspectors and to call 
attention to possible violations before, during and after inspections; 
protection of employees against discharge or discrimination in terms or 
conditions of employment through court suits brought by the Attorney 
General at the request of the Commissioner; notice to employees of their 
protections and obligations under the State law; prompt restraint of 
imminent danger situations; safeguard to protect trade secrets; prompt 
notice to employers and employees of alleged violations of standards and 
abatement requirements; effective sanctions against employers; and 
employer right to review of alleged violations, abatement periods, and 
proposed penalties with an opportunity for employee participation and 
employee right of review of such abatement periods.
    (d) The plan also contains a voluntary compliance program. The State 
will conduct seminars, conferences and meetings designed for management, 
supervisory personnel, employees and union representatives to transmit 
information about its safety and health program. These programs are 
specifically designed to cover the following areas: general industrial 
safety, construction safety, first aid instruction, supervisory safety 
training, hazard recognition, Indiana occupational health and safety 
laws, federal occupational safety and health laws, State health and 
safety standards, injury and illness reporting procedures requirements, 
rights and obligations to employers and employees, enforcement programs. 
On-site consultation services will be available for employers upon 
request as part of the developmental plan.
    (e) Also included in the plan are proposed budgets to be devoted to 
it as well as descriptions of the job classifications and personnel who 
will be carrying out the program. Further, the

[[Page 98]]

plan sets out goals and provides a timetable for bringing it into full 
conformity with 29 CFR part 1902.

[39 FR 8612, Mar. 6, 1974, as amended at 51 FR 2488, Jan. 17, 1986]



Sec. 1952.321  Developmental schedule.

    (a) Proposed legislative amendments to be introduced in the 1974 
session of the State legislature;
    (b) Refresher Course for inspectors will be completed by September 
1, 1974;
    (c) A full complement of 69 inspectors will be hired by the end of 
the first year of plan operation; the State will add 10 inspectors for 
each of the two succeeding years;
    (d) Development of a State employee safety program within nine 
months following plan approval;
    (e) Establishment of the rules of procedure for on-site 
consultations within nine months following plan approval;
    (f) Within three years of plan approval all developmental steps will 
be fully implemented.

[39 FR 8612, Mar. 6, 1974. Redesignated at 51 FR 2488, Jan. 17, 1986]



Sec. 1952.322  Completion of developmental steps and certification.

    (a) In accordance with the requirements of Sec. 1952.10, the Indiana 
poster was approved for use until Federal enforcement authority and 
standards become inapplicable to issues covered under the plan, by the 
Assistant Secretary on March 2, 1976.
    (b) In accordance with 29 CFR 1952.323(a), Indiana amended the 
Indiana Occupational Safety and Health Act (I.C. 22-8-1.1) in 1975, 
1977, and 1978. These amendments were approved by the Assistant 
Secretary on September 24, 1981.
    (c) In accordance with 29 CFR 1952.323(b), Indiana submitted 
documentation outlining training and refresher courses for its 
compliance staff on May 19, 1975 and May 4, 1981. This supplement was 
approved by the Assistant Secretary on September 24, 1981.
    (d) In accordance with 29 CFR 1952.323(c), Indiana submitted 
documentation on May 4, 1981, showing that it has substantially met its 
compliance staffing commitments by providing for 14 health and 70 safety 
compliance officers. This supplement was approved by the Assistant 
Secretary on September 24, 1981.
    (e) In accordance with 29 CFR 1952.323(d), Indiana developed an 
occupational safety and health program for public employees on August 
25, 1975, and resubmitted a revised program with implementing 
regulations on September 5, 1981. These were approved by the Assistant 
Secretary on September 24, 1981.
    (f) In accordance with 29 CFR 1952.323(e), Indiana promulgated rules 
for on-site consultation on March 7, 1975, which were amended on 
September 5, 1981. These regulations were approved by the Assistant 
Secretary on September 24, 1981.
    (g) Indiana submitted its compliance operations manual on August 7, 
1975, which was subsequently revised in 1978 and again on June 4, 1980. 
The State submitted a revised Industrial Hygiene manual on July 15, 
1981. These manuals, which reflect changes in the Federal program 
through 1980 were approved by the Assistant Secretary on September 24, 
1981.
    (h) Indiana promulgated regulations for inspections, safety orders, 
and proposed penalties parallel to 29 CFR part 1903 on January 18, 1977 
with amendments dated July 29, 1977 and September 5, 1981. These 
regulations were approved by the Assistant Secretary on September 24, 
1981.
    (i) Indiana promulgated regulations for recordkeeping and reporting 
of occupational injuries and illnesses parallel to 29 CFR part 1904 on 
January 18, 1977, which were amended on September 10, 1979. The State 
also revised its recordkeeping and reporting provisions for the public 
sector on September 5, 1981. These regulations were approved by the 
Assistant Secretary on September 24, 1981.
    (j) Indiana promulgated rules for variances, limitations, 
variations, tolerances, and exemptions, parallel to 29 CFR part 1905 on 
December 17, 1976, which were revised June 3, 1977 and September 5, 
1981. These regulations were approved by the Assistant Secretary on 
September 24, 1981.
    (k) Indiana adopted rules of procedure for the Board of Safety 
Review on

[[Page 99]]

September 19, 1976, which were subsequently amended on September 5, 
1981. These regulations were approved by the Assistant Secretary on 
September 24, 1981.
    (l) Indiana deleted coverage of the maritime and longshoring issues 
from its plan on June 9, 1981. This supplement was approved by the 
Assistant Secretary on September 24, 1981.
    (m) Indiana submitted documentation on establishment of its 
Management Information System on May 20, 1974. This supplement was 
approved by the Assistant Secretary on September 24, 1981.
    (n) In accordance with Sec. 1902.34 of this chapter, the Indiana 
occupational safety and health plan was certified, effective October 16, 
1981 as having completed all developmental steps specified in the plan 
as approved on February 25, 1974 on or before February 25, 1977. This 
certification attests to structural completion, but does not render 
judgment on adequacy of performance.

[46 FR 49119, 49121, Oct. 6, 1981; 47 FR 28918, July 2, 1982. 
Redesignated at 51 FR 2488, Jan. 17, 1986]



Sec. 1952.323  Compliance staffing benchmarks.

    Under the terms of the 1978 Court Order in AFL-CIO v. Marshall 
compliance staffing levels (benchmarks) necessary for a ``fully 
effective'' enforcement program were required to be established for each 
State operating an approved State plan. In September 1984 Indiana, in 
conjunction with OSHA, completed a reassessment of the levels initially 
established in 1980 and proposed revised compliance staffing benchmarks 
of 47 safety and 23 health compliance officers. After opportunity for 
public comment and service on the AFL-CIO, the Assistant Secretary 
approved these revised staffing requirements on January 17, 1986.

[51 FR 2488, Jan. 17, 1986]



Sec. 1952.324  Final approval determination.

    (a) In accordance with section 18(e) of the Act and procedures in 29 
CFR part 1902, and after determination that the State met the ``fully 
effective'' compliance staffing benchmarks as revised in 1986 in 
response to a Court Order in AFL-CIO v. Marshall (CA 74-406), and was 
satisfactorily providing reports to OSHA through participation in the 
Federal-State Integrated Management Information System, the Assistant 
Secretary evaluated actual operations under the Indiana State plan for a 
period of at least one year following certification of completion of 
developmental steps (46 FR 49119). Based on the 18(e) Evaluation Report 
for the period of March 1984 through December 1985, and after 
opportunity for public comment, the Assistant Secretary determined that 
in operation the State of Indiana's occupational safety and health 
program is at least as effective as the Federal program in providing 
safe and healthful employment and places of employment and meets the 
criteria for final State plan approval in section 18(e) of the Act and 
implementing regulations at 29 CFR part 1902. Accordingly, the Indiana 
plan was granted final approval, and concurrent Federal enforcement 
authority was relinquished under section 18(e) of the Act effective 
September 26, 1986.
    (b) Except as otherwise noted, the plan which has received final 
approval covers all activities of employers and all places of employment 
in Indiana. The plan does not cover maritime employment in the private 
sector; Federal government employers and employees; the U.S. Postal 
Service (USPS), including USPS employees, and contract employees and 
contractor-operated facilities engaged in USPS mail operations; the 
enforcement of the field sanitation standard, 29 CFR 1928.110, and the 
enforcement of the temporary labor camps standard, 29 CFR 1910.142, with 
respect to any agricultural establishment where employees are engaged in 
``agricultural employment'' within the meaning of the Migrant and 
Seasonal Agricultural Worker Protection Act, 29 U.S.C. 1802(3), 
regardless of the number of employees, including employees engaged in 
hand packing of produce into containers, whether done on the ground, on 
a moving machine, or in a temporary packing shed, except that Indiana 
retains enforcement responsibility over agricultural temporary labor 
camps for employees engaged in egg, poultry, or red meat production,

[[Page 100]]

or the post-harvest processing of agricultural or horticultural 
commodities.
    (c) Indiana is required to maintain a State program which is at 
least as effective as operations under the Federal program; to submit 
plan supplements in accordance with 29 CFR part 1953; to allocate 
sufficient safety and health enforcement staff to meet the benchmarks 
for State staffing established by the U.S. Department of Labor, or any 
revisions to those benchmarks; and, to furnish such reports in such form 
as the Assistant Secretary may from time to time require.

[51 FR 34215, Sept. 26, 1986, as amended at 62 FR 2564, Jan. 17, 1997; 
65 FR 36628, June 9, 2000]



Sec. 1952.325  Level of Federal enforcement.

    (a) As a result of the Assistant Secretary's determination granting 
final approval to the Indiana plan under section 18(e) of the Act, 
effective September 26, 1986, occupational safety and health standards 
which have been promulgated under section 6 of the Act do not apply with 
respect to issues covered under the Indiana plan. This determination 
also relinquishes concurrent Federal OSHA authority to issue citations 
for violations of such standards under sections 5 (a)(2) and 9 of the 
Act; to conduct inspections and investigations under section 8 (except 
those necessary to conduct evaluation of the plan under section 18(f) 
and other inspections, investigations, or proceedings necessary to carry 
out Federal responsibilities not specifically preempted by section 
18(e)); to conduct enforcement proceedings in contested cases under 
section 10; to institute proceedings to correct imminent dangers under 
section 13; and to propose civil penalties or initiate criminal 
proceedings for violations of the Federal Act under section 17. The 
Assistant Secretary retains jurisdiction under the above provisions in 
any proceeding commenced under section 9 or 10 before the effective date 
of the 18(e) determination.
    (b)(1) In accordance with section 18(e), final approval relinquishes 
Federal OSHA authority only with regard to occupational safety and 
health issues covered by the Indiana plan. OSHA retains full authority 
over issues which are not subject to State enforcement under the plan. 
Thus, Federal OSHA retains its authority relative to safety and health 
in private sector maritime activities and will continue to enforce all 
provisions of the Act, rules or orders, and all Federal standards, 
current or future, specifically directed to maritime employment (29 CFR 
Part 1915, shipyard employment; Part 1917, marine terminals; Part 1918, 
longshoring; Part 1919, gear certification), as well as provisions of 
general industry and construction standards (29 CFR Parts 1910 and 1926) 
appropriate to hazards found in these employments. Federal jurisdiction 
is retained and exercised by the Employment Standards Administration, 
U.S. Department of Labor, (Secretary's Order 5-96, dated December 27, 
1996) with respect to the field sanitation standard, 29 CFR 1928.110, 
and the enforcement of the temporary labor camps standard, 29 CFR 
1910.142, in agriculture, as described in Sec. 1952.324(b). Federal 
jurisdiction is also retained with respect to Federal government 
employers and employees, and the U.S. Postal Service (USPS), including 
USPS employees, and contract employees and contractor-operated 
facilities engaged in USPS mail operations.
    (2) In addition, any hazard, industry, geographical area, operation 
or facility over which the State is unable to effectively exercise 
jurisdiction for reasons not related to the required performance or 
structure of the plan shall be deemed to be an issue not covered by the 
plan which has received final approval and shall be subject to Federal 
enforcement. Where enforcement jurisdiction is shared between Federal 
and State authorities for a particular area, project, or facility, in 
the interest of administrative practicability Federal jurisdiction may 
be assumed over the entire project or facility. In either of the two 
aforementioned circumstances, Federal enforcement may be exercised 
immediately upon agreement between Federal OSHA and the State designated 
agency.
    (c) Federal authority under provisions of the Act not listed in 
section 18(e) is unaffected by final approval of

[[Page 101]]

the plan. Thus, for example, the Assistant Secretary retains his 
authority under section 11(c) of the Act with regard to complaints 
alleging discrimination against employees because of the exercise of any 
right afforded to the employee by the Act, although such complaints may 
be referred to the State for investigation. The Assistant Secretary also 
retains his authority under section 6 of the Act to promulgate, modify 
or revoke occupational safety and health standards which address the 
working conditions of all employees, including those in States which 
have received an affirmative 18(e) determination, although such 
standards may not be federally applied. In the event that the State's 
18(e) status is subsequently withdrawn and Federal authority reinstated, 
all Federal standards, including any standards promulgated or modified 
during the 18(e) period, would be federally enforceable in that State.
    (d) As required by section 18(f) of the Act, OSHA will continue to 
monitor the operations of the Indiana State program to assure that the 
provisions of the State plan are substantially complied with and that 
the program remains at least as effective as the Federal program. 
Failure by the State to comply with its obligations may result in the 
revocation of the final determination under section 18(e), resumption of 
Federal enforcement, and/or proceedings for withdrawal of plan approval.

[51 FR 34215, Sept. 26, 1986, as amended at 62 FR 2564, Jan. 17, 1997; 
65 FR 36628, June 9, 2000]



Sec. 1952.326  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected and copied during normal business hours at the following 
locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, 200 Constitution Avenue, NW, Room N3700, 
Washington, DC 20210;
Regional Administrator, Occupational Safety and Health Administration, 
U.S. Department of Labor, 230 S. Dearborn Street, 32nd Floor, Room 3244, 
Chicago, Illinois 60604; and
Office of the Commissioner, Indiana Department of Labor, State Office 
Building, 402 West Washington Street, Room W195, Indianapolis, Indiana 
46204.

[65 FR 36628, June 9, 2000]



Sec. 1952.327  Changes to approved plans.

    (a) Legislation. (1) On March 29, 1994, the Assistant Secretary 
approved Indiana's revised statutory penalty levels which are the same 
as the revised Federal penalty levels contained in section 17 of the Act 
as amended on November 5, 1990.
    (2)  [Reserved]
    (b) Temporary labor camps/field sanitation. Effective February 3, 
1997, the Assistant Secretary approved Indiana's plan amendment, dated 
July 9, 1996, relinquishing coverage for the issues of field sanitation 
(29 CFR 1928.110) and temporary labor camps (29 CFR 1910.142) in 
agriculture (except for agricultural temporary labor camps associated 
with egg, poultry or red meat production, or the post-harvest processing 
of agricultural or horticultural commodities.) The Employment Standards 
Administration, U.S. Department of Labor, has assumed responsibility for 
enforcement of these Federal OSHA standards in agriculture in Indiana 
pursuant to Secretary of Labor's Order 5-96, dated December 27, 1996.
    (c) The Voluntary Protection Program. On October 24, 1996, the 
Assistant Secretary approved Indiana's plan supplement which is 
generally identical to the Federal Voluntary Protection Program, with 
the exception of organizational and position titles.

[59 FR 14556, Mar. 29, 1994, as amended at 61 FR 55099, Oct. 24, 1996; 
62 FR 2564, Jan. 17, 1997]

Subpart AA [Reserved]



                           Subpart BB--Wyoming



Sec. 1952.340  Description of the plan as initially approved.

    (a) The plan identifies the Wyoming Occupational Health and Safety 
Commission as the agency to be responsible for administering the plan 
throughout the State. The Commission will be responsible for 
promulgating and enforcing occupational safety and health

[[Page 102]]

standards and deciding contested cases, subject to judicial review.
    (b) The State program will protect all employees within the State, 
including those employed by the State and its political subdivisions. 
Public employees are to be granted the same protections as are afforded 
employees in the private sector. The State plan does not cover employees 
of the Federal government or those employees whose working conditions 
are regulated by Federal agencies other than the U.S. Department of 
Labor.
    (c) The Wyoming Occupational Health and Safety Act gives the State 
agency full authority to administer and to enforce all laws, rules, and 
orders protecting employee safety and health in all places of employment 
in the State. The legislation provides employer and employee 
representatives an opportunity to accompany inspectors before or during 
the physical inspection of any workplace for the purpose of aiding such 
inspection; adequate safeguards to protect trade secrets; effective 
sanctions against employers; protection of employees against discharge 
or discrimination; procedures for prompt restraint or elimination of 
imminent danger situations; the right to review by employers and 
employees of alleged violations, abatement periods and proposed 
penalties; and prompt notice to employers and employees of alleged 
violations of standards and abatement requirements.
    (d) Administrative regulations include procedures for permanent and 
temporary variances; notice to employees or their representatives when 
no compliance action is taken as a result of a complaint, including 
procedures for informal review; information to employees on hazards, 
precautions, symptoms and emergency treatment; and training and 
education programs for employers and employees, including an on-site 
consultation program consistent with the criteria set out in the 
Washington Plan decision (38 FR 2421).
    (e) The State intends to promulgate Federal standards covering all 
of the issues contained in parts 1910 and 1926 of this chapter but will 
not cover those found in parts 1915, 1916, 1917, and 1918 of this 
chapter (ship repairing, ship building, ship breaking, and longshoring). 
The State also plans to adopt additional vertical standards relating to 
oil well drilling and servicing not provided by the Federal program. 
Future Federal standards shall be promulgated by the State within six 
months after promulgation by the Secretary of Labor. In the case of 
product standards the State has provided assurances that any State 
product standards will be required by compelling local conditions and 
will not unduly burden interstate commerce.
    (f) The plan sets out goals and provides a timetable for bringing it 
into full conformity with part 1902 of this chapter. All personnel 
employed to carry out the plan are to be hired under the Wyoming 
Personnel Merit System which conforms to standards established by the 
United States Civil Service Commission. The plan also contains a 
detailed description of the resources that are to be devoted to it.

[39 FR 15395, May 3, 1974, as amended at 50 FR 26558, June 27, 1985]



Sec. 1952.341  Developmental schedule.

    (a) Adoption of Federal standards as State standards by February 
1975.
    (b) Administrative regulations for recordkeeping and reporting, 
variances, posting requirements, employee complaint procedures, 
inspections under the Act, employee exposure to toxic materials, 
providing information to employees on their exposure to hazards, 
personal protective equipment, medical examinations, and monitoring, 
safeguarding trade secrets, administrative review of citations, proposed 
penalties, and abatement periods, to become effective by June 1, 1974.
    (c) Amendments to the Wyoming Administrative Procedure Act to be 
submitted to the State Legislature January 1975 and to become effective 
by May 1, 1975.
    (d) Management Information System to be completed August 1, 1974.
    (e) Merit staffing for administration of the program to be completed 
by August 15, 1974.

[[Page 103]]

    (f) Amendments to the State's Fair Employment Practices Act to be 
submitted to the State Legislature which convenes January 14, 1975.

[39 FR 15395, May 3, 1974. Redesignated at 50 FR 26558, June 27, 1985]



Sec. 1952.342  Completion of developmental steps and certification.

    (a) In accordance with Sec. 1952.343(a) the State adopted Federal 
standards covering all the issues contained in 29 CFR parts 1910 
subparts D through S, and 1926 (The State will not cover parts 1915, 
1916, 1917, and 1918). (40 FR 8948, Mar. 4, 1975; 41 FR 26767, June 29, 
1976.)
    (b) In accordance with the requirements of 29 CFR 1952.10 the 
Wyoming posters for private and public employees were approved by the 
Assistant Secretary on July 14, 1976.
    (c) In accordance with Sec. 1952.343(d), Wyoming has developed and 
implemented a Management Information System.
    (d) The State plan has been amended to include an Affirmative Action 
Plan outlining the State's policy of equal employment opportunity.
    (e) Guidelines and procedures for implementing the State's safety 
and health program for public employees were approved by the Assistant 
Secretary on June 1, 1978.
    (f) In accordance with Sec. 1952.343(b), Wyoming has promulgated its 
rules of practice and procedure which were approved by the Assistant 
Secretary on December 11, 1980.
    (g) Legislation revising the enabling law to provide for civil 
enforcement of safety and health violations and revised regulations 
establishing procedures for review of enforcement actions was approved 
by the Assistant Secretary on December 19, 1980. (45 FR 83483)
    (h) The State has met its plan commitment for hiring enforcement 
staff under an approved merit system for administration of its health 
and safety program pursuant to a July 3, 1980 memo from Don Owsley, 
Administrator of the Wyoming Occupational Health and Safety Department.
    (i) As required by 29 CFR 1902.34(b)(3), the personnel operations of 
the Wyoming Occupational Health and Safety Department have been found to 
be in substantial conformity with the ``Standards for a Merit System of 
Personnel Administration'' by the Office of Personnel Management in a 
letter dated October 17, 1980.
    (j) In accordance with Sec. 1902.34 of this chapter, the Wyoming 
occupational safety and health plan was certified, effective December 
30, 1980, as having completed all developmental steps specified in the 
plan as approved on April 25, 1974, on or before April 25, 1977. This 
certification attests to structural completion, but does not render 
judgment on adequacy of performance.

[41 FR 28789, July 13, 1976, as amended at 41 FR 30329, July 23, 1976; 
42 FR 45907, Sept. 13, 1977; 43 FR 25424, June 13, 1978; 43 FR 34463, 
Aug. 4, 1978; 45 FR 83485, Dec. 19, 1980; 45 FR 85740, Dec. 30, 1980; 47 
FR 1290, Jan. 12, 1982. Redesignated at 50 FR 26558, June 27, 1985]



Sec. 1952.343  Compliance staffing benchmarks.

    Under the terms of the 1978 Court Order in AFL-CIO v. Marshall, 
Compliance staffing levels (benchmarks) necessary for a ``fully 
effective'' enforcement program were required to be established for each 
State operating an approved State plan. In September 1984 Wyoming, in 
conjunction with OSHA, completed a reassessment of the levels initially 
established in 1980 and proposed revised compliance staffing benchmarks 
of 6 safety and 2 health compliance officers. After opportunity for 
pulbic comment and service on the AFL-CIO, the Assistant Secretary 
approved these revised staffing requirements on June 27, 1985.

[50 FR 26558, June 27, 1985]



Sec. 1952.344  Final approval determination.

    (a) In accordance with section 18(e) of the Act and procedures in 29 
CFR part 1902, and after a determination that the State met the ``fully 
effective'' compliance staffing benchmarks as revised in 1984 in 
response to a Court Order in AFL-CIO v. Marshall (CA 74-406), and was 
satisfactorily providing reports to OSHA through particiption in the 
Federal-State Unified Management Information System, the Assistant 
Secretary evaluated actual operations under the Wyoming State plan

[[Page 104]]

for a period of at least one year following certification of completion 
of developmental steps (45 FR 85739). Based on the 18(e) Evaluation 
Report for the period of October 1982 through March 1984, and after 
opportunity for public comment, the Assistant Secretary determined that 
in operation the State of Wyoming's occupational safety health program 
is at least as effective as the Federal program in providing safe and 
healthful employment and places of employment and meets the criteria for 
final State plan approval in section 18(e) of the Act and implementing 
regulations at 29 CFR part 1902. Accordingly, the Wyoming plan was 
granted final approval and concurrent Federal enforcement authority was 
relinquished under section 18(e) of the Act effective June 27, 1985.
    (b) Except as otherwise noted, the plan which has received final 
approval covers all activities of employers and all places of employment 
in Wyoming. The plan does not cover private sector maritime employment; 
employment on the Warren Air Force Base; Federal government employers 
and employees; the U.S. Postal Service (USPS), including USPS employees, 
and contract employees and contractor-operated facilities engaged in 
USPS mail operations; the enforcement of the field sanitation standard, 
29 CFR 1928.110, and the enforcement of the temporary labor camps 
standard, 29 CFR 1910.142, with respect to any agricultural 
establishment where employees are engaged in ``agricultural employment'' 
within the meaning of the Migrant and Seasonal Agricultural Worker 
Protection Act, 29 U.S.C. 1802(3), regardless of the number of 
employees, including employees engaged in hand packing of produce into 
containers, whether done on the ground, on a moving machine, or in a 
temporary packing shed, except that Wyoming retains enforcement 
responsibility over agricultural temporary labor camps for employees 
engaged in egg, poultry, or red meat production, or the post-harvest 
processing of agricultural or horticultural commodities.
    (c) Wyoming is required to maintain a State program which is at 
least as effective as operations under the Federal program; to submit 
plan supplements in accordance with 29 CFR part 1953; to allocate 
sufficient safety and health enforcement staff to meet the benchmarks 
for State staffing established by the U.S. Department of Labor, or any 
revisions to those benchmarks; and, to furnish such reports in such form 
as the Assistant Secretary may from time to time require.

[50 FR 26558, June 27, 1985, as amended at 62 FR 2564, Jan. 17, 1997; 65 
FR 36628, June 9, 2000]



Sec. 1952.345  Level of Federal enforcement.

    (a) As a result of the Assistant Secretary's determination granting 
final approval of the Wyoming plan under section 18(e) of the Act, 
effective June 27, 1985, occupational safety and health standards which 
have been promulgated under section 6 of the Act do not apply with 
respect to issues covered under the Wyoming plan. This determination 
also relinquishes concurrent Federal OSHA authority to issue citations 
for violations of such standards under sections 5(a)(2) and 9 of the 
Act; to conduct inspections and investigations under section 8 (except 
those necessary to conduct evaluation of the plan under section 18(f) 
and other inspections, investigations, or proceedings necessary to carry 
out Federal responsibilities not specifically preempted by section 
18(e)); to conduct enforcement proceedings in contested cases under 
section 10; to institute proceedings to correct imminent dangers under 
section 13; and to propose civil penalties or initiate criminal 
proceedings for violations of the Federal Act under section 17. The 
Assistant Secretary retains jurisdiction under the above provisions in 
any proceeding commenced under section 9 or 10 before the effective date 
of the 18(e) determination.
    (b)(1) In accordance with section 18(e), final approval relinquishes 
Federal OSHA authority only with regard to occupational safety and 
health issues covered by the Wyoming plan. OSHA retains full authority 
over issues which are not subject to State enforcement under the plan. 
Thus, Federal OSHA retains its authority relative to safety and health 
in private sector maritime activities and will continue to enforce all 
provisions of the Act,

[[Page 105]]

Federal standards, rules, or orders, and all Federal standards, current 
or future, specifically directed to maritime employment (29 CFR Part 
1915, shipyard employment; Part 1917, marine terminals; Part 1918, 
longshoring; Part 1919, gear certification) as well as provisions of 
general industry and construction standards (29 CFR Parts 1910 and 1926) 
appropriate to hazards found in these employments. Federal jurisdiction 
is retained and exercised by the Employment Standards Administration, 
U.S. Department of Labor, (Secretary's Order 5-96, dated December 27, 
1996) with respect to the field sanitation standard, 29 CFR 1928.110, 
and the enforcement of the temporary labor camps standard, 29 CFR 
1910.142, in agriculture, as described in Sec. 1952.344(b). Federal 
jurisdiction is also retained for employment at Warren Air Force Base; 
Federal government employers and employees; and the U.S. Postal Service 
(USPS), including USPS employees, and contract employees and contractor-
operated facilities engaged in USPS mail operations.
    (2) In addition, any hazard, industry, geographical area, operation 
or facility over which the State is unable to effectively exercise 
jurisdiction for reasons not related to the required performance or 
structure of the plan shall be deemed to be an issue not covered by the 
finally approved plan, and shall be subject to Federal enforcement. 
Where enforcement jurisdiction is shared between Federal and State 
authorities for a particular area, project, or facility, in the interest 
of administrative practicability, Federal jurisdiction may be assumed 
over the entire project or facility. In either of the two aforementioned 
circumstances, Federal enforcement may be exercised immediately upon 
agreement between Federal and State OSHA.
    (c) Federal authority under provisions of the Act not listed in 
section 18(e) is unaffected by final approval of the plan. Thus, for 
example, the Assistant Secretary retains his authority under section 
11(c) of the Act with regard to complaints alleging discrimination 
against employees because of the exercise of any right afforded to the 
employee by the Act, although such complaints may be referred to the 
State for investigation. The Assistant Secretary also retains his 
authority under section 6 of the Act to promulgate, modify or revoke 
occupational safety and health standards which address the working 
conditions of all employees, including those in States which have 
received an affirmative 18(e) determination, although such standards may 
not be Federally applied. In the event that the State's section 18(e) 
status is subsequently withdrawn and Federal authority reinstated, all 
Federal standards, including any standards promulgated or modified 
during the 18(e) period, would be Federally enforceable in that State.
    (d) As required by section 18(f) of the Act, OSHA will continue to 
monitor the operations of the Wyoming State program to assure that the 
provisions of the State plan are substantially complied with and that 
the program remains at least as effective as the Federal program. 
Failure by the State to comply with its obligations may result in the 
revocation of the final determination under section 18(e), resumption of 
Federal enforcement, and/or proceedings for withdrawal of plan approval.

[50 FR 26559, June 27, 1985, as amended at 62 FR 2565, Jan. 17, 1997; 65 
FR 36628, June 9, 2000]



Sec. 1952.346  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected and copied during normal business hours at the following 
locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, 200 Constitution Avenue, NW, Room N3700, 
Washington, DC 20210;
Office of the Regional Administrator, Occupational Safety and Health 
Administration, U.S. Department of Labor, 1999 Broadway Suite 1690, 
Denver, Colorado 80202-5716; and
Office of the Assistant Administrator, Worker's Safety and Compensation 
Division, Wyoming Department of Employment, Herschler Building, 2nd 
Floor East, 122 West 25th Street, Cheyenne, Wyoming 82002.

[65 FR 36629, June 9, 2000]

[[Page 106]]



Sec. 1952.347  Changes to approved plans.

    In accordance with part 1953 of this chapter, the following Wyoming 
plan changes were approved by the Assistant Secretary:
    (a) Legislation. (1) The State submitted amendments to its 
Occupational Health and Safety Act (Laws 1983, chapter 172), which 
became effective on May 27, 1983, modifying the powers and duties of the 
Occupational Health and Safety Commission, abolishing the powers of the 
review board and Commission to hear contested cases and establishing an 
independent hearing officer to hear contested cases, providing 
procedures for hearings and appeals whereby the Commission makes final 
administrative decisions in contested cases and the party adversely 
affected may appeal to the District Court, making penalties for posting 
violations discretionary (although the State guidelines on penalties for 
posting violations parallel OSHA's and are set forth in the Wyoming 
Operations Manual), requiring written notification to employers of their 
right to refuse entry, and creating the Department of Occupational 
Health and Safety. The Assistant Secretary approved these amendments on 
February 27, 1989.
    (2) On March 29, 1994, the Assistant Secretary approved Wyoming's 
revised statutory penalty levels which are the same as the revised 
Federal penalty levels contained in section 17 of the Act as amended on 
November 5, 1990.
    (b) Regulations. (1) The State submitted amendments to its Rules of 
Practice and Procedure pertaining to contested cases, hearings, 
discrimination, and petitions for modification of abatement; and making 
the regulations consistent with other statutory changes made to its 
Occupational Health and Safety Act which became effective on September 
6, 1984, except amendment to Chapter IV, Enforcement which became 
effective on March 28, 1985. The Assistant Secretary approved these 
amendments on February 27, 1989.
    (2) [Reserved]
    (c) The Voluntary Protection Program. On October 24, 1996, the 
Assistant Secretary approved Wyoming's plan supplement which is 
generally identical to the Federal Voluntary Protection Program, with 
the exception of organizational and position titles.
    (d) Temporary labor camps/field sanitation. Effective February 3, 
1997, the Assistant Secretary approved Wyoming's plan amendment, dated 
July 19, 1996, relinquishing coverage for the issues of field sanitation 
(29 CFR 1928.110) and temporary labor camps (29 CFR 1910.142) in 
agriculture (except for agricultural temporary labor camps associated 
with egg, poultry or red meat production, or the post-harvest processing 
of agricultural or horticultural commodities.) The Employment Standards 
Administration, U.S. Department of Labor, has assumed responsibility for 
enforcement of these Federal OSHA standards in agriculture in Wyoming 
pursuant to Secretary of Labor's Order 5-96, dated December 27, 1996.

[54 FR 9045, Mar. 3, 1989, as amended at 59 FR 14556, Mar. 29, 1994; 61 
FR 55099, Oct. 24, 1996; 62 FR 2565, Jan. 17, 1997]



                           Subpart CC--Arizona



Sec. 1952.350  Description of the plan as initially approved.

    (a)(1) The plan identifies the Arizona Industrial Commission, 
Division of Occupational Safety and Health, as the State agency 
designated to administer the plan throughout the State. It adopts the 
definition of occupational safety and health issues expressed in 
Sec. 1902.2(c)(1) of this chapter. The State intends to adopt all 
Federal standards except those found in 29 CFR parts 1915, 1916, 1917 
and 1918 (ship repairing, shipbuilding, shipbreaking, and longshoring) 
and those subparts of parts 1910 and 1926 pertaining to industries which 
are not applicable to Arizona. In addition, the State intends to enforce 
elevator (ANSI) and boiler pressure vessel (ASME) standards for which 
there are no Federal counterparts.
    (2) The plan provides a description of personnel employed under a 
merit system; the coverage of employees of political subdivisions; 
procedures for the development and promulgation of standards, including 
standards for the protection of employees against new and unforeseen 
hazards; and procedures for the prompt restraint or elimination of 
imminent danger situations.

[[Page 107]]

    (b)(1) The plan includes legislation enacted by the Arizona 
Legislature during its 1974 legislative session amending title 23, 
article 10 of the Arizona Revised Statutes to bring them into conformity 
with the requirements of part 1902 of this chapter. Under the 
legislation the Industrial Commission will have full authority to 
enforce and administer laws respecting the safety and health of 
employees in all workplaces of the State.
    (2) The legislation is intended, among other things, to assure 
inspections in response to employee complaints; give employer and 
employee representatives an opportunity to accompany inspectors in order 
to aid inspections; notification of employees or their representatives 
when no compliance action is taken as a result of alleged violations; 
notification of employees of their protections and obligations; 
protection of employees against discharge or discrimination in terms and 
conditions of employment; adequate safeguards to protect trade secrets; 
sanctions against employers for violations of standards and orders; 
employer right of review to an Occupational Safety and Health Review 
Board and then the courts, and employee participation in review 
proceedings. The plan also proposes a program of voluntary compliance by 
employers and employees, including a provision for on-site consultation. 
The State's consultation program should not detract from its enforcement 
program and the State has given assurances that it will meet the 
conditions set forth in the Washington Decision (38 FR 2421, January 26, 
1973).
    (c) The Arizona Plan includes the following documents as of the date 
of approval:
    (1) The plan description documents, in two volumes.
    (2) A copy of the enabling legislation as amended and enacted by the 
State Legislature in its 1974 Session.
    (3) Letters from Donald G. Wiseman, Director of the Division of 
Occupational Safety and Health of the Arizona Industrial Commission to 
Barry J. White, Associate Assistant Secretary for Regional Programs on 
October 15, 18, and 24, 1974 submitting information, clarifications, and 
revisions on several issues raised during the review process, including 
proposals to be submitted to the Arizona Legislature during its 1975 
Session.

[39 FR 39038, Nov. 5, 1974, as amended at 50 FR 25571, June 20, 1985]



Sec. 1952.351  Developmental schedule.

    The Arizona State plan is developmental. The following is the 
developmental schedule as provided by the plan:
    (a) Development of a complete management information and control 
system by July 1, 1976.
    (b) The formulation and approval of inter-agency agreements with the 
Arizona Atomic Energy Commission, the State Health Department and the 
Arizona Corporation Commission by March 1, 1975.
    (c) Promulgation of variance regulations by July 1, 1977.
    (d) The promulgation of recordkeeping regulations by March 1, 1975, 
but full implementation of these regulations will not be until July 1, 
1976.
    (e) The submission of legislative amendments to the Arizona 
Legislature during its 1977 Session.

[39 FR 39038, Nov. 5, 1974, as amended at 40 FR 11873, Mar. 14, 1975; 41 
FR 56315, Dec. 28, 1976. Redesignated at 50 FR 25571, June 20, 1985]



Sec. 1952.352  Completion of developmental steps and certification.

    (a) Implementation of the Arizona occupational safety and health 
program began on March 1, 1975.
    (b) Inter-agency agreements between the Arizona Industrial 
Commission and the Arizona Department of Health Services were finalized 
on November 7, 1974, and March 20, 1975.
    (c) Regulations concerning inspections, citations and proposed 
penalties and the Rules of Procedure for contests before the Governor's 
Review Board were promulgated on February 28, 1975.
    (d) Recordkeeping and reporting regulations were promulgated on 
March 1, 1975; however, these regulations will not be applicable to 
public employers until January 1, 1977.
    (e) The universe file system for the inspections scheduling system 
was completed and implemented on March 12, 1976.

[[Page 108]]

    (f) An interagency agreement was entered into between the 
Corporation Commission of Arizona and the Industrial Commission on May 
7, 1976 and became effective May 10, 1076.
    (g) In accordance with the requirements of Sec. 1952.10, the Arizona 
State poster was approved by the Assistant Secretary on July 22, 1976.
    (h) Arizona occupational safety and health standards comparable to 
Federal standards in effect as of July 28, 1974, were promulgated on 
February 28, 1975, and were approved by the Regional Administrator 
effective August 6, 1976.
    (i) In accordance with Sec. 1902.34 of this chapter, the Arizona 
occupational safety and health plan was certified, effective September 
18, 1981 as having completed all developmental steps specified in the 
plan as approved on October 29, 1974, on or before November 1, 1977. 
This certification attests to structural completion, but does not render 
judgment on adequacy of performance.
    (j) Regulations concerning discrimination complaints were 
promulgated on September 22, 1977, and were approved by the Assistant 
Secretary on November 13, 1980.
    (k) Legislative amendments required to bring the Arizona 
occupational safety and health law (Arizona Revised Statutes, Chapter 
23) into conformity with Federal requirements were enacted effective 
August 27, 1977.

[41 FR 31813, July 30, 1976, as amended at 41 FR 34251, Aug. 13, 1976; 
41 FR 56316, Dec. 28, 1976; 46 FR 20164, Apr. 3, 1981; 46 FR 32022, June 
19, 1981; 46 FR 46322, Sept. 18, 1981. Redesignated at 50 FR 25571, June 
20, 1985]



Sec. 1952.353  Compliance staffing benchmarks.

    Under the terms of the 1978 Court Order in AFL-CIO v. Marshall, 
compliance staffing levels (benchmarks) necessary for a ``fully 
effective'' enforcement program were required to be established for each 
State operating an approved State plan. In September 1984, Arizona in 
conjunction with OSHA, completed a reassessment of the levels initially 
established in 1980 and proposed revised compliance staffing benchmarks 
of 9 safety and 6 health compliance officers. After opportunity for 
public comment and service on the AFL-CIO, the Assistant Secretary 
approved these revised staffing requirements on June 20, 1985.

[50 FR 25571, June 20, 1985]



Sec. 1952.354  Final approval determination.

    (a) In accordance with section 18(e) of the Act and procedures in 29 
CFR part 1902, and after a determination that the State met the ``fully 
effective'' compliance staffing benchmarks as revised in 1984 in 
response to a Court Order in AFL-CIO v. Marshall, (CA 74-406), and was 
satisfactorily providing reports to OSHA through participation in the 
Federal-State Unified Management Information System, the Assistant 
Secretary evaluated actual operations under the State plan for a period 
of at least one year following certification of completion of 
developmental steps (46 FR 46320). Based on the 18(e) Evaluation Report 
(October 1982-March 1984) and after opportunity for public comment, the 
Assistant Secretary determined that, in operation, the State of 
Arizona's occupational safety and health program is at least as 
effective as the Federal program in providing safe and healthful 
employment and places of employment and meets the criteria for final 
State plan approval in section 18(e) of the Act and implementing 
regulations at 29 CFR part 1902. Accordingly, the Arizona plan was 
granted final approval and concurrent Federal enforcement authority was 
relinquished under section 18(e) of the Act effective June 20, 1985.
    (b) Except as otherwise noted, the plan which has received final 
approval covers all activities of employers and all places of employment 
in Arizona. The plan does not cover private sector maritime employment; 
Federal government employers and employees; enforcement relating to any 
contractors or subcontractors on any Federal establishment where the 
land is determined to be exclusive Federal jurisdiction; the U.S. Postal 
Service (USPS), including USPS employees, and contract employees and 
contractor-operated facilities engaged in USPS mail operations; copper 
smelters; concrete and asphalt batch plants that are physically 
connected to a mine or so interdependent with a mine as to form one

[[Page 109]]

integral enterprise; and Indian reservations.
    (c) Arizona is required to maintain a State program which is at 
least as effective as operations under the Federal program; to submit 
plan supplements in accordance with 29 CFR part 1953; to allocate 
sufficient safety and health enforcement staff to meet the benchmarks 
for State staffing established by the U.S. Department of Labor, or any 
revision to those benchmarks; and, to furnish such reports in such form 
as the Assistant Secretary may from time to time require.

[50 FR 25571, June 20, 1985, as amended at 63 FR 53281, Oct. 5, 1998; 65 
FR 36629, June 9, 2000]



Sec. 1952.355  Level of Federal enforcement.

    (a) As a result of the Assistant Secretary's determination granting 
final approval of the Arizona plan under section 18(e) of the Act, 
effective June 20, 1985, occupational safety and health standards which 
have been promulgated under section 6 of the Act do not apply with 
respect to issues covered under the Arizona plan. This determination 
also relinquishes concurrent Federal OSHA authority to issue citations 
for violation of such standards under sections 5(a)(2) and 9 of the Act; 
to conduct inspections and investigations under section 8 (except those 
necessary to conduct evaluation of the plan under section 18(f) and 
other inspections, investigations, or proceedings necessary to carry out 
Federal responsibilities not specifically preempted by section 18(e)); 
to conduct enforcement proceedings in contested cases under section 10; 
to institute proceedings to correct imminent dangers under section 13; 
and to propose civil penalties or initiate criminal proceedings for 
violations of the Federal Act under section 17. The Assistant Secretary 
retains jurisdiction under the above provisions in any proceeding 
commenced under section 9 or 10 before the effective date of the 18(e) 
determination.
    (b)(1) In accordance with section 18(e), final approval relinquishes 
Federal OSHA authority only with regard to occupational safety and 
health issues covered by the Arizona plan. OSHA retains full authority 
over issues which are not subject to State enforcement under the plan. 
Thus, Federal OSHA retains its authority relative to safety and health 
in private sector maritime activities and will continue to enforce all 
provisions of the Act, rules or orders, and all Federal standards, 
current or future, specifically directed to maritime employment (29 CFR 
Part 1915, shipyard employment; Part 1917, marine terminals; Part 1918, 
longshoring; Part 1919, gear certification) as well as provisions of 
general industry and construction standards (29 CFR Parts 1910 and 1926) 
appropriate to hazards found in these employments. Federal jurisdiction 
is also retained with respect to Federal government employers and 
employees; enforcement relating to any contractors or subcontractors on 
any Federal establishment where the land is determined to be exclusive 
Federal jurisdiction; the U.S. Postal Service (USPS), including USPS 
employees, and contract employees and contractor-operated facilities 
engaged in USPS mail operations; in copper smelters; in concrete and 
asphalt batch plants which are physically connected to a mine or so 
interdependent with the mine as to form one integral enterprise; and 
within Indian reservations.
    (2) In addition, any hazard, industry, geographical area, operation 
or facility over which the State is unable to effectively exercise 
jurisdiction for reasons not related to the required performance or 
structure of the plan shall be deemed to be an issue not covered by the 
finally approved plan, and shall be subject to Federal enforcement. 
Where enforcement jurisdiction is shared between Federal and State 
authorities for a particular area, project, or facility, in the interest 
of administrative practicability, Federal jurisdiction may be assumed 
over the entire project or facility. In either of the two aforementioned 
circumstances, Federal enforcement may be exercised immediately upon 
agreement between Federal and State OSHA.
    (c) Federal authority under provisions of the Act not listed in 
section 18(e) is unaffected by final approval of the plan. Thus, for 
example, the Assistant Secretary retains his authority

[[Page 110]]

under section 11(c) of the Act with regard to complaints alleging 
discrimination against employees because of the exercise of any right 
afforded to the employee by the Act, although such complaints may be 
referred to the State for investigation. The Assistant Secretary also 
retains his authority under section 6 of the Act to promulgate, modify 
or revoke occupational safety and health standards which address the 
working conditions of all employees, including those in States which 
have received an affirmative 18(e) determination, although such 
standards may not be Federally applied. In the event that the State's 
18(e) status is subsequently withdrawn and Federal authority reinstated, 
all Federal standards, including any standards promulgated or modified 
during the 18(e) period, would be federally enforceable in that State.
    (d) As required by section 18(f) of the Act, OSHA will continue to 
monitor the operations of the Arizona State program to assure that the 
provisions of the State plan are substantially complied with and that 
the program remains at least as effective as the Federal program. 
Failure by the State to comply with its obligations may result in the 
revocation of the Final determination under section 18(e), resumption of 
Federal enforcement, and/or proceedings for withdrawal of plan approval.

[50 FR 25571, June 20, 1985, as amended at 63 FR 53281, Oct. 5, 1998; 65 
FR 36629, June 9, 2000]



Sec. 1952.356  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected and copied during normal business hours at the following 
locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, 200 Constitution Avenue, NW, Room N3700, 
Washington, DC 20210;
Office of the Regional Administrator, Occupational Safety and Health 
Administration, U.S. Department of Labor, 71 Stevenson Street, 4th 
Floor, San Francisco, California 94105; and
Office of the Director, Industrial Commission of Arizona, 800 W. 
Washington, Phoenix, Arizona 85007.

[65 FR 36629, June 9, 2000]



Sec. 1952.357  Changes to approved plans.

    (a) The Voluntary Protection Program. On December 30, 1993, the 
Assistant Secretary approved Arizona's plan supplement, which is 
generally identical to the Federal Voluntary Protection Programs with 
the exception that the State's VPP is limited to the Star Program in 
general industry, excludes the Merit and Demonstration Programs and 
excludes the construction industry.
    (b) Legislation. (1) On March 29, 1994, the Assistant Secretary 
approved Arizona's revised statutory penalty levels which are the same 
as the revised Federal penalty levels contained in section 17 of the Act 
as amended on November 5, 1990.
    (2) [Reserved]

[59 FR 2295, Jan. 14, 1994, as amended at 59 FR 14556, Mar. 29, 1994]



                         Subpart DD--New Mexico



Sec. 1952.360  Description of the plan as initially approved.

    (a)(1) The plan identifies the New Mexico Environmental Improvement 
Agency, with its subordinate organization, the Occupational and 
Radiation Protection Division, as the State agency designated to 
administer the plan throughout the State. It adopts the definition of 
occupational safety and health issues expressed in Sec. 1909.2(c)(1) of 
this chapter. The State has adopted the Federal Field Operations Manual 
and all the Federal standards except those found in 29 CFR parts 1915, 
1916, 1917, and 1918 (ship repairing, shipbuilding, shipbreaking, and 
longshoring). In addition, the Occupational and Radiation Protection 
Division will be enforcing State standards under the Radiation 
Protection Act (chapter 284, Laws of 1971, 12-9-1 through 12-9-11, New 
Mexico Statutes Annotated). However, since this Act provides protection 
to the general public, in the event of conflict between Radiation 
Protection Act standards and

[[Page 111]]

occupational safety and health standards, employees will receive the 
protection provided under the more stringent regulation.
    (2) The plan provides a description of personnel employed under a 
merit system; the coverage of employees of political subdivisions; 
procedures for the development and promulgation of standards, including 
standards for the protection of employees against new and unforeseen 
hazards; and procedures for the prompt restraint of imminent danger 
situations.
    (b)(1) The plan includes legislation enacted by the New Mexico 
Legislature during its 1975 legislative session amending chapter 63, 
Laws of 1972, 59-14-1 through 59-14-23 of the New Mexico Statutes 
Annotated to bring them into conformity with the requirements of part 
1902 of this chapter. Under the legislation, the Environmental 
Improvement Agency will have full authority to enforce and administer 
laws respecting the safety and health of employees in all workplaces of 
the State.
    (2) The legislation is intended, among other things, to assure 
inspections in response to employee complaints; give employer and 
employee representatives an opportunity to accompany inspectors in order 
to aid inspections; notify employees of their protections and 
obligations; protect employees against discharge or discrimination in 
terms and conditions of employment; provide adequate safeguards to 
protect trade secrets; impose sanctions against employers for violations 
of standards and orders; insure employer right of review to an 
Occupational Health and Safety Review Commission and then the courts, 
and employee participation in the review proceedings. The plan also 
proposes a program of voluntary compliance by employers and employees, 
including a provision for on-site consultation. The State's consultation 
program will not detract from its enforcement program and the State's 
consultation program will meet the conditions set forth in the 
Washington Decision (38 FR 2421, January 26, 1973).
    (c) The New Mexico Plan includes the following documents as of the 
date of approval:
    (1) The plan description documents, in one volume.
    (2) A copy of the enabling legislation as amended by the State 
legislature in its 1975 session.
    (3) A letter from Aaron Bond, Director of the New Mexico 
Environmental Improvement Agency, to Barry J. White, Associate Assistant 
Secretary for Regional Programs, dated November 4, 1975, submitting 
information, clarification, and revisions on several issues raised 
during the review process, including proposals to be submitted to the 
New Mexico Legislature prior to the close of its 1977 legislative 
session.

[40 FR 57456, Dec. 10, 1975, as amended at 59 FR 42496, Aug. 18, 1994]



Sec. 1952.361  Developmental schedule.

    The New Mexico State Plan is developmental. The following is the 
developmental schedule as provided by the plan:
    (a) Development of a complete and operating management information 
and control system by January 1, 1976.
    (b) Submission of the State's occupational safety and health poster 
for approval by January 31, 1976.
    (c) Promulgation of Rules of Procedures for administrative review by 
the New Mexico Occupational Health and Safety Review Commission by 
January 31, 1976.
    (d) Enforcement program to achieve operational status by December 1, 
1976.
    (e) Amendments to basic legislation to become effective by July 1, 
1977.
    (f) Public employee program to become operational by July 1, 1977.

[40 FR 57456, Dec. 10, 1975. Redesignated at 59 FR 42496, Aug. 18, 1994]



Sec. 1952.362  Completion of developmental steps and certification.

    (a) In accordance with the requirements of Sec. 1952.10, the New 
Mexico State poster was approved by the Assistant Secretary on July 2, 
1976. A revised State poster reflecting legislative amendments and 
procedural changes was submitted on May 10, 1983, and approved by the 
Assistant Secretary on October 30, 1984.
    (b) In accordance with the intent of 29 CFR 1952.363(e), on December 
20, 1977, and June 3, 1983, New Mexico submitted procedural guidelines 
for its two-tier contested case procedures in lieu of

[[Page 112]]

legislative amendments. The procedures establish maximum timeframes for 
completion of the first level, informal administrative review of 
contested cases, and immediate docketing of cases with the New Mexico 
Occupational Health and Safety Review Commission. A second 15 day 
contest period is provided for employer/employee appeal directly to the 
Review Commission. The New Mexico Occupational Health and Safety Act 
(section 50-9-1 et seq., NMSA 1978) was amended in 1978, 1983 and 1984. 
These amendments deal with the imposition of penalties for serious 
violations by governmental entities; the private questioning of 
employees and employers by the Environmental Improvement Division 
officials at the worksite; the jurisdiction of the Environmental 
Improvement Division over working conditions in copper smelters; the use 
of interview statements as evidence in a civil or enforcement action; 
and the State's adoption of emergency temporary standards. These 
clarifications and legislative amendments were approved by the Assistant 
Secretary on October 30, 1984.
    (c) In accordance with 29 CFR 1952.363(a), New Mexico submitted 
documentation on establishment of its Management Information System on 
August 18, 1976, and June 3, 1983. The June 3, 1983, amendment specifies 
New Mexico's participation in OSHA's Unified Management Information 
System. These supplements were approved by the Assistant Secretary on 
October 30, 1984.
    (d) In accordance with 29 CFR 1952.363(c), New Mexico promulgated 
Review Commission Rules of Procedures on October 1, 1976. On January 11, 
1984, New Mexico submitted revised Review Commission Rules of Procedures 
which parallel 29 CFR part 2200. The revised rules were approved by the 
Assistant Secretary on October 30, 1984.
    (e) In accordance with 29 CFR 1952.363(d), New Mexico submitted 
documentation on December 20, 1977, showing that its enforcement program 
was operational effective June, 1976. The supplement was approved by the 
Assistant Secretary on October 30, 1984.
    (f) In accordance with 29 CFR 1952.363(f), New Mexico by letter 
dated December 20, 1977, submitted a plan supplement regarding its 
development of an occupational health and safety program for public 
employees in June, 1976. A revision thereto was submitted on February 
28, 1980. These supplements were approved by the Assistant Secretary on 
October 30, 1984.
    (g) New Mexico regulations for recording and reporting occupational 
injuries and illnesses parallel to 29 CFR part 1904 which were 
originally promulgated on August 8, 1975, were revised on February 19, 
1979, June 1, 1981, and October 26, 1983. The revised regulations were 
approved by the Assistant Secretary on October 30, 1984.
    (h) New Mexico regulations for inspections, citations and proposed 
penalties parallel to 29 CFR part 1903 originally promulgated on August 
8, 1975, were revised on April 14, 1981; May 10, 1981; May 27, 1981; 
June 1, 1981; April 6, 1982; May 11, 1983; June 8, 1983; June 14, 1983; 
and April 4, 1984. The revised regulations were approved by the 
Assistant Secretary on October 30, 1984.
    (i) New Mexico rules of practice for variances, limitations, 
variations, tolerances and exemptions parallel to 29 CFR part 1905 which 
were originally promulgated on August 8, 1975, were revised on April 14, 
1981. Subsequently, on June 18, 1981, and May 11, 1983, the State 
submitted amendments and assurances to its Field Operations Manual. 
These supplements were approved by the Assistant Secretary on October 
30, 1984.
    (j) New Mexico promulgated regulations for on-site consultation on 
March 7, 1979 and June 1, 1981 with an amendment dated October 17, 1983 
and assurances dated April 4, 1984 and July 10, 1984. These supplements 
were approved by the Assistant Secretary on October 30, 1984.
    (k) New Mexico adopted discrimination provisions parallel to 29 CFR 
part 1977 on March 29, 1982, with an amendment dated June 15, 1983. 
These supplements were approved by the Assistant Secretary on October 
30, 1984.
    (l) New Mexico submitted its field operations manual on May 16, 
1980, with subsequent amendments dated March 4, 1983; May 11, 1983; May 
23, 1983; June 8, 1983; June 16, 1983; June 17, 1983; and June 27, 1983. 
The manual reflects changes in the Federal program

[[Page 113]]

through March 1983. On July 25, 1980, with a subsequent amendment dated 
July 24, 1984, the State adopted Federal OSHA's Industrial Hygiene 
Manual. These supplements were approved by the Assistant Secretary on 
October 30, 1984.
    (m) New Mexico on February 28, 1980, submitted a supplement 
containing a revised plan narrative with further revisions dated June 
16, 1983; June 21, 1983; June 27, 1983, April 4, 1984, and July 24, 
1984. These supplements were approved by the Assistant Secretary on 
October 30, 1984.
    (n) In accordance with Sec. 1902.34 of this chapter, the New Mexico 
Occupational Health and Safety plan was certified effective December 4, 
1984, as having completed all developmental steps specified in the plan 
as approved on December 4, 1975, on or before December 4, 1978. This 
certification attests to structural completion, but does not render 
judgment on adequacy of performance.

[49 FR 44205, Nov. 5, 1984, as amended at 49 FR 48918, Dec. 17, 1984. 
Redesignated at 59 FR 42497, Aug. 18, 1994]



Sec. 1952.363  Compliance staffing benchmarks.

    Under the terms of the 1978 Court Order in AFL-CIO v. Marshall, 
compliance staffing levels (``benchmarks'') necessary for a ``fully 
effective'' enforcement program were required for each State operating 
an approved State plan. In May 1992, New Mexico completed, in 
conjunction with OSHA, a reassessment of the staffing levels initially 
established in 1980 and proposed revised benchmarks of 7 safety and 3 
health compliance officers. After opportunity for public comment and 
service on the AFL-CIO, the Assistant Secretary approved these revised 
staffing requirements on August 11, 1994.

[59 FR 42497, Aug. 18, 1994]



Sec. 1952.364  [Reserved]



Sec. 1952.365  Level of Federal enforcement.

    (a) Pursuant to Secs. 1902.20(b)(1)(iii) and 1954.3 of this chapter, 
under which an operational status agreement has been entered into 
between OSHA and New Mexico, effective October 5, 1981, and based on a 
determination that New Mexico is operational in issues covered by the 
New Mexico occupational health and safety plan, discretionary Federal 
enforcement authority under section 18(e) of the Act (29 U.S.C. 667(e)) 
will not be initiated with regard to Federal occupational safety and 
health standards in issues covered under 29 CFR parts 1910, 1926 and 
1928 except as provided in this section. The U.S. Department of Labor 
will continue to exercise authority, among other things, with regard to:
    (1) Complaints filed with the U.S. Department of Labor alleging 
discrimination under section 11(c) of the Act (29 U.S.C. 660(c));
    (2) Enforcement with respect to private sector maritime employment 
including 29 CFR parts 1915, 1917, 1918, 1919 (shipyard employment; 
marine terminals; longshoring and gear certification), and general 
industry and construction standards (29 CFR parts 1910 and 1926) 
appropriate to hazards found in these employments, which issues have 
been specifically excluded from coverage under the State plan;
    (3) Enforcement in situations where the State is refused and is 
unable to obtain a warrant or enforce its right of entry;
    (4) Enforcement of new Federal standards until the State adopts a 
comparable standard;
    (5) Enforcement of unique and complex standards as determined by the 
Assistant Secretary;
    (6) Enforcement in situations when the State is temporarily unable 
to exercise its enforcement authority fully or effectively;
    (7) Enforcement of occupational safety and health standards at all 
Federal and private sector establishments on military facilities and 
bases, including but not limited to Kirkland Air Force Base, Fort Bliss 
Military Reservation, White Sands Missile Range Military Reservation, 
Holloman Air Force Base, Cannon Air Force Base, Fort Wingate Military 
Reservation , Fort Bayard Veterans' Hospital, Albuquerque Veterans' 
Hospital, Santa Fe National Cemetery;
    (8) Enforcement of occuaptional safety and health standards, to the 
extent permitted by applicable law, over tribal or private sector 
employment within

[[Page 114]]

any Indian reservation and lands under the control of a tribal 
government;
    (9) Enforcement of occupational safety and health standards with 
regard to Federal government employers and employees; and the U.S. 
Postal Service (USPS), including USPS employees, and contract employees 
and contractor-operated facilities engaged in USPS mail operations; and
    (10) Investigations and inspections for the purpose of the 
evaluation of the New Mexico plan under sections 18(e) and (f) of the 
Act (29 U.S. C. 667 (e) and (f)).
    (b) The Regional Administrator for Occupational Safety and Health 
will make a prompt recommendation for the resumption of the exercise of 
Federal enforcement authority under section 18(e) of the Act (29 U.S.C. 
667(e)) whenever, and to the degree, necessary to assure occupational 
safety and health protection to employees in New Mexico.

[62 FR 49911, Sept. 24, 1997, as amended at 65 FR 36629, June 9, 2000]



Sec. 1952.366  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected and copied during normal business hours at the following 
locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, 200 Constitution Avenue, N.W., Room N3700, 
Washington, D.C. 20210;
Office of the Regional Administrator, Occupational Safety and Health 
Administration, U.S. Department of Labor, Room 602, 525 Griffin Street, 
Dallas, Texas 75202; and
New Mexico Environment Department, Occupational Safety and Health 
Bureau, 1190 St. Francis Drive, Santa Fe, New Mexico 87502.

[59 FR 42497, Aug. 18, 1994]



Sec. 1952.367  Changes to approved plans.

    (a) Legislation. (1) On March 29, 1994, the Assistant Secretary 
approved New Mexico's revised statutory penalty levels which are the 
same as the revised Federal penalty levels contained in section 17 of 
the Act as amended on November 5, 1990.
    (2) [Reserved]
    (b) In accordance with part 1953 of this chapter, New Mexico's State 
plan amendment, dated January 3, 1997, excluding coverage of all private 
sector employment on Federal military facilities and bases (see 
Sec. 1952.365), and, to the extent permitted by applicable law, over 
tribal or private sector employment within any Indian reservation and 
lands under the control of a tribal government, from its State plan was 
approved by the Acting Assistant Secretary on September 24, 1997.

[59 FR 14556, Mar. 29, 1994. Redesignated at 59 FR 42496, Aug. 18, 1994, 
as amended at 62 FR 49911, Sept. 24, 1997; 67 FR 60129, Sept. 25, 2002]



                          Subpart EE--Virginia



Sec. 1952.370  Description of the plan as initially approved.

    (a) The Virginia Department of Labor and Industry is the agency 
responsible for administering the plan and the Virginia Department of 
Health is designated as responsible for occupational health matters. The 
plan defines the covered occupational safety and health issues as 
defined by the Secretary of Labor in 29 CFR 1902.2(c)(1) and all safety 
and health standards adopted by the Secretary of Labor, except those 
found in 29 CFR parts 1915, 1916, 1917, and 1918 (ship repairing, 
shipbuilding, shipbreaking and longshoring), will be enforced by the 
State upon approval of the plan by the Assistant Secretary. The State 
will retain its existing standard applicable to ionizing radiation. New 
Federal standards will be adopted by the Safety and Health Codes 
Commission within 6 months after Federal promulgation.
    (b)(1) The plan includes enabling legislation passed by the Virginia 
legislature in February 1973, and amendments thereto enacted in 1975 and 
1976. The Commissioner of the Department of Labor and Industry will have 
authority to enforce and adminster laws regarding the safety and health 
of employees. Safety inspections will be conducted by the Department of 
Labor and Industry whereas health inspections will be conducted by the 
Department of Health. The Department of Labor and Industry will issue 
citations, set abatement

[[Page 115]]

dates, and issue summons and/or warrants for a civil district court 
determination of violations and assessment of proposed penalties for 
such safety and health violations. Appeals of the district court's 
determination shall be to the circuit court sitting without a jury. Fire 
safety inspections and enforcement will be provided by agreement with 
the State Fire Marshal. The State plan provides for the coverage of all 
employees including coverage of public employees within the Commonwealth 
with the exception of maritime workers, employees of the United States, 
and employees whose working conditions are regulated by Federal agencies 
other than the U.S. Department of Labor under section 4(b)(1) of the 
Occupational Safety and Health Act of 1970. The Commissioner is 
authorized to establish a program applicable to employees of the State 
and its political subdivisions.
    (2) The legislation also insures inspections in response to employee 
complaints; right of employer and employee representatives to accompany 
inspectors; notification to employees or their representatives when no 
compliance action is taken as a result of alleged violations; 
notification to employees of their protections and obligations; 
protection of employees against discharge or discrimination in terms and 
conditions of employment; adequate safeguards to protect trade secrets; 
prompt notice to employers and employees of alleged violations of 
standards and abatement requirements; effective sanctions against 
employers for violations of rules, regulations, standards and orders; 
employee right of review in the State civil courts and employee 
participation in this judicial review process. In addition, there is 
provision for prompt restraint of imminent danger situations by 
injunction and ``red-tag'' procedures. The plan also proposes to develop 
a program to encourage voluntary compliance by employers and employees, 
including provision for onsite consultation, which program will not 
detract from its enforcement program.
    (c) The plan sets out goals and provides a timetable for bringing it 
into conformity with part 1902 of this chapter at the end of three years 
after commencement of operations under the plan. The plan also includes 
the State Administrative Process Act. A merit system of personnel 
administration will be utilized.
    (d) The plan includes the following documents as of the date of 
approval:
    (1) The plan document and appendices including revised legislation, 
submitted June 21, 1976.
    (2) Letters from the Department of Labor and Industry dated January 
15, March 4, and August 23, 1976, and from the Department of Health 
dated August 18, 1976.

[41 FR 42658, Sept. 28, 1976, as amended at 51 FR 2489, Jan. 17, 1986]



Sec. 1952.371  Developmental schedule.

    The Virginia plan is developmental. Following is a schedule of major 
developmental steps:
    (a) Standards identical to the Federal standards will be completely 
adopted by January 1, 1978.
    (b) A plan for delegation of authority to the State Fire Marshal for 
fire standards development and enforcement will be completed by December 
31, 1976, with necessary legislative action and program implementation 
by July 1, 1978.
    (c) State poster(s) informing public and private employees of their 
rights and responsibilities will be developed and distributed within 6 
months of plan approval.
    (d) A voluntary compliance program (including on-site consultation 
services) will be initiated within 6 months of plan approval.
    (e) Both safety and health conpliance programs will be fully staffed 
by FY 1979.
    (f) Both safety and health consultation programs will be fully 
staffed by FY 1979.
    (g) An automated Management Information System, including a court 
reporting system, will be developed within 6 months of plan approval.
    (h) An Administrative Procedures Manual which will contain State 
regulations on standards promulgation, inspections, citations, proposal 
of penalties, review procedures, variances, etc., will be developed 
within 6 months of plan approval.

[[Page 116]]

    (i) A Compliance Manual establishing procedures to be used by safety 
and health inspectors and voluntary compliance personnel will be 
developed within 6 months of plan approval.
    (j) The State is now responsible for enforcement of the State 
explosive code. That code will be amended within 6 months of plan 
approval to contain only standards identical to OSHA's standards.
    (k) Job descriptions for both safety and health personnel will be 
reviewed and revised to accurately reflect job functions within 12 
months of plan approval.
    (l) The Directors of the Industry and Construction Safety Divisions 
in the Department of Labor and Industry will be brought under State 
merit system coverage by January 1, 1977.
    (m) An inspection scheduling system will be developed for the health 
program within 6 months of plan approval and for the safety program 
within 8 months of plan approval.
    (n) A public employee program will be developed and implemented 
within 6 months of plan approval.

[41 FR 42658, Sept. 28, 1976, as amended at 42 FR 10989, Feb. 25, 1977. 
Redesignated at 51 FR 2489, Jan. 17, 1986]



Sec. 1952.372  Completion of developmental steps and certification.

    (a) In accordance with 29 CFR 1952.373(b), Virginia was to develop a 
plan for delegation of authority to the State Fire Marshal for fire 
standards enforcement. The State has since announced that the authority 
for fire standards enforcement will rest with the Department of Labor 
and Industry, which has been enforcing fire standards since plan 
approval. This action is judged to have sufficiently fulfilled the 
commitments of this step.
    (b) In accordance with 29 CFR 1952.373(c) and 1952.10. Virginia's 
safety and health posters for public and private employers were approved 
by the Assistant Secretary on November 13, 1980.
    (c) In accordance with 29 CFR 1952.373(d), Virginia initiated a 
voluntary compliance program which includes on-site consultation 
services on March 15, 1977. (The State subsequently arranged for on-site 
consultation activities for the private sector to be covered by an 
agreement with the U.S. Department of Labor under section 7(c)(1) of the 
Act).
    (d) In accordance with 29 CFR 1952.373(f), the State had met its 
developmental commitment for the staffing of its on-site consultation 
program in the public sector by fiscal year 1979. On-site consultation 
in the private sector is covered by a section 7(c)(1) agreement with the 
U.S. Department of Labor.
    (e) In accordance with the relevant part of 29 CFR 1952.373(g), 
Virginia met its developmental commitment of developing and implementing 
an automated Management Information System on July 1, 1977.
    (f) In accordance with 29 CFR 1952.373(l), the Directors of the 
Industry and the Construction Safety Divisions have been placed under 
the State merit system as of September 1, 1976.
    (g) In accordance with 29 CFR 1952.373(a), Virginia was to 
completely adopt standards identical to the Federal standards by January 
1, 1978. State standards identical to the Federal standards of 29 CFR 
part 1910 (General Industry) and part 1926 (Construction) and as 
effective as the Federal standards for ionizing radiation exposure 
became effective on April 15, 1977, and were approved by the Regional 
Administrator in the Federal Register of March 17, 1978 (43 FR 11274). 
State standards identical to the Federal standards in 29 CFR part 1928 
(Agriculture) became effective on April 1, 1978, and were approved by 
the Regional Administrator in the Federal Register of June 12, 1979 (44 
FR 3375). The State's subsequent adoption of standards identical to the 
Federal standards for ionizing radiation exposure was approved on August 
20, 1982 (47 FR 36485). The State has continued to adopt standards, 
amendments and corrections identical to the Federal, as noted in 
separate standards approval notices.
    (h) In accordance with 29 CFR 1952.373(e), the State met its 
developmental commitment for the staffing of its compliance program by 
Fiscal Year 1979 with the submission of its Fiscal Year 1979 grant 
application on August 11, 1978, which allocated 38 safety and

[[Page 117]]

18 health compliance officer positions. This supplement was approved by 
the Assistant Secretary on October 14, 1983.
    (i) In accordance with 29 CFR 1952.373(g), Virginia met its 
developmental commitment for the development and implementation of a 
system for the reporting of court decisions resulting from the State's 
system for the judicial review of contested cases with the submission of 
a publication on May 27, 1981, which compiled final orders and decisions 
regarding cases contested to the Virginia General District and Circuit 
Courts. The State has subsequently submitted other compilations which 
are to be published annually. This amendment was approved by the 
Assistant Secretary on October 14, 1983.
    (j) In accordance with 29 CFR 1952.373(j), Virginia submitted 
revised standards for explosives and blasting agents on March 23, 1977, 
which were found to be identical to the Federal standards and were 
approved by the Regional Administrator in the Federal Register of March 
17, 1978 (43 FR 11274).
    (k) In accordance with 29 CFR 1952.373(k), the State met its 
developmental commitment of reviewing and revising job descriptions for 
both safety and health personnel with the submission of revised job 
specifications on October 5, 1977. This supplement was approved by the 
Assistant Secretary on October 14, 1983.
    (l) In accordance with 29 CFR 1952.373(m), Virginia submitted 
inspection scheduling systems for its health and safety programs on 
September 7 and November 2, 1977, and a revised health scheduling system 
on May 9, 1979. The State has subsequently adopted revisions identical 
to revisions to the Federal scheduling system for safety as well as 
health inspections with submissions dated December 11, 1980, October 30, 
1981, and May 28, 1982. These amendments were approved by the Assistant 
Secretary on October 14, 1983.
    (m) In accordance with 29 CFR 1952.373(h), Virginia submitted an 
administrative procedures manual containing State rules and regulations 
on standards promulgation, inspections, recordkeeping and reporting of 
occupational injuries and illnesses, nondiscrimination, citations, 
proposal of penalties, review procedures, variances, etc., on March 31, 
1977. The State has subsequently submitted revised versions of and 
clarifications to the manual by letters dated September 8, 1978, May 26, 
1981, November 12, 1982, January 20, 1983, March 16, 1983 and September 
13, 1983 in response to OSHA comments, and these actions are adjudged to 
have sufficiently fulfilled the commitments of this step. The Virginia 
Occupational Safety and Health Administrative Regulations Manual (which 
became effective on October 31, 1983 and was clarified by a letter dated 
June 13, 1984) was approved by the Assistant Secretary on August 15, 
1984.
    (n) In accordance wth 29 CFR 1952.373(i), the State was to develop a 
compliance manual establishing procedures to be used by safety and 
health compliance officers and voluntary compliance personnel. A 
voluntary compliance and training manual was initially submitted by the 
State on March 31, 1977 and a completely revised version was submitted 
by a letter dated March 21, 1984. The State submitted a compliance 
manual for safety and health compliance officers on August 2, 1977. By 
letters dated November 20, 1978 and August 2, 1979, Virginia informed 
OSHA that it would adopt and implement Federal OSHA's Field Operations 
Manual and Industrial Hygiene Field Operations Manual. The State has 
adopted subsequent Federal changes to these manuals by letters dated 
August 26, 1981, February 9, 1984, and June 18, 1984. On July 30, 1984, 
the State submitted a completely revised Field Operations Manual 
reflecting changes to the Federal manual through June 1, 1984. In 
addition, by a letter dated June 5, 1984, the State indicated its intent 
to utilize and adopt the March 30, 1984 Federal Industrial Hygiene 
Technical Manual. These supplements were approved by the Assistant 
Secretary on August 15, 1984.
    (o) In accordance with 29 CFR 1952.373(n), Virginia met its 
developmental commitment of developing and implementing an occupational 
safety and health program applicable to employees of the State and local 
governments. On March 31, 1977, the State

[[Page 118]]

submitted rules and regulations applying Virginia occupational safety 
and health law and standards to State, local and municipal governments. 
These regulations were subsequently revised and incorporated into the 
State's Administrative Regulations Manual as submitted on September 13, 
1983. These supplements were approved by the Assistant Secretary on 
August 15, 1984.
    (p) In accordance with part 1953 of this chapter, Virginia submitted 
legislative amendments to Title 40.1 of the Labor Laws of Virginia as 
enacted by the Virginia General Assembly of February 6, 1979. These 
legislative amendments, which dealt primarily with the Commissioner's 
delegation authority, procedures concerning Virginia's system of 
judicial review of contested cases, and penalty provisions, were 
approved by the Assistant Secretary on August 15, 1984.
    (q) In accordance with Sec. 1902.34 of this chapter, the Virginia 
occupational safety and health plan was certified effective August 15, 
1984 as having completed all developmental steps specified in the plan 
as approved on September 23, 1976 on or before September 23, 1979. This 
certification attests to structural completion, but does not render 
judgment on adequacy of performance.

[45 FR 77003, Nov. 21, 1980, as amended at 48 FR 48823, Oct. 21, 1983; 
49 FR 33122 and 33126, Aug. 21, 1984. Redesignated at 51 FR 2489, Jan. 
17, 1986; 67 FR 60129, Sept. 25, 2002]



Sec. 1952.373  Compliance staffing benchmarks.

    Under the terms of the 1978 Court Order in AFL-CIO v. Marshall 
compliance staffing levels (benchmarks) necessary for a ``fully 
effective'' enforcement program were required to be established for each 
State operating an approved State plan. In September 1984 Virginia, in 
conjunction with OSHA, completed a reassessment of the levels initially 
established in 1980 and proposed revised compliance staffing benchmarks 
of 38 safety and 21 health compliance officers. After opportunity for 
public comment and service on the AFL-CIO, the Assistant Secretary 
approved these revised staffing requirements on January 17, 1986.

[51 FR 2489, Jan. 17, 1986]



Sec. 1952.374  Final approval determination.

    (a) In accordance with section 18(e) of the Act and procedures in 29 
CFR part 1902, and after determination that the State met the ``fully 
effective'' compliance staffing benchmarks as revised in 1984 in 
response to a Court Order in AFL-CIO v. Marshall (CA 74-406), and was 
satisfactorily providing reports to OSHA through participation in the 
Federal-State Integrated Management Information System, the Assistant 
Secretary evaluated actual operations under the Virginia State plan for 
a period of at least one year following certification of completion of 
developmental steps (49 FR 33123). Based on the 18(e) Evaluation Report 
for the period of January 1, 1987 through March 31, 1988, and after 
opportunity for public comment, the Assistant Secretary determined that 
in operation the State of Virginia's occupational safety and health 
program is at least as effective as the Federal program in providing 
safe and healthful employment and places of employment and meets the 
criteria for final State plan approval in section 18(e) of the Act and 
implementing regulations at 29 CFR part 1902. Accordingly, the Virginia 
plan was granted final approval and concurrent Federal enforcement 
authority was relinquished under section 18(e) of the Act effective 
November 30, 1988.
    (b) Except as otherwise noted, the plan which has received final 
approval covers all activities of employers and all places of employment 
in Virginia. The plan does not cover private sector maritime employment; 
worksites located within Federal military facilities as well as on other 
Federal enclaves where civil jurisdiction has been ceded by the State to 
the Federal government; Federal government employers and employees; and 
the U.S. Postal Service (USPS), including USPS employees, and contract 
employees and contractor-operated facilities engaged in USPS mail 
operations.
    (c) Virginia is required to maintain a State program which is at 
least as effective as operations under the Federal program; to submit 
plan supplements in accordance with 29 CFR part 1953; to allocate 
sufficient safety and health

[[Page 119]]

enforcement staff to meet the benchmarks for State staffing established 
by the U.S. Department of Labor, or any revisions to those benchmarks; 
and, to furnish such reports in such form as the Assistant Secretary may 
from time to time require.

[53 FR 48258, Nov. 30, 1988, as amended at 65 FR 36630, June 9, 2000]



Sec. 1952.375  Level of Federal Enforcement.

    (a) As a result of the Assistant Secretary's determination granting 
final approval to the Virginia plan under section 18(e) of the Act, 
effective November 30, 1988, occupational safety and health standards 
which have been promulgated under section 6 of the Act do not apply with 
respect to issues covered under the Virginia plan. This determination 
also relinquishes concurrent Federal OSHA authority to issue citations 
for violations of such standards under section 5(a)(2) and 9 of the Act; 
to conduct inspections and investigations under section 8 (except those 
necessary to conduct evaluation of the plan under section 18(f) and 
other inspections, investigations, or proceedings necessary to carry out 
Federal responsibilities not specifically preempted by section 18(e)); 
to conduct enforcement proceedings in contested cases under section 10; 
to institute proceedings to correct imminent dangers under section 13; 
and to propose civil penalties or initiate criminal proceedings for 
violations of the Federal Act under section 17. The Assistant Secretary 
retains jurisdiction under the above provisions in any proceeding 
commenced under section 9 or 10 before the effective date of the 18(e) 
determination.
    (b)(1) In accordance with section 18(e), final approval relinquishes 
Federal OSHA authority only with regard to occupational safety and 
health issues covered by the Virginia plan. OSHA retains full authority 
over issues which are not subject to State enforcement under the plan. 
Thus, Federal OSHA retains its authority relative to safety and health 
in private sector maritime activities and will continue to enforce all 
provisions of the Act, rules or orders, and all Federal standards, 
current or future, specifically directed to maritime employment (29 CFR 
Part 1915, shipyard employment; Part 1917, marine terminals; Part 1918, 
longshoring; Part 1919, gear certification) as well as provisions of 
general industry and construction standards (29 CFR Parts 1910 and 1926) 
appropriate to hazards found in these employments, and employment at 
worksites located within Federal military facilities as well as on other 
Federal enclaves where civil jurisdiction has been ceded by the State to 
the Federal government. Federal jurisdiction is also retained with 
respect to Federal government employers and employees, and the U.S. 
Postal Service (USPS), including USPS employees, and contract employees 
and contractor-operated facilities engaged in USPS mail operations.
    (2) In addition, any hazard, industry, geographical area, operation 
or facility over which the State is unable to effectively exercise 
jurisdiction for reasons which OSHA determines are not related to the 
required performance or structure of the plan shall be deemed to be an 
issue not covered by plan which has received final approval, and shall 
be subject to Federal enforcement. Where enforcement jurisdiction is 
shared between Federal and State authorities for a particular area, 
project, or facility, in the interest of administrative practicability 
Federal jurisdiction may be assumed over the entire project or facility. 
In any of the aforementioned circumstances, Federal enforcement 
authority may be exercised after consultation with the State designated 
agency.
    (c) Federal authority under provisions of the Act not listed in 
section 18(e) is unaffected by final approval of the plan. Thus, for 
example, the Assistant Secretary retains his authority under section 
11(c) of the Act with regard to complaints alleging discrimination 
against employees because of the exercise of any right afforded to the 
employee by the Act, although such complaints may be referred to the 
State for investigation. The Assistant Secretary also retains his 
authority under section 6 of the Act to promulgate, modify or revoke 
occupational safety and health standards which address the working 
conditions of all employees, including those in States

[[Page 120]]

which have received an affirmative 18(e) determination, although such 
standards may not be Federally applied. In the event that the State's 
18(e) status is subsequently withdrawn and Federal authority reinstated, 
all Federal standards, including any standards promulgated or modified 
during the 18(e) period, would be Federally enforceable in that State.
    (d) As required by section 18(f) of the Act, OSHA will continue to 
monitor the operations of the Virginia State program to assure that the 
provisions of the State plan are substantially complied with and that 
the program remains at least as effective as the Federal program. 
Fairlure by the State to comply with its obligations may result in the 
revocation of Federal enforcement, and/or proceedings for withdrawal of 
plan approval.

[53 FR 48258, Nov. 30, 1988, as amended at 65 FR 36630, June 9, 2000]



Sec. 1952.376  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected and copied during normal business hours at the following 
locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, 200 Constitution Avenue, NW, Room N3700, 
Washington, DC 20210;
Office of the Regional Administrator, Occupational Safety and Health 
Administration, U.S. Department of Labor, The Curtis Center, 170 South 
Independence Mall West--Suite 740 West, Philadelphia, Pennsylvania
Office of the Commissioner, Virginia Department of Labor and Industry, 
Powers-Taylor Building, 13 South 13th Street, Richmond, Virginia 23219.

[65 FR 36630, June 9, 2000]



Sec. 1952.377  Changes to approved plans.

    In accordance with part 1953 of this chapter, the following Virginia 
plan changes were approved by the Assistant Secretary:
    (a) The State submitted legislative amendments related to the 
issuance and judicial review of administrative search warrants which 
became effective on July 1, 1987. The Assistant Secretary approved these 
amendments on 14 September, 1987.
    (b) Legislation. (1) On March 29, 1994, the Assistant Secretary 
approved Virginia's revised statutory penalty levels which are the same 
as the revised Federal penalty levels contained in section 17 of the Act 
as amended on November 5, 1990.

[52 FR 35070, Sept. 17, 1987, as amended at 59 FR 14556, Mar. 29, 1994]



                         Subpart FF--Puerto Rico



Sec. 1952.380  Description of the plan.

    (a) The plan designates the Puerto Rico Department of Labor and 
Human Resources as the agency responsible for the administration and 
enforcement of the plan throughout the Commonwealth. This includes the 
responsibility for administration of a public employee program for which 
the same enforcement provisions and procedures used for the private 
sector will apply, with the exception of penalties. Penalties in the 
Commonwealth's Act for the private sector are essentially identical to 
those in the Federal Act, and Puerto Rico intends to adopt all Federal 
standards. The Commonwealth will exclude from coverage all industries 
included within the classifications of Marine Cargo Handling (SIC 4463) 
and Shipbuilding and Repairing (SIC 3713), but will adopt and enforce 
standards for boilers and elevators and other issues where no Federal 
OSHA standards exist. The plan provides that program personnel will be 
employed under a merit system and provides for a Management Information 
System. It also provides procedures for the development and promulgation 
of standards and procedures for the prompt restraint or elimination of 
imminent danger situations.
    (b) The Puerto Rico Occupational Safety and Health Act was enacted 
on July 7, 1975, and approved by the Governor on August 5, 1975. It is 
similar in most respect to the Federal Act. The Puerto Rico Act provides 
employers the right of administrative review of citations, abatement 
requirements, and proposed penalties, and employee review of abatement 
dates, by a hearing examiner appointed by the Puerto Rico Secretary of 
Labor. The decision by the Secretary may be appealed by the employer or 
employees to the civil courts.

[[Page 121]]

The plan contains a statement of support by the Governor and an opinion 
by the Secretary of Justice that the Act is consistent with the State's 
Law and Constitution. Federal procedural regulations will be 
incorporated into the Commonwealth's regulations and the Federal 
Compliance Manual will be adopted to fit Puerto Rico's Law. In addition, 
the Puerto Rico Act requires that a Spanish language version of OSHA 
standards be made available within three years of plan approval.
    (c) The Puerto Rico Act provides for, among other things, 
inspections in response to employee complaints; an opportunity for 
employer and employee representatives to accompany inspectors in order 
to aid inspections; notification of employees or their representatives 
when no compliance action is taken as a result of a complaint; 
notification of employees of their protections and obligations; 
protection for employees against discharge or discrimination in terms 
and conditions of employment; adequate safeguards to protect trade 
secrets; sanctions against employers for violations of standards and 
orders; and review of citations by a hearing examiner, with appeal to 
the Secretary of Labor and the Commonwealth's courts.
    (d) The plan also proposes a program of voluntary compliance by 
employers and employees, including a provision for on-site consultation.
    (e) The Puerto Rico Plan includes the following documents as of the 
date of approval:
    (1) The plan description documents, in two volumes.
    (2) A copy of the enabling legislation as enacted on July 7, 1975, 
and signed by the Governor on August 5, 1975.
    (3) An assurance of separability of the enforcement personnel from 
the hearing examiner.
    (4) A letter of assurance of the authenticity of the English version 
of the Puerto Rico OSHA Act from John Cinque Sacarello, Assistant 
Secretary for Occupational Safety and Health, Puerto Rico Department of 
Labor, dated December 4, 1975.

[42 FR 43629, Aug. 30, 1977]



Sec. 1952.381  Where the plan may be inspected.

    A copy of the principal documents comprising the plan may be 
inspected and copied during normal business hours at the following 
locations:

Office of State Programs, Occupational Safety and Health Administration, 
U.S. Department of Labor, 200 Constitution Avenue, NW, Room N3700, 
Washington, DC 20210;
Regional Administrator, Occupational Safety and Health Administration, 
U.S. Department of Labor, 201 Varick Street, Room 670, New York, New 
York 10014.
Office of the Secretary, Puerto Rico Department of Labor and Human 
Resources, Prudencio Rivera Martinez Building, 505 Munoz Rivera Avenue, 
Hato Rey, Puerto Rico 00918.

[65 FR 36630, June 9, 2000]



Sec. 1952.382  Level of Federal enforcement.

    Pursuant to Sec. 1902.20(b)(1)(iii) and Sec. 1954.3 of this chapter 
under which an agreement has been entered into with Puerto Rico, 
effective December 8, 1981, and based on a determination that Puerto 
Rico is operational in the issues covered by the Puerto Rico 
occupational safety and health plan, discretionary Federal enforcement 
authority under section 18(e) of the Act (29 U.S.C. 667(e)) will not be 
initiated with regard to Federal occupational safety and health 
standards in issues covered under 29 CFR Parts 1910 and 1926 except as 
provided in this section. The U.S. Department of Labor will continue to 
exercise authority, among other things, with regard to: complaints filed 
with the U.S. Department of Labor alleging discrimination under section 
11(c) of the Act (29 U.S.C. 660(c)); safety and health in private sector 
maritime activities and will continue to enforce all provisions of the 
Act, rules of orders, and all Federal standards, current or future, 
specifically directed to maritime employment (29 CFR Part 1915, shipyard 
employment; Part 1917, marine terminals; Part 1918, longshoring; Part 
1919, gear certification) as well as provisions of general industry and 
construction standards (29 CFR Parts 1910 and 1926) appropriate to 
hazards found

[[Page 122]]

in these employments; enforcement relating to any contractors or 
subcontractors on any Federal establishment where the State cannot 
obtain entry; enforcement of new Federal standards until the State 
adopts a comparable standard; situations where the State is refused 
entry and is unable to obtain a warrant or enforce the right of entry; 
enforcement of unique and complex standards as determined by the 
Assistant Secretary; situations when the State is temporarily unable to 
exercise its enforcement authority fully or effectively; completion of 
enforcement actions initiated prior to the effective date of the 
agreement; and investigations and inspections for the purpose of the 
evaluation of the Puerto Rico plan under sections 18(e) and (f) of the 
Act (29 U.S.C. 667(e) and (f)). Federal OSHA will also retain authority 
for coverage of Federal employers and employees, and the U.S. Postal 
Service (USPS), including USPS employees, and contract employees and 
contractor-operated facilities engaged in USPS mail operations. The OSHA 
Regional Administrator will make a prompt recommendation for the 
resumption of the exercise of Federal enforcement authority under 
section 18(e) of the Act (29 U.S.C. 667(e)) whenever, and to the degree, 
necessary to assure occupational safety and health protection to 
employees in Puerto Rico.

[65 FR 36630, June 9, 2000]



Sec. 1952.383  Completion of developmental steps and certification.

    (a) Position descriptions of State plan personnel by March, 1978.
    (b) Public information program (private sector), one year after plan 
approval.
    (c) Analysis for inspection scheduling (private sector), March 1980.
    (d) Submit administrative regulations, September, 1978.
    (e) Affirmative action plan by July, 1980.
    (f) File and promulgate standards, March, 1978.
    (g) Adopt the Field Operations Manual, April, 1980.
    (h) Adopt management information system, January, 1980.
    (i) Internal training schedule, April, 1980.
    (j) Employer, employee training schedule, August, 1978.
    (k) Public information program (government sector), February, 1980.
    (l) Analysis for inspection scheduling (government sector), June, 
1980.
    (m) Implementation of public employee program, October, 1978.
    (n) On-site consultation regulations, March, 1979.
    (o) Laboratory, August, 1980.
    (p) Posters, February, 1978.
    (q) Boiler and Elevator Program, June, 1980.
    (r) Staffing on Board for consultation, laboratory, boiler and 
elevators, February, 1980.
    (s) In accordance with Sec. 1902.34 of this chapter, the Puerto Rico 
occupational safety and health plan was certified effective September 7, 
1982, as having completed all developmental steps specified in the plan 
as approved on August 15, 1977 on or before August 14, 1980. This 
certification attests to structural completion, but does not render 
judgment on adequacy of performance.

[45 FR 54334, July 15, 1980, as amended at 47 FR 39166, Sept. 7, 1982]



Sec. 1952.384  Completed developmental steps.

    (a) In accordance with the requirements of Sec. 1952.10, Puerto 
Rico's safety and health posters for private and public employees were 
approved by the Assistant Secretary, on July 2, 1979.
    (b) In accordance with 29 CFR 1952.383(a), Puerto Rico submitted 
position descriptions for State plan personnel on March 3, 1980, and 
submitted revised position descriptions on September 8, 1980.
    (c) In accordance with 29 CFR 1952.383(b), Puerto Rico submitted its 
public information program for the private sector on August 10, 1978.
    (d) In accordance with 29 CFR 1952.383(c), Puerto Rico submitted its 
analysis for inspection scheduling in the private sector on June 3, 
1980.
    (e) In accordance with 29 CFR 1952.383(d), Puerto Rico submitted its 
administrative regulations on September 13, 1978, and submitted 
revisions to the regulations on October 27, 1978, March 12, 1979, and 
February 14, 1980.

[[Page 123]]

    (f) In accordance with 29 CFR 1952.383(e), Puerto Rico has developed 
an affirmative action plan that was found acceptable by the United 
States Office of Personnel Management on March 27, 1981.
    (g) In accordance with 29 CFR 1952.383(f), Puerto Rico has 
promulgated standards identical to Federal standards and subsequent 
amendments to reflect changes in and additions to Federal standards. The 
Regional Administrator approved these supplements on July 14, 1978 (43 
FR 37233), June 18, 1979 (44 FR 71470), June 12, 1979 (44 FR 33751), 
April 17, 1979 (44 FR 22830), and October 23, 1981 (46 FR 52060).
    (h) In accordance with 29 CFR 1952.383(g), Puerto Rico submitted its 
Field Operations Manuals on July 31, 1980, and submitted a revised 
supplement adopting the Federal OSHA Field Operations Manuals on 
February 25, 1981.
    (i) In accordance with 29 CFR 1952.383(h), Puerto Rico has 
participated in the Federal OSHA Management Information System since 
August of 1978.
    (j) In accordance with 29 CFR 1952.383(i), Puerto Rico submitted its 
internal training schedule on May 5, 1980.
    (k) In accordance with 29 CFR 1952.383(j), Puerto Rico submitted its 
employer/employee training schedule on March 11, 1980, and on February 
13, 1981, submitted an updated training schedule.
    (l) In accordance with 29 CFR 1952.383(k), Puerto Rico submitted its 
public information program for the government sector on March 13, 1980.
    (m) In accordance with 29 CFR 1952.383(l), Puerto Rico submitted its 
analysis for inspection scheduling in the government sector on August 
13, 1980.
    (n) In accordance with 29 CFR 1952.383(m), Puerto Rico implemented 
its public employee program in October 1978.
    (o) In accordance with 29 CFR 1952.383(n), Puerto Rico submitted its 
on-site consultation regulations on March 30, 1979.
    (p) In accordance with 29 CFR 1952.383(o), Puerto Rico submitted a 
State plan supplement on its industrial hygiene laboratory on July 14, 
1980.
    (q) In accordance with 29 CFR 1952.383(q), Puerto Rico submitted its 
procedures for a boiler and elevator inspection program on November 28, 
1979. Based on OSHA recommendations, Puerto Rico submitted a revision to 
this supplement deleting the boiler and elevator inspection program from 
the State plan on November 14, 1980.
    (r) In accordance with 29 CFR 1952.383(r), Puerto Rico submitted 
documentation of staffing levels for the on-site consultation program 
and the industrial hygiene laboratory on March 3, 1980. Based on OSHA 
recommendations, Puerto Rico deleted staffing for the boiler and 
elevator inspection program from its State plan on November 14, 1980.

[44 FR 41429, July 17, 1979, as amended at 47 FR 25329, June 11, 1982]



Sec. 1952.385  Changes to approved plans.

    (a) The Voluntary Protection Programs. On December 30, 1993, the 
Assistant Secretary approved Puerto Rico's plan supplement, which is 
generally identical to the Federal Voluntary Protection Program with the 
exception of changes to reflect different structure and exclusion of the 
Demonstration Program.
    (b) Legislation. (1) On March 29, 1994, the Assistant Secretary 
approved Puerto Rico's revised statutory penalty levels which are the 
same as the revised Federal penalty levels contained in section 17 of 
the Act as amended on November 5, 1990.
    (2)  [Reserved]

[59 FR 2995, Jan. 14, 1994, as amended at 59 FR 14556, Mar. 29, 1994]



PART 1953--CHANGES TO STATE PLANS--Table of Contents




Sec.
1953.1  Purpose and scope.
1953.2  Definitions.
1953.3  General policies and procedures.
1953.4  Submission of plan supplements.
1953.5  Special provisions for standards changes.
1953.6  Review and approval of plan supplements.


[[Page 124]]


    Authority: Sec. 18, 84 Stat. 1608 (29 U.S.C. 667); Secretary of 
Labor's Order No. 3-2000 (65 FR 50017, August 16, 2000).

    Source: 67 FR 60125, Sept. 25, 2002, unless otherwise noted.



Sec. 1953.1  Purpose and scope.

    (a) This part implements the provisions of section 18 of the 
Occupational Safety and Health Act of 1970 (``OSH Act'' or the ``Act'') 
which provides for State plans for the development and enforcement of 
State occupational safety and health standards. These plans must meet 
the criteria in section 18(c) of the Act, and part 1902 of this chapter 
(for plans covering both private sector and State and local government 
employers) or part 1956 of this chapter (for plans covering only State 
and local government employers), either at the time of submission or--
where the plan is developmental--within the three year period 
immediately following commencement of the plan's operation. Approval of 
a State plan is based on a finding that the State has, or will have, a 
program, pursuant to appropriate State law, for the adoption and 
enforcement of State standards that is ``at least as effective'' as the 
Federal program.
    (b) When submitting plans, the States provide assurances that they 
will continue to meet the requirements in section 18(c) of the Act and 
part 1902 or part 1956 of this chapter for a program that is ``at least 
as effective'' as the Federal. Such assurances are a fundamental basis 
for approval of plans. (See Sec. 1902.3 and Sec. 1956.2 of this 
chapter.) From time to time after initial plan approval, States will 
need to make changes to their plans. This part establishes procedures 
for submission and review of State plan supplements documenting those 
changes that are necessary to fulfill the State's assurances, the 
requirements of the Act, and part 1902 or part 1956 of this chapter.
    (c) Changes to a plan may be initiated in several ways. In the case 
of a developmental plan, changes are required to document establishment 
of those necessary structural program components that were not in place 
at the time of plan approval. These commitments are included in a 
developmental schedule approved as part of the initial plan. These 
``developmental changes'' must be completed within the three year period 
immediately following the commencement of operations under the plan. 
Another circumstance requiring subsequent changes to a State plan would 
be the need to keep pace with changes to the Federal program, or 
``Federal Program Changes.'' A third situation would be when changes are 
required as a result of the continuing evaluation of the State program. 
Such changes are called ``evaluation changes.'' Finally, changes to a 
State program's safety and health requirements or procedures initiated 
by the State without a Federal parallel could have an impact on the 
effectiveness of the State program. Such changes are called ``State-
initiated changes.'' While requirements for submission of a plan 
supplement to OSHA differ depending on the type of change, all 
supplements are processed in accordance with the procedures in 
Sec. 1953.6.



Sec. 1953.2  Definitions.

    (a) OSHA means the Assistant Secretary of Labor for Occupational 
Safety and Health, or any representative authorized to perform any of 
the functions discussed in this part, as set out in implementing 
Instructions.
    (b) State means an authorized representative of the agency 
designated to administer a State plan under Sec. 1902.3(b) of this 
chapter.
    (c) Plan change means any modification made by a State to its 
approved occupational safety and health State plan which has an impact 
on the plan's effectiveness.
    (d) Plan supplement means all documents necessary to accomplish, 
implement, describe and evaluate the effectiveness of a change to a 
State plan which differs from the parallel Federal legislation, 
regulation, policy or procedure. (This would include a copy of the 
complete legislation, regulation, policy or procedure adopted; an 
identification of each of the differences; and an explanation of how 
each provision is at least as effective as the comparable Federal 
provision.)
    (e) Identical plan change means one in which the State adopts the 
same program provisions and documentation as

[[Page 125]]

the Federal program with the only differences being those modifications 
necessary to reflect a State's unique structure (e.g., organizational 
responsibility within a State and corresponding titles or internal State 
numbering system). Different plan change means one in which the State 
adopts program provisions and documentation that are not identical as 
defined in this paragraph.
    (g) Developmental change is a change made to a State plan which 
documents the completion of a program component which was not fully 
developed at the time of initial plan approval.
    (h) Federal program change is a change made to a State plan when 
OSHA determines that an alteration in the Federal program could render a 
State program less effective than OSHA's if it is not similarly 
modified.
    (i) Evaluation change is a change made to a State plan when 
evaluations of a State program show that some substantive aspect of a 
State plan has an adverse impact on the implementation of the State's 
program and needs revision.
    (j) State-initiated change is a change made to a State plan which is 
undertaken at a State's option and is not necessitated by Federal 
requirements.



Sec. 1953.3  General policies and procedures.

    (a) Effectiveness of State plan changes under State law. Federal 
OSHA approval of a State plan under section 18(b) of the OSH Act in 
effect removes the barrier of Federal preemption, and permits the State 
to adopt and enforce State standards and other requirements regarding 
occupational safety or health issues regulated by OSHA. A State with an 
approved plan may modify or supplement the requirements contained in its 
plan, and may implement such requirements under State law, without prior 
approval of the plan change by Federal OSHA. Changes to approved State 
plans are subject to subsequent OSHA review. If OSHA finds reason to 
reject a State plan change, and this determination is upheld after an 
adjudicatory proceeding, the plan change would then be excluded from the 
State's Federally-approved plan.
    (b) Required State plan notifications and supplements. Whenever a 
State makes a change to its legislation, regulations, standards, or 
major changes to policies or procedures, which affect the operation of 
the State plan, the State shall provide written notification to OSHA. 
When the change differs from a corresponding Federal program component, 
the State shall submit a formal, written plan supplement. When the State 
adopts a provision which is identical to a corresponding Federal 
provision, written notification, but no formal plan supplement, is 
required. However, the State is expected to maintain the necessary 
underlying State document (e.g., legislation or standard) and to make it 
available for review upon request. All plan change supplements or 
required documentation must be submitted within 60 days of adoption of 
the change. Submission of all notifications and supplements may be in 
electronic format.
    (c) Plan supplement availability. Copies of all principal documents 
comprising the State plan, whether approved or pending approval, shall 
be available for inspection and copying at the Federal and State 
locations specified in the subpart of Part 1952 of this chapter relating 
to each State plan. The underlying documentation for identical plan 
changes shall be maintained by the State and shall similarly be 
available for inspection and copying at the State locations. Annually, 
States shall submit updated copies of the principal documents comprising 
the plan, or appropriate page changes, to the extent that these 
documents have been revised. To the extent possible, plan documents will 
be maintained and submitted by the State in electronic format and also 
made available in such manner.
    (d) Advisory opinions. Upon State request, OSHA may issue an 
advisory opinion on the approvability of a proposed change which differs 
from the Federal program prior to promulgation or adoption by the State 
and submission as a formal supplement.
    (e) Alternative procedures. Upon reasonable notice to interested 
persons, the Assistant Secretary may prescribe additional or alternative 
procedures in order to expedite the review process or

[[Page 126]]

for any other good cause which may be consistent with the applicable 
laws.



Sec. 1953.4  Submission of plan supplements.

    (a) Developmental changes. (1) Sections 1902.2(b) and 1956.2(b) of 
this chapter require that each State with a developmental plan must set 
forth in its plan, as developmental steps, those changes which must be 
made to its initially-approved plan for its program to be at least as 
effective as the Federal program and a timetable for making these 
changes. The State must notify OSHA of a developmental change when it 
completes a developmental step or fails to meet any developmental step.
    (2) If the completion of a developmental step is the adoption of a 
program component which is identical to the Federal program component, 
the State need only submit documentation, such as the cover page of an 
implementing directive or a notice of promulgation, that it has adopted 
the program component, within 60 days of adoption of the change, but 
must make the underlying documentation available for Federal and public 
review upon request.
    (3) If the completion of a developmental step involves the adoption 
of policies or procedures which differ from the Federal program, the 
State must submit one copy of the required plan supplement within 60 
days of adoption of the change.
    (4) When a developmental step is missed, the State must submit a 
supplement which documents the impact on the program of the failure to 
complete the developmental step, an explanation of why the step was not 
completed on time and a revised timetable with a new completion date 
(generally not to exceed 90 days) and any other actions necessary to 
ensure completion. Where the State has an operational status agreement 
with OSHA under Sec. 1954.3 of this Chapter, the State must provide an 
assurance that the missed step will not affect the effectiveness of 
State enforcement in any issues for which the State program has been 
deemed to be operational.
    (5) If the State fails to submit the required documentation or 
supplement, as provided in Sec. 1953.4(a)(2), (3) or (4), when the 
developmental step is scheduled for completion, OSHA shall notify the 
State that documentation or a supplement is required and set a timetable 
for submission of any required documentation or supplement, generally 
not to exceed 60 days.
    (b) Federal Program changes. (1) When a significant change in the 
Federal program would have an adverse impact on the ``at least as 
effective'' status of the State program if a parallel State program 
modification were not made, State adoption of a change in response to 
the Federal program change shall be required. A Federal program change 
that would not result in any diminution of the effectiveness of a State 
plan compared to Federal OSHA generally would not require adoption by 
the State.
    (2) Examples of significant changes to the Federal program that 
would normally require a State response would include a change in the 
Act, promulgation or revision of OSHA standards or regulations, or 
changes in policy or procedure of national importance. A Federal program 
change that only establishes procedures necessary to implement a new or 
established policy, standard or regulation does not require a State 
response, although the State would be expected to establish policies and 
procedures which are ``at least as effective,'' which must be available 
for review on request.
    (3) When there is a change in the Federal program which requires 
State action, OSHA shall advise the States. This notification shall also 
contain a date by which States must adopt a corresponding change or 
submit a statement why a program change is not necessary. This date will 
generally be six months from the date of notification, except where the 
Assistant Secretary determines that the nature or scope of the change 
requires a different time frame, for example, a change requiring 
legislative action where a State has a biennial legislature or a policy 
of major national implications requiring a shorter implementing time 
frame. State notification of intent may be required prior to adoption.
    (4) If the State change is different from the Federal program 
change, the

[[Page 127]]

State shall submit one copy of the required supplement within 60 days of 
State adoption. The supplement shall contain a copy of the relevant 
legislation, regulation, policy or procedure and documentation on how 
the change maintains the ``at least as effective as'' status of the 
plan.
    (5) If the State adopts a change identical to the Federal program 
change, the State is not required to submit a supplement. However, the 
State shall provide documentation that it has adopted the change, such 
as the cover page of an implementing directive or a notice of 
promulgation, within 60 days of State adoption.
    (6) The State may demonstrate why a program change is not necessary 
because the State program is already the same as or at least as 
effective as the Federal program change. Such submissions will require 
review and approval as set forth in Sec. 1953.6.
    (7) Where there is a change in the Federal program which does not 
require State action but is of sufficient national interest to warrant 
indication of State intent, the State may be required to provide such 
notification within a specified time frame.
    (c) Evaluation changes. (1) Special and periodic evaluations of a 
State program by OSHA in cooperation with the State may show that some 
portion of a State plan has an adverse impact on the effectiveness of 
the State program and accordingly requires modification to the State's 
underlying legislation, regulations, policy or procedures as an 
evaluation change. For example, OSHA could find that additional 
legislative or regulatory authority may be necessary to effectively 
pursue the State's right of entry into workplaces, or to assure various 
employer rights.
    (2) OSHA shall advise the State of any evaluation findings that 
require a change to the State plan and the reasons supporting this 
decision. This notification shall also contain a date by which the State 
must accomplish this change and submit either the change supplement or a 
timetable for its accomplishment and interim steps to assure continued 
program effectiveness, documentation of adoption of a program component 
identical to the Federal program component, or, as explained in 
paragraph (c)(5) of this section, a statement demonstrating why a 
program change is not necessary.
    (3) If the State adopts a program component which differs from a 
corresponding Federal program component, the State shall submit one copy 
of a required supplement within 60 days of adoption of the change. The 
supplement shall contain a copy of the relevant legislation, regulation, 
policy or procedure and documentation on how the change maintains the 
``at least as effective as'' status of the plan.
    (4) If the State adopts a program component identical to a Federal 
program component, submission of a supplement is not required. However, 
the State shall provide documentation that it has adopted the change, 
such as the cover page of an implementing directive or a notice of 
promulgation, within 60 days of adoption of the change and shall retain 
all other documentation within the State available for review upon 
request.
    (5) The State may demonstrate why a program change is not necessary 
because the State program is meeting the requirements for an ``at least 
as effective'' program. Such submission will require review and approval 
as set forth in Sec. 1953.6.
    (d) State-initiated changes. (1) A State-initiated change is any 
change to the State plan which is undertaken at a State's option and is 
not necessitated by Federal requirements. State-initiated changes may 
include legislative, regulatory, administrative, policy or procedural 
changes which impact on the effectiveness of the State program.
    (2) A State-initiated change supplement is required whenever the 
State takes an action not otherwise covered by this part that would 
impact on the effectiveness of the State program. The State shall notify 
OSHA as soon as it becomes aware of any change which could affect the 
State's ability to meet the approval criteria in parts 1902 and 1956 of 
this chapter, e.g., changes to the State's legislation, and submit a 
supplement within 60 days. Other State initiated supplements must be 
submitted within 60 days after the change occurred. The State supplement 
shall contain a copy of the relevant legislation, regulation, policy or 
procedure

[[Page 128]]

and documentation on how the change maintains the ``at least as 
effective as'' status of the plan. If the State fails to notify OSHA of 
the change or fails to submit the required supplement within the 
specified time period, OSHA shall notify the State that a supplement is 
required and set a time period for submission of the supplement, 
generally not to exceed 30 days.



Sec. 1953.5  Special provisions for standards changes.

    (a) Permanent standards. (1) Where a Federal program change is a new 
permanent standard, or a more stringent amendment to an existing 
permanent standard, the State shall promulgate a State standard adopting 
such new Federal standard, or more stringent amendment to an existing 
Federal standard, or an at least as effective equivalent thereof, within 
six months of the date of promulgation of the new Federal standard or 
more stringent amendment. The State may demonstrate that a standard 
change is not necessary because the State standard is already the same 
as or at least as effective as the Federal standard change. In order to 
avoid delays in worker protection, the effective date of the State 
standard and any of its delayed provisions must be the date of State 
promulgation or the Federal effective date whichever is later. The 
Assistant Secretary may permit a longer time period if the State makes a 
timely demonstration that good cause exists for extending the time 
limitation. State permanent standards adopted in response to a new or 
revised Federal standard shall be submitted as a State plan supplement 
within 60 days of State promulgation in accordance with Sec. 1953.4(b), 
Federal Program changes.
    (2) Because a State may include standards and standards provisions 
in addition to Federal standards within an issue covered by an approved 
plan, it would generally be unnecessary for a State to revoke a standard 
when the comparable Federal standard is revoked or made less stringent. 
If the State does not adopt the Federal action, it need only provide 
notification of its intent to retain the existing State standard to OSHA 
within 6 months of the Federal promulgation date. If the State adopts a 
change to its standard parallel to the Federal action, it shall submit 
the appropriate documentation as provided in Secs. 1953.4(b)(3) or (4)--
Federal program changes. However, in the case of standards applicable to 
products used or distributed in interstate commerce where section 
18(c)(2) of the Act imposes certain restrictions on State plan 
authority, the modification, revision, or revocation of the Federal 
standard may necessitate the modification, revision, or revocation of 
the comparable State standard unless the State standard is required by 
compelling local conditions and does not unduly burden interstate 
commerce.
    (3) Where a State on its own initiative adopts a permanent State 
standard for which there is no Federal parallel, the State shall submit 
it within 60 days of State promulgation in accordance with 
Sec. 1953.4(d)--State-initiated changes,
    (b) Emergency temporary standards. (1) Immediately upon publication 
of an emergency temporary standard in the Federal Register, OSHA shall 
advise the States of the standard and that a Federal program change 
supplement shall be required. This notification must also provide that 
the State has 30 days after the date of promulgation of the Federal 
standard to adopt a State emergency temporary standard if the State plan 
covers that issue. The State may demonstrate that promulgation of an 
emergency temporary standard is not necessary because the State standard 
is already the same as or at least as effective as the Federal standard 
change. The State standard must remain in effect for the duration of the 
Federal emergency temporary standard which may not exceed six (6) 
months.
    (2) Within 15 days after receipt of the notice of a Federal 
emergency temporary standard, the State shall advise OSHA of the action 
it will take. State standards shall be submitted in accordance with the 
applicable procedures in Sec. 1953.4(b)--Federal Program Changes, except 
that the required documentation or plan supplement must be submitted 
within 5 days of State promulgation.

[[Page 129]]

    (3) If for any reason, a State on its own initiative adopts a State 
emergency temporary standard, it shall be submitted as a plan supplement 
in accordance with Sec. 1953.4(c), but within 10 days of promulgation.



Sec. 1953.6  Review and approval of plan supplements.

    (a) OSHA shall review a supplement to determine whether it is at 
least as effective as the Federal program and meets the criteria in the 
Act and implementing regulations and the assurances in the State plan. 
If the review reveals any defect in the supplement, or if more 
information is needed, OSHA shall offer assistance to the State and 
shall provide the State an opportunity to clarify or correct the change.
    (b) If upon review, OSHA determines that the differences from a 
corresponding Federal component are purely editorial and do not change 
the substance of the policy or requirements on employers, it shall deem 
the change identical. This includes ``plain language'' rewrites of new 
Federal standards or previously approved State standards which do not 
change the meaning or requirements of the standard. OSHA will inform the 
State of this determination. No further review or Federal Register 
publication is required.
    (c) Federal OSHA may seek public comment during its review of plan 
supplements. Generally, OSHA will seek public comment if a State program 
component differs significantly from the comparable Federal program 
component and OSHA needs additional information on its compliance with 
the criteria in section 18(c) of the Act, including whether it is at 
least as effective as the Federal program and in the case of a standard 
applicable to products used or distributed in interstate commerce, 
whether it is required by compelling local conditions or unduly burdens 
interstate commerce under section 18(c)(2) of the Act.
    (d) If the plan change meets the approval criteria, OSHA shall 
approve it and shall thereafter publish a Federal Register notice 
announcing the approval. OSHA reserves the right to reconsider its 
decision should subsequent information be brought to its attention.
    (e) If a State fails to submit a required supplement or if 
examination discloses cause for rejecting a submitted supplement, OSHA 
shall provide the State a reasonable time, generally not to exceed 30 
days, to submit a revised supplement or to show cause why a proceeding 
should not be commenced either for rejection of the supplement or for 
failure to adopt the change in accordance with the procedures in 
Sec. 1902.17 or Part 1955 of this chapter.



PART 1954--PROCEDURES FOR THE EVALUATION AND MONITORING OF APPROVED STATE PLANS--Table of Contents




                           Subpart A--General

Sec.
1954.1  Purpose and scope.
1954.2  Monitoring system.
1954.3  Exercise of Federal discretionary authority.

    Subpart B--State Monitoring Reports and Visits to State Agencies

1954.10  Reports from the States.
1954.11  Visits to State agencies.

    Subpart C--Complaints About State Program Administration (CASPA)

1954.20  Complaints about State program administration.
1954.21  Processing and investigating a complaint.
1954.22  Notice provided by State.

    Authority: Sec. 18, 84 Stat. 1608 (29 U.S.C. 667); Secretary of 
Labor's Order No. 3-2000 (65 FR 50017, August 16, 2000).

    Source: 39 FR 1838, Jan. 15, 1974, unless otherwise noted.



                           Subpart A--General



Sec. 1954.1  Purpose and scope.

    (a) Section 18(f) of the Williams-Steiger Occupational Safety and 
Health Act of 1970 (hereinafter referred to as the Act) provides that 
``the Secretary shall, on the basis of reports submitted by the State 
agency and his own inspections make a continuing evaluation of the 
manner in which each State having a plan approved *  *  * is carrying 
out such plan.''

[[Page 130]]

    (b) This part 1954 applies to the provisions of section 18(f) of the 
Act relating to the evaluation of approved plans for the development and 
enforcement of State occupational safety and health standards. The 
provisions of this part 1954 set forth the policies and procedures by 
which the Assistant Secretary for Occupational Safety and Health 
(hereinafter referred to as the Assistant Secretary) under a delegation 
of authority from the Secretary of Labor (Secretary's Order 12-71, 36 FR 
8754, May 12, 1971) will continually monitor and evaluate the operation 
and administration of approved State plans.
    (c) Following approval of a State plan under section 18(c) of the 
Act, workplaces in the State are subject to a period of concurrent 
Federal and State authority. The period of concurrent enforcement 
authority must last for at least three years. Before ending Federal 
enforcement authority, the Assistant Secretary is required to make a 
determination as to whether the State plan, in actual operation, is 
meeting the criteria in section 18(c) of the Act including the 
requirements in part 1902 of this chapter and the assurances in the 
approval plan itself. After an affirmative determination has been made, 
the provisions of sections 5(a)(2), 8 (except for the purpose of 
carrying out section 18(f) of the Act), 9, 10, 13, and 17 of the Act 
shall not apply with respect to any occupational safety or health issues 
covered under the plan. The Assistant Secretary may, however, retain 
jurisdiction under the above provisions in any proceeding commenced 
under section 9 or 10 of the Act before the date of the determination 
under section 18(e) of the Act.
    (d) During this period of concurrent Federal and State authority, 
the operation and administration of the plan will be continually 
evaluated under section 18(f) of the Act. This evaluation will continue 
even after an affirmative determination has been made under section 
18(e) of the Act.



Sec. 1954.2  Monitoring system.

    (a) To carry out the responsibilities for continuing evaluation of 
State plans under section 18(f) of the Act, the Assistant Secretary has 
established a State Program Performance Monitoring System. Evaluation 
under this monitoring system encompasses both the period before and 
after a determination has been made under section 18(e) of the Act. The 
monitoring system is a three phased system designed to assure not only 
that developmental steps are completed and that the operational plan is, 
in fact, at least as effective as the Federal program with respect to 
standards and enforcement, but also to provide a method for continuing 
review of the implementation of the plan and any modifications thereto 
to assure compliance with the provisions of the plan during the time the 
State participates in the cooperative Federal-State program.
    (b) Phase I of the system begins with the initial approval of a 
State plan and continues until the determination required by section 
18(e) of the Act is made. During Phase I, the Assistant Secretary will 
secure monitoring data to make the following key decisions:
    (1) What should be the level of Federal enforcement;
    (2) Should plan approval be continued; and
    (3) What level of technical assistance is needed by the State to 
enable it to have an effective program.
    (c) Phase II of the system relates to the determination required by 
section 18(e) of the Act. The Assistant Secretary must decide, after no 
less than three years following approval of the plan, whether or not to 
relinquish Federal authority to the State for issues covered by the 
occupational safety and health program in the State plan. Phase II will 
be a comprehensive evaluation of the total State program, drawing upon 
all information collected during Phase I.
    (d) Phase III of the system begins after an affirmative 
determination has been made under section 18(e) of the Act. The 
continuing evaluation responsibility will be exercised under Phase III, 
and will provide data concerning the total operations of a State program 
to enable the Assistant Secretary to determine whether or not the plan 
approval should be continued or withdrawn.
    (e) The State program performance monitoring system provides for, 
but is

[[Page 131]]

not limited to, the following major data inputs:
    (1) Quarterly and annual reports of State program activity;
    (2) Visits to State agencies;
    (3) On-the-job evaluation of State compliance officers; and
    (4) Investigation of complaints about State program administration.



Sec. 1954.3  Exercise of Federal discretionary authority.

    (a)(1) When a State plan is approved under section 18(c) of the Act, 
Federal authority for enforcement of standards continues in accordance 
with section 18(e) of the Act. That section prescribes a period of 
concurrent Federal-State enforcement authority which must last for at 
least three years, after which time the Assistant Secretary shall make a 
determination whether, based on actual operations, the State plan meets 
all the criteria set forth in section 18(c) of the Act and the 
implementing regulations in 29 CFR part 1902 and subpart A of 29 CFR 
part 1952. During this period of concurrent authority, the Assistant 
Secretary may, but shall not be required to, exercise his authority 
under sections 5(a)(2), 8, 9, 10, 13 and 17 of the Act with respect to 
standards promulgated under section 6 of the Act where the State has 
comparable standards. Accordingly, section 18(e) authorizes, but does 
not require, the Assistant Secretary to exercise his discretionary 
enforcement authority over all the issues covered by a State plan for 
the entire 18(e) period.
    (2) Existing regulations at 29 CFR part 1902 set forth factors to be 
considered in determining how Federal enforcement authority should be 
exercised. These factors include:
    (i) Whether the plan is developmental or complete;
    (ii) Results of evaluations conducted by the Assistant Secretary;
    (iii) The State's schedule for meeting Federal standards; and
    (iv) Any other relevant matters.

(29 CFR 1902.1(c)(2) and 1902.20(b)(1)(iii).
    (3) Other relevant matters requiring consideration in the decision 
as to the level of Federal enforcement include:
    (i) Coordinated utilization of Federal and State resources to 
provide effective worker protection throughout the Nation;
    (ii) Necessity for clarifying the rights and responsibilities of 
employers and employees with respect to Federal and State authority;
    (iii) Increasing responsibility for administration and enforcement 
by States under an approved plan for evaluation of their effectiveness; 
and
    (iv) The need to react promptly to any failure of the States in 
providing effective enforcement of standards.
    (b) Guidelines for determining the appropriate level of Federal 
enforcement. In light of the requirements of 29 CFR part 1902 as well as 
the factors mentioned in paragraph (a)(3) of this section, the following 
guidelines for the extent of the exercise of discretionary Federal 
authority have been determined to be reasonable and appropriate. When a 
State plan meets all of these guidelines it will be considered 
operational, and the State will conduct all enforcement activity 
including inspections in response to employee complaints, in all issues 
where the State is operational. Federal enforcement activity will be 
reduced accordingly and the emphasis will be placed on monitoring State 
activity in accordance with the provisions of this part.
    (1) Enabling legislation. A State with an approved plan must have 
enacted enabling legislation substantially in conformance with the 
requirements of section 18(c) and 29 CFR part 1902 in order to be 
considered operational. This legislation must have been reviewed and 
approved under 29 CFR part 1902. States without such legislation, or 
where State legislation as enacted requires substantial amendments to 
meet the requirements of 29 CFR part 1902, will not be considered 
operational.
    (2) Approved State standards. The State must have standards 
promulgated under State law which are identical to Federal standards; or 
have been found to be at least as effective as the comparable Federal 
standards; or have been reviewed by OSHA and found to provide overall 
protection equal to comparable Federal standards. Review of the 
effectiveness of State standards and their enforcement will be a 
continuing function of the evaluation process. Where State standards in 
an

[[Page 132]]

issue have not been promulgated by the State or have been promulgated 
and found not to provide overall protection equal to comparable Federal 
standards, the State will not be considered operational as to those 
issues.
    (3) Personnel. The State must have a sufficient number of qualified 
personnel who are enforcing the standards in accordance with the State's 
enabling legislation. Where a State lacks the qualified personnel to 
enforce in a particular issue; e.g., Occupational Health, the State will 
not be considered operational as to that issue even though it has 
enabling legislation and standards.
    (4) Review of enforcement actions. Provisions for review of State 
citations and penalties, including the appointment of the reviewing 
authority and the promulgation of implementing regulations, must be in 
effect.
    (c)(1) Evaluation reports. One of the factors to consider in 
determining the level of Federal enforcement is the result of 
evaluations conducted under the monitoring system described in this 
part. While completion of an initial comprehensive evaluation of State 
operations is not generally a prerequisite for a determination that a 
State is operational under paragraph (b) of this section, such 
evaluations will be used in determining the Federal enforcement 
responsibility in certain circumstances.
    (2) Where evaluations have been completed prior to the time a 
determination as to the operational status of a State plan is made, the 
results of those evaluations will be included in the determination.
    (3) Where the results of one or more evaluations conducted during 
the operation of a State plan and prior to an 18(e) determination reveal 
that actual operations as to one or more aspects of the plan fail in a 
substantial manner to be at least as effective as the Federal program, 
and the State does not adequately resolve the deficiencies in accordance 
with subpart C of part 1953, the appropriate level of Federal 
enforcement activity shall be reinstated. An example of such deficiency 
would be a finding that State standards and their enforcement in an 
issue are not at least as effective as comparable Federal standards and 
their enforcement. Federal enforcement activity may also be reinstated 
where the Assistant Secretary determines that such action is necessary 
to assure occupational safety and health protection to employees.
    (d)(1) Recognition of State procedures. In order to resolve 
potential conflicting responsibilities of employers and employees, 
Federal authority will be exercised in a manner designed to recognize 
the implementation of State procedures in accordance with approved plans 
in areas such as variances, informing employees of their rights and 
obligations, and recordkeeping and reporting requirements.
    (i) Subject to pertinent findings of effectiveness under this part, 
Federal enforcement proceedings will not be initiated where an employer 
is in compliance with a State standard which has been found to be at 
least as effective as the comparable Federal standard, or with any 
temporary or permanent variance granted to such employer with regard to 
the employment or place of employment from such State standard, or any 
order or interim order in connection therewith, or any modification or 
extension thereof: Provided such variance action was taken under the 
terms and procedures required under Sec. 1902.4(b)(2)(iv) of this 
chapter, and the employer has certified that he has not filed for such 
variance on the same set of facts with the Assistant Secretary.
    (ii) Subject to pertinent findings of effectiveness under this part, 
and approval under Part 1953 of this chapter, Federal enforcement 
proceedings will not be initiated where an employer has posted the 
approved State poster in accordance with the applicable provisions of an 
approved State plan and Sec. 1952.10.
    (iii) Subject to pertinent findings of effectiveness under this 
part, and approval under part 1953 of this chapter, Federal enforcement 
proceedings will not be initiated where an employer is in compliance 
with the recordkeeping and reporting requirements of an approved State 
plan as provided in Sec. 1952.4.
    (2) [Reserved]
    (e) Discrimination complaints. State plan provisions on employee 
discrimination do not divest the Secretary of Labor of any authority 
under section

[[Page 133]]

11(c) of the Act. The Federal authority to investigate discrimination 
complaints exists even after an affirmative 18(e) determination. (See 
South Carolina decision 37 FR 25932, December 6, 1972). Employee 
complaints alleging discrimination under section 11(c) of the Act will 
be subject to Federal jurisdiction.
    (f)(1) Procedural agreements. A determination as to the operational 
status of a State plan shall be accompanied by an agreement with the 
State setting forth the Federal-State responsibilities as follows:
    (i) Scope of the State's operational status including the issues 
excluded from the plan, the issues where State enforcement will not be 
operational at the time of the agreement and the dates for commencement 
of operations;
    (ii) Procedures for referral, investigation and enforcement of 
employee requests for inspections;
    (iii) Procedures for reporting fatalities and catastrophes by the 
agency which has received the report to the responsible enforcing 
authority both where the State has and has not adopted the requirement 
that employers report as provided in 29 CFR 1904.8;
    (iv) Specifications as to when and by what means the operational 
guidelines of this section were met; and
    (v) Provision for resumption of Federal enforcement activity for 
failure to substantially comply with this agreement, or as a result of 
evaluation or other relevant factors.
    (2) Upon approval of these agreements, the Assistant Secretary shall 
cause to be published in the Federal Register, notice of the operational 
status of each approved State plan.
    (3) Where subsequent changes in the level of Federal enforcement are 
made, similar Federal Register notices shall be published.

[39 FR 22126, June 20, 1974, as amended at 39 FR 29182, Aug. 14, 1974; 
39 FR 39036, Nov. 5, 1974; 40 FR 25450, June 16, 1975; 67 FR 60129, 
Sept. 25, 2002]



    Subpart B--State Monitoring Reports and Visits to State Agencies



Sec. 1954.10  Reports from the States.

    (a) In addition to any other reports required by the Assistant 
Secretary under sections 18(c)(8) and 18(f) of the Act and 
Sec. 1902.3(1) of this chapter, the State shall submit quarterly and 
annual reports as part of the evaluation and monitoring of State 
programs. \1\
---------------------------------------------------------------------------

    \1\ Such quarterly and annual reports forms may be obtained from the 
Office of the Assistant Regional Director in whose Region the State is 
located.
---------------------------------------------------------------------------

    (b) Each State with an approved State plan shall submit to the 
appropriate Regional Office an annual occupational safety and health 
report in the form and detail provided for in the report and the 
instructions contained therein.
    (c) Each State with an approved State plan shall submit to the 
appropriate Regional Office a quarterly occupational safety and health 
compliance and standards activity report in the form and detail provided 
for in the report and the instructions contained therein.



Sec. 1954.11  Visits to State agencies.

    As a part of the continuing monitoring and evaluation process, the 
Assistant Secretary or his representative shall conduct visits to the 
designated agency or agencies of State with approved plans at least 
every 6 months. An opportunity may also be provided for discussion and 
comments on the effectiveness of the State plan from other interested 
persons. These visits will be scheduled as needed. Periodic audits will 
be conducted to assess the progress of the overall State program in 
meeting the goal of becoming at least as effective as the Federal 
program. These audits will include case file review and follow-up 
inspections of workplaces.

[[Page 134]]



    Subpart C--Complaints About State Program Administration (CASPA)



Sec. 1954.20  Complaints about State program administration.

    (a) Any interested person or representative of such person or groups 
of persons may submit a complaint concerning the operation or 
administration of any aspect of a State plan. The complaint may be 
submitted orally or in writing to the Assistant Regional Director for 
Occupational Safety and Health (hereinafter referred to as the Assistant 
Regional Director) or his representative in the Region where the State 
is located.
    (b) Any such complaint should describe the grounds for the complaint 
and specify the aspect or aspects of the administration or operation of 
the plan which is believed to be inadequate. A pattern of delays in 
processing cases, of inadequate workplace inspections, or the granting 
of variances without regard to the specifications in the State plans, 
are examples.
    (c)(1) If upon receipt of the complaint, the Assistant Regional 
Director determines that there are reasonable grounds to believe that an 
investigation should be made, he shall cause such investigation, 
including any workplace inspection, to be made as soon as practicable.
    (2) In determining whether an investigation shall be conducted and 
in determining the timing of such investigation, the Assistant Regional 
Director shall consider such factors as:
    (i) The extent to which the complaint affects any substantial number 
of persons;
    (ii) The number of complaints received on the same or similar issues 
and whether the complaints relate to safety and health conditions at a 
particular establishment;
    (iii) Whether the complainant has exhausted applicable State 
remedies; and
    (iv) The extent to which the subject matter of the complaint is 
pertinent to the effectuation of Federal policy.



Sec. 1954.21  Processing and investigating a complaint.

    (a) Upon receipt of a complaint about State program administration, 
the Assistant Regional Director will acknowledge its receipt and may 
forward a copy of the complaint to the designee under the State plan and 
to such other person as may be necessary to complete the investigation. 
The complainant's name and the names of other complainants mentioned 
therein will be deleted from the complaint and the names shall not 
appear in any record published, released or made available.
    (b) In conducting the investigation, the Assistant Regional Director 
may obtain such supporting information as is appropriate to the 
complaint. Sources for this additional information may include ``spot-
check'' follow-up inspections of workplaces, review of the relevant 
State files, and discussion with members of the public, employers, 
employees and the State.
    (c) On the basis of the information obtained through the 
investigation, the Assistant Regional Director shall advise the 
complainant of the investigation findings and in general terms, any 
corrective action that may result. A copy of such notification shall be 
sent to the State and it shall be considered part of the evaluation of 
the State plan.
    (d) If the Assistant Regional Director determines that there are no 
reasonable grounds for an investigation to be made with respect to a 
complaint under this Subpart, he shall notify the complaining party in 
writing of such determination. Upon request of the complainant, or the 
State, the Assistant Regional Director, at his discretion, may hold an 
informal conference. After considering all written and oral views 
presented the Assistant Regional Director shall affirm, modify, or 
reverse his original determination and furnish the complainant with 
written notification of his decision and the reasons therefore. Where 
appropriate the State may also receive such notification.



Sec. 1954.22  Notice provided by State.

    (a)(1) In order to assure that employees, employers, and members of 
the public are informed of the procedures for complaints about State 
program administration, each State with an approved State plan shall 
adopt not later

[[Page 135]]

than July 1, 1974, a procedure not inconsistent with these regulations 
or the Act, for notifying employees, employers and the public of their 
right to complain to the Occupational Safety and Health Administration 
about State program administration.
    (2) Such notification may be by posting of notices in the workplace 
as part of the requirement in Sec. 1902.4(c)(2)(iv) of this chapter and 
other appropriate sources of information calculated to reach the public.
    (b)  [Reserved]



PART 1955--PROCEDURES FOR WITHDRAWAL OF APPROVAL OF STATE PLANS--Table of Contents




                           Subpart A--General

Sec.
1955.1  Purpose and scope.
1955.2  Definitions.
1955.3  General policy.
1955.4  Effect of withdrawal of approval.
1955.5  Petitions for withdrawal of approval.

                 Subpart B--Notice of Formal Proceeding

1955.10  Publication of notice of formal proceeding.
1955.11  Contents of notice of formal proceeding.
1955.12  Administrative law judge; powers and duties.
1955.13  Disqualification.
1955.14  Ex parte communications.
1955.15  Manner of service and filing.
1955.16  Time.
1955.17  Determination of parties.
1955.18  Provision for written comments.

            Subpart C--Consent Findings and Summary Decisions

1955.20  Consent findings and orders.
1955.21  Motion for a summary decision.
1955.22  Summary decision.

             Subpart D--Preliminary Conference and Discovery

1955.30  Submission of documentary evidence.
1955.31  Preliminary conference.
1955.32  Discovery.
1955.33  Sanctions for failure to comply with orders.
1955.34  Fees of witnesses.

                     Subpart E--Hearing and Decision

1955.40  Hearings.
1955.41  Decision of the administrative law judge.
1955.42  Exceptions.
1955.43  Transmission of the record.
1955.44  Final decision.
1955.45  Effect of appeal of administrative law judge's decision.
1955.46  Finality for purposes of judicial review.
1955.47  Judicial review.

    Authority: Sec. 18, 84 Stat. 1608 (29 U.S.C. 667); Secretary of 
Labor's Order No. 3-2000 (65 FR 50017, August 16, 2000).

    Source: 40 FR 23467, May 30, 1975, unless otherwise noted.



                           Subpart A--General



Sec. 1955.1  Purpose and scope.

    (a) This part contains rules of practice and procedure for formal 
administrative proceedings on the withdrawal of initial or final 
approval of State plans in accordance with section 18(f) of the 
Occupational Safety and Health Act of 1970 (29 U.S.C. 667).
    (b) These rules shall be construed to secure a prompt and just 
conclusion of the proceedings subject thereto.



Sec. 1955.2  Definitions.

    (a) As used in this part unless the context clearly requires 
otherwise:
    (1) Act means the Occupational Safety and Health Act of 1970;
    (2) Assistant Secretary means Assistant Secretary of Labor for 
Occupational Safety and Health;
    (3) Commencement of a case under section 18(f) of the Act means, for 
the purpose of determining State jurisdiction following a final decision 
withdrawing approval of a plan, the issuance of a citation.
    (4) Developmental step includes, but is not limited to, those items 
listed in the published developmental schedule, or any revisions 
thereto, for each plan contained in 29 CFR part 1952. A developmental 
step also includes those items in the plan as approved under section 
18(c) of the Act, as well as those items in the approval decision which 
are subject to evaluations (see e.g., approval of Michigan plan), which 
were deemed necessary to make the State program at least as effective as 
the Federal program within the 3 year developmental period. (See part 
1953 of this chapter.

[[Page 136]]

    (5) Final approval means approval of the State plan, or any 
modification thereof under section 18(e) of the Act and subpart D of 29 
CFR part 1902.
    (6) Initial approval means approval of a State plan, or any 
modification thereof under section 18(c) of the Act and subpart C of 29 
CFR part 1902;
    (7) Party includes the State agency or agencies designated to 
administer and enforce the State plan that is the subject of withdrawal 
proceedings, the Department of Labor, Occupational Safety and Health 
Administration (hereinafter called OSHA), represented by the Office of 
the Solicitor and any person participating in the proceedings pursuant 
to Sec. 1955.17;
    (8) Person means an individual, partnership, association, 
corporation, business trust, legal representative, an organized group of 
individuals, or an agency, authority, or instrumentality of the United 
States or of a State;
    (9) Secretary means Secretary of Labor;
    (10) Separable portion of a plan for purposes of withdrawal of 
approval generally means an issue as defined in 29 CFR 1902.2(c), i.e. 
``an industrial, occupational or hazard grouping which is at least as 
comprehensive as a corresponding grouping contained in (i) one or more 
sections in subpart B or R of part 1910 of this chapter, or (ii) one or 
more of the remaining subparts of part 1910'': Provided, That wherever 
the Assistant Secretary has determined that other industrial, 
occupational or hazard groupings are administratively practicable, such 
groupings shall be considered separable portions of a plan.
    (b)  [Reserved]

[40 FR 23467, May 30, 1975, as amended at 67 FR 60129, Sept. 25, 2002]



Sec. 1955.3  General policy.

    (a) The following circumstances shall be cause for initiation of 
proceedings under this part for withdrawal of approval of a State plan, 
or any portion thereof.
    (1) Whenever the Assistant Secretary determines that under 
Sec. 1902.2(b) of this chapter a State has not substantially completed 
the developmental steps of its plan at the end of three years from the 
date of commencement of operations, a withdrawal proceeding shall be 
instituted. Examples of a lack of substantial completion of 
developmental steps include but are not limited to the following:
    (i) A failure to develop the necessary regulations and 
administrative guidelines for an ``at least as effective'' enforcement 
program;
    (ii) Failure to promulgate all or a majority of the occupational 
safety and health standards in an issue covered by the plan; or
    (iii) Failure to enact the required enabling legislation.
    (2) Whenever the Assistant Secretary determines that there is no 
longer a reasonable expectation that a State plan will meet the criteria 
of Sec. 1902.3 of this chapter involving the completion of developmental 
steps within the three year period immediately following commencement of 
operations, a withdrawal proceeding shall be instituted. Examples of a 
lack of reasonable expectation include but are not limited to the 
following:
    (i) A failure to enact enabling legislation in the first two years 
following commencement of operations where the remaining developmental 
steps are dependent on the passage of enabling legislation and cannot be 
completed within one year; or
    (ii) Repeal or substantial amendment of the enabling legislation by 
the State legislature so that the State program fails to meet the 
criteria in Sec. 1902.3 of this chapter; or
    (iii) Inability to complete the developmental steps within the 
indicated three year period.
    (3) Whenever the Assistant Secretary determines that in the 
operation or administration of a State plan, or as a result of any 
modifications to a plan, there is a failure to comply substantially with 
any provision of the plan, including assurances contained in the plan, a 
withdrawal proceeding shall be instituted in a State which has received 
final approval under section 18(e) of the Act, and may be instituted in 
a State which has received initial approval under section 18(c) of the 
Act. Examples of a lack of substantial compliance include but are not 
limited to the following:

[[Page 137]]

    (i) Where a State over a period of time consistently fails to 
provide effective enforcement of standards;
    (ii) Where the rights of employees are circumscribed in such a 
manner as to diminish the effectiveness of the program;
    (iii) Where a State, without good cause, fails to continue to 
maintain its program in accordance with the appropriate changes in the 
Federal program;
    (iv) Where a State fails to comply with the required assurances on a 
sufficient number of qualified personnel and/or adequate resources for 
administration and enforcement of the program; or
    (v) Where, on the basis of actual operations, the Assistant 
Secretary determines that the criteria in section 18(c) of the Act are 
not being met, that the period of concurrent authority under section 
18(e) of the Act should not be extended, and that final approval under 
section 18(e) of the Act should not be given.
    (b) A State may, at any time both before or after a determination 
under section 18(e) of the Act, voluntarily withdraw its plan, or any 
portion thereof, by notifying the Assistant Secretary in writing setting 
forth the reasons for such withdrawal. Such notification shall be 
accompanied by a letter terminating the application for related grants 
authorized under section 23(g) of the Act in accordance with 29 CFR 
1951.25(d). Upon receipt of the State notice the Assistant Secretary 
shall cause to be published in the Federal Register a notice of 
withdrawal of approval of the State plan or portion thereof (see Montana 
notice 39 FR 2361, June 27, 1974).
    (c) Approval of a portion of a plan may be withdrawn under any of 
the paragraphs in this section when it is determined that that portion 
is reasonably separable from the remainder of the plan in a manner 
consistent with the provisions in Sec. 1902.2(c) of this chapter 
defining the scope of a State plan. As an example, such a partial 
withdrawal of approval would be considered appropriate where a State 
fails to adopt, without good cause shown, Federal standards within a 
separable issue, such as occupational health.

[40 FR 23467, May 30, 1975, as amended at 67 FR 60129, Sept. 25, 2002]



Sec. 1955.4  Effect of withdrawal of approval.

    (a) After receipt of notice of withdrawal of approval of a State 
plan, such plan, or any part thereof, shall cease to be in effect and 
the provisions of the Federal Act shall apply within that State. But the 
State, in accordance with section 18(f) of the Act, may retain 
jurisdiction in any case commenced before receipt of the notice of 
withdrawal of approval of the plan, in order to enforce standards under 
the plan, whenever the issues involved in the case or cases pending do 
not relate to the reasons for withdrawal of the plan.
    (b) Such notice of withdrawal of approval shall operate 
constructively as notice of termination of all related grants authorized 
under section 23(g) of the Act in accordance with 29 CFR 1951.25(c).



Sec. 1955.5  Petitions for withdrawal of approval.

    (a) At any time following the initial approval of a State plan under 
section 18(c) of the Act, any interested person may petition the 
Assistant Secretary in writing to initiate proceedings for withdrawal of 
approval of the plan under section 18(f) of the Act and this part. The 
petition shall contain a statement of the grounds for initiating a 
withdrawal proceeding, including facts to support the petition.
    (b)(1) The Assistant Secretary may request the petitioner for 
additional facts and may take such other actions as are considered 
appropriate such as:
    (i) Publishing the petition for public comment;
    (ii) Holding informal discussion on the issues raised by the 
petition with the State and other persons affected; or
    (iii) Holding an informal hearing in accordance with Sec. 1902.13 of 
this chapter.
    (2) Any such petition shall be considered and acted upon within a 
reasonable time. Prompt notice shall be given of the denial in whole or 
in part of any

[[Page 138]]

petition and the notice shall be accompanied by a brief statement of the 
grounds for the denial. A denial of a petition does not preclude future 
action on those issues or any other issues raised regarding a State 
plan.



                 Subpart B--Notice of Formal Proceeding



Sec. 1955.10  Publication of notice of formal proceeding.

    (a) The Assistant Secretary, prior to any notice of a formal 
proceeding under this subpart, shall by letter, provide the State with 
an opportunity to show cause within 45 days why a proceeding should not 
be instituted for withdrawal of approval of a plan or any portion 
thereof. When a State fails to show cause why a formal proceeding for 
withdrawal of approval should not be instituted, the State shall be 
deemed to have waived its right to a formal proceeding under paragraph 
(b) of this section and the Assistant Secretary shall cause to be 
published in the Federal Register a notice of withdrawal of approval of 
the State plan.
    (b)(1) Whenever the Assistant Secretary, on the basis of a petition 
under Sec. 1955.5 or on his own initiative, determines that approval of 
a State plan or any portion thereof should be withdrawn, and the State 
has not waived its right under Sec. 1955.3(b) or paragraph (a) of this 
section to a formal proceeding, he shall publish a notice of proposed 
withdrawal in the Federal Register as set out in Sec. 1955.11 and cause 
such notice, in the form of a complaint, to be served on the State in 
accordance with Sec. 1955.15.
    (2) Not later than 5 days following the publication of the notice in 
the Federal Register, the State agency shall publish, or cause to be 
published, within the State reasonable notice containing a summary of 
the information in the Federal notice, as well as the location or 
locations where a copy of the full notice is available for inspection 
and public copying.
    (3) Two copies of such notice shall be served on the Assistant 
Secretary in accordance with Sec. 1955.15.
    (c) Not less than 30 days following publication of the notice in the 
Federal Register, the State shall submit a statement of those items in 
the notice which are being contested and a brief statement of the facts 
relied upon, including whether the use of witnesses is intended. This 
statement shall be served on the Assistant Secretary in accordance with 
Sec. 1955.15. When a State fails to respond to the notice of proposed 
withdrawal under paragraph (b)(1) of this section, the State shall be 
deemed to have waived its right to a formal proceeding and the Assistant 
Secretary shall cause to be published in the Federal Register a notice 
of withdrawal of approval.



Sec. 1955.11  Contents of notice of formal proceeding.

    (a) A notice of a formal proceeding published under Sec. 1955.10 
shall include:
    (1) A statement on the nature of the proceeding and addresses for 
filing all papers;
    (2) The legal authority under which the proceeding is to be held;
    (3) A description of the issues and the grounds for the Assistant 
Secretary's proposed withdrawal of approval;
    (4) A specified period, generally not less than 30 days after 
publication of the notice in the Federal Register, for the State to 
submit a response to the statement of issues in the notice;
    (5) A provision for designation of an administrative law judge under 
5 U.S.C. 3105 to preside over the proceeding.
    (b) A copy of the notice of the proceeding stating the basis for the 
Assistant Secretary's determination that approval of the plan, or any 
portion thereof, should be withdrawn shall be referred to the 
administrative law judge.



Sec. 1955.12  Administrative law judge; powers and duties.

    (a) The administrative law judge appointed under 5 U.S.C. 3105 and 
designated by the Chief Administrative Law Judge to preside over a 
proceeding shall have all powers necessary and appropriate to conduct a 
fair, full, and impartial proceeding, including the following:
    (1) To administer oaths and affirmations;

[[Page 139]]

    (2) To rule upon offers of proof and receive relevant evidence;
    (3) To provide for discovery, including the issuance of subpoenas 
authorized by section 8(b) of the Act and 5 U.S.C. 555(d) and 556(c)(2), 
and to determine the scope and time limits of the discovery;
    (4) To regulate the course of the proceeding and the conduct of the 
parties and their counsel;
    (5) To consider and rule upon procedural requests, e.g. motions for 
extension of time;
    (6) To hold preliminary conferences for the settlement or 
simplification of issues;
    (7) To take official notice of material facts not appearing in the 
evidence in the record in accordance with Sec. 1955.40(c);
    (8) To render an initial decision;
    (9) To examine and cross-examine witnesses;
    (10) To take any other appropriate action authorized by the Act, the 
implementing regulations, or the Administrative Procedure Act, 5 U.S.C. 
554-557 (hereinafter called the APA).
    (b) On any procedural question not otherwise regulated by this part, 
the Act, or the APA, the administrative law judge shall be guided to the 
extent practicable by the pertinent provisions of the Federal Rules of 
Civil Procedure.



Sec. 1955.13  Disqualification.

    (a) If an administrative law judge deems himself disqualified to 
preside over a particular proceeding, he shall withdraw by notice on the 
record directed to the Chief Administrative Law Judge. Any party who 
deems an administrative law judge, for any reason, to be disqualified to 
preside, or to continue to preside, over a particular proceeding may 
file a motion to disqualify and remove the administrative law judge, 
provided the motion is filed prior to the time the administrative law 
judge files his decision. Such motion must be supported by affidavits 
setting forth the alleged ground for disqualification. The Chief 
Administrative Law Judge shall rule upon the motion.
    (b) Contumacious conduct at any proceeding before the administrative 
law judge shall be ground for summary exclusion from the proceeding. If 
a witness or party refuses to answer a question after being so directed, 
or refuses to obey an order to provide or permit discovery, the 
administrative law judge may make such orders with regard to the refusal 
as are just and proper, including the striking of all testimony 
previously given by such witness on related matters.



Sec. 1955.14  Ex parte communications.

    (a) Except to the extent required for the disposition of ex parte 
matters, the administrative law judge shall not consult any interested 
person or party or their representative on any fact in issue or on the 
merits of any matter before him except upon notice and opportunity for 
all parties to participate.
    (b)(1) Written or oral communications from interested persons 
outside the Department of Labor involving any substantive or procedural 
issues in a proceeding directed to the administrative law judge, the 
Secretary of Labor, the Assistant Secretary, the Associate Assistant 
Secretary for Regional Programs, the Solicitor of Labor, or the 
Associate Solicitor for Occupational Safety and Health, or their staffs 
shall be deemed ex parte communications and are not to be considered 
part of any record or the basis for any official decision, unless the 
communication is made by motion to the administrative law judge and 
served upon all the parties.
    (2) To facilitate implementation of this requirement, the above-
mentioned offices shall keep a log of such communications which shall be 
made available to the public and which may, by motion, be entered into 
the record.
    (c) No employee or agent of the Department of Labor engaged in the 
investigation or presentation of the withdrawal proceeding governed by 
this part shall participate or advise in the initial or final decision, 
except as a witness or counsel in the proceeding.



Sec. 1955.15  Manner of service and filing.

    (a) Service of any document upon any party may be made by personal 
delivery of, or by mailing a copy of the document by certified mail, to 
the last known address of the party or his representative. The person 
serving the

[[Page 140]]

document shall certify to the manner and date of service.
    (b) In addition to serving a copy of any documents upon the parties, 
the original and two copies of each document shall be filed with the 
administrative law judge. With respect to exhibits and transcripts, only 
originals or certified copies need be filed.



Sec. 1955.16  Time.

    Computation of any period of time under these rules shall begin with 
the first business day following that on which the act, event or 
development initiating such period of time shall have occurred. When the 
last day of the period so computed is a Saturday, Sunday, or national 
holiday, or other day on which the Department of Labor is closed, the 
period shall run until the end of the next following business day. When 
such period of time is 7 days or less, each of the Saturdays, Sundays, 
and such holidays shall be excluded from the computation.



Sec. 1955.17  Determination of parties.

    (a) The designated State agency or agencies and the Department of 
Labor, OSHA, shall be the initial parties to the proceedings. Other 
interested persons may, at the discretion of the administrative law 
judge, be granted the right to participate as parties if he determines 
that the final decision could substantially affect them or the class 
they represent or that they may contribute materially to the disposition 
of the proceedings.
    (b)(1) Any person wishing to participate in any proceeding as a 
party under paragraph (a) of this section shall submit a petition to the 
administrative law judge within 30 days after the notice of such 
proceeding has been published in the Federal Register. The petition 
shall also be served upon the other parties. Such petition shall 
concisely state:
    (i) Petitioner's interest in the proceeding;
    (ii) How his participation as a party will contribute materially to 
the disposition of the proceeding;
    (iii) Who will appear for petitioner;
    (iv) The issue or issues as set out in the notice published under 
Sec. 1955.10 of this part on which petitioner wishes to participate; and
    (v) Whether petitioner intends to present witnesses.
    (2) The administrative law judge shall, within 5 days of receipt of 
the petition, ascertain what objections, if any, there are to the 
petition. He shall then determine whether the petitioner is qualified in 
his judgment to be a party in the proceedings and shall permit or deny 
participation accordingly. The administrative law judge shall give each 
petitioner written notice of the decision on his petition promptly. If 
the petition is denied, the notice shall briefly state the grounds for 
denial. Persons whose petition for party participation is denied may 
appeal the decision to the Secretary within 5 days of receipt of the 
notice of denial. The Secretary will make the final decision to grant or 
deny the petition no later than 20 days following receipt of the appeal.
    (3) Where the petitions to participate as parties are made by 
individuals or groups with common interests, the administrative law 
judge may require all such petitioners to designate a single 
representative, or he may recognize one or more of such petitioners to 
represent all such petitioners.



Sec. 1955.18  Provision for written comments.

    Any person who is not a party may submit a written statement of 
position with 4 copies to either the Assistant Secretary or the State at 
any time during the proceeding which statement shall be made available 
to all parties and may be introduced into evidence by a party. Mere 
statements of approval or opposition to the plan without any documentary 
support shall not be considered as falling within this provision.



            Subpart C--Consent Findings and Summary Decisions



Sec. 1955.20  Consent findings and orders.

    (a)(1) At any time during the proceeding a reasonable opportunity 
may be afforded to permit negotiation by the parties of an agreement 
containing consent findings and a rule or order disposing of the whole 
or any part of

[[Page 141]]

the proceeding. The allowance of such opportunity and the duration 
thereof shall be in the discretion of the administrative law judge, 
after consideration of the requirements of section 18 of the Act, the 
nature of the proceeding, the requirements of the public interest, the 
representations of the parties, and the probability of an agreement 
which will result in a just disposition of the issues.
    (2) Any agreement containing consent findings and a rule or order 
disposing of a proceeding shall also provide:
    (i) That the rule or order shall have the same force and effect as 
if made after a full hearing;
    (ii) A waiver of any further procedural steps before the 
administrative law judge and the Secretary; and
    (iii) A waiver of any right to challenge or contest the validity of 
the findings and of the rule or order made in accordance with the 
agreement.
    (b)(1) On or before the expiration of the time granted for 
negotiations, the parties or their counsel may:
    (i) Submit the proposed agreement to the administrative law judge 
for his consideration; or
    (ii) Inform the administrative law judge that agreement cannot be 
reached.
    (2) In the event an agreement containing consent findings and a rule 
or order is submitted within the time allowed therefor, the 
administrative law judge may accept such agreement by issuing his 
decision based upon the agreed findings. Such decision shall be 
published in the Federal Register.



Sec. 1955.21  Motion for a summary decision.

    (a)(1) Any party may move, with or without supporting affidavits, 
for a summary decision on all or any part of the proceeding. Any other 
party may, within 10 days after service of the motion, serve opposing 
affidavits or file a cross motion for summary decision. The 
administrative law judge may, in his discretion, set the matter for 
argument and call for submission of briefs. The filing of any documents 
under this section shall be with the administrative law judge and copies 
of any such document shall be served on all the parties.
    (2) The administrative law judge may grant such motion if the 
pleadings, affidavits, material obtained by discovery or otherwise 
obtained, or matters officially noticed, show that there is no genuine 
issue as to any material fact and that a party is entitled to summary 
decision. Affidavits shall set forth such facts as would be admissible 
in evidence in the hearing and shall show affirmatively that the affiant 
is competent to testify to the matters stated therein. When a motion for 
summary decision is made and supported as provided in paragraph (a)(1) 
of this section, the party opposing the motion may not rest upon the 
mere allegations or denials of his pleading; his response must set forth 
specific facts showing that there is a genuine issue of fact for the 
hearing.
    (3) Should it appear from the affidavits of a party opposing the 
motion that he cannot, for reasons stated, present by affidavit facts 
essential to justify his opposition, the administrative law judge may 
refuse the application for summary decision or may order a continuance 
to permit affidavits to be obtained, or depositions to be taken, or 
discovery to be had, or may make such other order as is just.
    (b)(1) The denial of all or any part of a motion or cross motion for 
summary decision by the administrative law judge shall not be subject to 
interlocutory appeal to the Secretary unless the administrative law 
judge certifies in writing:
    (i) That the ruling involves an important question of law or policy 
as to which there is substantial ground for difference of opinion; and
    (ii) That an immediate appeal from the ruling may materially advance 
the ultimate termination of the proceeding.
    (2) The allowance of such an interlocutory appeal shall not stay the 
proceeding before the administrative law judge unless the Secretary so 
orders.



Sec. 1955.22  Summary decision.

    (a)(1) Where no genuine issue of material fact is found to have been 
raised, the administrative law judge shall issue an initial decision to 
become

[[Page 142]]

final 30 days after service thereof upon each party unless, within those 
30 days, any party has filed written exceptions to the decision with the 
Secretary. Requests for extension of time to file exceptions may be 
granted if the requests are received by the Secretary no later than 25 
days after service of the decision.
    (2) If any timely exceptions are filed, the Secretary may set a time 
for filing any response to the exceptions with supporting reasons. All 
exceptions and responses thereto shall be served on all the parties.
    (b)(1) The Secretary, after consideration of the decision, the 
exceptions, and any supporting briefs filed therewith and any responses 
to the exceptions with supporting reasons, shall issue a final decision.
    (2) An initial decision and a final decision under this section 
shall include a statement of:
    (i) Findings of fact and conclusions of law and the reasons and 
bases therefor on all issues presented;
    (ii) Reference to any material fact based on official notice; and
    (iii) The terms and conditions of the rule or order made.

The final decision shall be published in the Federal Register and served 
on all the parties.
    (c) Where a genuine material question of fact is raised, the 
administrative law judge shall, and in any other case may, set the case 
for an evidentiary hearing. A notice of such hearing shall be published 
in the Federal Register at least 30 days prior to the hearing date.



             Subpart D--Preliminary Conference and Discovery



Sec. 1955.30  Submission of documentary evidence.

    (a) Where there has been no consent finding or summary decision 
under subpart C of this part and a formal hearing is necessary, the 
administrative law judge shall set a date by which all documentary 
evidence, which is to be offered during the hearing, shall be submitted 
to the administrative law judge and served on the other parties. Such 
submission date shall be sufficiently in advance of the hearing as to 
permit study and preparation for cross-examination and rebuttal 
evidence. Documentary evidence not submitted in advance may be received 
into evidence upon a clear showing that the offering party had good 
cause for failure to produce the evidence sooner.
    (b) The authenticity of all documents submitted in advance shall be 
deemed admitted unless written objections are filed prior to the 
hearing, except that a party will be permitted to challenge such 
authenticity at a later date upon clear showing of good cause for 
failure to have filed such written objections.



Sec. 1955.31  Preliminary conference.

    (a) Upon his own motion, or the motion of a party, the 
administrative law judge may direct the parties to meet with him for a 
conference or conferences to consider:
    (1) Simplification of the issues;
    (2) The necessity or desirability of amendments to documents for 
purposes of clarification, simplification, or limitation;
    (3) Stipulations of fact, and of the authenticity, of the contents 
of documents;
    (4) Limitations on the number of parties and of witnesses;
    (5) Scope of participation of petitioners under Sec. 1955.17 of this 
part;
    (6) Establishment of dates for discovery; and
    (7) Such other matters as may tend to expedite the disposition of 
the proceedings, and to assure a just conclusion thereof.
    (b) The administrative law judge shall enter an order which recites 
the action taken at the conference, the amendments allowed to any 
documents which have been filed, and the agreements made between the 
parties as to any of the matters considered. Such order shall limit the 
issues for hearing to those not disposed of by admissions or agreements, 
and control the subsequent course of the hearing, unless modified at the 
hearing to prevent manifest injustice.



Sec. 1955.32  Discovery.

    (a)(1) At any time after the commencement of a proceeding under this 
part, but generally before the preliminary conference, if any, a party 
may

[[Page 143]]

request of any other party admissions that relate to statements or 
opinions of fact, or of the application of law to fact, including the 
genuineness of any document described in the request. Copies of 
documents shall be served with the request unless they have been or are 
otherwise furnished or made available for inspection or copying. The 
matter shall be deemed admitted unless within 30 days after service of 
the request, or within such shorter or longer time as the administrative 
law judge may prescribe, the party to whom the request is directed 
serves upon the party requesting the admission a specific written 
response.
    (2) If objection is made, the reasons therefor shall be stated. The 
answer shall specifically deny the matter or set forth in detail the 
reasons why the answering party cannot truthfully admit or deny the 
matter. A denial shall fairly meet the substance of the requested 
admission and when good faith requires that a party qualify his answer 
or deny only a part of the matter on which an admission is requested, he 
shall specify so much of it as is true and qualify or deny the 
remainder. An answering party may not give lack of information or 
knowledge as the reason for failure to admit or deny unless he states 
that he has made reasonable inquiry and that the information known or 
readily obtainable by him is insufficient to enable him to admit or 
deny.
    (3) The party who has requested the admission may move to determine 
the sufficiency of the answers or objections. Unless the administrative 
law judge determines that an objection is justified, he may order either 
that the matter is admitted or that an amended answer be served. The 
administrative law judge may, in lieu of these orders, determine that 
final disposition of the requests be made at a preliminary conference, 
or at a designated time prior to the hearing. Any matter admitted under 
this section is conclusively established unless the administrative law 
judge on motion permits withdrawal or amendment of the admission. Copies 
of all requests and responses shall be served on all parties and filed 
with the administrative law judge.
    (b)(1) The testimony of any witness may be taken by deposition. 
Depositions may be taken orally or upon written interrogatories before 
any person designated by the administrative law judge or having power to 
administer oaths.
    (2) Any party desiring to take the deposition of a witness may make 
application in writing to the administrative law judge setting forth:
    (i) The time when, the place where, and the name and post office 
address of the person before whom the deposition is to be taken;
    (ii) The name and address of each witness; and
    (iii) The subject matter concerning which each witness is expected 
to testify.
    (3) Such notice as the administrative law judge may order shall be 
given by the party taking the deposition to every other party.
    (c)(1) Each witness testifying upon deposition shall be sworn, and 
the parties not calling him shall have the right to cross-examine him. 
The questions propounded and the answers thereto, together with all 
objections made, shall be reduced to writing and shall be read to or by 
the witness unless such examination and reading are waived by the 
witness and the parties. Any changes in form or substance which the 
witness desires to make shall be entered upon the deposition by the 
officer with a statement of the reasons given by the witness for making 
them. The deposition shall then be signed by the witness and certified 
by the officer before whom the deposition was taken. Thereafter, the 
officer shall seal the deposition, with copies thereof, in an envelope 
and mail the same by registered or certified mail to the administrative 
law judge.
    (2) Subject to such objections to the questions and answers as were 
noted at the time of taking the deposition, and to the provisions in 
Sec. 1955.40(b)(1), any part or all of a deposition may be offered into 
evidence by the party taking it as against any party who was present, 
represented at the taking of the deposition, or who had due notice 
thereof.

[[Page 144]]

    (d) Whenever appropriate to a just disposition of any issue in the 
proceeding the administrative law judge may allow discovery by any other 
appropriate procedure, such as by interrogatories upon a party or 
request for production of documents by a party.
    (e) Upon motion by a party or by the person from whom discovery is 
sought, and for good cause shown, the administrative law judge may make 
any order which justice requires to limit or condition discovery in 
order to protect a party or person from annoyance, embarrassment, 
oppression, or undue burden or expense.



Sec. 1955.33  Sanctions for failure to comply with orders.

    (a) If a party or an official or agent of a party fails, without 
good cause, to comply with an order including, but not limited to, an 
order for the taking of a deposition, written interrogatories, the 
production of documents, or an order to comply with a subpoena, the 
administrative law judge or the Secretary or both, for the purpose of 
permitting resolution of relevant issues and disposition of the 
proceeding without unnecessary delay despite such failure, may take such 
action as is just, including but not limited to the following:
    (1) Infer that the admission, testimony, documents, or other 
evidence would have been adverse to the party;
    (2) Rule that for the purposes of the proceeding, the matter or 
matters concerning which the order or subpoena was issued be taken as 
established adversely to the party;
    (3) Rule that the party may not introduce into evidence or otherwise 
rely, in support of any claim or defense, upon testimony by such party, 
officer or agent, or the documents or other evidence;
    (4) Rule that the party may not be heard to object to introduction 
and use of secondary evidence to show what the withheld admission, 
testimony, documents, or other evidence would have shown;
    (5) Rule that a pleading, or part of a pleading, on a motion or 
other submission by the party, concerning which the order or subpoena 
was issued, be stricken or that decision on the pleading be rendered 
against the party, or both.
    (b) Any such action may be taken by written or oral order issued in 
the course of the proceeding or by inclusion in the initial decision of 
the administrative law judge or an order or opinion of the Secretary. 
The parties may seek, and the administrative law judge may grant, such 
of the foregoing means of relief or other appropriate relief as may be 
sufficient to compensate for the lack of withheld testimony, documents, 
or other evidence.



Sec. 1955.34  Fees of witnesses.

    Witnesses, including witnesses for depositions, shall be paid the 
same fees and mileage that are paid witnesses in the courts of the 
United States. Fees shall be paid by the party at whose instance the 
witness appears, and the person taking a deposition shall be paid by the 
party at whose instance the deposition is taken.



                     Subpart E--Hearing and Decision



Sec. 1955.40  Hearings.

    (a)(1) Except as may be ordered otherwise by the administrative law 
judge, the Department of Labor shall proceed first at the hearing.
    (2) The Department of Labor shall have the burden of proof to 
sustain the contentions alleged in the notice of proposed withdrawal, 
published under Sec. 1955.10(b)(1) but the proponent of any factual 
proposition shall be required to sustain the burden of proof with 
respect thereto.
    (b)(1) A party shall be entitled to present his case or defense by 
oral or documentary evidence, to submit rebuttal evidence, and to 
conduct such cross-examination as may be required for a full and true 
disclosure of the facts. Any oral or documentary evidence may be 
received, but the administrative law judge shall exclude evidence which 
is irrelevant, immaterial, or unduly repetitious.
    (2) The testimony of a witness shall be upon oath or affirmation 
administered by the administrative law judge.
    (3) If a party objects to the admission or rejection of any 
evidence, or to the limitation of the scope of any examination or cross-
examination, or to the

[[Page 145]]

failure to limit such scope, he shall state briefly the grounds for such 
objection. Rulings on all objections shall appear in the record. Only 
objections made before the administrative law judge may be relied upon 
subsequently in the proceeding.
    (4) Formal exception to an adverse ruling is not required.
    (c) Official notice may be taken of any material fact not appearing 
in evidence in the record, which is among the traditional matters of 
judicial notice, or concerning which the Department of Labor by reason 
of its functions is presumed to be expert: Provided, that the parties 
shall be given adequate notice, at the hearing or by reference in the 
administrative law judge's and the Secretary's decision of the matters 
so noticed and shall be given adequate opportunity to show the contrary.
    (d) When an objection to a question propounded to a witness is 
sustained, the examining party may make a specific offer of proof of 
what the party expects to prove by the answer of the witness orally or 
in writing. Written offers of proof, adequately marked for 
identification, shall be retained in the record so as to be available 
for consideration by any reviewing authority.
    (e) Hearings shall be stenographically reported. Copies of the 
transcript may be obtained by the parties and the public upon payment of 
the actual cost of duplication to the Department of Labor in accordance 
with 29 CFR 70.62(c).
    (f) Corrections of the official transcript may be made only when 
they involve errors affecting substance and then only in the manner 
herein provided. Corrections may be ordered by the administrative law 
judge or agreed to in a written stipulation by all parties or their 
representatives. Where the parties are in disagreement, the 
administrative law judge shall determine the corrections to be made and 
so order. Corrections may be interlineated in the official transcript so 
as not to obliterate the original text.



Sec. 1955.41  Decision of the administrative law judge.

    (a) Within 30 days after receipt of notice that the transcript of 
the testimony has been filed with the administrative law judge, or such 
additional time as the administrative law judge may allow, each party 
may file with the administrative law judge proposed findings of fact, 
conclusions of law, and rules or orders, together with a supporting 
brief expressing the reasons for such proposals. Such proposals and 
brief shall be served on all other parties and shall refer to all 
portions of the record and to all authorities relied upon in support of 
each proposal.
    (b)(1) Within a reasonable time after the time allowed for the 
filing of proposed findings of fact, conclusions of law, and rules or 
orders, the administrative law judge shall make and serve upon each 
party his initial decision which shall become final upon the 30th day 
after service thereof unless exceptions are filed thereto.
    (2) The decision of the administrative law judge shall be based 
solely upon substantial evidence on the record as a whole and shall 
state all facts officially noticed and relied upon. The decision of the 
administrative law judge shall include:
    (i) A statement of the findings of fact and conclusions of law, with 
reasons and bases therefor upon each material issue of fact, law, or 
discretion presented on the record;
    (ii) Reference to any material fact based on official notice; and
    (iii) The appropriate rule, order, relief, or denial thereof.



Sec. 1955.42  Exceptions.

    (a) Within 30 days after service of the decision of the 
administrative law judge, any party may file with the Secretary written 
exceptions thereto with supporting reasons. Such exceptions shall refer 
to the specific findings of fact, conclusions of law, or terms of the 
rule or order excepted to; and shall suggest corrected findings of fact, 
conclusions of law, or terms of the rule or order referencing the 
specific pages of the transcript relevant to the suggestions. Requests 
for extension of time to file exceptions may be granted if the requests 
are received by the Secretary no later than 25 days after service of the 
decision.
    (b) If any timely exceptions are filed, the Secretary may set a time 
for filing

[[Page 146]]

any response to the exceptions with supporting reasons. All exceptions 
and responses thereto shall be served on all the parties.



Sec. 1955.43  Transmission of the record.

    If exceptions are filed, the Secretary shall request the 
administrative law judge to transmit the record of the proceeding to the 
Secretary for review. The record shall include the State plan; a copy of 
the Assistant Secretary's notice of proposed withdrawal; the State's 
statement of items in contention; the notice of the hearing if any; any 
motions and requests filed in written form and rulings thereon; the 
transcript of the testimony taken at the hearing, together with any 
documents or papers filed in connection with the preliminary conference 
and the hearing itself; such proposed findings of fact, conclusions of 
law, rules or orders, and supporting reasons as may have been filed; the 
administrative law judge's decision; and such exceptions, responses, and 
briefs in support thereof as may have been filed in the proceedings.



Sec. 1955.44  Final decision.

    (a) After review of any exceptions, together with the record 
references and authorities cited in support thereof, the Secretary shall 
issue a final decision ruling upon each exception and objection filed. 
The final decision may affirm, modify, or set aside in whole or in part 
the findings, conclusions, and the rule or order contained in the 
decision of the administrative law judge. The final decision shall also 
include reference to any material fact based on official notice.
    (b) The Secretary's final decision shall be served upon all the 
parties and shall become final upon the 30th day after service thereof 
unless the Secretary grants a stay pending judicial review.



Sec. 1955.45  Effect of appeal of administrative law judge's decision.

    An administrative law judge's decision shall be stayed pending a 
decision on appeal to the Secretary. If there are no exceptions filed to 
the decisions of the administrative law judge, the administrative law 
judge's decision shall be published in the Federal Register as a final 
decision and served upon the parties.



Sec. 1955.46  Finality for purposes of judicial review.

    Only a final decision by the Secretary under Sec. 1955.44 shall be 
deemed final agency action for purposes of judicial review. A decision 
of an administrative law judge which becomes final for lack of appeal is 
not deemed final agency action for purposes of 5 U.S.C. 704.



Sec. 1955.47  Judicial review.

    The State may obtain judicial review of a decision by the Secretary 
in accordance with section 18(g) of the Act.



  PART 1956--STATE PLANS FOR THE DEVELOPMENT AND ENFORCEMENT OF STATE STANDARDS APPLICABLE TO STATE AND LOCAL GOVERNMENT EMPLOYEES IN STATES WITHOUT APPROVED 
PRIVATE EMPLOYEE PLANS--Table of Contents




                           Subpart A--General

Sec.
1956.1  Purpose and scope.
1956.2  General policies.

                           Subpart B--Criteria

1956.10  Specific criteria.
1956.11  Indices of effectiveness.

   Subpart C--Approval, Change, Evaluation and Withdrawal of Approval 
                               Procedures

1956.20  Procedures for submission, approval and rejection.
1956.21  Procedures for submitting changes.
1956.22  Procedures for evaluation and monitoring.
1956.23  Procedures for certification of completion of development and 
          determination on application of criteria.
1956.24  Procedures for withdrawal of approval.

Subpart D--General Provisions and Conditions [Reserved]

                         Subpart E--Connecticut

1956.40  Description of the plan.
1956.41  Where the plan may be inspected.
1956.43  Developmental schedule.
1956.44  Completion of developmental steps and certification.

[[Page 147]]

                           Subpart F--New York

1956.50  Description of the plan as initially approved.
1956.51  Developmental schedule.
1956.52  Completed developmental steps.
1956.53  Determination of operational effectiveness. [Reserved]
1956.54  Location of plan for inspection and copying.
1956.55  Changes to approved plans.

                          Subpart G--New Jersey

1956.60  Description of the plan as initially approved.
1956.61  Developmental schedule.
1956.62  Completion of developmental steps and certification. [Reserved]
1956.63  Determination of operational effectiveness. [Reserved]
1956.64  Location of plan for inspection and copying.

    Authority: Secs. 8, 18, Occupational Safety and Health Act of 1970 
(29 U.S.C. 657, 667); Secretary of Labor's Order No. 12-71 (36 FR 8754), 
8-76 (41 FR 25059), or 9-83 (48 FR 35736), as applicable, unless 
otherwise noted.

    Source: 41 FR 12429, Mar. 4, 1977, unless otherwise noted.



                           Subpart A--General



Sec. 1956.1  Purpose and scope.

    (a) This part sets forth procedures and requirements for approval, 
continued evaluation, and operation of State plans submitted under 
section 18 of the Occupational Safety and Health Act of 1970 (29 U.S.C. 
667) (hereinafter called the Act) for the development and enforcement of 
State standards applicable to State and local government employees in 
States without approved private employee plans. Although section 2(b) of 
the Act sets forth the policy of assuring every working man and woman 
safe and healthful working conditions, State and local government 
agencies are excluded from the definition of ``employer'' in section 
3(5). Only under section 18 of the Act are such public employees ensured 
protection under the provisions of an approved State plan. Where no such 
plan is in effect with regard to private employees, State and local 
government employees have not heretofore been assured any protections 
under the Act. Section 18(b), however, permits States to submit plans 
with respect to any occupational safety and health issue with respect to 
which a Federal standard has been promulgated under section 6 of the 
Act. Under Sec. 1902.2(c) of this chapter, an issue is defined as ``any 
* * * industrial, occupational, or hazard grouping that is found to be 
administratively practicable and * * * not in conflict with the purposes 
of the Act.'' Since Federal standards are in effect with regard to 
hazards found in public employment, a State plan covering this 
occupational category meets the definition of section 18 and the 
regulations. It is the purpose of this part to assure the availability 
of the protections of the Act to public employees, where no State plan 
covering private employees is in effect, by adapting the requirements 
and procedures applicable to State plans covering private employees to 
the situation where State coverage under section 18(b) is proposed for 
public employees only.
    (b) In adopting these requirements and procedures, consideration 
should be given to differences between public and private employment. 
For instance, a system of monetary penalties applicable to violations of 
public employers may not in all cases be necessarily the most 
appropriate method of achieving compliance. Further, the impact of the 
lack of Federal enforcement authority application to public employers 
requires certain adjustments of private employer plan procedures in 
adapting them to plans covering only public employees in a State.



Sec. 1956.2  General policies.

    (a) Policy. The Assistant Secretary of Labor for Occupational Safety 
and Health (hereinafter referred to as the Assistant Secretary) will 
approve a State plan which provides an occupational safety and health 
program for the protection of State and local government employees 
(hereinafter State and local government employees are referred to as 
public employees) that in his judgment meets or will meet the criteria 
set forth in Sec. 1956.10. Included among these criteria is the 
requirement that the State plan for public employees (hereinafter such a 
plan will be referred to as the plan) provides for the development and 
enforcement of standards relating to hazards in employment covered by 
the plan which are or will

[[Page 148]]

be at least as effective in providing safe and healthful employment and 
places of employment for public employees as standards promulgated and 
enforced under section 6 of the Act. In determining whether a plan 
satisfies the requirement of effectiveness, the Assistant Secretary will 
measure the plan against the indices of effectiveness, set forth in 
Sec. 1956.11.
    (b) Developmental plan. (1) A State plan for an occupational safety 
and health program for public employees may be approved although, upon 
submission, it does ot fully meet the criteria set forth in 
Sec. 1956.10, if it includes satisfactory assurances by the State that 
it will take the necessary steps to bring the program into conformity 
with these criteria within the 3-year period immediately following the 
commencement of the plan's operation. In such a case, the plan shall 
include the specific actions the State proposes to take, and a time 
schedule for their accomplishment which is not to exceed 3 years, at the 
end of which the plan will meet the criteria in Sec. 1956.10. A 
developmental plan shall include the dates within which intermediate and 
final action will be accomplished. Although administrative actions, such 
as stages for application of standards and enforcement, related 
staffing, development of regulations may be developmental, to be 
considered for approval, a State plan for public employees must contain 
at time of plan approval basic State legislative and/or executive 
authority under which these actions will be taken. If necessary program 
changes require further implementing executive action by the Governor or 
supplementary legislative action by the State, a copy of the appropriate 
order, or the bill or a draft of legislation that will be or has been 
proposed for enactment shall be submitted, accompanied by:
    (i) A statement of the Governor's support of the legislation or 
order and
    (ii) A statement of legal opinion that the proposed legislation or 
executive action will meet the requirements of the Act and this part in 
a manner consistent with the State's constitution and laws.
    (2) On the basis of the State's submission, the Assistant Secretary 
will approve the plan if he finds that there is a reasonable expectation 
that the plan for public employees will meet the criteria in 
Sec. 1956.10 within the indicated 3 year period. In such a case, the 
Assistant Secretary shall not make a determination that a State is fully 
applying the criteria in Sec. 1956.10 until the State has completed all 
the developmental steps specified in the plan which are designed to make 
it at least as effective as the Federal program for the private sector, 
and the Assistant Secretary has had at least 1 year to evaluate the plan 
on the basis of actual operations following the completion of all 
developmental steps. If at the end of 3 years from the date of 
commencement of the plan's operation, the State is found by the 
Assistant Secretary, after affording the State notice and an opportunity 
for a hearing, not to have substantially completed the developmental 
steps of the plan, he shall withdraw the approval of the plan.
    (3) Where a State plan approved under part 1902 of this chapter is 
discontinued, except for its public employee component, or becomes 
approved after approval of a plan under this part, the developmental 
period applicable to the public employee component of the earlier plan 
will be controlling with regard to any such public employee coverage. 
For good cause, a State may demonstrate that an additional period of 
time is required to make adjustments on account of the transfer from one 
type of plan to another.
    (c) Scope of a State plan for public employees. (1) A State plan for 
public employees must provide for the coverage of both State and local 
government employees to the full extent permitted by the State laws and 
constitution. The qualification ``to the extent permitted by its law'' 
means only that where a State may not constitutionally regulate 
occupational safety and health conditions in certain political 
subdivisions, the plan may exclude such political subdivision employees 
from coverage.
    (2) The State shall not exclude any occupational, industrial, or 
hazard grouping from coverage under its plan unless the Assistant 
Secretary finds

[[Page 149]]

that the State has shown there is no necessity for such coverage.



                           Subpart B--Criteria



Sec. 1956.10  Specific criteria.

    (a) General. A State plan for public employees must meet the 
specific criteria set forth in this section.
    (b) Designation of State agency. (1) The plan shall designate a 
State agency or agencies which will be responsible for administering the 
plan throughout the State.
    (2) The plan shall also describe the authority and responsibilities 
vested in such agency or agencies. The plan shall contain assurances 
that any other responsibilities of the designated agency shall not 
detract significantly from the resources and priorities assigned to the 
administration of the plan.
    (3) A State agency or agencies must be designated with overall 
responsibility for administering the plan throughout the State. Subject 
to this overall responsibility, enforcement of standards may be 
delegated to an appropriate agency having occupational safety and health 
responsibilities or expertise throughout the State. Included in this 
overall responsibility are the requirements that the designated agency 
have, or assure the provision of necessary qualified personnel, legal 
authority necessary for the enforcement of the standards and make 
reports as required by the Assistant Secretary.
    (c) Standards. The State plan for public employees shall include, or 
provide for the development or adoption of, standards which are or will 
be at least as effective as those promulgated under section 6 of the 
Act. The plan shall also contain assurances that the State will continue 
to develop or adopt such standards. Indices of the effectiveness of 
standards and procedures for the development or adoption of standards 
against which the Assistant Secretary will measure the plan in 
determining whether it is approvable are set forth in Sec. 1956.11(b).
    (d) Enforcement. (1) The State plan for public employees shall 
provide a program for the enforcement of the State standards which is, 
or will be, at least as effective in assuring safe and healthful 
employment and places of employment as the standards promulgated by 
section 6 of the Act; and provide assurances that the State's 
enforcement program for public employees will continue to be at least as 
effective in this regard as the Federal program in the private sector. 
Indices of the effectiveness of a State's enforcement plan against which 
the Assistant Secretary will measure the plan in determining whether it 
is approvable are set forth in Sec. 1956.11(c).
    (2) The plan shall require State and local government agencies to 
comply with all applicable State occupational safety and health 
standards included in the plan and all applicable rules issued 
thereunder, and employees to comply with all standards, rules, and 
orders applicable to their conduct.
    (e) Right of entry and inspection. The plan shall contain adequate 
assurances that inspectors will have a right to enter covered workplaces 
which is at least as effective as that provided in section 8 of the Act 
for the purpose of inspection or monitoring. Where such entry is 
refused, the State agency or agencies shall have the authority through 
appropriate legal process to compel such entry.
    (f) Prohibition against advance notice. The State plan shall contain 
a prohibition against advance notice of inspections. Any exceptions must 
be expressly authorized by the head of the designated agency or agencies 
or his representative and such exceptions may be no broader than those 
authorized under the Act and the rules published in part 1903 of this 
chapter relating to advance notice.
    (g) Personnel. The plan shall provide assurances that the designated 
agency or agencies and all government agencies to which authority has 
been delegated, have, or will have, a sufficient number of adequately 
trained and qualified personnel necessary for the enforcement of 
standards. For this purpose, qualified personnel means persons employed 
on a merit basis, including all persons engaged in the development of 
standards and the administration of the plan. Subject to the results of 
evaluations, conformity with the Standards for a Merit System of 
Personnel Administration, 45 CFR part 70,

[[Page 150]]

issued by the Secretary of Labor, including any amendments thereto, and 
any standards prescribed by the U.S. Civil Service Commission, pursuant 
to section 208 of the Intergovernmental Personnel Act of 1970, modifying 
or superseding such standards, and guidelines on ``at least as effective 
as'' staffing derived from the Federal private employee program will be 
deemed to meet this requirement.
    (h) Resources. The plan shall contain satisfactory assurances 
through the use of budget, organizational description, and any other 
appropriate means, that the State will devote adequate funds to the 
administration and enforcement of the public employee program. The 
Assistant Secretary will make the periodic evaluations of the adequacy 
of the resources the State has devoted to the plan.
    (i) Employer records and reports. The plan shall provide assurances 
that public employers covered by the plan will maintain records and make 
reports on occupational injuries and illnesses in a manner similar to 
that required of private employers under the Act.
    (j) State agency reports to the Assistant Secretary. The plan shall 
provide assurances that the designated agency or agencies shall make 
such reasonable reports to the Assistant Secretary in such form and 
containing such information as he may from time to time require. The 
agency or agencies shall establish specific goals consistent with the 
goals of the Act, including measures of performance, output, and results 
which will determine the efficiency and effectiveness of the State 
program for public employees, and shall make periodic reports to the 
Assistant Secretary on the extent to which the State, in implementation 
of its plan, has attained these goals. Reports will also include data 
and information on the implementation of the specific inspection and 
voluntary compliance activities included within the plan. Further, these 
reports shall contain such statistical information pertaining to work-
related deaths, injuries and illnesses in employments and places of 
employment covered by the plan as the Assistant Secretary may from time 
to time require.



Sec. 1956.11  Indices of effectiveness.

    (a) General. In order to satisfy the requirements of effectiveness 
under Sec. 1956.10 (c)(1) and (d)(1), the State plan for public 
employees shall:
    (1) Establish the same standards, procedures, criteria, and rules as 
have been established by the Assistant Secretary under the act; or
    (2) Establish alternative standards, procedures, criteria, and rules 
which will be measured against each of the indices of effectiveness in 
paragraphs (b) and (c) of this section to determine whether the 
alternatives are at least as effective as the Federal program for 
private employees, where applicable, with respect to the subject of each 
index. For each index the State must demonstrate by the presentation of 
factual or other appropriate information that its plan for public 
employees will, to the extent practicable, be at least as effective as 
the Federal program for private employees.
    (b) Standards. (1) The indices for measurement of a State plan for 
public employees with regard to standards follow in paragraph (b)(2) of 
this section. The Assistant Secretary will determine whether the State 
plan for public employees satisfies the requirements of effectiveness 
with regard to each index as provided in paragraph (a) of this section.
    (2) The Assistant Secretary will determine whether the State plan 
for public employees:
    (i) Provides for State standards which are or will be at least as 
effective as the standards promulgated under section 6 of the Act. In 
the case of any State standards dealing with toxic materials or harmful 
physical agents, they should adequately assure, to the extent feasible, 
that no employee will suffer material impairment of health or functional 
capacity, even if such employee has regular exposure to the hazard dealt 
with by such standard for the period of his working life, by such means 
as, in the development and promulgation of standards, obtaining the best 
available evidence through research, demonstration, experiments, and 
experience under this and any other safety and health laws.
    (ii) Provides an adequate method to assure that its standards will 
continue

[[Page 151]]

to be at least as effective as Federal standards, including Federal 
standards which become effective subsequent to any approval of the plan.
    (iii) Provides a procedure for the development and promulgation of 
standards which allows for the consideration of pertinent factual 
information and affords interested persons, including employees, 
employers and the public, an opportunity to participate in such 
processes, by such means as establishing procedures for consideration of 
expert technical knowledge, and providing interested persons, including 
employers, employees, recognized standards-producing organizations, and 
the public, an opportunity to submit information requesting the 
development or promulgation of new standards or the modification or 
revocation of existing standards and to participate in any hearings. 
This index may also be satisfied by such means as the adoption of 
Federal standards, in which case the procedures at the Federal level 
before adoption of a standard under section 6 may be considered to meet 
the conditions of this index.
    (iv) Provides authority for the granting of variances from State 
standards upon application of a public employer or employers which 
correspond to variances authorized under the Act, and for consideration 
of the views of interested parties, by such means as giving affected 
employees notice of each application and an opportunity to request and 
participate in hearings or other appropriate proceedings relating to 
applications for variances.
    (v) Provides for prompt and effective standards setting actions for 
the protection of employees against new and unforeseen hazards, by such 
means as the authority to promulgate emergency temporary standards. Such 
authority is particularly appropriate for those situations where public 
employees are exposed to unique hazards for which existing standards do 
not provide adequate protection.
    (vi) Provides that State standards contain appropriate provision for 
the furnishing to employees of information regarding hazards in the 
workplace, including information about suitable precautions, relevant 
symptoms, and emergency treatment in case of exposure; by such means as 
labelling, posting, and, where appropriate, results of medical 
examinations, being furnished only to appropriate State officials and, 
if the employee so requests, to his physician.
    (vii) Provides that State standards where appropriate, contain 
specific provision for the protection of employees from exposure to 
hazards, by such means as containing appropriate provision for the use 
of suitable protective equipment and for control or technological 
procedures with respect to such hazards, including monitoring or 
measuring such exposure.
    (c) Enforcement. (1) The indices for measurement of a State plan for 
public employees with regard to enforcement follow in paragraph (c)(2) 
of this section. The Assistant Secretary will determine whether the plan 
satisfies the requirements of effectiveness with regard to each index as 
provided in paragraph (a) of this section.
    (2) The Assistant Secretary will determine whether the State plan 
for public employees:
    (i) Provides for inspection of covered workplaces in the State by 
the designated agency or agencies or any other agency which is duly 
delegated authority, including inspections in response to complaints 
where there are reasonable grounds to believe a hazard exists, in order 
to assure, so far as possible, safe and healthful working conditions for 
covered employees by such means as providing for inspections under 
conditions such as those provided in section 8 of the Act.
    (ii) Provides an opportunity for employees and their representative, 
before, during, and after inspections, to bring possible violations to 
the attention of the State or local agency with enforcement 
responsibility in order to aid inspections, by such means as affording a 
representative of the employer, and a representative authorized by 
employees, an opportunity to accompany the inspector during the physical 
inspection of the workplace, or where there is no authorized 
representative, provide for consultation by the inspector with a 
reasonable number of employees.
    (iii) Provides for notification of employees, or their 
representatives, when

[[Page 152]]

the State decides not to take compliance action as a result of 
violations alleged by such employees or their representative, and 
further provides for informal review of such decisions, by such means as 
written notification of decisions not to take compliance action and the 
reasons therefor, and procedures for informal review of such decisions 
and written statements of the disposition of such review.
    (iv) Provides that public employees be informed of their protections 
and obligations under the Act, including the provisions of applicable 
standards, by such means as the posting of notices or other appropriate 
sources of information.
    (v) Provides necessary and appropriate protection to an employee 
against discharge or discrimination in terms and conditions of 
employment because he has filed a complaint, testified, or otherwise 
acted to exercise rights under the State program for public employees 
for himself or others, by such means as providing for appropriate 
sanctions against the State or local agency for such actions, and by 
providing for the withholding, upon request, of the names of 
complainants from the employer.
    (vi) Provides that public employees have access to information on 
their exposure to toxic materials or harmful physical agents and receive 
prompt information when they have been or are being exposed to such 
materials or agents in concentrations or at levels in excess of those 
prescribed by the applicable safety and health standards, by such means 
as the observation by employees of the monitoring or measuring of such 
materials or agents, employee access to the records of such monitoring 
or measuring, prompt notification by a public employer to any employee 
who has been or is being exposed to such agents or materials in excess 
of the applicable standards, and information to such employee of 
corrective action being taken.
    (vii) Provides procedures for the prompt restraint or elimination of 
any conditions or practices in covered places of employment which could 
reasonably be expected to cause death or serious physical harm 
immediately or before the imminence of such danger can be eliminated 
through the enforcement procedures otherwise provided for in the plan, 
by such means as immediately informing employees and employers of such 
hazards, taking steps to obtain immediate abatement of the hazard by the 
employer, and, where appropriate, authority to initiate necessary legal 
proceedings to require such abatement.
    (viii) Provides that the designated agency (or agencies) and any 
agency to which it has duly delegated authority, will have the necessary 
legal authority for the enforcement of standards by such means as 
provisions for appropriate compulsory process to obtain necessary 
evidence or testimony in connection with inspection and enforcement 
proceedings.
    (ix) Provides for prompt notice to public employers and employees 
when an alleged violation of standards has occurred, including the 
proposed abatement requirements, by such means as the issuance of a 
written citation to the public employer and posting of the citation at 
or near the site of the violation; further provides for advising the 
public employer of any proposed sanctions, wherever appropriate, by such 
means as a notice to the employer by certified mail within a reasonable 
time of any proposed sanctions.
    (x) Provides effective sanctions against public employers who 
violate State standards and orders, or applicable public agency 
standards, such as those prescribed in the Act. In lieu of monetary 
penalties a complex of enforcement tools and rights, such as various 
forms of equitable remedies available to the designee including 
administrative orders; availability of employee rights such as right to 
contest citations, and provisions for strengthened employee 
participation in enforcement may be demonstrated to be as effective as 
monetary penalties in achieving complianace in public employment. In 
evaluating the effectiveness of an alternate system for compelling 
compliance, elements of the enforcement educational program such as a 
system of agency self inspection procedures, and in-house training 
programs, and employee complaint procedures may be taken into 
consideration.

[[Page 153]]

    (xi) Provides for an employer to have the right of review of 
violations alleged by the State or any agency to which it has duly 
delegated authority, abatement periods and proposed penalties, where 
appropriate, for employees or their representatives to challenge the 
reasonableness of the period of time fixed in the citation for the 
abatement of the hazard, and for employees or their representatives to 
have an opportunity to participate in review, proceedings, by such means 
as providing for admininistrative review, with an opportunity for a full 
hearing on the issues.
    (xii) Provides that the State will undertake programs to encourage 
voluntary compliance by public employers and employees by such means as 
conducting training and consultation with such employers and employees, 
and encouraging agency self-inspection programs.
    (d) Additional indices. Upon his own motion, or after consideration 
of data, views, and arguments received in any proceedings held under 
subpart C of this part, the Assistant Secretary may prescribe additional 
indices for any State plan for public employees which shall be in 
furtherance of the purpose of this section.



   Subpart C--Approval, Change, Evaluation and Withdrawal of Approval 
                               Procedures



Sec. 1956.20  Procedures for submission, approval and rejection.

    The procedures contained in subpart C of part 1902 of this chapter 
shall be applicable to submission, approval, and rejection of State 
plans submitted under this part, except that the information required in 
Sec. 1902.20(b)(1)(iii) would not be included in decisions of approval.



Sec. 1956.21  Procedures for submitting changes.

    The procedures contained in part 1953 of this chapter shall be 
applicable to submission and consideration of developmental, Federal 
program, evaluation, and State-initiated change supplements to plans 
approved under this part.



Sec. 1956.22  Procedures for evaluation and monitoring.

    The procedures contained in part 1954 of this chapter shall be 
applicable to evaluation and monitoring of State plans approved under 
this part, except that the decision to relinquish Federal enforcement 
authority under section 18(e) of the Act is not relevant to Phase II and 
III monitoring under Sec. 1954.2 and the guidelines of exercise of 
Federal discretionary enforcement authority provided in Sec. 1954.3 are 
not applicable to plans approved under this part. The factors listed in 
Sec. 1902.37(b) of this chapter, except those specified in 
Sec. 1902.37(b)(11) and (12), which would be adapted to the State 
compliance program, provide the basis for monitoring.



Sec. 1956.23  Procedures for certification of completion of development and determination on application of criteria.

    The procedures contained in Secs. 1902.33 and 1902.34 of this 
chapter shall be applicable to certification of completion of 
developmental steps under plans approved in accordance with this part. 
Such certification shall initiate intensive monitoring of actual 
operations of the developed plan, which shall continue for at least a 
year after certification, at which time a determination shall be made 
under the procedures and criteria of Secs. 1902.38, 1902.39, 1902.40 and 
1902.41, that on the basis of actual operations, the criteria set forth 
in Secs. 1956.10 and 1956.11 of this part are being applied under the 
plan. The factors listed in Sec. 1902.37(b) of this chapter, except 
those specified in Sec. 1902.37(b)(11) and (12) which would be adapted 
to the State's compliance program provide the basis for making the 
determination of operational effectiveness.



Sec. 1956.24  Procedures for withdrawal of approval.

    The procedures and standards contained in part 1955 of this chapter 
shall be applicable to the withdrawal of approval of plans approved 
under this part 1956, except that (because these plans, as do public 
employee programs aproved and financed in connection with a State plan 
covering private employees, must cover all employees of State and local 
agencies in a State

[[Page 154]]

whenever a State is constitutionally able to do so, at least 
developmentally), no industrial or occupational issues may be considered 
a separable portion of a plan under Sec. 1955.2(a)(10); and, as Federal 
standards and enforcement do not apply to State and local government 
employers, withdrawal of approval of a plan approved under this part 
1956 could not bring about application of the provisions of the Federal 
Act to such employers as set out in Sec. 1955.4 of this chapter.

Subpart D--General Provisions and Conditions [Reserved]



                         Subpart E--Connecticut

    Source: 43 FR 51390, Nov. 3, 1978, unless otherwise noted.



Sec. 1956.40  Description of the plan.

    (a) The plan designates the Connecticut Department of Labor as the 
State agency responsible for administering the plan throughout the 
State. The State has adopted all Federal standards promulgated as of 
September 1977 and has given assurances that it will continue to adopt 
all Federal standards, revisions, and amendments. The State further 
assured that in those situations where public employees are exposed to 
unique hazards for which existing standards do not provide adequate 
protection, effective State standards will be adopted. The plan includes 
legislation, Public Act 73-379, passed by the Connecticut Legislature in 
1973 and amended as follows: P.A. 74-176, P.A. 75-285, P.A. 77-107, and 
P.A. 77-610. Under the legislation the Connecticut Department of Labor, 
Occupational Safety and Health Division has full authority to enforce 
and administer all laws and rules protecting the safety and health of 
employees of the State and its political subdivisions. The plan is 
accompanied by a statement of the Governor's support and a legal opinion 
that the Connecticut legislation meets the requirements of the 
Occupational Safety and Health Act of 1970 and is in accord with the 
constitution of the State.
    (b) The plan establishes procedures for variances and the protection 
of employees from hazards under a variance; insures inspection in 
response to complaints; provides employer and employee representatives 
an opportunity to accompany inspectors and to call attention to possible 
violations before, during, and after inspections; notification to 
employees or their representatives when no compliance action is taken as 
a result of alleged violations, including informal review; notification 
of employees of their protection; protection of employees against 
discharge or discrimination in terms and conditions of employment; 
provision for prompt notices to employers and employees of violations of 
standards and abatement requirements; sanctions against employers for 
violation of standards and orders; employer's right to appeal citations 
for violations, abatement periods and proposed penalties; employee's 
right to appeal abatement periods; and employee participation in review 
proceedings. Also included are provisions for right of entry for 
inspection, ``prohibition'' of advance notice of inspection and the 
requirement for both employers and employees to comply with the 
applicable rules, standards, and orders, and employer obligations to 
maintain records and provide reports as required. Further, the plan 
provides assurances of a fully trained adequate staff and sufficient 
funding.
    (c) The plan includes the following documents as of the date of 
approval:
    (1) The plan document and appendixes submitted January 30, 1978;
    (2) Letter from the Commissioner, Connecticut Department of Labor, 
dated September 19, 1978, providing supplemental assurances.



Sec. 1956.41  Where the plan may be inspected.

    A copy of the plan may be inspected and copied during normal 
business hours at the following locations: Office of State programs, 
2100 M Street NW, Room 149, Washington, DC 20210; Office of the Regional 
Administrator, Occupational Safety and Health Administration, Room 1804, 
John F. Kennedy Federal Building, Boston, Mass. 02203; Connecticut 
Department of Labor, 200 Folly Brook Boulevard, Wethersfield, Conn. 
06109.

[[Page 155]]



Sec. 1956.43  Developmental schedule.

    The Connecticut plan is developmental. The following is a schedule 
of major developmental steps as provided by the plan:
    (a) A new State poster will be printed, by December 15, 1978, in 
order to reflect coverage of the public sector only.
    (b) Standards identical to or at least as effective as all existing 
Federal standards will be adopted by February 1, 1979.
    (c) Connecticut regulations equivalent to the following Federal 
provisions will be revised by April 1, 1979, to show coverage of the 
public sector only and to accurately reflect the current program: 29 CFR 
part 1903 (Inspections, Citations, and Proposed Penalties); 29 CFR part 
1904 (Recording and Reporting Occupational Injuries and Illnesses); 29 
CFR part 1905 (Variance Rules); 29 CFR part 2200 (Review Commission); 
and the Field Operations Manual.
    (d) The State will submit revised and updated provisions dealing 
with employee discrimination by May 1, 1979.
    (e) The State will prepare by June 1, 1979, a comprehensive list of 
government entities whose employees are covered by the plan, giving the 
number of employees for each entity, describing the work performed, and 
assigning for each entity a standard industrial classification (SIC) 
code.
    (f) The State will resubmit its plan in the required outline format 
by October 1, 1979.



Sec. 1956.44  Completion of developmental steps and certification.

    (a) In accordance with 29 CFR 1956.43(f), Connecticut's reformatted 
and revised public employee only plan and narrative description 
(including background information on program operations) were approved 
by the Assistant Secretary on August 3, 1983.
    (b) In accordance with 29 CFR 1956.43(a), Connecticut's safety and 
health poster for public employees only was approved by the Assistant 
Secretary on August 3, 1983.
    (c) In accordance with 29 CFR 1956.43(b), Connecticut has 
promulgated standards identical to all basic Federal standards in 29 CFR 
parts 1910, 1926, and 1928. The State has continued to adopt Federal 
standards, amendments and corrections as noted in separate standards 
approval notices.
    (d) In accordance with 29 CFR 1956.43(c), Connecticut promulgated 
rules for inspections, citations, and proposed penalties (Administrative 
Regulation Section 31-371-1 through 20) parallel to 29 CFR part 1903; 
recording and reporting occupational injuries and illness 
(Administrative Regulation Section 31-374-1 through 15 parallel to 29 
CFR part 1904; rules of practices for variances (Administrative 
Regulation Section 31-372-1 through 51) parallel to 29 CFR part 1905; 
and review commission procedures (Administrative Regulation Section 31-
376-1 through 61) parallel to 29 CFR part 2200. In addition, Connecticut 
adopted Field Operations and Industrial Hygiene Manuals identical to the 
Federal. These supplements were approved by the Assistant Secretary on 
August 3, 1983.
    (e) In accordance with 29 CFR 1956.43(d), Connecticut's employee 
discrimination provisions (Administrative Regulation Section 31-379-1 
through 22) were approved by the Assistant Secretary on August 3, 1983.
    (f) In accordance with 29 CFR 1956.43(e), Connecticut's 
comprehensive list classifying governmental entities covered by the plan 
was approved by the Assistant Secretary on August 3, 1983.
    (g) In accordance with 29 CFR 1956.10(g), a State is required to 
have a sufficient number of adequately trained and competent personnel 
to discharge its responsibilities under the plan. The Connecticut Public 
Employee Only State plan provides for three (3) safety compliance 
officers and one (1) health compliance officer as set forth in the 
Connecticut Fiscal Year 1986 grant. This staffing level meets the 
``fully effective'' benchmarks established for Connecticut for both 
safety and health.
    (h) In accordance with Sec. 1956.23 of this chapter, the Connecticut 
occupational safety and health public employee only plan was certified 
effective August 19, 1986 as having completed all developmental steps 
specified in the plan as approved October 2, 1978, on or before October 
2, 1979. This certification attests to the structured completeness of

[[Page 156]]

the plan, but does not render judgment on adequacy of performance.

[48 FR 37027, Aug. 16, 1983, as amended at 51 FR 32454, Sept. 12, 1986]



                           Subpart F--New York

    Authority: Secs. 8(g), 18, 84 Stat. 1600, 1608 (29 U.S.C. 657(g), 
667); 29 CFR part 1956, Secretary of Labor's Order 9-83 (48 FR 35736).

    Source: 49 FR 23000, June 1, 1984, unless otherwise noted.



Sec. 1956.50  Description of the plan as initially approved.

    (a) Authority and scope. The New York State Plan for Public Employee 
Occupational Safety and Health received initial OSHA approval on June 1, 
1984. The plan designates the New York Department of Labor as the State 
agency responsible for administering the plan throughout the State. The 
plan includes legislation, the New York Act (Public Employees Safety and 
Health Act, Chapter 729 of the Laws of 1980), enacted in 1980, and 
amended on April 30, 1984, to clarify the State's right of entry for 
inspection authority. Under this legislation, the Industrial 
Commissioner (now the Commissioner of Labor), has full authority to 
enforce and administer all laws and rules protecting the safety and 
health of all employees of the State and its political subdivisions. In 
response to OSHA concern that language in section 27-a(2) of the New 
York Act, regarding the Commissioner of Education's authority with 
respect to school buildings, raised questions about the coverage under 
the plan of public school employees, New York submitted amendments to 
its plan consisting of Counsel's opinion and assurance that public 
school employees are fully covered under the terms of the New York Act. 
In a March 4, 1984 letter from Lee O. Smith, Deputy Commissioner of 
Labor for Legal Affairs, New York indicated that the Commissioner of 
Education's authority applies only to ensuring the safety and health of 
pupils, and that the Commissioner of Labor has exclusive authority to 
enforce occupational safety and health standards covering public 
employees in school buildings. Furthermore, New York has provided 
assurance that should the Department of Labor's interpretation on 
coverage of public school employees be challenged successfully, 
appropriate legislative correction would be sought.
    (b) Standards. The New York plan provides for the adoption of all 
Federal OSHA standards promulgated as of July 31, 1983, and for the 
incorporation of any subsequent revisions or additions thereto in a 
timely manner, including in response to Federal OSHA emergency temporary 
standards. The procedure for adoption of Federal OSHA standards calls 
for publication of the Commissioner of Labor's intent to adopt a 
standard in the New York State Register 30 days prior to such adoption. 
Subsequent to adoption and upon filing of the standard with the 
Secretary of State, a notice of final action will be published as soon 
as is practicable in the State Register. The plan also provides for the 
adoption of alternative or different occupational safety and health 
standards if a determination is made by the State that an issue is not 
properly addressed by OSHA standards and is relevant to the safety and 
health of public employees. In such cases, the State shall propose 
legislation mandating the development of an alternative standard to 
protect the safety and health of public employees. The procedures for 
adoption of alternative standards will contain criteria for development 
and consideration of expert technical knowledge in the field to be 
addressed by the standard, and provisions allowing interested persons to 
submit information requesting development or promulgation of any 
standard and to participate in any hearing for the development, 
modification or establishment of standards.
    (c) Variances. The plan includes provisions for the granting of 
permanent and temporary variances from State standards in terms 
substantially similar to the variance provisions contained in the 
Federal Act. The State provisions require employee notification of 
variance applications as well as employee rights to participate in 
hearings held on variance applications. Variances may not be granted 
unless it is established that adequate protection is afforded employees 
under the terms of the variance.

[[Page 157]]

    (d) Employee notice and discrimination protection. The plan provides 
for notification to employees of their protections and obligations under 
the plan by such means as a State poster, and required posting of 
notices of violations. The plan also provides for protection of 
employees against discharge or discrimination resulting from exercise of 
their rights under the State's Act in terms essentially identical to 
section 11(c) of the Federal Act.
    (e) Inspections and enforcement. The plan provides for inspection of 
covered workplaces including inspections in response to employee 
complaints. If a determination is made that an employee complaint does 
not warrant an inspection, the complainant shall be notified, in 
writing, of such determination and afforded an opportunity to seek 
informal review of the determination. The plan also provides the 
opportunity for employer and employee representatives to accompany the 
inspector during an inspection for the purpose of aiding in the 
inspection. The plan also provides for right of entry for inspection and 
prohibition of advance notice of inspection. In lieu of monetary 
penalties for violations, the plan establishes a scheme of enforcement 
for compelling compliance under which public employers are issued 
notices of violation and orders to comply, for any violation of 
standards and orders. Such notices will fix a reasonable time for 
compliance. The Commissioner of Labor may seek judicial enforcement 
(mandamus actions) of orders to comply by commencing a proceeding 
pursuant to Article 78 of the New York Civil Practice Law and Rules 
against public employers who fail to abide by the requirements of the 
order.
    (f) Review procedures. Under the plan, employers, employees and 
other affected parties may seek informal review with the Department of 
Labor of a notice of violation, including the reasonableness of the 
abatement period, and/or may seek formal administrative review with the 
Industrial Board of Appeals, the independent State agency authorized by 
section 27-a(6)(c) of the New York Act to consider petitions from 
affected parties for review of the Commissioner of Labor's 
determinations pursuant to the New York Act. The ``Rules of Practice and 
Procedure'' of the Industrial Board of Appeals also permit public 
employees or their representatives to participate in the review process 
when a public employer contests a notice. Judicial review of the 
decision of the Industrial Board of Appeals may be sought pursuant to 
Article 78 of the New York Civil Practice Law and Rules. The period 
fixed in the plan for contesting notices of violation is 60 calendar 
days, which is significantly longer than the 15 working day period 
allowed under the Federal OSHA program. However, New York has provided 
assurance, by Counsel's opinion of March 4, 1984, that it has the 
authority under Article 78 of the New York Civil Practice Law and Rules 
to obtain judicial enforcement of an uncontested order to comply upon 
expiration of the period stipulated for abatement, regardless of whether 
the 60 day contest period has expired or not. New York has also assured 
that should the State Labor Department's interpretation be challenged 
successfully appropriate legislative correction would be sought.
    (g) Staffing and resources. The plan provides assurances of a fully 
trained, adequate staff, including 30 safety and 8 health compliance 
officers for enforcement inspections and 10 safety and 12 health 
consultants to perform consultation services in the public sector. The 
State has also given satisfactory assurances of adequate funding to 
support the plan. In addition, the plan assures that New York will meet 
the compliance staffing benchmarks established pursuant to the terms of 
the court order in AFL-CIO v. Marshall (CA 74-406).
    (h) Records and reports. The plan provides that public employers in 
New York will maintain appropriate records and make timely reports on 
occupational injuries and illnesses in a manner substantially identical 
to that required for private sector employers under Federal OSHA. New 
York has assured that it will continue its participation in the Bureau 
of Labor Statistics Annual Survey of Injuries and Illnesses and will 
include the public sector under its plan after approval. The plan also 
contains assurances that the

[[Page 158]]

Commissioner of Labor will provide reports to OSHA in such form as the 
Assistant Secretary may require, and that New York will participate in 
OSHA's Integrated Management Information System.
    (i) Voluntary compliance programs. The plan provides that training 
will be provided to public employers and employees; seminars will be 
conducted to familiarize affected individuals with OSHA standards and 
requirements (as adopted by New York), and safe work practices; an on-
site consultation program in the public sector will be established to 
provide services to public employers who so desire; and, all State 
agencies and political subdivisions will be encouraged to develop and 
maintain self-inspection programs as an adjunct to but not substitute 
for the Commissioner of Labor's enforcement inspections.



Sec. 1956.51  Developmental schedule.

    The New York plan is developmental. The following is a schedule of 
major developmental steps as provided in the plan:
    (a) Adopt all OSHA standards promulgated as of July 1, 1983 (within 
three months after plan approval).
    (b) Promulgate regulations for inspections, citations and abatement, 
equivalent to 29 CFR part 1903 (within three years after plan approval).
    (c) Submit State poster (within six months after plan approval).
    (d) Extend BLS Survey of Injuries and Illnesses to State and local 
government (within one year after plan approval).
    (e) Promulgate regulations for granting variances, equivalent to 29 
CFR part 1905 (within one year after plan approval).
    (f) Promulgate regulations for injury/illness recordkeeping, 
equivalent to 29 CFR part 1904 (within two years after plan approval).
    (g) Develop employee nondiscrimination procedures (within three 
years after plan approval).
    (h) Promulgate procedures for review of contested cases (within 
three years after plan approval).
    (i) Promulgate regulations for development of alternative State 
standards, equivalent to 29 CFR part 1911 (within three years after plan 
approval).
    (j) Develop Field Operations Manual (within three years after plan 
approval).
    (k) Develop Industrial Hygiene Manual (within three years after plan 
approval).
    (l) Develop on-site consultation procedures for state and local 
government employers (within three years after plan approval).
    (m) Fully implement public employer/employee training and education 
program (within three years after plan approval).

[49 FR 23000, June 1, 1984, as amended at 52 FR 20073, May 29, 1987]



Sec. 1956.52  Completed developmental steps.

    (a) In accordance with 29 CFR 1956.51(c), the New York Safety and 
Health poster for public employees only was approved by the Assistant 
Secretary on May 16, 1985.
    (b) In accordance with 29 CFR 1956.51(a) the State of New York has 
promulgated standards identical to all Federal OSHA standards 
promulgated as of July 1, 1983. This supplement was approved by the 
Assistant Secretary on August 26, 1986. (51 FR 30449).
    (c) In accordance with 29 CFR 1956.51(d) the State extended its 
participation in the Bureau of Labor Statistics (BLS) Survey of Injuries 
and Illnesses to the public sector. This supplement was approved by the 
Assistant Secretary on December 29, 1989.
    (d) In accordance with 29 CFR 1956.51(e) the State promulgated 
regulations for granting variances, equivalent to 29 CFR part 1905, 
which were approved by the Assistant Secretary on December 29, 1989.
    (e) In accordance with 29 CFR 1956.51(f) the State promulgated 
regulations for injury/illness recordkeeping, equivalent to 29 CFR part 
1904, which were approved by the Assistant Secretary on December 29, 
1989.
    (f) In accordance with 29 CFR 1956.51(g) the State developed and 
adopted employee non-discrimination procedures equivalent to 29 CFR part 
1977, which were approved by the Assistant Secretary on December 29, 
1989.

[[Page 159]]

    (g) In accordance with 29 CFR 1956.51(h) the State adopted 
procedures for the review of contested cases equivalent to 29 CFR part 
2200, which were approved by the Assistant Secretary on December 29, 
1989.
    (h) In accordance with 29 CFR 1956.51(i) the State revised its plan 
to reflect the procedures dictated by State law that require specific 
legislative action in the development and adoption of alternative 
standards as the State's Public Employee Safety and Health Act provides 
only for the adoption of identical OSHA safety and health standards, 
which were approved by the Assistant Secretary on December 29, 1989.
    (i) In accordance with 29 CFR 1956.51(k) the State has adopted the 
Federal Industrial Hygiene Manual, including changes one (1) and two 
(2), through April 7, 1987, which was approved by the Assistant 
Secretary on December 29, 1989.
    (j) In accordance with 29 CFR 1956.51(l) the State issued a 
directive implementing an on-site consultation program in the public 
sector which was approved by the Assistant Secretary on December 29, 
1989.

[50 FR 21047, May 22, 1985, as amended at 52 FR 20073, May 29, 1987; 55 
FR 1206, Jan. 12, 1990]



Sec. 1956.53  Determination of operational effectiveness. [Reserved]



Sec. 1956.54  Location of plan for inspection and copying.

    A copy of the plan may be inspected and copied during normal 
business hours at the following locations:

Office of State Programs, U.S. Department of Labor, Occupational Safety 
and Health Administration, Third Street and Constitution Avenue, NW., 
Room N-3476, Washington, DC 20210;
Office of the Regional Administrator, U.S. Department of Labor, 
Occupational Safety and Health Administration, 1515 Broadway (1 Astor 
Plaza) Room 3445, New York, New York 10036;
State of New York Department of Labor, State Office Building Campus, 
Building 12, Room 579, Albany, New York 12226;
Division of Occupational Safety and Health, State of New York Department 
of Labor, Room 6994, 2 World Trade Center, New York, New York 10047.



Sec. 1956.55  Changes to approved plans.

    In accordance with part 1953, the following New York plan changes 
were approved by the Assistant Secretary:
    (a) The State submitted a staffing pattern change involving the 
reassignment of two positions from Industrial Hygiene Consultation to 
Industrial Hygiene Enforcement. The Assistant Secretary approved the 
supplement on May 26, 1987.
    (b) The State submitted a staffing pattern change which establishes 
an Analysis and Management Information System Unit. The Assistant 
Secretary approved the supplement on December 29, 1989.

[52 FR 20073, May 29, 1987, as amended at 55 FR 1206, Jan. 12, 1990]



                          Subpart G--New Jersey

    Authority: Section 18 of the OSH Act, (29 U.S.C. 667), 29 CFR Part 
1902, 29 CFR 1956, and Secretary of Labor's Order No. 3-2000 (65 FR 
50017).

    Source: 66 FR 2272, Jan. 11, 2001, unless otherwise noted.



Sec. 1956.60  Description of the plan as initially approved.

    (a) Authority and scope. The New Jersey State Plan for Public 
Employee Occupational Safety and Health received initial OSHA approval 
on January 11, 2001. The plan designates the New Jersey Department of 
Labor as the State agency responsible for administering the plan 
throughout the State. The plan includes enabling legislation, Public 
Employees Occupational Safety and Health Act of 1995 (N.J.S.A. 34:6A-25 
et seq.), enacted in 1984, and amended on July 25, 1995. Under this 
legislation, the State Commissioner of Labor has full authority to 
enforce and administer all laws and rules protecting the safety and 
health of all employees of the State and its political subdivisions 
under the Public Employee Occupational Safety and Health program 
(PEOSH). The Commissioner of Health and Senior Services has authority 
for occupational health matters including the authority to conduct 
health inspections, investigations and related activities. However, all 
standards adoption

[[Page 160]]

and enforcement authority for both occupational safety and health remain 
the responsibility of the New Jersey Department of Labor.
    (b) Standards. New Jersey has adopted State standards identical to 
OSHA occupational safety and health standards promulgated as of December 
7, 1998, with differences only in its hazard communication and fire 
protection standards. The State plan includes a commitment to bring 
those two (2) standards into conformance with OSHA requirements and to 
update all standards within one year after plan approval. The State plan 
also provides that future OSHA standards and revisions will be adopted 
by the State within six (6) months of Federal promulgation, in 
accordance with 29 CFR 1953.21. Any emergency temporary standards will 
be adopted within 30 days of Federal adoption. The State will adopt 
Federal OSHA standards in accordance with the provisions of New Jersey 
statute, N.J.S.A. 52:14B-5; Federal standards shall be deemed to be duly 
adopted as State regulations upon publication by the Commissioner of 
Labor. The plan also provides for the adoption of alternative or 
different occupational safety and health standards by the Commissioner 
of Labor in consultation with the Commissioner of Health and Senior 
Services, the Commissioner of Community Affairs, and the Public Employee 
Occupational Safety and Health Advisory Board, where no Federal 
standards are applicable to the conditions or circumstances or where 
standards more stringent than the Federal are deemed advisable.
    (c) Variances. The plan includes provisions for the granting of 
permanent and temporary variances from State standards in terms 
substantially similar to the variance provisions contained in the OSH 
Act. The State provisions require employee notification of variance 
applications as well as employee rights to participate in hearings held 
on variance applications. Variances may not be granted unless it is 
established that adequate protection is afforded employees under the 
terms of the variance. The State has committed to amend its current 
variance procedures at N.J.A.C. 12:110-6 to bring them into conformance 
with Federal procedures at 29 CFR Part 1905 within two years after state 
plan approval.
    (d) Employee notice and discrimination protection. The plan provides 
for notification to employees of their protections and obligations under 
the plan by such means as a State poster, and required posting of 
notices of violations. The plan also provides for protection of 
employees against discharge or discrimination resulting from exercise of 
their rights under the State's Act in terms similar to section ll(c) of 
the OSH Act. However, employees have 180 days to file complaints of 
discrimination with the Commissioner of Labor; and the Commissioner is 
authorized to both investigate and order all appropriate relief. The 
monetary penalty for repeated violations (up to $70,000 per violation) 
may also be applicable to repeated employer acts of discrimination.
    (e) Inspections and enforcement. The plan provides for inspection of 
covered workplaces including inspections in response to employee 
complaints, by both the Department of Labor, and by the Department of 
Health and Senior Services with regard to health issues. If a 
determination is made that an employee complaint does not warrant an 
inspection, the complainant shall be notified, in writing, of such 
determination and afforded an opportunity to seek informal review of the 
determination. The plan also provides the opportunity for employer and 
employee representatives to accompany the inspector during an inspection 
for the purpose of aiding in the inspection. Employee(s) accompanying an 
inspector are entitled to normal wages for the time spent during the 
inspection. The plan also provides for right of entry for inspection and 
prohibition of advance notice of inspection. The Commissioner of Labor 
is responsible for all enforcement actions including the issuance of 
citations/Orders to Comply which must also specify the abatement period, 
posting requirements and the employer's and employee's right to contest 
any or all orders. Although the plan does not provide for initial (first 
instance) monetary sanctions, the Commissioner of Labor has the 
authority

[[Page 161]]

to impose civil administrative penalties of up to $7,000 per day for 
each violation, for failure to abate, if the time for compliance with an 
order has elapsed, and the employer has not contested and has not made a 
good faith effort to comply. Willful or repeated violations also are 
subject to civil administrative penalties of up to $70,000 for each 
violation. Penalties may be recovered with costs in a civil action 
brought under the New Jersey Penalty Enforcement Act (N.J.S.2A.:58-1 et 
seq.)
    (f) Review procedures. Under the plan, employers, employees and 
other affected parties may seek informal review with the Department of 
Labor relative to a notice of violation/Order to Comply, the 
reasonableness of the abatement period, any penalty and/or may seek 
formal administrative review with the Occupational Safety and Health 
Review Commission, a board appointed by the Governor and authorized 
under section 34:6A.42 of the New Jersey Act to hear and rule on appeals 
of orders to comply and any penalties proposed. Any employer, employee 
or employee representative affected by a determination of the 
Commissioner may file a contest within fifteen (15) working days of the 
issuance of an order to comply. The Review Commission will issue an 
order, based on a finding of fact, affirming, modifying, or vacating the 
commissioner's order to comply or the proposed penalty, or directing 
other appropriate relief, and the order shall become final 45 days after 
its issuance. Judicial review of the decision of the Review Commission 
may be sought at the Appellate Division of the Superior Court.
    (g) Staffing and Resources. The plan further provides assurances of 
a fully trained, adequate staff, including 20 safety and 7 health 
compliance officers for enforcement inspections, and 4 safety and 3 
health consultants to perform consultation services in the public 
sector, and 2 safety and 3 health training and education staff. The 
State has assured that it will continue to provide a sufficient number 
of adequately trained and qualified personnel necessary for the 
enforcement of standards as required by 29 CFR 1956.10. The State has 
also given satisfactory assurance of adequate funding to support the 
plan.
    (h) Records and reports. The plan provides that public employers in 
New Jersey will maintain appropriate records and make timely reports on 
occupational injuries and illnesses in a manner substantially identical 
to that required for private sector employers under Federal OSHA. New 
Jersey has assured that it will continue its participation in the Bureau 
of Labor Statistics Annual Survey of Injuries and Illnesses with regard 
to both private and public sector employers. The State will comply with 
the provisions of 29 CFR 1904.7 which allows full employee and employee 
representative access, including employee's names, to the log of 
workplace injuries and illnesses; and will amend its regulations 
accordingly. The plan also contains assurances that the Commissioner of 
Labor will provide reports to OSHA in such form as the Assistant 
Secretary may require, and that New Jersey will participate in OSHA's 
Integrated Management Information System.
    (i) Voluntary compliance programs. The plan provides that training 
will be provided to public employers and employees; seminars will be 
conducted to familiarize affected individuals with OSHA standards, 
requirements and safe work practices; an on-site consultation program in 
the public sector will be established to provide services to public 
employers who so desire; and, all State agencies and political 
subdivisions will be encouraged to develop and maintain self inspection 
programs as well as internal safety and health programs as an adjunct to 
but not a substitute for the Commissioner of Labor's enforcement.



Sec. 1956.61  Developmental Schedule.

    The New Jersey State plan is developmental. The following is a 
schedule of major developmental steps as provided in the plan:
    (a) Adopt standards identical to or at least as effective as all 
existing OSHA standards within one year after plan approval.
    (b) Adopt amendments to regulations regarding inspections, 
citations, and proposed penalties equivalent to 29

[[Page 162]]

CFR part 1903 within one year after plan approval.
    (c) Develop a five year strategic plan within two years after plan 
approval.
    (d) Develop field inspection reference manual and/or field 
operations manual within two years after plan approval.
    (e) Fully implement public employer/employee consultation, training 
and education program equivalent to 29 CFR part 1908 within three years 
after plan approval.
    (f) Adopt amendments to regulations regarding discrimination against 
employees equivalent to 29 CFR part 1977 within two years after plan 
approval.
    (g) Adopt amendments to regulations regarding variances equivalent 
to 29 CFR part 1905 within two years after plan approval.
    (h) Adopt amendments to regulations regarding record keeping 
equivalent to 29 CFR part 1904 within two years after plan approval.



Sec. 1956.62  Completion of developmental steps and certification. [Reserved]



Sec. 1956.63  Determination of operational effectiveness. [Reserved]



Sec. 1956.64  Location of plan for inspection and copying.

    A copy of the plan may be inspected and copied during normal 
business hours at the following locations: Office of State Programs, 
U.S. Department of Labor, Occupational Safety and Health Administration, 
200 Constitution Avenue, NW., Room N-3700, Washington, DC 20210; Office 
of the Regional Administrator, U.S. Department of Labor, Occupational 
Safety and Health Administration, 1201 Varick Street, Room 670, New 
York, New York 10014; and New Jersey Department of Labor, Division of 
Public Safety and Occupational Safety and Health, Office of Public 
Employees' Safety, P.O. Box 386, 225 East State Street, 8th Floor West, 
Trenton, New Jersey 08625-0386.



PART 1960--BASIC PROGRAM ELEMENTS FOR FEDERAL EMPLOYEE OCCUPATIONAL SAFETY AND HEALTH PROGRAMS AND RELATED MATTERS--Table of Contents




                           Subpart A--General

Sec.
1960.1  Purpose and scope.
1960.2  Definitions.

                        Subpart B--Administration

1960.6  Designation of agency safety and health officials.
1960.7  Financial management.
1960.8  Agency responsibilities.
1960.9  Supervisory responsibilities.
1960.10  Employee responsibilities and rights.
1960.11  Evaluation of occupational safety and health performance.
1960.12  Dissemination of occupational safety and health program 
          information.

                          Subpart C--Standards

1960.16  Compliance with OSHA standards.
1960.17  Alternate standards.
1960.18  Supplementary standards.
1960.19  Other Federal agency standards affecting occupational safety 
          and health.

                   Subpart D--Inspection and Abatement

1960.25  Qualifications of safety and health inspectors and agency 
          inspections.
1960.26  Conduct of inspections.
1960.27  Representatives of officials in charge and representatives of 
          employees.
1960.28  Employee reports of unsafe or unhealthful working conditions.
1960.29  Accident investigation.
1960.30  Abatement of unsafe or unhealthful working conditions.
1960.31  Inspections by OSHA.

  Subpart E--General Services Administration and Other Federal Agencies

1960.34  General provisions.
1960.35  National Institute for Occupational Safety and Health.

          Subpart F--Occupational Safety and Health Committees

1960.36  General provisions.
1960.37  Committee organization.

[[Page 163]]

1960.38  Committee formation.
1960.39  Agency responsibilities.
1960.40  Establishment committee duties.
1960.41  National committee duties.

                   Subpart G--Allegations of Reprisal

1960.46  Agency responsibility.
1960.47  Results of investigations.

                           Subpart H--Training

1960.54  Training of top management officials.
1960.55  Training of supervisors.
1960.56  Training of safety and health specialists.
1960.57  Training of safety and health inspectors.
1960.58  Training of collateral duty safety and health personnel and 
          committee members.
1960.59  Training of employees and employee representatives.
1960.60  Training assistance.

           Subpart I--Recordkeeping and Reporting Requirements

1960.66  Purpose, scope and general provisions.
1960.67  Log of occupational injuries and illnesses.
1960.68  Supplementary record of occupational injuries and illnesses.
1960.69  Annual summaries of Federal occupational injuries and 
          illnesses.
1960.70  Reporting of serious accidents.
1960.71  Location and utilization of records and reports.
1960.72  Access to records by Secretary.
1960.73  Retention of records.
1960.74  Agency annual reports.
1960.75--1960.77  [Reserved]

Subpart J--Evaulation of Federal Occupational Safety and Health Programs

1960.78  Purpose and scope.
1960.79  Self-evaluations of occupational safety and health programs.
1960.80  Secretary's evaluations of agency occupational safety and 
          health programs.

           Subpart K--Field Federal Safety and Health Councils

1960.84  Purpose.
1960.85  Role of the Secretary.
1960.86  Establishing councils.
1960.87  Objectives.
1960.88  Membership and participation.
1960.89  Organization.
1960.90  Operating procedures.

    Authority: Sections 19 and 24 of the Occupational Safety and Health 
Act of 1970 (84 Stat. 1609, 1614; 29 U.S.C. 668, 673), 5 U.S.C. 553, 
Secretary of Labor's Order No. 1-90 (55 FR 9033), and Executive Order 
12196.

    Source: 45 FR 69798, Oct. 21, 1980, unless otherwise noted.



                           Subpart A--General



Sec. 1960.1  Purpose and scope.

    (a) Section 19 of the Occupational Safety and Health Act (the Act) 
contains special provisions to assure safe and healthful working 
conditions for Federal employees. Under that section, it is the 
responsibility of the head of each Federal agency to establish and 
maintain an effective and comprehensive occupational safety and health 
program which is consistent with the standards promulgated under section 
6 of the Act. The Secretary of Labor (the Secretary), under section 19, 
is to report to the President certain evaluations and recommendations 
with respect to the programs of the various agencies, and the duties 
which section 24 of the Act imposes on the Secretary of Labor 
necessarily extend to the collection, compilation and analysis of 
occupational safety and health statistics from the Federal Government. 
The role of the General Services Administration in this area stems from 
its duties as the Government's principal landlord and from its specific 
safety and health responsibilities under 41 CFR part 101, subchapter D, 
Federal Property Management Regulations.
    (b) Executive Order 12196, Occupational Safety and Health Programs 
for Federal Employees, issued February 26, 1980, prescribes additional 
responsibilities for the heads of agencies, the Secretary, and the 
General Services Administrator. Among other duties, the Secretary is 
required to issue basic program elements in accordance with which the 
heads of agencies shall operate their safety and health programs. The 
purpose of this part is to issue these basic program elements. Although 
agency heads are required to operate a program in accordance with the 
basic program elements, those elements contain numerous provisions 
which, by their terms, permit agency heads the flexibility necessary to 
implement their programs in a manner

[[Page 164]]

consistent with their respective missions, sizes, and organizations. 
Moreover, an agency head, after consultation with agency employees or 
their representatives and with appropriate safety and health committees 
may request the Secretary to consider approval of alternate program 
elements; the Secretary, after consultation with the Federal Advisory 
Council on Occupational Safety and Health, may approve such alternate 
program elements.
    (c) Under Executive Order 12196, the Secretary is required to 
perform various services for the agencies, including consultation, 
training, recordkeeping, inspections, and evaluations. Agencies are 
encouraged to seek such assistance from the Secretary as well as advice 
on how to comply with the basic program elements and operate effective 
occupational safety and health programs. Upon the request of an Agency, 
the Office of Federal Agency Safety and Health Programs will review 
proposed agency plans for the implementation of program elements.
    (d) Section 19 of the Act and the Executive Order require specific 
opportunities for employee participation in the operation of agency 
safety and health programs. The manner of fulfilling these requirements 
is set forth in part in these program elements. These requirements are 
separate from but consistent with the Federal Service Labor Management 
Relations Statute (5 U.S.C. 71) and regulations dealing with labor-
management relations within the Federal Government.
    (e) Executive Order 12196 and these basic program elements apply to 
all agencies of the Executive Branch. They apply to all Federal 
employees. They apply to all working conditions of Federal employees 
except those involving uniquely military equipment, systems, and 
operations.
    (f) No provision of the Executive Order or this part shall be 
construed in any manner to relieve any private employer, including 
Federal contractors, or their employees of any rights or 
responsibilities under the provisions of the Act, including compliance 
activities conducted by the Department of Labor or other appropriate 
authority.
    (g) Federal employees who work in establishments of private 
employers are covered by their agencies' occupational safety and health 
programs. Although an agency may not have the authority to require 
abatement of hazardous conditions in a private sector workplace, the 
agency head must assure safe and healthful working conditions for his/
her employees. This shall be accomplished by administrative controls, 
personal protective equipment, or withdrawal of Federal employees from 
the private sector facility to the extent necessary to assure that the 
employees are protected.

[45 FR 69798, Oct. 21, 1980, as amended at 60 FR 34852, July 5, 1995]



Sec. 1960.2  Definitions.

    (a) The term Act means the Occupational Safety and Health Act of 
1970 (84 Stat. 1590 et seq., 29 U.S.C. 651 et seq.).
    (b) The term agency for the purposes of this part means an Executive 
Department, as defined in 5 U.S.C. 101, or any employing unit or 
authority of the Executive Branch of the Government. For the purposes of 
this part to the extent it implements section 19 of the Act, the term 
agency includes the United States Postal Service. By agreement between 
the Secretary of Labor and the head of an agency of the Legislative or 
Judicial Branches of the Government, these regulations may be applicable 
to such agencies.
    (c) The term agency liaison means an agency person appointed with 
full authority and reponsibility to represent the occupant agency 
management with the official in charge of a facility or installation 
such as a GSA Building Manager.
    (d) The term building manager means the person who manages one or 
several buildings under the authority of a Federal agency. For example, 
a building manager may be the GSA person who manages building(s) for 
GSA.
    (e) As used in Executive Order 12196, the term consultation with 
representatives of the employees thereof shall include such 
consultation, conference, or negotiation with representatives of agency 
employees as is consistent with the Federal Service Labor Management

[[Page 165]]

Relations Statute (5 U.S.C. 71), or collective bargaining or other 
labor-management arrangements. As used in this part, the term 
representative of employees shall be interpreted with due regard for any 
obligation imposed by the aforementioned statute and any other labor-
management arrangement that may cover the employees involved.
    (f) The term Designated Agency Safety and Health Official means the 
individual who is responsible for the management of the safety and 
health program within an agency, and is so designated or appointed by 
the head of the agency pursuant to Sec. 1960.6 and the provisions of 
Executive Order 12196.
    (g) The term employee as used in this part means any person, other 
than members of the Armed Forces, employed or otherwise suffered, 
permitted, or required to work by an agency as the latter term is 
defined in paragraph (b) of this section.
    (h) The term establishment means a single physical location where 
business is conducted or where services or operations are performed. 
Where distinctly separate activities are performed at a single physical 
location, each activity shall be treated as a separate establishment. 
Typically, an establishment as used in this part refers to a field 
activity, regional office, area office, installation, or facility.
    (i) The term uniquely military equipment, systems, and operations 
excludes from the scope of the order the design of Department of Defense 
equipment and systems that are unique to the national defense mission, 
such as military aircraft, ships, submarines, missiles, and missile 
sites, early warning systems, military space systems, artillery, tanks, 
and tactical vehicles; and excludes operations that are uniquely 
military such as field maneuvers, naval operations, military flight 
operations, associated research test and development activities, and 
actions required under emergency conditions. The term includes within 
the scope of the Order Department of Defense workplaces and operations 
comparable to those of industry in the private sector such as: Vessel, 
aircraft, and vehicle repair, overhaul, and modification (except for 
equipment trials); construction; supply services; civil engineering or 
public works; medical services; and office work.
    (j) The term incidence rates means the number of injuries and 
illnesses, or lost workdays, per 100 full-time workers. Rates are 
calculated as

N x 200,000 / EH

N = number of injuries and illnesses, or number of lost workdays.
EH = total hours worked by all employees during a month, a quarter, or 
fiscal year.
200,000 = base for 100 full-time equivalent workers (working 40 hours 
per week, 50 weeks per year).

    (k) The term inspection means a comprehensive survey of all or part 
of a workplace in order to detect safety and health hazards. Inspections 
are normally performed during the regular work hours of the agency, 
except as special circumstances may require. Inspections do not include 
routine, day-to-day visits by agency occupational safety and health 
personnel, or routine workplace surveillance of occupational health 
conditions.
    (l) Categories of injuries/illnesses/fatalities--(1) Injury 
(Traumatic). A wound or other condition of the body caused by external 
force, including stress or strain. The injury is identifiable as to time 
and place of occurrence and member or function of the body affected, and 
is caused by a specific event or incident or series of events or 
incidents within a single day or work shift.
    (2) Illness/disease (occupational). A physiological harm or loss of 
capacity produced by systemic infection; continued or repeated stress or 
strain; exposure to toxins, poisons, fumes, etc.; or other continued and 
repeated exposures to conditions of the work environment over a long 
period of time. For practical purposes, an occupational illness/disease 
is any reported condition which does not meet the definition of injury 
(traumatic).
    (3) Fatality. Death resulting from an injury (traumatic) or illness/
disease (occupational).
    (4) The term lost time case means a nonfatal traumatic injury that 
causes any loss of time from work beyond the day or shift it occurred; 
or a nonfatal nontraumatic illness/disease that causes disability at any 
time.

[[Page 166]]

    (5) No-lost time case. A nonfatal injury (traumatic) or illness/
disease (occupational) that does not meet the definition of lost time 
case.
    (6) Catastrophe. An accident resulting in five or more agency and/or 
nonagency people being hospitalized for inpatient care.
    (m) The term representative of management means a supervisor or 
management official as defined in the applicable labor-management 
relations program covering the affected employees.
    (n)-(p) [Reserved]
    (q) The term Safety and Health Inspector means a safety and/or 
occupational health specialist or other person authorized pursuant to 
Executive Order 12196, section 1-201(g), to carry out inspections for 
the purpose of subpart D of this part, a person having equipment and 
competence to recognize safety and/or health hazards in the workplace.
    (r) The term Safety and Health Official means an individual who 
manages the occupational safety and/or occupational health program at 
organizational levels below the Designated Agency Safety and Health 
Official.
    (s) The term Safety and Health Specialist means a person or persons 
meeting the Office of Personnel Management standards for such 
occupations, which include but are not limited to:

Safety and Occupational Health Manager/Specialist GS-018
Safety Engineer GS-803
Fire Prevention Engineer GS-804
Industrial Hygienist GS-690
Fire Protection and Prevention Specialist/Marshal GS-081
Health Physicist GS-1306
Occupational Medicine Physician GS-602
Occupational Health Nurse GS-610
Safety Technician GS-019
Physical Science Technician GS-1311
Environmental Health Technician GS-699
Air Safety Investigation Officer GS-1815
Aviation Safety Specialist GS-1825
Chemist GS-1320
Health Technician GS-645
Highway Safety Manager GS-2125


or equally qualified military, agency, or nongovernment personnel. The 
agency head shall be responsible for determination and certification of 
equally qualified personnel.
    (t) The term workplace means a physical location where the agency's 
work or operations are performed.
    (u) The term imminent danger means any conditions or practices in 
any workplace which are such that a danger exists which could reasonably 
be expected to cause death or serious physical harm immediately or 
before the imminence of such danger can be eliminated through normal 
procedures.
    (v) The word serious as used in serious hazard, serious violation or 
serious condition means a hazard, violation or condition such that there 
is a substantial probability that death or serious physical harm could 
result.
    (w) The term certified safety and health committee means an agency 
safety and health committee that meets the provisions of section 1-3 of 
Executive Order 12196 and of this part, as listed and attested to by the 
head of each agency in writing to the Secretary.
    (x) The term reprisal as used in this part means any act of 
restraint, interference, coercion or discrimination against an employee 
for exercising his or her rights under Executive Order 12196 and this 
part, or for participating in the agency's safety and health program.

[45 FR 69798, Oct. 21, 1980, as amended at 49 FR 3078, Jan. 25, 1984; 50 
FR 40269, Oct. 2, 1985; 51 FR 28378, Aug. 7, 1986]



                        Subpart B--Administration



Sec. 1960.6  Designation of agency safety and health officials.

    (a) The head of each agency shall designate an official with 
sufficient authority and responsibility to represent effectively the 
interest and support of the agency head in the management and 
administration of the agency occupational safety and health program. 
This Designated Agency Safety and Health Official should be of the rank 
of Assistant Secretary, or of equivalent rank, or equivalent degree of 
responsibility, and shall have sufficient headquarters staff with the 
necessary training and experience. The headquarters staff should report 
directly to, or have appropriate access to, the Designated Agency Safety 
and Health Official, in order to carry out the responsibilities under 
this part.
    (b) The Designated Agency Safety and Health Official shall assist 
the agency head in establishing:

[[Page 167]]

    (1) An agency occupational safety and health policy and program to 
carry out the provisions of section 19 of the Act, Executive Order 
12196, and this part;
    (2) An organization, including provision for the designation of 
safety and health officials at appropriate levels, with adequate budgets 
and staffs to implement the occupational safety and health program at 
all operational levels;
    (3) A set of procedures that ensures effective implementation of the 
agency policy and program as required by section 19 of the Act, 
Executive Order 12196, and the program elements of this part, 
considering the mission, size, and organization of the agency;
    (4) Goals and objectives for reducing and eliminating occupational 
accidents, injuries, and illnesses;
    (5) Plans and procedures for evaluating the agency's occupational 
safety and health program effectiveness at all operational levels; and
    (6) Priorities with respect to the factors which cause occupational 
accidents, injuries, and illnesses in the agency's workplaces so that 
appropriate corrective actions can be taken.
    (c) The agency head shall assure that safety and health officials 
are designated at each appropriate level with sufficient authority and 
responsibility to plan for and assure funds for necessary safety and 
health staff, equipment, materials, and training required to ensure 
implementation of an effective occupational safety and health program.



Sec. 1960.7  Financial management.

    (a) The head of each agency shall ensure that the agency budget 
submission includes appropriate financial and other resources to 
effectively implement and administer the agency's occupational safety 
and health program.
    (b) The Designated Agency Safety and Health Official, management 
officials in charge of each establishment, safety and health officials 
at all appropriate levels, and other management officials shall be 
responsible for planning, requesting resources, implementing, and 
evaluating the occupational safety and health program budget in 
accordance with the regulations of the Office of Management and Budget 
Circular A-11 (sections 13.2(f) and 13.5(f)) and other relevant 
documents.
    (c) Appropriate resources for an agency's occupational safety and 
health program shall include, but not be limited to:
    (1) Sufficient personnel to implement and administer the program at 
all levels, including necessary administrative costs such as training, 
travel, and personal protective equipment;
    (2) Abatement of unsafe or unhealthful working conditions related to 
agency operations or facilities;
    (3) Safety and health sampling, testing, and diagnostic and 
analytical tools and equipment, including laboratory analyses;
    (4) Any necessary contracts to identify, analyze, or evaluate unsafe 
or unhealthful working conditions and operations;
    (5) Program promotional costs such as publications, posters, or 
films;
    (6) Technical information, documents, books, standards, codes, 
periodicals, and publications; and
    (7) Medical surveillance programs for employees.



Sec. 1960.8  Agency responsibilities.

    (a) The head of each agency shall furnish to each employee 
employment and a place of employment which are free from recognized 
hazards that are causing or are likely to cause death or serious 
physical harm.
    (b) The head of each agency shall comply with the Occupational 
Safety and Health Administration standards applicable to the agency.
    (c) The head of each agency shall develop, implement, and evaluate 
an occupational safety and health program in accordance with the 
requirements of section 19 of the Act, Executive Order 12196, and the 
basic program elements prescribed in this part, or approved alternate 
program elements.
    (d) The head of each agency shall acquire, maintain, and require the 
use of approved personal protective equipment, approved safety 
equipment, and other devices necessary to protect employees.
    (e) In order to provide essential specialized expertise, agency 
heads shall authorize safety and health personnel

[[Page 168]]

to utilize such expertise from whatever source available, including but 
not limited to other agencies, professional groups, consultants, 
universities, labor organizations, and safety and health committees.



Sec. 1960.9  Supervisory responsibilities.

    Employees who exercise supervisory functions shall, to the extent of 
their authority, furnish employees employment and a place of employment 
which are free from recognized hazards that are causing or are likely to 
cause death or serious physical harm. They shall also comply with the 
occupational safety and health standards applicable to their agency and 
with all rules, regulations, and orders issued by the head of the agency 
with respect to the agency occupational safety and health program.



Sec. 1960.10  Employee responsibilities   and rights.

    (a) Each employee shall comply with the standards, rules, 
regulations, and orders issued by his/her agency in accordance with 
section 19 of the Act, Executive Order 12196, and this part which are 
applicable to his/her own actions and conduct.
    (b) Employees shall use safety equipment, personal protective 
equipment, and other devices and procedures provided or directed by the 
agency and necessary for their protection.
    (c) Employees shall have the right to report unsafe and unhealthful 
working conditions to appropriate officials.
    (d) Employees shall be authorized official time to participate in 
the activities provided for in section 19 of the Act, Executive Order 
12196, this part, and the agency occupational safety and health program.



Sec. 1960.11  Evaluation of occupational safety and health performance.

    Each agency head shall ensure that any performance evaluation of any 
management official in charge of an establishment, any supervisory 
employee, or other appropriate management official, measures that 
employee's performance in meeting requirements of the agency 
occupational safety and health program, consistent with the employee's 
assigned responsibilities and authority, and taking into consideration 
any applicable regulations of the Office of Personnel Management or 
other appropriate authority. The recognition of superior performance in 
discharging safety and health responsibilities by an individual or group 
should be encouraged and noted.



Sec. 1960.12  Dissemination of occupational safety and health program information.

    (a) Copies of the Act, Executive Order 12196, program elements 
published in this part, details of the agency's occupational safety and 
health program, and applicable safety and health standards shall be made 
available upon request to employees or employee representatives for 
review.
    (b) A copy of the agency's written occupational safety and health 
program applicable to the establishment shall be made available to each 
supervisor, each occupational safety and health committee member, and to 
employee representatives.
    (c) Each agency shall post conspicuously in each establishment, and 
keep posted, a poster informing employees of the provisions of the Act, 
Executive Order 12196, and the agency occupational safety and health 
program under this part. The Department of Labor will furnish the core 
text of a poster to agencies. Each agency shall add the following items:
    (1) Details of the agency's procedures for responding to reports by 
employees of unsafe or unhealthful working conditions, and to 
allegations of discrimination or reprisal due to participation in safety 
and/or health activities;
    (2) The location where employees may obtain information about the 
agency's occupational safety and health program, including the full text 
of agency occupational safety and health standards, and
    (3) Relevant information about any agency safety and health 
committees.

Such posters and additions shall not be altered, defaced, or covered by 
other material.
    (d) A copy of the agency's poster shall be provided to the 
Secretary. If the agency needs assistance and advice on the content and 
development of the

[[Page 169]]

poster, such shall be requested of the Secretary prior to printing and 
distribution.
    (e) Agency heads shall promote employee awareness of occupational 
safety and health matters through their ordinary information channels, 
such as newsletters, bulletins and handbooks.



                          Subpart C--Standards



Sec. 1960.16  Compliance with OSHA   standards.

    Each agency head shall comply with all occupational safety and 
health standards issued under section 6 of the Act, or with alternate 
standards issued pursuant to this subpart. In complying with section 6 
standards, an agency may, upon prior notification to the Secretary, 
prescribe and enforce more stringent permissible exposure levels or 
threshhold limit values and may require more frequent monitoring of 
exposures without recourse to the approval procedures for alternate 
standards described in Sec. 1960.17. In addition, after consultation 
with employees and safety and health committees and prior notification 
to the Secretary, an agency may utilize the latest edition of a 
reference standard if it is more stringent than the section 6 standard. 
After notification, the Secretary may require the use of the approval 
procedures for alternate standards for any of the situations described 
in this paragraph.



Sec. 1960.17  Alternate standards.

    An agency head may apply an alternate standard where deemed 
necessary, and shall, after consultation with employees or their 
representatives, including appropriate occupational safety and health 
committees, notify the Secretary and request approval of such alternate 
standards.
    (a) Any request by the head of the agency for an alternate standard 
shall be transmitted to the Secretary.
    (b) Any such request for an alternate standard shall not be approved 
by the Secretary unless it provides equivalent or greater protection for 
affected employees. Any such request shall include:
    (1) A statement of why the agency cannot comply with the OSHA 
standard or wants to adopt an alternate standard;
    (2) A description of the alternate standard;
    (3) An explanation of how the alternate standard provides equivalent 
or greater protection for the affected employees;
    (4) A description of interim protective measures afforded employees 
until a decision is rendered by the Secretary of Labor; and
    (5) A summary of written comments, if any, from interested 
employees, employee representatives, and occupational safety and health 
committees.



Sec. 1960.18  Supplementary standards.

    (a) In addition to complying with emergency temporary standards 
issued under section 6 of the Act, an agency head shall adopt such 
emergency temporary and permanent supplementary standards as necessary 
and appropriate for application to working conditions of agency 
employees for which there exists no appropriate OSHA standards. In order 
to avoid any possible duplication of effort, the agency head should 
notify the Secretary of the subject matter of such standard when the 
development of the standard begins.
    (b) The agency head shall send a copy of the final draft of the 
permanent supplementary standard to the Secretary prior to official 
adoption by the agency, along with any written comments on the standard 
from interested employees, employee representatives, and occupational 
safety and health committees. If the Secretary finds the permanent 
supplementary standard to be adopted inconsistent with OSHA standards, 
or inconsistent with OSHA enforcement practices under section 5(a)(1) of 
the Act, the Secretary shall have 15 working days in which to notify the 
head of the agency of this finding. In such a case, the supplementary 
standard shall not be adopted, but the agency will be afforded an 
opportunity to resubmit a revised standard that is designed to provide 
adequate protection and is consistent with OSHA standards. Upon request 
of the agency head, the Secretary shall offer to the agency technical 
assistance in the development of the supplemental standard.

[[Page 170]]



Sec. 1960.19  Other Federal agency standards affecting occupational safety and health.

    (a) Where employees of different agencies engage in joint 
operations, and/or primarily report to work or carry out operations in 
the same establishment, the standards adopted under Sec. 1960.17 or 
Sec. 1960.18 of the host agency shall govern.
    (b) There are situations in which the head of an agency is required 
to comply with standards affecting occupational safety and health issued 
by a Federal agency other than OSHA. For example, standards issued by 
the Federal Aviation Administration, the Department of Energy, or the 
General Services Administration may be applicable to certain Federal 
workplaces. Nothing in this subpart affects the duty of any agency head 
to comply with such standards. In addition, agency heads should comply 
with other standards issued by Federal agencies which deal with 
hazardous working conditions, but for which OSHA has no standards.
    (c) Although it is not anticipated that standards of other Federal 
agencies will conflict with OSHA standards, should such conflict occur, 
the head of the agency shall inform the other Federal agency and the 
Secretary so that joint efforts to resolve the issues may be undertaken. 
However, until conflicts are resolved, agencies shall comply with the 
more protective of the conflicting standards.



                   Subpart D--Inspection and Abatement



Sec. 1960.25  Qualifications of safety and health inspectors and agency inspections.

    (a) Executive Order 12196 requires that each agency utilize as 
inspectors ``personnel with equipment and competence to recognize 
hazards.'' Inspections shall be conducted by inspectors qualified to 
recognize and evaluate hazards of the working environment and to suggest 
general abatement procedures. Safety and health specialists as defined 
in Sec. 1960.2(s), with experience and/or up-to-date training in 
occupational safety and health hazard recognition and evaluation are 
considered as meeting the qualifications of safety and health 
inspectors. For those working environments where there are less complex 
hazards, such safety and health specializations as cited above may not 
be required, but inspectors in such environments shall have sufficient 
documented training and/or experience in the safety and health hazards 
of the workplace involved to recognize and evaluate those particular 
hazards and to suggest general abatement procedures. All inspection 
personnel must be provided the equipment necessary to conduct a thorough 
inspection of the workplace involved.
    (b) Each agency which has workplaces containing information 
classified in the interest of national security shall provide access to 
safety and health inspectors who have obtained the appropriate security 
clearance.
    (c) All areas and operations of each workplace, including office 
operations, shall be inspected at least annually. More frequent 
inspections shall be conducted in all workplaces where there is an 
increased risk of accident, injury, or illness due to the nature of the 
work performed. Sufficient unannounced inspections and unannounced 
follow-up inspections should be conducted by the agency to ensure the 
identification and abatement of hazardous conditions.
    (d) When situations arise involving multiple agencies' 
responsibilities for conditions affecting employee safety and health, 
coordination of inspection functions is encouraged.



Sec. 1960.26  Conduct of inspections.

    (a) Preparation. (1) Prior to commencement of the inspection, the 
Safety and Health Inspector shall be provided all available relevant 
information which pertains to the occupational safety and health of the 
workplace to be inspected, including safety and health hazard reports, 
injury and illness records, previous inspection reports, and reports of 
unsafe and unhealthful working conditions.
    (2) The Safety and Health Inspector shall determine in advance, 
where possible, the actual work procedures and conditions to be 
inspected, in order to have the proper equipment available to conduct an 
effective inspection.

[[Page 171]]

    (b) Inspection. (1) For the purpose of assuring safe and healthful 
working conditions for employees of agencies, the head of the agency 
shall authorize safety and/or health inspectors: To enter without delay, 
and at reasonable times, any building, installation, facility, 
construction site, or other area, workplace, or environment where work 
is performed by employees of the agency; to inspect and investigate 
during regular working hours and at other reasonable times, and within 
reasonable limits and in a reasonable manner, any such place of 
employment and all pertinent conditions, structures, machines, 
apparatus, devices, equipment, and materials therein, and to question 
privately any agency employee, and/or any agency supervisory employee, 
and/or any official in charge of an establishment.
    (2) If there are no authorized representatives of employees, the 
inspector shall consult with a reasonable number of employees during the 
walkaround.
    (3) When, in the opinion of the inspector, it is necessary to 
conduct personal monitoring (sampling) of employee's work environments, 
the inspector may request employees to wear reasonable and necessary 
personal monitoring devices, e.g., noise dosimeters and air sampling 
pumps, for periods determined by the inspector to be necessary for 
complete and effective sampling of the environment.
    (4) Upon request of the inspector, the employer shall encourage 
employees to wear the personal environmental monitoring devices during 
an inspection.
    (5) Whenever and as soon as it is concluded on the basis of an 
inspection that a danger exists which could reasonably be expected to 
cause death or serious physical harm immediately, the inspector shall 
inform the affected employees and official in charge of the workplace of 
the danger. The official in charge of the workplace, or a person 
empowered to act for that official, shall undertake immediate abatement 
and the withdrawal of employees who are not necessary for abatement of 
the dangerous conditions. In the event the official in charge of the 
workplace needs assistance to undertake full abatement, that official 
shall promptly contact the Designated Agency Safety and Health Official 
and other responsible agency officials, who shall assist the abatement 
effort. Safety and health committees shall be informed of all relevant 
actions and representatives of the employees shall be so informed.
    (6) At the conclusion of an inspection, the Safety and Health 
Inspector shall confer with the official in charge of the workplace or 
that official's representative, and with an appropriate representative 
of the employees of the establishment, and informally advise them of any 
apparent unsafe or unhealthful working conditions disclosed by the 
inspection. During any such conference, the official in charge of the 
workplace and the employee representative shall be afforded an 
opportunity to bring to the attention of the Safety and Health Inspector 
any pertinent information regarding conditions in the workplace.
    (c) Written reports and notices of unsafe or unhealthful working 
conditions. (1) The inspector shall, in writing, describe with 
particularity the procedures followed in the inspection and the findings 
which form the basis for the issuance of any Notice of Unsafe or 
Unhealthful Working Conditions.
    (2) Each agency shall establish a procedure for the prompt issuance 
of a Notice of Unsafe or Unhealthful Working Conditions. Such notices 
shall be issued not later than 15 days after completion of the 
inspection for safety violations or not later than 30 days for health 
violations. If there are compelling reasons why such notice cannot be 
issued within the 15 days or 30 days indicated, the persons described in 
paragraph (c)(2)(iii) of this section shall be informed of the reasons 
for the delay. Such procedure shall include the following:
    (i) Notices shall be in writing and shall describe with 
particularity the nature and degree of seriousness of the unsafe or 
unhealthful working condition, including a reference to the standard or 
other requirement involved;
    (ii) The notice shall fix a reasonable time for the abatement of the 
unsafe or unhealthful working condition; and

[[Page 172]]

    (iii) A copy of the notice shall be sent to the official in charge 
of the workplace, the employee representative who participated in the 
closing conference, and/or the safety and health committee of the 
workplace, if any.
    (3) Upon receipt of any notice of an unsafe or unhealthful working 
condition, the official in charge of a workplace shall immediately post 
such notice, or copy thereof, unedited, except for reason of national 
security, at or near each place an unsafe or unhealthful working 
condition referred to in the notice exists or existed. In addition, a 
notice shall be posted if any special procedures are in effect. Where, 
because of the nature of the workplace operations, it is not practicable 
to post the notice at or near each such place, such notice shall be 
posted, unedited, except for reason of national security, in a prominent 
place where it will be readily observable by all affected employees. For 
example, where workplace activities are physically dispersed, the notice 
may be posted at the location to which employees report each day. Where 
employees do not primarily work at or report to a single location, the 
notice may be posted at the location from which the employees operate to 
carry out their activities.
    (4) Each notice of an unsafe or unhealthful working condition, or a 
copy thereof, shall remain posted until the unsafe or unhealthful 
working condition has been abated or for 3 working days whichever is 
later. A copy of the notice will be filed and maintained for a period of 
five years after abatement at the establishment and made available to 
the Secretary upon request.

[45 FR 69798, Oct. 21, 1980; 45 FR 77003, Nov. 21, 1980]



Sec. 1960.27  Representatives of officials in charge and representatives of employees.

    (a) Safety and health inspectors shall be in charge of inspections 
and may interview any employee in private if the inspector deems it 
necessary. A representative of the official in charge of a workplace and 
a representative of employees shall be given an opportunity to accompany 
Safety and Health Inspectors during the physical inspection of any 
workplace, both to aid the inspection and to provide such 
representatives with more detailed knowledge of any existing or 
potential unsafe or unhealthful working conditions. The representative 
of employees shall be selected by the employees. Additional 
representatives of the official in charge and additional representatives 
of employees may accompany the Safety and Health Inspectors if it is 
determined by the inspector that such additional representatives will 
further aid the inspection. Different representatives of the employer 
and employees may be allowed to accompany the Inspector during each 
different phase of an inspection.
    (b) Safety and health inspectors shall be authorized to deny the 
right of accompaniment under this section to any person whose 
participation interferes with a fair and orderly inspection.
    (c) With regard to facilities classified in the interest of national 
security, only persons authorized to have access to such facilities 
shall be allowed to accompany a Safety and Health Inspector in such 
areas.
    (d) Safety and health inspectors shall consult with employees 
concerning matters of occupational safety and health to the extent 
deemed necessary for the conduct of an effective and thorough 
inspection. During the course of an inspection, any employee shall be 
afforded an opportunity to bring to the attention of the Safety and 
Health Inspector any unsafe or unhealthful working condition which the 
employee has reason to believe exists in the workplace.



Sec. 1960.28  Employee reports of unsafe or unhealthful working conditions.

    (a) The purpose of employee reports is to inform agencies of the 
existence of, or potential for, unsafe or unhealthful working 
conditions. A report under this part is not a grievance.
    (b) This section provides guidance in establishing a channel of 
communication between agency employees and those with responsibilities 
for safety and health matters, e.g., their supervisor, the agency safety 
and health officials, safety and health committees, safety and health 
inspectors, the head of the agency, or the Secretary. These

[[Page 173]]

channels of communication are intended to assure prompt analysis and 
response to reports of unsafe or unhealthful working conditions in 
accordance with the requirements of Executive Order 12196. Since many 
safety and health problems can be eliminated as soon as they are 
identified, the existence of a formal channel of communication shall not 
preclude immediate corrective action by an employee's supervisor in 
response to oral reports of unsafe or unhealthful working conditions 
where such action is possible. Nor should an employee be required to 
await the outcome of such an oral report before filing a written report 
pursuant to the provisions of this section.
    (c) Any employee or representative of employees, who believes that 
an unsafe or unhealthful working condition exists in any workplace where 
such employee is employed, shall have the right and is encouraged to 
make a report of the unsafe or unhealthful working condition to an 
appropriate agency safety and health official and request an inspection 
of such workplace for this purpose. The report shall be reduced to 
writing either by the individual submitting the report or, in the case 
of an oral notification, by the above official or other person 
designated to receive the reports in the workplace. Any such report 
shall set forth the grounds for the report and shall contain the name of 
the employee or representative of employees. Upon the request of the 
individual making such report, no person shall disclose the name of the 
individual making the report or the names of individual employees 
referred to in the report, to anyone other than authorized 
representatives of the Secretary. In the case of imminent danger 
situations, employees shall make reports by the most expeditious means 
available.
    (d) Reports received by the agency. (1) Each report of an existing 
or potential unsafe or unhealthful working condition should be recorded 
on a log maintained at the establishment. If an agency finds it 
inappropriate to maintain a log of written reports at the establishment 
level, it may avail itself of procedures set forth in Sec. 1960.71. A 
copy of each report received shall be sent to the appropriate 
establishment safety and health committee.
    (2) A sequentially numbered case file, coded for identification, 
should be assigned for purposes of maintaining an accurate record of the 
report and the response thereto. As a minimum, each establishment's log 
should contain the following information: date, time, code/reference/
file number, location of condition, brief description of the condition, 
classification (imminent danger, serious or other), and date and nature 
of action taken.
    (3) Executive Order 12196 requires that agency inspections be 
conducted within 24 hours for employee reports of imminent danger 
conditions, within three working days for potentially serious 
conditions, and within 20 working days for other than serious safety and 
health conditions. However, an inspection may not be necessary if, 
through normal management action and with prompt notification to 
employees and safety and health committees, the hazardous condition(s) 
identified can be abated immediately.
    (4) An employee submitting a report of unsafe or unhealthful 
conditions shall be notified in writing within 15 days if the official 
receiving the report determines there are not reasonable grounds to 
believe such a hazard exists and does not plan to make an inspection 
based on such report. A copy of each such notification shall be provided 
by the agency to the appropriate certified safety and health committee, 
where established under Executive Order 12196. An agency's inspection or 
investigation report, if any, shall be made available to the employee 
making the report within 15 days after completion of the inspection, for 
safety violations or within 30 days for health violations, unless there 
are compelling reasons, and shall be made available to the Secretary or 
the Secretary's authorized representative on request.
    (e) Reports received by the Secretary of Labor. (1) Agency safety 
and health programs must have provisions for responding to employees' 
reports of unsafe or unhealthful working conditions and the Secretary 
encourages employees to use agency procedures as the most expeditious 
means of achieving abatement of hazardous conditions. It

[[Page 174]]

is recognized, however, that employee reports may be received directly 
by the Secretary.
    (2) When such reports are received directly from an employee or 
employee representative, the Secretary shall, where a certified safety 
and health committee exists, forward the report to the agency for 
handling in accordance with procedures outlined in Sec. 1960.28(d). A 
copy of the response to the originator shall be sent to the Secretary.
    (3) Where there is no certified safety and health committee, or when 
requested by half the members of a committee, the Secretary may initiate 
an inspection or other appropriate action. When the Secretary determines 
that an inspection is warranted, the Secretary shall observe the same 
response times as required of the agencies under the Executive Order and 
Sec. 1960.28(d)(3). When the Secretary determines not to make an 
inspection, the report shall be forwarded to the agency for handling in 
accordance with procedures outlined in Sec. 1960.28(d). A copy of the 
response to the originator shall be sent to the Secretary.



Sec. 1960.29  Accident investigation.

    (a) While all accidents should be investigated, including accidents 
involving property damage only, the extent of such investigation shall 
be reflective of the seriousness of the accident.
    (b) In any case, each accident which results in a fatality or the 
hospitalization of five or more employees shall be investigated to 
determine the causal factors involved. Except to the extent necessary to 
protect employees and the public, evidence at the scene of an accident 
shall be left untouched until inspectors have an opportunity to examine 
it.
    (c) Any information or evidence uncovered during accident 
investigations which would be of benefit in developing a new OSHA 
standard or in modifying or revoking an existing standard should be 
promptly transmitted to the Secretary.
    (d) The investigative report of the accident shall include 
appropriate documentation on date, time, location, description of 
operations, description of accident, photographs, interviews of 
employees and witnesses, measurements, and other pertinent information. 
A copy of the investigative report required by this section shall be 
forwarded to the official in charge of the workplace, the appropriate 
safety and health committee, and the exclusive employee representative, 
if any. The investigative report shall be made available to the 
Secretary or his authorized representative on request.



Sec. 1960.30  Abatement of unsafe or unhealthful working conditions.

    (a) The agency shall ensure the prompt abatement of unsafe and 
unhealthful conditions. Where a Notice of an Unsafe or Unhealthful 
Working Condition has been issued, abatement shall be within the time 
set forth in the notice, or in accordance with the established abatement 
plan.
    (b) The procedures for correcting unsafe or unhealthful working 
conditions shall include a follow-up, to the extent necessary, to 
determine whether the correction was made. If, upon the follow-up, it 
appears that the correction was not made, or was not carried out in 
accordance with an abatement plan prepared pursuant to paragraph (c) of 
this section, the official in charge of the establishment and the 
appropriate safety and health committee shall be notified of the failure 
to abate.
    (c) The official in charge of the establishment shall promptly 
prepare an abatement plan with the appropriate participation of the 
establishment's Safety and Health Official or a designee, if in the 
judgment of the establishment official the abatement of an unsafe or 
unhealthful working condition will not be possible within 30 calendar 
days. Such plan shall contain an explanation of the circumstances of the 
delay in abatement, a proposed timetable for the abatement, and a 
summary of steps being taken in the interim to protect employees from 
being injured as a result of the unsafe or unhealthful working 
condition. A copy of the plan shall be sent to the safety and health 
committee, and, if no committee exists, to the representative of the 
employees. Any changes in an abatement plan will require the preparation 
of a new plan in accordance with the provisions of this section.

[[Page 175]]

    (d) When a hazard cannot be abated within the authority and 
resources of the official in charge of the establishment, that official 
shall request assistance from appropriate higher authority. The local 
safety and health official, any established committee and/or employee 
representatives, and all personnel subject to the hazard shall be 
advised of this action and of interim protective measures in effect, and 
shall be kept informed of subsequent progress on the abatement plan.
    (e) When a hazard cannot be abated without assistance of the General 
Services Administration or other Federal lessor agency, the occupant 
agency shall act with the lessor agency to secure abatement. Procedures 
for coordination with the General Services Administration are contained 
in subpart E of this part.



Sec. 1960.31  Inspections by OSHA.

    (a) The Secretary or the Secretary's representatives are authorized 
to conduct, when the Secretary deems necessary, announced or unannounced 
inspections in the following situations:
    (1) Where an agency has not established occupational safety and 
health committees or where committees no longer operate in conformance 
to the requirements of subpart F of this part;
    (2) In response to a request from half the membership of record of 
any certified safety and health committee; and
    (3) In response to an employee's report of an imminent danger 
situation, where there is a certified committee, but where the Secretary 
determines that neither the agency nor the committee has responded to 
the employee.
    (b) The Secretary's inspectors or evaluators are authorized: to 
enter without delay, and at reasonable times, any building, 
installation, facility, construction site, or other area, workplace, or 
environment where work is performed by employees of the agency; to 
inspect and investigate during regular working hours and at other 
reasonable times, and within reasonable limits and in a reasonable 
manner, any such place of employment, and all pertinent conditions, 
structures, machines, apparatus, devices, equipment, and materials 
therein, and to question privately any employee, any supervisory 
employee, and/or any official in charge of an establishment.
    (c) The Secretary may also make scheduled inspections as an integral 
part of OSHA's evaluation of an agency's safety and health program in 
accordance with subpart J of this part.
    (d) OSHA inspections shall follow the general format set forth for 
agency inspections in other applicable parts of this subpart.



  Subpart E--General Services Administration and Other Federal Agencies



Sec. 1960.34  General provisions.

    Within six months of the effective date of this part, the Secretary 
of Labor and the Administrator of the General Services Administration 
(GSA) shall initiate a study of conflicts that may exist in their 
standards concerning Federal buildings, leased space, products purchased 
or supplied, and other requirements affecting Federal employee safety 
and health. Both agencies shall establish and publish a joint procedure 
for resolving conflicting standards. All other Federal agencies that 
have authority for purchasing equipment, supplies, and materials, and 
for controlling Government space, as well as the leasing of space, shall 
also be subject to the requirements of this subpart, including 
publication of a procedure for resolving conflicting standards.
    (a) In order to assist agencies in carrying out their duties under 
section 19 of the Act, Executive Order 12196, and this part, the 
Administrator or the Administrator's designee shall:
    (1) Upon an agency's request, furnish for any owned or leased space 
offered to a Federal agency for occupancy:
    (i) A report of a recent pre-occupancy inspection to identify 
serious hazards or serious violations of OSHA standards or approved 
alternate standards, and
    (ii) A plan for abatement of the hazards and violations discovered;
    (2) Provide space which:
    (i) Meets any special safety and health requirements submitted by 
the requesting agency, and

[[Page 176]]

    (ii) Does not contain either serious hazards or serious violations 
of OSHA standards or approved alternate standards which cannot be 
abated;
    (3) Repair, renovate, or alter, upon an agency's request, owned or 
leased space in a planned and controlled manner to reduce or eliminate, 
whenever possible, any hazardous exposure to the occupant agency's 
employees;
    (4) Accompany, upon request, the Secretary or the Secretary's 
designee on any inspection or investigation of a facility subject to the 
authority of the General Services Administration. Requests made for this 
purpose shall, whenever possible, be made at the GSA regional level in 
order to facilitate prompt assistance;
    (5) Investigate, upon an official agency request, reports of unsafe 
or unhealthful conditions within the scope of GSA's responsibility. Such 
investigation, when requiring an on-site inspection, shall be completed 
within 24 hours for imminent danger situations, within three working 
days for potentially serious conditions, and within 20 working days for 
other safety and health risk conditions;
    (6) Abate unsafe or unhealthful conditions disclosed by reports, 
investigation or inspection within 30 calendar days or submit to the 
occupant agency's designated liaison official an abatement plan. Such 
abatement plan shall give priority to the allocation of resources to 
bring about prompt abatement of the conditions. (GSA shall publish 
procedures for abatement of hazards in the Federal Property Management 
Regulations--41 CFR part 101);
    (7) Establish an occupancy permit program which will regulate the 
types of activities and occupancies in facilities in order to avoid 
incompatible groupings, e.g., chemical or biological laboratories in 
office space. GSA shall seek to consolidate Federal laboratory 
operations in facilities designed for such purposes;
    (8) Ensure, insofar as possible, that agency safety and health 
problems still outstanding are resolved, or otherwise answered by 
acceptable alternatives prior to renegotiation of leases; and
    (9) Ensure that GSA or other Federal lessor agencies' building 
managers maintain a log of reports of unsafe or unhealthful conditions 
submitted by tenants to include: date of receipt of report, action 
taken, and final resolution.
    (b) Product safety. Agencies such as GSA, DOD, and others which 
procure and provide supplies, equipment, devices, and material for their 
own use or use by other agencies, except for the design of uniquely 
military products as set forth in Sec. 1960.2(i), shall establish and 
maintain a product safety program which:
    (1) Ensures that items procured will allow user agencies to use such 
products safely for their designed purpose and will facilitate user 
compliance with all applicable standards.
    (2) Requires that products meet the applicable safety and health 
requirements of Federal law and regulations issued thereunder;
    (3) Ensures that hazardous material will be labelled in accordance 
with current law or regulation to alert users, shippers, occupational 
safety and health, and emergency action personnel, and others, to basic 
information concerning flammability, toxicity, compatibility, first aid 
procedures, and normal as well as emergency handling and disposal 
procedures;
    (4) Ensures availability of appropriate safety rescue and personal 
protective equipment to supply user agencies. The writing of Federal 
procurement specifications will be coordinated by GSA with OSHA/NIOSH as 
needed to assure purchase of approved products;
    (5) Ensures that products recalled by the manufacturer, either 
voluntarily or by order from a regulatory authority, are removed from 
inventory. Each recall notice or order shall be forwarded to all 
agencies which have ordered such product from or through the procuring/
supplying Federal agency, e.g., GSA, DOD, etc.;
    (6) Includes preparation of FEDSTD 313, Material Safety Data Sheets 
(MSDS), involving all interested agencies in review to keep the standard 
current. MSDS provided by agencies or contractors shall meet the 
requirements of FEDSTD 313 and be furnished to DOD for filing and 
distribution.
    (c) In order to assist agencies in carrying out their duties under 
section 19 of the Act, Executive Order 12196, and

[[Page 177]]

this part, the DOD operates and maintains an automated system to 
receive, file, reproduce, and make available MSDS data to other Federal 
agencies through the Government Printing Office or the National 
Technical Information Services.
    (d) All Federal agencies shall use MSDS either provided by DOD, or 
acquired directly from suppliers, when purchasing hazardous materials 
(as defined in FEDSTD 313) for local use. These data will be used to 
develop detailed procedures to advise employees in the workplace of the 
hazards involved with the materials and to protect them therefrom.
    (e) Safety and health services. GSA will operate and maintain for 
user agencies the following services:
    (1) Listings in the ``Federal Supply Schedule'' of safety and health 
services and equipment which are approved for use by agencies when 
needed. Examples of such services are: Workplace inspections, training, 
industrial hygiene surveys, asbestos bulk sampling, and mobile health 
testing; examples of such equipment are: personal protective equipment 
and apparel, safety devices, and environmental monitoring equipment;
    (2) Rules for assistance in the preparation of agency ``Occupant 
Emergency Plans'' (formerly called ``Facility Self-Protection Plans''), 
to be published by GSA at 41 CFR part 101;
    (3) An effective maintenance program in the Interagency Motorpool 
System which will ensure the safety and health of Federal employees 
utilizing the vehicles. Critical items to be included are: Exhaust 
systems, brakes, tires, lights, steering, and passenger restraint or 
other crash protection systems; and
    (4) A rapid response system whereby agencies can alert GSA to unsafe 
or unhealthful items purchased or contracted for by GSA, which in turn 
will evaluate the reports, initiate corrective action, as appropriate, 
and advise use agencies of interim protective measures.



Sec. 1960.35  National Institute for Occupational Safety and Health.

    (a) The Director of the National Institute for Occupational Safety 
and Health (NIOSH) shall, upon request by the Secretary, assist in:
    (1) Evaluations of Federal agency safety and health programs;
    (2) Investigations of possible safety and health hazards and
    (3) Inspections resulting from employee or committee reports of 
unsafe or unhealthful working conditions.
    (b) The Director of NIOSH shall provide a Hazard Evaluation (HE) 
program for Federal agencies. This program shall be designed to respond 
to requests for assistance in determining whether or not safety or 
health hazards are present in a Federal workplace. Requests for such 
Hazard Evaluations may be submitted to the Director by:
    (1) The Secretary of Labor;
    (2) The Head of a Federal agency;
    (3) An agency safety and health committee if half the committee 
requests such service; and
    (4) Employees who are not covered by a certified safety and health 
committee.
    (c) The Director of NIOSH may assist agencies by providing hazard 
alerts, technical services, training materials and conducting training 
programs upon request by an agency and with reimbursement.



          Subpart F--Occupational Safety and Health Committees



Sec. 1960.36  General provisions.

    (a) The occupational safety and health committees described in this 
subpart are organized and maintained basically to monitor and assist an 
agency's safety and health program. These committees assist agencies to 
maintain an open channel of communication between employees and 
management concerning safety and health matters in agency workplaces. 
The committees provide a method by which employees can utilize their 
knowledge of workplace operations to assist agency management to improve 
policies, conditions, and practices.
    (b) Agencies may elect to establish safety and health committees 
meeting the minimum requirements contained in this subpart. Where such 
committees are not established or fail to meet the minimum requirements 
established

[[Page 178]]

by the Secretary, the Secretary is authorized by section 1-401(i) of 
Executive Order 12196 to conduct unannounced inspections of agency 
workplaces when the Secretary determines them necessary.



Sec. 1960.37  Committee organization.

    (a) For agencies which elect to utilize the committee concept, 
safety and health committees shall be formed at both the national level 
and, for agencies with field or regional offices, at appropriate levels 
within the agency. To realize exemption from unannounced OSHA 
inspections, an agency must form a committee at the national level and 
at any establishment or grouping of establishments that is to be exempt, 
keeping the Secretary advised of the locations and activities where such 
committees are functioning.
    (1) The principal function of the national level committee shall be 
to consult and provide policy advice on, and monitor the performance of, 
the agency-wide safety and health program.
    (2) Committees at other appropriate levels shall be established at 
agency establishments or groupings of establishments consistent with the 
mission, size and organization of the agency and its collective 
bargaining configuration. The agency shall form committees at the lowest 
practicable local level. The principal function of the establishment (or 
local) committees is to monitor and assist in the execution of the 
agency's safety and health policies and program at the workplaces within 
their jurisdiction. Any dispute over the meaning of the term 
``appropriate levels'' shall be resolved by the Secretary.
    (b) Committees shall have equal representation of management and 
nonmanagement employees, who shall be members of record.
    (1) Management members of both national level and establishment 
level committees shall be appointed in writing by the person empowered 
to make such appointments.
    (2) Nonmanagement members of establishment level committees shall 
represent all employees of the establishment and shall be determined 
according to the following rules:
    (i) Where employees are represented under collective bargaining 
arrangements, members shall be appointed from among those recommended by 
the exclusive bargaining representative;
    (ii) Where employees are not represented under collective bargaining 
arrangements, members shall be determined through procedures devised by 
the agency which provide for effective representation of all employees; 
and
    (iii) Where some employees of an establishment are covered under 
collective bargaining arrangements and others are not, members shall be 
representative of both groups.
    (3) Nonmanagement members of national level committees shall be 
determined according to the following rules:
    (i) Where employees are represented by organizations having 
exclusive recognition on an agency basis or by organizations having 
national consultation rights, some members shall be determined in 
accordance with the terms of collective bargaining agreements and some 
members shall be selected from those organizations having consultation 
rights, and
    (ii) Where employees are not represented by organizations meeting 
the criteria of paragraph (b)(3)(i) of this section, members shall be 
determined through procedures devised by the agency which provide for 
effective representation of all employees.
    (c) Committee members should serve overlapping terms. Such terms 
should be of at least two years duration, except when the committee is 
initially organized.
    (d) The committee chairperson shall be nominated from among the 
committee's members and shall be elected by the committee members. 
Management and nonmanagement members should alternate in this position. 
Maximum service time as chairperson should be two consecutive years.
    (e) Committees shall establish a regular schedule of meetings and 
special meetings shall be held as necessary; establishment level 
committees shall meet at least quarterly and national committees shall 
meet at least annually.
    (f) Adequate advance notice of committee meetings shall be furnished 
to employees and each meeting shall be

[[Page 179]]

conducted pursuant to a prepared agenda.
    (g) Written minutes of each committee meeting shall be maintained 
and distributed to each committee member, and upon request, shall be 
made available to employees and to the Secretary.



Sec. 1960.38  Committee formation.

    (a) Upon forming such committees, heads of agencies shall submit 
information to the Secretary concerning the existence, location, and 
coverage, in terms of establishments and population, of such committees, 
certifying to the Secretary that such committees meet the requirements 
of this subpart. The information submitted should include the name and 
telephone numbers of the chairperson of each committee, and should be 
updated annually as part of the annual report required by Sec. 1960.74 
to reflect any changes that may have occurred.
    (b) If, upon evaluation, the Secretary determines that the 
operations of a committee do not meet the requirements of this subpart, 
the Secretary shall notify the agency and identify the deficiencies to 
be remedied. If the agency does not satisfy the Secretary within 90 days 
that the committee meets the requirements of this subpart, the committee 
shall not be deemed a committee under Executive Order 12196 and this 
part.

[45 FR 69798, Oct. 21, 1980; 45 FR 77003, Nov. 21, 1980, as amended at 
49 FR 3080, Jan. 24, 1984]



Sec. 1960.39  Agency responsibilities.

    (a) Agencies shall make available to committees all agency 
information relevant and necessary to their duties, except where 
prohibited by law. Examples of such information include, but are not 
limited to: The agency's safety and health policies and program; human 
and financial resources available to implement the program; accident, 
injury, and illness data; epidemiological data; employee exposure 
monitoring data; Material Safety Data Sheets; inspection reports; 
reprisal investigation reports; abatement plans; NIOSH hazard evaluation 
reports; and internal and external evaluation reports.
    (b) Agencies shall provide all committee members appropriate 
training as required by subpart H of this part.



Sec. 1960.40  Establishment committee duties.

    (a) The safety and health committee is an integral part of the 
safety and health program, and helps ensure effective implementation of 
the program at the establishment level.
    (b) An establishment committee formed under this subpart shall, 
except where prohibited by law:
    (1) Monitor and assist the safety and health program at 
establishments under its jurisdiction and make recommendations to the 
official in charge on the operation of the program;
    (2) Monitor findings and reports of workplace inspections to confirm 
that appropriate corrective measures are implemented;
    (3) When requested by the agency Safety and Health Official, or when 
the committee deems it necessary for effective monitoring of agency 
establishment inspection procedures, participate in inspections of the 
establishment;
    (4) Review internal and external evaluation reports and make 
recommendations concerning the establishment safety and health program;
    (5) Review, and recommend changes, as appropriate, to procedures for 
handling safety and health suggestions and recommendations from 
employees;
    (6) When requested by the Designated Agency Safety and Health 
Official, or when the committee deems it necessary, comment on standards 
proposed pursuant to the provisions of subpart C of this part;
    (7) Monitor and recommend changes, as required, in the level of 
resources allocated and spent on the establishment safety and health 
program;
    (8) Review agency responses to reports of hazardous conditions, 
safety and health program deficiencies, and allegations of reprisal;
    (9) Report their dissatisfaction to the Secretary if half a 
committee determines there are deficiencies in the establishment's 
safety and health program or is not satisfied with the agency's reports 
of reprisal investigations; and

[[Page 180]]

    (10) Request the Secretary to conduct an evaluation or inspection if 
half the members of record are not satisfied with an agency's response 
to a report of hazardous working conditions.



Sec. 1960.41  National committee duties.

    National committees established under this subpart shall, except 
where prohibited by law:
    (a) Monitor performance of the agency safety and health program and 
make policy recommendations to the head of the agency on the operation 
of the program;
    (b) Monitor and assist in the development and operation of the 
agency's establishment committees. As the committee deems appropriate, 
monitor and review: Reports of inspections; internal and external 
evaluation reports; agency safety and health training programs; proposed 
agency standards; agency plans for abating hazards; and responses to 
reports of hazardous conditions; safety and health program deficiencies; 
and allegations of reprisal;
    (c) Monitor and recommend changes in the resources allocated to the 
entire agency safety and health program;
    (d) Report their dissatisfaction to the Secretary if half a 
committee determines there are deficiencies in the agency's safety and 
health program or is not satisfied with the agency's reports of reprisal 
investigations; and
    (e) Request the Secretary to conduct an evaluation or inspection if 
half the members of record are not satisfied with an agency's response 
to a report of hazardous working conditions.



                   Subpart G--Allegations of Reprisal



Sec. 1960.46  Agency responsibility.

    (a) The head of each agency shall establish procedures to assure 
that no employee is subject to restraint, interference, coercion, 
discrimination or reprisal for filing a report of an unsafe or 
unhealthful working condition, or other participation in agency 
occupational safety and health program activities, or because of the 
exercise by such employee on behalf of himself or herself or others of 
any right afforded by section 19 of the Act, Executive Order 12196, or 
this part. These rights include, among other, the right of an employee 
to decline to perform his or her assigned task because of a reasonable 
belief that, under the circumstances the task poses an imminent risk of 
death or serious bodily harm coupled with a reasonable belief that there 
is insufficient time to seek effective redress through normal hazard 
reporting and abatement procedures established in accordance with this 
part.
    (b) Based on the Secretary's evaluation of agencies' procedures for 
protecting employees from reprisal, the Secretary shall report to the 
President by September 30, 1982 his findings and recommendations for 
improvements in procedures for the investigation and resolution of 
allegations of reprisal.



Sec. 1960.47  Results of investigations.

    Each agency shall keep occupational safety and health committees 
advised of agency activity regarding allegations of reprisal and any 
agency determinations thereof. Agency officials shall provide copies of 
reprisal investigation findings, if any, to the Secretary and to the 
appropriate safety and health committee.



                           Subpart H--Training



Sec. 1960.54  Training of top management officials.

    Each agency shall provide top management officials with orientation 
and other learning experiences which will enable them to manage the 
occupational safety and health programs of their agencies. Such 
orientation should include coverage of section 19 of the Act, Executive 
Order 12196, the requirements of this part, and the agency safety and 
health program.



Sec. 1960.55  Training of supervisors.

    (a) Each agency shall provide occupational safety and health 
training for supervisory employees that includes: supervisory 
responsibility for providing and maintaining safe and healthful working 
conditions for employees, the agency occupational safety and health 
program, section 19 of the Act, Executive Order 12196, this part, 
occupational safety and health standards applicable to the assigned 
workplaces, agency

[[Page 181]]

procedures for reporting hazards, agency procedures for reporting and 
investigating allegations of reprisal, and agency procedures for the 
abatement of hazards, as well as other appropriate rules and 
regulations.
    (b) This supervisory training should include introductory and 
specialized courses and materials which will enable supervisors to 
recognize and eliminate, or reduce, occupational safety and health 
hazards in their working units. Such training shall also include the 
development of requisite skills in managing the agency's safety and 
health program within the work unit, including the training and 
motivation of subordinates toward assuring safe and healthful work 
practices.



Sec. 1960.56  Training of safety and health specialists.

    (a) Each agency shall provide occupational safety and health 
training for safety and health specialists through courses, laboratory 
experiences, field study, and other formal learning experiences to 
prepare them to perform the necessary technical monitoring, consulting, 
testing, inspecting, designing, and other tasks related to program 
development and implementation, as well as hazard recognition, 
evaluation and control, equipment and facility design, standards, 
analysis of accident, injury, and illness data, and other related tasks.
    (b) Each agency shall implement career development programs for 
their occupational safety and health specialists to enable the staff to 
meet present and future program needs of the agency.



Sec. 1960.57  Training of safety and health inspectors.

    Each agency shall provide training for safety and health inspectors 
with respect to appropriate standards, and the use of appropriate 
equipment and testing procedures necessary to identify and evaluate 
hazards and suggest general abatement procedures during or following 
their assigned inspections, as well as preparation of reports and other 
documentation to support the inspection findings.



Sec. 1960.58  Training of collateral duty safety and health personnel and committee members.

    Within six months after October 1, 1980, or on appointment of an 
employee to a collateral duty position or to a committee, each agency 
shall provide training for collateral duty safety and health personnel 
and all members of certified occupational safety and health committees 
commensurate with the scope of their assigned responsibilities. Such 
training shall include: The agency occupational safety and health 
program; section 19 of the Act; Executive Order 12196; this part; agency 
procedures for the reporting, evaluation and abatement of hazards; 
agency procedures for reporting and investigating allegations of 
reprisal, the recognition of hazardous conditions and environments; 
identification and use of occupational safety and health standards, and 
other appropriate rules and regulations.



Sec. 1960.59  Training of employees and employee representatives.

    (a) Each agency shall provide appropriate safety and health training 
for employees including specialized job safety and health training 
appropriate to the work performed by the employee, for example: 
Clerical; printing; welding; crane operation; chemical analysis, and 
computer operations. Such training also shall inform employees of the 
agency occupational safety and health program, with emphasis on their 
rights and responsibilities.
    (b) Occupational safety and health training for employees of the 
agency who are representatives of employee groups, such as labor 
organizations which are recognized by the agency, shall include both 
introductory and specialized courses and materials that will enable such 
groups to function appropriately in ensuring safe and healthful working 
conditions and practices in the workplace and enable them to effectively 
assist in conducting workplace safety and health inspections. Nothing in 
this paragraph shall be construed to alter training provisions provided 
by law, Executive Order, or collective bargaining arrangements.

[[Page 182]]



Sec. 1960.60  Training assistance.

    (a) Agency heads may seek training assistance from the Secretary of 
Labor, the National Institute for Occupational Safety and Health and 
other appropriate sources.
    (b) After the effective date of Executive Order 12196, the Secretary 
shall, upon request and with reimbursement, conduct orientation for 
Designated Agency Safety and Health Officials and/or their designees 
which will enable them to manage the occupational safety and health 
programs of their agencies. Such orientation shall include coverage of 
section 19 of the Act, Executive Order 12196, and the requirements of 
this part.
    (c) Upon request and with reimbursement, the Department of Labor 
shall provide each agency with training materials to assist in 
fulfilling the training needs of this subpart, including resident and 
field training courses designed to meet selected training needs of 
agency safety and health specialists, safety and health inspectors, and 
collateral duty safety and health personnel. These materials and courses 
in no way reduce each agency's responsibility to provide whatever 
specialized training is required by the unique characteristics of its 
work.
    (d) In cooperation with OPM, the Secretary will develop guidelines 
and/or provide materials for the safety and health training programs for 
high-level managers, supervisors, members of committees, and employee 
representatives.



           Subpart I--Recordkeeping and Reporting Requirements

    Source: 50 FR 40269, Oct. 2, 1985, unless otherwise noted.



Sec. 1960.66  Purpose, scope and general provisions.

    (a) The purpose of this subpart is to establish uniform requirements 
for the collection and compilation by agencies of occupational safety 
and health data, for proper evaluation and necessary corrective action 
and to assist the Secretary in meeting the requirement to develop and 
maintain an effective program of collection, compilation, and analysis 
of occupational safety and health statistics. The term ``incident'' as 
hereinafter used in this subpart shall include all occupational injuries 
and illnesses.
    (b) In order to perform his duties under section 19 of the Act and 
Executive Order 12196, particularly with respect to providing the 
President with current information about the Federal agency safety and 
health program, it is necessary that the Secretary be promptly informed 
of serious incidents involving agency employees as provided in 
Sec. 1960.70. Assistance to agencies in the investigation of such 
incidents is available pursuant to the provisions of Executive Order 
12196 and this subpart.
    (c) Each agency shall utilize the information collected through its 
management information system to identify unsafe and unhealthful working 
conditions, and to establish program priorities.
    (d) The Department of Labor shall provide Federal agencies with the 
OSHA Form 101, when requested, to meet the recordkeeping specified in 
Sec. 1960.68.
    (e) The provisions of this subpart are not intended to discourage 
agencies from utilizing recordkeeping and reporting forms which contain 
a more detailed breakdown of information than the form provided by the 
Department of Labor.
    (f) Retention and access of employee record shall be in accordance 
with 29 CFR 1910.20.
    (g) Information concerning occupational injuries and illnesses or 
accidents which, pursuant to statute or Executive Order, must be kept 
secret in the interest of national defense or foreign policy shall be 
recorded on separate forms. Such records shall not be submitted to the 
Department of Labor, but may be used by the appropriate Federal agency 
in evaluating the agency's program to reduce occupational injuries, 
illnesses and accidents.

[50 FR 40269, Oct. 2, 1985, as amended at 60 FR 34852, July 5, 1995]



Sec. 1960.67  Log of occupational injuries and illnesses.

    (a) Each Federal agency shall maintain a log of all occupational 
injuries

[[Page 183]]

and illnesses specified in Sec. 1960.67(c) for each establishment. 
Except as provided in Sec. 1960.71 (b) and (c), the log is to be 
maintained at the establishment.
    (b) Within six working days after receiving information of an 
occupational injury or illness, apporpriate information concerning such 
injury or illness shall be entered on the log. The format printed in 
OSHA publication 2014 or an agency form with at least the same 12 data 
elements shall be used for the log.
    (c) Any occupational injury, illness or fatality reported on a CA-1, 
CA-2, or CA-6 to OWCP shall be reported on the log.

[51 FR 28378, Aug. 7, 1986]



Sec. 1960.68  Supplementary record of occupational injuries and illnesses.

    In addition to the log of occupational injuries and illnesses 
provided for under Sec. 1960.67, each Federal agency shall maintain a 
supplementary record for each occupational injury and illness. The 
record shall be completed within six working days after the receipt of 
information that an occupational injury or illness has occurred. Each 
Federal agency shall complete OWCP Forms CA-1, CA-2, and CA-6 in the 
detail required by the forms and instructions provided by the Secretary 
(OSHA-2014), and may be used as the supplementary record. OSHA Form No. 
101 or an agency equivalent may be used as a supplementary record. Where 
OWCP forms are used as supplementary records, copies shall be maintained 
in the occupational safety and/or health office.

[51 FR 28379, Aug. 7, 1986]



Sec. 1960.69  Annual summaries of Federal occupational injuries and illnesses.

    (a) Each Federal agency, on a fiscal year basis, shall compile an 
annual summary of occupational injuries and illnesses as prescribed in 
OSHA publication 2014. The summaries shall be based on the log of 
occupational injuries and illnesses maintained pursuant to Sec. 1960.67.
    (b) At the agency's option, and consistent with the Privacy Act 
considerations and applicable collective bargaining agreements, the last 
page of the log of occupational injuries and illnesses may be posted as 
the annual summary of Federal occupational injuries and illnesses.

[51 FR 28379, Aug. 7, 1986]



Sec. 1960.70  Reporting of serious accidents.

    (a) Within 8 hours after the death of any employee from a work-
related incident or the in-patient hospitalization of three or more 
employees as a result of a work-related incident, the Federal Agency 
head or his/her designee shall orally report the fatality/multiple 
hospitalization by telephone or in person to the Area Office of the 
Occupational Safety and Health Administration (OSHA), U.S. Department of 
Labor, that is nearest to the site of the incident, or by using the OSHA 
toll-free central telephone number.
    (b) This requirement applies to each such fatality or 
hospitalization of three or more employees which occurs within thirty 
(30) days of an incident.
    (c) Exception: If the Federal Agency Head or designee does not learn 
of a reportable incident at the time it occurs and the incident would 
otherwise be reportable under paragraphs (a) and (b) of this section, 
the Federal Agency Head or designee shall make the report within 8 hours 
of the time the incident is reported to any agent or employee of the 
employer.
    (d) Each report required by this section shall relate the following 
information: Establishment name; location of incident; time of the 
incident; number of fatalities or hospitalized employees; contact 
person; phone number; and a brief description of the incident.
    (e) Agencies shall provide the Office of Federal Agency Programs 
with a summary report of each fatal and catastrophic accident 
investigation. The summaries shall address the date/time of accident, 
agency/establishment name and location, and consequences, description of 
operation and the accident, causal factors, applicable standards and 
their effectiveness, and agency corrective/preventive actions.

[60 FR 18994, Apr. 14, 1995]

[[Page 184]]



Sec. 1960.71  Location and utilization of records and reports.

    (a) The provisions of the section, dealing with the availability of 
information compiled pursuant to this subpart, are designed to guide 
agencies in providing agency employees and their representatives with 
the basic information necessary to assure that they can actively 
participate in an agency safety and health program. The provisions of 
this section are also designed to encourage agencies to allow agency 
safety and health inspectors to have direct access to the accident, 
injury and illness records of the establishments they are inspecting in 
order that they may better carry out their duties pursuant to subpart D 
of this part.
    (b) The log and supplementary record required by Sec. 1960.67 and 
Sec. 1960.68 shall be maintained at each establishment. Where, for 
reasons of efficient administration or practicality, an agency must 
maintain this record at a place other than at each establishment, such 
agency shall ensure that there is available at each establishment a copy 
of this record. This record shall be complete and as current as 
possible; in no case shall more than 3 months elapse between the 
recording of an illness or injury occurring in an establishment and the 
availability of records reflecting that injury or illness at that 
establishment.
    (c)(1) For agencies engaged in activities such as agriculture, 
construction, transportation, communication, and electric, gas and 
sanitary services, which may be physically dispersed, the log and 
supplementary records, or copies thereof, may be maintained at a place 
to which employees report each day.
    (2) For personnel who do not primarily report or work at a single 
establishment, and who are generally not supervised in their daily work, 
such as traveling employees, technicians, engineers, etc., the log and 
supplementary records, or copies thereof, may be maintained at the base 
from which personnel operate to carry out their activities.
    (d) Each Federal agency shall post a copy of its agency annual 
summary of Federal occupational injuries and illnesses for an 
establishment, as compiled pursuant to Sec. 1960.67 or 1960.69, at such 
establishment, not later than 45 calendar days after the close of the 
fiscal year or otherwise disseminate a copy of the annual summary for an 
establishment in written form to all employees of the establishment. 
Copies of the annual summary shall be posted for a minimum of 30 
consecutive days in a conspicuous place or places in the establishment 
where notices to employees are customarily posted. Where establishment 
activities are physically dispersed, the notice may be posted at the 
location to which employees report each day. Where employees do not 
primarily work at or report to a single location, the notice may be 
posted at the location from which the employees operate to carry out 
their activities. Each Federal agency shall take necessary steps to 
ensure that such summary is not altered, defaced, or covered by other 
material.
    (e) The head of each agency shall ensure access to establishment 
logs and annual summaries by the establishment's Occupational Safety and 
Health Committees, employees, former employees and employee 
representatives.

[50 FR 40269, Oct. 2, 1985, as amended at 51 FR 28379, Aug. 7, 1986]



Sec. 1960.72  Access to records by Secretary.

    The records required to be maintained under the provisions of this 
subpart shall also be available and made accessible to the Secretary of 
Labor, Secretary of Health and Human Services and their authorized 
representative.



Sec. 1960.73  Retention of records.

    The records and reports required to be maintained under the 
provisions of this subpart shall be retained by each agency for five 
years following the end of the fiscal year to which they relate, and any 
location including a Federal record retention center, to which the 
Secretary or his authorized representative would have reasonable access. 
In addition, records required by OSHA standards shall be retained in 
accordance with those standards.

[[Page 185]]



Sec. 1960.74  Agency annual reports.

    (a) The Act and E.O. 12196 require all Federal agency heads to 
submit to the Secretary an annual report on their agency's occupational 
safety and health program, containing such information as the Secretary 
prescribes.
    (1) Each agency shall submit to the Secretary by January 1 of each 
year a report describing the agency occupational safety and health 
program of the previous fiscal year and objectives for the current year. 
The report shall include a summary of the agency's self-evaluation 
findings as required by Sec. 1960.78(b).
    (2) Guidelines for agency annual reports to OSHA are prescribed in 
OSHA publication 2014. The Secretary shall notify agencies by January 1 
of any changes to the guidelines for the subsequent year's report.
    (3) The agency reports shall be used in the preparation of the 
Secretary's report to the President.
    (b) The Secretary shall submit to the President by October 1 of each 
year a summary report of the status of the occupational safety and 
health of Federal employees, based on agency reports, evaluations of 
individual agency progress and problems in correcting unsafe or 
unhealthful working conditions, and recommendations for improving their 
performance.



Secs. 1960.75-1960.77  [Reserved]



Subpart J--Evaluation of Federal Occupational Safety and Health Programs



Sec. 1960.78  Purpose and scope.

    (a) The purpose of this subpart is to establish a comprehensive 
program for the evaluation of Federal employee occupational safety and 
health programs. This subpart includes the responsibilities of agency 
heads in conducting self-evaluations of the effectiveness of their 
occupational safety and health programs, and the responsibilities of the 
Secretary in evaluating the extent to which each agency head has 
developed and implemented agency programs in accordance with the 
requirements of Executive Order 12196 and this part.
    (b) Agency heads shall develop and implement a program for 
evaluating the effectiveness of their agency's occupational safety and 
health program. An annual summary report shall be submitted to the 
Secretary covering self-evaluations conducted during the previous year.
    (c) The Secretary shall conduct a comprehensive evaluation of each 
Federal agency's occupational safety and health program. Evaluations 
shall be conducted on a regular schedule to determine the performance 
levels of each agency's program. The Secretary shall submit to the 
President each year: A summary report of the status of the occupational 
safety and health of Federal employees; Department of Labor evaluations, 
together with agency responses, of individual agency progress and 
problems in correcting unsafe and unhealthful working conditions, and 
recommendations for improving agency's performance.



Sec. 1960.79  Self-evaluations of occupational safety and health programs.

    Agency heads shall develop and implement a program of self-
evaluations to determine the effectiveness of their occupational safety 
and health programs. The self-evaluations are to include qualitative 
assessments of the extent to which their agency safety and health 
programs are:
    (a) Developed in accordance with the requirements set forth in 
Executive Order 12196 and this part and,
    (b) Implemented effectively in all agency field activities.

Agencies needing assistance in developing a self-evaluation program 
should contact the Secretary.



Sec. 1960.80  Secretary's evaluations of agency occupational safety and health programs.

    (a) In accordance with section 1-401(h), the Secretary shall develop 
a comprehensive program for evaluating an agency's occupational safety 
and health program. To accomplish this, the Secretary shall conduct:
    (1) A complete and extensive evaluation of all elements of an 
agency's occupational safety and health program on a regular basis;

[[Page 186]]

    (2) Special studies of limited areas of an agency's occupational 
safety and health program as deemed necessary by the Secretary; and
    (3) Field reviews and scheduled inspections of agency workplaces as 
deemed necessary by the Secretary.
    (b) The Secretary shall develop and distribute to Federal agencies 
detailed information on the Department of Labor's evaluation program. 
The information shall include, but is not limited to:
    (1) The major program elements included in a complete and extensive 
evaluation of an agency's occupational safety and health program;
    (2) The methods and factors used to determine the effectiveness of 
each element of an agency's program;
    (3) The factors used to define ``large'' or ``more hazardous'' 
Federal agencies, establishments, or operations;
    (4) The procedures for conducting evaluations including field visits 
and scheduled inspections; and
    (5) The reporting format for agency heads in submitting annual 
summaries of their self-evaluation programs.
    (c) Prior to the initiation of an agency evaluation, the Department 
of Labor will review the annual agency self-evaluation summary report. 
The Secretary will then develop a program evaluation plan before the 
initiation of an agency evaluation. A copy of the plan shall be 
furnished to the agency to be evaluated at the time of the notification 
of the evaluation.
    (d) To facilitate the evaluation process and to insure full 
understanding of the procedures to be followed and the support required 
from the agency, the Secretary, or the Secretary's representative, shall 
conduct an opening conference with the agency head or designee. At the 
opening conference, the Secretary's authority and evaluation plan will 
be explained.
    (e) The agency evaluation should be completed within 90 calendar 
days of the date of the opening conference.
    (f) A report of the evaluation shall be submitted to the agency head 
by the Secretary within 90 calendar days from the date of the closing 
conference.
    (g) Agency heads shall respond to the evaluation report within 60 
calendar days of receipt of the report.

[45 FR 69798, Oct. 21, 1980; 45 FR 77003, Nov. 21, 1980]



           Subpart K--Field Federal Safety and Health Councils



Sec. 1960.84  Purpose.

    (a) Executive Order 12196 provides that the Secretary shall 
``facilitate the exchange of ideas and information throughout the 
Government about occupational safety and health.''
    (b) Consistent with this objective, the Secretary will continue to 
sponsor and/or provide guidance for those Field Federal Safety and 
Health Councils now established and in operation, and establish new 
field councils as necessary. The field councils will consist primarily 
of qualified representatives of local area Federal field activities 
whose duties pertain to occupational safety and health, and also of 
representatives of recognized local labor organizations, or other 
civilian employee organizations, at local area Federal field activities. 
For the purpose of this subpart the definition of field activity will be 
provided by each agency.



Sec. 1960.85  Role of the Secretary.

    (a) The Secretary shall maintain liaison with agency heads to ensure 
that they encourage their field activities to participate actively in 
field council programs. To ensure maximum participation, the field 
councils' annual reports to the Secretary shall provide descriptions of 
the degree of management and employee participation by the defined 
Federal field activities. The Secretary shall annually furnish each 
agency head with a report consolidating the information received as to 
the participation of the agency's several field installations in field 
council activities.
    (b) The Secretary shall provide leadership and guidance and make 
available necessary equipment, supplies, and staff services to the Field 
Federal Safety and Health Councils to assist them in carrying out their 
responsibilities. The Secretary shall also provide consultative and 
technical services to

[[Page 187]]

field councils. These services shall involve aid in any phase of 
developing and planning programs; and in sponsoring, conducting or 
supporting safety and health training courses.



Sec. 1960.86  Establishing councils.

    (a) Those field councils established and in operation prior to the 
effective date of this subpart will continue to function without 
interruption provided they are operating in accordance with the 
provision of their charter and this subpart.
    (b) The Secretary may establish a council in any area where ten or 
more Federal establishments totaling 300 or more employees are located 
within an area having a radius of 50 miles, and there is substantial 
agreement among the agencies that such a council would be useful. In any 
such area where there is no council already established, a field 
representative of the Secretary may, upon his own initiative or at the 
request of any establishment within the area, contact representatives of 
all establishments within the area and encourage the organization of a 
field council.
    (c) After a new council has been organized, officers elected, and 
articles of organization drafted and accepted by the council membership, 
a formal request for recognition as a field council shall be sent to the 
Secretary. Upon approval of the Articles of Organization, a charter will 
be issued.
    (d) At the first general meeting of the council, committees should 
be appointed and the cooperation of all participants should be solicited 
to aid the functioning of committees and the successful accomplishment 
of the council's objectives.



Sec. 1960.87  Objectives.

    The basic objective of field councils is to facilitate the exchange 
of ideas and information to assist agencies to reduce the incidence, 
severity and cost of occupational accidents, injuries, and illnesses. 
Field councils shall act on behalf of the Secretary or his designees on 
occupational safety and health activities in carrying out within their 
respective geographic areas the following functions:
    (a) To act as a clearinghouse on information and data on 
occupational accidents, injuries, and illnesses and their prevention.
    (b) To plan, organize and conduct field council meetings or programs 
which will give technical advice and information on occupational safety 
and health to representatives of participating agencies and employee 
organizations.
    (c) To promote improvement of safety and health programs and 
organizations in each Federal agency represented or participating in 
council activities.
    (d) To promote coordination, cooperation, and sharing of resources 
and expertise to aid agencies with inadequate or limited resources. 
These objectives can be accomplished in a variety of ways. For example, 
field councils could organize and conduct training programs for employee 
representatives, collateral duty and professional safety and health 
personnel, coordinate or promote programs for inspections, or, on 
request, conduct inspections and evaluations of the agencies' safety and 
health programs.
    (e) To provide Federal Executive Boards, Federal Executive 
Associations, labor union organizations and other employee 
representatives with information on the administrative and technical 
aspects of safety and health programs.
    (f) To evaluate the safety and health problems peculiar to local 
conditions and facilitate solutions to these problems through council 
activities.
    (g) To develop a cooperative relationship with local community 
leaders by informing them of the existing functions and objectives of 
the council and by calling on them for support and participation in 
council meetings and activities.



Sec. 1960.88  Membership and participation.

    (a) Each field council shall consist of the designated 
representatives of local Federal activities appointed by their 
respective activity heads, after consultation with appropriate employee 
representatives and appropriate certified safety and health committees.

[[Page 188]]

    (b) Federal agency heads should encourage each field activity having 
responsibility for the safety and health of agency employees to 
participate in the programs of these councils.
    (c) Each activity head shall appoint an equal number of officially 
designated representatives (with designated alternates), from management 
and from nonmanagement employees, consistent with applicable collective 
bargaining arrangements.
    (d) Representatives shall be selected from individuals in the 
following categories:
    (1) Federal occupational safety and health professionals.
    (2) Related Federal professionals, or collateral duty personnel. 
This includes persons employed in professions or occupations related to 
or concerned with safety and health of employees.
    (3) Line management officials.
    (4) Representatives of recognized Federal labor or other employee 
organizations.
    (i) Where certified occupational safety and health committees exist, 
nonmanagement members of the committees shall be given the opportunity 
to select one individual for official appointment to field councils by 
the activity head.
    (ii) Where employees are represented by collective bargaining 
arrangements, but no committee exists, nonmanagement members of field 
councils shall be selected from among those recommended by the exclusive 
bargaining representatives for official appointment to field councils by 
the activity head.
    (iii) Where some employees in an activity are represented by 
collective bargaining arrangements and others are not, the agency head 
should solicit nominations for the agency's designated nonmanagement 
representative and alternate both from lawful labor organization(s) with 
collective bargaining status and from employees not represented through 
collective bargaining and should select from the nominees for official 
appointment as designated employee representatives on the field council.
    (e) Representatives from non-Federal organizations. Associate 
membership may be granted to any non-Federally employed person who 
demonstrated interest in occupational safety and health. An associate 
member has no voting rights and may not hold any office.
    (f) No maximum limitation shall be imposed by a council on itself, 
in regard to the numbers of personnel in any of the above categories 
that may attend meetings and/or participate in field council activities. 
An agency is free to have any number of individuals, in addition to the 
officially designated representatives participate in council activities.
    (g) Only officially designated agency representatives or their 
alternates shall have voting privileges. All representatives and 
participants shall serve without additional compensation.
    (h) Travel funds shall be made available equally to management and 
nonmanagement employee representatives.



Sec. 1960.89  Organization.

    (a) Field council officers shall include, as a minimum, a 
chairperson, vice chairperson, and secretary. Officers shall be elected 
for a one or two-year term on a calendar year basis by a majority vote 
of the designated representatives. Election of officers shall be held at 
least 60 days before the beginning of a calendar year. The election may 
be conducted at a regularly scheduled meeting or by letter ballot.
    (b) Each council shall notify the appropriate OSHA Regional Office 
and the Office of Federal Agency Safety and Health Programs of the name, 
agency address, and telephone number of each newly elected official.
    (c) Each council shall have an Executive Committee consisting of all 
elected officers, chairpersons of appointed committees and the immediate 
past chairperson of the field council.
    (d) In addition to the Executive Committee, each council shall have 
either a membership committee, a program committee and a finance 
committee, or a council official designated responsibility in these 
areas. Additional committees may be appointed by the chairperson for 
specific purposes as warranted.

[[Page 189]]



Sec. 1960.90  Operating procedures.

    (a) The Executive Committee of each council shall meet at least 45 
days before the beginning of each calendar year to approve an annual 
program for the council designed to accomplish the objectives and 
functions stated in Sec. 1960.87. In addition, the Executive Committee 
shall meet periodically to ensure that the meetings and other activities 
of the council are being conducted as outlined in the council schedule.
    (b) The council program shall include at least four meetings or 
activities per year dealing with occupational safety and health issues.
    (c) Each field council shall submit to the Secretary or his designee 
by March 15 of each year a report describing the activities and programs 
of the previous calender year and plans for the current year. In 
addition, the report shall address the participation and attendance of 
designated representatives of the council. The Office of Federal Agency 
Safety and Health Programs, OSHA, shall furnish guidelines to field 
councils concerning the preparation of this report.
    (d) Upon determination that a council is not operating in accordance 
with its charter and the provisions of this subpart, and after 
consultation with appropriate OSHA regional officials, the Secretary 
shall revoke the council's charter. Upon revocation of a charter, the 
council shall surrender all its government property to the appropriate 
OSHA regional official. Any continuing or future organization in the 
same geographical area shall not use the title Field Federal Safety and 
Health Council, or any derivation thereof, unless formally rechartered 
by the Secretary. Notification of revocation of a council's charter 
shall be sent to the chairperson, where identifiable, and to the 
appropriate OSHA Regional Office.



PART 1975--COVERAGE OF EMPLOYERS UNDER THE WILLIAMS-STEIGER OCCUPATIONAL SAFETY AND HEALTH ACT OF 1970--Table of Contents




Sec.
1975.1  Purpose and scope.
1975.2  Basis of authority.
1975.3  Extent of coverage.
1975.4  Coverage.
1975.5  States and political subdivisions thereof.
1975.6  Policy as to domestic household employment activities in private 
          residences.

    Authority: Secs. 2, 3, 4, 8, Occupational Safety and Health Act of 
1970 (29 U.S.C. 651, 652, 653, 657); Secretary of Labor's Order No. 12-
71 (36 FR 8754).

    Source: 37 FR 929, Jan. 21, 1972, unless otherwise noted.



Sec. 1975.1  Purpose and scope.

    (a) Among other things, the Williams-Steiger Act poses certain 
duties on employers. This part has the limited purpose and scope of 
clarifying which persons are considered to be employers either as a 
matter of interpretation of the intent and terms of the Act or as a 
matter of policy appropriate to administering and enforcing the Act. In 
short, the purpose and scope of this part is to indicate which persons 
are covered by the Act as employers and, as such, subject to the 
requirements of the Act.
    (b) It is not the purpose of this part to indicate the legal effect 
of the Act, once coverage is determined. Section 4(b)(1) of the Act 
provides that the statute shall be inapplicable to working conditions to 
the extent they are subject to another Federal agency's exercise of 
different statutory authority affecting the occupational safety and 
health aspects of those conditions. Therefore, a person may be 
considered an employer covered by the Act, and yet standards issued 
under the Act respecting certain working conditions would not be 
applicable to the extent those conditions were subject to another 
agency's authority.



Sec. 1975.2  Basis of authority.

    The power of Congress to regulate employment conditions under the 
Williams-Steiger Occupational Safety and Health Act of 1970, is derived 
mainly from the Commerce Clause of the Constitution. (section 2(b), Pub. 
L. 91-596; U.S. Constitution, Art. I, Sec. 8, Cl. 3; ``United States v. 
Darby,'' 312 U.S. 100.) The reach of the Commerce Clause extends beyond 
Federal regulation of the channels and instrumentalities of

[[Page 190]]

interstate commerce so as to empower Congress to regulate conditions or 
activities which affect commerce even though the activity or condition 
may itself not be commerce and may be purely intrastate in character. 
(``Gibbons v. Ogden,'' 9 Wheat. 1, 195; ``United States v. Darby,'' 
supra; ``Wickard v. Filburn,'' 317 U.S. 111, 117; and ``Perez v. United 
States,'' 91 S. Ct. 1357 (1971).) And it is not necessary to prove that 
any particular intrastate activity affects commerce, if the activity is 
included in a class of activities which Congress intended to regulate 
because the class affects commerce. (``Heart of Atlanta Motel, Inc. v. 
United States,'' 379 U.S. 241; ``Katzenbach v. McClung,'' 379 U.S. 294; 
and ``Perez v. United States,'' supra.) Generally speaking, the class of 
activities which Congress may regulate under the commerce power may be 
as broad and as inclusive as Congress intends, since the commerce power 
is plenary and has no restrictions placed on it except specific 
constitutional prohibitions and those restrictions Congress, itself, 
places on it. (``United States v. Wrightwood Dairy Co.,'' 315 U.S. 110; 
and ``United States v. Darby,'' supra.) Since there are no specific 
constitutional prohibitions involved, the issue is reduced to the 
question: How inclusive did Congress intend the class of activities to 
be under the Williams-Steiger Act?



Sec. 1975.3  Extent of coverage.

    (a) Section 2(b) of the Williams-Steiger Occupational Safety and 
Health Act (Public Law 91-596) sets forth the purpose and policy of 
Congress in enacting this legislation. In pertinent part, that section 
reads as follows:

    (b) Congress declares it to be its purpose and policy, through the 
exercise of its powers to regulate commerce among the several States and 
with foreign nations and to provide for the general welfare, to assure 
so far as possible every working man and woman in the Nation safe and 
healthful working conditions and to preserve our human resources * * *


Congressman William Steiger described the scope of the Act's coverage in 
the following words during a discussion of the legislation on the floor 
of the House of Representatives:

    The coverage of this bill is as broad, generally speaking, as the 
authority vested in the Federal Government by the commerce clause of the 
Constitution (Cong. Rec., vol. 116, p. H-11899, Dec. 17, 1970)


The legislative history, as a whole, clearly shows that every amendment 
or other proposal which would have resulted in any employee's being left 
outside the protections afforded by the Act was rejected. The reason for 
excluding no employee, either by exemption or limitation on coverage, 
lies in the most fundamental of social purposes of this legislation 
which is to protect the lives and health of human beings in the context 
of their employment.
    (b) The Williams-Steiger Act includes special provisions (sections 
19 and 18(c)(6)) for the protection of Federal and State employees to 
whom the Act's other provisions are made inapplicable under section 
3(5), which excludes from the definition of the term ``employer'' both 
the United States and any State or political subdivision of a State.
    (c) In the case of section 4(b)(1) of the Act, which makes the Act 
inapplicable to working conditions to the extent they are protected 
under laws administered by other Federal agencies, Congress did not 
intend to grant any general exemptions under the Act; its sole purpose 
was to avoid duplication of effort by Federal agencies in establishing a 
national policy of occupational safety and health protection.
    (d) Interpretation of the provisions and terms of the Williams-
Steiger Act must of necessity be consistent with the express intent of 
Congress to exercise its commerce power to the extent that, ``so far as 
possible, every working man and woman in the Nation'' would be protected 
as provided for in the Act. The words ``so far as possible'' refer to 
the practical extent to which governmental regulation and expended 
resources are capable of achieving safe and healthful working 
conditions; the words are not ones of limitation on coverage. The 
controlling definition for the purpose of coverage under the Act is that 
of ``employer'' contained in section 3(5). This term is defined as 
follows:

    (5) The term ``employer'' means any person engaged in a business 
affecting commerce

[[Page 191]]

who has employees, but does not include the United States or any State 
or political subdivision of a State.


In carrying out the broad coverage mandate of Congress, we interpret the 
term ``business'' in the above definition as including any commercial or 
noncommercial activity affecting commerce and involving the employment 
of one or more employees; the term ``commerce'' is defined in the Act 
itself, in section 3(3). Since the legislative history and the words of 
the statute, itself, indicate that Congress intended the full exercise 
of its commerce power in order to reduce employment-related hazards 
which, as a whole impose a substantial burden on commerce, it follows 
that all employments where such hazards exist or could exist (that is, 
those involving the employment of one or more employees) were intended 
to be regulated as a class of activities which affects commerce.



Sec. 1975.4  Coverage.

    (a) General. Any employer employing one or more employees would be 
an ``employer engaged in a business affecting commerce who has 
employees'' and, therefore, he is covered by the Act as such.
    (b) Clarification as to certain employers--(1) The professions, such 
as physicians, attorneys, etc. Where a member of a profession, such as 
an attorney or physician, employs one or more employees such member 
comes within the definition of an employer as defined in the Act and 
interpreted thereunder and, therefore, such member is covered as an 
employer under the Act and required to comply with its provisions and 
with the regulations issued thereunder to the extent applicable.
    (2) Agricultural employers. Any person engaged in an agricultural 
activity employing one or more employees comes within the definition of 
an employer under the Act, and therefore, is covered by its provisions. 
However, members of the immediate family of the farm employer are not 
regarded as employees for the purposes of this definition.
    (3) Indians. The Williams-Steiger Act contains no special provisions 
with respect to different treatment in the case of Indians. It is well 
settled that under statutes of general application, such as the 
Williams-Steiger Act, Indians are treated as any other person, unless 
Congress expressly provided for special treatment. ``FPC v. Tuscarora 
Indian Nation,'' 362 U.S. 99, 115-118 (1960); ``Navajo Tribe v. 
N.L.R.B.,'' 288 F.2d 162, 164-165 (D.C. Cir. 1961), cert. den. 366 U.S. 
928 (1961). Therefore, provided they otherwise come within the 
definition of the term ``employer'' as interpreted in this part, Indians 
and Indian tribes, whether on or off reservations, and non-Indians on 
reservations, will be treated as employers subject to the requirements 
of the Act.
    (4) Nonprofit and charitable organizations. The basic purpose of the 
Williams-Steiger Act is to improve working environments in the sense 
that they impair, or could impair, the lives and health of employees. 
Therefore, certain economic tests such as whether the employer's 
business is operated for the purpose of making a profit or has other 
economic ends, may not properly be used as tests for coverage of an 
employer's activity under the Williams-Steiger Act. To permit such 
economic tests to serve as criteria for excluding certain employers, 
such as nonprofit and charitable organizations which employ one or more 
employees, would result in thousands of employees being left outside the 
protections of the Williams-Steiger Act in disregard of the clear 
mandate of Congress to assure ``every working man and woman in the 
Nation safe and healthful working conditions *  *  *''. Therefore, any 
charitable or non-profit organization which employs one or more 
employees is covered under the Williams-Steiger Act and is required to 
comply with its provisions and the regulations issued thereunder. (Some 
examples of covered charitable or non-profit organizations would be 
disaster relief organizations, philanthropic organizations, trade 
associations, private educational institutions, labor organizations, and 
private hospitals.)
    (c) Coverage of churches and special policy as to certain church 
activities--(1) Churches. Churches or religious organizations, like 
charitable and nonprofit organizations, are considered employers under 
the Act where they employ

[[Page 192]]

one or more persons in secular activities. As a matter of enforcement 
policy, the performance of, or participation in, religious services (as 
distinguished from secular or proprietary activities whether for 
charitable or religion-related purposes) will be regarded as not 
constituting employment under the Act. Any person, while performing 
religious services or participating in them in any degree is not 
regarded as an employer or employee under the Act, notwithstanding the 
fact that such person may be regarded as an employer or employee for 
other purposes--for example, giving or receiving remuneration in 
connection with the performance of religious services.
    (2) Examples. Some examples of coverage of religious organizations 
as employers would be: A private hospital owned or operated by a 
religious organization; a private school or orphanage owned or operated 
by a religious organization; commercial establishments of religious 
organizations engaged in producing or selling products such as alcoholic 
beverages, bakery goods, religious goods, etc.; and administrative, 
executive, and other office personnel employed by religious 
organizations. Some examples of noncoverage in the case of religious 
organizations would be: Clergymen while performing or participating in 
religious services; and other participants in religious services; 
namely, choir masters, organists, other musicians, choir members, 
ushers, and the like.



Sec. 1975.5  States and political subdivisions thereof.

    (a) General. The definition of the term ``employer'' in section 3(5) 
of the Act excludes the United States and States and political 
subdivisions of a State:

    (5) The term ``employer'' means a person engaged in a business 
affecting commerce who has employees, but does not include the United 
States or any State or political subdivision of a State.


The term ``State'' is defined as follows in section 3(7) of the Act:

    (7) The term ``State'' includes a State of the United States, the 
District of Columbia, Puerto Rico, the Virgin Islands, American Samoa, 
Guam, and the Trust Territory of the Pacific Islands.


Since States, as defined in section 3(7) of the Act, and political 
subdivisions thereof are not regarded as employers under section 3(5) of 
the Act, they would not be covered as employers under the Act, except to 
the extent that section 18(c)(6), and the pertinent regulations 
thereunder, require as a condition of approval by the Secretary of Labor 
of a State plan that such plan:

    (6) Contain[s] satisfactory assurances that such State will, to the 
extent permitted by its law, establish and maintain an effective and 
comprehensive occupational safety and health program applicable to all 
employees of public agencies of the State and its political 
subdivisions, which program is as effective as the standards contained 
in an approved plan.

    (b) Tests. Any entity which has been (1) created directly by the 
State, so as to constitute a department or administrative arm of the 
government, or (2) administered by individuals who are controlled by 
public officials and responsible to such officials or to the general 
electorate, shall be deemed to be a ``State or political subdivision 
thereof'' under section 3(5) of the Act and, therefore, not within the 
definition of employer, and, consequently, not subject to the Act as an 
employer.
    (c) Factors for meeting the tests. Various factors will be taken 
into consideration in determining whether an entity meets the test 
discussed above. Some examples of these factors are:

    Are the individuals who administer the entity appointed by a public 
official or elected by the general electorate?
    What are the terms and conditions of the appointment?
    Who may dismiss such individuals and under what procedures?
    What is the financial source of the salary of these individuals?
    Does the entity earn a profit? Are such profits treated as revenue?
    How are the entity's functions financed? What are the powers of the 
entity and are they usually characteristic of a government rather than a 
private instrumentality like the power of eminent domain?
    How is the entity regarded under State and local law as well as 
under other Federal laws?
    Is the entity exempted from State and local tax laws?

[[Page 193]]

    Are the entity's bonds, if any, tax-exempt? As to the entity's 
employees, are they regarded like employees of other State and political 
subdivisions?
    What is the financial source of the employee-payroll?
    How do employee fringe benefits, rights, obligations, and 
restrictions of the entity's employees compare to those of the employees 
of other State and local departments and agencies?


In evaluating these factors, due regard will be given to whether any 
occupational safety and health program exists to protect the entity's 
employees.
    (d) Weight of the factors. The above list of factors is not 
exhaustive and no factor, isolated from the particular facts of a case, 
is assigned any particular weight for the purpose of a determination by 
the Secretary of Labor as to whether a given entity is a ``State or 
political subdivision of a State'' and, as such, not subject to the Act 
as an ``employer''. Each case must be viewed on its merits; and whether 
a single factor will be decisive, or whether the factors must be viewed 
in their relationship to each other as part of a sum total, also depends 
on the merits of each case.
    (e) Examples. (1) The following types of entities would normally be 
regarded as not being employers under section 3(5) of the Act: the State 
Department of Labor and Industry; the State Highway and Motor Vehicle 
Department; State, county, and municipal law enforcement agencies as 
well as penal institutions; State, county, and municipal judicial 
bodies; State University Boards of Trustees; State, county, and 
municipal public school boards and commissions; and public libraries.
    (2) Depending on the facts in the particular situation, the 
following types of entities would probably be excluded as employers 
under section 3(5) of the Act: harbor districts, irrigation districts, 
port authorities, bi-State authorities over bridges, highways, rivers, 
harbors, etc.; municipal transit entities; and State, county, and local 
hospitals and related institutions.
    (3) The following examples are of entities which would normally not 
be regarded as a ``State or political subdivision of a State'', but 
unusual factors to the contrary in a particular case may indicate 
otherwise: Public utility companies, merely regulated by State or local 
bodies; businesses, such as alcoholic beverage distributors, licensed 
under State or local law; other business entities which under agreement 
perform certain functions for the State, such as gasoline stations 
conducting automobile inspections for State and county governments.



Sec. 1975.6  Policy as to domestic household employment activities in private residences.

    As a matter of policy, individuals who, in their own residences, 
privately employ persons for the purpose of performing for the benefit 
of such individuals what are commonly regarded as ordinary domestic 
household tasks, such as house cleaning, cooking, and caring for 
children, shall not be subject to the requirements of the Act with 
respect to such employment.



PART 1977--DISCRIMINATION AGAINST EMPLOYEES EXERCISING RIGHTS UNDER THE WILLIAMS-STEIGER OCCUPATIONAL SAFETY AND HEALTH ACT OF 1970--Table of Contents




                                 General

Sec.
1977.1  Introductory statement.
1977.2  Purpose of this part.
1977.3  General requirements of section 11(c) of the Act.
1977.4  Persons prohibited from discriminating.
1977.5  Persons protected by section 11(c).
1977.6  Unprotected activities distinguished.

                          Specific Protections

1977.9  Complaints under or related to the Act.
1977.10  Proceedings under or related to the Act.
1977.11  Testimony.
1977.12  Exercise of any right afforded by the Act.

                               Procedures

1977.15  Filing of complaint for discrimination.
1977.16  Notification of Secretary of Labor's determination.
1977.17  Withdrawal of complaint.
1977.18  Arbitration or other agency proceedings.

[[Page 194]]

                         Some Specific Subjects

1977.22  Employee refusal to comply with safety rules.
1977.23  State plans.

    Authority: Secs. 8, 11, Occupational Safety and Health Act of 1970 
(29 U.S.C. 657, 660); Secretary of Labor's Order No. 12-71 (36 FR 8754).

    Source: 38 FR 2681, Jan. 29, 1973, unless otherwise noted.

                                 General



Sec. 1977.1  Introductory statement.

    (a) The Occupational Safety and Health Act of 1970 (29 U.S.C. 651, 
et seq.), hereinafter referred to as the Act, is a Federal statute of 
general application designed to regulate employment conditions relating 
to occupational safety and health and to achieve safer and healthier 
workplaces throughout the Nation. By terms of the Act, every person 
engaged in a business affecting commerce who has employees is required 
to furnish each of his employees employment and a place of employment 
free from recognized hazards that are causing or likely to cause death 
or serious physical harm, and, further, to comply with occupational 
safety and health standards promulgated under the Act. See part 1975 of 
this chapter concerning coverage of the Act.
    (b) The Act provides, among other things, for the adoption of 
occupational safety and health standards, research and development 
activities, inspections and investigations of workplaces, and 
recordkeeping requirements. Enforcement procedures initiated by the 
Department of Labor, review proceedings before an independent quasi-
judicial agency (the Occupational Safety and Health Review Commission), 
and express judicial review are provided by the Act. In addition, States 
which desire to assume responsibility for development and enforcement of 
standards which are at least as effective as the Federal standards 
published in this chapter may submit plans for such development and 
enforcement of the Secretary of Labor.
    (c) Employees and representatives of employees are afforded a wide 
range of substantive and procedural rights under the Act. Moreover, 
effective implementation of the Act and achievement of its goals depend 
in large part upon the active but orderly participation of employees, 
individually and through their representatives, at every level of safety 
and health activity.
    (d) This part deals essentially with the rights of employees 
afforded under section 11(c) of the Act. Section 11(c) of the Act 
prohibits reprisals, in any form, against employees who exercise rights 
under the Act.



Sec. 1977.2  Purpose of this part.

    The purpose of this part is to make available in one place 
interpretations of the various provisions of section 11(c) of the Act 
which will guide the Secretary of Labor in the performance of his duties 
thereunder unless and until otherwise directed by authoritative 
decisions of the courts, or concluding, upon reexamination of an 
interpretation, that it is incorrect.



Sec. 1977.3  General requirements of section 11(c) of the Act.

    Section 11(c) provides in general that no person shall discharge or 
in any manner discriminate against any employee because the employee 
has:
    (a) Filed any complaint under or related to the Act;
    (b) Instituted or caused to be instituted any proceeding under or 
related to the Act;
    (c) Testified or is about to testify in any proceeding under the Act 
or related to the Act; or
    (d) Exercised on his own behalf or on behalf of others any right 
afforded by the Act.

Any employee who believes that he has been discriminated against in 
violation of section 11(c) of the Act may, within 30 days after such 
violation occurs, lodge a complaint with the Secretary of Labor alleging 
such violation. The Secretary shall then cause appropriate investigation 
to be made. If, as a result of such investigation, the Secretary 
determines that the provisions of section 11(c) have been violated civil 
action may be instituted in any appropriate United States district 
court, to restrain violations of section 11(c)(1) and to obtain other 
appropriate relief, including rehiring or reinstatement of the employee 
to his former position

[[Page 195]]

with back pay. Section 11(c) further provides for notification of 
complainants by the Secretary of determinations made pursuant to their 
complaints.



Sec. 1977.4  Persons prohibited from discriminating.

    Section 11(c) specifically states that ``no person shall discharge 
or in any manner discriminate against any employee'' because the 
employee has exercised rights under the Act. Section 3(4) of the Act 
defines ``person'' as ``one or more individuals, partnerships, 
associations, corporations, business trusts, legal representatives, or 
any group of persons.'' Consequently, the prohibitions of section 11(c) 
are not limited to actions taken by employers against their own 
employees. A person may be chargeable with discriminatory action against 
an employee of another person. Section 11(c) would extend to such 
entities as organizations representing employees for collective 
bargaining purposes, employment agencies, or any other person in a 
position to discriminate against an employee. See, Meek v. United 
States, 136 F. 2d 679 (6th Cir., 1943); Bowe v. Judson C. Burns, 137 F. 
2d 37 (3rd Cir., 1943).



Sec. 1977.5  Persons protected by section 11(c).

    (a) All employees are afforded the full protection of section 11(c). 
For purposes of the Act, an employee is defined as ``an employee of an 
employer who is employed in a business of his employer which affects 
commerce.'' The Act does not define the term ``employ.'' However, the 
broad remedial nature of this legislation demonstrates a clear 
congressional intent that the existence of an employment relationship, 
for purposes of section 11(c), is to be based upon economic realities 
rather than upon common law doctrines and concepts. See, U.S. v. Silk, 
331 U.S. 704 (1947); Rutherford Food Corporation v. McComb, 331 U.S. 722 
(1947).
    (b) For purposes of section 11(c), even an applicant for employment 
could be considered an employee. See, NLRB v. Lamar Creamery, 246 F. 2d 
8 (5th Cir., 1957). Further, because section 11(c) speaks in terms of 
any employee, it is also clear that the employee need not be an employee 
of the discriminator. The principal consideration would be whether the 
person alleging discrimination was an ``employee'' at the time of 
engaging in protected activity.
    (c) In view of the definitions of ``employer'' and ``employee'' 
contained in the Act, employees of a State or political subdivision 
thereof would not ordinarily be within the contemplated coverage of 
section 11(c).



Sec. 1977.6  Unprotected activities distinguished.

    (a) Actions taken by an employer, or others, which adversely affect 
an employee may be predicated upon nondiscriminatory grounds. The 
proscriptions of section 11(c) apply when the adverse action occurs 
because the employee has engaged in protected activities. An employee's 
engagement in activities protected by the Act does not automatically 
render him immune from discharge or discipline for legitimate reasons, 
or from adverse action dictated by non-prohibited considerations. See, 
NLRB v. Dixie Motor Coach Corp., 128 F. 2d 201 (5th Cir., 1942).
    (b) At the same time, to establish a violation of section 11(c), the 
employee's engagement in protected activity need not be the sole 
consideration behind discharge or other adverse action. If protected 
activity was a substantial reason for the action, or if the discharge or 
other adverse action would not have taken place ``but for'' engagement 
in protected activity, section 11(c) has been violated. See, Mitchell v. 
Goodyear Tire & Rubber Co., 278 F. 2d 562 (8th Cir., 1960); Goldberg v. 
Bama Manufacturing, 302 F. 2d 152 (5th Cir., 1962). Ultimately, the 
issue as to whether a discharge was because of protected activity will 
have to be determined on the basis of the facts in the particular case.

                          Specific Protections



Sec. 1977.9  Complaints under or related to the Act.

    (a) Discharge of, or discrimination against, an employee because the 
employee has filed ``any complaint * * * under or related to this Act * 
* *'' is prohibited by section 11(c). An example of a complaint made 
``under'' the Act

[[Page 196]]

would be an employee request for inspection pursuant to section 8(f). 
However, this would not be the only type of complaint protected by 
section 11(c). The range of complaints ``related to'' the Act is 
commensurate with the broad remedial purposes of this legislation and 
the sweeping scope of its application, which entails the full extent of 
the commerce power. (See Cong. Rec., vol. 116 p. P. 42206 Dec. 17, 
1970).
    (b) Complaints registered with other Federal agencies which have the 
authority to regulate or investigate occupational safety and health 
conditions are complaints ``related to'' this Act. Likewise, complaints 
made to State or local agencies regarding occupational safety and health 
conditions would be ``related to'' the Act. Such complaints, however, 
must relate to conditions at the workplace, as distinguished from 
complaints touching only upon general public safety and health.
    (c) Further, the salutary principles of the Act would be seriously 
undermined if employees were discouraged from lodging complaints about 
occupational safety and health matters with their employers. (Section 
2(1), (2), and (3)). Such complaints to employers, if made in good 
faith, therefore would be related to the Act, and an employee would be 
protected against discharge or discrimination caused by a complaint to 
the employer.



Sec. 1977.10  Proceedings under or related to the Act.

    (a) Discharge of, or discrimination against, any employee because 
the employee has ``instituted or caused to be instituted any proceeding 
under or related to this Act'' is also prohibited by section 11(c). 
Examples of proceedings which could arise specifically under the Act 
would be inspections of worksites under section 8 of the Act, employee 
contest of abatement date under section 10(c) of the Act, employee 
initiation of proceedings for promulgation of an occupational safety and 
health standard under section 6(b) of the Act and part 1911 of this 
chapter, employee application for modification of revocation of a 
variance under section 6(d) of the Act and part 1905 of this chapter, 
employee judicial challenge to a standard under section 6(f) of the Act 
and employee appeal of an Occupational Safety and Health Review 
Commission order under section 11(a) of the Act. In determining whether 
a ``proceeding'' is ``related to'' the Act, the considerations discussed 
in Sec. 1977.9 would also be applicable.
    (b) An employee need not himself directly institute the proceedings. 
It is sufficient if he sets into motion activities of others which 
result in proceedings under or related to the Act.



Sec. 1977.11  Testimony.

    Discharge of, or discrimination against, any employee because the 
employee ``has testified or is about to testify'' in proceedings under 
or related to the Act is also prohibited by section 11(c). This 
protection would of course not be limited to testimony in proceedings 
instituted or caused to be instituted by the employee, but would extend 
to any statements given in the course of judicial, quasi-judicial, and 
administrative proceedings, including inspections, investigations, and 
administrative rule making or adjudicative functions. If the employee is 
giving or is about to give testimony in any proceeding under or related 
to the Act, he would be protected against discrimination resulting from 
such testimony.



Sec. 1977.12  Exercise of any right   afforded by the Act.

    (a) In addition to protecting employees who file complaints, 
institute proceedings, or testify in proceedings under or related to the 
Act, section 11(c) also protects employees from discrimination occurring 
because of the exercise ``of any right afforded by this Act.'' Certain 
rights are explicitly provided in the Act; for example, there is a right 
to participate as a party in enforcement proceedings (section 10). 
Certain other rights exist by necessary implication. For example, 
employees may request information from the Occupational Safety and 
Health Administration; such requests would constitute the exercise of a 
right afforded by the Act. Likewise, employees interviewed by agents of 
the Secretary in the course of inspections or investigations could not 
subsequently be discriminated against because of their cooperation.

[[Page 197]]

    (b)(1) On the other hand, review of the Act and examination of the 
legislative history discloses that, as a general matter, there is no 
right afforded by the Act which would entitle employees to walk off the 
job because of potential unsafe conditions at the workplace. Hazardous 
conditions which may be violative of the Act will ordinarily be 
corrected by the employer, once brought to his attention. If corrections 
are not accomplished, or if there is dispute about the existence of a 
hazard, the employee will normally have opportunity to request 
inspection of the workplace pursuant to section 8(f) of the Act, or to 
seek the assistance of other public agencies which have responsibility 
in the field of safety and health. Under such circumstances, therefore, 
an employer would not ordinarily be in violation of section 11(c) by 
taking action to discipline an employee for refusing to perform normal 
job activities because of alleged safety or health hazards.
    (2) However, occasions might arise when an employee is confronted 
with a choice between not performing assigned tasks or subjecting 
himself to serious injury or death arising from a hazardous condition at 
the workplace. If the employee, with no reasonable alternative, refuses 
in good faith to expose himself to the dangerous condition, he would be 
protected against subsequent discrimination. The condition causing the 
employee's apprehension of death or injury must be of such a nature that 
a reasonable person, under the circumstances then confronting the 
employee, would conclude that there is a real danger of death or serious 
injury and that there is insufficient time, due to the urgency of the 
situation, to eliminate the danger through resort to regular statutory 
enforcement channels. In addition, in such circumstances, the employee, 
where possible, must also have sought from his employer, and been unable 
to obtain, a correction of the dangerous condition.

[38 FR 2681, Jan. 29, 1973, as amended at 38 FR 4577, Feb. 16, 1973]

                               Procedures



Sec. 1977.15  Filing of complaint for discrimination.

    (a) Who may file. A complaint of section 11(c) discrimination may be 
filed by the employee himself, or by a representative authorized to do 
so on his behalf.
    (b) Nature of filing. No particular form of complaint is required.
    (c) Place of filing. Complaint should be filed with the Area 
Director (Occupational Safety and Health Administration) responsible for 
enforcement activities in the geographical area where the employee 
resides or was employed.
    (d) Time for filing. (1) Section 11(c)(2) provides that an employee 
who believes that he has been discriminated against in violation of 
section 11(c)(1) ``may, within 30 days after such violation occurs,'' 
file a complaint with the Secretary of Labor.
    (2) A major purpose of the 30-day period in this provision is to 
allow the Secretary to decline to entertain complaints which have become 
stale. Accordingly, complaints not filed within 30 days of an alleged 
violation will ordinarily be presumed to be untimely.
    (3) However, there may be circumstances which would justify tolling 
of the 30-day period on recognized equitable principles or because of 
strongly extenuating circumstances, e.g., where the employer has 
concealed, or misled the employee regarding the grounds for discharge or 
other adverse action; or where the discrimination is in the nature of a 
continuing violation. The pendency of grievance-arbitration proceedings 
or filing with another agency, among others, are circumstances which do 
not justify tolling the 30-day period. In the absence of circumstances 
justifying a tolling of the 30-day period, untimely complaints will not 
be processed.

[38 FR 2681, Jan. 29, 1973, as amended at 50 FR 32846, Aug. 15, 1985]



Sec. 1977.16  Notification of Secretary of Labor's determination.

    Section 11(c)(3) provides that the Secretary is to notify a 
complainant within 90 days of the complaint of his

[[Page 198]]

determination whether prohibited discrimination has occurred. This 90-
day provision is considered directory in nature. While every effort will 
be made to notify complainants of the Secretary's determination within 
90 days, there may be instances when it is not possible to meet the 
directory period set forth in section 11(c)(3).



Sec. 1977.17  Withdrawal of complaint.

    Enforcement of the provisions of section 11(c) is not only a matter 
of protecting rights of individual employees, but also of public 
interest. Attempts by an employee to withdraw a previously filed 
complaint will not necessarily result in termination of the Secretary's 
investigation. The Secretary's jurisdiction cannot be foreclosed as a 
matter of law by unilateral action of the employee. However, a voluntary 
and uncoerced request from a complainant to withdraw his complaint will 
be given careful consideration and substantial weight as a matter of 
policy and sound enforcement procedure.



Sec. 1977.18  Arbitration or other agency proceedings.

    (a) General. (1) An employee who files a complaint under section 
11(c) of the Act may also pursue remedies under grievance arbitration 
proceedings in collective bargaining agreements. In addition, the 
complainant may concurrently resort to other agencies for relief, such 
as the National Labor Relations Board. The Secretary's jurisdiction to 
entertain section 11(c) complaints, to investigate, and to determine 
whether discrimination has occurred, is independent of the jurisdiction 
of other agencies or bodies. The Secretary may file action in U.S. 
district court regardless of the pendency of other proceedings.
    (2) However, the Secretary also recognizes the national policy 
favoring voluntary resolution of disputes under procedures in collective 
bargaining agreements. See, e.g., Boy's Markets, Inc. v. Retail Clerks, 
398 U.S. 235 (1970); Republic Steel Corp. v. Maddox, 379 U.S. 650 
(1965); Carey v. Westinghouse Electric Co., 375 U.S. 261 (1964); Collier 
Insulated Wire, 192 NLRB No. 150 (1971). By the same token, due 
deference should be paid to the jurisdiction of other forums established 
to resolve disputes which may also be related to section 11(c) 
complaints.
    (3) Where a complainant is in fact pursuing remedies other than 
those provided by section 11(c), postponement of the Secretary's 
determination and deferral to the results of such proceedings may be in 
order. See, Burlington Truck Lines, Inc., v. U.S., 371 U.S. 156 (1962).
    (b) Postponement of determination. Postponement of determination 
would be justified where the rights asserted in other proceedings are 
substantially the same as rights under section 11(c) and those 
proceedings are not likely to violate the rights guaranteed by section 
11(c). The factual issues in such proceedings must be substantially the 
same as those raised by section 11(c) complaint, and the forum hearing 
the matter must have the power to determine the ultimate issue of 
discrimination. See Rios v. Reynolds Metals Co., F.2d (5th Cir., 1972), 
41 U.S.L.W. 1049 (Oct. 10, 1972); Newman v. Avco Corp., 451 F.2d 743 
(6th Cir., 1971).
    (c) Deferral to outcome of other proceedings. A determination to 
defer to the outcome of other proceedings initiated by a complainant 
must necessarily be made on a case-to-case basis, after careful scrutiny 
of all available information. Before deferring to the results of other 
proceedings, it must be clear that those proceedings dealt adequately 
with all factual issues, that the proceedings were fair, regular, and 
free of procedural infirmities, and that the outcome of the proceedings 
was not repugnant to the purpose and policy of the Act. In this regard, 
if such other actions initiated by a complainant are dismissed without 
adjudicatory hearing thereof, such dismissal will not ordinarily be 
regarded as determinative of the section 11(c) complaint.

                         Some Specific Subjects



Sec. 1977.22  Employee refusal to comply with safety rules.

    Employees who refuse to comply with occupational safety and health 
standards or valid safety rules implemented by the employer in 
furtherance of the Act are not exercising any rights

[[Page 199]]

afforded by the Act. Disciplinary measures taken by employers solely in 
response to employee refusal to comply with appropriate safety rules and 
regulations, will not ordinarily be regarded as discriminatory action 
prohibited by section 11(c). This situation should be distinguished from 
refusals to work, as discussed in Sec. 1977.12.



Sec. 1977.23  State plans.

    A State which is implementing its own occupational safety and health 
enforcement program pursuant to section 18 of the Act and parts 1902 and 
1952 of this chapter must have provisions as effective as those of 
section 11(c) to protect employees from discharge or discrimination. 
Such provisions do not divest either the Secretary of Labor or Federal 
district courts of jurisdiction over employee complaints of 
discrimination. However, the Secretary of Labor may refer complaints of 
employees adequately protected by State Plans' provisions to the 
appropriate state agency. The basic principles outlined in Sec. 1977.18, 
supra will be observed as to deferrals to findings of state agencies.



PART 1978--RULES FOR IMPLEMENTING SECTION 405 OF THE SURFACE TRANSPORTATION ASSISTANCE ACT OF 1982 (STAA)--Table of Contents




Subpart A--Interpretive Rules [Reserved]

                      Subpart B--Rules of Procedure

       Complaints, Investigations, Findings and Preliminary Orders

Sec.
1978.100  Purpose and scope.
1978.101  Definitions.
1978.102  Filing of discrimination complaint.
1978.103  Investigation.
1978.104  Issuance of findings and preliminary orders.
1978.105  Objections to the findings and the preliminary order.

                               Litigation

1978.106  Scope of rules; applicability of other rules; notice of 
          hearing.
1978.107  Parties.
1978.108  Captions, titles of cases.
1978.109  Decision and orders.
1978.110  Judicial review.
1978.111  Withdrawal of section 405 complaints, objections, and 
          findings; settlement.

                        Miscellaneous Provisions

1978.112  Arbitration or other proceedings.
1978.113  Judicial enforcement.
1978.114  Statutory time periods.
1978.115  Special circumstances; waiver of rules.

    Authority: 29 U.S.C. 657(g)(2); 29 U.S.C. 660(c)(2); 49 U.S.C. 31101 
and 31105; Secretary of Labor's Order No. 1-90, 55 FR 9033.

    Source: 53 FR 47681, Nov. 25, 1988, unless otherwise noted.

Subpart A--Interpretive Rules [Reserved]



                      Subpart B--Rules of Procedure

       Complaints, Investigations, Findings and Preliminary Orders



Sec. 1978.100  Purpose and scope.

    (a) This subpart implements the procedural aspects of section 405 of 
the Surface Transportation Assistance Act of 1982, 49 U.S.C. 2305, which 
provides for employee protection from discrimination because the 
employee has engaged in protected activity pertaining to commercial 
motor vehicle safety and health matters.
    (b) Procedures are established by this subpart pursuant to the 
statutory provision set forth above for the expeditious handling of 
complaints of discrimination made by employees, or persons acting on 
their behalf. These rules, together with those rules set forth at 29 CFR 
part 18, set forth the procedures for submission of complaints under 
section 405, investigations, issuance of findings and preliminary 
orders, objections thereto, litigation before administrative law judges, 
post-hearing administrative review, withdrawals and settlements, 
judicial review and enforcement, and deferral to other forums.



Sec. 1978.101  Definitions.

    (a) Act means the Surface Transportation Assistance Act of 1982 
(STAA) (49 U.S.C. 2301 et seq.).
    (b) Secretary means Secretary of Labor or persons to whom authority 
under the Act has been delegated.

[[Page 200]]

    (c) Assistant Secretary means the Assistant Secretary of Labor for 
Occupational Safety and Health or the person or persons to whom he or 
she delegates authority under the Act.
    (d) Employee means (1) a driver of a commercial motor vehicle 
(including an independent contractor while in the course of personally 
operating a commercial motor vehicle); (2) a mechanic; (3) a freight 
handler; or (4) any individual other than an employer; who is employed 
by a commercial motor carrier and who in the course of his employment 
directly affects commercial motor vehicle safety, but such term does not 
include an employee of the United States, any State, or a political 
subdivision of a State who is acting within the course of such 
employment.
    (e) Commercial motor carrier means a person who meets the definition 
of motor carrier found at 49 U.S.C. 10102(13) (Supp. 1987) and motor 
private carrier found at 49 U.S.C. 10102(16) (Supp. 1987).
    (f) OSHA means the Occupational Safety and Health Administration.
    (g) Complainant means the employee who filed a section 405 complaint 
or on whose behalf a complaint was filed.
    (h) Named person means the person alleged to have violated section 
405.
    (i) Person means one or more individuals, partnerships, 
associations, corporations, business trusts, legal representatives or 
any group of persons.



Sec. 1978.102  Filing of discrimination   complaint.

    (a) Who may file. An employee may file, or have filed by any person 
on the employee's behalf, a complaint alleging a violation of section 
405.
    (b) Nature of filing. No particular form of complaint is required.
    (c) Place of filing. The complaint should be filed with the OSHA 
Area Director responsible for enforcement activities in the geographical 
area where the employee resides or was employed, but filing with any 
OSHA officer or employee is sufficient. Addresses and telephone numbers 
for these officials are set forth in local directories.
    (d) Time for filing. (1) Section 405(c)(1) provides that an employee 
who believes that he has been discriminated against in violation of 
section 405 (a) or (b) ``* * * may, within one hundred and eighty days 
after such alleged violation occurs,'' file or have filed by any person 
on the employee's behalf a complaint with the Secretary.
    (2) A major purpose of the 180-day period in this provision is to 
allow the Secretary to decline to entertain complaints which have become 
stale. Accordingly, complaints not filed within 180 days of an alleged 
violation will ordinarily be considered to be untimely.
    (3) However, there are circumstances which will justify tolling of 
the 180-day period on the basis of recognized equitable principles or 
because of extenuating circumstances, e.g., where the employer has 
concealed or misled the employee regarding the grounds for discharge or 
other adverse action; or where the discrimination is in the nature of a 
continuing violation. The pendency of grievance-arbitration proceedings 
or filing with another agency are examples of circumstances which do not 
justify a tolling of the 180-day period. The Assistant Secretary will 
not ordinarily investigate complaints which are determined to be 
untimely.
    (e) Relationship to section 11(c) complaints. A complaint filed by 
an employee within thirty days of the alleged violation or otherwise 
timely filed pursuant to section 11(c) of the OSHA Act, which alleges 
discrimination relating to safety or health, shall be deemed to be a 
complaint filed under both section 405 and section 11(c). Normal 
procedures for investigations under both sections will be followed, 
except as otherwise provided.
    (f) Upon receipt of a valid complaint, OSHA shall notify the named 
person of the filing of the complaint by providing a copy of the 
complaint, sanitized to protect witness confidentiality if necessary, 
and shall also notify the named person of his or her rights under 29 CFR 
1978.103 (b) and (c).



Sec. 1978.103  Investigation.

    (a) OSHA shall investigate and gather data concerning the case as it 
deems appropriate.
    (b) Within twenty days of his or her receipt of the complaint the 
named person may submit to OSHA a written statement and any affidavits 
or documents explaining or defending his or her position. Within the 
same twenty

[[Page 201]]

days the named person may request a meeting with OSHA to present his or 
her position. The meeting will be held before the issuance of any 
findings or preliminary order. At the meeting the named person may be 
accompanied by counsel and by any persons with information relating to 
the complaint, who may make statements concerning the case. At such 
meeting OSHA may present additional allegations of violations which may 
have been discovered in the course of its investigation.
    (c) If, on the basis of information gathered under paragraphs (a) 
and (b) of this section, OSHA has reasonable cause to believe that the 
named person has violated the Act and that temporary reinstatement is 
warranted, prior to the issuance of findings and preliminary order as 
provided for in Sec. 1978.104, OSHA shall again contact the named person 
to give him or her notice of the substance of the relevant evidence 
supporting the complainant's allegations as developed during the course 
of the investigation. The named person shall be given the opportunity to 
submit a written response, to meet with the investigators and to present 
statements from rebuttal witnesses. The named person shall present this 
rebuttal evidence within five days of OSHA's notification pursuant to 
this subsection, or as soon thereafter as OSHA and the named person can 
agree, if the interests of justice so require.



Sec. 1978.104  Issuance of findings and preliminary orders.

    (a) After considering all the relevant information collected during 
the investigation, the Assistant Secretary will issue, within sixty days 
of the filing of the complaint, written findings as to whether there is 
reasonable cause to believe that the named person or others have 
discriminated against the complainant in violation of section 405 (a) or 
(b). If the Assistant Secretary concludes that there is reasonable cause 
to believe that a violation has occurred, he shall accompany his 
findings with a preliminary order providing the relief prescribed in 
section 405(c)(2)(B). Such order will include, where appropriate, a 
requirement that the named person abate the violation; reinstatement of 
the complainant to his or her former position, together with the 
compensation (including back pay), terms, conditions and privileges of 
the complainant's employment; and payment of compensatory damages. At 
the complainant's request the order may also assess against the named 
party the complainant's costs and expenses (including attorney's fees) 
reasonably incurred in filing the complaint.
    (b) The findings and the preliminary order shall be sent by 
certified mail, return receipt requested, to all parties of record. The 
letter accompanying the findings and order shall inform the parties of 
the right to object to the findings and/or the order and shall give the 
address of the Chief Administrative Law Judge. At the same time, the 
Assistant Secretary shall file with the Chief Administrative Law Judge, 
U.S. Department of Labor, the original complaint and a copy of the 
findings and/or order.
    (c) Upon the issuance of findings that there is reasonable cause to 
believe that a violation has occurred, any pending section 11(c) 
complaint will be suspended until the section 405 proceeding is 
completed. When the section 405 proceeding is completed the Assistant 
Secretary will determine what action, if any, is appropriate on the 
section 11(c) complaint. If the Assistant Secretary's findings indicate 
that a violation has occurred, the Assistant Secretary shall make a 
separate determination as to whether section 11(c) has been violated.



Sec. 1978.105  Objections to the findings and the preliminary order.

    (a) Basic procedures. Within thirty days of receipt of the findings 
or preliminary order the named person or the complainant, or both, may 
file objections to the findings or preliminary order providing relief or 
both and request a hearing on the record. The objection and request 
shall be in writing and shall state whether the objection is to the 
findings or the preliminary order or both. Such objection shall also be 
considered a request for a hearing.

[[Page 202]]

The date of the postmark shall be considered to be the date of filing. 
Objections shall be filed with the Chief Administrative Law Judge, U.S. 
Department of Labor, Washington, DC and copies of the objections shall 
be mailed at the same time to the other parties of record, including the 
Assistant Secretary's designee who issued the findings and order.
    (b) Effective date of findings and preliminary order and failure to 
object. (1) The findings and the preliminary order shall be effective 
thirty days after the named person's receipt thereof, or on the 
compliance date set forth in the preliminary order, whichever is later, 
unless an objection to the findings or preliminary order has been timely 
filed. However, the portion of any preliminary order requiring 
reinstatement shall be effective immediately upon the named person's 
receipt of the findings and preliminary order, regardless of any 
objections thereto.
    (2) If no timely objection is filed with respect to either the 
findings or the preliminary order, such findings or preliminary order, 
as the case may be, shall become final and not subject to judicial 
review.

                               Litigation



Sec. 1978.106  Scope of rules; applicability of other rules; notice of hearing.

    (a) Except as otherwise noted, hearings shall be conducted in 
accordance with the Rules of Practice and Procedure for Administrative 
Hearings Before the Office of Administrative Law Judges promulgated at 
29 CFR part 18, 48 FR 32538 (July 15, 1983), amended at 49 FR 2739 
January 20, 1984. Hearings shall be conducted as hearings de novo.
    (b) Upon receipt of an objection, the Chief Administrative Law Judge 
shall immediately assign the case to a judge who shall, within seven 
days following the receipt of the objection, notify the parties, by 
certified mail, of the day, time, and place of hearing. The hearing 
shall commence within 30 days of the filing of the objection, except 
upon a showing of good cause or unless otherwise agreed to by the 
parties.
    (c) If both complainant and the named person object to the findings 
and/or order, the objections shall be consolidated and a single hearing 
shall be conducted. If the objections are not received simultaneously, 
the hearing shall commence within 30 days of the receipt of the later 
objection.
    (d) At the time the hearing order issues, the judge may order the 
prosecuting party to file a prehearing statement of position, which 
shall briefly set forth the issues involved in the proceeding and the 
remedy requested. Such prehearing statement shall be filed within three 
days of the receipt of the hearing order and shall be served on all 
parties by certified mail. Thereafter, within three days of receipt of 
the prosecuting party's prehearing statement, the other parties to the 
proceeding shall file prehearing statements of position.



Sec. 1978.107  Parties.

    (a) In any case in which only the named person objects to the 
findings or the preliminary order the Assistant Secretary ordinarily 
shall be the prosecuting party. In such a case the complainant shall 
also be a party and may engage in discovery, present evidence or 
otherwise act as a party. The named person shall be the party-
respondent. If, at any time after the named person files objections, the 
Assistant Secretary and complainant agree, the complainant may present 
the case to the judge. Under such circumstances the case will be handled 
as if it had arisen under paragraph (b) of this section.
    (b) In any case in which only the complainant objects to findings 
that the complaint lacks merit, to the preliminary order, or to both, 
the complainant shall be the prosecuting party. The Assistant Secretary 
may as of right intervene as a party at any time in proceedings under 
this paragraph. The named person shall be the party-respondent.
    (c) In any case in which both the complainant and the named person 
object to the preliminary order the Assistant Secretary shall be the 
prosecuting party. The complainant and the named person shall be the 
party-respondents. In any such case, if the named person also objected 
to the findings the Assistant Secretary, complainant, and named party 
shall each

[[Page 203]]

have the party status, rights, and responsibilities set forth in 
paragraph (a) of this section with respect to the findings.



Sec. 1978.108  Captions, titles of cases.

    (a) Cases described in Sec. 1978.107(a) shall be titled:

Assistant Secretary of Labor for Occupational Safety and Health, 
Prosecuting Party and (Name of Complainant), Complainant v. (Name of 
named person), Respondent.

    (b) Cases described in Sec. 1978.107(b) shall be titled:

(Name of complainant), Complainant v. (Name of named person), 
Respondent.

    (c) Cases described in Sec. 1978.107(c) shall be titled:

Assistant Secretary of Labor for Occupational Safety and Health, 
Prosecuting Party v. (Name of named person), Respondent.
(Name of complainant), Complainant v. (Name of named person), 
Respondent.

    (d) The titles listed in paragraphs (a), (b), and (c) of this 
section shall appear at the left upper portion of the initial page of 
any pleading or document (other than exhibits) filed.



Sec. 1978.109  Decision and orders.

    (a) Administrative Law Judge decisions. The administrative law judge 
shall issue a decision within 30 days after the close of the record. The 
close of the record shall occur no later than 30 days after the filing 
of the objection, except upon a showing of good cause or unless 
otherwise agreed to by the parties. For the purposes of the statute the 
issuance of the judge's decision shall be deemed the conclusion of the 
hearing. The decision shall contain appropriate findings, conclusions, 
and an order pertaining to the remedy which, among other things, may 
provide for reinstatement of a discharged employee and also may include 
an award of the complainant's costs and expenses (including attorney's 
fees) reasonably incurred in bringing and litigating the case, if the 
complainant's position has prevailed. The decision shall be forwarded 
immediately, together with the record, to the Secretary for review by 
the Secretary or his or her designee. The decision shall be served upon 
all parties to the proceeding.
    (b) The administrative law judge's decision and order concerning 
whether the reinstatement of a discharged employee is appropriate shall 
be effective immediately upon receipt of the decision by the named 
person. All other portions of the judge's order are stayed pending 
review by the Secretary.
    (c) Final order. (1) Within 120 days after issuance of the 
administrative law judge's decision and order, the Administrative Review 
Board, United States Department of Labor, shall issue a final decision 
and order based on the record and the decision and order of the 
administrative law judge.
    (2) The parties may file with the Administrative Review Board, 
United States Department of Labor, briefs in support of or in opposition 
to the administrative law judge's decision and order within thirty days 
of the issuance of that decision unless the Administrative Review Board, 
United States Department of Labor, upon notice to the parties, 
establishes a different briefing schedule.
    (3) The findings of the administrative law judge with respect to 
questions of fact, if supported by substantial evidence on the record 
considered as a whole, shall be considered conclusive.
    (4) Where the Administrative Review Board, United States Department 
of Labor, determines that the named party has not violated the law, the 
final order shall deny the complaint.
    (5) The final decision and order of the Administrative Review Board, 
United States Department of Labor, shall be served upon all parties to 
the proceeding.

[53 FR 47681, Nov. 25, 1988, as amended at 61 FR 19986, May 3, 1996]



Sec. 1978.110  Judicial review.

    (a) Within 60 days after the issuance of a final order under 
Sec. 1978.109, any person adversely affected or aggrieved by such order 
may file a petition for review of the order in the United States Court 
of Appeals for the circuit in which the violation allegedly occurred or 
the circuit in which the person resided on the date of the violation (49 
U.S.C. 2305(d)(1)).

[[Page 204]]

    (b) A final order of the Administrative Review Board, United States 
Department of Labor, shall not be subject to judicial review in any 
criminal or other civil proceedings (49 U.S.C. 2305(d)(2)).
    (c) The record of a case, including the record of proceedings before 
the administrative law judge, shall be transmitted by the Administrative 
Review Board, United States Department of Labor, to the appropriate 
court pursuant to the rules of such court.

[53 FR 47681, Nov. 25, 1988, as amended at 61 FR 19986, May 3, 1996]



Sec. 1978.111  Withdrawal of section 405 complaints, objections, and findings; settlement.

    (a) At any time prior to the filing of objections to the findings or 
preliminary order, an employee may withdraw his or her section 405 
complaint by filing a written withdrawal with the Assistant Secretary. 
The Assistant Secretary shall thereafter determine whether the 
withdrawal shall be approved. The Assistant Secretary shall notify the 
named person of the approval of any withdrawal.
    (b) The Assistant Secretary may withdraw his findings or a 
preliminary order at any time before the expiration of the 30-day 
objection period, provided that no objection has yet been filed, and 
substitute new findings or preliminary order. The date of the receipt of 
the substituted findings or order shall begin a new 30-day objection 
period.
    (c) At any time before the findings or order become final, a party 
may withdraw his objections to the findings or order by filing a written 
withdrawal with the administrative law judge or, if the case is on 
review, with the Administrative Review Board, United States Department 
of Labor. The judge or the Administrative Review Board, United States 
Department of Labor, as the case may be, shall affirm any portion of the 
findings or preliminary order with respect to which the objection was 
withdrawn.
    (d)(1) Investigative settlements. At anytime after the filing of a 
section 405 complaint by an employee and before the finding and/or order 
are objected to, or become a final order by operation of law, the case 
may be settled if the Assistant Secretary, the complainant and the named 
person agree to a settlement.
    (2) Adjudicatory settlement. At any time after the filing of 
objections to the Assistant Secretary's findings and/or order, the case 
may be settled if the participating parties agree to a settlement and 
such settlement is approved by the Administrative Review Board, United 
States Department of Labor, or the ALJ. A copy of the settlement shall 
be filed with the ALJ or the Administrative Review Board, United States 
Department of Labor as the case may be.
    (3) If, under paragraph (d)(1) or (2) of this section the named 
person makes an offer to settle the case which the Assistant Secretary, 
when acting as the prosecuting party, deems to be a fair and equitable 
settlement of all matters at issue and the complainant refuses to accept 
the offer, the Assistant Secretary may decline to assume the role of 
prosecuting party as set forth in Sec. 1978.107(a). In such 
circumstances, the Assistant Secretary shall immediately notify the 
complainant that his review of the settlement offer may cause the 
Assistant Secretary to decline the role of prosecuting party. After the 
Assistant Secretary has reviewed the offer and when he or she has 
decided to decline the role of prosecuting party, the Assistant 
Secretary shall immediately notify all parties of his or her decision in 
writing and, if the case is before the administrative law judge, or the 
Administrative Review Board, United States Department of Labor on 
review, a copy of the notice shall be sent to the appropriate official. 
Upon receipt of the Assistant Secretary's notice, the parties shall 
assume the roles set forth in Sec. 1978.107(b).

[53 FR 47681, Nov. 25, 1988, as amended at 61 FR 19986, May 3, 1996]

                        Miscellaneous Provisions



Sec. 1978.112  Arbitration or other proceedings.

    (a) General. (1) An employee who files a complaint under section 405 
of the Act may also pursue remedies under grievance arbitration 
proceedings in collective bargaining agreements. In

[[Page 205]]

addition, the complainant may concurrently resort to other agencies for 
relief, such as the National Labor Relations Board. The Secretary's 
jurisdiction to entertain section 405 complaints, to investigate, and to 
determine whether discrimination has occurred, is independent of the 
jurisdiction of other agencies or bodies. The Secretary may proceed with 
the investigation and the issuance of findings and orders regardless of 
the pendency of other proceedings.
    (2) However, the Secretary also recognizes the national policy 
favoring voluntary resolution of disputes under procedures in collective 
bargaining agreements. By the same token, due deference should be paid 
to the jurisdiction of other forums established to resolve disputes 
which may also be related to section 405 complaints.
    (3) Where complainant is in fact pursuing remedies other than those 
provided by section 405, the Secretary may, in his or her discretion, 
postpone a determination of the section 405 complaint and defer to the 
results of such proceedings.
    (b) Postponement of determination. When a complaint is under 
investigation pursuant to Sec. 1978.103, postponement of determination 
would be justified where the rights asserted in other proceedings are 
substantially the same as rights under section 405 and those proceedings 
are not likely to violate rights guaranteed by section 405. The factual 
issues in such proceedings must be substantially the same as those 
raised by a section 405 complaint, and the forum hearing the matter must 
have the power to determine the ultimate issue of discrimination.
    (c) Deferral to outcome of other proceedings. A determination to 
defer to the outcome of other proceedings initiated by a complainant 
must necessarily be made on a case-by-case basis, after careful scrutiny 
of all available information. Before the Assistant Secretary or the 
Secretary defers to the results of other proceedings, it must be clear 
that those proceedings dealt adequately with all factual issues, that 
the proceedings were fair, regular, and free of procedural infirmities, 
and that the outcome of the proceedings was not repugnant to the purpose 
and policy of the Act. In this regard, if such other actions initiated 
by a complainant are dismissed without adjudicatory hearing thereof, 
such dismissal will not ordinarily be regarded as determinative of the 
section 405 complaint.



Sec. 1978.113  Judicial enforcement.

    Whenever any person has failed to comply with a preliminary order of 
reinstatement or a final order or the terms of a settlement agreement, 
the Secretary may file a civil action seeking enforcement of the order 
in the United States district court for the district in which the 
violation was found to occur.



Sec. 1978.114  Statutory time periods.

    The time requirements imposed on the Secretary by these regulations 
are directory in nature. While every effort will be made to meet these 
requirements, there may be instances when it is not possible to meet 
these requirements. Failure to meet these requirements does not 
invalidate any action by the Assistant Secretary or Secretary under 
section 405.



Sec. 1978.115  Special circumstances;     waiver of rules.

    In special circumstances not contemplated by the provisions of these 
rules, or for good cause shown, the judge or the Secretary on review 
may, upon application, after three days notice to all parties and 
intervenors, waive any rule or issue such orders as justice or the 
administration of section 405 requires.



  PART 1979--PROCEDURES FOR THE HANDLING OF DISCRIMINATION COMPLAINTS UNDER SECTION 519 OF THE WENDELL H. FORD AVIATION INVESTMENT AND REFORM ACT FOR THE 21ST 
CENTURY--Table of Contents




 Subpart A--Complaints, Investigations, Findings and Preliminary Orders

Sec.
1979.100  Purpose and scope.
1979.101  Definitions.
1979.102  Obligations and prohibited acts.
1979.103  Filing of discrimination complaint.

[[Page 206]]

1979.104  Investigation.
1979.105  Issuance of findings and preliminary orders.

                          Subpart B--Litigation

1979.106  Objections to the findings and the preliminary order and 
          request for a hearing.
1979.107  Hearings.
1979.108  Role of Federal agencies.
1979.109  Decision and orders of the administrative law judge.
1979.110  Decision and orders of the Administrative Review Board.

                   Subpart C--Miscellaneous Provisions

1979.111  Withdrawal of complaints, objections, and findings; 
          settlement.
1979.112  Judicial review.
1979.113  Judicial enforcement.
1979.114  Special circumstances; waiver of rules.

    Authority: 49 U.S.C. 42121; Secretary of Labor's Order 5-2002, 67 FR 
65008 (October 22, 2002).

    Source: 68 FR 14107, Mar. 21, 2003, unless otherwise noted.



 Subpart A--Complaints, Investigations, Findings and Preliminary Orders



Sec. 1979.100  Purpose and scope.

    (a) This part implements procedures under section 519 of the Wendell 
H. Ford Aviation Investment and Reform Act for the 21st Century, 49 
U.S.C. 42121 (``AIR21''), which provides for employee protection from 
discrimination by air carriers or contractors or subcontractors of air 
carriers because the employee has engaged in protected activity 
pertaining to a violation or alleged violation of any order, regulation, 
or standard of the Federal Aviation Administration or any other 
provision of Federal law relating to air carrier safety.
    (b) This part establishes procedures pursuant to AIR21 for the 
expeditious handling of discrimination complaints made by employees, or 
by persons acting on their behalf. These rules, together with those 
rules codified at 29 CFR part 18, set forth the procedures for 
submission of complaints under AIR21, investigations, issuance of 
findings and preliminary orders, objections to findings and orders, 
litigation before administrative law judges, post-hearing administrative 
review, and withdrawals and settlements.



Sec. 1979.101  Definitions.

    Act or AIR21 means section 519 of the Wendell H. Ford Aviation 
Investment and Reform Act for the 21st Century, Public Law 106-181, 
April 5, 2000, 49 U.S.C. 42121.
    Air carrier means a citizen of the United States undertaking by any 
means, directly or indirectly, to provide air transportation.
    Assistant Secretary means the Assistant Secretary of Labor for 
Occupational Safety and Health or the person or persons to whom he or 
she delegates authority under the Act.
    Complainant means the employee who filed a complaint under the Act 
or on whose behalf a complaint was filed.
    Contractor means a company that performs safety-sensitive functions 
by contract for an air carrier.
    Employee means an individual presently or formerly working for an 
air carrier or contractor or subcontractor of an air carrier, an 
individual applying to work for an air carrier or contractor or 
subcontractor of an air carrier, or an individual whose employment could 
be affected by an air carrier or contractor or subcontractor of an air 
carrier.
    Named person means the person alleged to have violated the Act.
    OSHA means the Occupational Safety and Health Administration of the 
United States Department of Labor.
    Person means one or more individuals, partnerships, associations, 
corporations, business trusts, legal representatives, or any group of 
persons.
    Secretary means the Secretary of Labor or persons to whom authority 
under the Act has been delegated.



Sec. 1979.102  Obligations and prohibited acts.

    (a) No air carrier or contractor or subcontractor of an air carrier 
may discharge any employee or otherwise discriminate against any 
employee with respect to the employee's compensation, terms, conditions, 
or privileges of employment because the employee, or any person acting 
pursuant to the employee's request, engaged in

[[Page 207]]

any of the activities specified in paragraphs (b)(1) through (4) of this 
section.
    (b) It is a violation of the Act for any air carrier or contractor 
or subcontractor of an air carrier to intimidate, threaten, restrain, 
coerce, blacklist, discharge or in any other manner discriminate against 
any employee because the employee has:
    (1) Provided, caused to be provided, or is about to provide (with 
any knowledge of the employer) or cause to be provided to the air 
carrier or contractor or subcontractor of an air carrier or the Federal 
Government, information relating to any violation or alleged violation 
of any order, regulation, or standard of the Federal Aviation 
Administration or any other provision of Federal law relating to air 
carrier safety under subtitle VII of title 49 of the United States Code 
or under any other law of the United States;
    (2) Filed, caused to be filed, or is about to file (with any 
knowledge of the employer) or cause to be filed a proceeding relating to 
any violation or alleged violation of any order, regulation, or standard 
of the Federal Aviation Administration or any other provision of Federal 
law relating to air carrier safety under subtitle VII of title 49 of the 
United States Code, or under any other law of the United States;
    (3) Testified or is about to testify in such a proceeding; or
    (4) Assisted or participated or is about to assist or participate in 
such a proceeding.
    (c) This part shall have no application to any employee of an air 
carrier, contractor, or subcontractor who, acting without direction from 
an air carrier, contractor, or subcontractor (or such person's agent) 
deliberately causes a violation of any requirement relating to air 
carrier safety under Subtitle VII Aviation Programs of Title 49 of the 
United States Code or any other law of the United States.



Sec. 1979.103  Filing of discrimination complaint.

    (a) Who may file. An employee who believes that he or she has been 
discriminated against by an air carrier or contractor or subcontractor 
of an air carrier in violation of the Act may file, or have filed by any 
person on the employee's behalf, a complaint alleging such 
discrimination.
    (b) Nature of filing. No particular form of complaint is required, 
except that a complaint must be in writing and should include a full 
statement of the acts and omissions, with pertinent dates, which are 
believed to constitute the violations.
    (c) Place of filing. The complaint should be filed with the OSHA 
Area Director responsible for enforcement activities in the geographical 
area where the employee resides or was employed, but may be filed with 
any OSHA officer or employee. Addresses and telephone numbers for these 
officials are set forth in local directories and at the following 
Internet address: http://www.osha.gov.
    (d) Time for filing. Within 90 days after an alleged violation of 
the Act occurs (i.e., when the discriminatory decision has been both 
made and communicated to the complainant), an employee who believes that 
he or she has been discriminated against in violation of the Act may 
file, or have filed by any person on the employee's behalf, a complaint 
alleging such discrimination. The date of the postmark, facsimile 
transmittal, or e-mail communication will be considered to be the date 
of filing; if the complaint is filed in person, by hand-delivery, or 
other means, the complaint is filed upon receipt.
    (e) Relationship to section 11(c) complaints. A complaint filed 
under AIR21 that alleges facts which would constitute a violation of 
section 11(c) of the Occupational Safety and Health Act, 29 U.S.C. 
660(c), shall be deemed to be a complaint filed under both AIR21 and 
section 11(c). Similarly, a complaint filed under section 11(c) that 
alleges facts that would constitute a violation of AIR21 shall be deemed 
to be a complaint filed under both AIR21 and section 11(c). Normal 
procedures and timeliness requirements for investigations under the 
respective laws and regulations will be followed.

[[Page 208]]



Sec. 1979.104  Investigation.

    (a) Upon receipt of a complaint in the investigating office, the 
Assistant Secretary will notify the named person of the filing of the 
complaint, of the allegations contained in the complaint, and of the 
substance of the evidence supporting the complaint (redacted to protect 
the identity of any confidential informants). The Assistant Secretary 
will also notify the named person of his or her rights under paragraphs 
(b) and (c) of this section and paragraph (e) of Sec. 1979.110. A copy 
of the notice to the named person will also be provided to the Federal 
Aviation Administration.
    (b) A complaint of alleged violation will be dismissed unless the 
complainant has made a prima facie showing that protected behavior or 
conduct was a contributing factor in the unfavorable personnel action 
alleged in the complaint.
    (1) The complaint, supplemented as appropriate by interviews of the 
complainant, must allege the existence of facts and evidence to make a 
prima facie showing as follows:
    (i) The employee engaged in a protected activity or conduct;
    (ii) The named person knew or suspected, actually or constructively, 
that the employee engaged in the protected activity;
    (iii) The employee suffered an unfavorable personnel action; and
    (iv) The circumstances were sufficient to raise the inference that 
the protected activity was a contributing factor in the unfavorable 
action.
    (2) For purposes of determining whether to investigate, the 
complainant will be considered to have met the required burden if the 
complaint on its face, supplemented as appropriate through interviews of 
the complainant, alleges the existence of facts and either direct or 
circumstantial evidence to meet the required showing, i.e., to give rise 
to an inference that the named person knew or suspected that the 
employee engaged in protected activity and that the protected activity 
was a contributing factor in the unfavorable personnel action. Normally 
the burden is satisfied, for example, if the complaint shows that the 
adverse personnel action took place shortly after the protected 
activity, giving rise to the inference that it was a factor in the 
adverse action. If the required showing has not been made, the 
complainant will be so advised and the investigation will not commence.
    (c) Notwithstanding a finding that a complainant has made a prima 
facie showing, as required by this section, an investigation of the 
complaint will not be conducted if the named person, pursuant to the 
procedures provided in this paragraph, demonstrates by clear and 
convincing evidence that it would have taken the same unfavorable 
personnel action in the absence of the complainant's protected behavior 
or conduct. Within 20 days of receipt of the notice of the filing of the 
complaint, the named person may submit to the Assistant Secretary a 
written statement and any affidavits or documents substantiating his or 
her position. Within the same 20 days the named person may request a 
meeting with the Assistant Secretary to present his or her position.
    (d) If the named person fails to demonstrate by clear and convincing 
evidence that it would have taken the same unfavorable personnel action 
in the absence of the behavior protected by the Act, the Assistant 
Secretary will conduct an investigation. Investigations will be 
conducted in a manner that protects the confidentiality of any person 
who provides information on a confidential basis, other than the 
complainant, in accordance with 29 CFR part 70.
    (e) Prior to the issuance of findings and a preliminary order as 
provided for in Sec. 1979.105, if the Assistant Secretary has reasonable 
cause, on the basis of information gathered under the procedures of this 
part, to believe that the named person has violated the Act and that 
preliminary reinstatement is warranted, the Assistant Secretary will 
again contact the named person to give notice of the substance of the 
relevant evidence supporting the complainant's allegations as developed 
during the course of the investigation. This evidence includes any 
witness statements, which will be redacted to protect the identity of 
confidential informants where statements were given in confidence; if 
the statements cannot be redacted without revealing the identity

[[Page 209]]

of confidential informants, summaries of their contents will be 
provided. The named person shall be given the opportunity to submit a 
written response, to meet with the investigators to present statements 
from witnesses in support of his or her position, and to present legal 
and factual arguments. The named person shall present this evidence 
within ten business days of the Assistant Secretary's notification 
pursuant to this paragraph, or as soon afterwards as the Assistant 
Secretary and the named person can agree, if the interests of justice so 
require.



Sec. 1979.105  Issuance of findings and preliminary orders.

    (a) After considering all the relevant information collected during 
the investigation, the Assistant Secretary will issue, within 60 days of 
filing of the complaint, written findings as to whether or not there is 
reasonable cause to believe that the named person has discriminated 
against the complainant in violation of the Act.
    (1) If the Assistant Secretary concludes that there is reasonable 
cause to believe that a violation has occurred, he or she will accompany 
the findings with a preliminary order providing relief to the 
complainant. The preliminary order will include, where appropriate, a 
requirement that the named person abate the violation; reinstatement of 
the complainant to his or her former position, together with the 
compensation (including back pay), terms, conditions and privileges of 
the complainant's employment; and payment of compensatory damages. Where 
the named person establishes that the complainant is a security risk 
(whether or not the information is obtained after the complainant's 
discharge), a preliminary order of reinstatement would not be 
appropriate. At the complainant's request the order shall also assess 
against the named person the complainant's costs and expenses (including 
attorney's and expert witness fees) reasonably incurred in connection 
with the filing of the complaint.
    (2) If the Assistant Secretary concludes that a violation has not 
occurred, the Assistant Secretary will notify the parties of that 
finding.
    (b) The findings and the preliminary order will be sent by certified 
mail, return receipt requested, to all parties of record. The letter 
accompanying the findings and order will inform the parties of their 
right to file objections and to request a hearing, and of the right of 
the named person to request attorney's fees from the administrative law 
judge, regardless of whether the named person has filed objections, if 
the named person alleges that the complaint was frivolous or brought in 
bad faith. The letter also will give the address of the Chief 
Administrative Law Judge. At the same time, the Assistant Secretary will 
file with the Chief Administrative Law Judge, U.S. Department of Labor, 
a copy of the original complaint and a copy of the findings and order.
    (c) The findings and the preliminary order shall be effective 30 
days after receipt by the named person pursuant to paragraph (b) of this 
section, unless an objection and a request for a hearing has been filed 
as provided at Sec. 1979.106. However, the portion of any preliminary 
order requiring reinstatement shall be effective immediately upon 
receipt of the findings and preliminary order.



                          Subpart B--Litigation



Sec. 1979.106  Objections to the findings and the preliminary order and request for a hearing.

    (a) Any party who desires review, including judicial review, of the 
findings and preliminary order, or a named person alleging that the 
complaint was frivolous or brought in bad faith who seeks an award of 
attorney's fees, must file any objections and/or a request for a hearing 
on the record within 30 days of receipt of the findings and preliminary 
order pursuant to paragraph (b) of Sec. 1979.105. The objection or 
request for attorney's fees and request for a hearing must be in writing 
and state whether the objection is to the findings, the preliminary 
order, and/or whether there should be an award of attorney's fees. The 
date of the postmark, facsimile transmittal, or e-mail communication 
will be considered to be the date of filing; if the objection is filed 
in person, by hand-delivery or other means, the objection is filed upon

[[Page 210]]

receipt. Objections must be filed with the Chief Administrative Law 
Judge, U.S. Department of Labor, Washington, DC 20001, and copies of the 
objections must be mailed at the same time to the other parties of 
record, the OSHA official who issued the findings and order, and the 
Associate Solicitor, Division of Fair Labor Standards, U.S. Department 
of Labor, Washington, DC 20210.
    (b)(1) If a timely objection is filed, all provisions of the 
preliminary order shall be stayed, except for the portion requiring 
preliminary reinstatement. The portion of the preliminary order 
requiring reinstatement shall be effective immediately upon the named 
person's receipt of the findings and preliminary order, regardless of 
any objections to the order.
    (2) If no timely objection is filed with respect to either the 
findings or the preliminary order, the findings or preliminary order, as 
the case may be, shall become the final decision of the Secretary, not 
subject to judicial review.



Sec. 1979.107  Hearings.

    (a) Except as provided in this part, proceedings will be conducted 
in accordance with the rules of practice and procedure for 
administrative hearings before the Office of Administrative Law Judges, 
codified at subpart A, of 29 CFR part 18.
    (b) Upon receipt of an objection and request for hearing, the Chief 
Administrative Law Judge will promptly assign the case to a judge who 
will notify the parties, by certified mail, of the day, time, and place 
of hearing. The hearing is to commence expeditiously, except upon a 
showing of good cause or unless otherwise agreed to by the parties. 
Hearings will be conducted as hearings de novo, on the record. 
Administrative law judges shall have broad discretion to limit discovery 
in order to expedite the hearing.
    (c) If both the complainant and the named person object to the 
findings and/or order, the objections will be consolidated and a single 
hearing will be conducted.
    (d) Formal rules of evidence shall not apply, but rules or 
principles designed to assure production of the most probative evidence 
shall be applied. The administrative law judge may exclude evidence 
which is immaterial, irrelevant, or unduly repetitious.



Sec. 1979.108  Role of Federal agencies.

    (a)(1) The complainant and the named person shall be parties in 
every proceeding. At the Assistant Secretary's discretion, the Assistant 
Secretary may participate as a party or may participate as amicus curiae 
at any time in the proceedings. This right to participate shall include, 
but is not limited to, the right to petition for review of a decision of 
an administrative law judge, including a decision based on a settlement 
agreement between complainant and the named person, to dismiss a 
complaint or to issue an order encompassing the terms of the settlement.
    (2) Copies of pleadings in all cases, whether or not the Assistant 
Secretary is participating in the proceeding, must be sent to the 
Assistant Secretary, Occupational Safety and Health Administration, and 
to the Associate Solicitor, Division of Fair Labor Standards, U.S. 
Department of Labor, Washington, DC 20210.
    (b) The FAA may participate as amicus curiae at any time in the 
proceedings, at the FAA's discretion. At the request of the FAA, copies 
of all pleadings in a case must be sent to the FAA, whether or not the 
FAA is participating in the proceeding.



Sec. 1979.109  Decision and orders of the administrative law judge.

    (a) The decision of the administrative law judge will contain 
appropriate findings, conclusions, and an order pertaining to the 
remedies provided in paragraph (b) of this section, as appropriate. A 
determination that a violation has occurred may only be made if the 
complainant has demonstrated that protected behavior or conduct was a 
contributing factor in the unfavorable personnel action alleged in the 
complaint. Relief may not be ordered if the named person demonstrates by 
clear and convincing evidence that it would have taken the same 
unfavorable personnel action in the absence of any protected behavior. 
Neither the Assistant Secretary's determination to dismiss a complaint 
without completing

[[Page 211]]

an investigation pursuant to Sec. 1979.104(b) nor the Assistant 
Secretary's determination to proceed with an investigation is subject to 
review by the administrative law judge, and a complaint may not be 
remanded for the completion of an investigation or for additional 
findings on the basis that a determination to dismiss was made in error. 
Rather, if there otherwise is jurisdiction, the administrative law judge 
shall hear the case on the merits.
    (b) If the administrative law judge concludes that the party charged 
has violated the law, the order shall direct the party charged to take 
appropriate affirmative action to abate the violation, including, where 
appropriate, reinstatement of the complainant to that person's former 
position, together with the compensation (including back pay), terms, 
conditions, and privileges of that employment, and compensatory damages. 
At the request of the complainant, the administrative law judge shall 
assess against the named person all costs and expenses (including 
attorney's and expert witness fees) reasonably incurred. If, upon the 
request of the named person, the administrative law judge determines 
that a complaint was frivolous or was brought in bad faith, the judge 
may award to the named person a reasonable attorney's fee, not exceeding 
$1,000.
    (c) The decision will be served upon all parties to the proceeding. 
Any administrative law judge's decision requiring reinstatement or 
lifting an order of reinstatement by the Assistant Secretary shall be 
effective immediately upon receipt of the decision by the named person, 
and may not be stayed. All other portions of the judge's order shall be 
effective ten business days after the date of the decision unless a 
timely petition for review has been filed with the Administrative Review 
Board.



Sec. 1979.110  Decision and orders of the Administrative Review Board.

    (a) Any party desiring to seek review, including judicial review, of 
a decision of the administrative law judge, or a named person alleging 
that the complaint was frivolous or brought in bad faith who seeks an 
award of attorney's fees, must file a written petition for review with 
the Administrative Review Board (``the Board''), which has been 
delegated the authority to act for the Secretary and issue final 
decisions under this part. The decision of the administrative law judge 
shall become the final order of the Secretary unless, pursuant to this 
section, a petition for review is timely filed with the Board. The 
petition for review must specifically identify the findings, conclusions 
or orders to which exception is taken. Any exception not specifically 
urged ordinarily shall be deemed to have been waived by the parties. To 
be effective, a petition must be filed within ten business days of the 
date of the decision of the administrative law judge. The date of the 
postmark, facsimile transmittal, or e-mail communication will be 
considered to be the date of filing; if the petition is filed in person, 
by hand-delivery or other means, the petition is considered filed upon 
receipt. The petition must be served on all parties and on the Chief 
Administrative Law Judge at the time it is filed with the Board. Copies 
of the petition for review and all briefs must be served on the 
Assistant Secretary, Occupational Safety and Health Administration, and 
on the Associate Solicitor, Division of Fair Labor Standards, U.S. 
Department of Labor, Washington, DC 20210.
    (b) If a timely petition for review is filed pursuant to paragraph 
(a) of this section, the decision of the administrative law judge shall 
become the final order of the Secretary unless the Board, within 30 days 
of the filing of the petition, issues an order notifying the parties 
that the case has been accepted for review. If a case is accepted for 
review, the decision of the administrative law judge shall be 
inoperative unless and until the Board issues an order adopting the 
decision, except that a preliminary order of reinstatement shall be 
effective while review is conducted by the Board. The Board will specify 
the terms under which any briefs are to be filed. The Board will review 
the factual determinations of the administrative law judge under the 
substantial evidence standard.
    (c) The final decision of the Board shall be issued within 120 days 
of the conclusion of the hearing, which shall be deemed to be the 
conclusion of all

[[Page 212]]

proceedings before the administrative law judge--i.e., ten business days 
after the date of the decision of the administrative law judge unless a 
motion for reconsideration has been filed with the administrative law 
judge in the interim. The decision will be served upon all parties and 
the Chief Administrative Law Judge by mail to the last known address. 
The final decision will also be served on the Assistant Secretary, 
Occupational Safety and Health Administration, and on the Associate 
Solicitor, Division of Fair Labor Standards, U.S. Department of Labor, 
Washington, DC 20210, even if the Assistant Secretary is not a party.
    (d) If the Board concludes that the party charged has violated the 
law, the final order shall order the party charged to take appropriate 
affirmative action to abate the violation, including, where appropriate, 
reinstatement of the complainant to that person's former position, 
together with the compensation (including back pay), terms, conditions, 
and privileges of that employment, and compensatory damages. At the 
request of the complainant, the Board shall assess against the named 
person all costs and expenses (including attorney's and expert witness 
fees) reasonably incurred.
    (e) If the Board determines that the named person has not violated 
the law, an order shall be issued denying the complaint. If, upon the 
request of the named person, the Board determines that a complaint was 
frivolous or was brought in bad faith, the Board may award to the named 
person a reasonable attorney's fee, not exceeding $1,000.



                   Subpart C--Miscellaneous Provisions



Sec. 1979.111  Withdrawal of complaints, objections, and findings; settlement.

    (a) At any time prior to the filing of objections to the findings or 
preliminary order, a complainant may withdraw his or her complaint under 
the Act by filing a written withdrawal with the Assistant Secretary. The 
Assistant Secretary will then determine whether the withdrawal will be 
approved. The Assistant Secretary will notify the named person of the 
approval of any withdrawal. If the complaint is withdrawn because of 
settlement, the settlement shall be approved in accordance with 
paragraph (d) of this section.
    (b) The Assistant Secretary may withdraw his or her findings or a 
preliminary order at any time before the expiration of the 30-day 
objection period described in Sec. 1979.106, provided that no objection 
has yet been filed, and substitute new findings or preliminary order. 
The date of the receipt of the substituted findings or order will begin 
a new 30-day objection period.
    (c) At any time before the findings or order become final, a party 
may withdraw his or her objections to the findings or order by filing a 
written withdrawal with the administrative law judge or, if the case is 
on review, with the Board. The judge or the Board, as the case may be, 
will determine whether the withdrawal will be approved. If the 
objections are withdrawn because of settlement, the settlement shall be 
approved in accordance with paragraph (d) of this section.
    (d)(1) Investigative settlements. At any time after the filing of a 
complaint, and before the findings and/or order are objected to or 
become a final order by operation of law, the case may be settled if the 
Assistant Secretary, the complainant and the named person agree to a 
settlement.
    (2) Adjudicatory settlements. At any time after the filing of 
objections to the Assistant Secretary's findings and/or order, the case 
may be settled if the participating parties agree to a settlement and 
the settlement is approved by the administrative law judge if the case 
is before the judge, or by the Board if a timely petition for review has 
been filed with the Board. A copy of the settlement shall be filed with 
the administrative law judge or the Board, as the case may be.
    (e) Any settlement approved by the Assistant Secretary, the 
administrative law judge, or the Board, shall constitute the final order 
of the Secretary and may be enforced pursuant to Sec. 1979.113.



Sec. 1979.112  Judicial review.

    (a) Within 60 days after the issuance of a final order by the Board 
under Sec. 1979.110, any person adversely affected

[[Page 213]]

or aggrieved by the order may file a petition for review of the order in 
the United States Court of Appeals for the circuit in which the 
violation allegedly occurred or the circuit in which the complainant 
resided on the date of the violation. A final order of the Board is not 
subject to judicial review in any criminal or other civil proceeding.
    (b) If a timely petition for review is filed, the record of a case, 
including the record of proceedings before the administrative law judge, 
will be transmitted by the Board to the appropriate court pursuant to 
the rules of the court.



Sec. 1979.113  Judicial enforcement.

    Whenever any person has failed to comply with a preliminary order of 
reinstatement or a final order or the terms of a settlement agreement, 
the Secretary or a person on whose behalf the order was issued may file 
a civil action seeking enforcement of the order in the United States 
district court for the district in which the violation was found to have 
occurred.



Sec. 1979.114  Special circumstances; waiver of rules.

    In special circumstances not contemplated by the provisions of this 
part, or for good cause shown, the administrative law judge or the Board 
on review may, upon application, after three days notice to all parties 
and interveners, waive any rule or issue any orders that justice or the 
administration of the Act requires.



PART 1980--PROCEDURES FOR THE HANDLING OF DISCRIMINATION COMPLAINTS UNDER SECTION 806 OF THE CORPORATE AND CRIMINAL FRAUD ACCOUNTABILITY ACT OF 2002, TITLE VIII 
OF THE SARBANES-OXLEY ACT OF 2002--Table of Contents




 Subpart A--Complaints, Investigations, Findings and Preliminary Orders

Sec.
1980.100  Purpose and scope.
1980.101  Definitions.
1980.102  Obligations and prohibited acts.
1980.103  Filing of discrimination complaint.
1980.104  Investigation.
1980.105  Issuance of findings and preliminary orders.

                          Subpart B--Litigation

1980.106  Objections to the findings and the preliminary order and 
          request for a hearing.
1980.107  Hearings.
1980.108  Role of Federal agencies.
1980.109  Decision and orders of the administrative law judge.
1980.110  Decision and orders of the Administrative Review Board.

                   Subpart C--Miscellaneous Provisions

1980.111  Withdrawal of complaints, objections, and findings; 
          settlement.
1980.112  Judicial review.
1980.113  Judicial enforcement.
1980.114  District Court jurisdiction of discrimination complaints.
1980.115  Special circumstances; waiver of rules.

    Authority: 18 U.S.C. 1514A; Secretary of Labor's Order No. 5-2002, 
67 FR 65008 (October 22, 2002).

    Source: 68 FR 31864, May 28, 2003, unless otherwise noted.



 Subpart A--Complaints, Investigations, Findings and Preliminary Orders



Sec. 1980.100  Purpose and scope.

    (a) This part implements procedures under section 806 of the 
Corporate and Criminal Fraud Accountability Act of 2002, Title VIII of 
the Sarbanes-Oxley Act of 2002 (``Sarbanes-Oxley'' or ``Act''), enacted 
into law July 30, 2002. Sarbanes-Oxley provides for employee protection 
from discrimination by companies and representatives of companies 
because the employee has engaged in protected activity pertaining to a 
violation or alleged violation of 18 U.S.C. 1341, 1343, 1344, or 1348, 
or any rule or regulation of the Securities and Exchange Commission, or 
any provision of Federal law relating to fraud against shareholders.
    (b) This part establishes procedures pursuant to Sarbanes-Oxley for 
the expeditious handling of discrimination complaints made by employees, 
or by persons acting on their behalf. These rules, together with those 
rules codified at 29 CFR part 18, set forth the

[[Page 214]]

procedures for submission of complaints under Sarbanes-Oxley, 
investigations, issuance of findings and preliminary orders, objections 
to findings and orders, litigation before administrative law judges, 
post-hearing administrative review, and withdrawals and settlements.



Sec. 1980.101  Definitions.

    Act means section 806 of the Corporate and Criminal Fraud 
Accountability Act of 2002, Title VIII of the Sarbanes-Oxley Act of 
2002, Public Law No. 107-204, July 30, 2002, codified at 18 U.S.C. 
1514A.
    Assistant Secretary means the Assistant Secretary of Labor for 
Occupational Safety and Health or the person or persons to whom he or 
she delegates authority under the Act.
    Company means any company with a class of securities registered 
under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l) 
and any company required to file reports under section 15(d) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78o(d)).
    Company representative means any officer, employee, contractor, 
subcontractor, or agent of a company.
    Complainant means the employee who filed a complaint under the Act 
or on whose behalf a complaint was filed.
    Employee means an individual presently or formerly working for a 
company or company representative, an individual applying to work for a 
company or company representative, or an individual whose employment 
could be affected by a company or company representative.
    Named person means the employer and/or the company or company 
representative named in the complaint who is alleged to have violated 
the Act.
    OSHA means the Occupational Safety and Health Administration of the 
United States Department of Labor.
    Person means one or more individuals, partnerships, associations, 
corporations, business trusts, legal representatives or any group of 
persons.
    Secretary means the Secretary of Labor or persons to whom authority 
under the Act has been delegated.



Sec. 1980.102  Obligations and prohibited acts.

    (a) No company or company representative may discharge, demote, 
suspend, threaten, harass or in any other manner discriminate against 
any employee with respect to the employee's compensation, terms, 
conditions, or privileges of employment because the employee, or any 
person acting pursuant to the employee's request, engaged in any of the 
activities specified in paragraphs (b)(1) through (2) of this section.
    (b) A company or company representative is deemed to have violated 
the Act if it intimidates, threatens, restrains, coerces, blacklists, or 
in any other manner discriminates against an employee in the terms and 
conditions of employment because of any lawful act done by the employee:
    (1) To provide information, cause information to be provided, or 
otherwise assist in an investigation regarding any conduct which the 
employee reasonably believes constitutes a violation of 18 U.S.C. 1341, 
1343, 1344, or 1348, any rule or regulation of the Securities and 
Exchange Commission, or any provision of Federal law relating to fraud 
against shareholders, when the information or assistance is provided to 
or the investigation is conducted by--
    (i) A Federal regulatory or law enforcement agency;
    (ii) Any Member of Congress or any committee of Congress; or
    (iii) A person with supervisory authority over the employee (or such 
other person working for the employer who has the authority to 
investigate, discover, or terminate misconduct); or
    (2) To file, cause to be filed, testify, participate in, or 
otherwise assist in a proceeding filed or about to be filed (with any 
knowledge of the employer) relating to an alleged violation of 18 U.S.C. 
1341, 1343, 1344, or 1348, any rule or regulation of the Securities and 
Exchange Commission, or any provision of Federal law relating to fraud 
against shareholders.



Sec. 1980.103  Filing of discrimination complaint.

    (a) Who may file. An employee who believes that he or she has been 
discriminated against by a company or

[[Page 215]]

company representative in violation of the Act may file, or have filed 
by any person on the employee's behalf, a complaint alleging such 
discrimination.
    (b) Nature of filing. No particular form of complaint is required, 
except that a complaint must be in writing and should include a full 
statement of the acts and omissions, with pertinent dates, which are 
believed to constitute the violations.
    (c) Place of filing. The complaint should be filed with the OSHA 
Area Director responsible for enforcement activities in the geographical 
area where the employee resides or was employed, but may be filed with 
any OSHA officer or employee. Addresses and telephone numbers for these 
officials are set forth in local directories and at the following 
Internet address: http://www.osha.gov.
    (d) Time for filing. Within 90 days after an alleged violation of 
the Act occurs (i.e., when the discriminatory decision has been both 
made and communicated to the complainant), an employee who believes that 
he or she has been discriminated against in violation of the Act may 
file, or have filed by any person on the employee's behalf, a complaint 
alleging such discrimination. The date of the postmark, facsimile 
transmittal, or e-mail communication will be considered to be the date 
of filing; if the complaint is filed in person, by hand-delivery, or 
other means, the complaint is filed upon receipt.



Sec. 1980.104  Investigation.

    (a) Upon receipt of a complaint in the investigating office, the 
Assistant Secretary will notify the named person (or named persons) of 
the filing of the complaint, of the allegations contained in the 
complaint, and of the substance of the evidence supporting the complaint 
(redacted to protect the identity of any confidential informants). The 
Assistant Secretary also will notify the named person of its right under 
paragraphs (b) and (c) of this section and paragraph (e) of 
Sec. 1980.110. A copy of the notice to the named person will also be 
provided to the Securities and Exchange Commission.
    (b) A complaint of alleged violation will be dismissed unless the 
complainant has made a prima facie showing that protected behavior or 
conduct was a contributing factor in the unfavorable personnel action 
alleged in the complaint.
    (1) The complaint, supplemented as appropriate by interviews of the 
complainant, must allege the existence of facts and evidence to make a 
prima facie showing as follows:
    (i) The employee engaged in a protected activity or conduct;
    (ii) The named person knew or suspected, actually or constructively, 
that the employee engaged in the protected activity;
    (iii) The employee suffered an unfavorable personnel action; and
    (iv) The circumstances were sufficient to raise the inference that 
the protected activity was a contributing factor in the unfavorable 
action.
    (2) For purposes of determining whether to investigate, the 
complainant will be considered to have met the required burden if the 
complaint on its face, supplemented as appropriate through interviews of 
the complainant, alleges the existence of facts and either direct or 
circumstantial evidence to meet the required showing, i.e., to give rise 
to an inference that the named person knew or suspected that the 
employee engaged in protected activity and that the protected activity 
was a contributing factor in the unfavorable personnel action. Normally 
the burden is satisfied, for example, if the complaint shows that the 
adverse personnel action took place shortly after the protected 
activity, giving rise to the inference that it was a factor in the 
adverse action. If the required showing has not been made, the 
complainant will be so advised and the investigation will not commence.
    (c) Notwithstanding a finding that a complainant has made a prima 
facie showing, as required by this section, an investigation of the 
complaint will not be conducted if the named person, pursuant to the 
procedures provided in this paragraph, demonstrates by clear and 
convincing evidence that it would have taken the same unfavorable 
personnel action in the absence of the complainant's protected behavior 
or

[[Page 216]]

conduct. Within 20 days of receipt of the notice of the filing of the 
complaint, the named person may submit to the Assistant Secretary a 
written statement and any affidavits or documents substantiating its 
position. Within the same 20 days, the named person may request a 
meeting with the Assistant Secretary to present its position.
    (d) If the named person fails to demonstrate by clear and convincing 
evidence that it would have taken the same unfavorable personnel action 
in the absence of the behavior protected by the Act, the Assistant 
Secretary will conduct an investigation. Investigations will be 
conducted in a manner that protects the confidentiality of any person 
who provides information on a confidential basis, other than the 
complainant, in accordance with part 70 of this title.
    (e) Prior to the issuance of findings and a preliminary order as 
provided for in Sec. 1980.105, if the Assistant Secretary has reasonable 
cause, on the basis of information gathered under the procedures of this 
part, to believe that the named person has violated the Act and that 
preliminary reinstatement is warranted, the Assistant Secretary will 
again contact the named person to give notice of the substance of the 
relevant evidence supporting the complainant's allegations as developed 
during the course of the investigation. This evidence includes any 
witness statements, which will be redacted to protect the identity of 
confidential informants where statements were given in confidence; if 
the statements cannot be redacted without revealing the identity of 
confidential informants, summaries of their contents will be provided. 
The named person will be given the opportunity to submit a written 
response, to meet with the investigators to present statements from 
witnesses in support of its position, and to present legal and factual 
arguments. The named person will be directed to present this evidence 
within ten business days of the Assistant Secretary's notification 
pursuant to this paragraph, or as soon afterwards as the Assistant 
Secretary and the named person can agree, if the interests of justice so 
require.



Sec. 1980.105  Issuance of findings and preliminary orders.

    (a) After considering all the relevant information collected during 
the investigation, the Assistant Secretary will issue, within 60 days of 
filing of the complaint, written findings as to whether or not there is 
reasonable cause to believe that the named person has discriminated 
against the complainant in violation of the Act.
    (1) If the Assistant Secretary concludes that there is reasonable 
cause to believe that a violation has occurred, he or she will accompany 
the findings with a preliminary order providing relief to the 
complainant. The preliminary order will include all relief necessary to 
make the employee whole, including: Where appropriate, reinstatement 
with the same seniority status that the employee would have had but for 
the discrimination; back pay with interest; and compensation for any 
special damages sustained as a result of the discrimination, including 
litigation costs, expert witness fees, and reasonable attorney's fees. 
Where the named person establishes that the complainant is a security 
risk (whether or not the information is obtained after the complainant's 
discharge), a preliminary order of reinstatement would not be 
appropriate.
    (2) If the Assistant Secretary concludes that a violation has not 
occurred, the Assistant Secretary will notify the parties of that 
finding.
    (b) The findings and the preliminary order will be sent by certified 
mail, return receipt requested, to all parties of record. The letter 
accompanying the findings and order will inform the parties of their 
right to file objections and to request a hearing, and of the right of 
the named person to request attorney's fees from the ALJ, regardless of 
whether the named person has filed objections, if the named person 
alleges that the complaint was frivolous or brought in bad faith. The 
letter also will give the address of the Chief Administrative Law Judge. 
At the same time, the Assistant Secretary will file with the Chief 
Administrative Law Judge, U.S. Department of Labor, a copy of the 
original complaint and a copy of the findings and order.

[[Page 217]]

    (c) The findings and the preliminary order will be effective 30 days 
after receipt by the named person pursuant to paragraph (b) of this 
section, unless an objection and a request for a hearing has been filed 
as provided at Sec. 1980.106. However, the portion of any preliminary 
order requiring reinstatement will be effective immediately upon receipt 
of the findings and preliminary order.



                          Subpart B--Litigation



Sec. 1980.106  Objections to the findings and the preliminary order and request for a hearing.

    (a) Any party who desires review, including judicial review, of the 
findings and preliminary order, or a named person alleging that the 
complaint was frivolous or brought in bad faith who seeks an award of 
attorneys' fees, must file any objections and a request for a hearing on 
the record within 30 days of receipt of the findings and preliminary 
order pursuant to Sec. 1980.105(b). The objection or request for 
attorneys' fees and request for a hearing must be in writing and state 
whether the objection is to the findings, the preliminary order, and/or 
whether there should be an award of attorneys' fees. The date of the 
postmark, facsimile transmittal, or e-mail communication will be 
considered to be the date of filing; if the objection is filed in 
person, by hand-delivery or other means, the objection is filed upon 
receipt. Objections must be filed with the Chief Administrative Law 
Judge, U.S. Department of Labor, Washington, DC 20001, and copies of the 
objections must be mailed at the same time to the other parties of 
record, the OSHA official who issued the findings and order, and the 
Associate Solicitor, Division of Fair Labor Standards, U.S. Department 
of Labor, Washington, DC 20210.
    (b)(1) If a timely objection is filed, all provisions of the 
preliminary order will be stayed, except for the portion requiring 
preliminary reinstatement. The portion of the preliminary order 
requiring reinstatement will be effective immediately upon the named 
person's receipt of the findings and preliminary order, regardless of 
any objections to the order.
    (2) If no timely objection is filed with respect to either the 
findings or the preliminary order, the findings or preliminary order, as 
the case may be, will become the final decision of the Secretary, not 
subject to judicial review.



Sec. 1980.107  Hearings.

    (a) Except as provided in this part, proceedings will be conducted 
in accordance with the rules of practice and procedure for 
administrative hearings before the Office of Administrative Law Judges, 
codified at subpart A, part 18 of title 29 of the Code of Federal 
Regulations.
    (b) Upon receipt of an objection and request for hearing, the Chief 
Administrative Law Judge will promptly assign the case to a judge who 
will notify the parties, by certified mail, of the day, time, and place 
of hearing. The hearing is to commence expeditiously, except upon a 
showing of good cause or unless otherwise agreed to by the parties. 
Hearings will be conducted as hearings de novo, on the record. 
Administrative law judges will have broad discretion to limit discovery 
in order to expedite the hearing.
    (c) If the complainant and the named person object to the findings 
and/or order, the objections will be consolidated and a single hearing 
will be conducted.
    (d) Formal rules of evidence will not apply, but rules or principles 
designed to assure production of the most probative evidence will be 
applied. The administrative law judge may exclude evidence that is 
immaterial, irrelevant, or unduly repetitious.



Sec. 1980.108  Role of Federal agencies.

    (a)(1) The complainant and the named person will be parties in every 
proceeding. At the Assistant Secretary's discretion, the Assistant 
Secretary may participate as a party or may participate as amicus curiae 
at any time in the proceedings. This right to participate includes, but 
is not limited to, the right to petition for review of a decision of an 
administrative law judge, including a decision based on a settlement 
agreement between complainant and the named person, to dismiss a 
complaint or to issue an order

[[Page 218]]

encompassing the terms of the settlement.
    (2) Copies of pleadings in all cases, whether or not the Assistant 
Secretary is participating in the proceeding, must be sent to the 
Assistant Secretary, Occupational Safety and Health Administration, and 
to the Associate Solicitor, Division of Fair Labor Standards, U.S. 
Department of Labor, Washington, DC 20210.
    (b) The Securities and Exchange Commission (SEC) may participate as 
amicus curiae at any time in the proceedings, at the SEC's discretion. 
At the request of the SEC, copies of all pleadings in a case must be 
sent to the SEC, whether or not the SEC is participating in the 
proceeding.



Sec. 1980.109  Decision and orders of the administrative law judge.

    (a) The decision of the administrative law judge will contain 
appropriate findings, conclusions, and an order pertaining to the 
remedies provided in paragraph (b) of this section, as appropriate. A 
determination that a violation has occurred may only be made if the 
complainant has demonstrated that protected behavior or conduct was a 
contributing factor in the unfavorable personnel action alleged in the 
complaint. Relief may not be ordered if the named person demonstrates by 
clear and convincing evidence that it would have taken the same 
unfavorable personnel action in the absence of any protected behavior. 
Neither the Assistant Secretary's determination to dismiss a complaint 
without completing an investigation pursuant to Sec. 1980.104(b) nor the 
Assistant Secretary's determination to proceed with an investigation is 
subject to review by the administrative law judge, and a complaint may 
not be remanded for the completion of an investigation or for additional 
findings on the basis that a determination to dismiss was made in error. 
Rather, if there otherwise is jurisdiction, the administrative law judge 
will hear the case on the merits.
    (b) If the administrative law judge concludes that the party charged 
has violated the law, the order will provide all relief necessary to 
make the employee whole, including reinstatement of the complainant to 
that person's former position with the seniority status that the 
complainant would have had but for the discrimination, back pay with 
interest, and compensation for any special damages sustained as a result 
of the discrimination, including litigation costs, expert witness fees, 
and reasonable attorney's fees. If, upon the request of the named 
person, the administrative law judge determines that a complaint was 
frivolous or was brought in bad faith, the judge may award to the named 
person a reasonable attorney's fee, not exceeding $1,000.
    (c) The decision will be served upon all parties to the proceeding. 
Any administrative law judge's decision requiring reinstatement or 
lifting an order of reinstatement by the Assistant Secretary will be 
effective immediately upon receipt of the decision by the named person, 
and may not be stayed. All other portions of the judge's order will be 
effective ten business days after the date of the decision unless a 
timely petition for review has been filed with the Administrative Review 
Board.



Sec. 1980.110  Decision and orders of the Administrative Review Board.

    (a) Any party desiring to seek review, including judicial review, of 
a decision of the administrative law judge, or a named person alleging 
that the complaint was frivolous or brought in bad faith who seeks an 
award of attorney's fees, must file a written petition for review with 
the Administrative Review Board (``the Board''), which has been 
delegated the authority to act for the Secretary and issue final 
decisions under this part. The decision of the administrative law judge 
will become the final order of the Secretary unless, pursuant to this 
section, a petition for review is timely filed with the Board. The 
petition for review must specifically identify the findings, conclusions 
or orders to which exception is taken. Any exception not specifically 
urged ordinarily will be deemed to have been waived by the parties. To 
be effective, a petition must be filed within ten business days of the 
date of the decision of the administrative law judge. The date of the 
postmark, facsimile transmittal, or e-mail communication

[[Page 219]]

will be considered to be the date of filing; if the petition is filed in 
person, by hand-delivery or other means, the petition is considered 
filed upon receipt. The petition must be served on all parties and on 
the Chief Administrative Law Judge at the time it is filed with the 
Board. Copies of the petition for review and all briefs must be served 
on the Assistant Secretary, Occupational Safety and Health 
Administration, and on the Associate Solicitor, Division of Fair Labor 
Standards, U.S. Department of Labor, Washington, DC 20210.
    (b) If a timely petition for review is filed pursuant to paragraph 
(a) of this section, the decision of the administrative law judge will 
become the final order of the Secretary unless the Board, within 30 days 
of the filing of the petition, issues an order notifying the parties 
that the case has been accepted for review. If a case is accepted for 
review, the decision of the administrative law judge will be inoperative 
unless and until the Board issues an order adopting the decision, except 
that a preliminary order of reinstatement will be effective while review 
is conducted by the Board. The Board will specify the terms under which 
any briefs are to be filed. The Board will review the factual 
determinations of the administrative law judge under the substantial 
evidence standard.
    (c) The final decision of the Board will be issued within 120 days 
of the conclusion of the hearing, which will be deemed to be the 
conclusion of all proceedings before the administrative law judge--i.e., 
10 business days after the date of the decision of the administrative 
law judge unless a motion for reconsideration has been filed with the 
administrative law judge in the interim. The decision will be served 
upon all parties and the Chief Administrative Law Judge by mail to the 
last known address. The final decision will also be served on the 
Assistant Secretary, Occupational Safety and Health Administration, and 
on the Associate Solicitor, Division of Fair Labor Standards, U.S. 
Department of Labor, Washington, DC 20210, even if the Assistant 
Secretary is not a party.
    (d) If the Board concludes that the party charged has violated the 
law, the final order will order the party charged to provide all relief 
necessary to make the employee whole, including reinstatement of the 
complainant to that person's former position with the seniority status 
that the complainant would have had but for the discrimination, back pay 
with interest, and compensation for any special damages sustained as a 
result of the discrimination, including litigation costs, expert witness 
fees, and reasonable attorneys' fees.
    (e) If the Board determines that the named person has not violated 
the law, an order will be issued denying the complaint. If, upon the 
request of the named person, the Board determines that a complaint was 
frivolous or was brought in bad faith, the Board may award to the named 
person a reasonable attorneys' fee, not exceeding $1,000.



                   Subpart C--Miscellaneous Provisions



Sec. 1980.111  Withdrawal of complaints, objections, and findings; settlement.

    (a) At any time prior to the filing of objections to the findings or 
preliminary order, a complainant may withdraw his or her complaint under 
the Act by filing a written withdrawal with the Assistant Secretary. The 
Assistant Secretary will then determine whether the withdrawal will be 
approved. The Assistant Secretary will notify the named person of the 
approval of any withdrawal. If the complaint is withdrawn because of 
settlement, the settlement will be approved in accordance with paragraph 
(d) of this section.
    (b) The Assistant Secretary may withdraw his or her findings or a 
preliminary order at any time before the expiration of the 30-day 
objection period described in Sec. 1980.106, provided that no objection 
has yet been filed, and substitute new findings or preliminary order. 
The date of the receipt of the substituted findings or order will begin 
a new 30-day objection period.
    (c) At any time before the findings or order become final, a party 
may withdraw his or her objections to the findings or order by filing a 
written withdrawal with the administrative law judge or, if the case is 
on review, with the Board. The judge or the Board, as

[[Page 220]]

the case may be, will determine whether the withdrawal will be approved. 
If the objections are withdrawn because of settlement, the settlement 
will be approved in accordance with paragraph (d) of this section.
    (d)(1) Investigative settlements. At any time after the filing of a 
complaint, and before the findings and/or order are objected to or 
become a final order by operation of law, the case may be settled if the 
Assistant Secretary, the complainant and the named person agree to a 
settlement.
    (2) Adjudicatory settlements. At any time after the filing of 
objections to the Assistant Secretary's findings and/or order, the case 
may be settled if the participating parties agree to a settlement and 
the settlement is approved by the administrative law judge if the case 
is before the judge, or by the Board if a timely petition for review has 
been filed with the Board. A copy of the settlement will be filed with 
the administrative law judge or the Board, as the case may be.
    (e) Any settlement approved by the Assistant Secretary, the 
administrative law judge, or the Board, will constitute the final order 
of the Secretary and may be enforced pursuant to Sec. 1980.113.



Sec. 1980.112  Judicial review.

    (a) Within 60 days after the issuance of a final order under 
Sec. 1980.110, any person adversely affected or aggrieved by the order 
may file a petition for review of the order in the United States Court 
of Appeals for the circuit in which the violation allegedly occurred or 
the circuit in which the complainant resided on the date of the 
violation. A final order of the Board is not subject to judicial review 
in any criminal or other civil proceeding.
    (b) If a timely petition for review is filed, the record of a case, 
including the record of proceedings before the administrative law judge, 
will be transmitted by the Board to the appropriate court pursuant to 
the rules of the court.



Sec. 1980.113  Judicial enforcement.

    Whenever any person has failed to comply with a preliminary order of 
reinstatement or a final order or the terms of a settlement agreement, 
the Secretary or a person on whose behalf the order was issued may file 
a civil action seeking enforcement of the order in the United States 
district court for the district in which the violation was found to have 
occurred.



Sec. 1980.114  District Court jurisdiction of discrimination complaints.

    (a) If the Board has not issued a final decision within 180 days of 
the filing of the complaint, and there is no showing that there has been 
delay due to the bad faith of the complainant, the complainant may bring 
an action at law or equity for de novo review in the appropriate 
district court of the United States, which will have jurisdiction over 
such an action without regard to the amount in controversy.
    (b) Fifteen days in advance of filing a complaint in Federal court, 
a complainant must file with the administrative law judge or the Board, 
depending upon where the proceeding is pending, a notice of his or her 
intention to file such a complaint. The notice must be served upon all 
parties to the proceeding. If the Assistant Secretary is not a party, a 
copy of the notice must be served on the Assistant Secretary, 
Occupational Safety and Health Administration, and on the Associate 
Solicitor, Division of Fair Labor Standards, U.S. Department of Labor, 
Washington, DC 20210.



Sec. 1980.115  Special circumstances; waiver of rules.

    In special circumstances not contemplated by the provisions of this 
part, or for good cause shown, the administrative law judge or the Board 
on review may, upon application, after three days notice to all parties 
and interveners, waive any rule or issue any orders that justice or the 
administration of the Act requires.



PART 1990--IDENTIFICATION, CLASSIFICATION, AND REGULATION OF POTENTIAL OCCUPATIONAL CARCINOGENS--Table of Contents




                                 General

Sec.
1990.101  Scope.
1990.102  Purpose.
1990.103  Definitions.

[[Page 221]]

1990.104  Scientific review panel.
1990.105  Advisory committees.
1990.106  Amendments to this policy.

                         The OSHA Cancer Policy

1990.111  General statement of regulatory policy.
1990.112  Classification of potential carcinogens.

                            Priority Setting

1990.121  Candidate list of potential occupational carcinogens.
1990.122  Response to petitions.
1990.131  Priority lists for regulating potential occupational 
          carcinogens.
1990.132  Factors to be considered.
1990.133  Publication.

            Regulation of Potential Occupational Carcinogens

1990.141  Advance notice of proposed rulemaking.
1990.142  Initiation of a rulemaking.
1990.143  General provisions for the use of human and animal data.
1990.144  Criteria for consideration of arguments on certain issues.
1990.145  Consideration of substantial new issues or substantial new 
          evidence.
1990.146  Issues to be considered in the rulemaking.
1990.147  Final action.

                             Model Standards

1990.151  Model standard pursuant to section 6(b) of the Act.
1990.152  Model emergency temporary standard pursuant to section 6(c) of 
          the Act.

    Authority: Secs. 4, 6, 8, Occupational Safety and Health Act of 1970 
(29 U.S.C. 653, 655, 657); Secretary of Labor's Order No. 8-76 (41 FR 
25059); and 29 CFR part 1911.

    Source: 45 FR 5282, Jan. 22, 1980, unless otherwise noted.

                                 General



Sec. 1990.101  Scope.

    This part establishes criteria and procedures for the 
identification, classification, and regulation of potential occupational 
carcinogens found in each workplace in the United States regulated by 
the Occupational Safety and Health Act of 1970 (the Act). The procedures 
contained in this part supplement the procedural regulations in other 
parts of this chapter. In the event of a conflict, the procedures 
contained in this part shall govern the identification, classification, 
and regulation of potential occupational carcinogens. This part may be 
referred to as ``The OSHA Cancer Policy.''



Sec. 1990.102  Purpose.

    The Act provides, among other things, that

the Secretary, in promulgating standards dealing with toxic materials or 
harmful physical agents under this section, shall set the standard which 
most adequately assures, to the extent feasible, on the basis of the 
best available evidence, that no employee will suffer material 
impairment of health or functional capacity even if such employee has 
regular exposure to the hazard dealt with by such standard for the 
period of his or her working life. Development of standards under this 
section shall be based upon research, demonstrations, experiments, and 
such other information as may be appropriate. In addition to the 
attainment of the highest degree of health and safety protection for the 
employee, other considerations shall be the latest available scientific 
data in the field, the feasibility of the standards, and experience 
gained under this and other health and safety laws. Whenever 
practicable, the standard promulgated shall be expressed in terms of 
objective criteria and of the performance desired (section 6(b)(5)).


It is the purpose of the regulations of this part to carry out the 
intent of the Act with respect to the identification, classification, 
and regulation of potential occupational carcinogens.



Sec. 1990.103  Definitions.

    Terms used in this part shall have the meanings set forth in the 
Act. In addition, as used in this part, the following terms shall have 
the meanings set forth below:
    Act means the Occupational Safety and Health Act of 1970 (Pub. L. 
91-596, 84 Stat. 1590 et seq., 29 U.S.C. 551 et seq.).
    Administrator of EPA means the Administrator of the United States 
Environmental Protection Agency, or designee.
    Chairperson of CPSC means the Chairman of the United States Consumer 
Product Safety Commission, or designee.
    Commissioner of FDA means the Commissioner of the Food and Drug 
Administration, United States Department of Health and Human Services, 
or designee.
    Director of NCI means the Director of the National Cancer Institute, 
United

[[Page 222]]

States Department of Health and Human Services, or designee.
    Director of NIEHS means the Director of the National Institute of 
Environmental Health Sciences, United States Department of Health and 
Human Services, or designee.
    Director of NIOSH means the Director of the National Institute for 
Occupational Safety and Health, United States Department of Health and 
Human Services, or designee.
    Mutagenesis means the induction of heritable changes in the genetic 
material of either somatic or germinal cells.
    Positive results in short-term tests means positive results in 
assays for two or more of the following types of effect:
    (1) The induction of DNA damage and/or repair;
    (2) Mutagenesis in bacteria, yeast, Neurospora or Drosophila 
melanogaster;
    (3) Mutagenesis in mammalian somatic cells;
    (4) Mutagenesis in mammalian germinal cells; or
    (5) Neoplastic transformation of mammalian cells in culture.
    Potential occupational carcinogen means any substance, or 
combination or mixture of substances, which causes an increased 
incidence of benign and/or malignant neoplasms, or a substantial 
decrease in the latency period between exposure and onset of neoplasms 
in humans or in one or more experimental mammalian species as the result 
of any oral, respiratory or dermal exposure, or any other exposure which 
results in the induction of tumors at a site other than the site of 
administration. This definition also includes any substance which is 
metabolized into one or more potential occupational carcinogens by 
mammals.
    Secretary of HHS means the Secretary of the United States Department 
of Health and Human Services, or designee.



Sec. 1990.104  Scientific review panel.

    (a) General. At any time, the Secretary may request the Director of 
NCI, the Director of NIEHS and/or the Director of NIOSH to convene a 
scientific review panel (``the panel'') to provide recommendations to 
the Secretary in the identification, classification, or regulation of 
any potential occupational carcinogen.
    (b) Membership. The panel will consist of individuals chosen by the 
respective Director(s). The panel will consist of individuals who are 
appropriately qualified in the disciplines relevant to the issues to be 
considered, and who are employed by the United States. The panel does 
not constitute an advisory committee within the meaning of section 6(b) 
or 7(b) of the Act, or the Federal Advisory Committee Act (Pub. L. 92-
463, 86 Stat. 770).
    (c) Report. The Secretary shall request that the panel submit a 
report of its evaluation within ninety (90) days after the appointment 
of the members of the panel. The Secretary shall place a copy of the 
report in the record of any relevant rulemaking undertaken pursuant to 
this part and allow an appropriate time for public review and comment. 
If a panel is not established or fails to file a timely report, or if 
the Secretary determines that it is necessary to proceed without waiting 
for the panel's report, the Secretary may proceed in making any 
determination without such report.
    (d) Other aid and assistance. Nothing herein precludes the Secretary 
from obtaining advice or other aid from any person or organization 
including NCI, NIEHS, and NIOSH.



Sec. 1990.105  Advisory committees.

    The Secretary may appoint an Advisory Committee, pursuant to 
sections 6(b) and 7 of the Act, and 29 CFR part 1912, concerning any 
potential occupational carcinogen. The Secretary shall require the 
Advisory Committee to submit its recommendations to assist the Secretary 
in standard setting no later than ninety (90) days from the date of the 
Advisory Committee's appointment, unless extended by the Secretary for 
exceptional circumstances. If an Advisory Committee fails to file a 
timely report, the Secretary may proceed in standard setting activities 
without such a report.



Sec. 1990.106  Amendments to this policy.

    (a) Initiation of review of this policy--(1) Secretary's request. No 
later than every three (3) years from the effective

[[Page 223]]

date of this part, or from the last general review, the Secretary shall 
request the Director of NCI, the Director of NIEHS and/or the Director 
of NIOSH, to review this part and render their opinions on whether 
significant scientific or technical advances made since the effective 
date of this part warrant any amendment to this part. The request shall 
ask that the answer be provided to the Secretary within one hundred 
twenty (120) days.
    (2) Recommendations by the institutes. At any time, the Director of 
NCI, the Director of NIEHS and/or the Director of NIOSH may submit 
recommendations to the Secretary for amendments to this part whenever 
any of them believes that scientific or technical advances justify such 
amendments.
    (3) Petitions from the public. (i) Any interested person may 
petition the Secretary concerning amendments to this part based upon 
substantial new issues or substantial new evidence.
    (ii) For the purposes of this part, substantial new evidence is 
evidence which differs significantly from that presented in establishing 
this part, including amendments.
    (iii) For the purposes of this part, substantial new issues are 
issues which differ significantly from those upon which the Secretary 
has reached a conclusion in the rulemaking establishing this part 
(including the conclusions reached in the preamble).
    (iv) Each petition to amend this part shall contain at least the 
following information:
    (A) Name and address of petitioner;
    (B) The provisions which the petitioner believes are inappropriate;
    (C) All data, views and arguments relied upon by the petitioner; and
    (D) A detailed statement and analysis as to why the petitioner 
believes that the data, views and arguments presented by petitioner:
    (1) Constitute substantial new issues or substantial new evidence; 
and
    (2) Are so significant as to warrant amendment of this part.
    (b) Response to recommendations and petitions--(1) By the 
institutes. Whenever any Director recommends an amendment to this part, 
the Secretary shall, within one hundred twenty (120) days after receipt 
of the recommendation, publish in the Federal Register, a notice which:
    (i) States the reasons why the Secretary has determined not to 
commence a rulemaking proceeding to amend this part, in whole or in 
part, at that time; or
    (ii) Commences a rulemaking proceeding to consider amending this 
part accordingly; or
    (iii) Appoints an Advisory Committee as provided for by 
Sec. 1990.105 of this part and sections 6(b) and 7 of the Act.
    (2) By the public. Within ninety (90) days, or as soon thereafter as 
possible, after receipt of a petition pursuant to Sec. 1990.106(a)(3), 
the Secretary shall:
    (i) Refer the petition to the Director of NCI, the Director of NIEHS 
and/or the Director of NIOSH, in which case the provisions of 
Sec. 1990.106 (a)(1) and (b)(1) are applicable; or
    (ii) Appoint an advisory committee;
    (iii) Deny the petition, briefly giving the reasons therefor; or
    (iv) Commence a rulemaking proceeding to consider amending this part 
accordingly.
    (3) On the Secretary's motion. At any time, the Secretary may, on 
his own motion, commence a rulemaking proceeding to amend this part.

[45 FR 5282, Jan. 22, 1980; 45 FR 43405, June 27, 1980]

                         The OSHA Cancer Policy



Sec. 1990.111  General statement of regulatory policy.

    (a) This part establishes the criteria and procedures under which 
substances will be regulated by OSHA as potential occupational 
carcinogens. Although the conclusive identification of ``carcinogens'' 
is a complex matter ``on the frontiers of science,'' (IUD v. Hodgson 499 
F. 2d 467, 474 (D.C. Cir. 1974)), responsible health regulatory policy 
requires that criteria should be specified for the identification of 
substances which should be regulated as posing potential cancer risks to 
workers.
    (b) The criteria established by this part are based on an extensive 
review of scientific data and opinions. The part provides for amending 
these criteria in light of new scientific developments. Decisions as to 
whether any particular substance meets the criteria

[[Page 224]]

or not will be consistent with the policies and procedures established 
by this part and will be based upon scientific evaluation of the 
evidence on that substance.
    (c) This part applies to individual substances, groups of 
substances, or combinations or mixtures of substances which may be found 
in workplaces in the United States. In individual rulemaking proceedings 
under this part, the identity and range of substances and mixtures to be 
covered by the standard will be specified and the appropriateness of 
applying the available evidence to the range of substances and mixtures 
proposed for regulation will be subject to scientific and policy review.
    (d) Potential occupational carcinogens will be identified and 
classified on the basis of human epidemiological studies and/or 
experimental carcinogenesis bioassays in mammals. Positive results in 
short term tests will also be used as concordant evidence.
    (e) Potential occupational carcinogens will be classified and 
regulated in accordance with the policy. The scientific evidence as to 
whether individual substances meet these criteria will be considered in 
individual rulemakings. The issues which may be considered in these 
rulemakings will be limited as specified herein.
    (f) This policy provides for the classification of potential 
occupational carcinogens into two categories depending on the nature and 
extent of the available scientific evidence. The two categories of 
potential occupational carcinogens may be regulated differently.
    (g) The policy establishes a procedure for setting priorities and 
making them public.
    (h) Worker exposure to Category I Potential Carcinogens will be 
reduced primarily through the use of engineering and work practice 
controls.
    (i) Worker exposure to Category II Potential Carcinogens will be 
reduced as appropriate and consistent with the statutory requirements on 
a case-by-case basis in the rulemaking proceedings on individual 
substances. Any permissible exposure level so established shall be met 
primarily through engineering and work practice controls.
    (j) The assessment of cancer risk to workers resulting from exposure 
to a potential occupational carcinogen will be made on the basis of 
available data. Because of the uncertainties and serious consequences to 
workers if the estimated risk is understated, cautious and prudent 
assumptions will be utilized to perform risk assessments.
    (k) Where the Secretary determines that one or more suitable 
substitutes exist for certain uses of Category I Potential Carcinogens 
that are less hazardous to humans, a no occupational exposure level 
shall be set for those uses, to be achieved solely through the use of 
engineering and work practice controls to encourage substitution. In 
determining whether a substitute is suitable, the Secretary will 
consider the technological and economic feasibility of the introduction 
of the substitute, including its relative effectiveness and other 
relevant factors, such as regulatory requirements and the time needed 
for an orderly transition to the substitute.

[45 FR 5282, Jan. 22, 1980, as amended at 46 FR 5881, Jan. 21, 1981]



Sec. 1990.112  Classification of potential carcinogens.

    The following criteria for identification, classification and 
regulation of potential occupational carcinogens will be applied, unless 
the Secretary considers evidence under the provisions of Secs. 1990.143, 
1990.144 and 1990.145 and determines that such evidence warrants an 
exception to these criteria.
    (a) Category I Potential Carcinogens. A substance shall be 
identified, classified, and regulated as a Category I Potential 
Carcinogen if, upon scientific evaluation, the Secretary determines that 
the substance meets the definition of a potential occupational 
carcinogen in (1) humans, or (2) in a single mammalian species in a 
long-term bioassay where the results are in concordance with some other 
scientifically evaluated evidence of a potential carcinogenic hazard, or 
(3) in a single mammalian species in an adequately conducted long-term 
bioassay, in appropriate circumstances where the Secretary determines 
the requirement for concordance is not necessary. Evidence of 
concordance is any of the following: positive

[[Page 225]]

results from independent testing in the same or other species, positive 
results in short-term tests, or induction of tumors at injection or 
implantation sites.
    (b) Category II Potential Carcinogens. A substance shall be 
identified, classified, and regulated as a Category II Potential 
Carcinogen if, upon scientific evaluation, the Secretary determines 
that:
    (1) The substance meets the criteria set forth in Sec. 1990.112(a), 
but the evidence is found by the Secretary to be only ``suggestive''; or
    (2) The substance meets the criteria set forth in Sec. 1990.112(a) 
in a single mammalian species without evidence of concordance.

                            Priority Setting



Sec. 1990.121  Candidate list of potential occupational carcinogens.

    (a) Contents. The Secretary shall prepare a list of substances (the 
``Candidate List'') which are reported to be present in any American 
workplace and which, on the basis of a brief scientific review of 
available data, may be considered candidates for further scientific 
review and possible regulation as Category I Potential Carcinogens or 
Category II Potential Carcinogens. For the purposes of this paragraph, 
``available data'' means:
    (1) The data submitted by any person;
    (2) Any data referred to by the Secretary of HHS or by the Director 
of NIOSH, either in the latest list entitled ``Suspected Carcinogens'' 
or any other communication;
    (3) Literature referred to in U.S. Public Health Service, 
Publication No. 149;
    (4) Data summarized and reviewed in Monographs of the International 
Agency for Research on Cancer (IARC) of the World Health Organization;
    (5) The Toxic Substances Control Act Inventory of Chemical 
Substances, published by the Administrator of EPA;
    (6) The Secretary of HHS's Annual Report to the President and the 
Congress as required by the Community Mental Health Centers Extension 
Act of 1978, section 404(a)(9), 42 U.S.C. 285.
    (7) Any other relevant data of which the Secretary has actual 
knowledge.
    (b) Tentative classification. The Secretary may tentatively 
designate substances on the Candidate List as candidates for 
classification as Category I Potential Carcinogens or as Category II 
Potential Carcinogens, or may list substances without a tentative 
designation, based on the brief scientific review of available data for 
the purpose of initiating a more extensive scientific review.
    (c) No legal rights established. The inclusion or exclusion of any 
substance from the Candidate List shall not be subject to judicial 
review nor be the basis of any legal action, nor shall the exclusion of 
any substance from the list prevent the regulation of that substance as 
a potential occupational carcinogen. The inclusion of a substance on the 
Candidate List and its possible tentative designation as a Category I 
Potential Carcinogen or a Category II Potential Carcinogen therein do 
not reflect a final scientific determination that the substance is, in 
fact, a Category I Potential Carcinogen or a Category II Potential 
Carcinogen. It is a policy determination based on the brief scientific 
review that the Secretary should conduct a thorough review of all 
relevant scientific data concerning the substance.

    Effective Date Note: Paragraphs (a) and (b) of Sec. 1990.121 were 
stayed at 48 FR 243, Jan. 4, 1983, in order to evaluate the impact of 
publishing the Candidate Lists and Priority List and to reconsider the 
criteria used in establishing the lists (see also 47 FR 187, Jan. 5, 
1982).



Sec. 1990.122  Response to petitions.

    Whenever the Secretary receives any information submitted in writing 
by any interested person concerning the inclusion or omission of any 
substance from the Candidate List, the Secretary shall briefly review 
the information and any other available data, as defined in 
Sec. 1990.121(a). The results of the Secretary's review shall be 
transmitted to the petitioner, together with a short statement of the 
Secretary's reasons therefor, and made public upon request.

    Effective Date Note: Section 1990.122 was stayed at 48 FR 243, Jan. 
4, 1983, in order to

[[Page 226]]

evaluate the impact of publishing the Candidate List and Priority Lists 
and to reconsider the criteria used in establishing the lists (see also 
47 FR 187, Jan. 5, 1982).



Sec. 1990.131  Priority lists for regulating potential occupational carcinogens.

    The Secretary shall establish two priority lists for regulating 
potential occupational carcinogens. One list should include 
approximately ten (10) candidates for rulemaking as Category I Potential 
Carcinogens; the other approximately ten (10) candidates for rulemaking 
as Category II Potential Carcinogens. The order of placement of 
substances on these lists will not reflect the Secretary's determination 
of the exact order in which these substances should be regulated in 
rulemaking proceedings but rather a policy determination that the 
Secretary plans to address some or all of these substances prior to 
proceeding with a thorough scientific review of data concerning other 
substances on the Candidate List. The inclusion or exclusion of any 
substance on these lists shall not be subject to judicial review or be 
the basis for any legal action. The Secretary may regulate a potential 
occupational carcinogen which has not been placed on these lists. The 
inclusion of a substance on either of these lists does not reflect a 
final scientific determination that the substance is, in fact, a 
Category I Potential Carcinogen or a Category II Potential Carcinogen.

    Effective Date Note: Section 1990.131 was stayed at 48 FR 243, Jan. 
4, 1983, in order to evaluate the impact of publishing the Candidate 
List and Priority Lists and to reconsider the criteria used in 
establishing the lists (see also 47 FR 187, Jan. 5, 1982).



Sec. 1990.132  Factors to be considered.

    (a) The setting of priorities is a complex matter which requires 
subjective and policy judgments. It is not appropriate to establish a 
rigid formula or to assign predetermined weight to each factor. The 
identification of some of the elements is to guide the OSHA staff and 
inform the public on the development of priorities. It is not intended 
to create any legal rights with respect to the setting of priorities.
    (b) Some factors which may be taken into account in setting 
priorities for regulating potential occupational carcinogens, when such 
data are available, are:
    (1) The estimated number of workers exposed;
    (2) The estimated levels of human exposure;
    (3) The levels of exposure to the substance which have been reported 
to cause an increased incidence of neoplasms in exposed humans, animals 
or both;
    (4) The extent to which regulatory action could reduce not only 
risks of contracting cancer but also other occupational and 
environmental health hazards;
    (5) Whether the molecular structure of the substance is similar to 
the molecular structure of another substance which meets the definition 
of a potential occupational carcinogen;
    (6) Whether there are substitutes that pose a lower risk of cancer 
or other serious human health problems, or available evidence otherwise 
suggests that the social and economic costs of regulation would be 
small; and
    (7) OSHA will also consider its responsibilities for dealing with 
other health and safety hazards and will consider the actions being 
taken or planned by other governmental agencies in dealing with the same 
or similar health and safety hazards.



Sec. 1990.133  Publication.

    (a) The Secretary shall publish the Candidate List in the Federal 
Register at least annually.
    (b) The Secretary shall publish the Priority Lists in the Federal 
Register at least every six months and may seek public comment thereon.
    (c) The Secretary may periodically publish in the Federal Register a 
notice requesting information concerning the classification and 
establishment of priorities for substances on the Candidate List 
together with a brief statement describing the type of information being 
sought.

    Effective Date Note: Section 1990.133 was stayed at 48 FR 243, Jan. 
4, 1983, in order to evaluate the impact of publishing the Candidate 
List and Priority Lists and to reconsider the criteria used in 
establishing the lists (see also 47 FR 187, Jan. 5, 1982).

[[Page 227]]

            Regulation of Potential Occupational Carcinogens



Sec. 1990.141  Advance notice of proposed rulemaking.

    (a) Within thirty (30) days after OSHA initiates a study concerning 
the economic and/or technological feasibility of specific standards that 
might be applied in the regulation of a potential occupational 
carcinogen, the Secretary will normally publish, in the Federal 
Register, a notice which includes at least the following:
    (1) The name of the substance(s),
    (2) The scope of the study, including where possible,
    (i) Affected industries,
    (ii) Levels of exposure being studied,
    (iii) The anticipated completion date of the study;
    (3) A brief summary of the available data on health effects;
    (4) An estimate of when the Secretary anticipates the issuance of a 
proposal;
    (5) An invitation to interested parties to provide relevant 
information;
    (6) A statement that persons wishing to provide OSHA with their own 
study should complete it within 30 days after the anticipated proposal 
date; and
    (7) A statement of the procedural requirements that must be met 
before substantial new issues or substantial new evidence will be 
considered in the proceeding pursuant to Sec. 1990.145.
    (b) Where the Secretary determines to discontinue a feasibility 
study, the Secretary should publish, within 30 days, a notice in the 
Federal Register so indicating.



Sec. 1990.142  Initiation of a rulemaking.

    Where the Secretary decides to regulate a potential occupational 
carcinogen, the Secretary shall initiate a rulemaking proceeding in 
accordance with one of the following procedures, as appropriate.
    (a) Notice of proposed rulemakings (section 6(b) of the Act)--(1) 
General. The Secretary may issue a notice of proposed rulemaking in the 
Federal Register, pursuant to section 6(b) of the Act and part 1911 of 
this chapter. The notice shall provide for no more than a sixty (60) day 
comment period, and may provide for a hearing, which shall be scheduled 
for no later than one hundred (100) days after publication of the Notice 
of Proposed Rulemaking. The commencement of the hearing may be postponed 
once, for no more than thirty (30) days, for good cause shown.
    (2) Provisions of the proposed standard for Category I Potential 
Carcinogens. Whenever the Secretary issues a notice of proposed 
rulemaking to regulate a substance as a Category I Potential Carcinogen:
    (i) The proposed standard shall contain at least provisions for 
scope and application, definitions, notification of use, a permissible 
exposure limit, monitoring, regulated areas, methods of compliance 
including the development of a compliance plan, respiratory protection, 
protective clothing and equipment, housekeeping, waste disposal, hygiene 
facilities, medical surveillance, employee information and training, 
signs and labels, recordkeeping, and employee observation of monitoring 
as set forth in Sec. 1990.151, unless the Secretary explains why any or 
all such provisions are not appropriate;
    (ii) The model standard set forth in Sec. 1990.151 shall be used as 
a guideline, and
    (iii) The permissible exposure limit shall be achieved primarily 
through engineering and work practice controls except that if a suitable 
substitute is available for one or more uses no occupational exposure 
shall be permitted for those uses.
    (3) Provisions of the proposed standard for Category II Potential 
Carcinogens. Whenever the Secretary issues a Notice of Proposed 
Rulemaking to regulate a substance as a Category II Potential 
Carcinogen:
    (i) The proposed standard shall contain at least provisions for 
scope and application, definitions, notification of use, monitoring, 
respiratory protection, protective clothing and equipment, housekeeping, 
waste disposal, medical surveillance, employee information and training, 
recordkeeping and employee observation of monitoring as set forth in 
Sec. 1990.151, unless the Secretary explains why any or all such 
provisions are not appropriate; and

[[Page 228]]

    (ii) The model standard set forth in Sec. 1990.151 shall be used as 
a guideline; and
    (iii) Worker exposure to Category II Potential Carcinogens will be 
reduced as appropriate and consistent with the statutory requirements on 
a case-by-case basis in the individual rulemaking proceedings. Any 
permissible exposure level so established shall be met primarily through 
engineering and work practice controls.
    (b) Emergency temporary standards (section 6(c) of the Act).--(1) 
General. The Secretary may issue an Emergency Temporary Standard (ETS) 
for a Category I Potential Carcinogen in accordance with section 6(c) of 
the Act.
    (2) Provisions of the ETS. (i) The ETS shall contain at least 
provisions for scope and application, definitions, notification of use, 
a permissible exposure limit, monitoring, methods of compliance 
including the development of a compliance plan, respiratory protection, 
protective clothing and equipment, housekeeping, waste disposal, medical 
surveillance, employee information and training, signs and labels, 
recordkeeping and employee observation of monitoring, unless the 
Secretary explains why any or all such provisions are not appropriate.
    (ii) The model standard set forth in Sec. 1990.152 shall be used as 
a guideline.
    (iii) The permissible exposure limit shall be achieved through any 
practicable combination of engineering controls, work practice controls 
and respiratory protection.

[45 FR 5282, Jan. 22, 1980, as amended at 46 FR 5881, Jan. 21, 1981]



Sec. 1990.143  General provisions for the use of human and animal data.

    Human and animal data which are scientifically evaluated to be 
positive evidence for carcinogenicity including the following policies 
shall be uniformly relied upon for the identification of potential 
occupational carcinogens. Arguments challenging the following provisions 
or their application to specific substances will be considered in 
individual rulemaking proceedings only if the evidence presented in 
support of the arguments meets the criteria for consideration specified 
in Sec. 1990.144 or Sec. 1990.145.
    (a) Positive human studies. Positive results obtained in one or more 
human epidemiologic studies will be used to establish the qualitative 
inference of carcinogenic hazards to workers.
    (b) Positive animal studies. Positive results obtained in one or 
more experimental studies conducted in one or more mammalian species 
will be used to establish the qualitative inference of carcinogenic 
hazard to workers. Arguments that positive results obtained in mammalian 
species should not be relied upon will be considered only if evidence is 
presented which meets the criteria for consideration specified in 
Sec. 1990.144(c) or 1990.144(f).
    (c) Non-positive human studies. Positive results in human or 
mammalian studies generally will be used for the qualitative 
identification of potential occupational carcinogens, even where non-
positive results from human studies exist. Such non-positive results 
will be considered by the Secretary only if the studies or results meet 
the criteria set forth in Sec. 1990.144(a).
    (d) Non-positive animal studies. Positive results in one or more 
mammalian studies will be used for the qualitative identification of 
potential occupational carcinogens, even where non-positive studies 
exist in other mammalian species. Where non-positive and positive 
results exist in studies in the same species, the non-positive results 
will be evaluated.
    (e) Spontaneous tumors. Positive results in human or mammalian 
studies for the induction or acceleration of induction of tumors of a 
type which occurs ``spontaneously'' in unexposed individuals will be 
used for the qualitative identification of potential occupational 
carcinogens.
    (f) Routes of exposure. (1) Positive results in studies in which 
mammals are exposed via the oral, respiratory or dermal routes will be 
used for the qualitative identification of potential occupational 
carcinogens, whether tumors are induced at the site of application or 
distant sites.
    (2) Positive results in studies in which mammals are exposed via any 
route of exposure and in which tumors are induced at sites distant from 
the site of administration will be used for

[[Page 229]]

the qualitative identification of potential occupational carcinogens.
    (3)(i) Positive results in mammalian studies in which tumors are 
induced only at the site of administration, in which a substance or 
mixture of substances is administered by routes other than oral, 
respiratory or dermal, will be used as ``concordant'' evidence that a 
substance is a potential occupational carcinogen.
    (ii) Arguments that such studies should not be relied upon will be 
considered only if evidence which meets the criteria set forth in 
Sec. 1990.144(b) is provided.
    (g) Use of high doses in animal testing. Positive results for 
carcinogenicity obtained in mammals exposed to high doses of a substance 
will be used to establish the qualitative inference of carcinogenic 
hazard to workers. Arguments that such studies should not be relied upon 
will be considered only if evidence which meets the criteria set forth 
in Sec. 1990.144(d) is provided.
    (h) ``Threshold'' or ``No-effect'' Levels. No determination will be 
made that a ``threshold'' or ``no-effect'' level of exposure can be 
established for a human population exposed to carcinogens in general, or 
to any specific substance.
    (i) Benign tumors. Results based on the induction of benign or 
malignant tumors, or both, will be used to establish a qualitative 
inference of carcinogenic hazard to workers. Arguments that substances 
that induce benign tumors do not present a carcinogenic risk to workers 
will be considered only if evidence that meets the criteria set forth in 
Sec. 1990.144(e) is provided.
    (j) Statistical evaluation. Statistical evaluation will be used in 
the determination of whether results in human, animal or short-term 
studies provide positive evidence for carcinogenicity, but will not be 
the exclusive means for such evaluation.
    (k) Carcinogenicity of metabolites. A substance which is metabolized 
by mammals to yield one or more potential occupational carcinogens will 
itself be identified and classified as a potential occupational 
carcinogen, whether or not there is direct evidence that it induces 
tumors in humans or experimental animals. Evidence for such metabolism 
will normally be derived from in vivo studies in mammals. In appropriate 
circumstances, evidence may be derived from in vitro studies of 
mammalian tissues or fractions thereof. Arguments that evidence from in 
vivo metabolic studies in mammals is not relevant to the inference of 
carcinogenic hazard to humans will be considered only if such evidence 
meets the criteria set forth in Sec. 1990.144(c).

[45 FR 5282, Jan. 22, 1980; 45 FR 43405, June 27, 1980]



Sec. 1990.144  Criteria for consideration of arguments on certain issues.

    Arguments on the following issues will be considered by the 
Secretary in identifying or classifying any substance pursuant to this 
part, if evidence for the specific substance subject to the rulemaking 
conforms to the following criteria. Such arguments and evidence will be 
evaluated based upon scientific and policy judgments.
    (a) Non-positive results obtained in human epidemiologic studies. 
Non-positive results obtained in human epidemiologic studies regarding 
the substance subject to the rulemaking or to a similar or closely 
related substance will be considered by the Secretary only if they meet 
the following criteria:

    Criteria. (i) The epidemiologic study involved at least 20 years' 
exposure of a group of subjects to the substance and at least 30 years' 
observation of the subjects after initial exposure;
    (ii) Documented reasons are provided for predicting the site(s) at 
which the substance would induce cancer if it were carcinogenic in 
humans; and
    (iii) The group of exposed subjects was large enough for an increase 
in cancer incidence of 50% above that in unexposed controls to have been 
detected at any of the predicted sites.


Arguments that non-positive results obtained in human epidemiologic 
studies should be used to establish numerical upper limits on potential 
risks to humans exposed to specific levels of a substance will be 
considered only if criteria (i) and (ii) are met and, in addition:

    (iv) Specific data on the level of exposure of the group of workers 
are provided, based either on direct measurements made periodically 
throughout the period of exposure, or

[[Page 230]]

upon other data which provide reliable evidence of the magnitude of 
exposure.

    (b) Tumors induced at site of administration. Arguments that tumors 
at the site of administration should not be considered will be 
considered only if:
    (i) The route of administration is not oral, respiratory or dermal; 
and
    (ii) Evidence is provided which establishes that induction of local 
tumors is related to the physical configuration or formulation of the 
material administered (e.g., crystalline form or dimensions of a solid 
material, or matrix of an impregnated implant) and that tumors are not 
induced when the same material is administered in a different 
configuration or formula.
    (c) Metabolic differences. Arguments that differences in metabolic 
profiles can be used to demonstrate that a chemical found positive in an 
experimental study in a mammalian species would pose no potential 
carcinogenic risk to exposed workers will be considered by the Secretary 
only if the evidence presented for the specific substance subject to the 
rulemaking meets the following criteria:

    Criteria. (i) A complete metabolic profile, including identities of 
trace metabolites, is presented for the experimental animal species;
    (ii) A complete metabolic profile, including identities of trace 
metabolites, is available for a human population group representative of 
those who are occupationally exposed;
    (iii) Documented evidence is provided for ascribing the carcinogenic 
activity of the substance in the test animal species to metabolite(s) 
produced only in that species and not in humans; and
    (iv) Documented evidence is provided to show that other metabolites 
produced also in humans have been adequately tested and have not been 
shown to be carcinogenic.

    (d) Use of high doses in animal testing. Arguments that positive 
results obtained in carcinogenesis bioassays with experimental animals 
subjected to high doses of a substance are not relevant to potential 
carcinogenic risks to exposed workers will be considered by the 
Secretary only if the evidence for the specific substance subject to the 
rulemaking meets the following criteria:

    Criteria. (i) Documented evidence is presented to show that the 
substance in question is metabolized by the experimental animal species 
exposed at the dose levels used in the bioassay(s) to metabolic products 
which include one or more that are not produced in the same species at 
lower doses.
    (ii) Documented evidence is presented to show that the metabolite(s) 
produced only at high doses in the experimental animal species are the 
ultimate carcinogen(s) and that the metabolites produced at low doses 
are not also carcinogenic; and
    (iii) Documented evidence is presented to show that the 
metabolite(s) produced only at high doses in the experimental animal 
species are not produced in humans exposed to low doses.

    (e) Benign tumors. The Secretary will consider evidence that the 
substance subject to the rulemaking proceeding is capable only of 
inducing benign tumors in humans or experimental animals provided that 
the evidence for the specific substance meets the following criteria:

    Criteria. (i) Data are available from at least two well-conducted 
bioassays in each of two species of mammals (or from equivalent evidence 
in more than two species);
    (ii) Each of the bioassays to be considered has been conducted for 
the full lifetime of the experimental animals;
    (iii) The relevant tissue slides are made available to OSHA or its 
designee and the diagnoses of the tumors as benign are made by at least 
one qualified pathologist who has personally examined each of the slides 
and who provides specific diagnostic criteria and descriptions; and
    (iv) All of the induced tumors must be shown to belong to a type 
which is known not to progress to malignancy or to be at a benign stage 
when observed. In the latter case, data must be presented to show that 
multiple sections of the affected organ(s) were adequately examined to 
search for invasion of the tumor cells into adjacent tissue, and that 
multiple sections of other organs were adequately examined to search for 
tumor metastases.

    (f) Indirect mechanisms. The Secretary will consider evidence that 
positive results obtained in a carcinogenesis bioassay with experimental 
animals are not relevant to a determination of a carcinogenic risk to 
exposed workers, if the evidence demonstrates that the mechanism by 
which the observed tumor incidence is effected is indirect and would not 
occur if humans were exposed. As examples, evidence will be considered 
that a substance causes a carcinogenic effect by augmenting caloric 
intake or that the carcinogenic effect from exposure to a substance is

[[Page 231]]

demonstrated to be the result of the presence of a carcinogenic virus 
and it is demonstrated that, in either case, the effect would not take 
place in the absence of the particular carcinogenic virus or the 
augmented caloric intake.

[45 FR 5282, Jan. 22, 1980, as amended at 46 FR 5881, Jan. 21, 1981]



Sec. 1990.145  Consideration of substantial new issues or substantial new evidence.

    (a) Substantial new issues. Notwithstanding any other provision of 
this part, the Secretary will consider in a rulemaking proceeding on a 
specific substance any substantial new issues upon which the Secretary 
did not reach a conclusion in the rulemaking proceeding(s) underlying 
this part including conclusions presented in the preamble.
    (b) Substantial new evidence. Notwithstanding any other provision of 
this part, the Secretary will consider in a rulemaking proceeding on a 
specific substance any arguments, data or views which he determines are 
based upon substantial new evidence which may warrant the amendment of 
one or more provisions of this part. For the purposes of this part, 
``substantial new evidence'' is evidence directly relevant to any 
provision of this part and is based upon data, views or arguments which 
differ significantly from those presented in establishing this part, 
including amendments thereto.
    (c) Petitions for consideration of substantial new evidence--(1) 
Petition. Any interested person may file a written petition with the 
Secretary to consider ``substantial new evidence'' or one or more 
``substantial new issues'' which contains the information specified in 
paragraph (c)(2) of this section. The Secretary shall treat such a 
petition as a request to amend this part, as well as a petition to 
consider ``substantial new evidence''.
    (2) Contents. Each petition for consideration of ``substantial new 
evidence'' or one or more ``substantial new issues'' shall contain at 
least the following information:
    (i) Name and address of the petitioner;
    (ii) All of the data, views and arguments that the petitioner would 
like the Secretary to consider;
    (iii) The provision or provisions that petitioner believes are 
inappropriate or should be added to this part in light of the new data, 
views, and arguments;
    (iv) A statement which demonstrates that the data, views, and 
arguments relied upon by petitioners are directly relevant to the 
substance or class of substances that is the subject of a rulemaking or 
an Advance Notice of Proposed Rulemaking;
    (v) A detailed statement and analysis as to why the petitioner 
believes that the data, views, and arguments presented by the 
petitioner:
    (A) Differ significantly from those presented in the proceeding(s) 
which establish this part;
    (B) Are so substantial as to warrant amendment of this part; and
    (C) Constitute a new issue or new evidence within the meaning of 
paragraphs (a) and (b) of this section.
    (3) Deadline for petitions. (i) Petitions which comply with 
paragraph (c) of this section, shall be filed in accordance with the 
schedule set forth in the Advanced Notice of Proposed Rulemaking.
    (ii) In extraordinary cases the Secretary may consider evidence 
submitted after the deadline if the petitioner establishes that the 
evidence relied upon was not available and could not have reasonably 
been available in whole or substantial part by the deadline and that it 
is being submitted at the earliest possible time.
    (d) Secretary's response. (1) The Secretary shall respond to 
petitions under this paragraph in accordance with Sec. 1990.106.
    (2) Whenever the Secretary determines that the ``substantial new 
issue'' or the ``substantial new evidence'' submitted under this 
paragraph is sufficient to initiate a proceeding to amend this part, the 
Secretary shall:
    (i) Issue a notice to consider amendment to this part and not 
proceed on the rulemaking concerning the individual substance until 
completion of the amendment proceeding; or
    (ii) Issue a notice to consider amendment to this part and 
consolidate it

[[Page 232]]

with the proceeding on the individual substance.



Sec. 1990.146  Issues to be considered in the rulemaking.

    Except as provided in Sec. 1990.145, after issuance of the advance 
notice of rulemaking, the proceedings for individual substances under 
this part shall be limited to consideration of the following issues:
    (a) Whether the substance, group of substances or combination of 
substances subject to the proposed rulemaking is appropriately 
considered in a single proceeding;
    (b) Whether the substance or group of substances subject to the 
rulemaking meets the definition of a potential occupational carcinogen 
set forth in Sec. 1990.103, including whether the scientific studies are 
reliable;
    (c) Whether the available data can appropriately be applied to the 
substance, group of substances or combination of substances covered by 
the rulemaking;
    (d) Whether information, data, and views that are submitted in 
accordance with Sec. 1990.144 are sufficient to warrant an exception to 
this part;
    (e) Whether the data, views and arguments that are submitted in 
accordance with Sec. 1990.145 are sufficient to warrant amendment of 
this part;
    (f) Whether the potential occupational carcinogen meets the criteria 
for a Category I Potential Carcinogen or a Category II Potential 
Carcinogen.
    (g) The environmental impact arising from regulation of the 
substance;
    (h) Any issues required by statute or executive order;
    (i) The determination of the level to control exposures to Category 
I Potential Carcinogens primarily through the use of engineering and 
work practice controls including technological and economic 
considerations.
    (j) The determination of the appropriate employee exposure level, 
consistent with the Act's requirements, for Category II Potential 
Carcinogens;
    (k) Whether suitable substitutes are available for one or more uses 
of Category I Potential Carcinogens and; if so, the no occupational 
exposure level to be achieved solely with engineering and work practice 
controls and other issues relevant to substitution; and
    (l) Whether the provisions of the proposal and of Secs. 1990.151 and 
1990.152 (model standards) are appropriate, except as limited by 
Sec. 1990.142 and whether additional regulatory provisions may be 
appropriate.

[45 FR 5282, Jan. 22, 1980, as amended at 46 FR 5881, Jan. 21, 1981]



Sec. 1990.147  Final action.

    (a) Within one hundred twenty (120) days from the last day of any 
hearing or ninety (90) days from the close of any post hearing comment 
period, whichever occurs first, the Secretary shall publish in the 
Federal Register:
    (1) A final standard based upon the record in the proceeding; or
    (2) A statement that no final standard will be issued, and the 
reasons therefor, or
    (3) A statement that the Secretary intends to issue a final rule, 
but that he is unable to do so at the present time, including:
    (i) The reasons therefor; and
    (ii) The date by which the standard will be published, which may not 
exceed one hundred twenty (120) days thereafter.
    (iii) The Secretary may issue no more than one such notice, unless 
the Secretary determines that (A) new evidence which was unavailable 
during the rulemaking proceeding has just become available; (B) the 
evidence is so important that a final rule could not reasonably be 
issued without this evidence, and; (C) the record is reopened for 
receipt of comments and/or a hearing on this evidence. This paragraph 
does not require the Secretary to consider any evidence which is 
submitted after the dates established for the submission of evidence.
    (b) The failure of the Secretary to comply with the required 
timeframes shall not be a basis to set aside any standard or to require 
the issuance of a new proposal on any individual substance.
    (c) The final standard shall state whether the substance or group of 
substances subject to the rulemaking is classified as a Category I 
Potential Carcinogen or as a Category II Potential Carcinogen. If the 
classification

[[Page 233]]

differs from that in the notice of proposed rulemaking, the Secretary 
shall explain the reasons for the change in classification in the 
preamble to the final standard.
    (d) If the substance is classified as a Category I Potential 
Carcinogen, the final standard shall conform to the provisions of 
Sec. 1990.142(a)(2)(iii). If the final standard contains other 
provisions that substantially differ from the proposed provisions, the 
Secretary shall explain the reasons for the changes in the preamble to 
the final standard.
    (e) If the substance is classified as a Category II potential 
carcinogen, the final standard shall conform to the provisions of 
Sec. 1990.142(a)(3)(iii). If the final standard contains other 
provisions that substantially differ from the proposed provisions, the 
Secretary shall explain the reasons for the changes in the preamble to 
the final standard.
    (f) If the substance is classified as a Category II potential 
carcinogen, the Secretary shall notify the applicable federal and state 
agencies, including the Administrator of EPA, the Director of NCI, the 
Director of NIEHS, the Director of NIOSH, the Commissioner of FDA and 
the Chairperson of CPSC of such determination and request that the 
applicable agencies engage in, or stimulate, further research pursuant 
to their legislative authority, to develop new and additional scientific 
data.
    (g) If, after a rulemaking, the Secretary determines that the 
substance under consideration should not be classified as a Category I 
potential carcinogen or a Category II potential carcinogen, the 
Secretary shall publish a notice of this determination in the Federal 
Register, together with the reasons therefor.

                             Model Standards



Sec. 1990.151  Model standard pursuant to section 6(b) of the Act.

                Occupational Exposure to ----------------

         Permanent Standard (insert section number of standard)

    (a) Scope and application--(1) General. This section applies to all 
occupational exposures to ------ or to (specify those uses or classes of 
uses of ------ [Chemical Abstracts Service Registry Number 0000] which 
are covered by the standard, including, where appropriate, the type of 
exposure to be regulated by the standard) except as provided in 
paragraph (a)(2).
    (2) Exemptions. This section does not apply to (insert those uses or 
classes of uses of ------ which are exempted from compliance with the 
standard, including, where appropriate,
    (i) Workplaces where exposure to ------ results from solid or liquid 
mixtures containing a specified percentage of ------ or less;
    (ii) Workplaces where another Federal agency is exercising statutory 
authority to prescribe or enforce standards or regulations affecting 
occupational exposure to ------; or
    (iii) Workplaces which are appropriately addressed in a separate 
standard).
    (b) Definitions.
    ------ means (definition of the substance, group of substances, or 
combination of substances, to be regulated).
    Action level means an airborne concentration of ------ of (insert 
appropriate level of exposure).
    Note: Where appropriate, consider an action level as a limitation on 
requirements for periodic monitoring (para. (e)(3)), medical 
surveillance (para. (n)), training (para. (o)), labels (para. (p)(3)), 
and other provisions.
    Assistant Secretary means the Assistant Secretary of Labor for 
Occupational Safety and Health, U.S. Department of Labor, or designee.
    Authorized person means any person specifically authorized by the 
employer whose duties require the person to enter regulated areas or any 
person entering such an area as a designated representative of employees 
for the purpose of exercising the opportunity to observe monitoring 
procedures under paragraph (r) of this section.
    Director means the Director, National Institute for Occupational 
Safety and Health, U.S. Department of Health, and Health Services, or 
designee.
    Emergency means in any occurrence such as, but not limited to, 
equipment failure, rupture of containers, or failure of control 
equipment which may result in a massive release of ---------- which is 
(insert appropriate quantitative or qualitative level of release which 
constitutes an emergency).

[[Page 234]]

    OSHA Area Office means the Area Office of the Occupational Safety 
and Health Administration having jurisdiction over the geographic area 
where the affected workplace is located.
    (c) Permissible exposure limits provisions--(1) Inhalation--(i) Time 
weighted average limit (TWA). Within (insert appropriate time period) of 
the effective date of this section, the employer shall assure that no 
employee is exposed to an airborne concentration of ------in excess of: 
(insert appropriate exposure limit or when it is determined by the 
Secretary that there are available suitable substitutes for uses or 
classes of uses that are less hazardous to humans, the proposal shall 
permit no occupational exposure) as an eight (8)-hour-time-weighted 
average.

(Where the Secretary finds that suitable substitutes for ------may 
exist, the determination of the ------level shall include consideration 
of the availability, practicability, relative degree of hazard, and 
economic consequences of the substitutes.)
    (ii) Ceiling limit (if appropriate). Within (insert appropriate time 
period) of the effective date of this section, the employer shall assure 
that no employee is exposed to an airborne concentration of ------in 
excess of: (insert exposure limit) as averaged over any: (insert 
appropriate time period) during the working day.
    (2) Dermal and eye exposure. (As appropriate.) (i) Within (insert 
appropriate time period) of the effective date of this section, the 
employer shall (If eye exposure to ------does not create a risk of 
cancer, insert exposure level or criteria which will prevent other 
adverse health effects of eye exposure to ------if any. If eye exposure 
creates a risk of cancer, insert exposure level or criteria which 
represents the level of eye exposure to ------).
    (ii) Within (insert appropriate time period) of the effective date 
of this section, the employer shall (If skin exposure to ------does not 
create a risk of cancer, insert exposure level or criteria which will 
prevent other adverse health effects of skin exposure to ------if any. 
If skin exposure creates a risk of cancer, insert exposure level or 
criteria which represents the level of skin exposure to --------).
    (d) Notification of use and emergencies--(1) Use. Within (insert 
appropriate time period and additional information requirements if 
appropriate), of the effective date of this standard or within thirty 
days of the introduction of ------ into the workplace, every employer 
who has a place of employment in which ------ is present shall report 
the address and location of each place of employment to the OSHA Area 
Office and an estimate of the number of employees exposed.
    (2) Emergencies. Emergencies, and the facts obtainable at that time, 
shall be reported within (insert appropriate number) hours of, or during 
the first federal working day after, the time the employer becomes aware 
of the emergency to the OSHA Area Office, whichever is longer. Upon 
request of the OSHA Area Office, the employer shall submit additional 
information in writing relevant to the nature and extent of employee 
exposures and measures taken to prevent future emergencies of a similar 
nature.
    (e) Exposure monitoring--(1) General. (i) Determinations of airborne 
exposure levels shall be made from air samples that are representative 
of each employee's exposure to ------ over an eight (8) hour period. 
(Modify the time period as appropriate to be practical in the relevant 
industries yet reasonably representative of full shift exposures.) 
Monitoring of exposure levels required under this paragraph shall be 
made as follows: [insert method or alternative methods to be used to 
meet the requirements of this paragraph].
    (ii) For the purpose of this section, employee exposure is that 
exposure which would occur if the employee were not using a respirator.
    (2) Initial monitoring. Each employer who has one or more workplaces 
where (specify the types of workplaces subject to the monitoring 
requirement) shall, within (insert appropriate period) of the effective 
date of this section (insert requirements for initial monitoring, as 
appropriate).
    (3) Frequency. (Insert, if appropriate, provisions prescribing the 
minimum frequency at which monitoring must be repeated, the conditions 
under which such frequency must be increased or may be reduced, and 
conditions under

[[Page 235]]

which such routine monitoring may be discontinued (for example, where 
the action level is not exceeded). Where appropriate, specify different 
frequency requirements for certain types of workplaces where, for 
example, exposure levels are subject to greater or less variability.)
    (4) Additional monitoring. (Insert, if appropriate, provisions for 
monitoring, in addition to the requirements (if any) of paragraph 
(e)(3). This may include a production, process, control or personnel 
change which might result in new or additional exposure to ------,

or whenever the employer has any other reason to suspect a change which 
might result in new or additional exposures to  ------.)
    (5) Employee notification. (i) Within (insert appropriate period) 
after the receipt of monitoring results, the employer shall notify each 
employee in writing of the results which represent that employee's 
exposure.
    (ii) Whenever the results indicate that the representative employee 
exposure exceeds the permissible exposure limits, the employer shall 
include in the written notice a statement that the permissible exposure 
limits were exceeded and a description of the corrective action being 
taken to reduce exposure to or below the permissible exposure limits.
    (6) Accuracy of measurement. (Insert requirements for accuracy of 
methods of measurement or detection used to comply with the paragraph).
    (f) Regulated areas--(1) Within (insert appropriate time period) of 
the effective date of this section, the employer shall, where 
practicable, establish regulated areas where ------ concentrations are 
in excess of the permissible exposure limits.
    (2) Regulated areas shall be demarcated and segregated from the rest 
of the workplace, in any manner that minimizes the number of persons who 
will be exposed to  ------.
    (3) Access to regulated areas shall be limited to authorized persons 
or to persons otherwise authorized by the Act or regulations issued 
pursuant thereto.
    (4) The employer shall assure that in the regulated area, food or 
beverages are not present or consumed, smoking products are not present 
or used, and cosmetics are not applied (except that these activities may 
be conducted in the lunchroom, change rooms and showers required under 
paragraphs (m)(1) through (m)(3) of this section).
    (g) Methods of compliance--(1) Engineering and work practice 
controls. (i) The employer shall institute engineering or work practice 
controls to reduce and maintain employee exposures to  ------ to or 
below the permissible exposure limits, except to the extent that the 
employer establishes that such controls are not feasible.
    (ii) Engineering and work practice controls shall be implemented to 
reduce exposures even if they will not be sufficient to reduce exposures 
to or below the permissible exposure limits.
    (2) Compliance program. (i) Within (insert appropriate period) of 
the effective date of this section, the employer shall establish and 
implement a written program to reduce exposures to or below the 
permissible exposure limits by means of engineering and work practice 
controls, as required by paragraph (g)(1) of this section.
    (ii) Written plans for these compliance programs shall include at 
least the following:
    (A) A description of each operation or process resulting in employee 
exposure to ------;
    (B) Engineering plans and other studies contemplated or used to 
determine the controls for each process;
    (C) A report of the technology considered or to be considered in 
meeting the permissible exposure limits;
    (D) A detailed schedule for the implementation of engineering or 
work practice controls; and
    (E) Other relevant information reasonably requested by OSHA.
    (iii) Written plans for such a program shall be submitted, upon 
request, to the Assistant Secretary and the Director, and shall be 
available at the worksite for examination and copying by the Assistant 
Secretary, the Director, or any affected employee or designated 
representative.
    (iv) The plans required by this paragraph shall be revised and 
updated periodically to reflect the current status of the program.

[[Page 236]]

    (h) Respiratory protection--(1) General. The employer shall assure 
that respirators are used where required pursuant to this section to 
reduce employee exposures to or below the permissible exposure limits 
and in emergencies. Compliance with the permissible exposure limits may 
not be achieved by the use of respirators except:
    (i) During the time period necessary to install or implement 
feasible engineering and work practice controls; or
    (ii) In work operations in which the employer establishes that 
engineering and work practice controls are not feasible; or
    (iii) In work situations where feasible engineering and work 
practice controls are not yet sufficient to reduce exposure to or below 
the permissible exposure limits; or
    (iv) In emergencies.
    (2) Respirator selection. (i) Where respiratory protection is 
required under this section, the employer shall select and provide at no 
cost to the employee, the appropriate type of respirator from Table 1 
below and shall assure that the employee wears the respirator provided.

                     Table 1--Respiratory Protection

                               for ------

    (The table will contain a listing of the appropriate type of 
respirator for various conditions of exposure to ------).

    (ii) The employer shall select respirators from those approved by 
the National Institute for Occupational Safety and Health under the 
provisions of 30 CFR part 11.
    (3) Respirator program. (i) The employer shall institute a 
respiratory protection program in accordance with 29 CFR 1910.134 (b), 
(d), (e), and (f).
    (ii) Employees who wear respirators shall be allowed to wash their 
face and respirator facepiece to prevent potential skin irritation 
associated with respirator use.
    (iii) The employer shall assure that the respirator issued to each 
employee is properly fitted (as appropriate, indicate the requirement 
for a qualitative or quantitative respirator fit testing program).
    (i) Emergency situations--(1) Written plans. (i) A written plan for 
emergency situations shall be developed for each workplace where ------ 
is present. Appropriate portions of the plan shall be implemented in the 
event of an emergency.
    (ii) The plan shall specifically provide that employees engaged in 
correcting emergency conditions shall be equipped with respirators as 
required in paragraph (h) of this section and other necessary personal 
protective equipment as required in paragraph (j) until the emergency is 
abated.
    (2) Alerting employees--(i) Alarms. Where there is the possibility 
of employee exposure to ------ due to the occurrence of an emergency, a 
general alarm shall be installed and maintained to promptly alert 
employees of such occurrences.
    (ii) Evacuation. Employees not engaged in correcting the emergency 
shall be restricted from the area and shall not be permitted to return 
until the emergency is abated.
    (j) Protective clothing and equipment--(1) Provision and use. Where 
employees are exposed to eye or skin contact with ------ (insert 
criteria which trigger this requirement as appropriate), the employer 
shall, within (insert appropriate time period) of the effective date of 
this section provide at no cost to such employees, and assure that such 
employees wear, appropriate protective clothing or other equipment in 
accordance with 29 CFR 1910.132 and 1910.133 to protect the area of the 
body which may come in contact with ------.
    (2) Cleaning and replacement. (i) The employer shall clean, launder, 
maintain, or replace protective clothing and equipment required to 
maintain their effectiveness.
    (k) Housekeeping--(1) General. The employer shall, within 
appropriate time period of the effective date of this section, implement 
a housekeeping program to minimize accumulation of ------.
    (2) Specific provisions. The program shall include (insert 
appropriate elements).
    (i) Periodic scheduling of routine housekeeping.
    (ii) Provision for periodic cleaning of dust collection systems.
    (iii) Provision for maintaining clean surfaces.

[[Page 237]]

    (iv) Provision for assigning personnel to housekeeping procedures; 
and the
    (v) Provision for informing employees about housekeeping program.
    (l) Waste disposal--(1) General. The employer shall assure that no 
waste material containing ------ is dispersed into the workplace, to the 
extent practicable.
    (2) The employer shall label, or otherwise inform employees who may 
contact waste material containing ------, the contents of such waste 
material.
    (3) (Insert specific disposal methods, as appropriate.)
    (m) Hygiene facilities and practices. Where employees are exposed to 
airborne concentrations of ------ in excess of the permissible exposure 
limits specified in paragraph (c)(1), or where employees are required to 
wear protective clothing or equipment pursuant to paragraph (j) of this 
section, or where otherwise found to be appropriate, the following 
facilities shall be provided by the employer for the use of those 
employees and the employer shall assure that the employees use the 
facilities provided.
    [Specify appropriate hygiene facilities and practices such as]:
    (1) Change rooms. The employer shall provide clean change rooms in 
accordance with 29 CFR 1910.141(e).
    (2) Showers. (i) The employer shall provide shower facilities in 
accordance with 29 CFR 1910.141(d)(3).
    (ii) The employer shall assure that employees exposed to ------ 
shower at the end of the work shift.
    (3) Lunchrooms (if appropriate or other suitable requirements 
depending on the circumstances). Whenever food or beverages are consumed 
in the workplace, the employer shall provide lunchroom facilities which 
have a temperature controlled, positive pressure, filtered air supply, 
and which are readily accessible to employees exposed to ------.
    (n) Medical surveillance--(1) General. (i) The employer shall 
institute a program of medical surveillance for (specify the types of 
employees subject to the medical surveillance requirement, for example, 
by specifying the level, duration, and frequency of exposure to ------ 
which make medical surveillance appropriate for individual employees). 
The employer shall provide each such employee with an opportunity for 
medical examinations and tests in accordance with this paragraph.
    (ii) The employer shall assure that all medical examinations and 
procedures are performed by or under the supervision of a licensed 
physician, and shall be provided without cost to the employee.
    (2) Initial examinations. Within (insert appropriate time period) of 
the effective date of this section or thereafter at the time of initial 
assignment, the employer shall provide each employee specified in 
paragraph (n)(1) of this section an opportunity for a medical 
examination, including at least the following elements:
    (i) A work history and a medical history which shall include: 
(insert specific areas to be covered pertinent to the health hazards 
posed by --------------).
    (ii) A physical examination which shall include: (insert specific 
tests, procedures, etc., pertinent to the health hazards posed by ------
--------.) Where appropriate, provide that the examining physician shall 
conduct such additional examinations and tests as are needed according 
to his professional judgment).
    Note: Where appropriate, require or permit different medical 
protocols, or different frequencies of medical examinations, for 
separate sub-populations of employees covered under paragraph (n)(1).
    (3) Periodic examinations. (i) The employer shall provide the 
examinations specified below in this subparagraph at least (insert 
appropriate time) for all employees specified in paragraph (n)(3)(i) of 
this section: (insert appropriate medical protocol for periodic 
examinations).
    (ii) If an employee has not had the examinations prescribed in 
paragraph (n)(3)(i) of this section within (insert appropriate time 
period) prior to termination of employment, the employer shall make such 
examination available to the employee upon such termination.
    (4) Additional examinations. If the employee for any reason develops 
signs or symptoms commonly associated with exposure to ------, the 
employer shall provide appropriate examination and emergency medical 
treatment.

[[Page 238]]

    (5) Information provided to the physician. The employer shall 
provide the following information to the examining physician:
    (i) A copy of this standard and its appendices;
    (ii) A description of the affected employee's duties as they relate 
to the employee's exposure;
    (iii) The employee's actual or representative exposure level;
    (iv) The employee's anticipated or estimated exposure level (for 
preplacement examinations or in cases of exposure due to an emergency);
    (v) A description of any personal protective equipment used or to be 
used; and
    (vi) The names and addresses of physicians who, under the 
sponsorship of the employer, provided previous medical examinations of 
the affected employee, if such records are not otherwise available to 
the examining physician.
    (6) Physician's written opinion. (i) The employer shall obtain a 
written opinion from the examining physician which shall include:
    (A) The physician's certification that he has received the 
information from the employer required under the paragraph (n)(5) and 
has performed all medical examinations and tests which are in his 
opinion appropriate under this standard;
    (B) The physician's opinion as to whether the employee has any 
detected medical condition which would place the employee at an 
increased risk of material impairment of the employee's health from 
exposure to ------;
    (C) Any recommended limitations upon the employee's exposure to ----
-- or upon the use of protective clothing and equipment such as 
respirators; and
    (D) A statement that the employee has been informed by the physician 
of the results of the medical examination and any medical conditions 
which require further examination or treatment.
    (ii) The employer shall instruct the physician not to reveal in the 
written opinion specific findings or diagnoses unrelated to occupational 
exposure to ------;
    (iii) The employer shall provide a copy of the written opinion to 
the affected employee.
    (o) Employee information and training--(1) Training program. (i) 
Within (insert appropriate time period) from the effective date of this 
section, the employer shall institute a training program for all 
employees who (specify the employees subject to the training 
requirement), and shall assure their participation in the training 
program.
    (ii) The training program shall be provided at the time of initial 
assignment, or upon institution of the training program, and at least 
(insert appropriate time period) thereafter, and the employer shall 
assure that each employee is informed of the following:
    Note: Specify, as appropriate, some or all of the following 
information, or any other appropriate information. Where appropriate, 
require training programs with different contents, or different 
frequencies, for separate subpopulations of the employees specified in 
paragraph (o)(1).
    (A) The information contained in the Appendices;
    (B) The quantity, location, manner of use, release or storage of --
---- and the specific nature of operations which could result in 
exposure to ------, as well as any necessary protective steps;
    (C) The purpose, proper use, and limitations of respirators;
    (D) The purpose and a description of the medical surveillance 
program required by paragraph (n) of this section;
    (E) The emergency procedures developed, as required by paragraph (i) 
of this section;
    (F) The engineering and work practice controls, their function and 
the employee's relationship thereto; and
    (G) A review of this standard.
    (2) Access to training materials. (i) The employer shall make a copy 
of this standard and its appendices readily available to all affected 
employees.
    (ii) The employer shall provide, upon request, all materials 
relating to the employee information and training program to the 
Assistant Secretary and the Director.
    (p) Signs and labels--(1) General. (i) The employer may use labels 
or signs required by other statutes, regulations, or ordinances in 
addition to, or in combination with, signs and labels required by this 
paragraph.

[[Page 239]]

    (ii) The employer shall assure that no statement appears on or near 
any sign or label, required by this paragraph, which contradicts or 
detracts from the meaning of the required sign or label.
    (2) Signs. (i) The employer shall post signs to clearly indicate all 
workplaces. (Specify as appropriate the description of the area to be 
signposted such as ``where employees are exposed to ------------,'' or 
``where exposures exceed the action level,'' or ``where exposures exceed 
the PEL,'' or ``which are regulated areas''). The signs shall bear the 
following legend:

                                 DANGER

________________________________________________________________________
(insert appropriate trade or common names)

                              CANCER HAZARD

                        AUTHORIZED PERSONNEL ONLY

    (ii) The employer shall assure that signs required by this paragraph 
are illuminated and cleaned as necessary so that the legend is readily 
visible.
    (iii) Where airborne concentrations of ------ exceed the permissible 
exposure limits, the signs shall bear the additional legend: 
``Respirator Required'' or ``Respirator May Be Required'' as 
appropriate.
    (3) Labels. (i) The employer shall assure that precautionary labels 
are affixed to all containers of ------ and of products containing ----
-- (specify if appropriate suitable modifications), and that the labels 
remain affixed when the ------ or products containing ------ are sold, 
distributed or otherwise leave the employer's workplace.
    (ii) The employer shall assure that the precautionary labels 
required by this paragraph are readily visible and legible. The labels 
shall bear the following legend:

                                 DANGER

                             CONTAINS ------

                              CANCER HAZARD

    Note: Utilize the clause ``POTENTIAL CANCER HAZARD'' if it is 
appropriate to include a signs and labels provision for a Category II 
potential carcinogen.

    (q) Recordkeeping--(1) Exposure monitoring. (i) The employer shall 
establish and maintain an accurate record of all monitoring required by 
paragraph (e) of this section.
    (ii) This record shall include:
    (A) The dates, number, duration, and results of each of the samples 
taken, including a description of the sampling procedure used to 
determine representative employees exposure;
    (B) A description of the sampling and analytical methods used;
    (C) Type of respiratory protective devices worn, if any; and
    (D) Name, social security number and job classification of the 
employees monitored and of all other employees whose exposure the 
measurement is intended to represent.
    (iii) The employer shall maintain this record for (insert 
appropriate period) or for the duration of employment plus (insert 
appropriate period) whichever is longer.
    (2) Medical surveillance. (i) The employer shall establish and 
maintain an accurate record of each employee subject to medical 
surveillance as required by paragraph (n) of this section.
    (ii) This record shall include:
    (A) A copy of the physicians' written opinions or a written 
explanation of the absence of any such opinion or employee refusal to 
take the medical examination:
    (B) Any employees medical complaints related to exposure

to ------;
    (C) A copy of the information provided to the physician as required 
by paragraphs (n)(5)(ii) through (v) of this section unless it is 
systematically retained elsewhere by the employer for the period of time 
specified in paragraph (q)(2)(ii); and
    (D) A copy of the employee's work history.
    (iii) The employer shall assure that this record be maintained for 
(insert appropriate period) or for the duration of employment plus 
(insert appropriate period) whichever is longer.
    (3) Availability. (i) The employer shall assure that all records 
required to be maintained by this section be made available upon request 
to the Assistant Secretary and the Director for examination and copying.
    (ii) Employee exposure measurement records and employee medical 
records

[[Page 240]]

required by this section shall be provided upon request to employees, 
designated representatives, and the Assistant Secretary in accordance 
with 29 CFR 1910.20(a) through (e) and (g) through (i).
    (4) Transfer of records. (i) Whenever the employer ceases to do 
business, the successor employer shall receive and retain all records 
required to be maintained by this section.
    (ii) Whenever the employer ceases to do business and there is no 
successor employer to receive and retain the records for the prescribed 
period, these records shall be transmitted to the Director.
    (iii) At the expiration of the retention period for the records 
required to be maintained pursuant to this section, the employer shall 
transmit these records to the Director.
    (iv) The employer shall also comply with any additional requirements 
involving transfer of records set forth in 29 CFR 1910.20(h).

    Note: Include other recordkeeping requirements if appropriate.

    (r) Observation of monitoring--(1) Employee observation. The 
employer shall provide affected employees, or their designated 
representatives, an opportunity to observe any monitoring of employee 
exposure to ------ conducted pursuant to paragraph (e) of this section.
    (2) Observation procedures. (i) Whenever observation of the 
monitoring of employee exposure to ------ requires entry into an area 
where the use of protective clothing or equipment is required, the 
employer shall provide the observer with personal protective clothing or 
equipment required to be worn by employees working in the area, assure 
the use of such clothing and equipment, and require the observer to 
comply with all other applicable safety and health procedures.
    (ii) Without interfering with the monitoring, observers shall be 
entitled to:
    (A) Receive an explanation of the measurement procedures;
    (B) Observe all steps related to the measurement of airborne 
concentrations of ------ performed at the place of exposure; and
    (C) Record the results obtained, and receive results supplied by the 
laboratory.
    (s) Effective date. This section shall become effective (insert 
effective date).
    (t) Appendices. The information contained in the appendices is not 
intended, by itself, to create any additional obligations not otherwise 
imposed or to detract from any existing obligation. (In normal 
circumstances three appendices will be included in each standard, an 
``Appendix A--Substance Safety Data Sheet,'' an ``Appendix B--Substance 
Technical Guidelines,'' and an ``Appendix C--Medical Surveillance 
Guidelines.'' Insert additional appendices or delete any of the 
suggested appendices as appropriate.)

[45 FR 5282, Jan. 22, 1980; 45 FR 43405-43406, June 27, 1980, as amended 
at 46 FR 5881, Jan. 21, 1981]



Sec. 1990.152  Model emergency temporary standard pursuant to section 6(c) of the Act.

                    Occupational Exposure to ------;

    Emergency Temporary Standard (insert section number of standard)

    (a) Scope and application--(1) General. This section applies to all 
occupational exposures to ------, or to (specify the uses of classes of 
uses of ------ [Chemical Abstracts Service Registry Number 00000], which 
are covered by the standard, including, where appropriate, the type of 
exposure to be regulated by the standard) except as provided in 
paragraph (a)(2).
    (2) Exemption. This section does not apply to (insert those uses or 
classes of uses of ------ which are exempted from compliance with the 
standard, including, where appropriate,
    (i) Workplaces where exposure to ------ results from solid or liquid 
mixtures containing a specified percentage of ------ or less;
    (ii) Workplaces where another Federal agency is exercising statutory 
authority to prescribe or enforce standards or regulations affecting 
occupational exposure to ------ or
    (iii) Workplaces which are appropriately addressed in a separate 
standard.
    (b) Definitions.

[[Page 241]]

    ------ means (definition of the substance, group of substances, or 
combination of substances, to be regulated).
    Action level means an airborne concentration of ------ of (insert 
appropriate level of exposure).
    Note: Where appropriate, consider an action level as a limitation on 
requirements for periodic monitoring (para. (e)(3)), medical 
surveillance (para. (n)), training (para, (o)), and other provisions.
    Assistant Secretary means the Assistant Secretary of Labor for 
Occupational Safety and Health, U.S. Department of Labor, or designee.
    Authorized person means any person specifically authorized by the 
employer whose duties require the person to enter a regulated area or 
any person entering such an area as a designated representative of 
employees exercising the opportunity to observe monitoring procedures 
under paragraph (r) of this section.
    Director means the Director, National Institute for Occupational 
Safety and Health, U.S. Department of Health, Education and Welfare, or 
designee.
    Emergency means any occurrence such as, but not limited to, 
equipment failure, rupture of containers, or failure of control 
equipment which may result in a release of ------ which is (insert 
appropriate quantitative or qualitative level of release which 
constitutes an emergency).
    OSHA Area Office means the Area Office of the Occupational Safety 
and Health Administration having jurisdiction over the geographic area 
where the affected workplace is located.
    (c) Permissible exposure limits--(1) Inhalation--(i) Time-weighted 
average limit (TWA). Within (insert appropriate time) from the effective 
date of this emergency temporary standard, the employer shall assure 
that no employee is exposed to an airborne concentration of ------in 
excess of: (insert appropriate exposure limit representing a level that 
can be complied with immediately) as an eight (8)-hour-time-weighted 
average.
    (ii) Ceiling limit (if appropriate). The employer shall assure that 
no employee is exposed to an airborne concentration of ------in excess 
of: (insert appropriate exposure limit representing a level that can be 
complied with immediately) as averaged over any: (insert appropriate 
time period) during the working day.
    (2) Dermal and eye exposure. (As appropriate.) (i) Within (insert 
appropriate time period) of the effective date of this section, the 
employer shall (If eye exposure to ------does not create a risk of 
cancer, insert exposure level or criteria which will prevent other 
adverse effects of eye exposure to ------, if any. If eye exposure 
creates a risk of cancer, insert exposure level or criteria which 
represent the level of eye exposure to ------.)
    (ii) Within (insert appropriate time period) of the effective date 
of this section, the employer shall (If skin exposure to ------does not 
create a risk of cancer, insert exposure level or criteria which will 
prevent other adverse health affects of skin exposure to ------if any. 
If skin exposure creates a risk of cancer, insert exposure level or 
criteria which represents the level of skin exposure to ------).
    (d) Notification of use. Within (insert appropriate time and omit 
specific categories of information if appropriate) of the effective date 
of this section, or within fifteen (15) days following the introduction 
of ------ into the workplace, every employer shall report the following 
information to the nearest OSHA Area Office for each such workplace:
    (1) The address and location of each workplace in which ------ is 
present;
    (2) A brief description of each process or operation which may 
result in employee exposure to ------;
    (3) The number of employees engaged in each process or operation who 
may be exposed ------ and an estimate of the frequency and degree of 
exposure that occurs; and
    (4) A brief description of the employer's safety and health program 
as it relates to limitation of employee exposure to ------;
    (e) Exposure monitoring--(1) General. (i) Determinations of airborne 
exposure levels shall be made from air samples that are representative 
of each employee's exposure to ------ over an eight (8) hour period. 
(Modify the time period as appropriate to be practical in the relevant 
industries yet reasonably representative of full shift exposures).

[[Page 242]]

Monitoring of exposure levels required under this paragraph shall be 
made as follows: [insert method or alternative methods to be used to 
meet the requirements of this paragraph].
    (ii) For the purposes of this section, employee exposure is that 
exposure which would occur if the employee were not using a respirator.
    (2) Initial monitoring. Each employer who has one or more workplaces 
where (specify the types of workplaces subject to the monitoring 
requirement), shall within (insert appropriate period) of the effective 
date of this section (insert requirements for initial monitoring, as 
appropriate).
    (3) Frequency. (Insert, if appropriate, provisions prescribing the 
minimum frequency at which monitoring must be repeated, the conditions 
under which such frequency must be increased, or may be reduced, and 
conditions under which such routine monitoring may be discontinued (for 
example where the action level is not exceeded). Where appropriate, 
specify different frequency requirements for certain types of workplaces 
where, for example, exposure levels are subject to greater or less 
variability.)
    (4) Additional monitoring. (Insert, if appropriate, provisions for 
monitoring, in addition to the requirements (if any) of paragraph 
(e)(3). This may include a production, process, control or personnel 
change which might result in new or additional exposure to ------ or 
whenever the employer has any other reason to suspect a change which 
might result in new or additional exposures to ------.)
    (5) Employee notification. (i) Within (insert appropriate period) 
after the receipt of monitoring results, the employer shall notify each 
employee in writing of the results which represent that employee's 
exposure.
    (ii) Whenever the results indicate that the representative employee 
exposure exceeds the permissible exposure limits, the employer shall 
include in the written notice a statement that permissible exposure 
limits were exceeded and a description of the corrective action being 
taken to reduce exposure to or below the permissible exposure limits.
    (6) Accuracy of measurement. (Insert requirements for accuracy of 
methods of measurement or detection used to comply with the paragraph.)
    (f) [Reserved]
    (g) Methods of compliance--(1) General. (i) Employee exposures to --
---- shall be controlled to or below the permissible exposure limits by 
any practicable combination of engineering controls, work practices and 
personal protective devices and equipment, during the effective period 
of this emergency temporary standard.
    Note: Where engineering controls or work practices can reduce 
employee exposures to ------ it is recommended that they be implemented 
where practicable, even where they do not themselves reduce exposures 
to, or below the permissible exposure limits. Work practices which can 
be implemented by the employer to help reduce employee exposures to ----
-- include limiting access to work areas to authorized personnel, 
prohibiting smoking and consumption of food and beverages in work areas, 
and establishing good maintance and housekeeping practices, including 
the prompt clean-up of spills and repair of leaks.
    (2) Engineering and work practice control plan. (i) Within (insert 
appropriate time period) of the effective date of this emergency 
temporary standard, the employer shall develop a written plan describing 
proposed means to reduce employee exposures to the lowest feasible level 
by means of engineering and work practice controls (which will be 
eventually required by a permanent standard for occupational exposure to 
------, as provided for by Sec. 1990.151(g) of this subpart).
    (ii) Written plans required by this paragraph shall be submitted, 
upon request, to the Assistant Secretary and the Director and shall be 
available at the worksite for examination and copying by the Assistant 
Secretary, the Director, and any affected employee or designated 
representative.
    (h) Respiratory protection--(1) Required use. The employer shall 
assure that respirators are used where required pursuant to this section 
to reduce employee exposures to within the permissible exposure limits 
and in emergencies.
    (2) Respirator selection. (i) Where respiratory protection is 
required under this section, the employer shall select and provide at no 
cost to the employee,

[[Page 243]]

the appropriate respirator from Table 1 below and shall assure that the 
employee wears the respirator provided.

               Table 1--Respiratory Protection for ------

    (The table will contain a listing of the appropriate type of 
respirator for various conditions of exposure
to ------.)

    (ii) The employer shall select respirators from those approved by 
the National Institute for Occupational Safety and Health under the 
provisions of 30 CFR part 11.
    (3) Respirator program. (i) The employer shall institute a 
respirator protection program in accordance with 29 CFR 1910.134 (b), 
(d), (e) and (f).
    (ii) Employees who wear respirators shall be allowed to wash their 
face and respirator face piece to prevent potential skin irritation 
associated with respirator use.
    (iii) The employer shall assure that the respirator issued to each 
employee is properly fitted (as appropriate, indicate the requirement 
for a qualitative or quantitative respirator fit testing program.)
    (i) [Reserved]
    (j) Protective clothing and equipment--(1) Provision and use. Where 
employees are exposed to eye or skin contact with ------ (insert 
criteria which trigger this requirement as appropriate), the employer 
shall within (insert appropriate time period) of the effective date of 
this standard provide, at no cost to the employees, and assure that 
employees wear, appropriate protective clothing or other equipment in 
accordance with 29 CFR 1910.132 and 1910.133 to protect the area of the 
body which may come in contact with ------.
    (2) Cleaning and replacement. (i) The employer shall clean, launder, 
maintain, or replace protective clothing and equipment required by this 
paragraph, as needed to maintain their effectiveness.
    (k) Housekeeping--(1) General. The employer shall, within (insert 
appropriate time period) of the effective date of this section, 
implement a housekeeping program to minimize accumulations of ------.
    (2) Specific provisions. The program shall include (insert 
appropriate elements):
    (i) Periodic scheduling of routine housekeeping procedures;
    (ii) Provision for periodic cleaning of dust collection systems;
    (iii) Provision for maintaining clean surfaces;
    (iv) Provision for assigning personnel to housekeeping procedures; 
and
    (v) Provision for informing employees about housekeeping program.
    (l) Waste disposal--(1) General. The employer shall assure that no 
waste material containing ------ is dispersed into the workplace, to the 
extent practicable.
    (2) The employer shall label, or otherwise inform employees who may 
contact waste material containing ------ of the contents of such waste 
material.
    (3) (Insert specific disposal methods, as appropriate.)
    (m) [Reserved]
    (n) Medical surveillance--(1) General. (i) The employer shall 
institute a program of medical surveillance for (specify the types of 
employees subject to the medical surveillance requirement, for example, 
by specifying the level, duration, and frequency of exposure to -------- 
which make medical surveillance appropriate for individual employees). 
The employer shall provide each such employee with an opportunity for 
medical examinations and tests in accordance with this paragraph.
    (ii) The employer shall assure that all medical examinations and 
procedures are performed by or under the supervision of a licensed 
physician, and shall be provided without cost to the employee.
    (2) Initial examinations. Within (insert appropriate time period) of 
the effective date of this section, or thereafter at the time of initial 
assignment, the employer shall provide each employee specified in 
paragraph (n)(1) of this section an opportunity for a medical 
examination, including at least the following elements:
    (i) A work history and a medical history which shall include (insert 
specific areas to be covered pertinent to the health hazards posed by --
------).

[[Page 244]]

    (ii) A physical examination which shall include: (insert specific 
tests, procedures, etc., pertinent to the health hazards posed by ------
--. Where appropriate, provide that the examining physician shall 
conduct such additional examinations and tests as are needed according 
to his professional judgement).
    Note: Where appropriate, require or permit different medical 
protocols, or different frequencies of medical examinations, for 
separate sub-populations of employees covered under paragaph (n)(1).
    (3) Periodic examinations. (If appropriate insert appropriate 
medical protocol and time.)
    (4) Additional examinations. If the employee for any reason develops 
signs or symptoms commonly associated with exposure to ------, the 
employer shall provide an appropriate examination and emergency medical 
treatment.
    (5) Information provided to the physician. The employer shall 
provide the following information to the examining physician:
    (i) A copy of this emergency temporary standard and its appendices;
    (ii) A description of the affected employee's duties as they relate 
to the employee's exposure;
    (iii) The employee's actual or representative exposure level;
    (iv) The employee's anticipated or estimated exposure level (for 
preplacement examinations or in cases of exposures due to an emergency);
    (v) A description of any personal protective equipment used or to be 
used; and
    (vi) The names and addresses of physicians who, under the 
sponsorship of the employer, provided previous medical examinations of 
the affected employee, if such records are not otherwise available to 
the examining physician.
    (6) Physician's written opinion. (i) The employer shall obtain a 
written opinion from the examining physician which shall include:
    (A) The results of the medical tests performed;
    (B) The physician's opinion as to whether the employee has any 
detected medical condition which would place the employee at an 
increased risk of material impairment of the employee's health from 
exposure to ------;
    (C) Any recommended limitations upon the employee's exposure to ----
-- or upon the use of protective clothing and equipment such as 
respirators; and
    (D) A statement that the employee has been informed by the physician 
of the results of the medical examination and any medical conditions 
which require further examination or treatment.
    (ii) The employer shall instruct the physician not to reveal in the 
written opinion specific findings or diagnoses unrelated to occupational 
exposure to ------;
    (iii) The employer shall provide a copy of the written opinion to 
the affected employee.
    (o) Employee information and training--(1) Training program. (i) 
Within (insert appropriate time period) from the effective date of this 
standard, the employer shall institute a training program for all 
employees who (specify the employees subject to the training 
requirement), and shall assure their participation in the training 
program.
    (ii) The employer shall assure that each employee is informed of the 
following:
    (A) The information contained in the Appendices;
    (B) The quantity, location, manner of use, release, or storage of --
---- and the specific nature of operations which could result in 
exposure to ------, as well as any necessary protective steps;
    (C) The purpose, proper use, and limitations of respirators;
    (D) The purpose and description of the medical surveillance program 
required by paragraph (n) of this section; and
    (E) A review of this standard.
    (2) Access to training materials. (i) The employer shall make a copy 
of this standard and its appendices readily available to all affected 
employees.
    (ii) The employer shall provide, upon request, all materials 
relating to the employee information and training program to the 
Assistant Secretary and the Director.
    (p) Signs and labels (include a signs or a signs and labels 
provision if it is appropriate for the duration of the ETS)--(1) 
General. (i) The employer may use labels or signs required by

[[Page 245]]

other statutes, regulations, or ordinances in addition to, or in 
combination with, signs and labels required by this paragraph.
    (ii) The employer shall assure that no statement appears on or near 
any sign or label, required by this paragraph, which contradicts or 
detracts from the meaning of the required sign or label.
    (2) Signs. (i) The employer shall post signs to clearly indicate all 
workplaces (specify as appropriate the description of the area to be 
signposted such as ``where employees are exposed to --------,'' or 
``where exposures exceed the PEL,'' or ``which are regulated areas''). 
The signs shall bear the following legend:

                                 DANGER

                                  ------

(insert appropriate trade or common names)

                              CANCER HAZARD

                        AUTHORIZED PERSONNEL ONLY

    (ii) The employer shall assure that signs required by this paragraph 
are illuminated and cleaned as necessary so that the legend is readily 
visible.
    (iii) Where airborne concentrations of ------------ exceed the 
permissible exposure limits, the signs shall bear the additional legend: 
(``Respirator Required'' or ``Respirator may be Required'' as 
appropriate).
    (3) Labels. (i) The employer shall assure that precautionary labels 
are affixed to all containers of ------------ and of products containing 
-------------- (specify if appropriate suitable modifications), and that 
the labels remain affixed when ---------- or products containing ------
------ are sold, distributed or otherwise leave the employer's 
workplace.
    (ii) The employer shall assure that the precautionary labels 
required by this paragraph are readily visible and legible. The labels 
shall bear the following legend:

                                 DANGER

                         CONTAINS --------------

                              CANCER HAZARD

    (q) Recordkeeping--(1) Exposure monitoring. (i) The employer shall 
establish and maintain an accurate record of all monitoring required by 
paragraph (e) of this section.
    (ii) This record shall include:
    (A) The dates, number, duration, and results of each of the samples 
taken, including a description of the sampling procedures used to 
determine representative employee exposure;
    (B) A description of the sampling and analytical methods used;
    (C) Type of respiratory protective devices worn, if any; and
    (D) Name, social security number, and job classification of the 
employee monitored and of all other employees whose exposure the 
measurement is intended to represent.
    (iii) The employer shall maintain this record for the effective 
period of this emergency temporary standard, and for any additional 
period required by the permanent standard.
    (2) Medical surveillance. (i) The employer shall establish and 
maintain an accurate record for each employee subject to medical 
surveillance as required by paragraph (n) of this section.
    (ii) This record shall include:
    (A) A copy of the physicians' written opinions or a written 
explanation of the absence of any such opinion or employee refusal to 
take the medical examination;
    (B) Any employee medical complaints related to exposure to ------;
    (C) A copy of the information provided to the physician as required 
by paragraphs (n)(5)(ii)-(iv) of this section unless it is 
systematically retained elsewhere by the employer for the period of time 
specified in paragraph (q)(2)(iii); and,
    (D) A copy of the employee's work history. (1[hairsp][hairsp]) The 
employer shall assure that employee exposure measurement records, as 
required by this section, be made available upon request to the 
Assistant Secretary and the Director for examination and copying.
    (iii) The employer shall assure that this record be maintained for 
the effective period of this emergency temporary standard, and for any 
additional period required by the permanent standard.
    (3) Availability. (i) The employer shall assure that all records 
required to be maintained by this section be made

[[Page 246]]

available upon request, to the Assistant Secretary and the Director for 
examination and copying.
    (ii) Employee exposure measurement records and employee medical 
records required by this section shall be provided upon request to 
employees, designated representatives, and the Assistant Secretary in 
accordance with 29 CFR 1910.20 (a) through (e) and (g) through (i).
    (r) Observation of monitoring. (1) Employee observation. The 
employer shall provide affected employees, or their designated 
representatives, an opportunity to observe any monitoring of employee 
exposure to ------ conducted pursuant to paragraph (e) of this section.
    (2) Observation procedures. (i) Whenever observation of the 
monitoring of employee exposure to ------ requires entry into an area 
where the use of protective clothing or equipment is required, the 
employer shall provide the observer with personal protective clothing or 
equipment required to be worn by employees working in the area, assure 
the use of such clothing and equipment, and require the observer to 
comply with all other applicable safety and health procedures.
    (ii) Without interfering with the monitoring, observers shall be 
entitled to:
    (A) Receive an explanation of measurement procedures;
    (B) Observe all steps related to the measurement of airborne 
concentrations of ------ performed at the place of exposure; and
    (C) Record the results obtained and receive results supplied by the 
laboratory.
    (s) Effective date. This section shall become effective (insert 
effective date).
    (t) Appendices. The information contained in the appendices is not 
intended, itself, to create any additional obligations not otherwise 
imposed or to detract from any existing obligation. (In normal 
circumstances three appendices will be included in each standard, an 
``Appendix A--Substance Safety Data Sheet,'' an ``Appendix B--Substance 
Technical Guidelines,'' and an ``Appendix C--Medical Surveillance 
Guidelines.'' Insert additional appendices or delete any of the 
suggested appendices as appropriate.)

[45 FR 5282, Jan. 22, 1980; 45 FR 43406-43407, June 27, 1980, as amended 
at 46 FR 5882, Jan. 21, 1981]

[[Page 247]]



      CHAPTER XX--OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION




  --------------------------------------------------------------------
Part                                                                Page
2200            Rules of procedure..........................         249
2201            Regulations implementing the Freedom of 
                    Information Act.........................         284
2202

[Reserved]

2203            Regulations implementing the Government in 
                    the Sunshine Act........................         291
2204            Implementation of the Equal Access to 
                    Justice Act in proceedings before the 
                    Occupational Safety and Health Review 
                    Commission..............................         295
2205            Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by the Occupational 
                    Safety and Health Review Commission.....         301
2400            Regulations implementing the Privacy Act....         307

[[Page 249]]



PART 2200--RULES OF PROCEDURE--Table of Contents




                      Subpart A--General Provisions

Sec.
2200.1  Definitions.
2200.2  Scope of rules; applicability of Federal Rules of Civil 
          Procedure; construction.
2200.3  Use of gender and number.
2200.4  Computation of time.
2200.5  Extension of time.
2200.6  Record address.
2200.7  Service and notice.
2200.8  Filing.
2200.9  Consolidation.
2200.10  Severance.
2200.11  Protection of claims of privilege.
2200.12  References to cases.

                 Subpart B--Parties and Representatives

2200.20  Party status.
2200.21  Intervention; appearance by non-parties.
2200.22  Representation of parties and intervenors.
2200.23  Appearances and withdrawals.
2200.24  Brief of an amicus curiae.

                    Subpart C--Pleadings and Motions

2200.30  General rules.
2200.31  Caption; titles of cases.
2200.32  Signing of pleadings and motions.
2200.33  Notices of contest.
2200.34  Employer contests.
2200.35  Disclosure of corporate parents, subsidiaries, and affiliates.
2200.36  [Reserved]
2200.37  Petitions for modification of the abatement period.
2200.38  Employee contests.
2200.39  Statement of position.
2200.40  Motions and requests.
2200.41  Failure to obey rules.

             Subpart D--Prehearing Procedures and Discovery

2200.50  [Reserved]
2200.51  Prehearing conferences and orders.
2200.52  General provisions governing discovery.
2200.53  Production of documents and things.
2200.54  Requests for admissions.
2200.55  Interrogatories.
2200.56  Depositions.
2200.57  Issuance of subpoenas; petitions to revoke or modify subpoenas; 
          right to inspect or copy data.

                           Subpart E--Hearings

2200.60  Notice of hearing; location.
2200.61  Submission without hearing.
2200.62  Postponement of hearing.
2200.63  Stay of proceedings.
2200.64  Failure to appear.
2200.65  Payment of witness fees and mileage; fees of persons taking 
          depositions.
2200.66  Transcript of testimony.
2200.67  Duties and powers of judges.
2200.68  Disqualification of the judge.
2200.69  Examination of witnesses.
2200.70  Exhibits.
2200.71  Rules of evidence.
2200.72  Objections.
2200.73  Interlocutory review.
2200.74  Filing of briefs and proposed findings with the Judge; oral 
          argument at the hearing.

                    Subpart F--Posthearing Procedures

2200.90  Decisions of Judges.
2200.91  Discretionary review; petitions for discretionary review; 
          statements in opposition to petitions.
2200.92  Review by the Commission.
2200.93  Briefs before the Commission.
2200.94  Stay of final order.
2200.95  Oral argument before the Commission.
2200.96  Commission receipt pursuant to 28 U.S.C. 2112(a)(1) of copies 
          of petitions for judicial review of Commission orders when 
          petitions for review are filed in two or more courts of 
          appeals with respect to the same order.

                   Subpart G--Miscellaneous Provisions

2200.100  Settlement.
2200.101  Settlement Judge procedure.
2200.102  Withdrawal.
2200.103  Expedited proceeding.
2200.104  Standards of conduct.
2200.105  Ex parte communication.
2200.106  Amendment to rules.
2200.107  Special circumstances; waiver of rules.
2200.108  Official Seal of the Occupational Safety and Health Review 
          Commission.

                       Subpart H--Settlement Part

2200.120  Settlement part.

Subparts I-L [Reserved]

                          Subpart M--E-Z Trial

2200.200  Purpose.
2200.201  Application.
2200.202  Eligibility for E-Z Trial.
2200.203  Commencing E-Z Trial.
2200.204  Discontinuance of E-Z Trial.
2200.205  Filing of pleadings.
2200.206  Disclosure of information.
2200.207  Pre-hearing conference.
2200.208  Discovery.
2200.209  Hearing.
2200.210  Review of Judge's decision.

[[Page 250]]

2200.211  Applicability of subparts A through G.

    Authority: 29 U.S.C. 661(g), unless otherwise noted.
    Section 2200.96 is also issued under 28 U.S.C. 2112(a).

    Source: 51 FR 32015, Sept. 8, 1986, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 2200.1  Definitions.

    As used herein:
    (a) Act means the Occupational Safety and Health Act of 1970, 29 
U.S.C. 651-678.
    (b) Commission, person, employer, and employee have the meanings set 
forth in section 3 of the Act.
    (c) Secretary means the Secretary of Labor or his duly authorized 
representative.
    (d) Executive Secretary means the Executive Secretary of the 
Commission.
    (e) Affected employee means an employee of a cited employer who is 
exposed to or has access to the hazard arising out of the allegedly 
violative circumstances, conditions, practices or operations.
    (f) Judge means an Administrative Law Judge appointed by the 
Chairman of the Commission pursuant to section 12(j) of the Act, 29 
U.S.C. 661(j), as amended by Pub. L. 95-251, 92 Stat. 183, 184 (1978).
    (g) Authorized employee representative means a labor organization 
that has a collective bargaining relationship with the cited employer 
and that represents affected employees.
    (h) Representative means any person, including an authorized 
employee representative, authorized by a party or intervenor to 
represent him in a proceeding.
    (i) Citation means a written communication issued by the Secretary 
to an employer pursuant to 9(a) of the Act.
    (j) Notification of proposed penalty means a written communication 
issued by the Secretary to an employer pursuant to 10 (a) or (b) of the 
Act.
    (k) Day means a calendar day.
    (l) Working day means all days except Saturdays, Sundays, or Federal 
holidays.
    (m) Proceeding means any proceeding before the Commission or before 
a Judge.
    (n) Pleadings are complaints and answers filed under Sec. 2200.34, 
statements of reasons and contestants' responses filed under 
Sec. 2200.38, and petitions for modification of abatement and objecting 
parties' responses filed under Sec. 2200.37. A motion is not a pleading 
within the meaning of these rules.



Sec. 2200.2  Scope of rules; applicability of Federal Rules of Civil Procedure; construction.

    (a) Scope. These rules shall govern all proceedings before the 
Commission and its Judges.
    (b) Applicability of Federal Rules of Civil Procedure. In the 
absence of a specific provision, procedure shall be in accordance with 
the Federal Rules of Civil Procedure.
    (c) Construction. These rules shall be construed to secure an 
expeditious, just and inexpensive determination of every case.



Sec. 2200.3  Use of gender and number.

    (a) Number. Words importing the singular number may extend and be 
applied to the plural and vice versa.
    (b) Gender. Words importing the masculine gender may be applied to 
the feminine gender.



Sec. 2200.4  Computation of time.

    (a) Computation. In computing any period of time prescribed or 
allowed in these rules, the day from which the designated period begins 
to run shall not be included. The last day of the period so computed 
shall be included unless it is a Saturday, Sunday or Federal holiday, in 
which event the period runs until the end of the next day which is not a 
Saturday, Sunday, or Federal holiday. When the period of time prescribed 
or allowed is less than 11 days, the period shall commence on the first 
day which is not a Saturday, Sunday, or Federal holiday, and 
intermediate Saturdays, Sundays, and Federal holidays shall likewise be 
excluded from the computation.
    (b) Service by mail. Where service of a document, including 
documents issued by the Commission or Judge, is made by mail pursuant to 
Sec. 2200.7, a separate

[[Page 251]]

period of 3 days shall be allowed, in addition to the prescribed period, 
for the filing of a response. This additional 3-day period shall 
commence on the calendar day following the day on which service has been 
made and shall include all calendar days; that is, paragraph (a) of this 
section shall not apply to the extent it requires the exclusion of 
Saturdays, Sundays, or Federal holidays. The prescribed period for the 
responsive filing shall commence on the first day following the 
expiration of the 3-day period, except when the prescribed period is 
less than 11 days. Where the period is less than 11 days, it shall 
commence on the first day following the expiration of the 3-day period 
that is not a Saturday, Sunday, or Federal holiday.
    (c) Exclusion. Paragraph (b) of this section does not apply to 
petitions for discretionary review. The period of time for filing a 
petition for discretionary review is governed by Sec. 2200.91(b).

[57 FR 41683, Sept. 11, 1992]



Sec. 2200.5  Extension of time.

    Upon motion of a party, for good cause shown, the Commission or 
Judge may enlarge any time prescribed by these rules or prescribed by an 
order. All such motions shall be in writing but, in exigent 
circumstances in a case pending before a Judge, an oral request may be 
made and thereafter shall be followed by a written motion filed with the 
Judge within 3 working days. A request for an extension of time should 
be received in advance of the date on which the pleading or document is 
due to be filed. However, in exigent circumstances, an extension of time 
may be granted even though the request was filed after the designated 
time for filing has expired. In such circumstances, the party requesting 
the extension must show, in writing, the reasons for the party's failure 
to make the request before the time prescribed for the filing had 
expired. The motion may be acted upon before the time for response has 
expired.

[57 FR 41684, Sept. 11, 1992]



Sec. 2200.6  Record address.

    Every pleading or document filed by any party or intervenor shall 
contain the name, current address and telephone number of his 
representative or, if he has no representative, his own name, current 
address and telephone number. Any change in such information shall be 
communicated promptly in writing to the Judge, or the Executive 
Secretary if no Judge has been assigned, and to all other parties and 
intervenors. A party or intervenor who fails to furnish such information 
shall be deemed to have waived his right to notice and service under 
these rules.

[51 FR 32015, Sept. 8, 1986; 52 FR 13831, Apr. 27, 1987]



Sec. 2200.7  Service and notice.

    (a) When service is required. At the time of filing pleadings or 
other documents, a copy thereof shall be served by the filing party or 
intervenor on every other party or intervenor. Every paper relating to 
discovery required to be served on a party shall be served on all 
parties and intervenors. Every order required by its terms to be served 
shall be served upon each of the parties and intervenors.
    (b) Service on represented parties or intervenors. Service upon a 
party or intervenor who has appeared through a representative shall be 
made only upon such representative.
    (c) How accomplished. Unless otherwise ordered, service may be 
accomplished by postage pre-paid first class mail at the last known 
address or by personal delivery. Service is deemed effected at the time 
of mailing (if by mail) or at the time of personal delivery (if by 
personal delivery). Facsimile transmission of documents and documents 
sent by an overnight delivery service shall be considered personal 
delivery. Legibility of documents served by facsimile transmission is 
the responsibility of the serving party.
    (d) Proof of service. Proof of service shall be accomplished by a 
written statement of the same which sets forth the date and manner of 
service. Such statement shall be filed with the pleading or document.
    (e) Proof of posting. Where service is accomplished by posting, 
proof of such

[[Page 252]]

posting shall be filed not later than the first working day following 
the posting.
    (f) Service on represented employees. Service and notice to 
employees represented by an authorized employee representative shall be 
deemed accomplished by serving the representative in the manner 
prescribed in paragraph (c) of this section.
    (g) Service on unrepresented employees. In the event that there are 
any affected employees who are not represented by an authorized employee 
representative, the employer shall, immediately upon receipt of notice 
of the docketing of the notice of contest or petition for modification 
of the abatement period, post, where the citation is required to be 
posted, a copy of the notice of contest and a notice informing such 
affected employees of their right to party status and of the 
availability of all pleadings for inspection and copying at reasonable 
times. A notice in the following form shall be deemed to comply with 
this paragraph:

(Name of employer)______________________________________________________

Your employer has been cited by the Secretary of Labor for violation of 
the Occupational Safety and Health Act of 1970. The citation has been 
contested and will be the subject of a hearing before the OCCUPATIONAL 
SAFETY AND HEALTH REVIEW COMMISSION. Affected employees are entitled to 
participate in this hearing as parties under terms and conditions 
established by the OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION in 
its Rules of Procedure. Notice of intent to participate must be filed no 
later than 10 days before the hearing. Any notice of intent to 
participate should be sent to:

Occupational Safety and Health Review Commission, Office of the 
Executive Secretary, One Lafayette Centre, 1120-20th Street, NW., Suite 
980, Washington, DC 20036-3419.

    All pleadings relevant to this matter may be inspected at:

(Place reasonably convenient to employees, preferably at or near 
workplace.)


Where appropriate, the second sentence of the above notice will be 
deleted and the following sentence will be substituted:

The reasonableness of the period prescribed by the Secretary of Labor 
for abatement of the violation has been contested and will be the 
subject of a hearing before the OCCUPATIONAL SAFETY AND HEALTH REVIEW 
COMMISSION.

    (h) Special service requirements; authorized employee 
representatives. The authorized employee representative, if any, shall 
be served with the notice set forth in paragraph (g) of this section and 
with a copy of the notice of contest.
    (i) Notice of hearing to unrepresented employees. Immediately upon 
receipt, a copy of the notice of the hearing to be held before the Judge 
shall be served by the employer on affected employees who are not 
represented by an authorized employee representative by posting a copy 
of the notice of such hearing at or near the place where the citation is 
required to be posted.
    (j) Notice of hearing to represented employees. Immediately upon 
receipt, a copy of the notice of the hearing to be held before the Judge 
shall be served by the employer on the authorized employee 
representative of affected employees in the manner prescribed in 
paragraph (c) of this section, if the employer has not been informed 
that the authorized employee representative has entered an appearance as 
of the date such notice is received by the employer.
    (k) Employee contest; service on other employees. Where a notice of 
contest is filed by an affected employee who is not represented by an 
authorized employee representative and there are other affected 
employees who are represented by an authorized employee representative, 
the unrepresented employee shall, upon receipt of the statement filed in 
conformance with Sec. 2200.38, serve a copy thereof on such authorized 
employee representative in the manner prescribed in paragraph (c) of 
this section and shall file proof of such service.
    (l) Employee contest; Service on employer. Where a notice of contest 
is filed by an affected employee or an authorized employee 
representative, a copy of the notice of contest and response filed in 
support thereof shall be provided to the employer for posting in the 
manner prescribed in paragraph (g) of this section.
    (m) Employee contest; service on other authorized employee 
representatives. An authorized employee representative

[[Page 253]]

who files a notice of contest shall be responsible for serving any other 
authorized employee representative whose members are affected employees.
    (n) Duration of posting. Where posting is required by this section, 
such posting shall be maintained until the commencement of the hearing 
or until earlier disposition.

[51 FR 32015, Sept. 8, 1986; 52 FR 13831, Apr. 27, 1987, as amended at 
57 FR 41684, Sept. 11, 1992; 58 FR 26065, Apr. 30, 1993; 62 FR 35963, 
July 3, 1997]



Sec. 2200.8  Filing.

    (a) What to file. All papers required to be served on a party or 
intervenor, except for those papers associated with part of a discovery 
request under Rules 52 through 56, shall be filed either before service 
or within a reasonable time thereafter.
    (b) Where to file. Prior to assignment of a case to a Judge, all 
papers shall be filed with the Executive Secretary at One Lafayette 
Centre, 1120-20th Street, NW., Suite 980, Washington, DC 20036-3419. 
Subsequent to the assignment of the case to a Judge, all papers shall be 
filed with the Judge at the address given in the notice informing of 
such assignment. Subsequent to the docketing of the Judge's report, all 
papers shall be filed with the Executive Secretary, except as provided 
in Sec. 2200.90(b)(3).
    (c) How to file. Unless otherwise ordered, all filing may be 
accomplished by postage-prepaid first class mail or by personal 
delivery.
    (d) Number of copies. Unless otherwise ordered or stated in this 
part:
    (1) If a case is before a Judge or if it has not yet been assigned 
to a Judge, only the original of a document shall be filed.
    (2) If a case is before the Commission for review, the original and 
eight copies of a document shall be filed.
    (e) Filing date. Filing is effective upon mailing (if by mail) or 
upon receipt by the Commission (if filing is by personal delivery, 
overnight delivery service, or facsimile transmission), except that the 
filing of petitions for discretionary review is effective only upon 
receipt by the Commission. See Sec. 2200.91.
    (f) Facsimile transmissions. (1) Any document may be filed with the 
Commission or its Judges by facsimile transmission. Filing shall be 
deemed completed at the time that the facsimile transmission is received 
by the Commission or the Judge. The filed facsimile shall have the same 
force and effect as the original.
    (2) All facsimile transmissions shall include a facsimile of the 
appropriate certificate of service.
    (3) Within 3 days after the Commission or the Judge has received the 
facsimile, the party filing the document shall forward to the Commission 
or the Judge a signed, original document and, where appropriate, the 
proper number of multiple copies.
    (4) It is the responsibility of parties desiring to file documents 
by the use of facsimile transmission equipment to utilize equipment that 
is compatible with facsimile transmission equipment operated by the 
Commission. Legibility of the transmitted documents is the 
responsibility of the serving party.

[57 FR 41684, Sept. 11, 1992, as amended at 58 FR 26065, Apr. 30, 1993; 
62 FR 35963, July 3, 1997]



Sec. 2200.9  Consolidation.

    Cases may be consolidated on the motion of any party, on the Judge's 
own motion, or on the Commission's own motion, where there exist common 
parties, common questions of law or fact or in such other circumstances 
as justice or the administration of the Act require.

[51 FR 32015, Sept. 8, 1986; 52 FR 13831, Apr. 27, 1987; 52 FR 19631, 
May 26, 1987]



Sec. 2200.10  Severance.

    Upon its own motion, or upon motion of any party or intervenor, 
where a showing of good cause has been made by the party or intervenor, 
the Commission or the Judge may order any proceeding severed with 
respect to some or all claims or parties.

[57 FR 41684, Sept. 11, 1992]



Sec. 2200.11  Protection of claims of privilege.

    (a) Scope. This section applies to all claims of privilege, whenever 
asserted. It applies to privileged information,

[[Page 254]]

such as trade secrets and other matter protected by 18 U.S.C. 1905, and 
other information the confidentiality of which is protected by law. As 
it is used in this section, ``privileged information'' encompasses such 
confidential information.
    (b) Assertion of a privilege. A person claiming that information is 
privileged shall claim the privilege in writing or, if during a hearing, 
on the record. The claim shall (1) identify the information that would 
be disclosed and for which a privilege is claimed, and (2) allege with 
specificity the facts showing that the information is privileged. The 
claim shall be supported by affidavits, depositions or testimony and 
shall specify the relief sought. The claim may be accompanied by a 
motion for a protective order or by a motion that the allegedly 
privileged information be received and the claim be ruled upon in 
camera, that is, with the record and hearing room closed to the public, 
or ex parte, that is, without the participation of parties and their 
representatives.
    (c) Opposition to the claim. A party wishing to make a response 
opposing a claim of privilege, or asserting a substantial need for 
disclosure in the event a qualified privilege exists, must do so within 
15 days but, if the motion is made during a hearing, the Judge may 
prescribe a shorter time or require that the response be made during the 
hearing. A response contravening the facts stated by the claimant of the 
privilege shall be supported by affidavits, depositions, or testimony.
    (d) Examination of claim. In examining a claim of privilege, the 
Judge may enter such orders and impose such terms and conditions on his 
examination as justice may require, including orders designed to assure 
that the alleged privileged information not be disclosed until after the 
examination is completed. The Judge may:
    (1) Receive the allegedly privileged information in camera; he may 
temporarily seal the portions of the record containing the allegedly 
privileged information and may exclude the public from the hearing room.
    (2) Receive the allegedly privileged information ex parte; he may 
order that the allegedly privileged information not be heard or served 
on all parties and their representatives; he may hear or examine it 
without the presence of all parties and their representatives.
    (3) Order the preparation of a summary of the allegedly privileged 
information; he may order that a copy of a document be prepared with the 
allegedly privileged information excised; he may order that such 
summaries or documents be served upon other parties or their 
representatives.
    (4) Enter a protective order. See paragraphs (e) and (f) of this 
section.
    (e) Upholding of claim. If a claim of privilege is upheld, the Judge 
may enter such orders and impose such terms and conditions as justice 
may require, including orders that the privileged information not be 
disclosed or be disclosed in a specified manner. The Judge may: exclude 
the privileged information from the record; enter orders under 
Sec. 2200.52(d), including an order that discovery not be had; revoke or 
modify a subpoena; and permanently seal that portion of the record or 
other files of the Commission containing the privileged information, 
permitting access only to the Commission and any reviewing court. The 
Judge may also permit the information to be disclosed only to persons 
covered by protective orders under Sec. 2200.52(d) and paragraph (f) of 
this section.
    (f) Protective orders. To govern the examination of a claim of 
privilege or to govern the treatment of privileged information, the 
Judge may enter protective orders under Sec. 2200.52(d). The Judge may 
decline to permit disclosure to persons against whom the Commission 
could not enforce the order. The order may require that--
    (1) An attorney or other representative not disclose the allegedly 
privileged information to any person, including his client.
    (2) Any person to whom the material will be disclosed sign a written 
confidentiality agreement that the material will not be disclosed except 
under stated terms and conditions and that stipulates a reasonable 
preestimate of likely damages.
    (3) In the case of an entry upon land, the case be stayed to allow 
the party seeking entry an opportunity to seek an order of a court or 
search warrant with protective conditions.

[[Page 255]]

    (g) Rejection of claim. If the Judge overrules a claim of privilege, 
the person claiming the privilege may obtain as of right an order 
sealing from the public those portions of the record containing the 
allegedly privileged information pending interlocutory or final review 
of the ruling, or final disposition of the case, by the Commission. 
Interlocutory review of such an order shall be given priority 
consideration by the Commission.

[51 FR 32015, Sept. 8, 1986; 52 FR 13831, Apr. 27, 1987, as amended at 
62 FR 35963, July 3, 1997]



Sec. 2200.12  References to cases.

    (a) Citing decisions by Commission and Judges--(1) Generally. 
Parties citing decisions by the Commission should include in the 
citation the name of the employer, a citation to either the Bureau of 
National Affairs' Occupational Safety and Health Cases (``BNA OSHC'') or 
Commerce Clearing House's Occupational Safety and Health Decisions 
(``CCH OSHD''), the OSHRC docket number and the year of the decision. 
For example, Clement Food Co., 11 BNA OSHC 2120 (No. 80-607, 1984).
    (2) Parenthetical statements. When citing the decision of a Judge, 
the digest of an opinion, or the opinion of a single Commissioner, a 
parenthetical statement to that effect should be included. For example, 
Rust Engineering Co., 1984 CCH OSHD [para] 27,023 (No. 79-2090, 1984) 
(view of Chairman ------), vacating direction for review of 1980 CCH 
OSHD [para] 24,269 (1980) (ALJ) (digest).
    (3) Additional reference to OSAHRC Reports optional. A parallel 
reference to the Commission's official reporter, OSAHRC Reports, which 
prints the full text of all Commission and Judges' decisions in 
microfiche form, may also be included. For example, Texaco, Inc., 80 
OSAHRC 74/B1, 8 BNA OSHC 1758 (No. 77-3040, 1980). See generally 29 CFR 
2201.4(c) (on OSAHRC Reports).
    (b) References to court decisions--(1) Parallel references to BNA 
and CCH reporters. When citing a court decision, a parallel reference to 
either the Bureau of National Affairs' Occupational Safety and Health 
Cases (``BNA OSHC'') or Commerce Clearing House's Occupational Safety 
and Health Decisions (``CCH OSHD'') is desirable. For example, Simplex 
Time Recorder Co. v. Secretary of Labor, 766 F.2d 575, 12 BNA OSHC 1401 
(D.C. Cir. 1985); Deering Milliken, Inc. v. OSHRC, 630 F.2d 1094, 1980 
CCH OSHD [para] 24,991 (5th Cir. 1980).
    (2) Name of employer to be indicated. When a court decision is cited 
in which the first-listed party on each side is either the Secretary of 
Labor (or the name of a particular Secretary of Labor), the Commission, 
or a labor union, the citation should include in parenthesis the name of 
the employer in the Commission proceeding. For example, Donovan v. 
Allied Industrial Workers (Archer Daniels Midland Co.), 760 F.2d 783, 12 
BNA OSHC 1310 (7th Cir. 1985); Donovan v. OSHRC (Mobil Oil Corp.), 713 
F.2d 918, 1983 CCH OSHD [para] 26,627 (2d Cir. 1983).

[51 FR 32015, Sept. 8, 1986; 52 FR 13831, Apr. 27, 1987]



                 Subpart B--Parties and Representatives



Sec. 2200.20  Party status.

    (a) Affected employees. Affected employees and authorized employee 
representatives may elect party status concerning any matter in which 
the Act confers a right to participate. The election shall be 
accomplished by filing a written notice of election at least 10 days 
before the hearing. A notice of election filed less than ten days prior 
to the hearing is ineffective unless good cause is shown for not timely 
filing the notice. A notice of election shall be served on all other 
parties in accordance with Sec. 2200.7.
    (b) Employee contest. Where a notice of contest is filed by an 
employee or by an authorized employee representative with respect to the 
reasonableness of the period for abatement of a violation, the employer 
charged with the responsibility of abating the violation may elect party 
status by a notice filed at least ten days before the hearing. A notice 
filed less than ten days prior to the hearing is ineffective unless good 
cause is shown for not timely filing the notice.

[51 FR 32015, Sept. 8, 1986, as amended at 57 FR 41684, Sept. 11, 1992]

[[Page 256]]



Sec. 2200.21  Intervention; appearance by non-parties.

    (a) When allowed. A petition for leave to intervene may be filed at 
any time prior to ten days before commencement of the hearing. A 
petition filed less than ten days prior to the commencement of the 
hearing will be denied unless good cause is shown for not timely filing 
the petition. A petition shall be served on all parties in accordance 
with Sec. 2200.7.
    (b) Requirements of petition. The petition shall set forth the 
interest of the petitioner in the proceeding and show that the 
participation of the petitioner will assist in the determination of the 
issues in question, and that the intervention will not unduly delay the 
proceeding.
    (c) Granting of petition. The Commission or Judge may grant a 
petition for intervention to such an extent and upon such terms as the 
Commission or the Judge shall determine.



Sec. 2200.22  Representation of parties and intervenors.

    (a) Representation. Any party or intervenor may appear in person, 
through an attorney, or through another representative who is not an 
attorney. A representative must file an appearance in accordance with 
Sec. 2200.23. In the absence of an appearance by a representative, a 
party or intervenor will be deemed to appear for himself. A corporation 
or unincorporated association may be represented by an authorized 
officer or agent.
    (b) Affected employees in collective bargaining unit. Where an 
authorized employee representative (see Sec. 2200.1(g)) elects to 
participate as a party, affected employees who are members of the 
collective bargaining unit may not separately elect party status. If the 
authorized employee representative does not elect party status, affected 
employees who are members of the collective bargaining unit may elect 
party status in the same manner as affected employees who are not 
members of the collective bargaining unit. See paragraph (c) of this 
section.
    (c) Affected employees not in collective bargaining unit. Affected 
employees who are not members of a collective bargaining unit may elect 
party status under Sec. 2200.20(a). If more than one employee so elects, 
the Judge shall provide for them to be treated as one party.
    (d) Control of proceeding. A representative of a party or intervenor 
shall be deemed to control all matters respecting the interest of such 
party or intervenor in the proceeding.

[51 FR 32015, Sept. 8, 1986; 52 FR 13831, Apr. 27, 1987]



Sec. 2200.23  Appearances and withdrawals.

    (a) Entry of appearance--(1) General. A representative of a party or 
intervenor shall enter an appearance by signing the first document filed 
on behalf of the party or intervenor in accordance with paragraph (a)(2) 
of this section, or thereafter by filing an entry of appearance in 
accordance with paragraph (a)(3) of this section.
    (2) Appearance in first document or pleading. If the first document 
filed on behalf of a party or intervenor is signed by a representative, 
he shall be recognized as representing that party. No separate entry of 
appearance by him is necessary, provided the document contains the 
information required by Sec. 2200.6.
    (3) Subsequent appearance. Where a representative has not previously 
appeared on behalf of a party or intervenor, he shall file an entry of 
appearance with the Executive Secretary, or Judge if the case has been 
assigned. The entry of appearance shall be signed by the representative 
and contain the information required by Sec. 2200.6.
    (b) Withdrawal of counsel. Any counsel or representative of record 
desiring to withdraw his appearance, or any party desiring to withdraw 
the appearance of counsel or representative of record for him, must file 
a motion with the Commission or Judge requesting leave therefor, and 
showing that prior notice of the motion has been given by him to his 
client or counsel or representative, as the case may be. The motion of 
counsel to withdraw may, in the discretion of the Commission or Judge, 
be denied where it is necessary to avoid undue delay or prejudice to the 
rights of a party or intervenor.

[[Page 257]]



Sec. 2200.24  Brief of an amicus curiae.

    The brief of an amicus curiae may be filed only by leave of the 
Judge or Commission. The brief may be conditionally filed with the 
motion for leave. A motion for leave shall identify the interest of the 
applicant and shall state the reasons why a brief of an amicus curiae is 
desirable. Any amicus curiae shall file its brief within the time 
allowed the party whose position the amicus will support unless the 
Judge or Commission, for good cause shown, grants leave for later 
filing. In that event, the Judge or Commission shall specify within what 
period an opposing party may answer.

[57 FR 41684, Sept. 11, 1992]



                    Subpart C--Pleadings and Motions



Sec. 2200.30  General rules.

    (a) Format. Pleadings and other documents (other than exhibits) 
shall be typewritten, double spaced, on letter size opaque paper 
(approximately 8\1/2\ inches by 11 inches). All margins shall be 
approximately 1\1/2\ inches. Pleadings and other documents shall be 
fastened at the upper left corner.
    (b) Clarity. Each allegation or response of a pleading or motion 
shall be simple, concise and direct.
    (c) Separation of claims. Each allegation or response shall be made 
in separate numbered paragraphs. Each paragraph shall be limited as far 
as practicable to a statement of a single set of circumstances.
    (d) Adoption by reference. Statements in a pleading may be adopted 
by reference in a different part of the same pleading or in another 
pleading or in any motion. A copy of any written instrument which is an 
exhibit to a pleading is a part thereof for all purposes.
    (e) Alternative pleading. A party may set forth two or more 
statements of a claim or defense alternatively or hypothetically. When 
two or more statements are made in the alternative and one of them would 
be sufficient if made independently, the pleading is not made 
insufficient by the insufficiency of one or more of the alternative 
statements. A party may state as many separate claims or defenses as he 
has regardless of their consistency or the grounds on which based. All 
statements shall be made subject to the signature requirements of 
Sec. 2200.32.
    (f) Content of motions and miscellaneous pleadings. A motion shall 
contain a caption complying with Sec. 2200.31, a signature complying 
with Sec. 2200.32, and a clear and plain statement of the relief that is 
sought together with the grounds therefor. These requirements also apply 
to any pleading not governed by more specific requirements in this 
subpart.
    (g) Burden of persuasion. The rules of pleading established by this 
subpart are not determinative in deciding which party bears the burden 
of persuasion on an issue. By pleading a matter affirmatively, a party 
does not waive its right to argue that the burden of persuasion on the 
matter is on another party.
    (h) Enforcement of pleading rules. The Commission or the Judge may 
refuse for filing any pleading or motion that does not comply with the 
requirements of this subpart.

[51 FR 32015, Sept. 8, 1986, as amended at 57 FR 41685, Sept. 11, 1992]



Sec. 2200.31  Caption; titles of cases.

    (a) Notice of contest cases. Cases initiated by a notice of contest 
shall be titled:

              Secretary of Labor,

                                                            Complainant,

                                   v.

            (Name of Contestant),

                                                             Respondent.

    (b) Petitions for modification of abatement period. Cases initiated 
by a petition for modification of the abatement period shall be titled:

              (Name of employer),

                                                             Petitioner,

                                   v.

              Secretary of Labor,

                                                             Respondent.

    (c) Location of title. The titles listed in paragraphs (a) and (b) 
of this section shall appear at the left upper portion of

[[Page 258]]

the initial page of any pleading or document (other than exhibits) 
filed.
    (d) Docket number. The initial page of any pleading or document 
(other than exhibits) shall show, at the upper right of the page, 
opposite the title, the docket number, if known, assigned by the 
Commission.



Sec. 2200.32  Signing of pleadings and motions.

    Pleadings and motions shall be signed by the filing party or by the 
party's representative. The signature of a representative constitutes a 
representation by him that he is authorized to represent the party or 
parties on whose behalf the pleading is filed. The signature of a 
representative or party also constitutes a certificate by him that he 
has read the pleading, motion, or other paper, that to the best of his 
knowledge, information, and belief, formed after reasonable inquiry, it 
is well grounded in fact and is warranted by existing law or a good 
faith argument for the extension, modification, or reversal of existing 
law, and that it is not interposed for any improper purpose, such as to 
harass or to cause unnecessary delay or needless increase in the cost of 
litigation. If a pleading, motion or other paper is signed in violation 
of this rule, such signing party or its representative shall be subject 
to the sanctions set forth in Sec. 2200.41 or Sec. 2200.104.

[51 FR 32015, Sept. 8, 1986; 52 FR 13831, Apr. 27, 1987, as amended at 
57 FR 41685, Sept. 11, 1992]



Sec. 2200.33  Notices of contest.

    Within 15 working days after receipt of--
    (a) Notification that the employer intends to contest a citation or 
proposed penalty under section 10(a) of the Act, 29 U.S.C. 659(a); or
    (b) Notification that the employer wishes to contest a notice of a 
failure to abate or a proposed penalty under section 10(b) of the Act, 
29 U.S.C. 659(b); or
    (c) A notice of contest filed by an employee or representative of 
employees under section 10(c) of the Act, 29 U.S.C. 659(c),

the Secretary shall notify the Commission of the receipt in writing and 
shall promptly furnish to the Executive Secretary of the Commission the 
original of any documents or records filed by the contesting party and 
copies of all other documents or records relevant to the contest.

[51 FR 32015, Sept. 8, 1986; 52 FR 13831, Apr. 27, 1987]



Sec. 2200.34  Employer contests.

    (a) Complaint. (1) The Secretary shall file a complaint with the 
Commission no later than 20 days after receipt of the notice of contest.
    (2) The complaint shall set forth all alleged violations and 
proposed penalties which are contested, stating with particularity:
    (i) The basis for jurisdiction;
    (ii) The time, location, place, and circumstances of each such 
alleged violation; and
    (iii) The considerations upon which the period for abatement and the 
proposed penalty of each such alleged violation are based.
    (3) Where the Secretary seeks in his complaint to amend his citation 
or proposed penalty, he shall set forth the reasons for amendment and 
shall state with particularity the change sought.
    (b) Answer. (1) Within 20 days after service of the complaint, the 
party against whom the complaint was issued shall file an answer with 
the Commission.
    (2) The answer shall contain a short and plain statement denying 
those allegations in the complaint which the party intends to contest. 
Any allegation not denied shall be deemed admitted.
    (3) The answer shall include all affirmative defenses being 
asserted. Such affirmative defenses include, but are not limited to, 
``infeasibility,'' ``unpreventable employee misconduct,'' and ``greater 
hazard.''
    (4) The failure to raise an affirmative defense in the answer may 
result in the party being prohibited from raising the defense at a later 
stage in the proceeding, unless the Judge finds that the party has 
asserted the defense as soon as practicable.

[57 FR 41685, Sept. 11, 1992]

[[Page 259]]



Sec. 2200.35  Disclosure of corporate parents, subsidiaries, and affiliates.

    (a) General. All answers, petitions for modification of abatement 
period, or other initial pleadings filed under these rules by a 
corporation shall be accompanied by a separate declaration listing all 
parents, subsidiaries, and affiliates of that corporation or stating 
that the corporation has no parents, subsidiaries, or affiliates, 
whichever is applicable.
    (b) Failure to disclose. The Commission or Judge in its discretion 
may refuse to accept for filing an answer or other initial pleading that 
lacks the disclosure declaration required by this paragraph. A party 
that fails to file an adequate declaration may be held in default after 
being given an opportunity to show cause why it should not be held in 
default.
    (c) Continuing duty to disclose. A party subject to the disclosure 
requirement of this paragraph has a continuing duty to notify the 
Commission or the Judge of any change in the information on the 
disclosure declaration until the Commission issues a final order 
disposing of the proceeding.
    (d) Show cause orders. All show cause orders issued by the 
Commission or Judge under paragraph (b) of this section shall be served 
upon the affected party by certified mail, return receipt requested.

[57 FR 41685, Sept. 11, 1992]



Sec. 2200.36  [Reserved]



Sec. 2200.37  Petitions for modification of the abatement period.

    (a) Grounds for modifying abatement date. An employer may file a 
petition for modification of abatement date when such employer has made 
a good faith effort to comply with the abatement requirements of a 
citation, but such abatement has not been completed because of factors 
beyond the employer's reasonable control.
    (b) Contents of petition. A petition for modification of abatement 
date shall be in writing and shall include the following information:
    (1) All steps taken by the employer, and the dates of such action, 
in an effort to achieve compliance during the prescribed abatement 
period.
    (2) The specific additional abatement time necessary in order to 
achieve compliance.
    (3) The reasons such additional time is necessary, including the 
unavailability of professional or technical personnel or of materials 
and equipment, or because necessary construction or alteration of 
facilities cannot be completed by the original abatement date.
    (4) All available interim steps being taken to safeguard the 
employees against the cited hazard during the abatement period.
    (c) When and where filed; Posting requirement; Responses to 
petition. A petition for modification of abatement date shall be filed 
with the Area Director of the United States Department of Labor who 
issued the citation no later than the close of the next working day 
following the date on which abatement was originally required. A later-
filed petition shall be accompanied by the employer's statement of 
exceptional circumstances explaining the delay.
    (1) A copy of such petition shall be posted in a conspicuous place 
where all affected employees will have notice thereof or near each 
location where the violation occurred. The petition shall remain posted 
for a period of 10 days.
    (2) Affected employees or their representatives may file an 
objection in writing to such petition with the aforesaid Area Director. 
Failure to file such objection within 10 working days of the date of 
posting of such petition shall constitute a waiver of any further right 
to object to said petition.
    (3) The Secretary or his duly authorized agent shall have the 
authority to approve any uncontested petition for modification of 
abatement date filed pursuant to paragraphs (b) and (c) of this section. 
Such uncontested petitions shall become final orders pursuant to 
sections 10 (a) and (c) of the Act.
    (4) The Secretary or his authorized representative shall not 
exercise his approval power until the expiration of 15 working days from 
the date the petition was posted pursuant to paragraphs (c)(1) and (2) 
of this section by the employer.
    (d) Contested petitions. Where any petition is objected to by the 
Secretary or affected employees, such petition shall be processed as 
follows:

[[Page 260]]

    (1) The Secretary shall forward the petition, citation and any 
objections to the Commission within 10 working days after the expiration 
of the 15 working day period set out in paragraph (c)(4) of this 
section.
    (2) The Commission shall docket and process such petitions as 
expedited proceedings as provided for in Sec. 2200.103 of this part.
    (3) An employer petitioning for a modification of the abatement 
period shall have the burden of proving in accordance with the 
requirements of section 10(c) of the Act, 29 U.S.C. 659(c), that such 
employer has made a good faith effort to comply with the abatement 
requirements of the citation and that abatement has not been completed 
because of factors beyond the employer's control.
    (4) Where the petitioner is a corporation, it shall file a separate 
declaration listing all parents, subsidiaries, and affiliates of that 
corporation or stating that the corporation has no parents, 
subsidiaries, or affiliates, whichever is applicable, within 10 working 
days after the receipt of notice of the docketing by the Commission of 
the petition for modification of the abatement date. The requirements 
set forth in Sec. 2200.36(c)(2)-(c)(4) shall apply.
    (5) Each objecting party shall file a response setting forth the 
reasons for opposing the abatement date requested in the petition, 
within 10 working days after the receipt of notice of the docketing by 
the Commission of the petition for modification of the abatement date.

[51 FR 32015, Sept. 8, 1986; 52 FR 13832, Apr. 27, 1987, as amended at 
55 FR 22782, June 4, 1990]



Sec. 2200.38  Employee contests.

    (a) Secretary's statement of reasons. Where an affected employee or 
authorized employee representative files a notice of contest with 
respect to the abatement period, the Secretary shall, within 10 days 
from his receipt of the notice of contest, file a clear and concise 
statement of the reasons the abatement period prescribed by him is not 
unreasonable.
    (b) Response to Secretary's statement. Not later than 10 days after 
receipt of the statement referred to in paragraph (a) of this section, 
the contestant shall file a response.
    (c) Expedited proceedings. All contests under this section shall be 
handled as expedited proceedings as provided for in Sec. 2200.103 of 
this part.



Sec. 2200.39  Statement of position.

    At any time prior to the commencement of the hearing before the 
Judge, any person entitled to appear as a party, or any person who has 
been granted leave to intervene, may file a statement of position with 
respect to any or all issues to be heard. The Judge may order the filing 
of a statement of position.



Sec. 2200.40  Motions and requests.

    (a) How to make. A request for an order shall be made by motion. 
Motions shall be in writing or, unless the Judge directs otherwise, may 
be made orally during a hearing on the record and shall be included in 
the transcript. In exigent circumstances in cases pending before Judges, 
a motion may be made telephonically if it is reduced to writing and 
filed as soon as possible but no later than 3 working days following the 
time the motion was made. A motion shall state with particularity the 
grounds on which it is based and shall set forth the relief or order 
sought. A motion shall not be included in another document, such as a 
brief or a petition for discretionary review, but shall be made in a 
separate document. Prior to filing a motion, the moving party shall 
confer or make reasonable efforts to confer with the other parties and 
shall state in the motion if any other party opposes or does not oppose 
the motion.
    (b) When to make. A motion filed in lieu of an answer pursuant to 
Sec. 2200.34(b) shall be filed no later than twenty days after the 
service of the complaint. Any other motion shall be made as soon as the 
grounds therefor are known.
    (c) Responses. Any party or intervenor upon whom a motion is served 
shall have ten days from service of the motion to file a response. A 
procedural motion may be ruled upon prior to the expiration of the time 
for response; a party adversely affected by the ruling

[[Page 261]]

may within five days of service of the ruling seek reconsideration.
    (d) Postponement not automatic upon filing of motion. The filing of 
a motion, including a motion for a postponement, does not automatically 
postpone a hearing. See Sec. 2200.62 with respect to motions for 
postponement.

[51 FR 32015, Sept. 8, 1986; 52 FR 13832, Apr. 27, 1987, as amended at 
57 FR 41685, Sept. 11, 1992; 62 FR 35963, July 3, 1997]



Sec. 2200.41  Failure to obey rules.

    (a) Sanctions. When any party has failed to plead or otherwise 
proceed as provided by these rules or as required by the Commission or 
Judge, he may be declared to be in default either:
    (1) On the initiative of the Commission or Judge, after having been 
afforded an opportunity to show cause why he should not be declared to 
be in default; or
    (2) On the motion of a party. Thereafter, the Commission or Judge, 
in their discretion, may enter a decision against the defaulting party 
or strike any pleading or document not filed in accordance with these 
rules.
    (b) Motion to set aside sanctions. For reasons deemed sufficient by 
the Commission or Judge and upon motion expeditiously made, the 
Commission or Judge may set aside a sanction imposed under paragraph (a) 
of this rule. See Sec. 2200.90(b)(3).
    (c) Discovery sanctions. This section does not apply to sanctions 
for failure to comply with orders compelling discovery, which are 
governed by Sec. 2200.52(e).
    (d) Show cause orders. All show cause orders issued by the 
Commission or Judge under paragraph (a) of this section shall be served 
upon the affected party by certified mail, return receipt requested.

[51 FR 32015, Sept. 8, 1986; 52 FR 13832, Apr. 27, 1987, as amended at 
55 FR 22782, June 4, 1990]



             Subpart D--Prehearing Procedures and Discovery



Sec. 2200.50  [Reserved]



Sec. 2200.51  Prehearing conferences and orders.

    (a) Scheduling conference. (1) The Judge shall consult with all 
attorneys and any unrepresented parties, by a scheduling conference, 
telephone, mail, or other suitable means, and within 30 days after the 
filing of the answer, enter a scheduling order that limits the time:
    (i) To join other parties and to amend the pleadings;
    (ii) To file and hear motions; and
    (iii) To complete discovery.
    (2) The scheduling order also may include:
    (i) The date or dates for conferences before hearing, a final 
prehearing conference, and hearing; and
    (ii) Any other matters appropriate to the circumstances of the case.
    (b) Prehearing conference. In addition to the prehearing procedures 
set forth in Rule 16 of the Federal Rules of Civil Procedure, the Judge 
may upon his own initiative or on the motion of a party direct the 
parties to confer among themselves to consider settlement, stipulation 
of facts, or any other matter that may expedite the hearing.

[57 FR 41685, Sept. 11, 1992]



Sec. 2200.52  General provisions governing discovery.

    (a) General--(1) Methods and limitations. In conformity with these 
rules, any party may, without leave of the Commission or Judge, obtain 
discovery by one or more of the following methods:
    (i) Production of documents or things or permission to enter upon 
land or other property for inspection and other purposes (Sec. 2200.53);
    (ii) Requests for admission to the extent provided in Sec. 2200.54; 
and
    (iii) Interrogatories to the extent provided in Sec. 2200.55.

[[Page 262]]


Discovery is not available under these rules through depositions except 
to the extent provided in Sec. 2200.56. In the absence of a specific 
provision, procedure shall be in accordance with the Federal Rules of 
Civil Procedure.
    (2) Time for discovery. A party may initiate all forms of discovery 
in conformity with these Rules at any time after the filing of the first 
responsive pleading or motion that delays the filing of an answer, such 
as a motion to dismiss. Discovery shall be initiated early enough to 
permit completion of discovery no later than seven days prior to the 
date set for hearing, unless the Judge orders otherwise.
    (3) Service of discovery papers. Every paper relating to discovery 
required to be served on a party shall be served on all parties.
    (b) Scope of discovery. The information or response sought through 
discovery may concern any matter that is not privileged and that is 
relevant to the subject matter involved in the pending case. It is not 
ground for objection that the information or response sought will be 
inadmissible at the hearing, if the information or response appears 
reasonably calculated to lead to discovery of admissible evidence, 
regardless of which party has the burden of proof.
    (c) Limitations. The frequency or extent of the discovery methods 
provided by these rules may be limited by the Commission or Judge if it 
is determined that:
    (1) The discovery sought is unreasonably cumulative or duplicative, 
or is obtainable from some other source that is more convenient, less 
burdensome, or less expensive;
    (2) The party seeking discovery has had ample opportunity to obtain 
the information sought by discovery in the action; or
    (3) The discovery is unduly burdensome or expensive, taking into 
account the needs of the case, limitations on the parties' resources, 
and the importance of the issues in litigation.
    (d) Protective orders. In connection with any discovery procedures 
and where a showing of good cause has been made, the Commission or Judge 
may make any order including, but not limited to, one or more of the 
following:
    (1) That the discovery not be had;
    (2) That the discovery may be had only on specified terms and 
conditions, including a designation of the time or place;
    (3) That the discovery may be had only by a method of discovery 
other than that selected by the party seeking discovery;
    (4) That certain matters not be inquired into, or that the scope of 
the discovery be limited to certain matters;
    (5) That discovery be conducted with no one present except persons 
designated by the Commission or Judge;
    (6) That a deposition after being sealed be opened only by order of 
the Commission or Judge;
    (7) That a trade secret or other confidential research, development, 
or commercial information not be disclosed or be disclosed only in a 
designated way;
    (8) That the parties simultaneously file specified documents or 
information enclosed in sealed envelopes to be opened as directed by the 
Commission or Judge.
    (e) Failure to cooperate; sanctions. A party may apply for an order 
compelling discovery when another party refuses or obstructs discovery. 
For purposes of this paragraph, an evasive or incomplete answer is to be 
treated as a failure to answer. If a Judge enters an order compelling 
discovery and there is a failure to comply with that order, the Judge 
may make such orders with regard to the failure as are just. The orders 
may issue upon the initiative of a Judge, after affording an opportunity 
to show cause why the order should not be entered, or upon the motion of 
a party. The orders may include any sanction stated in Fed.R.Civ.P. 37, 
including the following:
    (1) An order that designated facts shall be taken to be established 
for purposes of the case in accordance with the claim of the party 
obtaining that order;
    (2) An order refusing to permit the disobedient party to support or 
to oppose designated claims or defenses, or prohibiting it from 
introducing designated matters in evidence;

[[Page 263]]

    (3) An order striking out pleadings or parts thereof, or staying 
further proceedings until the order is obeyed; and
    (4) An order dismissing the action or proceeding or any part 
thereof, or rendering a judgment by default against the disobedient 
party.
    (f) Unreasonable delays. None of the discovery procedures set forth 
in these rules shall be used in a manner or at a time which shall delay 
or impede the progress of the case toward hearing status or the hearing 
of the case on the date for which it is scheduled, unless, in the 
interests of justice, the Judge shall order otherwise. Unreasonable 
delays in utilizing discovery procedures may result in termination of 
the party's right to conduct discovery.
    (g) Show cause orders. All show cause orders issued by the 
Commission or Judge under paragraph (e) of this section shall be served 
upon the affected party by certified mail, return receipt requested.
    (h) Supplementation of responses. A party who has responded to a 
request for discovery with a response that was complete when made is 
under no duty to supplement the response to include information 
thereafter acquired, except as follows:
    (1) A party is under a duty seasonably to supplement the response 
with respect to any question directly addressed to (i) The identity and 
location of persons having knowledge of discoverable matters and (ii) 
The identity of each person expected to be called as an expert witness 
at the hearing, the subject matter on which the person is expected to 
testify, and the substance of the person's testimony.
    (2) A party is under a duty seasonably to amend a prior response if 
the party obtains information upon the basis of which (i) The party 
knows that the response was incorrect when made of (ii) The party that 
the response though correct when made is no longer true and the 
circumstances are such that a failure to amend the response is in 
substance a knowing concealment.
    (3) A duty to supplement responses may be imposed by order of the 
court, agreement of the parties, or at any time prior to the hearing 
through new requests for supplementation of prior responses.
    (i) Filing of discovery. Requests for production or inspection under 
Rule 53, requests for admission under Rule 54 and responses thereto, 
interrogatories under Rule 55 and the answers thereto, and depositions 
under Rule 56 shall be served upon other counsel or parties, but shall 
not be filed with the Commission or the Judge. The party responsible for 
service of the discovery material shall retain the original and become 
the custodian.
    (j) Relief from discovery requests. If relief is sought under Rules 
41 or 52 (d), (e), or (f) concerning any interrogatories, requests for 
production or inspection, requests for admissions, answers to 
interrogatories, or responses to requests for admissions, copies of the 
portions of the interrogatories, requests, answers, or responses in 
dispute shall be filed with the Judge or Commission contemporaneously 
with any motion filed under Rules 41 or 52 (d), (e), or (f).
    (k) Use at hearing. If interrogatories, requests, answers, 
responses, or depositions are to be used at the hearing or are necessary 
to a prehearing motion which might result in a final order on any claim, 
the portions to be used shall be filed with the Judge or the Commission 
at the outset of the hearing or at the filing of the motion insofar as 
their use can be reasonably anticipated.
    (l) Use on review or appeal. When documentation of discovery not 
previously in the record is needed for review or appeal purposes, upon 
an application and order of the Judge or Commission the necessary 
discovery papers shall be filed with the Executive Secretary of the 
Commission.

[51 FR 32015, Sept. 8, 1986; 52 FR 13832, Apr. 27, 1987, as amended at 
55 FR 22782, June 4, 1990; 57 FR 41686, Sept. 11, 1992]



Sec. 2200.53  Production of documents and things.

    (a) Scope. At any time after the filing of the first responsive 
pleading or motion that delays the filing of an answer, such as a motion 
to dismiss, any party may serve on any other party a request to:
    (1) Produce and permit the party making the request, or a person 
acting on his or her behalf, to inspect and copy any designated 
documents, or to

[[Page 264]]

inspect and copy, test, or sample any tangible things which are in the 
possession, custody, or control of the party upon whom the request is 
served;
    (2) Permit entry upon designated land or other property in the 
possession or control of the party upon whom the request is served for 
the purpose of inspection and measuring, surveying, photographing, 
testing or sampling the property or any designated object or operation 
thereon.
    (b) Procedure. The request shall set forth the items to be 
inspected, either by individual item or by category and describe each 
item and category with reasonable particularity. It shall specify a 
reasonable time, place and manner of making the inspection and 
performing related acts. The party upon whom the request is served shall 
serve a written response within 30 days after service of the request, 
unless the requesting party allows a longer time. The Commission or 
Judge may allow a shorter time or a longer time, should the requesting 
party deny an extension. The response shall state, with respect to each 
item or category, that inspection and related activities will be 
permitted as requested, unless the request is objected to in whole or in 
part, in which event the reasons for objection shall be stated. If 
objection is made to part of an item or category, that part shall be 
specified. To obtain a ruling on an objection by the responding party, 
the requesting party shall file a motion with the Judge and shall annex 
thereto his request, together with the response and objections, if any.

[51 FR 32015, Sept. 8, 1986, as amended at 57 FR 41686, Sept. 11, 1992]



Sec. 2200.54  Requests for admissions.

    (a) Scope. At any time after the filing of the first responsive 
pleading or motion that delays the filing of an answer, such as a motion 
to dismiss, any party may serve upon any other party written requests 
for admissions, for purposes of the pending action only, of the 
genuineness and authenticity of any document described in or attached to 
the requests, or of the truth of any specified matter of fact. Each 
matter of which an admission is requested shall be separately set forth. 
The number of requested admissions shall not exceed 25, including 
subparts, without an order of the Commission or Judge. The party seeking 
to serve more than 25 requested admissions, including subparts, shall 
have the burden of persuasion to establish that the complexity of the 
case or the number of citation items necessitates a greater number of 
requested admissions. The original of the request shall be filed with 
the Judge.
    (b) Response to requests. Each matter is deemed admitted unless, 
within 30 days after service of the requests or within such shorter or 
longer time as the Commission or Judge may allow, the party to whom the 
requests are directed serves upon the requesting party:
    (1) A written answer specifically admitting or denying the matter 
involved in whole or in part, or asserting that it cannot be truthfully 
admitted or denied and setting forth in detail the reasons why this is 
so, or
    (2) An objection, stating in detail the reasons therefor.

The response shall be made under oath or affirmation and signed by the 
party or his representative. The original shall be filed with the Judge.
    (c) Effect of admission. Any matter admitted under this section is 
conclusively established unless the Judge or Commission on motion 
permits withdrawal or modification of the admission. Withdrawal or 
modification may be permitted when the presentation of the merits of the 
case will be subserved thereby, and the party who obtained the admission 
fails to satisfy the Commission or Judge that the withdrawal or 
modification will prejudice him in presenting his case or defense on the 
merits.



Sec. 2200.55  Interrogatories.

    (a) General. At any time after the filing of the first responsive 
pleading or motion that delays the filing of an answer, such as a motion 
to dismiss, any party may serve interrogatories upon any other party. 
The number of interrogatories shall not exceed 25 questions, including 
subparts, without an order of the Commission or Judge. The party seeking 
to serve more than 25 questions, including subparts, shall

[[Page 265]]

have the burden of persuasion to establish that the complexity of the 
case or the number of citation items necessitates a greater number of 
interrogatories.
    (b) Answers. All answers shall be made in good faith and as 
completely as the answering party's information will permit. The 
answering party is required to make reasonable inquiry and ascertain 
readily obtainable information. An answering party may not give lack of 
information or knowledge as an answer or as a reason for failure to 
answer, unless he states that he has made reasonable inquiry and that 
information known or readily obtainable by him is insufficient to enable 
him to answer the substance of the interrogatory.
    (c) Procedure. Each interrogatory shall be answered separately and 
fully under oath or affirmation. If the interrogatory is objected to, 
the objection shall be stated in lieu of the answer. The answers are to 
be signed by the person making them and the objections shall be signed 
by the party or his counsel. The party on whom the interrogatories have 
been served shall serve a copy of his answers or objections upon the 
propounding party within 30 days after the service of the 
interrogatories. The Judge may allow a shorter or longer time. The 
burden shall be on the party submitting the interrogatories to move for 
an order with respect to any objection or other failure to answer an 
interrogatory.



Sec. 2200.56  Depositions.

    (a) General. Depositions of parties, intervenors, or witnesses shall 
be allowed only by agreement of all the parties, or on order of the 
Commission or Judge following the filing of a motion of a party stating 
good and just reasons. All depositions shall be before an officer 
authorized to administer oaths and affirmations at the place of 
examination. The deposition shall be taken in accordance with the 
Federal Rules of Civil Procedure, particularly Fed.R.Civ.P. 30.
    (b) When to file. A motion to take depositions may be filed after 
the filing of the first responsive pleading or motion that delays the 
filing of an answer, such as a motion to dismiss.
    (c) Notice of taking. Any depositions allowed by the Commission or 
Judge may be taken after ten days' written notice to the other party or 
parties. The ten-day notice requirement may be waived by the parties.
    (d) Expenses. Expenses for a court reporter and the preparing and 
serving of depositions shall be borne by the party at whose instance the 
deposition is taken.
    (e) Use of depositions. Depositions taken under this rule may be 
used for discovery, to contradict or impeach the testimony of a deponent 
as a witness, or for any other purpose permitted by the Federal Rules of 
Evidence and the Federal Rules of Civil Procedure, particularly 
Fed.R.Civ.P. 32.
    (f) Excerpts from depositions to be offered at hearing. Except when 
used for purposes of impeachment, at least 5 working days prior to the 
hearing, the parties or counsel shall furnish to the Judge and all 
opposing parties or counsel the excerpts from depositions (by page and 
line number) which they expect to introduce at the hearing. Four working 
days thereafter, the adverse party or counsel for the adverse party 
shall furnish to the Judge and all opposing parties or counsel 
additional excerpts from the depositions (by page and line number) which 
they expect to be read pursuant to Rule 32(a)(4) of the Federal Rules of 
Civil Procedure, as well as any objections (by page and line number) to 
opposing party's or counsel's depositions. With reasonable notice to the 
Judge and all parties or counsel, other excerpts may be read.
    (g) Telephone depositions. (1) Telephone depositions may be 
conducted pursuant to Rule 30(b)(7) of the Federal Rules of Civil 
Procedure.
    (2) If a party objects to a telephone deposition, he shall make 
known his objections at least 5 days prior to the taking of the 
deposition. If the objection is not resolved by the parties or the Judge 
before the scheduled deposition date, the deposition shall be stayed 
pending resolution of the dispute.
    (h) Video depositions. By indicating in its notice of a deposition 
that it wishes to record the deposition by videotape (and identifying 
the proposed videotape operator), a party shall be deemed to

[[Page 266]]

have moved for such an order under Rule 30(b)(4) of the Federal Rules of 
Civil Procedure. Unless an objection is filed and served within 10 days 
after such notice is received, the Judge shall be deemed to have granted 
the motion pursuant to the following terms and conditions:
    (1) Stenographic recording. The videotaped deposition shall be 
simultaneously recorded stenographically by a qualified court reporter. 
The court reporter shall administer the oath or affirmation to the 
deponents on camera. The written transcript by the court reporter shall 
constitute the official record of the deposition for purposes of Rule 
30(e) (submission to witness) of the Federal Rules of Civil Procedure.
    (2) Cost. The noticing party shall bear the expense of both the 
videotaping and the stenographic recording. Any party may at its own 
expense obtain a copy of the videotape and the stenographic transcript.
    (3) Video operator. The operator(s) of the videotape recording 
equipment shall be subject to the provisions of Rule 28(c) of the 
Federal Rules of Civil Procedure. At the commencement of the deposition 
the operator(s) shall swear or affirm to record the proceedings fairly 
and accurately.
    (4) Attendance. Each witness, attorney, and other person attending 
the deposition shall be identified on camera at the commencement of the 
deposition. Thereafter, only the deponent (and demonstrative materials 
used during the deposition) will be videotaped. Identification on camera 
of each witness, attorney, and other person attending the deposition may 
be waived by the attorneys for the parties.
    (5) Standards. The deposition will be conducted in a manner to 
replicate, to the extent feasible, the presentation of evidence at a 
hearing. Unless physically incapacitated, the deponent shall be seated 
at a table or in a witness box except when reviewing or presenting 
demonstrative materials for which a change in position is needed. To the 
extent practicable, the deposition will be conducted in a neutral 
setting, against a solid background, with only such lighting as is 
required for accurate video recording. Lighting, camera angle, lens 
setting, and field of view will be changed only as necessary to record 
accurately the natural body movements of the deponent or to portray 
exhibits and materials used during the deposition. Sound levels will be 
altered only as necessary to record satisfactorily the voices of counsel 
and the deponent. Eating and smoking by deponents or counsel during the 
deposition will not be permitted.
    (6) Interruptions. Videotape recording will be suspended during all 
``off the record'' discussions.
    (7) Index. The videotape operator shall use a counter on the 
recording equipment and after completion of the deposition shall prepare 
a log, cross-referenced to counter numbers, that identifies the 
positions on the tape at which examination by different counsel begins 
and ends; at which objections are made and examination resumes; at which 
exhibits are identified; and at which any interruption of continuous 
tape recording occurs, whether for recesses, ``off the record'' 
discussions, mechanical failure, or otherwise.
    (8) Filing. If a videotaped deposition is used at the hearing, the 
original of the videotape recording, together with the transcript, the 
operator's log index, and a certificate of the operator attesting to the 
accuracy of the tape, shall be filed with the Judge. No part of a 
videotaped deposition shall be released or made available to any member 
of the public unless authorized by the Commission or the Judge.
    (9) Objections. Requests for prehearing rulings on the admissibility 
of evidence obtained during a videotaped deposition shall be accompanied 
by appropriate pages of the written transcript. If the objection 
involves matters peculiar to the videotaping, a copy of the videotape 
and equipment for viewing the tape shall also be provided to the 
Commission or Judge.
    (10) Use at hearing; purged tapes. A party desiring to offer a 
videotape deposition at the hearing shall be responsible for having 
available appropriate playback equipment and a trained operator. After 
the designation by all parties of the portions of a videotape to be used 
at the hearing, an edited copy of the tape, purged of unnecessary 
portions (and any portions to which objections have been sustained), 
must be

[[Page 267]]

prepared by the offering party to facilitate continuous playback; but a 
copy of the edited tape shall be made available to other parties at 
least 10 days before it is used, and the unedited original of the tape 
shall also be available at the hearing.

[51 FR 32015, Sept. 8, 1986; 52 FR 13832, Apr. 27, 1987, as amended at 
57 FR 41686, Sept. 11, 1992]



Sec. 2200.57  Issuance of subpoenas; petitions to revoke or modify subpoenas; right to inspect or copy data.

    (a) Issuance of subpoenas. On behalf of the Commission or any member 
thereof, the Judge shall, on the application of any party, issue to the 
applying party subpoenas requiring the attendance and testimony of 
witnesses and the production of any evidence, including relevant books, 
records, correspondence, or documents, in his possession or under his 
control. The party to whom the subpoena is issued shall be responsible 
for its service. Applications for subpoenas, if filed prior to the 
assignment of the case to a Judge, shall be filed with the Executive 
Secretary at One Lafayette Centre, 1120-20th Street NW., 9th Floor, 
Washington, DC 20036-3419. After the case has been assigned to a Judge, 
applications shall be filed with the Judge. Applications for subpoena(s) 
may be made ex parte. The subpoena shall show on its face the name and 
address of the party at whose request the subpoena was issued.
    (b) Service of subpoenas. A subpoena may be served by any person who 
is not a party and is not less than 18 years of age. Service of a 
subpoena upon a person named therein may be made by service on the 
person named, by certified mail return receipt requested, or by leaving 
a copy at the person's principal place of business or at the person's 
residence with some person of suitable age and discretion residing 
therein.
    (c) Revocation or modification of subpoenas. Any person served with 
a subpoena, whether ad testificandum or duces tecum, shall, within 5 
days after the date of service of the subpoena upon him, move in writing 
to revoke or modify the subpoena if he does not intend to comply. All 
motions to revoke or modify shall be served on the party at whose 
request the subpoena was issued. The Judge or the Commission shall 
revoke or modify the subpoena if in its opinion the evidence whose 
production is required does not relate to any matter under investigation 
or in question in the proceedings or the subpoena does not describe with 
sufficient particularity the evidence whose production is required, or 
if for any other reason sufficient in law the subpoena is otherwise 
invalid. The Judge or the Commission, as the case may be, shall make a 
simple statement of procedural or other grounds for the ruling on the 
motion to revoke or modify. The motion to revoke or modify, any answer 
filed thereto, and any ruling thereon shall become a part of the record.
    (d) Rights of persons compelled to submit data. Persons compelled to 
submit data or evidence at a public proceeding are entitled to retain 
or, on payment of lawfully prescribed costs, to procure copies of 
transcripts of the data or evidence submitted by them.
    (e) Failure to comply with subpoena. Upon the failure of any person 
to comply with a subpoena issued upon the request of a party, the 
Commission by its counsel shall initiate proceedings in the appropriate 
district court for the enforcement thereof, if in its judgment the 
enforcement of such subpoena would be consistent with law and with 
policies of the Act. Neither the Commission nor its counsel shall be 
deemed thereby to have assumed responsibility for the effective 
prosecution of the same before the court.

[51 FR 32015, Sept. 8, 1986; 52 FR 13832, Apr. 27, 1987, as amended at 
57 FR 41687, Sept. 11, 1992; 58 FR 26065, Apr. 30, 1993; 62 FR 35963, 
July 3, 1997]



                           Subpart E--Hearings



Sec. 2200.60  Notice of hearing; location.

    Except by agreement of the parties, or in an expedited proceeding 
under Sec. 2200.103, notice of the time, place, and nature of the first 
setting of a hearing shall be given to the parties and intervenors at 
least thirty days in advance of the hearing. If a hearing is being 
rescheduled, or if exigent circumstances are present, at least ten days' 
notice

[[Page 268]]

shall be given. The Judge will designate a place and time of hearing 
that involves as little inconvenience and expense to the parties as is 
practicable.

[51 FR 32015, Sept. 8, 1986; 52 FR 13832, Apr. 27, 1987, as amended at 
62 FR 35963, July 3, 1997]



Sec. 2200.61  Submission without hearing.

    A case may be fully stipulated by the parties and submitted to the 
Commission or Judge for a decision at any time. The stipulation of facts 
shall be in writing and signed by the parties or their representatives. 
The submission of a case under this rule does not alter the burden of 
proof, the requirements otherwise applicable with respect to adducing 
proof, or the effect of failure of proof. Motions for summary judgment 
are covered by Fed.R.Civ.P. 56.



Sec. 2200.62  Postponement of hearing.

    (a) Motion to postpone. A hearing may be postponed by the Judge on 
his own initiative or for good cause shown upon the motion of a party. A 
motion for postponement shall state the position of the other parties, 
either by a joint motion or by a representation of the moving party. The 
filing of a motion for postponement does not automatically postpone a 
hearing.
    (b) Grounds for postponement. A motion for postponement grounded on 
conflicting engagements of counsel or employment of new counsel shall be 
filed promptly after notice is given of the hearing, or as soon as the 
conflict is learned of or the engagement occurs.
    (c) When motion must be received. A motion to postpone a hearing 
must be received at least seven days prior to the hearing. A motion for 
postponement received less than seven days prior to the hearing will 
generally be denied unless good cause is shown for late filing.
    (d) Postponement in excess of 60 days. No postponement in excess of 
60 days shall be granted without the concurrence of the Chief 
Administrative Law Judge. The original of any motion seeking a 
postponement in excess of 60 days shall be filed with the Judge and a 
copy sent to the Chief Administrative Law Judge.

[51 FR 32015, Sept. 8, 1986; 52 FR 13832, Apr. 27, 1987]



Sec. 2200.63  Stay of proceedings.

    (a) Motion for stay. Stays are not favored. A party seeking a stay 
of a case assigned to a Judge shall file a motion for stay with the 
Judge and send a copy to the Chief Administrative Law Judge. A motion 
for a stay shall state the position of the other parties, either by a 
joint motion or by the representation of the moving party. The motion 
shall set forth the reasons a stay is sought and the length of the stay 
requested.
    (b) Ruling on motion to stay. The Judge, with the concurrence of the 
Chief Administrative Law Judge, may grant any motion for stay for the 
period zequesten[cent] or for such period as is deemed appropriate.
    (c) Periodic reports required. The parties in a stayed proceeding 
shall be required to submit periodic reports on such terms and 
conditions as the Judge may direct. The length of time between the 
reports shall be no longer than 90 days unless the Commission or the 
Judge otherwise orders.

[51 FR 32015, Sept. 8, 1986, as amended at 57 FR 41687, Sept. 11, 1992]



Sec. 2200.64  Failure to appear.

    (a) Attendance at hearing. The failure of a party to appear at a 
hearing may result in a decision against that party.
    (b) Requests for reinstatement. Requests for reinstatement mustebe 
made, in the absence of extraordinary circumstances, within five days 
after the scheduled hearing date. See Sec. 2200.90(b)(3).
    (c) Rescheduling hearing. The Commission or the Judge, upon a 
showing of good cause, may excuse such failure to appear. In such event, 
the hearing will be rescheduled as expeditiously as possible from the 
issuance of the Judge's order.

[51 FR 32015, Sept. 8, 1986; 52 FR 13832, Apr. 27, 1987, as amended at 
57 FR 41687, Sept. 11, 1992]

[[Page 269]]



Sec. 2200.65  Payment of witness fees and mileage; fees of persons taking depositions.

    Witnesses summoned before the Commission or the Judge shall be paid 
the same fees and mileage that are paid witnesses in the courts of the 
United States, and witnesses whose depositions are taken and the persons 
taking the same shall severally be entitled to the same fees as are paid 
for like services in the courts of the United States. Witness fees and 
mileage shall be paid by the party at whose instance the witness 
appears, and the person taking a deposition shall be paid by the party 
at whose instance the deposition is taken.



Sec. 2200.66  Transcript of testimony.

    (a) Hearings. Hearings shall be transcribed verbatim. A copy of the 
transcript of testimony taken at the hearing, duly certified by the 
reporter, shall be filed with the Judge before whom the matter was 
heard.
    (b) Payment for transcript. The Commission shall bear all expenses 
for court reporters' fees and for copies of the hearing transcript 
received by it. Each party is responsible for securing and paying for 
its copy of the transcript.
    (c) Correction of errors. Error in the transcript of the hearing may 
be corrected by the Judge on his own motion, on joint motion by the 
parties, or on motion by any party. The motion shall state the error in 
the transcript and the correction to be made. Corrections will be made 
by hand with pen and ink and by the appending of an errata sheet.



Sec. 2200.67  Duties and powers of judges.

    It shall be the duty of the Judge to conduct a fair and impartial 
hearing, to assure that the facts are fully elicited, to adjudicate all 
issues and avoid delay. The Judge shall have authority with respect to 
cases assigned to him, between the time he is designated and the time he 
issues his decision, subject to the rules and regulations of the 
Commission, to:
    (a) Administer oaths and affirmations;
    (b) Issue authorized subpoenas;
    (c) Rule upon petitions to revoke subpoenas;
    (d) Rule upon offers of proof and receive relevant evidence;
    (e) Take or cause depositions to be taken whenever the needs of 
justice would be served;
    (f) Regulate the course of the hearing and, if appropriate or 
necessary, exclude persons or counsel from the hearing for contemptuous 
conduct and strike all related testimony of witnesses refusing to answer 
any proper questions;
    (g) Hold conferences for the settlement or simplification of the 
issues;
    (h) Dispose of procedural requests or similar matters, including 
motions referred to the Judge by the Commission and motions to amend 
pleadings; also to dismiss complaints or portions thereof, and to order 
hearings reopened or, upon motion, consolidated prior to issuance of his 
decision;
    (i) Make decisions in conformity with section 557 of title 5, United 
States Code;
    (j) Call and examine witnesses and to introduce into the record 
documentary or other evidence;
    (k) Request the parties to state their respective positions 
concerning any issue in the case or theory in support thereof;
    (l) Adjourn the hearing as the needs of justice and good 
administration require;
    (m) Take any other action necessary under the foregoing and 
authorized by the published rules and regulations of the Commission.

[51 FR 32015, Sept. 8, 1986, as amended at 62 FR 35963, July 3, 1997]



Sec. 2200.68  Disqualification of the judge.

    (a) Discretionary withdrawal. A Judge may withdraw from a proceeding 
whenever he deems himself disqualified.
    (b) Request for withdrawal. Any party may request the Judge, at any 
time following his designation and before the filing of his decision, to 
withdraw on ground of personal bias or disqualification, by filing with 
him promptly upon the discovery of the alleged facts an affidavit 
setting forth in detail the matters alleged to constitute grounds for 
disqualification.
    (c) Granting request. If, in the opinion of the Judge, the affidavit 
referred to in paragraph (b) of this section is filed

[[Page 270]]

with due diligence and is sufficient on its face, the Judge shall 
forthwith disqualify himself and withdraw from the proceeding.
    (d) Denial of request. If the Judge does not disqualify himself and 
withdraw from the proceedings, he shall so rule upon the record, stating 
the grounds for his ruling and shall proceed with the hearing, or, if 
the hearing has closed, he shall proceed with the issuance of his 
decision, and the provisions of Sec. 2200.90 shall thereupon apply.



Sec. 2200.69  Examination of witnesses.

    Witnesses shall be examined orally under oath or affirmation. 
Opposing parties have the right to cross-examine any witness whose 
testimony is introduced by an adverse party. All parties shall have the 
right to cross-examine any witness called by the Judge pursuant to 
Sec. 2200.67(j).



Sec. 2200.70  Exhibits.

    (a) Marking exhibits. All exhibits offered in evidence by a party 
shall be marked for identification before or during the hearing. 
Exhibits shall be marked with the case docket number, with a designation 
identifying the party or intervenor offering the exhibit, and numbered 
consecutively.
    (b) Removal or substitution of exhibits in evidence. Unless the 
Judge finds it impractical, a copy of each exhibit shall be given to the 
other parties and intervenors. A party may remove an exhibit from the 
official record during the hearing or at the conclusion of the hearing 
only upon permission of the Judge. The Judge, in his discretion, may 
permit the substitution of a duplicate for any original document offered 
into evidence.
    (c) Reasons for denial of admitting exhibit. A Judge may, in his 
discretion, deny the admission of any exhibit because of its excessive 
size, weight, or other characteristic that prohibits its convenient 
transportation and storage. A party may offer into evidence photographs, 
models or other representations of any such exhibit.
    (d) Rejected exhibits. All exhibits offered but denied admission 
into evidence, except exhibits referred to in paragraph (c) of this 
section, shall be placed in a separate file designated for rejected 
exhibits.
    (e) Return of physical exhibits. A party may on motion request the 
return of a physical exhibit within 30 days after expiration of the time 
for filing a petition for review of a Commission final order in a United 
States Court of Appeals under section 11 of the Act, 29 U.S.C. 660, or 
within 30 days after completion of any proceedings initiated thereunder. 
The motion shall be addressed to the Executive Secretary and provide 
supporting reasons. The exhibit shall be returned if the Executive 
Secretary determines that it is no longer necessary for use in any 
Commission proceeding.
    (f) Request for custody of physical exhibit. Any person may on 
motion to the Executive Secretary request custody of a physical exhibit 
for use in any court or tribunal. The motion shall state the reasons for 
the request and the duration of custody requested. If the exhibit has 
been admitted in a pending Commission case, the motion shall be served 
on all parties to the proceeding. Any person granted custody of an 
exhibit shall inform the Executive Secretary of the status every six 
months of his continuing need for the exhibit and return the exhibit 
after completion of the proceeding.
    (g) Disposal of physical exhibit. Any physical exhibit may be 
disposed of by the Commission's Executive Secretary at any time more 
than 30 days after expiration of the time for filing a petition for 
review of a Commission final order in a United States Court of Appeals 
under section 11 of the Act, 29 U.S.C. 660, or 30 days after completion 
of any proceedings initiated thereunder.

[51 FR 32015, Sept. 8, 1986; 52 FR 13832, Apr. 27, 1987]



Sec. 2200.71  Rules of evidence.

    The Federal Rules of Evidence are applicable.



Sec. 2200.72  Objections.

    (a) Statement of objection. Any objection with respect to the 
conduct of the hearing, including any objection to the introduction of 
evidence or a ruling by the Judge, may be stated orally or in

[[Page 271]]

writing, accompanied by a short statement of the grounds for the 
objection, and shall be included in the record. No such objection shall 
be deemed waived by further participation in the hearing.
    (b) Offer of proof. Whenever evidence is excluded from the record, 
the party offering such evidence may make an offer of proof, which shall 
be included in the record of the proceeding.



Sec. 2200.73  Interlocutory review.

    (a) General. Interlocutory review of a Judge's ruling is 
discretionary with the Commission. A petition for interlocutory review 
may be granted only where the petition asserts and the Commission finds:
    (1) That the review involves an important question of law or policy 
about which there is substantial ground for difference of opinion and 
that immediate review of the ruling may materially expedite the final 
disposition of the proceedings; or
    (2) That the ruling will result in a disclosure, before the 
Commission may review the Judge's report, of information that is alleged 
to be privileged.
    (b) Petition for interlocutory review. Within five days following 
the receipt of a Judge's ruling from which review is sought, a party may 
file a petition for interlocutory review with the Commission. Responses 
to the petition, if any, shall be filed within five days following 
service of the petition. A copy of the petition and responses shall be 
filed with the Judge. The petition is denied unless granted within 30 
days of the date of receipt by the Commission's Executive Secretary. A 
corporate party that files a petition for interlocutory review or a 
response to such a petition under this section shall file with the 
Commission a copy of its declaration of corporate parents, subsidiaries, 
and affiliates previously filed with the Judge under the requirements of 
Sec. 2200.36(c) or Sec. 2200.37(d)(4). In its discretion the Commission 
may refuse to accept for filing a petition or response that fails to 
comply with this disclosure requirement. A corporate party filing the 
declaration required by this paragraph shall have a continuing duty to 
advise the Executive Secretary of any changes to its declaration until 
the Commission either denies the petition for interlocutory appeal or 
issues its decision on the merits of the appeal.
    (c) Denial without prejudice. The Commission's action in denying a 
petition for interlocutory review shall not preclude a party from 
raising an objection to the Judge's interlocutory ruling in a petition 
for discretionary review.
    (d) Stay--(1) Trade secret matters. The filing of a petition for 
interlocutory review of a Judge's ruling concerning an alleged trade 
secret shall stay the effect of the ruling until the Commission denies 
the petition or rules on the merits.
    (2) Other cases. In all other cases, the filing or granting of a 
petition for interlocutory review shall not stay a proceeding or the 
effect of a ruling unless otherwise ordered.
    (e) Judge's comments. The Judge may be requested to provide the 
Commission with his written views on whether the petition is 
meritorious. The Judge shall serve copies of these comments on all 
parties when he files them with the Commission.
    (f) Briefs. Should the Commission desire briefs on the issues raised 
by an interlocutory review, it shall give notice to the parties. See 
Sec. 2200.93--Briefs before the Commission.

[51 FR 32015, Sept. 8, 1986, as amended at 54 FR 18491, May 1, 1989; 55 
FR 22782, June 4, 1990]



Sec. 2200.74  Filing of briefs and proposed findings with the Judge; oral argument at the hearing.

    (a) General. A party is entitled to a reasonable period at the close 
of the hearing for oral argument, which shall be included in the 
stenographic report of the hearing. Any party shall be entitled, upon 
request made before the close of hearing, to file a brief, proposed 
findings of fact and conclusions of law, or both, with the Judge. In 
lieu of briefs, the Judge may permit or direct the parties to file 
memoranda or statements of authority.
    (b) Time. Briefs shall be filed simultaneously on a date established 
by the Judge. A motion for extension of time for filing any brief shall 
be made at least three days prior to the due date and shall recite that 
the moving party has advised the other parties of the

[[Page 272]]

motion. Reply briefs shall not be allowed except by order of the Judge.
    (c) Untimely briefs. Untimely briefs will not be accepted unless 
accompanied by a motion setting forth good cause for the delay.



                    Subpart F--Posthearing Procedures



Sec. 2200.90  Decisions of Judges.

    (a) Contents. The Judge shall prepare a decision that constitutes 
his final disposition of the proceedings. The decision shall be in 
writing and shall include findings of fact, conclusions of law, and the 
reasons or bases for them, on all the material issues of fact, law or 
discretion presented on the record. The decision shall include an order 
affirming, modifying or vacating each contested citation item and each 
proposed penalty, or directing other appropriate relief. A decision 
finally disposing of a petition for modification of the abatement period 
shall contain an order affirming or modifying the abatement period.
    (b) The Judge's report--(1) Mailing to parties. The Judge shall mail 
or otherwise transmit a copy of his decision to each party.
    (2) Docketing of Judge's report by Executive Secretary. On the 
eleventh day after the transmittal of his decision to the parties, the 
Judge shall file his report with the Executive Secretary for docketing. 
The report shall consist of the record, including the Judge's decision, 
any petitions for discretionary review and statements in opposition to 
such petitions. Promptly upon receipt of the Judge's report, the 
Executive Secretary shall docket the report and notify all parties of 
the docketing date. The date of docketing of the Judge's report is the 
date that the Judge's report is made for purposes of section 12(j) of 
the Act, 29 U.S.C. 661(j).
    (3) Correction of errors; relief from default. Until the Judge's 
report has been directed for review or, in the absence of a direction 
for review, until the decision has become a final order, the Judge may 
correct clerical errors and errors arising through oversight or 
inadvertence in decisions, orders or other parts of the record. If a 
Judge's report has been directed for review, the decision may be 
corrected during the pendency of review with leave of the Commission. 
Until the Judge's report has been docketed by the Executive Secretary, 
the Judge may relieve a party of default or grant reinstatement under 
Sec. 2200.41(b), 2200.52(e) or 2200.64(b).
    (c) Filing documents after the docketing date. Except for papers 
filed under paragraph (b)(3) of this section, which shall be filed with 
the Judge, on or after the date of the docketing of the Judge's report 
all documents shall be filed with the Executive Secretary.
    (d) Judge's decision final unless review directed. If no 
Commissioner directs review of a report on or before the thirtieth day 
following the date of docketing of the Judge's report, the decision of 
the Judge shall become a final order of the Commission.

[51 FR 32015, Sept. 8, 1986; 52 FR 13832, Apr. 27, 1987, as amended at 
62 FR 35963, July 3, 1997]



Sec. 2200.91  Discretionary review; petitions for discretionary review; statements in opposition to petitions.

    (a) Review discretionary. Review by the Commission is not a right. A 
Commissioner may, as a matter of discretion, direct review on his own 
motion or on the petition of a party.
    (b) Petitions for discretionary review. A party adversely affected 
or aggrieved by the decision of the Judge may seek review by the 
Commission by filing a petition for discretionary review. Discretionary 
review by the Commission may be sought by filing with the Judge a 
petition for discretionary review within the 10-day period provided by 
Sec. 2200.90(b)(2). Review by the Commission may also be sought by 
filing directly with the Executive Secretary a petition for 
discretionary review. A petition filed directly with the Executive 
Secretary shall be filed within 20 days after the date of docketing of 
the Judge's report. The earlier a petition is filed, the more 
consideration it can be given. A petition for discretionary review may 
be conditional, and may state that review is sought only if a 
Commissioner were to direct review on the petition of an opposing party.
    (c) Cross-petitions for discretionary review. Where a petition for 
discretionary

[[Page 273]]

review has been filed by one party, any other party adversely affected 
or aggrieved by the decision of the Judge may seek review by the 
Commission by filing a cross-petition for discretionary review. The 
cross-petition may be conditional. See paragraph (b) of this section. A 
cross-petition shall be filed with the Judge during the 20 days provided 
by Sec. 2200.90(b) or directly with the Executive Secretary within 27 
days after the date of docketing of the Judge's report. The earlier a 
cross-petition is filed, the more consideration it can be given.
    (d) Contents of the petition. No particular form is required for a 
petition for discretionary review. A petition should state why review 
should be directed, including: Whether the Judge's decision raises an 
important question of law, policy or discretion; whether review by the 
Commission will resolve a question about which the Commission's Judges 
have rendered differing opinions; whether the Judge's decision is 
contrary to law or Commission precedent; whether a finding of material 
fact is not supported by a preponderance of the evidence; whether a 
prejudical error of procedure or an abuse of discretion was committed. A 
petition should concisely state the portions of the decision for which 
review is sought and should refer to the citations and citation items 
(for example, citation 3, item 4a) for which review is sought. A 
petition shall not incorporate by reference a brief or legal memorandum. 
Brevity and the inclusion of precise references to the record and legal 
authorities will facilitate prompt review of the petition.
    (e) When filing effective. A petition for discretionary review is 
filed when received. If a petition has been filed with the Judge, 
another petition need not be filed with the Commission.
    (f) Failure to file. The failure of a party adversely affected or 
aggrieved by the Judge's decision to file a petition for discretionary 
review may foreclose court review of the objections to the Judge's 
decision. See Keystone Roofing Co. v. Dunlop, 539 F.2d 960 (3d Cir. 
1976).
    (g) Statements in opposition to petition. Statements in opposition 
to petitions for discretionary review may be filed in the manner 
specified in this section for the filing of petitions for discretionary 
review. Statements in opposition shall concisely state why the Judge's 
decision should not be reviewed with respect to each portion of the 
petition to which it is addressed.
    (h) Number of copies. An original and eight copies of a petition or 
a statement in opposition to a petition shall be filed.

[51 FR 32015, Sept. 8, 1986; 52 FR 13832, Apr. 27, 1987, as amended at 
55 FR 22783, June 4, 1990; 62 FR 35963, July 3, 1997]



Sec. 2200.92  Review by the Commission.

    (a) Jurisdiction of the Commission; issues on review. Unless the 
Commission orders otherwise, a direction for review establishes 
jurisdiction in the Commission to review the entire case. The issues to 
be decided on review are within the discretion of the Commission but 
ordinarily will be those stated in the direction for review, those 
raised in the petitions for discretionary review, or those stated in any 
later order.
    (b) Review on a Commissioner's motion; issues on review. At any time 
within 30 days after the docketing date of the Judge's report, a 
Commissioner may, on his own motion, direct that a Judge's decision be 
reviewed. In the absence of a petition for discretionary review, a 
Commissioner will normally not direct review unless the case raises 
novel questions of law or policy or questions involving conflict in 
Administrative Law Judges' decisions. When a Commissioner directs review 
on his own motion, the issues ordinarily will be those specified in the 
direction for review or any later order.
    (c) Issues not raised before Judge. The Commission will ordinarily 
not review issues that the Judge did not have the opportunity to pass 
upon. In exercising discretion to review issues that the Judge did not 
have the opportunity to pass upon, the Commission may consider such 
factors as whether there was good cause for not raising the issue before 
the Judge, the degree to which the issue is factual, the degree to which 
proceedings will be disrupted or delayed by raising the issue on review, 
whether the ability of an adverse party to press a claim or defense 
would be impaired, and whether considering the

[[Page 274]]

new issue would avoid injustice or ensure that judgment will be rendered 
in accordance with the law and facts.



Sec. 2200.93  Briefs before the Commission.

    (a) Requests for briefs. The Commission ordinarily will request the 
parties to file briefs on issues before the Commission. After briefs are 
requested, a party may, instead of filing a brief, file a letter setting 
forth its arguments, a letter stating that it will rely on its petition 
for discretionary review or previous brief, or a letter stating that it 
wishes the case decided without its brief. The provisions of this 
section apply to the filing of briefs and letters filed in lieu of 
briefs.
    (b) Filing briefs. Unless the briefing notice states otherwise:
    (1) Time for filing briefs. The party required to file the first 
brief shall do so within 40 days after the date of the briefing notice. 
All other parties shall file their briefs within 30 days after the first 
brief is served. Any reply brief permitted by these rules or by order 
shall be filed within 15 days after the second brief is served.
    (2) Sequence of filing. (i) If one petition for discretionary or 
interlocutory review has been filed, the petitioning party shall file 
the first brief.
    (ii) If more than one petition has been filed but only one was 
granted, the party whose petition was granted shall file the first 
brief.
    (iii) If more than one petition has been filed, and more than one 
has been granted or none has been granted, the Secretary shall file the 
first brief.
    (iv) If no petition has been filed, the Secretary shall file the 
first brief.
    (3) Reply briefs. The party who filed the first brief may file a 
reply brief. Additional briefs are otherwise not allowed except by leave 
of the Commission.
    (c) Motion for extension of time for filing brief. An extension of 
time to file a brief will ordinarily not be granted except for good 
cause shown. A motion for extension of time to file a brief shall be 
filed at the Commission no later than 3 days prior to the expiration of 
the time limit prescribed in paragraph (b) of this section, shall comply 
with Sec. 2200.40 and shall include the following information: When the 
brief is due, the number and duration of extensions of time that have 
been granted to each party, the length of extension being requested, the 
specific reason for the extension being requested, and an assurance that 
the brief will be filed within the time extension requested.
    (d) Consequences of failure to timely file brief. The Commission may 
decline to accept a brief that is not timely filed. If a petitioning 
party fails to respond to a briefing notice or expresses no interest in 
review, the Commission may vacate the direction for review, or it may 
decide the case without that party's brief. If the non-petitioning party 
fails to respond to a briefing notice or expresses no interest in 
review, the Commission may decide the case without that party's brief. 
If a case was directed for review upon a Commissioner's own motion, and 
any party fails to respond to the briefing notice, the Commission may 
either vacate the direction for review or decide the case without 
briefs.
    (e) Length of brief. Except by permission of the Commission, a main 
brief, including briefs and legal memorandums it incorporates by 
reference, shall contain no more than 35 pages of text. A reply brief, 
including briefs and legal memorandums it incorporates by reference, 
shall contain no more than 20 pages of text.
    (f) Table of contents. A brief in excess of 15 pages shall include a 
table of contents.
    (g) Failure to meet requirements. The Commission may return briefs 
that do not meet the requirements of paragraphs (e) and (f) of this 
section.
    (h) Number of copies. The original and eight copies of a brief shall 
be filed. See Sec. 2200.8(d)(2).
    (i) Brief of an amicus curiae. The Commission may allow a brief of 
an amicus curiae pursuant to the criteria of Sec. 2200.24. Any brief of 
an amicus curiae must meet the requirements of paragraphs (b) through 
(h) of this section. No reply brief of an amicus curiae will be 
received.

[51 FR 32015, Sept. 8, 1986, as amended at 57 FR 41687, Sept. 11, 1992; 
62 FR 35963, July 3, 1997]

[[Page 275]]



Sec. 2200.94  Stay of final order.

    (a) Who may file. Any party aggrieved by a final order of the 
Commission may, while the matter is within the jurisdiction of the 
Commission, file a motion for a stay.
    (b) Contents of motion. Such motion shall set forth the reasons a 
stay is sought and the length of the stay requested.
    (c) Ruling on motion. The Commission may order such stay for the 
period requested or for such longer or shorter period as it deems 
appropriate.



Sec. 2200.95  Oral argument before the Commission.

    (a) When ordered. (1) Upon motion of any party, or upon its own 
motion, the Commission may order oral argument. Normally, motions for 
oral argument shall not be considered until after all briefs have been 
filed.
    (2) The Commission may designate specific issues to be addressed.
    (3) Except under extraordinary circumstances, oral argument shall be 
held at a location in Washington, DC.
    (b) Notice of argument. The Executive Secretary shall advise all 
parties whether oral argument is to be heard. Within a reasonable time 
before the oral argument is scheduled, the Executive Secretary shall 
inform the parties of the time and place therefor, the issues to be 
heard, and the time allotted to the parties.
    (c) Postponement. (1) Except under extraordinary circumstances, a 
request for postponement must be filed at least seven days before oral 
argument is scheduled.
    (2) The Executive Secretary shall notify the parties of a 
postponement in a manner best calculated to avoid unnecessary travel or 
inconvenience to the parties. The Executive Secretary shall inform all 
parties of the new time and place for the oral argument.
    (d) Order and content of argument. (1) Counsel shall be afforded 
such time for oral argument as the Commission may provide by order. 
Requests for enlargement of time may be made by motion filed reasonably 
in advance of the date fixed for the argument.
    (2) The petitioning party shall argue first. If the case is before 
the Commission on cross-petitions, the Commission will inform the 
parties in advance of the order of appearance.
    (3) Counsel are expected to cover all anticipated issues in their 
arguments in chief. Therefore, rebuttal will normally not be allowed. 
Should unexpected matters arise, the Commission,in its discretion, may 
give counsel additional time.
    (4) Oral argument should undertake to emphasize and clarify the 
written arguments appearing in the briefs. The Commission will look with 
disfavor on any oral argument that is read from a previously filed 
document.
    (5) At any time, the Commission may terminate a party's argument or 
interrupt the party's presentation for questioning by the Commissioners.
    (e) Failure to appear. Should either party fail to appear for oral 
argument, the party present may be allowed to proceed with its argument.
    (f) Consolidated cases. Where two or more consolidated cases are 
scheduled for oral argument, the consolidated cases shall be considered 
as one case for the purpose of allotting time to the parties unless the 
Commission otherwise directs.
    (g) Multiple counsel. Where more than one counsel argues for a party 
to the case or for multiple parties on the same side in the case, it is 
counsels' responsibility to agree upon a fair division of the total time 
allotted. In the event of a failure to agree, the Commission will 
allocate the time. The Commission may, in its discretion, limit the 
number of counsel heard for each party or side in the argument. No later 
than 3 days prior to the date of scheduled argument, the Commission must 
be notified of the names of the counsel who will argue.
    (h) Exhibits/visual aids. (1) The parties may use models, specimens, 
samples, charts or exhibits introduced into evidence at the hearing. If 
a party wishes to use a visual aid not part of the record, written 
notice of the proposed use shall be given to opposing counsel 15 days 
prior to the argument. Objections, if any, shall be in writing, served 
on all adverse parties, and filed not fewer than five days before the 
argument.

[[Page 276]]

    (2) No visual aid shall introduce or rely upon facts or evidence not 
already part of the record.
    (3) If visual aids or exhibits other than documents are to be used 
at the argument, counsel shall arrange with the Executive Secretary to 
have them placed in the hearing room on the date of the argument before 
the Commission convenes.
    (4) Parties using visual aids not introduced into evidence shall 
have them removed from the hearing room unless the Commission directs 
otherwise. If such visual aids are not reclaimed by the party within a 
reasonable time after notice is given by the Executive Secretary, such 
visual aids shall be disposed of at the discretion of the Executive 
Secretary.
    (i) Recording oral argument. (1) Unless the Commission directs 
otherwise, oral arguments shall be electronically recorded and made part 
of the record. Any other sound recording in the hearing room is 
prohibited. Upon leave of the Commission, any party, at its own expense, 
may arrange for a qualified court reporter to be present and to report 
and transcribe oral arguments. A copy of the transcript shall be 
provided to the Commission by the ordering party and shall be filed with 
the Executive Secretary.
    (2) Persons desiring to listen to the recordings shall make 
appropriate arrangements with the Executive Secretary.
    (j) Failure to file brief. A party who fails to file a brief shall 
not be heard at the time of oral argument except by permission of the 
Commission.
    (k) Participation in oral argument by amicus curiae. (1) An amicus 
curiae will not be permitted to participate in oral argument without 
leave of the Commission upon proper motion.
    (2) A motion by amicus curiae seeking leave to participate in oral 
argument shall be filed no later than 14 days prior to the date oral 
argument is scheduled.
    (3) The motion of an amicus curiae for leave to participate at oral 
argument shall identify the interest of the applicant and shall state 
the reason(s) why its participation at oral argument is desirable.
    (4) Motions in opposition to the motion of an amicus curiae for 
leave to participate in the oral argument must be filed within 7 days of 
the date of the motion.

[55 FR 22783, June 4, 1990, as amended at 57 FR 41688, Sept. 11, 1992]



Sec. 2200.96  Commission receipt pursuant to 28 U.S.C. 2112(a)(1) of copies of petitions for judicial review of Commission orders when petitions for review are 
          filed in two or more courts of appeals with respect to the 
          same order.

    The Commission officer and office designated to receive, pursuant to 
28 U.S.C. 2112(a)(1), copies of petitions for review of Commission 
orders, from the persons instituting the review proceedings in a court 
of appeals, are the Executive Secretary and the Office of the Executive 
Secretary at the Commission's office, One Lafayette Centre, 1120-20th 
Street NW., 9th Floor, Washington, DC 20036-3419. Five copies of the 
petition shall be submitted pursuant to this section. Each copy shall 
state that it is being submitted to the Commission pursuant to 28 U.S.C. 
2112 by the persons or person who filed the petition in the court of 
appeals and shall be stamped by the court with the date of filing.
    Note: 28 U.S.C. 2112(a) contains certain applicable requirements.

[54 FR 18491, May 1, 1989, as amended at 58 FR 26065, Apr. 30, 1993]



                   Subpart G--Miscellaneous Provisions



Sec. 2200.100  Settlement.

    (a) Policy. Settlement is permitted and encouraged by the Commission 
at any stage of the proceedings.
    (b) Requirements. The Commission does not require that the parties 
include any particular language in a settlement agreement, but does 
require that the agreement specify the terms of settlement for each 
contested item, specify any contested item or issue that remains to be 
decided (if any remain), and state whether any affected employees who 
have elected party status have raised an objection to the reasonableness 
of any abatement time. Unless the settlement agreement

[[Page 277]]

states otherwise, the withdrawal of a notice of contest, citation, 
notification of proposed penalty, or petition for modification of 
abatement period will be with prejudice.
    (c) Filing; service and notice. A settlement submitted for approval 
after the Judge's report has been directed for review shall be filed 
with the Executive Secretary. When a settlement agreement is filed with 
the Judge or the Executive Secretary, proof of service shall be filed 
with the settlement agreement, showing service upon all parties and 
authorized employee representatives in the manner prescribed by 
Sec. 2200.7(c) and the posting of notice to non-party affected employees 
in the manner prescribed by Sec. 2200.7(g). The parties shall also file 
a final consent order for adoption by the Judge. If the time has not 
expired under these rules for electing party status, or if party status 
has been elected, an order terminating the litigation before the 
Commission because of the settlement shall not be issued until at least 
10 days after service or posting to consider any affected employee's or 
authorized employee representative's objection to the reasonableness of 
any abatement time. The affected employee or authorized employee 
representative shall file any such objection within this time. If such 
objection is filed or stated in the settlement agreement, the Commission 
or the Judge shall provide an opportunity for the affected employees or 
authorized employee representative to be heard and present evidence on 
the objection, which shall be limited to the reasonableness of the 
abatement time.
    (d) Form of settlement document. It is preferred that settlement 
documents be typewritten in conformance with Sec. 2200.30(a). However, a 
settlement document that is hand-written or printed in ink and is 
legible shall be acceptable for filing.

[51 FR 32015, Sept. 8, 1986, as amended at 57 FR 41688, Sept. 11, 1992]



Sec. 2200.101  Settlement Judge procedure.

    (a) Appointment of Settlement Judge. (1) This section applies only 
to notices of contests by employers and to applications for fees under 
the Equal Access to Justice Act and 29 CFR part 2204.
    (2) Upon motion of any party following the filing of the pleadings 
(or notice of simplified proceedings), or otherwise with the consent of 
the parties at any time in the proceedings, the Chief Administrative Law 
Judge or the Chairman may assign a case to a Settlement Judge for 
processing under this section whenever it is determined that there is a 
reasonable prospect of substantial settlement with the assistance of 
mediation by a Settlement Judge. In the event either the Secretary or 
the employer objects to the use of a Settlement Judge procedure, such 
procedure shall not be imposed.
    (3) The settlement negotiations under this section shall be for a 
period not to exceed 45 days.
    (b) Powers and duties of Settlement Judges. (1) The Judge shall 
confer with the parties on subjects and issues of whole or partial 
settlement of the case.
    (2) The Judge may allow or suspend discovery during the time of 
assignment.
    (3) The Judge may suggest privately to each attorney or other 
representative of a party what concessions his or her client should 
consider, and assess privately with each attorney or other 
representative the reasonableness of the party's case or settlement 
position.
    (4) The Judge shall seek resolution of as many of the issues in the 
case as is feasible.
    (c) Settlement conference and other communication--(1) Types of 
conferences. In general it is expected that the Settlement Judge shall 
communicate with the parties by a conference telephone call. The 
Settlement Judge, however, may schedule a personal conference with the 
parties under one or more of the following circumstances:
    (i) It is possible for the Settlement Judge to schedule in one day 
three or more cases for conference at or near the same location;
    (ii) The offices of the attorneys or other representatives of the 
parties, as well as that of the Settlement Judge, are located in the 
same metropolitan area;
    (iii) A conference may be scheduled in a place and on a day that the 
Judge is scheduled to preside in other proceedings under this part;

[[Page 278]]

    (iv) Any other suitable circumstances in which, with the concurrence 
of the Chief Administrative Law Judge, the Settlement Judge determines 
that a personal meeting is necessary for a resolution of substantial 
issues in a case and the holding of a conference represents a prudent 
use of resources.
    (2) Participation in conference. The Settlement Judge may recommend 
that the attorney or other representative who is expected to try the 
case for each party be present, and, without regard to the scope of the 
attorney's or other representative's powers, may also recommend that the 
parties, or agents having full settlement authority, be present. The 
parties, their representatives, and attorneys are required to be 
completely candid with the Settlement Judge so that he may properly 
guide settlement discussions. The failure to be present at a settlement 
conference or the refusal to cooperate fully within the spirit of this 
rule may result in the termination of the settlement proceeding under 
this section. The Settlement Judge may make such other and additional 
requirements of the parties and persons having an interest in the 
outcome as to him shall seem proper in order to expedite an amicable 
resolution of the case. No evidence of statements or conduct in 
proceedings under this section will be admissible in any subsequent 
hearing, except by stipulation of the parties. Documents disclosed in 
the settlement process may not be used in litigation unless obtained 
through appropriate discovery or subpoena.
    (d) Report of Settlement Judge. (1) With the consent of the parties, 
the Settlement Judge may request from the Chief Administrative Law Judge 
an enlargement of the time of the settlement period not exceeding 20 
days. This request, and any action of the Chief Administrative Law Judge 
in response thereto, may be written or oral.
    (2) Under other circumstances the Settlement Judge, following the 
expiration of the settlement period or at such earlier date that he 
determines further negotiations would be fruitless, shall promptly 
notify the Chief Administrative Law Judge in writing of the status of 
the case. If he has not approved a full settlement pursuant to 
Sec. 2200.100 of these rules, such report shall include written 
stipulations embodying the terms of such partial settlement as has been 
achieved during the assignment.
    (3) At the termination of the settlement period without a full 
settlement, the Chief Administrative Law Judge shall promptly assign the 
case to a different Administrative Law Judge for appropriate action on 
the remaining issues, unless the parties request otherwise. The 
Settlement Judge shall not discuss the merits of the case with any 
Administrative Law Judge or other person, nor be called as a witness in 
any hearing of the case.
    (e) Non-reviewability. Any decision concerning the assignment of a 
particular Settlement Judge or the decision by any party or Settlement 
Judge to terminate proceedings under this section is not subject to 
review by, appeal to, or rehearing by any subsequent presiding officer, 
the Chief Administrative Law Judge, or the Commission.

[51 FR 32015, Sept. 8, 1986; 52 FR 13832, Apr. 27, 1987; 62 FR 35963, 
July 3, 1997]



Sec. 2200.102  Withdrawal.

    A party may withdraw its notice of contest, citation, notification 
of proposed penalty, or petition for modification of abatement period at 
any stage of a proceeding. The notice of withdrawal shall be served in 
accordance with Sec. 2200.7(c) upon all parties and authorized employee 
representatives that are eligible to elect, but have not elected, party 
status. It shall also be posted in the manner prescribed in 
Sec. 2200.7(g) for the benefit of any affected employees not represented 
by an authorized employee representative who are eligible to elect, but 
have not elected, party status. Proof of service shall accompany the 
notice of withdrawal.

[51 FR 32015, Sept. 8, 1986; 52 FR 13832, Apr. 27, 1987]



Sec. 2200.103  Expedited proceeding.

    (a) When ordered. Upon application of any party or intervenor or 
upon its own motion, the Commission may order an expedited proceeding. 
When an expedited proceeding is ordered by the Commission, the Executive 
Secretary shall notify all parties and intervenors.

[[Page 279]]

    (b) Automatic expedition. Cases initiated by employee contests and 
petitions for modification of abatement period shall be expedited.
    (c) Effect of ordering expedited proceeding. When an expedited 
proceeding is required by these rules or ordered by the Commission, it 
shall take precedence on the docket of the Judge to whom it is assigned, 
or on the Commission's review docket, as applicable, over all other 
classes of cases, and shall be set for hearing or for the submission of 
briefs at the earliest practicable date.
    (d) Time sequence set by Judge. The assigned Judge shall make 
rulings with respect to time for filing of pleadings and with respect to 
all other matters, without reference to times set forth in these rules, 
may order daily transcripts of the hearing, and shall do all other 
things appropriate to complete the proceeding in the minimum time 
consistent with fairness.



Sec. 2200.104  Standards of conduct.

    (a) General. All representatives appearing before the Commission and 
its Judges shall comply with the letter and spirit of the Model Rules of 
Professional Conduct of the American Bar Association.
    (b) Misbehavior before a Judge--(1) Exclusion from a proceeding. A 
Judge may exclude from participation in a proceeding any person, 
including a party or its representative, who engages in disruptive 
behavior, refuses to comply with orders or rules of procedure, 
continuously uses dilatory tactics, refuses to adhere to standards of 
orderly or ethical conduct, or fails to act in good faith. The cause for 
the exclusion shall be stated in writing, or may be stated in the record 
if the exclusion occurs during the course of the hearing. Where the 
person removed is a party's attorney or other representative, the Judge 
shall suspend the proceeding for a reasonable time for the purpose of 
enabling the party to obtain another attorney or other representative.
    (2) Appeal rights if excluded. Any attorney or other representative 
excluded from a proceeding by a Judge may, within five days of the 
exclusion, appeal to the Commission for reinstatement. No proceeding 
shall be delayed or suspended pending disposition of the appeal.
    (c) Disciplinary action by the Commission. If an attorney or other 
representative practicing before the Commission engages in unethical or 
unprofessional conduct or fails to comply with any rule or order of the 
Commission or its Judges, the Commission may, after reasonable notice 
and an opportunity to show cause to the contrary, and after hearing, if 
requested, take any appropriate disciplinary action, including 
suspension or disbarment from practice before the Commission.
    (d) Show cause orders. All show cause orders issued by the 
Commission or Judge under paragraph (c) of this section shall be served 
upon the affected party by certified mail, return receipt requested.

[51 FR 32015, Sept. 8, 1986, as amended at 55 FR 22783, June 4, 1990]



Sec. 2200.105  Ex parte communication.

    (a) General. Except as permitted by Sec. 2200.101 or as otherwise 
authorized by law, there shall be no ex parte communication with respect 
to the merits of any case not concluded, between any Commissioner, 
Judge, employee, or agent of the Commission who is employed in the 
decisional process and any of the parties or intervenors, 
representatives or other interested persons.
    (b) Disciplinary action. In the event an ex parte communication 
occurs, the Commission or the Judge may make such orders or take such 
actions as fairness requires. The exclusion of a person by a Judge from 
a proceeding shall be governed by Sec. 2200.104(b). Any disciplinary 
action by the Commission, including suspension or disbarment, shall be 
governed by Sec. 2200.104(c).
    (c) Placement on public record. All ex parte communications in 
violation of this section shall be placed on the public record of the 
proceeding.



Sec. 2200.106  Amendment to rules.

    The Commission may at any time upon its own motion or initiative, or 
upon written suggestion of any interested person setting forth 
reasonable grounds therefor, amend or revoke any

[[Page 280]]

of the rules contained herein. The Commission invites suggestions from 
interested parties to amend or revoke rules of procedure. Such 
suggestions should be addressed to the Executive Secretary of the 
Commission at One Lafayette Centre, 1120-20th Street NW., 9th Floor, 
Washington, DC 20036-3419.

[51 FR 32015, Sept. 8, 1986, as amended at 58 FR 26065, Apr. 30, 1993]



Sec. 2200.107  Special circumstances;    waiver of rules.

    In special circumstances not contemplated by the provisions of these 
rules and for good cause shown, the Commission or Judge may, upon 
application by any party or intervenor or on their own motion, after 3 
working days notice to all parties and intervenors, waive any rule or 
make such orders as justice or the administration of the Act requires.

[57 FR 41688, Sept. 11, 1992]



Sec. 2200.108  Official Seal of the Occupational Safety and Health Review Commission.

    The seal of the Commission shall consist of: A gold eagle outspread, 
head facing dexter, a shield with 13 vertical stripes superimposed on 
its breast, holding an olive branch in its claws, the whole superimposed 
over a plain solid white Greek cross with a green background, encircled 
by a white band edged in black and inscribed ``Occupational Safety and 
Health Review Commission'' in black letters.

[51 FR 32015, Sept. 8, 1986; 52 FR 13832, Apr. 27, 1987]



                       Subpart H--Settlement Part

    Source: 64 FR 8246, Feb. 19, 1999, unless otherwise noted.



Sec. 2200.120  Settlement part.

    (a) Applicability. This section applies only to notices of contest 
by employers in which the aggregate amount of the penalties sought by 
the Secretary is $200,000 or greater and notices of contest by employers 
which are determined to be suitable for assignment under this section 
for reasons deemed appropriate by the Chief Administrative Law Judge.
    (b) Proceedings under this Part. Notwithstanding any other 
provisions of these rules, upon the docketing of the notice of contest 
or at such other time as he deems appropriate the Chief Administrative 
Law Judge shall assign to the Settlement Part any case which satisfies 
the criteria set forth in paragraph (a) of this section. The Chief 
Administrative Law Judge shall either act as or appoint a Settlement 
Part Judge, who shall be a Judge other than the one assigned to hear and 
decide the case, to conduct proceedings under the Settlement Part as set 
forth in this section.
    (c) Powers and duties of Settlement Part Judges. (1) The Judge shall 
confer with the parties on subjects and issues of whole or partial 
settlement of the case.
    (2) The Judge shall seek resolution of as many of the issues in the 
case as is feasible.
    (3) The Judge may require the parties to provide statements of the 
issues in controversy and the factual predicate for each party's 
position on each issue or may enter other orders as appropriate to 
facilitate the proceedings.
    (4) The Judge may allow or suspend discovery during the time of 
assignment.
    (5) The Judge may suggest privately to each attorney or other 
representative of a party what concessions his or her client should 
consider, and assess privately with each attorney or other 
representative the reasonableness of the party's case or settlement 
position.
    (d) Settlement conference--(1) General. The Settlement Part Judge 
shall convene and preside over conferences between the parties. All 
settlement conferences shall be held in person. The Judge shall 
designate a place and time of conference.
    (2) Participation in conference. The Settlement Part Judge may 
require that any attorney or other representative who is expected to try 
the case for each party be present. The Settlement Part Judge may also 
require that the party's representative be accompanied by an official of 
the party having full settlement authority on behalf of the party. The 
parties and their representatives or attorneys are expected to be 
completely candid with the Settlement Part Judge so that he may properly

[[Page 281]]

guide settlement discussions. The failure to be present at a settlement 
conference or otherwise to comply with the orders of the Settlement Part 
Judge or the refusal to cooperate fully within the spirit of this rule 
may result in the imposition of sanctions under Sec. 2200.41.
    (3) Confidentiality. All statements made, and all information 
presented, during the course of proceedings under this section shall be 
regarded as confidential and shall not be divulged outside of these 
proceedings except with the consent of the parties. The Settlement Part 
Judge shall if necessary issue appropriate orders in accordance with 
Sec. 2200.11 to protect confidentiality. The Settlement Part Judge shall 
not divulge any statements or information presented during private 
negotiations with a party or his representative except with the consent 
of that party. No evidence of statements or conduct in proceedings under 
this section within the scope of Federal Rule of Evidence 408, no notes 
or other material prepared by or maintained by the Settlement Part 
Judge, and no communications between the Settlement Part Judge and the 
Chief Administrative Law Judge including the report of the Settlement 
Part Judge under paragraph (f) of this section, will be admissible in 
any subsequent hearing except by stipulation of the parties. Documents 
disclosed in the settlement process may not be used in litigation unless 
obtained through appropriate discovery of subpoena. The Settlement Part 
Judge shall not discuss the merits of the case with any other person, 
nor appear as a witness in any hearing of the case.
    (e) Record of proceedings. No material of any form required to be 
held confidential under paragraph (d)(3) of this section shall be 
considered part of the official case record required to be maintained 
under 29 U.S.C. 661(g), nor shall any such material be open to public 
inspection as required by section 661(g), unless the parties otherwise 
stipulate. With the exception of an order approving the terms of any 
partial settlement agreed to between the parties as set forth in 
paragraph (f)(1) of this section, the Settlement Part Judge shall not 
file or cause to be filed in the official case record any material in 
his possession relating to these proceedings, including but not limited 
to communications with the Chief Administrative Law Judge and his report 
under paragraph (f) of this section, unless the parties otherwise 
stipulate.
    (f) Report of Settlement Part Judge. (1) The Settlement Part Judge 
shall promptly notify the Chief Administrative Law Judge in writing of 
the status of the case at such time that he determines further 
negotiations would be fruitless. If the Settlement Part Judge has not 
made such a determination and a settlement agreement is not achieved 
within 120 days following assignment of the case to the Settlement Part 
Judge, the Settlement Part Judge shall then advise the Chief 
Administrative Law Judge in writing of his assessment of the likelihood 
that the parties could come to a settlement agreement if they were 
afforded additional time for settlement discussions and negotiations. 
The Chief Administrative Law Judge may then in his discretion allow an 
additional period of time, not to exceed 30 days, for further 
proceedings under this section. If at the expiration of the period 
allotted under this paragraph the Settlement Part Judge has not approved 
a full settlement pursuant to Sec. 2200.100, he shall furnish to the 
Chief Administrative Law Judge copies of any written stipulations and 
orders embodying the terms of any partial settlement the parties have 
reached.
    (2) At the termination of the settlement period without a full 
settlement, the Chief Administrative Law Judge shall promptly assign the 
case to an Administrative Law Judge other than the Settlement Part Judge 
or Chief Administrative Law Judge for appropriate action on the 
remaining issues.
    (g) Non-reviewability. Notwithstanding the provisions of 
Sec. 2200.73 regarding interlocutory review, any decision concerning the 
assignment of a Settlement Part Judge or a particular Judge and any 
decision by the Settlement Part Judge to terminate proceedings under 
this section is not subject to review by, appeal to, or rehearing by any 
subsequent presiding officer, the Chief Administrative Law Judge, or the 
Commission.

[[Page 282]]

Subparts I-L [Reserved]



                          Subpart M--E-Z Trial

    Source: 60 FR 41809, Aug. 14, 1995, unless otherwise noted.



Sec. 2200.200  Purpose.

    (a) The purpose of the E-Z Trial subpart is to provide simplified 
procedures for resolving contests under the Occupational Safety and 
Health Act of 1970, so that parties before the Commission may reduce the 
time and expense of litigation while being assured due process and a 
hearing that meets the requirements of the Administrative Procedure Act, 
5 U.S.C. 554. These procedural rules will be applied to accomplish this 
purpose.
    (b) Procedures under this subpart are simplified in a number of 
ways. The major differences between these procedures and those provided 
in subparts A through G of the Commission's rules of procedure are as 
follows.
    (1) Complaints and answers are not required.
    (2) Pleadings generally are not required. Early discussions among 
the parties and the Administrative Law Judge are required to narrow and 
define the disputes between the parties.
    (3) The Secretary is required to provide the employer with certain 
informational documents early in the proceeding.
    (4) Discovery is not permitted except as ordered by the 
Administrative Law Judge.
    (5) Interlocutory appeals are not permitted.
    (6) Hearings are less formal. The Federal Rules of Evidence do not 
apply. Instead of briefs, the parties will argue their case orally 
before the Judge at the conclusion of the hearing. In many instances, 
the Judge will render his or her decision from the bench.



Sec. 2200.201  Application.

    The rules in this subpart will govern proceedings before a Judge in 
a case chosen for E-Z Trial under Sec. 2200.203.

[60 FR 41809, Aug. 14, 1995, as amended at 62 FR 14822, Mar. 28, 1997; 
62 FR 40934, July 31, 1997]



Sec. 2200.202   Eligibility for E-Z Trial.

    (a) Those cases selected for E-Z Trial will be those that do not 
involve complex issues of law or fact. Cases appropriate for E-Z Trial 
would generally include those with one or more of the following 
characteristics:
    (1) Relatively few citation items,
    (2) An aggregate proposed penalty of not more than $10,000,
    (3) No allegation of willfulness or a repeat violation,
    (4) Not involving a fatality,
    (5) A hearing that is expected to take less than two days, or
    (6) A small employer whether appearing pro se or represented by 
counsel.
    (b) Those cases with an aggregate proposed penalty of more than 
$10,000, but not more than $20,000, if otherwise appropriate, may be 
selected for E-Z Trial at the discretion of the Chief Administrative Law 
Judge.

[62 FR 40934, July 31, 1997]



Sec. 2200.203  Commencing E-Z Trial.

    (a) Selection. Upon receipt of a Notice of Contest, the Chief 
Administrative Law Judge may, at his or her discretion, assign an 
appropriate case for E-Z Trial.
    (b) Party request. Within twenty days of the notice of docketing, 
any party may request that the case be assigned for E-Z Trial. The 
request must be in writing. For example, ``I request an E-Z Trial'' will 
suffice. The request must be sent to the Executive Secretary. Copies 
must be sent to each of the other parties.
    (c) Judge's ruling on request. The Chief Judge or the Judge assigned 
to the case may grant a party's request and assign a case for E-Z Trial 
at his or her discretion. Such request shall be acted upon within 
fifteen days of its receipt by the Judge.
    (d) Time for filing complaint or answer under Sec. 2200.34. If a 
party has requested E-Z Trial or the Judge has assigned the case for E-Z 
Trial, the times for filing a complaint or answer will not run. If a 
request for E-Z Trial is denied, the period for filing a complaint or 
answer will begin to run upon issuance of the notice denying E-Z Trial.

[60 FR 41809, Aug. 14, 1995, as amended at 62 FR 61012, Nov. 14, 1997]

[[Page 283]]



Sec. 2200.204  Discontinuance of E-Z Trial.

    (a) Procedure. If it becomes apparent at any time that a case is not 
appropriate for E-Z Trial, the Judge assigned to the case may, upon 
motion by any party or upon the Judge's own motion, discontinue E-Z 
Trial and order the case to continue under conventional rules. Before 
discontinuing E-Z Trial, the Judge will consult with the Chief Judge.
    (b) Party motion. At any time during the proceedings any party may 
request that the E-Z Trial be discontinued and that the matter continue 
under conventional procedures. A motion to discontinue must be in 
writing and explain why the case is inappropriate for E-Z Trial. All 
other parties will have seven days from the filing of the motion to 
state their agreement or disagreement and their reasons. Joint motions 
to return a case to conventional proceedings shall be granted by the 
Judge and do not require a showing of good cause.
    (c) Ruling. If E-Z Trial is discontinued, the Judge may issue such 
orders as are necessary for an orderly continuation under conventional 
rules.



Sec. 2200.205  Filing of pleadings.

    (a) Complaint and answer. Once a case is designated for E-Z Trial, 
the complaint and answer requirements are suspended. If the Secretary 
has filed a complaint under Sec. 2200.34(a), a response to a petition 
under Sec. 2200.37(d)(5), or a response to an employee contest under 
Sec. 2200.38(a), and if E-Z Trial has been ordered, no response to these 
documents will be required.
    (b) Motions. A primary purpose of E-Z Trials is to eliminate, as 
much as possible, motions and similar documents. A motion will not be 
viewed favorably if the subject of the motion has not been first 
discussed among the parties.



Sec. 2200.206  Disclosure of information.

    (a) Disclosure to employer. (1) Within 12 working days after a case 
is designated for E-Z Trial, the Secretary shall provide the employer, 
free of charge, copies of the narrative (Form OSHA 1-A) and the 
worksheet (Form OSHA 1-B), or their equivalents.
    (2) Within 30 calendar days after a case is designated for E-Z 
Trial, the Secretary shall provide the employer with reproductions of 
any photographs or videotapes that the Secretary anticipates using at 
the hearing.
    (3) Within 30 calendar days after a case is designated for E-Z 
Trial, the Secretary shall provide to the employer any exculpatory 
evidence in the Secretary's possession.
    (4) The Judge shall act expeditiously on any claim by the employer 
that the Secretary improperly withheld or redacted any portion of the 
documents, photographs, or videotapes on the grounds of confidentiality 
or privilege.
    (b) Disclosure to the Secretary. Where the employer raises an 
affirmative defense, the presiding Judge shall order the employer to 
disclose to the Secretary such documents relevant to the affirmative 
defense as the Judge deems appropriate.

[60 FR 41809, Aug. 14, 1995, as amended at 62 FR 40934, July 31, 1997]



Sec. 2200.207  Pre-hearing conference.

    (a) When held. As early as practicable after the employer has 
received the documents set forth in Sec. 2200.206(a)(1), the presiding 
Judge will order and conduct a pre-hearing conference. At the discretion 
of the Judge, the pre-hearing conference may be held in person, or by 
telephone or electronic means.
    (b) Content. At the pre-hearing conference, the parties will discuss 
the following: settlement of the case; the narrowing of issues; an 
agreed statement of issues and facts; defenses; witnesses and exhibits; 
motions; and any other pertinent matter. Except under extraordinary 
circumstances, any affirmative defenses not raised at the pre-hearing 
conference may not be raised later. At the conclusion of the conference, 
the Judge will issue an order setting forth any agreements reached by 
the parties and will specify in the order the issues to be addressed by 
the parties at the hearing.

[60 FR 41809, Aug. 14, 1995, as amended at 62 FR 40934, July 31, 1997]



Sec. 2200.208  Discovery.

    Discovery, including requests for admissions, will only be allowed 
under

[[Page 284]]

the conditions and time limits set by the Judge.



Sec. 2200.209  Hearing.

    (a) Procedures. As soon as practicable after the conclusion of the 
pre-hearing conference, the Judge will hold a hearing on any issue that 
remains in dispute. The hearing will be in accordance with subpart E of 
these rules, except for Sec. 2200.60, 2200.73, and 2200.74 which will 
not apply.
    (b) Agreements. At the beginning of the hearing, the Judge will 
enter into the record all agreements reached by the parties as well as 
defenses raised during the pre-hearing conference. The parties and the 
Judge then will attempt to resolve or narrow the remaining issues. The 
Judge will enter into the record any further agreements reached by the 
parties.
    (c) Evidence. The Judge will receive oral, physical, or documentary 
evidence that is not irrelevant, unduly repetitious or unreliable. 
Testimony will be given under oath or affirmation. The Federal Rules of 
Evidence do not apply.
    (d) Reporter. A reporter will be present at the hearing. An official 
verbatim transcript of the hearing will be prepared and filed with the 
Judge. Parties may purchase copies of the transcript from the reporter.
    (e) Oral and written argument. Each party may present oral argument 
at the close of the hearing. Post-hearing briefs will not be allowed 
except by order of the Judge.
    (f) Judge's decision. Where practicable, the Judge will render his 
or her decision from the bench. In rendering his or her decision from 
the bench, the Judge shall state the issues in the case and make clear 
both his or her findings of fact and conclusions of law on the record. 
The Judge shall reduce his or her order in the matter to writing and 
transmit it to the parties as soon as practicable, but no later than 45 
days after the hearing. All relevant transcript paragraphs and pages 
shall be excerpted and included in the decision. Alternatively, within 
45 days of the hearing, the Judge will issue a written decision. The 
decision will be in accordance with Sec. 2200.90. If additional time is 
needed, approval of the Chief is required.
    (g) Filing of Judge's decision with the Executive Secretary. When 
the Judge issues a written decision, it shall be filed simultaneously 
with the Commission and the parties. Once the Judge's order is 
transmitted to the Executive Secretary, Sec. 2200.90(b) applies, with 
the exception of the 21 day period provided for in rule 
Sec. 2200.90(b)(2).

[60 FR 41809, Aug. 14, 1995, as amended at 62 FR 40934, July 31, 1997]



Sec. 2200.210  Review of Judge's decision.

    Any party may petition for Commission review of the Judge's decision 
as provided in Sec. 2200.91. After the issuance of the Judge's written 
decision or order, the parties may pursue the case following the rules 
in subpart F.



Sec. 2200.211  Applicability of subparts A through G.

    The provisions of subpart D (except for Sec. 2200.57) and 
Secs. 2200.34, 2200.37(d)(5), 2200.38, 2200.71, 2200.73 and 2200.74 will 
not apply to E-Z Trials. All other rules contained in Subparts A through 
G of the Commission's rules of procedure will apply when consistent with 
the rules in this subpart governing E-Z Trials.



PART 2201--REGULATIONS IMPLEMENTING THE FREEDOM OF INFORMATION ACT--Table of Contents




Sec.
2201.1  Purpose and scope.
2201.2  Description of agency.
2201.3  Delegation of authority.
2201.4  General policy.
2201.5  Copies of Commission decisions.
2201.6  Procedure for requesting records.
2201.7  Responses to requests.
2201.8  Fees for copying, searching, and review.
2201.9  Waiver of fees.
2201.10  Maintenance of statistics.

    Authority: 29 U.S.C. 661(g); 5 U.S.C. 552.

    Source: 53 FR 17930, May 19, 1988, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 2201 appear at 61 FR 
14024, Mar. 29, 1996.

[[Page 285]]



Sec. 2201.1  Purpose of scope.

    This part prescribes procedures to obtain information and records of 
the Occupational Safety and Health Review Commission under the Freedom 
of Information Act, 5 U.S.C. 552. It applies only to records or 
information of the Commission or in the Commission's custody. This part 
does not affect discovery in adversary proceedings before the 
Commission. Discovery is governed by the Commission's Rules of Procedure 
in 29 CFR part 2200, subpart D.



Sec. 2201.2  Description of agency.

    The Occupational Safety and Health Review Commission (OSHRC or 
Commission) adjudicates contested enforcement actions under the 
Occupational Safety and Health Act of 1970, 29 U.S.C. 651-678. The 
Commission decides cases after the parties are given an opportunity for 
a hearing. All hearings are open to the public and are conducted at a 
place convenient to the parties by an Administrative Law Judge. Any 
Commissioner may direct that a decision of a Judge be reviewed by the 
full Commission.



Sec. 2201.3  Delegation of authority.

    The Freedom of Information Act Officer is delegated the authority to 
act upon all requests for public records. In the absence of the Freedom 
of Information Act Officer, the Chairman or the Executive Director may 
designate another Commission officer or employee, such as the General 
Counsel or the Executive Secretary, to respond to requests. Copies of 
individual Commission decisions may be obtained directly from the 
Freedom of Information Act Officer at the Commission's national office. 
See Sec. 2201.5(a). All other information requests shall be directed to 
the Freedom of Information Act Officer. See Sec. 2201.6(b).

[61 FR 14025, Mar. 29, 1996]



Sec. 2201.4  General policy.

    (a) Non-exempt records available to public. Except for records and 
information exempted from disclosure by 5 U.S.C. 553(b) or published in 
the Federal Register under 5 U.S.C. 552(a)(1), all records of the 
Commission or in its custody are available to any person who requests 
them in accordance with Sec. 2201.6. Records include any information 
that would be a record subject to the requirements of 5 U.S.C. 552 when 
maintained by the Review Commission in any format, including electronic 
format. In searching for records, the Review Commission will look for 
records manually or by automated means. The Review Commission will 
search for records in their electronic form and in hard copy form, in 
response to FOIA requests, except when such searching would 
significantly interfere with the operation of the Commission's automated 
information system.
    (b) Examination of records in cases appealed to courts. A final 
order of the Commission may be appealed to a United States Court of 
Appeals. When this occurs, the Commission may send part or all of the 
official case file to the court and may retain other parts of the file. 
Thus, a document in a case may not be available from the Commission but 
only from the court of appeals. In such a case, the Freedom of 
Information Act Officer may inform the requester that the request for a 
particular document should be directed to the court.
    (c) Record availability. The records of Review Commission activities 
are publicly available for inspection and copying at the OSHRC 
Information Office, 1120 20th St., NW, 9th Floor, Washington, DC. These 
records include:
    (1) Final opinions including concurring and dissenting opinions as 
well as orders issued as a result of adjudication of cases.
    (2) OSHRC Rules of Procedure and Guides to those procedures.
    (3) Copies of records that have been released to a person under the 
Freedom of Information Act (FOIA) that, because of the subject matter, 
the Review Commission determines that the records have become or are 
likely to become the subject of subsequent requests for substantially 
the same records.
    (4) A general index of records released under the FOIA.
    (d) Materials created on or after November 1, 1996 under paragraphs 
(c) (1), (2), (3) and (4) of this section may also be accessed through 
the Internet at the

[[Page 286]]

Review Commission's World Wide Web site at http://www.oshrc.gov.

[53 FR 17930, May 19, 1988, as amended at 65 FR 24130, Apr. 25, 2000]



Sec. 2201.5  Copies of Commission decisions.

    (a) Single decisions. One copy of a Commission decision or decision 
by an Administrative Law Judge may be obtained free of copying fees by 
calling, writing or visiting the Freedom of Information Act Officer at 
the Commission's national office. A search fee may be charged, however, 
if the decision is not identified by name and date, or by docket number, 
or if it is not otherwise easily identifiable. See Sec. 2201.8 
(b)(2)(i). Copying fees will be charged if more than one decision is 
requested and the copying cost exceeds $10. See Sec. 2201.8 (a)(1) and 
(b)(1). The address and telephone number of the office at which 
decisions are available is OSHRC, Freedom of Information Act Officer, 
One Lafayette Centre, 1120-20th St. NW., room 900, Washington, DC 20036-
3419. Telephone 202-606-5398.
    (b)(1) OSAHRC Reports. All final Commission decisions from 1971 
through 1992 (including decisions of the Commission and its 
Administrative Law Judges) of general applicability, and concurring and 
dissenting opinions, are published in a series of microfiche entitled 
OSAHRC Reports. OSAHRC Reports may be purchased from the Superintendent 
of Documents, U.S. Government Printing Office, Washington, DC 20402. 
Persons wishing to obtain copies of numerous decisions and avoid large 
copying charges may purchase OSAHRC Reports or subscribe to a private 
reporting service. Decisions issued after 1992 are available by calling, 
writing or visiting the national office.
    (2) Citation form. Decisions in the microfiche series of OSAHRC 
Reports are officially cited as follows: The name of the cited employer; 
the last two digits of the year of the decision; OSAHRC (signifying the 
name of the official reporter, OSAHRC Reports); the serial number of the 
fiche on which the decision is printed, followed by a slash mark and the 
coordinates on the fiche for the first page of the decision. For 
example, J.W. Black Lumber Co., 75 OSAHRC 1/B9.
    (3) Indices. The Commission indexes decisions in OSAHRC Reports by 
docket number and alphabetically by name. These indices may be purchased 
by contacting the Freedom of Information Act Officer.

[53 FR 17930, May 19, 1988, as amended at 58 FR 26066, Apr. 30, 1993; 61 
FR 14025, Mar. 29, 1996]



Sec. 2201.6  Procedure for requesting    records.

    (a) Obtaining procedural rules, press releases, hearing dates, etc. 
Press releases, rules of procedure, published material other than 
decisions and their indices, information concerning the date, time and 
place of hearings, and other information of a general nature concerning 
operations of the Commission may be obtained free of charge by calling, 
writing or visiting the Freedom of Information Act Officer. See the 
address and telephone number in Sec. 2201.5(a).
    (b) Other information. Persons wishing to obtain copies of documents 
(including the hearing transcript filed in a case before the Review 
Commission or a Judge, and information that is freely available under 
paragraph (a) of this section), shall submit a request in writing to the 
Freedom of Information Act Officer at the address in Sec. 2201.5(a). The 
request shall be clearly identified as a request for information under 
the Freedom of Information Act. The envelope or cover enclosing or 
covering the request shall have the phrase ``INFORMATION REQUEST'' in 
capital letters on it. The agency will make information available in any 
form or format requested by the person if the record is readily 
reproducible by the agency in that form or format.
    (c) Date of receipt. A request that complies with the preceding 
paragraph is deemed received when received by the Commission. A request 
that does not comply with the preceding paragraph is deemed received 
when it is actually received by the Freedom of Information Act Officer. 
If the Freedom of Information Act Officer has required advance payment 
or satisfactory assurance of full payment under Sec. 2201.8(f), the 
request will not be deemed received until the Freedom of Information Act 
Officer has received the payment or assurance.

[[Page 287]]

    (d) Specificity required. Requesters shall describe the records 
sought with reasonable specificity.

[53 FR 17930, May 19, 1988, as amended at 65 FR 24130, Apr. 25, 2000]



Sec. 2201.7  Responses to requests.

    (a) Responses within 20 working days. The Review Commission Freedom 
of Information Act Officer will either grant or deny a request for 
records within 20 working days after receiving the request.
    (b) Extensions of response time in unusual circumstances. In unusual 
circumstances, the Review Commission may extend the time limit 
prescribed in paragraph (a) of this section by not more than 10 working 
days. The extension may be made by written or telephonic notice to the 
requester and will include an explanation of the reasons for the 
extension and will indicate the date on which a determination is 
expected to be made. ``Unusual circumstances'' exists, but only to the 
extent reasonably necessary to the proper processing of the particular 
request, when there is a need to:
    (1) Search for and collect the requested records from field 
facilities or other establishments separate from the office processing 
the request;
    (2) Search for, collect, and appropriately examine a voluminous 
amount of separate and distinct records which are demanded in a single 
request; or
    (3) Consult, with all practicable speed, with another agency having 
a substantial interest in the determination of the request or among two 
or more components within the Review Commission having substantial 
subject-matter interest therein.
    (c) Additional extension. A requester shall be notified when it 
appears that a request cannot be completed within the allowable time (20 
working days plus a 10 working day extension). In such instances, the 
requester will be provided an opportunity to limit the scope of the 
request so that it may be processed in the time limit, or to agree to a 
reasonable alternative time frame for processing.
    (d) Multitrack processing. To ensure the most equitable treatment 
possible for all requesters, the Commission will process requests on a 
first-in, first-out basis using a two track processing system based upon 
the estimated time it will take to process the request.
    (1) The first track is for requests of simple to moderate complexity 
that are expected to be completed within 20 working days.
    (2) The second track is for requests involving ``unusual 
circumstances'' that are expected to take between 21 to 30 working days 
to complete and those that, because of their unusual volume or other 
complexity, are expected to take more than 30 working days to complete.
    (3) Requesters should assume, unless notified by the Review 
Commission, that their request is in the first track. The Review 
Commission will notify requesters when their request is placed in the 
second track for processing and that notification will include the 
estimated time for completion. Should subsequent information 
substantially change the estimated time to process a request, the 
requester will be notified telephonically or in writing. In the case of 
a request expected to take more than 30 working day for action, a 
requester may modify the request to allow it to be processed faster or 
to reduce the cost of processing. Partial responses may be sent to 
requesters as documents are obtained by the FOIA office from the 
supplying offices.
    (e) Expedited processing. (1) The Commission may place a person's 
request at the front of the queue for the appropriate track for that 
request upon receipt of a written request that clearly demonstrates a 
compelling need for expedited processing. Requesters must provide 
detailed explanations to support their expedited requests. For purposes 
of determining expedited processing, the term compelling need means:
    (i) That a failure to obtain requested records on an expedited basis 
could reasonably be expected to pose an imminent threat to the life or 
physical safety of any individual; or
    (ii) That a request is made by a person primarily engaged in 
disseminating information, and that person establishes that there is an 
urgency to inform the public concerning actual or alleged Federal 
Government activity.

[[Page 288]]

    (2) A person requesting expedited processing must include a 
statement certifying the compelling need given to be true and correct to 
the best of his or her knowledge and belief. The certification 
requirement may be waived by the Review Commission as a matter of agency 
discretion.
    (3) The FOIA Officer will make the initial determination whether to 
grant or deny a request for expedited processing and will notify a 
requester within 10 calendar days after receiving the request whether 
its processing will be expedited.
    (4) Administrative appeals of a denial of an expedited processing 
request will be handled with expeditious consideration.
    (f) Content of denial. When the Freedom of Information Act Officer 
denies a request, the notice of the denial shall state the reason for it 
and that the denial may be appealed as specified in paragraph (g) of 
this section. A refusal by the Freedom of Information Act Officer to 
process the request because the requester has not made advance payment 
or given a satisfactory assurance of full payment required under 
Sec. 2201.8(f) may be treated as a denial of the request and appealed 
under paragraph (g) of this section. When release of entire records is 
denied in whole or in part, a reasonable effort will be made to estimate 
the volume of any requested matter that is denied, unless providing such 
an estimate would harm an interest protected by the exemption(s) under 
which the matter has been denied.
    (g) Appeal of denial. A denial of a request may be appealed in 
writing to the Chairman of the Commission within 30 working days after 
the requester receives notice of the denial. The Chairman shall act on 
the appeal under 5 U.S.C. 552(a)(6)(ii) within 20 working days after the 
receipt of the appeal. If the Chairman wholly or partially upholds the 
denial of the request, he shall notify the requesting person that he may 
obtain judicial review of the Chairman's action under 5 U.S.C. 
552(a)(4)(B)-(G).
    (h) Deletions. The amount of information deleted from records shall 
be indicated on the released portion of the record, unless including 
that indication would harm an interest protected by the exemption under 
which the deletion is made. If technically feasible, the amount of the 
information deleted shall be indicated at the place in the record where 
the deletion is made.

[53 FR 17930, May 19, 1988, as amended at 65 FR 24131, Apr. 25, 2000]



Sec. 2201.8  Fees for copying, searching, and review.

    (a) Discretion in charging fees--(1) Fees required unless waived. 
The Freedom of Information Act Officer shall charge the fees in 
paragraph (b) of this section unless the fees for a request are less 
than $10, in which case no fees shall be charged. The Freedom of 
Information Act Officer shall, however, waive the fees in the 
circumstances stated in Sec. 2201.9.
    (2) News media requests deemed not commercial. Requests made for a 
commercial use are generally subject to higher fees than requests from a 
representative of the news media. For the purpose of this section, a 
request from a representative of the news media that supports the news 
dissemination function of the requester will not be considered to be for 
a commercial use.
    (3) Determination of commercial use request. A commercial use 
request refers to a request from or on behalf of one who seeks 
information for a use or purpose that furthers the commercial, trade or 
profit interests of the requester or the person on whose behalf the 
request is made. Where the Freedom of Information Act Officer has 
reasonable cause to doubt the use to which a requester will put the 
records sought, or where that use is not clear from the request itself, 
the Freedom of Information Act Officer may seek clarification from the 
requester before assigning the request to a specific category for fee 
assessment purposes.
    (b) Types of fees--(1) Copying fee. The fee per copy of each page up 
to 8\1/2\x14 shall be $.25 per copy per page. 
Copying fees shall not be charged for the first 100 pages of copies 
unless the copies are requested for a commercial use. One copy of a 
Commission or judge's decision will be provided free of charge. See 
Sec. 2201.5(a).
    (2) Search fee. The fee for searching for information and records 
shall be $19

[[Page 289]]

per hour of clerical time and $46 per hour of professional time. Fees 
for searches of computerized records shall be the actual cost to the 
Commission but shall not exceed $300 per hour. This fee includes machine 
time and that of the operator and clerical personnel. The fee for 
computer printouts shall be $.40 per page. Commercial requesters shall 
be charged for all search time. Time spent on unsuccessful searches 
shall be fully charged. However, search fees shall be limited or not 
charged as follows:
    (i) Easily identifiable decisions. Search fees shall not be charged 
for searching for decisions that the requester identifies by name and 
date, or by docket number, or that are otherwise easily identifiable.
    (ii) Educational, scientific or news media requests. No fee shall be 
charged if the request is not for a commercial use and is by an 
educational or scientific institution, whose purpose is scholarly or 
scientific research, or by a representative of the news media.
    (iii) Other non-commercial requests. No fee shall be charged for the 
first two hours of searching if the request is not for a commercial use 
and is not by an educational or scientific institution, or a 
representative of the news media.
    (iv) Requests for records about self. No fee shall be charged to 
search for records filed in the Commission's systems of records if the 
requester is the subject of the requested records. See the Privacy Act 
of 1974, 5 U.S.C. 552a(f)(5) (fees to be charged only for copying).
    (3) Review fee. A review fee shall be charged only for commercial 
requests. The review fee shall be charged for the initial examination of 
documents located in response to a request to determine if it may be 
withheld from disclosure, and for the excision of withholdable portions, 
but shall not be charged for review by the Chairman under 
Sec. 2201.7(c). The review fee is $20 per hour.
    (c) Aggregation of requests. When the Freedom of Information Act 
Officer reasonably believes that a requester, or a group of requesters 
acting in concert, is attempting to break a request into a series of 
requests for the purpose of evading the assessment of fees, the Freedom 
of Information Act Officer may aggregate any such requests and charge 
accordingly.
    (d) Certification or authentication. The fee for certification or 
authentication shall be $3 per document.
    (e) Fees likely to exceed $25. If copying or search charges are 
likely to exceed $25, the Freedom of Information Act Officer shall 
notify the requester of the estimated amount of the charges, unless the 
requester has indicated in advance a willingness to pay fees as high as 
those anticipated. The notification shall offer the requester an 
opportunity to confer with the Freedom of Information Act Officer to 
reformulate the request to meet the requester's needs at a lower cost.
    (f) Advance payments. Advance payment of fees will generally not be 
required. If, however, charges are likely to exceed $250, the Freedom of 
Information Act Officer shall notify the requester of the likely cost 
and: if the requester has a history of prompt payment of FOIA charges, 
obtain satisfactory assurance of full payment; or if the requester has 
no history of payment, require an advance payment of an amount up to the 
full estimated charge. If the requester has previously failed to pay a 
fee within 30 days of the date of billing, the Freedom of Information 
Act Officer may request the requester to pay the full amount owed plus 
any interest owed as provided in paragraph (g) of this section or 
demonstrate that he has, in fact, paid the fee, and to make an advance 
payment of the full amount of the estimated charges before the Freedom 
of Information Act Officer begins to process the new request or a 
pending request from that requester.
    (g) Interest on unpaid bills. The Freedom of Information Act Officer 
shall begin assessing interest charges on unpaid bills starting on the 
thirty-first day after the date the bill was sent. The accrual of 
interest will be stayed when the Freedom of Information Act Officer 
receives a check in payment. Interest will be at the rate described in 
31 U.S.C. 3717 and will accrue from the date of billing.
    (h) Debt collection procedures. If bills are unpaid 60 days after 
the mailing of a written notice to the requester, the

[[Page 290]]

Freedom of Information Act Officer may resort to the debt collection 
procedures set out in the Debt Collection Act of 1982, Pub. L. 97-365, 
including disclosure to consumer credit reporting agencies (see 26 
U.S.C. 6103) and use of collection agencies to encourage payment. See 31 
U.S.C. 3718 and 3302.

[53 FR 17930, May 19, 1988, as amended at 61 FR 14025, Mar. 29, 1996]



Sec. 2201.9  Waiver of fees.

    (a) General. The Freedom of Information Act Officer shall waive part 
or all of the fees assessed under Sec. 2201.8(b) if two conditions are 
satisfied: Disclosure of the information is in the public interest 
because it is likely to contribute significantly to public understanding 
of the operations or activities of the government; and disclosure is not 
primarily in the commercial interest of the requester. The Freedom of 
Information Act Officer shall afford the requester the opportunity to 
show that he comes within these two conditions. The following factors 
may be considered in determining whether the two conditions are 
satisfied:
    (1) Whether the subject of the requested records concerns the 
operations or activities of the government;
    (2) Whether the disclosure is likely to contribute significantly to 
public understanding of government operations or activities;
    (3) Whether the requester has a commercial interest that would be 
furthered by the requested disclosure; and, if so, whether the magnitude 
of the identified commercial interest of the requester is sufficiently 
large, in comparison with the public interest in disclosure, that 
disclosure is primarily in the commercial interest of the requester.
    (b) Partial waiver of fees. If the two conditions stated in 
paragraph (a) of this section are met, the Freedom of Information Act 
Officer will ordinarily waive all fees. In exceptional cases, however, 
only a partial waiver may be granted if the request for records would 
impose an exceptional burden or require an exceptional expenditure of 
Commission resources, and the request for a waiver minimally satisfies 
the ``public interest'' requirement in paragraph (a) of this section.



Sec. 2201.10  Maintenance of statistics.

    (a) The Freedom of Information Act Officer shall maintain records 
of:
    (1) The number of determinations made by the agency not to comply 
with the requests for records made to the agency and the reasons for 
those determinations;
    (2) The number of appeals made by persons, the results of those 
appeals, and the reason for the action upon each appeal that results in 
a denial of information;
    (3) A complete list of all statutes that the agency used to 
authorize the withholding of information under 5 U.S.C. 552(b)(3), which 
exempts information that is specifically exempted from disclosure by 
other statutes;
    (4) A description of whether a court has upheld the decision of the 
agency to withhold information under each of those statutes cited, and a 
concise description of the scope of any information upheld;
    (5) The number of requests for records pending before the agency as 
of September 30 of the preceding year and the median number of days that 
these requests had been pending before the agency as of that date;
    (6) The number of requests for records received by the agency and 
the number of requests the agency processed;
    (7) The median number of days taken by the agency to process 
different types of requests;
    (8) The total amount of fees collected by the agency for processing 
requests;
    (9) The average amount of time that the agency estimates as 
necessary, based on the past experience of the agency, to comply with 
different types of requests;
    (10) The number of full-time staff of the agency devoted to the 
processing of requests for records under this section; and
    (11) The total amount expended by the agency for processing these 
requests.
    (b) The Freedom of Information Act Officer shall annually, on or 
before February 1 of each year, prepare and submit to the Attorney 
General an annual report covering each of the categories of records to 
be maintained in accordance with paragraph (a) of this

[[Page 291]]

section, for the previous fiscal year. A copy of the report will be 
available for public inspection and copying at the Commission 
Information Office and a copy will accessible through the Internet at 
OSHRC's World Wide Web site at http://www.oshrc.gov.

[65 FR 24131, Apr. 25, 2000]

                          PART 2202 [RESERVED]



PART 2203--REGULATIONS IMPLEMENTING THE GOVERNMENT IN THE SUNSHINE ACT--Table of Contents




Sec.
2203.1  Purpose and scope.
2203.2  Definitions.
2203.3  Public attendance at Commission meetings.
2203.4  Procedures applicable to regularly-scheduled meetings.
2203.5  Procedures applicable to other meetings.
2203.6  Certification by the General Counsel.
2203.7  Transcripts, recordings and minutes of closed meetings.

    Authority: 29 U.S.C. 661(g); 5 U.S.C. 552b(d)(4); 5 U.S.C. 552b(g).

    Source: 50 FR 51679, Dec. 19, 1985, unless otherwise noted.



Sec. 2203.1  Purpose and scope.

    This part applies to all meetings of the Occupational Safety and 
Health Review Commission. Its purpose is to implement the Government in 
the Sunshine Act, 5 U.S.C. 552b. The rules in this part are intended to 
open to public observation, to the extent practicable, the meetings of 
the Commission, while preserving the Commission's ability to fulfill its 
adjudicatory responsibilities and protecting the rights of individuals.



Sec. 2203.2  Definitions.

    For the purposes of this part:
    Expedited closing procedure means the simplified procedures 
described at 5 U.S.C. 552b(d)(4) for announcing and closing certain 
agency meetings.
    General Counsel means the General Counsel of the Commission, the 
Deputy General Counsel, or any other person designated by the General 
Counsel to carry out his responsibilities under this part.
    Meeting means the deliberations of at least two Commissioners, where 
such deliberations determine or result in the joint conduct or 
disposition of ``official Commission business.'' A conference telephone 
call among the Commissioners is a meeting if it otherwise qualifies as a 
meeting under this paragraph. The term does not include:
    (a) The deliberations required or permitted under Secs. 2203.4(d) 
and 2203.5, e.g., a discussion of whether to open or close a meeting 
under this part;
    (b) Business that is conducted by circulating written materials 
sequentially among the Commissioners for their consideration on an 
individual basis;
    (c) A gathering at which the Chairman of the Commission seeks the 
advice of the other Commissioners on the carrying out of a function that 
has been vested in the Chairman, by statute or otherwise; or
    (d) Informal discussions of the Commissioners that clarify issues 
and expose varying views but do not effectively predetermine official 
actions.
    Official Commission business means matters that are the 
responsibility of the Commission acting as a collegial body, including 
the adjudication of litigated cases. The term does not include matters 
that are the responsibility of the Commission's Chairman. See, e.g., 29 
U.S.C. 661(e).
    Regularly-scheduled meetings means meetings of the Commission that 
are held at 10:00 a.m. on Thursday of each week, except on legal 
holidays. The term includes regularly-scheduled meetings that have been 
rescheduled for another time or day.



Sec. 2203.3  Public attendance at Commission meetings.

    (a) Policy. Commissioners will not jointly conduct or dispose of 
official Commission business in a meeting unless it is conducted in 
accordance with this part. Because the Commission was created for the 
purpose of adjudicating litigated cases, it can be expected that most of 
its meetings will be closed to the public. However, meetings that do not 
involve Commission adjudication or discussion of issues in cases before 
it will be open to the extent practicable.

[[Page 292]]

The public will not be allowed to participate in discussions during open 
meetings.
    (b) Grounds for closing meetings. Except where the Commission finds 
that the public interest requires otherwise, all or part of a meeting 
may be closed to the public, and information about a meeting may be 
withheld from the public, where the Commission determines that the 
meeting, or part of the meeting, or information about the meeting, is 
likely to:
    (1) Disclose matters that are:
    (i) Specifically authorized under criteria established by an 
Executive order to be kept secret in the interests of national defense 
or foreign policy and
    (ii) In fact properly classified pursuant to such Executive order;
    (2) Relate solely to the internal personnel rules and practices of 
the Commission;
    (3) Disclose matters specifically exempted from disclosure by 
statute (other than section 552 of title 5), Provided, That such statute
    (i) Requires that the matter be withheld from the public in such a 
manner as to leave no discretion on the issue, or
    (ii) Establishes particular criteria for withholding or refers to 
particular types of matters to be withheld;
    (4) Disclose trade secrets and commercial or financial information 
obtained from a person are privileged or confidential;
    (5) Involve accusing any person of a crime, or formally censuring 
any person;
    (6) Disclose information of a personal nature where disclosure would 
constitute a clearly unwarranted invasion of personal privacy;
    (7) Disclose investigatory records compiled for law enforcement 
purposes, or information which if written would be contained in such 
records, but only to the extent that the production of such records or 
information would:
    (i) Interfere with enforcement proceedings,
    (ii) Deprive a person of a right to a fair trail or an impartial 
adjudication,
    (iii) Constitute an unwarranted invasion of personal privacy,
    (iv) Disclose the identity of a confidential source and, in the case 
of a record compiled by a criminal law enforcement authority in the 
course of a criminal investigation, or by an agency conducting a lawful 
national security intelligence investigation, confidential information 
furnished only by the confidential source,
    (v) Disclose investigative techniques and procedures, or
    (vi) Endanger the life or physical safety of law enforcement 
personnel;
    (8) Disclose information contained in or related to examination, 
operating, or condition reports prepared by, on behalf of, or for the 
use of an agency responsible for the regulation or supervision of 
financial institutions;
    (9) Disclose information the premature disclosure of which would:
    (i) Be likely to (A) lead to significant financial speculation in 
currencies, securities, or commodities, or (B) significantly endanger 
the stability of any financial institution, or
    (ii) Be likely to significantly frustrate implementation of a 
proposed Commission action, except where the Commission has already 
disclosed to the public the content or nature of its proposed action, or 
where the Commission is required by law to make such disclosure on its 
own initiative prior to taking final agency action on such proposal; or
    (10) Specifically concern the Commission's issuance of a subpoena or 
the Commission's participation in a civil action or proceeding, an 
action in a foreign court or international tribunal, or an arbitration, 
or the initiation, conduct, discussion or disposition by the Commission 
of a particular case of formal Commission adjudication.
    (c) Regularly-scheduled meetings. The Commission will hold 
regularly-scheduled meetings for the purpose of considering matters that 
may properly be closed to the public under paragraph (b)(4), (8), (9)(i) 
or (10) of this section, or any combination thereof. Primarily, these 
meetings will be held for the purpose of considering or disposing of 
particular cases of formal Commission adjudication. The Commission 
therefore expects to close all regularly-scheduled meetings. The 
procedures established in Sec. 2203.4 apply to the public announcement 
and closing of regularly-scheduled meetings.

[[Page 293]]

    (d) Other Commission meetings. All other meetings of the Commission 
will be open to public observation unless the Commission determines that 
all or part of a meeting is likely to disclose information of the kind 
set forth in any subparagraph of paragraph (b) of this section. The 
procedures established in Sec. 2203.5 apply to the public announcement 
of Commission meetings that are not regularly scheduled and to the total 
or partial closing of these meetings.

[50 FR 51679, Dec. 19, 1985, as amended at 62 FR 35963, July 3, 1997]



Sec. 2203.4  Procedures applicable to regularly-scheduled meetings.

    (a) Statutory authority to adopt expedited closing procedure. The 
Government in the Sunshine Act provides, at 5 U.S.C. 552b(d)(4), that 
qualified agencies may establish by regulation expedited procedures for 
announcing and closing certain meetings. Specifically, ``[a]ny agency, a 
majority of whose meetings may properly be closed to the public pursuant 
to paragraph (4), (8), (9)(A), or (10) of subsection (c) [of the 
statute], or any combination thereof, may provide by regulation for the 
closing of such meetings or portions thereof [through the expedited 
closing procedure].'' See Sec. 2203.3(b)(4), (8), (9)(i) and (10), which 
are equivalent to the referenced paragraphs of the statute. The 
Commission had determined, for the reasons stated in paragraph (b) of 
this section, that it is qualified to adopt implementing regulations 
under 5 U.S.C. 552b(d)(4). It hereby announces that it will follow the 
expedited closing procedure authorized under that statutory provision in 
conducting its regularly-scheduled meetings.
    (b) Commission qualification to adopt expedited closing procedure. 
The Commission has determined that a majority of its meetings may be 
closed to the public under 5 U.S.C. 552b(c)(10). See Sec. 2203.3(b)(10). 
The Commission is an adjudicatory agency that has no regulatory 
functions. It was established to resolve disputes arising out of 
enforcement actions brought by the Secretary of Labor under the 
Occupational Safety and Health Act of 1970, 29 U.S.C. 651-678. See 29 
U.S.C. 659(c). The Commission's experience under the Government in the 
Sunshine Act has been that almost all of its meetings have been closed, 
in whole or in part, under 5 U.S.C. 552b(c)(10) because they involved 
only formal agency adjudication of specific cases.
    (c) Announcements. Regularly-scheduled meetings of the Commission 
will be held at 10 a.m. every Thursday, except for legal holidays, in 
the Hearing Room (Suite 965) of the Commission's national office at One 
Lafayette Centre, 1120-20th Street NW., Washington, DC 20036-3419. If a 
regularly-scheduled meeting is scheduled, public announcement of the 
time, date and place of the meeting will be made at the earliest 
practicable time by posting a notice in a prominent place at the 
Commission's national office. If a regularly-scheduled meeting is 
cancelled, a notice of cancellation will be posted in the same manner. 
Information about the subject of each regularly-scheduled meeting will 
be made available in the Office of the General Counsel, telephone number 
(202) 606-5410, at the earliest practicable time. However, no 
information that may be withheld under Sec. 2203.3(b) will be made 
available, and individual items may be added to or deleted from the 
agenda at any time. Inquiries from the public regarding any regularly-
scheduled meeting will be directed to the Office of the General Counsel.
    (d) Voting. At the beginning of each regularly-scheduled meeting, 
the Commission will vote on whether to close the meeting. No proxy vote 
will be permitted and the vote of each Commissioner will be recorded. 
This record of each Commissioner's vote will be made available to the 
public at the Commission's national office immediately after the 
meeting.

[50 FR 51679, Dec. 19, 1985, as amended at 58 FR 26066, Apr. 30, 1993]



Sec. 2203.5  Procedures applicable to   other meetings.

    (a) Announcements--(1) Meetings announced. Public announcement will 
be made of every meeting that is not a regularly-scheduled meeting. This 
announcemet will state the time, place, and subject of the meeting, 
whether it is to be open or closed, and the name and phone number of the 
person designated to respond to requests

[[Page 294]]

for information about the meeting. The announcement will be made at 
least one week before the meeting unless at least two Commissioners 
determine by a recorded vote that Commission business requires that such 
meeting be called at an earlier date. In that case, the Commission will 
make its public announcement at the earliest practicable time.
    (2) Changes announced. The time or place of a meeting may be changed 
following the public announcement required by paragraph (a)(1) of this 
section, but only if public announcement of the change is made at the 
earliest practicable time. The subject of a meeting, or the 
determination by the Commission to open or close all or part of a 
meeting, may also be changed following the public announcement required 
by paragraph (a)(1) of this section; however, these changes may be made 
only if:
    (i) At least two Commissioners determine by recorded vote that 
Commission business so requries and that no earlier announcement of the 
change was possible and
    (ii) Public announcement of the change and the vote of each 
Commissioner on the change is made at the earliest practicable time.
    (3) Form of announcements. The announcements requried under 
paragraph (a) of this section will be made by posting a notice in a 
prominent place at the Commission's national office. In addition, 
immediately following each announcement required by paragraph (a) of 
this section, notice of the same matters described in the posted notice 
will also be submitted for publication in the Federal Register.
    (b) Voting--(1) Requirement that vote be taken. Action to close all 
or part of a meeting that is not regularly scheduled or to withhold 
information about a meeting that is not regularly scheduled, under any 
paragraph of Sec. 2203.3(b), will be taken only when at least two 
Commissioners vote to take the proposed action.
    (2) Separate votes required. A separate vote of the Commissioners 
will be taken with respect to each Commission meeting or each part of a 
meeting that is proposed to be closed under paragraph (b) of this 
section or with respect to any information that is proposed to be 
withheld under paragraph (b) of this section.
    (3) Single vote on a series of meetings. A single vote may be taken 
with respect to closing all or part of a series of meetings under 
paragraph (b) of this section, or with respect to any information 
concerning a series of meetings, so long as each meeting in the series 
involves the same particular matters and is scheduled to be held no more 
than 30 days after the initial meeting in the series.
    (4) Public requests to close meetings. Any person whose interest may 
be directly affected by a portion of an open meeting may request that 
the Commission close that portion to the public for any of the reasons 
referred to in paragraph (b)(5), (6) or (7) of Sec. 2203.3. Upon the 
motion of any Commissioner, the Commission will vote by recorded vote 
whether to grant the request.
    (5) Proxy votes; recording of votes. No proxy vote will be permitted 
for any vote required under paragraph (b) of this section. The vote of 
each participating Commissioner will be recorded.
    (6) Public announcement of votes. Within one day after any vote 
taken under paragraph (b) of this section, the vote of each Commissioner 
on the question will be made publicly available at the Commission's 
national office. If any part of a meeting is to be closed under 
paragraph (b) of this section, a full written explanation of the 
Commission's action, together with a list of all persons expected to 
attend the meeting and their affiliation, will be made publicly 
available at the Commission's national office within one day after the 
vote to close.



Sec. 2203.6  Certification by the General Counsel.

    For every meeting closed under any provision of these rules, the 
General Counsel will be asked to certify before the meeting that in his 
opinion the meeting may properly be closed to the public, and to state 
which exemptions he has relied upon. A copy of this certification, 
together with a statement (from the Commissioner presiding over the 
meeting) setting forth the time and place of the meeting and the persons

[[Page 295]]

present, shall be retained by the Commission as part of the transcript, 
recording or minutes of the meeting described in Sec. 2203.7.



Sec. 2203.7  Transcripts, recordings and minutes of closed meetings.

    (a) Record of meeting. The Commission will make a complete 
transcript or electronic recording adequate to record fully the 
proceedings of each meeting, or portion of a meeting, closed to the 
public. However, if all or part of a meeting is closed under paragraph 
(b)(8), (9)(i) or (10) of Sec. 2203.3, the Commission shall maintain 
either such a transcript or recording, or a set of minutes. Such minutes 
will fully and clearly describe all matters discussed and will provide a 
full and accurate summary of any actions taken, and the reasons for the 
actions. The minutes will also include a description of each of the 
views expressed on any item and a record of any roll call vote 
(reflecting the vote of each Commissioner on the question). In addition, 
the minutes will identify all documents considered in connection with 
any action.
    (b) Public access to records. The Commission will make promptly 
available to the public, at its national office, the transcript, 
electronic recording, or minutes of the discussion of any item on the 
agenda, or of any testimony of any witness received at the meeting, 
except for such item or items of such discussion or testimony as the 
Commission determines to contain information which may be withheld under 
Sec. 2203.3(b). Copies of the transcript, the minutes, or a 
transcription of the recording disclosing the identity of each speaker, 
with the deletions noted in the preceding sentence, will be furnished to 
any person at the actual cost of duplication or transcription. Requests 
to inspect or to have copies made of any transcript, electronic 
recording or set of minutes of any meeting, or any item(s) on the agenda 
of any meeting, should be made in writing to the General Counsel at the 
Office of the General Counsel, Occupational Safety and Health Review 
Commission, Room 941, One Lafayette Centre, 1120-20th Street NW., 
Washington, DC 20036-3419. The request should identify the time, date, 
and place of the meeting and briefly describe the items sought. The 
Commission will maintain a complete verbatim copy of the transcript, a 
complete copy of the minutes, or a complete electronic recording of each 
closed meeting, or closed portion of a meeting, for a period of at least 
two years after the meeting, or until one year after the conclusion of 
any Commission proceeding with respect to which all or part of the 
meeting was held, whichever occurs later.

[50 FR 51679, Dec. 19, 1985, as amended at 58 FR 26066, Apr. 30, 1993]



PART 2204--IMPLEMENTATION OF THE EQUAL ACCESS TO JUSTICE ACT IN PROCEEDINGS BEFORE THE OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION--Table of Contents




                      Subpart A--General Provisions

Sec.
2204.101  Purpose of these rules.
2204.102  Definitions.
2204.103  When the EAJA applies.
2204.104  Proceedings covered.
2204.105  Eligibility of applicants.
2204.106  Standards for awards.
2204.107  Allowable fees and expenses.
2204.108  Delegation of authority.

             Subpart B--Information Required From Applicants

2204.201  Contents of applicaton.
2204.202  Net worth exhibit.
2204.203  Documentation of fees and expenses.

           Subpart C--Procedures for Considering Applications

2204.301  Filing and service of documents.
2204.302  When an application may be filed.
2204.303  Answer to application.
2204.304  Reply.
2204.305  Comments by other parties.
2204.306  Settlement.
2204.307  Further proceedings.
2204.308  Decision.
2204.309  Commission review.
2204.310  Waiver.
2204.311  Payment of award.

    Authority: Sec. 203(a)(1), Pub. L. 96-481, 94 Stat. 2325 (5 U.S.C. 
504(c)(1)); Pub. L. 99-80, 99 Stat. 183.

    Source: 46 FR 48080, Sept. 30, 1981, unless otherwise noted.

[[Page 296]]


    Editorial Note: Nomenclature changes to part 2204 appear at 62 FR 
59569, Nov. 4, 1997.



                      Subpart A--General Provisions



Sec. 2204.101  Purpose of these rules.

    The Equal Access to Justice Act, 5 U.S.C. 504, provides for the 
award of attorney or agent fees and other expenses to eligible 
individuals and entities who are parties to certain administrative 
proceedings (called ``adversary adjudications'') before the Occupational 
Safety and Health Review Commission. An eligible party may receive an 
award when it prevails over the Secretary of Labor, unless the 
Secretary's position in the proceeding was substantially justified or 
special circumstances make an award unjust. The rules in this part 
describe the parties eligible for awards and the proceedings that are 
covered. They also explain how to apply for awards and the procedures 
and standards that the Commission uses to make awards.

[46 FR 48080, Sept. 30, 1981, as amended at 52 FR 5456, Feb. 23, 1987]



Sec. 2204.102  Definitions.

    For the purposes of this part,
    (a) The term agent means any person other than an attorney who 
represents a party in a proceeding before the Commission pursuant to 
Sec. 2200.22;
    (b) The term Commission means the Occupational Safety and Health 
Review Commission;
    (c) The term EAJA means the Equal Access to Justice Act, 5 U.S.C. 
504.
    (d) The term judge means an administrative law judge appointed by 
the Commission under 29 U.S.C. 661(i);
    (e) The term OSH Act means the Occupational Safety and Health Act of 
1970, 29 U.S.C. 651-678;
    (f) The term Secretary means the Secretary of Labor.

[46 FR 48080, Sept. 30, 1981, as amended at 52 FR 5456, Feb. 23, 1987]



Sec. 2204.103  When the EAJA applies.

    The EAJA applies to adversary adjudications before the Commission 
pending or commenced on or after August 5, 1985. The EAJA also applies 
to adversary adjudications commenced on or before October 1, 1984, and 
finally disposed of before August 5, 1985, if an application for an 
award of fees and expenses, as described in subpart B of these rules, 
has been filed with the Commission within 30 days after August 5, 1985.

[52 FR 5456, Feb. 23, 1987]



Sec. 2204.104  Proceedings covered.

    The EAJA applies to adversary adjudications before the Commission. 
These are adjudications under 5 U.S.C. 554 and 29 U.S.C. 659(c) in which 
the position of the Secretary is represented by an attorney or other 
representative. The types of proceedings covered are the following 
proceedings under section 10(c), 29 U.S.C. 659(c), of the OSH Act:
    (a) Contests of citations, notifications, penalties, or abatement 
periods by an employer;
    (b) Contests of abatement periods by an affected employee or 
authorized employee representative; and
    (c) Petitions for modification of the abatement periods by an 
employer.



Sec. 2204.105  Eligibility of applicants.

    (a) To be eligible for an award of attorney or agent fees and other 
expenses under the EAJA, the applicant must be a party to the adversary 
adjudication. The term ``party'' is defined in 5 U.S.C. 551(3). The 
applicant must show that it satisfies the conditions of eligibility set 
out in this subpart and subpart B.
    (b) The types of eligible applicants are as follows:
    (1) The sole owner of an unincorporated business who has a net worth 
of not more than $7 million, including both personal and business 
interest, and employs not more than 500 employees;
    (2) A charitable or other tax-exempt organization described in 
section 501(c)(3) of the Internal Revenue Code (26 U.S.C. 501(c)(3)) 
with not more than 500 employees;
    (3) A cooperative association as defined in section 15(a) of the 
Agricultural Marketing Act (12 U.S.C. 1141j(a)) with not more than 500 
employees;
    (4) Any other partnership, corporation, association, unit of local 
government, or public or private organization that has a net worth of 
not more than $7 million and employs not more than 500 employees; and

[[Page 297]]

    (5) An individual with a net worth of not more than $2 million.
    (c) For the purpose of eligibility, the net worth and number of 
employees of an applicant shall be determined as of the date the notice 
of contest was filed, or, in the case of a petition for modification of 
abatement period, the date the petition was received by the Commission 
under Sec. 2200.34(d).
    (d) An applicant who owns an unincorporated business shall be 
considered as an ``individual'' rather than a ``sole owner of an 
unincorporated business'' only if the issues on which the applicant 
prevails are related primarily to personal interests rather than 
business interests.
    (e) For the purpose of determining eligibility under the EAJA, the 
employees of an applicant include all persons who regularly perform 
services for remuneration for the applicant under the applicant's 
direction and control. Part-time employees shall be included on a 
proportional basis.
    (f) The net worth and number of employees of the applicant and all 
of its affiliates shall be aggregated to determine eligibility. Any 
individual, corporation, or other entity that directly or indirectly 
controls or owns a majority of the voting shares or other interest of 
the applicant, or any corporation or other entity of which the applicant 
directly or indirectly owns or controls a majority of the voting shares 
or other interest, will be considered an affiliate for purposes of this 
part, unless such treatment would be unjust and contrary to the purposes 
of the EAJA in light of the actual relationship between the affiliated 
entities. In addition, financial relationships of the applicant other 
than those described in this paragraph may constitute special 
circumstances that would make an award unjust.

[46 FR 48080, Sept. 30, 1981, as amended at 52 FR 5456, Feb. 23, 1987; 
62 FR 59569, Nov. 4, 1997]



Sec. 2204.106  Standards for awards.

    (a) A prevailing applicant may receive an award for fees and 
expenses in connection with a proceeding, or in a discrete substantive 
portion of the proceedings, unless the position of the Secretary was 
substantially justified. The position of the Secretary includes, in 
addition to the position taken by the Secretary in the adversary 
adjudication, the action or failure to act by the Secretary upon which 
the adversary adjudication is based. The burden of persuasion that an 
award should not be made to an eligible prevailing applicant because the 
Secretary's position was substantially justified is on the Secretary.
    (b) An award shall be reduced or denied if the applicant has unduly 
or unreasonably protracted the proceeding. An award shall be denied if 
special circumstances make an award unjust.

[46 FR 48080, Sept. 30, 1981, as amended at 52 FR 5456, Feb. 23, 1987]



Sec. 2204.107  Allowable fees and   expenses.

    (a) Awards shall be based on rates customarily charged by persons 
engaged in the business of acting as attorneys, agents and expert 
witnesses, even if the services were made available without charge or at 
a reduced rate to the applicant.
    (b) An award for the fee of an attorney or agent under these rules 
shall not exceed $125 per hour, unless the Commission determines by 
regulation that an increase in the cost of living or a special factor, 
such as the limited availability of qualified attorneys or agents for 
Commission proceedings, justifies a higher fee. An award to compensate 
an expert witness shall not exceed the highest rate at which the 
Secretary pays expert witnesses. However, an award may include the 
reasonable expenses of the attorney, agent or witness as a separate 
item, if the attorney, agent or witness ordinarily charges clients 
separately for such expenses.
    (c) In determining the reasonableness of the fee sought for an 
attorney, agent or expert witness, the Commission shall consider the 
following:
    (1) If the attorney, agent, or witness is in private practice, his 
or her customary fee for similar services, or, if an employee of the 
applicant, the fully allocated cost of the services;
    (2) The prevailing rate for similar services in the community in 
which the attorney, agent, or witness ordinarily perform services;

[[Page 298]]

    (3) The time actually spent in the representation of the applicant;
    (4) The time reasonably spent in light of the difficulty or 
complexity of the issues in the proceeding; and
    (5) Such other factors as may bear on the value of the services 
provided.
    (d) The reasonable cost of any study, analysis, engineering report, 
test, project or similar matter prepared on behalf of a party may be 
awarded, to the extent that the charge for the service does not exceed 
the prevailing rate for similar services, and the study or other matter 
was necessary for preparation of the applicant's case.

[46 FR 48080, Sept. 30, 1981, as amended at 62 FR 35964, July 3, 1997]



Sec. 2204.108  Delegation of authority.

    The Commission delegates to each judge authority to entertain and, 
subject to Sec. 2204.309, take final action on applications for an award 
of fees and expenses arising from the OSH Act cases that are assigned to 
the judge under section 12(j) of the OSH Act, 29 U.S.C. 661(i). However, 
the Commission retains its right to consider an application for an award 
of fees and expenses without assignment to a judge or to assign such an 
application to a judge other than the one to whom the underlying OSH Act 
case is assigned. When entertaining an application for an award of fees 
and expenses pursuant to this section, each judge is authorized to take 
any action that the Commission may take under this part, with the 
exception of actions provided in Secs. 2204.309 and 2204.310.



             Subpart B--Information Required From Applicants



Sec. 2204.201  Contents of application.

    (a) An application for an award of fees and expenses under the EAJA 
shall identify the applicant and the proceeding for which an award is 
sought. The application shall show that the applicant has prevailed and 
identify the position of the Secretary that the applicant alleges was 
not substantially justified. The application also shall state the number 
of employees of the applicant and describe briefly the type and purpose 
of its organization or business.
    (b) The application also shall include a statement that the 
applicant's net worth does not exceed $2 million (if an individual) or 
$7 million (for all other applicants). However, an applicant may omit 
this statement if :
    (1) It attaches a copy of a ruling by the Internal Revenue Service 
that it qualifies as an organization described in section 501(c)(3) of 
the Internal Revenue Code (26 U.S.C. 501(c)(3)) or, in the case of a 
tax-exempt organization not required to obtain a ruling from the 
Internal Revenue Service on its exempt status, a statement that 
describes the basis for the applicant's belief that it qualifies under 
such section; or
    (2) It states that it is a cooperative association as defined in 
section 15(a) of the Agricultural Marketing Act (12 U.S.C. 1141j(a)).
    (c) The application shall state the amount of fees and expenses for 
which an award is sought.
    (d) The application also may include any other matters that the 
applicant wishes the Commission to consider in determining whether and 
in what amount an award should be made.
    (e) The application shall be signed by the applicant or an 
authorized officer or attorney of the applicant. It also shall contain 
or be accompanied by a written verification under oath or under penalty 
of perjury that the information provided in the application is true.

[46 FR 48080, Sept. 30, 1981, as amended at 52 FR 5456, Feb. 23, 1987]



Sec. 2204.202  Net worth exhibit.

    (a) Each applicant except a qualified tax-exempt organization or 
cooperative association shall provide with its application a detailed 
exhibit showing the net worth of the applicant as of the date specified 
by Sec. 2204.105(c). The exhibit may be in any form convenient to the 
applicant that provides full disclosure of the applicant's assets and 
liabilities and is sufficient to determine whether the applicant 
qualifies under the standards in this part. The Commission may require 
an applicant to file additional information to determine its eligibility 
for an award.

[[Page 299]]

    (b)(1) The net worth exhibit shall be included in the public record 
of the proceeding except as provided in paragraph (b)(2) of this 
section.
    (2) An applicant that objects to public disclosure of information in 
any portion of the exhibit and believes there are legal grounds for 
withholding it from disclosure may submit that portion of the exhibit in 
a sealed envelope labeled ``Confidential Information,'' accompanied by a 
motion to withhold the informaion from public disclosure. The motion 
shall describe the information sought to be withheld and explain, in 
detail, why it falls within one or more of the specific exemptions from 
mandatory disclosure under the Freedom of Information Act, 5 U.S.C. 
552(b)(1)-(9), why public disclosure of the information would adversely 
affect the applicant, and why disclosure is not required in the public 
interest. The material in question shall be served on the Secretary but 
need not be served on any other party to the proceeding. If the 
Commission finds that the information should not be withheld from 
disclosure, it shall be placed in the public record of the proceeding. 
Otherwise, any request to inspect or copy the exhibit shall be disposed 
of in accordance with the Commission's procedures under the Freedom of 
Information Act, part 2201.



Sec. 2204.203  Documentation of fees and expenses.

    The application shall be accompanied by full documentation of the 
fees and expenses, including the cost of any study, analysis, 
engineering report, test, project or similar matter, for which an award 
is sought. A separate itemized statement shall be submitted for each 
professional firm or individual whose services are covered by the 
application, showing the hours spent in connection with the proceeding 
by each individual, a description of the specific services performed, 
the rate at which each fee has been computed, any expenses for which 
reimbursement is sought, the total amount claimed, and the total amount 
paid or payable by the applicant or by any other person or entity for 
the services provided. The Commission may require the applicant to 
provide vouchers, receipts, or other substantiation for any fees or 
expenses claimed.

[46 FR 48080, Sept. 30, 1981, as amended at 52 FR 5457, Feb. 23, 1987]



           Subpart C--Procedures for Considering Applications



Sec. 2204.301  Filing and service of documents.

    An EAJA application is deemed to be filed only when received by the 
Commission. In all other respects, an application for an award and any 
other pleading or document related to an application shall be filed and 
served on all parties to the proceeding in accordance with Secs. 2200.7 
and 2200.8, except as provided in Sec. 2204.202(b) for confidential 
financial information.

[62 FR 35964, July 3, 1997]



Sec. 2204.302  When an application may be filed.

    (a) An application may be filed whenever an applicant has prevailed 
in a proceeding or in a discrete substantive portion of the proceeding, 
but in no case later than thirty days after the Commission's final 
disposition of the proceeding.
    (b) If Commission review is sought or directed of a judge's decision 
as to which an application for a fee award has been filed, proceedings 
concerning the award of fees shall be stayed until there is a final 
Commission disposition of the case and the period for seeking review in 
a court of appeals expires.
    (c) If review of a Commission decision, or any item or items 
contained in that decision, is sought in the court of appeals under 
section 11 of the OSH Act, 29 U.S.C. 660, an application for an award 
filed with the Commission with regard to that decision shall be 
dismissed under 5 U.S.C. 554(c)(1) as to the item or items of which 
review is sought. If the petition for review in the court of appeals is 
thereafter withdrawn, the applicant may reinstate its application before 
the Commission within thirty days of the withdrawal.
    (d) For purposes of this section, the date of final disposition is:
    (1) The date on which the order of the judge disposing of the case 
becomes

[[Page 300]]

final under section 12(j) of the OSH Act, 29 U.S.C. 661(i); or
    (2) The date on which the order of the Commission affirming, 
modifying, or vacating the Secretary's citation or proposed penalty or 
directing other appropriate relief becomes final under section 10(c) of 
the OSH Act, 29 U.S.C. 659(c).



Sec. 2204.303  Answer to application.

    (a) Within 30 days after service of an application, the Secretary 
shall file an answer to the application.
    (b) If the Secretary and the applicant believe that the issues in 
the fee application can be settled, they may jointly file a statement of 
their intent to negotiate a settlement. The filing of this statement 
shall extend the time for filing an answer for an additional 30 days, 
and further extensions may be granted upon request.
    (c) The answer shall explain in detail any objections to the award 
requested and identify the facts relied on in support of the Secretary's 
position. If the answer is based on any alleged facts not already in the 
record of the proceeding, the Secretary shall include with the answer 
either supporting affidavits or a request for further proceedings under 
Sec. 2204.307.



Sec. 2204.304  Reply.

    Within 15 days after service of an answer, the applicant may file a 
reply. If the reply is based on any alleged facts not already in the 
record of the proceeding, the applicant shall include with the reply 
either supporting affidavits or a request for further proceedings under 
Sec. 2204.307.



Sec. 2204.305  Comments by other parties.

    Any party to a proceeding other than the applicant and the Secretary 
may file comments on an application within 30 days after it is served or 
on an answer within 15 days after it is served. A commenting party may 
not participate further in proceedings on the application unless the 
Commission determines that the public interest requires such 
participation in order to permit full exploration of matters raised in 
the comments.



Sec. 2204.306  Settlement.

    The applicant and the Secretary may agree on a proposed settlement 
of the award before final action on the application, either in 
connection with a settlement of the underlying proceeding, or after the 
underlying proceeding has been concluded. If a prevailing party and the 
Secretary agree on a proposed settlement of an award before an 
application has been field, the application shall be filed with the 
proposed settlement.



Sec. 2204.307  Further proceedings.

    (a)(1) The determination of an award shall be made on the basis of 
the record made during the proceeding for which fees and expenses are 
sought, except as provided in paragraphs (a)(2) and (a)(3) of this 
section.
    (2) On the motion of a party or on the judge's own initiative, the 
judge may order further proceedings, including discovery and an 
evidentiary hearing, as to issues other than substantial justification 
(such as the applicant's eligibility or substantiation of fees and 
expenses).
    (3) If the proceeding for which fees and expenses are sought ended 
before the Secretary had an opportunity to introduce evidence supporting 
the citation or notification of proposed penalty (for example, a 
citation was withdrawn or settled before an evidentiary hearing was 
held), the Secretary may supplement the record with affidavits or other 
documentary evidence of substantial justification.
    (b) A request that the judge order further proceedings under this 
section shall specifically identify the information sought or the 
disputed issues and shall explain why the additional proceedings are 
necessary to resolve the issues.

[46 FR 48080, Sept. 30, 1981, as amended at 52 FR 5457, Feb. 23, 1987]



Sec. 2204.308  Decision.

    The preparation and issuance of decision shall be in accordance with 
Sec. 2200.90. Additionally, the judge's decision shall include written 
findings and conclusions on the applicant's eligibility and status as a 
prevailing party and an explanation of the reasons for

[[Page 301]]

any difference between the amount requested and the amount awarded. The 
decision shall also include, if at issue, findings on whether the 
Secretary's position was substantially justified, whether the applicant 
unduly protracted the proceedings, or whether special circumstances make 
an award unjust.



Sec. 2204.309  Commission review.

    Commission review shall be in accordance with Secs. 2200.91 and 
2200.92. The applicant, the Secretary, or both may seek review of the 
judge's decision on the fee application, and the Commission may grant 
such petitions for review or direct review of the decision on the 
Commission's own initiative. The Commission delegates to each of its 
members the authority to order review of a judge's decision concerning a 
fee application. Whether to review a decision is a matter within the 
discretion of each member of the Commission. If the Commission does not 
direct review, the judge's decision on the application shall become a 
final decision of the Commission 30 days after it is received and 
docketed by the Executive Secretary of the Commission. If review is 
directed, the Commission shall issue a final decision on the application 
or remand the application to the judge for further proceedings.



Sec. 2204.310  Waiver.

    After reasonable notice to the parties, the Commission may waive, 
for good cause shown, any provision contained in this part as long as 
the waiver is consistent with the terms and purpose of the EAJA.



Sec. 2204.311  Payment of award.

    An applicant seeking payment of an award shall submit to the officer 
designated by the Secretary a copy of the Commission's final decision 
granting the award.



PART 2205--ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF HANDICAP IN PROGRAMS OR ACTIVITIES CONDUCTED BY THE OCCUPATIONAL SAFETY AND HEALTH REVIEW COMMISSION--Table of Contents




Sec.
2205.101  Purpose.
2205.102  Application.
2205.103  Definitions.
2205.104--2205.109  [Reserved]
2205.110  Self-evaluation.
2205.111  Notice.
2205.112--2205.129  [Reserved]
2205.130  General prohibitions against discrimination.
2205.131--2205.139  [Reserved]
2205.140  Employment.
2205.141--2205.148  [Reserved]
2205.149  Program accessibility: Discrimination prohibited.
2205.150  Program accessibility: Existing facilities.
2205.151  Program accessibility: New construction and alterations.
2205.152--2205.159  [Reserved]
2205.160  Communications.
2205.161--2205.169  [Reserved]
2205.170  Compliance procedures.
2205.171--2205.999  [Reserved]

    Authority: 29 U.S.C. 794.

    Source: 51 FR 22892, 22896, June 23, 1986, unless otherwise noted.



Sec. 2205.101  Purpose.

    This part effectuates section 119 of the Rehabilitation, 
Comprehensive Services, and Developmental Disabilities Amendments of 
1978, which amended section 504 of the Rehabilitation Act of 1973 to 
prohibit discrimination on the basis of handicap in programs or 
activities conducted by Executive agencies or the United States Postal 
Service.



Sec. 2205.102  Application.

    This part applies to all programs or activities conducted by the 
agency.



Sec. 2205.103  Definitions.

    For purposes of this part, the term--

[[Page 302]]

    Assistant Attorney General means the Assistant Attorney General, 
Civil Rights Division, United States Department of Justice.
    Auxiliary aids means services or devices that enable persons with 
impaired sensory, manual, or speaking skills to have an equal 
opportunity to participate in, and enjoy the benefits of, programs or 
activities conducted by the agency. For example, auxiliary aids useful 
for persons with impaired vision include readers, brailled materials, 
audio recordings, telecommunications devices and other similar services 
and devices. Auxiliary aids useful for persons with impaired hearing 
include telephone handset amplifiers, telephones compatible with hearing 
aids, telecommunication devices for deaf persons (TDD's), interpreters, 
notetakers, written materials, and other similar services and devices.
    Complete complaint means a written statement that contains the 
complainant's name and address and describes the agency's alleged 
discriminatory action in sufficient detail to inform the agency of the 
nature and date of the alleged violation of section 504. It shall be 
signed by the complainant or by someone authorized to do so on his or 
her behalf. Complaints filed on behalf of classes or third parties shall 
describe or identify (by name, if possible) the alleged victims of 
discrimination.
    Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots, rolling stock or other 
conveyances, or other real or personal property.
    Handicapped person means any person who has a physical or mental 
impairment that substantially limits one or more major life activities, 
has a record of such an impairment, or is regarded as having such an 
impairment.
    As used in this definition, the phrase:
    (1) Physical or mental impairment includes--
    (i) Any physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one or more of the following body systems: 
Neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive; digestive; 
genitourinary; hemic and lymphatic; skin; and endocrine; or
    (ii) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities. The term physical or mental impairment 
includes, but is not limited to, such diseases and conditions as 
orthopedic, visual, speech, and hearing impairments, cerebral palsy, 
epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease, 
diabetes, mental retardation, emotional illness, and drug addiction and 
alcoholism.
    (2) Major life activities includes functions such as caring for 
one's self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning, and working.
    (3) Has a record of such an impairment means has a history of, or 
has been misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (4) Is regarded as having an impairment means--
    (i) Has a physical or mental impairment that does not substantially 
limit major life activities but is treated by the agency as constituting 
such a limitation;
    (ii) Has a physical or mental impairment that substantially limits 
major life activities only as a result of the attitudes of others toward 
such impairment; or
    (iii) Has none of the impairments defined in subparagraph (1) of 
this definition but is treated by the agency as having such an 
impairment.
    Historic preservation programs means programs conducted by the 
agency that have preservation of historic properties as a primary 
purpose.
    Historic properties means those properties that are listed or 
eligible for listing in the National Register of Historic Places or 
properties designated as historic under a statute of the appropriate 
State or local government body.
    Qualified handicapped person means--
    (1) With respect to preschool, elementary, or secondary education 
services provided by the agency, a handicapped person who is a member of 
a class of persons otherwise entitled by statute, regulation, or agency 
policy to receive education services from the agency.

[[Page 303]]

    (2) With respect to any other agency program or activity under which 
a person is required to perform services or to achieve a level of 
accomplishment, a handicapped person who meets the essential eligibility 
requirements and who can acheive the purpose of the program or activity 
without modifications in the program or activity that the agency can 
demonstrate would result in a fundamental alteration in its nature;
    (3) With respect to any other program or activity, a handicapped 
person who meets the essential eligibility requirements for 
participation in, or receipt of benefits from, that program or activity; 
and
    (4) Qualified handicapped person is defined for purposes of 
employment in 29 CFR 1613.702(f), which is made applicable to this part 
by Sec. 2205.140.
    Section 504 means section 504 of the Rehabilitation Act of 1973 
(Pub. L. 93-112, 87 Stat. 394 (29 U.S.C. 794)), as amended by the 
Rehabilitation Act Amendments of 1974 (Pub. L. 93-516, 88 Stat. 1617), 
and the Rehabilitation, Comprehensive Services, and Developmental 
Disabilities Amendments of 1978 (Pub. L. 95-602, 92 Stat. 2955). As used 
in this part, section 504 applies only to programs or activities 
conducted by Executive agencies and not to federally assisted programs.
    Substantial impairment means a significant loss of the integrity of 
finished materials, design quality, or special character resulting from 
a permanent alteration.



Secs. 2205.104-2205.109  [Reserved]



Sec. 2205.110  Self-evaluation.

    (a) The agency shall, by August 24, 1987, evaluate its current 
policies and practices, and the effects thereof, that do not or may not 
meet the requirements of this part, and, to the extent modification of 
any such policies and practices is required, the agency shall proceed to 
make the necessary modifications.
    (b) The agency shall provide an opportunity to interested persons, 
including handicapped persons or organizations representing handicapped 
persons, to participate in the self-evaluation process by submitting 
comments (both oral and written).
    (c) The agency shall, until three years following the completion of 
the self-evaluation, maintain on file and make available for public 
inspection:
    (1) A description of areas examined and any problems identified, and
    (2) A description of any modifications made.



Sec. 2205.111  Notice.

    The agency shall make available to employees, applicants, 
participants, beneficiaries, and other interested persons such 
information regarding the provisions of this part and its applicability 
to the programs or activities conducted by the agency, and make such 
information available to them in such manner as the head of the agency 
finds necessary to apprise such persons of the protections against 
discrimination assured them by section 504 and this regulation.



Secs. 2205.112-2205.129  [Reserved]



Sec. 2205.130  General prohibitions     against discrimination.

    (a) No qualified handicapped person shall, on the basis of handicap, 
be excluded from participation in, be denied the benefits of, or 
otherwise be subjected to discrimination under any program or activity 
conducted by the agency.
    (b)(1) The agency, in providing any aid, benefit, or service, may 
not, directly or through contractual, licensing, or other arrangements, 
on the basis of handicap--
    (i) Deny a qualified handicapped person the opportunity to 
participate in or benefit from the aid, benefit, or service;
    (ii) Afford a qualified handicapped person an opportunity to 
participate in or benefit from the aid, benefit, or service that is not 
equal to that afforded others;
    (iii) Provide a qualified handicapped person with an aid, benefit, 
or service that is not as effective in affording equal opportunity to 
obtain the same result, to gain the same benefit, or to reach the same 
level of achievement as that provided to others;

[[Page 304]]

    (iv) Provide different or separate aid, benefits, or services to 
handicapped persons or to any class of handicapped persons than is 
provided to others unless such action is necessary to provide qualified 
handicapped persons with aid, benefits, or services that are as 
effective as those provided to others;
    (v) Deny a qualified handicapped person the opportunity to 
participate as a member of planning or advisory boards; or
    (vi) Otherwise limit a qualified handicapped person in the enjoyment 
of any right, privilege, advantage, or opportunity enjoyed by others 
receiving the aid, benefit, or service.
    (2) The agency may not deny a qualified handicapped person the 
opportunity to participate in programs or activities that are not 
separate or different, despite the existence of permissibly separate or 
different programs or activities.
    (3) The agency may not, directly or through contractual or other 
arrangements, utilize criteria or methods of administration the purpose 
or effect of which would--
    (i) Subject qualified handicapped persons to discrimination on the 
basis of handicap; or
    (ii) Defeat or substantially impair accomplishment of the objectives 
of a program or activity with respect to handicapped persons.
    (4) The agency may not, in determining the site or location of a 
facility, make selections the purpose or effect of which would--
    (i) Exclude handicapped persons from, deny them the benefits of, or 
otherwise subject them to discrimination under any program or activity 
conducted by the agency; or
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of a program or activity with respect to handicapped persons.
    (5) The agency, in the selection of procurement contractors, may not 
use criteria that subject qualified handicapped persons to 
discrimination on the basis of handicap.
    (6) The agency may not administer a licensing or certification 
program in a manner that subjects qualified handicapped persons to 
discrimination on the basis of handicap, nor may the agency establish 
requirements for the programs or activities of licensees or certified 
entities that subject qualified handicapped persons to discrimination on 
the basis of handicap. However, the programs or activities of entities 
that are licensed or certified by the agency are not, themselves, 
covered by this part.
    (c) The exclusion of nonhandicapped persons from the benefits of a 
program limited by Federal statute or Executive order to handicapped 
persons or the exclusion of a specific class of handicapped persons from 
a program limited by Federal statute or Executive order to a different 
class of handicapped persons is not prohibited by this part.
    (d) The agency shall administer programs and activities in the most 
integrated setting appropriate to the needs of qualified handicapped 
persons.



Secs. 2205.131-2205.139  [Reserved]



Sec. 2205.140  Employment.

    No qualified handicapped person shall, on the basis of handicap, be 
subjected to discrimination in employment under any program or activity 
conducted by the agency. The definitions, requirements, and procedures 
of section 501 of the Rehabilitation Act of 1973 (29 U.S.C. 791), as 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1613, shall apply to employment in federally conducted programs or 
activities.



Secs. 2205.141-2205.148  [Reserved]



Sec. 2205.149  Program accessibility: Discrimination prohibited.

    Except as otherwise provided in Sec. 2205.150, no qualified 
handicapped person shall, because the agency's facilities are 
inaccessible to or unusable by handicapped persons, be denied the 
benefits of, be excluded from participation in, or otherwise be 
subjected to discrimination under any program or activity conducted by 
the agency.



Sec. 2205.150  Program accessibility: Existing facilities.

    (a) General. The agency shall operate each program or activity so 
that the program or activity, when viewed in its entirety, is readily 
accessible to and

[[Page 305]]

usable by handicapped persons. This paragraph does not--
    (1) Necessarily require the agency to make each of its existing 
facilities accessible to and usable by handicapped persons;
    (2) In the case of historic preservation programs, require the 
agency to take any action that would result in a substantial impairment 
of significant historic features of an historic property; or
    (3) Require the agency to take any action that it can demonstrate 
would result in a fundamental alteration in the nature of a program or 
activity or in undue financial and administrative burdens. In those 
circumstances where agency personnel believe that the proposed action 
would fundamentally alter the program or activity or would result in 
undue financial and administrative burdens, the agency has the burden of 
proving that compliance with Sec. 2205.150(a) would result in such 
alteration or burdens. The decision that compliance would result in such 
alteration or burdens must be made by the agency head or his or her 
designee after considering all agency resources available for use in the 
funding and operation of the conducted program or activity, and must be 
accompanied by a written statement of the reasons for reaching that 
conclusion. If an action would result in such an alteration or such 
burdens, the agency shall take any other action that would not result in 
such an alteration or such burdens but would nevertheless ensure that 
handicapped persons receive the benefits and services of the program or 
activity.
    (b) Methods--(1) General. The agency may comply with the 
requirements of this section through such means as redesign of 
equipment, reassignment of services to accessible buildings, assignment 
of aides to beneficiaries, home visits, delivery of services at 
alternate accessible sites, alteration of existing facilities and 
construction of new facilities, use of accessible rolling stock, or any 
other methods that result in making its programs or activities readily 
accessible to and usable by handicapped persons. The agency is not 
required to make structural changes in existing facilities where other 
methods are effective in achieving compliance with this section. The 
agency, in making alterations to existing buildings, shall meet 
accessibility requirements to the extent compelled by the Architectural 
Barriers Act of 1968, as amended (42 U.S.C. 4151-4157), and any 
regulations implementing it. In choosing among available methods for 
meeting the requirements of this section, the agency shall give priority 
to those methods that offer programs and activities to qualified 
handicapped persons in the most integrated setting appropriate.
    (2) Historic preservation programs. In meeting the requirements of 
Sec. 2205.150(a) in historic preservation programs, the agency shall 
give priority to methods that provide physical access to handicapped 
persons. In cases where a physical alteration to an historic property is 
not required because of Sec. 2205.150(a)(2) or (a)(3), alternative 
methods of achieving program accessibility include--
    (i) Using audio-visual materials and devices to depict those 
portions of an historic property that cannot otherwise be made 
accessible;
    (ii) Assigning persons to guide handicapped persons into or through 
portions of historic properties that cannot otherwise be made 
accessible; or
    (iii) Adopting other innovative methods.
    (c) Time period for compliance. The agency shall comply with the 
obligations established under this section by October 21, 1986, except 
that where structural changes in facilities are undertaken, such changes 
shall be made by August 22, 1989, but in any event as expeditiously as 
possible.
    (d) Transition plan. In the event that structural changes to 
facilities will be undertaken to achieve program accessibility, the 
agency shall develop, by February 23, 1987, a transition plan setting 
forth the steps necessary to complete such changes. The agency shall 
provide an opportunity to interested persons, including handicapped 
persons or organizations representing handicapped persons, to 
participate in the development of the transition plan by submitting 
comments (both oral and written). A copy of the transition plan

[[Page 306]]

shall be made available for public inspection. The plan shall, at a 
minimum--
    (1) Identify physical obstacles in the agency's facilities that 
limit the accessibility of its programs or activities to handicapped 
persons;
    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period; and
    (4) Indicate the official responsible for implementation of the 
plan.



Sec. 2205.151  Program accessibility: New construction and alterations.

    Each building or part of a building that is constructed or altered 
by, on behalf of, or for the use of the agency shall be designed, 
constructed, or altered so as to be readily accessible to and usable by 
handicapped persons. The definitions, requirements, and standards of the 
Architectural Barriers Act (42 U.S.C. 4151-4157), as established in 41 
CFR 101-19.600 to 101-19.607, apply to buildings covered by this 
section.



Secs. 2205.152-2205.159  [Reserved]



Sec. 2205.160  Communications.

    (a) The agency shall take appropriate steps to ensure effective 
communication with applicants, participants, personnel of other Federal 
entities, and members of the public.
    (1) The agency shall furnish appropriate auxiliary aids where 
necessary to afford a handicapped person an equal opportunity to 
participate in, and enjoy the benefits of, a program or activity 
conducted by the agency.
    (i) In determining what type of auxiliary aid is necessary, the 
agency shall give primary consideration to the requests of the 
handicapped person.
    (ii) The agency need not provide individually prescribed devices, 
readers for personal use or study, or other devices of a personal 
nature.
    (2) Where the agency communicates with applicants and beneficiaries 
by telephone, telecommunication devices for deaf person (TDD's) or 
equally effective telecommunication systems shall be used.
    (b) The agency shall ensure that interested persons, including 
persons with impaired vision or hearing, can obtain information as to 
the existence and location of accessible services, activities, and 
facilities.
    (c) The agency shall provide signage at a primary entrance to each 
of its inaccessible facilities, directing users to a location at which 
they can obtain information about accessible facilities. The 
international symbol for accessibility shall be used at each primary 
entrance of an accessible facility.
    (d) This section does not require the agency to take any action that 
it can demonstrate would result in a fundamental alteration in the 
nature of a program or activity or in undue financial and adminstrative 
burdens. In those circumstances where agency personnel believe that the 
proposed action would fundamentally alter the program or activity or 
would result in undue financial and administrative burdens, the agency 
has the burden of proving that compliance with Sec. 2205.160 would 
result in such alteration or burdens. The decision that compliance would 
result in such alteration or burdens must be made by the agency head or 
his or her designee after considering all agency resources available for 
use in the funding and operation of the conducted program or activity, 
and must be accompanied by a written statement of the reasons for 
reaching that conclusion. If an action required to comply with this 
section would result in such an alteration or such burdens, the agency 
shall take any other action that would not result in such an alteration 
or such burdens but would nevertheless ensure that, to the maximum 
extent possible, handicapped persons receive the benefits and services 
of the program or activity.



Secs. 2205.161-2205.169  [Reserved]



Sec. 2205.170  Compliance procedures.

    (a) Except as provided in paragraph (b) of this section, this 
section applies to all allegations of discrimination on the basis of 
handicap in programs or activities conducted by the agency.

[[Page 307]]

    (b) The agency shall process complaints alleging violations of 
section 504 with respect to employment according to the procedures 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1613 pursuant to section 501 of the Rehabilitation Act of 1973 (29 
U.S.C. 791).
    (c) The Executive Director shall be responsible for coordinating 
implementation of this section. Complaints may be sent to Executive 
Director, Occupational Safety and Health Review Commission, One 
Lafayette Centre, 1120-20th Street NW., 9th Floor, Washington, DC 20036-
3419.
    (d) The agency shall accept and investigate all complete complaints 
for which it has jurisdiction. All complete complaints must be filed 
within 180 days of the alleged act of discrimination. The agency may 
extend this time period for good cause.
    (e) If the agency receives a complaint over which it does not have 
jurisdiction, it shall promptly notify the complainant and shall make 
reasonable efforts to refer the complaint to the appropriate government 
entity.
    (f) The agency shall notify the Architectural and Transportation 
Barriers Compliance Board upon receipt of any complaint alleging that a 
building or facility that is subject to the Architectural Barriers Act 
of 1968, as amended (42 U.S.C. 4151-4157), or section 502 of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 792), is not readily 
accessible to and usable by handicapped persons.
    (g) Within 180 days of the receipt of a complete complaint for which 
it has jurisdiction, the agency shall notify the complainant of the 
results of the investigation in a letter containing--
    (1) Findings of fact and conclusions of law;
    (2) A description of a remedy for each violation found; and
    (3) A notice of the right to appeal.
    (h) Appeals of the findings of fact and conclusions of law or 
remedies must be filed by the complainant within 90 days of receipt from 
the agency of the letter required by Sec. 2205.170(g). The agency may 
extend this time for good cause.
    (i) Timely appeals shall be accepted and processed by the head of 
the agency.
    (j) The head of the agency shall notify the complainant of the 
results of the appeal within 60 days of the receipt of the request. If 
the head of the agency determines that additional information is needed 
from the complainant, he or she shall have 60 days from the date of 
receipt of the additional information to make his or her determination 
on the appeal.
    (k) The time limits cited in paragraphs (g) and (j) of this section 
may be extended with the permission of the Assistant Attorney General.
    (l) The agency may delegate its authority for conducting complaint 
investigations to other Federal agencies, except that the authority for 
making the final determination may not be delegated to another agency.

[51 FR 22892, 22896, June 23, 1986, as amended at 51 FR 22892, June 23, 
1986; 58 FR 26066, Apr. 30, 1993]



Secs. 2205.171-2205.999  [Reserved]



PART 2400--REGULATIONS IMPLEMENTING THE PRIVACY ACT--Table of Contents




Sec.
2400.1  Purpose and scope.
2400.2  Description of agency.
2400.3  Delegation of authority.
2400.4  Collection and disclosure of personal information.
2400.5  Notification.
2400.6  Procedures for requesting records.
2400.7  Procedures for requesting amendment.
2400.8  Schedule of fees.
2400.9  Exemptions.

    Authority: Sec. 3(f), Privacy Act of 1974 (5 U.S.C. 552a(f), 88 
Stat. 1896, 1900), and 5 U.S.C. 553.

    Source: 44 FR 3968, Jan. 19, 1979, unless otherwise noted.



Sec. 2400.1  Purpose and scope.

    The purpose of the provisions of this part is to provide procedures 
to implement the Privacy Act of 1974 (5 U.S.C. 552a). The following 
provisions are applicable only to such items of information as relate to 
the agency or are within its custody. The Commission's custody 
encompasses all information which is kept by an agent by contract with 
the agency. They are not applicable to the rights of parties appearing 
in

[[Page 308]]

adversary proceedings before the Commission to obtain discovery from an 
adverse party. Such matters are governed by the Commission's Rules of 
Procedure which are published at 29 CFR 2200.1 et seq. This part is 
intended to protect individual privacy, and affects all personal 
information collection and usage activity of the agency.



Sec. 2400.2  Description of agency.

    The Occupational Safety and Health Review Commission (OSHRC) 
adjudicates contested enforcement actions under the Occupational Safety 
and Health Act of 1970 (29 U.S.C. 651-677). Decisions of the Commission 
on such actions are issued only after the parties to the case are 
afforded an opportunity for a hearing in accordance with section 554 of 
title 5, United States Code. All such hearings are conducted by an OSHRC 
Administrative Law Judge at a place convenient to the parties and are 
open to the public. Each Commission member has the authority to direct 
that a decision of a Judge be reviewed by the full Commission before 
becoming a final order.



Sec. 2400.3  Delegation of authority.

    (a) The Executive Director shall insure agency-wide compliance with 
this policy.
    (b) Custodians are responsible for adherence to this part within 
their respective units and in particular for their collection, use and 
disclosure of personal information, and for affording individuals the 
right to inspect, obtain copies of and correct records concerning them. 
They are responsible for reporting the existence of personal records 
systems, changes to the contents of those systems and changes of routine 
use to the Executive Director, and also for establishing the relevancy 
of information within those systems.



Sec. 2400.4  Collection and disclosure of personal information.

    (a) The following rules govern the collection of personal 
information throughout OSHRC operations:
    (1) The OSHRC shall:
    (i) Solicit, collect and maintain only such personal information as 
is relevant and necessary to accomplish a purpose required by statute or 
executive order.
    (ii) Collect information, to the greatest extent practicable, 
directly from the subject individual when such information may result in 
adverse determinations about an individual's rights, benefits or 
privileges.
    (iii) Inform any individual requested to disclose personal 
information whether that disclosure is mandatory or voluntary, by what 
authority it is solicited, the principal purposes for which it is 
intended to be used, the routine uses which may be made of it, and any 
penalties or consequences known to the OSHRC which shall result to the 
individual from such non-disclosure.
    (2) OSHRC shall not discriminate against any individual who fails to 
provide personal information unless that information is required or 
necessary for the conduct of the system or program in which the 
individual desires to participate. See Sec. 2400.4(a)(1)(i).
    (3) No information shall be collected or maintained which describes 
how individuals exercise rights guaranteed by the First Amendment unless 
the Commission specifically determines that such information is relevant 
and necessary to carry out a statutory purpose of the OSHRC, and the 
collection is expressly authorized by statute or by the individual about 
whom the record is maintained.
    (4) OSHRC shall not require disclosure of any individual's Social 
Security account number or deny a right, privilege or benefit because of 
the individual's refusal to disclose the number unless disclosure is 
required by Federal law.
    (b) Disclosures--(1) Limitations. OSHRC shall not disseminate 
personal information unless reasonable efforts have been made to assure 
that the information is accurate, complete, timely and relevant and
    (i) The individual to whom the record pertains has requested in 
writing that the information be disseminated, or
    (ii) It has obtained the prior written consent of the individual to 
whom the record pertains, or
    (iii) The dissemination is in accordance with paragraph (b)(2) of 
this section.

[[Page 309]]

    (2) Dissemination of personal information may be made:
    (i) To a person pursuant to a requirement of the Freedom of 
Information Act (5 U.S.C. 552);
    (ii) To those officers and employees of OSHRC who have a need for 
such information in the performance of their duties;
    (iii) For a routine use as contained in the system notices published 
in the Federal Register;
    (iv) To a recipient who has provided adequate advance written 
assurance that the information shall be used solely as a statistical 
reporting or research record, and to whom the information is transferred 
in a form that is not individually identifiable;
    (v) To the Bureau of the Census for purposes of planning or carrying 
out a census or survey or related activity pursuant to the provisions of 
title 13, U.S. Code;
    (vi) To the National Archives of the United States as a record which 
has sufficient historical or other value to warrant its continued 
preservation by the United States Government, or for evaluation by the 
Administrator of General Services or his designee to determine whether 
the record has such value;
    (vii) To a person pursuant to a showing of compelling circumstances 
affecting the health or safety of an individual, if upon such disclosure 
notification is transmitted to the last known address of such 
individual;
    (viii) To a Federal agency or an instrumentality of any governmental 
jurisdiction within or under the control of the United States for a 
civil or criminal law enforcement activity, if such activity is 
authorized by law and if the head of the agency or instrumentality has 
made a written request to the OSHRC specifying the particular portion of 
the record desired and the law enforcement activity for which the record 
is sought;
    (ix) To either House of Congress or its committees or subcommittees 
to the extent of matter within their jurisdiction;
    (x) To the Comptroller General or any of his authorized 
representatives in the course of the performance of the duties of the 
General Accounting Office;
    (xi) Pursuant to the order of a court of competent jurisdiction;
    (xii) To a congressional office from the record of an individual in 
response to an inquiry from the congressional office made at the written 
request of that individual. The consent implied from such a written 
request applies only to congressional inquiries.
    (3) Employee credit references. The Personnel Office shall verify 
the following information provided by an employee to a credit bureau or 
commercial firm from which an employee is seeking credit: length of 
service, job title, grade, salary, tenure of employment, and Civil 
service status.
    (4) Employee job references. Prospective employers of an OSHRC 
employee or a former OSHRC employee may be furnished with the 
information in Sec. 2400.4(b)(3) above, in addition to the date and 
reason for separation if applicable, upon the request of the employee or 
former employee.
    (c) Correction disclosure. Any person or other agency to which a 
personal record has been or is to be disclosed shall be informed of any 
corrections or be provided copies of statements of dispute, and 
notifications specifying the portions of the record relating thereto 
affecting the accuracy, timeliness or relevance of that personal record.
    (d) Record of disclosure. (1) An accurate accounting of each 
disclosure shall be kept in all instances except those in which 
disclosure is made to OSHRC employees in the performance of their duties 
or is required by the Freedom of Information Act (5 U.S.C. 552), in 
conformance with section 552a(c) of the Privacy Act.
    (2) The accounting shall be maintained for at least five (5) years 
or the life of the record, whichever is longer.
    (3) The accounting shall be made available to the individual named 
in the record upon inquiry, except for disclosures made pursuant to 
provision paragraph (b)(2)(viii) of this section relating to law 
enforcement activities.



Sec. 2400.5  Notification.

    (a) Notification of systems. The following procedures permit 
individuals

[[Page 310]]

to determine the types of personal records systems maintained by OSHRC.
    (1) Upon written request, OSHRC shall notify any individual whether 
a specific system named by him contains a record pertaining to him. See 
Sec. 2400.6 for suggested form of request.
    (2) OSHRC shall publish annually in the Federal Register a notice of 
existence and character of all personal systems of records. This notice 
shall contain the following information:
    (i) Name and location of the system,
    (ii) Nature and purposes of the system,
    (iii) Categories of individuals on whom records are maintained and 
categories of records generally maintained in the system,
    (iv) Confidentiality requirements and the extent to which access 
controls apply to such information,
    (v) OSHRC policies and standards regarding the safeguarding and 
disclosure of information, retrievability of information, information 
storage, duration of retention of information, and disposal of such 
information from the system,
    (vi) Each routine use made by OSHRC of the personal information 
contained in the system, including the categories of users and the 
purpose of the use,
    (vii) Title and official address of the custodian,
    (viii) Procedures by which an individual can be informed if a system 
contains personal information pertaining to himself, gain access to such 
information, and contest the content, accuracy, completeness, 
timeliness, relevance and necessity for retention of the information,
    (ix) Categories of sources of such personal information,
    (x) System status--either developmental or operational.
    (b) Notification of disclosure. OSHRC shall make reasonable efforts 
to serve notice on an indivudial before any personal information is made 
available to any person under compulsory legal process when such process 
becomes a matter of public record.

(Also see Sec. 2400.4(b)(1)(ii) and (2)(vii).)
    (c) Notification of amendment. (See Sec. 2400.7 relating to 
amendment of records upon request.)
    (d) Notification of new use. Any new or revised use of personal 
information maintained by OSHRC shall be published in the Federal 
Register thirty (30) days before such use becomes operational. Public 
views may then be submitted to the Executive Director.
    (e) Notification of exemptions. OSHRC shall publish in the Federal 
Register its intent to exempt any system of records and shall specify 
the nature and purpose of that system.



Sec. 2400.6  Procedures for requesting   records.

    The purpose of this section is to provide procedures by which an 
individual may have access to personal information within a 
comprehensive format.
    (a) Submission of requests for access--(1) Manner. An individual 
seeking information regarding the contents of records systems or access 
to records about himself in a system of records should present a written 
request to that effect either in person or by mail to the Executive 
Director, OSHRC, One Lafayette Centre, 1120-20th Street NW., 9th Floor, 
Washington, DC 20036-3419. Access to OSHRC records maintained in 
National Archives and Records Service Centers may be obtained in 
accordance with the regulations issued by the General Services 
Administration.
    (2) Specification of records sought. Requests for access to records 
shall describe the nature of the record sought, the approximate dates 
covered by the record, and the system in which the record is thought to 
be included as described in the ``Notification'' for that system as 
published in the Federal Register. The requester should also indicate 
whether he wishes to review the record in person or obtain a copy by 
mail. If the information supplied is insufficient to locate or identify 
the record, the requester shall be notified promptly and, if necessary, 
informed of additional information required. Upon request, OSHRC also 
shall disclose to the individual an accounting of any disclosures made 
from the individual's record.
    (3) Period for response. Upon receipt of an inquiry the Executive 
Director shall respond promptly to the request and no later than 10 days 
from receipt of such inquiry.

[[Page 311]]

    (b) Verification of identity. The following standards are applicable 
to any individual who requests records concerning himself.
    (1) An individual seeking access to records about himself in person 
may establish his identity by the presentation of a single document 
bearing a photograph (such as a passport, employee identification card, 
or valid driver's license) or by the presentation of two items of 
identification which do not bear a photograph but do bear both a name 
and address (such as a valid driver's license, or credit card).
    (2) An individual seeking access to records about himself by mail 
shall establish his identity by a signature, address, date of birth, 
place of birth, employee identification number, if any, and one other 
identifier such as a photocopy of an identifying document.
    (3) An individual seeking access to records about himself by mail or 
in person who cannot provide the necessary documentation of 
identification may provide a notarized statement swearing or affirming 
to his identity and to the fact that he understands the penalties for 
false statements pursuant to 18 U.S.C. 1001. Forms for such notarized 
statements may be obtained on request from the Executive Director.
    (c) Verification of guardianship. The parent or guardian of a minor 
or a person judicially determined to be incompetent and seeking to act 
on behalf of such minor or incompetent shall, in addition to 
establishing his own identity, establish the identity of the minor or 
other person he represents as required in paragraph (b) of this section 
and establish his own parentage or guardianship of the subject of the 
record by furnishing either a copy of a birth certificate showing 
parentage or a court order establishing the guardianship.
    (d) Accompanying persons. An individual seeking to review records 
about himself may be accompanied by another individual of his own 
choosing. Both the individual seeking access and the individual 
accompanying him shall be required to sign the required form indicating 
that OSHRC is authorized to discuss the contents of the subject record 
in the presence of both individuals.
    (e) Special rules for medical records. Medical records shall be 
disclosed to the requester to whom they pertain unless the Executive 
Director, in consultation with a medical doctor named by the requesting 
individual, determines that access to such record could have an adverse 
effect upon such individual. In such a case, the Executive Director 
shall transmit such information to the named medical doctor.
    (f) When compliance is possible. (1) The Executive Director shall 
inform the requester of the determination to grant the request and shall 
make the record available to the individual in the manner requested, 
that is, either by forwarding a copy of the information to him or by 
making it available for review, unless:
    (i) It is impracticable to provide the requester with a copy of a 
record, in which case the requester shall be so notified, and, in 
addition, be informed of the procedures set forth in paragraph (b)(2) of 
this section, or
    (ii) The responsible official has reason to believe that the cost of 
a copy of a record is considerably more expensive than anticipated by 
the requester, in which case he shall notify the requester of the 
estimated cost, and ascertain whether the requester still wishes to be 
provided with a copy of the information.
    (2) Where a record is to be reviewed by the requester in person, the 
disclosure officer shall inform the requester in writing of:
    (i) The date on which the record shall become available for review, 
the location at which it may be reviewed, and the hours for inspection;
    (ii) The type of identification that shall be required in order for 
him to review the record;
    (iii) Such person's right to have a person of his own choosing 
accompany him to review the record; and
    (iv) Such person's right to have a person other than himself review 
the record.
    (3) If the requester seeks to inspect the record without receiving a 
copy, he shall not leave OSHRC premises with the record and shall sign a 
statement indicating he has reviewed a specific record or category of 
record.

[[Page 312]]

    (g) Response when compliance is not possible. A reply denying a 
written request to review a record shall be in writing signed by the 
Executive Director or other appropriate official and shall be made only 
if such a record does not exist or does not contain personal information 
relating to the requester, or is exempt. This reply shall include a 
statement regarding the determining factors of denial, and the right to 
obtain judicial review in a district court of the United States.

[44 FR 3968, Jan. 19, 1979, as amended at 58 FR 26066, Apr. 30, 1993]



Sec. 2400.7  Procedures for requesting   amendment.

    (a) Submission of requests for amendment. Upon review of an 
individual's personal record, that individual may submit a request to 
amend such record. This request shall be submitted in writing to the 
Executive Director and shall include a statement of the amendment 
requested and the reasons therefor, e.g., relevance, accuracy, 
timeliness or completeness of the record.
    (b) Action to be taken by the Executive Director. Upon receiving an 
amendment request, he or she shall promptly:
    (1) Acknowledge in writing within ten (10) working days the receipt 
of the request.
    (2) Make such inquiry as is necessary to determine whether the 
amendment is appropriate, and
    (3) Correct or eliminate any information that is found to be 
incomplete, inaccurate, not relevant to a statutory purpose of OSHRC, or 
not timely and notify the requester when this action is complete, or
    (4) Notify the requester of a determination not to amend and of the 
individual's right to appeal not later than thirty (30) working days 
after receipt of a request to amend.
    (c) Appeal procedure. (1) If a request to inspect, copy or amend a 
record is denied, in whole or in part, or if no determination is made 
within the period prescribed by this part, the requester may appeal to 
the Chairman, OSHRC, One Lafayette Centre, 1120-20th Street NW., 9th 
Floor, Washington, DC 20036-3419.
    (2) The requester shall submit his appeal in writing within thirty 
(30) days of the date of denial, or within ninety (90) days of such 
request if the appeal is from a failure of the Executive Director to 
make a determination. The letter of appeal should include, as 
applicable:
    (i) Reasonable identification of the record to which access was 
sought or the amendment of which was requested.
    (ii) A statement of the OSHRC action or failure to act being 
appealed and the relief sought.
    (iii) A copy of the request, the notification of denial and of any 
other related correspondence.
    (3) The Chairman shall make his final determination not later than 
thirty (30) days from the date of the request, unless he extends the 
time for good cause to be shown by him but not to exceed ninety (90) 
days from the date of the request. Any record found on appeal to be not 
complete, accurate, relevant, or timely, shall within thirty (30) 
working days of the date of such findings be appropriately amended.
    (4) The decision of the Chairman constitutes the final decision of 
OSHRC on the right of the requester to inspect, copy, change or update a 
record. The decision on the appeal shall be in writing and, in the event 
of a denial, shall set forth the reasons for such denial and state the 
individual's right to obtain judicial review in a district court. An 
indexed file of the agency decisions on appeal shall be maintained by 
the Executive Director.
    (d) Submission of statement of disagreement. If the final decision 
does not satisfy the requester, any statement of reasonable length, 
provided by that individual, setting forth a position regarding the 
disputed information, shall be accepted and included in the relevant 
personal record.
    (e) Availability of assistance in exercising rights. The Executive 
Director is available to provide an individual with assistance in 
exercising rights pursuant to this part.

[44 FR 3968, Jan. 19, 1979, as amended at 58 FR 26066, Apr. 30, 1993]

[[Page 313]]



Sec. 2400.8  Schedule of fees.

    (a) Policy. The purpose of this section is to establish fair and 
equitable fees to permit reproduction of records for concerned 
individuals.
    (b) Reproduction. (1) For reproducing any paper or micrographic 
record or publication, the fee is $.10 per page. No charge shall be made 
if the total fee authorized by this part in compliance with a request or 
series of related requests is less than $3.00.
    (2) OSHRC shall not normally furnish more than one copy of any 
record.
    (c) Limitations. No fee shall be charged to any individual for the 
process of retrieving, or amending records.



Sec. 2400.9  Exemptions.

    (a) Subsections 552a (j) and (k) of title 5, United States Code, 
empower the Chairman to exempt systems of records meeting certain 
criteria from various other subsections of section 552a. With respect to 
systems of records so exempted, nothing in this part shall require 
compliance with any provisions hereof implementing any subsections of 
section 552a from which those systems may properly be and have been 
exempted.

[[Page 315]]



 CHAPTER XXV--EMPLOYEE BENEFITS SECURITY ADMINISTRATION, DEPARTMENT OF 
                                  LABOR




  --------------------------------------------------------------------


  Editorial Note: For nomenclature changes to Chapter XXV, see 68 FR 
16400, Apr. 3, 2003.

                          SUBCHAPTER A--GENERAL
Part                                                                Page
2509            Interpretive bulletins relating to the 
                    Employee Retirement Income Security Act 
                    of 1974.................................         317
  SUBCHAPTER B--DEFINITIONS AND COVERAGE UNDER THE EMPLOYEE RETIREMENT 
                       INCOME SECURITY ACT OF 1974
2510            Definitions of terms used in subchapters C, 
                    D, E, F, and G of this chapter..........         342
  SUBCHAPTER C--REPORTING AND DISCLOSURE UNDER THE EMPLOYEE RETIREMENT 
                       INCOME SECURITY ACT OF 1974
2520            Rules and regulations for reporting and 
                    disclosure..............................         371
SUBCHAPTER D--MINIMUM STANDARDS FOR EMPLOYEE PENSION BENEFIT PLANS UNDER 
           THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
2530            Rules and regulations for minimum standards 
                    for employee pension benefit plans......         449
                         SUBCHAPTER E [RESERVED]
  SUBCHAPTER F--FIDUCIARY RESPONSIBILITY UNDER THE EMPLOYEE RETIREMENT 
                       INCOME SECURITY ACT OF 1974
2550            Rules and regulations for fiduciary 
                    responsibility..........................         490
    SUBCHAPTER G--ADMINISTRATION AND ENFORCEMENT UNDER THE EMPLOYEE 
                 RETIREMENT INCOME SECURITY ACT OF 1974
2560            Rules and regulations for administration and 
                    enforcement.............................         530
2570            Procedural regulations under the employee 
                    retirement income security act..........         552

[[Page 316]]

2575            Adjustment of civil penalties under ERISA 
                    Title I.................................         600
                         SUBCHAPTER H [RESERVED]
  SUBCHAPTER I--TEMPORARY BONDING RULES UNDER THE EMPLOYEE RETIREMENT 
                       INCOME SECURITY ACT OF 1974
2580            Temporary bonding rules.....................         602
  SUBCHAPTER J--FIDUCIARY RESPONSIBILITY UNDER THE FEDERAL EMPLOYEES' 
                      RETIREMENT SYSTEM ACT OF 1986
2582            Rules and regulations for fiduciary 
                    responsibility..........................         619
2584            Rules and regulations for the allocation of 
                    fiduciary responsibility................         620
     SUBCHAPTER K--ADMINISTRATION AND ENFORCEMENT UNDER THE FEDERAL 
                EMPLOYEES' RETIREMENT SYSTEM ACT OF 1986
2589            Rules and regulations for administration and 
                    enforcement.............................         624
 SUBCHAPTER L--HEALTH INSURANCE PORTABILITY AND RENEWABILITY FOR GROUP 
                              HEALTH PLANS
2590            Rules and regulations for group health plan 
                    requirements............................         625

[[Page 317]]



                          SUBCHAPTER A--GENERAL





PART 2509--INTERPRETIVE BULLETINS RELATING TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974--Table of Contents




Sec.
2509.75-2  Interpretive bulletin relating to prohibited transactions.
2509.75-3  Interpretive bulletin relating to investments by employee 
          benefit plans in securities of registered investment 
          companies.
2509.75-4  Interpretive bulletin relating to indemnification of 
          fiduciaries.
2509.75-5  Questions and answers relating to fiduciary responsibility.
2509.75-6  Interpretive bulletin relating to section 408(c)(2) of the 
          Employee Retirement Income Security Act of 1974.
2509.75-8  Questions and answers relating to fiduciary responsibility 
          under the Employee Retirement Income Security Act of 1974.
2509.75-9  Interpretive bulletin relating to guidelines on independence 
          of accountant retained by Employee Benefit Plan.
2509.75-10  Interpretive bulletin relating to the ERISA Guidelines and 
          the Special Reliance Procedure.
2509.78-1  Interpretive bulletin relating to payments by certain 
          employee welfare benefit plans.
2509.94-1  Interpretive bulletin relating to the fiduciary standard 
          under ERISA in considering economically targeted investments.
2509.94-2  Interpretive bulletin relating to written statements of 
          investment policy, including proxy voting policy or 
          guidelines.
2509.94-3  Interpretive bulletin relating to in-kind contributions to 
          employee benefit plans.
2509.95-1  Interpretive bulletin relating to the fiduciary standard 
          under ERISA when selecting an annuity provider.
2509.96-1  Interpretive bulletin relating to participant investment 
          education.
2509.99-1  Interpretive bulletin relating to payroll deduction IRAs.

    Authority: 29 U.S.C. 1135 and Secretary of Labor's Order 1-2003, 68 
FR 5374 (Feb. 3, 2003). Secs. 2509.75-10 and 2509-75-2 issued under 29 
U.S.C. 1052, 1053, 1054.



Sec. 2509.75-2  Interpretive bulletin relating to prohibited transactions.

    On February 6, 1975, the Department of Labor issued an interpretive 
bulletin, ERISA IB 75-2, with respect to whether a party in interest has 
engaged in a prohibited transaction with an employee benefit plan where 
the party in interest has engaged in a transaction with a corporation or 
partnership (within the meaning of section 7701 of the Internal Revenue 
Code of 1954) in which the plan has invested.
    On November 13, 1986 the Department published a final regulation 
dealing with the definition of ``plan assets''. See Sec. 2510.3-101 of 
this title. Under that regulation, the assets of certain entities in 
which plans invest would include ``plan assets'' for purposes of the 
fiduciary responsibility provisions of the Act. Section 2510.3-101 
applies only for purposes of identifying plan assets on or after the 
effective date of that section, however, and Sec. 2510.3-101 does not 
apply to plan investments in certain entities that qualify for the 
transitional relief provided for in paragraph (k) of that section. The 
principles discussed in paragraph (a) of this Interpretive Bulletin 
continue to be applicable for purposes of identifying assets of a plan 
for periods prior to the effective date of Sec. 2510.3-101 and for 
investments that are subject to the transitional rule in Sec. 2510.3-
101(k). Paragraphs (b) and (c) of this Interpretive Bulletin, however, 
relate to matters outside the scope of Sec. 2510.3-101, and nothing in 
that section affects the continuing application of the principles 
discussed in those parts.
    (a) Principles applicable to plan investments to which Sec. 2510.3-
101 does not apply. Generally, investment by a plan in securities 
(within the meaning of section 3(20) of the Employee Retirement Income 
Security Act of 1974) of a corporation or partnership will not, solely 
by reason of such investment, be considered to be an investment in the 
underlying assets of such corporation or partnership so as to make such 
assets of the entity ``plan assets'' and thereby make a subsequent 
transaction between the party in interest and the corporation or 
partnership a prohibited transaction under section 406 of the Act.
    For example, where a plan acquires a security of a corporation or a 
limited partnership interest in a partnership, a subsequent lease or 
sale of property between such corporation or partnership and a party in 
interest will not be a prohibited transaction solely by reason of the 
plan's investment in the corporation or partnership.
    This general proposition, as applied to corporations and 
partnerships, is consistent with section 401(b)(1) of the Act, relating 
to plan investments in investment companies registered under the 
Investment Company Act of 1940. Under section 401(b)(1), an investment 
by a plan in securities of such an investment company may be made 
without causing, solely by reason of such investment,

[[Page 318]]

any of the assets of the investment company to be considered to be 
assets of the plan.
    (b)  [Reserved]
    (c) Applications of the fiduciary responsibility rules. The 
preceding paragraphs do not mean that an investment of plan assets in a 
security of a corporation or partnership may not be a prohibited 
transaction. For example, section 406(a)(1)(D) prohibits the direct or 
indirect transfer to, or use by or for the benefit of, a party in 
interest of any assets of the plan and section 406(b)(1) prohibits a 
fiduciary from dealing with the assets of the plan in his own interest 
or for his own account.
    Thus, for example, if there is an arrangement under which a plan 
invests in, or retains its investment in, an investment company and as 
part of the arrangement it is expected that the investment company will 
purchase securities from a party in interest, such arrangement is a 
prohibited transaction.
    Similarly, the purchase by a plan of an insurance policy pursuant to 
an arrangement under which it is expected that the insurance company 
will make a loan to a party in interest is a prohibited transaction.
    Moreover, notwithstanding the foregoing, if a transaction between a 
party in interest and a plan would be a prohibited transaction, then 
such a transaction between a party in interest and such corporation or 
partnership will ordinarily be a prohibited transaction if the plan may, 
by itself, require the corporation or partnership to engage in such 
transaction.
    Similarly, if a transaction between a party in interest and a plan 
would be a prohibited transaction, then such a transaction between a 
party in interest and such corporation or partnership will ordinarily be 
a prohibited transaction if such party in interest, together with one or 
more persons who are parties in interest by reason of such persons' 
relationship (within the meaning of section 3(14)(E) through (I)) to 
such party in interest may, with the aid of the plan but without the aid 
of any other persons, require the corporation or partnership to engage 
in such a transaction. However, the preceding sentence does not apply if 
the parties in interest engaging in the transaction, together with one 
or more persons who are parties in interest by reason of such persons' 
relationship (within the meaning of section 3(14)(E) through (I)) to 
such party in interest, may, by themselves, require the corporation or 
partnership to engage in the transaction.
    Further, the Department of Labor emphasizes that it would consider a 
fiduciary who makes or retains an investment in a corporation or 
partnership for the purpose of avoiding the application of the fiduciary 
responsibility provisions of the Act to be in contravention of the 
provisions of section 404(a) of the Act.

[51 FR 41280, Nov. 13, 1986, as amended at 61 FR 33849, July 1, 1996]



Sec. 2509.75-3  Interpretive bulletin relating to investments by employee benefit plans in securities of registered investment companies.

    On March 12, 1975, the Department of Labor issued an interpretive 
bulletin, ERISA IB 75-3, with regard to its interpretation of section 
3(21)(B) of the Employee Retirement Income Security Act of 1974. That 
section provides that an investment by an employee benefit plan in 
securities issued by an investment company registered under the 
Investment Company Act of 1940 shall not by itself cause the investment 
company, its investment adviser or principal underwriter to be deemed to 
be a fiduciary or party in interest ``except insofar as such investment 
company or its investment adviser or principal underwriter acts in 
connection with an employee benefit plan covering employees of the 
investment company, the investment adviser, or its principal 
underwriter.''
    The Department of Labor interprets this section as an elaboration of 
the principle set forth in section 401(b)(1) of the Act and ERISA IB 75-
2 (issued February 6, 1975) that the assets of an investment company 
shall not be deemed to be assets of a plan solely by reason of an 
investment by such plan in the shares of such investment company. 
Consistent with this principle, the Department of Labor interprets this 
section to mean that a person who is connected with an investment 
company, such as the investment company itself, its investment adviser 
or its principal underwriter, is not to be deemed to be a fiduciary of 
or party in interest with respect to a plan solely because the plan has 
invested in the investment company's shares.
    This principle applies, for example, to a plan covering employees of 
an investment adviser to an investment company where the plan invests in 
the securities of the investment company. In such a case the investment 
company or its principal underwriter is not to be deemed to be a 
fiduciary of or party in interest with respect to the plan solely 
because of such investment.
    On the other hand, the exception clause in section 3(21) emphasizes 
that if an investment company, its investment adviser or its principal 
underwriter is a fiduciary or party in interest for a reason other than 
the investment in the securities of the investment company, such a 
person remains a party in interest or fiduciary. Thus, in the preceding 
example, since an employer is a party in interest, the investment 
adviser remains a

[[Page 319]]

party in interest with respect to a plan covering its employees.
    The Department of Labor emphasized that an investment adviser, 
principal underwriter or investment company which is a fiduciary by 
virtue of section 3(21)(A) of the Act is subject to the fiduciary 
responsibility provisions of part 4 of title I of the Act, including 
those relating to fiduciary duties under section 404.

[40 FR 31599, July 28, 1975. Redesignated at 41 FR 1906, Jan. 13, 1976]



Sec. 2509.75-4  Interpretive bulletin relating to indemnification of fiduciaries.

    On June 4, 1975, the Department of Labor issued an interpretive 
bulletin, ERISA IB 75-4, announcing the Department's interpretation of 
section 410(a) of the Employee Retirement Income Security Act of 1974, 
insofar as that section relates to indemnification of fiduciaries. 
Section 410(a) states, in relevant part, that ``any provision in an 
agreement or instrument which purports to relieve a fiduciary from 
responsibility or liability for any responsibility, obligation, or duty 
under this part shall be void as against public policy.''
    The Department of Labor interprets this section to permit 
indemnification agreements which do not relieve a fiduciary of 
responsibility or liability under part 4 of title I. Indemnification 
provisions which leave the fiduciary fully responsible and liable, but 
merely permit another party to satisfy any liability incurred by the 
fiduciary in the same manner as insurance purchased under section 
410(b)(3), are therefore not void under section 410(a).
    Examples of such indemnification provisions are:
    (1) Indemnification of a plan fiduciary by (a) an employer, any of 
whose employees are covered by the plan, or an affiliate (as defined in 
section 407(d)(7) of the Act) of such employer, or (b) an employee 
organization, any of whose members are covered by the plan; and
    (2) Indemnification by a plan fiduciary of the fiduciary's employees 
who actually perform the fiduciary services.
    The Department of Labor interprets section 410(a) as rendering void 
any arrangement for indemnification of a fiduciary of an employee 
benefit plan by the plan. Such an arrangement would have the same result 
as an exculpatory clause, in that it would, in effect, relieve the 
fiduciary of responsibility and liability to the plan by abrogating the 
plan's right to recovery from the fiduciary for breaches of fiduciary 
obligations.
    While indemnification arrangements do not contravene the provisions 
of section 410(a), parties entering into an indemnification agreement 
should consider whether the agreement complies with the other provisions 
of part 4 of title I of the Act and with other applicable laws.

[40 FR 31599, July 28, 1975. Redesignated at 41 FR 1906, Jan. 13, 1976]



Sec. 2509.75-5  Questions and answers relating to fiduciary responsibility.

    On June 25, 1975, the Department of Labor issued an interpretive 
bulletin, ERISA IB 75-5, containing questions and answers relating to 
certain aspects of the recently enacted Employee Retirement Income 
Security Act of 1974 (the ``Act'').
    Pending the issuance of regulations or other guidelines, persons may 
rely on the answers to these questions in order to resolve the issues 
that are specifically considered. No inferences should be drawn 
regarding issues not raised which may be suggested by a particular 
question and answer or as to why certain questions, and not others, are 
included. Furthermore, in applying the questions and answers, the effect 
of subsequent legislation, regulations, court decisions, and 
interpretative bulletins must be considered. To the extent that plans 
utilize or rely on these answers and the requirements of regulations 
subsequently adopted vary from the answers relied on, such plans may 
have to be amended.
    An index of the questions and answers, relating them to the 
appropriate sections of the Act, is also provided.

                                  Index

                        key to question prefixes

    D--Refers to Definitions.
    FR--Refers to Fiduciary Responsibility.

------------------------------------------------------------------------
                Section No.                         Question No.
------------------------------------------------------------------------
3(21).....................................  D-1.
3(38).....................................  FR-6, FR-7.
402(a)....................................  FR-1, FR-2, FR-3.
402(b)(1).................................  FR-4, FR-5.
402(c)(3).................................  FR-6, FR-7.
404(a)....................................  FR-10.
405(a)(3).................................  FR-10.
405(b)(1)(A)..............................  FR-10.
406(a)....................................  FR-9.
409(a)....................................  FR-10.
412(a)....................................  FR-8, FR-9.
------------------------------------------------------------------------

    D-1 Q: Is an attorney, accountant, actuary or consultant who renders 
legal, accounting, actuarial or consulting services to an employee 
benefit plan (other than an investment adviser to the plan) a fiduciary 
to the plan solely by virtue of the rendering of such services, absent a 
showing that such consultant (a) exercises discretionary authority or 
discretionary control respecting the management of the plan, (b) 
exercises authority or

[[Page 320]]

control respecting management or disposition of the plan's assets, (c) 
renders investment advice for a fee, direct or indirect, with respect to 
the assets of the plan, or has any authority or responsibility to do so, 
or (d) has any discretionary authority or discretionary responsibility 
in the administration of the plan?
    A: No. However, while attorneys, accountants, actuaries and 
consultants performing their usual professional functions will 
ordinarily not be considered fiduciaries, if the factual situation in a 
particular case falls within one of the categories described in clauses 
(a) through (d) of this question, such persons would be considered to be 
fiduciaries within the meaning of section 3(21) of the Act. The Internal 
Revenue Service notes that such persons would also be considered to be 
fiduciaries within the meaning of section 4975(e)(3) of the Internal 
Revenue Code of 1954.
    FR-1 Q: If an instrument establishing an employee benefit plan 
provides that the plan committee shall control and manage the operation 
and administration of the plan and specifies who shall constitute the 
plan committee (either by position or by naming individuals to the 
committee), does such provision adequately satisfy the requirement in 
section 402(a) that a ``named fiduciary'' be provided for in a plan 
instrument?
    A: Yes. While the better practice would be to state explicitly that 
the plan committee is the ``named fiduciary'' for purposes of the Act, 
clear identification of one or more persons, by name or title, combined 
with a statement that such person or persons have authority to control 
and manage the operation and administration of the plan, satisfies the 
``named fiduciary'' requirement of section 402(a). The purpose of this 
requirement is to enable employees and other interested persons to 
ascertain who is responsible for operating the plan. The instrument in 
the above example, which provides that ``the plan committee shall 
control and manage the operation and administration of the plan'', and 
specifies, by name or position, who shall constitute the committee, 
fulfills this requirement.
    FR-2 Q: In a union negotiated employee benefit plan, the instrument 
establishing the plan provides that a joint board on which employees and 
employers are equally represented shall control and manage the operation 
and administration of the plan. Does this provision adequately satisfy 
the requirement in section 402(a) that a ``named fiduciary'' be provided 
for in a plan instrument?
    A: Yes, for the reasons stated in response to question FR-1. The 
joint board is clearly identified as the entity which has authority to 
control and manage the operation and administration of the plan, and the 
persons designated to be members of such joint board would be named 
fiduciaries under section 402(a).
    FR-3 Q: May an employee benefit plan covering employees of a 
corporation designate the corporation as the ``named fiduciary'' for 
purposes of section 402(a)(1) of the Act?
    A: Yes, it may. Section 402(a)(2) of the Act states that a ``named 
fiduciary'' is a fiduciary either named in the plan instrument or 
designated according to a procedure set forth in the plan instrument. A 
fiduciary is a ``person'' falling within the definition of fiduciary set 
forth in section 3(21)(A) of the Act. A ``person'' may be a corporation 
under the definition of person contained in section 3(9) of the Act. 
While such designation satisfies the requirement of enabling employees 
and other interested persons to ascertain the person or persons 
responsible for operating the plan, a plan instrument which designates a 
corporation as ``named fiduciary'' should provide for designation by the 
corporation of specified individuals or other persons to carry out 
specified fiduciary responsibilities under the plan, in accordance with 
section 405(c)(1)(B) of the Act.
    FR-4 Q: A defined benefit pension plan's procedure for establishing 
and carrying out a funding policy provides that the plan's trustees 
shall, at a meeting duly called for the purpose, establish a funding 
policy and method which satisfies the requirements of part 3 of title I 
of the Act, and shall meet annually at a stated time of the year to 
review such funding policy and method. It further provides that all 
actions taken with respect to such funding policy and method and the 
reasons therefor shall be recorded in the minutes of the trustees' 
meetings. Does this procedure comply with section 402(b)(1) of the Act?
    A: Yes. The above procedure specifies who is to establish the 
funding policy and method for the plan, and provides for a written 
record of the actions taken with respect to such funding policy and 
method, including the reasons for such actions. The purpose of the 
funding policy requirement set forth in section 402(b)(1) is to enable 
plan participants and beneficiaries to ascertain that the plan has a 
funding policy that meets the requirements of part 3 of title I of the 
Act. The procedure set forth above meets that requirement.
    FR-5 Q: Must a welfare plan in which the benefits are paid out of 
the general assets of the employer have a procedure for establishing and 
carrying out a funding policy set forth in the plan instrument?
    A: No. Section 402(b)(1) requires that the plan provide for such a 
procedure ``consistent with the objectives of the plan'' and 
requirements of title I of the Act. In situations in which a plan is 
unfunded and title I of the Act does not require the plan to be funded, 
there is no need to provide for such a procedure. If the welfare plan 
were funded,

[[Page 321]]

a procedure consistent with the objectives of the plan would have to be 
established.
    FR-6 Q: May an investment adviser which is neither a bank nor an 
insurance company, and which is not registered under the Investment 
Advisers Act of 1940 in reliance upon an exemption from registration 
provided in that Act, be appointed an investment manager under section 
402(c)(3) of the Act?
    A: No. The only persons who may be appointed an investment manager 
under section 402(c)(3) of the Act are persons who meet the requirements 
of section 3(38) of the Act--namely, banks (as defined in the Investment 
Advisers Act of 1940), insurance companies qualified under the laws of 
more than one state to manage, acquire and dispose of plan assets, or 
persons registered as investment advisers under the Investment Advisers 
Act of 1940.
    FR-7 Q: May an investment adviser that has a registration 
application pending under the Investment Advisers Act of 1940 function 
as an investment manager under the Act prior to the effective date of 
registration under the Investment Advisers Act?
    A: No, for the reasons stated in the answer to FR-6 above.
    FR-8 Q: Under the temporary bonding regulation set forth in 29 CFR 
2550.412-1, must a person who renders investment advice to a plan for a 
fee or other compensation, direct or indirect, but who does not exercise 
or have the right to exercise discretionary authority with respect to 
the assets of the plan, be bonded solely by reason of the provision of 
such investment advice?
    A: No. A person who renders investment advice, but who does not 
exercise or have the right to exercise discretionary authority with 
respect to plan assets, is not required to be bonded solely by reason of 
the provision of such investment advice. Such a person is not considered 
to be ``handling'' funds within the meaning of the temporary bonding 
regulation set forth in 29 CFR 2550.412-1, which incorporates by 
reference 29 CFR 464.7. For purposes of the temporary bonding 
regulation, only those fiduciaries who handle funds must be bonded. If, 
in addition to the rendering of investment advice, such person performs 
any additional function which constitutes the handling of plan funds 
under 29 CFR 464.7, the person would have to be bonded.
    FR-9 Q: May an employee benefit plan purchase a bond covering plan 
officials?
    A: Yes. The bonding requirement, which applies, with certain 
exceptions, to every plan official under section 412(a) of the Act, is 
for the protection of the plan and does not benefit any plan official or 
relieve any plan official of any obligation to the plan. The purchase of 
such bond by a plan will not, therefore, be considered to be in 
contravention of sections 406(a) or (b) of the Act.
    FR-10 Q: An employee benefit plan is considering the construction of 
a building to house the administration of the plan. One trustee has 
proposed that the building be constructed on a cost plus basis by a 
particular contractor without competitive bidding. When the trustee was 
questioned by another trustee as to the basis of choice of the 
contractor, the impact of the building on the plan's administrative 
costs, whether a cost plus contract would yield a better price to the 
plan than a fixed price basis, and why a negotiated contract would be 
better than letting the contract for competitive bidding, no 
satisfactory answers were provided. Several of the trustees have argued 
that letting such a contract would be a violation of their general 
fiduciary responsibilities. Despite their arguments, a majority of the 
trustees appear to be ready to vote to construct the building as 
proposed. What should the minority trustees do to protect themselves 
from liability under section 409(a) of the Act and section 405(b)(1)(A) 
of the Act?
    A: Here, where a majority of trustees appear ready to take action 
which would clearly be contrary to the prudence requirement of section 
404(a)(1)(B) of the Act, it is incumbent on the minority trustees to 
take all reasonable and legal steps to prevent the action. Such steps 
might include preparations to obtain an injunction from a Federal 
District court under section 502(a)(3) of the Act, to notify the Labor 
Department, or to publicize the vote if the decision is to proceed as 
proposed. If, having taken all reasonable and legal steps to prevent the 
imprudent action, the minority trustees have not succeeded, they will 
not incur liability for the action of the majority. Mere resignation, 
however, without taking steps to prevent the imprudent action, will not 
suffice to avoid liability for the minority trustees once they have 
knowledge that the imprudent action is under consideration.
    More generally, trustees should take great care to document 
adequately all meetings where actions are taken with respect to 
management and control of fplan assets. Written minutes of all actions 
taken should be kept describing the action taken, and stating how each 
trustee voted on each matter. If, as in the case above, trustees object 
to a proposed action on the grounds of possible violation of the 
fiduciary responsibility provisions of the Act, the trustees so 
objecting should insist that their objections and the responses to such 
objections be included in the record of the meeting. It should be noted 
that, where a trustee believes that a cotrustee has already committed a 
breach, resignation by the trustee as a protest against such breach will 
not generally be considered sufficient to discharge the trustee's 
positive duty under section 405(a)(3) to

[[Page 322]]

make reasonable efforts under the circumstances to remedy the breach.

[40 FR 31599, July 28, 1975. Redesignated at 41 FR 1906, Jan. 13, 1976]



Sec. 2509.75-6  Interpretive bulletin relating to section 408(c)(2) of the Employee Retirement Income Security Act of 1974.

    The Department of Labor today announced guidelines for determining 
when a party in interest with respect to an employee benefit plan may 
receive an advance for expenses to be incurred on behalf of the plan 
without engaging in a transaction prohibited by section 406 of the 
Employee Retirement Income Security Act of 1974. That section prohibits, 
among other things, any lending of money from a plan to a party in 
interest, or transfer to, or use by or for the benefit of, a party in 
interest of any assets of the plan, as well as any act whereby a 
fiduciary deals with the assets of a plan in his own interest or for his 
own account.
    However, section 408(c)(2) of the Act provides that nothing in 
section 406 of the Act shall be construed to prohibit the reimbursement 
by a plan of expenses properly and actually incurred by a fiduciary in 
the performance of his duties with the plan. Questions have arisen under 
section 408(c)(2) of the Act as to whether a plan may reimburse a party 
in interest in the performance of his duties with the plan and as to 
whether a plan might make an advance to a fiduciary or other party in 
interest for expenses to be incurred in the future.
    The Department of Labor views the relevant provisions of section 
408(c)(2) as clarifying the scope of section 406 so as to permit 
reimbursement of fiduciaries for expenses incurred in the performance of 
their duties with a plan. Similarly, consistent with section 408(c)(2), 
section 406 is construed to permit the reimbursement by the plan of 
expenses properly and actually incurred by a party in interest in the 
performance of his duties with the plan.
    If a plan makes an advance to a fiduciary or other party in interest 
to cover expenses to be properly and actually incurred by such person in 
the performance of his duties with the plan, a prohibited transaction 
within the meaning of section 406 shall not occur when the plan makes 
the advance if--
    (a) The amount of such advance is reasonable with respect to the 
amount of the expense which is likely to be properly and actually 
incurred in the immediate future (such as during the next month), and
    (b) The party in interest accounts to the plan at the end of the 
period covered by the advance for the expenses actually incurred 
(whether computed on the basis of actual expenses incurred or on the 
basis of actual transportation costs plus a reasonable per diem 
allowance, where appropriate).
    It should be noted, however, that despite the reasonableness of the 
amount of the advance and of the expenses underlying it, the question of 
whether incurring such expenses was prudent, and thus whether the 
advance was for reasonable expenses, is to be judged pursuant to section 
404 of the Act (relating to fiduciary responsibilities).

[40 FR 31755, July 29, 1975. Redesignated at 41 FR 1906, Jan. 13, 1976]



Sec. 2509.75-8  Questions and answers relating to fiduciary responsibility under the Employee Retirement Income Security Act of 1974.

    The Department of Labor today issued questions and answers relating 
to certain aspects of fiduciary responsibility under the Act, thereby 
supplementing ERISA IB 75-5 (29 CFR 2555.75-5) which was issued on June 
24, 1975, and published in the Federal Register on July 28, 1975 (40 FR 
31598).
    Pending the issuance of regulations or other guidelines, persons may 
rely on the answers to these questions in order to resolve the issues 
that are specifically considered. No inferences should be drawn 
regarding issues not raised which may be suggested by a particular 
question and answer or as to why certain questions, and not others, are 
included. Furthermore, in applying the questions and answers, the effect 
of subsequent legislation, regulations, court decisions, and 
interpretive bulletins must be considered. To the extent that plans 
utilize or rely on these answers and the requirements of regulations 
subsequently adopted vary from the answers relied on, such plans may 
have to be amended.
    An index of the questions and answers, relating them to the 
appropriate sections of the Act, is also provided.

                                  Index

    Key to question prefixes: D--refers to definitions; FR--refers to 
fiduciary responsibility.

------------------------------------------------------------------------
                Section No.                         Question No.
------------------------------------------------------------------------
3(21)(A)..................................  D-2, D-3, D-4, D-5.
3(38).....................................  FR-15.
402(c)(1).................................  FR-12.
402(c)(2).................................  FR-15.
402(c)(3).................................  FR-15.
403(a)(2).................................  FR-15.
404(a)(1)(B)..............................  FR-11, FR-17.
405(a)....................................  FR-13, FR-14, FR-16.
405(c)(1).................................  FR-12, FR-15.
405(c)(2).................................  D-4, FR-13, FR-14, FR-16.
412.......................................  D-2.
------------------------------------------------------------------------

    Note: Questions D-2, D-3, D-4, and D-5 relate to not only section 
3(21)(A) of title I of

[[Page 323]]

the Act, but also section 4975(e)(3) of the Internal Revenue Code 
(section 2003 of the Act). The Internal Revenue Service has indicated 
its concurrence with the answers to these questions.

    D-2 Q: Are persons who have no power to make any decisions as to 
plan policy, interpretations, practices or procedures, but who perform 
the following administrative functions for an employee benefit plan, 
within a framework of policies, interpretations, rules, practices and 
procedures made by other persons, fiduciaries with respect to the plan:
    (1) Application of rules determining eligibility for participation 
or benefits;
    (2) Calculation of services and compensation credits for benefits;
    (3) Preparation of employee communications material;
    (4) Maintenance of participants' service and employment records;
    (5) Preparation of reports required by government agencies;
    (6) Calculation of benefits;
    (7) Orientation of new participants and advising participants of 
their rights and options under the plan;
    (8) Collection of contributions and application of contributions as 
provided in the plan;
    (9) Preparation of reports concerning participants' benefits;
    (10) Processing of claims; and
    (11) Making recommendations to others for decisions with respect to 
plan administration?
    A: No. Only persons who perform one or more of the functions 
described in section 3(21)(A) of the Act with respect to an employee 
benefit plan are fiduciaries. Therefore, a person who performs purely 
ministerial functions such as the types described above for an employee 
benefit plan within a framework of policies, interpretations, rules, 
practices and procedures made by other persons is not a fiduciary 
because such person does not have discretionary authority or 
discretionary control respecting management of the plan, does not 
exercise any authority or control respecting management or disposition 
of the assets of the plan, and does not render investment advice with 
respect to any money or other property of the plan and has no authority 
or responsibility to do so.
    However, although such a person may not be a plan fiduciary, he may 
be subject to the bonding requirements contained in section 412 of the 
Act if he handles funds or other property of the plan within the meaning 
of applicable regulations.
    The Internal Revenue Service notes that such persons would not be 
considered plan fiduciaries within the meaning of section 4975(e)(3) of 
the Internal Revenue Code of 1954.
    D-3 Q: Does a person automatically become a fiduciary with respect 
to a plan by reason of holding certain positions in the administration 
of such plan?
    A: Some offices or positions of an employee benefit plan by their 
very nature require persons who hold them to perform one or more of the 
functions described in section 3(21)(A) of the Act. For example, a plan 
administrator or a trustee of a plan must, be the very nature of his 
position, have ``discretionary authority or discretionary responsibility 
in the administration'' of the plan within the meaning of section 
3(21)(A)(iii) of the Act. Persons who hold such positions will therefore 
be fiduciaries.
    Other offices and positions should be examined to determine whether 
they involve the performance of any of the functions described in 
section 3(21)(A) of the Act. For example, a plan might designate as a 
``benefit supervisor'' a plan employee whose sole function is to 
calculate the amount of benefits to which each plan participant is 
entitled in accordance with a mathematical formula contained in the 
written instrument pursuant to which the plan is maintained. The benefit 
supervisor, after calculating the benefits, would then inform the plan 
administrator of the results of his calculations, and the plan 
administrator would authorize the payment of benefits to a particular 
plan participant. The benefit supervisor does not perform any of the 
functions described in section 3(21)(A) of the Act and is not, 
therefore, a plan fiduciary. However, the plan might designate as a 
``benefit supervisor'' a plan employee who has the final authority to 
authorize or disallow benefit payments in cases where a dispute exists 
as to the interpretation of plan provisions relating to eligibility for 
benefits. Under these circumstances, the benefit supervisor would be a 
fiduciary within the meaning of section 3(21)(A) of the Act.
    The Internal Revenue Service notes that it would reach the same 
answer to this question under section 4975(e)(3) of the Internal Revenue 
Code of 1954.
    D-4 Q: In the case of a plan established and maintained by an 
employer, are members of the board of directors of the employer 
fiduciaries with respect to the plan?
    A: Members of the board of directors of an employer which maintains 
an employee benefit plan will be fiduciaries only to the extent that 
they have responsibility for the functions described in section 3(21)(A) 
of the Act. For example, the board of directors may be responsible for 
the selection and retention of plan fiduciaries. In such a case, members 
of the board of directors exercise ``discretionary authority or 
discretionary control respecting management of such plan'' and are, 
therefore, fiduciaries with respect to the plan. However, their 
responsibility, and, consequently, their liability, is limited to the 
selection and retention of fiduciaries (apart from co-fiduciary 
liability arising under circumstances described in section 405(a) of the

[[Page 324]]

Act). In addition, if the directors are made named fiduciaries of the 
plan, their liability may be limited pursuant to a procedure provided 
for in the plan instrument for the allocation of fiduciary 
responsibilities among named fiduciaries or for the designation of 
persons other than named fiduciaries to carry out fiduciary 
responsibilities, as provided in section 405(c)(2).
    The Internal Revenue Service notes that it would reach the same 
answer to this question under section 4975(e)(3) of the Internal Revenue 
Code of 1954.
    D-5 Q: Is an officer or employee of an employer or employee 
organization which sponsors an employee benefit plan a fiduciary with 
respect to the plan solely by reason of holding such office or 
employment if he or she performs none of the functions described in 
section 3(21)(A) of the Act?
    A: No, for the reasons stated in response to question D-2.
    The Internal Revenue Service notes that it would reach the same 
answer to this question under section 4975(e)(3) of the Internal Revenue 
Code of 1954.
    FR-11 Q: In discharging fiduciary responsibilities, may a fiduciary 
with respect to a plan rely on information, data, statistics or analyses 
provided by other persons who perform purely ministerial functions for 
such plan, such as those persons described in D-2 above?
    A: A plan fiduciary may rely on information, data, statistics or 
analyses furnished by persons performing ministerial functions for the 
plan, provided that he has exercised prudence in the selection and 
retention of such persons. The plan fiduciary will be deemed to have 
acted prudently in such selection and retention if, in the exercise of 
ordinary care in such situation, he has no reason to doubt the 
competence, integrity or responsibility of such persons.
    FR-12 Q: How many fiduciaries must an employee benefit plan have?
    A: There is no required number of fiduciaries that a plan must have. 
Each plan must, of course, have at least one named fiduciary who serves 
as plan administrator and, if plan assets are held in trust, the plan 
must have at least one trustee. If these requirements are met, there is 
no limit on the number of fiduciaries a plan may have. A plan may have 
as few or as many fiduciaries as are necessary for its operation and 
administration. Under section 402(c)(1) of the Act, if the plan so 
provides, any person or group of persons may serve in more than one 
fiduciary capacity, including serving both as trustee and administrator. 
Conversely, fiduciary responsibilities not involving management and 
control of plan assets may, under section 405(c)(1) of the Act, be 
allocated among named fiduciaries and named fiduciaries may designate 
persons other than named fiduciaries to carry out such fiduciary 
responsibilities, if the plan instrument expressly provides procedures 
for such allocation or designation.
    FR-13 Q: If the named fiduciaries of an employee benefit plan 
allocate their fiduciary responsibilities among themselves in accordance 
with a procedure set forth in the plan for the allocation of 
responsibilities for operation and administration of the plan, to what 
extent will a named fiduciary be relieved of liability for acts and 
omissions of other named fiduciaries in carrying out fiduciary 
responsibilities allocated to them?
    A: If named fiduciaries of a plan allocate responsibilities in 
accordance with a procedure for such allocation set forth in the plan, a 
named fiduciary will not be liable for acts and omissions of other named 
fiduciaries in carrying out fiduciary responsibilities which have been 
allocated to them, except as provided in section 405(a) of the Act, 
relating to the general rules of co-fiduciary responsibility, and 
section 405(c)(2)(A) of the Act, relating in relevant part to standards 
for establishment and implementation of allocation procedures.
    However, if the instrument under which the plan is maintained does 
not provide for a procedure for the allocation of fiduciary 
responsibilities among named fiduciaries, any allocation which the named 
fiduciaries may make among themselves will be ineffective to relieve a 
named fiduciary from responsibility or liability for the performance of 
fiduciary responsibilities allocated to other named fiduciaries.
    FR-14 Q: If the named fiduciaries of an employee benefit plan 
designate a person who is not a named fiduciary to carry out fiduciary 
responsibilities, to what extent will the named fiduciaries be relieved 
of liability for the acts and omissions of such person in the 
performance of his duties?
    A: If the instrument under which the plan is maintained provides for 
a procedure under which a named fiduciary may designate persons who are 
not named fiduciaries to carry out fiduciary responsibilities, named 
fiduciaries of the plan will not be liable for acts and omissions of a 
person who is not a named fiduciary in carrying out the fiduciary 
responsibilities which such person has been designated to carry out, 
except as provided in section 405(a) of the Act, relating to the general 
rules of co-fiduciary liability, and section 405(c)(2)(A) of the Act, 
relating in relevant part to the designation of persons to carry out 
fiduciary responsibilities.
    However, if the instrument under which the plan is maintained does 
not provide for a procedure for the designation of persons who are not 
named fiduciaries to carry out fiduciary responsibilities, then any such 
designation which the named fiduciaries may make will not relieve the 
named fiduciaries from responsibility or liability for the acts and 
omissions of the persons so designated.

[[Page 325]]

    FR-15 Q: May a named fiduciary delegate responsibility for 
management and control of plan assets to anyone other than a person who 
is an investment manager as defined in section 3(38) of the Act so as to 
be relieved of liability for the acts and omissions of the person to 
whom such responsibility is delegated?
    A: No. Section 405(c)(1) does not allow named fiduciaries to 
delegate to others authority or discretion to manage or control plan 
assets. However, under the terms of sections 403(a)(2) and 402(c)(3) of 
the Act, such authority and discretion may be delegated to persons who 
are investment managers as defined in section 3(38) of the Act. Further, 
under section 402(c)(2) of the Act, if the plan so provides, a named 
fiduciary may employ other persons to render advice to the named 
fiduciary to assist the named fiduciary in carrying out his investment 
responsibilities under the plan.
    FR-16 Q: Is a fiduciary who is not a named fiduciary with respect to 
an employee benefit plan personally liable for all phases of the 
management and administration of the plan?
    A: A fiduciary with respect to the plan who is not a named fiduciary 
is a fiduciary only to the extent that he or she performs one or more of 
the functions described in section 3(21)(A) of the Act. The personal 
liability of a fiduciary who is not a named fiduciary is generally 
limited to the fiduciary functions, which he or she performs with 
respect to the plan. With respect to the extent of liability of a named 
fiduciary of a plan where duties are properly allocated among named 
fiduciaries or where named fiduciaries properly designate other persons 
to carry out certain fiduciary duties, see question FR-13 and FR-14.
    In addition, any fiduciary may become liable for breaches of 
fiduciary responsibility committed by another fiduciary of the same plan 
under circumstances giving rise to co-fiduciary liability, as provided 
in section 405(a) of the Act.
    FR-17 Q: What are the ongoing responsibilities of a fiduciary who 
has appointed trustees or other fiduciaries with respect to these 
appointments?
    A: At reasonable intervals the performance of trustees and other 
fiduciaries should be reviewed by the appointing fiduciary in such 
manner as may be reasonably expected to ensure that their performance 
has been in compliance with the terms of the plan and statutory 
standards, and satisfies the needs of the plan. No single procedure will 
be appropriate in all cases; the procedure adopted may vary in 
accordance with the nature of the plan and other facts and circumstances 
relevant to the choice of the procedure.

[40 FR 47491, Oct. 9, 1975. Redesignated at 41 FR 1906, Jan. 13, 1976]



Sec. 2509.75-9  Interpretive bulletin relating to guidelines on independence of accountant retained by Employee Benefit Plan.

    The Department of Labor today announced guidelines for determining 
when a qualified public accountant is independent for purposes of 
auditing and rendering an opinion on the financial information required 
to be included in the annual report filed with the Department.
    Section 103(a)(3)(A) requires that the accountant retained by an 
employee benefit plan be ``independent'' for purposes of examining plan 
financial information and rendering an opinion on the financial 
statements and schedules required to be contained in the annual report.
    Under the authority of section 103(a)(3)(A) the Department of Labor 
will not recognize any person as an independent qualified public 
accountant who is in fact not independent with respect to the employee 
benefit plan upon which that accountant renders an opinion in the annual 
report filed with the Department of Labor. For example, an accountant 
will not be considered independent with respect to a plan if:
    (1) During the period of professional engagement to examine the 
financial statements being reported, at the date of the opinion, or 
during the period covered by the financial statements, the accountant or 
his or her firm or a member thereof had, or was committed to acquire, 
any direct financial interest or any material indirect financial 
interest in such plan, or the plan sponsor, as that term is defined in 
section 3(16)(B) of the Act.
    (2) During the period of professional engagement to examine the 
financial statements being reported, at the date of the opinion, or 
during the period covered by the financial statements, the accountant, 
his or her firm or a member thereof was connected as a promoter, 
underwriter, investment advisor, voting trustee, director, officer, or 
employee of the plan or plan sponsor except that a firm will not be 
deemed not independent in regard to a particular plan if a former 
officer or employee of such plan or plan sponsor is employed by the firm 
and such individual has completely disassociated himself from the plan 
or plan sponsor and does not participate in auditing financial 
statements of the plan covering any period of his or her employment by 
the plan or plan sponsor. For the purpose of this bulletin the term 
``member'' means all partners or shareholder employees in the firm and 
all professional employees participating in the audit or located in an 
office of the firm participating in a significant portion of the audit;
    (3) An accountant or a member of an accounting firm maintains 
financial records for the employee benefit plan.

[[Page 326]]

    However, an independent, qualified public accountant may permissably 
engage in or have members of his or her firm engage in certain 
activities which will not have the effect of removing recognition of his 
or her independence. For example, (1) an accountant will not fail to be 
recognized as independent if at or during the period of his or her 
professional engagement with the employee benefit plan the accountant or 
his or her firm is retained or engaged on a professional basis by the 
plan sponsor, as that term is defined in section 3(16)(B) of the Act. 
However, to retain recognition of independence under such circumstances 
the accountant must not violate the prohibitions against recognition of 
independence established under paragraphs (1), (2) or (3) of this 
interpretive bulletin; (2) the rendering of services by an actuary 
associated with an accountant or accounting firm shall not impair the 
accountant's or accounting firm's independence. However, it should be 
noted that the rendering of services to a plan by an actuary and 
accountant employed by the same firm may constitute a prohibited 
transaction under section 406(a)(1)(C) of the Act. The rendering of such 
multiple services to a plan by a firm will be the subject of a later 
interpretive bulletin that will be issued by the Department of Labor.
    In determining whether an accountant or accounting firm is not, in 
fact, independent with respect to a particular plan, the Department of 
Labor will give appropriate consideration to all relevant circumstances, 
including evidence bearing on all relationships between the accountant 
or accounting firm and that of the plan sponsor or any affiliate 
thereof, and will not confine itself to the relationships existing in 
connection with the filing of annual reports with the Department of 
Labor.
    Further interpretive bulletins may be issued by the Department of 
Labor concerning the question of independence of an accountant retained 
by an employee benefit plan.

[40 FR 53998, Nov. 20, 1975, as amended at 40 FR 59728, Dec. 30, 1975. 
Redesignated at 41 FR 1906, Jan. 13, 1976]



Sec. 2509.75-10  Interpretive bulletin relating to the ERISA Guidelines and the Special Reliance Procedure.

    On November 5, 1975, the Department of Labor (the ``Department'') 
and the Internal Revenue Service (the ``Service'') announced the 
publication of a compendium of authoritative rules (hereinafter referred 
to as the ``ERISA Guidelines'') relating to ERISA requirements. See 
T.I.R. No. 1415 (November 5, 1975) issued by the Service. These rules 
were published in recognition of the need to provide an immediate and 
complete set of interim guidelines to facilitate (1) adoption of new 
employee pension benefit plans (hereinafter referred to as ``plans''), 
and (2) prompt amendment of existing plans, in conformance with the 
applicable requirements of the Employee Retirement Income Security Act 
of 1974 (``ERISA'') pending the issuance of final regulations or other 
rules. These rules govern the application of (1) the qualification 
requirements of the Internal Revenue Code of 1954 (the ``Code'') added 
or amended by ERISA, and (2) the requirements of the provisions of parts 
2 and 3 of title I of ERISA paralleling such qualification requirements 
(both such sets of requirements hereinafter referred to collectively as 
the ``new qualification requirements'').
    The ERISA Guidelines incorporate by reference the documents relating 
to the new qualification requirements heretofore published by the 
Department and by the Service as temporary or proposed regulations, 
revenue rulings, revenue procedures, questions and answers, technical 
information releases, and other issuances. The ERISA Guidelines also 
incorporate additional documents published on November 5, 1975, or to be 
published forthwith, which are necessary to complete the interim 
guidelines relating to the new qualification requirements. See the 
schedule set forth below for a complete list and brief description of 
the documents comprising the ERISA Guidelines.
    The Department and the Service emphasized that the ERISA Guidelines 
constitute the entire set of interim rules of the Department and the 
Service for satisfying the new qualification requirements, and thus 
provide authoritative guidance in respect of the new statutory 
requirements bearing on qualification. These rules are applicable to 
individually designed plans and to multiemployer (or other multiple 
employer) plans, and may be relied upon until amended or supplemented by 
final regulations or other rules. Moreover, the Department and the 
Service announced that any provisions of final regulations or other 
rules which amend or supplement the rules contained in the ERISA 
Guidelines will generally be prospective only, from the date of 
publication. Further, in the case of employee plan provisions adopted or 
amended before the date of such publication which satisfy the ERISA 
Guidelines, such final regulations or other rules will generally be made 
effective for plan years commencing after such date, except in unusual 
circumstances.
    The Service further announced that the ERISA Guidelines incorporate 
the procedures that will enable employers to obtain determination 
letters as to the qualification of pension, annuity, profit sharing, 
stock bonus and bond purchase plans which satisfy the requirements of 
sections 401(a), 403(a) and 405(a) of the Code, as amended by ERISA. The 
Service also pointed out that

[[Page 327]]

the ERISA Guidelines will enable sponsors of master and prototype plans 
(whether newly established or amended) to obtain opinion letters as to 
the acceptability of the form of such plans, and further, that employers 
who establish plans designed to meet the requirements of section 301(d) 
of the Tax Reduction Act of 1975 (relating to employee stock ownership 
plans) will be able to obtain determination letters as to the 
acceptability of such plans (whether or not such plans are intended to 
be qualified).
    To facilitate further the adoption of new plans and the prompt 
amendment of existing plans in conformance with the new qualification 
requirements, the Service announced on November 5, 1975, the adoption of 
a special procedure (hereinafter referred to as the ``Special Reliance 
Procedure'') pursuant to which the adoption, on or before May 30, 1976, 
of new plans and amendments of existing plans may be effectuated with 
full reliance upon the rules which comprise the ERISA Guidelines and 
without regard to any amendment or supplementation of such rules before 
such date. Therefore, except in unusual circumstances (described in 
Technical Information Release No. 1416 (November 5, 1975)), plans which 
comply with the Special Reliance Procedure shall generally be considered 
by the Service as satisfying the qualification requirements of the Code 
added or amended by ERISA for plan years commencing on or before 
December 31, 1976, to which such requirements are applicable, 
notwithstanding the date when final regulations or other rules hereafter 
published which amend or supplement the rules comprising the ERISA 
Guidelines may otherwise be made effective. Reference is hereby made to 
Technical Information Release No. 1416 (November 5, 1975) for a 
description of the Special Reliance Procedure.
    The Department announced that plans which comply with the Special 
Reliance Procedure will be considered by the Department as satisfying 
the requirements of the provisions of parts 2 and 3 of title I of ERISA 
which parallel the qualification requirements of the Code added or 
amended by ERISA to the same extent as such plans are considered by the 
Service as satisfying, in accordance with the terms of the Special 
Reliance Procedure, such qualification requirements.
    The availability of the Special Reliance Procedure will 
substantially diminish the occasions for plans to avail themselves of 
the right to satisfy, for tax purposes, the qualification requirements 
of the Code (added or amended by ERISA) by retroactive amendments 
adopted during or after the close of a plan year, in accordance with 
section 401(b) of the Code and the temporary regulations thereunder. The 
Department pointed out that no explicit parallel provision to section 
401(b) of the Code is contained in title I of ERISA. Nevertheless, to 
the extent retroactive amendments to a plan are made to satisfy the 
requirements of parts 2 and 3 of title I of ERISA which parallel the 
qualification requirements of the Code added or amended by ERISA, the 
Department noted that such plan will be in compliance with such 
requirements if such an amendment designed to satisfy such requirements 
(1) is adopted by the end of the plan year to which such requirements 
are applicable, and (2) is made effective for all purposes for such 
entire plan year.
    The schedule of documents comprising the ERISA Guidelines follows.

                                     ERISA Guidelines--Schedule of Documents
----------------------------------------------------------------------------------------------------------------
                                                                                               Code and ERISA
       Publication date 1975                Document                    Subject                   sections
----------------------------------------------------------------------------------------------------------------
Jan. 8.............................  TIR 1334..............  Questions and answers         410, 411, et al.
                                                              relating to defined
                                                              contribution plans subject
                                                              to ERISA.
Apr. 21............................  40 FR 17576...........  Notice of proposed            401(c), 401(d),
                                                              rulemaking: Qualification     401(e), 46, 50A, 72,
                                                              (and other aspects) of HR-    404(e), 901, and
                                                              10 plans.                     1379.
June 4.............................  T.D. 7358.............  Temporary regulations:        7476.
                                                              Notification of interested
                                                              parties.
July 14............................  T.D. 7367.............  Temporary regulations:        7476.
                                                              Notice of determination of
                                                              qualification.
Sept. 8............................  40 FR 41654...........  Department of Labor--Minimum  401(a)(3)(B),
                                                              standards for hours of        411(a)(5)(C), and
                                                              service, years of service,    ERISA secs. 202,
                                                              and breaks in service         203, and 204.
                                                              relating to participation,
                                                              vesting, and accrual of
                                                              benefits.
Sept. 17...........................  TIR 1403..............  Questions and answers         410, 411, et al.
                                                              relating mainly to defined
                                                              benefit plans subject to
                                                              ERISA (addition to TIR
                                                              1334).
Sept. 18...........................  40 FR 43034...........  Notice of proposed            414(f) and (g).
                                                              rulemaking: Definitions of
                                                              multi-employer plan and
                                                              plan administrator.
Sept. 29...........................  T.D. 7377.............  Temporary regulations:        401(b).
                                                              Certain retroactive
                                                              amendments of employee
                                                              plans.
Oct. 3.............................  T.D. 7379.............  Temporary regulations:        401(a)(11).
                                                              Qualified joint and
                                                              survivor annuities.

[[Page 328]]

 
                                     T.D. 7380.............  Temporary regulations:        410.
                                                              Minimum participation
                                                              standards.
Oct. 8.............................  T.D. 7381.............  Temporary regulations:        401(a)(14).
                                                              Commencement of benefits.
Oct. 15............................  T.D. 7382.............  Temporary regulations:        401(a)(15).
                                                              Requirement that benefits
                                                              under a qualified plan are
                                                              not decreased on account of
                                                              certain social security
                                                              increases.
Oct. 16............................  T.D. 7383.............  Temporary regulations:        401(d)(1).
                                                              Nonbank trustees of pension
                                                              and profit sharing trusts
                                                              benefiting owner-employees.
                                     40 FR 48517...........  Notice of proposed            401(f).
                                                              rulemaking: Certain
                                                              custodial accounts.
Oct. 30............................  TIR 1408..............  Questions and answers         401(a)(12) and
                                                              relating to mergers,          414(1).
                                                              consolidations, etc.
Nov. 3.............................  Rev. Rul. 75-480, 1975- Updating of Rev. Rul. 71-446  401(a)(5).
                                      44 IRB.                 to reflect changes mandated
                                                              by ERISA.
                                     Rev. Rul. 75-481, 1975- Guidelines for determining    401(a)(16) and 415.
                                      44 IRB.                 whether contributions or
                                                              benefits under plan satisfy
                                                              the limitations of sec. 415
                                                              of the code.
                                     TIR 1411, Rev. Proc.    Vesting and discrimination..  401(a)(4) and
                                      75-49, 1975-48 IRB.                                   411(d)(1).
Nov. 4.............................  TIR 1413..............  Questions and answers         401, 4975, and sec.
                                                              relating to employee stock    301(d) of the Tax
                                                              ownership plans.              Reduction Act of
                                                                                            1975.
Nov. 5.............................  T.D. 7387.............  Temporary regulations on      411.
                                                              minimum vesting standards.
                                     T.D. 7388.............  Controlled groups,            414(b) and (c).
                                                              businesses under common
                                                              control, etc.
(\1\)..............................  TIR...................  Nonforfeiture of employee     411(a)(1).
                                                              derived accrued benefit
                                                              upon death.
(\1\)..............................  ......................  Department of Labor--         410(a)(3)(B),
                                                              Interpretive bulletin:        411(a)(5)(C), and
                                                              Definition of seasonal        ERISA secs.
                                                              industries.                   202(a)(3)(C),
                                                                                            203(b)(2)(C).
Nov. 7.............................  40 FR 52008...........  Department of Labor--         414(f) and ERISA sec.
                                                              additional requirements       3(37).
                                                              applicable to definition of
                                                              multiemployer plan.
(\1\)..............................  ......................  Department of Labor--         411(a)(3)(B) and
                                                              suspension of benefits upon   ERISA sec.
                                                              reemployment of retiree.      203(a)(3)(A).
Dec. 3.............................  TIR 1422..............  Assignment or alienation of   401(a)(13).
                                                              plan benefits.
Dec. 9.............................  TIR 1424, Rev. Proc.    Vesting and discrimination..  401(a)(4) and
                                      76-1, 1976-1 IRB..                                    411(d)(1).
(\1\)..............................  TIR, Rev. Rul.........  Appropriate conversion        411(c)(2)(B)(ii).
                                                              factor.
----------------------------------------------------------------------------------------------------------------
\1\ To be published forthwith.


[41 FR 3289, Jan. 22, 1976]



Sec. 2509.78-1  Interpretive bulletin relating to payments by certain employee welfare benefit plans.

    The Department of Labor today announced its interpretation of 
certain provisions of part 4 of title I of the Employee Retirement 
Income Security Act of 1974 (ERISA), as those sections apply to a 
payment by multiple employer vacation plans of a sum of money to which a 
participant of beneficiary of the plan is entitled to a party other than 
the participant or beneficiary. \1\
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    \1\ Multiple employer vacation plans generally consist of trust 
funds to which employers are obligated to make contributions pursuant to 
collective bargaining agreements. Benefits are generally paid at 
specified intervals (usually annually or semi-annually) and such 
benefits are neither contingent upon the occurrence of a specified event 
nor restricted to use for a specified purpose when paid to the 
participant.
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    Section 402(b)(4) of ERISA requires every employee benefit plan to 
specify the basis on which payments are made to and from the plan.
    Section 403(c)(1) of ERISA generally requires the assets of an 
employee benefit plan to be held for the exclusive purpose of providing 
benefits to participants in the plan

[[Page 329]]

and their beneficiaries \2\ and defraying reasonable expenses of 
administering the plan. Similarly, section 404(a)(1)(A) requires a plan 
fiduciary to discharge his duties with respect to a plan solely in the 
interest of the participants and beneficiaries of the plan and for the 
exclusive purpose of providing benefits to participants and their 
beneficiaries and defraying reasonable expenses of administering the 
plan. Section 404(a)(1)(D) further requires the fiduciary to act in 
accordance with the documents and instruments governing the plan insofar 
as such documents and instruments are consistent with the provisions of 
title I of ERISA.
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    \2\ Section 403 (c) and (d) provide certain exceptions to this 
requirement, not here relevant.
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    In addition, section 406(a) of ERISA specifically prohibits a 
fiduciary with respect to a plan from causing the plan to engage in a 
transaction if he knows or should know that such transaction 
constitutes, inter alia, a direct or indirect: furnishing of goods, 
services or facilities between the plan and a party in interest (section 
406(a)(1)(C)); or transfer to, or use by or for the benefit of, a party 
in interest of any assets of the plan (section 406(a)(1)(D)). Section 
406(b)(2) of ERISA prohibits a plan fiduciary from acting in any 
transaction involving the plan on behalf of a party, or representing a 
party, whose interests are adverse to the interests of the plan or of 
its participants or beneficiaries.
    In this regard, however, Prohibited Transaction Exemptions 76-1, 
Part C, (41 FR 12740, March 26, 1976) and 77-10 (42 FR 33918, July 1, 
1977) exempt from the prohibitions of section 406(a) and 406(b)(2), 
respectively, the provision of administrative services by a multiple 
employer plan if specified conditions are met. These conditions are: (a) 
the plan receives reasonable compensation for the provision of the 
services (for purposes of the exemption, ``reasonable compensation'' 
need not include a profit which would ordinarily have been received in 
an arm's length transaction, but must be sufficient to reimburse the 
plan for its costs); (b) the arrangement allows any multiple employer 
plan which is a party to the transaction to terminate the relationship 
on a reasonably short notice under the circumstances; and (c) the plan 
complies with certain recordkeeping requirements. It should be noted 
that plans not subject to Prohibited Transaction Exemptions 76-1 and 77-
10--i.e., plans that are not multiple employer plans--cannot rely upon 
these exemptions.
    A payment by a vacation plan of all or any portion of benefits to 
which a plan participant or beneficiary is entitled to a party other 
than the participant or beneficiary will comply with the above-mentioned 
sections of ERISA if the arrangement pursuant to which payments are made 
does not constitute a prohibited transaction under ERISA and:
    (1) The plan documents expressly state that benefits payable under 
the plan to a participant or beneficiary may, at the direction of the 
participant or beneficiary, be paid to a third party rather than to the 
participant or beneficiary;
    (2) The participant or beneficiary directs in writing that the plan 
trustee(s) shall pay a named third party all or a specified portion of 
the sum of money which would otherwise be paid under the plan to him or 
her; and
    (3) A payment is made to a third party only when or after the money 
would otherwise be payable to the plan participant or beneficiary.

In the case of a multiple employer plan (as defined in Prohibited 
Transaction Exemption 76-1, Part C, Section III), if the arrangement to 
make payments to a third party is a prohibited transaction under ERISA, 
the arrangement will comply with the above-mentioned sections of ERISA 
if the conditions of Prohibited Transaction Exemptions 76-1, Part C, and 
77-10 and the above three paragraphs are met. In this regard, it is the 
view of the Department that the mere payment of money to which a 
participant or beneficiary is entitled, at the direction of the 
participant or beneficiary, to a third party who is a party in interest 
would not constitute a transfer of plan assets prohibited under section 
406(a)(1)(D). It is also the view of the Department that if a trustee or 
other fudiciary of a plan, in addition to his duties with respect to the 
plan, serves in a decisionmaking capacity with another party, the mere 
fact that the fiduciary effects payments to such party of money to which 
a participant is entitled at the direction of the participant and in 
accordance with specific provisions of governing plan documents and 
instruments, does not amount to a prohibited transaction under section 
406(b)(2).
    It should be noted that the interpretation set forth herein deals 
solely with the application of the provisions of title I of ERISA to the 
arrangements described herein. It does not deal with the application of 
any other statute to such arrangements. Specifically, no opinion is 
expressed herein as to the application of section 302 of the Labor 
Management Relations Act, 1947 or the Internal Revenue Code of 1954 
(particularly the provisions of section 501(c)(9) of the Code).

[43 FR 58565, Dec. 15, 1978]

[[Page 330]]



Sec. 2509.94-1  Interpretive bulletin relating to the fiduciary standard under ERISA in considering economically targeted investments.

    This Interpretive Bulletin sets forth the Department of Labor's 
interpretation of sections 403 and 404 of the Employee Retirement Income 
Security Act of 1974 (ERISA), as applied to employee benefit plan 
investments in ``economically targeted investments'' (ETIs), that is, 
investments selected for the economic benefits they create apart from 
their investment return to the employee benefit plan. Sections 403 and 
404, in part, require that a fiduciary of a plan act prudently, and to 
diversify plan investments so as to minimize the risk of large losses, 
unless under the circumstances it is clearly prudent not to do so. In 
addition, these sections require that a fiduciary act solely in the 
interest of the plan's participants and beneficiaries and for the 
exclusive purpose of providing benefits to their participants and 
beneficiaries. The Department has construed the requirements that a 
fiduciary act solely in the interest of, and for the exclusive purpose 
of providing benefits to, participants and beneficiaries as prohibiting 
a fiduciary from subordinating the interests of participants and 
beneficiaries in their retirement income to unrelated objectives.
    With regard to investing plan assets, the Department has issued a 
regulation, at 29 CFR 2550.404a-1, interpreting the prudence 
requirements of ERISA as they apply to the investment duties of 
fiduciaries of employee benefit plans. The regulation provides that the 
prudence requirements of section 404(a)(1)(B) are satisfied if (1) the 
fiduciary making an investment or engaging in an investment course of 
action has given appropriate consideration to those facts and 
circumstances that, given the scope of the fiduciary's investment 
duties, the fiduciary knows or should know are relevant, and (2) the 
fiduciary acts accordingly. This includes giving appropriate 
consideration to the role that the investment or investment course of 
action plays (in terms of such factors as diversification, liquidity and 
risk/return characteristics) with respect to that portion of the plan's 
investment portfolio within the scope of the fiduciary's responsibility.
    Other facts and circumstances relevant to an investment or 
investment course of action would, in the view of the Department, 
include consideration of the expected return on alternative investments 
with similar risks available to the plan. It follows that, because every 
investment necessarily causes a plan to forgo other investment 
opportunities, an investment will not be prudent if it would be expected 
to provide a plan with a lower rate of return than available alternative 
investments with commensurate degrees of risk or is riskier than 
alternative available investments with commensurate rates of return.
    The fiduciary standards applicable to ETIs are no different than the 
standards applicable to plan investments generally. Therefore, if the 
above requirements are met, the selection of an ETI, or the engaging in 
an investment course of action intended to result in the selection of 
ETIs, will not violate section 404(a)(1)(A) and (B) and the exclusive 
purpose requirements of section 403.

[59 FR 32607, June 23, 1994]



Sec. 2509.94-2  Interpretive bulletin relating to written statements of investment policy, including proxy voting policy or guidelines.

    This interpretive bulletin sets forth the Department of Labor's (the 
Department) interpretation of sections 402, 403 and 404 of the Employee 
Retirement Income Security Act of 1974 (ERISA) as those sections apply 
to voting of proxies on securities held in employee benefit plan 
investment portfolios and the maintenance of and compliance with 
statements of investment policy, including proxy voting policy. In 
addition, this interpretive bulletin provides guidance on the 
appropriateness under ERISA of active monitoring of corporate management 
by plan fiduciaries.

                            (1) Proxy Voting

    The fiduciary act of managing plan assets that are shares of 
corporate stock includes the voting of proxies appurtenant to those 
shares of stock. As a result, the responsibility for voting proxies lies 
exclusively with the plan trustee except to the extent that either (1) 
the trustee is subject to the directions of a named fiduciary pursuant 
to ERISA Sec. 403(a)(1); or (2) the power to manage, acquire or dispose 
of the relevant assets has been delegated by a named fiduciary to one or 
more investment managers pursuant to ERISA Sec. 403(a)(2). Where the 
authority to manage plan assets has been delegated to an investment 
manager pursuant to Sec. 403(a)(2), no person other than the investment 
manager has authority to vote proxies appurtenant to such plan assets 
except to the extent that the named fiduciary has reserved to itself (or 
to another named fiduciary so authorized by the plan document) the right 
to direct a plan trustee regarding the voting of proxies. In this 
regard, a named fiduciary, in delegating investment management authority 
to an investment manager, could reserve to itself the right to direct a 
trustee with respect to the voting of all proxies or reserve to itself 
the right to direct a trustee as to the voting of only those proxies 
relating to specified assets or issues.

[[Page 331]]

    If the plan document or investment management agreement provides 
that the investment manager is not required to vote proxies, but does 
not expressly preclude the investment manager from voting proxies, the 
investment manager would have exclusive responsibility for voting 
proxies. Moreover, an investment manager would not be relieved of its 
own fiduciary responsibilities by following directions of some other 
person regarding the voting of proxies, or by delegating such 
responsibility to another person. If, however, the plan document or the 
investment management contract expressly precludes the investment 
manager from voting proxies, the responsibility for voting proxies would 
lie exclusively with the trustee. The trustee, however, consistent with 
the requirements of ERISA Sec. 403(a)(1), may be subject to the 
directions of a named fiduciary if the plan so provides.
    The fiduciary duties described at ERISA Sec. 404(a)(1)(A) and (B), 
require that, in voting proxies, the responsible fiduciary consider 
those factors that may affect the value of the plan's investment and not 
subordinate the interests of the participants and beneficiaries in their 
retirement income to unrelated objectives. These duties also require 
that the named fiduciary appointing an investment manager periodically 
monitor the activities of the investment manager with respect to the 
management of plan assets, including decisions made and actions taken by 
the investment manager with regard to proxy voting decisions. The named 
fiduciary must carry out this responsibility solely in the interest of 
the participants and beneficiaries and without regard to its 
relationship to the plan sponsor.
    It is the view of the Department that compliance with the duty to 
monitor necessitates proper documentation of the activities that are 
subject to monitoring. Thus, the investment manager or other responsible 
fiduciary would be required to maintain accurate records as to proxy 
voting. Moreover, if the named fiduciary is to be able to carry out its 
responsibilities under ERISA Sec. 404(a) in determining whether the 
investment manager is fulfilling its fiduciary obligations in investing 
plans assets in a manner that justifies the continuation of the 
management appointment, the proxy voting records must enable the named 
fiduciary to review not only the investment manager's voting procedure 
with respect to plan-owned stock, but also to review the actions taken 
in individual proxy voting situations.
    The fiduciary obligations of prudence and loyalty to plan 
participants and beneficiaries require the responsible fiduciary to vote 
proxies on issues that may affect the value of the plan's investment. 
Although the same principles apply for proxies appurtenant to shares of 
foreign corporations, the Department recognizes that in voting such 
proxies, plans may, in some cases, incur additional costs. Thus, a 
fiduciary should consider whether the plan's vote, either by itself or 
together with the votes of other shareholders, is expected to have an 
effect on the value of the plan's investment that will outweigh the cost 
of voting. Moreover, a fiduciary, in deciding whether to purchase shares 
of a foreign corporation, should consider whether the difficulty and 
expense in voting the shares is reflected in their market price.

                   (2) Statements of Investment Policy

    The maintenance by an employee benefit plan of a statement of 
investment policy designed to further the purposes of the plan and its 
funding policy is consistent with the fiduciary obligations set forth in 
ERISA section 404(a)(1)(A) and (B). Since the fiduciary act of managing 
plan assets that are shares of corporate stock includes the voting of 
proxies appurtenant to those shares of stock, a statement of proxy 
voting policy would be an important part of any comprehensive statement 
of investment policy. For purposes of this document, the term 
``statement of investment policy'' means a written statement that 
provides the fiduciaries who are responsible for plan investments with 
guidelines or general instructions concerning various types or 
categories of investment management decisions, which may include proxy 
voting decisions. A statement of investment policy is distinguished from 
directions as to the purchase or sale of a specific investment at a 
specific time or as to voting specific plan proxies.
    In plans where investment management responsibility is delegated to 
one or more investment managers appointed by the named fiduciary 
pursuant to ERISA Sec. 402(c)(3), inherent in the authority to appoint 
an investment manager, the named fiduciary responsible for appointment 
of investment managers has the authority to condition the appointment on 
acceptance of a statement of investment policy. Thus, such a named 
fiduciary may expressly require, as a condition of the investment 
management agreement, that an investment manager comply with the terms 
of a statement of investment policy which sets forth guidelines 
concerning investments and investment courses of action which the 
investment manager is authorized or is not authorized to make. Such 
investment policy may include a policy or guidelines on the voting of 
proxies on shares of stock for which the investment manager is 
responsible. In the absence of such an express requirement to comply 
with an investment policy, the authority to manage the plan assets 
placed under the control of the investment manager would lie exclusively 
with the investment manager. Although a trustee may be subject to the 
directions of a named fiduciary pursuant to ERISA

[[Page 332]]

Sec. 403(a)(1), an investment manager who has authority to make 
investment decisions, including proxy voting decisions, would never be 
relieved of its fiduciary responsibility if it followed directions as to 
specific investment decisions from the named fiduciary or any other 
person.
    Statements of investment policy issued by a named fiduciary 
authorized to appoint investment managers would be part of the 
``documents and instruments governing the plan'' within the meaning of 
ERISA Sec. 404(a)(1)(D). An investment manager to whom such investment 
policy applies would be required to comply with such policy, pursuant to 
ERISA Sec. 404(a)(1)(D) insofar as the policy directives or guidelines 
are consistent with titles I and IV of ERISA. Therefore, if, for 
example, compliance with the guidelines in a given instance would be 
imprudent, then the investment manager's failure to follow the 
guidelines would not violate ERISA Sec. 404(a)(1)(D). Moreover, ERISA 
Sec. 404(a)(1)(D) does not shield the investment manager from liability 
for imprudent actions taken in compliance with a statement of investment 
policy.
    The plan document or trust agreement may expressly provide a 
statement of investment policy to guide the trustee or may authorize a 
named fiduciary to issue a statement of investment policy applicable to 
a trustee. Where a plan trustee is subject to an investment policy, the 
trustee's duty to comply with such investment policy would also be 
analyzed under ERISA Sec. 404(a)(1)(D). Thus, the trustee would be 
required to comply with the statement of investment policy unless, for 
example, it would be imprudent to do so in a given instance.
    Maintenance of a statement of investment policy by a named fiduciary 
does not relieve the named fiduciary of its obligations under ERISA 
Sec. 404(a) with respect to the appointment and monitoring of an 
investment manager or trustee. In this regard, the named fiduciary 
appointing an investment manager must periodically monitor the 
investment manager's activities with respect to management of the plan 
assets. Moreover, compliance with ERISA Sec. 404(a)(1)(B) would require 
maintenance of proper documentation of the activities of the investment 
manager and of the named fiduciary of the plan in monitoring the 
activities of the investment manager. In addition, in the view of the 
Department, a named fiduciary's determination of the terms of a 
statement of investment policy is an exercise of fiduciary 
responsibility and, as such, statements may need to take into account 
factors such as the plan's funding policy and its liquidity needs as 
well as issues of prudence, diversification and other fiduciary 
requirements of ERISA.

    An investment manager of a pooled investment vehicle that holds 
assets of more than one employee benefit plan may be subject to a proxy 
voting policy of one plan that conflicts with the proxy voting policy of 
another plan. Compliance with ERISA Sec. 404(a)(1)(D) would require such 
investment manager to reconcile, insofar as possible, the conflicting 
policies (assuming compliance with each policy would be consistent with 
ERISA Sec. 404(a)(1)(D)) and, if necessary and to the extent permitted 
by applicable law, vote the relevant proxies to reflect such policies in 
proportion to each plan's interest in the pooled investment vehicle. If, 
however, the investment manager determines that compliance with 
conflicting voting policies would violate ERISA Sec. 404(a)(1)(D) in a 
particular instance, for example, by being imprudent or not solely in 
the interest of plan participants, the investment manager would be 
required to ignore the voting policy that would violate ERISA 
Sec. 404(a)(1)(D) in that instance. Such an investment manager may, 
however, require participating investors to accept the investment 
manager's own investment policy statement, including any statement of 
proxy voting policy, before they are allowed to invest. As with 
investment policies originating from named fiduciaries, a policy 
initiated by an investment manager and adopted by the participating 
plans would be regarded as an instrument governing the participating 
plans, and the investment manager's compliance with such a policy would 
be governed by ERISA Sec. 404(a)(1)(D).

                        (3) Shareholder Activism

    An investment policy that contemplates activities intended to 
monitor or influence the management of corporations in which the plan 
owns stock is consistent with a fiduciary's obligations under ERISA 
where the responsible fiduciary concludes that there is a reasonable 
expectation that such monitoring or communication with management, by 
the plan alone or together with other shareholders, is likely to enhance 
the value of the plan's investment in the corporation, after taking into 
account the costs involved. Such a reasonable expectation may exist in 
various circumstances, for example, where plan investments in corporate 
stock are held as long-term investments or where a plan may not be able 
to easily dispose such an investment. Active monitoring and 
communication activities would generally concern such issues as the 
independence and expertise of candidates for the corporation's board of 
directors and assuring that the board has sufficient information to 
carry out its responsibility to monitor management. Other issues may 
include such matters as consideration of the appropriateness of 
executive compensation, the corporation's policy regarding mergers and 
acquisitions, the extent of debt financing and capitalization, the 
nature of long-term business plans, the corporation's investment in 
training to develop

[[Page 333]]

its work force, other workplace practices and financial and non-
financial measures of corporate performance. Active monitoring and 
communication may be carried out through a variety of methods including 
by means of correspondence and meetings with corporate management as 
well as by exercising the legal rights of a shareholder.

[59 FR 38863, July 29, 1994]



Sec. 2509.94-3  Interpretive bulletin relating to in-kind contributions to employee benefit plans.

    (a) General. This bulletin sets forth the views of the Department of 
Labor (the Department) concerning in-kind contributions (i.e., 
contributions of property other than cash) in satisfaction of an 
obligation to contribute to an employee benefit plan to which part 4 of 
title I of the Employee Retirement Income Security Act of 1974 (ERISA) 
or a plan to which section 4975 of the Internal Revenue Code (the Code) 
applies. (For purposes of this document the term ``plan'' shall refer to 
either or both types of such entities as appropriate). Section 
406(a)(1)(A) of ERISA provides that a fiduciary with respect to a plan 
shall not cause the plan to engage in a transaction if the fiduciary 
knows or should know that the transaction constitutes a direct or 
indirect sale or exchange of any property between a plan and a ``party 
in interest'' as defined in section 3(14) of ERISA. The Code imposes a 
two-tier excise tax under section 4975(c)(1)(A) an any direct or 
indirect sale or exchange of any property between a plan and a 
``disqualified person'' as defined in section 4975(e)(2) of the Code. An 
employer or employee organization that maintains a plan is included 
within the definitions of ``party in interest'' and ``disqualified 
person.'' \1\
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    \1\ Under Reorganization Plan No. 4 of 1978 (43 FR 47713, October 
17, 1978), the authority of the Secretary of the Treasury to issue 
rulings under the prohibited transactions provisions of section 4975 of 
the Code has been transferred, with certain exceptions not here 
relevant, to the Secretary of Labor. Except with respect to the types of 
plans covered, the prohibited transaction provisions of section 406 of 
ERISA generally parallel the prohibited transaction of provisions of 
section 4975 of the Code.
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    In Commissioner of Internal Revenue v. Keystone Consolidated 
Industries, Inc., ---- U.S. ----, 113 S. Ct. 2006 (1993), the Supreme 
Court held that an employer's contribution of unencumbered real property 
to a tax-qualified defined benefit pension plan was a sale or exchange 
prohibited under section 4975 of the Code where the stated fair market 
value of the property was credited against the employer's obligation to 
the defined benefit pension plan. The parties stipulated that the 
property was contributed to the plan free of encumbrances and the stated 
fair market value of the property was not challenged. 113 S. Ct. at 
2009. In reaching its holding the Court construed section 4975(f)(3) of 
the Code (and therefore section 406(c) of ERISA), regarding transfers of 
encumbered property, not as a limitation but rather as extending the 
reach of section 4975(c)(1)(A) of the Code (and thus section 
406(a)(1)(A) of ERISA) to include contributions of encumbered property 
that do not satisfy funding obligations. Id. at 2013. Accordingly, the 
Court concluded that the contribution of unencumbered property was 
prohibited under section 4975(c)(1)(A) of the Code (and thus section 
406(a)(1)(A) of ERISA) as ``at least both an indirect type of sale and a 
form of exchange, since the property is exchanged for diminution of the 
employer's funding obligation.'' 113 S. Ct. at 2012.
    (b) Defined benefit plans. Consistent with the reasoning of the 
Supreme Court in Keystone, because an employer's or plan sponsor's in-
kind contribution to a defined benefit pension plan is credited to the 
plan's funding standard account it would constitute a transfer to reduce 
an obligation of the sponsor or employer to the plan. Therefore, in the 
absence of an applicable exemption, such a contribution would be 
prohibited under section 406(a)(1)(A) of ERISA and section 4975(c)(1)(A) 
of the Code. Such an in-kind contribution would constitute a prohibited 
transaction even if the value of the contribution is in excess of the 
sponsor's or employer's funding obligation for the plan year in which 
the contribution is made and thus is not used to reduce the plan's 
accumulated funding deficiency for that plan year because the 
contribution would result in a credit against funding obligations which 
might arise in the future.
    (c) Defined contribution and welfare plans. In the context of 
defined contribution pension plans and welfare plans, it is the view of 
the Department that an in-kind contribution to a plan that reduces an 
obligation of a plan sponsor or employer to make a contribution measured 
in terms of cash amounts would constitute a prohibited transaction under 
section 406(a)(1)(A) of ERISA (and section 4975(c)(1)(A) of the Code) 
unless a statutory or administrative exemption under section 408 of 
ERISA (or sections 4975(c)(2) or (d) of the Code) applies. For example, 
if a profit sharing plan required the employer to make annual 
contributions ``in cash or in kind'' equal to a given percentage of the 
employer's net profits for the year, an in-kind contribution used to 
reduce this obligation would constitute a prohibited transaction in the 
absence of an exemption because the amount of the contribution 
obligation is measured in

[[Page 334]]

terms of cash amounts (a percentage of profits) even though the terms of 
the plan purport to permit in-kind contributions.
    Conversely, a transfer of unencumbered property to a welfare benefit 
plan that does not relieve the sponsor or employer of any present or 
future obligation to make a contribution that is measured in terms of 
cash amounts would not constitute a prohibited transaction under section 
406(a)(1)(A) of ERISA or section 4975(c)(1)(A) of the Code. The same 
principles apply to defined contribution plans that are not subject to 
the minimum funding requirements of section 302 of ERISA or section 412 
of the Code. For example, where a profit sharing or stock bonus plan, by 
its terms, is funded solely at the discretion of the sponsoring 
employer, and the employer is not otherwise obligated to make a 
contribution measured in terms of cash amounts, a contribution of 
unencumbered real property would not be a prohibited sale or exchange 
between the plan and the employer. If, however, the same employer had 
made an enforceable promise to make a contribution measured in terms of 
cash amounts to the plan, a subsequent contribution of unencumbered real 
property made to offset such an obligation would be a prohibited sale or 
exchange.
    (d) Fiduciary standards. Independent of the application of the 
prohibited transaction provisions, fiduciaries of plans covered by part 
4 of title I of ERISA must determine that acceptance of an in-kind 
contribution is consistent with ERISA's general standards of fiduciary 
conduct. It is the view of the Department that acceptance of an in-kind 
contribution is a fiduciary act subject to section 404 of ERISA. In this 
regard, sections 406(a)(1)(A) and (B) of ERISA require that fiduciaries 
discharge their duties to a plan solely in the interests of the 
participants and beneficiaries, for the exclusive purpose of providing 
benefits and defraying reasonable administrative expenses, and with the 
care, skill, prudence, and diligence under the circumstances then 
prevailing that a prudent person acting in a like capacity and familiar 
with such matters would use in the conduct of an enterprise of a like 
character and with like aims. In addition, section 406(a)(1)(C) requires 
generally that fiduciaries diversify plan assets so as to minimize the 
risk of large losses. Accordingly, the fiduciaries of a plan must act 
``prudently,'' ``solely in the interest'' of the plan's participants and 
beneficiaries and with a view to the need to diversify plan assets when 
deciding whether to accept in-kind contributions. If accepting an in-
kind contribution is not ``prudent,'' not ``solely in the interest'' of 
the participants and beneficiaries of the plan, or would result in an 
improper lack of diversification of plan assets, the responsible 
fiduciaries of the plan would be liable for any losses resulting from 
such a breach of fiduciary responsibility, even if a contribution in 
kind does not constitute a prohibited transaction under section 406 of 
ERISA. In this regard, a fiduciary should consider any liabilities 
appurtenant to the in-kind contribution to which the plan would be 
exposed as a result of acceptance of the contribution.

[59 FR 66736, Dec. 28, 1994]



Sec. 2509.95-1  Interpretive bulletin relating to the fiduciary standard under ERISA when selecting an annuity provider.

    (a) Scope. This Interpretive Bulletin provides guidance concerning 
certain fiduciary standards under part 4 of title I of the Employee 
Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. 1104-1114, 
applicable to the selection of annuity providers for the purpose of 
pension plan benefit distributions where the plan intends to transfer 
liability for benefits to the annuity provider.
    (b) In General. Generally, when a pension plan purchases an annuity 
from an insurer as a distribution of benefits, it is intended that the 
plan's liability for such benefits is transferred to the annuity 
provider. The Department's regulation defining the term ``participant 
covered under the plan'' for certain purposes under title I of ERISA 
recognizes that such a transfer occurs when the annuity is issued by an 
insurance company licensed to do business in a State. 29 CFR 2510.3-
3(d)(2)(ii). Although the regulation does not define the term 
``participant'' or ``beneficiary'' for purposes of standing to bring an 
action under ERISA Sec. 502(a), 29 U.S.C. 1132(a), it makes clear that 
the purpose of a benefit distribution annuity is to transfer the plan's 
liability with respect to the individual's benefits to the annuity 
provider.
    Pursuant to ERISA section 404(a)(1), 29 U.S.C. 1104(a)(1), 
fiduciaries must discharge their duties with respect to the plan solely 
in the interest of the participants and beneficiaries. Section 
404(a)(1)(A), 29 U.S.C. 1104(a)(1)(A), states that the fiduciary must 
act for the exclusive purpose of providing benefits to the participants 
and beneficiaries and defraying reasonable plan administration expenses. 
In addition, section 404(a)(1)(B), 29 U.S.C. 1104(a)(1)(B), requires a 
fiduciary to act with the care, skill, prudence and diligence under the 
prevailing circumstances that a prudent person acting in a like capacity 
and familiar with such matters would use.
    (c) Selection of Annuity Providers. The selection of an annuity 
provider for purposes of a pension benefit distribution, whether upon 
separation or retirement of a participant or upon the termination of a 
plan, is a fiduciary decision governed by the provisions of part 4

[[Page 335]]

of title I of ERISA. In discharging their obligations under section 
404(a)(1), 29 U.S.C. 1104(a)(1), to act solely in the interest of 
participants and beneficiaries and for the exclusive purpose of 
providing benefits to the participants and beneficiaries as well as 
defraying reasonable expenses of administering the plan, fiduciaries 
choosing an annuity provider for the purpose of making a benefit 
distribution must take steps calculated to obtain the safest annuity 
available, unless under the circumstances it would be in the interests 
of participants and beneficiaries to do otherwise. In addition, the 
fiduciary obligation of prudence, described at section 404(a)(1)(B), 29 
U.S.C. 1104(a)(1)(B), requires, at a minimum, that plan fiduciaries 
conduct an objective, thorough and analytical search for the purpose of 
identifying and selecting providers from which to purchase annuities. In 
conducting such a search, a fiduciary must evaluate a number of factors 
relating to a potential annuity provider's claims paying ability and 
creditworthiness. Reliance solely on ratings provided by insurance 
rating services would not be sufficient to meet this requirement. In 
this regard, the types of factors a fiduciary should consider would 
include, among other things:
    (1) The quality and diversification of the annuity provider's 
investment portfolio;
    (2) The size of the insurer relative to the proposed contract;
    (3) The level of the insurer's capital and surplus;
    (4) The lines of business of the annuity provider and other 
indications of an insurer's exposure to liability;
    (5) The structure of the annuity contract and guarantees supporting 
the annuities, such as the use of separate accounts;
    (6) The availability of additional protection through state guaranty 
associations and the extent of their guarantees. Unless they possess the 
necessary expertise to evaluate such factors, fiduciaries would need to 
obtain the advice of a qualified, independent expert. A fiduciary may 
conclude, after conducting an appropriate search, that more than one 
annuity provider is able to offer the safest annuity available.
    (d) Costs and Other Considerations. The Department recognizes that 
there are situations where it may be in the interest of the participants 
and beneficiaries to purchase other than the safest available annuity. 
Such situations may occur where the safest available annuity is only 
marginally safer, but disproportionately more expensive than competing 
annuities, and the participants and beneficiaries are likely to bear a 
significant portion of that increased cost. For example, where the 
participants in a terminating pension plan are likely to receive, in the 
form of increased benefits, a substantial share of the cost savings that 
would result from choosing a competing annuity, it may be in the 
interest of the participants to choose the competing annuity. It may 
also be in the interest of the participants and beneficiaries to choose 
a competing annuity of the annuity provider offering the safest 
available annuity is unable to demonstrate the ability to administer the 
payment of benefits to the participants and beneficiaries. The 
Department notes, however, that increased cost or other considerations 
could never justify putting the benefits of annuitized participants and 
beneficiaries at risk by purchasing an unsafe annuity.
    In contrast to the above, a fiduciary's decision to purchase more 
risky, lower-priced annuities in order to ensure or maximize a reversion 
of excess assets that will be paid solely to the employer-sponsor in 
connection with the termination of an over-funded pension plan would 
violate the fiduciary's duties under ERISA to act solely in the interest 
of the plan participants and beneficiaries. In such circumstances, the 
interests of those participants and beneficiaries who will receive 
annuities lies in receiving the safest annuity available and other 
participants and beneficiaries have no countervailing interests. The 
fiduciary in such circumstances must make diligent efforts to assure 
that the safest available annuity is purchased.
    Similarly, a fiduciary may not purchase a riskier annuity solely 
because there are insufficient assets in a defined benefit plan to 
purchase a safer annuity. The fiduciary may have to condition the 
purchase of annuities on additional employer contributions sufficient to 
purchase the safest available annuity.
    (e) Conflicts of Interest. Special care should be taken in reversion 
situations where fiduciaries selecting the annuity provider have an 
interest in the sponsoring employer which might affect their judgment 
and therefore create the potential for a violation of ERISA 
Sec. 406(b)(1). As a practical matter, many fiduciaries have this 
conflict of interest and therefore will need to obtain and follow 
independent expert advice calculated to identify those insurers with the 
highest claims-paying ability willing to write the business.

[60 FR 12329, Mar. 6, 1995]



Sec. 2509.96-1  Interpretive bulletin relating to participant investment education.

    (a) Scope. This interpretive bulletin sets forth the Department of 
Labor's interpretation of section 3(21)(A)(ii) of the Employee 
Retirement Income Security Act of 1974, as amended (ERISA), and 29 CFR 
2510.3-21(c) as applied to the provision of investment-related 
educational information to participants and beneficiaries in 
participant-directed individual account pension plans (i.e.,

[[Page 336]]

pension plans that permit participants and beneficiaries to direct the 
investment of assets in their individual accounts, including plans that 
meet the requirements of the Department's regulations at 29 CFR 
2550.404c-1).
    (b) General. Fiduciaries of an employee benefit plan are charged 
with carrying out their duties prudently and solely in the interest of 
participants and beneficiaries of the plan, and are subject to personal 
liability to, among other things, make good any losses to the plan 
resulting from a breach of their fiduciary duties. ERISA sections 403, 
404 and 409, 29 U.S.C. 1103, 1104, and 1109. Section 404(c) of ERISA 
provides a limited exception to these rules for a pension plan that 
permits a participant or beneficiary to exercise control over the assets 
in his or her individual account. The Department of Labor's regulation, 
at 29 CFR 2550.404c-1, describes the kinds of plans to which section 
404(c) applies, the circumstances under which a participant or 
beneficiary will be considered to have exercised independent control 
over the assets in his or her account, and the consequences of a 
participant's or beneficiary's exercise of such control.\1\
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    \1\ The section 404(c) regulation conditions relief from fiduciary 
liability on, among other things, the participant or beneficiary being 
provided or having the opportunity to obtain sufficient investment 
information regarding the investment alternatives available under the 
plan in order to make informed investment decisions. Compliance with 
this condition, however, does not require that participants and 
beneficiaries be offered or provided either investment advice or 
investment education, e.g. regarding general investment principles and 
strategies, to assist them in making investment decisions. 29 CFR 
2550.404c-1(c)(4).
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    With both an increase in the number of participant-directed 
individual account plans and the number of investment options available 
to participants and beneficiaries under such plans, there has been an 
increasing recognition of the importance of providing participants and 
beneficiaries, whose investment decisions will directly affect their 
income at retirement, with information designed to assist them in making 
investment and retirement-related decisions appropriate to their 
particular situations. Concerns have been raised, however, that the 
provision of such information may in some situations be viewed as 
rendering ``investment advice for a fee or other compensation,'' within 
the meaning of ERISA section 3(21)(A)(ii), thereby giving rise to 
fiduciary status and potential liability under ERISA for investment 
decisions of plan participants and beneficiaries.
    In response to these concerns, the Department of Labor is clarifying 
herein the applicability of ERISA section 3(21)(A)(ii) and 29 CFR 
2510.3-21(c) to the provision of investment-related educational 
information to participants and beneficiaries in participant directed 
individual account plans.\2\ In providing this clarification, the 
Department does not address the ``fee or other compensation, direct or 
indirect,'' which is a necessary element of fiduciary status under ERISA 
section 3(21)(A)(ii).\3\
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    \2\ Issues relating to the circumstances under which information 
provided to participants and beneficiaries may affect a participant's or 
beneficiary's ability to exercise independent control over the assets in 
his or her account for purposes of relief from fiduciary liability under 
ERISA section 404(c) are beyond the scope of this interpretive bulletin. 
Accordingly, no inferences should be drawn regarding such issues. See 29 
CFR 2550.404c-1(c)(2). It is the view of the Department, however, that 
the provision of investment-related information and material to 
participants and beneficiaries in accordance with paragraph (d) of this 
interpretive bulletin will not, in and of itself, affect the 
availability of relief under section 404(c).
    \3\ The Department has expressed the view that, for purposes of 
section 3(21)(A)(ii), such fees or other compensation need not come from 
the plan and should be deemed to include all fees or other compensation 
incident to the transaction in which the investment advise has been or 
will be rendered. See A.O. 83-60A (Nov. 21, 1983); Reich v. McManus, 883 
F. Supp. 1144 (N.D. Ill. 1995).
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    (c) Investment Advice. Under ERISA section 3(21)(A)(ii), a person is 
considered a fiduciary with respect to an employee benefit plan to the 
extent that person ``renders investment advice for a fee or other 
compensation, direct or indirect, with respect to any moneys or other 
property of such plan, or has any authority to do so * * *.'' The 
Department issued a regulation, at 29 CFR 2510.3-21(c), describing the 
circumstances under which a person will be considered to be rendering 
``investment advice'' within the meaning of section 3(21)(A)(ii). 
Because section 3(21)(A)(ii) applies to advice with respect to ``any 
moneys or other property'' of a plan and 29 CFR 2510.3-21(c) is intended 
to clarify the application of that section, it is the view of the 
Department of Labor that the criteria set forth in the regulation apply 
to determine whether a person renders ``investment advice'' to a pension 
plan participant or beneficiary who is permitted to direct the 
investment of assets in his or her individual account.
    Applying 29 CFR 2510.3-21(c) in the context of providing investment-
related information

[[Page 337]]

to participants and beneficiaries of participant-directed individual 
account pension plans, a person will be considered to be rendering 
``investment advice,'' within the meaning of ERISA section 3(21)(A)(ii), 
to a participant or beneficiary only if: (i) the person renders advice 
to the participant or beneficiary as to the value of securities or other 
property, or makes recommendations as to the advisability of investing 
in, purchasing, or selling securities or other property (2510.3-
21(c)(1)(i); and (ii) the person, either directly or indirectly, (A) has 
discretionary authority or control with respect to purchasing or selling 
securities or other property for the participant or beneficiary (2510.3-
21(c)(1)(ii)(A)), or (B) renders the advice on a regular basis to the 
participant or beneficiary, pursuant to a mutual agreement, arrangement 
or understanding (written or otherwise) with the participant or 
beneficiary that the advice will serve as a primary basis for the 
participant's or beneficiary's investment decisions with respect to plan 
assets and that such person will render individualized advice based on 
the particular needs of the participant or beneficiary (2510.3-
21(c)(1)(ii)(B)).\4\
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    \4\ This IB does not address the application of 29 CFR 2510.3-21(c) 
to communications with fiduciaries of participant-directed individual 
account pension plan plans.
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    Whether the provision of particular investment-related information 
or materials to a participant or beneficiary constitutes the rendering 
of ``investment advice,'' within the meaning of 29 CFR 2510.3-21(c)(1), 
generally can be determined only by reference to the facts and 
circumstances of the particular case with respect to the individual plan 
participant or beneficiary. To facilitate such determinations, however, 
the Department of Labor has identified, in paragraph (d), below, 
examples of investment-related information and materials which if 
provided to plan participants and beneficiaries would not, in the view 
of the Department, result in the rendering of ``investment advice'' 
under ERISA section 3(21)(A)(ii) and 29 CFR 2510.3-21(c).
    (d) Investment Education. For purposes of ERISA section 3(21)(A)(ii) 
and 29 CFR 2510.3-21(c), the Department of Labor has determined that the 
furnishing of the following categories of information and materials to a 
participant or beneficiary in a participant-directed individual account 
pension plan will not constitute the rendering of ``investment advice,'' 
irrespective of who provides the information (e.g., plan sponsor, 
fiduciary or service provider), the frequency with which the information 
is shared, the form in which the information and materials are provided 
(e.g., on an individual or group basis, in writing or orally, or via 
video or computer software), or whether an identified category of 
information and materials is furnished alone or in combination with 
other identified categories of information and materials.
    (1) Plan Information. (i) Information and materials that inform a 
participant or beneficiary about the benefits of plan participation, the 
benefits of increasing plan contributions, the impact of preretirement 
withdrawals on retirement income, the terms of the plan, or the 
operation of the plan; or
    (ii) information such as that described in 29 CFR 2550.404c-
1(b)(2)(i) on investment alternatives under the plan (e.g., descriptions 
of investment objectives and philosophies, risk and return 
characteristics, historical return information, or related 
prospectuses).\5\
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    \5\ Descriptions of investment alternatives under the plan may 
include information relating to the generic asset class (e,g,, equities, 
bonds, or cash) of the investment alternatives. 29 CFR 2550.404c-1 
(b)(2)(i)(B)(1)(ii).
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    The information and materials described above relate to the plan and 
plan participation, without reference to the appropriateness of any 
individual investment option for a particular participant or beneficiary 
under the plan. The information, therefore, does not contain either 
``advice'' or ``recommendations'' within the meaning of 29 CFR 2510.3-
21(c)(1)(i). Accordingly, the furnishing of such information would not 
constitute the rendering of ``investment advice'' for purposes of 
section 3(21)(A)(ii) of ERISA.
    (2) General Financial and Investment Information. Information and 
materials that inform a participant or beneficiary about: (i) General 
financial and investment concepts, such as risk and return, 
diversification, dollar cost averaging, compounded return, and tax 
deferred investment; (ii) historic differences in rates of return 
between different asset classes (e.g., equities, bonds, or cash) based 
on standard market indices; (iii) effects of inflation; (iv) estimating 
future retirement income needs; (v) determining investment time 
horizons; and (vi) assessing risk tolerance.
    The information and materials described above are general financial 
and investment information that have no direct relationship to 
investment alternatives available to participants and beneficiaries 
under a plan or to individual participants or beneficiaries. The 
furnishing of such information, therefore, would not constitute 
rendering ``advice'' or making ``recommendations'' to a participant or 
beneficiary within the meaning of 29 CFR 2510.3-21(c)(1)(i). 
Accordingly, the furnishing of such information would not constitute the 
rendering of ``investment advice'' for purposes of section 3(21)(A)(ii) 
of ERISA.
    (3) Asset Allocation Models. Information and materials (e.g., pie 
charts, graphs, or case studies) that provide a participant or 
beneficiary with models, available to all plan

[[Page 338]]

participants and beneficiaries, of asset allocation portfolios of 
hypothetical individuals with different time horizons and risk profiles, 
where: (i) Such models are based on generally accepted investments 
theories that take into account the historic returns of different asset 
classes (e.g., equities, bonds, or cash) over define periods of time; 
(ii) all material facts and assumptions on which such models are based 
(e.g., retirement ages, life expectancies, income levels, financial 
resources, replacement income ratios, inflation rates, and rates of 
return) accompany the models; (iii) to the extent that an asset 
allocation model identifies any specific investment alternative 
available under the plan, the model is accompanied by a statement 
indicating that other investment alternatives having similar risk and 
return characteristics may be available under the plan and identifying 
where information on those investment alternatives may be obtained; and 
(iv) the asset allocation models are accompanied by a statement 
indicating that, in applying particular asset allocation models to their 
individual situations, participants or beneficiaries should consider 
their other assets, income, and investments (e.g., equity in a home, IRA 
investments, savings accounts, and interests in other qualified and non-
qualified plans) in addition to their interests in the plan.
    Because the information and materials described above would enable a 
participant or beneficiary to assess the relevance of an asset 
allocation model to his or her individual situation, the furnishing of 
such information would not constitute a ``recommendation'' within the 
meaning of 29 CFR 2510.3-21(c)(1)(i) and, accordingly, would not 
constitute ``investment advice'' for purposes of section 3(21)(A)(ii) of 
ERISA. This result would not, in the view of the Department, be affected 
by the fact that a plan offers only one investment alternative in a 
particular asset class identified in an asset allocation model.
    (4) Interactive Investment Materials. Questionnaires, worksheets, 
software, and similar materials which provide a participant or 
beneficiary the means to estimate future retirement income needs and 
assess the impact of different asset allocations on retirement income, 
where: (i) Such materials are based on generally accepted investment 
theories that take into account the historic returns of different asset 
classes (e.g., equities, bonds, or cash) over defined periods of time; 
(ii) there is an objective correlation between the asset allocations 
generated by the materials and the information and data supplied by the 
participant or beneficiary; (iii) all material facts and assumptions 
(e.g., retirement ages, life expectancies, income levels, financial 
resources, replacement income ratios, inflation rates, and rates of 
return) which may affect a participant's or beneficiary's assessment of 
the different asset allocations accompany the materials or are specified 
by the participant or beneficiary; (iv) to the extent that an asset 
allocation generated by the materials identifies any specific investment 
alternative available under the plan, the asset allocation is 
accompanied by a statement indicating that other investment alternatives 
having similar risk and return characteristics may be available under 
the plan and identifying where information on those investment 
alternatives may be obtained; and (v) the materials either take into 
account or are accompanied by a statement indicating that, in applying 
particular asset allocations to their individual situations, 
participants or beneficiaries should consider their other assets, 
income, and investments (e.g., equity in a home, IRA investments, 
savings accounts, and interests in other qualified and non-qualified 
plans) in addition to their interests in the plan.
    The information provided through the use of the above-described 
materials enables participants and beneficiaries independently to design 
and assess multiple asset allocation models, but otherwise these 
materials do not differ from asset allocation models based on 
hypothetical assumptions. Such information would not constitute a 
``recommendation'' within the meaning of 29 CFR 2510.3-21(c)(1)(i) and , 
accordingly, would not constitute ``investment advice'' for purposes of 
section 3(21)(A)(ii) of ERISA.
    The Department notes that the information and materials described in 
subparagraphs (1)-(4) above merely represent examples of the type of 
information and materials which may be furnished to participants and 
beneficiaries without such information and materials constituting 
``investment advice.'' In this regard, the Department recognizes that 
there may be many other examples of information, materials, and 
educational services which, if furnished to participants and 
beneficiaries, would not constitute ``investment advice.'' Accordingly, 
no inferences should be drawn from subparagraphs (1)-(4), above, with 
respect to whether the furnishing of any information, materials or 
educational services not described therein may constitute ``investment 
advice.'' Determinations as to whether the provision of any information, 
materials or educational services not described herein constitutes the 
rendering of ``investment advice'' must be made by reference to the 
criteria set forth in 29 CFR 2510. 3-21(c)(1).
    (e) Selection and Monitoring of Educators and Advisors. As with any 
designation of a service provider to a plan, the designation of a 
person(s) to provide investment educational services or investment 
advice to plan participants and beneficiaries is an exercise of 
discretionary authority or control with respect to management of the 
plan; therefore, persons making the designation must act

[[Page 339]]

prudently and solely in the interest of the plan participants and 
beneficiaries, both in making the designation(s) and in continuing such 
designation(s). See ERISA sections 3(21)(A)(i) and 404(a), 29 U.S.C. 
1002 (21)(A)(i) and 1104(a). In addition, the designation of an 
investment advisor to serve as a fiduciary may give rise to co-fiduciary 
liability if the person making and continuing such designation in doing 
so fails to act prudently and solely in the interest of plan 
participants and beneficiaries; or knowingly participates in, conceals 
or fails to make reasonable efforts to correct a known breach by the 
investment advisor. See ERISA section 405(a), 29 U.S.C. 1105(a). The 
Department notes, however, that, in the context of an ERISA section 
404(c) plan, neither the designation of a person to provide education 
nor the designation of a fiduciary to provide investment advice to 
participants and beneficiaries would, in itself, give rise to fiduciary 
liability for loss, or with respect to any breach of part 4 of title I 
of ERISA, that is the direct and necessary result of a participant's or 
beneficiary's exercise of independent control. 29 CFR 2550.404c-1(d). 
The Department also notes that a plan sponsor or fiduciary would have no 
fiduciary responsibility or liability with respect to the actions of a 
third party selected by a participant or beneficiary to provide 
education or investment advice where the plan sponsor or fiduciary 
neither selects nor endorses the educator or advisor, nor otherwise 
makes arrangements with the educator or advisor to provide such 
services.

[61 FR 29588, June 11, 1996]



Sec. 2509.99-1  Interpretive Bulletin Relating to Payroll Deduction IRAs.

    (a) Scope. This interpretive bulletin sets forth the Department of 
Labor's (the Department's) interpretation of section 3(2)(A) of the 
Employee Retirement Income Security Act of 1974, as amended, (ERISA) and 
29 CFR 2510.3-2(d), as applied to payroll deduction programs established 
by employers 1 for the purpose of enabling employees to make 
voluntary contributions to individual retirement accounts or individual 
retirement annuities (IRAs) described in section 408(a) or (b) or 
section 408A of the Internal Revenue Code (the Code).
---------------------------------------------------------------------------

    \1\ The views expressed in this Interpretive Bulletin with respect 
to payroll deduction programs of employers are also generally applicable 
to dues checkoff programs of employee organizations.
---------------------------------------------------------------------------

    (b) General. It has been the Department's long-held view that an 
employer who simply provides employees with the opportunity for making 
contributions to an IRA through payroll deductions does not thereby 
establish a ``pension plan'' within the meaning of section 3 (2) (A) of 
ERISA. In this regard, 29 CFR 2510.3-2 (d) sets forth a safe harbor 
under which IRAs will not be considered to be pension plans when the 
conditions of the regulation are satisfied. Thus, an employer may, with 
few constraints, provide to its employees an opportunity for saving for 
retirement, under terms and conditions similar to those of certain other 
optional payroll deduction programs, such as for automatic savings 
deposits or purchases of United States savings bonds, without thereby 
creating a pension plan under Title I of ERISA. The guidance provided 
herein is intended to clarify the application of the IRA safe harbor set 
forth at 29 CFR 2510.3-2 (d) and, thereby, facilitate the establishment 
of payroll deduction IRAs.
    (c) Employee Communications. (1) It is the Department's view that, 
so long as an employer maintains neutrality with respect to an IRA 
sponsor in its communications with its employees, the employer will not 
be considered to ``endorse'' an IRA payroll deduction program for 
purposes of 29 CFR 2510.3-2(d).2 An employer may encourage 
its employees to save for retirement by providing

[[Page 340]]

general information on the IRA payroll deduction program and other 
educational materials that explain the advisability of retirement 
savings, including the advantages of contributing to an IRA, without 
thereby converting the program under which the employees' wages are 
withheld for contribution into the IRAs into an ERISA covered plan. 
However, the employer must make clear that its involvement in the 
program is limited to collecting the deducted amounts and remitting them 
promptly to the IRA sponsor and that it does not provide any additional 
benefit or promise any particular investment return on the employee's 
savings.
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    \2\ The Department has specifically stated, in its Advisory 
Opinions, that an employer may demonstrate its neutrality with respect 
to an IRA sponsor in a variety of ways, including (but not limited to) 
by ensuring that any materials distributed to employees in connection 
with an IRA payroll deduction program clearly and prominently state, in 
language reasonably calculated to be understood by the average employee, 
that the IRA payroll deduction program is completely voluntary; that the 
employer does not endorse or recommend either the sponsor or the funding 
media; that other IRA funding media are available to employees outside 
the payroll deduction program; that an IRA may not be appropriate for 
all individuals; and that the tax consequences of contributing to an IRA 
through the payroll deduction program are generally the same as the 
consequences of contributing to an IRA outside the program. The employer 
would not be considered neutral, in the Department's view, to the extent 
that the materials distributed to employees identified the funding 
medium as having as one of its purposes investing in securities of the 
employer or its affiliates or the funding medium in fact has any 
significant investments in such securities. If the IRA program were a 
result of an agreement between the employer and an employee 
organization, the Department would view informational materials that 
identified the funding medium as having as one of its purposes investing 
in an investment vehicle that is designed to benefit an employee 
organization by providing more jobs for its members, loans to its 
members, or similar direct benefits (or the funding medium's actual 
investments in any such investment vehicles) as indicating the employee 
organization's involvement in the program in excess of the limitations 
of 29 CFR 2510.3-2 (d).
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    (2)The employer may also do the following without converting a 
payroll deduction IRA program into an ERISA plan: An employer may answer 
employees' specific inquiries about the mechanics of the IRA payroll 
deduction program and may refer other inquiries to the appropriate IRA 
sponsor. An employer may provide to employees informational materials 
written by the IRA sponsor describing the sponsor's IRA programs or 
addressing topics of general interest regarding investments and 
retirement savings, provided that the material does not itself suggest 
that the employer is other than neutral with respect to the IRA sponsor 
and its products; the employer may request that the IRA sponsor prepare 
such informational materials and it may review such materials for 
appropriateness and completeness. The fact that the employer's name or 
logo is displayed in the informational materials in connection with 
describing the payroll deduction program would not in and of itself, in 
the Department's view, suggest that the employer has ``endorsed'' the 
IRA sponsor or its products, provided that the specific context and 
surrounding facts and circumstances make clear to the employees that the 
employer's involvement is limited to facilitating employee contributions 
through payroll deductions.3
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    \3\ For example, if the employer whose logo appeared on the 
promotional materials provided a statement along the lines of in the 
first sentence of footnote 5, the employer would not be considered to 
have endorsed the IRA product.
---------------------------------------------------------------------------

    (d) Employer Limitations on the number of IRA sponsors offered under 
the program. The Department recognizes that the cost of permitting 
employees to make IRA contributions through payroll deductions may be 
significantly affected by the number of IRA sponsors to which the 
employer must remit contributions. It is the view of the Department that 
an employer may limit the number of IRA sponsors to which employees may 
make payroll deduction contributions without exceeding the limitations 
of 29 CFR 2510.3-2(d), provided that any limitations on, or costs or 
assessments associated with an employee's ability to transfer or roll 
over IRA contributions to another IRA sponsor is fully disclosed in 
advance of the employee's decision to participate in the program. The 
employer may select one IRA sponsor as the designated recipient for 
payroll deduction contributions, or it may establish criteria by which 
to select IRA sponsors, e.g., standards relating to the sponsor's 
provision of investment education, forms, availability to answer 
employees' questions, etc., and may periodically review its selectees to 
determine whether to continue to designate them. However, an employer 
may be considered to be involved in the program beyond the limitations 
set forth in 29 CFR 2510.3-2(d) if the employer negotiates with an IRA 
sponsor and thereby obtains special terms and conditions for its 
employees that are not generally available to similar purchasers of the 
IRA. The employer's involvement in the IRA program would also be in 
excess of the limitations of the regulation if the employer exercises 
any influence over the investments made or permitted by the IRA sponsor.
    (e) Administrative fees. The employer may pay any fee the IRA 
sponsor imposes on employers for services the sponsor provides in 
connection with the establishment and maintenance of the payroll 
deduction process itself, without exceeding the limitations of 29 CFR 
2510.3-2(d). Further, the employer may assume the internal costs (such 
as for overhead, bookkeeping, etc) of implementing and maintaining the 
payroll deduction program without reimbursement from either employees or 
the IRA sponsor without exceeding the limits of the regulation. However, 
if an employer pays, in connection with operating an IRA payroll 
deduction program, any administrative, investment management, or other 
fee that the IRA sponsor would require employees to pay for establishing 
or maintaining the IRA, the employer would, in the view of the 
Department, fall outside the safe harbor and, as a result, may be 
considered to have established a ``pension plan'' for its employees.
    (f) Reasonable Compensation for Services. 29 CFR 2510.3-2(d) 
provides that an employer may not receive any consideration in 
connection with operating an IRA payroll deduction program, but may be 
paid ``reasonable compensation for services actually rendered in 
connection with payroll deductions or dues checkoffs.'' Employers have 
asked whether ``reasonable compensation'' under section 2510.3-2(d) 
includes payments from an

[[Page 341]]

IRA sponsor to an employer for the employer's cost of operating the IRA 
payroll deduction program. It is the Department's view that the IRA 
sponsor may make such payments, to the extent that they constitute 
compensation for the actual costs of the program to the employer. 
However, ``reasonable compensation'' does not include any profit to the 
employer. See 29 CFR 2510.3-1(j), relating to group or group-type 
insurance programs. For example, if an IRA sponsor offers to pay an 
employer an amount equal to a percentage of the assets contributed by 
employees to IRAs through payroll deduction, such an arrangement might 
exceed ``reasonable compensation'' for the services actually rendered by 
the employer in connection with the IRA payroll deduction program. An 
employer will also be considered to have received consideration that is 
not ``reasonable compensation'' if the IRA sponsor agrees to make or to 
permit particular investments of IRA contributions in consideration for 
the employer's agreement to make a payroll deduction program available 
to its employees, or if the IRA sponsor agrees to extend credit to or 
for the benefit of the employer in return for the employer's making 
payroll deduction available to the employees.
    (g) Additional rules when employer is IRA sponsor or affiliate of 
IRA sponsor. Under certain circumstances, an employer that offers IRAs 
in the normal course of its business to the general public or that is an 
affiliate 4 of an IRA sponsor may provide its employees with 
the opportunity to make contributions to IRAs sponsored by the employer 
or the affiliate through a payroll deduction program, without exceeding 
the limitations of Sec. 2510.3-2(d). If the IRA products offered to the 
employees for investment of the payroll deduction contributions are 
identical to IRA products the sponsor offers the general public in the 
ordinary course of its business, and any management fees, sales 
commissions, and the like charged by the IRA sponsor to employees 
participating in the payroll deduction program are the same as those 
charged by the sponsor to employees of non-affiliated employers that 
establish an IRA payroll deduction program, the Department has generally 
taken the position that this alone will not cause the employer to be 
sufficiently involved in the IRA program as an employer or to have 
received consideration of the type prohibited under Sec. 2510.2(d)(iv) 
to warrant the program being considered outside the safe harbor of the 
regulation.5 Under such circumstances, the employer, in 
offering payroll deduction contribution opportunities to its employees, 
would appear to be acting generally as an IRA sponsor, rather than as 
the employer of the individuals who make the contributions.6
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    \4\ For purposes of this interpretive bulletin, the definition of 
``affiliate'' in ERISA section 407(d)(7) applies.
    \5\ While the funding medium offered by an employer that is an IRA 
sponsor or an affiliate of an IRA sponsor might be considered an 
employer security when offered to its own employees, the fact that 
informational materials provided to employees identify the funding 
medium as having as one of its purposes investing in securities of the 
employer would not, in the Department's view, involve the employer 
beyond the limits of 29 CFR 2510.3-2(d). Neither would the fact that the 
funding medium may actually be so invested. However, the Department 
would consider that an employer may have exceeded the limitation of 
2510.3-2(d) if the informational materials the employer provides to 
employees suggest that the employer, in providing the IRA payroll 
deduction program for purposes of investing in employer securities, is 
acting as an employer in relation to persons who participate in the 
program, rather than as an IRA sponsor acting in the course of its 
ordinary business of making IRA products available to the public.
    \6\ However, if an employer that is an IRA sponsor waives enrollment 
and management fees for its employees' IRAs, and it normally charges 
those fees to members of the public who purchase IRAs, the employer 
would be considered to be so involved in the program as to be outside 
the safe harbor of the regulation.

[64 FR 33001, June 18, 1999]

[[Page 342]]



  SUBCHAPTER B--DEFINITIONS AND COVERAGE UNDER THE EMPLOYEE RETIREMENT 
                       INCOME SECURITY ACT OF 1974





PART 2510--DEFINITIONS OF TERMS USED IN SUBCHAPTERS C, D, E, F, AND G OF THIS CHAPTER--Table of Contents




Sec.
2510.3-1  Employee welfare benefit plan.
2510.3-2  Employee pension benefit plan.
2510.3-3  Employee benefit plan.
2510.3-21  Definition of ``Fiduciary''.
2510.3-37  Multiemployer plan.
2510.3-40  Plans Established or Maintained Under or Pursuant to 
          Collective Bargaining Agreements Under Section 3(40)(A) of 
          ERISA.
2510.3-101  Definition of ``plan assets''--plan investments.
2510.3-102  Definition of ``plan assets''--participant contributions.

    Authority: 29 U.S.C. 1002(2), 1002(21), 1002(37), 1002(40), 1031, 
and 1135; Secretary of Labor's Order 1-2003, 68 FR 5374; Sec. 2510.3-101 
also issued under sec. 102 of Reorganization Plan No. 4 of 1978, 43 FR 
47713, 3 CFR, 1978 Comp., p. 332 and E.O. 12108, 44 FR 1065, 3 CFR, 1978 
Comp., p. 275, and 29 U.S.C. 1135 note. Sec. 2510.3-102 also issued 
under sec. 102 of Reorganization Plan No. 4 of 1978, 43 FR 47713, 3 CFR, 
1978 Comp., p. 332 and E.O. 12108, 44 FR 1065, 3 CFR, 1978 Comp., p. 
275.



Sec. 2510.3-1  Employee welfare benefit plan.

    (a) General. (1) The purpose of this section is to clarify the 
definition of the terms ``employee welfare benefit plan'' and ``welfare 
plan'' for purposes of title I of the Act and this chapter by 
identifying certain practices which do not constitute employee welfare 
benefit plans for those purposes. In addition, the practices listed in 
this section do not constitute employee pension benefit plans within the 
meaning of section 3(2) of the Act, and, therefore, do not constitute 
employee benefit plans within the meaning of section 3(3). Since under 
section 4(a) of the Act, only employee benefit plans within the meaning 
of section 3(3) are subject to title I of the Act, the practices listed 
in this section are not subject to title I.
    (2) The terms ``employee welfare benefit plan'' and ``welfare plan'' 
are defined in section 3(1) of the Act to include plans providing ``(i) 
medical, surgical, or hospital care or benefits, or benefits in the 
event of sickness, accident, disability, death or unemployment, or 
vacation benefits, apprenticeship or other training programs, or day 
care centers, scholarship funds, or prepaid legal services, or (ii) any 
benefit described in section 302(c) of the Labor Management Relations 
Act, 1947 (other than pensions on retirement or death, and insurance to 
provide such pensions).'' Under this definition, only plans which 
provide benefits described in section 3(1)(A) of the Act or in section 
302(c) of the Labor-Management Relations Act, 1947 (hereinafter ``the 
LMRA'') (other than pensions on retirement or death) constitute welfare 
plans. For example, a system of payroll deductions by an employer for 
deposit in savings accounts owned by its employees is not an employee 
welfare benefit plan within the meaning of section 3(1) of the Act 
because it does not provide benefits described in section 3(1)(A) of the 
Act or section 302(c) of the LMRA. (In addition, if each employee has 
the right to withdraw the balance in his or her account at any time, 
such a payroll savings plan does not meet the requirements for a pension 
plan set forth in section 3(2) of the Act and, therefore, is not an 
employee benefit plan within the meaning of section 3(3) of the Act).
    (3) Section 302(c) of the LMRA lists exceptions to the restrictions 
contained in subsections (a) and (b) of that section on payments and 
loans made by an employer to individuals and groups representing 
employees of the employer. Of these exceptions, only those contained in 
paragraphs (5), (6), (7) and (8) describe benefits provided through 
employee benefit plans. Moreover, only paragraph (6) describes benefits 
not described in section 3(1)(A) of the Act. The benefits described in 
section 302(c)(6) of the LMRA but not in section 3(1)(A) of the Act are 
``* * * holiday, severance or similar benefits''. Thus, the effect of 
section 3(1)(B) of the Act is to include within the definition of 
``welfare plan'' those plans which

[[Page 343]]

provide holiday and severance benefits, and benefits which are similar 
(for example, benefits which are in substance severance benefits, 
although not so characterized).
    (4) Some of the practices listed in this section as excluded from 
the definition of ``welfare plan'' or mentioned as examples of general 
categories of excluded practices are inserted in response to questions 
received by the Department of Labor and, in the Department's judgment, 
do not represent borderline cases under the definition in section 3(1) 
of the Act. Therefore, this section should not be read as implicitly 
indicating the Department's views on the possible scope of section 3(1).
    (b) Payroll practices. For purposes of title I of the Act and this 
chapter, the terms ``employee welfare benefit plan'' and ``welfare 
plan'' shall not include--
    (1) Payment by an employer of compensation on account of work 
performed by an employee, including compensation at a rate in excess of 
the normal rate of compensation on account of performance of duties 
under other than ordinary circumstances, such as--
    (i) Overtime pay,
    (ii) Shift premiums,
    (iii) Holiday premiums,
    (iv) Weekend premiums;
    (2) Payment of an employee's normal compensation, out of the 
employer's general assets, on account of periods of time during which 
the employee is physically or mentally unable to perform his or her 
duties, or is otherwise absent for medical reasons (such as pregnancy, a 
physical examination or psychiatric treatment); and
    (3) Payment of compensation, out of the employer's general assets, 
on account of periods of time during which the employee, although 
physically and mentally able to perform his or her duties and not absent 
for medical reasons (such as pregnancy, a physical examination or 
psychiatric treatment) performs no duties; for example--
    (i) Payment of compensation while an employee is on vacation or 
absent on a holiday, including payment of premiums to induce employees 
to take vacations at a time favorable to the employer for business 
reasons,
    (ii) Payment of compensation to an employee who is absent while on 
active military duty,
    (iii) Payment of compensation while an employee is absent for the 
purpose of serving as a juror or testifying in official proceedings,
    (iv) Payment of compensation on account of periods of time during 
which an employee performs little or no productive work while engaged in 
training (whether or not subsidized in whole or in part by Federal, 
State or local government funds), and
    (v) Payment of compensation to an employee who is relieved of duties 
while on sabbatical leave or while pursuing further education.
    (c) On-premises facilities. For purposes of title I of the Act and 
this chapter, the terms ``employee welfare benefit plan'' and ``welfare 
plan'' shall not include--
    (1) The maintenance on the premises of an employer or of an employee 
organization of recreation, dining or other facilities (other than day 
care centers) for use by employees or members; and
    (2) The maintenance on the premises of an employer of facilities for 
the treatment of minor injuries or illness or rendering first aid in 
case of accidents occurring during working hours.
    (d) Holiday gifts. For purposes of title I of the Act and this 
chapter the terms ``employee welfare benefit plan'' and ``welfare plan'' 
shall not include the distribution of gifts such as turkeys or hams by 
an employer to employees at Christmas and other holiday seasons.
    (e) Sales to employees. For purposes of title I of the Act and this 
chapter, the terms ``employee welfare benefit plan'' and ``welfare 
plan'' shall not include the sale by an employer to employees of an 
employer, whether or not at prevailing market prices, of articles or 
commodities of the kind which the employer offers for sale in the 
regular course of business.
    (f) Hiring halls. For purposes of title I of the Act and this 
chapter, the terms ``employee welfare benefit plan'' and ``welfare 
plan'' shall not include the maintenance by one or more employers, 
employee organizations, or both, of a hiring hall facility.
    (g) Remembrance funds. For purposes of title I of the Act and this 
chapter,

[[Page 344]]

the terms ``employee welfare benefit plan'' and ``welfare plan'' shall 
not include a program under which contributions are made to provide 
remembrances such as flowers, an obituary notice in a newspaper or a 
small gift on occasions such as the sickness, hospitalization, death or 
termination of employment of employees, or members of an employee 
organization, or members of their families.
    (h) Strike funds. For purposes of title I of the Act and this 
chapter, the terms ``employee welfare benefit plan'' and ``welfare 
plan'' shall not include a fund maintained by an employee organization 
to provide payments to its members during strikes and for related 
purposes.
    (i) Industry advancement programs. For purposes of title I of the 
Act and this chapter, the terms ``employee welfare benefit plan'' and 
``welfare plan'' shall not include a program maintained by an employer 
or group or association of employers, which has no employee participants 
and does not provide benefits to employees or their dependents, 
regardless of whether the program serves as a conduit through which 
funds or other assets are channelled to employee benefit plans covered 
under title I of the Act.
    (j) Certain group or group-type insurance programs. For purposes of 
title I of the Act and this chapter, the terms ``employee welfare 
benefit plan'' and ``welfare plan'' shall not include a group or group-
type insurance program offered by an insurer to employees or members of 
an employee organization, under which
    (1) No contributions are made by an employer or employee 
organization;
    (2) Participation the program is completely voluntary for employees 
or members;
    (3) The sole functions of the employer or employee organization with 
respect to the program are, without endorsing the program, to permit the 
insurer to publicize the program to employees or members, to collect 
premiums through payroll deductions or dues checkoffs and to remit them 
to the insurer; and
    (4) The employer or employee organization receives no consideration 
in the form of cash or otherwise in connection with the program, other 
than reasonable compensation, excluding any profit, for administrative 
services actually rendered in connection with payroll deductions or dues 
checkoffs.
    (k) Unfunded scholarship programs. For purposes of title I of the 
Act and this chapter, the terms ``employe welfare benefit plan'' and 
``welfare plan'' shall not include a scholarship program, including a 
tuition and education expense refund program, under which payments are 
made solely from the general assets of an employer or employee 
organization.

[40 FR 34530, Aug. 15, 1975]



Sec. 2510.3-2  Employee pension benefit plan.

    (a) General. This section clarifies the limits of the defined terms 
``employee pension benefit plan'' and ``pension plan'' for purposes of 
title I of the Act and this chapter by identifying certain specific 
plans, funds and programs which do not constitute employee pension 
benefit plans for those purposes. To the extent that these plans, funds 
and programs constitute employee welfare benefit plans within the 
meaning of section 3(1) of the Act and Sec. 2510.3-1 of this part, they 
will be covered under title I; however, they will not be subject to 
parts 2 and 3 of title I of the Act.
    (b) Severance pay plans. (1) For purposes of title I of the Act and 
this chapter, an arrangement shall not be deemed to constitute an 
employee pension benefit plan or pension plan solely by reason of the 
payment of severance benefits on account of the termination of an 
employee's service, provided that:
    (i) Such payments are not contingent, directly or indirectly, upon 
the employee's retiring;
    (ii) The total amount of such payments does not exceed the 
equivalent of twice the employee's annual compensation during the year 
immediately preceding the termination of his service; and
    (iii) All such payments to any employee are completed,
    (A) In the case of an employee whose service is terminated in 
connection with a limited program of terminations, within the later of 
24 months after the termination of the employee's

[[Page 345]]

service, or 24 months after the employee reaches normal retirement age; 
and
    (B) In the case of all other employees, within 24 months after the 
termination of the employee's service.
    (2) For purposes of this paragraph (b),
    (i) ``Annual compensation'' means the total of all compensation, 
including wages, salary, and any other benefit of monetary value, 
whether paid in the form of cash or otherwise, which was paid as 
consideration for the employee's service during the year, or which would 
have been so paid at the employee's usual rate of compensation if the 
employee had worked a full year.
    (ii) ``Limited program of terminations'' means a program of 
terminations:
    (A) Which, when begun, was scheduled to be completed upon a date 
certain or upon the occurrence of one or more specified events;
    (B) Under which the number, percentage or class or classes of 
employees whose services are to be terminated is specified in advance; 
and
    (C) Which is described in a written document which is available to 
the Secretary upon request, and which contains information sufficient to 
demonstrate that the conditions set forth in paragraphs (b)(2)(ii)(A) 
and (B) of this section have been met.
    (c) Bonus program. For purposes of title I of the Act and this 
chapter, the terms ``employee pension benefit plan'' and ``pension 
plan'' shall not include payments made by an employer to some or all of 
its employees as bonuses for work performed, unless such payments are 
systematically deferred to the termination of covered employment or 
beyond, or so as to provide retirement income to employees.
    (d) Individual Retirement Accounts. (1) For purposes of title I of 
the Act and this chapter, the terms ``employee pension benefit plan'' 
and ``pension plan'' shall not include an individual retirement account 
described in section 408(a) of the Code, an individual retirement 
annuity described in section 408(b) of the Internal Revenue Code of 1954 
(hereinafter ``the Code'') and an individual retirement bond described 
in section 409 of the Code, provided that--
    (i) No contributions are made by the employer or employee 
association;
    (ii) Participation is completely voluntary for employees or members;
    (iii) The sole involvement of the employer or employee organization 
is without endorsement to permit the sponsor to publicize the program to 
employees or members, to collect contributions through payroll 
deductions or dues checkoffs and to remit them to the sponsor; and
    (iv) The employer or employee organization receives no consideration 
in the form of cash or otherwise, other than reasonable compensation for 
services actually rendered in connection with payroll deductions or dues 
checkoffs.
    (e) Gratuitous payments to pre-Act retirees. For purposes of title I 
of the Act and this chapter the terms ``employee pension benefit plan'' 
and ``pension plan'' shall not include voluntary, gratuitous payments by 
an employer to former employees who separated from the service of the 
employer if:
    (1) Payments are made out of the general assets of the employer,
    (2) Former employees separated from the service of the employer 
prior to September 2, 1974,
    (3) Payments made to such employees commenced prior to September 2, 
1974, and
    (4) Each former employee receiving such payments is notified 
annually that the payments are gratuitous and do not constitute a 
pension plan.
    (f) Tax sheltered annuities. For the purpose of title I of the Act 
and this chapter, a program for the purchase of an annuity contract or 
the establishment of a custodial account described in section 403(b) of 
the Internal Revenue Code of 1954 (the Code), pursuant to salary 
reduction agreements or agreements to forego an increase in salary, 
which meets the requirements of 26 CFR 1.403(b)-1(b)(3) shall not be 
``established or maintained by an employer'' as that phrase is used in 
the definition of the terms ``employee pension benefit plan'' and 
``pension plan'' if
    (1) Participation is completely voluntary for employees;

[[Page 346]]

    (2) All rights under the annuity contract or custodial account are 
enforceable solely by the employee, by a beneficiary of such employee, 
or by any authorized representative of such employee or beneficiary;
    (3) The sole involvement of the employer, other than pursuant to 
paragraph (f)(2) of this section, is limited to any of the following:
    (i) Permitting annuity contractors (which term shall include any 
agent or broker who offers annuity contracts or who makes available 
custodial accounts within the meaning of section 403(b)(7) of the Code) 
to publicize their products to employees,
    (ii) Requesting information concerning proposed funding media, 
products or annuity contractors;
    (iii) Summarizing or otherwise compiling the information provided 
with respect to the proposed funding media or products which are made 
available, or the annuity contractors whose services are provided, in 
order to facilitate review and analysis by the employees;
    (iv) Collecting annuity or custodial account considerations as 
required by salary reduction agreements or by agreements to forego 
salary increases, remitting such considerations to annuity contractors 
and maintaining records of such considerations;
    (v) Holding in the employer's name one or more group annuity 
contracts covering its employees;
    (vi) Before February 7, 1978, to have limited the funding media or 
products available to employees, or the annuity contractors who could 
approach employees, to those which, in the judgment of the employer, 
afforded employees appropriate investment opportunities; or
    (vii) After February 6, 1978, limiting the funding media or products 
available to employees, or the annuity contractors who may approach 
employees, to a number and selection which is designed to afford 
employees a reasonable choice in light of all relevant circumstances. 
Relevant circumstances may include, but would not necessarily be limited 
to, the following types of factors:
    (A) The number of employees affected,
    (B) The number of contractors who have indicated interest in 
approaching employees,
    (C) The variety of available products,
    (D) The terms of the available arrangements,
    (E) The administrative burdens and costs to the employer, and
    (F) The possible interference with employee performance resulting 
from direct solicitation by contractors; and
    (4) The employer receives no direct or indirect consideration or 
compensation in cash or otherwise other than reasonable compensation to 
cover expenses properly and actually incurred by such employer in the 
performance of the employer's duties pursuant to the salary reduction 
agreements or agreements to forego salary increases described in this 
paragraph (f) of this section.
    (g) Supplemental payment plans--(1) General rule. Generally, an 
arrangement by which a payment is made by an employer to supplement 
retirement income is a pension plan. Supplemental payments made on or 
after September 26, 1980, shall be treated as being made under a welfare 
plan rather than a pension plan for purposes of title I of the Act if 
all of the following conditions are met:
    (i) Payment is made for the purpose of supplementing the pension 
benefits of a participant or his or her beneficiary out of:
    (A) The general assets of the employer, or
    (B) A separate trust fund established and maintained solely for that 
purpose.
    (ii) The amount payable under the supplemental payment plan to a 
participant or his or her beneficiary with respect to a month does not 
exceed the payee's supplemental payment factor (``SPF,'' as defined in 
paragraph (g)(3)(i) of this section) for that month, provided however 
that unpaid monthly amounts may be cumulated and paid in subsequent 
months to the participant or his or her beneficiary.
    (iii) The payment is not made before the last day of the month with 
respect to which it is computed.

[[Page 347]]

    (2) Safe harbor for arrangements concerning pre-1977 retirees. (i) 
Notwithstanding paragraph (g)(1) of this section, effective January 1, 
1975 an arrangement by which a payment is made by an employer to 
supplement the retirement income of a former employee who separated from 
the service of the employer prior to January 1, 1977 shall be deemed not 
to have been made under an employee benefit plan if all of the following 
conditions are met:
    (A) The employer is not obligated to make the payment or similar 
payments for more than twelve months at a time.
    (B) The payment is made out of the general assets of the employer.
    (C) The former employee is notified in writing at least once each 
year in which a payment is made that the payments are not part of an 
employee benefit plan subject to the protections of the Act.
    (D) The former employee is notified in writing at least once each 
year in which a payment is made of the extent of the employer's 
obligation, if any, to continue the payments.
    (ii) A person who receives a payment on account of his or her 
relationship to a former employee who retired prior to January 1, 1977 
is considered to be a former employee for purposes of this paragraph 
(g)(2).
    (3) Definitions and special rules. For purposes of this paragraph 
(g)--
    (i) The term ``supplemental payment factor'' (SPF) is, for any 
particular month, the product of:
    (A) The individual's pension benefit amount (as defined in paragraph 
(g)(3)(ii) of this section), and
    (B) The cost of living increase (as defined in paragraph (g)(3)(v) 
of this section) for that month.
    (ii)(A) The term ``pension benefit amount'' (PBA) means, with regard 
to a retiree, the amount of pension benefits payable, in the form of the 
annuity chosen by the retiree, for the first full month that he or she 
is in pay status under a pension plan (as defined in paragraph 
(g)(3)(iii) of this section) sponsored by his or her employer or under a 
multiemployer plan in which his or her employer participates. If the 
retiree has received a lump-sum distribution from the plan, the PBA for 
the retiree shall be determined as follows:
    (1) If the plan provides an annuity option at the time of the 
distribution, the PBA shall be computed as if the distribution had been 
applied on that date to the purchase from the plan of a level straight 
annuity for the life of the participant if the participant was unmarried 
at the time of the distribution or a joint and survivor annuity if the 
participant was married at the time of distribution.
    (2) If the plan does not provide an annuity option at the time of 
the distribution, the PBA shall be computed as if the distribution had 
been applied on that date to the purchase from an insurance company 
qualified to do business in a State of a commercially available level 
straight annuity for the life of the participant if the participant was 
then single, or a joint and survivor annuity if the participant was then 
married, based upon the assumption that the participant and beneficiary 
are standard mortality risks.
    (B) If the retiree has received from the plan a series of 
distributions which do not constitute a lump-sum distribution or an 
annuity, the PBA for the retiree shall be determined with respect to 
each distribution according to paragraph (g)(3)(ii)(A) of this section, 
or in accordance with a reasonably equivalent method.
    (C) The term PBA, with regard to the beneficiary of a plan 
participant, means:
    (1) The amount of pension benefits, payable in the form of a 
survivor annuity to the beneficiary, for the first full month that he or 
she begins to receive the survivor annuity, reduced by:
    (2) Any increases which have been incorporated as part of the 
survivor annuity under the plan since the participant entered pay status 
or, if the participant died before the commencement of pension benefits, 
since the participant's date of death.
    (D) Where a plan participant has commenced to receive his or her 
pension benefits in the form of a straight-life annuity, or another form 
of an annuity that does not continue after the participant's death in 
the form of a survivor annuity, no beneficiary of the participant will 
have a PBA.

[[Page 348]]

    (iii) The term ``pension plan'' means, for purposes of this 
paragraph (g), a pension plan as defined in section 3(2) of the Act, but 
not including a plan described in section 4(b), 201(2), or 301(a)(3) of 
the Act. The term also does not include an arrangement meeting all the 
conditions of paragraph (g)(1) or (g)(2) of this section or of an 
arrangement described in Sec. 2510.3-2(e). In the case of a controlled 
group of corporations within the meaning of section 407(d)(5) of the 
Act, all pension plans sponsored by members of the group shall be 
considered to be one pension plan.
    (iv) The term ``employer'' means, for purposes of paragraph (g) of 
this section, the former employer making the supplemental payment. In 
the case of a contolled group of corporations within the meaning of 
section 407(d)(7) of the Act, all members of the controlled group shall 
be considered to be one employer for purposes of this paragraph (g).
    (v) The term ``cost of living increase'' (CLI) means, as to any 
month, a percentage equal to the following fraction:
[GRAPHIC] [TIFF OMITTED] TC21OC91.039


where a= the CPIU for the month for which a payment is being computed, 
and b= the CPIU for the first full month the retiree was in pay status. 
Where the CLI is calculated for the beneficiary of a plan participant, 
``b'' continues to be equal to the CPIU for the first full month the 
retiree was in pay status. If, however, the participant dies before the 
commencement of pension benefits, ``b'' is equal to the CPIU for the 
first full month the survivor is in pay status.
    (vi) The term ``CPIU'' means the U.S. City Average All Items 
Consumer Price Index for all Urban Consumers, published by the U.S. 
Department of Labor, Bureau of Labor Statistics. Data concerning the 
CPIU for a particular period can be obtained from the U.S. Department of 
Labor, Bureau of Labor Statistics, Division of Consumer Prices and Price 
Indexes, Washington, DC 20212.
    (vii) Where an employer does not pay to a retiree the full amount of 
the supplemental payments which would be permitted under paragraph 
(g)(1) of this section, any unpaid amounts may be cumulated and paid in 
subsequent months to either the retiree or the beneficiary of the 
retiree. The beneficiary need not be the recipient of a survivor annuity 
in order to be paid these cumulated supplemental payments.
    (5) Examples. The following examples illustrate how this paragraph 
(g) works. As referred to in these examples, the CPIU's for July through 
November of 1980 are as follows:

July 1980: 247.8
August 1980: 249.4
September 1980: 251.7
October 1980: 253.9
November 1980: 256.2

    Example (1)(a). E is an employer. R received monthly benefits of 
$600 under a straight-life annuity under E's defined benefit pension 
plan after R retired from E and entered pay status on July 1, 1980. The 
amount that E may pay to R as supplemental payments under a welfare 
rather than pension plan with respect to the months of July through 
September of 1980 is computed as follows:

SPF for July 1980:
[GRAPHIC] [TIFF OMITTED] TC21OC91.040

SPF for August 1980:
[GRAPHIC] [TIFF OMITTED] TC21OC91.041

SPF for September 1980:
[GRAPHIC] [TIFF OMITTED] TC21OC91.042

No supplemental payment may be made to R as a welfare plan payment with 
respect to July 1980, the month of retirement. The $3.87

[[Page 349]]

that may be paid with respect to August 1980 may be paid at any time 
after August 31, 1980. The $9.44 that may be paid with respect to 
September 1980 may be paid at any time after September 30, 1980.
    Example (1)(b). S is the beneficiary of R. Because R received 
pension benefits under a straight-life annuity, S will receive no 
survivor annuity from E after R's death. S thus will have no PBA after 
R's death and will not be eligible to receive any supplemental payments 
from E based on S's PBA. To the extent, however, that R did not receive 
supplemental payments from E to the maximum limit allowable under 
paragraph (g)(1), any amounts not paid to R may be cumulated and paid to 
S after R's death.
    Example (2)(a). E is an employer. Q received monthly benefits of 
$500 in the form of a joint and survivor annuity under E's defined 
benefit pension plan since retirement from E on July 1, 1980. The amount 
that E may pay to Q as welfare rather than pension plan payments with 
respect to the months of July through September of 1980 is computed as 
follows:

SPF for July 1980:
[GRAPHIC] [TIFF OMITTED] TC21OC91.043

SPF for August 1980:
[GRAPHIC] [TIFF OMITTED] TC21OC91.044

SPF for September 1980:
[GRAPHIC] [TIFF OMITTED] TC21OC91.045

No supplemental payment may be made as a welfare plan payment with 
respect to July 1980, the month of retirement. The $3.23 that may be 
paid with respect to August 1980 may be paid at any time after August 
31, 1980. The $7.87 that may be paid with respect to September 1980 may 
be paid at any time after September 30, 1980.
    Example (2)(b). Q dies on October 15, 1980 without having received 
any supplemental payments from E. T is the beneficiary of Q. E pays T a 
survivor's annuity of $300 beginning in November of 1980. The amount 
payable to T as a survivor annuity under the plan has not been increased 
since Q began to receive pension benefits. Thus, T's PBA is $300. The 
amount that E may pay to T as welfare rather than pension plan payments 
with respect to the months of July through November 1980 is computed as 
follows:

SPF for July 1980=$0.00
SPF for August 1980=$3.23
SPF for September 1980=$7.87
SPF for October 1980:
[GRAPHIC] [TIFF OMITTED] TC21OC91.046

(Note that T's ``b'' is equal to Q's ``b''.)
SPF for November 1980:
[GRAPHIC] [TIFF OMITTED] TC21OC91.047

Total that may be paid to T

The maximum E may pay T with respect to the months of July through 
November 1980 as welfare rather than pension plan payments is the sum of 
those months' SPFs, which is $33.58.
    Example (3). Assume the same facts as in Example (1)(a), except that 
R elected to receive a lump-sum distribution rather than a straight-life 
annuity. If R is unmarried on July 1, 1980, R's PBA is $600 for the 
remainder of R's life. If R is married to S on July 1, 1980, the PBAs of 
R and S are based on the annuity that would have been paid under an 
election to receive a joint and survivor annuity. See paragraph 
(g)(3)(ii)(A)(1) of this section.

[40 FR 34530, Aug. 15, 1975, as amended at 44 FR 11763, Mar. 2, 1979; 44 
FR 23527, Apr. 20, 1979; 47 FR 50240, Nov. 5, 1982; 47 FR 56847, Dec. 
21, 1982]



Sec. 2510.3-3  Employee benefit plan.

    (a) General. This section clarifies the definition in section 3(3) 
of the term ``employee benefit plan'' for purposes of title I of the Act 
and this chapter. It states a general principle which can be applied to 
a large class of plans to determine whether they constitute employee 
benefit plans within the meaning of section 3(3) of the Act. Under 
section 4(a) of the Act, only employee benefit plans within the meaning 
of section 3(3) are subject to title I.

[[Page 350]]

    (b) Plans without employees. For purposes of title I of the Act and 
this chapter, the term ``employee benefit plan'' shall not include any 
plan, fund or program, other than an apprenticeship or other training 
program, under which no employees are participants covered under the 
plan, as defined in paragraph (d) of this section. For example, a so-
called ``Keogh'' or ``H.R. 10'' plan under which only partners or only a 
sole proprietor are participants covered under the plan will not be 
covered under title I. However, a Keogh plan under which one or more 
common law employees, in addition to the self-employed individuals, are 
participants covered under the plan, will be covered under title I. 
Similarly, partnership buyout agreements described in section 736 of the 
Internal Revenue Code of 1954 will not be subject to title I.
    (c) Employees. For purposes of this section:
    (1) An individual and his or her spouse shall not be deemed to be 
employees with respect to a trade or business, whether incorporated or 
unincorporated, which is wholly owned by the individual or by the 
individual and his or her spouse, and
    (2) A partner in a partnership and his or her spouse shall not be 
deemed to be employees with respect to the partnership.
    (d) Participant covered under the plan. (1)(i) An individual becomes 
a participant covered under an employee welfare benefit plan on the 
earlier of--
    (A) The date designated by the plan as the date on which the 
individual begins participation in the plan;
    (B) The date on which the individual becomes eligible under the plan 
for a benefit subject only to occurrence of the contingency for which 
the benefit is provided; or
    (C) The date on which the individual makes a contribution to the 
plan, whether voluntary or mandatory.
    (ii) An individual becomes a participant covered under an employee 
pension plan--
    (A) In the case of a plan which provides for employee contributions 
or defines participation to include employees who have not yet retired, 
on the earlier of--
    (1) The date on which the individual makes a contribution, whether 
voluntary or mandatory, or
    (2) The date designated by the plan as the date on which the 
individual has satisfied the plan's age and service requirements for 
participation, and
    (B) In the case of a plan which does not provide for employee 
contributions and does not define participation to include employees who 
have not yet retired, the date on which the individual completes the 
first year of employment which may be taken into account in determining-
-
    (1) Whether the individual is entitled to benefits under the plan, 
or
    (2) The amount of benefits to which the individual is entitled,

whichever results in earlier participation.
    (2)(i) An individual is not a participant covered under an employee 
welfare plan on the earliest date on which the individual--
    (A) Is ineligible to receive any benefit under the plan even if the 
contingency for which such benefit is provided should occur, and
    (B) Is not designated by the plan as a participant.
    (ii) An individual is not a participant covered under an employee 
pension plan or a beneficiary receiving benefits under an employee 
pension plan if--
    (A) The entire benefit rights of the individual--
    (1) Are fully guaranteed by an insurance company, insurance service 
or insurance organization licensed to do business in a State, and are 
legally enforceable by the sole choice of the individual against the 
insurance company, insurance service or insurance organization; and
    (2) A contract, policy or certificate describing the benefits to 
which the individual is entitled under the plan has been issued to the 
individual; or
    (B) The individual has received from the plan a lump-sum 
distribution or a series of distributions of cash or other property 
which represents the balance of his or her credit under the plan.
    (3)(i) In the case of an employee pension benefit plan, an 
individual who, under the terms of the plan, has incurred a one-year 
break in service after having become a participant covered

[[Page 351]]

under the plan, and who has acquired no vested right to a benefit before 
such break in service is not a participant covered under the plan until 
the individual has completed a year of service after returning to 
employment covered by the plan.
    (ii) For purposes of paragraph (d)(3)(i) of this section, in the 
case of an employee pension benefit plan which is subject to section 203 
of the Act the term ``year of service'' shall have the same meaning as 
in section 203(b)(2)(A) of the Act and any regulations issued under the 
Act and the term ``one-year break in service'' shall have the same 
meaning as in section 203(b)(3)(A) of the Act and any regulations issued 
under the Act.

[40 FR 34530, Aug. 15, 1975]



Sec. 2510.3-21  Definition of ``Fiduciary.''

    (a)-(b) [Reserved]
    (c) Investment advice. (1) A person shall be deemed to be rendering 
``investment advice'' to an employee benefit plan, within the meaning of 
section 3(21)(A)(ii) of the Employee Retirement Income Security Act of 
1974 (the Act) and this paragraph, only if:
    (i) Such person renders advice to the plan as to the value of 
securities or other property, or makes recommendation as to the 
advisability of investing in, purchasing, or selling securities or other 
property; and
    (ii) Such person either directly or indirectly (e.g., through or 
together with any affiliate)--
    (A) Has discretionary authority or control, whether or not pursuant 
to agreement, arrangement or understanding, with respect to purchasing 
or selling securities or other property for the plan; or
    (B) Renders any advice described in paragraph (c)(1)(i) of this 
section on a regular basis to the plan pursuant to a mutual agreement, 
arrangement or understanding, written or otherwise, between such person 
and the plan or a fiduciary with respect to the plan, that such services 
will serve as a primary basis for investment decisions with respect to 
plan assets, and that such person will render individualized investment 
advice to the plan based on the particular needs of the plan regarding 
such matters as, among other things, investment policies or strategy, 
overall portfolio composition, or diversification of plan investments.
    (2) A person who is a fiduciary with respect to a plan by reason of 
rendering investment advice (as defined in paragraph (c)(1) of this 
section) for a fee or other compensation, direct or indirect, with 
respect to any moneys or other property of such plan, or having any 
authority or responsibility to do so, shall not be deemed to be a 
fiduciary regarding any assets of the plan with respect to which such 
person does not have any discretionary authority, discretionary control 
or discretionary responsibility, does not exercise any authority or 
control, does not render investment advice (as defined in paragraph 
(c)(1) of this section) for a fee or other compensation, and does not 
have any authority or responsibility to render such investment advice, 
provided that nothing in this paragraph shall be deemed to:
    (i) Exempt such person from the provisions of section 405(a) of the 
Act concerning liability for fiduciary breaches by other fiduciaries 
with respect to any assets of the plan; or
    (ii) Exclude such person from the definition of the term ``party in 
interest'' (as set forth in section 3(14)(B) of the Act) with respect to 
any assets of the plan.
    (d) Execution of securities transactions. (1) A person who is a 
broker or dealer registered under the Securities Exchange Act of 1934, a 
reporting dealer who makes primary markets in securities of the United 
States Government or of an agency of the United States Government and 
reports daily to the Federal Reserve Bank of New York its positions with 
respect to such securities and borrowings thereon, or a bank supervised 
by the United States or a State, shall not be deemed to be a fiduciary, 
within the meaning of section 3(21)(A) of the Act, with respect to an 
employee benefit plan solely because such person executes transactions 
for the purchase or sale of securities on behalf of such plan in the 
ordinary course of its business as a broker, dealer, or bank, pursuant 
to instructions of a fiduciary with respect to such plan, if:

[[Page 352]]

    (i) Neither the fiduciary nor any affiliate of such fiduciary is 
such broker, dealer, or bank; and
    (ii) The instructions specify (A) the security to be purchased or 
sold, (B) a price range within which such security is to be purchased or 
sold, or, if such security is issued by an open-end investment company 
registered under the Investment Company Act of 1940 (15 U.S.C. 80a-1, et 
seq.), a price which is determined in accordance with Rule 22c-1 under 
the Investment Company Act of 1940 (17 CFR 270.22c-1), (C) a time span 
during which such security may be purchased or sold (not to exceed five 
business days), and (D) the minimum or maximum quantity of such security 
which may be purchased or sold within such price range, or, in the case 
of a security issued by an open-end investment company registered under 
the Investment Company Act of 1940, the minimum or maximum quantity of 
such security which may be purchased or sold, or the value of such 
security in dollar amount which may be purchased or sold, at the price 
referred to in paragraph (d)(1)(ii)(B) of this section.
    (2) A person who is a broker-dealer, reporting dealer, or bank which 
is a fiduciary with respect to an employee benefit plan solely by reason 
of the possession or exercise of discretionary authority or 
discretionary control in the management of the plan or the management or 
disposition of plan assets in connection with the execution of a 
transaction or transactions for the purchase or sale of securities on 
behalf of such plan which fails to comply with the provisions of 
paragraph (d)(1) of this section, shall not be deemed to be a fiduciary 
regarding any assets of the plan with respect to which such broker-
dealer, reporting dealer or bank does not have any discretionary 
authority, discretionary control or discretionary responsibility, does 
not exercise any authority or control, does not render investment advice 
(as defined in paragraph (c)(1) of this section) for a fee or other 
compensation, and does not have any authority or responsibility to 
render such investment advice, provided that nothing in this paragraph 
shall be deemed to:
    (i) Exempt such broker-dealer, reporting dealer, or bank from the 
provisions of section 405(a) of the Act concerning liability for 
fiduciary breaches by other fiduciaries with respect to any assets of 
the plan; or
    (ii) Exclude such broker-dealer, reporting dealer, or bank from the 
definition, of the term ``party in interest'' (as set forth in section 
3(14)(B) of the Act) with respect to any assets of the plan.
    (e) Affiliate and control. (1) For purposes of paragraphs (c) and 
(d) of this section, an ``affiliate'' of a person shall include:
    (i) Any person directly or indirectly, through one or more 
intermediaries, controlling, controlled by, or under common control with 
such person;
    (ii) Any officer, director, partner, employee or relative (as 
defined is section 3(15) of the Act) of such person; and
    (iii) Any corporation or partnership of which such person is an 
officer, director or partner.
    (2) For purposes of this paragraph, the term ``control'' means the 
power to exercise a controlling influence over the management or 
policies of a person other than an individual.

[40 FR 50843, Oct. 31, 1975]



Sec. 2510.3-37  Multiemployer plan.

    (a) General. Section 3(37) of the Act contains in paragraphs (a)(i)-
(iv) a number of criteria which an employee benefit plan must meet in 
order to be a multiemployer plan under the Act. Section 3(37) also 
provides that the Secretary may prescribe by regulation other 
requirements in addition to those contained in paragraphs (a)(i)-(iv). 
The purpose of this regulation is to establish such requirements.
    (b) Plans in existence before the effective date. (1) A plan in 
existence before September 2, 1974, will be considered a multiemployer 
plan if it satisfies the requirements of section 3(37)(A)(i)-(iv) of the 
Act.
    (2) For purposes of this section, a plan is considered to be in 
existence if:
    (i)(A) The plan was reduced to writing and adopted by the 
participating employers and the employee organization (including, in the 
case of a corporate employer, formal approval by an

[[Page 353]]

employer's board of directors or shareholders, if required), even though 
no amounts had been contributed under the plan, and
    (B) The plan has not been terminated; or
    (ii)(A) There was a legally enforceable agreement to establish such 
a plan signed by the employers and the employee organization, and
    (B) The contributions to be made to the plan were set forth in the 
agreement.
    (iii) If a plan was in existence within the meaning of paragraph 
(b)(2)(i) or (ii) of this section, any other plan with which such 
existing plan is merged or consolidated shall also be considered to be 
in existence.
    (c) Plans not in existence before the effective date. In addition to 
the provisions of section 3(37)(A)(i)-(iv) of the Act, a multiemployer 
plan established on or after September 2, 1974, must meet the 
requirement that it was established for a substantial business purpose. 
A substantial business purpose includes the interest of a labor 
organization in securing an employee benefit plan for its members. The 
following factors are relevant in determining whether a substantial 
business purpose existed for the establishment of a plan; any single 
factor may be sufficient to constitute a substantial business purpose:
    (1) The extent to which the plan is maintained by a substantial 
number of unaffiliated contributing employers and covers a substantial 
portion of the trade, craft or industry in terms of employees or a 
substantial number of the employees in the trade, craft or industry in a 
locality or geographic area;
    (2) The extent to which the plan provides benefits more closely 
related to years of service within the trade, craft or industry rather 
than with an employer, reflecting the fact that an employee's 
relationship with an employer maintaining the plan is generally short-
term although service in the trade, craft or industry is generally long-
term;
    (3) The extent to which collective bargaining takes place on matters 
other than employee benefit plans between the employee organization and 
the employers maintaining the plan; and
    (4) The extent to which the administrative burden and expense of 
providing benefits through single employer plans would be greater than 
through a multiemployer plan.

[40 FR 52008, Nov. 7, 1975]



Sec. 2510.3-40  Plans Established or Maintained Under or Pursuant to Collective Bargaining Agreements Under Section 3(40)(A) of ERISA.

    (a) Scope and purpose. Section 3(40)(A) of the Employee Retirement 
Income Security Act of 1974 (ERISA) provides that the term ``multiple 
employer welfare arrangement'' (MEWA) does not include an employee 
welfare benefit plan that is established or maintained under or pursuant 
to one or more agreements that the Secretary of Labor (the Secretary) 
finds to be collective bargaining agreements. This section sets forth 
criteria that represent a finding by the Secretary whether an 
arrangement is an employee welfare benefit plan established or 
maintained under or pursuant to one or more collective bargaining 
agreements. A plan is established or maintained under or pursuant to 
collective bargaining if it meets the criteria in this section. However, 
even if an entity meets the criteria in this section, it will not be an 
employee welfare benefit plan established or maintained under or 
pursuant to a collective bargaining agreement if it comes within the 
exclusions in the section. Nothing in or pursuant to this section shall 
constitute a finding for any purpose other than the exception for plans 
established or maintained under or pursuant to one or more collective 
bargaining agreements under section 3(40) of ERISA. In a particular case 
where there is an attempt to assert state jurisdiction or the 
application of state law with respect to a plan or other arrangement 
that allegedly is covered under Title I of ERISA, the Secretary has set 
forth a procedure for obtaining individualized findings at 29 CFR part 
2570, subpart H.
    (b) General criteria. The Secretary finds, for purposes of section 
3(40) of ERISA, that an employee welfare benefit plan is ``established 
or maintained under or pursuant to one or more

[[Page 354]]

agreements which the Secretary finds to be collective bargaining 
agreements'' for any plan year in which the plan meets the criteria set 
forth in paragraphs (b)(1), (2), (3), and (4) of this section, and is 
not excluded under paragraph (c) of this section.
    (1) The entity is an employee welfare benefit plan within the 
meaning of section 3(1) of ERISA.
    (2) At least 85% of the participants in the plan are:
    (i) Individuals employed under one or more agreements meeting the 
criteria of paragraph (b)(3) of this section, under which contributions 
are made to the plan, or pursuant to which coverage under the plan is 
provided;
    (ii) Retirees who either participated in the plan at least five of 
the last 10 years preceding their retirement, or
    (A) Are receiving benefits as participants under a multiemployer 
pension benefit plan that is maintained under the same agreements 
referred to in paragraph (b)(3) of this section, and
    (B) Have at least five years of service or the equivalent under that 
multiemployer pension benefit plan;
    (iii) Participants on extended coverage under the plan pursuant to 
the requirements of a statute or court or administrative agency 
decision, including but not limited to the continuation coverage 
requirements of the Consolidated Omnibus Budget Reconciliation Act of 
1985, sections 601-609, 29 U.S.C. 1169, the Family and Medical Leave 
Act, 29 U.S.C. 2601 et seq., the Uniformed Services Employment and 
Reemployment Rights Act of 1994, 38 U.S.C. 4301 et seq., or the National 
Labor Relations Act, 29 U.S.C. 158(a)(5);
    (iv) Participants who were active participants and whose coverage is 
otherwise extended under the terms of the plan, including but not 
limited to extension by reason of self-payment, hour bank, long or 
short-term disability, furlough, or temporary unemployment, provided 
that the charge to the individual for such extended coverage is no more 
than the applicable premium under section 604 of the Act;
    (v) Participants whose coverage under the plan is maintained 
pursuant to a reciprocal agreement with one or more other employee 
welfare benefit plans that are established or maintained under or 
pursuant to one or more collective bargaining agreements and that are 
multiemployer plans;
    (vi) Individuals employed by:
    (A) An employee organization that sponsors, jointly sponsors, or is 
represented on the association, committee, joint board of trustees, or 
other similar group of representatives of the parties who sponsor the 
plan;
    (B) The plan or associated trust fund;
    (C) Other employee benefit plans or trust funds to which 
contributions are made pursuant to the same agreement described in 
paragraph (b)(3) of this section; or
    (D) An employer association that is the authorized employer 
representative that actually engaged in the collective bargaining that 
led to the agreement that references the plan as described in paragraph 
(b)(3) of this section;
    (vii) Individuals who were employed under an agreement described in 
paragraph (b)(3) of this section, provided that they are employed by one 
or more employers that are parties to an agreement described in 
paragraph (b)(3) and are covered under the plan on terms that are 
generally no more favorable than those that apply to similarly situated 
individuals described in paragraph (b)(2)(i) of this section;
    (viii) Individuals (other than individuals described in paragraph 
(b)(2)(i) of this section) who are employed by employers that are bound 
by the terms of an agreement described in paragraph (b)(3) of this 
section and that employ personnel covered by such agreement, and who are 
covered under the plan on terms that are generally no more favorable 
than those that apply to such covered personnel. For this purpose, such 
individuals in excess of 10% of the total population of participants in 
the plan are disregarded;
    (ix) Individuals who are, or were for a period of at least three 
years, employed under one or more agreements between or among one or 
more ``carriers'' (including ``carriers by air'') and one or more 
``representatives'' of employees for collective bargaining purposes and 
as defined by the Railway Labor Act, 45 U.S.C. 151 et seq., providing 
for such individuals' current or subsequent participation in the plan, 
or providing for

[[Page 355]]

contributions to be made to the plan by such carriers; or
    (x) Individuals who are licensed marine pilots operating in United 
States ports as a state-regulated enterprise and are covered under an 
employee welfare benefit plan that meets the definition of a qualified 
merchant marine plan, as defined in section 415(b)(2)(F) of the Internal 
Revenue Code (26 U.S.C.).
    (3) The plan is incorporated or referenced in a written agreement 
between one or more employers and one or more employee organizations, 
which agreement, itself or together with other agreements among the same 
parties:
    (i) Is the product of a bona fide collective bargaining relationship 
between the employers and the employee organization(s);
    (ii) Identifies employers and employee organization(s) that are 
parties to and bound by the agreement;
    (iii) Identifies the personnel, job classifications, and/or work 
jurisdiction covered by the agreement;
    (iv) Provides for terms and conditions of employment in addition to 
coverage under, or contributions to, the plan; and
    (v) Is not unilaterally terminable or automatically terminated 
solely for non-payment of benefits under, or contributions to, the plan.
    (4) For purposes of paragraph (b)(3)(i) of this section, the 
following factors, among others, are to be considered in determining the 
existence of a bona fide collective bargaining relationship. In any 
proceeding initiated under 29 CFR part 2570 subpart H, the existence of 
a bona fide collective bargaining relationship under paragraph (b)(3)(i) 
shall be presumed where at least four of the factors set out in 
paragraphs (b)(4)(i) through (viii) of this section are established. In 
such a proceeding, the Secretary may also consider whether other 
objective or subjective indicia of actual collective bargaining and 
representation are present as set out in paragraph (b)(4)(ix) of this 
section.
    (i) The agreement referred to in paragraph (b)(3) of this section 
provides for contributions to a labor-management trust fund structured 
according to section 302(c)(5), (6), (7), (8), or (9) of the Taft-
Hartley Act, 29 U.S.C. 186(c)(5), (6), (7), (8) or (9), or to a plan 
lawfully negotiated under the Railway Labor Act;
    (ii) The agreement referred to in paragraph (b)(3) of this section 
requires contributions by substantially all of the participating 
employers to a multiemployer pension plan that is structured in 
accordance with section 401 of the Internal Revenue Code (26 U.S.C.) and 
is either structured in accordance with section 302(c)(5) of the Taft-
Hartley Act, 29 U.S.C. 186(c)(5), or is lawfully negotiated under the 
Railway Labor Act, and substantially all of the active participants 
covered by the employee welfare benefit plan are also eligible to become 
participants in that pension plan;
    (iii) The predominant employee organization that is a party to the 
agreement referred to in paragraph (b)(3) of this section has maintained 
a series of agreements incorporating or referencing the plan since 
before January 1, 1983;
    (iv) The predominant employee organization that is a party to the 
agreement referred to in paragraph (b)(3) of this section has been a 
national or international union, or a federation of national and 
international unions, or has been affiliated with such a union or 
federation, since before January 1, 1983;
    (v) A court, government agency, or other third-party adjudicatory 
tribunal has determined, in a contested or adversary proceeding, or in a 
government-supervised election, that the predominant employee 
organization that is a party to the agreement described in paragraph 
(b)(3) of this section is the lawfully recognized or designated 
collective bargaining representative with respect to one or more 
bargaining units of personnel covered by such agreement;
    (vi) Employers who are parties to the agreement described in 
paragraph (b)(3) of this section pay at least 75% of the premiums or 
contributions required for the coverage of active participants under the 
plan or, in the case of a retiree-only plan, the employers pay at least 
75% of the premiums or contributions required for the coverage of the 
retirees. For this purpose, coverage

[[Page 356]]

under the plan for dental or vision care, coverage for excepted benefits 
under 29 CFR 2590.732(b), and amounts paid by participants and 
beneficiaries as co-payments or deductibles in accordance with the terms 
of the plan are disregarded;
    (vii) The predominant employee organization that is a party to the 
agreement described in paragraph (b)(3) of this section provides, 
sponsors, or jointly sponsors a hiring hall(s) and/or a state-certified 
apprenticeship program(s) that provides services that are available to 
substantially all active participants covered by the plan;
    (viii) The agreement described in paragraph (b)(3) of this section 
has been determined to be a bona fide collective bargaining agreement 
for purposes of establishing the prevailing practices with respect to 
wages and supplements in a locality, pursuant to a prevailing wage 
statute of any state or the District of Columbia.
    (ix) There are other objective or subjective indicia of actual 
collective bargaining and representation, such as that arm's-length 
negotiations occurred between the parties to the agreement described in 
paragraph (b)(3) of this section; that the predominant employee 
organization that is party to such agreement actively represents 
employees covered by such agreement with respect to grievances, 
disputes, or other matters involving employment terms and conditions 
other than coverage under, or contributions to, the employee welfare 
benefit plan; that there is a geographic, occupational, trade, 
organizing, or other rationale for the employers and bargaining units 
covered by such agreement; that there is a connection between such 
agreement and the participation, if any, of self-employed individuals in 
the employee welfare benefit plan established or maintained under or 
pursuant to such agreement.
    (c) Exclusions. An employee welfare benefit plan shall not be deemed 
to be ``established or maintained under or pursuant to one or more 
agreements which the Secretary finds to be collective bargaining 
agreements'' for any plan year in which:
    (1) The plan is self-funded or partially self-funded and is marketed 
to employers or sole proprietors
    (i) By one or more insurance producers as defined in paragraph (d) 
of this section;
    (ii) By an individual who is disqualified from, or ineligible for, 
or has failed to obtain, a license to serve as an insurance producer to 
the extent that the individual engages in an activity for which such 
license is required; or
    (iii) By individuals (other than individuals described in paragraphs 
(c)(1)(i) and (ii) of this section) who are paid on a commission-type 
basis to market the plan.
    (iv) For the purposes of this paragraph (c)(1):
    (A) ``Marketing'' does not include administering the plan, 
consulting with plan sponsors, counseling on benefit design or coverage, 
or explaining the terms of coverage available under the plan to 
employees or union members;
    (B) ``Marketing'' does include the marketing of union membership 
that carries with it plan participation by virtue of such membership, 
except for membership in unions representing insurance producers 
themselves;
    (2) The agreement under which the plan is established or maintained 
is a scheme, plan, stratagem, or artifice of evasion, a principal intent 
of which is to evade compliance with state law and regulations 
applicable to insurance; or
    (3) There is fraud, forgery, or willful misrepresentation as to the 
factors relied on to demonstrate that the plan satisfies the criteria 
set forth in paragraph (b) of this section.
    (d) Definitions. (1) Active participant means a participant who is 
not retired and who is not on extended coverage under paragraphs 
(b)(2)(iii) or (b)(2)(iv) of this section.
    (2) Agreement means the contract embodying the terms and conditions 
mutually agreed upon between or among the parties to such agreement. 
Where the singular is used in this section, the plural is automatically 
included.
    (3) Individual employed means any natural person who furnishes 
services to another person or entity in the capacity of an employee 
under common law, without regard to any specialized definitions or 
interpretations of the

[[Page 357]]

terms ``employee,'' ``employer,'' or ``employed'' under federal or state 
statutes other than ERISA.
    (4) Insurance producer means an agent, broker, consultant, or 
producer who is an individual, entity, or sole proprietor that is 
licensed under the laws of the state to sell, solicit, or negotiate 
insurance.
    (5) Predominant employee organization means, where more than one 
employee organization is a party to an agreement, either the 
organization representing the plurality of individuals employed under 
such agreement, or organizations that in combination represent the 
majority of such individuals.
    (e) Examples. The operation of the provisions of this section may be 
illustrated by the following examples.

    Example 1. Plan A has 500 participants, in the following 4 
categories of participants under paragraph (b)(2) of this section:

----------------------------------------------------------------------------------------------------------------
                   Categories of participants                      Total number     Nexus group      Non-nexus
----------------------------------------------------------------------------------------------------------------
1. Individuals working under CBAs...............................       335 (67%)       335 (67%)        0
2. Retirees.....................................................        50 (10%)        50 (10%)        0
3. ``Special Class''--Non-CBA, non-CBA-alumni...................       100 (20%)        50 (10%)        50 (10%)
4. Non-nexus participants.......................................         15 (3%)        0                15 (3%)
                                                                 -----------------------------------------------
      Total.....................................................      500 (100%)       435 (87%)        65 (13%)
----------------------------------------------------------------------------------------------------------------

    In determining whether at least 85% of Plan A's participant 
population is made up of individuals with the required nexus to the 
collective bargaining agreement as required by paragraph (b)(2) of this 
section, the Plan may count as part of the nexus group only 50 (10% of 
the total plan population) of the 100 individuals described in paragraph 
(b)(2)(viii) of this section. That is because the number of individuals 
meeting the category of individuals in paragraph (b)(2)(viii) exceeds 
10% of the total participant population by 50 individuals. The paragraph 
specifies that of those individuals who would otherwise be deemed to be 
nexus individuals because they are the type of individuals described in 
paragraph (b)(2)(viii), the number in excess of 10% of the total plan 
population may not be counted in the nexus group. Here, 50 of the 100 
individuals employed by signatory employers, but not covered by the 
collective bargaining agreement, are counted as nexus individuals and 50 
are not counted as nexus individuals. Nonetheless, the Plan satisfies 
the 85% criterion under paragraph (b)(2) because a total of 435 (335 
individuals covered by the collective bargaining agreement, plus 50 
retirees, plus 50 individuals employed by signatory employers), or 87%, 
of the 500 participants in Plan A are individuals who may be counted as 
nexus participants under paragraph (b)(2). Beneficiaries (e.g., spouses, 
dependent children, etc.) are not counted to determine whether the 85% 
test has been met.
    Example 2. (i) International Union MG and its Local Unions have 
represented people working primarily in a particular industry for over 
60 years. Since 1950, most of their collective bargaining agreements 
have called for those workers to be covered by the National MG Health 
and Welfare Plan. During that time, the number of union-represented 
workers in the industry, and the number of active participants in the 
National MG Health and Welfare Plan, first grew and then declined. New 
Locals were formed and later were shut down. Despite these fluctuations, 
the National MG Health and Welfare Plan meets the factors described in 
paragraphs (b)(4)(iii) and (iv) of this section, as the plan has been in 
existence pursuant to collective bargaining agreements to which the 
International Union and its affiliates have been parties since before 
January 1, 1983.
    (ii) Assume the same facts, except that on January 1, 1999, 
International Union MG merged with International Union RE to form 
International Union MRGE. MRGE and its Locals now represent the active 
participants in the National MG Health and Welfare Plan and in the 
National RE Health and Welfare Plan, which, for 45 years, had been 
maintained under collective bargaining agreements negotiated by 
International Union RE and its Locals. Since International Union MRGE is 
the continuation of, and successor to, the MG and RE unions, the two 
plans continue to meet the factors in paragraphs (b)(4)(iii) and (iv) of 
this section. This also would be true if the two plans were merged.
    (iii) Assume the same facts as in paragraphs (i) and (ii) of this 
Example. In addition to maintaining the health and welfare plans 
described in those paragraphs, International Union MG also maintained 
the National MG Pension Plan and International Union RE maintained the 
National RE Pension Plan. When the unions merged and the health and 
welfare plans were merged, National MG Pension Plan and National RE 
Pension Plan were merged to form National MRGE Pension Plan. When the 
unions merged, the employees and retirees covered under the pre-merger 
plans continued to be covered under the post-merger plans pursuant to 
the collective bargaining agreements

[[Page 358]]

and also were given credit in the post-merger plans for their years of 
service and coverage in the pre-merger plans. Retirees who originally 
were covered under the pre-merger plans and continue to be covered under 
the post-merger plans based on their past service and coverage would be 
considered to be ``retirees'' for purposes of 2550.3-40(b)(2)(ii). 
Likewise, bargaining unit alumni who were covered under the pre-merger 
plans and continued to be covered under the post-merger plans based on 
their past service and coverage and their continued employment with 
employers that are parties to an agreement described in paragraph (b)(3) 
of this section would be considered to be bargaining unit alumni for 
purposes of 2550.3-40(b)(2)(vii).
    Example 3. Assume the same facts as in paragraph (ii) of Example 2 
with respect to International Union MG. However, in 1997, one of its 
Locals and the employers with which it negotiates agree to set up a new 
multiemployer health and welfare plan that only covers the individuals 
represented by that Local Union. That plan would not meet the factor in 
paragraph (b)(4)(iii) of this section, as it has not been incorporated 
or referenced in collective bargaining agreements since before January 
1, 1983.
    Example 4. (i) Pursuant to a collective bargaining agreement between 
various employers and Local 2000, the employers contribute $2 per hour 
to the Fund for every hour that a covered employee works under the 
agreement. The covered employees are automatically entitled to health 
and disability coverage from the Fund for every calendar quarter the 
employees have 300 hours of additional covered service in the preceding 
quarter. The employees do not need to make any additional contributions 
for their own coverage, but must pay $250 per month if they want health 
coverage for their dependent spouse and children. Because the employer 
payments cover 100% of the required contributions for the employees' own 
coverage, the Local 2000 Employers Health and Welfare Fund meets the 
``75% employer payment'' factor under paragraph (b)(4)(vi) of this 
section.
    (ii) Assume, however, that the negotiated employer contribution rate 
was $1 per hour, and the employees could only obtain health coverage for 
themselves if they also elected to contribute $1 per hour, paid on a 
pre-tax basis through salary reduction. The Fund would not meet the 75% 
employer payment factor, even though the employees' contributions are 
treated as employer contributions for tax purposes. Under ERISA, and 
therefore under this section, elective salary reduction contributions 
are treated as employee contributions. The outcome would be the same if 
a uniform employee contribution rate applied to all employees, whether 
they had individual or family coverage, so that the $1 per hour employee 
contribution qualified an employee for his or her own coverage and, if 
he or she had dependents, dependent coverage as well.
    Example 5. Arthur is a licensed insurance broker, one of whose 
clients is Multiemployer Fund M, a partially self-funded plan. Arthur 
takes bids from insurance companies on behalf of Fund M for the insured 
portion of its coverage, helps the trustees to evaluate the bids, and 
places the Fund's health insurance coverage with the carrier that is 
selected. Arthur also assists the trustees of Fund M in preparing 
material to explain the plan and its benefits to the participants, as 
well as in monitoring the insurance company's performance under the 
contract. At the Trustees' request, Arthur meets with a group of 
employers with which the union is negotiating for their employees' 
coverage under Fund M, and he explains the cost structure and benefits 
that Fund M provides. Arthur is not engaged in marketing within the 
meaning of paragraph (c)(1) of this section, so the fact that he 
provides these administrative services and sells insurance to the Fund 
itself does not affect the plan's status as a plan established or 
maintained under or pursuant to a collective bargaining agreement. This 
is the case whether or how he is compensated.
    Example 6. Assume the same facts as Example 5, except that Arthur 
has a group of clients who are unrelated to the employers bound by the 
collective bargaining agreement, whose employees would not be ``nexus 
group'' members, and whose insurance carrier has withdrawn from the 
market in their locality. He persuades the client group to retain him to 
find them other coverage. The client group has no relationship with the 
labor union that represents the participants in Fund M. However, Arthur 
offers them coverage under Fund M and persuades the Fund's Trustees to 
allow the client group to join Fund M in order to broaden Fund M's 
contribution base. Arthur's activities in obtaining coverage for the 
unrelated group under Fund M constitutes marketing through an insurance 
producer; Fund M is a MEWA under paragraph (c)(1) of this section.
    Example 7. Union A represents thousands of construction workers in a 
three-state geographic region. For many years, Union A has maintained a 
standard written collective bargaining agreement with several hundred 
large and small building contractors, covering wages, hours, and other 
terms and conditions of employment for all work performed in Union A's 
geographic territory. The terms of those agreements are negotiated every 
three years between Union A and a multiemployer Association, which signs 
on behalf of those employers who have delegated their bargaining 
authority to the Association. Hundreds of other employers--including 
both local and traveling contractors--have chosen to become bound

[[Page 359]]

to the terms of Union A's standard area agreement for various periods of 
time and in various ways, such as by signing short-form binders or ``me 
too'' agreements, executing a single job or project labor agreement, or 
entering into a subcontracting arrangement with a signatory employer. 
All of these employ individuals represented by Union A and contribute to 
Plan A, a self-insured multiemployer health and welfare plan established 
and maintained under Union A's standard area agreement. During the past 
year, the trustees of Plan A have brought lawsuits against several 
signatory employers seeking contributions allegedly owed, but not paid 
to the trust. In defending that litigation, a number of employers have 
sworn that they never intended to operate as union contractors, that 
their employees want nothing to do with Union A, that Union A procured 
their assent to the collective bargaining agreement solely by threats 
and fraudulent misrepresentations, and that Union A has failed to file 
certain reports required by the Labor Management Reporting and 
Disclosure Act. In at least one instance, a petition for a 
decertification election has been filed with the National Labor 
Relations Board. In this example, Plan A meets the criteria for a 
regulatory finding under this section that it is a multiemployer plan 
established and maintained under or pursuant to one or more collective 
bargaining agreements, assuming that its participant population 
satisfies the 85% test of paragraph (b)(2) of this section and that none 
of the disqualifying factors in paragraph (c) of this section is 
present. Plan A's status for the purpose of this section is not affected 
by the fact that some of the employers who deal with Union A have 
challenged Union A's conduct, or have disputed under labor statutes and 
legal doctrines other than ERISA section 3(40) the validity and 
enforceability of their putative contract with Union A, regardless of 
the outcome of those disputes.
    Example 8. Assume the same facts as Example 7. Plan A's benefits 
consultant recently entered into an arrangement with the Medical 
Consortium, a newly formed organization of health care providers, which 
allows the Plan to offer a broader range of health services to Plan A's 
participants while achieving cost savings to the Plan and to 
participants. Union A, Plan A, and Plan A's consultant each have added a 
page to their Web sites publicizing the new arrangement with the Medical 
Consortium. Concurrently, Medical Consortium's Web site prominently 
publicizes its recent affiliation with Plan A and the innovative 
services it makes available to the Plan's participants. Union A has 
mailed out informational packets to its members describing the benefit 
enhancements and encouraging election of family coverage. Union A has 
also begun distributing similar material to workers on hundreds of non-
union construction job sites within its geographic territory. In this 
example, Plan A remains a plan established and maintained under or 
pursuant to one or more collective bargaining agreements under section 
3(40) of ERISA. Neither Plan A's relationship with a new organization of 
health care providers, nor the use of various media to publicize Plan 
A's attractive benefits throughout the area served by Union A, alters 
Plan A's status for purpose of this section.
    Example 9. Assume the same facts as in Example 7. Union A undertakes 
an area-wide organizing campaign among the employees of all the health 
care providers who belong to the Medical Consortium. When soliciting 
individual employees to sign up as union members, Union A distributes 
Plan A's information materials and promises to bargain for the same 
coverage. At the same time, when appealing to the employers in the 
Medical Consortium for voluntary recognition, Union A promises to 
publicize the Consortium's status as a group of unionized health care 
service providers. Union A eventually succeeds in obtaining recognition 
based on its majority status among the employees working for Medical 
Consortium employers. The Consortium, acting on behalf of its employer 
members, negotiates a collective bargaining agreement with Union A that 
provides terms and conditions of employment, including coverage under 
Plan A. In this example, Plan A still meets the criteria for a 
regulatory finding that it is collectively bargained under section 3(40) 
of ERISA. Union A's recruitment and representation of a new occupational 
category of workers unrelated to the construction trade, its promotion 
of attractive health benefits to achieve organizing success, and the 
Plan's resultant growth, do not take Plan A outside the regulatory 
finding.
    Example 10. Assume the same facts as in Example 7. The Medical 
Consortium, a newly formed organization, approaches Plan A with a 
proposal to make money for Plan A and Union A by enrolling a large group 
of employers, their employees, and self-employed individuals affiliated 
with the Medical Consortium. The Medical Consortium obtains employers' 
signatures on a generic document bearing Union A's name, labeled 
``collective bargaining agreement,'' which provides for health coverage 
under Plan A and compliance with wage and hour statutes, as well as 
other employment laws. Employees of signatory employers sign enrollment 
documents for Plan A and are issued membership cards in Union A; their 
membership dues are regularly checked off along with their monthly 
payments for health coverage. Self-employed individuals similarly 
receive union membership cards and make monthly payments, which are 
divided between Plan A and the Union. Aside from health coverage 
matters,

[[Page 360]]

these new participants have little or no contact with Union A. The new 
participants enrolled through the Consortium amount to 18% of the 
population of Plan A during the current Plan Year. In this example, Plan 
A now fails to meet the criteria in paragraphs (b)(2) and (b)(3) of this 
section, because more than 15% of its participants are individuals who 
are not employed under agreements that are the product of a bona fide 
collective bargaining relationship and who do not fall within any of the 
other nexus categories set forth in paragraph (b)(2) of this section. 
Moreover, even if the number of additional participants enrolled through 
the Medical Consortium, together with any other participants who did not 
fall within any of the nexus categories, did not exceed 15% of the total 
participant population under the plan, the circumstances in this example 
would trigger the disqualification of paragraph (c)(2) of this section, 
because Plan A now is being maintained under a substantial number of 
agreements that are a ``scheme, plan, stratagem or artifice of evasion'' 
intended primarily to evade compliance with state laws and regulations 
pertaining to insurance. In either case, the consequence of adding the 
participants through the Medical Consortium is that Plan A is now a MEWA 
for purposes of section 3(40) of ERISA and is not exempt from state 
regulation by virtue of ERISA.

    (f) Cross-reference. See 29 CFR part 2570, subpart H for procedural 
rules relating to proceedings seeking an Administrative Law Judge 
finding by the Secretary under section 3(40) of ERISA.
    (g) Effect of proceeding seeking Administrative Law Judge Section 
3(40) Finding.
    (1) An Administrative Law Judge finding issued pursuant to the 
procedures in 29 CFR part 2570, subpart H will constitute a finding 
whether the entity in that proceeding is an employee welfare benefit 
plan established or maintained under or pursuant to an agreement that 
the Secretary finds to be a collective bargaining agreement for purposes 
of section 3(40) of ERISA.
    (2) Nothing in this section or in 29 CFR part 2570, subpart H is 
intended to provide the basis for a stay or delay of a state 
administrative or court proceeding or enforcement of a subpoena.

[68 FR 17480, Apr. 9, 2003]



Sec. 2510.3-101  Definition of ``plan assets''--plan investments.

    (a) In general. (1) This section describes what constitute assets of 
a plan with respect to a plan's investment in another entity for 
purposes of subtitle A, and parts 1 and 4 of subtitle B, of title I of 
the Act and section 4975 of the Internal Revenue Code. Paragraph (a)(2) 
of this section contains a general rule relating to plan investments. 
Paragraphs (b) through (f) of this section define certain terms that are 
used in the application of the general rule. Paragraph (g) of this 
section describes how the rules in this section are to be applied when a 
plan owns property jointly with others or where it acquires an equity 
interest whose value relates solely to identified assets of an issuer. 
Paragraph (h) of this section contains special rules relating to 
particular kinds of plan investments. Paragraph (i) describes the assets 
that a plan acquires when it purchases certain guaranteed mortgage 
certificates. Paragraph (j) of this section contains examples 
illustrating the operation of this section. The effective date of this 
section is set forth in paragraph (k) of this section.
    (2) Generally, when a plan invests in another entity, the plan's 
assets include its investment, but do not, solely by reason of such 
investment, include any of the underlying assets of the entity. However, 
in the case of a plan's investment in an equity interest of an entity 
that is neither a publicly-offered security nor a security issued by an 
investment company registered under the Investment Company Act of 1940 
its assets include both the equity interest and an undivided interest in 
each of the underlying assets of the entity, unless it is established 
that--
    (i) The entity is an operating company, or
    (ii) Equity participation in the entity by benefit plan investors is 
not significant.

Therefore, any person who exercises authority or control respecting the 
management or disposition of such underlying assets, and any person who 
provides investment advice with respect to such assets for a fee (direct 
or indirect), is a fiduciary of the investing plan.
    (b) Equity interests and publicly-offered securities. (1) The term 
equity interest means any interest in an entity other than an instrument 
that is treated as

[[Page 361]]

indebtedness under applicable local law and which has no substantial 
equity features. A profits interest in a partnership, an undivided 
ownership interest in property and a beneficial interest in a trust are 
equity interests.
    (2) A publicly-offered security is a security that is freely 
transferable, part of a class of securities that is widely held and 
either--
    (i) Part of a class of securities registered under section 12(b) or 
12(g) of the Securities Exchange Act of 1934, or
    (ii) Sold to the plan as part of an offering of securities to the 
public pursuant to an effective registration statement under the 
Securities Act of 1933 and the class of securities of which such 
security is a part is registered under the Securities Exchange Act of 
1934 within 120 days (or such later time as may be allowed by the 
Securities and Exchange Commission) after the end of the fiscal year of 
the issuer during which the offering of such securities to the public 
occurred.
    (3) For purposes of paragraph (b)(2) of this section, a class of 
securities is ``widely-held'' only if it is a class of securities that 
is owned by 100 or more investors independent of the issuer and of one 
another. A class of securities will not fail to be widely-held solely 
because subsequent to the initial offering the number of independent 
investors falls below 100 as a result of events beyond the control of 
the issuer.
    (4) For purposes of paragraph (b)(2) of this section, whether a 
security is ``freely transferable'' is a factual question to be 
determined on the basis of all relevant facts and circumstances. If a 
security is part of an offering in which the minimum investment is 
$10,000 or less, however, the following factors ordinarily will not, 
alone or in combination, affect a finding that such securities are 
freely transferable:
    (i) Any requirement that not less than a minimum number of shares or 
units of such security be transferred or assigned by any investor, 
provided that such requirement does not prevent transfer of all of the 
then remaining shares or units held by an investor;
    (ii) Any prohibition against transfer or assignment of such security 
or rights in respect thereof to an ineligible or unsuitable investor;
    (iii) Any restriction on, or prohibition against, any transfer or 
assignment which would either result in a termination or 
reclassification of the entity for Federal or state tax purposes or 
which would violate any state or Federal statute, regulation, court 
order, judicial decree, or rule of law;
    (iv) Any requirement that reasonable transfer or administrative fees 
be paid in connection with a transfer or assignment;
    (v) Any requirement that advance notice of a transfer or assignment 
be given to the entity and any requirement regarding execution of 
documentation evidencing such transfer or assignment (including 
documentation setting forth representations from either or both of the 
transferor or transferee as to compliance with any restriction or 
requirement described in this paragraph (b)(4) of this section or 
requiring compliance with the entity's governing instruments);
    (vi) Any restriction on substitution of an assignee as a limited 
partner of a partnership, including a general partner consent 
requirement, provided that the economic benefits of ownership of the 
assignor may be transferred or assigned without regard to such 
restriction or consent (other than compliance with any other restriction 
described in this paragraph (b)(4)) of this section;
    (vii) Any administrative procedure which establishes an effective 
date, or an event, such as the completion of the offering, prior to 
which a transfer or assignment will not be effective; and
    (viii) Any limitation or restriction on transfer or assignment which 
is not created or imposed by the issuer or any person acting for or on 
behalf of such issuer.
    (c) Operating company. (1) An ``operating company'' is an entity 
that is primarily engaged, directly or through a majority owned 
subsidiary or subsidiaries, in the production or sale of a product or 
service other than the investment of capital. The term ``operating 
company'' includes an entity which is not described in the preceding 
sentence, but which is a ``venture capital operating company'' described 
in paragraph (d) or a ``real estate operating company'' described in 
paragraph (e).

[[Page 362]]

    (2)  [Reserved]
    (d) Venture capital operating company. (1) An entity is a ``venture 
capital operating company'' for the period beginning on an initial 
valuation date described in paragraph (d)(5)(i) and ending on the last 
day of the first ``annual valuation period'' described in paragraph 
(d)(5)(ii) (in the case of an entity that is not a venture capital 
operating company immediately before the determination) or for the 12 
month period following the expiration of an ``annual valuation period'' 
described in paragraph (d)(5)(ii) (in the case of an entity that is a 
venture capital operating company immediately before the determination) 
if--
    (i) On such initial valuation date, or at any time within such 
annual valuation period, at least 50 percent of its assets (other than 
short-term investments pending long-term commitment or distribution to 
investors), valued at cost, are invested in venture capital investments 
described in paragraph (d)(3)(i) or derivative investments described in 
paragraph (d)(4); and
    (ii) During such 12 month period (or during the period beginning on 
the initial valuation date and ending on the last day of the first 
annual valuation period), the entity, in the ordinary course of its 
business, actually exercises management rights of the kind described in 
paragraph (d)(3)(ii) with respect to one or more of the operating 
companies in which it invests.
    (2)(i) A venture capital operating company described in paragraph 
(d)(1) shall continue to be treated as a venture capital operating 
company during the ``distribution period'' described in paragraph 
(d)(2)(ii). An entity shall not be treated as a venture capital 
operating company at any time after the end of the distribution period.
    (ii) The ``distribution period'' referred to in paragraph (d)(2)(i) 
begins on a date established by a venture capital operating company that 
occurs after the first date on which the venture capital operating 
company has distributed to investors the proceeds of at least 50 percent 
of the highest amount of its investments (other than short-term 
investments made pending long-term commitment or distribution to 
investors) outstanding at any time from the date it commenced business 
(determined on the basis of the cost of such investments) and ends on 
the earlier of--
    (A) The date on which the company makes a ``new portfolio 
investment'', or
    (B) The expiration of 10 years from the beginning of the 
distribution period.
    (iii) For purposes of paragraph (d)(2)(ii)(A), a ``new portfolio 
investment'' is an investment other than--
    (A) An investment in an entity in which the venture capital 
operating company had an outstanding venture capital investment at the 
beginning of the distribution period which has continued to be 
outstanding at all times during the distribution period, or
    (B) A short-term investment pending long-term commitment or 
distribution to investors.
    (3)(i) For purposes of this paragraph (d) a ``venture capital 
investment'' is an investment in an operating company (other than a 
venture capital operating company) as to which the investor has or 
obtains management rights.
    (ii) The term ``management rights'' means contractual rights 
directly between the investor and an operating company to substantially 
participate in, or substantially influence the conduct of, the 
management of the operating company.
    (4)(i) An investment is a ``derivative investment'' for purposes of 
this paragraph (d) if it is--
    (A) A venture capital investment as to which the investor's 
management rights have ceased in connection with a public offering of 
securities of the operating company to which the investment relates, or
    (B) An investment that is acquired by a venture capital operating 
company in the ordinary course of its business in exchange for an 
existing venture capital investment in connection with:
    (1) A public offering of securities of the operating company to 
which the existing venture capital investment relates, or
    (2) A merger or reorganization of the operating company to which the 
existing venture capital investment relates,

[[Page 363]]

provided that such merger or reorganization is made for independent 
business reasons unrelated to extinguishing management rights.
    (ii) An investment ceases to be a derivative investment on the later 
of:
    (A) 10 years from the date of the acquisition of the original 
venture capital investment to which the derivative investment relates, 
or
    (B) 30 months from the date on which the investment becomes a 
derivative investment.
    (5) For purposes of this paragraph (d) and paragraph (e)--
    (i) An ``initial valuation date'' is the later of--
    (A) Any date designated by the company within the 12 month period 
ending with the effective date of this section, or
    (B) The first date on which an entity makes an investment that is 
not a short-term investment of funds pending long-term commitment.
    (ii) An ``annual valuation period'' is a preestablished annual 
period, not exceeding 90 days in duration, which begins no later than 
the anniversary of an entity's initial valuation date. An annual 
valuation period, once established may not be changed except for good 
cause unrelated to a determination under this paragraph (d) or paragraph 
(e).
    (e) Real estate operating company. An entity is a ``real estate 
operating company'' for the period beginning on an initial valuation 
date described in paragraph (d)(5)(i) and ending on the last day of the 
first ``annual valuation period'' described in paragraph (d)(5)(ii) (in 
the case of an entity that is not a real estate operating company 
immediately before the determination) or for the 12 month period 
following the expiration of an annual valuation period described in 
paragraph (d)(5)(ii) (in the case of an entity that is a real estate 
operating company immediately before the determination) if:
    (1) On such initial valuation date, or on any date within such 
annual valuation period, at least 50 percent of its assets, valued at 
cost (other than short-term investments pending long-term commitment or 
distribution to investors), are invested in real estate which is managed 
or developed and with respect to which such entity has the right to 
substantially participate directly in the management or development 
activities; and
    (2) During such 12 month period (or during the period beginning on 
the initial valuation date and ending on the last day of the first 
annual valuation period) such entity in the ordinary course of its 
business is engaged directly in real estate management or development 
activities.
    (f) Participation by benefit plan investors. (1) Equity 
participation in an entity by benefit plan investors is ``significant'' 
on any date if, immediately after the most recent acquisition of any 
equity interest in the entity, 25 percent or more of the value of any 
class of equity interests in the entity is held by benefit plan 
investors (as defined in paragraph (f)(2)). For purposes of 
determinations pursuant to this paragraph (f), the value of any equity 
interests held by a person (other than a benefit plan investor) who has 
discretionary authority or control with respect to the assets of the 
entity or any person who provides investment advice for a fee (direct or 
indirect) with respect to such assets, or any affiliate of such a 
person, shall be disregarded.
    (2) A ``benefit plan investor'' is any of the following--
    (i) Any employee benefit plan (as defined in section 3(3) of the 
Act), whether or not it is subject to the provisions of title I of the 
Act,
    (ii) Any plan described in section 4975(e)(1) of the Internal 
Revenue Code,
    (iii) Any entity whose underlying assets include plan assets by 
reason of a plan's investment in the entity.
    (3) An ``affiliate'' of a person includes any person, directly or 
indirectly, through one or more intermediaries, controlling, controlled 
by, or under common control with the person. For purposes of this 
paragraph (f)(3), ``control'', with respect to a person other than an 
individual, means the power to exercise a controlling influence over the 
management or policies of such person.
    (g) Joint ownership. For purposes of this section, where a plan 
jointly owns property with others, or where the value of a plan's equity 
interest in an

[[Page 364]]

entity relates solely to identified property of the entity, such 
property shall be treated as the sole property of a separate entity.
    (h) Specific rules relating to plan investments. Notwithstanding any 
other provision of this section--
    (1) Except where the entity is an investment company registered 
under the Investment Company Act of 1940, when a plan acquires or holds 
an interest in any of the following entities its assets include its 
investment and an undivided interest in each of the underlying assets of 
the entity:
    (i) A group trust which is exempt from taxation under section 501(a) 
of the Internal Revenue Code pursuant to the principles of Rev. Rul. 81-
100, 1981-1 C.B. 326,
    (ii) A common or collective trust fund of a bank,
    (iii) A separate account of an insurance company, other than a 
separate account that is maintained solely in connection with fixed 
contractual obligations of the insurance company under which the amounts 
payable, or credited, to the plan and to any participant or beneficiary 
of the plan (including an annuitant) are not affected in any manner by 
the investment performance of the separate account.
    (2) When a plan acquires or holds an interest in any entity (other 
than an insurance company licensed to do business in a State) which is 
established or maintained for the purpose of offering or providing any 
benefit described in section 3(1) or section 3(2) of the Act to 
participants or beneficiaries of the investing plan, its assets will 
include its investment and an undivided interest in the underlying 
assets of that entity.
    (3) When a plan or a related group of plans owns all of the 
outstanding equity interests (other than director's qualifying shares) 
in an entity, its assets include those equity interests and all of the 
underlying assets of the entity. This paragraph (h)(3) does not apply, 
however, where all of the outstanding equity interests in an entity are 
qualifying employer securities described in section 407(d)(5) of the 
Act, owned by one or more eligible individual account plan(s) (as 
defined in section 407(d)(3) of the Act) maintained by the same 
employer, provided that substantially all of the participants in the 
plan(s) are, or have been, employed by the issuer of such securities or 
by members of a group of affiliated corporations (as determined under 
section 407(d)(7) of the Act) of which the issuer is a member.
    (4) For purposes of paragraph (h)(3), a ``related group'' of 
employee benefit plans consists of every group of two or more employee 
benefit plans--
    (i) Each of which receives 10 percent or more of its aggregate 
contributions from the same employer or from members of the same 
controlled group of corporations (as determined under section 1563(a) of 
the Internal Revenue Code, without regard to section 1563(a)(4) 
thereof); or
    (ii) Each of which is either maintained by, or maintained pursuant 
to a collective bargaining agreement negotiated by, the same employee 
organization or affiliated employee organizations. For purposes of this 
paragraph, an ``affiliate'' of an employee organization means any person 
controlling, controlled by, or under common control with such 
organization, and includes any organization chartered by the same parent 
body, or governed by the same constitution and bylaws, or having the 
relation of parent and subordinate.
    (i) Governmental mortgage pools. (1) Where a plan acquires a 
guaranteed governmental mortgage pool certificate, as defined in 
paragraph (i)(2), the plan's assets include the certificate and all of 
its rights with respect to such certificate under applicable law, but do 
not, solely by reason of the plan's holding of such certificate, include 
any of the mortgages underlying such certificate.
    (2) A ``guaranteed governmental mortgage pool certificate'' is a 
certificate backed by, or evidencing an interest in, specified mortgages 
or participation interests therein and with respect to which interest 
and principal payable pursuant to the certificate is guaranteed by the 
United States or an agency or instrumentality thereof. The term 
``guaranteed governmental mortgage pool certificate'' includes a 
mortgage pool certificate with respect to which interest and principal 
payable

[[Page 365]]

pursuant to the certificate is guaranteed by:
    (i) The Government National Mortgage Association;
    (ii) The Federal Home Loan Mortgage Corporation; or
    (iii) The Federal National Mortgage Association.
    (j) Examples. The principles of this section are illustrated by the 
following examples:

    (1) A plan, P, acquires debentures issued by a corporation, T, 
pursuant to a private offering. T is engaged primarily in investing and 
reinvesting in precious metals on behalf of its shareholders, all of 
which are benefit plan investors. By its terms, the debenture is 
convertible to common stock of T at P's option. At the time of P's 
acquisition of the debentures, the conversion feature is incidental to 
T's obligation to pay interest and principal. Although T is not an 
operating company, P's assets do not include an interest in the 
underlying assets of T because P has not acquired an equity interest in 
T. However, if P exercises its option to convert the debentures to 
common stock, it will have acquired an equity interest in T at that time 
and (assuming that the common stock is not a publicly-offered security 
and that there has been no change in the composition of the other equity 
investors in T) P's assets would then include an undivided interest in 
the underlying assets of T.
    (2) A plan, P, acquires a limited partnership interest in a limited 
partnership, U, which is established and maintained by A, a general 
partner in U. U has only one class of limited partnership interests. U 
is engaged in the business of investing and reinvesting in securities. 
Limited partnership interests in U are offered privately pursuant to an 
exemption from the registration requirements of the Securities Act of 
1933. P acquires 15 percent of the value of all the outstanding limited 
partnership interests in U, and, at the time of P's investment, a 
governmental plan owns 15 percent of the value of those interests. U is 
not an operating company because it is engaged primarily in the 
investment of capital. In addition, equity participation by benefit plan 
investors is significant because immediately after P's investment such 
investors hold more than 25 percent of the limited partnership interests 
in U. Accordingly, P's assets include an undivided interest in the 
underlying assets of U, and A is a fiduciary of P with respect to such 
assets by reason of its discretionary authority and control over U's 
assets. Although the governmental plan's investment is taken into 
account for purposes of determining whether equity participation by 
benefit plan investors is significant, nothing in this section imposes 
fiduciary obligations on A with respect to that plan.
    (3) Assume the same facts as in paragraph (j)(2), except that P 
acquires only 5 percent of the value of all the outstanding limited 
partnership interests in U, and that benefit plan investors in the 
aggregate hold only 10 percent of the value of the limited partnership 
interests in U. Under these facts, there is no significant equity 
participation by benefit plan investors in U, and, accordingly, P's 
assets include its limited partnership interest in U, but do not include 
any of the underlying assets of U. Thus, A would not be a fiduciary of P 
by reason of P's investment.
    (4) Assume the same facts as in paragraph (j)(3) and that the 
aggregate value of the outstanding limited partnership interests in U is 
$10,000 (and that the value of the interests held by benefit plan 
investors is thus $1000). Also assume that an affiliate of A owns 
limited partnership interests in U having a value of $6500. The value of 
the limited partnership interests held by A's affiliate are disregarded 
for purposes of determining whether there is significant equity 
participation in U by benefit plan investors. Thus, the percentage of 
the aggregate value of the limited partnership interests held by benefit 
plan investors in U for purposes of such a determination is 
approximately 28.6% ($1000/$3500). Therefore there is significant 
benefit plan investment in T.
    (5) A plan, P, invests in a limited partnership, V, pursuant to a 
private offering. There is significant equity participation by benefit 
plan investors in V. V acquires equity positions in the companies in 
which it invests, and, in connection with these investments, V 
negotiates terms that give it the right to participate in or influence 
the management of those companies. Some of these investments are in 
publicly-offered securities and some are in securities acquired in 
private offerings. During its most recent valuation period, more than 50 
percent of V's assets, valued at cost, consisted of investments with 
respect to which V obtained management rights of the kind described 
above. V's managers routinely consult informally with, and advise, the 
management of only one portfolio company with respect to which it has 
management rights, although it devotes substantial resources to its 
consultations with that company. With respect to the other portfolio 
companies, V relies on the managers of other entities to consult with 
and advise the companies' management. V is a venture capital operating 
company and therefore P has acquired its limited partnership investment, 
but has not acquired an interest in any of the underlying assets of V. 
Thus, none of the managers of V would be fiduciaries with respect to P 
solely by reason of its investment. In this situation, the mere fact 
that V does not participate in or influence the management of all its 
portfolio companies does not

[[Page 366]]

affect its characterization as a venture capital operating company.
    (6) Assume the same facts as in paragraph (j)(5) and the following 
additional facts: V invests in debt securities as well as equity 
securities of its portfolio companies. In some cases V makes debt 
investments in companies in which it also has an equity investment; in 
other cases V only invests in debt instruments of the portfolio company. 
V's debt investments are acquired pursuant to private offerings and V 
negotiates covenants that give it the right to substantially participate 
in or to substantially influence the conduct of the management of the 
companies issuing the obligations. These covenants give V more 
significant rights with respect to the portfolio companies' management 
than the covenants ordinarily found in debt instruments of established, 
creditworthy companies that are purchased privately by institutional 
investors. V routinely consults with and advises the management of its 
portfolio companies. The mere fact that V's investments in portfolio 
companies are debt, rather than equity, will not cause V to fail to be a 
venture capital operating company, provided it actually obtains the 
right to substantially participate in or influence the conduct of the 
management of its portfolio companies and provided that in the ordinary 
course of its business it actually exercises those rights.
    (7) A plan, P, invests (pursuant to a private offering) in a limited 
partnership, W, that is engaged primarily in investing and reinvesting 
assets in equity positions in real property. The properties acquired by 
W are subject to long-term leases under which substantially all 
management and maintenance activities with respect to the property are 
the responsibility of the lessee. W is not engaged in the management or 
development of real estate merely because it assumes the risks of 
ownership of income-producing real property, and W is not a real estate 
operating company. If there is significant equity participation in W by 
benefit plan investors, P will be considered to have acquired an 
undivided interest in each of the underlying assets of W.
    (8) Assume the same facts as in paragraph (j)(7) except that W owns 
several shopping centers in which individual stores are leased for 
relatively short periods to various merchants (rather than owning 
properties subject to long-term leases under which substantially all 
management and maintenance activities are the responsibility of the 
lessee). W retains independent contractors to manage the shopping center 
properties. These independent contractors negotiate individual leases, 
maintain the common areas and conduct maintenance activities with 
respect to the properties. W has the responsibility to supervise and the 
authority to terminate the independent contractors. During its most 
recent valuation period more than 50 percent of W's assets, valued at 
cost, are invested in such properties. W is a real estate operating 
company. The fact that W does not have its own employees who engage in 
day-to-day management and development activities is only one factor in 
determining whether it is actively managing or developing real estate. 
Thus, P's assets include its interest in W, but do not include any of 
the underlying assets of W.
    (9) A plan, P, acquires a limited partnership interest in X pursuant 
to a private offering. There is significant equity participation in X by 
benefit plan investors. X is engaged in the business of making 
``convertible loans'' which are structured as follows: X lends a 
specified percentage of the cost of acquiring real property to a 
borrower who provides the remaining capital needed to make the 
acquisition. This loan is secured by a mortgage on the property. Under 
the terms of the loan, X is entitled to receive a fixed rate of interest 
payable out of the initial cash flow from the property and is also 
entitled to that portion of any additional cash flow which is equal to 
the percentage of the acquisition cost that is financed by its loan. 
Simultaneously with the making of the loan, the borrower also gives X an 
option to purchase an interest in the property for the original 
principal amount of the loan at the expiration of its initial term. X's 
percentage interest in the property, if it exercises this option, would 
be equal to the percentage of the acquisition cost of the property which 
is financed by its loan. The parties to the transaction contemplate that 
the option ordinarily will be exercised at the expiration of the loan 
term if the property has appreciated in value. X and the borrower also 
agree that, if the option is exercised, they will form a limited 
partnership to hold the property. X negotiates loan terms which give it 
rights to substantially influence, or to substantially participate in, 
the management of the property which is acquired with the proceeds of 
the loan. These loan terms give X significantly greater rights to 
participate in the management of the property than it would obtain under 
a conventional mortgage loan. In addition, under the terms of the loan, 
X and the borrower ratably share any capital expenditures relating to 
the property. During its most recent valuation period, more than 50 
percent of the value of X's assets valued at cost consisted of real 
estate investments of the kind described above. X, in the ordinary 
course of its business, routinely exercises its management rights and 
frequently consults with and advises the borrower and the property 
manager. Under these facts, X is a real estate operating company. Thus, 
P's assets include its interest in X, but do not include any of the 
underlying assets of X.

[[Page 367]]

    (10) In a private transaction, a plan, P, acquires a 30 percent 
participation in a debt instrument that is held by a bank. Since the 
value of the participation certificate relates solely to the debt 
instrument, that debt instrument is, under paragraph (g), treated as the 
sole asset of a separate entity. Equity participation in that entity by 
benefit plan investors is significant since the value of the plan's 
participation exceeds 25 percent of the value of the instrument. In 
addition, the hypothetical entity is not an operating company because it 
is primarily engaged in the investment of capital (i.e., holding the 
debt instrument). Thus, P's assets include the participation and an 
undivided interest in the debt instrument, and the bank is a fiduciary 
of P to the extent it has discretionary authority or control over the 
debt instrument.
    (11) In a private transaction, a plan, P, acquires 30% of the value 
of a class of equity securities issued by an operating company, Y. These 
securities provide that dividends shall be paid solely out of earnings 
attributable to certain tracts of undeveloped land that are held by Y 
for investment. Under paragraph (g), the property is treated as the sole 
asset of a separate entity. Thus, even though Y is an operating company, 
the hypothetical entity whose sole assets are the undeveloped tracts of 
land is not an operating company. Accordingly, P is considered to have 
acquired an undivided interest in the tracts of land held by Y. Thus, Y 
would be a fiduciary of P to the extent it exercises discretionary 
authority or control over such property.
    (12) A medical benefit plan, P, acquires a beneficial interest in a 
trust, Z, that is not an insurance company licensed to do business in a 
State. Under this arrangement, Z will provide the benefits to the 
participants and beneficiaries of P that are promised under the terms of 
the plan. Under paragraph (h)(2), P's assets include its beneficial 
interest in Z and an undivided interest in each of its underlying 
assets. Thus, persons with discretionary authority or control over the 
assets of Z would be fiduciaries of P.

    (k) Effective date and transitional rules. (1) In general, this 
section is effective for purposes of identifying the assets of a plan on 
or after March 13, 1987. Except as a defense, this section shall not 
apply to investments in an entity in existence on March 13, 1987, if no 
plan subject to title I of the Act or plan described in section 
4975(e)(1) of the Code (other than a plan described in section 
4975(g)(2) or (3)) acquires an interest in the entity from an issuer or 
underwriter at any time on or after March 13, 1987 except pursuant to a 
contract binding on the plan in effect on March 13, 1987 with an issuer 
or underwriter to acquire an interest in the entity.
    (2) Notwithstanding paragraph (k)(1), this section shall not, except 
as a defense, apply to a real estate entity described in section 
11018(a) of Pub. L. 99-272.

[51 FR 41280, Nov. 13, 1986, as amended at 51 FR 47226, Dec. 31, 1986]



Sec. 2510.3-102  Definition of ``plan assets''--participant contributions.

    (a) General rule. For purposes of subtitle A and parts 1 and 4 of 
subtitle B of title I of ERISA and section 4975 of the Internal Revenue 
Code only (but without any implication for and may not be relied upon to 
bar criminal prosecutions under 18 U.S.C. 664), the assets of the plan 
include amounts (other than union dues) that a participant or 
beneficiary pays to an employer, or amounts that a participant has 
withheld from his wages by an employer, for contribution to the plan as 
of the earliest date on which such contributions can reasonably be 
segregated from the employer's general assets.
    (b) Maximum time period for pension benefit plans. (1) Except as 
provided in paragraph (b)(2), of this section, with respect to an 
employee pension benefit plan as defined in section 3(2) of ERISA, in no 
event shall the date determined pursuant to paragraph (a) of this 
section occur later than the 15th business day of the month following 
the month in which the participant contribution amounts are received by 
the employer (in the case of amounts that a participant or beneficiary 
pays to an employer) or the 15th business day of the month following the 
month in which such amounts would otherwise have been payable to the 
participant in cash (in the case of amounts withheld by an employer from 
a participant's wages).
    (2) With respect to a SIMPLE plan that involves SIMPLE IRAs (i.e., 
Simple Retirement Accounts, as described in section 408(p) of the 
Internal Revenue Code), in no event shall the date determined pursuant 
to paragraph (a) of this section occur later than the 30th calendar day 
following the month in which the participant contribution

[[Page 368]]

amounts would otherwise have been payable to the participant in cash.
    (c) Maximum time period for welfare benefit plans. With respect to 
an employee welfare benefit plan as defined in section 3(1) of ERISA, in 
no event shall the date determined pursuant to paragraph (a) of this 
section occur later than 90 days from the date on which the participant 
contribution amounts are received by the employer (in the case of 
amounts that a participant or beneficiary pays to an employer) or the 
date on which such amounts would otherwise have been payable to the 
participant in cash (in the case of amounts withheld by an employer from 
a participant's wages).
    (d) Extension of maximum time period for pension plans. (1) With 
respect to participant contributions received or withheld by the 
employer in a single month, the maximum time period provided under 
paragraph (b) of this section shall be extended for an additional 10 
business days for an employer who--
    (i) Provides a true and accurate written notice, distributed in a 
manner reasonably designed to reach all the plan participants within 5 
business days after the end of such extension period, stating--
    (A) That the employer elected to take such extension for that month;
    (B) That the affected contributions have been transmitted to the 
plan; and
    (C) With particularity, the reasons why the employer cannot 
reasonably segregate the participant contributions within the time 
period described in paragraph (b) of this section;
    (ii) Prior to such extension period, obtains a performance bond or 
irrevocable letter of credit in favor of the plan and in an amount of 
not less than the total amount of participant contributions received or 
withheld by the employer in the previous month; and
    (iii) Within 5 business days after the end of such extension period, 
provides a copy of the notice required under paragraph (d)(1)(i) of this 
section to the Secretary, along with a certification that such notice 
was provided to the participants and that the bond or letter of credit 
required under paragraph (d)(1)(ii) of this section was obtained.
    (2) The performance bond or irrevocable letter of credit required in 
paragraph (d)(1)(ii) of this section shall be guaranteed by a bank or 
similar institution that is supervised by the Federal government or a 
State government and shall remain in effect for 3 months after the month 
in which the extension expires.
    (3)(i) An employer may not elect an extension under this paragraph 
(d) more than twice in any plan year unless the employer pays to the 
plan an amount representing interest on the participant contributions 
that were subject to all the extensions within such plan year.
    (ii) The amount representing interest in paragraph (d)(3)(i) of this 
section shall be the greater of--
    (A) The amount that otherwise would have been earned on the 
participant contributions from the date on which such contributions were 
paid to, or withheld by, the employer until such money is transmitted to 
the plan had such contributions been invested during such period in the 
investment alternative available under plan which had the highest rate 
of return; or
    (B) Interest at a rate equal to the underpayment rate defined in 
section 6621(a)(2) of the Internal Revenue Code from the date on which 
such contributions were paid to, or withheld by, the employer until such 
money is fully restored to the plan.
    (e) Definition. For purposes of this section, the term business day 
means any day other than a Saturday, Sunday or any day designated as a 
holiday by the Federal Government.
    (f) Examples. The requirements of this section are illustrated by 
the following examples:
    (1) Employer W is a small company with a small number of employees 
at a single payroll location. W maintains a plan under section 401(k) of 
the Code in which all of its employees participate. W's practice is to 
issue a single check to a trust that is maintained under the plan in the 
amount of the total withheld employee contributions within two business 
days of the date on which the employees are paid. In view of the 
relatively small number of employees and the fact that they are paid 
from a single location, W could reasonably be expected to transmit 
participant contributions to the trust within two days

[[Page 369]]

after the employee's wages are paid. Therefore, the assets of W's 401(k) 
plan include the participant contributions attributable to such pay 
periods as of the date two business days from the date the employee's 
wages are paid.
    (2) Employer X is a large national corporation which sponsors a 
section 401(k) plan. X has several payroll centers and uses an outside 
payroll processing service to pay employee wages and process deductions. 
Each payroll center has a different pay period. Each center maintains 
separate accounts on its books for purposes of accounting for that 
center's payroll deductions and provides the outside payroll processor 
the data necessary to prepare employee paychecks and process deductions. 
The payroll processing service has adopted a procedure under which it 
issues the employees' paychecks when due and deducts all payroll taxes 
and elective employee deductions. It deposits withheld income and 
employment payroll taxes within the time frame specified by 26 CFR 
31.6302-1 and forwards a computer data tape representing the total 
payroll deductions for each employee, for a month's worth of pay 
periods, to a centralized location in X, within 4 days after the end of 
the month, where the data tape is checked for accuracy. A single check 
representing the aggregate participant contributions for the month is 
then issued to the plan by the employer. X has determined that this 
procedure, which takes up to 10 business days to complete, permits 
segregation of participant contributions at the earliest practicable 
time and avoids mistakes in the allocation of contribution amounts for 
each participant. Therefore, the assets of X's 401(k) plan would include 
the participant contributions no later than 10 business days after the 
end of the month.
    (3) Assume the same facts as in paragraph (f)(2) of this section, 
except that X takes 30 days after receipt of the data tape to issue a 
check to the plan representing the aggregate participant contributions 
for the prior month. X believes that this procedure permits segregation 
of participant contributions at the earliest practicable time and avoids 
mistakes in the allocation of contribution amounts for each participant. 
Under paragraphs (a) and (b) of this section, the assets of the plan 
include the participant contributions as soon as X could reasonably be 
expected to segregate the contributions from its general assets, but in 
no event later than the 15th business day of the month following the 
month that a participant or beneficiary pays to an employer, or has 
withheld from his wages by an employer, money for contribution to the 
plan. The participant contributions become plan assets no later than 
that date.
    (4) Employer Y is a medium-sized company which maintains a self-
insured contributory group health plan. Several former employees have 
elected, pursuant to the provisions of ERISA section 602, 29 U.S.C. 
1162, to pay Y for continuation of their coverage under the plan. These 
checks arrive at various times during the month and are deposited in the 
employer's general account at bank Z. Under paragraphs (a) and (b) of 
this section, the assets of the plan include the former employees' 
payments as soon after the checks have cleared the bank as Y could 
reasonably be expected to segregate the payments from its general 
assets, but in no event later than the 90 days after a participant or 
beneficiary, including a former employee, pays to an employer, or has 
withheld from his wages by an employer, money for contribution to the 
plan.
    (g) Effective date. This section is effective February 3, 1997.
    (h) Applicability date for collectively-bargained plans. (1) 
Paragraph (b) of this section applies to collectively bargained plans no 
sooner than the later of--
    (i) February 3, 1997; or
    (ii) The first day of the plan year that begins after the expiration 
of the last to expire of any applicable bargaining agreement in effect 
on August 7, 1996.
    (2) Until paragraph (b) of this section applies to a collectively 
bargained plan, paragraph (c) of this section shall apply to such plan 
as if such plan were an employee welfare benefit plan.
    (i) Optional postponement of applicability. (1) The application of 
paragraph (b) of this section shall be postponed for up to an additional 
90 days beyond

[[Page 370]]

the effective date described in paragraph (g) of this section for an 
employer who, prior to February 3, 1997--
    (i) Provides a true and accurate written notice, distributed in a 
manner designed to reach all the plan participants before the end of 
February 3, 1997, stating--
    (A) That the employer elected to postpone such applicability;
    (B) The date that the postponement will expire; and
    (C) With particularity the reasons why the employer cannot 
reasonably segregate the participant contributions within the time 
period described in paragraph (b) of this section, by February 3, 1997;
    (ii) Obtains a performance bond or irrevocable letter of credit in 
favor of the plan and in an amount of not less than the total amount of 
participant contributions received or withheld by the employer in the 
previous 3 months;
    (iii) Provides a copy of the notice required under paragraph 
(i)(1)(i) of this section to the Secretary, along with a certification 
that such notice was provided to the participants and that the bond or 
letter of credit required under paragraph (i)(1)(ii) of this section was 
obtained; and
    (iv) For each month during which such postponement is in effect, 
provides a true and accurate written notice to the plan participants 
indicating the date on which the participant contributions received or 
withheld by the employer during such month were transmitted to the plan.
    (2) The notice required in paragraph (i)(1)(iv) of this section 
shall be distributed in a manner reasonably designed to reach all the 
plan participants within 10 days after transmission of the affected 
participant contributions.
    (3) The bond or letter of credit required under paragraph (i)(1)(ii) 
shall be guaranteed by a bank or similar institution that is supervised 
by the Federal government or a State government and shall remain in 
effect for 3 months after the month in which the postponement expires.
    (4) During the period of any postponement of applicability with 
respect to a plan under this paragraph (i), paragraph (c) of this 
section shall apply to such plan as if such plan were an employee 
welfare benefit plan.

[61 FR 41233, Aug. 7, 1996, as amended at 62 FR 62936, Nov. 25, 1997]

[[Page 371]]



  SUBCHAPTER C--REPORTING AND DISCLOSURE UNDER THE EMPLOYEE RETIREMENT 
                       INCOME SECURITY ACT OF 1974





PART 2520--RULES AND REGULATIONS FOR REPORTING AND DISCLOSURE--Table of Contents




        Subpart A--General Reporting and Disclosure Requirements

Sec.
2520.101-1  Duty of reporting and disclosure.
2520.101-2  Annual reporting by multiple employer welfare arrangements 
          and certain other entities offering or providing coverage for 
          medical care to the employees of two or more employers.
2520.101-3  Notice of blackout periods under individual account plans.

 Subpart B--Contents of Plan Descriptions and Summary Plan Descriptions

2520.102-1  [Reserved]
2520.102-2  Style and format of summary plan description.
2520.102-3  Contents of summary plan description.
2520.102-4  Option for different summary plan descriptions.

                  Subpart C--Annual Report Requirements

2520.103-1  Contents of the annual report.
2520.103-2  Contents of the annual report for a group insurance 
          arrangement.
2520.103-3  Exemption from certain annual reporting requirements for 
          assets held in a common or collective trust.
2520.103-4  Exemption from certain annual reporting requirements for 
          assets held in an insurance company pooled separate account.
2520.103-5  Transmittal and certification of information to plan 
          administrator for annual reporting purposes.
2520.103-6  Definition of reportable transaction for Annual Return/
          Report.
2520.103-8  Limitation on scope of accountant's examination.
2520.103-9  Direct filing for bank or insurance carrier trusts and 
          accounts.
2520.103-10  Annual report financial schedules.
2520.103-11  Assets held for investment purposes.
2520.103-12  Limited exemption and alternative method of compliance for 
          annual reporting of investments in certain entities.

   Subpart D--Provisions Applicable to Both Reporting and Disclosure 
                              Requirements

2520.104-1  General.
2520.104-2--2520.104-3  [Reserved]
2520.104-4  Alternative method of compliance for certain successor 
          pension plans.
2520.104-5--2520.104-6  [Reserved]
2520.104-20  Limited exemption for certain small welfare plans.
2520.104-21  Limited exemption for certain group insurance arrangements.
2520.104-22  Exemption from reporting and disclosure requirements for 
          apprenticeship and training plans.
2520.104-23  Alternative method of compliance for pension plans for 
          certain selected employees.
2520.104-24  Exemption for welfare plans for certain selected employees.
2520.104-25  Exemption from reporting and disclosure for day care 
          centers.
2520.104-26  Limited exemption for certain unfunded dues financed 
          welfare plans maintained by employee organizations.
2520.104-27  Alternative method of compliance for certain unfunded dues 
          financed pension plans maintained by employee organizations.
2520.104-28  [Reserved]
2520.104-41  Simplified annual reporting requirements for plans with 
          fewer than 100 participants.
2520.104-42  Waiver of certain actuarial information in the annual 
          report.
2520.104-43  Exemption from annual reporting requirement for certain 
          group insurance arrangements.
2520.104-44  Limited exemption and alternative method of compliance for 
          annual reporting by unfunded plans and by certain insured 
          plans.
2520.104-45  [Reserved]
2520.104-46  Waiver of examination and report of an independent 
          qualified public accountant for employee benefit plans with 
          fewer than 100 participants.
2520.104-47  Limited exemption and alternative method of compliance for 
          filing of insurance company financial reports.
2520.104-48  Alternative method of compliance for model simplified 
          employee pensions--IRS Form 5305-SEP.
2520.104-49  Alternative method of compliance for certain simplified 
          employee pensions.
2520.104-50  Short plan years, deferral of accountant's examination and 
          report.

[[Page 372]]

                    Subpart E--Reporting Requirements

2520.104a-1  Filing with the Secretary of Labor.
2520.104a-2--2520.104a-4  [Reserved]
2520.104a-5  Annual report filing requirements.
2520.104a-6  Annual reporting for plans which are part of a group 
          insurance arrangement.
2520.104a-7  [Reserved]
2520.104a-8  Requirement to furnish documents to the Secretary of Labor 
          on request.

                   Subpart F--Disclosure Requirements

2520.104b-1  Disclosure.
2520.104b-2  Summary plan description.
2520.104b-3  Summary of material modifications to the plan and changes 
          in the information required to be included in the summary plan 
          description.
2520.104b-4  Alternative methods of compliance for furnishing the 
          summary plan description and summaries of material 
          modifications of a pension plan to a retired participant, a 
          separated participant with vested benefits, and a beneficiary 
          receiving benefits.
2520.104b-10  Summary Annual Report.
2520.104b-30  Charges for documents.

Subpart G--Recordkeeping Requirements

2520.107-1  Use of electronic media for maintenance and retention of 
          records.

    Authority: 29 U.S.C. 1021-1025, 1027, 1029-31, 1059, 1134 and 1135; 
Secretary of Labor's Order 1-2003, 68 FR 5374 (Feb. 3, 2003). Sec. 
2520.101-2 also issued under 29 U.S.C. 1132, 1181-1183, 1181 note, 1185, 
1185a-b, 1191, and 1191a-c. Secs. 2520.102-3, 2520.104b-1 and 2520.104b-
3 also issued under 29 U.S.C. 1003,1181-1183, 1181 note, 1185, 1185a-b, 
1191, and 1191a-c. Secs. 2520.104b-1 and 2520.107 also issued under 26 
U.S.C. 401 note, 111 Stat. 788.



        Subpart A--General Reporting and Disclosure Requirements



Sec. 2520.101-1  Duty of reporting and disclosure.

    The procedures for implementing the plan administrator's duty of 
reporting to the Secretary of Labor and disclosing information to 
participants and beneficiaries are located in subparts D, E and F of 
this part.

(Approved by the Office of Management and Budget under control number 
1210-0016)

[41 FR 16962, Apr. 23, 1976, as amended at 46 FR 62845, Dec. 29, 1981]



Sec. 2520.101-2  Annual reporting by multiple employer welfare arrangements and certain other entities offering or providing coverage for medical care to the 
          employees of two or more employers.

    (a) Basis and scope. Section 101(g){h{time} \1\ of the Act permits 
the Secretary of Labor to require, by regulation, multiple employer 
welfare arrangements (MEWAs) providing benefits that consist of medical 
care (within the meaning of section 733(a)(2) of the Act), and that are 
not group health plans, to report, not more frequently than annually, in 
such form and manner as the Secretary may require, for the purpose of 
determining the extent to which the requirements of part 7 of the Act 
are being carried out in connection with such benefits. Section 734 of 
the Act provides that the Secretary may promulgate such regulations as 
may be necessary or appropriate to carry out the provisions of part 7 of 
the Act. This section sets out requirements for annual reporting by 
MEWAs that provide benefits that consist of medical care and by certain 
entities that claim not to be a MEWA solely due to the exception in 
section 3(40)(A)(i) of the Act (Entities Claiming Exception or ECEs). 
These requirements apply regardless of whether the MEWA or ECE is a 
group health plan.
---------------------------------------------------------------------------

    \1\ Section 1421(d)(1) of the Small Business Job Protection Act of 
1996 (Pub. L. 104-188) created a new section 101(g) of ERISA relating to 
Simple Retirement Accounts. Subsequently, section 101(e)(1) of HIPAA 
also created a new section 101(g) of ERISA relating to MEWA reporting. 
Accordingly, when referring to section 101(g) of ERISA relating to MEWA 
reporting, this document cites section 101(g){h{time}  of ERISA.
---------------------------------------------------------------------------

    (b) Definitions. As used in this section, the following definitions 
apply:
    Administrator means--
    (1) The person specifically so designated by the terms of the 
instrument under which the MEWA or ECE is operated;
    (2) If the MEWA or ECE is a group health plan and the administrator 
is not so designated, the plan sponsor (as defined in section 3(16)(B) 
of the Act); or

[[Page 373]]

    (3) In the case of a MEWA or ECE for which an administrator is not 
designated and a plan sponsor cannot be identified, the person or 
persons actually responsible (whether or not so designated under the 
terms of the instrument under which the MEWA or ECE is operated) for the 
control, disposition, or management of the cash or property received by 
or contributed to the MEWA or ECE, irrespective of whether such control, 
disposition, or management is exercised directly by such person or 
persons or indirectly through an agent, custodian, or trustee designated 
by such person or persons.
    Entity Claiming Exception (ECE) means an entity that claims it is 
not a MEWA due to the exception in section 3(40)(A)(i) of the Act. (In 
general, this exception is for entities that are established and 
maintained under or pursuant to one or more agreements that the 
Secretary finds to be collective bargaining agreements).
    Group health plan means a group health plan within the meaning of 
section 733(a) of the Act and Sec. 2590.701-2.
    Health insurance issuer means a health insurance issuer within the 
meaning of section 733(b)(2) of the Act and Sec. 2590.701-2.
    Medical care means medical care within the meaning of section 
733(a)(2) of the Act and Sec. 2590.701-2.
    Multiple employer welfare arrangement (MEWA) means a multiple 
employer welfare arrangement within the meaning of section 3(40) of the 
Act.
    Origination means the occurrence of any of the following three 
events (and a MEWA or ECE is considered to have been originated when any 
of the following three events occurs)--
    (1) The MEWA or ECE first begins offering or providing coverage for 
medical care to the employees of two or more employers (including one or 
more self-employed individuals);
    (2) The MEWA or ECE begins offering or providing coverage for 
medical care to the employees of two or more employers (including one or 
more self-employed individuals) after a merger with another MEWA or ECE 
(unless all of the MEWAs or ECEs that participate in the merger 
previously were last originated at least three years prior to the 
merger); or
    (3) The number of employees receiving coverage for medical care 
under the MEWA or ECE is at least 50 percent greater than the number of 
such employees on the last day of the previous calendar year (unless the 
increase is due to a merger with another MEWA or ECE under which all 
MEWAs and ECEs that participate in the merger were last originated at 
least three years prior to the merger).
    (c) Persons required to report--(1) General rule. Except as provided 
in paragraph (c)(2) of this section, the following persons are required 
to report under this section--
    (i) The administrator of a MEWA that offers or provides benefits 
consisting of medical care, regardless of whether the entity is a group 
health plan; and
    (ii) The administrator of an ECE that offers or provides benefits 
consisting of medical care during the first three years after the ECE is 
originated.
    (2) Exception. Nothing in this paragraph (c) shall be construed to 
require reporting under this section by the administrator of a MEWA or 
ECE if the MEWA or ECE is licensed or authorized to operate as a health 
insurance issuer in every State in which it offers or provides coverage 
for medical care to employees.
    (3) Construction. For purposes of this section, the following rules 
of construction apply--
    (i) Whether or not an entity is a MEWA or ECE is determined by the 
administrator acting in good faith. Therefore, if an administrator makes 
a good faith determination at the time when a filing under this section 
would otherwise be required that the entity is maintained pursuant to 
one or more collective bargaining agreements, the entity is an ECE, and 
the administrator of the ECE is not required to file if its most recent 
origination was more than three years. Even if the entity is later 
determined to be a MEWA, filings are not required prior to the 
determination that the entity is a MEWA if at the time the filings were 
otherwise due, the administrator made a good faith determination that 
the entity was an ECE. However, filings are required for years after the 
determination that the entity is a MEWA.

[[Page 374]]

    (ii) In contrast, while an administrator's good faith determination 
that an entity is an ECE may eliminate the requirement that the 
administrator of the entity file under this section for more than three 
years after the entity's origination date, the administrator's 
determination, nonetheless, does not affect the applicability of State 
law to the entity. Accordingly, incorrectly claiming the exception may 
eliminate the need to file under this section, if the claiming of the 
exception is done in good faith. However, the claiming of the exception 
for ECEs under this filing requirement does not prevent the application 
of State law to an entity that is later determined to be a MEWA. This is 
because the filing, or the failure to file, under this section does not 
in any way affect the application of State law to a MEWA.
    (d) Information to be reported. (1) The annual report required by 
this section shall consist of a completed copy of the Form M-1 ``Annual 
Report for Multiple Employer Welfare Arrangements (MEWAs) and Certain 
Entities Claiming Exception (ECEs)'' (Form M-1) and any additional 
statements required in the instructions to the Form M-1. This report is 
available by calling 1-800-998-7542 and on the Internet at     http://
www.dol.gov/ebsa.
    (2) The Secretary may reject any filing under this section if the 
Secretary determines that the filing is incomplete, in accordance with 
Sec. 2560.502c-5.
    (3) If the Secretary rejects a filing under paragraph (d)(2) of this 
section, and if a revised filing satisfactory to the Secretary is not 
submitted within 45 days after the notice of rejection, the Secretary 
may bring a civil action for such relief as may be appropriate 
(including penalties under section 502(c)(5) of the Act and 
Sec. 2560.502c-5).
    (e) Timing--(1) Period to be Reported. A completed copy of the Form 
M-1 is required to be filed for each calendar year during all or part of 
which the MEWA or ECE offers or provides coverage for medical care to 
the employees of two or more employers (including one or more self-
employed individuals).
    (2) Filing deadline--(i) General March 1 filing due date. Subject to 
the transition rule described in paragraph (e)(2)(ii) of this section, a 
completed copy of the Form M-1 is required to be filed on or before each 
March 1 that follows a period to be reported (as described in paragraph 
(e)(1) of this section). However, if March 1 is a Saturday, Sunday, or 
federal holiday, the form must be filed no later than the next business 
day.
    (ii) Transition rule for Year 2000 filings. For the year 1999 period 
to be reported, a completed copy of the Form M-1 is required to be filed 
no later than May 1, 2000.
    (iii) Special rule requiring a 90-Day Origination Report when a MEWA 
or ECE is originated--(A) In general. Subject to paragraph (e)(2)(ii)(B) 
of this section, when a MEWA or ECE is originated, the administrator of 
the MEWA or ECE is also required to file a completed copy of the Form M-
1 within 90 days of the origination date (unless 90 days after the 
origination date is a Saturday, Sunday, or federal holiday, in which 
case the form must be filed no later than the next business day).
    (B) Exceptions. (1) Paragraph (d)(2)(ii)(A) of this section does not 
apply if the origination occurred between October 1 and December 31.
    (2) Paragraph (d)(2)(ii)(A) of this section does not apply before 
May 1, 2000. Therefore, for an entity that is originated, for example, 
on January 1, 2000, no 90-day origination report is required. 
Nonetheless, for an entity originated, for example, on April 1, 2000, a 
90-day origination report is required to be completed and filed no later 
than June 30, 2000.
    (iv) Extensions. An extension may be granted for filing a report if 
the administrator complies with the extension procedure prescribed in 
the Instructions to the Form M-1.
    (f) Filing address. A completed copy of the Form M-1 is filed with 
the Secretary by sending it to the address prescribed in the 
Instructions to the Form M-1.
    (g) Civil penalties and procedures. For information on civil 
penalties under section 502(c)(5) of the Act for persons who fail to 
file the information required under this section (including a transition 
rule applicable to filings due in the year 2000), see Sec. 2560.502c-5. 
For information relating to administrative

[[Page 375]]

hearings and appeals in connection with the assessment of civil 
penalties under section 502(c)(5) of the Act, see Sec. 2570.90 et seq.
    (h) Examples. The rules of this section are illustrated by the 
following examples:
    Example 1. (i) MEWA A began offering coverage for medical care to 
the employees of two or more employers July 1, 1989 (and continuous to 
offer such coverage). MEWA A does not claim the exception under section 
3(40)(A)(i) of ERISA.
    (ii) In this Example 1, the administrator of MEWA A must file a 
completed copy of the Form M-1 by May 1, 2000. Furthermore, the 
administrator of MEWA A must file the Form M-1 annually by every March 1 
thereafter.
    Example 2. (i) ECE B began offering coverage for medical care to the 
employees of two or more employers on January 1, 1992. ECE B has not 
been involved in any mergers and in 1999 the number of employees to 
which ECE B provides coverage for medical care is not at least 50 
percent greater than the number of such employees on December 31, 1998.
    (ii) In this Example 2, ECE B was originated was on January 1, 1992 
has not been originated since then. Therefore, the administrator of ECE 
B is not required to file a Form M-1 on May 1, 2000 because the last 
time the ECE B was originated was January 1, 1992 which more than 3 
years prior to May 1, 2000.
    Example 3. (i) ECE C began offering coverage for medical care to the 
employees of two or more employers on July 1, 1998.
    (ii) In this Example 3, the administrator of ECE C must file a 
completed copy of the Form M-1 by May 1, 2000 because the last date A 
was originated was July 1, 1998, which is less than 3 years prior to the 
May 1, 2000 due date. Furthermore, the administrator of ECE C must file 
a year 2000 annual report by March 1, 2001 (because July 1, 1998 is less 
than three years prior to March 1, 2001). However, if ECE C is not 
involved in any mergers that would result in a new origination date and 
if ECE C does not experience a growth of 50 percent or more in the 
number of employees to which ECE C provides coverage from the last day 
of the previous calendar year to any day in the current calendar year, 
then no Form M-1 report is required to be filed after March 1, 2001.
    Example 4. (i) MEWA D begins offering coverage to the employees of 
two or more employers on January 1, 2000. MEWA D is licensed or 
authorized to operate as a health insurance issuer in every State in 
which it offers coverage for medical care to employees.
    (ii) In this Example 4, the administrator of MEWA D is not required 
to file Form M-1 on May 1, 2000 because it is licensed or authorized to 
operate as a health insurance issuer in every State in which it offers 
coverage for medical care to employees.
    Example 5. (i) MEWA E is originated on September 1, 2000.
    (ii) In this Example 5, because MEWA E was originated on September 
1, 2000, the administrator of MEWA E must file a completed copy of the 
Form M-1 on or before November 30, 2000 (which is 90 days after the 
origination date). In addition, the administrator of MEWA E must file a 
completed copy of the Form M-1 annually by every March 1 thereafter.

    (i) Compliance dates--(1) Subject to paragraph (i)(2) of this 
section, reports filed pursuant to this reporting requirement are first 
due by May 1, 2000. (Therefore, on May 1, 2000, filings are due with 
respect to MEWAs or ECEs that provided coverage in calendar year 1999.)
    (2) 90-Day Origination Reports (described in paragraph (e)(2)(ii) of 
this section) are first due by May 1, 2000. Therefore, for an entity 
that is originated, for example, on January 1, 2000, no 90-day 
origination report is required. Nonetheless, for an entity originated, 
for example, on April 1, 2000, a 90-day origination report is required 
to be completed and filed no later than June 30, 2000.

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[65 FR 7163, Feb. 11, 2000]

[[Page 391]]


    Effective Date Note: At 68 FR 17501, Apr. 9, 2003, Sec. 2520.101-2 
was revised, effective Jan. 1, 2004. For the convenience of the user, 
the revised text is set forth as follows:

Sec. 2520.101-2  Annual Reporting by Multiple Employer Welfare 
          Arrangements and Certain Other Entities Offering or Providing 
          Coverage for Medical Care to the Employees of Two or More 
          Employers.

    (a) Basis and scope. Section 101(g) of the Employee Retirement 
Income Security Act (ERISA) permits the Secretary of Labor to require, 
by regulation, multiple employer welfare arrangements (MEWAs) providing 
benefits that consist of medical care (within the meaning of section 
733(a)(2) of ERISA), and that are not group health plans, to report, not 
more frequently than annually, in such form and manner as the Secretary 
may require, for the purpose of determining the extent to which the 
requirements of part 7 of subtitle B of title I of ERISA (part 7) are 
being carried out in connection with such benefits. Section 734 of ERISA 
provides that the Secretary may promulgate such regulations as may be 
necessary or appropriate to carry out the provisions of part 7. This 
section sets out requirements for annual reporting by MEWAs that provide 
benefits that consist of medical care and by certain entities that claim 
not to be a MEWA solely due to the exception in section 3(40)(A)(i) of 
ERISA (referred to in this section as Entities Claiming Exception or 
ECEs). These requirements apply regardless of whether the MEWA or ECE is 
a group health plan.
    (b) Definitions. As used in this section, the following definitions 
apply:
    Administrator means--
    (1) The person specifically so designated by the terms of the 
instrument under which the MEWA or ECE is operated;
    (2) If the MEWA or ECE is a group health plan and the administrator 
is not so designated, the plan sponsor (as defined in section 3(16)(B) 
of ERISA); or
    (3) In the case of a MEWA or ECE for which an administrator is not 
designated and a plan sponsor cannot be identified, jointly and 
severally the person or persons actually responsible (whether or not so 
designated under the terms of the instrument under which the MEWA or ECE 
is operated) for the control, disposition, or management of the cash or 
property received by or contributed to the MEWA or ECE, irrespective of 
whether such control, disposition, or management is exercised directly 
by such person or persons or indirectly through an agent, custodian, or 
trustee designated by such person or persons.
    Entity Claiming Exception (ECE) means an entity that claims it is 
not a MEWA on the basis that the entity is established or maintained 
pursuant to one or more agreements that the Secretary finds to be 
collective bargaining agreements within the meaning of section 
3(40)(A)(i) of ERISA and 29 CFR 2510.3-40.
    Excepted benefits means excepted benefits within the meaning of 
section 733(c) of ERISA and 29 CFR 2590.732(b).
    Group health plan means a group health plan within the meaning of 
section 733(a) of ERISA and 29 CFR 2590.701-2.
    Health insurance issuer means a health insurance issuer within the 
meaning of section 733(b)(2) of ERISA and 29 CFR 2590.701-2.
    Medical care means medical care within the meaning of section 
733(a)(2) of ERISA and 29 CFR 2590.701-2.
    Multiple employer welfare arrangement (MEWA) means a multiple 
employer welfare arrangement within the meaning of section 3(40) of 
ERISA and 29 CFR 2510.3-40.
    Origination means the occurrence of any of the following three 
events (and a MEWA or ECE is considered to have been originated when any 
of the following three events occurs)--
    (1) The MEWA or ECE first begins offering or providing coverage for 
medical care to the employees of two or more employers (including one or 
more self-employed individuals);
    (2) The MEWA or ECE begins offering or providing coverage for 
medical care to the employees of two or more employers (including one or 
more self-employed individuals) after a merger with another MEWA or ECE 
(unless all of the MEWAs or ECEs that participate in the merger 
previously were last originated at least three years prior to the 
merger); or
    (3) The number of employees receiving coverage for medical care 
under the MEWA or ECE is at least 50 percent greater than the number of 
such employees on the last day of the previous calendar year (unless the 
increase is due to a merger with another MEWA or ECE under which all 
MEWAs and ECEs that participate in the merger were last originated at 
least three years prior to the merger).
    (c) Persons required to report--(1) General rule. Except as provided 
in paragraph (c)(2) of this section, the following persons are required 
to report under this section--
    (i) The administrator of a MEWA that offers or provides benefits 
consisting of medical care, regardless of whether the entity is a group 
health plan; and
    (ii) The administrator of an ECE that offers or provides benefits 
consisting of medical care during the first three years after the ECE is 
originated.
    (2) Exceptions--(i) Nothing in this paragraph (c) shall be construed 
to require reporting under this section by the administrator of a MEWA 
or ECE if the MEWA or ECE--
    (A) Is licensed or authorized to operate as a health insurance 
issuer in every state in

[[Page 392]]

which it offers or provides coverage for medical care to employees;
    (B) Provides coverage that consists solely of excepted benefits, 
which are not subject to Part 7. If the MEWA or ECE provides coverage 
that consists of both excepted benefits and other benefits for medical 
care that are not excepted benefits, the administrator of the MEWA or 
ECE is required to report under this section;
    (C) Is a group health plan that is not subject to ERISA, including a 
governmental plan, church plan, or a plan maintained solely for the 
purpose of complying with workmen's compensation laws, within the 
meaning of sections (4)(b)(1), 4(b)(2), or 4(b)(3) of ERISA, 
respectively; or
    (D) Provides coverage only through group health plans that are not 
covered by ERISA, including governmental plans, church plans, or plans 
maintained solely for the purpose of complying with workmen's 
compensation laws within the meaning of sections 4(b)(1), 4(b)(2), or 
4(b)(3) of ERISA, respectively (or other arrangements not covered by 
ERISA, such as health insurance coverage offered to individuals other 
than in connection with a group health plan, known as individual market 
coverage);
    (ii) Nothing in this paragraph (c) shall be construed to require 
reporting under this section by the administrator of an entity that 
would not constitute a MEWA or ECE but for the following circumstances:
    (A) The entity provides coverage to the employees of two or more 
trades or businesses that share a common control interest of at least 25 
percent at any time during the plan year, applying the principles of 
section 414(b) or (c) of the Internal Revenue Code (26 U.S.C.);
    (B) The entity provides coverage to the employees of two or more 
employers due to a change in control of businesses (such as a merger or 
acquisition) that occurs for a purpose other than avoiding Form M-1 
filing and is temporary in nature. For purposes of this paragraph, 
``temporary'' means the MEWA or ECE does not extend beyond the end of 
the plan year following the plan year in which the change in control 
occurs; or
    (C) The entity provides coverage to persons (excluding spouses and 
dependents) who are not employees or former employees of the plan 
sponsor, such as non-employee members of the board of directors or 
independent contractors, and the number of such persons who are not 
employees or former employees does not exceed one percent of the total 
number of employees or former employees covered under the arrangement, 
determined as of the last day of the year to be reported or, in the case 
of a 90-day origination report, determined as of the 60th day following 
the origination date.
    (d) Information to be reported-- (1) The annual report required by 
this section shall consist of a completed copy of the Form M-1 Annual 
Report for Multiple Employer Welfare Arrangements (MEWAs) and Certain 
Entities Claiming Exception (ECEs) and any additional statements 
required in the Instructions to the Form M-1.
    (2) The Secretary may reject any filing under this section if the 
Secretary determines that the filing is incomplete, in accordance with 
29 CFR 2560.502c-5.
    (3) If the Secretary rejects a filing under paragraph (d)(2) of this 
section, and if a revised filing satisfactory to the Secretary is not 
submitted within 45 days after the notice of rejection, the Secretary 
may bring a civil action for such relief as may be appropriate 
(including penalties under section 502(c)(5) of ERISA and 29 CFR 
2560.502c-5).
    (e) Reporting requirement and timing--(1) Period for which report is 
required. A completed copy of the Form M-1 is required to be filed for 
each calendar year during all or part of which the MEWA or ECE offers or 
provides coverage for medical care to the employees of two or more 
employers (including one or more self-employed individuals).
    (2) Filing deadline--(i) General March 1 filing due date for annual 
filings. A completed copy of the Form M-1 is required to be filed on or 
before each March 1 that follows a period to be reported (as described 
in paragraph (e)(1) of this section). However, if March 1 is a Saturday, 
Sunday, or federal holiday, the form must be filed no later than the 
next business day.
    (ii) Special rule requiring a 90-Day Origination Report when a MEWA 
or ECE is originated--(A) In general. Subject to paragraph (e)(2)(ii)(B) 
of this section, when a MEWA or ECE is originated, the administrator of 
the MEWA or ECE is also required to file a completed copy of the Form M-
1 within 90 days of the origination date (unless 90 days after the 
origination date is a Saturday, Sunday, or federal holiday, in which 
case the form must be filed no later than the next business day).
    (B) Exception. Paragraph (e)(2)(ii)(A) of this section does not 
apply if the origination occurred between October 1 and December 31. 
(Thus, no 90-day origination report is due when an entity is originated 
between October 1 and December 31. However, the March 1 filing deadline 
of paragraph (e)(2)(i) of this section continues to apply.)
    (iii) Extensions. An extension may be granted for filing a report if 
the administrator complies with the extension procedure prescribed in 
the Instructions to the Form M-1.
    (f) Filing address. A completed copy of the Form M-1 is filed with 
the Secretary by sending it to the address prescribed in the 
Instructions to the Form M-1.
    (g) Civil penalties and procedures. For information on civil 
penalties under section 502(c)(5) of ERISA for persons who fail to file 
the information required under this section,

[[Page 393]]

see 29 CFR 2560.502c-5. For information relating to administrative 
hearings and appeals in connection with the assessment of civil 
penalties under section 502(c)(5) of ERISA, see 29 CFR 2570.90 through 
2570.101.
    (h) Examples. The rules of this section are illustrated by the 
following examples:

    Example 1. (i) Facts. MEWA A began offering coverage for medical 
care to the employees of two or more employers July 1, 1989 (and 
continues to offer such coverage). MEWA A does not claim the exception 
under section 3(40)(A)(i) of ERISA.
    (ii) Conclusion. In this Example 1, the administrator of MEWA A must 
file a completed copy of the Form M-1 each year by March 1.
    Example 2. (i) Facts. ECE B began offering coverage for medical care 
to the employees of two or more employers on January 1, 1992. ECE B has 
not been involved in any mergers and the number of employees to which 
ECE B provides coverage for medical care has not grown by more than 50 
percent in any given year.
    (ii) Conclusion. In this Example 2, ECE B was originated on January 
1, 1992 and has not been originated since then. Therefore, the 
administrator of ECE B is not required to file a 2003 Form M-1 on March 
1, 2004 because the last time the ECE B was originated was January 1, 
1992 which is more than 3 years prior to March 1, 2004.
    Example 3. (i) Facts. ECE C began offering coverage for medical care 
to the employees of two or more employers on July 1, 2004.
    (ii) Conclusion. In this Example 3, the administrator of ECE C must 
file a completed copy of the 2004 Form M-1 on or before September 29, 
2004 (which is 90 days after the origination date). In addition, the 
administrator of ECE C must file an updated copy of the 2004 Form M-1 by 
March 1, 2005 because the last date C was originated was July 1, 2004, 
which is less than 3 years prior to the March 1, 2005 due date. 
Furthermore, the administrator of ECE C must file a 2005 Form M-1 by 
March 1, 2006 and a 2006 Form M-1 by March 1, 2007 (because July 1, 2004 
is less than three years prior to March 1, 2006 and March 1, 2007, 
respectively). However, if ECE C is not involved in any mergers that 
would result in a new origination date and if ECE C does not experience 
a growth of 50 percent or more in the number of employees to which ECE C 
provides coverage from the last day of the previous calendar year to any 
day in the current calendar year, then no Form M-1 report is required to 
be filed after March 1, 2007.
    Example 4. (i) Facts. MEWA D begins offering coverage to the 
employees of two or more employers on January 1, 2000. MEWA D is 
licensed or authorized to operate as a health insurance issuer in every 
state in which it offers coverage for medical care to employees.
    (ii) Conclusion. In this Example 4, the administrator of MEWA D is 
not required to file Form M-1 because it is licensed or authorized to 
operate as a health insurance issuer in every state in which it offers 
coverage for medical care to employees.
    Example 5. (i) Facts. MEWA E is originated on September 1, 2004.
    (ii) Conclusion. In this Example 5, because MEWA E was originated on 
September 1, 2004, the administrator of MEWA E must file a completed 
copy of the Form M-1 on or before November 30, 2004 (which is 90 days 
after the origination date). In addition, the administrator of MEWA E 
must file a completed copy of the Form M-1 annually by every March 1 
thereafter.
    Example 6. (i) Facts. Company F maintains a group health plan that 
provides benefits for medical care for its employees (and their 
dependents). Company F establishes a joint venture in which it has a 25 
percent stock ownership interest, determined by applying the principles 
under section 414(b) of the Internal Revenue Code, and transfers some of 
its employees to the joint venture. Company F continues to cover these 
transferred employees under its group health plan.
    (ii) Conclusion. In this Example 6, the administrator is not 
required to file the Form M-1 because Company F's group health plan 
meets the exception to the filing requirement in paragraph (c)(2)(ii)(A) 
of this section. This is because Company F's group health plan would not 
constitute a MEWA but for the fact that it provides coverage to two or 
more trades or businesses that share a common control interest of at 
least 25 percent.
    Example 7. (i) Facts. Company G maintains a group health plan that 
provides benefits for medical care for its employees. The plan year of 
Company G's group health plan is the fiscal year for Company G, which is 
October 1st--September 30th. Therefore, October 1, 2004--September 30, 
2005 is the 2005 plan year. Company G decides to sell a portion of its 
business, Division X, to Company H. Company G signs an agreement with 
Company H under which Division X will be transferred to Company H, 
effective September 30, 2005. The change in control of Division X 
therefore occurs on September 30, 2005. Under the terms of the 
agreement, Company G agrees to continue covering all of the employees 
that formerly worked for Division X under its group health plan until 
Company H has established a new group health plan to cover these 
employees. Under the terms of the agreement, it is anticipated that 
Company G will not be required to cover the employees of Division X 
under its group health plan beyond the end of the 2006 plan year, which 
is the plan year following the plan year in which the change in control 
of Division X occurs.

[[Page 394]]

    (ii) Conclusion. In this Example 7, the administrator of Company G's 
group health plan is not required to file the Form M-1 on March 1, 2006 
for fiscal year 2005 because it is subject to the exception to the 
filing requirement in paragraph (c)(2)(ii)(B) of this section for an 
entity that would not constitute a MEWA but for the fact that it is 
created by a change in control of businesses that occurs for a purpose 
other than to avoid filing the Form M-1 and is temporary in nature. 
Under the exception, ``temporary'' means the MEWA does not extend beyond 
the end of the plan year following the plan year in which the change in 
control occurs. The administrator is not required to file the 2005 Form 
M-1 because it is anticipated that Company G will not be required to 
cover the employees of Division X under its group health plan beyond the 
end of the 2006 plan year, which is the plan year following the plan 
year in which the change in control of businesses occurred.
    Example 8. (i) Facts. Company I maintains a group health plan that 
provides benefits for medical care for its employees (and their 
dependents) as well as certain independent contractors who are self-
employed individuals. The plan is therefore a MEWA. The administrator of 
Company I's group health plan uses calendar year data to report for 
purposes of the Form M-1. The administrator of Company I's group health 
plan determines that the number of independent contractors covered under 
the group health plan as of the last day of calendar year 2004 is less 
than one percent of the total number of employees and former employees 
covered under the plan determined as of the last day of calendar year 
2004.
    (ii) Conclusion. In this Example 8, the administrator of Company I's 
group health plan is not required to file a Form M-1 for calendar year 
2004 (which is otherwise due by March 1, 2005) because it is subject to 
the exception to the filing requirement provided in paragraph 
(c)(2)(ii)(C) of this section for entities that cover a very small 
number of persons who are not employees or former employees of the plan 
sponsor.



Sec. 2520.101-3  Notice of blackout periods under individual account plans.

    (a) In general. In accordance with section 101(i) of the Act, the 
administrator of an individual account plan, within the meaning of 
paragraph (d)(2) of this section, shall provide notice of any blackout 
period, within the meaning of paragraph (d)(1) of this section, to all 
participants and beneficiaries whose rights under the plan will be 
temporarily suspended, limited, or restricted by the blackout period 
(the ``affected participants and beneficiaries'') and to issuers of 
employer securities subject to such blackout period in accordance with 
this section.
    (b) Notice to participants and beneficiaries--(1) Content. The 
notice required by paragraph (a) of this section shall be written in a 
manner calculated to be understood by the average plan participant and 
shall include--
    (i) The reasons for the blackout period;
    (ii) A description of the rights otherwise available to participants 
and beneficiaries under the plan that will be temporarily suspended, 
limited or restricted by the blackout period (e.g., right to direct or 
diversify assets in individual accounts, right to obtain loans from the 
plan, right to obtain distributions from the plan), including 
identification of any investments subject to the blackout period;
    (iii) The length of the blackout period by reference to:
    (A) The expected beginning date and ending date of the blackout 
period; or
    (B) The calendar week during which the blackout period is expected 
to begin and end, provided that during such weeks information as to 
whether the blackout period has begun or ended is readily available, 
without charge, to affected participants and beneficiaries, such as via 
a toll-free number or access to a specific web site, and the notice 
describes how to access the information;
    (iv) In the case of investments affected, a statement that the 
participant or beneficiary should evaluate the appropriateness of their 
current investment decisions in light of their inability to direct or 
diversify assets in their accounts during the blackout period (a notice 
that includes the advisory statement contained in paragraph 4. of the 
model notice in paragraph (e)(2) of this section will satisfy this 
requirement);
    (v) In any case in which the notice required by paragraph (a) of 
this section is not furnished at least 30 days in advance of the last 
date on which affected participants and beneficiaries could exercise 
affected rights immediately before the commencement of the blackout 
period, except for a notice furnished pursuant to paragraph 
(b)(2)(ii)(C) of this section:

[[Page 395]]

    (A) A statement that Federal law generally requires that notice be 
furnished to affected participants and beneficiaries at least 30 days in 
advance of the last date on which participants and beneficiaries could 
exercise the affected rights immediately before the commencement of a 
blackout period (a notice that includes the statement contained in 
paragraph 5. of the model notice in paragraph (e)(2) of this section 
will satisfy this requirement), and
    (B) An explanation of the reasons why at least 30 days advance 
notice could not be furnished; and
    (vi) The name, address and telephone number of the plan 
administrator or other contact responsible for answering questions about 
the blackout period.
    (2) Timing. (i) The notice described in paragraph (a) of this 
section shall be furnished to all affected participants and 
beneficiaries at least 30 days, but not more than 60 days, in advance of 
the last date on which such participants and beneficiaries could 
exercise the affected rights immediately before the commencement of any 
blackout period.
    (ii) The requirement to give at least 30 days advance notice 
contained in paragraph (b)(2)(i) of this section shall not apply in any 
case in which--
    (A) A deferral of the blackout period in order to comply with 
paragraph (b)(2)(i) of this section would result in a violation of the 
requirements of section 404(a)(1)(A) or (B) of the Act, and a fiduciary 
of the plan reasonably so determines in writing;
    (B) The inability to provide the advance notice of a blackout period 
is due to events that were unforeseeable or circumstances beyond the 
reasonable control of the plan administrator, and a fiduciary of the 
plan reasonably so determines in writing; or
    (C) The blackout period applies only to one or more participants or 
beneficiaries solely in connection with their becoming, or ceasing to 
be, participants or beneficiaries of the plan as a result of a merger, 
acquisition, divestiture, or similar transaction involving the plan or 
plan sponsor.
    (iii) In any case in which paragraph (b)(2)(ii) of this section 
applies, the administrator shall furnish the notice described in 
paragraph (a) of this section to all affected participants and 
beneficiaries as soon as reasonably possible under the circumstances, 
unless such notice in advance of the termination of the blackout period 
is impracticable.
    (iv) Determinations under paragraph (b)(2)(ii)(A) and (B) of this 
section must be dated and signed by the fiduciary.
    (3) Form and manner of furnishing notice. The notice required by 
paragraph (a) of this section shall be in writing and furnished to 
affected participants and beneficiaries in any manner consistent with 
the requirements of Sec. 2520.104b-1 of this chapter, including 
paragraph (c) of that section relating to the use of electronic media.
    (4) Changes in length of blackout period. If, following the 
furnishing of a notice pursuant to this section, there is a change in 
the length of the blackout period (specified in such notice pursuant to 
paragraph (b)(1)(iii) of this section), the administrator shall furnish 
all affected participants and beneficiaries an updated notice explaining 
the reasons for the change and identifying all material changes in the 
information contained in the prior notice. Such notice shall be 
furnished to all affected participants and beneficiaries as soon as 
reasonably possible, unless such notice in advance of the termination of 
the blackout period is impracticable.
    (c) Notice to issuer of employer securities. (1) The notice required 
by paragraph (a) of this section shall be furnished to the issuer of any 
employer securities held by the plan and subject to the blackout period. 
Such notice shall contain the information described in paragraph 
(b)(1)(i), (ii), (iii) and (vi) of this section and shall be furnished 
in accordance with the time frames prescribed in paragraph (b)(2) of 
this section. In the event of a change in the length of the blackout 
period specified in such notice, the plan administrator shall furnish an 
updated notice to the issuer in accordance with the requirements of 
paragraph (b)(4) of this section.
    (2) For purposes of this section, notice to the agent for service of 
legal process for the issuer shall constitute notice to the issuer, 
unless the issuer has provided the plan administrator

[[Page 396]]

with the name of another person for service of notice, in which case the 
plan administrator shall furnish notice to such person. Such notice 
shall be in writing, except that the notice may be in electronic or 
other form to the extent the person to whom notice must be furnished 
consents to receive the notice in such form.
    (3) If the issuer designates the plan administrator as the person 
for service of notice pursuant to paragraph (c)(2) of this section, the 
issuer shall be deemed to have been furnished notice on the same date as 
notice is furnished to affected participants and beneficiaries pursuant 
to paragraph (b) of this section.
    (d) Definitions. For purposes of this section--
    (1) Blackout period--(i) General. The term ``blackout period'' 
means, in connection with an individual account plan, any period for 
which any ability of participants or beneficiaries under the plan, which 
is otherwise available under the terms of such plan, to direct or 
diversify assets credited to their accounts, to obtain loans from the 
plan, or to obtain distributions from the plan is temporarily suspended, 
limited, or restricted, if such suspension, limitation, or restriction 
is for any period of more than three consecutive business days.
    (ii) Exclusions. The term ``blackout period'' does not include a 
suspension, limitation, or restriction--
    (A) Which occurs by reason of the application of the securities laws 
(as defined in section 3(a)(47) of the Securities Exchange Act of 1934);
    (B) Which is a regularly scheduled suspension, limitation, or 
restriction under the plan (or change thereto), provided that such 
suspension, limitation or restriction (or change) has been disclosed to 
affected plan participants and beneficiaries through the summary plan 
description, a summary of material modifications, materials describing 
specific investment alternatives under the plan and limits thereon or 
any changes thereto, participation or enrollment forms, or any other 
documents and instruments pursuant to which the plan is established or 
operated that have been furnished to such participants and 
beneficiaries;
    (C) Which occurs by reason of a qualified domestic relations order 
or by reason of a pending determination (by the plan administrator, by a 
court of competent jurisdiction or otherwise) whether a domestic 
relations order filed (or reasonably anticipated to be filed) with the 
plan is a qualified order within the meaning of section 206(d)(3)(B)(i) 
of the Act; or
    (D) Which occurs by reason of an act or a failure to act on the part 
of an individual participant or by reason of an action or claim by a 
party unrelated to the plan involving the account of an individual 
participant.
    (2) Individual account plan. The term ``individual account plan'' 
shall have the meaning provided such term in section 3(34) of the Act, 
except that such term shall not include a ``one-participant retirement 
plan'' within the meaning of paragraph (d)(3) of this section.
    (3) One-participant retirement plan. The term ``one-participant 
retirement plan'' means a one-participant retirement plan as defined in 
section 101(i)(8)(B) of the Act.
    (4) Issuer. The term ``issuer'' means an issuer as defined in 
section 3 of the Securities Exchange Act of 1934 (15 U.S.C. 78c), the 
securities of which are registered under section 12 of the Securities 
Exchange Act of 1934, or that is required to file reports under section 
15(d) of the Securities Exchange Act of 1934, or files or has filed a 
registration statement that has not yet become effective under the 
Securities Act of 1933 (15 U.S.C. 77a et seq.), and that it has not 
withdrawn.
    (5) Calendar week. For purposes of paragraph (b)(1)(iii)(B), the 
term ``calendar week'' means a seven day period beginning on Sunday and 
ending on Saturday.
    (e) Model notice--(1) General. The model notice set forth in 
paragraph (e)(2) of this section is intended to assist plan 
administrators in discharging their notice obligations under this 
section. Use of the model notice is not mandatory. However, a notice 
that uses the statements provided in paragraphs 4. and 5.(A) of the 
model notice will be deemed to satisfy the notice content requirements 
of paragraph (b)(1)(iv) and (b)(1)(v)(A), respectively,

[[Page 397]]

of this section. With regard to all other information required by 
paragraph (b)(1) of this section, compliance with the notice content 
requirements will depend on the facts and circumstances pertaining to 
the particular blackout period and plan.
    (2) Form and content of model notice.

                 Important Notice Concerning Your Rights

            Under The [Enter Name of Individual Account Plan]

    [Enter date of notice]

    1. This notice is to inform you that the [enter name of plan] will 
be [enter reasons for blackout period, as appropriate: changing 
investment options, changing recordkeepers, etc.].
    2. As a result of these changes, you temporarily will be unable to 
[enter as appropriate: direct or diversify investments in your 
individual accounts (if only specific investments are subject to the 
blackout, those investments should be specifically identified), obtain a 
loan from the plan, or obtain a distribution from the plan]. This 
period, during which you will be unable to exercise these rights 
otherwise available under the plan, is called a ``blackout period.'' 
Whether or not you are planning retirement in the near future, we 
encourage you to carefully consider how this blackout period may affect 
your retirement planning, as well as your overall financial plan.
    3. The blackout period for the plan [enter the following as 
appropriate: is expected to begin on [enter date] and end [enter date]/
is expected to begin during the week of [enter date] and end during the 
week of [enter date]. During these weeks, you can determine whether the 
blackout period has started or ended by [enter instructions for use 
toll-free number or accessing web site].
    4. [In the case of investments affected by the blackout period, add 
the following: During blackout period you will be unable to direct or 
diversify the assets held in your plan account. For this reason, it is 
very important that you review and consider the appropriateness of your 
current investments in light of your inability to direct or diversify 
those investments during the blackout period. For your long-term 
retirement security, you should give careful consideration to the 
importance of a well-balanced and diversified investment portfolio, 
taking into account all your assets, income and investments.] [If the 
plan permits investments in individual securities, add the following: 
You should be aware that there is a risk to holding substantial portions 
of your assets in the securities of any one company, as individual 
securities tend to have wider price swings, up and down, in short 
periods of time, than investments in diversified funds. Stocks that have 
wide price swings might have a large loss during the blackout period, 
and you would not be able to direct the sale of such stocks from your 
account during the blackout period.]
    5. [If timely notice cannot be provided (see paragraph (b)(1)(v) of 
this section) enter: (A) Federal law generally requires that you be 
furnished notice of a blackout period at least 30 days in advance of the 
last date on which you could exercise your affected rights immediately 
before the commencement of any blackout period in order to provide you 
with sufficient time to consider the effect of the blackout period on 
your retirement and financial plans. (B) [Enter explanation of reasons 
for inability to furnish 30 days advance notice.]]
    6. If you have any questions concerning this notice, you should 
contact [enter name, address and telephone number of the plan 
administrator or other contact responsible for answering questions about 
the blackout period].

    (f) Effective date. This section shall be effective and shall apply 
to any blackout period commencing on or after January 26, 2003. For the 
period January 26, 2003 to February 25, 2003, plan administrators shall 
furnish notice as soon as reasonably possible.

[68 FR 3727, Jan. 24, 2003]



 Subpart B--Contents of Plan Descriptions and Summary Plan Descriptions



Sec. 2520.102-1  [Reserved]



Sec. 2520.102-2  Style and format of summary plan description.

    (a) Method of presentation. The summary plan description shall be 
written in a manner calculated to be understood by the average plan 
participant and shall be sufficiently comprehensive to apprise the 
plan's participants and beneficiaries of their rights and obligations 
under the plan. In fulfilling these requirements, the plan administrator 
shall exercise considered judgment and discretion by taking into account 
such factors as the level of comprehension and education of typical 
participants in the plan and the complexity of the terms of the plan. 
Consideration of these factors will usually require the limitation or 
elimination of technical jargon and of long, complex sentences,

[[Page 398]]

the use of clarifying examples and illustrations, the use of clear cross 
references and a table of contents.
    (b) General format. The format of the summary plan description must 
not have the effect to misleading, misinforming or failing to inform 
participants and beneficiaries. Any description of exception, 
limitations, reductions, and other restrictions of plan benefits shall 
not be minimized, rendered obscure or otherwise made to appear 
unimportant. Such exceptions, limitations, reductions, or restrictions 
of plan benefits shall be described or summarized in a manner not less 
prominent than the style, captions, printing type, and prominence used 
to describe or summarize plan benefits. The advantages and disadvantages 
of the plan shall be presented without either exaggerating the benefits 
or minimizing the limitations. The description or summary of restrictive 
plan provisions need not be disclosed in the summary plan description in 
close conjunction with the description or summary of benefits, provided 
that adjacent to the benefit description the page on which the 
restrictions are described is noted.
    (c) Foreign languages. In the case of either--
    (1) A plan that covers fewer than 100 participants at the beginning 
of a plan year, and in which 25 percent or more of all plan participants 
are literate only in the same non-English language, or
    (2) A plan which covers 100 or more participants at the beginning of 
the plan year, and in which the lesser of (i) 500 or more participants, 
or (ii) 10% or more of all plan participants are literate only in the 
same non-English language, so that a summary plan description in English 
would fail to inform these participants adequately of their rights and 
obligations under the plan, the plan administrator for such plan shall 
provide these participants with an English-language summary plan 
description which prominently displays a notice, in the non-English 
language common to these participants, offering them assistance. The 
assistance provided need not involve written materials, but shall be 
given in the non-English language common to these participants and shall 
be calculated to provide them with a reasonable opportunity to become 
informed as to their rights and obligations under the plan. The notice 
offering assistance contained in the summary plan description shall 
clearly set forth in the non-English language common to such 
participants offering them assistance. The assistance provided need not 
involve written materials, but shall be given in the non-English 
language common to these participants and shall be calculated to provide 
them with a reasonable opportunity to become informed as to their rights 
and obligations under the plan. The notice offering assistance contained 
in the summary plan description shall clearly set forth in the non-
English language common to such participants the procedures they must 
follow in order to obtain such assistance.

    Example. Employer A maintains a pension plan which covers 1000 
participants. At the beginning of a plan year five hundred of Employer 
A's covered employees are literate only in Spanish, 101 are literate 
only in Vietnamese, and the remaining 399 are literate in English. Each 
of the 1000 employees receives a summary plan description in English, 
containing an assistance notice in both Spanish and Vietnamese stating 
the following:
    ``This booklet contains a summary in English of your plan rights and 
benefits under Employer A Pension Plan. If you have difficulty 
understanding any part of this booklet, contact Mr. John Doe, the plan 
administrator, at his office in Room 123, 456 Main St., Anywhere City, 
State 20001. Office hours are from 8:30 A.M. to 5:00 P.M. Monday through 
Friday. You may also call the plan administrator's office at (202) 555-
2345 for assistance.''

[42 FR 37180, July 19, 1977]



Sec. 2520.102-3  Contents of summary plan description.

    Section 102 of the Act specifies information that must be included 
in the summary plan description. The summary plan description must 
accurately reflect the contents of the plans as of the date not earlier 
than 120 days prior to the date such summary plan description is 
disclosed. The following information shall be included in the summary 
plan description of both employee welfare benefit plans and employee 
pension benefit plans, except as

[[Page 399]]

stated otherwise in paragraphs (j) through (n):
    (a) The name of the plan, and, if different, the name by which the 
plan is commonly known by its participants and beneficiaries;
    (b) The name and address of--
    (1) In the case of a single employer plan, the employer whose 
employees are covered by the plan,
    (2) In the case of a plan maintained by an employee organization for 
its members, the employee organization that maintains the plan,
    (3) In the case of a collectively-bargained plan established or 
maintained by one or more employers and one or more employee 
organizations, the association, committee, joint board of trustees, 
parent or most significantly employer of a group of employers all of 
which contribute to the same plan, or other similar representative of 
the parties who established or maintain the plan, as well as
    (i) A statement that a complete list of the employers and employee 
organizations sponsoring the plan may be obtained by participants and 
beneficiaries upon written request to the plan administrator, and is 
available for examination by participants and beneficiaries, as required 
by Secs. 2520.104b-1 and 2520.104b-30; or
    (ii) A statement that participants and beneficiaries may receive 
from the plan administrator, upon written request, information as to 
whether a particular employer or employee organization is a sponsor of 
the plan and, if the employer or employee organization is a plan 
sponsor, the sponsor's address.
    (4) In the case of a plan established or maintained by two or more 
employers, the association, committee, joint board of trustees, parent 
or most significant employer of a group of employers all of which 
contribute to the same plan, or other similar representative of the 
parties who established or maintain the plan, as well as
    (i) A statement that a complete list of the employers sponsoring the 
plan may be obtained by participants and beneficiaries upon written 
request to the plan administrator, and is available for examination by 
participants and beneficiaries, as required by Secs. 2520.104b-1 and 
2520.104b-30, or,
    (ii) A statement that participants and beneficiaries may receive 
from the plan administrator, upon written request, information as to 
whether a particular employer is a sponsor of the plan and, if the 
employer is a plan sponsor, the sponsor's address.
    (c) The employer identification number (EIN) assigned by the 
Internal Revenue Service to the plan sponsor and the plan number 
assigned by the plan sponsor. (For further detailed explanation, see the 
instructions to the plan description Form EBS-1 and ``Identification 
Numbers Under ERISA'' (Publ. 1004), published jointly by DOL, IRS, and 
PBGC);
    (d) The type of pension or welfare plan, e.g. pension plans--defined 
benefit, defined contribution, 401(k), cash balance, money purchase, 
profit sharing, ERISA section 404(c) plan, etc., and for welfare plans--
group health plans, disability, pre-paid legal services, etc.
    (e) The type of administration of the plan, e.g., contract 
administration, insurer administration, etc.;
    (f) The name, business address and business telephone number of the 
plan administrator as that term is defined by section 3(16) of the Act;
    (g) The name of the person designated as agent for service of legal 
process, and the address at which process may be served on such person, 
and in addition, a statement that service of legal process may be made 
upon a plan trustee or the plan administrator;
    (h) The name, title and address of the principal place of business 
of each trustee of the plan;
    (i) If a plan is maintained pursuant to one or more collective 
bargaining agreements, a statement that the plan is so maintained, and 
that a copy of any such agreement may be obtained by participants and 
beneficiaries upon written request to the plan administrator, and is 
available for examination by participants and beneficiaries, as required 
by Secs. 2520.104b-1 and 2520.104b-30. For the purpose of this 
paragraph, a plan is maintained pursuant to a collective bargaining 
agreement if such agreement controls any duties, rights or benefits 
under the plan, even though such agreement has been superseded in part 
for other purposes;

[[Page 400]]

    (j) The plan's requirements respecting eligibility for participation 
and for benefits. The summary plan description shall describe the plan's 
provisions relating to eligibility to participate in the plan and the 
information identified in paragraphs (j)(1), (2) and (3) of this 
section, as appropriate.
    (1) For employee pension benefit plans, it shall also include a 
statement describing the plan's normal retirement age, as that term is 
defined in section 3(24) of the Act, and a statement describing any 
other conditions which must be met before a participant will be eligible 
to receive benefits. Such plan benefits shall be described or 
summarized. In addition, the summary plan description shall include a 
description of the procedures governing qualified domestic relations 
order (QDRO) determinations or a statement indicating that participants 
and beneficiaries can obtain, without charge, a copy of such procedures 
from the plan administrator.
    (2) For employee welfare benefit plans, it shall also include a 
statement of the conditions pertaining to eligibility to receive 
benefits, and a description or summary of the benefits. In the case of a 
welfare plan providing extensive schedules of benefits (a group health 
plan, for example), only a general description of such benefits is 
required if reference is made to detailed schedules of benefits which 
are available without cost to any participant or beneficiary who so 
requests. In addition, the summary plan description shall include a 
description of the procedures governing qualified medical child support 
order (QMCSO) determinations or a statement indicating that participants 
and beneficiaries can obtain, without charge, a copy of such procedures 
from the plan administrator.
    (3) For employee welfare benefit plans that are group health plans, 
as defined in section 733(a)(1) of the Act, the summary plan description 
shall include a description of: any cost-sharing provisions, including 
premiums, deductibles, coinsurance, and copayment amounts for which the 
participant or beneficiary will be responsible; any annual or lifetime 
caps or other limits on benefits under the plan; the extent to which 
preventive services are covered under the plan; whether, and under what 
circumstances, existing and new drugs are covered under the plan; 
whether, and under what circumstances, coverage is provided for medical 
tests, devices and procedures; provisions governing the use of network 
providers, the composition of the provider network, and whether, and 
under what circumstances, coverage is provided for out-of-network 
services; any conditions or limits on the selection of primary care 
providers or providers of speciality medical care; any conditions or 
limits applicable to obtaining emergency medical care; and any 
provisions requiring preauthorizations or utilization review as a 
condition to obtaining a benefit or service under the plan. In the case 
of plans with provider networks, the listing of providers may be 
furnished as a separate document that accompanies the plan's SPD, 
provided that the summary plan description contains a general 
description of the provider network and provided further that the SPD 
contains a statement that provider lists are furnished automatically, 
without charge, as a separate document.
    (k) In the case of an employee pension benefit plan, a statement 
describing any joint and survivor benefits provided under the plan, 
including any requirement that an election be made as a condition to 
select or reject the joint and survivor annuity;
    (l) For both pension and welfare benefit plans, a statement clearly 
identifying circumstances which may result in disqualification, 
ineligibility, or denial, loss, forfeiture, suspension, offset, 
reduction, or recovery (e.g., by exercise of subrogation or 
reimbursement rights) of any benefits that a participant or beneficiary 
might otherwise reasonably expect the plan to provide on the basis of 
the description of benefits required by paragraphs (j) and (k) of this 
section. In addition to other required information, plans must include a 
summary of any plan provisions governing the authority of the plan 
sponsors or others to terminate the plan or amend or eliminate benefits 
under the plan and the circumstances, if any, under which the plan may 
be terminated or benefits may be amended or

[[Page 401]]

eliminated; a summary of any plan provisions governing the benefits, 
rights and obligations of participants and beneficiaries under the plan 
on termination of the plan or amendment or elimination of benefits under 
the plan, including, in the case of an employee pension benefit plan, a 
summary of any provisions relating to the accrual and the vesting of 
pension benefits under the plan upon termination; and a summary of any 
plan provisions governing the allocation and disposition of assets of 
the plan upon termination. Plans also shall include a summary of any 
provisions that may result in the imposition of a fee or charge on a 
participant or beneficiary, or on an individual account thereof, the 
payment of which is a condition to the receipt of benefits under the 
plan. The foregoing summaries shall be disclosed in accordance with the 
requirements under 29 CFR 2520.102-2(b).
    (m) For an employee pension benefit plan the following information:
    (1) If the benefits of the plan are not insured under title IV of 
the Act, a statement of this fact, and reason for the lack of insurance; 
and
    (2) If the benefits of the plan are insured under title IV of the 
Act, a statement of this fact, a summary of the pension benefit guaranty 
provisions of title IV, and a statement indicating that further 
information on the provisions of title IV can be obtained from the plan 
administrator or the Pension Benefit Guaranty Corporation. The address 
of the PBGC shall be provided.
    (3) A summary plan description for a single-employer plan will be 
deemed to comply with paragraph (m)(2) of this section if it includes 
the following statement:

    Your pension benefits under this plan are insured by the Pension 
Benefit Guaranty Corporation (PBGC), a federal insurance agency. If the 
plan terminates (ends) without enough money to pay all benefits, the 
PBGC will step in to pay pension benefits. Most people receive all of 
the pension benefits they would have received under their plan, but some 
people may lose certain benefits.
    The PBGC guarantee generally covers: (1) Normal and early retirement 
benefits; (2) disability benefits if you become disabled before the plan 
terminates; and (3) certain benefits for your survivors.
    The PBGC guarantee generally does not cover: (1) Benefits greater 
than the maximum guaranteed amount set by law for the year in which the 
plan terminates; (2) some or all of benefit increases and new benefits 
based on plan provisions that have been in place for fewer than 5 years 
at the time the plan terminates; (3) benefits that are not vested 
because you have not worked long enough for the company; (4) benefits 
for which you have not met all of the requirements at the time the plan 
terminates; (5) certain early retirement payments (such as supplemental 
benefits that stop when you become eligible for Social Security) that 
result in an early retirement monthly benefit greater than your monthly 
benefit at the plan's normal retirement age; and (6) non-pension 
benefits, such as health insurance, life insurance, certain death 
benefits, vacation pay, and severance pay.
    Even if certain of your benefits are not guaranteed, you still may 
receive some of those benefits from the PBGC depending on how much money 
your plan has and on how much the PBGC collects from employers.
    For more information about the PBGC and the benefits it guarantees, 
ask your plan administrator or contact the PBGC's Technical Assistance 
Division, 1200 K Street N.W., Suite 930, Washington, D.C. 20005-4026 or 
call 202-326-4000 (not a toll-free number). TTY/TDD users may call the 
federal relay service toll-free at 1-800-877-8339 and ask to be 
connected to 202-326-4000. Additional information about the PBGC's 
pension insurance program is available through the PBGC's website on the 
Internet at http://www.pbgc.gov.

    (4) A summary plan description for a multiemployer plan will be 
deemed to comply with paragraph (m)(2) of this section if it includes 
the following statement:

    Your pension benefits under this multiemployer plan are insured by 
the Pension Benefit Guaranty Corporation (PBGC), a federal insurance 
agency. A multiemployer plan is a collectively bargained pension 
arrangement involving two or more unrelated employers, usually in a 
common industry.
    Under the multiemployer plan program, the PBGC provides financial 
assistance through loans to plans that are insolvent. A multiemployer 
plan is considered insolvent if the plan is unable to pay benefits (at 
least equal to the PBGC's guaranteed benefit limit) when due.
    The maximum benefit that the PBGC guarantees is set by law. Under 
the multiemployer program, the PBGC guarantee equals a participant's 
years of service multiplied by (1) 100% of the first $5 of the monthly 
benefit accrual rate and (2) 75% of the next $15. The PBGC's maximum 
guarantee limit is $16.25

[[Page 402]]

per month times a participant's years of service. For example, the 
maximum annual guarantee for a retiree with 30 years of service would be 
$5,850.
    The PBGC guarantee generally covers: (1) Normal and early retirement 
benefits; (2) disability benefits if you become disabled before the plan 
becomes insolvent; and (3) certain benefits for your survivors.
    The PBGC guarantee generally does not cover: (1) Benefits greater 
than the maximum guaranteed amount set by law; (2) benefit increases and 
new benefits based on plan provisions that have been in place for fewer 
than 5 years at the earlier of: (i) The date the plan terminates or (ii) 
the time the plan becomes insolvent; (3) benefits that are not vested 
because you have not worked long enough; (4) benefits for which you have 
not met all of the requirements at the time the plan becomes insolvent; 
and (5) non-pension benefits, such as health insurance, life insurance, 
certain death benefits, vacation pay, and severance pay.
    For more information about the PBGC and the benefits it guarantees, 
ask your plan administrator or contact the PBGC's Technical Assistance 
Division, 1200 K Street, N.W., Suite 930, Washington, D.C. 20005-4026 or 
call 202-326-4000 (not a toll-free number). TTY/TDD users may call the 
federal relay service toll-free at 1-800-877-8339 and ask to be 
connected to 202-326-4000. Additional information about the PBGC's 
pension insurance program is available through the PBGC's website on the 
Internet at http://www.pbgc.gov.

    (n) In the case of an employee pension benfit plan, a description 
and explanation of the plan provisions for determining years of service 
for eligibility to participate, vesting, and breaks in service, and 
years of participation for benefit accrual. The description shall state 
the service required to accrue full benefits and the manner in which 
accrual of benefits is prorated for employees failing to complete full 
service for a year.
    (o) In the case of a group health plan, within the meaning of 
section 607(1) of the Act, subject to the continuation coverage 
provisions of Part 6 of Title I of ERISA, a description of the rights 
and obligations of participants and beneficiaries with respect to 
continuation coverage, including, among other things, information 
concerning qualifying events and qualified beneficiaries, premiums, 
notice and election requirements and procedures, and duration of 
coverage.
    (p) The sources of contributions to the plan--for example, employer, 
employee organization, employees--and the method by which the amount of 
contribution is calculated. Defined benefit pension plans may state 
without further explanation that the contribution is actuarially 
determined.
    (q) The identity of any funding medium used for the accumulation of 
assets through which benefits are provided. The summary plan description 
shall identify any insurance company, trust fund, or any other 
institution, organization, or entity which maintains a fund on behalf of 
the plan or through which the plan is funded or benefits are provided. 
If a health insurance issuer, within the meaning of section 733(b)(2) of 
the Act, is responsible, in whole or in part, for the financing or 
administration of a group health plan, the summary plan description 
shall indicate the name and address of the issuer, whether and to what 
extent benefits under the plan are guaranteed under a contract or policy 
of insurance issued by the issuer, and the nature of any administrative 
services (e.g., payment of claims) provided by the issuer.
    (r) The date of the end of the year for purposes of maintaining the 
plan's fiscal records;
    (s) The procedures governing claims for benefits (including 
procedures for obtaining preauthorizations, approvals, or utilization 
review decisions in the case of group health plan services or benefits, 
and procedures for filing claim forms, providing notifications of 
benefit determinations, and reviewing denied claims in the case of any 
plan), applicable time limits, and remedies available under the plan for 
the redress of claims which are denied in whole or in part (including 
procedures required under section 503 of Title I of the Act). The plan's 
claims procedures may be furnished as a separate document that 
accompanies the plan's SPD, provided that the document satisfies the 
style and format requirements of 29 CFR 2520.102-2 and, provided further 
that the SPD contains a statement that the plan's claims procedures are 
furnished automatically, without charge, as a separate document.
    (t)(1) The statement of ERISA rights described in section 104(c) of 
the Act,

[[Page 403]]

containing the items of information applicable to the plan included in 
the model statement of paragraph (t)(2) of this section. Items which are 
not applicable to the plan are not required to be included. The 
statement may contain explanatory and descriptive provisions in addition 
to those prescribed in paragraph (t)(2) of this section. However, the 
style and format of the statement shall not have the effect of 
misleading, misinforming or failing to inform participants and 
beneficiaries of a plan. All such information shall be written in a 
manner calculated to be understood by the average plan participant, 
taking into account factors such as the level of comprehension and 
education of typical participants in the plan and the complexity of the 
items required under this subparagraph to be included in the statement. 
Inaccurate, incomprehensible or misleading explanatory material will 
fail to meet the requirements of this section. The statement of ERISA 
rights (the model statement or a statement prepared by the plan), must 
appear as one consolidated statement. If a plan finds it desirable to 
make additional mention of certain rights elsewhere in the summary plan 
description, it may do so. The summary plan description may state that 
the statement of ERISA rights is required by Federal law and regulation.
    (2) A summary plan description will be deemed to comply with the 
requirements of paragraph (t)(1) of this section if it includes the 
following statement; items of information which are not applicable to a 
particular plan should be deleted:

    As a participant in (name of plan) you are entitled to certain 
rights and protections under the Employee Retirement Income Security Act 
of 1974 (ERISA). ERISA provides that all plan participants shall be 
entitled to:

            Receive Information About Your Plan and Benefits

    Examine, without charge, at the plan administrator's office and at 
other specified locations, such as worksites and union halls, all 
documents governing the plan, including insurance contracts and 
collective bargaining agreements, and a copy of the latest annual report 
(Form 5500 Series) filed by the plan with the U.S. Department of Labor 
and available at the Public Disclosure Room of the Pension and Welfare 
Benefit Administration.
    Obtain, upon written request to the plan administrator, copies of 
documents governing the operation of the plan, including insurance 
contracts and collective bargaining agreements, and copies of the latest 
annual report (Form 5500 Series) and updated summary plan description. 
The administrator may make a reasonable charge for the copies.
    Receive a summary of the plan's annual financial report. The plan 
administrator is required by law to furnish each participant with a copy 
of this summary annual report.
    Obtain a statement telling you whether you have a right to receive a 
pension at normal retirement age (age * * *) and if so, what your 
benefits would be at normal retirement age if you stop working under the 
plan now. If you do not have a right to a pension, the statement will 
tell you how many more years you have to work to get a right to a 
pension. This statement must be requested in writing and is not required 
to be given more than once every twelve (12) months. The plan must 
provide the statement free of charge.

                   Continue Group Health Plan Coverage

    Continue health care coverage for yourself, spouse or dependents if 
there is a loss of coverage under the plan as a result of a qualifying 
event. You or your dependents may have to pay for such coverage. Review 
this summary plan description and the documents governing the plan on 
the rules governing your COBRA continuation coverage rights.
    Reduction or elimination of exclusionary periods of coverage for 
preexisting conditions under your group health plan, if you have 
creditable coverage from another plan. You should be provided a 
certificate of creditable coverage, free of charge, from your group 
health plan or health insurance issuer when you lose coverage under the 
plan, when you become entitled to elect COBRA continuation coverage, 
when your COBRA continuation coverage ceases, if you request it before 
losing coverage, or if you request it up to 24 months after losing 
coverage. Without evidence of creditable coverage, you may be subject to 
a preexisting condition exclusion for 12 months (18 months for late 
enrollees) after your enrollment date in your coverage.

                   Prudent Actions by Plan Fiduciaries

    In addition to creating rights for plan participants ERISA imposes 
duties upon the people who are responsible for the operation of the 
employee benefit plan. The people who operate your plan, called 
``fiduciaries'' of the plan, have a duty to do so prudently and in the 
interest of you and other plan participants and beneficiaries. No one, 
including

[[Page 404]]

your employer, your union, or any other person, may fire you or 
otherwise discriminate against you in any way to prevent you from 
obtaining a (pension, welfare) benefit or exercising your rights under 
ERISA.

                           Enforce Your Rights

    If your claim for a (pension, welfare) benefit is denied or ignored, 
in whole or in part, you have a right to know why this was done, to 
obtain copies of documents relating to the decision without charge, and 
to appeal any denial, all within certain time schedules.
    Under ERISA, there are steps you can take to enforce the above 
rights. For instance, if you request a copy of plan documents or the 
latest annual report from the plan and do not receive them within 30 
days, you may file suit in a Federal court. In such a case, the court 
may require the plan administrator to provide the materials and pay you 
up to $110 a day until you receive the materials, unless the materials 
were not sent because of reasons beyond the control of the 
administrator. If you have a claim for benefits which is denied or 
ignored, in whole or in part, you may file suit in a state or Federal 
court. In addition, if you disagree with the plan's decision or lack 
thereof concerning the qualified status of a domestic relations order or 
a medical child support order, you may file suit in Federal court. If it 
should happen that plan fiduciaries misuse the plan's money, or if you 
are discriminated against for asserting your rights, you may seek 
assistance from the U.S. Department of Labor, or you may file suit in a 
Federal court. The court will decide who should pay court costs and 
legal fees. If you are successful the court may order the person you 
have sued to pay these costs and fees. If you lose, the court may order 
you to pay these costs and fees, for example, if it finds your claim is 
frivolous.

                     Assistance with Your Questions

    If you have any questions about your plan, you should contact the 
plan administrator. If you have any questions about this statement or 
about your rights under ERISA, or if you need assistance in obtaining 
documents from the plan administrator, you should contact the nearest 
office of the Employee Benefits Security Administration, U.S. Department 
of Labor, listed in your telephone directory or the Division of 
Technical Assistance and Inquiries, Employee Benefits Security 
Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., 
Washington, D.C. 20210. You may also obtain certain publications about 
your rights and responsibilities under ERISA by calling the publications 
hotline of the Employee Benefits Security Administration.

    (u)(1) For a group health plan, as defined in section 733(a)(1) of 
the Act, that provides maternity or newborn infant coverage, a statement 
describing any requirements under federal or state law applicable to the 
plan, and any health insurance coverage offered under the plan, relating 
to hospital length of stay in connection with childbirth for the mother 
or newborn child. If federal law applies in some areas in which the plan 
operates and state law applies in other areas, the statement should 
describe the different areas and the federal or state law requirements 
applicable in each.
    (2) In the case of a group health plan subject to section 711 of the 
Act, the summary plan description will be deemed to have complied with 
paragraph (u)(1) of this section relating to the required description of 
federal law requirements if it includes the following statement in the 
summary plan description:

    Group health plans and health insurance issuers generally may not, 
under Federal law, restrict benefits for any hospital length of stay in 
connection with childbirth for the mother or newborn child to less than 
48 hours following a vaginal delivery, or less than 96 hours following a 
cesarean section. However, Federal law generally does not prohibit the 
mother's or newborn's attending provider, after consulting with the 
mother, from discharging the mother or her newborn earlier than 48 hours 
(or 96 hours as applicable). In any case, plans and issuers may not, 
under Federal law, require that a provider obtain authorization from the 
plan or the insurance issuer for prescribing a length of stay not in 
excess of 48 hours (or 96 hours).

(Approved by the Office of Management and Budget under control number 
1210-0039)

[42 FR 37180, July 19, 1977, as amended at 62 FR 16984, Apr. 8, 1997; 62 
FR 31695, June 10, 1997; 62 FR 36205, July 7, 1997; 63 FR 48375, Sept. 
9, 1998; 65 FR 70241, Nov. 21, 2000; 66 FR 34994, July 2, 2001; 66 FR 
36368, July 11, 2001]



Sec. 2520.102-4  Option for different summary plan descriptions.

    In some cases an employee benefit plan may provide different 
benefits for various classes of participants and beneficiaries. For 
example, a plan amendment altering benefits may apply to only those 
participants who are employees of an employer when the

[[Page 405]]

amendment is adopted and to employees who later become participants, but 
not to participants who no longer are employees when the amendment is 
adopted. (See Sec. 2520.104b-4). Similarly, a plan may provide for 
different benefits for participants employed at different plants of the 
employer, or for different classes of participants in the same plant. In 
such cases the plan administrator may fulfill the requirement to furnish 
a summary plan description to participants covered under the plan and 
beneficiaries receiving benefits under the plan by furnishing to each 
member of each class of participants and beneficiaries a copy of a 
summary plan description appropriate to that class. Each summary plan 
description so prepared shall follow the style and format prescribed in 
Sec. 2520.102-2, and shall contain all information which is required to 
be contained in the summary plan description under Sec. 2520.102-3. It 
may omit information which is not applicable to the class of 
participants or beneficiaries to which it is furnished. It should also 
clearly identify on the first page of the text the class of participants 
and beneficiaries for which it has been prepared and the plan's coverage 
of other classes. If the classes which the employee benefit plan covers 
are too numerous to be listed adequately on the first page of the text 
of the summary plan description, they may be listed elsewhere in the 
text so long as the first page of the text contains a reference to the 
page or pages in the text which contain this information.

[67 FR 775, Jan. 7, 2002]



                  Subpart C--Annual Report Requirements

    Source: 43 FR 10140, Mar. 10, 1978, unless otherwise noted.



Sec. 2520.103-1  Contents of the annual report.

    (a) General. The administrator of a plan required to file an annual 
report in accordance with section 104(a)(1) of the Act shall include 
with the annual report the information prescribed in paragraph (a)(1) of 
this section or in the limited exemption or alternative method of 
compliance described in paragraph (a)(2) of this section.
    (1) The annual report shall contain the information prescribed in 
section 103 of the Act.
    (2) Under the authority of sections 104(a)(3) and 110 of the Act, a 
limited exemption or alternative method of compliance is prescribed for 
employee welfare and pension benefit plans, respectively, which cover 
100 or more participants at the beginning of the plan year. A plan 
electing the limited exemption or alternative method of compliance shall 
file an annual report containing the information prescribed in paragraph 
(b) of this section and shall furnish a summary annual report as 
prescribed in Sec. 2520.104b-10.
    (b) Contents of the annual report for plans with 100 or more 
participants electing the limited exemption or alternative method of 
compliance. Except as provided in paragraph (d) of this section and in 
Secs. 2520.103-2 and 2520.104-44, the annual report of an employee 
benefit plan covering 100 or more participants at the beginning of the 
plan year which elects the limited exemption or alternative method of 
compliance described in paragraph (a)(2) of this section shall include:
    (1) A Form 5500 ``Annual Return/Report of Employee Benefit Plan'' 
and any statements or schedules required to be attached to the form, 
completed in accordance with the instructions for the form, including 
Schedule A (Insurance Information), Schedule B (Actuarial Information), 
Schedule C (Service Provider Information), Schedule D (DFE/Participating 
Plan Information), Schedule G (Financial Transaction Schedules), 
Schedule H (Financial Information), Schedule R (Retirement Plan 
Information), and the other financial schedules described in 
Sec. 2520.103-10. See the instructions for this form.
    (2) Separate financial statements (in addition to the information 
required by paragraph (b)(1) of this section), if such financial 
statements are prepared in order for the independent qualified public 
accountant to form the opinion required by section 103(a)(3)(A) of the 
Act and Sec. 2520.103-1(b)(5). These statements shall include the 
following:

[[Page 406]]

    (i) A statement of assets and liabilities at current value presented 
in comparative form for the beginning and end of the year. The statement 
of plan assets and liabilities shall include the assets and liabilities 
required to be reported on the Form 5500; however, the assets and 
liabilities may be aggregated into categories in a manner other than 
that used on Form 5500.
    (ii) Separate or combined statements of plan income and expenses and 
of changes in net assets which include the categories of income, 
expense, and changes in assets reqired to be reported on the Form 5500; 
however the income, expense, and changes in net assets may be aggregated 
into categories in a manner other than that used on Form 5500.
    (3) Notes to the financial statements described in paragraph (b)(1) 
or (2) of this section which contain a description of the accounting 
principles and practices reflected in the financial statements and, if 
applicable, variances from generally accepted accounting principles; a 
description of the plan, including any significant changes in the plan 
made during the period and the impact of such changes on benefits; the 
funding policy (including policy with respect to prior service cost) and 
any changes in such policy from the prior year, a description of 
material lease commitments, other commitments, and contingent 
liabilities; a description of agreements and transactions with persons 
known to be parties in interest; a general description of priorities 
upon termination of the plan; information concerning whether or not a 
tax ruling or determination letter has been obtained; an explanation of 
the differences, if any, between the information contained in the 
separate financial statements and the assets, liabilities, income, 
expenses and changes in the net assets as required to be reported on the 
Form 5500, and any other matters necessary to fully and fairly present 
the financial condition of the plan.
    (4) In the case of a plan, some or all of the assets of which are 
held in a pooled separate account maintained by an insurance company, or 
a common or collective trust maintained by a bank or similar 
institution, a copy of the annual statement of assets and liabilities of 
such account or trust for the fiscal year of the account or trust which 
ends with or within the plan year for which the annual report is made as 
required to be furnished to the administrator by such account or trust 
under Sec. 2520.103-5(c). Although the statement of assets and 
liabilities referred to in Sec. 2520.103-5(c) shall be considered part 
of the plan's annual report, such statement of assets and liabilities 
need not be filed with the plan's annual report. See Secs. 2520.103-3 
and 2520.103-4 for reporting requirements for plans some or all of the 
assets of which are held in a pooled separate account maintained by an 
insurance company, or a common or collective trust maintained by a bank 
or similar institution.
    (5) A report of an independent qualified public accountant.
    (i) Technical requirements. The accountant's report--
    (A) Shall be dated;
    (B) Shall be signed manually;
    (C) Shall indicate the city and state where issued; and
    (D) Shall identify without detailed enumeration the financial 
statements and schedules covered by the report.
    (ii) Representations as to the audit. The accountant's report--
    (A) Shall state whether the audit was made in accordance with 
generally accepted auditing standards; and
    (B) Shall designate any auditing procedures deemed necessary by the 
accountant under the circumstances of the particular case which have 
been omitted, and the reasons for their omission. Authority for the 
omission of certain procedures which independent accountants might 
ordinarily employ in the course of an audit made for the purpose of 
expressing the opinions required by paragraph (b)(5)(iii) of this 
section is contained in Secs. 2520.103-8 and 2520.103-12.
    (iii) Opinion to be expressed. The accountant's report shall state 
clearly:
    (A) The opinion of the accountant in respect of the financial 
statements and schedules covered by the report and the accounting 
principles and practices reflected therein; and
    (B) The opinion of the accountant as to the consistency of the 
application of

[[Page 407]]

the accounting principles with the application of such principles in the 
preceding year or as to any changes in such principles which have a 
material effect on the financial statements.
    (iv) Exceptions. Any matters to which the accountant takes exception 
shall be clearly identified, the exception thereto specifically and 
clearly stated, and, to the extent practicable, the effect of the 
matters to which the accountant takes exception on the related financial 
statements given. The matters to which the accountant takes exception 
shall be further identified as (A) those that are the result of DOL 
regulations, and (B) all others.
    (c) Contents of the annual report for plans with fewer than 100 
participants. Except as provided in paragraph (d) of this section and in 
Secs. 2520.104-43 and 2520.104a-6, the annual report of an employee 
benefit plan which covers fewer than 100 participants at the beginning 
of the plan year shall include a Form 5500 ``Annual Return/Report of 
Employee Benefit Plan'' and any statements or schedules required to be 
attached to the form, completed in accordance with the instructions for 
the form, including Schedule A (Insurance Information), Schedule B 
(Actuarial Information), Schedule D (DFE/Participating Plan 
Information), Schedule I (Financial Information--Small Plan), and 
Schedule R (Retirement Plan Information). See the instructions for this 
form.
    (d) Special rule. If a plan has between 80 and 120 participants 
(inclusive) as of the beginning of the plan year, the plan administrator 
may elect to file the same category of annual report (i.e., the annual 
report for plans with 100 or more participants under paragraph (b) of 
this section or the annual report for plans with fewer than 100 
participants under paragraph (c) of this section) that was filed for the 
previous plan year.
    (e) Plans which participate in a master trust. The plan 
administrator of a plan which participates in a master trust shall file 
an annual report on Form 5500 in accordance with the instructions for 
the form relating to master trusts and master trust investment accounts. 
For purposes of annual reporting, a master trust is a trust for which a 
regulated financial institution serves as trustee or custodian 
(regardless of whether such institution exercises discretionary 
authority or control respecting the management of assets held in the 
trust) and in which assets of more than one plan sponsored by a single 
employer or by a group of employers under common control are held. For 
purpose of this paragraph, a regulated financial institution is a bank, 
trust company, or similar financial institution regulated, supervised, 
and subject to periodic examination by a State or Federal agency. Common 
control is determined on the basis of all relevant facts and 
circumstances (whether or not such employers are incorporated).
    (f) Electronic filing. The Form 5500 ``Annual Return/Report of 
Employee Benefit Plan'' may be filed electronically or through other 
media in accordance with the instructions accompanying the form, 
provided the plan administrator maintains an original copy, with all 
required signatures, as part of the plan's records.

[43 FR 10140, Mar. 10, 1978, as amended at 45 FR 51446, Aug. 1, 1980; 46 
FR 61079, Dec. 15, 1981; 51 FR 41288, Nov. 13, 1986; 54 FR 8627, Mar. 1, 
1989; 65 FR 21080, Apr. 19, 2000]



Sec. 2520.103-2  Contents of the annual report for a group insurance arrangement.

    (a) General. (1) A trust or other entity described in Sec. 2520.104-
43(b) that files an annual report for purposes of Sec. 2520.104-43 shall 
include in such report the items set forth in paragraph (b) of this 
section.
    (2) [Reserved]
    (b) Contents. (1) A Form 5500 ``Annual Return/Report of Employee 
Benefit Plan'' and any statements or schedules required to be attached 
to the form, completed in accordance with the instructions for the form, 
including Schedule A (Insurance Information), Schedule C (Service 
Provider Information), Schedule D (DFE/Participating Plan Information), 
Schedule G (Financial Transaction Schedules), Schedule H (Financial 
Information), and the other financial schedules described in 
Sec. 2520.103-10. See the instructions for this form.

[[Page 408]]

    (2) Separate financial statements (in addition to the information 
required by paragraph (b)(1) of this section), if such financial 
statements are prepared in order for the independent qualified public 
accountant to form the opinion required by section 103(a)(3)(A) of the 
Act and Sec. 2520.103-2(b)(5). These financial statements shall include 
the following:
    (i) A statement of all trust assets and liabilities at current value 
presented in comparative form for the beginning and end of the year. The 
statement of trust assets and liabilities shall include the assets and 
liabilities required to be reported on the Form 5500; however, the 
assets and liabilities may be aggregated into categories in a manner 
other than that used on Form 5500.
    (ii) Separate or combined statements of all trust income and 
expenses and changes in net assets which includes the categories of 
income, expense, and changes in assets required to be reported on the 
Form 5500; however, the income, expense, and changes in assets may be 
aggregated into categories in a manner other than that used on Form 
5500.
    (3) Notes to the financial statements described in paragraph (b)(1) 
or (2) of this section which contain a description of the accounting 
principles and practices reflected in the financial statements and, if 
applicable, variances from generally accepted accounting principles; a 
description of the group insurance arrangement including any significant 
changes in the group insurance arrangement made during the period and 
the impact of such changes on benefits; a description of material lease 
commitments, other commitments, and contingent liabilities; a 
description of agreements and transactions with persons known to be 
parties in interest; a general description of priorities upon 
termination of the plan; an explanation of the differences, if any, 
between the information contained in the separate financial statements 
and the assets, liabilities, income, expenses and changes in net assets 
as required to be reported on the Form 5500; and any other matters 
necessary to fully and fairly present the financial condition of the 
plan.
    (4) In the case of a group insurance arrangement some or all of the 
assets of which are held in a pooled separate account maintained by an 
insurance carrier, or in a common or collective trust maintained by a 
bank, trust company or similar institution, a copy of the annual 
statement of assets and liabilities of such account or trust for the 
fiscal year of the account or trust which ends with or within the plan 
year for which the annual report is made as required to be furnished by 
such account or trust under Sec. 2520.103-5(c). Although the statement 
of assets and liabilities referred to in Sec. 2520.103-5(c) shall be 
considered part of the group insurance arrangement's annual report, such 
statement of assets and liabilities need not be filed with its annual 
report. See Secs. 2520.103-3 and 2520.103-4 for reporting requirements 
for plans some or all of the assets of which are held in a pooled 
separate account maintained by an insurance company, or a common or 
collective trust maintained by a bank or similar institution, and see 
Sec. 2520.104-43(b)(2) for when the terms ``group insurance 
arrangement'' or ``trust or other entity'' shall be, respectively, used 
in place of the terms ``plan'' and ``plan administrator.''
    (5) A report of an independent qualified public accountant.
    (i) Technical requirements. The accountant's report--
    (A) Shall be dated;
    (B) Shall be signed manually;
    (C) Shall indicate the city and State where issued; and
    (D) Shall identify without detailed enumeration the financial 
statements and schedules covered by the report.
    (ii) Representations as to the audit. The accountant's report--
    (A) Shall state whether the audit was made in accordance with 
generally accepted auditing standards; and
    (B) Shall designate any auditing procedures deemed necessary by the 
accountant under the circumstances of the particular case, which have 
been omitted, and the reasons for their omission. Authority for the 
omission of certain procedures which independent accountants might 
ordinarily employ in the course of an audit made for the

[[Page 409]]

purpose of expressing the opinions required by paragraph (b)(5)(iii) of 
this section is contained in Sec. 2520.103-8.
    (iii) Opinion to be expressed. The accountant's report shall state 
clearly:
    (A) The opinion of the accountant in respect of the financial 
statements and schedules covered by the report and the accounting 
principles and practices reflected therein; and
    (B) The opinion of the accountant as to the consistency of the 
application of the accounting principles with the application of such 
priniciples in the preceding year, or as to any changes in such 
principles which have a material effect on the financial statements.
    (iv) Exceptions. Any matters to which the accountant takes exception 
shall be clearly identified, the exception thereto specifically and 
clearly stated, and, to the extent practicable, the effect of the 
matters to which the accountant takes exception on the related financial 
statements given. The matters to which the accountant takes exception 
shall be further identified as to (A) those that are the result of DOL 
regulations and (B) all others.
    (c) Electronic filing. The Form 5500 ``Annual Return/Report of 
Employee Benefit Plan'' may be filed electronically or through other 
media in accordance with the instructions accompanying the form, 
provided the trust or other entity described in Sec. 2520.104-43(b) 
maintains an original copy, with all required signatures, as part of the 
trust's or entity's records.

[43 FR 10140, Mar. 10, 1978, as amended at 54 FR 8627, Mar. 1, 1989; 65 
FR 21080, Apr. 19, 2000]



Sec. 2520.103-3  Exemption from certain annual reporting requirements for assets held in a common or collective trust.

    (a) General. Under the authority of sections 103(b)(3)(G), 
103(b)(4), 104(a)(2)(B), 104(a)(3), 110 and 505 of the Act, a plan whose 
assets are held in whole or in part in a common or collective trust 
maintained by a bank, trust company, or similar institution which meets 
the requirements of paragraph (b) of this section shall include as part 
of the annual report required to be filed under Secs. 2520.104a-5 or 
2520.104a-6 the information described in paragraph (c) of this section. 
Such plan is not required to include in its annual report information 
concerning the individual transactions of the common or collective 
trust. This exemption has no application to assets not held in such 
trusts.
    (b) Application. This provision applies only to a plan some or all 
of the assets of which are held in a common or collective trust 
maintained by a bank, trust company, or similar institution regulated 
and supervised and subject to periodic examination by a State or Federal 
agency. For purposes of this section,
    (1) A common or collective trust is a trust which consists of the 
assets of two or more participating entities and is maintained for the 
collective investment and reinvestment of assets contributed thereto, 
and
    (2) Plans maintained by a single employer or by the members of a 
controlled group of corporations, as defined in section 1563(a) of the 
Internal Revenue Code of 1954, shall be deemed to be a single 
participating entity.
    (c) Contents. (1) A plan which meets the requirements of paragraph 
(b) of this section, and which invests in a common or collective trust 
that files a Form 5500 report in accordance with Sec. 2520.103-9, shall 
include in its annual report: information required by the instructions 
to Schedule H (Financial Information) or Schedule I (Financial 
Information--Small Plan) about the current value of and net investment 
gain or loss relating to the units of participation in the common or 
collective trust held by the plan; identifying information about the 
common or collective trust including its name, employer identification 
number, and any other information required by the instructions to the 
Schedule D (DFE/Participating Plan Information); and such other 
information as is required in the separate statements and schedules of 
the annual report about the value of the plan's units of participation 
in the common or collective trust and transactions involving the 
acquisition and disposition by the plan of units of participation in the 
common or collective trust.
    (2) A plan which meets the requirements of paragraph (b) of this 
section,

[[Page 410]]

and which invests in a common or collective trust that does not file a 
Form 5500 report in accordance with Sec. 2520.103-9, shall include in 
its annual report: information required by the instructions to Schedule 
H (Financial Information) or Schedule I (Financial Information--Small 
Plan) about the current value of the plan's allocable portion of the 
underlying assets and liabilities of the common or collective trust and 
the net investment gain or loss relating to the units of participation 
in the common or collective trust held by the plan; identifying 
information about the common or collective trust including its name, 
employer identification number, and any other information required by 
the instructions to the Schedule D (DFE/Participating Plan Information); 
and such other information as is required in the separate statements and 
schedules of the annual report about the value of the plan's units of 
participation in the common or collective trust and transactions 
involving the acquisition and disposition by the plan of units of 
participation in the common or collective trust.

[43 FR 10140, Mar. 10, 1978, as amended at 65 FR 21081, Apr. 19, 2000]



Sec. 2520.103-4  Exemption from certain annual reporting requirements for assets held in an insurance company pooled separate account.

    (a) General. Under the authority of sections 103(b)(3)(G), 
103(b)(4), 104(a)(2)(B), 104(a)(3), 110 and 505 of the Act, a plan whose 
assets are held in whole or in part in a pooled separate account of an 
insurance carrier which meets the requirements of paragraph (b) of this 
section shall include as part of the annual report required to be filed 
under Sec. 2520.104a-5 or Sec. 2520.104a-6 the information described in 
paragraph (c) of this section. Such plan is not required to include in 
its annual report information concerning the individual transactions of 
the pooled separate account. This exemption has no application to assets 
not held in such a pooled separate account.
    (b) Application. This provision applies only to a plan some or all 
of the assets of which are held in a pooled separate account of an 
insurance carrier regulated and supervised and subject to periodic 
examination by a State agency. For purposes of this section, (1) a 
pooled separate account is an account which consists of the assets of 
two or more participating entities and is maintained for the collective 
investment and reinvestment of assets contributed thereto, and (2) plans 
maintained by a single employer or by members of a controlled group of 
corporations, as defined in section 1563(a) of the Internal Revenue Code 
of 1954, shall be deemed to be a single participating entity.
    (c) Contents. (1) A plan which meets the requirements of paragraph 
(b) of this section, and which invests in a pooled separate account that 
files a Form 5500 report in accordance with Sec. 2520.103-9, shall 
include in its annual report: information required by the instructions 
to Schedule H (Financial Information) or Schedule I (Financial 
Information--Small Plan) about the current value of, and net investment 
gain or loss relating to, the units of participation in the pooled 
separate account held by the plan; identifying information about the 
pooled separate account including its name, employer identification 
number, and any other information required by the instructions to the 
Schedule D (DFE/Participating Plan Information); and such other 
information as is required in the separate statements and schedules of 
the annual report about the value of the plan's units of participation 
in the pooled separate accounts and transactions involving the 
acquisition and disposition by the plan of units of participation in the 
pooled separate account.
    (2) A plan which meets the requirements of paragraph (b) of this 
section, and which invests in a pooled separate account that does not 
file a Form 5500 report in accordance with Sec. 2520.103-9, shall 
include in its annual report: information required by the instructions 
to Schedule H (Financial Information) or Schedule I (Financial 
Information--Small Plan) about the current value of the plan's allocable 
portion of the underlying assets and liabilities of the pooled separate 
account and the net investment gain or loss relating to the

[[Page 411]]

units of participation in the pooled separate account held by the plan; 
identifying information about the pooled separate account including its 
name, employer identification number, and any other information required 
by the instructions to the Schedule D (DFE/Participating Plan 
Information); and such other information as is required in the separate 
statements and schedules of the annual report about the value of the 
plan's units of participation in the pooled separate account and 
transactions involving the acquisition and disposition by the plan of 
units of participation in the pooled separate account.

[43 FR 10140, Mar. 10, 1978, as amended at 65 FR 21081, Apr. 19, 2000]



Sec. 2520.103-5  Transmittal and certification of information to plan administrator for annual reporting purposes.

    (a) General. In accordance with section 103(a)(2) of the Act, an 
insurance carrier or other organization which provides benefits under 
the plan or holds plan assets, a bank or similar institution which holds 
plan assets, or a plan sponsor shall transmit and certifty such 
information as needed by the administrator to file the annual report 
under section 104(a)(1) of the Act and Sec. 2520.104a-5 or 
Sec. 2520.104a-6:
    (1) Within 9 months after the close of the plan year which begins in 
1975 or September 30, 1976, whichever is later, and
    (2) Within 120 days after the close of any plan year which begins 
after December 31, 1975.
    (b) Application. This requirement applies with respect to--
    (1) An insurance carrier or other organization which:
    (i) Provides from its general asset account funds for the payment of 
benefits under a plan, or
    (ii) Holds assets of a plan in a separate account;
    (2) A bank, trust company, or similar institution which holds assets 
of a plan in a common or collective trust, separate trust, or custodial 
account; and
    (3) A plan sponsor as defined in section 3(16)(B) of the Act.
    (c) Contents. The information required to be provided to the 
administrator shall include--
    (1) In the case of an insurance carrier or other organization which:
    (i) Provides funds from its general asset account for the payment of 
benefits under a plan, upon request of the plan administrator, such 
information as is contained within the ordinary business records of the 
insurance carrier or other organization and is needed by the plan 
administrator to comply with the requirements of section 104(a)(1) of 
the Act and Sec. 2520.104a-5 or Sec. 2520.104a-6;
    (ii) Holds assets of a plan in a pooled separate account and files a 
Form 5500 report pursuant to Sec. 2520.103-9 for the participating 
plan's plan year--
    (A) A copy of the annual statement of assets and liabilities of the 
separate account for the fiscal year of such account ending with or 
within the plan year for which the participating plan's annual report is 
made,
    (B) A statement of the value of the plan's units of participation in 
the separate account,
    (C) The Employer Identification Number (EIN) of the separate 
account, entity number required for purposes of completing the Form 5500 
and any other identifying number assigned by the insurance carrier to 
the separate account,
    (D) A statement that a filing pursuant to Sec. 2520.103-9(c) will be 
made for the separate account (for its fiscal year ending with or within 
the participating plan's plan year) on or before the filing due date for 
such account in accordance with the Form 5500 instructions, and
    (E) Upon request of the plan administrator, any other information 
that can be obtained from the ordinary business records of the insurance 
carrier and that is needed by the plan administrator to comply with the 
requirements of section 104(a)(1) of the Act and Sec. 2520.104a-5 or 
Sec. 2520.104a-6;
    (iii) Holds assets of a plan in a pooled separate account and does 
not file a Form 5500 report pursuant to Sec. 2520.103-9 for the 
participating plan's plan year--
    (A) A copy of the annual statement of assets and liabilities of the 
separate

[[Page 412]]

account for the fiscal year of such account that ends with or within the 
plan year for which the participating plan's annual report is made,
    (B) A statement of the value of the plan's units of participation in 
the separate account,
    (C) The EIN of the separate account and any other identifying number 
assigned by the insurance carrier to the separate account,
    (D) A statement that a filing pursuant to Sec. 2520.103-9(c) will 
not be made for the separate account for its fiscal year ending with or 
within the participating plan's plan year, and
    (E) Upon request of the plan administrator, any other information 
that can be obtained from the ordinary business records of the insurance 
carrier and that is needed by the plan administrator to comply with the 
requirements of section 104(a)(1) of the Act and Sec. 2520.104a-5 or 
Sec. 2520.104a-6.
    (iv) Holds assets of a plan in a separate account which is not 
exempted from certain reporting requirements under Sec. 2520.103-4, a 
listing of all transactions of the separate account and, upon request of 
the plan administrator, such information as is contained within the 
ordinary business records of the insurance carrier and is needed by the 
plan administrator to comply with the requirements of section 104(a)(1) 
of the Act and Sec. 2520.104a-5 or Sec. 2520.104a-6.
    (2) In the case of a bank, trust company, or similar institution 
holding assets of a plan--
    (i) In a common or collective trust that files a Form 5500 report 
pursuant to Sec. 2520.103-9 for the participating plan's plan year--
    (A) A copy of the annual statement of assets and liabilities of the 
common or collective trust for the fiscal year of such trust ending with 
or within the plan year for which the participating plan's annual report 
is made,
    (B) A statement of the value of the plan's units of participation in 
the common or collective trust,
    (C) The EIN of the common or collective trust, entity number 
assigned for purposes of completing the Form 5500 and any other 
identifying number assigned by the bank, trust company, or similar 
institution,
    (D) A statement that a filing pursuant to Sec. 2520.103-9(c) will be 
made for the common or collective trust (for its fiscal year ending with 
or within the participating plan's plan year) on or before the filing 
due date for such trust in accordance with the Form 5500 instructions, 
and
    (E) Upon request of the plan administrator, any other information 
that can be obtained from the ordinary business records of the bank, 
trust company or similar institution and that is needed by the plan 
administrator to comply with the requirements of section 104(a)(1) of 
the Act and Secs. 2520.104a-5 or 2520.104a-6.
    (ii) In a common or collective trust that does not file a Form 5500 
report pursuant to Sec. 2520.103-9 for the participating plan's plan 
year--
    (A) A copy of the annual statement of assets and liabilities of the 
common or collective trust for the fiscal year of such account that ends 
with or within the plan year for which the participating plan's annual 
report is made,
    (B) A statement of the value of the plan's units of participation in 
the common or collective trust,
    (C) The EIN of the common or collective trust and any other 
identifying number assigned by the bank, trust company or similar 
institution,
    (D) A statement that a filing pursuant to Sec. 2520.103-9(c) will 
not be made for the common or collective trust for its fiscal year 
ending with or within the participating plan's plan year, and
    (E) Upon request of the plan administrator, any other information 
that can be obtained from the ordinary business records of the bank, 
trust company or similar institution and that is needed by the plan 
administrator to comply with the requirements of section 104(a)(1) of 
the Act and Secs. 2520.104a-5 or 2520.104a-6.
    (iii) In a trust which is not exempted from certain reporting 
requirements under Sec. 2520.103-3, a listing of all transactions of the 
separate trust and, upon request of the plan administrator, such 
information as is contained within the ordinary business records of the 
bank, trust company, or similar institution

[[Page 413]]

and is needed by the plan administrator to comply with the requirements 
of section 104(a)(1) of the Act and Sec. 2520.104a-5.
    (iv) In a custodial account, upon request of the plan administrator, 
such information as is contained within the ordinary business records of 
the bank, trust company, or similar institution and is needed by the 
plan administrator to comply with the requirements of section 104(a)(1) 
of the Act and Sec. 2520.104a-5 or Sec. 2520.104a-6.
    (3) In the case of a plan sponsor, a listing of all transactions 
directly or indirectly involving plan assets engaged in by the plan 
sponsor and such information as is needed by the plan administrator to 
comply with the requirements of section 104(a)(1) of the Act and 
Sec. 2520.104a-5 or Sec. 2520.104a-6.
    (d) Certification. (1) An insurance carrier or other organization, a 
bank, trust company, or similar institution, or plan sponsor, as 
described in paragraph (b) of this section, shall certify to the 
accuracy and completeness of the information described in paragraph (c) 
of this section by a written declaration which is signed by a person 
authorized to represent the insurance carrier, bank, or plan sponsor. 
Such certification will serve as a written assurance of the truth of the 
facts stated therein.
    (2) Example of Certification. The XYZ Bank (Insurance Carrier) 
hereby certifies that the foregoing statement furnished pursuant to 29 
CFR 2520.103-5(c) is complete and accurate.

[43 FR 10140, Mar. 10, 1978, as amended at 65 FR 21082, Apr. 19, 2000]



Sec. 2520.103-6  Definition of reportable transaction for Annual Return/Report.

    (a) General. For purposes of preparing the schedule of reportable 
transactions described in Sec. 2520.103-10(b)(6), and subject to the 
exceptions provided in Secs. 2520.103-3, 2520.103-4 and 2520.103-12, 
with respect to individual transactions by a common or collective trust, 
pooled separate account, or a 103-12 investment entity, a reportable 
transaction includes any transaction or series of transactions described 
in paragraph (c) of this section.
    (b) Definitions. (1)(i) Except as provided in paragraphs (c)(2) and 
(d)(1)(vi) of this section (relating to assets acquired or disposed of 
during the plan year), ``current value'' shall mean the current value, 
as defined in section 3(26) of the Act, of plan assets as of the 
beginning of the plan year, or the end of the previous plan year.
    (ii) Except as provided in paragraphs (c)(2) and (d)(1)(vi) of this 
section (relating to assets acquired or disposed of during the plan 
year), with respect to schedules of reportable transactions for the 
initial plan year of a plan, ``current value'' shall mean the current 
value, as defined in section 3(26) of the Act, of plan assets at the end 
of a plan's initial plan year.
    (2)(i) A ``transaction with respect to securities'' is any purchase, 
sale, or exchange of securities. A transaction with respect to 
securities for purposes of this section occurs on either the trade date 
or settlement date of a purchase, sale, or exchange of securities; 
either the trade date or settlement date must be used consistently 
during the plan year for the purposes of this section. For the purposes 
of this section, except as provided in paragraph (b)(2)(ii) of this 
section, ``securities'' includes a unit of participation in a common or 
collective trust or a pooled separate account.
    (ii) Solely for purposes of paragraph (c)(1)(iv) of this section, 
the term ``securities'', as it applies to any transaction involving a 
bank or insurance company regulated by a Federal or State agency, an 
investment company registered under the Investment Company Act of 1940, 
or a broker-dealer registered under the Securities Exchange Act of 1934, 
shall not include:
    (A) Debt obligations of the United States or any United States 
agency with a maturity of not more than one year;
    (B) Debt obligations of the United States or any United States 
agency with a maturity of more than one year if purchased or sold under 
a repurchase agreement having a term of less than 91 days;
    (C) Interests issued by a company registered under the Investment 
Company Act of 1940;

[[Page 414]]

    (D) Bank certificates of deposit with a maturity of not more than 
one year;
    (E) Commercial paper with a maturity of not more than nine months if 
it is ranked in the highest rating category for commercial paper by at 
least two nationally recognized statistical rating services and is 
issued by a company required to file reports under section 13 of the 
Securities Exchange Act of 1934;
    (F) Participations in a bank common or collective trust;
    (G) Participations in an insurance company pooled separate account;
    (3)(i) Except as provided by paragraph (b)(3)(ii) of this section, a 
transaction is ``with or in conjunction with a person'' for purposes of 
this section if that person benefits from, executes, facilitates, 
participates, promotes, or solicits a transaction or part of a 
transaction involving plan assets.
    (ii) Solely for the purposes of paragraph (c)(1)(iv) of this 
section, a transaction shall not be considered ``with or in conjunction 
with a person'' if:
    (A) That person is a broker-dealer registered under the Securities 
Exchange Act of 1934;
    (B) The transaction involves the purchase or sale of securities 
listed on a national securities exchange registered under section 6 of 
the Securities Exchange Act of 1934 or quoted on NASDAQ; and
    (C) The broker-dealer does not purchase or sell securities involved 
in the transaction for its own account or the account of an affiliated 
person.
    (c) Application. (1) Except as provided in paragraph (c)(4) of this 
section, this provision applies to--
    (i) A transaction within the plan year, with respect to any plan 
asset, involving an amount in excess of 3 percent of the current value 
of plan assets;
    (ii) Any series of transactions (other than transactions with 
respect to securities) within the plan year with or in conjunction with 
the same person which, when aggregated, regardless of the category of 
asset and the gain or loss on any transaction, involves an amount in 
excess of 3 percent of the current value of plan assets;
    (iii) Any transaction within the plan year involving securities of 
the same issue if within the plan year any series of transactions with 
respect to such securities, when aggregated, involves an amount in 
excess of 3 percent of the current value of plan assets; and
    (iv) Any transaction within the plan year with respect to securities 
with or in conjunction with a person if any prior or subsequent single 
transaction within the plan year with such person with respect to 
securities exceeds 3 percent of the current value of plan assets.
    (2) For purposes of determining whether any 3 percent transactions 
occur, the ``current value'' of an asset acquired or disposed of during 
the plan year is the current value, as defined in section 3(26) of the 
Act, at the time of acquisition or disposition of such asset.
    (3) Plans whose assets are held in whole or in part in a common or 
collective trust or a pooled separate account, as provided in 
Secs. 2520.103-3 and 2520.103-4, and which satisfy the requirements of 
those sections, are not required to prepare schedules of reportable 
transactions with respect to the individual transactions of the common 
or collective trust or pooled separate account.
    (4) For plan years beginning on or after January 1, 1988, 5 percent 
shall be substituted for 3 percent in paragraphs (c)(1) and (2) of this 
section for purposes of determining whether a transaction or series of 
transactions constitutes a reportable transaction under this section.
    (d) Contents. (1) The schedule of transactions shall include the 
following information as to each transaction or series of transactions:
    (i) The name of each party, except that in the case of a transaction 
or series of transactions involving a purchase or sale of a security on 
the market, the schedule need not include the person from whom it was 
purchased or to whom it was sold. A purchase or sale on the market is a 
purchase or sale of a security through a registered broker-dealer acting 
as a broker under the Securities Exchange Act of 1934;
    (ii) A brief description of each asset;
    (iii) The purchase or selling price in the case of a purchase or 
sale, the rental in the case of a lease, and the amount of principal, 
interest rate, payment schedule (e.g., fully amortized, partly amortized 
with balloon) and maturity date in the case of a loan;

[[Page 415]]

    (iv) Expenses incurred, including, but not limited to, any fees or 
commissions;
    (v) The cost of any asset;
    (vi) The current value of any asset acquired or disposed of at the 
time of acquisition or disposition; and
    (vii) The net gain or loss.
    (2) The schedule of transactions with respect to a series of 
transactions described in paragraph (c)(1)(iii) may include the 
following information for each issue in lieu of the information 
prescribed in paragraphs (d)(1)(i) through (vii):
    (i) The total number of purchases of such securities made by the 
plan within the plan year;
    (ii) The total number of sales of such securities made by the plan 
within the plan year;
    (iii) The total dollar value of such purchases;
    (iv) The total dollar value of such sales;
    (v) The net gain or loss as a result of these transactions.
    (e) Examples. These examples are effective for reporting for plan 
years beginning on or after January 1, 1988.
    (1) At the beginning of the plan year, XYZ plan has 10 percent of 
the current value of its plan assets invested in ABC common stock. 
Halfway through the plan year, XYZ purchases ABC common stock in a 
single transaction in an amount equal to 6 percent of the current value 
of plan assets. At about this time, XYZ plan also purchases a commercial 
development property in an amount equal to 8 percent of the current 
value of plan assets. Under paragraph (c)(1)(i) of this section, the 6 
percent stock transaction is a reportable transaction for the plan year 
because it exceeds 5 percent of the current value of plan assets. The 8 
percent land transaction is also reportable under paragraph (c)(1)(i) of 
this section because it exceeds 5 percent of the current value of plan 
assets.
    (2) During the plan year, AAA plan purchases a commercial lot from 
ZZZ corporation at a cost equal to 2 percent of the current value of the 
plan assets. Two months later, AAA plan loans ZZZ corporation an amount 
of money equal to 3.5 percent of the current value of plan assets. Under 
the provisions of paragraph (c)(1)(ii) of this section, the plan has 
engaged in a reportable series of transactions with or in conjunction 
with the same person, ZZZ corporation, which when aggregated involves 
5.5 percent of plan assets.
    (3) During the plan year NMN plan sells to OPO corporation a 
commercial property that represents 3.5 percent of the current value of 
plan assets. OPO simultaneously executes a note and mortgage on the 
purchased property to NMN which represents 3 percent of the current 
value of plan assets. Under the provisions of paragraph (c)(1)(ii) of 
this section, NMN has engaged in a reportable series of transactions 
with or in conjunction with the same person, OPO corporation, consisting 
of a simultaneous sale of property and a loan, which, when aggregated, 
involves 6.5 percent of the current value of plan assets.
    (4) At the beginning of the plan year, ABC plan has 10 percent of 
the current value of plan assets invested equally in a combination of 
XYZ Corporation common stock and XYZ preferred stock. One month into the 
plan year, ABC sells some of its XYZ common stock in an amount equal to 
2 percent of the current value of plan assets.
    (i) Six weeks later the plan sells XYZ preferred stock in an amount 
equal to 4 percent of the current value of plan assets. A reportable 
series of transactions has not occurred because only transactions 
involving securities of the same issue are to be aggregated under 
paragraph (c)(1)(iii) of this section.
    (ii) Two weeks later when the ABC plan purchases XYZ common stock in 
an amount equal to 3.5 percent of the current value of plan assets, a 
reportable series of transactions under paragraph (c)(1)(iii) of this 
section has occurred. The sale of XYZ common stock worth 2 percent of 
plan assets and the purchase of XYZ common stock worth 3.5 percent of 
plan assets aggregate to exceed 5 percent of the total value of plan 
assets.
    (5) At the beginning of the plan year, Plan X purchases through 
broker-dealer Y common stock of Able Industries in an amount equal to 6 
percent of plan assets. The common stock of Able Industries is not 
listed on any national securities exchange or quoted on

[[Page 416]]

NASDAQ. This purchase is a reportable transaction under paragraph 
(c)(1)(i) of this section. Three months later, Plan X purchases short 
term debt obligations of Charley Company through broker-dealer Y in the 
amount of 0.2 percent of plan assets. This purchase is also a reportable 
transaction under the provisions of paragraph (c)(1)(iv) of this 
section.
    (6) At the beginning of the plan year, Plan X purchases from Bank B 
certificates of deposit having a 180 day maturity in an amount equal to 
6 percent of plan assets. Bank B is a national bank regulated by the 
Comptroller of the Currency. This purchase is a reportable transaction 
under paragraph (c)(1)(i) of this section. Three months later, Plan X 
purchases through Bank B 91-day Treasury bills in the amount of 0.2 
percent of plan assets. This purchase is not a reportable transaction 
under paragraph (c)(1)(iv) of this section because the purchase of the 
Treasury bills as well as the purchase of the certificates of deposit 
are not considered to involve a security under the definition of 
``securities'' in paragraph (b)(2)(ii) of this section.
    (7) At the beginning of the plan year, Plan X purchases through 
broker-dealer Y common stock of Able Industries, a New York Stock 
Exchange listed security, in an amount equal to 6 percent of plan 
assets. This purchase is a reportable transaction under paragraph 
(c)(1)(i) of this section. Three months later, Plan X purchases through 
broker-dealer Y, acting as agent, common stock of Baker Corporation, 
also a New York Stock Exchange listed security, in an amount equal to 
0.2 percent of plan assets. This latter purchase is not a reportable 
transaction under paragraph (c)(1)(iv) of this section because it is not 
a transaction ``with or in conjunction with a person'' pursuant to 
paragraph (b)(3)(ii) of this section.
    (f) Special rule for certain participant-directed transactions. 
Participant or beneficiary directed transactions under an individual 
account plan shall not be taken into account under paragraph (c)(1) of 
this section for purposes of preparing the schedule of reportable 
transactions described in this section. For purposes of this section 
only, a transaction will be considered directed by a participant or 
beneficiary if it has been authorized by such participant or 
beneficiary.

[43 FR 10140, Mar. 10, 1978; 43 FR 14009, Apr. 4, 1978, as amended at 54 
FR 8628, Mar. 1, 1989; 61 FR 33849, July 1, 1996; 65 FR 21082, Apr. 19, 
2000]



Sec. 2520.103-8  Limitation on scope of accountant's examination.

    (a) General. Under the authority of section 103(a)(3)(C) of the Act, 
the examination and report of an independent qualified public accountant 
need not extend to any statement or information prepared and certified 
by a bank or similar institution or insurance carrier. A plan, trust or 
other entity which meets the requirements of paragraph (b) of this 
section is not required to have covered by the accountant's examination 
or report any of the information described in paragraph (c) of this 
section.
    (b) Application. This section applies to any plan, trust or other 
entity some or all of the assets of which are held by a bank or similar 
institution or insurance carrier which is regulated and supervised and 
subject to periodic examination by a State or Federal agency.
    (c) Excluded information. Any statements or information certified to 
by a bank or similar institution or insurance carrier described in 
paragraph (b) of this section, provided that the statements or 
information regarding assets so held are prepared and certified to by 
the bank or insurance carrier in accordance with Sec. 2520.103-5.



Sec. 2520.103-9  Direct filing for bank or insurance carrier trusts and accounts.

    (a) General. Under the authority of sections 103(b)(4), 104(a)(3), 
110 and 505 of the Act, an employee benefit plan, some or all of the 
assets of which are held in a common or collective trust or a pooled 
separate account described in section 103(b)(3)(G) of the Act and 
Secs. 2520.103-3 and 2520.103-4, is relieved from including in its 
annual report information about the current value of the plan's 
allocable portion of assets and liabilities of the common or collective 
trust or pooled separate account and information concerning the 
individual transactions of the common or

[[Page 417]]

collective trust or pooled separate account, provided that the plan 
meets the requirements of paragraph (b) of this section, and, provided 
further, that the bank or insurance carrier which holds the plan's 
assets meets the requirements of paragraph (c) of this section.
    (b) Application. A plan whose assets are held in a common or 
collective trust or a pooled separate account described in section 
103(b)(3)(G) of the Act and Secs. 2520.103-3 and 2520.103-4, provided 
the plan administrator, on or before the end of the plan year, provides 
the bank or insurance carrier which maintains the common or collective 
trust or pooled separate account with the plan number, and name and 
Employer Identification Number of the plan sponsor as will be reported 
on the plan's annual report.
    (c) Separate filing by common or collective trusts and pooled 
separate accounts. The bank or insurance carrier which maintains the 
common or collective trust or pooled separate account in which assets of 
the plan are held shall file, in accordance with the instructions for 
the form, a completed Form 5500 ``Annual Return/Report of Employee 
Benefit Plan'' and any statements or schedules required to be attached 
to the form for the common or collective trust or pooled separate 
account, including Schedule D (DFE/Participating Plan Information) and 
Schedule H (Financial Information). See the instructions for this form. 
The information reported shall be for the fiscal year of such trust or 
account ending with or within the plan year for which the annual report 
of the plan is made.
    (d) Method of filing. The Form 5500 ``Annual Return/Report of 
Employee Benefit Plan'' may be filed electronically or through other 
media in accordance with the instructions accompanying the form, 
provided the bank or insurance company which maintains the common or 
collective trust or pooled separate account maintains an original copy, 
with all required signatures, as part of its records.

[65 FR 21082, Apr. 19, 2000]



Sec. 2520.103-10  Annual report financial schedules.

    (a) General. The administrator of a plan filing an annual report 
pursuant to Sec. 2520.103-1(a)(2) or the report for a group insurance 
arrangement pursuant to Sec. 2520.103-2 shall, as provided in the 
instructions to the Form 5500 ``Annual Return/Report of Employee Benefit 
Plan,'' include as part of the annual report the separate financial 
schedules described in paragraph (b) of this section.
    (b) Schedules. (1) Assets held for investment. (i) A schedule of all 
assets held for investment purposes at the end of the plan year (see 
Sec. 2520.103-11) with assets aggregated and identified by:
    (A) Identity of issue, borrower, lessor or similar party to the 
transaction (including a notation as to whether such party is known to 
be a party in interest);
    (B) Description of investment including maturity date, rate of 
interest, collateral, par, or maturity value;
    (C) Cost; and
    (D) Current value, and, in the case of a loan, the payment schedule.
    (ii) Except as provided in the Form 5500 and the instructions 
thereto, in the case of assets or investment interests of two or more 
plans maintained in one trust, all entries on the schedule of assets 
held for investment purposes that relate to the trust shall be completed 
by including the plan's allocable portion of the trust.
    (2) Assets acquired and disposed within the plan year. (i) A 
schedule of all assets acquired and disposed of within the plan year 
(see Sec. 2520.103-11) with assets aggregated and identified by:
    (A) Identity of issue, borrower, issuer or similar party;
    (B) Descriptions of investment including maturity date, rate of 
interest, collateral, par, or maturity value;
    (C) Cost of acquisitions; and
    (D) Proceeds of dispositions.
    (ii) Except as provided in the Form 5500 and the instructions 
thereto, in the case of assets or investment interests of two or more 
plans maintained in one trust, all entries on the schedule of assets 
held for investment purposes that relate to the trust shall be completed 
by including the plan's allocable portion of the trust.

[[Page 418]]

    (3) Party in interest transactions. A schedule of each transaction 
involving a person known to be a party in interest except do not 
include:
    (i) A transaction to which a statutory exemption under part 4 of 
title I applies;
    (ii) A transaction to which an administrative exemption under 
section 408(a) of the Act applies; or
    (iii) A transaction to which the exemptions of section 4975(c) or 
4975(d) of the Internal Revenue Code (Title 26 of the United States 
Code) applies.
    (4) Obligations in default. A schedule of all loans or fixed income 
obligations which were in default as of the end of the plan year or were 
classified during the year as uncollectible.
    (5) Leases in default. A schedule of all leases which were in 
default or were classified during the year as uncollectible.
    (6) Reportable transactions. A schedule of all reportable 
transactions as defined in Sec. 2520.103-6.
    (c) Format requirements for certain schedules. See the instructions 
to the Form 5500 ``Annual Return/Report of Employee Benefit Plan'' as to 
the format requirement for the schedules referred to in paragraphs 
(b)(1), (b)(2) or (b)(6) of this section.

[65 FR 21083, Apr. 19, 2000]



Sec. 2520.103-11  Assets held for investment purposes.

    (a) General. For purposes of preparing the schedule of assets held 
for investment purposes described in Sec. 2520.103-10(b)(1) and (2), 
assets held for investment purposes include those assets described in 
paragraph (b) of this section.
    (b) Definitions. (1) Assets held for investment purposes shall 
include:
    (i) Any investment asset held by the plan on the last day of the 
plan year; and
    (ii) Any investment asset which was purchased at any time during the 
plan year and was sold at any time before the last day of the plan year, 
except as provided by paragraphs (b)(2) and (b)(3) of this section.
    (2) Assets held for investment purposes shall not include any 
investment which was not held by the plan on the last day of the plan 
year for which the annual report is filed if that investment falls 
within any of the following categories:
    (i) Debt obligations of the United States or any agency of the 
United States;
    (ii) Interests issued by a company registered under the Investment 
Company Act of 1940;
    (iii) Bank certificates of deposit with a maturity of not more than 
one year;
    (iv) Commerical paper with a maturity of not more than nine months 
if it is ranked in the highest rating category by at least two 
nationally recognized statistical rating services and is issued by a 
company required to file reports with the Securities and Exchange 
Commission under section 13 of the Securities Exchange Act of 1934;
    (v) Participations in a bank common or collective trust;
    (vi) Participations in an insurance company pooled separate account;
    (vii) Securities purchased from a person registered as a broker-
dealer under the Securities Exchange Act of 1934 and listed on a 
national securities exchange registered under section 6 of the 
Securities Exchange Act of 1934 or quoted on NASDAQ;
    (3) Assets held for investment purposes shall not include any 
investment which was not held by the plan on the last day of the plan 
year for which the annual report is filed if that investment is reported 
on the annual report of that same plan in any of the following:
    (i) The schedule of each transaction involving a person known to be 
a party in interest required by section 103(b)(3)(D) of the Act and 
Sec. 2520.103-10(b)(3);
    (ii) The schedule of loans or fixed income obligations in default 
required by section 103(b)(3)(E) of the Act and Sec. 2520.103-10(b)(4);
    (iii) The schedule of leases in default or classified as 
uncollectible required by section 103(b)(3)(F) of the Act and 
Sec. 2520.103-10(b)(5); or
    (iv) The schedule of reportable transactions required by section 
103(b)(3)(H) of the Act and Sec. 2520.103-10(b)(6).
    (c) Examples. (1) On February 1, 1977, plan N purchases an interest 
in registered investment company F (fund F). Fund F is not a party in 
interest with respect to plan N. On November 1,

[[Page 419]]

1977, plan N sells this interest in fund F and purchases 1,000 shares of 
stock S, which the plan holds for the rest of the plan year. Plan N must 
include in its schedule of assets held for investment purposes the 1,000 
shares of stock S under paragraph (b)(1) of this section, but need not 
include the interest in fund F because of paragraph (b)(2)(ii) of this 
section.
    (2) On February 1, 1977, plan N purchases a parcel of real estate 
from Mr. M, who is not a party in interest with respect to plan N. On 
November 1, 1977, plan N sells the parcel of real estate for cash to Mr. 
X, who is not a party in interest with respect to plan N. Plan N uses 
the cash from this transaction to purchase a 1-year certificate of 
deposit in bank B, which it holds until maturity in 1978. Plan N must 
include in its schedule of assets held for investment purposes the 1-
year certificate of deposit in bank B under paragraph (b)(1)(i) of this 
section, and must also include the parcel of real estate under paragraph 
(b)(1)(ii) of this section.
    (d) Special rule for certain participant-directed transactions. Cost 
information may be omitted from the schedule of assets held for 
investment purposes for assets described in paragraphs (b)(1)(i) and 
(b)(1)(ii) of this section only with respect to participant or 
beneficiary directed transactions under an individual account plan. For 
purposes of this section only, a transaction will be considered directed 
by a participant or beneficiary if it has been authorized by such 
participant or beneficiary.

[43 FR 10140, Mar. 10, 1978, as amended at 65 FR 21083, Apr. 19, 2000]



Sec. 2520.103-12  Limited exemption and alternative method of compliance for annual reporting of investments in certain entities.

    (a) This section prescribes an exemption from and alternative method 
of compliance with the annual reporting requirements of part 1 of title 
I of ERISA for employee benefit plans whose assets are invested in 
certain entities described in paragraph (c). A plan utilizing this 
method of reporting shall include as part of its annual report the 
current value of its investment or units of participation in the entity 
in the manner prescribed by the Return/Report Form and the instructions 
thereto. The plan is not required to include in its annual report any 
information regarding the underlying assets or individual transactions 
of the entity, provided the information described in paragraph (b) 
regarding the entity is reported directly to the Department on behalf of 
the plan administrator on or before the filing due date for the entity 
in accordance with the instructions to the Form 5500 Annual Return/
Report. The information described in paragraph (b), however, shall be 
considered as part of the annual report for purposes of the requirements 
of section 104(a)(1) of the Act and Secs. 2520.104a-5 and 2520.104a-6.
    (b) The following information must be filed regarding the entity 
described in paragraph (c) of this section:
    (1) A Form 5500 ``Annual Return/Report of Employee Benefit Plan'' 
and any statements or schedules required to be attached to the form for 
such entity, completed in accordance with the instructions for the form, 
including Schedule A (Insurance Information), Schedule C (Service 
Provider Information), Schedule D (DFE/Participating Plan Information), 
Schedule G (Financial Transaction Schedules), Schedule H (Financial 
Information), and the schedules described in Sec. 2520.103-10(b)(1) and 
(b)(2). See the instructions for this form. The information reported 
shall be for the fiscal year of such entity ending with or within the 
plan year for which the annual report of the plan is made.
    (2) A report of an independent qualified public accountant regarding 
the financial statements and schedules described in paragraph (b)(1) of 
this section which meets the requirements of Sec. 2520.103-1(b)(5).
    (c) This method of reporting is available to any employee benefit 
plan which has invested in an entity the assets of which are deemed to 
include plan assets under Sec. 2510.3-101, provided the entity holds the 
assets of two or more plans which are not members of a ``related group'' 
of employee benefit plans as that term is defined in paragraph (e) of 
this section. The method of reporting is not available for investments 
in an insurance company pooled

[[Page 420]]

separate account or a common or collective trust maintained by a bank, 
trust company, or similar institution.
    (d) The examination and report of an independent qualified public 
accountant required by Sec. 2520.103-1 for a plan utilizing the method 
of reporting described in this section need not extend to any 
information concerning an entity which is reported directly to the 
Department under paragraph (b) of this section.
    (e) A ``related group'' of employee benefit plans consists of every 
group of two or more employee benefit plans--
    (1) Each of which receives 10 percent or more of its aggregate 
contributions from the same employer or from members of the same 
controlled group of corporations (as determined under section 1563(a) of 
the Internal Revenue Code, without regard to section 1563(a)(4) 
thereof); or
    (2) Each of which is either maintained by, or maintained pursuant to 
a collective bargaining agreement negotiated by, the same employee 
organization or affiliated employee organizations. For purposes of this 
paragraph, an ``affiliate'' of an employee organization means any person 
controlling, controlled by, or under common control with such 
organization, and includes any organization chartered by the same parent 
body, or governed by the same constitution and bylaws, or having the 
relation of parent and subordinate.
    (f) Method of filing. The Form 5500 ``Annual Return/Report of 
Employee Benefit Plan'' may be filed electronically or through other 
media in accordance with the instructions accompanying the form provided 
the entity described in paragraph (c) of this section maintains an 
original copy, with all required signatures, as part of its records.

[51 FR 41287, Nov. 13, 1986, as amended at 65 FR 21083, Apr. 19, 2000]



   Subpart D--Provisions Applicable to Both Reporting and Disclosure 
                              Requirements

(The information collection requirements contained in subpart D were 
approved by the Office of Management and Budget under control number 
1210-0016)



Sec. 2520.104-1  General.

    The administrator of an employee benefit plan covered by part 1 of 
title I of the Act must file reports and additional information with the 
Secretary of Labor, and disclose reports, statements, and documents to 
plan participants and to beneficiaries receiving benefits from the plan. 
The regulations contained in this subpart are applicable to both the 
reporting and disclosure requirements of part 1 of title I of the Act. 
Regulations concerning only a plan administrator's duty of reporting to 
the Secretary of Labor are set forth in subpart E of this part, and 
those applicable only to the duty of disclosure to participants and 
beneficiaries are set forth in subpart F of this part.

[41 FR 16962, Apr. 23, 1976]



Sec. 2520.104-2--2520.104-3  [Reserved]



Sec. 2520.104-4  Alternative method of compliance for certain successor pension plans.

    (a) General. Under the authority of section 110 of the Act, this 
section sets forth an alternative method of compliance for certain 
successor pension plans in which some participants and beneficiaries not 
only have their rights set out in the plan, but also retain eligibility 
for certain benefits under the terms of a former plan which has been 
merged into the successor. This section is applicable only to plan 
mergers which occur after the issuance by the successor plan of the 
initial summary plan description under the Act. Under the alternative 
method, the plan administrator of the successor plan is not required to 
describe relevant provisions of merged plans in summary plan 
descriptions of the successor plan furnished after the merger to that 
class of participants and beneficiaries still affected by the terms of 
the merged plans.
    (b) Scope and application. This alternative method of compliance is 
available only if:
    (1) The plan administrator of the successor plan furnishes to the 
participants covered under the predecessor plan and beneficiaries 
receiving pension benefits under the merged plan within 90 days after 
the effective date of the merger:

[[Page 421]]

    (i) A copy of the most recent summary plan description of the 
successor plan;
    (ii) A copy of any summaries of material modifications to the 
successor plan not incorporated in the most recent summary plan 
description; and
    (iii) A separate statement containing a brief description of the 
merger, a description of the provisions of, and benefits provided by, 
the merged and successor plans which are applicable to the participants 
and beneficiaries of the merged plan; and a notice that copies of the 
merged and successor plan documents, as well as the plan merger 
documents (including the portions of any corporate merger documents 
which describe or control the plan merger), are available for inspection 
and that copies may be obtained upon written request for a duplication 
charge (pursuant to Sec. 2520.104b-30); and
    (2) After the merger, the plan administrator, in all subsequent 
summary plan descriptions furnished pursuant to Sec. 2520.104b-2(a)--
    (i) Clearly and conspicuously identifies the class of participants 
and beneficiaries affected by the provisions of the merged plan, and
    (ii) States that the documents described in paragraph (b)(1) of this 
section are available for inspection and that copies may be obtained 
upon written request for a duplication charge (pursuant to 
Sec. 2520.104b-30).

[42 FR 37182, July 19, 1977, as amended at 67 FR 776, Jan. 7, 2002]



Sec. 2520.104-5--2520.104-6  [Reserved]



Sec. 2520.104-20  Limited exemption for certain small welfare plans.

    (a) Scope. Under the authority of section 104(a)(3) of the Act, the 
administrator of any employee welfare benefit plan which covers fewer 
than 100 participants at the beginning of the plan year and which meets 
the requirements of paragraph (b) of this section is exempted from 
certain reporting and disclosure provisions of the Act. Specifically, 
the administrator of such plan is not required to file with the 
Secretary an annual or terminal report. In addition, the administrator 
of a plan exempted under this section--
    (1) Is not required to furnish participants covered under the plan 
and beneficiaries receiving benefits under the plan with statements of 
the plan's assets and liabilities and receipts and disbursements and a 
summary of the annual report required by section 104(b)(3) of the Act;
    (2) Is not required to furnish upon written request of any 
participant or beneficiary a copy of the annual report and any terminal 
report, as required by section 104(b)(4) of the Act;
    (3) Is not required to make copies of the annual report available 
for examination by any participant or beneficiary in the principal 
office of the administrator and such other places as may be necessary, 
as required by section 104(b)(2) of the Act.
    (b) Application. This exemption applies only to welfare benefit 
plans--
    (1) Which have fewer than 100 participants at the beginning of the 
plan year;
    (2)(i) For which benefits are paid as needed solely from the general 
assets of the employer or employee organization maintaining the plan, or
    (ii) The benefits of which are provided exclusively through 
insurance contracts or policies issued by an insurance company or 
similar organization which is qualified to do business in any State or 
through a qualified health maintenance organization as defined in 
section 1310(d) of the Public Health Service Act, as amended, 42 U.S.C. 
300e-9(d), the premiums for which are paid directly by the employer or 
employee organization from its general assets or partly from its general 
assets and partly from contributions by its employees or members, 
Provided, That contributions by participants are forwarded by the 
employer or employee organization within three months of receipt, or
    (iii) Both; and
    (3) For which, in the case of an insured plan--
    (i) Refunds, to which contributing participants are entitled, are 
returned to them within three months of receipt by the employer or 
employee organization, and
    (ii) Contributing participants are informed upon entry into the plan 
of the provisions of the plan concerning the allocation of refunds.

[[Page 422]]

    (c) Limitations. This exemption does not exempt the administrator of 
an employee benefit plan from any other requirement of title I of the 
Act, including the provisions which require that plan administrators 
furnish copies of the summary plan description to participants and 
beneficiaries (section 104(b)(1)) and furnish certain documents to the 
Secretary of Labor upon request (section 104(a)(6)), and which authorize 
the Secretary of Labor to collect information and data from employee 
benefit plans for research and analysis (section 513).
    (d) Examples. (1) A welfare plan has 75 participants at the 
beginning of the plan year and 105 participants at the end of the plan 
year. Plan benefits are fully insured and premiums are paid directly to 
the insurance company by the employer pursuant to an insurance contract 
purchased with premium payments derived half from the general assets of 
the employer and half from employee contributions (which the employer 
forwards within three months of receipt). Refunds to the plan are paid 
to participating employees within three months of receipt as provided in 
the plan and as described to each participant upon entering the plan. 
The plan appoints the employer as its plan administrator. The employer, 
as plan administrator, provides summary plan descriptions to 
participants and beneficiaries. He also makes copies of certain plan 
documents available at the plan's principal office and such other places 
as necessary to give participants reasonable access to them. The 
exemption provided by Sec. 2520.104-20 applies even though the plan has 
more than 100 participants by the end of the plan year, because it had 
fewer than 100 participants at the beginning of the plan year and 
otherwise satisfied the conditions of the exemption.
    (2) A welfare plan is established and maintained in the same way as 
the plan described in example (1), except that a trade association which 
sponsors the plan is the holder of the insurance contract. Since the 
plan still sends the premium payments directly to the insurance company, 
the exemption applies, as in example (1).

[43 FR 10148, Mar. 10, 1978, as amended at 46 FR 5884, Jan. 21, 1981; 67 
FR 776, Jan. 7, 2002]



Sec. 2520.104-21  Limited exemption for certain group insurance arrangements.

    (a) Scope. Under the authority of section 104(a)(3) of the Act, the 
administrator of any employee welfare benefit plan which covers fewer 
than 100 participants at the beginning of the plan year and which meets 
the requirements of paragraph (b) of this section is exempted from 
certain reporting and disclosure provisions of the Act. Specifically, 
the administrator of such plan is not required to file with the 
Secretary a terminal report or furnish upon written request of any 
participant or beneficiary a copy of any terminal report as required by 
section 104(b)(4) of the Act.
    (b) Application. This exemption applies only to welfare plans, each 
of which has fewer than 100 participants at the beginning of the plan 
year and which are part of a group insurance arrangement if such 
arrangement:
    (1) Provides benefits to the employees of two or more unaffiliated 
employers, but not in connection with a multiemployer plan as defined in 
section 3(37) of the Act and any regulations prescribed under the Act 
concerning section 3(37);
    (2) Fully insures one or more welfare plans of each participating 
employer through insurance contracts purchased solely by the employers 
or purchased partly by the employers and partly by their participating 
employees, with all benefit payments made by the insurance company: 
Provided, That--
    (i) Contributions by participating employees are forwarded by the 
employers within three months of receipt,
    (ii) Refunds, to which contributing participants are entitled, are 
returned to them within three months of receipt, and
    (iii) Contributing participants are informed upon entry into the 
plan of the provisions of the plan concerning the allocation of refunds; 
and
    (3) Uses a trust (or other entity such as a trade association) as 
the holder of the insurance contracts and uses a trust as the conduit 
for payment of premiums to the insurance company.
    (c) Limitations. This exemption does not exempt the administrator of 
an employee benefit plan from any other

[[Page 423]]

requirement of title I of the Act, including the provisions which 
require that plan administrators furnish copies of the summary plan 
description to participants and beneficiaries (section 104(b)(1)), file 
an annual report with the Secretary of Labor (section 104(a)(1)) and 
furnish certain documents to the Secretary of Labor upon request 
(section 104(a)(6)), and authorize the Secretary of Labor to collect 
information and data from employee benefit plans for research and 
analysis (section 513).
    (d) Examples. (1) A welfare plan has 25 participants at the 
beginning of the plan year. It is part of a group insurance arrangement 
of a trade association which provides benefits to employees of two or 
more unaffiliated employers, but not in connection with a multiemployer 
plan as defined in the Act. Plan benefits are fully insured pursuant to 
insurance contracts purchased with premium payments derived half from 
employee contributions (which the employer forwards within three months 
of receipt) and half from the general assets of each participating 
employer. Refunds to the plan are paid to participating employees within 
three months of receipt as provided in the plan and as described to each 
participant upon entering the plan. The trade association holds the 
insurance contracts. A trust acts as a conduit for payments, receiving 
premium payments from participating employers and paying the insurance 
company. The plan appoints the trade association as its plan 
administrator. The association, as plan administrator, provides summary 
plan descriptions to participants and beneficiaries, enlisting the help 
of participating employers in carrying out this distribution. The plan 
administrator also makes copies of certain plan documents available to 
the plan's principal office and such other places as necessary to give 
participants reasonable access to them. The plan administrator files 
with the Secretary an annual report covering activities of the plan, as 
required by the Act and such regulations as the Secretary may issue. The 
exemption provided by this section applies because the conditions of 
paragraph (b) have been satisfied.
    (2) Assume the same facts as paragraph (d)(1) of this section except 
that the premium payments for the insurance company are paid from the 
trust to an independent insurance brokerage firm acting as the agent of 
the insurance company. The trade association is the holder of the 
insurance contract. The plan appoints an officer of the participating 
employer as the plan administrator. The officer, as plan administrator, 
performs the same reporting and disclosure functions as the 
administrator in paragraph (d)(1) of this section, enlisting the help of 
the association in providing summary plan descriptions and necessary 
information. The exemption provided by this section applies.
    (3) The facts are the same as paragraph (d)(1) of this section 
except the welfare plan has 125 participants at the beginning of the 
plan year. The exemption provided by this section does not apply because 
the plan had 100 or more participants at the beginning of the plan year. 
See, however, Sec. 2520.104-43.
    (4) The facts are the same as paragraph (d)(2) of this section 
except the welfare plan has 125 participants. The exemption provided by 
this section does not apply because the plan had 100 or more 
participants at the beginning of the plan year. See, however, 
Sec. 2520.104-43.
    (e) Applicability date. For purposes of paragraph (b)(3) of this 
section, the arrangement may continue to use an entity (such as a trade 
association) as the conduit for the payment of insurance premiums to the 
insurance company for reporting years of the arrangement beginning 
before January 1, 2001.

[43 FR 10149, Mar. 10, 1978, as amended at 65 FR 21084, Apr. 19, 2000; 
67 FR 776, Jan. 7, 2002]



Sec. 2520.104-22  Exemption from reporting and disclosure requirements for apprenticeship and training plans.

    (a) An employee welfare benefit plan that provides exclusively 
apprenticeship training benefits or other training benefits or that 
provides exclusively apprenticeship and training benefits shall not be 
required to meet any requirement of part 1 of the Act, provided that the 
administrator of such plan:
    (1) Has filed with the Secretary the notice described in paragraph 
(b) of this section;

[[Page 424]]

    (2) Takes steps reasonably designed to ensure that the information 
required to be contained in such notice is disclosed to employees of 
employers contributing to the plan who may be eligible to enroll in any 
course of study sponsored or established by the plan; and
    (3) Makes such notice available to such employees upon request.
    (b) The notice referred to in paragraph (a) of this section shall 
contain accurate information concerning:
    (1) The name of the plan;
    (2) The Employer Identification Number (EIN) of the plan sponsor;
    (3) The name of the plan administrator;
    (4) The name and location of an office or person from whom an 
interested individual can obtain:
    (i) A description of any existing or anticipated future course of 
study sponsored or established by the plan, including any prerequisites 
for enrolling in such course; and
    (ii) A description of the procedure by which to enroll in such 
course.
    (c) Filing address. The notice referred to in paragraph (a) of this 
section shall be filed with the Secretary of Labor by mailing it to: 
Apprenticeship and Training Plan Exemption, Employee Benefits Security 
Administration, Room N-1513, U.S. Department of Labor, 200 Constitution 
Avenue NW., Washington, DC 20210, or by delivering it during normal 
working hours to the Employee Benefits Security Administration, Room N-
1513, U.S. Department of Labor, 200 Constitution Avenue NW., Washington, 
DC.

[45 FR 15529, Mar. 11, 1980, as amended at 45 FR 27933, Apr. 25, 1980; 
54 FR 8629, Mar. 1, 1989; 68 FR 16400, Apr. 3, 2003]



Sec. 2520.104-23  Alternative method of compliance for pension plans for certain selected employees.

    (a) Purpose and scope. (1) This section contains an alternative 
method of compliance with the reporting and disclosure requirements of 
part 1 of title I of the Employee Retirement Income Security Act of 1974 
for unfunded or insured pension plans maintained by an employer for a 
select group of management or highly compensated employees, pursuant to 
the authority of the Secretary of Labor under section 110 of the Act (88 
Stat. 851).
    (2) Under section 110 of the Act, the Secretary is authorized to 
prescribe an alternative method for satisfying any requirement of part 1 
of title I of the Act with respect to any pension plans, or class of 
pension plans, subject to such requirement.
    (b) Filing obligation. Under the authority of section 110 of the 
Act, an alternative form of compliance with the reporting and disclosure 
requirements of part 1 of the Act is provided for certain pension plans 
for a select group of management or highly compensated employees. The 
administrator of a pension plan described in paragraph (d) shall be 
deemed to satisfy the reporting and disclosure provisions of part 1 of 
title I of the Act by--
    (1) Filing a statement with the Secretary of Labor that includes the 
name and address of the employer, the employer identification number 
(EIN) assigned by the Internal Revenue Service, a declaration that the 
employer maintains a plan or plans primarily for the purpose of 
providing deferred compensation for a select group of management or 
highly compensated employees, and a statement of the number of such 
plans and the number of employees in each, and
    (2) Providing plan documents, if any, to the Secretary upon request 
as required by section 104(a)(6) of the Act. Only one statement need be 
filed for each employer maintaining one or more of the plans described 
in paragraph (d) of this section. For plans in existence on May 4, 1975, 
the statement shall be filed on or before August 31, 1975. For a plan to 
which part 1 of title I of the Act becomes applicable after May 4, 1975, 
the statement shall be filed within 120 days after the plan becomes 
subject to part 1.
    (c) Filing address. Statements may be filed with the Secretary of 
Labor by mailing them addressed to: Top Hat Plan Exemption, Employee 
Benefits Security Administration, Room N-1513, U.S. Department of Labor, 
200 Constitution Avenue NW., Washington, DC 20210, or by delivering it 
during normal working hours to the Employee Benefits Security 
Administration, Room N-1513, U.S. Department of Labor, 200

[[Page 425]]

Constitution Avenue NW., Washington, DC.
    (d) Application. The alternative form of compliance described in 
paragraph (b) of this section is available only to employee pension 
benefit plans--
    (1) Which are maintained by an employer primarily for the purpose of 
providing deferred compensation for a select group of management or 
highly compensated employees, and
    (2) For which benefits (i) are paid as needed solely from the 
general assets of the employer, (ii) are provided exclusively through 
insurance contracts or policies, the premiums for which are paid 
directly by the employer from its general assets, issued by an insurance 
company or similar organization which is qualified to do business in any 
State, or (iii) both.

[40 FR 34533, Aug. 15, 1975, as amended at 54 FR 8629, Mar. 1, 1989; 67 
FR 776, Jan. 7, 2002; 68 FR 16400, Apr. 3, 2003]



Sec. 2520.104-24  Exemption for welfare plans for certain selected employees.

    (a) Purpose and scope. (1) This section, under the authority of 
section 104(a)(3) of the Employee Retirement Income Security Act of 
1974, exempts unfunded or insured welfare plans maintained by an 
employer for the purpose of providing benefits for a select group of 
management or highly compensated employees from the reporting and 
disclosure provisions of part 1 of title I of the Act, except for the 
requirement to provide plan documents to the Secretary of Labor upon 
request under section 104(a)(1) of the Act.
    (2) Under section 104(a)(3) of the Act, the Secretary is authorized 
to exempt by regulation any welfare benefit plan from all or part of the 
reporting and disclosure requirements of title I of the Act.
    (b) Exemption. Under the authority of section 104(a)(3) of the Act, 
each employee welfare benefit plan described in paragraph (c) of this 
section is exempted from the reporting and disclosure provisions of part 
1 of title I of the Act, except for providing plan documents to the 
Secretary of Labor upon request as required by section 104(a)(6).
    (c) Application. This exemption is available only to employee 
welfare benefit plans:
    (1) Which are maintained by an employer primarily for the purpose of 
providing benefits for a select group of management or highly 
compensated employees, and
    (2) For which benefits (i) are paid as needed solely from the 
general assets of the employer, (ii) are provided exclusively through 
insurance contracts or policies, the premiums for which are paid 
directly by the employer from its general assets, issued by an insurance 
company or similar organization which is qualified to do business in any 
State, or (iii) both.

[40 FR 34533, Aug. 15, 1975, as amended at 67 FR 776, Jan. 7, 2002]



Sec. 2520.104-25  Exemption from reporting and disclosure for day care centers.

    Under the authority of section 104(a)(3) of the Act, day care 
centers are exempted from the reporting and disclosure provisions of 
part 1 of title I of the Act, except for providing plan documents to the 
Secretary upon request as required under section 104(a)(6) of the Act.

[40 FR 34533, Aug. 15, 1975, as amended at 67 FR 776, Jan. 7, 2002]



Sec. 2520.104-26  Limited exemption for certain unfunded dues financed welfare plans maintained by employee organizations.

    (a) Scope. Under the authority of section 104(a)(3) of the Act, a 
welfare benefit plan that meets the requirements of paragraph (b) of 
this section is exempted from the provisions of the Act that require 
filing with the Secretary an annual report and furnishing a summary 
annual report to participants and beneficiaries. Such plans may use a 
simplified method of reporting and disclosure to comply with the 
requirement to furnish a summary plan description to participants and 
beneficiaries, as follows:
    (1) In lieu of filing an annual report with the Secretary or 
distributing a summary annual report, a filing is made of Report Form 
LM-2 or LM-3, pursuant to the Labor-Management Reporting and Disclosure 
Act

[[Page 426]]

(LMRDA) and regulations thereunder, and
    (2) In lieu of a summary plan description, the employee organization 
constitution or by-laws may be furnished in accordance with 
Sec. 2520.104b-2 to participants and beneficiaries together with any 
supplement to such document necessary to meet the requirements of 
Secs. 2520.102-2 and 2520.102-3.
    (b) Application. This exemption is available only to welfare benefit 
plans maintained by an employee organization, as that term is defined in 
section 3(4) of the Act, paid for out of the employee organization's 
general assets, which are derived wholly or partly from membership dues, 
and which cover employee organization members and their beneficiaries.
    (c) Limitations. This exemption does not exempt the administrator 
from any other requirement of part 1 of title I of the Act.

[42 FR 37184, July 19, 1977, as amended at 67 FR 776, Jan. 7, 2002]



Sec. 2520.104-27  Alternative method of compliance for certain unfunded dues financed pension plans maintained by employee organizations.

    (a) Scope. Under the authority of section 110 of the Act, a pension 
benefit plan that meets the requirements of paragraph (b) of this 
section is exempted from the provisions of the Act that require filing 
with the Secretary an annual report and furnishing a summary annual 
report to participants and beneficiaries receiving benefits. Such plans 
may use a simplified method of reporting and disclosure to comply with 
the requirement to furnish a summary plan description to participants 
and beneficiaries receiving benefits, as follows:
    (1) In lieu of filing an annual report with the Secretary or 
distributing a summary annual report, a filing is made of Report Form 
LM-2 or LM-3, pursuant to the Labor-Management Reporting and Disclosure 
Act (LMRDA) and regulations thereunder, and
    (2) In lieu of a summary plan description, the employee organization 
constitution or bylaws may be furnished in accordance with 
Sec. 2520.104b-2 to participants and beneficiaries together with any 
supplement to such document necessary to meet the requirements of 
Secs. 2520.102-2 and 2520.102-3.
    (b) Application. This exemption is available only to pension benefit 
plans maintained by an employee organization, as that term is defined in 
section 3(4) of the Act, paid for out of the employee organization's 
general assets, which are derived wholly or partly from membership dues, 
and which cover employee organization members and their beneficiaries.
    (c) Limitations. This exemption does not exempt the administrator 
from any other requirement of part 1 of title I of the Act.

[42 FR 37184, July 19, 1977, as amended at 67 FR 777, Jan. 7, 2002]



Sec. 2520.104-28  [Reserved]



Sec. 2520.104-41  Simplified annual reporting requirements for plans with fewer than 100 participants.

    (a) General. (1) Under the authority of section 104(a)(2)(A), the 
Secretary of Labor may prescribe simplified annual reporting for 
employee pension benefit plans with fewer than 100 participants.
    (2) Under the authority of section 104(a)(3), the Secretary of Labor 
may provide a limited exemption for any employee welfare benefit plan 
with respect to certain annual reporting requirements.
    (b) Application. The administrator of an employee pension or welfare 
benefit plan which covers fewer than 100 participants at the beginning 
of the plan year and the administrator of an employee pension or welfare 
benefit plan described in Sec. 2520.103-1(d) may file the simplified 
annual report described in paragraph (c) of this section in lieu of the 
annual report described in Sec. 2520.103-1(b).
    (c) Contents. The administrator of an employee pension or welfare 
benefit plan described in paragraph (b) of this section shall file, in 
the manner prescribed in Sec. 2520.104a-5, a completed Form 5500 
``Annual Return/Report of Employee Benefit Plan,'' including any 
required schedules or statements prescribed by the instructions to the 
form, and, unless waived by Sec. 2520.104-46, a report of an independent 
qualified public

[[Page 427]]

accountant meeting the requirements of Sec. 2520.103-1(b).

[43 FR 10150, Mar. 10, 1978, as amended at 45 FR 51446, Aug. 1, 1980; 54 
FR 8629, Mar. 1, 1989; 65 FR 21084, Apr. 19, 2000; 65 FR 62973, Oct. 19, 
2000]



Sec. 2520.104-42  Waiver of certain actuarial information in the annual report.

    Under the authority of section 104(a)(2)(A) of ERISA, the 
requirement of section 103(d)(6) of ERISA that the annual report include 
as part of the actuarial statement (Schedule B) \1\ the present value of 
all of the plan's liabilities for nonforfeitable pension benefits 
allocated by termination priority categories, as set forth in section 
4044 of title IV of ERISA, and the actuarial assumptions used in these 
computations, is waived.
---------------------------------------------------------------------------

    \1\ Schedule B was filed as part of the original document.

[44 FR 5446, Jan. 26, 1979]



Sec. 2520.104-43  Exemption from annual reporting requirement for certain group insurance arrangements.

    (a) General. Under the authority of section 104(a)(3) of the Act, 
the administrator of an employee welfare benefit plan which meets the 
requirements of paragraph (b) of this section is not required to file an 
annual report with the Secretary of Labor as required by section 
104(a)(1) of the Act.
    (b) Application. (1) This exemption applies only to a welfare plan 
for a plan year in which (i) such plan meets the requirements of 
Sec. 2520.104-21, except the requirement that the plan cover fewer than 
100 participants at the beginning of the plan year, and
    (ii) An annual report containing the items set forth in 
Sec. 2520.103-2 has been filed with the Secretary of Labor in accordance 
with Sec. 2520.104a-6 by the trust or other entity which is the holder 
of the group insurance contracts by which plan benefits are provided.
    (2) For purposes of this section, the terms ``group insurance 
arrangement'' or ``trust or other entity'' shall be used in place of the 
terms ``plan'' and ``plan administrator,'' as applicable, in 
Secs. 2520.103-3, 2520.103-4, 2520.103-6, 2520.103-8, 2520.103-9 and 
2520.103-10.
    (c) Limitation. This provision does not exempt the administrator of 
an employee benefit plan which meets the requirements of paragraph (b) 
from furnishing a copy of a summary annual report to participants and 
beneficiaries of the plan, as required by section 104(b)(3) of the Act.

[43 FR 10150, Mar. 10, 1978, as amended at 65 FR 21084, Apr. 19, 2000; 
67 FR 777, Jan. 7, 2002]



Sec. 2520.104-44  Limited exemption and alternative method of compliance for annual reporting by unfunded plans and by certain insured plans.

    (a) General. (1) Under the authority of section 104(a)(3) of the 
Act, the Secretary of Labor may exempt an employee welfare benefit plan 
from any or all of the reporting and disclosure requirements of title I. 
An employee welfare benefit plan which meets the requirements of 
paragraph (b)(1) of this section is not required to comply with the 
annual reporting requirements described in paragraph (c) of this 
section.
    (2) Under the authority of section 110 of the Act, an alternative 
method of compliance is prescribed for certain employee pension benefit 
plans subject to part 1, title I of the Act. An employee pension benefit 
plan which meets the requirements of paragraph (b)(2) or (b)(3) of this 
section is not required to comply with the annual reporting requirements 
described in paragraph (c) of this section.
    (b) Application. This section applies only to:
    (1) An employee welfare benefit plan under the terms of which 
benefits are to be paid--
    (i) Solely from the general assets of the employer or employee 
organization maintaining the plan;
    (ii) The benefits of which are provided exclusively through 
insurance contracts or policies issued by an insurance company or 
similar organization which is qualified to do business in any State or 
through a qualified health maintenance organization as defined in 
section 1310(d) of the Public Health Service Act, as amended, 42 U.S.C. 
300e-9(d), the premiums for which are paid directly by the employer or 
employee organization from its general assets or partly from its general 
assets and partly from contributions by its

[[Page 428]]

employees or members, provided that any plan assets held by such an 
insurance company are held solely in the general account of such company 
or organization, contributions by participants are forwarded by the 
employer or employee organization within three months of receipt and, in 
the case of a plan that provides for the return of refunds to 
contributing participants, such refunds are returned to them within 
three months of receipt by the employer or employee organization, or
    (iii) Partly in the manner specified in paragraph (b)(1)(i) of this 
section and partly in the manner specified in paragraph (b)(1)(ii) of 
this section;
    (2) A pension benefit plan the benefits of which are provided 
exclusively through allocated insurance contracts or policies which are 
issued by, and pursuant to the specific terms of such contracts or 
policies benefit payments are fully guaranteed by an insurance company 
or similar organization which is qualified to do business in any State, 
and the premiums for which are paid directly by the employer or employee 
organization from its general assets or partly from its general assets 
and partly from contributions by its employees or members: Provided, 
That contributions by participants are forwarded by the employer or 
employee organization to the insurance company or organization within 
three months of receipt and, in the case of a plan that provides for the 
return of refunds to contributing participants, such refunds are 
returned to them within three months of receipt by the employer or 
employee organization; and
    (3) A pension plan using a tax deferred annuity arrangement under 
section 403(b)(1) of the Internal Revenue Code (Title 26 of the United 
States Code) and/or a custodial account for regulated investment company 
stock under Code section 403(b)(7) as the sole funding vehicle for 
providing pension benefits.
    (c) Contents. An employee benefit plan described in paragraph (b) of 
this section is exempt from complying with the following annual 
reporting requirements:
    (1) Completing certain items of the annual report relating to 
financial information and transactions entered into by the plan as 
described in the instructions to the Form 5500 ``Annual Return/Report of 
Employee Benefit Plan'' and accompanying schedules;
    (2) Engaging an independent qualified public accountant pursuant to 
section 103(a)(3)(A) of the Act and Sec. 2520.103-1(b) to conduct an 
examination of the financial statements and schedules of the plan; and
    (3) Including in the annual report a report of an independent 
qualified public accountant concerning the financial statements and 
schedules required to be a part of the annual report pursuant to section 
103(b) of the Act and Sec. 2520.103-1(b).
    (d) Limitation. This section does not exempt any plan from filing an 
annual report form with the Secretary in accordance with section 
104(a)(1) of the Act and Sec. 2520.104a-5.
    (e) Example. A welfare plan which is funded entirely with insurance 
contracts and which meets all the requirements of exemption under 
Sec. 2520.104-20 except that it covers 100 or more participants at the 
beginning of the plan year is not exempt from the annual reporting 
requirements under Sec. 2520.104-20, but is exempt from certain 
reporting requirements under Sec. 2520.104-44. Under the latter section, 
such a welfare plan should file Form 5500, including Schedule A 
``Insurance Information.'' However, the plan is not required to engage 
an independent qualified public accountant and need not complete certain 
items on form 5500.

[43 FR 10150, Mar. 10, 1978, as amended at 45 FR 51446, Aug. 1, 1980; 46 
FR 5884, Jan. 21, 1981; 65 FR 21085, Apr. 19, 2000; 67 FR 777, Jan. 7, 
2002]



Sec. 2520.104-45  [Reserved]



Sec. 2520.104-46  Waiver of examination and report of an independent qualified public accountant for employee benefit plans with fewer than 100 participants.

    (a) General. (1) Under the authority of section 103(a)(3)(A) of the 
Act, the Secretary may waive the requirements of section 103(a)(3)(A) in 
the case of a plan for which simplified annual reporting has been 
prescribed in accordance with section 104(a)(2) of the Act.
    (2) Under the authority of section 104(a)(3) of the Act the 
Secretary may

[[Page 429]]

exempt any employee welfare benefit plan from certain annual reporting 
requirements.
    (b) Application. (1)(i) The administrator of an employee pension 
benefit plan for which simplified annual reporting has been prescribed 
in accordance with section 104(a)(2)(A) of the Act and Sec. 2520.104-41 
is not required to comply with the annual reporting requirements 
described in paragraph (c) of this section, provided that with respect 
to each plan year for which the waiver is claimed--
    (A)(1) At least 95 percent of the assets of the plan constitute 
qualifying plan assets within the meaning of paragraph (b)(1)(ii) of 
this section, or
    (2) Any person who handles assets of the plan that do not constitute 
qualifying plan assets is bonded in accordance with the requirements of 
section 412 of the Act and the regulations issued thereunder, except 
that the amount of the bond shall not be less than the value of such 
assets;
    (B) The summary annual report, described in Sec. 2520.104b-10, 
includes, in addition to any other required information:
    (1) Except for qualifying plan assets described in paragraph 
(b)(1)(ii)(A), (B) and (F) of this section, the name of each regulated 
financial institution holding (or issuing) qualifying plan assets and 
the amount of such assets reported by the institution as of the end of 
the plan year;
    (2) The name of the surety company issuing the bond, if the plan has 
more than 5% of its assets in non-qualifying plan assets;
    (3) A notice indicating that participants and beneficiaries may, 
upon request and without charge, examine, or receive copies of, evidence 
of the required bond and statements received from the regulated 
financial institutions describing the qualifying plan assets; and
    (4) A notice stating that participants and beneficiaries should 
contact the Regional Office of the U.S. Department of Labor's Employee 
Benefits Security Administration if they are unable to examine or obtain 
copies of the regulated financial institution statements or evidence of 
the required bond, if applicable; and
    (C) in response to a request from any participant or beneficiary, 
the administrator, without charge to the participant or beneficiary, 
makes available for examination, or upon request furnishes copies of, 
each regulated financial institution statement and evidence of any bond 
required by paragraph (b)(1)(i)(A)(2).
    (ii) For purposes of paragraph (b)(1), the term ``qualifying plan 
assets'' means:
    (A) Qualifying employer securities, as defined in section 407(d)(5) 
of the Act and the regulations issued thereunder;
    (B) Any loan meeting the requirements of section 408(b)(1) of the 
Act and the regulations issued thereunder;
    (C) Any assets held by any of the following institutions:
    (1) A bank or similar financial institution as defined in 
Sec. 2550.408b-4(c);
    (2) An insurance company qualified to do business under the laws of 
a state;
    (3) An organization registered as a broker-dealer under the 
Securities Exchange Act of 1934; or
    (4) Any other organization authorized to act as a trustee for 
individual retirement accounts under section 408 of the Internal Revenue 
Code.
    (D) Shares issued by an investment company registered under the 
Investment Company Act of 1940;
    (E) Investment and annuity contracts issued by any insurance company 
qualified to do business under the laws of a state; and,
    (F) In the case of an individual account plan, any assets in the 
individual account of a participant or beneficiary over which the 
participant or beneficiary has the opportunity to exercise control and 
with respect to which the participant or beneficiary is furnished, at 
least annually, a statement from a regulated financial institution 
referred to in paragraphs (b)(1)(ii)(C), (D) or (E) of this section 
describing the assets held (or issued) by such institution and the 
amount of such assets.
    (iii)(A) For purposes of this paragraph (b)(1), the determination of 
the percentage of all plan assets consisting of qualifying plan assets 
with respect to a given plan year shall be made in the same manner as 
the amount of the

[[Page 430]]

bond is determined pursuant to Secs. 2580.412-11, 2580.412-14, and 
2580.412-15.
    (B) Examples. Plan A, which reports on a calendar year basis, has 
total assets of $600,000 as of the end of the 1999 plan year. Plan A's 
assets, as of the end of year, include: investments in various bank, 
insurance company and mutual fund products of $520,000; investments in 
qualifying employer securities of $40,000; participant loans, meeting 
the requirements of ERISA section 408(b)(1), totaling $20,000; and a 
$20,000 investment in a real estate limited partnership. Because the 
only asset of the plan that does not constitute a ``qualifying plan 
asset'' is the $20,000 real estate investment and that investment 
represents less than 5% of the plan's total assets, no bond would be 
required under the proposal as a condition for the waiver for the 2000 
plan year. By contrast, Plan B also has total assets of $600,000 as of 
the end of the 1999 plan year, of which $558,000 constitutes 
``qualifying plan assets'' and $42,000 constitutes non-qualifying plan 
assets. Because 7%--more than 5%--of Plan B's assets do not constitute 
``qualifying plan assets,'' Plan B, as a condition to electing the 
waiver for the 2000 plan year, must ensure that it has a fidelity bond 
in an amount equal to at least $42,000 covering persons handling non-
qualifying plan assets. Inasmuch as compliance with section 412 requires 
the amount of bonds to be not less than 10% of the amount of all the 
plan's funds or other property handled, the bond acquired for section 
412 purposes may be adequate to cover the non-qualifying plan assets 
without an increase (i.e., if the amount of the bond determined to be 
needed for the relevant persons for section 412 purposes is at least 
$42,000). As demonstrated by the foregoing example, where a plan has 
more than 5% of its assets in non-qualifying plan assets, the bond 
required by the proposal is for the total amount of the non-qualifying 
plan assets, not just the amount in excess of 5%.
    (2) The administrator of an employee welfare benefit plan that 
covers fewer than 100 participants at the beginning of the plan year is 
not required to comply with annual reporting requirements described in 
paragraph (c) of this section.
    (c) Waiver. The administrator of a plan described in paragraph 
(b)(1) or (2) of this section is not required to:
    (1) Engage an independent qualified public accountant to conduct an 
examination of the financial statements of the plan;
    (2) Include within the annual report the financial statements and 
schedules prescribed in section 103(b) of the Act and Secs. 2520.103-1, 
2520.103-2, and 2520.103-10; and
    (3) Include within the annual report a report of an independent 
qualified public accountant as prescribed in section 103(a)(3)(A) of the 
Act and Sec. 2520.103-1.
    (d) Limitations. (1) The waiver described in this section does not 
affect the obligation of a plan described in paragraph (b) (1) or (2) of 
this section to file a Form 5500 ``Annual Return/Report of Employee 
Benefit Plan,'' including any required schedules or statements 
prescribed by the instructions to the form. See Sec. 2520.104-41.
    (2) For purposes of this section, an employee pension benefit plan 
for which simplified annual reporting has been prescribed includes an 
employee pension benefit plan which elects to file a Form 5500 as a 
small plan pursuant to Sec. 2520.103-1(d) with respect to the plan year 
for which the waiver is claimed. See Sec. 2520.104-41.
    (3) For purposes of this section, an employee welfare benefit plan 
that covers fewer than 100 participants at the beginning of the plan 
year includes an employee welfare benefit plan which elects to file a 
Form 5500 as a small plan pursuant to Sec. 2520.103-1(d) with respect to 
the plan year for which the waiver is claimed. See Sec. 2520.104-41.
    (4) A plan that elects to file a Form 5500 as a large plan pursuant 
to Sec. 2520.103-1(d) may not claim a waiver under this section.

[43 FR 10151, Mar. 10, 1978, as amended at 43 FR 14010, Apr. 4, 1978; 45 
FR 51447, Aug. 1, 1980; 54 FR 8629, Mar. 1, 1989; 65 FR 21085, Apr. 19, 
2000; 65 FR 62973, Oct. 19, 2000]

[[Page 431]]



Sec. 2520.104-47  Limited exemption and alternative method of compliance for filing of insurance company financial reports.

    An administrator of an employee benefit plan to which section 
103(e)(2) of the Act applies shall be deemed in compliance with the 
requirement to include with its annual report a copy of the financial 
report of the insurance company, insurance service or similar 
organization, provided that the administrator files a copy of such 
report within 45 days of receipt of a written request for such report by 
the Secretary of Labor.

[45 FR 14034, Mar. 4, 1980]



Sec. 2520.104-48  Alternative method of compliance for model simplified employee pensions--IRS Form 5305-SEP.

    Under the authority of section 110 of the Act the provisions of this 
section are prescribed as an alternative method of compliance with the 
reporting and disclosure requirements set forth in part 1 of title I of 
the Employee Retirement Income Security Act of 1974 in the case of a 
simplified employee pension (SEP) described in section 408(k) of the 
Internal Revenue Code of 1954 as amended (the Code) that is created by 
use without modification of Internal Revenue Service (IRS) Form 5305-
SEP.
    (a) At the time an employee becomes eligible to participate in the 
SEP (whether at the creation of the SEP or thereafter), the 
administrator of the SEP (generally the employer establishing and 
maintaining the SEP) shall furnish the employee with a copy of the 
completed and unmodified IRS Form 5305-SEP used to create the SEP, 
including (1) the completed Contribution Agreement, (2) the General 
Information and Guidelines, and (3) the Questions and Answers.
    (b) Following the end of each calendar year the administrator of the 
SEP shall notify each participant in the SEP in writing of any employer 
contributions made under the Contribution Agreement to the participant's 
individual retirement account or individual retirement annuity (IRA) for 
that year.
    (c) If the employer establishing and maintaining the SEP selects, 
recommends, or in any other way influences employees to choose a 
particular IRA or type of IRA into which contributions under the SEP 
will be made, and if that IRA is subject to restrictions on a 
participant's ability to withdraw funds (other than restrictions imposed 
by the Code that apply to all IRAs), the administrator of the SEP shall 
give to each employee, in writing, within 90 days of the adoption of 
this regulation or at the time such employee becomes eligible to 
participate in the SEP, whichever is later, a clear explanation of those 
restrictions and a statement to the effect that other IRAs, into which 
rollovers or employee contributions may be made, may not be subject to 
such restrictions.

[45 FR 24869, Apr. 11, 1980]



Sec. 2520.104-49  Alternative method of compliance for certain simplified employee pensions.

    Under the authority of section 110 of the Act, the provisions of 
this section are prescribed as an alternative method of compliance with 
the reporting and disclosure requirements set forth in part 1 of title I 
of the Act for a simplified employee pension (SEP) described in section 
408(k) of the Internal Revenue Code of 1954 as amended, except for:

A SEP that is created by proper use of Internal Revenue Service Form 
5305-SEP, or; a SEP in connection with which the employer who 
establishes or maintains the SEP selects, recommends or influences its 
employees to choose the IRAs into which employer contributions will be 
made and those IRAs are subject to provisions that prohibit withdrawal 
of funds by participants for any period of time.
    (a) At the time an employee becomes eligible to participate in the 
SEP (whether at the creation of the SEP or thereafter) or up to 90 days 
after the effective date of this regulation, whichever is later, the 
administrator of the SEP (generally the employer establishing or 
maintaining the SEP) shall furnish the employee in writing with:
    (1) Specific information concerning the SEP, including:

[[Page 432]]

    (i) The requirements for employee participation in the SEP,
    (ii) The formula to be used to allocate employer contributions made 
under the SEP to each participant's individual retirement account or 
annuity (IRA),
    (iii) The name or title of the individual who is designated by the 
employer to provide additional information to participants concerning 
the SEP, and
    (iv) If the employer who establishes or maintains the SEP selects, 
recommends or substantially influences its employees to choose the IRAs 
into which employer contributions under the SEP will be made, a clear 
explanation of the terms of those IRAs, such as the rate(s) of return 
and any restrictions on a participant's ability to roll over or withdraw 
funds from the IRAs, including restrictions that allow rollovers or 
withdrawals but reduce earnings of the IRAs or impose other penalties.
    (2) General information concerning SEPs and IRAs, including a clear 
explanation of:
    (i) What a SEP is and how it operates,
    (ii) The statutory provisions prohibiting discrimination in favor of 
highly compensated employees,
    (iii) A participant's right to receive contributions under a SEP-and 
the allowable sources of contributions to a SEP-related IRA (SEP-IRA),
    (iv) The statutory limits on contributions to SEP-IRAs,
    (v) The consequences of excess contributions to a SEP-IRA and how to 
avoid excess contributions,
    (vi) A participant's rights with respect to contributions made under 
a SEP to his or her IRA(s),
    (vii) How a participant must treat contributions to a SEP-IRA for 
tax purposes,
    (viii) The statutory provisions concerning withdrawal of funds from 
a SEP-IRA and the consequences of a premature withdrawal, and
    (ix) A participant's ability to roll over or transfer funds from a 
SEP-IRA to another IRA, SEP-IRA, or retirement bond, and how such a 
rollover or transfer may be effected without causing adverse tax 
consequences.
    (3) A statement to the effect that:
    (i) IRAs other than the IRA(s) into which employer contributions 
will be made under the SEP may provide different rates of return and may 
have different terms concerning, among other things, transfers and 
withdrawals of funds from the IRA(s),
    (ii) In the event a participant is entitled to make a contribution 
or rollover to an IRA, such contribution or rollover can be made to an 
IRA other than the one into which employer contributions under the SEP 
are to be made, and
    (iii) Depending on the terms of the IRA into which employer 
contributions are made, a participant may be able to make rollovers or 
transfers of funds from that IRA to another IRA.
    (4) A description of the disclosure required by the Internal Revenue 
Service to be made to individuals for whose benefit an IRA is 
established by the financial institution or other person who sponsors 
the IRA(s) into which contributions will be made under the SEP.
    (5) A statement that, in addition to the information provided to an 
employee at the time he or she becomes eligible to participate in a SEP, 
the administrator of the SEP must furnish each participant:
    (i) Within 30 days of the effective date of any amendment to the 
terms of the SEP, a copy of the amendment and a clear written 
explanation of its effects, and
    (ii) No later than the later of:
    (A) January 31 of the year following the year for which a 
contribution is made,
    (B) 30 days after a contribution is made, or
    (C) 30 days after the effective date of this regulation

written notification of any employer contributions made under the SEP to 
that participant's IRA(s).
    (6) In the case of a SEP that provides for integration with Social 
Security
    (i) A statement that Social Security taxes paid by the employer on 
account of a participant will be considered as an employer contribution 
under the SEP to a participant's SEP-IRA for purposes of determining the 
amount

[[Page 433]]

contributed to the SEP-IRA(s) of a participant by the employer pursuant 
to the allocation formula,
    (ii) A description of the effect that integration with Social 
Security would have on employer contributions under a SEP, and
    (iii) The integration formula, which may constitute part of the 
allocation formula required by paragraph (a)(1)(ii) of this section.
    (b)(1) The requirements of paragraphs (a)(1)(i), (ii), (iii) and 
(a)(6)(i) of this regulation may be met by furnishing the SEP agreement 
to participants, provided that the SEP agreement is written in a manner 
reasonably calculated to be understood by the average plan participant.
    (2) The requirements of paragraph (a)(1)(iv) of this regulation may 
be met through disclosure materials furnished by the financial 
institution in which the participant's IRA is maintained, provided the 
materials contain the information specified in such paragraph.
    (c) No later than the later of:
    (1) January 31 of the year following the year for which a 
contribution is made,
    (2) 30 days after a contribution is made, or
    (3) 30 days after the effective date of this regulation

the administrator of the SEP shall notify a participant in the SEP in 
writing of any employer contributions made under the SEP to the 
participant's IRA(s).
    (d) Within 30 days of the effective date of any amendment to the 
terms of the SEP, the administrator shall furnish each participant a 
copy of the amendment and a clear explanation in writing of its effect.

[46 FR 1264, Jan. 6, 1981]



Sec. 2520.104-50  Short plan years, deferral of accountant's examination and report.

    (a) Definition of ``short plan year.'' For purposes of this section, 
a short plan year is a plan year, as defined in section 3(39) of the 
Act, of seven or fewer months' duration, which occurs in the event that:
    (1) A plan is established or commences operations;
    (2) A plan is merged or consolidated with another plan or plans;
    (3) A plan is terminated; or
    (4) The annual date on which the plan year begins is changed.
    (b) Deferral of accountant's report. A plan administrator is not 
required to include the report of an independent qualified public 
accountant in the annual report for the first of two consecutive plan 
years, one of which is a short plan year, provided that the following 
conditions are satisfied:
    (1) The annual report for the first of the two consecutive plan 
years shall include:
    (i) Financial statements and accompanying schedules prepared in 
conformity with the requirements of section 103(b) of the Act and 
regulations promulgated thereunder;
    (ii) An explanation why one of the two plan years is of seven or 
fewer months' duration; and
    (iii) A statement that the annual report for the immediately 
following plan year will include a report of an independent qualified 
public accountant with respect to the financial statements and 
accompanying schedules for both of the two plan years.
    (2) The annual report for the second of the two consecutive plan 
years shall include:
    (i) Financial statements and accompanying schedules prepared in 
conformity with section 103(b) of the Act and regulations promulgated 
thereunder with respect to both plan years;
    (ii) A report of an independent qualified public accountant with 
respect to the financial statements and accompanying schedules for both 
plan years; and
    (iii) A statement identifying any material differences between the 
unaudited financial information relating to, and contained in the annual 
report for, the first of the two consecutive plan years and the audited 
financial information relating to that plan year contained in the annual 
report for the immediately following plan year.
    (c) Accountant's examination and report. The examination by the 
accountant which serves as the basis for the portion of his report 
relating to the first of the two consecutive plan years may be conducted 
at the same time as

[[Page 434]]

the examination which serves as the basis for the portion of his report 
relating to the immediately following plan year. The report of the 
accountant shall be prepared in conformity with section 103(a)(3)(A) of 
the Act and regulations thereunder.

[46 FR 1265, Jan. 6, 1981]



                    Subpart E--Reporting Requirements

(The information collection requirements contained in subpart E were 
approved by the Office of Management and Budget under control number 
1210-0016)



Sec. 2520.104a-1  Filing with the Secretary of Labor.

    (a) General reporting requirements. Part 1 of title I of the Act 
requires that the administrator of an employee benefit plan subject to 
the provisions of part 1 file with the Secretary of Labor certain 
reports and additional documents. Each report filed shall accurately and 
comprehensively detail the information required. Where a form is 
prescribed, the reports shall be filed on that form. The Secretary may 
reject any incomplete filing. Reports and documents shall be filed as 
specified in this part.
    (b) Exemption for certain welfare plans. See Secs. 2520.104-20, 
2520.104-21, 2520.104-22, 2520.104-24, and 2520.104-25.
    (c) Alternative method of compliance for pension plans for certain 
selected employees. See Sec. 2520.104-23.

[42 FR 37185, July 19, 1977]



Secs. 2520.104a-2--2520.104a-4  [Reserved]



Sec. 2520.104a-5  Annual reporting filing requirements.

    (a) Filing obligation. Except as provided in Sec. 2520.104a-6, the 
administrator of an employee benefit plan required to file an annual 
report pursuant to section 104(a)(1) of the Act shall file an annual 
report containing the items prescribed in Sec. 2520.103-1 within:
    (1) [Reserved]
    (2) Seven months after the close of any plan year which begins after 
December 31, 1975, unless extended. See ``When to file'' instructions of 
the appropriate Annual Return/Report Form.
    (b) Where to file. The annual report described in Sec. 2520.103-1 
shall be filed in accordance with and at the address provided in the 
instructions to the Annual Return/Report Form.

[43 FR 10152, Mar. 10, 1978; 43 FR 14010, Apr. 4, 1978; 67 FR 777, Jan. 
7, 2002]



Sec. 2520.104a-6  Annual reporting for plans which are part of a group insurance arrangement.

    (a) General. A trust or other entity described in Sec. 2520.104-
43(b) that files an annual report in accordance with the terms of 
subsections (b) and (c) shall be deemed to have filed such report in 
accordance with Sec. 2520.104a-6 for purposes of Sec. 2520.104-43.
    (b) Date of filing. The annual report shall be filed within:
    (1) Eleven and one-half months after the close of the fiscal year of 
the trust or other entity described in Sec. 2520.104-43 which begins in 
1975 or December 15, 1977, whichever is later; and
    (2) Seven months after the close of the fiscal year of the trust or 
other entity which begins after December 31, 1975, unless extended. See 
``When to file'' instructions of the appropriate Annual Return/Report 
Form.
    (c) Where to file. The annual report prescribed in Sec. 2520.103-2 
shall be filed in accordance with and at the address provided in the 
instructions to the Annual Return/Report Form.

[43 FR 10152, Mar. 10, 1978; 43 FR 14010, Apr. 4, 1978]



Sec. 2520.104a-7  [Reserved]



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 an employee benefit plan subject to the provisions of 
part 1 of title I of the Act is required to furnish to the Secretary, 
upon request, any documents relating to the employee benefit plan. For 
purposes of section 104(a)(6) of the Act, the administrator of an 
employee benefit plan shall furnish to the Secretary, upon service of a 
written request, a copy of:
    (i) The latest updated summary plan description (including any 
summaries of material modifications to the plan

[[Page 435]]

or changes in the information required to be included in the summary 
plan description); and
    (ii) Any other document described in section 104(b)(4) of the Act 
with respect to which a participant or beneficiary has requested, in 
writing, a copy from the plan administrator and which the administrator 
has failed or refused to furnish to the participant or beneficiary.
    (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).
    (b) For purposes of this section, a participant or beneficiary will 
include any individual who is:
    (1) A participant or beneficiary within the meaning of ERISA 
sections 3(7) and 3(8), respectively;
    (2) 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);
    (3) A qualified beneficiary under COBRA (see ERISA section 607(3)) 
or prospective qualified beneficiary (spouse or dependent child);
    (4) An alternate recipient under a qualified medical child support 
order (see ERISA section 609(a)(2)(C)) or a prospective alternate 
recipient; or
    (5) A representative of any of the foregoing.
    (c) Service of request. Requests under this section shall be served 
in accordance with Sec. 2560.502c-6(i).
    (d) Furnishing documents. A document shall be deemed to be furnished 
to the Secretary on the date the document is received by the Department 
of Labor at the address specified in the request; or, if a document is 
delivered by certified mail, the date on which the document is mailed to 
the Department of Labor at the address specified in the request.

[67 FR 784, Jan. 7, 2002]



                   Subpart F--Disclosure Requirements

(The information collection requirements contained in subpart F were 
approved by the Office of Management and Budget under control number 
1210-0016)



Sec. 2520.104b-1  Disclosure.

    (a) General disclosure requirements. The administrator of an 
employee benefit plan covered by Title I of the Act must disclose 
certain material, including reports, statements, notices, and other 
documents, to participants, beneficiaries and other specified 
individuals. Disclosure under Title I of the Act generally takes three 
forms. First, the plan administrator must, by direct operation of law, 
furnish certain material to all participants covered under the plan and 
beneficiaries receiving benefits under the plan (other than 
beneficiaries under a welfare plan) at stated times or if certain events 
occur. Second, the plan administrator must furnish certain material to 
individual participants and beneficiaries upon their request. Third, the 
plan administrator must make certain material available to participants 
and beneficiaries for inspection at reasonable times and places.
    (b) Fulfilling the disclosure obligation. (1) Except as provided in 
paragraph (e) of this section, where certain material, including 
reports, statements, notices and other documents, is required under 
Title I of the Act, or regulations issued thereunder, to be furnished 
either by direct operation of law or on individual request, the plan 
administrator shall use measures reasonably calculated to ensure actual 
receipt of the material by plan participants, beneficiaries and other 
specified individuals. Material which is required to be furnished to all 
participants covered under the plan and beneficiaries receiving benefits 
under the plan (other than beneficiaries under a welfare plan) must be 
sent by a method or methods of delivery likely to result in full 
distribution. For example, in-hand delivery to an employee at his or her 
worksite is acceptable. However, in no case is it acceptable merely to 
place copies of the material in a location frequented by participants. 
It is also acceptable to furnish such material as a special insert in a 
periodical distributed to employees such as a union newspaper or a 
company publication if the distribution list for the periodical is 
comprehensive and up-to-date and a prominent notice on the front page of 
the periodical advises readers that the issue contains an

[[Page 436]]

insert with important information about rights under the plan and the 
Act which should be read and retained for future reference. If some 
participants and beneficiaries are not on the mailing list, a periodical 
must be used in conjunction with other methods of distribution such that 
the methods taken together are reasonably calculated to ensure actual 
receipt. Material distributed through the mail may be sent by first, 
second, or third-class mail. However, distribution by second or third-
class mail is acceptable only if return and forwarding postage is 
guaranteed and address correction is requested. Any material sent by 
second or third-class mail which is returned with an address correction 
shall be sent again by first-class mail or personally delivered to the 
participant at his or her worksite.
    (2) For purposes of section 104(b)(4) of the Act, materials 
furnished upon written request shall be mailed to an address provided by 
the requesting participant or beneficiary or personally delivered to the 
participant or beneficiary.
    (3) For purposes of section 104(b)(2) of the Act, where certain 
documents are required to be made available for examination by 
participants and beneficiaries in the principal office of the plan 
administrator and in such other places as may be necessary to make 
available all pertinent information to all participants and 
beneficiaries, disclosure shall be made pursuant to the provisions of 
this paragraph. Such documents must be current, readily accessible, and 
clearly identified, and copies must be available in sufficient number to 
accommodate the expected volume of inquiries. Plan administrators shall 
make copies of the latest annual report, and the bargaining agreement, 
trust agreement, contract, or other instruments under which the plan is 
established or operated available at all times in their principal 
offices. They are not required to maintain these plan documents at all 
times at each employer establishment or union hall or office as 
described in paragraphs (b)(3)(i), (ii), and (iii) of this section, but 
the documents must be made available at any such location within ten 
calendar days following the day on which a request for disclosure at 
that location is made. Plan administrators shall make plan documents 
available at the appropriate employer establishment or union meeting 
hall or office within the required ten day period when a request is made 
directly to the plan administrator or through a procedure establishing 
reasonable rules governing the making of requests for examination of 
plan documents. If a plan administrator prescribes such a procedure and 
communicates it to plan participants and beneficiaries, a plan 
administrator will not be required to comply with a request made in a 
manner which does not conform to the established procedure. In order to 
comply with the requirements of this section, a procedure for making 
requests to examine plan documents must permit requests to be made in a 
reasonably convenient manner both directly to the plan administrator and 
at each employer establishment, or union meeting hall or office where 
documents must be made available in accordance with this paragraph. If 
no such reasonable procedure is established, a good faith effort by a 
participant or beneficiary to request examination of plan documents will 
be deemed a request to the plan administrator for purposes of this 
paragraph.
    (i) In the case of a plan not maintained according to a collective 
bargaining agreement, including a plan maintained by a single employer 
with more than one establishment, a multiple employer plan, and a plan 
maintained by a controlled group of corporations (within the meaning of 
section 1563(a) of the Internal Revenue Code of 1954 (the Code)), 
determined without regard to section 1563(a)(4) and (e)(3)(C) of the 
Code), documents shall be made available for examination in the 
principal office of the employer and at each employer establishment in 
which at least 50 participants covered under a plan are customarily 
working. ``Establishment'' means a single physical location where 
business is conducted or where services or industrial operations are 
performed. Where employees are engaged in activities which are 
physically dispersed, such as agriculture, construction, transportation

[[Page 437]]

and communications, the ``establishment'' shall be the place to which 
employees report each day. When employees do not usually work at, or 
report to, a single establishment--for example, traveling salesmen, 
technicians, and engineers--the establishment shall be the location from 
which the employees customarily carry out their activities--for example 
the field office of an engineering firm servicing at least 50 
participants covered under the plan.
    (ii) In the case of a plan maintained solely by an employee 
organization, the plan administrator shall take measures to ensure that 
documents are available for examination at the meeting hall or office of 
each union local in which there are at least 50 participants covered 
under the plan. Such measures shall include distributing copies of the 
documents to each union local in which there are at least 50 
participants covered under the plan.
    (iii) In the case of a plan maintained according to a collective 
bargaining agreement, including a collectively bargained single employer 
plan with more than one establishment, a collectively bargained multiple 
employer plan, and a multiemployer plan which meets the definition of 
section 3(37) of the Act, Sec. 2510.3-37 of this chapter, and section 
414(b) of the Internal Revenue Code of 1954 and 26 CFR 1.414(f) (40 FR 
43034), documents shall be made available for examination in the 
principal office of the employee organization and at each employer 
establishment in which at least 50 participants covered under the plan 
are customarily working. In employment situations where employees do not 
usually work at, or report to, a single establishment, the plan 
administrator shall take measures to ensure that plan documents are 
available for examination at the meeting hall or office of each union 
local in which there are at least 50 participants covered under the 
plan.
    (c) Disclosure through electronic media. (1) Except as otherwise 
provided by applicable law, rule or regulation, the administrator of an 
employee benefit plan furnishing documents through electronic media is 
deemed to satisfy the requirements of paragraph (b)(1) of this section 
with respect to an individual described in paragraph (c)(2) if:
    (i) The administrator takes appropriate and necessary measures 
reasonably calculated to ensure that the system for furnishing 
documents--
    (A) Results in actual receipt of transmitted information (e.g., 
using return-receipt or notice of undelivered electronic mail features, 
conducting periodic reviews or surveys to confirm receipt of the 
transmitted information); and
    (B) Protects the confidentiality of personal information relating to 
the individual's accounts and benefits (e.g., incorporating into the 
system measures designed to preclude unauthorized receipt of or access 
to such information by individuals other than the individual for whom 
the information is intended);
    (ii) The electronically delivered documents are prepared and 
furnished in a manner that is consistent with the style, format and 
content requirements applicable to the particular document;
    (iii) Notice is provided to each participant, beneficiary or other 
individual, in electronic or non-electronic form, at the time a document 
is furnished electronically, that apprises the individual of the 
significance of the document when it is not otherwise reasonably evident 
as transmitted (e.g., the attached document describes changes in the 
benefits provided by your plan) and of the right to request and obtain a 
paper version of such document; and
    (iv) Upon request, the participant, beneficiary or other individual 
is furnished a paper version of the electronically furnished documents.
    (2) Paragraph (c)(1) shall only apply with respect to the following 
individuals:
    (i) A participant who--
    (A) Has the ability to effectively access documents furnished in 
electronic form at any location where the participant is reasonably 
expected to perform his or her duties as an employee; and
    (B) With respect to whom access to the employer's or plan sponsor's 
electronic information system is an integral part of those duties; or
    (ii) A participant, beneficiary or any other person entitled to 
documents under Title I of the Act or regulations

[[Page 438]]

issued thereunder (including, but not limited to, an ``alternate payee'' 
within the meaning of section 206(d)(3) of the Act and a ``qualified 
beneficiary'' within the meaning of section 607(3) of the Act) who--
    (A) Except as provided in paragraph (c)(2)(ii) (B) of this section, 
has affirmatively consented, in electronic or non-electronic form, to 
receiving documents through electronic media and has not withdrawn such 
consent;
    (B) In the case of documents to be furnished through the Internet or 
other electronic communication network, has affirmatively consented or 
confirmed consent electronically, in a manner that reasonably 
demonstrates the individual's ability to access information in the 
electronic form that will be used to provide the information that is the 
subject of the consent, and has provided an address for the receipt of 
electronically furnished documents;
    (C) Prior to consenting, is provided, in electronic or non-
electronic form, a clear and conspicuous statement indicating:
    (1) The types of documents to which the consent would apply;
    (2) That consent can be withdrawn at any time without charge;
    (3) The procedures for withdrawing consent and for updating the 
participant's, beneficiary's or other individual's address for receipt 
of electronically furnished documents or other information;
    (4) The right to request and obtain a paper version of an 
electronically furnished document, including whether the paper version 
will be provided free of charge; and
    (5) Any hardware and software requirements for accessing and 
retaining the documents; and
    (D) Following consent, if a change in hardware or software 
requirements needed to access or retain electronic documents creates a 
material risk that the individual will be unable to access or retain 
electronically furnished documents:
    (1) Is provided with a statement of the revised hardware or software 
requirements for access to and retention of electronically furnished 
documents;
    (2) Is given the right to withdraw consent without charge and 
without the imposition of any condition or consequence that was not 
disclosed at the time of the initial consent; and
    (3) Again consents, in accordance with the requirements of paragraph 
(c)(2)(ii)(A) or paragraph (c)(2)(ii)(B) of this section, as applicable, 
to the receipt of documents through electronic media.
    (d) Participant and beneficiary status for purposes of section 
101(a) and 104(b)(1) of the Act and subpart F of this part. See 
Secs. 2510.3-3(d)(1), 2510.3-3(d)(2) and 2520.3-3(d)(3) of this chapter.
    (e) Limitations. This section does not apply to disclosures required 
under provisions of part 2 and part 3 of the Act over which the 
Secretary of the Treasury has interpretative and regulatory authority 
pursuant to Reorganization Plan No. 4 of 1978.

(Approved by the Office of Management and Budget under control number 
1210-0039)

[42 FR 37186, July 19, 1977, as amended at 62 FR 16985, Apr. 8, 1997; 62 
FR 36205, July 7, 1997; 67 FR 777, Jan. 7, 2002; 67 FR 17275, Apr. 9, 
2002]



Sec. 2520.104b-2  Summary plan description.

    (a) Obligation to furnish. Under the authority of sections 104(b)(1) 
and 104(c) of the Act, the plan administrator of an employee benefit 
plan subject to the provisions of part 1 of title I shall furnish a copy 
of the summary plan description and a statement of ERISA rights as 
provided in Sec. 2520.102-3(t), to each participant covered under the 
plan (as defined in Sec. 2510.3-3(d)), and each beneficiary receiving 
benefits under a pension plan on or before the later of:
    (1) The date which is 90 days after the employee becomes a 
participant, or (in the case of a beneficiary receiving benefits under a 
pension plan) within 90 days after he or she first receives benefits, 
except as provided in Sec. 2520.104b-4(a), or,
    (2) Within 120 days after the plan becomes subject to part 1 of 
title I.
    (3)(i) A plan becomes subject to part 1 of title I on the first day 
on which an employee is credited with an hour of service under 
Sec. 2530.200b-2 or Sec. 2530.200b-3. Where a plan is made prospectively 
effective to take effect after a certain date or after a condition is 
satisfied,

[[Page 439]]

the day upon which the plan becomes subject to part 1 of title I is the 
day after such date or condition is satisfied. Where a plan is adopted 
with a retroactive effective date, the 120 day period begins on the day 
after the plan is adopted. Where a plan is made retroactively effective 
dependent on a condition, the day on which the plan becomes subject to 
part 1 of title I is the day after the day on which the condition is 
satisfied. Where a plan is made retroactively effective subject to a 
contingency which may or may not occur in the future, the day on which 
the plan becomes subject to part 1, title I is the day after the day on 
which the contingency occurs.
    (ii) Examples: Company A is negotiating the purchase of Company B. 
On September 1, 1978, as part of the negotiations, Company A adopts a 
pension plan covering the employees of Company B, contingent on the 
successful conclusion of its negotiations to purchase Company B. The 
plan provides that it shall take effect on the first day of the calendar 
year in which the purchase is concluded. On February 1, 1979, the 
negotiations conclude with Company A's purchase of Company B. The plan 
therefore becomes effective on February 1, 1979, retroactive to January 
1, 1979. The summary plan description must be filed and disclosed no 
later than 120 days after February 1, 1979.
    (b) Periods for furnishing updated summary plan description. (1) For 
purposes of the requirement to furnish the updated summary plan 
description to each participant and each beneficiary receiving benefits 
under the plan (other than beneficiaries receiving benefits under a 
welfare plan) required by section 104(b)(1) of the Act, the 
administrator of an employee benefit plan shall furnish such updated 
summary plan description no later than 210 days following the end of the 
plan year which occurs five years after the last date a change in the 
information required to be disclosed by section 102 or 29 CFR 2520.102-3 
would have been reflected in the most recently distributed summary plan 
description (or updated summary plan description) as described in 
section 102 of the Act.
    (2) In the case of a plan to which no amendments have been made 
between the end of the time period covered by the last distributed 
summary plan description (or updated summary plan description), 
described in section 102 of the Act, and the next occurring applicable 
date described in paragraph (b)(1) of this section, for purposes of the 
requirement to furnish the updated summary plan description to each 
participant, and to each beneficiary receiving benefits under the plan 
(other than beneficiaries receiving benefits under a welfare plan), 
required by section 104(b)(1) of the Act, the administrator of an 
employee benefit plan shall furnish such updated summary plan 
description no later than 210 days following the end of the plan year 
which occurs ten years after the last date a change in the information 
required to be disclosed by section 102 or 29 CFR 2520.102-3 would have 
been reflected in the most recently distributed summary plan description 
(or updated summary plan description), as described in section 102 of 
the Act.
    (c)-(f)  [Reserved]
    (g) Terminated plans. (1) If, on or before the date by which a plan 
is required to furnish a summary plan description or updated summary 
plan description to participants and pension plan beneficiaries under 
this section, the plan has terminated within the meaning of paragraph 
(g)(2) of this section, the administrator of such plan is not required 
to furnish to participants covered under the plan or to beneficiaries 
receiving benefits under the plan a summary plan description.
    (2) For purposes of this section, a plan shall be considered 
terminated if:
    (i) In the case of an employee pension benefit plan, all 
distributions to participants and beneficiaries have been completed; and
    (ii) In the case of an employee welfare benefit plan, no claims can 
be incurred which will result in a liability of the plan to pay 
benefits. A claim is incurred upon the occurrence of the event or 
condition from which the claim arises (whether or not discovered).
    (h)  [Reserved]
    (i) Style and format of the summary plan description. See 
Sec. 2520.102-2.

[[Page 440]]

    (j) Contents of the summary plan description. See Sec. 2520.102-3.
    (k) Option for different summary plan descriptions. See 
Sec. 2520.102-4; Sec. 2520.104-26; and Sec. 2520.104-27.
    (l) Employee benefit plan--participant covered under a plan. See 
Sec. 2510.3-3(d).

[42 FR 37187, July 19, 1977, as amended at 45 FR 14032, Mar. 4, 1980; 48 
FR 1714, Jan. 14, 1983; 61 FR 33849, 33850, July 1, 1996; 67 FR 777, 
Jan. 7, 2002]



Sec. 2520.104b-3  Summary of material modifications to the plan and changes in the information required to be included in the summary plan description.

    (a) The administrator of an employee benefit plan subject to the 
provisions of part 1 of title I of the Act shall, in accordance with 
Sec. 2520.104b-1(b), furnish a summary description of any material 
modification to the plan and any change in the information required by 
section 102(b) of the Act and Sec. 2520.102-3 of these regulations to be 
included in the summary plan description to each participant covered 
under the plan and each beneficiary receiving benefits under the plan. 
Except as provided in paragraph (d) of this section, the plan 
administrator shall furnish this summary, written in a manner calculated 
to be understood by the average plan participant, not later than 210 
days after the close of the plan year in which the modification or 
change was adopted. This disclosure date is not affected by retroactive 
application to a prior plan year of an amendment which makes a material 
modification to the plan; a modification does not occur before it is 
adopted. For example, a calendar year plan adopts a modification in 
April, 1978. The modification, by its terms, applies retroactively to 
the 1977 plan year. A summary description of the material modification 
is furnished on or before July 29, 1979. A plan which adopts an 
amendment which makes a material modification to the plan which takes 
effect on a date in the future must disclose a summary of that 
modification within 210 days after the close of the plan year in which 
the modification or change is adopted. Under the authority of sections 
104(a)(3) and 110 of the Act, a summary description of a material 
modification or change is not required to be disclosed if it is 
rescinded or otherwise does not take effect. For example, a calendar 
year plan adopts a modification in June, 1978. The modification, by its 
terms, becomes effective beginning in plan year 1979. Before the 
beginning of plan year 1979, the prospective modification is withdrawn. 
No summary of the material modification is required to be disclosed.
    (b) The summary of material modifications to the plan or changes in 
information required to be included in the summary plan description need 
not be furnished separately if the changes or modifications are 
described in a timely summary plan description. For example, a calendar 
year plan adopts a material modification on June 3, 1976. The 
modification is incorporated in a summary plan description furnished on 
July 15, 1977. No separate summary of the material modification is 
furnished. The plan adopts another material modification September 15, 
1977. A separate summary of the modification is furnished on or before 
July 29, 1978.
    (c) The copy of the summary plan description furnished in accordance 
with Secs. 2520.104b-2(a)(1)(i) and 2520.104b-4 shall be acompanied by 
all summaries of material modifications or changes in information 
required to be included in the summary plan description which have not 
been incorporated into that summary plan description.
    (d) Special rule for group health plans--(1) General. Except as 
provided in paragraph (d)(2) of this section, the administrator of a 
group health plan, as defined in section 733(a)(1) of the Act, shall 
furnish to each participant covered under the plan a summary, written in 
a manner calculated to be understood by the average plan participant, of 
any modification to the plan or change in the information required to be 
included in the summary plan description, within the meaning of 
paragraph (a) of this section, that is a material reduction in covered 
services or benefits not later than 60 days after the date of adoption 
of the modification or change.
    (2) 90-day alternative rule. The administrator of a group health 
plan shall not be required to furnish a summary of any material 
reduction in covered

[[Page 441]]

services or benefits within the 60-day period described in paragraph 
(d)(1) of this section to any participant covered under the plan who 
would reasonably be expected to be furnished such summary in connection 
with a system of communication maintained by the plan sponsor or 
administrator, with respect to which plan participants are provided 
information concerning their plan, including modifications and changes 
thereto, at regular intervals of not more than 90 days and such 
communication otherwise meets the disclosure requirements of 29 CFR 
2520.104b-1.
    (3) ``Material reduction''. (i) For purposes of this paragraph (d), 
a ``material reduction in covered services or benefits'' means any 
modification to the plan or change in the information required to be 
included in the summary plan description that, independently or in 
conjunction with other contemporaneous modifications or changes, would 
be considered by the average plan participant to be an important 
reduction in covered services or benefits under the plan.
    (ii) A ``reduction in covered services or benefits'' generally would 
include any plan modification or change that: eliminates benefits 
payable under the plan; reduces benefits payable under the plan, 
including a reduction that occurs as a result of a change in formulas, 
methodologies or schedules that serve as the basis for making benefit 
determinations; increases premiums, deductibles, coinsurance, 
copayments, or other amounts to be paid by a participant or beneficiary; 
reduces the service area covered by a health maintenance organization; 
establishes new conditions or requirements (e.g., preauthorization 
requirements) to obtaining services or benefits under the plan.
    (e) Applicability date. Paragraph (d) of this section is applicable 
as of the first day of the first plan year beginning after June 30, 
1997.
    (f)-(g) [Reserved]

(Approved by the Office of Management and Budget under control number 
1210-0039)

[42 FR 37188, July 19, 1977, as amended at 62 FR 16985, Apr. 8, 1997; 62 
FR 36205, July 7, 1997; 65 FR 70243, Nov. 21, 2000; 66 FR 34994, July 2, 
2001; 67 FR 777, Jan. 7, 2002]



Sec. 2520.104b-4  Alternative methods of compliance for furnishing the summary 

plan description and summaries of material modifications of a pension plan to a retired participant, a separated participant with vested 
          benefits, and a beneficiary receiving benefits.

    Under the authority of section 110 of the Act, in the case of an 
employee pension benefit plan--
    (a) Summary plan descriptions. A plan administrator will be deemed 
to satisfy the requirements of section 104(b)(1) of the Act and 
Sec. 2520.104b-2(a) to furnish a copy of the initial summary plan 
description to a retired participant, a beneficiary receiving benefits, 
or a separated participant with vested benefits (``vested separated 
participant'') if, no earlier than the date stated in paragraph (a)(4) 
of this section,
    (1) In the case of a retired participant or a beneficiary receiving 
benefits, a document is furnished which--
    (i) Meets the requirements of Secs. 2520.102-2 and 2520.102-3 except 
paragraphs (b)(3), (b)(4), (j), (k), (l), (n), (o) and (p);
    (ii) Contains a statement that the benefit payment presently being 
received by the retired participant or beneficiary receiving benefits 
will continue in the same amount and for the period provided in the mode 
of settlement selected at retirement, and will not be changed except as 
described in paragraph (a)(1)(iii) of this section; and
    (iii) Contains a statement describing any plan provision under which 
the present benefit payment may be reduced, changed, terminated, 
forfeited or suspended;
    (2) In the case of a vested separated participant, a document is 
furnished which--
    (i) Meets the requirements of Secs. 2520.102-2 and 2520.102-3 except 
paragraphs (b)(3), (b)(4), (j), (l), (n), (o), (p) and (r);
    (ii)(A) If at or after separation, a separated vested participant 
was furnished a statement of the dollar amount of the vested benefit or 
the method of computation of the benefit, includes a statement that the 
dollar amount of the vested benefit was previously furnished and that a 
copy of the previously furnished statement of the dollar amount of such 
vested benefit or

[[Page 442]]

method of computation of the benefit may be obtained from the plan upon 
request;
    (B) If the vested separated participant was not furnished a 
statement of the dollar amount of the vested benefit or the method of 
computation of the benefit, the plan furnishes either a statement of the 
dollar amount of the vested benefit, or a statement of the formula used 
to determine the dollar amount of the vested benefit;
    (iii) Includes a statement of the form in which the benefits will be 
paid and duration of the payment period or a description of the optional 
modes of payment available under the plan; and
    (iv) Includes a statement describing any plan provision under which 
a benefit may be reduced, changed, terminated, forfeited or suspended; 
or
    (3)(i) Such retired participant, vested separated participant, or 
beneficiary receiving benefits was furnished with a copy of a document 
which--
    (A) Satisfies the requirements of section 102(a)(1) of the Act and 
Sec. 2520.102-2 (relating to the style and format of the summary plan 
description) and Sec. 2520.102-3 (relating to the content of the summary 
plan description);
    (B) Describes the rights and obligations under the plan of such 
retired participant, vested separated participant, or beneficiary 
receiving benefits as of the date stated in subparagraph (4);
    (ii) In the case of a person who retired, became a beneficiary, or 
separated with vested benefits before November 16, 1977, a document will 
be deemed to comply with the requirements of paragraph (a)(2)(i) of this 
section if the document omitted only information described in one or 
more of the provisions of Sec. 2520.102-3 listed below, provided that a 
supplement containing such information, which meets the requirements of 
Sec. 2520.102-2, is furnished to the retired participant, vested 
separated participant, or beneficiary receiving benefits by November 16, 
1977.
    (A) Employer identification number (EIN), as required by 
Sec. 2520.102-3(c);
    (B) Type of administration, as required by Sec. 2520.102-3(e);
    (C) Name of agent for service of legal process, as required by 
Sec. 2520.102-3(g);
    (D) Names and addresses of trustees, as required by Sec. 2520.102-
3(h);
    (E) Statement regarding plan termination insurance as required by 
Sec. 2520.102-3(m);
    (F) Date of the end of the fiscal year, as required by 
Sec. 2520.102-3(r); or
    (G) Statement of ERISA rights, as required by Sec. 2520.102-3(t).
    (4) For purposes of this paragraph the dates are: For a vested 
separated participant, the date of separation; for a beneficiary, the 
date on which payment of benefits commences; and for a retired 
participant, the date of retirement.
    (b) Updated summary plan descriptions. A copy of an updated summary 
plan description need not be furnished as prescribed in section 
104(b)(1) of the Act and Sec. 2520.104b-2(b) to a retired participant, 
vested separated participant, or a beneficiary receiving benefits if--
    (1)(i) On or after the date stated in paragraph (b)(1)(ii) of this 
section, the retired participant, vested separated participant, or 
beneficiary is furnished with a copy of the most recent summary plan 
description and a copy of any summaries of material modifications not 
incorporated in such summary plan description;
    (ii) For purposes of paragraph (b)(1)(i) of this section the dates 
are: for a retired participant, the date of retirement; for a vested 
separated participant, the date of separation; and for a beneficiary, 
the date on which payment of benefits commences;
    (2) No latter than the date on which an updated summary plan 
description is furnished to participants and beneficiaries as prescribed 
by section 104(b)(1) of the Act and Sec. 2520.104b-2(b), a retired 
participant, vested separated participant, or beneficiary receiving 
benefits is furnished a notice containing the following:
    (i) A statement that the benefit rights of such retired participant, 
vested separated participant, or beneficiary receiving benefits are set 
forth in the earlier summary plan description and any subsequently 
furnished summaries of material modifications (see paragraph (c)), and
    (ii) A statement that such retired participant, vested separated 
participant, or beneficiary receiving benefits

[[Page 443]]

may obtain a copy of the earlier summary plan description and summaries 
of material modifications described in paragraph (b)(2)(i) of this 
section, and the updated summary plan description, without charge, upon 
request, from the plan administrator; and
    (3) The plan administrator furnishes a copy of the documents 
described in paragraph (b)(2)(ii) of this section to such retired 
participant, vested separated participant or beneficiary, without 
charge, upon request.
    (c) Summary of material modifications or changes. A summary 
description of a material modification to the plan or a change in the 
information required to be included in the summary plan description need 
not be furnished to a retired participant, a vested separated 
participant or a beneficiary receiving benefits under the plan, within 
the time prescribed in section 104(b)(1) of the Act and Sec. 2520.104b-3 
for furnishing summary descriptions of such modifications and changes, 
if the material modification or change in no way affects such retired 
participant's, vested separated participant's, or beneficiary's rights 
under the plan. For example, a change in trustees is information which 
such a person may need to know in order to make inquiries about his or 
her rights expeditiously, and hence must be furnished. On the other 
hand, a modification in benefits under the plan to which such retired 
participant, vested separated participant, or beneficiary had not at any 
time been entitled (and would not in the future be entitled) would not 
affect his or her rights and hence need not be furnished. If such 
retired participant, vested separated participant, or beneficiary 
requests a copy of a summary description of a material modification or a 
change which was not furnished, the plan administrator shall furnish the 
copy, without charge.

[45 FR 14032, Mar. 4, 1980, as amended at 61 FR 33850, July 1, 1996]



Sec. 2520.104b-10  Summary Annual Report.

    (a) Obligation to furnish. Except as otherwise provided in paragraph 
(g) of this section, the administrator of any employee benefit plan 
shall furnish annually to each participant of such plan and to each 
beneficiary receiving benefits under such plan (other than beneficiaries 
under a welfare plan) a summary annual report conforming to the 
requirements of this section. Such furnishing of the summary annual 
report shall take place in accordance with the requirements of 
Sec. 2520.104b-1 of this part.
    (b) [Reserved]
    (c) When to furnish. Except as otherwise provided in this paragraph 
(c), the summary annual report required by paragraph (a) of this section 
shall be furnished within nine months after the close of the plan year.
    (1) In the case of a welfare plan described in Sec. 2520.104-43 of 
this part, such furnishing shall take place within 9 months after the 
close of the fiscal year of the trust or other entity which files the 
annual report under Sec. 2520.104a-6 of this part.
    (2) When an extension of time in which to file an annual report has 
been granted by the Internal Revenue Service, such furnishing shall take 
place within 2 months after the close of the period for which the 
extension was granted.
    (d) Contents, style and format. Except as otherwise provided in this 
paragraph (d), the summary annual report furnished to participants and 
beneficiaries of an employee pension benefit plan pursuant to this 
section shall consist of a completed copy of the form prescribed in 
paragraph (d)(3) of this section, and the summary annual report 
furnished to participants and beneficiaries of an employee welfare 
benefit plan pursuant to this section shall consist of a completed copy 
of the form prescribed in paragraph (d)(4) of this section. The 
information used to complete the form shall be based upon information 
contained in the most recent annual report of the plan which is required 
to be filed in accordance with section 104(a)(1) of the Act.
    (1) Any portion of the forms set forth in this paragraph (d) which 
is not applicable to the plan to which the summary annual report 
relates, or which would require information which is not required to be 
reported on the annual report of that plan, may be omitted.
    (2) Where the plan administrator determines that additional 
explanation of

[[Page 444]]

any information furnished pursuant to this paragraph (d) is necessary to 
fairly summarize the annual report, such explanation shall be set forth 
following the completed form required by this paragraph (d) and shall be 
headed, ``Additional Explanation.''
    (3) Form for Summary Annual Report Relating to Pension Plans.

                Summary Annual Report for (name of plan)

This is a summary of the annual report for (name of plan and EIN) for 
(period covered by this report). The annual report has been filed with 
the Pension and Welfare Benefits Administration, as required under the 
Employee Retirement Income Security Act of 1974 (ERISA).

                        Basic Financial Statement

Benefits under the plan are provided by (indicate funding arrangements). 
Plan expenses were ($      ). These expenses included ($      ) in 
administrative expenses and ($      ) in benefits paid to participants 
and beneficiaries, and ($      ) in other expenses. A total of (      ) 
persons were participants in or beneficiaries of the plan at the end of 
the plan year, although not all of these persons had yet earned the 
right to receive benefits.

[If the plan is funded other than solely by allocated insurance 
contracts:]

    The value of plan assets, after subtracting liabilities of the plan, 
was ($      ) as of (the end of the plan year), compared to ($      ) as 
of (the beginning of the plan year). During the plan year the plan 
experienced an (increase) (decrease) in its net assets of ($        ) 
This (increase) (decrease) includes unrealized appreciation or 
depreciation in the value of plan assets; that is, the difference 
between the value of the plan's assets at the end of the year and the 
value of the assets at the beginning of the year or the cost of assets 
acquired during the year. The plan had total income of ($      ), 
including employer contributions of ($      ), employee contributions of 
($        ), (gains) (losses) of ($      ), from the sale of assets, and 
earnings from investments of ($      ).

[If any funds are used to purchase allocated insurance contracts:]

    The plan has (a) contract(s) with (name of insurance carrier(s)) 
which allocate(s) funds toward (state whether individual policies, group 
deferred annuities or other). The total premiums paid for the plan year 
ending (date) were ($        ).

                        Minimum Funding Standards

[If the plan is a defined benefit plan:]
    An actuary's statement shows that (enough money was contributed to 
the plan to keep it funded in accordance with the minimum funding 
standards of ERISA) (not enough money was contributed to the plan to 
keep it funded in accordance with the mimimum funding standards of 
ERISA. The amount of the deficit was $      ).

[If the plan is a defined contribution plan covered by funding 
requirements:]

    (Enough money was contributed to the plan to keep it funded in 
accordance with the minimum funding standards of ERISA) (Not enough 
money was contributed to the plan to keep it funded in accordance with 
the minimum funding standards of ERISA. The amount of the deficit was 
[dollar]      ).

                  Your Rights to Additional Information

You have the right to receive a copy of the full annual report, or any 
part thereof, on request. The items listed below are included in that 
report: [Note--list only those items which are actually included in the 
latest annual report]
    1. an accountant's report;
    2. financial information and information on payments to service 
providers;
    3. assets held for investment;
    4. fiduciary information, including non-exempt transactions between 
the plan and parties-in-interest (that is, persons who have certain 
relationships with the plan);
    5. loans or other obligations in default or classified as 
uncollectible;
    6. leases in default or classified as uncollectible;
    7. transactions in excess of 5 percent of the plan assets;
    8. insurance information including sales commissions paid by 
insurance carriers;
    9. information regarding any common or collective trusts, pooled 
separate accounts, master trusts or 103-12 investment entities in which 
the plan participates, and
    10. actuarial information regarding the funding of the plan.
To obtain a copy of the full annual report, or any part thereof, write 
or call the office of (name), who is (state title: e.g., the plan 
administrator), (business address and telephone number). The charge to 
cover copying costs will be ($      ) for the full annual report, or ($  
    ) per page for any part thereof.

You also have the right to receive from the plan administrator, on 
request and at no charge, a statement of the assets and liabilities of 
the plan and accompanying notes, or a statement of income and expenses 
of the plan and accompanying notes, or both. If you request a copy of 
the full annual report from the plan administrator, these two statements 
and accompanying notes will be included as part of that report. The 
charge to

[[Page 445]]

cover copying costs given above does not include a charge for the 
copying of these portions of the report because these portions are 
furnished without charge.
You also have the legally protected right to examine the annual report 
at the main office of the plan (      address            ), (at any 
other location where the report is available for examination), and at 
the U.S. Department of Labor in Washington, D.C., or to obtain a copy 
from the U.S. Department of Labor upon payment of copying costs. 
Requests to the Department should be addressed to: Public Disclosure 
Room, Room N-1513, Employee Benefits Security Administration, U.S. 
Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 
20210.

    (4) Form for Summary Annual Report Relating to Welfare Plans.

                Summary Annual Report for (name of plan)

This is a summary of the annual report of the (name of plan, EIN and 
type of welfare plan) for (period covered by this report). The annual 
report has been filed with the Employee Benefits Security 
Administration, as required under the Employee Retirement Income 
Security Act of 1974 (ERISA).
[If any benefits under the plan are provided on an uninsured basis:]

(Name of sponsor) has committed itself to pay (all, certain) (state type 
of) claims incurred under the terms of the plan.

[If any of the funds are used to purchase insurance contracts:]

                          Insurance Information

    The plan has (a) contract(s) with (name of insurance carrier(s)) to 
pay (all, certain) (state type of) claims incurred under the terms of 
the plan. The total premiums paid for the plan year ending (date) were 
($ ----).

[If applicable add:]

    Because (it is a) (they are) so called ``experience-rated'' 
contract(s), the premium costs are affected by, among other things, the 
number and size of claims. Of the total insurance premiums paid for the 
plan year ending (date), the premiums paid under such ``experience-
rated'' contract(s) were ($    ) and the total of all benefit claims 
paid under the(se) experience-rated contract(s) during the plan year was 
($    ).

[If any funds of the plan are held in trust or in a separately 
maintained fund:]

                        Basic financial statement

    The value of plan assets, after subtracting liabilities of the plan, 
was ($     ) as of (the end of plan year), compared to ($          ) as 
of (the beginning of the plan year). During the plan year the plan 
experienced an (increase) (decrease) in its net assets of
($      ). This (increase) (decrease) includes unrealized appreciation 
and depreciation in the value of plan assets; that is, the difference 
between the value of the plan's assets at the end of the year and the 
value of the assets at the beginning of the year or the cost of assets 
acquired during the year. During the plan year, the plan had total 
income of ($    ) including employer contributions of ($    ), employee 
contributions of ($            ), realized (gains) (losses) of ($    ) 
from the sale of assets, and earnings from investments of ($    ). Plan 
expenses were ($            ). These expenses included ($            ) 
in administrative expenses, ($            ) in benefits paid to 
participants and beneficiaries, and ($            ) in other expenses.

                  Your Rights to Additional Information

You have the right to receive a copy of the full annual report, or any 
part thereof, on request. The items listed below are included in that 
report: [Note--list only those items which are actually included in the 
latest annual report].
    1. an accountant's report;
    2. financial information and information on payments to service 
providers;
    3. assets held for investment;
    4. fiduciary information, including non-exempt transactions between 
the plan and parties-in-interest (that is, persons who have certain 
relationships with the plan);
    5. loans or other obligations in default or classified as 
uncollectible;
    6. leases in default or classified as uncollectible;
    7. transactions in excess of 5 percent of the plan assets;
    8. insurance information including sales commissions paid by 
insurance carriers; and
    9. information regarding any common or collective trusts, pooled 
separate accounts, master trusts or 103-12 investment entities in which 
the plan participates.
To obtain a copy of the full annual report, or any part thereof, write 
or call the office of (name), who is (state title: e.g., the plan 
administrator), (business address and telephone number). The charge to 
cover copying costs will be ($    ) for the full annual report, or ($    
) per page for any part thereof.

You also have the right to receive from the plan administrator, on 
request and at no charge, a statement of the assets and liabilities of 
the plan and accompanying notes, or a statement of income and expenses 
of the plan and accompanying notes, or both. If you request a copy of 
the full annual report from the plan administrator, these two statements 
and accompanying notes will be included as part of that report. The 
charge to

[[Page 446]]

cover copying costs given above does not include a charge for the 
copying of these portions of the report because these portions are 
furnished without charge.
You also have the legally protected right to examine the annual report 
at the main office of the plan (address), (at any other location where 
the report is available for examination), and at the U.S. Department of 
Labor in Washington, D.C. or to obtain a copy from the U.S. Department 
of Labor upon payment of copying costs. Requests to the Department 
should be addressed to: Public Disclosure Room, Room N-1513, Employee 
Benefits Security Administration, U.S. Department of Labor, 200 
Constitution Avenue, N.W., Washington, D.C. 20210.

    (e) Foreign languages. In the case of either--
    (1) A plan which covers fewer than 100 participants at the beginning 
of a plan year in which 25 percent or more of all plan participants are 
literate only in the same non-English language; or
    (2) A plan which covers 100 or more participants in which 500 or 
more participants or 10 percent or more of all plan participants, 
whichever is less, are literate only in the same non-English language--


The plan administrator for such plan shall provide these participants 
with an English-language summary annual report which prominently 
displays a notice, in the non-English language common to these 
participants, offering them assistance. The assistance provided need not 
involve written materials, but shall be given in the non-English 
language common to these participants. The notice offering assistance 
shall clearly set forth any procedures participants must follow to 
obtain such assistance.
    (f) Furnishing of additional documents to participants and 
beneficiaries. A plan administrator shall promptly comply with any 
request by a participant or beneficiary for additional documents made in 
accordance with the procedures or rights described in paragraph (d) of 
this section.
    (g) Exemptions. Notwithstanding the provisions of this section, a 
summary annual report is not required to be furnished with respect to 
the following:
    (1) A totally unfunded welfare plan described in 29 CFR 2520.104-
44(b)(1)(i);
    (2) A welfare plan which meets the requirements of 29 CFR 2520.104-
20(b);
    (3) An apprenticeship or other training plan which meets the 
requirements of 29 CFR 2520.104-22;
    (4) A pension plan for selected employees which meets the 
requirements of 29 CFR 2520.104-23;
    (5) A welfare plan for selected employees which meets the 
requirements of 29 CFR 2520.104-24;
    (6) A day care center referred to in 29 CFR 2520.104-25;
    (7) A dues financed welfare plan which meets the requirements of 29 
CFR 2520.104-26; and
    (8) A dues financed pension plan which meets the requirements of 29 
CFR 2520.104-27.

  Appendix to Sec.  2520.104b-10--The Summary Annual Report (SAR) Under
              ERISA: A Cross-Reference to the Annual Report
------------------------------------------------------------------------
                              Form 5500 Large Plan  Form 5500 Small Plan
          SAR Item              Filer Line Items      Filer Line Items
------------------------------------------------------------------------
       A. PENSION PLAN
 
1. Funding arrangement......  Form 5500--9a.......  Same.
2. Total plan expenses......  Sch. H--2j..........  Sch. I--2i.
3. Administrative expenses..  Sch. H--2i(5).......  Not applicable.
4. Benefits paid............  Sch. H--2e(4).......  Sch. I--2e.
5. Other expenses...........  Sch. H--Subtract the  Sch. I--2h.
                               sum of 2e(4) &
                               2i(5) from 2j.
6. Total participants.......  Form 5500--7f.......  Same.
7. Value of plan assets
 (net):
    a. End of plan year.....  Sch. H--1l [Col.      Sch. I--1c [Col.
                               (b)].                 (b)].
    b. Beginning of plan      Sch. H--1l [Col.      Sch. I--1c [Col.
     year.                     (a)].                 (a)].
8. Change in net assets.....  Sch. H--Subtract 1l   Sch. I--Subtract 1c
                               [Col. (a)] from       [Col. (a) from 1c
                               1l[Col. (b)].         [Col. (b)].
9. Total income.............  Sch. H--2d..........  Sch. I--2d.
    a. Employer               Sch. H--2a(1)(A) &    Sch. I--2a(1) & 2b
     contributions.            2a(2) if applicable.  if applicable.
    b. Employee               Sch. H--2a(1)(B) &    Sch. I--2a(2) & 2b
     contributions.            2a(2) if applicable.  if applicable.
    c. Gains (losses) from    Sch. H--2b(4)(C)....  Not applicable.
     sale of assets.
    d. Earnings from          Sch. H--Subtract the  Sch. I -2c.
     investments.              sum of 2a(3),
                               2b(4)(C) and 2c
                               from 2d.
10. Total insurance premiums  Total of all Schs. A  Total of all Schs. A-
                               -5b.                  -5b.

[[Page 447]]

 
11. Funding deficiency:
    a. Defined benefit plans  Sch. B--10..........  Same.
    b. Defined contribution   Sch. R--6c, if more   Same.
     plans.                    than zero.
 
       B. WELFARE PLAN
 
1. Name of insurance carrier  All Schs. A--1(a)...  Same.
2. Total (experience rated    All Schs. A--Sum of   Same.
 and non-experienced rated)    8a(4) and 9(a).
 insurance premiums.
3. Experience rated premiums  All Schs. A--8a(4)..  Same.
4. Experience rated claims..  All Schs. A--8b(4)..  Same.
5. Value of plan assets
 (net):
    a. End of plan year.....  Sch. H--1l [Col.      Sch. I--1c [Col.
                               (b)].                 (b)].
    b. Beginning of plan      Sch. H--1l [Col.      Sch. I--1c [Col.
     year.                     (a)].                 (a)].
6. Change in net assets.....  Sch. H--Subtract 1l   Sch. I--Subtract 1c
                               [Col. (a)] from 1l    [Col. (a)] from 1c
                               [Col. (b)].           [Col. (b)].
7. Total income.............  Sch. H--2d..........  Sch. I--2d.
    a. Employer               Sch. H--2a(1)(A) &    Sch. I--2a(1) & 2b
     contributions.            2a(2) if applicable.  if applicable.
    b. Employee               Sch. H--2a(1)(B) &    Sch. I--2a(2) & 2b
     contributions.            2a(2) if applicable.  if applicable.
    c. Gains (losses) from    Sch. H--2b(4)(C)....  Not applicable.
     sale of assets.
    d. Earnings from          Sch. H--Subtract the  Sch. I -2c.
     investments.              sum of 2a(3),
                               2b(4)(C) and 2c
                               from 2d.
 8. Total plan expenses.....  Sch. H--2j..........  Sch. I--2i.
9. Administrative expenses..  Sch. H--2i(5).......  Not applicable.
10. Benefits paid...........  Sch. H--2e(4).......  Sch. I--2e.
11. Other expenses..........  Sch. H--Subtract the  Sch. I--2h.
                               sum of 2e(4) &
                               2i(5) from 2j.
------------------------------------------------------------------------


[44 FR 19403, Apr. 3, 1979, as amended at 44 FR 31640, June 1, 1979; 47 
FR 31873, July 23, 1982; 54 FR 8629, Mar. 1, 1989; 65 FR 21085, Apr. 19, 
2000; 65 FR 35568, June 5, 2000; 68 FR 16400, Apr. 3, 2003]



Sec. 2520.104b-30  Charges for documents.

    (a) Application. The plan administrator of an employee benefit plan 
may impose a reasonable charge to cover the cost of furnishing to 
participants and beneficiaries upon their written request as required 
under section 104(b)(4) of the Act, copies of the following information, 
statements or documents: The latest updated summary plan description, 
and the latest annual report, any terminal report, the bargaining 
agreement, trust agreement, contract, or other instruments under which 
the plan is established or operated. No charge may be assessed for 
furnishing information, statements or documents as required by other 
provisions of the Act, which include, in part 1 of title I, sections 
104(b)(1), (2), (3) and (c) and 105(a) and (c).
    (b) Reasonableness. The charge assessed by the plan administrator to 
cover the costs of furnishing documents is reasonable if it is equal to 
the actual cost per page to the plan for the least expensive means of 
acceptable reproduction, but in no event may such charge exceed 25 cents 
per page. For example, if a plan printed a large number of pamphlets at 
$1.00 per 50-page pamphlet, the actual cost of reproduction for the 
entire pamphlet ($1.00) would be equal to 2 cents per page. If only one 
page of such a pamphlet were requested, the actual cost of providing 
that page from the printed copy would be $1.00, since the copy would no 
longer be complete. In such a case, the least expensive means of 
acceptable reproduction would be individually reproducing the page 
requested at a charge of no more than 25 cents. On the other hand, if 
six pages of the same plan document were requested and each page cost 20 
cents to be reproduced, the actual cost of providing those pages would 
be $1.20. In such a case, if a printed copy is available, the least 
expensive means of acceptable reproduction would be to use pages from 
the printed copy at a charge of no more than $1.00. No other charge for 
furnishing documents, such as handling or postage charges, will be 
deemed reasonable. The plan administrator shall

[[Page 448]]

provide information to a plan participant or beneficiary, upon request, 
about the charge that would be made to provide a copy of material 
described in this paragraph.

[41 FR 16964, Apr. 23, 1976, as amended at 41 FR 37575, Sept. 7, 1976]



                  Subpart G--Recordkeeping Requirements



Sec. 2520.107-1  Use of electronic media for maintenance and retention of records.

    (a) Scope and purpose. Sections 107 and 209 of the Employee 
Retirement Income Security Act of 1974, as amended (ERISA), contain 
certain requirements relating to the maintenance of records for 
reporting and disclosure purposes and for determining the pension 
benefits to which participants and beneficiaries are or may become 
entitled. This section provides standards applicable to both pension and 
welfare plans concerning the use of electronic media for the maintenance 
and retention of records required to be kept under sections 107 and 209 
of ERISA.
    (b) General requirements. The record maintenance and retention 
requirements of sections 107 and 209 of ERISA are satisfied when using 
electronic media if:
    (1) The electronic recordkeeping system has reasonable controls to 
ensure the integrity, accuracy, authenticity and reliability of the 
records kept in electronic form;
    (2) The electronic records are maintained in reasonable order and in 
a safe and accessible place, and in such manner as they may be readily 
inspected or examined (for example, the recordkeeping system should be 
capable of indexing, retaining, preserving, retrieving and reproducing 
the electronic records);
    (3) The electronic records are readily convertible into legible and 
readable paper copy as may be needed to satisfy reporting and disclosure 
requirements or any other obligation under Title I of ERISA;
    (4) The electronic recordkeeping system is not subject, in whole or 
in part, to any agreement or restriction that would, directly or 
indirectly, compromise or limit a person's ability to comply with any 
reporting and disclosure requirement or any other obligation under Title 
I of ERISA; and
    (5) Adequate records management practices are established and 
implemented (for example, following procedures for labeling of 
electronically maintained or retained records, providing a secure 
storage environment, creating back-up electronic copies and selecting an 
off-site storage location, observing a quality assurance program 
evidenced by regular evaluations of the electronic recordkeeping system 
including periodic checks of electronically maintained or retained 
records, and retaining paper copies of records that cannot be clearly, 
accurately or completely transferred to an electronic recordkeeping 
system).
    (c) Legibility and readability. All electronic records must exhibit 
a high degree of legibility and readability when displayed on a video 
display terminal or other method of electronic transmission and when 
reproduced in paper form. The term ``legibility'' means the observer 
must be able to identify all letters and numerals positively and quickly 
to the exclusion of all other letters or numerals. The term 
``readability'' means that the observer must be able to recognize a 
group of letters or numerals as words or complete numbers.
    (d) Disposal of original paper records. Original paper records may 
be disposed of any time after they are transferred to an electronic 
recordkeeping system that complies with the requirements of this 
section, except such original records may not be discarded if the 
electronic record would not constitute a duplicate or substitute record 
under the terms of the plan and applicable federal or state law.

[67 FR 17275, Apr. 9, 2002]

[[Page 449]]



SUBCHAPTER D--MINIMUM STANDARDS FOR EMPLOYEE PENSION BENEFIT PLANS UNDER 
           THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974





PART 2530--RULES AND REGULATIONS FOR MINIMUM STANDARDS FOR EMPLOYEE PENSION BENEFIT PLANS--Table of Contents




                 Subpart A--Scope and General Provisions

Sec.
2530.200a  Scope.
2530.200a-1  Relationship of the Act and the Internal Revenue Code of 
          1954.
2530.200a-2  Treasury regulations for purposes of the Act.
2530.200a-3  Labor regulations for purposes of the Internal Revenue Code 
          of 1954.
2530.200b-1  Computation periods.
2530.200b-2  Hour of service.
2530.200b-3  Determination of service to be credited to employees.
2530.200b-4  One-year break in service.
2530.200b-5  Seasonal industries. [Reserved]
2530.200b-6  Maritime industry.
2530.200b-7  Day of service for employees in the maritime industry.
2530.200b-8  Determination of days of service to be credited to maritime 
          employees.
2530.201-1  Coverage; general.
2530.201-2  Plans covered by part 2530.

          Subpart B--Participation, Vesting and Benefit Accrual

2530.202-1  Eligibility to participate; general.
2530.202-2  Eligibility computation period.
2530.203-1  Vesting; general.
2530.203-2  Vesting computation period.
2530.203-3  Suspension of pension benefits upon employment.
2530.204-1  Year of participation for benefit accrual.
2530.204-2  Accrual computation period.
2530.204-3  Alternative computation methods for benefit accrual.
2530.204-4  Deferral of benefit accrual.

                 Subpart C--Form and Payment of Benefits

2530.205--2530.206  [Reserved]

          Subpart D--Plan Administration as Related to Benefits

2530.207--2530.209  [Reserved]
2530.210  Employer or employers maintaining the plan.

    Authority: Secs. 201, 202, 203, 204, 210, 505, 1011, 1012, 1014 and 
1015, Pub. L. 93-406, 88 Stat. 852-862, 866-867, 894, 898-913, 924-929 
(29 U.S.C. 1051-4, 1060, 1135, 26 U.S.C. 410, 411, 413, 414); Secretary 
of Labor's Order No. 13-76.

    Source: 41 FR 56462, Dec. 28, 1976, unless otherwise noted.



                 Subpart A--Scope and General Provisions



Sec. 2530.200a  Scope.



Sec. 2530.200a-1  Relationship of the Act and the Internal Revenue Code of 1954.

    (a) Part 2 of title I of the Employee Retirement Income Security Act 
of 1974 (hereinafter referred to as ``the Act'') contains minimum 
standards that a plan which is an employee pension benefit plan within 
the meaning of section 3(2) of the Act and which is covered under part 2 
must satisfy. (For a general explanation of the coverage of part 2, see 
Sec. 2530.201-1.) Substantially identical requirements are imposed by 
subchapter D of chapter 1 of subtitle A of the Internal Revenue Code of 
1954 (hereinafter referred to as ``the Code'') for plans seeking 
qualification for certain tax benefits under the Code. In general, the 
Code provisions apply to ``qualified'' pension, profit-sharing, and 
stock bonus plans described in section 401(a) of the Code, annuity plans 
described in section 403(a) of the Code and bond purchase plans 
described in section 405(a) of the Code. The standards contained in 
title I of the Act apply generally to both ``nonqualified' and 
``qualified'' employee pension benefit plans. The standards contained in 
the Act, and the related Code provisions, are ``minimum'' standards. In 
general, more liberal plan provisions (in terms of the benefit to be 
derived by the employee) are not prohibited.
    (b) For a definition of the term ``employee pension benefit plan'', 
see section 3(2) of the Act and Sec. 2510.3-2.
    (c) For a statement of the coverage of part 2 of the Act, see 
sections 4 and 201 of the Act and Secs. 2510.3-2, 2510.3-3, 2530.201-1 
and 2530.201-2.

[[Page 450]]



Sec. 2530.200a-2  Treasury regulations for purposes of the Act.

    Regulations prescribed by the Secretary of the Treasury or his 
delegate under sections 410 and 411 of the Code (relating to minimum 
standards for participation and vesting) shall apply for purposes of 
sections 202 through 204 of the Act. Thus, except for those provisions 
(such as the definition of an hour of service or a year of service) for 
which authority to prescribe regulations is specifically delegated to 
the Secretary of Labor, regulations prescribed by the Secretary of the 
Treasury shall also be used to implement the related provisions 
contained in the Act. Those regulations specify the credit that must be 
given to an employee for years of service and years of participation 
completed by the employee. The allocation of regulatory jurisdiction 
between the Secretary of Treasury or his delegate and the Secretary of 
Labor is governed by titles I through III of the Act. See section 3002 
of the Act (88 Stat. 996).



Sec. 2530.200a-3  Labor regulations for purposes of the Internal Revenue Code of 1954.

    The Secretary of Labor is specifically authorized to prescribe 
certain regulations (generally relating to hour of service, year of 
service, break in service, year of participation and special rules for 
seasonal and maritime industries) applicable to both title I of the Act 
and sections 410 and 411 of the Code. These regulations are contained in 
this subpart (A) and subpart B of this part (2530) and must be 
integrated with regulations prescribed by the Secretary of the Treasury 
or his delegate under sections 410 of the Code (relating to minimum 
participation standards), 411(a) of the Code (relating to minimum 
vesting standards) and 411(b) of the Code (relating to benefit accrual 
requirements). The allocation of regulatory jurisdiction between the 
Secretary of Labor and the Secretary of the Treasury or his delegate is 
governed by titles I through III of the Act. See section 3002 of the Act 
(88 Stat. 996).



Sec. 2530.200b-1  Computation periods.

    (a) General. Under sections 202, 203 and 204 of the Act and sections 
410 and 411 of the Code, an employee's statutory entitlements with 
regard to participation, vesting and benefit accrual are generally 
determined by reference to years of service and years of participation 
completed by the employee and one-year breaks in service incurred by the 
employee. The units used for determining an employee's credit towards 
statutory participation, vesting and benefit accrual entitlements are in 
turn defined in terms of the number of hours of service credited to the 
employee during a specified period--in general, a twelve-consecutive-
month period--referred to herein as a ``computation period''. A plan 
must designate eligibility computation periods pursuant to 
Sec. 2530.202-2 and vesting computation periods pursuant to 
Sec. 2530.203-2, and, under certain circumstances, a defined benefit 
plan must designate accrual computation periods pursuant to 
Sec. 2530.204-2. An employee who is credited with 1000 hours of service 
during an eligibility computation period must generally be credited with 
a year of service for purposes of section 202 of the Act and section 410 
of the Code (relating to minimum participation standards). An employee 
who is credited with 1000 hours of service during a vesting computation 
period must generally be credited with a year of service for purposes of 
section 203 of the Act and 411(a) of the Code (relating to minimum 
vesting standards). An employee who completes 1000 hours of service 
during an accrual computation period must, under certain circumstances, 
be credited with at least a partial year of participation for purposes 
of section 204 of the Act and section 411(b) of the Code (relating to 
benefit accrual requirements). With respect to benefit accrual, however, 
the plan may not be required to credit an employee with a full year of 
participation and, therefore, full accrual for such year of 
participation unless the employee is credited with the number of hours 
of service or other permissible units of credit prescribed under the 
plan for crediting of a full year of participation (see Sec. 2530.204-2 
(c) and (d)). It should be noted that under some of the equivalencies 
which a plan may use under Sec. 2530.200b-3 to determine the

[[Page 451]]

number of units of service to be credited to an employee in a 
computation period, an employee must be credited with a year of service 
of partial year of participation if the employee is credited with a 
number of units of service which is less than 1000 in a computation 
period. See also Sec. 2530.200b-9, relating to elapsed time.
    (b) Rules generally applicable to computation periods. In general, 
employment at the beginning or the end of an applicable computation 
period or on any particular date during the computation period is not 
determinative of whether the employee is credited with a year of service 
or a partial year of participation, or incurs a break in service, for 
the computation period. Rather, these determinations generally must be 
made solely with reference to the number of hours (or other units of 
service) which are credited to the employee during the applicable 
computation period. For example, an employee who is credited with 1000 
hours of service during any portion of a vesting computation period must 
be credited with a year of service for that computation period 
regardless of whether the employee is employed by the employer on the 
first or the last day of the computation period. It should be noted, 
however, that in certain circumstances, a plan may provide that certain 
consequences follow from an employee's failure to be employed on a 
particular date. For example, under section 202(a)(4) of the Act and 
section 410(a)(4) of the Code, a plan may provide that an individual 
otherwise entitled to commence participation in the plan on a specified 
date does not commence participation on that date if he or she was 
separated from the service before that date. Similary, under section 
204(b)(1) of the Act and section 411(b)(1) of the Code, a plan which is 
not a defined benefit plan is not subject to section 204 (b)(1) and 
(b)(3) of the Act and section 411 (b)(1) and (b)(3) of the Code. Such a 
plan, therefore, may provide that an individual who has been a 
participant in the plan, but who has separated from service before the 
date on which the employer's contributions to the plan or forfeitures 
are allocated among participant's accounts or before the last day of the 
vesting computation period, does not share in the allocation of such 
contributions or forfeitures even though the individual is credited with 
1000 or more hours of service for the applicable vesting computation 
period. Under certain circumstances, however, such a plan provision may 
result in discrimination prohibited under section 401(a)(4) of the Code. 
See Revenue Ruling 76-250, I.R.B. 1976-27.



Sec. 2530.200b-2  Hour of service.

    (a) General rule. An hour of service which must, as a minimum, be 
counted for the purposes of determining a year of service, a year of 
participation for benefit accrual, a break in service and employment 
commencement date (or reemployment commencement date) under sections 
202, 203 and 204 of the Act and sections 410 and 411 of the Code, is an 
hour of service as defined in paragraphs (a)(1), (2) and (3) of this 
section. The employer may round up hours at the end of a computation 
period or more frequently.
    (1) An hour of service is each hour for which an employee is paid, 
or entitled to payment, for the performance of duties for the employer 
during the applicable computation period.
    (2) An hour of service is each hour for which an employee is paid, 
or entitled to payment, by the employer on account of a period of time 
during which no duties are performed (irrespective of whether the 
employment relationship has terminated) due to vacation, holiday, 
illness, incapacity (including disability), layoff, jury duty, military 
duty or leave of absence. Notwithstanding the preceding sentence,
    (i) No more than 501 hours of service are required to be credited 
under this paragraph (a)(2) to an employee on account of any single 
continuous period during which the employee performs no duties (whether 
or not such period occurs in a single computation period);
    (ii) An hour for which an employee is directly or indirectly paid, 
or entitled to payment, on account of a period during which no duties 
are performed is not required to be credited to the employee if such 
payment is made or due under a plan maintained solely for the purpose of 
complying with applicable

[[Page 452]]

workmen's compensation, or unemployment compensation or disability 
insurance laws; and
    (iii) Hours of service are not required to be credited for a payment 
which solely reimburses an employee for medical or medically related 
expenses incurred by the employee.

For purposes of this paragraph (a)(2), a payment shall be deemed to be 
made by or due from an employer regardless of whether such payment is 
made by or due from the employer directly, or indirectly through, among 
others, a trust fund, or insurer, to which the employer contributes or 
pays premiums and regardless of whether contributions made or due to the 
trust fund, insurer or other entity are for the benefit of particular 
employees or are on behalf of a group of employees in the aggregate.
    (3) An hour of service is each hour for which back pay, irrespective 
of mitigation of damages, is either awarded or agreed to by the 
employer. The same hours of service shall not be credited both under 
paragraph (a)(1) or paragraph (a)(2), as the case may be, and under this 
paragraph (a)(3). Thus, for example, an employee who receives a back pay 
award following a determination that he or she was paid at an unlawful 
rate for hours of service previously credited will not be entitled to 
additional credit for the same hours of service. Crediting of hours of 
service for back pay awarded or agreed to with respect to periods 
described in paragraph (a)(2) shall be subject to the limitations set 
forth in that paragraph. For example, no more than 501 hours of service 
are required to be credited for payments of back pay, to the extent that 
such back pay is agreed to or awarded for a period of time during which 
an employee did not or would not have performed duties.
    (b) Special rule for determining hours of service for reasons other 
than the performance of duties. In the case of a payment which is made 
or due on account of a period during which an employee performs no 
duties, and which results in the crediting of hours of service under 
paragraph (a)(2) of this section, or in the case of an award or 
agreement for back pay, to the extent that such award or agreement is 
made with respect to a period described in paragraph (a)(2) of this 
section, the number of hours of service to be credited shall be 
determined as follows:
    (1) Payments calculated on the basis of units of time. (i) Except as 
provided in paragraph (b)(3) of this section, in case of a payment made 
or due which is calculated on the basis of units of time, such as hours, 
days, weeks or months, the number of hours of service to be credited 
shall be the number of regularly scheduled working hours included in the 
units of time on the basis of which the payment is calculated. For 
purposes of the preceding sentence, in the case of an employee without a 
regular work schedule, a plan may provide for the calculation of the 
number of hours to be credited on the basis of a 40-hour workweek or an 
8-hour workday, or may provide for such calculation on any reasonable 
basis which reflects the average hours worked by the employee, or by 
other employees in the same job classification, over a representative 
period of time, provided that the basis so used is consistently applied 
with respect to all employees within the same job classifications, 
reasonably defined. Thus, for example, a plan may not use a 40-hour 
workweek as a basis for calculating the number of hours of service to be 
credited for periods of paid absences for one employee while using an 
average based on hours worked over a representative period of time as a 
basis for such calculation for another, similarly situated employee.
    (ii) Examples. The following examples illustrate the rules in 
paragraph (b)(1) of this section without regard to paragraphs (b)(2) and 
(3).
    (A) Employee A was paid for 6 hours of sick leave at his normal 
hourly rate. The payment was therefore calculated on the basis of units 
of time (hours). A must, therefore, be credited with 6 hours of service 
for the 6 hours of sick leave.
    (B) Employee B was paid his normal weekly salary for 2 weeks of 
vacation. The payment was therefore calculated on the basis of units of 
time (weeks). B is scheduled to work 37\1/2\ hours per week (although 
from time to time working overtime). B must, therefore, be credited with 
75 hours of service for the vacation (37\1/2\ hours per week multiplied 
by 2 weeks).

[[Page 453]]

    (C) Employee C spent 3 weeks on a paid vacation. C's salary is 
established at an annual rate but is paid on a bi-weekly basis. The 
amount of salary payments attributable to be paid vacation was 
calculated on the basis of units of time (weeks). C has no regular work 
schedule but works at least 50 hours per week. The plan provides for the 
calculation of hours of service to be credited to employees in C's 
situation for periods of paid absences on the basis of a 40-hour 
workweek. C must, therefore, be credited with 120 hours of service for 
the vacation (3 weeks multiplied by 40 hours per week).
    (D) Employee D spent 2 weeks on vacation, for which he was paid 
$150. Although D has no regular work schedule, the $150 payment was 
established on the assumption that an employee in D's position works an 
average of 30 hours per week at a rate of $2.25 per hour. The payment of 
$150 was therefore calculated on the basis of units of time (weeks). The 
plan provides for the calculation of hours of service to be credited to 
employees in D's situation for periods of paid absences on the basis of 
the average number of hours worked by an employee over a period of 6 
months. D's employer's records show that D worked an average of 28 hours 
per week for a 6-month period. D must, therefore, be credited with 56 
hours of service for the vacation (28 hours per week multiplied by 2 
weeks).
    (E) Employee E is regularly scheduled to work a 40-hour week. During 
a computation period E is incapacitated as a result of injury for a 
period of 11 weeks. Under the sick leave policy of E's employer E is 
paid his normal weekly salary for the first 8 weeks of his incapacity. 
After 8 weeks the employer ceases to pay E's normal salary but, under a 
disability insurance program maintained by the employer, E receives 
payments equal to 65% of his normal weekly salary for the remaining 3 
weeks during which E is incapacitated. For the period during which he is 
incapacitated, therefore, E receives credit for 440 hours of service (11 
weeks multiplied by 40 hours per week) regardless of the fact that 
payments to E for the last 3 wseeks of the period during which hs was 
incapacitated were made in amounts less than E's normal compensation.
    (2) Payments not calculated on the basis of units of time. (i) 
Except as provided in paragraph (b)(3) of this section, in the case of a 
payment made or due, which is not calculated on the basis of units of 
time, the number of hours of service to be credited shall be equal to 
the amount of the payment divided by the employee's most recent hourly 
ratre of compensation (as determined under paragraph (b)(2)(ii) of this 
section) before the period during which no duties are performed.
    (ii) For purposes of paragraph (b)(2)(i) of this section an 
employee's hourly rate of compensation shall be determined as follows:
    (A) In the case of an employee whose compensation is determined on 
the basis of an hourly rate, such hourly rate shall be the employee's 
most recent hourly rate of compensation.
    (B) In the case of an employee whose compensation is determined on 
the basis of a fixed rate for specified periods of time (other than 
hours) such as days, weeks or months, the employee's hourly rate of 
compensation shall be the employee's most recent rate of compensation 
for a specified period of time (other than an hour), divided by the 
number of hours regularly scheduled for the performance of duties during 
such period of time. For purposes of the preceding sentence, in the case 
of an employee without a regular work schedule, the plan may provide for 
the calculation of the employee's hourly rate of compensation on the 
basis of a 40-hour workweek, an 8-hour workday, or may provide for such 
calculation on any reasonable basis which reflects the average hours 
worked by the employee over a representative period of time, provided 
that the basis so used is consistently applied with respect to all 
employees within the same job classificatons, reasonably defined.
    (C) In the case of an employee whose compensation is not determined 
on the basis of a fixed rate for specified periods of time, the 
employee's hourly rate of compensation shall be the lowest hourly rate 
of compensation paid to employees in the same job classification as that 
of the employee or, if no

[[Page 454]]

employees in the same job classification have an hourly rate, the 
minimum wage as established from time to time under section 6(a)(1) of 
the Fair Labor Standards Act of 1938, as amended.
    (iii) Examples. The following examples illustrate the rules in 
paragraph (b)(2) of this section without regard to paragraphs (b)(1) and 
(3).
    (A) As a result of an injury, an employee is incapacitated for 5 
weeks. A lump sum payment of $500 is made to the employee with respect 
to the injury under a disability insurance plan maintained by the 
employee's employer. At the time of the injury, the employee's rate of 
pay was $3.00 per hour. The employee must, therefore, be credited with 
167 hours of service ($500 divided by $3.00 per hour).
    (B) Same facts as in Example (A), above, except that at the time of 
the injury, the employee's rate of pay was $160 per week and the 
employee has a regular work schedule of 40 hours per week. The 
employee's hourly rate of compensation is, therefore, $4.00 per hour 
($160 per week divided by 40 hours per week) and the employee must be 
credited with 125 hours of service for the period of absence ($500 
divided by $4.00 per hour).
    (C) An employee is paid at an hourly rate of $3.00 per hour and 
works a regular schedule of 40 hours per week. The employee is disabled 
for 26 weeks during a computation period. For the first 12 weeks of 
disability, the employee is paid his normal weekly earnings of $120 per 
week by the employer. Thereupon, a lump-sum disability payment of $1000 
is made to the employee under a disability insurance plan maintained by 
the employer. Under paragraph (a)(3)(i) of this section, the employee is 
credited with 501 hours of service for the period of disability (lesser 
of 501 hours--the maximum number of hours required to be credited for a 
period of absence--or the sum of 12 weeks multiplied by 40 hours per 
week plus $1000 divided by $3.00 per hour).
    (3) Rule against double credit. (i) Nothwithstanding paragraphs 
(b)(1) and (2) of this section, an employee is not required to be 
credited on account of a period during which no duties are performed 
with a number of hours of service which is greater than the number of 
hours regularly scheduled for the performance of duties during such 
period. For purposes of applying the preceding sentence in the case of 
an employee without a regular work schedule, a plan may provide for the 
calculation of the number of hours of service to be credited to the 
employee for a period during which no duties are performed on the basis 
of a 40-hour workweek or an 8-hour workday, or may provide for such 
calculation on any reasonable basis which reflects the average hours 
worked by the employee, or by other employees in the same job 
classification, over a representative period of time, provided that the 
basis so used is consistently applied with respect to all employees 
within the same job classifications, reasonably defined.
    (ii) Examples. (A) Employee A has a regular 40-hour workweek. Each 
year Employee A is entitled to pay for a two-week vacation, in addition 
to receiving normal wages for all hours worked, regardless of whether A 
actually takes a vacation and regardless of the duration of his 
vacation. The vacation payments are, therefore, calculated on the basis 
of units of time (weeks). In computation period I, A takes no vacation 
but receives vacation pay. A is entitled to no credit for hours of 
service for the vacation payment made in computation period I because 
the payment was not made on account of a period during which no duties 
were performed. In computation period II, A takes a vacation of one week 
in duration, although receiving pay for a two-week vacation. A is 
entitled to be credited with 40 hours of service for his one-week 
vacation in computation period II even though paid for two weeks of 
vacation. In computation period III, A takes a vacation for a period 
lasting more than 2 weeks. A is entitled to be credited with 80 hours of 
service for his vacation in computation period III (40 hours per week 
multiplied by 2 weeks) even though the vacation lasted more than 2 
weeks.
    (B) Employee B has no regular work schedule. As a result of an 
injury, B is incapacitated for 1 day. A lump-sum payment of $500 is made 
to A with respect to the injury under an insurance program maintained by 
the employer.

[[Page 455]]

A pension plan maintained by the employer provides for the calculation 
of the number of hours of service to be credited to an employee without 
a regular work schedule on the basis of an 8-hour day. A is therefore 
required to be credited with no more than 8 hours for the day during 
which he was incapacitated, even though A's rate of pay immediately 
before the injury was $3.00 per hour.
    (c) Crediting of hours of service to computation periods. (1) Except 
as provided in paragraph (c)(4) of this section, hours of service 
described in paragraph (a)(1) of this section shall be credited to the 
computation period in which the duties are performed.
    (2) Except as provided in paragraph (c)(4) of this section, hours of 
service described in paragraph (a)(2) of this section shall be credited 
as follows:
    (i) Hours of service credited to an employee on account of a payment 
which is calculated on the basis of units of time, such as hours, days, 
weeks or months, shall be credited to the computation period or 
computation periods in which the period during which no duties are 
performed occurs, beginning with the first unit of time to which the 
payment relates.
    (ii) Hours of service credited to an employee by reason of a payment 
which is not calculated on the basis of units of time shall be credited 
to the computation period in which the period during which no duties are 
performed occurs, or if the period during which no duties are performed 
extends beyond one computation period, such hours of service shall be 
allocated between not more than the first two computation periods on any 
reasonable basis which is consistently applied with respect to all 
employees within the same job classifications, reasonably defined.
    (3) Except as provided in paragraph (c)(4) of this section, hours of 
service described in paragraph (a)(3) of this section shall be credited 
to the computation period or periods to which the award or agreement for 
back pay pertains, rather than to the computation period in which the 
award, agreement or payment is made.
    (4) In the case of hours of service to be credited to an employee in 
connection with a period of no more than 31 days which extends beyond 
one computation period, all such hours of service may be credited to the 
first computation period or the second computation period. Crediting of 
hours of service under this paragraph must be done consistently with 
respect to all employees within the same job classifications, reasonably 
defined.
    (5) Examples. The following examples are intended to illustrate 
paragraph (c)(4) of this section.
    (i) An employer maintaining a plan pays employees on a bi-weekly 
basis. The plan designates the calendar year as the vesting computation 
period. The employer adopts the practice of crediting hours of service 
for the performance of duties during a bi-weekly payroll period to the 
vesting computation period in which the payroll period ends. Thus, when 
a payroll period ends on January 7, 1978, all hours of service to be 
credited to employees for the performance of duties during that payroll 
period are credited to the vesting computation period beginning on 
January 1, 1978. This practice is consistent with paragraph (c)(4) of 
this section, even though some hours of service credited to the 
computation period beginning on January 1, 1978, are attributable to 
duties performed during the previous vesting computation period.
    (ii) An employer maintains a sick leave policy under which an 
employee is entitled to a certain number of hours of sick leave each 
year, on account of which the employee is paid his or her normal rate of 
compensation. An employee with a work schedule of 8 hours per day, 5 
days per week, is sick from December 26, 1977 through January 4, 1978. 
Under the employer's sick leave policy, the employee is entitled to 
compensation for the entire period. A plan maintained by the employer 
establishes a calendar-year vesting computation period. The period from 
December 26, 1977 through December 31, 1977 includes 5 working days; the 
period from January 1, 1978 through January 4, 1978 includes 3 working 
days. Unless the plan adopts the alternative method for crediting 
service under paragraph (c)(4) of this section (illustrated in Example 
(iii), below) for the period of paid sick leave, the plan, pursuant to 
paragraph (c)(2)(i) of this section, must

[[Page 456]]

credit the employee with 40 hours of service in the 1977 vesting 
computation period (5 days multiplied by 8 hours per day) and 24 hours 
of service in the 1978 vesting computation period (3 days multiplied by 
8 hours per day).
    (iii) Same facts as in Example (ii), above, except that the plan 
adopts the practice of crediting hours of service for sick leave and 
other periods of compensated absences to the vesting computation period 
in which the employer's bi-weekly payroll period ends. The employee 
returns to work on January 5, 1978 and works for 2 days. For the 2-week 
payroll period ending on January 8, 1978, the employee may be credited 
with 80 hours of service in the 1978 vesting computation period (64 
hours of service for the paid sick leave and 16 hours of service for the 
2 days during which duties were performed).
    (d) Other Federal law. Nothing in this section shall be construed to 
alter, amend, modify, invalidate, impair or supersede any law of the 
United States or any rule or regulation issued under any such law. Thus, 
for example, nothing in this section shall be construed as denying an 
employee credit for an ``hour of service'' if credit is required by 
separate Federal law. Furthermore, the nature and extent of such credit 
shall be determined under such law.
    (e) Additional examples. (1) During a computation period, an 
employee was paid for working 38\1/4\ hours a week for 45 weeks. During 
the remaining 7 weeks of the computation period the employee was not 
employed by this employer. The employee completed 1,721\1/4\ hours of 
service (45 weeks worked multiplied by 38\1/4\ hours per week). The 
employer may also round up hours at the end of the computation period or 
more frequently. Thus, this employee could be credited with 1,722 hours 
of service (or, if the employer rounded up at the end of each week, 39 
hours of service per week, resulting in credit for 1,755 hours of 
service).
    (2) During a computation period, an employee was paid for a workweek 
of 40 hours per week for 40 weeks and, including overtime, for working 
50 hours per week for 8 weeks. The employee completed 2,000 hours of 
service (40 weeks multiplied by 40 hours per week, plus 8 weeks worked 
multiplied by 50 hours per week).
    (3) During a computation period an employee was paid for working 2 
regularly scheduled 40-hour weeks and then became disabled. The employee 
was disabled through the remainder of the computation period and the 
following computation period. Throughout the period of disability, 
payments were made to the employee as follows: For the first month of 
the period of disability, the employer continued to pay the employee the 
employee's normal compensation at the same rate as before the disability 
occurred; thereupon, under the employer's disability insurance policy, 
payments were made to the employee in amounts equal to 80 percent of the 
employee's compensation before the disability. For the first computation 
period the employee is credited with 80 hours of service for the 
performance of duties (2 weeks multiplied by 40 hours per week) and 501 
hours hours of service for the period of disability (the lesser of 501 
hours of service or 50 weeks multiplied by 40 hours per week), or a 
total of 581 hours of service; for the second computation period the 
employee is credited with no hours of service because, under paragraph 
(a)(2)(i) of this section, the maximum of 501 hours of service has been 
credited for the period of disability in the first computation period.
    (4) An employee has a regularly scheduled 5-day, 40-hour week. 
During a computation period the employee works for the first week, 
spends the second week on a paid vacation, returns to work for an hour 
and is then disabled for the remainder of the computation period. 
Payments under a disability plan maintained by the employer are made to 
the employee on account of the period of disability. The employee is 
credited with 582 hours of service for the computation period (40 hours 
for the period of paid vacation; 41 hours for the performance of duties; 
501 hours for the period of disability).
    (5) Same facts as in Example (4), above, except that the employee's 
period of disability begins before the employee returns from vacation to 
the performance of duties. The employee is credited with only 541 hours 
of service,

[[Page 457]]

because the paid vacation and the disability together constitute a 
single, continuous period during which no duties were performed and, 
therefore, under paragraph (a)(2)(i) of this section, no more than 501 
hours of service are required to be credited for such period.
    (6) During a computation period, an employee worked 40 hours a week 
for the first 2 weeks. The employee then began serving on active duty in 
the Armed Forces of the United States, which service occupied the 
remaining 50 weeks of the computation period. The employee would be 
credited with 80 hours (2 weeks worked multiplied by 40 hours) plus such 
credit as may be prescribed by separate Federal laws relating to 
military service. The nature and extent of the credit that the employee 
receives upon his return and the purpose for which such credit is given, 
e.g., the percentage of his or her accrued benefits derived from 
employer contributions which are nonforfeitable (or vested), will depend 
upon the interpretation of the Federal law governing veterans' 
reemployment rights.
    (f) Plan document. A plan which credits service on the basis of 
hours of service must state in the plan document the definition of hours 
of service set forth in paragraph (a) of this section, but is not 
required to state the rules set forth in paragraph (b) and (c) of this 
section if they are incorporated by reference.



Sec. 2530.200b-3  Determination of service to be credited to employees.

    (a) General rule. For the purpose of determining the hours of 
service which must be credited to an employee for a computation period, 
a plan shall determine hours of service from records of hours worked and 
hours for which payment is made or due or shall use an equivalency 
permitted under paragraph (d), (e) or (f) of this section to determine 
hours of service. Any records may be used to determine hours of service 
to be credited to employees under a plan, even though such records are 
maintained for other purposes, provided that they accurately reflect the 
actual number of hours of service with which an employee is required to 
be credited under Sec. 2530.200b-2(a). Payroll records, for example, may 
provide sufficiently accurate data to serve as a basis for determining 
hours of service. If, however, existing records do not accurately 
reflect the actual number of hours of service with which an employee is 
entitled to be credited, a plan must either develop and maintain 
adequate records or use one of the permitted equivalencies. A plan may 
in any case credit hours of service under any method which results in 
the crediting of no less than the actual number of hours of service 
required to be credited under Sec. 2530.200b-2(a) to each employee in a 
computation period, even though such method may result in the crediting 
of hours of service in excess of the number of hours required to be 
credited under Sec. 2530.200b-2. A plan is not required to prescribe in 
its documents which records are to be used to determine hours of 
service.
    (b) Determination of pre-effective date hours of service. To the 
extent that a plan is required to determine hours of service completed 
before the effective date of part 2 of title I of the Act (see section 
211 of the Act), the plan may use whatever records may be reasonably 
accessible to it and may make whatever calculations are necessary to 
determine the approximate number of hours of service completed before 
such effective date. For example, if a plan or an employer maintaining 
the plan has, or has access to, only the records of compensation of 
employees for the period before the effective date, it may derive the 
pre-effective date hours of service by using the hourly rate for the 
period or the hours customarily worked. If accessible records are 
insufficient to make an approximation of the number of pre-effective 
date hours of service for a particular employee or group of employees, 
the plan may make a reasonable estimate of the hours of service 
completed by such employee or employees during the particular period. 
For example, if records are available with respect to some employees, 
the plan may estimate the hours of other employees in the same job 
classification based on these records. A plan may use any of the 
equivalencies permitted under this section, or the elapsed time method 
of crediting service permitted under this

[[Page 458]]

section, or the elapsed time method of crediting service permitted under 
Sec. 2530.200b-9, to determine hours of service completed before the 
effective date of part 2 of title I of the Act.
    (c) Use of equivalencies for determining service to be credited to 
employees. (1) The equivalencies permitted under paragraphs (d), (e) and 
(f) of this section are methods of determining service to be credited to 
employees during computation periods which are alternatives to the 
general rule for determining hours of service set forth in paragraph (a) 
of this section. The equivalencies are designed to enable a plan to 
determine the amount of service to be credited to an employee in a 
computation period on the basis of records which do not accurately 
reflect the actual number of hours of service required to be credited to 
the employee under Sec. 2530.200b-2(a). However, the equivalencies may 
be used even if such records are maintained. Any equivalency used by a 
plan must be set forth in the document under which the plan is 
maintained.
    (2) A plan may use different methods of crediting service, including 
equivalencies permitted under paragraphs (d), (e) and (f) of this 
section and the method of crediting service under the general rule set 
forth in Sec. 2530.200b-2(a), for different classifications of employees 
covered under the plan or for different purposes, provided that such 
classifications are reasonable and are consistently applied. Thus, for 
example, a plan may provide that part-time employees are credited under 
the general method of crediting service set forth in Sec. 2530.200b-2 
and full-time employees are credited under a permissible equivalency. A 
classification, however, will not be deemed to be reasonable or 
consistently applied if such classification is designed with an intent 
to preclude an employee or employees from attaining statutory 
entitlement with respect to eligibility to participate, vesting or 
benefit accrual. For example, a classification applied so that any 
employee credited with less than 1,000 hours of service during a given 
12-consecutive-month period would be considered part-time and subject to 
the general method of crediting service rather than an equivalency would 
not be reasonable.
    (3) Notwithstanding paragraphs (c)(1) and (2) of this section, the 
use of a permissible equivalency for some, but not all, purposes or the 
use of a permissible equivalency for some, but not all, employees may, 
under certain circumstances, result in discrimination prohibited under 
section 401a of the Code, even though it is permitted under this 
section.
    (d) Equivalencies based on working time--(1) Hours worked. A plan 
may determine service to be credited to an employee on the basis of 
hours worked, as defined in paragraph (d)(3)(i) of this section, if 870 
hours worked are treated as equivalent to 1,000 hours of service and 435 
hours worked are treated as equivalent to 500 hours of service.
    (2) Regular time hours. A plan may determine service to be credited 
to an employee on the basis of regular time hours, as defined in 
paragraph (d)(3)(ii) of this section, if 750 regular time hours are 
treated as equivalent to 1,000 hours of service and 375 regular time 
hours are treated as equivalent to 500 hours of service.
    (3) For purposes of this section:
    (i) The term ``hours worked'' shall mean hours of service described 
in Sec. 2530.200b-2(a)(1), and hours for which back pay, irrespective of 
mitigation of damages, is awarded or agreed to by an employer, to the 
extent that such award or agreement is intended to compensate an 
employee for periods during which the employee would have been engaged 
in the performance of duties for the employer.
    (ii) The term ``regular time hours'' shall mean hours worked, except 
hours for which a premium rate is paid because such hours are in excess 
of the maximum workweek applicable to an employee under section 7(a) of 
the Fair Labor Standards Act of 1938, as amended, or because such hours 
are in excess of a bona fide standard workweek or workday.
    (4) A plan determining service to be credited to an employee on the 
basis of hours worked or regular time hours shall credit hours worked or 
regular time hours, as the case may be, to computation periods in 
accordance with the rules for crediting hours of service

[[Page 459]]

to computation periods set forth in Sec. 2530.200b-2(c).
    (5) Examples. (i) A defined benefit plan uses the equivalency based 
on hours worked permitted under paragraph (d)(1) of this section. The 
plan uses the same 12-consecutive-month period for the vesting and 
accrual computation periods. The plan credits a participant with each 
hour for which the participant is paid, or entitled to payment, for the 
performance of duties for the employer during a computation period (as 
well as each hour for which back pay is awarded or agreed to). During a 
vesting/accrual computation period Participant A is credited with 870 
hours worked. A is credited with a year of service for purposes of 
vesting for the computation period and with at least a partial year of 
participation for purposes of accrual, as if A had been credited with 
1000 hours of service during the computation period. During the same 
computation period Participant B is credited with 436 hours of service. 
B is not credited with a year of service for purposes of vesting or a 
partial year or paritcipation for purposes of accrual for the 
computation period, but does not incur a one-year break in service for 
the computation period, as if B had been credited with 501 hours of 
service during the computation period.
    (ii) A plan uses the equivalency based on regular time hours 
permitted under paragraph (d)(2) of this section. During a computation 
period a participant works 370 regular time hours and 20 overtime hours. 
The participant incurs a one-year break in service for the computation 
period because he has not been credited with 375 regular time hours in 
the computation period.
    (e) Equivalencies based on periods of employment. (1) Except as 
provided in paragraphs (e)(4) and (6) of this section, a plan may 
determine the number of hours of service to be credited to employees in 
a computation period on the following bases:
    (i) On the basis of days of employment, if an employee is credited 
with 10 hours of service for each day for which the employee would be 
required to be credited with at least one hour of service under 
Sec. 2530.200b-2;
    (ii) On the basis of weeks of employment, if an employee is credited 
with 45 hours of service for each week for which the employee would be 
required to be credited with at least one hour of service under 
Sec. 2530.200b-2;
    (iii) On the basis of semi-monthly payroll periods, if an employee 
is credited with 95 hours of service for each semi-monthly payroll 
period for which the employee would be required to be credited with at 
least one hour of service under Sec. 2530.200b-2; or
    (iv) On the basis of months of employment, if an employee is 
credited with 190 hours of service for each month for which the employee 
would be required to be credited with at least one hour of service under 
Sec. 2530.200 b-2.
    (2) Except as provided in paragraphs (e)(4) and (6) of this section, 
a plan may determine the number of hours of service to be credited to 
employees in a computation period on the basis of shifts if an employee 
is credited with the number of hours included in a shift for each shift 
for which the employee would be required to be credited with at least 
one hour of service under Sec. 2530.200b-2. if a plan uses the 
equivalency based on shifts permitted under this paragraph, the times of 
the beginning and end of each shift used as a basis for the 
determination of service shall be set forth in a document referred to in 
the plan.
    (3) Examples. The following examples illustrate the application of 
paragraphs (e)(1) and (2) of this section;
    (i) A plan uses the equivalency based on weeks of employment 
permitted under paragraph (e)(1)(ii) of this section. An employee works 
for one hour on the first workday of a week and then takes leave without 
pay for the entire remainder of the week. The plan must credit the 
employee with 45 hours of service for the week.
    (ii) A plan uses the equivalency based on weeks of employment 
permitted under paragraph (e)(1)(ii) of this section. An employee spends 
a week on vacation with pay. The plan must credit the employee with 45 
hours of service for the week.
    (iii) A plan uses the equivalency based on weeks of employment 
permitted under paragraph (e)(1)(ii) of this section. An employee spends 
two days of a week on vacation with pay and the

[[Page 460]]

remainder of the week on leave without pay. The plan must credit the 
employee with 45 hours of service for the week.
    (iv) A plan uses the equivalency based on weeks of employment 
permitted under paragraph (e)(1)(ii) of this section. An employee spends 
the entire week on leave without pay. The plan is not required to credit 
the employee with any hours of service for the week because no payment 
was made to the employee for the week of leave and, therefore, under 
Sec. 2530.200b-2 no hours of service would be credited to the employee 
for the week of leave.
    (v) The workday of an employer maintaining a plan is scheduled in 
shifts. Ordinarily, each shift is 6 hours in duration. At certain times, 
however, the employer schedules 8-hour shifts in order to meet increased 
demand. Such shifts are described in a collective bargaining agreement 
referred to in the plan documents. The plan must credit an employee with 
6 hours of service for each 6-hour shift for which the employee would be 
credited with one hour of service under Sec. 2530.200b-2, and with 8 
hours of service for each such 8-hour shift.
    (vi) An employer's workday is divided into three 8-hour shifts, each 
employee generally working 5 shifts per week. A plan maintained by the 
employer uses the equivalency based on shifts permitted under paragraph 
(e)(2) of this section. An employee is on vacation with pay for 2 weeks, 
during which, in the ordinary course of his work schedule, he would have 
worked 10 shifts. The employee must be credited with 80 hours of service 
for the vacation (10 shifts multiplied by 8 hours per shift).
    (vii) An employer's workday is divided into three 8-hour shifts, 
each employee generally working 1 shift per workday. A plan maintained 
by the employer uses the equivalency based on shifts permitted under 
paragraph (e)(2) of this section. On a certain day, an employee works 
his normal 8-hour shift and an hour during the following shift. In 
addition to 8 hours service for the first shift, the employee must be 
credited with 8 hours of service for the following shift, since he would 
be entitled to be credited with at least one hour of service for the 
second shift under Sec. 2530.200b-2.
    (viii) A plan uses the equivalency based on days permitted under 
paragraph (e)(1)(i) of this section. During a computation period an 
employee spends 2 weeks on vacation with pay. In the ordinary course of 
the employee's regular work schedule, the employee would be engaged in 
the performance of duties for 10 days during the 2-week vacation period. 
Under Sec. 2530.200b-2, the employee would be credited with at least one 
hour of service for each of the 10 days during the 2-week vacation for 
which the employee would ordinarily be engaged in the performance of 
duties. Under paragraph (e)(4) of this section, the employee is credited 
with 100 hours of service for the 2-week vacation (10 days multiplied by 
10 hours of service per day).
    (4) For purposes of this paragraph, in the case of a payment 
described in Sec. 2530.200b-2(b)(2) (relating to payments not calculated 
on the basis of units of time), a plan using an equivalency based on 
units of time permitted under this paragraph shall credit the employee 
with the number of hours of service determined under paragraph (2) of 
Sec. 2530.200b-2(b), and, to the extent applicable, paragraph (e)(3), 
containing the rule against double crediting, of Sec. 2530.200b-2(b). 
For example, if an employee with a regular work schedule of 40 hours per 
week paid at a rate of $3.00 per hour is incapacitated for a period of 4 
weeks and receives a lump sum payment of $500 for his incapacity, the 
employee must be credited with 160 hours of service for the period of 
incapacity, regardless of whether the plan uses an equivalency permitted 
under this paragraph (see example at Sec. 2530.200b-2(b)(2)(iii)(A). If, 
however, the employee is incapacitated for only 3 weeks, under 
Sec. 2530.200b-2(b)(3) the emmployee is not required to be credited with 
more than 120 hours of service (lesser of 167 hours of service 
determined under the preceding sentence or 3 weeks multiplied by 40 
hours per week).
    (5) For purposes of this paragraph, in the case of a payment to an 
employee calculated on the basis of units of time which are greater than 
the periods of employment used by a plan as a basis

[[Page 461]]

for determining service to be credited to the employee under this 
paragraph, the plan shall credit the employee with the number of periods 
of employment which, in the course of the employee's regular work 
schedule, would be included in the unit or units of time on the basis of 
which the payment is calculated. For example, a plan uses the 
equivalency based on days permitted under paragraph (e)(1)(i) of this 
section. During a computation period an employee spends 2 weeks on 
vacation with pay. In the ordinary course of the employee's regular work 
schedule, the employee would be engaged in the performance of duties for 
10 days during the 2-week vacation period. Under Sec. 2530.200b-2, the 
emplopyee would be credited with at least one hour of service for each 
of the 10 days during the 2-week vacation for which the employee would 
ordinarily be engaged in the performance of duties. Under this paragraph 
the employee is credited with 100 hours of service for the 2-week 
vacation (10 days multiplied by 10 hours of service per day). If, 
however, the employee, although paid for a 2-week vacation, spends only 
one week on vacation, under Sec. 2530.200b-2(b)(3) the employee is not 
required to be credited with more than 50 hours of service (5 days 
multiplied by 10 hours per day).
    (6) For purposes of this paragraph, in the case of periods of time 
used as a basis for determining service to be credited to an employee 
which extend into two computation periods, the plan may credit all hours 
of service (or other units of service) credited for such a period to the 
first computation period or the second computation period, or may 
allocate such hours of service (or other units of service) between the 
two computation periods on a pro rata basis. Crediting of service under 
this paragraph must be done consistently with respect to all employees 
within the same job classifications, reasonably defined.
    (7) A plan may combine an equivalency based on working time 
permitted under paragraph (d) of this section (i.e., hours worked or 
regular time hours) with an equivalency based on periods of employment 
permitted under this paragraph if the following conditions are met:
    (i) The plan credits an employee with the number of hours worked or 
regular time hours, as the case may be, equal to the number of hours of 
service which would be credited to the employee under paragraphs (e)(1) 
and (2) of this section, for each period of employment for which the 
employee would be credited with one hour worked or one regular time 
hour; and
    (ii) The plan treats hours worked and regular time hours in the 
manner prescribed under paragraphs (d)(1) and (2) of this section.
    (8) Example. The following example illustrates the application of 
paragraph (e)(7) of this section. A plan uses the equivalency based on 
weeks of employment permitted under paragraph (e)(1)(ii) of this section 
in conjunction with the equivalency based on hours worked permitted 
under paragraph (d)(1) of this section, as provided in paragraph (e)(7) 
of this section. During a vesting computation period an employee is paid 
for the performance of duties for at least 1 hour in each of the first 
20 weeks of the computation period and spends the next 2 weeks on a paid 
vacation. The employee thereupon terminates employment performing no 
further duties for the employer, and receiving no further compensation 
in the computation period. The employee is therefore credited with 900 
hours worked for the vesting computation period (20 weeks multiplied by 
45 hours per week), receiving no credit for the two weeks of paid 
vacation. The employee is credited with a year of service for the 
vesting computation period because he has been credited with more than 
870 hours for the computation period.
    (f) Equivalencies based on earnings. (1) In the case of an employee 
whose compensation is determined on the basis of an hourly rate, a plan 
may determine the number of hours to be credited the employee in a 
computation period on the basis of earnings, if:
    (i) The employee is credited with the number of hours equal to the 
total of the employee's earnings from time to time during the 
computation period divided by the employee's hourly rate as

[[Page 462]]

in effect at such times during the computation period, or equal to the 
employee's total earnings for the performance of duties during the 
computation period divided by the employee's lowest hourly rate of 
compensation during the computation period, or by the lowest hourly rate 
of compensation payable to an employee in the same, or a similar job 
classification, reasonably defined; and
    (ii) 870 hours credited under paragraph (f)(1)(i) of this section 
are treated as equivalent to 1,000 hours of service, and 435 hours 
credited under paragraph (f)(1)(i) of this section are treated as 
equivalent to 500 hours of service.

For purposes of this paragraph (f)(1), a plan may divide earnings at 
premium rates for overtime by the employee's hourly rate for overtime, 
rather than the regular time hourly rate.
    (2) In the case of an employee whose compensation is determined on a 
basis other than an hourly rate, a plan may determine the number of 
hours to be credited to the employee in a computation period on the 
basis of earnings if:
    (i) The employee is credited with the number of hours equal to the 
employee's total earnings for the performance of duties during the 
computation period divided by the employee's lowest hourly rate of 
compensation during the computation period, determined under paragraph 
(f)(3) of this section; and
    (ii) 750 hours credited under paragraph (f)(2)(i) of this section 
are treated as equivalent to 1,000 hours of service, and 375 hours 
credited under paragraph (f)(2)(i) of this section are treated as 
equivalent to 500 hours of service.
    (3) For purposes of paragraph (f)(2) of this section, an employee's 
hourly rate of compensation shall be determined as follows:
    (i) In the case of an employee whose compensation is determined on 
the basis of a fixed rate for a specified period of time (other than an 
hour) such as a day, week or month, the employee's hourly rate of 
compensation shall be the employee's lowest rate of compensation during 
a computation period for such specified period of time divided by the 
number of hours regularly scheduled for the performance of duties during 
such period of time. For purposes of the preceding sentence, in the case 
of an employee without a regular work schedule, the plan may provide for 
the calculation of the employee's hourly rate of compensation on the 
basis of a 40-hour workweek or an 8-hour workday, or may provide for 
such calculation on any reasonable basis which reflects the average 
hours worked by the employee over a representative period of time, 
provided that the basis so used is consistently applied to all employees 
within the same job classifications, reasonably defined.
    (ii) In the case of an employee whose compensation is not determined 
on the basis of a fixed rate for a specified period of time, the 
employee's hourly rate of compensation shall be the lowest hourly rate 
of compensation payable to employees in the same job classification as 
the employee, or, if no employees in the same job classification have an 
hourly rate, the minimum wage as established from time to time under 
section 6(a)(1) of the Fair Labor Standards Act of 1938, as amended.
    (4) Examples. (i) In a particular job classification employees' 
wages range from $3.00 per hour to $4.00 per hour. To determine the 
number of hours to be credited to an employee in that job classification 
who is compensated at a rate of $4.00 per hour, a plan may divide the 
employee's total earnings during the computation period for the 
performance of duties either by $3.00 per hour (the lowest hourly rate 
of compensation in the job classification) or by $4.00 per hour (the 
employee's own hourly rate of compensation).
    (ii) An hourly employee's total earnings for the performance of 
duties during a vesting computation period amount to $4,350. During that 
calendar year, the employee's lowest hourly rate of compensation was 
$5.00 per hour. The plan may determine the number of hours to be 
credited to the employee for that vesting computation period by dividing 
$4,350 by $5.00 per hour. The employee is credited with 870 hours for 
the vesting computation period and is, therefore, credited with a year 
of service for purposes of vesting.
    (iii) During the first 3 months of a vesting computation period an 
hourly employee is paid at a rate of $3.00 per

[[Page 463]]

hour and earns $675 for the performance of duties; during the next 6 
months, the employee is paid at a rate of $3.50 per hour and earns 
$1,575 for the performance of duties; during the final 3 months the 
employee is paid at a rate of $3.60 per hour and earns $810 for the 
performance of duties. The plan may determine the number of hours to be 
credited to the employee in the computation period under the equivalency 
set forth in paragraph (f)(1) of this section either (A) by dividing the 
employee's earnings for each period during which the employee was paid 
at a separate rate ($675 divided by $3.00 per hour equals 225 hours; 
$1,575 divided by $3.50 per hour equals 450 hours; $810 divided by $3.60 
per hour equals 225 hours) and adding the hours so obtained (900 hours), 
or (B) by dividing the employee's total compensation for the vesting 
computation period by the employee's lowest hourly rate during the 
computation period ($3,020 divided by $3.00 per hour equals 1,009\2/3\ 
hours). The plan may also divide the employee's total compensation 
during the computation period by the lowest hourly rate payable to an 
employee in the same, or a similar, job classification.
    (iv) During a plan's computation period an hourly employee's total 
earnings for the performance of duties consist of $7,500 at a basic rate 
of $5.00 per hour and $750 at an overtime rate of $7.50 per hour for 
hours worked in excess of 40 in a week. If the plan uses the equivalency 
permitted under paragraph (f)(1) of this section, the plan may adjust 
for the overtime rate in calculating the number of hours to be credited 
to the employee. Thus, the plan may calculate the number of hours to be 
credited to the employee by adding the employee's earnings at the basic 
rate divided by the basic rate and the employee's earnings at the 
overtime rate divided by the overtime rate ($7,500 divided by $5.00 per 
hour, plus $750 divided by $7.50 per hour, or 1,500 hours plus 100 
hours), resulting in credit for 1,600 hours for the computation period.
    (v) During a plan's vesting computation period an employee's lowest 
weekly rate of compensation is $400 per week. The employee has a regular 
work schedule of 40 hours per week. The employee's lowest hourly rate 
during the vesting computation period is, therefore, $10 per hour ($400 
per week divided by 40 hours per week). During the vesting computation 
period, the employee receives a total of $7,500 for the performance of 
duties. The plan determines the number of regular time hours to be 
credited to the employee for the computation period by dividing $7,500 
by $10 per hour. The employee is credited with 750 hours for the 
computation period and is, therefore, credited with a year of service 
for purposes of vesting.



Sec. 2530.200b-4  One-year break in service.

    (a) Computation period. (1) Under sections 202(b) and 203(b)(3) of 
the Act and sections 410(a)(5) and 411(a)(6) of the Code, a plan may 
provide that an employee incurs a one-year break in service for a 
computation period or periods if the employee fails to complete more 
than 500 hours of service or, in the case of any maritime industry, 62 
days of service in such period or periods.
    (2) For purposes of section 202(b) of the Act and section 410(a)(5) 
of the Code, relating to one-year breaks in service for eligibility to 
participate, in determining whether an employee incurs a one-year break 
in service, a plan shall use the eligibility computation period 
designated under Sec. 2530.202-2(b) for measuring years of service after 
the intital eligibility computation period.
    (3) For purposes of section 203(b)(3) of the Act and section 
411(a)(6) of the Code, relating to breaks in service for purposes of 
vesting, in determining whether an employee incurs a one-year break in 
service, a plan shall use the vesting computation period designated 
under Sec. 2530.203-2(a).
    (4) For rules regarding service which is not required to be taken 
into account for purposes of benefit accrual, see Sec. 2530.204-1(b)(1).
    (b) Service following a break in service. (1) For purposes of 
section 202(b)(3) of the Act and section 410(a)(5)(C) of the Code 
(relating to completion of a year of service for eligibility to 
participate after a one-year break in service), the following rules 
shall be applied in measuring completion of a year of

[[Page 464]]

service upon an employee's return after a one-year break in service:
    (i) In the case of a plan which, after the initial eligibility 
computation period, measures years of service for purposes of 
eligibility to participate on the basis of eligibility computation 
periods beginning on anniversaries of an employee's employment 
commencement date, as permitted under Sec. 2530.202-2(b)(1), the plan 
shall use the 12-consecutive-month period beginning on an employee's 
reemployment commencement date (as defined in paragraphs (b)(1)(iii) and 
(iv) of this section) and, where necessary, subsequent 12-consecutive-
month periods beginning on anniversaries of the reemployment of 
commencement date.
    (ii) In the case of a plan which, after the initial eligibility 
computation period, measures years of service for eligibility to 
participate on the basis of plan years beginning with the plan year 
which includes the first anniversary of the initial eligibility 
computation period, as permitted under Sec. 2530.202-2(b)(2), the plan 
shall use the 12-consecutive-month period beginning on an employee's 
reemployment commencement date (as defined in paragraphs (b)(1)(iii) and 
(iv) of this section and, where necessary, plan years beginning with the 
plan year which includes the first anniversary of the employee's 
reemployment commencement date.
    (iii) Except as provided in paragraph (b)(1)(iv) of this section, an 
employee's reemployment commencement date shall be the first day on 
which the employee is entitled to be credited with an hour of service 
described in Sec. 2530.200b-2(a)(1) after the first eligibility 
computation period in which the employee incurs a one-year break in 
service following an eligibility computation period in which the 
employee is credited with more than 500 hours of service.
    (iv) In the case of an employee who is credited with no hours of 
service in an eligibility computation period beginning after the 
employee's reemployment commencement date established under paragraph 
(b)(1)(iii) of this section, the employee shall be treated as having a 
new reemployment commencement date as of the first day on which the 
employee is entitled to be credited with an hour of service described in 
Sec. 2530.200b-2(a)(1) after such eligibility computation period.
    (2) For purposes of section 203(b)(3)(B) of the Act and section 
411(a)(6)(B) of the Code (relating to the completion of a year of 
service for vesting following a one-year break in service), in measuring 
completion of a year of service upon an employee's return after a one-
year break in service, a plan shall use the vesting computation period 
designated under Sec. 2530.203-2. In the case of a plan which designates 
a separate vesting computation period for each employee (rather than one 
vesting computation period for all employees), when an employee who has 
incurred a one-year break in service later completes an initial hour of 
service, the plan may change the employee's vesting computation period 
to a 12-consecutive-month period beginning on the day on which such 
initial hour of service is completed, provided that the plan follows the 
rules for changing the vesting computation period set forth in 
Sec. 2530.203-2(c)(1). Specifically, such a plan must ensure that as a 
result of the change of the vesting computation period of an employee 
who has incurred a one-year break in service to the 12-month period 
beginning on the first day on which the employee later completes an 
initial hour of service, the employee's vested percentage of the accrued 
benefit derived from employer contributions will not be less on any date 
after the change than such nonforfeitable percentage would be in the 
absence of the change. As under Sec. 2530.203-2(c)(1), the plan will be 
deemed to satisfy the requirement of that paragraph if, in the case of 
an employee who has incurred a one-year break in service, the vesting 
computation period beginning on the day on which the employee completes 
an hour of service after the one-year break in service begins before the 
end of the last vesting computation period established before the change 
of vesting computation periods and, if the employee is credited with 
1000 hours of service in both such vesting computation periods, the 
employee is credited with 2 years of service for purposes of vesting.
    (3) For purposes of section 203(b)(3)(B) of the Act and section 
411(a)(6)(B) of

[[Page 465]]

the Code (relating to the completion of a year of service for vesting 
following a one-year break in service), in measuring completion of a 
year of service upon an employee's return after a one-year break in 
service, a plan shall use the vesting computation period designated 
under Sec. 2530.203-2. In the case of a plan which designates a separate 
vesting computation period for each employee (rather than one vesting 
computation period for all employees), when an employee who has incurred 
a one-year break in service later completes an initial hour of service, 
the plan may change the employee's vesting computation period to a 12-
consecutive-month period beginning on the day on which such initial hour 
of service is completed, provided that the plan follows the rules for 
changing the vesting computation period set forth in Sec. 2530.203-
2(c)(1).
    (4) Examples. (i) Employer X maintains a pension plan. The plan uses 
a calendar year vesting computation period and plan year. As conditions 
for participation, the plan requires that an employee of X complete one 
year of service and attain age 25, and, in accordance with 
Sec. 2530.202-2(b)(2), provides that after the initial eligibility 
computation period, plan years will be used as eligibility computation 
periods, beginning with the plan year which includes the first 
anniversary of an employee's employment commencement date. Thus, under 
paragraph (a)(2) of this section, the plan must use plan years in 
measuring one-year breaks in service for eligibility to participate. The 
plan provides that an employee acquires a nonforfeitable right to 100 
percent of the accrued benefit derived from employer contributions upon 
completion of 10 years of service. Under the plan, for purposes of 
vesting, years of service completed before an employee attains age 22 
are not taken into account. The plan also provides that if an employee 
has incurred a one-year break in service, in computing the employee's 
period of service for eligibility to participate, years of service 
before such break will not be taken into account until the employee has 
completed a year of service with X after the employee's return. The plan 
further provides that in the case of an employee who has no vested right 
to an accrued benefit derived from employer contributions, years of 
service for purposes of eligibility to participate or vesting before a 
one-year break in service for eligibility or vesting (as the case may 
be) shall not be required to be taken into account if the number of 
consecutive one-year breaks in service equals or exceeds the aggregate 
number of such years of service before such consecutive one-year breaks 
in service.
    (A) Employee A commences employment with X on January 1, 1976 at age 
30 and completes a year of service for eligibility to participate and 
vesting in both the 1976 and 1977 computation periods. A becomes a 
participant in the plan on January 1, 1977. A terminates employment with 
X on November 3, 1977, after completing 1,000 hours of service; 
completes no hours of service in 1978, incurring a one-year break in 
service; and is reemployed by X on June 1, 1979. A completes 800 hours 
of service during the remainder of 1979 and 600 hours of service from 
January 1, 1980 through May 31, 1980. Under paragraph (b)(1)(iii) of 
this section, A's reemployment commencement date is June 1, 1979. By 
June 1, 1980, A has completed a year of service during the eligibility 
computation period following his return, and receives credit for his 
pre-break service to the extent required under section 202 of the Act 
and section 410 of the Code and the regulations thereunder. The plan is 
not, however, required to credit A with a year of service for vesting 
during 1979 because he failed to complete 1,000 hours of service during 
that vesting computation period. If A completes 400 or more hours of 
service from June 1, 1980 to December 31, 1980, then A will be credited 
with one year of service for vesting purposes for the 1980 vesting 
computation period.
    (B) Employee B was born on February 22, 1955 and commenced 
employment with Employer X on July 1, 1975. B is credited with a year of 
service for eligibility to participate in the plan for the eligibility 
computation period beginning on his employment commencement date (July 
1, 1975) and a year of service for eligibility and vesting for the 1976 
and 1977 plan years. As of the end of the 1977 plan year, B is credited

[[Page 466]]

with 3 years of service for purposes of eligibility to participate, but 
only one year of service for purposes of vesting. Not having attained 
age 25, however, B is not admitted to participation in the plan upon 
completion of his first year of service with X. In the 1978 plan year, B 
fails to be credited with 500 hours of service, thereby incurring a one-
year break in service. As a result of B's one-year break in service in 
the 1978 plan year, the year of service for vesting which was earlier 
credited to B for the 1977 plan year is disregarded because the one-year 
break in service equals the one year of service credited to B before the 
one-year break in service. After the end of the 1978 plan year, B does 
not perform an hour of service with X until February 3, 1979. February 
3, 1979, therefore, is B's reemployment commencement date under 
paragraph (b)(1)(i) of this section. B fails to be credited with 1,000 
hours of service in the first eligibility computation period beginning 
on February 3, 1979, and also for the vesting computation period 
beginning January 1, 1979. Because, in accordance with Sec. 2530.202-
2(b)(2), the plan provides that after the initial eligibility 
computation period, plan years will be used as eligibility computation 
periods, under paragraph (b)(1)(ii) of this section the plan must 
provide that, in measuring completion of a year of service for 
eligibility to participate after a one-year break in service, plan years 
beginning with the plan year which includes an employee's reemployment 
commencement date will be used. B is credited with 1,000 hours of 
service for the plan year beginning on January 1, 1980 and is therefore 
credited with a year of service for the 1980 plan year. Under section 
202(b)(3) of the Act and section 410(a)(5)(C) of the Code, as a 
consequence of B's completion of a year of service in the 1980 plan 
year, B's service before his one-year break in service in the 1978 plan 
year must be taken into account for eligibility purposes. As conditions 
of participation, the plan requires that an employee attain age 25 and 
complete one year of service. Upon his completion of a year of service 
for the 1980 plan year, B is deemed to have met the plan's participation 
requirements as of February 22, 1980, his twenty-fifth birthday, because 
the year of service completed by B in B's eligibility computation period 
beginning on January 1, 1976 is taken into account for eligibility 
purposes.
    (ii) Employer Y maintains a defined benefit pension plan. The plan 
provides that an employee acquires a nonforfeitable right to 100 percent 
of the employee's accrued benefit derived from employer contributions 
upon completion of 10 years of service. As conditions for participation, 
the plan requires that an employee of Y complete one year of service and 
provides that if an employee has incurred a one-year break in service, 
in computing the employee's period of service for eligibility to 
participate, years of service before such break will not be taken into 
account until the employee has completed a year of service with Y after 
the employee's return. In accordance with Sec. 2530.202-2(b)(1), the 
plan provides that after the initial eligibility computation period, 
eligibility computation periods beginning on anniversaries of an 
employee's employment commencement date will be used. Thus, under 
paragraph (a)(1) of this section, the plan must use computation periods 
beginning on anniversaries of the employee's employment commencement 
date in measuring one-year breaks in service. Employee C's employment 
commencement date with Y is February 1, 1975, C is credited with a year 
of service for eligibility to participate in the eligibility computation 
period beginning on C's employment commencement date and meets the 
plan's eligibility requirements as of February 1, 1976. In accordance 
with the provisions of the plan, C commences participation in the plan 
as of July 1, 1976. C is thereafter credited with a year of service for 
eligibility to participate in each of the eligibility computation 
periods beginning on anniversaries of C's employment commencement date 
(February 1) in 1976, 1977, 1978 and 1979. Thus, as of February 1, 1980, 
C is credited with 5 years of service for eligibility to participate. In 
the eligibility computation period beginning on February 1, 1980, C 
fails to be credited with more than 500 hours of service and therefore 
incurs a one-year break in service. In the eligibility computation

[[Page 467]]

period beginning on February 1, 1981, C is not credited with an hour of 
service for the performance of duties until March 1, 1981. Under 
paragraph (b)(1)(iii) of this section, March 1, 1981 is C's reemployment 
commencement date. C terminates employment with Y on May 1, 1981 and 
fails to be credited with 1000 hours of service in the 12-consecutive-
month period beginning on March 1, 1981, or with more than 500 hours of 
service in the eligibility computation period beginning on February 1, 
1981, thereby incurring a second one-year break in service for 
eligibility to participate. C is credited with no hours of service in 
the eligibility computation period beginning on February 1, 1982, 
thereby incurring a third one-year break in service for eligibility to 
participate, and is likewise credited with no hours of service in the 
12-consecutive-month period beginning on March 1, 1982, the anniversary 
of B's reemployment commencement date. Under paragraph (b)(1)(iv) of 
this section, C must therefore be treated as having a new reemployment 
commencement date as of the first day following the close of the 
eligibility computation period beginning on February 1, 1982. On January 
1, 1984 (before the end of the eligibility computation period beginning 
February 1, 1983) C is rehired by Y and is credited with an hour of 
service for the performance of duties. C is therefore treated as having 
a new reemployment commencement date January 1, 1984. C fails to be 
credited with more than 500 hours of service in the eligibility 
computation period beginning on February 1, 1983, thereby incurring a 
fourth one-year break in service, and fails to be credited with 1000 
hours of service in the 12-consecutive-month period beginning on March 
1, 1983, the anniversary of C's original reemployment commencement date. 
However, in the 12-consecutive-month period beginning on January 1, 
1984, C is credited with 1000 hours of service, thus meeting the plan's 
requirement that an employee who has incurred a one-year break in 
service for eligibility to participate must complete a year of service 
upon the employee's return in order for years of service before the one-
year break in service to be taken into account for purposes of 
eligibility. Because C's years of service completed before C's first 
one-year break in service must be taken into account under section 
202(b) of the Act and section 410(b)(5) of the Code for purposes of 
eligibility to participate, under Sec. 2530.204-2(a)(2) the period 
beginning on July 1, 1976 (the earliest date on which C was a 
participant) and extending until January 31, 1980 (the last day before 
C's first one-year break in service) must be taken into account for 
purposes of benefit accrual.
    (c) Prior service for eligibility to participate. For rules relating 
to computing service preceding a break in service for the purpose of 
eligibility to participate in the plan, see Sec. 2530.202-2(c).
    (d) Prior service for vesting. For rules relating to computing 
service preceding a break in service for the purpose of credit toward 
vesting, see Sec. 2530.203-2(d).



Sec. 2530.200b-5  Seasonal industries. [Reserved]



Sec. 2530.200b-6  Maritime industry.

    (a) General. Sections 202(a)(3)(D), 203(b)(2)(D) and 204(b)(3)(E) of 
the Act and sections 410(a)(3)(D) and 411(a)(5)(D) and (b)(3)(E) of the 
Code contain special provisions applicable to the maritime industry. In 
general, those provisions permit statutory standards otherwise expressed 
in terms of 1,000 hours of service to be applied to employees in the 
maritime industry as if such standards were expressed in terms of 125 
days of service. A plan covering employees in the maritime industry may 
nevertheless credit service to such employees on the basis of hours of 
service, as prescribed in Sec. 2530.200b-2, including the use of any 
equivalency permitted under Sec. 2530.200b-3, or may credit service to 
such employees on the basis of elapsed time, as permitted under 
Sec. 2530.200b-9.
    (b) Definition. For purposes of sections 202, 203, and 204 of the 
Act and sections 410 and 411 of the Code, the maritime industry is that 
industry in which employees perform duties on board commercial, 
exploratory, service or other vessels moving on the high seas, inland 
waterways, Great Lakes,

[[Page 468]]

coastal zones, harbors and noncontiguous areas, or on offshore ports, 
platforms or other similar sites.
    (c) Computation periods. For employees in the maritime industry, 
computation periods shall be established as for employees in any other 
industry.
    (d) Year of service. To the extent that a plan covers employees 
engaged in the maritime industry, and credits service for such employees 
on the basis of days of service, such employees who are credited with 
125 days of service in the applicable computation period must be 
credited with a year of service. In the case of a plan covering both 
employees engaged in the maritime industry and employees not engaged in 
the maritime industry, service of employees not engaged in the maritime 
industry shall not be determined on the basis of days of service.
    (e) Year of participation for benefit accrual. A plan covering 
employees engaged in the maritime industry may determine such an 
employee's period of service for purposes of benefit accrual on any 
basis permitted under Secs. 2530.204-2 and 2530.204-3. For purposes of 
Sec. 2530.204-2(c) (relating to partial years of participation), in the 
case of an employee engaged in the maritime industry who is credited by 
the plan on the basis of days of service and whose service is not less 
than 125 days of service during an accrual computation period, the 
calculation of such employee's period of service for purposes of benefit 
accrual shall be treated as not made on a reasonable and consistent 
basis if service during such computation period is not taken into 
account. Thus, the employee must be credited with at least a partial 
year of participation (but not necessarily a full year of participation) 
for that accrual computation period, in accordance with Sec. 2530.204-
2(c).
    (f) Employment commencement date. For purposes of Sec. 2530.200b-4 
(relating to breaks in service) and Sec. 2530.202-2 (relating to 
eligibility computation periods):
    (1) The employment commencement date of an employee engaged in the 
maritime industry who is credited by the plan on the basis of days of 
service shall be the first day for which the employee is entitled to be 
credited with a day of service described in Sec. 2530.200b-7(a)(1).
    (2)(i) Except as provided in paragraph (f)(2)(ii) of this section, 
the reemployment commencement date of an employee engaged in the 
maritime industry shall be the first day for which the employee is 
entitled to be credited with a day of service described in 
Sec. 2530.200b-7(a)(1) after the first eligibility computation period in 
which the employee incurs a 1-year break in service following an 
eligibility computation period in which the employee is credited with 
more than 62 days of service.
    (ii) In the case of an employee engaged in the maritime industry who 
is credited with no hours of service in an eligibility computation 
period beginning after the employee's reemployment commencement date 
established under paragraph (f)(2)(i) of this section, the employee 
shall be treated as having a new reemployment commencement date as of 
the first day for which the employee is entitled to be credited with day 
of service described in Sec. 2530.200b-7(a)(1) after such eligibility 
computation period.



Sec. 2530.200b-7  Day of service for employees in the maritime industry.

    (a) General rule. A day of service in the maritime industry which 
must, as a minimum, be counted for the purposes of determining a year of 
service, a year of participation for benefit accrual, a break in service 
and an employment commencement date (or reemployment commencement date) 
under sections 202, 203 and 204 of the Act and sections 410 and 411 of 
the Code by a plan that credits service by days of service rather than 
hours of service (as prescribed in Sec. 2530.200b-2, or under 
equivalencies permitted under Sec. 2530.200b-3) or elapsed time (as 
permitted under Sec. 2530.200b-9), is a day of service as defined in 
paragraphs (a)(1), (2) and (3) of this section.
    (1) A day of service is each day for which an employee is paid or 
entitled to payment for the performance of duties for the employer 
during the applicable computation period.
    (2) A day of service is each day for which an employee is paid, or 
entitled

[[Page 469]]

to payment, by the employer on account of a period of time during which 
no duties are performed (irrespective of whether the employment 
relationship has terminated) due to vacation, holiday, illness, 
incapacity (including disability), layoff, jury duty, military duty or 
leave of absence. Notwithstanding the preceding sentence:
    (i) No more than 63 days of service are required to be credited 
under this paragraph (a)(2) to an employee on account of any single 
continuous period during which the employee performs no duties (whether 
or not such period occurs in a single computation period);
    (ii) A day for which an employee is directly or indirectly paid, or 
entitled to payment, on account of a period during which no duties are 
performed is not required to be credited to the employee if such payment 
is made or due under a plan maintained solely for the purpose of 
complying with applicable workmen's compensation (including maintenance 
and care), or unemployment compensation or disability insurance laws; 
and
    (iii) Days of service are not required to be credited for a payment 
which solely reimburses an employee for medical or medically related 
expenses incurred by the employee.

For purposes of this paragraph (a)(2), a payment shall be deemed to be 
made by or due from an employer regardless of whether such payment is 
made by or due from the employer directly, or indirectly through, among 
others, a trust, fund, or insurer, to which the employer contributes or 
pays premiums, and regardless of whether contributions made or due to 
the trust, fund, insurer or other entity are for the benefit of 
particular employees or are made on behalf of a group of employees in 
the aggregate.
    (3) A day of service is each day for which back pay, irrespective of 
mitigation of damages, has been either awarded or agreed to by the 
employer. Days of service shall not be credited both under paragraph 
(a)(1) or paragraph (a)(2), as the case may be, and under this 
subparagraph. Thus, for example, an employee who receives a back pay 
award following a determination that he or she was paid at an unlawful 
rate for days of service previously credited will not be entitled to 
additional credit for the same days of service. Crediting of days of 
service for back pay awarded or agreed to with respect to periods 
described in paragraph (a)(2) shall be subject to the limitations set 
forth in that paragraph. For example, no more than 63 days of service 
are required to be credited for payments of back pay, to the extent that 
such back pay is agreed to or awarded for a period of time during which 
an employee did not or would not have performed duties.
    (b) Special rule for determining days of service for reasons other 
than the performance of duties. In the case of a payment which is made 
or due on account of a period during which an employee performs no 
duties, and which results in the crediting of days of service under 
paragraph (a)(3) of this section, or, in the case of an award or 
agreement for back pay, to the extent that such award or agreement is 
made with respect to a period described in paragraph (a)(2) of this 
section, the number of days of service to be credited shall be 
determined as follows:
    (1) Payments calculated on the basis of units of time. In the case 
of a payment made or due which is calculated on the basis of units of 
time, such as days, weeks or months, the number of days of service to be 
credited shall be the number of regularly scheduled working days 
included in the units of time on the basis of which the payment is 
calculated. For purposes of the preceding sentence, in the case of an 
employee without a regular work schedule, a plan may provide for the 
calculation of the number of days of service to be credited on the basis 
of a 5-day workweek, or may provide for such calculation on any 
reasonable basis which reflects the average days worked by the employee, 
or by other employees in the same job classification, over a 
representative period of time, provided that the basis so used is 
consistently applied with respect to all employees within the same job 
classifications, reasonably defined.
    (2) Payments not calculated on the basis of units of time. Except as 
provided in paragraph (b)(3) of this section, in the case of a payment 
made or due, which is not calculated on the basis of units of time, the 
number of days of service

[[Page 470]]

to be credited shall be equal to the amount of the payment divided by 
the employee's most recent daily rate of compensation before the period 
during which no duties are performed.
    (3) Rule against double credit. Notwithstanding paragraphs (b)(1) 
and (2) of this section, an employee is not required to be credited on 
account of a period during which no duties are performed with a number 
of days of service which is greater than the number of days regularly 
scheduled for the performance of duties during such period. For purposes 
of the preceding sentence, in the case of an employee without a regular 
work schedule, a plan may provide for the calculation of the number of 
days of service to be credited to the employee for a period during which 
no duties are performed on the basis of a 5-day workweek, or may provide 
for such calculation on any reasonable basis which reflects the average 
hours worked by the employee, or by other employees in the same job 
classification, over a representative period of time, provided that the 
basis so used is consistently applied with respect to all employees in 
the same job classifications, reasonably defined.
    (c) Crediting of days of service to computation periods. (1) Except 
as provided in paragraph (c)(4) of this section, days of service 
described in paragraph (a)(1) of this section shall be credited to the 
computation period in which the duties are performed.
    (2) Except as provided in paragraph (c)(4) of this section, days of 
service described in paragraph (a)(2) of this section shall be credited 
as follows:
    (i) Days of service credited to an employee on account of a payment 
which is calculated on the basis of units of time, such as days, weeks 
or months, shall be credited to the computation period or computation 
periods in which the period during which no duties are performed occurs, 
beginning with the first unit of time to which the payment relates.
    (ii) Days of service credited to an employee by reason of a payment 
which is not calculated on the basis of units of time shall be credited 
to the computation period in which the period during which no duties are 
performed occurs, or if the period during which no duties are performed 
extends beyond one computation period, such hours of service shall be 
allocated between not more than the first two computation periods on any 
reasonable basis which is consistently applied with respect to all 
employees within the same job classifications, reasonably defined.
    (3) Except as provided in paragraph (c)(4) of this section, days of 
service described in paragraph (a)(3) of this section shall be credited 
to the computation period or periods to which the award or agreement for 
back pay pertains, rather than to the computation period in which the 
award, agreement or payment is made.
    (4) In the case of days of service to be credited to an employee in 
connection with a period of no more than 31 days which extends beyond 
one computation period, all such days of service may be credited to the 
first computation period or the second computation period. Crediting of 
days of service under this paragraph must be done consistently with 
respect to all employees with the same job classifications, reasonably 
defined.
    (d) Other federal law. Nothing in this section shall be construed to 
alter, amend, modify, invalidate, impair or supersede any law of the 
United States or any rule or regulation issued under any such law. Thus, 
for example, nothing in this section shall be construed as denying an 
employee credit for a day of service if credit is required by separate 
federal law. Furthermore, the nature and extent of such credit shall be 
determined under such law.
    (e) Nondaily employees. For maritime employees whose compensation is 
not determined on the basis of certain amounts for each day worked 
during a given period, service shall be credited on the basis of hours 
of service as determined in accordance with Sec. 2530.200b-2(a) 
(including use of any equivalency permitted under Sec. 2530.200b-3) or 
on the basis of elapsed time, as permitted under Sec. 2530.200b-9.
    (f) Plan document. A plan which credits service on the basis of days 
of service must state in the plan document the definition of days of 
service set forth in paragraph (a) of this section, but is not required 
to state the rules

[[Page 471]]

set forth in paragraphs (b) and (c) if they are incorporated by 
reference.



Sec. 2530.200b-8  Determination of days of service to be credited to maritime employees.

    (a) General rule. For the purpose of determining the days of service 
which must be credited to an employee for a computation period, a plan 
shall determine days of service from records of days worked and days for 
which payment is made or due. Any records may be used to determine days 
of service to be credited to employees under a plan, even though such 
records are maintained for other purposes, provided that they accurately 
reflect the actual number of days of service with which an employee is 
required to be credited under Sec. 2530.200b-7(a). Payroll records, for 
example, may provide sufficiently accurate data to serve as a basis for 
determining days of service. If, however, existing records do not 
accurately reflect the actual number of days of service with which an 
employee is entitled to be credited, a plan must develop and maintain 
adequate records. A plan may in any case credit days of service under 
any method which results in the crediting of no less than the actual 
number of days of service required to be credited under Sec. 2530.200b-
7(a) to each employee in a computation period, even though such method 
may result in the crediting of days of service in excess of the number 
of days required to be credited under Sec. 2530.200b-7(a). A plan is not 
required to prescribe in its documents which records are to be used to 
determine days of service.
    (b) Determination of pre-effective date days of service. To the 
extent that a plan is required to determine days of service completed 
before the effective date of part 2 of title I of the Act (see section 
211 of the Act), the plan may use whatever records may be reasonably 
accessible to it and may make whatever calculations are necessary to 
determine the approximate number of hours of service completed before 
such effective date. For example, if a plan or an employer maintaining 
the plan has, or has access to, only the records of compensation of 
employees for the period before the effective date, it may derive the 
pre-effective date days of service by using the daily rate for the 
period or the days customarily worked. If accessible records are 
insufficient to make an approximation of the number of pre-effective 
date days of service for a particular employee or group of employees, 
the plan may make a reasonable estimate of the days of service completed 
by such employee or employees during the particular period. For example, 
if records are available with respect to some employees, the plan may 
estimate the days of service of other employees in the same job 
classification based on these records. A plan may use the elapsed time 
method prescribed under Sec. 2530.200b-9 to determine days of service 
completed before the effective date of part 2 of title I of the Act.



Sec. 2530.201-1  Coverage; general.

    Coverage of the provisions of part 2 of title I of the Act is 
determined under a multiple step process. First, the plan must be an 
employee benefit plan as defined under section 3(3) of the Act and 
Sec. 2510.3-3. (See also the definitions of employee welfare benefit 
plan, section 3(1) of the Act and Sec. 2510.3-1 and employe pension 
benefit plan, section 3(2) of the Act and Sec. 2510.3-2). Second, the 
employee benefit plan must be subject to title I of the Act. Coverage 
for title I is specified in section 4 of the Act. Third, section 201 of 
the Act specifies the employee benefit plans subject to title I which 
are not subject to the minimum standards of part 2 of title I of the 
Act. Section 2530.201-2 specifies the employee benefit plans subject to 
title I of the Act which are exempted from coverage under part 2 of 
title I of the Act and this part (2530).



Sec. 2530.201-2  Plans covered by part 2530.

    This part (2530) shall apply to any employee benefit plan described 
in section 4(a) of the Act (and not exempted under section 4(b)) other 
than--
    (a) An employee welfare benefit plan as defined in section 3(1) of 
the Act and Sec. 2510.3-1;
    (b) A plan which is unfunded and is maintained by an employer 
primarily for the purpose of providing deferred compensation for a 
select group of

[[Page 472]]

management or highly compensated employees;
    (c) A plan established and maintained by a society, order, or 
association described in section 501(c)(8) or (9) of the Code, if no 
part of the contributions to or under such plan are made by employers of 
participants in such plan;
    (d) A trust described in section 501(c)(18) of the Code;
    (e) A plan which is established and maintained by a labor 
organization described in section 501(c)(5) of the Code and which does 
not at any time after the date of enactment of the Act provide for 
employer contributions;
    (f) Any agreement providing payments to a retired partner or a 
deceased partner's successor in interest, as described in section 736 of 
the Code;
    (g) An individual retirement account or annuity described in section 
408 of the Code, or a retirement bond described in section 409 of the 
Code;
    (h) An excess benefit plan as described in section 3(36) of the Act.



          Subpart B--Participation, Vesting and Benefit Accrual



Sec. 2530.202-1  Eligibility to participate; general.

    (a) Section 202 of the Act and section 410 of the Code contain 
minimum participation standards relating to certain employee pension 
benefit plans. In general, an employee pension benefit plan may not 
require, as a condition of participation in the plan, that an employee 
complete a period of service with the employer or employers maintaining 
the plan in excess of limits established by section 202 of the Act and 
section 410 of the Code and the regulations issued thereunder. Service 
for this purpose is measured in units of years of service. Section 
2530.202-2 sets forth rules relating to the computation periods which a 
plan must use to determine whether an employee has completed a year of 
service for purposes of eligibility to participate (``eligibility 
computation periods'').
    (b) For rules relating to ``service with the employer or employers 
maintaining the plan'', see Sec. 2530.210.



Sec. 2530.202-2  Eligibility computation period.

    (a) Initial eligibility computation period. For purposes of section 
202(a)(1)(A)(ii) of the Act and section 410(a)(1)(A)(ii) of the Code, 
the initial eligibility computation period the plan must use is the 12-
consecutive-month period beginning on the employment commencement date. 
An employee's employment commencement date is the first day for which 
the employee is entitled to be credited with an hour of service 
described in Sec. 2530.200b-2(a)(1) for an employer maintaining the 
plan. (For establishment of a reemployment commencement date following a 
break in service, see Sec. 2530.200b-4(b)(1)(iii) and (iv).)
    (b) Eligibility computation periods after the initial eligibility 
computation period. In measuring years of service for purposes of 
eligibility to participate after the initial eligibility computation 
period, a plan may adopt either of the following alternatives:
    (1) A plan may designate 12-consecutive-month periods beginning on 
the first anniversary of an employee's employment commencement date and 
succeeding anniversaries thereof as the eligibility computation period 
after the initial eligibility computation period; or
    (2) A plan may designate plan years beginning with the plan year 
which includes the first anniversary of an employee's employment 
commencement date as the eligibility computation period after the 
initial eligibility computation period (without regard to whether the 
employee is entitled to be credited with 1,000 hours of service during 
such period), provided that an employee who is credited with 1,000 hours 
of service in both the initial eligibility computation period and the 
plan year which includes the first anniversary of the employee's 
employment commencement date is credited with two years of service for 
purposes of eligibility to participate.
    (c) Service prior to a break in service. For purposes of applying 
section 202(b)(4) of the Act and section 410(a)(5)(D) of the Code 
(relating to years of service completed prior to a break in service for 
purposes of eligibility to participate), the computation

[[Page 473]]

periods used by a plan in determining years of service before such break 
shall be the eligibility computation periods established in accordance 
with paragraphs (a) and (b) of this section.
    (d) Plans with 3-year 100 percent vesting. A plan which, under 
202(a)(1)(B)(i) of the Act and section 410a(1)(B)(i) of the Code, 
requires more than one year of service for eligibility to participate in 
the plan shall use an initial eligibility computation period established 
under paragraph (a) of this section and eligibility computation periods 
designated in accordance with paragraph (b) of this section. Thus, for 
the eligibility computation period after the initial eligibility 
computation period, such a plan may designate either eligibility 
computation periods beginning on anniversaries of an employee's 
employment commencement date or plan years beginning with the plan year 
which includes the anniversary of the first day of the initial 
eligibility computation period.
    (e) Alternative eligibility computation period. The following rule 
is designed primarily for a plan using a rec-ordkeeping system which 
does not permit the plan to identify an employee's employment 
commencement date (or, in the case of an employee who has incurred a 
one-year break in service, the employee's reemployment commencement 
date), but which does permit the plan to identify a period of no more 
than 31 days during which the employee's employment commencement date 
(or reemployment commencement date) occurred.
    (1) A plan may use an initial eligibility computation period (or 
initial computation period for measuring completion of a year of service 
upon an employee's return after a one-year break in service) beginning 
on the first day of a period of no more than 31 days during which an 
employee's employment commencement date (or reemployment commencement 
date) occurs and ending on the anniversary of the last day of such 
period.
    (2) If a plan uses an initial eligibility computation period (or 
initial computation period for measuring completion of a year of service 
upon an employee's return after a one-year break in service) permitted 
under paragraph (e)(1) of this section, the plan shall use the following 
computation periods after the initial computation period:
    (i) If the plan does not use plan years for computation periods 
after the initial computation period, the plan shall use computation 
periods beginning on anniversaries of the first day of the initial 
computation period and ending on anniversaries of the last day of the 
initial computation period, and including a period of at least 12 
consecutive months.
    (ii) If the plan uses plan years for computation periods after the 
initial computation period, the plan shall use plan years beginning with 
the plan year which includes the anniversary of the first day of the 
initial computation period.
    (3) For purposes of determining an employee's commencement of 
participation under section 202(a)(4) of the Act and section 410(a)(4) 
of the Code, regardless of whether an eligibility computation period 
permitted under this paragraph includes a period longer than 12 
consecutive months, an employee who completes 1,000 hours of service in 
such eligibility computation period shall be treated as having satisfied 
the plan's service requirement for eligibility to participate as of the 
last day of the 12-consecutive-month period beginning on the first day 
of such eligibility computation period. In the case of a plan described 
in section 202(a)(1)(B)(i) of the Act and section 410(a)(1)(B)(i) of the 
Code, the requirement of the preceding sentence shall apply only with 
respect to the last year of service required under the plan for 
eligibility to participate.
    (4) Example. A plan maintained by Employer X obtains records from X 
which indicate the number of hours worked by an employee during a 
monthly payroll period. The records do not, however, break down the 
number of hours worked by an employee by days. Thus, after a new 
employee has begun employment with X it is impossible for the plan to 
ascertain the employee's employment commencement date from the records 
furnished by X (although it is possible for the plan to determine the 
month during which an

[[Page 474]]

employee's employment commencement date occurred). For administrative 
convenience, in conjunction with the equivalency based on hours worked 
permitted under Sec. 2530.200b-3(d)(1), and with the method of crediting 
hours of service to computation periods set forth in Sec. 2530.200b-
2(c)(4), the plan uses the alternative initial eligibility computation 
period permitted under this paragraph. The plan provides that an 
employee's initial eligibility computation period shall be the period 
beginning on the first day of the first monthly payroll period for which 
the employee is entitled to credit for the performance of duties and 
ending on the last day of the monthly payroll period which includes the 
anniversary of the last day of the initial monthly payroll period. This 
condition ensures that the initial eligibility computation period will 
include the 12-consecutive-month period beginning on the employee's 
employment commencement date and ending on the day before the 
anniversary of the employee's employment commencement date. If, however, 
an employee completes the plans requirement of one year of service for 
eligibility to participate (i.e., completion of 870 hours worked in an 
eligibility computation period) in the initial eligibility computation 
period, the plan provides that the employee is deemed to have satisfied 
the plan's service requirements for eligibility to participate as of the 
day before the anniversary of the first day of the initial eligibility 
computation period. This provision ensures that no employee who has in 
fact completed 1000 hours of service in the 12-consecutive-month period 
beginning on the employee's employment commencement date will be 
admitted to participation later than the date specified under section 
202(a)(4) of the Act and section 410(a)(4) of the Code. For example, in 
the case of an employee who begins employment in January 1977, the 
employee's initial eligibility computation period begins on January 1, 
1977 and ends on January 31, 1978. If the employee completes 879 hours 
worked in the initial eligibility computation period, the employee is 
treated as having met the plan's service requirements for eligibility to 
participate as of December 31, 1977. If the plan provides for semi-
annual entry dates of January 1 and July 1, and the employee has met any 
eligibility requirements of the plan other than the minimum service 
requirement as of December 31, 1977, the plan must provide that the 
employee commences participation as of January 1, 1978.



Sec. 2530.203-1  Vesting; general.

    (a) Section 203 of the Act and section 411(a) of the Code contain 
minimum vesting standards relating to certain employee pension benefit 
plans. In general, a pension plan subject to section 203 of the Act of 
section 411(a) of the Code must meet certain requirements relating to an 
employee's nonforfeitable (``vested'') right to his or her normal 
retirement benefit. One of these requirements specifies that an 
employee's accrued benefit derived from employer contributions must be 
vested in accordance with certain schedules. The schedules (or 
alternative minimum vesting standards) are generally based on the 
employee's number of years of service with the employer or employers 
maintaining the plan. Section 2530.203-2 sets forth rules relating to 
the computation periods used to determine whether an employee has 
completed a year of service for vesting purposes (``vesting computation 
periods'').
    (b) For rules relating to service with the employer or employers 
maintaining the plan, see Sec. 2530.210.



Sec. 2530.203-2  Vesting computation period.

    (a) Designation of vesting computation periods. Except as provided 
in paragraph (b) of this section, a plan may designate any 12-
consecutive-month period as the vesting computation period. The period 
so designated must apply equally to all participants. This requirement 
may be satisfied even though the actual 12-consecutive-month periods are 
not the same for all employees (e.g., if the designated vesting 
computation period is the 12-consecutive-month period beginning on an 
employee's employment commencement date and anniversaries of that date). 
The plan is prohibited, however, from using any period that would result 
in artificial postponement of vesting credit, such as a period meassured

[[Page 475]]

by anniversaries of the date four months following the employment 
commencement date.
    (b) Plans with 3-year 100 percent vesting. For rules regarding when 
a participant has a nonforfeitable right to his accrued benefit, see 
section 202(a)(1)(B)(i) of the Act and section 410(a)(1)(B)(i) of the 
Code and regulations issued thereunder.
    (c) Amendments to change the vesting computation period. (1) A plan 
may be amended to change the vesting computation period to a different 
12-consecutive-month period provided that as a result of such change no 
employee's vested percentage of the accrued benefit derived from 
employer contributions is less on any date after such change than such 
vested percentage would be in the absence of such change. A plan 
amendment changing the vesting computation period shall be deemed to 
comply with the requirements of this subparagraph if the first vesting 
computation period established under such amendment begins before the 
last day of the preceding vesting computation period and an employee who 
is credited with 1,000 hours of service in both the vesting computation 
period under the plan before the amendment and the first vesting 
computation period under the plan as amended is credited with 2 years of 
service for those vesting computation periods. For example, a plan which 
has been using a calendar year vesting computation period is amended to 
provide for a July 1-June 30 vesting computation period starting in 
1977. Employees who complete more than 1,000 hours of service in both of 
the 12-month periods extending from January 1, 1977 to December 31, 1977 
and from July 1, 1977 to June 30, 1978 are advanced two years on the 
plan's vesting schedule. The plan is deemed to meet the requirements of 
this subparagraph.
    (2) For additional requirements pertaining to changes in the vesting 
schedule, see section 203(c)(1) of the Act and section 411(a)(10) of the 
Code and the regulations issued thereunder.
    (d) Service preceding a break in service. For purposes of applying 
section 203(b)(3)(D) of the Act and section 411(a)(6)(D) of the Code, 
(relating to counting years of service before a break in service for 
vesting purposes), the computation periods used by the plan in computing 
years of service before such break must be the vesting computation 
periods. (For application of the break in service rules, see section 
203(b)(3)(D) and section 411(a)(6)(D) of the Code and regulations issued 
thereunder.)



Sec. 2530.203-3  Suspension of pension benefits upon employment.

    (a) General. Section 203(a)(3)(B) of the Act provides that the right 
to the employer-derived portion of an accrued pension benefit shall not 
be treated as forfeitable solely because an employee pension benefit 
plan provides that the payment of benefits is suspended during certain 
periods of reemployment which occur subsequent to the commencement of 
payment of such benefits. This section sets forth the circumstances and 
conditions under which such benefit payments may be suspended. A plan 
may provide for the suspension of pension benefits which commence prior 
to the attainment of normal retirement age, or for the suspension of 
that portion of pension benefits which exceeds the normal retirement 
benefit, or both, for any reemployment and without regard to the 
provisions of section 203(a)(3)(B) and this regulation to the extent 
(but only to the extent) that suspension of such benefits does not 
affect a retiree's entitlement to normal retirement benefits payable 
after attainment of normal retirement age, or the actuarial equivalent 
thereof.
    (b) Suspension rules--(1) General rule. A plan may provide for the 
permanent withholding of an amount which does not exceed the suspendible 
amount of an employee's accrued benefit for each calendar month, or for 
each four or five week payroll period ending in a calendar month, during 
which an employee is employed in ``section 203(a)(3)(B) service'' as 
described in Sec. 2530.203-3(c).
    (2) Resumption of payments. If benefit payments have been suspended 
pursuant to paragraph (b)(1) of this section, payments shall resume no 
later than the first day of the third calendar month after the calendar 
month in

[[Page 476]]

which the employee ceases to be employed in section 203(a)(3)(B) 
service: Provided, That the employee has complied with any reasonable 
procedure adopted by the plan for notifying the plan that he has ceased 
such employment. The initial payment upon resumption shall include the 
payment scheduled to occur in the calendar month when payments resume 
and any amounts withheld during the period between the cessation of 
employment and the resumption of payments, less any amounts which are 
subject to offset.
    (3) Offset rules. A plan which provides for the permanent 
withholding of benefits may deduct from benefit payments to be made by 
the plan payments previously made by the plan during those calendar 
months or pay periods in which the employee was employed in section 
203(a)(3)(B) service, Provided, That such deduction or offset does not 
exceed in any one month 25 percent of that month's total benefit payment 
which would have been due but for the offset (excluding the initial 
payment described in paragraph (b)(2) of this section, which may be 
subject to offset without limitation).
    (4) Notification. No payment shall be withheld by a plan pursuant to 
this section unless the plan notifies the employee by personal delivery 
or first class mail during the first calendar month or payroll period in 
which the plan withholds payments that his benefits are suspended. Such 
notification shall contain a description of the specific reasons why 
benefit payments are being suspended, a general description of the plan 
provisions relating to the suspension of payments, a copy of such 
provisions, and a statement to the effect that applicable Department of 
Labor regulations may be found in Sec. 2530.203-3 of the Code of Federal 
Regulations. In addition, the suspension notification shall inform the 
employee of the plan's procedure for affording a review of the 
suspension of benefits. Requests for such reviews may be considered in 
accordance with the claims procedure adopted by the plan pursuant to 
section 503 of the Act and applicable regulations. In the case of a plan 
which requires the filing of a benefit resumption notice as a condition 
precedent to the resumption of benefits, the suspension notification 
shall also describe the procedure for filing such notice and include the 
forms (if any) which must be filed. Furthermore, if a plan intends to 
offset any suspendible amounts actually paid during the periods of 
employment in section 203(a)(3)(B) service, the notification shall 
identify specifically the periods of employment, the suspendible amounts 
which are subject to offset, and the manner in which the plan intends to 
offset such suspendible amounts. Where the plan's summary plan 
description (SPD) contains information which is substantially the same 
as information required by this paragraph (b)(4), the suspension 
notification may refer the employee to relevant pages of the SPD for 
information as to a particular item, provided the employee is informed 
how to obtain a copy of the SPD, or relevant pages thereof, and provided 
requests for referenced information are honored within a reasonable 
period of time, not to exceed 30 days.
    (5) Verification. A plan may provide that an employee must notify 
the plan of any employment. A plan may request from an employee access 
to reasonable information for the purpose of verifying such employment. 
Furthermore, a plan may provide that an employee must, at such time and 
with such frequency as may be reasonable, as a condition to receiving 
future benefit payments, either certify that he is unemployed or provide 
factual information sufficient to establish that any employment does not 
constitute section 203(a)(3)(B) service if specifically requested by the 
plan administrator. Once an employee has furnished the required 
certification or information, the plan must forward, at the next 
regularly scheduled time for payment of benefits, all payments which had 
been withheld pursuant to this paragraph (b)(5) except to the extent 
that payments may be withheld and offset pursuant to other provisions of 
this regulation.
    (6) Status determination. If a plan provides for benefits 
suspension, the plan shall adopt a procedure, and so inform employees, 
whereunder an employee may request, and the plan administrator in a 
reasonable amount of time will render, a determination of whether

[[Page 477]]

specific contemplated employment will be section 203(a)(3)(B) service 
for purposes of plan provisions concerning suspension of benefits. 
Requests for status determinations may be considered in accordance with 
the claims procedure adopted by the plan pursuant to section 503 of the 
Act and applicable regulations.
    (7) Presumptions. (i) A plan which has adopted verification 
requirements described in paragraph (b)(5) of this section, and which 
complies with the notice requirements set forth in paragraph (b)(7)(ii) 
of this section may provide that whenever the plan fiduciaries become 
aware that a retiree is employed in section 203(a)(3)(B) service and the 
retiree has not complied with the plan's reporting requirements with 
regard to that employment, the plan fiduciaries may, unless it is 
unreasonable under the circumstances to do so, act on the basis of a 
rebuttable presumption that the retiree had worked a period exceeding 
the plan's minimum number of hours for that month. In addition, a plan 
covering persons employed in the building trades which has adopted 
verification requirements described in paragraph (b)(5) of this section 
and which complies with the notice requirements set forth in paragraph 
(b)(7)(ii) of this section may provide that whenever the plan 
fiduciaries become aware that a retiree is employed in section 
203(a)(3)(B) service at a construction site and the retiree has not 
complied with the plan's reporting requirements with regard to that 
employment, then the plan fiduciaries may, unless it is unreasonable 
under the circumstances to do so, act on the basis of a rebuttable 
presumption that the retiree engaged in such employment for the same 
employer in work at that site for so long before the work in question as 
that same employer performed that work at that construction site.
    (ii) A plan which provides for a presumption described in paragraph 
(b)(7)(i) of this section may employ such presumption only if the 
following requirements are met. The plan must describe its employment 
verification requirements and the nature and effect of such presumption 
in the plan's summary plan description and in any communication to plan 
participants which relates to such verification requirements (for 
example, employment reporting reminders or forms), and retirees must be 
furnished such disclosure, whether through receipt of the above 
communications or by special distribution, at least once every 12 
months.
    (c) Section 202(a)(3)(B) service--(1) Plans other than multiemployer 
plans. In the case of a plan other than a multi-employer plan, as 
defined in section 3(37) of the Act, the employment of an employee, 
subsequent to the time the payment of benefits commenced or would have 
commenced if the employee had not remained in or returned to employment, 
results in section 203(a)(3)(B) service during a calendar month, or 
during a four or five week payroll period ending in a calendar month, if 
the employee, in such month or payroll period,
    (i) Completes 40 or more hours of service (as defined in 29 CFR 
2530.200b-2(a)(1) and (2)) for an employer which maintains the plan, 
including employers described in Sec. 2530.210 (d) and (e), as of the 
time that the payment of benefits commenced or would have commenced if 
the employee had not remained in or returned to employment; or
    (ii) Receives from such employer payment for any such hours of 
service performed on each of 8 or more days (or separate work shifts) in 
such month or payroll period, Provided, That the plan has not for any 
purpose determined or used the actual number of hours of service which 
would be required to be credited to the employee under Sec. 2530.200b-
(2)(a).
    (2) Multiemployer plans. In the case of a multiemployer plan, as 
defined in section 3(37) of the Act, the employment of an employee 
subsequent to the time the payment of benefits commenced or would have 
commenced if the employee had not remained in or returned to employment 
results in section 203(a)(3)(B) service during a calendar month, or 
during a four or five week payroll period ending in a calendar month, if 
the employee, in such month or payroll period:

--Completes 40 or more hours of service (as defined in Sec. 2530.200b-
2(a)(1) and (2)) or

[[Page 478]]

--Receives payment for any such hours of service performed on each of 8 
or more days (or separate work shifts) in such month or payroll period, 
Provided, That the plan has not for any purpose determined or used the 
actual number of hours of service which would be required to be credited 
to the employee under Sec. 2530.200(b)-(2)(a); in
--An industry in which employees covered by the plan were employed and 
accrued benefits under the plan as a result of such employment at the 
time that the payment of benefits commenced or would have commenced if 
the employee had not remained in or returned to employment, and
--A trade or craft in which the employee was employed at any time under 
the plan, and
--The geographic area covered by the plan at the time that the payment 
of benefits commenced or would have commenced if the employee had not 
remained in or returned to employment.

    (i) Industry. The term ``industry'' means the business activities of 
the types engaged in by any employers maintaining the plan.

    Example. One of the employers contributing to a multiemployer plan 
engages in heavy construction, another in textile manufacturing, and 
another in communications. Employee E began his career as an employee of 
an employer engaged in heavy construction. Later E was employed by an 
employer in communications. With both employers, E accrued benefits 
under the plan. If E retires and then becomes reemployed in the same 
trade or craft and in the same geographic area, employment by E in 
either heavy construction, communications or textile manufacturing, 
whether or not with an employer who contributes to the plan or in a 
self-employed capacity, may be considered by the plan to be employment 
in the same industry, assuming that employees covered by the plan were 
accruing benefits as a result of employment in these industries at the 
time E commenced receiving benefits. This is true even though E did not 
previously accrue benefits as a result of employment with an employer 
engaged in textile manufacturing because other employees covered by the 
plan were employed in that industry and were accruing benefits under the 
plan as a result of such employment at the time when benefit payments to 
E commenced or would have commenced if E had not returned to employment.

    (ii) Trade or craft. A trade or craft is (A) a skill or skills, 
learned during a significant period of training or practice, which is 
applicable in occupations in some industry, (B) a skill or skills 
relating to selling, retailing, managerial, clerical or professional 
occupations, or (C) supervisory activities relating to a skill or skills 
described in (A) or (B) of this paragraph (c)(2)(ii). For purposes of 
this paragraph (c)(2)(ii), the determination whether a particular job 
classification, job description or industrial occupation constitutes or 
is included in a trade or craft shall be based upon the facts and 
circumstances of each case. Factors which may be examined include 
whether there is a customary and substantial period of practical, on-
the-job training or a period of related supplementary instruction. 
Notwithstanding any other factor, the registration of an apprenticeship 
program with the Bureau of Apprenticeship and Training of the Employment 
Training Administration of the U.S. Department of Labor is sufficient 
for the conclusion that a skill or skills which is the subject of the 
apprenticeship program constitutes a trade or craft.

    Example. Participation in a multiemployer plan is limited solely to 
electricians. Electrician E retired and then became reemployed as a 
foreman of electricians. Because a ``trade or craft'' includes related 
supervisory activities, E remains within his trade or craft for purposes 
of this section.

    (iii) Geographic area covered by the plan. (A) With the exception of 
a plan covering employees in a maritime industry, the ``geographic area 
covered by the plan'' consists of any state or any province of Canada in 
which contributions were made or were required to be made by or on 
behalf of an employer and the remainder of any Standard Metropolitan 
Statistical Area (SMSA) which falls in part within such state, 
determined as of the time that the payment of benefits commenced or 
would have commenced if the employee had not returned to employment.

    Example. A multiemployer plan covers plumbers in Pennsylvania. All 
contributing employers have always been located within Pennsylvania. 
Accordingly, the ``geographic area covered by the plan'' consists of 
Pennsylvania and any SMSAs which fall in part within Pennsylvania. Thus, 
for example, in the case of the Philadelphia SMSA, Burlington, Camden 
and Gloucester Counties in New Jersey are within the ``geographic area 
covered by the plan''.

    (B) [Reserved--for definition of the geographic area covered by a 
plan that

[[Page 479]]

covers employees in a maritime industry.]


For purposes of this paragraph (c)(2)(iii), contributions shall not 
include amounts contributed: After December 31, 1978 by or on hehalf of 
an employer where no contributions were made by or on behalf of that 
employer before that date, if the primary purpose of such contribution 
is to allow for the suspension of plan benefits in a geographic area not 
otherwise covered by the plan; or with respect to isolated projects 
performed in states where plan participants were not otherwise employed.
    (3) Employment in a maritime industry. For plans covering employees 
employed in a maritime industry, as defined in Sec. 2530.200b-6, the 
standard of ``five or more days of service, as defined in 
Sec. 2530.200b-7(a)(1)'' shall be used in lieu of the standard ``40 or 
more hours of service'', for purposes of determining whether an employee 
is employed in section 203(a)(3)(B) service.
    (d) Suspendable amount--(1) Life annuity. In the case of benefits 
payable periodically on a monthly basis for as long as a life (or lives) 
continues, such as a straight life annuity or a qualified joint and 
survivor annuity, a plan may provide that an amount not greater than the 
portion of a monthly benefit payment derived from employer contributions 
may be withheld permanently for a calendar month, or for a four or five 
week payroll period ending in a calendar month, in which the employee is 
employed in section 203(a)(3)(B) service.
    (2) Other benefit forms. In the case of benefits payable in a form 
other than the form described in paragraph (d)(1) of this section, a 
plan may provide for the permanent withholding of an amount of the 
employer-derived portion of benefit payments for a calendar month, or 
for a four or five week payroll period ending in a calendar month, in 
which the employee is employed in section 203(a)(3)(B) service, not 
exceeding the lesser of--
    (i) The amount of benefits which would have been payable to the 
employee if he had been receiving monthly benefits under the plan since 
actual retirement based on a single life annuity commencing at actual 
retirement age; or
    (ii) The actual amount paid or scheduled to be paid to the employee 
for such month. Payments which are scheduled to be paid less frequently 
than monthly may be converted to monthly payments for purposes of this 
paragraph (d)(2)(ii).

(Approved by the Office of Management and Budget under control number 
1210-0048)

[46 FR 8903, Jan. 27, 1981, as amended at 46 FR 59245, Dec. 4, 1981; 46 
FR 60572, Dec. 11, 1981; 49 FR 18295, Apr. 30, 1984]



Sec. 2530.204-1  Year of participation for benefit accrual.

    (a) General. Section 204(b)(1) of the Act and section 411(b)(1) of 
the Code contain certain requirements relating to benefit accrual under 
a defined benefit pension plan. Some of these requirements are based on 
the number of years of participation included in an employee's period of 
service. Paragraph (b) of this section relates to service which must be 
taken into account in determining an employee's period of service for 
purposes of benefit accrual. Section 2530.204-2 sets forth rules 
relating to the computation periods to be used in measuring years of 
participation for benefit accrual (``accrual computation periods'').
    (b) Service which may be disregarded for purposes of benefit 
accrual. (1) In calculating an employee's period of service for purposes 
of benefit accrual under a defined benefit pension plan, section 
204(b)(3) of the Act and section 411(b)(3) of the Code permit the 
following service to be disregarded: service before an employee first 
becomes a participant in the plan; service which is not required to be 
taken into account under section 202(b) of the Act and section 410(b)(5) 
of the Code (relating to one-year breaks in service for purposes of 
eligibility to participate); and service which is not required to be 
taken into account under section 204(b)(3)(C) of the Act and section 
411(b)(3)(C) of the Code (relating to 12-consecutive-month periods 
during which an employee's service is less than 1,000 hours). In 
addition, in calculating an employee's period of service for purposes of 
benefit accrual, a defined benefit plan shall not be required

[[Page 480]]

to take into account service before the conclusion of a series of 
consecutive 1-year breaks in service occurs which permits a plan to 
disregard prior service under section 203(b)(3)(D) of the Act and 
section 411(a)(6)(D) of the Code.
    (2) Example. The following example illustrates paragraph (b)(1) of 
this section. A plan has a calendar year vesting and accrual computation 
period and, under Sec. 2530.202-2 (a) and (b)(1), uses eligibility 
computation periods beginning on an employee's employment commencement 
date and anniversaries thereof. The plan provides that an employee who 
has at least 10 years of service has a vested right to 100 percent of 
his accrued benefit derived from employer contributions. The plan 
provides that an employee who is credited with at least 1,000 hours of 
service in a calendar year accrual computation period is credited with 
at least partial year of participation for purposes of benefit accrual. 
An employee whose birthday is October 16, 1956, begins employment with 
an employer maintaining the plan on January 1, 1977. Under 
Sec. 2530.202-2(a)(1), January 1, 1977 is the employee's employment 
commencement date and the calendar year 1977 is the employee's initial 
eligibility computation period. The employee completes at least 1,000 
hours of service in each of the calendar years from 1977 through 1981. 
On January 1, 1982 the employee is admitted to participation in the 
plan, having met the plan's age requirement (25 years) and service 
requirement (one year of service) for eligibility to participate. In 
1982, the employee is credited with the number of hours of service 
required for a full year of participation (i.e., more than 1,000 hours 
of service). Under Sec. 2530.202-2(c), for purposes of applying section 
202(b)(4) of the Act and section 410(a)(5)(D) of the Code (relating to 
years of service completed before a break in service for purposes of 
eligibility to participate), eligibility computation periods beginning 
on the employee's employment commencement date and anniversaries thereof 
are used under the plan to measure service prior to a break in service 
(in addition, under Sec. 2530.200b-4(a)(2), the same eligibility 
computation periods are used in measuring one-year breaks in service for 
purposes of eligibility to participate). Thus, as of January 1, 1983, 
the employee is credited with six years of service for purposes of 
eligibility to participate and is credited with one year of 
participation. In accordance with section 203(b)(1)(A) of the Act and 
section 411(a)(4)(A) of the Code, the plan provides that years of 
service completed before age 22 are disregarded for purposes of vesting. 
As of January 1, 1983, therefore, the employee is credited with four 
years of service for purposes of vesting. In 1983 the employee 
terminates employment with the employer, incurring one-year breaks in 
service in each of the calendar years from 1983 through 1986. As of 
December 31, 1986, the employee's consecutive one-year breaks in service 
equal the employee's four years of service for vesting before such 
breaks. Under section 203(b)(3)(D) of the Act and section 410(a)(5)(D) 
of the Code and the terms of the plan, the four years of service for 
vesting completed by the employee before his four consecutive one-year 
breaks in service are not taken into account for purposes of vesting. 
Under paragraph (b)(1) of this section, therefore, in calculating the 
employee's period of service for purposes of benefit accrual, the plan 
may disregard the year of participation completed by the employee before 
his four consecutive one-year breaks in service for vesting, because the 
four consecutive one-year breaks in service equal the four years of 
service credited to the employee for vesting. The employee is re-
employed by the employer on January 1, 1987 completing an hour of 
service on that date. Under Sec. 2530.200b-4(b)(1), therefore, January 
1, 1987 is the employee's reemployment commencement date. In 1987, the 
employee completes the number of hours of service required for a full 
year of participation (i.e., more than 1,000 hours of service). For 
1987, therefore, the employee is credited with a year of service for 
purposes of eligibility to participate and vesting, and with a year of 
participation. As of December 31, 1987, the employee is credited with 
one year of service for purposes of vesting, since service before the 
employee's four consecutive one-year breaks in service--including the 
year of service completed in 1982--

[[Page 481]]

is not taken into account. Because under paragraph (b)(1) of this 
section, the year of participation credited to the employee for 1982 is 
not required to be taken into account for purposes of benefit accrual, 
the employee is credited with one year of participation as of December 
31, 1987.



Sec. 2530.204-2  Accrual computation period.

    (a) Designation of accrual computation periods. A plan may designate 
any 12-consecutive-month period as the accrual computation period except 
that the period so designated must apply equally to all participants. 
This requirement may be satisfied even though the actual time periods 
are not the same for all participants. For example, the accrual 
computation period may be designated as the vesting computation period, 
the plan year, or the 12-consecutive-month period beginning on either of 
two semi-annual dates designated for entry to participation under a 
plan.
    (b) Participation prior to effective date. For purposes of applying 
the accrual rules of section 204(b)(1)(D) of the Act and section 
411(b)(1)(D) of the Code (relating to accrual requirements for defined 
benefit plans for periods prior to the effective date of those 
sections), all service from the date of participation in the plan as 
determined in accordance with applicable plan provisions, shall be taken 
into account in determining an employee's period of service. When the 
plan documents do not provide a definite means for determining the date 
of commencement of participation, the date of commencement of employment 
covered under the plan during the period that the employer maintained 
the plan shall be presumed to be the date of commencement of 
participation in the plan. The plan may rebut this presumption by 
demonstrating from circumstances surrounding the operation of the plan, 
such as the date of commencement of mandatory employee contributions, 
that participation actually began on a later date.
    (c) Partial year of participation. (1) Under section 204(b)(3)(C) of 
the Act and section 411(b)(3)(C) of the Code, in calculating an 
employee's period of service for purposes of benefit accrual, a plan is 
not required to take into account a 12-consecutive-month period during 
which the employee's service is less than 1,000 hours of service. In 
measuring an employee's service for purposes of section 204(b)(3)(C) of 
the Act and section 411(b)(3)(C) of the Code, a plan shall use the 
accrual computation period designated under paragraph (a) of this 
section. Under section 204(b)(3)(B) of the Act and section 411(b)(3)(B) 
of the Code, in the case of an employee whose service is not less than 
1,000 hours of service during an accrual computation period, the 
calculation of such employee's period of service will not be treated as 
made on a reasonable and consistent basis unless service during such 
computation period is taken into account. To the extent that the 
employee's service during the accrual computation period is less than 
the service required under the plan for a full year of participation, 
the employee must be credited with a partial year of participation 
equivalent to no less than a ratable portion of a full year of 
participation.
    (2) For purposes of calculating the portion of a full year of 
participation to be credited to an employee whose service during a 
computation period is not less than 1,000 hours of service but is less 
than service required for a full year of participation in the plan, the 
plan may credit the employee with a greater portion of a full year of 
participation than a ratable portion, or may credit an employee with a 
full year of participation even though the employee's service is less 
than the service required for a full year of participation, provided 
that such crediting is reasonable and is consistent for all employees 
within the same job classifications, reasonably established.
    (3) In the case of an employee who commences participation in a plan 
(or recommences participation in the plan upon the employee's return 
after one or more 1-year breaks in service) on a date other than the 
first day of an applicable accrual computation period, all hours of 
service required to be credited to the employee during the entire 
accrual computation period, including

[[Page 482]]

hours of service credited to the employee for the portion of the 
computation period before the date on which the employee commences (or 
recommences) participation, shall be taken into account in determining 
whether the employee has 1,000 or more hours of service for purposes of 
section 204(b)(3)(C) of the Act and section 411(b)3)(C) of the Code. If 
such employee's service is not less than 1,000 hours in such accrual 
computation period, the employee must be credited with a partial year of 
participation which is equivalent to no less than a ratable portion of a 
full year of participation for service credited to the employee for the 
portion of the computation period after the date of commencement (or 
recommencement) of participation.
    (4) Examples. The following are examples of reasonable and 
consistent methods for crediting partial years of participation:
    (i) A plan requires 2,000 hours of service for a full year of 
participation. An employee who is credited during a computation period 
with no less than 1,000 hours of service but less than 2,000 hours of 
service is credited with a partial year of participation equal to a 
portion of a full year of participation determined by dividing the 
number of hours of service credited to the employee by 2,000.
    (ii) A plan requires 2,000 hours of service for a full year of 
participation. The plan credits service in an accrual computation period 
in accordance with the following table:

------------------------------------------------------------------------
                                                         Percentage of
                                                          full year of
              Hours of service credited                  participation
                                                            credited
------------------------------------------------------------------------
1000.................................................                 50
1001 to 1200.........................................                 60
1201 to 1400.........................................                 70
1401 to 1600.........................................                 80
1601 to 1800.........................................                 90
1801 and above.......................................                100
------------------------------------------------------------------------


Under this method of crediting partial years of participation, each 
employee who is credited with not less than 1,000 hours of service is 
credited with at least a ratable portion of a full year of 
participation.
    (iii) A plan provides that each employee who is credited with at 
least 1,000 hours of service in an accrual computation period must 
receive credit for at least a partial year of participation for that 
computation period. For full accrual, however, the plan requires that an 
employee must be credited with a specified number of hours worked; 
employees who meet the 1,000 hours of service requirement but who are 
not credited with the specified number of hours worked required for a 
full year of participation are credited with a partial year of 
participation on a prorata basis. For example, if the plan requires 
1,500 hours worked for full accrual, an employee with 1,500 hours worked 
would be credited with full accrual, but an employee with 1,000 hours 
worked and 500 other hours of service would be credited with \2/3\ of 
full accrual. The plan's method of crediting service for accrual 
purposes is consistent with the requirements of this paragraph. It 
should be noted, however, that use of hours worked as a basis for 
prorating benefit accrual may result in discrimination prohibited under 
section 401(a)(4) of the Code.
    (iv) Employee A is employed on June 1, 1980 in service covered by a 
plan with a calendar year accrual computation period, and which requires 
1,800 hours of service for a full accrual. Employee A completes 500 
hours from June 1, 1980 to December 31, 1980, and completes 100 hours 
per month in each month during 1981. A is admitted to participation on 
July 1, 1981. A is credited with 1,200 hours of service for the accrual 
computation period beginning January 1, 1981. Under the rules set forth 
in paragraph (c)(3) of this section, A is required to be credited with 
not less than one-third of a full accrual (600 hours divided by 1,800 
hours).
    (d) Prohibited double proration. (1) In the case of a defined 
benefit plan that (i) defines benefits on a basis which has the effect 
of prorating benefits to reflect less than full-time employment or less 
than maximum compensation and (ii) does not adjust less-than-full-time 
service to reflect the equivalent of full-time hours or compensation (as 
the case may be), the plan may not further prorate benefit accrual under 
section 204(b)(3)(B) of the Act and section 411(b)(3)(B) of the Code by 
crediting less than full years of participation, as would otherwise be 
permitted under paragraph (c) of this section. These

[[Page 483]]

plans must credit, except when service may be disregarded under section 
204(b)(3)(C) of the Act and section 411(b)(3)(C) of the Code (relating 
to less than 1,000 hours of service), less-than-full-time employees with 
a full year of participation for the purpose of accrual of benefits.
    (2) Examples. (i) A plan's defined benefit formula provides that the 
annual retirement benefit shall be 2 percent of the average compensation 
in all years of participation multiplied by the number of years of 
participation. Employee A is a full-time employee who has completed 
2,000 hours during each of 20 accrual computation periods. A's average 
hourly rate was $5 an hour. Thus, A's average compensation for each year 
during participation in the plan is $10,000 ($5 per hour multiplied by 
2,000 hours). If the plan states that a full year of participation is 
2,000 hours, then A's annual retirement benefits, if he retired at that 
time, would be $4,000 ($10,000 per year of compensation x.02x20 years of 
participation). Employee B, however, is a part-time employee who 
completes 1,000 hours of service during each of 20 accrual computation 
periods. Like A, B's average hourly rate is $5 per hour. B's average 
compensation for his total years of participation is $5,000 ($5 per hour 
multiplied by 1,000 hours). Thus, the plan's benefit formula, by basing 
benefits on an employee's average compensation in all years of 
participation, in effect prorates benefits to reflect the fact that 
during B's participation in the plan, he has earned less than the 
maximum compensation that a full-time employee paid at the same rate 
could earn during the same period of participation in the plan. Under 
the rule of subparagraph (1), therefore, the plan is not permitted to 
prorate B's years of participation to reflect B's less than full-time 
employment throughout his participation in the plan. Therefore, B's 
annual retirement benefit would be $2,000 ($5,000 average compensation 
x.02x20 years of participation). (If double proration were permitted, 
then B's total years of participation would be only 10 since he would be 
credited with only one-half of a year of participation during each of 
the accrual computation periods (1,000/2,000). Thus, B's annual 
retirement benefit would be $1,000--i.e., $5,000 average compensation 
x.02x10 years of participation.)
    (ii) If the plan adjusts the average compensation during plan 
participation to reflect full compensation, then the plan may prorate 
years of participation. Thus, the average full annual compensation for B 
would be $10,000 rather than the $5,000 actually paid. Employee B's 
annual retirement benefit would then be $2,000 ($10,000 average full 
compensation x.02x10 years of participation).
    (e) Amendments to change accrual computation periods. (1) A plan may 
be amended to change the accrual computation period to a different 12-
consecutive-month period, provided that the period between the end of 
the last accrual computation period under the plan as in effect before 
such amendment and the beginning of the first accrual computation period 
under the plan as amended is treated as a partial accrual computation 
period in accordance with the rules set forth in paragraph (e)(2) of 
this section.
    (2) In the case of a partial accrual computation period, the 
following rules shall apply:
    (i) A plan having a minimum service requirement expressed in hours 
of service (or other units of service) for benefit accrual in a full 
accrual computation period (as permitted under section 204(b)(3)(B) of 
the Act and section 411(b)(3)(B) of the Code) may apply a minimum 
service requirement for benefit accrual in a partial accrual computation 
period which is equal to the plan's minimum service requirement for 
benefit accrual in a full accrual computation period, multiplied by the 
ratio of the length of the partial accrual computation period to a full 
year.
    (ii) In the case of a participant who meets a plan's minimum service 
requirement for benefit accrual in a partial accrual computation period 
(as permitted under paragraph (e)(2)(i) of this section), the plan shall 
credit the participant with at least a partial year of participation for 
purposes of benefit accrual. Credit for a partial accrual computation 
period shall be determined in accordance with paragraphs (c) and (d) of 
this section.

[[Page 484]]

    (3) Example. Effective October 1, 1977, a plan is amended to change 
the accrual computation period from the 12-consecutive-month period 
beginning on January 1 to the 12-consecutive-month period beginning on 
October 1. The period from January 1, 1977 to September 30, 1977 must be 
treated as a partial accrual computation period. The plan has a 
requirement that a participant must be credited with 1,000 hours of 
service in an accrual computation period in order to be credited with a 
year of participation for purposes of benefit accrual. For the partial 
accrual computation period the plan may require a participant to be 
credited with 750 hours of service in the partial accrual computation 
period in order to receive credit for purposes of benefit accrual (1,000 
hours of service multiplied by the ratio of 9 months to 12 months). To 
the extent permitted under paragraph (d) of this section, the plan may 
prorate accrual credit on whatever basis the plan uses to prorate 
accrual credit for employees whose service is 1,000 hours of service or 
more but less than service required for full accrual in a full accrual 
computation period.



Sec. 2530.204-3  Alternative computation methods for benefit accrual.

    (a) General. Under section 204(b)(3)(A) of the Act and section 
411(b)(3)(A) of the Code, a defined benefit pension plan may determine 
an employee's service for purposes of benefit accrual on the basis of 
accrual computation periods, as specified in Sec. 2530.204-2, or on any 
other basis which is reasonable and consistent and which takes into 
account all covered service during the employee's participation in the 
plan which is included in a period of service required to be taken into 
account under section 202(b) of the Act and section 410(a)(5) of the 
Code. If, however, a plan determines an employee's service for purposes 
of benefit accrual on a basis other than computation periods, it must be 
possible to prove that, despite the fact that benefit accrual under the 
plan is not based on computation periods, the plan's provisions meet at 
least one of the three benefit accrual rules of section 204(b)(1) of the 
Act and section 411(b)(1) of the Code under all circumstances. Further, 
a plan which does not provide for benefit accrual on the basis of 
computation periods may not disregard service under section 204(b)(3)(C) 
of the Act and section 411(b)(3)(C) of the Code.
    (b) Examples. The following are examples of methods of determining 
an employee's period of service for purposes of benefit accrual under 
which an employee's period of service is not determined on the basis of 
computation periods but which may be used by a plan provided that the 
requirements of paragraph (a) of this section are met:
    (1) Career compensation. A defined benefit formula based on a 
percentage of compensation earned in a participant's career or during 
participation, with no variance depending on hours completed in given 
periods.
    (2) Credited hours. A defined benefit formula pursuant to which an 
employee is credited with a specified amount of accrual for each hour of 
service (or hour worked or regular time hour) completed by the employee 
during his or her career.
    (3) Elapsed time. See Sec. 2530.200b-9(e).



Sec. 2530.204-4  Deferral of benefit accrual.

    For purposes of section 204(b)(1)(E) of the Act and section 
411(b)(1)(E) of the Code (which permit deferral of benefit accrual until 
an employee has 2 continuous years of service), an employee shall be 
credited with a year of service for each computation period in which he 
or she completes 1,000 hours of service. The computation period shall be 
the eligibility computation period designated in accordance with 
Sec. 2530.202-2.



                 Subpart C--Form and Payment of Benefits



Secs. 2530.205-2530.206  [Reserved]



          Subpart D--Plan Administration as Related to Benefits



Secs. 2530.207-2530.209  [Reserved]



Sec. 2530.210  Employer or employers maintaining the plan.

    (a) General statutory provisions--(1) Eligibility to participate and 
vesting. Except as otherwise provided in section

[[Page 485]]

202(b) or 203(b)(1) of the Act and sections 410(a)(5), 411(a)(5) and 
411(a)(6) of the Code, all years of service with the employer or 
employers maintaining the plan shall be taken into account for purposes 
of section 202 of the Act and section 410 of the Code (relating to 
minimum eligibility standards) and section 203 of the Act and section 
411(a) of the Code (relating to minimum vesting standards).
    (2) Accrual of benefits. Except as otherwise provided in section 
202(b) of the Act and section 410(a)(5) of the Code, all years of 
participation under the plan must be taken into account for purposes of 
section 204 of the Act and section 411(b) of the Code (relating to 
benefit accrual). Section 204(b) of the Act and section 411(b) of the 
Code require only that periods of actual participation in the plan 
(e.g., covered service) be taken into account for purposes of benefit 
accrual.
    (b) General rules concerning service to be credited under this 
section. Section 210 of the Act and sections 413(c), 414(b), and 414(c) 
of the Code provide rules applicable to sections 202, 203, and 204 of 
the Act and sections 410, 411(a), and 411(b) of the Code for purposes of 
determining who is an ``employer or employers maintaining the plan'' 
and, accordingly, what service is required to be taken into account in 
the case of a plan maintained by more than one employer. Paragraphs (c) 
through (e) of this section set forth the rules for determining service 
required to be taken into account in the case of a plan or plans 
maintained by multiple employers, controlled groups of corporations and 
trades or businesses under common control. Note throughout that every 
mention of multiple employer plans includes multiemployer plans. See 
Sec. 2530.210(c)(3). Paragraph (f) of this section sets forth special 
break in service rules for such plans. Paragraph (g) of this section 
applies the break in service rules of sections 202(b)(4) and 
203(b)(3)(D) of the Act and sections 410(a)(5)(D) and 411(a)(6)(D) of 
the Code (rule of parity) to such plans.
    (c) Multiple employer plans--(1) Eligibility to participate and 
vesting. A multiple employer plan shall be treated as if all maintaining 
employers constitute a single employer so long as an employee is 
employed in either covered service or contiguous noncovered service. 
Accordingly, except as referred to in paragraph (a)(1) and provided in 
paragraph (f) of this section, in determining an employee's service for 
eligibility to participate and vesting purposes, all covered service 
with an employer or employers maintaining the plan and all contiguous 
noncovered service with an employer or employers maintaining the plan 
shall be taken into account. Thus, for example, if an employee in 
service covered under a multiple employer plan leaves covered service 
with one employer maintaining the plan and is employed immediately 
thereafter in covered service with another employer maintaining the 
plan, the plan is required to credit all hours of service with both 
employers for purposes of participation and vesting. If an employee 
moves from contiguous noncovered to covered service, or from covered 
service to contiguous noncovered service, with the same employer, the 
plan is required to credit all hours of service with such employer for 
purposes of eligibility to participate and vesting.
    (2) Benefit accrual. A multiple employer plan shall be treated as if 
all maintaining employers constitute a single employer so long as an 
employee is employed in covered service. Accordingly, except as referred 
to in paragraph (a)(2) and provided in paragraph (f) of this section, in 
determining a participant's service for benefit accrual purposes, all 
covered service with an employer or employers maintaining the plan shall 
be taken into account.
    (3) Definitions. (i) For purposes of this section, the term 
``multiple employer plan'' shall mean a multiemployer plan as defined in 
section 3(37) of the Act and section 414(f) of the Code or a multiple 
employer plan within the meaning of sections 413 (b) and (c) of the Code 
and the regulations issued thereunder. Notwithstanding the preceding 
sentence, a plan maintained solely by members of the same controlled 
group of corporations within the meaning of paragraph (d) of this 
section or by trades or businesses which are under the common control of 
one person or group of persons within the meaning of paragraph (e) of 
this section shall not

[[Page 486]]

be deemed to be a multiple employer plan for purposes of this section, 
and such plan is required to apply the rules under this section which 
are applicable to controlled groups of corporations or commonly 
controlled trades or businesses respectively.
    (ii) For purposes of this section, the term ``covered service'' 
shall mean service with an employer or employers maintaining the plan 
within a job classification or class of employees covered under the 
plan.
    (iii) For purposes of this section the term ``noncovered service'' 
shall mean service with an employer or employers maintaining the plan 
which is not covered service.
    (iv)(A) General. For purposes of this section noncovered service 
shall be deemed ``contiguous'' if (1) the noncovered service precedes or 
follows covered service and (2) no quit, discharge, or retirement occurs 
between such covered service and noncovered service.
    (B) Exception. Notwithstanding the preceding paragraph, in the case 
of a controlled group of corporations within the meaning of paragraph 
(d) of this section or trades or businesses which are under the common 
control of one person or group of persons within the meaning of 
paragraph (e) of this section, any transfer of an employee from one 
member of the controlled group to another member or from one trade or 
business under common control to another trade or business under the 
common control of the same person or group of persons shall result in 
the period of noncovered service which immediately precedes or follows 
such transfer being deemed ``noncontiguous'' for purposes of paragraph 
(c) of this section.
                Diagram No. 1. (Multiple Employer Plan.)
[GRAPHIC] [TIFF OMITTED] TC21OC91.033

    Assume for purposes of diagram No. 1 that X and Y are both employers 
who are required to contribute to a multiple employer plan and that 
neither employer maintains any other plan. Covered service is 
represented by the shaded segments of the diagram. After completing 1 
year of noncovered service, employee A immediately enters covered 
service with X and completes 4 years of covered service. For purposes of 
eligibility to participate and vesting, the plan is required to credit 
employee A with 5 years of service with employer X because his period of 
service with X includes a period of covered service and a period of 
contiguous noncovered service. On the other hand, employee B, 
immediately after completing 2 years of noncovered service with X, 
enters covered service with Y. Because B quit employment with X, his 
period of noncovered service with X is not contiguous and, therefore, is 
not required to be taken into account. In the case of employee C, the 
plan is required to take into account all service with employers X and Y 
because employee C is employed in covered service with both employers.
                   Diagram No. 2. (Multiple Employer.)
[GRAPHIC] [TIFF OMITTED] TC21OC91.034

    The multiple employer plan rules with respect to noncovered service 
are illustrated in diagram No. 2. Assume that X and Y are both employers 
who are required to contribute to a multiple employer plan and that 
neither employer maintains any other plan. Covered service is 
represented by the shaded segments of the diagram. Employee E completed 
3 years of service with employer X in covered service and then 
immediately entered noncovered service with X. Because E's noncovered 
service is contiguous, the plan is required to take into account all 
service with X for purposes of eligibility to participate and vesting 
under the multiple employer plan. Employee F does not continue to 
receive credit; F quit the employment of Y and entered noncovered 
service with X.

    (d) Controlled groups of corporations. (1) With respect to a plan 
maintained by one or more members of a controlled group of corporations 
(within the meaning of section 1563(a) of the Code, determined without 
regard to sections 1563(a)(4) and (e)(3)(C), all employees of such 
corporations shall be treated as employed by a single employer.
    (2) Accordingly, except as referred to in paragraph (a)(1) and 
provided in

[[Page 487]]

paragraph (f) of this section, in determining an employee's service for 
eligibility to participate and vesting purposes, all service with any 
employer which is a member of the controlled group of corporations shall 
be taken into account. Except as referred to in paragraph (a)(2) and 
provided in paragraph (f) of this section, in determining a 
participant's service for benefit accrual purposes, all service during 
periods of participation covered under the plan with any employer which 
is a member of the controlled group of corporations shall be taken into 
account.
    (e) Commonly controlled trades or businesses. With respect to a plan 
maintained only by one or more trades or businesses (whether or not 
incorporated) which are under common control within the meaning of 
section 414(c) of the Code and the regulations issued thereunder, all 
employees of such trades or businesses shall be treated as employed by a 
single employer. Accordingly, except as referred to in paragraph (a)(1) 
and provided in paragraph (f) of this section, in determining an 
employee's service for eligibility to participate and vesting purposes, 
all service with any employer which is under common control shall be 
taken into account. Except as referred to in paragraph (a)(2) and 
provided in paragraph (f) of this section, in determining a 
participant's service for benefit accrual purposes, all service during 
periods of participation covered under the plan with any employer which 
is under common control shall be taken into account.
    Diagram No. 3. (Controlled group or commonly controlled trade or 
                               business.)
[GRAPHIC] [TIFF OMITTED] TC21OC91.035

    Assume for purposes of diagram No. 3 that X and Y are either members 
of the same controlled group of corporations or trades or businesses 
which are under the same common control. The dotted segments of the 
diagram represent plan coverage under plans separately maintained by X 
and Y. Neither employer maintains any other plans. Because A1, B1, C1, 
and D1 have their service with X and Y treated as if X and Y were a 
single employer, the plans are required to take into account all service 
with X and Y for eligibility to participate and vesting purposes.

    (f) Special break in service rules. (1) In addition to service which 
may be disregarded under the statutory provisions referred to in 
paragraph (a) of this section, a multiple employer plan may disregard 
noncontiguous non- covered service.
    (2) In the case of a plan maintained solely by one or more members 
of a controlled group of corporations or one or more trades or 
businesses which are under common control, if one of the maintaining 
employers is also a participating employer in a multiple employer plan 
which includes other employers which are not members of the controlled 
group or commonly controlled trades or businesses, service with such 
other employer maintaining the multiple employer plan may be disregarded 
by the controlled group or commonly controlled plan.
                Diagram No. 4. (Break in Service Rules.)
[GRAPHIC] [TIFF OMITTED] TC21OC91.036

    Diagram No. 4 illustrates the break in service rules of paragraph 
(f) of this section. Assume for purposes of diagram No. 4 that employer 
Z is controlled by employer X but employer Y's only relation to X and Z 
is that X, Y, and Z are required to contribute to a multiple employer 
plan. The multiple employer plan, represented by the shaded segments of 
the diagram, provides for 100 percent vesting after 10 years. X, Y, and 
Z maintain no other plans.

[[Page 488]]

    Employee G completed 5 years of covered service with employer Y, and 
then moved to noncovered service with employer Z. G's noncovered service 
is noncontiguous (see employee F in diagram No. 2 above), and such 
service may be disregarded for purposes of the multiple employer plan 
under the rule in paragraph (f)(1).
    Employee H completed 2 years of covered service with employer Y and 
then entered covered service with employer X for 1 year. The multiple 
employer plan is required to credit H with 3 years of service. H then 
entered noncovered service with employer Z. H's noncovered service is 
noncontiguous (see employee F in diagram No. 2 above), and such service 
may be disregarded for purposes of the multiple employer plan under the 
rule in paragraph (f)(1).

    (g) Rule of parity. For purposes of sections 202(b)(4) and 
203(b)(3)(D) of the Act and sections 410(a)(5)(D) and 411(a)(6)(D) of 
the Code, in the case of an employee who is a nonvested participant in 
employer-derived accrued benefits at the time he incurs a 1-year break 
in service, years of service completed by such employee before such 
break are not required to be taken into account if at such time he 
incurs consecutive 1-year breaks in service which equal or exceed the 
aggregate number of years of service before such breaks. This is so even 
though the period of noncontiguous noncovered service with an employer 
or employers maintaining the plan may subsequently be deemed contiguous 
as the result of the employee entering covered service with the same 
employer maintaining the plan and, consequently, such plan may be 
required to credit such service.
                     Diagram No. 5. (Rule of parity)
[GRAPHIC] [TIFF OMITTED] TC21OC91.037

    Assume for purposes of diagram No. 5 that X and Y are both employers 
who are required to contribute to a multiple employer plan which 
contains a provision applying the rule of parity. Covered service is 
represented by the shaded segments of the diagram. The plan has 100% 
vesting after 10 years. X and Y maintain no other plan.
    The multiple employer plan credited employee I with 4 years of 
service with X when he quit employment with X and entered noncovered 
service with Y. As a result of 4 years of noncontiguous noncovered 
service with Y, employee I incurred 4 consecutive 1-year breaks in 
service, so that the multiple employer plan may disregard his prior 
service (i.e., the 4 years of service with X).
    When employee I entered covered service with Y (as a ``new 
employee''), his 4 years of noncontiguous service with Y became 
contiguous for purposes of the multiple employer plan. Consequently, 
after 1 year of covered service with Y, the plan is required to credit 
employee I with 5 years of service.

    (h) Example. Under section 203(b)(1)(C) of the Act and section 
411(a)(4)(C) of the Code, service with an employer prior to such 
employer's adoption of the plan need not be taken into account. The 
following example demonstrates that this rule applies even if an 
employee is employed in contiguous noncovered service. The example is 
applicable to any plan subject to the rules of this section. However, 
for purposes of clarity, the example assumes that X and Y are required 
to contribute to a multiple employer plan.

    Assume that employee D completed 3 years of covered service with 
employer Y as of the date X adopts the plan. Immediately after X's 
adoption of the plan D left covered service with Y and D entered covered 
service with X. His prior covered service with Y is required to be 
counted, and D remains a participant.
    On the other hand, if D had entered service with X any time prior to 
X's adoption of the plan and subsequently was covered by the plan when X 
adopted it, his prior service with Y must also be counted, unless such 
service may be disregarded under the break in service rules because the 
period of service with X before X's adoption of the plan was equal to or 
greater than his prior service with Y. For example, if X adopted the 
plan three years after D began employment with X, and consequently after 
D had incurred 3 consecutive 1-year breaks in service, his prior service 
with Y could be disregarded.

[[Page 489]]

                   (i) Comprehensive diagram. (No. 6)
[GRAPHIC] [TIFF OMITTED] TC21OC91.038

    Assume for purposes of diagram No. 6 that employer Z is controlled 
by employer X within the meaning of paragraph (d) but employer Y's only 
relation to X and Z is that X, Y and Z are required to contribute to a 
multiple employer plan. The shaded segments represent coverage under the 
multiple employer plan which contains a provision applying the rule of 
parity. The dotted segment represents a separate plan maintained by Z. 
Both plans have 100% vesting after 10 years.
    Employee J completed 3 years of service with employer X in covered 
service with the multiple employer plan. J then entered non- covered 
service with Y and remained with Y for 1 year, and thereby incurred a 1-
year break in service under the multiple employer plan. J then entered 
covered service with employer Y, thereby causing the noncovered service 
with Y to become contiguous. Covered service with X and contiguous 
noncovered and covered service with Y must be taken into account for 
purposes of the multiple employer plan; accordingly, that plan is 
required to credit J with a total of 5 years of service.
    J then left service with Y and entered noncovered service (with 
respect to the multiple employer plan) with Z. J remained in noncovered 
service with Z (with respect to the multiple employer plan) for 5 years 
and thereby incurred 5 consecutive 1-year break in service for purposes 
of the multiple employer plan. Consequently, the prior service with X 
and Y may be disregarded for purposes of the multiple employer plan.
    J then entered covered service under the multiple employer plan with 
Z and completed 1 year of service. Because the 5 years of noncovered 
service with Z is contiguous with the 1 year of covered service, the 
multiple employer plan is now required to credit J with 6 years of 
service for purposes of eligibility to participate and vesting.
    For purposes of Z's controlled group plan (i.e., dotted segment), 
employee J is entitled to receive credit for 9 years of service. The 3 
years of service with X, a member of the controlled group, may not be 
disregarded under the rule of parity because J incurred only 2 
consecutive 1-year breaks in service while employed with Y. When J 
entered service with Z covered under Z's controlled group plan, the 3 
years of service with X were still required to be credited by the 
controlled group plan. In addition, J must receive credit for the 5 
years of service with Z covered under the controlled group plan. 
Finally, when J moved to service with Z covered under the multiple 
employer plan the controlled group plan was required to credit J with an 
additional year of service.



                         SUBCHAPTER E [RESERVED]



[[Page 490]]



  SUBCHAPTER F--FIDUCIARY RESPONSIBILITY UNDER THE EMPLOYEE RETIREMENT 
                       INCOME SECURITY ACT OF 1974





PART 2550--RULES AND REGULATIONS FOR FIDUCIARY RESPONSIBILITY--Table of Contents




Sec.
2550.401c-1  Definition of ``plan assets''--insurance company general 
          accounts.
2550.403a-1  Establishment of trust.
2550.403b-1  Exemptions from trust requirement.
2550.404a-1  Investment duties.
2550.404b-1  Maintenance of the indicia of ownership of plan assets 
          outside the jurisdiction of the district courts of the United 
          States.
2550.404c-1  ERISA section 404(c) plans.
2550.407a-1  General rule for the acquisition and holding of employer 
          securities and employer real property.
2550.407a-2  Limitation with respect to the acquisition of qualifying 
          employer securities and qualifying employer real property.
2550.407d-5  Definition of the term ``qualifying employer security''.
2550.407d-6  Definition of the term ``employee stock ownership plan''.
2550.408b-1  General statutory exemption for loans to plan participants 
          and beneficiaries who are parties in interest with respect to 
          the plan.
2550.408b-2  General statutory exemption for services or office space.
2550.408b-3  Loans to Employee Stock Ownership Plans.
2550.408b-4  Statutory exemption for investments in deposits of banks or 
          similar financial institutions.
2550.408b-6  Statutory exemption for ancillary services by a bank or 
          similar financial institution.
2550.408c-2  Compensation for services.
2550.408e  Statutory exemption for acquisition or sale of qualifying 
          employer securities and for acquisition, sale, or lease of 
          qualifying employer real property.
2550.412-1  Temporary bonding requirements.

    Authority: 29 U.S.C. 1135, and Secretary of Labor's Order 1-2003, 68 
FR 5374 (Feb. 3, 2003). Sec. 2550.401b-1 also issued under sec. 102, 
Reorganization Plan No. 4 of 1978, 43 FR 47713 (Oct. 17, 1978), 3 CFR, 
1978 Comp. 332, effective Dec. 31, 1978, 44 FR 1065 (Jan. 3, 1978), 3 
CFR 1978 Comp. 332. Sec. 2550.401c-1 also issued under 29 U.S.C. 1101. 
Sec. 2550.404c-1 also issued under 29 U.S.C. 1104. Sec. 2550.407c-3 also 
issued under 29 U.S.C. 1107. Sec. 2550.408b-1 also issued under 29 
U.S.C. 1108(b)(1) and sec. 102, Reorganization Plan No. 4 of 1978, 3 
CFR, 1978 Comp. p. 332, effective Dec. 31, 1978, 44 FR 1065 (Jan. 3, 
1978), and 3 CFR 1978 Comp. 332. Sec. 2550.412-1 also issued under 29 
U.S.C. 1112.



Sec. 2550.401c-1  Definition of ``plan assets''--insurance company general accounts.

    (a) In general. (1) This section describes, in the case where an 
insurer issues one or more policies to or for the benefit of an employee 
benefit plan (and such policies are supported by assets of an insurance 
company's general account), which assets held by the insurer (other than 
plan assets held in its separate accounts) constitute plan assets for 
purposes of Subtitle A, and Parts 1 and 4 of Subtitle B, of Title I of 
the Employee Retirement Income Security Act of 1974 (ERISA or the Act) 
and section 4975 of the Internal Revenue Code (the Code), and provides 
guidance with respect to the application of Title I of the Act and 
section 4975 of the Code to the general account assets of insurers.
    (2) Generally, when a plan has acquired a Transition Policy (as 
defined in paragraph (h)(6) of this section), the plan's assets include 
the Transition Policy, but do not include any of the underlying assets 
of the insurer's general account if the insurer satisfies the 
requirements of paragraphs (c) through (f) of this section or, if the 
requirements of paragraphs (c) through (f) were not satisfied, the 
insurer cures the non-compliance through satisfaction of the 
requirements in paragraph (i)(5) of this section.
    (3) For purposes of paragraph (a)(2) of this section, a plan's 
assets will not include any of the underlying assets of the insurer's 
general account if the insurer fails to satisfy the requirements of 
paragraphs (c) through (f) of this section solely because of the 
takeover of the insurer's operations from management as a result of the 
granting of a petition filed in delinquency proceedings in the State 
court where the insurer is domiciled.

[[Page 491]]

    (b) Approval by fiduciary independent of the issuer. (1) In general. 
An independent plan fiduciary who has the authority to manage and 
control the assets of the plan must expressly authorize the acquisition 
or purchase of the Transition Policy. For purposes of this paragraph, a 
fiduciary is not independent if the fiduciary is an affiliate of the 
insurer issuing the policy.
    (2) Notwithstanding paragraph (b)(1) of this section, the 
authorization by an independent plan fiduciary is not required if:
    (i) The insurer is the employer maintaining the plan, or a party in 
interest which is wholly owned by the employer maintaining the plan; and
    (ii) The requirements of section 408(b)(5) of the Act are 
met.1
---------------------------------------------------------------------------

    \1\ The Department notes that, because section 401(c)(1)(D) of the 
Act and the definition of Transition Policy preclude the issuance of any 
additional Transition Policies after December 31, 1998, the requirement 
for independent fiduciary authorization of the acquisition or purchase 
of the Transition Policy in paragraph (b) no longer has any application.
---------------------------------------------------------------------------

    (c) Duty of disclosure. (1) In general. An insurer shall furnish the 
information described in paragraphs (c)(3) and (c)(4) of this section to 
a plan fiduciary acting on behalf of a plan to which a Transition Policy 
has been issued. Paragraph (c)(2) of this section describes the style 
and format of such disclosure. Paragraph (c)(3) of this section 
describes the content of the initial disclosure. Paragraph (c)(4) of 
this section describes the information that must be disclosed by the 
insurer at least once per year for as long as the Transition Policy 
remains outstanding.
    (2) Style and format. The disclosure required by this paragraph 
should be clear and concise and written in a manner calculated to be 
understood by a plan fiduciary, without relinquishing any of the 
substantive detail required by paragraphs (c)(3) and (c)(4) of this 
section. The information does not have to be organized in any particular 
order but should be presented in a manner which makes it easy to 
understand the operation of the Transition Policy.
    (3) Initial disclosure. The insurer must provide to the plan, either 
as part of an amended policy, or as a separate written document, the 
disclosure information set forth in paragraphs (c)(3)(i) through (iv) of 
this section. The disclosure must include all of the following 
information which is applicable to the Transition Policy:
    (i) A description of the method by which any income and any expense 
of the insurer's general account are allocated to the policy during the 
term of the policy and upon its termination, including:
    (A) A description of the method used by the insurer to determine the 
fees, charges, expenses or other amounts that are, or may be, assessed 
against the policyholder or deducted by the insurer from any 
accumulation fund under the policy, including the extent and frequency 
with which such fees, charges, expenses or other amounts may be modified 
by the insurance company;
    (B) A description of the method by which the insurer determines the 
return to be credited to any accumulation fund under the policy, 
including a description of the method used to allocate income and 
expenses to lines of business, business segments, and policies within 
such lines of business and business segments, and a description of how 
any withdrawals, transfers, or payments will affect the amount of the 
return credited;
    (C) A description of the rights which the policyholder or plan 
participants have to withdraw or transfer all or a portion of any 
accumulation fund under the policy, or to apply the amount of a 
withdrawal to the purchase of guaranteed benefits or to the payment of 
benefits, and the terms on which such withdrawals or other applications 
of funds may be made, including a description of any charges, fees, 
credits, market value adjustments, or any other charges or adjustments, 
both positive and negative;
    (D) A statement of the method used to calculate any charges, fees, 
credits or market value adjustments described in paragraph (c)(3)(i)(C) 
of this section, and, upon the request of a plan fiduciary, the insurer 
must provide within 30 days of the request:
    (1) The formula actually used to calculate the market value 
adjustment, if any, to be applied to the unallocated

[[Page 492]]

amount in the accumulation fund upon distribution of a lump sum payment 
to the policyholder, and
    (2) The actual calculation, as of a specified date that is no 
earlier than the last contract anniversary preceding the date of the 
request, of the applicable market value adjustment, including a 
description of the specific variables used in the calculation, the value 
of each of the variables, and a general description of how the value of 
each of those variables was determined.
    (3) If the formula is based on interest rate guarantees applicable 
to new contracts of the same class or classes, and the duration of the 
assets underlying the accumulation fund, the contract must describe the 
process by which those components are ascertained or obtained. If the 
formula is based on an interest rate implicit in an index of publicly 
traded obligations, the identity of the index, the manner in which it is 
used, and identification of the source or publication where any data 
used in the formula can be found, must be disclosed;
    (ii) A statement describing the expense, income and benefit 
guarantees under the policy, including a description of the length of 
such guarantees, and of the insurer's right, if any, to modify or 
eliminate such guarantees;
    (iii) A description of the rights of the parties to make or 
discontinue contributions under the policy, and of any restrictions 
(such as timing, minimum or maximum amounts, and penalties and grace 
periods for late payments) on the making of contributions under the 
policy, and the consequences of the discontinuance of contributions 
under the policy; and
    (iv) A statement of how any policyholder or participant-initiated 
withdrawals are to be made: first-in, first-out (FIFO) basis, last-in, 
first-out (LIFO) basis, pro rata or another basis.
    (4) Annual disclosure. At least annually and not later than 90 days 
following the period to which it relates, an insurer shall provide the 
following information to each plan to which a Transition Policy has been 
issued:
    (i) The balance of any accumulation fund on the first day and last 
day of the period covered by the annual report;
    (ii) Any deposits made to the accumulation fund during such annual 
period;
    (iii) An itemized statement of all income attributed to the policy 
or added to the accumulation fund during the period, and a description 
of the method used by the insurer to determine the precise amount of 
income;
    (iv) The actual rate of return credited to the accumulation fund 
under the policy during such period, stating whether the rate of return 
was calculated before or after deduction of expenses charged to the 
accumulation fund;
    (v) Any other additions to the accumulation fund during such period;
    (vi) An itemized statement of all fees, charges, expenses or other 
amounts assessed against the policy or deducted from the accumulation 
fund during the reporting year, and a description of the method used by 
the insurer to determine the precise amount of the fees, charges and 
other expenses;
    (vii) An itemized statement of all benefits paid, including annuity 
purchases, to participants and beneficiaries from the accumulation fund;
    (viii) The dates on which the additions or subtractions were 
credited to, or deducted from, the accumulation fund during such period;
    (ix) A description, if applicable, of all transactions with 
affiliates which exceed 1 percent of group annuity reserves of the 
general account for the prior reporting year;
    (x) A statement describing any expense, income and benefit 
guarantees under the policy, including a description of the length of 
such guarantees, and of the insurer's right, if any, to modify or 
eliminate such guarantees. However, the information on guarantees does 
not have to be provided annually if it was previously disclosed in the 
insurance policy and has not been modified since that time;
    (xi) A good faith estimate of the amount that would be payable in a 
lump sum at the end of such period pursuant to the request of a 
policyholder for payment or transfer of amounts in the accumulation fund 
under the policy after the insurer deducts any applicable charges and 
makes any appropriate market value

[[Page 493]]

adjustments, upward or downward, under the terms of the policy. However, 
upon the request of a plan fiduciary, the insurer must provide within 30 
days of the request the information contained in paragraph (c)(3)(i)(D) 
as of a specified date that is no earlier than the last contract 
anniversary preceding the date of the request; and
    (xii) An explanation that the insurer will make available promptly 
upon request of a plan, copies of the following publicly available 
financial data or other publicly available reports relating to the 
financial condition of the insurer:
    (A) National Association of Insurance Commissioners Statutory Annual 
Statement, with Exhibits, General Interrogatories, and Schedule D, Part 
1A, Sections 1 and 2 and Schedule S--Part 3E;
    (B) Rating agency reports on the financial strength and claims-
paying ability of the insurer;
    (C) Risk adjusted capital ratio, with a brief description of its 
derivation and significance, referring to the risk characteristics of 
both the assets and the liabilities of the insurer;
    (D) Actuarial opinion of the insurer's Appointed Actuary certifying 
the adequacy of the insurer's reserves as required by New York State 
Insurance Department Regulation 126 and comparable regulations of other 
States; and
    (E) The insurer's most recent SEC Form 10K and Form 10Q (stock 
companies only).
    (d) Alternative separate account arrangements. (1) In general. An 
insurer must provide the plan fiduciary with the following additional 
information at the same time as the initial disclosure required under 
paragraph (c)(3) of this section:
    (i) A statement explaining the extent to which alternative contract 
arrangements supported by assets of separate accounts of insurers are 
available to plans;
    (ii) A statement as to whether there is a right under the policy to 
transfer funds to a separate account and the terms governing any such 
right; and
    (iii) A statement explaining the extent to which general account 
contracts and separate account contracts of the insurer may pose 
differing risks to the plan.
    (2) An insurer will be deemed to comply with the requirements of 
paragraph (d)(1)(iii) of this section if the disclosure provided to the 
plan includes the following statement:

    a. Contractual arrangements supported by assets of separate accounts 
may pose differing risks to plans from contractual arrangements 
supported by assets of general accounts. Under a general account 
contract, the plan's contributions or premiums are placed in the 
insurer's general account and commingled with the insurer's corporate 
funds and assets (excluding separate accounts and special deposit 
funds). The insurance company combines in its general account premiums 
received from all of its lines of business. These premiums are pooled 
and invested by the insurer. General account assets in the aggregate 
support the insurer's obligations under all of its insurance contracts, 
including (but not limited to) its individual and group life, health, 
disability, and annuity contracts. Experience rated general account 
policies may share in the experience of the general account through 
interest credits, dividends, or rate adjustments, but assets in the 
general account are not segregated for the exclusive benefit of any 
particular policy or obligation. General account assets are also 
available to the insurer for the conduct of its routine business 
activities, such as the payment of salaries, rent, other ordinary 
business expenses and dividends.
    b. An insurance company separate account is a segregated fund which 
is not commingled with the insurer's general assets. Depending on the 
particular terms of the separate account contract, income, expenses, 
gains and losses associated with the assets allocated to a separate 
account may be credited to or charged against the separate account 
without regard to other income, expenses, gains, or losses of the 
insurance company, and the investment results passed through directly to 
the policyholders. While most, if not all, general account investments 
are

[[Page 494]]

maintained at book value, separate account investments are normally 
maintained at market value, which can fluctuate according to market 
conditions. In large measure, the risks associated with a separate 
account contract depend on the particular assets in the separate 
account.
    c. The plan's legal rights vary under general and separate account 
contracts. In general, an insurer is subject to ERISA's fiduciary 
responsibility provisions with respect to the assets of a separate 
account (other than a separate account registered under the Investment 
Company Act of 1940) to the extent that the investment performance of 
such assets is passed directly through to the plan policyholders. ERISA 
requires insurers, in administering separate account assets, to act 
solely in the interest of the plan's participants and beneficiaries; 
prohibits self-dealing and conflicts of interest; and requires insurers 
to adhere to a prudent standard of care. In contrast, ERISA generally 
imposes less stringent standards in the administration of general 
account contracts which were issued on or before December 31, 1998.
    d. On the other hand, State insurance regulation is typically more 
restrictive with respect to general accounts than separate accounts. 
However, State insurance regulation may not provide the same level of 
protection to plan policyholders as ERISA regulation. In addition, 
insurance company general account policies often include various 
guarantees under which the insurer assumes risks relating to the funding 
and distribution of benefits. Insurers do not usually provide any 
guarantees with respect to the investment returns on assets held in 
separate accounts. Of course, the extent of any guarantees from any 
general account or separate account contract will depend upon the 
specific policy terms.
    e. Finally, separate accounts and general accounts pose differing 
risks in the event of the insurer's insolvency. In the event of 
insolvency, funds in the general account are available to meet the 
claims of the insurer's general creditors, after payment of amounts due 
under certain priority claims, including amounts owed to its 
policyholders. Funds held in a separate account as reserves for its 
policy obligations, however, may be protected from the claims of 
creditors other than the policyholders participating in the separate 
account. Whether separate account funds will be granted this protection 
will depend upon the terms of the applicable policies and the provisions 
of any applicable laws in effect at the time of insolvency.

    (e) Termination procedures. Within 90 days of written notice by a 
policyholder to an insurer, the insurer must permit the policyholder to 
exercise the right to terminate or discontinue the policy and to elect 
to receive without penalty either:
    (1) A lump sum payment representing all unallocated amounts in the 
accumulation fund. For purposes of this paragraph (e)(1), the term 
penalty does not include a market value adjustment (as defined in 
paragraph (h)(7)of this section) or the recovery of costs actually 
incurred which would have been recovered by the insurer but for the 
termination or discontinuance of the policy, including any unliquidated 
acquisition expenses, to the extent not previously recovered by the 
insurer; or
    (2) A book value payment of all unallocated amounts in the 
accumulation fund under the policy in approximately equal annual 
installments, over a period of no longer than 10 years, together with 
interest computed at an annual rate which is no less than the annual 
rate which was credited to the accumulation fund under the policy as of 
the date of the contract termination or discontinuance, minus 1 
percentage point. Notwithstanding paragraphs (e)(1) and (e)(2) of this 
section, the insurer may defer, for a period not to exceed 180 days, 
amounts required to be paid to a policyholder under this paragraph for 
any period of time during which regular banking activities are suspended 
by State or federal authorities, a national securities exchange is 
closed for trading (except for normal holiday closings), or the 
Securities and Exchange Commission has determined that a state of 
emergency exists which may make such determination and payment 
impractical.

[[Page 495]]

    (f) Insurer-initiated amendments. In the event the insurer makes an 
insurer-initiated amendment (as defined in paragraph (h)(8) of this 
section), the insurer must provide written notice to the plan at least 
60 days prior to the effective date of the insurer-initiated amendment. 
The notice must contain a complete description of the amendment and must 
inform the plan of its right to terminate or discontinue the policy and 
withdraw all unallocated funds without penalty by sending a written 
request within such 60 day period to the name and address contained in 
the notice. The plan must be offered the election to receive either a 
lump sum or an installment payment as described in paragraph (e)(1) and 
(e)(2) of this section. An insurer-initiated amendment shall not apply 
to a contract if the plan fiduciary exercises its right to terminate or 
discontinue the contract within such 60 day period and to receive a lump 
sum or installment payment.
    (g) Prudence. An insurer shall manage those assets of the insurer 
which are assets of such insurer's general account (irrespective of 
whether any such assets are plan assets) with the care, skill, prudence 
and diligence under the circumstances then prevailing that a prudent man 
acting in a like capacity and familiar with such matters would use in 
the conduct of an enterprise of a like character and with like aims, 
taking into account all obligations supported by such enterprise. This 
prudence standard applies to the conduct of all insurers with respect to 
policies issued to plans on or before December 31, 1998, and differs 
from the prudence standard set forth in section 404(a)(1)(B) of the Act. 
Under the prudence standard provided in this paragraph, prudence must be 
determined by reference to all of the obligations supported by the 
general account, not just the obligations owed to plan policyholders. 
The more stringent standard of prudence set forth in section 
404(a)(1)(B) of the Act continues to apply to any obligations which 
insurers may have as fiduciaries which do not arise from the management 
of general account assets, as well as to insurers' management of plan 
assets maintained in separate accounts. The terms of this section do not 
modify or reduce the fiduciary obligations applicable to insurers in 
connection with policies issued after December 31, 1998, which are 
supported by general account assets, including the standard of prudence 
under section 404(a)(1)(B) of the Act.
    (h) Definitions. For purposes of this section:
    (1) An affiliate of an insurer means:
    (i) Any person, directly or indirectly, through one or more 
intermediaries, controlling, controlled by, or under common control with 
the insurer,
    (ii) Any officer of, director of, 5 percent or more partner in, or 
highly compensated employee (earning 5 percent or more of the yearly 
wages of the insurer) of, such insurer or of any person described in 
paragraph (h)(1)(i) of this section including in the case of an insurer, 
an insurance agent or broker thereof (whether or not such person is a 
common law employee) if such agent or broker is an employee described in 
this paragraph or if the gross income received by such agent or broker 
from such insurer exceeds 5 percent of such agent's gross income from 
all sources for the year, and
    (iii) Any corporation, partnership, or unincorporated enterprise of 
which a person described in paragraph (h)(1)(ii) of this section is an 
officer, director, or a 5 percent or more partner.
    (2) The term control means the power to exercise a controlling 
influence over the management or policies of a person other than an 
individual.
    (3) The term guaranteed benefit policy means a policy described in 
section 401(b)(2)(B) of the Act and any regulations promulgated 
thereunder.
    (4) The term insurer means an insurer as described in section 
401(b)(2)(A) of the Act.
    (5) The term accumulation fund means the aggregate net 
considerations (i.e., gross considerations less all deductions from such 
considerations) credited to the Transition Policy plus all additional 
amounts, including interest and dividends, credited to such Transition 
Policy less partial withdrawals, benefit payments and less all charges 
and fees imposed against this accumulated amount under the Transition 
Policy other than surrender charges and market value adjustments.

[[Page 496]]

    (6) The term Transition Policy means:
    (i) A policy or contract of insurance (other than a guaranteed 
benefit policy) that is issued by an insurer to, or on behalf of, an 
employee benefit plan on or before December 31, 1998, and which is 
supported by the assets of the insurer's general account.
    (ii) A policy will not fail to be a Transition Policy merely because 
the policy is amended or modified:
    (A) To comply with the requirements of section 401(c) of the Act and 
this section; or
    (B) Pursuant to a merger, acquisition, demutualization, conversion, 
or reorganization authorized by applicable State law, provided that the 
premiums, policy guarantees, and the other terms and conditions of the 
policy remain the same, except that a membership interest in a mutual 
insurance company may be eliminated from the policy in exchange for 
separate consideration (e.g., shares of stock or policy credits).
    (7) For purposes of this section, the term market value adjustment 
means an adjustment to the book value of the accumulation fund to 
accurately reflect the effect on the value of the accumulation fund of 
its liquidation in the prevailing market for fixed income obligations, 
taking into account the future cash flows that were anticipated under 
the policy. An adjustment is a market value adjustment within the 
meaning of this definition only if the insurer has determined the amount 
of the adjustment pursuant to a method which was previously disclosed to 
the policyholder in accordance with paragraph (c)(3)(i)(D) of this 
section, and the method permits both upward and downward adjustments to 
the book value of the accumulation fund.
    (8) The term insurer-initiated amendment is defined in paragraphs 
(h)(8)(i), (ii) and (iii) of this section as:
    (i) An amendment to a Transition Policy made by an insurer pursuant 
to a unilateral right to amend the policy terms that would have a 
material adverse effect on the policyholder; or
    (ii) Any of the following unilateral changes in the insurer's 
conduct or practices with respect to the policyholder or the 
accumulation fund under the policy that result in a material reduction 
of existing or future benefits under the policy, a material reduction in 
the value of the policy or a material increase in the cost of financing 
the plan or plan benefits:
    (A) A change in the methodology for assessing fees, expenses, or 
other charges against the accumulation fund or the policyholder;
    (B) A change in the methodology used for allocating income between 
lines of business, or product classes within a line of business;
    (C) A change in the methodology used for determining the rate of 
return to be credited to the accumulation fund under the policy;
    (D) A change in the methodology used for determining the amount of 
any fees, charges, expenses, or market value adjustments applicable to 
the accumulation fund under the policy in connection with the 
termination of the contract or withdrawal from the accumulation fund;
    (E) A change in the dividend class to which the policy or contract 
is assigned;
    (F) A change in the policyholder's rights in connection with the 
termination of the policy, withdrawal of funds or the purchase of 
annuities for plan participants; and
    (G) A change in the annuity purchase rates guaranteed under the 
terms of the contract or policy, unless the new rates are more favorable 
for the policyholder.
    (iii) For purposes of this definition, an insurer-initiated 
amendment is material if a prudent fiduciary could reasonably conclude 
that the amendment should be considered in determining how or whether to 
exercise any rights with respect to the policy, including termination 
rights.
    (iv) For purposes of this definition, the following amendments or 
changes are not insurer-initiated amendments:
    (A) Any amendment or change which is made with the affirmative 
consent of the policyholder;
    (B) Any amendment or change which is made in order to comply with 
the requirements of section 401(c) of the Act and this section; or
    (C) Any amendment or change which is made pursuant to a merger, 
acquisition, demutualization, conversion, or

[[Page 497]]

reorganization authorized by applicable State law, provided that the 
premiums, policy guarantees, and the other terms and conditions of the 
policy remain the same, except that a membership interest in a mutual 
insurance company may be eliminated from the policy in exchange for 
separate consideration (e.g., shares of stock or policy credits).
    (i) Limitation on liability. (1) No person shall be subject to 
liability under Parts 1 and 4 of Title I of the Act or section 4975 of 
the Internal Revenue Code of 1986 for conduct which occurred prior to 
the applicability dates of the regulation on the basis of a claim that 
the assets of an insurer (other than plan assets held in a separate 
account) constitute plan assets. Notwithstanding the provisions of this 
paragraph (i)(1), this section shall not:
    (i) Apply to an action brought by the Secretary of Labor pursuant to 
paragraphs (2) or (5) of section 502(a) of ERISA for a breach of 
fiduciary responsibility which would also constitute a violation of 
Federal or State criminal law;
    (ii) Preclude the application of any Federal criminal law; or
    (iii) Apply to any civil action commenced before November 7, 1995.
    (2) Nothing in this section relieves any person from any State law 
regulating insurance which imposes additional obligations or duties upon 
insurers to the extent not inconsistent with the provisions of this 
section. Therefore, nothing in this section should be construed to 
preclude a State from requiring insurers to make additional disclosures 
to policyholders, including plans. Nor does this section prohibit a 
State from imposing additional substantive requirements with respect to 
the management of general accounts or from otherwise regulating the 
relationship between the policyholder and the insurer to the extent not 
inconsistent with the provisions of this section.
    (3) Nothing in this section precludes any claim against an insurer 
or other person for violations of the Act which do not require a finding 
that the underlying assets of a general account constitute plan assets, 
regardless of whether the violation relates to a Transition Policy.
    (4) If the requirements in paragraphs (c) through (f) of this 
section are not met with respect to a plan that has purchased or 
acquired a Transition Policy, and the insurer has not cured the non-
compliance through satisfaction of the requirements in paragraph (i)(5) 
of this section, the plan's assets include an undivided interest in the 
underlying assets of the insurer's general account for that period of 
time for which the requirements are not met. However, an insurer's 
failure to comply with the requirements of this section with respect to 
any particular Transition Policy will not result in the underlying 
assets of the general account constituting plan assets with respect to 
other Transition Policies if the insurer is otherwise in compliance with 
the requirements contained in this section.
    (5) Notwithstanding paragraphs (a)(2) and (i)(4) of this section, a 
plan's assets will not include an undivided interest in the underlying 
assets of the insurer's general account if the insurer made reasonable 
and good faith attempts at compliance with each of the requirements of 
paragraphs (c) through (f) of this section, and meets each of the 
following conditions:
    (i) The insurer has in place written procedures that are reasonably 
designed to assure compliance with the requirements of paragraphs (c) 
through (f) of this section, including procedures reasonably designed to 
detect any instances of non-compliance.
    (ii) No later than 60 days following the earlier of the insurer's 
detection of an instance of non-compliance or the receipt of written 
notice of non-compliance from the plan, the insurer complies with the 
requirements of paragraphs (c) through (f) of this section. If the 
insurer has failed to pay a plan the amounts required under paragraphs 
(e) or (f) of this section within 90 days of receiving written notice of 
termination or discontinuance of the policy, the insurer must make all 
corrections and adjustments necessary to restore to the plan the full 
amounts that the plan would have received but for the insurer's non-
compliance within the applicable 60 day period; and

[[Page 498]]

    (iii) The insurer makes the plan whole for any losses resulting from 
the non-compliance as follows:
    (A) If the insurer has failed to comply with the disclosure or 
notice requirements set forth in paragraphs (c), (d) and (f) of this 
section, then the insurer must make the plan whole for any losses 
resulting from its non-compliance within the earlier of 60 days of 
detection by the insurer or sixty days following the receipt of written 
notice from the plan; and
    (B) If the insurer has failed to pay a plan any amounts required 
under paragraphs (e) or (f) of this section within 90 days of receiving 
written notice of termination or discontinuance of the policy, the 
insurer must pay to the plan interest on any amounts restored pursuant 
to paragraph (i)(5)(ii) of this section at the ``underpayment rate'' as 
set forth in 26 U.S.C. sections 6621 and 6622. Such interest must be 
paid within the earlier of 60 days of detection by the insurer or sixty 
days following receipt of written notice of non-compliance from the 
plan.
    (j) Applicability dates. (1) In general. Except as provided in 
paragraphs (j)(2) through (4) of this section, this section is 
applicable on July 5, 2001.
    (2) Paragraph (c) relating to initial disclosures and paragraph (d) 
relating to separate account disclosures are applicable on July 5, 2000.
    (3) The first annual disclosure required under paragraph(c)(4) of 
this section shall be provided to each plan not later than 18 months 
following January 5, 2000.
    (4) Paragraph (f), relating to insurer-initiated amendments, is 
applicable on January 5, 2000.
    (k) Effective date. This section is effective January 5, 2000.

[65 FR 639, Jan. 5, 2000]



Sec. 2550.403a-1  Establishment of trust.

    (a) In general. Except as otherwise provided in Sec. 403b-1, all 
assets of an employee benefit plan shall be held in trust by one or more 
trustees pursuant to a written trust instrument.
    (b) Specific applications. (1) The requirements of paragraph (a) of 
this section will not fail to be satisfied merely because securities of 
a plan are held in the name of a nominee or in street name, provided 
such securities are held on behalf of the plan by:
    (i) A bank or trust company that is subject to supervision by the 
United States or a State, or a nominee of such bank or trust company;
    (ii) A broker or dealer registered under the Securities Exchange Act 
of 1934, or a nominee of such broker or dealer; or
    (iii) A ``clearing agency,'' as defined in section 3(a)(23) of the 
Securities Exchange Act of 1934, or its nominee.
    (2) Where a corporation described in section 501(c)(2) of the 
Internal Revenue Code holds property on behalf of a plan, the 
requirements of paragraph (a) of this section are satisfied with respect 
to such property if all the stock of such corporation is held in trust 
on behalf of the plan by one or more trustees.
    (3) If the assets of an entity in which a plan invests include plan 
assets by reason of the plan's investment in the entity, the 
requirements of paragraph (a) of this section are satisfied with respect 
to such investment if the indicia of ownership of the plan's interest in 
the entity are held in trust on behalf of the plan by one or more 
trustees.
    (c) Requirements concerning trustees. The trustee or trustees 
referred to in paragraphs (a) and (b) shall be either named in the trust 
instrument or in the plan instrument described in section 402(a) of the 
Act, or appointed by a person who is a named fiduciary (within the 
meaning of section 402(a)(2) of the Act). Upon acceptance of being named 
or appointed, the trustee or trustees shall have exclusive authority and 
discretion to manage and control the assets of the plan, except to the 
extent that:
    (1) The plan instrument or the trust instrument expressly provides 
that the trustee or trustees are subject to the direction of a named 
fiduciary who is not a trustee, in which case the trustees shall be 
subject to the proper directions of such fiduciary which are made in 
accordance with the terms of the plan and which are not contrary to the 
provisions of title I of the Act of chapter XXV of this title, or

[[Page 499]]

    (2) Authority to manage, acquire or dispose of assets of the plan is 
delegated to one or more investment managers (within the meaning of 
section 3(38) of the Act) pursuant to section 402(c)(3) of the Act.

[47 FR 21247, May 18, 1982]



Sec. 2550.403b-1  Exemptions from trust requirement.

    (a) Statutory exemptions. The requirements of section 403(a) of the 
Act and section 403a-1 shall not apply--
    (1) To any assets of a plan which consist of insurance contracts or 
policies issued by an insurance company qualified to do business in a 
State;
    (2) To any assets of such an insurance company or any assets of a 
plan which are held by such an insurance company;
    (3) To a plan--
    (i) Some or all of the participants of which are employees described 
in section 401(c)(1) of the Internal Revenue Code of 1954; or
    (ii) Which consists of one or more individual retirement accounts 
described in section 408 of the Internal Revenue Code of 1954. To the 
extent that such plan's assets are held in one or more custodial 
accounts which qualify under section 401(f) or 408(h) of such Code, 
whichever is applicable;
    (4) To a contract established and maintained under section 403(b) of 
the Internal Revenue Code of 1954 to the extent that the assets of the 
contract are held in one or more custodial accounts pursuant to section 
403(b)(7) of such Code.
    (5) To any plan, fund or program under which an employer, all of 
whose stock is directly or indirectly owned by employees, former 
employees or their beneficiaries, proposes through an unfunded 
arrangement to compensate retired employees for benefits which were 
forfeited by such employees under a pension plan maintained by a former 
employer prior to the date such pension plan became subject to the Act.

[47 FR 21247, May 18, 1982]



Sec. 2550.404a-1  Investment duties.

    (a) In general. Section 404(a)(1)(B) of the Employee Retirement 
Income Security Act of 1974 (the Act) provides, in part, that a 
fiduciary shall discharge his duties with respect to a plan with the 
care, skill, prudence, and diligence under the circumstances then 
prevailing that a prudent man acting in a like capacity and familiar 
with such matters would use in the conduct of an enterprise of a like 
character and with like aims.
    (b) Investment duties. (1) With regard to an investment or 
investment course of action taken by a fiduciary of an employee benefit 
plan pursuant to his investmemt duties, the requirements of section 
404(a)(1)(B) of the Act set forth in subsection (a) of this section are 
satisfied if the fiduciary:
    (i) Has given appropriate consideration to those facts and 
circumstances that, given the scope of such fiduciary's investment 
duties, the fiduciary knows or should know are relevant to the 
particular investment or investment course of action involved, including 
the role the investment or investment course of action plays in that 
portion of the plan's investment portfolio with respect to which the 
fiduciary has investment duties; and
    (ii) Has acted accordingly.
    (2) For purposes of paragraph (b)(1) of this section, ``appropriate 
consideration'' shall include, but is not necessarily limited to,
    (i) A determination by the fiduciary that the particular investment 
or investment course of action is reasonably designed, as part of the 
portfolio (or, where applicable, that portion of the plan portfolio with 
respect to which the fiduciary has investment duties), to further the 
purposes of the plan, taking into consideration the risk of loss and the 
opportunity for gain (or other return) associated with the investment or 
investment course of action, and
    (ii) Consideration of the following factors as they relate to such 
portion of the portfolio:
    (A) The composition of the portfolio with regard to diversification;
    (B) The liquidity and current return of the portfolio relative to 
the anticipated cash flow requirements of the plan; and
    (C) The projected return of the portfolio relative to the funding 
objectives of the plan.

[[Page 500]]

    (3) An investment manager appointed, pursuant to the provisions of 
section 402(c)(3) of the Act, to manage all or part of the assets of a 
plan, may, for purposes of compliance with the provisions of paragraphs 
(b)(1) and (2) of this section, rely on, and act upon the basis of, 
information pertaining to the plan provided by or at the direction of 
the appointing fiduciary, if--
    (i) Such information is provided for the stated purpose of assisting 
the manager in the performance of his investment duties, and
    (ii) The manager does not know and has no reason to know that the 
information is incorrect.
    (c) Definitions. For purposes of this section:
    (1) The term investment duties means any duties imposed upon, or 
assumed or undertaken by, a person in connection with the investment of 
plan assets which make or will make such person a fiduciary of an 
employee benefit plan or which are performed by such person as a 
fiduciary of an employee benefit plan as defined in section 3(21)(A)(i) 
or (ii) of the Act.
    (2) The term investment course of action means any series or program 
of investments or actions related to a fiduciary's performance of his 
investment duties.
    (3) The term plan means an employee benefit plan to which title I of 
the Act applies.

[44 FR 37225, June 26, 1979]



Sec. 2550.404b-1  Maintenance of the indicia of ownership of plan assets outside the jurisdiction of the district courts of the United States.

    (a) No fiduciary may maintain the indicia of ownership of any assets 
of a plan outside the jurisdiction of the district courts of the United 
States, unless:
    (1) Such assets are:
    (i) Securities issued by a person, as defined in section 3(9) of the 
Employee Retirement Income Security Act of 1974 (Act) (other than an 
individual), which is not organized under the laws of the United States 
or a State and does not have its principal place of business within the 
United States;
    (ii) Securities issued by a government other than the government of 
the United States or of a State, or any political subdivision, agency or 
instrumentality of such a government;
    (iii) Securities issued by a person, as defined in section 3(9) of 
the Act (other than an individual), the principal trading market for 
which securities is outside the jurisdiction of the district courts of 
the United States; or
    (iv) Currency issued by a government other than the government of 
the United States if such currency is maintained outside the 
jurisdiction of the district courts of the United States solely as an 
incident to the purchase, sale or maintenance of securities described in 
paragraph (a)(1) of this section; and
    (2)(i) Such assets are under the management and control of a 
fiduciary which is a corporation or partnership organized under the laws 
of the United States or a State, which fiduciary has its principal place 
of business within the United States and which is--
    (A) A bank as defined in section 202 (a)(2) of the Investment 
Advisers Act of 1940 that has, as of the last day of its most recent 
fiscal year, equity capital in excess of $1,000,000;
    (B) An insurance company which is qualified under the laws of more 
than one State to manage, acquire, or dispose of any asset of a plan, 
which company has, as of the last day of its most recent fiscal year, 
net worth in excess of $1,000,000 and which is subject to supervision 
and examination by the State authority having supervision over insurance 
companies; or
    (C) An investment adviser registered under the Investment Advisers 
Act of 1940 that has, as of the last day of its most recent fiscal year, 
total client assets under its management and control in excess 
$50,000,000 and either
    (1) Shareholders' or partners' equity in excess of $750,000 or
    (2) All of its obligations and liabilities assumed or guaranteed by 
a person described in paragraph (a)(2)(i)(A), (B), or (C)(1) or 
(a)(2)(ii)(A)(2) of this section; or
    (ii) Such indicia of ownership are either
    (A) In the physical possession of, or, as a result of normal 
business operations, are in transit to the physical

[[Page 501]]

possession of, a person which is organized under the laws of the United 
States or a State, which person has its principal place of business in 
the United States and which is--
    (1) A bank as defined in section 202(a)(2) of the Investment 
Advisers Act of 1940 that has, as of the last day of its most recent 
fiscal year, equity capital in excess of $1,000,000;
    (2) A broker or dealer registered under the Securities Exchange Act 
of 1934 that has, as of the last day of its most recent fiscal year, net 
worth in excess of $750,000; or
    (3) A broker or dealer registered under the Securities Exchange Act 
of 1934 that has all of its obligations and liabilities assumed or 
guaranteed by a person described in paragraph (a)(2)(i)(A), (B), or 
(C)(1) or (a)(2)(ii)(A)(2) of this section; or
    (B) Maintained by a broker or dealer, described in paragraph 
(a)(2)(ii)(A)(2) or (3) of this section, in the custody of an entity 
designated by the Securities and Exchange Commission as a ``satisfactory 
control location'' with respect to such broker or dealer pursuant to 
Rule 15c3-3 under the Securities Exchange Act of 1934, provided that:
    (1) Such entity holds the indicia of ownership as agent for the 
broker or dealer, and
    (2) Such broker or dealer is liable to the plan to the same extent 
it would be if it retained the physical possession of the indicia of 
ownership pursuant to paragraph (a)(2)(ii)(A) of this section.
    (C) Maintained by a bank described in paragraph (a)(2)(ii)(A)(1), in 
the custody of an entity that is a foreign securities depository, 
foreign clearing agency which acts as a securities depository, or 
foreign bank, which entity is supervised or regulated by a government 
agency or regulatory authority in the foreign jurisdiction having 
authority over such depositories, clearing agencies or banks, provided 
that:
    (1) The foreign entity holds the indicia of ownership as agent for 
the bank;
    (2) The bank is liable to the plan to the same extent it would be if 
it retained the physical possession of the indicia of ownership within 
the United States;
    (3) The indicia of ownership are not subject to any right, charge, 
security interest, lien or claim of any kind in favor of the foreign 
entity except for their safe custody or administration;
    (4) Beneficial ownership of the assets represented by the indicia of 
ownership is freely transferable without the payment of money or value 
other than for safe custody or administration; and
    (5) Upon request by the plan fiduciary who is responsible for the 
selection and retention of the bank, the bank identifies to such 
fiduciary the name, address and principal place of business of the 
foreign entity which acts as custodian for the plan pursuant to this 
paragraph (a)(2)(ii)(C), and the name and address of the governmental 
agency or other regulatory authority that supervises or regulates that 
foreign entity.
    (b) Notwithstanding any requirement of paragraph (a) of this 
section, a fiduciary with respect to a plan may maintain in Canada the 
indicia of ownership of plan assets which are attributable to a 
contribution made on behalf of a plan participant who is a citizen or 
resident of Canada, if such indicia of ownership must remain in Canada 
in order for the plan to qualify for and maintain tax exempt status 
under the laws of Canada or to comply with other applicable laws of 
Canada or any Province of Canada.
    (c) For purposes of this regulation:
    (1) The term management and control means the power to direct the 
acquisition or disposition through purchase, sale, pledging, or other 
means; and
    (2) The term depository means any company, or agency or 
instrumentality of government, that acts as a custodian of securities in 
connection with a system for the central handling of securities whereby 
all securities of a particular class or series of any issuer deposited 
within the system are treated as fungible and may be transferred, 
loaned, or pledged by bookkeeping entry without physical delivery of 
securities certificates.

[42 FR 54124, Oct. 4, 1977, as amended at 46 FR 1267, Jan. 6, 1981]



Sec. 2550.404c-1  ERISA section 404(c) plans.

    (a) In general. (1) Section 404(c) of the Employee Retirement Income 
Security Act of 1974 (ERISA or the Act) provides

[[Page 502]]

that if a pension plan that provides for individual accounts permits a 
participant or beneficiary to exercise control over assets in his 
account and that participant or beneficiary in fact exercises control 
over assets in his account, then the participant or beneficiary shall 
not be deemed to be a fiduciary by reason of his exercise of control and 
no person who is otherwise a fiduciary shall be liable for any loss, or 
by reason of any breach, which results from such exercise of control. 
This section describes the kinds of plans that are ``ERISA section 
404(c) plans,'' the circumstances in which a participant or beneficiary 
is considered to have exercised independent control over the assets in 
his account as contemplated by section 404(c), and the consequences of a 
participant's or beneficiary's exercise of control.
    (2) The standards set forth in this section are applicable solely 
for the purpose of determining whether a plan is an ERISA section 404(c) 
plan and whether a particular transaction engaged in by a participant or 
beneficiary of such plan is afforded relief by section 404(c). Such 
standards, therefore, are not intended to be applied in determining 
whether, or to what extent, a plan which does not meet the requirements 
for an ERISA section 404(c) plan or a fiduciary with respect to such a 
plan satisfies the fiduciary responsibility or other provisions of title 
I of the Act.
    (b) ERISA section 404(c) plans--(1) In general. An ``ERISA section 
404(c) Plan'' is an individual account plan described in section 3(34) 
of the Act that:
    (i) Provides an opportunity for a participant or beneficiary to 
exercise control over assets in his individual account (see paragraph 
(b)(2) of this section); and
    (ii) Provides a participant or beneficiary an opportunity to choose, 
from a broad range of investment alternatives, the manner in which some 
or all of the assets in his account are invested (see paragraph (b)(3) 
of this section).
    (2) Opportunity to exercise control. (i) a plan provides a 
participant or beneficiary an opportunity to exercise control over 
assets in his account only if:
    (A) Under the terms of the plan, the participant or beneficiary has 
a reasonable opportunity to give investment instructions (in writing or 
otherwise, with opportunity to obtain written confirmation of such 
instructions) to an identified plan fiduciary who is obligated to comply 
with such instructions except as otherwise provided in paragraph 
(b)(2)(ii)(B) and (d)(2)(ii) of this section; and
    (B) The participant or beneficiary is provided or has the 
opportunity to obtain sufficient information to make informed decisions 
with regard to investment alternatives available under the plan, and 
incidents of ownership appurtenant to such investments. For purposes of 
this subparagraph, a participant or beneficiary will not be considered 
to have sufficient investment information unless--
    (1) The participant or beneficiary is provided by an identified plan 
fiduciary (or a person or persons designated by the plan fiduciary to 
act on his behalf):
    (i) An explanation that the plan is intended to constitute a plan 
described in section 404(c) of the Employee Retirement Income Security 
Act, and title 29 of the Code of Federal Regulations, Sec. 2550.440c-1, 
and that the fiduciaries of the plan may be relieved of liability for 
any losses which are the direct and necessary result of investment 
instructions given by such participant or beneficiary;
    (ii) A description of the investment alternatives available under 
the plan and, with respect to each designated investment alternative, a 
general description of the investment objectives and risk and return 
characteristics of each such alternative, including information relating 
to the type and diversification of assets comprising the portfolio of 
the designed investment alternative;
    (iii) Identification of any designated investment managers;
    (iv) An explanation of the circumstances under which participants 
and beneficiaries may give investment instructions and explanation of 
any specified limitations on such instructions under the terms of the 
plan, including any restrictions on transfer to

[[Page 503]]

or from a designated investment alternative, and any restrictions on the 
exercise of voting, tender and similar rights appurtenant to a 
participant's or beneficiary's investment in an investment alternative;
    (v) A description of any transaction fees and expenses which affect 
the participant's or beneficiary's account balance in connection with 
purchases or sales of interests in investment alternatives (e.g., 
commissions, sales load, deferred sales charges, redemption or exchange 
fees);
    (vi) The name, address, and phone number of the plan fiduciary (and, 
if applicable, the person or persons designated by the plan fiduciary to 
act on his behalf) responsible for providing the information described 
in paragraph (b)(2)(i)(B)(2) upon request of a participant or 
beneficiary and a description of the information described in paragraph 
(b)(2)(i)(B)(2) which may be obtained on request;
    (vii) In the case of plans which offer an investment alternative 
which is designed to permit a participant or beneficiary to directly or 
indirectly acquire or sell any employer security (employer security 
alternative), a description of the procedures established to provide for 
the confidentiality of information relating to the purchase, holding and 
sale of employer securities, and the exercise of voting, tender and 
similar rights, by participants and beneficiaries, and the name, address 
and phone number of the plan fiduciary responsible for monitoring 
compliance with the procedures (see paragraphs (d)(2)(ii)(E)(4)(vii), 
(viii) and (ix) of this section); and
    (viii) In the case of an investment alternative which is subject to 
the Securities Act of 1933, and in which the participant or beneficiary 
has no assets invested, immediately following the participant's or 
beneficiary's initial investment, a copy of the most recent prospectus 
provided to the plan. This condition will be deemed satisfied if the 
participant or beneficiary has been provided with a copy of such most 
recent prospectus immediately prior to the participant's or 
beneficiary's initial investment in such alternative;
    (ix) Subsequent to an investment in a investment alternative, any 
materials provided to the plan relating to the exercise of voting, 
tender or similar rights which are incidental to the holding in the 
account of the participant or beneficiary of an ownership interest in 
such alternative to the extent that such rights are passed through to 
participants and beneficiaries under the terms of the plan, as well as a 
description of or reference to plan provisions relating to the exercise 
of voting, tender or similar rights.
    (2) The participants or beneficiary is provided by the identified 
plan fiduciary (or a person or persons designated by the plan fiduciary 
to act on his behalf), either directly or upon request, the following 
information, which shall be based on the latest information available to 
the plan:
    (i) A description of the annual operating expenses of each 
designated investment alternative (e.g., investment management fees, 
administrative fees, transaction costs) which reduce the rate of return 
to participants and beneficiaries, and the aggregate amount of such 
expenses expressed as a percentage of average net assets of the 
designated investment alternative;
    (ii) Copies of any prospectuses, financial statements and reports, 
and of any other materials relating to the investment alternatives 
available under the plan, to the extent such information is provided to 
the plan;
    (iii) A list of the assets comprising the portfolio of each 
designated investment altenaive which constitute plan assets within the 
meaning of 29 CFR 2510.3-101, the value of each such asset (or the 
proportion of the investment alternative which it comprises), and, with 
respect to each such asset which is a fixed rate investment contract 
issued by a bank, savings and loan association or insurance company, the 
name of the issuer of the contract, the term of the contract and the 
rate of return on the contract;
    (iv) Information concerning the value of shares or units in 
designated investment alternatives available to participants and 
beneficiaries under the plan, as well as the past and current investment 
performance of such alternatives, determined, net of expenses, on a 
reasonable and consistent basis; and

[[Page 504]]

    (v) Information concerning the value of shares or units in 
designated investment alternatives held in the account of the 
participant or beneficiary.
    (ii) A plan does not fail to provide an opportunity for a 
participant or beneficiary to exercise control over his individual 
account merely because it--
    (A) Imposes charges for reasonable expenses. A plan may charge 
participants' and beneficiaries' accounts for the reasonable expenses of 
carrying out investment instructions, provided that procedures are 
established under the plan to periodically inform such participants and 
beneficiaries of actual expenses incurred with respect to their 
respective individual accounts;
    (B) Permits a fiduciary to decline to implement investment 
instructions by participants and beneficiaries. A fiduciary may decline 
to implement participant and beneficiary instructions which are 
described at paragraph (d)(2)(ii) of this section, as well as 
instructions specified in the plan, including instructions--
    (1) Which would result in a prohibited transaction described in 
ERISA section 406 or section 4975 of the Internal Revenue Code, and
    (2) Which would generate income that would be taxable to the plan;
    (C) Imposes reasonable restrictions on frequency of investment 
instructions. A plan may impose reasonable restrictions on the frequency 
with which participants and beneficiaries may give investment 
instructions. In no event, however, is such a restriction reasonable 
unless, with respect to each investment alternative made available by 
the plan, it permits participants and beneficiaries to give investment 
instructions with a frequency which is appropriate in light of the 
market volatility to which the investment alternative may reasonably be 
expected to be subject, provided that--
    (1) At least three of the investment alternatives made available 
pursuant to the requirements of paragraph (b)(3)(i)(B) of this section, 
which constitute a broad range of investment alternatives, Permit 
participants and beneficiaries to give investment instructions no less 
frequently than once within any three month period; and
    (2)(i) At least one of the investment alternatives meeting the 
requirements of paragraph (b)(2)(ii)(C)(1) of this section permits 
participants and beneficiaries to give investment instructions with 
regard to transfers into the investment alternative as frequently as 
participants and beneficiaries are permitted to give investment 
instructions with respect to any investment alternative made available 
by the plan which permits participants and beneficiaries to give 
investment instructions more frequently than once within any three month 
period; or
    (ii) With respect to each investment alternative which permits 
participants and beneficiaries to give investment instructions more 
frequently than once within any three month period, participants and 
beneficiaries are permitted to direct their investments from such 
alternative into an income producing, low risk, liquid fund, subfund, or 
account as frequently as they are permitted to give investment 
instructions with respect to each such alternative and, with respect to 
such fund, subfund or account, participants and beneficiaries are 
permitted to direct investments from the fund, subfund or account to an 
investment alternative meeting the requirements of paragraph 
(b)(2)(ii)(C)(1) as frequently as they are permitted to give investment 
instructions with respect to that investment alternative; and
    (3) With respect to transfers from an investment alternative which 
is designed to permit a participant or beneficiary to directly or 
indirectly acquire or sell any employer security (employer security 
alternative) either:
    (i) All of the investment alternatives meeting the requirements of 
paragraph (b)(2)(ii)(C)(1) of this section must permit participants and 
beneficiaries to give investment instructions with regard to transfers 
into each of the investment alternatives as frequently as participants 
and beneficiaries are permitted to give investment instructions with 
respect to the employer security alternative; or
    (ii) Participants and beneficiaries are permitted to direct their 
investments from each employer security alternative into an income 
producing, low risk, liquid fund, subfund, or account

[[Page 505]]

as frequently as they are permitted to give investment instructions with 
respect to such employer security alternative and, with respect to such 
fund, subfund, or account, participants and beneficiaries are permitted 
to direct investments from the fund, subfund or account to each 
investment alternative meeting the requirements of paragraph 
(b)(2)(ii)(C)(1) as frequently as they are permitted to give investment 
instructions with respect to each such investment alternative.
    (iii) Paragraph (c) of this section describes the circumstances 
under which a participant or beneficiary will be considered to have 
exercised independent control with respect to a particular transaction.
    (3) Broad range of investment alternatives. (i) A plan offers a 
broad range of investment alternatives only if the available investment 
alternatives are sufficient to provide the participant or beneficiary 
with a reasonable opportunity to:
    (A) Materially affect the potential return on amounts in his 
individual account with respect to which he is permitted to exercise 
control and the degree of risk to which such amounts are subject;
    (B) Choose from at least three investment alternatives:
    (1) Each of which is diversified;
    (2) Each of which has materially different risk and return 
characteristics;
    (3) Which in the aggregate enable the participant or beneficiary by 
choosing among them to achieve a portfolio with aggregate risk and 
return characteristics at any point within the range normally 
appropriate for the participant or beneficiary; and
    (4) Each of which when combined with investments in the other 
alternatives tends to minimize through diversification the overall risk 
of a participant's or beneficiary's portfolio;
    (C) Diversify the investment of that portion of his individual 
account with respect to which he is permitted to exercise control so as 
to minimize the risk of large losses, taking into account the nature of 
the plan and the size of participants' or beneficiaries' accounts. In 
determining whether a plan provides the participant or beneficiary with 
a reasonable opportunity to diversify his investments, the nature of the 
investment alternatives offered by the plan and the size of the portion 
of the individual's account over which he is permitted to exercise 
control must be considered. Where such portion of the account of any 
participant or beneficiary is so limited in size that the opportunity to 
invest in look-through investment vehicles is the only prudent means to 
assure an opportunity to achieve appropriate diversification, a plan may 
satisfy the requirements of this paragraph only by offering look-through 
investment vehicles.
    (ii) Diversification and look-through investment vehicles. Where 
look-through investment vehicles are available as investment 
alternatives to participants and beneficiaries, the underlying 
investments of the look-through investment vehicles shall be considered 
in determining whether the plan satisfies the requirements of 
subparagraphs (b)(3)(i)(B) and (b)(3)(i)(C).
    (c) Exercise of control--(1) In general. (i) Sections 404(c)(1) and 
404(c)(2) of the Act and paragraphs (a) and (d) of this section apply 
only with respect to a transaction where a participant or beneficiary 
has exercised independent control in fact with respect to the investment 
of assets in his individual account under an ERISA section 404(c) plan.
    (ii) For purposes of sections 404(c)(1) and 4040(c)(2) of the Act 
and paragraphs (a) and (d) of this section, a participant or beneficiary 
will be deemed to have exercised control with respect to the exercise of 
voting, tender and similar rights appurtenant to the participant's or 
beneficiary's ownership interest in an investment alternative, provided 
that the participant's or beneficiary's investment in the investment 
alternative was itself the result of an exercise of control, the 
participant or beneficiary was provided a reasonable opportunity to give 
instruction with respect to such incidents of ownership, including the 
provision of the information described in paragraph (b)(2)(i)(B)(1)(ix) 
of this section, and the participant or beneficiary has not failed to 
exercise control by reason of

[[Page 506]]

the circumstances described in paragraph (c)(2) with respect to such 
incidents of ownership.
    (2) Independent control. Whether a participant or beneficiary has 
exercised independent control in fact with respect to a transaction 
depends on the facts and circumstances of the particular case. However, 
a participant's or beneficiary's exercise of control is not independent 
in fact if:
    (i) The participant or beneficiary is subjected to improper 
influence by a plan fiduciary or the plan sponsor with respect to the 
transaction;
    (ii) A plan fiduciary has concealed material non-public facts 
regarding the investment from the participant or beneficiary, unless the 
disclosure of such information by the plan fiduciary to the participant 
or beneficiary would violate any provision of federal law or any 
provision of state law which is not preempted by the Act; or
    (iii) The participant or beneficiary is legally incompetent and the 
responsible plan fiduciary accepts the instructions of the participant 
or beneficiary knowing him to be legally incompetent.
    (3) Transactions involving a fiduciary. In the case of a sale, 
exchange or leasing of property (other than a transaction described in 
paragraph (d)(2)(ii)(E) of this section) between an ERISA section 404(c) 
plan and a plan fiduciary or an affiliate of such a fiduciary, or a loan 
to a plan fiduciary or an affiliate of such a fiduciary, the participant 
or beneficiary will not be deemed to have exercised independent control 
unless the transaction is fair and reasonable to him. For purposes of 
this paragraph (c)(3), a transaction will be deemed to be fair and 
reasonable to a participant or beneficiary if he pays no more than, or 
receives no less than, adequate consideration (as defined in section 
3(18) of the Act) in connection with the transaction.
    (4) No obligation to advise. A fiduciary has no obligation under 
part 4 of title I of the Act to provide investment advice to a 
participant or beneficiary under an ERISA section 404(c) plan.
    (d) Effect of independent exercise of control--(1) Participant or 
beneficiary not a fiduciary. If a participant or beneficiary of an ERISA 
section 404(c) plan exercises independent control over assets in his 
individual account in the manner described in paragraph (c), then such 
participant or beneficiary is not a fiduciary of the plan by reason of 
such exercise of control.
    (2) Limitation on liability of plan fiduciaries. (i) If a 
participant or beneficiary of an ERISA section 404(c) plan exercises 
independent control over assets in his individual account in the manner 
described in paragraph (c), then no other person who is a fiduciary with 
respect to such plan shall be liable for any loss, or with respect to 
any breach of part 4 of title I of the Act, that is the direct and 
necessary result of that participant's or beneficiary's exercise of 
control.
    (ii) Paragraph (d)(2)(i) does not apply with respect to any 
instruction, which if implemented--
    (A) Would not be in accordance with the documents and instruments 
governing the plan insofar as such documents and instruments are 
consistent with the provisions of title I of ERISA;
    (B) Would cause a fiduciary to maintain the indicia of ownership of 
any assets of the plan outside the jurisdiction of the district courts 
of the United States other than as permitted by section 404(b) of the 
Act and 29 CFR 2550.404b-1;
    (C) Would jeopardize the plan's tax qualified status under the 
Internal Revenue Code;
    (D) Could result in a loss in excess of a participant's or 
beneficiary's account balance; or
    (E) Would result in a direct or indirect:
    (1) Sale, exchange, or lease of property between a plan sponsor or 
any affiliate of the sponsor and the plan except for the acquisition or 
disposition of any interest in a fund, subfund or portfolio managed by a 
plan sponsor or an affiliate of the sponsor, or the purchase or sale of 
any qualifying employer security (as defined in section 407(d)(5) of the 
Act) which meets the conditions of section 408(e) of ERISA and section 
(d)(2)(ii)(E)(4) below;
    (2) Loan to a plan sponsor or any affiliate of the sponsor;
    (3) Acquisition or sale of any employer real property (as defined in 
section 407(d)(2) of the Act); or

[[Page 507]]

    (4) Acquisition or sale of any employer security except to the 
extent that:
    (i) Such securities are qualifying employer securities (as defined 
in section 407(d)(5) of the Act);
    (ii) Such securities are stock or an equity interest in a publicly 
traded partnership (as defined in section 7704(b) of the Internal 
Revenue Code of 1986), but only if such partnership is an existing 
partnership as defined in section 10211(c)(2)(A) of the Revenue Act of 
1987 (Public Law 100-203);
    (iii) Such securities are publicly traded on a national exchange or 
other generally recognized market;
    (iv) Such securities are traded with sufficient frequency and in 
sufficient volume to assure that participant and beneficiary directions 
to buy or sell the security may be acted upon promptly and efficiently;
    (v) Information provided to shareholders of such securities is 
provided to participants and beneficiaries with accounts holding such 
securities;
    (vi) Voting, tender and similar rights with respect to such 
securities are passed through to participants and beneficiaries with 
accounts holding such securities;
    (vii) Information relating to the purchase, holding, and sale of 
securities, and the exercise of voting, tender and similar rights with 
respect to such securities by participants and beneficiaries, is 
maintained in accordance with procedures which are designed to safeguard 
the confidentiality of such information, except to the extent necessary 
to comply with Federal laws or state laws not preempted by the Act;
    (viii) The plan designates a fiduciary who is responsible for 
ensuring that: The procedures required under subparagraph 
(d)(2)(ii)(E)(4)(vii) are sufficient to safeguard the confidentiality of 
the information described in that subparagraph, such procedures are 
being followed, and the independent fiduciary required by subparagraph 
(d)(2)(ii)(E)(4)(ix) is appointed; and
    (ix) An independent fiduciary is appointed to carry out activities 
relating to any situations which the fiduciary designated by the plan 
for purposes of subparagraph (d)(2)(ii)(E)(4)(viii) determines involve a 
potential for undue employer influence upon participants and 
beneficiaries with regard to the direct or indirect exercise of 
shareholder rights. For purposes of this subparagraph, a fiduciary is 
not independent if the fiduciary is affiliated with any sponsor of the 
plan.
    (iii) The individual investment decisions of an investment manager 
who is designated directly by a participant or beneficiary or who 
manages a look-through investment vehicle in which a participant or 
beneficiary has invested are not direct and necessary results of the 
designation of the investment manager or of investment in the look-
through investment vehicle. However, this paragraph (d)(2)(iii) shall 
not be construed to result in liability under section 405 of ERISA with 
respect to a fiduciary (other than the investment manager) who would 
otherwise be relieved of liability by reason of section 404(c)(2) of the 
Act and paragraph (d) of this section.
    (3) Prohibited transactions. The relief provided by section 404(c) 
of the Act and this section applies only to the provisions of part 4 of 
title I of the Act. Therefore, nothing in this section relieves a 
disqualified person from the taxes imposed by sections 4975 (a) and (b) 
of the Internal Revenue Code with respect to the transactions prohibited 
by section 4975(c)(1) of the Code.
    (e) Defintions. For purposes of this section:
    (1) Look-through investment vehicle means:
    (i) An investment company described in section 3(a) of the 
Investment Company Act of 1940, or a series investment company described 
in section 18(f) of the 1940 Act or any of the segregated portfolios of 
such company;
    (ii) A common or collective trust fund or a pooled investment fund 
maintained by a bank or similar institution, a deposit in a bank or 
similar institution, or a fixed rate investment contract of a bank or 
similar institution;
    (iii) A pooled separate account or a fixed rate investment contract 
of an insurance company qualified to do business in a State; or
    (iv) Any entity whose assets include plan assets by reason of a 
plan's investment in the entity;

[[Page 508]]

    (2) Adequate consideration has the meaning given it in section 3(18) 
of the Act and in any regulations under this title;
    (3) An affiliate of a person includes the following:
    (i) Any person directly or indirectly controlling, controlled by, or 
under common control with the person;
    (ii) Any officer, director, partner, employee, an employee of an 
affiliated employer, relative (as defined in section 3(15) of ERISA), 
brother, sister, or spouse of a brother or sister, of the person; and
    (iii) Any corporation or partnership of which the person is an 
officer director or partner.

For purposes of this paragraph (e)(3), the term ``control'' means, with 
respect to a person other than an individual, the power to exercise a 
controlling influence over the management or policies of such person.
    (4) A designated investment alternative is a specific investment 
identified by a plan fiduciary as an available investment alternative 
under the plan.
    (f) Examples. The provisions of this section are illustrated by the 
following examples. Examples (5) through (11) assume that the 
participant has exercised independent control with respect to his 
individual account under an ERISA section 404(c) plan described in 
paragraph (b) and has not directed a transaction described in paragraph 
(d)(2)(ii).

    (1) Plan A is an individual account plan described in section 3(34) 
of the Act. The plan states that a plan participant or beneficiary may 
direct the plan administrator to invest any portion of his individual 
account in a particular diversified equity fund managed by an entity 
which is not affiliated with the plan sponsor, or any other asset 
administratively feasible for the plan to hold. However, the plan 
provides that the plan administrator will not implement certain listed 
instructions for which plan fiduciaries would not be relieved of 
liability under section 404(c) (see paragraph (d)(2)(ii)). Plan 
participants and beneficiaries are permitted to give investment 
instructions during the first week of each month with respect to the 
equity fund and at any time with respect to other investments. The plan 
provides for the pass-through of voting, tender and similar rights 
incidental to the holding in the account of a participant or beneficiary 
of an ownership interest in the equity fund or any other investment 
alternative available under the plan. The plan administrator of plan A 
provides each participant and beneficiary with the information described 
in subparagraphs (i), (ii), (iii), (iv), (v), (vi) and (vii) of 
paragraph (b)(2)(i)(B)(1) upon their entry into the plan, and provides 
updated information in the event of any material change in the 
information provided. Immediately following an investment by a 
participant or beneficiary in the equity fund, the plan administrator 
provides a copy of the most recent prospectus received from the fund to 
the investing participant or beneficiary. Immediately following any 
investment by a participant or beneficiary in any other investment 
alternative which is subject to the Securities Act of 1933, the plan 
administrator provides the participant or beneficiary with the most 
recent prospectus received from that investment alternative (see 
paragraph (b)(2)(i)(B)(1)(viii)). Finally, subsequent to any investment 
by a participant or beneficiary, the plan administrator forwards to the 
investing participant or beneficiary any materials provided to the plan 
relating to the exercise of voting, tender or similar rights attendant 
to ownership of an interest in such investment (see paragraph 
(b)(2)(i)(B)(1)(ix)). Upon request, the plan administrator provides each 
participant or beneficiary with copies of any prospectuses, financial 
statements and reports, and any other materials relating to the 
investment alternatives available under the plan which are received by 
the plan (see paragraph (b)(2)(i)(B)(2 )(ii)). Also upon request, the 
plan administrator provides each participant and beneficiary with the 
other information required by paragraph (b)(2)(i)(B)(2) with respect to 
the equity fund, which is a designated investment alternative, including 
information concerning the latest available value of the participant's 
or beneficiary's interest in the equity fund (see paragraph 
(b)(2)(i)(B)(2)(v)). Plan A meets the requirements of paragraphs 
(b)(2)(i)(B)(1) and (2) of this section regarding the provision of 
investment information.
    Note: The regulation imposes no additional obligation on the 
administrator to furnish or make available materials relating to the 
companies in which the equity fund invests (e.g., prospectuses, proxies, 
etc.).
    (2) Plan C is an individual account plan described in section 3(34) 
of the Act under which participants and beneficiaries may choose among 
three investment alternatives which otherwise meet the requirements of 
paragraph (b) of this section. The plan permits investment instruction 
with respect to each investment alternative only on the first 10 days of 
each calendar quarter, i.e. January 1-10, April 1-10, July 1-10 and 
October 1-10. Plan C satisfies the condition of paragraph 
(b)(2)(ii)(C)(1) that instruction be permitted not less frequently than 
once within any

[[Page 509]]

three month period, since there is not any three month period during 
which control could not be exercised.
    (3) Assume the same facts as in paragraph (f)(2), except that 
investment instruction may only be given on January 1, April 4, July 1 
and October 1. Plan C is not an ERISA section 404(c) plan because it 
does not satisfy the condition of paragraph (b)(2)(ii)(C)(1) that 
instruction be permitted not less frequently than once within any three 
month period. Under these facts, there is a three month period, e.g., 
January 2 through April 1, during which control could not be exercised 
by participants and beneficiaries.
    (4) Plan D is an individual account plan described in section 3(34) 
of the Act under which participants and beneficiaries may choose among 
three diversified investment alternatives which constitute a broad range 
of investment alternatives. The plan also permits investment instruction 
with respect to an employer securities alternative but provides that a 
participant or beneficiary can invest no more than 25% of his account 
balance in this alternative. This restriction does not affect the 
availability of relief under section 404(c) inasmuch as it does not 
relate to the three diversified investment alternatives and, therefore, 
does not cause the plan to fail to provide an opportunity to choose from 
a broad range of investment alternatives.
    (5) A participant, P, independently exercises control over assets in 
his individual account plan by directing a plan fiduciary, F, to invest 
100% of his account balance in a single stock. P is not a fiduciary with 
respect to the plan by reason of his exercise of control and F will not 
be liable for any losses that necessarily result form P's investment 
instruction.
    (6) Assume the same facts as in paragraph (f)(5), except that P 
directs F to purchase the stock from B, who is a party in interest with 
respect to the plan. Neither P nor F has engaged in a transaction 
prohibited under section 406 of the Act: P because he is not a fiduciary 
with respect to the plan by reason of his exercise of control and F 
because he is not liable for any breach of part 4 of title I that is the 
direct and necessary consequence of P's exercise of control. However, a 
prohibited transaction under section 4975(c) of the Internal Revenue 
Code may have occurred, and, in the absence of an exemption, tax 
liability may be imposed pursuant to sections 495 (a) and (b) of the 
Code.
    (7) Assume the same facts as in paragraph (f)(5), except that P does 
not specify that the stock be purchased from B, and F chooses to 
purchase the stock from B. In the absence of an exemption, F has engaged 
in a prohibited transaction described in 406(a) of ERISA because the 
decision to purchase the stock from B is not a direct or necessary 
result of P's exercise of control.
    (8) Pursuant to the terms of the plan, plan fiduciary F designates 
three reputable investment managers whom participants may appoint to 
manage assets in their individual accounts. Participant P selects M, one 
of the designated managers, to manage the assets in his account. M 
prudently manages P's account for 6 months after which he incurs losses 
in managing the account through his imprudence. M has engaged in a 
breach of fiduciary duty because M's imprudent management of P's account 
is not a direct or necessary result of P's exercise of control (the 
choice of M as manager). F has no fiduciary liability for M's imprudence 
because he has no affirmative duty to advise P (see paragraph (c)(4)) 
and because F is relieved of co-fiduciary liability by reason of section 
404(c)(2) (see paragraph (d)(2)(iii)). F does have a duty to monitor M's 
performance to determine the suitability of continuing M as an 
investment manager, however, and M's imprudence would be a factor which 
F must consider in periodically reevaluating its decision to designate 
M.
    (9) Participant P instructs plan fiduciary F to appoint G as his 
investment manager pursuant to the terms of the plan which provide P 
total discretion in choosing an investment manager. Through G's 
imprudence, G incurs losses in managing P's account. G has engaged in a 
breach of fiduciary duty because G's imprudent management of P's account 
is not a direct or necessary result of P's exercise of control (the 
choice of G as manager). Plan fiduciary F has no fiduciary liability for 
G's imprudence because F has no obligation to advise P (see paragraph 
(c)(4)) and because F is relieved of co-fiduciary liability for G's 
actions by reason of section 404(c)(2) (see paragraph (d)(2)(iii)). In 
addition, F also has no duty to determine the suitability of G as an 
investment manager because the plan does not designate G as an 
investment manager.
    (10) Participant P directs a plan fiduciary, F, a bank, to invest 
all of the assets in his individual account in a collective trust fund 
managed by F that is designed to be invested solely in a diversified 
portfolio of common stocks. Due to economic conditions, the value of the 
common stocks in the bank collective trust fund declines while the value 
of publicly-offered fixed income obligations remains relatively stable. 
F is not liable for any losses incurred by P solely because his 
individual account was not diversified to include fixed income 
obligations. Such losses are the direct result of P's exercise of 
control; moreover, under paragraph (c)(4) of this section F has no 
obligation to advise P regarding his investment decisions.
    (11) Assume the same facts as in paragraph (f)(10) except that F, in 
managing the collective trust fund, invests the assets of the fund 
solely in a few highly speculative stocks. F

[[Page 510]]

is liable for losses resulting from its imprudent investment in the 
speculative stocks and for its failure to diversify the assets of the 
account. This conduct involves a separate breach of F's fiduciary duty 
that is not a direct or necessary result of P's exercise of control (see 
paragraph (d)(2)(iii)).

    (g) Effective date--(1) In general. Except as provided in paragraph 
(g)(2), this section is effective with respect to transactions occurring 
on or after the first day of the second plan year beginning on or after 
October 13, 1992.
    (2) This section is effective with respect to transactions occurring 
under a plan maintained pursuant to one or more collective bargaining 
agreements between employee representatives and one or more employers 
ratified before October 13, 1992 after the later of the date determined 
under paragraph (g)(1) or the date on which the last collective 
bargaining agreement terminates. For purposes of this paragraph (g)(2), 
any extension or renegotiation of a collective bargaining agreement 
which is ratified on or after October 13, 1992 is to be disregarded in 
determining the date on which the agreement terminates.
    (3) Transactions occurring before the date determined under 
subparagraph (g)(1) or (2) of this section, as applicable, are governed 
by section 404(c) of the Act without regard to the regulation.

[57 FR 46932, Oct. 13, 1992]



Sec. 2550.407a-1  General rule for the acquisition and holding of employer securities and employer real property.

    (a) In general. Section 407(a)(1) of the Employee Retirement Income 
Security Act of 1974 (the Act) states that except as otherwise provided 
in section 407 and section 414 of the Act, a plan may not acquire or 
hold any employer security which is not a qualifying employer security 
or any employer real property which is not qualifying employer real 
property. Section 406(a)(1)(E) prohibits a fiduciary from knowingly 
causing a plan to engage in a transaction which constitutes a direct or 
indirect acquisition, on behalf of a plan, of any employer security or 
employer real property in violation of section 407(a), and section 
406(a)(2) prohibits a fiduciary who has authority or discretion to 
control or manage assets of a plan to permit the plan to hold any 
employer security or employer real property if he knows or should know 
that holding such security or real property violates section 407(a).
    (b) Requirements applicable to all plans. A plan may hold or acquire 
only employer securities which are qualifying employer securities and 
employer real property which is qualifying employer real property. A 
plan may not hold employer securities and employer real property which 
are not qualifying employer securities and qualifying employer real 
property, except to the extent that:
    (1) The employer security is held by a plan which has made an 
election under section 407(c)(3) of the Act; or
    (2) The employer security is a loan or other extension of credit 
which satisfies the requirements of section 414(c)(1) of the Act or the 
employer real property is leased to the employer pursuant to a lease 
which satisfies the requirements of section 414(c)(2) of the Act.

[42 FR 47201, Sept. 20, 1977; 42 FR 59842, Nov. 22, 1977]



Sec. 2550.407a-2  Limitation with respect to the acquisition of qualifying employer securities and qualifying employer real property.

    (a) In general. Section 407(a)(2) of the Employee Retirement Income 
Security Act of 1974 (the Act) provides that a plan may not acquire any 
qualifying employer security or qualifying employer real property, if 
immediately after such acquisition the aggregate fair market value of 
qualifying employer securities and qualifying employer real property 
held by the plan exceeds 10 percent of the fair market value of the 
assets of the plan.
    (b) Acquisition. For pusposes of section 407(a) of the Act, an 
acquisition by a plan of qualifying employer securities or qualifying 
employer real property shall include, but not be limited to, an 
acquisition by purchase, by the exchange of plan assets, by the exercise 
of warrants or rights, by the conversion of a security (except any 
acquisition pursuant to a conversion exempt under section 408(b)(7) of 
the Act), by

[[Page 511]]

default of a loan where the qualifying employer security or qualifying 
employer real property was security for the loan, or by the contribution 
of such securities or real property to the plan. However, an acquisition 
of a security shall not be deemed to have occured if a plan acquires the 
security as a result of a stock dividend or stock split.
    (c) Fair market value--Indebtedness incurred in connection with the 
acquisition of a plan asset. In determining whether a plan is in 
compliance with the limitation on the acquisition of qualifying employer 
securities and qualifying employer real property in section 407(a)(2), 
the limitation on the holding of qualifying employer securities and 
qualifying employer real property in section 407(a)(3) and 
Sec. 2550.407a-3 thereunder, and the requirement regarding the 
disposition of employer securities and employer real property in section 
407(a)(4) and Sec. 2550.407a-4 thereunder, the fair market value of 
total plan assets shall be the fair market value of such assets less the 
unpaid amount of:
    (1) Any indebtedness incurred by the plan in acquiring such assets;
    (2) Any indebtedness incurred before the acquisition of such assets 
if such indebtedness would not have been incurred but for such 
acquisition; and
    (3) Any indebtedness incurred after the acquisition of such assets 
if such indebtedness would not have been incurred but for such 
acquisition and the incurrence of such indebtedness was reasonably 
foreseeable at the time of such acquisition. However, the fair market 
value of qualifying employer securities and qualifying employer real 
property shall be the fair market value of such assets without any 
reduction for the unpaid amount of any indebtedness incurred by the plan 
in connection with the acquisition of such employer securities and 
employer real property.
    (d) Examples. (1) Plan assets have a fair market value of $100,000. 
The plan has no liabilities other than liabilities for vested benefits 
of participants and does not own any employer securities or employer 
real property. The plan proposes to acquire qualifying employer 
securities with a fair market value of $10,000 by paying $1,000 in cash 
and borrowing $9,000. The fair market value of plan assets would be 
$100,000 ($100,000 of plan assets less $1,000 cash payment plus $10,000 
of employer securities less $9,000 indebtedness), the fair market value 
of the qualifying employer securities would be $10,000, which is 10 
percent of the fair market value of plan assets. Accordingly, the 
acquisition would not contravene section 407(a).
    (2) Plan assets have a fair market value of $100,000. The plan has 
liabilities of $20,000 which were incurred in connection with the 
acquisition of those assets, and does not own any employer securities or 
employer real property. The plan proposes to pay cash for qualifying 
employer securities with a fair market value of $10,000. The fair market 
value of plan assets would be $80,000 ($100,000 of plan assets less 
$10,000 cash payment plus $10,000 of employer securities less $20,000 
indebtedness), the fair market value of the qualifying employer 
securities would be $10,000, which is 12.5 percent of the fair market 
value of plan assets. Accordingly, the acquisition would contravene 
section 407(a).

[42 FR 47201, Sept. 20, 1977]



Sec. 2550.407d-5  Definition of the term ``qualifying employer security''.

    (a) In general. For purposes of this section and section 407(d)(5) 
of the Employee Retirement Income Security Act of 1974 (the Act), the 
term ``qualifying employer security'' means an employer security which 
is:
    (1) Stock; or
    (2) A marketable obligation, as defined in paragraph (b) of this 
section and section 407(e) of the Act.
    (b) For purposes of paragraph (a)(2) of this section and section 
407(d)(5) of the Act, the term ``marketable obligation'' means a bond, 
debenture, note, or certificate, or other evidence of indebtedness 
(hereinafter in this paragraph referred to as ``obligation'') if:
    (1) Such obligation is acquired--
    (i) On the market, either--
    (A) At the price of the obligation prevailing on a national 
securities exchange which is registered with the Securities and Exchange 
Commission, or
    (B) If the obligation is not traded on such a national securities 
exchange, at a price not less favorable to the plan

[[Page 512]]

than the offering price for the obligation as established by current bid 
and asked prices quoted by persons independent of the issuer;
    (ii) From an underwriter, at a price--
    (A) Not in excess of the public offering price for the obligation as 
set forth in a prospectus or offering circular filed with the Securities 
and Exchange Commission, and
    (B) At which a substantial portion of the same issue is acquired by 
persons independent of the issuer; or
    (iii) Directly from the issuer at a price not less favorable to the 
plan than the price paid currently for a substantial portion of the same 
issue by persons independent of the issuer;
    (2) Immediately following acquisition of such obligation,
    (i) Not more than 25 percent of the aggregate amount of obligations 
issued in such issue and outstanding at the time of acquisition is held 
by the plan, and
    (ii) At least 50 percent of the aggregate amount referred to in 
paragraph (A) is held by persons independent of the issuer; and
    (3) Immediately following acquisition of the obligation, not more 
than 25 percent of the assets of the plan is invested in obligations of 
the employer or an affiliate of the employer.

[42 FR 44388, Sept. 2, 1977]



Sec. 2550.407d-6  Definition of the term ``employee stock ownership plan''.

    (a) In general--(1) Type of plan. To be an ``ESOP'' (employee stock 
ownership plan), a plan described in section 407(d)(6)(A) of the 
Employee Retirement Income Security Act of 1974 (the Act) must meet the 
requirements of this section. See section 407(d)(6)(B).
    (2) Designation as ESOP. To be an ESOP, a plan must be formally 
designated as such in the plan document.
    (3) Retroactive amendment. A plan meets the requirements of this 
section as of the date that it is designated as an ESOP if it is amended 
retroactively to meet, and in fact does meet, such requirements at any 
of the following times:
    (i) 12 months after the date on which the plan is designated as an 
ESOP;
    (ii) 90 days after a determination letter is issued with respect to 
the qualification of the plan as an ESOP under this section, but only if 
the determination is requested by the date in paragraph (a)(3)(i) of 
this section; or
    (iii) A later date approved by the Internal Revenue Service district 
director.
    (4) Addition to other plan. An ESOP may form a portion of a plan the 
balance of which includes a qualified pension, profit-sharing, or stock 
bonus plan which is not an ESOP. A reference to an ESOP includes an ESOP 
that forms a portion of another plan.
    (5) Conversion of existing plan to an ESOP. If an existing pension, 
profit-sharing, or stock bonus plan is converted into an ESOP, the 
requirements of section 404 of the Act, relating to fiduciary duties, 
and section 401(a) of the Internal Revenue Code (the Code), relating to 
requirements for plans established for the exclusive benefit of 
employees, apply to such conversion. A conversion may constitute a 
termination of an existing plan. For definition of a termination, see 
the regulations under section 411(d)(3) of the Code and section 4041(f) 
of the Act.
    (6) Certain arrangements barred--(i) Buy-sell agreements. An 
arrangement involving an ESOP that creates a put option must not provide 
for the issuance of put options other than as provided under 
Sec. 2550.408b-3 (j), (k) and (l). Also, an ESOP must not otherwise 
obligate itself to acquire securities from a particular security holder 
at an indefinite time determined upon the happening of an event such as 
the death of the holder.
    (b) Plan designed to invest primarily in qualifying employer 
securities. A plan constitutes an ESOP only if the plan specifically 
states that it is designed to invest primarily in qualifying employer 
securities. Thus, a stock bonus plan or a money purchase pension plan 
constituting an ESOP may invest part of its assets in other than 
qualifying employer securities. Such plan will be treated the same as 
other stock bonus plans or money purchase pension plans qualified under 
section 401(a) of the Code with respect to those investments.
    (c) Regulations of the Secretary of the Treasury. A plan constitutes 
an ESOP for a plan year only if it meets such

[[Page 513]]

other requirements as the Secretary of the Treasury may prescribe by 
regulation under section 4975(e)(7) of the Code. (See 26 CFR 54.4975-
11).

[42 FR 44388, Sept. 2, 1977]



Sec. 2550.408b-1  General statutory exemption for loans to plan participants and beneficiaries who are parties in interest with respect to the plan.

    (a)(1) In general. Section 408(b)(1) of the Employee Retirement 
Income Security Act of 1974 (the Act or ERISA) exempts from the 
prohibitions of section 406(a), 406(b)(1) and 406(b)(2) loans by a plan 
to parties in interest who are participants or beneficiaries of the 
plan, provided that such loans:
    (i) Are available to all such participants and beneficiaries on a 
reasonably equivalent basis;
    (ii) Are not made available to highly compensated employees, 
officers or shareholders in an amount greater than the amount made 
available to other employees;
    (iii) Are made in accordance with specific provisions regarding such 
loans set forth in the plan;
    (iv) Bear a reasonable rate of interest; and
    (v) Are adequately secured.

The Internal Revenue Code (the Code) contains parallel provisions to 
section 408(b)(1) of the Act. Effective, December 31, 1978, section 102 
of Reorganization Plan No. 4 of 1978 (43 FR 47713, October 17, 1978) 
transferred the authority of the Secretary of the Treasury to promulgate 
regulations of the type published herein to the Secretary of Labor. 
Therefore, all references herein to section 408(b)(1) of the Act should 
be read to include reference to the parallel provisions of section 
4975(d)(1) of the Code.

Section 1114(b)(15)(B) of the Tax Reform Act of 1986 amended section 
408(b)(1)(B) of ERISA by deleting the phrase ``highly compensated 
employees, officers or shareholders'' and substituting the phrase 
``highly compensated employees (within the meaning of section 414(q) of 
the Internal Revenue Code of 1986).'' Thus, for plans with participant 
loan programs which are subject to the amended section 408(b)(1)(B), the 
requirements of this regulation should be read to conform with the 
amendment.
    (2) Scope. Section 408(b)(1) of the Act does not contain an 
exemption from acts described in section 406(b)(3) of the Act 
(prohibiting fiduciaries from receiving consideration for their own 
personal account from any party dealing with a plan in connection with a 
transaction involving plan assets). If a loan from a plan to a 
participant who is a party in interest with respect to that plan 
involves an act described in section 406(b)(3), such an act constitutes 
a separate transaction which is not exempt under section 408(b)(1) of 
the Act. The provisions of section 408(b)(1) are further limited by 
section 408(d) of the Act (relating to transactions with owner-employees 
and related persons).
    (3) Loans. (i) Section 408(b)(1) of the Act provides relief from the 
prohibitions of section 406(a), 406(b)(1) and 406(b)(2) for the making 
of a participant loan. The term ``participant loan'' refers to a loan 
which is arranged and approved by the fiduciary administering the loan 
program primarily in the interest of the participant and which otherwise 
satisfies the criteria set forth in section 408(b)(1) of the Act. The 
existence of a participant loan or participant loan program will be 
determined upon consideration of all relevant facts and circumstances. 
Thus, for example, the mere presence of a loan document appearing to 
satisfy the requirements of section 408(b)(1) will not be dispositive of 
whether a participant loan exists where the subsequent administration of 
the loan indicates that the parties to the loan agreement did not intend 
the loan to be repaid. Moreover, a loan program containing a 
precondition designed to benefit a party in interest (other than the 
participant) is not afforded relief by section 408(b)(1) or this 
regulation. In this regard, section 408(b)(1) recognizes that a program 
of participant loans, like other plan investments, must be prudently 
established and administered for the exclusive purpose of providing 
benefits to participants and beneficiaries of the plan.
    (ii) For the purpose of this regulation, the term ``loan'' will 
include any renewal or modification of an existing loan agreement, 
provided that, at the

[[Page 514]]

time of each such renewal or modification, the requirements of section 
408(b)(1) and this regulation are met.
    (4) Examples. The following examples illustrate the provisions of 
Sec. 2550.408b-1(a).

    Example (1): T, a trustee of plan P, has exclusive discretion over 
the management and disposition of plan assets. As a result, T is a 
fiduciary with respect to P under section 3(21)(A) of the Act and a 
party in interest with respect to P pursuant to section 3(14)(A) of the 
Act. T is also a participant in P. Among T's duties as fiduciary is the 
administration of a participant loan program which meets the 
requirements of section 408(b)(1) of the Act. Pursuant to strict 
objective criteria stated under the program, T, who participates in all 
loan decisions, receives a loan on the same terms as other participants. 
Although the exercise of T's discretion on behalf of himself may 
constitute an act of self-dealing described in section 406(b)(1), 
section 408(b)(1) provides an exemption from section 406(b)(1). As a 
result, the loan from P to T would be exempt under section 408(b)(1), 
provided the conditions of that section are otherwise satisfied.
    Example (2): P is a plan covering all the employees of E, the 
employer who established and maintained P. F is a fiduciary with respect 
to P and an officer of E. The plan documents governing P give F the 
authority to establish a participant loan program in accordance with 
section 408(b)(1) of the Act. Pursuant to an arrangement with E, F 
establishes such a program but limits the use of loan funds to 
investments in a limited partnership which is established and maintained 
by E as general partner. Under these facts, the loan program and any 
loans made pursuant to this program are outside the scope of relief 
provided by section 408(b)(1) because the loan program is designed to 
operate for the benefit of E. Under the circumstances described, the 
diversion of plan assets for E's benefit would also violate sections 
403(c)(1) and 404(a) of the Act.
    Example (3): Assume the same facts as in Example 2, above, except 
that F does not limit the use of loan funds. However, E pressures his 
employees to borrow funds under P's participant loan program and then 
reloan the loan proceeds to E. F, unaware of E's activities, arranges 
and approves the loans. If the loans meet all the conditions of section 
408(b)(1), such loans will be exempt under that section. However, E's 
activities would cause the entire transaction to be viewed as an 
indirect transfer of plan assets between P and E, who is a party in 
interest with respect to P, but not the participant borrowing from P. By 
coercing the employees to engage in loan transactions for its benefit, E 
has engaged in separate transactions that are not exempt under section 
408(b)(1). Accordingly, E would be liable for the payment of excise 
taxes under section 4975 of the Code.
    Example (4): Assume the same facts as in Example 2, above, except 
that, in return for structuring and administering the loan program as 
indicated, E agrees to pay F an amount equal to 10 percent of the funds 
loaned under the program. Such a payment would result in a separate 
transaction not covered by section 408(b)(1). This transaction would be 
prohibited under section 406(b)(3) since F would be receiving 
consideration from a party in connection with a transaction involving 
plan assets.
    Example (5): F is a fiduciary with respect to plan P. D is a party 
in interest with respect to plan P. Section 406(a)(1)(B) of the Act 
would prohibit F from causing P to lend money to D. However, F enters 
into an agreement with Z, a plan participant, whereby F will cause P to 
make a participant loan to Z with the express understanding that Z will 
subsequently lend the loan proceeds to D. An examination of Z's credit 
standing indicates that he is not creditworthy and would not, under 
normal circumstances, receive a loan under the conditions established by 
the participant loan program. F's decision to approve the participant 
loan to Z on the basis of Z's prior agreement to lend the money to D 
violates the exclusive purpose requirements of sections 403(c) and 
404(a). In effect, the entire transaction is viewed as an indirect 
transfer of plan assets between P and D, and not a loan to a participant 
exempt under section 408(b)(1). Z's lack of credit standing would also 
cause the transaction to fail under section 408(b)(1)(A) of the Act.
    Example (6): F is a fiduciary with respect to Plan P. Z is a plan 
participant. Z and D are both parties in interest with respect to P. F 
approves a participant loan to Z in accordance with the conditions 
established under the participant loan program. Upon receipt of the 
loan, Z intends to lend the money to D. If F has approved this loan 
solely upon consideration of those factors which would be considered in 
a normal commercial setting by an entity in the business of making 
comparable loans, Z's subsequent use of the loan proceeds will not 
affect the determination of whether loans under P's program satisfy the 
conditions of section 408(b)(1).
    Example (7): A is the trustee of a small individual account plan. D, 
the president of the plan sponsor, is also a participant in the plan. 
Pursuant to a participant loan program meeting the requirements of 
section 408(b)(1), D applies for a loan to be secured by a parcel of 
real property. D does not intend to repay the loan; rather, upon 
eventual default, he will permit the property to be foreclosed upon and 
transferred to the plan in discharge of his legal obligation to repay 
the loan. A, aware of D's intention, approves the

[[Page 515]]

loan. D fails to make two consecutive quarterly payments of principal 
and interest under the note evidencing the loan thereby placing the loan 
in default. The plan then acquires the real property upon foreclosure. 
Such facts and circumstances indicate that the payment of money from the 
plan to D was not a participant loan eligible for the relief afforded by 
section 408(b)(1). In effect, this transaction is a prohibited sale or 
exchange of property between a plan and a party in interest from the 
time D receives the money.
    Example (8): Plan P establishes a participant loan program. All 
loans are subject to the condition that the borrowed funds must be used 
to finance home purchases. Interest rates on the loans are the same as 
those charged by a local savings and loan association under similar 
circumstances. A loan by P to a participant to finance a home purchase 
would be subject to the relief provided by section 408(b)(1) provided 
that the conditions of 408(b)(1) are met. A participant loan program 
which is established to make loans for certain stated purposes (e.g., 
hardship, college tuition, home purchases, etc.) but which is not 
otherwise designed to benefit parties in interest (other than plan 
participants) would not, in itself, cause such program to be ineligible 
for the relief provided by section 408(b)(1). However, fiduciaries are 
cautioned that operation of a loan program with limitations may result 
in loans not being made available to all participants and beneficiaries 
on a reasonably equivalent basis.

    (b) Reasonably equivalent basis. (1) Loans will not be considered to 
have been made available to participants and beneficiaries on a 
reasonably equivalent basis unless:
    (i) Such loans are available to all plan participants and 
beneficiaries without regard to any individual's race, color, religion, 
sex, age or national origin;
    (ii) In making such loans, consideration has been given only to 
those factors which would be considered in a normal commercial setting 
by an entity in the business of making similar types of loans. Such 
factors may include the applicant's creditworthiness and financial need; 
and
    (iii) An evaluation of all relevant facts and circumstances 
indicates that, in actual practice, loans are not unreasonably withheld 
from any applicant.
    (2) A participant loan program will not fail the requirement of 
paragraph (b)(1) of this section or Sec. 2550.408b-1(c) if the program 
establishes a minimum loan amount of up to $1,000, provided that the 
loans granted meet the requirements of Sec. 2550.408b-1(f).
    (3) Examples. The following examples illustrate the provisions of 
Sec. 2550.408b-1(b)(1):

    Example (1): T, a trustee of plan P, has exclusive discretion over 
the management and disposition of plan assets. T's duties include the 
administration of a participant loan program which meets the 
requirements of section 408(b)(1) of the Act. T receives a participant 
loan at a lower interest rate than the rate made available to other plan 
participants of similar financial condition or creditworthiness with 
similar security. The loan by P to T would not be covered by the relief 
provided by section 408(b)(1) because loans under P's program are not 
available to all plan participants on a reasonably equivalent basis.
    Example (2): Same facts as in example 1, except that T is a member 
of a committee of trustees responsible for approving participant loans. 
T pressures the committee to refuse loans to other qualified 
participants in order to assure that the assets allocated to the 
participant loan program would be available for a loan by P to T. The 
loan by P to T would not be covered by the relief provided by section 
408(b)(1) since participant loans have not been made available to all 
participants and beneficiaries on a reasonably equivalent basis.
    Example (3): T is the trustee of plan P, which covers the employees 
of E. A, B and C are employees of E, participants in P, and friends of 
T. The documents governing P provide that T, in his discretion, may 
establish a participant loan program meeting certain specified criteria. 
T institutes such a program and tells A, B and C of his decision. Before 
T is able to notify P's other participants and beneficiaries of the loan 
program, A, B, and C file loan applications which, if approved, will use 
up substantially all of the funds set aside for the loan program. 
Approval of these applications by T would represent facts and 
circumstances showing that loans under P's program are not available to 
all participants and beneficiaries on a reasonably equivalent basis.

    (c) Highly compensated employees. (1) Loans will not be considered 
to be made available to highly compensated employees, officers or 
shareholders in an amount greater than the amount made available to 
other employees if, upon consideration of all relevant facts and 
circumstances, the program does not operate to exclude large numbers of 
plan participants from receiving loans under the program.

[[Page 516]]

    (2) A participant loan program will not fail to meet the requirement 
in paragraph (c)(1), of this section, merely because the plan documents 
specifically governing such loans set forth either (i) a maximum dollar 
limitation, or (ii) a maximum percentage of vested accrued benefit which 
no loan may exceed.
    (3) If the second alternative in paragraph (c)(2) of this section 
(maximum percentage of vested accrued benefit) is chosen, a loan program 
will not fail to meet this requirement solely because maximum loan 
amounts will vary directly with the size of the participant's accrued 
benefit.
    (4) Examples. The following examples illustrate the provisions of 
Sec. 2550.408b-1(c).

    Example (1): The documents governing plan P provide for the 
establishment of a participant loan program in which the amount of any 
loan under the program (when added to the outstanding balances of any 
other loans under the program to the same participant) does not exceed 
the lesser of (i) $50,000, or (ii) one-half of the present value of that 
participant's vested accrued benefit under the plan (but not less than 
$10,000). P's participant loan program does not fail to meet the 
requirement in section 408(b)(1)(B) of the Act, and would be covered by 
the relief provided by section 408(b)(1) if the other conditions of that 
section are met.
    Example (2): The documents governing plan T provide for the 
establishment of a participant loan program in which the minimum loan 
amount would be $25,000. The documents also require that the only 
security acceptable under the program would be the participant's vested 
accrued benefit. A, the plan fiduciary administering the loan program, 
finds that because of the restrictions in the plan documents only 20 
percent of the plan participants, all of whom earn in excess of $75,000 
a year, would meet the threshold qualifications for a loan. Most of 
these participants are high-level supervisors or corporate officers. 
Based on these facts, it appears that loans under the program would be 
made available to highly compensated employees in an amount greater than 
the amount made available to other employees. As a result, the loan 
program would fail to meet the requirement in section 408(b)(1)(B) of 
the Act and would not be covered by the relief provided in section 
408(b)(1).

    (d) Specific plan provisions. For the purpose of section 408(b)(1) 
and this regulation, the Department will consider that participant loans 
granted or renewed at any time prior to the last day of the first plan 
year beginning on or after January 1, 1989, are made in accordance with 
specific provisions regarding such loans set forth in the plan if:
    (1) The plan provisions regarding such loans contain (at a minimum) 
an explicit authorization for the plan fiduciary responsible for 
investing plan assets to establish a participant loan program; and
    (2) For participant loans granted or renewed on or after the last 
day of the first plan year beginning on or after January 1, 1989, the 
participant loan program which is contained in the plan or in a written 
document forming part of the plan includes, but need not be limited to, 
the following:
    (i) The identity of the person or positions authorized to administer 
the participant loan program;
    (ii) A procedure for applying for loans;
    (iii) The basis on which loans will be approved or denied;
    (iv) Limitations (if any) on the types and amount of loans offered;
    (v) The procedure under the program for determining a reasonable 
rate of interest;
    (vi) The types of collateral which may secure a participant loan; 
and
    (vii) The events constituting default and the steps that will be 
taken to preserve plan assets in the event of such default.

    Example (1): Plan P authorizes the trustee to establish a 
participant loan program in accordance with section 408(b)(1) of the 
Act. Pursuant to this explicit authority, the trustee establishes a 
written program which contains all of the information required by 
Sec. 2550.408b-1(d)(2). Loans made pursuant to this authorization and 
the written loan program will not fail under section 408(b)(1)(C) of the 
Act merely because the specific provisions regarding such loans are 
contained in a separate document forming part of the plan. The specific 
provisions describing the loan program, whether contained in the plan or 
in a written document forming part of a plan, do affect the rights and 
obligations of the participants and beneficiaries under the plan and, 
therefore, must in accordance with section 102(a)(1) of the Act, be 
disclosed in the plan's summary plan description.

    (e) Reasonable rate of interest. A loan will be considered to bear a 
reasonable rate of interest if such loan provides

[[Page 517]]

the plan with a return commensurate with the interest rates charged by 
persons in the business of lending money for loans which would be made 
under similar circumstances.

    Example (1): Plan P makes a participant loan to A at the fixed 
interest rate of 8% for 5 years. The trustees, prior to making the loan, 
contacted two local banks to determine under what terms the banks would 
make a similar loan taking into account A's creditworthiness and the 
collateral offered. One bank would charge a variable rate of 10% 
adjusted monthly for a similar loan. The other bank would charge a fixed 
rate of 12% under similar circumstances. Under these facts, the loan to 
A would not bear a reasonable rate of interest because the loan did not 
provide P with a return commensurate with interest rates charged by 
persons in the business of lending money for loans which would be made 
under similar circumstances. As a result, the loan would fail to meet 
the requirements of section 408(b)(1)(D) and would not be covered by the 
relief provided by section 408(b)(1) of the Act.
    Example (2): Pursuant to the provisions of plan P's participant loan 
program, T, the trustee of P, approves a loan to M, a participant and 
party in interest with respect to P. At the time of execution, the loan 
meets all of the requirements of section 408(b)(1) of the Act. The loan 
agreement provides that at the end of two years M must pay the remaining 
balance in full or the parties may renew for an additional two year 
period. At the end of the initial two year period, the parties agree to 
renew the loan for an additional two years. At the time of renewal, 
however, A fails to adjust the interest rate charged on the loan in 
order to reflect current economic conditions. As a result, the interest 
rate on the renewal fails to provide a ``reasonable rate of interest'' 
as required by section 408(b)(1)(D) of the Act. Under such 
circumstances, the loan would not be exempt under section 408(b)(1) of 
the Act from the time of renewal.
    Example (3): The documents governing plan P's participant loan 
program provide that loans must bear an interest rate no higher than the 
maximum interest rate permitted under State X's usury law. Pursuant to 
the loan program, P makes a participant loan to A, a plan participant, 
at a time when the interest rates charged by financial institutions in 
the community (not subject to the usury limit) for similar loans are 
higher than the usury limit. Under these circumstances, the loan would 
not bear a reasonable rate of interest because the loan does not provide 
P with a return commensurate with the interest rates charged by persons 
in the business of lending money under similar circumstances. In 
addition, participant loans that are artificially limited to the maximum 
usury ceiling then prevailing call into question the status of such 
loans under sections 403(c) and 404(a) where higher yielding comparable 
investment opportunities are available to the plan.

    (f) Adequate security. (1) A loan will be considered to be 
adequately secured if the security posted for such loan is something in 
addition to and supporting a promise to pay, which is so pledged to the 
plan that it may be sold, foreclosed upon, or otherwise disposed of upon 
default of repayment of the loan, the value and liquidity of which 
security is such that it may reasonably be anticipated that loss of 
principal or interest will not result from the loan. The adequacy of 
such security will be determined in light of the type and amount of 
security which would be required in the case of an otherwise identical 
transaction in a normal commercial setting between unrelated parties on 
arm's-length terms. A participant's vested accrued benefit under a plan 
may be used as security for a participant loan to the extent of the 
plan's ability to satisfy the participant's outstanding obligation in 
the event of default.
    (2) For purposes of this paragraph,
    (i) No more than 50% of the present value of a participant's vested 
accrued benefit may be considered by a plan as security for the 
outstanding balance of all plan loans made to that participant;
    (ii) A plan will be in compliance with paragraph (f)(2)(i) of this 
section if, with respect to any participant, it meets the provisions of 
paragraph (f)(2)(i) of this section immediately after the origination of 
each participant loan secured in whole or in part by that participant's 
vested accrued benefit; and
    (iii) Any loan secured in whole or in part by a portion of a 
participant's vested accrued benefit must also meet the requirements of 
paragraph (f)(1) of this section.
    (g) Effective date. This section is effective for all participant 
loans granted or renewed after October 18, 1989, except with respect to 
paragraph (d)(2) of this section relating to specific plan provisions. 
Paragraph (d)(2) of this section is effective for participant loans 
granted or renewed on or after the last

[[Page 518]]

day of the first plan year beginning on or after January 1, 1989.

(Approved by the Office of Management and Budget under control number 
1210-0076)

[54 FR 30528, July 20, 1989]



Sec. 2550.408b-2  General statutory exemption for services or office space.

    (a) In general. Section 408(b)(2) of the Employee Retirement Income 
Security Act of 1974 (the Act) exempts from the prohibitions of section 
406(a) of the Act payment by a plan to a party in interest, including a 
fiduciary, for office space or any service (or a combination of 
services) if:
    (1) Such office space or service is necessary for the establishment 
or operation of the plan;
    (2) Such office space or service is furnished under a contract or 
arrangement which is reasonable; and
    (3) No more than reasonable compensation is paid for such office 
space or service.

However, section 408(b)(2) does not contain an exemption from acts 
described in section 406(b)(1) of the Act (relating to fiduciaries 
dealing with the assets of plans in their own interest or for their own 
account), section 406(b)(2) of the Act (relating to fiduciaries in their 
individual or in any other capacity acting in any transaction involving 
the plan on behalf of a party (or representing a party) whose interests 
are adverse to the interests of the plan or the interests of its 
participants or beneficiaries) or section 406(b)(3) of the Act (relating 
to fiduciaries receiving consideration for their own personal account 
from any party dealing with a plan in connection with a transaction 
involving the assets of the plan). Such acts are separate transactions 
not described in section 408(b)(2). See Sec. 2250.408b-2 (e) and (f) for 
guidance as to whether transactions relating to the furnishing of office 
space or services by fiduciaries to plans involve acts described in 
section 406(b)(1) of the Act. Section 408(b)(2) of the Act does not 
contain an exemption from other provisions of the Act, such as section 
404, or other provisions of law which may impose requirements or 
restrictions relating to the transactions which are exempt under section 
408(b)(2). See, for example, section 401 of the Internal Revenue Code of 
1954. The provisions of section 408(b)(2) of the Act are further limited 
by section 408(d) of the Act (relating to transactions with owner-
employees and related persons).
    (b) Necessary service. A service is necessary for the establishment 
or operation of a plan within the meaning of section 408(b)(2) of the 
Act and Sec. 2550.408b-2(a)(1) if the service is appropriate and helpful 
to the plan obtaining the service in carrying out the purposes for which 
the plan is established or maintained. A person providing such a service 
to a plan (or a person who is a party in interest solely by reason of a 
relationship to such a service provider described in section 3(14)(F), 
(G), (H), or (I) of the Act) may furnish goods which are necessary for 
the establishment or operation of the plan in the course of, and 
incidental to, the furnishing of such service to the plan.
    (c) Reasonable contract or arrangement. No contract or arrangement 
is reasonable within the meaning of section 408(b)(2) of the Act and 
Sec. 2550.408b-2(a)(2) if it does not permit termination by the plan 
without penalty to the plan on reasonably short notice under the 
circumstances to prevent the plan from becoming locked into an 
arrangement that has become disadvantageous. A long-term lease which may 
be terminated prior to its expiration (without penalty to the plan) on 
reasonably short notice under the circumstances is not generally an 
unreasonable arrangement merely because of its long term. A provision in 
a contract or other arrangement which reasonably compensates the service 
provider or lessor for loss upon early termination of the contract, 
arrangement or lease is not a penalty. For example, a minimal fee in a 
service contract which is charged to allow recoupment of reasonable 
start- up costs is not a penalty. Similary, a provision in a lease for a 
termination fee that covers reasonably foreseeable expenses related to 
the vacancy and reletting of the office space upon early termination of 
the lease is not a penalty. Such a provision does not reasonably 
compensate for loss if it provides for payment in excess of actual loss 
or if it fails to require mitigation of damages.

[[Page 519]]

    (d) Reasonable compensation. Section 408(b)(2) of the Act and 
Sec. 2550.408b-2(a)(3) permit a plan to pay a party in interest 
reasonable compensation for the provision of office space or services 
described in section 408(b)(2). Section 2550.408c-2 of these regulations 
contains provisions relating to what constitutes reasonable compensation 
for the provision of services.
    (e) Transactions with fiduciaries--(1) In general. If the furnishing 
of office space or a service involves an act described in section 406(b) 
of the Act (relating to acts involving conflicts of interest by 
fiduciaries), such an act constitutes a separate transaction which is 
not exempt under section 408(b)(2) of the Act. The prohibitions of 
section 406(b) supplement the other prohibitions of section 406(a) of 
the Act by imposing on parties in interest who are fiduciaries a duty of 
undivided loyalty to the plans for which they act. These prohibitions 
are imposed upon fiduciaries to deter them from exercising the 
authority, control, or responsibility which makes such persons 
fiduciaries when they have interests which may conflict with the 
interests of the plans for which they act. In such cases, the 
fiduciaries have interests in the transactions which may affect the 
exercise of their best judgment as fiduciaries. Thus, a fiduciary may 
not use the authority, control, or responsibility which makes such 
person a fiduciary to cause a plan to pay an additional fee to such 
fiduciary (or to a person in which such fiduciary has an interest which 
may affect the exercise of such fiduciary's best judgment as a 
fiduciary) to provide a service. Nor may a fiduciary use such authority, 
control, or responsibility to cause a plan to enter into a transaction 
involving plan assets whereby such fiduciary (or a person in which such 
fiduciary has an interest which may affect the exercise of such 
fiduciary's best judgment as a fiduciary) will receive consideration 
from a third party in connection with such transaction. A person in 
which a fiduciary has an interest which may affect the exercise of such 
fiduciary's best judgment as a fiduciary includes, for example, a person 
who is a party in interest by reason of a relationship to such fiduciary 
described in section 3(14)(E), (F), (G), (H), or (I).
    (2) Transactions not described in section 406(b)(1). A fiduciary 
does not engage in an act described in section 406(b)(1) of the Act if 
the fiduciary does not use any of the authority, control or 
responsibility which makes such person a fiduciary to cause a plan to 
pay additional fees for a service furnished by such fiduciary or to pay 
a fee for a service furnished by a person in which such fiduciary has an 
interest which may affect the exercise of such fiduciary's best judgment 
as a fiduciary. This may occur, for example, when one fiduciary is 
retained on behalf of a plan by a second fiduciary to provide a service 
for an additional fee. However, because the authority, control or 
responsibility which makes a person a fiduciary may be exercised ``in 
effect'' as well as in form, mere approval of the transaction by a 
second fiduciary does not mean that the first fiduciary has not used any 
of the authority, control or responsibility which makes such person a 
fiduciary to cause the plan to pay the first fiduciary an additional fee 
for a service. See paragraph (f) of this section.
    (3) Services without compensation. If a fiduciary provides services 
to a plan without the receipt of compensation or other consideration 
(other than reimbursement of direct expenses properly and actually 
incurred in the performance of such services within the meaning of 
Sec. 2550.408c-2(b)(3)), the provision of such services does not, in and 
of itself, constitute an act described in section 406(b) of the Act. The 
allowance of a deduction to an employer under section 162 or 212 of the 
Code for the expense incurred in furnishing office space or services to 
a plan established or maintained by such employer does not constitute 
compensation or other consideration.
    (f) Examples. The provisions of Sec. 2550.408b-2(e) may be 
illustrated by the following examples.

    Example (1). E, an employer whose employees are covered by plan P, 
is a fiduciary of P. I is a professional investment adviser in which E 
has no interest which may affect the exercise of E's best judgment as a 
fiduciary. E causes P to retain I to provide certain kinds of investment 
advisory services of a type which causes I to be a fiduciary of P

[[Page 520]]

under section 3(21)(A)(ii) of the Act. thereafter, I proposes to perform 
for additional fees portfolio evaluation services in addition to the 
services currently provided. The provision of such services is arranged 
by I and approved on behalf of the plan by E. I has not engaged in an 
act described in section 406(b)(1) of the Act, because I did not use any 
of the authority, control or responsibility which makes I a fiduciary 
(the provision of investment advisory services) to cause the plan to pay 
I additional fees for the provision of the portfolio evaluation 
services. E has not engaged in an act which is described in section 
406(b)(1). E, as the fiduciary who has the responsibility to be prudent 
in his selection and retention of I and the other investment advisers of 
the plan, has an interest in the purchase by the plan of portfolio 
evaluation services. However, such an interest is not an interest which 
may affect the exercise of E's best judgment as a fiduciary.
    Example (2). D, a trustee of plan P with discretion over the 
management and disposition of plan assets, relies on the advice of C, a 
consultant to P, as to the investment of plan assets, thereby making C a 
fiduciary of the plan. On January 1, 1978, C recommends to D that the 
plan purchase an insurance policy from U, an insurance company which is 
not a party in interest with respect to P. C thoroughly explains the 
reasons for the recommendation and makes a full disclosure concerning 
the fact that C will receive a commission from U upon the purchase of 
the policy of P. D considers the recommendation and approves the 
purchase of the policy by P. C receives a commission. Under such 
circumstances, C has engaged in an act described in section 406(b)(1) of 
the Act (as well as sections 406(b)(2) and (3) of the Act) because C is 
in fact exercising the authority, control or responsibility which makes 
C a fiduciary to cause the plan to purchase the policy. However, the 
transaction is exempt from the prohibited transaction provisions of 
section 406 of the Act, if the requirements of Prohibited Transaction 
Exemption 77-9 are met.
    Example (3). Assume the same facts as in Example (2) except that the 
nature of C's relationship with the plan is not such that C is a 
fiduciary of P. The purchase of the insurance policy does not involve an 
act described in section 406(b)(1) of the Act (or sections 406(b)(2) or 
(3) of the Act) because such sections only apply to acts by fiduciaries.
    Example (4). E, an employer whose employees are covered by plan P, 
is a fiduciary with respect to P. A, who is not a party in interest with 
respect to P, persuades E that the plan needs the services of a 
professional investment adviser and that A should be hired to provide 
the investment advice. Accordingly, E causes P to hire A to provide 
investment advice of the type which makes A a fiduciary under 
Sec. 2510.3-21(c)(1)(ii)(B). Prior to the expiration of A's first 
contract with P, A persuades E to cause P to renew A's contract with P 
to provide the same services for additional fees in view of the 
increased costs in providing such services. During the period of A's 
second contract, A provides additional investment advice services for 
which no additional charge is made. Prior to the expiration of A's 
second contract, A persuades E to cause P to renew his contract for 
additional fees in view of the additional services A is providing. A has 
not engaged in an act described in section 406(b)(1) of the Act, because 
A has not used any of the authority, control or responsibility which 
makes A a fiduciary (the provision of investment advice) to cause the 
plan to pay additional fees for A's services.
    Example (5). F, a trustee of plan P with discretion over the 
management and disposition of plan assets, retains C to provide 
administrative services to P of the type which makes C a fiduciary under 
section 3(21)(A)(iii). Thereafter, C retains F to provide for additional 
fees actuarial and various kinds of administrative services in addition 
to the services F is currently providing to P. Both F and C have engaged 
in an act described in section 406(b)(1) of the Act. F, regardless of 
any intent which he may have had at the time he retained C, has engaged 
in such an act because F has, in effect, exercised the authority, 
control or responsibility which makes F a fiduciary to cause the plan to 
pay F additional fees for the services. C, whose continued employment by 
P depends on F, has also engaged in such an act, because C has an 
interest in the transaction which might affect the exercise of C's best 
judgment as a fiduciary. As a result, C has dealt with plan assets in 
his own interest under section 406(b)(1).
    Example (6). F, a fiduciary of plan P with discretionary authority 
respecting the management of P, retains S, the son of F, to provide for 
a fee various kinds of administrative services necessary for the 
operation of the plan. F has engaged in an act described in section 
406(b)(1) of the Act because S is a person in whom F has an interest 
which may affect the exercise of F's best judgment as a fiduciary. Such 
act is not exempt under section 408(b)(2) of the Act irrespective of 
whether the provision of the services by S is exempt.
    Example (7). T, one of the trustees of plan P, is president of bank 
B. The bank proposes to provide administrative services to P for a fee. 
T physically absents himself from all consideration of B's proposal and 
does not otherwise exercise any of the authority, control or 
responsibility which makes T a fiduciary to cause the plan to retain B. 
The other trustees decide to retain B. T has not engaged in an act 
described in section 406(b)(1) of the Act. Further, the other trustees 
have not engaged in an act described in

[[Page 521]]

section 406(b)(1) merely because T is on the board of trustees of P. 
This fact alone would not make them have an interest in the transaction 
which might affect the exercise of their best judgment as fiduciaries.

[42 FR 32390, June 24, 1977]



Sec. 2550.408b-3  Loans to Employee Stock Ownership Plans.

    (a) Definitions. When used in this section, the terms listed below 
have the following meanings:
    (1) ESOP. The term ESOP refers to an employee stock ownership plan 
that meets the requirements of section 407(d)(6) of the Employee 
Retirement Income Security Act of 1974 (the Act) and 29 CFR 2550.407d-6. 
It is not synonymous with ``stock bonus plan.'' A stock bonus plan must, 
however, be an ESOP to engage in an exempt loan. The qualification of an 
ESOP under section 401 (a) of the Internal Revenue Code (the Code) and 
26 CFR 54.4975-11 will not be adversely affected merely because it 
engages in a non-exempt loan.
    (2) Loan. The term loan refers to a loan made to an ESOP by a party 
in interest or a loan to an ESOP which is guaranteed by a party in 
interest. It includes a direct loan of cash, a purchase-money 
transaction, and an assumption of the obligation of an ESOP. 
``Guarantee'' includes an unsecured guarantee and the use of assets of a 
party in interest as collateral for a loan, even though the use of 
assets may not be a guarantee under applicable state law. An amendment 
of a loan in order to qualify as an exempt loan is not a refinancing of 
the loan or the making of another loan.
    (3) Exempt loan. The term exempt loan refers to a loan that 
satisfies the provisions of this section. A ``non-exempt loan'' is one 
that fails to satisfy such provisions.
    (4) Publicly traded. The term publicly traded refers to a security 
that is listed on a national securities exchange registered under 
section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f) or that 
is quoted on a system sponsored by a national securities association 
registered under section 15A(b) of the Securities Exchange Act (15 
U.S.C. 78o).
    (5) Qualifying employer security. The term qualifying employer 
security reters to a security described in 29 CFR 2550.407d-5.
    (b) Statutory exemption--(1) Scope. Section 408(b)(3) of the Act 
provides an exemption from the prohibited transaction provisions of 
sections 406(a) and 406(b)(1) of the Act (relating to fiduciaries 
dealing with the assets of plans in their own interest or for their own 
account) and 406(b)(2) of the Act (relating to fiduciaries in their 
individual or in any other capacity acting in any transaction involving 
the plan on behalf of a party (or representing a party) whose interests 
are adverse to the interests of the plan or the interests of its 
participants or beneficiaries). Section 408(b)(3) does not provide an 
exemption from the prohibitions of section 406(b)(3) of the Act 
(relating to fiduciaries receiving consideration for their own personal 
account from any party dealing with a plan in connection with a 
transaction involving the income or assets of the plan).
    (2) Special scrutiny of transaction. The exemption under section 
408(b)(3) includes within its scope certain transaction in which the 
potential for self-dealing by fiduciaries exists and in which the 
interests of fiduciaries may conflict with the interests of 
participants. To guard against these potential abuses, the Department of 
Labor will subject these transactions to special scrutiny to ensure that 
they are primarily for the benefit of participants and their 
beneficiaries. Although the transactions need not be arranged and 
approved by an independent fiduciary, fiduciaries are cautioned to 
scrupulously exercise their discretion in approving them. For example, 
fiduciaries should be prepared to demonstrate compliance with the net 
effect test and the arm's-length standard under paragraphs (c)(2) and 
(3) of this section. Also, fiduciaries should determine that the 
transaction is truly arranged primarily in the interest of participants 
and their beneficiaries rather than, for example, in the interest of 
certain selling shareholders.
    (c) Primary benefit requirements--(1) In general. An exempt loan 
must be primarily for the benefit of the ESOP participants and their 
beneficiaries. All the surrounding facts and circumstances, including 
those described

[[Page 522]]

in paragraphs (c)(2) and (3) of this section, will be considered in 
determining whether such loan satisfies this requirement. However, no 
loan will satisfy such requirement unless it satisfies the requirements 
of paragraphs (d), (e) and (f) of this section.
    (2) Net effect on plan assets. At the time that a loan is made, the 
interest rate for the loan and the price of securities to be acquired 
with the loan proceeds should not be such that plan assets might be 
drained off.
    (3) Arm's-length standard. The terms of a loan, whether or not 
between independent parties, must, at the time the loan is made, be at 
least as favorable to the ESOP as the terms of a comparable loan 
resulting from arm`s-length negotiations between independent parties.
    (d) Use of loan proceeds. The proceeds of an exempt loan must be 
used, within a reasonable time after their receipt, by the borrowing 
ESOP only for any or all of the following purposes:
    (1) To acquire qualifying employer securities.
    (2) To repay such loan.
    (3) To repay a prior exempt loan. A new loan, the proceeds of which 
are so used, must satisfy the provisions of this section.

Except as provided in paragraphs (i) and (j) of this section or as 
otherwise required by applicable law, no security acquired with the 
proceeds of an exempt loan may be subject to a put, call, or other 
option, or buy-sell or similar arrangement while held by and when 
distributed from a plan, whether or not the plan is then ESOP.
    (e) Liability and collateral of ESOP for loan. An exempt loan must 
be without recourse against the ESOP. Furthermore, the only assets of 
the ESOP that may be given as collateral on an exempt loan are 
qualifying employer securities of two classes: Those acquired with the 
proceeds of the exempt loan and those that were used as collateral on a 
prior exempt loan repaid with the proceeds of the current exempt loan. 
No person entitled to payment under the exempt loan shall have any right 
to assets of the ESOP other than:
    (1) Collateral given for the loan,
    (2) Contributions (other than contributions of employer securities) 
that are made under an ESOP to meet its obligations under the loan, and
    (3) Earnings attributable to such collateral and the investment of 
such contributions.

The payments made with respect to an exempt loan by the ESOP during a 
plan year must not exceed an amount equal to the sum of such 
contributions and earnings received during or prior to the year less 
such payments in prior years. Such contributions and earnings must be 
accounted for separately in the books of account of the ESOP until the 
loan is repaid.
    (f) Default. In the event of default upon an exempt loan, the value 
of plan assets transferred in satisfaction of the loan must not exceed 
the amount of default. If the lender is a party in interest, a loan must 
provide for a transfer of plan assets upon default only upon and to the 
extent of the failure of the plan to meet the payment schedule of the 
loan. For purposes of this paragraph, the making of a guarantee does not 
make a person a lender.
    (g) Reasonable rate of interest. The interest rate of a loan must 
not be in excess of a reasonable rate of interest. All relevant factors 
will be considered in determining a reasonable rate of interest, 
including the amount and duration of the loan, the security and 
guarantee (if any) involved, the credit standing of the ESOP and the 
guarantor (if any), and the interest rate prevailing for comparable 
loans. When these factors are considered, a variable interest rate may 
be reasonable.
    (h) Release from encumbrance--(1) General rule. In general, an 
exempt loan must provide for the release from encumbrance of plan assets 
used as collateral for the loan under this paragraph. For each plan year 
during the duration of the loan, the number of securities released must 
equal the number of encumbered securities held immediately before 
release for the current plan year multiplied by a fraction. The 
numerator of the fraction is the amount of principal and interest paid 
for the year. The denominator of the fraction is the sum of the 
numerator plus the principal and interest to be paid for all future 
years. See Sec. 2550.408b-3(h)(4). The number of future years under the 
loan must be definitely

[[Page 523]]

ascertainable and must be determined without taking into account any 
possible extensions or renewal periods. If the interest rate under the 
loan is variable, the interest to be paid in future years must be 
computed by using the interest rate applicable as of the end of the plan 
year. If collateral includes more than one class of securities, the 
number of securities of each class to be released for a plan year must 
be determined by applying the same fraction to each class.
    (2) Special rule. A loan will not fail to be exempt merely because 
the number of securities to be released from encumbrance is determined 
solely with reference to principal payments. However, if release is 
determined with reference to principal payments only, the following 
three additional rules apply. The first rule is that the loan must 
provide for annual payments of principal and interest at a cumulative 
rate that is not less rapid at any time than level annual payments of 
such amounts for 10 years. The second rule is that interest included in 
any payment is disregarded only to the extent that it would be 
determined to be interest under standard loan amortization tables. The 
third rule is that subdivision (2) is not applicable from the time that, 
by reason of a renewal, extension, or refinancing, the sum of the 
expired duration of the exempt loan, the renewal period, the extension 
period, and the duration of a new exempt loan exceeds 10 years.
    (3) Caution against plan disqualification. Under an exempt loan, the 
number of securities released from encumbrance may vary from year to 
year. The release of securities depends upon certain employer 
contributions and earnings under the ESOP. Under 26 CFR 54.4975-11(d)(2) 
actual allocations to participants' accounts are based upon assets 
withdrawn from the suspense account. Nevertheless, for purposes of 
applying the limitations under section 415 of the Code to these 
allocations, under 26 CFR 54.4975-11(a)(8)(ii) contributions used by the 
ESOP to pay the loan are treated as annual additions to participants' 
accounts. Therefore, particular caution must be exercised to avoid 
exceeding the maximum annual additions under section 415 of the Code. At 
the same time, release from encumbrance in annually varying numbers may 
reflect a failure on the part of the employer to make substantial and 
recurring contributions to the ESOP which will lead to loss of 
qualification under section 401(a) of the Code. The Internal Revenue 
Service will observe closely the operation of ESOPs that release 
encumbered securities in varying annual amounts, particularly those that 
provide for the deferral of loan payments or for balloon payments. See 
26 CFR 54.4975-7(b)(8)(iii).
    (4) Illustration. The general rule under paragraph (h)(1) of this 
section operates as illustrated in the following examples:

    Example. Corporation X establishes an ESOP that borrows $750,000 
from a bank. X guarantees the loan which is for 15 years at 5% interest 
and is payable in level annual amounts of $72,256.72. Total payments on 
the loan are $1,083,850.80. The ESOP uses the entire proceeds of the 
loan to acquire 15,000 shares of X stock which is used as collateral for 
the loan. The number of securities to be released for the first year is 
1,000 shares, i.e., 15,000 shares x $72,256.72/$1,083,850.80 = 15,000 
shares x \1/15\. The number of securities to be released for the second 
year is 1,000 shares, i.e., 14,000 shares x $72,256.72/$1,011,594.08 = 
14,000 shares x \1/14\. If all loan payments are made as originally 
scheduled, the number of securities released in each succeeding year of 
the loan will also be 1,000.

    (i) Right of first refusal. Qualifying employer securities acquired 
with proceeds of an exempt loan may, but need not, be subject to a right 
of first refusal. However, any such right must meet the requirements of 
this paragraph. Securities subject to such right must be stock or an 
equity security, or a debt security convertible into stock or an equity 
security. Also, they must not be publicly traded at the time the right 
may be exercised. The right of first refusal must be in favor of the 
employer, the ESOP, or both in any order of priority. The selling price 
and other terms under the right must not be less favorable to the seller 
than the greater of the value of the security determined under 26 CFR 
54.4975-11(d)(5), or the purchase price and other terms offered by a 
buyer, other than the employer or the ESOP, making a good faith offer to 
purchase the security. The right of

[[Page 524]]

first refusal must lapse no later than 14 days after the security holder 
gives written notice to the holder of the right that an offer by a third 
party to purchase the security has been received.
    (j) Put option. A qualifying employer security acquired with the 
proceeds of an exempt loan by an ESOP after September 30, 1976, must be 
subject to a put option if it is not publicly traded when distributed or 
if it is subject to a trading limitation when distributed. For purposes 
of this paragraph, a ``trading limitation'' or a security is a 
restriction under any Federal or State securities law or any regulation 
thereunder, or an agreement (not prohibited by this section) affecting 
the security which would make the security not as freely tradeable as 
one not subject to such restriction. The put option must be exercisable 
only by a participant, by the participant's donees, or by a person 
(including an estate or its distributee) to whom the security passes by 
reason of a participant's death. (Under this paragraph ``participant'' 
means a participant and the beneficiaries of the participant under the 
ESOP.) The put option must permit a participant to put the security to 
the employer. Under no circumstances may the put option bind the ESOP. 
However, it may grant the ESOP an option to assume the rights and 
obligations of the employer at the time that the put option is 
exercised. If it is known at the time a loan is made that Federal or 
state law will be violated by the employer's honoring such put option, 
the put option must permit the security to be put, in a manner 
consistent with such law, to a third party (e.g., an affiliate of the 
employer or a shareholder other than the ESOP) that has substantial net 
worth at the time the loan is made and whose net worth is reasonably 
expected to remain substantial.
    (k) Duration of put option--(1) General rule. A put option must be 
exercisable at least during a 15-month period which begins the date the 
security subject to the put option is distributed by the ESOP.
    (2) Special rule. In the case of a security that is publicly traded 
without restriction when distributed but ceases to be so traded within 
15 months after distribution, the employer must notify each security 
holder in writing on or before the tenth day after the date the security 
ceases to be so traded that for the remainder of the 15-month period the 
security is subject to a put option. The number of days between the 
tenth day and the date on which notice is actually given, if later than 
the tenth day, must be added to the duration of the put option. The 
notice must inform distributees of the terms of the put options that 
they are to hold. The terms must satisfy the requirements of paragraphs 
(j) through (l) of this section.
    (l) Other put option provisions--(1) Manner of exercise. A put 
option is exercised by the holder notifying the employer in writing that 
the put option is being exercised.
    (2) Time excluded from duration of put option. The period during 
which a put option is exercisable does not include any time when a 
distributee is unable to exercise it because the party bound by the put 
option is prohibited from honoring it by applicable Federal or State 
law.
    (3) Price. The price at which a put option must be exercisable is 
the value of the security, determined in accordance with paragraph 
(d)(5) of 26 CFR 54.4975-11.
    (4) Payment terms. The provisions for payment under a put option 
must be reasonable. The deferral of payment is reasonable if adequate 
security and a reasonable interest rate are provided for any credit 
extended and if the cumulative payments at any time are no less than the 
aggregate of reasonable periodic payments as of such time. Periodic 
payments are reasonable if annual installments, beginning with 30 days 
after the date the put option is exercised, are substantially equal. 
Generally, the payment period may not end more than 5 years after the 
date the put option is exercised. However, it may be extended to a date 
no later than the earlier of 10 years from the date the put option is 
exercised or the date the proceeds of the loan used by the ESOP to 
acquire the security subject to such put option are entirely repaid.
    (5) Payment restrictions. Payment under a put option may be 
restricted by the terms of a loan, including one

[[Page 525]]

used to acquire a security subject to a put option, made before November 
1, 1977. Otherwise, payment under a put option must not be restricted by 
the provisions of a loan or any other arrangement, including the terms 
of the employer's articles of incorporation, unless so required by 
applicable state law.
    (m) Other terms of loan. An exempt loan must be for a specific term. 
Such loan may not be payable at the demand of any person, except in the 
case of default.
    (n) Status of plan as ESOP. To be exempt, a loan must be made to a 
plan that is an ESOP at the time of such loan. However, a loan to a plan 
formally designated as an ESOP at the time of the loan that fails to be 
an ESOP because it does not comply with section 401(a) of the Code or 26 
CFR 54.4975-11 will be exempt as of the time of such loan if the plan is 
amended retroactively under section 401(b) of the Code or 26 CFR 
54.4975-11(a)(4).
    (o) Special rules for certain loans--(1) Loans made before January 
1, 1976. A loan made before January 1, 1976, or made afterwards under a 
binding agreement in effect on January 1, 1976 (or under renewals 
permitted by the terms of such an agreement on that date) is exempt for 
the entire period of such loan if it otherwise satisfies the provisions 
of this section for such period, even though it does not satisfy the 
following provisions of this section:
    (i) The last sentence of paragraph (d);
    (ii) Paragraphs (e), (f), and (h)(1) and (2); and
    (iii) Paragraphs (i) through (m), inclusive.
    (2) Loans made after December 31, 1975, but before November 1, 1977. 
A loan made after December 31, 1975, but before November 1, 1977, or 
made afterwards under a binding agreement in effect on November 1, 1977 
(or under renewals permitted by the terms of such an agreement on that 
date) is exempt for the entire period of such loan if it otherwise 
satisfies the provisions of this section for such period even though it 
does not satisfy the following provisions of this section:
    (i) Paragraph (f);
    (ii) The three provisions of paragraph (h)(2); and
    (iii) Paragraph (i).
    (3) Release rule. Notwithstanding paragraphs (o)(1) and (2) of this 
section, if the proceeds of a loan are used to acquire securities after 
November 1, 1977, the loan must comply by such date with the provisions 
of paragraph (h) of this section.
    (4) Default rule. Notwithstanding paragraphs (o)(1) and (2) of this 
section, a loan by a party in interest other than a guarantor must 
satisfy the requirements of paragraph (f) of this section. A loan will 
satisfy these requirements if it is retroactively amended before 
November 1, 1977, to satisfy these requirements.
    (5) Put option rule. With respect to a security distributed before 
November 1, 1977, the put option provisions of paragraphs (j), (k), and 
(l) of this section will be deemed satisfied as of the date the security 
is distributed if by December 31, 1977, the security is subject to a put 
option satisfying such provisions. For purposes of satisfying such 
provisions, the security will be deemed distributed on the date the put 
option is issued. However, the put option provisions need not be 
satisfied with respect to a security that is not owned on November 1, 
1977, by a person in whose hands a put option must be exercisable.

(Approved by the Office of Management and Budget under control number 
1210-0046)

[42 FR 44385, Sept. 2, 1977; 42 FR 45907, Sept. 13, 1977, as amended at 
49 FR 18295, Apr. 30, 1984]



Sec. 2550.408b-4  Statutory exemption for investments in deposits of banks or similar financial institutions.

    (a) In general. Section 408(b)(4) of the Employee Retirement Income 
Security Act of 1974 (the Act) exempts from the prohibitions of section 
406 of the Act the investment of all or a part of a plan's assets in 
deposits bearing a reasonable rate of interest in a bank or similar 
financial institution supervised by the United States or a State, even 
though such bank or similar financial insitution is a fiduciary or other 
party in interest with respect to the plan, if the conditions of either 
Sec. 2550.408b-4(b)(1) or Sec. 2550.408b-4(b)(2) are met. Section 
408(b)(4) provides an exemption

[[Page 526]]

from sections 406(b)(1) of the Act (relating to fiduciaries dealing with 
the assets of plans in their own interest or for their own account) and 
406(b)(2) of the Act (relating to fiduciaries in their individual or in 
any other capacity acting in any transaction involving the plan on 
behalf of a party (or representing a party) whose interests are adverse 
to the interests of the plan or the interests of its participants or 
beneficiaries), as well as section 406(a)(1), because section 408(b)(4) 
contemplates a bank or similar financial institution causing a plan for 
which it acts as a fiduciary to invest plan assets in its own deposits 
if the requirements of section 408(b)(4) are met. However, it does not 
provide an exemption from section 406(b)(3) of the Act (relating to 
fiduciaries receiving consideration for their own personal account from 
any party dealing with a plan in connection with a transaction involving 
the assets of the plan). The receipt of such consideration is a separate 
transaction not described in the statutory exemption. Section 408(b)(4) 
does not contain an exemption from other provisions of the Act, such as 
section 404, or other provisions of law which may impose requirements or 
restrictions relating to the transactions which are exempt under section 
408(b)(4) of the Act. See, for example, section 401 of the Internal 
Revenue Code of 1954 (Code). The provisions of section 408(b)(4) of the 
Act are further limited by section 408(d) of the Act (relating to 
transactions with owner-employees and related persons).
    (b)(1) Plan covering own employees. Such investment may be made if 
the plan is one which covers only the employees of the bank or similar 
financial institution, the employees of any of its affiliates, or the 
employees of both.
    (2) Other plans. Such investment may be made if the investment is 
expressly authorized by a provision of the plan or trust instrument or 
if the investment is expressly authorized (or made) by a fiduciary of 
the plan (other than the bank or similar financial institution or any of 
its affiliates) who has authority to make such investments, or to 
instruct the trustee or other fiduciary with respect to investments, and 
who has no interest in the transaction which may affect the exercise of 
such authorizing fiduciary's best judgment as a fiduciary so as to cause 
such authorization to consititute an act described in section 406(b) of 
the Act. Any authorization to make investments contained in a plan or 
trust instrument will satisfy the requirement of express authorization 
for investments made prior to November 1, 1977. Effective November 1, 
1977, in the case of a bank or similar financial institution that 
invests plan assets in deposits in itself or its affiliates under an 
authorization contained in a plan or trust instrument, such 
authorization must name such bank or similar financial institution and 
must state that such bank or similar financial institution may make 
investments in deposits which bear a reasonable rate of interest in 
itself (or in an affiliate).
    (3) Example. B, a bank, is the trustee of plan P's assets. The trust 
instruments give the trustees the right to invest plan assets in its 
discretion. B invests in the certificates of deposit of bank C, which is 
a fiduciary of the plan by virtue of performing certain custodial and 
administrative services. The authorization is sufficient for the plan to 
make such investment under section 408(b)(4). Further, such 
authorization would suffice to allow B to make investments in deposits 
in itself prior to November 1, 1977. However, subsequent to October 31, 
1977, B may not invest in deposits in itself, unless the plan or trust 
instrument specifically authorizes it to invest in deposits of B.
    (c) Definitions. (1) The term bank or similar financial institution 
includes a bank (as defined in section 581 of the Code), a domestic 
building and loan association (as defined in section 7701(a)(19) of the 
Code), and a credit union (as defined in section 101(6) of the Federal 
Credit Union Act).
    (2) A person is an affiliate of a bank or similar financial 
institution if such person and such bank or similar financial 
institution would be treated as members of the same controlled group of 
corporations or as members of two or more trades or businesses under 
common control within the meaning of section 414 (b) or (c) of the Code 
and the regulations thereunder.
    (3) The term deposits includes any account, temporary or otherwise, 
upon

[[Page 527]]

which a reasonable rate of interest is paid, including a certificate of 
deposit issued by a bank or similar financial institution.

[42 FR 32392, June 24, 1977; 42 FR 36823, July 18, 1977]



Sec. 2550.408b-6  Statutory exemption for ancillary services by a bank or similar financial institution.

    (a) In general. Section 408(b)(6) of the Employee Retirement Income 
Security Act of 1974 (the Act) exempts from the prohibitions of section 
406 of the Act the provision of certain ancillary services by a bank or 
similar financial institution (as defined in Sec. 2550.408b-4(c)(1) 
supervised by the United States or a State to a plan for which it acts 
as a fiduciary if the conditions of Sec. 2550.408b-6(b) are met. Such 
ancillary services include services which do not meet the requirements 
of section 408(b)(2) of the Act because the provision of such services 
involves an act described in section 406(b)(1) of the Act (relating to 
fiduciaries dealing with the assets of plans in their own interest or 
for their own account) by the fiduciary bank or similar financial 
institution or an act described in section 406(b)(2) of the Act 
(relating to fiduciaries in their individual or in any other capacity 
acting in any transaction involving the plan on behalf of a party (or 
representing a party) whose interests are adverse to the interests of 
the plan or the interests of its participants or beneficiaries). Section 
408(b)(6) provides an exemption from sections 406(b)(1) and (2) because 
section 408(b)(6) contemplates the provision of such ancillary services 
without the approval of a second fiduciary (as described in 
Sec. 2550.408b-2(e)(2)) if the conditions of Sec. 2550.408b-6(b) are 
met. Thus, for example, plan assets held by a fiduciary bank which are 
reasonably expected to be needed to satisfy current plan expenses may be 
placed by the bank in a non-interest-bearing checking account in the 
bank if the conditions of Sec. 2550.408b-6(b) are met, notwithstanding 
the provisions of section 408(b)(4) of the Act (relating to investments 
in bank deposits). However, section 408(b)(6) does not provide an 
exemption for an act described in section 406(b)(3) of the Act (relating 
to fiduciaries receiving consideration for their own personal account 
from any party dealing with a plan in connection with a transaction 
involving the assets of the plan). The receipt of such consideration is 
a separate transaction not described in section 408(b)(6). Section 
408(b)(6) does not contain an exemption from other provisions of the 
Act, such as section 404, or other provisions of law which may impose 
requirements or restrictions relating to the transactions which are 
exempt under section 408(b)(6) of the Act. See, for example, section 401 
of the Internal Revenue Code of 1954. The provisions of section 
408(b)(6) of the Act are further limited by section 408(d) of the Act 
(relating to transactions with owner-employees and related persons).
    (b) Conditions. Such service must be provided--
    (1) At not more than reasonable compensation;
    (2) Under adequate internal safeguards which assure that the 
provision of such service is consistent with sound banking and financial 
practice, as determined by Federal or State supervisory authority; and
    (3) Only to the extent that such service is subject to specific 
guidelines issued by the bank or similar financial institution which 
meet the requirements of Sec. 2550.408b-6(c).

[42 FR 32392, June 24, 1977; 42 FR 36823, July 18, 1977]



Sec. 2550.408c-2  Compensation for services.

    (a) In general. Section 408(b)(2) of the Employee Retirement Income 
Security Act of 1974 (the Act) refers to the payment of reasonable 
compensation by a plan to a party in interest for services rendered to 
the plan. Section 408(c)(2) of the Act and Secs. 2550.408c-2(b)(1) 
through 2550.408c-2(b)(4) clarify what constitutes reasonable 
compensation for such services.
    (b)(1) General rule. Generally, whether compensation is 
``reasonable'' under sections 408 (b)(2) and (c)(2) of the Act depends 
on the particular facts and circumstances of each case.
    (2) Payments to certain fiduciaries. Under sections 408(b)(2) and 
408(c)(2) of

[[Page 528]]

the Act, the term ``reasonable compensation'' does not include any 
compensation to a fiduciary who is already receiving full-time pay from 
an employer or association of employers (any of whose employees are 
participants in the plan) or from an employee organization (any of whose 
members are participants in the plan), except for the reimbursement of 
direct expenses properly and actually incurred and not otherwise 
reimbursed. The restrictions of this paragraph (b)(2) do not apply to a 
party in interest who is not a fiduciary.
    (3) Certain expenses not direct expenses. An expense is not a direct 
expense to the extent it would have been sustained had the service not 
been provided or if it represents an allocable portion of overhead 
costs.
    (4) Expense advances. Under sections 408(b)(2) and 408(c)(2) of the 
Act, the term ``reasonable compensation,'' as applied to a fiduciary or 
an employee of a plan, includes an advance to such a fiduciary or 
employee by the plan to cover direct expenses to be properly and 
actually incurred by such person in the performance of such person's 
duties with the plan if:
    (i) The amount of such advance is reasonable with respect to the 
amount of the direct expense which is likely to be properly and actually 
incurred in the immediate future (such as during the next month); and
    (ii) The fiduciary or employee accounts to the plan at the end of 
the period covered by the advance for the expenses properly and actually 
incurred.
    (5) Excessive compensation. Under sections 408(b)(2) and 408(c)(2) 
of the Act, any compensation which would be considered excessive under 
26 CFR 1.162-7 (Income Tax Regulations relating to compensation for 
personal services which consitutes an ordinary and necessary trade or 
business expense) will not be ``reasonable compensation.'' Depending 
upon the facts and circumstances of the particular situation, 
compensation which is not excessive under 26 CFR 1.162-7 may, 
nevertheless, not be ``reasonable compensation'' within the meaning of 
sections 408(b)(2) and 408 (c)(2) of the Act.

[42 FR 32393, June 24, 1977]



Sec. 2550.408e  Statutory exemption for acquisition or sale of qualifying employer securities and for acquisition, sale, or lease of qualifying employer real 
          property.

    (a) General. Section 408(e) of the Employee Retirement Income 
Security Act of 1974 (the Act) exempts from the prohibitions of section 
406(a) and 406(b)(1) and (2) of the Act any acquisition or sale by a 
plan of qualifying employer securities (as defined in section 407(d)(5) 
of the Act), or any acquisition, sale or lease by a plan of qualifying 
employer real property (as defined in section 407(d)(4) of the Act) if 
certain conditions are met. The conditions are that:
    (1) The acquisition, sale or lease must be for adequate 
consideration (which is defined in paragraph (d) of this section);
    (2) No commission may be charged directly or indirectly to the plan 
with respect to the transaction; and
    (3) In the case of an acquisition or lease of qualifying employer 
real property, or an acquisition of qualifying employer securities, by a 
plan other than an eligible individual account plan (as defined in 
section 407(d)(3) of the Act), the acquisition or lease must comply with 
the requirements of section 407(a) of the Act.
    (b) Acquisition. For purposes of section 408(e) and this section, an 
acquisition by a plan of qualifying employer securities or qualifying 
employer real property shall include, but not be limited to, an 
acquisition by purchase, by the exchange of plan assets, by the exercise 
of warrants or rights, by the conversion of a security, by default of a 
loan where the qualifying employer security or qualifying employer real 
property was security for the loan, or in connection with the 
contribution of such securities or real property to the plan. However, 
an acquisition of a security shall not be deemed to have occurred if a 
plan acquires the security as a result of a stock dividend or stock 
split.
    (c) Sale. For purposes of section 408(e) and this section, a sale of 
qualifying employer real property or qualifying employer securities 
shall include any disposition for value.

[[Page 529]]

    (d) Adequate consideration. For purposes of section 408(e) and this 
section, adequate consideration means:
    (1) In the case of a marketable obligation, a price not less 
favorable to the plan than the price determined under section 407(e)(1) 
of the Act; and
    (2) In all other cases, a price not less favorable to the plan than 
the price determined under section 3(18) of the Act.
    (e) Commission. For purposes of section 408(e) and this section, the 
term ``commission'' includes any fee, commission or similar charge paid 
in connection with a transaction, except that the term ``commission'' 
does not include a charge incurred for the purpose of enabling the 
appropriate plan fiduciaries to evaluate the desirability of entering 
into a transaction to which this section would apply, such as an 
appraisal or investment advisory fee.

[45 FR 51197, Aug. 1, 1980]



Sec. 2550.412-1  Temporary bonding requirements.

    (a) Pending the issuance of permanent regulations with respect to 
the bonding provisions under section 412 of the Employee Retirement 
Income Security Act of 1974 (the Act), any plan official, as defined in 
section 412(a) of the Act, shall be deemed to be in compliance with the 
bonding requirements of the Act if he or she is bonded under a bond 
which would have been in compliance with section 13 of the Welfare and 
Pension Plans Disclosure Act, as amended (the WPPDA), and with the basic 
bonding requirements of subparts A through E of part 2580, title 29 CFR, 
and with the prohibition against bonding by parties interested in the 
plan contained in subpart G of part 2580 of such title, or would be 
exempt from such bonding requirements because bonding would not be 
required under the exemption provisions contained in subpart F of part 
2580 of such title. Part 2580 of this title incorporates material 
previously designated as subparts A through E of part 464, subpart B of 
part 465 and part 485 of this title of the CFR. The requirements which 
are set forth in the temporary regulations hereby adopted shall be 
applicable to all employee benefit plans covered by the Act, including 
those plans which were not covered by the WPPDA. Thus, for example, the 
regulations so adopted are applicable to plans containing fewer than 26 
participants, although such plans were not covered by the WPPDA.
    (b) For the purpose of this temporary regulation, any bond or rider 
thereto obtained by a plan official which contains a reference to the 
WPPDA will be construed by the Secretary to refer to the Act: Provided, 
That the surety company so agrees.
    (c) For the purpose of this regulation,
    (1) Any reference to section 13 of the WPPDA or any subsection 
thereof in the regulations issued under the WPPDA and which are 
incorporated by reference by this temporary regulation shall be deemed 
to refer to section 412 of the Act, or the corresponding subsection 
thereof,
    (2) Where the particular phrases set forth in the Act are not 
identical to the phrases in the WPPDA and the regulations issued 
pursuant thereto, the phrases appearing in the Act shall be substituted 
by operation of law, and
    (3) Where the phrases are identical but the meaning is different, 
the meaning given such phrases by the Act shall govern. For example, the 
phrase ``administrators, officers, and employees of any employee welfare 
benefit plan or of any employee pension benefit plan subject to this Act 
who handle funds or other property of such plan'' which appears in 
section 13 of the WPPDA and the regulations issued thereunder shall be 
construed to mean, for purposes of this regulation, ``plan officials'', 
which is the term appearing in section 412 of the Act, and the terms 
``employee welfare benefit plan'' and ``employee pension benefit plan'' 
shall be given the meaning assigned to them by the Act, and not the 
meaning set forth in the WPPDA.
    (d) The requirements of this temporary regulation, as set forth in 
paragraphs (a) through (c) of this section, shall remain in effect 
pending the issuance of permanent regulations by the Secretary.

[40 FR 2203, Jan. 10, 1975. Redesignated at 40 FR 20629, May 12, 1975, 
as amended at 50 FR 26706, June 28, 1985]

[[Page 530]]



    SUBCHAPTER G--ADMINISTRATION AND ENFORCEMENT UNDER THE EMPLOYEE 
                 RETIREMENT INCOME SECURITY ACT OF 1974





PART 2560--RULES AND REGULATIONS FOR ADMINISTRATION AND ENFORCEMENT--Table of Contents




Sec.
2560.502-1  Requests for enforcement pursuant to section 502(b)(2).
2560.502c-2  Civil penalties under section 502(c)(2).
2560.502c-5  Civil penalties under section 502(c)(5).
2560.502c-6  Civil penalties under section 502(c)(6).
2560.502c-7  Civil penalties under section 502(c)(7).
2560.502i-1  Civil penalties under section 502(i).
2560.503-1  Claims procedure.

    Authority: 29 U.S.C. 1132, 1135, and Secretary of Labor's Order 1-
2003, 68 FR 5374 (Feb. 3, 2003). Sec. 2560.503-1 also issued under 29 
U.S.C. 1133.



Sec. 2560.502-1  Requests for enforcement pursuant to section 502(b)(2).

    (a) Form, content and filing. All requests by participants, 
beneficiaries, and fiduciaries for the Secretary of Labor to exercise 
his enforcement authority pursuant to section 502(a)(5), 29 U.S.C. 
1132(a)(5), with respect to a violation of, or the enforcement of, parts 
2 and 3 of title I of the Employee Retirement Income Security Act of 
1974 (the Act) shall be in writing and shall contain information 
sufficient to form a basis for identifying the participant, beneficiary, 
or fiduciary and the plan involved. All such requests shall be 
considered filed if they are directed to and received by any office or 
official of the Department of Labor or referred to and received by any 
such office or official by any party to whom such writing is directed.
    (b) Consideration. The Secretary of Labor retains discretion to 
determine whether any enforcement proceeding should be commenced in the 
case of any request received pursuant to paragraph (a) of this section, 
and he may, but shall not be required to, exercise his authority 
pursuant to section 502(a)(5) of the Act only if he determines that such 
violation affects, or such enforcement is necessary to protect claims of 
participants or beneficiaries to benefits under the plan.

[43 FR 50175, Oct. 27, 1978]



Sec. 2560.502c-2  Civil penalties under section 502(c)(2).

    (a) In general. (1) Pursuant to the authority granted the Secretary 
under section 502(c)(2) 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, et seq.) for which an annual report is 
required to be filed under section 101(b)(1) shall be liable for civil 
penalties assessed by the Secretary under section 502(c)(2) of the Act 
in each case in which there is a failure or refusal to file the annual 
report required to be filed under section 101(b)(1).
    (2) For purposes of this section, a failure or refusal to file the 
annual report required to be filed under section 101(b)(1) shall mean a 
failure or refusal to file, in whole or in part, that information 
described in section 103 and Sec. 2520.103-1, et seq., on behalf of the 
plan at the time and in the manner prescribed therefor.
    (b) Amount assessed. (1) The amount assessed under section 502(c)(2) 
of the Act shall be determined by the Department of Labor, taking into 
consideration the degree and/or willfulness of the failure or refusal to 
file the annual report. However, the amount assessed under section 
502(c)(2) of the Act shall not exceed $1,000 a day (or such other 
maximum amount as may be established by regulation pursuant to the 
Federal Civil Penalties Inflation Adjustment Act of 1990, as amended), 
computed from the date of the administrator's failure or refusal to file 
the annual report and, except as provided

[[Page 531]]

in paragraph (b)(2) of this section, continuing up to the date on which 
an annual report satisfactory to the Secretary is filed.
    (2) If upon receipt of a notice of intent to assess a penalty (as 
described in paragraph (c) of this section) the administrator files a 
statement of reasonable cause for the failure to file, in accordance 
with paragraph (e) of this section, a penalty shall not be assessed for 
any day from the date the Department serves the administrator with a 
copy of such notice until the day after the Department serves notice on 
the administrator of its determination on reasonable cause and its 
intention to assess a penalty (as described in paragraph (g) of this 
section).
    (3) For purposes of this paragraph, the date on which the 
administrator failed or refused to file the annual report shall be the 
date on which the annual report was due (determined without regard to 
any extension for filing). An annual report which is rejected under 
section 104(a)(4) for a failure to provide material information shall be 
treated as a failure to file an annual report when a revised report 
satisfactory to the Department is not filed within 45 days of the date 
of the Department's notice of rejection.

A penalty shall not be assessed under section 502(c)(2) for any day 
earlier than the day after the date of an administrator's failure or 
refusal to file the annual report if a revised filing satisfactory to 
the Department is not submitted within 45 days of the date of the notice 
of rejection by the Department.
    (c) Notice of intent to assess a penalty. Prior to the assessment of 
any penalty under section 502(c)(2), the Department shall provide to the 
administrator of the plan a written notice indicating the Department's 
intent to assess a penalty under section 502(c)(2), the amount of such 
penalty, the period to which the penalty applies, and the reason(s) for 
the penalty.
    (d) Reconsideration or waiver of penalty to be assessed. The 
Department may determine that all or part of the penalty amount in the 
notice of intent to assess a penalty shall not be assessed on a showing 
that the administrator complied with the requirements of section 
101(b)(1) of the Act or on a showing by the administrator of mitigating 
circumstances regarding the degree or willfulness of the noncompliance.
    (e) Showing of reasonable cause. Upon issuance by the Department of 
a notice of intent to assess a penalty, the administrator shall have 
thirty (30) days from the date of service of the notice, as described in 
paragraph (i) of this section, to file a statement of reasonable cause 
explaining why the penalty, as calculated, should be reduced, or not be 
assessed, for the reasons set forth in paragraph (d) of this section. 
Such statement must be made in writing and set forth all the facts 
alleged as reasonable cause for the reduction or nonassessment of the 
penalty. 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 reasonable cause. Failure of an 
administrator to file a statement of reasonable cause within the thirty 
(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 of intent, 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)(2) of the Act. Such notice shall then become a final order of the 
Secretary, within the meaning of Sec. 2570.61(g) of this chapter, forty-
five (45) days from the date of service of the notice.
    (g) Notice of the determination on statement of reasonable cause. 
(1) The Department, following a review of all the facts alleged in 
support of no assessment or a complete or partial waiver of the penalty, 
shall notify the administrator, in writing, of its determination to 
waive the penalty, in whole or in part, and/or assess a penalty. If it 
is the determination 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. 2570.61(m) of this chapter.

[[Page 532]]

    (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. 2570.61(g) of this chapter, forty-five (45) 
days from the date of service of the notice.
    (h) Administrative hearing. A notice issued pursuant to paragraph 
(g) of this section will not become a final order, within the meaning of 
Sec. 2570.61(g) of this chapter, if, within thirty (30) days from the 
date of the service of the notice, the administrator or a representative 
thereof files a request for a hearing under Secs. 2570.60 through 
2570.71 of this chapter, and files an answer to the notice. The request 
for hearing and answer must be filed in accordance with Sec. 2570.62 of 
this chapter and Sec. 18.4 of this title. The answer opposing the 
proposed sanction shall be in writing, and supported by reference to 
specific circumstances or facts surrounding the notice of determination 
issued pursuant to paragraph (g) of this section.
    (i) Service of notices and filing of statements. (1) Service of a 
notice for purposes of paragraphs (c) and (g) of this section shall be 
made:
    (i) By delivering a copy to the administrator or representative 
thereof;
    (ii) By leaving a copy at the principal office, place of business, 
or residence of the administrator or representative thereof; or
    (iii) By 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 service is by regular mail, service is 
complete upon receipt by the addressee. When service of a notice under 
paragraph (c) or (g) of this section is by certified mail, five (5) days 
shall be added to the time allowed by these rules for the filing of a 
statement, or a request for hearing and answer, as applicable.
    (3) For purposes of this section, a statement of reasonable cause 
shall be considered filed:
    (i) Upon mailing, if accomplished using United States Postal Service 
certified mail or Express Mail;
    (ii) Upon receipt by the delivery service, if accomplished using a 
``designated private delivery service'' within the meaning of 26 U.S.C. 
7502(f);
    (iii) Upon transmittal, if transmitted in a manner specified in the 
notice of intent to assess a penalty as a method of transmittal to be 
accorded such special treatment; or
    (iv) In the case of any other method of filing, upon receipt by the 
Department at the address provided in the notice of intent to assess a 
penalty.
    (j) Liability. (1) If more than one person is responsible as 
administrator for the failure to file the annual report, all such 
persons shall be jointly and severally liable with respect to such 
failure.
    (2) Any person against whom a civil penalty has been assessed under 
section 502(c)(2) pursuant to a final order, within the meaning of 
Sec. 2570.61(g), shall be personally liable for the payment of such 
penalty.
    (k) Cross-reference. See Secs. 2570.60 through 2570.71 of this 
chapter for procedural rules relating to administrative hearings under 
section 502(c)(2) of the Act.

[54 FR 26894, June 26, 1989, as amended by 67 FR 777, Jan. 7, 2002; 68 
FR 3734, Jan. 24, 2003]



Sec. 2560.502c-5  Civil penalties under section 502(c)(5).

    (a) In general. (1) Pursuant to the authority granted the Secretary 
under section 502(c)(5) of the Employee Retirement Income Security Act 
of 1974 Pub.L. 93-406, 88 Stat. 840-52, as amended by Pub. L. 104-191, 
101 Stat. 1936) (the Act), the administrator of a multiple employer 
welfare arrangement (MEWA) (within the meaning of section 3(40)(A) of 
the Act) that is not a group health plan, and that provides benefits 
consisting of medical care (within the meaning of section 733(a)(2)), 
for which a report is required to be filed under section 101(g){h{time}  
of the Act and Sec. 2520.101-2, shall be liable for civil penalties 
assessed by the Secretary under section 502(c)(5) of the Act for each 
failure or refusal to file a completed report required to be filed under 
section 101(g){h{time}  and Sec. 2520.101-2. The term ``administrator'' 
is defined in Sec. 2520.101-2(b).

[[Page 533]]

    (2) For purposes of this section, a failure or refusal to file the 
report required to be filed under section 101(g){h{time}  shall mean a 
failure or refusal to file, in whole or in part, that information 
described in section 101(g){h{time}  and Sec. 2520.101-2, on behalf of 
the MEWA, at the time and in the manner prescribed therefor.
    (b) Amount assessed. (1) The amount assessed under section 502(c)(5) 
of the Act shall be determined by the Department of Labor, taking into 
consideration the degree and/or willfulness of the failure or refusal to 
file the report. However, the amount assessed under section 502(c)(5) of 
the Act shall not exceed $1,000 a day (or such other maximum amount as 
may be established by regulation pursuant to the Federal Civil Penalties 
Inflation Adjustment Act of 1990, as amended), computed from the date of 
the administrator's failure or refusal to file the report and, except as 
provided in paragraph (b)(2) of this section, continuing up to the date 
on which a report meeting the requirements of section 101(g) and 
Sec. 2520.101-2, as determined by the Secretary, is filed.
    (2) If, upon receipt of a notice of intent to assess a penalty (as 
described in paragraph (c) of this section), the administrator files a 
statement of reasonable cause for the failure to file, in accordance 
with paragraph (e) of this section, a penalty shall not be assessed for 
any day from the date the Department serves the administrator with a 
copy of such notice until the day after the Department serves notice on 
the administrator of its determination on reasonable cause and its 
intention to assess a penalty (as described in paragraph (g) of this 
section).
    (3) For purposes of this paragraph, the date on which the 
administrator failed or refused to file the report shall be the date on 
which the report was due (determined without regard to any extension of 
time for filing). A report which is rejected under Sec. 2520.101-2 shall 
be treated as a failure to file a report when a revised report meeting 
the requirements of this section is not filed within 45 days of the date 
of the Department's notice of rejection. If a revised report meeting the 
requirements of this section, as determined by the Secretary, is not 
submitted within 45 days of the date of the notice of rejection by the 
Department, a penalty shall be assessed under section 502(c)(5) 
beginning on the day after the date of the administrator's failure or 
refusal to file the report.
    (c) Notice of intent to assess a penalty. Prior to the assessment of 
any penalty under section 502(c)(5), the Department shall provide to the 
administrator of the MEWA a written notice indicating the Department's 
intent to assess a penalty under section 502(c)(5), the amount of such 
penalty, the period to which the penalty applies, and a statement of the 
facts and the reason(s) for the penalty.
    (d) Reconsideration or waiver of penalty to be assessed. The 
Department may determine that all or part of the penalty amount in the 
notice of intent to assess a penalty shall not be assessed on a showing 
that the administrator complied with the requirements of section 101(g) 
of the Act or on a showing by the administrator of mitigating 
circumstances regarding the degree or willfulness of the noncompliance.
    (e) Showing of reasonable cause. Upon issuance by the Department of 
a notice of intent to assess a penalty, the administrator shall have 
thirty (30) days from the date of service of the notice, as described in 
paragraph (i) of this section, to file a statement of reasonable cause 
explaining why the penalty, as calculated, should be reduced, or not be 
assessed, for the reasons set forth in paragraph (d) of this section. 
Such statement must be made in writing and set forth all the facts 
alleged as reasonable cause for the reduction or nonassessment of the 
penalty. 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 reasonable cause. Failure of an 
administrator to file a statement of reasonable cause within the thirty 
(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 of intent,

[[Page 534]]

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)(5) of the Act. Such notice shall then 
become a final order of the Secretary, within the meaning of 
Sec. 2570.91(g) of this chapter, forty-five (45) days from the date of 
service of the notice.
    (g) Notice of the determination on statement of reasonable cause. 
(1) The Department, following a review of all the facts alleged in 
support of no assessment or a complete or partial waiver of the penalty, 
shall notify the administrator, in writing, of its determination to 
waive the penalty, in whole or in part, and/or assess a penalty. If it 
is the determination 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, and a brief statement of the 
reasons for assessing the penalty. This notice is a ``pleading'' for 
purposes of Sec. 2570.91(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. 2570.91(g) of this chapter, forty-five (45) 
days from the date of service of the notice.
    (h) Administrative hearing. A notice issued pursuant to paragraph 
(g) of this section will not become a final order, within the meaning of 
Sec. 2570.91(g) of this chapter, if, within thirty (30) days from the 
date of the service of the notice, the administrator or a representative 
thereof files a request for a hearing under Secs. 2570.90 through 
2570.101 of this chapter, and files an answer to the notice. The request 
for hearing and answer must be filed in accordance with Sec. 2570.92 of 
this chapter and Sec. 18.4 of this title. The answer opposing the 
proposed sanction shall be in writing, and supported by reference to 
specific circumstances or facts surrounding the notice of determination 
issued pursuant to paragraph (g) of this section.
    (i) Service of notices and filing of statements. (1) Service of a 
notice for purposes of paragraphs (c) and (g) of this section shall be 
made:
    (i) By delivering a copy to the administrator or representative 
thereof;
    (ii) By leaving a copy at the principal office, place of business, 
or residence of the administrator or representative thereof; or
    (iii) By 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 service is by regular mail, service is 
complete upon receipt by the addressee. When service of a notice under 
paragraph (c) or (g) of this section is by certified mail, five (5) days 
shall be added to the time allowed by these rules for the filing of a 
statement, or a request for hearing and answer, as applicable.
    (3) For purposes of this section, a statement of reasonable cause 
shall be considered filed:
    (i) Upon mailing, if accomplished using United States Postal Service 
certified mail or Express Mail;
    (ii) Upon receipt by the delivery service, if accomplished using a 
``designated private delivery service'' within the meaning of 26 U.S.C. 
7502(f);
    (iii) Upon transmittal, if transmitted in a manner specified in the 
notice of intent to assess a penalty as a method of transmittal to be 
accorded such special treatment; or
    (iv) In the case of any other method of filing, upon receipt by the 
Department at the address provided in the notice of intent to assess a 
penalty.
    (j) Liability--(1) If more than one person is responsible as 
administrator for the failure to file the report, all such persons shall 
be jointly and severally liable with respect to such failure.
    (2) Any person against whom a civil penalty has been assessed under 
section 502(c)(5) pursuant to a final order, within the meaning of 
Sec. 2570.91(g), shall be personally liable for the payment of such 
penalty.
    (k) Cross-reference. See Secs. 2570.90 through 101 of this chapter 
for procedural rules relating to administrative hearings under section 
502(c)(5) of the Act.
    (l) Applicability date--(1) In general. This section applies to 
administrators

[[Page 535]]

of multiple employer welfare arrangements that are not group health 
plans beginning May 1, 2000.
    (2) Transitional safe harbor period. No civil penalty will be 
assessed against an administrator that has made a good faith effort to 
comply with a Sec. 2520.101-2 filing that is due in the Year 2000.

[65 FR 7184, Feb. 11, 2000, as amended at 68 FR 3734, Jan. 24, 2003]

    Effective Date Note: At 68 FR 17505, Apr. 9, 2003, Sec. 2560.502c-5 
was revised, effective Jan. 1, 2004. For the convenience of the user, 
the revised text is set forth as follows:

Sec. 2560.502c-5--Civil  penalties under section 502(c)(5).

    (a) In general--(1) Pursuant to the authority granted the Secretary 
under section 502(c)(5) of the Employee Retirement Income Security Act 
of 1974, as amended (the Act), the administrator of a multiple employer 
welfare arrangement (MEWA) (within the meaning of section 3(40)(A) of 
the Act) that is not a group health plan, and that provides benefits 
consisting of medical care (within the meaning of section 733(a)(2)), 
for which a report is required to be filed under section 101(g) of the 
Act and 29 CFR 2520.101-2, shall be liable for civil penalties assessed 
by the Secretary under section 502(c)(5) of the Act for each failure or 
refusal to file a completed report required to be filed under section 
101(g) and 29 CFR 2520.101-2. The term ``administrator'' is defined in 
29 CFR 2520.101-2(b).
    (2) For purposes of this section, a failure or refusal to file the 
report required to be filed under section 101(g) shall mean a failure or 
refusal to file, in whole or in part, that information described in 
section 101(g) and 29 CFR 2520.101-2, on behalf of the MEWA, at the time 
and in the manner prescribed therefor.
    (b) Amount assessed--(1) The amount assessed under section 502(c)(5) 
shall be determined by the Department of Labor, taking into 
consideration the degree and/or willfulness of the failure to file the 
report. However, the amount assessed under section 502(c)(5) of the Act 
shall not exceed $1,000 a day, computed from the date of the 
administrator's failure or refusal to file the report and, except as 
provided in paragraph (b)(2) of this section, continuing up to the date 
on which a report meeting the requirements of section 101(g) and 29 CFR 
2520.101-2, as determined by the Secretary, is filed.
    (2) If, upon receipt of a notice of intent to assess a penalty (as 
described in paragraph (c) of this section), the administrator files a 
statement of reasonable cause for the failure to file, in accordance 
with paragraph (e) of this section, a penalty shall not be assessed for 
any day from the date the Department serves the administrator with a 
copy of such notice until the day after the Department serves notice on 
the administrator of its determination on reasonable cause and its 
intention to assess a penalty (as described in paragraph (g) of this 
section).
    (3) For purposes of this paragraph, the date on which the 
administrator failed or refused to file the report shall be the date on 
which the report was due (determined without regard to any extension of 
time for filing). A report which is rejected under 29 CFR 2520.101-2 
shall be treated as a failure to file a report when a revised report 
meeting the requirements of this section is not filed within 45 days of 
the date of the Department's notice of rejection. If a revised report 
meeting the requirements of this section, as determined by the 
Secretary, is not submitted within 45 days of the date of the notice of 
rejection by the Department, a penalty shall be assessed under section 
502(c)(5) beginning on the day after the date of the administrator's 
failure or refusal to file the report.
    (c) Notice of intent to assess a penalty. Prior to the assessment of 
any penalty under section 502(c)(5), the Department shall provide to the 
administrator of the MEWA a written notice indicating the Department's 
intent to assess a penalty under section 502(c)(5), the amount of such 
penalty, the period to which the penalty applies, and a statement of the 
facts and the reason(s) for the penalty.
    (d) Reconsideration or waiver of penalty to be assessed. The 
Department may determine that all or part of the penalty amount in the 
notice of intent to assess a penalty shall not be assessed on a showing 
that the administrator complied with the requirements of section 101(g) 
of the Act or on a showing by the administrator of mitigating 
circumstances regarding the degree or willfulness of the noncompliance.
    (e) Showing of reasonable cause. Upon issuance by the Department of 
a notice of intent to assess a penalty, the administrator shall have 
thirty (30) days from the date of service of the notice, as described in 
paragraph (i) of this section, to file a statement of reasonable cause 
explaining why the penalty, as calculated, should be reduced, or not be 
assessed, for the reasons set forth in paragraph (d) of this section. 
Such statement must be made in writing and set forth all the facts 
alleged as reasonable cause for the reduction or nonassessment of the 
penalty. 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 reasonable cause. Failure of an 
administrator to file a statement of reasonable cause within the thirty 
(30) day period described in paragraph (e) of this section shall be 
deemed to constitute a waiver of the right to appear and

[[Page 536]]

contest the facts alleged in the notice of intent, 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)(5) of the Act. Such notice shall then become a 
final order of the Secretary, within the meaning of 29 CFR 2570.91(g), 
forty-five (45) days from the date of service of the notice.
    (g) Notice of the determination on statement of reasonable cause--
(1) The Department, following a review of all the facts alleged in 
support of no assessment or a complete or partial waiver of the penalty, 
shall notify the administrator, in writing, of its determination to 
waive the penalty, in whole or in part, and/or assess a penalty. If it 
is the determination 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, and a brief statement of the 
reasons for assessing the penalty. This notice is a ``pleading'' for 
purposes of 29 CFR 2570.91(m).
    (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 29 CFR 2570.91(g), forty-five (45) days from the 
date of service of the notice.
    (h) Administrative hearing. A notice issued pursuant to paragraph 
(g) of this section will not become a final order, within the meaning of 
29 CFR 2570.91(g), if, within thirty (30) days from the date of the 
service of the notice, the administrator or a representative thereof 
files a request for a hearing under 29 CFR 2570.90 through 2570.101, and 
files an answer to the notice. The request for hearing and answer must 
be filed in accordance with 29 CFR 2570.92 and 18.4. The answer opposing 
the proposed sanction shall be in writing, and supported by reference to 
specific circumstances or facts surrounding the notice of determination 
issued pursuant to paragraph (g) of this section.
    (i) Service of notices and filing of statements--(1) Service of a 
notice for purposes of paragraphs (c) and (g) of this section shall be 
made:
    (i) By delivering a copy to the administrator or representative 
thereof;
    (ii) By leaving a copy at the principal office, place of business, 
or residence of the administrator or representative thereof; or
    (iii) By 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 service is by regular mail, service is 
complete upon receipt by the addressee. When service of a notice under 
paragraph (c) or (g) of this section is by certified mail, five (5) days 
shall be added to the time allowed by these rules for the filing of a 
statement, or a request for hearing and answer, as applicable.
    (3) For purposes of this section, a statement of reasonable cause 
shall be considered filed:
    (i) Upon mailing, if accomplished using United States Postal Service 
certified mail or Express Mail;
    (ii) Upon receipt by the delivery service, if accomplished using a 
``designated private delivery service'' within the meaning of 26 U.S.C. 
7502(f);
    (iii) Upon transmittal, if transmitted in a manner specified in the 
notice of intent to assess a penalty as a method of transmittal to be 
accorded such special treatment; or
    (iv) In the case of any other method of filing, upon receipt by the 
Department at the address provided in the notice of intent to assess a 
penalty.
    (j) Liability--(1) If more than one person is responsible as 
administrator for the failure to file the report, all such persons shall 
be jointly and severally liable with respect to such failure.
    (2) Any person against whom a civil penalty has been assessed under 
section 502(c)(5) pursuant to a final order, within the meaning of 29 
CFR 2570.91(g), shall be personally liable for the payment of such 
penalty.
    (k) Cross-reference. See 29 CFR 2570.90 through 2570.101 for 
procedural rules relating to administrative hearings under section 
502(c)(5) of the Act.



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 the Act) of an employee benefit plan (within the 
meaning of section 3(3) of the Act 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.

[[Page 537]]

    (b) Amount assessed. (1) The amount assessed under section 502(c)(6) 
of the Act shall be determined by the Department of Labor, taking into 
consideration the degree and/or willfulness of the failure or refusal to 
furnish any document or documents requested by the Department under 
section 104(a)(6) of the Act. However, the amount assessed under section 
502(c)(6) of the Act shall not exceed $100 a day or $1,000 per request 
(or such other maximum amounts as may be established by regulation 
pursuant to the Federal Civil Penalties Inflation Adjustment Act of 
1990, as amended), computed from the date of the administrator's failure 
or refusal to furnish any document or documents requested by the 
Department.
    (2) For purposes of 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 thirtieth day after service of the 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) of the Act, 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) of 
the Act, the amount of the penalty, the period to which the penalty 
applies, and the reason(s) for the penalty.
    (d) Reconsideration or waiver of penalty to be assessed. The 
Department may determine that all or part of the penalty amount in the 
notice of intent to assess a penalty shall not be assessed on a showing 
that the administrator complied with the requirements of section 
104(a)(6) of the Act or on a showing by the administrator of mitigating 
circumstances regarding the degree or willfulness of the noncompliance.
    (e) Showing of reasonable cause. Upon issuance by the Department of 
a notice of intent to assess a penalty, the administrator shall have 
thirty (30) days from the date of service of the notice, as described in 
paragraph (i) of this section, to file a statement of reasonable cause 
explaining why the penalty, as calculated, should be reduced or not be 
assessed, for the reasons set forth in paragraph (d) of this section. 
Such statement must be made in writing and set forth all the facts 
alleged as reasonable cause for the reduction or nonassessment of the 
penalty. 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 reasonable cause. Failure to file 
a statement of reasonable cause 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 of 
intent, 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) of the Act. Such 
notice shall then become a final order of the Secretary, within the 
meaning of Sec. 2570.111(g) of this chapter, forty-five (45) days from 
the date of service of the notice.
    (g) Notice of determination on statement of reasonable cause. (1) 
The Department, following a review of all of the facts alleged in 
support of no assessment or a complete or partial waiver of the penalty, 
shall notify the administrator, in writing, of its determination not to 
assess or to waive the penalty, in whole or in part, and/or assess a 
penalty. If it is the determination 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, forty-five (45) 
days from the date of service of the notice.
    (h) Administrative hearing. A notice issued pursuant to paragraph 
(g) of this section will not become a final order, within the meaning of 
Sec. 2570.91(g) of this chapter, if, within thirty (30) days from the 
date of the service of the notice, the administrator or a representative 
thereof files a request for a hearing under Secs. 2570.110 through 
2570.121 of this chapter, and files an answer to the

[[Page 538]]

notice. The request for hearing and answer must be filed in accordance 
with Sec. 2570.112 of this chapter and Sec. 18.4 of this title. The 
answer opposing the proposed sanction shall be in writing, and supported 
by reference to specific circumstances or facts surrounding the notice 
of determination issued pursuant to paragraph (g) of this section.
    (i) Service of notices and filing of statements. (1) Service of a 
notice for purposes of paragraphs (c) and (g) of this section shall be 
made:
    (i) By delivering a copy to the administrator or representative 
thereof;
    (ii) By leaving a copy at the principal office, place of business, 
or residence of the administrator or representative thereof; or
    (iii) By 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 service is by regular mail, service is 
complete upon receipt by the addressee. When service of a notice under 
paragraph (c) or (g) of this section is by certified mail, five (5) days 
shall be added to the time allowed by these rules for the filing of a 
statement, or a request for hearing and answer, as applicable.
    (3) For purposes of this section, a statement of reasonable cause 
shall be considered filed:
    (i) Upon mailing, if accomplished using United States Postal Service 
certified mail or Express Mail;
    (ii) Upon receipt by the delivery service, if accomplished using a 
``designated private delivery service'' within the meaning of 26 U.S.C. 
7502(f);
    (iii) Upon transmittal, if transmitted in a manner specified in the 
notice of intent to assess a penalty as a method of transmittal to be 
accorded such special treatment; or
    (iv) In the case of any other method of filing, upon receipt by the 
Department at the address provided in the notice of intent to assess a 
penalty.
    (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) of the Act 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) of this section, 
against whom a civil penalty has been assessed under section 502(c)(6) 
of the Act 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.

[67 FR 785, Jan. 7, 2002, as amended at 68 FR 3735, Jan. 24, 2003]



Sec. 2560.502c-7  Civil penalties under section 502(c)(7).

    (a) In general. (1) Pursuant to the authority granted the Secretary 
under section 502(c)(7) of the Employee Retirement Income Security Act 
of 1974, as amended (the Act), the administrator (within the meaning of 
section 3(16)(A) of the Act) of an individual account plan (within the 
meaning of section 101(i)(8) of the Act and Sec. 2520.101-3(d)(2) of 
this chapter), shall be liable for civil penalties assessed by the 
Secretary under section 502(c)(7) of the Act for failure or refusal to 
provide notice of a blackout period to affected participants and 
beneficiaries in accordance with section 101(i) of the Act and 
Sec. 2520.101-3 of this chapter.
    (2) For purposes of this section, a failure or refusal to provide a 
notice of blackout period shall mean a failure or refusal, in whole or 
in part, to provide notice of a blackout period to an affected plan 
participant or beneficiary at the time and in the manner prescribed by 
section 101(i) of the Act and Sec. 2520.101-3 of this chapter.
    (b) Amount assessed. (1) The amount assessed under section 502(c)(7) 
of the Act for each separate violation shall be determined by the 
Department of Labor, taking into consideration the degree and/or 
willfulness of the failure or refusal to provide a notice of blackout 
period. However, the amount assessed for each violation under section 
502(c)(7) of the Act shall not exceed $100 a day (or such other maximum 
amount as may be established by regulation pursuant to the Federal Civil 
Penalties

[[Page 539]]

Inflation Adjustment Act of 1990, as amended), computed from the date of 
the administrator's failure or refusal to provide a notice of blackout 
period up to and including the date that is the final day of the 
blackout period for which the notice was required.
    (2) For purposes of calculating the amount to be assessed under this 
section, a failure or refusal to provide a notice of blackout period 
with respect to any single participant or beneficiary shall be treated 
as a separate violation under section 101(i) of the Act and 
Sec. 2520.101-3 of this chapter.
    (c) Notice of intent to assess a penalty. Prior to the assessment of 
any penalty under section 502(c)(7) of the Act, the Department shall 
provide to the administrator of the plan a written notice indicating the 
Department's intent to assess a penalty under section 502(c)(7) of the 
Act, the amount of such penalty, the number of participants and 
beneficiaries on which the penalty is based, the period to which the 
penalty applies, and the reason(s) for the penalty.
    (d) Reconsideration or waiver of penalty to be assessed. The 
Department may determine that all or part of the penalty amount in the 
notice of intent to assess a penalty shall not be assessed on a showing 
that the administrator complied with the requirements of section 101(i) 
of the Act or on a showing by the administrator of mitigating 
circumstances regarding the degree or willfulness of the noncompliance.
    (e) Showing of reasonable cause. Upon issuance by the Department of 
a notice of intent to assess a penalty, the administrator shall have 
thirty (30) days from the date of service of the notice, as described in 
paragraph (i) of this section, to file a statement of reasonable cause 
explaining why the penalty, as calculated, should be reduced, or not be 
assessed, for the reasons set forth in paragraph (d) of this section. 
Such statement must be made in writing and set forth all the facts 
alleged as reasonable cause for the reduction or nonassessment of the 
penalty. 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 reasonable cause. Failure to file 
a statement of reasonable cause 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 of 
intent, 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)(7) of the Act. Such 
notice shall then become a final order of the Secretary, within the 
meaning of Sec. 2570.131(g) of this chapter, forty-five (45) days from 
the date of service of the notice.
    (g) Notice of determination on statement of reasonable cause. (1) 
The Department, following a review of all of the facts in a statement of 
reasonable cause alleged in support of no assessment or a complete or 
partial waiver of the penalty, shall notify the administrator, in 
writing, of its determination on the statement of reasonable cause and 
its determination whether to waive the penalty in whole or in part, and/
or assess a penalty. If it is the determination of the Department to 
assess a penalty, the notice shall indicate the amount of the penalty 
assessment, not to exceed the amount described in paragraph (c) of this 
section. This notice is a ``pleading'' for purposes of Sec. 2570.131(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 determination to assess a penalty, shall become a final 
order, within the meaning of Sec. 2570.131(g) of this chapter, forty-
five (45) days from the date of service of the notice.
    (h) Administrative hearing. A notice issued pursuant to paragraph 
(g) of this section will not become a final order, within the meaning of 
Sec. 2570.131(g) of this chapter, if, within thirty (30) days from the 
date of the service of the notice, the administrator or a representative 
thereof files a request for a hearing under Secs. 2570.130 through 
2570.141 of this chapter, and files an answer to the notice. The request 
for hearing and answer must be filed in accordance with Sec. 2570.132 of 
this chapter and Sec. 18.4 of this title. The answer opposing the 
proposed sanction shall be in writing, and

[[Page 540]]

supported by reference to specific circumstances or facts surrounding 
the notice of determination issued pursuant to paragraph (g) of this 
section.
    (i) Service of notices and filing of statements. (1) Service of a 
notice for purposes of paragraphs (c) and (g) of this section shall be 
made:
    (i) By delivering a copy to the administrator or representative 
thereof;
    (ii) By leaving a copy at the principal office, place of business, 
or residence of the administrator or representative thereof; or
    (iii) By 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 service is by regular mail, service is 
complete upon receipt by the addressee. When service of a notice under 
paragraph (c) or (g) of this section is by certified mail, five (5) days 
shall be added to the time allowed by these rules for the filing of a 
statement or a request for hearing and answer, as applicable.
    (3) For purposes of this section, a statement of reasonable cause 
shall be considered filed:
    (i) Upon mailing, if accomplished using United States Postal Service 
certified mail or Express Mail;
    (ii) Upon receipt by the delivery service, if accomplished using a 
``designated private delivery service'' within the meaning of 26 U.S.C. 
7502(f);
    (iii) Upon transmittal, if transmitted in a manner specified in the 
notice of intent to assess a penalty as a method of transmittal to be 
accorded such special treatment; or
    (iv) In the case of any other method of filing, upon receipt by the 
Department at the address provided in the notice of intent to assess a 
penalty.
    (j) Liability. (1) If more than one person is responsible as 
administrator for the failure to provide a notice of blackout period 
under section 101(i) of the Act and its implementing regulations 
(Sec. 2520.101-3 of this chapter), all such persons shall be jointly and 
severally liable for such failure.
    (2) Any person, or persons under paragraph (j)(1) of this section, 
against whom a civil penalty has been assessed under section 502(c)(7) 
of the Act, pursuant to a final order, within the meaning of 
Sec. 2570.131(g) of this chapter, shall be personally liable for the 
payment of such penalty.
    (k) Cross-reference. See Secs. 2570.130 through 2570.141 of this 
chapter for procedural rules relating to administrative hearings under 
section 502(c)(7) of the Act.

[68 FR 3736, Jan. 24, 2003]



Sec. 2560.502i-1  Civil penalties under section 502(i).

    (a) In general. Section 502(i) of the Employee Retirement Income 
Security Act of 1974 (ERISA or the Act) permits the Secretary of Labor 
to assess a civil penalty against a party in interest who engages in a 
prohibited transaction with respect to an employee benefit plan other 
than a plan described in section 4975(e)(1) of the Internal Revenue Code 
(the Code). The initial penalty under section 502(i) is five percent of 
the total ``amount involved'' in the prohibited transaction (unless a 
lesser amount is otherwise agreed to by the parties). However, if the 
prohibited transaction is not corrected during the ``correction 
period,'' the civil penalty shall be 100 percent of the ``amount 
involved'' (unless a lesser amount is otherwise agreed to by the 
parties). Paragraph (b) of this section defines the term ``amount 
involved,'' paragraph (c) defines the term ``correction,'' and paragraph 
(d) defines the term ``correction period.'' Paragraph (e) illustrates 
the computation of the civil penalty under section 502(i). Paragraph (f) 
is a cross reference to the Department's procedural rules for section 
502(i) proceedings.
    (b) Amount involved. Section 502(i) of ERISA states that the term 
``amount involved'' in that section shall be defined as it is defined 
under section 4975(f)(4) of the Code. As provided in 26 CFR 141.4975.13, 
26 CFR 53.4941(e)-1(b) is controlling with respect to the interpretation 
of the term ``amount involved'' under section 4975 of the Code. 
Accordingly, the Department of Labor will apply the principles set out 
at 26 CFR 53.4941(e)-1(b) in determining the ``amount involved' in a 
transaction subject to the civil penalty provided by section 502(i) of 
the Act and this section.

[[Page 541]]

    (c) Correction. Section 502(i) of ERISA states that the term 
``correction'' shall be defined in a manner that is consistent with the 
definition of that term under section 4975(f)(5) of the Code. As 
provided in 26 CFR 141.4975-13, 26 CFR 53.4941(e)-1(c) is controlling 
with respect to the interpretation of the term ``correction'' for 
purposes of section 4975 of the Code. Accordingly, the Department of 
Labor will apply the principles set out in 26 CFR 53.4941(e)-(1)(c) in 
interpreting the term ``correction'' under section 502(i) of the Act and 
this section.
    (d) Correction period. (1) In general, the ``correction period'' 
begins on the date the prohibited transaction occurs and ends 90 days 
after a final agency order with respect to such transaction.
    (2) When a party in interest seeks judicial review within 90 days of 
a final agency order in an ERISA section 502(i) proceeding, the 
correction period will end 90 days after the entry of a final order in 
the judicial action.
    (3) The following examples illustrate the operation of this 
paragraph:

    (i) A party in interest receives notice of the Department's intent 
to impose the section 502(i) penalty and does not invoke the ERISA 
section 502(i) prohibited transaction penalty proceedings described in 
Sec. 2570.1 of this chapter within 30 days of such notice. As provided 
in Sec. 2570.5 of this chapter, the notice of the intent to impose a 
penalty becomes a final order after 30 days. Thus, the ``correction 
period'' ends 90 days after the expiration of the 30 day period.
    (ii) A party in interest contests a proposed section 502(i) penalty, 
but does not appeal an adverse decision of the administrative law judge 
in the proceeding. As provided in Sec. 2570.10(a) of this chapter, the 
decision of the administrative law judge becomes a final order of the 
Department unless the decision is appealed within 20 days after the date 
of such order. Thus, the correction period ends 90 days after the 
expiration of such 20 day period.
    (iii) The Secretary of Labor issues to a party in interest a 
decision upholding an administrative law judge's adverse decision. As 
provided in Sec. 2570.12(b) of this chapter, the decision of the 
Secretary becomes a final order of the Department immediately. Thus, the 
correction period will end 90 days after the issuance of the Secretary's 
order unless the party in interest judicially contests the order within 
that 90 day period. If the party in interest so contests the order, the 
correction period will end 90 days after the entry of a final order in 
the judicial action.

    (e) Computation of the section 502(i) penalty. (1) In general, the 
civil penalty under section 502(i) is determined by applying the 
applicable percentage (five percent or one hundred percent) to the 
aggregate amount involved in the transaction. However, a continuing 
prohibited transaction, such as a lease or a loan, is treated as giving 
rise to a separate event subject to the sanction for each year (as 
measured from the anniversary date of the transaction) in which the 
transaction occurs.
    (2) The following examples illustrate the computation of the section 
502(i) penalty:

    (i) An employee benefit plan purchases property from a party in 
interest at a price of $10,000. The fair market value of the property is 
$5,000. The ``amount involved'' in that transaction, as determined under 
26 CFR 53.4941(e)-1(b), is $10,000 (the greater of the amount paid by 
the plan or the fair market value of the property). The initial five 
percent penalty under section 502(i) is $500 (five percent of $10,000).
    (ii) An employee benefit plan executes a four year lease with a 
party in interest at an annual rental of $10,000 (which is the fair 
rental value of the property). The amount involved in each year of that 
transaction, as determined under 26 CFR 53.4941(e)-1(b), is $10,000. The 
amount of the initial sanction under ERISA section 502(i) would be a 
total of $5,000: $2,000 ($10,000 x 5% x 4 with respect to the rentals 
paid in the first year of the lease); $1,500 ($10,000 x 5% x 3 with 
respect to the second year); $1,000 ($10,000 x 5% x 2 with respect to 
the third year); $500 ($10,000 x 5% x 1 with respect to the fourth 
year).

    (f) Cross reference. See Secs. 2570.1--2570.12 of this chapter for 
procedural rules relating to section 502(i) penalty proceedings.

[53 FR 37476, Sept. 26, 1988]



Sec. 2560.503-1  Claims procedure.

    (a) Scope and purpose. In accordance with the authority of sections 
503 and 505 of the Employee Retirement Income Security Act of 1974 
(ERISA or the Act), 29 U.S.C. 1133, 1135, this section sets forth 
minimum requirements for employee benefit plan procedures pertaining to 
claims for benefits by participants and beneficiaries (hereinafter 
referred to as claimants). Except as otherwise specifically provided in 
this section, these requirements apply

[[Page 542]]

to every employee benefit plan described in section 4(a) and not 
exempted under section 4(b) of the Act.
    (b) Obligation to establish and maintain reasonable claims 
procedures. Every employee benefit plan shall establish and maintain 
reasonable procedures governing the filing of benefit claims, 
notification of benefit determinations, and appeal of adverse benefit 
determinations (hereinafter collectively referred to as claims 
procedures). The claims procedures for a plan will be deemed to be 
reasonable only if--
    (1) The claims procedures comply with the requirements of paragraphs 
(c), (d), (e), (f), (g), (h), (i), and (j) of this section, as 
appropriate, except to the extent that the claims procedures are deemed 
to comply with some or all of such provisions pursuant to paragraph 
(b)(6) of this section;
    (2) A description of all claims procedures (including, in the case 
of a group health plan within the meaning of paragraph (m)(6) of this 
section, any procedures for obtaining prior approval as a prerequisite 
for obtaining a benefit, such as preauthorization procedures or 
utilization review procedures) and the applicable time frames is 
included as part of a summary plan description meeting the requirements 
of 29 CFR 2520.102-3;
    (3) The claims procedures do not contain any provision, and are not 
administered in a way, that unduly inhibits or hampers the initiation or 
processing of claims for benefits. For example, a provision or practice 
that requires payment of a fee or costs as a condition to making a claim 
or to appealing an adverse benefit determination would be considered to 
unduly inhibit the initiation and processing of claims for benefits. 
Also, the denial of a claim for failure to obtain a prior approval under 
circumstances that would make obtaining such prior approval impossible 
or where application of the prior approval process could seriously 
jeopardize the life or health of the claimant (e.g., in the case of a 
group health plan, the claimant is unconscious and in need of immediate 
care at the time medical treatment is required) would constitute a 
practice that unduly inhibits the initiation and processing of a claim;
    (4) The claims procedures do not preclude an authorized 
representative of a claimant from acting on behalf of such claimant in 
pursuing a benefit claim or appeal of an adverse benefit determination. 
Nevertheless, a plan may establish reasonable procedures for determining 
whether an individual has been authorized to act on behalf of a 
claimant, provided that, in the case of a claim involving urgent care, 
within the meaning of paragraph (m)(1) of this section, a health care 
professional, within the meaning of paragraph (m)(7) of this section, 
with knowledge of a claimant's medical condition shall be permitted to 
act as the authorized representative of the claimant; and
    (5) The claims procedures contain administrative processes and 
safeguards designed to ensure and to verify that benefit claim 
determinations are made in accordance with governing plan documents and 
that, where appropriate, the plan provisions have been applied 
consistently with respect to similarly situated claimants.
    (6) In the case of a plan established and maintained pursuant to a 
collective bargaining agreement (other than a plan subject to the 
provisions of section 302(c)(5) of the Labor Management Relations Act, 
1947 concerning joint representation on the board of trustees)--
    (i) Such plan will be deemed to comply with the provisions of 
paragraphs (c) through (j) of this section if the collective bargaining 
agreement pursuant to which the plan is established or maintained sets 
forth or incorporates by specific reference--
    (A) Provisions concerning the filing of benefit claims and the 
initial disposition of benefit claims, and
    (B) A grievance and arbitration procedure to which adverse benefit 
determinations are subject.
    (ii) Such plan will be deemed to comply with the provisions of 
paragraphs (h), (i), and (j) of this section (but will not be deemed to 
comply with paragraphs (c) through (g) of this section) if the 
collective bargaining agreement pursuant to which the plan is 
established or maintained sets forth or incorporates by specific 
reference a grievance and arbitration procedure to which adverse benefit 
determinations

[[Page 543]]

are subject (but not provisions concerning the filing and initial 
disposition of benefit claims).
    (c) Group health plans. The claims procedures of a group health plan 
will be deemed to be reasonable only if, in addition to complying with 
the requirements of paragraph (b) of this section--
    (1)(i) The claims procedures provide that, in the case of a failure 
by a claimant or an authorized representative of a claimant to follow 
the plan's procedures for filing a pre-service claim, within the meaning 
of paragraph (m)(2) of this section, the claimant or representative 
shall be notified of the failure and the proper procedures to be 
followed in filing a claim for benefits. This notification shall be 
provided to the claimant or authorized representative, as appropriate, 
as soon as possible, but not later than 5 days (24 hours in the case of 
a failure to file a claim involving urgent care) following the failure. 
Notification may be oral, unless written notification is requested by 
the claimant or authorized representative.
    (ii) Paragraph (c)(1)(i) of this section shall apply only in the 
case of a failure that--
    (A) Is a communication by a claimant or an authorized representative 
of a claimant that is received by a person or organizational unit 
customarily responsible for handling benefit matters; and
    (B) Is a communication that names a specific claimant; a specific 
medical condition or symptom; and a specific treatment, service, or 
product for which approval is requested.
    (2) The claims procedures do not contain any provision, and are not 
administered in a way, that requires a claimant to file more than two 
appeals of an adverse benefit determination prior to bringing a civil 
action under section 502(a) of the Act;
    (3) To the extent that a plan offers voluntary levels of appeal 
(except to the extent that the plan is required to do so by State law), 
including voluntary arbitration or any other form of dispute resolution, 
in addition to those permitted by paragraph (c)(2) of this section, the 
claims procedures provide that:
    (i) The plan waives any right to assert that a claimant has failed 
to exhaust administrative remedies because the claimant did not elect to 
submit a benefit dispute to any such voluntary level of appeal provided 
by the plan;
    (ii) The plan agrees that any statute of limitations or other 
defense based on timeliness is tolled during the time that any such 
voluntary appeal is pending;
    (iii) The claims procedures provide that a claimant may elect to 
submit a benefit dispute to such voluntary level of appeal only after 
exhaustion of the appeals permitted by paragraph (c)(2) of this section;
    (iv) The plan provides to any claimant, upon request, sufficient 
information relating to the voluntary level of appeal to enable the 
claimant to make an informed judgment about whether to submit a benefit 
dispute to the voluntary level of appeal, including a statement that the 
decision of a claimant as to whether or not to submit a benefit dispute 
to the voluntary level of appeal will have no effect on the claimant's 
rights to any other benefits under the plan and information about the 
applicable rules, the claimant's right to representation, the process 
for selecting the decisionmaker, and the circumstances, if any, that may 
affect the impartiality of the decisionmaker, such as any financial or 
personal interests in the result or any past or present relationship 
with any party to the review process; and
    (v) No fees or costs are imposed on the claimant as part of the 
voluntary level of appeal.
    (4) The claims procedures do not contain any provision for the 
mandatory arbitration of adverse benefit determinations, except to the 
extent that the plan or procedures provide that:
    (i) The arbitration is conducted as one of the two appeals described 
in paragraph (c)(2) of this section and in accordance with the 
requirements applicable to such appeals; and
    (ii) The claimant is not precluded from challenging the decision 
under section 502(a) of the Act or other applicable law.
    (d) Plans providing disability benefits. The claims procedures of a 
plan that provides disability benefits will be

[[Page 544]]

deemed to be reasonable only if the claims procedures comply, with 
respect to claims for disability benefits, with the requirements of 
paragraphs (b), (c)(2), (c)(3), and (c)(4) of this section.
    (e) Claim for benefits. For purposes of this section, a claim for 
benefits is a request for a plan benefit or benefits made by a claimant 
in accordance with a plan's reasonable procedure for filing benefit 
claims. In the case of a group health plan, a claim for benefits 
includes any pre-service claims within the meaning of paragraph (m)(2) 
of this section and any post-service claims within the meaning of 
paragraph (m)(3) of this section.
    (f) Timing of notification of benefit determination. (1) In general. 
Except as provided in paragraphs (f)(2) and (f)(3) of this section, if a 
claim is wholly or partially denied, the plan administrator shall notify 
the claimant, in accordance with paragraph (g) of this section, of the 
plan's adverse benefit determination within a reasonable period of time, 
but not later than 90 days after receipt of the claim by the plan, 
unless the plan administrator determines that special circumstances 
require an extension of time for processing the claim. If the plan 
administrator determines that an extension of time for processing is 
required, written notice of the extension shall be furnished to the 
claimant prior to the termination of the initial 90-day period. In no 
event shall such extension exceed a period of 90 days from the end of 
such initial period. The extension notice shall indicate the special 
circumstances requiring an extension of time and the date by which the 
plan expects to render the benefit determination.
    (2) Group health plans. In the case of a group health plan, the plan 
administrator shall notify a claimant of the plan's benefit 
determination in accordance with paragraph (f)(2)(i), (f)(2)(ii), or 
(f)(2)(iii) of this section, as appropriate.
    (i) Urgent care claims. In the case of a claim involving urgent 
care, the plan administrator shall notify the claimant of the plan's 
benefit determination (whether adverse or not) as soon as possible, 
taking into account the medical exigencies, but not later than 72 hours 
after receipt of the claim by the plan, unless the claimant fails to 
provide sufficient information to determine whether, or to what extent, 
benefits are covered or payable under the plan. In the case of such a 
failure, the plan administrator shall notify the claimant as soon as 
possible, but not later than 24 hours after receipt of the claim by the 
plan, of the specific information necessary to complete the claim. The 
claimant shall be afforded a reasonable amount of time, taking into 
account the circumstances, but not less than 48 hours, to provide the 
specified information. Notification of any adverse benefit determination 
pursuant to this paragraph (f)(2)(i) shall be made in accordance with 
paragraph (g) of this section. The plan administrator shall notify the 
claimant of the plan's benefit determination as soon as possible, but in 
no case later than 48 hours after the earlier of--
    (A) The plan's receipt of the specified information, or
    (B) The end of the period afforded the claimant to provide the 
specified additional information.
    (ii) Concurrent care decisions. If a group health plan has approved 
an ongoing course of treatment to be provided over a period of time or 
number of treatments--
    (A) Any reduction or termination by the plan of such course of 
treatment (other than by plan amendment or termination) before the end 
of such period of time or number of treatments shall constitute an 
adverse benefit determination. The plan administrator shall notify the 
claimant, in accordance with paragraph (g) of this section, of the 
adverse benefit determination at a time sufficiently in advance of the 
reduction or termination to allow the claimant to appeal and obtain a 
determination on review of that adverse benefit determination before the 
benefit is reduced or terminated.
    (B) Any request by a claimant to extend the course of treatment 
beyond the period of time or number of treatments that is a claim 
involving urgent care shall be decided as soon as possible, taking into 
account the medical exigencies, and the plan administrator shall notify 
the claimant of the benefit determination, whether adverse or not, 
within 24 hours after receipt of the

[[Page 545]]

claim by the plan, provided that any such claim is made to the plan at 
least 24 hours prior to the expiration of the prescribed period of time 
or number of treatments. Notification of any adverse benefit 
determination concerning a request to extend the course of treatment, 
whether involving urgent care or not, shall be made in accordance with 
paragraph (g) of this section, and appeal shall be governed by paragraph 
(i)(2)(i), (i)(2)(ii), or (i)(2)(iii), as appropriate.
    (iii) Other claims. In the case of a claim not described in 
paragraphs (f)(2)(i) or (f)(2)(ii) of this section, the plan 
administrator shall notify the claimant of the plan's benefit 
determination in accordance with either paragraph (f)(2)(iii)(A) or 
(f)(2)(iii)(B) of this section, as appropriate.
    (A) Pre-service claims. In the case of a pre-service claim, the plan 
administrator shall notify the claimant of the plan's benefit 
determination (whether adverse or not) within a reasonable period of 
time appropriate to the medical circumstances, but not later than 15 
days after receipt of the claim by the plan. This period may be extended 
one time by the plan for up to 15 days, provided that the plan 
administrator both determines that such an extension is necessary due to 
matters beyond the control of the plan and notifies the claimant, prior 
to the expiration of the initial 15-day period, of the circumstances 
requiring the extension of time and the date by which the plan expects 
to render a decision. If such an extension is necessary due to a failure 
of the claimant to submit the information necessary to decide the claim, 
the notice of extension shall specifically describe the required 
information, and the claimant shall be afforded at least 45 days from 
receipt of the notice within which to provide the specified information. 
Notification of any adverse benefit determination pursuant to this 
paragraph (f)(2)(iii)(A) shall be made in accordance with paragraph (g) 
of this section.
    (B) Post-service claims. In the case of a post-service claim, the 
plan administrator shall notify the claimant, in accordance with 
paragraph (g) of this section, of the plan's adverse benefit 
determination within a reasonable period of time, but not later than 30 
days after receipt of the claim. This period may be extended one time by 
the plan for up to 15 days, provided that the plan administrator both 
determines that such an extension is necessary due to matters beyond the 
control of the plan and notifies the claimant, prior to the expiration 
of the initial 30-day period, of the circumstances requiring the 
extension of time and the date by which the plan expects to render a 
decision. If such an extension is necessary due to a failure of the 
claimant to submit the information necessary to decide the claim, the 
notice of extension shall specifically describe the required 
information, and the claimant shall be afforded at least 45 days from 
receipt of the notice within which to provide the specified information.
    (3) Disability claims. In the case of a claim for disability 
benefits, the plan administrator shall notify the claimant, in 
accordance with paragraph (g) of this section, of the plan's adverse 
benefit determination within a reasonable period of time, but not later 
than 45 days after receipt of the claim by the plan. This period may be 
extended by the plan for up to 30 days, provided that the plan 
administrator both determines that such an extension is necessary due to 
matters beyond the control of the plan and notifies the claimant, prior 
to the expiration of the initial 45-day period, of the circumstances 
requiring the extension of time and the date by which the plan expects 
to render a decision. If, prior to the end of the first 30-day extension 
period, the administrator determines that, due to matters beyond the 
control of the plan, a decision cannot be rendered within that extension 
period, the period for making the determination may be extended for up 
to an additional 30 days, provided that the plan administrator notifies 
the claimant, prior to the expiration of the first 30-day extension 
period, of the circumstances requiring the extension and the date as of 
which the plan expects to render a decision. In the case of any 
extension under this paragraph (f)(3), the notice of extension shall 
specifically explain the standards on which entitlement to a benefit is 
based, the unresolved issues that prevent a decision on the claim, and 
the

[[Page 546]]

additional information needed to resolve those issues, and the claimant 
shall be afforded at least 45 days within which to provide the specified 
information.
    (4) Calculating time periods. For purposes of paragraph (f) of this 
section, the period of time within which a benefit determination is 
required to be made shall begin at the time a claim is filed in 
accordance with the reasonable procedures of a plan, without regard to 
whether all the information necessary to make a benefit determination 
accompanies the filing. In the event that a period of time is extended 
as permitted pursuant to paragraph (f)(2)(iii) or (f)(3) of this section 
due to a claimant's failure to submit information necessary to decide a 
claim, the period for making the benefit determination shall be tolled 
from the date on which the notification of the extension is sent to the 
claimant until the date on which the claimant responds to the request 
for additional information.
    (g) Manner and content of notification of benefit determination. (1) 
Except as provided in paragraph (g)(2) of this section, the plan 
administrator shall provide a claimant with written or electronic 
notification of any adverse benefit determination. Any electronic 
notification shall comply with the standards imposed by 29 CFR 
2520.104b-1(c)(1)(i), (iii), and (iv). The notification shall set forth, 
in a manner calculated to be understood by the claimant --
    (i) The specific reason or reasons for the adverse determination;
    (ii) Reference to the specific plan provisions on which the 
determination is based;
    (iii) A description of any additional material or information 
necessary for the claimant to perfect the claim and an explanation of 
why such material or information is necessary;
    (iv) A description of the plan's review procedures and the time 
limits applicable to such procedures, including a statement of the 
claimant's right to bring a civil action under section 502(a) of the Act 
following an adverse benefit determination on review;
    (v) In the case of an adverse benefit determination by a group 
health plan or a plan providing disability benefits,
    (A) If an internal rule, guideline, protocol, or other similar 
criterion was relied upon in making the adverse determination, either 
the specific rule, guideline, protocol, or other similar criterion; or a 
statement that such a rule, guideline, protocol, or other similar 
criterion was relied upon in making the adverse determination and that a 
copy of such rule, guideline, protocol, or other criterion will be 
provided free of charge to the claimant upon request; or
    (B) If the adverse benefit determination is based on a medical 
necessity or experimental treatment or similar exclusion or limit, 
either an explanation of the scientific or clinical judgment for the 
determination, applying the terms of the plan to the claimant's medical 
circumstances, or a statement that such explanation will be provided 
free of charge upon request.
    (vi) In the case of an adverse benefit determination by a group 
health plan concerning a claim involving urgent care, a description of 
the expedited review process applicable to such claims.
    (2) In the case of an adverse benefit determination by a group 
health plan concerning a claim involving urgent care, the information 
described in paragraph (g)(1) of this section may be provided to the 
claimant orally within the time frame prescribed in paragraph (f)(2)(i) 
of this section, provided that a written or electronic notification in 
accordance with paragraph (g)(1) of this section is furnished to the 
claimant not later than 3 days after the oral notification.
    (h) Appeal of adverse benefit determinations. (1) In general. Every 
employee benefit plan shall establish and maintain a procedure by which 
a claimant shall have a reasonable opportunity to appeal an adverse 
benefit determination to an appropriate named fiduciary of the plan, and 
under which there will be a full and fair review of the claim and the 
adverse benefit determination.
    (2) Full and fair review. Except as provided in paragraphs (h)(3) 
and (h)(4) of this section, the claims procedures of a plan will not be 
deemed to provide a claimant with a reasonable opportunity for a full 
and fair review of a claim and adverse benefit determination unless the 
claims procedures--

[[Page 547]]

    (i) Provide claimants at least 60 days following receipt of a 
notification of an adverse benefit determination within which to appeal 
the determination;
    (ii) Provide claimants the opportunity to submit written comments, 
documents, records, and other information relating to the claim for 
benefits;
    (iii) Provide that a claimant shall be provided, upon request and 
free of charge, reasonable access to, and copies of, all documents, 
records, and other information relevant to the claimant's claim for 
benefits. Whether a document, record, or other information is relevant 
to a claim for benefits shall be determined by reference to paragraph 
(m)(8) of this section;
    (iv) Provide for a review that takes into account all comments, 
documents, records, and other information submitted by the claimant 
relating to the claim, without regard to whether such information was 
submitted or considered in the initial benefit determination.
    (3) Group health plans. The claims procedures of a group health plan 
will not be deemed to provide a claimant with a reasonable opportunity 
for a full and fair review of a claim and adverse benefit determination 
unless, in addition to complying with the requirements of paragraphs 
(h)(2)(ii) through (iv) of this section, the claims procedures--
    (i) Provide claimants at least 180 days following receipt of a 
notification of an adverse benefit determination within which to appeal 
the determination;
    (ii) Provide for a review that does not afford deference to the 
initial adverse benefit determination and that is conducted by an 
appropriate named fiduciary of the plan who is neither the individual 
who made the adverse benefit determination that is the subject of the 
appeal, nor the subordinate of such individual;
    (iii) Provide that, in deciding an appeal of any adverse benefit 
determination that is based in whole or in part on a medical judgment, 
including determinations with regard to whether a particular treatment, 
drug, or other item is experimental, investigational, or not medically 
necessary or appropriate, the appropriate named fiduciary shall consult 
with a health care professional who has appropriate training and 
experience in the field of medicine involved in the medical judgment;
    (iv) Provide for the identification of medical or vocational experts 
whose advice was obtained on behalf of the plan in connection with a 
claimant's adverse benefit determination, without regard to whether the 
advice was relied upon in making the benefit determination;
    (v) Provide that the health care professional engaged for purposes 
of a consultation under paragraph (h)(3)(iii) of this section shall be 
an individual who is neither an individual who was consulted in 
connection with the adverse benefit determination that is the subject of 
the appeal, nor the subordinate of any such individual; and
    (vi) Provide, in the case of a claim involving urgent care, for an 
expedited review process pursuant to which--
    (A) A request for an expedited appeal of an adverse benefit 
determination may be submitted orally or in writing by the claimant; and
    (B) All necessary information, including the plan's benefit 
determination on review, shall be transmitted between the plan and the 
claimant by telephone, facsimile, or other available similarly 
expeditious method.
    (4) Plans providing disability benefits. The claims procedures of a 
plan providing disability benefits will not, with respect to claims for 
such benefits, be deemed to provide a claimant with a reasonable 
opportunity for a full and fair review of a claim and adverse benefit 
determination unless the claims procedures comply with the requirements 
of paragraphs (h)(2)(ii) through (iv) and (h)(3)(i) through (v) of this 
section.
    (i) Timing of notification of benefit determination on review. (1) 
In general. (i) Except as provided in paragraphs (i)(1)(ii), (i)(2), and 
(i)(3) of this section, the plan administrator shall notify a claimant 
in accordance with paragraph (j) of this section of the plan's benefit 
determination on review within a reasonable period of time, but not 
later than 60 days after receipt of the claimant's request for review by 
the plan, unless the plan administrator determines that special 
circumstances (such

[[Page 548]]

as the need to hold a hearing, if the plan's procedures provide for a 
hearing) require an extension of time for processing the claim. If the 
plan administrator determines that an extension of time for processing 
is required, written notice of the extension shall be furnished to the 
claimant prior to the termination of the initial 60-day period. In no 
event shall such extension exceed a period of 60 days from the end of 
the initial period. The extension notice shall indicate the special 
circumstances requiring an extension of time and the date by which the 
plan expects to render the determination on review.
    (ii) In the case of a plan with a committee or board of trustees 
designated as the appropriate named fiduciary that holds regularly 
scheduled meetings at least quarterly, paragraph (i)(1)(i) of this 
section shall not apply, and, except as provided in paragraphs (i)(2) 
and (i)(3) of this section, the appropriate named fiduciary shall 
instead make a benefit determination no later than the date of the 
meeting of the committee or board that immediately follows the plan's 
receipt of a request for review, unless the request for review is filed 
within 30 days preceding the date of such meeting. In such case, a 
benefit determination may be made by no later than the date of the 
second meeting following the plan's receipt of the request for review. 
If special circumstances (such as the need to hold a hearing, if the 
plan's procedures provide for a hearing) require a further extension of 
time for processing, a benefit determination shall be rendered not later 
than the third meeting of the committee or board following the plan's 
receipt of the request for review. If such an extension of time for 
review is required because of special circumstances, the plan 
administrator shall provide the claimant with written notice of the 
extension, describing the special circumstances and the date as of which 
the benefit determination will be made, prior to the commencement of the 
extension. The plan administrator shall notify the claimant, in 
accordance with paragraph (j) of this section, of the benefit 
determination as soon as possible, but not later than 5 days after the 
benefit determination is made.
    (2) Group health plans. In the case of a group health plan, the plan 
administrator shall notify a claimant of the plan's benefit 
determination on review in accordance with paragraphs (i)(2)(i) through 
(iii), as appropriate.
    (i) Urgent care claims. In the case of a claim involving urgent 
care, the plan administrator shall notify the claimant, in accordance 
with paragraph (j) of this section, of the plan's benefit determination 
on review as soon as possible, taking into account the medical 
exigencies, but not later than 72 hours after receipt of the claimant's 
request for review of an adverse benefit determination by the plan.
    (ii) Pre-service claims. In the case of a pre-service claim, the 
plan administrator shall notify the claimant, in accordance with 
paragraph (j) of this section, of the plan's benefit determination on 
review within a reasonable period of time appropriate to the medical 
circumstances. In the case of a group health plan that provides for one 
appeal of an adverse benefit determination, such notification shall be 
provided not later than 30 days after receipt by the plan of the 
claimant's request for review of an adverse benefit determination. In 
the case of a group health plan that provides for two appeals of an 
adverse determination, such notification shall be provided, with respect 
to any one of such two appeals, not later than 15 days after receipt by 
the plan of the claimant's request for review of the adverse 
determination.
    (iii) Post-service claims. (A) In the case of a post-service claim, 
except as provided in paragraph (i)(2)(iii)(B) of this section, the plan 
administrator shall notify the claimant, in accordance with paragraph 
(j) of this section, of the plan's benefit determination on review 
within a reasonable period of time. In the case of a group health plan 
that provides for one appeal of an adverse benefit determination, such 
notification shall be provided not later than 60 days after receipt by 
the plan of the claimant's request for review of an adverse benefit 
determination. In the case of a group health plan that provides for two 
appeals of an adverse determination, such notification shall

[[Page 549]]

be provided, with respect to any one of such two appeals, not later than 
30 days after receipt by the plan of the claimant's request for review 
of the adverse determination.
    (B) In the case of a multiemployer plan with a committee or board of 
trustees designated as the appropriate named fiduciary that holds 
regularly scheduled meetings at least quarterly, paragraph 
(i)(2)(iii)(A) of this section shall not apply, and the appropriate 
named fiduciary shall instead make a benefit determination no later than 
the date of the meeting of the committee or board that immediately 
follows the plan's receipt of a request for review, unless the request 
for review is filed within 30 days preceding the date of such meeting. 
In such case, a benefit determination may be made by no later than the 
date of the second meeting following the plan's receipt of the request 
for review. If special circumstances (such as the need to hold a 
hearing, if the plan's procedures provide for a hearing) require a 
further extension of time for processing, a benefit determination shall 
be rendered not later than the third meeting of the committee or board 
following the plan's receipt of the request for review. If such an 
extension of time for review is required because of special 
circumstances, the plan administrator shall notify the claimant in 
writing of the extension, describing the special circumstances and the 
date as of which the benefit determination will be made, prior to the 
commencement of the extension. The plan administrator shall notify the 
claimant, in accordance with paragraph (j) of this section, of the 
benefit determination as soon as possible, but not later than 5 days 
after the benefit determination is made.
    (3) Disability claims. (i) Except as provided in paragraph 
(i)(3)(ii) of this section, claims involving disability benefits 
(whether the plan provides for one or two appeals) shall be governed by 
paragraph (i)(1) of this section, except that a period of 45 days shall 
apply instead of 60 days for purposes of that paragraph.
    (ii) In the case of a multiemployer plan with a committee or board 
of trustees designated as the appropriate named fiduciary that holds 
regularly scheduled meetings at least quarterly, paragraph (i)(3)(i) of 
this section shall not apply, and the appropriate named fiduciary shall 
instead make a benefit determination no later than the date of the 
meeting of the committee or board that immediately follows the plan's 
receipt of a request for review, unless the request for review is filed 
within 30 days preceding the date of such meeting. In such case, a 
benefit determination may be made by no later than the date of the 
second meeting following the plan's receipt of the request for review. 
If special circumstances (such as the need to hold a hearing, if the 
plan's procedures provide for a hearing) require a further extension of 
time for processing, a benefit determination shall be rendered not later 
than the third meeting of the committee or board following the plan's 
receipt of the request for review. If such an extension of time for 
review is required because of special circumstances, the plan 
administrator shall notify the claimant in writing of the extension, 
describing the special circumstances and the date as of which the 
benefit determination will be made, prior to the commencement of the 
extension. The plan administrator shall notify the claimant, in 
accordance with paragraph (j) of this section, of the benefit 
determination as soon as possible, but not later than 5 days after the 
benefit determination is made.
    (4) Calculating time periods. For purposes of paragraph (i) of this 
section, the period of time within which a benefit determination on 
review is required to be made shall begin at the time an appeal is filed 
in accordance with the reasonable procedures of a plan, without regard 
to whether all the information necessary to make a benefit determination 
on review accompanies the filing. In the event that a period of time is 
extended as permitted pursuant to paragraph (i)(1), (i)(2)(iii)(B), or 
(i)(3) of this section due to a claimant's failure to submit information 
necessary to decide a claim, the period for making the benefit 
determination on review shall be tolled from the date on which the 
notification of the extension is sent to the claimant until the date on 
which the claimant

[[Page 550]]

responds to the request for additional information.
    (5) Furnishing documents. In the case of an adverse benefit 
determination on review, the plan administrator shall provide such 
access to, and copies of, documents, records, and other information 
described in paragraphs (j)(3), (j)(4), and (j)(5) of this section as is 
appropriate.
    (j) Manner and content of notification of benefit determination on 
review. The plan administrator shall provide a claimant with written or 
electronic notification of a plan's benefit determination on review. Any 
electronic notification shall comply with the standards imposed by 29 
CFR 2520.104b-1(c)(1)(i), (iii), and (iv). In the case of an adverse 
benefit determination, the notification shall set forth, in a manner 
calculated to be understood by the claimant--
    (1) The specific reason or reasons for the adverse determination;
    (2) Reference to the specific plan provisions on which the benefit 
determination is based;
    (3) A statement that the claimant is entitled to receive, upon 
request and free of charge, reasonable access to, and copies of, all 
documents, records, and other information relevant to the claimant's 
claim for benefits. Whether a document, record, or other information is 
relevant to a claim for benefits shall be determined by reference to 
paragraph (m)(8) of this section;
    (4) A statement describing any voluntary appeal procedures offered 
by the plan and the claimant's right to obtain the information about 
such procedures described in paragraph (c)(3)(iv) of this section, and a 
statement of the claimant's right to bring an action under section 
502(a) of the Act; and
    (5) In the case of a group health plan or a plan providing 
disability benefits--
    (i) If an internal rule, guideline, protocol, or other similar 
criterion was relied upon in making the adverse determination, either 
the specific rule, guideline, protocol, or other similar criterion; or a 
statement that such rule, guideline, protocol, or other similar 
criterion was relied upon in making the adverse determination and that a 
copy of the rule, guideline, protocol, or other similar criterion will 
be provided free of charge to the claimant upon request;
    (ii) If the adverse benefit determination is based on a medical 
necessity or experimental treatment or similar exclusion or limit, 
either an explanation of the scientific or clinical judgment for the 
determination, applying the terms of the plan to the claimant's medical 
circumstances, or a statement that such explanation will be provided 
free of charge upon request; and
    (iii) The following statement: ``You and your plan may have other 
voluntary alternative dispute resolution options, such as mediation. One 
way to find out what may be available is to contact your local U.S. 
Department of Labor Office and your State insurance regulatory agency.''
    (k) Preemption of State law. (1) Nothing in this section shall be 
construed to supersede any provision of State law that regulates 
insurance, except to the extent that such law prevents the application 
of a requirement of this section.
    (2)(i) For purposes of paragraph (k)(1) of this section, a State law 
regulating insurance shall not be considered to prevent the application 
of a requirement of this section merely because such State law 
establishes a review procedure to evaluate and resolve disputes 
involving adverse benefit determinations under group health plans so 
long as the review procedure is conducted by a person or entity other 
than the insurer, the plan, plan fiduciaries, the employer, or any 
employee or agent of any of the foregoing.
    (ii) The State law procedures described in paragraph (k)(2)(i) of 
this section are not part of the full and fair review required by 
section 503 of the Act. Claimants therefore need not exhaust such State 
law procedures prior to bringing suit under section 502(a) of the Act.
    (l) Failure to establish and follow reasonable claims procedures. In 
the case of the failure of a plan to establish or follow claims 
procedures consistent with the requirements of this section, a claimant 
shall be deemed to have exhausted the administrative remedies available 
under the plan and shall be entitled to pursue any available remedies 
under section 502(a) of the Act on

[[Page 551]]

the basis that the plan has failed to provide a reasonable claims 
procedure that would yield a decision on the merits of the claim.
    (m) Definitions. The following terms shall have the meaning ascribed 
to such terms in this paragraph (m) whenever such term is used in this 
section:
    (1)(i) A ``claim involving urgent care'' is any claim for medical 
care or treatment with respect to which the application of the time 
periods for making non-urgent care determinations--
    (A) Could seriously jeopardize the life or health of the claimant or 
the ability of the claimant to regain maximum function, or,
    (B) In the opinion of a physician with knowledge of the claimant's 
medical condition, would subject the claimant to severe pain that cannot 
be adequately managed without the care or treatment that is the subject 
of the claim.
    (ii) Except as provided in paragraph (m)(1)(iii) of this section, 
whether a claim is a ``claim involving urgent care'' within the meaning 
of paragraph (m)(1)(i)(A) of this section is to be determined by an 
individual acting on behalf of the plan applying the judgment of a 
prudent layperson who possesses an average knowledge of health and 
medicine.
    (iii) Any claim that a physician with knowledge of the claimant's 
medical condition determines is a ``claim involving urgent care'' within 
the meaning of paragraph (m)(1)(i) of this section shall be treated as a 
``claim involving urgent care'' for purposes of this section.
    (2) The term ``pre-service claim'' means any claim for a benefit 
under a group health plan with respect to which the terms of the plan 
condition receipt of the benefit, in whole or in part, on approval of 
the benefit in advance of obtaining medical care.
    (3) The term ``post-service claim'' means any claim for a benefit 
under a group health plan that is not a pre-service claim within the 
meaning of paragraph (m)(2) of this section.
    (4) The term ``adverse benefit determination'' means any of the 
following: a denial, reduction, or termination of, or a failure to 
provide or make payment (in whole or in part) for, a benefit, including 
any such denial, reduction, termination, or failure to provide or make 
payment that is based on a determination of a participant's or 
beneficiary's eligibility to participate in a plan, and including, with 
respect to group health plans, a denial, reduction, or termination of, 
or a failure to provide or make payment (in whole or in part) for, a 
benefit resulting from the application of any utilization review, as 
well as a failure to cover an item or service for which benefits are 
otherwise provided because it is determined to be experimental or 
investigational or not medically necessary or appropriate.
    (5) The term ``notice'' or ``notification'' means the delivery or 
furnishing of information to an individual in a manner that satisfies 
the standards of 29 CFR 2520.104b-1(b) as appropriate with respect to 
material required to be furnished or made available to an individual.
    (6) The term ``group health plan'' means an employee welfare benefit 
plan within the meaning of section 3(1) of the Act to the extent that 
such plan provides ``medical care'' within the meaning of section 733(a) 
of the Act.
    (7) The term ``health care professional'' means a physician or other 
health care professional licensed, accredited, or certified to perform 
specified health services consistent with State law.
    (8) A document, record, or other information shall be considered 
``relevant'' to a claimant's claim if such document, record, or other 
information
    (i) Was relied upon in making the benefit determination;
    (ii) Was submitted, considered, or generated in the course of making 
the benefit determination, without regard to whether such document, 
record, or other information was relied upon in making the benefit 
determination;
    (iii) Demonstrates compliance with the administrative processes and 
safeguards required pursuant to paragraph (b)(5) of this section in 
making the benefit determination; or
    (iv) In the case of a group health plan or a plan providing 
disability benefits, constitutes a statement of policy or guidance with 
respect to the plan concerning the denied treatment option or

[[Page 552]]

benefit for the claimant's diagnosis, without regard to whether such 
advice or statement was relied upon in making the benefit determination.
    (n) Apprenticeship plans. This section does not apply to employee 
benefit plans that solely provide apprenticeship training benefits.
    (o) Applicability dates. (1) Except as provided in paragraph (o)(2) 
of this section, this section shall apply to claims filed under a plan 
on or after January 1, 2002.
    (2) This section shall apply to claims filed under a group health 
plan on or after the first day of the first plan year beginning on or 
after July 1, 2002, but in no event later than January 1, 2003.

[65 FR 70265, Nov. 21, 2000, as amended at 66 FR 35887, July 9, 2001]



PART 2570--PROCEDURAL REGULATIONS UNDER THE EMPLOYEE RETIREMENT INCOME SECURITY ACT--Table of Contents




Subpart A--Procedures for the Assessment of Civil Sanctions Under ERISA 
                             Section 502(i)

Sec.
2570.1  Scope of rules.
2570.2  Definitions.
2570.3  Service: Copies of documents and pleadings.
2570.4  Parties.
2570.5  Consequences of default.
2570.6  Consent order or settlement.
2570.7  Scope of discovery.
2570.8  Summary decision.
2570.9  Decision of the administrative law judge.
2570.10  Review by the Secretary.
2570.11  Scope of review.
2570.12  Procedures for review by the Secretary.

 Subpart B--Procedures for Filing and Processing Prohibited Transaction 
                         Exemption Applications

2570.30  Scope of rules.
2570.31  Definitions.
2570.32  Persons who may apply for exemptions.
2570.33  Applications the Department will not ordinarily consider.
2570.34  Information to be included in every exemption application.
2570.35  Information to be included in applications for individual 
          exemptions only.
2570.36  Where to file an application.
2570.37  Duty to amend and supplement exemption applications.
2570.38  Tentative denial letters.
2570.39  Opportunities to submit additional information.
2570.40  Conferences.
2570.41  Final denial letters.
2570.42  Notice of proposed exemption.
2570.43  Notification of interested persons by applicant.
2570.44  Withdrawal of exemption applications.
2570.45  Requests for reconsideration.
2570.46  Hearings in opposition to exemptions from restrictions on 
          fiduciary self-dealing.
2570.47  Other hearings.
2570.48  Decision to grant exemptions.
2570.49  Limits on the effect of exemptions.
2570.50  Revocation or modification of exemptions.
2570.51  Public inspection and copies.
2570.52  Effective date.

Subpart C--Procedures for the Assessment of Civil Penalties Under ERISA 
                            Section 502(c)(2)

2570.60  Scope of rules.
2570.61  Definitions.
2570.62  Service: Copies of documents and pleadings.
2570.63  Parties, how designated.
2570.64  Consequences of default.
2570.65  Consent order or settlement.
2570.66  Scope of discovery.
2570.67  Summary decision.
2570.68  Decision of the administrative law judge.
2570.69  Review by the Secretary.
2570.70  Scope of review.
2570.71  Procedures for review by the Secretary.

 Subpart D--Procedure for the Assessment of Civil Penalties Under ERISA 
                             Section 502(l)

2570.80  Scope of rules.
2570.81  In general.
2570.82  Definitions.
2570.83  Assessment of civil penalty.
2570.84  Payment of civil penalty.
2570.85  Waiver or reduction of civil penalty.
2570.86  Reduction of penalty by other penalty assessments.
2570.87  Revision of assessment.
2570.88  Effective date.

Subpart E--Procedures for the Assessment of Civil Penalties Under ERISA 
                            Section 502(c)(5)

2570.90  Scope of rules.
2570.91  Definitions.
2570.92  Service: Copies of documents and pleadings.
2570.93  Parties, how designated.
2570.94  Consequences of default.

[[Page 553]]

2570.95  Consent order or settlement.
2570.96  Scope of discovery.
2570.97  Summary decision.
2570.98  Decision of the administrative law judge.
2570.99  Review by the Secretary.
2570.100  Scope of review.
2570.101  Procedures for review by the Secretary.

Subpart F--Procedures for the Assessment of Civil Penalties Under ERISA 
                            Section 502(c)(6)

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 decision.
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 G--Procedures for the Assessment of Civil Penalties under ERISA 
                            Section 502(c)(7)

2570.130  Scope of rules.
2570.131  Definitions.
2570.132  Service: Copies of documents and pleadings.
2570.133  Parties, how designated.
2570.134  Consequences of default.
2570.135  Consent order or settlement.
2570.136  Scope of discovery.
2570.137  Summary decision.
2570.138  Decision of the administrative law judge.
2570.139  Review by the Secretary.
2570.140  Scope of review.
2570.141  Procedures for review by the Secretary.

  Subpart H--Procedures for Issuance of Findings Under ERISA Sec. 3(40)

2570.150  Scope of rules.
2570.151  In general.
2570.152  Definitions.
2570.153  Parties.
2570.154  Filing and contents of petition.
2570.155  Service.
2570.156  Expedited proceedings.
2570.157  Allocation of burden of proof.
2570.158  Decision of the Administrative Law Judge.
2570.159  Review by the Secretary.

    Authority: 5 U.S.C. 8477, 29 U.S.C. 1002(40), 1021, 1108, 1132, 
1135; sec. 102, Reorganization Plan No. 4 of 1978, 43 FR 47713, 3 CFR, 
1978 Comp. p. 332, and E.O. 12108, 44 FR 1065, 3 CFR, 1978 Comp., p. 
275; Secretary of Labor's Order 1-2003, 68 FR 5374 (Feb. 3, 2003).

    Source: 53 FR 37476, Sept. 26, 1988, unless otherwise noted.



Subpart A--Procedures for the Assessment of Civil Sanctions Under ERISA 
                             Section 502(i)



Sec. 2570.1  Scope of rules.

    The rules of practice set forth in this part are applicable to 
``prohibited transaction penalty proceedings'' (as defined in 
Sec. 2570.2(o) of this part) under section 502(i) of the Employee 
Retirement Income Security Act of 1974. The rules of procedure for 
administrative hearings published by the Department's Office of 
Administrative Law Judges at part 18 of this title will apply to matters 
arising under ERISA section 502(i) 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. 2570.2  Definitions.

    For prohibited transaction 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 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)(2) of this title;
    (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 sanction under ERISA 
section

[[Page 554]]

502(i) against a particular party. Such final order may result from a 
decision of an administrative law judge or the Secretary, or the failure 
of a party to invoke the procedures for hearings or appeals under this 
title. 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) Notice means any document, however designated, issued by the 
Department of Labor which initiates an adjudicatory proceeding under 
ERISA section 502(i);
    (j) Order means the whole or any part of a final procedural or 
substantive disposition of a matter under ERISA section 502(i);
    (k) Party includes a person or agency named or admitted as a party 
to a proceeding;
    (l) Person includes an individual, partnership, corporation, 
employee benefit plan, association, exchange or other entity or 
organization;
    (m) Petition means a written request, made by a person or party, for 
some affirmative action;
    (n) Pleading means the notice, the answer to the notice, any 
supplement or amendment thereto, and any reply that may be permitted to 
any answer, supplement or amendment;
    (o) Prohibited transaction penalty proceeding means a proceeding 
relating to the assessment of the civil penalty provided for in section 
502(i) of ERISA;
    (p) Respondent means the party against whom the Department is 
seeking to assess a civil sanction under ERISA section 502(i);
    (q) 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 Employee Benefits Security), 
administrator, commissioner, appellate body, board, or other official;
    (r) Solicitor means the Solicitor of Labor or his or her delegate.



Sec. 2570.3  Service: Copies of documents and pleadings.

    For prohibited transaction 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 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 proceedings 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 of 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(i) Proceeding, P.O. 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, except notices, shall be made by 
regular mail to the last known address.
    (d) Service of notices. (1) Service of notices shall be made either:
    (i) By delivering a copy to the individual, any partner, any officer 
of a corporation, or any attorney of record;
    (ii) By leaving a copy at the principal office, place of business, 
or residence of such individual, partner, officer or attorney; or
    (iii) By mailing a copy to the last known address of such 
individual, partner, officer or attorney.
    (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.

[[Page 555]]

    (e) Form of pleadings. (1) Every pleading shall contain information 
indicating the name of the Employee Benefits Security Administration 
(EBSA) 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, 
photocopied, or otherwise, will not be accepted. Papers may be 
reproduced by any duplicating process provided all copies are clear and 
legible.

[53 FR 37476, Sept. 26, 1988, as amended at 65 FR 7191, Feb. 11, 2000]

    Effective Date Note: At 68 FR 17508, Apr. 9, 2003, Sec. 2570.3(a) 
was revised, effective Jan. 1, 2004. For the convenience of the user, 
the revised text is set forth as follows:

Sec. 2570.3  Service: Copies of documents and pleadings.

                                * * * * *

    (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 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 proceedings may have been transferred for 
hearing. Each document filed shall be clear and legible.

                                * * * * *



Sec. 2570.4  Parties.

    For prohibited transaction 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 sanction 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 petititioners to designate 
a single representative, or he or she may recognize one or more of such 
petitioners. The administrative law judge shall give

[[Page 556]]

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. 2570.5  Consequences of default.

    For prohibited transaction penalty proceedings, this section shall 
apply in lieu of Sec. 18.5(b) of this title. Failure of the respondent 
to file an answer within the 30 day time period provided in Sec. 18.5 of 
this title shall be deemed to constitute a waiver of his right to appear 
and contest the allegations of the notice, and such failure shall be 
deemed to be an admission of the facts as alleged in the notice for 
purposes of the prohibited transaction penalty proceeding. Such notice 
shall then become the final order of the Secretary, except that the 
administrative law judge may set aside a default entered under this 
provision where there is proof of defective notice.



Sec. 2570.6  Consent order or settlement.

    For prohibited transaction 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 deferment 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 
therefor, 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,

[[Page 557]]

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. 2570.7  Scope of discovery.

    For prohibited transaction 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 a 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 
representative of a party concerning the proceeding.



Sec. 2570.8  Summary decision.

    For prohibited transaction 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 genuine issue of 
a material fact is found to have been raised, the administrative law 
judge may issue a decision which, in the absence of an appeal pursuant 
to Secs. 2570.10-2570.12 of this part, 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 issue of fact. Where a genuine question of material 
fact is raised, the administrative law judge shall, and in any other 
case may, set the case for an evidentiary hearing.



Sec. 2570.9  Decision of the administrative law judge.

    For prohibited transaction 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

[[Page 558]]

fact, conclusions of law, and order together with a supporting brief 
expressing the reasons for such proposals. Such proposals and brief 
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 of 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 prohibited transaction penalty proceedings as set 
forth in this part, the penalty (if any) which may be included in the 
decision of the administrative law judge shall be limited to the 
sanction expressly provided for in section 502(i) 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. 2570.10 through 2570.12.



Sec. 2570.10  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 a copy of the entire 
record before the administrative law judge.



Sec. 2570.11  Scope of review.

    The review of the Secretary shall not be a 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. 2570.12  Procedures for review by the Secretary.

    (a) Upon receipt of a 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 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.



 Subpart B--Procedures for Filing and Processing Prohibited Transaction 
                         Exemption Applications

    Source: 55 FR 32847, Aug. 10, 1990, unless otherwise noted.



Sec. 2570.30  Scope of rules.

    (a)(1) The rules of procedure set forth in this subpart apply to all 
applications for exemption which the Department has authority to issue 
under:
    (i) Section 408(a) of the Employee Retirement Income Security Act of 
1974 (ERISA);
    (ii) Section 4975(c)(2) of the Internal Revenue Code of 1986 (the 
Code) (see Reorganization Plan No. 4 of 1978); or
    (iii) The Federal Employees' Retirement System Act of 1986 (FERSA) 
(5 U.S.C. 8477(c)(3)).

[[Page 559]]

    (b) The Department will generally treat any exemption application 
which is filed solely under section 408(a) of ERISA or solely under 
section 4975(c)(2) of the Code as an exemption filed under both section 
408(a) and section 4975(c)(2) if it relates to a transaction that would 
be prohibited both by ERISA and by the corresponding provisions of the 
Code.
    (c) The procedures set forth in this subpart represent the exclusive 
means by which the Department will issue administrative exemptions. The 
Department will not issue exemptions upon oral request alone. Likewise, 
the Department will not grant exemptions orally. An applicant for an 
administrative exemption may request and receive oral advice from 
Department employees in preparing an exemption application. However, 
such advice does not constitute part of the administrative record and is 
not binding on the Department in its processing of an exemption 
application or in its examination or audit of a plan.



Sec. 2570.31  Definitions.

    For purposes of these procedures, the following definitions apply:
    (a) An affiliate of a person means--
    (1) Any person directly or indirectly through one or more 
intermediaries, controlling, controlled by, or under common control with 
the person;
    (2) Any director of, relative of, or partner in, any such person;
    (3) Any corporation, partnership, trust, or unincorporated 
enterprise of which such person is an officer, director, or a 5 percent 
or more partner or owner; and
    (4) Any employee or officer of the person who--
    (i) Is highly compensated (as defined in section 4975(e)(2)(H) of 
the Code), or
    (ii) Has direct or indirect authority, responsibility, or control 
regarding the custody, management, or disposition of plan assets.
    (b) A class exemption is an administrative exemption, granted under 
section 408(a) of ERISA, section 4975(c)(2) of the Code, and/or 5 U.S.C. 
8477(c)(3), which applies to any parties in interest within the class of 
parties in interest specified in the exemption who meet the conditions 
of the exemption.
    (c) Department means the U.S. Department of Labor and includes the 
Secretary of Labor or his delegate exercising authority with respect to 
prohibited transaction exemptions to which this subpart applies.
    (d) Exemption transaction means the transaction or transactions for 
which an exemption is requested.
    (e) An individual exemption is an administrative exemption, granted 
under section 408(a) of ERISA, section 4975(c)(2) of the Code, and/or 5 
U.S.C. 8477(c)(3), which applies only to the specific parties in 
interest named or otherwise defined in the exemption.
    (f) A party in interest means a person described in section 3(14) of 
ERISA or 5 U.S.C. 8477(a)(4) and includes a disqualified person, as 
defined in section 4975(e)(2) of the Code.
    (g) Pooled fund means an account or fund for the collective 
investment of the assets of two or more unrelated plans, including (but 
not limited to) a pooled separate account maintained by an insurance 
company and a common or collective trust fund maintained by a bank or 
similar financial institution.



Sec. 2570.32  Persons who may apply for exemptions.

    (a) The Department may initiate exemption proceedings on its own 
motion. In addition, the Department will initiate exemption proceedings 
upon the application of:
    (1) Any party in interest to a plan who is or may be a party to the 
exemption transaction;
    (2) Any plan which is a party to the exemption transaction; or
    (3) In the case of an application for an exemption covering a class 
of parties in interest or a class of transactions, in addition to any 
person described in paragraphs (a)(1) and (a)(2) of this section, an 
association or organization representing parties in interest who may be 
parties to the exemption transaction.
    (b) An application by or for a person described in paragraph (a) of 
this section, may be submitted by the applicant or by his authorized 
representatives. If the application is submitted by a representative of 
the applicant, the representative must submit proof of his authority in 
the form of:

[[Page 560]]

    (1) A power of attorney; or
    (2) A written certification from the applicant that the 
representation is authorized.
    (c) If the authorized representative of an applicant submits an 
application for an exemption to the Department together with proof of 
his authority to file the application as required by paragraph (b) of 
this section, the Department will direct all correspondence and 
inquiries concerning the application to the representative unless 
requested to do otherwise by the applicant.



Sec. 2570.33  Applications the Department will not ordinarily consider.

    (a) The Department will not ordinarily consider:
    (1) An application that fails to include all the information 
required by Secs. 2570.34 and 2570.35 or otherwise fails to conform to 
the requirements of these procedures; or
    (2) An application for exemption involving a transaction or 
transactions which are the subject of an investigation for possible 
violations of part 1 or 4 of subtitle B of title I of ERISA or section 
8477 or 8478 of FERSA or an application for an exemption involving a 
party in interest who is the subject of such an investigation or who is 
a defendant in an action by the Department or the Internal Revenue 
Service to enforce the above-mentioned provisions of ERISA or FERSA.
    (b) If for any reason the Department decides not to consider an 
exemption application, it will inform the applicant of that decision in 
writing and of the reasons therefor.
    (c) An application for an individual exemption relating to a 
specific transaction or transactions will ordinarily not be considered 
separately if the Department is considering a class exemption relating 
to the same type of transaction or transactions.



Sec. 2570.34  Information to be included in every exemption application.

    (a) All applications for exemptions must contain the following 
information:
    (1) The name(s) of the applicant(s);
    (2) A detailed description of the exemption transaction and the 
parties in interest for whom an exemption is requested, including a 
description of any larger integrated transaction of which the exemption 
transaction is a part;
    (3) Whether the affected plan(s) and any parties in interest will be 
represented by the same person with regard to the exemption application;
    (4) Reasons a plan would have for entering into the exemption 
transaction;
    (5) The prohibited transaction provisions from which exemptive 
relief is requested and the reason why the transaction would violate 
each such provision;
    (6) Whether the exemption transaction is customary for the industry 
or class involved;
    (7) Whether the exemption transaction is or has been the subject of 
an investigation or enforcement action by the Department or by the 
Internal Revenue Service; and
    (8) The hardship or economic loss, if any, which would result to the 
person or persons on behalf of whom the exemption is sought, to affected 
plans, and to their participants and beneficiaries from denial of the 
exemption.
    (b) All applications for exemption must also contain the following:
    (1) A statement explaining why the requested exemption would be--
    (i) Administratively feasible;
    (ii) In the interests of affected plans and their participants and 
beneficiaries; and
    (iii) Protective of the rights of participants and beneficiaries of 
affected plans.
    (2) With respect to the notification of interested persons required 
by Sec. 2570.43:
    (i) A description of the interested persons to whom the applicant 
intends to provide notice;
    (ii) The manner in which the applicant will provide such notice; and
    (iii) An estimate of the time the applicant will need to furnish 
notice to all interested persons following publication of a notice of 
the proposed exemption in the Federal Register.
    (3) If an advisory opinion has been requested with respect to any 
issue relating to the exemption transaction--
    (i) A copy of the letter concluding the Department's action on the 
advisory opinion request; or

[[Page 561]]

    (ii) If the Department has not yet concluded its action on the 
request:
    (A) A copy of the request or the date on which it was submitted 
together with the Department's correspondence control number as 
indicated in the acknowledgment letter; and
    (B) An explanation of the effect of a favorable advisory opinion 
upon the exemption transaction.
    (4) If the application is to be signed by anyone other than an 
individual party in interest seeking exemptive relief on his own behalf, 
a statement which--
    (i) Identifies the individual who will be signing the application 
and his position with the applicant; and
    (ii) Explains briefly the basis of his familiarity with the matters 
discussed in the application.
    (5)(i) A declaration in the following form:

    Under penalty of perjury, I declare that I am familiar with the 
matters discussed in this application and, to the best of my knowledge 
and belief, the representations made in this application are true and 
correct.

    (ii) This declaration must be dated and signed by:
    (A) The applicant himself in the case of an individual party in 
interest seeking exemptive relief on his own behalf;
    (B) A corporate officer or partner where the applicant is a 
corporation or partnership;
    (C) A designated officer or official where the applicant is an 
association, organization or other unincorporated enterprise;
    (D) The plan fiduciary who has the authority, responsibility, and 
control with respect to the exemption transaction where the applicant is 
a plan.
    (iii) Specialized statements from third-party experts, such as 
appraisals or analyses of market conditions, submitted to support an 
application for exemption must also be accompanied by a statement of 
consent from such expert acknowledging that he or she knows that his or 
her statement is being submitted to the Department as part of an 
application for exemption.
    (iv) For those applications requiring an independent fiduciary to 
represent the plan in the exemption transaction, each statement 
submitted by said independent fiduciary must contain a signed and dated 
declaration under penalty of perjury that, to the best of said 
fiduciary's knowledge and belief, the representations made in such 
statement are true and correct.
    (c) An application for exemption may also include a draft of the 
requested exemption which defines the transaction and parties in 
interest for which exemptive relief is sought and the specific 
conditions under which the exemption would apply.



Sec. 2570.35  Information to be included in applications for individual exemptions only.

    (a) Except as provided in paragraph (c) of this section, every 
application for an individual exemption must include, in addition to the 
information specified in Sec. 2570.34, the following information:
    (1) The name, address, telephone number, and type of plan or plans 
to which the requested exemption applies;
    (2) The Employer Identification Number (EIN) and the plan number 
(PN) used by such plan or plans in all reporting and disclosure required 
by the Department;
    (3) Whether any plan or trust affected by the requested exemption 
has ever been found by the Department, the Internal Revenue Service, or 
by a court to have violated the exclusive benefit rule of section 401(a) 
of the Code, or to have engaged in a prohibited transaction under 
section 503(b) of the Code or corresponding provisions of prior law, 
section 4975(c)(1) of the Code, section 406 or 407(a) of ERISA, or 5 
U.S.C. 8477(c)(3);
    (4) Whether any relief under section 408(a) of ERISA, section 
4975(c)(2) of the Code, or 5 U.S.C. 8477(c)(3) has been requested by, or 
provided to, the applicant or any of the parties on behalf of whom the 
exemption is sought and, if so, the exemption application number or the 
prohibited transaction exemption number;
    (5) Whether the applicant or any of the parties in interest involved 
in the exemption transaction is currently, or has been within the last 
five years, a defendant in any lawsuit or criminal action concerning 
such person's conduct as a fiduciary or party in interest with respect 
to any plan;

[[Page 562]]

    (6) Whether the applicant or any of the parties in interest involved 
in the exemption transaction has, within the last 13 years, been 
convicted of any crime described in section 411 of ERISA;
    (7) Whether, within the last five years, any plan affected by the 
exemption transaction or any party in interest involved in the exemption 
transaction has been under investigation or examination by, or has been 
engaged in litigation or a continuing controversy with, the Department, 
the Internal Revenue Service, the Justice Department, the Pension 
Benefit Guaranty Corporation, or the Federal Retirement Thrift 
Investment Board involving compliance with provisions of ERISA, 
provisions of the Code relating to employee benefit plans, or provisions 
of FERSA relating to the Federal Thrift Savings Fund. If so, the 
applicant must submit copies of all correspondence with the Department, 
the Internal Revenue Service, the Justice Department, the Pension 
Benefit Guaranty Corporation, or the Federal Retirement Thrift 
Investment Board regarding the substantive issues involved in the 
investigation, examination, litigation, or controversy which relate to 
compliance with the provisions of part 1 or 4 of subtitle B of title I 
of ERISA, section 4975 of the Code, or section 8477 or 8478 of FERSA. 
For this purpose, the term ``examination'' does not include routine 
audits conducted by the Department pursuant to section 8477(g) of FERSA;
    (8) Whether any plan affected by the requested exemption has 
experienced a reportable event under section 4043 of ERISA;
    (9) Whether a notice of intent to terminate has been filed under 
section 4041 of ERISA respecting any plan affected by the requested 
exemption;
    (10) Names, addresses, and taxpayer identifying numbers of all 
parties in interest involved in the subject transaction;
    (11) The estimated number of participants and beneficiaries in each 
plan affected by the requested exemption as of the date of the 
application;
    (12) The percentage of the fair market value of the total assets of 
each affected plan that is involved in the exemption transaction;
    (13) Whether the exemption transaction has been consummated or will 
be consummated only if the exemption is granted;
    (14) If the exemption transaction has already been consummated:
    (i) The circumstances which resulted in plan fiduciaries causing the 
plan(s) to engage in the subject transaction before obtaining an 
exemption from the Department;
    (ii) Whether the transaction has been terminated;
    (iii) Whether the transaction has been corrected as defined in Code 
section 4975(f)(5);
    (iv) Whether Form 5330, Return of Excise Taxes Related to Employee 
Benefit Plans, has been filed with the Internal Revenue Service with 
respect to the transaction; and
    (v) Whether any excise taxes due under section 4975(a) and (b) of 
the Code by reason of the transaction have been paid.
    (15) The name of every person who has investment discretion over any 
assets involved in the exemption transaction and the relationship of 
each such person to the parties in interest involved in the exemption 
transaction and the affiliates of such parties in interest;
    (16) Whether or not the assets of the affected plan(s) are invested 
in loans to any party in interest involved in the exemption transaction, 
in property leased to any such party in interest, or in securities 
issued by any such party in interest, and, if such investments exist, a 
statement for each of these three types of investments which indicates:
    (i) The type of investment to which the statement pertains;
    (ii) The aggregate fair market value of all investments of this type 
as reflected in the plan's most recent annual report;
    (iii) The approximate percentage of the fair market value of the 
plan's total assets as shown in such annual report that is represented 
by all investments of this type; and
    (iv) The statutory or administrative exemption covering these 
investments, if any.

[[Page 563]]

    (17) The approximate aggregate fair market value of the total assets 
of each affected plan;
    (18) The person(s) who will bear the costs of the exemption 
application and of notifying interested persons; and
    (19) Whether an independent fiduciary is or will be involved in the 
exemption transaction and, if so, the names of the persons who will bear 
the cost of the fee payable to such fiduciary.
    (b) Each application for an individual exemption must also include:
    (1) True copies of all contracts, deeds, agreements, and 
instruments, as well as relevant portions of plan documents, trust 
agreements, and any other documents bearing on the exemption 
transaction;
    (2) A discussion of the facts relevant to the exemption transaction 
that are reflected in these documents and an analysis of their bearing 
on the requested exemption; and
    (3) A copy of the most recent financial statements of each plan 
affected by the requested exemption.
    (c) Special rule for applications for individual exemption involving 
pooled funds. (1) The information required by paragraphs (a)(8) through 
(12) of this section is not required to be furnished in an application 
for individual exemption involving one or more pooled funds;
    (2) The information required by paragraphs (a)(1) through (7) and 
(a)(13) through (19) of this section and by paragraphs (b)(1) through 
(3) of this section must be furnished by reference to the pooled fund, 
rather than to the plans participating therein. (For purposes of this 
paragraph, the information required by paragraph (a)(16) of this section 
relates solely to other pooled fund transactions with, and investments 
in, parties in interest involved in the exemption transaction which are 
also sponsors of plans which invest in the pooled fund.);
    (3) The following information must also be furnished--
    (i) The estimated number of plans that are participating (or will 
participate) in the pooled fund; and
    (ii) The minimum and maximum limits imposed by the pooled fund (if 
any) on the portion of the total assets of each plan that may be 
invested in the pooled fund.
    (4) Additional requirements for applications for individual 
exemption involving pooled funds in which certain plans participate.
    (i) This paragraph applies to any application for individual 
exemption involving one or more pooled funds in which any plan 
participating therein--
    (A) Invests an amount which exceeds 20% of the total assets of the 
pooled fund, or
    (B) Covers employees of:
    (1) The party sponsoring or maintaining the pooled fund, or any 
affiliate of such party, or
    (2) Any fiduciary with investment discretion over the pooled fund's 
assets, or any affiliate of such fiduciary.
    (ii) The exemption application must include, with respect to each 
plan described in paragraph (c)(4)(i) of this section, the information 
required by paragraphs (a)(1) through (3), (a)(5) through (7), (a)(10), 
(a)(12) through (16) and, (a)(18) and (19), of this section. The 
information required by this paragraph must be furnished by reference to 
the plan's investment in the pooled fund (e.g., the names, addresses and 
taxpayer identifying numbers of all fiduciaries responsible for the 
plan's investment in the pooled fund [Sec. 2570.35(a) (10)], the 
percentage of the assets of the plan invested in the pooled fund 
[Sec. 2570.35(a)(12)], whether the plan's investment in the pooled fund 
has been consummated or will be consummated only if the exemption is 
granted [Sec. 2570.35(a)(13)], etc.).
    (iii) The information required by paragraph (c)(4) of this section 
is in addition to the information required by paragraphs (c)(2) and (3) 
of this section relating to information furnished by reference to the 
pooled fund.
    (5) The special rule and the additional requirements described in 
paragraphs (c)(1) through (4) of this section do not apply to an 
individual exemption request solely for the investment by a plan in a 
pooled fund. Such an application must provide the information required 
by paragraphs (a) and (b) of this section.

[55 FR 32847, Aug. 10, 1990; 56 FR 14861, Apr. 12, 1991]

[[Page 564]]



Sec. 2570.36  Where to file an application.

    The Department's prohibited transaction exemption program is 
administered by the Employee Benefits Security Administration (EBSA). 
Any exemption application governed by these procedures should be mailed 
or otherwise delivered to: Exemption Application, EBSA, Office of 
Exemption Determinations, Division of Exemptions, U.S. Department of 
Labor, 200 Constitution Avenue NW., Washington, DC 20210.



Sec. 2570.37  Duty to amend and supplement exemption applications.

    (a) During the pendency of his exemption application, an applicant 
must promptly notify the Division of Exemptions in writing if he 
discovers that any material fact or representation contained in his 
application or in any documents or testimony provided in support of the 
application is inaccurate, if any such fact or representation changes 
during this period, or if, during the pendency of the application, 
anything occurs that may affect the continuing accuracy of any such fact 
or representation.
    (b) If, at any time during the pendency of his exemption 
application, an applicant or any other party in interest who would 
participate in the exemption transaction becomes the subject of an 
investigation or enforcement action by the Department, the Internal 
Revenue Service, the Justice Department, the Pension Benefit Guaranty 
Corporation, or the Federal Retirement Thrift Investment Board involving 
compliance with provisions of ERISA, provisions of the Code relating to 
employee benefit plans, or provisions of FERSA relating to the Federal 
Thrift Savings Fund, the applicant must promptly notify the Division of 
Exemptions.
    (c) The Department may require an applicant to provide documentation 
it considers necessary to verify any statements contained in the 
application or in supporting materials or documents.



Sec. 2570.38  Tentative denial letters.

    (a) If, after reviewing an exemption file, the Department concludes 
that it will not grant the exenption, it will notify the applicant in 
writing of its tentative denial of the exemption application. At the 
same time, the Department will provide a short statement of the reasons 
for its tentative denial.
    (b) An applicant will have 20 days from the date of a tentative 
denial letter to request a conference under Sec. 2570.40 of these 
procedures and/or to notify the Department of its intent to submit 
additional information in writing under Sec. 2570.39 of these 
procedures. If the Department does not receive a request for a 
conference or a notification of intent to submit additional information 
within that time, it will issue a final denial letter pursuant to 
Sec. 2570.41.
    (c) The Department need not issue a tentative denial letter to an 
applicant before issuing a final denial letter where the Department has 
conducted a hearing on the exemption pursuant to either Sec. 2570.46 or 
Sec. 2570.47 of these procedures.



Sec. 2570.39  Opportunities to submit additional information.

    (a) An applicant may notify the Department of its intent to submit 
additional information supporting an exemption application either by 
telephone or by letter sent to the address furnished in the applicant's 
tentative denial letter. At the same time, the applicant should indicate 
generally the type of information that he will submit.
    (b) An applicant will have 30 days from the date of the notification 
discussed in paragraph (a) of this section to submit in writing all of 
the additional information he intends to provide in support of his 
application. All such information must be accompanied by a declaration 
under penalty of perjury attesting to the truth and correctness of the 
information provided, which is dated and signed by a person qualified 
under Sec. 2570.34(b)(5) of these procedures to sign such a declaration.
    (c) If, for reasons beyond his control, an applicant is unable to 
submit in writing all the additional information he intends to provide 
in support of his application within the 30-day period described in 
paragraph (b) of this section, he may request an extension of time to 
furnish the information. Such requests must be made before the 
expiration of

[[Page 565]]

the 30-day period and will be granted only in unusual circumstances and 
for limited periods of time.
    (d) If an applicant is unable to submit all of the additional 
information he intends to provide in support of his exemption 
application within the 30-day period specified in paragraph (b) of this 
section, or within any additional period of time granted to him pursuant 
to paragraph (c) of this section, the applicant may withdraw the 
exemption application before expiration of the applicable time period 
and reinstate it later pursuant to Sec. 2570.44 of these procedures.
    (e) The Department will issue, without further notice, a final 
denial letter denying the requested exemption pursuant to Sec. 2570.41 
of these procedures where--
    (1) The Department has not received the additional information that 
the applicant indicated he would submit within the 30-day period 
described in paragraph (b) of this section, or within any additional 
period of time granted pursuant to paragraph (c) of this section;
    (2) The applicant did not request a conference pursuant to 
Sec. 2570.38(b) of these procedures; and
    (3) The applicant has not withdrawn his application as permitted by 
paragraph (d) of this section.



Sec. 2570.40  Conferences.

    (a) Any conference between the Department and an applicant 
pertaining to a requested exemption will be held in Washington, DC, 
except that a telephone conference will be held at the applicant's 
request.
    (b) An applicant is entitled to only one conference with respect to 
any exemption application. An applicant will not be entitled to a 
conference, however, where the Department has held a hearing on the 
exemption under either Sec. 2570.46 or Sec. 2570.47 of these procedures.
    (c) Insofar as possible, conferences will be scheduled as joint 
conferences with all applicants present where:
    (1) More than one applicant has requested an exemption with respect 
to the same or similar types of transactions;
    (2) The Department is considering the applications together as a 
request for a class exemption;
    (3) The Department contemplates not granting the exemption; and
    (4) More than one applicant has requested a conference.
    (d) The Department will attempt to schedule a conference under this 
section for a mutually convenient time during the 45-day period 
following the later of--
    (1) The date the Department receives the applicant's request for a 
conference, or
    (2) The date the Department notifies the applicant, after reviewing 
additional information submitted pursuant to Sec. 2570.39, that it is 
still not prepared to propose the requested exemption.

If the applicant is unable to attend a conference at any of the times 
proposed by the Department during this 45-day period or if the applicant 
fails to appear for a scheduled conference, he will be deemed to have 
waived his right to a conference unless circumstances beyond his control 
prevent him from scheduling a conference or attending a scheduled 
conference within this period.
    (e) Within 20 days after the date of any conference held under this 
section, the applicant may submit to the Department a written record of 
any additional data, arguments, or precedents discussed at the 
conference but not previously or adequately presented in writing.



Sec. 2570.41  Final denial letters.

    (a) The Department will issue a final denial letter denying a 
requested exemption where:
    (1) The conditions for issuing a final denial letter specified in 
Sec. 2570.38(b) or Sec. 2570.39(e) of these procedures are satisfied;
    (2) After issuing a tentative denial letter under Sec. 2570.38 of 
this part and considering the entire record in the case, including all 
written information submitted pursuant to Sec. 2570.39 and 
Sec. 2570.40(e) of these procedures, the Department decides not to 
propose an exemption or to withdraw an exemption already proposed; or
    (3) After proposing an exemption and conducting a hearing on the 
exemption

[[Page 566]]

under either Sec. 2570.46 or Sec. 2570.47 of this part and after 
considering the entire record in the case, including the record of the 
hearing, the Department decides to withdraw the proposed exemption.
    (b)  [Reserved]



Sec. 2570.42  Notice of proposed exemption.

    If the Department tentatively decides, based on all the information 
submitted by an applicant, that the exemption should be granted, it will 
publish a notice of proposed exemption in the Federal Register. The 
notice will:
    (a) Explain the exemption transaction and summarize the information 
received by the Department in support of the exemption;
    (b) Specify any conditions under which the exemption is proposed;
    (c) Inform interested persons of their right to submit comments in 
writing to the Department relating to the proposed exemption and 
establish a deadline for receipt of such comments;
    (d) If the proposed exemption includes relief from the prohibitions 
of section 406(b) of ERISA, section 4975(c)(1)(E) or (F) of the Code, or 
section 8477(c)(2) of FERSA, inform interested persons of their right to 
request a hearing under Sec. 2570.46 of this part and establish a 
deadline for receipt of requests for such hearings.



Sec. 2570.43  Notification of interested persons by applicant.

    (a) If, as set forth in the exemption application, the notification 
that an applicant intends to provide to interested persons upon 
publication of a notice of proposed exemption in the Federal Register is 
inadequate, the Department will so inform the applicant and will secure 
the applicant's written agreement to provide what it considers to be 
adequate notice under the circumstances.
    (b) If a notice of proposed exemption is published in the Federal 
Register in accordance with Sec. 2570.42 of this part, the applicant 
must notify interested persons of the pendency of the exemption in the 
manner and time period specified in the application or in any 
superseding agreement with the Department. Any such notification must 
include:
    (1) A copy of the notice of proposed exemption; and
    (2) A supplemental statement in the following form:

    You are hereby notified that the United States Department of Labor 
is considering granting an exemption from the prohibited transaction 
restrictions of the Employee Retirement Income Security Act of 1974, the 
Internal Revenue Code of 1986, or the Federal Employees' Retirement 
System Act of 1986. The exemption under consideration is explained in 
the enclosed Notice of Proposed Exemption. As a person who may be 
affected by this exemption, you have the right to comment on the 
proposed exemption by [date].\1\ [If you may be adversely affected by 
the grant of the exemption, you also have the right to request a hearing 
on the exemption by [date].] \2\

    \1\ The applicant will write in this space the date of the last day 
of the time period specified in the notice of proposed exemption.
    \2\ To be added in the case of an exemption that provides relief 
from section 406(b) of ERISA or corresponding sections of the Code or 
FERSA.

    Comments or requests for a hearing should be addressed to: Office of 
Exemption Determinations, Employee Benefits Security Administration, 
room ------,\3\ U.S. Department of Labor, 200 Constitution Avenue NW., 
---------------------------------------------------------------------------
Washington, DC 20210, ATTENTION: Application No. ------.\4\

    \3\ The applicant will fill in the room number of the Division of 
Exemptions. As of the date of this final regulation, the room number of 
the Division of Exemptions was N-5671.
    \4\ The applicant will fill in the exemption application number, 
which is stated in the notice of proposed exemption, as well as in all 
correspondence from the Department to the applicant regarding the 
application.

    The Department will make no final decision on the proposed exemption 
until it reviews all comments received in response to the enclosed 
notice. If the Department decides to hold a hearing on the exemption 
before making its final decision, you will be notified of the time and 
---------------------------------------------------------------------------
place of the hearing.

    (c) The method used to furnish notice to interested persons must be 
reasonably calculated to ensure that interested persons actually receive 
the notice. In all cases, personal delivery and delivery by first-class 
mail will be considered reasonable methods of furnishing notice.

[[Page 567]]

    (d) After furnishing the notice required by this section, an 
applicant must provide the Department with a statement confirming that 
notice was furnished to the persons and in the manner and time 
designated in its exemption application or in any superseding agreement 
with the Department. This statement must be accompanied by a declaration 
under penalty of perjury attesting to the truth of the information 
provided in the statement and signed by a person qualified under 
Sec. 2570.34(b)(5) of these procedures to sign such a declaration. No 
exemption will be granted until such a statement and its accompanying 
declaration have been furnished to the Department.



Sec. 2570.44  Withdrawal of exemption applications.

    (a) An applicant may withdraw his application for an exemption at 
any time by informing the Department, either orally or in writing, of 
his intent to withdraw.
    (b) Upon receiving an applicant's notice of intent to withdraw an 
application for an individual exemption, the Department will confirm by 
letter the applicant's withdrawal of the application and will terminate 
all proceedings relating to the application. If a notice of proposed 
exemption has been published in the Federal Register, the Department 
will publish a notice withdrawing the proposed exemption.
    (c) Upon receiving an applicant's notice of intent to withdraw an 
application for a class exemption or for an individual exemption that is 
being considered with other applications as a request for a class 
exemption, the Department will inform any other applicants for the 
exemption of the withdrawal. The Department will continue to process 
other applications for the same exemption. If all applicants for a 
particular class exemption withdraw their applications, the Department 
may either terminate all proceedings relating to the exemption or 
propose the exemption on its own motion.
    (d) If, following the withdrawal of an exemption application, an 
applicant decides to reapply for the same exemption, he may submit a 
letter to the Department requesting that the application be reinstated 
and referring to the application number assigned to the original 
application. If, at the time the original application was withdrawn, any 
additional information to be submitted to the Department under 
Sec. 2570.39 of these procedures was outstanding, that information must 
accompany the letter requesting reinstatement of the application. 
However, the applicant need not resubmit information previously 
furnished to the Department in connection with a withdrawn application 
unless reinstatement of the application is requested more than two years 
after the date of its withdrawal.
    (e) Any request for reinstatement of a withdrawn application 
submitted in accordance with paragraph (d) of this section, will be 
granted by the Department, and the Department will take whatever steps 
remained at the time the application was withdrawn to process the 
application.



Sec. 2570.45  Requests for reconsideration.

    (a) The Department will entertain one request for reconsideration of 
an exemption application that has been finally denied pursuant to 
Sec. 2570.41 (a)(2) or (a)(3) of this part if the applicant presents in 
support of the application significant new facts or arguments, which, 
for good reason, could not have been submitted for the Department's 
consideration during its initial review of the exemption application.
    (b) A request for reconsideration of a previously denied application 
must be made within 180 days after the issuance of the final denial 
letter and must be accompanied by a copy of the Department's final 
letter denying the exemption and a statement setting forth the new 
information and/or arguments that provide the basis for reconsideration.
    (c) A request for reconsideration must also be accompanied by a 
declaration under penalty of perjury attesting to the truth of the new 
information provided, which is signed by a person qualified under 
Sec. 2570.34(b)(5) of these procedures to sign such a declaration.
    (d) If, after reviewing a request for reconsideration, the 
Department decides that the facts and arguments presented do not warrant 
reversal of its

[[Page 568]]

original decision to deny the exemption, it will send a letter to the 
applicant reaffirming that decision.
    (e) If, after reviewing a request for reconsideration, the 
Department decides, based on the new facts and arguments submitted, to 
reconsider its denial letter, it will notify the applicant of its intent 
to reconsider the application in light of the new information presented. 
The Department will then take whatever steps remained at the time it 
issued its final denial letter to process the exemption application.
    (f) If, at any point during its subsequent processing of the 
application, the Department decides again that the exemption is 
unwarranted, it will issue a letter affirming its final denial.



Sec. 2570.46  Hearings in opposition to exemptions from restrictions on fiduciary self-dealing.

    (a) Any interested person who may be adversely affected by an 
exemption which the Department proposes to grant from the restrictions 
of section 406(b) of ERISA, section 4975(c)(1)(E) or (F) of the Code, or 
section 8477(c)(2) of FERSA may request a hearing before the Department 
within the period of time specified in the Federal Register notice of 
the proposed exemption. Any such request must state:
    (1) The name, address, and telephone number of the person making the 
request;
    (2) The nature of the person's interest in the exemption and the 
manner in which the person would be adversely affected by the exemption; 
and
    (3) A statement of the issues to be addressed and a general 
description of the evidence to be presented at the hearing.
    (b) The Department will grant a request for a hearing made in 
accordance with paragraph (a) of this section where a hearing is 
necessary to fully explore material factual issues identified by the 
person requesting the hearing. However, the Department may decline to 
hold a hearing where:
    (1) The request for the hearing does not meet the requirements of 
paragraph (a);
    (2) The only issues identified for exploration at the hearing are 
matters of law; or
    (3) The factual issues identified can be fully explored through the 
submission of evidence in written form.
    (c) An applicant for an exemption must notify interested persons in 
the event that the Department schedules a hearing on the exemption. Such 
notification must be given in the form, time, and manner prescribed by 
the Department. Ordinarily, however, adequate notification can be given 
by providing to interested persons a copy of the notice of hearing 
published by the Department in the Federal Register within 10 days of 
its publication, using any of the methods approved in Sec. 2570.43(c) of 
this part.
    (d) After furnishing the notice required by paragraph (c) of this 
section, an applicant must submit a statement confirming that notice was 
given in the form, manner, and time prescribed. This statement must be 
accompanied by a declaration under penalty of perjury attesting to the 
truth of the information provided in the statement, which is signed by a 
person qualified under Sec. 2570.34(b)(5) of these procedures to sign 
such a declaration.



Sec. 2570.47  Other hearings.

    (a) In its discretion, the Department may schedule a hearing on its 
own motion where it determines that issues relevant to the exemption can 
be most fully or expeditiously explored at a hearing.
    (b) An applicant for an exemption must notify interested persons of 
any hearing on an exemption scheduled by the Department in the manner 
described in Sec. 2570.46(c). In addition, the applicant must submit a 
statement subscribed as true under penalty of perjury like that required 
in Sec. 2570.46(d).



Sec. 2570.48  Decision to grant exemptions.

    (a) If, after considering all the facts and representations 
submitted by an applicant in support of an exemption application, all 
the comments received in response to a notice of proposed exemption, and 
the record of any hearing held in connection with the proposed 
exemption, the Department determines that the exemption should be 
granted, it will publish a notice in the Federal Register granting the 
exemption.

[[Page 569]]

    (b) A Federal Register notice granting an exemption will summarize 
the transaction or transactions for which exemptive relief has been 
granted and will specify the conditions under which such exemptive 
relief is available.



Sec. 2570.49  Limits on the effect of exemptions.

    (a) An exemption does not take effect or protect parties in interest 
from liability with respect to the exemption transaction unless the 
material facts and representations contained in the application and in 
any materials and documents submitted in support of the application were 
true and complete.
    (b) An exemption is effective only for the period of time specified 
and only under the conditions set forth in the exemption.
    (c) Only the specific parties to whom an exemption grants relief may 
rely on the exemption. If the notice granting an exemption does not 
limit exemptive relief to specific parties, all parties to the exemption 
transaction may rely on the exemption.



Sec. 2570.50  Revocation or modification of exemptions.

    (a) If, after an exemption takes effect, changes in circumstances, 
including changes in law or policy, occur which call into question the 
continuing validity of the Department's original conclusions concerning 
the exemption, the Department may take steps to revoke or modify the 
exemption.
    (b) Before revoking or modifying an exemption, the Department will 
publish a notice of its proposed action in the Federal Register and 
provide interested persons with an opportunity to comment on the 
proposed revocation or modification. In addition, the Department will 
give the applicant at least 30 days notice in writing of the proposed 
revocation or modification and the reasons therefor and will provide the 
applicant with the opportunity to comment on the revocation or 
modification.
    (c) Ordinarily the revocation or modification of an exemption will 
have prospective effect only.



Sec. 2570.51  Public inspection and copies.

    (a) The administrative record of each exemption application will be 
open to public inspection and copying at the Public Disclosure Branch, 
EBSA, U.S. Department of Labor, 200 Constitution Avenue, NW., 
Washington, DC 20210.
    (b) Upon request, the staff of the Public Disclosure Branch will 
furnish photocopies of an administrative record, or any specified 
portion of that record, for a specified charge per page.



Sec. 2570.52  Effective date.

    This regulation is effective with respect to all applications for 
exemptions filed with the Department under section 408(a) of ERISA, 
section 4975(c)(2) of the Code, or 5 U.S.C. 8477(c)(3) at any time on or 
after September 10, 1990. Applications for exemptions under section 
408(a) of ERISA and/or section 4975 of the Code filed before September 
10, 1990, are governed by ERISA Procedure 75-1. Applications for 
exemption under 5 U.S.C. 8477(c)(3) filed before September 10, 1990, but 
after December 29, 1988 are governed by part 2585 of chapter XXV of 
title 29 of the Code of Federal Regulations, (title 29 CFR part 2585 as 
revised July 1, 1990). Applications under 5 U.S.C. 8477(c)(3) filed 
before December 29, 1988 are governed by ERISA Procedure 75-1.



Subpart C--Procedures for the Assessment of Civil Penalties Under ERISA 
                            Section 502(c)(2)

    Source: 54 FR 26897, June 26, 1989, unless otherwise noted.



Sec. 2570.60  Scope of rules.

    The rules of practice set forth in this subpart are applicable to 
``502(c)(2) civil penalty proceedings'' (as defined in Sec. 2570.61(n) 
of this subpart) under section 502(c)(2) 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)(2) except as modified by this section. These proceedings shall be 
conducted as expeditiously as possible, and the parties

[[Page 570]]

shall make every effort to avoid delay at each stage of the proceedings.



Sec. 2570.61  Definitions.

    For 502(c)(2) 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 ludge means an administrative law judge 
appointed pursuant to the provisions of 5 U.S.C. 3105;
    (c) Answer means a written statement that is supported by reference 
to specific circumstances or facts surrounding the notice of 
determination issued pursuant to Sec. 2560.502c-2(g) of this chapter.
    (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)(2) 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 reasonable cause described 
in Sec. 2560.502c-2(e) 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)(2);
    (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 a person or party, 
for some affirmative action;
    (m) Pleading means the notice as defined in Sec. 2560.502c-2(g), 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)(2) civil penalty proceeding means an adjudicatory 
proceeding relating to the assessment of a civil penalty provided for in 
section 502(c)(2) of ERISA;
    (o) Respondent means the party against whom the Department is 
seeking to assess a civil sanction under ERISA section 502(c)(2);
    (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 Employee Benefits Security), 
administrator, commissioner, appellate body, board, or other official; 
and
    (q) Solicitor means the Solicitor of Labor or his or her delegate.

[54 FR 26897, June 26, 1989, as amended at 68 FR 3737, Jan. 24, 2003]



Sec. 2570.62  Service: Copies of documents and pleadings.

    For 502(c)(2) 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

[[Page 571]]

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)(2) Proceeding, P.O. 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 Employee Benefits Security Administration 
(EBSA) 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.

[54 FR 26897, June 26, 1989, as amended at 56 FR 54708, Oct. 22, 1991]



Sec. 2570.63  Parties, how designated.

    For 502(c)(2) 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 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,

[[Page 572]]

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. 2570.64  Consequences of default.

    For 502(c)(2) 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-2(g) of this chapter within the 30 day period provided by 
Sec. 2560.502c-2(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)(2) of the Act. Such notice shall then become the final order of 
the Secretary, within the meaning of Sec. 2570.61(g) of this subpart, 
forty-five (45) days from the date of service of the notice.

[68 FR 3737, Jan. 24, 2003]



Sec. 2570.65  Consent order or settlement.

    For 502(c)(2) 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 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,

[[Page 573]]

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. 2570.66  Scope of discovery.

    For 502(c)(2) 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. 2570.67  Summary decision.

    For 502(c)(2) civil penalty proceedings, this section shall apply in 
lieu of Sec. 18.41 of this title.
    (a) No genuine issue of material of fact. (1) Where no issue of a 
material of fact is found to have been raised, the administrative law 
judge may issue a decision which, in the absence of an appeal pursuant 
to Secs. 2570.69 through 2570.71 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 material 
of fact is raised, the administrative law judge shall, and in any other 
case may, set the case for an evidentiary hearing.



Sec. 2570.68  Decision of the administrative law judge.

    For 502(c)(2) 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 of 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

[[Page 574]]

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 administative 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)(2) 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)(2) 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. 2570.69 through 2570.71.



Sec. 2570.69  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. 2570.70  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. 2570.71  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.



 Subpart D--Procedure for the Assessment of Civil Penalties Under ERISA 
                             Section 502(l)

    Source: 55 FR 25286, June 20, 1990, unless otherwise noted.



Sec. 2570.80  Scope of rules.

    The rules of practice set forth in this subpart are applicable to 
``502(l) civil penalty proceedings'' (as defined in Sec. 2570.82 of this 
subpart) under section 502(l) of the Employee Retirement Income Security 
Act of 1974 (ERISA or the Act). Refer to 29 CFR 2560.502-1 for the 
definition of the relevant terms of ERISA section 502(l).



Sec. 2570.81  In general.

    Section 502(l) of the Employee Retirement Income Security Act of 
1974

[[Page 575]]

(ERISA or the Act) requires the Secretary of Labor to assess a civil 
penalty against a fiduciary who breaches a fiduciary responsibility 
under, or commits any other violation of, part 4 of title I of ERISA or 
any other person who knowingly participates in such breach or violation. 
The penalty under section 502(l) is equal to 20 percent of the 
``applicable recovery amount'' paid pursuant to any settlement agreement 
with the Secretary or ordered by a court to be paid in a judicial 
proceeding instituted by the Secretary under section 502 (a)(2) or 
(a)(5). The Secretary may, in the Secretary's sole discretion, waive or 
reduce the penalty if the Secretary determines in writing that:
    (a) The fiduciary or other person acted reasonably and in good 
faith, or
    (b) It is reasonable to expect that the fiduciary or other person 
will not be able to restore all losses to the plan or any participant or 
beneficiary of such plan without severe financial hardship unless such 
waiver or reduction is granted.

The penalty imposed on a fiduciary or other person with respect to any 
transaction shall be reduced by the amount of any penalty or tax imposed 
on such fiduciary or other person with respect to such transaction under 
section 502(i) or section 4975 of the Internal Revenue Code of 1986 (the 
Code).



Sec. 2570.82  Definitions.

    For purposes of this section:
    (a) 502(l) civil penalty proceedings means an adjudicatory 
proceeding relating to the assessment of a civil penalty provided in 
section 502(l) of ERISA;
    (b) Notice of assessment means any document, however designated, 
issued by the Secretary which contains a specified assessment, in 
monetary terms, of a civil penalty under ERISA section 502(l). A 
``notice of assessment'' will contain a brief factual description of the 
violation for which the assessment is being made, the identity of the 
person being assessed, and the amount of the assessment and the basis 
for assessing that particular person that particular penalty amount;
    (c) Person includes an individual, partnership, corporation, 
employee benefit plan, association, exchange or other entity or 
organization;
    (d) Petition means a written request, made by a person, for a waiver 
or reduction of the civil penalty described herein; and
    (e) Secretary means the Secretary of Labor and includes, pursuant to 
any delegation of authority by the Secretary, the Assistant Secretary 
for Employee Benefits Security, Regional Directors for Employee Benefits 
Security, or Deputy Regional Directors for Employee Benefits Security.

[55 FR 25286, June 20, 1990, as amended at 68 FR 16400, Apr. 3, 2003]



Sec. 2570.83  Assessment of civil penalty.

    (a) Except as described in Secs. 2570.85 and 2570.86 of this part, 
subsequent to the payment of the applicable recovery amount pursuant to 
either a settlement agreement or a court order, the Secretary shall 
serve on the person liable for making such payment a notice of 
assessment of civil penalty equal to 20 percent of the applicable 
recovery amount.
    (b) Service of such notice shall be made either:
    (1) By delivering a copy to the person being assessed; if the person 
is an individual, to the individual; if the person is a partnership, to 
any partner; if the person is a corporation, association, exchange, or 
other entity or organization, to any officer of such entity; if the 
person is an employee benefit plan, to a trustee of such plan; or to any 
attorney representing any such person;
    (2) By leaving a copy at the principal office, place of business, or 
residence of such individual, partner, officer, trustee, or attorney; or
    (3) By mailing a copy to the last known address of such individual, 
partner, officer, trustee, or attorney.

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.



Sec. 2570.84  Payment of civil penalty.

    (a) The civil penalty must be paid within 60 days of service of the 
notice of assessment.

[[Page 576]]

    (b) At any time prior to the expiration of the payment period for 
the assessed penalty, any person who has committed, or knowingly 
participated in, a breach or violation, or has been alleged by the 
Secretary to have so committed or participated, may submit a written 
request for a conference with the Secretary to discuss the calculation 
of the assessed penalty. A person will be entitled under this section to 
one such conference per assessment. If such written request is submitted 
during the 60 day payment period described in subparagraph (a), such a 
request will not toll the running of that payment period.
    (c) The notice of assessment will become a final order (within the 
meaning of 5 U.S.C. 704) on the first day following the 60 day payment 
period, subject to any tolling caused by a petition to waive or reduce 
described in Sec. 2570.85.



Sec. 2570.85  Waiver or reduction of civil penalty.

    (a) At any time prior to the expiration of the payment period for 
the assessed penalty, any person who has committed, or knowingly 
participated in, a breach or violation, or has been alleged by the 
Secretary to have so committed or participated, may petition the 
Secretary to waive or reduce the penalty under this section on the basis 
that:
    (1) The person acted reasonably and in good faith in engaging in the 
breach or violation; or
    (2) The person will not be able to restore all losses to the plan or 
participant or beneficiary of such plan without severe financial 
hardship unless such waiver or reduction is granted.
    (b) All petitions for waiver or reduction shall be in writing and 
contain the following information:
    (1) The name of the petitioner(s);
    (2) A detailed description of the breach or violation which is the 
subject of the penalty;
    (3) A detailed recitation of the facts which support one, or both, 
of the bases for waiver or reduction described in Sec. 2570.85(a) of 
this part, accompanied by underlying documentation supporting such 
factual allegations;
    (4) A declaration, signed and dated by the petitioner(s), in the 
following form:

    Under penalty of perjury, I declare that, to the best of my 
knowledge and belief, the representations made in this petition are true 
and correct.

    (c) If a petition for waiver or reduction is submitted during the 60 
day payment period described in Sec. 2570.84(a) of this part, the 
payment period for the penalty in question will be tolled pending 
Departmental consideration of the petition. During such consideration, 
the applicant is entitled to one conference with the Secretary, but the 
Secretary, in his or her sole discretion, may schedule or hold 
additional conferences with the petitioner concerning the factual 
allegations contained in the petition.
    (d) Based solely on his or her discretion, the Secretary will 
determine whether to grant such a waiver or reduction. Pursuant to the 
procedure described in Sec. 2570.83(b), the petitioner will be served 
with a written determination informing him or her of the Secretary's 
decision. Such written determination shall briefly state the grounds for 
the Secretary's decision, and shall be final and non-reviewable. In the 
case of a determination not to waive, the payment period for the penalty 
in question, if previously initiated, will resume as of the date of 
service of the Secretary's written determination.



Sec. 2570.86  Reduction of penalty by other penalty assessments.

    The penalty assessed on a person pursuant to this section with 
respect to any transaction shall be reduced by the amount of any penalty 
or tax imposed on such person with respect to such transaction under 
ERISA section 502(i) and section 4975 of the Code. Prior to a reduction 
of penalty under this paragraph, the person being assessed must provide 
proof to the Department of the payment of the penalty or tax and the 
amount of that payment. Submissions of proof of other penalty or tax 
assessments will not toll the 60 day payment period, if previously 
initiated.



Sec. 2570.87  Revision of assessment.

    If, based on the procedures described in Sec. 2570.84, 2570.85, or 
2570.86, the assessed penalty amount is revised, the

[[Page 577]]

person being assessed will receive a revised notice of assessment and 
will be obligated to pay the revised assessed penalty within the 
relevant 60 day payment period (as determined by the applicable 
procedure in Sec. 2570.84, 2570.85, or 2570.86), and, if necessary, any 
excess penalty payment will be refunded as soon as administratively 
feasible. The revised notice of assessment will revoke any previously 
issued notice of assessment with regard to the transaction in question 
and will become a final order (within the meaning of 5 U.S.C. 704) the 
later of the first day following the 60 day payment period or the date 
of its service on the person being assessed, pursuant to the service 
procedures described in Sec. 2570.83(b).



Sec. 2570.88  Effective date.

    This section is effective June 20, 1990, and shall apply to 
assessments under section 502(l) made by the Secretary after June 20, 
1990, based on any breach or violation occurring on or after December 
19, 1989.



Subpart E--Procedures for the Assessment of Civil Penalties Under ERISA 
                            Section 502(c)(5)

    Effective Date Note: At 68 FR 17508, Apr. 9, 2003, subpart E of part 
2570 was revised, effective Jan. 1, 2004. For the convenience of the 
user, the new subpart E follows the text of this subpart.

    Source: 65 FR 7188, Feb. 11, 2000 unless otherwise noted.



Sec. 2570.90  Scope of rules.

    The rules of practice set forth in this subpart are applicable to 
``502(c)(5) civil penalty proceedings'' (as defined in Sec. 2570.91(n) 
of this subpart) under section 502(c)(5) of the Employee Retirement 
Income Security Act of 1974 (Pub. L. 93-406, 88 Stat. 840-52, as amended 
by Pub. L. 104-191, 101 Stat. 1936). The rules of procedure for 
administrative hearings published by the Department's Office of 
Administrative Law Judges in Subpart A of Part 18 of this title will 
apply to matters arising under ERISA section 502(c)(5) 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. 2570.91  Definitions.

    For 502(c)(5) 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 means a written statement that is supported by reference 
to specific circumstances or facts surrounding the notice of 
determination issued pursuant to Sec. 2560.502c-5(g);
    (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)(5) 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 reasonable cause described 
in Sec. 2560.502c-5(e) 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)(5);

[[Page 578]]

    (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-5(g), 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)(5) civil penalty proceeding means an adjudicatory 
proceeding relating to the assessment of a civil penalty provided for in 
section 502(c)(5) of ERISA;
    (o) Respondent means the party against whom the Department is 
seeking to assess a civil sanction under ERISA section 502(c)(5);
    (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 Employee Benefits Security), 
administrator, commissioner, appellate body, board, or other official of 
the Department of Labor; and
    (q) Solicitor means the Solicitor of Labor or his or her delegate.



Sec. 2570.92  Service: Copies of documents and pleadings.

    For 502(c)(5) penalty proceedings, this section shall apply in lieu 
of Sec. 18.3 of this title.
    (a) In 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 (OALJ), 800 K Street, N.W., 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 of 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)(5) Proceeding, P.O. 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 Employee Benefits Security Administration 
(EBSA) 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\x11 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. 2570.93  Parties, how designated.

    For 502(c)(5) 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.''

[[Page 579]]

    (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 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. 2570.94  Consequences of default.

    For 502(c)(5) 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-5(g) of this chapter within the 30 day period provided by 
Sec. 2560.502c-5(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)(5) of the Act. Such notice shall then become a final order of the 
Secretary, within the meaning of Sec. 2570.91(g) of this subpart, forty-
five (45) days from the date of the service of the notice.

[68 FR 3737, Jan. 24, 2003]



Sec. 2570.95  Consent order or settlement.

    For 502(c)(5) civil penalty proceedings, the following shall apply 
in lieu of Sec. 18.9 of this title.
    (a) In 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 deferment 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:

[[Page 580]]

    (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 that 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 
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 a 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 to 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. 2570.96  Scope of discovery.

    For 502(c)(5) 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

[[Page 581]]

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 representative of a party concerning the proceeding.



Sec. 2570.97  Summary decision.

    For 502(c)(5) 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 
material fact is found to have been raised, the administrative law judge 
may issue a decision which, in the absence of an appeal pursuant to 
2570.99 through 2570.101 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 material 
fact is raised, the administrative law judge shall, and in any other 
case may, set the case for an evidentiary hearing.



Sec. 2570.98  Decision of the administrative law judge.

    For 502(c)(5) 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 an 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 an 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)(5) 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)(5) of ERISA. It shall 
be supported by reliable and probative evidence. The decision of the 
administrative law judge shall become a 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. 2570.99 through 2570.101.



Sec. 2570.99  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

[[Page 582]]

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. 2570.100  Scope of review.

    The review of the Secretary shall not be a 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. 2570.101  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.

    Effective Date Note: At 68 FR 17508, Apr. 9, 2003, subpart E of part 
2570 was revised, effective Jan. 1, 2004. For the convenience of the 
user, the revised text is set forth as follows:


  

Subpart E--Procedures for the Assessment of Civil Penalties Under ERISA 
                            Section 502(c)(5)

Sec.
2570.90  Scope of Rules.
2570.91  Definitions.
2570.92  Service: Copies of documents and pleadings.
2570.93  Parties, how designated.
2570.94  Consequnces of default.
2570.95  Consent order or settlement.
2570.96  Scope of discovery.
2570.97  Summary decision.
2570.98  Decision of the administrative law judge.
2570.99  Review by the Secretary.
2570.100  Scope of review.
2570.101  Procedures for review by the Secretary.

Sec. 2570.90  Scope of rules.

    The rules of practice set forth in this subpart are applicable to 
``502(c)(5) civil penalty proceedings'' (as defined in 2570.91(n)) under 
section 502(c)(5) of the Employee Retirement Income Security Act of 
1974. The rules of procedure for administrative hearings published by 
the Department's Office of Administrative Law Judges in subpart A of 29 
CFR part 18 will apply to matters arising under ERISA section 502(c)(5) 
except as described 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. 2570.91  Definitions.

    For 502(c)(5) 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 means a written statement that is supported by reference 
to specific circumstances or facts surrounding the notice of 
determination issued pursuant to 29 CFR 2560.502c-5(g);
    (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)(5) 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 reasonable cause described 
in 29 CFR 2560.502c-5(e) 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)(5);
    (j) Party includes a person or agency named or admitted as a party 
to a proceeding;

[[Page 583]]

    (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 29 CFR 2560.502c-5(g), 
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)(5) civil penalty proceeding means an adjudicatory 
proceeding relating to the assessment of a civil penalty provided for in 
section 502(c)(5) of ERISA;
    (o) Respondent means the party against whom the Department is 
seeking to assess a civil sanction under ERISA section 502(c)(5);
    (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 Employee Benefits Security), 
administrator, commissioner, appellate body, board, or other official of 
the Department of Labor; and
    (q) Solicitor means the Solicitor of Labor or his or her delegate.

Sec. 2570.92  Service: Copies of documents and pleadings.

    For 502(c)(5) penalty proceedings, this section shall apply in lieu 
of 29 CFR 18.3.
    (a) In 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 (OALJ), 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 of 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)(5) Proceeding, P.O. 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 Employee Benefits Security Administration 
(EBSA) 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. 2570.93  Parties, how designated.

    For 502(c)(5) civil penalty proceedings, this section shall apply in 
lieu of 29 CFR 18.10.
    (a) The term party wherever used in this subpart 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.

[[Page 584]]

    (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 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. 2570.94  Consequences of default.

    For 502(c)(5) civil penalty proceedings, this section shall apply in 
lieu of 29 CFR 18.5(a) and (b). Failure of the respondent to file an 
answer to the notice of determination described in 29 CFR 2560.502c-5(g) 
within the 30 day period provided by 29 CFR 2560.502c-5(h) 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)(5) of the Act. Such notice shall then become a 
final order of the Secretary, within the meaning of Sec. 2570.91(g), 
forty-five (45) days from the date of the service of the notice.

Sec. 2570.95  Consent order or settlement.

    For 502(c)(5) civil penalty proceedings, the following shall apply 
in lieu of 29 CFR 18.9.
    (a) In 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 deferment 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;
    (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 that a settlement agreement containing 
consent findings and an order is submitted within the time allowed 
therefor, the administrative law judge shall issue a decision 
incorporating such findings and agreement within thirty (30) days of 
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 a 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 to sign or reject the proposed 
settlement. Where the record lacks substantial evidence

[[Page 585]]

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. 2570.96  Scope of discovery.

    For 502(c)(5) civil penalty proceedings, this section shall apply in 
lieu of 29 CFR 18.14.
    (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 representative of a 
party concerning the proceeding.

Sec. 2570.97  Summary decision.

    For 502(c)(5) civil penalty proceedings, this section shall apply in 
lieu of 29 CFR 18.41.
    (a) No genuine issue of material fact.
    (1) Where no issue of material fact is found to have been raised, 
the administrative law judge may issue a decision which, in the absence 
of an appeal pursuant to Secs. 2570.99 through 2570.101, 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 
therefore, 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 material 
fact is raised, the administrative law judge shall, and in any other 
case may, set the case for an evidentiary hearing.

Sec. 2570.98  Decision of the administrative law judge.

    For 502(c)(5) civil penalty proceedings, this section shall apply in 
lieu of 29 CFR 18.57.
    (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 an 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 an 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)(5) 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)(5) of ERISA. It shall 
be supported by reliable and probative evidence. The decision of the 
administrative law judge shall become a 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. 2570.99 through 2570.101.

Sec. 2570.99  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

[[Page 586]]

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. 2570.100  Scope of review.

    The review of the Secretary shall not be a 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. 2570.101  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.



Subpart F--Procedures for the Assessment of Civil Penalties Under ERISA 
                            Section 502(c)(6)

    Source: 67 FR 786, Jan. 7, 2002, unless otherwise noted.



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 means a written statement that is supported by reference 
to specific circumstances or facts surrounding the notice of 
determination issued pursuant to Sec. 2560.502c-6(g) of this chapter;
    (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;

[[Page 587]]

    (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 Employee Benefits Security), 
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 of 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, P.O. 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 Employee Benefits Security Administration 
(EBSA) 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, 
photocopied, 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 this subpart 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

[[Page 588]]

``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 petitioner has 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 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, within the meaning of Sec. 2570.111(g) of this subpart, 
forty-five (45) days from the date of service of the notice.

[68 FR 3738, Jan. 24, 2003]



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

[[Page 589]]

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 
therefor, the administrative law judge shall issue a decision 
incorporating such findings and agreement within 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 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)

[[Page 590]]

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 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 (a) 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 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 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

[[Page 591]]

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 a 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.



Subpart G--Procedures for the Assessment of Civil Penalties Under ERISA 
                            Section 502(c)(7)

    Source: 68 FR 3738, Jan. 24, 2003, unless otherwise noted.



Sec. 2570.130  Scope of rules.

    The rules of practice set forth in this subpart are applicable to 
``502(c)(7) civil penalty proceedings'' (as defined in Sec. 2570.131(n) 
of this subpart) under section 502(c)(7) of the Employee Retirement 
Income Security Act of 1974, as amended (the Act). The rules of 
procedure for administrative hearings published by the Department's 
Office of Administrative Law Judges at Part 18 of this title will apply 
to matters arising under ERISA section 502(c)(7) except as modified by 
this subpart. 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. 2570.131  Definitions.

    For 502(c)(7) 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 means a written statement that is supported by reference 
to specific circumstances or facts surrounding the notice of 
determination issued pursuant to Sec. 2560.502c-7(g) of this chapter;
    (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)(7) 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 reasonable cause described 
in Sec. 2560.502c-7(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, by either oral presentation or written 
submission, to the administrative law judge;

[[Page 592]]

    (i) Order means the whole or any part of a final procedural or 
substantive disposition of a matter under ERISA section 502(c)(7);
    (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-7(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)(7) civil penalty proceeding means an adjudicatory 
proceeding relating to the assessment of a civil penalty provided for in 
section 502(c)(7) of ERISA;
    (o) Respondent means the party against whom the Department is 
seeking to assess a civil sanction under ERISA section 502(c)(7);
    (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 Employee Benefits Security), 
administrator, commissioner, appellate body, board, or other official; 
and
    (q) Solicitor means the Solicitor of Labor or his or her delegate.



Sec. 2570.132  Service: Copies of documents and pleadings.

    For 502(c)(7) 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 of 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)(7) Proceeding, P.O. 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 Employee Benefits Security Administration 
(EBSA) 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, 
photocopied, or otherwise, will not be accepted. Papers may be 
reproduced by any duplicating process provided all copies are clear and 
legible.



Sec. 2570.133  Parties, how designated.

    For 502(c)(7) civil penalty proceedings, this section shall apply in 
lieu of Sec. 18.10 of this title.
    (a) The term ``party'' wherever used in this subpart 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

[[Page 593]]

``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 who or organization that 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 petitioner has 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 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. 2570.134  Consequences of default.

    For 502(c)(7) 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-7(g) of this chapter within the 30 day period provided by 
Sec. 2560.502c-7(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)(7) of the Act. Such notice shall then become the final order of 
the Secretary, within the meaning of Sec. 2570.131(g) of this subpart, 
forty-five (45) days from the date of service of the notice.



Sec. 2570.135  Consent order or settlement.

    For 502(c)(7) 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:

[[Page 594]]

    (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 
therefor, the administrative law judge shall issue a decision 
incorporating such findings and agreement within 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 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. 2570.136  Scope of discovery.

    For 502(c)(7) 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

[[Page 595]]

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. 2570.137  Summary decision.

    For 502(c)(7) 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 decision which, in the absence of an appeal pursuant to 
Secs. 2570.139 through 2570.141 of this subpart, shall become a final 
order.
    (2) A decision made under paragraph (a) of this section 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. 2570.138  Decision of the administrative law judge.

    For 502(c)(7) 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)(7) 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)(7) 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. 2570.139 through 2570.141 of this subpart.



Sec. 2570.139  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

[[Page 596]]

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. 2570.140  Scope of review.

    The review of the Secretary shall not be a 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. 2570.141  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.



  Subpart H--Procedures for Issuance of Findings Under ERISA Sec. 3(40)

    Source: 68 FR 17489, Apr. 9, 2003, unless otherwise noted.



Sec. 2570.150  Scope of rules.

    The rules of practice set forth in this subpart H apply to ``section 
3(40) Finding Proceedings'' (as defined in Sec. 2570.152(g)), under 
section 3(40) of the Employee Retirement Income Security Act of 1974 
(ERISA or the Act). Refer to 29 CFR 2510.3-40 for the definition of 
relevant terms of section 3(40) of ERISA, 29 U.S.C. 1002(40). To the 
extent that the regulations in this subpart differ from the regulations 
in subpart A of 29 CFR part 18, the regulations in this subpart apply to 
matters arising under section 3(40) of ERISA rather than the rules of 
procedure for administrative hearings published by the Department's 
Office of Administrative Law Judges in subpart A of 29 CFR part 18. 
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. 2570.151  In general.

    If there is an attempt to assert state jurisdiction or the 
application of state law, either by the issuance of a state 
administrative or court subpoena to, or the initiation of administrative 
or judicial proceedings against, a plan or other arrangement that 
alleges it is covered by title I of ERISA, 29 U.S.C. 1003, the plan or 
other arrangement may petition the Secretary to make a finding under 
section 3(40)(A)(i) of ERISA that it is a plan established or maintained 
under or pursuant to an agreement or agreements that the Secretary finds 
to be collective bargaining agreements for purposes of section 3(40) of 
ERISA.



Sec. 2570.152  Definitions.

    For section 3(40) Finding Proceedings, this section shall apply 
instead of the definitions in 29 CFR 18.2.
    (a) ERISA means the Employee Retirement Income Security Act of 1974, 
et seq., 29 U.S.C. 1001, et seq., as amended.
    (b) Order means the whole or part of a final procedural or 
substantive disposition by the administrative law judge of a matter 
under section 3(40) of ERISA. No order will be appealable to the 
Secretary except as provided in this subpart.
    (c) Petition means a written request under the procedures in this 
subpart for a finding by the Secretary under section 3(40) of ERISA that 
a plan is established or maintained under or pursuant to one or more 
collective bargaining agreements.
    (d) Petitioner means the plan or arrangement filing a petition.
    (e) Respondent means:
    (1) A state government instrumentality charged with enforcing the 
law

[[Page 597]]

that is alleged to apply or which has been identified as asserting 
jurisdiction over a plan or other arrangement, including any agency, 
commission, board, or committee charged with investigating and enforcing 
state insurance laws, including parties joined under Sec. 2570.153;
    (2) The person or entity asserting that state law or state 
jurisdiction applies to the petitioner;
    (3) The Secretary of Labor; and
    (4) A state not named in the petition that has intervened under 
Sec. 2570.153(b).
    (f) Secretary means the Secretary of Labor, and includes, pursuant 
to any delegation or sub-delegation of authority, the Assistant 
Secretary for Employee Benefits Security or other employee of the 
Employee Benefits Security Administration.
    (g) Section 3(40) Finding Proceeding means a proceeding before the 
Office of Administrative Law Judges (OALJ) relating to whether the 
Secretary finds an entity to be a plan to be established or maintained 
under or pursuant to one or more collective bargaining agreements within 
the meaning of section 3(40) of ERISA.



Sec. 2570.153  Parties.

    For section 3(40) Finding Proceedings, this section shall apply 
instead of 29 CFR 18.10.
    (a) The term ``party'' with respect to a Section 3(40) Finding 
Proceeding means the petitioner and the respondents.
    (b) States not named in the petition may participate as parties in a 
Section 3(40) Finding Proceeding by notifying the OALJ and the other 
parties in writing prior to the date for filing a response to the 
petition. After the date for service of responses to the petition, a 
state not named in the petition may intervene as a party only with the 
consent of all parties or as otherwise ordered by the ALJ.
    (c) The Secretary of Labor shall be named as a ``respondent'' to all 
actions.
    (d) The failure of any party to comply with any order of the ALJ 
may, at the discretion of the ALJ, result in the denial of the 
opportunity to present evidence in the proceeding.



Sec. 2570.154  Filing and contents of petition.

    (a) A person seeking a finding under section 3(40) of ERISA must 
file a written petition by delivering or mailing it to the Chief Docket 
Clerk, Office of Administrative Law Judges (OALJ), 800 K Street, NW., 
Suite 400, Washington, DC 20001-8002, or by making a filing by any 
electronic means permitted under procedures established by the OALJ.
    (b) The petition shall--
    (1) Provide the name and address of the entity for which the 
petition is filed;
    (2) Provide the names and addresses of the plan administrator and 
plan sponsor(s) of the plan or other arrangement for which the finding 
is sought;
    (3) Identify the state or states whose law or jurisdiction the 
petitioner claims has been asserted over the petitioner, and provide the 
addresses and names of responsible officials;
    (4) Include affidavits or other written evidence showing that:
    (i) State jurisdiction has been asserted over or legal process 
commenced against the petitioner pursuant to state law;
    (ii) The petitioner is an employee welfare benefit plan as defined 
at section 3(1) of ERISA (29 U.S.C. 1002(1)) and 29 CFR 2510.3-1 and is 
covered by title I of ERISA (see 29 U.S.C. 1003);
    (iii) The petitioner is established or maintained for the purpose of 
offering or providing benefits described in section 3(1) of ERISA (29 
U.S.C. 1002(1)) to employees of two or more employers (including one or 
more self-employed individuals) or their beneficiaries;
    (iv) The petitioner satisfies the criteria in 29 CFR 2510.3-40(b); 
and
    (v) Service has been made as provided in Sec. 2570.155.
    (5) The affidavits shall set forth such facts as would be admissible 
in evidence in a proceeding under 29 CFR part 18 and shall show 
affirmatively that the affiant is competent to testify to the matters 
stated therein. The affidavit or other written evidence must set forth 
specific facts showing the factors required under paragraph (b)(4) of 
this section.

[[Page 598]]



Sec. 2570.155  Service.

    For section 3(40) proceedings, this section shall apply instead of 
29 CFR 18.3.
    (a) In 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 (OALJ), 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 of 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 by first class, prepaid U.S. mail, a 
copy to the last known address. The Secretary shall be served by 
delivery to the Associate Solicitor, Plan Benefits Security Division, 
ERISA Section 3(40) 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 to all parties of record 
by regular mail to their last known address.
    (d) Form of pleadings (1) Every pleading shall contain information 
indicating the name of the Employee Benefits Security Administration 
(EBSA) as the agency under which the proceeding is instituted, the title 
of the proceeding, the docket number (if any) assigned by the OALJ 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. 2570.156  Expedited proceedings.

    For section 3(40) Finding Proceedings, this section shall apply 
instead of 29 CFR 18.42.
    (a) At any time after commencement of a proceeding, any party may 
move to advance the scheduling of a proceeding, including the time for 
conducting discovery.
    (b) Except when such proceedings are directed by the Chief 
Administrative Law Judge or the administrative law judge assigned, any 
party filing a motion under this section shall:
    (1) Make the motion in writing;
    (2) Describe the circumstances justifying advancement;
    (3) Describe the irreparable harm that would result if the motion is 
not granted; and
    (4) Incorporate in the motion affidavits to support any 
representations of fact.
    (c) Service of a motion under this section shall be accomplished by 
personal delivery, or by facsimile, followed by first class, prepaid, 
U.S. mail. Service is complete upon personal delivery or mailing.
    (d) Except when such proceedings are required, or unless otherwise 
directed by the Chief Administrative Law Judge or the administrative law 
judge assigned, all parties to the proceeding in which the motion is 
filed shall have ten (10) days from the date of service of the motion to 
file an opposition in response to the motion.
    (e) Following the timely receipt by the administrative law judge of 
statements in response to the motion, the administrative law judge may 
advance pleading schedules, discovery schedules, prehearing conferences, 
and the hearing, as deemed appropriate; provided, however, that a 
hearing on the merits shall not be scheduled with less than five (5) 
working days notice to the parties, unless all parties consent to an 
earlier hearing.
    (f) When an expedited hearing is held, the decision of the 
administrative law

[[Page 599]]

judge shall be issued within twenty (20) days after receipt of the 
transcript of any oral hearing or within twenty (20) days after the 
filing of all documentary evidence if no oral hearing is conducted.



Sec. 2570.157  Allocation of burden of proof.

    For purposes of a final decision under Sec. 2570.158 (Decision of 
the Administrative Law Judge) or Sec. 2570.159 (Review by the 
Secretary), the petitioner shall have the burden of proof as to whether 
it meets 29 CFR 2510.3-40.



Sec. 2570.158  Decision of the Administrative Law Judge.

    For section 3(40) finding proceedings, this section shall apply 
instead of 29 CFR 18.57.
    (a) Proposed findings of fact, conclusions of law, and order. Within 
twenty (20) days of filing 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 under 29 CFR 18.55, proposed findings of fact, conclusions of 
law, and order together with the supporting brief expressing the reasons 
for such proposals. Such proposals and brief 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 based on oral argument in lieu of briefs. In any case 
in which the administrative law judge believes that written briefs or 
proposed findings of fact and conclusions of law may not be necessary, 
the administrative law judge shall notify the parties at the opening of 
the hearing or as soon thereafter as is practicable that he or she may 
wish to hear oral argument in lieu of briefs. The administrative law 
judge shall issue his or her decision at the close of oral argument, or 
within 30 days thereafter.
    (c) Decision of the administrative law judge. Within 30 days, or as 
soon as possible thereafter, 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 therefore, 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. It shall be supported by 
reliable and probative evidence. Such decision shall be in accordance 
with the regulations found at 29 CFR 2510.3-40 and shall be limited to 
whether the petitioner, based on the facts presented at the time of the 
proceeding, is a plan established or maintained under or pursuant to 
collective bargaining for the purposes of section 3(40) of ERISA.



Sec. 2570.159  Review by the Secretary.

    (a) A request for review by the Secretary of an appealable decision 
of the administrative law judge may be made by any party. Such a request 
must be filed within 20 days of the issuance of the final decision or 
the final decision of the administrative law judge will become the final 
agency order for purposes of 5 U.S.C. 701 et seq.
    (b) A request for review by the Secretary shall state with 
specificity the issue(s) in the administrative law judge's final 
decision upon which review is sought. The request shall be served on all 
parties to the proceeding.
    (c) The review by the Secretary shall not be a de novo proceeding 
but rather a review of the record established by the administrative law 
judge.
    (d) The Secretary may, in his or her discretion, allow the 
submission of supplemental briefs by the parties to the proceeding.
    (e) The Secretary shall issue a decision as promptly as possible, 
affirming, modifying, or setting aside, in whole or in part, the 
decision under review, and shall set forth a brief statement of reasons 
therefor. Such decision by the Secretary shall be the final agency 
action within the meaning of 5 U.S.C. 704.

[[Page 600]]



PART 2575--ADJUSTMENT OF CIVIL PENALTIES UNDER ERISA TITLE I--Table of Contents




      Subpart A--Adjustment of Civil Penalties Under ERISA Title I

Sec.
2575.100  In general.
2575.209b-1  Adjusted civil penalty under section 209(b).
2575.502c-1  Adjusted civil penalty under section 502(c)(1).
2575.502c-2  Adjusted civil penalty under section 502(c)(2).
2575.502c-3  Adjusted civil penalty under section 502(c)(3).
2575.502c-5  Adjusted civil penalty under section 502(c)(5).
2575.502c-6  Adjusted civil penalty under section 502(c)(6).

Subpart B--D  [Reserved]

    Authority: 29 U.S.C. 1135; 28 U.S.C. 2461 note; Secretary of Labor's 
Order 1-2003, 68 FR 5374 (Feb. 3, 2003).

    Source: 64 FR 42246, Aug. 3, 1999, unless otherwise noted.



      Subpart A--Adjustment of Civil Penalties Under ERISA Title I

    Source: 62 FR 40699, July 29, 1997, unless otherwise noted. 
Redesignated at 64 FR 42246, Aug. 3, 1999.



Sec. 2575.100  In general.

    Section 31001(s) of the Debt Collection Improvement Act of 1996 (the 
Act, Public Law 104-134, 110 Stat. 1321-373) amended the Federal Civil 
Penalties Inflation Adjustment Act of 1990 (the 1990 Act, Public Law 
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 least once every four years thereafter.

[68 FR 2878, Jan. 22, 2003]



Sec. 2575.209b-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. 2575.502c-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. 2575.502c-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. 2575.502c-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.



Sec. 2575.502c-5  Adjusted civil penalty under section 502(c)(5).

    In accordance with the requirements of the 1990 Act, as amended, the 
maximum amount of the civil monetary penalty established by section 
502(c)(5) of the Employee Retirement Income Security Act of 1974, as 
amended (ERISA), is hereby increased from $1,000 a day to $1,100 a day. 
This adjusted penalty applies only to violations occurring after March 
24, 2003.

[68 FR 2879, Jan. 22, 2003]

[[Page 601]]



Sec. 2575.502c-6  Adjusted civil penalty under section 502(c)(6).

    In accordance with the requirements of the 1990 Act, as amended, the 
maximum amount of the civil monetary penalty established by section 
502(c)(6) of the Employee Retirement Income Security Act of 1974, as 
amended (ERISA), is hereby increased from $100 a day but in no event in 
excess of $1,000 per request to $110 a day but in no event in excess of 
$1,100 per request. This adjusted penalty applies only to violations 
occurring after March 24, 2003.

[68 FR 2879, Jan. 22, 2003]

Subpart B-D [Reserved]



                         SUBCHAPTER H [RESERVED]



[[Page 602]]



  SUBCHAPTER I--TEMPORARY BONDING RULES UNDER THE EMPLOYEE RETIREMENT 
                       INCOME SECURITY ACT OF 1974





PART 2580--TEMPORARY BONDING RULES--Table of Contents




         Subpart A--Criteria for Determining Who Must Be Bonded

Sec.
2580.412-1  Statutory provisions.
2580.412-2  Plans exempt from the coverage of section 13.
2580.412-3  Plan administrators, officers and employees for purposes of 
          section 13.
2580.412-4  ``Funds or other property'' of a plan.
2580.412-5  Determining when ``funds or other property'' belong to a 
          plan.
2580.412-6  Determining when ``funds or other property'' are ``handled'' 
          so as to require bonding.

                  Subpart B--Scope and Form of the Bond

2580.412-7  Statutory provision--scope of the bond.
2580.412-8  The nature of the duties or activities to which the bonding 
          requirement relates.
2580.412-9  Meaning of fraud or dishonesty.
2580.412-10  Individual or schedule or blanket form of bonds.

                      Subpart C--Amount of the Bond

2580.412-11  Statutory provision.
2580.412-12  Relationship of determining the amount of the bond to 
          ``handling''.
2580.412-13  The meaning of ``funds'' in determining the amount of the 
          bond.
2580.412-14  Determining the amount of funds ``handled'' during the 
          preceding reporting year.
2580.412-15  Procedures to be used for estimating the amount of funds to 
          be ``handled'' during the current reporting year in those 
          cases where there is no preceding reporting year.
2580.412-16  Amount of bond required in given types of bonds or where 
          more than one plan is insured in the same bond.
2580.412-17  Bonds over $500,000.

                      Subpart D--General Bond Rules

2580.412-18  Naming of insureds.
2580.412-19  Term of the bond, discovery period, other bond clauses.
2580.412-20  Use of existing bonds, separate bonds and additional 
          bonding.

   Subpart E--Qualified Agents, Brokers and Surety Companies for the 
                            Placing of Bonds

2580.412-21  Corporate sureties holding grants of authority from the 
          Secretary of the Treasury.
2580.412-22  Interests held in agents, brokers and surety companies.

                          Subpart F--Exemptions

             Bonds Placed With Certain Reinsuring Companies

2580.412-23  Exemption.
2580.412-24  Conditions of exemption.

            Bonds Placed With Underwriters at Lloyds, London

2580.412-25  Exemption.
2580.412-26  Conditions of exemption.

           Banking Institutions Subject to Federal Regulation

2580.412-27  Exemption.
2580.412-28  Conditions of exemption.

       Savings and Loan Associations Subject to Federal Regulation

2580.412-29  Exemption.
2580.412-30  Conditions of exemption.

       Insurance Carriers, Service and Other Similar Organizations

2580.412-31  Exemption.
2580.412-32  Conditions of exemption.

Subpart G--Prohibition Against Bonding by Parties Interested in the Plan

2580.412-33  Introductory statement.
2580.412-34  General.
2580.412-35  Disqualification of agents, brokers and sureties.
2580.412-36  Application of 13(c) to ``party in interest''.

    Authority: Sec. 505, Pub. L. 93-406, 88 Stat. 894 (29 U.S.C. 1135); 
sec. 412(e), Pub. L. 93-406, 88 Stat. 889 (29 U.S.C. 1112).

    Source: 28 FR 14403, Dec. 27, 1963, unless otherwise noted. 
Redesignated at 50 FR 26706, June 28, 1985.

[[Page 603]]



         Subpart A--Criteria for Determining Who Must Be Bonded



Sec. 2580.412-1  Statutory provisions.

    Section 13(a) of the Welfare and Pension Plans Disclosure Act of 
1958, as amended, states, in part, that:

    Every administrator, officer and employee of any employee welfare 
benefit plan or of any employee pension benefit plan subject to this Act 
who handles funds or other property of such plan shall be bonded as 
herein provided; except that, where such plan is one under which the 
only assets from which benefits are paid are the general assets of a 
union or of an employer, the administrator, officers and employees of 
such plan shall be exempt from the bonding requirements of this section.
    * * * Such bond shall provide protection to the plan against loss by 
reason of acts of fraud or dishonesty on the part of such administrator, 
officer, or employee, directly or through connivance with others.



Sec. 2580.412-2  Plans exempt from the coverage of section 13.

    Only completely unfunded plans in which the plan benefits derive 
solely from the general assets of a union \1\ or employer, and in which 
plan assets are not segregated in any way from the general assets of a 
union or employer and remain solely within the general assets until the 
time of distribution of benefits, shall be exempt from the bonding 
provisions. As such, the language ``where such plan is one under which 
the only assets from which benefits are paid are the general assets of a 
union or of an employer'' shall not be deemed to exempt a plan from the 
coverage of section 13 if the plan is one in which:
---------------------------------------------------------------------------

    \1\ For purposes of the exemption discussed in Sec. 2580.412-2, the 
term ``union'' shall include ``* * * any organization of any kind or any 
agency or employee representation committee, association, group, or 
plan, in which employees participate and which exists for the purpose in 
whole or in part, of dealing with employers concerning an employee 
welfare or pension benefit plan, or other matters incidental to 
employement relationships * * *'' (29 U.S.C. 302(a)(3)).
---------------------------------------------------------------------------

    (a) Any benefits thereunder are provided or underwritten by an 
insurance carrier or service or other organization, or
    (b) There is a trust or other separate entity to which contributions 
are made or out of which benefits are paid, or
    (c) Contributions to the plan are made by the employees, either 
through withholding or otherwise, or from any source other than the 
employer or union involved, or
    (d) There is a separately maintained bank account or separately 
maintained books and records for the plan or other evidence of the 
existence of a segregrated or separately maintained or administered fund 
out of which plan benefits are to be provided.

As a general rule, the presence of special ledger accounts or accounting 
entries for plan funds as an integral part of the general books and 
records of an employer or union shall not, in and of itself, be deemed 
sufficient evidence of segregation of plan funds to take a plan out of 
the exempt category, but shall be considered along with the other 
factors and criteria discussed above in determining whether the 
exemption applies. Again, it should be noted, however, that the fact 
that a plan is not exempt from the coverage of section 13 does not 
necessarily mean that its administrators, officers or employees are 
required to be bonded. As stated previously, this will depend in each 
case on whether or not they ``handle'' funds or other property of the 
plan within the meaning of section 13 and under the standards set forth 
in Sec. 2580.412-6.



Sec. 2580.412-3  Plan administrators, officers and employees for purposes of section 13.

    (a) Administrator. (1) For purposes of the bonding provisions, the 
term ``administrator'' is defined in the same manner as under section 5 
of the Act and refers to:
    (i) The person or persons designated by the terms of the plan or the 
collective bargaining agreement with responsibility for the ultimate 
control, disposition, or management of the money received or 
contributed; or
    (ii) In the absence of such designation, the person or persons 
actually responsible for the control, disposition, or management of the 
money received or contributed, irrespective of whether

[[Page 604]]

such control, disposition, or management is exercised directly or 
through an agent or trustee designated by such person or persons.
    (2) Where by virtue of this definition, or regulations, 
interpretations or opinions issued with respect thereto, the term 
embodies natural persons such as members of the board of trustees of a 
trust, the bonding requirements shall apply to such persons.
    (3) However, when by virtue of this definition or regulations, 
interpretations, or opinions issued with respect thereto, the 
administrator in a given case in an entity such as a partnership, 
corporation, mutual company, joint stock company, trust, unincorporated 
organization, union or employees' beneficiary association, the term 
shall be deemed to apply, in meeting the bonding requirements, only to 
those natural persons who:
    (i) Are vested under the authority of the entity-administrator with 
the responsibility for carrying out functions constituting control, 
disposition or management of the money received or contributed within 
the definition of administrator, or who, acting on behalf of or under 
the actual or apparent authority of the entity-administrator, actually 
perform such functions, and who
    (ii) ``Handle'' funds or other property of the plan within the 
meaning of these regulations.
    (b) Officers. For purposes of the bonding provisions, the term 
``officer'' shall include any person designated by the terms of a plan 
or collective bargaining agreement as an officer, any person performing 
or authorized to perform executive functions of the plan or any member 
of a board of trustees or similar governing body of a plan. The term 
shall include such persons regardless of whether they are 
representatives of or selected by an employer, employees or an employee 
organization. In its most frequent application the term will emcompass 
those natural persons appointed or elected as officers of the plan or as 
members of boards or committees performing executive or supervisory 
functions for the plan, but who do not fall within the definition of 
administrator.
    (c) Employees. For purposes of the bonding provisions the term 
``employee'' shall, to the extent a person performs functions not 
falling within the definition of officer or administrator, include any 
employee who performs work for or directly related to a covered plan, 
regardless of whether technically he is employed, directly or 
indirectly, by or for a plan, a plan administrator, a trust, or by an 
employee organization or employer within the meaning of section 3(3) or 
3(4) of the Act.
    (d) Other persons covered. For purposes of the bonding provisions, 
the terms ``administrator, officer, or employee'' shall include any 
persons performing functions for the plan normally performed by 
administrators, officers, or employees of a plan. As such, the terms 
shall include persons indirectly employed, or otherwise delegated, to 
perform such work for the plan, such as pension consultants and 
planners, and attorneys who perform ``handling'' functions within the 
meaning of Sec. 2580.412-6. On the other hand, the terms would not 
include those brokers or independent contractors who have contracted for 
the performance of functions which are not ordinarily carried out by the 
administrators, officers, or employees of a plan, such as securities, 
brokers who purchase and sell securities or armored motor vehicle 
companies.

[28 FR 14403, Dec. 27, 1963, as amended at 34 FR 5158, Mar. 13, 1969. 
Redesignated at 50 FR 26706, June 28, 1985]



Sec. 2580.412-4  ``Funds or other property'' of a plan.

    The affirmative requirement for bonding persons falling within the 
definition of administrator, officer or employee is applicable only if 
they handle ``funds or other property'' of the plan concerned. The term 
``funds or other property'' is intended to encompass all property which 
is used or may be used as a source for the payment of benefits to plan 
participants. It does not include permanent assets used in the operation 
of the plan such as land and buildings, furniture and fixtures or office 
and delivery equipment used in the operation of the plan. It does 
include all items in the nature of quick assets,

[[Page 605]]

such as cash, checks and other negotiable instruments, government 
obligations and marketable securities. It also includes all other 
property or items convertible into cash or having a cash value and held 
or acquired for the ultimate purpose of distribution to plan 
participants or beneficiaries. In the case of a plan which has 
investments, this would include all the investments of the plan even 
though not in the nature of quick assets, such as land and buildings, 
mortgages, and securities in closely held corporations. However, in a 
given case, the question of whether a person was ``handling'' such 
``funds or other property'' so as to require bonding would depend on 
whether his relationship to this property was such that there was a risk 
that he, alone or in connivance with others, could cause a loss of such 
``funds or other property'' through fraud or dishonesty.



Sec. 2580.412-5  Determining when ``funds or other property'' belong to a plan.

    With respect to any contribution to a plan from any source, 
including employers, employees or employee organizations, the point at 
which any given item or amount becomes ``funds or other property'' of a 
plan for purposes of the bonding provisions shall be determined as 
described in this section.
    (a) Where the plan administrator is a board of trustees, person or 
body other than the employer or employee organization establishing the 
plan, a contribution to the plan from any source shall become ``funds or 
other property'' of the plan at the time it is received by the plan 
administrator. Employee contributions collected by an employer and later 
turned over to the plan administrator would not become ``funds or other 
property'' of the plan until receipt by the plan administrator.
    (b) Where the employer or employee organization establishing the 
plan is itself the plan administrator:
    (1) Contributions from employees or other persons who are plan 
participants would normally become ``funds or other property'' of the 
plan at the time they are received by the employer or employee 
organization, except however that contributions made by withholding from 
employees' salaries shall not be considered ``funds or other property'' 
of the plan for purposes of the bonding provisions so long as they are 
retained in and not segregated in any way from the general assets of the 
withholding employer or employee organization.
    (2) Contributions made to a plan by such employer or employee 
organization and contributions made by withholdings from employees' 
salaries would normally become ``funds or other property'' of the plan 
if and when they are taken out of the general assets of the employer or 
employee organization and placed in a special bank account or investment 
account; or identified on a separate set of books and records; or paid 
over to a corporate trustee or used to purchase benefits from an 
insurance carrier or service or other organization; or otherwise 
segregated, paid out or used for plan purposes, whichever shall occur 
first. Thus, if a plan is operated by a corporate trustee and no 
segregation from general assets is made of monies to be turned over to 
the corporate trustee prior to the actual transmittal of such monies, 
the contribution represented in the transmission becomes ``funds or 
other property'' of the plan at the time of receipt by the corporate 
trustee. On the other hand, if a special fund is first established from 
which monies are paid over to the corporate trustee, a given item would 
become ``funds or other property'' of the plan at the time it is placed 
in the special fund. Similarly, if plan benefits are provided through 
the medium of an insurance carrier or service or other organization and 
no segregation from general assets of monies used to purchase such 
benefits is made prior to turning such monies over to the organization 
contracting to provide benefits, plan funds or other property come into 
being at the time of receipt of payment for such benefits by the 
insurance carrier or service or other organization. In such a case, the 
``funds or other property'' of the plan would be represented by the 
insurance contract or other obligations to pay benefits and would not be 
normally subject to ``handling''. Bonding would not be required for any 
person with respect to the purchase of such benefits directly from 
general assets nor with respect to

[[Page 606]]

the bare existence of the contract obligation to pay benefits. However, 
if the particular, arrangement were such that monies derived from, or by 
virtue of, the contract did subsequently flow back to the plan, bonding 
may be required if such monies returning to the plan are handled by plan 
administrators, officers or employees. (Further discussion on bonding of 
insured plans is contained in Sec. 2580.412-6(b)(7)).



Sec. 2580.412-6  Determining when ``funds or other property'' are ``handled'' so as to require bonding.

    (a) General scope of term. (1) A plan administrator, officer, or 
employee shall be deemed to be ``handling'' funds or other property of a 
plan, so as to require bonding under section 13, whenever his duties or 
activities with respect to given funds or other property are such that 
there is a risk that such funds or other property could be lost in the 
event of fraud or dishonesty on the part of such person, acting either 
alone or in collusion with others. While ordinarily, those plan 
administrators, officers and employees who ``handle'' within the meaning 
of section 13 will be those persons with duties related to the receipt, 
safekeeping and disbursement of funds, the scope of the term ``handles'' 
and the prohibitions of paragraph (b) of section 13 shall be deemed to 
encompass any relationship of an administrator, officer or employee with 
respect to funds or other property which can give rise to a risk of loss 
through fraud or dishonesty. This shall include relationships such as 
those which involve access to funds or other property or decisionmaking 
powers with respect to funds or property which can give rise to such 
risk of loss.
    (2) Section 13 contains no exemptions based on the amount or value 
of funds or other property ``handled'', nor is the determination of the 
existence of risk of loss based on the amount involved. However, 
regardless of the amount involved, a given duty or relationship to funds 
or other property shall not be considered ``handling'', and bonding is 
not required, where it occurs under conditions and circumstances in 
which the risk that a loss will occur through fraud or dishonesty is 
negligible. This may be the case where the risk of mishandling is 
precluded by the nature of the funds or other property (e.g., checks, 
securities or title papers which can not be negotiated by the persons 
performing duties with respect to them). It may also be the case where 
significant risk of mishandling in the performance of duties of an 
essentially clerical character is precluded by fiscal controls.
    (b) General criteria for determining ``handling''. Subject to the 
application of the basic standard of risk of loss to each situation, 
general criteria for determining whether there is ``handling'' so as to 
require bonding are:
    (1) Physical contact. Physical contact with cash, checks or similar 
property generally constitutes ``handling''. However, persons who from 
time to time perform counting, packaging, tabulating, messenger or 
similar duties of an essentially clerical character involving physical 
contact with funds or other property would not be ``handling'' when they 
perform these duties under conditions and circumstances where risk of 
loss is negligible because of factors such as close supervision and 
control or the nature of the property.
    (2) Power to exercise physical contact or control. Whether or not 
physical contact actually takes place, the power to secure physical 
possession of cash, checks or similar property through factors such as 
access to a safe deposit box or similar depository, access to cash or 
negotiable assets, powers of custody or safekeeping, power to withdraw 
funds from a bank or other account generally constitutes ``handling'', 
regardless of whether the person in question has specific duties in 
these matters and regardless of whether the power or access is 
authorized.
    (3) Power to transfer to oneself or a third party or to negotiate 
for value. With respect to property such as mortgages, title to land and 
buildings, or securities, while physical contact or the possibility of 
physical contact may not, of itself, give rise to risk of loss so as to 
constitute ``handling'', a person shall be regarded as ``handling'' such 
items where he, through actual or apparent authority, can cause those 
items to be transferred to himself or to a third party or to be 
negotiated for value.

[[Page 607]]

    (4) Disbursement. Persons who actually disburse funds or other 
property, such as officers or trustees authorized to sign checks or 
other negotiable instruments, or persons who make cash disbursements, 
shall be considered to be ``handling'' such funds or property. Whether 
other persons who may influence, authorize or direct disbursements or 
the signing or endorsing of checks or similar instruments will be 
considered to be ``handling'' funds or other property shall be 
determined by reference to the particular duties or responsibilities of 
such persons as applied to the basic criteria of risk of loss.
    (5) Signing or endorsing checks or other negotiable instruments. In 
connection with disbursements or otherwise, any persons with the power 
to sign or endorse checks or similar instruments or otherwise render 
them transferable, whether individually or as co-signers with one or 
more persons, shall each be considered to be ``handling'' such funds or 
other property.
    (6) Supervisory or decision making responsibility. To the extent a 
person's supervisory or decision making responsibility involves factors 
in relationship to funds discussed in paragraph (b)(1), (2), (3), (4), 
or (5) of this section, such persons shall be considered to be 
``handling'' in the same manner as any person to whom the criteria of 
those paragraphs apply. To the extent that only general responsibility 
for the conduct of the business affairs of the plan is involved, 
including such functions as approval of contracts, authorization of 
disbursements, auditing of accounts, investment decisions, determination 
of benefit claims and similar responsibilities, such persons shall be 
considered to be ``handling'' whenever the facts of the particular case 
raise the possibility that funds or other property of the plan are 
likely to be lost in the event of their fraud or dishonesty. The mere 
fact of general supervision would not necessarily, in and of itself, 
mean that such persons are ``handling.'' Factors to be accorded weight 
are the system of fiscal controls, the closeness and continuity of 
supervision, who is in fact charged with, or actually exercising final 
responsibility for determining whether specific disbursements, 
investments, contracts, or benefit claims are bona fide, regular and 
made in accordance with the applicable trust instrument or other plan 
documents.
    (i) For example, persons having supervisory or decisionmaking 
responsibility would be ``handling'' to the extent they:
    (a) Act in the capacity of plan ``administrator'' and have ultimate 
responsibility for the plan within the meaning of the definition of 
``administrator'' (except to the extent that it can be shown that such 
persons could not, in fact, cause a loss to the plan to occur through 
fraud or dishonesty);
    (b) Exercise close supervision over corporate trustees or other 
parties charged with dealing with plan funds or other property; exercise 
such close control over investment policy that they, in effect, 
determine all specific investments;
    (c) Conduct, in effect, a continuing daily audit of the persons who 
``handle'' funds;
    (d) Regularly review and have veto power over the actions of a 
disbursing officer whose duties are essentially ministerial.
    (ii) On the other hand, persons having supervisory or decisionmaking 
responsibility would not be ``handling'' to the extent:
    (a) They merely conduct a periodic or sporadic audit of the persons 
who ``handle'' funds;
    (b) Their duties with respect to investment policy are essentially 
advisory;
    (c) They make a broad general allocation of funds or general 
authorization of disbursements intended to permit expenditures by a 
disbursing officer who has final responsibility for determining the 
propriety of any specific expenditure and making the actual 
disbursement;
    (d) A bank or corporate trustee has all the day to day functions of 
administering the plan;
    (e) They are in the nature of a Board of Directors of a corporation 
or similar authority acting for the corporation rather than for the plan 
and do not perform specific functions with respect to the operations of 
the plan.
    (7) Insured plan arrangements. In many cases, plan contributions 
made

[[Page 608]]

by employers or employee organizations or by withholding from employee's 
salaries are not segregated from the general assets of the employer or 
employee organization until payment for purchase of benefits from an 
insurance carrier or service or other organization. No bonding is 
required with respect to the payment of premiums or other payments made 
to purchase such benefits directly from general assests, nor with 
respect to the bare existence of the contract obligation to pay 
benefits. Such arrangements would not normally be subject to bonding 
except to the extent that monies returned by way of benefit payments, 
cash surrender, dividends, credits or otherwise, and which by the terms 
of the plan belonged to the plan (rather than to the employer, employee 
organization, insurance carrier or service or other organization) were 
subject to ``handling'' by plan administrators, officers or employees.



                  Subpart B--Scope and Form of the Bond



Sec. 2580.412-7  Statutory provision--scope of the bond.

    The statute requires that the bond shall provide protection to the 
plan against loss by reason of acts of fraud or dishonesty on the part 
of a plan administrator, officer, or employee, directly or through 
connivance with others.



Sec. 2580.412-8  The nature of the duties or activities to which the bonding requirement relates.

    The bond required under section 13 is limited to protection for 
those duties and activities from which loss can arise through fraud or 
dishonesty. It is not required to provide the same scope of coverage 
that is required in faithful discharge of duties bonds under the Labor-
Management Reporting and Disclosure Act of 1959 or in the faithful 
performance bonds of public officials.



Sec. 2580.412-9  Meaning of fraud or dishonesty.

    The term ``fraud or dishonesty'' shall be deemed to encompass all 
those risks of loss that might arise through dishonest or fraudulent 
acts in handling of funds as delineated in Sec. 2580.412-6. As such, the 
bond must provide recovery for loss occasioned by such acts even though 
no personal gain accrues to the person committing the act and the act is 
not subject to punishment as a crime or misdemeanor, provided that 
within the law of the state in which the act is committed, a court would 
afford recovery under a bond providing protection against fraud or 
dishonesty. As usually applied under state laws, the term ``fraud or 
dishonesty'' encompasses such matters as larceny, theft, embezzlement, 
forgery, misappropriation, wrongful abstraction, wrongful conversion, 
willful misapplication or any other fraudulent or dishonest acts. For 
the purposes of section 13, other fraudulent or dishonest acts shall 
also be deemed to include acts where losses result through any act or 
arrangement prohibited by title 18, section 1954 of the U.S. Code.



Sec. 2580.412-10  Individual or schedule or blanket form of bonds.

    Section 13 provides that ``any bond shall be in a form or of a type 
approved by the Secretary, including individual bonds or schedule or 
blanket forms of bonds which cover a group or class''. Any form of bond 
which may be described as individual, schedule or blanket in form or any 
combination of such forms of bonds shall be acceptable to meet the 
requirements of section 13, provided that in each case, the form of the 
bond, in its particular clauses and application, is not inconsistent 
with meeting the substantive requirements of the statute for the persons 
and plan involved and with meeting the specific requirements of the 
regulations in this part. Basic types of bonds in general usage are:
    (a) Individual bond. Covers a named individual in a stated penalty.
    (b) Name schedule bond. Covers a number of named individuals in the 
respective amounts set opposite their names.
    (c) Position schedule bond. Covers each of the occupants of 
positions listed in the schedule in the respective amounts set opposite 
such positions.
    (d) Blanket bonds. Cover all the insured's officers and employees 
with no schedule or list of those covered being necessary and with all 
new officers and

[[Page 609]]

employees bonded automatically, in a blanket penalty which takes two 
forms--an aggregate penalty bond and a multiple penalty bond which are 
described below:
    (1) The aggregate penalty blanket bond such as the Commercial 
Blanket Bond; the amount of the bond is available for dishonesty losses 
caused by persons covered thereunder or losses in which such person is 
concerned or implicated. Payment of loss on account of any such person 
does not reduce the amount of coverage available for losses other than 
those caused by such person or in which he was concerned or implicated.
    (2) The multiple penalty bond such as the Blanket Position Bond 
giving separate coverage on each person for a uniform amount--the net 
effect being the same as though a separate bond were issued on each 
person covered thereunder and all of such bonds being for a uniform 
amount.
    Note: For the purpose of section 13, blanket bonds which are either 
aggregate penalty or multiple penalty in form shall be permissible if 
they otherwise meet the requirements of the Act and the regulations in 
this part.

Bonding, to the extent required, of persons indirectly employed, or 
otherwise delegated, to perform functions for the plan which are 
normally performed by ``administrators, officers, or employees'' as 
described in Sec. 2580.412-3(d) may be accomplished either by including 
them under individual or schedule bonds or other forms of bonds meeting 
the requirements of the Act, or naming them in what is known under 
general trade usage as an ``Agents Rider'' attached to a Blanket Bond.



                      Subpart C--Amount of the Bond



Sec. 2580.412-11  Statutory provision.

    Section 13 requires that the amount of the bond be fixed at the 
beginning of each calendar, policy or other fiscal year, as the case may 
be, which constitutes the reporting year of the plan for purposes of the 
reporting provisions of the Act. The amount of the bond shall be not 
less than 10 per centum of the amount of funds handled, except that any 
such bond shall be in at least the amount of $1,000 and no such bond 
shall be required in an amount in excess of $500,000: Provided, That the 
Secretary, after due notice and opportunity for hearing to all 
interested parties, and after consideration of the record, may prescribe 
an amount in excess of $500,000, which in no event shall exceed 10 per 
centum of the funds handled. For purposes of fixing the amount of such 
bond, the amount of funds handled shall be determined by the funds 
handled by the person, group, or class to be covered by such bond and by 
their predecessor or predecessors, if any, during the preceding 
reporting year, or if the plan has no preceding reporting year, the 
amount of funds to be handled during the current reporting year by such 
person, group, or class, estimated as provided in the regulations in 
this part. With respect to persons required to be bonded, section 13 
shall be deemed to require the bond to insure from the first dollar of 
loss up to the requisite bond amount and not to permit the use of 
deductible or similar features whereby a portion of the risk within such 
requisite bond amount is assumed by the insured. Any request for 
variance from these requirements shall be made pursuant to the 
provisions of section 13(e) of the Act.



Sec. 2580.412-12  Relationship of determining the amount of the bond to ``handling''.

    A determination of whether persons falling within the definition of 
administrator, officer or employee are required to be bonded depends on 
whether they ``handle'' funds or other property. Determining the amount 
of the bond is an aspect of the same process in that it requires a 
determination of what funds or other property are being handled or what 
amounts of funds or other property are subject to risk of loss with 
respect to the duties or powers of an administrator, officer or employee 
of a covered plan. Once this calculation is made, the required amount 
for which that person must be covered by a bond, either by himself or as 
a part of a group or class being bonded under a blanket or schedule 
bond, is not less than 10 percent of the amount ``handled'' or $1,000, 
whichever is the greater amount, except that no such bond shall be 
required in an amount

[[Page 610]]

greater than $500,000 by virtue of these regulations. (See 
Sec. 2580.412-17.)



Sec. 2580.412-13  The meaning of ``funds'' in determining the amount of the bond.

    The amount of the bond depends on the amount of ``funds'' 
``handled'', and shall be sufficient to provide bonding protection 
against risk of loss through fraud or dishonesty for all plan funds, 
including other property similar to funds or in the nature of funds. As 
such, the term ``funds'' shall be deemed to include and be equivalent to 
``funds and other property'' of the plan as described in Sec. 2580.412-
4. With respect to any item of ``funds or other property'' which does 
not have a cash or readily ascertainable market value, the value of such 
property may be estimated on such basis as will reasonably reflect the 
loss the plan might suffer if it were mishandled.



Sec. 2580.412-14  Determining the amount of funds ``handled'' during the preceding reporting year.

    (a) The amount of funds ``handled'' by each person falling within 
the definition of administrator, officer, or employee (or his 
predecessors) during the preceding reporting year shall be the total of 
funds subject to risk of loss, within the meaning of the definition of 
``handling'' (see Sec. 2580.412-6), through acts of fraud or dishonesty, 
directly or in connivance with others, by such person or his 
predecessors during the preceding reporting year. The relationship of 
the determination of the amount of funds ``handled'' to the 
determination of who is ``handling'' can best be illustrated by a 
situation that commonly arises with respect to executive personnel of a 
plan, where a bank or corporate trustee has the responsibility for the 
receipt, safekeeping, physical handling and investment of a plan's 
assets and the basic function of the executive personnel is to authorize 
payments to beneficiaries and payments for services to the corporate 
trustee, the actuary and the employees of the plan itself. Normally, in 
any given year, only a small portion of the plan's total assets is 
disbursed, and the question arises as to whether an administrator or 
executive personnel are ``handling'' only the amounts actually disbursed 
each year or whether they are ``handling'' the total amounts of the 
assets. The answer to this question depends on the same basic criterion 
that governs all questions of ``handling'', namely, the possibility of 
loss. If the authorized duties of the persons in question are strictly 
limited to disbursements of benefits and payments for services, and the 
fiscal controls and practical realities of the situation are such that 
these persons cannot gain access to funds which they are not 
legitimately allowed to disburse, the amount on which the bond is based 
may be limited to the amount actually disbursed in the reporting year. 
This would depend, in part, on the extent to which the bank or corporate 
trustee which has physical possession of the funds also has final 
responsibility for questioning and limiting disbursements from the plan, 
and on whether this responsibility is embodied in the original plan 
instruments. On the other hand, where insufficient fiscal controls exist 
so that the persons involved have free access to, or can obtain control 
of, the total amount of the fund, the bond shall reflect this fact and 
the amount ``handled'' shall be based on the total amount of the fund. 
This would generally occur with respect to persons such as the 
``administrator'', regardless of what functions are performed by a bank 
or corporate trustee, since the ``administrator'' by definition retains 
ultimate power to revoke any arrangement with a bank or corporate 
trustee. In such case, the ``administrator'' would have the power to 
commit the total amount of funds involved to his control, unless the 
plan itself or other specific agreement (1) prevents the 
``administrator'' from so doing or (2) requires that revocation cannot 
be had unless a new agreement providing for similar controls and 
limitations on the ``handling'' of funds is simultaneously entered into.
    (b) Where the circumstances of ``handling'' are such that the total 
amount of a given account or fund is subject to ``handling'', the amount 
``handled'' shall include the total of all such funds on hand at the 
beginning of the reporting year, plus any items received during the year 
for any reason,

[[Page 611]]

such as contributions or income, or items received as a result of sales, 
investments, reinvestment, interest or otherwise. It would not, however, 
be necessary to count the same item twice in arriving at the total funds 
``handled'' by a given person during a reporting year. For example, a 
given person may have various duties or powers involving receipt, 
safekeeping or disbursement of funds which would place him in contact 
with the same funds at several times during the same year. Different 
duties, however, would not make it necessary to count the same item 
twice in arriving at the total ``handled'' by him. Similarly, where a 
person has several different positions with respect to a plan, it would 
not be necessary to count the same funds each time that they are 
``handled'' by him in these different positions, so long as the amount 
of the bond is sufficient to meet the 10 percent requirement with 
respect to the total funds ``handled'' by him subject to risk or loss 
through fraud or dishonesty, whether acting alone or in collusion with 
others. In general, once an item properly within the category of 
``funds,'' has been counted as ``handled'' by a given person, it need 
not be counted again even though it should subsequently be ``handled'' 
by the same person during the same year.



Sec. 2580.412-15  Procedures to be used for estimating the amount of funds to be ``handled'' during the current reporting year in those cases where there is no 
          preceding reporting year.

    If for any reason a plan does not have a complete preceding 
reporting year, the amount ``handled'' by persons required to be covered 
by a bond shall be estimated at the beginning of the calendar, policy or 
other fiscal year, as the case may be, which would constitute either the 
operating year or the reporting year of the plan, whichever shall occur 
first, as follows:
    (a) In the case of a plan having a previous experience year, even 
though it has no preceding reporting year, the estimate of the amount to 
be ``handled'' for any person required to be covered shall be based on 
the experience in the previous year by applying the same standards and 
criteria as in a plan which has a preceding reporting year. Similarly, 
where a plan is recently established, but has had, at the time a bond is 
obtained, sufficient experience to reasonably estimate a complete year's 
experience for persons required to be bonded, the amount of funds to be 
``handled'' shall be projected to the complete year on the basis of the 
period in which the plan has had experience, unless, to the knowledge of 
the plan administrator, the given period of experience is so seasonal or 
unrepresentative of the complete year's experience as not to provide a 
reasonable basis for projecting the estimate for the complete year.
    (b) Where a plan does not have any prior experience sufficient to 
allow it to estimate the amount ``handled'' in the manner outlined in 
paragraph (a) of this section, the amount to be ``handled'' by the 
administrators, officers and employees of the plan during the current 
reporting year shall be that amount initially required to fund or set up 
the plan, plus the amount of contributions required to be made under the 
plan formula from any source during the current reporting year. In most 
cases, the amount of contributions will be calculated by multiplying the 
total yearly contribution per participant (required by the plan formula 
from either employers, employees, employer organizations or any other 
source) by the number of participants in the plan at the beginning of 
such reporting year. In cases where the per capita contribution cannot 
readily be determined, such as in the case of certain insured plans 
covered by the Act, the amount of contributions shall be estimated on 
the amount of insurance premiums which are actuarially estimated as 
necessary to support the plan, or on such other actuarially estimated 
basis as may be applicable. In the case of a newly formed profit-sharing 
plan covered by the Act, if the employer establishing the plan has a 
previous year of experience, the amount of contributions required by the 
plan formula shall be estimated on the basis of the profits of the 
previous year. The amount of the bond shall then be fixed at 10 percent 
of this calculation, but not more than $500,000. A bond for such amount 
shall be obtained in any form

[[Page 612]]

the plan desires on all persons who are administrators, officers, or 
employees of the plan and who ``handle'' funds or other property of the 
plan.



Sec. 2580.412-16  Amount of bond required in given types of bonds or where more than one plan is insured in the same bond.

    (a) As indicated in Sec. 2580.412-10, the Act permits the use of 
blanket, schedule and individual forms of bonds so long as the amount of 
the bond penalty is sufficient to meet the requirements of the Act for 
any person who is an administrator, officer or employee of a plan 
handling funds or other property of the plan. Such person must be bonded 
for 10 percent of the amount he handles, and the amount of the bond must 
be sufficient to indemnify the plan for any losses in which such person 
is involved up to that amount.
    (b) When individual or schedule bonds are written, the bond amount 
for each person must represent not less than 10 percent of the funds 
``handled'' by the named individual or by the person in the position. 
When a blanket bond is written, the amount of the bond shall be at least 
10 percent of the highest amount handled by any administrator, officer 
or employee to be covered under the bond. It should also be noted that 
if an individual or group or class covered under a blanket bond 
``handle'' a large amount of funds or other property, while the 
remaining bondable persons ``handle'' only a smaller amount, it is 
permissible to obtain a blanket bond in an amount sufficient to meet the 
10 percent requirements for all except the individual, group or class 
``handling'' the larger amounts, with respect to whom excess indemnity 
shall be secured in an amount sufficient to meet the 10 percent 
requirement.
    (c) The Act does not prohibit more than one plan from being named as 
insured under the same bond. However, any such bond must allow for 
recovery by each plan in an amount at least equal to that which would be 
required if bonded separately. This requirement has application where a 
person or persons sought to be bonded pursuant to the requirements of 
section 13 have ``handling'' functions in more than one plan covered 
under the bond. Where such is the case, the amount of the bond must be 
sufficient to cover any such persons having functions in more than one 
plan for at least 10 percent of the total amount ``handled'' by them in 
all the plans covered under the bond. For example, X is the 
administrator of two welfare plans run by the same employer and he 
``handled'' $100,000 in the preceding reporting year for Plan A and 
$500,000 in the preceding reporting year for Plan B. If both plans are 
covered under the same bond, the amount of the bond with respect to X 
shall be at least $60,000 or ten percent of the total ``handled'' by X 
for both plans covered under the bond in which X has powers and duties 
of ``handling'' since Plan B is required to carry bond in at least the 
amount of $50,000 and Plan A, $10,000.
    (d) Additionally, in order to meet the requirement that each plan be 
protected, it shall be necessary that arrangement be made either by the 
terms of the bond or rider to the bond or by separate agreement among 
the parties concerned, that payment of a loss sustained by one of such 
insureds shall not work to the detriment of any other plan covered under 
the bond with respect to the amount for which that plan is required to 
be covered. For example, if Plan A suffered a loss of $30,000 as 
described above and such loss was recompensed in its entirety by the 
surety company, it would receive $20,000 more than the $10,000 
protection required under section 13, and only $30,000 would be 
available for recovery with respect to further losses caused by X. In a 
subsequently discovered defalcation of $40,000 by X from Plan B, it 
would be necessary that the bond, rider, or separate agreement provide 
that such amount of recovery paid to Plan A in excess of the $10,000 for 
which it is required to be covered, be made available by such insured 
to, or held for the use of, Plan B in such amount as Plan B would 
receive if bonded separately. Thus, in the instant case, Plan B would be 
able to recover the full $40,000 of its loss. Where the funds or other 
property of several plans are commingled (if permitted by law) with each 
other or with other funds, such arrangement shall allow recovery to be 
attributed proportionately to the

[[Page 613]]

amount for which each plan is required to be protected. Thus, in the 
instant case, if funds or other property were commingled, and X caused a 
loss of these funds through fraud or dishonesty, one-sixth of the loss 
would be attributable to Plan A and five-sixths of the loss attributable 
to Plan B.
    (e) The maximum amount of any bond with respect to any person in any 
one plan in $500,000, but bonds covering more than one plan may be 
required to be over $500,000 in order to meet the requirements of the 
Act, since persons covered by such a bond may have ``handling'' 
functions in more than one plan. The $500,000 limitations for such 
persons applies only with respect to each separate plan in which they 
have such functions. The minimum bond coverage for any administrator, 
officer, or employee ``handling'' funds or other property of a plan is 
$1,000 as respects each plan in which he has ``handling'' functions.



Sec. 2580.412-17  Bonds over $500,000.

    The Labor-Management Services Administrator, after due notice and 
opportunity for hearing to all interested parties, and after 
consideration of the record, may prescribe an amount in excess of 
$500,000, which in no event shall exceed 10 per centum of the funds 
``handled.'' Any requirement for bonding in excess of $500,000 shall be 
according to such other regulations as may be prescribed.



                      Subpart D--General Bond Rules



Sec. 2580.412-18  Naming of insureds.

    Since section 13 is intended to protect funds or other property of 
all plans involved, bonds under this section shall allow for enforcement 
or recovery by those persons usually authorized to act for such plans in 
such matters. In most cases, the naming of the plan or plans as insured 
will provide for such recovery. Where it is not clear that such recovery 
will be provided, however, a rider shall be attached to the bond or 
separate agreement made among the parties concerned to make certain that 
any reimbursement collected under the bond will be for the benefit and 
use of the plan suffering a loss. Such rider or agreement shall always 
be required as respects any bond (a) where the employer or employee 
organization is first named joint insured with one or more plans, or (b) 
two or more plans are named joint insureds under a single bond with the 
first named acting for all insureds for the purpose of orderly servicing 
of the bond.



Sec. 2580.412-19  Term of the bond, discovery period, other bond clauses.

    (a) Term of the bond. The amount of any required bond must in each 
instance be based on the amount of funds ``handled'' and must be fixed 
or estimated at the beginning of the plan's reporting year, that is, as 
soon after the date when such year begins as the necessary information 
from the preceding reporting year can practicably be ascertained. This 
does not mean, however, that a new bond must be obtained each year. 
There is nothing in the Act that prohibits a bond for a term longer than 
one year, with whatever advantages such a bond might offer by way of a 
lower premium. However, at the beginning of each reporting year the bond 
shall be in at least the requisite amount. If, for any reason, the bond 
is below the required level at that time, the existing bond shall either 
be increased to the proper amount, or a supplemental bond shall be 
obtained.
    (b) Discovery period. A discovery period of no less than one year 
after the termination or cancellation of the bond is required. Any 
standard form written on a ``discovery'' basis, i.e., providing that a 
loss must be discovered within the bond period as a prerequisite to 
recovery of such loss, however, will not be required to have a discovery 
period if it contains a provision giving the insured the right to 
purchase a discovery period of one year in the event of termination or 
cancellation and the insured has already given the surety notice that it 
desires such discovery period.
    (c) Other bond clauses. A bond shall not be adequate to meet the 
requirements of section 13, if, with respect to bonding coverage 
required under section 13, it contains a clause, or is otherwise, in 
contravention of the law of the State in which it is executed.

[[Page 614]]



Sec. 2580.412-20  Use of existing bonds, separate bonds and additional bonding.

    (a) Additional bonding. Section 13 neither prevents additional 
bonding beyond that required by its terms, nor prescribes the form in 
which additional coverage may be taken. Thus, so long as a particular 
bond meets the requirements of the regulations in this part as to the 
persons required to be bonded and provides coverage for such persons in 
at least the minimum required amount, additional coverage as to persons 
or amount may be taken in any form, either on the same or separate bond.
    (b) Use of existing bonds. Insofar as a bond currently in use is 
adequate to meet the requirements of the Act and the regulations in this 
part or may be made adequate to meet these requirements through rider, 
modification or separate agreement between the parties, no further 
bonding is required.
    (c) Use of separate bonds. The choice of whether persons required to 
be bonded should be bonded separately or under the same bond, whether 
given plans should be bonded separately or under the same bond, whether 
existing bonds should be used or separate bonds for Welfare and Pension 
Plans Disclosure Act bonding should be obtained, or whether the bond is 
underwritten by a single surety company or more than one surety company, 
either separately or on a cosurety basis, is left to the judgment of the 
parties concerned, so long as the bonding program adopted meets the 
requirements of the Act and the regulations in this part.



   Subpart E--Qualified Agents, Brokers and Surety Companies for the 
                            Placing of Bonds



Sec. 2580.412-21  Corporate sureties holding grants of authority from the Secretary of the Treasury.

    (a) The provisions of section 13 require that any surety company 
with which a bond is placed pursuant to that section must be a corporate 
surety which holds a grant of authority from the Secretary of the 
Treasury under the Act of July 30, 1947 (6 U.S.C. 6-13), as an 
acceptable surety on Federal bonds. The Act provides, among other 
things, that in order for a surety company to be eligible for such grant 
of authority, it must be incorporated under the laws of the United 
States or of any State and the Secretary of the Treasury shall be 
satisfied of certain facts relating to its authority and capitalization. 
Such grants of authority are evidenced by Certificates of Authority 
which are issued by the Secretary of the Treasury and which expire on 
the April 30 following the date of their issuance. A list of the 
companies holding such Certificates of Authority is published annually 
in the Federal Register, usually in May or June. Changes in the list, 
occurring between May 1 and April 30, either by addition to or removal 
from the list of companies, are also published in the Federal Register 
following each such change.
    (b) Where a surety becomes insolvent and is placed in receivership, 
or if for any other reason the Secretary of the Treasury determines that 
its financial condition is not satisfactory to him and he revokes the 
authority of such company to act as an acceptable surety under the Act 
of July 30, 1947, the ``administrator'' of the insured plan shall, upon 
knowledge of such facts, be responsible for securing a new bond with an 
acceptable surety.
    (c) In obtaining or renewing a bond, the plan administrator shall 
assure that the surety is one which satisfies the requirements of this 
section. If the bond is for a term of more than one year, the plan 
administrator, at the beginning of each reporting year, shall assure 
that the surety continues to satisfy the requirements of this subpart.



Sec. 2580.412-22  Interests held in agents, brokers and surety companies.

    Section 13(c) prohibits the placing of bonds, required to be 
obtained pursuant to section 13, with any surety or other company, or 
through any agent or broker in whose business operations a plan or any 
party in interest in a plan has significant control or financial 
interest, direct or indirect. An interpretation of this section has been 
issued (Sec. 2580.412-36 of this chapter).

[[Page 615]]



                          Subpart F--Exemptions

    Source: 28 FR 14410, Dec. 27, 1963, unless otherwise noted. 
Redesignated at 50 FR 26706, June 28, 1985.

             Bonds Placed With Certain Reinsuring Companies



Sec. 2580.412-23  Exemption.

    An exemption from the bonding requirements of the Welfare and 
Pension Plans Disclosure Act is granted by this section whereby bonding 
arrangements (which otherwise comply with the requirements of section 13 
of the Act and the regulations issued thereunder) with companies 
authorized by the Secretary of the Treasury as acceptable reinsurers on 
Federal bonds will satisfy the bonding requirements of the Act.



Sec. 2580.412-24  Conditions of exemption.

    (a) This exemption obtains only with respect to the requirement of 
section 13(a) of the Act that all bonds required thereunder shall have 
as surety thereon, a corporate surety company, which is an acceptable 
surety on Federal bonds under authority granted by the Secretary of the 
Treasury pursuant to the Act of July 30, 1947 (6 U.S.C. 6-13).
    (b) The exemption is granted upon the condition that if for any 
reason the authority of any such company to act as an acceptable 
reinsuring company is terminated, the administrator of a plan insured 
with such company, shall, upon knowledge of such fact, be responsible 
for securing a new bond with a company acceptable under the Act and the 
exemptions issued thereunder.
    (c) In obtaining or renewing a bond, the plan administrator shall 
ascertain that the surety is one which satisfies the requirements of the 
Act and the exemptions thereunder. If the bond is for a term of more 
than one year, the plan administrator, at the beginning of each 
reporting year, shall ascertain that the surety continues to do so.

            Bonds Placed With Underwriters at Lloyds, London



Sec. 2580.412-25  Exemption.

    An exemption from the bonding requirements of subsection 13(a) of 
the Welfare and Pension Plans Disclosure Act is granted by this section 
whereby arrangements (which otherwise comply with the requirements of 
section 13 of the Act and the regulations issued thereunder), with the 
Underwriters at Lloyds, London will satisfy the bonding requirements of 
the Act.



Sec. 2580.412-26  Conditions of exemption.

    (a) This exemption obtains only with respect to the requirements of 
section 13(a) of the Act that all bonds required thereunder shall have 
as surety thereon, a corporate surety company, which is an acceptable 
surety on Federal bonds under authority granted by the Secretary of the 
Treasury, pursuant to the Act of July 30, 1947 (6 U.S.C. 6-13).
    (b) This exemption is granted on the following conditions:
    (1) Underwriters at Lloyds, London shall continue to be licensed in 
a state of the United States to enter into bonding arrangements of the 
type required by the Act.
    (2) Underwriters at Lloyds, London, shall file with the Office of 
Pension and Welfare Benefit Programs two (2) copies of each annual 
statement required to be made to the Commissioner of Insurance of those 
states in which Underwriters at Lloyds, London are licensed. Copies of 
annual statements shall be filed with the Office of Pension and Welfare 
Benefit Programs within the same period required by the respective 
states.
    (3) All bonding arrangements entered into by Underwriters at Lloyds, 
London under section 13 of the Act shall contain a ``Service of Suit 
Clause'' in substantial conformity with that set forth in the petition 
for exemption.

           Banking Institutions Subject to Federal Regulation



Sec. 2580.412-27  Exemption.

    An exemption from the bonding requirements of subsections 13 (a) and 
(b) of the Welfare and Pension Plans Disclosure Act is granted whereby 
banking institutions and trust companies specified in Sec. 2580.412-28 
are not required to comply with subsections 13 (a) and (b) of the Act, 
with respect to

[[Page 616]]

welfare and pension benefit plans covered by the Act.

[34 FR 5158, Mar. 13, 1969. Redesignated at 50 FR 26706, June 28, 1985]



Sec. 2580.412-28  Conditions of exemption.

    This exemption applies only to those banking institutions and trust 
companies subject to regulation and examination by the Comptroller of 
the Currency or the Board of Governors of the Federal Reserve System, or 
the Federal Deposit Insurance Corporation.

       Savings and Loan Associations Subject to Federal Regulation



Sec. 2580.412-29  Exemption.

    An exemption from the bonding requirements of subsections 13 (a) and 
(b) of the Welfare and Pension Plans Disclosure Act is granted whereby 
savings and loan associations (including building and loan associations, 
cooperative banks and homestead associations) specified in 
Sec. 2580.412-30 are not required to comply with subsections 13 (a) and 
(b) of the Act, with respect to welfare and pension benefit plans 
covered by the Act for the benefit of their own employees, where such a 
savings and loan association is the administrator of such plans.

[32 FR 6840, May 4, 1967. Redesignated at 50 FR 26706, June 28, 1985]



Sec. 2580.412-30  Conditions of exemption.

    This exemption applies only to those savings and loan associations 
(including building and loan associations, cooperative banks and 
homestead associations) subject to regulation and examination by the 
Federal Home Loan Bank Board.

[32 FR 6840, May 4, 1967. Redesignated at 50 FR 26706, June 28, 1985]

       Insurance Carriers, Service and Other Similar Organizations



Sec. 2580.412-31  Exemption.

    An exemption from the bonding requirements of subsection 13 (a) and 
(b) of the Welfare and Pension Plans Disclosure Act is granted whereby 
any insurance carrier or service or other similar organization specified 
in Sec. 2580.412-32 is not required to comply with subsections 13 (a) 
and (b) of the Act with respect to any welfare or pension benefit plan 
covered by the Act which is established or maintained for the benefit of 
persons other than the employees of such insurance carrier or service or 
other similar organization.

[34 FR 5158, Mar. 13, 1969. Redesignated at 50 FR 26706, June 28, 1985]



Sec. 2580.412-32  Conditions of exemption.

    This exemption applies only to those insurance carriers, service or 
other similar organizations providing or underwriting welfare or pension 
plan benefits in accordance with State law.

[34 FR 5158, Mar. 13, 1969. Redesignated at 50 FR 26706, June 28, 1985]



Subpart G--Prohibition Against Bonding by Parties Interested in the Plan

    Source: 28 FR 14412, Dec. 27, 1963, unless otherwise noted. 
Redesignated at 50 FR 26706, June 28, 1985.



Sec. 2580.412-33  Introductory statement.

    (a) This part discusses the meaning and scope of section 13(c) of 
the Welfare and Pension Plans Disclosure Act of 1958 (76 Stat. 39, 29 
U.S.C. 308d(c)) (hereinafter referred to as the Act). This provision 
makes it unlawful ``for any person to procure any bond [required by the 
Act] from any surety or other company or through any agent or broker in 
whose business operations such plan or any party in interest in such 
plan has any significant control or financial interest, direct or 
indirect.'' Because the prohibition contained in this provision is 
broadly stated, it becomes a matter of importance to determine more 
specifically the types of arrangements intended to be prohibited.
    (b) The provisions of section 13 of the Act, including 13(c) are 
subject to the general investigatory authority of the Director, Office 
of Labor-Management and Welfare-Pension Reports, embodied in section 9 
of the Act. The correctness of an interpretation of these provisions can 
be determined finally and authoritatively only by the courts. It is 
necessary, however, for the Labor-Management Services Administrator to 
reach

[[Page 617]]

informed conclusions as to the meaning of the law to enable him to carry 
out his statutory duties of administration and enforcement. The 
interpretations of the Labor-Management Services Administrator contained 
in this part, which are issued upon the advice of the Solicitor of 
Labor, indicate the construction of the law which will guide the Labor-
Management Services Administrator in performing his duties unless and 
until he is directed otherwise by authoritative ruling of the courts or 
unless and until he subsequently decides that his prior interpretation 
is incorrect. Under section 12 of the Act, the interpretations contained 
in this part, if relied upon in good faith, will constitute a defense in 
any action or proceeding based on any Act or omission in alleged 
violation of section 13(c) of the Act. The omission, however to discuss 
a particular problem in this part, or in interpretations supplementing 
it, should not be taken to indicate the adoption of any position by the 
Labor-Management Services Administrator with respect to such problem or 
to constitute an administrative interpretation or practice. 
Interpretations of the Labor-Management Services Administrator with 
respect to 13(c) are set forth in this part to provide those affected by 
the provisions of the Act with ``a practical guide * * * as to how the 
office representing the public interest in its enforcement will seek to 
apply it'' (Skidmore v. Swift & Co., 323 U.S. 134, 138).
    (c) To the extent that prior opinions and interpretations relating 
to 13(c) are inconsistent with the principles stated in this part, they 
are hereby rescinded and withdrawn.



Sec. 2580.412-34  General.

    The purpose of section 13(c), as shown by its legislative history, 
is similar to a closely related provision contained in section 502(a) of 
the Labor-Management Reporting and Disclosure Act of 1959 (73 Stat. 536; 
29 U.S.C. 502(a)). The fundamental purpose of Congress under 13(c) is to 
insure against potential abuses arising from significant financial or 
other influential interests affecting the objectivity of the plan or 
parties in interest in the plan and agents, brokers, or surety or other 
companies, in securing and providing the bond specified in section 
13(a). As will be explained more fully below, this prohibition, however, 
was not intended to preclude the placing of bonds through or with 
certain parties in interest in plans which provide a variety of services 
to the plan, one of which is a bonding service.



Sec. 2580.412-35  Disqualification of agents, brokers and sureties.

    Since 13(c) is to be construed as disqualifying any agent, broker, 
surety or other company from having a bond placed through or with it, if 
the plan or any party in interest in the plan has a significant 
financial interest or control in such agent, broker, surety or other 
company, a question of fact will necessarily arise in many cases as to 
whether the financial interest or control held is sufficiently 
significant to disqualify the agent, broker or surety. Although no rule 
of guidance can be established to govern each and every case in which 
this question arises, in general, the essential test is whether the 
existing financial interest or control held is incompatible with an 
unbiased exercise of judgment in regard to procuring the bond or bonding 
the plan's personnel. In regard to the foregoing, it is also to be 
pointed out that lack of knowledge or consent on the part of persons 
responsible for procuring bonds with respect to the existence of a 
significant financial interest or control rendering the bonding 
arrangement unlawful will not be deemed a mitigating factor where such 
persons have failed to make a reasonable examination into the pertinent 
circumstances affecting the procuring of the bond.



Sec. 2580.412-36  Application of 13(c) to ``party in interest''.

    (a) Under 13(c), an agent, broker or surety or other company is 
disqualified from having a bond placed through or with it if a ``party 
in interest'' in the plan has any significant control or financial 
interest in such agent, broker, surety or other company. Section 3(13) 
of the Act defines the term ``party in interest'' to mean ``any 
administrator, officer, trustee, custodian, counsel, or

[[Page 618]]

employee of any employee welfare benefit plan or a person providing 
benefit plan services to any such plan, or an employer any of whose 
employees are covered by such a plan or officer or employee or agent of 
such employer, or an officer or agent or employee of an employee 
organization having members covered by such plan.''
    (b) A basic question presented is whether the effect of 13(c) is to 
prohibit persons from placing a bond through or with any ``party in 
interest'' in the plan. The language used in 13(c) appears to indicate 
that in this connection the intent of Congress was to eliminate those 
instances where the existing financial interest or control held by the 
``party in interest'' in the agent, broker, surety or other company is 
incompatible with an unbiased exercise of judgment in regard to 
procuring the bond or bonding the plan's personnel. Accordingly, not all 
parties in interest are disqualified from procuring or providing bonds 
for the plan. Thus where a ``party in interest'' or its affiliate 
provides multiple benefit plan services to plans, persons are not 
prohibited from availing themselves of the bonding services provided by 
the ``party in interest'' or its affiliate merely because the plan has 
already availed itself, or will avail itself, of other services provided 
by the ``party in interest.'' In this case, it is inherent in the nature 
of the ``party in interest'' or its affiliate as an individual or 
organization providing multiple benefit plan services, one of which is a 
bonding service, that the existing financial interest or control held is 
not, in and of itself, incompatible with an unbiased exercise of 
judgment in regard to procuring the bond or bonding the plan's 
personnel. In short, there is no distinction between this type of 
relationship and the ordinary arm's length business relationship which 
may be established between a plan-customer and an agent, broker or 
surety company, a relationship which Congress could not have intended to 
disturb. On the other hand, where a ``party in interest'' in the plan or 
an affiliate does not provide a bonding service as part of its general 
business operations, 13(c) would prohibit any person from procuring the 
bond through or with any agent, broker, surety or other company, with 
respect to which the ``party in interest'' has any significant control 
or financial interest, direct or indirect. In this case, the failure of 
the ``party in interest'' or its affiliate to provide a bonding service 
as part of its general business operations raises the posibility of less 
than an arm's length business relationship between the plan and the 
agent, broker, surety or other company since the objectivity of either 
the plan or the agent, broker or surety may be influenced by the ``party 
in interest''.
    (c) The application of the principles discussed in this section is 
illustrated by the following examples:

    Example (1). B, a broker, renders actuarial and consultant service 
to plan P. B has also procured a group life insurance policy for plan P. 
B may also place a bond for P with surety company S, provided that 
neither B nor P has any significant control or financial interest, 
direct or indirect, in S and provided that neither P nor any other 
``party in interest'' in P, e.g., an officer of the plan, has any 
significant control or financial interest, direct or indirect, in B or 
S.
    Example (2). I, a life insurance company, has provided a group life 
insurance policy for plan P. I is affiliated with S, a surety company, 
and has a significant financial interest or control in S. P is not 
prohibited from obtaining a bond from S since I's affiliation with S 
does not ordinarily, in and of itself, affect the objectivity of P in 
procuring the bond or the objectivity of S in bonding P's personnel. 
However, if any other ``party in interest'' as defined in section 3(13) 
of the Act, such as the employer whose employees are covered by P, 
should have a significant financial interest or control in S, S could 
not write the bond for P, since the employer's interest affects the 
objectivity of P and S.

[[Page 619]]



  SUBCHAPTER J--FIDUCIARY RESPONSIBILITY UNDER THE FEDERAL EMPLOYEES' 
                      RETIREMENT SYSTEM ACT OF 1986





PART 2582--RULES AND REGULATIONS FOR FIDUCIARY RESPONSIBILITY--Table of Contents




                   Subpart A--Temporary Bonding Rules

Sec.
2582.8478-1  Temporary bonding requirements.
2582.8478-2  Amount of the bond.

                   Subpart B--Permanent Bonding Rules

2582.8478-3  Permanent bonding requirements.
2582.8478-4  Permanent amount of the bond.

    Authority: 5 U.S.C. 8478 and 8478 note; Secretary of Labor's Order 
1-2003, 68 FR 5374 (Feb. 3, 2003).



                   Subpart A--Temporary Bonding Rules



Sec. 2582.8478-1  Temporary bonding requirements.

    (a) General. Pending the issuance of permanent regulations under 
section 8478 of the Federal Employees' Retirement System Act of 1986 
(FERSA), any fiduciary with respect to the Thrift Savings Fund (Fund) 
established under FERSA or any person who handles funds or other 
property of the Fund, shall be deemed to be in compliance with the 
bonding requirements of section 8478 of FERSA if he or she is bonded in 
compliance with the temporary bonding regulations under section 412 of 
the Employee Retirement Income Security Act of 1974 (ERISA) set forth in 
part 2580 of title 29 of the Code of Federal Regulations.
    (b) Application of ERISA temporary bonding rules. For purposes of 
this section:
    (1) Any reference to section 13 of the Welfare and Pension Plans 
Disclosure Act, as amended (WPPDA), or any section thereof in the ERISA 
temporary bonding regulations shall be deemed to refer to section 8478 
of FERSA or the corresponding subsection thereof;
    (2) Where the particular phrases set forth in FERSA are not 
identical to the phrases in the WPPDA, ERISA or the ERISA temporary 
bonding regulations, the phrases appearing in FERSA shall be substituted 
by operation of law; and
    (3) Where the phrases are identical but the meaning is different, 
the meaning given such phrases by FERSA shall govern. For example, the 
phrase ``every administrator, officer and employee of any employee 
welfare benefit plan or of any employee pension benefit plan subject to 
this Act who handles funds or other property of such plan'' which 
appears in the WPPDA and in the ERISA temporary bonding regulations 
shall be construed to mean, for purposes of this section, ``each 
fiduciary and each person who handles funds or property of the Thrift 
Savings Fund,'' which is the term appearing in section 8478 of FERSA; 
the terms ``employee benefit plan'' and ``plan'' which appear in the 
ERISA temporary bonding regulations shall be construed to mean, for 
purposes of this section, ``Thrift Savings Fund''; and the term 
``reporting year of the plan'' which appears in the ERISA temporary 
bonding regulations shall be construed to mean, for purposes of this 
section, ``fiscal year of the Thrift Savings Fund.''
    (c) Effectiveness. This section is effective until the earlier of 
the date of issuance by the Secretary of Labor of permanent regulations 
under section 8478 of FERSA or December 31, 1989.

[52 FR 35866, Sept. 23, 1987]



Sec. 2582.8478-2  Amount of the bond.

    (a) General. Under the authority of section 8478(b)(1) of the 
Federal Employees' Retirement System Act of 1986 (FERSA), the amount of 
a bond for each person, group or class to be bonded shall not be less 
than 10 percent of the amount of funds handled by such person, group or 
class with respect to any fiscal year of the Fund. In no case shall such 
bond be less than $1,000 nor more than $500,000. However, the Secretary 
of Labor reserves the authority under section 8478(b)(1) of FERSA to 
prescribe an amount in excess of

[[Page 620]]

$500,000, after due notice and opportunity for hearing to all interested 
parties, and other consideration of the record.
    (b) Effectiveness. This section shall remain in effect until it is 
amended or withdrawn in accordance with section 8478(b)(1) of FERSA, but 
in no event shall this section remain in effect beyond December 31, 
1989.

[52 FR 35866, Sept. 23, 1987, as amended at 54 FR 53609, Dec. 29, 1989]



                   Subpart B--Permanent Bonding Rules



Sec. 2582.8478-3  Permanent bonding requirements.

    (a) General. Any fiduciary with respect to the Thrift Savings Fund 
(Fund) established under the Federal Employees' Retirement System Act of 
1986 (FERSA) or any person who handles funds or other property of the 
Fund shall be deemed to be in compliance with the bonding requirements 
of section 8478 of FERSA if he or she is bonded in compliance with the 
temporary bonding regulations under section 412 of the Employee 
Retirement Income Security Act of 1974 (ERISA) set forth in part 2580 of 
title 29 of the Code of Federal Regulations.
    (b) Application of ERISA temporary bonding rules. For purposes of 
this section:
    (1) Any reference to section 13 of the Welfare and Pension Plans 
Disclosure Act, as amended (WPPDA), or any section thereof in the ERISA 
temporary bonding regulations shall be deemed to refer to section 8478 
of FERSA or the corresponding subsection thereof;
    (2) Where the particular phrases set forth in FERSA are not 
identical to the phrases in the WPPDA, ERISA or the ERISA temporary 
bonding regulations, the phrases appearing in FERSA shall be substituted 
by operation of law; and
    (3) Where the phrases are identical but the meaning is different, 
the meaning given such phrases by FERSA shall govern. For example, the 
phrase ``every administrator, officer and employee of any employee 
welfare benefit plan or of any employee pension benefit plan subject to 
this Act who handles funds or other property of such plan'' which 
appears in the WPPDA and in the ERISA temporary bonding regulations 
shall be construed to mean, for purposes of this section ``each 
fiduciary and each person who handles funds or other property of the 
Thrift Savings Fund,'' which is the term appearing in section 8478 of 
FERSA; the terms ``employee benefit plan'' and ``plan'' which appear in 
the ERISA temporary bonding regulations shall be construed to mean, for 
purposes of this section, ``Thrift Savings Fund''; and the term 
``reporting year of the plan'' which appears in the ERISA temporary 
bonding regulations shall be construed to mean, for purposes of this 
section, ``fiscal year of the Thrift Savings Fund.''
    (c) Effective date. This section is effective January 1, 1990.

[54 FR 53609, Dec. 29, 1989]



Sec. 2582.8478-4  Permanent amount of the bond.

    (a) General. Under the authority of section 8478(b)(1) of the 
Federal Employees' Retirement System Act of 1986 (FERSA), the amount of 
a bond for each person, group or class to be bonded shall not be less 
than 10 percent of the amount of funds handled by such person, group or 
class with respect to any fiscal year of the Fund. In no case shall such 
bond be less than $1,000 nor more than $500,000. However, the Secretary 
of Labor reserves the authority under section 8478(b)(1) of FERSA to 
prescribe an amount in excess of $500,000, after due notice and 
opportunity for hearing to all interested parties, and other 
consideration of the record.
    (b) Effective date. This section shall become effective January 1, 
1990, and remain in effect until it is amended or withdrawn in 
accordance with section 8478(b)(1) of FERSA.

[54 FR 53609, Dec. 29, 1989]



PART 2584--RULES AND REGULATIONS FOR THE ALLOCATION OF FIDUCIARY RESPONSIBILITY--Table of Contents




Sec.
2584.8477(e)-1  General.
2584.8477(e)-2  Allocation of fiduciary duties.
2584.8477(e)-3  Procedures for allocation.

[[Page 621]]

2584.8477(e)-4  Revocation and termination of allocation.
2584.8477(e)-5  Effect of allocation.
2584.8477(e)-6  Definitions.
2584.8477(e)-7  Effective date.

    Authority: 5 U.S.C. 8477(e)(1)(E) and Secretary of Labor's Order 1-
2003, 68 FR 5374 (Feb. 3, 2003).

    Source: 53 FR 52687, Dec. 29, 1988, unless otherwise noted.



Sec. 2584.8477(e)-1  General.

    5 U.S.C. 8477(e)(1)(E) provides that any fiduciary with respect to 
the Thrift Savings Fund of the Federal Employees Retirement System who 
allocates a fiduciary responsibility to another person pursuant to 
procedures prescribed by the Secretary of Labor shall not be liable for 
an act or omission of such person except in specified circumstances. 
This part sets forth the procedures which have been prescribed by the 
Secretary of Labor for the allocation of fiduciary responsibilities.



Sec. 2584.8477(e)-2  Allocation of fiduciary duties.

    (a) The fiduciary duties of the Board as set forth at 5 U.S.C. 8472 
may not be allocated to any person other than a member or members of the 
Board.
    (b) The Executive Director may allocate authority and responsibility 
for the investment and management of the Fixed Income Investment Fund to 
a qualified professional asset manager(s).
    (c) The Executive Director may allocate authority and responsibility 
for the investment and management of the Government Securities 
Investment Fund, the Common Stock Index Investment Fund, the 
International Stock Index Investment Fund and the Small Capitalization 
Stock Index Investment Fund to an investment manager(s).
    (d) Notwithstanding any other provision of this part, no allocation 
may be made which would constitute:
    (1) A violation of an express policy of the Board; or
    (2) An invalid delegation according to the Act or any other law.
    (e) Except as provided in this part, no person who has or may 
acquire fiduciary responsibility in connection with the Thrift Savings 
Fund may allocate such responsibility to another person.

[53 FR 52687, Dec. 29, 1988, as amended at 65 FR 34394, May 30, 2000]



Sec. 2584.8477(e)-3  Procedures for allocation.

    (a) Any allocation made by the Board must--
    (1) Be authorized by the concurring vote of a majority of the total 
membership of the Board;
    (2) Be made in writing, signed by the Chairman of the Board and 
acknowledged in writing by the receiving Board member or members;
    (3) Set forth the duties and responsibilities allocated, either in 
the body of the document or by reference to another document existing at 
the time of the allocation; and
    (4) Be communicated in an appropriate written form to the Executive 
Director, the participants and the beneficiaries of the Thrift Savings 
Fund.
    (b) Any allocation made by the Executive Director must--
    (1) Be made in writing, signed by the Executive Director and 
acknowledged in writing by the receiving fiduciary;
    (2) Set forth the duties and responsibilities allocated, either in 
the body of the document or by reference to another document existing at 
the time of the allocation; and
    (3) Be communicated in an appropriate written form to the 
participants and beneficiaries of the Thrift Savings Fund.



Sec. 2584.8477(e)-4  Revocation and termination of allocation.

    (a) Any allocation made pursuant to this part must be revocable at 
will by the allocating fiduciary, subject only to notice which is 
reasonable under the circumstances.
    (b) Any revocation by the allocating fiduciary or termination of an 
allocation by the fiduciary to whom duties have been allocated must set 
forth in writing the duties and responsibilities as to which the 
revocation or termination is effective, either in the body of the 
document or by reference to another document existing at the time of the 
revocation or termination.

[[Page 622]]

    (c) Any revocation of an allocation must--
    (1) In the case of an allocation which was made by the Board, be 
authorized by the concurring vote of a majority of the total membership 
of the Board and be signed by the Chairman of the Board, or
    (2) In the case of an allocation which was made by the Executive 
Director, be signed by the Executive Director.
    (d) Any termination of an allocation, to be effective, must--
    (1) In the case of an allocation which was made by the Board, be 
signed by the terminating fiduciary and acknowledged in writing by the 
Chairman of the Board, or
    (2) In the case of an allocation which was made by the Executive 
Director, be signed by the terminating fiduciary and acknowledged in 
writing by the Executive Director.
    (e) Any revocation or termination of an allocation must be 
communicated by the Executive Director in an appropriate written form to 
the participants and beneficiaries of the Thrift Savings Fund in a 
manner which identifies the person(s) assuming the responsibilities 
which were the subject of the revocation or termination.



Sec. 2584.8477(e)-5  Effect of allocation.

    Where fiduciary responsibility has been allocated to another person 
or persons pursuant to the procedures contained in this part, the 
allocating fiduciary shall not be liable for any act or omission of such 
person or persons unless:
    (a) The allocating fiduciary has violated 5 U.S.C. 8477(b) with 
respect to--
    (1) The allocation or the continuation of the allocation,
    (2) The implementation of these procedures, or
    (3) The duty to monitor the performance of such person or persons in 
a reasonable manner during the life of the allocation, or
    (b) The allocating fiduciary would otherwise be liable in accordance 
with 5 U.S.C. 8477(e)(1)(D).



Sec. 2584.8477(e)-6  Definitions.

    As used in this part:
    (a) Act means the Federal Employees' Retirement System Act of 1986, 
5 U.S.C. 8401 et seq. (Supp. III 1997);
    (b) Board means the Federal Retirement Thrift Investment Board 
established pursuant to 5 U.S.C. 8472;
    (c) Common Stock Index Investment Fund means the fund established 
under 5 U.S.C. 8438(b)(1)(C);
    (d) Executive Director means the executive director of the Federal 
Retirement Thrift Investment Board as appointed pursuant to 5 U.S.C. 
8474;
    (e) Fiduciary duty and fiduciary responsibility mean any duty or 
responsibility which involves the exercise of discretionary authority or 
discretionary control over--
    (1) The management or disposition of the assets of the Thrift 
Savings Fund, or
    (2) The administration of the Thrift Savings Fund;
    (f) Fixed Income Investment Fund means the fund established under 5 
U.S.C. 8438(b)(1)(B);
    (g) Government Securities Investment Fund means the fund established 
under 5 U.S.C. 8438(b)(1)(A);
    (h) International Stock Index Investment Fund means the fund 
established under 5 U.S.C. 8438(b)(1)(E);
    (i) Investment manager means any fiduciary who--
    (1) Has the power to manage, acquire or dispose of any asset of the 
plan,
    (2) Is:
    (i) Registered as an investment adviser under the Investment 
Advisers Act of 1940 (15 U.S.C. 80b-1),
    (ii) Not registered as an investment adviser under such Act by 
reason of paragraph (1) of section 203A(a) of such Act (15 U.S.C. 80b-
3a) but is registered as an investment adviser under the laws of the 
state (referred to in such paragraph (1)) in which it maintains its 
principal office and place of business, and, at the time the fiduciary 
last filed the registration form most recently filed by the fiduciary 
with such state in order to maintain the fiduciary's registration under 
the laws of such state, also filed a copy of such form with the 
Secretary of Labor,
    (iii) A bank, as defined in that Act, or

[[Page 623]]

    (iv) An insurance company qualified to perform services described in 
paragraph (i)(1) of this section under the laws of more than one state, 
and
    (3) Has acknowledged in writing that he or she is a fiduciary with 
respect to the Thrift Savings Fund;
    (j) Qualified professional asset manager has the meaning which is 
prescribed at 5 U.S.C. 8438(a)(7);
    (k) Small Capitalization Stock Index Investment Fund means the fund 
established under 5 U.S.C. 8438(b)(1)(D);
    (l) Thrift Savings Fund means the fund established under 5 U.S.C. 
8437.

[53 FR 52687, Dec. 29, 1988, as amended at 65 FR 34394, May 30, 2000]



Sec. 2584.8477(e)-7  Effective date.

    This section is effective December 29, 1988, and liability for any 
transaction which occurs on or after this date will be governed by this 
section only. In accordance with section 114(a) of Pub. L. 99-556, the 
interim regulations promulgated by the Board appearing at title 5, CFR, 
chapter VI, Secs. 1660.1 through 1660.5 will no longer be effective as 
of December 29, 1988. Liability for transactions which occur before the 
effective date of this regulation, however, will continue to be governed 
by allocations made both during the statutorily defined effective period 
of the previously cited interim regulations and pursuant to the 
requirements of those regulations.

[[Page 624]]



     SUBCHAPTER K--ADMINISTRATION AND ENFORCEMENT UNDER THE FEDERAL 
                EMPLOYEES' RETIREMENT SYSTEM ACT OF 1986





PART 2589--RULES AND REGULATIONS FOR ADMINISTRATION AND ENFORCEMENT--Table of Contents




    Authority: 5 U.S.C. 8477(e)(1)(B) and (f); Secretary of Labor's 
Order 1-2003, 68 FR 5374 (Feb. 3, 2003).

    Source: 54 FR 32636, Aug. 9, 1989, unless otherwise noted.



Sec. 2589.1  Civil penalties under section 8477(e)(1)(B) of FERSA.

    (a) Section 8477(e)(1)(B) of FERSA, 5 U.S.C. 8477(e)(1)(B), permits 
the Secretary of Labor to assess a civil penalty against a party in 
interest who engages in a prohibited transaction with respect to the 
Thrift Savings Fund. The initial penalty under section 8477(e)(1)(B) is 
five percent of the ``amount involved'' in each such transaction for 
each year or part thereof during which the prohibited transaction 
continues. However, if the prohibited transaction is not corrected 
during the ``correction period,'' the civil penalty may be in an amount 
not more than 100% of the ``amount involved.'' The Department of Labor 
will apply the definitions set out in Sec. 2560.502i-1(b) through (e) of 
this chapter of title 29 (civil penalties under section 502(i) of ERISA) 
in determining the ``amount involved,'' ``correction,'' ``correction 
period,'' and for computation of the section 8477(e)(1)(B) penalty.
    (b) The rules of practice set forth in Secs. 2570.1-2570.12 of part 
2570, subpart A of subchapter G of this chapter of title 29 (procedures 
for the assessment of civil sanctions under ERISA section 502(i)) are 
applicable to prohibited transaction penalty proceedings under FERSA 
section 8477(e)(1)(B).

[[Page 625]]



 SUBCHAPTER L--HEALTH INSURANCE PORTABILITY AND RENEWABILITY FOR GROUP 
                              HEALTH PLANS





PART 2590--RULES AND REGULATIONS FOR GROUP HEALTH PLAN REQUIREMENTS--Table of Contents




   Subpart A--Continuation Coverage, Qualified Medical Child Support 
                  Orders, Coverage for Adopted Children

Sec.
2590.609-1  [Reserved]
2590.609-2  National Medical Support Notice.

Subpart B--Requirements Relating to Access and Renewability of Coverage, 
       and Limitations on Preexisting Condition Exclusion Periods

2590.701-1  Basis and scope.
2590.701-2  Definitions.
2590.701-3  Limitations on preexisting condition exclusion period.
2590.701-4  Rules relating to creditable coverage.
2590.701-5  Certification and disclosure of previous coverage.
2590.701-6  Special enrollment periods.
2590.701-7  HMO affiliation period as alternative to preexisting 
          condition exclusion.
2590.702  Prohibiting discrimination against participants and 
          beneficiaries based on a health factor.
2590.703  Guaranteed renewability in multiemployer plans and multiple 
          employer welfare arrangements. [Reserved]

                      Subpart C--Other Requirements

2590.711  Standards relating to benefits for mothers and newborns.
2590.712  Parity in the application of certain limits to mental health 
          benefits.

                      Subpart D--General Provisions

2590.731  Preemption; State flexibility; construction.
2590.732  Special rules relating to group health plans.
2590.734  Enforcement. [Reserved]
2590.736  Applicability dates.

    Authority: 29 U.S.C. 1027, 1059, 1135, 1169, 1181-1183, 1185, 1185a, 
1185b, 1191, 1191a, 1191b, and 1191c, sec. 101 (g) Pub. L. 104-191, 101 
Stat. 1936; sec. 401(b) Pub. L. 105-200, 112 Stat. 645; Secretary of 
Labor's Order No. 1-2003, 68 FR 5373, (Feb. 3, 2003).

    Source: 62 FR 16941, Apr. 8, 1997, unless otherwise noted.



   Subpart A--Continuation Coverage, Qualified Medical Child Support 
                  Orders, Coverage for Adopted Children



Sec. 2590.609-1  [Reserved]



Sec. 2590.609-2  National Medical Support Notice.

    (a) This section promulgates the National Medical Support Notice 
(the Notice), as mandated by section 401(b) of the Child Support 
Performance and Incentive Act of 1998 (Pub. L. 105-200). If the Notice 
is appropriately completed and satisfies paragraphs (3) and (4) of 
section 609(a) of the Employee Retirement Income Security Act (ERISA), 
the Notice is deemed to be a qualified medical child support order 
(QMCSO) pursuant to ERISA section 609(a)(5)(C). Section 609(a) of ERISA 
delineates the rights and obligations of the alternate recipient 
(child), the participant, and the group health plan under a QMCSO. A 
copy of the Notice is available on the Internet at http://www.dol.gov/
ebsa.
    (b) For purposes of this section, a plan administrator shall find 
that a Notice is appropriately completed if it contains the name of an 
Issuing Agency, the name and mailing address (if any) of an employee who 
is a participant under the plan, the name and mailing address of one or 
more alternate recipient(s) (child(ren) of the participant) (or the name 
and address of a substituted official or agency which has been 
substituted for the mailing address of the alternate recipient(s)), and 
identifies an underlying child support order.
    (c)(1) Under section 609(a)(3)(A) of ERISA, in order to be 
qualified, a medical child support order must clearly specify the name 
and the last known mailing address (if any) of the participant and the 
name and mailing address of each alternate recipient covered by the 
order, except that, to the extent provided in the order, the name and 
mailing address of an official of a State or a political subdivision 
thereof may be substituted for the mailing address

[[Page 626]]

of any such alternate recipient. Section 609(a)(3)(B) of ERISA requires 
a reasonable description of the type of coverage to be provided to each 
such alternate recipient, or the manner in which such type of coverage 
is to be determined. Section 609(a)(3)(C) of ERISA requires that the 
order specify the period to which such order applies.
    (2) The Notice satisfies ERISA section 609(a)(3)(A) by including the 
necessary identifying information described in Sec. 2590.609-2(b).
    (3) The Notice satisfies ERISA section 609(a)(3)(B) by having the 
Issuing Agency identify either the specific type of coverage or all 
available group health coverage. If an employer receives a Notice that 
does not designate either specific type(s) of coverage or all available 
coverage, the employer and plan administrator should assume that all are 
designated. The Notice further satisfies ERISA section 609(a)(3)(B) by 
instructing the plan administrator that if a group health plan has 
multiple options and the participant is not enrolled, the Issuing Agency 
will make a selection after the Notice is qualified, and, if the Issuing 
Agency does not respond within 20 days, the child will be enrolled under 
the plan's default option (if any).
    (4) Section 609(a)(3)(C) of ERISA is satisfied because the Notice 
specifies that the period of coverage may only end for the alternate 
recipient(s) when similarly situated dependents are no longer eligible 
for coverage under the terms of the plan, or upon the occurrence of 
certain specified events.
    (d)(1) Under ERISA section 609(a)(4), a qualified medical child 
support order may not require a plan to provide any type or form of 
benefit, or any option, not otherwise provided under the plan, except to 
the extent necessary to meet the requirements of a law relating to 
medical child support described in section 1908 of the Social Security 
Act, 42 U.S.C. 1396g-1.
    (2) The Notice satisfies the conditions of ERISA section 609(a)(4) 
because it requires the plan to provide to an alternate recipient only 
those benefits that the plan provides to any dependent of a participant 
who is enrolled in the plan, and any other benefits that are necessary 
to meet the requirements of a State law described in such section 1908.
    (e) For the purposes of this section, an ``Issuing Agency'' is a 
State agency that administers the child support enforcement program 
under Part D of Title IV of the Social Security Act.

[65 FR 82142, Dec. 27, 2000]



Subpart B--Requirements Relating to Access and Renewability of Coverage, 
       and Limitations on Preexisting Condition Exclusion Periods

    Source: 62 FR 16941, Apr. 8, 1997. Redesignated at 65 FR 82142, Dec. 
27, 2000, unless otherwise noted.



Sec. 2590.701-1  Basis and scope.

    (a) Statutory basis. This subpart implements part 7 of subtitle B of 
title I of the Employee Retirement Income Security Act of 1974, as 
amended (hereinafter ERISA or the Act).
    (b) Scope. A group health plan or health insurance issuer offering 
group health insurance coverage may provide greater rights to 
participants and beneficiaries than those set forth in this subpart. 
This subpart A sets forth minimum requirements for group health plans 
and health insurance issuers offering group health insurance coverage 
concerning:
    (1) Limitations on a preexisting condition exclusion period.
    (2) Certificates and disclosure of previous coverage.
    (3) Rules relating to counting creditable coverage.
    (4) Special enrollment periods.
    (5) Use of an affiliation period by an HMO as an alternative to a 
preexisting condition exclusion.



Sec. 2590.701-2  Definitions.

    Unless otherwise provided, the definitions in this section govern in 
applying the provisions of Secs. 2590.701 through 2590.734.
    Affiliation period means a period of time that must expire before 
health insurance coverage provided by an HMO becomes effective, and 
during which the HMO is not required to provide benefits.
    COBRA definitions:

[[Page 627]]

    (1) COBRA means title X of the Consolidated Omnibus Budget 
Reconciliation Act of 1985, as amended.
    (2) COBRA continuation coverage means coverage, under a group health 
plan, that satisfies an applicable COBRA continuation provision.
    (3) COBRA continuation provision means sections 601-608 of the Act, 
section 4980B of the Code (other than paragraph (f)(1) of such section 
4980B insofar as it relates to pediatric vaccines), and title XXII of 
the PHSA.
    (4) Exhaustion of COBRA continuation coverage means that an 
individual's COBRA continuation coverage ceases for any reason other 
than either failure of the individual to pay premiums on a timely basis, 
or for cause (such as making a fraudulent claim or an intentional 
misrepresentation of a material fact in connection with the plan). An 
individual is considered to have exhausted COBRA continuation coverage 
if such coverage ceases--
    (i) Due to the failure of the employer or other responsible entity 
to remit premiums on a timely basis; or
    (ii) When the individual no longer resides, lives, or works in a 
service area of an HMO or similar program (whether or not within the 
choice of the individual) and there is no other COBRA continuation 
coverage available to the individual.
    Condition means a medical condition.
    Creditable coverage means creditable coverage within the meaning of 
Sec. 2590.701-4(a).
    Enroll means to become covered for benefits under a group health 
plan (i.e., when coverage becomes effective), without regard to when the 
individual may have completed or filed any forms that are required in 
order to enroll in the plan. For this purpose, an individual who has 
health insurance coverage under a group health plan is enrolled in the 
plan regardless of whether the individual elects coverage, the 
individual is a dependent who becomes covered as a result of an election 
by a participant, or the individual becomes covered without an election.
    Enrollment date definitions (enrollment date and first day of 
coverage) are set forth in Sec. 2590.701-3(a)(2) (i) and (ii).
    Excepted benefits means the benefits described as excepted in 
Sec. 2590.732(b).
    Genetic information means information about genes, gene products, 
and inherited characteristics that may derive from the individual or a 
family member. This includes information regarding carrier status and 
information derived from laboratory tests that identify mutations in 
specific genes or chromosomes, physical medical examinations, family 
histories, and direct analysis of genes or chromosomes.
    Group health insurance coverage means health insurance coverage 
offered in connection with a group health plan.
    Group health plan means an employee welfare benefit plan to the 
extent that the plan provides medical care (including items and services 
paid for as medical care) to employees or their dependents (as defined 
under the terms of the plan) directly or through insurance, 
reimbursement, or otherwise.
    Group market means the market for health insurance coverage offered 
in connection with a group health plan. (However, certain very small 
plans may be treated as being in the individual market, rather than the 
group market; see the definition of individual market in this section.)
    Health insurance coverage means benefits consisting of medical care 
(provided directly, through insurance or reimbursement, or otherwise) 
under any hospital or medical service policy or certificate, hospital or 
medical service plan contract, or HMO contract offered by a health 
insurance issuer.
    Health insurance issuer or issuer means an insurance company, 
insurance service, or insurance organization (including an HMO) that is 
required to be licensed to engage in the business of insurance in a 
State and that is subject to State law that regulates insurance (within 
the meaning of section 514(b)(2) of the Act). Such term does not include 
a group health plan.
    Health maintenance organization or HMO means--
    (1) A federally qualified health maintenance organization (as 
defined in section 1301(a) of the PHSA);
    (2) An organization recognized under State law as a health 
maintenance organization; or
    (3) A similar organization regulated under State law for solvency in 
the

[[Page 628]]

same manner and to the same extent as such a health maintenance 
organization.
    Individual health insurance coverage means health insurance coverage 
offered to individuals in the individual market, but does not include 
short-term, limited duration insurance. For this purpose, short-term, 
limited duration insurance means health insurance coverage provided 
pursuant to a contract with an issuer that has an expiration date 
specified in the contract (taking into account any extensions that may 
be elected by the policyholder without the issuer's consent) that is 
within 12 months of the date such contract becomes effective. Individual 
health insurance coverage can include dependent coverage.
    Individual market means the market for health insurance coverage 
offered to individuals other than in connection with a group health 
plan. Unless a State elects otherwise in accordance with section 
2791(e)(1)(B)(ii) of the PHSA, such term also includes coverage offered 
in connection with a group health plan that has fewer than two 
participants as current employees on the first day of the plan year.
    Internal Revenue Code (Code) means the Internal Revenue Code of 
1986, as amended (Title 26, United States Code).
    Issuer means a health insurance issuer.
    Late enrollment definitions (late enrollee and late enrollment) are 
set forth in Sec. 2590.701-3(a)(2) (iii) and (iv).
    Medical care means amounts paid for--
    (1) The diagnosis, cure, mitigation, treatment, or prevention of 
disease, or amounts paid for the purpose of affecting any structure or 
function of the body;
    (2) Transportation primarily for and essential to medical care 
referred to in paragraph (1) of this definition; and
    (3) Insurance covering medical care referred to in paragraphs (1) 
and (2) of this definition.
    Medical condition or condition means any condition, whether physical 
or mental, including, but not limited to, any condition resulting from 
illness, injury (whether or not the injury is accidental), pregnancy, or 
congenital malformation. However, genetic information is not a 
condition.
    Placement, or being placed, for adoption means the assumption and 
retention of a legal obligation for total or partial support of a child 
by a person with whom the child has been placed in anticipation of the 
child's adoption. The child's placement for adoption with such person 
terminates upon the termination of such legal obligation.
    Plan year means the year that is designated as the plan year in the 
plan document of a group health plan, except that if the plan document 
does not designate a plan year or if there is no plan document, the plan 
year is--
    (1) The deductible/limit year used under the plan;
    (2) If the plan does not impose deductibles or limits on a yearly 
basis, then the plan year is the policy year;
    (3) If the plan does not impose deductibles or limits on a yearly 
basis, and either the plan is not insured or the insurance policy is not 
renewed on an annual basis, then the plan year is the employer's taxable 
year; or
    (4) In any other case, the plan year is the calendar year.
    Preexisting condition exclusion means a limitation or exclusion of 
benefits relating to a condition based on the fact that the condition 
was present before the first day of coverage, whether or not any medical 
advice, diagnosis, care, or treatment was recommended or received before 
that day. A preexisting condition exclusion includes any exclusion 
applicable to an individual as a result of information that is obtained 
relating to an individual's health status before the individual's first 
day of coverage, such as a condition identified as a result of a pre-
enrollment questionnaire or physical examination given to the 
individual, or review of medical records relating to the pre-enrollment 
period.
    Public health plan means public health plan within the meaning of 
Sec. 2590.701-4(a)(1)(ix).
    Public Health Service Act (PHSA) means the Public Health Service Act 
(42 U.S.C. 201, et seq.).
    Significant break in coverage means a significant break in coverage 
within the meaning of Sec. 2590.701-4(b)(2)(iii).

[[Page 629]]

    Special enrollment date means a special enrollment date within the 
meaning of Sec. 2590.701-6(d).
    State means each of the several States, the District of Columbia, 
Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Northern 
Mariana Islands.
    State health benefits risk pool means a State health benefits risk 
pool within the meaning of Sec. 2590.701-4(a)(1)(vii).
    Waiting period means the period that must pass before an employee or 
dependent is eligible to enroll under the terms of a group health plan. 
If an employee or dependent enrolls as a late enrollee or on a special 
enrollment date, any period before such late or special enrollment is 
not a waiting period. If an individual seeks and obtains coverage in the 
individual market, any period after the date the individual files a 
substantially complete application for coverage and before the first day 
of coverage is a waiting period.

[62 FR 16941, Apr. 8, 1997; 62 FR 31692, June 10, 1997. Redesignated at 
65 FR 82142, Dec. 27, 2000]



Sec. 2590.701-3  Limitations on preexisting condition exclusion period.

    (a) Preexisting condition exclusion--(1) In general. Subject to 
paragraph (b) of this section, a group health plan, and a health 
insurance issuer offering group health insurance coverage, may impose, 
with respect to a participant or beneficiary, a preexisting condition 
exclusion only if the requirements of this paragraph (a) are satisfied.
    (i) 6-month look-back rule. A preexisting condition exclusion must 
relate to a condition (whether physical or mental), regardless of the 
cause of the condition, for which medical advice, diagnosis, care, or 
treatment was recommended or received within the 6-month period ending 
on the enrollment date.
    (A) For purposes of this paragraph (a)(1)(i), medical advice, 
diagnosis, care, or treatment is taken into account only if it is 
recommended by, or received from, an individual licensed or similarly 
authorized to provide such services under State law and operating within 
the scope of practice authorized by State law.
    (B) For purposes of this paragraph (a)(1)(i), the 6-month period 
ending on the enrollment date begins on the 6-month anniversary date 
preceding the enrollment date. For example, for an enrollment date of 
August 1, 1998, the 6-month period preceding the enrollment date is the 
period commencing on February 1, 1998 and continuing through July 31, 
1998. As another example, for an enrollment date of August 30, 1998, the 
6-month period preceding the enrollment date is the period commencing on 
February 28, 1998 and continuing through August 29, 1998.
    (C) The rules of this paragraph (a)(1)(i) are illustrated by the 
following examples:

    Example 1. (i) Individual A is treated for a medical condition 7 
months before the enrollment date in Employer R's group health plan. As 
part of such treatment, A's physician recommends that a follow-up 
examination be given 2 months later. Despite this recommendation. A does 
not receive a follow-up examination and no other medical advice, 
diagnosis, care, or treatment for that condition is recommended to A or 
received by A during the 6-month period ending on A's enrollment date in 
Employer R's plan.
    (ii) In this Example 1, Employer R's plan may not impose a 
preexisting condition exclusion period with respect to the condition for 
which A received treatment 7 months prior to the enrollment date.
    Example 2. (i) Same facts as Example 1, except that Employer R's 
plan learns of the condition and attaches a rider to A's policy 
excluding coverage for the condition. Three months after enrollment, A's 
condition recurs, and Employer R's plan denies payment under the rider.
    (ii) In this Example 2, the rider is a preexisting condition 
exclusion and Employer R's plan may not impose a preexisting condition 
exclusion with respect to the condition for which A received treatment 7 
months prior to the enrollment date.
    Example 3. (i) Individual B has asthma and is treated for that 
condition several times during the 6-month period before B's enrollment 
date in Employer S's plan. The plan imposes a 12-month preexisting 
condition exclusion. B has no prior creditable coverage to reduce the 
exclusion period. Three months after the enrollment date, B begins 
coverage under Employer S's plan. Two months later, B is hospitalized 
for asthma.
    (ii) In this Example 3, Employer S's plan may exclude payment for 
the hospital stay and the physician services associated with this 
illness because the care is related to a medical condition for which 
treatment was

[[Page 630]]

received by B during the 6-month period before the enrollment date.
    Example 4. (i) Individual D, who is subject to a preexisting 
exclusion imposed by Employer U's plan, has diabetes, as well as a foot 
condition caused by poor circulation and retinal degeneration (both of 
which are conditions that may be directly attributed to diabetes). After 
enrolling in the plan, D stumbles and breaks a leg.
    (ii) In this Example 4, the leg fracture is not a condition related 
to D's diabetes, even though poor circulation in D's extremities and 
poor vision may have contributed towards the accident. However, any 
additional medical services that may be needed because of D's 
preexisting diabetic condition that would not be needed by another 
patient with a broken leg who does not have diabetes may be subject to 
the preexisting condition exclusion imposed under Employer U's plan.

    (ii) Maximum length of preexisting condition exclusion (the look-
forward rule). A preexisting condition exclusion is not permitted to 
extend for more than 12 months (18 months in the case of a late 
enrollee) after the enrollment date. For purposes of this paragraph 
(a)(1)(ii), the 12-month and 18-month periods after the enrollment date 
are determined by reference to the anniversary of the enrollment date. 
For example, for an enrollment date of August 1, 1998, the 12-month 
period after the enrollment date is the period commencing on August 1, 
1998 and continuing through July 31, 1999.
    (iii) Reducing a preexisting condition exclusion period by 
creditable coverage. The period of any preexisting condition exclusion 
that would otherwise apply to an individual under a group health plan is 
reduced by the number of days of creditable coverage the individual has 
as of the enrollment date, as counted under Sec. 2590.701-4. For 
purposes of this subpart the phrase ``days of creditable coverage'' has 
the same meaning as the phrase ``aggregate of the periods of creditable 
coverage'' as such phrase is used in section 701(a)(3) of the Act.
    (iv) Other standards. See Sec. 2590.702 for other standards that may 
apply with respect to certain benefits limitations or restrictions under 
a group health plan.
    (2) Enrollment definitions--(i) Enrollment date means the first day 
of coverage or, if there is a waiting period, the first day of the 
waiting period.
    (ii)(A) First day of coverage means, in the case of an individual 
covered for benefits under a group health plan in the group market, the 
first day of coverage under the plan and, in the case of an individual 
covered by health insurance coverage in the individual market, the first 
day of coverage under the policy.
    (B) The following example illustrates the rule of paragraph 
(a)(2)(ii)(A) of this section:

    Example. (i) Employer V's group health plan provides for coverage to 
begin on the first day of the first payroll period following the date an 
employee is hired and completes the applicable enrollment forms, or on 
any subsequent January 1 after completion of the applicable enrollment 
forms. Employer's V's plan imposes a preexisting condition exclusion for 
12 months (reduced by the individual's creditable coverage) following an 
individual's enrollment date. Employee E is hired by Employer V on 
October 13, 1998 and then on October 14, 1998 completes and files all 
the forms necessary to enroll in the plan. E's coverage under the plan 
becomes effective on October 25, 1998 (which is the beginning of the 
first payroll period after E's date of hire).
    (ii) In this Example, E's enrollment date is October 13, 1998 (which 
is the first day of the waiting period for E's enrollment and is also 
E's date of hire). Accordingly, with respect to E, the 6-month period in 
paragraph (a)(1)(i) would be the period from April 13, 1998 through 
October 12, 1998, the maximum permissible period during which Employer 
V's plan could apply a preexisting condition exclusion under paragraph 
(a)(1)(ii) would be the period from October 13, 1998 through October 12, 
1999, and this period would be reduced under paragraph (a)(1)(iii) by 
E's days of creditable coverage as of October 13, 1998.

    (iii) Late enrollee means an individual whose enrollment in a plan 
is a late enrollment.
    (iv)(A) Late enrollment means enrollment under a group health plan 
other than on--
    (1) The earliest date on which coverage can become effective under 
the terms of the plan; or
    (2) A special enrollment date for the individual.
    (B) If an individual ceases to be eligible for coverage under the 
plan by terminating employment, and then subsequently becomes eligible 
for coverage

[[Page 631]]

under the plan by resuming employment, only eligibility during the 
individual's most recent period of employment is taken into account in 
determining whether the individual is a late enrollee under the plan 
with respect to the most recent period of coverage. Similar rules apply 
if an individual again becomes eligible for coverage following a 
suspension of coverage that applied generally under the plan.
    (v) Examples. The rules of this paragraph (a)(2) are illustrated by 
the following examples:

    Example 1. (i) Employee F first becomes eligible to be covered by 
Employer W's group health plan on January 1, 1999, but elects not to 
enroll in the plan until April 1, 1999. April 1, 1999 is not a special 
enrollment date for F.
    (ii) In this Example 1, F would be a late enrollee with respect to 
F's coverage that became effective under the plan on April 1, 1999.
    Example 2. (i) Same as Example 1, except that F does not enroll in 
the plan on April 1, 1999 and terminates employment with Employer W on 
July 1, 1999, without having had any health insurance coverage under the 
plan. F is rehired by Employer W on January 1, 2000 and is eligible for 
and elects coverage under Employer W's plan effective on January 1, 
2000.
    (ii) In this Example 2, F would not be a late enrollee with respect 
to F's coverage that became effective on January 1, 2000.

    (b) Exceptions pertaining to preexisting condition exclusions--(1) 
Newborns--(i) In general. Subject to paragraph (b)(3) of this section, a 
group health plan, and a health insurance issuer offering group health 
insurance coverage, may not impose any preexisting condition exclusion 
with regard to a child who, as of the last day of the 30-day period 
beginning with the date of birth, is covered under any creditable 
coverage. Accordingly, if a newborn is enrolled in a group health plan 
(or other creditable coverage) within 30 days after birth and 
subsequently enrolls in another group health plan without a significant 
break in coverage, the other plan may not impose any preexisting 
condition exclusion with regard to the child.
    (ii) Example. The rule of this paragraph (b)(1) is illustrated by 
the following example:

    Example. (i) Seven months after enrollment in Employer W's group 
health plan, Individual E has a child born with a birth defect. Because 
the child is enrolled in Employer W's plan within 30 days of birth, no 
preexisting condition exclusion may be imposed with respect to the child 
under Employer W's plan. Three months after the child's birth, E 
commences employment with Employer X and enrolls with the child in 
Employer X's plan 45 days after leaving Employer W's plan. Employer X's 
plan imposes a 12-month exclusion for any preexisting condition.
    (ii) In this Example, Employer X's plan may not impose any 
preexisting condition exclusion with respect to E's child because the 
child was covered within 30 days of birth and had no significant break 
in coverage. This result applies regardless of whether E's child is 
included in the certificate of creditable coverage provided to E by 
Employer W indicating 300 days of dependent coverage or receives a 
separate certificate indicating 90 days of coverage. Employer X's plan 
may impose a preexisting condition exclusion with respect to E for up to 
65 days for any preexisting condition of E for which medical advice, 
diagnosis, care, or treatment was recommended or received by E within 
the 6-month period ending on E's enrollment date in Employer X's plan.

    (2) Adopted children. Subject to paragraph (b)(3) of this section, a 
group health plan, and a health insurance issuer offering group health 
insurance coverage, may not impose any preexisting condition exclusion 
in the case of a child who is adopted or placed for adoption before 
attaining 18 years of age and who, as of the last day of the 30-day 
period beginning on the date of the adoption or placement for adoption, 
is covered under creditable coverage. This rule does not apply to 
coverage before the date of such adoption or placement for adoption.
    (3) Break in coverage. Paragraphs (b) (1) and (2) of this section no 
longer apply to a child after a significant break in coverage.
    (4) Pregnancy. A group health plan, and a health insurance issuer 
offering group health insurance coverage, may not impose a preexisting 
condition exclusion relating to pregnancy as a preexisting condition.
    (5) Special enrollment dates. For special enrollment dates relating 
to new dependents, see Sec. 2590.701-6(b).
    (c) Notice of plan's preexisting condition exclusion. A group health 
plan, and a health insurance issuer offering group health insurance 
under the plan, may not impose a preexisting condition exclusion with 
respect to a participant

[[Page 632]]

or dependent of the participant before notifying the participant, in 
writing, of the existence and terms of any preexisting condition 
exclusion under the plan and of the rights of individuals to demonstrate 
creditable coverage (and any applicable waiting periods) as required by 
Sec. 2590.701-5. The description of the rights of individuals to 
demonstrate creditable coverage includes a description of the right of 
the individual to request a certificate from a prior plan or issuer, if 
necessary, and a statement that the current plan or issuer will assist 
in obtaining a certificate from any prior plan or issuer, if necessary.

(Approved by the Office of Management and Budget under control number 
1210-0102)

[62 FR 16941, Apr. 8, 1997; 62 FR 31670, 31692, June 10, 1997, as 
amended at 62 FR 35905, July 2, 1997. Redesignated at 65 FR 82142, Dec. 
27, 2000]



Sec. 2590.701-4  Rules relating to creditable coverage.

    (a) General rules--(1) Creditable coverage. For purposes of this 
section, except as provided in paragraph (a)(2) of this section, the 
term creditable coverage means coverage of an individual under any of 
the following:
    (i) A group health plan as defined in Sec. 2590.701-2.
    (ii) Health insurance coverage as defined in Sec. 2590.701-2 
(whether or not the entity offering the coverage is subject to part 7 of 
subtitle B of title I of the Act, and without regard to whether the 
coverage is offered in the group market, the individual market, or 
otherwise).
    (iii) Part A or B of title XVIII of the Social Security Act 
(Medicare).
    (iv) Title XIX of the Social Security Act (Medicaid), other than 
coverage consisting solely of benefits under section 1928 of the Social 
Security Act (the program for distribution of pediatric vaccines).
    (v) Title 10 U.S.C. chapter 55 (medical and dental care for members 
and certain former members of the uniformed services, and for their 
dependents; for purposes of title 10 U.S.C. chapter 55, uniformed 
services means the armed forces and the Commissioned Corps of the 
National Oceanic and Atmospheric Administration and of the Public Health 
Service).
    (vi) A medical care program of the Indian Health Service or of a 
tribal organization.
    (vii) A State health benefits risk pool. For purposes of this 
section, a State health benefits risk pool means--
    (A) An organization qualifying under section 501(c)(26) of the Code;
    (B) A qualified high risk pool described in section 2744(c)(2) of 
the PHSA; or
    (C) Any other arrangement sponsored by a State, the membership 
composition of which is specified by the State and which is established 
and maintained primarily to provide health insurance coverage for 
individuals who are residents of such State and who, by reason of the 
existence or history of a medical condition--
    (1) Are unable to acquire medical care coverage for such condition 
through insurance or from an HMO, or
    (2) Are able to acquire such coverage only at a rate which is 
substantially in excess of the rate for such coverage through the 
membership organization.
    (viii) A health plan offered under title 5 U.S.C. chapter 89 (the 
Federal Employees Health Benefits Program).
    (ix) A public health plan. For purposes of this section, a public 
health plan means any plan established or maintained by a State, county, 
or other political subdivision of a State that provides health insurance 
coverage to individuals who are enrolled in the plan.
    (x) A health benefit plan under section 5(e) of the Peace Corps Act 
(22 U.S.C. 2504(e)).
    (2) Excluded coverage. Creditable coverage does not include coverage 
consisting solely of coverage of excepted benefits (described in 
Sec. 2590.732).
    (3) Methods of counting creditable coverage. For purposes of 
reducing any preexisting condition exclusion period, as provided under 
Sec. 2590.701-3(a)(1)(iii), a group health plan, and a health insurance 
issuer offering group health insurance coverage, determines the amount 
of an individual's creditable coverage by using the standard method 
described in paragraph (b) of this section, except that the plan, or 
issuer, may use the alternative method under

[[Page 633]]

paragraph (c) of this section with respect to any or all of the 
categories of benefits described under paragraph (c)(3) of this section.
    (b) Standard method--(1) Specific benefits not considered. Under the 
standard method, a group health plan, and a health insurance issuer 
offering group health insurance coverage, determines the amount of 
creditable coverage without regard to the specific benefits included in 
the coverage.
    (2) Counting creditable coverage--(i) Based on days. For purposes of 
reducing the preexisting condition exclusion period, a group health 
plan, and a health insurance issuer offering group health insurance 
coverage, determines the amount of creditable coverage by counting all 
the days that the individual has under one or more types of creditable 
coverage. Accordingly, if on a particular day, an individual has 
creditable coverage from more than one source, all the creditable 
coverage on that day is counted as one day. Further, any days in a 
waiting period for a plan or policy are not creditable coverage under 
the plan or policy.
    (ii) Days not counted before significant break in coverage. Days of 
creditable coverage that occur before a significant break in coverage 
are not required to be counted.
    (iii) Definition of significant break in coverage. A significant 
break in coverage means a period of 63 consecutive days during all of 
which the individual does not have any creditable coverage, except that 
neither a waiting period nor an affiliation period is taken into account 
in determining a significant break in coverage. (See section 
731(b)(2)(iii) of the Act and section 2723(b)(2)(iii) of the PHSA which 
exclude from preemption State insurance laws that require a break of 
more than 63 days before an individual has a significant break in 
coverage for purposes of State law.)
    (iv) Examples. The following examples illustrate how creditable 
coverage is counted in reducing preexisting condition exclusion periods 
under this paragraph (b)(2):

    Example 1. (i) Individual A works for Employer P and has creditable 
coverage under Employer P's plan for 18 months before A's employment 
terminates. A is hired by Employer Q, and enrolls in Employer Q's group 
health plan, 64 days after the last date of coverage under Employer P's 
plan. Employer Q's plan has a 12-month preexisting condition exclusion 
period.
    (ii) In this Example 1, because A had a break in coverage of 63 
days, Employer Q's plan may disregard A's prior coverage and A may be 
subject to a 12-month preexisting condition exclusion period.
    Example 2. (i) Same facts as Example 1, except that A is hired by 
Employer Q, and enrolls in Employer Q's plan, on the 63rd day after the 
last date of coverage under Employer P's plan.
    (ii) In this Example 2, A has a break in coverage of 62 days. 
Because A's break in coverage is not a significant break in coverage, 
Employer Q's plan must count A's prior creditable coverage for purposes 
of reducing the plan's preexisting condition exclusion period as it 
applies to A.
    Example 3. (i) Same facts as Example 1, except that Employer Q's 
plan provides benefits through an insurance policy that, as required by 
applicable State insurance laws, defines a significant break in coverage 
as 90 days.
    (ii) In this Example 3, the issuer that provides group health 
insurance to Employer Q's plan must count A's period of creditable 
coverage prior to the 63-day break.
    Example 4. (i) Same facts as Example 3, except that Employer Q's 
plan is a self-insured plan, and, thus, is not subject to State 
insurance laws.
    (ii) In this Example 4, the plan is not governed by the longer break 
rules under State insurance law and A's previous coverage may be 
disregarded.
    Example 5. (i) Individual B begins employment with Employer R 45 
days after terminating coverage under a prior group health plan. 
Employer R's plan has a 30-day waiting period before coverage begins. B 
enrolls in Employer R's plan when first eligible.
    (ii) In this Example 5, B does not have a significant break in 
coverage for purposes of determining whether B's prior coverage must be 
counted by Employer R's plan. B has only a 44-day break in coverage 
because the 30-day waiting period is not taken into account in 
determining a significant break in coverage.
    Example 6. (i) Individual C works for Employer S and has creditable 
coverage under Employer S's plan for 200 days before C's employment is 
terminated and coverage ceases. C is then unemployed and does not have 
any creditable coverage for 51 days before being hired by Employer T. 
Employer T's plan has a 3-month waiting period. C works for Employer T 
for 2 months and then terminates employment. Eleven days after 
terminating employment with Employer T, C begins working for Employer U. 
Employer U's plan

[[Page 634]]

has no waiting period, but has a 6-month preexisting condition exclusion 
period.
    (ii) In this Example 6, C does not have a significant break in 
coverage because, after disregarding the waiting period under Employer 
T's plan, C had only a 62-day break in coverage (51 days plus 11 days). 
Accordingly, C has 200 days of creditable coverage and Employer U's plan 
may not apply its 6-month preexisting condition exclusion period with 
respect to C.
    Example 7. (i) Individual D terminates employment with Employer V on 
January 13, 1998 after being covered for 24 months under Employer V's 
group health plan. On March 17, the 63rd day without coverage, D applies 
for a health insurance policy in the individual market. D's application 
is accepted and the coverage is made effective May 1.
    (ii) In this Example 7, because D applied for the policy before the 
end of the 63rd day, and coverage under the policy ultimately became 
effective, the period between the date of application and the first day 
of coverage is a waiting period and no significant break in coverage 
occurred even though the actual period without coverage was 107 days.
    Example 8. (i) Same facts as Example 7, except that D's application 
for a policy in the individual market is denied.
    (ii) In this Example 8, because D did not obtain coverage following 
application, D incurred a significant break in coverage on the 64th day.

    (v) Other permissible counting methods--(A) Rule. Notwithstanding 
any other provisions of this paragraph (b)(2), for purposes of reducing 
a preexisting condition exclusion period (but not for purposes of 
issuing a certificate under Sec. 2590.701-5), a group health plan, and a 
health insurance issuer offering group health insurance coverage, may 
determine the amount of creditable coverage in any other manner that is 
at least as favorable to the individual as the method set forth in this 
paragraph (b)(2), subject to the requirements of other applicable law.
    (B) Example. The rule of this paragraph (b)(2)(v) is illustrated by 
the following example:

    Example. (i) Individual F has coverage under Group Health Plan Y 
from January 3, 1997 through March 25, 1997. F then becomes covered by 
Group Health Plan Z. F's enrollment date in Plan Z is May 1, 1997. Plan 
Z has a 12-month preexisting condition exclusion period.
    (ii) In this Example, Plan Z may determine, in accordance with the 
rules prescribed in paragraph (b)(2) (i), (ii), and (iii) of this 
section, that F has 82 days of creditable coverage (29 days in January, 
28 days in February, and 25 days in March). Thus, the preexisting 
condition exclusion period will no longer apply to F on February 8, 1998 
(82 days before the 12-month anniversary of F's enrollment (May 1)). For 
administrative convenience, however, Plan Z may consider that the 
preexisting condition exclusion period will no longer apply to F on the 
first day of the month (February 1).

    (c) Alternative method--(1) Specific benefits considered. Under the 
alternative method, a group health plan, or a health insurance issuer 
offering group health insurance coverage, determines the amount of 
creditable coverage based on coverage within any category of benefits 
described in paragraph (c)(3) of this section and not based on coverage 
for any other benefits. The plan or issuer may use the alternative 
method for any or all of the categories. The plan may apply a different 
preexisting condition exclusion period with respect to each category 
(and may apply a different preexisting condition exclusion period for 
benefits that are not within any category). The creditable coverage 
determined for a category of benefits applies only for purposes of 
reducing the preexisting condition exclusion period with respect to that 
category. An individual's creditable coverage for benefits that are not 
within any category for which the alternative method is being used is 
determined under the standard method of paragraph (b) of this section.
    (2) Uniform application. A plan or issuer using the alternative 
method is required to apply it uniformly to all participants and 
beneficiaries under the plan or policy. The use of the alternative 
method is required to be set forth in the plan.
    (3) Categories of benefits. The alternative method for counting 
creditable coverage may be used for coverage for the following 
categories of benefits--
    (i) Mental health;
    (ii) Substance abuse treatment;
    (iii) Prescription drugs;
    (iv) Dental care; or
    (v) Vision care.
    (4) Plan notice. If the alternative method is used, the plan is 
required to--
    (i) State prominently that the plan is using the alternative method 
of counting creditable coverage in disclosure

[[Page 635]]

statements concerning the plan, and state this to each enrollee at the 
time of enrollment under the plan; and
    (ii) Include in these statements a description of the effect of 
using the alternative method, including an identification of the 
categories used.
    (5) Disclosure of information on previous benefits. See 
Sec. 2590.701-5(b) for special rules concerning disclosure of coverage 
to a plan, or issuer, using the alternative method of counting 
creditable coverage under this paragraph (c).
    (6) Counting creditable coverage--(i) In general. Under the 
alternative method, the group health plan or issuer counts creditable 
coverage within a category if any level of benefits is provided within 
the category. Coverage under a reimbursement account or arrangement, 
such as a flexible spending arrangement (as defined in section 106(c)(2) 
of the Internal Revenue Code), does not constitute coverage within any 
category.
    (ii) Special rules. In counting an individual's creditable coverage 
under the alternative method, the group health plan, or issuer, first 
determines the amount of the individual's creditable coverage that may 
be counted under paragraph (b) of this section, up to a total of 365 
days of the most recent creditable coverage (546 days for a late 
enrollee). The period over which this creditable coverage is determined 
is referred to as the determination period. Then, for the category 
specified under the alternative method, the plan or issuer counts within 
the category all days of coverage that occurred during the determination 
period (whether or not a significant break in coverage for that category 
occurs), and reduces the individual's preexisting condition exclusion 
period for that category by that number of days. The plan or issuer may 
determine the amount of creditable coverage in any other reasonable 
manner, uniformly applied, that is at least as favorable to the 
individual.
    (iii) Example. The rules of this paragraph (c)(6) are illustrated by 
the following example:

    Example. (i) Individual D enrolls in Employer V's plan on January 1, 
2001. Coverage under the plan includes prescription drug benefits. On 
April 1, 2001, the plan ceases providing prescription drug benefits. D's 
employment with Employer V ends on January 1, 2002, after D was covered 
under Employer V's group health plan for 365 days. D enrolls in Employer 
Y's plan on February 1, 2002 (D's enrollment date). Employer Y's plan 
uses the alternative method of counting creditable coverage and imposes 
a 12-month preexisting condition exclusion on prescription drug 
benefits.
    (ii) In this Example, Employer Y's plan may impose a 275-day 
preexisting condition exclusion with respect to D for prescription drug 
benefits because D had 90 days of creditable coverage relating to 
prescription drug benefits within D's determination period.

(Approved by the Office of Management and Budget under control number 
1210-0102)

[62 FR 16941, Apr. 8, 1997; 62 FR 31692, 31693, June 10, 1997, as 
amended at 62 FR 35905, July 2, 1997. Redesignated at 65 FR 82142, Dec. 
27, 2000]



Sec. 2590.701-5  Certification and disclosure of previous coverage.

    (a) Certificate of creditable coverage--(1) Entities required to 
provide certificate--(i) In general. A group health plan, and each 
health insurance issuer offering group health insurance coverage under a 
group health plan, is required to furnish certificates of creditable 
coverage in accordance with this paragraph (a).
    (ii) Duplicate certificates not required. An entity required to 
provide a certificate under this paragraph (a)(1) for an individual is 
deemed to have satisfied the certification requirements for that 
individual if another party provides the certificate, but only to the 
extent that information relating to the individual's creditable coverage 
and waiting or affiliation period is provided by the other party. For 
example, in the case of a group health plan funded through an insurance 
policy, the issuer is deemed to have satisfied the certification 
requirement with respect to a participant or beneficiary if the plan 
actually provides a certificate that includes the information required 
under paragraph (a)(3) of this section with respect to the participant 
or beneficiary.
    (iii) Special rule for group health plans. To the extent coverage 
under a plan consists of group health insurance coverage, the plan is 
deemed to have satisfied the certification requirements under this 
paragraph (a)(1) if any issuer offering the coverage is required to

[[Page 636]]

provide the certificates pursuant to an agreement between the plan and 
the issuer. For example, if there is an agreement between an issuer and 
the plan sponsor under which the issuer agrees to provide certificates 
for individuals covered under the plan, and the issuer fails to provide 
a certificate to an individual when the plan would have been required to 
provide one under this paragraph (a), then the issuer, but not the plan, 
violates the certification requirements of this paragraph (a).
    (iv) Special rules for issuers--(A)(1) Responsibility of issuer for 
coverage period. An issuer is not required to provide information 
regarding coverage provided to an individual by another party.
    (2) Example. The rule of this paragraph (a)(1)(iv)(A) is illustrated 
by the following example:

    Example. (i) A plan offers coverage with an HMO option from one 
issuer and an indemnity option from a different issuer. The HMO has not 
entered into an agreement with the plan to provide certificates as 
permitted under paragraph (a)(1)(iii) of this section.
    (ii) In this Example, if an employee switches from the indemnity 
option to the HMO option and later ceases to be covered under the plan, 
any certificate provided by the HMO is not required to provide 
information regarding the employee's coverage under the indemnity 
option.

    (B)(1) Cessation of issuer coverage prior to cessation of coverage 
under a plan. If an individual's coverage under an issuer's policy 
ceases before the individual's coverage under the plan ceases, the 
issuer is required to provide sufficient information to the plan (or to 
another party designated by the plan) to enable a certificate to be 
provided by the plan (or other party), after cessation of the 
individual's coverage under the plan, that reflects the period of 
coverage under the policy. The provision of that information to the plan 
will satisfy the issuer's obligation to provide an automatic certificate 
for that period of creditable coverage for the individual under 
paragraph (a) (2)(ii) and (3) of this section. In addition, an issuer 
providing that information is required to cooperate with the plan in 
responding to any request made under paragraph (b)(1) of this section 
(relating to the alternative method of counting creditable coverage). If 
the individual's coverage under the plan ceases at the time the 
individual's coverage under the issuer's policy ceases, the issuer must 
provide an automatic certificate under paragraph (a)(2)(ii) of this 
section. An issuer may presume that an individual whose coverage ceases 
at a time other than the effective date for changing enrollment options 
has ceased to be covered under the plan.
    (2) Example. The rule of this paragraph (a)(1)(iv)(B) is illustrated 
by the following example.

    Example. (i) A group health plan provides coverage under an HMO 
option and an indemnity option with a different issuer, and only allows 
employees to switch on each January 1. Neither the HMO nor the indemnity 
issuer has entered into an agreement with the plan to provide 
certificates as permitted under paragraph (a)(1)(iii) of this section.
    (ii) In this Example, if an employee switches from the indemnity 
option to the HMO option on January 1, the issuer must provide the plan 
(or a person designated by the plan) with appropriate information with 
respect to the individual's coverage with the indemnity issuer. However, 
if the individual's coverage with the indemnity issuer ceases at a date 
other than January 1, the issuer is instead required to provide the 
individual with an automatic certificate.

    (2) Individuals for whom certificate must be provided; timing of 
issuance--(i) Individuals. A certificate must be provided, without 
charge, for participants or dependents who are or were covered under a 
group health plan upon the occurrence of any of the events described in 
paragraph (a)(2)(ii) or (iii) of this section.
    (ii) Issuance of automatic certificates. The certificates described 
in this paragraph (a)(2)(ii) are referred to as automatic certificates.
    (A) Qualified beneficiaries upon a qualifying event. In the case of 
an individual who is a qualified beneficiary (as defined in section 
607(3) of the Act) entitled to elect COBRA continuation coverage, an 
automatic certificate is required to be provided at the time the 
individual would lose coverage under the plan in the absence of COBRA 
continuation coverage or alternative coverage elected instead of COBRA 
continuation coverage. A plan or issuer satisfies this requirement if it 
provides the automatic certificate no later than

[[Page 637]]

the time a notice is required to be furnished for a qualifying event 
under section 606 of the Act (relating to notices required under COBRA).
    (B) Other individuals when coverage ceases. In the case of an 
individual who is not a qualified beneficiary entitled to elect COBRA 
continuation coverage, an automatic certificate is required to be 
provided at the time the individual ceases to be covered under the plan. 
A plan or issuer satisfies this requirement if it provides the automatic 
certificate within a reasonable time period thereafter. In the case of 
an individual who is entitled to elect to continue coverage under a 
State program similar to COBRA and who receives the automatic 
certificate not later than the time a notice is required to be furnished 
under the State program, the certificate is deemed to be provided within 
a reasonable time period after the cessation of coverage under the plan.
    (C) Qualified beneficiaries when COBRA ceases. In the case of an 
individual who is a qualified beneficiary and has elected COBRA 
continuation coverage (or whose coverage has continued after the 
individual became entitled to elect COBRA continuation coverage), an 
automatic certificate is to be provided at the time the individual's 
coverage under the plan ceases. A plan, or issuer, satisfies this 
requirement if it provides the automatic certificate within a reasonable 
time after coverage ceases (or after the expiration of any grace period 
for nonpayment of premiums). An automatic certificate is required to be 
provided to such an individual regardless of whether the individual has 
previously received an automatic certificate under paragraph 
(a)(2)(ii)(A) of this section.
    (iii) Any individual upon request. Requests for certificates are 
permitted to be made by, or on behalf of, an individual within 24 months 
after coverage ceases. Thus, for example, a plan in which an individual 
enrolls may, if authorized by the individual, request a certificate of 
the individual's creditable coverage on behalf of the individual from a 
plan in which the individual was formerly enrolled. After the request is 
received, a plan or issuer is required to provide the certificate by the 
earliest date that the plan or issuer, acting in a reasonable and prompt 
fashion, can provide the certificate. A certificate is required to be 
provided under this paragraph (a)(2)(iii) even if the individual has 
previously received a certificate under this paragraph (a)(2)(iii) or an 
automatic certificate under paragraph (a)(2)(ii) of this section.
    (iv) Examples. The following examples illustrate the rules of this 
paragraph (a)(2):

    Example 1. (i) Individual A terminates employment with Employer Q. A 
is a qualified beneficiary entitled to elect COBRA continuation coverage 
under Employer Q's group health plan. A notice of the rights provided 
under COBRA is typically furnished to qualified beneficiaries under the 
plan within 10 days after a covered employee terminates employment.
    (ii) In this Example 1, the automatic certificate may be provided at 
the same time that A is provided the COBRA notice.
    Example 2. (i) Same facts as Example 1, except that the automatic 
certificate for A is not completed by the time the COBRA notice is 
furnished to A.
    (ii) In this Example 2, the automatic certificate may be provided 
within the period permitted by law for the delivery of notices under 
COBRA.
    Example 3. (i) Employer R maintains an insured group health plan. R 
has never had 20 employees and thus R's plan is not subject to the COBRA 
continuation coverage provisions. However, R is in a State that has a 
State program similar to COBRA. B terminates employment with R and loses 
coverage under R's plan.
    (ii) In this Example 3, the automatic certificate may be provided 
not later than the time a notice is required to be furnished under the 
State program.
    Example 4. (i) Individual C terminates employment with Employer S 
and receives both a notice of C's rights under COBRA and an automatic 
certificate. C elects COBRA continuation coverage under Employer S's 
group health plan. After four months of COBRA continuation coverage and 
the expiration of a 30-day grace period, Employer S's group health plan 
determines that C's COBRA continuation coverage has ceased due to 
failure to make a timely payment for continuation coverage.
    (ii) In this Example 4, the plan must provide an updated automatic 
certificate to C within a reasonable time after the end of the grace 
period.

[[Page 638]]

    Example 5. (i) Individual D is currently covered under the group 
health plan of Employer T. D requests a certificate, as permitted under 
paragraph (a)(2)(iii) of this section. Under the procedure for Employer 
T's plan, certificates are mailed (by first class mail) 7 business days 
following receipt of the request. This date reflects the earliest date 
that the plan, acting in a reasonable and prompt fashion, can provide 
certificates.
    (ii) In this Example 5, the plan's procedure satisfies paragraph 
(a)(2)(iii) of this section.

    (3) Form and content of certificate-- (i) Written certificate--(A) 
In general. Except as provided in paragraph (a)(3)(i)(B) of this 
section, the certificate must be provided in writing (including any form 
approved by the Secretary as a writing).
    (B) Other permissible forms. No written certificate is required to 
be provided under this paragraph (a) with respect to a particular event 
described in paragraph (a)(2) (ii) or (iii) of this section, if--
    (1) An individual is entitled to receive a certificate;
    (2) The individual requests that the certificate be sent to another 
plan or issuer instead of to the individual;
    (3) The plan or issuer that would otherwise receive the certificate 
agrees to accept the information in this paragraph (a)(3) through means 
other than a written certificate (e.g., by telephone); and
    (4) The receiving plan or issuer receives such information from the 
sending plan or issuer in such form within the time periods required 
under paragraph (a)(2) of this section.
    (ii) Required information. The certificate must include the 
following--
    (A) The date the certificate is issued;
    (B) The name of the group health plan that provided the coverage 
described in the certificate;
    (C) The name of the participant or dependent with respect to whom 
the certificate applies, and any other information necessary for the 
plan providing the coverage specified in the certificate to identify the 
individual, such as the individual's identification number under the 
plan and the name of the participant if the certificate is for (or 
includes) a dependent;
    (D) The name, address, and telephone number of the plan 
administrator or issuer required to provide the certificate;
    (E) The telephone number to call for further information regarding 
the certificate (if different from paragraph (a)(3)(ii)(D) of this 
section);
    (F) Either--
    (1) A statement that an individual has at least 18 months (for this 
purpose, 546 days is deemed to be 18 months) of creditable coverage, 
disregarding days of creditable coverage before a significant break in 
coverage, or
    (2) The date any waiting period (and affiliation period, if 
applicable) began and the date creditable coverage began; and
    (G) The date creditable coverage ended, unless the certificate 
indicates that creditable coverage is continuing as of the date of the 
certificate.
    (iii) Periods of coverage under certificate. If an automatic 
certificate is provided pursuant to paragraph (a)(2)(ii) of this 
section, the period that must be included on the certificate is the last 
period of continuous coverage ending on the date coverage ceased. If an 
individual requests a certificate pursuant to paragraph (a)(2)(iii) of 
this section, a certificate must be provided for each period of 
continuous coverage ending within the 24-month period ending on the date 
of the request (or continuing on the date of the request). A separate 
certificate may be provided for each such period of continuous coverage.
    (iv) Combining information for families. A certificate may provide 
information with respect to both a participant and the participant's 
dependents if the information is identical for each individual or, if 
the information is not identical, certificates may be provided on one 
form if the form provides all the required information for each 
individual and separately states the information that is not identical.
    (v) Model certificate. The requirements of paragraph (a)(3)(ii) of 
this section are satisfied if the plan or issuer provides a certificate 
in accordance with a model certificate authorized by the Secretary.
    (vi) Excepted benefits; categories of benefits. No certificate is 
required to be furnished with respect to excepted benefits described in 
Sec. 2590.732. In addition,

[[Page 639]]

the information in the certificate regarding coverage is not required to 
specify categories of benefits described in Sec. 2590.701-4(c) (relating 
to the alternative method of counting creditable coverage). However, if 
excepted benefits are provided concurrently with other creditable 
coverage (so that the coverage does not consist solely of excepted 
benefits), information concerning the benefits may be required to be 
disclosed under paragraph (b) of this section.
    (4) Procedures--(i) Method of delivery. The certificate is required 
to be provided to each individual described in paragraph (a)(2) of this 
section or an entity requesting the certificate on behalf of the 
individual. The certificate may be provided by first-class mail. If the 
certificate or certificates are provided to the participant and the 
participant's spouse at the participant's last known address, then the 
requirements of this paragraph (a)(4) are satisfied with respect to all 
individuals residing at that address. If a dependent's last known 
address is different than the participant's last known address, a 
separate certificate is required to be provided to the dependent at the 
dependent's last known address. If separate certificates are being 
provided by mail to individuals who reside at the same address, separate 
mailings of each certificate are not required.
    (ii) Procedure for requesting certificates. A plan or issuer must 
establish a procedure for individuals to request and receive 
certificates pursuant to paragraph (a)(2)(iii) of this section.
    (iii) Designated recipients. If an automatic certificate is required 
to be provided under paragraph (a)(2)(ii) of this section, and the 
individual entitled to receive the certificate designates another 
individual or entity to receive the certificate, the plan or issuer 
responsible for providing the certificate is permitted to provide the 
certificate to the designated party. If a certificate is required to be 
provided upon request under paragraph (a)(2)(iii) of this section and 
the individual entitled to receive the certificate designates another 
individual or entity to receive the certificate, the plan or issuer 
responsible for providing the certificate is required to provide the 
certificate to the designated party.
    (5) Special rules concerning dependent coverage--(i)(A) Reasonable 
efforts. A plan or issuer is required to use reasonable efforts to 
determine any information needed for a certificate relating to dependent 
coverage. In any case in which an automatic certificate is required to 
be furnished with respect to a dependent under paragraph (a)(2)(ii) of 
this section, no individual certificate is required to be furnished 
until the plan or issuer knows (or making reasonable efforts should 
know) of the dependent's cessation of coverage under the plan.
    (B) Example. The rules of this paragraph (a)(5) are illustrated by 
the following example:

    Example. (i) A group health plan covers employees and their 
dependents. The plan annually requests all employees to provide updated 
information regarding dependents, including the specific date on which 
an employee has a new dependent or on which a person ceases to be a 
dependent of the employee.
    (ii) In this Example, the plan has satisfied the standard in this 
paragraph (a)(5)(i) that it make reasonable efforts to determine the 
cessation of dependents' coverage and the related dependent coverage 
information.

    (ii) Special rules for demonstrating coverage. If a certificate 
furnished by a plan or issuer does not provide the name of any dependent 
of an individual covered by the certificate, the individual may, if 
necessary, use the procedures described in paragraph (c)(4) of this 
section for demonstrating dependent status. In addition, an individual 
may, if necessary, use these procedures to demonstrate that a child was 
enrolled within 30 days of birth, adoption, or placement for adoption. 
See Sec. 2590.701-3(b), under which such a child would not be subject to 
a preexisting condition exclusion.
    (iii) Transition rule for dependent coverage through June 30, 1998--
(A) In general. A group health plan or health insurance issuer that 
cannot provide the names of dependents (or related coverage information) 
for purposes of providing a certificate of coverage for a dependent may 
satisfy the requirements of paragraph (a)(3)(ii)(C) of this section by 
providing the name of the participant covered by the group health plan 
or health insurance issuer

[[Page 640]]

and specifying that the type of coverage described in the certificate is 
for dependent coverage (e.g., family coverage or employee-plus-spouse 
coverage).
    (B) Certificates provided on request. For purposes of certificates 
provided on the request of, or on behalf of, an individual pursuant to 
paragraph (a)(2)(iii) of this section, a plan or issuer must make 
reasonable efforts to obtain and provide the names of any dependent 
covered by the certificate where such information is requested to be 
provided. If a certificate does not include the name of any dependent of 
an individual covered by the certificate, the individual may, if 
necessary, use the procedures described in paragraph (c) of this section 
for submitting documentation to establish that the creditable coverage 
in the certificate applies to the dependent.
    (C) Demonstrating a dependent's creditable coverage. See paragraph 
(c)(4) of this section for special rules to demonstrate dependent 
status.
    (D) Duration. This paragraph (a)(5)(iii) is only effective for 
certificates provided with respect to events occurring through June 30, 
1998.
    (6) Special certification rules for entities not subject to part 7 
of subtitle B of title I of the Act--(i) Issuers. For special rules 
requiring that issuers, not subject to part 7 of subtitle B of title I 
of the Act, provide certificates consistent with the rules in this 
section, including issuers offering coverage with respect to creditable 
coverage described in sections 701(c)(1)(G) through (c)(1)(J) of the Act 
(coverage under a State health benefits risk pool, the Federal Employees 
Health Benefits Program, a public health plan, and a health benefit plan 
under section 5(e) of the Peace Corps Act), see section 2721(b)(1)(B) of 
the PHSA (requiring certificates by issuers offering health insurance 
coverage in connection with a group health plan, including a church plan 
or a governmental plan (including the Federal Employees Health Benefits 
Program (FEHBP)). In addition, see section 2743 of the PHSA applicable 
to health insurance issuers in the individual market. (However, this 
section does not require a certificate to be provided with respect to 
short-term limited duration insurance, as described in the definition of 
individual health insurance coverage in Sec. 2590.701-2, that is not 
provided by a group health plan or issuer offering health insurance in 
connection with a group health plan.)
    (ii) Other entities. For special rules requiring that certain other 
entities, not subject to part 7 of subtitle B of title I of the Act, 
provide certificates consistent with the rules in this section, see 
section 2791(a)(3) of the PHSA applicable to entities described in 
sections 2701(c)(1)(C), (D), (E), and (F) of PHSA (relating to Medicare, 
Medicaid, CHAMPUS, and Indian Health Service), section 2721(b)(1)(A) of 
the PHSA applicable to nonfederal governmental plans generally, section 
2721(b)(2)(C)(ii) of the PHSA applicable to nonfederal governmental 
plans that elect to be excluded from the requirements of subparts 1 
through 3 of part A of title XXVII of the PHSA, and section 9805(a) of 
the Internal Revenue Code applicable to group health plans, which 
includes church plans (as defined in section 414(e) of the Internal 
Revenue Code).
    (b) Disclosure of coverage to a plan, or issuer, using the 
alternative method of counting creditable coverage--(1) In general. If 
an individual enrolls in a group health plan with respect to which the 
plan, or issuer, uses the alternative method of counting creditable 
coverage described in Sec. 2590.701-4(c) the individual provides a 
certificate of coverage under paragraph (a) of this section, and the 
plan or issuer in which the individual enrolls so requests, the entity 
that issued the certificate (the prior entity) is required to disclose 
promptly to a requesting plan or issuer (the requesting entity) the 
information set forth in paragraph (b)(2) of this section.
    (2) Information to be disclosed. The prior entity is required to 
identify to the requesting entity the categories of benefits with 
respect to which the requesting entity is using the alternative method 
of counting creditable coverage, and the requesting entity may identify 
specific information that the requesting entity reasonably needs in 
order to determine the individual's creditable coverage with respect to 
any

[[Page 641]]

such category. The prior entity is required to disclose promptly to the 
requesting entity the creditable coverage information so requested.
    (3) Charge for providing information. The prior entity furnishing 
the information under paragraph (b) of this section may charge the 
requesting entity for the reasonable cost of disclosing such 
information.
    (c) Ability of an individual to demonstrate creditable coverage and 
waiting period information--(1) In general. The rules in this paragraph 
(c) implement section 701(c)(4) of the Act, which permits individuals to 
establish creditable coverage through means other than certificates, and 
section 701(e)(3) of the Act, which requires the Secretary to establish 
rules designed to prevent an individual's subsequent coverage under a 
group health plan or health insurance coverage from being adversely 
affected by an entity's failure to provide a certificate with respect to 
that individual. If the accuracy of a certificate is contested or a 
certificate is unavailable when needed by the individual, the individual 
has the right to demonstrate creditable coverage (and waiting or 
affiliation periods) through the presentation of documents or other 
means. For example, the individual may make such a demonstration when--
    (i) An entity has failed to provide a certificate within the 
required time period;
    (ii) The individual has creditable coverage but an entity may not be 
required to provide a certificate of the coverage pursuant to paragraph 
(a) of this section;
    (iii) The coverage is for a period before July 1, 1996;
    (iv) The individual has an urgent medical condition that 
necessitates a determination before the individual can deliver a 
certificate to the plan; or
    (v) The individual lost a certificate that the individual had 
previously received and is unable to obtain another certificate.
    (2) Evidence of creditable coverage--(i) Consideration of evidence. 
A plan or issuer is required to take into account all information that 
it obtains or that is presented on behalf of an individual to make a 
determination, based on the relevant facts and circumstances, whether an 
individual has creditable coverage and is entitled to offset all or a 
portion of any preexisting condition exclusion period. A plan or issuer 
shall treat the individual as having furnished a certificate under 
paragraph (a) of this section if the individual attests to the period of 
creditable coverage, the individual also presents relevant corroborating 
evidence of some creditable coverage during the period, and the 
individual cooperates with the plan's or issuer's efforts to verify the 
individual's coverage. For this purpose, cooperation includes providing 
(upon the plan's or issuer's request) a written authorization for the 
plan or issuer to request a certificate on behalf of the individual, and 
cooperating in efforts to determine the validity of the corroborating 
evidence and the dates of creditable coverage. While a plan or issuer 
may refuse to credit coverage where the individual fails to cooperate 
with the plan's or issuer's efforts to verify coverage, the plan or 
issuer may not consider an individual's inability to obtain a 
certificate to be evidence of the absence of creditable coverage.
    (ii) Documents. Documents that may establish creditable coverage 
(and waiting periods or affiliation periods) in the absence of a 
certificate include explanations of benefit claims (EOBs) or other 
correspondence from a plan or issuer indicating coverage, pay stubs 
showing a payroll deduction for health coverage, a health insurance 
identification card, a certificate of coverage under a group health 
policy, records from medical care providers indicating health coverage, 
third party statements verifying periods of coverage, and any other 
relevant documents that evidence periods of health coverage.
    (iii) Other evidence. Creditable coverage (and waiting period or 
affiliation period information) may also be established through means 
other than documentation, such as by a telephone call from the plan or 
provider to a third party verifying creditable coverage.
    (iv) Example. The rules of this paragraph (c)(2) are illustrated by 
the following example:

    Example. (i) Individual F terminates employment with Employer W and, 
a month later, is hired by Employer X. Employer X's

[[Page 642]]

group health plan imposes a preexisting condition exclusion of 12 months 
on new enrollees under the plan and uses the standard method of 
determining creditable coverage. F fails to receive a certificate of 
prior coverage from the self-insured group health plan maintained by F's 
prior employer, Employer W, and requests a certificate. However, F (and 
Employer X's plan, on F's behalf) is unable to obtain a certificate from 
Employer W's plan. F attests that, to the best of F's knowledge, F had 
at least 12 months of continuous coverage under Employer W's plan, and 
that the coverage ended no earlier than F's termination of employment 
from Employer W. In addition, F presents evidence of coverage, such as 
an explanation of benefits for a claim that was made during the relevant 
period.
    (ii) In this Example, based solely on these facts, F has 
demonstrated creditable coverage for the 12 months of coverage under 
Employer W's plan in the same manner as if F had presented a written 
certificate of creditable coverage.

    (3) Demonstrating categories of creditable coverage. Procedures 
similar to those described in this paragraph (c) apply in order to 
determine an individual's creditable coverage with respect to any 
category under paragraph (b) of this section (relating to determining 
creditable coverage under the alternative method).
    (4) Demonstrating dependent status. If, in the course of providing 
evidence (including a certificate) of creditable coverage, an individual 
is required to demonstrate dependent status, the group health plan or 
issuer is required to treat the individual as having furnished a 
certificate showing the dependent status if the individual attests to 
such dependency and the period of such status and the individual 
cooperates with the plan's or issuer's efforts to verify the dependent 
status.
    (d) Determination and notification of creditable coverage--(1) 
Reasonable time period. In the event that a group health plan or health 
insurance issuer offering group health insurance coverage receives 
information under paragraph (a) of this section (certifications), 
paragraph (b) of this section (disclosure of information relating to the 
alternative method), or paragraph (c) of this section (other evidence of 
creditable coverage), the entity is required, within a reasonable time 
period following receipt of the information, to make a determination 
regarding the individual's period of creditable coverage and notify the 
individual of the determination in accordance with paragraph (d)(2) of 
this section. Whether a determination and notification regarding an 
individual's creditable coverage is made within a reasonable time period 
is determined based on the relevant facts and circumstances. Relevant 
facts and circumstances include whether a plan's application of a 
preexisting condition exclusion would prevent an individual from having 
access to urgent medical services.
    (2) Notification to individual of period of preexisting condition 
exclusion. A plan or issuer seeking to impose a preexisting condition 
exclusion is required to disclose to the individual, in writing, its 
determination of any preexisting condition exclusion period that applies 
to the individual, and the basis for such determination, including the 
source and substance of any information on which the plan or issuer 
relied. In addition, the plan or issuer is required to provide the 
individual with a written explanation of any appeal procedures 
established by the plan or issuer, and with a reasonable opportunity to 
submit additional evidence of creditable coverage. However, nothing in 
this paragraph (d) or paragraph (c) of this section prevents a plan or 
issuer from modifying an initial determination of creditable coverage if 
it determines that the individual did not have the claimed creditable 
coverage, provided that--
    (i) A notice of such reconsideration, as described in this paragraph 
(d), is provided to the individual; and
    (ii) Until the final determination is made, the plan or issuer, for 
purposes of approving access to medical services (such as a pre-surgery 
authorization), acts in a manner consistent with the initial 
determination.
    (3) Examples. The following examples illustrate this paragraph (d):

    Example 1. (i) Individual G is hired by Employer Y. Employer Y's 
group health plan imposes a preexisting condition exclusion for 12 
months with respect to new enrollees and uses the standard method of 
determining creditable coverage. Employer Y's plan determines that G is 
subject to a 4-month preexisting condition exclusion, based on a 
certificate of creditable coverage that is provided by G to Employer Y's 
plan indicating 8

[[Page 643]]

months of coverage under G's prior group health plan.
    (ii) In this Example 1, Employer Y's plan must notify G within a 
reasonable period of time following receipt of the certificate that G is 
subject to a 4-month preexisting condition exclusion beginning on G's 
enrollment date in Y's plan.
    Example 2. (i) Same facts as in Example 1, except that Employer Y's 
plan determines that G has 14 months of creditable coverage based on G's 
certificate indicating 14 months of creditable coverage under G's prior 
plan.
    (ii) In this Example 2, Employer Y's plan is not required to notify 
G that G will not be subject to a preexisting condition exclusion.
    Example 3. (i) Individual H is hired by Employer Z. Employer Z's 
group health plan imposes a preexisting condition exclusion for 12 
months with respect to new enrollees and uses the standard method of 
determining creditable coverage. H develops an urgent health condition 
before receiving a certificate of prior coverage. H attests to the 
period of prior coverage, presents corroborating documentation of the 
coverage period, and authorizes the plan to request a certificate on H's 
behalf.
    (ii) In this Example 3, Employer Z's plan must review the evidence 
presented by H. In addition, the plan must make a determination and 
notify H regarding any preexisting condition exclusion period that 
applies to H (and the basis of such determination) within a reasonable 
time period following receipt of the evidence that is consistent with 
the urgency of H's health condition (this determination may be modified 
as permitted under paragraph (d)(2) of this section).

(Approved by the Office of Management and Budget under control numbers 
1210-0102 and 1210-0103)

[62 FR 16941, Apr. 8, 1997; 62 FR 31670, 31692, June 10, 1997, as 
amended at 62 FR 35905, July 2, 1997. Redesignated at 65 FR 82142, Dec. 
27, 2000]



Sec. 2590.701-6  Special enrollment periods.

    (a) Special enrollment for certain individuals who lose coverage--
(1) In general. A group health plan, and a health insurance issuer 
offering group health insurance coverage in connection with a group 
health plan, is required to permit employees and dependents described in 
paragraph (a) (2), (3), or (4) of this section to enroll for coverage 
under the terms of the plan if the conditions in paragraph (a)(5) of 
this section are satisfied and the enrollment is requested within the 
period described in paragraph (a)(6) of this section. The enrollment is 
effective at the time described in paragraph (a)(7) of this section. The 
special enrollment rights under this paragraph (a) apply without regard 
to the dates on which an individual would otherwise be able to enroll 
under the plan.
    (2) Special enrollment of an employee only. An employee is described 
in this paragraph (a)(2) if the employee is eligible, but not enrolled, 
for coverage under the terms of the plan and, when enrollment was 
previously offered to the employee under the plan and was declined by 
the employee, the employee was covered under another group health plan 
or had other health insurance coverage.
    (3) Special enrollment of dependents only. A dependent is described 
in this paragraph (a)(3) if the dependent is a dependent of an employee 
participating in the plan, the dependent is eligible, but not enrolled, 
for coverage under the terms of the plan, and, when enrollment was 
previously offered under the plan and was declined, the dependent was 
covered under another group health plan or had other health insurance 
coverage.
    (4) Special enrollment of both employee and dependent. An employee 
and any dependent of the employee are described in this paragraph (a)(4) 
if they are eligible, but not enrolled, for coverage under the terms of 
the plan and, when enrollment was previously offered to the employee or 
dependent under the plan and was declined, the employee or dependent was 
covered under another group health plan or had other health insurance 
coverage.
    (5) Conditions for special enrollment. An employee or dependent is 
eligible to enroll during a special enrollment period if each of the 
following applicable conditions is met:
    (i) When the employee declined enrollment for the employee or the 
dependent, the employee stated in writing that coverage under another 
group health plan or other health insurance coverage was the reason for 
declining enrollment. This paragraph (a)(5)(i) applies only if--
    (A) The plan required such a statement when the employee declined 
enrollment; and
    (B) The employee is provided with notice of the requirement to 
provide

[[Page 644]]

the statement in this paragraph (a)(5)(i) (and the consequences of the 
employee's failure to provide the statement) at the time the employee 
declined enrollment.
    (ii)(A) When the employee declined enrollment for the employee or 
dependent under the plan, the employee or dependent had COBRA 
continuation coverage under another plan and COBRA continuation coverage 
under that other plan has since been exhausted; or
    (B) If the other coverage that applied to the employee or dependent 
when enrollment was declined was not under a COBRA continuation 
provision, either the other coverage has been terminated as a result of 
loss of eligibility for the coverage or employer contributions towards 
the other coverage has been terminated. For this purpose, loss of 
eligibility for coverage includes a loss of coverage as a result of 
legal separation, divorce, death, termination of employment, reduction 
in the number of hours of employment, and any loss of eligibility after 
a period that is measured by reference to any of the foregoing. Thus, 
for example, if an employee's coverage ceases following a termination of 
employment and the employee is eligible for but fails to elect COBRA 
continuation coverage, this is treated as a loss of eligibility under 
this paragraph (a)(5)(ii)(B). However, loss of eligibility does not 
include a loss due to failure of the individual or the participant to 
pay premiums on a timely basis or termination of coverage for cause 
(such as making a fraudulent claim or an intentional misrepresentation 
of a material fact in connection with the plan). In addition, for 
purposes of this paragraph (a)(5)(ii)(B), employer contributions include 
contributions by any current or former employer (of the individual or 
another person) that was contributing to coverage for the individual.
    (6) Length of special enrollment period. The employee is required to 
request enrollment (for the employee or the employee's dependent, as 
described in paragraph (a) (2), (3), or (4) of this section) not later 
than 30 days after the exhaustion of the other coverage described in 
paragraph (a)(5)(ii)(A) of this section or termination of the other 
coverage as a result of the loss of eligibility for the other coverage 
for items described in paragraph (a)(5)(ii)(B) of this section or 
following the termination of employer contributions toward that other 
coverage. The plan may impose the same requirements that apply to 
employees who are otherwise eligible under the plan to immediately 
request enrollment for coverage (e.g., that the request be made in 
writing).
    (7) Effective date of enrollment. Enrollment is effective not later 
than the first day of the first calendar month beginning after the date 
the completed request for enrollment is received.
    (b) Special enrollment with respect to certain dependent 
beneficiaries--(1) In general. A group health plan that makes coverage 
available with respect to dependents of a participant is required to 
provide a special enrollment period to permit individuals described in 
paragraph (b) (2), (3), (4), (5), or (6) of this section to be enrolled 
for coverage under the terms of the plan if the enrollment is requested 
within the time period described in paragraph (b)(7) of this section. 
The enrollment is effective at the time described in paragraph (b)(8) of 
this section. The special enrollment rights under this paragraph (b) 
apply without regard to the dates on which an individual would otherwise 
be able to enroll under the plan.
    (2) Special enrollment of an employee who is eligible but not 
enrolled. An individual is described in this paragraph (b)(2) if the 
individual is an employee who is eligible, but not enrolled, for 
coverage under the terms of the plan, the individual would be a 
participant but for a prior election by the individual not to enroll in 
the plan during a previous enrollment period, and a person becomes a 
dependent of the individual through marriage, birth, or adoption or 
placement for adoption.
    (3) Special enrollment of a spouse of a participant. An individual 
is described in this paragraph (b)(3) if either--
    (i) The individual becomes the spouse of a participant; or
    (ii) The individual is a spouse of the participant and a child 
becomes a dependent of the participant through birth, adoption or 
placement for adoption.

[[Page 645]]

    (4) Special enrollment of an employee who is eligible but not 
enrolled and the spouse of such employee. An employee who is eligible, 
but not enrolled, for coverage under the terms of the plan, and an 
individual who is a dependent of such employee, are described in this 
paragraph (b)(4) if the employee would be a participant but for a prior 
election by the employee not to enroll in the plan during a previous 
enrollment period, and either--
    (i) The employee and the individual become married; or
    (ii) The employee and individual are married and a child becomes a 
dependent of the employee through birth, adoption or placement for 
adoption.
    (5) Special enrollment of a dependent of a participant. An 
individual is described in this paragraph (b)(5) if the individual is a 
dependent of a participant and the individual becomes a dependent of 
such participant through marriage, birth, or adoption or placement for 
adoption.
    (6) Special enrollment of an employee who is eligible but not 
enrolled and a new dependent. An employee who is eligible, but not 
enrolled, for coverage under the terms of the plan, and an individual 
who is a dependent of the employee, are described in this paragraph 
(b)(6) if the employee would be a participant but for a prior election 
by the employee not to enroll in the plan during a previous enrollment 
period, and the dependent becomes a dependent of the employee through 
marriage, birth, or adoption or placement for adoption.
    (7) Length of special enrollment period. The special enrollment 
period under paragraph (b)(1) of this section is a period of not less 
than 30 days and begins on the date of the marriage, birth, or adoption 
or placement for adoption (except that such period does not begin 
earlier than the date the plan makes dependent coverage generally 
available).
    (8) Effective date of enrollment. Enrollment is effective--
    (i) In the case of marriage, not later than the first day of the 
first calendar month beginning after the date the completed request for 
enrollment is received by the plan;
    (ii) In the case of a dependent's birth, the date of such birth; and
    (iii) In the case of a dependent's adoption or placement for 
adoption, the date of such adoption or placement for adoption.
    (9) Example. The rules of this paragraph (b) are illustrated by the 
following example:

    Example. (i) Employee A is hired on September 3, 1998 by Employer X, 
which has a group health plan in which A can elect to enroll either for 
employee-only coverage, for employee-plus-spouse coverage, or for family 
coverage, effective on the first day of any calendar quarter thereafter. 
A is married and has no children. A does not elect to join Employer X's 
plan (for employee-only coverage, employee-plus-spouse coverage, or 
family coverage) on October 1, 1998 or January 1, 1999. On February 15, 
1999, a child is placed for adoption with A and A's spouse.
    (ii) In this Example, the conditions for special enrollment of an 
employee with a new dependent under paragraph (b)(2) of this section are 
satisfied, the conditions for special enrollment of an employee and a 
spouse with a new dependent under paragraph (b)(4) of this section are 
satisfied, and the conditions for special enrollment of an employee and 
a new dependent under paragraph (b)(6) of this section are satisfied. 
Accordingly, Employer X's plan will satisfy this paragraph (b) if and 
only if it allows A to elect, by filing the required forms by March 16, 
1999, to enroll in Employer X's plan either with employee-only coverage, 
with employee-plus-spouse coverage, or with family coverage, effective 
as of February 15, 1999.

    (c) Notice of enrollment rights. On or before the time an employee 
is offered the opportunity to enroll in a group health plan, the plan is 
required to provide the employee with a description of the plan's 
special enrollment rules under this section. For this purpose, the plan 
may use the following model description of the special enrollment rules 
under this section:

    If you are declining enrollment for yourself or your dependents 
(including your spouse) because of other health insurance coverage, you 
may in the future be able to enroll yourself or your dependents in this 
plan, provided that you request enrollment within 30 days after your 
other coverage ends. In addition, if you have a new dependent as a 
result of marriage, birth, adoption, or placement for adoption, you may 
be able to enroll yourself and your dependents, provided that you 
request enrollment within 30 days after the marriage, birth, adoption, 
or placement for adoption.


[[Page 646]]


    (d)(1) Special enrollment date definition. A special enrollment date 
for an individual means any date in paragraph (a)(7) or (b)(8) of this 
section on which the individual has a right to have enrollment in a 
group health plan become effective under this section.
    (2) Examples. The rules of this section are illustrated by the 
following examples:

    Example 1. (i)(A) Employer Y maintains a group health plan that 
allows employees to enroll in the plan either--
    (1) Effective on the first day of employment by an election filed 
within three days thereafter;
    (2) Effective on any subsequent January 1 by an election made during 
the preceding months of November or December; or
    (3) Effective as of any special enrollment date described in this 
section.
    (B) Employee B is hired by Employer Y on March 15, 1998 and does not 
elect to enroll in Employer Y's plan until January 31, 1999 when B loses 
coverage under another plan. B elects to enroll in Employer Y's plan 
effective on February 1, 1999, by filing the completed request form by 
January 31, 1999, in accordance with the special rule set forth in 
paragraph (a) of this section.
    (ii) In this Example 1, B has enrolled on a special enrollment date 
because the enrollment is effective at a date described in paragraph 
(a)(7) of this section.
    Example 2. (i) Same facts as Example 1, except that B's loss of 
coverage under the other plan occurs on December 31, 1998 and B elect to 
enroll in Employer Y's plan effective on January 1, 1999 by filing the 
completed request form by December 31, 1998, in accordance with the 
special rule set forth in paragraph (a) of this section.
    (ii) In this Example 2, B has enrolled on a special enrollment date 
because the enrollment is effective at a date described in paragraph 
(a)(7) of this section (even though this date is also a regular 
enrollment date under the plan).

(Approved by the Office of Management and Budget under control number 
1210-0101)

[62 FR 16941, Apr. 8, 1997; 62 FR 31693, June 10, 1997, as amended at 62 
FR 35905, July 2, 1997. Redesignated at 65 FR 82142, Dec. 27, 2000]



Sec. 2590.701-7  HMO affiliation period as alternative to preexisting condition exclusion.

    (a) In general. A group health plan offering health insurance 
coverage through an HMO, or an HMO that offers health insurance coverage 
in connection with a group health plan, may impose an affiliation period 
only if each of the requirements in paragraph (b) of this section is 
satisfied.
    (b) Requirements for affiliation period. (1) No preexisting 
condition exclusion is imposed with respect to any coverage offered by 
the HMO in connection with the particular group health plan.
    (2) No premium is charged to a participant or beneficiary for the 
affiliation period.
    (3) The affiliation period for the HMO coverage is applied uniformly 
without regard to any health status-related factors.
    (4) The affiliation period does not exceed 2 months (or 3 months in 
the case of a late enrollee).
    (5) The affiliation period begins on the enrollment date.
    (6) The affiliation period for enrollment in the HMO under a plan 
runs concurrently with any waiting period.
    (c) Alternatives to affiliation period. An HMO may use alternative 
methods in lieu of an affiliation period to address adverse selection, 
as approved by the State insurance commissioner or other official 
designated to regulate HMOs. Nothing in the part requires a State to 
receive proposals for or approve alternatives to affiliation periods.



Sec. 2590.702  Prohibiting discrimination against participants and beneficiaries based on a health factor.

    (a) Health factors. (1) The term health factor means, in relation to 
an individual, any of the following health status-related factors:
    (i) Health status;
    (ii) Medical condition (including both physical and mental 
illnesses), as defined in Sec. 2590.701-2;
    (iii) Claims experience;
    (iv) Receipt of health care;
    (v) Medical history;
    (vi) Genetic information, as defined in Sec. 2590.701-2;
    (vii) Evidence of insurability; or
    (viii) Disability.
    (2) Evidence of insurability includes--
    (i) Conditions arising out of acts of domestic violence; and
    (ii) Participation in activities such as motorcycling, snowmobiling, 
all-terrain vehicle riding, horseback riding, skiing, and other similar 
activities.

[[Page 647]]

    (3) The decision whether health coverage is elected for an 
individual (including the time chosen to enroll, such as under special 
enrollment or late enrollment) is not, itself, within the scope of any 
health factor. (However, under Sec. 2590.701-6, a plan or issuer must 
treat special enrollees the same as similarly situated individuals who 
are enrolled when first eligible.)
    (b) Prohibited discrimination in rules for eligibility--(1) In 
general--(i) A group health plan, and a health insurance issuer offering 
health insurance coverage in connection with a group health plan, may 
not establish any rule for eligibility (including continued eligibility) 
of any individual to enroll for benefits under the terms of the plan or 
group health insurance coverage that discriminates based on any health 
factor that relates to that individual or a dependent of that 
individual. This rule is subject to the provisions of paragraph (b)(2) 
of this section (explaining how this rule applies to benefits), 
paragraph (b)(3) of this section (allowing plans to impose certain 
preexisting condition exclusions), paragraph (d) of this section 
(containing rules for establishing groups of similarly situated 
individuals), paragraph (e) of this section (relating to nonconfinement, 
actively-at-work, and other service requirements), paragraph (f) of this 
section (relating to bona fide wellness programs), and paragraph (g) of 
this section (permitting favorable treatment of individuals with adverse 
health factors).
    (ii) For purposes of this section, rules for eligibility include, 
but are not limited to, rules relating to--
    (A) Enrollment;
    (B) The effective date of coverage;
    (C) Waiting (or affiliation) periods;
    (D) Late and special enrollment;
    (E) Eligibility for benefit packages (including rules for 
individuals to change their selection among benefit packages);
    (F) Benefits (including rules relating to covered benefits, benefit 
restrictions, and cost-sharing mechanisms such as coinsurance, 
copayments, and deductibles), as described in paragraphs (b)(2) and (3) 
of this section;
    (G) Continued eligibility; and
    (H) Terminating coverage (including disenrollment) of any individual 
under the plan.
    (iii) The rules of this paragraph (b)(1) are illustrated by the 
following examples:

    Example 1. (i) Facts. An employer sponsors a group health plan that 
is available to all employees who enroll within the first 30 days of 
their employment. However, employees who do not enroll within the first 
30 days cannot enroll later unless they pass a physical examination.
    (ii) Conclusion. In this Example 1, the requirement to pass a 
physical examination in order to enroll in the plan is a rule for 
eligibility that discriminates based on one or more health factors and 
thus violates this paragraph (b)(1).
    Example 2. (i) Facts. Under an employer's group health plan, 
employees who enroll during the first 30 days of employment (and during 
special enrollment periods) may choose between two benefit packages: an 
indemnity option and an HMO option. However, employees who enroll during 
late enrollment are permitted to enroll only in the HMO option and only 
if they provide evidence of good health.
    (ii) Conclusion. In this Example 2, the requirement to provide 
evidence of good health in order to be eligible for late enrollment in 
the HMO option is a rule for eligibility that discriminates based on one 
or more health factors and thus violates this paragraph (b)(1). However, 
if the plan did not require evidence of good health but limited late 
enrollees to the HMO option, the plan's rules for eligibility would not 
discriminate based on any health factor, and thus would not violate this 
paragraph (b)(1), because the time an individual chooses to enroll is 
not, itself, within the scope of any health factor.
    Example 3. (i) Facts. Under an employer's group health plan, all 
employees generally may enroll within the first 30 days of employment. 
However, individuals who participate in certain recreational activities, 
including motorcycling, are excluded from coverage.
    (ii) Conclusion. In this Example 3, excluding from the plan 
individuals who participate in recreational activities, such as 
motorcycling, is a rule for eligibility that discriminates based on one 
more health factors and thus violates this paragraph (b)(1).
    Example 4. (i) Facts. A group health plan applies for a group health 
policy offered by an issuer. As part of the application, the issuer 
receives health information about individuals to be covered under the 
plan. Individual A is an employee of the employer maintaining the plan. 
A and A's dependents have a history of high health claims. Based

[[Page 648]]

on the information about A and A's dependents, the issuer excludes A and 
A's dependents from the group policy it offers to the employer.
    (ii) Conclusion. In this Example 4, the issuer's exclusion of A and 
A's dependents from coverage is a rule for eligibility that 
discriminates based on one or more health factors, and thus violates 
this paragraph (b)(1). (If the employer is a small employer under 45 CFR 
144.103 (generally, an employer with 50 or fewer employees), the issuer 
also may violate 45 CFR 146.150, which requires issuers to offer all the 
policies they sell in the small group market on a guaranteed available 
basis to all small employers and to accept every eligible individual in 
every small employer group.) If the plan provides coverage through this 
policy and does not provide equivalent coverage for A and A's dependents 
through other means, the plan will also violate this paragraph (b)(1).

    (2) Application to benefits--(i) General rule--(A) Under this 
section, a group health plan or group health insurance issuer is not 
required to provide coverage for any particular benefit to any group of 
similarly situated individuals.
    (B) However, benefits provided under a plan or through group health 
insurance coverage must be uniformly available to all similarly situated 
individuals (as described in paragraph (d) of this section). Likewise, 
any restriction on a benefit or benefits must apply uniformly to all 
similarly situated individuals and must not be directed at individual 
participants or beneficiaries based on any health factor of the 
participants or beneficiaries (determined based on all the relevant 
facts and circumstances). Thus, for example, a plan or issuer may limit 
or exclude benefits in relation to a specific disease or condition, 
limit or exclude benefits for certain types of treatments or drugs, or 
limit or exclude benefits based on a determination of whether the 
benefits are experimental or not medically necessary, but only if the 
benefit limitation or exclusion applies uniformly to all similarly 
situated individuals and is not directed at individual participants or 
beneficiaries based on any health factor of the participants or 
beneficiaries. In addition, a plan or issuer may impose annual, 
lifetime, or other limits on benefits and may require the satisfaction 
of a deductible, copayment, coinsurance, or other cost-sharing 
requirement in order to obtain a benefit if the limit or cost-sharing 
requirement applies uniformly to all similarly situated individuals and 
is not directed at individual participants or beneficiaries based on any 
health factor of the participants or beneficiaries. In the case of a 
cost-sharing requirement, see also paragraph (b)(2)(ii) of this section, 
which permits variances in the application of a cost-sharing mechanism 
made available under a bona fide wellness program. (Whether any plan 
provision or practice with respect to benefits complies with this 
paragraph (b)(2)(i) does not affect whether the provision or practice is 
permitted under any other provision of the Act, the Americans with 
Disabilities Act, or any other law, whether State or federal.)
    (C) For purposes of this paragraph (b)(2)(i), a plan amendment 
applicable to all individuals in one or more groups of similarly 
situated individuals under the plan and made effective no earlier than 
the first day of the first plan year after the amendment is adopted is 
not considered to be directed at any individual participants or 
beneficiaries.
    (D) The rules of this paragraph (b)(2)(i) are illustrated by the 
following examples:

    Example 1. (i) Facts. A group health plan applies a $500,000 
lifetime limit on all benefits to each participant or beneficiary 
covered under the plan. The limit is not directed at individual 
participants or beneficiaries.
    (ii) Conclusion. In this Example 1, the limit does not violate this 
paragraph (b)(2)(i) because $500,000 of benefits are available uniformly 
to each participant and beneficiary under the plan and because the limit 
is applied uniformly to all participants and beneficiaries and is not 
directed at individual participants or beneficiaries.
    Example 2. (i) Facts. A group health plan has a $2 million lifetime 
limit on all benefits (and no other lifetime limits) for participants 
covered under the plan. Participant B files a claim for the treatment of 
AIDS. At the next corporate board meeting of the plan sponsor, the claim 
is discussed. Shortly thereafter, the plan is modified to impose a 
$10,000 lifetime limit on benefits for the treatment of AIDS, effective 
before the beginning of the next plan year.
    (ii) Conclusion. Under the facts of this Example 2, the plan 
violates this paragraph (b)(2)(i) because the plan modification is 
directed at B based on B's claim.
    Example 3. (i) A group health plan applies for a group health policy 
offered by an

[[Page 649]]

issuer. Individual C is covered under the plan and has an adverse health 
condition. As part of the application, the issuer receives health 
information about the individuals to be covered, including information 
about C 's adverse health condition. The policy form offered by the 
issuer generally provides benefits for the adverse health condition that 
C has, but in this case the issuer offers the plan a policy modified by 
a rider that excludes benefits for C for that condition. The 
exclusionary rider is made effective the first day of the next plan 
year.
    (ii) Conclusion. In this Example 3, the issuer violates this 
paragraph (b)(2)(i) because benefits for C 's condition are available to 
other individuals in the group of similarly situated individuals that 
includes C but are not available to C. Thus, the benefits are not 
uniformly available to all similarly situated individuals. Even though 
the exclusionary rider is made effective the first day of the next plan 
year, because the rider does not apply to all similarly situated 
individuals, the issuer violates this paragraph (b)(2)(i).
    Example 4. (i) Facts. A group health plan has a $2,000 lifetime 
limit for the treatment of temporomandibular joint syndrome (TMJ). The 
limit is applied uniformly to all similarly situated individuals and is 
not directed at individual participants or beneficiaries.
    (ii) Conclusion. In this Example 4, the limit does not violate this 
paragraph (b)(2)(i) because $2000 of benefits for the treatment of TMJ 
are available uniformly to all similarly situated individuals and a plan 
may limit benefits covered in relation to a specific disease or 
condition if the limit applies uniformly to all similarly situated 
individuals and is not directed at individual participants or 
beneficiaries.
    Example 5. (i) Facts. A group health plan applies a $2 million 
lifetime limit on all benefits. However, the $2 million lifetime limit 
is reduced to $10,000 for any participant or beneficiary covered under 
the plan who has a congenital heart defect.
    (ii) Conclusion. In this Example 5, the lower lifetime limit for 
participants and beneficiaries with a congenital heart defect violates 
this paragraph (b)(2)(i) because benefits under the plan are not 
uniformly available to all similarly situated individuals and the plan's 
lifetime limit on benefits does not apply uniformly to all similarly 
situated individuals.
    Example 6. (i) Facts. A group health plan limits benefits for 
prescription drugs to those listed on a drug formulary. The limit is 
applied uniformly to all similarly situated individuals and is not 
directed at individual participants or beneficiaries.
    (ii) Conclusion. In this Example 6, the exclusion from coverage of 
drugs not listed on the drug formulary does not violate this paragraph 
(b)(2)(i) because benefits for prescription drugs listed on the 
formulary are uniformly available to all similarly situated individuals 
and because the exclusion of drugs not listed on the formulary applies 
uniformly to all similarly situated individuals and is not directed at 
individual participants or beneficiaries.
    Example 7. (i) Facts. Under a group health plan, doctor visits are 
generally subject to a $250 annual deductible and 20 percent coinsurance 
requirement. However, prenatal doctor visits are not subject to any 
deductible or coinsurance requirement. These rules are applied uniformly 
to all similarly situated individuals and are not directed at individual 
participants or beneficiaries.
    (ii) Conclusion. In this Example 7, imposing different deductible 
and coinsurance requirements for prenatal doctor visits and other visits 
does not violate this paragraph (b)(2)(i) because a plan may establish 
different deductibles or coinsurance requirements for different services 
if the deductible or coinsurance requirement is applied uniformly to all 
similarly situated individuals and is not directed at individual 
participants or beneficiaries.

    (ii) Cost-sharing mechanisms and wellness programs. A group health 
plan or group health insurance coverage with a cost-sharing mechanism 
(such as a deductible, copayment, or coinsurance) that requires a higher 
payment from an individual, based on a health factor of that individual 
or a dependent of that individual, than for a similarly situated 
individual under the plan (and thus does not apply uniformly to all 
similarly situated individuals) does not violate the requirements of 
this paragraph (b)(2) if the payment differential is based on whether an 
individual has complied with the requirements of a bona fide wellness 
program.
    (iii) Specific rule relating to source-of-injury exclusions--(A) If 
a group health plan or group health insurance coverage generally 
provides benefits for a type of injury, the plan or issuer may not deny 
benefits otherwise provided for treatment of the injury if the injury 
results from an act of domestic violence or a medical condition 
(including both physical and mental health conditions).
    (B) The rules of this paragraph (b)(2)(iii) are illustrated by the 
following examples:

    Example 1. (i) Facts. A group health plan generally provides 
medical/surgical benefits, including benefits for hospital stays, that 
are medically necessary. However, the plan

[[Page 650]]

excludes benefits for self-inflicted injuries or injuries sustained in 
connection with attempted suicide. Individual D suffers from depression 
and attempts suicide. As a result, D sustains injuries and is 
hospitalized for treatment of the injuries. Pursuant to the exclusion, 
the plan denies D benefits for treatment of the injuries.
    (ii) Conclusion. In this Example 1, the suicide attempt is the 
result of a medical condition (depression). Accordingly, the denial of 
benefits for the treatments of D's injuries violates the requirements of 
this paragraph (b)(2)(iii) because the plan provision excludes benefits 
for treatment of an injury resulting from a medical condition.
    Example 2. (i) Facts. A group health plan provides benefits for head 
injuries generally. The plan also has a general exclusion for any injury 
sustained while participating in any of a number of recreational 
activities, including bungee jumping. However, this exclusion does not 
apply to any injury that results from a medical condition (nor from 
domestic violence). Participant E sustains a head injury while bungee 
jumping. The injury did not result from a medical condition (nor from 
domestic violence). Accordingly, the plan denies benefits for E's head 
injury.
    (ii) Conclusion. In this Example 2, the plan provision that denies 
benefits based on the source of an injury does not restrict benefits 
based on an act of domestic violence or any medical condition. 
Therefore, the provision is permissible under this paragraph (b)(2)(iii) 
and does not violate this section. (However, if the plan did not allow E 
to enroll in the plan (or applied different rules for eligibility to E) 
because E frequently participates in bungee jumping, the plan would 
violate paragraph (b)(1) of this section.)

    (3) Relationship to Sec. 2590.701-3. (i) A preexisting condition 
exclusion is permitted under this section if it --
    (A) Complies with Sec. 2590.701-3;
    (B) Applies uniformly to all similarly situated individuals (as 
described in paragraph (d) of this section); and
    (C) Is not directed at individual participants or beneficiaries 
based on any health factor of the participants or beneficiaries. For 
purposes of this paragraph (b)(3)(i)(C), a plan amendment relating to a 
preexisting condition exclusion applicable to all individuals in one or 
more groups of similarly situated individuals under the plan and made 
effective no earlier than the first day of the first plan year after the 
amendment is adopted is not considered to be directed at any individual 
participants or beneficiaries.
    (ii) The rules of this paragraph (b)(3) are illustrated by the 
following examples:

    Example 1. (i) Facts. A group health plan imposes a preexisting 
condition exclusion on all individuals enrolled in the plan. The 
exclusion applies to conditions for which medical advice, diagnosis, 
care, or treatment was recommended or received within the six-month 
period ending on an individual's enrollment date. In addition, the 
exclusion generally extends for 12 months after an individual's 
enrollment date, but this 12-month period is offset by the number of 
days of an individual's creditable coverage in accordance with 
Sec. 2590.701-3. There is nothing to indicate that the exclusion is 
directed at individual participants or beneficiaries.
    (ii) Conclusion. In this Example 1, even though the plan's 
preexisting condition exclusion discriminates against individuals based 
on one or more health factors, the preexisting condition exclusion does 
not violate this section because it applies uniformly to all similarly 
situated individuals, is not directed at individual participants or 
beneficiaries, and complies with Sec. 2590.701-3 (that is, the 
requirements relating to the six-month look-back period, the 12-month 
(or 18-month) maximum exclusion period, and the creditable coverage 
offset).
    Example 2. (i) Facts. A group health plan excludes coverage for 
conditions with respect to which medical advice, diagnosis, care, or 
treatment was recommended or received within the six-month period ending 
on an individual's enrollment date. Under the plan, the preexisting 
condition exclusion generally extends for 12 months, offset by 
creditable coverage. However, if an individual has no claims in the 
first six months following enrollment, the remainder of the exclusion 
period is waived.
    (ii) Conclusion. In this Example 2, the plan's preexisting condition 
exclusions violate this section because they do not meet the 
requirements of this paragraph (b)(3); specifically, they do not apply 
uniformly to all similarly situated individuals. The plan provisions do 
not apply uniformly to all similarly situated individuals because 
individuals who have medical claims during the first six months 
following enrollment are not treated the same as similarly situated 
individuals with no claims during that period. (Under paragraph (d) of 
this section, the groups cannot be treated as two separate groups of 
similarly situated individuals because the distinction is based on a 
health factor.)

    (c) Prohibited discrimination in premiums or contributions--(1) In 
general--(i) A group health plan, and a health insurance issuer offering 
health insurance coverage in connection with

[[Page 651]]

a group health plan, may not require an individual, as a condition of 
enrollment or continued enrollment under the plan or group health 
insurance coverage, to pay a premium or contribution that is greater 
than the premium or contribution for a similarly situated individual 
(described in paragraph (d) of this section) enrolled in the plan or 
group health insurance coverage based on any health factor that relates 
to the individual or a dependent of the individual.
    (ii) Discounts, rebates, payments in kind, and any other premium 
differential mechanisms are taken into account in determining an 
individual's premium or contribution rate. (For rules relating to cost-
sharing mechanisms, see paragraph (b)(2) of this section (addressing 
benefits).)
    (2) Rules relating to premium rates--(i) Group rating based on 
health factors not restricted under this section. Nothing in this 
section restricts the aggregate amount that an employer may be charged 
for coverage under a group health plan.
    (ii) List billing based on a health factor prohibited. However, a 
group health insurance issuer, or a group health plan, may not quote or 
charge an employer (or an individual) a different premium for an 
individual in a group of similarly situated individuals based on a 
health factor. (But see paragraph (g) of this section permitting 
favorable treatment of individuals with adverse health factors.)
    (iii) Examples. The rules of this paragraph (c)(2) are illustrated 
by the following examples:

    Example 1. (i) Facts. An employer sponsors a group health plan and 
purchases coverage from a health insurance issuer. In order to determine 
the premium rate for the upcoming plan year, the issuer reviews the 
claims experience of individuals covered under the plan. The issuer 
finds that Individual F had significantly higher claims experience than 
similarly situated individuals in the plan. The issuer quotes the plan a 
higher per-participant rate because of F 's claims experience.
    (ii) Conclusion. In this Example 1, the issuer does not violate the 
provisions of this paragraph (c)(2) because the issuer blends the rate 
so that the employer is not quoted a higher rate for F than for a 
similarly situated individual based on F 's claims experience.
    Example 2. (i) Facts. Same facts as Example 1, except that the 
issuer quotes the employer a higher premium rate for F, because of F 's 
claims experience, than for a similarly situated individual.
    (ii) Conclusion. In this Example 2, the issuer violates this 
paragraph (c)(2). Moreover, even if the plan purchased the policy based 
on the quote but did not require a higher participant contribution for F 
than for a similarly situated individual, the issuer would still violate 
this paragraph (c)(2) (but in such a case the plan would not violate 
this paragraph (c)(2)).

    (3) Exception for bona fide wellness programs. Notwithstanding 
paragraphs (c)(1) and (2) of this section, a plan may establish a 
premium or contribution differential based on whether an individual has 
complied with the requirements of a bona fide wellness program.
    (d) Similarly situated individuals. The requirements of this section 
apply only within a group of individuals who are treated as similarly 
situated individuals. A plan or issuer may treat participants as a group 
of similarly situated individuals separate from beneficiaries. In 
addition, participants may be treated as two or more distinct groups of 
similarly situated individuals and beneficiaries may be treated as two 
or more distinct groups of similarly situated individuals in accordance 
with the rules of this paragraph (d). Moreover, if individuals have a 
choice of two or more benefit packages, individuals choosing one benefit 
package may be treated as one or more groups of similarly situated 
individuals distinct from individuals choosing another benefit package.
    (1) Participants. Subject to paragraph (d)(3) of this section, a 
plan or issuer may treat participants as two or more distinct groups of 
similarly situated individuals if the distinction between or among the 
groups of participants is based on a bona fide employment-based 
classification consistent with the employer's usual business practice. 
Whether an employment-based classification is bona fide is determined on 
the basis of all the relevant facts and circumstances. Relevant facts 
and circumstances include whether the employer uses the classification 
for purposes independent of qualification for health coverage (for 
example, determining eligibility for other employee

[[Page 652]]

benefits or determining other terms of employment). Subject to paragraph 
(d)(3) of this section, examples of classifications that, based on all 
the relevant facts and circumstances, may be bona fide include full-time 
versus part-time status, different geographic location, membership in a 
collective bargaining unit, date of hire, length of service, current 
employee versus former employee status, and different occupations. 
However, a classification based on any health factor is not a bona fide 
employment-based classification, unless the requirements of paragraph 
(g) of this section are satisfied (permitting favorable treatment of 
individuals with adverse health factors).
    (2) Beneficiaries--(i) Subject to paragraph (d)(3) of this section, 
a plan or issuer may treat beneficiaries as two or more distinct groups 
of similarly situated individuals if the distinction between or among 
the groups of beneficiaries is based on any of the following factors:
    (A) A bona fide employment-based classification of the participant 
through whom the beneficiary is receiving coverage;
    (B) Relationship to the participant (e.g., as a spouse or as a 
dependent child);
    (C) Marital status;
    (D) With respect to children of a participant, age or student 
status; or
    (E) Any other factor if the factor is not a health factor.
    (ii) Paragraph (d)(2)(i) of this section does not prevent more 
favorable treatment of individuals with adverse health factors in 
accordance with paragraph (g) of this section.
    (3) Discrimination directed at individuals. Notwithstanding 
paragraphs (d)(1) and (2) of this section, if the creation or 
modification of an employment or coverage classification is directed at 
individual participants or beneficiaries based on any health factor of 
the participants or beneficiaries, the classification is not permitted 
under this paragraph (d), unless it is permitted under paragraph (g) of 
this section (permitting favorable treatment of individuals with adverse 
health factors). Thus, if an employer modified an employment-based 
classification to single out, based on a health factor, individual 
participants and beneficiaries and deny them health coverage, the new 
classification would not be permitted under this section.
    (4) Examples. The rules of this paragraph (d) are illustrated by the 
following examples:

    Example 1. (i) Facts. An employer sponsors a group health plan for 
full-time employees only. Under the plan (consistent with the employer's 
ususal business practice), employees who normally work at least 30 hours 
per week are considered to be working full-time. Other employees are 
considered to be working part-time. There is no evidence to suggest that 
the classification is directed at individual participants or 
beneficiaries.
    (ii) Conclusion. In this Example 1, treating the full-time and part-
time employees as two separate groups of similarly situated individuals 
is permitted under this paragraph (d) because the classification is bona 
fide and is not directed at individual participants or beneficiaries.
    Example 2. (i) Facts. Under a group health plan, coverage is made 
available to employees, their spouses, and their dependent children. 
However, coverage is made available to a dependent child only if the 
dependent child is under age 19 (or under age 25 if the child is 
continuously enrolled full-time in an institution of higher learning 
(full-time students)). There is no evidence to suggest that these 
classifications are directed at individual participants or 
beneficiaries.
    (ii) Conclusion. In this Example 2, treating spouses and dependent 
children differently by imposing an age limitation on dependent 
children, but not on spouses, is permitted under this paragraph (d). 
Specifically, the distinction between spouses and dependent children is 
permitted under paragraph (d)(2) of this section and is not prohibited 
under paragraph (d)(3) of this section because it is not directed at 
individual participants or beneficiaries. It is also permissible to 
treat dependent children who are under age 19 (or full-time students 
under age 25) as a group of similarly situated individuals separate from 
those who are age 25 or older (or age 19 or older if they are not full-
time students) because the classification is permitted under paragraph 
(d)(2) of this section and is not directed at individual participants or 
beneficiaries.
    Example 3. (i) Facts. A university sponsors a group health plan that 
provides one health benefit package to faculty and another health 
benefit package to other staff. Faculty and staff are treated 
differently with respect to other employee benefits such as retirement 
benefits and leaves of absence. There is no evidence to suggest that the 
distinction is directed at individual participants or beneficiaries.

[[Page 653]]

    (ii) Conclusion. In this Example 3, the classification is permitted 
under this paragraph (d) because there is a distinction based on a bona 
fide employment-based classification consistent with the employer's 
usual business practice and the distinction is not directed at 
individual participants and beneficiaries.
    Example 4. (i) Facts. An employer sponsors a group health plan that 
is available to all current employees. Former employees may also be 
eligible, but only if they complete a specified number of years of 
service, are enrolled under the plan at the time of termination of 
employment, and are continuously enrolled from that date. There is no 
evidence to suggest that these distinctions are directed at individual 
participants or beneficiaries.
    (ii) Conclusion. In this Example 4, imposing additional eligibility 
requirements on former employees is permitted because a classification 
that distinguishes between current and former employees is a bona fide 
employment-based classification that is permitted under this paragraph 
(d), provided that it is not directed at individual participants or 
beneficiaries. In addition, it is permissible to distinguish between 
former employees who satisfy the service requirement and those who do 
not, provided that the distinction is not directed at individual 
participants or beneficiaries. (However, former employees who do not 
satisfy the eligibility criteria may, nonetheless, be eligible for 
continued coverage pursuant to a COBRA continuation provision or similar 
State law.)
    Example 5. (i) Facts. An employer sponsors a group health plan that 
provides the same benefit package to all seven employees of the 
employer. Six of the seven employees have the same job title and 
responsibilities, but Employee G has a different job title and different 
responsibilities. After G files an expensive claim for benefits under 
the plan, coverage under the plan is modified so that employees with G's 
job title receive a different benefit package that includes a lower 
lifetime dollar limit than in the benefit package made available to the 
other six employees.
    (ii) Conclusion. Under the facts of this Example 5, changing the 
coverage classification for G based on the existing employment 
classification for G is not permitted under this paragraph (d) because 
the creation of the new coverage classification for G is directed at G 
based on one or more health factors.

    (e) Nonconfinement and actively-at-work provisions--(1) 
Nonconfinement provisions--(i) General rule. Under the rules of 
paragraphs (b) and (c) of this section, a plan or issuer may not 
establish a rule for eligibility (as described in paragraph (b)(1)(ii) 
of this section) or set any individual's premium or contribution rate 
based on whether an individual is confined to a hospital or other health 
care institution. In addition, under the rules of paragraphs (b) and (c) 
of this section, a plan or issuer may not establish a rule for 
eligibility or set any individual's premium or contribution rate based 
on an individual's ability to engage in normal life activities, except 
to the extent permitted under paragraphs (e)(2)(ii) and (3) of this 
section (permitting plans and issuers, under certain circumstances, to 
distinguish among employees based on the performance of services).
    (ii) Examples. The rules of this paragraph (e)(1) are illustrated by 
the following examples:

    Example 1. (i) Facts. Under a group health plan, coverage for 
employees and their dependents generally becomes effective on the first 
day of employment. However, coverage for a dependent who is confined to 
a hospital or other health care institution does not become effective 
until the confinement ends.
    (ii) Conclusion. In this Example 1, the plan violates this paragraph 
(e)(1) because the plan delays the effective date of coverage for 
dependents based on confinement to a hospital or other health care 
institution.
    Example 2. (i) Facts. In previous years, a group health plan has 
provided coverage through a group health insurance policy offered by 
Issuer M. However, for the current year, the plan provides coverage 
through a group health insurance policy offered by Issuer N. Under 
Issuer N's policy, items and services provided in connection with the 
confinement of a dependent to a hospital or other health care 
institution are not covered if the confinement is covered under an 
extension of benefits clause from a previous health insurance issuer.
    (ii) Conclusion. In this Example 2, Issuer N violates this paragraph 
(e)(1) because the group health insurance coverage restricts benefits (a 
rule for eligibility under paragraph (b)(1)) based on whether a 
dependent is confined to a hospital or other health care institution 
that is covered under an extension of benefits clause from a previous 
issuer. This section does not affect any obligation Issuer M may have 
under applicable State law to provide any extension of benefits and does 
not affect any State law governing coordination of benefits.

    (2) Actively-at-work and continuous service provisions--(i) General 
rule--(A) Under the rules of paragraphs (b) and

[[Page 654]]

(c) of this section and subject to the exception for the first day of 
work described in paragraph (e)(2)(ii) of this section, a plan or issuer 
may not establish a rule for eligibility (as described in paragraph 
(b)(1)(ii) of this section) or set any individual's premium or 
contribution rate based on whether an individual is actively at work 
(including whether an individual is continuously employed), unless 
absence from work due to any health factor (such as being absent from 
work on sick leave) is treated, for purposes of the plan or health 
insurance coverage, as being actively at work.
    (B) The rules of this paragraph (e)(2)(i) are illustrated by the 
following examples:

    Example 1. (i) Facts. Under a group health plan, an employee 
generally becomes eligible to enroll 30 days after the first day of 
employment. However, if the employee is not actively at work on the 
first day after the end of the 30-day period, then eligibility for 
enrollment is delayed until the first day the employee is actively at 
work.
    (ii) Conclusion. In this Example 1, the plan violates this paragraph 
(e)(2) (and thus also violates paragraph (b) of this section). However, 
the plan would not violate paragraph (e)(2) or (b) of this section if, 
under the plan, an absence due to any health factor is considered being 
actively at work.
    Example 2. (i) Facts. Under a group health plan, coverage for an 
employee becomes effective after 90 days of continuous service; that is, 
if an employee is absent from work (for any reason) before completing 90 
days of service, the beginning of the 90-day period is measured from the 
day the employee returns to work (without any credit for service before 
the absence).
    (ii) Conclusion. In this Example 2, the plan violates this paragraph 
(e)(2) (and thus also paragraph (b) of this section) because the 90-day 
continuous service requirement is a rule for eligibility based on 
whether an individual is actively at work. However, the plan would not 
violate this paragraph (e)(2) or paragraph (b) of this section if, under 
the plan, an absence due to any health factor is not considered an 
absence for purposes of measuring 90 days of continuous service.

    (ii) Exception for the first day of work--(A) Notwithstanding the 
general rule in paragraph (e)(2)(i) of this section, a plan or issuer 
may establish a rule for eligibility that requires an individual to 
begin work for the employer sponsoring the plan (or, in the case of a 
multiemployer plan, to begin a job in covered employment) before 
coverage becomes effective, provided that such a rule for eligibility 
applies regardless of the reason for the absence.
    (B) The rules of this paragraph (e)(2)(ii) are illustrated by the 
following examples:

    Example 1. (i) Facts. Under the eligibility provision of a group 
health plan, coverage for new employees becomes effective on the first 
day that the employee reports to work. Individual H is scheduled to 
begin work on August 3. However, H is unable to begin work on that day 
because of illness. H begins working on August 4, and H's coverage is 
effective on August 4.
    (ii) Conclusion. In this Example 1, the plan provision does not 
violate this section. However, if coverage for individuals who do not 
report to work on the first day they were scheduled to work for a reason 
unrelated to a health factor (such as vacation or bereavement) becomes 
effective on the first day they were scheduled to work, then the plan 
would violate this section.
    Example 2. (i) Facts. Under a group health plan, coverage for new 
employees becomes effective on the first day of the month following the 
employee's first day of work, regardless of whether the employee is 
actively at work on the first day of the month. Individual J is 
scheduled to begin work on March 24. However, J is unable to begin work 
on March 24 because of illness. J begins working on April 7 and J's 
coverage is effective May 1.
    (ii) Conclusion. In this Example 2, the plan provision does not 
violate this section. However, as in Example 1, if coverage for 
individuals absent from work for reasons unrelated to a health factor 
became effective despite their absence, then the plan would violate this 
section.

    (3) Relationship to plan provisions defining similarly situated 
individuals--(i) Notwithstanding the rules of paragraphs (e)(1) and (2) 
of this section, a plan or issuer may establish rules for eligibility or 
set any individual's premium or contribution rate in accordance with the 
rules relating to similarly situated individuals in paragraph (d) of 
this section. Accordingly, a plan or issuer may distinguish in rules for 
eligibility under the plan between full-time and part-time employees, 
between permanent and temporary or seasonal employees, between current 
and former employees, and between employees currently performing 
services and employees no longer performing services for

[[Page 655]]

the employer, subject to paragraph (d) of this section. However, other 
federal or State laws (including the COBRA continuation provisions and 
the Family and Medical Leave Act of 1993) may require an employee or the 
employee's dependents to be offered coverage and set limits on the 
premium or contribution rate even though the employee is not performing 
services.
    (ii) The rules of this paragraph (e)(3) are illustrated by the 
following examples:

    Example 1. (i) Facts. Under a group health plan, employees are 
eligible for coverage if they perform services for the employer for 30 
or more hours per week or if they are on paid leave (such as vacation, 
sick, or bereavement leave). Employees on unpaid leave are treated as a 
separate group of similarly situated individuals in accordance with the 
rules of paragraph (d) of this section.
    (ii) Conclusion. In this Example 1, the plan provisions do not 
violate this section. However, if the plan treated individuals 
performing services for the employer for 30 or more hours per week, 
individuals on vacation leave, and individuals on bereavement leave as a 
group of similarly situated individuals separate from individuals on 
sick leave, the plan would violate this paragraph (e) (and thus also 
would violate paragraph (b) of this section) because groups of similarly 
situated individuals cannot be established based on a health factor 
(including the taking of sick leave) under paragraph (d) of this 
section.
    Example 2. (i) Facts. To be eligible for coverage under a bona fide 
collectively bargained group health plan in the current calendar 
quarter, the plan requires an individual to have worked 250 hours in 
covered employment during the three-month period that ends one month 
before the beginning of the current calendar quarter. The distinction 
between employees working at least 250 hours and those working less than 
250 hours in the earlier three-month period is not directed at 
individual participants or beneficiaries based on any health factor of 
the participants or beneficiaries.
    (ii) Conclusion. In this Example 2, the plan provision does not 
violate this section because, under the rules for similarly situated 
individuals allowing full-time employees to be treated differently than 
part-time employees, employees who work at least 250 hours in a three-
month period can be treated differently than employees who fail to work 
250 hours in that period. The result would be the same if the plan 
permitted individuals to apply excess hours from previous periods to 
satisfy the requirement for the current quarter.
    Example 3. (i) Facts. Under a group health plan, coverage of an 
employee is terminated when the individual's employment is terminated, 
in accordance with the rules of paragraph (d) of this section. Employee 
B has been covered under the plan. B experiences a disabling illness 
that prevents B from working. B takes a leave of absence under the 
Family and Medical Leave Act of 1993. At the end of such leave, B 
terminates employment and consequently loses coverage under the plan. 
(This termination of coverage is without regard to whatever rights the 
employee (or members of the employee's family) may have for COBRA 
continuation coverage.)
    (ii) Conclusion. In this Example 3, the plan provision terminating 
B's coverage upon B's termination of employment does not violate this 
section.
    Example 4. (i) Facts. Under a group health plan, coverage of an 
employee is terminated when the employee ceases to perform services for 
the employer sponsoring the plan, in accordance with the rules of 
paragraph (d) of this section. Employee C is laid off for three months. 
When the layoff begins, C 's coverage under the plan is terminated. 
(This termination of coverage is without regard to whatever rights the 
employee (or members of the employee's family) may have for COBRA 
continuation coverage.)
    (ii) Conclusion. In this Example 4, the plan provision terminating C 
's coverage upon the cessation of C 's performance of services does not 
violate this section.

    (f) Bona fide wellness programs. [Reserved.]
    (g) More favorable treatment of individuals with adverse health 
factors permitted--(1) In rules for eligibility--(i) Nothing in this 
section prevents a group health plan or group health insurance issuer 
from establishing more favorable rules for eligibility (described in 
paragraph (b)(1) of this section) for individuals with an adverse health 
factor, such as disability, than for individuals without the adverse 
health factor. Moreover, nothing in this section prevents a plan or 
issuer from charging a higher premium or contribution with respect to 
individuals with an adverse health factor if they would not be eligible 
for the coverage were it not for the adverse health factor. (However, 
other laws, including State insurance laws, may set or limit premium 
rates; these laws are not affected by this section.)
    (ii) The rules of this paragraph (g)(1) are illustrated by the 
following examples:


[[Page 656]]


    Example 1. (i) Facts. An employer sponsors a group health plan that 
generally is available to employees, spouses of employees, and dependent 
children until age 23. However, dependent children who are disabled are 
eligible for coverage beyond age 23.
    (ii) Conclusion. In this Example 1, the plan provision allowing 
coverage for disabled dependent children beyond age 23 satisfies this 
paragraph (g)(1) (and thus does not violate this section).
    Example 2. (i) Facts. An employer sponsors a group health plan, 
which is generally available to employees (and members of the employee's 
family) until the last day of the month in which the employee ceases to 
perform services for the employer. The plan generally charges employees 
$50 per month for employee-only coverage and $125 per month for family 
coverage. However, an employee who ceases to perform services for the 
employer by reason of disability may remain covered under the plan until 
the last day of the month that is 12 months after the month in which the 
employee ceased to perform services for the employer. During this 
extended period of coverage, the plan charges the employee $100 per 
month for employee-only coverage and $250 per month for family coverage. 
(This extended period of coverage is without regard to whatever rights 
the employee (or members of the employee's family) may have for COBRA 
continuation coverage.)
    (ii) Conclusion. In this Example 2, the plan provision allowing 
extended coverage for disabled employees and their families satisfies 
this paragraph (g)(1) (and thus does not violate this section). In 
addition, the plan is permitted, under this paragraph (g)(1), to charge 
the disabled employees a higher premium during the extended period of 
coverage.
    Example 3. (i) Facts. To comply with the requirements of a COBRA 
continuation provision, a group health plan generally makes COBRA 
continuation coverage available for a maximum period of 18 months in 
connection with a termination of employment but makes the coverage 
available for a maximum period of 29 months to certain disabled 
individuals and certain members of the disabled individual's family. 
Although the plan generally requires payment of 102 percent of the 
applicable premium for the first 18 months of COBRA continuation 
coverage, the plan requires payment of 150 percent of the applicable 
premium for the disabled individual's COBRA continuation coverage during 
the disability extension if the disabled individual would not be 
entitled to COBRA continuation coverage but for the disability.
    (ii) Conclusion. In this Example 3, the plan provision allowing 
extended COBRA continuation coverage for disabled individuals satisfies 
this paragraph (g)(1) (and thus does not violate this section). In 
addition, the plan is permitted, under this paragraph (g)(1), to charge 
the disabled individuals a higher premium for the extended coverage if 
the individuals would not be eligible for COBRA continuation coverage 
were it not for the disability. (Similarly, if the plan provided an 
extended period of coverage for disabled individuals pursuant to State 
law or plan provision rather than pursuant to a COBRA continuation 
coverage provision, the plan could likewise charge the disabled 
individuals a higher premium for the extended coverage.)

    (2) In premiums or contributions--(i) Nothing in this section 
prevents a group health plan or group health insurance issuer from 
charging individuals a premium or contribution that is less than the 
premium (or contribution) for similarly situated individuals if the 
lower charge is based on an adverse health factor, such as disability.
    (ii) The rules of this paragraph (g)(2) are illustrated by the 
following example:

    Example. (i) Facts. Under a group health plan, employees are 
generally required to pay $50 per month for employee-only coverage and 
$125 per month for family coverage under the plan. However, employees 
who are disabled receive coverage (whether employee-only or family 
coverage) under the plan free of charge.
    (ii) Conclusion. In this Example, the plan provision waiving premium 
payment for disabled employees is permitted under this paragraph (g)(2) 
(and thus does not violate this section).

    (h) No effect on other laws. Compliance with this section is not 
determinative of compliance with any other provision of the Act 
(including the COBRA continuation provisions) or any other State or 
federal law, such as the Americans with Disabilities Act. Therefore, 
although the rules of this section would not prohibit a plan or issuer 
from treating one group of similarly situated individuals differently 
from another (such as providing different benefit packages to current 
and former employees), other federal or State laws may require that two 
separate groups of similarly situated individuals be treated the same 
for certain purposes (such as making the same benefit package available 
to COBRA qualified beneficiaries as is made available to active 
employees). In addition, although this section generally does not impose 
new disclosure obligations on plans and issuers, this section does not 
affect any

[[Page 657]]

other laws, including those that require accurate disclosures and 
prohibit intentional misrepresentation.
    (i) Applicability dates--(1) Paragraphs applicable May 8, 2001. 
Paragraphs (a)(1), (a)(2)(i), (b)(1)(i), (b)(1)(iii) Example 1, 
(b)(2)(i)(A), (b)(2)(ii), (c)(1)(i), (c)(2)(i), and (c)(3) of this 
section and this paragraph (i)(1) apply to group health plans and health 
insurance issuers offering group health insurance coverage May 8, 2001.
    (2) Paragraphs applicable for plan years beginning on or after July 
1, 2001. Except as provided in paragraph (i)(3) of this section, the 
provisions of this section not listed in paragraph (i)(1) of this 
section apply to group health plans and health insurance issuers 
offering group health insurance coverage for plan years beginning on or 
after July 1, 2001. Except as provided in paragraph (i)(3) of this 
section, with respect to efforts to comply with section 702 of the Act 
before the first plan year beginning on or after July 1, 2001, the 
Secretary will not take any enforcement action against a plan that has 
sought to comply in good faith with section 702 of the Act.
    (3) Transitional rules for individuals previously denied coverage 
based on a health factor. This paragraph (i)(3) provides rules relating 
to individuals previously denied coverage under a group health plan or 
group health insurance coverage based on a health factor of the 
individual. Paragraph (i)(3)(i) clarifies what constitutes a denial of 
coverage under this paragraph (i)(3). Paragraph (i)(3)(ii) of this 
section applies with respect to any individual who was denied coverage 
if the denial was not based on a good faith interpretation of section 
702 of the Act or the Secretary's published guidance. Under that 
paragraph, such an individual must be allowed to enroll retroactively to 
the effective date of section 702 of the Act, or, if later, the date the 
individual meets eligibility criteria under the plan that do not 
discriminate based on any health factor. Paragraph (i)(3)(iii) of this 
section applies with respect to any individual who was denied coverage 
based on a good faith interpretation of section 702 of the Act or the 
Secretary's published guidance. Under that paragraph, such an individual 
must be given an opportunity to enroll effective July 1, 2001. In either 
event, whether under paragraph (i)(3)(ii) or (iii) of this section, the 
Secretary will not take any enforcement action with respect to denials 
of coverage addressed in this paragraph (i)(3) if the plan has complied 
with the transitional rules of this paragraph (i)(3).
    (i) Denial of coverage clarified. For purposes of this paragraph 
(i)(3), an individual is considered to have been denied coverage if the 
individual--
    (A) Failed to apply for coverage because it was reasonable to 
believe that an application for coverage would have been futile due to a 
plan provision that discriminated based on a health factor; or
    (B) Was not offered an opportunity to enroll in the plan and the 
failure to give such an opportunity violates this section.
    (ii) Individuals denied coverage without a good faith interpretation 
of the law--(A) Opportunity to enroll required. If a plan or issuer has 
denied coverage to any individual based on a health factor and that 
denial was not based on a good faith interpretation of section 702 of 
the Act or any guidance published by the Secretary, the plan or issuer 
is required to give the individual an opportunity to enroll (including 
notice of an opportunity to enroll) that continues for at least 30 days. 
This opportunity must be presented not later than May 8, 2001.
    (1) If this enrollment opportunity was presented before or within 
the first plan year beginning on or after July 1, 1997 (or in the case 
of a collectively bargained plan, before or within the first plan year 
beginning on the effective date for the plan described in section 
101(g)(3) of the Health Insurance Portability and Accountability Act of 
1996), the coverage must be effective within that first plan year.
    (2) If this enrollment opportunity is presented after such plan 
year, the individual must be given the choice of having the coverage 
effective on either of the following two dates--
    (i) The date the plan receives a request for enrollment in 
connection with the enrollment opportunity; or

[[Page 658]]

    (ii) Retroactively to the first day of the first plan year beginning 
on the effective date for the plan described in sections 101(g)(1) and 
(3) of the Health Insurance Portability and Accountability Act of 1996 
(or, if the individual otherwise first became eligible to enroll for 
coverage after that date, on the date the individual was otherwise 
eligible to enroll in the plan). If an individual elects retroactive 
coverage, the plan or issuer is required to provide the benefits it 
would have provided if the individual had been enrolled for coverage 
during that period (irrespective of any otherwise applicable plan 
provisions governing timing for the submission of claims). The plan or 
issuer may require the individual to pay whatever additional amount the 
individual would have been required to pay for the coverage (but the 
plan or issuer cannot charge interest on that amount).
    (B) Relation to preexisting condition rules. For purposes of part 7 
of subtitle B of title I of the Act, the individual may not be treated 
as a late enrollee or as a special enrollee. Moreover, the individual's 
enrollment date is the effective date for the plan described in sections 
101(g)(1) and (3) of the Health Insurance Portability and Accountability 
Act (or, if the individual otherwise first became eligible to enroll for 
coverage after that date, on the date the individual was otherwise 
eligible to enroll in the plan), even if the individual chooses under 
paragraph (i)(3)(ii)(A) of this section to have coverage effective only 
prospectively. In addition, any period between the individual's 
enrollment date and the effective date of coverage is treated as a 
waiting period.
    (C) Examples. The rules of this paragraph (i)(3)(ii) are illustrated 
by the following examples:

    Example 1. (i) Facts. Employer X maintains a group health plan with 
a plan year beginning October 1 and ending September 30. Individual F 
was hired by Employer X before the effective date of section 702 of the 
Act. Before the effective date of section 702 of the Act for this plan 
(October 1, 1997), the terms of the plan allowed employees and their 
dependents to enroll when the employee was first hired, and on each 
January 1 thereafter, but in either case, only if the individual could 
pass a physical examination. F 's application to enroll when first hired 
was denied because F had diabetes and could not pass a physical 
examination. Upon the effective date of section 702 of the Act for this 
plan (October 1, 1997), the plan is amended to delete the requirement to 
pass a physical examination. In November of 1997, the plan gives F an 
opportunity to enroll in the plan (including notice of the opportunity 
to enroll) without passing a physical examination, with coverage 
effective January 1, 1998.
    (ii) Conclusion. In this Example 1, the plan complies with the 
requirements of this paragraph (i)(3)(ii).
    Example 2. (i) Facts. The plan year of a group health plan begins 
January 1 and ends December 31. Under the plan, a dependent who is 
unable to engage in normal life activities on the date coverage would 
otherwise become effective is not enrolled until the dependent is able 
to engage in normal life activities. Individual G is a dependent who is 
otherwise eligible for coverage, but is unable to engage in normal life 
activities. The plan has not allowed G to enroll for coverage.
    (ii) Conclusion. In this Example 2, beginning on the effective date 
of section 702 of the Act for the plan (January 1, 1998), the plan 
provision is not permitted under any good faith interpretation of 
section 702 of the Act or any guidance published by the Secretary. 
Therefore, the plan is required, not later than May 8, 2001, to give G 
an opportunity to enroll (including notice of the opportunity to 
enroll), with coverage effective, at G's option, either retroactively 
from January 1, 1998 or prospectively from the date G's request for 
enrollment is received by the plan. If G elects coverage to be effective 
beginning January 1, 1998, the plan can require G to pay any required 
employee premiums for the retroactive coverage.

    (iii) Individuals denied coverage based on a good faith 
interpretation of the law--(A) Opportunity to enroll required. If a plan 
or issuer has denied coverage to any individual before the first day of 
the first plan year beginning on or after July 1, 2001 based in part on 
a health factor and that denial was based on a good faith interpretation 
of section 702 of the Act or guidance published by the Secretary, the 
plan or issuer is required to give the individual an opportunity to 
enroll (including notice of an opportunity to enroll) that continues for 
at least 30 days, with coverage effective no later than July 1, 2001. 
Individuals required to be offered an opportunity to enroll include 
individuals previously offered enrollment without regard to a health 
factor but subsequently denied enrollment due to a health factor.

[[Page 659]]

    (B) Relation to preexisting condition rules. For purposes of Part 7 
of Subtitle B of Title I of the Act, the individual may not be treated 
as a late enrollee or as a special enrollee. Moreover, the individual's 
enrollment date is the effective date for the plan described in sections 
101(g)(1) and (3) of the Health Insurance Portability and Accountability 
Act (or, if the individual otherwise first became eligible to enroll for 
coverage after that date, on the date the individual was otherwise 
eligible to enroll in the plan). In addition, any period between the 
individual's enrollment date and the effective date of coverage is 
treated as a waiting period.
    (C) Example. The rules of this paragraph (i)(3)(iii) are illustrated 
by the following example:

    Example. (i) Facts. Individual H was hired by Employer Y on May 3, 
1995. Y maintains a group health plan with a plan year beginning on 
February 1. Under the terms of the plan, employees and their dependents 
are allowed to enroll when the employee is first hired (without a 
requirement to pass a physical examination), and on each February 1 
thereafter if the individual can pass a physical examination. H chose 
not to enroll for coverage when hired in May of 1995. On February 1, 
1997, H tried to enroll for coverage under the plan. However, H was 
denied coverage for failure to pass a physical examination. Shortly 
thereafter, Y's plan eliminated late enrollment, and H was not given 
another opportunity to enroll in the plan. There is no evidence to 
suggest that Y's plan was acting in bad faith in denying coverage under 
the plan beginning on the effective date of section 702 of the Act 
(February 1, 1998).
    (ii) Conclusion. In this Example, because coverage previously had 
been made available with respect to H without regard to any health 
factor of H and because Y's plan was acting in accordance with a good 
faith interpretation of section 702 (and guidance published by the 
Secretary), the failure of Y's plan to allow H to enroll effective 
February 1, 1998 was permissible on that date. However, under the 
transitional rules of this paragraph (i)(3)(iii), Y's plan must give H 
an opportunity to enroll that continues for at least 30 days, with 
coverage effective no later than July 1, 2001. (In addition, February 1, 
1998 is H's enrollment date under the plan and the period between 
February 1, 1998 and July 1, 2001 is treated as a waiting period. 
Accordingly, any preexisting condition exclusion period permitted under 
Sec. 2590.701-3 will have expired before July 1, 2001.)

[66 FR 1404, Jan. 8, 2001, as amended at 66 FR 14077, Mar. 9, 2001]



Sec. 2590.703  Guaranteed renewability in multiemployer plans and multiple employer welfare arrangements. [Reserved]



                      Subpart C--Other Requirements

    Source: 62 FR 16941, Apr. 8, 1997. Redesignated at 65 FR 62142, Dec. 
27, 2000, unless otherwise noted.



Sec. 2590.711  Standards relating to benefits for mothers and newborns.

    (a) Hospital length of stay--(1) General rule. Except as provided in 
paragraph (a)(5) of this section, a group health plan, or a health 
insurance issuer offering group health insurance coverage, that provides 
benefits for a hospital length of stay in connection with childbirth for 
a mother or her newborn may not restrict benefits for the stay to less 
than--
    (i) 48 hours following a vaginal delivery; or
    (ii) 96 hours following a delivery by cesarean section.
    (2) When stay begins--(i) Delivery in a hospital. If delivery occurs 
in a hospital, the hospital length of stay for the mother or newborn 
child begins at the time of delivery (or in the case of multiple births, 
at the time of the last delivery).
    (ii) Delivery outside a hospital. If delivery occurs outside a 
hospital, the hospital length of stay begins at the time the mother or 
newborn is admitted as a hospital inpatient in connection with 
childbirth. The determination of whether an admission is in connection 
with childbirth is a medical decision to be made by the attending 
provider.
    (3) Examples. The rules of paragraphs (a)(1) and (2) of this section 
are illustrated by the following examples. In each example, the group 
health plan provides benefits for hospital lengths of stay in connection 
with childbirth and is subject to the requirements of this section, as 
follows:

    Example 1. (i) A pregnant woman covered under a group health plan 
goes into labor and is admitted to the hospital at 10 p.m. on

[[Page 660]]

June 11. She gives birth by vaginal delivery at 6 a.m. on June 12.
    (ii) In this Example 1, the 48-hour period described in paragraph 
(a)(1)(i) of this section ends at 6 a.m. on June 14.
    Example 2. (i) A woman covered under a group health plan gives birth 
at home by vaginal delivery. After the delivery, the woman begins 
bleeding excessively in connection with the childbirth and is admitted 
to the hospital for treatment of the excessive bleeding at 7 p.m. on 
October 1.
    (ii) In this Example 2, the 48-hour period described in paragraph 
(a)(1)(i) of this section ends at 7 p.m. on October 3.
    Example 3. (i) A woman covered under a group health plan gives birth 
by vaginal delivery at home. The child later develops pneumonia and is 
admitted to the hospital. The attending provider determines that the 
admission is not in connection with childbirth.
    (ii) In this Example 3, the hospital length-of-stay requirements of 
this section do not apply to the child's admission to the hospital 
because the admission is not in connection with childbirth.

    (4) Authorization not required--(i) In general. A plan or issuer may 
not require that a physician or other health care provider obtain 
authorization from the plan or issuer for prescribing the hospital 
length of stay required under paragraph (a)(1) of this section. (See 
also paragraphs (b)(2) and (c)(3) of this section for rules and examples 
regarding other authorization and certain notice requirements.)
    (ii) Example. The rule of this paragraph (a)(4) is illustrated by 
the following example:

    Example. (i) In the case of a delivery by caesarean section, a group 
health plan subject to the requirements of this section automatically 
provides benefits for any hospital length of stay of up to 72 hours. For 
any longer stay, the plan requires an attending provider to complete a 
certificate of medical necessity. The plan then makes a determination, 
based on the certificate of medical necessity, whether a longer stay is 
medically necessary.
    (ii) In this Example, the requirement that an attending provider 
complete a certificate of medical necessity to obtain authorization for 
the period between 72 hours and 96 hours following a delivery by 
caesarean section is prohibited by this paragraph (a)(4).

    (5) Exceptions--(i) Discharge of mother. If a decision to discharge 
a mother earlier than the period specified in paragraph (a)(1) of this 
section is made by an attending provider, in consultation with the 
mother, the requirements of paragraph (a)(1) of this section do not 
apply for any period after the discharge.
    (ii) Discharge of newborn. If a decision to discharge a newborn 
child earlier than the period specified in paragraph (a)(1) of this 
section is made by an attending provider, in consultation with the 
mother (or the newborn's authorized representative), the requirements of 
paragraph (a)(1) of this section do not apply for any period after the 
discharge.
    (iii) Attending provider defined. For purposes of this section, 
attending provider means an individual who is licensed under applicable 
State law to provide maternity or pediatric care and who is directly 
responsible for providing maternity or pediatric care to a mother or 
newborn child.
    (iv) Example. The rules of this paragraph (a)(5) are illustrated by 
the following example:

    Example. (i) A pregnant woman covered under a group health plan 
subject to the requirements of this section goes into labor and is 
admitted to a hospital. She gives birth by caesarean section. On the 
third day after the delivery, the attending provider for the mother 
consults with the mother, and the attending provider for the newborn 
consults with the mother regarding the newborn. The attending providers 
authorize the early discharge of both the mother and the newborn. Both 
are discharged approximately 72 hours after the delivery. The plan pays 
for the 72-hour hospital stays.
    (ii) In this Example, the requirements of this paragraph (a) have 
been satisfied with respect to the mother and the newborn. If either is 
readmitted, the hospital stay for the readmission is not subject to this 
section.

    (b) Prohibitions--(1) With respect to mothers--(i) In general. A 
group health plan, and a health insurance issuer offering group health 
insurance coverage, may not--
    (A) Deny a mother or her newborn child eligibility or continued 
eligibility to enroll or renew coverage under the terms of the plan 
solely to avoid the requirements of this section; or
    (B) Provide payments (including payments-in-kind) or rebates to a 
mother to encourage her to accept less than the minimum protections 
available under this section.

[[Page 661]]

    (ii) Examples. The rules of this paragraph (b)(1) are illustrated by 
the following examples. In each example, the group health plan is 
subject to the requirements of this section, as follows:

    Example 1. (i) A group health plan provides benefits for at least a 
48-hour hospital length of stay following a vaginal delivery. If a 
mother and newborn covered under the plan are discharged within 24 hours 
after the delivery, the plan will waive the copayment and deductible.
    (ii) In this Example 1, because waiver of the copayment and 
deductible is in the nature of a rebate that the mother would not 
receive if she and her newborn remained in the hospital, it is 
prohibited by this paragraph (b)(1). (In addition, the plan violates 
paragraph (b)(2) of this section because, in effect, no copayment or 
deductible is required for the first portion of the stay and a double 
copayment and a deductible are required for the second portion of the 
stay.)
    Example 2. (i) A group health plan provides benefits for at least a 
48-hour hospital length of stay following a vaginal delivery. In the 
event that a mother and her newborn are discharged earlier than 48 hours 
and the discharges occur after consultation with the mother in 
accordance with the requirements of paragraph (a)(5) of this section, 
the plan provides for a follow-up visit by a nurse within 48 hours after 
the discharges to provide certain services that the mother and her 
newborn would otherwise receive in the hospital.
    (ii) In this Example 2, because the follow-up visit does not provide 
any services beyond what the mother and her newborn would receive in the 
hospital, coverage for the follow-up visit is not prohibited by this 
paragraph (b)(1).

    (2) With respect to benefit restrictions--(i) In general. Subject to 
paragraph (c)(3) of this section, a group health plan, and a health 
insurance issuer offering group health insurance coverage, may not 
restrict the benefits for any portion of a hospital length of stay 
required under paragraph (a) of this section in a manner that is less 
favorable than the benefits provided for any preceding portion of the 
stay.
    (ii) Example. The rules of this paragraph (b)(2) are illustrated by 
the following example:

    Example. (i) A group health plan subject to the requirements of this 
section provides benefits for hospital lengths of stay in connection 
with childbirth. In the case of a delivery by caesarean section, the 
plan automatically pays for the first 48 hours. With respect to each 
succeeding 24-hour period, the participant or beneficiary must call the 
plan to obtain precertification from a utilization reviewer, who 
determines if an additional 24-hour period is medically necessary. If 
this approval is not obtained, the plan will not provide benefits for 
any succeeding 24-hour period.
    (ii) In this Example, the requirement to obtain precertification for 
the two 24-hour periods immediately following the initial 48-hour stay 
is prohibited by this paragraph (b)(2) because benefits for the latter 
part of the stay are restricted in a manner that is less favorable than 
benefits for a preceding portion of the stay. (However, this section 
does not prohibit a plan from requiring precertification for any period 
after the first 96 hours.) In addition, if the plan's utilization 
reviewer denied any mother or her newborn benefits within the 96-hour 
stay, the plan would also violate paragraph (a) of this section.

    (3) With respect to attending providers. A group health plan, and a 
health insurance issuer offering group health insurance coverage, may 
not directly or indirectly--
    (i) Penalize (for example, take disciplinary action against or 
retaliate against), or otherwise reduce or limit the compensation of, an 
attending provider because the provider furnished care to a participant 
or beneficiary in accordance with this section; or
    (ii) Provide monetary or other incentives to an attending provider 
to induce the provider to furnish care to a participant or beneficiary 
in a manner inconsistent with this section, including providing any 
incentive that could induce an attending provider to discharge a mother 
or newborn earlier than 48 hours (or 96 hours) after delivery.
    (c) Construction. With respect to this section, the following rules 
of construction apply:
    (1) Hospital stays not mandatory. This section does not require a 
mother to--
    (i) Give birth in a hospital; or
    (ii) Stay in the hospital for a fixed period of time following the 
birth of her child.
    (2) Hospital stay benefits not mandated. This section does not apply 
to any group health plan, or any group health insurance coverage, that 
does not provide benefits for hospital lengths of stay in connection 
with childbirth for a mother or her newborn child.
    (3) Cost-sharing rules--(i) In general. This section does not 
prevent a group

[[Page 662]]

health plan or a health insurance issuer offering group health insurance 
coverage from imposing deductibles, coinsurance, or other cost-sharing 
in relation to benefits for hospital lengths of stay in connection with 
childbirth for a mother or a newborn under the plan or coverage, except 
that the coinsurance or other cost-sharing for any portion of the 
hospital length of stay required under paragraph (a) of this section may 
not be greater than that for any preceding portion of the stay.
    (ii) Examples. The rules of this paragraph (c)(3) are illustrated by 
the following examples. In each example, the group health plan is 
subject to the requirements of this section, as follows:

    Example 1. (i) A group health plan provides benefits for at least a 
48-hour hospital length of stay in connection with vaginal deliveries. 
The plan covers 80 percent of the cost of the stay for the first 24-hour 
period and 50 percent of the cost of the stay for the second 24-hour 
period. Thus, the coinsurance paid by the patient increases from 20 
percent to 50 percent after 24 hours.
    (ii) In this Example 1, the plan violates the rules of this 
paragraph (c)(3) because coinsurance for the second 24-hour period of 
the 48-hour stay is greater than that for the preceding portion of the 
stay. (In addition, the plan also violates the similar rule in paragraph 
(b)(2) of this section.)
    Example 2. (i) A group health plan generally covers 70 percent of 
the cost of a hospital length of stay in connection with childbirth. 
However, the plan will cover 80 percent of the cost of the stay if the 
participant or beneficiary notifies the plan of the pregnancy in advance 
of admission and uses whatever hospital the plan may designate.
    (ii) In this Example 2, the plan does not violate the rules of this 
paragraph (c)(3) because the level of benefits provided (70 percent or 
80 percent) is consistent throughout the 48-hour (or 96-hour) hospital 
length of stay required under paragraph (a) of this section. (In 
addition, the plan does not violate the rules in paragraph (a)(4) or 
(b)(2) of this section.)

    (4) Compensation of attending provider. This section does not 
prevent a group health plan or a health insurance issuer offering group 
health insurance coverage from negotiating with an attending provider 
the level and type of compensation for care furnished in accordance with 
this section (including paragraph (b) of this section).
    (d) Notice requirement. See 29 CFR 2520.102-3 (u) and (v)(2) 
(relating to the disclosure requirement under section 711(d) of the 
Act).
    (e) Applicability in certain States--(1) Health insurance coverage. 
The requirements of section 711 of the Act and this section do not apply 
with respect to health insurance coverage offered in connection with a 
group health plan if there is a State law regulating the coverage that 
meets any of the following criteria:
    (i) The State law requires the coverage to provide for at least a 
48-hour hospital length of stay following a vaginal delivery and at 
least a 96-hour hospital length of stay following a delivery by 
caesarean section.
    (ii) The State law requires the coverage to provide for maternity 
and pediatric care in accordance with guidelines established by the 
American College of Obstetricians and Gynecologists, the American 
Academy of Pediatrics, or any other established professional medical 
association.
    (iii) The State law requires, in connection with the coverage for 
maternity care, that the hospital length of stay for such care is left 
to the decision of (or is required to be made by) the attending provider 
in consultation with the mother. State laws that require the decision to 
be made by the attending provider with the consent of the mother satisfy 
the criterion of this paragraph (e)(1)(iii).
    (2) Group health plans--(i) Fully-insured plans. For a group health 
plan that provides benefits solely through health insurance coverage, if 
the State law regulating the health insurance coverage meets any of the 
criteria in paragraph (e)(1) of this section, then the requirements of 
section 711 of the Act and this section do not apply.
    (ii) Self-insured plans. For a group health plan that provides all 
benefits for hospital lengths of stay in connection with childbirth 
other than through health insurance coverage, the requirements of 
section 711 of the Act and this section apply.
    (iii) Partially-insured plans. For a group health plan that provides 
some benefits through health insurance coverage, if the State law 
regulating the health insurance coverage meets any of the criteria in 
paragraph (e)(1) of this

[[Page 663]]

section, then the requirements of section 711 of the Act and this 
section apply only to the extent the plan provides benefits for hospital 
lengths of stay in connection with childbirth other than through health 
insurance coverage.
    (3) Relation to section 731(a) of the Act. The preemption provisions 
contained in section 731(a)(1) of the Act and Sec. 2590.731(a) do not 
supersede a State law described in paragraph (e)(1) of this section.
    (4) Examples. The rules of this paragraph (e) are illustrated by the 
following examples:

    Example 1. (i) A group health plan buys group health insurance 
coverage in a State that requires that the coverage provide for at least 
a 48-hour hospital length of stay following a vaginal delivery and at 
least a 96-hour hospital length of stay following a delivery by 
caesarean section.
    (ii) In this Example 1, the coverage is subject to State law, and 
the requirements of section 711 of the Act and this section do not 
apply.
    Example 2. (i) A self-insured group health plan covers hospital 
lengths of stay in connection with childbirth in a State that requires 
health insurance coverage to provide for maternity care in accordance 
with guidelines established by the American College of Obstetricians and 
Gynecologists and to provide for pediatric care in accordance with 
guidelines established by the American Academy of Pediatrics.
    (ii) In this Example 2, even though the State law satisfies the 
criterion of paragraph (e)(1)(ii) of this section, because the plan 
provides benefits for hospital lengths of stay in connection with 
childbirth other than through health insurance coverage, the plan is 
subject to the requirements of section 711 of the Act and this section.

    (f) Effective date. Section 711 of the Act applies to group health 
plans, and health insurance issuers offering group health insurance 
coverage, for plan years beginning on or after January 1, 1998. This 
section applies to group health plans, and health insurance issuers 
offering group health insurance coverage, for plan years beginning on or 
after January 1, 1999.

[63 FR 57556, Oct. 27, 1998. Redesignated at 65 FR 82142, Dec. 27, 2000]



Sec. 2590.712  Parity in the application of certain limits to mental health benefits.

    (a) Definitions. For purposes of this section, except where the 
context clearly indicates otherwise, the following definitions apply:
    Aggregate lifetime limit means a dollar limitation on the total 
amount of specified benefits that may be paid under a group health plan 
(or group health insurance coverage offered in connection with such a 
plan) for an individual (or for a group of individuals considered a 
single unit in applying this dollar limitation, such as a family or an 
employee plus spouse).
    Annual limit means a dollar limitation on the total amount of 
specified benefits that may be paid in a 12-month period under a plan 
(or group health insurance coverage offered in connection with such a 
plan) for an individual (or for a group of individuals considered a 
single unit in applying this dollar limitation, such as a family or an 
employee plus spouse).
    Medical/surgical benefits means benefits for medical or surgical 
services, as defined under the terms of the plan or group health 
insurance coverage, but does not include mental health benefits.
    Mental health benefits means benefits for mental health services, as 
defined under the terms of the plan or group health insurance coverage, 
but does not include benefits for treatment of substance abuse or 
chemical dependency.
    (b) Requirements regarding limits on benefits--(1)--general--(i) 
General parity requirement. A group health plan (or health insurance 
coverage offered by an issuer in connection with a group health plan) 
that provides both medical/surgical benefits and mental health benefits 
must comply with paragraph (b)(2), (3), or (6) of this section.
    (ii) Exception. The rule in paragraph (b)(1)(i) of this section does 
not apply if a plan, or coverage, satisfies the requirements of 
paragraph (e) or (f) of this section.
    (2) Plan with no limit or limits on less than one-third of all 
medical/surgical benefits. If a plan (or group health insurance 
coverage) does not include an aggregate lifetime or annual limit on any

[[Page 664]]

medical/surgical benefits or includes aggregate lifetime or annual 
limits that apply to less than one-third of all medical/surgical 
benefits, it may not impose an aggregate lifetime or annual limit, 
respectively, on mental health benefits.
    (3) Plan with a limit on at least two-thirds of all medical/surgical 
benefits. If a plan (or group health insurance coverage) includes an 
aggregate lifetime or annual limit on at least two-thirds of all 
medical/surgical benefits, it must either--
    (i) Apply the aggregate lifetime or annual limit both to the 
medical/surgical benefits to which the limit would otherwise apply and 
to mental health benefits in a manner that does not distinguish between 
the medical/surgical and mental health benefits; or
    (ii) Not include an aggregate lifetime or annual limit on mental 
health benefits that is less than the aggregate lifetime or annual 
limit, respectively, on the medical/surgical benefits.
    (4) Examples. The rules of paragraphs (b)(2) and (3) of this section 
are illustrated by the following examples:

    Example 1. (i) Prior to the effective date of the mental health 
parity provisions, a group health plan had no annual limit on medical/
surgical benefits and had a $10,000 annual limit on mental health 
benefits. To comply with the parity requirements of this paragraph (b), 
the plan sponsor is considering each of the following options:
    (A) Eliminating the plan's annual limit on mental health benefits;
    (B) Replacing the plan's previous annual limit on mental health 
benefits with a $500,000 annual limit on all benefits (including 
medical/surgical and mental health benefits); and
    (C) Replacing the plan's previous annual limit on mental health 
benefits with a $250,000 annual limit on medical/surgical benefits and a 
$250,000 annual limit on mental health benefits.
    (ii) In this Example 1, each of the three options being considered 
by the plan sponsor would comply with the requirements of this section 
because they offer parity in the dollar limits placed on medical/
surgical and mental health benefits.
    Example 2. (i) Prior to the effective date of the mental health 
parity provisions, a group health plan had a $100,000 annual limit on 
medical/surgical inpatient benefits, a $50,000 annual limit on medical/
surgical outpatient benefits, and a $100,000 annual limit on all mental 
health benefits. To comply with the parity requirements of this 
paragraph (b), the plan sponsor is considering each of the following 
options:
    (A) Replacing the plan's previous annual limit on mental health 
benefits with a $150,000 annual limit on mental health benefits; and
    (B) Replacing the plan's previous annual limit on mental health 
benefits with a $100,000 annual limit on mental health inpatient 
benefits and a $50,000 annual limit on mental health outpatient 
benefits.
    (ii) In this Example 2, each option under consideration by the plan 
sponsor would comply with the requirements of this section because they 
offer parity in the dollar limits placed on medical/surgical and mental 
health benefits.
    Example 3. (i) A group health plan that is subject to the 
requirements of this section has no aggregate lifetime or annual limit 
for either medical/surgical benefits or mental health benefits. While 
the plan provides medical/surgical benefits with respect to both network 
and out-of-network providers, it does not provide mental health benefits 
with respect to out-of-network providers.
    (ii) In this Example 3, the plan complies with the requirements of 
this section because they offer parity in the dollar limits placed on 
medical/surgical and mental health benefits.
    Example 4. (i) Prior to the effective date of the mental health 
parity provisions, a group health plan had an annual limit on medical/
surgical benefits and a separate but identical annual limit on mental 
health benefits. The plan included benefits for treatment of substance 
abuse and chemical dependency in its definition of mental health 
benefits. Accordingly, claims paid for treatment of substance abuse and 
chemical dependency were counted in applying the annual limit on mental 
health benefits. To comply with the parity requirements of this 
paragraph (b), the plan sponsor is considering each of the following 
options:
    (A) Making no change in the plan so that claims paid for treatment 
of substance abuse and chemical dependency continue to count in applying 
the annual limit on mental health benefits;
    (B) Amending the plan to count claims paid for treatment of 
substance abuse and chemical dependency in applying the annual limit on 
medical/surgical benefits (rather than counting those claims in applying 
the annual limit on mental health benefits);
    (C) Amending the plan to provide a new category of benefits for 
treatment of chemical dependency and substance abuse that is subject to 
a separate, lower limit and under which claims paid for treatment of 
substance abuse and chemical dependency are counted only in applying the 
annual limit on this separate category; and
    (D) Amending the plan to eliminate distinctions between medical/
surgical benefits

[[Page 665]]

and mental health benefits and establishing an overall limit on benefits 
offered under the plan under which claims paid for treatment of 
substance abuse and chemical dependency are counted with medical/
surgical benefits and mental health benefits in applying the overall 
limit.
    (ii) In this Example 4, the group health plan is described in 
paragraph (b)(3) of this section. Because mental health benefits are 
defined in paragraph (a) of this section as excluding benefits for 
treatment of substance abuse and chemical dependency, the inclusion of 
benefits for treatment of substance abuse and chemical dependency in 
applying an aggregate lifetime limit or annual limit on mental health 
benefits under option (A) of this Example 4 would not comply with the 
requirements of paragraph (b)(3) of this section. However, options (B), 
(C), and (D) of this Example 4 would comply with the requirements of 
paragraph (b)(3) of this section because they offer parity in the dollar 
limits placed on medical/surgical and mental health benefits.

    (5) Determining one-third and two-thirds of all medical/surgical 
benefits. For purposes of this paragraph (b), the determination of 
whether the portion of medical/surgical benefits subject to a limit 
represents one-third or two-thirds of all medical/surgical benefits is 
based on the dollar amount of all plan payments for medical/surgical 
benefits expected to be paid under the plan for the plan year (or for 
the portion of the plan year after a change in plan benefits that 
affects the applicability of the aggregate lifetime or annual limits). 
Any reasonable method may be used to determine whether the dollar 
amounts expected to be paid under the plan will constitute one-third or 
two-thirds of the dollar amount of all plan payments for medical/
surgical benefits.
    (6) Plan not described in paragraph (b)(2) or (3) of this section--
(i) In general. A group health plan (or group health insurance coverage) 
that is not described in paragraph (b)(2) or (3) of this section, must 
either--
    (A) Impose no aggregate lifetime or annual limit, as appropriate, on 
mental health benefits; or
    (B) Impose an aggregate lifetime or annual limit on mental health 
benefits that is no less than an average limit calculated for medical/
surgical benefits in the following manner. The average limit is 
calculated by taking into account the weighted average of the aggregate 
lifetime or annual limits, as appropriate, that are applicable to the 
categories of medical/surgical benefits. Limits based on delivery 
systems, such as inpatient/outpatient treatment or normal treatment of 
common, low-cost conditions (such as treatment of normal births), do not 
constitute categories for purposes of this paragraph (b)(6)(i)(B). In 
addition, for purposes of determining weighted averages, any benefits 
that are not within a category that is subject to a separately-
designated limit under the plan are taken into account as a single 
separate category by using an estimate of the upper limit on the dollar 
amount that a plan may reasonably be expected to incur with respect to 
such benefits, taking into account any other applicable restrictions 
under the plan.
    (ii) Weighting. For purposes of this paragraph (b)(6), the weighting 
applicable to any category of medical/surgical benefits is determined in 
the manner set forth in paragraph (b)(5) of this section for determining 
one-third or two-thirds of all medical/surgical benefits.
    (iii) Example. The rules of this paragraph (b)(6) are illustrated by 
the following example:

    Example. (i) A group health plan that is subject to the requirements 
of this section includes a $100,000 annual limit on medical/surgical 
benefits related to cardio-pulmonary diseases. The plan does not include 
an annual limit on any other category of medical/surgical benefits. The 
plan determines that 40% of the dollar amount of plan payments for 
medical/surgical benefits are related to cardio-pulmonary diseases. The 
plan determines that $1,000,000 is a reasonable estimate of the upper 
limit on the dollar amount that the plan may incur with respect to the 
other 60% of payments for medical/surgical benefits.
    (ii) In this Example, the plan is not described in paragraph (b)(3) 
of this section because there is not one annual limit that applies to at 
least two-thirds of all medical/surgical benefits. Further, the plan is 
not described in paragraph (b)(2) of this section because more than one-
third of all medical/surgical benefits are subject to an annual limit. 
Under this paragraph (b)(6), the plan sponsor can choose either to 
include no annual limit on mental health benefits, or to include an 
annual limit on mental health benefits that is not less than the 
weighted average of the annual limits applicable to each category of 
medical/surgical benefits. In this example, the minimum weighted average 
annual limit

[[Page 666]]

that can be applied to mental health benefits is $640,000 
(40%x$100,000+60%x$1,000,000=$640,000).

    (c) Rule in the case of separate benefit packages. If a group health 
plan offers two or more benefit packages, the requirements of this 
section, including the exemption provisions in paragraph (f) of this 
section, apply separately to each benefit package. Examples of a group 
health plan that offers two or more benefit packages include a group 
health plan that offers employees a choice between indemnity coverage or 
HMO coverage, and a group health plan that provides one benefit package 
for retirees and a different benefit package for current employees.
    (d) Applicability--(1) Group health plans. The requirements of this 
section apply to a group health plan offering both medical/surgical 
benefits and mental health benefits regardless of whether the mental 
health benefits are administered separately under the plan.
    (2) Health insurance issuers. The requirements of this section apply 
to a health insurance issuer offering health insurance coverage for both 
medical/surgical benefits and mental health benefits in connection with 
a group health plan.
    (3) Scope. This section does not--
    (i) Require a group health plan (or health insurance issuer offering 
coverage in connection with a group health plan) to provide any mental 
health benefits; or
    (ii) Affect the terms and conditions (including cost sharing, limits 
on the number of visits or days of coverage, requirements relating to 
medical necessity, requiring prior authorization for treatment, or 
requiring primary care physicians' referrals for treatment) relating to 
the amount, duration, or scope of the mental health benefits under the 
plan (or coverage) except as specifically provided in paragraph (b) of 
this section.
    (e) Small employer exemption--(1) In general. The requirements of 
this section do not apply to a group health plan (or health insurance 
issuer offering coverage in connection with a group health plan) for a 
plan year of a small employer. For purposes of this paragraph (e), the 
term small employer means, in connection with a group health plan with 
respect to a calendar year and a plan year, an employer who employed an 
average of at least two but not more than 50 employees on business days 
during the preceding calendar year and who employs at least two 
employees on the first day of the plan year. See section 732(a) of the 
Act and Sec. 2590.732(a), which provide that this section (and certain 
other sections) does not apply to any group health plan (and health 
insurance issuer offering coverage in connection with a group health 
plan) for any plan year if, on the first day of the plan year, the plan 
has fewer than two participants who are current employees.
    (2) Rules in determining employer size. For purposes of paragraph 
(e)(1) of this section--
    (i) All persons treated as a single employer under subsections (b), 
(c), (m), and (o) of section 414 of the Internal Revenue Code of 1986 
(26 U.S.C. 414) are treated as one employer;
    (ii) If an employer was not in existence throughout the preceding 
calendar year, whether it is a small employer is determined based on the 
average number of employees the employer reasonably expects to employ on 
business days during the current calendar year; and
    (iii) Any reference to an employer for purposes of the small 
employer exemption includes a reference to a predecessor of the 
employer.
    (f) Increased cost exemption--(1) In general. A group health plan 
(or health insurance coverage offered in connection with a group health 
plan) is not subject to the requirements of this section if the 
requirements of this paragraph (f) are satisfied. If a plan offers more 
than one benefit package, this paragraph (f) applies separately to each 
benefit package. Except as provided in paragraph (h) of this section, a 
plan must comply with the requirements of paragraph (b)(1)(i) of this 
section for the first plan year beginning on or after January 1, 1998, 
and must continue to comply with the requirements of paragraph (b)(1)(i) 
of this section until the plan satisfies the requirements in this 
paragraph (f). In no event is the exemption of this paragraph (f) 
effective until 30 days after the notice requirements

[[Page 667]]

in paragraph (f)(3) of this section are satisfied. If the requirements 
of this paragraph (f) are satisfied with respect to a plan, the 
exemption continues in effect (at the plan's discretion) until December 
31, 2003, even if the plan subsequently purchases a different policy 
from the same or a different issuer and regardless of any other changes 
to the plan's benefit structure.
    (2) Calculation of the one-percent increase--(i) Ratio. A group 
health plan (or group health insurance coverage) satisfies the 
requirements of this paragraph (f)(2) if the application of paragraph 
(b)(1)(i) of this section to the plan (or to such coverage) results in 
an increase in the cost under the plan (or for such coverage) of at 
least one percent. The application of paragraph (b)(1)(i) of this 
section results in an increased cost of at least one percent under a 
group health plan (or for such coverage) only if the ratio below equals 
or exceeds 1.01000. The ratio is determined as follows:
    (A) The incurred expenditures during the base period, divided by,
    (B) The incurred expenditures during the base period, reduced by--
    (1) The claims incurred during the base period that would have been 
denied under the terms of the plan absent plan amendments required to 
comply with this section; and
    (2) Administrative expenses attributable to complying with the 
requirements of this section.
    (ii) Formula. The ratio of paragraph (f)(2)(i) of this section is 
expressed mathematically as follows:
[GRAPHIC] [TIFF OMITTED] TR22DE97.003

    (A) IE means the incurred expenditures during the base period.
    (B) CE means the claims incurred during the base period that would 
have been denied under the terms of the plan absent plan amendments 
required to comply with this section
    (C) AE means administrative costs related to claims in CE and other 
administrative costs attributable to complying with the requirements of 
this section.
    (iii) Incurred expenditures. Incurred expenditures means actual 
claims incurred during the base period and reported within two months 
following the base period, and administrative costs for all benefits 
under the group health plan, including mental health benefits and 
medical/surgical benefits, during the base period. Incurred expenditures 
do not include premiums.
    (iv) Base period. Base period means the period used to calculate 
whether the plan may claim the one-percent increased cost exemption in 
this paragraph (f). The base period must begin on the first day in any 
plan year that the plan complies with the requirements of paragraph 
(b)(1)(i) of this section and must extend for a period of at least six 
consecutive calendar months. However, in no event may the base period 
begin prior to September 26, 1996 (the date of enactment of the Mental 
Health Parity Act (Pub. L. 104-204, 110 Stat. 2944)).
    (v) Rating pools. For plans that are combined in a pool for rating 
purposes, the calculation under this paragraph (f)(2) for each plan in 
the pool for the base period is based on the incurred expenditures of 
the pool, whether or not all the plans in the pool have participated in 
the pool for the entire base period. (However, only the plans that have 
complied with paragraph (b)(1)(i) of this section for at least six 
months as a member of the pool satisfy the requirements of this 
paragraph (f)(2).) Otherwise, the calculation under this paragraph 
(f)(2) for each plan is calculated by the plan administrator (or issuer) 
based on the incurred expenditures of the plan.
    (vi) Examples. The rules of this paragraph (f)(2) are illustrated by 
the following examples:

    Example 1. (i) A group health plan has a plan year that is the 
calendar year. The plan satisfies the requirements of paragraph 
(b)(1)(i) of this section as of January 1, 1998.

[[Page 668]]

On September 15, 1998, the plan determines that $1,000,000 in claims 
have been incurred during the period between January 1, 1998 and June 
30, 1998 and reported by August 30, 1998. The plan also determines that 
$100,000 in administrative costs have been incurred for all benefits 
under the group health plan, including mental health benefits. Thus, the 
plan determines that its incurred expenditures for the base period are 
$1,100,000. The plan also determines that the claims incurred during the 
base period that would have been denied under the terms of the plan 
absent plan amendments required to comply with this section are $40,000 
and that administrative expenses attributable to complying with the 
requirements of this section are $10,000. Thus, the total amount of 
expenditures for the base period had the plan not been amended to comply 
with the requirements of paragraph (b)(1)(i) of this section are 
$1,050,000 ($1,100,000 - ($40,000 + $10,000) = $1,050,000).
    (ii) In this Example 1, the plan satisfies the requirements of this 
paragraph (f)(2) because the application of this section results in an 
increased cost of at least one percent under the terms of the plan 
($1,100,000/$1,050,000 = 1.04762).
    Example 2. (i) A health insurance issuer sells a group health 
insurance policy that is rated on a pooled basis and is sold to 30 group 
health plans. One of the group health plans inquires whether it 
qualifies for the one-percent increased cost exemption. The issuer 
performs the calculation for the pool as a whole and determines that the 
application of this section results in an increased cost of 0.500 
percent (for a ratio under this paragraph (f)(2) of 1.00500) for the 
pool. The issuer informs the requesting plan and the other plans in the 
pool of the calculation.
    (ii) In this Example 2, none of the plans satisfy the requirements 
of this paragraph (f)(2) and a plan that purchases a policy not 
complying with the requirements of paragraph (b)(1)(i) of this section 
violates the requirements of this section. In addition, an issuer that 
issues to any of the plans in the pool a policy not complying with the 
requirements of paragraph (b)(1)(i) of this section violates the 
requirements of this section.
    Example 3. (i) A partially insured plan is collecting the 
information to determine whether it qualifies for the exemption. The 
plan administrator determines the incurred expenses for the base period 
for the self-funded portion of the plan to be $2,000,000 and the 
administrative expenses for the base period for the self-funded portion 
to be $200,000. For the insured portion of the plan, the plan 
administrator requests data from the insurer. For the insured portion of 
the plan, the plan's own incurred expenses for the base period are 
$1,000,000 and the administrative expenses for the base period are 
$100,000. The plan administrator determines that under the self-funded 
portion of the plan, the claims incurred for the base period that would 
have been denied under the terms of the plan absent the amendment are $0 
because the self-funded portion does not cover mental health benefits 
and the plan's administrative costs attributable to complying with the 
requirements of this section are $1,000. The issuer determines that 
under the insured portion of the plan, the claims incurred for the base 
period that would have been denied under the terms of the plan absent 
the amendment are $25,000 and the administrative costs attributable to 
complying with the requirements of this section are $1,000. Thus, the 
total incurred expenditures for the plan for the base period are 
$3,300,000 ($2,000,000 + $200,000 + $1,000,000 + $100,000 = $3,300,000) 
and the total amount of expenditures for the base period had the plan 
not been amended to comply with the requirements of paragraph (b)(1)(i) 
of this section are $3,273,000 ($3,300,000-($0 + $1,000 + $25,000 + 
$1,000) = $3,273,000).
    (ii) In this Example 3, the plan does not satisfy the requirements 
of this paragraph (f)(2) because the application of this section does 
not result in an increased cost of at least one percent under the terms 
of the plan ($3,300,000/$3,273,000 = 1.00825).

    (3) Notice of exemption--(i) Participants and beneficiaries--(A) In 
general. A group health plan must notify participants and beneficiaries 
of the plan's decision to claim the one-percent increased cost 
exemption. The notice must include the following information:
    (1) A statement that the plan is exempt from the requirements of 
this section and a description of the basis for the exemption;
    (2) The name and telephone number of the individual to contact for 
further information;
    (3) The plan name and plan number (PN);
    (4) The plan administrator's name, address, and telephone number;
    (5) For single-employer plans, the plan sponsor's name, address, and 
telephone number (if different from paragraph (f)(3)(i)(A)(3) of this 
section) and the plan sponsor's employer identification number (EIN);
    (6) The effective date of the exemption;
    (7) The ability of participants and beneficiaries to contact the 
plan administrator to see how benefits may be affected as a result of 
the plan's claim of the exemption; and

[[Page 669]]

    (8) The availability, upon request and free of charge, of a summary 
of the information required under paragraph (f)(4) of this section.
    (B) Use of summary of material reductions in covered services or 
benefits. A plan may satisfy the requirements of paragraph (f)(3)(i)(A) 
of this section by providing participants and beneficiaries (in 
accordance with paragraph (f)(3)(i)(C) of this section) with a summary 
of material reductions in covered services or benefits required under 
Sec. 2520.104b-3(d) that also includes the information of this paragraph 
(f)(3)(i). However, in all cases, the exemption is not effective until 
30 days after notice has been sent.
    (C) Delivery. The notice described in this paragraph (f)(3)(i) is 
required to be provided to all participants and beneficiaries. The 
notice may be furnished by any method of delivery that satisfies the 
requirements of section 104(b)(1) of ERISA (e.g., first-class mail). If 
the notice is provided to the participant at the participant's last 
known address, then the requirements of this paragraph (f)(3)(i) are 
satisfied with respect to the participant and all beneficiaries residing 
at that address. If a beneficiary's last known address is different from 
the participant's last known address, a separate notice is required to 
be provided to the beneficiary at the beneficiary's last known address.
    (D) Example. The rules of this paragraph (f)(3)(i) are illustrated 
by the following example:

    Example. (i) A group health plan has a plan year that is the 
calendar year and has an open enrollment period every November 1 through 
November 30. The plan determines on September 15 that it satisfies the 
requirements of paragraph (f)(2) of this section. As part of its open 
enrollment materials, the plan mails, on October 15, to all participants 
and beneficiaries a notice satisfying the requirements of this paragraph 
(f)(3)(i).
    (ii) In this Example, the plan has sent the notice in a manner that 
complies with this paragraph (f)(3)(i).

    (ii) Federal agencies--(A) Church plans. A church plan (as defined 
in section 414(e) of the Internal Revenue Code) claiming the exemption 
of this paragraph (f) for any benefit package must provide notice to the 
Department of the Treasury. This requirement is satisfied if the plan 
sends a copy, to the address designated by the Secretary in generally 
applicable guidance, of the notice described in paragraph (f)(3)(i) of 
this section identifying the benefit package to which the exemption 
applies.
    (B) Group health plans subject to Part 7 of Subtitle B of Title I of 
ERISA. A group health plan subject to Part 7 of Subtitle B of Title I of 
ERISA, and claiming the exemption of this paragraph (f) for any benefit 
package, must provide notice to the Department of Labor. This 
requirement is satisfied if the plan sends a copy, to the address 
designated by the Secretary in generally applicable guidance, of the 
notice described in paragraph (f)(3)(i) of this section identifying the 
benefit package to which the exemption applies.
    (C) Nonfederal governmental plans. A group health plan that is a 
nonfederal governmental plan claiming the exemption of this paragraph 
(f) for any benefit package must provide notice to the Department of 
Health and Human Services (HHS). This requirement is satisfied if the 
plan sends a copy, to the address designated by the Secretary in 
generally applicable guidance, of the notice described in paragraph 
(f)(3)(i) of this section identifying the benefit package to which the 
exemption applies.
    (4) Availability of documentation. The plan (or issuer) must make 
available to participants and beneficiaries (or their representatives), 
on request and at no charge, a summary of the information on which the 
exemption was based. An individual who is not a participant or 
beneficiary and who presents a notice described in paragraph (f)(3)(i) 
of this section is considered to be a representative. A representative 
may request the summary of information by providing the plan a copy of 
the notice provided to the participant under paragraph (f)(3)(i) of this 
section with any individually identifiable information redacted. The 
summary of information must include the incurred expenditures, the base 
period, the dollar amount of claims incurred during the base period that 
would have been denied under the terms of the plan absent amendments 
required to comply with

[[Page 670]]

paragraph (b)(1)(i) of this section, the administrative costs related to 
those claims, and other administrative costs attributable to complying 
with the requirements of this section. In no event should the summary of 
information include any individually identifiable information.
    (g) Special rules for group health insurance coverage--(1) Sale of 
nonparity policies. An issuer may sell a policy without parity (as 
described in paragraph (b) of this section) only to a plan that meets 
the requirements of paragraphs (e) or (f) of this section.
    (2) Duration of exemption. After a plan meets the requirements of 
paragraph (f) of this section, the plan may change issuers without 
having to meet the requirements of paragraph (f) of this section again 
before December 31, 2003.
    (h) Effective dates--(1) In general. The requirements of this 
section are applicable for plan years beginning on or after January 1, 
1998.
    (2) Limitation on actions. (i) Except as provided in paragraph 
(h)(3) of this section, no enforcement action is to be taken by the 
Secretary against a group health plan that has sought to comply in good 
faith with the requirements of section 712 of the Act, with respect to a 
violation that occurs before the earlier of--
    (A) The first day of the first plan year beginning on or after April 
1, 1998; or
    (B) January 1, 1999.
    (ii) Compliance with the requirements of this section is deemed to 
be good faith compliance with the requirements of section 712 of Part 7 
of Subtitle B of Title I of ERISA.
    (iii) The rules of this paragraph (h)(2) are illustrated by the 
following examples:

    Example 1. (i) A group health plan has a plan year that is the 
calendar year. The plan complies with section 712 of Part 7 of Subtitle 
B of Title I of ERISA in good faith using assumptions inconsistent with 
paragraph (b)(6) of this section relating to weighted averages for 
categories of benefits.
    (ii) In this Example 1, no enforcement action may be taken against 
the plan with respect to a violation resulting solely from those 
assumptions and occurring before January 1, 1999.
    Example 2. (i) A group health plan has a plan year that is the 
calendar year. For the entire 1998 plan year, the plan applies a 
$1,000,000 annual limit on medical/surgical benefits and a $100,000 
annual limit on mental health benefits.
    (ii) In this Example 2, the plan has not sought to comply with the 
requirements of section 712 of the Act in good faith and this paragraph 
(h)(2) does not apply.

    (3) Transition period for increased cost exemption--(i) In general. 
No enforcement action will be taken against a group health plan that is 
subject to the requirements of this section based on a violation of this 
section that occurs before April 1, 1998 solely because the plan claims 
the increased cost exemption under section 712(c)(2) of Part 7 of 
Subtitle B of Title I of ERISA based on assumptions inconsistent with 
the rules under paragraph (f) of this section, provided that a plan 
amendment that complies with the requirements of paragraph (b)(1)(i) of 
this section is adopted and effective no later than March 31, 1998 and 
the plan complies with the notice requirements in paragraph (h)(3)(ii) 
of this section.
    (ii) Notice of plan's use of transition period. (A) A group health 
plan satisfies the requirements of this paragraph (h)(3)(ii) only if the 
plan provides notice to the applicable federal agency and posts such 
notice at the location(s) where documents must be made available for 
examination by participants and beneficiaries under section 104(b)(2) of 
ERISA and the regulations thereunder (29 CFR 2520.104b-1(b)(3)). The 
notice must indicate the plan's decision to use the transition period in 
paragraph (h)(3)(i) of this section by 30 days after the first day of 
the plan year beginning on or after January 1, 1998, but in no event 
later than March 31, 1998. For a group health plan that is a church 
plan, the applicable federal agency is the Department of the Treasury. 
For a group health plan that is subject to Part 7 of Subtitle B of Title 
I of ERISA, the applicable federal agency is the Department of Labor. 
For a group health plan that is a nonfederal governmental plan, the 
applicable federal agency is the Department of Health and Human 
Services. The notice must include--
    (1) The name of the plan and the plan number (PN);
    (2) The name, address, and telephone number of the plan 
administrator;

[[Page 671]]

    (3) For single-employer plans, the name, address, and telephone 
number of the plan sponsor (if different from the plan administrator) 
and the plan sponsor's employer identification number (EIN);
    (4) The name and telephone number of the individual to contact for 
further information; and
    (5) The signature of the plan administrator and the date of the 
signature.
    (B) The notice must be provided at no charge to participants or 
their representative within 15 days after receipt of a written or oral 
request for such notification, but in no event before the notice has 
been sent to the applicable federal agency.
    (i) Sunset. This section does not apply to benefits for services 
furnished on or after December 31, 2003.

[62 FR 66957, Dec. 22, 1997. Redesignated at 65 FR 82142, Dec. 27, 2000; 
as amended at 67 FR 60861, Sept. 27, 2002; 68 FR 18049, Apr. 14, 2003]



                      Subpart D--General Provisions

    Source: 62 FR 16941, Apr. 8, 1997. Redesignated at 65 FR 82142, Dec. 
27, 2000, unless otherwise noted.



Sec. 2590.731  Preemption; State flexibility; construction.

    (a) Continued applicability of State law with respect to health 
insurance issuers. Subject to paragraph (b) of this section and except 
as provided in paragraph (c) of this section, part 7 of subtitle B of 
title I of the Act is not to be construed to supersede any provision of 
State law which establishes, implements, or continues in effect any 
standard or requirement solely relating to health insurance issuers in 
connection with group health insurance coverage except to the extent 
that such standard or requirement prevents the application of a 
requirements of this part.
    (b) Continued preemption with respect to group health plans. Nothing 
in part 7 of subtitle B of title I of the Act affects or modifies the 
provisions of section 514 of the Act with respect to group health plans.
    (c) Special rules--(1) In general. Subject to paragraph (c)(2) of 
this section, the provisions of part 7 of subtitle B of title I of the 
Act relating to health insurance coverage offered by a health insurance 
issuer supersede any provision of State law which establishes, 
implements, or continues in effect a standard or requirement applicable 
to imposition of a preexisting condition exclusion specifically governed 
by section 701 which differs from the standards or requirements 
specified in such section.
    (2) Exceptions. Only in relation to health insurance coverage 
offered by a health insurance issuer, the provisions of this part do not 
supersede any provision of State law to the extent that such provision--
    (i) Shortens the period of time from the ``6-month period'' 
described in section 701(a)(1) of the Act and Sec. 2590.701-3(a)(1)(i) 
(for purposes of identifying a preexisting condition);
    (ii) Shortens the period of time from the ``12 months'' and ``18 
months'' described in section 701(a)(2) of the Act and Sec. 2590.701-
3(a)(1)(ii) (for purposes of applying a preexisting condition exclusion 
period);
    (iii) Provides for a greater number of days than the ``63 day 
period'' described in sections 701(c)(2)(A) and (d)(4)(A) of the Act and 
Secs. 2590.701-3(a)(1)(iii) and 2590.701-4 (for purposes of applying the 
break in coverage rules);
    (iv) Provides for a greater number of days than the ``30-day 
period'' described in sections 701 (b)(2) and (d)(1) of the Act and 
Sec. 2590.701-3(b) (for purposes of the enrollment periods and 
preexisting condition exclusion periods for certain newborns and 
children that are adopted or placed for adoption);
    (v) Prohibits the imposition of any preexisting condition exclusion 
in cases not described in section 701(d) of the Act or expands the 
exceptions described therein;
    (vi) Requires special enrollment periods in addition to those 
required under section 701(f) of the Act; or
    (vii) Reduces the maximum period permitted in an affiliation period 
under section 701(g)(1)(B) of the Act.
    (d) Definitions--(1) State law. For purposes of this section the 
term State law includes all laws, decisions, rules, regulations, or 
other State action having the effect of law, of any State. A law of the 
United States applicable only to the District of Columbia is treated as 
a

[[Page 672]]

State law rather than a law of the United States.
    (2) State. For purposes of this section the term State includes a 
State, the Northern Mariana Islands, any political subdivisions of a 
State or such Island, or any agency or instrumentality of either.

[62 FR 16941, Apr. 8, 1997; 62 FR 31670, 31693, June 10, 1997. 
Redesignated at 65 FR 82142, Dec. 27, 2000]



Sec. 2590.732  Special rules relating to group health plans.

    (a) General exception for certain small group health plans. The 
requirements of this part 7 of subtitle B of title I of the Act do not 
apply to any group health plan (and group health insurance coverage 
offered in connection with a group health plan) for any plan year if, on 
the first day of the plan year, the plan has fewer than 2 participants 
who are current employees.
    (b) Excepted benefits--(1) In general. The requirements of subparts 
A and C of this part do not apply to any group health plan (or any group 
health insurance coverage offered in connection with a group health 
plan) in relation to its provision of the benefits described in 
paragraph (b)(2), (3), (4), or (5) of this section (or any combination 
of these benefits).
    (2) Benefits excepted in all circumstances. The following benefits 
are excepted in all circumstances--
    (i) Coverage only for accident (including accidental death and 
dismemberment);
    (ii) Disability income insurance;
    (iii) Liability insurance, including general liability insurance and 
automobile liability insurance;
    (iv) Coverage issued as a supplement to liability insurance;
    (v) Workers' compensation or similar insurance;
    (vi) Automobile medical payment insurance;
    (vii) Credit-only insurance (for example, mortgage insurance); and
    (viii) Coverage for on-site medical clinics.
    (3) Limited excepted benefits--(i) In general. Limited-scope dental 
benefits, limited-scope vision benefits, or long-term care benefits are 
excepted if they are provided under a separate policy, certificate, or 
contract of insurance, or are otherwise not an integral part of the 
plan, as defined in paragraph (b)(3)(ii) of this section.
    (ii) Integral. For purposes of paragraph (b)(3)(i) of this section, 
benefits are deemed to be an integral part of a plan unless a 
participant has the right to elect not to receive coverage for the 
benefits and, if the participant elects to receive coverage for the 
benefits, the participant pays an additional premium or contribution for 
that coverage.
    (iii) Limited scope. Limited scope dental or vision benefits are 
dental or vision benefits that are sold under a separate policy or rider 
and that are limited in scope to a narrow range or type of benefits that 
are generally excluded from hospital/medical/surgical benefit packages.
    (iv) Long-term care. Long-term care benefits are benefits that are 
either--
    (A) Subject to State long-term care insurance laws;
    (B) For qualified long-term care insurance services, as defined in 
section 7702B(c)(1) of the Code, or provided under a qualified long-term 
care insurance contract, as defined in section 7702B(b) of the Internal 
Revenue Code; or
    (C) Based on cognitive impairment or a loss of functional capacity 
that is expected to be chronic.
    (4) Noncoordinated benefits--(i) Excepted benefits that are not 
coordinated. Coverage for only a specified disease or illness (for 
example, cancer-only policies) or hospital indemnity or other fixed 
dollar indemnity insurance (for example, $100/day) is excepted only if 
it meets each of the conditions specified in paragraph (b)(4)(ii) of 
this section.
    (ii) Conditions. Benefits are described in paragraph (b)(4)(i) of 
this section only if--
    (A) The benefits are provided under a separate policy, certificate, 
or contract of insurance;
    (B) There is no coordination between the provision of the benefits 
and an exclusion of benefits under any group health plan maintained by 
the same plan sponsor; and
    (C) The benefits are paid with respect to an event without regard to 
whether benefits are provided with respect to

[[Page 673]]

the event under any group health plan maintained by the same plan 
sponsor.
    (5) Supplemental benefits. The following benefits are excepted only 
if they are provided under a separate policy, certificate, or contract 
of insurance:
    (i) Medicare supplemental health insurance (as defined under section 
1882(g)(1) of the Social Security Act; also known as Medigap or MedSupp 
insurance);
    (ii) Coverage supplemental to the coverage provided under chapter 
55, title 10 of the United States Code (also known as CHAMPUS 
supplemental programs); and
    (iii) Similar supplemental coverage provided to coverage under a 
group health plan.
    (c) Treatment of partnerships. [Reserved]

[62 FR 16941, Apr. 8, 1997; 62 FR 31670, June 10, 1997. Redesignated at 
65 FR 82142, Dec. 27, 2000]



Sec. 2590.734  Enforcement. [Reserved]



Sec. 2590.736  Applicability dates.

    (a) General applicability dates--(1) Non-collectively bargained 
plans. Part 7 of Subtitle B of Title I of the Act and Secs. 2590.701-1 
through 2590.701-7, 2590.703, 2590.731 through 2590.734, and this 
section apply with respect to group health plans, and health insurance 
coverage offered in connection with group health plans, for plan years 
beginning after June 30, 1997, except as otherwise provided in this 
section.
    (2) Collectively-bargained plans. Except as otherwise provided in 
this section (other than in paragraph (a)(1) of this section), in the 
case of a group health plan maintained pursuant to one or more 
collective bargaining agreements between employee representatives and 
one or more employers ratified before August 21, 1996, Part 7 of 
Subtitle B of Title I of the Act and Secs. 2590.701-1 through 2590.701-
7, 2590.703, 2590.731 through 2590.734, and this section do not apply to 
plan years beginning before the later of July 1, 1997, or the date on 
which the last of the collective bargaining agreements relating to the 
plan terminates (determined without regard to any extension thereof 
agreed to after August 21, 1996). For these purposes, any plan amendment 
made pursuant to a collective bargaining agreement relating to the plan, 
that amends the plan solely to conform to any requirement of such part, 
is not treated as a termination of the collective bargaining agreement.
    (3)(i) Preexisting condition exclusion periods for current 
employees. Any preexisting condition exclusion period permitted under 
Sec. 2590.701-3 is measured from the individual's enrollment date in the 
plan. Such exclusion period, as limited under Sec. 2590.701-3, may be 
completed prior to the effective date of the Health Insurance 
Portability and Accountability Act of 1996 (HIPAA) for his or her plan. 
Therefore, on the date the individual's plan becomes subject to part 7 
of subtitle B of title I of the Act, no preexisting condition exclusion 
may be imposed with respect to an individual beyond the limitation of 
Sec. 2590.701-3. For an individual who has not completed the permitted 
exclusion period under HIPAA, upon the effective date for his or her 
plan, the individual may use creditable coverage that the individual had 
prior to the enrollment date to reduce the remaining preexisting 
condition exclusion period applicable to the individual.
    (ii) Examples. The following examples illustrate the rules of this 
paragraph (a)(3):

    Example 1. (i) Individual A has been working for Employer X and has 
been covered under Employer X's plan since March 1, 1997. Under Employer 
X's plan, as in effect before January 1, 1998, there is no coverage for 
any preexisting condition. Employer X's plan year begins on January 1, 
1998. A's enrollment date in the plan is March 1, 1997 and A has no 
creditable coverage before this date.
    (ii) In this Example 1, Employer X may continue to impose the 
preexisting condition exclusion under the plan through February 28, 1998 
(the end of the 12-month period using anniversary dates).
    Example 2. (i) Same facts as in Example 1, except that A's 
enrollment date was August 1, 1996, instead of March 1, 1997.
    (ii) In this Example 2, on January 1, 1998, Employer X's plan may no 
longer exclude treatment for any preexisting condition that A may have; 
however, because Employer X's plan is not subject to HIPAA until January 
1, 1998, A is not entitled to claim reimbursement for expenses under the 
plan for treatments for any preexisting condition of A received before 
January 1, 1998.


[[Page 674]]


    (b) Effective date for certification requirement--(1) In general. 
Subject to the transitional rule in Sec. 2590.701-5(a)(5)(iii), the 
certification rules of Sec. 2590.701-5 apply to events occurring on or 
after July 1, 1996.
    (2) Period covered by certificate. A certificate is not required to 
reflect coverage before July 1, 1996.
    (3) No certificate before June 1, 1997. Notwithstanding any other 
provision of subpart A or C of this part, in no case is a certificate 
required to be provided before June 1, 1997.
    (c) Limitation on actions. No enforcement action is to be taken, 
pursuant to part 7 of subtitle B of title I of the Act, against a group 
health plan or health insurance issuer with respect to a violation of a 
requirement imposed by part 7 of subtitle B of title I of the Act before 
January 1, 1998, if the plan or issuer has sought to comply in good 
faith with such requirements. Compliance with this part is deemed to be 
good faith compliance with the requirements of part 7 of subtitle B of 
title I of the Act.
    (d) Transition rules for counting creditable coverage. An individual 
who seeks to establish creditable coverage for periods before July 1, 
1996 is entitled to establish such coverage through the presentation of 
documents or other means in accordance with the provisions of 
Sec. 2590.701-5(c). For coverage relating to an event occurring before 
July 1, 1996, a group health plan and a health insurance issuer are not 
subject to any penalty or enforcement action with respect to the plan's 
or issuer's counting (or not counting) such coverage if the plan or 
issuer has sought to comply in good faith with the applicable 
requirements under Sec. 2590.701-5(c).
    (e) Transition rules for certificates of creditable coverage--(1) 
Certificates only upon request. For events occurring on or after July 1, 
1996, but before October 1, 1996, a certificate is required to be 
provided only upon a written request by or on behalf of the individual 
to whom the certificate applies.
    (2) Certificates before June 1, 1997. For events occurring on or 
after October 1, 1996 and before June 1, 1997, a certificate must be 
furnished no later than June 1, 1997, or any later date permitted under 
Sec. 2590.701-5(a)(2) (ii) and (iii).
    (3) Optional notice--(i) In general. This paragraph (e)(3) applies 
with respect to events described in Sec. 2590.701-5(a)(2)(ii), that 
occur on or after October 1, 1996 but before June 1, 1997. A group 
health plan or health insurance issuer offering group health coverage is 
deemed to satisfy Sec. 2590.701-5(a) (2) and (3) if a notice is provided 
in accordance with the provisions of paragraphs (e)(3) (i) through (iv) 
of this section.
    (ii) Time of notice. The notice must be provided no later than June 
1, 1997.
    (iii) Form and content of notice. A notice provided pursuant to this 
paragraph (e)(3) must be in writing and must include information 
substantially similar to the information included in a model notice 
authorized by the Secretary. Copies of the model notice are available on 
the following website--http://www.dol.gov/ebsa/ (or call 1-800-998-
7542).
    (iv) Providing certificate after request. If an individual requests 
a certificate following receipt of the notice, the certificate must be 
provided at the time of the request as set forth in Sec. 2590.701-
5(a)(2)(iii).
    (v) Other certification rules apply. The rules set forth in 
Sec. 2590.701-5(a)(4)(i) (method of delivery) and Sec. 2590.701-5(a)(1) 
(entities required to provide a certificate) apply with respect to the 
provision of the notice.

[62 FR 16941, Apr. 8, 1997; 62 FR 31693, June 10, 1997. Redesignated at 
65 FR 82142, Dec. 27, 2000; 66 FR 1411, Jan. 8, 2001]

[[Page 675]]



     CHAPTER XXVII--FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION




  --------------------------------------------------------------------
Part                                                                Page
2700            Procedural rules............................         677
2701            Government in the Sunshine Act regulations..         696
2702            Regulations implementing the Freedom of 
                    Information Act.........................         698
2703            Employee responsibilities and conduct.......         702
2704            Implementation of the Equal Access to 
                    Justice Act in Commission proceedings...         702
2705            Privacy Act implementation..................         710
2706            Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by the Federal Mine 
                    Safety and Health Review Commission.....         712

[[Page 677]]



PART 2700--PROCEDURAL RULES--Table of Contents




                      Subpart A--General Provisions

Sec.
2700.1  Scope; applicability of other rules; construction.
2700.2  Definitions.
2700.3  Who may practice.
2700.4  Parties, intervenors, and amici curiae.
2700.5  General requirements for pleadings and other documents; status 
          or informational requests.
2700.6  Signing of documents.
2700.7  Service.
2700.8  Computation of time.
2700.9  Extensions of time.
2700.10  Motions.
2700.11  Withdrawal of pleading.
2700.12  Consolidation of proceedings.

               Subpart B--Contests of Citations and Orders

2700.20  Notice of contest of a citation or order issued under section 
          104 of the Act.
2700.21  Effect of failure to file notice of contest of citation.
2700.22  Notice of contest of imminent danger withdrawal orders under 
          section 107 of the Act.
2700.23  Review of a subsequent citation or order.

                Subpart C--Contests of Proposed Penalties

2700.25  Proposed penalty assessment.
2700.26  Notice of contest of proposed penalty assessment.
2700.27  Effect of failure to contest proposed penalty assessment.
2700.28  Filing of petition for assessment of penalty with the 
          Commission.
2700.29  Answer.
2700.30  Assessment of penalty.
2700.31  Penalty settlement.

                 Subpart D--Complaints for Compensation

2700.35  Time to file.
2700.36  Contents of complaint.
2700.37  Answer.

   Subpart E--Complaints of Discharge, Discrimination or Interference

2700.40  Who may file.
2700.41  Time to file.
2700.42  Contents of complaint.
2700.43  Answer.
2700.44  Petition for assessment of penalty in discrimination cases.
2700.45  Temporary reinstatement proceedings.

              Subpart F--Applications for Temporary Relief

2700.46  Procedure.
2700.47  Contents of application.

                           Subpart G--Hearings

2700.50  Assignment of Judges.
2700.51  Hearing sites.
2700.52  Expedition of proceedings.
2700.53  Prehearing conferences and statements.
2700.54  Notice of hearing.
2700.55  Powers of Judges.
2700.56  Discovery; general.
2700.57  Depositions.
2700.58  Interrogatories, requests for admissions and requests for 
          production of documents.
2700.59  Failure to cooperate in discovery; sanctions.
2700.60  Subpoenas.
2700.61  Name of miner informant.
2700.62  Name of miner witness.
2700.63  Evidence; presentation of case.
2700.64  Retention of exhibits.
2700.65  Proposed findings, conclusions and orders.
2700.66  Summary disposition of proceedings.
2700.67  Summary decision of the Judge.
2700.68  Substitution of the Judge.
2700.69  Decision of the Judge.

                   Subpart H--Review by the Commission

2700.70  Petitions for discretionary review.
2700.71  Review by the Commission on its own motion.
2700.72  Unreviewed decisions.
2700.73  Procedure for intervention.
2700.74  Procedure for participation as amicus curiae.
2700.75  Briefs.
2700.76  Interlocutory review.
2700.77  Oral argument.
2700.78  Reconsideration.
2700.79  Correction of clerical errors.

                        Subpart I--Miscellaneous

2700.80  Standards of conduct; disciplinary proceedings.
2700.81  Recusal and disqualification.
2700.82  Ex parte communications.
2700.83  Authority to sign orders.
2700.84  Effective date.

    Authority: 30 U.S.C. 815, 820 and 823.

    Source: 58 FR 12164, Mar. 3, 1993, unless otherwise noted.

[[Page 678]]



                      Subpart A--General Provisions



Sec. 2700.1  Scope; applicability of other rules; construction.

    (a) Scope. This part sets forth rules applicable to proceedings 
before the Federal Mine Safety and Health Review Commission and its 
Administrative Law Judges.
    (b) Applicability of other rules. On any procedural question not 
regulated by the Federal Mine Safety and Health Act of 1977, 30 U.S.C. 
801 et seq. (``the Act''), these Procedural Rules, or the Administrative 
Procedure Act (particularly 5 U.S.C. 554 and 556), the Commission and 
its Judges shall be guided so far as practicable by the Federal Rules of 
Civil Procedure and the Federal Rules of Appellate Procedure.
    (c) Construction. These rules shall be construed to secure the just, 
speedy and inexpensive determination of all proceedings, and to 
encourage the participation of miners and their representatives. 
Wherever the masculine gender is used in these rules, the feminine 
gender is also implied.



Sec. 2700.2  Definitions.

    For purposes of this part, the definitions contained in section 3 of 
the Act, 30 U.S.C. 802, apply.



Sec. 2700.3  Who may practice.

    (a) Attorneys. Attorneys admitted to practice before the highest 
court of any State, Territory, District, Commonwealth or possession of 
the United States are permitted to practice before the Commission.
    (b) Other persons. A person who is not authorized to practice before 
the Commission as an attorney under paragraph (a) of this section may 
practice before the Commission as a representative of a party if he is:
    (1) A party;
    (2) A representative of miners;
    (3) An owner, partner, officer or employee of a party when the party 
is a labor organization, an association, a partnership, a corporation, 
other business entity, or a political subdivision; or
    (4) Any other person with the permission of the presiding judge or 
the Commission.
    (c) Entry of appearance. A representative of a party shall enter an 
appearance in a proceeding under the Act or these procedural rules by 
signing the first document filed on behalf of the party with the 
Commission or Judge; filing a written entry of appearance with the 
Commission or Judge; or, if the Commission or Judge permits, by orally 
entering an appearance in open hearing.
    (d) Withdrawal of appearance. Any representative of a party desiring 
to withdraw his appearance shall file a motion with the Commission or 
Judge. The motion to withdraw may, in the discretion of the Commission 
or Judge, be denied where it is necessary to avoid undue delay or 
prejudice to the rights of a party.

[58 FR 12164, Mar. 3, 1993, as amended at 64 FR 48712, Sept. 8, 1999]



Sec. 2700.4  Parties, intervenors, and amici curiae.

    (a) Party status. A person, including the Secretary or an operator, 
who is named as a party or who is permitted to intervene, is a party. In 
a proceeding instituted by the Secretary under section 105(c)(2) of the 
Act, 30 U.S.C. 815(c)(2), the complainant on whose behalf the Secretary 
has filed the complaint is a party and may present additional evidence 
on his own behalf. A miner, applicant for employment, or representative 
of a miner who has filed a complaint with the Commission under section 
105(c)(3) or 111 of the Act, 30 U.S.C. 815(c)(3) and 821, and an 
affected miner or his representative who has become a party in 
accordance with paragraph (b) of this section, are parties.
    (b) Intervention--(1) Intervention by affected miners and their 
representatives. Before a case has been assigned to a Judge, affected 
miners or their representatives shall be permitted to intervene upon 
filing a written notice of intervention with the Executive Director, 
Federal Mine Safety and Health Review Commission, 601 New Jersey Avenue, 
NW., Suite 9500, Washington, DC 20001. If the case has been assigned to 
a Judge, the notice of intervention shall be filed with the Judge. The 
Commission or the Judge shall mail forthwith a copy of the notice to all 
parties.

[[Page 679]]

After the start of the hearing, affected miners or their representatives 
may intervene upon just terms and for good cause shown.
    (2) Intervention by other persons. (i) Motions by other persons for 
leave to intervene shall be filed before the start of a hearing on the 
merits unless the Judge, for good cause shown, allows a later filing. 
The motion shall set forth:
    (A) The interest of the movant relating to the property or events 
that are the subject of the proceeding;
    (B) The reasons why such interest is not otherwise adequately 
represented by the parties already involved in the proceeding; and
    (C) A showing that intervention will not unduly delay or prejudice 
the adjudication of the issues.
    (ii) Such intervention is not a matter of right but of the sound 
discretion of the Judge. In denying a motion to intervene, the Judge may 
alternatively permit the movant to participate in the proceeding as 
amicus curiae.
    (c) Procedure for participation as amicus curiae. Any person may 
move to participate as amicus curiae in a proceeding before a Judge. 
Such participation as amicus curiae shall not be a matter of right but 
of the sound discretion of the Judge. A motion for participation as 
amicus curiae shall set forth the interest of the movant and show that 
the granting of the motion will not unduly delay or prejudice the 
adjudication of the issues. If the Judge permits amicus curiae 
participation, the Judge's order shall specify the time within which 
such amicus curiae memorandum, brief, or other pleading must be filed 
and the time within which a reply may be made. The movant may 
conditionally attach its memorandum, brief, or other pleading to its 
motion for participation as amicus curiae.

[58 FR 12164, Mar. 3, 1993, as amended at 67 FR 60862, Sept. 27, 2002]



Sec. 2700.5  General requirements for pleadings and other documents; status or informational requests.

    (a) Jurisdiction. A proposal for a penalty under section 110, 30 
U.S.C. 820; an answer to a notice of contest of a citation or withdrawal 
order issued under section 104, 30 U.S.C. 814; an answer to a notice of 
contest of an order issued under section 107, 30 U.S.C. 817; a complaint 
issued under section 105(c) or 111, 30 U.S.C. 815(c) and 821; and an 
application for temporary reinstatement under section 105(c)(2), 30 
U.S.C. 815(c)(2), shall allege that the violation or imminent danger 
took place in or involves a mine that has products which enter commerce 
or has operations or products that affect commerce. Jurisdictional facts 
that are alleged are deemed admitted unless specifically denied in a 
responsive pleading.
    (b) Where to file. Until a Judge has been assigned to a case, all 
documents shall be filed with the Commission. Documents filed with the 
Commission shall be addressed to the Executive Director and mailed or 
delivered to the Docket Office, Federal Mine Safety and Health Review 
Commission, 601 New Jersey Avenue, NW., Suite 9500, Washington, DC 
20001; facsimile delivery as allowed by these rules (see 
Sec. 1700.5(d)), shall be transmitted to (202) 434-9954. After a Judge 
has been assigned, and before he issues a decision, documents shall be 
filed with the Judge at the address set forth on the notice of 
assignment. Documents filed in connection with interlocutory review 
shall be filed with the Commission in accordance with Sec. 2700.76. 
After the Judge has issued his final decision, documents shall be filed 
with the Commission.
    (c) Necessary information. All documents shall be legible and shall 
clearly identify on the cover page the filing party by name. All 
documents shall be dated and shall include the assigned docket number, 
page numbers, and the filing person's address and telephone number. 
Written notice of any change in address or telephone number shall be 
given promptly to the Commission or the Judge and all other parties.
    (d) Manner and date of filing. A notice of contest of a citation or 
order, a petition for assessment of penalty, a complaint for 
compensation, a complaint of discharge, discrimination or interference, 
an application for temporary reinstatement, and an application for 
temporary relief shall be filed by personal delivery, including courier 
service, or by registered or certified mail,

[[Page 680]]

return receipt requested. All subsequent documents that are filed with a 
Judge or the Commission may be filed by first class mail, express mail, 
or personal delivery. Express mail includes delivery by a third-party 
commercial carrier. When filing is by personal delivery, filing is 
effective upon receipt. When filing is by mail, filing is effective upon 
mailing, except that the filing of a petition for discretionary review, 
a petition for review of a temporary reinstatement order, a motion for 
extension of time, and a motion to exceed page limit is effective upon 
receipt. See Secs. 2700.9, 2700.45(f), 2700.70(a), (f), and 2700.75(f). 
Filing by facsimile transmission is permissible only when specifically 
permitted by these rules (see Secs. 2700.9, 2700.45(f), 2700.52, 
2700.70(a), (f), and 2700.75(f)), or when otherwise allowed by a Judge 
or the Commission. Filing by facsimile transmission is effective upon 
receipt.
    (e) Number of copies. In cases before a Judge, two copies shall be 
filed for each docket; in cases before the Commission, seven copies 
shall be filed; but if the filing party is not represented by a lawyer 
or other representative, one copy shall be sufficient. When filing is by 
facsimile transmission, the appropriate number of non-facsimile copies 
must be filed with the Judge or Commission within 3 days of the 
facsimile transmission.
    (f) Form of pleadings. All printed material shall appear in at least 
12 point type on paper 8\1/2\ by 11 inches in size, with margins of at 
least one inch on all four sides. Text and footnotes shall appear in the 
same size type. Text shall be double spaced. Headings and footnotes may 
be single spaced. Quotations of 50 words or more may be single spaced 
and indented left and right. Excessive footnotes are prohibited. The 
failure to comply with the requirements of this paragraph or the use of 
compacted or otherwise compressed printing features will be grounds for 
rejection of a brief.
    (g) Status or informational requests. Any inquiries concerning 
filing requirements, the status of cases before the Commission, or 
docket information shall be directed to the Office of General Counsel or 
the Docket Office of the Federal Mine Safety and Health Review 
Commission, 601 New Jersey Avenue, NW., Suite 9500, Washington, DC 
20001..

[58 FR 12164, Mar. 3, 1993, as amended at 64 FR 48712, Sept. 8, 1999; 67 
FR 60862, Sept. 27, 2002]



Sec. 2700.6  Signing of documents.

    When a person who appears in a representative capacity signs a 
document, that person's signature shall constitute his certificate:
    (a) That under the provisions of the law, including these rules and 
all federal conflict of interest statutes, he is authorized and 
qualified to represent the particular party in the matter; and
    (b) That he has read the document; that to the best of his 
knowledge, information, and belief formed after reasonable inquiry it is 
well grounded in fact and is warranted by existing law or a good faith 
argument for extension, modification, or reversal of existing law; and 
that it is not interposed for any improper purpose, such as to harass or 
to cause unnecessary delay or needless increase in the cost of 
litigation.



Sec. 2700.7  Service.

    (a) Generally. A copy of each document filed with the Commission 
shall be served on all parties. In addition, a copy of a notice of 
contest of a citation or order, a petition for assessment of penalty, a 
discrimination complaint, a complaint for compensation, and an 
application for temporary relief shall be served upon the representative 
of miners, if known.
    (b) Posting. A copy of an order, citation, notice, or decision 
required under section 109 of the Act, 30 U.S.C. 819, to be posted on a 
mine bulletin board shall, upon receipt, be immediately posted on such 
bulletin board by the operator.
    (c) Methods of service. A notice of contest of a citation or order, 
a proposed penalty assessment, a petition for assessment of penalty, a 
complaint for compensation, a complaint of discharge, discrimination or 
interference, an application for temporary reinstatement, and an 
application for temporary relief shall be served by personal delivery, 
including courier service, or by

[[Page 681]]

registered or certified mail, return receipt requested. All subsequent 
papers may be served by first class mail, express mail, or personal 
delivery, except as specified in Secs. 2700.9, 2700.45, 2700.70(f), and 
2700.75(f) (extensions of time, temporary reinstatement proceedings, and 
extensions of page limit). Express mail includes delivery by a third-
party commercial carrier. Service by mail, including first class, 
express, or registered or certified mail, return receipt requested, is 
effective upon mailing. Service by personal delivery is effective upon 
receipt. When filing by facsimile transmission (see Sec. 2700.5(d)), the 
filing party must also serve by facsimile transmission or, if serving by 
facsimile transmission is impossible, the filing party must serve by a 
third-party commercial overnight delivery service or by personal 
delivery. Service by facsimile transmission is effective upon receipt.
    (d) Service upon representative. Whenever a party is represented by 
an attorney or other authorized representative who has entered an 
appearance on behalf of such party pursuant to Sec. 2700.3(c), service 
thereafter shall be made upon the attorney or other authorized 
representative.
    (e) Proof of service. All pleadings and other filed documents shall 
be accompanied by a statement setting forth the date and manner of 
service.

[58 FR 12164, Mar. 3, 1993, as amended at 64 FR 48713, Sept. 8, 1999]



Sec. 2700.8  Computation of time.

    In computing any period of time prescribed in these rules, the day 
from which the designated period begins to run shall not be included. 
The last day of the period so computed shall be included unless it is a 
Saturday, Sunday, or federal holiday, in which event the period runs 
until the end of the next business day. When the period of time 
prescribed is less than 7 days, intermediate Saturdays, Sundays, and 
federal holidays shall be excluded in the computation. When service of a 
document is by mail, 5 days shall be added to the time allowed by these 
rules for the filing of a response or other documents.



Sec. 2700.9  Extensions of time.

    (a) The time for filing or serving any document may be extended for 
good cause shown. Filing of a motion requesting an extension of time, 
including a facsimile transmission, is effective upon receipt. A motion 
requesting an extension of time shall be received no later than 3 days 
prior to the expiration of the time allowed for the filing or serving of 
the document, and shall comply with Sec. 2700.10. A motion requesting an 
extension of time and a statement in opposition to such a motion may be 
filed and served by facsimile. The motion and any statement in 
opposition shall include proof of service on all parties by a means of 
delivery no less expeditious than that used for filing the motion, 
except that if service by facsimile transmission is impossible, the 
filing party shall serve by a third-party commercial overnight delivery 
service or by personal delivery.
    (b) In exigent circumstances, an extension of time may be granted 
even though the request was filed after the designated time for filing 
has expired. In such circumstances, the party requesting the extension 
must show, in writing, the reasons for the party's failure to make the 
request before the time prescribed for the filing had expired.

[64 FR 48713, Sept. 8, 1999]



Sec. 2700.10  Motions.

    (a) An application for an order shall be by motion which, unless 
made during a hearing or a conference, shall be made in writing and 
shall set forth the relief or order sought.
    (b) Written motions shall be set forth in a document separate from 
other pleadings.
    (c) Prior to filing a procedural motion, the moving party shall 
confer or make reasonable efforts to confer with the other parties and 
shall state in the motion if any other party opposes or does not oppose 
the motion.
    (d) A statement in opposition to a written motion may be filed by 
any party within 10 days after service upon the party. Unless otherwise 
ordered, oral argument on motions will not be heard. Where circumstances 
warrant, a

[[Page 682]]

motion may be ruled upon prior to the expiration of the time for 
response; a party adversely affected by the ruling may seek 
reconsideration.

[58 FR 12164, Mar. 3, 1993, as amended at 64 FR 48713, Sept. 8, 1999]



Sec. 2700.11  Withdrawal of pleading.

    A party may withdraw a pleading at any stage of a proceeding with 
the approval of the Judge or the Commission.



Sec. 2700.12  Consolidation of proceedings.

    The Commission and its Judges may at any time, upon their own motion 
or a party's motion, order the consolidation of proceedings that involve 
similar issues.



               Subpart B--Contests of Citations and Orders



Sec. 2700.20  Notice of contest of a citation or order issued under section 104 of the Act.

    (a) Who may contest. (1) An operator may contest:
    (i) A citation or an order issued under section 104 of the Act, 30 
U.S.C. 814;
    (ii) A modification of a citation or an order issued under section 
104 of the Act; and
    (iii) The reasonableness of the length of time fixed for abatement 
in a citation or modification thereof issued under section 104 of the 
Act.
    (2) A miner or representative of miners may contest:
    (i) The issuance, modification or termination of any order issued 
under section 104 of the Act; and
    (ii) The reasonableness of the length of time fixed for abatement in 
a citation or modification thereof issued under section 104 of the Act.
    (b) Time to contest. Contests filed by an operator pursuant to 
paragraph (a)(1) of this section shall be filed with the Secretary at 
the appropriate Regional Solicitor's Office or at the Solicitor's 
Office, Mine Safety and Health Division, Arlington, Virginia, within 30 
days of receipt by the operator of the contested citation, order, or 
modification. Contests filed by a miner or representative of miners 
pursuant to paragraph (a)(2) of this section shall be filed in the same 
manner within 30 days of receipt by the miner or representative of 
miners of the contested order, modification, or termination.
    (c) Notification by the Secretary. The Secretary, in accordance with 
section 105(d) of the Act, 30 U.S.C. 815(d), shall immediately advise 
the Commission of such notice of contest upon its receipt.
    (d) Copy to Commission. The contesting party shall also file a copy 
of his notice of contest with the Commission at the time he files with 
the Secretary.
    (e) Contents of notice of contest. (1) A notice of contest shall 
contain a short and plain statement of:
    (i) The party's position with respect to each issue of law and fact 
that the party contends is pertinent; and
    (ii) The relief requested by the party.
    (2) A legible copy of the contested citation or order shall be 
attached to the notice of contest. If a legible copy is not available, 
the notice of contest shall set forth the text of the contested citation 
or order.
    (f) Answer. Within 20 days after service of a notice of contest, the 
Secretary shall file an answer responding to each allegation of the 
notice of contest.



Sec. 2700.21  Effect of failure to file notice of contest of citation.

    An operator's failure to file a notice of contest of a citation or 
order issued under section 104 of the Act, 30 U.S.C. 814, shall not 
preclude the operator from challenging, in a penalty proceeding, the 
fact of violation or any special findings contained in a citation or 
order including the assertion in the citation or order that the 
violation was of a significant and substantial nature or was caused by 
the operator's unwarrantable failure to comply with the standard.



Sec. 2700.22  Notice of contest of imminent danger withdrawal orders under section 107 of the Act.

    (a) Time to file. A notice of contest of a withdrawal order issued 
under section 107 of the Act, 30 U.S.C. 817, or any modification or 
termination of the order, shall be filed with the Commission by the 
contesting party within 30 days of receipt of the order or any

[[Page 683]]

modification or termination of the order.
    (b) Contents of notice of contest. (1) A notice of contest shall 
contain a short and plain statement of:
    (i) The contesting party's position on each issue of law and fact 
that the contesting party contends is pertinent; and
    (ii) The relief requested by the contesting party.
    (2) A legible copy of the contested order shall be attached to the 
notice of contest. If a legible copy is not available, the notice of 
contest shall set forth the text of the contested order.
    (c) Answer. Within 15 days after service of the notice of contest, 
the Secretary shall file an answer responding to each allegation of the 
notice of contest.



Sec. 2700.23  Review of a subsequent citation or order.

    (a) The contesting party shall file any subsequent citation or order 
that modifies or terminates the citation or order under review within 30 
days of its receipt. The notice of contest under section 105 or section 
107 of the Act, 30 U.S.C. 815 and 817, unless withdrawn, shall be deemed 
to challenge any such subsequent citation or order.
    (b) A person who is not a party in a pending proceeding for review 
of a citation or order may obtain review of a modification or 
termination of the citation or order by filing a notice of contest under 
section 105 or section 107 of the Act. The notice of contest shall be 
filed within 30 days of receipt of the citation or order that modifies 
or terminates the citation or order being reviewed.



                Subpart C--Contests of Proposed Penalties



Sec. 2700.25  Proposed penalty assessment.

    The Secretary, by certified mail, shall notify the operator or any 
other person against whom a penalty is proposed of the violation 
alleged, the amount of the proposed penalty assessment, and that such 
person shall have 30 days to notify the Secretary that he wishes to 
contest the proposed penalty assessment.



Sec. 2700.26  Notice of contest of proposed penalty assessment.

    A person has 30 days after receipt of the proposed penalty 
assessment within which to notify the Secretary that he contests the 
proposed penalty. The Secretary shall immediately transmit to the 
Commission the notice of contest.



Sec. 2700.27  Effect of failure to contest proposed penalty assessment.

    If, within 30 days from the receipt of the Secretary's proposed 
penalty assessment, the operator or other person fails to notify the 
Secretary that he contests the proposed penalty, the Secretary's 
proposed penalty assessment shall be deemed to be a final order of the 
Commission not subject to review by any court or agency.



Sec. 2700.28  Filing of petition for assessment of penalty with the Commission.

    (a) Time to file. Within 45 days of receipt of a timely contest of a 
proposed penalty assessment, the Secretary shall file with the 
Commission a petition for assessment of penalty.
    (b) Contents. The petition for assessment of penalty shall list the 
alleged violations and the proposed penalties. Each violation shall be 
identified by the number and date of the citation or order and the 
section of the Act or regulations alleged to be violated. The petition 
for assessment of penalty shall state whether the citation or order has 
been contested and the docket number of any contest. The petition for 
assessment of penalty shall advise the party against whom a penalty is 
filed that he has 30 days to file an answer pursuant to Sec. 2700.29.
    (c) Attachments. A legible copy of each citation or order for which 
a penalty is sought shall be attached to the petition for assessment of 
penalty. If a legible copy is not available, the petition for assessment 
of penalty shall set forth the text of the citation or order.



Sec. 2700.29  Answer.

    A party against whom a petition for assessment of penalty is filed 
shall file an answer within 30 days after service of the petition for 
assessment of penalty. An answer shall include a short

[[Page 684]]

and plain statement responding to each allegation of the petition.



Sec. 2700.30  Assessment of penalty.

    (a) In assessing a penalty the Judge shall determine the amount of 
penalty in accordance with the six statutory criteria contained in 
section 110(i) of the Act, 30 U.S.C. 820(i), and incorporate such 
determination in a written decision. The decision shall contain findings 
of fact and conclusions of law on each of the statutory criteria and an 
order requiring that the penalty be paid.
    (b) In determining the amount of penalty, neither the Judge nor the 
Commission shall be bound by a penalty proposed by the Secretary or by 
any offer of settlement made by a party.



Sec. 2700.31  Penalty settlement.

    (a) General. A proposed penalty that has been contested before the 
Commission may be settled only with the approval of the Commission upon 
motion.
    (b) Settlement motion. A motion to approve a penalty settlement 
shall include the following information for each violation:
    (1) The amount of the penalty proposed by the Secretary;
    (2) The amount of the penalty agreed to in settlement; and
    (3) Facts in support of the penalty agreed to by the parties.
    (c) Order approving settlement. Any order by the Judge approving a 
settlement shall set forth the reasons for approval and shall be 
supported by the record. Such order shall become the final decision of 
the Commission 40 days after issuance unless the Commission has directed 
that the order be reviewed.



                 Subpart D--Complaints for Compensation



Sec. 2700.35  Time to file.

    A complaint for compensation under section 111 of the Act, 30 U.S.C. 
821, shall be filed within 90 days after the beginning of the period 
during which the complainants are idled or would have been idled by the 
order that gives rise to the claim.



Sec. 2700.36  Contents of complaint.

    A complaint for compensation shall include:
    (a) A short and plain statement of the facts giving rise to the 
claim, including the period for which compensation is claimed;
    (b) The total amount of the compensation claimed, if known; and
    (c) A legible copy of any pertinent order of withdrawal or, if a 
legible copy is not available, the text of the order.



Sec. 2700.37  Answer.

    Within 30 days after service of a complaint for compensation, the 
operator shall file an answer responding to each allegation of the 
complaint.



   Subpart E--Complaints of Discharge, Discrimination or Interference



Sec. 2700.40  Who may file.

    (a) The Secretary. A discrimination complaint under section 
105(c)(2) of the Act, 30 U.S.C. 815(c)(2), shall be filed by the 
Secretary if, after an investigation conducted pursuant to section 
105(c)(2), the Secretary determines that a violation of section 
105(c)(1), 30 U.S.C. 815(c)(1), has occurred.
    (b) Miner, representative of miners, or applicant for employment. A 
discrimination complaint under section 105(c)(3) of the Act, 30 U.S.C. 
815(c)(3), may be filed by the complaining miner, representative of 
miners, or applicant for employment if the Secretary, after 
investigation, has determined that the provisions of section 105(c)(1) 
of the Act, 30 U.S.C. 815(c)(1), have not been violated.



Sec. 2700.41  Time to file.

    (a) The Secretary. A discrimination complaint shall be filed by the 
Secretary within 30 days after his written determination that a 
violation has occurred.
    (b) Miner, representative of miners, or applicant for employment. A 
discrimination complaint may be filed by a complaining miner, 
representative of miners, or applicant for employment within 30 days 
after receipt of a written determination by the Secretary that no 
violation has occurred.

[[Page 685]]



Sec. 2700.42  Contents of complaint.

    A discrimination complaint shall include a short and plain statement 
of the facts, setting forth the alleged discharge, discrimination or 
interference, and a statement of the relief requested.



Sec. 2700.43  Answer.

    Within 30 days after service of a discrimination complaint, the 
respondent shall file an answer responding to each allegation of the 
complaint.



Sec. 2700.44  Petition for assessment of penalty in discrimination cases.

    (a) Petition for assessment of penalty in Secretary's complaint. A 
discrimination complaint filed by the Secretary shall propose a civil 
penalty of a specific amount for the alleged violation of section 105(c) 
of the Act, 30 U.S.C. 815(c). The petition for assessment of penalty 
shall include a short and plain statement of supporting reasons based on 
the criteria for penalty assessment set forth in section 110(i) of the 
Act. 30 U.S.C. 820(i).
    (b) Petition for assessment of penalty after sustaining of complaint 
by miner, representative of miners, or applicant for employment. 
Immediately upon issuance of a decision by a Judge sustaining a 
discrimination complaint brought pursuant to section 105(c)(3), 30 
U.S.C. 815(c)(3), the Judge shall notify the Secretary in writing of 
such determination. The Secretary shall file with the Commission a 
petition for assessment of civil penalty within 45 days of receipt of 
such notice.



Sec. 2700.45  Temporary reinstatement proceedings.

    (a) Service of pleadings. A copy of each document filed with the 
Commission in a temporary reinstatement proceeding shall be served on 
all parties by personal delivery, including courier service, by 
certified or registered mail, return receipt requested, express mail or, 
as specified in paragraph (f) of this section, by facsimile 
transmission.
    (b) Contents of application. An application for temporary 
reinstatement shall state the Secretary's finding that the miner's 
discrimination complaint was not frivolously brought and shall be 
accompanied by an affidavit setting forth the Secretary's reasons 
supporting his finding. The application also shall include a copy of the 
miner's complaint to the Secretary, and proof of notice to and service 
on the person against whom relief is sought by the most expeditious 
means of notice and delivery reasonably available.
    (c) Request for hearing. Within 10 days following receipt of the 
Secretary's application for temporary reinstatement, the person against 
whom relief is sought shall advise the Commission's Chief Administrative 
Law Judge or his designee, and simultaneously notify the Secretary, 
whether a hearing on the application is requested. If no hearing is 
requested, the Judge assigned to the matter shall review immediately the 
Secretary's application and, if based on the contents thereof the Judge 
determines that the miner's complaint was not frivolously brought, he 
shall issue immediately a written order of temporary reinstatement. If a 
hearing on the application is requested, the hearing shall be held 
within 10 days following receipt of the request for hearing by the 
Commission's Chief Administrative Law Judge or his designee, unless 
compelling reasons are shown in an accompanying request for an extension 
of time.
    (d) Hearing. The scope of a hearing on an application for temporary 
reinstatement is limited to a determination as to whether the miner's 
complaint was frivolously brought. The burden of proof shall be upon the 
Secretary to establish that the complaint was not frivolously brought. 
In support of his application for temporary reinstatement, the Secretary 
may limit his presentation to the testimony of the complainant. The 
respondent shall have an opportunity to cross-examine any witnesses 
called by the Secretary and may present testimony and documentary 
evidence in support of its position that the complaint was frivolously 
brought.
    (e) Order on application. Within 7 days following the close of a 
hearing on an application for temporary reinstatement, the Judge shall 
issue a written order granting or denying the application. However, in 
extraordinary circumstances, the Judge's time for issuing an order may 
be extended as deemed necessary by the Judge. The

[[Page 686]]

Judge's order shall include findings and conclusions supporting the 
determination as to whether the miner's complaint has been frivolously 
brought. The parties shall be notified of his determination by the most 
expeditious means reasonably available. Service of the order granting or 
denying the application shall be by certified or registered mail, return 
receipt requested.
    (f) Review of order. Review by the Commission of a Judge's written 
order granting or denying an application for temporary reinstatement may 
be sought by filing with the Commission a petition, which shall be 
captioned ``Petition for Review of Temporary Reinstatement Order,'' with 
supporting arguments, within 5 days following receipt of the Judge's 
written order. The filing of any such petition is effective upon 
receipt. The filing and service of any pleadings under this rule may be 
made by facsimile transmission. The filing of a petition shall not stay 
the effect of the Judge's order unless the Commission so directs; a 
motion for such a stay will be granted only under extraordinary 
circumstances. Any response shall be filed within 5 days following 
service of a petition. Pleadings under this rule shall include proof of 
service on all parties by a means of delivery no less expeditious than 
that used for filing, except that if service by facsimile transmission 
is impossible, the filing party shall serve by a third-party commercial 
overnight delivery service or by personal delivery. The Commission's 
ruling on a petition shall be made on the basis of the petition and any 
response (any further briefs will be entertained only at the express 
direction of the Commission), and shall be rendered within 10 days 
following receipt of any response or the expiration of the period for 
filing such response. In extraordinary circumstances, the Commission's 
time for decision may be extended.
    (g) Dissolution of order. If, following an order of temporary 
reinstatement, the Secretary determines that the provisions of section 
105(c)(1), 30 U.S.C. 815(c)(1), have not been violated, the Judge shall 
be so notified and shall enter an order dissolving the order of 
reinstatement. An order dissolving the order of reinstatement shall not 
bar the filing of an action by the miner in his own behalf under section 
105(c)(3) of the Act, 30 U.S.C. 815(c)(3), and Sec. 2700.40(b) of these 
rules.

[58 FR 12164, Mar. 3, 1993, as amended at 64 FR 48713, Sept. 8, 1999]



              Subpart F--Applications for Temporary Relief



Sec. 2700.46  Procedure.

    (a) When to file. As provided in section 105(b)(2) of the Act, 30 
U.S.C. 815(b)(2), an application for temporary relief from any 
modification or termination of any order or from any order issued under 
section 104 of the Act, 30 U.S.C. 814, may be filed at any time before 
such order becomes final. No temporary relief shall be granted with 
respect to a citation issued under section 104(a) or (f) of the Act. 30 
U.S.C. 814(a) and (f).
    (b) Statements in opposition. Any party opposing the application 
shall file a statement in opposition within 4 days after receipt of the 
application.
    (c) Prior hearing required. Temporary relief shall not be granted 
prior to a hearing on such application.



Sec. 2700.47  Contents of application.

    (a) An application for temporary relief shall contain:
    (1) A showing of substantial likelihood that the findings and 
decision of the Judge or the Commission will be favorable to the 
applicant;
    (2) A statement of the specific relief requested; and
    (3) A showing that such relief will not adversely affect the health 
and safety of miners in the affected mine.
    (b) An application for temporary relief may be supported by 
affidavits or other evidence.



                           Subpart G--Hearings



Sec. 2700.50  Assignment of Judges.

    Judges shall be assigned cases in rotation as far as practicable.



Sec. 2700.51  Hearing sites.

    All cases will be assigned a hearing site by order of the Judge. The 
Judge shall give due regard to the convenience and necessity of the 
parties or

[[Page 687]]

their representatives and witnesses, the availability of suitable 
hearing facilities, and other relevant factors.



Sec. 2700.52  Expedition of proceedings.

    (a) Motions. In addition to making a written motion pursuant to 
Sec. 2700.10, a party may request expedition of proceedings by oral 
motion, with concurrent notice to all parties, or may file and serve 
such motion by facsimile. Oral motions shall be reduced to writing 
within 24 hours.
    (b) Timing of hearing. Unless all parties consent to an earlier 
hearing, an expedited hearing on the merits of the case shall not be 
held on less than 4 days notice.



Sec. 2700.53  Prehearing conferences and statements.

    (a) The Judge may require the parties to participate in a prehearing 
conference, either in person or by telephone. The participants at any 
such conference may consider and take action with respect to:
    (1) The formulation and simplification of the issues;
    (2) The possibility of obtaining stipulations, admissions of fact 
and of documents that will avoid unnecessary proof and advance rulings 
from the Judge on the admissibility of evidence;
    (3) The exchange of exhibits and the names of witnesses and a 
synopsis of the testimony expected from each witness;
    (4) The necessity or desirability of amendments to the pleadings and 
the joinder of parties;
    (5) The possibility of agreement disposing of any or all of the 
issues in dispute;
    (6) Such other matters as may aid in the expedition of the hearing 
or the disposition of the case.
    (b) The Judge may also require the parties to submit prehearing 
statements addressing one or more of the matters set forth in paragraph 
(a) of this section.



Sec. 2700.54  Notice of hearing.

    Except in expedited proceedings, written notice of the time, place, 
and nature of the hearing, the legal authority under which the hearing 
is to be held, and the matters of fact and law asserted shall be given 
to all parties at least 20 days before the date set for hearing. The 
notice shall be mailed by certified or registered mail, return receipt 
requested.



Sec. 2700.55  Powers of Judges.

    Subject to these rules, a Judge is empowered to:
    (a) Administer oaths and affirmations;
    (b) Issue subpoenas authorized by law;
    (c) Rule on offers of proof and receive relevant evidence;
    (d) Order depositions to be taken;
    (e) Regulate the course of the hearing;
    (f) Hold conferences for the settlement or simplification of the 
issues;
    (g) Dispose of procedural requests or similar matters;
    (h) Make decisions in the proceedings before him, provided that he 
shall not be assigned to make a recommended decision; and
    (i) Take other action authorized by these rules, by 5 U.S.C. 556, or 
by the Act.



Sec. 2700.56  Discovery; general.

    (a) Discovery methods. Parties may obtain discovery by one or more 
of the following methods: Depositions upon oral examination or written 
questions; written interrogatories; or requests for admissions, for 
production of documents or objects or for permission to enter upon 
property for inspecting, copying, photographing, and gathering 
information.
    (b) Scope of discovery. Parties may obtain discovery of any 
relevant, non-privileged matter that is admissible evidence or appears 
likely to lead to the discovery of admissible evidence.
    (c) Limitation of discovery. Upon motion by a party or by the person 
from whom discovery is sought or upon his own motion, a Judge may, for 
good cause shown, limit discovery to prevent undue delay or to protect a 
party or person from oppression or undue burden or expense.
    (d) Initiation of discovery. Discovery shall be initiated within 20 
days after an answer to a notice of contest, an answer to a petition for 
assessment of penalty, or an answer to a complaint

[[Page 688]]

under section 105(c) or 111 of the Act has been filed. 30 U.S.C. 815(c) 
and 30 U.S.C. 821. For good cause shown, the Judge may permit discovery 
to be initiated after that date.
    (e) Completion of discovery. Discovery shall be completed within 40 
days after its initiation. For good cause shown, the Judge may extend 
the time for discovery.



Sec. 2700.57  Depositions.

    (a) Generally. Any party, without leave of the Judge, may take the 
testimony of any person, including a party, by deposition upon oral 
examination or written interrogatories.
    (b) Orders for deposition. If the parties are unable to agree, the 
time, place, and manner of taking depositions shall be governed by order 
of the Judge.



Sec. 2700.58  Interrogatories, requests for admissions and requests for production of documents.

    (a) Interrogatories. Any party, without leave of the Judge, may 
serve written interrogatories upon another party. A party served with 
interrogatories shall answer each interrogatory separately and fully in 
writing under oath within 25 days of service unless the proponent of the 
interrogatories agrees to a longer time. The Judge may order a shorter 
or longer time period for responding. A party objecting to an 
interrogatory shall state the basis for the objection in its answer.
    (b) Requests for admissions. Any party, without leave of the Judge, 
may serve on another party a written request for admissions. A party 
served with a request for admissions shall respond to each request 
separately and fully in writing within 25 days of service, unless the 
party making the request agrees to a longer time. The Judge may order a 
shorter or longer time period for responding. A party objecting to a 
request for admissions shall state the basis for the objection in its 
response. Any matter admitted under this rule is conclusively 
established for the purpose of the pending proceeding unless the Judge, 
on motion, permits withdrawal or amendment of the admission.
    (c) Request for production, entry or inspection. Any party, without 
leave of the Judge, may serve on another party a written request to 
produce and permit inspection, copying or photocopying of designated 
documents or objects, or to permit a party or his agent to enter upon 
designated property to inspect and gather information. A party served 
with such a request shall respond in writing within 25 days of service 
unless the party making the request agrees to a longer time. The Judge 
may order a shorter or longer period for responding. A party objecting 
to a request for production, entry or inspection shall state the basis 
for the objection in its response.



Sec. 2700.59.  Failure to cooperate in discovery; sanctions.

    Upon the failure of any person, including a party, to respond to a 
discovery request or upon an objection to such a request, the party 
seeking discovery may file a motion with the Judge requesting an order 
compelling discovery. If any person, including a party, fails to comply 
with an order compelling discovery, the Judge may make such orders with 
regard to the failure as are just and appropriate, including deeming as 
established the matters sought to be discovered or dismissing the 
proceeding in favor of the party seeking discovery. For good cause shown 
the Judge may excuse an objecting party from complying with the request.



Sec. 2700.60  Subpoenas.

    (a) Compulsory attendance of witnesses and production of documents. 
The Commission and its Judges are authorized to issue subpoenas, on 
their own motion or on the oral or written application of a party, 
requiring the attendance of witnesses and the production of documents or 
physical evidence. A subpoena may be served by any person who is at 
least 18 years of age. A subpoena may also be served by registered or 
certified mail, return receipt requested, but, in such case, any risk of 
delivery is on the serving party. A copy of the subpoena bearing a 
certificate of service shall be filed with the Commission or the Judge.
    (b) Fees payable to witnesses. Subpoenaed witnesses shall be paid 
the same fees and mileage as are paid in the district courts of the 
United States. The

[[Page 689]]

witness fees and mileage shall be paid by the party at whose request the 
witness appears, or by the Commission if a witness is subpoenaed on the 
motion of the Commission or a Judge. This paragraph does not apply to 
Government employees who are called as witnesses by the Government.
    (c) Motions to revoke or modify subpoenas. Any person served with a 
subpoena may move within 5 days of service or at the hearing, whichever 
is sooner, to revoke or modify the subpoena. The Commission or the 
Judge, as appropriate, shall revoke or modify the subpoena if it seeks 
information outside the proper scope of discovery as set forth in 
Sec. 2700.56(b); or if it does not describe with sufficient 
particularity the evidence required to be produced; or if for any other 
reason it is found to be invalid or unreasonable. The Commission or the 
Judge shall set forth a concise statement of the grounds for such 
ruling.
    (d) Availability of transcript. Persons compelled to submit evidence 
at a public proceeding are entitled to obtain, on payment of prescribed 
costs, a transcript of that part of the proceeding that sets forth their 
testimony or refers to their production of evidence.
    (e) Failure to comply. Upon the failure of any person to comply with 
an order to testify or with a subpoena issued by the Commission or the 
Judge, the Judge or the Commission's General Counsel, at the request of 
the Judge or at the direction of the Commission, may undertake to 
initiate proceedings in the appropriate district court of the United 
States for the enforcement of the subpoena.



Sec. 2700.61  Name of miner informant.

    A Judge shall not, except in extraordinary circumstances, disclose 
or order a person to disclose to an operator or his agent the name of an 
informant who is a miner.



Sec. 2700.62  Name of miner witness.

    A Judge shall not, until 2 days before a hearing, disclose or order 
a person to disclose to an operator or his agent the name of a miner who 
is expected by the Judge to testify or whom a party expects to summon or 
call as a witness.



Sec. 2700.63  Evidence; presentation of case.

    (a) Relevant evidence, including hearsay evidence, that is not 
unduly repetitious or cumulative is admissible.
    (b) The proponent of an order has the burden of proof. A party shall 
have the right to present his case or defense by oral or documentary 
evidence, to submit rebuttal evidence, and to conduct such cross-
examination as may be required for a full and true disclosure of the 
facts.



Sec. 2700.64  Retention of exhibits.

    All exhibits received in evidence in a hearing or submitted for the 
record in any proceeding before the Commission shall be retained with 
the official record of the proceeding. The withdrawal of original 
exhibits may be permitted by the Commission or the Judge, upon request 
and after notice to the other parties, if true copies are substituted, 
where practical, for the originals.



Sec. 2700.65  Proposed findings, conclusions and orders.

    The Judge may require the submission of proposed findings of fact, 
conclusions of law, and orders, together with supporting briefs. The 
proposals shall be served upon all parties, and shall contain adequate 
references to the record and authorities.



Sec. 2700.66  Summary disposition of proceedings.

    (a) Generally. When a party fails to comply with an order of a Judge 
or these rules, except as provided in paragraph (b) of this section, an 
order to show cause shall be directed to the party before the entry of 
any order of default or dismissal. The order shall be mailed by 
registered or certified mail, return receipt requested.
    (b) Failure to attend hearing. If a party fails to attend a 
scheduled hearing, the Judge, where appropriate, may find the party in 
default or dismiss the proceeding without issuing an order to show 
cause.
    (c) Penalty proceedings. When the Judge finds a party in default in 
a civil penalty proceeding, the Judge shall

[[Page 690]]

also enter an order assessing appropriate penalties and directing that 
such penalties be paid.



Sec. 2700.67  Summary decision of the Judge.

    (a) Filing of motion for summary decision. At any time after 
commencement of a proceeding and no later than 10 days before the date 
fixed for the hearing on the merits, a party may move the Judge to 
render summary decision disposing of all or part of the proceeding.
    (b) Grounds. A motion for summary decision shall be granted only if 
the entire record, including the pleadings, depositions, answers to 
interrogatories, admissions, and affidavits, shows:
    (1) That there is no genuine issue as to any material fact; and
    (2) That the moving party is entitled to summary decision as a 
matter of law.
    (c) Form of motion and affidavits. The motion may be supported by 
affidavits or other verified documents, and shall specify the grounds 
upon which the party seeks relief. Supporting and opposing affidavits 
shall be made on personal knowledge and shall show affirmatively that 
the affiant is competent to testify to the matters stated. Sworn or 
certified copies of all papers or parts of papers referred to in an 
affidavit shall be attached to the affidavit or be incorporated by 
reference if not otherwise a matter of record. The Judge shall permit 
affidavits to be supplemented or opposed by depositions, answers to 
interrogatories, admissions or further affidavits. When a motion for 
summary decision is made and supported as provided in this rule, an 
adverse party may not rest upon the mere allegations or denials of his 
pleadings, but his response, by affidavits or as otherwise provided in 
this rule, must set forth specific facts showing that there is a genuine 
issue for a hearing. If the party does not respond, summary decision, if 
appropriate, shall be entered against him.
    (d) Case not fully adjudicated on motion. If a motion for summary 
decision is denied in whole or in part, the Judge shall ascertain what 
material facts are controverted and shall issue an order directing 
further proceedings as appropriate.



Sec. 2700.68  Substitution of the Judge.

    (a) Generally. Should a Judge become unavailable to the Commission, 
the proceedings assigned to him shall be reassigned to a substitute 
Judge.
    (b) Substitution following a hearing. The substitute Judge may 
render a decision based upon the existing record, provided the parties 
are notified of his intent and they are given an opportunity to object. 
An objection to the Judge rendering a decision based upon the existing 
record shall be filed within 10 days following receipt of the Judge's 
notice, or the objection shall be deemed to be waived. An objection 
shall be founded upon a showing of a need for the resolution of 
conflicting material testimony requiring credibility determinations. 
Upon good cause shown the Judge may order a further hearing on the 
merits, which shall be limited, so far as practicable, to the testimony 
in dispute.



Sec. 2700.69  Decision of the Judge.

    (a) Form and content of the Judge's decision. The Judge shall make a 
decision that constitutes his final disposition of the proceedings. The 
decision shall be in writing and shall include all findings of fact and 
conclusions of law, and the reasons or bases for them, on all the 
material issues of fact, law or discretion presented by the record, and 
an order. If a decision is announced orally from the bench, it shall be 
reduced to writing after the filing of the transcript. An order by a 
Judge approving a settlement proposal is a decision of the Judge.
    (b) Termination of the Judge's jurisdiction. The jurisdiction of the 
Judge terminates when his decision has been issued.
    (c) Correction of clerical errors. At any time before the Commission 
has directed that a Judge's decision be reviewed, and on his own motion 
or the motion of a party, the Judge may correct clerical errors in 
decisions, orders or other parts of the record. After the Commission has 
directed that a Judge's decision be reviewed, the Judge may correct such 
errors with the leave

[[Page 691]]

of the Commission. If a Judge's decision has become the final order of 
the Commission, the Judge may correct such errors with the leave of the 
Commission.



                   Subpart H--Review by the Commission



Sec. 2700.70  Petitions for discretionary review.

    (a) Procedure. Any person adversely affected or aggrieved by a 
Judge's decision or order may file with the Commission a petition for 
discretionary review within 30 days after issuance of the decision or 
order. Filing of a petition for discretionary review, including a 
facsimile transmission, is effective upon receipt. Two or more parties 
may join in the same petition; the Commission may consolidate related 
petitions. Procedures governing petitions for review of temporary 
reinstatement orders are found at Sec. 2700.45(f).
    (b) Review discretionary. Review by the Commission shall not be a 
matter of right but of the sound discretion of the Commission. Review by 
the Commission shall be granted only by affirmative vote of at least two 
of the Commissioners present and voting.
    (c) Grounds. Petitions for discretionary review shall be filed only 
upon one or more of the following grounds:
    (1) A finding or conclusion of material fact is not supported by 
substantial evidence;
    (2) A necessary legal conclusion is erroneous;
    (3) The decision is contrary to law or to the duly promulgated rules 
or decisions of the Commission;
    (4) A substantial question of law, policy, or discretion is 
involved; or
    (5) A prejudicial error of procedure was committed.
    (d) Requirements. Each issue shall be separately numbered and 
plainly and concisely stated, and shall be supported by detailed 
citations to the record, when assignments of error are based on the 
record, and by statutes, regulations, or other principal authorities 
relied upon. Except by permission of the Commission and for good cause 
shown, petitions for discretionary review shall not exceed 35 pages. 
Except for good cause shown, no assignment of error by any party shall 
rely on any question of fact or law upon which the Judge had not been 
afforded an opportunity to pass.
    (e) Statement in opposition to petition. A statement in opposition 
to a petition for discretionary review may be filed, but the opportunity 
for such filing shall not require the Commission to delay its action on 
the petition.
    (f) Motion for leave to exceed page limit. A motion requesting leave 
to exceed the page limit shall be received not less than 3 days prior to 
the date the petition for discretionary review is due to be filed, shall 
state the total number of pages proposed, and shall comply with 
Sec. 2700.10. A motion requesting an extension of page limit and a 
statement in opposition to such a motion may be filed and served by 
facsimile. Filing of a motion requesting an extension of page limit, 
including a facsimile transmission, is effective upon receipt. The 
motion and any statement in opposition shall include proof of service on 
all parties by a means of delivery no less expeditious than that used 
for filing the motion, except that if service by facsimile transmission 
is impossible, the filing party shall serve by a third-party commercial 
overnight delivery service or by personal delivery.
    (g) Scope of review. If a petition is granted, review shall be 
limited to the issues raised by the petition, unless the Commission 
directs review of additional issues pursuant to Sec. 2700.71.
    (h) Denial of petition. A petition not granted within 40 days after 
the issuance of the Judge's decision is deemed denied.

[58 FR 12164, Mar. 3, 1993, as amended at 64 FR 48713, Sept. 8, 1999]



Sec. 2700.71  Review by the Commission on its own motion.

    At any time within 30 days after the issuance of a Judge's decision, 
the Commission may, by the affirmative vote of at least two of the 
Commissioners present and voting, direct the case for review on its own 
motion. Review shall be directed only upon the ground that the decision 
may be contrary to law or Commission policy or that a novel question of 
policy has been presented. The Commission shall

[[Page 692]]

state in such direction for review the specific issue of law, Commission 
policy, or novel question of policy to be reviewed. Review shall be 
limited to the issues specified in such direction for review.



Sec. 2700.72  Unreviewed decisions.

    An unreviewed decision of a Judge is not a precedent binding upon 
the Commission.



Sec. 2700.73  Procedure for intervention.

    After the Commission has directed a case for review, a person may 
move to intervene. A motion to intervene shall be filed within 30 days 
after the Commission's direction for review unless the Commission, for 
good cause shown, allows a later filing. Intervention before the 
Commission shall not be a matter of right but of the sound discretion of 
the Commission. The movant shall set forth:
    (a) A legally protectible interest directly relating to the property 
or events that are the subject of the case on review;
    (b) A showing that the disposition of the proceeding may impair or 
impede his ability to protect that interest;
    (c) The reasons why the movant's interest is not adequately 
represented by parties already involved in the proceeding; and
    (d) The reasons why the movant should be excused for failing to file 
for intervention before the Judge. A motion for intervention shall also 
show that the granting of the motion will not unduly delay the 
proceeding or prejudice any party and shall explain why the movant's 
participation as an amicus curiae would be inadequate. If the Commission 
permits intervention, the Commission's order shall specify the time 
within which the intervenor's brief and any response or reply may be 
filed. In denying a motion to intervene, the Commission may 
alternatively permit the movant to participate in the proceeding as 
amicus curiae.



Sec. 2700.74  Procedure for participation as amicus curiae.

    (a) After the Commission has directed a case for review, any person 
may move to participate as amicus curiae. Such participation before the 
Commission shall not be a matter of right but of the sound discretion of 
the Commission. A motion for participation as amicus curiae shall set 
forth the interest of the movant and show that the granting of the 
motion will not unduly delay the proceeding or prejudice any party. The 
movant may conditionally attach its brief to its motion for 
participation as amicus curiae.
    (b) The brief of an amicus curiae shall be filed within the initial 
briefing period (see Sec. 2700.75(a)(1)) allotted to the party whose 
position the amicus curiae supports.
    (c) In the interest of avoiding duplication of argument, however, 
the Commission may permit the filing of an amicus curiae brief within 20 
days after the close of the briefing period set forth in 
Sec. 2700.75(a)(1), provided that the amicus curiae's motion for 
participation as an amicus curiae is filed within the initial briefing 
period (see Sec. 2700.75(a)(1)) allotted to the party whose position the 
amicus curiae supports. If the Commission grants any such motion, the 
Commission's order shall specify the time within which a response or 
reply may be made to the amicus curiae brief.

[58 FR 12164, Mar. 3, 1993, as amended at 64 FR 48714, Sept. 8, 1999]



Sec. 2700.75  Briefs.

    (a) Time to file--(1) Opening and response briefs. Within 30 days 
after the Commission grants a petition for discretionary review, the 
petitioner shall file his opening brief. If the petitioner desires, he 
may notify the Commission and all other parties within the 30-day period 
that his petition and any supporting memorandum are to constitute his 
brief. Other parties may file response briefs within 30 days after the 
petitioner's brief is served. If the Commission directs review on its 
own motion, all parties shall file any opening briefs within 30 days of 
the direction for review. In such cases, a party may file a response 
brief within 20 days after service of the opposing party's opening 
brief.
    (2) Reply briefs. In cases where the Commission has granted a 
petition for discretionary review, the petitioner may file a reply brief 
within 20 days after the service of the response briefs.

[[Page 693]]

    (b) Additional briefs. No further briefs shall be filed except by 
leave of the Commission.
    (c) Length of brief. Except by permission of the Commission and for 
good cause shown, opening and response briefs shall not exceed 35 pages, 
and reply briefs shall not exceed 15 pages. A brief of an amicus curiae 
shall not exceed 25 pages. A brief of an intervenor shall not exceed the 
page limitation applicable to the party whose position it supports in 
affirming or reversing the Judge, or if a different position is taken, 
such brief shall not exceed 25 pages. Tables of contents or authorities 
shall not be counted against the length of a brief.
    (d) Motion for extension of time. A motion for an extension of time 
to file a brief shall comply with Sec. 2700.9. The Commission may 
decline to accept a brief that is not timely filed.
    (e) Consequences of petitioner's failure to file brief. If a 
petitioner fails to timely file a brief or to designate the petition as 
his brief, the direction for review may be vacated.
    (f) Motion for leave to exceed page limit. A motion requesting leave 
to exceed the page limit for a brief shall be received not less than 3 
days prior to the date the brief is due to be filed, shall state the 
total number of pages proposed, and shall comply with Sec. 2700.10. A 
motion requesting an extension of page limit and a statement in 
opposition to such a motion may be filed and served by facsimile. Filing 
of a motion requesting an extension of page limit, including a facsimile 
transmission, is effective upon receipt. The motion and any statement in 
opposition shall include proof of service on all parties by a means of 
delivery no less expeditious than that used for filing the motion, 
except that if service by facsimile transmission is impossible, the 
filing party shall serve by a third-party commercial overnight delivery 
service or by personal delivery.
    (g) Number of copies. As provided in Sec. 2700.5(e), each party 
shall file seven copies of its brief. If the filing party is not 
represented by a lawyer or other representative, one copy shall be 
sufficient.

[58 FR 12164, Mar. 3, 1993, as amended at 64 FR 48714, Sept. 8, 1999]



Sec. 2700.76  Interlocutory review.

    (a) Procedure. Interlocutory review by the Commission shall not be a 
matter of right but of the sound discretion of the Commission. 
Procedures governing petitions for review of temporary reinstatement 
orders are found at Sec. 2700.45(f).
    (1) Review cannot be granted unless:
    (i) The judge has certified, upon his own motion or the motion of a 
party, that his interlocutory ruling involves a controlling question of 
law and that in his opinion immediate review will materially advance the 
final disposition of the proceeding; or
    (ii) The Judge has denied a party's motion for certification of the 
interlocutory ruling to the Commission, and the party files with the 
Commission a petition for interlocutory review within 30 days of the 
Judge's denial of such motion for certification.
    (2) In the case of either paragraph (a)(1)(i) or (ii) of this 
section, the Commission, by a majority vote of the full Commission or a 
majority vote of a duly constituted panel of the Commission, may grant 
interlocutory review upon a determination that the Judge's interlocutory 
ruling involves a controlling question of law and that immediate review 
may materially advance the final disposition of the proceeding. 
Interlocutory review by the Commission shall not operate to suspend the 
hearing unless otherwise ordered by the Commission. Any grant or denial 
of interlocutory review shall be by written order of the Commission.
    (b) Petitions for interlocutory review. Where the Judge denies a 
party's motion for certification of an interlocutory ruling and the 
party seeks interlocutory review, a petition for interlocutory review 
shall be in writing and shall not exceed 15 pages. A copy of the Judge's 
interlocutory ruling sought to be reviewed and of the Judge's order 
denying the petitioner's motion for certification shall be attached to 
the petition.
    (c) Briefs. When the Commission grants interlocutory review, the 
parties shall file briefs not to exceed 25 pages within 20 days of the 
order granting interlocutory review unless otherwise ordered by the 
Commission.

[[Page 694]]

    (d) Scope of review. Unless otherwise specified in the Commission's 
order granting interlocutory review, review shall be confined to the 
issues raised in the Judge's certification or to the issues raised in 
the petition for interlocutory review.

[58 FR 12164, Mar. 3, 1993, as amended at 64 FR 48714, Sept. 8, 1999; 67 
FR 18485, Apr. 16, 2002]



Sec. 2700.77  Oral argument.

    Oral argument may be ordered by the Commission on its own motion or 
on the motion of a party. A party requesting oral argument shall do so 
by separate motion no later than the time that it files its opening or 
response brief.



Sec. 2700.78  Reconsideration.

    (a) A petition for reconsideration must be filed with the Commission 
within 10 days after a decision or order of the Commission. Any response 
must be filed with the Commission within 10 days of service of the 
petition.
    (b) Unless the Commission orders otherwise, the filing of a petition 
for reconsideration shall not stay the effect of a decision or order of 
the Commission and shall not affect the finality of a decision or order 
for purposes of review in the courts.



Sec. 2700.79  Correction of clerical errors.

    The Commission may correct clerical errors in its decisions at any 
time.



                        Subpart I--Miscellaneous



Sec. 2700.80  Standards of conduct; disciplinary proceedings.

    (a) Standards of conduct. Individuals practicing before the 
Commission and Commission Judges shall conform to the standards of 
ethical conduct required of practitioners in the courts of the United 
States.
    (b) Grounds. Disciplinary proceedings may be instituted against 
anyone who is practicing or has practiced before the Commission on 
grounds that such person has engaged in unethical or unprofessional 
conduct; has failed to comply with these rules or an order of the 
Commission or its Judges; has been disbarred or suspended by a court or 
administrative agency; or has been disciplined by a Judge under 
paragraph (e) of this section.
    (c) Disciplinary proceedings shall be subject to the following 
procedure:
    (1) Disciplinary referral. Except as provided in paragraph (e) of 
this section, a Judge or other person having knowledge of circumstances 
that may warrant disciplinary proceedings against an individual who is 
practicing or has practiced before the Commission shall forward to the 
Commission for action such information in the form of a written 
disciplinary referral. Whenever the Commission receives a disciplinary 
referral, the matter shall be assigned a docket number.
    (2) Inquiry by the Commission. The Commission shall conduct an 
inquiry concerning a disciplinary referral and shall determine whether 
disciplinary proceedings are warranted. The Commission may require 
persons to submit affidavits setting forth their knowledge of relevant 
circumstances. If the Commission determines that disciplinary 
proceedings are not warranted, it shall issue an order terminating the 
referral.
    (3) Transmittal and hearing. Whenever, as a result of its inquiry, 
the Commission, by a majority vote of the full Commission or a majority 
vote of a duly constituted panel of the Commission, determines that the 
circumstances warrant a hearing, the Commission's Chief Administrative 
Law Judge shall assign the matter to a Judge, other than the referring 
Judge, for hearing and decision. The Commission shall specify the 
disciplinary issues to be resolved through hearing and may designate 
counsel to prosecute the matter before the Judge. The Judge shall 
provide the opportunity for reply and hearing on the specific 
disciplinary matters at issue. The individual shall have the opportunity 
to present evidence and cross-examine witnesses. The Judge's decision 
shall include findings of fact and conclusions of law and either an 
order dismissing the proceedings or an appropriate disciplinary order, 
which may include reprimand, suspension, or disbarment from practice 
before the Commission.
    (d) Appeal from Judge's decision. Any person adversely affected or 
aggrieved by the Judge's decision is entitled to

[[Page 695]]

review by the Commission. A person seeking such review shall file a 
notice of appeal with the Commission within 30 days after the issuance 
of the Judge's decision.
    (e) Misconduct before a Judge. A Judge may order the removal of any 
person, including a representative of a party, who engages in disruptive 
conduct in the Judge's presence. If a representative is ordered removed, 
the Judge shall allow the party represented by the person a reasonable 
time to engage another representative. In all instances of removal of a 
person for disruptive conduct, the Judge shall place in the record a 
written statement on the matter. A party aggrieved by a Judge's order of 
removal may appeal by requesting interlocutory review pursuant to 
Sec. 2700.76 or, alternatively, may assign the Judge's ruling as error 
in a petition for discretionary review.



Sec. 2700.81  Recusal and disqualification.

    (a) Recusal. A Commissioner or a Judge may recuse himself from a 
proceeding whenever he deems such action appropriate.
    (b) Request to withdraw. A party may request a Commissioner or a 
Judge to withdraw on grounds of personal bias or other disqualification. 
A party shall make such a request by promptly filing an affidavit 
setting forth in detail the matters alleged to constitute personal bias 
or other grounds for disqualification.
    (c) Procedure if Commissioner or Judge does not withdraw. If, upon 
being requested to withdraw pursuant to paragraph (b) of this section, 
the Commissioner or the Judge does not withdraw from the proceeding, he 
shall so rule upon the record, stating the grounds for his ruling. If 
the Judge does not withdraw, he shall proceed with the hearing, or, if 
the hearing has been completed, he shall proceed with the issuance of 
his decision, unless the Commission stays the hearing or further 
proceedings upon the granting of a petition for interlocutory review of 
the Judge's decision not to withdraw.



Sec. 2700.82  Ex parte communications.

    (a) For purposes of this section, the following definitions shall 
apply:
    (1) Ex parte communication means an oral or written communication 
not on the public record concerning any matter or proceeding with 
respect to which reasonable prior notice to all parties has not been 
given. A status or informational request does not constitute an ex parte 
communication.
    (2) Status or informational request means a request for a status 
report on any matter or proceeding or a request concerning filing 
requirements or other docket information.
    (3) Merits of a case, which shall be broadly construed by the 
Commission, includes discussion of the factual or legal issues in a case 
or resolution of those issues.
    (b) Prohibited ex parte communication. There shall be no ex parte 
communication with respect to the merits of a case not concluded, 
between the Commission, including any member, Judge, officer, or agent 
of the Commission who is employed in the decisional process, and any of 
the parties, intervenors, representatives, amici, or other interested 
persons.
    (c) Procedure in case of violation. (1) In the event a prohibited ex 
parte communication occurs, the Commission or the Judge may make such 
orders or take such action to remedy the effect of the ex parte 
communication as circumstances require. Upon notice and hearing, the 
Commission may take disciplinary action against any person who knowingly 
and willfully makes or causes to be made a prohibited ex parte 
communication.
    (2) A memorandum setting forth all ex parte communications, whether 
prohibited or not, shall be placed on the public record of the 
proceeding.
    (d) Inquiries. Any inquiries concerning filing requirements, the 
status of cases before the Commission, or docket information shall be 
directed to the Office of General Counsel or the Docket Office of the 
Federal Mine Safety and Health Review Commission, 601 New Jersey Avenue, 
NW., Suite 9500, Washington, DC 20001.

[58 FR 12164, Mar. 3, 1993, as amended at 67 FR 60862, Sept. 27, 2002]



Sec. 2700.83  Authority to sign orders.

    The Chairman or other designated Commissioner is authorized to sign 
on

[[Page 696]]

behalf of the Commissioners, orders disposing of the following 
procedural motions: motions for extensions of time, motions for 
permission to file briefs in excess of page limits, motions to accept 
late filed briefs, motions to consolidate, motions to expedite 
proceedings, motions for oral argument, and similar procedural motions. 
A person aggrieved by such an order may, within 10 days of the date of 
the order, file a motion requesting that the order be signed by the 
participating Commissioners.



Sec. 2700.84  Effective date.

    These rules are effective on May 3, 1993 and apply to cases 
initiated after they take effect. They also apply to further proceedings 
in cases then pending, except to the extent that application of the 
rules would not be feasible, or would work injustice, in which event the 
former rules of procedure apply.



PART 2701--GOVERNMENT IN THE SUNSHINE ACT REGULATIONS--Table of Contents




Sec.
2701.1  Purpose and scope.
2701.2  Open meetings policy; closure of meetings.
2701.3  Announcement of meetings.
2701.4  Request to open or close meeting.
2701.5  Petition for review.
2701.6  Discussion during open meetings.
2701.7  Expedited closing procedure.

    Authority: Sec. 113, Federal Mine Safety and Health Act of 1977, 
Pub. L. 95-165 (30 U.S.C. 823).

    Source: 44 FR 2575, Jan. 12, 1979, unless otherwise noted.



Sec. 2701.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to implement the Government 
in the Sunshine Act, 5 U.S.C. 552b. The rules in this part are intended 
to open, to the extent practicable, the meetings of the Commission to 
public observation while preserving the Commission's ability to fulfill 
its responsibilities and respect the interests of persons in 
confidential consideration of sensitive matters.
    (b) Scope. This part applies to all meetings of the Commission. A 
``meeting of the Commission'' means a joint deliberation in person or by 
conference telephone call of at least a majority of either the members 
of the Commission or of a panel of three or more Commissioners that 
determines or results in the joint conduct or disposition of official 
Commission business, but does not include (1) deliberations regarding a 
decision to open or close a meeting, to withhold information about a 
meeting, and the circumstances of meetings, such as their time, place, 
and subject matter, and (2) the individual deliberations of Commission 
members of matters considered upon circulated documents or other 
notation procedure.



Sec. 2701.2  Open meetings policy; closure of meetings.

    (a) Policy. Commission meetings will generally be open to public 
observation, including meetings concerning the disposition by the 
Commission of a formal adjudication. See 5 U.S.C. 522b(c)(10).
    (b) Closure. Meetings may be closed, or certain information about a 
meeting may not be disclosed under the circumstances contemplated by 5 
U.S.C. 522b(c)(1)-(10), and under the procedures specified by 5 U.S.C. 
552b (d) and (f). Commission employees may attend closed meetings of the 
commission unless the notice of a closed meeting states otherwise.



Sec. 2701.3  Announcement of meetings.

    (a) Generally. The Commission shall publicly announce and submit to 
the Federal Register at least 7 days before a meeting, the time, place, 
subject matter of a meeting, whether it is to be open or closed, and the 
name and phone number of the Commission employee who will respond to 
requests for information about the meeting. The description of the 
subject matter of a meeting at which the Commission will consider 
adjudicatory matters, shall include the names and docket numbers of the 
cases to be considered. The Commission shall also contact, by phone or 
mail, the parties to the cases to be considered at the meeting, shall 
post a copy of a notice of the meeting at the Office of Public 
Information, shall mail notices to persons who have requested inclusion 
of their names on a meeting mailing list, and may issue press releases.

[[Page 697]]

    (b) Shorter notice. If a majority of the members of the Commission 
or a panel of three or more Commissioners determines by a recorded vote 
that pressing Commission business requires that a meeting be called in 
less than 7 days, the announcement required by paragraph (a) of this 
section shall be made at the earliest practicable time.
    (c) Changes in time, place, subject matter, and decision whether to 
open or close after public announcement of meeting. If the time or place 
of a meeting publicly announced is changed, or an item to be considered 
at such a meeting is to be deleted, the change or deletion shall be 
publicly announced without a recorded vote at the earliest practicable 
time in the manner required by paragraph (a) of this section. The 
subject matter of a meeting publicly announced shall not be expanded and 
the decision to open or close such a meeting shall not be changed unless 
a majority of the members of the Commission or if a panel of three or 
more Commissioners determines by a recorded vote that agency business so 
requires and that no earlier announcement of the change was possible; 
the Commission shall publicly announce such a change and the vote of 
each member upon the change at the earliest practicable time.



Sec. 2701.4  Request to open or close meeting.

    Any person may request that the Commission open a meeting that it 
has earlier decided to close. Any person whose interest may be directly 
affected by the opening of a meeting may request that the meeting be 
closed. Two copies of a request shall be filed in writing with the 
Executive Director of the Commission at the earliest practicable time, 
and no later than one hour before the meeting. A request to close shall 
state the interest of the person that may be adversely affected. The 
Commission shall take a recorded vote on the request if one member 
desires that it do so. The Executive Director shall inform the 
requesting person of whether a vote was taken, and, if so, its outcome. 
Requests shall be addressed as follows: Sunshine Act Request, Office of 
the Executive Director, Federal Mine Safety and Health Review 
Commission, 601 New Jersey Avenue, NW., Suite 9500, Washington, DC 
20001.

[44 FR 2575, Jan. 12, 1979, as amended at 67 FR 60862, Sept. 27, 2002]



Sec. 2701.5  Petition for review.

    Any person may petition the Commission to review any action he 
alleges to be in violation of this part or 5 U.S.C. 552b that was taken 
by any employee or member of the Commission. The petition shall be in 
writing and shall be filed with the Executive Director within 30 days of 
the alleged violation. The Commission shall consider and rule upon the 
petition with expedition.



Sec. 2701.6  Discussion during open meetings.

    Deliberations, discussions, comments, statements, or observations 
made during the course of an open meeting do not constitute actions of 
the Commission, nor do they necessarily represent the basis for any 
Commission action. Comments made by a Commissioner or an employee of the 
Commission may be advanced for purposes of discussion or argument, or as 
an aside, and may not reflect the views or ultimate position of that 
Commissioner or employee. Reasons for decisions stated by a Commissioner 
at an open meeting may be later changed by that Commissioner, as may a 
Commissioner's vote. For these reasons, persons who choose to act on the 
basis of discussions at open meetings do so entirely at their own risk 
and without any assurance that the Commission's final decisions will be 
reflective of the discussions or initial vote.



Sec. 2701.7  Expedited closing procedure.

    (a) Policy. Although it is the general policy of the Commission to 
open to the public meetings that may be subject to closure, including 
meetings concerning adjudication of cases, the Commission may find it 
necessary in the public interest to close meetings. The purpose of this 
section is to provide an expedited closing procedure under 5 U.S.C. 
552b(d)(4). The Commission has determined that, inasmuch as the 
Commission's responsibilities are almost entirely adjudicatory, a 
majority of its meetings may properly be closed under

[[Page 698]]

5 U.S.C. 552b(c)(10). Although the Commission has to date held few 
meetings, those that have been held concerned the adjudication of cases 
and could properly have been closed.
    (b) Procedure. A meeting may be closed if a majority of either the 
members of the Commission or of a panel of three or more Commissioners 
votes by recorded vote at the beginning of such a meeting to close it to 
the public. The record of the vote shall reflect the vote of each voting 
member and shall be made available to the public. A public announcement 
of the time, place, and subject matter of the meeting shall be made at 
the earliest practicable time, except to the extent that such 
information is exempt from disclosure under 5 U.S.C. 552b(c). Section 
2701.3 does not apply to meetings closed under this section.



PART 2702--REGULATIONS IMPLEMENTING THE FREEDOM OF INFORMATION ACT--Table of Contents




Sec.
2702.1  Purpose and scope.
2702.2  Location of offices.
2702.3  Requests for information.
2702.4  Materials available.
2702.5  Fees applicable--catagories of requesters.
2702.6  Fee schedule.
2702.7  No fees; waiver or reduction of fees.
2702.8  Advance payment of fees; interest; debt collection procedures.

    Authority: Sec. 113, Federal Mine Safety and Health Act of 1977, 
Pub. L. 95-165 (30 U.S.C. 801 et seq.); 5 U.S.C. 552; Pub. L. 104-231, 
October 2, 1996, 110 Stat. 3048.

    Source: 45 FR 33607, May 20, 1980, unless otherwise noted.



Sec. 2702.1  Purpose and scope.

    The Federal Mine Safety and Health Review Commission (Commission) is 
an independent agency with authority to adjudicate contests between the 
Mine Safety and Health Administration of the U.S. Department of Labor 
and private parties, as well as certain disputes solely between private 
parties, arising under the Federal Mine Safety and Health Act of 1977, 
30 U.S.C. 801 et seq. The purpose of these rules is to establish 
procedures for implementing the Freedom of Information Act, 5 U.S.C. 
552, as amended by the Electronic Freedom of Information Act Amendments 
of 1996, Pub. L. No. 104-231, 110 Stat. 3048; to provide guidance for 
those seeking to obtain information from the Commission; and to make all 
designated information readily available to the public. Additional 
guidance on obtaining information from the Commission can be found in 
the document entitled ``Reference Guide for Obtaining Information from 
the Federal Mine Safety and Health Review Commission,'' which is 
available upon request from the Commission. The scope of these rules may 
be limited to requests for information that is not presently the subject 
of litigation before the Commission and that is not otherwise governed 
by the Commission's Procedural Rules at 29 CFR part 2700.

[62 FR 55334, Oct. 24, 1997]



Sec. 2702.2  Location of offices.

    The Commission maintains its Headquarters office at 601 New Jersey 
Avenue, NW., Suite 9500, Washington, DC 20001. It has two offices for 
Administrative Law Judges, one at 601 New Jersey Avenue, NW., Suite 
9500, Washington, DC 20001, and the other at 1244 Speer Boulevard, Suite 
280, Denver, Colorado 80204-3582.

[67 FR 60862, Sept. 27, 2002]



Sec. 2702.3  Requests for information.

    (a) All requests for information should be in writing and should be 
mailed or delivered to Executive Director, Federal Mine Safety and 
Health Review Commission, 601 New Jersey Avenue, NW., Suite 9500, 
Washington, DC 20001. The words ``Freedom of Information Act Request'' 
should be printed on the face of the envelope. Requests for information 
shall describe the particular record requested to the fullest extent 
possible and specify the preferred form or format (including electronic 
formats) of the response. The Commission shall accommodate requesters as 
to form or format if the record is readily reproducible in the requested 
form or format. When requesters do not specify the preferred form or 
format of the response, the Commission shall respond in the form or 
format in which the record is most accessible to the Commission.

[[Page 699]]

    (b) A determination whether to comply with the request will be made 
by the Executive Director, with the consent of a majority of the 
Commissioners. In the event of a tie vote of the Commissioners regarding 
the Executive Director's determination whether to comply with a request, 
the Executive Director's recommendation will be deemed approved by the 
Commission. Except in unusual circumstances, as described in paragraph 
(c) of this section the determination will be made within 20 working 
days of receipt. Appeals of adverse decisions may be made, in writing, 
to the Chairman of the Commission, at the same address, within 20 
working days. Determination of appeals will be made by the Chairman 
within 20 working days after receipt. If the records to be disclosed are 
not provided with the initial letter setting forth the determination as 
to the request, the records will be sent as soon as possible thereafter.
    (c)(1) In unusual circumstances as described in this paragraph, when 
additional time is needed to respond to the initial request, the 
Commission shall acknowledge the request in writing within the 20-day 
period, describe the circumstances requiring the delay, and indicate the 
anticipated date for a substantive response that may not exceed 10 
additional working days, except as provided in paragraph (d) of this 
section. With respect to a request for which a written notice has 
extended the time limit by 10 additional working days, and the 
Commission determines that it cannot make a response determination 
within that additional 10 working day period, the requester will be 
notified and provided an opportunity to limit the scope of the request 
so that it may be processed within the extended time limit, or an 
opportunity to arrange an alternative time frame for processing the 
request or a modified request. Refusal by the requester to reasonably 
modify the request or arrange for an alternative time frame shall be 
considered as a factor in determining whether exceptional circumstances 
exist for purposes of paragraph (d) of this section. For purposes of 
this paragraph, ``unusual circumstances'' that may justify a delay are:
    (i) The need to search for and collect the requested records from 
other facilities that are separate from the office processing the 
request;
    (ii) The need to search for, collect, and appropriately examine a 
voluminous amount of separate and distinct records that are requested in 
a single request;
    (iii) The need for consultation, which shall be conducted with all 
practicable speed, with another agency having a substantial interest in 
the determination of the request, or among two or more components of the 
agency having substantial subject matter interest in the request; or
    (iv) The need to consult with the submitter of requested 
information.
    (2) Whenever it reasonably appears that certain requests by the same 
requester, or a group of requesters acting in concert, actually 
constitute a single request that would otherwise satisfy the unusual 
circumstances specified in this paragraph, and the requests involve 
clearly related matters, such requests may be aggregated for purposes of 
this paragraph. Multiple requests involving unrelated matters will not 
be aggregated.
    (d) In the event that the Commission is unable to comply with the 
time limits for responding to a request specified in paragraphs (a) and 
(c) of this section, it may request additional time to complete its 
review of the records, and request a court to retain jurisdiction and 
allow it such additional time to complete its review, if it can show 
that exceptional circumstances exist and that it is exercising due 
diligence in responding to the request. For purposes of this paragraph, 
``exceptional circumstances'' do not include a delay that results from a 
predictable workload of requests, unless the agency demonstrates 
reasonable progress in reducing its backlog of pending requests. Refusal 
by a person to reasonably modify the scope of a request or arrange an 
alternative time frame for processing the request (or a modified 
request) under paragraph (c) of this section shall be considered as a 
factor in determining whether exceptional circumstances exist for 
purposes of this paragraph.

[[Page 700]]

    (e)(1) A person requesting records from the Commission pursuant to 
this section may request expedited processing of his request in cases in 
which he can demonstrate a compelling need for the records requested. 
For purposes of this paragraph a compelling need means:
    (i) That a failure to obtain the requested records on an expedited 
basis could reasonably be expected to pose an imminent threat to the 
life or physical safety of an individual; or
    (ii) The information is urgently needed by a person primarily 
engaged in disseminating information in order to inform the public 
concerning actual or alleged Federal Government activity.
    (2) A demonstration of compelling need by a person making a request 
for expedited processing shall be made by a statement certified by such 
person to be true and correct to the best of his knowledge and belief. 
Notice of the determination whether to grant expedited processing in 
response to a requester's claim of compelling need shall be provided to 
the person making the request within 10 calendar days after receipt of 
the request. The Commission will provide expeditious consideration of 
administrative appeals of determinations whether to provide expedited 
processing. Once a determination has been made to grant expedited 
processing, the Commission will process the request as soon as 
practicable.
    (f) In denying a request for records, in whole or in part, the 
Commission shall make a reasonable effort to estimate the volume of the 
records denied, and provide this estimate to the person making the 
request, unless providing such an estimate would harm an interest 
protected by the exemption pursuant to which the request is denied.
    (g) Any reasonably segregable portion of a record shall be provided 
to the person requesting it after the deletion of any exempt portions of 
the record. The amount of information deleted shall be indicated on the 
released portion of the record, at the place in the record the deletion 
is made if technically feasible, unless indicating the extent of the 
deletion would harm an interest protected by the exemption pursuant to 
which the deletion is made.

[62 FR 55335, Oct. 24, 1997, as amended at 67 FR 60863, Sept. 30, 2002]



Sec. 2702.4  Materials available.

    Materials which may be made promptly available from the Commission 
include, but are not limited to:
    (a) A guide for requesting records or publicly available information 
from the Commission;
    (b) Final opinions, including concurring and dissenting opinions, as 
well as orders, made in the adjudication of cases;
    (c) Indices providing identifying information to the public as to 
the opinions described in the preceding paragraph which may be relied 
upon, used, or cited as precedent;
    (d) Statements of policy and interpretations which have been adopted 
by the Commission and are not published in the Federal Register.

[62 FR 55336, Oct. 24, 1997]



Sec. 2702.5  Fees applicable--categories of requesters.

    (a) When documents are requested for commercial use, requesters will 
be assessed the full direct costs of searching for, reviewing for 
release, and duplicating the records sought.
    (b) When records are being requested by educational or noncommercial 
scientific institutions whose purpose is scholarly or scientific 
research, and not for commercial use, the requester will be assessed 
only for the cost of duplicating the records sought, but no charge will 
be made for the first 100 paper pages reproduced.
    (c) When records are being requested by representatives of the news 
media, the requester will be assessed only for the cost of duplicating 
the records sought, but no charge will be made for the first 100 paper 
pages reproduced.
    (d) For any other request not described in paragraphs (a) through 
(c) of this section, the requester will be assessed the full direct 
costs of searching for and duplicating the records sought, except that 
the first two hours of manual search time and the first 100 paper pages 
of reproduction shall be furnished without charge.

[[Page 701]]

    (e) For purposes of paragraphs (b) through (d) of this section, 
whenever it reasonably appears that a requester, or a group of 
requesters acting in concert, is attempting to break down a single 
request into a series of requests relating to the same subject matter 
for the purpose of evading the assessment of fees, such requests will be 
aggregated and fees assessed accordingly.

[54 FR 3022, Jan. 23, 1989, as amended at 62 FR 55336, Oct. 24, 1997]



Sec. 2702.6  Fee schedule.

    (a) Search fee. The fee for searching for information and records 
shall be $15 per hour for clerical time and $30 per hour for 
professional time. Fees for searches of computerized records shall be 
the actual cost to the Commission but shall not exceed $300 per hour. 
This fee includes machine time and that of the operator and clerical 
personnel. The fee for computer printouts shall be $.40 per page. If 
search charges are likely to exceed $25, the requester shall be notified 
of the estimated amount of fees, unless the requester has indicated in 
advance his willingness to pay fees as high as those anticipated. Time 
spent on unsuccessful searches shall be fully charged.
    (b) Review fee. The review fee shall be charged for the initial 
examination by the Executive Director of documents located in response 
to a request in order to determine if they may be withheld from 
disclosure, and for the deletion of portions that are exempt from 
disclosure, but shall not be charged for review by the Chairman or the 
Commissioners. See Sec. 2702.3. The review fee is $45 per hour.
    (c) Duplicating fee. The copy fee for each page of paper up to 8\1/
2\x14 shall be $.15 per copy per page. Any private 
section services required will be assessed at the charge to the 
Commission. The fee for copying computer tapes or discs, photographs, 
and other nonstandard documents will be the actual direct cost incurred 
by the Commission. If duplication charges are likely to exceed $25, the 
requester shall be notified of the estimated amount of fees, unless the 
requester has indicated in advance his willingness to pay fees as high 
as those anticipated.

[54 FR 3022, Jan. 23, 1989, as amended at 62 FR 55336, Oct. 24, 1997]



Sec. 2702.7  No fees; waiver or reduction of fees.

    (a) No fees shall be charged to any requester, including commercial 
use requesters, if the anticipated cost of processing and collecting the 
fee would be equal to or greater than the fee itself. Accordingly, the 
Commission has determined that fees of less than $10 shall be waived.
    (b) Documents shall be furnished without any charge, or at a charge 
reduced below the fees otherwise applicable, if disclosure of the 
information is determined to be in the public interest because it is 
likely to contribute significantly to public understanding of the 
operations or activities of the government and is not primarily in the 
commercial interest of the requester.
    (1) The following six factors will be employed in determining when 
such fees shall be waived or reduced:
    (i) The subject of the request: Whether the subject of the requested 
records concerns ``the operations or activities of the government'';
    (ii) The informative value of the information to be disclosed: 
Whether the disclosure is ``likely to contribute'' to an understanding 
of government operations or activities;
    (iii) The contribution to an understanding of the subject by the 
general public likely to result from disclosure: Whether disclosure of 
the requested information will contribute to ``public understanding'';
    (iv) The significance of contribution to public understanding: 
Whether the disclosure is likely to contribute ``significantly'' to 
public understanding of government operations or activities;
    (v) The existence and magnitude of a commercial interest: Whether 
the requester has a commercial interest that would be furthered by the 
requested disclosure; and, if so
    (vi) The primary interest in disclosure: Whether the magnitude of 
the identified commercial interest of the requester is sufficiently 
large, in comparison with the public interest in disclosure, that 
disclosure is ``primarily

[[Page 702]]

in the commerical interest of the requester.''
    (2) The Executive Director, upon request, shall determine whether a 
waiver or reduction of fees is warranted. Requests shall be made 
concurrently with requests for information under Sec. 2702.3. Appeals of 
adverse decisions may be made to the Chairman within 5 working days. 
Determination of appeals will be made by the Chairman within 10 working 
days of receipt.

[54 FR 3022, Jan. 23, 1989, as amended at 62 FR 55336, Oct. 24, 1997]



Sec. 2702.8  Advance payment of fees; interest; debt collection procedures.

    (a) Advance payment of fees generally will not be required. However, 
an advance payment (before work is commenced or continued on a request) 
may be required if the charges are likely to exceed $250.
    (b) Requesters who have previously failed to pay a fee charged in 
timely fashion (i.e., within 30 days of the date of billing) may be 
required first to pay that amount plus any applicable interest (or 
demonstrate that the fee has been paid) and then make an advance payment 
of the full amount of the estimated fee before the new or pending 
request is processed.
    (c) Interest charges may be assessed on any unpaid bill starting on 
the 31st day following the day on which the billing was sent at the rate 
presecribed in 31 U.S.C. 3717 and will accrue from the date of billing.
    (d) The Debt Collection Act of 1982, Pub. L. 97-365, including 
disclosure to consumer credit reporting agencies and the use of 
collection agencies will be utilized to encourage payment where 
appropriate.

[54 FR 3023, Jan. 23, 1989]



PART 2703--EMPLOYEE RESPONSIBILITIES AND CONDUCT--Table of Contents




Sec.
2703.1  Cross-reference to employee ethical conduct standards and 
          financial disclosure regulations.
2703.2  Designated agency ethics official and alternate designated 
          agency ethics official.

    Authority: 5 U.S.C. 7301; 5 CFR 2638.202.

    Source: 61 FR 39872, July 31, 1996, unless otherwise noted.



Sec. 2703.1  Cross-reference to employee ethical conduct standards and financial disclosure regulations.

    Members and employees of the Federal Mine Safety and Review 
Commission are subject to the executive branch-wide Standards of Ethical 
Conduct at 5 CFR part 2635; the Commission's regulations at 5 CFR part 
8401, which supplement the executive branch-wide standards; and the 
executive branch-wide financial disclosure regulations at 5 CFR part 
2634.



Sec. 2703.2  Designated agency ethics official and alternate designated agency ethics official.

    The Chairman shall appoint an individual to serve as the designated 
agency ethics official, and an individual to serve in an acting capacity 
in the absence of the primary designated agency ethics official 
(alternate designated agency ethics official), to coordinate and manage 
the Commission's ethics program.



PART 2704--IMPLEMENTATION OF THE EQUAL ACCESS TO JUSTICE ACT IN COMMISSION PROCEEDINGS--Table of Contents




                      Subpart A--General Provisions

Sec.
2704.100  Purpose of these rules.
2704.101  Definitions.
2704.102  Applicability.
2704.103  Proceedings covered.
2704.104  Eligibility of applicants.
2704.105  Standards for awards.
2704.106  Allowable fees and expenses.
2704.107  Rulemaking on maximum rates for attorney fees.
2704.108  Awards.
2704.109  Delegations of authority.

             Subpart B--Information Required From Applicants

2704.201  Contents of application--in general.
2704.202  Contents of application--where the applicant has prevailed.
2704.203  Contents of application--where the Secretary's demand is 
          substantially in excess of the judgment finally obtained and 
          unreasonable.
2704.204  Confidential financial information.
2704.205  Documentation of fees and expenses.

[[Page 703]]

2704.206  When an application may be filed.

           Subpart C--Procedures for Considering Applications

2704.301  Filing and service of documents.
2704.302  Answer to application.
2704.303  Reply.
2704.304  Comments by other parties.
2704.305  Settlement.
2704.306  Further proceedings on the application.
2704.307  Decision of administrative law judge.
2704.308  Commission review.
2704.309  Judicial review.
2704.310  Payment of award.

    Authority: (5 U.S.C. 504(c)(1); Pub. L. 99-80, 99 Stat. 183; Pub. L. 
104-121, 110 Stat. 862.

    Source: 47 FR 10001, Mar. 9, 1982, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 2704.100  Purpose of these rules.

    The Equal Access to Justice Act, 5 U.S.C. 504, provides for the 
award of attorney fees and other expenses to eligible individuals and 
entities who are parties to certain administrative proceedings (called 
``adversary adjudications'') before this Commission. An eligible party 
may receive an award when it prevails over the Department of Labor, Mine 
Safety and Health Administration (MSHA), unless the Secretary of Labor's 
position in the proceeding was substantially justified or special 
circumstances make an award unjust. In addition to the foregoing ground 
of recovery, an eligible party may receive an award if the demand of the 
Secretary is substantially in excess of the decision of the Commission 
and unreasonable, unless the applicant party has committed a willful 
violation of law or otherwise acted in bad faith, or special 
circumstances make an award unjust. The rules in this part describe the 
parties eligible for each type of award. They also explain how to apply 
for awards, and the procedures and standards that this Commission will 
use to make the awards.

[63 FR 63175, Nov. 12, 1998]



Sec. 2704.101  Definitions.

    The following terms shall have the following meaning when used in 
these rules:
    Adjudication Officer, as defined in 5 U.S.C. 504(b)(1)(D), means the 
Commission's administrative law judge who presided at the underlying 
adversary adjudication between the applicant and the Secretary of Labor. 
For the sake of clarity, references hereafter shall be to 
``administrative law judge''.
    The Act means the Equal Access to Justice Act 5 U.S.C. 504;
    The Commission means the Federal Mine Safety and Health Review 
Commission, created as an independent agency under 30 U.S.C. 823;
    The Mine Act means the Federal Mine Safety and Health Act of 1977, 
30 U.S.C. 801 et seq;
    The Secretary means the Secretary of Labor or his designee.



Sec. 2704.102  Applicability.

    Section 2704.105(a) applies to adversary adjudications before the 
Commission pending or commenced on or after August 5, 1984. Section 
2704.105(b) applies to adversary adjudications commenced on or after 
March 29, 1996.

[63 FR 63175, Nov. 12, 1998]



Sec. 2704.103  Proceedings covered.

    (a) The Act applies to adversary adjudications conducted by this 
Commission. These are adjudications before the Commission arising under 
the Mine Act in which the position of the Secretary of Labor is 
represented by an attorney or other representative who enters an 
appearance and participates in the proceeding. For this Commission, the 
types of proceedings generally covered include:
    (1) Contests of citations or orders issued under section 104 or 107 
of the Mine Act (30 U.S.C. 814, 817);
    (2) Contests of penalties proposed under section 105 (a) and (b) of 
the Mine Act (30 U.S.C. 815(a), (b));
    (3) Challenges to claims of discrimination under section 105(c) of 
the Mine Act (30 U.S.C. 815(c)) where the Secretary of Labor represents 
the miner;
    (b) The Commission may also designate a proceeding not listed in 
paragraph (a) of this section as an adversary adjudication for purposes 
of the Act by so stating in an order initiating

[[Page 704]]

the proceeding or designating the matter for hearing. The Commission's 
failure to designate a proceeding as an adversary adjudication shall not 
preclude the filing of an application by a party who believes the 
proceeding is covered by the Act; whether the proceeding is covered will 
then be an issue for resolution in proceedings on the application.
    (c) If a proceeding includes both matters covered by the Act and 
matters specifically excluded from coverage, any award made will include 
only fees and expenses related to covered issues.



Sec. 2704.104  Eligibility of applicants.

    (a) To be eligible for an award of attorney fees and other expenses 
under the Act, the applicant must be a party to the adversary 
adjudication for which it seeks an award. The term ``party'' is defined 
in 5 U.S.C. 551(3). The applicant must show that it satisfies the 
conditions of eligibility set out in this subpart and in subpart B.
    (b) For purposes of awards under Sec. 2704.105(a) for prevailing 
parties:
    (1) The employees of an applicant include all persons who regularly 
perform services for remuneration for the applicant, under the 
applicant's direction and control. Part-time employees shall be included 
on a proportional basis;
    (2) The net worth and number of employees of the applicant and all 
of its affiliates shall be aggregated to determine eligibility. Any 
individual, corporation or other entity that directly or indirectly 
controls or owns a majority of the voting shares or other interest of 
the applicant, or any corporation or other entity of which the applicant 
directly or indirectly owns or controls a majority of the voting shares 
or other interest, will be considered an affiliate for purposes of this 
part unless the administrative law judge determines that such treatment 
would be unjust and contrary to the purposes of the Act in light of the 
actual relationship between the affiliated entities. In addition, the 
administrative law judge may determine that financial relationships of 
the applicant other than those described in this paragraph constitute 
special circumstances that would make an award unjust.
    (3) An applicant who owns an unincorporated business will be 
considered as an ``individual'' rather than a ``sole owner of an 
unincorporated business'' if the issues on which the applicant prevails 
are related primarily to personal interests rather than to business 
interests.
    (4) The types of eligible applicants are as follows:
    (i) An individual with a net worth of not more than $2 million;
    (ii) The sole owner of an unincorporated business who has a net 
worth of not more than $7 million, including both personal and business 
interests, and employs not more than 500 employees;
    (iii) Any other partnership, corporation, association, unit of local 
government, or public or private organization with a net worth of not 
more than $7 million and not more than 500 employees.
    (c) For the purposes of awards under Sec. 2704.105(b), eligible 
applicants are small entities as defined in 5 U.S.C. 601, subject to the 
annual-receipts and number-of-employees standards as set forth by the 
Small Business Administration at 13 CFR Part 121.
    (d) For the purpose of eligibility, the net worth, number of 
employees, or annual receipts of an applicant, as applicable, shall be 
determined as of the date the underlying proceeding was initiated under 
the Mine Act.
    (e) An applicant that participates in a proceeding primarily on 
behalf of one or more other persons or entities that would be ineligible 
is not itself eligible for an award.

[47 FR 10001, Mar. 9, 1982, as amended at 54 FR 6285, Feb. 9, 1989, 63 
FR 63175, Nov. 12, 1998]



Sec. 2704.105  Standards for awards.

    (a) A prevailing applicant may receive an award of fees and expenses 
incurred in connection with a proceeding, or in a significant and 
discrete substantive portion of the proceeding, unless the position of 
the Secretary was substantially justified. The position of the Secretary 
includes, in addition to the position taken by the Secretary in the 
adversary adjudication, the action or failure to act by the Secretary 
upon which the adversary adjudication is

[[Page 705]]

based. The burden of proof that an award should not be made to a 
prevailing applicant because the Secretary's position was substantially 
justified is on the Secretary, who may avoid an award by showing that 
his position was reasonable in law and fact. An award will be reduced or 
denied if the applicant has unduly or unreasonably protracted the 
underlying proceeding or if special circumstances make the award unjust.
    (b) If the demand of the Secretary is substantially in excess of the 
decision of the Commission and is unreasonable when compared with such 
decision, under the facts and circumstances of the case, the Commission 
shall award to an eligible applicant the fees and expenses related to 
defending against the excessive demand, unless the applicant has 
committed a willful violation of law or otherwise acted in bad faith or 
special circumstances make an award unjust. The burden of proof is on 
the applicant to establish that the Secretary's demand was substantially 
in excess of the Commission's decision; the Secretary may avoid an award 
by establishing that the demand was not unreasonable when compared to 
that decision. As used in this section, ``demand'' means the express 
demand of the Secretary which led to the adversary adjudication, but 
does not include a recitation by the Secretary of the maximum statutory 
penalty--
    (1) In the administrative complaint, or
    (2) Elsewhere when accompanied by an express demand for a lesser 
amount.

[63 FR 63176, Nov. 12, 1998]



Sec. 2704.106  Allowable fees and expenses.

    (a) Awards will be based on rates customarily charged by persons 
engaged in the business of acting as attorneys, agents and expert 
witnesses, even if the services were made available without charge or at 
a reduced rate to the applicant.
    (b) No award for the fee of an attorney or agent under this part may 
exceed $125 per hour, except as provided in Sec. 2704.107. No award to 
compensate an expert witness may exceed the highest rate at which the 
Secretary of Labor pays expert witnesses. However, an award may also 
include the reasonable expenses of the attorney, agent, or witness as a 
separate item if the attorney, agent or witness ordinarily charges 
clients separately for such expenses.
    (c) In determining the reasonableness of the fee sought for an 
attorney, agent or expert witness, the administrative law judge shall 
consider the following:
    (1) If the attorney, agent or witness is in private practice, his or 
her customary fee for similar services, or, if an employee of the 
applicant, the fully allocated cost of the services;
    (2) The prevailing rate for similar services in the community in 
which the attorney, agent or witness ordinarily performs services;
    (3) The time actually spent in the representation of the applicant;
    (4) The time reasonably spent in light of the difficulty or 
complexity of the issues in the underlying proceeding; and
    (5) Such other factors as may bear on the value of the services 
provided.
    (d) The reasonable cost of any study, analysis, engineering report, 
test, project or similar matter prepared on behalf of a party may be 
awarded, to the extent that the charge for the service does not exceed 
the prevailing rate for similar services, and the study or other matter 
was necessary for preparation of the applicant's case in the underlying 
proceeding.

[47 FR 10001, Mar. 9, 1982, as amended at 63 FR 63176, Nov. 12, 1998]



Sec. 2704.107  Rulemaking on maximum rates for attorney's fees.

    (a) If warranted by an increase in the cost of living or by special 
circumstances (such as limited availability of attorneys qualified to 
handle certain types of proceedings), attorney's fees may be awarded at 
a rate higher than $125 per hour. Any such increase in the rate for 
attorney's fees will be made only upon a petition submitted by the 
applicant, pursuant to Sec. 2704.201, and only if the administrative law 
judge determines, in his or her discretion, that it is justified. Any 
such adjustment in fees is subject to Commission review as specified in 
Sec. 2704.308.

[[Page 706]]

    (b) Any person may file with the Commission a petition for 
rulemaking to increase the maximum rate for attorney fees. The petition 
should identify the rate the petitioner believes the Commission should 
establish and the types of proceedings in which the rate should be used. 
It should also explain fully the reasons why the higher rate is 
warranted. The Commission will respond to the petition within 60 days 
after it is filed, by initiating an informal rulemaking proceeding, 
denying the petition, or taking other appropriate action.

[47 FR 10001, Mar. 9, 1982, as amended at 63 FR 63176, Nov. 12, 1998]



Sec. 2704.108  Awards.

    If an applicant is entitled to an award under Sec. 2704.105(a) or 
(b), the award shall be made by the Commission against the Department of 
Labor.

[63 FR 53176, Nov. 12, 1998]



Sec. 2704.109  Delegations of authority.

    The Commission retains authority to take final action on matters 
pertaining to the Equal Access to Justice Act in actions arising under 
the Mine Act. The Commission may, however, by order delegate authority 
to take final action on matters pertaining to the Equal Access to 
Justice Act in particular cases to other subordinate officials or 
bodies.



             Subpart B--Information Required From Applicants

    Source: 63 FR 63176, Nov. 12, 1998, unless otherwise noted.



Sec. 2704.201  Contents of application--in general.

    (a) An application for an award of fees and expenses under the Act 
shall be made to the Chief Administrative Law Judge of the Commission at 
601 New Jersey Avenue, NW., Suite 9500, Washington, DC 20001. The 
application shall identify the applicant and the underlying proceeding 
for which an award is sought.
    (b) The application shall state the amount of fees and expenses for 
which an award is sought. The application may also include a request 
that attorney's fees be awarded at a rate higher than $125 per hour 
because of an increase in the cost of living or other special factors.
    (c) The application may also include any other matters that the 
applicant wishes the Commission to consider in determining whether and 
in what amount an award should be made.
    (d) The application should be signed by the applicant or an 
authorized officer or attorney of the applicant. It shall also contain 
or be accompanied by a written verification under oath or under penalty 
of perjury that the information provided in the application is true and 
correct.
    (e) Upon receipt of an application, the Chief Administrative Law 
Judge shall immediately assign it for disposition to the administrative 
law judge who presided over the underlying Mine Act proceeding.

[63 FR 63176, Nov. 12, 1998, as amended at 67 FR 60863, Sept. 27, 2002]



Sec. 2704.202  Contents of application--where the applicant has prevailed.

    (a) An application for an award under Sec. 2704.105(a) shall show 
that the applicant has prevailed in a significant and discrete 
substantive portion of the underlying proceeding and identify the 
position of the Department of Labor in the proceeding that the applicant 
alleges was not substantially justified. Unless the applicant is an 
individual, the application shall also state the number of employees of 
the applicant and describe briefly the type and purpose of its 
organization or business.
    (b) The application also shall include a statement that the 
applicant's net worth does not exceed $2 million (if an individual) or 
$7 million (for all other applicants including their affiliates, as 
described in Sec. 2704.104(b)(2) of this part).
    (c) Each applicant must provide with its application a detailed 
exhibit showing the net worth of the applicant and any affiliates (as 
described in Sec. 2704.104(b)(2) of this part) when the underlying 
proceeding was initiated. The exhibit may be in any form convenient to 
the applicant that provides full disclosure of the applicant's and its 
affiliates' assets and liabilities and is sufficient to determine 
whether the applicant qualifies under the standards in

[[Page 707]]

this part. The administrative law judge may require an applicant to file 
additional information to determine its eligibility for an award.



Sec. 2704.203  Contents of application--where the Secretary's demand is substantially in excess of the judgment finally obtained and unreasonable.

    (a) An application for an award under Sec. 2704.105(b) shall show 
that the Secretary's demand is substantially in excess of the decision 
of the Commission; the application shall further allege that the 
Secretary's demand is unreasonable when compared with the Commission's 
decision.
    (b) The application shall show that the applicant is a small entity 
as defined in 5 U.S.C. 601(6), and the application must conform to the 
standards of the Small Business Administration at 13 CFR 121.201 for 
mining entities. The application shall include a statement of the 
applicant's annual receipts or number of employees, as applicable, in 
conformance with the requirements of 13 CFR 121.104 and 121.106. The 
application shall describe briefly the type and purpose of its 
organization or business.



Sec. 2704.204  Confidential financial information.

    Ordinarily, the net-worth and annual-receipts exhibits will be 
included in the public record of the proceeding. However, an applicant 
that objects to public disclosure of information in any portion of such 
exhibits and believes there are legal grounds for withholding the 
information from disclosure may submit that portion of the exhibit 
directly to the administrative law judge in a sealed envelope labeled 
``Confidential Financial Information,'' accompanied by a motion to 
withhold the information from public disclosure. The motion shall 
describe the information sought to be withheld and explain, in detail, 
why it falls within one or more of the specific exemptions from 
mandatory disclosure under the Freedom of Information Act, 5 U.S.C. 
552(b)(1)-(9), why public disclosure of the information would adversely 
affect the applicant, and why disclosure is not required in the public 
interest. The material in question shall be served on counsel 
representing the Secretary of Labor against whom the applicant seeks an 
award, but need not be served on any other party to the proceeding. If 
the administrative law judge finds that the information should not be 
withheld from disclosure, it shall be placed in the public record of the 
proceeding. Otherwise, any request to inspect or copy the exhibit shall 
be disposed of in accordance with the established procedures under the 
Freedom of Information Act (29 CFR part 2702).



Sec. 2704.205  Documentation of fees and expenses.

    The application shall be accompanied by full documentation of the 
fees and expenses, including the cost of any study, analysis, 
engineering report, test, project or similar matter, for which an award 
is sought. A separate itemized statement shall be submitted for each 
professional firm or individual whose services are covered by the 
application, showing the hours spent in connection with the underlying 
proceeding by each individual, a description of the specific services 
performed, the rate at which each fee has been computed, any expenses 
for which reimbursement is sought, the total amount claimed, and the 
total amount paid or payable by the applicant or by any other person or 
entity for the services provided. The administrative law judge may 
require the applicant to provide vouchers, receipts, or other 
substantiation for any expenses claimed.



Sec. 2704.206  When an application may be filed.

    (a) An application may be filed whenever the applicant has prevailed 
in the underlying proceeding or in a significant and discrete 
substantive portion of that proceeding. An application may also be filed 
when a demand by the Secretary is substantially in excess of the 
decision of the Commission and is unreasonable when compared with such 
decision. In no case may an application be filed later than 30 days 
after the Commission's final disposition of the underlying proceeding, 
or 30 days after issuance of a court judgment that is final and 
nonappealable in any Commission adjudication that has been appealed 
pursuant to section 106 of the Mine Act, 30 U.S.C. 816.

[[Page 708]]

    (b) If review or reconsideration is sought or taken of a decision on 
the merits as to which an applicant has prevailed or has been subjected 
to a demand from the Secretary substantially in excess of the decision 
of the Commission and unreasonable when compared to that decision, 
proceedings for the award of fees shall be stayed pending final 
disposition of the underlying controversy.
    (c) For purposes of this part, final disposition before the 
Commission means the date on which a decision in the underlying 
proceeding on the merits becomes final under sections 105(d) and 113(d) 
of the Mine Act (30 U.S.C. 815(d), 823(d)).



           Subpart C--Procedures for Considering Applications



Sec. 2704.301  Filing and service of documents.

    Any application for an award or other pleading or other document 
related to an application, including a petition for discretionary 
review, shall be filed and served on all parties in the same manner as 
pleadings in the underlying proceeding, except as provided in 
Sec. 2704.202(b) for confidential financial information.



Sec. 2704.302  Answer to application.

    (a) Within 30 days after service of an application, counsel 
representing the Secretary of Labor may file an answer to the 
application. Unless counsel requests an extension of time for filing or 
files a statement of intent to negotiate under paragraph (b) of this 
section, failure to file an answer within the 30-day period may be 
treated as a consent to the award requested.
    (b) If counsel for the Secretary and the applicant believe that the 
issues in the fee application can be settled, they may jointly file a 
statement of their intent to negotiate a settlement. The filing of this 
statement shall extend the time for filing an answer for an additional 
30 days, and further extensions may be granted by the administrative law 
judge upon request by counsel for the Secretary and the applicant.
    (c) The answer shall explain in detail any objections to the award 
requested and identify the facts relied on in support of the position of 
the Secretary of Labor. If the answer is based on any alleged facts not 
already in the record of the underlying proceeding, counsel shall 
include with the answer either supporting affidavits or a request for 
further proceedings under Sec. 2704.306 of this part.



Sec. 2704.303  Reply.

    Within 15 days after service of an answer, the applicant may file a 
reply. If the reply is based on any alleged facts not already in the 
record of the proceeding, the applicant shall include with the reply 
either supporting affidavits or a request for further proceedings under 
Sec. 2704.306 of this part.



Sec. 2704.304  Comments by other parties.

    Any party to a proceeding other than the applicant and counsel for 
the Secretary of Labor may file comments on an application within 30 
days after it is served or on an answer within 15 days after it is 
served. A commenting party may not participate further in proceedings on 
the application unless the administrative law judge determines that the 
public interest requires such participation in order to permit full 
exploration of matters raised in the comments.



Sec. 2704.305  Settlement.

    In the event that counsel for the Secretary and an applicant agree 
to settle an EAJA claim after an application has been filed with the 
Commission, the applicant shall timely notify the Commission of the 
settlement and request dismissal of the application.

[63 FR 63177, Nov. 12, 1998]



Sec. 2704.306  Further proceedings on the application.

    (a) The determination of an award will be made on the basis of the 
record made during the proceeding for which fees and expenses are 
sought, except as provided in paragraphs (b) and (c) of this section.
    (b) On request of either the applicant or the Secretary, or on the 
administrative law judge's own initiative, the judge may order further 
proceedings,

[[Page 709]]

such as an informal conference, oral argument, additional written 
submissions or, as to issues other than substantial justification (such 
as the applicant's eligibility or substantiation of fees and expenses), 
pertinent discovery or an evidentiary hearing. Such further proceedings 
shall be held only when necessary for full and fair resolution of the 
issues arising from the application and shall be conducted as promptly 
as possible.
    (c) If the proceeding for which fees and expenses are sought was 
conceded by the Secretary on the merits, withdrawn by the Secretary, or 
otherwise settled before any of the merits were heard, the applicant and 
the Secretary may supplement the administrative record with affidavits 
or other documentary evidence.
    (d) A request that the judge order further proceedings under this 
section shall specifically identify the information sought on the 
disputed issues and shall explain why the additional proceedings are 
necessary to resolve the issues.

[54 FR 6286, Feb. 9, 1989]



Sec. 2704.307  Decision of administrative law judge.

    The administrative law judge shall issue an initial decision on the 
application within 75 days after completion of proceedings on the 
application. In all decisions on applications, the administrative law 
judge shall include written findings and conclusions on the applicant's 
eligibility, and an explanation of the reasons for any difference 
between the amount requested and the amount awarded. As to applications 
filed pursuant to Sec. 2704.105(a), the administrative law judge shall 
also include findings on the applicant's status as a prevailing party 
and whether the position of the Secretary was substantially justified; 
if at issue, the judge shall also make findings on whether the applicant 
unduly protracted or delayed the underlying proceeding or whether 
special circumstances make the award unjust. As to applications filed 
pursuant to Sec. 2704.105(b), the administrative law judge shall include 
findings on whether the Secretary made a demand that is substantially in 
excess of the decision of the Commission and unreasonable when compared 
with that decision; if at issue, the judge shall also make findings on 
whether the applicant has committed a willful violation of the law or 
otherwise acted in bad faith or whether special circumstances make the 
award unjust. Under either paragraph, the decision shall include, if at 
issue, detailed findings and conclusions on whether an increase in the 
cost of living or any other special factor justifies a higher fee than 
the $125 per hour fee set forth in the statute. The initial decision by 
the administrative law judge shall become final 40 days after its 
issuance unless review by the Commission is ordered under Sec. 2704.308 
of this part.

[63 FR 63177, Nov. 12, 1998]



Sec. 2704.308  Commission review.

    (a) Either the applicant or the Secretary of Labor may seek review 
by the Commission of the initial decision by the administrative law 
judge, but review shall be discretionary with the Commission.
    (b) The party seeking review shall file a petition for discretionary 
review so as to be received by the Commission at 601 New Jersey Avenue, 
NW., Suite 9500, Washington, DC 20001 within 30 days of the issuance of 
the initial decision by the administrative law judge. Each issue in 
dispute shall be plainly and concisely stated, with supporting reasons 
set forth. Except for good cause shown, no issue not raised before the 
administrative law judge shall be set forth in the petition for 
discretionary review. Review by the Commission shall be granted only by 
affirmative vote of two of the Commissioners within 40 days of the 
issuance of the initial opinion, except that within 30 days after the 
issuance of the initial decision by the administrative law judge, two or 
more Commissioners may in their discretion order the case for review 
without the filing of a petition. The latter procedure shall be reserved 
for novel questions of law or policy, however.
    (c) If review of the initial decision of the administrative law 
judge is granted by the Commission, the Commission shall, after allowing 
opportunity for presentation of views by opposing parties, review the 
case and issue its own

[[Page 710]]

order affirming, modifying or vacating in whole or in part the initial 
decision or directing other appropriate relief.

[47 FR 10001, Mar. 9, 1982, as amended at 63 FR 63178, Nov. 12, 1998; 67 
FR 60863, Sept. 27, 2002]



Sec. 2704.309  Judicial review.

    Judicial review of final Commission decisions on awards may be 
sought as provided in 5 U.S.C. 504(c)(2).



Sec. 2704.310  Payment of award.

    Payment of awards made under the Equal Access to Justice Act by 
final orders of the Commission or its administrative law judge shall be 
in accordance with the applicable rules of the Department of Labor.



PART 2705--PRIVACY ACT IMPLEMENTATION--Table of Contents




Sec.
2705.1  Purpose and scope.
2705.2  Definitions.
2705.3  Procedure for requests pertaining to individuals' records in a 
          records system.
2705.4  Times, places, and requirements for the identification of the 
          individual making a request.
2705.5  Access to requested information to the individual.
2705.6  Request for correction or amendment to the record.
2705.7  Agency review of request for correction or amendment of the 
          record.
2705.8  Appeal of an initial adverse Commission determination on 
          correction or amendment of the record.
2705.9  Disclosure of record to a person other than the individual to 
          whom the record pertains.
2705.10  Fees.

    Authority: 5 U.S.C. 552a; Pub. L. 93-579.

    Source: 49 FR 38542, Oct. 1, 1984, unless otherwise noted.



Sec. 2705.1  Purpose and scope.

    The purposes of these regulations are to:
    (a) Establish a procedure by which an individual can determine if 
the Federal Mine Safety and Health Review Commission, hereafter the 
``Commission'', maintains a system of records which includes a record 
pertaining to the individual; and
    (b) Establish a procedure by which an individual can gain access to 
a record pertaining to him or her for the purpose of review, amendment 
and/or correction.



Sec. 2705.2  Definitions.

    For the purpose of these regulations--
    (a) The term individual means a citizen of the United States or an 
alien lawfully admitted for permanent residence;
    (b) The term maintain includes maintain, collect, use of 
disseminate;
    (c) The term record means any item, collection or grouping of 
information about an individual that is maintained by the Commission, 
including, but not limited to, his or her employment history, payroll 
information, and financial transactions and that contains his or her 
name, or the identifying number, symbol, or other identifying particular 
assigned to the individual, such as social security number.
    (d) The term system or records means a group of any records under 
control of the Commission from which information is retrieved by the 
name of the individual or by some identifying number, symbol, or other 
identifying particular assigned to the individual; and
    (e) The term routine use means, with respect to the disclosure of a 
record, the use of such record for a purpose which is compatible with 
the purpose for which it was collected.



Sec. 2705.3  Procedure for requests pertaining to individuals' records in a records system.

    An individual shall submit a request to the Executive Director to 
determine if a system of records named by the individual contains a 
record pertaining to the individual. If a record pertaining to the 
individual does exist in the specified system of records and the 
individual wishes to review that record he or she shall submit a request 
to the Executive Director of the Commission which states the 
individual's desire to review his or her record.



Sec. 2705.4  Times, places, and requirements for the identification of the individual making a request.

    An individual making a request to the Executive Director of the 
Commission pursuant to Sec. 2705.3 shall present a

[[Page 711]]

written request at the Commission Office, 601 New Jersey Avenue, NW., 
Suite 9500, Washington, DC 20001, on any business day between the hour 
of 8:30 a.m. and 5:00 p.m. The individual submitting the request should 
present himself or herself at the Commission's offices with a form of 
identification which will permit the Commission to verify that the 
individual is the same individual as contained in the record requested.

[49 FR 38542, Oct. 1, 1984, as amended at 67 FR 60863, Sept. 27, 2002]



Sec. 2705.5  Access to requested information to the individual.

    As soon as practicable after verification of identity the Commission 
shall disclose to the individual the information contained in the record 
which pertains to that individual.



Sec. 2705.6  Request for correction or amendment to the record.

    The individual shall submit a written request to the Executive 
Director which states the individual's desire to correct or to amend his 
or her record and details the specific corrections or amendments sought. 
This request is to be made in accord with provisions of Sec. 2705.4.



Sec. 2705.7  Agency review of request for correction or amendment of the record.

    Within ten working days of the receipt of the request to correct or 
to amend the record, the Executive Director will acknowledge in writing 
such receipt and promptly either--
    (a) Make any correction or amendment to that portion of the record 
which the individual believes is not accurate, relevant, timely, or 
complete; or
    (b) Inform the individual of the Executive Director's refusal to 
correct or to amend the record in accordance with the request, and the 
procedures established by the Commission for the individual to request a 
review of that refusal.



Sec. 2705.8  Appeal of an initial adverse Commission determination on correction or amendment of the record.

    An individual who disagrees with the refusal of the Executive 
Director to correct or to amend his or her record may submit a request 
for a review of such refusal to the Chairman, Federal Mine Safety and 
Health Review Commission, 601 New Jersey Avenue, NW., Suite 9500, 
Washington, DC 20001. The Chairman will, not later than thirty working 
days from the date on which the individual requests such review, 
complete such review and make final determination unless, for good cause 
shown, the Chairman extends such thirty-day period. If, after his or her 
review, the Chairman also refuses to correct or to amend the record in 
accordance with the request, the Individual may file with the Commission 
a concise statement setting forth the reasons for his or her 
disagreement with the refusal of the Commission and may seek judicial 
review of the Chairman's determination under 5 U.S.C. 552a(g)(1)(A).

[49 FR 38542, Oct. 1, 1984, as amended at 67 FR 60863, Sept. 27, 2002]



Sec. 2705.9  Disclosure of record to a person other than the individual to whom the record pertains.

    The Commission will not disclose a record to any individual other 
than the individual to whom the record pertains without receiving the 
prior written consent of the individual to whom the record pertains, 
unless the disclosure has been listed as a ``routine use'' in the 
Commission's notices of its system of records, or falls within one of 
the special disclosure situations listed in the Privacy Act of 1974 (5 
U.S.C. 552a(b)).



Sec. 2705.10  Fees.

    If an individual requests copies of his or her record, he or she 
will be charged a reasonable fee, excluding the cost of any search for 
review of the record, in advance of receipt of the pages.

[[Page 712]]



PART 2706--ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF HANDICAP IN PROGRAMS OR ACTIVITIES CONDUCTED BY THE FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION--Table of Contents




Sec.
2706.101  Purpose.
2706.102  Application.
2706.103  Definitions.
2706.104--2706.109  [Reserved]
2706.110  Self-evaluation.
2706.111  Notice.
2706.112--2706.129  [Reserved]
2706.130  General prohibitions against discrimination.
2706.131--2706.139  [Reserved]
2706.140  Employment.
2706.141--2706.148  [Reserved]
2706.149  Program accessibility: Discrimination prohibited.
2706.150  Program accessibility: Existing facilities.
2706.151  Program accessibility: New construction and alterations.
2706.152--2706.159  [Reserved]
2706.160  Communications.
2706.161--2706.169  [Reserved]
2706.170  Compliance procedures.
2706.171--2706.999  [Reserved]

    Authority: 29 U.S.C. 794.

    Source: 51 FR 22893, 22896, June 23, 1986, unless otherwise noted.



Sec. 2706.101  Purpose.

    This part effectuates section 119 of the Rehabilitation, 
Comprehensive Services, and Developmental Disabilities Amendments of 
1978, which amended section 504 of the Rehabilitation Act of 1973 to 
prohibit discrimination on the basis of handicap in programs or 
activities conducted by Executive agencies or the United States Postal 
Service.



Sec. 2706.102  Application.

    This part applies to all programs or activities conducted by the 
agency.



Sec. 2706.103  Definitions.

    For purposes of this part, the term--
    Assistant Attorney General means the Assistant Attorney General, 
Civil Rights Division, United States Department of Justice.
    Auxiliary aids means services or devices that enable persons with 
impaired sensory, manual, or speaking skills to have an equal 
opportunity to participate in, and enjoy the benefits of, programs or 
activities conducted by the agency. For example, auxiliary aids useful 
for persons with impaired vision include readers, brailled materials, 
audio recordings, telecommunications devices and other similar services 
and devices. Auxiliary aids useful for persons with impaired hearing 
include telephone handset amplifiers, telephones compatible with hearing 
aids, telecommunication devices for deaf persons (TDD's), interpreters, 
notetakers, written materials, and other similar services and devices.
    Complete complaint means a written statement that contains the 
complainant's name and address and describes the agency's alleged 
discriminatory action in sufficient detail to inform the agency of the 
nature and date of the alleged violation of section 504. It shall be 
signed by the complainant or by someone authorized to do so on his or 
her behalf. Complaints filed on behalf of classes or third parties shall 
describe or identify (by name, if possible) the alleged victims of 
discrimination.
    Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots, rolling stock or other 
conveyances, or other real or personal property.
    Handicapped person means any person who has a physical or mental 
impairment that substantially limits one or more major life activities, 
has a record of such an impairment, or is regarded as having such an 
impairment.
    As used in this definition, the phrase:
    (1) Physical or mental impairment includes--
    (i) Any physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one or more of the following body systems: 
Neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive; digestive; 
genitourinary; hemic and lymphatic; skin; and endocrine; or
    (ii) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities. The term ``physical or mental 
impairment'' includes, but is

[[Page 713]]

not limited to, such diseases and conditions as orthopedic, visual, 
speech, and hearing impairments, cerebral palsy, epilepsy, muscular 
dystrophy, multiple sclerosis, cancer, heart disease, diabetes, mental 
retardation, emotional illness, and drug addiction and alcoholism.
    (2) Major life activities includes functions such as caring for 
one's self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning, and working.
    (3) Has a record of such an impairment means has a history of, or 
has been misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (4) Is regarded as having an impairment means--
    (i) Has a physical or mental impairment that does not substantially 
limit major life activities but is treated by the agency as constituting 
such a limitation;
    (ii) Has a physical or mental impairment that substantially limits 
major life activities only as a result of the attitudes of others toward 
such impairment; or
    (iii) Has none of the impairments defined in subparagraph (1) of 
this definition but is treated by the agency as having such an 
impairment.
    Historic preservation programs means programs conducted by the 
agency that have preservation of historic properties as a primary 
purpose.
    Historic properties means those properties that are listed or 
eligible for listing in the National Register of Historic Places or 
properties designated as historic under a statute of the appropriate 
State or local government body.
    Qualified handicapped person means--
    (1) With respect to preschool, elementary, or secondary education 
services provided by the agency, a handicapped person who is a member of 
a class of persons otherwise entitled by statute, regulation, or agency 
policy to receive education services from the agency.
    (2) With respect to any other agency program or activity under which 
a person is required to perform services or to achieve a level of 
accomplishment, a handicapped person who meets the essential eligibility 
requirements and who can acheive the purpose of the program or activity 
without modifications in the program or activity that the agency can 
demonstrate would result in a fundamental alteration in its nature;
    (3) With respect to any other program or activity, a handicapped 
person who meets the essential eligibility requirements for 
participation in, or receipt of benefits from, that program or activity; 
and
    (4) Qualified handicapped person is defined for purposes of 
employment in 29 CFR 1613.702(f), which is made applicable to this part 
by Sec. 2706.140.
    Section 504 means section 504 of the Rehabilitation Act of 1973 
(Pub. L. 93-112, 87 Stat. 394 (29 U.S.C. 794)), as amended by the 
Rehabilitation Act Amendments of 1974 (Pub. L. 93-516, 88 Stat. 1617), 
and the Rehabilitation, Comprehensive Services, and Developmental 
Disabilities Amendments of 1978 (Pub. L. 95-602, 92 Stat. 2955). As used 
in this part, section 504 applies only to programs or activities 
conducted by Executive agencies and not to federally assisted programs.
    Substantial impairment means a significant loss of the integrity of 
finished materials, design quality, or special character resulting from 
a permanent alteration.



Secs. 2706.104-2706.109  [Reserved]



Sec. 2706.110  Self-evaluation.

    (a) The agency shall, by August 24, 1987, evaluate its current 
policies and practices, and the effects thereof, that do not or may not 
meet the requirements of this part, and, to the extent modification of 
any such policies and practices is required, the agency shall proceed to 
make the necessary modifications.
    (b) The agency shall provide an opportunity to interested persons, 
including handicapped persons or organizations representing handicapped 
persons, to participate in the self-evaluation process by submitting 
comments (both oral and written).
    (c) The agency shall, until three years following the completion of 
the self-evaluation, maintain on file and make available for public 
inspection:

[[Page 714]]

    (1) A description of areas examined and any problems identified, and
    (2) A description of any modifications made.



Sec. 2706.111  Notice.

    The agency shall make available to employees, applicants, 
participants, beneficiaries, and other interested persons such 
information regarding the provisions of this part and its applicability 
to the programs or activities conducted by the agency, and make such 
information available to them in such manner as the head of the agency 
finds necessary to apprise such persons of the protections against 
discrimination assured them by section 504 and this regulation.



Secs. 2706.112-2706.129  [Reserved]



Sec. 2706.130  General prohibitions against discrimination.

    (a) No qualified handicapped person shall, on the basis of handicap, 
be excluded from participation in, be denied the benefits of, or 
otherwise be subjected to discrimination under any program or activity 
conducted by the agency.
    (b)(1) The agency, in providing any aid, benefit, or service, may 
not, directly or through contractual, licensing, or other arrangements, 
on the basis of handicap--
    (i) Deny a qualified handicapped person the opportunity to 
participate in or benefit from the aid, benefit, or service;
    (ii) Afford a qualified handicapped person an opportunity to 
participate in or benefit from the aid, benefit, or service that is not 
equal to that afforded others;
    (iii) Provide a qualified handicapped person with an aid, benefit, 
or service that is not as effective in affording equal opportunity to 
obtain the same result, to gain the same benefit, or to reach the same 
level of achievement as that provided to others;
    (iv) Provide different or separate aid, benefits, or services to 
handicapped persons or to any class of handicapped persons than is 
provided to others unless such action is necessary to provide qualified 
handicapped persons with aid, benefits, or services that are as 
effective as those provided to others;
    (v) Deny a qualified handicapped person the opportunity to 
participate as a member of planning or advisory boards; or
    (vi) Otherwise limit a qualified handicapped person in the enjoyment 
of any right, privilege, advantage, or opportunity enjoyed by others 
receiving the aid, benefit, or service.
    (2) The agency may not deny a qualified handicapped person the 
opportunity to participate in programs or activities that are not 
separate or different, despite the existence of permissibly separate or 
different programs or activities.
    (3) The agency may not, directly or through contractual or other 
arrangments, utilize criteria or methods of administration the purpose 
or effect of which would--
    (i) Subject qualified handicapped persons to discrimination on the 
basis of handicap; or
    (ii) Defeat or substantially impair accomplishment of the objectives 
of a program or activity with respect to handicapped persons.
    (4) The agency may not, in determining the site or location of a 
facility, make selections the purpose or effect of which would--
    (i) Exclude handicapped persons from, deny them the benefits of, or 
otherwise subject them to discrimination under any program or activity 
conducted by the agency; or
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of a program or activity with respect to handicapped persons.
    (5) The agency, in the selection of procurement contractors, may not 
use criteria that subject qualified handicapped persons to 
discrimination on the basis of handicap.
    (6) The agency may not administer a licensing or certification 
program in a manner that subjects qualified handicapped persons to 
discrimination on the basis of handicap, nor may the agency establish 
requirements for the programs or activities of licensees or certified 
entities that subject qualified handicapped persons to discrimination on 
the basis of handicap. However, the programs or activities of entities 
that

[[Page 715]]

are licensed or certified by the agency are not, themselves, covered by 
this part.
    (c) The exclusion of nonhandicapped persons from the benefits of a 
program limited by Federal statute or Executive order to handicapped 
persons or the exclusion of a specific class of handicapped persons from 
a program limited by Federal statute or Executive order to a different 
class of handicapped persons is not prohibited by this part.
    (d) The agency shall administer programs and activities in the most 
integrated setting appropriate to the needs of qualified handicapped 
persons.



Secs. 2706.131-2706.139  [Reserved]



Sec. 2706.140  Employment.

    No qualified handicapped person shall, on the basis of handicap, be 
subjected to discrimination in employment under any program or activity 
conducted by the agency. The definitions, requirements, and procedures 
of section 501 of the Rehabilitation Act of 1973 (29 U.S.C. 791), as 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1613, shall apply to employment in federally conducted programs or 
activities.



Secs. 2706.141-2706.148  [Reserved]



Sec. 2706.149  Program accessibility: Discrimination prohibited.

    Except as otherwise provided in Sec. 2706.150, no qualified 
handicapped person shall, because the agency's facilities are 
inaccessible to or unusable by handicapped persons, be denied the 
benefits of, be excluded from participation in, or otherwise be 
subjected to discrimination under any program or activity conducted by 
the agency.



Sec. 2706.150  Program accessibility: Existing facilities.

    (a) General. The agency shall operate each program or activity so 
that the program or activity, when viewed in its entirety, is readily 
accessible to and usable by handicapped persons. This paragraph does 
not--
    (1) Necessarily require the agency to make each of its existing 
facilities accessible to and usable by handicapped persons;
    (2) In the case of historic preservation programs, require the 
agency to take any action that would result in a substantial impairment 
of significant historic features of an historic property; or
    (3) Require the agency to take any action that it can demonstrate 
would result in a fundamental alteration in the nature of a program or 
activity or in undue financial and administrative burdens. In those 
circumstances where agency personnel believe that the proposed action 
would fundamentally alter the program or activity or would result in 
undue financial and administrative burdens, the agency has the burden of 
proving that compliance with Sec. 2706.150(a) would result in such 
alteration or burdens. The decision that compliance would result in such 
alteration or burdens must be made by the agency head or his or her 
designee after considering all agency resources available for use in the 
funding and operation of the conducted program or activity, and must be 
accompanied by a written statement of the reasons for reaching that 
conclusion. If an action would result in such an alteration or such 
burdens, the agency shall take any other action that would not result in 
such an alteration or such burdens but would nevertheless ensure that 
handicapped persons receive the benefits and services of the program or 
activity.
    (b) Methods--(1) General. The agency may comply with the 
requirements of this section through such means as redesign of 
equipment, reassignment of services to accessible buildings, assignment 
of aides to beneficiaries, home visits, delivery of services at 
alternate accessible sites, alteration of existing facilities and 
construction of new facilities, use of accessible rolling stock, or any 
other methods that result in making its programs or activities readily 
accessible to and usable by handicapped persons. The agency is not 
required to make structural changes in existing facilities where other 
methods are effective in achieving compliance with this section. The 
agency, in making alterations to existing buildings, shall meet 
accessibility requirements

[[Page 716]]

to the extent compelled by the Architectural Barriers Act of 1968, as 
amended (42 U.S.C. 4151-4157), and any regulations implementing it. In 
choosing among available methods for meeting the requirements of this 
section, the agency shall give priority to those methods that offer 
programs and activities to qualified handicapped persons in the most 
integrated setting appropriate.
    (2) Historic preservation programs. In meeting the requirements of 
Sec. 2706.150(a) in historic preservation programs, the agency shall 
give priority to methods that provide physical access to handicapped 
persons. In cases where a physical alteration to an historic property is 
not required because of Sec. 2706.150(a)(2) or (a)(3), alternative 
methods of achieving program accessibility include--
    (i) Using audio-visual materials and devices to depict those 
portions of an historic property that cannot otherwise be made 
accessible;
    (ii) Assigning persons to guide handicapped persons into or through 
portions of historic properties that cannot otherwise be made 
accessible; or
    (iii) Adopting other innovative methods.
    (c) Time period for compliance. The agency shall comply with the 
obligations established under this section by October 21, 1986, except 
that where structural changes in facilities are undertaken, such changes 
shall be made by August 22, 1989, but in any event as expeditiously as 
possible.
    (d) Transition plan. In the event that structural changes to 
facilities will be undertaken to achieve program accessibility, the 
agency shall develop, by February 23, 1987 a transition plan setting 
forth the steps necessary to complete such changes. The agency shall 
provide an opportunity to interested persons, including handicapped 
persons or organizations representing handicapped persons, to 
participate in the development of the transition plan by submitting 
comments (both oral and written). A copy of the transition plan shall be 
made available for public inspection. The plan shall, at a minimum--
    (1) Identify physical obstacles in the agency's facilities that 
limit the accessibility of its programs or activities to handicapped 
persons;
    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period; and
    (4) Indicate the official responsible for implementation of the 
plan.



Sec. 2706.151  Program accessibility: New construction and alterations.

    Each building or part of a building that is constructed or altered 
by, on behalf of, or for the use of the agency shall be designed, 
constructed, or altered so as to be readily accessible to and usable by 
handicapped persons. The definitions, requirements, and standards of the 
Architectural Barriers Act (42 U.S.C. 4151-4157), as established in 41 
CFR 101-19.600 to 101-19.607, apply to buildings covered by this 
section.



Secs. 2706.152-2706.159  [Reserved]



Sec. 2706.160  Communications.

    (a) The agency shall take appropriate steps to ensure effective 
communication with applicants, participants, personnel of other Federal 
entities, and members of the public.
    (1) The agency shall furnish appropriate auxiliary aids where 
necessary to afford a handicapped person an equal opportunity to 
participate in, and enjoy the benefits of, a program or activity 
conducted by the agency.
    (i) In determining what type of auxiliary aid is necessary, the 
agency shall give primary consideration to the requests of the 
handicapped person.
    (ii) The agency need not provide individually prescribed devices, 
readers for personal use or study, or other devices of a personal 
nature.
    (2) Where the agency communicates with applicants and beneficiaries 
by telephone, telecommunication devices for deaf person (TDD's) or 
equally effective telecommunication systems shall be used.
    (b) The agency shall ensure that interested persons, including 
persons

[[Page 717]]

with impaired vision or hearing, can obtain information as to the 
existence and location of accessible services, activities, and 
facilities.
    (c) The agency shall provide signage at a primary entrance to each 
of its inaccessible facilities, directing users to a location at which 
they can obtain information about accessible facilities. The 
international symbol for accessibility shall be used at each primary 
entrance of an accessible facility.
    (d) This section does not require the agency to take any action that 
it can demonstrate would result in a fundamental alteration in the 
nature of a program or activity or in undue financial and adminstrative 
burdens. In those circumstances where agency personnel believe that the 
proposed action would fundamentally alter the program or activity or 
would result in undue financial and administrative burdens, the agency 
has the burden of proving that compliance with Sec. 2706.160 would 
result in such alteration or burdens. The decision that compliance would 
result in such alteration or burdens must be made by the agency head or 
his or her designee after considering all agency resources available for 
use in the funding and operation of the conducted program or activity, 
and must be accompanied by a written statement of the reasons for 
reaching that conclusion. If an action required to comply with this 
section would result in such an alteration or such burdens, the agency 
shall take any other action that would not result in such an alteration 
or such burdens but would nevertheless ensure that, to the maximum 
extent possible, handicapped persons receive the benefits and services 
of the program or activity.



Secs. 2706.161-2706.169  [Reserved]



Sec. 2706.170  Compliance procedures.

    (a) Except as provided in paragraph (b) of this section, this 
section applies to all allegations of discrimination on the basis of 
handicap in programs or activities conducted by the agency.
    (b) The agency shall process complaints alleging violations of 
section 504 with respect to employment according to the procedures 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1613 pursuant to section 501 of the Rehabilitation Act of 1973 (29 
U.S.C. 791).
    (c) The General Counsel shall be responsible for coordinating 
implementation of this section. Complaints may be sent to General 
Counsel, Federal Mine Safety and Health Review Commission, 601 New 
Jersey Avenue, NW., Suite 9500, Washington, DC 20001.
    (d) The agency shall accept and investigate all complete complaints 
for which it has jurisdiction. All complete complaints must be filed 
within 180 days of the alleged act of discrimination. The agency may 
extend this time period for good cause.
    (e) If the agency receives a complaint over which it does not have 
jurisdiction, it shall promptly notify the complainant and shall make 
reasonable efforts to refer the complaint to the appropriate government 
entity.
    (f) The agency shall notify the Architectural and Transportation 
Barriers Compliance Board upon receipt of any complaint alleging that a 
building or facility that is subject to the Architectural Barriers Act 
of 1968, as amended (42 U.S.C. 4151-4157), or section 502 of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 792), is not readily 
accessible to and usable by handicapped persons.
    (g) Within 180 days of the receipt of a complete complaint for which 
it has jurisdiction, the agency shall notify the complainant of the 
results of the investigation in a letter containing--
    (1) Findings of fact and conclusions of law;
    (2) A description of a remedy for each violation found; and
    (3) A notice of the right to appeal.
    (h) Appeals of the findings of fact and conclusions of law or 
remedies must be filed by the complainant within 90 days of receipt from 
the agency of the letter required by Sec. 2706.170(g). The agency may 
extend this time for good cause.
    (i) Timely appeals shall be accepted and processed by the head of 
the agency.
    (j) The head of the agency shall notify the complainant of the 
results of the appeal within 60 days of the receipt of the request. If 
the head of the agency determines that additional information is needed 
from the complainant,

[[Page 718]]

he or she shall have 60 days from the date of receipt of the additional 
information to make his or her determination on the appeal.
    (k) The time limits cited in paragraphs (g) and (j) of this section 
may be extended with the permission of the Assistant Attorney General.
    (l) The agency may delegate its authority for conducting complaint 
investigations to other Federal agencies, except that the authority for 
making the final determination may not be delegated to another agency.

[51 FR 22893, 22896, June 23, 1986, as amended at 51 FR 22893, June 23, 
1986; 67 FR 60863, Sept. 27, 2002]



Secs. 2706.171-2706.999  [Reserved]

[[Page 719]]



            CHAPTER XL--PENSION BENEFIT GUARANTY CORPORATION




  --------------------------------------------------------------------

                          SUBCHAPTER A--GENERAL
Part                                                                Page
4000            Finding aids................................         723
4001            Terminology.................................         724
4002            Bylaws of the Pension Benefit Guaranty 
                    Corporation.............................         727
4003            Rules for administrative review of agency 
                    decisions...............................         729
                         SUBCHAPTER B--PREMIUMS
4006            Premium rates...............................         736
4007            Payment of premiums.........................         743
       SUBCHAPTER C--CERTAIN REPORTING AND DISCLOSURE REQUIREMENTS
4010            Annual financial and actuarial information 
                    reporting...............................         749
4011            Disclosure to participants..................         754
                   SUBCHAPTER D--COVERAGE AND BENEFITS
4022            Benefits payable in terminated single-
                    employer plans..........................         760
4022B           Aggregate limits on guaranteed benefits.....         792
                     SUBCHAPTER E--PLAN TERMINATIONS
4041            Termination of single-employer plans........         793
4041A           Termination of multiemployer plans..........         814
4043            Reportable events and certain other 
                    notification requirements...............         819
4044            Allocation of assets in single-employer 
                    plans...................................         835
4047            Restoration of terminating and terminated 
                    plans...................................         854

[[Page 720]]

4050            Missing participants........................         856
                         SUBCHAPTER F--LIABILITY
4061            Amounts payable by the Pension Benefit 
                    Guaranty Corporation....................         866
4062            Liability for termination of single-employer 
                    plans...................................         866
4063            Withdrawal liability; plans under multiple 
                    controlled groups.......................         871
4064            Liability on termination of single-employer 
                    plans under multiple controlled groups..         871
               SUBCHAPTER G--ANNUAL REPORTING REQUIREMENTS
4065            Annual report...............................         872
                  SUBCHAPTER H--ENFORCEMENT PROVISIONS
4067            Recovery of liability for plan terminations.         873
4068            Lien for liability..........................         873
4071            Penalties for failure to provide certain 
                    notices or other material information...         874
       SUBCHAPTER I--WITHDRAWAL LIABILITY FOR MULTIEMPLOYER PLANS
4203            Extension of special withdrawal liability 
                    rules...................................         875
4204            Variances for sale of assets................         876
4206            Adjustment of liability for a withdrawal 
                    subsequent to a partial withdrawal......         880
4207            Reduction or waiver of complete withdrawal 
                    liability...............................         883
4208            Reduction or waiver of partial withdrawal 
                    liability...............................         892
4211            Allocating unfunded vested benefits to 
                    withdrawing employers...................         899
4219            Notice, collection, and redetermination of 
                    withdrawal liability....................         909
4220            Procedures for PBGC approval of plan 
                    amendments..............................         919
4221            Arbitration of disputes in multiemployer 
                    plans...................................         920
 SUBCHAPTER J--INSOLVENCY, REORGANIZATION, TERMINATION, AND OTHER RULES 
                    APPLICABLE TO MULTIEMPLOYER PLANS
4231            Mergers and transfers between multiemployer 
                    plans...................................         927
4245            Notice of insolvency........................         933
4261            Financial assistance to multiemployer plans.         937

[[Page 721]]

4281            Duties of plan sponsor following mass 
                    withdrawal..............................         937
           SUBCHAPTER K--MULTIEMPLOYER ENFORCEMENT PROVISIONS
4302            Penalties for failure to provide certain 
                    multiemployer plan notices..............         948
     SUBCHAPTER L--INTERNAL AND ADMINISTRATIVE RULES AND PROCEDURES
4901            Examination and copying of Pension Benefit 
                    Guaranty Corporation records............         949
4902            Disclosure and amendment of records 
                    pertaining to individuals under the 
                    Privacy Act.............................         957
4903            Debt collection.............................         960
4904            Ethical conduct of employees................         965
4905            Appearances in certain proceedings..........         966
4906

[Reserved]

4907            Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by the Pension 
                    Benefit Guaranty Corporation............         967

[[Page 723]]



                          SUBCHAPTER A--GENERAL





PART 4000--FINDING AIDS--Table of Contents




Sec.
4000.1  Distribution table.
4000.2  Derivation table.

    Authority: 29 U.S.C. 1302(b)(3).



Sec. 4000.1  Distribution table.

    The following table shows where in chapter XL of 29 CFR to find 
regulations previously codified in chapter XXVI.

------------------------------------------------------------------------
                                              Ch. XL Part(s)/Subpart(s)
    Ch. XXVI Part Subpart(s)/Section(s)         Subpart(s)/Section(s)
------------------------------------------------------------------------
             Subchapter A--Internal and Administrative Rules
------------------------------------------------------------------------
2601......................................  4002
2602:
    Subpart A.............................  4904
    Subpart B.............................  4905
2603......................................  4901
2604......................................  Repealed
2606......................................  4003
2607......................................  4902
2608......................................  4907
2609......................................  4903
------------------------------------------------------------------------
   Subchapter B--Rules Applicable to Single-Employer and Multiemployer
                                  Plans
------------------------------------------------------------------------
2610......................................  4006 & 4007
    Secs.  2610.1, 2610.21, 2610.31.......  Secs.  4006.1 & 4007.1
    Secs.  2610.2.........................  Secs.  4006.2 & 4007.2
    Secs.  2610.3-2610.9 & 2610.11........  4007
    Sec.  2610.10.........................  4006.5(e)
    Secs.  2610.22-2610.24 & 2610.33......  4006
    Secs.  2610.25, 2610.26 & 2610.34.....  4007
2611......................................  4065
2612......................................  4001
2613......................................  4022, Subpart A
------------------------------------------------------------------------
                   Subchapter C--Single-Employer Plans
------------------------------------------------------------------------
2615......................................  4043
2616......................................  4041
    Subpart A.............................  Subpart A
    Subpart B.............................  Subpart C
2617......................................  4041
    Subpart A.............................  Subpart A
    Subpart B.............................  Subpart B
2618......................................  4044, Subpart A
2619......................................  4044, Subpart B
2620......................................  4044, Subpart B
2621 (except Sec.  2621.23(b))............  4022, Subpart B
2621.3(b).................................  4022B
2622 (except 2622.9)......................  4062
    Sec.  2622.9..........................  4068
2623......................................  4022, Subparts D & E
2625......................................  4047
2627......................................  4011
2628......................................  4010
2629......................................  4050
------------------------------------------------------------------------
        Subchapter F--Withdrawal Liability in Multiemployer Plans
------------------------------------------------------------------------
2640:
    Sec.  2640.2..........................  Sec.  4001.2
    Sec.  2640.3..........................  Sec.  4221.2
    Sec.  2640.4..........................  Sec.  4211.2
    Sec.  2640.5..........................  Sec.  4204.2
    Sec.  2640.6..........................  Sec.  4207.2, 4208.2
    Sec.  2640.7..........................  Sec.  4219.2
    Sec.  2640.8..........................  Sec.  4206.2
2641......................................  4221
2642......................................  4211
2643......................................  4204
2644......................................  4219, Subpart C
2645......................................  4203
2646......................................  4208
2647......................................  4207
2648......................................  4219, Subpart B
2649......................................  4206
------------------------------------------------------------------------
       Subchapter H--Other Rules Applicable to Multiemployer Plans
------------------------------------------------------------------------
2670:
    Sec.  2670.2..........................  Sec.  4001.2
    Sec.  2670.3..........................  Sec.  4231.2
    Sec.  2670.4..........................  Secs.  4041A.2, 4245.2, &
                                             4281.2
2672......................................  4231
2673......................................  4041A, Subpart B, &
                                             4041A.3(a)
2674......................................  4245
2675......................................  4041A, Subparts C & D, &
                                             4281, Subparts C & D
2676......................................  4281, Subpart B
2677......................................  4220
------------------------------------------------------------------------


[61 FR 34007, July 1, 1996; 61 FR 67943, Dec. 26, 1996, as amended at 62 
FR 67728, Dec. 30, 1997]



Sec. 4000.2  Derivation table.

    The following table shows where in previous chapter XXVI of 29 CFR 
to find regulations now codified in chapter XL.

------------------------------------------------------------------------
                                              Ch. XXVI Part(s) Subpart/
      Ch. XL Part Subpart/Section(s)                 Section(s)
------------------------------------------------------------------------
                          Subchapter A--General
------------------------------------------------------------------------
4000......................................  [Tables]
4001......................................  2612 (and various statutory
                                             and regulatory definitions)
4002......................................  2601
4003......................................  2606
------------------------------------------------------------------------
                         Subchapter B--Premiums
------------------------------------------------------------------------
4006......................................  2610
4007......................................  2610
------------------------------------------------------------------------
       Subchapter C--Certain Reporting and Disclosure Requirements
------------------------------------------------------------------------
4010......................................  2628

[[Page 724]]

 
4011......................................  2627
------------------------------------------------------------------------
                   Subchapter D--Coverage and Benefits
------------------------------------------------------------------------
4022:
    Subpart A.............................  2613
    Subpart B.............................  2621 (except Sec.
                                             2621.3(b))
    Subparts D & E........................  2623
4022B.....................................  Sec.  2621.3(b)
------------------------------------------------------------------------
                     Subchapter E--Plan Terminations
------------------------------------------------------------------------
4041:
    Subpart A.............................  Secs.  2616 & 2617, Subparts
                                             A
    Subpart B.............................  2617, Subpart B
    Subpart C.............................  2616, Subpart B
4041A:
    Subpart A.............................  Secs.  2670.4, 2673.1,
                                             2673.4, 2675.1 & 2675.2
    Subpart B.............................  Secs.  2673.2 & .3
    Subparts C & D........................  2675, Subparts B & E
4043......................................  2615
4044......................................  2618, 2619 & 2620
4047......................................  2625
4050......................................  2629
------------------------------------------------------------------------
                         Subchapter F--Liability
------------------------------------------------------------------------
4061......................................  [cross-references]
4062......................................  2622 (except Sec.  2622.9)
4063......................................  [cross-references]
4064......................................  [cross-references]
------------------------------------------------------------------------
               Subchapter G--Annual Reporting Requirements
------------------------------------------------------------------------
4065......................................  2611
------------------------------------------------------------------------
                  Subchapter H--Enforcement Provisions
------------------------------------------------------------------------
4067......................................  [cross-reference]
4068......................................  2622.9
4071......................................  [new]
        Subchapter I--Withdrawal Liability in Multiemployer Plans
------------------------------------------------------------------------
4203......................................  2645
4204......................................  2643 & Sec.  2640.5
4206......................................  2649 & Sec.  2640.8
4207......................................  2647 & 2640.6
4208......................................  2646 & 2640.6
4211......................................  2642 & 2640.4
4219:
    Subpart A.............................  Sec.  2640.7
    Subpart B.............................  2648
    Subpart C.............................  2644
4220......................................  2677
4221......................................  2641 & Sec.  2640.3
------------------------------------------------------------------------
 Subchapter J--Insolvency, Reorganization, Termination, and Other Rules
                    Applicable to Multiemployer Plans
------------------------------------------------------------------------
4231......................................  2672 & Sec.  2670.3
4245......................................  2674 & 2670.4
4261......................................  [cross-reference]
4281:
    Subpart A.............................  2675, Subpart A, & 2670.4
    Subpart B.............................  2676
    Subpart C.............................  2675, Subpart C
    Subpart D.............................  2675, Subpart D
------------------------------------------------------------------------
           Subchapter K--Multiemployer enforcement Provisions
------------------------------------------------------------------------
4301......................................  [new]
       Subchapter L--Internal Administrative Rules and Procedures
------------------------------------------------------------------------
4901......................................  2603
4902......................................  2607
4903......................................  2609
4904......................................  2602, Subpart A
4905......................................  2602, Subpart B
4907......................................  2608
------------------------------------------------------------------------


[61 FR 34007, July 1, 1996; 61 FR 67943, Dec. 26, 1996, as amended at 62 
FR 36994, July 10, 1997; 62 FR 67728, Dec. 30, 1997]



PART 4001--TERMINOLOGY--Table of Contents




Sec.
4001.1  Purpose and scope.
4001.2  Definitions.
4001.3  Trades or businesses under common control; controlled groups.

    Authority: 29 U.S.C. 1301, 1302(b)(3).

    Source: 61 FR 34010, July 1, 1996, unless otherwise noted.



Sec. 4001.1  Purpose and scope.

    This part contains definitions of certain terms used in this chapter 
and the regulations under which the PBGC makes various controlled group 
determinations.



Sec. 4001.2  Definitions.

    For purposes of this chapter (unless otherwise indicated or required 
by the context):
    Affected party means, with respect to a plan--
    (1) Each participant in the plan;
    (2) Each beneficiary of a deceased participant;
    (3) Each alternate payee under an applicable qualified domestic 
relations order, as defined in section 206(d)(3) of ERISA;
    (4) Each employee organization that currently represents any group 
of participants;
    (5) For any group of participants not currently represented by an 
employee organization, the employee organization, if any, that last 
represented such group of participants within the 5-year period 
preceding issuance of the notice of intent to terminate; and
    (6) The PBGC.

If an affected party has designated, in writing, a person to receive a 
notice on

[[Page 725]]

behalf of the affected party, any reference to the affected party (in 
connection with the notice) shall be construed to refer to such person.
    Annuity means a series of periodic payments to a participant or 
surviving beneficiary for a fixed or contingent period.
    Basic-type benefit means a benefit that is guaranteed under part 
4022 of this chapter or that would be guaranteed if the guarantee limits 
in Secs. 4022.22 through 4022.27 of this chapter did not apply.
    Benefit liabilities means the benefits of participants and their 
beneficiaries under the plan (within the meaning of section 401(a)(2) of 
the Code).
    Code means the Internal Revenue Code of 1986, as amended.
    Complete withdrawal means a complete withdrawal as described in 
section 4203 of ERISA.
    Contributing sponsor means a person who is a contributing sponsor as 
defined in section 4001(a)(13) of ERISA.
    Controlled group means, in connection with any person, a group 
consisting of such person and all other persons under common control 
with such person, determined under Sec. 4001.3 of this part. For 
purposes of determining the persons liable for contributions under 
section 412(c)(11)(B) of the Code or section 302(c)(11)(B) of ERISA, or 
for premiums under section 4007(e)(2) of ERISA, a controlled group also 
includes any group treated as a single employer under section 414 (m) or 
(o) of the Code. Any reference to a plan's controlled group means all 
contributing sponsors of the plan and all members of each contributing 
sponsor's controlled group.
    Corporation means the Pension Benefit Guaranty Corporation, except 
where the context demonstrates that a different meaning is intended.
    Defined benefit plan means a plan described in section 3(35) of 
ERISA.
    Distress termination means the voluntary termination of a single-
employer plan in accordance with section 4041(c) of ERISA and part 4041, 
subpart C, of this chapter.
    Distribution date means:
    (1) Except as provided in paragraph (2)--
    (i) For benefits provided through the purchase of irrevocable 
commitments, the date on which the obligation to provide the benefits 
passes from the plan to the insurer; and
    (ii) For benefits provided other than through the purchase of 
irrevocable commitments, the date on which the benefits are delivered to 
the participant or beneficiary (or to another plan or benefit 
arrangement or other recipient authorized by the participant or 
beneficiary in accordance with applicable law and regulations) 
personally or by deposit with a mail or courier service (as evidenced by 
a postmark or written receipt); or
    (2) The deemed distribution date (as defined in Sec. 4050.2) in the 
case of a designated benefit paid to the PBGC in accordance with part 
4050 of this chapter (dealing with missing participants).
    EIN means the nine-digit employer identification number assigned by 
the Internal Revenue Service to a person.
    Employer means all trades or businesses (whether or not 
incorporated) that are under common control, within the meaning of 
Sec. 4001.3 of this chapter.
    ERISA means the Employee Retirement Income Security Act of 1974, as 
amended.
    Fair market value means the price at which property would change 
hands between a willing buyer and a willing seller, neither being under 
any compulsion to buy or sell and both having reasonable knowledge of 
relevant facts.
    FOIA means the Freedom of Information Act, as amended (5 U.S.C. 
552).
    Funding standard account means an account established and maintained 
under section 302(b) of ERISA or section 412(b) of the Code.
    Guaranteed benefit means a benefit under a single-employer plan that 
is guaranteed by the PBGC under section 4022(a) of ERISA and part 4022 
of this chapter, or a benefit under a multiemployer plan that is 
guaranteed by the PBGC under section 4022A of ERISA.
    Insurer means a company authorized to do business as an insurance 
carrier under the laws of a State or the District of Columbia.
    Irrevocable commitment means an obligation by an insurer to pay 
benefits to

[[Page 726]]

a named participant or surviving beneficiary, if the obligation cannot 
be cancelled under the terms of the insurance contract (except for fraud 
or mistake) without the consent of the participant or beneficiary and is 
legally enforceable by the participant or beneficiary.
    IRS means the Internal Revenue Service.
    Mandatory employee contributions means amounts contributed to the 
plan by a participant that are required as a condition of employment, as 
a condition of participation in such plan, or as a condition of 
obtaining benefits under the plan attributable to employer 
contributions.
    Mass withdrawal means:
    (1) The withdrawal of every employer from the plan,
    (2) The cessation of the obligation of all employers to contribute 
under the plan, or
    (3) The withdrawal of substantially all employers pursuant to an 
agreement or arrangement to withdraw.
    Multiemployer Act means the Multiemployer Pension Plan Amendments 
Act of 1980.
    Multiemployer plan means a plan that is described in section 
4001(a)(3) of ERISA and that is covered by title IV of ERISA.
    Multiple employer plan means a single-employer plan maintained by 
two or more contributing sponsors that are not members of the same 
controlled group, under which all plan assets are available to pay 
benefits to all plan participants and beneficiaries.
    Nonbasic-type benefit means any benefit provided by a plan other 
than a basic-type benefit.
    Nonforfeitable benefit means a benefit described in section 
4001(a)(8) of ERISA. Benefits that become nonforfeitable solely as a 
result of the termination of a plan will be considered forfeitable.
    Normal retirement age means the age specified in the plan as the 
normal retirement age. This age shall not exceed the later of age 65 or 
the age attained after 5 years of participation in the plan. If no 
normal retirement age is specified in the plan, it is age 65.
    Notice of intent to terminate means the notice of a proposed 
termination of a single-employer plan, as required by section 4041(a)(2) 
of ERISA and Sec. 4041.21 (in a standard termination) or Sec. 4041.41 
(in a distress termination) of this chapter.
    PBGC means the Pension Benefit Guaranty Corporation.
    Person means a person defined in section 3(9) of ERISA.
    Plan means a defined benefit plan within the meaning of section 
3(35) of ERISA that is covered by title IV of ERISA.
    Plan administrator means an administrator, as defined in section 
3(16)(A) of ERISA.
    Plan sponsor means, with respect to a multiemployer plan, the person 
described in section 4001(a)(10) of ERISA.
    Plan year means the calendar, policy, or fiscal year on which the 
records of the plan are kept.
    PN means the three-digit plan number assigned to a plan.
    Proposed termination date means the date specified as such by the 
plan administrator of a single-employer plan in a notice of intent to 
terminate or, if later, in the standard or distress termination notice, 
in accordance with section 4041 of ERISA and part 4041 of this chapter.
    Single-employer plan means any defined benefit plan (as defined in 
section 3(35) of ERISA) that is not a multiemployer plan (as defined in 
section 4001(a)(3) of ERISA) and that is covered by title IV of ERISA.
    Standard termination means the voluntary termination, in accordance 
with section 4041(b) of ERISA and part 4041, subpart B, of this chapter, 
of a single-employer plan that is able to provide for all of its benefit 
liabilities when plan assets are distributed.
    Substantial owner means a substantial owner as defined in section 
4022(b)(5)(A) of ERISA.
    Sufficient for benefit liabilities means that there is no amount of 
unfunded benefit liabilities, as defined in section 4001(a)(18) of 
ERISA.
    Sufficient for guaranteed benefits means that there is no amount of 
unfunded guaranteed benefits, as defined in section 4001(a)(17) of 
ERISA.
    Termination date means the date established pursuant to section 
4048(a) of ERISA.

[[Page 727]]

    Title IV benefit means the guaranteed benefit plus any additional 
benefits to which plan assets are allocated pursuant to section 4044 of 
ERISA and part 4044 of this chapter.
    Voluntary employee contributions means amounts contributed by an 
employee to a plan, pursuant to the provisions of the plan, that are not 
mandatory employee contributions.

[61 FR 34010, July 1, 1996, as amended at 61 FR 63989, Dec. 2, 1996; 62 
FR 35342, July 1, 1997; 62 FR 60428, Nov. 7, 1997; 62 FR 67728, Dec. 30, 
1997]



Sec. 4001.3  Trades or businesses under common control; controlled groups.

    For purposes of title IV of ERISA:
    (a)(1) The PBGC will determine that trades and businesses (whether 
or not incorporated) are under common control if they are ``two or more 
trades or businesses under common control'', as defined in regulations 
prescribed under section 414(c) of the Code.
    (2) The PBGC will determine that all employees of trades or 
businesses (whether or not incorporated) which are under common control 
shall be treated as employed by a single employer, and all such trades 
and businesses shall be treated as a single employer.
    (3) An individual who owns the entire interest in an unincorporated 
trade or business is treated as his own employer, and a partnership is 
treated as the employer of each partner who is an employee within the 
meaning of section 401(c)(1) of the Code.
    (b) In the case of a single-employer plan:
    (1) In connection with any person, a controlled group consists of 
that person and all other persons under common control with such person.
    (2) Persons are under common control if they are members of a 
``controlled group of corporations'', as defined in regulations 
prescribed under section 414(b) of the Code, or if they are ``two or 
more trades or businesses under common control'', as defined in 
regulations prescribed under section 414(c) of the Code.



PART 4002--BYLAWS OF THE PENSION BENEFIT GUARANTY CORPORATION--Table of Contents




Sec.
4002.1  Name.
4002.2  Offices.
4002.3  Board of Directors.
4002.4  Chairman.
4002.5  Quorum.
4002.6  Meetings.
4002.7  Place of meetings; use of conference call communications 
          equipment.
4002.8  Alternate voting procedure.
4002.9  Amendments.

    Authority: 29 U.S.C. 1302(f).

    Source: 61 FR 34011, July 1, 1996, unless otherwise noted.



Sec. 4002.1  Name.

    The name of the Corporation is the Pension Benefit Guaranty 
Corporation.



Sec. 4002.2  Offices.

    The principal office of the Corporation shall be in the Metropolitan 
area of the City of Washington, District of Columbia. The Corporation 
may have additional offices at such other places as the Board of 
Directors may deem necessary or desirable to the conduct of its 
business.



Sec. 4002.3  Board of Directors.

    (a) The Board of Directors shall establish the policies of the 
Corporation and shall perform the other functions assigned to the Board 
of Directors in title IV of the Employee Retirement Income Security Act 
of 1974. The Board of Directors of the Corporation shall be composed of 
the Secretary of Labor, the Secretary of the Treasury, and the Secretary 
of Commerce. Members of the Board shall serve without compensation, but 
shall be reimbursed by the Corporation for travel, subsistence, and 
other necessary expenses incurred in the performance of their duties as 
members of the Board. A person at the time of a meeting of the Board of 
Directors who is serving as Secretary of Labor, Secretary of the 
Treasury or Secretary of Commerce in an acting capacity, shall serve as 
a member of the Board of Directors with the same authority and effect as 
the designated Secretary.

[[Page 728]]

    (b) The following powers are expressly reserved to the Board of 
Directors and shall not be delegated:
    (1) Approval of all final substantive regulations prior to 
publication in the Federal Register, except for amendments to the 
regulations on Allocation of Assets in Single-employer Plans and Duties 
of Plan Sponsor Following Mass Withdrawal (parts 4044 and 4281 of this 
chapter) establishing new interest rates and factors, which may be 
approved by the Executive Director of the PBGC.
    (2) Approval of all reports or recommendations to the Congress that 
are required by statute;
    (3) Establishment from time to time of the Corporation's budget and 
debt ceiling up to the statutory limit;
    (4) Determination from time to time of limits on advances to the 
revolving funds administered by the Corporation pursuant to section 
4005(a) of ERISA;
    (5) Final decision on any policy matter that would materially affect 
the rights of a substantial number of employers or covered participants 
and beneficiaries.
    (c) Final non-substantive regulations and all proposed regulations 
shall be approved by the Executive Director prior to publication in the 
Federal Register; provided that all proposed substantive regulations 
shall first be circulated for review to the Board of Directors or their 
designees, and may thereafter be issued by the Executive Director after 
responding to any comments made within 21 days after circulation of the 
proposed regulation, or, if no comments are received, after expiration 
of the 21-day period.



Sec. 4002.4  Chairman.

    The Secretary of Labor shall be the Chairman of the Board of 
Directors and he shall be the administrator of the Corporation with 
responsibility for its management, including overall supervision of the 
Corporation's personnel, organization, and budget practices, and shall 
exercise such incidental powers as may be necessary to carry out his 
administrative responsibilities. The Chairman may delegate his 
administrative responsibilities.



Sec. 4002.5  Quorum.

    A majority of the Directors shall constitute a quorum for the 
transaction of business. Any act of a majority of the Directors present 
at any meeting at which there is a quorum shall be the act of the Board, 
except as may otherwise be provided in these bylaws.



Sec. 4002.6  Meetings.

    Regular meetings of the Board of Directors shall be held at such 
times as the Chairman shall select. Special meetings of the Board of 
Directors shall be called by the Chairman on the request of any other 
Director. Reasonable notice of any meetings shall be given to each 
Director. The General Counsel of the Corporation shall serve as 
Secretary to the Board of Directors and keep its minutes. As soon as 
practicable after each meeting, a draft of the minutes of such meeting 
shall be distributed to each member of the Board for correction or 
approval.



Sec. 4002.7  Place of meetings; use of conference call communications equipment.

    Meetings of the Board of Directors shall be held at the principal 
office of the Corporation unless otherwise determined by the Board of 
Directors or the Chairman. Any Director may participate in a meeting of 
the Board of Directors through the use of conference call telephone or 
similar communications equipment, by means of which all persons 
participating in the meeting can simultaneously speak to and hear each 
other. Any Director so participating in a meeting shall be deemed 
present for all purposes. Actions taken by the Board of Directors at 
meetings conducted through the use of such equipment, including the 
votes of each member, shall be recorded in the usual manner in the 
minutes of the meetings of the Board of Directors. A resolution of the 
Board of Directors signed by each of its three members shall have the 
same force and effect as if agreed at a duly called meeting and shall be 
recorded in the minutes of the Board of Directors.

[[Page 729]]



Sec. 4002.8  Alternate voting procedure.

    (a) A Director shall be deemed to have participated in a meeting of 
the Board of Directors for all purposes if,
    (1) That Director was represented at that meeting by an individual 
who was designated to act on his behalf, and
    (2) That Director ratified in writing the actions taken by his 
designee at that meeting within a reasonable period of time after such 
meeting.
    (b) For purposes of this section, a Director, including an 
individual serving as Acting Secretary, shall designate a representative 
at a level not below that of Assistant Secretary within his Department. 
Such designation shall be in writing and shall be effective until 
withdrawn or until a date specified therein.
    (c) For purposes of this section, a Director's approval of the 
minutes of a meeting of the Board of Directors shall constitute 
ratification of the actions of his designee at such meeting.



Sec. 4002.9  Amendments.

    These bylaws may be amended or new bylaws adopted by unanimous vote 
of the Board.



PART 4003--RULES FOR ADMINISTRATIVE REVIEW OF AGENCY DECISIONS--Table of Contents




                      Subpart A--General Provisions

Sec.
4003.1  Purpose and scope.
4003.2  Definitions.
4003.3  PBGC assistance in obtaining information.
4003.4  Extension of time.
4003.5  Non-timely request for review.
4003.6  Representation.
4003.7  Exhaustion of administrative remedies.
4003.8  Request for confidential treatment.
4003.9  Filing of documents.
4003.10  Computation of time.

                    Subpart B--Initial Determinations

4003.21  Form and contents of initial determinations.
4003.22  Effective date of determinations.

          Subpart C--Reconsideration of Initial Determinations

4003.31  Who may request reconsideration.
4003.32  When to request reconsideration.
4003.33  Where to submit request for reconsideration.
4003.34  Form and contents of request for reconsideration.
4003.35  Final decision on request for reconsideration.

                    Subpart D--Administrative Appeals

4003.51  Who may appeal or participate in appeals.
4003.52  When to file.
4003.53  Where to file.
4003.54  Contents of appeal.
4003.55  Opportunity to appear and to present witnesses.
4003.56  Consolidation of appeals.
4003.57  Appeals affecting third parties.
4003.58  Powers of the Appeals Board.
4003.59  Decision by the Appeals Board.
4003.60  Referral of appeal to the Executive Director.
4003.61  Action by a single Appeals Board member.

    Authority: 29 U.S.C. 1302(b)(3).

    Source: 61 FR 34012, July 1, 1996, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 4003.1  Purpose and scope.

    (a) Purpose. This part sets forth the rules governing the issuance 
of all initial determinations by the PBGC on cases pending before it 
involving the matters set forth in paragraph (b) of this section and the 
procedures for requesting and obtaining administrative review by the 
PBGC of those determinations. Subpart A contains general provisions. 
Subpart B sets forth rules governing the issuance of all initial 
determinations of the PBGC on matters covered by this part. Subpart C 
establishes procedures governing the reconsideration by the PBGC of 
initial determinations relating to the matters set forth in paragraphs 
(b)(1) through (b)(4). Subpart D establishes procedures governing 
administrative appeals from initial determinations relating to the 
matters set forth in paragraphs (b)(5) through (b)(10).
    (b) Scope. This part applies to the following determinations made by 
the PBGC in cases pending before it and to the review of those 
determinations:
    (1) Determinations that a plan is covered under section 4021 of 
ERISA;
    (2) Determinations with respect to premiums, interest and late 
payment

[[Page 730]]

penalties pursuant to section 4007 of ERISA;
    (3) Determinations with respect to voluntary terminations under 
section 4041 of ERISA, including--
    (i) A determination that a notice requirement or a certification 
requirement under section 4041 of ERISA has not been met,
    (ii) A determination that the requirements for demonstrating 
distress under section 4041(c)(2)(B) of ERISA have not been met, and
    (iii) A determination with respect to the sufficiency of plan assets 
for benefit liabilities or for guaranteed benefits;
    (4) Determinations with respect to allocation of assets under 
section 4044 of ERISA, including distribution of excess assets under 
section 4044(d);
    (5) Determinations that a plan is not covered under section 4021 of 
ERISA;
    (6) Determinations under section 4022 (a) or (c) or section 4022A(a) 
of ERISA with respect to benefit entitlement of participants and 
beneficiaries under covered plans and determinations that a domestic 
relations order is or is not a qualified domestic relations order under 
section 206(d)(3) of ERISA and section 414(p) of the Code;
    (7) Determinations under section 4022 (b) or (c), section 4022A (b) 
through (e), or section 4022B of ERISA of the amount of benefits payable 
to participants and beneficiaries under covered plans;
    (8) Determinations of the amount of money subject to recapture 
pursuant to section 4045 of ERISA;
    (9) Determinations of the amount of liability under section 
4062(b)(1), section 4063, or section 4064 of ERISA;
    (10) Determinations--
    (i) That the amount of a participant's or beneficiary's benefit 
under section 4050(a)(3) of ERISA has been correctly computed based on 
the designated benefit paid to the PBGC under section 4050(b)(2) of 
ERISA, or
    (ii) That the designated benefit is correct, but only to the extent 
that the benefit to be paid does not exceed the participant's or 
beneficiary's guaranteed benefit.
    (c) Matters not covered by this part. Nothing in this part limits--
    (1) The authority of the PBGC to review, either upon request or on 
its own initiative, a determination to which this part does not apply 
when, in its discretion, the PBGC determines that it would be 
appropriate to do so, or
    (2) The procedure that the PBGC may utilize in reviewing any 
determination to which this part does not apply.



Sec. 4003.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
Code, contributing sponsor, controlled group, ERISA, multiemployer plan, 
PBGC, person, plan administrator, and single-employer plan.
    In addition, for purposes of this part:
    Aggrieved person means any participant, beneficiary, plan 
administrator, contributing sponsor of a single-employer plan or member 
of such a contributing sponsor's controlled group, plan sponsor of a 
multiemployer plan, or employer that is adversely affected by an initial 
determination of the PBGC with respect to a pension plan in which such 
person has an interest. The term ``beneficiary'' includes an alternate 
payee (within the meaning of section 206(d)(3)(K) of ERISA) under a 
qualified domestic relations order (within the meaning of section 
206(d)(3)(B) of ERISA).
    Appeals Board means a board consisting of three PBGC officials. The 
Executive Director shall appoint a senior PBGC official to serve as 
Chairperson and three or more other PBGC officials to serve as regular 
Appeals Board members. The Chairperson shall designate the three 
officials who will constitute the Appeals Board with respect to a case, 
provided that a person may not serve on the Appeals Board with respect 
to a case in which he or she made a decision regarding the merits of the 
determination being appealed. The Chairperson need not serve on the 
Appeals Board with respect to all cases.
    Appellant means any person filing an appeal under subpart D of this 
part.
    Director means the Director of any department of the PBGC and 
includes the Executive Director of the PBGC, Deputy Executive Directors, 
and the General Counsel.

[[Page 731]]



Sec. 4003.3  PBGC assistance in obtaining information.

    A person who lacks information or documents necessary to file a 
request for review pursuant to subpart C or D of this part, or necessary 
to a decision whether to seek review, or necessary to participate in an 
appeal pursuant to Sec. 4003.57 of this part or necessary to a decision 
whether to participate, may request the PBGC's assistance in obtaining 
information or documents in the possession of a party other than the 
PBGC. The request shall state or describe the missing information or 
documents, the reason why the person needs the information or documents, 
and the reason why the person needs the assistance of the PBGC in 
obtaining the information or documents. The request may also include a 
request for an extension of time to file pursuant to Sec. 4003.4 of this 
part.



Sec. 4003.4  Extension of time.

    (a) General rule. When a document is required under this part to be 
filed within a prescribed period of time, an extension of time to file 
will be granted only upon good cause shown and only when the request for 
an extension is made before the expiration of the time prescribed. The 
request for an extension shall be in writing and state why additional 
time is needed and the amount of additional time requested. The filing 
of a request for an extension shall stop the running of the prescribed 
period of time. When a request for an extension is granted, the PBGC 
shall notify the person requesting the extension, in writing, of the 
amount of additional time granted. When a request for an extension is 
denied, the PBGC shall so notify the requestor in writing, and the 
prescribed period of time shall resume running from the date of denial.
    (b) Disaster relief. When the President of the United States 
declares that, under the Disaster Relief Act of 1974, as amended (42 
U.S.C. 5121, 5122(2), 5141(b)), a major disaster exists, the Executive 
Director of the PBGC (or his or her designee) may, by issuing one or 
more notices of disaster relief, extend the due date for filing a 
request for reconsideration under Sec. 4003.32 or an appeal under 
Sec. 4003.52 by up to 180 days.
    (1) The due date extension or extensions shall be available only to 
an aggrieved person who is residing in, or whose principal place of 
business is within, a designated disaster area, or with respect to whom 
the office of the service provider, bank, insurance company, or other 
person maintaining the information necessary to file the request for 
reconsideration or appeal is within a designated disaster area; and
    (2) The request for reconsideration or appeal shall identify the 
filing as one for which the due date extension is available.



Sec. 4003.5  Non-timely request for review.

    The PBGC will process a request for review of an initial 
determination that was not filed within the prescribed period of time 
for requesting review (see Secs. 4003.32 and 4003.52) if--
    (a) The person requesting review demonstrates in his or her request 
that he or she did not file a timely request for review because he or 
she neither knew nor, with due diligence, could have known of the 
initial determination; and
    (b) The request for review is filed within 30 days after the date 
the aggrieved person, exercising due diligence at all relevant times, 
first learned of the initial determination where the requested review is 
reconsideration, or within 45 days after the date the aggrieved person, 
exercising due diligence at all relevant times, first learned of the 
initial determination where the request for review is an appeal.



Sec. 4003.6  Representation.

    A person may file any document or make any appearance that is 
required or permitted by this part on his or her own behalf or he or she 
may designate a representative. When the representative is not an 
attorney-at-law, a notarized power of attorney, signed by the person 
making the designation, which authorizes the representation and 
specifies the scope of representation shall be filed with the PBGC in 
accordance with Sec. 4003.9(b) of this part.

[[Page 732]]



Sec. 4003.7  Exhaustion of administrative remedies.

    Except as provided in Sec. 4003.22(b), a person aggrieved by an 
initial determination of the PBGC covered by this part, other than a 
determination subject to reconsideration that is issued by a Department 
Director, has not exhausted his or her administrative remedies until he 
or she has filed a request for reconsideration under subpart C of this 
part or an appeal under subpart D of this part, whichever is applicable, 
and a decision granting or denying the relief requested has been issued.



Sec. 4003.8  Request for confidential treatment.

    If any person filing a document with the PBGC believes that some or 
all of the information contained in the document is exempt from the 
mandatory public disclosure requirements of the Freedom of Information 
Act, 5 U.S.C. 552, he or she shall specify the information with respect 
to which confidentiality is claimed and the grounds therefor.



Sec. 4003.9  Filing of documents.

    (a) Date of filing. Any document required or permitted to be filed 
under this part is considered filed on the date of the United States 
postmark stamped on the cover in which the document is mailed, provided 
that--
    (1) The postmark was made by the United States Postal Service; and
    (2) The document was mailed postage prepaid, properly packaged and 
addressed to the PBGC.

If the conditions stated in both paragraphs (a)(1) and (a)(2) of this 
section are not met, the document is considered filed on the date it is 
received by the PBGC. Documents received after regular business hours 
are considered filed on the next regular business day.
    (b) Where to file. Any document required or permitted to be filed 
under this part in connection with a request for reconsideration shall 
be submitted to the Director of the department within the PBGC that 
issued the initial determination. Any document required or permitted to 
be filed under this part in connection with an appeal shall be submitted 
to the Appeals Board, Pension Benefit Guaranty Corporation, 1200 K 
Street NW., Washington, DC 20005-4026.



Sec. 4003.10  Computation of time.

    In computing any period of time prescribed or allowed by this part, 
the day of the act, event, or default from which the designated period 
of time begins to run is not counted. The last day of the period so 
computed shall be included, unless it is a Saturday, Sunday, or Federal 
holiday, in which event the period runs until the end of the next day 
which is not a Saturday, Sunday, or a Federal holiday.



                    Subpart B--Initial Determinations



Sec. 4003.21  Form and contents of initial determinations.

    All determinations to which this subpart applies shall be in 
writing, shall state the reason for the determination, and, except when 
effective on the date of issuance as provided in Sec. 4003.22(b), shall 
contain notice of the right to request review of the determination 
pursuant to subpart C or subpart D of this part, as applicable, and a 
brief description of the procedures for requesting review.



Sec. 4003.22  Effective date of determinations.

    (a) General rule. Except as provided in paragraph (b) of this 
section, an initial determination covered by this subpart will not 
become effective until the prescribed period of time for filing a 
request for reconsideration under subpart C of this part or an appeal 
under subpart D of this part, whichever is applicable, has elapsed. The 
filing of a request for review under subpart C or D of this part shall 
automatically stay the effectiveness of a determination until a decision 
on the request for review has been issued by the PBGC.
    (b) Exception. The PBGC may, in its discretion, order that the 
initial determination in a case is effective on the date it is issued. 
When the PBGC makes such an order, the initial determination shall state 
that the determination is effective on the date of

[[Page 733]]

issuance and that there is no obligation to exhaust administrative 
remedies with respect to that determination by seeking review of it by 
the PBGC.



          Subpart C--Reconsideration of Initial Determinations



Sec. 4003.31  Who may request reconsideration.

    Any person aggrieved by an initial determination of the PBGC to 
which this subpart applies may request reconsideration of the 
determination.



Sec. 4003.32  When to request reconsideration.

    Except as provided in Secs. 4003.4 and 4003.5, a request for 
reconsideration must be filed within 30 days after the date of the 
initial determination of which reconsideration is sought or, when 
administrative review includes a procedure in Sec. 4903.33 of this 
chapter, by a date 60 days (or more) thereafter that is specified in the 
PBGC's notice of the right to request review.



Sec. 4003.33  Where to submit request for reconsideration.

    A request for reconsideration shall be submitted to the Director of 
the department within the PBGC that issued the initial determination, 
except that a request for reconsideration of a determination described 
in Sec. 4003.1(b)(3)(ii) shall be submitted to the Executive Director.



Sec. 4003.34  Form and contents of request for reconsideration.

    A request for reconsideration shall--
    (a) Be in writing;
    (b) Be clearly designated as a request for reconsideration;
    (c) Contain a statement of the grounds for reconsideration and the 
relief sought; and
    (d) Reference all pertinent information already in the possession of 
the PBGC and include any additional information believed to be relevant.



Sec. 4003.35  Final decision on request for reconsideration.

    (a) Except as provided in paragraphs (a)(1) or (a)(2), final 
decisions on requests for reconsideration will be issued by the same 
department of the PBGC that issued the initial determination, by an 
official whose level of authority in that department is higher than that 
of the person who issued the initial determination.
    (1) When an initial determination is issued by a Department 
Director, the Department Director (or an official designated by the 
Department Director) will issue the final decision on request for 
reconsideration of a determination other than one described in 
Sec. 4003.1(b)(3)(ii).
    (2) The Executive Director (or an official designated by the 
Executive Director) will issue the final decision on a request for 
reconsideration of a determination described in Sec. 4003.1(b)(3)(ii).
    (b) The final decision on a request for reconsideration shall be in 
writing, specify the relief granted, if any, state the reason(s) for the 
decision, and state that the person has exhausted his or her 
administrative remedies.



                    Subpart D--Administrative Appeals



Sec. 4003.51  Who may appeal or participate in appeals.

    Any person aggrieved by an initial determination to which this 
subpart applies may file an appeal. Any person who may be aggrieved by a 
decision under this subpart granting the relief requested in whole or in 
part may participate in the appeal in the manner provided in 
Sec. 4003.57.



Sec. 4003.52  When to file.

    Except as provided in Secs. 4003.4 and 4003.5, an appeal under this 
subpart must be filed within 45 days after the date of the initial 
determination being appealed or, when administrative review includes a 
procedure in Sec. 4903.33 of this chapter, by a date 60 days (or more) 
thereafter that is specified in the PBGC's notice of the right to 
request review.



Sec. 4003.53  Where to file.

    An appeal or a request for an extension of time to appeal shall be 
submitted to the Appeals Board, Pension Benefit Guaranty Corporation, 
1200 K Street NW., Washington, DC 20005-4026.

[[Page 734]]



Sec. 4003.54  Contents of appeal.

    (a) An appeal shall--
    (1) Be in writing;
    (2) Be clearly designated as an appeal;
    (3) Contain a statement of the grounds upon which it is brought and 
the relief sought;
    (4) Reference all pertinent information already in the possession of 
the PBGC and include any additional information believed to be relevant;
    (5) State whether the appellant desires to appear in person or 
through a representative before the Appeals Board; and
    (6) State whether the appellant desires to present witnesses to 
testify before the Appeals Board, and if so, state why the presence of 
witnesses will further the decision-making process.
    (b) In any case where the appellant believes that another person may 
be aggrieved if the PBGC grants the relief sought, the appeal shall also 
include the name(s) and address(es) (if known) of such other person(s).



Sec. 4003.55  Opportunity to appear and to present witnesses.

    (a) At the discretion of the Appeals Board, any appearance permitted 
under this subpart may be before a hearing officer designated by the 
Appeals Board.
    (b) An opportunity to appear before the Appeals Board (or a hearing 
officer) and an opportunity to present witnesses will be permitted at 
the discretion of the Appeals Board. In general, an opportunity to 
appear will be permitted if the Appeals Board determines that there is a 
dispute as to a material fact; an opportunity to present witnesses will 
be permitted when the Appeals Board determines that witnesses will 
contribute to the resolution of a factual dispute.
    (c) Appearances permitted under this section will take place at the 
main offices of the PBGC, 1200 K Street NW., Washington, DC 20005-4026, 
unless the Appeals Board, in its discretion, designates a different 
location, either on its own initiative or at the request of the 
appellant or a third party participating in the appeal.



Sec. 4003.56  Consolidation of appeals.

    (a) When consolidation may be required. Whenever multiple appeals 
are filed that arise out of the same or similar facts and seek the same 
or similar relief, the Appeals Board may, in its discretion, order the 
consolidation of all or some of the appeals.
    (b) Representation of parties. Whenever the Appeals Board orders the 
consolidation of appeals, the appellants may designate one (or more) of 
their number to represent all of them for all purposes relating to their 
appeals.
    (c) Decision by Appeals Board. The decision of the Appeals Board in 
a consolidated appeal shall be binding on all appellants whose appeals 
were subject to the consolidation.



Sec. 4003.57  Appeals affecting third parties.

    (a) Before the Appeals Board issues a decision granting, in whole or 
in part, the relief requested in an appeal, it shall make a reasonable 
effort to notify third persons who will be aggrieved by the decision of 
the following:
    (1) The pendency of the appeal;
    (2) The grounds upon which the appeal is based;
    (3) The grounds upon which the Appeals Board is considering 
reversing the initial determination;
    (4) The right to submit written comments on the appeal;
    (5) The right to request an opportunity to appear in person or 
through a representative before the Appeals Board and to present 
witnesses; and
    (6) That no further opportunity to present information to the PBGC 
with respect to the determination under appeal will be provided.
    (b) Written comments and a request to appear before the Appeals 
Board must be filed within 45 days after the date of the notice from the 
Appeals Board.
    (c) If more than one third party is involved, their participation in 
the appeal may be consolidated pursuant to the provisions of 
Sec. 4003.56.



Sec. 4003.58  Powers of the Appeals Board.

    In addition to the powers specifically described in this part, the 
Appeals Board may request the submission of any information or the 
appearance of

[[Page 735]]

any person it considers necessary to resolve a matter before it and to 
enter any order it considers necessary for or appropriate to the 
disposition of any matter before it.



Sec. 4003.59  Decision by the Appeals Board.

    (a) In reaching its decision, the Appeals Board shall consider those 
portions of the file relating to the initial determination, all material 
submitted by the appellant and any third parties in connection with the 
appeal, and any additional information submitted by PBGC staff.
    (b) The decision of the Appeals Board constitutes the final agency 
action by the PBGC with respect to the determination which was the 
subject of the appeal and is binding on all parties who participated in 
the appeal and who were notified pursuant to Sec. 4003.57 of their right 
to participate in the appeal.
    (c) The decision of the Appeals Board shall be in writing, specify 
the relief granted, if any, state the bases for the decision, including 
a brief statement of the facts or legal conclusions supporting the 
decision, and state that the appellant has exhausted his or her 
administrative remedies.



Sec. 4003.60  Referral of appeal to the Executive Director.

    The Appeals Board may, in its discretion, refer any appeal to the 
Executive Director of the PBGC for decision. In such a case, the 
Executive Director shall have all the powers vested in the Appeals Board 
by this subpart and the decision of the Executive Director shall meet 
the requirements of and have the effect of a decision issued under 
Sec. 4003.59 of this part.



Sec. 4003.61  Action by a single Appeals Board member.

    (a) Authority to act. Notwithstanding any other provision of this 
part, any member of the Appeals Board has the authority to take any 
action that the Appeals Board could take with respect to a routine 
appeal as defined in paragraph (b) of this section.
    (b) Routine appeal defined. For purposes of this section, a routine 
appeal is any appeal that does not raise a significant issue of law or a 
precedent-setting issue. This would generally include any appeal that--
    (1) Is outside the jurisdiction of the Appeals Board (for example, 
an appeal challenging the plan's termination date);
    (2) Is filed by a person other than an aggrieved person or an 
aggrieved person's authorized representative;
    (3) Is untimely and presents no grounds for waiver or extension of 
the time limit for filing the appeal, or only grounds that are clearly 
without merit;
    (4) Presents grounds that clearly warrant or clearly do not warrant 
the relief requested;
    (5) Presents only factual issues that are not reasonably expected to 
affect other appeals (for example, the participant's date of birth or 
date of hire); or
    (6) Presents only issues that are controlled by settled principles 
of existing law, including Appeals Board precedent (for example, an 
issue of plan interpretation that has been resolved by the Appeals Board 
in a decision on an appeal by another participant in the same plan).

[67 FR 47695, July 22, 2002]

[[Page 736]]



                         SUBCHAPTER B--PREMIUMS





PART 4006--PREMIUM RATES--Table of Contents




Sec.
4006.1  Purpose and scope.
4006.2  Definitions.
4006.3  Premium rate.
4006.4  Determination of unfunded vested benefits.
4006.5  Exemptions and special rules.
4006.6  Definition of ``participant.''

    Authority: 29 U.S.C. 1302(b)(3), 1306, 1307.

    Source: 61 FR 34016, July 1, 1996, unless otherwise noted.



Sec. 4006.1  Purpose and scope.

    This part, which applies to all plans covered by title IV of ERISA, 
provides rules for computing the premiums imposed by sections 4006 and 
4007 of ERISA. (See part 4007 of this chapter for rules for the payment 
of premiums, including due dates and late payment charges.)



Sec. 4006.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
Code, contributing sponsor, ERISA, fair market value, insurer, 
irrevocable commitment, multiemployer plan, notice of intent to 
terminate, PBGC, plan administrator, plan, plan year, and single-
employer plan.
    In addition, for purposes of this part:
    New plan means a plan that became effective within the premium 
payment year and includes a plan resulting from a consolidation or 
spinoff. A plan that meets this definition is considered to be a new 
plan even if the plan constitutes a successor plan within the meaning of 
section 4021(a) of ERISA.
    Newly-covered plan means a plan that is not a new plan and that was 
not covered by title IV of ERISA immediately prior to the premium 
payment year.
    Participant has the meaning described in Sec. 4006.6.
    Premium payment year means the plan year for which the premium is 
being paid.
    Short plan year means a plan year that is less than twelve full 
months.

[61 FR 34016, July 1, 1996, as amended at 65 FR 75163, Dec. 1, 2000]



Sec. 4006.3  Premium rate.

    Subject to the provisions of Sec. 4006.5 (dealing with exemptions 
and special rules), the premium paid for basic benefits guaranteed under 
section 4022(a) of ERISA shall equal the flat-rate premium under 
paragraph (a) of this section plus, in the case of a single-employer 
plan, the variable-rate premium under paragraph (b) of this section.
    (a) Flat-rate premium. The flat-rate premium is equal to the number 
of participants in the plan on the last day of the plan year preceding 
the premium payment year, multiplied by--
    (1) $19 for a single-employer plan, or
    (2) $2.60 for a multiemployer plan.
    (b) Variable-rate premium. The variable-rate premium is $9 for each 
$1,000 of a single-employer plan's unfunded vested benefits, as 
determined under Sec. 4006.4.



Sec. 4006.4  Determination of unfunded vested benefits.

    (a) General rule. Except as permitted by paragraph (c) of this 
section or as provided in the exemptions and special rules under 
Sec. 4006.5, the amount of a plan's unfunded vested benefits (as defined 
in paragraph (b) of this section) shall be determined as of the last day 
of the plan year preceding the premium payment year, based on the plan 
provisions and the plan's population as of that date. The determination 
shall be made in accordance with paragraph (a)(1) or (a)(2), and shall 
be certified to in accordance with paragraph (a)(4).
    (1) The unfunded vested benefits shall be determined using the 
actuarial assumptions and methods described in paragraph (a)(3) for the 
plan year preceding the premium payment year (or, in the case of a new 
or newly-covered plan, for the premium payment year), except to the 
extent that other actuarial assumptions or methods are specifically 
prescribed by this section or are necessary to reflect the occurrence of 
a significant event described in paragraph (d) of this section between 
the date of the funding valuation and the last day of the plan year 
preceding the premium payment year. (If the plan

[[Page 737]]

does a valuation as of the last day of the plan year preceding the 
premium payment year, no separate adjustment for significant events is 
needed.)
    (2) Under this rule, the determination of the unfunded vested 
benefits may be based on a plan valuation done as of the first day of 
the premium payment year, provided that--
    (i) The actuarial assumptions and methods used are those described 
in paragraph (a)(3) for the premium payment year, except to the extent 
that other actuarial assumptions or methods are specifically prescribed 
by this section or are required to make the adjustment described in 
paragraph (a)(2)(ii) of this section; and
    (ii) If an enrolled actuary determines that there is a material 
difference between the values determined under the valuation and the 
values that would have been determined as of the last day of the 
preceding plan year, the valuation results are adjusted to reflect 
appropriately the values as of the last day of the preceding plan year. 
(This adjustment need not be made if the unadjusted valuation would 
result in greater unfunded vested benefits.)
    (3) For purposes of paragraphs (a)(1) and (a)(2), the actuarial 
assumptions and methods for a plan year are those used by the plan for 
purposes of determining the additional funding requirement under section 
302(d) of ERISA and section 412(1) of the Code (or, in the case of a 
plan that is not required to determine such additional funding 
requirement, any assumptions and methods that would be permitted for 
such purpose if the plan were so required).
    (4) In the case of any plan that determines the amount of its 
unfunded vested benefits under the general rule described in this 
paragraph, an enrolled actuary must certify, in accordance with the PBGC 
annual Premium Payment Package provided for in Sec. 4007.3 of this part, 
that the determination was made in a manner consistent with generally 
accepted actuarial principles and practices.
    (b) Unfunded vested benefits. The amount of a plan's unfunded vested 
benefits under this section shall be the excess of the plan's vested 
benefits amount (determined under paragraph (b)(1) of this section) over 
the value of the plan's assets (determined under paragraph (b)(2) of 
this section).
    (1) Vested benefits amount. A plan's vested benefits amount under 
this section shall be the plan's current liability (within the meaning 
of section 302(d)(7) of ERISA and section 412(1)(7) of the Code) 
determined by taking into account only vested benefits and by using an 
interest rate equal to the applicable percentage of the annual yield for 
30-year Treasury constant maturities, as reported in Federal Reserve 
Statistical Release G.13 and H.15, for the calendar month preceding the 
calendar month in which the premium payment year begins. If the interest 
rate (or rates) used by the plan to determine current liability was (or 
were all) not greater than the required interest rate, the vested 
benefits need not be revalued if an enrolled actuary certifies that the 
interest rate (or interest rates) used was (or were all) not greater 
than the required interest rate. For purposes of this paragraph (b)(1) 
(subject to the provisions of Sec. 4006.5(g), dealing with plans of 
regulated public utilities), the applicable percentage is--
    (i) For a premium payment year that begins before July 1997, 80 
percent;
    (ii) For a premium payment year that begins after June 1997 and 
before the first premium payment year to which the first tables 
prescribed under section 302(d)(7)(C)(ii)(II) of ERISA and section 
412(1)(7)(C)(ii)(II) of the Code apply, 85 percent; and
    (iii) For the first premium payment year to which the first tables 
prescribed under section 302(d)(7)(C)(ii)(II) of ERISA and section 
412(1)(7)(C)(ii)(II) of the Code apply and any subsequent plan year, 100 
percent.
    (2) Value of assets--(i) Actuarial value. For a premium payment year 
that is described in paragraph (b)(1)(i) or (b)(1)(ii) of this section, 
the value of the plan's assets shall be their actuarial value determined 
in accordance with section 302(c)(2) of ERISA and section 412(c)(2) of 
the Code.
    (ii) Fair market value. For a premium payment year that is described 
in paragraph (b)(1)(iii) of this section, the value of the plan's assets 
shall be their fair market value.

[[Page 738]]

    (iii) Use of credit balance. The value of the plan's assets shall 
not be reduced by a credit balance in the funding standard account.
    (iv) Contributions. Contributions owed for any plan year preceding 
the premium payment year shall be included for plans with 500 or more 
participants and may be included for any other plan. Contributions may 
be included only to the extent such contributions have been paid into 
the plan on or before the earlier of the due date for payment of the 
variable-rate portion of the premium under Sec. 4007.11 or the date that 
portion is paid. Contributions included that are paid after the last day 
of the plan year preceding the premium payment year shall be discounted 
at the plan asset valuation rate (on a simple or compound basis in 
accordance with the plan's discounting rules) to such last day to 
reflect the date(s) of payment. Contributions for the premium payment 
year may not be included for any plan.
    (c) Alternative method for calculating unfunded vested benefits. In 
lieu of determining the amount of the plan's unfunded vested benefits 
pursuant to paragraph (a) of this section, a plan administrator may 
calculate the amount of a plan's unfunded vested benefits under this 
paragraph (c) using the plan's Form 5500, Schedule B, for the plan year 
preceding the premium payment year. Pursuant to this paragraph (c), 
unfunded vested benefits shall be determined, in accordance with the 
Premium Payment Package, from values for the plan's vested benefits and 
assets that are required to be reported on the plan's Schedule B. The 
value of the vested benefits shall be adjusted in accordance with 
paragraph (c)(1) of this section to reflect accruals during the plan 
year preceding the premium payment year and with paragraph (c)(2) of 
this section to reflect the interest rate prescribed in paragraph (b)(1) 
of this section, and the value of the assets shall be adjusted in 
accordance with paragraph (c)(4) of this section. (If the plan 
administrator certifies that the interest rate (or rates) used to 
determine the vested benefit values taken from the Schedule B was (or 
were all) not greater than the interest rate prescribed in paragraph 
(b)(1) of this section, the interest rate adjustment prescribed in 
paragraph (c)(2) of this section is not required.) The resulting 
unfunded vested benefits amount shall be adjusted in accordance with 
paragraph (c)(5) of this section to reflect the passage of time from the 
date of the Schedule B data to the last day of the plan year preceding 
the premium payment year.
    (1) Vested benefits adjustment for accruals. The total value of the 
plan's current liability as of the first day of the plan year preceding 
the premium payment year for vested benefits of active and terminated 
vested participants not in pay status, computed in accordance with 
section 302(d)(7) of ERISA and section 412(l)(7) of the Code, shall be 
adjusted to reflect the increase in vested benefits attributable to 
accruals during the plan year preceding the premium payment year by 
multiplying that value by 1.07.
    (2) Vested benefits interest rate adjustment. The value of vested 
benefits as entered on the Schedule B shall be adjusted in accordance 
with the following formula (except as provided in paragraph (c)(3) of 
this section) to reflect the interest rate prescribed in paragraph 
(b)(1) of this section:

VBadj = 
    VBPAYx.94[lpar]RIR-BIR[rpar]+VBNON-PAY
     x.94[lpar]RIR-BIR[rpar]x((100+BIA)/ 
    (100+RIR))[lpar]ARA-50[rpar];


where--

    (i) VBadj is the adjusted vested benefits amount (as of 
the first day of the plan year preceding the premium payment year) under 
the alternative calculation method;
    (ii) VBPAY is the plan's current liability as of the 
first day of the plan year preceding the premium payment year for vested 
benefits of participants and beneficiaries in pay status, computed in 
accordance with section 302(d)(7) of ERISA and section 412(l)(7) of the 
Code;
    (iii) VBNON-PAY is the total of the plan's current 
liability as of the first day of the plan year preceding the premium 
payment year for vested benefits of active and terminated vested 
participants not in pay status, computed in accordance with section 
302(d)(7) of ERISA and section 412(l)(7) of the Code, multiplied by 1.07 
in accordance with paragraph (c)(1) of this section;

[[Page 739]]

    (iv) RIR is the required interest rate prescribed in paragraph 
(b)(1) of this section;
    (v) BIR is the post-retirement current liability interest rate used 
to determine the pay-status current liability figure referred to in 
paragraph (c)(2)(ii) of this section;
    (vi) BIA is the pre-retirement current liability interest rate used 
to determine the pre-pay-status current liability figures referred to in 
paragraph (c)(2)(iii) of this section; and
    (vii) ARA is the plan's assumed weighted average retirement age.
    (3) Optional use of substitution factors in interest rate adjustment 
formula. In lieu of the term, .94 [lpar]RIR-BIR[rpar], in the 
formula prescribed by paragraph (c)(2) of this section, a plan 
administrator may use the optional substitution factor provided in the 
Premium Payment Package.
    (4) Adjusted value of plan assets. The value of plan assets shall be 
the actuarial value of plan assets as of the first day of the plan year 
preceding the premium payment year, determined in accordance with 
section 302(c)(2) of ERISA and section 412(c)(2) of the Code without 
reduction for any credit balance in the plan's funding standard account, 
unless that amount was determined as of a date other than the first day 
of the plan year preceding the premium payment year or the premium 
payment year is described in Sec. 4006.4(b)(1)(iii). In either of those 
events, the value of plan assets shall be the current value of assets 
(as reported on Form 5500) as of that first day or (if Form 5500-EZ is 
filed) as of the last day of the plan year preceding the Schedule B 
year. The value of assets from the Schedule B shall be adjusted in 
accordance with paragraph (b)(2) of this section, except that the amount 
of all contributions that are included in the value of assets and that 
were made after the first day of the plan year preceding the premium 
payment year shall be discounted to such first day at the interest rate 
prescribed in paragraph (b)(1) of this section for the premium payment 
year, compounded annually except that simple interest may be used for 
any partial years.
    (5) Adjustment for passage of time. The amount of the plan's 
unfunded vested benefits shall be adjusted to reflect the passage of 
time between the date of the Schedule B data (the first day of the plan 
year preceding the premium payment year) and the last day of the plan 
year preceding the premium payment year in accordance with the following 
formula:

UVBadj = (VBadj-Aadj)x(1+RIR/
    100)Y;


where--

    (i) UVBadj is the amount of the plan's adjusted unfunded 
vested benefits;
    (ii) VBadj is the value of the adjusted vested benefits 
calculated in accordance with paragraphs (c)(1) and (c)(2) of this 
section;
    (iii) Aadj is the adjusted asset amount calculated in 
accordance with paragraph (c)(3) of this section;
    (iv) RIR is the required interest rate prescribed in paragraph 
(b)(1) of this section; and
    (v) Y is deemed to be equal to 1 (unless the plan year preceding the 
premium payment year is a short plan year, in which case Y is the number 
of years between the first day and the last day of the short plan year, 
expressed as a decimal fraction of 1.0 with two digits to the right of 
the decimal point).
    (d) Restrictions on alternative calculation method for large plans. 
(1) The alternative calculation method described in paragraph (c) of 
this section may be used for a plan with 500 or more participants as of 
the last day of the plan year preceding the premium payment year only 
if--
    (i) No significant event, as described in paragraph (d)(2) of this 
section, has occurred between the first day and the last day of the plan 
year preceding the premium payment year, and an enrolled actuary so 
certifies in accordance with the Premium Payment Package; or
    (ii) An enrolled actuary makes an appropriate adjustment to the 
value of unfunded vested benefits to reflect the occurrence of 
significant events that have occurred between those dates and certifies 
to that fact in accordance with the Premium Payment Package.
    (2) The significant events described in this paragraph are--
    (i) An increase in the plan's actuarial costs (consisting of the 
plan's normal

[[Page 740]]

cost under section 302(b)(2)(A) of ERISA and section 412(b)(2)(A) of the 
Code, amortization charges under section 302(b)(2)(B) of ERISA and 
section 412(b)(2)(B) of the Code, and amortization credits under section 
302(b)(3)(B) of ERISA and section 412(b)(3)(B) of the Code) attributable 
to a plan amendment, unless the cost increase attributable to the 
amendment is less than 5 percent of the actuarial costs determined 
without regard to the amendment;
    (ii) The extension of coverage under the plan to a new group of 
employees resulting in an increase of 5 percent or more in the plan's 
liability for accrued benefits;
    (iii) A plan merger, consolidation or spinoff that is not de minimis 
pursuant to the regulations under section 414(l) of the Code;
    (iv) The shutdown of any facility, plant, store, etc., that creates 
immediate eligibility for benefits that would not otherwise be 
immediately payable for participants separating from service;
    (v) The offer by the plan for a temporary period to permit 
participants to retire at benefit levels greater than that to which they 
would otherwise be entitled;
    (vi) A cost-of-living increase for retirees resulting in an increase 
of 5 percent or more in the plan's liability for accrued benefits; and
    (vii) Any other event or trend that results in a material increase 
in the value of unfunded vested benefits.



Sec. 4006.5  Exemptions and special rules.

    (a) Variable-rate premium exemptions. A plan described in any of 
paragraphs (a)(1)-(a)(5) of this section is not required to determine 
its unfunded vested benefits under Sec. 4006.4 and does not owe a 
variable-rate premium under Sec. 4006.3(b).
    (1) Certain fully funded plans. A plan is described in this 
paragraph if the plan had fewer than 500 participants on the last day of 
the plan year preceding the premium payment year, and an enrolled 
actuary certifies in accordance with the Premium Payment Package that, 
as of that date, the plan had no unfunded vested benefits (valued at the 
interest rate prescribed in Sec. 4006.4(b)(1)).
    (2) Plans without vested benefit liabilities. A plan is described in 
this paragraph if it did not have any participants with vested benefits 
as of the last day of the plan year preceding the premium payment year, 
and the plan administrator so certifies in accordance with the Premium 
Payment Package.
    (3) Section 412(i) plans. A plan is described in this paragraph if 
the plan was a plan described in section 412(i) of the Code and the 
regulations thereunder on the last day of the plan year preceding the 
premium payment year and the plan administrator so certifies, in 
accordance with the Premium Payment Package.
    (4) Plans terminating in standard terminations. The exemption for a 
plan described in this paragraph is conditioned upon the plan's making a 
final distribution of assets in a standard termination. If a plan is 
ultimately unable to do so, the exemption is revoked and all variable-
rate amounts not paid pursuant to this exemption are due retroactive to 
the applicable due date(s). A plan is described in this paragraph if--
    (i) The plan administrator has issued notices of intent to terminate 
the plan in a standard termination in accordance with section 4041(a)(2) 
of ERISA; and
    (ii) The proposed termination date set forth in the notice of intent 
to terminate is on or before the last day of the plan year preceding the 
premium payment year.
    (5) Plans at full funding limit. A plan is described in this 
paragraph if, on or before the earlier of the due date for payment of 
the variable-rate portion of the premium under Sec. 4007.11 or the date 
that portion is paid, the plan's contributing sponsor or contributing 
sponsors made contributions to the plan for the plan year preceding the 
premium payment year in an amount not less than the full funding 
limitation for such preceding plan year under section 302(c)(7) of ERISA 
and section 412(c)(7) of the Code (determined in accordance with 
paragraphs (a)(5)(i) and (a)(5)(ii) of this section). In order for a 
plan to qualify for this exemption, an enrolled actuary must certify 
that the plan has

[[Page 741]]

met the requirements of this paragraph.
    (i) Determination of full funding limitation. The determination of 
whether contributions for the preceding plan year were in an amount not 
less than the full funding limitation under section 302(c)(7) of ERISA 
and section 412(c)(7) of the Code for such preceding plan year shall be 
based on the methods of computing the full funding limitation, including 
actuarial assumptions and funding methods, used by the plan (provided 
such assumptions and methods met all requirements, including the 
requirements for reasonableness, under section 302 of ERISA and section 
412 of the Code) with respect to such preceding plan year. Plan assets 
shall not be reduced by the amount of any credit balance in the plan's 
funding standard account.
    (ii) Rounding of de minimis amounts. Any contribution that is 
rounded down to no less than the next lower multiple of one hundred 
dollars (in the case of full funding limitations up to one hundred 
thousand dollars) or to no less than the next lower multiple of one 
thousand dollars (in the case of full funding limitations above one 
hundred thousand dollars) shall be deemed for purposes of this paragraph 
to be in an amount equal to the full funding limitation.
    (b) Special rule for determining vested benefits for certain large 
plans. With respect to a plan that had 500 or more participants on the 
last day of the plan year preceding the premium payment year, if an 
enrolled actuary determines pursuant to Sec. 4006.4(a) that the 
actuarial value of plan assets equals or exceeds the value of all 
benefits accrued under the plan (valued at the interest rate prescribed 
in Sec. 4006.4(b)(1)), the enrolled actuary need not determine the value 
of the plan's vested benefits, and may instead report in the Premium 
Payment Package the value of the accrued benefits.
    (c) Special rule for determining unfunded vested benefits for plans 
terminating in distress or involuntary terminations. A plan described in 
this paragraph may determine its unfunded vested benefits by using the 
special alternative calculation method set forth in this paragraph. A 
plan is described in this paragraph if it has issued notices of intent 
to terminate in a distress termination in accordance with section 
4041(a)(2) of ERISA with a proposed termination date on or before the 
last day of the plan year preceding the premium payment year, or if the 
PBGC has instituted proceedings to terminate the plan in accordance with 
section 4042 of ERISA and has sought a termination date on or before the 
last day of the plan year preceding the premium payment year. Pursuant 
to this paragraph, a plan shall determine its unfunded vested benefits 
in accordance with the alternative calculation method in Sec. 4006.4(c), 
except that--
    (1) The calculation shall be based on the Form 5500, Schedule B, for 
the plan year which includes (in the case of a distress termination) the 
proposed termination date or (in the case of an involuntary termination) 
the termination date sought by the PBGC, or, if no Schedule B is filed 
for that plan year, on the Schedule B for the immediately preceding plan 
year;
    (2) All references in Sec. 4006.4(c) and Sec. 4006.4(d) to the first 
day of the plan year preceding the premium payment year shall be deemed 
to refer to the first day of the plan year for which the Schedule B was 
filed;
    (3) The value of the sum of the plan's current liability as of the 
first day of the plan year preceding the premium payment year for vested 
benefits of active and terminated vested participants not in pay status, 
computed in accordance with section 302(d)(7) of ERISA and section 
412(l)(7) of the Code, shall be adjusted (in lieu of the adjustment 
required by Sec. 4006.4(c)(1)) by multiplying that value by the sum of 1 
plus the product of .07 and the number of years (rounded to the nearest 
hundredth of a year) between the date of the Schedule B data and (in the 
case of a distress termination) the proposed termination date or (in the 
case of an involuntary termination) the termination date sought by the 
PBGC; and
    (4) The exponent, ``Y,'' in the time adjustment formula of 
Sec. 4006.4(c)(5) shall be deemed to equal the number of years (rounded 
to the nearest hundredth of a year) between the date of the Schedule B 
data and the last day of

[[Page 742]]

the plan year preceding the premium payment year.
    (d) Special determination date rule for new and newly-covered plans. 
In the case of a new plan or a newly-covered plan, all references in 
Secs. 4006.3, 4006.4, and paragraphs (a) and (b) of this section to the 
last day of the plan year preceding the premium payment year shall be 
deemed to refer to the first day of the premium payment year or, if 
later, the date on which the plan became effective for benefit accruals 
for future service, and for purposes of determining the plan's premium, 
the number of plan participants, and (for a single-employer plan) the 
amount of the plan's unfunded vested benefits and the applicability of 
any exemption or special rule under paragraph (a) or (b) of this 
section, shall be determined as of such first day or later date.
    (e) Special determination date rule for certain mergers and 
spinoffs. (1) With respect to a plan described in paragraph (e)(2) of 
this section, all references in Secs. 4006.3, 4006.4, and this section, 
as applicable, to the last day of the plan year preceding the premium 
payment year shall be deemed to refer to the first day of the premium 
payment year.
    (2) A plan is described in this paragraph (e)(2) if--
    (i) The plan engages in a merger or spinoff that is not de minimis 
pursuant to the regulations under section 414(l) of the Code (in the 
case of single-employer plans) or pursuant to part 4231 of this chapter 
(in the case of multiemployer plans), as applicable;
    (ii) The merger or spinoff is effective on the first day of the 
plan's premium payment year; and
    (iii) The plan is the transferee plan in the case of a merger or the 
transferor plan in the case of a spinoff.
    (f) Proration for certain short plan years. The premium for a plan 
that has a short plan year as described in this paragraph (f) is 
prorated by the number of months in the short plan year (treating a part 
of a month as a month). The proration applies whether or not the short 
plan year ends by the premium due date for the short plan year. For 
purposes of this paragraph (f), there is a short plan year in the 
following circumstances:
    (1) New plan. A new or newly-covered plan becomes effective for 
premium purposes on a date other than the first day of its first plan 
year.
    (2) Change in plan year. A plan amendment changes the plan year, but 
only if the plan does not merge into or consolidate with another plan or 
otherwise cease its independent existence either during the short plan 
year or at the beginning of the full plan year following the short plan 
year.
    (3) Distribution of assets. The plan's assets (other than any excess 
assets) are distributed pursuant to the plan's termination.
    (4) Appointment of trustee. The plan is a single-employer plan, and 
a plan trustee is appointed pursuant to section 4042 of ERISA.

[61 FR 34016, July 1, 1996, as amended at 62 FR 60428, Nov. 7, 1997; 65 
FR 75163, Dec. 1, 2000]



Sec. 4006.6  Definition of ``participant.''

    (a) General rule. For purposes of this part and part 4007 of this 
chapter, an individual is considered to be a participant in a plan on 
any date if the plan has benefit liabilities with respect to the 
individual on that date.
    (b) Loss or distribution of benefit. For purposes of this section, 
an individual is treated as no longer being a participant--
    (1) In the case of an individual with no vested accrued benefit, 
after--
    (i) The individual incurs a one-year break in service under the 
terms of the plan,
    (ii) The individual's entire ``zero-dollar'' vested accrued benefit 
is deemed distributed under the terms of the plan, or
    (iii) The individual dies; and
    (2) In the case of a living individual whose accrued benefit is 
fully or partially vested, or a deceased individual whose accrued 
benefit was fully or partially vested at the time of death, after--
    (i) An insurer makes an irrevocable commitment to pay all benefit 
liabilities with respect to the individual, or
    (ii) All benefit liabilities with respect to the individual are 
otherwise distributed.

[[Page 743]]

    (c) Examples. The operation of this section is illustrated by the 
following examples:

    Example 1. Participation under a calendar-year plan begins upon 
commencement of employment, and the only benefit provided by the plan is 
an accrued benefit (expressed as a life annuity beginning at age 65) of 
$30 per month times full years of service. The plan credits a ratable 
portion of a full year of service for service of at least 1,000 hours 
but less than 2,000 hours in a service computation period that begins on 
the date when the participant commences employment and each anniversary 
of that date. John and Mary both commence employment on July 1, 2000. On 
December 31, 2000 (the snapshot date for the plan's 2001 premium), John 
has credit for 988 hours of service and Mary has credit for 1,006 hours 
of service. For purposes of this section, Mary is considered to have an 
accrued benefit, and John is considered not to have an accrued benefit. 
Thus, the plan is considered to have benefit liabilities with respect to 
Mary, but not John, on December 31, 2000; and Mary, but not John, must 
be counted as a participant for purposes of computing the plan's 2001 
premium.
    Example 2. The plan also provides that a participant becomes vested 
five years after commencing employment and defines a one-year break in 
service as a service computation period in which less than 500 hours of 
service is performed. On February 1, 2002, John has an accrued benefit 
of $18 per month beginning at age 65 based on credit for 1,200 hours of 
service in the service computation period that began July 1, 2000. 
However, John has credit for only 492 hours of service in the service 
computation period that began July 1, 2001. On February 1, 2002, John 
terminates his employment. On December 31, 2002 (the snapshot date for 
the 2003 premium), John has incurred a one-year break in service, and 
thus is not counted as a participant for purposes of computing the 
plan's 2003 premium.
    Example 3. On January 1, 2004, the plan is amended to provide that 
if a vested participant whose accrued benefit has a present value of 
$5,000 or less leaves employment, the benefit will be immediately cashed 
out. On December 30, 2005, Jane, who has a vested benefit with a present 
value of less than $5,000, leaves employment. Because of reasonable 
administrative delay in determining the amount of the benefit to be 
paid, the plan does not pay Jane the value of her benefit until January 
9, 2006. Under the provisions of this section, Jane is treated as not 
having an accrued benefit on December 31, 2005 (the snapshot date for 
the 2006 premium), because Jane's benefit is treated as having been paid 
on December 30, 2005. Thus, Jane is not counted as a participant for 
purposes of computing the plan's 2006 premium.
    Example 4. If the plan amendment had instead provided for cashouts 
as of the first of the month following termination of employment, and 
the plan paid Jane the value of her benefit on January 1, 2006, Jane 
would be treated under the provisions of this section as having an 
accrued benefit on December 31, 2005, and would thus be counted as a 
participant for purposes of computing the plan's 2006 premium.

[65 FR 75163, Dec. 1, 2000]



PART 4007--PAYMENT OF PREMIUMS--Table of Contents




Sec.
4007.1  Purpose and scope.
4007.2  Definitions.
4007.3  Filing requirement and forms.
4007.4  Filing address.
4007.5  Date of filing.
4007.6  Computation of time.
4007.7  Late payment interest charges.
4007.8  Late payment penalty charges.
4007.9  Coverage for guaranteed basic benefits.
4007.10  Recordkeeping; audits; disclosure of information.
4007.11  Due dates.
4007.12  Liability for single-employer premiums.

    Authority: 29 U.S.C. 1302(b)(3), 1303(a), 1306, 1307.

    Source: 61 FR 34020, July 1, 1996, unless otherwise noted.



Sec. 4007.1  Purpose and scope.

    This part, which applies to all plans that are covered by title IV 
of ERISA, provides procedures for paying the premiums imposed by 
sections 4006 and 4007 of ERISA. (See part 4006 of this chapter for 
premium rates and computational rules.)



Sec. 4007.2  Definitions.

    (a) The following terms are defined in Sec. 4001.2 of this chapter: 
Code, contributing sponsor, ERISA, insurer, IRS, multiemployer plan, 
notice of intent to terminate, PBGC, plan, plan administrator, plan 
year, and single-employer plan.
    (b) For purposes of this part, the following terms are defined in 
Sec. 4006.2 of this chapter: new plan, newly covered plan, participant, 
premium payment year, and short plan year.

[[Page 744]]



Sec. 4007.3  Filing requirement and forms.

    The estimation, declaration, reconciliation and payment of premiums 
shall be made using the forms prescribed by and in accordance with the 
instructions in the PBGC annual Premium Payment Package. The plan 
administrator of each covered plan shall file the prescribed form or 
forms, and any premium payments due, no later than the applicable due 
date specified in Sec. 4007.11.



Sec. 4007.4  Filing address.

    Plan administrators shall file all forms required to be filed under 
this part and all payments for premiums, interest, and penalties 
required to be made under this part at the address specified in the 
Premium Payment Package.



Sec. 4007.5  Date of filing.

    (a) Any form required to be filed under this part and any payment 
required to be made under this part shall be deemed to have been filed 
or made on the date on which it is mailed.
    (b) A form or payment shall be presumed to have been mailed on the 
date on which it is postmarked by the United States Postal Service, or 
three days prior to the date on which it is received by the PBGC if it 
does not contain a legible United States Postal Service postmark.



Sec. 4007.6  Computation of time.

    In computing any period of time prescribed by this part, the day of 
the act, event, or default from which the designated period of time 
begins to run is not counted. The last day of the period so computed 
shall be included, unless it is a Saturday, Sunday, or federal holiday, 
in which event the period runs until the end of the next day that is not 
a Saturday, Sunday, or federal holiday. For purposes of computing late 
payment interest charges under Sec. 4007.7 and late payment penalty 
charges under Sec. 4007.8, a Saturday, Sunday or federal holiday 
referred to in the previous sentence shall be included.



Sec. 4007.7  Late payment interest charges.

    (a) If any premium payment due under this part is not paid by the 
due date prescribed for such payment by Sec. 4007.11, an interest charge 
will accrue on the unpaid amount at the rate imposed under section 
6601(a) of the Code for the period from the date payment is due to the 
date payment is made. Late payment interest charges are compounded 
daily.
    (b) When PBGC issues a bill for premium payments necessary to 
reconcile the premiums paid with the actual premium due, interest will 
be accrued on the unpaid premium until the date of the bill if paid no 
later than 30 days after the date of such bill. If the bill is not paid 
within the 30-day period following the date of such bill, interest will 
continue to accrue throughout such 30-day period and thereafter, until 
the date paid.
    (c) PBGC bills for interest assessed under this section will be 
deemed paid when due if paid no later than 30 days after the date of 
such bills. Otherwise, interest will accrue in accordance with paragraph 
(a) of this section on the amount of the bill from the date of the bill 
until the date of payment.



Sec. 4007.8  Late payment penalty charges.

    (a) Penalty charge. If any premium payment due under this part is 
not paid by the due date under Sec. 4007.11, the PBGC will assess a late 
payment penalty charge as determined under this paragraph (a), except to 
the extent the charge is waived under paragraphs (b) through (g) of this 
section. The charge will be no more than 100% of the unpaid premium. The 
charge will be based on the number of months (counting any portion of a 
month as a whole month) from the due date to the date of payment and is 
subject to a floor of $25 (or, if less, the amount of the unpaid 
premium).
    (1) Penalty rate for post-1995 premium payment years. This paragraph 
(a)(1) applies to the premium for any premium payment year beginning 
after 1995. The penalty rate is--
    (i) 1% per month (for all months) on any amount of unpaid premium 
that is

[[Page 745]]

paid on or before the date the PBGC issues a written notice to any 
person liable for the plan's premium that there is or may be a premium 
delinquency (e.g., a premium bill, a letter initiating a premium 
compliance review, or a letter questioning a failure to make a premium 
filing); or
    (ii) 5% per month (for all months) on any amount of unpaid premium 
that is paid after that date.
    (2) Penalty rate for pre-1996 premium payment years. This paragraph 
(a)(2) applies to the premium for any premium payment year beginning 
before 1996. The penalty rate is 5% per month (for all months) on any 
amount of unpaid premium.
    (b) Hardship waiver. The PBGC may grant a waiver based upon a 
showing of substantial hardship as provided in section 4007(b) of ERISA.
    (c) Reasonable cause waiver. The PBGC may, upon any demonstration of 
reasonable cause, waive all or part of a late payment penalty charge.
    (d) Waiver on PBGC's own initiative. The PBGC may, on its own 
initiative, waive all or part of a late payment penalty charge.
    (e) Grace period. With respect to any PBGC bill for a premium 
underpayment, the PBGC will waive any late payment penalty charge 
accruing after the date of the bill, provided the premium underpayment 
is paid within 30 days after the date of the bill.
    (f) Safe-harbor relief for certain large plans. This waiver applies 
in the case of a plan for which a reconciliation filing is required 
under Sec. 4007.11(a)(2)(iii). The PBGC will waive the penalty on any 
underpayment of the flat-rate premium for the period that ends on the 
date the reconciliation filing is due if fewer than 500 participants are 
reported for the plan year preceding the premium payment year 
(determined in accordance with paragraph (h) of this section).
    (g) Safe-harbor relief for plans that make minimum estimated 
payment. This waiver applies in the case of a plan for which a 
reconciliation filing is required under Sec. 4007.11(a)(2)(iii). The 
PBGC will waive the penalty on any underpayment of the flat-rate premium 
for the period that ends on the date the reconciliation filing is due 
if, by the date the flat-rate premium for the premium payment year is 
due under Sec. 4007.11(a)(2)(i), the plan administrator pays at least 
the lesser of--
    (1) 90% of the flat-rate premium due for the premium payment year; 
or
    (2) 100% of the flat-rate premium that would be due for the premium 
payment year if the number of participants for that year were the lesser 
of--
    (i) The number of participants for whom premiums were required to be 
paid for the plan year preceding the premium payment year; or
    (ii) The number of participants reported for the plan year preceding 
the premium payment year (determined in accordance with paragraph (h) of 
this section).
    (h) Reported participant count. For purposes of paragraphs (f) and 
(g)(2)(ii) of this section, the number of participants reported for the 
plan year preceding the premium payment year is the number of 
participants last reported under this part to the PBGC (for the plan 
year preceding the premium payment year) by the date the flat-rate 
premium for the premium payment year is due under Sec. 4007.11(a)(2)(i).
    (i) Safe harbor relief for certain plan amendments prospectively 
changing plan year. This waiver applies in the case of a plan for which 
a reconciliation filing is required under Sec. 4007.11(a)(2)(iii). The 
PBGC will waive the penalty on any underpayment of the flat-rate premium 
for the period that ends on the date the reconciliation filing is due 
if, by the date the flat-rate premium for the premium payment year is 
due under Sec. 4007.11(a)(2)(i),--
    (1) The plan has been amended to change its plan year and the 
amendment as in effect on that date makes the premium payment year a 
short year that will end after that date; and
    (2) The plan administrator pays at least the lesser of--
    (i) The amount determined under Sec. 4007.8(g) based on the actual 
length of the premium payment year, or
    (ii) The amount determined under Sec. 4007.8(g) based on the length 
that the premium payment year would have if the new plan year cycle 
began as anticipated by the amendment.

[64 FR 66385, Nov. 26, 1999, as amended at 65 FR 75164, Dec. 1, 2000]

[[Page 746]]



Sec. 4007.9  Coverage for guaranteed basic benefits.

    (a) The failure by a plan administrator to pay the premiums due 
under this part will not result in that plan's loss of coverage for 
basic benefits guaranteed under section 4022(a) or 4022A(a) of ERISA.
    (b) The payment of the premiums imposed by this part will not result 
in coverage for basic benefits guaranteed under section 4022(a) or 
4022A(a) of ERISA for plans not covered under title IV of ERISA.



Sec. 4007.10  Recordkeeping; audits; disclosure of information.

    (a) Retention of records to support premium payments. All plan 
records, including calculations and other data prepared by an enrolled 
actuary or, for a plan described in section 412(i) of the Code, by the 
insurer from which the insurance contracts are purchased, that are 
necessary to support or to validate premium payments under this part 
shall be retained by the plan administrator for a period of six years 
after the premium due date. Records that must be retained pursuant to 
this paragraph include, but are not limited to, records that establish 
the number of plan participants and that reconcile the calculation of 
the plan's unfunded vested benefits with the actuarial valuation upon 
which the calculation was based.
    (b) PBGC audit. Premium payments under this part are subject to 
audit by the PBGC. If, upon audit, the PBGC determines that a premium 
due under this part was underpaid, the late payment interest charges 
under Sec. 4007.7 and the late payment penalty charges under Sec. 4007.8 
shall apply to the unpaid balance from the premium due date to the date 
of payment. In determining the premium due, if, in the judgment of the 
PBGC, the plan's records fail to establish the number of plan 
participants with respect to whom premiums were required for any premium 
payment year, the PBGC may rely on data it obtains from other sources 
(including the IRS and the Department of Labor) for presumptively 
establishing the number of plan participants for premium computation 
purposes.
    (c) Providing record information. (1) In general. The plan 
administrator shall make the records retained pursuant to paragraph (a) 
of this section available to the PBGC upon request for inspection and 
photocopying at the location where they are kept (or another, mutually 
agreeable, location) and shall submit information in such records to the 
PBGC within 45 days of the date of the PBGC's written request therefor, 
or by a different time specified therein.
    (2) Extension. Except as provided in paragraph (c)(3) of this 
section, the plan administrator may automatically extend the period 
described in paragraph (c)(1) by submitting a certification to the PBGC 
prior to the expiration of that time period. The certification shall--
    (i) Specify a date to which the time period described in paragraph 
(c)(1) is extended that is no more than 90 days from the date of the 
PBGC's written request for information; and
    (ii) Contain a statement, certified to by the plan administrator 
under penalty of perjury (18 U.S.C. Sec. 1001), that, despite reasonable 
efforts, the additional time is necessary to comply with the PBGC's 
request.
    (3) Shortening of time period. The PBGC may in its discretion 
shorten the time period described in paragraph (c)(1) or (c)(2) of this 
section where it determines that collection of unpaid premiums (or any 
associated interest or penalties) would otherwise be jeopardized. If the 
PBGC shortens the time period described in paragraph (c)(1), no 
extension is available under paragraph (c)(2).
    (d) Address and timeliness. Information required to be submitted 
under paragraph (c) of this section shall be submitted to the address 
specified in the PBGC's request. The timeliness of a submission shall be 
determined in accordance with Secs. 4007.5 and 4007.6.

[61 FR 34020, July 1, 1996, as amended at 62 FR 36663, July 9, 1997]



Sec. 4007.11  Due dates.

    (a) In general. The premium filing due date for small plans is 
prescribed in paragraph (a)(1) of this section and the premium filing 
due dates for large plans are prescribed in paragraph (a)(2) of this 
section.
    (1) Plans with fewer than 500 participants. If the plan has fewer 
than 500

[[Page 747]]

participants, as determined under paragraph (b) of this section, the due 
date is the fifteenth day of the tenth full calendar month following the 
end of the plan year preceding the premium payment year.
    (2) Plans with 500 or more participants. If the plan has 500 or more 
participants, as determined under paragraph (b) of this section--
    (i) The due date for the flat-rate premium required by 
Sec. 4006.3(a) is the last day of the second full calendar month 
following the close of the plan year preceding the premium payment year; 
and
    (ii) The due date for the variable-rate premium required by 
Sec. 4006.3(b) for single-employer plans is the fifteenth day of the 
tenth full calendar month following the end of the plan year preceding 
the premium payment year.
    (iii) If the number of plan participants on the last day of the plan 
year preceding the premium payment year is not known by the date 
specified in paragraph (a)(2)(i) of this section, a reconciliation 
filing (on the form prescribed by this part) and any required premium 
payment or request for refund shall be made by the date specified in 
paragraph (a)(2)(ii) of this section.
    (3) Plans that change plan years. For any plan that changes its plan 
year, the premium form or forms and payment or payments for the short 
plan year shall be filed by the applicable due date or dates specified 
in paragraphs (a)(1), (a)(2), or (c) of this section. For the plan year 
that follows a short plan year, the due date or dates for the premium 
forms and payments shall be, with respect to each such due date, the 
later of--
    (i) The applicable due date or dates specified in paragraph (a)(1) 
or (a)(2) of this section; or
    (ii) 30 days after the date on which the amendment changing the plan 
year was adopted.
    (b) Participant count rule for purposes of determining filing due 
dates. For purposes of determining under paragraph (a) of this section 
whether a plan has fewer than 500 participants, or 500 or more 
participants, the plan administrator shall use--
    (1) For a single-employer plan, the number of participants for whom 
premiums were payable for the plan year preceding the premium payment 
year, or
    (2) For a multiemployer plan,--
    (i) If the premium payment year is the plan's second plan year, the 
first day of the first plan year; or
    (ii) If the premium payment year is the plan's third or a subsequent 
plan year, the last day of the second preceding plan year.
    (c) Due dates for new and newly covered plans. Notwithstanding 
paragraph (a) of this section, the premium form and all premium payments 
due for the first plan year of coverage of any new plan or newly covered 
plan shall be filed on or before the latest of--
    (1) The fifteenth day of the tenth full calendar month that began on 
or after the later of--
    (i) The first day of the premium payment year; or
    (ii) The day on which the plan became effective for benefit accruals 
for future service;
    (2) 90 days after the date of the plan's adoption; or
    (3) 90 days after the date on which the plan became covered by title 
IV of ERISA.
    (d) Continuing obligation to file. The obligation to file the form 
or forms prescribed by this part and to pay any premiums due continues 
through the plan year in which all plan assets are distributed pursuant 
to a plan's termination or in which a trustee is appointed under section 
4042 of ERISA, whichever occurs earlier. The entire premium computed 
under this part is due, irrespective of whether the plan is entitled to 
a refund for a short plan year pursuant to Sec. 4006.5(f).
    (e) Improper filings. Any form not filed in accordance with this 
part, not filed in accordance with the instructions in the Premium 
Payment Package, not accompanied by the required premium payment, or 
otherwise incomplete, may, in the discretion of the PBGC, be returned 
with any payment accompanying the form to the plan administrator, and 
such payment shall be treated as not having been made.

[61 FR 34020, July 1, 1996, as amended at 63 FR 68685, Dec. 14, 1998]

[[Page 748]]



Sec. 4007.12  Liability for single-employer premiums.

    (a) The designation under this part of the plan administrator as the 
person required to file the applicable forms and to submit the premium 
payment for a single-employer plan is a procedural requirement only and 
does not alter the liability for premium payments imposed by section 
4007 of ERISA. Pursuant to section 4007(e) of ERISA, both the plan 
administrator and the contributing sponsor of a single-employer plan are 
liable for premium payments, and, if the contributing sponsor is a 
member of a controlled group, each member of the controlled group is 
jointly and severally liable for the required premiums. Any entity that 
is liable for required premiums is also liable for any interest and 
penalties assessed with respect to such premiums.
    (b) For any plan year in which a plan administrator issues (pursuant 
to section 4041(a)(2) of ERISA) notices of intent to terminate in a 
distress termination under section 4041(c) of ERISA or the PBGC 
initiates a termination proceeding under section 4042 of ERISA, and for 
each plan year thereafter, the obligation to pay the premiums (and any 
interest or penalties thereon) imposed by ERISA and this part for a 
single-employer plan shall be an obligation solely of the contributing 
sponsor and the members of its controlled group, if any.

(Approved by the Office of Management and Budget under control number 
1212-0009)

[[Page 749]]



       SUBCHAPTER C--CERTAIN REPORTING AND DISCLOSURE REQUIREMENTS





PART 4010--ANNUAL FINANCIAL AND ACTUARIAL INFORMATION REPORTING--Table of Contents




Sec.
4010.1  Purpose and scope.
4010.2  Definitions.
4010.3  Filing requirement.
4010.4  Filers.
4010.5  Information year.
4010.6  Information to be filed.
4010.7  Identifying information.
4010.8  Plan actuarial information.
4010.9  Financial information.
4010.10  Due date and filing with the PBGC.
4010.11  Waivers and extensions.
4010.12  Confidentiality of information submitted.
4010.13  Penalties.
4010.14  OMB control number.

    Authority: 29 U.S.C. 1302(b)(3); 29 U.S.C. 1310.

    Source: 61 FR 34022, July 1, 1996, unless otherwise noted.



Sec. 4010.1  Purpose and scope.

    This part prescribes the requirements for annual filings with the 
PBGC under section 4010 of ERISA. This part applies to filers for any 
information year ending on or after December 31, 1995.



Sec. 4010.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
benefit liabilities, Code, contributing sponsor, controlled group, 
ERISA, fair market value, IRS, PBGC, person, plan, and plan year.
    In addition, for purposes of this part:
    Exempt entity means a person who does not have to file information 
and about whom information does not have to be filed, as described in 
Sec. 4010.4(d) of this part.
    Exempt plan means a plan about which actuarial information does not 
have to be filed, as described in Sec. 4010.8(c) of this part.
    Fair market value of the plan's assets means the fair market value 
of the plan's assets at the end of the plan year ending within the 
filer's information year (determined without regard to any contributions 
receivable).
    Filer means a person who is required to file reports, as described 
in Sec. 4010.4 of this part.
    Fiscal year means, with respect to a person, the person's annual 
accounting period or, if the person has not adopted a closing date, the 
calendar year.
    Information year means the year determined under Sec. 4010.5 of this 
part.



Sec. 4010.3  Filing requirement.

    (a) In general. Except as provided in Sec. 4010.8(c) (relating to 
exempt plans) and except where waivers have been granted under 
Sec. 4010.11 of this part, each filer shall submit to the PBGC annually, 
on or before the due date specified in Sec. 4010.10, all information 
specified in Sec. 4010.6(a) with respect to all members of a controlled 
group and all plans maintained by members of a controlled group.
    (b) Single controlled group submission. Any filer or other person 
may submit the information specified in Sec. 4010.6(a) on behalf of one 
or more members of a filer's controlled group. If a person other than a 
filer submits the information, the submission must also include a 
written power of attorney signed by a filer authorizing the person to 
act on behalf of one or more filers.



Sec. 4010.4  Filers.

    (a) General. A contributing sponsor of a plan and each member of the 
contributing sponsor's controlled group is a filer with respect to an 
information year (unless exempted under paragraph (d) of this section) 
if--
    (1) The aggregate unfunded vested benefits of all plans (including 
any exempt plans) maintained by the members of the contributing 
sponsor's controlled group exceed $50 million (disregarding those plans 
with no unfunded vested benefits);
    (2) Any member of a controlled group fails to make a required 
installment or other required payment to a plan and, as a result, the 
conditions for imposition of a lien described in section 302(f)(1)(A) 
and (B) of ERISA or section 412(n)(1)(A) and (B) of the Code have

[[Page 750]]

been met during the information year, and the required installment or 
other required payment is not made within ten days after its due date; 
or
    (3) Any plan maintained by a member of a controlled group has been 
granted one or more minimum funding waivers under section 303 of ERISA 
or section 412(d) of the Code totaling in excess of $1 million that, as 
of the end of the plan year ending within the information year, are 
still outstanding (determined in accordance with paragraph (c) of this 
section).
    (b) Unfunded vested benefits--(1) General. Except as provided in 
paragraph (b)(2) of this section, for purposes of the $50 million test 
in paragraph (a)(1) of this section, the value of a plan's unfunded 
vested benefits is determined at the end of the plan year ending within 
the filer's information year in accordance with section 
4006(a)(3)(E)(iii) of ERISA and Sec. 4006.4 of this chapter (without 
reference to the exemptions and special rules under Sec. 4006.5).
    (2) Optional assumptions. Prior to the first information year in 
which the mortality assumptions prescribed under section 
302(d)(7)(C)(ii)(II) of ERISA apply to all of the plans maintained by a 
controlled group, the value of unfunded vested benefits for a plan may 
be determined by substituting for the respective assumptions used under 
paragraph (b)(1) of this section (but not using the alternative 
calculation method under Sec. 4006.4(c) of this chapter) all of the 
following assumptions:
    (i) An interest rate equal to 100% of the annual yield for 30-year 
Treasury constant maturities (as reported in Federal Reserve Statistical 
Release G.13 and H.15) for the last full calendar month in the plan 
year;
    (ii) The fair market value of the plan's assets; and
    (iii) The mortality tables described in section 302(d)(7)(C)(ii)(I) 
of ERISA or section 412(l)(7)(C)(ii)(I) of the Code; provided that for 
any plan year ending on or after the effective date of an amendment 
changing the mortality assumptions used to value benefits to be paid as 
annuities in trusteed plans under part 4044 of this chapter, those 
amended mortality assumptions shall be used.
    (c) Outstanding waiver. Before the end of the statutory amortization 
period, a minimum funding waiver for a plan is considered outstanding 
unless--
    (1) A credit balance exists in the funding standard account 
(described in section 302(b) of ERISA and section 412(b) of the Code) 
that is no less than the outstanding balance of all waivers for the 
plan;
    (2) A waiver condition or contractual obligation requires that a 
credit balance as described in paragraph (c)(1) continue to be 
maintained as of the end of each plan year during the remainder of the 
statutory amortization period for the waiver; and
    (3) No portion of any credit balance described in paragraph (c)(1) 
is used to make any required installment under section 302(e) of ERISA 
or section 412(m) of the Code for any plan year during the remainder of 
the statutory amortization period.
    (d) Exempt entities. A person is an exempt entity if the person--
    (1) Is not a contributing sponsor of a plan (other than an exempt 
plan);
    (2) Has revenue for its fiscal year ending within the controlled 
group's nformation year that is five percent or less of the controlled 
group's revenue for the fiscal year(s) ending within the information 
year;
    (3) Has annual operating income for the fiscal year ending within 
the controlled group's information year that is no more than the greater 
of--
    (i) Five percent of the controlled group's annual operating income 
for the fiscal year(s) ending within the information year, or
    (ii) $5 million; and
    (4) Has net assets at the end of the fiscal year ending within the 
controlled group's information year that is no more than the greater of-
-
    (i) Five percent of the controlled group's net assets at the end of 
the fiscal year(s) ending within the information year, or
    (ii) $5 million.



Sec. 4010.5  Information year.

    (a) Determinations based on information year. An information year is 
used under this part to determine which persons are filers 
(Sec. 4010.4), what information a filer must submit (Secs. 4010.6-

[[Page 751]]

4010.9), whether a plan is an exempt plan (Sec. 4010.8(c)), and the due 
date for submitting the information (Sec. 4010.10(a)).
    (b) General. Except as provided in paragraph (c) of this section, a 
person's information year shall be the fiscal year of the person. A 
filer is not required to change its fiscal year or the plan year of a 
plan, to report financial information for any accounting period other 
than an existing fiscal year, or to report actuarial information for any 
plan year other than an existing plan year.
    (c) Controlled group members with different fiscal years--(1) Use of 
calendar year. If members of a controlled group (disregarding any exempt 
entity) report financial information on the basis of different fiscal 
years, the information year shall be the calendar year.
    (2) Example. Filers A and B are members of the same controlled 
group. Filer A has a July 1 fiscal year, and filer B has an October 1 
fiscal year. The information year is the calendar year. Filer A's 
financial information with respect to its fiscal year ending June 30, 
1996, and filer B's financial information with respect to its fiscal 
year ending September 30, 1996, must be submitted to the PBGC following 
the end of the 1996 calendar year (the calendar year in which those 
fiscal years end). If filer B were an exempt entity, the information 
year would be filer A's July 1 fiscal year.



Sec. 4010.6  Information to be filed.

    (a) General. A filer must submit the information specified in 
Sec. 4010.7 (identifying information), Sec. 4010.8 (plan actuarial 
information) and Sec. 4010.9 (financial information) of this part with 
respect to each member of the filer's controlled group and each plan 
maintained by any member of the controlled group.
    (b) Additional information. By written notification, the PBGC may 
require any filer to submit additional actuarial or financial 
information that is necessary to determine plan assets and liabilities 
for any period through the end of the filer's information year, or the 
financial status of a filer for any period through the end of the 
filer's information year. The information must be submitted within ten 
days after the date of the written notification or by a different time 
specified therein.
    (c) Previous submissions. If any required information has been 
previously submitted to the PBGC, a filer may incorporate this 
information into the required submission by referring to the previous 
submission.



Sec. 4010.7  Identifying information.

    (a) Filers. Each filer is required to provide the following 
identifying information with respect to each member of the controlled 
group (excluding exempt entities)--
    (1) The name, address, and telephone number of each member of the 
controlled group and the legal relationships of each (for example, 
parent, subsidiary); and
    (2) The nine-digit Employer Identification Number (EIN) assigned by 
the IRS to each member (or if there is no EIN for a member, an 
explanation).
    (b) Plans. Each filer is required to provide the following 
identifying information with respect to each plan (including exempt 
plans) maintained by any member of the controlled group (including 
exempt entities)--
    (1) The name of each plan;
    (2) The EIN and the three-digit Plan Number (PN) assigned by the 
contributing sponsor to each plan (or if there is no EIN or PN for a 
plan, an explanation); and
    (3) If the EIN or PN of a plan has changed since the beginning of 
the filer's information year, the previous EIN or PN and an explanation.



Sec. 4010.8  Plan actuarial information.

    (a) Required information. For each plan (other than an exempt plan) 
maintained by any member of the filer's controlled group, each filer is 
required to provide the following actuarial information--
    (1) The fair market value of the plan's assets;
    (2) The value of the plan's benefit liabilities (determined in 
accordance with paragraph (d) of this section) at the end of the plan 
year ending within the filer's information year;
    (3) A copy of the actuarial valuation report for the plan year 
ending within

[[Page 752]]

the filer's information year that contains or is supplemented by the 
following information--
    (i) Each amortization base and related amortization charge or credit 
to the funding standard account (as defined in section 302 (b) of ERISA 
or section 412 (b) of the Code) for that plan year (excluding the amount 
considered contributed to the plan as described in section 302(b)(3)(A) 
of ERISA or section 412(b)(3)(A) of the Code),
    (ii) The itemized development of the additional funding charge 
payable for that plan year pursuant to section 412(l) of the Code,
    (iii) The minimum funding contribution and the maximum deductible 
contribution for that plan year,
    (iv) The actuarial assumptions and methods used for that plan year 
for purposes of section 302(b) and (d) of ERISA or section 412(b) and 
(l) of the Code (and any change in those assumptions and methods since 
the previous valuation and justifications for any change), and
    (v) A summary of the principal eligibility and benefit provisions on 
which the valuation of the plan was based (and any changes to those 
provisions since the previous valuation), along with descriptions of any 
benefits not included in the valuation, any significant events that 
occurred during that plan year, and the plan's early retirement factors; 
and
    (4) A written certification by an enrolled actuary that, to the best 
of his or her knowledge and belief, the actuarial information submitted 
is true, correct, and complete and conforms to all applicable laws and 
regulations, provided that this certification may be qualified in 
writing, but only to the extent the qualification(s) are permitted under 
26 CFR Sec. 301.6059-1(d).
    (b) Alternative compliance for plan actuarial information. If any of 
the information specified in paragraph (a)(3) of this section is not 
available by the date specified in Sec. 4010.10(a), a filer may satisfy 
the requirement to provide such information by--
    (1) Including a statement, with the material that is submitted to 
the PBGC, that the filer will file the unavailable information by the 
alternative due date specified in Sec. 4010.10(b) of this part, and
    (2) Filing such information (along with a certification by an 
enrolled actuary under paragraph (a)(4) of this section) with the PBGC 
by that alternative due date.
    (c) Exempt plan. The actuarial information specified in this section 
is not required with respect to a plan that, as of the end of the plan 
year ending within the filer's information year, has fewer than 500 
participants or has benefit liabilities (determined in accordance with 
paragraph (d) of this section) equal to or less than the fair market 
value of the plan's assets, provided that the plan--
    (1) Has received, on or within ten days after their due dates, all 
required installments or other payments required to be made during the 
information year under section 302 of ERISA or section 412 of the Code; 
and
    (2) Has no minimum funding waivers outstanding (as described in 
Sec. 4010.4(c) of this part) as of the end of the plan year ending 
within the information year.
    (d) Value of benefit liabilities. The value of a plan's benefit 
liabilities at the end of a plan year shall be determined using the plan 
census data described in paragraph (d)(1) of this section and the 
actuarial assumptions and methods described in paragraph (d)(2) or, 
where applicable, (d)(3) of this section.
    (1) Census data--(i) Census data period. Plan census data shall be 
determined (for all plans for any information year) either as of the end 
of the plan year or as of the beginning of the next plan year.
    (ii) Projected census data. If actual plan census data is not 
available, a plan may use a projection of plan census data from a date 
within the plan year. The projection must be consistent with projections 
used to measure pension obligations of the plan for financial statement 
purposes and must give a result appropriate for the end of the plan year 
for these obligations. For example, adjustments to the projection 
process will be required where there has been a significant event (such 
as a plan amendment or a plant shutdown)

[[Page 753]]

that has not been reflected in the projection data.
    (2) Actuarial assumptions and methods. The value of benefit 
liabilities shall be determined using the assumptions and methods 
applicable to the valuation of benefits to be paid as annuities in 
trusteed plans terminating at the end of the plan year (as prescribed in 
Secs. 4044.51 through 4044.57 of this chapter).
    (3) Special actuarial assumptions for exempt plan determination. 
Solely for purposes of determining whether a plan is an exempt plan, the 
value of benefit liabilities may be determined by substituting for the 
retirement age assumptions in paragraph (d)(2) the retirement age 
assumptions used by the plan for that plan year for purposes of section 
302(d) of ERISA or section 412(l) of the Code.



Sec. 4010.9  Financial information.

    (a) General. Except as provided in this section, each filer is 
required to provide the following financial information for each 
controlled group member (other than an exempt entity)--
    (1) Audited financial statements for the fiscal year ending within 
the information year (including balance sheets, income statements, cash 
flow statements, and notes to the financial statements);
    (2) If audited financial statements are not available by the date 
specified in Sec. 4010.10(a), unaudited financial statements for the 
fiscal year ending within the information year; or
    (3) If neither audited nor unaudited financial statements are 
available by the date specified in Sec. 4010.10(a), copies of federal 
tax returns for the tax year ending within the information year.
    (b) Consolidated financial statements. If the financial information 
of a controlled group member is combined with the information of other 
group members in consolidated financial statements, a filer may provide 
the following financial information in lieu of the information required 
in paragraph (a) of this section--
    (1) The audited consolidated financial statements for the filer's 
information year or, if the audited consolidated financial statements 
are not available by the date specified in Sec. 4010.10(a), unaudited 
consolidated financial statements for the fiscal year ending within the 
information year; and
    (2) For each controlled group member included in the consolidated 
financial statements that is a contributing sponsor of a plan (other 
than an exempt plan), the contributing sponsor's revenues and operating 
income for the information year, and net assets at the end of the 
information year.
    (c) Subsequent submissions. If unaudited financial statements are 
submitted as provided in paragraph (a)(2) or (b)(1) of this section, 
audited financial statements must thereafter be filed within 15 days 
after they are prepared. If federal tax returns are submitted as 
provided in paragraph (a)(3) of this section, audited and unaudited 
financial statements must thereafter be filed within 15 days after they 
are prepared.
    (d) Submission of public information. If any of the financial 
information required by paragraphs (a) through (c) of this section is 
publicly available, the filer, in lieu of submitting such information to 
the PBGC, may include a statement with the other information that is 
submitted to the PBGC indicating when such financial information was 
made available to the public and where the PBGC may obtain it. For 
example, if the controlled group member has filed audited financial 
statements with the Securities and Exchange Commission, it need not file 
the financial statements with PBGC but instead can identify the SEC 
filing as part of its submission under this part.
    (e) Inclusion of information about non-filers and exempt entities. 
Consolidated financial statements provided pursuant to paragraph (b)(1) 
of this section may include financial information of persons who are not 
controlled group members (e.g., joint ventures) or are exempt entities.



Sec. 4010.10  Due date and filing with the PBGC.

    (a) Due date. Except as permitted under paragraph (b) of this 
section, a filer shall file the information required under this part 
with the PBGC on or before the 105th day after the close of the filer's 
information year.

[[Page 754]]

    (b) Alternative due date. A filer that includes the statement 
specified in Sec. 4010.8(b)(1) with its submission to the PBGC by the 
date specified in paragraph (a) of this section must submit the 
actuarial information specified in Sec. 4010.8(b)(2) within 15 days 
after the deadline for filing the plan's annual report (Form 5500 
series) for the plan year ending within the filer's information year 
(see Sec. 2520.104a-5(a)(2) of this title).
    (c) How to file. Requests and information may be delivered by mail, 
by delivery service, by hand, or by any other method acceptable to the 
PBGC, to: Corporate Finance and Negotiations Department, Pension Benefit 
Guaranty Corporation, 1200 K Street, N.W., Washington, DC 20005-4026.
    (d) Date when information filed. Information filed under this part 
is considered filed--
    (1) On the date of the United States postmark stamped on the cover 
in which the information is mailed, if--
    (i) The postmark was made by the United States Postal Service; and
    (ii) The document was mailed postage prepaid, properly addressed to 
the PBGC; or
    (2) If the conditions stated in paragraph (d)(1) of this section are 
not met, on the date it is received by the PBGC. Information received on 
a weekend or Federal holiday or after 5:00 p.m. on a weekday is 
considered filed on the next regular business day.
    (e) Computation of time. In computing any period of time under this 
part, the day of the act or event from which the designated period of 
time begins to run shall not be included. The last day of the period so 
computed shall be included, unless it is a weekend or Federal holiday, 
in which event the period runs until the end of the next day that is not 
a weekend or Federal holiday.



Sec. 4010.11  Waivers and extensions.

    The PBGC may waive the requirement to submit information with 
respect to one or more filers or plans or may extend the applicable due 
date or dates specified in Sec. 4010.10 of this part. The PBGC will 
exercise this discretion in appropriate cases where it finds convincing 
evidence supporting a waiver or extension; any waiver or extension may 
be subject to conditions. A request for a waiver or extension must be 
filed in writing with the PBGC at the address provided in 
Sec. 4010.10(c) no later than 15 days before the applicable date 
specified in Sec. 4010.10 of this part, and must state the facts and 
circumstances on which the request is based.



Sec. 4010.12  Confidentiality of information submitted.

    In accordance with Sec. 4901.21(a)(3) of this chapter and section 
4010(c) of ERISA, any information or documentary material that is not 
publicly available and is submitted to the PBGC pursuant to this part 
shall not be made public, except as may be relevant to any 
administrative or judicial action or proceeding or for disclosures to 
either body of Congress or to any duly authorized committee or 
subcommittee of the Congress.



Sec. 4010.13  Penalties.

    If all of the information required under this part is not provided 
within the specified time limit, the PBGC may assess a separate penalty 
under section 4071 of ERISA against the filer and each member of the 
filer's controlled group (other than an exempt entity) of up to $1,100 a 
day for each day that the failure continues. The PBGC may also pursue 
other equitable or legal remedies available to it under the law.

[61 FR 34022, July 1, 1996, as amended at 62 FR 36994, July 10, 1997]



Sec. 4010.14  OMB control number.

    The collection of information requirements contained in this part 
have been approved by the Office of Management and Budget under OMB 
control number 1212-0049.



PART 4011--DISCLOSURE TO PARTICIPANTS--Table of Contents




Sec.
4011.1  Purpose and scope.
4011.2  Definitions.
4011.3  Notice requirement.
4011.4  Small plan rules.
4011.5  Exemption for new and newly-covered plans.
4011.6  Mergers, consolidations, and spinoffs.
4011.7  Persons entitled to receive notice.
4011.8  Time of notice.
4011.9  Manner of issuance of notice.

[[Page 755]]

4011.10  Form of notice.
4011.11  OMB control number.

Appendix A to Part 4011--Model Participant Notice
Appendix B to Part 4011--Table of Maximum Guaranteed Benefits

    Authority: 29 U.S.C. 1302(b)(3), 1311.

    Source: 61 FR 34026, July 1, 1996, unless otherwise noted.



Sec. 4011.1  Purpose and scope.

    This part prescribes rules and procedures for complying with the 
requirements of section 4011 of ERISA. This part applies for any plan 
year beginning on or after January 1, 1995, with respect to any single-
employer plan that is covered by section 4021 of ERISA.



Sec. 4011.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
contributing sponsor, employer, ERISA, normal retirement age, PBGC, 
person, plan, plan administrator, plan year, and single-employer plan.
    In addition, for purposes of this part:
    Participant has the meaning in Sec. 4041.2 of this chapter.
    Participant Notice means the notice required pursuant to section 
4011 of ERISA and this part.



Sec. 4011.3  Notice requirement.

    (a) General. Except as otherwise provided in this part, the plan 
administrator of a plan must provide a Participant Notice for a plan 
year if a variable rate premium is payable for the plan under section 
4006(a)(3)(E) of ERISA and part 4006 of this chapter for that plan year, 
unless, for that plan year or for the prior plan year, the plan meets 
the Deficit Reduction Contribution (``DRC'') Exception Test in paragraph 
(b) of this section. The DRC Exception Test may be applied using the 
Small Plan DRC Exception Test rules in Sec. 4011.4(b), where applicable.
    (b) DRC Exception Test--(1) Basic rule. A plan meets the DRC 
Exception Test for a plan year if it is exempt from the requirements of 
section 302(d) of ERISA for that plan year by reason of section 
302(d)(9), without regard to the small plan exemption in section 
302(d)(6)(A).
    (2) 1994 plan year. A plan satisfies the DRC Exception Test for the 
1994 plan year if, for any two of the plan years beginning in 1992, 
1993, and 1994 (whether or not consecutive), the plan satisfies any 
requirement of section 302(d)(9)(D)(i) of ERISA.
    (c) Penalties for non-compliance. If a plan administrator fails to 
provide a Participant Notice within the specified time limit or omits 
material information from a Participant Notice, the PBGC may assess a 
penalty under section 4071 of ERISA of up to $1,100 a day for each day 
that the failure continues.

[61 FR 34026, July 1, 1996, as amended at 62 FR 36994, July 10, 1997]



Sec. 4011.4  Small plan rules.

    (a) 1995 plan year exemption. A plan that is exempt from the 
requirements of section 302(d) of ERISA for the 1994 or 1995 plan year 
by reason of section 302(d)(6)(A) is exempt from the Participant Notice 
requirement for the 1995 plan year.
    (b) Small Plan DRC Exception Test. In determining whether the 
Participant Notice requirement applies for a plan year beginning after 
1995, the plan administrator of a plan that is exempt from the 
requirements of section 302(d) of ERISA by reason of section 
302(d)(6)(A) for the plan year being tested may use any one or more of 
the following rules in determining whether the plan meets the DRC 
Exception Test for that plan year:
    (1) Use of Schedule B data. For any plan year for which the plan is 
exempt from the requirements of section 302(d) of ERISA by reason of 
section 302(d)(6)(A), provided both of the following adjustments are 
made--
    (i) The market value of the plan's assets as of the beginning of the 
plan year (as required to be reported on Form 5500, Schedule B) may be 
substituted for the actuarial value of the plan's assets as of the 
valuation date; and
    (ii) The plan's current liability for all participants' total 
benefits as of the beginning of the plan year (as required to be 
reported on Form 5500, Schedule B) may be substituted for the plan's 
current liability as of the valuation date.

[[Page 756]]

    (2) Pre-1995 plan year 90 percent test. A plan that is exempt from 
the requirements of section 302(d) of ERISA for a pre-1995 plan year by 
reason of section 302(d)(6)(A) satisfies the requirements of section 
302(d)(9)(D)(i) for that pre-1995 plan year if the ratio of its assets 
to its current liability for that plan year is at least 90 percent. For 
this purpose, the plan's assets are valued without subtracting any 
credit balance under section 302(b) of ERISA, and its current liability 
is determined using the highest interest rate allowable for the plan 
year under section 302(d)(7)(C).
    (3) Interest rate adjustment. If the interest rate used to calculate 
current liability for a plan year is less than the highest rate 
allowable for the plan year under section 302(d)(7)(C) of ERISA, the 
current liability may be reduced by one percent for each tenth of a 
percentage point by which the highest rate exceeds the rate so used.



Sec. 4011.5  Exemption for new and newly-covered plans.

    A plan (other than a plan resulting from a consolidation or spinoff) 
is exempt from the Participant Notice requirement for the first plan 
year for which the plan must pay premiums under parts 4006 and 4007 of 
this chapter.



Sec. 4011.6  Mergers, consolidations, and spinoffs.

    In the case of a plan involved in a merger, consolidation, or 
spinoff transaction that becomes effective during a plan year, the plan 
administrator shall apply the requirements of section 4011 of ERISA and 
of this part for that plan year in a reasonable manner to ensure that 
the Participant Notice serves its statutory purpose.



Sec. 4011.7  Persons entitled to receive notice.

    The plan administrator must provide the Participant Notice to each 
person who is a participant, a beneficiary of a deceased participant, an 
alternate payee under an applicable qualified domestic relations order 
(as defined in section 206(d)(3) of ERISA), or an employee organization 
that represents any group of participants for purposes of collective 
bargaining. To determine who is a person that must receive the 
Participant Notice for a plan year, the plan administrator may select 
any date during the period beginning with the last day of the previous 
plan year and ending with the day on which the Participant Notice for 
the plan year is due, provided that a change in the date from one plan 
year to the next does not exclude a substantial number of participants 
and beneficiaries.



Sec. 4011.8  Time of notice.

    The plan administrator must issue the Participant Notice for a plan 
year no later than two months after the deadline (including extensions) 
for filing the annual report for the previous plan year (see 
Sec. 2520.104a-5(a)(2) of this title). The plan administrator may change 
the date of issuance from one plan year to the next, provided that the 
effect of any change is not to avoid disclosing a minimum funding waiver 
under Sec. 4011.10(b)(5) or a missed contribution under 
Sec. 4011.10(b)(6). When the President of the United States declares 
that, under the Disaster Relief Act of 1974, as amended (42 U.S.C. 5121, 
5122(2), 5141(b)), a major disaster exists, the PBGC may extend the due 
date for providing the Participant Notice by up to 180 days.



Sec. 4011.9  Manner of issuance of notice.

    The Participant Notice shall be issued by using measures reasonably 
calculated to ensure actual receipt by the persons entitled to receive 
it. It may be issued together with another document, such as the summary 
annual report required under section 104(b)(3) of ERISA for the prior 
plan year, but must be in a separate document.



Sec. 4011.10  Form of notice.

    (a) General. The Participant Notice (and any additional information 
under paragraph (d) of this section) shall be readable and written in a 
manner calculated to be understood by the average plan participant and 
not to mislead recipients. The Model Participant Notice in appendix A to 
this part (when properly completed) is an example of a Participant 
Notice meeting the requirements of this section.

[[Page 757]]

    (b) Content. The Participant Notice for a plan year shall include--
    (1) Identifying information (the name of the plan and the 
contributing sponsor, the employer identification number of the 
contributing sponsor, the plan number, the date (at least the month and 
year) on which the Participant Notice is issued, and the name, title, 
address and telephone number of the person(s) who can provide 
information about the plan's funding);
    (2) A statement to the effect that the Participant Notice is 
required by law;
    (3) The Notice Funding Percentage for the plan year, determined in 
accordance with paragraph (c) of this section, and the date as of which 
the Notice Funding Percentage is determined;
    (4) A statement to the effect that--
    (i) To pay pension benefits, the employer is required to contribute 
money to the plan over a period of years;
    (ii) A plan's funding percentage does not take into consideration 
the financial strength of the employer; and
    (iii) The employer, by law, must pay for all pension benefits, but 
benefits may be at risk if the employer faces a severe financial crisis 
or is in bankruptcy;
    (5) If, for any of the five plan years immediately preceding the 
plan year, the plan has been granted a minimum funding waiver under 
section 303 of ERISA that has not (as of the end of the prior plan year) 
been fully repaid, a statement identifying each such plan year and an 
explanation of a minimum funding waiver;
    (6) For any payment subject to the requirements of this paragraph, a 
statement identifying the due date for the payment and noting that the 
payment has or has not been made and (if made) the date of the payment. 
Once participants have been notified (under this part or title I of 
ERISA) of a missed contribution that is subject to the requirements of 
this paragraph, the delinquency need not be reported in a Participant 
Notice for a subsequent plan year if the missed contribution has been 
paid in full by the time the subsequent Participant Notice is issued. 
The payments subject to the requirements of this paragraph are--
    (i) Any minimum funding payment necessary to satisfy the minimum 
funding standard under section 302(a) of ERISA for any plan year 
beginning on or after January 1, 1994, if not paid by the earlier of the 
due date for that payment (the latest date allowed under section 
302(c)(10)) or the date of issuance of the Participant Notice; and
    (ii) An installment or other payment required by section 302 of 
ERISA for a plan year beginning on or after January 1, 1995, that was 
not paid by the 60th day after the due date for that payment;
    (7) A statement to the effect that if a plan terminates before all 
pension benefits are fully funded, the PBGC pays most persons all 
pension benefits, but some persons may lose certain benefits that are 
not guaranteed;
    (8) A summary of plan benefits guaranteed by the PBGC, with an 
explanation of the limitations on such guarantee; and
    (9) A statement that further information about the PBGC's guarantee 
may be obtained by requesting a free copy of the booklet ``Your 
Guaranteed Pension'' from Consumer Information Center, Dept. YGP, 
Pueblo, Colorado 81009. The Participant Notice may include a statement 
that the booklet may be obtained through electronic access via the World 
Wide Web from the PBGC Homepage at http://www.pbgc.gov.
    (c) Notice Funding Percentage--(1) General rule. The Notice Funding 
Percentage that must be included in the Participant Notice for a plan 
year is the ``funded current liability percentage'' (as that term is 
defined in section 302(d)(9)(C) of ERISA) for that plan year or the 
prior plan year.
    (2) Small plans. A plan that is exempt from the requirements of 
section 302(d) of ERISA for a plan year by reason of section 
302(d)(6)(A) may determine its funded current liability percentage for 
that plan year using the Small Plan DRC Exception Test rules in 
Sec. 4011.4(b).
    (d) Additional information. The plan administrator may include with 
the Participant Notice any information not described in paragraph (b) of 
this section only if it is in a separate document.
    (e) Foreign languages. In the case of a plan that (as of the date 
selected under Sec. 4011.7) covers the numbers or percentages specified 
in Sec. 2520.104b-10(e) of this

[[Page 758]]

title of participants literate only in the same non-English language, 
the plan administrator shall provide those participants either--
    (1) An English-language Participant Notice that prominently displays 
a legend, in their common non-English language, offering them assistance 
in that language, and clearly setting forth any procedures participants 
must follow to obtain such assistance, or
    (2) A Participant Notice in that language.

[61 FR 34026, July 1, 1996, as amended at 65 FR 75165, Dec. 1, 2000]



Sec. 4011.11  OMB control number.

    The collections of information contained in this part have been 
approved by the Office of Management and Budget under OMB control number 
1212-0050.

            Appendix A to Part 4011--Model Participant Notice

    The following is an example of a Participant Notice that satisfies 
the requirements of Sec. 4011.10 when the required information is filled 
in (subject to Secs. 4011.10(d)-(e), where applicable).

                  Notice to Participants of [Plan Name]

    The law requires that you receive information on the funding level 
of your defined benefit pension plan and the benefits guaranteed by the 
Pension Benefit Guaranty Corporation (PBGC), a federal insurance agency. 
YOUR PLAN'S FUNDING
    As of [DATE], your plan had [INSERT NOTICE FUNDING PERCENTAGE 
(DETERMINED IN ACCORDANCE WITH Sec. 4011.10(c))] percent of the money 
needed to pay benefits promised to employees and retirees.
    To pay pension benefits, your employer is required to contribute 
money to the pension plan over a period of years. A plan's funding 
percentage does not take into consideration the financial strength of 
the employer. Your employer, by law, must pay for all pension benefits, 
but your benefits may be at risk if your employer faces a severe 
financial crisis or is in bankruptcy.
    [INCLUDE THE FOLLOWING PARAGRAPH ONLY IF, FOR ANY OF THE PREVIOUS 
FIVE PLAN YEARS, THE PLAN HAS BEEN GRANTED AND HAS NOT FULLY REPAID A 
FUNDING WAIVER.]
    Your plan received a funding waiver for [LIST ANY OF THE FIVE 
PREVIOUS PLAN YEARS FOR WHICH A FUNDING WAIVER WAS GRANTED AND HAS NOT 
BEEN FULLY REPAID]. If a company is experiencing temporary financial 
hardship, the Internal Revenue Service may grant a funding waiver that 
permits the company to delay contributions that fund the pension plan.
    [INCLUDE THE FOLLOWING WITH RESPECT TO ANY UNPAID OR LATE PAYMENT 
THAT MUST BE DISCLOSED UNDER Sec. 4011.10(b)(6):]
    Your plan was required to receive a payment from the employer on 
[LIST APPLICABLE DUE DATE(S)]. That payment [has not been made] [was 
made on [LIST APPLICABLE PAYMENT DATE(S)]].

                             PBGC GUARANTEES

    When a pension plan ends without enough money to pay all benefits, 
the PBGC steps in to pay pension benefits. The PBGC pays most people all 
pension benefits, but some people may lose certain benefits that are not 
guaranteed.
    The PBGC pays pension benefits up to certain maximum limits.
     The maximum guaranteed benefit is [INSERT FROM TABLE IN 
APPENDIX B] per month or [INSERT FROM TABLE IN APPENDIX B] per year for 
a 65-year-old person in a plan that terminates in [INSERT APPLICABLE 
YEAR].
     The maximum benefit may be reduced for an individual who is 
younger than age 65. For example, it is [INSERT FROM TABLE IN APPENDIX 
B] per month or [INSERT FROM TABLE IN APPENDIX B] per year for an 
individual who starts receiving benefits at age 55. [IN LIEU OF AGE 55, 
YOU MAY ADD OR SUBSTITUTE ANY AGE(S) RELEVANT UNDER THE PLAN. FOR 
EXAMPLE, YOU MAY ADD OR SUBSTITUTE THE MAXIMUM BENEFIT FOR AGES 62 OR 60 
FROM THE TABLE IN APPENDIX B. IF THE PLAN PROVIDES FOR NORMAL RETIREMENT 
BEFORE AGE 65, YOU MUST INCLUDE THE NORMAL RETIREMENT AGE.]
    [IF THE PLAN DOES NOT PROVIDE FOR COMMENCEMENT OF BENEFITS BEFORE 
AGE 65, YOU MAY OMIT THIS PARAGRAPH.]
     The maximum benefit will also be reduced when a benefit is 
provided for a survivor.
    The PBGC does not guarantee certain types of benefits.
    [INCLUDE THE FOLLOWING GUARANTEE LIMITS THAT APPLY TO THE BENEFITS 
AVAILABLE UNDER YOUR PLAN.]
     The PBGC does not guarantee benefits for which you do not 
have a vested right when a plan ends, usually because you have not 
worked enough years for the company.
     The PBGC does not guarantee benefits for which you have not 
met all age, service, or other requirements at the time the plan ends.
     Benefit increases and new benefits that have been in place 
for less than a year are not guaranteed. Those that have been in

[[Page 759]]

place for less than 5 years are only partly guaranteed.
     Early retirement payments that are greater than payments at 
normal retirement age may not be guaranteed. For example, a supplemental 
benefit that stops when you become eligible for Social Security may not 
be guaranteed.
     Benefits other than pension benefits, such as health 
insurance, life insurance, death benefits, vacation pay, or severance 
pay, are not guaranteed.
     The PBGC generally does not pay lump sum exceeding $5,000.

                      WHERE TO GET MORE INFORMATION

    Your plan, [EIN-PN], is sponsored by [CONTRIBUTING SPONSOR(S)]. If 
you would like more information about the funding of your plan, contact 
[INSERT NAME, TITLE, BUSINESS ADDRESS AND PHONE NUMBER OF INDIVIDUAL OR 
ENTITY].
    For more information about the PBGC and the benefits it guarantees, 
you may request a free copy of ``Your Guaranteed Pension'' by writing to 
Consumer Information Center, Dept. YGP, Pueblo, Colorado 81009.
    [THE FOLLOWING SENTENCE MAY BE INCLUDED:] ``Your Guaranteed 
Pension'' is also available from the PBGC Homepage on the World Wide Web 
at http://www.pbgc.gov.
    Issued: [INSERT AT LEAST MONTH AND YEAR]

[61 FR 34026, July 1, 1996, as amended at 63 FR 38306, July 16, 1998; 65 
FR 75165, Dec. 1, 2000]
          Appendix B to Part 4011--Table of Maximum Guaranteed 
                               Benefits

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             The maximum guaranteed benefit for an individual starting to receive benefits at the age
                                                                           listed below is the amount (monthly or annual) listed below:
                                                         -----------------------------------------------------------------------------------------------
                If a plan terminates in--                         Age 65                  Age 62                  Age 60                  Age 55
                                                         -----------------------------------------------------------------------------------------------
                                                            Monthly     Annual      Monthly     Annual      Monthly     Annual      Monthly     Annual
--------------------------------------------------------------------------------------------------------------------------------------------------------
1995....................................................   $2,573.86  $30,886.32   $2,033.35  $24,400.20   $1,673.01  $20,076.12   $1,158.24  $13,898.88
1996....................................................   $2,642.05  $31,704.60   $2,087.22  $25,046.64   $1,717.33  $20,607.96   $1,188.92  $14,267.04
1997....................................................   $2,761.36  $33,136.32   $2,181.47  $26,177.64   $1,794.88  $21,538.56   $1,242.61  $14,911.32
1998....................................................   $2,880.68  $34,568.16   $2,275.74  $27,308.88   $1,872.44  $22,469.28   $1,296.31  $15,555.72
1999....................................................   $3,051.14  $36,613.68   $2,410.40  $28,924.80   $1,983.24  $23,798.88   $1,373.01  $16,476.12
2000....................................................   $3,221.59  $38,659.08   $2,545.06  $30,540.72   $2,094.03  $25,128.36   $1,449.72  $17,396.64
2001....................................................   $3,392.05  $40,704.60   $2,679.72  $32,156.64   $2,204.83  $26,457.96   $1,526.42  $18,317.04
2002....................................................   $3,579.55  $42,954.60   $2,827.84  $33,934.08   $2,326.71  $27,920.52   $1,610.80  $19,329.60
2003....................................................   $3,664.77  $43,977.24   $2,895.17  $34,742.04   $2,382.10  $28,585.20   $1,649.15  $19,789.80
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The maximum guaranteed benefit for an individual starting to receive 
benefits at ages other than those listed above can be determined by 
applying the PBGC's regulation on computation of maximum guaranteeable 
benefits (29 CFR 4022.22).

[61 FR 34026, July 1, 1996, as amended at 61 FR 65474, Dec. 13, 1996; 62 
FR 65608, Dec. 15, 1997; 63 FR 63179, Nov. 12, 1998; 64 FR 67164, Dec. 
1, 1999; 65 FR 75165, Dec. 1, 2000; 66 FR 59693, Nov. 30, 2001; 67 FR 
71471, Dec. 2, 2002]

[[Page 760]]



                   SUBCHAPTER D--COVERAGE AND BENEFITS





PART 4022--BENEFITS PAYABLE IN TERMINATED SINGLE-EMPLOYER PLANS--Table of Contents




           Subpart A--General Provisions; Guaranteed Benefits

Sec.
4022.1  Purpose and scope.
4022.2  Definitions.
4022.3  Guaranteed benefits.
4022.4  Entitlement to a benefit.
4022.5  Determination of nonforfeitable benefits.
4022.6  Annuity payable for total disability.
4022.7  Benefits payable in a single installment.
4022.8  Form of payment.
4022.9  Time of payment; benefit applications.
4022.10  Earliest PBGC Retirement Date.

              Subpart B--Limitations on Guaranteed Benefits

4022.21  Limitations; in general.
4022.22  Maximum guaranteeable benefit.
4022.23  Computation of maximum guaranteeable benefits.
4022.24  Benefit increases.
4022.25  Five-year phase-in of benefit guarantee for participants other 
          than substantial owners.
4022.26  Phase-in of benefit guarantee for participants who are 
          substantial owners.
4022.27  Effect of tax disqualification.

Subpart C--Calculation and Payment of Unfunded Nonguaranteed Benefits 
[Reserved]

           Subpart D--Benefit Reductions in Terminating Plans

4022.61  Limitations on benefit payments by plan administrator.
4022.62  Estimated guaranteed benefit.
4022.63  Estimated title IV benefit.

Subpart E--PBGC Recoupment and Reimbursement of Benefit Overpayments and 
                              Underpayments

4022.81  General rules.
4022.82  Method of recoupment.
4022.83  PBGC reimbursement of benefit underpayments.

               Subpart F--Certain Payments Owed Upon Death

4022.91  When do these rules apply?
4022.92  What definitions do I need to know for these rules?
4022.93  Who will get benefits the PBGC may owe me at the time of my 
          death?
4022.94  What are the PBGC's rules on designating a person to get 
          benefits the PBGC may owe me at the time of my death?
4022.95  Examples.

Subpart G--Certain-and-Continuous and Similar Annuity Payments Owed for 
                       Future Periods After Death

4022.101  When do these rules apply?
4022.102  What definitions do I need to know for these rules?
4022.103  Who will get benefits if I die when payments for future 
          periods under a certain-and-continuous or similar annuity are 
          owed upon my death?
4022.104  Examples.

Appendix A to Part 4022--Lump Sum Mortality Rates
Appendix B to Part 4022--Lump Sum Interest Rates for PBGC Payments
Appendix C to Part 4022--Lump Sum Interest Rtaes for Private-Sector 
          Payments
Appendix D to Part 4022--Maximum Guaranteeable Monthly Benefit

    Authority: 29 U.S.C. 1302, 1322, 1322b, 1341(c)(3)(D), and 1344.

    Source: 61 FR 34028, July 1, 1996, unless otherwise noted.



           Subpart A--General Provisions; Guaranteed Benefits



Sec. 4022.1  Purpose and scope.

    The purpose of this part is to prescribe rules governing the 
calculation and payment of benefits payable in terminated single-
employer plans under section 4022 of ERISA. Subpart A, which applies to 
each plan providing benefits guaranteed under title IV of ERISA, 
contains definitions applicable to all subparts, and describes benefits 
that are guaranteed by the PBGC subject to the limitations set forth in 
subpart B. Subpart C is reserved for rules relating to the calculation 
and payment of unfunded nonguaranteed benefits under section 4022(c) of 
ERISA. Subpart D prescribes procedures that minimize the overpayment of 
benefits by plan administrators after initiating

[[Page 761]]

distress terminations of single-employer plans that are not expected to 
be sufficient for guaranteed benefits. Subpart E sets forth the method 
of recoupment of benefit payments in excess of the amounts permitted 
under sections 4022, 4022B, and 4044 of ERISA from participants and 
beneficiaries in PBGC-trusteed plans, and provides for reimbursement of 
benefit underpayments. (The provisions of this part have not been 
amended to take account of changes made in section 4022 of ERISA by 
sections 766 and 777 of the Retirement Protection Act of 1994.)

[61 FR 34028, July 1, 1996, as amended at 62 FR 67728, Dec. 30, 1997]



Sec. 4022.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
annuity, Code, employer, ERISA, guaranteed benefit, mandatory employee 
contributions, nonforfeitable benefit, normal retirement age, notice of 
intent to terminate, PBGC, person, plan, plan administrator, plan year, 
proposed termination date, substantial owner, and title IV benefit.
    In addition, for purposes of this part (unless otherwise required by 
the context):
    Accumulated mandatory employee contributions means mandatory 
employee contributions plus interest credited on those contributions 
under the plan, or, if greater, interest required by section 204(c) of 
ERISA.
    Benefit in pay status means that one or more benefit payments have 
been made or would have been made except for administrative delay.
    Benefit increase means any benefit arising from the adoption of a 
new plan or an increase in the value of benefits payable arising from an 
amendment to an existing plan. Such increases include, but are not 
limited to, a scheduled increase in benefits under a plan or plan 
amendment, such as a cost-of-living increase, and any change in plan 
provisions which advances a participant's or beneficiary's entitlement 
to a benefit, such as liberalized participation requirements or vesting 
schedules, reductions in the normal or early retirement age under a 
plan, and changes in the form of benefit payments. In the case of a plan 
under which the amount of benefits depends on the participant's salary 
and the participant receives a salary increase the resulting increase in 
benefits to which the participant becomes entitled will not, for the 
purpose of this part, be treated as a benefit increase. Similarly, in 
the case of a plan under which the amount of benefits depends on the 
participant's age or service, and the participant becomes entitled to 
increased benefits solely because of advancement in age or service, the 
increased benefits to which the participant becomes entitled will not, 
for the purpose of this part, be treated as a benefit increase.
    Covered employment means employment with respect to which benefits 
accrue under a plan.
    Pension benefit means a benefit payable as an annuity, or one or 
more payments related thereto, to a participant who permanently leaves 
or has permanently left covered employment, or to a surviving 
beneficiary, which payments by themselves or in combination with Social 
Security, Railroad Retirement, or workmen's compensation benefits 
provide a substantially level income to the recipient.
    Straight life annuity means a series of level periodic payments 
payable for the life of the recipient, but does not include any combined 
annuity form, including an annuity payable for a term certain and life.



Sec. 4022.3  Guaranteed benefits.

    Except as otherwise provided in this part, the PBGC will guarantee 
the amount, as of the termination date, of a benefit provided under a 
plan to the extent that the benefit does not exceed the limitations in 
ERISA and in subpart B, if--
    (a) The benefit is, on the termination date, a nonforfeitable 
benefit;
    (b) The benefit qualifies as a pension benefit as defined in 
Sec. 4022.2; and
    (c) The participant is entitled to the benefit under Sec. 4022.4.

[61 FR 34028, July 1, 1996; 61 FR 67943, Dec. 26, 1996]



Sec. 4022.4  Entitlement to a benefit.

    (a) A participant or his surviving beneficiary is entitled to a 
benefit if under the provisions of a plan:

[[Page 762]]

    (1) The benefit was in pay status on the date of the termination of 
the plan.
    (2) A benefit payable at normal retirement age is an optional form 
of payment to the benefit otherwise payable at such age and the 
participant elected the benefit before the termination date of the plan.
    (3) Except for a benefit described in paragraph (a)(2) of this 
section, before the termination date (or on or before the termination 
date, in the case of a requirement that a participant attain a 
particular age, earn a particular amount of service, become disabled, or 
die) the participant had satisfied the conditions of the plan necessary 
to establish the right to receive the benefit prior to such date (prior 
to or on such date, in the case of a requirement that a participant 
attain a particular age, earn a particular amount of service, become 
disabled, or die) other than application for the benefit, satisfaction 
of a waiting period described in the plan, or retirement; or
    (4) Absent an election by the participant, the benefit would be 
payable upon retirement.
    (5) In the case of a benefit that returns all or a portion of a 
participant's accumulated mandatory employee contributions upon death, 
the participant (or beneficiary) had satisfied the conditions of the 
plan necessary to establish the right to the benefit other than death or 
designation of a beneficiary.
    (b) If none of the conditions set forth in paragraph (a) of this 
section is met, the PBGC will determine whether the participant is 
entitled to a benefit on the basis of the provisions of the plan and the 
circumstances of the case.

[61 FR 34028, July 1, 1996, as amended at 67 FR 16954, Apr. 8, 2002]



Sec. 4022.5  Determination of nonforfeitable benefits.

    (a) A guaranteed benefit payable to a surviving beneficiary is not 
considered to be forfeitable solely because the plan provides that the 
benefit will cease upon the remarriage of such beneficiary or his 
attaining a specified age. However, the PBGC will observe the provisions 
of the plan relating to the effect of such remarriage or attainment of 
such specified age on the surviving beneficiary's eligibility to 
continue to receive benefit payments.
    (b) Any other provision in a plan that the right to a benefit in pay 
status will cease or be suspended upon the occurrence of any specified 
condition does not automatically make that benefit forfeitable. In each 
such case the PBGC will determine whether the benefit is forfeitable.
    (c) A benefit guaranteed under Sec. 4022.6 shall not be considered 
forfeitable solely because the plan provides that upon recovery of the 
participant the benefit will cease.



Sec. 4022.6  Annuity payable for total disability.

    (a) Except as provided in paragraph (b) of this section, an annuity 
which is payable (or would be payable after a waiting period described 
in the plan, whether or not the participant is in receipt of other 
benefits during such waiting period), under the terms of a plan on 
account of the total and permanent disability of a participant which is 
expected to last for the life of the participant and which began on or 
before the termination date is considered to be a pension benefit.
    (b) In any case in which the PBGC determines that the standards for 
determining such total and permanent disability under a plan were 
unreasonable, or were modified in anticipation of termination of the 
plan, the disability benefits payable to a participant under such 
standard shall not be guaranteed unless the participant meets the 
standards of the Social Security Act and the regulations promulgated 
thereunder for determining total disability.
    (c) For the purpose of this section, a participant may be required, 
upon the request of the PBGC, to submit to an examination or to submit 
proof of continued total and permanent disability. If the PBGC finds 
that a participant is no longer so disabled, it may suspend, modify, or 
discontinue the payment of the disability benefit.

[61 FR 34028, July 1, 1996, as amended at 67 FR 16954, Apr. 8, 2002]



Sec. 4022.7  Benefits payable in a single installment.

    (a) Alternative benefit. If a benefit that is guaranteed under this 
part is

[[Page 763]]

payable in a single installment or substantially so under the terms of 
the plan, or an option elected under the plan by the participant, the 
benefit will not be guaranteed or paid as such, but the PBGC will 
guarantee the alternative benefit, if any, in the plan which provides 
for the payment of equal periodic installments for the life of the 
recipient. If the plan provides more than one such annuity, the 
recipient may within 30 days after notification of the proposed 
termination of the plan elect to receive one of those annuities. If the 
plan does not provide such an annuity, the PBGC will guarantee an 
actuarially equivalent life annuity.
    (b)(1) Payment in lump sum. Notwithstanding paragraph (a) of this 
section:
    (i) In general. If the lump sum value of a benefit (or of an 
estimated benefit) payable by the PBGC is $5,000 or less and the benefit 
is not yet in pay status, the benefit (or estimated benefit) may be paid 
in a lump sum.
    (ii) Annuity option. If the PBGC would otherwise make a lump sum 
payment in accordance with paragraph (b)(1)(i) of this section and the 
monthly benefit (or the estimated monthly benefit) is equal to or 
greater than $25 (at normal retirement age and in the normal form for an 
unmarried participant), the PBGC will provide the option to receive the 
benefit in the form of an annuity.
    (iii) Election of QPSA lump sum. If the lump sum value of annuity 
payments under a qualified preretirement survivor annuity (or under an 
estimated qualified preretirement survivor annuity) is $5,000 or less, 
the benefit is not yet in pay status, and the participant dies after the 
termination date, the benefit (or estimated benefit) may be paid in a 
lump sum if so elected by the surviving spouse.
    (iv) Payments to estates. The PBGC may pay any annuity payments 
payable to an estate in a single installment without regard to the 
threshold in paragraph (b)(1)(i) of this section if so elected by the 
estate. The PBGC will discount the annuity payments using the federal 
mid-term rate (as determined by the Secretary of the Treasury pursuant 
to section 1274(d)(1)(C)(ii) of the Code) applicable for the month the 
participant died based on monthly compounding.
    (2) Return of employee contributions--(i) General. Notwithstanding 
any other provision of this part, the PBGC may pay in a single 
installment (or a series of installments) instead of as an annuity, the 
value of the portion of an individual's basic-type benefit derived from 
mandatory employee contributions, if:
    (A) The individual elects payment in a single installment (or a 
series of installments) before the sixty-first (61st) day after the date 
he or she receives notice that such an election is available; and
    (B) Payment in a single installment (or a series of installments) is 
consistent with the plan's provisions. For purposes of this part, the 
portion of an individual's basic-type benefit derived from mandatory 
employee contributions is determined under Sec. 4044.12 (priority 
category 2 benefits) of this chapter, and the value of that portion is 
computed under the applicable rules contained in part 4044, subpart B, 
of this chapter.
    (ii) Set-off for distributions after termination. The amount to be 
returned under paragraph (b)(2)(i) of this section is reduced by the 
set-off amount. The set-off amount is the amount by which distributions 
made to the individual after the termination date exceed the amount that 
would have been distributed, exclusive of mandatory employee 
contributions, if the individual had withdrawn the mandatory employee 
contributions on the termination date.

    Example: Participant A is receiving a benefit of $600 per month when 
the plan terminates, $200 of which is derived from mandatory employee 
contributions. If the participant had withdrawn his contributions on the 
termination date, his benefit would have been reduced to $400 per month. 
The participant receives two monthly payments after the termination 
date. The set-off amount is $400. (The $600 actual payment minus the 
$400 the participant would have received if he had withdrawn his 
contributions multiplied by the two months for which he received the 
extra payment.)

    (c) Death benefits--(1) General. Notwithstanding paragraph (a) of 
this section, a benefit that would otherwise be guaranteed under the 
provisions of this subpart, except for the fact that it is payable 
solely in a single installment

[[Page 764]]

(or substantially so) upon the death of a participant, shall be paid by 
the PBGC as an annuity that has the same value as the single 
installment. The PBGC will in each case determine the amount and 
duration of the annuity based on all the facts and circumstances.
    (2) Exception. Upon the death of a participant the PBGC may pay in a 
single installment (or a series of installments) that portion of the 
participant's accumulated mandatory employee contributions that is 
payable under the plan in a single installment (or a series of 
installments) upon the participant's death.
    (d) Determination of lump sum amount. For purposes of paragraph 
(b)(1) of this section--
    (1) Benefits disregarded. In determining whether the lump-sum value 
of a benefit is $5,000 or less, the PBGC may disregard the value of any 
benefits the plan or the PBGC previously paid in lump-sum form or the 
plan paid by purchasing an annuity contract, the value of any benefits 
returned under paragraph (b)(2) of this section, and the value of any 
benefits the PBGC has not yet determined under section 4022(c) of ERISA.
    (2) Actuarial assumptions. The PBGC will calculate the lump sum 
value of a benefit by valuing the monthly annuity benefits payable in 
the form determined under Sec. 4044.51(a) of this chapter and commencing 
at the time determined under Sec. 4044.51(b) of this chapter. The 
actuarial assumptions used will be those described in Sec. 4044.52, 
except that--
    (i) Loading for expenses. There will be no adjustment to reflect the 
loading for expenses;
    (ii) Mortality rates and interest assumptions. The mortality rates 
in appendix A to this part and the interest assumptions in appendix B to 
this part will apply; and
    (iii) Date for determining lump sum value. The date as of which a 
lump sum value is calculated is the termination date, except that in the 
case of a subsequent insufficiency it is the date described in section 
4062(b)(1)(B) of ERISA.
    (e) Publication of lump sum rates. The PBGC will provide two sets of 
lump sum interest rates as follows--
    (1) In appendix B to this part, the lump sum interest rates for PBGC 
payments, as provided under paragraph (d)(2) of this section; and
    (2) In appendix C to this part, the lump sum interest rates for 
private-sector payments.

[61 FR 34028, July 1, 1996, as amended at 63 FR 38306, July 16, 1998; 65 
FR 14752, 14755, Mar. 17, 2000; 67 FR 16954, Apr. 8, 2002]



Sec. 4022.8  Form of payment.

    (a) In general. This section applies where benefits are not already 
in pay status. Except as provided in Sec. 4022.7 (relating to the 
payment of lump sums), the PBGC will pay benefits--
    (1) In the automatic PBGC form described in paragraph (b) of this 
section; or
    (2) If an optional PBGC form described in paragraph (c) of this 
section is elected, in that optional form.
    (b) Automatic PBGC form. (1) Participants. (i) Married participants. 
The automatic PBGC form with respect to a participant who is married at 
the time the benefit enters pay status is the form a married participant 
would be entitled to receive from the plan in the absence of an 
election.
    (ii) Unmarried participants. The automatic PBGC form with respect to 
a participant who is unmarried at the time the benefit enters pay status 
is the form an unmarried person would be entitled to receive from the 
plan in the absence of an election.
    (2) Beneficiaries. (i) QPSA beneficiaries. The automatic PBGC form 
with respect to the spouse of a married participant in a plan with a 
termination date on or after August 23, 1984, who dies before his or her 
benefit enters pay status is the qualified preretirement survivor 
annuity such a spouse would be entitled to receive from the plan in the 
absence of an election. The PBGC will not charge the participant or 
beneficiary for this survivor benefit coverage for the time period 
beginning on the plan's termination date (regardless of whether the plan 
would have charged).
    (ii) Alternate payees. The automatic PBGC form with respect to an 
alternate payee with a separate interest

[[Page 765]]

under a qualified domestic relations order is the form an unmarried 
participant would be entitled to receive from the plan in the absence of 
an election.
    (c) Optional PBGC forms. (1) Participant and beneficiary elections. 
A participant may elect any optional form described in paragraphs (c)(4) 
or (c)(5) of this section. A beneficiary described in paragraph (b)(2) 
of this section (a QPSA beneficiary or an alternate payee) may elect any 
optional form described in paragraphs (c)(4)(i) through (c)(4)(iv) of 
this section.
    (2) Permitted designees. A participant or beneficiary, whether 
married or unmarried, who elects an optional form with a survivor 
feature (e.g., a 5-year certain-and-continuous annuity or, in the case 
of a participant, a joint-and-50%-survivor annuity) may designate either 
a spouse or a non-spouse beneficiary to receive survivor benefits. An 
optional joint-life form must be payable to a natural person or (with 
the consent of the PBGC) to a trust for the benefit of one or more 
natural persons.
    (3) Spousal consent. In the case of a participant who is married at 
the time the benefit enters pay status, the election of an optional form 
or the designation of a non-spouse beneficiary is valid only if the 
participant's spouse consents.
    (4) Permitted optional single-life forms. The PBGC may offer 
benefits in the following single-life forms:
    (i) A straight-life annuity;
    (ii) A 5-year certain-and-continuous annuity;
    (iii) A 10-year certain-and-continuous annuity;
    (iv) A 15-year certain-and-continuous annuity; and
    (v) The form an unmarried person would be entitled to receive from 
the plan in the absence of an election.
    (5) Permitted optional joint-life forms. The PBGC may offer benefits 
in the following joint-life forms:
    (i) A joint-and-50%-survivor annuity;
    (ii) A joint-and-50%-survivor-``pop-up'' annuity (i.e., where the 
participant's benefit ``pops up'' to the unreduced level if the 
beneficiary dies first);
    (iii) A joint-and-75%-survivor annuity; and
    (iv) A joint-and-100%-survivor annuity.
    (6) Determination of benefit amount; starting benefit. To determine 
the amount of the benefit in an optional PBGC form--
    (i) Single-life forms. In the case of an optional PBGC form under 
paragraph (c)(4) of this section, the PBGC will first determine the 
amount of the benefit in the form the plan would pay to an unmarried 
participant in the absence of an election.
    (ii) Joint-life forms. In the case of an optional PBGC form under 
paragraph (c)(5) of this section, the PBGC will first determine the 
amount of the benefit in the form the plan would pay to a married 
participant in the absence of an election. For this purpose, the PBGC 
will treat a participant who designates a non-spouse beneficiary as 
being married to a person who is the same age as that non-spouse 
beneficiary.
    (7) Determination of benefit amount; conversion factors. The PBGC 
will convert the benefit amount determined under paragraph (c)(6) of 
this section to the optional form elected, using PBGC factors based on--
    (i) Mortality. Unisex mortality rates that are a fixed blend of 50 
percent of the male mortality rates and 50 percent of the female 
mortality rates from the 1983 Group Annuity Mortality Table as 
prescribed in Rev. Rul. 95-6, 1995-1 C.B. 80 (Internal Revenue Service 
Cumulative Bulletins are available from the Superintendent of Documents, 
Government Printing Office, Washington, DC 20402); and
    (ii) Interest. An interest rate of six percent.
    (8) Determination of benefit amount; limitation. The PBGC will limit 
the benefit amount determined under paragraph (c)(7) of this section to 
the amount of the benefit it would pay in the form of a straight life 
annuity under paragraph (c)(4)(i) of this section.
    (9) Incidental benefits. The PBGC will not pay an optional PBGC form 
with a death benefit (e.g., a joint-and-50%-survivor annuity) unless the 
death benefit would be an ``incidental death benefit'' under 26 CFR 
1.401-1(b)(1)(i). If the

[[Page 766]]

death benefit would not be an ``incidental death benefit,'' the PBGC may 
instead offer a modified version of the optional form under which the 
death benefit would be an ``incidental death benefit.''
    (d) Change in benefit form. Once payment of a benefit starts, the 
benefit form cannot be changed.
    (e) PBGC discretion. The PBGC may make other optional annuity forms 
available subject to the rules in paragraph (c) of this section.

[67 FR 16954, Apr. 8, 2002]



Sec. 4022.9  Time of payment; benefit applications.

    (a) Time of payment. A participant may start receiving an annuity 
benefit from the PBGC (subject to the PBGC's rules for starting benefit 
payments) on his or her Earliest PBGC Retirement Date as determined 
under Sec. 4022.10 of this subchapter or, if later, the plan's 
termination date.
    (b) Elections and consents. The PBGC may prescribe the time and 
manner for benefit elections to be made and spousal consents to be 
provided.
    (c) Benefit applications. The PBGC is not required to accept any 
application for benefits not made in accordance with its forms and 
instructions.

[67 FR 16955, Apr. 8, 2002]



Sec. 4022.10  Earliest PBGC Retirement Date.

    The Earliest PBGC Retirement Date for a participant is the earliest 
date on which the participant could retire under plan provisions for 
purposes of section 4044(a)(3)(B) of ERISA. The Earliest PBGC Retirement 
Date is determined in accordance with this Sec. 4022.10. For purposes of 
this Sec. 4022.10, ``age'' means the participant's age as of his or her 
last birthday (unless otherwise required by the context).
    (a) Immediate annuity at or after age 55. If the earliest date on 
which a participant could separate from service with the right to 
receive an immediate annuity is on or after the date the participant 
reaches age 55, the Earliest PBGC Retirement Date for the participant is 
the earliest date on which the participant could separate from service 
with the right to receive an immediate annuity.
    (b) Immediate annuity before age 55. If the earliest date on which a 
participant could separate from service with the right to receive an 
immediate annuity is before the date the participant reaches age 55, the 
Earliest PBGC Retirement Date for the participant is the date the 
participant reaches age 55 (except as provided in paragraph (c) of this 
section).
    (c) Facts and circumstances. If a participant could separate from 
service with the right to receive an immediate annuity before the date 
the participant reaches age 55, the PBGC will make a determination, 
under the facts and circumstances, as to whether the participant could 
retire under plan provisions for purposes of section 4044(a)(3)(B) of 
ERISA on an earlier date. If the PBGC determines, under the facts and 
circumstances, that the participant could retire under plan provisions 
for those purposes on an earlier date, that earlier date is the Earliest 
PBGC Retirement Date for the participant. In making this determination, 
the PBGC will take into account plan provisions (e.g., the general 
structure of the provisions, the extent to which the benefit is 
subsidized, and whether eligibility for the benefit is based on a 
substantial service or age-and-service requirement), the age at which 
employees customarily retire (under the particular plan or in the 
particular company or industry, as appropriate), and all other relevant 
considerations. Neither a plan's reference to a separation from service 
at a particular age as a ``retirement'' nor the ability of a participant 
to receive an immediate annuity at a particular age necessarily makes 
the date the participant reaches that age the Earliest PBGC Retirement 
Date for the participant. The Earliest PBGC Retirement Date determined 
by the PBGC under this paragraph (c) will never be earlier than the 
earliest date the participant could separate from service with the right 
to receive an immediate annuity.
    (d) Examples. The following examples illustrate the operation of the 
rules in paragraphs (a) through (c) of this section.

[[Page 767]]

    (1) Normal retirement age. A plan's normal retirement age is age 65. 
The plan does not offer a consensual lump sum or an immediate annuity 
upon separation before normal retirement age. The Earliest PBGC 
Retirement Date for a participant who, as of the plan's termination 
date, is age 50 is the date the participant reaches age 65.
    (2) Early retirement age. A plan's normal retirement age is age 65. 
The plan specifies an early retirement age of 60 with 10 years of 
service. The plan does not offer a consensual lump sum or an immediate 
annuity upon separation before early retirement age. The Earliest PBGC 
Retirement Date for a participant who, as of the plan's termination 
date, is age 55 and has completed 10 years of service is the date the 
participant reaches age 60.
    (3) Separation at any age. A plan's normal retirement age is age 65. 
The plan specifies an early retirement age of 60 but offers an immediate 
annuity upon separation regardless of age. The Earliest PBGC Retirement 
Date for a participant who, as of the plan's termination date, is age 35 
is the date the participant reaches age 55, unless the PBGC determines 
under the facts and circumstances that the participant could ``retire'' 
for purposes of ERISA section 4044(a)(3)(B) on an earlier date, in which 
case the participant's Earliest PBGC Retirement Date would be that 
earlier date.
    (4) Age 50 retirement common. A plan's normal retirement age is age 
60. The plan specifies an early retirement age of 50 but offers an 
immediate annuity upon separation regardless of age. The Earliest PBGC 
Retirement Date for a participant who, as of the plan's termination 
date, is age 35 is the date the participant reaches age 55, unless the 
PBGC determines under the facts and circumstances that the participant 
could retire for purposes of ERISA section 4044(a)(3)(B) on an earlier 
date, in which case the Earliest PBGC Retirement Date would be that 
earlier date. For example, if it were common for participants to retire 
at age 50, the PBGC could determine that the participant's Earliest PBGC 
Retirement Date would be the date the participant reached age 50.
    (5) ``30-and-out'' benefit. A plan's normal retirement age is age 
65. The plan offers an immediate annuity upon separation regardless of 
age and a fully-subsidized annuity upon separation with 30 years of 
service. The Earliest PBGC Retirement Date for a participant who, as of 
the plan's termination date, is age 48 and has completed 30 years of 
service is the date the participant reaches age 55, unless the PBGC 
determines under the facts and circumstances that the participant could 
retire for purposes of ERISA section 4044(a)(3)(B) on an earlier date, 
in which case the participant's Earliest PBGC Retirement Date would be 
that earlier date. In this example, the PBGC generally would determine 
under the facts and circumstances that the participant's Earliest PBGC 
Retirement Date is the date the participant completed 30 years of 
service.
    (6) Typical airline pilots' plan. An airline pilots' plan has a 
normal retirement age of 60. The plan specifies an early retirement age 
of 50 (with 5 years of service). The Earliest PBGC Retirement Date for a 
participant who, as of the plan's termination date, is age 48 and has 
completed five years of service would be the date the participant 
reaches age 55, unless the PBGC determines under the facts and 
circumstances that the participant could retire for purposes of ERISA 
section 4044(a)(3)(B) on an earlier date, in which case the 
participant's Earliest PBGC Retirement Date would be that earlier date. 
In this example, the PBGC generally would determine under the facts and 
circumstances that the participant's Earliest PBGC Retirement Date is 
the date the participant reaches age 50. If the plan instead had 
provided for early retirement before age 50, the PBGC would consider all 
the facts and circumstances (including the plan's normal retirement age 
and the age at which employees customarily retire in the airline 
industry) in determining whether to treat the date the participant 
reaches the plan's early retirement age as the participant's Earliest 
PBGC Retirement Date.
    (e) Special rule for ``window'' provisions. For purposes of 
paragraphs (a), (b), and (c) of this section, the PBGC will treat a 
participant as being able,

[[Page 768]]

under plan provisions, to separate from service with the right to 
receive an immediate annuity on a date before the plan's termination 
date only if--
    (1) Eligibility for that immediate annuity continues through the 
earlier of--
    (i) The plan's termination date; or
    (ii) The date the participant actually separates from service with 
the right to receive an immediate annuity; and
    (2) The participant satisfies the conditions for eligibility for 
that immediate annuity on or before the plan's termination date.

[67 FR 16955, Apr. 8, 2002]



              Subpart B--Limitations on Guaranteed Benefits



Sec. 4022.21  Limitations; in general.

    (a)(1) Subject to paragraphs (b), (c) and (d) of this section, the 
PBGC will not guarantee that part of an installment payment that exceeds 
the dollar amount payable as a straight life annuity commencing at 
normal retirement age, or thereafter, to which a participant would have 
been entitled under the provisions of the plan in effect on the 
termination date, on the basis of his credited service to such date. If 
the plan does not provide a straight life annuity either as its normal 
form of retirement benefit or as an option to the normal form, the PBGC 
will for purposes of this paragraph convert the plan's normal form 
benefit to a straight life annuity of equal actuarial value as 
determined by the PBGC.
    (2) The limitation of paragraph (a)(1) of this section shall not 
apply to:
    (i) A survivor's benefit payable as an annuity on account of the 
death of a participant that occurred on or before the plan's termination 
date and before the participant retired;
    (ii) A disability pension described in Sec. 4022.6 of this part; or
    (iii) A benefit payable in non-level installments that in 
combination with Social Security, Railroad Retirement, or workman's 
compensation benefits yields a substantially level income if the 
projected income from the plan benefit over the expected life of the 
recipient does not exceed the value of the straight life annuity 
described in paragraph (a)(1) of this section.
    (b) The PBGC will not guarantee the payment of that part of any 
benefit that exceeds the limitations in section 4022(b) of ERISA and 
this subpart B.
    (c)(1) Except as provided in paragraph (c)(2) of this section, the 
PBGC does not guarantee a benefit payable in a single installment (or 
substantially so) upon the death of a participant or his surviving 
beneficiary unless that benefit is substantially derived from a 
reduction in the pension benefit payable to the participant or surviving 
beneficiary.
    (2) Paragraphs (a) and (c)(1) of this section do not apply to that 
portion of accumulated mandatory employee contributions payable under a 
plan upon the death of a participant, and such a benefit is a pension 
benefit for purposes of this part.
    (d) The PBGC will not guarantee a joint-life annuity benefit payable 
to other than--
    (1) Natural persons; or
    (2) A trust or estate for the benefit of one or more natural 
persons.

[61 FR 34028, July 1, 1996, as amended at 67 FR 16956, Apr. 8, 2002]



Sec. 4022.22  Maximum guaranteeable benefit.

    Subject to section 4022B of ERISA and part 4022B of this chapter, 
benefits payable with respect to a participant under a plan shall be 
guaranteed only to the extent that such benefits do not exceed the 
actuarial value of a benefit in the form of a life annuity payable in 
monthly installments, commencing at age 65 equal to the lesser of the 
amounts computed in paragraphs (a) and (b) of this section.
    (a) One-twelfth of the participant's average annual gross income 
from his employer during either his highest-paid five consecutive 
calendar years in which he was an active participant under the plan, or 
if he was not an active participant throughout the entire such period, 
the lesser number of calendar years within that period in which he was 
an active participant under the plan.

[[Page 769]]

    (1) As used in this paragraph, ``gross income'' means ``earned 
income'' as defined in section 911(b) of the Code, determined without 
regard to any community property laws.
    (2) For the purposes of this paragraph, if the plan is one to which 
more than one employer contributes, and during any calendar year the 
participant received gross income from more than one such contributing 
employer, then the amounts so received shall be aggregated in 
determining the participant's gross income for the calendar year.
    (b) $750 multiplied by the fraction x/$13,200 where ``x'' is the 
Social Security contribution and benefit base determined under section 
230 of the Social Security Act in effect at the termination date of the 
plan.



Sec. 4022.23  Computation of maximum guaranteeable benefits.

    (a) General. Where a benefit is payable in any manner other than as 
a monthly benefit payable for life commencing at age 65, the maximum 
guaranteeable monthly amount of such benefit shall be computed by 
applying the applicable factor or factors set forth in paragraphs (c)-
(e) of this section to the monthly amount computed under Sec. 4022.22. 
In the case of a step-down life annuity, the maximum guaranteeable 
monthly amount of such benefit shall be computed in accordance with 
paragraph (f) of this section.
    (b) Application of adjustment factors to monthly amount computed 
under Sec. 4022.22. (1) Each percentage increase or decrease computed 
under paragraphs (c), (d), and (e) of this section shall be added to or 
subtracted from a base of 1.00, and the resulting amounts shall be 
multiplied.
    (2) The monthly amount computed under Sec. 4022.22 shall be 
multiplied by the product computed pursuant to paragraph (b)(1) of this 
section in order to determine the participant's and/or beneficiary's 
maximum benefit guaranteeable.
    (c) Annuitant's age factor. If a participant or the beneficiary of a 
deceased participant is entitled to and chooses to receive his benefit 
at an age younger than 65, the monthly amount computed under 
Sec. 4022.22 shall be reduced by the following amounts for each month up 
to the number of whole months below age 65 that corresponds to the later 
of the participant's age at the termination date or his age at the time 
he begins to receive the benefit: For each of the 60 months immediately 
preceding the 65th birthday, the reduction shall be \7/12\ of 1%; For 
each of the 60 months immediately preceding the 60th birthday, the 
reduction shall be \4/12\ of 1%; For each of the 120 months immediately 
preceding the 55th birthday, the reduction shall be \2/12\ of 1%; and 
For each succeeding 120 months period, the monthly percentage reduction 
shall be \1/2\ of that used for the preceding 120 month period.
    (d) Factor for benefit payable in a form other than as a life 
annuity. When a benefit is in a form other than a life annuity payable 
in monthly installments, the monthly amount computed under Sec. 4022.22 
shall be adjusted by the appropriate factors on a case-by-case basis by 
PBGC. This paragraph sets forth the adjustment factors to be used for 
several common benefit forms payable in monthly installments.
    (1) Period certain and continuous annuity. A period certain and 
continuous annuity means an annuity which is payable in periodic 
installments for the participant's life, but for not less than a 
specified period of time whether or not the participant dies during that 
period. The monthly amount of a period certain and continuous annuity 
computed under Sec. 4022.22 shall be reduced by the following amounts 
for each month of the period certain subsequent to the termination date:
    For each month up to 60 months deduct \1/24\ of 1%;
    For each month beyond 60 months deduct \1/12\ of 1%.
    (i) A cash refund annuity means an annuity under which if the 
participant dies prior to the time when he has received pension payments 
equal to a fixed sum specified in the plan, then the balance is paid as 
a lump-sum death benefit. A cash refund annuity shall be treated as a 
benefit payable for a period certain and continuous. The period of 
certainty shall be computed by dividing the amount of the lump-sum 
refund by the monthly amount to

[[Page 770]]

which the participant is entitled under the terms of the plan.
    (ii) An installment refund annuity means an annuity under which if 
the participant dies prior to the time he has received pension payments 
equal to a fixed sum specified in the plan, then the balance is paid as 
a death benefit in periodic installments equal in amount to the 
participant's periodic benefit. An installment refund annuity shall be 
treated as a benefit payable for a period certain and continuous. The 
period of certainty shall be computed by dividing the amount of the 
remaining refund by the monthly amount to which the participant is 
entitled under the terms of the plan.
    (2) Joint and survivor annuity (contingent basis). A joint and 
survivor annuity (contingent basis) means an annuity which is payable in 
periodic installments to a participant for his life and upon his death 
is payable to his beneficiary for the beneficiary's life in the same or 
in a reduced amount. The monthly amount of a joint and survivor annuity 
(contingent basis) computed under Sec. 4022.22 shall be reduced by an 
amount equal to 10% plus \2/10\ of 1% for each percentage point in 
excess of 50% of the participant's benefit that will continue to be paid 
to the beneficiary. If the benefit payable to the beneficiary is less 
than 50 percent of the participant's benefit, PBGC shall provide the 
adjustment factors to be used.
    (3) Joint and survivor annuity (joint basis). A joint and survivor 
annuity (joint basis) means an annuity which is payable in periodic 
installments to a participant and upon his death or the death of his 
beneficiary is payable to the survivor for the survivor's life in the 
same or in a reduced amount. The monthly amount of a joint and survivor 
annuity (joint basis) computed under Sec. 4022.22 shall be reduced by an 
amount equal to \4/10\ of 1% for each percentage point in excess of 50% 
of the participant's original benefit that will continue to be paid to 
the survivor. If the benefit payable to the survivor is less than 50 
percent of the participant's original benefit, PBGC shall provide the 
adjustment factors to be used.
    (e) When a benefit is payable in a form described in paragraph 
(d)(2) or (3) of this section, and the beneficiary's age is different 
from the participant's age, by 15 years or less, the monthly amount 
computed under Sec. 4022.22 shall be adjusted by the following amounts: 
If the beneficiary is younger than the participant, deduct 1% for each 
year of the age difference; If the beneficiary is older than the 
participant, add \1/2\ of 1% for each year of the age difference. In 
computing the difference in ages, years over 65 years of age shall not 
be counted. If the difference in age between the beneficiary and the 
participant is greater than 15 years, PBGC shall provide the adjustment 
factors to be used.
    (f) Step-down life annuity. A step-down life annuity means an 
annuity payable in a certain amount for the life of the participant plus 
a temporary additional amount payable until the participant attains an 
age specified in the plan.
    (1) The temporary additional amount payable under a step-down life 
annuity shall be converted to a life annuity payable in monthly 
installments by multiplying the appropriate factor based on the 
participant's age and the number of remaining years of the temporary 
additional benefit by the amount of the temporary additional benefit. 
The factors to be used are set forth in the table below. The amount of 
the monthly benefit so calculated shall be added to the level amount of 
the monthly benefit payable for life to determine the level-life annuity 
that is equivalent to the step-down life annuity.

                Factors for Converting Temporary Additional Benefit Under Step-Down Life Annuity
----------------------------------------------------------------------------------------------------------------
  Age of participant \1\ at the    Number of years temporary additional benefit is payable under the plan as of
 later of the date the temporary                         the date of plan termination \2\
 additional benefit commences or -------------------------------------------------------------------------------
  the date of plan termination       1       2       3       4       5       6       7       8       9      10
----------------------------------------------------------------------------------------------------------------
45..............................   0.060   0.117   0.170   0.220   0.268   0.315   0.355   0.395   0.435   0.475
46..............................    .061    .119    .173    .224    .273    .321    .362    .403    .444    .485
47..............................    .062    .121    .176    .228    .278    .327    .369    .411    .453    .495
48..............................    .063    .123    .179    .232    .283    .333    .376    .419    .462    .505

[[Page 771]]

 
49..............................    .064    .125    .182    .236    .288    .339    .383    .427    .471    .515
50..............................    .065    .127    .185    .240    .293    .345    .390    .435    .480    .525
51..............................    .066    .129    .188    .244    .298    .351    .397    .443    .489    .535
52..............................    .067    .131    .191    .248    .303    .357    .404    .451    .498    .545
53..............................    .068    .133    .194    .252    .308    .363    .411    .459    .507    .555
54..............................    .069    .135    .197    .256    .313    .369    .418    .467    .516    .565
55..............................    .070    .137    .200    .260    .318    .375    .425    .475    .525    .575
56..............................    .072    .141    .206    .268    .328    .387    .439    .491    .543  ......
57..............................    .074    .145    .212    .276    .338    .399    .453    .507  ......  ......
58..............................    .076    .149    .218    .284    .348    .411    .467  ......  ......  ......
59..............................    .078     153    .224    .292    .358    .423  ......  ......  ......  ......
60..............................    .080    .157    .230    .300    .368  ......  ......  ......  ......  ......
61..............................    .082    .161    .236    .308  ......  ......  ......  ......  ......  ......
62..............................    .084    .165    .242  ......  ......  ......  ......  ......  ......  ......
63..............................    .086    .169  ......  ......  ......  ......  ......  ......  ......  ......
64..............................    .088  ......  ......  ......  ......  ......  ......  ......  ......  ......
----------------------------------------------------------------------------------------------------------------
\1\ At last birthday.
\2\ If the benefit is payable for less than 1 yr, the appropriate factor is obtained by multiplying the factor
  for 1 yr by a fraction, the numerator of which is the number of months the benefit is payable, and the
  denominator of which is 12. If the benefit is payable for 1 or more whole years, plus an additional number of
  months less than 12, the appropriate factor is obtained by linear interpolation between the factor for the
  number of whole years the benefit is payable and the factor for the next year.

    (2) If a participant is entitled to and chooses to receive a step-
down life annuity at an age younger than 65, the monthly amount computed 
under Sec. 4022.22 shall be adjusted by applying the factors set forth 
in paragraph (c) of this section in the manner described in paragraph 
(b) of this section.
    (3) If the level-life monthly benefit calculated pursuant to 
paragraph (f)(1) of this section exceeds the monthly amount calculated 
pursuant to paragraph (f)(2) of this section, then the monthly maximum 
benefit guaranteeable shall be a step-down life annuity under which the 
monthly amount of the temporary additional benefit and the amount of the 
monthly benefit payable for life, respectively, shall bear the same 
ratio to the monthly amount of the temporary additional benefit and the 
monthly benefit payable for life provided under the plan, respectively, 
as the monthly benefit calculated pursuant to paragraph (f)(2) of this 
section bears to the monthly benefit calculated pursuant to paragraph 
(f)(1) of this section.

[61 FR 34028, July 1, 1996; 61 FR 36626, July 12, 1996]



Sec. 4022.24  Benefit increases.

    (a) Scope. This section applies:
    (1) To all benefit increases, as defined in Sec. 4022.2, payable 
with respect to a participant other than a substantial owner, which have 
been in effect for less than five years preceding the termination date; 
and
    (2) To all benefit increases payable with respect to a substantial 
owner, which have been in effect for less than 30 years preceding the 
termination date.
    (b) General rule. Benefit increases described in paragraph (a) of 
this section shall be guaranteed only to the extent provided in 
Sec. 4022.25 with respect to a participant other than a substantial 
owner and in Sec. 4022.26 with respect to a participant who is a 
substantial owner.
    (c) Computation of guaranteeable benefit increases. Except as 
provided in paragraph (d) of this section pertaining to multiple benefit 
increases, the amount of a guaranteeable benefit increase shall be the 
amount, if any, by which the monthly benefit calculated pursuant to 
paragraph (c)(1) of this section (the monthly benefit provided under the 
terms of the plan as of the termination date, as limited by 
Sec. 4022.22) exceeds the monthly benefit calculated pursuant to 
paragraph (c)(4) of this section (the monthly benefit which would have 
been payable on the

[[Page 772]]

termination date if the benefit provided subsequent to the increase were 
equivalent, as of the date of the increase, to the benefit provided 
prior to the increase).
    (1) Determine the amount of the monthly benefit payable on the 
termination date (or, in the case of a deferred benefit, the monthly 
benefit which will become payable thereafter) under the terms of the 
plan subsequent to the increase, using service credited to the 
participant as of the termination date, that is guaranteeable pursuant 
to Sec. 4022.22;
    (2) Determine, as of the date of the benefit increase, in accordance 
with the provisions of Sec. 4022.23, the factors which would be used to 
calculate the monthly maximum benefit guaranteeable (i) under the terms 
of the plan prior to the increase and (ii) under the terms of the plan 
subsequent to the increase. However, when the benefit referred to in 
paragraph (c)(2)(ii) of this section is a joint and survivor benefit 
deferred as of the termination date and there is no beneficiary on that 
date, the factors computed in paragraph (c)(2)(ii) of this section shall 
be determined as if the benefit were payable only to the participant. 
Each set of factors determined under this paragraph shall be stated in 
the manner set forth in Sec. 4022.23(b)(1);
    (3) Multiply the monthly benefit which would have been payable (or, 
in the case of a deferred benefit, would have become payable) under the 
terms of the plan prior to the increase based on service credited to the 
participant as of the termination date by a fraction, the numerator of 
which is the product of the factors computed pursuant to paragraph 
(c)(2)(ii) of this section and the denominator of which is the product 
of the factors computed pursuant to paragraph (c)(2)(i) of this section.
    (4) Calculate the amount of the monthly benefit which would be 
payable on the termination date if the monthly benefit computed in 
paragraph (c)(3) of this section had been payable commencing on the date 
of the benefit increase (or, in the case of a deferred benefit, would 
have become payable thereafter). In the case of a benefit which does not 
become payable until subsequent to the termination date, the amount of 
the monthly benefit determined pursuant to this paragraph is the same as 
the amount of the monthly benefit calculated pursuant to paragraph 
(c)(3) of this section.
    (d) Multiple benefit increases. (1) Where there has been more than 
one benefit increase described in paragraph (a) of this section, the 
amounts of guaranteeable benefit increases shall be calculated beginning 
with the earliest increase, and each such amount (except for the amount 
resulting from the final benefit increase) shall be multiplied by a 
fraction, the numerator of which is the product of the factors, stated 
in the manner set forth in Sec. 4022.23(b)(1), used to calculate the 
monthly maximum guaranteeable benefit under Sec. 4022.22 and the 
denominator of which is the product of the factors used in the 
calculation under paragraph (c)(2)(i) of this section.
    (2) Each benefit increase shall be treated separately for the 
purposes of Sec. 4022.25, except as otherwise provided in paragraph (d) 
of that section, and for the purposes of Sec. 4022.26, as appropriate.
    (e) For the purposes of Secs. 4022.22 through 4022.27, a benefit 
increase is deemed to be in effect commencing on the later of its 
adoption date or its effective date.

[61 FR 34028, July 1, 1996; 61 FR 36626, July 12, 1996, as amended at 62 
FR 67728, Dec. 30, 1997]



Sec. 4022.25  Five-year phase-in of benefit guarantee for participants other than substantial owners.

    (a) Scope. This section applies to the guarantee of benefit 
increases which have been in effect for less than five years with 
respect to participants other than substantial owners.
    (b) Phase-in formula. The amount of a benefit increase computed 
pursuant to Sec. 4022.24 shall be guaranteed to the extent provided in 
the following formula: the number of years the benefit increase has been 
in effect, not to exceed five, multiplied by the greater of (1) 20 
percent of the amount computed pursuant to Sec. 4022.24; or (2) $20 per 
month.
    (c) Computation of years. In computing the number of years a benefit 
increase has been in effect, each complete 12-month period ending on or 
before the termination date during which

[[Page 773]]

such benefit increase was in effect constitutes one year.
    (d) Multiple benefit increases. In applying the formula contained in 
paragraph (b) of this section, multiple benefit increases within any 12-
month period ending on or before the termination date and calculated 
from that date are aggregated and treated as one benefit increase.
    (e) Notwithstanding the provisions of paragraph (b) of this section, 
a benefit increase described in paragraph (a) of this section shall be 
guaranteed only if PBGC determines that the plan was terminated for a 
reasonable business purpose and not for the purpose of obtaining the 
payment of benefits by PBGC.

[61 FR 34028, July 1, 1996, as amended at 67 FR 16956, Apr. 8, 2002]



Sec. 4022.26  Phase-in of benefit guarantee for participants who are substantial owners.

    (a) Scope. This section shall apply to the guarantee of all benefits 
described in subpart A (subject to the limitations in Sec. 4022.21) with 
respect to participants who are substantial owners at the termination 
date or who were substantial owners at any time within the 5-year period 
preceding that date.
    (b) Phase-in formula when there have been no benefit increases. 
Benefits provided by a plan under which there has been no benefit 
increase, other than the adoption of the plan, shall be guaranteed to 
the extent provided in the following formula: The monthly amount 
computed under Sec. 4022.22 multiplied by a fraction not to exceed 1, 
the numerator of which is the number of full years prior to the 
termination date that the substantial owner was an active participant 
under the plan, and the denominator of which is 30. Active participation 
under a plan commences at the later of the date on which the plan is 
adopted or becomes effective.
    (c) Phase-in formula when there have been benefit increases. If 
there has been a benefit increase under the plan, other than the 
adoption of the plan, benefits provided by each such increase shall be 
guaranteed to the extent provided in the following formula: The amount 
of the guaranteeable benefit increase computed under Sec. 4022.24 
multiplied by a fraction not to exceed 1, the numerator of which is the 
number of full years prior to the termination date that the benefit 
increase was in effect and during which the substantial owner was an 
active participant under the plan, and the denominator of which is 30. 
However, in no event shall the total benefits guaranteed under all such 
benefit increases exceed the benefits which are guaranteed under 
paragraph (b) of this section with respect to a plan described therein.
    (d) For the purpose of computing the benefits guaranteed under this 
section, in the case of a substantial owner who becomes an active 
participant under a plan after a benefit increase (other than the 
adoption of the plan) has been put into effect, the plan as it exists at 
the time he commences his participation shall be deemed to be the 
original plan with respect to him.

[61 FR 34028, July 1, 1996, as amended at 62 FR 67729, Dec. 30, 1997]



Sec. 4022.27  Effect of tax disqualification.

    (a) General rule. Except as provided in paragraph (b) of this 
section, benefits accrued under a plan after the date on which the 
Secretary of the Treasury or his delegate issues a notice that any trust 
which is part of the plan no longer meets the requirements of section 
401(a) of the Code or that the plan no longer meets the requirements of 
section 404(a) of the Code or after the date of adoption of a plan 
amendment that causes the issuance of such a notice shall not be 
guaranteed under this part.
    (b) Exceptions. The restriction on the guarantee of benefits set 
forth in paragraph (a) of this section shall not apply if:
    (1) The Secretary of the Treasury or his delegate issues a notice 
stating that the original notice referred to in paragraph (a) of this 
section was erroneous;
    (2) The Secretary of the Treasury or his delegate finds that, 
subsequent to the issuance of the notice referred to in paragraph (a) of 
this section, appropriate action has been taken with respect to the 
trust or plan to cause it to meet the requirements of sections 401(a) or 
404(a)(2) of the Code, respectively, and issues a subsequent notice

[[Page 774]]

stating that the trust or plan meets such requirements; or
    (3) The plan amendment is revoked retroactively to its original 
effective date.

Subpart C--Calculation and Payment of Unfunded Nonguaranteed Benefits 
[Reserved]



           Subpart D--Benefit Reductions in Terminating Plans



Sec. 4022.61  Limitations on benefit payments by plan administrator.

    (a) General. When Sec. 4041.42 of this chapter requires a plan 
administrator to reduce benefits, the plan administrator shall limit 
benefit payments in accordance with this section.
    (b) Accrued benefit at normal retirement. Except to the extent 
permitted by paragraph (d) of this section, a plan administrator may not 
pay that portion of a monthly benefit payable with respect to any 
participant that exceeds the participant's accrued benefit payable at 
normal retirement age under the plan. For the purpose of applying this 
limitation, post-retirement benefit increases, such as cost-of-living 
adjustments, are not considered to increase a participant's benefit 
beyond his or her accrued benefit payable at normal retirement age.
    (c) Maximum guaranteeable benefit. Except to the extent permitted by 
paragraph (d) of this section, a plan administrator may not pay that 
portion of a monthly benefit payable with respect to any participant, as 
limited by paragraph (b) of this section, that exceeds the maximum 
guaranteeable benefit under section 4022(b)(3)(B) of ERISA and 
Sec. 4022.22(b) of this part, adjusted for age and benefit form, for the 
year of the proposed termination date.
    (d) Estimated benefit payments. A plan administrator shall pay the 
monthly benefit payable with respect to each participant as determined 
under Sec. 4022.62 or Sec. 4022.63, whichever produces the higher 
benefit.
    (e) PBGC authority to modify procedures. In order to avoid abuse of 
the plan termination insurance system, inequitable treatment of 
participants and beneficiaries, or the imposition of unreasonable 
burdens on terminating plans, the PBGC may authorize or direct the use 
of alternative procedures for determining benefit reductions.
    (f) Examples. This section is illustrated by the following examples:

    Example 1--Facts. On October 10, 1992, a plan administrator files 
with the PBGC a notice of intent to terminate in a distress termination 
that includes December 31, 1992, as the proposed termination date. A 
participant who is in pay status on December 31, 1992, has been 
receiving his accrued benefit of $2,500 per month under the plan. The 
benefit is in the form of a joint and survivor annuity (contingent 
basis) that will pay 50 percent of the participant's benefit amount 
(i.e., $1,250 per month) to his surviving spouse following the death of 
the participant. On December 31, 1992, the participant is age 66, and 
his wife is age 56.
    Benefit reductions. Paragraph (b) of this section requires the plan 
administrator to cease paying benefits in excess of the accrued benefit 
payable at normal retirement age. Because the participant is receiving 
only his accrued benefit, no reduction is required under paragraph (b).
    Paragraph (c) of this section requires the plan administrator to 
cease paying benefits in excess of the maximum guaranteeable benefit, 
adjusted for age and benefit form in accordance with the provisions of 
subpart B. The maximum guaranteeable benefit for plans terminating in 
1992, the year of the proposed termination date, is $2,352.27 per month, 
payable in the form of a single life annuity at age 65. Because the 
participant is older than age 65, no adjustment is required under 
Sec. 4022.23(c) based on the annuitant's age factor. The benefit form is 
a joint and survivor annuity (contingent basis), as defined in 
Sec. 4022.23(d)(2). The required benefit reduction for this benefit form 
under Sec. 4022.23(d) is 10 percent. The corresponding adjustment factor 
is 0.90 (1.00-0.10). The benefit reduction factor to adjust for the age 
difference between the participant and the beneficiary is computed under 
Sec. 4022.23(e). In computing the difference in ages, years over 65 
years of age are not taken into account. Therefore, the age difference 
is 9 years (65-56). The required percentage reduction when the 
beneficiary is 9 years younger than the participant is 9 percent. The 
corresponding adjustment factor is 0.91 (1.00-0.09).
    The maximum guaranteeable benefit adjusted for age and benefit form 
is $1,926.51 ($2,352.27x0.90x0.91) per month. Therefore, the plan 
administrator must reduce the participant's benefit payment from $2,500 
to $1,926.51. If the participant dies after December 31, 1992, the plan 
administrator will pay his spouse $963.26 (0.50x$1,926.51) per month.

[[Page 775]]

    Example 2--Facts. The benefit of a participant who retired under a 
plan at age 60 is a reduced single life annuity of $400 per month plus a 
temporary supplement of $400 per month payable until age 62 (i.e., a 
step-down benefit). The participant's accrued benefit under the plan is 
$450 per month, payable from the plan's normal retirement age. On the 
proposed termination date, June 30, 1992, the participant is 61 years 
old.
    The maximum guaranteeable benefit adjusted for age under 
Sec. 4022.23(c) of this chapter is $1,693.63 ($2,352.27 x 0.72) per 
month. Since the benefit is payable as a single life annuity, no 
adjustment is required under Sec. 4022.23(d) for benefit form.
    Benefit reductions. The plan benefit of $800 per month payable until 
age 62 exceeds the participant's accrued benefit at normal requirement 
age of $450 per month. Paragraph (b) of this section requires that, 
except to the extent permitted by paragraph (d), the plan benefit must 
be reduced to $450 per month. Since the levelized benefit of $404.10 
((0.082 x 50) + $400) per month, determined under Sec. 4022.23(f), is 
less than the adjusted maximum guaranteeable benefit of $1,693.63 per 
month, no further reduction in the $450 per month benefit payment is 
required under paragraph (c) of this section. The plan administrator 
next would determine the amount of the participant's estimated benefit 
under paragraph (d).
    Example 3--Facts. A retired participant is receiving a reduced early 
retirement benefit of $1,100 per month plus a temporary supplement of 
$700 per month payable until age 62. The benefit is in the form of a 
single life annuity. On the proposed termination date, November 30, 
1992, the participant is 56 years old.
    The participant's accrued benefit at normal retirement age under the 
plan is $1,200 per month. The maximum guaranteeable benefit adjusted for 
age is $1,152.61 ($2,352.27 x 0.49) per month. A form adjustment is not 
required.
    Benefit reductions. The plan benefit of $1,800 per month payable 
from age 56 to age 62 exceeds the participant's accrued benefit at 
normal retirement age of $1,200 per month. Therefore, under paragraph 
(b) of this section, the plan administrator must reduce the temporary 
supplement to $100 per month.
    For the purpose of determining whether the reduced benefit, i.e., a 
level-life annuity of $1,100 per month and a temporary annuity 
supplement of $100 per month to age 62, exceeds the maximum 
guaranteeable benefit adjusted for age, the temporary annuity supplement 
of $100 per month is converted to a level-life annuity equivalent in 
accordance with Sec. 4022.23(f) of this chapter. The level-life annuity 
equivalent is $38.70 ($100 x 0.387). This, added to the life annuity of 
$1,100 per month, equals $1,138.70. Since the maximum guaranteeable 
benefit of $1,152.61 per month exceeds $1,138.70 per month, no further 
reduction is required under paragraph (c) of this section.
    The plan administrator next would determine the participant's 
estimated benefit under paragraph (d). Assume that the estimated benefit 
under paragraph (d) is $780 per month until age 62 and $715 per month 
thereafter. The plan administrator would pay the participant $780 per 
month, reduced to $715 per month at age 62, subject to the final benefit 
determination made under title IV.
    Example 4--Facts. A retired participant is receiving a reduced early 
retirement benefit of $2,650 per month plus a temporary supplement of 
$800 per month payable until age 62. The benefit is in the form of a 
joint and survivor annuity (contingent basis) that will pay 50 percent 
of the participant's benefit amount to his surviving spouse following 
the death of the participant. On the proposed termination date, December 
20, 1992, the participant and his spouse are each 56 years old.
    The participant's accrued benefit at normal retirement age under the 
plan is $3,000 per month. The maximum guaranteeable benefit adjusted for 
age and the joint and survivor annuity (contingent basis) annuity form 
is $1,037.35 per month. An adjustment for age difference is not required 
because the participant and his spouse are the same age.
    Benefit reductions. The plan benefit of $3,450 per month payable 
from age 56 to age 62 exceeds the participant's accrued benefit at 
normal retirement age, which is $3,000 per month. Therefore, under 
paragraph (b) of this section, the plan administrator must reduce the 
participant's benefit so that it does not exceed $3,000 per month.
    The level-life equivalent of the participant's reduced benefit, 
determined using the Sec. 4022.23(f) adjustment factor, is $2,785.45 
(($350 x 0.387) + $2,650) per month. Since this benefit exceeds the 
participant's maximum guaranteeable benefit of $1,037.35 per month, the 
plan administrator must reduce the participant's benefit payment so that 
it does not exceed the maximum guaranteeable benefit.
    The ratio of (i) the participant's maximum guaranteeable benefit to 
(ii) the level-life equivalent of the participant's reduced benefit 
(computed under the ``accrued for normal retirement age'' limitation) is 
used in converting the level-life maximum guaranteeable benefit to the 
step-down benefit form. The level-life equivalent of the reduced benefit 
computed under the ``accrued for normal retirement age'' limitation is 
37.24 percent ($1,037.35/$2,785.45). Thus, the plan administrator must 
reduce the participant's level-life benefit of $2,650 per month to 
$986.86 ($2,650 x 0.3724) and must further reduce the reduced temporary 
benefit of $350 per month to $130.34 ($350 x 0.3724). Under paragraph 
(c) of this section, therefore, the

[[Page 776]]

participant's maximum guaranteeable benefit is $1,117.20 ($986.86 + 
$130.34) per month to age 62 and $986.86 per month thereafter, subject 
to any adjustment under paragraph (d) of this section.
    Assume that the estimated benefit under paragraph (d) is $1,005.48 
per month to age 62 and $888.17 per month thereafter. The plan 
administrator would reduce the participant's benefit from $3,450 per 
month to $1,005.48 per month and pay this amount until age 62, at which 
time the benefit payment would be reduced to $888.17 per month, subject 
to the final benefit determination made under title IV.

[61 FR 34028, July 1, 1996, as amended at 62 FR 60428, Nov. 7, 1997]



Sec. 4022.62  Estimated guaranteed benefit.

    (a) General. The estimated guaranteed benefit payable with respect 
to each participant who is not a substantial owner is computed under 
paragraph (c) of this section. The estimated guaranteed benefit payable 
with respect to each participant who is a substantial owner is computed 
under paragraph (d) of this section.
    (b) Rules for determining benefits. For the purposes of determining 
entitlement to a benefit and the amount of the estimated benefit under 
this section, the following rules apply:
    (1) Participants in pay status on the proposed termination date. For 
benefits payable with respect to a participant who is in pay status on 
or before the proposed termination date, the plan administrator shall 
use the participant's age and benefit payable under the plan as of the 
proposed termination date.
    (2) Participants who enter pay status after the proposed termination 
date. For benefits payable with respect to a participant who enters pay 
status after the proposed termination date, the plan administrator shall 
use the participant's age as of the benefit commencement date and his or 
her service and compensation as of the proposed termination date.
    (3) Participants with new benefits or benefit improvements. For the 
purpose of determining the estimated guaranteed benefit under paragraph 
(c) of this section, only new benefits and benefit improvements that 
affect the benefit of the participant or beneficiary for whom the 
determination is made are taken into account.
    (4) Limitations on estimated guaranteed benefits. For the purpose of 
determining the estimated guaranteed benefit under paragraph (c) or (d) 
of this section, the benefit determined under paragraph (b)(1) or (b)(2) 
of this section is subject to the limitations set forth in Sec. 4022.61 
(b) and (c).
    (c) Estimated guaranteed benefit payable with respect to a 
participant who is not a substantial owner. For benefits payable with 
respect to a participant who is not a substantial owner, the estimated 
guaranteed benefit is determined under paragraph (c)(1) of this section, 
if no portion of the benefit is subject to the phase-in of plan 
termination insurance guarantees set forth in section 4022(b)(1) of 
ERISA. In any other case, the estimated guaranteed benefit is determined 
under paragraph (c)(2). ``Benefit subject to phase-in'' means a benefit 
that is subject to the phase-in of plan termination insurance guarantees 
set forth in section 4022(b)(1) of ERISA, determined without regard to 
section 4022(b)(7) of ERISA.
    (1) Participants with no benefits subject to phase-in. In the case 
of a participant or beneficiary with no benefit improvement (as defined 
in paragraph (c)(2)(ii)) or new benefit (as defined in paragraph 
(c)(2)(i)) in the five years preceding the proposed termination date, 
the estimated guaranteed benefit is the benefit to which he or she is 
entitled under the rules in paragraph (b) of this section.
    (2) Participants with benefits subject to phase-in. In the case of a 
participant or beneficiary with a benefit improvement or new benefit in 
the five years preceding the proposed termination date, the estimated 
guaranteed benefit is the benefit to which he or she is entitled under 
the rules in paragraph (b) of this section, multiplied by the multiplier 
determined according to paragraphs (i), (ii), and (iii), but not less 
than the benefit to which he or she would have been entitled if the 
benefit improvement or new benefit had not been adopted.
    (i) From column (a) of Table I, select the line that applies 
according to the number of full years before the proposed termination 
date since the plan was last amended to provide for a new benefit (or 
the number of full years

[[Page 777]]

since the plan was established, if it has never been amended to provide 
for a new benefit). ``New benefit'' means a change in the terms of the 
plan that results in (a) a participant's or a beneficiary's eligibility 
for a benefit that was not previously available or to which he or she 
was not entitled (excluding a benefit that is actuarially equivalent to 
the normal retirement benefit to which the participant was previously 
entitled) or (b) an increase of more than twenty percent in the benefit 
to which a participant is entitled upon entering pay status before his 
or her normal retirement age under the plan. ``New benefits'' result 
from liberalized participation or vesting requirements, reductions in 
the age or service requirements for receiving unreduced benefits, 
additions of actuarially subsidized benefits, and increases in actuarial 
subsidies. The establishment of a plan creates a new benefit as of the 
effective date of the plan. A change in the amount of a benefit is not 
deemed to be a ``new benefit'' if it results solely from a benefit 
improvement. ``New benefit'' and ``benefit improvement'' are mutually 
exclusive terms.
    (ii) If there was no benefit improvement under the plan during the 
one-year period ending on the proposed termination date, use the 
multiplier set forth in column (b) of Table I on the line selected from 
column (a). ``Benefit improvement'' means a change in the terms of the 
plan that results in (a) an increase in the benefit to which a 
participant is entitled at his or her normal retirement age under the 
plan or (b) an increase in the benefit to which a participant or 
beneficiary in pay status is entitled.
    (iii) If there was any benefit improvement during the one-year 
period ending on the proposed termination date, use the multiplier set 
forth in column (c) of Table I on the line selected from column (a).

                   Table I--Applicable Multiplier If--
------------------------------------------------------------------------
                                                 No benefit    Benefit
                                                improvement  improvement
       Full years since last new benefit        during last  during last
                                                    year         year
(a)                                                     (b)          (c)
------------------------------------------------------------------------
Five or more..................................          .90          .80
Four..........................................          .80          .70
Three.........................................          .65          .55
Two...........................................          .50          .45
Fewer than two................................          .35          .30
------------------------------------------------------------------------
Note: The foregoing method of estimating guaranteed benefits is based
  upon the PBGC's experience with a wide range of plans and may not
  provide accurate estimates in certain circumstances. In accordance
  with Sec.  4022.61(e), a plan administrator may use a different method
  of estimation if he or she demonstrates to the PBGC that his proposed
  method will be more equitable to participants and beneficiaries. The
  PBGC may require the use of a different method in certain cases.

    (d) Estimated guaranteed benefit payable with respect to a 
substantial owner. For benefits payable with respect to each participant 
who is a substantial owner and who commenced participation under the 
plan fewer than five full years before the proposed termination date, 
the estimated guaranteed benefit is determined under paragraph (d)(1). 
With respect to any other substantial owner, the estimated guaranteed 
benefit is determined under paragraph (d)(2).
    (1) Fewer than five years of participation. The estimated guaranteed 
benefit under this paragraph is the benefit to which the substantial 
owner is entitled, as determined under paragraph (b) of this section, 
multiplied by a fraction, not to exceed one, the numerator of which is 
the number of full years prior to the proposed termination date that the 
substantial owner was an active participant under the plan and the 
denominator of which is thirty.
    (2) Five or more years of participation. The estimated guaranteed 
benefit under this paragraph is the lesser of--
    (i) The estimated guaranteed benefit calculated under paragraph 
(d)(1) of this section; or
    (ii) The benefit to which the substantial owner would have been 
entitled as of the proposed termination date (or benefit commencement 
date in the case of a substantial owner whose benefit commences after 
the proposed termination date) under the terms of the plan in effect 
when he or she first began participation, as limited by Sec. 4022.61 (b) 
and (c), multiplied by a

[[Page 778]]

fraction, not to exceed one, the numerator of which is two times the 
number of full years of his or her active participation under the plan 
prior to the proposed termination date and the denominator of which is 
thirty.
    (e) Examples. This section is illustrated by the following examples:

    Example 1--Facts. A participant who is not a substantial owner 
retired on December 31, 1991, at age 60 and began receiving a benefit of 
$600 per month. On January 1, 1989, the plan had been amended to allow 
participants to retire with unreduced benefits at age 60. Previously, a 
participant who retired before age 65 was subject to a reduction of \1/
15\ for each year by which his or her actual retirement age preceded age 
65. On January 1, 1992, the plan's benefit formula was amended to 
increase benefits for participants who retired before January 1, 1992. 
As a result, the participant's benefit was increased to $750 per month. 
There have been no other pertinent amendments. The proposed termination 
date is December 15, 1992.
    Estimated guaranteed benefit. No reduction is required under 
Sec. 4022.61 (b) or (c) because the participant's benefit does not 
exceed either the participant's accrued benefit at normal retirement age 
or the maximum guaranteeable benefit. (Post-retirement benefit increases 
are not considered as increasing accrued benefits payable at normal 
retirement age.)
    The amendment as of January 1, 1989, resulted in a ``new benefit'' 
because the reduction in the age at which the participant could receive 
unreduced benefits increased the participant's benefit entitlement at 
actual retirement age by \5/15\, which is more than a 20 percent 
increase. The amendment of January 1, 1992, which increased the 
participant's benefit to $750 per month, is a ``benefit improvement'' 
because it is an increase in the amount of benefit for persons in pay 
status. (No percentage test applies in determining whether such an 
increase is a benefit improvement.)
    The multiplier for computing the amount of the estimated guaranteed 
benefit is taken from the third row of Table I (because the last new 
benefit had been in effect for 3 full years as of the proposed 
termination date) and column (c) (because there was a benefit 
improvement within the 1-year period preceding the proposed termination 
date). This multiplier is 0.55. Therefore, the amount of the 
participant's estimated guaranteed benefit is $412.50 (0.55x$750) per 
month.
    Example 2--Facts. A participant who is not a substantial owner 
terminated employment on December 31, 1990. On January 1, 1992, she 
reached age 65 and began receiving a benefit or $250 per month. She had 
completed 3 years of service at her termination of employment and was 
fully vested in her accrued benefit. The plan's vesting schedule had 
been amended on July 1, 1988. Under the schedule in effect before the 
amendment, a participant with 5 years of service was 100 percent vested. 
There have been no other pertinent amendments. The proposed termination 
date is December 31, 1992.
    Estimated guaranteed benefit. No reduction is required under 
Sec. 4022.61 (b) or (c) because the participant's benefit does not 
exceed either her accrued benefit at normal retirement age or the 
maximum guaranteeable benefit. The plan's change of vesting schedule 
created a new benefit for the participant. Because the amendment was in 
effect for 4 full years before the proposed termination date, the second 
row of Table I is used to determine the applicable multiplier for 
estimating the amount of the participant's guaranteed benefit. Because 
the participant did not receive any benefit improvement during the 12-
month period ending on the proposed termination date, column (b) of the 
table is used. Therefore, the multiplier is 0.80, and the amount of the 
participant's estimated guaranteed benefit is $200 (0.80x$250) per 
month.
    Example 3--Facts. A participant who is a substantial owner retired 
prior to the proposed termination date after 5\1/2\ years of active 
participation in the plan. The benefit under the terms of the plan when 
he first began active participation was $800 per month. On the proposed 
termination date of April 30, 1992, he was entitled to receive a benefit 
of $2,000 per month. No reduction of this benefit is required under 
Sec. 4022.61 (b) or (c).
    Estimated guaranteed benefit. Paragraph (d)(2) of this section is 
used to compute the amount of the estimated guaranteed benefit of 
substantial owners with 5 or more years of active participation prior to 
the proposed termination date. Consequently, the amount of this 
participant's estimated guaranteed benefit is the lesser of--
    (i) The amount calculated as if he had been an active participant in 
the plan for fewer than 5 full years on the proposed termination date, 
or $333.33 ($2,000x\5/30\) per month, or
    (ii) The amount to which he would have been entitled as of the 
proposed termination date under the terms of the plan when he first 
began participation, as limited by Sec. 4022.61 (b) and (c), multiplied 
by 2 times the number of years of active participation and divided by 
30, or $266.67 ($800x2 x\5/30\) per month. Therefore, the amount of the 
participant's estimated guaranteed benefit is $266.67 per month.

[61 FR 34028, July 1, 1996; 61 FR 36626, July 12, 1996]

[[Page 779]]



Sec. 4022.63  Estimated title IV benefit.

    (a) General. If the conditions specified in paragraph (b) exist, the 
plan administrator shall determine each participant's estimated title IV 
benefit. The estimated title IV benefit payable with respect to each 
participant who is not a substantial owner is computed under paragraph 
(c) of this section. The estimated title IV benefit payable with respect 
to each participant who is a substantial owner is computed under 
paragraph (d) of this section.
    (b) Conditions for use of this section. The conditions set forth in 
this paragraph must be satisfied in order to make use of the procedures 
set forth in this section. If the specified conditions exist, estimated 
title IV benefits must be determined in accordance with these procedures 
(or in accordance with alternative procedures authorized by the PBGC 
under Sec. 4022.61(f)) for each participant and beneficiary whose 
benefit under the plan exceeds the limitations contained in 
Sec. 4022.61(b) or (c) or who is a substantial owner or the beneficiary 
of a substantial owner. If the specified conditions do not exist, title 
IV benefits may be estimated by the plan administrator in accordance 
with procedures authorized by the PBGC, but no such estimate is 
required. The conditions are as follows:
    (1) An actuarial valuation of the plan has been performed for a plan 
year beginning not more than eighteen months before the proposed 
termination date. If the interest rate used to value plan liabilities in 
this valuation exceeded the applicable valuation interest rates and 
factors under appendix B to part 4044 of this chapter in effect on the 
proposed termination date, the value of benefits in pay status and the 
value of vested benefits not in pay status on the valuation date must be 
converted to the PBGC's valuation rates and factors.
    (2) The plan has been in effect for at least five full years before 
the proposed termination date, and the most recent actuarial valuation 
demonstrates that the value of plan assets, reduced by employee 
contributions remaining in the plan and interest credited thereon under 
the terms of the plan, exceeds the present value, adjusted as required 
under paragraph (b)(1), of all plan benefits in pay status on the 
valuation date.
    (c) Estimated title IV benefit payable with respect to a participant 
who is not a substantial owner. For benefits payable with respect to a 
participant who is not a substantial owner, the estimated title IV 
benefit is the estimated priority category 3 benefit computed under this 
paragraph. Priority category 3 benefits are payable with respect to 
participants who were, or could have been, in pay status three full 
years prior to the proposed termination date. The estimated priority 
category 3 benefit is computed by multiplying the benefit payable with 
respect to the participant under Sec. 4022.62 (b)(1) and (b)(2) by a 
fraction, not to exceed one--
    (1) The numerator of which is the benefit that would be payable with 
respect to the participant at normal retirement age under the provisions 
of the plan in effect on the date five full years before the proposed 
termination date, based on the participant's age, service, and 
compensation as of the earlier of the participant's benefit commencement 
date or the proposed termination date, and
    (2) The denominator of which is the benefit that would be payable 
with respect to the participant at normal retirement age under the 
provisions of the plan in effect on the proposed termination date, based 
on the participant's age, service, and compensation as of the earlier of 
the participant's benefit commencement date or the proposed termination 
date.
    (d) Estimated title IV benefit payable with respect to a substantial 
owner. For benefits payable with respect to a participant who is a 
substantial owner, the estimated title IV benefit is the higher of the 
benefit computed under paragraph (c) of this section or the benefit 
computed under this paragraph.
    (1) The plan administrator shall first calculate the estimated 
guaranteed benefit payable with respect to the substantial owner as if 
he or she were not a substantial owner, using the method set forth in 
Sec. 4022.62(c).
    (2) The benefit computed under paragraph (d)(1) shall be multiplied 
by the priority category 4 funding ratio. The

[[Page 780]]

category 4 funding ratio is the ratio of x to y, not to exceed one, 
where--
    (i) In a plan with priority category 3 benefits, x equals plan 
assets minus employee contributions remaining in the plan on the 
valuation date, with interest credited thereon under the terms of the 
plan, and the present value of benefits in pay status, and y equals the 
present value of all vested benefits not in pay status minus such 
employee contributions and interest; or
    (ii) In a plan with no priority category 3 benefits, x equals plan 
assets minus employee contributions remaining in the plan on the 
valuation date, with interest credited thereon under the terms of the 
plan, and y equals the present value of all vested benefits minus such 
employee contributions and interest.
    (e) Examples. This section is illustrated by the following examples:

    Example 1--Facts. A participant who is not a substantial owner was 
eligible to retire 3\1/2\ years before the proposed termination date. 
The participant retired 2 years before the proposed termination date 
with 20 years of service. Her final 5 years' average salary was $45,000, 
and she was entitled to an unreduced early retirement benefit of $1,500 
per month payable as a single life annuity. This retirement benefit does 
not exceed the limitation in Sec. 4022.61 (b) or (c).
    On the participant's benefit commencement date, the plan provided 
for a normal retirement benefit of 2 percent of the final 5 years' 
salary times the number of years of service. Five years before the 
proposed termination date, the percentage was 1\1/2\ percent. The 
amendments improving benefits were put into effect 3\1/2\ years prior to 
the proposed termination date. There were no other amendments during the 
5-year period.
    The participant's estimated guaranteed benefit computed under 
Sec. 4022.62(c) is $1,500 per month times 0.90 (the factor from column 
(b) of Table I in Sec. 4022.62(c)(2)), or $1,350 per month. It is 
assumed that the plan meets the conditions set forth in paragraph (b) of 
this section, and the plan administrator is therefore required to 
estimate the title IV benefit.
    Estimated title IV benefit. For a participant who is not a 
substantial owner, the amount of the estimated title IV benefit is the 
estimated priority category 3 benefit computed under paragraph (c) of 
this section. This amount is computed by multiplying the participant's 
benefit under the plan as of the later of the proposed termination date 
or the benefit commencement date by the ratio of (i) the normal 
retirement benefit under the provisions of the plan in effect 5 years 
before the proposed termination date and (ii) the normal retirement 
benefit under the plan provisions in effect on the proposed termination 
date.
    Thus, the numerator of the ratio is the benefit that would be 
payable to the participant under the normal retirement provisions of the 
plan 5 years before the proposed termination date, based on her age, 
service, and compensation on her benefit commencement date. The 
denominator of the ratio is the benefit that would be payable to the 
participant under the normal retirement provisions of the plan in effect 
on the proposed termination date, based on her age, service, and 
compensation as of the earlier of her benefit commencement date or the 
proposed termination date. Since the only different factor in the 
numerator and denominator is the salary percentage, the amount of the 
estimated title IV benefit is $1,125 (0.015/0.020 x $1,500) per month. 
This amount is less than the estimated guaranteed benefit of $1,350 per 
month. Therefore, in accordance with Sec. 4022.61(d), the benefit 
payable to the participant is $1,350 per month.
    Example 2--Facts. A participant who is a substantial owner retires 
at the plan's normal retirement age, having completed 5 years of active 
participation in the plan, on October 31, 1992, which is the proposed 
termination date. Under provisions of the plan in effect 5 years prior 
to the proposed termination date, the participant is entitled to a 
single life annuity of $500 per month. Under the most recent plan 
amendments, which were put into effect 1\1/2\ years prior to the 
proposed termination date, the participant is entitled to a single life 
annuity of $1,000 per month. The participant's estimated guaranteed 
benefit computed under Sec. 4022.62(d)(2) is $166.67 per month.
    It is assumed that all of the conditions in paragraph (b) of this 
section have been met. Plan assets equal $2 million. The present value 
of all benefits in pay status is $1.5 million based on applicable PBGC 
interest rates. There are no employee contributions and the present 
value of all vested benefits that are not in pay status is $0.75 million 
based on applicable PBGC interest rates.
    Estimated title IV benefit. Paragraph (d) of this section provides 
that the amount of the estimated title IV benefit payable with respect 
to a participant who is a substantial owner is the higher of the 
estimated priority category 3 benefit computed under paragraph (c) of 
this section or the estimated priority category 4 benefit computed under 
paragraph (d) of this section.
    Under paragraph (c), the participant's estimated priority category 3 
benefit is $500 ($1,000 x $500/$1,000) per month.
    Under paragraph (d), the participant's estimated priority category 4 
benefit is the estimated guaranteed benefit computed under 
Sec. 4022.62(c) (i.e., as if the participant were not

[[Page 781]]

a substantial owner) multiplied by the priority category 4 funding 
ratio. Since the plan has priority category 3 benefits, the ratio is 
determined under paragraph (d)(2)(i). The numerator of the ratio is plan 
assets minus the present value of benefits in pay status. The 
denominator of the ratio is the present value of all vested benefits 
that are not in pay status. The participant's estimated guaranteed 
benefit under Sec. 4022.62(c) is $1,000 per month times 0.90 (the factor 
from column (b) of Table I in Sec. 4022.62(c)(2)), or $900 per month. 
Multiplying $900 by the category 4 funding ratio of \2/3\ (($2 million--
$1.5 million)/$0.75 million) produces an estimated category 4 benefit of 
$600 per month.
    Because the estimated category 4 benefit so computed is greater than 
the estimated category 3 benefit so computed, the estimated category 4 
benefit is the estimated title IV benefit. Because the estimated 
category 4 benefit so computed is greater than the estimated guaranteed 
benefit of $166.67 per month, in accordance with Sec. 4022.61(d), the 
benefit payable to the participant is the estimated category 4 benefit 
of $600 per month.

[61 FR 34028, July 1, 1996; 61 FR 36626, July 12, 1996]



Subpart E--PBGC Recoupment and Reimbursement of Benefit Overpayments and 
                              Underpayments



Sec. 4022.81  General rules.

    (a) Recoupment of benefit overpayments. If at any time the PBGC 
determines that net benefits paid with respect to any participant in a 
PBGC-trusteed plan exceed the total amount to which the participant (and 
any beneficiary) is entitled up to that time under title IV of ERISA, 
and the participant (or beneficiary) is, as of the termination date, 
entitled to receive future benefit payments, the PBGC will recoup the 
net overpayment in accordance with paragraph (c) of this section and 
Sec. 4022.82. Notwithstanding the previous sentence, the PBGC may, in 
its discretion, recover overpayments by methods other than recouping in 
accordance with the rules in this subpart. The PBGC will not normally do 
so unless net benefits paid after the termination date exceed those to 
which a participant (and any beneficiary) is entitled under the terms of 
the plan before any reductions under subpart D.
    (b) Reimbursement of benefit underpayments. If at any time the PBGC 
determines that net benefits paid with respect to a participant in a 
PBGC-trusteed plan are less than the amount to which the participant 
(and any beneficiary) is entitled up to that time under title IV of 
ERISA, the PBGC will reimburse the participant or beneficiary for the 
net underpayment in accordance with paragraph (c) of this section and 
Sec. 4022.83.
    (c) Amount to be recouped or reimbursed. In order to determine the 
amount to be recouped from, or reimbursed to, a participant (or 
beneficiary), the PBGC will calculate a monthly account balance for each 
month ending after the termination date. The PBGC will start with a 
balance of zero as of the end of the calendar month ending immediately 
prior to the termination date and determine the account balance as of 
the end of each month thereafter as follows:
    (1) Debit for overpayments. The PBGC will subtract from the account 
balance the amount of overpayments made in that month. Only overpayments 
made on or after the latest of the proposed termination date, the 
termination date, or, if no notice of intent to terminate was issued, 
the date on which proceedings to terminate the plan are instituted 
pursuant to section 4042 of ERISA will be included.
    (2) Credit for underpayments. The PBGC will add to the account 
balance the amount of underpayments made in that month. Only 
underpayments made on or after the termination date will be included.
    (3) Credit for interest on net underpayments. If at the end of a 
month there is a positive account balance (a net underpayment), the PBGC 
will add to the account balance interest thereon for that month using--
    (i) For months after May 1998, the applicable federal mid-term rate 
(as determined by the Secretary of the Treasury pursuant to section 
1274(d)(1)(C)(ii) of the Code) for that month (or, where the rate for a 
month is not available at the time the PBGC calculates the amount to be 
recouped or reimbursed, the most recent month for which the rate is 
available) based on monthly compounding; and

[[Page 782]]

    (ii) For May 1998 and earlier months, the immediate annuity rate 
established for lump sum valuations as set forth in Table II of Appendix 
B of part 4044 of this chapter.
    (4) No interest on net overpayments. If at the end of a month, there 
is a negative account balance (a net overpayment), there will be no 
interest adjustment for that month.
    (d) Death of participant. (1) Benefit overpayments. If the PBGC 
determines that, at the time of a participant's death, there was a net 
overpayment to the participant--
    (i) Future annuity payments. If the participant was entitled to 
future annuity payments as of the plan's termination date, the PBGC will 
(except as provided in paragraph (a) of this section) recoup the 
overpayment from the person (if any) who is receiving survivor benefits 
under the annuity.
    (ii) No future annuity payments. If the participant was not entitled 
to future annuity benefits as of the plan's termination date, the PBGC 
may seek repayment of the overpayment from the participant's estate.
    (2) Benefit underpayments. If the PBGC determines that, at the time 
of a participant's death, there was a net underpayment to the 
participant--
    (i) Future annuity payments. If the benefit is in the form of a 
joint-and-survivor or other annuity under which payments may continue 
after the participant's death, the PBGC will pay the underpayment to the 
person who is receiving survivor benefits; for this purpose, if the 
person receiving survivor benefits is an alternate payee under a 
qualified domestic relations order, the PBGC will treat the benefit as 
if payments do not continue after the participant's death (see paragraph 
(d)(2)(ii) of this section).
    (ii) No future annuity payments. If the benefit is not in the form 
of a joint-and-survivor or other annuity (e.g., a certain-and-continuous 
annuity) under which payments may continue after the participant's death 
or although the benefit is in such a form payments do not continue after 
the participant's death (i.e., in the case of a joint-and-survivor 
annuity, the person designated to receive survivor benefits predeceased 
the participant or, in the case of another annuity under which payments 
may continue after the participant's death the participant died with no 
payments owed for future periods), the PBGC will pay the underpayment to 
the person determined under the rules in Secs. 4022.91 through 4022.95.

[63 FR 29354, May 29, 1998, as amended at 67 FR 16956, Apr. 8, 2002]



Sec. 4022.82  Method of recoupment.

    (a) Future benefit reduction. The PBGC will recoup net overpayments 
of benefits by reducing the amount of each future benefit payment to 
which the participant or any beneficiary is entitled by the fraction 
determined under paragraphs (a)(1) and (a)(2) of this section, except 
that benefit reduction will cease when the amount (without interest) of 
the net overpayment is recouped. Notwithstanding the preceding sentence, 
the PBGC may accept repayment ahead of the recoupment schedule.
    (1) Computation. The PBGC will determine the fractional multiplier 
by dividing the amount of the net overpayment by the present value of 
the benefit payable with respect to the participant under title IV of 
ERISA. The PBGC will determine the present value of the benefit to which 
a participant or beneficiary is entitled under title IV of ERISA as of 
the termination date, using the PBGC interest rates and factors in 
effect on that date. The PBGC may, however, utilize a different date of 
determination if warranted by the facts and circumstances of a 
particular case.
    (2) Limitation on benefit reduction. Except as provided in paragraph 
(a)(1) of this section, the PBGC will reduce benefits with respect to a 
participant or beneficiary by no more than the greater of--
    (i) Ten percent per month; or
    (ii) The amount of benefit per month in excess of the maximum 
guaranteeable benefit payable under section 4022(b)(3)(B) of ERISA, 
determined without adjustment for age and benefit form.
    (3) PBGC notice to participant or beneficiary. Before effecting a 
benefit reduction pursuant to this paragraph, the PBGC will notify the 
participant or beneficiary in writing of the amount of

[[Page 783]]

the net overpayment and of the amount of the reduced benefit computed 
under this section.
    (4) Waiver of de minimis amounts. The PBGC may, in its discretion, 
decide not to recoup net overpayments that it determines to be de 
minimis.
    (5) Final installment. The PBGC will cease recoupment one month 
early if the amount remaining to be recouped in the final month is less 
than the amount of the monthly reduction.
    (b) Full repayment through recoupment. Recoupment under this section 
constitutes full repayment of the net overpayment.

[63 FR 29354, May 29, 1998]



Sec. 4022.83  PBGC reimbursement of benefit underpayments.

    When the PBGC determines that there has been a net benefit 
underpayment made with respect to a participant, it shall pay the 
participant or beneficiary the amount of the net underpayment, 
determined in accordance with Sec. 4022.81(c), in a single payment.

[61 FR 34028, July 1, 1996, as amended at 63 FR 29355, May 29, 1998]



               Subpart F--Certain Payments Owed Upon Death

    Source: 67 FR 16957, Apr. 8, 2002, unless otherwise noted.



Sec. 4022.91  When do these rules apply?

    (a) Types of benefits. Provided the conditions in paragraphs (b) and 
(c) of this section are satisfied, these rules (Secs. 4022.91 through 
4022.95) apply to any benefits we may owe you (including benefits we owe 
you because your plan owed them) at the time of your death, such as a 
payment of a lump-sum benefit that we calculated as of your plan's 
termination date but have not yet paid you or a back payment to 
reimburse you for monthly underpayments. We may owe you benefits at the 
time of your death if--
    (1) You are a participant in a terminated plan;
    (2) You are a beneficiary (including an alternate payee) of a 
participant; or
    (3) You are a designee or other payee (e.g., a participant's next of 
kin) under these rules, as explained in Sec. 4022.93.
    (b) Payments do not continue after death. These rules apply only if 
payments do not continue after your death. (If payments continue after 
your death, we will make up any underpayment to you at the time of your 
death under the rule in Sec. 4022.81(d)(2)(i) by paying it to the person 
who is entitled to receive those continuing payments.) Payments do not 
continue after your death if--
    (1) Your benefit is not in the form of a joint-and-survivor or other 
annuity under which payments may continue after your death (e.g., a 
certain-and-continuous annuity);
    (2) Your benefit is in the form of a joint-and-survivor annuity and 
the person designated to receive survivor benefits died before you; or
    (3) Your benefit is in the form of another type of annuity under 
which payments may continue after your death (e.g., a certain-and-
continuous annuity) but you die with no payments owed for future 
periods.
    (c) Time of death. These rules apply only if you die--
    (1) On or after the date we take over your plan (as trustee); or
    (2) Before the date we take over your plan, to the extent that, by 
that date, the plan administrator has not paid all benefits owed to you 
at the time of your death.
    (d) Effect of plan or will. These rules apply even if there is a 
contrary provision in a plan or will.



Sec. 4022.92  What definitions do I need to know for these rules?

    You need to know three definitions from Sec. 4001.2 of this chapter 
(PBGC, person, and plan) and the following definitions:
    ``We'' means the PBGC.
    ``You'' means the person to whom we may owe benefits at the time of 
death.



Sec. 4022.93  Who will get benefits the PBGC may owe me at the time of my death?

    (a) In general. Except as provided in paragraphs (b) and (c) of this 
section (which explain what happens if you die before the date we take 
over your plan or within 180 days after the date we take over your 
plan), we will pay any benefits we owe you at the time of your

[[Page 784]]

death to the person(s) surviving you in the following order--
    (1) Designee with the PBGC. The person(s) you designated with us to 
get any benefits we may owe you at the time of your death. See 
Sec. 4022.94 for information on designating with us.
    (2) Spouse. Your spouse. We will consider a person to whom you are 
married to be your spouse even if you and that person are separated, 
unless a decree of divorce or annulment has been entered in a court.
    (3) Children. Your children and descendants of your deceased 
children.
    (i) Adopted children. In determining who is a child or descendant, 
an adopted child is treated the same way as a natural child.
    (ii) Child dies before parent. If one of your children dies before 
you, any of your grandchildren through that deceased child will equally 
divide that deceased child's share; if one of your grandchildren through 
that deceased child dies before that deceased child, any of your great-
grandchildren through that deceased grandchild will equally divide that 
deceased grandchild's share; and so on.
    (4) Parents. Your parents. A parent includes an adoptive parent.
    (5) Estate. Your estate, provided your estate is open.
    (6) Next of kin. Your next of kin in accordance with applicable 
state law.
    (b) Pre-trusteeship deaths. If you die before the date we take over 
your plan and, by that date, the plan administrator has not paid all 
benefits owed to you at the time of your death, we will pay any benefits 
we owe you at the time of your death to the person(s) designated by or 
under the plan to get those benefits (provided the designation clearly 
applies to those benefits). If there is no such designation, we will pay 
those benefits to your spouse, children, parents, estate, or next of kin 
under the rules in paragraphs (a) (2) through (a)(6) of this section.
    (c) Deaths shortly after trusteeship. If you die within 180 days 
after the date we take over your plan and you have not designated anyone 
with the PBGC under paragraph (a)(1) of this section, we will pay any 
benefits we owe you at the time of your death to the person(s) 
designated by or under the plan to get those benefits (provided the 
designation clearly applies to those benefits) before paying those 
benefits to your spouse, children, parents, estate, or next of kin under 
the rules in paragraphs (a) (2) through (a)(6) of this section.



Sec. 4022.94  What are the PBGC's rules on designating a person to get benefits the PBGC may owe me at the time of my death?

    (a) When you may designate. At any time on or after the date we take 
over your plan, you may designate with us who will get any benefits we 
owe you at the time of your death.
    (b) Change of designee. If you want to change the person(s) you 
designate with us, you must submit another designation to us.
    (c) If your designee dies before you. (1) In general. If the 
person(s) you designate with us dies before you or at the same time as 
you, we will treat you as not having designated anyone with us (unless 
you named an alternate designee who survives you). Therefore, you should 
keep your designation with us current.
    (2) Simultaneous deaths. If you and a person you designated die as a 
result of the same event, we will treat you and that person as having 
died at the same time, provided you and that person die within 30 days 
of each other.



Sec. 4022.95  Examples.

    The following examples show how the rules in Secs. 4022.91 through 
4022.94 apply. For examples on how these rules apply in the case of a 
certain-and-continuous annuity, see Sec. 4022.104.
    At the time of his death, Charlie was receiving payments under a 
joint-and-survivor annuity. Charlie designated Ellen to receive survivor 
benefits under his joint-and-survivor annuity. We underpaid Charlie for 
periods before his death. At the time of his death, we owed Charlie a 
back payment to reimburse him for those underpayments.
    (a) Example 1: where surviving beneficiary is alive at participant's 
death. Ellen survived Charlie. As explained in Sec. 4022.91(b), because 
Ellen is entitled to survivor benefits under the joint-and-survivor 
annuity, we would pay Ellen the back payment.

[[Page 785]]

    (b) Example 2: where surviving beneficiary predeceases participant. 
Ellen died before Charlie. As explained in Secs. 4022.91(b) and 4022.93, 
because benefits do not continue after Charlie's death under the joint-
and-survivor annuity, we would pay the back payment to the person(s) 
Charlie designated to receive any payments we might owe him at the time 
of his death. If Charlie did not designate anyone to receive those 
payments or his designee died before him, we would pay the back payment 
to the person(s) surviving Charlie in the following order: spouse, 
children, parents, estate and next of kin.



Subpart G--Certain-and-Continuous and Similar Annuity Payments Owed for 
                       Future Periods After Death

    Source: 67 FR 16958, Apr. 8, 2002, unless otherwise noted.



Sec. 4022.101  When do these rules apply?

    (a) In general. These rules (Secs. 4022.101 through 4022.104) apply 
only if you die--
    (1) Required payments for future periods. Without having received 
all required payments for future periods under a form of annuity 
promising that, regardless of a participant's death, there will be 
annuity payments for a certain period of time (e.g., a certain-and-
continuous annuity) or until a certain amount is paid (e.g., a cash-
refund annuity or installment-refund annuity);
    (2) No surviving beneficiary. Without a surviving beneficiary 
designated to receive the payments described in paragraph (a)(1) of this 
section; and
    (3) Time of death. (i) On or after the date we take over your plan 
(as trustee); or
    (ii) Before the date we take over your plan, to the extent that, by 
that date, the plan administrator has not paid any required payments for 
future periods.
    (b) Effect of plan or will. These rules apply even if there is a 
contrary provision in a plan or will.
    (c) Payments owed at time of death. See Secs. 4022.91 through 
4022.95 for rules that apply to benefits we may owe you at the time of 
your death, such as a correction for monthly underpayments.



Sec. 4022.102  What definitions do I need to know for these rules?

    You need to know three definitions from Sec. 4001.2 of this chapter 
(PBGC, person, and plan) and the following definitions:
    ``We'' means the PBGC.
    ``You'' means the person who might die--
    (1) Without having received all required payments for future periods 
under a form of annuity promising that, regardless of a participant's 
death, there will be annuity payments for a certain period of time 
(e.g., a certain-and-continuous annuity) or until a certain amount is 
paid (e.g., a cash-refund annuity or installment-refund annuity); and
    (2) Without a surviving beneficiary designated to receive the 
payments described in paragraph (1) of this definition.



Sec. 4022.103  Who will get benefits if I die when payments for future periods under a certain-and-continuous or similar annuity are owed upon my death?

    If you die at a time when payments are owed for future periods under 
a form of annuity promising that, regardless of a participant's death, 
there will be annuity payments for a certain period of time (e.g., a 
certain-and-continuous annuity) or until a certain amount is paid (e.g., 
a cash-refund annuity or installment-refund annuity), and there is no 
surviving beneficiary designated to receive such payments, we will pay 
the remaining payments to the person determined under the rules in 
Sec. 4022.93.



Sec. 4022.104  Examples.

    The following examples show how the rules in Secs. 4022.101 through 
4022.103 and 4022.91 through 4022.94 apply in the case of a certain-and-
continuous annuity.

    (a) C&C annuity with no underpayment. At the time of his death, 
Charlie was receiving payments (in the correct amount) under a 5-year 
certain-and-continuous annuity. Charlie designated Ellen to receive any 
payments we might owe for periods after his death (but did not designate 
an alternate beneficiary to

[[Page 786]]

receive those payments in case Ellen died before him). Charlie died with 
three years of payments remaining.
    (1) Example 1: where surviving beneficiary predeceases participant. 
Ellen died before Charlie. As explained in Secs. 4022.103 and 4022.93, 
we would pay the remaining three years of payments to the person(s) 
surviving Charlie in the following order: spouse, children, parents, 
estate and next of kin.
    (2) Example 2: where surviving beneficiary dies during certain 
period. Ellen survived Charlie and lived another year. We pay Ellen one 
year of payments. As explained in Secs. 4022.103 and 4022.93, we would 
pay the remaining two years of payments to the person Ellen designated 
to receive any payments we might owe for periods after Ellen's death. If 
Ellen did not designate anyone to receive those payments or her designee 
died before her, we would pay the remaining year of payments to the 
person(s) surviving Ellen in the following order: spouse, children, 
parents, estate, next of kin.
    (b) C&C annuity with underpayment. At the time of his death, Charlie 
was receiving payments under a 5-year certain-and-continuous annuity. 
Charlie designated Ellen to receive any payments we might owe for 
periods after his death. We underpaid Charlie for periods before his 
death. At the time of his death, we owed Charlie a back payment to 
reimburse him for those underpayments.
    (1) Example 3: where participant dies during certain period. Charlie 
died with three years of payments remaining. Ellen survived Charlie and 
lived at least another three years. We pay Ellen the remaining three 
years of payments. As explained in Sec. 4022.91(b), because Ellen is 
entitled to survivor benefits under the certain-and-continuous annuity, 
we would pay Ellen the back payment for the underpayments to Charlie 
(and for any underpayments to Ellen).
    (2) Example 4: where participant and surviving beneficiary die 
during certain period. Charlie died with three years of payments 
remaining. Ellen survived Charlie and lived another year. We paid Ellen 
one year of payments. Ellen designated Jean to receive any payments we 
might owe for periods after Ellen's death. Jean survived Ellen and lives 
at least another two years. We pay Jean the remaining two years of 
payments. As explained in Sec. 4022.91(b), because Jean is entitled to 
survivor benefits under the certain-and-continuous annuity, we would pay 
Jean the back payment for the underpayments to Charlie (and for any 
underpayments to Ellen).
    (3) Example 5: where participant dies after certain period. Charlie 
died after receiving seven years of payments. As explained in 
Secs. 4022.91(b) and 4022.93, because benefits do not continue after 
Charlie's death under the certain-and-continuous annuity, we would pay 
the back payment to the person(s) Charlie designated to receive any 
payments we might owe him at the time of his death in case he died after 
the end of certain period. If Charlie did not designate anyone to 
receive those payments or his designee died before him, we would pay the 
back payment to the person(s) surviving Charlie in the following order: 
spouse, children, parents, estate and next of kin.

            Appendix A to Part 4022--Lump Sum Mortality Rates

------------------------------------------------------------------------
                            Age x                                  qx
------------------------------------------------------------------------
12...........................................................   0.000000
13...........................................................   0.000000
14...........................................................   0.000000
15...........................................................   0.000000
16...........................................................   0.001437
17...........................................................   0.001414
18...........................................................   0.001385
19...........................................................   0.001351
20...........................................................   0.001311
21...........................................................   0.001267
22...........................................................   0.001219
23...........................................................   0.001167
24...........................................................   0.001149
25...........................................................   0.001129
26...........................................................   0.001107
27...........................................................   0.001083
28...........................................................   0.001058
29...........................................................   0.001083
30...........................................................   0.001111
31...........................................................   0.001141
32...........................................................   0.001173
33...........................................................   0.001208
34...........................................................   0.001297
35...........................................................   0.001398
36...........................................................   0.001513
37...........................................................   0.001643
38...........................................................   0.001792
39...........................................................   0.001948
40...........................................................   0.002125
41...........................................................   0.002327
42...........................................................   0.002556
43...........................................................   0.002818
44...........................................................   0.003095
45...........................................................   0.003410
46...........................................................   0.003769
47...........................................................   0.004180
48...........................................................   0.004635
49...........................................................   0.005103
50...........................................................   0.005616
51...........................................................   0.006196
52...........................................................   0.006853
53...........................................................   0.007543
54...........................................................   0.008278
55...........................................................   0.009033
56...........................................................   0.009875
57...........................................................   0.010814
58...........................................................   0.011863
59...........................................................   0.012952
60...........................................................   0.014162
61...........................................................   0.015509
62...........................................................   0.017010
63...........................................................   0.018685
64...........................................................   0.020517
65...........................................................   0.022562
66...........................................................   0.024847
67...........................................................   0.027232
68...........................................................   0.029634
69...........................................................   0.032073
70...........................................................   0.034743
71...........................................................   0.037667

[[Page 787]]

 
72...........................................................   0.040871
73...........................................................   0.044504
74...........................................................   0.048504
75...........................................................   0.052913
76...........................................................   0.057775
77...........................................................   0.063142
78...........................................................   0.068628
79...........................................................   0.074648
80...........................................................   0.081256
81...........................................................   0.088518
82...........................................................   0.096218
83...........................................................   0.104310
84...........................................................   0.112816
85...........................................................   0.122079
86...........................................................   0.132174
87...........................................................   0.143179
88...........................................................   0.155147
89...........................................................   0.168208
90...........................................................   0.182461
91...........................................................   0.198030
92...........................................................   0.215035
93...........................................................   0.232983
94...........................................................   0.252545
95...........................................................   0.273878
96...........................................................   0.297152
97...........................................................   0.322553
98...........................................................   0.349505
99...........................................................   0.378865
100..........................................................   0.410875
101..........................................................   0.445768
102..........................................................   0.483830
103..........................................................   0.524301
104..........................................................   0.568365
105..........................................................   0.616382
106..........................................................   0.668696
107..........................................................   0.725745
108..........................................................   0.786495
109..........................................................   0.852659
110..........................................................   0.924666
111..........................................................   1.000000
------------------------------------------------------------------------


[61 FR 34059, July 1, 1996; 61 FR 36626, July 12, 1996. Redesignated at 
65 FR 14753, Mar. 17, 2000]

   Appendix B to Part 4022--Lump Sum Interest Rates for PBGC Payments

 [In using this table: (1) For benefits for which the participant or beneficiary is entitled to be in pay status
on the valuation date, the immediate annuity rate shall apply; (2) For benefits for which the deferral period is
  y years (where y is an integer and 0 < y [lE] n1), interest rate i1 shall apply from the valuation date for a
  period of y years; thereafter the immediate annuity rate shall apply; (3) For benefits for which the deferral
    period is y years (where y is an integer and n1 < y [lE] n1 + n2); interest rate i2 shall apply from the
 valuation date for a period of y-n1 years, interest rate i1 shall apply for the following n1 years; thereafter
the immediate annuity rate shall apply; (4) For benefits for which the deferral period is y years (where y is an
  integer and y > n1 + n2), interest rate i3 shall apply from the valuation date for a period of y-n1-n2 years;
   interest rate i2 shall apply for the following n2 years; interest rate i1 shall apply for the following n1
                           years; thereafter the immediate annuity rate shall apply.]
----------------------------------------------------------------------------------------------------------------
                                         For plans with a                      Deferred annuities (percent)
                                          valuation date      Immediate  ---------------------------------------
               Rate set               ----------------------   annuity
                                         On or                   rate       i1      i2      i3      n1      n2
                                         after      Before    (percent)
----------------------------------------------------------------------------------------------------------------
1....................................    11-1-93    12-1-93         4.25    4.00    4.00    4.00       7       8
2....................................    12-1-93     1-1-94         4.25    4.00    4.00    4.00       7       8
3....................................     1-1-94     2-1-94         4.50    4.00    4.00    4.00       7       8
4....................................     2-1-94     3-1-94         4.50    4.00    4.00    4.00       7       8
5....................................     3-1-94     4-1-94         4.50    4.00    4.00    4.00       7       8
6....................................     4-1-94     5-1-94         4.75    4.00    4.00    4.00       7       8
7....................................     5-1-94     6-1-94         5.25    4.50    4.00    4.00       7       8
8....................................     6-1-94     7-1-94         5.25    4.50    4.00    4.00       7       8
9....................................     7-1-94     8-1-94         5.50    4.75    4.00    4.00       7       8
10...................................     8-1-94     9-1-94         5.75    5.00    4.00    4.00       7       8
11...................................     9-1-94    10-1-94         5.50    4.75    4.00    4.00       7       8
12...................................    10-1-94    11-1-94         5.50    4.75    4.00    4.00       7       8
13...................................    11-1-94    12-1-94         6.00    5.25    4.00    4.00       7       8
14...................................    12-1-94     1-1-95         6.25    5.50    4.25    4.00       7       8
15...................................     1-1-95     2-1-95         6.00    5.25    4.00    4.00       7       8
16...................................     2-1-95     3-1-95         6.00    5.25    4.00    4.00       7       8
17...................................     3-1-95     4-1-95         6.00    5.25    4.00    4.00       7       8
18...................................     4-1-95     5-1-95         5.75    5.00    4.00    4.00       7       8
19...................................     5-1-95     6-1-95         5.50    4.75    4.00    4.00       7       8
20...................................     6-1-95     7-1-95         5.50    4.75    4.00    4.00       7       8
21...................................     7-1-95     8-1-95         4.75    4.00    4.00    4.00       7       8
22...................................     8-1-95     9-1-95         4.75    4.00    4.00    4.00       7       8
23...................................     9-1-95    10-1-95         5.00    4.25    4.00    4.00       7       8
24...................................    10-1-95    11-1-95         4.75    4.00    4.00    4.00       7       8
25...................................    11-1-95    12-1-95         4.75    4.00    4.00    4.00       7       8
26...................................    12-1-95     1-1-96         4.50    4.00    4.00    4.00       7       8
27...................................     1-1-96     2-1-96         4.50    4.00    4.00    4.00       7       8
28...................................     2-1-96     3-1-96         4.25    4.00    4.00    4.00       7       8
29...................................     3-1-96     4-1-96         4.25    4.00    4.00    4.00       7       8
30...................................     4-1-96     5-1-96         4.75    4.00    4.00    4.00       7       8
31...................................     5-1-96     6-1-96         5.00    4.25    4.00    4.00       7       8
32...................................     6-1-96     7-1-96         5.00    4.25    4.00    4.00       7       8
33...................................     7-1-96     8-1-96         5.00    4.25    4.00    4.00       7       8
34...................................     8-1-96     9-1-96         5.25    4.50    4.00    4.00       7       8

[[Page 788]]

 
35...................................     9-1-96    10-1-96         5.25    4.50    4.00    4.00       7       8
36...................................    10-1-96    11-1-96         5.25    4.50    4.00    4.00       7       8
37...................................    11-1-96    12-1-96         5.00    4.25    4.00    4.00       7       8
38...................................    12-1-96     1-1-97         4.75    4.00    4.00    4.00       7       8
39...................................     1-1-97     2-1-97         4.50    4.00    4.00    4.00       7       8
40...................................     2-1-97     3-1-97         4.75    4.00    4.00    4.00       7       8
41...................................     3-1-97     4-1-97         5.00    4.25    4.00    4.00       7       8
42...................................     4-1-97     5-1-97         4.75    4.00    4.00    4.00       7       8
43...................................     5-1-97     6-1-97         5.00    4.25    4.00    4.00       7       8
44...................................     6-1-97     7-1-97         5.25    4.50    4.00    4.00       7       8
45...................................     7-1-97     8-1-97         5.25    4.50    4.00    4.00       7       8
46...................................     8-1-97     9-1-97         4.75    4.00    4.00    4.00       7       8
47...................................     9-1-97    10-1-97         4.50    4.00    4.00    4.00       7       8
48...................................    10-1-97    11-1-97         4.75    4.00    4.00    4.00       7       8
49...................................    11-1-97    12-1-97         4.50    4.00    4.00    4.00       7       8
50...................................    12-1-97     1-1-98         4.50    4.00    4.00    4.00       7       8
51...................................     1-1-98     2-1-98         4.25    4.00    4.00    4.00       7       8
52...................................     2-1-98     3-1-98         4.25    4.00    4.00    4.00       7       8
53...................................     3-1-98     4-1-98         4.25    4.00    4.00    4.00       7       8
54...................................     4-1-98     5-1-98         4.25    4.00    4.00    4.00       7       8
55...................................     5-1-98     6-1-98         4.25    4.00    4.00    4.00       7       8
56...................................     6-1-98     7-1-98         4.25    4.00    4.00    4.00       7       8
57...................................     7-1-98     8-1-98         4.00    4.00    4.00    4.00       7       8
58...................................     8-1-98     9-1-98         4.00    4.00    4.00    4.00       7       8
59...................................     9-1-98    10-1-98         4.00    4.00    4.00    4.00       7       8
60...................................    10-1-98    11-1-98         4.00    4.00    4.00    4.00       7       8
61...................................    11-1-98    12-1-98         3.75    4.00    4.00    4.00       7       8
62...................................    12-1-98     1-1-99         4.00    4.00    4.00    4.00       7       8
63...................................     1-1-99     2-1-99         4.00    4.00    4.00    4.00       7       8
64...................................     2-1-99     3-1-99         4.00    4.00    4.00    4.00       7       8
65...................................     3-1-99     4-1-99         4.00    4.00    4.00    4.00       7       8
66...................................     4-1-99     5-1-99         4.25    4.00    4.00    4.00       7       8
67...................................     5-1-99     6-1-99         4.25    4.00    4.00    4.00       7       8
68...................................     6-1-99     7-1-99         4.25    4.00    4.00    4.00       7       8
69...................................     7-1-99     8-1-99         4.50    4.00    4.00    4.00       7       8
70...................................     8-1-99     9-1-99         5.00    4.25    4.00    4.00       7       8
71...................................     9-1-99    10-1-99         5.00    4.25    4.00    4.00       7       8
72...................................    10-1-99    11-1-99         5.00    4.25    4.00    4.00       7       8
73...................................    11-1-99    12-1-99         5.00    4.25    4.00    4.00       7       8
74...................................    12-1-99     1-1-00         5.25    4.50    4.00    4.00       7       8
75...................................     1-1-00     2-1-00         5.00    4.25    4.00    4.00       7       8
76...................................     2-1-00     3-1-00         5.25    4.50    4.00    4.00       7       8
77...................................     3-1-00     4-1-00         5.25    4.50    4.00    4.00       7       8
78...................................     4-1-00     5-1-00         5.25    4.50    4.00    4.00       7       8
79...................................     5-1-00     6-1-00         5.25    4.50    4.00    4.00       7       8
80...................................     6-1-00     7-1-00         5.25    4.50    4.00    4.00       7       8
81...................................     7-1-00     8-1-00         5.50    4.75    4.00    4.00       7       8
82...................................     8-1-00     9-1-00         5.25    4.50    4.00    4.00       7       8
83...................................     9-1-00    10-1-00         5.25    4.50    4.00    4.00       7       8
84...................................    10-1-00    11-1-00         5.00    4.25    4.00    4.00       7       8
85...................................    11-1-00    12-1-00         5.25    4.50    4.00    4.00       7       8
86...................................    12-1-00     1-1-01         5.25    4.50    4.00    4.00       7       8
87...................................     1-1-01     2-1-01         5.00    4.25    4.00    4.00       7       8
88...................................     2-1-01     3-1-01         4.75    4.00    4.00    4.00       7       8
89...................................     3-1-01     4-1-01         4.75    4.00    4.00    4.00       7       8
90...................................     4-1-01     5-1-01         4.75    4.00    4.00    4.00       7       8
91...................................     5-1-01     6-1-01         4.75    4.00    4.00    4.00       7       8
92...................................     6-1-01     7-1-01         5.00    4.25    4.00    4.00       7       8
93...................................     7-1-01     8-1-01         5.00    4.25    4.00    4.00       7       8
94...................................     8-1-01     9-1-01         4.75    4.00    4.00    4.00       7       8
95...................................     9-1-01    10-1-01         4.50    4.00    4.00    4.00       7       8
96...................................    10-1-01    11-1-01         4.50    4.00    4.00    4.00       7       8
97...................................    11-1-01    12-1-01         4.75    4.00    4.00    4.00       7       8

[[Page 789]]

 
98...................................    12-1-01     1-1-02         4.50    4.00    4.00    4.00       7       8
99...................................     1-1-02     2-1-02         4.50    4.00    4.00    4.00       7       8
100..................................     2-1-02     3-1-02         4.75    4.00    4.00    4.00       7       8
101..................................     3-1-02     4-1-02         4.50    4.00    4.00    4.00       7       8
102..................................     4-1-02     5-1-02         4.25    4.00    4.00    4.00       7       8
103..................................     5-1-02     6-1-02         4.75    4.00    4.00    4.00       7       8
104..................................     6-1-02     7-1-02         4.50    4.00    4.00    4.00       7       8
105..................................     7-1-02     8-1-02         4.50    4.00    4.00    4.00       7       8
106..................................     8-1-02     9-1-02         4.25    4.00    4.00    4.00       7       8
107..................................     9-1-02    10-1-02         4.25    4.00    4.00    4.00       7       8
108..................................    10-1-02    11-1-02         4.00    4.00    4.00    4.00       7       8
109..................................    11-1-02    12-1-02         3.75    4.00    4.00    4.00       7       8
110..................................    12-1-02     1-1-03         4.00    4.00    4.00    4.00       7       8
111..................................     1-1-03     2-1-03         4.00    4.00    4.00    4.00       7       8
112..................................     2-1-03     3-1-03         3.75    4.00    4.00    4.00       7       8
113..................................     3-1-03     4-1-03         3.75    4.00    4.00    4.00       7       8
114..................................     4-1-03     5-1-03         3.50    4.00    4.00    4.00       7       8
115..................................     5-1-03     6-1-03         3.50    4.00    4.00    4.00       7       8
116..................................     6-1-03     7-1-03         3.50    4.00    4.00    4.00       7       8
117..................................     7-1-03     8-1-03         3.00    4.00    4.00    4.00       7       8
----------------------------------------------------------------------------------------------------------------


[61 FR 34059, July 1, 1996]

    Editorial Note: For Federal Register citations affecting part 4022, 
appendix B, see the List of CFR Sections Affected, which appears in the 
Finding Aids section of the printed volume and on GPO Access.

  Appendix C to Part 4022--Lump Sum Interest Rates for Private-Sector 
                                Payments

[In using this table: (1) For benefits for which the participant or 
beneficiary is entitled to be in pay status on the valuation date, the 
immediate annuity rate shall apply; (2) For benefits for which the 
deferral period is y years (where y is an integer and 0 < y [le] 
n1), interest rate i1 shall apply from the 
valuation date for a period of y years, and thereafter the immediate 
annuity rate shall apply; (3) For benefits for which the deferral period 
is y years (where y is an integer and n1 < y [le] n1 
+ n2), interest rate i2 shall apply from the 
valuation date for a period of y - n1 years, interest rate 
i1 shall apply for the following n1 years, and 
thereafter the immediate annuity rate shall apply; (4) For benefits for 
which the deferral period is y years (where y is an integer and y 
 n1 + n2), interest rate i3 
shall apply from the valuation date for a period of y-n1-
n2 years, interest rate i2 shall apply for the 
following n2 years, interest rate i1 shall apply 
for the following n1 years, and thereafter the immediate 
annuity rate shall apply.]

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      For plans with a valuation   Immediate                 Deferred annuities (percent)
                                                                 date               annuity  -----------------------------------------------------------
                      Rate set                       ----------------------------    rate
                                                       On or after     Before      (percent)      i1          i2          i3          n1          n2
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...................................................       11-1-93       12-1-93        4.25        4.00        4.00        4.00           7           8
2...................................................       12-1-93        1-1-94        4.25        4.00        4.00        4.00           7           8
3...................................................        1-1-94        2-1-94        4.50        4.00        4.00        4.00           7           8
4...................................................        2-1-94        3-1-94        4.50        4.00        4.00        4.00           7           8
5...................................................        3-1-94        4-1-94        4.50        4.00        4.00        4.00           7           8
6...................................................        4-1-94        5-1-94        4.75        4.00        4.00        4.00           7           8
7...................................................        5-1-94        6-1-94        5.25        4.50        4.00        4.00           7           8
8...................................................        6-1-94        7-1-94        5.25        4.50        4.00        4.00           7           8
9...................................................        7-1-94        8-1-94        5.50        4.75        4.00        4.00           7           8
10..................................................        8-1-94        9-1-94        5.75        5.00        4.00        4.00           7           8
11..................................................        9-1-94       10-1-94        5.50        4.75        4.00        4.00           7           8
12..................................................       10-1-94       11-1-94        5.50        4.75        4.00        4.00           7           8

[[Page 790]]

 
13..................................................       11-1-94       12-1-94        6.00        5.25        4.00        4.00           7           8
14..................................................       12-1-94        1-1-95        6.25        5.50        4.25        4.00           7           8
15..................................................        1-1-95        2-1-95        6.00        5.25        4.00        4.00           7           8
16..................................................        2-1-95        3-1-95        6.00        5.25        4.00        4.00           7           8
17..................................................        3-1-95        4-1-95        6.00        5.25        4.00        4.00           7           8
18..................................................        4-1-95        5-1-95        5.75        5.00        4.00        4.00           7           8
19..................................................        5-1-95        6-1-95        5.50        4.75        4.00        4.00           7           8
20..................................................        6-1-95        7-1-95        5.50        4.75        4.00        4.00           7           8
21..................................................        7-1-95        8-1-95        4.75        4.00        4.00        4.00           7           8
22..................................................        8-1-95        9-1-95        4.75        4.00        4.00        4.00           7           8
23..................................................        9-1-95       10-1-95        5.00        4.25        4.00        4.00           7           8
24..................................................       10-1-95       11-1-95        4.75        4.00        4.00        4.00           7           8
25..................................................       11-1-95       12-1-95        4.75        4.00        4.00        4.00           7           8
26..................................................       12-1-95        1-1-96        4.50        4.00        4.00        4.00           7           8
27..................................................        1-1-96        2-1-96        4.50        4.00        4.00        4.00           7           8
28..................................................        2-1-96        3-1-96        4.25        4.00        4.00        4.00           7           8
29..................................................        3-1-96        4-1-96        4.25        4.00        4.00        4.00           7           8
30..................................................        4-1-96        5-1-96        4.75        4.00        4.00        4.00           7           8
31..................................................        5-1-96        6-1-96        5.00        4.25        4.00        4.00           7           8
32..................................................        6-1-96        7-1-96        5.00        4.25        4.00        4.00           7           8
33..................................................        7-1-96        8-1-96        5.00        4.25        4.00        4.00           7           8
34..................................................        8-1-96        9-1-96        5.25        4.50        4.00        4.00           7           8
35..................................................        9-1-96       10-1-96        5.25        4.50        4.00        4.00           7           8
36..................................................       10-1-96       11-1-96        5.25        4.50        4.00        4.00           7           8
37..................................................       11-1-96       12-1-96        5.00        4.25        4.00        4.00           7           8
38..................................................       12-1-96        1-1-97        4.75        4.00        4.00        4.00           7           8
39..................................................        1-1-97        2-1-97        4.50        4.00        4.00        4.00           7           8
40..................................................        2-1-97        3-1-97        4.75        4.00        4.00        4.00           7           8
41..................................................        3-1-97        4-1-97        5.00        4.25        4.00        4.00           7           8
42..................................................        4-1-97        5-1-97        4.75        4.00        4.00        4.00           7           8
43..................................................        5-1-97        6-1-97        5.00        4.25        4.00        4.00           7           8
44..................................................        6-1-97        7-1-97        5.25        4.50        4.00        4.00           7           8
45..................................................        7-1-97        8-1-97        5.25        4.50        4.00        4.00           7           8
46..................................................        8-1-97        9-1-97        4.75        4.00        4.00        4.00           7           8
47..................................................        9-1-97       10-1-97        4.50        4.00        4.00        4.00           7           8
48..................................................       10-1-97       11-1-97        4.75        4.00        4.00        4.00           7           8
49..................................................       11-1-97       12-1-97        4.50        4.00        4.00        4.00           7           8
50..................................................       12-1-97        1-1-98        4.50        4.00        4.00        4.00           7           8
51..................................................        1-1-98        2-1-98        4.25        4.00        4.00        4.00           7           8
52..................................................        2-1-98        3-1-98        4.25        4.00        4.00        4.00           7           8
53..................................................        3-1-98        4-1-98        4.25        4.00        4.00        4.00           7           8
54..................................................        4-1-98        5-1-98        4.25        4.00        4.00        4.00           7           8
55..................................................        5-1-98        6-1-98        4.25        4.00        4.00        4.00           7           8
56..................................................        6-1-98        7-1-98        4.25        4.00        4.00        4.00           7           8
57..................................................        7-1-98        8-1-98        4.00        4.00        4.00        4.00           7           8
58..................................................        8-1-98        9-1-98        4.00        4.00        4.00        4.00           7           8
59..................................................        9-1-98       10-1-98        4.00        4.00        4.00        4.00           7           8
60..................................................       10-1-98       11-1-98        4.00        4.00        4.00        4.00           7           8
61..................................................       11-1-98       12-1-98        3.75        4.00        4.00        4.00           7           8
62..................................................       12-1-98        1-1-99        4.00        4.00        4.00        4.00           7           8
63..................................................        1-1-99        2-1-99        4.00        4.00        4.00        4.00           7           8
64..................................................        2-1-99        3-1-99        4.00        4.00        4.00        4.00           7           8
65..................................................        3-1-99        4-1-99        4.00        4.00        4.00        4.00           7           8
66..................................................        4-1-99        5-1-99        4.25        4.00        4.00        4.00           7           8
67..................................................        5-1-99        6-1-99        4.25        4.00        4.00        4.00           7           8
68..................................................        6-1-99        7-1-99        4.25        4.00        4.00        4.00           7           8
69..................................................        7-1-99        8-1-99        4.50        4.00        4.00        4.00           7           8
70..................................................        8-1-99        9-1-99        5.00        4.25        4.00        4.00           7           8
71..................................................        9-1-99       10-1-99        5.00        4.25        4.00        4.00           7           8
72..................................................       10-1-99       11-1-99        5.00        4.25        4.00        4.00           7           8
73..................................................       11-1-99       12-1-99        5.00        4.25        4.00        4.00           7           8
74..................................................       12-1-99        1-1-00        5.25        4.50        4.00        4.00           7           8
75..................................................        1-1-00        2-1-00        5.00        4.25        4.00        4.00           7           8
76..................................................        2-1-00        3-1-00        5.25        4.50        4.00        4.00           7           8
77..................................................        3-1-00        4-1-00        5.25        4.50        4.00        4.00           7           8
78..................................................        4-1-00        5-1-00        5.25        4.50        4.00        4.00           7           8
79..................................................        5-1-00        6-1-00        5.25        4.50        4.00        4.00           7           8
80..................................................        6-1-00        7-1-00        5.25        4.50        4.00        4.00           7           8
81..................................................        7-1-00        8-1-00        5.50        4.75        4.00        4.00           7           8
82..................................................        8-1-00        9-1-00        5.25        4.50        4.00        4.00           7           8
83..................................................        9-1-00       10-1-00        5.25        4.50        4.00        4.00           7           8

[[Page 791]]

 
84..................................................       10-1-00       11-1-00        5.00        4.25        4.00        4.00           7           8
85..................................................       11-1-00       12-1-00        5.25        4.50        4.00        4.00           7           8
86..................................................       12-1-00        1-1-01        5.25        4.50        4.00        4.00           7           8
87..................................................        1-1-01        2-1-01        5.00        4.25        4.00        4.00           7           8
88..................................................        2-1-01        3-1-01        4.75        4.00        4.00        4.00           7           8
89..................................................        3-1-01        4-1-01        4.75        4.00        4.00        4.00           7           8
90..................................................        4-1-01        5-1-01        4.75        4.00        4.00        4.00           7           8
91..................................................        5-1-01        6-1-01        4.75        4.00        4.00        4.00           7           8
92                                                          6-1-01        7-1-01        5.00        4.25        4.00        4.00           7           8
93..................................................        7-1-01        8-1-01        5.00        4.25        4.00        4.00           7           8
94..................................................        8-1-01        9-1-01        4.75        4.00        4.00        4.00           7           8
95..................................................        9-1-01       10-1-01        4.50        4.00        4.00        4.00           7           8
96..................................................       10-1-01       11-1-01        4.50        4.00        4.00        4.00           7           8
97..................................................       11-1-01       12-1-01        4.75        4.00        4.00        4.00           7           8
98..................................................       12-1-01        1-1-02        4.50        4.00        4.00        4.00           7           8
99..................................................        1-1-02        2-1-02        4.50        4.00        4.00        4.00           7           8
100.................................................        2-1-02        3-1-02        4.75        4.00        4.00        4.00           7           8
101.................................................        3-1-02        4-1-02        4.50        4.00        4.00        4.00           7           8
102.................................................        4-1-02        5-1-02        4.25        4.00        4.00        4.00           7           8
103.................................................        5-1-02        6-1-02        4.75        4.00        4.00        4.00           7           8
104.................................................        6-1-02        7-1-02        4.50        4.00        4.00        4.00           7           8
105.................................................        7-1-02        8-1-02        4.50        4.00        4.00        4.00           7           8
106.................................................        8-1-02        9-1-02        4.25        4.00        4.00        4.00           7           8
107.................................................        9-1-02       10-1-02        4.25        4.00        4.00        4.00           7           8
108.................................................       10-1-02       11-1-02        4.00        4.00        4.00        4.00           7           8
109.................................................       11-1-02       12-1-02        3.75        4.00        4.00        4.00           7           8
110.................................................       12-1-02        1-1-03        4.00        4.00        4.00        4.00           7           8
111.................................................        1-1-03        2-1-03        4.00        4.00        4.00        4.00           7           8
112.................................................        2-1-03        3-1-03        3.75        4.00        4.00        4.00           7           8
113.................................................        3-1-03        4-1-03        3.75        4.00        4.00        4.00           7           8
114.................................................        4-1-03        5-1-03        3.50        4.00        4.00        4.00           7           8
115.................................................        5-1-03        6-1-03        3.50        4.00        4.00        4.00           7           8
116.................................................        6-1-03        7-1-03        3.50        4.00        4.00        4.00           7           8
117.................................................        7-1-03        8-1-03        3.00        4.00        4.00        4.00           7           8
--------------------------------------------------------------------------------------------------------------------------------------------------------


[65 FR 14755, Mar. 17, 2000]

    Editorial Note: For Federal Register citations affecting part 4022, 
appendix C, see the List of CFR Sections Affected, which appears in the 
Finding Aids section of the printed volume and on GPO Access.

     Appendix D to Part 4022--Maximum Guaranteeable Monthly Benefit

    The following table lists by year the maximum guaranteeable monthly 
benefit payable in the form of a life annuity commencing at age 65 as 
described by Sec. 4022.22(b) to a participant in a plan that terminated 
in that year:

------------------------------------------------------------------------
                                                              Maximum
                                                           guaranteeable
                          Year                                monthly
                                                              benefit
------------------------------------------------------------------------
1974....................................................         $750.00
1975....................................................          801.14
1976....................................................          869.32
1977....................................................          937.50
1978....................................................        1,005.68
1979....................................................        1,073.86
1980....................................................        1,159.09
1981....................................................        1,261.36
1982....................................................        1,380.68
1983....................................................        1,517.05
1984....................................................        1,602.27
1985....................................................        1,687.50
1986....................................................        1,789.77
1987....................................................        1,857.95
1988....................................................        1,909.09
1989....................................................        2,028.41
1990....................................................        2,164.77
1991....................................................        2,250.00
1992....................................................        2,352.27
1993....................................................        2,437.50
1994....................................................        2,556.82
1995....................................................        2,573.86
1996....................................................        2,642.05
1997....................................................        2,761.36
1998....................................................        2,880.68
1999....................................................        3,051.14
2000....................................................        3,221.59
2001....................................................        3,392.05
2002....................................................        3,579.55
2003....................................................        3,664.77
------------------------------------------------------------------------


[[Page 792]]


[61 FR 34028, July 1, 1996, as amended at 61 FR 65474, Dec. 13, 1996; 62 
FR 65608, Dec. 15, 1997; 63 FR 63179, Nov. 12, 1998; 64 FR 67164, Dec. 
1, 1999. Redesignated at 65 FR 14753 and 14755, Mar. 17, 2000; 65 FR 
75165, Dec. 1, 2000; 66 FR 59694, Nov. 30, 2001; 67 FR 71472, Dec. 2, 
2002]



PART 4022B--AGGREGATE LIMITS ON GUARANTEED BENEFITS--Table of Contents




    Authority: 29 U.S.C. 1302(b)(3), 1322B.



Sec. 4022B.1  Aggregate payments limitation.

    (a) Benefits with respect to two or more plans. If a person (or 
persons) is entitled to benefits payable with respect to one participant 
in two or more plans, the aggregate benefits payable by PBGC from its 
funds is limited by Sec. 4022.22 of this chapter (without regard to 
Sec. 4022.22(a)). The PBGC will determine the limitation as of the date 
of the last plan termination.
    (b) Benefits with respect to two or more participants. The PBGC will 
not aggregate the benefits payable with respect to one participant with 
the benefits payable with respect to any other participant (e.g., if an 
individual is entitled to benefits both as a participant and as the 
spouse of a deceased participant).

[67 FR 16959, Apr. 8, 2002]

[[Page 793]]



                     SUBCHAPTER E--PLAN TERMINATIONS





PART 4041--TERMINATION OF SINGLE-EMPLOYER PLANS--Table of Contents




                      Subpart A--General Provisions

Sec.
4041.1  Purpose and scope.
4041.2  Definitions.
4041.3  Computation of time; filing and issuance rules.
4041.4  Disaster relief.
4041.5  Record retention and availability.
4041.6  Effect of failure to provide required information.
4041.7  Challenges to plan termination under collective bargaining 
          agreement.
4041.8  Post-termination amendments.

                 Subpart B--Standard Termination Process

4041.21  Requirements for a standard termination.
4041.22  Administration of plan during pendency of termination process.
4041.23  Notice of intent to terminate.
4041.24  Notices of plan benefits.
4041.25  Standard termination notice.
4041.26  PBGC review of standard termination notice.
4041.27  Notice of annuity information.
4041.28  Closeout of plan.
4041.29  Post-distribution certification.
4041.30  Requests for deadline extensions.
4041.31  Notice of noncompliance.

                 Subpart C--Distress Termination Process

4041.41  Requirements for a distress termination.
4041.42  Administration of plan during termination process.
4041.43  Notice of intent to terminate.
4041.44  PBGC review of notice of intent to terminate.
4041.45  Distress termination notice.
4041.46  PBGC determination of compliance with requirements for distress 
          termination.
4041.47  PBGC determination of plan sufficiency/insufficiency.
4041.48  Sufficient plans; notice requirements.
4041.49  Verification of plan sufficiency prior to closeout.
4041.50  Closeout of plan.

    Authority: 29 U.S.C. 1302(b)(3), 1341, 1344, 1350.

    Source: 62 FR 60428, Nov. 7, 1997, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 4041.1  Purpose and scope.

    This part sets forth the rules and procedures for terminating a 
single-employer plan in a standard or distress termination under section 
4041 of ERISA, the exclusive means of voluntarily terminating a plan.



Sec. 4041.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
affected party, annuity, benefit liabilities, Code, contributing 
sponsor, controlled group, distress termination, distribution date, EIN, 
employer, ERISA, guaranteed benefit, insurer, irrevocable commitment, 
IRS, mandatory employee contributions, normal retirement age, notice of 
intent to terminate, PBGC, person, plan administrator, plan year, PN, 
single-employer plan, standard termination, termination date, and title 
IV benefit. In addition, for purposes of this part:
    Distress termination notice means the notice filed with the PBGC 
pursuant to Sec. 4041.45.
    Distribution notice means the notice issued to the plan 
administrator by the PBGC pursuant to Sec. 4041.47(c) upon the PBGC's 
determination that the plan has sufficient assets to pay at least 
guaranteed benefits.
    Majority owner means, with respect to a contributing sponsor of a 
single-employer plan, an individual who owns, directly or indirectly, 50 
percent or more (taking into account the constructive ownership rules of 
section 414(b) and (c) of the Code) of--
    (1) An unincorporated trade or business;
    (2) The capital interest or the profits interest in a partnership; 
or
    (3) Either the voting stock of a corporation or the value of all of 
the stock of a corporation.
    Notice of noncompliance means a notice issued to a plan 
administrator by the PBGC pursuant to Sec. 4041.31 advising the plan 
administrator that the requirements for a standard termination

[[Page 794]]

have not been satisfied and that the plan is an ongoing plan.
    Notice of plan benefits means the notice to each participant and 
beneficiary required by Sec. 4041.24.
    Participant means--
    (1) Any individual who is currently in employment covered by the 
plan and who is earning or retaining credited service under the plan, 
including any individual who is considered covered under the plan for 
purposes of meeting the minimum participation requirements but who, 
because of offset or similar provisions, does not have any accrued 
benefits;
    (2) Any nonvested individual who is not currently in employment 
covered by the plan but who is earning or retaining credited service 
under the plan; and
    (3) Any individual who is retired or separated from employment 
covered by the plan and who is receiving benefits under the plan or is 
entitled to begin receiving benefits under the plan in the future, 
excluding any such individual to whom an insurer has made an irrevocable 
commitment to pay all the benefits to which the individual is entitled 
under the plan.
    Plan benefits means benefit liabilities determined as of the 
termination date (taking into account the rules in Sec. 4041.8(a)).
    Proposed termination date means the date specified as such by the 
plan administrator in the notice of intent to terminate or, if later, in 
the standard or distress termination notice.
    Residual assets means the plan assets remaining after all plan 
benefits and other liabilities (e.g., PBGC premiums) of the plan have 
been satisfied (taking into account the rules in Sec. 4041.8(b)).
    Standard termination notice means the notice filed with the PBGC 
pursuant to Sec. 4041.25.
    State guaranty association means an association of insurers created 
by a State, the District of Columbia, or the Commonwealth of Puerto Rico 
to pay benefits and to continue coverage, within statutory limits, under 
life and health insurance policies and annuity contracts when an insurer 
fails.



Sec. 4041.3  Computation of time; filing and issuance rules.

    (a) Computation of time. In computing any period of time under this 
part, the day of the event from which the period begins is not counted. 
The last day of the period is counted. If the last day falls on a 
Saturday, Sunday, or Federal holiday, the period runs until the end of 
the next regular business day. A proposed termination date may be any 
day, including a Saturday, Sunday, or Federal holiday.
    (b) Filing with the PBGC. Any document to be filed under this part 
must be filed with the PBGC in the manner described in the applicable 
forms and instructions package. The document is deemed filed on the date 
described in paragraph (b)(1), (b)(2), (b)(3) or (b)(4) of this section, 
as applicable, or such earlier date as is provided in the applicable 
forms and instructions package. For purposes of this paragraph (b), 
information received by the PBGC on a weekend or Federal holiday or 
after 5:00 p.m. on a weekday is considered filed on the next regular 
business day.
    (1) Filing by mail. If the document is mailed with the United States 
Postal Service by first class mail postage prepaid to the PBGC, the 
document is filed on--
    (i) The date of the legible United States Postal Service postmark;
    (ii) If there is no legible United States Postal Service postmark, 
the date of the legible postmark made by a private postage meter, 
provided that the document is received by the PBGC not later than the 
date when a document sent by first class mail would ordinarily be 
received if it were postmarked at the same point of origin by the United 
States Postal Service on the last date prescribed for filing the 
document; or
    (iii) In any other case, the date that the plan administrator can 
establish the document was deposited in the mail before the last 
collection of mail from the place of deposit.
    (2) Filing by commercial delivery service. If the document is 
deposited with a commercial delivery service, the document is filed on 
the earlier of--
    (i) The date that would be considered the postmark date under 
section 7502(f) of the Code; or

[[Page 795]]

    (ii) The date it is deposited for delivery with the commercial 
delivery service, provided it is received by the PBGC within two regular 
business days.
    (3) Electronic filings. If the document is filed electronically, the 
document is filed on the date on which it is transmitted electronically 
to the PBGC, provided that, if there is reason to believe the document 
was not delivered, the plan administrator promptly refiles the document 
in accordance with the applicable forms and instructions package.
    (4) Other filings. If a filing date is not established under 
paragraphs (b)(1) through (b)(3) of this section, the document is filed 
on the date on which it is received by the PBGC.
    (c) Issuance to other parties. The following rules apply to affected 
parties (other than the PBGC). For purposes of this paragraph (c), a 
person entitled to notice under the spin-off/termination transaction 
rules of Secs. 4041.23(c) or 4041.24(f) is treated as an affected party.
    (1) Permissible methods of issuance. The plan administrator must 
issue any notice to an affected party individually--
    (i) By hand delivery;
    (ii) By first-class mail or commercial delivery service to the 
affected party's last known address; or
    (iii) By electronic means reasonably calculated to ensure actual 
receipt by the affected party.
    (2) Date of issuance. Any notice is deemed issued to an affected 
party on the date on which it is--
    (i) Handed to the affected party;
    (ii) Deposited in the mail;
    (iii) Deposited with a commercial delivery service; or
    (iv) Transmitted electronically to the affected party, provided 
that, if there is reason to believe the notice was not delivered, the 
plan administrator promptly reissues the notice in accordance with the 
applicable forms and instructions package.
    (3) Omission of affected parties. The failure to issue any notice to 
an affected party (other than any employee organization) within the 
specified time period will not cause the notice to be untimely if--
    (i) After-discovered affected parties. The plan administrator could 
not reasonably have been expected to know of the affected party, and 
issues the notice promptly after discovering the affected party;
    (ii) De minimis administrative errors. The failure was due to 
administrative error involving only a de minimis percentage of affected 
parties, and the plan administrator issues the notice to each such 
affected party promptly after discovering the error; or
    (iii) Unlocated participants. The plan administrator could not 
locate the affected party after making reasonable efforts, and issues 
the notice promptly in the event the affected party is located.
    (4) Deceased participants. In the case of a deceased participant, 
the plan administrator need not issue a notice to the participant's 
estate if the estate is not entitled to a distribution.
    (5) Form of notices to affected parties. All notices to affected 
parties must be readable and written in a manner calculated to be 
understood by the average plan participant. The plan administrator may 
provide additional information with a notice only if the information is 
not misleading.
    (6) Foreign languages. The plan administrator of a plan that (as of 
the proposed termination date) covers the numbers or percentages in 
Sec. 2520.104b-10(e) of this title of participants literate only in the 
same non-English language must, for any notice to affected parties--
    (i) Include a prominent legend in that common non-English language 
advising them how to obtain assistance in understanding the notice; or
    (ii) Provide the notice in that common non-English language to those 
affected parties literate only in that language.



Sec. 4041.4  Disaster relief.

    When the President of the United States declares that, under the 
Disaster Relief Act (42 U.S.C. 5121, 5122(2), 5141(b)), a major disaster 
exists, the Executive Director of the PBGC (or his or her designee) may, 
by issuing one or more notices of disaster relief, extend by up to 180 
days any due date under this part.

[[Page 796]]



Sec. 4041.5  Record retention and availability.

    (a) Retention requirement. (1) Persons subject to requirement. Each 
contributing sponsor and the plan administrator of a plan terminating in 
a standard termination, or in a distress termination that closes out in 
accordance with Sec. 4041.50, must maintain all records necessary to 
demonstrate compliance with section 4041 of ERISA and this part. A 
record may be maintained in any format that reasonably ensures the 
integrity of the original information and that allows the record to be 
converted to hardcopy if necessary under paragraph (b) of this section. 
If a contributing sponsor or the plan administrator maintains 
information in accordance with this paragraph (a)(1), the other(s) need 
not maintain that information.
    (2) Retention period. The records described in paragraph (a)(1) of 
this section must be preserved for six years after the date when the 
post-distribution certification under this part is filed with the PBGC.
    (b) Availability of records. The contributing sponsor or plan 
administrator must make all records needed to determine compliance with 
section 4041 of ERISA and this part available to the PBGC upon request 
for inspection and photocopying, and must submit such records to the 
PBGC within 30 days after the date of a written request by the PBGC or 
by a later date specified therein. Unless the PBGC agrees to a different 
format, records must be submitted in hardcopy.



Sec. 4041.6  Effect of failure to provide required information.

    If a plan administrator fails to provide any information required 
under this part within the specified time limit, the PBGC may assess a 
penalty under section 4071 of ERISA of up to $1,100 a day for each day 
that the failure continues. The PBGC may also pursue any other equitable 
or legal remedies available to it under the law, including, if 
appropriate, the issuance of a notice of noncompliance under 
Sec. 4041.31.



Sec. 4041.7  Challenges to plan termination under collective bargaining agreement.

    (a) Suspension upon formal challenge to termination (1) Notice of 
formal challenge. (i) If the PBGC is advised, before its review period 
under Sec. 4041.26(a) ends, or before issuance of a notice of inability 
to determine sufficiency or a distribution notice under Sec. 4041.47(b) 
or (c), that a formal challenge to the termination has been initiated as 
described in paragraph (c) of this section, the PBGC will suspend the 
termination proceeding and so advise the plan administrator in writing.
    (ii) If the PBGC is advised of a challenge described in paragraph 
(a)(1)(i) of this section after the time specified therein, the PBGC may 
suspend the termination proceeding and will so advise the plan 
administrator in writing.
    (2) Standard terminations. During any period of suspension in a 
standard termination --
    (i) The running of all time periods specified in ERISA or this part 
relevant to the termination will be suspended; and
    (ii) The plan administrator must comply with the prohibitions in 
Sec. 4041.22.
    (3) Distress terminations. During any period of suspension in a 
distress termination --
    (i) The issuance by the PBGC of any notice of inability to determine 
sufficiency or distribution notice will be stayed or, if any such notice 
was previously issued, its effectiveness will be stayed;
    (ii) The plan administrator must comply with the prohibitions in 
Sec. 4041.42; and
    (iii) The plan administrator must file a distress termination notice 
with the PBGC pursuant to Sec. 4041.45.
    (b) Existing collective bargaining agreement. For purposes of this 
section, an existing collective bargaining agreement means a collective 
bargaining agreement that has not been made inoperative by a judicial 
ruling and, by its terms, either has not expired or is extended beyond 
its stated expiration date because neither of the collective bargaining 
parties took the required action to terminate it. When a collective 
bargaining agreement no longer

[[Page 797]]

meets these conditions, it ceases to be an ``existing collective 
bargaining agreement,'' whether or not any or all of its terms may 
continue to apply by operation of law.
    (c) Formal challenge to termination. A formal challenge to a plan 
termination asserting that the termination would violate the terms and 
conditions of an existing collective bargaining agreement is initiated 
when --
    (1) Any procedure specified in the collective bargaining agreement 
for resolving disputes under the agreement commences; or
    (2) Any action before an arbitrator, administrative agency or board, 
or court under applicable labor-management relations law commences.
    (d) Resolution of challenge. Immediately upon the final resolution 
of the challenge, the plan administrator must notify the PBGC in writing 
of the outcome of the challenge, provide the PBGC with a copy of any 
award or order, and, if the validity of the proposed termination has 
been upheld, advise the PBGC whether the proposed termination is to 
proceed. The final resolution ends the suspension period under paragraph 
(a) of this section.
    (1) Challenge sustained. If the final resolution is that the 
proposed termination violates an existing collective bargaining 
agreement, the PBGC will dismiss the termination proceeding, all actions 
taken to effect the plan termination will be null and void, and the plan 
will be an ongoing plan. In this event, in a distress termination, 
Sec. 4041.42(d) will apply as of the date of the dismissal by the PBGC.
    (2) Termination sustained. If the final resolution is that the 
proposed termination does not violate an existing collective bargaining 
agreement and the plan administrator has notified the PBGC that the 
termination is to proceed, the PBGC will reactivate the termination 
proceeding by sending a written notice thereof to the plan 
administrator, and --
    (i) The termination proceeding will continue from the point where it 
was suspended;
    (ii) All actions taken to effect the termination before the 
suspension will be effective;
    (iii) Any time periods that were suspended will resume running from 
the date of the PBGC's notice of the reactivation of the proceeding;
    (iv) Any time periods that had fewer than 15 days remaining will be 
extended to the 15th day after the date of the PBGC's notice, or such 
later date as the PBGC may specify; and
    (v) In a distress termination, the PBGC will proceed to issue a 
notice of inability to determine sufficiency or a distribution notice 
(or reactivate any such notice stayed under paragraph (a)(3) of this 
section), either with or without first requesting updated information 
from the plan administrator pursuant to Sec. 4041.45(c).
    (e) Final resolution of challenge. A formal challenge to a proposed 
termination is finally resolved when--
    (1) The parties involved in the challenge enter into a settlement 
that resolves the challenge;
    (2) A final award, administrative decision, or court order is issued 
that is not subject to review or appeal; or
    (3) A final award, administrative decision, or court order is issued 
that is not appealed, or review or enforcement of which is not sought, 
within the time for filing an appeal or requesting review or 
enforcement.
    (f) Involuntary termination by the PBGC. Notwithstanding any other 
provision of this section, the PBGC retains the authority in any case to 
initiate a plan termination in accordance with the provisions of section 
4042 of ERISA.



Sec. 4041.8  Post-termination amendments.

    (a) Plan benefits. A participant's or beneficiary's plan benefits 
are determined under the plan's provisions in effect on the plan's 
termination date. Notwithstanding the preceding sentence, an amendment 
that is adopted after the plan's termination date is taken into account 
with respect to a participant's or beneficiary's plan benefits to the 
extent the amendment--
    (1) Does not decrease the value of the participant's or 
beneficiary's plan benefits under the plan's provisions in effect on the 
termination date; and
    (2) Does not eliminate or restrict any form of benefit available to 
the participant or beneficiary on the plan's termination date.

[[Page 798]]

    (b) Residual assets. In a plan in which participants or 
beneficiaries will receive some or all of the plan's residual assets 
based on an allocation formula, the amount of the plan's residual assets 
and each participant's or beneficiary's share thereof is determined 
under the plan's provisions in effect on the plan's termination date. 
Notwithstanding the preceding sentence, an amendment adopted after the 
plan's termination date is taken into account with respect to a 
participant's or beneficiary's allocation of residual assets to the 
extent the amendment does not decrease the value of the participant's or 
beneficiary's allocation of residual assets under the plan's provisions 
in effect on the termination date.
    (c) Permitted decreases. For purposes of this section, an amendment 
shall not be treated as decreasing the value of a participant's or 
beneficiary's plan benefits or allocation of residual assets to the 
extent--
    (1) The decrease is necessary to meet a qualification requirement 
under section 401 of the Code;
    (2) The participant's or beneficiary's allocation of residual assets 
is paid in the form of an increase in the participant's or beneficiary's 
plan benefits; or
    (3) The decrease is offset by assets that would otherwise revert to 
the contributing sponsor or by additional contributions.
    (d) Distress terminations. In the case of a distress termination, a 
participant's or beneficiary's benefit liabilities are determined as of 
the termination date in the same manner as plan benefits under this 
section.



                 Subpart B--Standard Termination Process



Sec. 4041.21  Requirements for a standard termination.

    (a) Notice and distribution requirements. A standard termination is 
valid if the plan administrator--
    (1) Issues a notice of intent to terminate to all affected parties 
(other than the PBGC) in accordance with Sec. 4041.23;
    (2) Issues notices of plan benefits to all affected parties entitled 
to plan benefits in accordance with Sec. 4041.24;
    (3) Files a standard termination notice with the PBGC in accordance 
with Sec. 4041.25;
    (4) Distributes the plan's assets in satisfaction of plan benefits 
in accordance with Sec. 4041.28(a) and (c); and
    (5) In the case of a spin-off/termination transaction (as defined in 
Sec. 4041.23(c)), issues the notices required by Sec. 4041.23(c), 
Sec. 4041.24(f), and Sec. 4041.27(a)(2) in accordance with such 
sections.
    (b) Plan sufficiency. (1) Commitment to make plan sufficient. A 
contributing sponsor of a plan or any other member of the plan's 
controlled group may make a commitment to contribute any additional sums 
necessary to enable the plan to satisfy plan benefits in accordance with 
Sec. 4041.28. A commitment will be valid only if--
    (i) It is made to the plan;
    (ii) It is in writing, signed by the contributing sponsor or 
controlled group member(s); and
    (iii) In any case in which the person making the commitment is the 
subject of a bankruptcy liquidation or reorganization proceeding, as 
described in Sec. 4041.41(c)(1) or (c)(2), the commitment is approved by 
the court before which the liquidation or reorganization proceeding is 
pending or a person not in bankruptcy unconditionally guarantees to meet 
the commitment at or before the time distribution of assets is required.
    (2) Alternative treatment of majority owner's benefit. A majority 
owner may elect to forgo receipt of his or her plan benefits to the 
extent necessary to enable the plan to satisfy all other plan benefits 
in accordance with Sec. 4041.28. Any such alternative treatment of the 
majority owner's plan benefits is valid only if--
    (i) The majority owner's election is in writing;
    (ii) In any case in which the plan would require the spouse of the 
majority owner to consent to distribution of the majority owner's 
receipt of his or her plan benefits in a form other than a qualified 
joint and survivor annuity, the spouse consents in writing to the 
election;
    (iii) The majority owner makes the election and the spouse consents 
during the time period beginning with the

[[Page 799]]

date of issuance of the first notice of intent to terminate and ending 
with the date of the last distribution; and
    (iv) Neither the majority owner's election nor the spouse's consent 
is inconsistent with a qualified domestic relations order (as defined in 
section 206(d)(3) of ERISA).



Sec. 4041.22  Administration of plan during pendency of termination process.

    (a) In general. A plan administrator may distribute plan assets in 
connection with the termination of the plan only in accordance with the 
provisions of this part. From the first day the plan administrator 
issues a notice of intent to terminate to the last day of the PBGC's 
review period under Sec. 4041.26(a), the plan administrator must 
continue to carry out the normal operations of the plan. During that 
time period, except as provided in paragraph (b) of this section, the 
plan administrator may not--
    (1) Purchase irrevocable commitments to provide any plan benefits; 
or
    (2) Pay benefits attributable to employer contributions, other than 
death benefits, in any form other than an annuity.
    (b) Exception. The plan administrator may pay benefits attributable 
to employer contributions either through the purchase of irrevocable 
commitments or in a form other than an annuity if--
    (1) The participant has separated from active employment or is 
otherwise permitted under the Code to receive the distribution;
    (2) The distribution is consistent with prior plan practice; and
    (3) The distribution is not reasonably expected to jeopardize the 
plan's sufficiency for plan benefits.



Sec. 4041.23  Notice of intent to terminate.

    (a) Notice requirement. (1) In general. At least 60 days and no more 
than 90 days before the proposed termination date, the plan 
administrator must issue a notice of intent to terminate to each person 
(other than the PBGC) that is an affected party as of the proposed 
termination date. In the case of a beneficiary of a deceased participant 
or an alternate payee, the plan administrator must issue a notice of 
intent to terminate promptly to any person that becomes an affected 
party after the proposed termination date and on or before the 
distribution date.
    (2) Early issuance of NOIT. The PBGC may consider a notice of intent 
to terminate to be timely under paragraph (a)(1) of this section if the 
notice was early by a de minimis number of days and the PBGC finds that 
the early issuance was the result of administrative error.
    (b) Contents of notice. The PBGC's standard termination forms and 
instructions package includes a model notice of intent to terminate. The 
notice of intent to terminate must include --
    (1) Identifying information. The name and PN of the plan, the name 
and EIN of each contributing sponsor, and the name, address, and 
telephone number of the person who may be contacted by an affected party 
with questions concerning the plan's termination;
    (2) Intent to terminate plan. A statement that the plan 
administrator intends to terminate the plan in a standard termination as 
of a specified proposed termination date and will notify the affected 
party if the proposed termination date is changed to a later date or if 
the termination does not occur;
    (3) Sufficiency requirement. A statement that, in order to terminate 
in a standard termination, plan assets must be sufficient to provide all 
plan benefits under the plan;
    (4) Cessation of accruals. A statement (as applicable) that--
    (i) Benefit accruals will cease as of the termination date, but will 
continue if the plan does not terminate;
    (ii) A plan amendment has been adopted under which benefit accruals 
will cease, in accordance with section 204(h) of ERISA, as of the 
proposed termination date or a specified date before the proposed 
termination date, whether or not the plan is terminated; or
    (iii) Benefit accruals ceased, in accordance with section 204(h) of 
ERISA, as of a specified date before the notice of intent to terminate 
was issued;

[[Page 800]]

    (5) Annuity information. If required under Sec. 4041.27, the annuity 
information described therein;
    (6) Benefit information. A statement that each affected party 
entitled to plan benefits will receive a written notification regarding 
his or her plan benefits;
    (7) Summary plan description. A statement as to how an affected 
party entitled to receive the latest updated summary plan description 
under section 104(b) of ERISA can obtain it.
    (8) Continuation of monthly benefits. For persons who are, as of the 
proposed termination date, in pay status, a statement (as applicable) --
    (i) That their monthly (or other periodic) benefit amounts will not 
be affected by the plan's termination; or
    (ii) Explaining how their monthly (or other periodic) benefit 
amounts will be affected under plan provisions); and
    (9) Extinguishment of guarantee. A statement that after plan assets 
have been distributed in full satisfaction of all plan benefits under 
the plan with respect to a participant or a beneficiary of a deceased 
participant, either by the purchase of irrevocable commitments (annuity 
contracts) or by an alternative form of distribution provided for under 
the plan, the PBGC no longer guarantees that participant's or 
beneficiary's plan benefits.
    (c) Spin-off/termination transactions. In the case of a transaction 
in which a single defined benefit plan is split into two or more plans 
and there is a reversion of residual assets to an employer upon the 
termination of one or more but fewer than all of the resulting plans (a 
``spin-off/termination transaction''), the plan administrator must, 
within the time period specified in paragraph (a) of this section, 
provide a notice describing the transaction to all participants, 
beneficiaries of deceased participants, and alternate payees in the 
original plan who are, as of the proposed termination date, covered by 
an ongoing plan.



Sec. 4041.24  Notices of plan benefits.

    (a) Notice requirement. The plan administrator must, no later than 
the time the plan administrator files the standard termination notice 
with the PBGC, issue a notice of plan benefits to each person (other 
than the PBGC and any employee organization) who is an affected party as 
of the proposed termination date. In the case of a beneficiary of a 
deceased participant or an alternate payee, the plan administrator must 
issue a notice of plan benefits promptly to any person that becomes an 
affected party after the proposed termination date and on or before the 
distribution date.
    (b) Contents of notice. The plan administrator must include in each 
notice of plan benefits--
    (1) The name and PN of the plan, the name and EIN of each 
contributing sponsor, and the name, address, and telephone number of an 
individual who may be contacted to answer questions concerning plan 
benefits;
    (2) The proposed termination date given in the notice of intent to 
terminate and any extended proposed termination date under 
Sec. 4041.25(b);
    (3) If the amount of plan benefits set forth in the notice is an 
estimate, a statement that the amount is an estimate and that plan 
benefits paid may be greater than or less than the estimate;
    (4) Except in the case of an affected party in pay status for more 
than one year as of the proposed termination date--
    (i) The personal data (if available) needed to calculate the 
affected party's plan benefits, along with a statement requesting that 
the affected party promptly correct any information he or she believes 
to be incorrect; and
    (ii) If any of the personal data needed to calculate the affected 
party's plan benefits is not available, the best available data, along 
with a statement informing the affected party of the data not available 
and affording him or her the opportunity to provide it; and
    (5) The information in paragraphs (c) through (e) of this section, 
as applicable.
    (c) Benefits of persons in pay status. For an affected party in pay 
status as of the proposed termination date, the plan administrator must 
include in the notice of plan benefits --
    (1) The amount and form of the participant's or beneficiary's plan 
benefits payable as of the proposed termination date;

[[Page 801]]

    (2) The amount and form of plan benefits, if any, payable to a 
beneficiary upon the participant's death and the name of the 
beneficiary; and
    (3) The amount and date of any increase or decrease in the benefit 
scheduled to occur (or that has already occurred) after the proposed 
termination date and an explanation of the increase or decrease, 
including, where applicable, a reference to the pertinent plan 
provision.
    (d) Benefits of persons with valid elections or de minimis benefits. 
For an affected party who, as of the proposed termination date, has 
validly elected a form and starting date with respect to plan benefits 
not yet in pay status, or with respect to whom the plan administrator 
has determined that a nonconsensual lump sum distribution will be made, 
the plan administrator must include in the notice of plan benefits--
    (1) The amount and form of the person's plan benefits payable as of 
the projected benefit starting date, and what that date is;
    (2) The information in paragraphs (c)(2) and (c)(3) of this section;
    (3) If the plan benefits will be paid in any form other than a lump 
sum and the age at which, or form in which, the plan benefits will be 
paid differs from the normal retirement benefit--
    (i) The age or form stated in the plan; and
    (ii) The age or form adjustment factors; and
    (4) If the plan benefits will be paid in a lump sum --
    (i) An explanation of when a lump sum may be paid without the 
consent of the participant or the participant's spouse;
    (ii) A description of the mortality table used to convert to the 
lump sum benefit (e.g., the mortality table published by the IRS in 
Revenue Ruling 95-6, 1995-1 C.B. 80) and a reference to the pertinent 
plan provisions;
    (iii) A description of the interest rate to be used to convert to 
the lump sum benefit (e.g., the 30-year Treasury rate for the third 
month before the month in which the lump sum is distributed), a 
reference to the pertinent plan provision, and (if known) the applicable 
interest rate;
    (iv) An explanation of how interest rates are used to calculate lump 
sums;
    (v) A statement that the use of a higher interest rate results in a 
smaller lump sum amount; and
    (vi) A statement that the applicable interest rate may change before 
the distribution date.
    (e) Benefits of all other persons not in pay status. For any other 
affected party not described in paragraph (c) or (d) of this section (or 
described therein only with respect to a portion of the affected party's 
plan benefits), the plan administrator must include in the notice of 
plan benefits--
    (1) The amount and form of the person's plan benefits payable at 
normal retirement age in any one form permitted under the plan;
    (2) Any alternative benefit forms, including those payable to a 
beneficiary upon the person's death either before or after benefits 
commence;
    (3) If the person is or may become entitled to a benefit that would 
be payable before normal retirement age, the amount and form of benefit 
that would be payable at the earliest benefit commencement date (or, if 
more than one such form is payable at the earliest benefit commencement 
date, any one of those forms) and whether the benefit commencing on such 
date would be subject to future reduction; and
    (4) If the plan benefits may be paid in a lump sum, the information 
in paragraph (d)(4) of this section.
    (f) Spin-off/termination transactions. In the case of a spin-off/
termination transaction (as defined in Sec. 4041.23(c)), the plan 
administrator must, no later than the time the plan administrator files 
the standard termination notice for any terminating plan, provide all 
participants, beneficiaries of deceased participants, and alternate 
payees in the original plan who are (as of the proposed termination 
date) covered by an ongoing plan with a notice of plan benefits 
containing the information in paragraphs (b) through (e) of this 
section.



Sec. 4041.25  Standard termination notice.

    (a) Notice requirement. The plan administrator must file with the 
PBGC a

[[Page 802]]

standard termination notice, consisting of the PBGC Form 500, completed 
in accordance with the instructions thereto, on or before the 180th day 
after the proposed termination date.
    (b) Change of proposed termination date. The plan administrator may, 
in the standard termination notice, select a proposed termination date 
that is later than the date specified in the notice of intent to 
terminate, provided it is not later than 90 days after the earliest date 
on which a notice of intent to terminate was issued to any affected 
party.
    (c) Request for IRS determination letter. To qualify for the 
distribution deadline in Sec. 4041.28(a)(1)(ii), the plan administrator 
must submit to the IRS a valid request for a determination of the plan's 
qualification status upon termination (``determination letter'') by the 
time the standard termination notice is filed.



Sec. 4041.26  PBGC review of standard termination notice.

    (a) Review period. (1) In general. The PBGC will notify the plan 
administrator in writing of the date on which it received a complete 
standard termination notice at the address provided in the PBGC's 
standard termination forms and instructions package. If the PBGC does 
not issue a notice of noncompliance under Sec. 4041.31 during its 60-day 
review period following such date, the plan administrator must proceed 
to close out the plan in accordance with Sec. 4041.28.
    (2) Extension of review period. The PBGC and the plan administrator 
may, before the expiration of the PBGC review period in paragraph (a)(1) 
of this section, agree in writing to extend that period.
    (b) If standard termination notice is incomplete. (1) For purposes 
of timely filing. If the standard termination notice is incomplete, the 
PBGC may, based on the nature and extent of the omission, provide the 
plan administrator an opportunity to complete the notice. In such a 
case, the standard termination notice will be deemed to have been 
complete as of the date when originally filed for purposes of 
Sec. 4041.25(a), provided the plan administrator provides the missing 
information by the later of--
    (i) The 180th day after the proposed termination date; or
    (ii) The 30th day after the date of the PBGC notice that the filing 
was incomplete.
    (2) For purposes of PBGC review period. If the standard termination 
notice is completed under paragraph (b)(1) of this section, the PBGC 
will determine whether the notice will be deemed to have been complete 
as of the date when originally filed for purposes of determining when 
the PBGC's review period begins under Sec. 4041.26(a)(1).
    (c) Additional information. (1) Deadline for providing additional 
information. The PBGC may in any case require the submission of 
additional information relevant to the termination proceeding. Any such 
additional information becomes part of the standard termination notice 
and must be submitted within 30 days after the date of a written request 
by the PBGC, or within a different time period specified therein. The 
PBGC may in its discretion shorten the time period where it determines 
that the interests of the PBGC or participants may be prejudiced by a 
delay in receipt of the information.
    (2) Effect on termination proceeding. A request for additional 
information will suspend the running of the PBGC's 60-day review period. 
The review period will begin running again on the day the required 
information is received and continue for the greater of--
    (i) The number of days remaining in the review period; or
    (ii) Five regular business days.



Sec. 4041.27  Notice of annuity information.

    (a) Notice requirement. (1) In general. The plan administrator must 
provide notices in accordance with this section to each affected party 
entitled to plan benefits other than an affected party whose plan 
benefits will be distributed in the form of a nonconsensual lump sum.
    (2) Spin-off/termination transactions. The plan administrator must 
provide the information in paragraph (d) of this section to a person 
entitled to notice under Secs. 4041.23(c) or 4041.24(f), at the

[[Page 803]]

same time and in the same manner as required for an affected party.
    (b) Content of notice. The plan administrator must include, as part 
of the notice of intent to terminate--
    (1) Identity of insurers. The name and address of the insurer or 
insurers from whom (if known), or (if not) from among whom, the plan 
administrator intends to purchase irrevocable commitments (annuity 
contracts);
    (2) Change in identity of insurers. A statement that if the plan 
administrator later decides to select a different insurer, affected 
parties will receive a supplemental notice no later than 45 days before 
the distribution date; and
    (3) State guaranty association coverage information. A statement 
informing the affected party--
    (i) That once the plan distributes a benefit in the form of an 
annuity purchased from an insurance company, the insurance company takes 
over the responsibility for paying that benefit;
    (ii) That all states, the District of Columbia, and the Commonwealth 
of Puerto Rico have established ``guaranty associations'' to protect 
policy holders in the event of an insurance company's financial failure;
    (iii) That a guaranty association is responsible for all, part, or 
none of the annuity if the insurance company cannot pay;
    (iv) That each guaranty association has dollar limits on the extent 
of its guaranty coverage, along with a general description of the 
applicable dollar coverage limits;
    (v) That in most cases the policy holder is covered by the guaranty 
association for the state where he or she lives at the time the 
insurance company fails to pay; and
    (vi) How to obtain the addresses and telephone numbers of guaranty 
association offices from the PBGC (as described in the applicable forms 
and instructions package).
    (c) Where insurer(s) not known. (1) Extension of deadline for 
notice. If the identity-of-insurer information in paragraph (b)(1) of 
this section is not known at the time the plan administrator is required 
to provide it to an affected party as part of a notice of intent to 
terminate, the plan administrator must instead provide it in a 
supplemental notice under paragraph (d) of this section.
    (2) Alternative NOIT information. A plan administrator that 
qualifies for the extension in paragraph (c)(1) of this section with 
respect to a notice of intent to terminate must include therein (in lieu 
of the information in paragraph (b) of this section) a statement that--
    (i) Irrevocable commitments (annuity contracts) may be purchased 
from an insurer to provide some or all of the benefits under the plan;
    (ii) The insurer or insurers have not yet been identified; and
    (iii) Affected parties will be notified at a later date (but no 
later than 45 days before the distribution date) of the name and address 
of the insurer or insurers from whom (if known), or (if not) from among 
whom, the plan administrator intends to purchase irrevocable commitments 
(annuity contracts).
    (d) Supplemental notice. The plan administrator must provide a 
supplemental notice to an affected party in accordance with this 
paragraph (d) if the plan administrator did not previously notify the 
affected party of the identity of insurer(s) or, after having previously 
notified the affected party of the identity of insurer(s), decides to 
select a different insurer. A failure to provide a required supplemental 
notice to an affected party will be deemed to be a failure to comply 
with the notice of intent to terminate requirements.
    (1) Deadline for supplemental notice. The deadline for issuing the 
supplemental notice is 45 days before the affected party's distribution 
date (or, in the case of an employee organization, 45 days before the 
earliest distribution date for any affected party that it represents).
    (2) Content of supplemental notice. The supplemental notice must 
include--
    (i) The identity-of-insurer information in paragraph (b)(1) of this 
section;
    (ii) The information regarding change of identity of insurer(s) in 
paragraph (b)(2) of this section; and
    (iii) Unless the state guaranty association coverage information in 
paragraph (b)(3) of this section was previously provided to the affected 
party,

[[Page 804]]

such information and the extinguishment-of-guarantee information in 
Sec. 4041.23(b)(9).



Sec. 4041.28  Closeout of plan.

    (a) Distribution deadline. (1) In general. Unless a notice of 
noncompliance is issued under Sec. 4041.31(a), the plan administrator 
must complete the distribution of plan assets in satisfaction of plan 
benefits (through priority category 6 under section 4044 of ERISA and 
part 4044 of this chapter) by the later of--
    (i) 180 days after the expiration of the PBGC's 60-day (or extended) 
review period under Sec. 4041.26(a); or
    (ii) If the plan administrator meets the requirements of 
Sec. 4041.25(c), 120 days after receipt of a favorable determination 
from the IRS.
    (2) Revocation of notice of noncompliance. If the PBGC revokes a 
notice of noncompliance issued under Sec. 4041.31(a), the distribution 
deadline is extended until the 180th day after the date of the 
revocation.
    (b) Assets insufficient to satisfy plan benefits. If, at the time of 
any distribution, the plan administrator determines that plan assets are 
not sufficient to satisfy all plan benefits (with assets determined net 
of other liabilities, including PBGC premiums), the plan administrator 
may not make any further distribution of assets to effect the plan's 
termination and must promptly notify the PBGC.
    (c) Method of distribution. (1) In general. The plan administrator 
must, in accordance with all applicable requirements under the Code and 
ERISA, distribute plan assets in satisfaction of all plan benefits by 
purchase of an irrevocable commitment from an insurer or in another 
permitted form.
    (2) Lump sum calculations. In the absence of evidence establishing 
that another date is the ``annuity starting date'' under the Code, the 
distribution date is the ``annuity starting date'' for purposes of--
    (i) Calculating the present value of plan benefits that may be 
provided in a form other than by purchase of an irrevocable commitment 
from an insurer (e.g., in selecting the interest rate(s) to be used to 
value a lump sum distribution); and
    (ii) Determining whether plan benefits will be paid in such other 
form.
    (3) Selection of insurer. In the case of plan benefits that will be 
provided by purchase of an irrevocable commitment from an insurer, the 
plan administrator must select the insurer in accordance with the 
fiduciary standards of Title I of ERISA.
    (4) Participating annuity contracts. In the case of a plan in which 
any residual assets will be distributed to participants, a participating 
annuity contract may be purchased to satisfy the requirement that 
annuities be provided by the purchase of irrevocable commitments only if 
the portion of the price of the contract that is attributable to the 
participation feature--
    (i) Is not taken into account in determining the amount of residual 
assets; and
    (ii) Is not paid from residual assets allocable to participants.
    (5) Missing participants. The plan administrator must distribute 
plan benefits to missing participants in accordance with part 4050.
    (d) Provision of annuity contract. If plan benefits are provided 
through the purchase of irrevocable commitments--
    (1) Either the plan administrator or the insurer must, within 30 
days after it is available, provide each participant and beneficiary 
with a copy of the annuity contract or certificate showing the insurer's 
name and address and clearly reflecting the insurer's obligation to 
provide the participant's or beneficiary's plan benefits; and
    (2) If such a contract or certificate is not provided to the 
participant or beneficiary by the date on which the post-distribution 
certification is required to be filed in order to avoid the assessment 
of penalties under Sec. 4041.29(b), the plan administrator must, no 
later than that date, provide the participant and beneficiary with a 
notice that includes--
    (i) A statement that the obligation for providing the participant's 
or beneficiary's plan benefits has transferred to the insurer;
    (ii) The name and address of the insurer;
    (iii) The name, address, and telephone number of the person 
designated

[[Page 805]]

by the insurer to answer questions concerning the annuity; and
    (iv) A statement that the participant or beneficiary will receive 
from the plan administrator or insurer a copy of the annuity contract or 
a certificate showing the insurer's name and address and clearly 
reflecting the insurer's obligation to provide the participant's or 
beneficiary's plan benefits.



Sec. 4041.29  Post-distribution certification.

    (a) Deadline. Within 30 days after the last distribution date for 
any affected party, the plan administrator must file with the PBGC a 
post-distribution certification consisting of the PBGC Form 501, 
completed in accordance with the instructions thereto.
    (b) Assessment of penalties. The PBGC will assess a penalty for late 
filing of a post-distribution certification only to the extent the 
certification is filed more than 90 days after the distribution deadline 
(including extensions) under Sec. 4041.28(a).



Sec. 4041.30  Requests for deadline extensions.

    (a) In general. The PBGC may in its discretion extend a deadline for 
taking action under this subpart to a later date. The PBGC will grant 
such an extension where it finds compelling reasons why it is not 
administratively feasible for the plan administrator (or other persons 
acting on behalf of the plan administrator) to take the action until the 
later date and the delay is brief. The PBGC will consider--
    (1) The length of the delay; and
    (2) Whether ordinary business care and prudence in attempting to 
meet the deadline is exercised.
    (b) Time of extension request. Any request for an extension under 
paragraph (a) of this section that is filed later than the 15th day 
before the applicable deadline must include a justification for not 
filing the request earlier.
    (c) IRS determination letter requests. Any request for an extension 
under paragraph (a) of this section of the deadline in Sec. 4041.25(c) 
for submitting a determination letter request to the IRS (in order to 
qualify for the distribution deadline in Sec. 4041.28(a)(1)(ii)) will be 
deemed to be granted unless the PBGC notifies the plan administrator 
otherwise within 60 days after receipt of the request (or, if later, by 
the end of the PBGC's review period under Sec. 4041.26(a)). The PBGC 
will notify the plan administrator in writing of the date on which it 
receives such request.
    (d) Statutory deadlines not extendable. The PBGC will not--
    (1) Pre-distribution deadlines. (i) Extend the 60-day time limit 
under Sec. 4041.23(a) for issuing the notice of intent to terminate; or
    (ii) Waive the requirement in Sec. 4041.24(a) that the notice of 
plan benefits be issued by the time the plan administrator files the 
standard termination notice with the PBGC; or
    (2) Post-distribution deadlines. Extend the deadline under 
Sec. 4041.29(a) for filing the post-distribution certification. However, 
the PBGC will assess a penalty for late filing of a post-distribution 
certification only under the circumstances described in Sec. 4041.29(b).



Sec. 4041.31  Notice of noncompliance.

    (a) Failure to meet pre-distribution requirements. (1) In general. 
Except as provided in paragraphs (a)(2) and (c) of this section, the 
PBGC will issue a notice of noncompliance within the 60-day (or 
extended) time period prescribed by Sec. 4041.26(a) whenever it 
determines that--
    (i) The plan administrator failed to issue the notice of intent to 
terminate to all affected parties (other than the PBGC) in accordance 
with Sec. 4041.23;
    (ii) The plan administrator failed to issue notices of plan benefits 
to all affected parties entitled to plan benefits in accordance with 
Sec. 4041.24;
    (iii) The plan administrator failed to file the standard termination 
notice in accordance with Sec. 4041.25;
    (iv) As of the distribution date proposed in the standard 
termination notice, plan assets will not be sufficient to satisfy all 
plan benefits under the plan; or
    (v) In the case of a spin-off/termination transaction (as described 
in Sec. 4041.23(c)), the plan administrator failed to issue any notice 
required by Sec. 4041.23(c), Sec. 4041.24(f), or Sec. 4041.27(a)(2) in 
accordance with such section.
    (2) Interests of participants. The PBGC may decide not to issue a 
notice of

[[Page 806]]

noncompliance based on a failure to meet a requirement under paragraphs 
(a)(1)(i) through (a)(1)(iii) or (a)(1)(v) of this section if it 
determines that issuance of the notice would be inconsistent with the 
interests of participants and beneficiaries.
    (3) Continuing authority. The PBGC may issue a notice of 
noncompliance or suspend the termination proceeding based on a failure 
to meet a requirement under paragraphs (a)(1)(i) through (a)(1)(v) of 
this section after expiration of the 60-day (or extended) time period 
prescribed by Sec. 4041.26(a) (including upon audit) if the PBGC 
determines such action is necessary to carry out the purposes of Title 
IV.
    (b) Failure to meet distribution requirements. (1) In general. If 
the PBGC determines, as part of an audit or otherwise, that the plan 
administrator has not satisfied any distribution requirement of 
Sec. 4041.28(a) or (c), it may issue a notice of noncompliance.
    (2) Criteria. In deciding whether to issue a notice of noncompliance 
under paragraph (b)(1) of this section, the PBGC may consider--
    (i) The nature and extent of the failure to satisfy a requirement of 
Sec. 4041.28(a) or (c);
    (ii) Any corrective action taken by the plan administrator; and
    (iii) The interests of participants and beneficiaries.
    (3) Late distributions. The PBGC will not issue a notice of 
noncompliance for failure to distribute timely based on any facts 
disclosed in the post-distribution certification if 60 or more days have 
passed from the PBGC's receipt of the post-distribution certification. 
The 60-day period may be extended by agreement between the plan 
administrator and the PBGC.
    (c) Correction of errors. The PBGC will not issue a notice of 
noncompliance based solely on the plan administrator's inclusion of 
erroneous information (or omission of correct information) in a notice 
required to be provided to any person under this part if --
    (1) The PBGC determines that the plan administrator acted in good 
faith in connection with the error;
    (2) The plan administrator corrects the error no later than --
    (i) In the case of an error in the notice of plan benefits under 
Sec. 4041.24, the latest date an election notice may be provided to the 
person; or
    (ii) In any other case, as soon as practicable after the plan 
administrator knows or should know of the error, or by any later date 
specified by the PBGC; and
    (3) The PBGC determines that the delay in providing the correct 
information will not substantially harm any person.
    (d) Reconsideration. A plan administrator may request 
reconsideration of a notice of noncompliance in accordance with the 
rules prescribed in part 4003, subpart C.
    (e) Consequences of notice of noncompliance. (1) Effect on 
termination. A notice of noncompliance ends the standard termination 
proceeding, nullifies all actions taken to terminate the plan, and 
renders the plan an ongoing plan. A notice of noncompliance is effective 
upon the expiration of the period within which the plan administrator 
may request reconsideration under paragraph (d) of this section or, if 
reconsideration is requested, a decision by the PBGC upholding the 
notice. However, once a notice is issued, the running of all time 
periods specified in ERISA or this part relevant to the termination will 
be suspended, and the plan administrator may take no further action to 
terminate the plan (except by initiation of a new termination) unless 
and until the notice is revoked. A plan administrator that still desires 
to terminate a plan must initiate the termination process again, 
starting with the issuance of a new notice of intent to terminate.
    (2) Effect on plan administration. If the PBGC issues a notice of 
noncompliance, the prohibitions in Sec. 4041.22(a)(1) and (a)(2) will 
cease to apply--
    (i) Upon expiration of the period during which reconsideration may 
be requested or, if earlier, at the time the plan administrator decides 
not to request reconsideration; or
    (ii) If reconsideration is requested, upon PBGC issuance of a 
decision on reconsideration upholding the notice of noncompliance.

[[Page 807]]

    (3) Revocation of notice of noncompliance. If a notice of 
noncompliance is revoked, unless the PBGC provides otherwise, any time 
period suspended by the issuance of the notice will resume running from 
the date of the revocation. In no case will the review period under 
Sec. 4041.26(a) end less than 60 days from the date the PBGC received 
the standard termination notice.
    (f) If no notice of noncompliance is issued. A standard termination 
is deemed to be valid if--
    (1) The plan administrator files a standard termination notice under 
Sec. 4041.25 and the PBGC does not issue a notice of noncompliance 
pursuant to Sec. 4041.31(a); and
    (2) The plan administrator files a post-distribution certification 
under Sec. 4041.29 and the PBGC does not issue a notice of noncompliance 
pursuant to Sec. 4041.31(b).
    (g) Notice to affected parties. Upon a decision by the PBGC on 
reconsideration affirming the issuance of a notice of noncompliance or, 
if earlier, upon the plan administrator's decision not to request 
reconsideration, the plan administrator must notify the affected parties 
(other than the PBGC), and any persons who were provided notice under 
Sec. 4041.23(c), in writing that the plan is not going to terminate or, 
if applicable, that the termination was invalid but that a new notice of 
intent to terminate is being issued.



                 Subpart C--Distress Termination Process



Sec. 4041.41  Requirements for a distress termination.

    (a) Distress requirements. A plan may be terminated in a distress 
termination only if--
    (1) The plan administrator issues a notice of intent to terminate to 
each affected party in accordance with Sec. 4041.43 at least 60 days and 
(except with PBGC approval) not more than 90 days before the proposed 
termination date;
    (2) The plan administrator files a distress termination notice with 
the PBGC in accordance with Sec. 4041.45 no later than 120 days after 
the proposed termination date; and
    (3) The PBGC determines that each contributing sponsor and each 
member of its controlled group satisfy one of the distress criteria set 
forth in paragraph (c) of this section.
    (b) Effect of failure to satisfy requirements. (1) Except as 
provided in paragraph (b)(2)(i) of this section, if the plan 
administrator does not satisfy all of the requirements for a distress 
termination, any action taken to effect the plan termination is null and 
void, and the plan is an ongoing plan. A plan administrator who still 
desires to terminate the plan must initiate the termination process 
again, starting with the issuance of a new notice of intent to 
terminate.
    (2)(i) The PBGC may, upon its own motion, waive any requirement with 
respect to notices to be filed with the PBGC under paragraph (a)(1) or 
(a)(2) of this section if the PBGC believes that it will be less costly 
or administratively burdensome to the PBGC to do so. The PBGC will not 
entertain requests for waivers under this paragraph.
    (ii) Notwithstanding any other provision of this part, the PBGC 
retains the authority in any case to initiate a plan termination in 
accordance with the provisions of section 4042 of ERISA.
    (c) Distress criteria. In a distress termination, each contributing 
sponsor and each member of its controlled group must satisfy at least 
one (but not necessarily the same one) of the following criteria in 
order for a distress termination to occur:
    (1) Liquidation. This criterion is met if, as of the proposed 
termination date--
    (i) A person has filed or had filed against it a petition seeking 
liquidation in a case under title 11, United States Code, or under a 
similar federal law or law of a State or political subdivision of a 
State, or a case described in paragraph (e)(2) of this section has been 
converted to such a case; and
    (ii) The case has not been dismissed.
    (2) Reorganization. This criterion is met if--
    (i) As of the proposed termination date, a person has filed or had 
filed against it a petition seeking reorganization in a case under title 
11, United States Code, or under a similar law of

[[Page 808]]

a state or a political subdivision of a state, or a case described in 
paragraph (e)(1) of this section has been converted to such a case;
    (ii) As of the proposed termination date, the case has not been 
dismissed;
    (iii) The person notifies the PBGC of any request to the bankruptcy 
court (or other appropriate court in a case under such similar law of a 
state or a political subdivision of a state) for approval of the plan 
termination by concurrently filing with the PBGC a copy of the motion 
requesting court approval, including any documents submitted in support 
of the request; and
    (iv) The bankruptcy court or other appropriate court determines 
that, unless the plan is terminated, such person will be unable to pay 
all its debts pursuant to a plan of reorganization and will be unable to 
continue in business outside the reorganization process and approves the 
plan termination.
    (3) Inability to continue in business. This criterion is met if a 
person demonstrates to the satisfaction of the PBGC that, unless a 
distress termination occurs, the person will be unable to pay its debts 
when due and to continue in business.
    (4) Unreasonably burdensome pension costs. This criterion is met if 
a person demonstrates to the satisfaction of the PBGC that the person's 
costs of providing pension coverage have become unreasonably burdensome 
solely as a result of declining covered employment under all single-
employer plans for which that person is a contributing sponsor.
    (d) Non-duplicative efforts. (1) If a person requests approval of 
the plan termination by a court, as described in paragraph (c)(2) of 
this section, the PBGC--
    (i) Will normally enter an appearance to request that the court make 
specific findings as to whether the contributing sponsor or controlled 
group member meets the distress test in paragraph (c)(3) of this 
section, or state that it is unable to make such findings;
    (ii) Will provide the court with any information it has that may be 
germane to the court's ruling;
    (iii) Will, if the person has requested, or later requests, a 
determination by the PBGC under paragraph (c)(3) of this section, defer 
action on the request until the court makes its determination; and
    (iv) Will be bound by a final and non-appealable order of the court.
    (2) If a person requests a determination by the PBGC under paragraph 
(c)(3) of this section, the PBGC determines that the distress criterion 
is not met, and the person thereafter requests approval of the plan 
termination by a court, as described in paragraph (c)(2) of this 
section, the PBGC will advise the court of its determination and make 
its administrative record available to the court.
    (e) Non-recognition of certain actions. If the PBGC finds that a 
person undertook any action or failed to act for the principal purpose 
of satisfying any of the distress criteria contained in paragraph (c) of 
this section, rather than for a reasonable business purpose, the PBGC 
will disregard such act or failure to act in determining whether the 
person has satisfied any of those criteria.
    (f) Requests for deadline extensions. The PBGC may extend any 
deadline under this subpart in accordance with the rules described in 
section Sec. 4041.30, except that the PBGC will not extend--
    (1) Pre-distribution deadlines. The 60-day time limit under 
Sec. 4041.43(a) for issuing the notice of intent to terminate; or
    (2) Post-distribution deadlines. The deadline under Sec. 4041.50 for 
filing the post-distribution certification.



Sec. 4041.42  Administration of plan during termination process.

    (a) General rule. Except to the extent specifically prohibited by 
this section, during the pendency of termination proceedings the plan 
administrator must continue to carry out the normal operations of the 
plan, such as putting participants into pay status, collecting 
contributions due the plan, and investing plan assets.
    (b) Prohibitions after issuing notice of intent to terminate. The 
plan administrator may not make loans to plan participants beginning on 
the first day he or she issues a notice of intent to terminate, and from 
that date until a distribution is permitted pursuant to Sec. 4041.50, 
the plan administrator may not--

[[Page 809]]

    (1) Distribute plan assets pursuant to, or (except as required by 
this part) take any other actions to implement, the termination of the 
plan;
    (2) Pay benefits attributable to employer contributions, other than 
death benefits, in any form other than as an annuity; or
    (3) Purchase irrevocable commitments to provide benefits from an 
insurer.
    (c) Limitation on benefit payments on or after proposed termination 
date. Beginning on the proposed termination date, the plan administrator 
must reduce benefits to the level determined under part 4022, subpart D, 
of this chapter.
    (d) Failure to qualify for distress termination. In any case where 
the PBGC determines, pursuant to Sec. 4041.44(c) or Sec. 4041.46(c)(1), 
that the requirements for a distress termination are not satisfied--
    (1) The prohibitions in paragraph (b) of this section, other than 
those in paragraph (b)(1), will cease to apply--
    (i) Upon expiration of the period during which reconsideration may 
be requested under Secs. 4041.44(e) and 4041.46(e) or, if earlier, at 
the time the plan administrator decides not to request reconsideration; 
or
    (ii) If reconsideration is requested, upon PBGC issuance of its 
decision on reconsideration.
    (2) Any benefits that were not paid pursuant to paragraph (c) of 
this section will be due and payable as of the effective date of the 
PBGC's determination, together with interest from the date (or dates) on 
which the unpaid amounts were originally due until the date on which 
they are paid in full at the rate or rates prescribed under 
Sec. 4022.81(c)(3) of this chapter.
    (e) Effect of subsequent insufficiency. If the plan administrator 
makes a finding of subsequent insufficiency for guaranteed benefits 
pursuant to Sec. 4041.49(b), or the PBGC notifies the plan administrator 
that it has made a finding of subsequent insufficiency for guaranteed 
benefits pursuant to Sec. 4041.40(d), the prohibitions in paragraph (b) 
of this section will apply in accordance with Sec. 4041.49(e).

[62 FR 60428, Nov. 7, 1997, as amended at 63 FR 29355, May 29, 1998]



Sec. 4041.43  Notice of intent to terminate.

    (a) General rules. (1) At least 60 days and (except with PBGC 
approval) no more than 90 days before the proposed termination date, the 
plan administrator must issue a written notice of intent to terminate to 
each person who is an affected party as of the proposed termination 
date.
    (2) The plan administrator must issue the notice of intent to 
terminate to all affected parties other than the PBGC at or before the 
time he or she files the notice with the PBGC.
    (3) The notice to affected parties other than the PBGC must contain 
all of the information specified in paragraph (b) of this section.
    (4) The notice to the PBGC must be filed on PBGC Form 600, Distress 
Termination, Notice of Intent to Terminate, completed in accordance with 
the instructions thereto.
    (5) In the case of a beneficiary of a deceased participant or an 
alternate payee, the plan administrator must issue a notice of intent to 
terminate promptly to any person that becomes an affected party after 
the proposed termination date and on or before the date a trustee is 
appointed for the plan pursuant to section 4042(c) of ERISA (or, in the 
case of a plan that distributes assets pursuant to Sec. 4041.50, the 
distribution date).
    (b) Contents of notice to affected parties other than the PBGC. The 
plan administrator must include in the notice of intent to terminate to 
each affected party other than the PBGC all of the following 
information:
    (1) The name of the plan and of the contributing sponsor;
    (2) The EIN of the contributing sponsor and the PN; if there is no 
EIN or PN, the notice must so state;
    (3) The name, address, and telephone number of the person who may be 
contacted by an affected party with questions concerning the plan's 
termination;
    (4) A statement that the plan administrator expects to terminate the 
plan in a distress termination on a specified proposed termination date;
    (5) The cessation of accruals information in Sec. 4041.23(b)(4);

[[Page 810]]

    (6) A statement as to how an affected party entitled to receive the 
latest updated summary plan description under section 104(b) of ERISA 
can obtain it;
    (7) A statement of whether plan assets are sufficient to pay all 
guaranteed benefits or all benefit liabilities;
    (8) A brief description of what benefits are guaranteed by the PBGC 
(e.g., if only a portion of the benefits are guaranteed because of the 
phase-in rule, this should be explained), and a statement that 
participants and beneficiaries also may receive a portion of the 
benefits to which each is entitled under the terms of the plan in excess 
of guaranteed benefits; and
    (9) A statement, if applicable, that benefits may be subject to 
reduction because of the limitations on the amounts guaranteed by the 
PBGC or because plan assets are insufficient to pay for full benefits 
(pursuant to part 4022, subparts B and D, of this chapter) and that 
payments in excess of the amount guaranteed by the PBGC may be recouped 
by the PBGC (pursuant to part 4022, subpart E, of this chapter).
    (c) Spin-off/termination transactions. In the case of a spin-off/
termination transaction (as described in Sec. 4041.23(c)), the plan 
administrator must provide all participants and beneficiaries in the 
original plan who are also participants or beneficiaries in the ongoing 
plan (as of the proposed termination date) with a notice describing the 
transaction no later than the date on which the plan administrator 
completes the issuance of notices of intent to terminate under this 
section.



Sec. 4041.44  PBGC review of notice of intent to terminate.

    (a) General. When a notice of intent to terminate is filed with it, 
the PBGC--
    (1) Will determine whether the notice was issued in compliance with 
Sec. 4041.43; and
    (2) Will advise the plan administrator of its determination, in 
accordance with paragraph (b) or (c) of this section, no later than the 
proposed termination date specified in the notice.
    (b) Tentative finding of compliance. If the PBGC determines that the 
issuance of the notice of intent to terminate appears to be in 
compliance with Sec. 4041.43, it will notify the plan administrator in 
writing that--
    (1) The PBGC has made a tentative determination of compliance;
    (2) The distress termination proceeding may continue; and
    (3) After reviewing the distress termination notice filed pursuant 
to Sec. 4041.45, the PBGC will make final, or reverse, this tentative 
determination.
    (c) Finding of noncompliance. If the PBGC determines that the 
issuance of the notice of intent to terminate was not in compliance with 
Sec. 4041.43 (except for requirements that the PBGC elects to waive 
under Sec. 4041.41(b)(2)(i) with respect to the notice filed with the 
PBGC), the PBGC will notify the plan administrator in writing--
    (1) That the PBGC has determined that the notice of intent to 
terminate was not properly issued; and
    (2) That the proposed distress termination is null and void and the 
plan is an ongoing plan.
    (d) Information on need to institute section 4042 proceedings. The 
PBGC may require the plan administrator to submit, within 20 days after 
the plan administrator's receipt of the PBGC's written request (or such 
other period as may be specified in such written request), any 
information that the PBGC determines it needs in order to decide whether 
to institute termination or trusteeship proceedings pursuant to section 
4042 of ERISA, whenever--
    (1) A notice of intent to terminate indicates that benefits 
currently in pay status (or that should be in pay status) are not being 
paid or that this is likely to occur within the 180-day period following 
the issuance of the notice of intent to terminate;
    (2) The PBGC issues a determination under paragraph (c) of this 
section; or
    (3) The PBGC has any reason to believe that it may be necessary or 
appropriate to institute proceedings under section 4042 of ERISA.
    (e) Reconsideration of finding of noncompliance. A plan 
administrator may request reconsideration of the PBGC's determination of 
noncompliance under paragraph (c) of this section in accordance with the 
rules prescribed in part

[[Page 811]]

4003, subpart C, of this chapter. Any request for reconsideration 
automatically stays the effectiveness of the determination until the 
PBGC issues its decision on reconsideration, but does not stay the time 
period within which information must be submitted to the PBGC in 
response to a request under paragraph (d) of this section.
    (f) Notice to affected parties. Upon a decision by the PBGC 
affirming a finding of noncompliance or upon the expiration of the 
period within which the plan administrator may request reconsideration 
of a finding of noncompliance (or, if earlier, upon the plan 
administrator's decision not to request reconsideration), the plan 
administrator must notify the affected parties (and any persons who were 
provided notice under Sec. 4041.43(e)) in writing that the plan is not 
going to terminate or, if applicable, that the termination is invalid 
but that a new notice of intent to terminate is being issued.



Sec. 4041.45  Distress termination notice.

    (a) General rule. The plan administrator must file with the PBGC a 
PBGC Form 601, Distress Termination Notice, Single-Employer Plan 
Termination, with Schedule EA-D, Distress Termination Enrolled Actuary 
Certification, that has been completed in accordance with the 
instructions thereto, on or before the 120th day after the proposed 
termination date.
    (b) Participant and benefit information. (1) Plan insufficient for 
guaranteed benefits. Unless the enrolled actuary certifies, in the 
Schedule EA-D filed in accordance with paragraph (a) of this section, 
that the plan is sufficient either for guaranteed benefits or for 
benefit liabilities, the plan administrator must file with the PBGC the 
participant and benefit information described in PBGC Form 601 and the 
instructions thereto by the later of--
    (i) 120 days after the proposed termination date, or
    (ii) 30 days after receipt of the PBGC's determination, pursuant to 
Sec. 4041.46(b), that the requirements for a distress termination have 
been satisfied.
    (2) Plan sufficient for guaranteed benefits or benefit liabilities. 
If the enrolled actuary certifies that the plan is sufficient either for 
guaranteed benefits or for benefit liabilities, the plan administrator 
need not submit the participant and benefit information described in 
PBGC Form 601 and the instructions thereto unless requested to do so 
pursuant to paragraph (c) of this section.
    (3) Effect of failure to provide information. The PBGC may void the 
distress termination if the plan administrator fails to provide complete 
participant and benefit information in accordance with this section.
    (c) Additional information. The PBGC may in any case require the 
submission of any additional information that it needs to make the 
determinations that it is required to make under this part or to pay 
benefits pursuant to section 4061 or 4022(c) of ERISA. The plan 
administrator must submit any information requested under this paragraph 
within 30 days after receiving the PBGC's written request (or such other 
period as may be specified in such written request).



Sec. 4041.46  PBGC determination of compliance with requirements for distress termination.

    (a) General. Based on the information contained and submitted with 
the PBGC Form 600 and the PBGC Form 601, with Schedule EA-D, and on any 
information submitted by an affected party or otherwise obtained by the 
PBGC, the PBGC will determine whether the requirements for a distress 
termination set forth in Sec. 4041.41(c) have been met and will notify 
the plan administrator in writing of its determination, in accordance 
with paragraph (b) or (c) of this section.
    (b) Qualifying termination. If the PBGC determines that all of the 
requirements of Sec. 4041.41(c) have been satisfied, it will so advise 
the plan administrator and will also advise the plan administrator of 
whether participant and benefit information must be submitted in 
accordance with Sec. 4041.45(b).
    (c) Non-qualifying termination. (1) Except as provided in paragraph 
(c)(2) of this section, if the PBGC determines that any of the 
requirements of Sec. 4041.41 have not been met, it will notify the plan 
administrator of its determination, the basis therefor, and the effect 
thereof (as provided in Sec. 4041.41(b)).

[[Page 812]]

    (2) If the only basis for the PBGC's determination described in 
paragraph (c)(1) of this section is that the distress termination notice 
is incomplete, the PBGC will advise the plan administrator of the 
missing item(s) of information and that the information must be filed 
with the PBGC no later than the 120th day after the proposed termination 
date or the 30th day after the date of the PBGC's notice of its 
determination, whichever is later.
    (d) Reconsideration of determination of non-qualification. A plan 
administrator may request reconsideration of the PBGC's determination 
under paragraph (c)(1) of this section in accordance with the rules 
prescribed in part 4003, subpart C, of this chapter. The filing of a 
request for reconsideration automatically stays the effectiveness of the 
determination until the PBGC issues its decision on reconsideration.
    (e) Notice to affected parties. Upon a decision by the PBGC 
affirming a determination of non-qualification or upon the expiration of 
the period within which the plan administrator may request 
reconsideration of a determination of non-qualification (or, if earlier, 
upon the plan administrator's decision not to request reconsideration), 
the plan administrator must notify the affected parties (and any persons 
who were provided notice under Sec. 4041.43(e)) in writing that the plan 
is not going to terminate or, if applicable, that the termination is 
invalid but that a new notice of intent to terminate is being issued.



Sec. 4041.47  PBGC determination of plan sufficiency/insufficiency.

    (a) General. Upon receipt of participant and benefit information 
filed pursuant to Sec. 4041.45 (b)(1) or (c), the PBGC will determine 
the degree to which the plan is sufficient and notify the plan 
administrator in writing of its determination in accordance with 
paragraph (b) or (c) of this section.
    (b) Insufficiency for guaranteed benefits. If the PBGC finds that it 
is unable to determine that a plan is sufficient for guaranteed 
benefits, it will issue a ``notice of inability to determine 
sufficiency'' notifying the plan administrator of this finding and 
advising the plan administrator that--
    (1) The plan administrator must continue to administer the plan 
under the restrictions imposed by Sec. 4041.42; and
    (2) The termination will be completed under section 4042 of ERISA.
    (c) Sufficiency for guaranteed benefits or benefit liabilities. If 
the PBGC determines that a plan is sufficient for guaranteed benefits 
but not for benefit liabilities or is sufficient for benefit 
liabilities, the PBGC will issue to the plan administrator a 
distribution notice advising the plan administrator--
    (1) To issue notices of benefit distribution in accordance with 
Sec. 4041.48;
    (2) To close out the plan in accordance with Sec. 4041.50;
    (3) To file a timely post-distribution certification with the PBGC 
in accordance with Sec. 4041.50(b); and
    (4) That either the plan administrator or the contributing sponsor 
must preserve and maintain plan records in accordance with Sec. 4041.5.
    (d) Alternative treatment of majority owner's benefit. A majority 
owner may elect to forgo receipt of all or part of his or her plan 
benefits in connection with a distress termination. Any such alternative 
treatment--
    (1) Is valid only if the conditions in Sec. 4041.21(b)(2) (i) 
through (iv) are met (except that, in the case of a plan that does not 
distribute assets pursuant to Sec. 4041.50, the majority owner may make 
the election and the spouse may consent any time on or after the date of 
issuance of the first notice of intent to terminate); and--
    (2) Is subject to the PBGC's approval if the election--
    (i) Is made after the termination date; and
    (ii) Would result in the PBGC determining that the plan is 
sufficient for guaranteed benefits under paragraph (c).



Sec. 4041.48  Sufficient plans; notice requirements.

    (a) Notices of benefit distribution. When a distribution notice is 
issued by the PBGC pursuant to Sec. 4041.47, the plan administrator must 
issue notices of benefit distribution in accordance with the rules 
regarding notices of plan benefits in Sec. 4041.24, except that--
    (1) The deadline for issuing the notices of benefit distribution is 
the 60th

[[Page 813]]

day after receipt of the distribution notice; and
    (2) With respect to the information described in Sec. 4041.24 (b) 
through (e), the term ``plan benefits'' is replaced with ``title IV 
benefits'' and the term ``proposed termination date'' is replaced with 
``termination date''.
    (b) Certification to PBGC. No later than 15 days after the date on 
which the plan administrator completes the issuance of the notices of 
benefit distribution, the plan administrator must file with the PBGC a 
certification that the notices were so issued in accordance with the 
requirements of this section.
    (c) Notice of annuity information. (1) In general. Unless all title 
IV benefits will be distributed in the form of nonconsensual lump sums, 
the plan administrator must provide a notice of annuity information to 
each affected party other than--
    (i) An affected party whose title IV benefits will be distributed in 
the form of a nonconsensual lump sum; and
    (ii) The PBGC.
    (2) Spin-off/termination transactions. The plan administrator must 
provide the information in paragraph (c)(4) of this section to a person 
entitled to notice under Sec. 4041.43(c), at the same time and in the 
same manner as required for an affected party described in paragraph 
(c)(1) of this section.
    (3) Selection of different insurer. A plan administrator that 
decides to select a different insurer after having previously notified 
the affected party of the identity of insurer(s) under this paragraph 
must provide another notice of annuity information.
    (4) Content of notice. The notice must include--
    (i) The identity-of-insurer information in Sec. 4041.27(b)(1);
    (ii) The information regarding change in identity of insurer(s) in 
Sec. 4041.27(b)(2); and
    (iii) Unless the state guaranty coverage information in 
Sec. 4041.27(b)(3) was previously provided to the affected party, such 
information and the extinguishment-of-guaranty information in 
Sec. 4041.23(b)(9) (replacing the term ``plan benefits'' with ``title IV 
benefits'').
    (5) Deadline for notice. The plan administrator must issue the 
notice of annuity information to each affected party by the deadline in 
Sec. 4041.27(d)(1).
    (d) Request for IRS determination letter. To qualify for the 
distribution deadline in Sec. 4041.28(a)(1)(ii) (as modified and made 
applicable by Sec. 4041.50(c)), the plan administrator must submit to 
the IRS a valid request for a determination of the plan's qualification 
status upon termination (``determination letter'') by the day on which 
the plan administrator completes the issuance of the notices of benefit 
distribution.



Sec. 4041.49  Verification of plan sufficiency prior to closeout.

    (a) General rule. Before distributing plan assets pursuant to a 
closeout under Sec. 4041.50, the plan administrator must verify whether 
the plan's assets are still sufficient to provide for benefits at the 
level determined by the PBGC, i.e., guaranteed benefits or benefit 
liabilities. If the plan administrator finds that the plan is no longer 
able to provide for benefits at the level determined by the PBGC, then 
paragraph (b) or (c) of this section, as appropriate, will apply.
    (b) Subsequent insufficiency for guaranteed benefits. When a plan 
administrator finds that a plan is no longer sufficient for guaranteed 
benefits, the plan administrator must promptly notify the PBGC in 
writing of that fact and may take no further action to implement the 
plan termination, pending the PBGC's determination and notice pursuant 
to paragraph (b)(1) or (b)(2) of this section.
    (1) PBGC concurrence with finding. If the PBGC concurs with the plan 
administrator's finding, the distribution notice will be void, and the 
PBGC will--
    (i) Issue the plan administrator a notice of inability to determine 
sufficiency in accordance with Sec. 4041.47(b); and
    (ii) Require the plan administrator to submit a new valuation, 
certified to by an enrolled actuary, of the benefit liabilities and 
guaranteed benefits under the plan, valued in accordance with 
Secs. 4044.41 through 4044.57 of this chapter as of the date of the plan 
administrator's notice to the PBGC.
    (2) PBGC non-concurrence with finding. If the PBGC does not concur 
with

[[Page 814]]

the plan administrator's finding, it will so notify the plan 
administrator in writing, and the distribution notice will remain in 
effect.
    (c) Subsequent insufficiency for benefit liabilities. When a plan 
administrator finds that a plan is sufficient for guaranteed benefits 
but is no longer sufficient for benefit liabilities, the plan 
administrator must immediately notify the PBGC in writing of this fact, 
but must continue with the distribution of assets in accordance with 
Sec. 4041.50.
    (d) Finding by PBGC of subsequent insufficiency. In any case in 
which the PBGC finds on its own initiative that a subsequent 
insufficiency for guaranteed benefits has occurred, paragraph (b)(1) of 
this section will apply, except that the guaranteed benefits must be 
revalued as of the date of the PBGC's finding.
    (e) Restrictions upon finding of subsequent insufficiency. When the 
plan administrator makes the finding described in paragraph (b) of this 
section or receives notice that the PBGC has made the finding described 
in paragraph (d) of this section, the plan administrator is (except to 
the extent the PBGC otherwise directs) subject to the prohibitions in 
Sec. 4041.42.



Sec. 4041.50  Closeout of plan.

    If a plan administrator receives a distribution notice from the PBGC 
pursuant to Sec. 4041.47 and neither the plan administrator nor the PBGC 
makes the finding described in Sec. 4041.49(b) or (d), the plan 
administrator must distribute plan assets in accordance with 
Sec. 4041.28 and file a post-distribution certification in accordance 
with Sec. 4041.29, except that--
    (a) The term ``plan benefits'' is replaced with ``title IV 
benefits'';
    (b) For purposes of applying the distribution deadline in 
Sec. 4041.28(a)(1)(i), the phrase ``after the expiration of the PBGC's 
60-day (or extended) review period under Sec. 4041.26(a)'' is replaced 
with ``the day on which the plan administrator completes the issuance of 
the notices of benefit distribution pursuant to Sec. 4041.48(a)''; and
    (c) For purposes of applying the distribution deadline in 
Sec. 4041.28(a)(1)(ii), the phrase ``the requirements of 
Sec. 4041.25(c)'' is replaced with ``the requirements of 
Sec. 4041.48(d)''.



PART 4041A--TERMINATION OF MULTIEMPLOYER PLANS--Table of Contents




                      Subpart A--General Provisions

Sec.
4041A.1  Purpose and scope.
4041A.2  Definitions.
4041A.3  Submission of documents.

                    Subpart B--Notice of Termination

4041A.11  Requirement of notice.
4041A.12  Contents of notice.

                     Subpart C--Plan Sponsor Duties

4041A.21  General rule.
4041A.22  Payment of benefits.
4041A.23  Imposition and collection of withdrawal liability.
4041A.24  Annual plan valuations and monitoring.
4041A.25  Periodic determinations of plan solvency.
4041A.26  Financial assistance.
4041A.27  PBGC approval to pay benefits not otherwise permitted.

                 Subpart D--Closeout of Sufficient Plans

4041A.41  General rule.
4041A.42  Method of distribution.
4041A.43  Benefit forms.
4041A.44  Cessation of withdrawal liability.

    Authority: 29 U.S.C. 1302(b)(3), 1341a, 1441.

    Source: 61 FR 34052, July 1, 1996, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 4041A.1  Purpose and scope.

    The purpose of this part is to establish rules for notifying the 
PBGC of the termination of a multiemployer plan and rules for the 
administration of multiemployer plans that have terminated by mass 
withdrawal. Subpart B prescribes the contents of and procedures for 
filing a Notice of Termination for a multiemployer plan. Subpart C 
prescribes basic duties of plan sponsors of mass-withdrawal-terminated 
plans. (Other duties are prescribed in part 4281 of this chapter.) 
Subpart D contains procedures for closing out sufficient plans. This 
part applies to terminated multiemployer plans covered by title IV of 
ERISA but,

[[Page 815]]

in the case of subparts C and D, only to plans terminated by mass 
withdrawal under section 4041A(a)(2) of ERISA (including plans created 
by partition pursuant to section 4233 of ERISA).



Sec. 4041A.2  Definitions.

    The following terms are defined in Sec. 4001.1 of this chapter: 
annuity, ERISA, insurer, IRS, mass withdrawal, multiemployer plan, 
nonforfeitable benefit, PBGC, plan, and plan year.
    In addition, for purposes of this part:
    Available resources means, for a plan year, available resources as 
described in section 4245(b)(3) of ERISA.
    Benefits subject to reduction means those benefits accrued under 
plan amendments (or plans) adopted after March 26, 1980, or under 
collective bargaining agreements entered into after March 26, 1980, that 
are not eligible for the PBGC's guarantee under section 4022A(b) of 
ERISA.
    Financial assistance means financial assistance from the PBGC under 
section 4261 of ERISA.
    Insolvency benefit level means the greater of the resource benefit 
level or the benefit level guaranteed by the PBGC for each participant 
and beneficiary in pay status.
    Insolvency year means insolvency year as described in section 
4245(b)(4) of ERISA.
    Insolvent means that a plan is unable to pay benefits when due 
during the plan year. A plan terminated by mass withdrawal is not 
insolvent unless it has been amended to eliminate all benefits that are 
subject to reduction under section 4281(c) of ERISA, or, in the absence 
of an amendment, no benefits under the plan are subject to reduction 
under section 4281(c) of ERISA.
    Nonguaranteed benefits means those benefits that are eligible for 
the PBGC's guarantee under section 4022A(b) of ERISA, but exceed the 
guarantee limits under section 4022A(c).
    Resource benefit level means resource benefit level as described in 
section 4245(b)(2) of ERISA.

[61 FR 34052, July 1, 1996; 61 FR 36626, July 12, 1996]



Sec. 4041A.3  Submission of documents.

    (a) Filing date. Any notice, document, or information required to be 
filed with the PBGC under this part shall be deemed filed on the date of 
the postmark stamped on the cover in which the notice, document, or 
information is mailed, provided that the postmark was made by the United 
States Postal Service and the document was mailed postage prepaid, 
properly packaged and addressed to the PBGC. If these conditions are not 
met, the document is considered filed on the date it is received by the 
PBGC. Documents received after regular business hours are considered 
filed on the next regular business day.
    (b) Address. Any notice, document, or information required to be 
filed with the PBGC under this part shall be sent by mail or submitted 
by hand during normal working hours to Reports Processing, Insurance 
Operations Department, Pension Benefit Guaranty Corporation, 1200 K 
Street NW., Washington, DC 20005-4026.



                    Subpart B--Notice of Termination



Sec. 4041A.11  Requirement of notice.

    (a) General. A Notice of Termination shall be filed with the PBGC by 
a multiemployer plan when the plan has terminated as described in 
section 4041A(a) of ERISA.
    (b) Who shall file. The plan sponsor or a duly authorized 
representative acting on behalf of the plan sponsor shall sign and file 
the Notice.
    (c) When to file. (1) For a termination pursuant to a plan 
amendment, the Notice shall be filed with the PBGC within thirty days 
after the amendment is adopted or effective, whichever is later.
    (2) For a termination that results from a mass withdrawal, the 
Notice shall be filed with the PBGC within thirty days after the last 
employer withdrew from the plan or thirty days after the first day of 
the first plan year for which no employer contributions were required 
under the plan, whichever is earlier.

(Approved by the Office of Management and Budget under control number 
1212-0020)



Sec. 4041A.12  Contents of notice.

    (a) Information to be contained in notice. Except to the extent 
provided in paragraph (d), each Notice shall contain:

[[Page 816]]

    (1) The name of the plan;
    (2) The name, address and telephone number of the plan sponsor and 
of the plan sponsor's duly authorized representative, if any;
    (3) The name, address, and telephone number of the person that will 
administer the plan after the date of termination, if other than the 
plan sponsor;
    (4) A copy of the plan's most recent Form 5500 (Annual Report Form), 
including schedules; and
    (5) The date of termination of the plan.
    (b) Information to be contained in a notice involving a mass 
withdrawal. In addition to the information contained in paragraph (a) 
and except as provided in paragraph (d), the following information shall 
be contained in a Notice filed by a plan that has terminated by mass 
withdrawal:
    (1) A copy of the plan document in effect 5 years prior to the date 
of termination and copies of any amendments adopted after that date.
    (2) A copy (or copies) of the trust agreement (or agreements), if 
any, authorizing the plan sponsor to control and manage the operation 
and administration of the plan.
    (3) A copy of the most recent actuarial statement and opinion (if 
any) relating to the plan.
    (4) A statement of any material change in the assets or liabilities 
of the plan occurring after either the date of the actuarial statement 
referred to in item (5) or the date of the plan's Form 5500 submitted as 
part of the Notice.
    (5) Complete copies of any letters of determination issued by the 
IRS relating to the establishment of the plan, any letters of 
determination relating to the disqualification of the plan and any 
subsequent requalification, and any letters of determination relating to 
the termination of the plan.
    (6) A statement whether the plan assets will be sufficient to pay 
all benefits in pay status during the 12-month period following the date 
of termination.
    (7) If plan assets on hand are sufficient to satisfy all 
nonforfeitable benefits under the plan, and if the plan sponsor intends 
to distribute such assets, a brief description of the proposed method of 
distributing the plan assets.
    (8) If plan assets on hand are not sufficient to satisfy all 
nonforfeitable benefits under the plan, the name and address of any 
employer who contributed to the plan within 3 plan years prior to the 
date of termination.
    (c) Certification. As part of the Notice, the plan sponsor or duly 
authorized representatives shall certify that all information and 
documents submitted pursuant to this section are true and correct to the 
best of the plan sponsor's or representative's knowledge and belief.
    (d) Avoiding duplication. Information described in paragraphs (a) 
and (b) of this section need not be supplied if it duplicates 
information contained in Form 5500, or a schedule thereof, that a plan 
submits as part of the Notice.
    (e) Additional information. In addition to the information described 
in paragraphs (a) and (b) of this section, the PBGC may require the 
submission of any other information which the PBGC determines is 
necessary for review of a Notice of Termination.



                     Subpart C--Plan Sponsor Duties



Sec. 4041A.21  General rule.

    The plan sponsor of a multiemployer plan that terminates by mass 
withdrawal shall continue to administer the plan in accordance with 
applicable statutory provisions, regulations, and plan provisions until 
a trustee is appointed under section 4042 of ERISA or until plan assets 
are distributed in accordance with subpart D of this part. In addition, 
the plan sponsor shall be responsible for the specific duties described 
in this subpart.



Sec. 4041A.22  Payment of benefits.

    (a) Except as provided in paragraph (b), the plan sponsor shall pay 
any benefit attributable to employer contributions, other than a death 
benefit, only in the form of an annuity.
    (b) The plan sponsor may pay a benefit in a form other than an 
annuity if--
    (1) The plan distributes plan assets in accordance with subpart D of 
this part;
    (2) The PBGC approves the payment of the benefit in an alternative 
form pursuant to Sec. 4041A.27; or

[[Page 817]]

    (3) The value of the entire nonforfeitable benefit does not exceed 
$1,750.
    (c) Except to the extent provided in the next sentence, the plan 
sponsor shall not pay benefits in excess of the amount that is 
nonforfeitable under the plan as of the date of termination, unless 
authorized to do so by the PBGC pursuant to Sec. 4041A.27. Subject to 
the restriction stated in paragraph (d) of this section, however, the 
plan sponsor may pay a qualified preretirement survivor annuity with 
respect to a participant who died after the date of termination.
    (d) The payment of benefits subject to reduction shall be 
discontinued to the extent provided in Sec. 4281.31 if the plan sponsor 
determines, in accordance with Sec. 4041A.24, that the plan's assets are 
insufficient to provide all nonforfeitable benefits.
    (e) The plan sponsor shall, to the extent provided in Sec. 4281.41, 
suspend the payment of nonguaranteed benefits if the plan sponsor 
determines, in accordance with Sec. 4041A.25, that the plan is 
insolvent.
    (f) The plan sponsor shall, to the extent required by Sec. 4281.42, 
make retroactive payments of suspended benefits if it determines under 
that section that the level of the plan's available resources requires 
such payments.



Sec. 4041A.23  Imposition and collection of withdrawal liability.

    Until plan assets are distributed in accordance with subpart D of 
this part, or until the end of the plan year as of which the PBGC 
determines that plan assets (exclusive of claims for withdrawal 
liability) are sufficient to satisfy all nonforfeitable benefits under 
the plan, the plan sponsor shall be responsible for determining, 
imposing and collecting withdrawal liability (including the liability 
arising as a result of the mass withdrawal), in accordance with part 
4219, subpart C, of this chapter and sections 4201 through 4225 of 
ERISA.



Sec. 4041A.24  Annual plan valuations and monitoring.

    (a) Annual valuation. Not later than 150 days after the end of the 
plan year, the plan sponsor shall determine or cause to be determined in 
writing the value of nonforfeitable benefits under the plan and the 
value of the plan's assets, in accordance with part 4281, subpart B. 
This valuation shall be done as of the end of the plan year in which the 
plan terminates and each plan year thereafter (exclusive of a plan year 
for which the plan receives financial assistance from the PBGC under 
section 4261 of ERISA) up to but not including the plan year in which 
the plan is closed out in accordance with subpart D of this part.
    (b) Plan monitoring. Upon receipt of the annual valuation described 
in paragraph (a) of this section, the plan sponsor shall determine 
whether the value of nonforfeitable benefits exceeds the value of the 
plan's assets, including claims for withdrawal liability owed to the 
plan. When benefits do exceed assets, the plan sponsor shall--
    (1) If the plan provides benefits subject to reduction, amend the 
plan to reduce those benefits in accordance with the procedures in part 
4281, subpart C, of this chapter to the extent necessary to ensure that 
the plan's assets are sufficient to discharge when due all of the plan's 
obligations with respect to nonforfeitable benefits; or
    (2) If the plan provides no benefits subject to reduction, make 
periodic determinations of plan solvency in accordance with 
Sec. 4041A.25.
    (c) Notices of benefit reductions. The plan sponsor of a plan that 
has been amended to reduce benefits shall provide participants and 
beneficiaries and the PBGC notice of the benefit reduction in accordance 
with Sec. 4281.32.



Sec. 4041A.25  Periodic determinations of plan solvency.

    (a) Annual insolvency determination. The plan sponsor of a plan that 
has been amended to eliminate all benefits that are subject to reduction 
under section 4281(c) of ERISA shall determine in writing whether the 
plan is expected to be insolvent for the first plan year beginning after 
the effective date of the amendment and for each plan year thereafter. 
In the event that a plan adopts more than one amendment reducing 
benefits under section 4281(c) of ERISA, the initial determination shall 
be made for the first plan year beginning after the effective date of 
the

[[Page 818]]

amendment that effects the elimination of all such benefits, and a 
determination shall be made for each plan year thereafter. The plan 
sponsor of a plan under which no benefits are subject to reduction under 
section 4281(c) of ERISA as of the date the plan terminated shall 
determine in writing whether the plan is expected to be insolvent. The 
initial determination shall be made for the second plan year beginning 
after the first plan year for which it is determined under section 
4281(b) of ERISA that the value of nonforfeitable benefits under the 
plan exceeds the value of the plan's assets. The plan sponsor shall also 
make a solvency determination for each plan year thereafter. A 
determination required under this paragraph shall be made no later than 
six months before the beginning of the plan year to which it applies.
    (b) Other determination of insolvency. Whether or not a prior 
determination of plan solvency has been made under paragraph (a) of this 
section (or under section 4245 of ERISA), a plan sponsor that has reason 
to believe, taking into account the plan's recent and anticipated 
financial experience, that the plan is or may be insolvent for the 
current or next plan year shall determine in writing whether the plan is 
expected to be insolvent for that plan year.
    (c) Benefit suspensions. If the plan sponsor determines that the 
plan is, or is expected to be, insolvent for a plan year, it shall 
suspend benefits in accordance with Sec. 4281.41.
    (d) Insolvency notices. If the plan sponsor determines that the plan 
is, or is expected to be, insolvent for a plan year, it shall issue 
notices of insolvency or annual updates and notices of insolvency 
benefit level of the PBGC and to plan participants and beneficiaries in 
accordance with part 4281, subpart D.



Sec. 4041A.26  Financial assistance.

    A plan sponsor that determines a resource benefit level under 
section 4245(b)(2) of ERISA that is below the level of guaranteed 
benefits or that determines that the plan will be unable to pay 
guaranteed benefits for any month during an insolvency year shall apply 
for financial assistance from the PBGC in accordance with Sec. 4281.47.



Sec. 4041A.27  PBGC approval to pay benefits not otherwise permitted.

    Upon written application by the plan sponsor, the PBGC may authorize 
the plan to pay benefits other than nonforfeitable benefits or to pay 
benefits valued at more than $1,750 in a form other than an annuity. The 
PBGC will approve such payments if it determines that the plan sponsor 
has demonstrated that the payments are not adverse to the interests of 
the plan's participants and beneficiaries generally and do not 
unreasonably increase the PBGC's risk of loss with respect to the plan.



                 Subpart D--Closeout of Sufficient Plans



Sec. 4041A.41  General rule.

    If a plan's assets, excluding any claim of the plan for unpaid 
withdrawal liability, are sufficient to satisfy all obligations for 
nonforfeitable benefits provided under the plan, the plan sponsor may 
close out the plan in accordance with this subpart by distributing plan 
assets in full satisfaction of all nonforfeitable benefits under the 
plan.



Sec. 4041A.42  Method of distribution.

    The plan sponsor shall distribute plan assets by purchasing from an 
insurer contracts to provide all benefits required by Sec. 4041A.43 to 
be provided in annuity form and by paying in a lump sum (or other 
alternative elected by the participant) all other benefits.



Sec. 4041A.43  Benefit forms.

    (a) General rule. Except as provided in paragraph (b) of this 
section, the sponsor of a plan that is closed out shall provide for the 
payment of any benefit attributable to employer contributions only in 
the form of an annuity.
    (b) Exceptions. The plan sponsor may pay a benefit attributable to 
employer contributions in a form other than an annuity if:
    (1) The present value of the participant's entire nonforfeitable 
benefit, determined using the interest assumption

[[Page 819]]

under Secs. 4044.41 through 4044.57, does not exceed $5,000.
    (2) The payment is for death benefits provided under the plan.
    (3) The participant elects an alternative form of distribution under 
paragraph (c) of this section.
    (c) Alternative forms of distribution. The plan sponsor may allow 
participants to elect alternative forms of distribution in accordance 
with this paragraph. When a form of distribution is offered as an 
alternative to the normal form, the plan sponsor shall notify each 
participant, in writing, of the form and estimated amount of the 
participant's normal form of distribution. The notification shall also 
describe any risks attendant to the alternative form. Participants' 
elections of alternative forms shall be in writing.

[61 FR 34052, July 1, 1996, as amended at 63 FR 38306, July 16, 1998]



Sec. 4041A.44  Cessation of withdrawal liability.

    The obligation of an employer to make payments of initial withdrawal 
liability and mass withdrawal liability shall cease on the date on which 
the plan's assets are distributed in full satisfaction of all 
nonforfeitable benefits provided by the plan.



PART 4043--REPORTABLE EVENTS AND CERTAIN OTHER NOTIFICATION REQUIREMENTS--Table of Contents




                      Subpart A--General Provisions

Sec.
4043.1  Purpose and scope.
4043.2  Definitions.
4043.3  Requirement of notice.
4043.4  Waivers and extensions.
4043.5  How and where to file.
4043.6  Date of filing.
4043.7  Computation of time.
4043.8  Confidentiality.

            Subpart B--Post-Event Notice of Reportable Events

4043.20  Post-Event filing obligation.
4043.21  Tax disqualification and title I noncompliance.
4043.22  Amendment decreasing benefits payable.
4043.23  Active participant reduction.
4043.24  Termination or partial termination.
4043.25  Failure to make required minimum funding payment.
4043.26  Inability to pay benefits when due.
4043.27  Distribution to a substantial owner.
4043.28  Plan merger, consolidation, or transfer.
4043.29  Change in contributing sponsor or controlled group.
4043.30  Liquidation.
4043.31  Extraordinary dividend or stock redemption.
4043.32  Transfer of benefit liabilities.
4043.33  Application for minimum funding waiver.
4043.34  Loan default.
4043.35  Bankruptcy or similar settlement.

             Subpart C--Advance Notice of Reportable Events

4043.61  Advance reporting filing obligation.
4043.62  Change in contributing sponsor or controlled group.
4043.63  Liquidation.
4043.64  Extraordinary dividend or stock redemption.
4043.65  Transfer of benefit liabilities.
4043.66  Application for minimum funding waiver.
4043.67  Loan default.
4043.68  Bankruptcy or similar settlement.

       Subpart D--Notice of Failure To Make Required Contributions

4043.81  PBGC Form 200, notice of failure to make required 
          contributions; supplementary information.

    Authority: 29 U.S.C. 1082(f), 1302(b)(3), 1343.

    Source: 61 FR 63989, Dec. 2, 1996, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 4043.1  Purpose and scope.

    This part prescribes the requirements for notifying the PBGC of a 
reportable event under section 4043 of ERISA or of a failure to make 
certain required contributions under section 302(f)(4) of ERISA or 
section 412(n)(4) of the Code. Subpart A contains definitions and 
general rules. Subpart B contains rules for post-event notice of a 
reportable event. Subpart C contains rules for advance notice of a 
reportable event. Subpart D contains rules for notifying the PBGC of a 
failure to make certain required contributions.

[[Page 820]]



Sec. 4043.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
Code, contributing sponsor, controlled group, ERISA, fair market value, 
irrevocable commitment, multiemployer plan, notice of intent to 
terminate, PBGC, person, plan, plan administrator, proposed termination 
date, single-employer plan, and substantial owner.
    In addition, for purposes of this part:
    De minimis 10-percent segment means, in connection with a plan's 
controlled group, one or more entities that in the aggregate have for a 
fiscal year--
    (1) Revenue not exceeding 10 percent of the controlled group's 
revenue;
    (2) Annual operating income not exceeding the greatest of--
    (i) 10 percent of the controlled group's annual operating income;
    (ii) 5 percent of the controlled group's first $200 million in net 
tangible assets at the end of the fiscal year(s); or
    (iii) $5 million; and
    (3) Net tangible assets at the end of the fiscal year(s) not 
exceeding the greater of--
    (i) 10 percent of the controlled group's net tangible assets at the 
end of the fiscal year(s); or
    (ii) $5 million.
    De minimis 5-percent segment has the same meaning as a de minimis 
10-percent segment, except that ``5 percent'' is substituted for ``10 
percent'' each time it appears.
    Event year means the plan year in which the reportable event occurs.
    Fair market value of the plan's assets means the fair market value 
of the plan's assets as of the testing date for the applicable plan 
year, including contributions attributable to the previous plan year for 
funding purposes under section 302(c)(10) of ERISA or section 412(c)(10) 
of the Code if made by the earlier of the due date or filing date of the 
variable rate premium for the applicable plan year, but not to the 
extent contributions are used to satisfy the quarterly contribution 
requirements under section 302(e) of ERISA or section 412(m) of the Code 
for the applicable plan year.
    Foreign entity means a member of a controlled group that--
    (1) Is not a contributing sponsor of a plan;
    (2) Is not organized under the laws of (or, if an individual, is not 
a domiciliary of) any state (as defined in section 3(10) of ERISA); and
    (3) For the fiscal year that includes the date the reportable event 
occurs, meets one of the following tests--
    (i) Is not required to file any United States federal income tax 
form;
    (ii) Has no income reportable on any United States federal income 
tax form other than passive income not exceeding $1,000; or
    (iii) Does not own substantial assets in the United States 
(disregarding stock of a member of the plan's controlled group) and is 
not required to file any quarterly United States tax returns for 
employee withholding.
    Foreign-linked entity means a person that--
    (1) Is neither a foreign entity nor a contributing sponsor of a 
plan; and
    (2) Is a member of the plan's controlled group only because of 
ownership interests in or by foreign entities.
    Foreign parent means a foreign entity that is a direct or indirect 
parent of a person that is a contributing sponsor.
    Form 5500 due date means the deadline (including extensions) for 
filing the annual report under section 103 of ERISA.
    Notice date means the deadline (including extensions) for filing 
notice of the reportable event with the PBGC.
    Participant means a participant as defined in Sec. 4006.2.
    Public company means a person subject to the reporting requirements 
of section 13 or 15(d) of the Securities Exchange Act of 1934 or a 
subsidiary (as defined for purposes of the Securities Exchange Act of 
1934) of a person subject to such reporting requirements.
    Testing date means, with respect to a plan year--
    (1) The last day of the prior plan year, except as provided in 
paragraphs (2) or (3) of this definition;
    (2) In the case of a new or newly-covered plan (as defined in 
Sec. 4006.2 of this chapter), the first day of the plan year or, if 
later, the date on which the plan becomes effective for benefit accruals 
for future service; or
    (3) In the case of a plan described in Sec. 4006.5(e)(2) of this 
chapter (relating to

[[Page 821]]

certain mergers or spinoffs), the first day of the plan year.
    Ultimate parent means the parent at the highest level in the chain 
of corporations and/or other organizations constituting the parent-
subsidiary controlled group.
    Unfunded vested benefits means unfunded vested benefits determined 
in accordance with Sec. 4006.4 of this chapter, without regard to the 
exemptions and special rules in Sec. 4006.5(a)--(c) of this chapter. For 
purposes of subpart B only, unfunded vested benefits may be determined 
by subtracting the fair market value of the plan's assets from the 
plan's vested benefits amount.
    Variable rate premium means the portion of the premium determined 
under section 4006(a)(3)(E) of ERISA and Sec. 4006.3(b) of this chapter.
    Vested benefits amount means the vested benefits amount determined 
under Sec. 4006.4(b)(1) of this chapter.



Sec. 4043.3  Requirement of notice.

    (a) Obligation to file--(1) In general. Each person that is required 
to file a notice under this part, or a duly authorized representative, 
shall submit the information required by this part by the time specified 
in Sec. 4043.20 (for post-event notice), Sec. 4043.61 (for advance 
notice), or Sec. 4043.81 (for Form 200 filings). Any information 
previously filed with the PBGC may be incorporated by reference.
    (2) Multiple plans. If a reportable event occurs for more than one 
plan, the filing obligation with respect to each plan is independent of 
the filing obligation with respect to any other plan.
    (3) Optional consolidated filing. A filing by any person will be 
deemed to be a filing by all persons required to notify the PBGC under 
this part. If notices are required for two or more events, the notices 
may be combined in one filing.
    (b) Contents of reportable event notice. A person required to file a 
reportable event notice shall provide, by the notice date, the following 
general information, along with any other information required for each 
reportable event under subpart B or C of this part:
    (1) The name of the plan;
    (2) The name, address, and telephone number of the contributing 
sponsor(s) and of an individual that should be contacted;
    (3) The name, address, and telephone number of the plan 
administrator and of an individual that should be contacted;
    (4) The EIN of the contributing sponsor and the EIN/PN of the plan;
    (5) A brief statement of the pertinent facts relating to the 
reportable event;
    (6) A copy of the plan document in effect, i.e., the last 
restatement of the plan and all amendments thereto;
    (7) A copy of the most recent actuarial statement and opinion (if 
any) relating to the plan; and
    (8) A statement of any material change in the assets or liabilities 
of the plan occurring after the date of the most recent actuarial 
statement and opinion.
    (c) Optional reportable event forms. The PBGC shall issue optional 
reportable events forms, which may provide for reduced initial 
information submissions.
    (d) Requests for additional information. The PBGC may, in any case, 
require the submission of additional information. Any such information 
shall be submitted for subpart B of this part within 30 days, and for 
subpart C or D of this part within 7 days, after the date of a written 
request by the PBGC, or within a different time period specified 
therein. The PBGC may in its discretion shorten the time period where it 
determines that the interests of the PBGC or participants may be 
prejudiced by a delay in receipt of the information.
    (e) Effect of failure to file. If a notice (or any other information 
required under this part) is not provided within the specified time 
limit, the PBGC may assess against each person required to provide the 
notice a separate penalty under section 4071 of ERISA of up to $1,100 a 
day for each day that the failure continues. The PBGC may pursue any 
other equitable or legal remedies available to it under the law.

[61 FR 63989, Dec. 2, 1996, as amended at 62 FR 36994, July 10, 1997]

[[Page 822]]



Sec. 4043.4  Waivers and extensions.

    (a) Specific events. For specific reportable events, waivers from 
reporting and information requirements and extensions of time are 
provided in subparts B and C of this part. If an occurrence constitutes 
two or more reportable events, reporting requirements for each event are 
determined independently. For example, any event reportable under more 
than one section will be exempt from reporting only if it satisfies the 
requirements for a waiver under each section.
    (b) Multiemployer plans. The requirements of section 4043 of ERISA 
are waived with respect to multiemployer plans.
    (c) Terminating plans. No notice is required from the plan 
administrator or contributing sponsor of a plan if the notice date is on 
or after the date on which--
    (1) All of the plan's assets (other than any excess assets) are 
distributed pursuant to a termination; or
    (2) A trustee is appointed for the plan under section 4042(c) of 
ERISA.
    (d) Other waivers and extensions. The PBGC may extend any deadline 
or waive any other requirement under this part where it finds convincing 
evidence that the waiver or extension is appropriate under the 
circumstances. Any waiver or extension may be subject to conditions. A 
request for a waiver or extension must be filed in writing with the PBGC 
and must state the facts and circumstances on which the request is 
based.



Sec. 4043.5  How and where to file.

    Requests and information shall be filed in accordance with the 
instructions to the applicable PBGC reporting form.



Sec. 4043.6  Date of filing.

    (a) Post-event notice. Information filed under subpart B of this 
part is considered filed--
    (1) On the date of the United States postmark stamped on the cover 
in which the information is mailed, if--
    (i) The postmark was made by the United States Postal Service; and
    (ii) The document was mailed postage prepaid, properly addressed to 
the PBGC;
    (2) On the date it is deposited for delivery to the PBGC with a 
commercial delivery service, provided it is received by the PBGC within 
two regular business days; or
    (3) Except as provided in paragraphs (a)(1) and (a)(2), on the date 
it is received by the PBGC.
    (b) Advance notice and Form 200 filings. Information filed under 
subpart C or D of this part is considered filed on the date it is 
received by PBGC.
    (c) Electronic filing. A reportable event notice or Form 200 will be 
deemed timely filed if--
    (1) An electronic transmission containing at least the minimum 
initial information (as specified in the instruction to the applicable 
form) is filed on or before the notice date; and
    (2) The remaining initial information is received by the PBGC on or 
before--
    (i) The first regular business day following the notice date, in the 
case of advance notice or a Form 200; or
    (ii) The second regular business day following the notice date, in 
the case of post-event notice.
    (d) Receipt date. Information received on a weekend or Federal 
holiday or after 5:00 p.m. on a weekday is considered filed on the next 
regular business day.



Sec. 4043.7  Computation of time.

    In computing any period of time, the day of the event from which the 
period of time begins to run shall not be included. The last day so 
computed shall be included, unless it is a weekend or Federal holiday, 
in which case the period runs until the end of the next regular business 
day.



Sec. 4043.8  Confidentiality.

    In accordance with section 4043(f) of ERISA and Sec. 4901.21(a)(3) 
of this chapter, any information or documentary material that is not 
publicly available and is submitted to the PBGC pursuant to this part 
shall not be made public, except as may be relevant to any 
administrative or judicial action or proceeding or for disclosures to 
either body of Congress or to any duly authorized committee or 
subcommittee of the Congress.

[[Page 823]]



            Subpart B--Post-Event Notice of Reportable Events



Sec. 4043.20  Post-Event filing obligation.

    The plan administrator and each contributing sponsor of a plan for 
which a reportable event under this subpart has occurred are required to 
notify the PBGC within 30 days after that person knows or has reason to 
know that the reportable event has occurred, unless a waiver or 
extension applies. If there is a change in plan administrator or 
contributing sponsor, the reporting obligation applies to the person who 
is the plan administrator or contributing sponsor of the plan on the 
30th day after the reportable event occurs.



Sec. 4043.21  Tax disqualification and title I noncompliance.

    (a) Reportable event. A reportable event occurs when the Secretary 
of the Treasury issues notice that a plan has ceased to be a plan 
described in section 4021(a)(2) of ERISA, or when the Secretary of Labor 
determines that a plan is not in compliance with title I of ERISA.
    (b) Waivers. Notice is waived for this event.



Sec. 4043.22  Amendment decreasing benefits payable.

    (a) Reportable event. A reportable event occurs when an amendment to 
a plan is adopted under which the retirement benefit payable from 
employer contributions with respect to any participant may be decreased.
    (b) Waivers. Notice is waived for this event.



Sec. 4043.23  Active participant reduction.

    (a) Reportable event. A reportable event occurs when the number of 
active participants under a plan is reduced to less than 80 percent of 
the number of active participants at the beginning of the plan year, or 
to less than 75 percent of the number of active participants at the 
beginning of the previous plan year.
    (b) Initial information required. In addition to the information in 
Sec. 4043.3(b), the notice shall include--
    (1) A statement explaining the cause of the reduction (e.g., 
facility shutdown or sale); and
    (2) The number of active participants at the date the reportable 
event occurs, at the beginning of the plan year, and at the beginning of 
the prior plan year.
    (c) Waivers--(1) Small plan. Notice is waived if the plan has fewer 
than 100 participants at the beginning of either the current or the 
previous plan year.
    (2) Plan funding. Notice is waived if--
    (i) No variable rate premium. No variable rate premium is required 
to be paid for the plan for the event year;
    (ii) $1 million unfunded vested benefits. As of the testing date for 
the event year, the plan has less than $1 million in unfunded vested 
benefits; or
    (iii) No unfunded vested benefits. As of the testing date for the 
event year, the plan would have no unfunded vested benefits if unfunded 
vested benefits were determined in accordance with the assumptions and 
methodology in Sec. 4010.4(b)(2) of this chapter.
    (3) No facility closing event/80-percent funded. Notice is waived 
if--
    (i) The active participant reduction would not be reportable if only 
those active participant reductions resulting from cessation of 
operations at one or more facilities were taken into account; and
    (ii) As of the testing date for the event year, the fair market 
value of the plan's assets is at least 80 percent of the plan's vested 
benefits amount.
    (d) Extensions. The notice date is extended to the latest of--
    (1) Form 1 extension. 30 days after the plan's variable rate premium 
filing due date for the event year if a waiver under any of paragraphs 
(c)(2)(i) through (c)(2)(iii) or (c)(3) of this section would apply if 
``the plan year preceding the event year'' were substituted for ``the 
event year'';
    (2) Form 5500 extension. 30 days after the plan's Form 5500 due date 
that next follows the date the reportable event occurs, provided the 
event would not be reportable counting only those participant reductions 
resulting from cessation of operations at a single facility; and
    (3) Form 1-ES extension. The due date for the Form 1-ES for the plan 
year following the event year if--
    (i) The plan is required to file a Form 1-ES for the plan year 
following the event year;

[[Page 824]]

    (ii) The event would not be reportable counting only those 
participant reductions resulting from cessation of operations at a 
single facility; and
    (iii) The participant reduction represents no more than 20 percent 
of the total active participants (at the beginning of the plan year(s) 
in which the reduction occurs) in all plans maintained by any member of 
the plan's controlled group.
    (e) Determination of the number of active participants--(1) 
Determination date. The number of active participants at the beginning 
of a plan year may be determined by using the number of active 
participants at the end of the previous plan year.
    (2) Active participant. ``Active participant'' means a participant 
who--
    (i) Is receiving compensation for work performed;
    (ii) Is on paid or unpaid leave granted for a reason other than a 
layoff;
    (iii) Is laid off from work for a period of time that has lasted 
less than 30 days; or
    (iv) Is absent from work due to a recurring reduction in employment 
that occurs at least annually.



Sec. 4043.24  Termination or partial termination.

    (a) Reportable event. A reportable event occurs when the Secretary 
of the Treasury determines that there has been a termination or partial 
termination of a plan within the meaning of section 411(d)(3) of the 
Code.
    (b) Waivers. Notice is waived for this event.



Sec. 4043.25  Failure to make required minimum funding payment.

    (a) Reportable event. A reportable event occurs when a required 
installment or a payment required under section 302 of ERISA or section 
412 of the Code (including a payment required as a condition of a 
funding waiver) is not made by the due date for the payment. In the case 
of a payment needed to avoid a deficiency in the plan's funding standard 
account, the due date is the latest date such payment may be made under 
section 302(c)(10)(A) of ERISA or section 412(c)(10)(A) of the Code.
    (b) Initial information required. In addition to the information in 
Sec. 4043.3(b), the notice shall include--
    (1) The due date and amount of the required minimum funding payment 
that was not made and of the next payment due;
    (2) The name of each member of the plan's controlled group and its 
ownership relationship to other members of that controlled group; and
    (3) For each other plan maintained by any member of the plan's 
controlled group, identification of the plan and its contributing 
sponsor(s) by name and EIN/PN or EIN, as appropriate.
    (c) Waiver. Notice is waived if the required minimum funding payment 
is made by the 30th day after its due date.
    (d) Form 200 filed. If, with respect to the same failure, a Form 200 
has been completed and submitted in accordance with Sec. 4043.81, the 
Form 200 filing shall satisfy the requirements of this section.



Sec. 4043.26  Inability to pay benefits when due.

    (a) Reportable event. A reportable event occurs when a plan is 
currently unable or projected to be unable to pay benefits.
    (1) Current inability. A plan is currently unable to pay benefits if 
it fails to provide any participant or beneficiary the full benefits to 
which the person is entitled under the terms of the plan, at the time 
the benefit is due and in the form in which it is due. A plan shall not 
be treated as being currently unable to pay benefits if its failure to 
pay is caused solely by the need to verify the person's eligibility for 
benefits; the inability to locate the person; or any other 
administrative delay if the delay is for less than the shorter of two 
months or two full benefit payment periods.
    (2) Projected inability. A plan is projected to be unable to pay 
benefits when, as of the last day of any quarter of a plan year, the 
plan's ``liquid assets'' are less than two times the amount of the 
``disbursements from the plan'' for such quarter. Liquid assets and 
disbursements from the plan have the same meaning as under section 
302(e)(5)(E) of ERISA and section 412(m)(5)(E) of the Code.

[[Page 825]]

    (b) Initial information required. In addition to the information in 
Sec. 4043.3(b), the notice shall include--
    (1) The date of any current inability and the amount of benefit 
payments not made;
    (2) The next date on which the plan is expected to be unable to pay 
benefits, the amount of the projected shortfall, and the number of plan 
participants and beneficiaries expected to be affected by the inability 
to pay benefits;
    (3) For a projected inability described in paragraph (a)(2), the 
amount of the plan's liquid assets at the end of the quarter, and the 
amount of its disbursements for the quarter; and
    (4) The name, address, and phone number of the trustee of the plan 
(and of any custodian).
    (c) Waivers. Notice is waived unless the reportable event occurs 
during a plan year for which the plan is described in section 
302(d)(6)(A) of ERISA or section 412(l)(6)(A) of the Code.



Sec. 4043.27  Distribution to a substantial owner.

    (a) Reportable event. A reportable event occurs for a plan when--
    (1) There is a distribution to a substantial owner of a contributing 
sponsor of the plan;
    (2) The total of all distributions made to the substantial owner 
within the one-year period ending with the date of such distribution 
exceeds $10,000;
    (3) The distribution is not made by reason of the substantial 
owner's death; and
    (4) Immediately after the distribution, the plan has nonforfeitable 
benefits (as provided in Sec. 4022.5) that are not funded.
    (b) Initial information required. In addition to the information in 
Sec. 4043.3(b), the notice shall include--
    (1) The name, address and telephone number of the substantial owner 
receiving the distribution(s); and
    (2) The amount, form, and date of each distribution.
    (c) Waivers--(1) Distribution up to section 415 limit. Notice is 
waived if the total of all distributions made to the substantial owner 
within the one-year period ending with the date of the distribution does 
not exceed the limitation (as of the date the reportable event occurs) 
under section 415(b)(1)(A) of the Code (as adjusted in accordance with 
section 415(d)) when expressed as an annual benefit in the form of a 
straight life annuity to a participant beginning at Social Security 
retirement age ($120,000 for calendar year 1996).
    (2) Plan funding. Notice is waived if--
    (i) No variable rate premium. No variable rate premium is required 
to be paid for the plan for the event year;
    (ii) No unfunded vested benefits. As of the testing date for the 
event year, the plan would have no unfunded vested benefits if unfunded 
vested benefits were determined in accordance with the assumptions and 
methodology in Sec. 4010.4(b)(2) of this chapter; or
    (iii) 80-percent funded. As of the testing date for the event year, 
the fair market value of the plan's assets is at least 80 percent of the 
plan's vested benefits amount.
    (3) Distribution up to one percent of assets. Notice is waived if 
the sum of the values of all distributions that are made to the 
substantial owner within the one-year period ending with the date of the 
distribution is one percent or less of the end-of-year current value of 
the plan's assets (as required to be reported on the plan's Form 5500) 
for either of the two plan years immediately preceding the event year.
    (d) Form 1 extension. The notice date is extended until 30 days 
after the plan's variable rate premium filing due date for the event 
year, provided that a waiver under any of paragraphs (c)(2)(i) through 
(c)(2)(iii) of this section would apply if ``the plan year preceding the 
event year'' were substituted for ``the event year.''
    (e) Determination rules--(1) Valuation of distribution. The value of 
a distribution under this section is the sum of--
    (i) The cash amounts actually received by the substantial owner;
    (ii) The purchase price of any irrevocable commitment; and
    (iii) The fair market value of any other assets distributed, 
determined as of the date of distribution to the substantial owner.
    (2) Date of substantial owner distribution. The date of distribution 
to a substantial owner of a cash distribution is

[[Page 826]]

the date it is received by the substantial owner. The date of 
distribution to a substantial owner of an irrevocable commitment is the 
date on which the obligation to provide benefits passes from the plan to 
the insurer. The date of any other distribution to a substantial owner 
is the date when the plan relinquishes control over the assets 
transferred directly or indirectly to the substantial owner.
    (3) Determination date. The determination of whether a participant 
is (or has been in the preceding 60 months) a substantial owner is made 
on the date when there has been a distribution that would be reportable 
under this section if made to a substantial owner.



Sec. 4043.28  Plan merger, consolidation, or transfer.

    (a) Reportable event. A reportable event occurs when a plan merges, 
consolidates, or transfers its assets or liabilities under section 208 
of ERISA or section 414(1) of the Code.
    (b) Waivers. Notice is waived for this event. However, notice may be 
required under Sec. 4043.29 (for a controlled group change) or 
Sec. 4043.32 (for a transfer of benefit liabilities).



Sec. 4043.29  Change in contributing sponsor or controlled group.

    (a) Reportable event. A reportable event occurs for a plan when 
there is a transaction that results, or will result, in one or more 
persons ceasing to be members of the plan's controlled group. For 
purposes of this section, the term ``transaction'' includes, but is not 
limited to, a legally binding agreement, whether or not written, to 
transfer ownership, an actual transfer of ownership, and an actual 
change in ownership that occurs as a matter of law or through the 
exercise or lapse of pre-existing rights. A transaction is not 
reportable if it will result solely in a reorganization involving a mere 
change in identity, form, or place of organization, however effected.
    (b) Initial information required. In addition to the information in 
Sec. 4043.3(b), the notice shall include--
    (1) The name of each member of the plan's old and new controlled 
groups and the member's ownership relationship to other members of those 
groups;
    (2) For each other plan maintained by any member of the plan's old 
or new controlled group, identification of the plan and its contributing 
sponsor(s) by name and EIN/PN or EIN, as appropriate; and
    (3) A copy of the most recent audited (or if not available, 
unaudited) financial statements, and the most recent interim financial 
statements, of the plan's contributing sponsor (both old and new, in the 
case of a change in the contributing sponsor) and any persons that will 
cease to be in the plan's controlled group.
    (c) Waivers--(1) De minimis 10-percent segment. Notice is waived if 
the person or persons that will cease to be members of the plan's 
controlled group represent a de minimis 10-percent segment of the plan's 
old controlled group for the most recent fiscal year(s) ending on or 
before the date the reportable event occurs.
    (2) Foreign entity. Notice is waived if each person that will cease 
to be a member of the plan's controlled group is a foreign entity other 
than a foreign parent.
    (3) Plan funding. Notice is waived if--
    (i) No variable rate premium. No variable rate premium is required 
to be paid for the plan for the event year;
    (ii) $1 million unfunded vested benefits. As of the testing date for 
the event year, the plan has less than $1 million in unfunded vested 
benefits; or
    (iii) No unfunded vested benefits. As of the testing date for the 
event year, the plan would have no unfunded vested benefits if unfunded 
vested benefits were determined in accordance with the assumptions and 
methodology in Sec. 4010.4(b)(2) of this chapter.
    (4) Public company/80-percent funded. Notice is waived if--
    (i) The plan's contributing sponsor before the effective date of the 
transaction is a public company; and
    (ii) As of the testing date for the event year, the fair market 
value of the plan's assets is at least 80 percent of the plan's vested 
benefits amount.
    (d) Extensions. The notice date is extended to the latest of--
    (1) Form 1 extension. 30 days after the plan's variable rate premium 
filing due date for the event year if a waiver under any of paragraphs 
(c)(3)(i)

[[Page 827]]

through (c)(3)(iii) or (c)(4) of this section would apply if ``the plan 
year preceding the event year'' were substituted for ``the event year';
    (2) Foreign parent and foreign-linked entities. With respect to a 
transaction in which only foreign parents or foreign-linked entities 
will cease to be members of the plan's controlled group, 30 days after 
the plan's first Form 5500 due date after the person required to notify 
the PBGC has actual knowledge of the transaction and of the controlled 
group relationship; and
    (3) Press releases; Forms 10Q. If the plan's contributing sponsor 
before the effective date of the transaction is a public company, 30 
days after the earlier of--
    (i) The first Form 10Q filing deadline that occurs after the 
transaction; or
    (ii) The date (if any) when a press release with respect to the 
transaction is issued.
    (e) Examples. The following examples assume that no waivers apply.
    (1) Controlled group breakup. Plan A's controlled group consists of 
Company A (its contributing sponsor), Company B (which maintains Plan 
B), and Company C. As a result of a transaction, the controlled group 
will break into two separate controlled groups--one segment consisting 
of Company A and the other segment consisting of Companies B and C. Both 
Company A (Plan A's contributing sponsor) and the plan administrator of 
plan A are required to report that Companies B and C will leave plan A's 
controlled group. Company B (Plan B's contributing sponsor) and the plan 
administrator of Plan B are required to report that Company A will leave 
Plan B's controlled group. Company C is not required to report because 
it is not a contributing sponsor or a plan administrator.
    (2) Change in contributing sponsor. Plan Q is maintained by Company 
Q. Company Q enters into a binding contract to sell a portion of its 
assets and to transfer employees participating in Plan Q, along with 
Plan Q, to Company R, which is not a member of Company Q's controlled 
group. There will be no change in the structure of Company Q's 
controlled group. On the effective date of the sale, Company R will 
become the contributing sponsor of Plan Q. A reportable event occurs on 
the date of the transaction (i.e., the binding contract), because as a 
result of the transaction, Company Q (and any other member of its 
controlled group) will cease to be a member of Plan Q's controlled 
group. If, on the 30th day after Company Q and Company R enter into the 
binding contract, the change in the contributing sponsor has not yet 
become effective, Company Q has the reporting obligation. If the change 
in the contributing sponsor has become effective by the 30th day, 
Company R has the reporting obligation.
    (3) Merger/consolidation within a controlled group. Company X and 
Company Y are subsidiaries of Company Z, which maintains Plan Z. Company 
Y merges into Company X (only Company X survives). Company Z and the 
plan administrator of Plan Z must report that Company Y has ceased to be 
a member of Plan Z's controlled group.



Sec. 4043.30  Liquidation.

    (a) Reportable event. A reportable event occurs for a plan when a 
member of the plan's controlled group--
    (1) Is involved in any transaction to implement its complete 
liquidation (including liquidation into another controlled group 
member);
    (2) Institutes or has instituted against it a proceeding to be 
dissolved or is dissolved, whichever occurs first; or
    (3) Liquidates in a case under the Bankruptcy Code, or under any 
similar law.
    (b) Initial information required. In addition to the information in 
Sec. 4043.3(b), the notice shall include--
    (1) The name of each member of the plan's controlled group before 
and after the liquidation and its ownership relationship to other 
members of that controlled group; and
    (2) For each other plan maintained by any member of the plan's 
controlled group, identification of the plan and its contributing 
sponsor(s) by name and EIN/PN or EIN, as appropriate.
    (c) Waivers--(1) De minimis 10-percent segment. Notice is waived if-
-
    (i) The person or persons that liquidate represent a de minimis 10-
percent segment of the plan's controlled group for the most recent 
fiscal year(s)

[[Page 828]]

ending on or before the date the reportable event occurs; and
    (ii) Each plan that was maintained by the liquidating member is 
maintained by another member of the plan's controlled group after the 
liquidation.
    (2) Foreign entity. Notice is waived if each person that liquidates 
is a foreign entity other than a foreign parent.
    (3) Plan funding. Notice is waived if each plan that was maintained 
by the liquidating member is maintained by another member of the plan's 
controlled group after the liquidation and--
    (i) No variable rate premium. No variable rate premium is required 
to be paid for the plan for the event year;
    (ii) $1 million unfunded vested benefits. As of the testing date for 
the event year, the plan has less than $1 million in unfunded vested 
benefits; or
    (iii) No unfunded vested benefits. As of the testing date for the 
event year, the plan would have no unfunded vested benefits if unfunded 
vested benefits were determined in accordance with the assumptions and 
methodology in Sec. 4010.4(b)(2) of this chapter.
    (4) Public company/80-percent funded. Notice is waived if--
    (i) The plan's contributing sponsor is a public company;
    (ii) As of the testing date for the event year, the fair market 
value of the plan's assets is at least 80 percent of the plan's vested 
benefits amount; and
    (iii) Each plan that was maintained by the liquidating member is 
maintained by another member of the plan's controlled group after the 
liquidation.
    (d) Extensions. The notice date is extended to the latest of--
    (1) Form 1 extension. 30 days after the plan's variable rate premium 
filing due date for the event year if a waiver under any of paragraphs 
(c)(3)(i) through (c)(3)(iii) or (c)(4) of this section would apply if 
``the plan year preceding the event year'' were substituted for ``the 
event year';
    (2) Foreign parent and foreign-linked entity. 30 days after the 
plan's first Form 5500 due date after the person required to notify the 
PBGC has actual knowledge of the transaction and of the controlled group 
relationship, if the person liquidating is a foreign parent or foreign-
linked entity; and
    (3) Press releases; Forms 100. If the plan's contributing sponsor is 
a public company, 30 days after the earlier of--
    (i) The first Form 10Q filing deadline that occurs after the 
transaction; or
    (ii) The date (if any) when a press release with respect to the 
transaction is issued.



Sec. 4043.31  Extraordinary dividend or stock redemption.

    (a) Reportable event. A reportable event occurs for a plan when any 
member of the plan's controlled group declares a dividend (as defined in 
paragraph (e)(3) of this section) or redeems its own stock, if the 
resulting distribution is reportable under this paragraph.
    (1) Cash distributions. A cash distribution is reportable if--
    (i) The distribution, when combined with any other cash 
distributions to shareholders previously made during the fiscal year, 
exceeds the adjusted net income (as defined in paragraph (e)(1) of this 
section) of the person making the distribution for the preceding fiscal 
year; and
    (ii) The distribution, when combined with any other cash 
distributions to shareholders previously made during the fiscal year or 
during the three prior fiscal years, exceeds the adjusted net income (as 
defined in paragraph (e)(1) of this section) of the person making the 
distribution for the four preceding fiscal years.
    (2) Non-cash distributions. A non-cash distribution is reportable if 
its net value (as defined in paragraph (e)(4) of this section), when 
combined with the net value of any other non-cash distributions to 
shareholders previously made during the fiscal year, exceeds 10 percent 
of the total net assets (as defined in paragraph (e)(6) of this section) 
of the person making the distribution.
    (3) Combined distributions. If both cash and non-cash distributions 
to shareholders are made during a fiscal year, a distribution is 
reportable when the sum of the cash distribution percentage (as defined 
in paragraph (e)(2) of this section) and the non-cash distribution 
percentages (as defined in paragraph (e)(5) of this section) for the 
fiscal year exceeds 100 percent.

[[Page 829]]

    (b) Information required. In addition to the information in 
Sec. 4043.5(b), the notice shall include--
    (1) Identification of the person making the distribution (by name 
and EIN); and
    (2) The date and amount of any cash distribution during the fiscal 
year;
    (3) A description of any non-cash distribution during the fiscal 
year, the fair market value of each asset distributed, and the date or 
dates of distribution; and
    (4) A statement as to whether the recipient was a member of the 
plan's controlled group.
    (c) Waivers--(1) Extraordinary dividends and stock redemptions. The 
reportable event described in section 4043(c)(11) of ERISA related to 
extraordinary dividends and stock redemptions is waived except to the 
extent reporting is required under this section.
    (2) De minimis 5-percent segment. Notice is waived if the person 
making the distribution is a de minimis 5-percent segment of the plan's 
controlled group for the most recent fiscal year(s) ending on or before 
the date the reportable event occurs.
    (3) Foreign entity. Notice is waived if the person making the 
distribution is a foreign entity other than a foreign parent.
    (4) Foreign parent. Notice is waived if the person making the 
distribution is a foreign parent, and the distribution is made solely to 
other members of the plan's controlled group.
    (5) Plan funding. Notice is waived if--
    (i) No variable rate premium. No variable rate premium is required 
to be paid for the plan for the event year;
    (ii) $1 million unfunded vested benefits. As of the testing date for 
the event year, the plan has less than $1 million in unfunded vested 
benefits;
    (iii) No unfunded vested benefits. As of the testing date for the 
event year, the plan would have no unfunded vested benefits if unfunded 
vested benefits were determined in accordance with the assumptions and 
methodology in Sec. 4010.4(b)(2) of this chapter; or
    (iv) 80-percent funded. As of the testing date for the event year, 
the fair market value of the plan's assets is at least 80 percent of the 
plan's vested benefits amount.
    (d) Extensions. The notice date is extended to the latest of--
    (1) Form 1 extension. 30 days after the plan's variable rate premium 
filing due date for the event year if a waiver under any of paragraphs 
(c)(5)(i) through (c)(5)(iv) of this section would apply if ``the plan 
year preceding the event year'' were substituted for ``the event year';
    (2) Foreign parent and foreign-linked entity. 30 days after the 
plan's first Form 5500 due date after the person required to notify the 
PBGC has actual knowledge of the distribution and the controlled group 
relationship, if the person making the distribution is a foreign parent 
or foreign-linked entity; and
    (3) Press releases; Forms 10Q. If the plan's contributing sponsor is 
a public company, 30 days after the earlier of--
    (i) The first Form 10Q filing deadline that occurs after the 
distribution; or
    (ii) The date (if any) when a press release with respect to the 
distribution is issued.
    (e) Definitions--(1) Adjusted net income means the net income before 
after-tax gain or loss on any sale of assets, as determined in 
accordance with generally accepted accounting principles and practices.
    (2) Cash distribution percentage means, for a fiscal year, the 
lesser of--
    (i) The percentage that all cash distributions to one or more 
shareholders made during that fiscal year bears to the adjusted net 
income (as defined in paragraph (e)(1) of this section) of the person 
making the distributions for the preceding fiscal year, or
    (ii) The percentage that all cash distributions to one or more 
shareholders made during that fiscal year and the three preceding fiscal 
years bears to the adjusted net income (as defined in paragraph (e)(1) 
of this section) of the person making the distributions for the four 
preceding fiscal years.
    (3) Dividend means a distribution to one or more shareholders. A 
payment by a person to a member of its controlled group is treated as a 
distribution to its shareholder(s).
    (4) Net value of non-cash distribution means the fair market value 
of assets transferred by the person making the

[[Page 830]]

distribution, reduced by the fair market value of any liabilities 
assumed or consideration given by the recipient in connection with the 
distribution. A distribution of stock that one controlled group member 
holds in another controlled group member is disregarded. Net value 
determinations should be based on readily available fair market value(s) 
or independent appraisal(s) performed within one year before the 
distribution is made. To the extent that fair market values are not 
readily available and no such appraisals exist, the fair market value of 
an asset transferred in connection with a distribution or a liability 
assumed by a recipient of a distribution shall be deemed to be equal to 
200 percent of the book value of the asset or liability on the books of 
the person making the distribution. Stock redeemed is deemed to have no 
value.
    (5) Non-cash distribution percentage means the percentage that the 
net value of the non-cash distribution bears to one-tenth of the value 
of the total net assets (as defined in paragraph (e)(6) of this section) 
of the person making the distribution.
    (6) Total net assets means, with respect to the person declaring a 
non-cash distribution--
    (i) If all classes of the person's securities are publicly traded, 
the total market value (immediately before the distribution is made) of 
the publicly-traded securities of the person making the distribution;
    (ii) If no classes of the person's securities are publicly traded, 
the excess (immediately before the distribution is made) of the book 
value of the person's assets over the book value of the person's 
liabilities, adjusted to reflect the net value of the non-cash 
distribution; or
    (iii) If some but not all classes of the person's securities are 
publicly traded, the greater of the amounts in paragraphs (e)(6)(i) or 
(ii) of this section.



Sec. 4043.32  Transfer of benefit liabilities.

    (a) Reportable event--(1) In general. A reportable event occurs for 
a plan when--
    (i) The plan or any other plan maintained by a person in the plan's 
controlled group makes a transfer of benefit liabilities to a person, or 
to a plan or plans maintained by a person or persons, that are not 
members of the transferor plan's controlled group; and
    (ii) The amount of benefit liabilities transferred, in conjunction 
with other benefit liabilities transferred during the 12-month period 
ending on the date of the transfer, is 3 percent or more of the plan's 
total benefit liabilities. Both the benefit liabilities transferred and 
the plan's total benefit liabilities shall be valued as of any one date 
in the plan year in which the transfer occurs, using actuarial 
assumptions that comply with section 414(l) of the Code.
    (2) Date of transfer. The date of transfer shall be determined on 
the basis of the facts and circumstances of the particular situation. 
For transfers subject to the requirements of section 414(l) of the Code, 
the date determined in accordance with 26 CFR 1.414(l)-1(b)(11) will be 
considered the date of transfer.
    (b) Initial information required. In addition to the information 
required in Sec. 4043.3(b), the notice shall include--
    (1) Identification of the transferee(s) and each contributing 
sponsor of each transferee plan by name and EIN/PN or EIN, as 
appropriate;
    (2) An explanation of the actuarial assumptions used in determining 
the value of benefit liabilities (and, if appropriate, the value of plan 
assets) for each transfer; and
    (3) An estimate of the amounts of assets and liabilities being 
transferred, and the number of participants whose benefits are 
transferred.
    (c) Waivers--(1) Complete plan transfer. Notice is waived if the 
transfer is a transfer of all of the transferor plan's benefit 
liabilities and assets to one other plan.
    (2) Transfer of less than 3 percent of assets. Notice is waived if 
the value of the assets being transferred--
    (i) Equals the present value of the accrued benefits (whether or not 
vested) being transferred, using actuarial assumptions that comply with 
section 414(l) of the Code; and
    (ii) In conjunction with other assets transferred during the same 
plan year, is less than 3 percent of the assets of the transferor plan 
as of at least one day in that year.

[[Page 831]]

    (3) Section 414(l) safe harbor. Notice is waived if the transfer 
complies with section 414(l) of the Code using the actuarial assumptions 
prescribed for valuing benefits in trusteed plans under Sec. 4044.51-57 
of this chapter.
    (4) Fully funded plans. Notice is waived if the transfer complies 
with section 414(l) of the Code using reasonable actuarial assumptions 
and, after the transfer, the transferor and transferee plans are fully 
funded (using the actuarial assumptions prescribed for valuing benefits 
in trusteed plans under Sec. 4044.51-57) of this chapter.
    (d) Who must file. Only the plan administrator and contributing 
sponsor of the plan that made the transfer described in paragraph (a)(1) 
of this section are required to file a notice of a reportable event 
under this section. Notice by any other contributing sponsor or plan 
administrator is waived.



Sec. 4043.33  Application for minimum funding waiver.

    (a) Reportable event. A reportable event for a plan occurs when an 
application for a minimum funding waiver for the plan is submitted under 
section 303 of ERISA or section 412(d) of the Code.
    (b) Initial information required. In addition to the information in 
Sec. 4043.3(b), the notice shall include a copy of the waiver 
application, including all attachments.



Sec. 4043.34  Loan default.

    (a) Reportable event. A reportable event occurs for a plan whenever 
there is a default by a member of the plan's controlled group with 
respect to a loan with an outstanding balance of $10 million or more, 
if--
    (1) The default results from the debtor's failure to make a required 
loan payment when due (unless the payment is made within 30 days after 
the due date);
    (2) The lender accelerates the loan; or
    (3) The debtor receives a written notice of default from the lender 
(and does not establish the notice was issued in error) on account of:
    (i) A drop in the debtor's cash reserves below an agreed-upon level;
    (ii) An unusual or catastrophic event experienced by the debtor; or
    (iii) A persisting failure by the debtor to attain agreed-upon 
financial performance levels.
    (b) Initial information required. In addition to the information in 
Sec. 4043.3(b), the notice shall include--
    (1) A copy of the relevant loan documents (e.g., promissory note, 
security agreement);
    (2) The due date and amount of any missed payment;
    (3) A copy of any notice of default from the lender; and
    (4) A copy of any notice of acceleration from the lender.
    (c) Waivers--(1) Default cured. Notice is waived if the default is 
cured, or waived by the lender, within 30 days or, if later, by the end 
of any cure period provided by the loan agreement.
    (2) Foreign entity. Notice is waived if the debtor is a foreign 
entity other than a foreign parent.
    (3) Plan funding. Notice is waived if--
    (i) No variable rate premium. No variable rate premium is required 
to be paid for the plan for the event year;
    (ii) $1 million unfunded vested benefits. As of the testing date for 
the event year, the plan has less than $1 million in unfunded vested 
benefits;
    (iii) No unfunded vested benefits. As of the testing date for the 
event year, the plan would have no unfunded vested benefits if unfunded 
vested benefits were determined in accordance with the assumptions and 
methodology in Sec. 4010.4(b)(2) of this chapter; or
    (iv) 80-percent funded. As of the testing date for the event year, 
the fair market value of the plan's assets is at least 80 percent of the 
plan's vested benefits amount.
    (d) Notice date and extensions--(1) In general. Except as provided 
in paragraph (d)(2) or (d)(3) of this section, the notice date is 30 
days after the person required to report knows or has reason to know of 
the occurrence of the default, without regard to the time of any other 
conditions required for the default to be reportable.
    (2) Cure period extensions. The notice date is extended to one day 
after--
    (i) The applicable cure period provided in the loan agreement (in 
the case of a reportable event described in paragraph (a)(1) of this 
section);

[[Page 832]]

    (ii) The date the loan is accelerated (in the case of a reportable 
event described in paragraph (a)(2) of this section); or
    (iii) The date the debtor receives written notice of the default (in 
the case of a reportable event described in paragraph (a)(3) of this 
section).
    (3) Form 1 extension. The notice date is extended to 30 days after 
the plan's variable rate premium filing due date for the event year, if 
a waiver under any of paragraphs (c)(3)(i) through (c)(3)(iv) of this 
section would apply if the ``the plan year preceding the event year'' 
were substituted for ``the event year.''
    (4) Foreign parent and foreign-linked entities. With respect to a 
loan default involving only a foreign parent or a foreign-linked entity, 
the notice date is extended to 30 days after the plan's first Form 5500 
due date after the person required to notify the PBGC has actual 
knowledge of the default and of the controlled group relationship.
    (5) Example. Company A has a debt with an outstanding balance of $20 
million, for which a payment is due on October 1. Under the terms of the 
loan, the default may be cured within 10 days. Company A does not make 
the payment until October 31. Because Company A has made the payment 
within 30 days of the due date, no reportable event has occurred. If 
Company A does not make the payment by October 31, a reportable event 
will have occurred on October 1, and notice will be due by October 31.



Sec. 4043.35  Bankruptcy or similar settlement.

    (a) Reportable event. A reportable event occurs for a plan when any 
member of the plan's controlled group--
    (1) Commences a bankruptcy case (under the Bankruptcy Code), or has 
a bankruptcy case commenced against it;
    (2) Commences or has commenced against it any other type of 
insolvency proceeding (including, but not limited to, the appointment of 
a receiver);
    (3) Commences, or has commenced against it, a proceeding to effect a 
composition, extension, or settlement with creditors;
    (4) Executes a general assignment for the benefit of creditors; or
    (5) Undertakes to effect any other nonjudicial composition, 
extension, or settlement with substantially all its creditors.
    (b) Initial information required. In addition to the information in 
Sec. 4043.3(b), the notice shall include--
    (1) A copy of all papers filed in the relevant proceeding, 
including, but not limited to, petitions and supporting schedules;
    (2) The last date for filing claims;
    (3) The name, address, and phone number of any trustee or receiver 
(or similar person);
    (4) The name of each member of the plan's controlled group and its 
ownership relationship to other members of that controlled group; and
    (5) For each other plan maintained by any member of the plan's 
controlled group, identification of the plan and its contributing 
sponsor(s) by name and EIN/PN or EIN, as appropriate.
    (c) Waivers. Notice is waived if the person described in paragraph 
(a) of this section is a foreign entity other than a foreign parent.
    (d) Extensions. Unless the controlled group member described in 
paragraph (a) of this section is the contributing sponsor of the plan, 
the notice date is extended until 30 days after the person required to 
notify the PBGC has actual knowledge of the reportable event.



             Subpart C--Advance Notice of Reportable Events



Sec. 4043.61  Advance reporting filing obligation.

    (a) In general. Unless a waiver or extension applies with respect to 
the plan, each contributing sponsor of a plan for which a reportable 
event under this subpart is going to occur is required to notify the 
PBGC no later than 30 days before the effective date of the reportable 
event if the contributing sponsor is subject to advance reporting. If 
there is a change in contributing sponsor, the reporting obligation 
applies to the person who is the contributing sponsor of the plan on the 
notice date.

[[Page 833]]

    (b) Persons subject to advance reporting. A contributing sponsor is 
subject to the advance reporting requirement under paragraph (a) of this 
section if--
    (1) Neither the contributing sponsor nor the member of the plan's 
controlled group to which the event relates is a public company; and
    (2) The contributing sponsor is a member of a controlled group 
maintaining one or more plans that, in the aggregate (disregarding plans 
with no unfunded vested benefits) have--
    (i) Vested benefits amounts that exceed the actuarial values of plan 
assets by more than $50 million; and
    (ii) A funded vested benefit percentage of less than 90 percent.
    (c) Funding determinations. For purposes of paragraph (b)(2) of this 
section--
    (1) Actuarial value of assets. The actuarial value of plan assets is 
determined in accordance with Sec. 4006.4(b)(2) of this chapter;
    (2) Funded vested benefit percentage. The aggregate funded vested 
percentage of one or more plans is the percentage that the total 
actuarial values of plan assets bears to the plans' total vested 
benefits amounts; and
    (3) Testing date. Each plan's assets and vested benefits amount are 
determined as of that plan's testing date for the plan year that 
includes the effective date of the reportable event.
    (d) Shortening of 30-day period. Pursuant to Sec. 4043.3(d), the 
PBGC may, upon review of an advance notice, shorten the notice period to 
allow for an earlier effective date.



Sec. 4043.62  Change in contributing sponsor or controlled group.

    (a) Reportable event and information required. Advance notice is 
required for a change in a plan's contributing sponsor or controlled 
group, as described in Sec. 4043.29(a), and the notice shall include the 
information described in Sec. 4043.29(b) and, if known, the expected 
effective date of the reportable event.
    (b) Waivers--(1) Small plan. Notice is waived with respect to a 
change of contributing sponsor if the transferred plan has 500 or fewer 
participants.
    (2) De minimis 5-percent segment. Notice is waived if the person or 
persons that will cease to be members of the plan's controlled group 
represent a de minimis 5-percent segment of the plan's old controlled 
group for the most recent fiscal year(s) ending on or before the 
effective date of the reportable event.



Sec. 4043.63  Liquidation.

    (a) Reportable event and information required. Advance notice is 
required for a liquidation of a member of a plan's controlled group, as 
described in Sec. 4043.30(a), and the notice shall include the 
information described in Sec. 4043.30(b) and, if known, the expected 
effective date of the reportable event.
    (b) Waiver. Notice is waived if the person that liquidates is a de 
minimis 5-percent segment of the plan's controlled group for the most 
recent fiscal year(s) ending on or before the effective date of the 
reportable event, and each plan that was maintained by the liquidating 
member is maintained by another member of the plan's controlled group.



Sec. 4043.64  Extraordinary dividend or stock redemption.

    (a) Reportable event and information required. Advance notice is 
required for a distribution by a member of a plan's controlled group 
that would be described in Sec. 4043.31(a) if both assets and 
liabilities were valued at fair market value. The notice shall include 
the information described in Sec. 4043.31(b).
    (b) Waiver. Notice is waived if the person making the distribution 
is a de minimis 5-percent segment of the plan's controlled group for the 
most recent fiscal year(s) ending on or before the effective date of the 
reportable event.



Sec. 4043.65  Transfer of benefit liabilities.

    (a) Reportable event and information required. Advance notice is 
required for a transfer of benefit liabilities, as described in 
Sec. 4043.32(a) (determined without regard to Sec. 4043.32(d)), and the 
notice shall include the information described in Sec. 4043.32(b).
    (b) Waivers. Notice is waived--
    (1) In the circumstances described in Sec. 4043.32 (c)(1), (c)(2), 
and (c)(4); and
    (2) If the benefit liabilities of 500 or fewer participants are 
transferred, in

[[Page 834]]

the circumstances described in Sec. 4043.32(c)(3).



Sec. 4043.66  Application for minimum funding waiver.

    (a) Reportable event and information required. Advance notice is 
required for an application for a minimum funding waiver, as described 
in Sec. 4043.33(a), and the notice shall include the information 
described in Sec. 4043.33(b).
    (b) Extension. The notice date is extended until 10 days after the 
reportable event has occurred.



Sec. 4043.67  Loan default.

    (a) Reportable event and information required. Advance notice is 
required for a loan default, as described in Sec. 4043.34(a) (or that 
would be so described if ``10 days'' were substituted for ``30 days'' in 
Sec. 4043.34(a)(1)). The notice shall include the information described 
in Sec. 4043.34(b).
    (b) Waivers. Notice is waived if the reportable default is cured, or 
the lender waives the default, within 10 days or, if later, by the end 
of any cure period.
    (c) Extensions. The notice date is extended to the later of--
    (1) 10 days after default. 10 days after the default occurs (without 
regard to the time of any other conditions required for the default to 
be reportable); and
    (2) One day after subsequent event. One day after--
    (i) The applicable cure period provided in the loan agreement (in 
the case of a default described in Sec. 4043.34(a)(1));
    (ii) The date the loan is accelerated (in the case of a default 
described in Sec. 4043.34(a)(2)); and
    (iii) The date the debtor receives written notice of the default (in 
the case of a default described in Sec. 4043.34(a)(3)).



Sec. 4043.68  Bankruptcy or similar settlement.

    (a) Reportable event and information required. Advance notice is 
required for a bankruptcy or similar settlement, as described in 
Sec. 4043.35(a), and the notice shall include the information described 
in Sec. 4043.35(b).
    (b) Extension. The notice date is extended until 10 days after the 
reportable event has occurred.



       Subpart D--Notice of Failure To Make Required Contributions



Sec. 4043.81  PBGC Form 200, notice of failure to make required contributions; supplementary information.

    (a) General rules. To comply with the notification requirement in 
section 302(f)(4) of ERISA and section 412(n)(4) of the Code, a 
contributing sponsor of a single-employer plan that is covered under 
section 4021 of ERISA and, if that contributing sponsor is a member of a 
parent-subsidiary controlled group, the ultimate parent must complete 
and submit in accordance with this section a properly certified Form 200 
that includes all required documentation and other information, as 
described in the related filing instructions. Notice is required 
whenever the unpaid balance of a required installment or any other 
payment required under section 302 of ERISA and section 412 of the Code 
(including interest), when added to the aggregate unpaid balance of all 
preceding such installments or other payments for which payment was not 
made when due (including interest), exceeds $1 million.
    (1) Form 200 must be filed with the PBGC no later than 10 days after 
the due date for any required payment for which payment was not made 
when due.
    (2) If a contributing sponsor or the ultimate parent completes and 
submits Form 200 in accordance with this section, the PBGC will consider 
the notification requirement in section 302(f)(4) of ERISA and section 
412(n)(4) of the Code to be satisfied by all members of a controlled 
group of which the person who has filed Form 200 is a member.
    (b) Supplementary information. If, upon review of a Form 200, the 
PBGC concludes that it needs additional information in order to make 
decisions regarding enforcement of a lien imposed by section 302(f) of 
ERISA and section 412(n) of the Code, the PBGC may require any member of 
the contributing sponsor's controlled group to supplement the Form 200 
in accordance with Sec. 4043.3(d).

[[Page 835]]



PART 4044--ALLOCATION OF ASSETS IN SINGLE-EMPLOYER PLANS--Table of Contents




                     Subpart A--Allocation of Assets

                           General Provisions

Sec.
4044.1  Purpose and scope.
4044.2  Definitions.
4044.3  General rule.
4044.4  Violations.

               Allocation of Assets to Benefit Categories

4044.10  Manner of allocation.
4044.11  Priority category 1 benefits.
4044.12  Priority category 2 benefits.
4044.13  Priority category 3 benefits.
4044.14  Priority category 4 benefits.
4044.15  Priority category 5 benefits.
4044.16  Priority category 6 benefits.
4044.17  Subclasses.

                      Allocation of Residual Assets

4044.30  [Reserved]

               Subpart B--Valuation of Benefits and Assets

                           General Provisions

4044.41  General valuation rules.

                             Trusteed Plans

4044.51  Benefits to be valued.
4044.52  Valuation of benefits.
4044.53  Mortality assumptions.
4044.54  [Reserved]

                         Expected Retirement Age

4044.55  XRA when a participant must retire to receive a benefit.
4044.56  XRA when a participant need not retire to receive a benefit.
4044.57  Special rule for facility closing.

                           Non-Trusteed Plans

4044.71  Valuation of annuity benefits.
4044.72  Form of annuity to be valued.
4044.73  Lump sums and other alternative forms of distribution in lieu 
          of annuities.
4044.74  Withdrawal of employee contributions.
4044.75  Other lump sum benefits.

Appendix A to Part 4044--Mortality Rate Tables
Appendix B to Part 4044--Interest Rates Used to Value Benefits
Appendix C to Part 4044--Loading Assumptions
Appendix D to Part 4044--Tables Used To Determine Expected Retirement 
          Age

    Authority: 29 U.S.C. 1301(a), 1302(b)(3), 1341, 1344, 1362.
    Note: Certain provisions of part 4044 have been superseded by 
legislative changes. For example, there are references to provisions 
formerly codified in 29 CFR part 2617, subpart C (and to the Notice of 
Sufficiency provided for thereunder) that no longer exist because of 
changes in the PBGC's plan termination regulations in response to the 
Single-Employer Pension Plan Amendments Act of 1986 and the Pension 
Protection Act of 1987. The PBGC intends to amend part 4044 at a later 
date to conform it to current statutory provisions.

    Source: 61 FR 34059, July 1, 1996, unless otherwise noted.



                     Subpart A--Allocation of Assets

                           General Provisions



Sec. 4044.1  Purpose and scope.

    This part implements section 4044 of ERISA, which contains rules for 
allocating a plan's assets when the plan terminates. These rules have 
been in effect since September 2, 1974, the date of enactment of ERISA. 
This part applies to any single-employer plan covered by title IV of 
ERISA that submits a notice of intent to terminate, or for which PBGC 
commences an action to terminate the plan under section 4042 of ERISA.
    (a) Subpart A. Sections 4044.1 through 4044.4 set forth general 
rules for applying Secs. 4044.10 through 4044.17. Sections 4044.10 
through 4044.17 interpret the rules and describe procedures for 
allocating plan assets to priority categories 1 through 6.
    (b) Subpart B. The purpose of subpart B is to establish the method 
of determining the value of benefits and assets under terminating 
single-employer pension plans covered by title IV of ERISA. This 
valuation is needed for both plans trusteed under title IV and plans 
which are not trusteed. For the former, the valuation is needed to 
allocate plan assets in accordance with subpart A of this part and to 
determine the amount of any plan asset insufficiency. For the latter, 
the valuation is needed to allocate assets in accordance with subpart A 
and to distribute the assets in accordance with subpart B of part 4041 
of this chapter.
    (1) Section 4044.41 sets forth the general provisions of subpart B 
and applies to all terminating single-employer

[[Page 836]]

plans. Sections 4044.51 through 4044.57 prescribe the benefit valuation 
rules for plans that receive or that expect to receive a Notice of 
Inability to Determine Sufficiency from PBGC and are placed into 
trusteeship by PBGC, including (in Secs. 4044.55 through 4044.57) the 
rules and procedures a plan administrator shall follow to determine the 
expected retirement age (XRA) for a plan participant entitled to early 
retirement benefits for whom the annuity starting date is not known as 
of the valuation date. This applies to all trusteed plans which have 
such early retirement benefits. The plan administrator shall determine 
an XRA under Sec. 4044.55, Sec. 4044.56 or Sec. 4044.57, as appropriate, 
for each active participant or participant with a deferred vested 
benefit who is entitled to an early retirement benefit and who as of the 
valuation date has not selected an annuity starting date. (See Note at 
beginning of part 4044.)
    (2) Sections 4044.71 through 4044.75 prescribe the benefit valuation 
rules for calculating the value of a benefit to be paid a participant or 
beneficiary under a terminating pension plan that is distributing assets 
where the plan has received a Notice of Sufficiency issued by PBGC 
pursuant to part 2617 of this chapter and has not been placed into 
trusteeship by PBGC. (See Note at beginning of part 4044.)



Sec. 4044.2  Definitions.

    (a) The following terms are defined in Sec. 4001.2 of this chapter: 
annuity, basic-type benefit, Code, distribution date, ERISA, fair market 
value, guaranteed benefit, insurer, IRS, irrevocable commitment, 
mandatory employee contributions, nonbasic-type benefit, nonforfeitable 
benefit, normal retirement age, notice of intent to terminate, PBGC, 
person, plan, plan administrator, single-employer plan, substantial 
owner, termination date, and voluntary employee contributions.
    (b) For purposes of this part:
    Deferred annuity means an annuity under which the specified date or 
age at which payments are to begin occurs after the valuation date.
    Earliest retirement age at valuation date means the later of (a) a 
participant's age on his or her birthday nearest to the valuation date, 
or (b) the participant's attained age as of his or her Earliest PBGC 
Retirement Date (as determined under Sec. 4022.10 of this chapter).
    Early retirement benefit means an annuity benefit payable under the 
terms of the plan, under which the participant is entitled to begin 
receiving payments before his or her normal retirement age and which is 
not payable on account of the disability of the participant. It may be 
reduced according to the terms of the plan.
    Expected retirement age (XRA) means the age, determined in 
accordance with Secs. 4044.55 through 4044.57, at which a participant is 
expected to begin receiving benefits when the participant has not 
elected, before the allocation date, an annuity starting date. This is 
the age to which a participant's benefit payment is assumed to be 
deferred for valuation purposes. An XRA is equal to or greater than the 
participant's earliest retirement age at valuation date but less than 
his or her normal retirement age.
    Non-trusteed plan means a single-employer plan which receives a 
Notice of Sufficiency from PBGC and is able to close out by purchasing 
annuities in the private sector in accordance with part 2617 of this 
chapter. (See Note at beginning of part 4044.)
    Notice of Sufficiency means a notice issued by the PBGC that it has 
determined that plan assets are sufficient to discharge when due all 
obligations of the plan with respect to benefits in priority categories 
1 through 4 after plan assets have been allocated to benefits in 
accordance with section 4044 of ERISA and this subpart. (See Note at 
beginning of part 4044.)
    Priority category means one of the categories contained in sections 
4044 (a)(1) through (a)(6) of ERISA that establish the order in which 
plan assets are to be allocated.
    Trusteed plan means a single-employer plan which has been placed 
into trusteeship by PBGC.
    Unreduced retirement age (URA) means the earlier of the normal 
retirement age specified in the plan or the age at which an unreduced 
benefit is first payable.

[[Page 837]]

    Valuation date means (1) for non-trusteed plans, the date of 
distribution and (2) for trusteed plans, the date of termination.
    (c) For purposes of subpart B of this part (unless otherwise 
required by the context):
    Age means the participant's age at his or her nearest birthday and 
is determined by rounding the individual's exact age to the nearest 
whole year. Half years are rounded to the next highest year. This is 
also known as the ``insurance age.''
    (d) For purposes of Secs. 4044.55 through 4044.57:
    Monthly benefit means the guaranteed benefit payable by PBGC.
    (e) For purposes of Secs. 4044.71 through 4044.75:
    Lump sum payable in lieu of an annuity means a benefit that is 
payable in a single installment and is derived from an annuity payable 
under the plan.
    Other lump sum benefit means a benefit in priority category 5 or 6, 
determined under subpart A of this part, that is payable in a single 
installment (or substantially so) under the terms of the plan, and that 
is not derived from an annuity payable under the plan. The benefit may 
be a severance pay benefit, a death benefit or other single installment 
benefit.
    Qualifying bid means a bid obtained from an insurer in accordance 
with Sec. 2617.14(b) of this chapter. (See Note at beginning of part 
4044.)

[61 FR 34059, July 1, 1996, as amended at 67 FR 16959, Apr. 8, 2002]



Sec. 4044.3  General rule.

    (a) Asset allocation. Upon the termination of a single-employer 
plan, the plan administrator shall allocate the plan assets available to 
pay for benefits under the plan in the manner prescribed by this 
subpart. Plan assets available to pay for benefits include all plan 
assets (valued according to Sec. 4044.41(b)) remaining after the 
subtraction of all liabilities, other than liabilities for future 
benefit payments, paid or payable from plan assets under the provisions 
of the plan. Liabilities include expenses, fees and other administrative 
costs, and benefit payments due before the allocation date. Except as 
provided in Sec. 4044.4(b), an irrevocable commitment by an insurer to 
pay a benefit, which commitment is in effect on the date of the asset 
allocation, is not considered a plan asset, and a benefit payable under 
such a commitment is excluded from the allocation process.
    (b) Allocation date. For plans that close out pursuant to a Notice 
of Sufficiency under the provisions of subpart C of part 2617 of this 
chapter, assets shall be allocated as of the date plan assets are to be 
distributed. For other plans, assets shall be allocated as of the 
termination date. (See Note at beginning of part 4044.)



Sec. 4044.4  Violations.

    (a) General. A plan administrator violates ERISA if plan assets are 
allocated or distributed upon plan termination in a manner other than 
that prescribed in section 4044 of ERISA and this subpart, except as may 
be required to prevent disqualification of the plan under the Code and 
regulations thereunder.
    (b) Distributions in anticipation of termination. A distribution, 
transfer, or allocation of assets to a participant or to an insurance 
company for the benefit of a participant, made in anticipation of plan 
termination, is considered to be an allocation of plan assets upon 
termination, and is covered by paragraph (a) of this section. In 
determining whether a distribution, transfer, or allocation of assets 
has been made in anticipation of plan termination PBGC will consider all 
of the facts and circumstances including--
    (1) Any change in funding or operation procedures;
    (2) Past practice with regard to employee requests for forms of 
distribution;
    (3) Whether the distribution is consistent with plan provisions; and
    (4) Whether an annuity contract that provides for a cutback based on 
the guarantee limits in subpart B of part 4022 of this chapter could 
have been purchased from an insurance company.

               Allocation of Assets to Benefit Categories



Sec. 4044.10  Manner of allocation.

    (a) General. The plan administrator shall allocate plan assets 
available to pay for benefits under the plan using

[[Page 838]]

the rules and procedures set forth in paragraphs (b) through (f) of this 
section, or any other procedure that results in each participant (or 
beneficiary) receiving the same benefits he or she would receive if the 
procedures in paragraphs (b) through (f) were followed.
    (b) Assigning benefits. The basic-type and nonbasic-type benefits 
payable with respect to each participant in a terminated plan shall be 
assigned to one or more priority categories in accordance with 
Secs. 4044.11 through 4044.16. Benefits derived from voluntary employee 
contributions, which are assigned only to priority category 1, are 
treated, under section 204(c)(4) of ERISA and section 411(d)(5) of the 
Code, as benefits under a separate plan. The amount of a benefit payable 
with respect to each participant shall be determined as of the 
termination date.
    (c) Valuing benefits. The value of a participant's benefit or 
benefits assigned to each priority category shall be determined, as of 
the allocation date, in accordance with the provisions of subpart B of 
this part. The value of each participant's basic-type benefit or 
benefits in a priority category shall be reduced by the value of the 
participant's benefit of the same type that is assigned to a higher 
priority category. Except as provided in the next two sentences, the 
same procedure shall be followed for nonbasic-type benefits. The value 
of a participant's nonbasic-type benefits in priority categories 3, 5, 
and 6 shall not be reduced by the value of the participant's nonbasic-
type benefit assigned to priority category 2. Benefits in priority 
category 1 shall neither be included in nor subtracted from lower 
priority categories. In no event shall a benefit assigned to a priority 
category be valued at less than zero.
    (d) Allocating assets to priority categories. Plan assets available 
to pay for benefits under the plan shall be allocated to each priority 
category in succession, beginning with priority category 1. If the plan 
has sufficient assets to pay for all benefits in a priority category, 
the remaining assets shall then be allocated to the next lower priority 
category. This process shall be repeated until all benefits in priority 
categories 1 through 6 have been provided or until all available plan 
assets have been allocated.
    (e) Allocating assets within priority categories. Except for 
priority category 5, if the plan assets available for allocation to any 
priority category are insufficient to pay for all benefits in that 
priority category, those assets shall be distributed among the 
participants according to the ratio that the value of each participant's 
benefit or benefits in that priority category bears to the total value 
of all benefits in that priority category. If the plan assets available 
for allocation to priority category 5 are insufficient to pay for all 
benefits in that category, the assets shall be allocated, first, to the 
value of each participant's nonforfeitable benefits that would be 
assigned to priority category 5 under Sec. 4044.15 after reduction for 
the value of benefits assigned to higher priority categories, based only 
on the provisions of the plan in effect at the beginning of the 5-year 
period immediately preceding the termination date. If assets available 
for allocation to priority category 5 are sufficient to fully satisfy 
the value of those benefits, assets shall then be allocated to the value 
of the benefit increase under the oldest amendment during the 5-year 
period immediately preceding the termination date, reduced by the value 
of benefits assigned to higher priority categories (including higher 
subcategories in priority category 5). This allocation procedure shall 
be repeated for each succeeding plan amendment within the 5-year period 
until all plan assets available for allocation have been exhausted. If 
an amendment decreased benefits, amounts previously allocated with 
respect to each participant in excess of the value of the reduced 
benefit shall be reduced accordingly. In the subcategory in which assets 
are exhausted, the assets shall be distributed among the participants 
according to the ratio that the value of each participant's benefit or 
benefits in that subcategory bears to the total value of all benefits in 
that subcategory.
    (f) Applying assets to basic-type or nonbasic-type benefits within 
priority categories. The assets allocated to a participant's benefit or 
benefits within

[[Page 839]]

each priority category shall first be applied to pay for the 
participant's basic-type benefit or benefits assigned to that priority 
category. Any assets allocated on behalf of that participant remaining 
after satisfying the participant's basic-type benefit or benefits in 
that priority category shall then be applied to pay for the 
participant's nonbasic-type benefit or benefits assigned to that 
priority category. If the assets allocable to a participant's basic-type 
benefit or benefits in all priority categories are insufficient to pay 
for all of the participant's guaranteed benefits, the assets allocated 
to that participant's benefit in priority category 4 shall be applied, 
first, to the guaranteed portion of the participant's benefit in 
priority category 4. The remaining assets allocated to that 
participant's benefit in priority category 4, if any, shall be applied 
to the nonguaranteed portion of the participant's benefit.
    (g) Allocation to established subclasses. Notwithstanding paragraphs 
(e) and (f) of this section, the assets of a plan that has established 
subclasses within any priority category may be allocated to the plan's 
subclasses in accordance with the rules set forth in Sec. 4044.17.



Sec. 4044.11  Priority category 1 benefits.

    (a) Definition. The benefits in priority category 1 are 
participants' accrued benefits derived from voluntary employee 
contributions.
    (b) Assigning benefits. Absent an election described in the next 
sentence, the benefit assigned to priority category 1 with respect to 
each participant is the balance of the separate account maintained for 
the participant's voluntary contributions. If a participant has elected 
to receive an annuity in lieu of his or her account balance, the benefit 
assigned to priority category 1 with respect to that participant is the 
present value of that annuity.



Sec. 4044.12  Priority category 2 benefits.

    (a) Definition. The benefits in priority category 2 are 
participants' accrued benefits derived from mandatory employee 
contributions, whether to be paid as an annuity benefit with a pre-
retirement death benefit that returns mandatory employee contributions 
or, if a participant so elects under the terms of the plan and subpart A 
of part 4022 of this chapter, as a lump sum benefit. Benefits are 
primarily basic-type benefits although nonbasic-type benefits may also 
be included as follows:
    (1) Basic-type benefits. The basic-type benefit in priority category 
2 with respect to each participant is the sum of the values of the 
annuity benefit and the pre-retirement death benefit determined under 
the provisions of paragraph (c)(1) of this section.
    (2) Nonbasic-type benefits. If a participant elects to receive a 
lump sum benefit and if the value of the lump sum benefit exceeds the 
value of the basic-type benefit in priority category 2 determined with 
respect to the participant, the excess is a nonbasic-type benefit. There 
is no nonbasic-type benefit in priority category 2 for a participant who 
does not elect to receive a lump sum benefit.
    (b) Conversion of mandatory employee contributions to an annuity 
benefit. Subject to the limitation set forth in paragraph (b)(3) of this 
section, a participant's accumulated mandatory employee contributions 
shall be converted to an annuity form of benefit payable at the normal 
retirement age or, if the plan provides for early retirement, at the 
expected retirement age. The conversion shall be made using the interest 
rates and factors specified in paragraph (b)(2) of this section. The 
form of the annuity benefit (e.g., straight life annuity, joint and 
survivor annuity, cash refund annuity, etc.) is the form that the 
participant or beneficiary is entitled to on the termination date. If 
the participant does not have a nonforfeitable right to a benefit, other 
than the return of his or her mandatory contributions in a lump sum, the 
annuity form of benefit is the form the participant would be entitled to 
if the participant had a nonforfeitable right to an annuity benefit 
under the plan on the termination date.
    (1) Accumulated mandatory employee contributions. Subject to any 
addition for the cost of ancillary benefits plus interest, as provided 
in the following

[[Page 840]]

sentence, the amount of the accumulated mandatory employee contributions 
for each participant is the participant's total nonforfeitable mandatory 
employee contributions remaining in the plan on the termination date 
plus interest, if any, under the plan provisions. Mandatory employee 
contributions, if any, used after the effective date of the minimum 
vesting standards in section 203 of ERISA and section 411 of the Code 
for costs or to provide ancillary benefits such as life insurance or 
health insurance, plus interest under the plan provisions, shall be 
added to the contributions that remain in the plan to determine the 
accumulated mandatory employee contributions.
    (2) Interest rates and conversion factors. The interest rates and 
conversion factors used in the administration of the plan shall be used 
to convert a participant's accumulated mandatory contributions to the 
annuity form of benefit. In the absence of plan rules and factors, the 
interest rates and conversion factors established by the IRS for 
allocation of accrued benefits between employer and employee 
contributions under the provisions of section 204(c) of ERISA and 
section 411(c) of the Code shall be used.
    (3) Minimum accrued benefit. The annuity benefit derived from 
mandatory employee contributions may not be less than the minimum 
accrued benefit under the provisions of section 204(c) of ERISA and 
section 411(c) of the Code.
    (c) Assigning benefits. If a participant or beneficiary elects to 
receive a lump sum benefit, his or her benefit shall be determined under 
paragraph (c)(2) of this section. Otherwise, the benefits with respect 
to a participant shall be determined under paragraph (c)(1) of this 
section.
    (1) Annuity benefit and pre-retirement death benefit. The annuity 
benefit and the pre-retirement death benefit assigned to priority 
category 2 with respect to a participant are determined as follows:
    (i) The annuity benefit is the benefit computed under paragraph (b) 
of this section.
    (ii) Except for adjustments necessary to meet the minimum lump sum 
requirements as hereafter provided, the pre-retirement death benefit is 
the benefit under the plan that returns all or a portion of the 
participant's mandatory employee contributions upon the death of the 
participant before retirement. A benefit that became payable in a single 
installment (or substantially so) because the participant died before 
the termination date is a liability of the plan within the meaning of 
Sec. 4044.3(a) and should not be assigned to priority category 2. A 
benefit payable upon a participant's death that is included in the 
annuity form of the benefit derived from mandatory employee 
contributions (e.g., the survivor's portion of a joint and survivor 
annuity or the cash refund portion of a cash refund annuity) is assigned 
to priority category 2 as part of the annuity benefit under paragraph 
(c)(1)(i) of this section and is not assigned as a death benefit. The 
pre-retirement death benefit may not be less than the minimum lump sum 
required upon withdrawal of mandatory employee contributions by the IRS 
under section 204(c) of ERISA and section 411(c) of the Code.
    (2) Lump sum benefit. Except for adjustments necessary to meet the 
minimum lump sum requirements as hereafter provided, if a participant 
elects to receive a lump sum benefit under the provisions of the plan, 
the amount of the benefit that is assigned to priority category 2 with 
respect to the participant is--
    (i) The combined value of the annuity benefit and the pre-retirement 
death benefit determined according to paragraph (c)(1) (which 
constitutes the basic-type benefit) plus
    (ii) The amount, if any, of the participant's accumulated mandatory 
employee contributions that exceeds the combined value of the annuity 
benefit and the pre-retirement death benefit (which constitutes the 
nonbasic-type benefit), but not more than
    (iii) The amount of the participant's accumulated mandatory 
contributions.
    (3) For purposes of paragraph (c)(2) of this section, accumulated 
mandatory contributions means the contributions with interest, if any, 
payable under plan provisions to the participant or beneficiary on 
termination of the plan or, in the absence of such provisions,

[[Page 841]]

the amount that is payable if the participant withdrew his or her 
contributions on the termination date. The lump sum benefit may not be 
less than the minimum lump required by the IRS under section 204(c) of 
ERISA and section 411(c) of the Code upon withdrawal of mandatory 
employee contributions.



Sec. 4044.13  Priority category 3 benefits.

    (a) Definition. The benefits in priority category 3 are those 
annuity benefits that were in pay status before the beginning of the 3-
year period ending on the termination date, and those annuity benefits 
that could have been in pay status (then or as of the next payment date 
under the plan's rules for starting benefit payments) for participants 
who, before the beginning of the 3-year period ending on the termination 
date, had reached their Earliest PBGC Retirement Date (as determined 
under Sec. 4022.10 of this chapter based on plan provisions in effect on 
the day before the beginning of the 3-year period ending on the 
termination date). Benefit increases that were effective throughout the 
5-year period ending on the termination date, including automatic 
benefit increases during that period to the extent provided in paragraph 
(b)(5) of this section, shall be included in determining the priority 
category 3 benefit. Benefits are primarily basic-type benefits, although 
nonbasic-type benefits will be included if any portion of a 
participant's priority category 3 benefit is not guaranteeable under the 
provisions of subpart A of part 4022 and Sec. 4022.21 of this chapter.
    (b) Assigning benefits. The annuity benefit that is assigned to 
priority category 3 with respect to each participant is the lowest 
annuity that was paid or payable under the rules in paragraphs (b)(2) 
through (b)(6) of this section.
    (1) Eligibility of participants and beneficiaries. A participant or 
beneficiary is eligible for a priority category 3 benefit if either of 
the following applies:
    (i) The participant's (or beneficiary's) benefit was in pay status 
before the beginning of the 3-year period ending on the termination 
date.
    (ii) Before the beginning of the 3-year period ending on the 
termination date, the participant was eligible for an annuity benefit 
that could have been in pay status and had reached his or her Earliest 
PBGC Retirement Date (as determined in Sec. 4022.10 of this chapter, 
based on plan provisions in effect on the day before the beginning of 
the 3-year period ending on the termination date). Whether a participant 
was eligible to receive an annuity before the beginning of the 3-year 
period shall be determined using the plan provisions in effect on the 
day before the beginning of the 3-year period.
    (iii) If a participant described in either of the preceding two 
paragraphs died during the 3-year period ending on the date of the plan 
termination and his or her beneficiary is entitled to an annuity, the 
beneficiary is eligible for a priority category 3 benefit.
    (2) Plan provisions governing determination of benefit. In 
determining the amount of the priority category 3 annuity with respect 
to a participant, the plan administrator shall use the participant's 
age, service, actual or expected retirement age, and other relevant 
facts as of the following dates:
    (i) Except as provided in the next sentence, for a participant or 
beneficiary whose benefit was in pay status before the beginning of the 
3-year period ending on the termination date, the priority category 3 
benefit shall be determined according to plan provisions in effect on 
the date the benefit commenced. Benefit increases that were effective 
throughout the 5-year period ending on the termination date, including 
automatic benefit increases during that period to the extent provided in 
paragraph (b)(5) of this section, shall be included in determining the 
priority category 3 benefit. The form of annuity elected by a retiree is 
considered the normal form of annuity for that participant.
    (ii) For a participant who was eligible to receive an annuity before 
the beginning of the 3-year period ending on the termination date but 
whose benefit was not in pay status, the priority category 3 benefit and 
the normal form of annuity shall be determined according to plan 
provisions in effect on the day before the beginning of the 3-year 
period ending on the termination date as if the benefit had commenced at 
that time.

[[Page 842]]

    (3) General benefit limitations. The general benefit limitation is 
determined as follows:
    (i) If a participant's benefit was in pay status before the 
beginning of the 3-year period, the benefit assigned to priority 
category 3 with respect to that participant is limited to the lesser of 
the lowest annuity benefit in pay status during the 3-year period ending 
on the termination date and the lowest annuity benefit payable under the 
plan provisions at any time during the 5-year period ending on the 
termination date.
    (ii) Unless a benefit was in pay status before the beginning of the 
3-year period ending on the termination date, the benefit assigned to 
priority category 3 with respect to a participant is limited to the 
lowest annuity benefit payable under the plan provisions, including any 
reduction for early retirement, at any time during the 5-year period 
ending on the termination date. If the annuity form of benefit under a 
formula that appears to produce the lowest benefit differs from the 
normal annuity form for the participant under paragraph (b)(2)(ii) of 
this section, the benefits shall be compared after the differing form is 
converted to the normal annuity form, using plan factors. In the absence 
of plan factors, the factors in subpart B of part 4022 of this chapter 
shall be used.
    (iii) For purposes of this paragraph, if a terminating plan has been 
in effect less than five years on the termination date, computed in 
accordance with paragraph (b)(6) of this section, the lowest annuity 
benefit under the plan during the 5-year period ending on the 
termination date is zero. If the plan is a successor to a previously 
established defined benefit plan within the meaning of section 4021(a) 
of ERISA, the time it has been in effect will include the time the 
predecessor plan was in effect.
    (4) Determination of beneficiary's benefit. If a beneficiary is 
eligible for a priority category 3 benefit because of the death of a 
participant during the 3-year period ending on the termination date, the 
benefit assigned to priority category 3 for the beneficiary shall be 
determined as if the participant had died the day before the 3-year 
period began.
    (5) Automatic benefit increases. If plan provisions adopted and 
effective on or before the first day of the 5-year period ending on the 
termination date provided for automatic increases in the benefit formula 
for both active participants and those in pay status or for participants 
in pay status only, the lowest annuity benefit payable during the 5-year 
period ending on the termination date determined under paragraph (b)(3) 
of this section includes the automatic increases scheduled during the 
fourth and fifth years preceding termination, subject to the restriction 
that benefit increases for active participants in excess of the 
increases for retirees shall not be taken into account.
    (6) Computation of time periods. For purposes of this section, a 
plan or amendment is ``in effect'' on the later of the date on which it 
is adopted or the date it becomes effective.

[61 FR 34059, July 1, 1996, as amended at 62 FR 67729, Dec. 30, 1997; 67 
FR 16959, Apr. 8, 2002; 67 FR 38003, May 31, 2002]



Sec. 4044.14  Priority category 4 benefits.

    The benefits assigned to priority category 4 with respect to each 
participant are the participant's basic-type benefits that do not exceed 
the guarantee limits set forth in subpart B of part 4022 of this 
chapter, except as provided in the next sentence. The benefit assigned 
to priority category 4 with respect to a participant is not limited by 
the aggregate benefits limitations set forth in Sec. 4022B.1 of this 
chapter for individuals who are participants in more than one plan or by 
the phase-in limitation applicable to substantial owners set forth in 
Sec. 4022.26.



Sec. 4044.15  Priority category 5 benefits.

    The benefits assigned to priority category 5 with respect to each 
participant are all of the participant's nonforfeitable benefits under 
the plan.



Sec. 4044.16  Priority category 6 benefits.

    The benefits assigned to priority category 6 with respect to each 
participant are all of the participant's benefits under the plan, 
whether forfeitable or nonforfeitable.

[[Page 843]]



Sec. 4044.17  Subclasses.

    (a) General rule. A plan may establish one or more subclasses within 
any priority category, other than priority categories 1 and 2, which 
subclasses will govern the allocation of assets within that priority 
category. The subclasses may be based only on a participant's longer 
service, older age, or disability, or any combination thereof.
    (b) Limitation. Except as provided in paragraph (c) of this section, 
whenever the allocation within a priority category on the basis of the 
subclasses established by the plan increases or decreases the cumulative 
amount of assets that otherwise would be allocated to guaranteed 
benefits, the assets so shifted shall be reallocated to other 
participants' benefits within the priority category in accordance with 
the subclasses.
    (c) Exception for subclasses in effect on September 2, 1974. A plan 
administrator may allocate assets to subclasses within any priority 
category, other than priority categories 1 and 2, without regard to the 
limitation in paragraph (b) of this section if, on September 2, 1974, 
the plan provided for allocation of plan assets upon termination of the 
plan based on a participant's longer service, older age, or disability, 
or any combination thereof, and--
    (1) Such provisions are still in effect; or
    (2) The plan, if subsequently amended to modify or remove those 
subclasses, is re-amended to re-establish the same subclasses on or 
before July 28, 1981.
    (d) Discrimination under Code. Notwithstanding the provisions of 
paragraphs (a) through (c) of this section, allocation of assets to 
subclasses established under this section is permitted only to the 
extent that the allocation does not result in discrimination prohibited 
under the Code and regulations thereunder.

                      Allocation of Residual Assets



Sec. 4044.30  [Reserved]



               Subpart B--Valuation of Benefits and Assets

                           General Provisions



Sec. 4044.41  General valuation rules.

    (a) Valuation of benefits--(1) Trusteed plans. The plan 
administrator of a plan that has been or will be placed into trusteeship 
by the PBGC shall value plan benefits in accordance with Secs. 4044.51 
through 4044.57.
    (2) Non-trusteed plans. The plan administrator of a non-trusteed 
plan shall value plan benefits in accordance with Secs. 4044.71 through 
4044.75. If a plan with respect to which PBGC has issued a Notice of 
Sufficiency is unable to satisfy all benefits assigned to priority 
categories 1 through 4 on the distribution date, the PBGC will place it 
into trusteeship and the plan administrator shall re-value the benefits 
in accordance with Secs. 4044.51 through 4044.57. (See Note at beginning 
of part 4044.)
    (b) Valuation of assets. Plan assets shall be valued at their fair 
market value, based on the method of valuation that most accurately 
reflects such fair market value.

                             Trusteed Plans



Sec. 4044.51  Benefits to be valued.

    (a) Form of benefit. The plan administrator shall determine the form 
of each benefit to be valued in accordance with the following rules:
    (1) If a benefit is in pay status as of the valuation date, the plan 
administrator shall value the form of the benefit being paid.
    (2) If a benefit is not in pay status as of the valuation date but a 
valid election with respect to the form of benefit has been made on or 
before the valuation date, the plan administrator shall value the form 
of benefit so elected.

[[Page 844]]

    (3) If a benefit is not in pay status as of the valuation date and 
no valid election with respect to the form of benefit has been made on 
or before the valuation date, the plan administrator shall value the 
form of benefit that, under the terms of the plan, is payable in the 
absence of a valid election.
    (b) Timing of benefit. The plan administrator shall value benefits 
whose starting date is subject to election using the assumption 
specified in paragraph (b)(1) or (b)(2) of this section.
    (1) Where election made. If a valid election of the starting date of 
a benefit has been made on or before the valuation date, the plan 
administrator shall assume that the starting date of the benefit is the 
starting date so elected.
    (2) Where no election made. If no valid election of the starting 
date of a benefit has been made on or before the valuation date, the 
plan administrator shall assume that the starting date of the benefit is 
the later of--
    (i) The expected retirement age, as determined under Secs. 4044.55 
through 4044.57, of the participant with respect to whom the benefit is 
payable, or
    (ii) The valuation date.



Sec. 4044.52  Valuation of benefits.

    The plan administrator shall value all benefits as of the valuation 
date by--
    (a) Using the mortality assumptions prescribed by Sec. 4044.53 and 
the interest assumptions prescribed in appendix B to this part;
    (b) Using interpolation methods, where necessary, at least as 
accurate as linear interpolation;
    (c) Using valuation formulas that accord with generally accepted 
actuarial principles and practices;
    (d) Taking mortality into account during the deferral period of a 
deferred joint and survivor benefit only with respect to the participant 
(or other principal annuitant); and
    (e) Adjusting the values to reflect loading expenses in accordance 
with appendix C to this part.

[65 FR 14753, Mar. 17, 2000]



Sec. 4044.53  Mortality assumptions.

    (a) General rule. Subject to paragraph (b) of this section 
(regarding certain death benefits), the plan administrator shall use the 
mortality factors prescribed in paragraphs (c), (d), and (e) of this 
section to value benefits under Sec. 4044.52.
    (b) Certain death benefits. If an annuity for one person is in pay 
status on the valuation date, and if the payment of a death benefit 
after the valuation date to another person, who need not be identifiable 
on the valuation date, depends in whole or in part on the death of the 
pay status annuitant, then the plan administrator shall value the death 
benefit using--
    (1) The mortality rates that are applicable to the annuity in pay 
status under this section to represent the mortality of the pay status 
annuitant; and
    (2) The mortality rates applicable to annuities not in pay status 
and to deferred benefits other than annuities, under paragraph (c) of 
this section, to represent the mortality of the death beneficiary.
    (c) Mortality rates for healthy lives. The mortality rates 
applicable to annuities in pay status on the valuation date that are not 
being received as disability benefits, to annuities not in pay status on 
the valuation date, and to deferred benefits other than annuities, are--
    (1) For male participants, the rates in Table 1 of appendix A to 
this part, and
    (2) For female participants, the rates in Table 1 of appendix A to 
this part, set back 6 years.
    (d) Mortality rates for disabled lives (other than Social Security 
disability). The mortality rates applicable to annuities in pay status 
on the valuation date that are being received as disability benefits and 
for which neither eligibility for, nor receipt of, Social Security 
disability benefits is a prerequisite, are--
    (1) For male participants, the rates in Table 1 of appendix A to 
this part, set forward 3 years, and
    (2) For female participants, the rates in Table 1 of appendix A to 
this part, set back 3 years.
    (e) Mortality rates for disabled lives (Social Security disability). 
The mortality rates applicable to annuities in pay status on the 
valuation date that

[[Page 845]]

are being received as disability benefits and for which either 
eligibility for, or receipt of, Social Security disability benefits is a 
prerequisite, are the rates in Tables 2-M and 2-F of appendix A to this 
part.

[61 FR 34059, July 1, 1996, as amended at 65 FR 14753, Mar. 17, 2000]



Sec. 4044.54  [Reserved]

                         Expected Retirement Age



Sec. 4044.55  XRA when a participant must retire to receive a benefit.

    (a) Applicability. Except as provided in Sec. 4044.57, the plan 
administrator shall determine the XRA under this section when plan 
provisions or established plan practice require a participant to retire 
from his or her job to begin receiving an early retirement benefit.
    (b) Data needed. The plan administrator shall determine for each 
participant who is entitled to an early retirement benefit--
    (1) The amount of the participant's monthly benefit payable at 
unreduced retirement age in the normal form payable under the terms of 
the plan or in the form validly elected by the participant before the 
termination date;
    (2) The calendar year in which the participant reaches unreduced 
retirement age (``URA'');
    (3) The participant's URA; and
    (4) The participant's earliest retirement age at the valuation date.
    (c) Procedure. (1) The plan administrator shall determine whether a 
participant is in the high, medium or low retirement rate category using 
the applicable Selection of Retirement Rate Category Table in appendix 
D, based on the participant's benefit determined under paragraph (b)(1) 
of this section and the year in which the participant reaches URA.
    (2) Based on the retirement rate category determined under paragraph 
(c)(1), the plan administrator shall determine the XRA from Table II-A, 
II-B or II-C, as appropriate, by using the participant's URA and 
earliest retirement age at valuation date.



Sec. 4044.56  XRA when a participant need not retire to receive a benefit.

    (a) Applicability. Except as provided in Sec. 4044.57, the plan 
administrator shall determine the XRA under this section when plan 
provisions or established plan practice do not require a participant to 
retire from his or her job to begin receiving his or her early 
retirement benefit.
    (b) Data needed. The plan administrator shall determine for each 
participant--
    (1) The participant's URA; and
    (2) The participant's earliest retirement age at valuation date.
    (c) Procedure. Participants in this case are always assigned to the 
high retirement rate category and therefore the plan administrator shall 
use Table II-C of appendix D to determine the XRA. The plan 
administrator shall determine the XRA from Table II-C by using the 
participant's URA and earliest retirement age at termination date.



Sec. 4044.57  Special rule for facility closing.

    (a) Applicability. The plan administrator shall determine the XRA 
under this section, rather than Sec. 4044.55 or Sec. 4044.56, when both 
the conditions set forth in paragraphs (a)(1) and (a)(2) of this section 
exist.
    (1) The facility at which the participant is or was employed 
permanently closed within one year before the valuation date, or is in 
the process of being permanently closed on the valuation date.
    (2) The participant left employment at the facility less than one 
year before the valuation date or was still employed at the facility on 
the valuation date.
    (b) XRA. The XRA is equal to the earliest retirement age at 
valuation date.

                           Non-Trusteed Plans



Sec. 4044.71  Valuation of annuity benefits.

    The value of a benefit which is to be paid as an annuity is the cost 
of purchasing the annuity on the date of distribution from an insurer 
under the qualifying bid.

[[Page 846]]



Sec. 4044.72  Form of annuity to be valued.

    (a) When both the participant and beneficiary are alive on the date 
of distribution, the form of annuity to be valued is--
    (1) For a participant or beneficiary already receiving a monthly 
benefit, that form which is being received, or
    (2) For a participant or beneficiary not receiving a monthly 
benefit, the normal annuity form payable under the plan or the optional 
form for which the participant has made a valid election pursuant to 
Sec. 2617.4(c) of this chapter. (See Note at beginning of part 4044.)
    (b) When the participant dies after the date of plan termination but 
before the date of distribution, the form of annuity to be valued is 
determined under paragraph (b)(1) or (b)(2) of this section:
    (1) For a participant who was entitled to a deferred annuity--
    (i) If the form was a single or joint life annuity, no benefit shall 
be valued; or
    (ii) If the participant had made a valid election of a lump sum 
benefit before he or she died, the form to be valued is the lump sum.
    (2) For a participant who was eligible for immediate retirement, and 
for a participant who was in pay status at the date of termination--
    (i) If the form was a single life annuity, no benefit shall be 
valued;
    (ii) If the form was an annuity for a period certain and life 
thereafter, the form to be valued is an annuity for the certain period;
    (iii) If the form was a joint and survivor annuity, the form to be 
valued is a single life annuity payable to the beneficiary, unless the 
beneficiary has also died, in which case no benefit shall be valued;
    (iv) If the form was an annuity for a period certain and joint and 
survivor thereafter, the form to be valued is an annuity for the certain 
period and the life of the beneficiary thereafter, unless the 
beneficiary has also died, in which case the form to be valued is an 
annuity for the certain period;
    (v) If the form was a cash refund annuity, the form to be valued is 
the remaining lump sum death benefit; or
    (vi) If the participant had elected a lump sum benefit before he or 
she died, the form to be valued is the lump sum.
    (c) When the participant is still living and the named beneficiary 
or spouse dies after the date of termination but before the date of 
distribution, the form of annuity to be valued is determined under 
paragraph (c)(1) or (c)(2) of this section:
    (1) For a participant entitled to a deferred annuity--
    (i) If the form was a joint and survivor annuity, the form to be 
valued is a single life annuity payable to the participant; or
    (ii) If the form was an annuity for a period certain and joint and 
survivor thereafter, the form to be valued is an annuity for the certain 
period and the life of the participant thereafter.
    (2) For a participant eligible for immediate retirement and for a 
participant in pay status at the date of termination--
    (i) If the form was a joint and survivor annuity, the form to be 
valued is a single life annuity payable to the participant; or
    (ii) If the form was an annuity for a period certain and joint 
survivor thereafter annuity, the form to be valued is an annuity for the 
certain period and for the life of the participant thereafter.



Sec. 4044.73  Lump sums and other alternative forms of distribution in lieu of annuities.

    (a) Valuation. (1) The value of the lump sum or other alternative 
form of distribution is the present value of the normal form of benefit 
provided by the plan payable at normal retirement age, determined as of 
the date of distribution using reasonable actuarial assumptions as to 
interest and mortality.
    (2) If the participant dies before the date of distribution, but had 
elected a lump sum benefit, the present value shall be determined as if 
the participant were alive on the date of distribution.
    (b) Actuarial assumptions. The plan administrator shall specify the 
actuarial assumptions used to determine the value calculated under 
paragraph

[[Page 847]]

(a) of this section when the plan administrator submits the benefit 
valuation data to the PBGC pursuant to Sec. 2617.12 of part 2617 of this 
chapter. The same actuarial assumptions shall be used for all such 
calculations. The PBGC reserves the right to review the actuarial 
assumptions used and to re-value the benefits determined by the plan 
administrator if the actuarial assumptions are found to be unreasonable.
    (See Note at beginning of part 4044.)



Sec. 4044.74  Withdrawal of employee contributions.

    (a) If a participant has not started to receive monthly benefit 
payments on the date of distribution, the value of the lump sum which 
returns mandatory employee contributions is equal to the total amount of 
contributions made by the participant, plus interest that is payable to 
the participant under the terms of the plan, plus interest on that total 
amount from the date of termination to the date of distribution. The 
rate of interest credited on employee contributions up to the date of 
termination shall be the greater of the interest rate provided under the 
terms of the plan or the interest rate required under section 204(c) of 
ERISA or section 411(c) of the IRC.
    (b) If a participant has started to receive monthly benefit payments 
on the date of distribution, part of which are attributable to his or 
her contributions, the value of the lump sum which returns employee 
contributions is equal to the excess of the amount described in 
paragraph (b)(1) of this section over the amount computed in paragraph 
(b)(2) of this section.
    (1) The amount of accumulated mandatory employee contributions 
remaining in the plan as of the date of termination plus interest from 
the date of termination to the date of distribution.
    (2) The excess of benefit payments made from the plan between date 
of plan termination and the date of distribution, over the amount of 
payments that would have been made if the employee contributions had 
been paid as a lump sum on the date of plan termination, with interest 
accumulated on the excess from the date of payment to the date of 
distribution.
    (c) Interest assumptions. The interest rate used under this section 
to credit interest between the date of termination to the date of 
distribution shall be a reasonable rate and shall be the same for both 
paragraphs (a) and (b).



Sec. 4044.75  Other lump sum benefits.

    The value of a lump sum benefit which is not covered under 
Sec. 4044.73 or Sec. 4044.74 is equal to--
    (a) The value under the qualifying bid, if an insurer provides the 
benefit; or
    (b) The present value of the benefit as of the date of distribution, 
determined using reasonable actuarial assumptions, if the benefit is to 
be distributed other than by the purchase of the benefit from an 
insurer. The PBGC reserves the right to review the actuarial assumptions 
as to reasonableness and re-value the benefit if the actuarial 
assumptions are unreasonable.
    (See Note at beginning of part 4044.)

             Appendix A to Part 4044--Mortality Rate Tables

    The tables in this appendix set forth for each age x the probability 
qX that an individual aged x will not survive to attain age 
x+1.

         Table 1--Mortality Table for Healthy Male Participants
------------------------------------------------------------------------
                            Age x                                  qx
------------------------------------------------------------------------
5............................................................   0.000342
6............................................................   0.000318
7............................................................   0.000302
8............................................................   0.000294
9............................................................   0.000292
10...........................................................   0.000293
11...........................................................   0.000298
12...........................................................   0.000304
13...........................................................   0.000310
14...........................................................   0.000317
15...........................................................   0.000325
16...........................................................   0.000333
17...........................................................   0.000343
18...........................................................   0.000353
19...........................................................   0.000365
20...........................................................   0.000377
21...........................................................   0.000392
22...........................................................   0.000408
23...........................................................   0.000424
24...........................................................   0.000444
25...........................................................   0.000464
26...........................................................   0.000488
27...........................................................   0.000513
28...........................................................   0.000542
29...........................................................   0.000572
30...........................................................   0.000607
31...........................................................   0.000645
32...........................................................   0.000687
33...........................................................   0.000734

[[Page 848]]

 
34...........................................................   0.000785
35...........................................................   0.000860
36...........................................................   0.000907
37...........................................................   0.000966
38...........................................................   0.001039
39...........................................................   0.001128
40...........................................................   0.001238
41...........................................................   0.001370
42...........................................................   0.001527
43...........................................................   0.001715
44...........................................................   0.001932
45...........................................................   0.002183
46...........................................................   0.002471
47...........................................................   0.002790
48...........................................................   0.003138
49...........................................................   0.003513
50...........................................................   0.003909
51...........................................................   0.004324
52...........................................................   0.004755
53...........................................................   0.005200
54...........................................................   0.005660
55...........................................................   0.006131
56...........................................................   0.006618
57...........................................................   0.007139
58...........................................................   0.007719
59...........................................................   0.008384
60...........................................................   0.009158
61...........................................................   0.010064
62...........................................................   0.011133
63...........................................................   0.012391
64...........................................................   0.013868
65...........................................................   0.015592
66...........................................................   0.017579
67...........................................................   0.019804
68...........................................................   0.022229
69...........................................................   0.024817
70...........................................................   0.027530
71...........................................................   0.030354
72...........................................................   0.033370
73...........................................................   0.036680
74...........................................................   0.040388
75...........................................................   0.044597
76...........................................................   0.049388
77...........................................................   0.054758
78...........................................................   0.060678
79...........................................................   0.067125
80...........................................................   0.074070
81...........................................................   0.081484
82...........................................................   0.089320
83...........................................................   0.097525
84...........................................................   0.106047
85...........................................................   0.114836
86...........................................................   0.124170
87...........................................................   0.133870
88...........................................................   0.144073
89...........................................................   0.154859
90...........................................................   0.166307
91...........................................................   0.178214
92...........................................................   0.190460
93...........................................................   0.203007
94...........................................................   0.217904
95...........................................................   0.234086
96...........................................................   0.248436
97...........................................................   0.263954
98...........................................................   0.280803
99...........................................................   0.299154
100..........................................................   0.319185
101..........................................................   0.341086
102..........................................................   0.365052
103..........................................................   0.393102
104..........................................................   0.427255
105..........................................................   0.469531
106..........................................................   0.521945
107..........................................................   0.586518
108..........................................................   0.665268
109..........................................................   0.760215
110..........................................................   1.000000
------------------------------------------------------------------------


   Table 2-M--Mortality Table for Disabled Male Participants Receiving
               Social Security Disability Benefit Payments
------------------------------------------------------------------------
                          Age x                                 qx
------------------------------------------------------------------------
5.......................................................        0.000000
6.......................................................        0.000000
7.......................................................        0.000000
8.......................................................        0.000000
9.......................................................        0.000000
10......................................................        0.000000
11......................................................        0.000000
12......................................................        0.000000
13......................................................        0.000000
14......................................................        0.000000
15......................................................        0.000000
16......................................................        0.000000
17......................................................        0.000000
18......................................................        0.000000
19......................................................        0.000000
20......................................................        0.048300
21......................................................        0.048300
22......................................................        0.048300
23......................................................        0.048300
24......................................................        0.048300
25......................................................        0.048300
26......................................................        0.046100
27......................................................        0.043600
28......................................................        0.041100
29......................................................        0.038600
30......................................................        0.036200
31......................................................        0.033900
32......................................................        0.032000
33......................................................        0.030200
34......................................................        0.028800
35......................................................        0.027800
36......................................................        0.027200
37......................................................        0.027100
38......................................................        0.027300
39......................................................        0.027600
40......................................................        0.028200
41......................................................        0.028800
42......................................................        0.029700
43......................................................        0.030500
44......................................................        0.031400
45......................................................        0.032200
46......................................................        0.033000
47......................................................        0.034000
48......................................................        0.035300
49......................................................        0.036700
50......................................................        0.038300
51......................................................        0.040100
52......................................................        0.042000
53......................................................        0.043900
54......................................................        0.046000
55......................................................        0.048200
56......................................................        0.050600
57......................................................        0.053100
58......................................................        0.055500
59......................................................        0.058100
60......................................................        0.060300

[[Page 849]]

 
61......................................................        0.062400
62......................................................        0.064300
63......................................................        0.065700
64......................................................        0.066800
65......................................................        0.069225
66......................................................        0.071813
67......................................................        0.074526
68......................................................        0.077350
69......................................................        0.080366
70......................................................        0.083676
71......................................................        0.087384
72......................................................        0.091593
73......................................................        0.096384
74......................................................        0.101754
75......................................................        0.107674
76......................................................        0.114121
77......................................................        0.121066
78......................................................        0.128480
79......................................................        0.136316
80......................................................        0.144521
81......................................................        0.153043
82......................................................        0.161832
83......................................................        0.171166
84......................................................        0.180866
85......................................................        0.191069
86......................................................        0.201855
87......................................................        0.213303
88......................................................        0.225210
89......................................................        0.237456
90......................................................        0.250003
91......................................................        0.264900
92......................................................        0.281082
93......................................................        0.295432
94......................................................        0.310950
95......................................................        0.327799
96......................................................        0.346150
97......................................................        0.366181
98......................................................        0.388082
99......................................................        0.412048
100.....................................................        0.440098
101.....................................................        0.474251
102.....................................................        0.516527
103.....................................................        0.568941
104.....................................................        0.633514
105.....................................................        0.712264
106.....................................................        0.807211
107.....................................................        1.000000
------------------------------------------------------------------------


  Table 2-F--Mortality Table for Disabled Female Participants Receiving
               Social Security Disability Benefit Payments
------------------------------------------------------------------------
                            Age x                                  qx
------------------------------------------------------------------------
5............................................................   0.000000
6............................................................   0.000000
7............................................................   0.000000
8............................................................   0.000000
9............................................................   0.000000
10...........................................................   0.000000
11...........................................................   0.000000
12...........................................................   0.000000
13...........................................................   0.000000
14...........................................................   0.000000
15...........................................................   0.000000
16...........................................................   0.000000
17...........................................................   0.000000
18...........................................................   0.000000
19...........................................................   0.000000
20...........................................................   0.026300
21...........................................................   0.026300
22...........................................................   0.026300
23...........................................................   0.026300
24...........................................................   0.026300
25...........................................................   0.026300
26...........................................................   0.025700
27...........................................................   0.025300
28...........................................................   0.024700
29...........................................................   0.024200
30...........................................................   0.023700
31...........................................................   0.023200
32...........................................................   0.022700
33...........................................................   0.022200
34...........................................................   0.021800
35...........................................................   0.021400
36...........................................................   0.021200
37...........................................................   0.021000
38...........................................................   0.020800
39...........................................................   0.020800
40...........................................................   0.020900
41...........................................................   0.021000
42...........................................................   0.021300
43...........................................................   0.021600
44...........................................................   0.021900
45...........................................................   0.022400
46...........................................................   0.022900
47...........................................................   0.023500
48...........................................................   0.024200
49...........................................................   0.024900
50...........................................................   0.025700
51...........................................................   0.026400
52...........................................................   0.027200
53...........................................................   0.028100
54...........................................................   0.028800
55...........................................................   0.029500
56...........................................................   0.030100
57...........................................................   0.030700
58...........................................................   0.031500
59...........................................................   0.032300
60...........................................................   0.033100
61...........................................................   0.033900
62...........................................................   0.034700
63...........................................................   0.035500
64...........................................................   0.036200
65...........................................................   0.037269
66...........................................................   0.038527
67...........................................................   0.040004
68...........................................................   0.041728
69...........................................................   0.043715
70...........................................................   0.045940
71...........................................................   0.048365
72...........................................................   0.050953
73...........................................................   0.053666
74...........................................................   0.056490
75...........................................................   0.059506
76...........................................................   0.062816
77...........................................................   0.066524
78...........................................................   0.070733
79...........................................................   0.075524
80...........................................................   0.080894
81...........................................................   0.086814
82...........................................................   0.093261
83...........................................................   0.100206
84...........................................................   0.107620
85...........................................................   0.115456

[[Page 850]]

 
86...........................................................   0.123661
87...........................................................   0.132183
88...........................................................   0.140972
89...........................................................   0.150306
90...........................................................   0.160006
91...........................................................   0.170209
92...........................................................   0.180995
93...........................................................   0.192443
94...........................................................   0.204350
95...........................................................   0.216596
96...........................................................   0.229143
97...........................................................   0.244040
98...........................................................   0.260222
99...........................................................   0.274572
100..........................................................   0.290090
101..........................................................   0.306939
102..........................................................   0.325290
103..........................................................   0.345321
104..........................................................   0.367222
105..........................................................   0.391188
106..........................................................   0.419238
107..........................................................   0.453391
108..........................................................   0.495667
109..........................................................   0.548081
110..........................................................   0.612654
111..........................................................   0.691404
112..........................................................   0.786351
113..........................................................   1.000000
------------------------------------------------------------------------


[61 FR 34059, July 1, 1996; 61 FR 36626, July 12, 1996, as amended at 65 
FR 14753, Mar. 17, 2000]

     Appendix B to Part 4044--Interest Rates Used To Value Benefits

  [This table sets forth, for each indicated calendar month, the interest rates (denoted by i1, i2, . . ., and
  referred to generally as it) assumed to be in effect between specified anniversaries of a valuation date that
 occurs within that calendar month; those anniversaries are specified in the columns adjacent to the rates. The
              last listed rate is assumed to be in effect after the last listed anniversary date.]
----------------------------------------------------------------------------------------------------------------
                                                                               The values of it are:
          For valuation dates occurring in the month--           -----------------------------------------------
                                                                    it    for t=    it    for t=    it    for t=
----------------------------------------------------------------------------------------------------------------
November 1993...................................................   .0560    1-25   .0525  
PART 4047--RESTORATION OF TERMINATING AND TERMINATED PLANS--Table of Contents




Sec.
4047.1  Purpose and scope.
4047.2  Definitions.
4047.3  Funding of restored plan.
4047.4  Payment of premiums.
4047.5  Repayment of PBGC payments of guaranteed benefits.

    Authority: 29 U.S.C. 1302(b)(3), 1347.

    Source: 61 FR 34073, July 1, 1996, unless otherwise noted.



Sec. 4047.1  Purpose and scope.

    Section 4047 of ERISA gives the PBGC broad authority to take any 
necessary actions in furtherance of a plan restoration order issued 
pursuant to section 4047. This part (along with Treasury regulation 26 
CFR 1.412(c)(1)-3) describes certain legal obligations that arise 
incidental to a plan restoration under section 4047. This part also 
establishes procedures with respect to these obligations that are 
intended to facilitate the orderly transition of a restored plan from 
terminated (or terminating) status to ongoing status, and to help ensure 
that the restored plan will continue to be ongoing consistent with the 
best interests of the plan's participants and beneficiaries and the 
single-employer insurance program. This part applies to terminated and 
terminating single-employer plans (except for plans terminated and 
terminating under ERISA section 4041(b)) with respect to which the PBGC 
has issued or is issuing a plan restoration order pursuant to ERISA 
section 4047.



Sec. 4047.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
controlled group, ERISA, IRS, PBGC, plan, plan administrator, plan year, 
and single-employer plan.

[[Page 855]]



Sec. 4047.3  Funding of restored plan.

    (a) General. Whenever the PBGC issues or has issued a plan 
restoration order under ERISA section 4047, it shall issue to the plan 
sponsor a restoration payment schedule order in accordance with the 
rules of this section. PBGC, through its Executive Director, shall also 
issue a certification to its Board of Directors and the IRS, as 
described in paragraph (c) of this section. If more than one plan is or 
has been restored, the PBGC shall issue a separate restoration payment 
schedule order and separate certification with respect to each restored 
plan.
    (b) Restoration payment schedule order. A restoration payment 
schedule order shall set forth a schedule of payments sufficient to 
amortize the initial restoration amortization base described in 
paragraph (b) of 26 CFR 1.412(c)(1)-3 over a period extending no more 
than 30 years after the initial post-restoration valuation date, as 
defined in paragraph (a)(1) of 26 CFR 1.412(c)(1)-3. The restoration 
payment schedule shall be consistent with the requirements of 26 CFR 
1.412(c)(1)-3 and may require payments at intervals of less than one 
year, as determined by the PBGC. The PBGC may, in its discretion, amend 
the restoration payment schedule at any time, consistent with the 
requirements of 26 CFR 1.412(c)(1)-3.
    (c) Certification. The Executive Director's certification to the 
Board of Directors and the IRS pursuant to paragraph (a) of this section 
shall state that the PBGC has reviewed the funding of the plan, the 
financial condition of the plan sponsor and its controlled group 
members, the payments required under the restoration payment schedule 
(taking into account the availability of deferrals as permitted under 
paragraph (c)(4) of 26 CFR 1.412(c)(1)-3) and any other factor that the 
PBGC deems relevant, and, based on that review, determines that it is in 
the best interests of the plan's participants and beneficiaries and the 
single-employer insurance program that the restored plan not be 
reterminated.
    (d) Periodic PBGC review. As long as a restoration payment schedule 
order issued under this section is in effect, the PBGC shall review 
annually the funding status of the plan with respect to which the order 
applies. As part of this review, the PBGC, through its Executive 
Director, shall issue a certification in the form described in paragraph 
(c) of this section. As a result of its funding review, PBGC may amend 
the restoration payment schedule, consistent with the requirements of 
paragraph (c)(2) of 26 CFR 1.412(c)(1)-3.



Sec. 4047.4  Payment of premiums.

    (a) General. Upon restoration of a plan pursuant to ERISA section 
4047, the obligation to pay PBGC premiums pursuant to ERISA section 4007 
is reinstated as of the date on which the plan was trusteed under 
section 4042 of ERISA. Except as otherwise specifically provided in 
paragraphs (b) and (c) of this section, the amount of the outstanding 
premiums owed shall be computed and paid by the plan administrator in 
accordance with part 4006 of this chapter (Premium Rates) and the forms 
and instructions issued pursuant thereto, as in effect for the plan 
years for which premiums are owed.
    (b) Notification of premiums owed. Whenever the PBGC issues or has 
issued a plan restoration order, it shall send a written notice to the 
plan administrator of the restored plan advising the plan administrator 
of the plan year(s) for which premiums are owed. PBGC will include with 
the notice the necessary premium payment forms and instructions. The 
notice shall prescribe the payment due dates for the outstanding 
premiums.
    (c) Methods for determining variable rate portion of the premium. In 
general, the variable rate portion of the outstanding premiums shall be 
determined in accordance with the premium regulation and forms, as 
provided in paragraph (a) of this section, except that for any plan year 
following a plan year for which Form 5500, Schedule B was not filed 
because the plan was terminated, the alternative calculation method in 
Sec. 4006.4(c) of this chapter may not be used.



Sec. 4047.5  Repayment of PBGC payments of guaranteed benefits.

    (a) General. Upon restoration of a plan pursuant to ERISA section 
4047, amounts paid by the PBGC from its single-employer insurance fund 
(the

[[Page 856]]

fund established pursuant to ERISA section 4005(a)) to pay guaranteed 
benefits and related expenses under the plan while it was terminated are 
a debt of the restored plan. The terms and conditions for payment of 
this debt shall be determined by the PBGC.
    (b) Repayment terms. The PBGC shall prescribe reasonable terms and 
conditions for payment of the debt described in paragraph (a) of this 
section, including the number, amount and commencement date of the 
payments. In establishing the terms, PBGC will consider the cash needs 
of the plan, the timing and amount of contributions owed to the plan, 
the liquidity of plan assets, the interests of the single-employer 
insurance program, and any other factors PBGC deems relevant. PBGC may, 
in its discretion, revise any of the payment terms and conditions, upon 
written notice to the plan administrator in accordance with paragraph 
(c) of this section.
    (c) Notification to plan administrator. Whenever the PBGC issues or 
has issued a plan restoration order, it shall send a written notice to 
the plan administrator of the restored plan advising the plan 
administrator of the amount owed the PBGC pursuant to paragraph (a) of 
this section. The notice shall also include the terms and conditions for 
payment of this debt, as established under paragraph (b) of this 
section.



PART 4050--MISSING PARTICIPANTS--Table of Contents




Sec.
4050.1  Purpose and scope.
4050.2  Definitions.
4050.3  Method of distribution for missing participants.
4050.4  Diligent search.
4050.5  Designated benefit.
4050.6  Payment and required documentation.
4050.7  Benefits of missing participants--in general.
4050.8  Automatic lump sum.
4050.9  Annuity or elective lump sum--living missing participant.
4050.10  Annuity or elective lump sum--beneficiary of deceased missing 
          participant.
4050.11  Limitations.
4050.12  Special rules.

Appendix A to part 4050--Examples of designated benefit determinations 
          for missing participants under Sec. 4050.5 in plans with 
          deemed distribution dates on and after August 17, 1998
Appendix B to part 4050--Examples of benefit payments for missing 
          participants under Secs. 4050.8 through 4050.10

    Authority: 29 U.S.C. 1302(b)(3), 1350.

    Source: 62 FR 60440, Nov. 7, 1997, unless otherwise noted.



Sec. 4050.1  Purpose and scope.

    This part prescribes rules for distributing benefits under a 
terminating single-employer plan for any individual whom the plan 
administrator has not located when distributing benefits under 
Sec. 4041.28 of this chapter. This part applies to a plan if the plan's 
deemed distribution date (or the date of a payment made in accordance 
with Sec. 4050.12) is in a plan year beginning on or after January 1, 
1996.



Sec. 4050.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
annuity, Code, ERISA, insurer, irrevocable commitment, mandatory 
employee contributions, normal retirement age, PBGC, person, plan, plan 
administrator, plan year and title IV benefit.
    In addition, for purposes of this part:
    Deemed distribution date means--
    (1) The last day of the period in which distribution may be made 
under part 4041 of this chapter; or
    (2) If the plan administrator selects an earlier date that is no 
earlier than the date when all benefit distributions have been made 
under the plan except for distributions to missing participants whose 
designated benefits are paid to the PBGC, such earlier date.
    Designated benefit means the amount payable to the PBGC for a 
missing participant pursuant to Sec. 4050.5.
    Designated benefit interest rate means the rate of interest 
applicable to underpayments of guaranteed benefits by the PBGC under 
Sec. 4022.81(c) of this chapter.
    Guaranteed benefit form means, with respect to a benefit, the form 
in which the PBGC would pay a guaranteed benefit to a participant or 
beneficiary in the PBGC's program for trusteed plans under subparts A 
and B of part 4022 of this chapter (treating the deemed distribution 
date as the termination date for this purpose).

[[Page 857]]

    Missing participant means a participant or beneficiary entitled to a 
distribution under a terminating plan whom the plan administrator has 
not located as of the date when the plan administrator pays the 
individual's designated benefit to the PBGC (or distributes the 
individual's benefit by purchasing an irrevocable commitment from an 
insurer). In the absence of proof of death, individuals not located are 
presumed living.
    Missing participant annuity assumptions means the interest rate 
assumptions and actuarial methods for valuing benefits under 
Sec. 4044.52 of this chapter, applied--
    (1) As if the deemed distribution date were the termination date;
    (2) Using the mortality rates prescribed in Revenue Ruling 95-6, 
1995-1 C.B. 80 (for availability, see 26 CFR 601.601(d));
    (3) Without using the expected retirement age assumptions in 
Secs. 4044.55 through 4044.57 of this chapter;
    (4) Without making the adjustment for expenses provided for in 
Sec. 4044.52(e) of this chapter; and
    (5) By adding $300, as an adjustment (loading) for expenses, for 
each missing participant whose designated benefit without such 
adjustment would be greater than $5,000.
    Missing participant forms and instructions means PBGC Forms 501 and 
602, Schedule MP thereto, and related forms, and their instructions.
    Missing participant lump sum assumptions means the interest rate and 
mortality assumptions and actuarial methods for determining the lump sum 
value of a benefit under Sec. 4022.7(d) of this chapter applied--
    (1) As if the deemed distribution date were the termination date; 
and
    (2) Without using the expected retirement age assumptions in 
Secs. 4044.55 through 4044.57 of this chapter.
    Pay status means, with respect to a benefit under a plan, that the 
plan administrator has made or (except for administrative delay or a 
waiting period) would have made one or more benefit payments.
    Post-distribution certification means the post-distribution 
certification required by Sec. 4041.29 or Sec. 4041.50 of this chapter.
    Unloaded designated benefit means the designated benefit reduced by 
$300; except that the reduction does not apply in the case of a 
designated benefit determined using the missing participant annuity 
assumptions without adding the $300 load described in paragraph (5) of 
the definition of ``missing participant annuity assumptions.''

[62 FR 60440, Nov. 7, 1997, as amended at 63 FR 29355, May 29, 1998; 63 
FR 38306, July 16, 1998; 65 FR 14753, Mar. 17, 2000]



Sec. 4050.3  Method of distribution for missing participants.

    The plan administrator of a terminating plan must distribute 
benefits for each missing participant by--
    (a) Purchasing from an insurer an irrevocable commitment that 
satisfies the requirements of Sec. 4041.28(c) or Sec. 4041.50 of this 
chapter (whichever is applicable); or
    (b) Paying the PBGC a designated benefit in accordance with 
Secs. 4050.4 through 4050.6 (subject to the special rules in 
Sec. 4050.12).



Sec. 4050.4  Diligent search.

    (a) Search required. A diligent search must be made for each missing 
participant before information about the missing participant or payment 
is submitted to the PBGC pursuant to Sec. 4050.6.
    (b) Diligence. A search is a diligent search only if the search --
    (1) Begins not more than 6 months before notices of intent to 
terminate are issued and is carried on in such a manner that if the 
individual is found, distribution to the individual can reasonably be 
expected to be made on or before the deemed distribution date;
    (2) Includes inquiry of any plan beneficiaries (including alternate 
payees) of the missing participant whose names and addresses are known 
to the plan administrator; and
    (3) Includes use of a commercial locator service to search for the 
missing participant (without charge to the missing participant or 
reduction of the missing participant's plan benefit).



Sec. 4050.5  Designated benefit.

    (a) Amount of designated benefit. The amount of the designated 
benefit is the amount determined under paragraph

[[Page 858]]

(a)(1), (a)(2), (a)(3), or (a)(4) of this section (whichever is 
applicable) or, if less, the maximum amount that could be provided under 
the plan to the missing participant in the form of a single sum in 
accordance with section 415 of the Code.
    (1) Mandatory lump sum. The designated benefit of a missing 
participant required under a plan to receive a mandatory lump sum as of 
the deemed distribution date is the lump sum payment that the plan 
administrator would have distributed to the missing participant as of 
the deemed distribution date.
    (2) De minimis lump sum. The designated benefit of a missing 
participant not described in paragraph (a)(1) of this section whose 
benefit is not in pay status as of the deemed distribution date and 
whose benefit has a de minimis actuarial present value ($5,000 or less) 
as of the deemed distribution date under the missing participant lump 
sum assumptions is such value.
    (3) No lump sum. The designated benefit of a missing participant not 
described in paragraph (a)(1) or (a)(2) of this section who, as of the 
deemed distribution date, cannot elect an immediate lump sum under the 
plan is the actuarial present value of the missing participant's benefit 
as of the deemed distribution date under the missing participant annuity 
assumptions.
    (4) Elective lump sum. The designated benefit of a missing 
participant not described in paragraph (a)(1), (a)(2), or (a)(3) of this 
section is the greater of the amounts determined under the methodologies 
of paragraph (a)(1) or (a)(3) of this section.
    (b) Assumptions. When the plan administrator uses the missing 
participant annuity assumptions or the missing participant lump sum 
assumptions for purposes of determining the designated benefit under 
paragraph (a) of this section, the plan administrator must value the 
most valuable benefit, as determined under paragraph (b)(1) of this 
section, using the assumptions described in paragraph (b)(2) or (b)(3) 
of this section (whichever is applicable).
    (1) Most valuable benefit. For a missing participant whose benefit 
is in pay status as of the deemed distribution date, the most valuable 
benefit is the pay status benefit. For a missing participant whose 
benefit is not in pay status as of the deemed distribution date, the 
most valuable benefit is the benefit payable at the age on or after the 
deemed distribution date (beginning with the participant's earliest 
early retirement age and ending with the participant's normal retirement 
age) for which the present value as of the deemed distribution date is 
the greatest. The present value as of the deemed distribution date with 
respect to any age is determined by multiplying:
    (i) The monthly (or other periodic) benefit payable under the plan; 
by
    (ii) The present value (determined as of the deemed distribution 
date using the missing participant annuity assumptions) of a $1 monthly 
(or other periodic) annuity beginning at the applicable age.
    (2) Participant. A missing participant who is a participant, and 
whose benefit is not in pay status as of the deemed distribution date, 
is assumed to be married to a spouse the same age, and the form of 
benefit that must be valued is the qualified joint and survivor annuity 
benefit that would be payable under the plan. If the participant's 
benefit is in pay status as of the deemed distribution date, the form 
and beneficiary of the participant's benefit are the form of benefit and 
beneficiary of the pay status benefit.
    (3) Beneficiary. A missing participant who is a beneficiary, and 
whose benefit is not in pay status as of the deemed distribution date, 
is assumed not to be married, and the form of benefit that must be 
valued is the survivor benefit that would be payable under the plan. If 
the beneficiary's benefit is in pay status as of the deemed distribution 
date, the form and beneficiary of the beneficiary's benefit are the form 
of benefit and beneficiary of the pay status benefit.
    (4) Examples. See Appendix A to this part for examples illustrating 
the provisions of this section.
    (c) Missed payments. In determining the designated benefit, the plan 
administrator must include the value of any payments that were due 
before the deemed distribution date but that were not made.

[[Page 859]]

    (d) Payment of designated benefits. Payment of designated benefits 
must be made in accordance with Sec. 4050.6 and will be deemed made on 
the deemed distribution date.

[62 FR 60440, Nov. 7, 1997, as amended at 63 38306, July 16, 1998]



Sec. 4050.6  Payment and required documentation.

    (a) Time of payment and filing. The plan administrator must pay 
designated benefits, and file the information and certifications (of the 
plan administrator and the plan's enrolled actuary) specified in the 
missing participant forms and instructions, by the time the post-
distribution certification is due. Except as otherwise provided in the 
missing participant forms and instructions, the plan administrator must 
submit the designated benefits, information, and certifications with the 
post-distribution certification.
    (b) Late charges. (1) Interest on late payments. Except as provided 
in paragraph (b)(2) of this section, if the plan administrator does not 
pay a designated benefit by the time specified in paragraph (a) of this 
section, the plan administrator must pay interest as assessed by the 
PBGC for the period beginning on the deemed distribution date and ending 
on the date when the payment is received by the PBGC. Interest will be 
assessed at the rate provided for late premium payments in Sec. 4007.7 
of this chapter. Interest assessed under this paragraph will be deemed 
paid in full if payment of the amount assessed is received by the PBGC 
within 30 days after the date of a PBGC bill for such amount.
    (2) Assessment of interest and penalties. The PBGC will assess 
interest for late payment of a designated benefit or a penalty for late 
filing of information only to the extent paid or filed beyond the time 
provided in Sec. 4041.29(b).
    (c) Supplemental information. Within 30 days after the date of a 
written request from the PBGC, a plan administrator required to provide 
the information and certifications described in paragraph (a) of this 
section must file supplemental information, as requested, for the 
purpose of verifying designated benefits, determining benefits to be 
paid by the PBGC under this part, and substantiating diligent searches.
    (d) Filing with the PBGC. The rules described in Sec. 4041.3(b) of 
this chapter apply to filings with the PBGC under this part.



Sec. 4050.7  Benefits of missing participants--in general.

    (a) If annuity purchased. If a plan administrator distributes a 
missing participant's benefit by purchasing an irrevocable commitment 
from an insurer, and the missing participant (or his or her beneficiary 
or estate) later contacts the PBGC, the PBGC will inform the person of 
the identity of the insurer, the relevant policy number, and (to the 
extent known) the amount or value of the benefit.
    (b) If designated benefit paid. If the PBGC locates or is contacted 
by a missing participant (or his or her beneficiary or estate) for whom 
a plan administrator paid a designated benefit to the PBGC, the PBGC 
will pay benefits in accordance with Secs. 4050.8 through 4050.10 
(subject to the limitations and special rules in Secs. 4050.11 and 
4050.12).
    (c) Examples. See Appendix B to this part for examples illustrating 
the provisions of Secs. 4050.8 through 4050.10.



Sec. 4050.8  Automatic lump sum.

    This section applies to a missing participant whose designated 
benefit was determined under Sec. 4050.5(a)(1) (mandatory lump sum) or 
Sec. 4050.5(a)(2) (de minimis lump sum).
    (a) General rule. (1) Benefit paid. The PBGC will pay a single sum 
benefit equal to the designated benefit plus interest at the designated 
benefit interest rate from the deemed distribution date to the date on 
which the PBGC pays the benefit.
    (2) Payee. Payment will be made--
    (i) To the missing participant, if located;
    (ii) If the missing participant died before the deemed distribution 
date, and if the plan so provides, to the missing participant's 
beneficiary or estate; or
    (iii) If the missing participant dies on or after the deemed 
distribution date, to the missing participant's estate.

[[Page 860]]

    (b) De minimis annuity alternative. If the guaranteed benefit form 
for a missing participant whose designated benefit was determined under 
Sec. 4050.5(a)(2) (de minimis lump sum) (or the guaranteed benefit form 
for a beneficiary of such a missing participant) would provide for the 
election of an annuity, the missing participant (or the beneficiary) may 
elect to receive an annuity. If such an election is made --
    (1) The PBGC will pay the benefit in the elected guaranteed benefit 
form, beginning on the annuity starting date elected by the missing 
participant (or the beneficiary), which may not be before the later of 
the date of the election or the earliest date on which the missing 
participant (or the beneficiary) could have begun receiving benefits 
under the plan; and
    (2) The benefit paid will be actuarially equivalent to the 
designated benefit, i.e., each monthly (or other periodic) benefit 
payment will equal the designated benefit divided by the present value 
(determined as of the deemed distribution date under the missing 
participant lump sum assumptions) of a $1 monthly (or other periodic) 
annuity beginning on the annuity starting date.



Sec. 4050.9  Annuity or elective lump sum--living missing participant.

    This section applies to a missing participant whose designated 
benefit was determined under Sec. 4050.5(a)(3) (no lump sum) or 
Sec. 4050.5(a)(4) (elective lump sum) and who is living on the date as 
of which the PBGC begins paying benefits.
    (a) Missing participant whose benefit was not in pay status as of 
the deemed distribution date. The PBGC will pay the benefit of a missing 
participant whose benefit was not in pay status as of the deemed 
distribution date as follows.
    (1) Time and form of benefit. The PBGC will pay the missing 
participant's benefit in the guaranteed benefit form, beginning on the 
annuity starting date elected by the missing participant (which may not 
be before the later of the date of the election or the earliest date on 
which the missing participant could have begun receiving benefits under 
the plan).
    (2) Amount of benefit. The PBGC will pay a benefit that is 
actuarially equivalent to the unloaded designated benefit, i.e., each 
monthly (or other periodic) benefit payment will equal the unloaded 
designated benefit divided by the present value (determined as of the 
deemed distribution date under the missing participant annuity 
assumptions) of a $1 monthly (or other periodic) annuity beginning on 
the annuity starting date.
    (b) Missing participant whose benefit was in pay status as of the 
deemed distribution date. The PBGC will pay the benefit of a missing 
participant whose benefit was in pay status as of the deemed 
distribution date as follows.
    (1) Time and form of benefit. The PBGC will pay the benefit in the 
form that was in pay status, beginning when the missing participant is 
located.
    (2) Amount of benefit. The PBGC will pay the monthly (or other 
periodic) amount of the pay status benefit, plus a lump sum equal to the 
payments the missing participant would have received under the plan, 
plus interest on the missed payments (at the plan rate up to the deemed 
distribution date and thereafter at the designated benefit interest 
rate) to the date as of which the PBGC pays the lump sum.
    (c) Payment of lump sum. If a missing participant whose designated 
benefit was determined under Sec. 4050.5(a)(4) (elective lump sum) so 
elects, the PBGC will pay his or her benefit in the form of a single 
sum. This election is not effective unless the missing participant's 
spouse consents (if such consent would be required under section 205 of 
ERISA). The single sum equals the designated benefit plus interest (at 
the designated benefit interest rate) from the deemed distribution date 
to the date as of which the PBGC pays the benefit.



Sec. 4050.10  Annuity or elective lump sum--beneficiary of deceased missing participant.

    This section applies to a beneficiary of a deceased missing 
participant whose designated benefit was determined under 
Sec. 4050.5(a)(3) (no lump sum) or Sec. 4050.5(a)(4) (elective lump sum) 
and whose benefit is not payable under Sec. 4050.9.

[[Page 861]]

    (a) If deceased missing participant's benefit was not in pay status 
as of the deemed distribution date. The PBGC will pay a benefit with 
respect to a deceased missing participant whose benefit was not in pay 
status as of the deemed distribution date as follows.
    (1) General rule. (i) Beneficiary. The PBGC will pay a benefit to 
the surviving spouse of a missing participant who was a participant 
(unless the surviving spouse has properly waived a benefit in accordance 
with section 205 of ERISA).
    (ii) Form and amount of benefit. The PBGC will pay the survivor 
benefit in the form of a single life annuity. Each monthly (or other 
periodic) benefit payment will equal 50 percent of the quotient that 
results when the unloaded designated benefit is divided by the present 
value (determined as of the deemed distribution date under the missing 
participant annuity assumptions, and assuming that the missing 
participant survived to the deemed distribution date) of a $1 monthly 
(or other periodic) joint and 50 percent survivor annuity beginning on 
the annuity starting date, under which reduced payments (at the 50 
percent level) are made only after the death of the missing participant 
during the life of the spouse (and not after the death of the spouse 
during the missing participant's life).
    (iii) Time of benefit. The PBGC will pay the survivor benefit 
beginning at the time elected by the surviving spouse (which may not be 
before the later of the date of the election or the earliest date on 
which the surviving spouse could have begun receiving benefits under the 
plan).
    (2) If missing participant died before deemed distribution date. 
Notwithstanding the provisions of paragraph (a)(1) of this section, if a 
beneficiary of a missing participant who died before the deemed 
distribution date establishes to the PBGC's satisfaction that he or she 
is the proper beneficiary or would have received benefits under the plan 
in a form, at a time, or in an amount different from the benefit paid 
under paragraph (a)(1)(ii) or (a)(1)(iii) of this section, the PBGC will 
make payments in accordance with the facts so established, but only in 
the guaranteed benefit form.
    (3) Elective lump sum. Notwithstanding the provisions of paragraphs 
(a)(1) and (a)(2) of this section, if the beneficiary of a missing 
participant whose designated benefit was determined under 
Sec. 4050.5(a)(4) (elective lump sum) so elects, the PBGC will pay his 
or her benefit in the form of a single sum. The single sum will be equal 
to the actuarial present value (determined as of the deemed distribution 
date under the missing participant annuity assumptions) of the death 
benefit payable on the annuity starting date, plus interest (at the 
designated benefit interest rate) from the deemed distribution date to 
the date as of which the PBGC pays the benefit.
    (b) If deceased missing participant's benefit was in pay status as 
of the deemed distribution date. The PBGC will pay a benefit with 
respect to a deceased missing participant whose benefit was in pay 
status as of the deemed distribution date as follows.
    (1) Beneficiary. The PBGC will pay a benefit to the beneficiary (if 
any) of the benefit that was in pay status as of the deemed distribution 
date.
    (2) Form and amount of benefit. The PBGC will pay a monthly (or 
other periodic) amount equal to the monthly (or other periodic) amount, 
if any, that the beneficiary would have received under the form of 
payment in effect, plus a lump sum payment equal to the payments the 
beneficiary would have received under the plan after the missing 
participant's death and before the date as of which the benefit is paid 
under paragraph (b)(4) of this section, plus interest on the missed 
payments (at the plan rate up to the deemed distribution date and 
thereafter at the designated benefit interest rate) to the date as of 
which the benefit is paid under paragraph (b)(4) of this section.
    (3) Lump sum payment to estate. The PBGC will make a lump sum 
payment to the missing participant's estate equal to the payments that 
the missing participant would have received under the plan for the 
period before the missing participant's death, plus interest on the 
missed payments (at the plan rate up to the deemed distribution date

[[Page 862]]

and thereafter at the designated benefit interest rate) to the date when 
the lump sum is paid. Notwithstanding the preceding sentence, if a 
beneficiary of a missing participant other than the estate establishes 
to the PBGC's satisfaction that the beneficiary is entitled to the lump 
sum payment, the PBGC will pay the lump sum to such beneficiary.
    (4) Time of benefit. The PBGC will pay the survivor benefit 
beginning when the beneficiary is located.
    (5) Spouse deceased. If the PBGC locates the estate of the deceased 
missing participant's spouse under circumstances where a benefit would 
have been paid under this paragraph (b) if the spouse had been located 
while alive, the PBGC will pay to the spouse's estate a lump sum payment 
computed in the same manner as provided for in paragraph (b)(2) of this 
section based on the period from the missing participant's death to the 
death of the spouse.



Sec. 4050.11  Limitations.

    (a) Exclusive benefit. The benefits provided for under this part 
will be the only benefits payable by the PBGC to missing participants or 
to beneficiaries based on the benefits of deceased missing participants.
    (b) Limitation on benefit value. The total actuarial present value 
of all benefits paid with respect to a missing participant under 
Secs. 4050.8 through 4050.10, determined as of the deemed distribution 
date, will not exceed the missing participant's designated benefit.
    (c) Guaranteed benefit. If a missing participant or his or her 
beneficiary establishes to the PBGC's satisfaction that the benefit 
under Secs. 4050.8 through 4050.10 (based on the designated benefit 
actually paid to the PBGC) is less than the minimum benefit in this 
paragraph (c), the PBGC will instead pay the minimum benefit. The 
minimum benefit is the lesser of:
    (1) The benefit as determined under the PBGC's rules for paying 
guaranteed benefits in trusteed plans under subparts A and B of part 
4022 of this chapter (treating the deemed distribution date as the 
termination date for this purpose); or
    (2) The benefit based on the designated benefit that should have 
been paid under Sec. 4050.5.
    (d) Limitation on annuity starting date. A missing participant (or 
his or her survivor) may not elect an annuity starting date after the 
later of--
    (1) The required beginning date under section 401(a)(9) of the Code; 
or
    (2) The date when the missing participant (or the survivor) is 
notified of his or her right to a benefit.



Sec. 4050.12  Special rules.

    (a) Missing participants located quickly. Notwithstanding the 
provisions of Secs. 4050.8 through 4050.10, if the PBGC or the plan 
administrator locates a missing participant within 30 days after the 
PBGC receives the missing participant's designated benefit, the PBGC may 
in its discretion return the missing participant's designated benefit to 
the plan administrator, and the plan administrator must make 
distribution to the individual in such manner as the PBGC will direct.
    (b) Qualified domestic relations orders. Plan administrators must 
and the PBGC will take the provisions of qualified domestic relations 
orders (QDROs) under section 206(d)(3) of ERISA or section 414(p) of the 
Code into account in determining designated benefits and benefit 
payments by the PBGC, including treating an alternate payee under an 
applicable QDRO as a missing participant or as a beneficiary of a 
missing participant, as appropriate, in accordance with the terms of the 
QDRO. For purposes of calculating the amount of the designated benefit 
of an alternate payee, the plan administrator must use the assumptions 
for a missing participant who is a beneficiary under Sec. 4050.5(b).
    (c) Employee contributions. (1) Mandatory employee contributions. 
Notwithstanding the provisions of Sec. 4050.5, if a missing participant 
made mandatory contributions (within the meaning of section 4044(a)(2) 
of ERISA), the missing participant's designated benefit may not be less 
than the sum of the missing participant's mandatory contributions and 
interest to the deemed distribution date at the plan's rate or the rate 
under section 204(c) of ERISA

[[Page 863]]

(whichever produces the greater amount).
    (2) Voluntary employee contributions. (i) Applicability. This 
paragraph (c)(2) applies to any employee contributions that were not 
mandatory (within the meaning of section 4044(a)(2) of ERISA) to which a 
missing participant is entitled in connection with the termination of a 
defined benefit plan.
    (ii) Payment to PBGC. A plan administrator, in accordance with the 
missing participant forms and instructions, must pay the employee 
contributions described in paragraph (c)(2)(i) of this section (together 
with any earnings thereon) to the PBGC, and must file Schedule MP with 
the PBGC, by the time the designated benefit is due under Sec. 4050.6. 
Any such amount must be in addition to the designated benefit and must 
be separately identified.
    (iii) Payment by PBGC. In addition to any other amounts paid by the 
PBGC under Secs. 4050.8 through 4050.10, the PBGC will pay any amount 
paid to it under paragraph (c)(2)(ii) of this section, with interest at 
the designated benefit interest rate from the date of receipt by the 
PBGC to the date of payment by the PBGC, in the same manner as described 
in Sec. 4050.8 (automatic lump sums), except that if the missing 
participant died before the deemed distribution date and there is no 
beneficiary, payment will be made to the missing participant's estate.
    (d) Residual assets. The PBGC will determine, in a manner consistent 
with the purposes of this part and section 4050 of ERISA, how the 
provisions of this part apply to any distribution (to participants and 
beneficiaries who cannot be located) of residual assets remaining after 
the satisfaction of plan benefits (as defined in Sec. 4041.2 of this 
chapter) in connection with the termination of a defined benefit plan. 
Unless the PBGC otherwise determines, the payment of residual assets for 
a participant or beneficiary who cannot be located, and the submission 
to the PBGC of the related Schedule MP (or amended Schedule MP), must be 
made no earlier than the date when the post-distribution certification 
is filed with the PBGC, and no later than the later of--
    (1) The 30th day after the date on which all residual assets have 
been distributed to all participants and beneficiaries other than those 
who cannot be located and for whom payment of residual assets is made to 
the PBGC, and
    (2) The date when the post-distribution certification is filed with 
the PBGC.
    (e) Sufficient distress terminations. In the case of a plan 
undergoing a distress termination (under section 4041(c) of ERISA) that 
is sufficient for at least all guaranteed benefits and that distributes 
its assets in the manner described in section 4041(b)(3) of ERISA, the 
benefit assumed to be payable by the plan for purposes of determining 
the amount of the designated benefit under Sec. 4050.5 is limited to the 
title IV benefit plus any benefit to which funds under section 4022(c) 
of ERISA have been allocated.
    (f) Similar rules for later payments. If the PBGC determines that 
one or more persons should receive benefits (which may be in addition to 
benefits already provided) in order for a plan termination to be valid 
(e.g., upon audit of the termination), and one or more of such 
individuals cannot be located, the PBGC will determine, in a manner 
consistent with the purposes of this part and section 4050 of ERISA, how 
the provisions of this part apply to such benefits.
    (g) Discretionary extensions. Any deadline under this part may be 
extended in accordance with the rules described in Sec. 4041.30 of this 
chapter.
    (h) Payments beginning after required beginning date. If the PBGC 
begins paying an annuity under Sec. 4050.9(a) or 4050.10(a) to a 
participant or a participant's spouse after the required beginning date 
under section 401(a)(9)(C) of the Code, the PBGC will pay to the 
participant or the spouse (or their respective estates) or both, as 
appropriate, the lump sum equivalent of the past annuity payments the 
participant and spouse would have received if the PBGC had begun making 
payments on the required beginning date. The PBGC will also pay lump sum 
equivalents under this paragraph (g) if the PBGC locates the estate of 
the participant or spouse after both are deceased. (Nothing in this 
paragraph (g) will increase the total value of the benefits payable with 
respect to a missing participant.)

[[Page 864]]

 Appendix A to Part 4050--Examples of Designated Benefit Determinations 
    for Missing Participants Under Sec. 4050.5 in Plans with Deemed 
             Distribution Dates on and After August 17, 1998

    The calculation of the designated benefit under Sec. 4050.5 is 
illustrated by the following examples.
    Example 1. Plan A provides that any participant whose benefit has a 
value at distribution of $3,500 or less will be paid a lump sum, and 
that no other lump sums will be paid. P, Q, and R are missing 
participants.
    (1) As of the deemed distribution date, the value of P's benefit is 
$3,000 under plan A's assumptions. Under Sec. 4050.5(a)(1), the plan 
administrator pays the PBGC $3,000 as P's designated benefit.
    (2) As of the deemed distribution date, the value of Q's benefit is 
$5,200 under plan A's assumptions and $4,700 under the missing 
participant lump sum assumptions. Under Sec. 4050.5(a)(2), the plan 
administrator pays the PBGC $4,700 as Q's designated benefit.
    (3) As of the deemed distribution date, the value of R's benefit is 
$4,900 under plan A's assumptions, $3,600 under the missing participant 
lump sum assumptions, and $4,950 under the missing participant annuity 
assumptions. Under Sec. 4050.5(a)(3), the plan administrator pays the 
PBGC $4,950 as R's designated benefit.
    Example 2. Plan B provides for a normal retirement age of 65 and 
permits early commencement of benefits at any age between 60 and 65, 
with benefits reduced by 5 percent for each year before age 65 that the 
benefit begins. The qualified joint and 50 percent survivor annuity 
payable under the terms of the plan requires in all cases a 16 percent 
reduction in the benefit otherwise payable. The plan does not provide 
for elective lump sums.
    (1) M is a missing participant who separated from service under plan 
B with a deferred vested benefit. M is age 50 at the deemed distribution 
date, and has a normal retirement benefit of $1,000 per month payable at 
age 65 in the form of a single life annuity. M's benefit as of the 
deemed distribution date has a value greater than $5,000 using either 
plan assumptions or the missing participant lump sum assumptions. 
Accordingly, M's designated benefit is to be determined under 
Sec. 4050.5(a)(3).
    (2) For purposes of determining M's designated benefit, M is assumed 
to be married to a spouse who is also age 50 on the deemed distribution 
date. M's monthly benefit in the form of the qualified joint and 
survivor annuity under the plan varies from $840 at age 65 (the normal 
retirement age) ($1,000 x (1-.16)) to $630 at age 60 (the earliest 
retirement age) ($1,000 x (1-5 x (.05)) x (1-.16)).
    (3) Under Sec. 4050.5(a)(3), M's benefit is to be valued using the 
missing participant annuity assumptions. The select and ultimate 
interest rates on Plan B's deemed distribution date are 7.50 percent for 
the first 20 years and 5.75 percent thereafter. Using these rates and 
the blended mortality table described in paragraph (2) of the definition 
of ``missing participant annuity assumptions'' in Sec. 4050.2, the plan 
administrator determines that the benefit commencing at age 60 is the 
most valuable benefit (i.e., the benefit at age 60 is more valuable than 
the benefit at ages 61, 62, 63, 64 or 65). The present value as of the 
deemed distribution date of each dollar of annual benefit (payable 
monthly as a joint and 50 percent survivor annuity) is $5.4307 if the 
benefit begins at age 60. (Because a new spouse may succeed to the 
survivor benefit, the mortality of the spouse during the deferral period 
is ignored.) Thus, without adjustment (loading) for expenses, the value 
of the benefit beginning at age 60 is $41,056 (12 x $630 x 5.4307). The 
designated benefit is equal to this value plus an expense adjustment of 
$300, or a total of $41,356.

[62 FR 60440, Nov. 7, 1997, as amended at 63 FR 38306, July 16, 1998]

   Appendix B to Part 4050--Examples of Benefit Payments for Missing 
             Participants Under Secs. 4050.8 Through 4050.10

    The provisions of Secs. 4050.8 through 4050.10 are illustrated by 
the following examples.
    Example 1. Participant M from Plan B (see Example 2 in Appendix A of 
this part) is located. M's spouse is ten years younger than M. M elects 
to receive benefits in the form of a joint and 50 percent survivor 
annuity commencing at age 62.
    (1) M's designated benefit was $41,356. The unloaded designated 
benefit was $41,056. As of Plan B's deemed distribution date (and using 
the missing participant annuity assumptions), the present value per 
dollar of annual benefit (payable monthly as a joint and 50 percent 
survivor annuity commencing at age 62 and reflecting the actual age of 
M's spouse) is $4.7405. Thus, the monthly benefit to M at age 62 is $722 
($41,056 / (4.7405 x 12)). M's spouse will receive $361 (50 percent of 
$722) per month for life after the death of M.
    (2) If M had instead been found to have died on or after the deemed 
distribution date, and M's spouse wanted benefits to commence when M 
would have attained age 62, the same calculation would be performed to 
arrive at a monthly benefit of $361 to M's spouse.
    Example 2. Participant P is a missing participant from Plan C, a 
plan that allows elective lump sums upon plan termination. Plan C's 
administrator pays a designated benefit of $10,000 to the PBGC on behalf 
of P, who was age 30 on the deemed distribution date.

[[Page 865]]

    (1) P's spouse, S, is located and has a death certificate showing 
that P died on or after the deemed distribution date with S as spouse. S 
is the same age as P, and would like survivor benefits to commence 
immediately, at age 55 (as permitted by the plan). S's benefit is the 
survivor's share of the joint and 50 percent survivor annuity which is 
actuarially equivalent, as of the deemed distribution date, to $9,700 
(the unloaded designated benefit).
    (2) The select and ultimate interest rates on Plan C's deemed 
distribution date were 7.50 percent for the first 20 years and 5.75 
percent thereafter. Using these rates and the blended mortality table 
described in paragraph (2) of the definition of ``missing participant 
annuity assumptions'' in Sec. 4050.2, the present value as of the deemed 
distribution date of each dollar of annual benefit (payable monthly as a 
joint and 50 percent survivor annuity) is $2.4048 if the benefit begins 
when S and P would have been age 55. Thus, the monthly benefit to S 
commencing at age 55 is $168 (50 percent of $9,700 / (2.4048 x 12)). 
Since P could have elected a lump sum upon plan termination, S may elect 
a lump sum. S's lump sum is the present value as of the deemed 
distribution date (using the missing participant annuity assumptions) of 
the monthly benefit of $168, accumulated with interest at the designated 
benefit interest rate to the date paid.

[[Page 866]]



                         SUBCHAPTER F--LIABILITY





PART 4061--AMOUNTS PAYABLE BY THE PENSION BENEFIT GUARANTY CORPORATION--Table of Contents




    Authority: 29 U.S.C. 1302(b)(3).

    Source: 61 FR 34079, July 1, 1996, unless otherwise noted.



Sec. 4061.1  Cross-references.

    See part 4022 of this chapter regarding benefits payable under 
terminated single-employer plans and Sec. 4281.47 of this chapter 
regarding financial assistance to pay benefits under insolvent 
multiemployer plans.



PART 4062--LIABILITY FOR TERMINATION OF SINGLE-EMPLOYER PLANS--Table of Contents




Sec.
4062.1  Purpose and scope.
4062.2  Definitions.
4062.3  Amount and payment of section 4062(b) liability.
4062.4  Determinations of net worth and collective net worth.
4062.5  Net worth record date.
4062.6  Net worth notification and information.
4062.7  Calculating interest on liability and refunds of overpayments.
4062.8  Arrangements for satisfying liability.
4062.9  Filing of documents.
4062.10  Computation of time.

    Authority: 29 U.S.C. 1302(b)(3), 1362-1364, 1367, 1368.

    Source: 61 FR 34079, July 1, 1996, unless otherwise noted.



Sec. 4062.1  Purpose and scope.

    The purpose of this part is to set forth rules for determination and 
payment of the liability incurred, under section 4062(b) of ERISA, upon 
termination of any single-employer plan and, to the extent appropriate, 
determination of the liability incurred with respect to multiple 
employer plans under sections 4063 and 4064 of ERISA. The provisions of 
this part regarding the amount of liability to the PBGC that is incurred 
upon termination of a single-employer plan apply with respect to a plan 
for which a notice of intent to terminate under section 4041(c) of ERISA 
is issued or proceedings to terminate under section 4042 of ERISA are 
instituted after December 17, 1987. Those provisions also apply, to the 
extent described in paragraph (a) of this section, to the amount of 
liability for withdrawal from a multiple employer plan after that date.



Sec. 4062.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
benefit liabilities, Code, contributing sponsor, controlled group, 
ERISA, fair market value, guaranteed benefit, multiple employer plan, 
notice of intent to terminate, PBGC, person, plan, plan administrator, 
proposed termination date, single-employer plan, and termination date.
    In addition, for purposes of this part, the term collective net 
worth of persons subject to liability in connection with a plan 
termination means the sum of the individual net worths of all persons 
that have individual net worths which are greater than zero and that (as 
of the termination date) are contributing sponsors of the terminated 
plan or members of their controlled groups, as determined in accordance 
with section 4062(d)(1) of ERISA and Sec. 4062.4 of this part.



Sec. 4062.3  Amount and payment of section 4062(b) liability.

    (a) Amount of liability--(1) General rule. Except as provided in 
paragraph (a)(2) of this section, the amount of section 4062(b) 
liability is the total amount (as of the termination date) of the 
unfunded benefit liabilities (within the meaning of section 4001(a)(18) 
of ERISA) to all participants and beneficiaries under the plan, together 
with interest calculated from the termination date in accordance with 
Sec. 4062.7.
    (2) Special rule in case of subsequent finding of inability to pay 
guaranteed benefits. In any distress termination proceeding under 
section 4041(c) of ERISA and part 4041 of this chapter in which (as 
described in section 4041(c)(3)(C)(ii) of ERISA), after a determination 
that the plan is sufficient

[[Page 867]]

for benefit liabilities or for guaranteed benefits, the plan 
administrator finds that the plan is or will be insufficient for 
guaranteed benefits and the PBGC concurs with that finding, or the PBGC 
makes such a finding on its own initiative, actuarial present values 
shall be determined as of the date of the notice to, or the finding by, 
the PBGC of insufficiency for guaranteed benefits.
    (b) Payment of liability. Section 4062(b) liability is due and 
payable as of the termination date, in cash or securities acceptable to 
the PBGC, except that, as provided in Sec. 4062.8(c), the PBGC shall 
prescribe commercially reasonable terms for payment of so much of such 
liability as exceeds 30 percent of the collective net worth of persons 
subject to liability in connection with a plan termination. The PBGC may 
make alternative arrangements, as provided in Sec. 4062.8(b).



Sec. 4062.4  Determinations of net worth and collective net worth.

    (a) General rules. When a contributing sponsor, or member(s) of a 
contributing sponsor's controlled group, notifies and submits 
information to the PBGC in accordance with Sec. 4062.6, the PBGC shall 
determine the net worth, as of the net worth record date, of that 
contributing sponsor and any members of its controlled group based on 
the factors set forth in paragraph (c) of this section and shall include 
the value of any assets that it determines, pursuant to paragraph (d) of 
this section, have been improperly transferred. In making such 
determinations, the PBGC will consider information submitted pursuant to 
Sec. 4062.6. The PBGC shall then determine the collective net worth of 
persons subject to liability in connection with a plan termination.
    (b) Partnerships and sole proprietorships. In the case of a person 
that is a partnership or a sole proprietorship, net worth does not 
include the personal assets and liabilities of the partners or sole 
proprietor, except for the assets included pursuant to paragraph (d) of 
this section. As used in this paragraph, ``personal assets'' are those 
assets which do not produce income for the business being valued or are 
not used in the business.
    (c) Factors for determining net worth. A person's net worth is equal 
to its fair market value and fair market value shall be determined on 
the basis of the factors set forth below, to the extent relevant; 
different factors may be considered with respect to different portions 
of the person's operations.
    (1) A bona fide sale of, agreement to sell, or offer to purchase or 
sell the business of the person made on or about the net worth record 
date.
    (2) A bona fide sale of, agreement to sell, or offer to purchase or 
sell stock or a partnership interest in the person, made on or about the 
net worth record date.
    (3) If stock in the person is publicly traded, the price of such 
stock on or about the net worth record date.
    (4) The price/earnings ratios and prices of stocks of similar trades 
or businesses on or about the net worth record date.
    (5) The person's economic outlook, as reflected by its earnings and 
dividend projections, current financial condition, and business history.
    (6) The economic outlook for the person's industry and the market it 
serves.
    (7) The appraised value, including the liquidating value, of the 
person's tangible and intangible assets.
    (8) The value of the equity assumed in a plan of reorganization of a 
person in a case under title 11, United States Code, or any similar law 
of a state or political subdivision thereof.
    (9) Any other factor relevant in determining the person's net worth.
    (d) Improper transfers. A person's net worth shall include the value 
of any assets transferred by the person which the PBGC determines were 
improperly transferred for the purpose, as inferred from all the facts 
and circumstances, and with the effect of avoiding liability under this 
part. Assets ``improperly transferred'' include but are not limited to 
assets sold, leased or otherwise transferred for less than adequate 
consideration and assets distributed as gifts, capital distributions and 
stock redemptions inconsistent with past practices of the employer. The 
word transfer includes but is not limited to sales, assignments, 
pledges, leases, gifts and dividends.

[[Page 868]]



Sec. 4062.5  Net worth record date.

    (a) General. Unless the PBGC establishes an earlier net worth record 
date pursuant to paragraph (b) of this section, the net worth record 
date, for all purposes under this part, is the plan's termination date.
    (b) Establishment of an earlier net worth record date. At any time 
during a termination proceeding, the PBGC, in order to prevent undue 
loss to or abuse of the plan termination insurance system, may establish 
as the net worth record date an earlier date during the 120-day period 
ending with the termination date.
    (c) Notification. Whenever the PBGC establishes an earlier net worth 
record date, it shall immediately give liable person(s) written 
notification of that fact. The written notice may also include a request 
for additional information, as provided in Sec. 4062.6(a)(3).



Sec. 4062.6  Net worth notification and information.

    (a) General. (1) A contributing sponsor or member of the 
contributing sponsor's controlled group that believes section 4062(b) 
liability exceeds 30 percent of the collective net worth of persons 
subject to liability in connection with a plan termination shall--
    (i) So notify the PBGC by the 90th day after the notice of intent to 
terminate is filed with the PBGC or, if no notice of intent to terminate 
is filed with the PBGC and the PBGC institutes proceedings under section 
4042 of ERISA, within 30 days after the establishment of the plan's 
termination date in such proceedings; and
    (ii) Submit to the PBGC the information specified in paragraph (b) 
of this section with respect to the contributing sponsor and each member 
of the contributing sponsor's controlled group (if any)--
    (A) By the 120th day after the proposed termination date, or
    (B) If no notice of intent to terminate is filed with the PBGC and 
the PBGC institutes proceedings under section 4042 of ERISA, within 120 
days after the establishment of the plan's termination date in such 
proceedings.
    (2) If a contributing sponsor or a member of its controlled group 
complies with the requirements of paragraph (a)(1) of this section, the 
PBGC will consider the requirements to be satisfied by all members of 
that controlled group.
    (3) The PBGC may require any person subject to liability--
    (i) To submit the information specified in paragraph (b) of this 
section within a shorter period whenever the PBGC believes that its 
ability to obtain information or payment of liability is in jeopardy, 
and
    (ii) To submit additional information within 30 days, or a different 
specified time, after the PBGC's written notification that it needs such 
information to make net worth determinations.
    (4) If a provision of paragraph (b) of this section or a PBGC notice 
specifies information previously submitted to the PBGC, a person may 
respond by identifying the previous submission in which the response was 
provided.
    (b) Net worth information. The following information specifications 
apply, individually, with respect to each person subject to liability:
    (1) An estimate, made in accordance with Sec. 4062.4, of the 
person's net worth on the net worth record date and a statement, with 
supporting evidence, of the basis for the estimate.
    (2) A copy of the person's audited (or if not available, unaudited) 
financial statements for the 5 full fiscal years plus any partial fiscal 
year preceding the net worth record date. The statements must include 
balance sheets, income statements, and statements of changes in 
financial position and must be accompanied by the annual reports, if 
available.
    (3) A statement of all sales and copies of all offers or agreements 
to buy or sell at least 25 percent of the person's assets or at least 5 
percent of the person's stock or partnership interest, made on or about 
the net worth record date.
    (4) A statement of the person's current financial condition and 
business history.
    (5) A statement of the person's business plans, including projected 
earnings and, if available, dividend projections.
    (6) Any appraisal of the person's fixed and intangible assets made 
on or about the net worth record date.

[[Page 869]]

    (7) A copy of any plan of reorganization, whether or not confirmed, 
with respect to a case under title 11, United States Code, or any 
similar law of a state or political subdivision thereof, involving the 
person and occurring within 5 calendar years prior to or any time after 
the net worth record date.
    (c) Incomplete submission. If a contributing sponsor and/or members 
of the contributing sponsor's controlled group do not submit all of the 
information required pursuant to paragraph (a) of this section (other 
than the estimate described in paragraph (b)(1) of this section) with 
respect to each person subject to liability, the PBGC may base 
determinations of net worth and the collective net worth of persons 
subject to liability in connection with a plan termination on any such 
information that such person(s) did submit, as well as any other 
pertinent information that the PBGC may have. In general, the PBGC will 
view information as of a date further removed from the net worth record 
date as having less probative value than information as of a date nearer 
to the net worth record date.



Sec. 4062.7  Calculating interest on liability and refunds of overpayments.

    (a) Interest. Whether or not the PBGC has granted deferred payment 
terms pursuant to Sec. 4062.8, the amount of liability under this part 
includes interest, from the termination date, on any unpaid portion of 
the liability. Such interest accrues at the rate set forth in paragraph 
(c) of this section until the liability is paid in full and is 
compounded daily. When liability under this part is paid in more than 
one payment, the PBGC will apply each payment to the satisfaction of 
accrued interest and then to the reduction of principal.
    (b) Refunds. If a contributing sponsor or member(s) of a 
contributing sponsor's controlled group pays the PBGC an amount that 
exceeds the full amount of liability under this part, the PBGC shall 
refund the excess amount, with interest at the rate set forth in 
paragraph (c) of this section. Interest on an overpayment accrues from 
the later of the date of the overpayment or 10 days prior to the 
termination date until the date of the refund and is compounded daily.
    (c) Interest rate. The interest rate on liability under this part 
and refunds thereof is the annual rate prescribed in section 6601(a) of 
the Code, and will change whenever the interest rate under section 
6601(a) of the Code changes.



Sec. 4062.8  Arrangements for satisfying liability.

    (a) General. The PBGC will defer payment, or agree to other 
arrangements for the satisfaction, of any portion of liability to the 
PBGC only when--
    (1) As provided in paragraph (b) of this section, the PBGC 
determines that such action is necessary to avoid the imposition of a 
severe hardship and that there is a reasonable possibility that the 
terms so prescribed will be met and the entire liability paid; or
    (2) As provided in paragraph (c) of this section, the PBGC 
determines that section 4062(b) liability exceeds 30 percent of the 
collective net worth of persons subject to liability in connection with 
a plan termination.
    (b) Upon request. If the PBGC determines that such action is 
necessary to avoid the imposition of a severe hardship on persons that 
are or may become liable under section 4062, 4063, or 4064 of ERISA and 
that there is a reasonable possibility that persons so liable will be 
able to meet the terms prescribed and pay the entire liability, the 
PBGC, in its discretion and when so requested in accordance with 
paragraph (b)(2) of this section, may grant deferred payment or other 
terms for the satisfaction of such liability.
    (1) In determining what, if any, terms to grant, the PBGC shall 
examine the following factors:
    (i) The ratio of the liability to the net worth of the person making 
the request and (if different) to the collective net worth of persons 
subject to liability in connection with a plan termination.
    (ii) The overall financial condition of persons that are or may 
become liable, including, with respect to each such person--
    (A) The amounts and terms of existing debts;

[[Page 870]]

    (B) The amount and availability of liquid assets;
    (C) Current and past cash flow; and
    (D) Projected cash flow, including a projection of the impact on 
operations that would be caused by the immediate full payment of the 
liability.
    (iii) The availability of credit from private sector sources to the 
person making the request and to other liable persons.
    (2) A contributing sponsor or member of a contributing sponsor's 
controlled group may request deferred payment or other terms for the 
satisfaction of any portion of the liability under section 4062, 4063, 
or 4064 of ERISA at any time by filing a written request. The request 
must include the information specified in Sec. 4062.6(b), except that--
    (i) If the request is filed one year or more after the net worth 
record date, references to ``the net worth record date'' in 
Sec. 4062.6(b) shall be replaced by ``the most recent annual anniversary 
of the net worth record date''; and
    (ii) Information that already has been submitted to the PBGC need 
not be submitted again.
    (c) Liability exceeding 30 percent of collective net worth. If the 
PBGC determines that section 4062(b) liability exceeds 30 percent of the 
collective net worth of persons subject to the liability, the PBGC will, 
after making a reasonable effort to reach agreement with such persons, 
prescribe commercially reasonable terms for payment of so much of the 
liability as exceeds 30 percent of the collective net worth of such 
persons. The terms prescribed by the PBGC for payment of that portion of 
the liability (including interest) will provide for deferral of 50 
percent of any amount otherwise payable for any year if a person subject 
to such liability demonstrates to the satisfaction of the PBGC that no 
person subject to such liability has any individual pre-tax profits 
(within the meaning of section 4062(d)(2) of ERISA) for such person's 
last full fiscal year ending during that year.
    (d) Interest. Interest on unpaid liability is calculated in 
accordance with Sec. 4062.7(a).
    (e) Security during period of deferred payment. As a condition to 
the granting of deferred payment terms, PBGC may, in its discretion, 
require that the liable person(s) provide PBGC with such security for 
its obligations as the PBGC deems adequate.



Sec. 4062.9  Filing of documents.

    (a) Date of filing. Any document (including information) required or 
permitted to be filed under this part is considered filed on the date of 
the United States postmark stamped on the cover in which the document is 
mailed, provided that--
    (1) The postmark was made by the United States Postal Service; and
    (2) The document was mailed postage prepaid, properly packaged and 
addressed to the PBGC. If the conditions stated in both paragraphs 
(a)(1) and (a)(2) of this section are not met, the document is 
considered filed on the date it is received by the PBGC. Documents 
received after regular business hours are considered filed on the next 
regular business day.
    (b) Where to file. Payments of liability shall be clearly designated 
as such and include the name of the plan. Such payments shall be sent to 
the address specified in the notification or demand for liability issued 
by the PBGC under Sec. 4068.3 or, if not so specified, to the address 
provided, upon request, by the Investment Management Division, Pension 
Benefit Guaranty Corporation, 1200 K Street, NW., Washington, DC 20005-
4026. Any document (including information) required or permitted to be 
filed under this part, except for documents relating to appeals, shall 
be submitted to the Insurance Operations Department, Pension Benefit 
Guaranty Corporation, at the above address. Any document submitted 
pursuant to part 4003 in connection with an appeal of an initial 
determination shall be submitted to the Appeals Board, Pension Benefit 
Guaranty Corporation, at the above address.



Sec. 4062.10  Computation of time.

    In computing any period of time prescribed or allowed by this 
subpart, the day of the act, event, or default from which the designated 
period of time begins to run is not counted. The last day of the period 
so computed shall be included, unless it is a Saturday, Sunday, or 
Federal holiday, in which event the

[[Page 871]]

period runs until the end of the next day which is not a Saturday, 
Sunday, or a Federal holiday. For the purpose of computing interest 
accrued, a Saturday, Sunday or Federal holiday referred to in the 
previous sentence shall be included.

(Approved by the Office of Management and Budget under control number 
1212-0017)



PART 4063--WITHDRAWAL LIABILITY; PLANS UNDER MULTIPLE CONTROLLED GROUPS--Table of Contents




    Authority: 29 U.S.C. 1302(b)(3).

    Source: 61 FR 34082, July 1, 1996, unless otherwise noted.



Sec. 4063.1  Cross-references.

    (a) Part 4062, subpart A, of this chapter sets forth rules for 
determination and payment of the liability incurred, under section 
4062(b) of ERISA, upon termination of any single-employer plan and, to 
the extent appropriate, determination of the liability incurred with 
respect to multiple employer plans under sections 4063 and 4064 of 
ERISA.
    (b) Part 4068 of this chapter includes rules regarding the PBGC's 
lien under section 4068 of ERISA with respect to liability arising under 
section 4062, 4063, or 4064.



PART 4064--LIABILITY ON TERMINATION OF SINGLE-EMPLOYER PLANS UNDER MULTIPLE CONTROLLED GROUPS--Table of Contents




    Authority: 29 U.S.C. 1302(b)(3).

    Source: 61 FR 34082, July 1, 1996, unless otherwise noted.



Sec. 4064.1  Cross-references.

    (a) Part 4062, subpart A, of this chapter sets forth rules for 
determination and payment of the liability incurred under section 
4062(b) of ERISA, upon termination of any single-employer plan and, to 
the extent appropriate, determination of the liability incurred with 
respect to multiple employer plans under sections 4063 and 4064 of 
ERISA.
    (b) Part 4068 of this chapter includes rules regarding the PBGC's 
lien under section 4068 of ERISA with respect to liability arising under 
section 4062, 4063, or 4064.

[[Page 872]]



               SUBCHAPTER G--ANNUAL REPORTING REQUIREMENTS





PART 4065--ANNUAL REPORT--Table of Contents




Sec.
4065.1  Purpose and scope.
4065.2  Definitions.
4065.3  Filing requirement.

    Authority: 29 U.S.C. 1302(b)(3), 1365.

    Source: 61 FR 34082, July 1, 1996, unless otherwise noted.



Sec. 4065.1  Purpose and scope.

    The purpose of this part is to specify the form and content of the 
Annual Report required by section 4065 of ERISA. This part applies to 
all plans covered by title IV of ERISA.



Sec. 4065.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
ERISA, IRS, PBGC, and plan.



Sec. 4065.3  Filing requirement.

    (a) The requirement to report the occurrence of a reportable event 
under section 4043 of ERISA in the Annual Report is waived.
    (b) Plan administrators shall file the Annual Report on IRS/DOL/PBGC 
Form 5500, 5500-C, 5500-K or 5500-R, as appropriate, in accordance with 
the instructions therein.

(Approved by the Office of Management and Budget under control number 
1212-0026)

[61 FR 34082, July 1, 1996, as amended at 61 FR 63998, Dec. 2, 1996]

[[Page 873]]



                  SUBCHAPTER H--ENFORCEMENT PROVISIONS





PART 4067--RECOVERY OF LIABILITY FOR PLAN TERMINATIONS--Table of Contents




    Authority: 29 U.S.C. 1302, 1367.

    Source: 61 FR 34082, July 1, 1996, unless otherwise noted.



Sec. 4067.1  Cross-reference.

    Section 4062.8 of this chapter contains rules on deferred payment 
and other arrangements for satisfaction of liability to the PBGC after 
termination of single-employer plans.



PART 4068--LIEN FOR LIABILITY--Table of Contents




Sec.
4068.1  Purpose; cross-references.
4068.2  Definitions.
4068.3  Notification of and demand for liability.
4068.4  Lien.

    Authority: 29 U.S.C. 1302(b)(3), 1362-1364, 1367-1368.

    Source: 61 FR 34083, July 1, 1996, unless otherwise noted.



Sec. 4068.1  Purpose; cross-references.

    This part contains rules regarding the PBGC's lien under section 
4068 of ERISA with respect to liability arising under section 4062, 
4063, or 4064 of ERISA.



Sec. 4068.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
ERISA, PBGC, person, plan, and termination date.
    Collective net worth of persons subject to liability in connection 
with a plan termination has the meaning in Sec. 4062.2.



Sec. 4068.3  Notification of and demand for liability.

    (a) Notification of liability. Except as provided in paragraph (c) 
of this section, when the PBGC has determined the amount of the 
liability under part 4062 and whether or not the liability has already 
been paid, the PBGC shall notify liable person(s) in writing of the 
amount of the liability. If the full liability has not yet been paid, 
the notification will include a request for payment of the full 
liability and will indicate that, as provided in Sec. 4062.8, the PBGC 
will prescribe commercially reasonable terms for payment of so much of 
the liability as it determines exceeds 30 percent of the collective net 
worth of persons subject to liability in connection with a plan 
termination. In all cases, the notification will include a statement of 
the right to appeal the assessment of liability pursuant to part 4003.
    (b) Demand for liability. Except as provided in paragraph (c) of 
this section, if person(s) liable to the PBGC fail to pay the full 
liability and no appeal is filed or an appeal is filed and the decision 
on appeal finds liability, the PBGC will issue a demand letter for the 
liability--
    (1) If no appeal is filed, upon the expiration of time to file an 
appeal under part 4003; or
    (2) If an appeal is filed, upon issuance of a decision on the appeal 
finding that there is liability under this part.

The demand letter will indicate that, as provided in Sec. 4062.8, the 
PBGC will prescribe commercially reasonable terms for payment of so much 
of the liability as it determines exceeds 30 percent of the collective 
net worth of such persons.
    (c) Special rule. Notwithstanding paragraphs (a) and (b) of this 
section, the PBGC may, in any case in which it believes that its ability 
to assert or obtain payment of liability is in jeopardy, issue a demand 
letter for the liability under this part immediately upon determining 
the liability, without first issuing a notification of liability 
pursuant to paragraph (a) of this section. When the PBGC issues a demand 
letter under this paragraph, there is no right to an appeal pursuant to 
part 4003 of this chapter.



Sec. 4068.4  Lien.

    If any person liable to the PBGC under section 4062, 4063, or 4064 
of ERISA fails or refuses to pay the full amount of such liability 
within the time specified in the demand letter issued under Sec. 4068.3, 
the PBGC shall have a lien in the amount of the liability, including 
interest, arising as of the

[[Page 874]]

plan's termination date, upon all property and rights to property, 
whether real or personal, belonging to that person, except that such 
lien may not be in an amount in excess of 30 percent of the collective 
net worth of all persons described in section 4062(a) of ERISA and part 
4062 of this chapter.



PART 4071--PENALTIES FOR FAILURE TO PROVIDE CERTAIN NOTICES OR OTHER MATERIAL INFORMATION--Table of Contents




Sec.
4071.1  Purpose and scope.
4071.2  Definitions.
4071.3  Penalty amount.

    Authority: 28 U.S.C. 2461 note, as amended by sec. 31001(s)(1), 
Pub.L. 104-134, 110 Stat. 1321-373; 29 U.S.C. 1302(b)(3), 1371.

    Source: 62 FR 36994, July 10, 1997, unless otherwise noted.



Sec. 4071.1  Purpose and scope.

    This part specifies the maximum daily amount of penalties that may 
be assessed by the PBGC under ERISA section 4071 for certain failures to 
provide notices or other material information, as such amount has been 
adjusted to account for inflation pursuant to the Federal Civil Monetary 
Penalty Inflation Adjustment Act of 1990, as amended by the Debt 
Collection Improvement Act of 1996.



Sec. 4071.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
ERISA and PBGC.



Sec. 4071.3  Penalty amount.

    The maximum daily amount of the penalty under section 4071 of ERISA 
shall be $1,100.

[[Page 875]]



       SUBCHAPTER I--WITHDRAWAL LIABILITY FOR MULTIEMPLOYER PLANS





PART 4203--EXTENSION OF SPECIAL WITHDRAWAL LIABILITY RULES--Table of Contents




Sec.
4203.1  Purpose and scope.
4203.2  Definitions.
4203.3  Plan adoption of special withdrawal rules.
4203.4  Requests for PBGC approval of plan amendments.
4203.5  PBGC action on requests.
4203.6  OMB control number.

    Authority: 29 U.S.C. 1302(b)(3).

    Source: 61 FR 34083, July 1, 1996, unless otherwise noted.



Sec. 4203.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to prescribe procedures 
whereby a multiemployer plan may, pursuant to sections 4203(f) and 
4208(e)(3) of ERISA, request the PBGC to approve a plan amendment which 
establishes special complete or partial withdrawal liability rules.
    (b) Scope. This part applies to a multiemployer pension plan covered 
by title IV of ERISA.



Sec. 4203.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
complete withdrawal, employer, ERISA, multiemployer plan, PBGC, person, 
plan, plan sponsor, and plan year.



Sec. 4203.3  Plan adoption of special withdrawal rules.

    (a) General rule. A plan may, subject to the approval of the PBGC, 
establish by plan amendment special complete or partial withdrawal 
liability rules. A complete withdrawal liability rule adopted pursuant 
to this part shall be similar to the rules for the construction and 
entertainment industries described in section 4203 (b) and (c) of ERISA. 
A partial withdrawal liability rule adopted pursuant to this part shall 
be consistent with the complete withdrawal rule adopted by the plan. A 
plan amendment adopted under this part may not be put into effect until 
it is approved by the PBGC.
    (b) Discretionary provisions of the plan amendment. A plan amendment 
adopted pursuant to this part may--
    (1) Cover an entire industry or industries, or be limited to a 
segment of an industry; and
    (2) Apply to cessations of the obligation to contribute that 
occurred prior to the adoption of the amendment.



Sec. 4203.4  Requests for PBGC approval of plan amendments.

    (a) Filing of request. A plan shall apply to the PBGC for approval 
of a plan amendment which establishes special complete or partial 
withdrawal liability rules. The request for approval shall be filed 
after the amendment is adopted. PBGC approval shall also be required for 
any subsequent modification of the plan amendment, other than a repeal 
of the amendment which results in employers being subject to the general 
statutory rules on withdrawal.
    (b) Who may request. The plan sponsor, or a duly authorized 
representative acting on behalf of the plan sponsor, shall sign and 
submit the request.
    (c) Where to file. The request shall be delivered by mail or 
submitted by hand to Reports Processing, Insurance Operations 
Department, Pension Benefit Guaranty Corporation, 1200 K Street NW., 
Washington, DC 20005-4026.
    (d) Information. Each request shall contain the following 
information:
    (1) The name and address of the plan for which the plan amendment is 
being submitted, and the telephone number of the plan sponsor or its 
authorized representative.
    (2) A copy of the executed amendment, including the proposed 
effective date.
    (3) A statement certifying that notice of the adoption of the 
amendment and the request for approval filed under this part has been 
given to all employers who have an obligation to contribute under the 
plan and to all employee organizations representing employees covered 
under the plan.

[[Page 876]]

    (4) A statement indicating how the withdrawal rules in the plan 
amendment would operate in the event of a sale of assets by a 
contributing employer or the cessation of the obligation to contribute 
or the cessation of covered operations by all employers.
    (5) A copy of the plan's most recent actuarial valuation.
    (6) For each of the previous five plan years, information on the 
number of plan participants by category (active, retired and separate 
vested) and a complete financial statement. This requirement may be 
satisfied by the submission for each of those years of Form 5500, 
including schedule B, or similar reports required under prior law.
    (7) A detailed description of the industry to which the plan 
amendment will apply, including information sufficient to demonstrate 
the effect of withdrawals on the plan's contribution base, and 
information establishing industry characteristics which would indicate 
that withdrawals in the industry do not typically have an adverse effect 
on the plan's contribution base. Such industry characteristics include 
the mobility of employees, the intermittent nature of employment, the 
project-by-project nature of the work, extreme fluctuations in the level 
of an employer's covered work under the plan, the existence of a 
consistent pattern of entry and withdrawal by employers, and the local 
nature of the work performed.
    (e) Supplemental information. In addition to the information 
described in paragraph (d) of this section, a plan may submit any other 
information it believes is pertinent to its request. The PBGC may 
require the plan sponsor to submit any other information the PBGC 
determines it needs to review a request under this part.



Sec. 4203.5  PBGC action on requests.

    (a) General. The PBGC shall approve a plan amendment providing for 
the application of special complete or partial withdrawal liability 
rules upon a determination by the PBGC that the plan amendment--
    (1) Will apply only to an industry that has characteristics that 
would make use of the special withdrawal rules appropriate; and
    (2) Will not pose a significant risk to the insurance system.
    (b) Notice of pendency of request. As soon as practicable after 
receiving a request for approval of a plan amendment containing all the 
information required under Sec. 4203.4, the PBGC shall publish a notice 
of the pendency of the request in the Federal Register. The notice shall 
contain a summary of the request and invite interested persons to submit 
written comments to the PBGC concerning the request. The notice will 
normally provide for a comment period of 45 days.
    (c) PBGC decision on request. After the close of the comment period, 
PBGC shall issue its decision in writing on the request for approval of 
a plan amendment. Notice of the decision shall be published in the 
Federal Register.



Sec. 4203.6  OMB control number.

    The collections of information contained in this part have been 
approved by the Office of Management and Budget under OMB control number 
1212-0050.



PART 4204--VARIANCES FOR SALE OF ASSETS--Table of Contents




                           Subpart A--General

Sec.
4204.1  Purpose and scope.
4204.2  Definitions.

            Subpart B--Variance of the Statutory Requirements

4204.11  Variance of the bond/escrow and sale-contract requirements.
4204.12  De minimis transactions.
4204.13  Net income and net tangible assets tests.

 Subpart C--Procedures for Individual and Class Variances or Exemptions

4204.21  Requests to PBGC for variances and exemptions.
4204.22  PBGC action on requests.

    Authority: 29 U.S.C. 1302(b)(3), 1384(c).

    Source: 61 FR 34084, July 1, 1996, unless otherwise noted.

[[Page 877]]



                           Subpart A--General



Sec. 4204.1  Purpose and scope.

    (a) Purpose. Under section 4204 of ERISA, an employer that ceases 
covered operations under a multiemployer plan, or ceases to have an 
obligation to contribute for such operations, because of a bona fide, 
arm's-length sale of assets to an unrelated purchaser does not incur 
withdrawal liability if certain conditions are met. One condition is 
that the sale contract provide that the seller will be secondarily 
liable if the purchaser withdraws from the plan within five years and 
does not pay its withdrawal liability. Another condition is that the 
purchaser furnish a bond or place funds in escrow, for a period of five 
plan years, in a prescribed amount. Section 4204 also authorizes the 
PBGC to provide for variances or exemptions from these requirements. 
Subpart B of this part provides variances and exemptions from the 
requirements for certain sales of assets. Subpart C of this part 
establishes procedures under which a purchaser or seller may, when the 
conditions set forth in subpart B are not satisfied or when the parties 
decline to provide certain financial information to the plan, request 
the PBGC to grant individual or class variances or exemptions from the 
requirements.
    (b) Scope. In general, this part applies to any sale of assets 
described in section 4204(a)(1) of ERISA. However, this part does not 
apply to a sale of assets involving operations for which the seller is 
obligated to contribute to a plan described in section 404(c) of the 
Code, or a continuation of such a plan, unless the plan is amended to 
provide that section 4204 applies.



Sec. 4204.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
Code, employer, ERISA, IRS, multiemployer plan, PBGC, person, plan, plan 
administrator, plan sponsor, and plan year.
    In addition, for purposes of this part:
    Date of determination means the date on which a seller ceases 
covered operations or ceases to have an obligation to contribute for 
such operations as a result of a sale of assets within the meaning of 
section 4204(a) of ERISA.
    Net income after taxes means revenue minus expenses after taxes 
(excluding extraordinary and non-recurring income or expenses), as 
presented in an audited financial statement or, in the absence of such 
statement, in an unaudited financial statement, each prepared in 
conformance with generally accepted accounting principles.
    Net tangible assets means tangible assets (assets other than 
licenses, patents copyrights, trade names, trademarks, goodwill, 
experimental or organizational expenses, unamortized debt discounts and 
expenses and all other assets which, under generally accepted accounting 
principles, are deemed intangible) less liabilities (other than pension 
liabilities). Encumbered assets shall be excluded from net tangible 
assets only to the extent of the amount of the encumbrance.
    Purchaser means a purchaser described in section 4204(a)(1) of 
ERISA.
    Seller means a seller described in section 4204(a)(1) of ERISA.



            Subpart B--Variance of the Statutory Requirements



Sec. 4204.11  Variance of the bond/escrow and sale-contract requirements.

    (a) General rule. A purchaser's bond or escrow under section 
4204(a)(1)(B) of ERISA and the sale-contract provision under section 
4204(a)(1)(C) are not required if the parties to the sale inform the 
plan in writing of their intention that the sale be covered by section 
4204 of ERISA and demonstrate to the satisfaction of the plan that at 
least one of the criteria contained in Sec. 4204.12 or Sec. 4204.13(a) 
is satisfied.
    (b) Requests after posting of bond or establishment of escrow. A 
request for a variance may be filed at any time. If, after a purchaser 
has posted a bond or placed money in escrow pursuant to section 
4204(a)(1)(B) of ERISA, the purchaser demonstrates to the satisfaction 
of the plan that the criterion in either Sec. 4204.13 (a)(1) or (a)(2) 
is satisfied, then the bond shall be cancelled or the amount in escrow 
shall be refunded. For purposes of considering a request after the bond 
or escrow is in place, the words ``the year preceding the date of

[[Page 878]]

the variance request'' shall be substituted for ``the date of 
determination'' for the first mention of that term in both Sec. 4204.13 
(a)(1) and (a)(2). In addition, in determining the purchaser's average 
net income after taxes under Sec. 4204.13(a)(1), for any year included 
in the average for which the net income figure does not reflect the 
interest expense incurred with respect to the sale, the purchaser's net 
income shall be reduced by the amount of interest paid with respect to 
the sale in the fiscal year following the date of determination.
    (c) Information required. A request for a variance shall contain 
financial or other information that is sufficient to establish that one 
of the criteria in Sec. 4204.12 or Sec. 4204.13(a) is satisfied. A 
request on the basis of either Sec. 4204.13 (a)(1) or (a)(2) shall also 
include a copy of the purchaser's audited (if available) or (if not) 
unaudited financial statements for the specified time period.
    (d) Limited exemption during pendency of request. Provided that all 
of the information required to be submitted is submitted before the 
first day of the first plan year beginning after the sale, a plan may 
not, pending its decision on the variance, require a purchaser to post a 
bond or place an amount in escrow pursuant to section 4204(a)(1)(B). In 
the event a bond or escrow is not in place pursuant to the preceding 
sentence, and the plan determines that the request does not qualify for 
a variance, the purchaser shall comply with section 4204(a)(1)(B) within 
30 days after the date on which it receives notice of the plan's 
decision.

(Approved by the Office of Management and Budget under control number 
1212--0021)



Sec. 4204.12  De minimis transactions.

    The criterion under this section is that the amount of the bond or 
escrow does not exceed the lesser of $250,000 or two percent of the 
average total annual contributions made by all employers to the plan, 
for the purposes of section 412(b)(3)(A) of the Code, for the three most 
recent plan years ending before the date of determination. For this 
purpose, ``contributions made'' shall have the same meaning as the term 
has under Sec. 4211.12(a) of this chapter.



Sec. 4204.13  Net income and net tangible assets tests.

    (a) General. The criteria under this section are that either--
    (1) Net income test. The purchaser's average net income after taxes 
for its three most recent fiscal years ending before the date of 
determination (as defined in Sec. 4204.12), reduced by any interest 
expense incurred with respect to the sale which is payable in the fiscal 
year following the date of determination, equals or exceeds 150 percent 
of the amount of the bond or escrow required under ERISA section 
4204(a)(1)(B); or
    (2) Net tangible assets test. The purchaser's net tangible assets at 
the end of the fiscal year preceding the date of determination (as 
defined in Sec. 4204.12), equal or exceed--
    (i) If the purchaser was not obligated to contribute to the plan 
before the sale, the amount of unfunded vested benefits allocable to the 
seller under section 4211 (with respect to the purchased operations), as 
of the date of determination, or
    (ii) If the purchaser was obligated to contribute to the plan before 
the sale, the sum of the amount of unfunded vested benefits allocable to 
the purchaser and to the seller under ERISA section 4211 (with respect 
to the purchased operations), each as of the date of determination.
    (b) Special rule when more than one plan is covered by request. For 
the purposes of paragraphs (a)(1) and (a)(2), if the transaction 
involves the assumption by the purchaser of the seller's obligation to 
contribute to more than one multiemployer plan, then the total amount of 
the bond or escrow or of the unfunded vested benefits, as applicable, 
for all of the plans with respect to which the purchaser has not posted 
a bond or escrow shall be used to determine whether the applicable test 
is met.
    (c) Non-applicability of tests in event of purchaser's insolvency. A 
purchaser will not qualify for a variance under this subpart pursuant to 
paragraph (a)(1) or (a)(2) of this section if, as of the earlier of the 
date of the plan's decision on the variance request or the first day of 
the first plan year beginning after the date of determination, the 
purchaser is the

[[Page 879]]

subject of a petition under title 11, United States Code, or of a 
proceeding under similar provisions of state insolvency laws.



 Subpart C--Procedures for Individual and Class Variances or Exemptions



Sec. 4204.21  Requests to PBGC for variances and exemptions.

    (a) General. If a transaction covered by this part does not satisfy 
the conditions set forth in subpart B of this part, or if the parties 
decline to provide to the plan privileged or confidential financial 
information within the meaning of section 552(b)(4) of the Freedom of 
Information Act (5 U.S.C. 552), the purchaser or seller may request from 
the PBGC an exemption or variance from the requirements of section 
4204(a)(1)(B) and (C) of ERISA.
    (b) Who may request. A purchaser or a seller may file a request for 
a variance or exemption. The request may be submitted by one or more 
duly authorized representatives acting on behalf of the party or 
parties. When a contributing employer withdraws from a plan as a result 
of related sales of assets involving several purchasers, or withdraws 
from more than one plan as a result of a single sale, the application 
may request a class variance or exemption for all the transactions.
    (c) Where to file. The request shall be delivered by mail or 
submitted by hand to Reports Processing, Insurance Operations 
Department, Pension Benefit Guaranty Corporation, 1200 K Street NW., 
Washington, DC 20005-4026.
    (d) Information. Each request shall contain the following 
information:
    (1) The name and address of the plan or plans for which the variance 
or exemption is being requested, and the telephone number of the plan 
administrator of each plan.
    (2) For each plan described in paragraph (d)(1) of this section, the 
nine-digit Employer Identification Number (EIN) assigned by the IRS to 
the plan sponsor and the three-digit Plan Identification Number (PN) 
assigned by the plan sponsor to the plan, and, if different, also the 
EIN and PN last filed with the PBGC. If an EIN or PN has not been 
assigned, that should be indicated.
    (3) The name, address and telephone number of the seller and of its 
duly authorized representative, if any.
    (4) The name, address and telephone number of the purchaser and of 
its duly authorized representative, if any.
    (5) A full description of each transaction for which the request is 
being made, including effective date.
    (6) A statement explaining why the requested variance or exemption 
would not significantly increase the risk of financial loss to the plan, 
including evidence, financial or otherwise, that supports that 
conclusion.
    (7) When the request for a variance or exemption is filed by the 
seller alone, a statement signed by the purchaser indicating its 
intention that section 4204 of ERISA apply to the sale of assets.
    (8) A statement indicating the amount of the purchaser's bond or 
escrow required under section 4204(a)(1)(B) of ERISA.
    (9) The estimated amount of withdrawal liability that the seller 
would otherwise incur as a result of the sale if section 4204 did not 
apply to the sale.
    (10) A certification that a complete copy of the request has been 
sent to each plan described in paragraph (d)(1) of this section and each 
collective bargaining representative of the seller's employees by 
certified mail, return receipt requested.
    (e) Additional information. In addition to the information described 
in paragraph (d) of this section, the PBGC may require the purchaser, 
the seller, or the plan to submit any other information the PBGC 
determines it needs to review the request.
    (f) Disclosure of information. Any party submitting information 
pursuant to this section may include a statement of whether any of the 
information is of a nature that its disclosure may not be required under 
the Freedom of Information Act, 5 U.S.C. 552. The statement should 
specify the information that may not be subject to disclosure and the 
grounds therefor.

(Approved by the Office of Management and Budget under control number 
1212-0021)

[[Page 880]]



Sec. 4204.22  PBGC action on requests.

    (a) General. The PBGC shall approve a request for a variance or 
exemption if PBGC determines that approval of the request is warranted, 
in that it--
    (1) Would more effectively or equitably carry out the purposes of 
title IV of ERISA; and
    (2) Would not significantly increase the risk of financial loss to 
the plan.
    (b) Notice of pendency of request. As soon as practicable after 
receiving a variance or exemption request containing all the information 
specified in Sec. 4204.21, the PBGC shall publish a notice of the 
pendency of the request in the Federal Register. The notice shall 
provide that any interested person may, within the period of time 
specified therein, submit written comments to the PBGC concerning the 
request. The notice will usually provide for a comment period of 45 
days.
    (c) PBGC decision on request. The PBGC shall issue a decision on a 
variance or exemption request as soon as practicable after the close of 
the comment period described in paragraph (b) of this section. PBGC's 
decision shall be in writing, and if the PBGC disapproves the request, 
the decision shall state the reasons therefor. Notice of the decision 
shall be published in the Federal Register.



PART 4206--ADJUSTMENT OF LIABILITY FOR A WITHDRAWAL SUBSEQUENT TO A PARTIAL WITHDRAWAL--Table of Contents




Sec.
4206.1  Purpose and scope.
4206.2  Definitions.
4206.3  Credit against liability for a subsequent withdrawal.
4206.4  Amount of credit in plans using the presumptive method.
4206.5  Amount of credit in plans using the modified presumptive method.
4206.6  Amount of credit in plans using the rolling-5 method.
4206.7  Amount of credit in plans using the direct attribution method.
4206.8  Reduction of credit for abatement or other reduction of prior 
          partial withdrawal liability.
4206.9  Amount of credit in plans using alternative allocation methods.
4206.10  Special rule for 70-percent decline partial withdrawals.

    Authority: 29 U.S.C. 1302(b)(3) and 1386(b).

    Source: 61 FR 34086, July 1, 1996, unless otherwise noted.



Sec. 4206.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to prescribe rules, 
pursuant to section 4206(b) of ERISA, for adjusting the partial or 
complete withdrawal liability of an employer that previously partially 
withdrew from the same multiemployer plan. Section 4206(b)(1) provides 
that when an employer that has partially withdrawn from a plan 
subsequently incurs liability for another partial or a complete 
withdrawal from that plan, the employer's liability for the subsequent 
withdrawal is to be reduced by the amount of its liability for the prior 
partial withdrawal (less any waiver or reduction of that prior 
liability). Section 4206(b)(2) requires the PBGC to prescribe 
regulations adjusting the amount of this credit to ensure that the 
liability for the subsequent withdrawal properly reflects the employer's 
share of liability with respect to the plan. The purpose of the credit 
is to protect a withdrawing employer from being charged twice for the 
same unfunded vested benefits of the plan. The reduction in the credit 
protects the other employers in the plan from becoming responsible for 
unfunded vested benefits properly allocable to the withdrawing employer. 
In the interests of simplicity, the rules in this part provide for, 
generally, a one-step calculation of the adjusted credit under section 
4206(b)(2) against the subsequent liability, rather than for separate 
calculations first of the credit under section 4206(b)(1) and then of 
the reduction in the credit under paragraph (b)(2) of that section. In 
cases where the withdrawal liability for the prior partial withdrawal 
was reduced by an abatement or other reduction of that liability, the 
adjusted credit is further reduced in accordance with Sec. 4206.8 of 
this part.
    (b) Scope. This part applies to multiemployer plans covered under 
title IV of ERISA, and to employers that have partially withdrawn from 
such plans after September 25, 1980 and subsequently completely or 
partially withdraw from the same plan.

[[Page 881]]



Sec. 4206.2  Definitions.

    The following are defined in Sec. 4001.2 of this chapter: Code, 
employer, ERISA, multiemployer plan, PBGC, plan, and plan year.
    In addition, for purposes of this part:
    Complete withdrawal means a complete withdrawal as described in 
section 4203 of ERISA.
    Partial withdrawal means a partial withdrawal as described in 
section 4205 of ERISA.



Sec. 4206.3  Credit against liability for a subsequent withdrawal.

    Whenever an employer that was assessed withdrawal liability for a 
partial withdrawal from a plan partially or completely withdraws from 
that plan in a subsequent plan year, it shall receive a credit against 
the new withdrawal liability in an amount greater than or equal to zero, 
determined in accordance with this part. If the credit determined under 
Secs. 4206.4 through 4206.9 is less than zero, the amount of the credit 
shall equal zero.



Sec. 4206.4  Amount of credit in plans using the presumptive method.

    (a) General. In a plan that uses the presumptive allocation method 
described in section 4211(b) of ERISA, the credit shall equal the sum of 
the unamortized old liabilities determined under paragraph (b) of this 
section, multiplied by the fractions described or determined under 
paragraph (c) of this section. When an employer's prior partial 
withdrawal liability has been reduced or waived, this credit shall be 
adjusted in accordance with Sec. 4206.8.
    (b) Unamortized old liabilities. The amounts determined under this 
paragraph are the employer's proportional shares, if any, of the 
unamortized amounts as of the end of the plan year preceding the 
withdrawal for which the credit is being calculated, of--
    (1) The plan's unfunded vested benefits as of the end of the last 
plan year ending before September 26, 1980;
    (2) The annual changes in the plan's unfunded vested benefits for 
plan years ending after September 25, 1980, and before the year of the 
prior partial withdrawal; and
    (3) The reallocated unfunded vested benefits (if any), as determined 
under section 4211(b)(4) of ERISA, for plan years ending before the year 
of the prior partial withdrawal.
    (c) Employer's allocable share of old liabilities. The sum of the 
amounts determined under paragraph (b) are multiplied by the two 
fractions described in this paragraph in order to determine the amount 
of the old liabilities that was previously assessed against the 
employer.
    (1) The first fraction is the fraction determined under section 
4206(a)(2) of ERISA for the prior partial withdrawal.
    (2) The second fraction is a fraction, the numerator of which is the 
amount of the liability assessed against the employer for the prior 
partial withdrawal, and the denominator of which is the product of--
    (i) The amount of unfunded vested benefits allocable to the employer 
as if it had completely withdrawn as of the date of the prior partial 
withdrawal (determined without regard to any adjustments), multiplied 
by--
    (ii) The fraction determined under section 4206(a)(2) of ERISA for 
the prior partial withdrawal.



Sec. 4206.5  Amount of credit in plans using the modified presumptive method.

    (a) General. In a plan that uses the modified presumptive method 
described in section 4211(c)(2) of ERISA, the credit shall equal the sum 
of the unamortized old liabilities determined under paragraph (b) of 
this section, multiplied by the fractions described or determined under 
paragraph (c) of this section. When an employer's prior partial 
withdrawal liability has been reduced or waived, this credit shall be 
adjusted in accordance with Sec. 4206.8.
    (b) Unamortized old liabilities. The amounts described in this 
paragraph shall be determined as of the end of the plan year preceding 
the withdrawal for which the credit is being calculated, and are the 
employer's proportional shares, if any, of--
    (1) The plan's unfunded vested benefits as of the end of the last 
plan year ending before September 26, 1980, reduced as if those 
obligations were being fully amortized in level annual installments over 
15 years beginning with the

[[Page 882]]

first plan year ending on or after such date; and
    (2) The aggregate post-1980 change amount determined under section 
4211(c)(2)(C) of ERISA as if the employer had completely withdrawn in 
the year of the prior partial withdrawal, reduced as if those 
obligations were being fully amortized in level annual installments over 
the 5-year period beginning with the plan year in which the prior 
partial withdrawal occurred.
    (c) Employer's allocable share of old liabilities. The sum of the 
amounts determined under paragraph (b) are multiplied by the two 
fractions described in this paragraph in order to determine the amount 
of old liabilities that was previously assessed against the employer.
    (1) The first fraction is the fraction determined under section 
4206(a)(2) of ERISA for the prior partial withdrawal.
    (2) The second fraction is a fraction, the numerator of which is the 
amount of the liability assessed against the employer for the prior 
partial withdrawal, and the denominator of which is the product of--
    (i) The amount of unfunded vested benefits allocable to the employer 
as if it had completely withdrawn as of the date of the prior partial 
withdrawal (determined without regard to any adjustments), multiplied 
by--
    (ii) The fraction determined under section 4206(a)(2) of ERISA for 
the prior partial withdrawal.



Sec. 4206.6  Amount of credit in plans using the rolling-5 method.

    In a plan that uses the rolling-5 allocation method described in 
section 4211(c)(3) of ERISA, the credit shall equal the amount of the 
liability assessed for the prior partial withdrawal, reduced as if that 
amount was being fully amortized in level annual installments over the 
5-year period beginning with the plan year in which the prior partial 
withdrawal occurred. When an employer's prior partial withdrawal 
liability has been reduced or waived, this credit shall be adjusted in 
accordance with Sec. 4206.8.



Sec. 4206.7  Amount of credit in plans using the direct attribution method.

    In a plan that uses the direct attribution allocation method 
described in section 4211(c)(4) of ERISA, the credit shall equal the 
amount of the liability assessed for the prior partial withdrawal, 
reduced as if that amount was being fully amortized in level annual 
installments beginning with the plan year in which the prior partial 
withdrawal occurred, over the greater of 10 years or the amortization 
period for the resulting base when the combined charge base and the 
combined credit base are offset under section 412(b)(4) of the Code. 
When an employer's prior partial withdrawal liability has been reduced 
or waived, this credit shall be adjusted in accordance with Sec. 4206.8.



Sec. 4206.8  Reduction of credit for abatement or other reduction of prior partial withdrawal liability.

    (a) General. If an employer's withdrawal liability for a prior 
partial withdrawal has been reduced or waived, the credit determined 
pursuant to Secs. 4206.4 through 4206.7 shall be adjusted in accordance 
with this section.
    (b) Computation. The adjusted credit is calculated by multiplying 
the credit determined under the preceding sections of this part by a 
fraction--
    (1) The numerator of which is the excess of the total partial 
withdrawal liability of the employer for all partial withdrawals in 
prior years (excluding those partial withdrawals for which the credit is 
zero) over the present value of each abatement or other reduction of 
that prior withdrawal liability calculated as of the date on which that 
prior partial withdrawal liability was determined; and
    (2) The denominator of which is the total partial withdrawal 
liability of the employer for all partial withdrawals in prior years 
(excluding those partial withdrawals for which the credit is zero).



Sec. 4206.9  Amount of credit in plans using alternative allocation methods.

    A plan that has adopted an alternative method of allocating unfunded 
vested benefits pursuant to section 4211(c)(5) of ERISA and part 4211 of 
this

[[Page 883]]

chapter shall adopt, by plan amendment, a method of calculating the 
credit provided by Sec. 4206.3 that is consistent with the rules in 
Secs. 4206.4 through 4206.8 for plans using the statutory allocation 
method most similar to the plan's alternative allocation method.



Sec. 4206.10  Special rule for 70-percent decline partial withdrawals.

    For the purposes of applying the rules in Secs. 4206.4 through 
4206.9 in any case in which either the prior or subsequent partial 
withdrawal resulted from a 70-percent contribution decline (or a 35-
percent decline in the case of certain retail food industry plans), the 
first year of the 3-year testing period shall be deemed to be the plan 
year in which the partial withdrawal occurred.



PART 4207--REDUCTION OR WAIVER OF COMPLETE WITHDRAWAL LIABILITY--Table of Contents




Sec.
4207.1  Purpose and scope.
4207.2  Definitions.
4207.3  Abatement.
4207.4  Withdrawal liability payments during pendency of abatement 
          determination.
4207.5  Requirements for abatement.
4207.6  Partial withdrawals after reentry.
4207.7  Liability for subsequent complete withdrawals and related 
          adjustments for allocating unfunded vested benefits.
4207.8  Liability for subsequent partial withdrawals.
4207.9  Special rules.
4207.10  Plan rules for abatement.

    Authority: 29 U.S.C. 1302(b)(3), 1387.

    Source: 61 FR 34088, July 1, 1996, unless otherwise noted.



Sec. 4207.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to prescribe rules, 
pursuant to section 4207(a) of ERISA, for reducing or waiving the 
withdrawal liability of certain employers that have completely withdrawn 
from a multiemployer plan and subsequently resume covered operations 
under the plan. This part prescribes rules pursuant to which the plan 
must waive the employer's obligation to make future liability payments 
with respect to its complete withdrawal and must calculate the amount of 
the employer's liability for a partial or complete withdrawal from the 
plan after its reentry into the plan. This part also provides 
procedures, pursuant to section 4207(b) of ERISA, for plan sponsors of 
multiemployer plans to apply to PBGC for approval of plan amendments 
that provide for the reduction or waiver of complete withdrawal 
liability under conditions other than those specified in section 4207(a) 
of ERISA and this part.
    (b) Scope. This part applies to multiemployer plans covered under 
title IV of ERISA, and to employers that have completely withdrawn from 
such plans after September 25, 1980, and that have not, as of the date 
of their reentry into the plan, fully satisfied their obligation to pay 
withdrawal liability arising from the complete withdrawal.



Sec. 4207.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
employer, ERISA, IRS, Multiemployer Act, multiemployer plan, 
nonforfeitable benefit, PBGC, plan, and plan year.
    In addition, for purposes of this part:
    Complete withdrawal means a complete withdrawal as described in 
section 4203 of ERISA.
    Eligible employer means the employer, as defined in section 4001(b) 
of ERISA, as it existed on the date of its initial partial or complete 
withdrawal, as applicable. An eligible employer shall continue to be an 
eligible employer notwithstanding the occurrence of any of the following 
events:
    (1) A restoration involving a mere change in identity, form or place 
of organization, however effected;
    (2) A reorganization involving a liquidation into a parent 
corporation;
    (3) A merger, consolidation or division solely between (or among) 
trades or businesses (whether or not incorporated) of the employer; or
    (4) An acquisition by or of, or a merger or combination with another 
trade or business.
    Partial withdrawal means a partial withdrawal as described in 
section 4205 of ERISA.
    Period of withdrawal means the plan year in which the employer 
completely withdrew from the plan, the plan year in which the employer 
reentered the plan and all intervening plan years.

[[Page 884]]



Sec. 4207.3  Abatement.

    (a) General. Whenever an eligible employer that has completely 
withdrawn from a multiemployer plan reenters the plan, it may apply to 
the plan for abatement of its complete withdrawal liability. 
Applications shall be filed by the date of the first scheduled 
withdrawal liability payment falling due after the employer resumes 
covered operations or, if later, the fifteenth calendar day after the 
employer resumes covered operations. Applications shall identify the 
eligible employer, the withdrawn employer, if different, the date of 
withdrawal, and the date of resumption of covered operations. Upon 
receiving an application for abatement, the plan sponsor shall 
determine, in accordance with paragraph (b) of this section, whether the 
employer satisfies the requirements for abatement of its complete 
withdrawal liability under Sec. 4207.5, Sec. 4207.9, or a plan amendment 
which has been approved by PBGC pursuant to Sec. 4207.10. If the plan 
sponsor determines that the employer satisfies the requirements for 
abatement of its complete withdrawal liability, the provisions of 
paragraph (c) of this section shall apply. If the plan sponsor 
determines that the employer does not satisfy the requirements for 
abatement of its complete withdrawal liability, the provisions of 
paragraphs (d) and (e) of this section shall apply.
    (b) Determination of abatement. As soon as practicable after an 
eligible employer that completely withdrew from a multiemployer plan 
applies for abatement, the plan sponsor shall determine whether the 
employer satisfies the requirements for abatement of its complete 
withdrawal liability under this part and shall notify the employer in 
writing of its determination and of the consequences of its 
determination, as described in paragraphs (c) or (d) and (e) of this 
section, as appropriate. If a bond or escrow has been provided to the 
plan under Sec. 4207.4, the plan sponsor shall send a copy of the notice 
to the bonding or escrow agent.
    (c) Effects of abatement. If the plan sponsor determines that the 
employer satisfies the requirements for abatement of its complete 
withdrawal liability under this part, then--
    (1) The employer shall have no obligation to make future withdrawal 
liability payments to the plan with respect to its complete withdrawal;
    (2) The employer's liability for a subsequent withdrawal shall be 
determined in accordance with Sec. 4207.7 or Sec. 4207.8, as applicable;
    (3) Any bonds furnished under Sec. 4207.4 shall be cancelled and any 
amounts held in escrow under Sec. 4207.4 shall be refunded to the 
employer; and
    (4) Any withdrawal liability payments due after the reentry and made 
by the employer to the plan shall be refunded by the plan without 
interest.
    (d) Effects of non-abatement. If the plan sponsor determines that 
the employer does not satisfy the requirements for abatement of its 
complete withdrawal liability under this part, then--
    (1) The bond or escrow furnished under Sec. 4207.4 shall be paid to 
the plan within 30 days after the date of the plan sponsor's notice 
under paragraph (b) of this section;
    (2) The employer shall pay to the plan within 30 days after the date 
of the plan sponsor's notice under paragraph (b) of this section, the 
amount of its withdrawal liability payment or payments, with respect to 
which the bond or escrow was furnished, in excess of the bond or escrow;
    (3) The employer shall resume making its withdrawal liability 
payments as they are due to the plan; and
    (4) The employer shall be treated as a new employer for purposes of 
any future application of the withdrawal liability rules in sections 
4201--4225 of title IV of ERISA with respect to its participation in the 
plan after its reentry into the plan, except that in plans using the 
``direct attribution'' method (section 4211(c)(4) of ERISA), the 
nonforfeitable benefits attributable to service with the employer shall 
include nonforfeitable benefits attributable to service prior to reentry 
that were not nonforfeitable at that time.
    (e) Collection of payments due and review of non-abatement 
determination. The rules in part 4219, subpart C, of this chapter 
(relating to overdue, defaulted, and overpaid withdrawal liability) 
shall apply with respect to all payments required to be made under

[[Page 885]]

paragraphs (d)(2) and (d)(3) of this section. For this purpose, a 
payment required to be made under paragraph (d)(2) shall be treated as a 
withdrawal liability payment due on the 30th day after the date of the 
plan sponsor's notice under paragraph (b) of this section.
    (1) Review of non-abatement determination. A plan sponsor's 
determination that the employer does not satisfy the requirements for 
abatement under this part shall be subject to plan review under section 
4219(b)(2) of ERISA and to arbitration under section 4221 of ERISA, 
within the times prescribed by those sections. For this purpose, the 
plan sponsor's notice under paragraph (b) of this section shall be 
treated as a demand under section 4219(b)(1) of ERISA.
    (2) Determination of abatement. If the plan sponsor or an arbitrator 
determines that the employer satisfies the requirements for abatement of 
its complete withdrawal liability under this part, the plan sponsor 
shall immediately refund the following payments (plus interest, except 
as indicated below, determined in accordance with Sec. 4219.31(d) of 
this chapter as if the payments were overpayments of withdrawal 
liability) to the employer in a lump sum:
    (i) The amount of the employer's withdrawal liability payment or 
payments, without interest, due after its reentry and made by the 
employer.
    (ii) The bond or escrow paid to the plan under paragraph (d)(1) of 
this section.
    (iii) The amount of the employer's withdrawal liability payment or 
payments in excess of the bond or escrow, paid to the plan under 
paragraph (d)(2) of this section.
    (iv) Any withdrawal liability payment made by the employer to the 
plan pursuant to paragraph (d)(3) of this section after the plan 
sponsor's notice under paragraph (b) of this section.



Sec. 4207.4  Withdrawal liability payments during pendency of abatement determination.

    (a) General rule. An eligible employer that completely withdraws 
from a multiemployer plan and subsequently reenters the plan may, in 
lieu of making withdrawal liability payments due after its reentry, 
provide a bond to, or establish an escrow account for, the plan that 
satisfies the requirements of paragraph (b) of this section or any plan 
rules adopted under paragraph (d) of this section, pending a 
determination by the plan sponsor under Sec. 4207.3(b) of whether the 
employer satisfies the requirements for abatement of its complete 
withdrawal liability. An employer that applies for abatement and neither 
provides a bond/escrow nor pays its withdrawal liability payments 
remains eligible for abatement.
    (b) Bond/escrow. The bond or escrow allowed by this section shall be 
in an amount equal to 70 percent of the withdrawal liability payments 
that would otherwise be due. The bond or escrow relating to each payment 
shall be furnished before the due date of that payment. A single bond or 
escrow may be provided for more than one payment due during the pendency 
of the plan sponsor's determination. The bond or escrow agreement shall 
provide that if the plan sponsor determines that the employer does not 
satisfy the requirements for abatement of its complete withdrawal 
liability under this part, the bond or escrow shall be paid to the plan 
upon notice from the plan sponsor to the bonding or escrow agent. A bond 
provided under this paragraph shall be issued by a corporate surety 
company that is an acceptable surety for purposes of section 412 of 
ERISA.
    (c) Notice of bond/escrow. Concurrently with posting a bond or 
establishing an escrow account under paragraph (b) of this section, the 
employer shall notify the plan sponsor. The notice shall include a 
statement of the amount of the bond or escrow, the scheduled payment or 
payments with respect to which the bond or escrow is being furnished, 
and the name and address of the bonding or escrow agent.
    (d) Plan amendments concerning bond/escrow. A plan may, by 
amendment, adopt rules decreasing the amount specified in paragraph (b) 
of a bond or escrow allowed under this section. A plan amendment adopted 
under this paragraph may be applied only to the extent that it is 
consistent with the purposes of ERISA.

[[Page 886]]



Sec. 4207.5  Requirements for abatement.

    (a) General rule. Except as provided in Sec. 4207.9 (d) and (e) 
(pertaining to acquisitions, mergers and other combinations), an 
eligible employer that completely withdraws from a multiemployer plan 
and subsequently reenters the plan shall have its liability for that 
withdrawal abated in accordance with Sec. 4207.3(c) if the employer 
resumes covered operations under the plan, and the number of 
contribution base units with respect to which the employer has an 
obligation to contribute under the plan for the measurement period (as 
defined in paragraph (b) of this section) after it resumes covered 
operations exceeds 30 percent of the number of contribution base units 
with respect to which the employer had an obligation to contribute under 
the plan for the base year (as defined in paragraph (c) of this 
section).
    (b) Measurement period. If the employer resumes covered operations 
under the plan at least six full months prior to the end of a plan year 
and would satisfy the test in paragraph (a) based on its contribution 
base units for that plan year, then the measurement period shall be the 
period from the date it resumes covered operations until the end of that 
plan year. If the employer would not satisfy this test, or if the 
employer resumes covered operations under the plan less than six full 
months prior to the end of the plan year, the measurement period shall 
be the first twelve months after it resumes covered operations.
    (c) Base year. For purposes of paragraph (a) of this section, the 
employer's number of contribution base units for the base year is the 
average number of contribution base units for the two plan years in 
which its contribution base units were the highest, within the five plan 
years immediately preceding the year of its complete withdrawal.



Sec. 4207.6  Partial withdrawals after reentry.

    (a) General rule. For purposes of determining whether there is a 
partial withdrawal of an eligible employer whose liability is abated 
under this part upon the employer's reentry into the plan or at any time 
thereafter, the plan sponsor shall apply the rules in section 4205 of 
ERISA, as modified by the rules in this section, and section 108 of the 
Multiemployer Act. A partial withdrawal of an employer whose liability 
is abated under this part may occur under these rules upon the 
employer's reentry into the plan. However, a plan sponsor may not demand 
payment of withdrawal liability for a partial withdrawal occurring upon 
the employer's reentry before the plan sponsor has determined that the 
employer's liability for its complete withdrawal is abated under this 
part and has so notified the employer in accordance with Sec. 4207.3(b).
    (b) Partial withdrawal--70-percent contribution decline. The plan 
sponsor shall determine whether there is a partial withdrawal described 
in section 4205(a)(1) of ERISA (relating to a 70-percent contribution 
decline) in accordance with the rules in section 4205 of ERISA and 
section 108 of the Multiemployer Act, as modified by the rules in this 
paragraph, and shall determine the amount of an employer's liability for 
that partial withdrawal in accordance with the rules in Sec. 4207.8(b).
    (1) Definition of ``3-year testing period.'' For purposes of section 
4205(b)(1) of ERISA, the term ``3-year testing period'' means the period 
consisting of the plan year for which the determination is made and the 
two immediately preceding plan years, excluding any plan year during the 
period of withdrawal.
    (2) Contribution base units for high base year. For purposes of 
section 4205(b)(1) of ERISA and except as provided in section 108(d)(3) 
of the Multiemployer Act, in determining the number of contribution base 
units for the high base year, if the five plan years immediately 
preceding the beginning of the 3-year testing period include a plan year 
during the period of withdrawal, the number of contribution base units 
for each such year of withdrawal shall be deemed to be the greater of--
    (i) The employer's contribution base units for that plan year; or
    (ii) The average of the employer's contribution base units for the 
three plan years preceding the plan year in which the employer 
completely withdrew from the plan.

[[Page 887]]

    (c) Partial withdrawal--partial cessation of contribution 
obligation. The plan sponsor shall determine whether there is a partial 
withdrawal described in section 4205(a)(2) of ERISA (relating to a 
partial cessation of the employer's contribution obligation) in 
accordance with the rules in section 4205 of ERISA, as modified by the 
rules in this paragraph, and section 108 of the Multiemployer Act. In 
making this determination, the sponsor shall exclude all plan years 
during the period of withdrawal. A partial withdrawal under this 
paragraph can occur no earlier than the plan year of reentry. If the 
sponsor determines that there was a partial withdrawal, it shall 
determine the amount of an employer's liability for that partial 
withdrawal in accordance with the rules in Sec. 4207.8(c).



Sec. 4207.7  Liability for subsequent complete withdrawals and related adjustments for allocating unfunded vested benefits.

    (a) General. When an eligible employer that has had its liability 
for a complete withdrawal abated under this part completely withdraws 
from the plan, the employer's liability for that subsequent withdrawal 
shall be determined in accordance with the rules in sections 4201--4225 
of title IV, as modified by the rules in this section, and section 108 
of the Multiemployer Act. In the case of a combination described in 
Sec. 4207.9(d), the modifications described in this section shall be 
applied only with respect to that portion of the eligible employer that 
had previously withdrawn from the plan. In the case of a combination 
described in Sec. 4207.9(e), the modifications shall be applied 
separately with respect to each previously withdrawn employer that 
comprises the eligible employer. In addition, when a plan has abated the 
liability of a reentered employer, if the plan uses either the 
``presumptive'' or the ``direct attribution'' method (section 4211(b) or 
(c)(4), respectively) for allocating unfunded vested benefits, the plan 
shall modify those allocation methods as described in this section in 
allocating unfunded vested benefits to any employer that withdraws from 
the plan after the reentry.
    (b) Allocation of unfunded vested benefits for subsequent withdrawal 
in plans using ``presumptive'' method. In a plan using the 
``presumptive'' allocation method under section 4211(b) of ERISA, the 
amount of unfunded vested benefits allocable to a reentered employer for 
a subsequent withdrawal shall equal the sum of--
    (1) The unamortized amount of the employer's allocable shares of the 
amounts described in section 4211(b)(1), for the plan years preceding 
the initial withdrawal, determined as if the employer had not previously 
withdrawn;
    (2) The sum of the unamortized annual credits attributable to the 
year of the initial withdrawal and each succeeding year ending prior to 
reentry; and
    (3) The unamortized amount of the employer's allocable shares of the 
amounts described in section 4211(b)(1)(A) and (C) for plan years ending 
after its reentry. For purposes of paragraph (b)(2), the annual credit 
for a plan year is the amount by which the employer's withdrawal 
liability payments for the year exceed the greater of the employer's 
imputed contributions or actual contributions for the year. The 
employer's imputed contributions for a year shall equal the average 
annual required contributions of the employer for the three plan years 
preceding the initial withdrawal. The amount of the credit for a plan 
year is reduced by 5 percent of the original amount for each succeeding 
plan year ending prior to the year of the subsequent withdrawal.
    (c) Allocation of unfunded vested benefits for subsequent withdrawal 
in plans using ``modified presumptive'' or ``rolling-5'' method. In a 
plan using either the ``modified presumptive'' allocation method under 
section 4211(c)(2) of ERISA or the ``rolling-5'' method under section 
4211(c)(3), the amount of unfunded vested benefits allocable to a 
reentered employer for a subsequent withdrawal shall equal the sum of--
    (1) The amount determined under section 4211 (c)(2) or (c)(3) of 
ERISA, as appropriate, as if the date of reentry were the employer's 
initial date of participation in the plan; and
    (2) The outstanding balance, as of the date of reentry, of the 
unfunded vested

[[Page 888]]

benefits allocated to the employer for its previous withdrawal (as 
defined in paragraph (c)(2)(i) of this section) reduced as if that 
amount were being fully amortized in level annual installments, at the 
plan's funding rate as of the date of reentry, over the period described 
in paragraph (c)(2)(ii), beginning with the first plan year after 
reentry.
    (i) The outstanding balance of the unfunded vested benefits 
allocated to an employer for its previous withdrawal is the excess of 
the amount determined under section 4211 (c)(2) or (c)(3) of ERISA as of 
the end of the plan year in which the employer initially withdrew, 
accumulated with interest at the plan's funding rate for that year, from 
that year to the date of reentry, over the withdrawal liability payments 
made by the employer, accumulated with interest from the date of payment 
to the date of reentry at the plan's funding rate for the year of entry.
    (ii) The period referred to in paragraph (c)(2) for plans using the 
modified presumptive method is the greater of five years, or the number 
of full plan years remaining on the amortization schedule under section 
4211(c)(2)(B)(i) of ERISA. For plans using the rolling-5 method, the 
period is five years.
    (d) Adjustments applicable to all employers in plans using 
``presumptive'' method. In a plan using the ``presumptive'' allocation 
method under section 4211(b) of ERISA, when the plan has abated the 
withdrawal liability of a reentered employer pursuant to this part, the 
following adjustments to the allocation method shall be made in 
computing the unfunded vested benefits allocable to any employer that 
withdraws from the plan in a plan year beginning after the reentry:
    (1) The sum of the unamortized amounts of the annual credits of a 
reentered employer shall be treated as a reallocated amount under 
section 4211(b)(4) of ERISA in the plan year in which the employer 
reenters.
    (2) In the event that the 5-year period used to compute the 
denominator of the fraction described in section 4211 (b)(2)(E) and 
(b)(4)(D) of ERISA includes a year during the period of withdrawal of a 
reentered employer, the contributions for a year during the period of 
withdrawal shall be adjusted to include any actual or imputed 
contributions of the employer, as determined under paragraph (b) of this 
section.
    (e) Adjustments applicable to all employers in plans using ``direct 
attribution'' method. In a plan using the ``direct attribution'' method 
under section 4211(c)(4) of ERISA, when the plan has abated the 
withdrawal liability of a reentered employer pursuant to this part, the 
following adjustments to the allocation method shall be made in 
computing the unfunded vested benefits allocable to any employer that 
withdraws from the plan in a plan year beginning after the reentry:
    (1) The nonforfeitable benefits attributable to service with a 
reentered employer prior to its initial withdrawal shall be treated as 
benefits that are attributable to service with that employer.
    (2) For purposes of section 4211(c)(4)(D)(ii) and (iii) of ERISA, 
withdrawal liability payments made by a reentered employer shall be 
treated as contributions made by the reentered employer.
    (f) Plans using alternative allocation methods under section 
4211(c)(5). A plan that has adopted an alternative method of allocating 
unfunded vested benefits pursuant to section 4211(c)(5) of ERISA and 
part 4211 of this chapter shall adopt by plan amendment a method of 
determining a reentered employer's allocable share of the plan's 
unfunded vested benefits upon its subsequent withdrawal. The method 
shall treat the reentered employer and other withdrawing employers in a 
manner consistent with the treatment under the paragraph(s) of this 
section applicable to plans using the statutory allocation method most 
similar to the plan's alternative allocation method.
    (g) Adjustments to amount of annual withdrawal liability payments 
for subsequent withdrawal. For purposes of section 4219(c)(1)(C)(i)(I) 
and (ii)(I) of ERISA, in determining the amount of the annual withdrawal 
liability payments for a subsequent complete withdrawal, if the period 
of ten consecutive plan years ending before the plan year in which the 
withdrawal occurs includes a plan year during the period of

[[Page 889]]

withdrawal, the employer's number of contribution base units, used in 
section 4219(c)(1)(C)(i)(I), or the required employer contributions, 
used in section 4219(c)(1)(C)(ii)(I), for each such plan year during the 
period of withdrawal shall be deemed to be the greater of--
    (1) The employer's contribution base units or the required employer 
contributions, as applicable, for that year; or
    (2) The average of the employer's contribution base units or of the 
required employer contributions, as applicable, for those plan years not 
during the period of withdrawal, within the ten consecutive plan years 
ending before the plan year in which the employer's subsequent complete 
withdrawal occurred.



Sec. 4207.8  Liability for subsequent partial withdrawals.

    (a) General. When an eligible employer that has had its liability 
for a complete withdrawal abated under this part partially withdraws 
from the plan, the employer's liability for that subsequent partial 
withdrawal shall be determined in accordance with the rules in sections 
4201--4225 of ERISA, as modified by the rules in Sec. 4207.7 (b) through 
(g) of this part and the rules in this section, and section 108 of the 
Multiemployer Act.
    (b) Liability for a 70-percent contribution decline. The amount of 
an employer's liability under section 4206(a) (relating to the 
calculation of liability for a partial withdrawal), section 4208 
(relating to the reduction of liability for a partial withdrawal) and 
section 4219(c)(1) (relating to the schedule of partial withdrawal 
liability payments) of ERISA, for a subsequent partial withdrawal 
described in section 4205(a)(1) of ERISA (relating to a 70-percent 
contribution decline) shall be modified in accordance with the rules in 
this paragraph.
    (1) Definition of ``3-year testing period.'' For purposes of 
sections 4206(a) and 4219(c)(1) of ERISA, and paragraphs (b)(2)--(b)(4) 
of this section, the term ``3-year testing period'' means the period 
consisting of the plan year for which the determination is made and the 
two immediately preceding plan years, excluding any plan year during the 
period of withdrawal.
    (2) Determination date of section 4211 allocable share. For purposes 
of section 4206(a)(1)(B) of ERISA, the amount determined under section 
4211 shall be determined as if the employer had withdrawn from the plan 
in a complete withdrawal on the last day of the first plan year in the 
3-year testing period or the last day of the plan year in which the 
employer reentered the plan, whichever is later.
    (3) Calculation of fractional share of section 4211 amount. For 
purposes of sections 4206(a)(2)(B)(ii) and 4219(c)(1)(E)(ii) of ERISA, 
if the five plan years immediately preceding the beginning of the 3-year 
testing period include a plan year during the period of withdrawal, 
then, in determining the denominator of the fraction described in 
section 4206(a)(2), the employer's contribution base units for each such 
year of withdrawal shall be deemed to be the greater of--
    (i) The employer's contribution base units for that plan year; or
    (ii) The average of the employer's contribution base units for the 
three plan years preceding the plan year in which the employer 
completely withdrew from the plan.
    (4) Contribution base units for high base year. If the five plan 
years immediately preceding the beginning of the 3-year testing period 
include a plan year during the period of withdrawal, then for purposes 
of section 4208 (a) and (b)(1) of ERISA, the number of contribution base 
units for the high base year shall be the number of contribution base 
units determined under paragraph (b)(3) of this section.
    (c) Liability for partial cessation of contribution obligation. The 
amount of an employer's liability under section 4206(a) (relating to the 
calculation of liability for a partial withdrawal) and section 
4219(c)(1) (relating to the amount of the annual partial withdrawal 
liability payments) of ERISA, for a subsequent partial withdrawal 
described in section 4205(a)(2) of ERISA (relating to a partial 
cessation of the contribution obligation) shall be modified in 
accordance with the rules in this paragraph. For purposes of sections 
4206(a)(2)(B)(i) and 4219(c)(1)(E)(ii)

[[Page 890]]

of ERISA, if the five plan years immediately preceding the plan year in 
which the partial withdrawal occurs include a plan year during the 
period of withdrawal, the denominator of the fraction described in 
section 4206(a)(2) shall be determined in accordance with the rule set 
forth in paragraph (b)(3) of this section.



Sec. 4207.9  Special rules.

    (a) Employer that has withdrawn and reentered the plan before the 
effective date of this part. This part shall apply, in accordance with 
the rules in this paragraph, with respect to an eligible employer that 
completely withdraws from a multiemployer plan after September 25, 1980, 
and is performing covered work under the plan on the effective date of 
this part. Upon the application of an employer described in the 
preceding sentence, the plan sponsor of a multiemployer plan shall 
determine whether the employer satisfies the requirements for abatement 
of its complete withdrawal liability under this part. Pending the plan 
sponsor's determination, the employer may provide the plan with a bond 
or escrow that satisfies the requirements of Sec. 4207.4, in lieu of 
making its withdrawal liability payments due after its application for 
an abatement determination. The plan sponsor shall notify the employer 
in writing of its determination and the consequences of its 
determination as described in Sec. 4207.3 (c) or (d) and (e), as 
applicable. If the plan sponsor determines that the employer qualifies 
for abatement, only withdrawal liability payments made prior to the 
employer's reentry shall be retained by the plan; payments made by the 
employer after its reentry shall be refunded to the employer, with 
interest on those made prior to the application for abatement, in 
accordance with Sec. 4207.3(e)(2). If a bond or escrow has been provided 
to the plan in accordance with Sec. 4207.4, the plan sponsor shall send 
a copy of the notice to the bonding or escrow agent. Sections 4207.6 
through 4207.8 shall apply with respect to the employer's subsequent 
complete withdrawal occurring on or after the effective date of this 
part, or partial withdrawal occurring either before or after that date. 
This paragraph shall not negate reasonable actions taken by plans prior 
to the effective date of this part under plan rules implementing section 
4207(a) of ERISA that were validly adopted pursuant to section 405 of 
the Multiemployer Act.
    (b) Employer with multiple complete withdrawals that has reentered 
the plan before effective date of this part. If an employer described in 
paragraph (a) of this section has completely withdrawn from a 
multiemployer plan on two or more occasions before the effective date of 
this part, the rules in paragraph (a) of this section shall be applied 
as modified by this paragraph.
    (1) The plan sponsor shall determine whether the employer satisfies 
the requirements for abatement under Sec. 4207.5 based on the most 
recent complete withdrawal.
    (2) If the employer satisfies the requirements for abatement, the 
employer's liability with respect to all previous complete withdrawals 
shall be abated.
    (3) If the liability is abated, Secs. 4207.6 and 4207.7 shall be 
applied as if the employer's earliest complete withdrawal were its 
initial complete withdrawal.
    (c) Employer with multiple complete withdrawals that has not 
reentered the plan as of the effective date of this part. If an eligible 
employer has completely withdrawn from a multiemployer plan on two or 
more occasions between September 26, 1980, and the effective date of 
this part and is not performing covered work under the plan on the 
effective date of this regulation, the rules in this part shall apply, 
subject to the modifications specified in paragraphs (b)(1)--(b)(3) of 
this section, upon the employer's reentry into the plan.
    (d) Combination of withdrawn employer with contributing employer. If 
a withdrawn employer merges or otherwise combines with an employer that 
has an obligation to contribute to the plan from which the first 
employer withdrew, the combined entity is the eligible employer, and the 
rules of Sec. 4207.5 shall be applied--
    (1) By subtracting from the measurement period contribution base 
units the contribution base units for which the non-withdrawn portion of 
the employer was obligated to contribute in

[[Page 891]]

the last plan year ending prior to the combination;
    (2) By determining the base year contribution base units solely by 
reference to the contribution base units of the withdrawn portion of the 
employer; and
    (3) By using the date of the combination, rather than the date of 
resumption of covered operations, to begin the measurement period.
    (e) Combination of two or more withdrawn employers. If two or more 
withdrawn employers merge or otherwise combine, the combined entity is 
the eligible employer, and the rules of Sec. 4207.5 shall be applied by 
combining the number of contribution base units with respect to which 
each portion of the employer had an obligation to contribute under the 
plan for its base year. However, the combined number of contribution 
base units shall not include contribution base units of a withdrawn 
portion of the employer that had fully paid its withdrawal liability as 
of the date of the resumption of covered operations.



Sec. 4207.10  Plan rules for abatement.

    (a) General rule. Subject to the approval of the PBGC, a plan may, 
by amendment, adopt rules for the reduction or waiver of complete 
withdrawal liability under conditions other than those specified in 
Secs. 4207.5 and 4207.9 (c) and (d), provided that such conditions 
relate to events occurring or factors existing subsequent to a complete 
withdrawal year. The request for PBGC approval shall be filed after the 
amendment is adopted. A plan amendment under this section may not be put 
into effect until it is approved by the PBGC. However, an amendment that 
is approved by the PBGC may apply retroactively to the date of the 
adoption of the amendment. PBGC approval shall also be required for any 
subsequent modification of the amendment, other than repeal of the 
amendment. Sections 4207.6, 4207.7, and 4207.8 shall apply to all 
subsequent partial withdrawals after a reduction or waiver of complete 
withdrawal liability under a plan amendment approved by the PBGC 
pursuant to this section.
    (b) Who may request. The plan sponsor, or a duly authorized 
representative acting on behalf of the plan sponsor, shall sign and 
submit the request.
    (c) Where to file. The request shall be addressed to Reports 
Processing, Insurance Operations Department, Pension Benefit Guaranty 
Corporation, 1200 K Street, NW., Washington, DC 20005-4026.
    (d) Information. Each request shall contain the following 
information:
    (1) The name and address of the plan for which the plan amendment is 
being submitted and the telephone number of the plan sponsor or its duly 
authorized representative.
    (2) The nine-digit Employer Identification Number (EIN) assigned to 
the plan sponsor by the IRS and the three-digit Plan Identification 
Number (PN) assigned to the plan by the plan sponsor, and, if different, 
the EIN and PN last filed with the PBGC. If no EIN or PN has been 
assigned, that should be indicated.
    (3) A copy of the executed amendment, including--
    (i) The date on which the amendment was adopted;
    (ii) The proposed effective date; and
    (iii) The full text of the rules on the reduction or waiver of 
complete withdrawal liability.
    (4) A copy of the most recent actuarial valuation report of the 
plan.
    (5) A statement certifying that notice of the adoption of the 
amendment and of the request for approval filed under this section has 
been given to all employers that have an obligation to contribute under 
the plan and to all employee organizations representing employees 
covered under the plan.
    (e) Supplemental information. In addition to the information 
described in paragraph (d) of this section, a plan may submit any other 
information that it believes it pertinent to its request. The PBGC may 
require the plan sponsor to submit any other information that the PBGC 
determines it needs to review a request under this section.
    (f) Criteria for PBGC approval. The PBGC shall approve a plan 
amendment authorized by paragraph (a) of this section if it determines 
that the rules therein are consistent with the purposes of ERISA. An 
abatement rule is not consistent with the purposes of ERISA if--

[[Page 892]]

    (1) Implementation of the rule would be adverse to the interest of 
plan participants and beneficiaries; or
    (2) The rule would increase the PBGC's risk of loss with respect to 
the plan.

(Approved by the Office of Management and Budget under control number 
1212-0044)



PART 4208--REDUCTION OR WAIVER OF PARTIAL WITHDRAWAL LIABILITY--Table of Contents




Sec.
4208.1  Purpose and scope.
4208.2  Definitions.
4208.3  Abatement.
4208.4  Conditions for abatement.
4208.5  Withdrawal liability payments during pendency of abatement 
          determination.
4208.6  Computation of reduced annual partial withdrawal liability 
          payment.
4208.7  Adjustment of withdrawal liability for subsequent withdrawals.
4208.8  Multiple partial withdrawals in one plan year.
4208.9  Plan adoption of additional abatement conditions.

    Authority: 29 U.S.C. 1302(b)(3), 1388 (c) and (e).

    Source: 61 FR 34093, July 1, 1996, unless otherwise noted.



Sec. 4208.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to establish rules for 
reducing or waiving the liability of certain employers that have 
partially withdrawn from a multiemployer pension plan.
    (b) Scope. This part applies to multiemployer pension plans covered 
under title IV of ERISA and to employers that have partially withdrawn 
from such plans after September 25, 1980, and that have not, as of the 
date on which they satisfy the conditions for reducing or eliminating 
their partial withdrawal liability, fully satisfied their obligation to 
pay that partial withdrawal liability. This rule shall not negate 
reasonable actions taken by plans prior to the effective date of this 
part under plan rules implementing section 4208 of ERISA that were 
validly adopted pursuant to section 405 of the Multiemployer Act.



Sec. 4208.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
employer, ERISA, IRS, Multiemployer Act, multiemployer plan, PBGC, plan, 
and plan year.
    In addition, for purposes of this part:
    Complete withdrawal means a complete withdrawal as described in 
section 4203 of ERISA.
    Eligible employer means the employer, as defined in section 4001(b) 
of ERISA, as it existed on the date of its initial partial or complete 
withdrawal, as applicable. An eligible employer shall continue to be an 
eligible employer notwithstanding the occurrence of any of the following 
events:
    (1) A restoration involving a mere change in identity, form or place 
of organization, however effected;
    (2) A reorganization involving a liquidation into a parent 
corporation;
    (3) A merger, consolidation or division solely between (or among) 
trades or businesses (whether or not incorporated) of the employer; or
    (4) An acquisition by or of, or a merger or combination with another 
trade or business.
    Partial withdrawal means a partial withdrawal as described in 
section 4205 of ERISA.
    Partial withdrawal year means the third year of the 3-year testing 
period in the case of a partial withdrawal caused by a 70-percent 
contribution decline, or the year of the partial cessation in the case 
of a partial withdrawal caused by a partial cessation of the employer's 
contribution obligation.



Sec. 4208.3  Abatement.

    (a) General. Whenever an eligible employer that has partially 
withdrawn from a multiemployer plan satisfies the requirements in 
Sec. 4208.4 for the reduction or waiver of its partial withdrawal 
liability, it may apply to the plan for abatement of its partial 
withdrawal liability. Applications shall identify the eligible employer, 
the withdrawn employer (if different), the date of withdrawal, and the 
basis for reduction or waiver of its withdrawal liability. Upon 
receiving a complete application for abatement, the plan sponsor shall 
determine, in accordance with paragraph (b) of this section,

[[Page 893]]

whether the employer satisfies the requirements for abatement of its 
partial withdrawal liability under Sec. 4208.4. If the plan sponsor 
determines that the employer satisfies the requirements for abatement of 
its partial withdrawal liability, the provisions of paragraph (c) of 
this section shall apply. If the plan sponsor determines that the 
employer does not satisfy the requirements for abatement of its partial 
withdrawal liability, the provisions of paragraphs (d) and (e) of this 
section shall apply.
    (b) Determination of abatement. Within 60 days after an eligible 
employer that partially withdrew from a multiemployer plan applies for 
abatement in accordance with paragraph (a) of this section, the plan 
sponsor shall determine whether the employer satisfies the requirements 
for abatement of its partial withdrawal liability under Sec. 4208.4 and 
shall notify the employer in writing of its determination and of the 
consequences of its determination, as described in paragraphs (c) or (d) 
and (e) of this section, as appropriate. If a bond or escrow has been 
provided to the plan under Sec. 4208.5 of this part, the plan sponsor 
shall send a copy of the notice to the bonding or escrow agent.
    (c) Effects of abatement. If the plan sponsor determines that the 
employer satisfies the requirements for abatement of its partial 
withdrawal liability under Sec. 4208.4, then--
    (1) The employer's partial withdrawal liability shall be eliminated 
or its annual partial withdrawal liability payments shall be reduced in 
accordance with Sec. 4208.6, as applicable;
    (2) The employer's liability for a subsequent withdrawal shall be 
determined in accordance with Sec. 4208.7;
    (3) Any bonds furnished under Sec. 4208.5 shall be canceled and any 
amounts held in escrow under Sec. 4208.5 shall be refunded to the 
employer; and
    (4) Any withdrawal liability payments originally due and paid after 
the end of the plan year in which the conditions for abatement were 
satisfied, in excess of the amount due under this part after that date 
shall be credited to the remaining withdrawal liability payments, if 
any, owed by the employer, beginning with the first payment due after 
the revised payment schedule is issued pursuant to this paragraph. If 
the credited amount is greater than the outstanding amount of the 
employer's partial withdrawal liability, the amount remaining after 
satisfaction of the liability shall be refunded to the employer. 
Interest on the credited amount at the rate prescribed in part 4219, 
subpart C, of this chapter (relating to overdue, defaulted, and overpaid 
withdrawal liability) shall be added if the plan sponsor does not issue 
a revised payment schedule reflecting the credit or make the required 
refund within 60 days after receipt by the plan sponsor of a complete 
abatement application. Interest shall accrue from the 61st day.
    (d) Effects of non-abatement. If the plan sponsor determines that 
the employer does not satisfy the requirements for abatement of its 
partial withdrawal liability under Sec. 4208.4, then the employer shall 
take or cause to be taken the actions set forth in paragraphs (d)(1)--
(d)(3) of this section. The rules in part 4219, subpart C, shall apply 
with respect to all payments required to be made under paragraphs (d)(2) 
and (d)(3). For this purpose, a payment required under paragraph (d)(2) 
shall be treated as a withdrawal liability payment due on the 30th day 
after the date of the plan sponsor's notice under paragraph (b) of this 
section.
    (1) Any bond or escrow furnished under Sec. 4208.5 shall be paid to 
the plan within 30 days after the date of the plan sponsor's notice 
under paragraph (b) of this section.
    (2) The employer shall pay to the plan within 30 days after the date 
of the plan sponsor's notice under paragraph (b) of this section, the 
amount of its withdrawal liability payment or payments, with respect to 
which the bond or escrow was furnished, in excess of the bond or escrow.
    (3) The employer shall resume or continue making its partial 
withdrawal liability payments as they are due to the plan.
    (e) Review of non-abatement determination. A plan sponsor's 
determinations that the employer does not satisfy the requirements for 
abatement under Sec. 4208.4 and of the amount of reduction determined 
under Sec. 4208.6 shall be subject to plan review under section 
4219(b)(2) of ERISA and to arbitration

[[Page 894]]

under section 4221 of ERISA and part 4221 of this chapter, within the 
times prescribed by those provisions. For this purpose, the plan 
sponsor's notice under paragraph (b) of this section shall be treated as 
a demand under section 4219(b)(1) of ERISA. If the plan sponsor upon 
review or an arbitrator determines that the employer satisfies the 
requirements for abatement of its partial withdrawal liability under 
Sec. 4208.4, the plan sponsor shall immediately refund the amounts 
described in paragraph (e)(1) of this section if the liability is 
waived, or credit and refund the amounts described in paragraph (e)(2) 
if the annual payment is reduced.
    (1) Refund for waived liability. If the employer's partial 
withdrawal liability is waived, the plan sponsor shall refund to the 
employer the payments made pursuant to paragraphs (d)(1)--(d)(3) of this 
section (plus interest determined in accordance with Sec. 4219.31(d) of 
this chapter as if the payments were overpayments of withdrawal 
liability).
    (2) Credit for reduced annual payment. If the employer's annual 
partial withdrawal liability payment is reduced, the plan sponsor shall 
credit the payments made pursuant to paragraphs (d)(1)--(d)(3) of this 
section (plus interest determined in accordance with Sec. 4219.31(d) of 
this chapter as if the payments were overpayments of withdrawal 
liability) to future withdrawal liability payments owed by the employer, 
beginning with the first payment that is due after the determination, 
and refund any credit (including interest) remaining after satisfaction 
of the outstanding amount of the employer's partial withdrawal 
liability.



Sec. 4208.4  Conditions for abatement.

    (a) Waiver of liability for a 70-percent contribution decline. An 
employer that has incurred a partial withdrawal under section 4205(a)(1) 
of ERISA shall have no obligation to make payments with respect to that 
partial withdrawal (other than delinquent payments) for plan years 
beginning after the second consecutive plan year in which the conditions 
of either paragraph (a)(1) or (a)(2) are satisfied for each of the two 
years:
    (1) The number of contribution base units with respect to which the 
employer has an obligation to contribute under the plan for each year is 
not less than 90 percent of the total number of contribution base units 
with respect to which the employer had an obligation to contribute to 
the plan for the high base year (as defined in paragraph (d) of this 
section).
    (2) The conditions of this paragraph are satisfied if--
    (i) The number of contribution base units with respect to which the 
employer has an obligation to contribute for each year exceeds 30 
percent of the total number of contribution base units with respect to 
which the employer had an obligation to contribute to the plan for the 
high base year (as defined in paragraph (d) of this section); and
    (ii) The total number of contribution base units with respect to 
which all employers under the plan have obligations to contribute in 
each of the two years is not less than 90 percent of the total number of 
contribution base units for which all employers had obligations to 
contribute in the partial withdrawal year.
    (b) Waiver of liability for a partial cessation of the employer's 
contribution obligation. Except as provided in Sec. 4208.8, an employer 
that has incurred partial withdrawal liability under section 4205(a)(2) 
of ERISA shall have no obligation to make payments with respect to that 
partial withdrawal (other than delinquent payments) for plan years 
beginning after the second consecutive plan year in which the employer 
satisfies the conditions under either paragraph (b)(1) or (b)(2) of this 
section.
    (1) Partial restoration of withdrawn work. The employer satisfies 
the conditions under this paragraph if, for each of two consecutive plan 
years--
    (i) The employer makes contributions for the same facility or under 
the same collective bargaining agreement that gave rise to the partial 
withdrawal;
    (ii) The employer's contribution base units for that facility or 
under that agreement exceed 30 percent of the contribution base units 
with respect to which the employer had an obligation to contribute for 
that facility or under that agreement for the high base year

[[Page 895]]

(as defined in paragraph (d) of this section); and
    (iii) The total number of contribution base units with respect to 
which the employer has an obligation to contribute to the plan equals at 
least 90 percent of the total number of contribution base units with 
respect to which the employer had an obligation to contribute under the 
plan for the high base year (as defined in paragraph (d) of this 
section).
    (2) Substantial restoration of withdrawn work. The employer 
satisfies the conditions under this paragraph if, for each of two 
consecutive plan years--
    (i) The employer makes contributions for the same facility or under 
the same collective bargaining agreement that gave rise to the partial 
withdrawal;
    (ii) The employer's contribution base units for that facility or 
under that agreement are not less than 90 percent of the contribution 
base units with respect to which the employer had an obligation to 
contribute for that facility or under that agreement for the high base 
year (as defined in paragraph (d) of this section); and
    (iii) The total number of contribution base units with respect to 
which the employer has an obligation to contribute to the plan equals or 
exceeds the sum of--
    (A) The number of contribution base units with respect to which the 
employer had an obligation to contribute in the year prior to the 
partial withdrawal year, determined without regard to the contribution 
base units for the facility or under the agreement that gave rise to the 
partial withdrawal; and
    (B) 90 percent of the contribution base units with respect to which 
the employer had an obligation to contribute for that facility or under 
that agreement in either the year prior to the partial withdrawal year 
or the high base year (as defined in paragraph (d) of this section), 
whichever is less.
    (c) Reduction in annual partial withdrawal liability payment--(1) 
Partial withdrawals under section 4205(a)(1). An employer shall be 
entitled to a reduction of its annual partial withdrawal liability 
payment for a plan year if the number of contribution base units with 
respect to which the employer had an obligation to contribute during the 
plan year exceeds the greater of--
    (i) 110 percent (or such lower number as the plan may, by amendment, 
adopt) of the number of contribution base units with respect to which 
the employer had an obligation to contribute in the partial withdrawal 
year; or
    (ii) The total number of contribution base units with respect to 
which the employer had an obligation to contribute to the plan for the 
plan year following the partial withdrawal year.
    (2) Partial withdrawals under section 4205(a)(2). An employer that 
resumes the obligation to contribute with respect to a facility or 
collective bargaining agreement that gave rise to a partial withdrawal, 
but does not qualify to have that liability waived under paragraph (b) 
of this section, shall have its annual partial withdrawal liability 
payment reduced for any plan year in which the total number of 
contribution base units with respect to which the employer has an 
obligation to contribute equals or exceeds the sum of--
    (i) The number of contribution base units for the reentered facility 
or agreement during that year; and
    (ii) The total number of contribution base units with respect to 
which the employer had an obligation to contribute to the plan for the 
year following the partial withdrawal year.
    (d) High base year. For purposes of paragraphs (a) and (b)(1)(iii) 
of this section, the high base year contributions are the average of the 
total contribution base units for the two plan years for which the 
employer's total contribution base units were highest within the five 
plan years immediately preceding the beginning of the 3-year testing 
period defined in section 4205(b)(1)(B)(i) of ERISA, with respect to 
paragraph (a) of this section, or the partial withdrawal year, with 
respect to paragraph (b)(1)(iii) of this section. For purposes of 
paragraphs (b)(1)(ii) and (b)(2) of this section, the high base year 
contributions are the average number of contribution base units for the 
facility or under the agreement for the two plan years for which the 
employer's contribution base units for that facility or under that 
agreement were highest within the five plan years

[[Page 896]]

immediately preceding the partial withdrawal.



Sec. 4208.5  Withdrawal liability payments during pendency of abatement determination.

    (a) Bond/Escrow. An employer that has satisfied the requirements of 
Sec. 4208.4(a)(1) without regard to ``90 percent of'' or Sec. 4208.4(b) 
for one year with respect to all partial withdrawals it incurred in a 
plan year may, in lieu of making scheduled withdrawal liability payments 
in the second year for those withdrawals, provide a bond to, or 
establish an escrow account for, the plan that satisfies the 
requirements of paragraph (b) of this section or any plan rules adopted 
under paragraph (d) of this section, pending a determination by the plan 
sponsor of whether the employer satisfies the requirements of 
Sec. 4208.4 (a)(1) or (b) for the second consecutive plan year. An 
employer that applies for abatement and neither provides a bond/escrow 
nor makes its withdrawal liability payments remains eligible for 
abatement.
    (b) Amount of bond/escrow. The bond or escrow allowed by this 
section shall be in an amount equal to 50 percent of the withdrawal 
liability payments that would otherwise be due. The bond or escrow 
relating to each payment shall be furnished before the due date of that 
payment. A single bond or escrow may be provided for more than one 
payment due during the pendency of the plan sponsor's determination. The 
bond or escrow agreement shall provide that if the plan sponsor 
determines that the employer does not satisfy the requirements for 
abatement of its partial withdrawal liability under Sec. 4208.4 (a)(1) 
or (b), the bond or escrow shall be paid to the plan upon notice from 
the plan sponsor to the bonding or escrow agent. A bond provided under 
this paragraph shall be issued by a corporate surety company that is an 
acceptable surety for purposes of section 412 of ERISA.
    (c) Notice of bond/escrow. Concurrently with posting a bond or 
establishing an escrow account under this section, the employer shall 
notify the plan sponsor. The notice shall include a statement of the 
amount of the bond or escrow, the scheduled payment or payments with 
respect to which the bond or escrow is being furnished, and the name and 
address of the bonding or escrow agent.
    (d) Plan amendments concerning bond/escrow. A plan may, by 
amendment, adopt rules decreasing the amount of the bond or escrow 
specified in paragraph (b) of this section. A plan amendment adopted 
under this paragraph may be applied only to the extent that it is 
consistent with the purposes of ERISA. An amendment satisfies this 
requirement only if it does not create an unreasonable risk of loss to 
the plan.
    (e) Plan sponsor determination. Within 60 days after the end of the 
plan year in which the bond/escrow is furnished, the plan sponsor shall 
determine whether the employer satisfied the requirements of Sec. 4208.4 
(a)(1) or (b) for the second consecutive plan year. The plan sponsor 
shall notify the employer and the bonding or escrow agent in writing of 
its determination and of the consequences of its determination, as 
described in Sec. 4208.3 (c) or (d) and (e), as appropriate.



Sec. 4208.6  Computation of reduced annual partial withdrawal liability payment.

    (a) Amount of reduced payment. An employer that satisfies the 
requirements of Sec. 4208.4 (c)(1) or (c)(2) shall have its annual 
partial withdrawal liability payment for that plan year reduced in 
accordance with paragraph (a)(1) or (a)(2) of this section, 
respectively.
    (1) The reduced annual payment amount for an employer that satisfies 
Sec. 4208.4(c)(1) shall be determined by substituting the number of 
contribution base units in the plan year in which the requirements are 
satisfied for the number of contribution base units in the year 
following the partial withdrawal year in the numerator of the fraction 
described in section 4206(a)(2)(A) of ERISA.
    (2) The reduced annual payment for an employer that satisfies 
Sec. 4208.4(c)(2) shall be determined by adding the contribution base 
units for which the employer is obligated to contribute with respect to 
the reentered facility or

[[Page 897]]

agreement in the year in which the requirements are satisfied to the 
numerator of the fraction described in section 4206(a)(2)(A) of ERISA.
    (b) Credit for reduction. The plan sponsor shall credit the account 
of an employer that satisfies the requirements of Sec. 4208.4(c)(1) or 
(c)(2) with the amount of annual withdrawal liability that it paid in 
excess of the amount described in paragraph (a)(1) or (a)(2) of this 
section, as appropriate. The credit shall be applied, a revised payment 
schedule issued, refund made and interest added, all in accordance with 
Sec. 4208.3(c)(4).



Sec. 4208.7  Adjustment of withdrawal liability for subsequent withdrawals.

    The liability of an employer for a partial or complete withdrawal 
from a plan subsequent to a partial withdrawal from that plan in a prior 
plan year shall be reduced in accordance with part 4206 of this chapter.



Sec. 4208.8  Multiple partial withdrawals in one plan year.

    (a) General rule. If an employer partially withdraws from the same 
multiemployer plan on two or more occasions during the same plan year, 
the rules of Sec. 4208.4 shall be applied as modified by this section.
    (b) Partial withdrawals under section 4205 (a)(1) and (a)(2) in the 
same plan year. If an employer partially withdraws from the same 
multiemployer plan as a result of a 70-percent contribution decline and 
a partial cessation of the employer's contribution obligation in the 
same plan year, the employer shall not be eligible for abatement under 
Sec. 4208.4 (b) or (c)(2) or under paragraph (c) of this section. The 
employer may qualify for abatement under Sec. 4208.4(a) and (c)(1) and 
under any rules adopted by the plan pursuant to Sec. 4208.9.
    (c) Multiple partial cessations of the employer's contribution 
obligation. If an employer permanently ceases to have an obligation to 
contribute for more than one facility, under more than one collective 
bargaining agreement, or for one or more facilities and under one or 
more collective bargaining agreements, resulting in multiple partial 
withdrawals under section 4205(b)(2)(A) in the same plan year, the 
abatement rules in Sec. 4208.4(b) shall be applied as modified by this 
paragraph. If an employer resumes work at all such facilities and under 
all such collective bargaining agreements, the determination of whether 
the employer qualifies for elimination of its liability under 
Sec. 4208.4(b) shall be made by substituting the test set forth in 
paragraph (c)(1) of this section for that prescribed by Sec. 4208.4 
(b)(1)(ii) or (b)(2)(ii), as applicable. If the employer resumes work at 
or under fewer than all the facilities or collective bargaining 
agreements described in this paragraph, the employer cannot qualify for 
elimination of its liability under Sec. 4208.4(b). However, the employer 
may qualify for a reduction in its partial withdrawal liability pursuant 
to paragraph (c)(2) of this section.
    (1) Resumption of work at all facilities and under all bargaining 
agreements. The test under this paragraph is satisfied if for each of 
the two consecutive plan years referred to in Sec. 4208.4(b), the 
employer's total contribution base units for the facilities and under 
the collective bargaining agreements with respect to which the employer 
incurred the multiple partial withdrawals exceed 30 percent of the total 
number of contribution base units with respect to which the employer had 
an obligation to contribute for those facilities and under those 
agreements for the base year (as defined in paragraph (d) of this 
section).
    (2) Resumption at fewer than all facilities or under fewer than all 
bargaining agreements. If the employer satisfies the conditions in 
Sec. 4208.4 (b)(1)(i) and (b)(1)(iii) and paragraph (c)(2)(i) of this 
section, or the conditions in Sec. 4208.4 (b)(2)(i) and (b)(2)(iii) and 
paragraph (c)(2)(ii) of this section, as applicable, the employer's 
withdrawal liability shall be partially waived as set forth in paragraph 
(c)(2)(iii) of this section.
    (i) With respect to a resumption of work under Sec. 4208.4(b)(1), 
the condition under this paragraph is satisfied if, for the two 
consecutive plan years referred to in Sec. 4208.4(b)(1), the employer's 
contribution base units for any reentered facility or agreement exceed 
30 percent of the number of contribution base

[[Page 898]]

units with respect to which the employer had an obligation to contribute 
for that facility or under that agreement for the base year (as defined 
in paragraph (d) of this section).
    (ii) With respect to a resumption of work under Sec. 4208.4(b)(2), 
the condition under this paragraph is satisfied if, for the two 
consecutive plan years referred to in Sec. 4208.4(b)(2), the employer's 
contribution base units for any reentered facility or agreement exceed 
90 percent of the number of contribution base units with respect to 
which the employer had an obligation to contribute for that facility or 
under that agreement for the base year (as defined in paragraph (d) of 
this section).
    (iii) The employer's reduced withdrawal liability and, if any, the 
reduced annual payments of the liability shall be determined by adding 
the average number of contribution base units that the employer is 
required to contribute for those two consecutive years for that 
facility(ies) or agreement(s) to the numerator of the fraction described 
in section 4206(a)(2)(A) of ERISA. The amount of any remaining partial 
withdrawal liability shall be paid over the schedule originally 
established starting with the first payment due after the revised 
payment schedule is issued under Sec. 4208.3(c)(4).
    (d) Base year. For purposes of this section, the base year 
contribution base units for a reentered facility(ies) or under a 
reentered agreement(s) are the average number of contribution base units 
for the facility(ies) or under the agreement(s) for the two plan years 
for which the employer's contribution base units for that facility(ies) 
or under that agreement(s) were highest within the five plan years 
immediately preceding the partial withdrawal.



Sec. 4208.9  Plan adoption of additional abatement conditions.

    (a) General rule. A plan may by amendment, subject to the approval 
of the PBGC, adopt rules for the reduction or waiver of partial 
withdrawal liability under conditions other than those specified in 
Sec. 4208.4, provided that such conditions relate to events occurring or 
factors existing subsequent to a partial withdrawal year. The request 
for PBGC approval shall be filed after the amendment is adopted. PBGC 
approval shall also be required for any subsequent modification of the 
amendment, other than repeal of the amendment. A plan amendment under 
this section may not be put into effect until it is approved by the 
PBGC. An amendment that is approved by the PBGC may apply retroactively.
    (b) Who may request. The plan sponsor, or a duly authorized 
representative acting on behalf of the plan sponsor, shall sign and 
submit the request.
    (c) Where to file. The request shall be addressed to Reports 
Processing, Insurance Operations Department, Pension Benefit Guaranty 
Corporation, 1200 K Street NW., Washington, DC 20005-4026.
    (d) Information. Each request shall contain the following 
information:
    (1) The name and address of the plan for which the plan amendment is 
being submitted and the telephone number of the plan sponsor or its duly 
authorized representative.
    (2) The nine-digit Employer Identification Number (EIN) assigned to 
the plan sponsor by the IRS and the three-digit Plan Identification 
Number (PIN) assigned to the plan by the plan sponsor, and, if 
different, also the EIN-PIN last filed with the PBGC. If an EIN-PIN has 
not been assigned, that should be indicated.
    (3) A copy of the executed amendment, including--
    (i) The date on which the amendment was adopted;
    (ii) The proposed effective date;
    (iii) The full text of the rules on the reduction or waiver of 
partial withdrawal liability; and
    (iv) The full text of the rules adjusting the reduction in the 
employer's liability for a subsequent partial or complete withdrawal, as 
required by section 4206(b)(1) of ERISA.
    (4) A copy of the most recent actuarial valuation report of the 
plan.
    (5) A statement certifying that notice of the adoption of the 
amendment and of the request for approval filed under this section has 
been given to all employers that have an obligation to contribute under 
the plan and to all employee organizations representing employees 
covered under the plan.
    (e) Supplemental information. In addition to the information 
described in

[[Page 899]]

paragraph (d) of this section, a plan may submit any other information 
that it believes is pertinent to its request. The PBGC may require the 
plan sponsor to submit any other information that the PBGC determines 
that it needs to review a request under this section.
    (f) Criteria for PBGC approval. The PBGC shall approve a plan 
amendment authorized by paragraph (a) of this section if it determines 
that the rules therein are consistent with the purposes of ERISA. An 
abatement amendment is not consistent with the purposes of ERISA unless 
the PBGC determines that--
    (1) The amendment is not adverse to the interests of plan 
participants and beneficiaries in the aggregate; and
    (2) The amendment would not significantly increase the PBGC's risk 
of loss with respect to the plan.

(Approved by the Office of Management and Budget under control no. 1212-
0039)



PART 4211--ALLOCATING UNFUNDED VESTED BENEFITS TO WITHDRAWING EMPLOYERS--Table of Contents




                           Subpart A--General

Sec.
4211.1  Purpose and scope.
4211.2  Definitions.
4211.3  Special rules for construction industry and IRC section 404(c) 
          plans.

             Subpart B--Changes Not Subject to PBGC Approval

4211.11  Changes not subject to PBGC approval.
4211.12  Modifications to the presumptive, modified presumptive and 
          rolling-5 methods.
4211.13  Modifications to the direct attribution method.

               Subpart C--Changes Subject to PBGC Approval

4211.21  Changes subject to PBGC approval.
4211.22  Requests for PBGC approval.
4211.23  Approval of alternative method.
4211.24  Special rule for certain alternative methods previously 
          approved.

      Subpart D--Allocation Methods for Merged Multiemployer Plans

4211.31  Allocation of unfunded vested benefits following the merger of 
          plans.
4211.32  Presumptive method for withdrawals after the initial plan year.
4211.33  Modified presumptive method for withdrawals after the initial 
          plan year.
4211.34  Rolling-5 method for withdrawals after the initial plan year.
4211.35  Direct attribution method for withdrawals after the initial 
          plan year.
4211.36  Modifications to the determination of initial liabilities, the 
          amortization of initial liabilities, and the allocation 
          fraction.
4211.37  Allocating unfunded vested benefits for withdrawals before the 
          end of the initial plan year.

    Authority: 29 U.S.C. 1302(b)(3); 1391(c)(1), (c)(2)(D), (c)(5)(A), 
(c)(5)(B), (c)(5)(D), and (f).

    Source: 61 FR 34097, July 1, 1996, unless otherwise noted.



                           Subpart A--General



Sec. 4211.1  Purpose and scope.

    (a) Purpose. Section 4211 of ERISA provides four methods for 
allocating unfunded vested benefits to employers that withdraw from a 
multiemployer plan: the presumptive method (section 4211(b)); the 
modified presumptive method (section 4211(c)(2)); the rolling-5 method 
(section 4211(c)(3)); and the direct attribution method (section 
4211(c)(4)). With the minor exceptions covered in Sec. 4211.3, a plan 
determines the amount of unfunded vested benefits allocable to a 
withdrawing employer in accordance with the presumptive method, unless 
the plan is amended to adopt an alternative allocative method. 
Generally, the PBGC must approve the adoption of an alternative 
allocation method. On September 25, 1984, 49 FR 37686, the PBGC granted 
a class approval of all plan amendments adopting one of the statutory 
alternative allocation methods. Subpart C sets forth the criteria and 
procedures for PBGC approval of nonstatutory alternative allocation 
methods. Section 4211(c)(5) of ERISA also permits certain modifications 
to the statutory allocation methods. The PBGC is to prescribe these 
modifications in a regulation, and plans may adopt them without PBGC 
approval. Subpart B contains the permissible modifications to the 
statutory methods. Plans may adopt other modifications subject to PBGC 
approval under subpart C. Finally, under section 4211(f) of ERISA, the 
PBGC is

[[Page 900]]

required to prescribe rules governing the application of the statutory 
allocation methods or modified methods by plans following merger of 
multiemployer plans. Subpart D sets forth alternative allocative methods 
to be used by merged plans. In addition, such plans may adopt any of the 
allocation methods or modifications described under subparts B and C in 
accordance with the rules under subparts B and C.
    (b) Scope. This part applies to all multiemployer plans covered by 
title IV of ERISA.



Sec. 4211.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
Code, employer, IRS, multiemployer plan, nonforfeitable benefit, PBGC, 
plan, and plan year.
    In addition, for purposes of this part:
    Initial plan year means a merged plan's first complete plan year 
that begins after the establishment of the merged plan.
    Initial plan year unfunded vested benefits means the unfunded vested 
benefits as of the close of the initial plan year, less the value as of 
the end of the initial plan year of all outstanding claims for 
withdrawal liability that can reasonably be expected to be collected 
from employers that had withdrawn as of the end of the initial plan 
year.
    Merged plan means a plan that is the result of the merger of two or 
more multiemployer plans.
    Merger means the combining of two or more multiemployer plans into 
one multiemployer plan.
    Prior plan means the plan in which an employer participated 
immediately before that plan became a part of the merged plan.
    Unfunded vested benefits means an amount by which the value of 
nonforfeitable benefits under the plan exceeds the value of the assets 
of the plan.
    Withdrawing employer means the employer for whom withdrawal 
liability is being calculated under section 4201 of ERISA.
    Withdrawn employer means an employer who, prior to the withdrawing 
employer, has discontinued contributions to the plan or covered 
operations under the plan and whose obligation to contribute has not 
been assumed by a successor employer within the meaning of section 4204 
of ERISA. A temporary suspension of contributions, including a 
suspension described in section 4218(2) of ERISA, is not considered a 
discontinuance of contributions.



Sec. 4211.3  Special rules for construction industry and IRC section 404(c) plans.

    (a) Construction plans. Except as provided in Secs. 4211.11(b) and 
4211.21(b), a plan that primarily covers employees in the building and 
construction industry shall use the presumptive method for allocating 
unfunded vested benefits.
    (b) Section 404(c) plans. A plan described in section 404(c) of the 
Code or a continuation of such a plan shall allocate unfunded vested 
benefits under the rolling-5 method unless the plan, by amendment, 
adopts an alternative method or modification.



             Subpart B--Changes Not Subject to PBGC Approval



Sec. 4211.11  Changes not subject to PBGC approval.

    (a) General rule. A plan, other than a plan that primarily covers 
employees in the building and construction industry, may adopt, by 
amendment, any of the statutory allocation methods and any of the 
modifications set forth in Secs. 4211.12 and 4211.13, without the 
approval of the PBGC.
    (b) Building and construction industry plans. A plan that primarily 
covers employees in the building and construction industry may adopt, by 
amendment, any of the modifications to the presumptive rule set forth in 
Sec. 4211.12 without the approval of the PBGC.



Sec. 4211.12  Modifications to the presumptive, modified presumptive and rolling-5 methods.

    (a) ``Contributions made'' and ``total amount contributed''. Each of 
the allocation fractions used in the presumptive, modified presumptive 
and rolling-5 methods is based on contributions that certain employers 
have made to the plan for a five-year period. For purposes of these 
methods, and except as provided in paragraph (b) of this section, ``the 
sum of all contributions

[[Page 901]]

made'' or ``total amount contributed'' by employers for a plan year 
means the amounts (other than withdrawal liability payments) considered 
contributed to the plan for the plan year for purposes of section 
412(b)(3)(A) of the Code. For plan years before section 412 applies to 
the plan, ``the sum of all contributions made'' or ``total amount 
contributed'' means the amount reported to the IRS or the Department of 
Labor as total contributions for the plan year; for example, for plan 
years in which the plan filed the Form 5500, the amount reported as 
total contributions on that form. Employee contributions, if any, shall 
be excluded from the totals.
    (b) Changing the period for counting contributions. A plan sponsor 
may amend a plan to modify the denominators in the presumptive, modified 
presumptive and rolling-5 methods in accordance with one of the 
alternatives described in this paragraph. Except as provided in 
paragraph (b)(4) of this section, any amendment adopted under this 
paragraph shall be applied consistently to all plan years. Contributions 
counted for one plan year may be not counted for any other plan year. If 
a contribution is counted as part of the ``total amount contributed'' 
for any plan year used to determine a denominator, that contribution may 
not also be counted as a contribution owed with respect to an earlier 
year used to determine the same denominator, regardless of when the plan 
collected that contribution.
    (1) A plan sponsor may amend a plan to provide that ``the sum of all 
contributions made'' or ``total amount contributed'' for a plan year 
means the amount of contributions that the plan actually received during 
the plan year, without regard to whether the contributions are treated 
as made for that plan year under section 412(b)(3)(A) of the Code.
    (2) A plan sponsor may amend a plan to provide that ``the sum of all 
contributions made'' or ``total amount contributed'' for a plan year 
means the amount of contributions actually received during the plan 
year, increased by the amount of contributions received during a 
specified period of time after the close of the plan year not to exceed 
the period described in section 412(c)(10) of the Code and regulations 
thereunder.
    (3) A plan sponsor may amend a plan to provide that ``the sum of all 
contributions made'' or ``total amount contributed'' for a plan year 
means the amount of contributions actually received during the plan 
year, increased by the amount of contributions accrued during the plan 
year and received during a specified period of time after the close of 
the plan year not to exceed the period described in section 412(c)(10) 
of the Code and regulations thereunder.
    (4) A plan sponsor may amend a plan to provide that--
    (i) For plan years ending before September 26, 1980, ``the sum of 
all contributions made'' or ``total amount contributed'' means the 
amount of total contributions reported on Form 5500 and, for years 
before the plan was required to file Form 5500, the amount of total 
contributions reported on any predecessor reporting form required by the 
Department of Labor or the IRS; and
    (ii) For subsequent plan years, ``the sum of all contributions 
made'' or ``total amount contributed'' means the amount described in 
paragraph (a) of this section, or the amount described in paragraph 
(b)(1), (b)(2) or (b)(3) of this section.
    (c) Excluding contributions of significant withdrawn employers. 
Contributions of certain withdrawn employers are excluded from the 
denominator in each of the fractions used to determine a withdrawing 
employer's share of unfunded vested benefits under the presumptive, 
modified presumptive and rolling-5 methods. Except as provided in 
paragraph (c)(1) of this section, contributions of all employers that 
permanently cease to have an obligation to contribute to the plan or 
permanently cease covered operations before the end of the period of 
plan years used to determine the fractions for allocating unfunded 
vested benefits under each of those methods (and contributions of all 
employers that withdrew before September 26, 1980) are excluded from the 
denominators of the fractions.
    (1) The plan sponsor of a plan using the presumptive, modified 
presumptive

[[Page 902]]

or rolling-5 method may amend the plan to provide that only the 
contributions of significant withdrawn employers shall be excluded from 
the denominators of the fractions used in those methods.
    (2) For purposes of this paragraph (c), ``significant withdrawn 
employer'' means--
    (i) An employer to which the plan has sent a notice of withdrawal 
liability under section 4219 of ERISA; or
    (ii) A withdrawn employer that in any plan year used to determine 
the denominator of a fraction contributed at least $250,000 or, if less, 
1% of all contributions made by employers for that year.
    (3) If a group of employers withdraw in a concerted withdrawal, the 
plan shall treat the group as a single employer in determining whether 
the members are significant withdrawn employers under paragraph (c)(2) 
of this section. A ``concerted withdrawal'' means a cessation of 
contributions to the plan during a single plan year--
    (i) By an employer association;
    (ii) By all or substantially all of the employers covered by a 
single collective bargaining agreement; or
    (iii) By all or substantially all of the employers covered by 
agreements with a single labor organization.



Sec. 4211.13  Modifications to the direct attribution method.

    (a) Error in direct attribution method. The unfunded vested benefits 
allocated to a withdrawing employer under the direct attribution method 
are the sum of the employer's attributable liability, determined under 
section 4211(c)(4)(A)(i) and (B) of ERISA, and the employer's share of 
the plan's unattributable liability, determined under section 
4211(c)(4)(E) and allocated to the employer under section 4211(c)(4)(F). 
Plan sponsors should allocate unattributable liabilities on the basis of 
the employer's share of the attributable liabilities. However, section 
4211(c)(4)(F) of ERISA, which describes the allocation of unattributable 
liabilities, contains a typographical error. Therefore, plans adopting 
the direct attribution method shall modify the phrase ``as the amount 
determined under subparagraph (C) for the employer bears to the sum of 
the amounts determined under subparagraph (C) for all employers under 
the plan'' in section 4211(c)(4)(F) by substituting ``subparagraph (B)'' 
for ``subparagraph (C)'' in both places it appears.
    (b) Allocating unattributable liability based on contributions in 
period before withdrawal. A plan that is amended to adopt the direct 
attribution method may provide that instead of allocating the 
unattributable liability in accordance with section 4211(c)(4)(F) of 
ERISA, the employer's share of the plan's unattributable liability shall 
be determined by multiplying the plan's unattributable liability 
determined under section 4211(c)(4)(E) by a fraction--
    (1) The numerator of which is the total amount of contributions 
required to be made by the withdrawing employer over a period of 
consecutive plan years (not fewer than five) ending before the 
withdrawal; and
    (2) The denominator of which is the total amount contributed under 
the plan by all employers for the same period of years used in paragraph 
(b)(1) of this section, decreased by any amount contributed by an 
employer that withdrew from the plan during those plan years.



               Subpart C--Changes Subject to PBGC Approval



Sec. 4211.21  Changes subject to PBGC approval.

    (a) General rule. Subject to the approval of the PBGC pursuant to 
this subpart, a plan, other than a plan that primarily covers employees 
in the building and construction industry, may adopt, by amendment, any 
allocation method or modification to an allocation method that is not 
permitted under subpart B of this part.
    (b) Building and construction industry plans. Subject to the 
approval of the PBGC pursuant to this subpart, a plan that primarily 
covers employees in the building and construction industry may adopt, by 
amendment, any allocation method or modification to an allocation method 
that is not permitted

[[Page 903]]

under Sec. 4211.12 if the method or modification is applicable only to 
its employers that are not construction industry employers within the 
meaning of section 4203(b)(1)(A) of ERISA.
    (c) Substantial overallocation not allowed. No plan may adopt an 
allocation method or modification to an allocation method that results 
in a systematic and substantial overallocation of the plan's unfunded 
vested benefits.
    (d) Use of method prior to approval. A plan may implement an 
alternative allocation method or modification to an allocation method 
that requires PBGC approval before that approval is given. However, the 
plan sponsor shall assess liability in accordance with this paragraph.
    (1) Demand for payment. Until the PBGC approves the allocation 
method or modification, a plan may not demand withdrawal liability under 
section 4219 of ERISA in an amount that exceeds the lesser of the amount 
calculated under the amendment or the amount calculated under the 
allocation method that the plan would be required to use if the PBGC did 
not approve the amendment. The plan must inform each withdrawing 
employer of both amounts and explain that the higher amount may become 
payable depending on the PBGC's decision on the amendment.
    (2) Adjustment of liability. When necessary because of the PBGC 
decision on the amendment, the plan shall adjust the amount demanded 
from each employer under paragraph (c)(1) of this section and the 
employer's withdrawal liability payment schedule. The length of the 
payment schedule shall be increased, as necessary. The plan shall notify 
each affected employer of the adjusted liability and payment schedule 
and shall collect the adjusted amount in accordance with the adjusted 
schedule.



Sec. 4211.22  Requests for PBGC approval.

    (a) General. A plan shall submit a request for approval of an 
alternative allocation method or modification to an allocation method to 
the PBGC in accordance with the requirements of this section as soon as 
practicable after the adoption of the amendment.
    (b) Who shall submit. The plan sponsor, or a duly authorized 
representative acting on behalf of the plan sponsor, shall sign the 
request.
    (c) Where to submit. The plan shall submit the request by first 
class mail or courier service to Reports Processing, Insurance 
Operations Department, Pension Benefit Guaranty Corporation, 1200 K 
Street, NW., Washington, DC 20005-4026, or by hand to the above address.
    (d) Content. Each request shall contain the following information:
    (1) The name, address and telephone number of the plan sponsor, and 
of the duly authorized representative, if any, of the plan sponsor.
    (2) The name of the plan.
    (3) The nine-digit Employer Identification Number (EIN) that the 
Internal Revenue Service assigned to the plan sponsor and the three-
digit Plan Identification Number (PIN) that the plan sponsor assigned to 
the plan, and, if different, also the EIN-PIN that the plan last filed 
with the PBGC. If the plan has no EIN-PIN, the request shall so 
indicate.
    (4) The date the amendment was adopted.
    (5) A copy of the amendment, setting forth the full text of the 
alternative allocation method or modification.
    (6) The allocation method that the plan currently uses and a copy of 
the plan amendment (if any) that adopted the method.
    (7) A statement certifying that notice of the adoption of the 
amendment has been given to all employers that have an obligation to 
contribute under the plan and to all employee organizations that 
represent employees covered by the plan.
    (e) Additional information. In addition to the information listed in 
paragraph (d) of this section, the PBGC may require the plan sponsor to 
submit any other information that the PBGC determines is necessary for 
the review of an alternative allocation method or modification to an 
allocation method.

(Approved by the Office of Management and Budget under control number 
1212-0035)

[[Page 904]]



Sec. 4211.23  Approval of alternative method.

    (a) General. The PBGC shall approve an alternative allocation method 
or modification to an allocation method if the PBGC determines that 
adoption of the method or modification would not significantly increase 
the risk of loss to plan participants and beneficiaries or to the PBGC.
    (b) Criteria. An alternative allocation method or modification to an 
allocation method satisfies the requirements of paragraph (a) of this 
section if it meets the following three conditions:
    (1) The method or modification allocates a plan's unfunded vested 
benefits, both for the adoption year and for the five subsequent plan 
years, to the same extent as any of the statutory allocation methods, or 
any modification to a statutory allocation method permitted under 
subpart B.
    (2) The method or modification allocates unfunded vested benefits to 
each employer on the basis of either the employer's share of 
contributions to the plan or the unfunded vested benefits attributable 
to each employer. The method or modification may take into account 
differences in contribution rates paid by different employers and 
differences in benefits of different employers' employees.
    (3) The method or modification fully reallocates among employers 
that have not withdrawn from the plan all unfunded vested benefits that 
the plan sponsor has determined cannot be collected from withdrawn 
employers, or that are not assessed against withdrawn employers because 
of section 4209, 4219(c)(1)(B) or 4225 of ERISA.
    (c) PBGC action on request. The PBGC's decision on a request for 
approval shall be in writing. If the PBGC disapproves the request, the 
decision shall state the reasons for the disapproval and shall include a 
statement of the sponsor's right to request a reconsideration of the 
decision pursuant to part 4003 of this chapter.



Sec. 4211.24  Special rule for certain alternative methods previously approved.

    A plan may not apply to any employer withdrawing on or after 
November 25, 1987, an allocation method approved by the PBGC before that 
date that allocates to the employer the greater of the amounts of 
unfunded vested benefits determined under two different allocation 
rules. Until a plan that has been using such a method is amended to 
adopt a valid allocation method, its allocation method shall be deemed 
to be the statutory allocation method that would apply if it had never 
been amended.



      Subpart D--Allocation Methods for Merged Multiemployer Plans



Sec. 4211.31  Allocation of unfunded vested benefits following the merger of plans.

    (a) General rule. Except as provided in paragraphs (b) through (d) 
of this section, when two or more multiemployer plans merge, the merged 
plan shall adopt one of the statutory allocation methods, in accordance 
with subpart B of this part, or one of the allocation methods prescribed 
in Secs. 4211.32 through 4211.35, and the method adopted shall apply to 
all employer withdrawals occurring after the initial plan year. 
Alternatively, a merged plan may adopt its own allocation method in 
accordance with subpart C of this part. If a merged plan fails to adopt 
an allocation method pursuant to this subpart or subpart B or C, it 
shall use the presumptive allocation method prescribed in Sec. 4211.32. 
In addition, a merged plan may adopt any of the modifications prescribed 
in Sec. 4211.36 or in subpart B of this part.
    (b) Construction plans. Except as provided in the next sentence, a 
merged plan that primarily covers employees in the building and 
construction industry shall use the presumptive allocation method 
prescribed in Sec. 4211.32. However, the plan may, with respect to 
employers that are not construction industry employers within the 
meaning of section 4203(b)(1)(A) of ERISA, adopt, by amendment, one of 
the alternative methods prescribed in Secs. 4211.33 through 4211.35 or 
any other allocation method. Any such amendment shall be adopted in 
accordance with subpart C of this part. A construction plan may, without 
the PBGC's approval, adopt by amendment any of the modifications

[[Page 905]]

set forth in Sec. 4211.36 or any of the modifications to the statutory 
presumptive method set forth in Sec. 4211.12.
    (c) Section 404(c) plans. A merged plan that is a continuation of a 
plan described in section 404(c) of the Code shall use the rolling-5 
allocation method prescribed in Sec. 4211.34, unless the plan, by 
amendment, adopts an alternative method. The plan may adopt one of the 
statutory allocation methods or one of the allocation methods set forth 
in Secs. 4211.32 through 4211.35 without PBGC approval; adoption of any 
other allocation method is subject to PBGC approval under subpart B of 
this plan. The plan may, without the PBGC's approval, adopt by amendment 
any of the modifications set forth in Sec. 4211.36 or in subpart B of 
this part.
    (d) Withdrawals before the end of the initial plan year. For 
employer withdrawals after the effective date of a merger and prior to 
the end of the initial plan year, the amount of unfunded vested benefits 
allocable to a withdrawing employer shall be determined in accordance 
with Sec. 4211.37.



Sec. 4211.32  Presumptive method for withdrawals after the initial plan year.

    (a) General rule. Under this section, the amount of unfunded vested 
benefits allocable to an employer that withdraws from a merged plan 
after the initial plan year is the sum (but not less than zero) of--
    (1) The employer's proportional share, if any, of the unamortized 
amount of the plan's initial plan year unfunded vested benefits, as 
determined under paragraph (b) of this section;
    (2) The employer's proportional share of the unamortized amount of 
the change in the plan's unfunded vested benefits for plan years ending 
after the initial plan year, as determined under paragraph (c) of this 
section; and
    (3) The employer's proportional share of the unamortized amounts of 
the reallocated unfunded vested benefits (if any) as determined under 
paragraph (d) of this section.
    (b) Share of initial plan year unfunded vested benefits. An 
employer's proportional share, if any, of the unamortized amount of the 
plan's initial plan year unfunded vested benefits is the sum of the 
employer's share of its prior plan's liabilities (determined under 
paragraph (b)(1) of this section) and the employer's share of the 
adjusted initial plan year unfunded vested benefits (determined under 
paragraph (b)(2) of this section), with such sum reduced by five percent 
of the original amount for each plan year subsequent to the initial 
year.
    (1) Share of prior plan liabilities. An employer's share of its 
prior plan's liabilities is the amount of unfunded vested benefits that 
would have been allocable to the employer if it had withdrawn on the 
first day of the initial plan year, determined as if each plan had 
remained a separate plan.
    (2) Share of adjusted initial plan year unfunded vested benefits. An 
employer's share of the adjusted initial plan year unfunded vested 
benefits equals the plan's initial plan year unfunded vested benefits, 
less the amount that would be determined under paragraph (b)(1) of this 
section for each employer that had not withdrawn as of the end of the 
initial plan year, multiplied by a fraction--
    (i) The numerator of which is the amount determined under paragraph 
(b)(1) of this section; and
    (ii) The denominator of which is the sum of the amounts that would 
be determined under paragraph (b)(1) of this section for each employer 
that had not withdrawn as of the end of the initial plan year.
    (c) Share of annual changes. An employer's proportional share of the 
unamortized amount of the change in the plan's unfunded vested for the 
plan years ending after the end of the initial plan year is the sum of 
the employer's proportional shares (determined under paragraph (c)(2) of 
this section) of the unamortized amount of the change in unfunded vested 
benefits (determined under paragraph (c)(1) of this section) for each 
plan year in which the employer has an obligation to contribute under 
the plan ending after the initial plan year and before the plan year in 
which the employer withdraws.
    (1) Change in plan's unfunded vested benefits. The change in a 
plan's unfunded vested benefits for a plan year is the amount by which 
the unfunded

[[Page 906]]

vested benefits at the end of a plan year, less the value as of the end 
of such year of all outstanding claims for withdrawal liability that can 
reasonably be expected to be collected from employers that had withdrawn 
as of the end of the initial plan year, exceed the sum of the 
unamortized amount of the initial plan year unfunded vested benefits 
(determined under paragraph (c)(1)(i) of this section) and the 
unamortized amounts of the change in unfunded vested benefits for each 
plan year ending after the initial plan year and preceding the plan year 
for which the change is determined (determined under paragraph 
(c)(1)(ii) of this section).
    (i) Unamortized amount of initial plan year unfunded vested 
benefits. The unamortized amount of the initial plan year unfunded 
vested benefits is the amount of those benefits reduced by five percent 
of the original amount for each succeeding plan year.
    (ii) Unamortized amount of the change. The unamortized amount of the 
change in a plan's unfunded vested benefits with respect to a plan year 
is the change in unfunded vested benefits for the plan year, reduced by 
five percent of such change for each succeeding plan year.
    (2) Employer's proportional share. An employer's proportional share 
of the amount determined under paragraph (c)(1) of this section is 
computed by multiplying that amount by a fraction--
    (i) The numerator of which is the total amount required to be 
contributed under the plan (or under the employer's prior plan) by the 
employer for the plan year in which the change arose and the four 
preceding full plan years; and
    (ii) The denominator of which is the total amount contributed under 
the plan (or under employer's prior plan) for the plan year in which the 
change arose and the four preceding full plan years by all employers 
that had an obligation to contribute under the plan for the plan year in 
which such change arose, reduced by any amount contributed by an 
employer that withdrew from the plan in the year in which the change 
arose.
    (d) Share of reallocated amounts. An employer's proportional share 
of the unamortized amounts of the reallocated unfunded vested benefits, 
if any, is the sum of the employer's proportional shares (determined 
under paragraph (d)(2) of this section) of the unamortized amount of the 
reallocated unfunded vested benefits (determined under paragraph (d)(1) 
of this section) for each plan year ending before the plan year in which 
the employer withdrew from the plan.
    (1) Unamortized amount of reallocated unfunded vested benefits. The 
unamortized amount of the reallocated unfunded vested benefits with 
respect to a plan year is the sum of the amounts described in paragraphs 
(d)(1)(i), (d)(1)(ii), and (d)(1)(iii) of this section for the plan 
year, reduced by five percent of such sum for each succeeding plan year.
    (i) Uncollectible amounts. Amounts included as reallocable under 
this paragraph are those that the plan sponsor determines in that plan 
year to be uncollectible for reasons arising out of cases or proceedings 
under title 11, United States Code, or similar proceedings, with respect 
to an employer that withdrew after the close of the initial plan year.
    (ii) Relief amounts. Amounts included as reallocable under this 
paragraph are those that the plan sponsor determines in that plan year 
will not be assessed as a result of the operation of section 4209, 
4219(c)(1)(B), or 4225 of ERISA with respect to an employer that 
withdrew after the close of the initial plan year.
    (iii) Other amounts. Amounts included as reallocable under this 
paragraph are those that the plan sponsor determines in that plan year 
to be uncollectible or unassessable for other reasons under standards 
not inconsistent with regulations prescribed by the PBGC.
    (2) Employer's proportional share. An employer's proportional share 
of the amount of the reallocated unfunded vested benefits with respect 
to a plan year is computed by multiplying the unamortized amount of the 
reallocated unfunded vested benefits (as of the end of the year 
preceding the plan year in which the employer withdraws) by the

[[Page 907]]

allocation fraction described in paragraph (c)(2) of this section for 
the same plan year.



Sec. 4211.33  Modified presumptive method for withdrawals after the initial plan year.

    (a) General rule. Under this section, the amount of unfunded vested 
benefits allocable to an employer that withdraws from a merged plan 
after the initial plan year is the sum of the employer's proportional 
share, if any, of the unamortized amount of the plan's initial plan year 
unfunded vested benefits (determined under paragraph (b) of this 
section) and the employer's proportional share of the unamortized amount 
of the unfunded vested benefits arising after the initial plan year 
(determined under paragraph (c) of this section).
    (b) Share of initial plan year unfunded vested benefits. An 
employer's proportional share, if any, of the unamortized amount of the 
plan's initial plan year unfunded vested benefits is the sum of the 
employer's share of its prior plan's liabilities, as determined under 
Sec. 4211.32(b)(1), and the employer's share of the adjusted initial 
plan year unfunded vested benefits, as determined under 
Sec. 4211.32(b)(2), with such sum reduced as if it were being fully 
amortized in level annual installments over fifteen years beginning with 
the first plan year after the initial plan year.
    (c) Share of unfunded vested benefits arising after the initial plan 
year. An employer's proportional share of the amount of the plan's 
unfunded vested benefits arising after the initial plan year is the 
employer's proportional share (determined under paragraph (c)(2) of this 
section) of the plan's unfunded vested benefits as of the end of the 
plan year preceding the plan year in which the employer withdraws, 
reduced by the amount of the plan's unfunded vested benefits as of the 
close of the initial plan year (determined under paragraph (c)(1) of 
this section).
    (1) Amount of unfunded vested benefits. The plan's unfunded vested 
benefits as of the end of the plan year preceding the plan year in which 
the employer withdraws shall be reduced by the sum of--
    (i) The value as of that date of all outstanding claims for 
withdrawal liability that can reasonably be expected to be collected, 
with respect to employers that withdrew before that plan year; and
    (ii) The sum of the amounts that would be allocable under paragraph 
(b) of this section to all employers that have an obligation to 
contribute in the plan year preceding the plan year in which the 
employer withdraws and that also had an obligation to contribute in the 
first plan year ending after the initial plan year.
    (2) Employer's proportional share. An employer's proportional share 
of the amount determined under paragraph (c)(1) of this section is 
computed by multiplying that amount by a fraction--
    (i) The numerator of which is the total amount required to be 
contributed under the plan (or under the employer's prior plan) by the 
employer for the last five full plan years ending before the date on 
which the employer withdraws; and
    (ii) The denominator of which is the total amount contributed under 
the plan (or under each employer's prior plan) by all employers for the 
last five full plan years ending before the date on which the employer 
withdraws, increased by the amount of any employer contributions owed 
with respect to earlier periods that were collected in those plan years, 
and decreased by any amount contributed by an employer that withdrew 
from the plan (or prior plan) during those plan years.



Sec. 4211.34  Rolling-5 method for withdrawals after the initial plan year.

    (a) General rule. Under this section, the amount of unfunded vested 
benefits allocable to an employer that withdraws from a merged plan 
after the initial plan year is the sum of the employer's proportional 
share, if any, of the unamortized amount of the plan's initial plan year 
unfunded vested benefits (determined under paragraph (b) of this 
section) and the employer's proportional share of the unamortized amount 
of the unfunded vested benefits arising after the initial plan year 
(determined under paragraph (c) of this section).

[[Page 908]]

    (b) Share of initial plan year unfunded vested benefits. An 
employer's proportional share, if any, of the unamortized amount of the 
plan's initial plan year unfunded vested benefits is the sum of the 
employer's share of its prior plan's liabilities, as determined under 
Sec. 4211.32(b)(1), and the employer's share of the adjusted initial 
plan year unfunded vested benefits, as determined under 
Sec. 4211.32(b)(2), with such sum reduced as if it were being fully 
amortized in level annual installments over five years beginning with 
the first plan year after the initial plan year.
    (c) Share of unfunded vested benefits arising after the initial plan 
year. An employer's proportional share of the amount of the plan's 
unfunded vested benefits arising after the initial plan year is the 
employer's proportional share determined under Sec. 4211.33(c).



Sec. 4211.35  Direct attribution method for withdrawals after the initial plan year.

    The allocation method under this section is the allocation method 
described in section 4211(c)(4) of ERISA.



Sec. 4211.36  Modifications to the determination of initial liabilities, the amortization of initial liabilities, and the allocation fraction.

    (a) General rule. A plan using any of the allocation methods 
described in Secs. 4211.32 through 4211.34 may, by plan amendment and 
without PBGC approval, adopt any of the modifications described in this 
section.
    (b) Restarting initial liabilities. A plan may be amended to 
allocate the initial plan year unfunded vested benefits under 
Sec. 4211.32(b), Sec. 4211.33(b), or Sec. 4211.34(b) without separately 
allocating to employers the liabilities attributable to their 
participation under their prior plans. An amendment under this paragraph 
must include an allocation fraction under paragraph (d) of this section 
for determining the employer's proportional share of the total unfunded 
benefits as of the close of the initial plan year.
    (c) Amortizing initial liabilities. A plan may by amendment modify 
the amortization of initial liabilities in either of the following ways:
    (1) If two or more plans that use the presumptive allocation method 
of section 4211(b) of ERISA merge, the merged plan may adjust the 
amortization of initial liabilities under Sec. 4211.32(b) to amortize 
those unfunded vested benefits over the remaining length of the prior 
plans' amortization schedules.
    (2) A plan that has adopted the allocation method under Sec. 4211.33 
or Sec. 4211.34 may adjust the amortization of initial liabilities under 
Sec. 4211.33(b) or Sec. 4211.34(b) to amortize those unfunded vested 
benefits in level annual installments over any period of at least five 
and not more than fifteen years.
    (d) Changing the allocation fraction. A plan may by amendment 
replace the allocation fraction under Sec. 4211.32(b), Sec. 4211.33(b), 
or Sec. 4211.34(b) with any of the following contribution-based 
fractions--
    (1) A fraction, the numerator of which is the total amount required 
to be contributed under the merged and prior plans by the withdrawing 
employer in the 60-month period ending on the last day of the initial 
plan year, and the denominator of which is the sum for that period of 
the contributions made by all employers that had not withdrawn as of the 
end of the initial plan year;
    (2) A fraction, the numerator of which is the total amount required 
to be contributed by the withdrawing employer for the initial plan year 
and the four preceding full plan years of its prior plan, and the 
denominator of which is the sum of all contributions made over that 
period by employers that had not withdrawn as of the end of the initial 
plan year; or
    (3) A fraction, the numerator of which is the total amount required 
to be contributed to the plan by the withdrawing employer since the 
effective date of the merger, and the denominator of which is the sum of 
all contributions made over that period by employers that had not 
withdrawn as of the end of the initial plan year.



Sec. 4211.37  Allocating unfunded vested benefits for withdrawals before the end of the initial plan year.

    If an employer withdraws after the effective date of a merger and 
before the end of the initial plan year, the

[[Page 909]]

amount of unfunded vested benefits allocable to the employer shall be 
determined as if each plan had remained a separate plan. In making this 
determination, the plan sponsor shall use the allocation method of the 
withdrawing employer's prior plan and shall compute the employer's 
allocable share of the plan's unfunded vested benefits as if the day 
before the effective date of the merger were the end of the last plan 
year prior to the withdrawal.



PART 4219--NOTICE, COLLECTION, AND REDETERMINATION OF WITHDRAWAL LIABILITY--Table of Contents




                           Subpart A--General

Sec.
4219.1  Purpose and scope.
4219.2  Definitions.

 Subpart B--Redetermination of Withdrawal Liability Upon Mass Withdrawal

4219.11  Withdrawal liability upon mass withdrawal.
4219.12  Employers liable upon mass withdrawal.
4219.13  Amount of liability for de minimis amounts.
4219.14  Amount of liability for 20-year-limitation amounts.
4219.15  Determination of reallocation liability.
4219.16  Imposition of liability.
4219.17  Filings with PBGC.
4219.18  Withdrawal in a plan year in which substantially all employers 
          withdraw.
4219.19  Information collection.

    Subpart C--Overdue, Defaulted, and Overpaid Withdrawal Liability

4219.31  Overdue and defaulted withdrawal liability; overpayment.
4219.32  Interest on overdue, defaulted and overpaid withdrawal 
          liability.
4219.33  Plan rules concerning overdue and defaulted withdrawal 
          liability.

    Authority: 29 U.S.C. 1302(b)(3) and 1399(c)(6).

    Source: 61 FR 34102, July 1, 1996, unless otherwise noted.



                           Subpart A--General



Sec. 4219.1  Purpose and scope.

    (a) Subpart A. Subpart A of this part describes the purpose and 
scope of the provisions in this part and defined terms used in this 
part.
    (b) Subpart B--(1) Purpose. When a multiemployer plan terminates by 
the withdrawal of every employer from the plan, or when substantially 
all employers withdraw from a multiemployer plan pursuant to an 
agreement or arrangement to withdraw from the plan, section 
4219(c)(1)(D)(i) of ERISA requires that the liability of such 
withdrawing employers be determined (or redetermined) without regard to 
the 20-year limitation on annual payments established in section 
4219(c)(1)(B) of ERISA. In addition, section 4219(c)(1)(D)(ii) requires 
that, upon the occurrence of a withdrawal described above, the total 
unfunded vested benefits of the plan be fully allocated among such 
withdrawing employers in a manner that is not inconsistent with PBGC 
regulations. Section 4209(c) of ERISA provides that the de minimis 
reduction established in sections 4209 (a) and (b) of ERISA shall not 
apply to an employer that withdraws in a plan year in which 
substantially all employers withdraw from the plan, or to an employer 
that withdraws pursuant to an agreement to withdraw during a period of 
one or more plan years during which substantially all employers withdraw 
pursuant to an agreement or arrangement to withdraw. The purpose of 
subpart B of this part is to prescribe rules, pursuant to sections 
4219(c)(1)(D) and 4209(c) of ERISA, for redetermining an employer's 
withdrawal liability and fully allocating the unfunded vested benefits 
of a multiemployer plan in either of two mass-withdrawal situations: the 
termination of a plan by the withdrawal of every employer and the 
withdrawal of substantially all employers pursuant to an agreement or 
arrangement to withdraw. Subpart B also prescribes rules for 
redetermining the liability of an employer without regard to section 
4209 (a) or (b) when the employer withdraws in a plan year in which 
substantially all employers withdraw, regardless of the occurrence of a 
mass withdrawal. (See part 4281 regarding the valuation of unfunded 
vested benefits to be fully allocated under subpart B, and parts 4041A 
and 4281 regarding the powers and duties of the

[[Page 910]]

plan sponsor of a plan terminated by mass withdrawal.)
    (2) Scope. Subpart B applies to multiemployer plans covered by title 
IV of ERISA, with respect to which there is a termination by the 
withdrawal of every employer (including a plan created by a partition 
pursuant to section 4233 of ERISA) or a withdrawal of substantially all 
employers in the plan pursuant to an agreement or arrangement to 
withdraw from the plan, and to employers that withdraw from such 
multiemployer plans. The obligations of a plan sponsor of a mass-
withdrawal-terminated plan under subpart B shall cease to apply when the 
plan assets are distributed in full satisfaction of all nonforfeitable 
benefits under the plan. Subpart B also applies, to the extent 
appropriate, to multiemployer plans with respect to which there is a 
withdrawal of substantially all employers in a single plan year and to 
employers that withdraw from such plans in that plan year.
    (c) Subpart C. Subpart C establishes the interest rate to be charged 
on overdue, defaulted and overpaid withdrawal liability under section 
4219(c)(6) of ERISA, and authorizes multiemployer plans to adopt 
alternative rules concerning assessment of interest and related matters. 
Subpart C applies to multiemployer plans covered under title IV of 
ERISA, and to employers that have withdrawn from such plans after April 
28, 1980 (May 2, 1979, for certain employers in the seagoing industry).



Sec. 4219.2  Definitions.

    (a) The following terms are defined in Sec. 4001.2 of this chapter: 
employer, ERISA, IRS, mass withdrawal, multiemployer plan, 
nonforfeitable benefit, PBGC, plan, and plan year.
    (b) For purposes of this part:
    Initial withdrawal liability means the amount of withdrawal 
liability determined in accordance with sections 4201 through 4225 of 
title IV without regard to the occurrence of a mass withdrawal.
    Mass withdrawal liability means the sum of an employer's liability 
for de minimis amounts, liability for 20-year-limitation amounts, and 
reallocation liability.
    Mass withdrawal valuation date means--
    (1) In the case of a termination by mass withdrawal, the last day of 
the plan year in which the plan terminates; or
    (2) in the case of a withdrawal of substantially all employers 
pursuant to an agreement or arrangement to withdraw, the last day of the 
plan year as of which substantially all employers have withdrawn.
    Reallocation liability means the amount of unfunded vested benefits 
allocated to an employer in the event of a mass withdrawal.
    Reallocation record date means a date selected by the plan sponsor, 
which shall be not earlier than the date of the plan's actuarial report 
for the year of the mass withdrawal and not later than one year after 
the mass withdrawal valuation date.
    Redetermination liability means the sum of an employer's liability 
for de minimis amounts and the employer's liability for 20-year-
limitation amounts.
    Unfunded vested benefits means the amount by which the present value 
of a plan's vested benefits exceeds the value of plan assets (including 
claims of the plan for unpaid initial withdrawal liability and 
redetermination liability), determined in accordance with section 4281 
of ERISA and part 4281, subpart B.
    (c) For purposes of subpart B--
    Withdrawal means a complete withdrawal as defined in section 4203 of 
ERISA.



 Subpart B--Redetermination of Withdrawal Liability Upon Mass Withdrawal



Sec. 4219.11  Withdrawal liability upon mass withdrawal.

    (a) Initial withdrawal liability. The plan sponsor of a 
multiemployer plan that experiences a mass withdrawal shall determine 
initial withdrawal liability pursuant to section 4201 of ERISA of every 
employer that has completely or partially withdrawn from the plan and 
for whom the liability has not previously been determined and, in 
accordance with section 4202 of ERISA, notify each employer of the 
amount of the initial withdrawal liability and collect the amount of the

[[Page 911]]

initial withdrawal liability from each employer.
    (b) Mass withdrawal liability. The plan sponsor of a multiemployer 
plan that experiences a mass withdrawal shall also--
    (1) Notify withdrawing employers, in accordance with 
Sec. 4219.16(a), that a mass withdrawal has occurred;
    (2) Within 150 days after the mass withdrawal valuation date, 
determine the liability of withdrawn employers for de minimis amounts 
and for 20-year-limitation amounts in accordance with Secs. 4219.13 and 
4219.14;
    (3) Within one year after the reallocation record date, determine 
the reallocation liability of withdrawn employers in accordance with 
Sec. 4219.15;
    (4) Notify each withdrawing employer of the amount of mass 
withdrawal liability determined pursuant to this subpart and the 
schedule for payment of such liability, and demand payment of and 
collect that liability, in accordance with Sec. 4219.16; and
    (5) Notify the PBGC of the occurrence of a mass withdrawal and 
certify, in accordance with Sec. 4219.17, that determinations of mass 
withdrawal liability have been completed.
    (c) Extensions of time. The plan sponsor of a multiemployer plan 
that experiences a mass withdrawal may apply to the PBGC for an 
extension of the deadlines contained in paragraph (b) of this section. 
The PBGC shall approve such a request only if it finds that failure to 
grant the extension will create an unreasonable risk of loss to plan 
participants or the PBGC.



Sec. 4219.12  Employers liable upon mass withdrawal.

    (a) Liability for de minimis amounts. An employer shall be liable 
for de minimis amounts to the extent provided in section 4219(c)(1)(D) 
of ERISA if the employer's initial withdrawal liability was reduced 
pursuant to section 4209 (a) or (b) of ERISA.
    (b) Liability for 20-year-limitation amounts. An employer shall be 
liable for 20-year-limitation amounts to the extent provided in section 
4219(c)(1)(D) of ERISA.
    (c) Liability for reallocation liability. An employer shall be 
liable for reallocation liability if the employer withdrew pursuant to 
an agreement or arrangement to withdraw from a multiemployer plan from 
which substantially all employers withdrew pursuant to an agreement or 
arrangement to withdraw, or if the employer withdrew after the beginning 
of the second full plan year preceding the termination date from a plan 
that terminated by the withdrawal of every employer, and, as of the 
reallocation record date--
    (1) The employer has not been completely liquidated or dissolved;
    (2) The employer is not the subject of a case or proceeding under 
title 11, United States Code, or any case or proceeding under similar 
provisions of state insolvency laws, except that a plan sponsor may 
determine that such an employer is liable for reallocation liability if 
the plan sponsor determines that the employer is reasonably expected to 
be able to pay its initial withdrawal liability and its redetermination 
liability in full and on time to the plan; and
    (3) The plan sponsor has not determined that the employer's initial 
withdrawal liability or its redetermination liability is limited by 
section 4225 of ERISA.
    (d) General exclusion. In the event that a plan experiences 
successive mass withdrawals, an employer that has been determined to be 
liable under this subpart for any component of mass withdrawal liability 
shall not be liable as a result of the same withdrawal for that 
component of mass withdrawal liability with respect to a subsequent mass 
withdrawal.
    (e) Free-look rule. An employer that is not liable for initial 
withdrawal liability pursuant to a plan amendment adopting section 
4210(a) of ERISA shall not be liable for de minimis amounts or for 20-
year-limitation amounts, but shall be liable for reallocation liability 
in accordance with paragraph (c) of this section.
    (f) Payment of initial withdrawal liability. An employer's payment 
of its total initial withdrawal liability, whether by prepayment or 
otherwise, for a withdrawal which is later determined to be part of a 
mass withdrawal shall not exclude the employer from or otherwise limit 
the employer's mass withdrawal liability under this subpart.

[[Page 912]]

    (g) Agreement presumed. Withdrawal by an employer during a period of 
three consecutive plan years within which substantially all employers 
withdraw from a plan shall be presumed to be a withdrawal pursuant to an 
agreement or arrangement to withdraw unless the employer proves 
otherwise by a preponderance of the evidence.



Sec. 4219.13  Amount of liability for de minimis amounts.

    An employer that is liable for de minimis amounts shall be liable to 
the plan for the amount by which the employer's allocable share of 
unfunded vested benefits for the purpose of determining its initial 
withdrawal liability was reduced pursuant to section 4209 (a) or (b) of 
ERISA. Any liability for de minimis amounts determined under this 
section shall be limited by section 4225 of ERISA to the extent that 
section would have been limiting had the employer's initial withdrawal 
liability been determined without regard to the de minimis reduction.



Sec. 4219.14  Amount of liability for 20-year-limitation amounts.

    An employer that is liable for 20-year-limitation amounts shall be 
liable to the plan for an amount equal to the present value of all 
initial withdrawal liability payments for which the employer was not 
liable pursuant to section 4219(c)(1)(B) of ERISA. The present value of 
such payments shall be determined as of the end of the plan year 
preceding the plan year in which the employer withdrew, using the 
assumptions that were used to determine the employer's payment schedule 
for initial withdrawal liability pursuant to section 4219(c)(1)(A)(ii) 
of ERISA. Any liability for 20-year-limitation amounts determined under 
this section shall be limited by section 4225 of ERISA to the extent 
that section would have been limiting had the employer's initial 
withdrawal liability been determined without regard to the 20-year 
limitation.



Sec. 4219.15  Determination of reallocation liability.

    (a) General rule. In accordance with the rules in this section, the 
plan sponsor shall determine the amount of unfunded vested benefits to 
be reallocated and shall fully allocate those unfunded vested benefits 
among all employers liable for reallocation liability.
    (b) Amount of unfunded vested benefits to be reallocated. For 
purposes of this section, the amount of a plan's unfunded vested 
benefits to be reallocated shall be the amount of the plan's unfunded 
vested benefits, determined as of the mass withdrawal valuation date, 
adjusted to exclude from plan assets the value of the plan's claims for 
unpaid initial withdrawal liability and unpaid redetermination liability 
that are deemed to be uncollectible under Sec. 4219.12(c)(1) or (c)(2).
    (c) Amount of reallocation liability. An employer's reallocation 
liability shall be equal to the sum of the employer's initial allocable 
share of the plan's unfunded vested benefits, as determined under 
paragraph (c)(1) of this section, plus any unassessable amounts 
allocated to the employer under paragraph (c)(2), limited by section 
4225 of ERISA to the extent that section would have been limiting had 
the employer's reallocation liability been included in the employer's 
initial withdrawal liability. If a plan is determined to have no 
unfunded vested benefits to be reallocated, the reallocation liability 
of each liable employer shall be zero.
    (1) Initial allocable share. Except as otherwise provided in rules 
adopted by the plan pursuant to paragraph (d) of this section, and in 
accordance with paragraph (c)(3) of this section, an employer's initial 
allocable share shall be equal to the product of the plan's unfunded 
vested benefits to be reallocated, multiplied by a fraction--
    (i) The numerator of which is the sum of the employer's initial 
withdrawal liability and the employer's redetermination liability, if 
any; and
    (ii) The denominator of which is the sum of all initial withdrawal 
liabilities and all the redetermination liabilities of all employers 
liable for reallocation liability.
    (2) Allocation of unassessable amounts. If after computing each 
employer's initial allocable share of unfunded vested benefits, the plan 
sponsor knows that

[[Page 913]]

any portion of an employer's initial allocable share is unassessable as 
withdrawal liability because of the limitations in section 4225 of 
ERISA, the plan sponsor shall allocate any such unassessable amounts 
among all other liable employers. This allocation shall be done by 
prorating the unassessable amounts on the basis of each such employer's 
initial allocable share. No employer shall be liable for unfunded vested 
benefits allocated under paragraph (c)(1) or this paragraph to another 
employer that are determined to be unassessable or uncollectible 
subsequent to the plan sponsor's demand for payment of reallocation 
liability.
    (3) Special rule for certain employers with no or reduced initial 
withdrawal liability. If an employer has no initial withdrawal liability 
because of the application of the free-look rule in section 4210 of 
ERISA, then, in computing the fraction prescribed in paragraph (c)(1), 
the plan sponsor shall use the employer's allocable share of unfunded 
vested benefits, determined under section 4211 of ERISA at the time of 
the employer's withdrawal and adjusted in accordance with section 4225 
of ERISA, if applicable. If an employer's initial withdrawal liability 
was reduced pursuant to section 4209(a) or (b) of ERISA and the employer 
is not liable for de minimis amounts pursuant to Sec. 4219.13, then, in 
computing the fraction prescribed in paragraph (c)(1) of this section, 
the plan sponsor shall use the employer's allocable share of unfunded 
vested benefits, determined under section 4211 of ERISA at the time of 
the employer's withdrawal and adjusted in accordance with section 4225 
of ERISA, if applicable.
    (d) Plan rules. Plans may adopt rules for calculating an employer's 
initial allocable share of the plan's unfunded vested benefits in a 
manner other than that prescribed in paragraph (c)(1) of this section, 
provided that those rules allocate the plan's unfunded vested benefits 
to substantially the same extent the prescribed rules would. Plan rules 
adopted under this paragraph shall operate and be applied uniformly with 
respect to each employer. If such rules would increase the reallocation 
liability of any employer, they may be effective with respect to that 
employer earlier than three full plan years after their adoption only if 
the employer consents to the application of the rules to itself. The 
plan sponsor shall give a written notice to each contributing employer 
and each employee organization that represents employees covered by the 
plan of the adoption of plan rules under this paragraph.



Sec. 4219.16  Imposition of liability.

    (a) Notice of mass withdrawal. Within 30 days after the mass 
withdrawal valuation date, the plan sponsor shall give written notice of 
the occurrence of a mass withdrawal to each employer that the plan 
sponsor reasonably expects may be a liable employer under Sec. 4219.12. 
The notice shall include--
    (1) The mass withdrawal valuation date;
    (2) A description of the consequences of a mass withdrawal under 
this subpart; and
    (3) A statement that each employer obligated to make initial 
withdrawal liability payments shall continue to make those payments in 
accordance with its schedule. Failure of the plan sponsor to notify an 
employer of a mass withdrawal as required by this paragraph shall not 
cancel the employer's mass withdrawal liability or waive the plan's 
claim for such liability.
    (b) Notice of redetermination liability. Within 30 days after the 
date as of which the plan sponsor is required under Sec. 4219.11(b)(2) 
to have determined the redetermination liability of employers, the plan 
sponsor shall issue a notice of redetermination liability in writing to 
each employer liable under Sec. 4219.12 for de minimis amounts or 20-
year-limitation amounts, or both. The notice shall include--
    (1) The amount of the employer's liability, if any, for de minimis 
amounts determined pursuant to Sec. 4219.13;
    (2) The amount of the employer's liability, if any, for 20-year-
limitation amounts determined pursuant to Sec. 4219.14;
    (3) The schedule for payment of the liability determined under 
paragraph (f) of this section;
    (4) A demand for payment of the liability in accordance with the 
schedule; and

[[Page 914]]

    (5) A statement of when the plan sponsor expects to issue notices of 
reallocation liability to liable employers.
    (c) Notice of reallocation liability. Within 30 days after the date 
as of which the plan sponsor is required under Sec. 4219.11(b)(3) to 
have determined the reallocation liability of employers, the plan 
sponsor shall issue a notice of reallocation liability in writing to 
each employer liable for reallocation liability. The notice shall 
include--
    (1) The amount of the employer's reallocation liability determined 
pursuant to Sec. 4219.15;
    (2) The schedule for payment of the liability determined under 
paragraph (f) of this section; and
    (3) A demand for payment of the liability in accordance with the 
schedule.
    (d) Notice to employers not liable. The plan sponsor shall notify in 
writing any employer that receives a notice of mass withdrawal under 
paragraph (a) of this section and subsequently is determined not to be 
liable for mass withdrawal liability or any component thereof. The 
notice shall specify the liability from which the employer is excluded 
and shall be provided to the employer not later than the date by which 
liable employers are to be provided notices of reallocation liability 
pursuant to paragraph (c) of this section. If the employer is not liable 
for mass withdrawal liability, the notice shall also include a 
statement, if applicable, that the employer is obligated to continue to 
make initial withdrawal liability payments in accordance with its 
existing schedule for payment of such liability.
    (e) Combined notices. A plan sponsor may combine a notice of 
redetermination liability with the notice of and demand for payment of 
initial withdrawal liability. If a mass withdrawal and a withdrawal 
described in Sec. 4219.18 occur concurrently, a plan sponsor may 
combine--
    (1) A notice of mass withdrawal with a notice of withdrawal issued 
pursuant to Sec. 4219.18(d); and
    (2) A notice of redetermination liability with a notice of liability 
issued pursuant to Sec. 4219.18(e).
    (f) Payment schedules. The plan sponsor shall establish payment 
schedules for payment of an employer's mass withdrawal liability in 
accordance with the rules in section 4219(c) of ERISA, as modified by 
this paragraph. For an employer that owes initial withdrawal liability 
as of the mass withdrawal valuation date, the plan sponsor shall 
establish new payment schedules for each element of mass withdrawal 
liability by amending the initial withdrawal liability payment schedule 
in accordance with the paragraph (f)(1) of this section. For all other 
employers, the payment schedules shall be established in accordance with 
paragraph (f)(2).
    (1) Employers owing initial withdrawal liability as of mass 
withdrawal valuation date. For an employer that owes initial withdrawal 
liability as of the mass withdrawal valuation date, the plan sponsor 
shall amend the existing schedule of payments in order to amortize the 
new amounts of liability being assessed, i.e., redetermination liability 
and reallocation liability. With respect to redetermination liability, 
the plan sponsor shall add that liability to the total initial 
withdrawal liability and determine a new payment schedule, in accordance 
with section 4219(c)(1) of ERISA, using the interest assumptions that 
were used to determine the original payment schedule. For reallocation 
liability, the plan sponsor shall add that liability to the present 
value, as of the date following the mass withdrawal valuation date, of 
the unpaid portion of the amended payment schedule described in the 
preceding sentence and determine a new payment schedule of level annual 
payments, calculated as if the first payment were made on the day 
following the mass withdrawal valuation date using the interest 
assumptions used for determining the amount of unfunded vested benefits 
to be reallocated.
    (2) Other employers. For an employer that had no initial withdrawal 
liability, or had fully paid its liability prior to the mass withdrawal 
valuation date, the plan sponsor shall determine the payment schedule 
for redetermination liability, in accordance with section 4219(c)(1) of 
ERISA, in the same manner and using the same interest assumptions as 
were used or would have been used in determining the payment schedule 
for the employer's initial

[[Page 915]]

withdrawal liability. With respect to reallocation liability, the plan 
sponsor shall follow the rules prescribed in paragraph (f)(1) of this 
section.
    (g) Review of mass withdrawal liability determinations. 
Determinations of mass withdrawal liability made pursuant to this 
subpart shall be subject to plan review under section 4219(b)(2) of 
ERISA and to arbitration under section 4221 of ERISA within the times 
prescribed by those sections. Matters that relate solely to the amount 
of, and schedule of payments for, an employer's initial withdrawal 
liability are not matters relating to the employer's liability under 
this subpart and are not subject to review pursuant to this paragraph.
    (h) Cessation of withdrawal liability obligations. If the plan 
sponsor of a terminated plan distributes plan assets in full 
satisfaction of all nonforfeitable benefits under the plan, the plan 
sponsor's obligation to impose and collect liability, and each 
employer's obligation to pay liability, in accordance with this subpart 
ceases on the date of such distribution.
    (i) Determination that a mass withdrawal has not occurred. If a plan 
sponsor determines, after imposing mass withdrawal liability pursuant to 
this subpart, that a mass withdrawal has not occurred, the plan sponsor 
shall refund to employers all payments of mass withdrawal liability with 
interest, except that a plan sponsor shall not refund payments of 
liability for de minimis amounts to an employer that remains liable for 
such amounts under Sec. 4219.18. Interest shall be credited at the 
interest rate prescribed in subpart C and shall accrue from the date the 
payment was received by the plan until the date of the refund.



Sec. 4219.17  Filings with PBGC.

    (a) Filing requirements. The plan sponsor shall file with PBGC a 
notice that a mass withdrawal has occurred and separate certifications 
that determinations of redetermination liability and reallocation 
liability have been made and notices provided to employers in accordance 
with this subpart.
    (b) Who shall file. The plan sponsor or a duly authorized 
representative acting on behalf of the plan sponsor shall sign and file 
the notice and the certifications.
    (c) When to file. A notice of mass withdrawal for a plan from which 
substantially all employers withdraw pursuant to an agreement or 
arrangement to withdraw shall be filed with the PBGC no later than 30 
days after the mass withdrawal valuation date. A notice of mass 
withdrawal termination shall be filed within the time prescribed for the 
filing of that notice in part 4041A, subparts A and B, of this chapter. 
Certifications of liability determinations shall be filed with the PBGC 
no later than 30 days after the date on which the plan sponsor is 
required to have provided employers with notices pursuant to 
Sec. 4219.16.
    (d) Where to file. The notice and certifications may be sent by mail 
or submitted by hand during normal working hours to Reports Processing, 
Insurance Operations Department, Pension Benefit Guaranty Corporation, 
1200 K Street NW., Washington, DC 20005-4026.
    (e) Filing date. For purposes of paragraph (c)--
    (1) The notice is considered filed on the date of the postmark 
stamped on the cover in which the notice is mailed if--
    (i) The postmark was made by the United States Postal Service; and
    (ii) The notice was mailed postage prepaid, properly packaged and 
addressed to the PBGC.
    (2) If both conditions described in paragraph (e)(1) are not met, 
the notice is considered filed on the date it is received by the PBGC, 
except that notices received after regular business hours are considered 
filed on the next regular business day.
    (f) Contents of notice of mass withdrawal. If a plan terminates by 
the withdrawal of every employer, a notice of termination filed in 
accordance with part 4041A, subparts A and B, of this chapter shall 
satisfy the requirements for a notice of mass withdrawal under this 
subpart. If substantially all employers withdraw from a plan pursuant to 
an agreement or arrangement to withdraw, the notice of mass withdrawal 
shall contain the following information:
    (1) The name of the plan.

[[Page 916]]

    (2) The name, address and telephone number of the plan sponsor and 
of the duly authorized representative, if any, of the plan sponsor.
    (3) The nine-digit Employer Identification Number (EIN) assigned by 
the IRS to the plan sponsor and the three-digit Plan Identification 
Number (PIN) assigned by the plan sponsor to the plan, and, if 
different, the EIN or PIN last filed with the PBGC. If no EIN or PIN has 
been assigned, the notice shall so indicate.
    (4) The mass withdrawal valuation date.
    (5) A description of the facts on which the plan sponsor has based 
its determination that a mass withdrawal has occurred, including the 
number of contributing employers withdrawn and the number remaining in 
the plan, and a description of the effect of the mass withdrawal on the 
plan's contribution base.
    (g) Contents of certifications. Each certification shall contain the 
following information:
    (1) The name of the plan.
    (2) The name, address and telephone number of the plan sponsor and 
of the duly authorized representative, if any, of the plan sponsor.
    (3) The nine-digit Employer Identification Number (EIN) assigned by 
the IRS to the plan sponsor and the three-digit Plan Identification 
Number (PIN) last assigned by the plan sponsor to the plan, and, if 
different, the EIN or PIN filed with the PBGC. If no EIN or PIN has been 
assigned, the notice shall so indicate.
    (4) Identification of the liability determination to which the 
certification relates.
    (5) A certification, signed by the plan sponsor or a duly authorized 
representative, that the determinations have been made and the notices 
given in accordance with this subpart.
    (6) For reallocation liability certifications--
    (i) A certification, signed by the plan's actuary, that the 
determination of unfunded vested benefits has been done in accordance 
with part 4281, subpart B; and
    (ii) A copy of plan rules, if any, adopted pursuant to 
Sec. 4219.15(d).
    (h) Additional information. In addition to the information described 
in paragraph (g) of this section, the PBGC may require the plan sponsor 
to submit any other information the PBGC determines it needs in order to 
monitor compliance with this subpart.



Sec. 4219.18  Withdrawal in a plan year in which substantially all employers withdraw.

    (a) General rule. An employer that withdraws in a plan year in which 
substantially all employers withdraw from the plan shall be liable to 
the plan for de minimis amounts if the employer's initial withdrawal 
liability was reduced pursuant to section 4209(a) or (b) of ERISA.
    (b) Amount of liability. An employer's liability for de minimis 
amounts under this section shall be determined pursuant to Sec. 4219.13.
    (c) Plan sponsor's obligations. The plan sponsor of a plan that 
experiences a withdrawal described in paragraph (a) shall--
    (1) Determine and collect initial withdrawal liability of every 
employer that has completely or partially withdrawn, in accordance with 
sections 4201 and 4202 of ERISA;
    (2) Notify each employer that is or may be liable under this 
section, in accordance with paragraph (d) of this section;
    (3) Within 90 days after the end of the plan year in which the 
withdrawal occurred, determine, in accordance with paragraph (b) of this 
section, the liability of each withdrawing employer that is liable under 
this section;
    (4) Notify each liable employer, in accordance with paragraph (e) of 
this section, of the amount of its liability under this section, demand 
payment of and collect that liability; and
    (5) Certify to the PBGC that determinations of liability have been 
completed, in accordance with paragraph (g) of this section.
    (d) Notice of withdrawal. Within 30 days after the end of a plan 
year in which a plan experiences a withdrawal described in paragraph 
(a), the plan sponsor shall notify in writing each employer that is or 
may be liable under this section. The notice shall specify the plan year 
in which substantially all

[[Page 917]]

employers have withdrawn, describe the consequences of such withdrawal 
under this section, and state that an employer obligated to make initial 
withdrawal liability payments shall continue to make those payments in 
accordance with its schedule.
    (e) Notice of liability. Within 30 days after the determination of 
liability, the plan sponsor shall issue a notice of liability in writing 
to each liable employer. The notice shall include--
    (1) The amount of the employer's liability for de minimis amounts;
    (2) A schedule for payment of the liability, determined under 
Sec. 4219.16(f); and
    (3) A demand for payment of the liability in accordance with the 
schedule.
    (f) Review of liability determinations. Determinations of liability 
made pursuant to this section shall be subject to plan review under 
section 4219(b)(2) of ERISA and to arbitration under section 4221 of 
ERISA, subject to the limitations contained in Sec. 4219.16(g).
    (g) Notice to the PBGC. No later than 30 days after the notices of 
liability under this section are required to be provided to liable 
employers, the plan sponsor shall file with the PBGC a notice. The 
notice shall include the items described in Sec. 4219.17 (g)(1) through 
(g)(3), as well as the information listed below. In addition, the PBGC 
may require the plan sponsor to submit any further information that the 
PBGC determines it needs in order to monitor compliance with this 
section.
    (1) The plan year in which the withdrawal occurred.
    (2) A description of the effect of the withdrawal, including the 
number of contributing employers that withdrew in the plan year in which 
substantially all employers withdrew, the number of employers remaining 
in the plan, and a description of the effect of the withdrawal on the 
plan's contribution base.
    (3) A certification, signed by the plan sponsor or duly authorized 
representative, that determinations have been made and notices given in 
accordance with this section.



Sec. 4219.19  Information collection.

    The information collection requirements contained in Secs. 4219.16, 
4219.17, and 4219.18 have been approved by the Office of Management and 
Budget under control number 1212-0034.



    Subpart C--Overdue, Defaulted, and Overpaid Withdrawal Liability



Sec. 4219.31  Overdue and defaulted withdrawal liability; overpayment.

    (a) Overdue withdrawal liability payment. Except as otherwise 
provided in rules adopted by the plan in accordance with Sec. 4219.33, a 
withdrawal liability payment is overdue if it is not paid on the date 
set forth in the schedule of payments established by the plan sponsor.
    (b) Default. (1) Except as provided in paragraph (c)(1), ``default'' 
means--
    (i) The failure of an employer to pay any overdue withdrawal 
liability payment within 60 days after the employer receives written 
notification from the plan sponsor that the payment is overdue; and
    (ii) Any other event described in rules adopted by the plan which 
indicates a substantial likelihood that an employer will be unable to 
pay its withdrawal liability.
    (2) In the event of a default, a plan sponsor may require immediate 
payment of all or a portion of the outstanding amount of an employer's 
withdrawal liability, plus interest. In the event that the plan sponsor 
accelerates only a portion of the outstanding amount of an employer's 
withdrawal liability, the plan sponsor shall establish a new schedule of 
payments for the remaining amount of the employer's withdrawal 
liability.
    (c) Plan review or arbitration of liability determination. The 
following rules shall apply with respect to the obligation to make 
withdrawal liability payments during the period for plan review and 
arbitration and with respect to the failure to make such payments:
    (1) A default as a result of failure to make any payments shall not 
occur until the 61st day after the last of--
    (i) Expiration of the period described in section 4219(b)(2)(A) of 
ERISA;
    (ii) If the employer requests review under section 4219(b)(2)(A) of 
ERISA of the plan's withdrawal liability determination or the schedule 
of payments established by the plan, expiration of

[[Page 918]]

the period described in section 4221(a)(1) of ERISA for initiation of 
arbitration; or
    (iii) If arbitration is timely initiated either by the plan, the 
employer or both, issuance of the arbitrator's decision.
    (2) Any amounts due before the expiration of the period described in 
paragraph (c)(1) shall be paid in accordance with the schedule 
established by the plan sponsor. If a payment is not made when due under 
the schedule, the payment is overdue and interest shall accrue in 
accordance with the rules and at the same rate set forth in 
Sec. 4219.32.
    (d) Overpayments. If the plan sponsor or an arbitrator determines 
that payments made in accordance with the schedule of payments 
established by the plan sponsor have resulted in an overpayment of 
withdrawal liability, the plan sponsor shall refund the overpayment, 
with interest, in a lump sum. The plan sponsor shall credit interest on 
the overpayment from the date of the overpayment to the date on which 
the overpayment is refunded to the employer at the same rate as the rate 
for overdue withdrawal liability payments, as established under 
Sec. 4219.32 or by the plan pursuant to Sec. 4219.33.



Sec. 4219.32  Interest on overdue, defaulted and overpaid withdrawal liability.

    (a) Interest assessed. The plan sponsor of a multiemployer plan--
    (1) Shall assess interest on overdue withdrawal liability payments 
from the due date, as defined in paragraph (d) of this section, until 
the date paid, as defined in paragraph (e); and
    (2) In the event of a default, may assess interest on any 
accelerated portion of the outstanding withdrawal liability from the due 
date, as defined in paragraph (d) of this section, until the date paid, 
as defined in paragraph (e).
    (b) Interest rate. Except as otherwise provided in rules adopted by 
the plan pursuant to Sec. 4219.33, interest under this section shall be 
charged or credited for each calendar quarter at an annual rate equal to 
the average quoted prime rate on short-term commercial loans for the 
fifteenth day (or next business day if the fifteenth day is not a 
business day) of the month preceding the beginning of each calendar 
quarter, as reported by the Board of Governors of the Federal Reserve 
System in Statistical Release H.15 (``Selected Interest Rates'').
    (c) Calculation of interest. The interest rate under paragraph (b) 
of this section is the nominal rate for any calendar quarter or portion 
thereof. The amount of interest due the plan for overdue or defaulted 
withdrawal liability, or due the employer for overpayment, is equal to 
the overdue, defaulted, or overpaid amount multiplied by:
    (1) For each full calendar quarter in the period from the due date 
(or date of overpayment) to the date paid (or date of refund), one-
fourth of the annual rate in effect for that quarter;
    (2) For each full calendar month in a partial quarter in that 
period, one-twelfth of the annual rate in effect for that quarter; and
    (3) For each day in a partial month in that period, one-three-
hundred-sixtieth of the annual rate in effect for that month.
    (d) Due date. Except as otherwise provided in rules adopted by the 
plan, the due date from which interest accrues shall be, for an overdue 
withdrawal liability payment and for an amount of withdrawal liability 
in default, the date of the missed payment that gave rise to the 
delinquency or the default.
    (e) Date paid. Any payment of withdrawal liability shall be deemed 
to have been paid on the date on which it is received.



Sec. 4219.33  Plan rules concerning overdue and defaulted withdrawal liability.

    Plans may adopt rules relating to overdue and defaulted withdrawal 
liability, provided that those rules are consistent with ERISA. These 
rules may include, but are not limited to, rules for determining the 
rate of interest to be charged on overdue, defaulted and overpaid 
withdrawal liability (provided that the rate reflects prevailing market 
rates for comparable obligations); rules providing reasonable grace 
periods during which late payments may be made without interest; 
additional definitions of default which indicate a substantial 
likelihood that an employer will be unable to pay its

[[Page 919]]

withdrawal liability; and rules pertaining to acceleration of the 
outstanding balance on default. Plan rules adopted under this section 
shall be reasonable. Plan rules shall operate and be applied uniformly 
with respect to each employer, except that the rules may take into 
account the creditworthiness of an employer. Rules which take into 
account the creditworthiness of an employer shall state with 
particularity the categories of creditworthiness the plan will use, the 
specific differences in treatment accorded employers in different 
categories, and the standards and procedures for assigning an employer 
to a category.



PART 4220--PROCEDURES FOR PBGC APPROVAL OF PLAN AMENDMENTS--Table of Contents




Sec.
4220.1  Purpose and scope.
4220.2  Definitions.
4220.3  Requests for PBGC approval.
4220.4  PBGC action on requests.

    Authority: 29 U.S.C. 1302(b)(3), 1400.

    Source: 61 FR 34108, July 1, 1996, unless otherwise noted.



Sec. 4220.1  Purpose and scope.

    (a) General. This part establishes procedures under which a plan 
sponsor shall request the PBGC to approve a plan amendment under section 
4220 of ERISA. This part applies to all multiemployer plans covered by 
title IV of ERISA that adopt amendments pursuant to the authorization of 
sections 4201-4219 of ERISA (except for amendments adopted pursuant to 
section 4211(c)(5)). (The covered amendments are set forth in paragraph 
(b) of this section.) The subsequent modification of a plan amendment 
adopted by authorization of those sections is also covered by this part. 
This part does not, however, cover a plan amendment that merely repeals 
a previously adopted amendment, returning the plan to the statutorily 
prescribed rule.
    (b) Covered amendments. Amendments made pursuant to the following 
sections of ERISA are covered by this part:
    (1) Section 4203 (b)(1)(B)(ii).
    (2) Section 4203(c)(4).
    (3) Section 4205(c)(1).
    (4) Section 4205(d).
    (5) Section 4209(b).
    (6) Section 4210(b)(2).
    (7) Section 4211(c)(1).
    (8) Section 4211(c)(4)(D).
    (9) Section 4211(d)(1).
    (10) Section 4211(d)(2).
    (11) Section 4219(c)(1)(C)(ii)(I).
    (12) Section 4219(c)(1)(C)(iii).
    (c) Exception. Submission of a request for approval under this part 
is not required for a plan amendment for which the PBGC has published a 
notice in the Federal Register granting class approval.



Sec. 4220.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
employer, ERISA, IRS, multiemployer plan, PBGC, plan, and plan sponsor.



Sec. 4220.3  Requests for PBGC approval.

    (a) Filing of request. A request for approval of an amendment filed 
with the PBGC in accordance with this section shall constitute notice to 
the PBGC for purposes of the 90-day period specified in section 4220 of 
ERISA. A request is deemed filed on the date on which a request 
containing all information required by paragraph (d) of this section is 
received by the PBGC.
    (b) Who may request. The plan sponsor, or a duly authorized 
representative acting on behalf of a plan sponsor, shall sign and submit 
the request.
    (c) Where to file. The request shall be delivered by hand or by mail 
to Reports Processing, Insurance Operations Department, Pension Benefit 
Guaranty Corporation, 1200 K Street NW., Washington, DC 20005-4026.
    (d) Information. Each request filed shall contain the following 
information:
    (1) The name of the plan for which the amendment is being submitted, 
and the name, address and the telephone number of the plan sponsor or 
its duly authorized representative.
    (2) The nine-digit Employer Identification Number (EIN) assigned by 
the IRS to the plan sponsor and the three-digit Plan Identification 
Number (PIN) assigned by the plan sponsor to the plan, and, if 
different, the EIN or PIN last filed with PBGC. If no EIN or PIN

[[Page 920]]

has been assigned, that fact must be indicated.
    (3) A copy of the amendment as adopted, including its proposed 
effective date.
    (4) A copy of the most recent actuarial valuation of the plan.
    (5) A statement containing a certification that notice of the 
adoption of the amendment has been given to all employers who have an 
obligation to contribute under the plan and to all employee 
organizations representing employees covered by the plan.
    (6) Any other information that the plan sponsor believes to be 
pertinent to its request.
    (e) Supplemental information. The PBGC may require a plan sponsor to 
submit any other information that the PBGC determines to be necessary to 
review a request under this part. The PBGC may suspend the running of 
the 90-day period pursuant to Sec. 4220.4(c), pending the submission of 
the supplemental information.

(Approved by the Office of Management and Budget under control number 
1212-0031)



Sec. 4220.4  PBGC action on requests.

    (a) General. Upon receipt of a complete request, the PBGC shall 
notify the plan sponsor in writing of the date of commencement of the 
90-day period specified in section 4220 of ERISA. Except as provided in 
paragraph (c) of this section, the PBGC shall approve or disapprove a 
plan amendment submitted to it under this part within 90 days after 
receipt of a complete request for approval. If the PBGC fails to act 
within the 90-day period, or within that period notifies the plan 
sponsor that it will not disapprove the amendment, the amendment may be 
made effective without the approval of the PBGC.
    (b) Decision on request. The PBGC's decision on a request for 
approval shall be in writing. If the PBGC disapproves the plan 
amendment, the decision shall state the reasons for the disapproval. An 
approval by the PBGC constitutes its finding only with respect to the 
issue of risk as set forth in section 4220(c) of ERISA, and not with 
respect to whether the amendment is otherwise properly adopted in 
accordance with the terms of ERISA and the plan in question.
    (c) Suspension of the 90-day period. The PBGC may suspend the 
running of the 90-day period referred to in paragraph (a) of this 
section if it determines that additional information is required under 
Sec. 4220.3(e). When it does so, PBGC's request for additional 
information will advise the plan sponsor that the running of 90-day 
period has been suspended. The 90-day period will resume running on the 
date on which the additional information is received by the PBGC, and 
the PBGC will notify the plan sponsor of that date upon receipt of the 
information.



PART 4221--ARBITRATION OF DISPUTES IN MULTIEMPLOYER PLANS--Table of Contents




Sec.
4221.1  Purpose and scope.
4221.2  Definitions.
4221.3  Initiation of arbitration.
4221.4  Appointment of the arbitrator.
4221.5  Powers and duties of the arbitrator.
4221.6  Hearing.
4221.7  Reopening of proceedings.
4221.8  Award.
4221.9  Reconsideration of award.
4221.10  Costs.
4221.11  Waiver of rules.
4221.12  Calculation of periods of time.
4221.13  Filing or service of documents.
4221.14  PBGC-approved arbitration procedures.

    Authority: 29 U.S.C. 1302(b)(3), 1401.

    Source: 61 FR 34109, July 1, 1996, unless otherwise noted.



Sec. 4221.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to establish procedures for 
the arbitration, pursuant to section 4221 of ERISA, of withdrawal 
liability disputes arising under sections 4201 through 4219 and 4225 of 
ERISA.
    (b) Scope. This part applies to arbitration proceedings initiated 
pursuant to section 4221 of ERISA and this part on or after September 
26, 1985. On and after the effective date, any plan rules governing 
arbitration procedures (other than a plan rule adopting a PBGC-approved 
arbitration procedure in accordance with Sec. 4221.14) are effective 
only to the extent that they are consistent with this part and adopted

[[Page 921]]

by the arbitrator in a particular proceeding.



Sec. 4221.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
ERISA, IRS, multiemployer plan, PBGC, plan, and plan sponsor.
    In addition, for purposes of this part:
    Arbitrator means an individual or panel of individuals selected 
according to this part to decide a dispute concerning withdrawal 
liability.
    Employer means an individual, partnership, corporation or other 
entity against which a plan sponsor has made a demand for payment of 
withdrawal liability pursuant to section 4219(b)(1) of ERISA.
    Party or parties means the employer and the plan sponsor involved in 
a withdrawal liability dispute.
    Withdrawal liability dispute means a dispute described in 
Sec. 4221.1(a) of this chapter.



Sec. 4221.3  Initiation of arbitration.

    (a) Time limits--in general. Arbitration of a withdrawal liability 
dispute may be initiated within the time limits described in section 
4221(a)(1) of ERISA.
    (b) Waiver or extension of time limits. Arbitration shall be 
initiated in accordance with this section, notwithstanding any 
inconsistent provision of any agreement entered into by the parties 
before the date on which the employer received notice of the plan's 
assessment of withdrawal liability. The parties may, however, agree at 
any time to waive or extend the time limits for initiating arbitration.
    (c) Establishment of timeliness of initiation. A party that 
unilaterally initiates arbitration is responsible for establishing that 
the notice of initiation of arbitration was timely received by the other 
party. If arbitration is initiated by agreement of the parties, the date 
on which the agreement to arbitrate was executed establishes whether the 
arbitration was timely initiated.
    (d) Contents of agreement or notice. If the employer initiates 
arbitration, it shall include in the notice of initiation a statement 
that it disputes the plan sponsor's determination of its withdrawal 
liability and is initiating arbitration. A copy of the demand for 
withdrawal liability and any request for reconsideration, and the 
response thereto, shall be attached to the notice. If a party other than 
an employer initiates arbitration, it shall include in the notice a 
statement that it is initiating arbitration and a brief description of 
the questions on which arbitration is sought. If arbitration is 
initiated by agreement, the agreement shall include a brief description 
of the questions submitted to arbitration. In no case is compliance with 
formal rules of pleading required.
    (e) Effect of deficient agreement or notice. If a party fails to 
object promptly in writing to deficiencies in an initiation agreement or 
a notice of initiation of arbitration, it waives its right to object.



Sec. 4221.4  Appointment of the arbitrator.

    (a) Appointment of and acceptance by arbitrator. The parties shall 
select the arbitrator within 45 days after the arbitration is initiated, 
or within such other period as is mutually agreed after the initiation 
of arbitration, and shall mail to the designated arbitrator a notice of 
his or her appointment. The notice of appointment shall include a copy 
of the notice or agreement initiating arbitration, a statement that the 
arbitration is to be conducted in accordance with this part, and a 
request for a written acceptance by the arbitrator. The arbitrator's 
appointment becomes effective upon his or her written acceptance, 
stating his or her availability to serve and making any disclosures 
required by paragraph (b) of this section. If the arbitrator does not 
accept in writing within 15 days after the notice of appointment is 
mailed or delivered to him or her, he or she is deemed to have declined 
to act, and the parties shall select a new arbitrator in accordance with 
paragraph (d) of this section.
    (b) Disclosure by arbitrator and disqualification. Upon accepting 
the appointment, the arbitrator shall disclose to the parties any 
circumstances likely to affect his or her impartiality, including any 
bias or any financial or personal interest in the result of the 
arbitration and any past or present relationship with the parties or 
their counsel. If any party determines that

[[Page 922]]

the arbitrator should be disqualified because of the information 
disclosed, that party shall notify all other parties and the arbitrator 
no later than 10 days after the arbitrator makes the disclosure required 
by this paragraph (but in no event later than the commencement of the 
hearing under Sec. 4221.6). The arbitrator shall then withdraw, and the 
parties shall select another arbitrator in accordance with paragraph (d) 
of this section.
    (c) Challenge and withdrawal. After the arbitrator has been 
selected, a party may request that he or she withdraw from the 
proceedings at any point before a final award is rendered on the ground 
that he or she is unable to render an award impartially. The request for 
withdrawal shall be served on all other parties and the arbitrator by 
hand or by certified or registered mail and shall include a statement of 
the circumstances that, in the requesting party's view, affect the 
arbitrator's impartiality and a statement that the requesting party has 
brought these circumstances to the attention of the arbitrator and the 
other parties at the earliest practicable point in the proceedings. If 
the arbitrator determines that the circumstances adduced are likely to 
affect his or her impartiality and have been presented in a timely 
fashion, he or she shall withdraw from the proceedings and notify the 
parties of the reasons for his or her withdrawal. The parties shall then 
select a new arbitrator in accordance with paragraph (d) of this 
section.
    (d) Filling vacancies. If the designated arbitrator declines his or 
her appointment or, after accepting his or her appointment, is 
disqualified, resigns, dies, withdraws, or is unable to perform his or 
her duties at any time before a final award is rendered, the parties 
shall select another arbitrator to fill the vacancy. The selection shall 
be made, in accordance with the procedure used in the initial selection, 
within 20 days after the parties receive notice of the vacancy. The 
matter shall then be reheard by the newly chosen arbitrator, who may, in 
his or her discretion, rely on all or any portion of the record already 
established.
    (e) Failure to select arbitrator. If the parties fail to select an 
arbitrator within the time prescribed by this section, either party or 
both may seek the designation and appointment of an arbitrator in a 
United States district court pursuant to the provisions of title 9 of 
the United States Code.



Sec. 4221.5  Powers and duties of the arbitrator.

    (a) Arbitration hearing. Except as otherwise provided in this part, 
the arbitrator shall conduct the arbitration hearing under Sec. 4221.6 
in the same manner, and shall possess the same powers, as an arbitrator 
conducting a proceeding under title 9 of the United States Code.
    (1) Application of the law. In reaching his or her decision, the 
arbitrator shall follow applicable law, as embodied in statutes, 
regulations, court decisions, interpretations of the agencies charged 
with the enforcement of ERISA, and other pertinent authorities.
    (2) Prehearing discovery. The arbitrator may allow any party to 
conduct prehearing discovery by interrogatories, depositions, requests 
for the production of documents, or other means, upon a showing that the 
discovery sought is likely to lead to the production of relevant 
evidence and will not be disproportionately burdensome to the other 
parties. The arbitrator may impose appropriate sanctions if he or she 
determines that a party has failed to respond to discovery in good faith 
or has conducted discovery proceedings in bad faith or for the purpose 
of harassment. The arbitrator may, at the request of any party or on his 
or her own motion, require parties to give advance notice of expert or 
other witnesses that they intend to introduce.
    (3) Admissibility of evidence. The arbitrator determines the 
relevance and materiality of the evidence offered during the course of 
the hearing and is the judge of the admissibility of evidence offered. 
Conformity to legal rules of evidence is not necessary. To the extent 
reasonably practicable, all evidence shall be taken in the presence of 
the arbitrator and the parties. The arbitrator may, however, consider 
affidavits, transcripts of depositions, and similar documents.

[[Page 923]]

    (4) Production of documents or other evidence. The arbitrator may 
subpoena witnesses or documents upon his or her own initiative or upon 
request by any party after determining that the evidence is likely to be 
relevant to the dispute.
    (b) Prehearing conference. If it appears that a prehearing 
conference will expedite the proceedings, the arbitrator may, at any 
time before the commencement of the arbitration hearing under 
Sec. 4221.6, direct the parties to appear at a conference to consider 
settlement of the case, clarification of issues and stipulation of facts 
not in dispute, admission of documents to avoid unnecessary proof, 
limitations on the number of expert or other witnesses, and any other 
matters that could expedite the disposition of the proceedings.
    (c) Proceeding without hearing. The arbitrator may render an award 
without a hearing if the parties agree and file with the arbitrator such 
evidence as the arbitrator deems necessary to enable him or her to 
render an award under Sec. 4221.8.



Sec. 4221.6  Hearing.

    (a) Time and place of hearing established. Unless the parties agree 
to proceed without a hearing as provided in Sec. 4221.5(c), the parties 
and the arbitrator shall, no later than 15 days after the written 
acceptance by the arbitrator is mailed to the parties, establish a date 
and place for the hearing. If agreement is not reached within the 15-day 
period, the arbitrator shall, within 10 additional days, choose a 
location and set a hearing date. The date set for the hearing may be no 
later than 50 days after the mailing date of the arbitrator's written 
acceptance.
    (b) Notice. After the time and place for the hearing have been 
established, the arbitrator shall serve a written notice of the hearing 
on the parties by hand or by certified or registered mail.
    (c) Appearances. The parties may appear in person or by counsel or 
other representatives. Any party that, after being duly notified and 
without good cause shown, fails to appear in person or by representative 
at a hearing or conference, or fails to file documents in a timely 
manner, is deemed to have waived all rights with respect thereto and is 
subject to whatever orders or determinations the arbitrator may make.
    (d) Record and transcript of hearing. Upon the request of either 
party, the arbitrator shall arrange for a record of the arbitration 
hearing to be made by stenographic means or by tape recording. The cost 
of making the record and the costs of transcription and copying are 
costs of the arbitration proceedings payable as provided in 
Sec. 4221.10(b) except that, if only one party requests that a 
transcript of the record be made, that party shall pay the cost of the 
transcript.
    (e) Order of hearing. The arbitrator shall conduct the hearing in 
accordance with the following rules:
    (1) Opening. The arbitrator shall open the hearing and place in the 
record the notice of initiation of arbitration or the initiation 
agreement. The arbitrator may ask for statements clarifying the issues 
involved.
    (2) Presentation of claim and response. The arbitrator shall 
establish the procedure for presentation of claim and response in such a 
manner as to afford full and equal opportunity to all parties for the 
presentation of their cases.
    (3) Witnesses. All witnesses shall testify under oath or affirmation 
and are subject to cross-examination by opposing parties. If testimony 
of an expert witness is offered by a party without prior notice to the 
other party, the arbitrator shall grant the other party a reasonable 
time to prepare for cross-examination and to produce expert witnesses on 
its own behalf. The arbitrator may on his or her own initiative call 
expert witnesses on any issue raised in the arbitration. The cost of any 
expert called by the arbitrator is a cost of the proceedings payable as 
provided in Sec. 4221.10(b).
    (f) Continuance of hearing. The arbitrator may, for good cause 
shown, grant a continuance for a reasonable period. When granting a 
continuance, the arbitrator shall set a date for resumption of the 
hearing.
    (g) Filing of briefs. Each party may file a written statement of 
facts and argument supporting the party's position. The parties' briefs 
are due no later than 30 days after the close of the hearing. Within 15 
days thereafter,

[[Page 924]]

each party may file a reply brief concerning matters contained in the 
opposing brief. The arbitrator may establish a briefing schedule and may 
reduce or extend these time limits. Each party shall deliver copies of 
all of its briefs to the arbitrator and to all opposing parties.



Sec. 4221.7  Reopening of proceedings.

    (a) Grounds for reopening. At any time before a final award is 
rendered, the proceedings may be reopened, on the motion of the 
arbitrator or at the request of any party, for the purpose of taking 
further evidence or rehearing or rearguing any matter, if the arbitrator 
determines that--
    (1) The reopening is likely to result in new information that will 
have a material effect on the outcome of the arbitration;
    (2) Good cause exists for the failure of the party that requested 
reopening to present such information at the hearing; and
    (3) The delay caused by the reopening will not be unfairly injurious 
to any party.
    (b) Comments on and notice of reopening. The arbitrator shall allow 
all affected parties the opportunity to comment on any motion or request 
to reopen the proceedings. If he or she determines that the proceedings 
should be reopened, he or she shall give all parties written notice of 
the reasons for reopening and of the schedule of the reopened 
proceedings.



Sec. 4221.8  Award.

    (a) Form. The arbitrator shall render a written award that--
    (1) States the basis for the award, including such findings of fact 
and conclusions of law (which need not be explicitly designated as such) 
as are necessary to resolve the dispute;
    (2) Adjusts (or provides a method for adjusting) the amount or 
schedule of payments to be made after the award to reflect overpayments 
or underpayments made before the award was rendered or requires the plan 
sponsor to refund overpayments in accordance with Sec. 4219.31(d); and
    (3) Provides for an allocation of costs in accordance with 
Sec. 4221.10.
    (b) Time of award. Except as provided in paragraphs (c), (d), and 
(e) of this section, the arbitrator shall render the award no later than 
30 days after the proceedings close. The award is rendered when filed or 
served on the parties as provided in Sec. 4221.13. The award is final 
when the period for seeking modification or reconsideration in 
accordance with Sec. 4221.9(a) has expired or the arbitrator has 
rendered a revised award in accordance with Sec. 4221.9(c).
    (c) Reopened proceedings. If the proceedings are reopened in 
accordance with Sec. 4221.7 after the close of the hearing, the 
arbitrator shall render the award no later than 30 days after the date 
on which the reopened proceedings are closed.
    (d) Absence of hearing. If the parties have chosen to proceed 
without a hearing, the arbitrator shall render the award no later than 
30 days after the date on which final statements and proofs are filed 
with him or her.
    (e) Agreement for extension of time. Notwithstanding paragraphs (b), 
(c), and (d), the parties may agree to an extension of time for the 
arbitrator's award in light of the particular facts and circumstances of 
their dispute.
    (f) Close of proceedings. For purposes of paragraphs (b) and (c) of 
this section, the proceedings are closed on the date on which the last 
brief or reply brief is due or, if no briefs are to be filed, on the 
date on which the hearing or rehearing closes.
    (g) Publication of award. After a final award has been rendered, the 
plan sponsor shall make copies available upon request to the PBGC and to 
all companies that contribute to the plan. The plan sponsor may impose 
reasonable charges for copying and postage.



Sec. 4221.9  Reconsideration of award.

    (a) Motion for reconsideration and objections. A party may seek 
modification or reconsideration of the arbitrator's award by filing a 
written motion with the arbitrator and all opposing parties within 20 
days after the award is rendered. Opposing parties may file objections 
to modification or reconsideration within 10 days after the motion is 
filed. The filing of a written motion for modification or 
reconsideration suspends the 30-day period under section

[[Page 925]]

4221(b)(2) of ERISA for requesting court review of the award. The 30-day 
statutory period again begins to run when the arbitrator denies the 
motion pursuant to paragraph (c) of this section or renders a revised 
award.
    (b) Grounds for modification or reconsideration. The arbitrator may 
grant a motion for modification or reconsideration of the award only if-
-
    (1) There is a numerical error or a mistake in the description of 
any person, thing, or property referred to in the award; or
    (2) The arbitrator has rendered an award upon a matter not submitted 
to the arbitrator and the matter affects the merits of the decision; or
    (3) The award is imperfect in a matter of form not affecting the 
merits of the dispute.
    (c) Decision of arbitrator. The arbitrator shall grant or deny the 
motion for modification or reconsideration, and may render an opinion to 
support his or her decision within 20 days after the motion is filed 
with the arbitrator, or within 30 days after the motion is filed if an 
objection is also filed.



Sec. 4221.10  Costs.

    The costs of arbitration under this part shall be borne by the 
parties as follows:
    (a) Witnesses. Each party to the dispute shall bear the costs of its 
own witnesses.
    (b) Other costs of arbitration. Except as provided in Sec. 4221.6(d) 
with respect to a transcript of the hearing, the parties shall bear the 
other costs of the arbitration proceedings equally unless the arbitrator 
determines otherwise. The parties may, however, agree to a different 
allocation of costs if their agreement is entered into after the 
employer has received notice of the plan's assessment of withdrawal 
liability.
    (c) Attorneys' fees. The arbitrator may require a party that 
initiates or contests an arbitration in bad faith or engages in 
dilatory, harassing, or other improper conduct during the course of the 
arbitration to pay reasonable attorneys' fees of other parties.



Sec. 4221.11  Waiver of rules.

    Any party that fails to object in writing in a timely manner to any 
deviation from any provision of this part is deemed to have waived the 
right to interpose that objection thereafter.



Sec. 4221.12  Calculation of periods of time.

    For purposes of calculating any period of time under this part, the 
period begins to run on the day following the day that a communication 
is received or an act is completed. If the last day of the period is a 
Federal, State, or local holiday or a non-business day for one of the 
parties or the arbitrator, the period runs until the end of the first 
business day that follows. Holidays or non-business days occurring 
during the running of the period of time are included in calculating the 
period.



Sec. 4221.13  Filing or service of documents.

    (a) By mail. A document that is to be filed or served under this 
part is considered filed or served on--
    (1) The date of the receipt provided to the sender by the United 
States Postal Service, if the document was sent by certified or 
registered mail, postage prepaid, properly packaged, and properly 
addressed; or
    (2) The date of the United States Postal Service postmark stamped on 
the cover in which the document is mailed, if paragraph (a)(1) is not 
applicable, a legible postmark was made, and the document was sent 
postage prepaid, properly packaged, and properly addressed.
    (b) By means other than mail. A document required to be delivered 
under this part that is not mailed in accordance with paragraph (a) of 
this section is considered filed or served on the date on which it is 
received.



Sec. 4221.14  PBGC-approved arbitration procedures.

    (a) Use of PBGC-approved arbitration procedures. In lieu of the 
procedures prescribed by this part, an arbitration may be conducted in 
accordance with an alternative arbitration procedure approved by the 
PBGC in accordance with paragraph (c) of this section. A plan may by 
plan amendment require the use of a PBGC-approved procedure for all 
arbitrations of withdrawal liability disputes, or the parties may

[[Page 926]]

agree to the use of a PBGC-approved procedure in a particular case.
    (b) Scope of alternative procedures. If an arbitration is conducted 
in accordance with a PBGC-approved arbitration procedure, the 
alternative procedure shall govern all aspects of the arbitration, with 
the following exceptions:
    (1) The time limits for the initiation of arbitration may not differ 
from those provided for by Sec. 4221.3.
    (2) The arbitrator shall be selected after the initiation of the 
arbitration.
    (3) The arbitrator shall give the parties opportunity for prehearing 
discovery substantially equivalent to that provided by 
Sec. 4221.5(a)(2).
    (4) The award shall be made available to the public to at least the 
extent provided by Sec. 4221.8(g).
    (5) The costs of arbitration shall be allocated in accordance with 
Sec. 4221.10.
    (c) Procedure for approval of alternative procedures. The PBGC may 
approve arbitration procedures on its own initiative by publishing an 
appropriate notice in the Federal Register. The sponsor of an 
arbitration procedure may request PBGC approval of its procedures by 
submitting an application to the PBGC. The application shall be 
submitted to Reports Processing, Insurance Operations Department, 
Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington, DC 
20005-4026, and shall include:
    (1) A copy of the procedures for which approval is sought;
    (2) A description of the history, structure and membership of the 
organization that sponsors the procedures; and
    (3) A discussion of the reasons why, in the sponsoring 
organization's opinion, the procedures satisfy the criteria for approval 
set forth in this section.
    (d) Criteria for approval of alternative procedures. The PBGC shall 
approve an application if it determines that the proposed procedures 
will be substantially fair to all parties involved in the arbitration of 
a withdrawal liability dispute and that the sponsoring organization is 
neutral and able to carry out its role under the procedures. The PBGC 
may request comments on the application by publishing an appropriate 
notice in the Federal Register. Notice of the PBGC's decision on the 
application shall be published in the Federal Register. Unless the 
notice of approval specifies otherwise, approval will remain effective 
until revoked by the PBGC through a Federal Register notice.

[[Page 927]]



 SUBCHAPTER J--INSOLVENCY, REORGANIZATION, TERMINATION, AND OTHER RULES 
                    APPLICABLE TO MULTIEMPLOYER PLANS





PART 4231--MERGERS AND TRANSFERS BETWEEN MULTIEMPLOYER PLANS--Table of Contents




Sec.
4231.1  Purpose and scope.
4231.2  Definitions.
4231.3  Requirements for mergers and transfers.
4231.4  Preservation of accrued benefits.
4231.5  Valuation requirement.
4231.6  Plan solvency tests.
4231.7  De minimis mergers and transfers.
4231.8  Notice of merger or transfer.
4231.9  Request for compliance determination.
4231.10  Actuarial calculations and assumptions.

    Authority: 29 U.S.C. 1302(b)(3), 1411.

    Source: 63 FR 24421, May 4, 1998, unless otherwise noted.



Sec. 4231.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to prescribe notice 
requirements under section 4231 of ERISA for mergers and transfers of 
assets or liabilities among multiemployer pension plans. This part also 
interprets the other requirements of section 4231 and prescribes special 
rules for de minimis mergers and transfers. The collections of 
information in this part have been approved by the Office of Management 
and Budget under OMB control number 1212-0022.
    (b) Scope. This part applies to mergers and transfers among 
multiemployer plans where all of the plans immediately before and 
immediately after the transaction are multiemployer plans covered by 
title IV of ERISA.



Sec. 4231.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
Code, EIN, ERISA, fair market value, IRS, multiemployer plan, PBGC, 
plan, plan year, and PN.
    In addition, for purposes of this part:
    Actuarial valuation means a valuation of assets and liabilities 
performed by an enrolled actuary using the actuarial assumptions used 
for purposes of determining the charges and credits to the funding 
standard account under section 302 of ERISA and section 412 of the Code.
    Certified change of collective bargaining representative means a 
change of collective bargaining representative certified under the 
Labor-Management Relations Act of 1947, as amended, or the Railway Labor 
Act, as amended.
    Fair market value of assets has the same meaning as the term has for 
minimum funding purposes under section 302 of ERISA and section 412 of 
the Code.
    Merger means the combining of two or more plans into a single plan. 
For example, a consolidation of two plans into a new plan is a merger.
    Significantly affected plan means a plan that--
    (1) Transfers assets that equal or exceed 15 percent of its assets 
before the transfer,
    (2) Receives a transfer of unfunded accrued benefits that equal or 
exceed 15 percent of its assets before the transfer,
    (3) Is created by a spinoff from another plan, or
    (4) Engages in a merger or transfer (other than a de minimis merger 
or transfer) either--
    (i) After such plan has terminated by mass withdrawal under section 
4041A(a)(2) of ERISA, or
    (ii) With another plan that has so terminated.
    Transfer and transfer of assets or liabilities mean a diminution of 
assets or liabilities with respect to one plan and the acquisition of 
these assets or the assumption of these liabilities by another plan or 
plans (including a plan that did not exist prior to the transfer). 
However, the shifting of assets or liabilities pursuant to a written 
reciprocity agreement between two multiemployer plans in which one plan 
assumes liabilities of another plan is not a transfer of assets or 
liabilities. In addition, the shifting of assets between several funding 
media used for a single

[[Page 928]]

plan (such as between trusts, between annuity contracts, or between 
trusts and annuity contracts) is not a transfer of assets or 
liabilities.
    Unfunded accrued benefits means the excess of the present value of a 
plan's accrued benefits over the fair market value of its assets, 
determined on the basis of the actuarial valuation required under 
Sec. 4231.5(b).



Sec. 4231.3  Requirements for mergers and transfers.

    (a) General requirements. A plan sponsor may not cause a 
multiemployer plan to merge with one or more multiemployer plans or 
transfer assets or liabilities to or from another multiemployer plan 
unless the merger or transfer satisfies all of the following 
requirements:
    (1) No participant's or beneficiary's accrued benefit is lower 
immediately after the effective date of the merger or transfer than the 
benefit immediately before that date.
    (2) Actuarial valuations of the plans that existed before the merger 
or transfer have been performed in accordance with Sec. 4231.5.
    (3) For each plan that exists after the transaction, an enrolled 
actuary--
    (i) Determines that the plan meets the applicable plan solvency 
requirement set forth in Sec. 4231.6; or
    (ii) Otherwise demonstrates that benefits under the plan are not 
reasonably expected to be subject to suspension under section 4245 of 
ERISA.
    (4) The plan sponsor notifies the PBGC of the merger or transfer in 
accordance with Sec. 4231.8.
    (b) Compliance determination. If a plan sponsor requests a 
determination that a merger or transfer that may otherwise be prohibited 
by section 406(a) or (b)(2) of ERISA satisfies the requirements of 
section 4231 of ERISA, the plan sponsor must submit the information 
described in Sec. 4231.9 in addition to the information required by 
Sec. 4231.8. PBGC may request additional information if necessary to 
determine whether a merger or transfer complies with the requirements of 
section 4231 and this part. Plan sponsors are not required to request a 
compliance determination. Under section 4231(c) of ERISA, if the PBGC 
determines that the merger or transfer complies with section 4231 of 
ERISA and this part, the merger or transfer will not constitute a 
violation of the prohibited transaction provisions of section 406(a) and 
(b)(2) of ERISA.
    (c) Certified change in bargaining representative. Transfers of 
assets and liabilities pursuant to a certified change in bargaining 
representative are governed by section 4235 of ERISA. Plan sponsors 
involved in such transfers are not required to comply with this part. 
However, under section 4235(f)(1) of ERISA, the plan sponsors of the 
plans involved in the transfer may agree to a transfer that complies 
with sections 4231 and 4234 of ERISA. Plan sponsors that elect to comply 
with sections 4231 and 4234 must comply with the rules in this part.



Sec. 4231.4  Preservation of accrued benefits.

    Section 4231(b)(2) of ERISA and Sec. 4231.3(a)(1) require that no 
participant's or beneficiary's accrued benefit may be lower immediately 
after the effective date of the merger or transfer than the benefit 
immediately before the merger or transfer. A plan that assumes an 
obligation to pay benefits for a group of participants satisfies this 
requirement only if the plan contains a provision preserving all accrued 
benefits. The determination of what is an accrued benefit must be made 
in accordance with section 411 of the Code and the regulations 
thereunder.



Sec. 4231.5  Valuation requirement.

    (a) In general. For a plan that is not a significantly affected 
plan, or that is a significantly affected plan only because the merger 
or transfer involves a plan that has terminated by mass withdrawal under 
section 4041A(a)(2) of ERISA, the actuarial valuation requirement under 
section 4231(b)(4) of ERISA and Sec. 4231.3(a)(2) is satisfied if an 
actuarial valuation has been performed for the plan based on the plan's 
assets and liabilities as of a date not more than three years before the 
date on which the notice of the merger or transfer is filed.
    (b) Significantly affected plans. For a significantly affected plan, 
other than a plan that is a significantly affected

[[Page 929]]

plan only because the merger or transfer involves a plan that has 
terminated by mass withdrawal under section 4041A(a)(2) of ERISA, the 
actuarial valuation requirement under section 4231(b)(4) of ERISA and 
Sec. 4231.3(a)(2) is satisfied only if an actuarial valuation has been 
performed for the plan based on the plan's assets and liabilities as of 
a date not earlier than the first day of the last plan year ending 
before the proposed effective date of the transaction. The valuation 
must separately identify assets, contributions, and liabilities being 
transferred and must be based on the actuarial assumptions and methods 
that are expected to be used for the plan for the first plan year 
beginning after the transfer.



Sec. 4231.6  Plan solvency tests.

    (a) In general. For a plan that is not a significantly affected 
plan, the plan solvency requirement of section 4231(b)(3) of ERISA and 
Sec. 4231.3(a)(3)(i) is satisfied if--
    (1) The expected fair market value of plan assets immediately after 
the merger or transfer equals or exceeds five times the benefit payments 
for the last plan year ending before the proposed effective date of the 
merger or transfer; or
    (2) In each of the first five plan years beginning on or after the 
proposed effective date of the merger or transfer, expected plan assets 
plus expected contributions and investment earnings equal or exceed 
expected expenses and benefit payments for the plan year.
    (b) Significantly affected plans. The plan solvency requirement of 
section 4231(b)(3) of ERISA and Sec. 4231.3(a)(3)(i) is satisfied for a 
significantly affected plan if all of the following requirements are 
met:
    (1) Expected contributions equal or exceed the estimated amount 
necessary to satisfy the minimum funding requirement of section 412(a) 
of the Code (including reorganization funding, if applicable) for the 
five plan years beginning on or after the proposed effective date of the 
transaction.
    (2) The expected fair market value of plan assets immediately after 
the transaction equal or exceed the total amount of expected benefit 
payments for the first five plan years beginning on or after the 
proposed effective date of the transaction.
    (3) Expected contributions for the first plan year beginning on or 
after the proposed effective date of the transaction equal or exceed 
expected benefit payments for that plan year.
    (4) Expected contributions for the amortization period equal or 
exceed unfunded accrued benefits plus expected normal costs. The actuary 
may select as the amortization period either--
    (i) The first 25 plan years beginning on or after the proposed 
effective date of the transaction, or
    (ii) The amortization period for the resulting base when the 
combined charge base and the combined credit base are offset under 
section 412(b)(4) of the Code.
    (c) Rules for determinations. In determining whether a transaction 
satisfies the plan solvency requirements set forth in this section, the 
following rules apply:
    (1) Expected contributions after a merger or transfer must be 
determined by assuming that contributions for each plan year will equal 
contributions for the last full plan year ending before the date on 
which the notice of merger or transfer is filed with the PBGC. 
Contributions must be adjusted, however, to reflect--
    (i) The merger or transfer,
    (ii) Any change in the rate of employer contributions that has been 
negotiated (whether or not in effect), and
    (iii) Any trend of changing contribution base units over the 
preceding five plan years or other period of time that can be 
demonstrated to be more appropriate.
    (2) Expected normal costs must be determined under the funding 
method and assumptions expected to be used by the plan actuary for 
purposes of determining the minimum funding requirement under section 
412 of the Code (which requires that such assumptions be reasonable in 
the aggregate). If the plan uses an aggregate funding method, normal 
costs must be determined under the entry age normal method.
    (3) Expected benefit payments must be determined by assuming that 
current benefits remain in effect and that

[[Page 930]]

all scheduled increases in benefits occur.
    (4) The expected fair market value of plan assets immediately after 
the merger or transfer must be based on the most recent data available 
immediately before the date on which the notice is filed.
    (5) Expected investment earnings must be determined using the same 
interest assumption to be used for determining the minimum funding 
requirement under section 412 of the Code.
    (6) Expected expenses must be determined using expenses in the last 
plan year ending before the notice is filed, adjusted to reflect any 
anticipated changes.
    (7) Expected plan assets for a plan year must be determined by 
adjusting the most current data on fair market value of plan assets to 
reflect expected contributions, investment earnings, benefit payments 
and expenses for each plan year between the date of the most current 
data and the beginning of the plan year for which expected assets are 
being determined.



Sec. 4231.7  De minimis mergers and transfers.

    (a) Special plan solvency rule. The determination of whether a de 
minimis merger or transfer satisfies the plan solvency requirement in 
Sec. 4231.6(a) may be made without regard to any other de minimis 
mergers or transfers that have occurred since the last actuarial 
valuation.
    (b) De minimis merger defined. A merger is de minimis if the present 
value of accrued benefits (whether or not vested) of one plan is less 
than 3 percent of the fair market value of the other plan's assets.
    (c) De minimis transfer defined. A transfer of assets or liabilities 
is de minimis if--
    (1) The fair market value of the assets transferred, if any, is less 
than 3 percent of the fair market value of all the assets of the 
transferor plan;
    (2) The present value of the accrued benefits transferred (whether 
or not vested) is less than 3 percent of the fair market value of all 
the assets of the transferee plan; and
    (3) The transferee plan is not a plan that has terminated under 
section 4041A(a)(2) of ERISA.
    (d) Value of assets and benefits. For purposes of paragraphs (b) and 
(c) of this section, the value of plan assets and accrued benefits may 
be determined as of any date prior to the proposed effective date of the 
transaction, but not earlier than the date of the most recent actuarial 
valuation.
    (e) Aggregation required. In determining whether a merger or 
transfer is de minimis, the assets and accrued benefits transferred in 
previous de minimis mergers and transfers within the same plan year must 
be aggregated as described in paragraphs (e)(1) and (e)(2) of this 
section. For the purposes of those paragraphs, the value of plan assets 
may be determined as of the date during the plan year on which the total 
value of the plan's assets is the highest.
    (1) A merger is not de minimis if the total present value of accrued 
benefits merged into a plan, when aggregated with all prior de minimis 
mergers of and transfers to that plan effective within the same plan 
year, equals or exceeds 3 percent of the value of the plan's assets.
    (2) A transfer is not de minimis if, when aggregated with all 
previous de minimis mergers and transfers effective within the same plan 
year--
    (i) The value of all assets transferred from a plan equals or 
exceeds 3 percent of the value of the plan's assets; or
    (ii) The present value of all accrued benefits transferred to a plan 
equals or exceeds 3 percent of the plan's assets.



Sec. 4231.8  Notice of merger or transfer.

    (a) When to file. Except as provided in paragraph (f) of this 
section, a notice of a proposed merger or transfer must be filed not 
less than 120 days before the effective date of the transaction. For 
purposes of this part, the effective date of a merger or transfer is the 
earlier of--
    (1) The date on which one plan assumes liability for benefits 
accrued under another plan involved in the transaction; or
    (2) The date on which one plan transfers assets to another plan 
involved in the transaction.

[[Page 931]]

    (b) Who must file. The plan sponsors of all plans involved in a 
merger or transfer, or the duly authorized representative(s) acting on 
behalf of the plan sponsors, must jointly file the notice required by 
this section.
    (c) Where to file. The notice must be delivered to Reports 
Processing, Insurance Operations Department, Pension Benefit Guaranty 
Corporation, 1200 K Street NW., Washington, DC 20005-4026.
    (d) Filing date. For purposes of paragraph (a) of this section, the 
notice is not considered filed until all of the information required by 
paragraph (e) of this section has been submitted. Information filed 
under this part is considered filed--
    (1) On the date of the United States postmark stamped on the cover 
in which the information is mailed, if--
    (i) The postmark was made by the United States Postal Service; and
    (ii) The information was mailed postage prepaid, properly addressed 
to the PBGC; or
    (2) On the date it is received by the PBGC, if the conditions stated 
in paragraph (d)(1) of this section are not met. Information received on 
a weekend or Federal holiday or after 5:00 p.m. on a weekday is 
considered filed on the next regular business day.
    (e) Information required. Each notice must contain the following 
information:
    (1) For each plan involved in the merger or transfer--
    (i) The name of the plan;
    (ii) The name, address and telephone number of the plan sponsor and 
of the plan sponsor's duly authorized representative, if any; and
    (iii) The plan sponsor's EIN and the plan's PN and, if different, 
the EIN or PN last filed with the PBGC. If no EIN or PN has been 
assigned, the notice must so indicate.
    (2) Whether the transaction being reported is a merger or transfer, 
whether it involves any plan that has terminated under section 
4041A(a)(2) of ERISA, whether any significantly affected plan is 
involved in the transaction (and, if so, identifying each such plan), 
and whether it is a de minimis transaction as defined in Sec. 4231.7 
(and, if so, including an enrolled actuary's certification to that 
effect).
    (3) The proposed effective date of the transaction.
    (4) A copy of each plan provision stating that no participant's or 
beneficiary's accrued benefit will be lower immediately after the 
effective date of the merger or transfer than the benefit immediately 
before that date.
    (5) For each plan that exists after the transaction, one of the 
following statements, certified by an enrolled actuary:
    (i) A statement that the plan satisfies the applicable plan solvency 
test set forth in Sec. 4231.6, indicating which is the applicable test.
    (ii) A statement of the basis on which the actuary has determined 
that benefits under the plan are not reasonably expected to be subject 
to suspension under section 4245 of ERISA, including the supporting data 
or calculations, assumptions and methods.
    (6) For each plan that exists before a transaction (unless the 
transaction is de minimis and does not involve any plan that has 
terminated under section 4041A(a)(2) of ERISA), a copy of the most 
recent actuarial valuation report that satisfies the requirements of 
Sec. 4231.5.
    (7) For each significantly affected plan that exists after the 
transaction, the following information used in making the plan solvency 
determination under Sec. 4231.6(b):
    (i) The present value of the accrued benefits and fair market value 
of plan assets under the valuation required by Sec. 4231.5(b), allocable 
to the plan after the transaction.
    (ii) The fair market value of assets in the plan after the 
transaction (determined in accordance with Sec. 4231.6(c)(4)).
    (iii) The expected benefit payments for the plan in the first plan 
year beginning on or after the proposed effective date of the 
transaction (determined in accordance with Sec. 4231.6(c)(3)).
    (iv) The contribution rates in effect for the plan for the first 
plan year beginning on or after the proposed effective date of the 
transaction.
    (v) The expected contributions for the plan in the first plan year 
beginning on or after the proposed effective date of the transaction 
(determined in accordance with Sec. 4231.6(c)(1)).

[[Page 932]]

    (f) Waiver of notice. The PBGC may waive the notice requirements of 
this section and section 4231(b)(1) of ERISA if--
    (1) A plan sponsor demonstrates to the satisfaction of the PBGC that 
failure to complete the merger or transfer in less than 120 days after 
filing the notice will cause harm to participants or beneficiaries of 
the plans involved in the transaction;
    (2) The PBGC determines that the transaction complies with the 
requirements of section 4231 of ERISA; or
    (3) The PBGC completes its review of the transaction.



Sec. 4231.9  Request for compliance determination.

    (a) General. The plan sponsor(s) of one or more plans involved in a 
merger or transfer, or the duly authorized representative(s) acting on 
behalf of the plan sponsor(s), may file a request for a determination 
that the transaction complies with the requirements of section 4231 of 
ERISA. The request must contain the information described in paragraph 
(b) or (c) of this section, as applicable.
    (1) The place of filing. The request must be delivered to the 
address set forth in Sec. 4231.8(c).
    (2) Single request permitted for all de minimis transactions. 
Because the plan solvency test for de minimis mergers and transfers is 
based on the most recent valuation (without adjustment for intervening 
de minimis transactions), a plan sponsor may submit a single request for 
a compliance determination covering all de minimis mergers or transfers 
that occur between one plan valuation and the next. However, the plan 
sponsor must still notify PBGC of each de minimis merger or transfer 
separately, in accordance with Sec. 4231.8. The single request for a 
compliance determination may be filed concurrently with any one of the 
notices of a de minimis merger or transfer.
    (b) Contents of request. (1) General. A request for a compliance 
determination concerning a merger or transfer that is not de minimis 
must contain--
    (i) A copy of the merger or transfer agreement;
    (ii) A summary of the required calculations, including a complete 
description of assumptions and methods, on which the enrolled actuary 
based each certification that a plan involved in the merger or transfer 
satisfied a plan solvency test described in Sec. 4231.6; and
    (iii) For each significantly affected plan, other than a plan that 
is a significantly affected plan only because the merger or transfer 
involves a plan that has terminated by mass withdrawal under section 
4041A(a)(2) of ERISA, copies of all actuarial valuations performed 
within the 5 years preceding the date of filing the notice required 
under Sec. 4231.8.
    (2) De minimis merger or transfer. A request for a compliance 
determination concerning a de minimis merger or transfer must contain 
one of the following statements for each plan that exists after the 
transaction, certified by an enrolled actuary:
    (i) A statement that the plan satisfies one of the plan solvency 
tests set forth in Sec. 4231.6(a), indicating which test is satisfied.
    (ii) A statement of the basis on which the actuary has determined 
that benefits under the plan are not reasonably expected to be subject 
to suspension under section 4245 of ERISA, including supporting data or 
calculations, assumptions and methods.



Sec. 4231.10  Actuarial calculations and assumptions.

    (a) Most recent valuation. All calculations required by this part 
must be based on the most recent actuarial valuation as of the date of 
filing the notice, updated to show any material changes.
    (b) Assumptions. All calculations required by this part must be 
based on methods and assumptions that are reasonable in the aggregate, 
based on generally accepted actuarial principles.
    (c) Updated calculations. If the actual effective date of the merger 
or transfer is more than one year after the date the notice is filed 
with the PBGC, PBGC may require the plans involved to provide updated 
calculations and representations based on the actual effective date of 
the transaction.

[[Page 933]]



PART 4245--NOTICE OF INSOLVENCY--Table of Contents




Sec.
4245.1  Purpose and scope.
4245.2  Definitions.
4245.3  Notice of insolvency.
4245.4  Contents of notice of insolvency.
4245.5  Notice of insolvency benefit level.
4245.6  Contents of notice of insolvency benefit level.
4245.7  PBGC address.

    Authority: 29 U.S.C. 1302(b)(3), 1426(e).

    Source: 61 FR 34115, July 1, 1996, unless otherwise noted.



Sec. 4245.1  Purpose and scope.

    (a) Purpose. The purpose of this part is to prescribe notice 
requirements pertaining to insolvent multiemployer plans that are in 
reorganization.
    (b) Scope. This part applies to multiemployer plans in 
reorganization covered by title IV of ERISA, other than plans that have 
terminated by mass withdrawal under section 4041A(a)(2) of ERISA.



Sec. 4245.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
employer, ERISA, IRS, multiemployer plan, nonforfeitable benefit, PBGC, 
person, plan, and plan year.
    In addition, for purposes of this part:
    Actuarial valuation means a report submitted to the plan in 
connection with a valuation of plan assets and liabilities, which, in 
the case of a plan covered by subparts C and D of part 4281, shall be 
performed in accordance with subpart B of part 4281.
    Available resources means, for a plan year, available resources as 
described in section 4245(b)(3) of ERISA.
    Benefits subject to reduction means those benefits accrued under 
plan amendments (or plans) adopted after March 26, 1980, or under 
collective bargaining agreements entered into after March 26, 1980, that 
are not eligible for the PBGC's guarantee under section 4022A(b) of 
ERISA.
    Financial assistance means financial assistance from the PBGC under 
section 4261 of ERISA.
    Insolvency benefit level means the greater of the resource benefit 
level or the benefit level guaranteed by the PBGC for each participant 
and beneficiary in pay status.
    Insolvency year means insolvency year as described in section 
4245(b)(4) of ERISA.
    Insolvent means that a plan is unable to pay benefits when due 
during the plan year. A plan terminated by mass withdrawal is not 
insolvent unless it has been amended to eliminate all benefits that are 
subject to reduction under section 4281(c) of ERISA, or, in the absence 
of an amendment, no benefits under the plan are subject to reduction 
under section 4281(c) of ERISA.
    Reasonably expected to enter pay status means, with respect to plan 
participants and beneficiaries, persons (other than those in pay status) 
who, according to plan records, are disabled, have applied for benefits, 
or have reached or will reach during the applicable period the normal 
retirement age under the plan, and any others whom it is reasonable for 
the plan sponsor to expect to enter pay status during the applicable 
period.
    Reorganization means reorganization under section 4241(a) of ERISA.
    Resource benefit level means resource benefit level as described in 
section 4245(b)(2) of ERISA.



Sec. 4245.3  Notice of insolvency.

    (a) Requirement of notice. A plan sponsor of a multiemployer plan in 
reorganization that determines under section 4245 (b)(1), (d)(1) or 
(d)(2) of ERISA that the plan's available resources are or may be 
insufficient to pay benefits when due for a plan year shall so notify 
the PBGC and the interested parties, as defined in paragraph (d) of this 
section. A single notice may cover more than one plan year. The notices 
shall be delivered in the manner and within the time prescribed in this 
section and shall contain the information described in Sec. 4245.4.
    (b) When delivered. A plan sponsor shall mail or otherwise deliver 
the notices of insolvency no later than 30 days after it determines that 
the plan is or may become insolvent, as described in paragraph (a) of 
this section. However, the notice to participants and beneficiaries in 
pay status may be delivered concurrently with the first benefit payment 
made more than 30

[[Page 934]]

days after the determination of insolvency.
    (c) Methods of delivery. The notice of insolvency shall be delivered 
by mail or by hand to the PBGC and the interested parties described in 
paragraph (d) of this section, other than participants and beneficiaries 
who are not in pay status when the notice is required to be delivered. 
The notice to participants and beneficiaries who are not in pay status 
shall be provided in any manner reasonably calculated to reach those 
participants and beneficiaries. Reasonable methods of notification 
include, but are not limited to, posting the notice at participants' 
worksites or publishing the notice in a union newsletter or in a 
newspaper of general circulation in the area or areas where participants 
reside. Notice to a participant shall be deemed notice to that 
participant's beneficiary or beneficiaries.
    (d) Interested parties. For purposes of this part, the term 
``interested parties'' means--
    (1) Employers required to contribute to the plan;
    (2) Employee organizations that, for collective bargaining purposes, 
represent plan participants employed by such employers; and
    (3) Plan participants and beneficiaries.



Sec. 4245.4  Contents of notice of insolvency.

    (a) Notice to the PBGC. A notice of insolvency required to be filed 
with the PBGC pursuant to Sec. 4245.3 shall contain the information set 
forth below:
    (1) The name of the plan.
    (2) The name, address and telephone number of the plan sponsor and 
of the plan sponsor's duly authorized representative, if any.
    (3) The nine-digit Employer Identification Number (EIN) assigned by 
the IRS to the plan sponsor and the three-digit Plan Identification 
Number (PIN) assigned by the plan sponsor to the plan, and, if 
different, the EIN or PIN last filed with the PBGC. If no EIN or PIN has 
been assigned, the notice shall so indicate.
    (4) The IRS key district that has jurisdiction over determination 
letters with respect to the plan.
    (5) The case number assigned to the plan by the PBGC. If the plan 
has no case number, the notice shall state whether the plan has 
previously filed a notice of insolvency with the PBGC and, if so, the 
date on which the notice was filed.
    (6) The plan year or years for which the plan sponsor has determined 
that the plan is or may become insolvent.
    (7) A copy of the plan document, including the last restatement of 
the plan and all subsequent amendments in effect, or to become 
effective, during the insolvency year or years. However, if a copy of 
the plan document was submitted to the PBGC with a previous notice of 
insolvency or notice of insolvency benefit level, only subsequent plan 
amendments need be submitted, and the notice shall state when the copy 
of the plan document was filed.
    (8) A copy of the most recent actuarial valuation for the plan and a 
copy of the most recent Schedule B (Form 5500) filed for the plan, if 
the Schedule B contains more recent information than the actuarial 
valuation. If the actuarial valuation or Schedule B was previously 
submitted to the PBGC, it may be omitted, and the notice shall state the 
date on which the document was filed and that the information is still 
accurate and complete.
    (9) The estimated amount of annual benefit payments under the plan 
(determined without regard to the insolvency) for each insolvency year.
    (10) The estimated amount of the plan's available resources for each 
insolvency year.
    (11) A certification, signed by the plan sponsor (or a duly 
authorized representative), that notices of insolvency have been given 
to all interested parties in accordance with the requirements of this 
part.
    (b) Notices to interested parties. A notice of insolvency required 
under Sec. 4245.3 to be given to an interested party, as defined in 
Sec. 4245.3(d), shall contain the information set forth below:
    (1) The name of the plan.
    (2) The plan year or years for which the plan sponsor has determined 
that the plan is or may become insolvent.

[[Page 935]]

    (3) The estimated amount of annual benefit payment under the plan 
(determined without regard to the insolvency) for each insolvency year.
    (4) The estimated amount of the plan's available resources for each 
insolvency year.
    (5) A statement that, during the insolvency year, benefits above the 
amount that can be paid from available resources or the level guaranteed 
by the PBGC, whichever is greater, will be suspended, with a brief 
explanation of which benefits are guaranteed by the PBGC. The following 
statement may be included as an explanation of PBGC-guaranteed benefits:

Should the plan become insolvent, each participant's benefit guaranteed 
by the Pension Benefit Guaranty Corporation (PBGC) is determined as 
follows. Each participant's nonforfeitable monthly benefit payable under 
the plan at retirement is computed. This benefit is then divided by the 
participant's years of credited service under the plan. Of the resulting 
figure (the accrual rate), the first $5 is guaranteed at 100%. Any 
additional amount (up to $15) is either 75% or 65% guaranteed, depending 
on the past funding practices of the plan. Any remaining amount that 
exceeds $20 is not guaranteed. The PBGC guarantees the payment of a 
monthly benefit equal to this adjusted accrual rate times years of 
credited service. The PBGC does not guarantee benefits or benefit 
increases that have been in effect for fewer than 60 months before the 
plan becomes insolvent or is amended to reduce accrued benefits.

    (6) The name, address, and telephone number of the plan 
administrator or other person designated by the plan sponsor to answer 
inquiries concerning benefits during the plan's insolvency.



Sec. 4245.5  Notice of insolvency benefit level.

    (a) Requirement of notice. Except as provided in paragraph (b) of 
this section, for each insolvency year the plan sponsor shall notify the 
PBGC and the interested parties, as defined in Sec. 4245.3(d), of the 
level of benefits expected to be paid during the year (the ``insolvency 
benefit level''). These notices shall be delivered in the manner and 
within the time prescribed in this section and shall contain the 
information described in Sec. 4245.6.
    (b) Waiver of notice to certain interested parties. The notice of 
insolvency benefit level required under this section need not be given 
to interested parties, other than participants and beneficiaries who are 
in pay status or are reasonably expected to enter pay status during the 
insolvency year, for an insolvency year immediately following the plan 
year in which a notice of insolvency was required to be delivered 
pursuant to Sec. 4245.3, provided that the notice of insolvency was in 
fact delivered.
    (c) When delivered. The plan sponsor shall mail or otherwise deliver 
the required notices of insolvency benefit level no later than 60 days 
before the beginning of the insolvency year, except that if the 
determination of insolvency is made fewer than 120 days before the 
beginning of the insolvency year, the notices shall be delivered within 
60 days after the date of the plan sponsor's determination.
    (d) Methods of delivery. The notice of insolvency benefit level 
shall be delivered by mail or by hand to the PBGC and to the interested 
parties described in Sec. 4245.3(d), other than participants and 
beneficiaries who are neither in pay status nor reasonably expected to 
enter pay status during the insolvency year for which the notice is 
given. The notice to participants and beneficiaries not in pay status, 
nor reasonably expected to enter pay status during the insolvency year, 
shall be provided in any manner reasonably calculated to reach those 
participants and beneficiaries. Reasonable methods of notification 
include, but are not limited to, posting the notice at participants' 
worksites or publishing the notice in a union newsletter or in a 
newspaper of general circulation in the area or areas where participants 
reside. Notice to a participant shall be deemed notice to that 
participant's beneficiary or beneficiaries.



Sec. 4245.6  Contents of notice of insolvency benefit level.

    (a) Notice to the PBGC. A notice of insolvency benefit level 
required to be filed with the PBGC pursuant to Sec. 4245.5(a) shall 
contain the information set forth below, except as provided in the next 
sentence. The information required in paragraphs (a)(7) to (a)(10) need 
be submitted only if it is different

[[Page 936]]

from the information submitted to the PBGC with the notice of insolvency 
filed for that insolvency year (see Sec. 4245.4 (a)(7) to (a)(10)) or 
the notice of insolvency benefit level filed for a prior year. When any 
information is omitted under this exception, the notice shall so state 
and indicate when the notice of insolvency or prior notice of insolvency 
benefit level was filed.
    (1) The name of the plan.
    (2) The name, address and telephone number of the plan sponsor and 
of the plan sponsor's authorized representative, if any.
    (3) The nine-digit Employer Identification Number (EIN) assigned by 
the IRS to the plan sponsor and the three-digit Plan Identification 
Number (PIN) assigned by the plan sponsor to the plan, and, if 
different, the EIN or PIN last filed with the PBGC. If no EIN or PIN has 
been assigned, the notice shall so indicate.
    (4) The IRS key district that has jurisdiction over determination 
letters with respect to the plan.
    (5) The case number assigned to the plan by the PBGC.
    (6) The plan year for which the notice is filed.
    (7) A copy of the plan document, including any amendments, in effect 
during the insolvency year.
    (8) A copy of the most recent actuarial valuation for the plan and a 
copy of the most recent Schedule B (Form 5500) filed for the plan, if 
the Schedule B contains more recent information than the actuarial 
valuation.
    (9) The estimated amount of annual benefit payments under the plan 
(determined without regard to the insolvency) for the insolvency year.
    (10) The estimated amount of the plan's available resources for the 
insolvency year.
    (11) The estimated amount of the annual benefit payments guaranteed 
by the PBGC for the insolvency year.
    (12) The amount of financial assistance, if any, requested from the 
PBGC.
    (13) A certification, signed by the plan sponsor (or a duly 
authorized representative), that notices of insolvency benefit level 
have been given to all interested parties in accordance with the 
requirements of this part.

When financial assistance is requested, the PBGC may require the plan 
sponsor to submit additional information necessary to process the 
request.
    (b) Notices to interested parties other than participants in or 
entering pay status. A notice of insolvency benefit level required by 
Sec. 4245.5(a) to be delivered to interested parties, as defined in 
Sec. 4245.3(d), other than a notice to a participant or beneficiary who 
is in pay status or is reasonably expected to enter pay status during 
the insolvency year, shall include the information set forth below:
    (1) The name of the plan.
    (2) The plan year for which the notice is issued.
    (3) The estimated amount of annual benefit payments under the plan 
(determined without regard to the insolvency) for the insolvency year.
    (4) The estimated amount of the plan's available resources for the 
insolvency year.
    (5) The amount of financial assistance, if any, requested from the 
PBGC.
    (c) Notices to participants and beneficiaries in or entering pay 
status. A notice of insolvency benefit level required by Sec. 4245.5(a) 
to be delivered to participants and beneficiaries who are in pay status 
or are reasonably expected to enter pay status during the insolvency 
year for which the notice is given, shall include the following 
information:
    (1) The name of the plan.
    (2) The plan year for which the notice is issued.
    (3) A statement of the monthly benefit expected to be paid to the 
participant or beneficiary during the insolvency year.
    (4) A statement that in subsequent plan years, depending on the 
plan's available resources, this benefit level may be increased or 
decreased but will not fall below the level guaranteed by the PBGC, and 
that the participant or beneficiary will be notified in advance of the 
new benefit level if it is less than his full nonforfeitable benefit 
under the plan.
    (5) The name, address, and telephone number of the plan 
administrator or other person designated by the plan sponsor to answer 
inquiries concerning benefits during the plan's insolvency.

[[Page 937]]



Sec. 4245.7  PBGC address.

    All notices required to be filed with the PBGC under this part shall 
be addressed to Reports Processing, Insurance Operations Department, 
Pension Benefit Guaranty Corporation, 1200 K Street NW., Washington, DC 
20005-4026.

(Approved by the Office of Management and Budget under control number 
1212-0033)



PART 4261--FINANCIAL ASSISTANCE TO MULTIEMPLOYER PLANS--Table of Contents




    Source: 61 FR 34118, July 1, 1996, unless otherwise noted.



Sec. 4261.1  Cross-reference.

    See Sec. 4281.47 for procedures for applying to the PBGC for 
financial assistance under section 4261 of ERISA.



PART 4281--DUTIES OF PLAN SPONSOR FOLLOWING MASS WITHDRAWAL--Table of Contents




                      Subpart A--General Provisions

Sec.
4281.1  Purpose and scope.
4281.2  Definitions.
4281.3  Submission of documents.
4281.4  Collection of information.

          Subpart B--Valuation of Plan Benefits and Plan Assets

4281.11  Valuation dates.
4281.12  Benefits to be valued.
4281.13  Benefit valuation methods--in general.
4281.14  Mortality assumptions.
4281.15  [Reserved]
4281.16  Benefit valuation methods--plans closing out.
4281.17  Asset valuation methods--in general.
4281.18  Outstanding claims for withdrawal liability.

                      Subpart C--Benefit Reductions

4281.31  Plan amendment.
4281.32  Notices of benefit reductions.
4281.33  Restoration of benefits.

                     Subpart D--Benefit Suspensions

4281.41  Benefit suspensions.
4281.42  Retroactive payments.
4281.43  Notices of insolvency and annual updates.
4281.44  Contents of notices of insolvency and annual updates.
4281.45  Notices of insolvency benefit level.
4281.46  Contents of notices of insolvency benefit level.
4281.47  Application for financial assistance.

    Authority: 29 U.S.C. 1302(b)(3), 1341a, 1399(c)(1)(D), and 1441.

    Source: 61 FR 34118, July 1, 1996, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 4281.1  Purpose and scope.

    (a) General--(1) Purpose. When a multiemployer plan terminates by 
mass withdrawal under section 4041A(a)(2) of ERISA, the plan's assets 
and benefits must be valued annually under section 4281(b) of ERISA, and 
plan benefits may have to be reduced or suspended to the extent provided 
in section 4281 (c) or (d). This part implements the provisions of 
section 4281 and provides rules for applying for financial assistance 
from the PBGC under section 4261 of ERISA. The plan valuation rules in 
this part also apply to the determination of reallocation liability 
under section 4219(c)(1)(D) of ERISA and subpart B of part 4219 of this 
chapter for multiemployer plans that undergo mass withdrawal (with or 
without termination).
    (2) Scope. This part applies to multiemployer plans covered by title 
IV of ERISA that have terminated by mass withdrawal under section 
4041A(a)(2) of ERISA (including plans created by partition pursuant to 
section 4233 of ERISA). Subpart B of this part also applies to covered 
multiemployer plans that have undergone mass withdrawal without 
terminating.
    (b) Subpart B. Subpart B establishes rules for determining the value 
of multiemployer plan benefits and assets, including outstanding claims 
for withdrawal liability, for plans required to perform annual 
valuations under section 4281(b) of ERISA or allocate unfunded vested 
benefits under section 4219(c)(1)(D) of ERISA.
    (c) Subpart C. Subpart C sets forth procedures under which the plan 
sponsor of a terminated plan shall amend the plan to reduce benefits 
subject to reduction in accordance with section 4281(c) of ERISA and 
Sec. 4041A.24(b) of

[[Page 938]]

this chapter. Subpart C applies to a plan for which the annual valuation 
required by Sec. 4041A.24(a) indicates that the value of nonforfeitable 
benefits under the plan exceeds the value of the plan's assets 
(including claims for withdrawal liability) if, at the end of the plan 
year for which that valuation was done, the plan provided any benefits 
subject to reduction. Benefit reductions required to be made under 
subpart C shall not apply to accrued benefits under plans or plan 
amendments adopted on or before March 26, 1980, or under collective 
bargaining agreements entered into on or before March 26, 1980.
    (d) Subpart D. Subpart D sets forth the procedures under which the 
plan sponsor of an insolvent plan must suspend benefit payments and 
issue insolvency notices in accordance with section 4281(d) of ERISA and 
Sec. 4041A.25 (c) and (d) of this chapter. Subpart D applies to a plan 
that has been amended under section 4281(c) of ERISA and subpart C of 
this part to eliminate all benefits subject to reduction and to a plan 
that provided no benefits subject to reduction as of the date on which 
the plan terminated.



Sec. 4281.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
annuity, employer, ERISA, fair market value, IRS, insurer, irrevocable 
commitment, mass withdrawal, multiemployer plan, nonforfeitable benefit, 
normal retirement age, PBGC, person, plan, plan administrator, and plan 
year.
    In addition, for purposes of this part:
    Available resources means, for a plan year, available resources as 
described in section 4245(b)(3) of ERISA.
    Benefits subject to reduction means those benefits accrued under 
plan amendments (or plans) adopted after March 26, 1980, or under 
collective bargaining agreements entered into after March 26, 1980, that 
are not eligible for the PBGC's guarantee under section 4022A(b) of 
ERISA.
    Financial assistance means financial assistance from the PBGC under 
section 4261 of ERISA.
    Insolvency benefit level means the greater of the resource benefit 
level or the benefit level guaranteed by the PBGC for each participant 
and beneficiary in pay status.
    Insolvency year means insolvency year as described in section 
4245(b)(4) of ERISA.
    Insolvent means that a plan is unable to pay benefits when due 
during the plan year. A plan terminated by mass withdrawal is not 
insolvent unless it has been amended to eliminate all benefits that are 
subject to reduction under section 4281(c), or, in the absence of an 
amendment, no benefits under the plan are subject to reduction under 
section 4281(c) of ERISA.
    Pro rata means that the required benefit reduction or payment shall 
be allocated among affected participants in the same proportion that 
each such participant's nonforfeitable benefits under the plan bear to 
all nonforfeitable benefits of those participants under the plan.
    Reasonably expected to enter pay status means, with respect to plan 
participants and beneficiaries, persons (other than those in pay status) 
who, according to plan records, are disabled, have applied for benefits, 
or have reached or will reach during the applicable period the normal 
retirement age under the plan, and any others whom it is reasonable for 
the plan sponsor to expect to enter pay status during the applicable 
period.
    Resource benefit level means resource benefit level as described in 
section 4245(b)(2) of ERISA.
    Valuation date means the last day of the plan year in which the plan 
terminates and the last day of each plan year thereafter.



Sec. 4281.3  Submission of documents.

    (a) Filing date. Any notice, document or information required to be 
filed with the PBGC under this part shall be considered filed on the 
date of the United States postmark stamped on the cover in which the 
document or information is mailed, provided that the postmark was made 
by the United States Postal Service and the document was mailed postage 
prepaid, properly packaged and addressed to the PBGC. If these 
conditions are not met, the document shall be considered filed on the 
date on which it was received by the PBGC.

[[Page 939]]

    (b) Address. All notices, documents and information required to be 
filed with the PBGC under this part shall be addressed to Reports 
Processing, Insurance Operations Department, Pension Benefit Guaranty 
Corporation, 1200 K Street NW., Washington, DC 20005-4026.



Sec. 4281.4  Collection of information.

    The collection of information requirements contained in this part 
have been approved by the Office of Management and Budget under control 
number 1212-0032.



          Subpart B--Valuation of Plan Benefits and Plan Assets



Sec. 4281.11  Valuation dates.

    (a) Annual valuations of mass-withdrawal-terminated plans. The 
valuation dates for the annual valuation required under section 4281(b) 
of ERISA shall be the last day of the plan year in which the plan 
terminates and the last day of each plan year thereafter.
    (b) Valuations related to mass withdrawal reallocation liability. 
The valuation date for determining the value of unfunded vested benefits 
(for purposes of allocation) under section 4219(c)(1)(D) of ERISA shall 
be--
    (1) If the plan terminates by mass withdrawal, the last day of the 
plan year in which the plan terminates; or
    (2) If substantially all the employers withdraw from the plan 
pursuant to an agreement or arrangement to withdraw from the plan, the 
last day of the plan year as of which substantially all employers have 
withdrawn from the plan pursuant to the agreement or arrangement.



Sec. 4281.12  Benefits to be valued.

    (a) Form of benefit. The plan sponsor shall determine the form of 
each benefit to be valued, without regard to the form of benefit valued 
in any prior year, in accordance with the following rules:
    (1) If a benefit is in pay status as of the valuation date, the plan 
sponsor shall value the form of benefit being paid.
    (2) If a benefit is not in pay status as of the valuation date but a 
valid election with respect to the form of benefit has been made on or 
before the valuation date, the plan sponsor shall value the form of 
benefit so elected.
    (3) If a benefit is not in pay status as of the valuation date and 
no valid election with respect to the form of benefit has been made on 
or before the valuation date, the plan sponsor shall value the form of 
benefit that, under the terms of the plan or applicable law, is payable 
in the absence of a valid election.
    (b) Timing of benefit. The plan sponsor shall value benefits whose 
starting date is subject to election--
    (1) By assuming that the starting date of each benefit is the 
earliest date, not preceding the valuation date, that could be elected; 
or
    (2) By using any other assumption that the plan sponsor demonstrates 
to the satisfaction of the PBGC is more reasonable under the 
circumstances.



Sec. 4281.13  Benefit valuation methods--in general.

    Except as otherwise provided in Sec. 4281.16 (regarding plans that 
are closing out), the plan sponsor shall value benefits as of the 
valuation date by--
    (a) Using the interest assumptions described in Table I of appendix 
B to part 4044 of this chapter;
    (b) Using the mortality assumptions described in Sec. 4281.14;
    (c) Using interpolation methods, where necessary, at least as 
accurate as linear interpolation;
    (d) Applying valuation formulas that accord with generally accepted 
actuarial principles and practices; and
    (e) Adjusting the values to reflect the loading for expenses in 
accordance with appendix C to part 4044 of this chapter (substituting 
the term ``benefits'' for the term ``benefit liabilities (as defined in 
29 U.S.C. Sec. 1301(a)(16))'').

[61 FR 34118, July 1, 1996, as amended at 63 FR 38307, July 16, 1998]



Sec. 4281.14  Mortality assumptions.

    (a) General rule. Subject to paragraph (b) of this section 
(regarding certain death benefits), the plan administrator shall use the 
mortality factors prescribed in paragraphs (c), (d), and (e) of this 
section to value benefits under Sec. 4281.13.
    (b) Certain death benefits. If an annuity for one person is in pay 
status on

[[Page 940]]

the valuation date, and if the payment of a death benefit after the 
valuation date to another person, who need not be identifiable on the 
valuation date, depends in whole or in part on the death of the pay 
status annuitant, then the plan administrator shall value the death 
benefit using--
    (1) The mortality rates that are applicable to the annuity in pay 
status under this section to represent the mortality of the pay status 
annuitant; and
    (2) The mortality rates applicable to annuities not in pay status 
and to deferred benefits other than annuities, under paragraph (c) of 
this section, to represent the mortality of the death beneficiary.
    (c) Mortality rates for healthy lives. The mortality rates 
applicable to annuities in pay status on the valuation date that are not 
being received as disability benefits, to annuities not in pay status on 
the valuation date, and to deferred benefits other than annuities, are,-
-
    (1) For male participants, the rates in Table 1 of appendix A to 
part 4044 of this chapter, and
    (2) For female participants, the rates in Table 1 of appendix A to 
part 4044 of this chapter, set back 6 years.
    (d) Mortality rates for disabled lives (other than Social Security 
disability). The mortality rates applicable to annuities in pay status 
on the valuation date that are being received as disability benefits and 
for which neither eligibility for, nor receipt of, Social Security 
disability benefits is a prerequisite, are,--
    (1) For male participants, the rates in Table 1 of appendix A to 
part 4044 of this chapter, set forward 3 years, and
    (2) For female participants, the rates in Table 1 of appendix A to 
part 4044 of this chapter, set back 3 years.
    (e) Mortality rates for disabled lives (Social Security disability). 
The mortality rates applicable to annuities in pay status on the 
valuation date that are being received as disability benefits and for 
which either eligibility for, or receipt of, Social Security disability 
benefits is a prerequisite, are the rates in Tables 2-M and 2-F of 
appendix A to part 4044 of this chapter.

[61 FR 34118, July 1, 1996, as amended at 63 FR 38307, July 16, 1998]



Sec. 4281.15  [Reserved]



Sec. 4281.16  Benefit valuation methods--plans closing out.

    (a) Applicability. For purposes of the annual valuation required by 
section 4281(b) of ERISA, the plan sponsor shall value the plan's 
benefits in accordance with paragraph (b) of this section if,--
    (1) Plans closed out before valuation. Before the time when the 
valuation is performed, the plan has satisfied in full all liabilities 
for payment of nonforfeitable benefits, in a manner consistent with the 
terms of the plan and applicable law, by the purchase of one or more 
nonparticipating irrevocable commitments from one or more insurers, with 
respect to all benefits payable as annuities, and by the payment of 
single-sum cash distributions, with respect to benefits not payable as 
annuities; or
    (2) Plans to be closed out after valuation. As of the time when the 
valuation is performed, the plan sponsor reasonably expects that the 
plan will close out before the next annual valuation date and the plan 
sponsor has a currently exercisable bid or bids to provide the 
irrevocable commitment(s) described in paragraph (a)(1) of this section 
and the total cost of the irrevocable commitment(s) under the bid, plus 
the total amount of the single-sum cash distributions described in 
paragraph (a)(1), does not exceed the value of the plan's assets, 
exclusive of outstanding claims for withdrawal liability, as determined 
under this subpart.
    (b) Valuation rule. The present value of nonforfeitable benefits 
under this section is the total amount of single-sum cash distributions 
made or to be made plus the cost of the irrevocable commitment(s) 
purchased or to be purchased in order to satisfy in full all liabilities 
of the plan for nonforfeitable benefits.

[[Page 941]]



Sec. 4281.17  Asset valuation methods--in general.

    (a) General rule. The plan sponsor shall value plan assets as of the 
valuation date, using the valuation methods prescribed by this section 
and Sec. 4281.18 (regarding outstanding claims for withdrawal 
liability), and deducting administrative liabilities in accordance with 
paragraph (c) of this section.
    (b) Assets other than withdrawal liability claims. The plan sponsor 
shall value any plan asset (other than an outstanding claim for 
withdrawal liability) by such method or methods as the plan sponsor 
reasonably believes most accurately determine fair market value.
    (c) Adjustment for administrative liabilities. In determining the 
total value of plan assets, the plan sponsor shall subtract all plan 
liabilities, other than liabilities to pay benefits. For this purpose, 
any obligation to repay financial assistance received from the PBGC 
under section 4261 of ERISA is a plan liability other than a liability 
to pay benefits. The obligation to repay financial assistance shall be 
valued by determining the value of the scheduled payments in the same 
manner as prescribed in Sec. 4281.18(a) for valuing claims for 
withdrawal liability.



Sec. 4281.18  Outstanding claims for withdrawal liability.

    (a) Value of claim. The plan sponsor shall value an outstanding 
claim for withdrawal liability owed by an employer described in 
paragraph (b) of this section in accordance with paragraphs (a)(1) and 
(a)(2) of this section:
    (1) If the schedule of withdrawal liability payments provides for 
one or more series of equal payments, the plan sponsor shall value each 
series of payments as an annuity certain in accordance with the 
provisions of Sec. 4281.13.
    (2) If the schedule of withdrawal liability payments provides for 
one or more payments that are not part of a series of equal payments as 
described in paragraph (a)(1) of this section, the plan sponsor shall 
value each such unequal payment as a lump-sum payment in accordance with 
the provisions of Sec. 4281.13.
    (b) Employers neither liquidated nor in insolvency proceedings. The 
plan sponsor shall value an outstanding claim for withdrawal liability 
under paragraph (a) of this section if, as of the valuation date--
    (1) The employer has not been completely liquidated or dissolved; 
and
    (2) The employer is not the subject of any case or proceeding under 
title 11, United States Code, or any case or proceeding under similar 
provisions of state insolvency laws; except that the claim for 
withdrawal liability of an employer that is the subject of a proceeding 
described in this paragraph (b)(2) shall be valued under paragraph (a) 
of this section if the plan sponsor determines that the employer is 
reasonably expected to be able to pay its withdrawal liability in full 
and on time.
    (c) Claims against other employers. The plan sponsor shall value at 
zero any outstanding claim for withdrawal liability owed by an employer 
that does not meet the conditions set forth in paragraph (b) of this 
section.



                      Subpart C--Benefit Reductions



Sec. 4281.31  Plan amendment.

    The plan sponsor of a plan described in Sec. 4281.31 shall amend the 
plan to eliminate those benefits subject to reduction in excess of the 
value of benefits that can be provided by plan assets. Such reductions 
shall be effected by a pro rata reduction of all benefits subject to 
reduction or by elimination or pro rata reduction of any category of 
benefit. Benefit reductions required by this section shall apply only 
prospectively. An amendment required under this section shall take 
effect no later than six months after the end of the plan year for which 
it is determined that the value of nonforfeitable benefits exceeds the 
value of the plan's assets.



Sec. 4281.32  Notices of benefit reductions.

    (a) Requirement of notices. A plan sponsor of a multiemployer plan 
under which a plan amendment reducing benefits is adopted pursuant to 
section 4281(c) of ERISA shall so notify the PBGC and plan participants 
and beneficiaries whose benefits are reduced by

[[Page 942]]

the amendment. The notices shall be delivered in the manner and within 
the time prescribed, and shall contain the information described, in 
this section. The notice required in this section shall be filed in lieu 
of the notice described in section 4244A(b)(2) of ERISA.
    (b) When delivered. The plan sponsor shall mail or otherwise deliver 
the notices of benefit reduction no later than the earlier of--
    (1) 45 days after the amendment reducing benefits is adopted; or
    (2) The date of the first reduced benefit payment.
    (c) Method of delivery. The notices of benefit reductions shall be 
delivered by mail or by hand to the PBGC and to plan participants and 
beneficiaries who are in pay status when the notice is required to be 
delivered or who are reasonably expected to enter pay status before the 
end of the plan year after the plan year in which the amendment is 
adopted. The notice to other participants and beneficiaries whose 
benefit is reduced by the amendment shall be provided in any manner 
reasonably calculated to reach those participants and beneficiaries. 
Reasonable methods of notification include, but are not limited to, 
posting the notice at participants' worksites or publishing the notice 
in a union newsletter or newspaper of general circulation in the area or 
areas where participants reside. Notice to a participant shall be deemed 
notice to the participant's beneficiary or beneficiaries.
    (d) Contents of notice to the PBGC. A notice of benefit reduction 
required to be filed with the PBGC pursuant to paragraph (a) of this 
section shall contain the following information:
    (1) The name of the plan.
    (2) The name, address, and telephone number of the plan sponsor and 
of the plan sponsor's duly authorized representative, if any.
    (3) The nine-digit Employer Identification Number (EIN) assigned by 
the IRS to the plan sponsor and the three-digit Plan Number (PN) 
assigned by the plan sponsor to the plan, and, if different, the EIN or 
PN last filed with the PBGC. If no EIN or PN has been assigned, the 
notice shall so state.
    (4) The case number assigned by the PBGC to the filing of the plan's 
notice of termination pursuant to part 4041A, subpart B, of this 
chapter.
    (5) A statement that a plan amendment reducing benefits has been 
adopted, listing the date of adoption and the effective date of the 
amendment.
    (6) A certification, signed by the plan sponsor or its duly 
authorized representative, that notice of the benefit reductions has 
been given to all participants and beneficiaries whose benefits are 
reduced by the plan amendment, in accordance with the requirements of 
this section.
    (e) Contents of notice to participants and beneficiaries. A notice 
of benefit reductions required under paragraph (a) of this section to be 
given to plan participants and beneficiaries whose benefits are reduced 
by the amendment shall contain the following information:
    (1) The name of the plan.
    (2) A statement that a plan amendment reducing benefits has been 
adopted, listing the date of adoption and the effective date of the 
amendment.
    (3) A summary of the amendment, including a description of the 
effect of the amendment on the benefits to which it applies.
    (4) The name, address, and telephone number of the plan 
administrator or other person designated by the plan sponsor to answer 
inquiries concerning benefits.



Sec. 4281.33  Restoration of benefits.

    (a) General. The plan sponsor of a plan that has been amended to 
reduce benefits under this subpart shall amend the plan to restore those 
benefits before adopting any amendment increasing benefits under the 
plan. A plan is not required to make retroactive benefit payments with 
respect to any benefit that was reduced and subsequently restored in 
accordance with this section.
    (b) Notice to the PBGC. The plan sponsor shall notify the PBGC in 
writing of any restoration under this section. The notice shall include 
the information specified in Sec. 4281.32 (d)(1) through (d)(4); a 
statement that a plan amendment restoring benefits has been adopted, the 
date of adoption, and the effective date of the amendment; and a 
certification, signed by the plan sponsor

[[Page 943]]

or its duly authorized representative, that the amendment has been 
adopted in accordance with this section.



                     Subpart D--Benefit Suspensions



Sec. 4281.41  Benefit suspensions.

    If the plan sponsor determines that the plan is or is expected to be 
insolvent for a plan year, the plan sponsor shall suspend benefits to 
the extent necessary to reduce the benefits to the greater of the 
resource benefit level or the level of guaranteed benefits.



Sec. 4281.42  Retroactive payments.

    (a) Erroneous resource benefit level. If, by the end of a year in 
which benefits were suspended under Sec. 4281.41, the plan sponsor 
determines in writing that the plan's available resources in that year 
could have supported benefit payments above the resource benefit level 
determined for that year, the plan sponsor may distribute the excess 
resources to each affected participant and beneficiary who received 
benefit payments that year on a pro rata basis. The amount distributed 
to each participant under this paragraph may not exceed the amount that, 
when added to benefit payments already made, brings the total benefit 
for the plan year up to the total benefit provided under the plan.
    (b) Benefits paid below resource benefit level. If, by the end of a 
plan year in which benefits were suspended under Sec. 4281.41, any 
benefit has not been paid at the resource benefit level, amounts up to 
the resource benefit level that were unpaid shall be distributed to each 
affected participant and beneficiary on a pro rata basis to the extent 
possible, taking into account the plan's total available resources in 
that year.



Sec. 4281.43  Notices of insolvency and annual updates.

    (a) Requirement of notices of insolvency. A plan sponsor that 
determines that the plan is, or is expected to be, insolvent for a plan 
year shall issue notices of insolvency to the PBGC and to plan 
participants and beneficiaries. Once notices of insolvency have been 
issued to the PBGC and to plan participants and beneficiaries, no notice 
of insolvency needs to be issued for subsequent insolvency years. 
Notices shall be delivered in the manner and within the time prescribed 
in this section and shall contain the information described in 
Sec. 4281.44.
    (b) Requirement of annual updates. A plan sponsor that has issued 
notices of insolvency to the PBGC and to plan participants and 
beneficiaries shall thereafter issue annual updates to the PBGC and 
participants and beneficiaries for each plan year beginning after the 
plan year for which the notice of insolvency was issued. However, the 
plan sponsor need not issue an annual update to plan participants and 
beneficiaries who are issued notices of insolvency benefit level in 
accordance with Sec. 4281.45 for the same insolvency year. A plan 
sponsor that, after issuing annual updates for a plan year, determines 
under Sec. 4041A.25(b) that the plan is or may be insolvent for that 
plan year need not issue revised annual updates. Annual updates shall be 
delivered in the manner and within the time prescribed in this section 
and shall contain the information described in Sec. 4281.44.
    (c) Notices of insolvency--when delivered. Except as provided in the 
next sentence, the plan sponsor shall mail or otherwise deliver the 
notices of insolvency no later than 30 days after the plan sponsor 
determines that the plan is or may be insolvent. However, the notice to 
plan participants and beneficiaries in pay status may be delivered 
concurrently with the first benefit payment made after the determination 
of insolvency.
    (d) Annual updates--when delivered. Except as provided in the next 
sentence, the plan sponsor shall mail or otherwise deliver annual 
updates no later than 60 days before the beginning of the plan year for 
which the annual update is issued. A plan sponsor that determines under 
Sec. 4041A.25(b) that the plan is or may be insolvent for a plan year 
and that has not at that time issued annual updates for that year, shall 
mail or otherwise deliver the annual updates by the later of 60 days 
before the beginning of the plan year or 30 days after the date of the 
plan sponsor's determination under Sec. 4041A.25(b).
    (e) Notices of insolvency--method of delivery. The notices of 
insolvency shall be delivered by mail or by hand to the

[[Page 944]]

PBGC and to plan participants and beneficiaries in pay status when the 
notice is required to be delivered. Notice to participants and 
beneficiaries not in pay status shall be provided in any manner 
reasonably calculated to reach those participants and beneficiaries. 
Reasonable methods of notification include, but are not limited to, 
posting the notice at participants' worksites or publishing the notice 
in a union newsletter or newspaper of general circulation in the area or 
areas where participants reside. Notice to a participant shall be deemed 
notice to that participant's beneficiary or beneficiaries.
    (f) Annual updates--method of delivery. Each annual update shall be 
delivered by mail or by hand to the PBGC. Each annual update to plan 
participants and beneficiaries shall be provided in any manner 
reasonably calculated to reach participants and beneficiaries. 
Reasonable methods of notification include, but are not limited to, 
posting the notice at participants' worksites and publishing the notice 
in a union newsletter of general circulation in the area or areas where 
participants reside. Notice to a participant shall be deemed notice to 
that participant's beneficiary or beneficiaries.



Sec. 4281.44  Contents of notices of insolvency and annual updates.

    (a) Notice of insolvency to the PBGC. A notice of insolvency 
required under Sec. 4281.43(a) to be filed with the PBGC shall contain 
the following information:
    (1) The name of the plan.
    (2) The name, address, and telephone number of the plan sponsor and 
of the plan sponsor's duly authorized representative, if any.
    (3) The nine-digit Employer Identification Number (EIN) assigned by 
the IRS to the plan sponsor and the three-digit Plan Number (PN) 
assigned by the plan sponsor to the plan, and, if different, the EIN or 
PN last filed with the PBGC. If no EIN or PN has been assigned, the 
notice shall so state.
    (4) The IRS Key District that has jurisdiction over determination 
letters with respect to the plan.
    (5) The case number assigned by the PBGC to the filing of the plan's 
notice of termination pursuant to part 4041A, subparts A and B, of this 
chapter.
    (6) The plan year for which the plan sponsor has determined that the 
plan is or may be insolvent.
    (7) A copy of the plan document currently in effect, i.e., a copy of 
the last restatement of the plan and all subsequent amendments. However, 
if a copy of the plan document was submitted to the PBGC with a previous 
filing, only subsequent plan amendments need be submitted, and the 
notice shall state when the copy of the plan document was filed.
    (8) A copy of the most recent actuarial valuation for the plan 
(i.e., the most recent report submitted to the plan in connection with a 
valuation of plan assets and liabilities, which shall be performed in 
accordance with subpart B of this part). If the actuarial valuation was 
previously submitted to the PBGC, it may be omitted, and the notice 
shall state the date on which the document was filed and that the 
information is still accurate and complete.
    (9) The estimated amount of annual benefit payments under the plan 
(determined without regard to the insolvency) for the insolvency year.
    (10) The estimated amount of the plan's available resources for the 
insolvency year.
    (11) The estimated amount of the annual benefits guaranteed by the 
PBGC for the insolvency year.
    (12) A statement indicating whether the notice of insolvency is the 
result of an insolvency determination under Sec. 4041A.25 (a) or (b).
    (13) A certification, signed by the plan sponsor or its duly 
authorized representative, that notices of insolvency have been given to 
all plan participants and beneficiaries in accordance with this part.
    (b) Notice of insolvency to participants and beneficiaries. A notice 
of insolvency required under Sec. 4281.43(a) to be issued to plan 
participants and beneficiaries shall contain the following information:
    (1) The name of the plan.
    (2) A statement of the plan year for which the plan sponsor has 
determined that the plan is or may be insolvent.

[[Page 945]]

    (3) A statement that benefits above the amount that can be paid from 
available resources or the level guaranteed by the PBGC, whichever is 
greater, will be suspended during the insolvency year, with a brief 
explanation of which benefits are guaranteed by the PBGC.
    (4) The name, address, and telephone number of the plan 
administrator or other person designated by the plan sponsor to answer 
inquiries concerning benefits.
    (c) Annual update to the PBGC. Each annual update required by 
Sec. 4281.43(b) to be filed with the PBGC shall contain the following 
information:
    (1) The case number assigned by the PBGC to the filing of the plan's 
notice of termination pursuant to part 4041A, subparts A and B, of this 
chapter.
    (2) A copy of the annual update to plan participants and 
beneficiaries, as described in paragraph (d) of this section, for the 
plan year.
    (3) A statement indicating whether the annual update is the result 
of an insolvency determination under Sec. 4041A.25(a) or (b).
    (4) A certification, signed by the plan sponsor or a duly authorized 
representative, that the annual update has been given to all plan 
participants and beneficiaries in accordance with this part.
    (d) Annual updates to participants and beneficiaries. Each annual 
update required by Sec. 4281.43(b) to be issued to plan participants and 
beneficiaries shall contain the following information:
    (1) The name of the plan.
    (2) The date the notice of insolvency was issued and the insolvency 
year identified in the notice.
    (3) The plan year to which the annual update pertains and the plan 
sponsor's determination whether the plan may be insolvent in that year.
    (4) If the plan may be insolvent for the plan year, a statement that 
benefits above the amount that can be paid from available resources or 
the level guaranteed by the PBGC, whichever is greater, will be 
suspended during the insolvency year, with a brief explanation of which 
benefits are guaranteed by the PBGC.
    (5) If the plan will not be insolvent for the plan year, a statement 
that full nonforfeitable benefits under the plan will be paid.
    (6) The name, address, and telephone number of the plan 
administrator or other person designated by the plan sponsor to answer 
inquiries concerning benefits.



Sec. 4281.45  Notices of insolvency benefit level.

    (a) Requirement of notices. For each insolvency year, the plan 
sponsor shall issue a notice of insolvency benefit level to the PBGC and 
to plan participants and beneficiaries in pay status or reasonably 
expected to enter pay status during the insolvency year. The notices 
shall be delivered in the manner and within the time prescribed in this 
section and shall contain the information described in Sec. 4281.46.
    (b) When delivered. The plan sponsor shall mail or otherwise deliver 
the notices of insolvency benefit level no later than 60 days before the 
beginning of the insolvency year. A plan sponsor that determines under 
Sec. 4041A.25(b) that the plan is or may be insolvent for a plan year 
shall mail or otherwise deliver the notices of insolvency benefit level 
by the later of 60 days before the beginning of the insolvency year or 
60 days after the date of the plan sponsor's determination under 
Sec. 4041A.25(b).
    (c) Method of delivery. The notices of insolvency benefit level 
shall be delivered by mail or by hand to the PBGC and to plan 
participants and beneficiaries in pay status or reasonably expected to 
enter pay status during the insolvency year.



Sec. 4281.46  Contents of notices of insolvency benefit level.

    (a) Notice to the PBGC. A notice of insolvency benefit level 
required by Sec. 4281.45(a) to be filed with the PBGC shall contain the 
information specified in Sec. 4281.44(a)(1) through (a)(5) and (a)(7) 
through (a)(11) and:
    (1) The insolvency year for which the notice is being filed.
    (2) The amount of financial assistance, if any, requested from the 
PBGC. (When financial assistance is requested, the plan sponsor shall 
submit an application in accordance with Sec. 4281.47.)

[[Page 946]]

    (3) A statement indicating whether the notice of insolvency benefit 
level is the result of an insolvency determination under 
Sec. 4041A.25(a) or (b).
    (4) A certification, signed by the plan sponsor or its duly 
authorized representative, that a notice of insolvency benefit level has 
been sent to all plan participants and beneficiaries in pay status or 
reasonably expected to enter pay status during the insolvency year, in 
accordance with this part.
    (b) Notice to participants in or entering pay status. A notice of 
insolvency benefit level required by Sec. 4281.45(a) to be delivered to 
plan participants and beneficiaries in pay status or reasonably expected 
to enter pay status during the insolvency year for which the notice is 
given, shall contain the following information:
    (1) The name of the plan.
    (2) The insolvency year for which the notice is being sent.
    (3) The monthly benefit that the participant or beneficiary may 
expect to receive during the insolvency year.
    (4) A statement that in subsequent plan years, depending on the 
plan's available resources, this benefit level may be increased or 
decreased but not below the level guaranteed by the PBGC, and that the 
participant or beneficiary will be notified in advance of the new 
benefit level if it is less than the participant's full nonforfeitable 
benefit under the plan.
    (5) The amount of the participant's or beneficiary's monthly 
nonforfeitable benefit under the plan.
    (6) The amount of the participant's or beneficiary's monthly benefit 
that is guaranteed by the PBGC.
    (7) The name, address, and telephone number of the plan 
administrator or other person designated by the plan sponsor to answer 
inquiries concerning benefits.



Sec. 4281.47  Application for financial assistance.

    (a) General. If the plan sponsor determines that the plan's resource 
benefit level for an insolvency year is below the level of benefits 
guaranteed by PBGC or that the plan will be unable to pay guaranteed 
benefits when due for any month during the year, the plan sponsor shall 
apply to the PBGC for financial assistance pursuant to section 4261 of 
ERISA. The application shall be filed within the time prescribed in 
paragraph (b) of this section. When the resource benefit level is below 
the guarantee level, the application shall contain the information set 
forth in paragraph (c) of this section. When the plan is unable to pay 
guaranteed benefits for any month, the application shall contain the 
information set forth in paragraph (d) of this section.
    (b) When to apply. When the plan sponsor determines a resource 
benefit level that is less than guaranteed benefits, it shall apply for 
financial assistance at the same time that it submits its notice of 
insolvency benefit level pursuant to Sec. 4281.45. When the plan sponsor 
determines an inability to pay guaranteed benefits for any month, it 
shall apply for financial assistance within 15 days after making that 
determination.
    (c) Contents of application--resource benefit level below level of 
guaranteed benefits. A plan sponsor applying for financial assistance 
because the plan's resource benefit level is below the level of 
guaranteed benefits shall file an application that includes the 
information specified in Sec. 4281.44 (a)(1) through (a)(5) and:
    (1) The insolvency year for which the application is being filed.
    (2) A participant data schedule showing each participant and 
beneficiary in pay status or reasonably expected to enter pay status 
during the year for which financial assistance is requested, listing for 
each--
    (i) Name;
    (ii) Sex;
    (iii) Date of birth;
    (iv) Credited service;
    (v) Vested accrued monthly benefit;
    (vi) Monthly benefit guaranteed by PBGC;
    (vii) Benefit commencement date; and
    (viii) Type of benefit.
    (d) Contents of application--unable to pay guaranteed benefits for 
any month. A plan sponsor applying for financial assistance because the 
plan is unable to pay guaranteed benefits for any month shall file an 
application that includes the data described in Sec. 4281.44 (a)(1)

[[Page 947]]

through (a)(5), the month for which financial assistance is requested, 
and the plan's available resources and guaranteed benefits payable in 
that month. The participant data schedule described in paragraph (c)(2) 
of this section shall be submitted upon the request of the PBGC.
    (e) Additional information. The PBGC may request any additional 
information that it needs to calculate or verify the amount of financial 
assistance necessary as part of the conditions of granting financial 
assistance pursuant to section 4261 of ERISA.

[[Page 948]]



           SUBCHAPTER K--MULTIEMPLOYER ENFORCEMENT PROVISIONS





PART 4302--PENALTIES FOR FAILURE TO PROVIDE CERTAIN MULTIEMPLOYER PLAN NOTICES--Table of Contents




Sec.
4302.1  Purpose and scope.
4302.2  Definitions.
4302.3  Penalty amount.

    Authority: 28 U.S.C. 2461 note, as amended by sec. 31001(s)(1), 
Pub.L. 104-134, 110 Stat. 1321-373; 29 U.S.C. 1302(b)(3), 1452.

    Source: 62 FR 36995, July 10, 1997, unless otherwise noted.



Sec. 4302.1  Purpose and scope.

    This part specifies the maximum daily amount of penalties for which 
a person may be liable to the PBGC under ERISA section 4302 for certain 
failures to provide multiemployer plan notices, as such amount has been 
adjusted to account for inflation pursuant to the Federal Civil Monetary 
Penalty Inflation Adjustment Act of 1990, as amended by the Debt 
Collection Improvement Act of 1996.



Sec. 4302.2  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: 
ERISA, multiemployer plan, and PBGC.



Sec. 4302.3  Penalty amount.

    The maximum daily amount of the penalty under section 4302 of ERISA 
shall be $110.

[[Page 949]]



     SUBCHAPTER L--INTERNAL AND ADMINISTRATIVE RULES AND PROCEDURES





PART 4901--EXAMINATION AND COPYING OF PENSION BENEFIT GUARANTY CORPORATION RECORDS--Table of Contents




                           Subpart A--General

Sec.
4901.1  Purpose and scope.
4901.2  Definitions.
4901.3  Disclosure facilities.
4901.4  Information maintained in public reference room.
4901.5  Disclosure of other information.

                Subpart B--Procedure for Formal Requests

4901.11  Submittal of requests for access to records.
4901.12  Description of information requested.
4901.13  Receipt by agency of request.
4901.14  Action on request.
4901.15  Appeals from denial of requests.
4901.16  Extensions of time.
4901.17  Exhaustion of administrative remedies.

                  Subpart C--Restrictions on Disclosure

4901.21  Restrictions in general.
4901.22  Partial disclosure.
4901.23  Record of concern to more than one agency.
4901.24  Special rules for trade secrets and confidential commercial or 
          financial information submitted to the PBGC.

                             Subpart D--Fees

4901.31  Charges for services.
4901.32  Fee schedule.
4901.33  Payment of fees.
4901.34  Waiver or reduction of charges.

    Authority: 5 U.S.C. 552; 29 U.S.C. 1302(b)(3); E.O. 12600, 52 FR 
23781.

    Source: 61 FR 34123, July 1, 1996, unless otherwise noted.



                           Subpart A--General



Sec. 4901.1  Purpose and scope.

    This part contains the general rules of the PBGC implementing the 
Freedom of Information Act. This part sets forth generally the 
categories of records accessible to the public, the types of records 
subject to prohibitions or restrictions on disclosure, and the procedure 
whereby members of the public may obtain access to and inspect and copy 
information from records in the custody of the PBGC.



Sec. 4901.2  Definitions.

    In addition to terminology in part 4001 of this chapter, as used in 
this part--
    Agency, person, party, rule, rulemaking, order, and adjudication 
have the meanings attributed to these terms by the definitions in 5 
U.S.C. 551, except where the context demonstrates that a different 
meaning is intended, and except that for purposes of the Freedom of 
Information Act the term agency as defined in 5 U.S.C. 551 includes any 
executive department, military department, Government corporation, 
Government controlled corporation, or other establishment in the 
executive branch of the Government (including the Executive Office of 
the President) or any independent regulatory agency.
    Disclosure officer means the designated official in the 
Communications and Public Affairs Department, PBGC.
    FOIA means the Freedom of Information Act, as amended (5 U.S.C. 
552).
    Working day means any weekday excepting Federal holidays.



Sec. 4901.3  Disclosure facilities.

    (a) Public reference room. The PBGC will maintain a public reference 
room in its offices located at 1200 K Street NW., Washington, DC 20005-
4026, wherein persons may inspect and copy all records made available 
for such purposes under this part.
    (b) No withdrawal of records. No person may remove any record made 
available for inspection or copying under this part from the place where 
it is made available except with the written consent of the General 
Counsel of the PBGC.

[[Page 950]]



Sec. 4901.4  Information maintained in public reference room.

    The PBGC shall make available in its public reference room for 
inspection and copying without formal request--
    (a) Information published in the Federal Register. Copies of Federal 
Register documents published by the PBGC, and copies of Federal Register 
indexes;
    (b) Information in PBGC publications. Copies of informational 
material, such as press releases, pamphlets, and other material 
ordinarily made available to the public without cost as part of a public 
information program;
    (c) Rulemaking proceedings. All papers and documents made a part of 
the official record in administrative proceedings conducted by the PBGC 
in connection with the issuance, amendment, or revocation of rules and 
regulations or determinations having general applicability or legal 
effect with respect to members of the public or a class thereof (with a 
register being kept to identify the persons who inspect the records and 
the times at which they do so);
    (d) Except to the extent that deletion of identifying details is 
required to prevent a clearly unwarranted invasion of personal privacy 
(in which case the justification for the deletion shall be fully 
explained in writing)--
    (1) Adjudication proceedings. Final opinions, orders, and (except to 
the extent that an exemption provided by FOIA must be asserted in the 
public interest to prevent a clearly unwarranted invasion of personal 
privacy or violation of law or to ensure the proper discharge of the 
functions of the PBGC) other papers and documents made a part of the 
official record in adjudication proceedings conducted by the PBGC,
    (2) Policy statements and interpretations. Statements of policy and 
interpretations affecting a member of the public which have been adopted 
by the PBGC and which have not been published in the Federal Register, 
and
    (3) Staff manuals and instructions. Administrative staff manuals and 
instructions to staff issued by the PBGC that affect any member of the 
public, and
    (e) Indexes to certain records. Current indexes (updated at least 
quarterly) identifying materials described in paragraph (a)(2) of FOIA 
and paragraph (d) of this section.



Sec. 4901.5  Disclosure of other information.

    (a) In general. Upon the request of any person submitted in 
accordance with subpart B of this part, the disclosure officer shall 
make any document (or portion thereof) from the records of the PBGC in 
the custody of any official of the PBGC available for inspection and 
copying unless exempt from disclosure under the provisions of subsection 
(b) of FOIA and subpart C of this part. The subpart B procedures must be 
used for records that are not made available in the PBGC's public 
reference room under Sec. 4901.4 and may be used for records that are 
available in the public reference room. Records that could be produced 
only by manipulation of existing information (such as computer analyses 
of existing data), thus creating information not previously in being, 
are not records of the PBGC and are not required to be furnished under 
FOIA.
    (b) Discretionary disclosure. Notwithstanding the applicability of 
an exemption under subsection (b) of FOIA and subpart C of this part 
(other than an exemption under paragraph (b)(1) or (b)(3) of FOIA and 
Sec. 4901.21 (a)(2) and (a)(3)), the disclosure officer may (subject to 
18 U.S.C. 1905 and Sec. 4901.21(a)(1)) make any document (or portion 
thereof) from the records of the PBGC available for inspection and 
copying if the disclosure officer determines that disclosure furthers 
the public interest and does not impede the discharge of any of the 
functions of the PBGC.



                Subpart B--Procedure for Formal Requests



Sec. 4901.11  Submittal of requests for access to records.

    A request to inspect or copy any record subject to this subpart 
shall be submitted in writing to the Disclosure Officer, Communications 
and Public Affairs Department, Pension Benefit Guaranty Corporation, 
1200 K Street

[[Page 951]]

NW., Washington, DC 20005-4026. To expedite processing, the words ``FOIA 
request'' should appear clearly on the request and its envelope.



Sec. 4901.12  Description of information requested.

    (a) In general. Each request should reasonably describe the record 
or records sought in sufficient detail to permit identification and 
location with a reasonable amount of effort. So far as practicable, the 
request should specify the subject matter of the record, the place where 
and date or approximate date when made, the person or office that made 
it, and any other pertinent identifying details.
    (b) Deficient descriptions. If the description is insufficient to 
enable a professional employee familiar with the subject area of the 
request to locate the record with a reasonable amount of effort, the 
disclosure officer will notify the requester and, to the extent 
possible, indicate the additional information required. Every reasonable 
effort shall be made to assist a requester in the identification and 
location of the record or records sought. Records will not be withheld 
merely because it is difficult to find them.
    (c) Requests for categories of records. Requests calling for all 
records falling within a reasonably specific category will be regarded 
as reasonably described within the meaning of this section and paragraph 
(a)(3) of FOIA if the PBGC is reasonably able to determine which records 
come within the request and to search for and collect them without 
unduly interfering with PBGC operations. If PBGC operations would be 
unduly disrupted, the disclosure officer shall promptly notify the 
requester and provide an opportunity to confer in an attempt to reduce 
the request to manageable proportions.



Sec. 4901.13  Receipt by agency of request.

    The disclosure officer shall note the date and time of receipt on 
each request for access to records. A request shall be deemed received 
and the period within which action on the request shall be taken, as set 
forth in Sec. 4901.14 of this part, shall begin on the next business day 
following such date, except that a request shall be deemed received only 
if and when the PBGC receives--
    (a) A sufficient description under Sec. 4901.12;
    (b) Payment or assurance of payment if required under 
Sec. 4901.33(b); and
    (c) The requester's consent to pay substantial search, review, and/
or duplication charges under subpart D of this part if the PBGC 
determines that such charges may be substantial and so notifies the 
requester. Consent may be in the form of a statement that costs under 
subpart D will be acceptable either in any amount or up to a specified 
amount. To avoid possible delay, a requester may include such a 
statement in a request.



Sec. 4901.14  Action on request.

    (a) Time for action. Promptly and in any event within 10 working 
days after receipt of a disclosure request (subject to extension under 
Sec. 4901.16), the disclosure officer shall take action with respect to 
each requested item (or portion of an item) under either paragraph (b), 
(c), or (d) of this section.
    (b) Request granted. If the disclosure officer determines that the 
request should be granted, the requester shall be so advised and the 
records shall be promptly made available to the requester.
    (c) Request denied. If the disclosure officer determines that the 
request should be denied, the requester shall be so advised in writing 
with a brief statement of the reasons for the denial, including a 
reference to the specific exemption(s) authorizing the denial and an 
explanation of how each such exemption applies to the matter withheld. 
The denial shall also include the name and title or position of the 
person(s) responsible for the denial and outline the appeal procedure 
available.
    (d) Records not promptly located. As to records that are not located 
in time to make an informed determination, the disclosure officer may 
deny the request and so advise the requester in writing with an 
explanation of the circumstances. The denial shall also include the name 
and title or position of the person(s) responsible for the denial, 
outline the appeal procedure available, and advise the requester that 
the

[[Page 952]]

search or examination will be continued and that the denial may be 
withdrawn, modified, or confirmed when processing of the request is 
completed.



Sec. 4901.15  Appeals from denial of requests.

    (a) Submittal of appeals. If a disclosure request is denied in whole 
or in part by the disclosure officer, the requester may file a written 
appeal within 30 days from the date of the denial or, if later (in the 
case of a partial denial), 30 days from the date the requester receives 
the disclosed material. The appeal shall state the grounds for appeal 
and any supporting statements or arguments, and shall be addressed to 
the General Counsel, Pension Benefit Guaranty Corporation, 1200 K Street 
NW., Washington, DC 20005-4026. To expedite processing, the words ``FOIA 
appeal'' should appear clearly on the appeal and its envelope.
    (b) Receipt and consideration of appeal. The General Counsel shall 
note the date and time of receipt on each appeal and notify the 
requester thereof. Promptly and in any event within 20 working days 
after receipt of an appeal (subject to extension under Sec. 4901.16), 
the General Counsel shall issue a decision on the appeal.
    (1) The General Counsel may determine de novo whether the denial of 
disclosure was in accordance with FOIA and this part.
    (2) If the denial appealed from was under Sec. 4901.14(d), the 
General Counsel shall consider any supplementary determination by the 
disclosure officer in deciding the appeal.
    (3) Unless otherwise ordered by the court, the General Counsel may 
act on an appeal notwithstanding the pendency of an action for judicial 
relief in the same matter and, if no appeal has been filed, may treat 
such an action as the filing of an appeal.
    (c) Decision on appeal. As to each item (or portion of an item) 
whose nondisclosure is appealed, the General Counsel shall either--
    (1) Grant the appeal and so advise the requester in writing, in 
which case the records with respect to which the appeal is granted shall 
be promptly made available to the requester; or
    (2) Deny the appeal and so advise the requester in writing with a 
brief statement of the reasons for the denial, including a reference to 
the specific exemption(s) authorizing the denial, an explanation of how 
each such exemption applies to the matter withheld, and notice of the 
provisions for judicial review in paragraph (a)(4) of FOIA. The General 
Counsel's decision shall be the final action of the PBGC with respect to 
the request.
    (d) Records of appeals. Copies of both grants and denials of appeals 
shall be collected in one file available in the PBGC's public reference 
room under Sec. 4901.4(d)(1) and indexed under Sec. 4901.4(e).



Sec. 4901.16  Extensions of time.

    In unusual circumstances (as described in subparagraph (a)(6)(B) of 
FOIA), the time to respond to a disclosure request under Sec. 4901.14(a) 
or an appeal under Sec. 4901.15(b) may be extended as reasonably 
necessary to process the request or appeal. The disclosure officer (with 
the prior approval of the General Counsel) or the General Counsel, as 
appropriate, shall notify the requester in writing within the original 
time period of the reasons for the extension and the date when a 
response is expected to be sent. The maximum extension for responding to 
a disclosure request shall be 10 working days, and the maximum extension 
for responding to an appeal shall be 10 working days minus the amount of 
any extension on the request to which the appeal relates.



Sec. 4901.17  Exhaustion of administrative remedies.

    If the disclosure officer fails to make a determination to grant or 
deny access to requested records, or the General Counsel does not make a 
decision on appeal from a denial of access to PBGC records, within the 
time prescribed (including any extension) for making such determination 
or decision, the requester's administrative remedies shall be deemed 
exhausted and the requester may apply for judicial relief under FOIA. 
However, since a court may allow the PBGC additional time to act as 
provided in FOIA, processing of the request or appeal shall

[[Page 953]]

continue and the requester shall be so advised.



                  Subpart C--Restrictions on Disclosure



Sec. 4901.21  Restrictions in general.

    (a) Records not disclosable. Records shall not be disclosed to the 
extent prohibited by--
    (1) 18 U.S.C. 1905, dealing in general with commercial and financial 
information;
    (2) Paragraph (b)(1) of FOIA, dealing in general with matters of 
national defense and foreign policy; or
    (3) Paragraph (b)(3) of FOIA, dealing in general with matters 
specifically exempted from disclosure by statute, including information 
or documentary material submitted to the PBGC pursuant to sections 4010 
and 4043 of ERISA.
    (b) Records disclosure of which may be refused. Records need not 
(but may, as provided in Sec. 4901.5(b)) be disclosed to the extent 
provided by--
    (1) Paragraph (b)(2) of FOIA, dealing in general with internal 
agency personnel rules and practices;
    (2) Paragraph (b)(4) of FOIA, dealing in general with trade secrets 
and commercial and financial information;
    (3) Paragraph (b)(5) of FOIA, dealing in general with inter-agency 
and intra-agency memoranda and letters;
    (4) Paragraph (b)(6) of FOIA, dealing in general with personnel, 
medical, and similar files;
    (5) Paragraph (b)(7) of FOIA, dealing in general with records or 
information compiled for law enforcement purposes;
    (6) Paragraph (b)(8) of FOIA, dealing in general with reports on 
financial institutions; or
    (7) Paragraph (b)(9) of FOIA, dealing in general with information 
about wells.



Sec. 4901.22  Partial disclosure.

    If an otherwise disclosable record contains some material that is 
protected from disclosure, the record shall not for that reason be 
withheld from disclosure if deletion of the protected material is 
feasible. This principle shall be applied in particular to identifying 
details the disclosure of which would constitute an unwarranted invasion 
of personal privacy.



Sec. 4901.23  Record of concern to more than one agency.

    If the release of a record in the custody of the PBGC would be of 
concern not only to the PBGC but also to another Federal agency, the 
record will be made available by the PBGC only if its interest in the 
record is the primary interest and only after coordination with the 
other interested agency. If the interest of the PBGC in the record is 
not primary, the request will be transferred promptly to the agency 
having the primary interest, and the requester will be so notified.



Sec. 4901.24  Special rules for trade secrets and confidential commercial or financial information submitted to the PBGC.

    (a) Application. To the extent permitted by law, this section 
applies to a request for disclosure of a record that contains 
information that has been designated by the submitter in good faith in 
accordance with paragraph (b) of this section or a record that the PBGC 
has reason to believe contains such information, unless--
    (1) Access to the information is denied;
    (2) The information has been published or officially made available 
to the public;
    (3) Disclosure of the information is required by law other than 
FOIA; or
    (4) The designation under paragraph (b) of this section appears 
obviously frivolous, except that in such a case the PBGC will notify the 
submitter in writing of a determination to disclose the information 
within a reasonable time before the disclosure date (which shall be 
specified in the notice).
    (b) Designation by submitter. To designate information as being 
subject to this section, the submitter shall, at the time of submission 
or by a reasonable time thereafter, assert that information being 
submitted is confidential business information and designate, with 
appropriate markings, the portion(s) of the submission to which the 
assertion applies. Any designation under this paragraph shall expire 10 
years after the date of submission unless a longer designation period is 
requested and reasonable justification is provided therefor.

[[Page 954]]

    (c) Notification to submitter of disclosure request. When disclosure 
of information subject to this section may be made, the disclosure 
officer or (where disclosure may be made in response to an appeal) the 
General Counsel shall promptly notify the submitter, describing (or 
providing a copy of) the information that may be disclosed, and afford 
the submitter a reasonable period of time to object in writing to the 
requested disclosure. (The notification to the submitter may be oral or 
written; if oral, it will be confirmed in writing.) When a submitter is 
notified under this paragraph, the requester shall be notified that the 
submitter is being afforded an opportunity to object to disclosure.
    (d) Objection of submitter. A submitter's statement objecting to 
disclosure should specify all grounds relied upon for opposing 
disclosure of any portion(s) of the information under subsection (b) of 
FOIA and, with respect to the exemption in paragraph (b)(4) of FOIA, 
demonstrate why the information is a trade secret or is commercial or 
financial information that is privileged or confidential. Facts asserted 
should be certified or otherwise supported. (Information provided 
pursuant to this paragraph may itself be subject to disclosure under 
FOIA.) Any timely objection of a submitter under this paragraph shall be 
carefully considered in determining whether to grant a disclosure 
request or appeal.
    (e) Notification to submitter of decision to disclose. If the 
disclosure officer or (where disclosure is in response to an appeal) the 
General Counsel decides to disclose information subject to this section 
despite the submitter's objections, the disclosure officer (or General 
Counsel) shall give the submitter written notice, explaining briefly why 
the information is to be disclosed despite those objections, describing 
the information to be disclosed, and specifying the date when the 
information will be disclosed to the requester. The notification shall, 
to the extent permitted by law, be provided a reasonable number of days 
before the disclosure date so specified, and a copy shall be provided to 
the requester.
    (f) Notification to submitter of action to compel disclosure. The 
disclosure officer or the General Counsel shall promptly notify the 
submitter if a requester brings suit seeking to compel disclosure.



                             Subpart D--Fees



Sec. 4901.31  Charges for services.

    (a) Generally. Pursuant to the provisions of FOIA, as amended, 
charges will be assessed to cover the direct costs of searching for, 
reviewing, and/or duplicating records requested under FOIA from the 
PBGC, except where the charges are limited or waived under paragraph (b) 
or (d) of this section, according to the fee schedule in Sec. 4901.32 of 
this part. No charge will be assessed if the costs of routine collection 
and processing of the fee would be equal to or greater than the fee 
itself.
    (1) Direct costs means those expenditures which the PBGC actually 
incurs in searching for and duplicating (and in the case of commercial 
requesters, reviewing) documents to respond to a request under FOIA and 
this part. Direct costs include, for example, the salary of the employee 
performing work (i.e., the basic rate of pay plus benefits) or an 
established average pay for a homogeneous class of personnel (e.g., all 
administrative/clerical or all professional/executive), and the cost of 
operating duplicating machinery. Not included in direct costs are 
overhead expenses such as costs of space, and heating or lighting the 
facility in which the records are stored.
    (2) Search means all time spent looking for material that is 
responsive to a request under FOIA and this part, including page-by-page 
or line-by-line identification of materials within a document, if 
required, and may be done manually or by computer using existing 
programming. ``Search should be distinguished from ``review'' which is 
defined in paragraph (a)(3) of this section.
    (3) Review means the process of examining documents located in 
response to a request under FOIA and this part to determine whether any 
portion of any document located is permitted or required to be withheld. 
It also includes processing any documents for disclosure, e.g., doing 
all that is necessary to excise them and otherwise prepare

[[Page 955]]

them for release. Review does not include time spent resolving general 
legal or policy issues regarding the application of exemptions.
    (4) Duplication means the process of making a copy of a document 
necessary to respond to a request under FOIA and this part, in a form 
that is reasonably usable by the requester. Copies can take the form of 
paper copy, microform, audio-visual materials, or machine readable 
documentation (e.g., magnetic tape or disk), among others.
    (b) Categories of requesters. Requesters who seek access to records 
under FOIA and this part are divided into four categories: commercial 
use requesters, educational and noncommercial scientific institutions, 
representatives of the news media, and all other requesters. The PBGC 
will determine the category of a requester and charge fees according to 
the following rules.
    (1) Commercial use requesters. When records are requested for 
commercial use, the PBGC will assess charges, as provided in this 
subpart, for the full direct costs of searching for, reviewing for 
release, and duplicating the records sought. Fees for search and review 
may be charged even if the record searched for is not found or if, after 
it is found, it is determined that the request to inspect it may be 
denied under the provisions of subsection (b) of FOIA and this part.
    (i) ``Commercial use'' request means a request from or on behalf of 
one who seeks information for a use or purpose that furthers the 
commercial, trade, or profit interests of the requester or the person on 
whose behalf the request is made.
    (ii) In determining whether a request properly belongs in this 
category, the PBGC will look to the use to which a requester will put 
the documents requested. Moreover, where the PBGC has reasonable cause 
to doubt the use to which a requester will put the records sought, or 
where that use is not clear from the request itself, the PBGC will 
require the requester to provide clarification before assigning the 
request to this category.
    (2) Educational and noncommercial scientific institution requesters. 
When records are requested by an educational or noncommercial scientific 
institution, the PBGC will assess charges, as provided in this subpart, 
for the full direct cost of duplication only, excluding charges for the 
first 100 pages.
    (i) Educational institution means a preschool, a public or private 
elementary or secondary school, an institution of graduate higher 
education, an institution of undergraduate higher education, an 
institution of professional education, and an institution of vocational 
education, which operates a program or programs of scholarly research.
    (ii) Noncommercial scientific institution means an institution that 
is not operated on a ``commercial'' basis as that term is defined in 
paragraph (b)(1)(i) of this section, and which is operated solely for 
the purpose of conducting scientific research the results of which are 
not intended to promote any particular product or industry.
    (iii) To be eligible for inclusion in this category, requesters must 
show that the request is being made as authorized by and under the 
auspices of a qualifying institution and that the records are not sought 
for a commercial use, but are sought in furtherance of scholarly (if the 
request is from an educational institution) or scientific (if the 
request is from a noncommercial scientific institution) research.
    (3) Requesters who are representatives of the news media. When 
records are requested by representatives of the news media, the PBGC 
will assess charges, as provided in this subpart, for the full direct 
cost of duplication only, excluding charges for the first 100 pages.
    (i) Representative of the news media means any person actively 
gathering news for an entity that is organized and operated to publish 
or broadcast news to the public. The term news means information that is 
about current events or that would be of current interest to the public. 
Examples of news media entities include television or radio stations 
broadcasting to the public at large, and publishers of periodicals (but 
only in those instances when they can qualify as disseminators of 
``news'') who make their products available for purchase or subscription 
by the general public. These examples are not intended to be all-
inclusive.

[[Page 956]]

``Freelance'' journalists may be regarded as working for a news 
organization if they can demonstrate a solid basis for expecting 
publication through that organization, even though not actually employed 
by it.
    (ii) To be eligible for inclusion in this category, the request must 
not be made for a commercial use. A request for records supporting the 
news dissemination function of the requester who is a representative of 
the news media shall not be considered to be a request that is for a 
commercial use.
    (4) All other requesters. When records are requested by requesters 
who do not fit into any of the categories in paragraphs (b)(1) through 
(b)(3) of this section, the PBGC will assess charges, as provided in 
this subpart, for the full direct cost of searching for and duplicating 
the records sought, with the exceptions that there will be no charge for 
the first 100 pages of duplication and the first two hours of manual 
search time (or its cost equivalent in computer search time). 
Notwithstanding the preceding sentence, there will be no charge for 
search time in the event of requests under the Privacy Act of 1974 from 
subjects of records filed in the PBGC's systems of records for the 
disclosure of records about themselves. Search fees, where applicable, 
may be charged even if the record searched for is not found.
    (c) Aggregation of requests. If the PBGC reasonably believes that a 
requester or group of requesters is attempting to break a request down 
into a series of requests for the purpose of evading the assessment of 
fees, the PBGC will aggregate any such requests and charge accordingly. 
In no case will the PBGC aggregate multiple requests on unrelated 
subjects from one requester.
    (d) Waiver or reduction of charges. Circumstances under which 
searching, review, and duplication facilities or services may be made 
available to the requester without charge or at a reduced charge are set 
forth in Sec. 4901.34 of this part.



Sec. 4901.32  Fee schedule.

    (a) Charges for searching and review of records. Charges applicable 
under this subpart to the search for and review of records will be made 
according to the following fee schedule:
    (1) Search and review time. (i) Ordinary search and review by 
custodial or clerical personnel, $1.75 for each one-quarter hour or 
fraction thereof of employee worktime required to locate or obtain the 
records to be searched and to make the necessary review; and (ii) search 
or review requiring services of professional or supervisory personnel to 
locate or review requested records, $4.00 for each one-quarter hour or 
fraction thereof of professional or supervisory personnel worktime.
    (2) Additional search costs. If the search for a requested record 
requires transportation of the searcher to the location of the records 
or transportation of the records to the searcher, at a cost in excess of 
$5.00, actual transportation costs will be added to the search time 
cost.
    (3) Search in computerized records. Charges for information that is 
available in whole or in part in computerized form will include the cost 
of operating the central processing unit (CPU) for that portion of 
operating time that is directly attributable to searching for records 
responsive to the request, personnel salaries apportionable to the 
search, and tape or printout production or an established agency-wide 
average rate for CPU operating costs and operator/programmer salaries 
involved in FOIA searches. Charges will be computed at the rates 
prescribed in paragraphs (a) and (b) of this section.
    (b) Charges for duplication of records. Charges applicable under 
this subpart for obtaining requested copies of records made available 
for inspection will be made according to the following fee schedule and 
subject to the following conditions.
    (1) Standard copying fee. $0.15 for each page of record copies 
furnished. This standard fee is also applicable to the furnishing of 
copies of available computer printouts as stated in paragraph (a)(3) of 
this section.
    (2) Voluminous material. If the volume of page copy desired by the 
requester is such that the reproduction charge at the standard page rate 
would be in excess of $50, the person desiring reproduction may request 
a special rate quotation from the PBGC.

[[Page 957]]

    (3) Limit of service. Not more than 10 copies of any document will 
be furnished.
    (4) Manual copying by requester. No charge will be made for manual 
copying by the requesting party of any document made available for 
inspection under the provisions of this part. The PBGC shall provide 
facilities for such copying without charge at reasonable times during 
normal working hours.
    (5) Indexes. Pursuant to paragraph (a)(2) of FOIA copies of indexes 
or supplements thereto which are maintained as therein provided but 
which have not been published will be provided on request at a cost not 
to exceed the direct cost of duplication.
    (c) Other charges. The scheduled fees, set forth in paragraphs (a) 
and (b) of this section, for furnishing records made available for 
inspection and duplication represent the direct costs of furnishing the 
copies at the place of duplication. Upon request, single copies of the 
records will be mailed, postage prepaid, free of charge. Actual costs of 
transmitting records by special methods such as registered, certified, 
or special delivery mail or messenger, and of special handling or 
packaging, if required, will be charged in addition to the scheduled 
fees.



Sec. 4901.33  Payment of fees.

    (a) Medium of payment. Payment of the applicable fees as provided in 
this subsection shall be made in cash, by U.S. postal money order, or by 
check payable to the PBGC. Postage stamps will not be accepted in lieu 
of cash, checks, or money orders as payment for fees specified in the 
schedule. Cash should not be sent by mail.
    (b) Advance payment or assurance of payment. Payment or assurance of 
payment before work is begun or continued on a request may be required 
under the following rules.
    (1) Where the PBGC estimates or determines that charges allowable 
under the rules in this subpart are likely to exceed $250, the PBGC may 
require advance payment of the entire fee or assurance of payment, as 
follows:
    (i) Where the requester has a history of prompt payment of fees 
under this part, the PBGC will notify the requester of the likely cost 
and obtain satisfactory assurance of full payment; or
    (ii) Where the requester has no history of payment for requests made 
pursuant to FOIA and this part, the PBGC may require the requester to 
make an advance payment of an amount up to the full estimated charges.
    (2) Where the requester has previously failed to pay a fee charged 
in a timely fashion (i.e., within 30 days of the date of the billing), 
the PBGC may require the requester to pay the full amount owed plus any 
applicable interest as provided in paragraph (c) of this section (or 
demonstrate that he has, in fact, paid the fee) and to make an advance 
payment of the full amount of the estimated fee.
    (c) Late payment interest charges. The PBGC may assess late payment 
interest charges on any amounts unpaid by the 31st day after the date a 
bill is mailed to a requester. Interest will be assessed at the rate 
prescribed in 31 U.S.C. 3717 and will accrue from the date the bill is 
mailed.



Sec. 4901.34  Waiver or reduction of charges.

    (a) The disclosure officer may waive or reduce fees otherwise 
applicable under this subpart when disclosure of the information is in 
the public interest because it is likely to contribute significantly to 
public understanding of the operations or activities of the government 
and is not primarily in the commercial interest of the requester. A fee 
waiver request shall set forth full and complete information upon which 
the request for waiver is based.
    (b) The disclosure officer may reduce or waive fees applicable under 
this subpart when the requester has demonstrated his inability to pay 
such fees.



PART 4902--DISCLOSURE AND AMENDMENT OF RECORDS PERTAINING TO INDIVIDUALS UNDER THE PRIVACY ACT--Table of Contents




Sec.
4902.1  Purpose and scope.
4902.2  Definitions.
4902.3  Procedures for determining existence of and requesting access to 
          records.
4902.4  Disclosure of record to an individual.

[[Page 958]]

4902.5  Procedures for requesting amendment of a record.
4902.6  Action on request for amendment of a record.
4902.7  Appeal of a denial of a request for amendment of a record.
4902.8  Fees.
4902.9  Specific exemptions.

    Authority: 5 U.S.C. 552a.

    Source: 61 FR 34128, July 1, 1996, unless otherwise noted.



Sec. 4902.1  Purpose and scope.

    This part establishes procedures whereby an individual can determine 
whether the PBGC maintains any system of records that contains a record 
pertaining to the individual, procedures to effect access to an 
individual's record upon his or her request, and procedures for making 
requests to amend records, for making the initial determinations on such 
requests, and for appealing denials of such requests. This part also 
prescribes the fees for making copies of an individual's record. 
Finally, this part sets forth those systems of records that are exempted 
from certain disclosure and other provisions of the Privacy Act (5 
U.S.C. 552a).



Sec. 4902.2  Definitions.

    In addition to terminology in part 4001 of this chapter, as used in 
this part:
    Disclosure officer means the designated official in the 
Communications and Public Affairs Department, PBGC.
    Record means any item, collection, or grouping of information about 
an individual that is maintained by an agency, including, but not 
limited to, his or her education, financial transactions, medical 
history, and criminal or employment history and that contains his or her 
name, or the identifying number, symbol, or other identifying particular 
assigned to the individual, such as a finger or voice print or a 
photograph.
    System of records means a group of any records under the control of 
any agency from which information is retrieved by the name of the 
individual or by some identifying number, symbol, or other identifying 
particular assigned to the individual.
    Working day means any weekday excepting Federal holidays.



Sec. 4902.3  Procedures for determining existence of and requesting access to records.

    (a) Any individual may submit a written request, either by mail to 
the Disclosure Officer, Communications and Public Affairs Department, 
Pension Benefit Guaranty Corporation, 1200 K Street NW., Washington, DC 
20005-4026, or in person between the hours of 9 a.m. and 4 p.m. on any 
working day in Suite 240 at the above address, for the purpose of--
    (1) Learning whether a system of records maintained by the PBGC 
contains any record pertaining to the requester, or
    (2) Obtaining access to such a record.
    (b) Each request submitted pursuant to paragraph (a) of this section 
shall include the name of the system of records to which the request 
pertains and the requester's full name, home address and date of birth, 
and shall clearly state on the envelope and on the request ``Privacy Act 
Request.'' If this information is insufficient to enable the PBGC to 
identify the record in question, the disclosure officer shall request 
such further identifying data as the disclosure officer deems necessary 
to locate the record.
    (c) Unless the request is only for notification of the existence of 
a record and such notification is required under the Freedom of 
Information Act (5 U.S.C. 552), the requester shall be required to 
provide verification of his or her identity to the PBGC as set forth in 
paragraph (c)(1) or (2) of this section, as appropriate.
    (1) If the request is made by mail, the requester shall submit a 
notarized statement establishing his or her identity.
    (2) If the request is made in person, the requester shall show 
identification satisfactory to the disclosure officer, such as a 
driver's license, employee identification, annuitant identification or 
Medicare card.
    (d) The disclosure officer shall respond to the request in writing 
within 10 working days after receipt of the request or of such 
additional information as may be required under paragraph (b) of this 
section. If a request for access to a record is granted, the response

[[Page 959]]

shall state when the record will be made available.



Sec. 4902.4  Disclosure of record to an individual.

    (a) When the disclosure officer grants a request for access to 
records under Sec. 4902.3, such records shall be made available when the 
requester is advised of the determination or as promptly thereafter as 
possible. At the requester's option, the record will be made available 
for the requester's inspection and copying at the Communications and 
Public Affairs Department, Pension Benefit Guaranty Corporation, 1200 K 
Street NW., Washington, DC 20005-4026, between the hours of 9 a.m. and 4 
p.m. on any working day, or a copy of the record will be mailed to the 
requester.
    (b) If the requester desires to be accompanied by another individual 
during the inspection and/or copying of the record, the requester shall, 
either when the record is made available or at any earlier time, submit 
to the disclosure officer a signed statement identifying such other 
individual and authorizing such other individual to be present during 
the inspection and/or copying of the record.



Sec. 4902.5  Procedures for requesting amendment of a record.

    (a) Any individual about whom the PBGC maintains a record contained 
in a system of records may request that the record be amended. Such a 
request shall be submitted in the same manner described in 
Sec. 4902.3(a).
    (b) Each request submitted under paragraph (a) of this section shall 
include the information described in Sec. 4902.3(b) and a statement 
specifying the changes to be made in the record and the justification 
therefor. The disclosure officer may request further identifying data as 
described in Sec. 4902.3(b).
    (c) An individual who desires assistance in the preparation of a 
request for amendment of a record shall submit such request for 
assistance in writing to the Deputy General Counsel, Pension Benefit 
Guaranty Corporation, 1200 K Street NW., Washington, DC 20005-4026. The 
Deputy General Counsel shall respond to such request as promptly as 
possible.



Sec. 4902.6  Action on request for amendment of a record.

    (a) Within 20 working days after receipt by the PBGC of a request 
for amendment of a record under Sec. 4902.5, unless for good cause shown 
the Executive Director of the PBGC extends such 20-day period, the 
disclosure officer shall notify the requester in writing whether and to 
what extent the request shall be granted. To the extent that the request 
is granted, the disclosure officer shall cause the requested amendment 
to be made promptly.
    (b) When a request for amendment of a record is denied in whole or 
in part, the denial shall include a statement of the reasons therefor, 
the procedures for appealing such denial, and a notice that the 
requester has a right to assistance in preparing an appeal of the 
denial.
    (c) An individual who desires assistance in preparing an appeal of a 
denial under this section shall submit a request in writing to the 
Deputy General Counsel, Pension Benefit Guaranty Corporation, 1200 K 
Street NW., Washington, DC 20005-4026. The Deputy General Counsel shall 
respond to the request as promptly as possible, but in no event more 
than 30 days after receipt.



Sec. 4902.7  Appeal of a denial of a request for amendment of a record.

    (a) An appeal from a denial of a request for amendment of a record 
under Sec. 4902.6 shall be submitted, within 45 days of receipt of the 
denial, to the General Counsel, Pension Benefit Guaranty Corporation, 
1200 K Street NW., Washington, DC 20005-4026, unless the record subject 
to such request is one maintained by the Office of the General Counsel, 
in which event the appeal shall be submitted to the Deputy Executive 
Director at the same address. The appeal shall state in detail the basis 
on which it is made and both the envelope and the appeal shall clearly 
state ``Privacy Act Request''.
    (b) Within 30 working days after the receipt of the appeal, unless 
for good cause shown the Executive Director of the PBGC extends such 30-
day period,

[[Page 960]]

the General Counsel or, where appropriate, the Deputy Executive 
Director, shall issue a decision in writing granting or denying the 
appeal in whole or in part. To the extent that the appeal is granted, 
the General Counsel or, where appropriate, the Deputy Executive 
Director, shall cause the requested amendment to be made promptly. To 
the extent that the appeal is denied, the decision shall include the 
reasons for the denial and a notice of the requester's right to submit a 
brief statement setting forth reasons for disputing the denial of 
appeal, to seek judicial review of the denial pursuant to 5 U.S.C. 
552a(g)(1)(A), and to obtain further information concerning the 
provisions for judicial review under that section.
    (c) An individual whose appeal has been denied in whole or in part 
may submit a brief summary statement setting forth reasons for disputing 
such denial. Such statement shall be submitted within 30 days of receipt 
of the denial of the appeal to the Disclosure Officer. Any such 
statement shall be made available by the PBGC to anyone to whom the 
record is subsequently furnished and may also be accompanied, at the 
discretion of the PBGC, by a brief statement summarizing the PBGC's 
reasons for refusing to amend the record. The PBGC shall also provide 
copies of the individual's statement of dispute to all prior recipients 
of the record with respect to whom an accounting of the disclosure of 
the record was maintained pursuant to 5 U.S.C. 552a(c)(1).
    (d) To request further information concerning the provisions for 
judicial review, an individual shall submit such request in writing to 
the Deputy General Counsel, who shall respond to such request as 
promptly as possible.



Sec. 4902.8  Fees.

    When an individual requests a copy of his or her record under 
Sec. 4902.4, charges for the copying shall be made according to the 
following fee schedule:
    (a) Standard copying fee. There shall be a charge of $0.15 per page 
of record copies furnished. Where the copying fee is less than $1.50, it 
shall not be assessed.
    (b) Voluminous material. If the volume of page copy desired by the 
requester is such that the reproduction charge at the standard page rate 
would be in excess of $50, the individual desiring reproduction may 
request a special rate quotation from the PBGC.
    (c) Manual copying by requester. No charge will be made for manual 
copying by the requester of any document made available for inspection 
under Sec. 4902.4. The PBGC shall provide facilities for such copying 
without charge between the hours of 9 a.m. and 4 p.m. on any working 
day.



Sec. 4902.9  Specific exemptions.

    (a) Under the authority granted by 5 U.S.C. 552a(k)(5), the PBGC 
hereby exempts the system of records entitled ``Personnel Security 
Investigation Records--PBGC'' from the provisions of 5 U.S.C. 552a 
(c)(3), (d), (e)(1), (e)(4)(G), (H), and (I), and (f), to the extent 
that the disclosure of such material would reveal the identity of a 
source who furnished information to PBGC under an express promise of 
confidentiality or, before September 27, 1975, under an implied promise 
of confidentiality.
    (b) The reasons for asserting this exemption are to insure the 
gaining of information essential to determining suitability and fitness 
for PBGC employment or for work for the PBGC as a contractor or as an 
employee of a contractor, access to information, and security 
clearances, to insure that full and candid disclosures are obtained in 
making such determinations, to prevent subjects of such determinations 
from thwarting the completion of such determinations, and to avoid 
revealing the identities of persons who furnish information to the PBGC 
in confidence.

[61 FR 34128, July 1, 1996, as amended at 66 FR 32222, June 14, 2001]



PART 4903--DEBT COLLECTION--Table of Contents




                           Subpart A--General

Sec.
4903.1  Purpose and scope.
4903.2  General.
4903.3  Definitions.

[[Page 961]]

                    Subpart B--Administrative Offset

4903.21  Application of Federal Claims Collection Standards.
4903.22  Administrative offset procedures.
4903.23  PBGC requests for offset by other agencies.
4903.24  Requests for offset from other agencies.

                      Subpart C--Tax Refund Offset

4903.31  Eligibility of debt for tax refund offset.
4903.32  Tax refund offset procedures.
4903.33  Referral of debt for tax refund offset.

Subpart D--Salary Offset [Reserved]

    Authority: 29 U.S.C. 1302(b); 31 U.S.C. 3701, 3711(f), 3720A; 4 CFR 
part 102; 26 CFR 301.6402--6.

    Source: 61 FR 34130, July 1, 1996, unless otherwise noted.



                           Subpart A--General



Sec. 4903.1  Purpose and scope.

    (a) Subpart A. Subpart A of this part contains definitions and 
general provisions applicable to debt collection generally.
    (b) Subpart B. Subpart B of this part prescribes procedures for debt 
collection by administrative offset, as authorized by the Federal Claims 
Collection Act (31 U.S.C. 3716), and consistent with applicable 
provisions of the Federal Claims Collection Standards. These procedures 
apply when the PBGC determines that collection by administrative offset 
of a claim that is liquidated or certain in amount is feasible and not 
otherwise prohibited or when another agency seeks administrative offset 
against a payment to be made by the PBGC.
    (c) Subpart C. Subpart C of this part prescribes procedures for debt 
collection by tax refund offset, as authorized by section 3720A of 
subchapter II, chapter 37 of title 31 of the United States Code (31 
U.S.C. 3720A) and in accordance with applicable IRS regulations (26 CFR 
301-6402.6), including a related procedure for disclosure to a consumer 
reporting agency. These procedures apply to determinations that a debt 
of at least $25 is past-due and legally enforceable, to referrals by the 
PBGC of past-due, legally enforceable debts to the IRS for offset, and 
to any subsequent corrections of information contained in such 
referrals.



Sec. 4903.2  General.

    (a) Certain PBGC efforts to obtain payment of debts arising out of 
activities under ERISA are authorized by and subject to requirements 
prescribed under other federal statutes. When, and to the extent, such 
requirements apply to collection of a debt by the PBGC, PBGC activities 
will be consistent with such requirements, as well as with any other 
applicable requirements (see, e.g., parts 4003, 4007, and 4062 of this 
chapter).
    (b)(1) The Executive Director of the PBGC has delegated to the 
Director of the Financial Operations Department primary responsibility 
for PBGC debt collection activities. This delegation includes 
responsibility for procedures implementing requirements prescribed under 
federal statutes other than ERISA, and for coordinating the activities 
of other PBGC departments with functional responsibilities for different 
types of claims.
    (2) PBGC departments are responsible for ascertaining indebtedness 
and other aspects of agency collection activities within their areas of 
functional responsibility.



Sec. 4903.3  Definitions.

    The following terms are defined in Sec. 4001.2 of this chapter: IRS, 
PBGC, and person. In addition, for purposes of this part:
    Administrative offset has the meaning set forth in 31 U.S.C. 
3701(a)(1).
    Agency means an executive or legislative agency (within the meaning 
of 31 U.S.C. 3701(a)(4)).
    Claim and debt, as defined in the Federal Claims Collection 
Standards (4 CFR 101.2(a)), are used synonymously and interchangeably to 
refer to an amount of money or property which has been determined by an 
appropriate agency official to be owed to the United States from any 
person, organization, or entity, except another Federal agency.
    Consumer reporting agency has the meaning set forth in 31 U.S.C. 
3701(a)(3).

[[Page 962]]

    Federal Claims Collection Act means the Federal Claims Collection 
Act of 1966, as amended (31 U.S.C. 3701 et seq.).
    Federal Claims Collection Standards means 4 CFR parts 101 through 
105, which are regulations issued jointly by the Comptroller General of 
the United States and the Attorney General of the United States that 
implement the Federal Claims Collection Act.
    Repayment agreement means a written agreement by a debtor to repay a 
debt to the PBGC.
    Tax refund offset means the reduction by the IRS of a tax 
overpayment payable to a taxpayer by the amount of past-due, legally 
enforceable debt owed by that taxpayer to a federal agency that has 
entered into an agreement with the IRS with regard to its participation 
in the tax refund offset program, pursuant to IRS regulations (26 CFR 
301.6402-6).



                    Subpart B--Administrative Offset



Sec. 4903.21  Application of Federal Claims Collection Standards.

    The PBGC will determine the feasibility of collection by 
administrative offset, whether to accept a repayment agreement in lieu 
of offset, and how to apply amounts collected by administrative offset 
on multiple debts as provided in the Federal Claims Collection Standards 
(4 CFR 102.3).
    (a) Feasibility. The PBGC will determine whether collection by 
administrative offset is feasible on a case-by-case basis in the 
exercise of sound discretion. In making such determinations, the PBGC 
will consider:
    (1) Whether administrative offset can be accomplished, both 
practically and legally;
    (2) Whether administrative offset is best suited to further and 
protect all governmental interests;
    (3) In appropriate circumstances, the debtor's financial condition; 
and
    (4) Whether offset would tend to interfere substantially with or 
defeat the purposes of the program authorizing the payments against 
which offset is contemplated.
    (b) Repayment agreements. The PBGC will exercise its discretion in 
determining whether to accept a repayment agreement in lieu of offset, 
balancing the Government's interest in collecting the debt against 
fairness to the debtor. If the debt is delinquent (within the meaning of 
4 CFR 101.2(b)) and the debtor has not disputed its existence or amount, 
the PBGC will accept a repayment agreement in lieu of offset only if the 
debtor is able to establish that offset would result in undue financial 
hardship or would be against equity and good conscience.
    (c) Multiple debts. When the PBGC collects multiple debts by 
administrative offset, it will apply the recovered amounts to those 
debts in accordance with the best interests of the United States, as 
determined by the facts and circumstances of the particular case, paying 
special attention to applicable statutes of limitations.



Sec. 4903.22  Administrative offset procedures.

    (a) General. Except as otherwise required by law or as provided in 
paragraph (e) of this section, the PBGC will not effect administrative 
offset against a payment to be made to a debtor prior to the completion 
of the procedures specified in paragraphs (b) and (c) of this section. 
However, the PBGC will not duplicate any notice or other procedural 
protection it previously provided in connection with the same debt under 
some other statutory or regulatory authority, such as part 4003 of this 
chapter.
    (b) Notice. The PBGC will provide written notice informing the 
debtor of the following:
    (1) The nature and amount of the debt, and the PBGC's intention to 
collect by offset;
    (2) That the debtor may inspect and copy PBGC records pertaining to 
the debt in accordance with part 4901 or part 4902 of this chapter, as 
applicable (access under the Freedom of Information Act (5 U.S.C. 552) 
or the Privacy Act (5 U.S.C. 552a), respectively);
    (3) How and from whom the debtor may obtain administrative review of 
a determination of indebtedness;
    (4) The facts and circumstances that the PBGC will consider in 
determining whether to accept a repayment agreement in lieu of offset; 
and
    (5) If the PBGC has not previously demanded payment of the debt, the 
date

[[Page 963]]

by which payment must be made to avoid further collection action.
    (c) Administrative review. (1) A debtor may obtain review within the 
PBGC of a determination of indebtedness by submitting a written request 
for review, designated as such, to the PBGC official specified in the 
notice of indebtedness. Unless another regulation in this chapter 
specifies a different period of time, such a request must be submitted 
within 30 days after the date of a PBGC notice under paragraph (b) of 
this section.
    (2) A request for review must:
    (i) State the ground(s) on which the debtor disputes the debt; and
    (ii) Reference all pertinent information already in the possession 
of the PBGC and include any additional information believed to be 
relevant.
    (3) The PBGC will review a determination of indebtedness, when 
requested to do so in a timely manner. The PBGC will issue a written 
decision, based on the written record, and will notify the debtor of its 
decision.
    (i) The review will be conducted by an official of at least the same 
level of authority as the person who made the determination of 
indebtedness.
    (ii) The notice of the PBGC's decision on review will include a 
brief statement of the reason(s) why the determination of indebtedness 
has or has not been changed.
    (4) Upon receipt of a request for administrative review, the PBGC 
may, in its discretion, temporarily suspend transactions in any of the 
debtor's accounts maintained by the PBGC. If the PBGC resolves the 
dispute in the debtor's favor, it will lift the suspension immediately.
    (d) Repayment agreement in lieu of offset. (1) The PBGC will not 
consider entering a repayment agreement in lieu of offset unless a 
debtor submits a copy of the debtor's most recent audited (or if not 
available, unaudited) financial statement (with balance sheets, income 
statements, and statements of changes in financial position), to the 
extent such documents have been prepared, and other information 
regarding the debtor's financial condition (e.g., the types of 
information on assets, liabilities, earnings, and other factors 
specified in paragraphs (b)(3) through (b)(7) of Sec. 4062.6 of this 
chapter).
    (2) The PBGC may require appropriate security as a condition of 
accepting a repayment agreement in lieu of offset.
    (e) Exception. (1) The PBGC may effect administrative offset against 
a payment to be made to the debtor prior to completing the procedures 
specified in paragraphs (b) and (c) of this section if:
    (i) Failure to take the offset would substantially prejudice the 
government's ability to collect the debt; and
    (ii) The time before the payment is to be made does not reasonably 
permit the completion of those procedures.
    (2) The PBGC has determined that a case in which it applies the 
special rule in Sec. 4068.3(c) of this chapter meets the criteria in 
paragraph (e)(1) of this section.
    (3) If the PBGC effects administrative offset against a payment to 
be made to a debtor prior to completing the procedures specified in 
paragraphs (b) and (c) of this section, the PBGC--
    (i) Will promptly complete those procedures; and
    (ii) Will promptly refund any amounts recovered by offset but later 
found not to be owed to the Government.



Sec. 4903.23  PBGC requests for offset by other agencies.

    (a) General. The PBGC may request that funds payable to its debtor 
by another agency be administratively offset to collect a debt owed to 
the PBGC by the debtor. A PBGC request for administrative offset against 
amounts due and payable from the Civil Service Retirement and Disability 
Fund will be made in accordance with 5 CFR part 831, subpart R (Agency 
Requests to OPM for Recovery of a Debt from the Civil Service Retirement 
and Disability Fund).
    (b) Certification. In requesting administrative offset, the Director 
of the Financial Operations Department (or a department official 
designated by the Director) will certify in writing to the agency 
holding funds of the debtor--
    (1) That the debtor owes the debt (including the amount) and that 
the

[[Page 964]]

PBGC has fully complied with the provisions of 4 CFR 102.3; and
    (2) In a request for administrative offset against amounts due and 
payable from the Civil Service Retirement and Disability Fund, that the 
PBGC has complied with applicable statutes and the regulations and 
procedures of the Office of Personnel Management.



Sec. 4903.24  Requests for offset from other agencies.

    (a) General. As provided in the Federal Claims Collections Standards 
(4 CFR 102.3(d)), the PBGC generally will comply with requests from 
other agencies to initiate administrative offset to collect debts owed 
to the United States unless the requesting agency has not complied with 
the applicable provisions of the Federal Claims Collection Standards or 
the offset would be otherwise contrary to law.
    (b) Submission of requests. (1) Any agency may request that funds 
payable to its debtor by the PBGC be administratively offset to collect 
a debt owed to such agency by the debtor by submitting the certification 
described in paragraph (c) of this section.
    (2) All such requests should be directed to the Director, Financial 
Operations Department, Pension Benefit Guaranty Corporation, 1200 K 
Street, NW., Washington, DC 20005-4026.
    (c) Certification required. The PBGC will not initiate 
administrative offset in response to a request from another agency until 
it receives written certification from the requesting agency, signed by 
an appropriate agency official, that the debtor owes the debt (including 
the amount) and that the requesting agency has fully complied with the 
provisions of 4 CFR 102.3 (with a citation to the agency's own 
administrative offset regulations).



                      Subpart C--Tax Refund Offset



Sec. 4903.31  Eligibility of debt for tax refund offset.

    The PBGC will determine whether a debt is eligible for tax refund 
offset in accordance with IRS regulations (26 CFR 301.6402-6 (c) and 
(d)). The PBGC may refer a past-due, legally enforceable debt to the IRS 
for offset if:
    (a) The debt is a judgment debt, or the PBGC's right of action 
accrued not more than 10 years earlier (unless the debt is specifically 
exempt from this requirement);
    (b) The PBGC cannot currently collect the debt by salary offset 
(pursuant to 5 U.S.C. 5514(a)(1));
    (c) The debt is ineligible for administrative offset (by reason of 
31 U.S.C. 3716(c)(2)), or the PBGC cannot currently collect the debt by 
administrative offset (under 31 U.S.C. 3716 and subpart B of this part) 
against amounts payable by the debtor to the PBGC;
    (d) The PBGC has notified, or attempted to notify, the debtor of its 
intent to refer the debt, given the debtor an opportunity to present 
evidence that all or part of the debt is not past-due or not legally 
enforceable, considered any evidence presented by the debtor in 
accordance with Sec. 4903.32, and determined that the debt is past-due 
and legally enforceable;
    (e) If the debt is a consumer debt and exceeds $100, the PBGC has 
disclosed the debt to a consumer reporting agency (as authorized by 31 
U.S.C. 3711(f) and provided in Sec. 4903.32), unless a consumer 
reporting agency would be prohibited from reporting information 
concerning the debt (by reason of 15 U.S.C. 1681c); and
    (f) The debt is at least $25.



Sec. 4903.32  Tax refund offset procedures.

    (a) General. Before referring a debt for tax refund offset, the PBGC 
will complete the procedures specified in paragraph (b) and, if 
applicable, paragraph (c) of this section. The PBGC may satisfy these 
requirements in conjunction with any other procedures that apply to the 
same debt, such as those prescribed in Sec. 4903.22 or part 4003 of this 
chapter.
    (b) Notice, opportunity to present evidence, and determination of 
indebtedness. (1) The PBGC will notify, or make a reasonable attempt to 
notify, a person owing a debt (a ``debtor'') that a debt is past-due and 
if not repaid within 60 days, the PBGC will refer the debt to the IRS 
for offset against any overpayment of tax. For this purpose, compliance 
with IRS procedures (26 CFR 301.6402-6(d)(1)) constitutes a reasonable 
attempt to notify a debtor.

[[Page 965]]

    (2) A debtor will have at least 60 days to present evidence, for 
consideration by the PBGC, that all or part of a debt is not past-due or 
not legally enforceable.
    (3) If evidence that all or part of a debt is not past-due or not 
legally enforceable is considered by an agent or person other than a 
PBGC employee acting on behalf of the PBGC, a debtor will have at least 
30 days from the date of the determination on the debt to request review 
by the Director of the Financial Operations Department (or a department 
official designated by the Director).
    (4) The PBGC will notify a debtor of its determination as to whether 
all or part of a debt is past-due and legally enforceable.
    (c) Consumer reporting agency disclosure. (1)(i) If a consumer debt 
exceeds $100, the Director of the Financial Operations Department (or a 
department official designated by the Director), after verifying the 
validity and overdue status of the debt and that section 605 of the 
Consumer Credit Protection Act (15 U.S.C. 1681c) does not prohibit a 
consumer reporting agency from reporting information concerning the debt 
because it is obsolete, will send the individual who owes the debt a 
written notice--
    (A) That the debt is past-due;
    (B) That the PBGC intends to disclose to a consumer reporting agency 
that the individual is responsible for the debt and the specific 
information to be disclosed; and
    (C) How the individual may obtain an explanation of the debt, 
dispute the information in PBGC's records, and obtain administrative 
review of the debt.
    (ii) If the PBGC does not have a current address for an individual, 
the Director of the Financial Operations Department (or a department 
official designated by the Director) will take reasonable action to 
locate the individual.
    (2) The Director of the Financial Operations Department (or a 
department official designated by the Director) will disclose the debt 
if, within 60 days (or, at his or her discretion, more than 60 days) 
after sending the notice described in paragraph (c)(1) of this section, 
the individual has not repaid the debt, or agreed to repay the debt 
under a written agreement, or requested administrative review of the 
debt.



Sec. 4903.33  Referral of debt for tax refund offset.

    The Director of the Financial Operations Department (or a department 
official designated by the Director) will refer debts to the IRS for 
refund offset, and will correct referrals, in accordance with IRS 
regulations (26 CFR 301.6402-6(e) and (f)).

Subpart D--Salary Offset [Reserved]



PART 4904--ETHICAL CONDUCT OF EMPLOYEES--Table of Contents




    Authority: 29 U.S.C. 1302(b); E.O. 11222, 30 FR 6469; 5 CFR 735.104.



Sec. 4904.1  Outside employment and other activity.

    (a)-(c) [Reserved]
    (d) An employee who is engaged in or is planning to engage in 
outside employment, business, professional or other such activities for 
pay shall obtain clearance:
    (1) When such activities raise a question of conflict with this 
subpart or any applicable laws, orders, regulations or standards, or
    (2) When applicable laws, orders or regulations require clearance of 
such activities.
    (e) A request for clearance shall be in writing and shall include a 
statement of the nature of and the amount of time to be devoted to the 
activity. The heads of offices shall receive and review requests for 
clearance submitted by members of their staff. The Executive Director or 
his designee shall receive and review requests for clearance submitted 
by the heads of offices and special Government employees. The employee 
reviewing the request for clearance may require the employee making the 
request to furnish such other information as may be appropriate in 
considering the request and shall consult with the Corporation's Ethics 
Counselor where appropriate. The request may be granted only if such 
activity would be consistent with applicable laws, orders and 
regulations.

[[Page 966]]

If the request for clearance is not granted, the employee making the 
request shall not commence or continue in the activity unless the 
Executive Director or his designee, upon written request of the 
employee, determines that such activity would be consistent with 
applicable laws, orders and regulations.

[61 FR 34133, July 1, 1996]



PART 4905--APPEARANCES IN CERTAIN PROCEEDINGS--Table of Contents




Sec.
4905.1  Purpose and scope.
4905.2  Definitions.
4905.3  General.
4905.4  Appearances by PBGC employees.
4905.5  Requests for authenticated copies of PBGC records.
4905.6  Penalty.

    Authority: 29 U.S.C. 1302(b); E.O. 11222, 30 FR 6469; 5 CFR 735.104.

    Source: 61 FR 34133, July 1, 1996, unless otherwise noted.



Sec. 4905.1  Purpose and scope.

    (a) Purpose. This part sets forth the rules and procedures to be 
followed when a PBGC employee or former employee is requested or served 
with compulsory process to appear as a witness or produce documents in a 
proceeding in which the PBGC is not a party, if such appearance arises 
out of, or is related to, his or her employment with the PBGC. It 
provides a centralized decisionmaking mechanism for responding to such 
requests and compulsory process.
    (b) Scope. (1) This part applies when, in a judicial, 
administrative, legislative, or other proceeding, a PBGC employee or 
former employee is requested or served with compulsory process to 
provide testimony concerning information acquired in the course of 
performing official duties or because of official status and/or to 
produce material acquired in the course of performing official duties or 
contained in PBGC files.
    (2) This part does not apply to:
    (i) Proceedings in which the PBGC is a party;
    (ii) Congressional requests or subpoenas for testimony or documents; 
or
    (iii) Appearances by PBGC employees in proceedings that do not arise 
out of, or relate to, their employment with PBGC (e.g., outside 
activities that are engaged in consistent with applicable standards of 
ethical conduct).



Sec. 4905.2  Definitions.

    For purposes of this part:
    Appearance means testimony or production of documents or other 
material, including an affidavit, deposition, interrogatory, 
declaration, or other required written submission.
    Compulsory process means any subpoena, order, or other demand of a 
court or other authority (e.g., an administrative agency or a state or 
local legislative body) for the appearance of a PBGC employee or former 
employee.
    Employee means any officer or employee of the PBGC, including a 
special government employee.
    Proceeding means any proceeding before any federal, state, or local 
court; federal, state, or local agency; state or local legislature; or 
other authority responsible for administering regulatory requirements or 
adjudicating disputes or controversies, including arbitration, 
mediation, and other similar proceedings.
    Special government employee means an employee of the PBGC who is 
retained, designated, appointed or employed to perform, with or without 
compensation, for not to exceed one hundred and thirty days during any 
three hundred and sixty-five consecutive days, temporary duties either 
on a full-time or intermittent basis (18 U.S.C. 202).



Sec. 4905.3  General.

    No PBGC employee or former employee may appear in any proceeding to 
which this part applies to testify and/or produce documents or other 
material unless authorized under this part.



Sec. 4905.4  Appearances by PBGC employees.

    (a) Whenever a PBGC employee or former employee is requested or 
served with compulsory process to appear in a proceeding to which this 
part applies, he or she will promptly notify the General Counsel.
    (b) The General Counsel or his or her designee will authorize an 
appearance

[[Page 967]]

by a PBGC employee or former employee if, and to the extent, he or she 
determines that such appearance is in the interest of the PBGC.
    (1) In determining whether an appearance is in the interest of the 
PBGC, the General Counsel or his or her designee will consider relevant 
factors, including:
    (i) What, if any, objective of the PBGC (and, where relevant, any 
federal agency, if the United States is a party) would be promoted by 
the appearance;
    (ii) Whether the appearance would unnecessarily interfere with the 
employee's official duties;
    (iii) Whether the appearance would result in the appearance of 
improperly favoring one litigant over another; and
    (iv) Whether the appearance is appropriate under applicable 
substantive and procedural rules.
    (2) If the General Counsel or his or her designee concludes that 
compulsory process is essentially a request for PBGC record information, 
it will be treated as a request under the Freedom of Information Act, as 
amended, in accordance with part 4901 of this chapter, except to the 
extent that the Privacy Act of 1974, as amended, and part 4902 of this 
chapter govern disclosure of a record maintained on an individual.
    (c) If, in response to compulsory process in a proceeding to which 
this part applies, the General Counsel or his or her designee has not 
authorized an appearance by the return date, the employee or former 
employee shall appear at the stated time and place (unless advised by 
the General Counsel or his or her designee that process either was not 
validly issued or served or has been withdrawn), accompanied by a PBGC 
attorney, produce a copy of this part of the regulations, and 
respectfully decline to provide any testimony or produce any documents 
or other material. When the demand is under consideration, the employee 
shall respectfully request that the court or other authority stay the 
demand pending the employee's receipt of instructions from the General 
Counsel.



Sec. 4905.5  Requests for authenticated copies of PBGC records.

    The PBGC will grant requests for authenticated copies of PBGC 
records, for purposes of admissibility under 28 U.S.C. 1733 and Rule 44 
of the Federal Rules of Civil Procedure, for records that are to be 
disclosed pursuant to this part or part 4901 of this chapter. 
Appropriate fees will be charged for providing authenticated copies of 
PBGC records, in accordance with part 4901, subpart D, of this chapter.



Sec. 4905.6  Penalty.

    A PBGC employee who testifies or produces documents or other 
material in violation of a provision of this part of the regulations 
shall be subject to disciplinary action.

                          PART 4906 [RESERVED]



PART 4907--ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF HANDICAP IN PROGRAMS OR ACTIVITIES CONDUCTED BY THE PENSION BENEFIT GUARANTY CORPORATION--Table of Contents




Sec.
4907.101  Purpose.
4907.102  Application.
4907.103  Definitions.
4907.104-4907.109  [Reserved]
4907.110  Self-evaluation.
4907.111  Notice.
4907.112-4907.129  [Reserved]
4907.130  General prohibitions against discrimination.
4907.131-4907.139  [Reserved]
4907.140  Employment.
4907.141-4907.148  [Reserved]
4907.149  Program accessibility: Discrimination prohibited.
4907.150  Program accessibility: Existing facilities.
4907.151  Program accessibility: New construction and alterations.
4907.152-4907.159  [Reserved]
4907.160  Communications.
4907.161-4907.169  [Reserved]
4907.170  Compliance procedures.
4907.171-4907.999  [Reserved]

    Authority: 29 U.S.C. 794, 1302(b)(3).

    Source: 61 FR 34134, July 1, 1996, unless otherwise noted.



Sec. 4907.101  Purpose.

    This part effectuates section 119 of the Rehabilitation, 
Comprehensive Services, and Developmental Disabilities Amendments of 
1978, which

[[Page 968]]

amended section 504 of the Rehabilitation Act of 1973 to prohibit 
discrimination on the basis of handicap in programs or activities 
conducted by Executive agencies or the United States Postal Service.



Sec. 4907.102  Application.

    This part applies to all programs or activities conducted by the 
agency.



Sec. 4907.103  Definitions.

    For purposes of this part, the term--
    Assistant Attorney General means the Assistant Attorney General, 
Civil Rights Division, United States Department of Justice.
    Auxiliary aids means services or devices that enable persons with 
impaired sensory, manual, or speaking skills to have an equal 
opportunity to participate in, and enjoy the benefits of, programs or 
activities conducted by the agency. For example, auxiliary aids useful 
for persons with impaired vision include readers, brailled materials, 
audio recordings, telecommunications devices and other similar services 
and devices. Auxiliary aids useful for persons with impaired hearing 
include telephone handset amplifiers, telephones compatible with hearing 
aids, telecommunication devices for deaf persons (TDD's), interpreters, 
notetakers, written materials, and other similar services and devices.
    Complete complaint means a written statement that contains the 
complainant's name and address and describes the agency's alleged 
discriminatory action in sufficient detail to inform the agency of the 
nature and date of the alleged violation of section 504. It shall be 
signed by the complainant or by someone authorized to do so on his or 
her behalf. Complaints filed on behalf of classes or third parties shall 
describe or identify (by name, if possible) the alleged victims of 
discrimination.
    Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots, rolling stock or other 
conveyances, or other real or personal property.
    Handicapped person means any person who has a physical or mental 
impairment that substantially limits one or more major life activities, 
has a record of such an impairment, or is regarded as having such an 
impairment.
    As used in this definition, the phrase:
    (1) Physical or mental impairment includes--
    (i) Any physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one or more of the following body systems: 
Neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive; digestive; 
genitourinary; hemic and lymphatic; skin; and endocrine; or
    (ii) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities. The term ``physical or mental 
impairment'' includes, but is not limited to, such diseases and 
conditions as orthopedic, visual, speech, and hearing impairments, 
cerebral palsy, epilepsy, muscular dystrophy, multiple sclerosis, 
cancer, heart disease, diabetes, mental retardation, emotional illness, 
and drug addiction and alcoholism.
    (2) Major life activities includes functions such as caring for 
one's self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning, and working.
    (3) Has a record of such an impairment means has a history of, or 
has been misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (4) Is regarded as having an impairment means--
    (i) Has a physical or mental impairment that does not substantially 
limit major life activities but is treated by the agency as constituting 
such a limitation;
    (ii) Has a physical or mental impairment that substantially limits 
major life activities only as a result of the attitudes of others toward 
such impairment; or
    (iii) Has none of the impairments defined in subparagraph (1) of 
this definition but is treated by the agency as having such an 
impairment.
    Historic preservation programs means programs conducted by the 
agency that have preservation of historic properties as a primary 
purpose.

[[Page 969]]

    Historic properties means those properties that are listed or 
eligible for listing in the National Register of Historic Places or 
properties designated as historic under a statute of the appropriate 
State or local government body.
    Qualified handicapped person means--
    (1) With respect to preschool, elementary, or secondary education 
services provided by the agency, a handicapped person who is a member of 
a class of persons otherwise entitled by statute, regulation, or agency 
policy to receive education services from the agency.
    (2) With respect to any other agency program or activity under which 
a person is required to perform services or to achieve a level of 
accomplishment, a handicapped person who meets the essential eligibility 
requirements and who can achieve the purpose of the program or activity 
without modifications in the program or activity that the agency can 
demonstrate would result in a fundamental alteration in its nature;
    (3) With respect to any other program or activity, a handicapped 
person who meets the essential eligibility requirements for 
participation in, or receipt of benefits from, that program or activity; 
and
    (4) Qualified handicapped person is defined for purposes of 
employment in 29 CFR 1613.702(f), which is made applicable to this part 
by Sec. 4907.140.
    Section 504 means section 504 of the Rehabilitation Act of 1973 
(Pub. L. 93-112, 87 Stat. 394 (29 U.S.C. 794)), as amended by the 
Rehabilitation Act Amendments of 1974 (Pub. L. 93-516, 88 Stat. 1617), 
and the Rehabilitation, Comprehensive Services, and Developmental 
Disabilities Amendments of 1978 (Pub. L. 95-602, 92 Stat. 2955). As used 
in this part, section 504 applies only to programs or activities 
conducted by Executive agencies and not to federally assisted programs.
    Substantial impairment means a significant loss of the integrity of 
finished materials, design quality, or special character resulting from 
a permanent alteration.



Secs. 4907.104-4907.109  [Reserved]



Sec. 4907.110  Self-evaluation.

    (a) The agency shall, by August 24, 1987, evaluate its current 
policies and practices, and the effects thereof, that do not or may not 
meet the requirements of this part, and, to the extent modification of 
any such policies and practices is required, the agency shall proceed to 
make the necessary modifications.
    (b) The agency shall provide an opportunity to interested persons, 
including handicapped persons or organizations representing handicapped 
persons, to participate in the self-evaluation process by submitting 
comments (both oral and written).
    (c) The agency shall, until three years following the completion of 
the self-evaluation, maintain on file and make available for public 
inspection:
    (1) A description of areas examined and any problems identified, and
    (2) A description of any modifications made.



Sec. 4907.111  Notice.

    The agency shall make available to employees, applicants, 
participants, beneficiaries, and other interested persons such 
information regarding the provisions of this part and its applicability 
to the programs or activities conducted by the agency, and make such 
information available to them in such manner as the head of the agency 
finds necessary to apprise such persons of the protections against 
discrimination assured them by section 504 and this regulation.



Secs. 4907.112-4907.129  [Reserved]



Sec. 4907.130  General prohibitions against discrimination.

    (a) No qualified handicapped person shall, on the basis of handicap, 
be excluded from participation in, be denied the benefits of, or 
otherwise be subjected to discrimination under any program or activity 
conducted by the agency.

[[Page 970]]

    (b)(1) The agency, in providing any aid, benefit, or service, may 
not, directly or through contractual, licensing, or other arrangements, 
on the basis of handicap--
    (i) Deny a qualified handicapped person the opportunity to 
participate in or benefit from the aid, benefit, or service;
    (ii) Afford a qualified handicapped person an opportunity to 
participate in or benefit from the aid, benefit, or service that is not 
equal to that afforded others;
    (iii) Provide a qualified handicapped person with an aid, benefit, 
or service that is not as effective in affording equal opportunity to 
obtain the same result, to gain the same benefit, or to reach the same 
level of achievement as that provided to others;
    (iv) Provide different or separate aid, benefits, or services to 
handicapped persons or to any class of handicapped persons than is 
provided to others unless such action is necessary to provide qualified 
handicapped persons with aid, benefits, or services that are as 
effective as those provided to others;
    (v) Deny a qualified handicapped person the opportunity to 
participate as a member of planning or advisory boards; or
    (vi) Otherwise limit a qualified handicapped person in the enjoyment 
of any right, privilege, advantage, or opportunity enjoyed by others 
receiving the aid, benefit, or service.
    (2) The agency may not deny a qualified handicapped person the 
opportunity to participate in programs or activities that are not 
separate or different, despite the existence of permissibly separate or 
different programs or activities.
    (3) The agency may not, directly or through contractual or other 
arrangements, utilize criteria or methods of administration the purpose 
or effect of which would--
    (i) Subject qualified handicapped persons to discrimination on the 
basis of handicap; or
    (ii) Defeat or substantially impair accomplishment of the objectives 
of a program or activity with respect to handicapped persons.
    (4) The agency may not, in determining the site or location of a 
facility, make selections the purpose or effect of which would--
    (i) Exclude handicapped persons from, deny them the benefits of, or 
otherwise subject them to discrimination under any program or activity 
conducted by the agency; or
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of a program or activity with respect to handicapped persons.
    (5) The agency, in the selection of procurement contractors, may not 
use criteria that subject qualified handicapped persons to 
discrimination on the basis of handicap.
    (6) The agency may not administer a licensing or certification 
program in a manner that subjects qualified handicapped persons to 
discrimination on the basis of handicap, nor may the agency establish 
requirements for the programs or activities of licensees or certified 
entities that subject qualified handicapped persons to discrimination on 
the basis of handicap. However, the programs or activities of entities 
that are licensed or certified by the agency are not, themselves, 
covered by this part.
    (c) The exclusion of nonhandicapped persons from the benefits of a 
program limited by Federal statute or Executive Order to handicapped 
persons or the exclusion of a specific class of handicapped persons from 
a program limited by Federal statute or Executive Order to a different 
class of handicapped persons is not prohibited by this part.
    (d) The agency shall administer programs and activities in the most 
integrated setting appropriate to the needs of qualified handicapped 
persons.



Secs. 4907.131-4907.139  [Reserved]



Sec. 4907.140  Employment.

    No qualified handicapped person shall, on the basis of handicap, be 
subjected to discrimination in employment under any program or activity 
conducted by the agency. The definitions, requirements, and procedures 
of section 501 of the Rehabilitation Act of 1973 (29 U.S.C. 791), as 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1613, shall

[[Page 971]]

apply to employment in federally-conducted programs or activities.



Secs. 4907.141-4907.148  [Reserved]



Sec. 4907.149  Program accessibility: Discrimination prohibited.

    Except as otherwise provided in Sec. 4907.150, no qualified 
handicapped person shall, because the agency's facilities are 
inaccessible to or unusable by handicapped persons, be denied the 
benefits of, be excluded from participation in, or otherwise be 
subjected to discrimination under any program or activity conducted by 
the agency.



Sec. 4907.150  Program accessibility: Existing facilities.

    (a) General. The agency shall operate each program or activity so 
that the program or activity, when viewed in its entirety, is readily 
accessible to and usable by handicapped persons. This paragraph does 
not--
    (1) Necessarily require the agency to make each of its existing 
facilities accessible to and usable by handicapped persons;
    (2) In the case of historic preservation programs, require the 
agency to take any action that would result in a substantial impairment 
of significant historic features of an historic property; or
    (3) Require the agency to take any action that it can demonstrate 
would result in a fundamental alteration in the nature of a program or 
activity or in undue financial and administrative burdens. In those 
circumstances where agency personnel believe that the proposed action 
would fundamentally alter the program or activity or would result in 
undue financial and administrative burdens, the agency has the burden of 
proving that compliance with Sec. 4907.150(a) would result in such 
alteration or burdens. The decision that compliance would result in such 
alteration or burdens must be made by the agency head or his or her 
designee after considering all agency resources available for use in the 
funding and operation of the conducted program or activity, and must be 
accompanied by a written statement of the reasons for reaching that 
conclusion. If an action would result in such an alteration or such 
burdens, the agency shall take any other action that would not result in 
such an alteration or such burdens but would nevertheless ensure that 
handicapped persons receive the benefits and services of the program or 
activity.
    (b) Methods--(1) General. The agency may comply with the 
requirements of this section through such means as redesign of 
equipment, reassignment of services to accessible buildings, assignment 
of aides to beneficiaries, home visits, delivery of services at 
alternate accessible sites, alteration of existing facilities and 
construction of new facilities, use of accessible rolling stock, or any 
other methods that result in making its programs or activities readily 
accessible to and usable by handicapped persons. The agency is not 
required to make structural changes in existing facilities where other 
methods are effective in achieving compliance with this section. The 
agency, in making alterations to existing buildings, shall meet 
accessibility requirements to the extent compelled by the Architectural 
Barriers Act of 1968, as amended (42 U.S.C. 4151-4157), and any 
regulations implementing it. In choosing among available methods for 
meeting the requirements of this section, the agency shall give priority 
to those methods that offer programs and activities to qualified 
handicapped persons in the most integrated setting appropriate.
    (2) Historic preservation programs. In meeting the requirements of 
Sec. 4907.150(a) in historic preservation programs, the agency shall 
give priority to methods that provide physical access to handicapped 
persons. In cases where a physical alteration to an historic property is 
not required because of Sec. 4907.150 (a)(2) or (a)(3), alternative 
methods of achieving program accessibility include--
    (i) Using audio-visual materials and devices to depict those 
portions of an historic property that cannot otherwise be made 
accessible;
    (ii) Assigning persons to guide handicapped persons into or through 
portions of historic properties that cannot otherwise be made 
accessible; or
    (iii) Adopting other innovative methods.

[[Page 972]]

    (c) Time period for compliance. The agency shall comply with the 
obligations established under this section by October 21, 1986, except 
that where structural changes in facilities are undertaken, such changes 
shall be made by August 22, 1989, but in any event as expeditiously as 
possible.
    (d) Transition plan. In the event that structural changes to 
facilities will be undertaken to achieve program accessibility, the 
agency shall develop, by February 23, 1987 a transition plan setting 
forth the steps necessary to complete such changes. The agency shall 
provide an opportunity to interested persons, including handicapped 
persons or organizations representing handicapped persons, to 
participate in the development of the transition plan by submitting 
comments (both oral and written). A copy of the transition plan shall be 
made available for public inspection. The plan shall, at a minimum--
    (1) Identify physical obstacles in the agency's facilities that 
limit the accessibility of its programs or activities to handicapped 
persons;
    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period; and
    (4) Indicate the official responsible for implementation of the 
plan.



Sec. 4907.151  Program accessibility: New construction and alterations.

    Each building or part of a building that is constructed or altered 
by, on behalf of, or for the use of the agency shall be designed, 
constructed, or altered so as to be readily accessible to and usable by 
handicapped persons. The definitions, requirements, and standards of the 
Architectural Barriers Act (42 U.S.C. 4151-4157), as established in 41 
CFR 101-19.600 to 101-19.607, apply to buildings covered by this 
section.



Secs. 4907.152-4907.159  [Reserved]



Sec. 4907.160  Communications.

    (a) The agency shall take appropriate steps to ensure effective 
communication with applicants, participants, personnel of other Federal 
entities, and members of the public.
    (1) The agency shall furnish appropriate auxiliary aids where 
necessary to afford a handicapped person an equal opportunity to 
participate in, and enjoy the benefits of, a program or activity 
conducted by the agency.
    (i) In determining what type of auxiliary aid is necessary, the 
agency shall give primary consideration to the requests of the 
handicapped person.
    (ii) The agency need not provide individually prescribed devices, 
readers for personal use or study, or other devices of a personal 
nature.
    (2) Where the agency communicates with applicants and beneficiaries 
by telephone, telecommunication devices for deaf person (TDD's) or 
equally effective telecommunication systems shall be used.
    (b) The agency shall ensure that interested persons, including 
persons with impaired vision or hearing, can obtain information as to 
the existence and location of accessible services, activities, and 
facilities.
    (c) The agency shall provide signage at a primary entrance to each 
of its inaccessible facilities, directing users to a location at which 
they can obtain information about accessible facilities. The 
international symbol for accessibility shall be used at each primary 
entrance of an accessible facility.
    (d) This section does not require the agency to take any action that 
it can demonstrate would result in a fundamental alteration in the 
nature of a program or activity or in undue financial and administrative 
burdens. In those circumstances where agency personnel believe that the 
proposed action would fundamentally alter the program or activity or 
would result in undue financial and administrative burdens, the agency 
has the burden of proving that compliance with Sec. 4907.160 would 
result in such alteration or burdens. The decision that compliance would 
result in such alteration or burdens must

[[Page 973]]

be made by the agency head or his or her designee after considering all 
agency resources available for use in the funding and operation of the 
conducted program or activity, and must be accompanied by a written 
statement of the reasons for reaching that conclusion. If an action 
required to comply with this section would result in such an alteration 
or such burdens, the agency shall take any other action that would not 
result in such an alteration or such burdens but would nevertheless 
ensure that, to the maximum extent possible, handicapped persons receive 
the benefits and services of the program or activity.



Secs. 4907.161-4907.169  [Reserved]



Sec. 4907.170  Compliance procedures.

    (a) Except as provided in paragraph (b) of this section, this 
section applies to all allegations of discrimination on the basis of 
handicap in programs or activities conducted by the agency.
    (b) The agency shall process complaints alleging violations of 
section 504 with respect to employment according to the procedures 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1613 pursuant to section 501 of the Rehabilitation Act of 1973 (29 
U.S.C. 791).
    (c) The Equal Opportunity Manager shall be responsible for 
coordinating implementation of this section. Complaints may be sent to 
Equal Opportunity Manager, Human Resources Department, Pension Benefit 
Guaranty Corporation, 1200 K Street NW., Washington, DC 20005-4026.
    (d) The agency shall accept and investigate all complete complaints 
for which it has jurisdiction. All complete complaints must be filed 
within 180 days of the alleged act of discrimination. The agency may 
extend this time period for good cause.
    (e) If the agency receives a complaint over which it does not have 
jurisdiction, it shall promptly notify the complainant and shall make 
reasonable efforts to refer the complaint to the appropriate government 
entity.
    (f) The agency shall notify the Architectural and Transportation 
Barriers Compliance Board upon receipt of any complaint alleging that a 
building or facility that is subject to the Architectural Barriers Act 
of 1968, as amended (42 U.S.C. 4151-4157), or section 502 of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 792), is not readily 
accessible to and usable by handicapped persons.
    (g) Within 180 days of the receipt of a complete complaint for which 
it has jurisdiction, the agency shall notify the complainant of the 
results of the investigation in a letter containing--
    (1) Findings of fact and conclusions of law;
    (2) A description of a remedy for each violation found; and
    (3) A notice of the right to appeal.
    (h) Appeals of the findings of fact and conclusions of law or 
remedies must be filed by the complainant within 90 days of receipt from 
the agency of the letter required by Sec. 4907.170(g). The agency may 
extend this time for good cause.
    (i) Timely appeals shall be accepted and processed by the head of 
the agency.
    (j) The head of the agency shall notify the complainant of the 
results of the appeal within 60 days of the receipt of the request. If 
the head of the agency determines that additional information is needed 
from the complainant, he or she shall have 60 days from the date of 
receipt of the additional information to make his or her determination 
on the appeal.
    (k) The time limits cited in paragraphs (g) and (j) of this section 
may be extended with the permission of the Assistant Attorney General.
    (l) The agency may delegate its authority for conducting complaint 
investigations to other Federal agencies, except that the authority for 
making the final determination may not be delegated to another agency.



Secs. 4907.171-4907.999  [Reserved]


[[Page 975]]



                              FINDING AIDS




  --------------------------------------------------------------------

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.

  Material Approved for Incorporation by Reference
  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 977]]

            Material Approved for Incorporation by Reference

                      (Revised as of July 1, 2003)

  The Director of the Federal Register has approved under 5 U.S.C. 
552(a) and 1 CFR Part 51 the incorporation by reference of the following 
publications. This list contains only those incorporations by reference 
effective as of the revision date of this volume. Incorporations by 
reference found within a regulation are effective upon the effective 
date of that regulation. For more information on incorporation by 
reference, see the preliminary pages of this volume.


29 CFR (PART 1927 TO END)

OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION, DEPARTMENT OF LABOR
                                                                  29 CFR
  (Copies of the documents listed in this table 
  are available through the Technical Data Center, 
  U.S. Department of Labor, Washington, DC, and 
  through Regional Offices of the Occupational 
  Safety and Health Administration. For a complete 
  listing of these addresses, see the end of this 
  table.)


American Society of Agricultural Engineers

  2950 Niles Rd., P.O. Box 229, St. Jospeh, MI 
  49085
ASAE R313.1, 1971 Soil Cone Penetrometer..........      1928.52; 1928.53
ASAE S306.3--1974, Protective Frame for                          1928.51
  Agricultural Tractors--Test Procedures and 
  Performance Requirements.
ASAE S336.1--1974, Protective Enclosures--Test                   1928.51
  Procedures and Performance Requirements.


Society of Automotive Engineers

  400 Commonwealth Dr., Warrendale, PA 15096; 
  Telephone: (412) 776-4841
SAE J4C, 1955, Motor Vehicle Seat Belt Assembly...               1928.51
SAE J674, 1963, Safety Glazing Materials..........               1928.53
SAE J168--1970, Protective Enclosures--Test                      1928.51
  Procedures and Performance Requirements.
SAE J334a--1970, Protective Frame--Test Procedures               1928.51
  and Performance Requirements.


Addresses

  Technical Data Center: Frances Perkins 
  Department of Labor Building, Room N2625, 200 
  Constitution Ave., NW., Washington, DC 20210.
  Boston Regional Office--Region I: Regional 
  Administrator, U.S. Department of Labor--OSHA, 
  JFK Federal Bldg., Rm. E-340, Boston, MA 02203.
  New York Regional Office--Region II: Regional 
  Administrator, U.S. Department of Labor--OSHA, 
  201 Varick St., Room 670, New York, NY 10014.
  Philadelphia Regional Office--Region III: 
  Regional Administrator, U.S. Department of 
  Labor--OSHA, Gateway Bldg., Suite 2100, 3535 
  Market St., Philadelphia, PA 19104.

[[Page 978]]

  Atlanta Regional Office--Region IV: Regional 
  Administrator, U.S. Department of Labor--OSHA, 
  1375 Peachtree St., NE., Suite 587, Atlanta, GA 
  30367.
  Chicago Regional Office--Region V: Regional 
  Administrator, U.S. Department of Labor--OSHA, 
  32nd Fl., Room 3244, 230 S. Dearborn St., 
  Chicago, IL 60604.
  Dallas Regional Office--Region VI: Regional 
  Administrator, U.S. Department of Labor--OSHA, 
  555 Griffin St., Room 602, Dallas, TX 75202.
  Kansas City Regional Office--Region VII: 
  Regional Administrator, U.S. Department of 
  Labor--OSHA, 1100 Main St., Kansas City, MO 
  64106.
  Denver Regional Office--Region VIII: Regional 
  Administrator, U.S. Department of Labor--OSHA, 
  1999 Broadway, Suite 1690, Denver, CO 80202-
  5716.
  San Francisco Regional Office--Region IX: 
  Regional Administrator, U.S. Department of 
  Labor--OSHA, 71 Stevenson St., Suite 420, San 
  Francisco, CA 94105.
  Seattle Regional Office--Region X: Regional 
  Administrator, U.S. Department of Labor--OSHA, 
  1111 Third Avenue, Suite 715, Seattle, WA 98101-
  3212.



[[Page 979]]



                    Table of CFR Titles and Chapters




                      (Revised as of July 1, 2003)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
        IV  Miscellaneous Agencies (Parts 400--500)

                          Title 2 [Reserved]

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  General Accounting Office (Parts 1--99)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Part 2100)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
        XV  Office of Administration, Executive Office of the 
                President (Parts 2500--2599)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Part 3201)
     XXIII  Department of Energy (Part 3301)
      XXIV  Federal Energy Regulatory Commission (Part 3401)
       XXV  Department of the Interior (Part 3501)
      XXVI  Department of Defense (Part 3601)

[[Page 980]]

    XXVIII  Department of Justice (Part 3801)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  Overseas Private Investment Corporation (Part 4301)
      XXXV  Office of Personnel Management (Part 4501)
        XL  Interstate Commerce Commission (Part 5001)
       XLI  Commodity Futures Trading Commission (Part 5101)
      XLII  Department of Labor (Part 5201)
     XLIII  National Science Foundation (Part 5301)
       XLV  Department of Health and Human Services (Part 5501)
      XLVI  Postal Rate Commission (Part 5601)
     XLVII  Federal Trade Commission (Part 5701)
    XLVIII  Nuclear Regulatory Commission (Part 5801)
         L  Department of Transportation (Part 6001)
       LII  Export-Import Bank of the United States (Part 6201)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Part 6401)
      LVII  General Services Administration (Part 6701)
     LVIII  Board of Governors of the Federal Reserve System (Part 
                6801)
       LIX  National Aeronautics and Space Administration (Part 
                6901)
        LX  United States Postal Service (Part 7001)
       LXI  National Labor Relations Board (Part 7101)
      LXII  Equal Employment Opportunity Commission (Part 7201)
     LXIII  Inter-American Foundation (Part 7301)
       LXV  Department of Housing and Urban Development (Part 
                7501)
      LXVI  National Archives and Records Administration (Part 
                7601)
     LXVII  Institute of Museum and Library Services (Part 7701)
      LXIX  Tennessee Valley Authority (Part 7901)
      LXXI  Consumer Product Safety Commission (Part 8101)
    LXXIII  Department of Agriculture (Part 8301)
     LXXIV  Federal Mine Safety and Health Review Commission (Part 
                8401)
     LXXVI  Federal Retirement Thrift Investment Board (Part 8601)
    LXXVII  Office of Management and Budget (Part 8701)

                      Title 6--Homeland Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 0--99)

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture

[[Page 981]]

         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)
        II  Food and Nutrition Service, Department of Agriculture 
                (Parts 210--299)
       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)
      VIII  Grain Inspection, Packers and Stockyards 
                Administration (Federal Grain Inspection Service), 
                Department of Agriculture (Parts 800--899)
        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)
        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  Rural Telephone Bank, Department of Agriculture (Parts 
                1600--1699)
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)
     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
        XX  Local Television Loan Guarantee Board (Parts 2200--
                2299)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy, Department of Agriculture (Parts 
                2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)
      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)

[[Page 982]]

    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  Cooperative State Research, Education, and Extension 
                Service, Department of Agriculture (Parts 3400--
                3499)
      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)
     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)

                    Title 8--Aliens and Nationality

         I  Department of Homeland Security (Immigration and 
                Naturalization) (Parts 1--599)
         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1400)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Grain Inspection, Packers and Stockyards 
                Administration (Packers and Stockyards Programs), 
                Department of Agriculture (Parts 200--299)
       III  Food Safety and Inspection Service, Department of 
                Agriculture (Parts 300--599)

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 1000-
                -1099)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Part 1800)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)

[[Page 983]]

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)
        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)
         V  Office of Thrift Supervision, Department of the 
                Treasury (Parts 500--599)
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  Federal Housing Finance Board (Parts 900--999)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700--1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)
        IV  Emergency Steel Guarantee Loan Board (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board (Parts 
                500--599)

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--499)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)
        VI  Air Transportation System Stabilization (Parts 1300--
                1399)

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)

[[Page 984]]

        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Industry and Security, Department of 
                Commerce (Parts 700--799)
      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  Technology Administration, Department of Commerce 
                (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)
            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399)

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  United States Customs Service, Department of the 
                Treasury (Parts 1--199)

[[Page 985]]

        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       III  Social Security Administration (Parts 400--499)
        IV  Employees' Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Employment Standards Administration, Department of 
                Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 800-
                -899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training, Department of Labor 
                (Parts 1000--1099)

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)
        II  Agency for International Development (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  Broadcasting Board of Governors (Parts 500--599)
       VII  Overseas Private Investment Corporation (Parts 700--
                799)
        IX  Foreign Service Grievance Board (Parts 900--999)
         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)

[[Page 986]]

        XV  African Development Foundation (Parts 1500--1599)
       XVI  Japan-United States Friendship Commission (Parts 1600-
                -1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--1699)
         X  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Interstate Land Sales 
                Registration Program) (Parts 1700--1799)

[[Page 987]]

       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--799)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900)
        VI  Office of the Assistant Secretary-Indian Affairs, 
                Department of the Interior (Parts 1000--1199)
       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Part 1200)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--899)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Alcohol and Tobacco Tax and Trade Bureau, Department 
                of the Treasury (Parts 1--299)
        II  Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
                Department of Justice (Parts 400--699)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--299)
       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)
         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)
      VIII  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 800--899)
        IX  National Crime Prevention and Privacy Compact Council 
                (Parts 900--999)

[[Page 988]]

        XI  Department of Justice and Department of State (Parts 
                1100--1199)

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 0-
                -99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)
        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)
       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)
      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Employee Benefits Security Administration, Department 
                of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Minerals Management Service, Department of the 
                Interior (Parts 200--299)
       III  Board of Surface Mining and Reclamation Appeals, 
                Department of the Interior (Parts 300--399)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance
         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)
        II  Fiscal Service, Department of the Treasury (Parts 200-
                -399)

[[Page 989]]

        IV  Secret Service, Department of the Treasury (Parts 400-
                -499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)
        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)
      VIII  Office of International Investment, Department of the 
                Treasury (Parts 800--899)
        IX  Federal Claims Collection Standards (Department of the 
                Treasury--Department of Justice) (Parts 900--999)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)
         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)
       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Defense Logistics Agency (Parts 1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
     XVIII  National Counterintelligence Center (Parts 1800--1899)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)
    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Transportation (Parts 1--
                199)
        II  Corps of Engineers, Department of the Army (Parts 200-
                -399)
        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)

[[Page 990]]

        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)
       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        IV  Office of Vocational and Adult Education, Department 
                of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599)
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
        XI  National Institute for Literacy (Parts 1100--1199)
            Subtitle C--Regulations Relating to Education
       XII  National Council on Disability (Parts 1200--1299)

                        Title 35--Panama Canal

         I  Panama Canal Regulations (Parts 1--299)

             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 300-
                -399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
         X  Presidio Trust (Parts 1000--1099)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
        XV  Oklahoma City National Memorial Trust (Part 1501)
       XVI  Morris K. Udall Scholarship and Excellence in National 
                Environmental Policy Foundation (Parts 1600--1699)

             Title 37--Patents, Trademarks, and Copyrights

         I  United States Patent and Trademark Office, Department 
                of Commerce (Parts 1--199)
        II  Copyright Office, Library of Congress (Parts 200--299)
        IV  Assistant Secretary for Technology Policy, Department 
                of Commerce (Parts 400--499)
         V  Under Secretary for Technology, Department of Commerce 
                (Parts 500--599)

[[Page 991]]

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--99)

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Rate Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--799)
        IV  Environmental Protection Agency and Department of 
                Justice (Parts 1400--1499)
         V  Council on Environmental Quality (Parts 1500--1599)
        VI  Chemical Safety and Hazard Investigation Board (Parts 
                1600--1699)
       VII  Environmental Protection Agency and Department of 
                Defense; Uniform National Discharge Standards for 
                Vessels of the Armed Forces (Parts 1700--1799)

          Title 41--Public Contracts and Property Management

            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)
        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 61-1--61-999)
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       102  Federal Management Regulation (Parts 102-1--102-299)
       105  General Services Administration (Parts 105-1--105-999)
       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System
       201  Federal Information Resources Management Regulation 
                (Parts 201-1--201-99) [Reserved]
            Subtitle F--Federal Travel Regulation System
       300  General (Parts 300-1--300-99)
       301  Temporary Duty (TDY) Travel Allowances (Parts 301-1--
                301-99)

[[Page 992]]

       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-70)
       304  Payment of Travel Expenses from a Non-Federal Source 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
        IV  Centers for Medicare & Medicaid Services, Department 
                of Health and Human Services (Parts 400--499)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1999)

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 200--499)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10005)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency, Department of 
                Homeland Security (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare
        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)
       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)

[[Page 993]]

        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)
         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  Corporation for National and Community Service (Parts 
                1200--1299)
      XIII  Office of Human Development Services, Department of 
                Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission on Fine Arts (Parts 2100--2199)
     XXIII  Arctic Research Commission (Part 2301)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Transportation (Parts 1--
                199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Transportation (Parts 400--499)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)
        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 300-
                -399)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Department of Defense (Parts 200--299)
         3  Department of Health and Human Services (Parts 300--
                399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)

[[Page 994]]

         7  United States Agency for International Development 
                (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)
        12  Department of Transportation (Parts 1200--1299)
        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)
        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  Broadcasting Board of Governors (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)
        21  Office of Personnel Management, Federal Employees 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)
        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        35  Panama Canal Commission (Parts 3500--3599)
        44  Federal Emergency Management Agency (Parts 4400--4499)
        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199)
        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement (Parts 5300--5399)
        54  Defense Logistics Agency, Department of Defense (Parts 
                5400--5499)
        57  African Development Foundation (Parts 5700--5799)
        61  General Services Administration Board of Contract 
                Appeals (Parts 6100--6199)
        63  Department of Transportation Board of Contract Appeals 
                (Parts 6300--6399)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

[[Page 995]]

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Research and Special Programs Administration, 
                Department of Transportation (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)
       III  Federal Motor Carrier Safety Administration, 
                Department of Transportation (Parts 300--399)
        IV  Coast Guard, Department of Transportation (Parts 400--
                499)
         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)
      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board, Department of 
                Transportation (Parts 1000--1399)
        XI  Bureau of Transportation Statistics, Department of 
                Transportation (Parts 1400--1499)
       XII  Transportation Security Administration, Department of 
                Transportation (Parts 1500--1599)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)
        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)
         V  Marine Mammal Commission (Parts 500--599)
        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

                      CFR Index and Finding Aids

            Subject/Agency Index
            List of Agency Prepared Indexes
            Parallel Tables of Statutory Authorities and Rules
            List of CFR Titles, Chapters, Subchapters, and Parts
            Alphabetical List of Agencies Appearing in the CFR



[[Page 997]]





           Alphabetical List of Agencies Appearing in the CFR




                      (Revised as of July 1, 2003)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Committee of the Federal Register  1, I
Advanced Research Projects Agency                 32, I
Advisory Council on Historic Preservation         36, VIII
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development, United      22, II
     States
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture Department                            5, LXXIII
  Agricultural Marketing Service                  7, I, IX, X, XI
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Chief Financial Officer, Office of              7, XXX
  Commodity Credit Corporation                    7, XIV
  Cooperative State Research, Education, and      7, XXXIV
       Extension Service
  Economic Research Service                       7, XXXVII
  Energy, Office of                               7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Food and Nutrition Service                      7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Grain Inspection, Packers and Stockyards        7, VIII; 9, II
       Administration
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Procurement and Property Management, Office of  7, XXXII
  Rural Business-Cooperative Service              7, XVIII, XLII
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV
  Rural Telephone Bank                            7, XVI
  Rural Utilities Service                         7, XVII, XVIII, XLII
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force Department                              32, VII
  Federal Acquisition Regulation Supplement       48, 53
Air Transportation Stabilization Board            14, VI
Alcohol and Tobacco Tax and Trade Bureau          27, I
Alcohol, Tobacco, Firearms, and Explosives,       27, II
     Bureau of
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII
Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX

[[Page 998]]

Architectural and Transportation Barriers         36, XI
     Compliance Board
Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI
Army Department                                   32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Benefits Review Board                             20, VII
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase From People Who Are
Broadcasting Board of Governors                   22, V
  Federal Acquisition Regulation                  48, 19
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
Central Intelligence Agency                       32, XIX
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X
Civil Rights, Commission on                       45, VII
Civil Rights, Office for                          34, I
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce Department                               44, IV
  Census Bureau                                   15, I
  Economic Affairs, Under Secretary               37, V
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 13
  Fishery Conservation and Management             50, VI
  Foreign-Trade Zones Board                       15, IV
  Industry and Security, Bureau of                15, VII
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II
  National Marine Fisheries Service               50, II, IV, VI
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Telecommunications and Information     15, XXIII; 47, III
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office, United States      37, I
  Productivity, Technology and Innovation,        37, IV
       Assistant Secretary for
  Secretary of Commerce, Office of                15, Subtitle A
  Technology, Under Secretary for                 37, V
  Technology Administration                       15, XI
  Technology Policy, Assistant Secretary for      37, IV
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Product Safety Commission                5, LXXI; 16, II
Cooperative State Research, Education, and        7, XXXIV
     Extension Service
Copyright Office                                  37, II
Corporation for National and Community Service    45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Court Services and Offender Supervision Agency    28, VIII
     for the District of Columbia
Customs Service, United States                    19, I
Defense Contract Audit Agency                     32, I
Defense Department                                5, XXVI; 32, Subtitle A; 
                                                  40, VII

[[Page 999]]

  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII
  Army Department                                 32, V; 33, II; 36, III, 
                                                  48, 51
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 2
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
District of Columbia, Court Services and          28, VIII
     Offender Supervision Agency for the
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Affairs, Under Secretary                 37, V
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
  Vocational and Adult Education, Office of       34, IV
Educational Research and Improvement, Office of   34, VII
Elementary and Secondary Education, Office of     34, II
Emergency Oil and Gas Guaranteed Loan Board       13, V
Emergency Steel Guarantee Loan Board              13, IV
Employee Benefits Security Administration         29, XXV
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             5, XXIII; 10, II, III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Environmental Protection Agency                   5, LIV; 40, I, IV, VII
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Administration, Office of                       5, XV
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                5, III, LXXVII; 14, VI; 
                                                  48, 99
  National Drug Control Policy, Office of         21, III
  National Security Council                       32, XXI; 47, 2
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II

[[Page 1000]]

  Trade Representative, Office of the United      15, XX
       States
Export-Import Bank of the United States           5, LII; 12, IV
Family Assistance, Office of                      45, II
Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV
Farm Service Agency                               7, VII, XVIII
Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               31, IX
Federal Communications Commission                 5, XXIX; 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       11, I
Federal Emergency Management Agency               44, I
  Federal Acquisition Regulation                  48, 44
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Board                     12, IX
Federal Labor Relations Authority, and General    5, XIV; 22, XIV
     Counsel of the Federal Labor Relations 
     Authority
Federal Law Enforcement Training Center           31, VII
Federal Management Regulation                     41, 102
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Motor Carrier Safety Administration       49, III
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
  Board of Governors                              5, LVIII
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Fine Arts, Commission on                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Fishery Conservation and Management               50, VI
Food and Drug Administration                      21, I
Food and Nutrition Service                        7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX
Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV
Forest Service                                    36, II
General Accounting Office                         4, I
General Services Administration                   5, LVII; 41, 105
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5

[[Page 1001]]

  Federal Management Regulation                   41, 102
  Federal Property Management Regulations         41, 101
  Federal Travel Regulation System                41, Subtitle F
  General                                         41, 300
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302
  Temporary Duty (TDY) Travel Allowances          41, 301
Geological Survey                                 30, IV
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          5, XLV; 45, Subtitle A
  Centers for Medicare & Medicaid Services        42, IV
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Human Development Services, Office of           45, XIII
  Indian Health Service                           25, V; 42, I
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Homeland Security, Department of                  6, I
  Federal Emergency Management Agency             44, I
  Immigration and Naturalization                  8, I
Housing and Urban Development, Department of      5, LXV; 24, Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Housing, Office of, and Multifamily Housing     24, IV
       Assistance Restructuring, Office of
  Inspector General, Office of                    24, XII
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
Human Development Services, Office of             45, XIII
Immigration and Naturalization                    8, I
Immigration Review, Executive Office for          8, V
Independent Counsel, Office of                    28, VII
Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V; 42, I
Industry and Security, Bureau of                  15, VII
Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
     Archives and Records Administration
Inspector General
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Interior Department

[[Page 1002]]

  American Indians, Office of the Special         25, VII
       Trustee
  Endangered Species Committee                    50, IV
  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  Minerals Management Service                     30, II
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Reclamation, Bureau of                          43, I
  Secretary of the Interior, Office of            43, Subtitle A
  Surface Mining and Reclamation Appeals, Board   30, III
       of
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, United States Agency   22, II
     for
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
International Fishing and Related Activities      50, III
International Investment, Office of               31, VIII
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice Department                                5, XXVIII; 28, I, XI; 40, 
                                                  IV
  Alcohol, Tobacco, Firearms, and Explosives,     27, II
       Bureau of
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             31, IX
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration Review, Executive Office for        8, V
  Offices of Independent Counsel                  28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor Department                                  5, XLII
  Benefits Review Board                           20, VII
  Employee Benefits Security Administration       29, XXV
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V
  Employment Standards Administration             20, VI
  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50
  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training Service,      41, 61; 20, IX
       Office of the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II

[[Page 1003]]

Legal Services Corporation                        45, XVI
Library of Congress                               36, VII
  Copyright Office                                37, II
Local Television Loan Guarantee Board             7, XX
Management and Budget, Office of                  5, III, LXXVII; 14, VI; 
                                                  48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II
Micronesian Status Negotiations, Office for       32, XXVII
Mine Safety and Health Administration             30, I
Minerals Management Service                       30, II
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
Morris K. Udall Scholarship and Excellence in     36, XVI
     National Environmental Policy Foundation
National Aeronautics and Space Administration     5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National and Community Service, Corporation for   45, XII, XXV
National Archives and Records Administration      5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Bureau of Standards                      15, II
National Capital Planning Commission              1, IV
National Commission for Employment Policy         1, IV
National Commission on Libraries and Information  45, XVII
     Science
National Council on Disability                    34, XII
National Counterintelligence Center               32, XVIII
National Credit Union Administration              12, VII
National Crime Prevention and Privacy Compact     28, IX
     Council
National Drug Control Policy, Office of           21, III
National Foundation on the Arts and the           45, XI
     Humanities
National Highway Traffic Safety Administration    23, II, III; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute for Literacy                   34, XI
National Institute of Standards and Technology    15, II
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV, VI
National Mediation Board                          29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI
National Security Council and Office of Science   47, II
     and Technology Policy
National Telecommunications and Information       15, XXIII; 47, III
     Administration
National Transportation Safety Board              49, VIII
National Weather Service                          15, IX
Natural Resources Conservation Service            7, VI
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy Department                                   32, VI
  Federal Acquisition Regulation                  48, 52
Neighborhood Reinvestment Corporation             24, XXV
Northeast Interstate Low-Level Radioactive Waste  10, XVIII
     Commission
Nuclear Regulatory Commission                     5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Offices of Independent Counsel                    28, VI

[[Page 1004]]

Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII
Overseas Private Investment Corporation           5, XXXIII; 22, VII
Panama Canal Commission                           48, 35
Panama Canal Regulations                          35, I
Patent and Trademark Office, United States        37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
     Certain Employees
Peace Corps                                       22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 45, VIII
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Postal Rate Commission                            5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Documents                            3
Presidio Trust                                    36, X
Prisons, Bureau of                                28, V
Procurement and Property Management, Office of    7, XXXII
Productivity, Technology and Innovation,          37, IV
     Assistant Secretary
Public Contracts, Department of Labor             41, 50
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Refugee Resettlement, Office of                   45, IV
Regional Action Planning Commissions              13, V
Relocation Allowances                             41, 302
Research and Special Programs Administration      49, I
Rural Business-Cooperative Service                7, XVIII, XLII
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV
Rural Telephone Bank                              7, XVI
Rural Utilities Service                           7, XVII, XVIII, XLII
Saint Lawrence Seaway Development Corporation     33, IV
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
     National Security Council
Secret Service                                    31, IV
Securities and Exchange Commission                17, II
Selective Service System                          32, XVI
Small Business Administration                     13, I
Smithsonian Institution                           36, V
Social Security Administration                    20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI
Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State Department                                  22, I; 28, XI
  Federal Acquisition Regulation                  48, 6
Surface Mining and Reclamation Appeals, Board of  30, III
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII
Technology Administration                         15, XI
Technology Policy, Assistant Secretary for        37, IV
Technology, Under Secretary for                   37, V
Tennessee Valley Authority                        5, LXIX; 18, XIII
Thrift Supervision Office, Department of the      12, V
     Treasury
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     5, L

[[Page 1005]]

  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Commercial Space Transportation                 14, III
  Contract Appeals, Board of                      48, 63
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II
  Federal Motor Carrier Safety Administration     49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 49, V
  Research and Special Programs Administration    49, I
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Surface Transportation Board                    49, X
  Transportation Security Administration          49, XII
  Transportation Statistics Bureau                49, XI
Transportation, Office of                         7, XXXIII
Transportation Security Administration            49, XII
Transportation Statistics Bureau                  49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury Department                               5, XXI; 12, XV; 17, IV; 
                                                  31, IX
  Alcohol and Tobacco Tax and Trade Bureau        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs Service, United States                  19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Law Enforcement Training Center         31, VII
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  International Investment, Office of             31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
  Thrift Supervision, Office of                   12, V
Truman, Harry S. Scholarship Foundation           45, XVIII
United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
     and Water Commission, United States Section
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs Department                       38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training Service,        41, 61; 20, IX
     Office of the Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Vocational and Adult Education, Office of         34, IV
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I
World Agricultural Outlook Board                  7, XXXVIII

[[Page 1007]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations which were 
made by documents published in the Federal Register since January 1, 
2001, are enumerated in the following list. Entries indicate the nature 
of the changes effected. Page numbers refer to Federal Register pages. 
The user should consult the entries for chapters and parts as well as 
sections for revisions.
For the period before January 1, 2001, see the ``List of CFR Sections 
Affected, 1949-1963, 1964-1972, 1973-1985, and 1986-2000'' published in 
11 separate volumes.

                                  2001

29 CFR
                                                                   66 FR
                                                                    Page
Chapter XVII
1952  Authority citation revised....................................6135
1952.4  Revised.....................................................6135
1956.60--1956.64 (Subpart G)  Added.................................2272
Chapter XX
2202  Removed......................................................21671
Chapter XXV
2520  Technical correction.........................................36368
2520.102-3  (d) and (j)(3) corrected...............................34994
2520.104b-3  (d)(3)(ii) corrected..................................34994
2560.503-1  (o) revised............................................35887
2590  Authority citation revised....................................1404
    Regulation at 65 FR 82142 eff. date delayed.....................8076
2590.702  Revised; interim..........................................1404
    (i)(1), (3)(ii)(A) introductory text and (C) Example 2 
amended; interim...................................................14077
2590.736  Heading and (a)(1) revised; (a)(2) amended; interim.......1411
Chapter XL
Chapter  XL Policy statement.......................................51864
4011  Appendix B amended...........................................59693
4022  Appendix B amended..............................2822, 15031, 19090
    Appendix C amended................................2823, 15032, 19090
        Appendices B and C amended.......................10366,  15032, 
                                                                   26792
    Appendix B amended.............................................32543
    Appendix C amended.............................................32544
    Appendix B amended.............................................36702
    Appendix C amended.............................................36703
        Appendices B and C amended.........42738,  47886, 52316, 57370, 
                                                                   64745
    Appendix D amended.............................................59694
4044  Appendix B amended................2823, 10366, 15032, 19090, 26793
    Appendix B amended.............................................32544
    Appendix B amended..........36703, 42738, 47886, 52316, 57371, 64745
    Appendix D amended.............................................59695
4902.9  (b) amended................................................32222

                                  2002

29 CFR
                                                                   67 FR
                                                                    Page
Chapter XVII
1952  Authority citation revised...................................60128
1952.125  (a) revised..............................................60129
1952.175  (a) and (c) through (h) revised..........................60129
1952.212  (a) revised..............................................60129
1952.367  (b) revised..............................................60129
1952.372  (p) revised..............................................60129
1953  Revised......................................................60125
1954  Authority citation revised...................................60129
1954.3  (b)(2), (d)(1)(ii) and (iii) revised.......................60129
1955  Authority citation revised...................................60129
1955.2  (a)(4) revised.............................................60129
1955.3  (a)(1) and (2) introductory texts revised..................60129
1979  Added; interim...............................................15457

[[Page 1008]]

    Comment period extended........................................40597
Chapter XXV
2520  Authority citation revised............................17274, 64772
2520.101-3  Added; interim.........................................64773
2520.102-1  Removed..................................................775
2520.102-4  Revised..................................................775
2520.104-4  (a) revised..............................................776
2520.104-20  (a) introductory text, (2), (3) and (c) revised.........776
2520.104-21  (a) and (c) revised.....................................776
2520.104-23  (b)(2) amended..........................................776
2520.104-24  (b) amended.............................................776
2520.104-25  Amended.................................................776
2520.104-26  (a) revised.............................................776
2520.104-27  (a) revised.............................................777
2520.104-43  (a) amended.............................................777
2520.104-44  (d) amended.............................................777
2520.104a-2  Removed.................................................777
2520.104a-3  Removed.................................................777
2520.104a-4  Removed.................................................777
2520.104a-5  (a) amended; (a)(1) removed.............................777
2520.104a-7  Removed.................................................777
2520.104a-8  Added...................................................784
2520.104b-1  (b)(3) amended..........................................777
    (a), (b)(1) and (c) amended; (e) added.........................17274
2520.104b-2  (g)(1) revised..........................................777
2520.104b-3  (f) and (g) removed.....................................777
2520.107-1 (Subpart G)  Added;.....................................17275
2560  Program announcement.........................................15052
    Authority citation revised.....................................64779
2560.502c-2  (a)(1) and (2) amended..................................777
    (d) through (i) revised; interim...............................64779
2560.502c-5  (d) through (i) revised...............................64780
2560.502c-6  Added...................................................785
    (d) through (i) revised........................................64781
2560.502c-7  (d) through (i) revised...............................64781
2570  Authority citation revised..............................786, 64782
    Program announcement...........................................15052
2570.61(c)  Revised; interim.......................................64782
2570.64  Revised; interim..........................................64782
2570.94  Revised; interim..........................................64783
2570.110--2570.121 (Subpart F)  Added................................786
2570.114  Revised; interim.........................................64783
2570.130--2570.141 (Subpart G)  Added..............................64783
2590  Authority citation revised...................................60861
2590.712  (f)(1), (g)(2) and (i) amended; interim..................60861
Chapter XXVII
2700.4  (b)(1) amended.............................................60862
2700.5  (b) and (g) amended........................................60862
2700.76  (a) revised...............................................18485
2700.82  (d) amended...............................................60862
2701.4  Amended....................................................60862
2702.2  Revised....................................................60862
2702.3  (a) amended................................................60863
2704.201  (a) amended..............................................60863
2704.308  (b) amended..............................................60863
2705.4  Amended....................................................60863
2705.8  Amended....................................................60863
2706.170  (c) amended..............................................60863
Chapter XL
4003.61  Added.....................................................47695
4011  Appendix B amended...........................................71471
4022.4  (a)(3) amended.............................................16954
4022.6  (a) amended................................................16954
4022.7  (b)(1) and (d) revised.....................................16954
4022.8  Added......................................................16954
4022.9  Added......................................................16955
4022.10  Added.....................................................16955
4022.21  (a)(2)(i) amended; (d) revised............................16956
4022.25  (c) and (d) revised.......................................16956
4022.81  (d) added.................................................16956
4022.91--4022.95 (Subpart F) Added.................................16957
4022.101--4022.104 (Subpart G) Added...............................16958
4022  Appendix B amended.........1861, 7077, 11572, 40850, 46376, 53307, 
                                              57950, 63545, 69122, 76683
    Appendix C amended....1862, 7077, 11573, 40851, 46377, 53307, 57950, 
                                                     63545, 69122, 76683
        Appendices B and C amended..............................18113,  
                                                                   34611
    Appendix D amended.............................................71472
4022B  Authority citation added....................................16959
4022B.1  Revised...................................................16959
4044.2  (b) amended................................................16959
4044.13  Revised...................................................16959
    Corrected......................................................38003
4044  Appendix B amended.........1862, 7078, 11573, 18113, 34611, 46377, 
                                       53308, 57950, 63545, 69122, 76683
    Appendix D amended.............................................71472

[[Page 1009]]

                                  2003

   (Regulations published from January 1, 2003, through July 1, 2003)

29 CFR
                                                                   68 FR
                                                                    Page
Subtitle B
Chapter XVII
1979  Revised......................................................14107
1980  Added; interim...............................................31864
Chapter XXV
Chapter  XXV Heading revised; nomenclature change..................16400
2509  Authority citation revised...................................16400
2510  Authority citation revised............................16400, 17480
2510.3-40  Added...................................................17480
2520  Authority citation revised...................................16400
2520.101-2  Revised; eff. 1-1-04...................................17501
2520.101-3  Revised.................................................3727
2520.104-22  (c) amended...........................................16400
2520.104-23  (c) amended...........................................16400
2520.104b-10  (d)(3) and (4) amended...............................16400
2550  Authority citation revised...................................16400
2560  Authority citation revised...................................16400
2560.502c-2  (b)(1) and (d) through (i) revised.....................3734
2560.502c-5  Revised; eff. 1-1-04..................................17505
    (b)(1) and (d) through (i) revised..............................3734
2560.502c-6  (b)(1) and (d) through (i) revised.....................3735
2560.502c-7  Revised................................................3736
2570  Authority citation revised............................16400, 17489
2570.3  (a) revised; eff. 1-1-04...................................17508
2570.61(c)  (c) revised.............................................3737
2570.64  Revised....................................................3737
2570.82  (e) amended...............................................16400
2570.90--2570.101 (Subpart E)  Revised; eff. 1-1-04................17508
2570.94  Revised....................................................3737
2570.114  Revised...................................................3738
2570.130--2570.141 (Subpart G)  Revised.............................3738
2570.150--2570.159 (Subpart H)  Added..............................17489
2575  Authority citation revised.............................2878, 16400
2575.100  Revised...................................................2878
2575.502c-5  Added..................................................2878
2575.502c-6  Added..................................................2878
2582  Authority citation revised...................................16400
2584  Authority citation revised...................................16401
2589  Authority citation revised...................................16401
2590  Authority citation revised............................16401, 18049
2590.712  (f)(1), (g)(2) and (i) amended; interim..................18049
Chapter XL
     4022  Appendices B and C amended........1966,  7420, 12304, 18122, 
                                                            26207, 35295
4044  Appendix B amended..........1967, 7421, 12304, 18123, 26208, 35295


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